Beruflich Dokumente
Kultur Dokumente
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1.1
GUSTAVO ZENO
SRGIO KARIYA
Auditor
YES
CVM code
385-9
Auditor type
Name/Social Reason
Nacional
Deloitte Touche
Tomahtsu
CPF/CNPJ
49.928.567/0001-11
Period of service
4/18/2011 a 3/9/2016
In the fiscal year ended 2015 the services provided by Deloitte of independent audit of the financial statements of
Mills Estruturas e Servios de Engenharia S.A. (Company or Mills) for the fiscal year ended 2015, with issuance of
the opinion, and limited review of quarterly financial statements for the periods ended March 31, June 30 and
September 30, 2015, with the issuance of the related reports; In the fiscal year ended 2014 the services provided by
Deloitte of independent audit of the financial statements of Mills Estruturas e Servios de Engenharia S.A. (Company
or Mills) for the fiscal year ended 2014, with issuance of the opinion, and limited review of quarterly financial
statements for the periods ended March 31, June 30 and September 30, 2014, with the issuance of the related
reports; and services related to the release of previously agreed procedures (PAP) about the financial statements
ended December 31st of 2013 of the investee Rohr S.A Estruturas Tubulares.
In the fiscal year ended 2013 the following services were provided by Deloitte: (i) independent audit of the financial
statements of Mills Estruturas e Servios de Engenharia S.A. (Company or Mills) for the fiscal year ended 2013, with
issuance of the opinion, limited review of quarterly financial statements for the periods ended March31, June 30 and
September 30, 2013, with the issuance of the related reports, and limited review of Industrial Services financial
statements for the purpose of its disposal.
In the fiscal year ended in December 2014, the Company registered R$ 366.4 thousand of fees paid to Deloitte,
referring to limited reviews of financial statements and the Audit Report of that year. In the fiscal year ended in
December 2014, the Company registered R$ 448.0 thousand of fees paid to Deloitte, referring to limited reviews of
financial statements and the Audit Report of that year and
Total amount of remuneration of auditors separated by ; R$ 30.2 thousand related to the release of previously agreed procedures (PAP) about the financial statements
offered services
ended December 31st of 2013 of the investee Rohr S.A Estruturas Tubulares.
Replacement justification
8/6/2014 a 3/9/2016
Adress
Avenida Presidente Wilson, 231, Centro, Rio de Janeiro, RJ, Brasil,
CEP 20030-021, Telefone (21)
004.400.929-14
39810500, Fax (21) 39810600, e-mail: feleite@deloitte.com
Auditor?
YES
CVM code
418-9
Auditor type
Nacional
Name/Social Reason
CPF/CNPJ
57.755.217/0022-53
Period of service
28/03/2016
KPMG was hired to audit the financial statements of Mills Estruturas e Servios de Engenharia S.A.
Description of contracted service
Total amount of remuneration of auditors separated by
offered services:
It hs not made any payment to KPMG, since the contract started on 3/28/2016
Replacement justification
28/03/2016
Endereo
Avenida Almirante Barroso, 52, 0, Centro, Rio de Janeiro, Brasil, CEP
20031-000, Telefone (21)
079.525.807-01
35159400, Fax (21) 35159000, e-mail: lcaraujo@kpmg.com.br
2013
1.016.513
1.059.397
962.231
1.801.245
832.262
497.328
172.592
1.892.723
794.166
431.786
64.268
1.637.957
576.106
232.327
(97.801)
126.955.111
127.816.990
125.779.503
7,98
1,35
8,27
0,50
7,65
(0,78)
2015
2014
2015
293.853
157.938
(65.578)
136.888
168.259
169.641
EBITDA
430.741
326.197
104.063
293.853
(88.156)
1.541
(65.578)
19.673
1.546
207.238
111.830
(44.359)
1.471.402
943.023
619.452
91.073
1.675.840
1.058.376
722.302
104.838
1.505.823
1.026.158
660.509
180.844
ROIC (%).......................................................................................
14,10%
6,67%
-2,9%
2013
Operating Income before financial results .....................................
(+) Income tax and CSLL provision (1) ............................................
(+)Remuneration of affiliated companies
Operating profit before financial income, after taxation and remuneration of affiliated companies
......................................................................................................
2015
________________________________________
(1) Theoretical rate of 30%.
(2) Comprising shareholders equity.
(3) Comprising total loans and other liabilities that carry interest.
3.3
The Board of Directors on February 5, 2016, approved by unanimous vote and without any reservations or restrictions, except for the member who said prevented the increase in the
Company's capital stock, within the authorized capital limit, with the possibility of partial approval, through the issuance, for private subscription of new common shares issued by the
Company, in accordance with the following terms and conditions indicated:
Value of the Capital Increase: at least R $ 105,435,311.36 (105.435 million three hundred and eleven reais and thirty-six cents) and a maximum of R $ 124,999,999.71 (one hundred
and 24.999 million nine hundred and ninety-nine reais and seventy one centavos) through the private placement of a minimum of 40,089,472 (forty million eighty-nine thousand, four
hundred and seventy-two) and a maximum of 47,528,517 (47,528,000 five hundred and seventeen) common shares, with no par value.
Issue Price: R $ 2.63 (two reais and sixty-three cents) per share. The issue price per share was set without unjustified dilution for the existing shareholders of the Company, pursuant
to Article 170, paragraph 1, item III, of the Law of Corporations, based on the price of the Company's shares on the stock values, considering the average price (average of the
weighted daily closing prices by trading volume) of the Company's shares on the BM & FBovespa SA - Securities, Commodities and Futures Exchange in trading sessions between
conducted between November 27, 2015 (inclusive) and February 4, 2016 (inclusive), a criterion which, in the opinion of the Board, best fits the current reality of the Company.
Objectives of the capital increase: The capital increase aims to (a) strengthen the Company's capital structure, strengthening its cash to meet the medium and long-term capital needs
for the development of its activities; (B) strengthen the Company's liquidity levels and reduce its debt margins; and (c) enable the Company to take advantage of market consolidation
opportunities that may arise in the medium term.
There were receipts relating to the capital increase now disclosed on the date of February 5, 2016 the following shareholders on the dates of 24 and 25 February 2016.
Number of shares
(in thousands)
(in R$ thousands)
Shareholders
Controlling shareholders
15.209
39.999
The actions described above to the reporting date of the consolidated financial statements for the year ended 12/31/2014 were unsubscribed.
3.4
The
Companys
shareholders
are
entitled to receive the
mandatory minimum
dividend of 25% from
the
adjusted
net
income
(after
allocation to the legal
reserve).
At
the
Ordinary
Shareholders Meeting
held in 2014, it was
approved the payment
of 25% of the adjusted
net income recorded in
2013
to
its
shareholders,
as
dividends and interest
on capital.
the establishment of
statutory reserves on
net income in the
amounts (i) R $ 0.00
Retained earnings,
which will be used to
cover part of the
investments planned
in budget Company's
capital in the
acquisition of
equipment for
expansion and
investments in
facilities and
information
technology to support
the planned
expansion; (ii) R $
0.00 for the legal
reserve; and (iii) R $
0.00 for the
Expansion Reserve.
The Company's
shareholders are
entitled to receive the
mandatory minimum
dividend of 25% of
adjusted net income
(after allocation to the
legal reserve).
Dividends are
distributed as decided
by the Annual General
Meeting. The
Company may
distribute interest on
capital, by resolution
of the Board of
Restrictions to dividend
distribution
3.5
No restrictions.
No restrictions.
In R$
2013
2014
2015
163,962,523.90
61,054,456.23
0.00
46,497,455.75
25,081,000.00
0.00
3,483,455.75
43,014,000.00
25,081,000.00
0.00
30/4/2014
5/6/2015
25.0%
39.03%
17.0%
5.76%
118,273,166.08
33,567,832.00
4/25/2014
4/28/2015
4/30/2014
3.6
The dividends presented in the chart of item 3.5 were declared in the net income of the last three fiscal years.
3.7 - Debt
Social Exercise
12/31/2015
Type Index
Gross Debt
R$ 620.8 millions
(-) Availabilities
- R$232.0 millions
Net Debt
R$ 388.8 millions
() LTM EBITDA Adjusted with non-recurring items
R$ 186.7 millions
Net debt on EBITDA (the Companys debt payment
capacity)
2,1 x
18,959,222.80
6,276,318
259,658,466
265,934,785
2,347,222.80
5,054,502
159,426,156
164,480,657
Over 5 years
5,574,654.15
599,724
599,724
Total
54,892,335.75
15,115,324
605,718,340
620,833,664
3.9
4.1
Risk Factors
a.
to the Company.
Companys activities consist of providing solutions and assistance to demand of several economy
sectors, specially in civil construction, oil and gas and industrial segments. Consequently, its
operations are subject to similar risks faced by other companies of the sector.
The Heavy Construction business unit offers customized solutions to companies involved in the
implementation of large infrastructure projects, while the Real Estate business unit provides services to
residential and commercial construction companies. The products offered by Rental business unit are leased
to companies operating in a broad number of industrial segments. Consequently, the Companys financial
condition and results of operations are directly linked to the growth and performance of these several
industries, and the Company is exposed to many of the risks faced by companies operating in these
industries.
Events that may negatively affect these industries in such sectors, includes macroeconomic factors, adverse
climate conditions, deterioration of the Brazilian social conditions, decreases in investment, changes to laws
and regulations that adversely affect these industries, credit restrictions, supplier problem, reductions in client
purchasing power, and difficulties in the management of the clients business, among others, are beyond the
managements control and may cause an adverse material effect on the Companys operations and results.
Additionally, the Company presents relevant exposure in its revenues to companies related to the ongoing
investigations known as Car-wash operation. Consequences of investigations may include reduction or
even extinction of companies involved, which can bring delays on current construction works, lower future
construction activity and, consequently, lower demand for equipment and services of the Company.
The Companys equipments are needed on projects with construction methods that require onsite concrete.
In case there is significant modification in construction firms to other construction methods, as, for instance,
steel or pre-molded structures, the demand for Companys equipment and services can be reduced.
The Company may not be able to fully implement its business strategy
The continued growth depends on several factors, many of them are beyond the Companys control. In
particular, the Companys strategy for the expansion of its business units depends on, specially, the
performance of civil construction and industrial sectors in the next years in Brazil. The performance depends
on private and public investments to improve Brazilian infrastructure in several areas, such as energy,
sanitation, transportation and housing, including housing program Minha casa minha vida and the package
of projects which includes the Package of Logistics Investments - Programa de Investimentos em Logstica,
among others. In case these investments are not implemented, delayed or generate a lower demand than
expected, the Company may not be able to implement its expansion strategy adequately.
The organic growth strategy of Rental business unit includes, yet, activities for geographic expansion,
counting with opening of new branches. The Company may not be able to successfully establish business
in different cities and regions of Brazil due to several factors, as, for instance, skilled labor shortage, lack of
reliable suppliers in the local, local competitors, expensive and hard to find terrains, licensing term, and
difficulties to brand acceptance. Even though geographic expansion comes to happen, the Company is
subject to new local economy risks.
Additionally, the Companys future performance will depend on its ability to manage the growth of its
operations. The Company cannot warrantee that it will be able to manage its growth successfully, or that this
growth will not have an adverse effect on its existing business. If the Company is unable to manage its
growth, it may lose its leading market position, which could have a material adverse effect on its financial
condition, results of operations and the negotiation price of its shares.
With operations growth current facilities may become insufficient to store our equipment and provide space
to maintenance and handling of the equipment in an efficient way, which can result in an increase of our
operational costs or a need of moving to new facilities. In case of moving, Company may suffer increase in
rental costs, incur termination fines and may necessitate a supplementary improvement investment on the
new branches.
Adverse conditions in the financial and credit markets, or the Companys failure to secure financing
on adequate terms, may adversely affect its ability to run its business or to implement its strategy.
The implementation of the Companys expansion strategy, as well as the maintenance of its operational
capacity, could demand additional investments and require additional capital, which may not result in an
equivalent increase in its operating income. In addition, the Company may face an increase in operating
costs as a result of other factors, as, for instance, shortages of raw materials, equipment or skilled labor,
increased equipment costs and increased competition in the segments in which it operates. The Company
may need to raise additional funds through securities offerings, including offerings of its shares or debt
instruments, or through credit financings, in order to meet its future capital needs. The Company may not be
able to secure such funds on favorable terms, or at all.
The Company future capital needs will be determined by a number of factors, which includes growth rate of
its revenues, cost and significance of future acquisitions, and expansion of its business operations.
Depending on the investment volume needed, or of costs that may incur, the Company may be forced to
increment cash flow and/or search alternate sources of funds, including creating strategic partnerships. Anny
effort to increment cash flow, by increasing sales, costs reduction, more efficient receivables charge, and
inventory reduction, can be unsuccessful. In addition, the Company may not be able to raise funds to finance
the Companys operations on favorable terms, in which case it may be unable to take advantage of future
opportunities, to react to an increase in competition, or to meet its existing debt obligations. Any of the events
mentioned above could have a material adverse effect on its financial condition, operation results and the
negotiation price of its shares.
The current funding lines from the Company represented, on December 31 of 2015, total debt of R$ 620.8
million. Pursuant to the terms of the Companys existing financing agreements it must comply with certain
conditions which restrict, among other things, its ability to incur additional debt, pay dividends and carry out
capital reductions. As a result of these restrictions, the Company may have difficulty in securing additional
financing to run its operations. New financing contracts may require even more severe restrictions.
In addition, some of the Companys clients are dependent on the credit availability to finance their
investments. A scenario of credit shortages and high interest rates may adversely affect its clients ability to
fund their projects and, consequently, purchase the Companys services, which may have a material adverse
effect on its financial condition and results of operations.
The Company is also exposed to the fact that counterparts to its financing agreements may be prevented
from fulfilling their obligations toward the company, should they go bankrupt or into receivership due to a
sharp decrease in their liquidity levels, so great that such institutions may be prevented from fulfilling their
obligations. The Companys difficulty in the credit scarcity may also adversely affect its suppliers. Therefore,
should the Companys financial counterparts or suppliers be unable to satisfactorily meet their obligations
under the terms of the Companys existing agreements, the Company may need to secure alternative
financing and/or approach alternative suppliers in order to meet its own obligations toward its clients. Such
events could also lead to litigation with its partners or clients, which could have a significant adverse impact
on its reputation, operation and financial condition.
Service cycle leads the Company to apply significant financial and technical resources even before
engaging.
Companys services require high level of initial investment, directed to new process development and,
mainly, to machinery and equipment acquisition which will be used in clients operation, besides the constant
improvement of employees. Some of these investments are performed without any assurance that the
company will be hired in a continuous base to provide service. Thus, the company is particularly vulnerable
to its equipment idleness, until it is reallocated in a project.
The loss of members of the Companys management team may have a material adverse effect on its
operations.
The Companys current market position and its ability to maintain this position is largely dependent on the
skill of its highly experienced management team. None of the Companys executive officers are subject to
long-term employment contracts or non-compete agreements.
The Company cannot guarantee that it will be able to retain its current executive officers or hire other qualified
professionals. The loss of a few of the Companys senior executive officers, or its failure to attract and retain
experienced professionals, may adversely affect its business.
Flaw in asset management can affect credibility and profitability of the Company.
As a rental Company, it needs to manage efficiently its assets, being in investment and disinvestment
decision or in its equipment rental contracts, equally both.
The Company performs investment and disinvestment based on a demand forecast for its services. In case
this forecast does not happen or changes, the Company may have increase on its idle capacity, affecting its
profitability in terms of return on invested capital, or loss of market share.
In its rental contracts, the Company counts the amount of rented equipment in delivery versus the amount
returned. In case the Company is not efficient in account of rented spare parts, it can have its credibility
affected by charging its clients improper compensation or having not enough equipment to replace lost or
broken equipment, if it charges lower than payable.
All of the Companys business units face significant competition in the markets in which they
operate.
The Company faces strong competition in all of the segments in which it operates. Moreover, the Company
may be exposed in the future to additional competition from new market players, as well as from foreign
competitors entering the Brazilian market. The Company operates in a fragmented market which
demonstrates considerable potential for growth and is served by a substantial number of companies offering
less sophisticated and, therefore, less cost services. The Companys clients decision to hire a particular
service provider is influenced by a number of factors, including the quality of the services, the reliability of
the contractor and its ability to offer innovative solutions, and the price charged for the services required. The
Companys competitors are making substantial efforts to improve their market positions and the Company
may lose certain clients to these competitors, including long-standing clients that regularly employ its
services.
In addition, if construction companies and industries create new in-house departments to complement their
core operations, and no longer require the Companys services (or even to compete with the Company).
Competition could also come from substitute products, such as scaffolding, stairs and other types of access
equipment, in the case of motorized access equipment. All these events can lead to a reduction in demand
for Companys services, and a potential increase in competition, which may adversely affect its market stock
price and results of operations.
The development of engineering solutions and technological innovations which add value to the
Companys services is critical to the protection of its leading market position and to the expansion
of its business.
Due to the nature of the Companys business, it must remain abreast of the latest engineering solutions and
technological innovations in its industry. The Company must employ qualified personnel, maintain an
adequate infrastructure, and expand relationships with suppliers that have a successful track record. Should
the Company fail to provide value-added engineering solutions, or to buy or license new technologies
developed by third-parties on acceptable terms, the services rendered by the Company could become
outdated or obsolete in comparison to the services offered by its competitors. Any failure to remain at the
technological forefront of the industry would adversely affect its relationship with clients and, consequently,
its financial condition and results of operations.
In case the Company is unable to hire qualified professionals and provide training to its staff.
In case there in growth in its activities, the Company will need to hire new qualified professionals active in
the most various business sectors. However, it faces significant competition in the hiring of qualified
personnel from other providers of engineering and industrial services and there can be no assurance that it
will be able to attract the number of professionals necessary to implement its expansion plan in the desired
timeframe. In addition, the Company may face difficulties in retaining its current staff if it is unable to preserve
its corporate culture and offer competitive compensation packages. The Company believes that the hiring
and retention of skilled labor is a critical factor for business success and its growth strategy. If the Company
does not achieve its strategy, it can affect operation and future results.
The Companys operations have already been interrupted in the past by labor issues, and the
Company cannot guarantee that such interruptions will not occur in the future.
As of December 31, 2015, approximately 0.3% of the Companys employees were members of labor unions,
primarily in the civil construction and trade industries. The Company has entered into collective bargaining
agreements with each of these unions, which agreements are renegotiated on an annual basis. The
renegotiation of these agreements could become more difficult as unions campaign for salary increases on
the basis of the growth of its operations. During 2013 and 2014, the operations of Industrial Services business
unit have been interrupted during negotiation of new collective bargaining agreements, the segment was
sold in 2013.
The Companys success depends, to a large extent, on the quality and safety of its services and
products.
The Companys success depends, to a large extent, on the quality and safety of the machinery and
equipment that it uses in the provision of its services or that are rented to its clients. If the Companys products
are in any way defective, incorrectly assembled or unsafe, if they cause any kind of accident or delay in its
clients operations, or if they do not meet the expected quality and safety standards, the Companys
relationships with its clients and partners could suffer, its reputation and strength of its brand could be
adversely affected, and the Company could lose market share, besides being exposed to administrative
proceedings and lawsuits in connection with any potential failures of its machinery or equipment and incur
significant expenses. The occurrence of any of these factors could adversely affect the Companys activities.
In addition, the sales contract of the Industrial Services business unit, from 2013, allow the buyer to use the
brand and expression Mills for 3 years. In this way, Mills brand reputation depends too on quality and safety
of services and products offered by the buyer while he can use the brand.
Proceeds from the Companys insurance policies may not be sufficient to cover damages resulting
from a contingent event.
The Company cannot guarantee that proceeds from its insurance policies will be sufficient to cover the
damages resulting from any event covered by such policies. Accordingly, certain risks may not be covered
under the terms of its insurance policies (such as war, fortuitous events, force majeure and interruption of
certain operations). Therefore, if any non-covered event occurs, the Company may incur additional expenses
to rebuild or refurbish its buildings, or to repair or replace its equipment. Furthermore, the Company cannot
guarantee that the proceeds from its insurance policies will be sufficient to cover the damages caused by
any event for which its insurance policies provide coverage. There can be no assurance that the Company
will be able to renew its insurance policies on favorable or acceptable terms, or at all, or enter into new
insurance policies with alternate providers.
The Companys results could be adversely affected if it receives an unfavorable judgment or decision
in one or more of the administrative proceedings and lawsuits filed against the company.
As of December 31, 2015, the Company was involved in administrative proceedings and lawsuits involving
contingencies amounting to R$ 118.6 million, for which it has recorded provisions of R$ 16.6 million. For
more information in this regard, refer to item 4.3 in this Reference Form.
The Companys financial condition and results of operations could be materially adversely affected, if it
receives an unfavorable judgment or decision with respect to a significant share of these proceedings and
lawsuits. In addition, proceedings involving alleged acts of negligence, imprudence or failure could affect the
Companys reputation and adversely affect its operations, whether or not it receives an unfavorable decision.
The Companys growth may be adversely affected if it fails to identify and complete strategic
acquisitions. Difficulties in the integration of acquisitions could adversely affect its results of
operations.
The Company operates in a fragmented market, where the credit access is limited. The Company believes,
therefore, that its sector will go through a process of consolidation over the next few years, which may
significantly change the existing competitive landscape. The Company believes that identifying and
executing strategic acquisitions is one way it could successfully implement its growth strategy and quickly
and efficiently expand its operations and geographic footprint.
However, this strategy could be adversely affected if the Company fails to identify suitable acquisition
opportunities and/or fail to execute such acquisitions on favorable terms. In addition, the Company may not
be able to integrate companies it acquires into its operations within the timeframe and in the manner
determined by its management. Any such failure could have an adverse effect on the rate of return on the
Companys investment, preventing from taking full advantage of the potential synergies of any such
acquisition and result in an adverse effect on its financial condition and results of operations.
b.
The interests of the Companys controlling shareholder may conflict with the interests of its
investors.
The Companys controlling shareholder has the ability, among other things, to elect the majority of the
members of its board of directors and determine the outcome of decisions requiring shareholder approval,
including with respect to transactions with related parties, corporate restructurings, asset sales and
partnership agreements, and will have power to influence the amount and timing of any dividends to be
distributed in the future, subject to the provisions of the Brazilian corporate law regarding the payment of
mandatory dividends. The Companys controlling shareholder may choose to pursue acquisition
opportunities, dispose of assets, and enter into partnership and financing agreements or similar operations
which may conflict with the interests of its other shareholders.
The Company is a diffused controlled company, since it does not have a controlling shareholder or
group of shareholders holding more than 50% of its voting capital, which can allow it be susceptible
to alliances and conflicts between shareholders and other events resulting from the absence of a
controlling shareholder or shareholder group holding more than 50% of the voting capital.
The Company does not have a shareholder holding more than 50% of its voting capital. Alliances or
agreements can be made between the new shareholders, which could have the same effect as having a
group of shareholders. In the event of a group of shareholders and this group takes a hold of the decision
power of the company, it can suffer sudden and unexpected changes in the corporate policies and strategies,
including through mechanisms such as the replacement of the Companys management staff. Besides this,
the Company may be more vulnerable to hostile attempts to acquire control and conflicts from this outcome.
Additionally, the Company's shareholders can possibly change or exclude these provisions from its bylaws
which provide a public offering for share acquisition by a shareholder who becomes holder of 20% of its
share capital and then disregard their obligation to make a public offering to acquire shares as it is required
by its bylaws. The absence of a controlling shareholder or controlling group of shareholders of more than
50% of the voting shares of the Company may also hinder certain decision-making processes, which could
not be reached the quorum required by law for certain decisions. In the case that there isnt a controlling
shareholder holding the absolute majority of the voting shares of the Company, the Company's shareholders
may not use of the same protection granted by Share Companies Law against abuses practiced by other
shareholders and, consequently, may have difficulty in repairing the damage caused. Any sudden or
unexpected change in the Company's management team in its business policy or strategic direction, attempt
to acquire control or any dispute among shareholders concerning their respective rights may adversely affect
the Company's business and operating results.
c.
to the shareholders.
An active and liquid market for the Companys shares may not develop. The volatility and lack of
liquidity of the Brazilian capital market could substantially limit the investors ability to sell their
shares at the desired price and time.
An investment in securities traded in emerging market countries such as Brazil frequently involves a greater
degree of risk when compared to investments in securities of issuers located in major international securities
markets, and are generally considered to be more speculative in nature. The Brazilian securities market is
substantially smaller, less liquid, more concentrated and usually more volatile than major international
securities markets such as the United States.
These characteristics of the Brazilian capital market may substantially limit investors ability to sell the
Companys shares for the desired price and at the desired time, which in turn may have a significant adverse
effect on the price of its shares.
As of December 31, 2015, the BM&FBOVESPA represented, with an average daily trading volume of R$ 4.2
million during the year.
give the right to receive corresponding to 20% (twenty percent) or more of the shares of the Company, shall
apply or request for registration for subsequent realization of an OPA of all shares issued by the Company,
observing the applicable CVM regulations, to the Novo Mercado, the other regulations of BM&FBOVESPA
and the terms of the Company's Bylaws.
These provisions could have the effect to discourage, delay or even prevent the Company to merge with
another company or be acquired by another company, including transactions in which the investor may
receive a bonus over the market value of the Companys shares. Likewise, statutory provision might allow
the maintenance or perpetuation of the staff members of the Company nominated and elected by
shareholders holding less predominant portion of the Company's capital.
d.
to its suppliers.
Fluctuations in the price of raw materials, components and equipment used in the Companys
operations, as well as of commodities, may adversely affect its results.
Certain raw materials and components used in the Companys operations are prone to sudden and significant
fluctuations in price, over which it has no control. The final price of components, machinery and equipment
that are acquired or rented from third parties correlates to a significant extent with the price of commodities
such as steel and aluminum. A substantial increase in the price of such commodities generally results in an
equivalent increase in the Companys suppliers operating costs and, consequently, in an increase in the
prices they charge for their products. The Company may not be able to pass these price increases on to its
clients, which could have an adverse effect on its operating costs and financial condition and results of
operations.
In addition, all of the equipment used by the Rental business unit is imported, as there is no equipment of
comparable quality available locally, and their prices are defined in foreign currencies. Brazilian Real
depreciation against the foreign currencies in which the Company purchases equipment increases costs and
the Company may not be able to reflect the increased cost of equipment in the rental prices charged.
The components, machinery and equipment used in the Companys operations are manufactured
and supplied by third parties.
The components, machinery and equipment used in the Companys operations are manufactured by thirdparties. The Company also buys other materials used in its operations from local or foreign companies. The
Company generally does not carry a very large inventory of equipment in its warehouses, only the minimum
required for the provision of its services. As a result, the Company is vulnerable to delays in the delivery of
equipment or increases in the prices charged by its suppliers, which could prevent from providing its services
or renting its equipment to its clients in a timely manner. Also, if the Companys suppliers are not prepared
for and are unable to meet potential increases in the demand for their products, it may not be able to buy the
amount of equipment or volume of raw materials necessary to carry out its operations. The same can occur
if the company interrupts its purchases with a supplier and, because of the interruption, this supplier is not
able to serve by having compromising its production to another client or by any other reason. If such delays
in delivery or lack of products become recurrent, the company may not be able to find new suppliers quickly
enough to meet its clients needs. In addition, the introduction of restrictions on the acquisition of imported
goods, or the increase of taxes due on imported equipment, may have a negative impact on the Companys
business, in particular on the operations of the Rental business unit.
If any of the events above happens, the Company may suffer demand contraction, which, consequently, will
impair its results and financial situation.
f.
to its clients.
The Company has significant exposition to clients related to ongoing Petrobras investigation.
In 2015, approximately 23% of Companys total net revenue derived from companies and its consortiums
that are being mentioned, someway, with ongoing investigations related to Petrobras corruption, called Car
Wash operation. In December 31st, 2015, the Company possessed R$ 23 million in its net receivables.
Investigations ramifications may cause reduction in activities, difficulty to access credit or even the extension
of involved companies, what can result in delays or failure in payments.
The Company may have difficulty to recover its equipment if its clients enter in judicial recovery or
suspends its payments
In case of judicial recovery or suspension of payments, the Company may recover its shoring equipment
only after the concrete structure, held by it, is able to sustain itself, which can take months to happen. During
this period, the Company might not receive rental revenue, and therefore have its profitability affected.
Client relationship can be affected by undue protest
Due to increase in payment delay and, consequently, in the allowance for doubtful debts, the Company
performed a procurement centralization. This change can generate undue clients protests and,
consequently, damage future relationships between the Company and its Clients.
The success of the Heavy Construction business unit depends on the development of long-term
relationships with a limited number of large companies operating in the Brazilian civil construction
sector.
Ten biggest clients of the Company represent [39%] of Heavy Construction billings in fiscal year ended on
December 31st, 2015.
Maintaining long-standing partnerships with such companies is the key to ensure the Companys involvement
in the implementation of prestigious and innovative activities and execute its operations, in particular, more
complex projects. Should the Company lose any of its main clients, or in case the Company is unable to
maintain a close relationship with such clients, the operations and revenue from the Heavy Construction
business unit could be materially adversely affected.
The Company may be unable to attract new clients or to develop new business at the pace required
for the expansion of the Real Estate and Rental business units.
The average term of the service agreements between the Real Estate and Rental business units and their
clients is generally shorter than that of the service agreements negotiated by the other business units. As a
result, both the Real Estate and Rental business units rely on the constant generation of new business in
order to maintain their revenue at a constant level. Due to the high degree of competition faced by the Real
Estate and Rental business units, the Company must make significant investments in order to attract new
clients and retain existing ones, in addition to offering its services at competitive prices. If the Company is
unable to generate new business at the rate required by the Real Estate and Rental business units, the
operations and expansion of the activities carried out by these business units could be adversely affected.
The Company may be unable to meet the needs of all of its clients or deliver its services in a timely
manner.
The Company owns a limited number of machinery and equipment, which must be properly allocated to each
project in which it is involved. Delays or interruptions in the manufacturing and maintenance of such
equipment and its component parts, as well as sudden increases in the demand for the Companys services,
could prevent from providing its services in the agreed timeframe or from meeting the needs of its clients
satisfactorily and efficiently, as a result of any of the following factors:
inability to foresee the needs of its clients;
delays caused by its suppliers;
insufficient production capacity;
equipment failure;
shortage of qualified workers, strikes and labor claims;
interruption in the provision of public services, in particular power cuts;
delays or interruption of the equipment transportation system;
changes to customs regulations;
macroeconomic factors; and
natural disasters.
Besides being subject to applicable penalties, if the Company is unable to meet its deadlines, either due to
internal problems, or as a result of events over which it has no control or not, it may lose the trust of its clients
and, therefore, experience a decrease in the demand for its services, which could adversely affect its financial
condition and operation results.
Fluctuations in the price of commodities may impact the Companys clients investment decisions
and the cost of equipment and, consequently, the Company may face cancellations or delays
affecting its existing and future projects or loss of revenue.
Fluctuation in commodity prices may affect the Companys clients in many areas. For example, for clients
engaged in the oil and gas, copper and fertilizers business, fluctuation in their product prices may have a
direct impact in the profit margins and cash flows, and consequently influence decisions between maintaining
existing investments or making new expenditures. Should the Companys clients choose to postpone new
investments and/or to cancel or delay the execution of existing projects, the demand for the Companys
services would drop, which could have a material adverse effect on its operations and financial condition.
The Companys operations and financial situation has been adversely affected in the past, and could be
substantially affected in the future, due to cancellations and delays in connection with projects in which it
was or is involved.
g.
interest rates;
exchange controls and restrictions on remittances abroad;
changes in exchange rates;
inflation;
social and political instability;
expansion or contraction of global and Brazilian economy;
liquidity in the domestic financial and capital markets and lending markets;
tax burden, fiscal policy, tax regime; and
political, social and economic developments that may affect Brazil.
The uncertainly about the implementation of changes promoted by the government regarding the
policies or standarts that may affect these or other factors in the future can contribute to economic
uncertainty in Brazil and heightened volatility in the securities market in the country.
It is not possible to predict whether the current or future management of the Federal Government
Will implement changes in fiscal, Exchange rate policies, monetary, social security, among others,
or what will be the consequences of such policies in the Brazilian economy and the Companys
operations.
Efforts of the Federal Government to combat inflation may slow the growth of the Brazilian
economy and harm our business.
In the past, Brazil experienced extremely high rates of inflation and, consequently, adopted
monetary policies that resulted in one of the hightest real interest rates in the world. In 2015,
SELIC showed average of 13.38%. The annual inflation calculated by the IGP-M was 5.51%,
3.39% and 10.53% in 2013, 2014 and 2015, respectively, and by the IPCA was 5.91%, 6.41%
and 10.67% in 2013, 2014 and 2015, respectively. Inflation and the measures adopted by the
Federal Government to combat it, mainly through the Central Bank, have had and may have
significant effects on the Brazilian economy on the Companys business. Tight monetary policies
with high interest rates may restrict Brazils growth and the availability of credit. Conversely,
government policy and looser monetary, the decrease in interest rates and intervention in the
foreign Exchange and stock market adjust or fix the real value may trigger increases in inflation
and, consequently, the volatility of growth and the need for sudden and significant increases in
interest rates. In addition, the Company may not have conditions to adjust the prices to offset the
effects of inflation on its cost structure. Any of these factors could affect their business negatively.
The demand for the Companys services is directly linked to the volume of public investment in the
engineering, construction and infrastructure sectors.
The public sector is generally involved in the implementation of large engineering and infrastructure projects
in Brazil, either by means of direct investment in such projects or through financing agreements.
According to estimates from BNDES, the public and private sectors are expected to invest R$ 187 billion in
investments in highways, railways and ports. Although there is great uncertainty about the terms of its
accomplish, that depends on improving in planning and on balancing concession model and financing.
In Brazil, public investments have historically been influenced by macroeconomic, political and legal factors,
which are all beyond of the Companys control. Such factors could determine, among other things, the
suspension or cancelation of projects that require the involvement of the public sector. Any such suspension
or cancellation could have a material adverse effect on the Companys clients operations and on the demand
for its services. If estimates regarding the level of future investments in construction and infrastructure are
not correct, or if such investments are not made, the Companys clients operations (and, consequently, the
Companys financial condition and operations) may be adversely affected.
The Company may have difficulties in adjusting the prices charged by it to offset the
effects of inflation
The Company seeks to pass along the effects of price inflation which charges for its products and
services. However, in case of long-term contracts, the adjustment is only permitted by Brazilian
Law every 12 months. The main price ndices used for the correction values in its long-term
contracts are the IGP-M (ndice Geral de Preos do Mercado), [released by Fundao Getlio
Vargas (FGV)], and the IPCA (ndice de Preos ao Consumidor Amplo), released by Instituto
Brasileiro de Geografia e Estatstica (IBGE). In addition, the cost of the Company's workforce is
impacted by increases agreed in collective bargaining, with adjustments generally also defined
according to price indices.
In periods of low demand and therefore price pressure, you probably cant pass on the effects of
inflation the prices it charges for its products and services and hence profitability could suffer
reduction.
Raw Material Price Risk and Imported Equipment
Increase in the price of commodities used in the manufacture of the equipment used in
providing the Company's services, such as steel and aluminum above the inflation rate used in
the adjustment of their contracts may also compromise their future earnings until these real
increases are incorporated into prices.
Additionally, in the case of contracts in which imported equipment is used, such as business
unit Rental, increases the exchange rate above inflation also compromise their future earnings
until these increases can be incorporated into prices.
h.
Costs related to laws and workplace safety regulations as well as those third-party professionals.
Such costs can be relevant and adversely impact the Companys results.
As of December 31, 2015, the Company had 1.558 active employees (to further information go to section 14
in this Reference Form). Due to the nature of the services provided, both the Companys employees and
employees of third parties face risks when executing its projects, which could result in serious injury or death.
In accordance with existing labor laws and regulations, the Company is required to provide and ensure the
use of safety equipment for its employees and other individuals working on its projects, under the Companys
responsibility. If the Company fails to provide all necessary safety equipment and ensure its proper use, or
if it works with companies that are not sufficiently committed to ensuring the safety of their staff, the Company
could be deemed responsible for any accidents that take place at the worksites where it provides services.
Any accidents at the worksites where it provides its services could potentially reduce the number of able
bodied employees available to carry out its operations and would expose the Company to the payment of
fines and penalties to the workers involved.
Any changes to existing safety regulations may impose additional obligations on the Company and result in
an increase in its expenses with respect to safety equipment and procedures. The Company cannot predict
whether any such changes would have a significant impact on its operations. For example, changes imposing
a reduced work day, for safety reasons, could result in a drop in employee productivity, therefore forcing the
Company to hire additional staff. Similarly, provisions requiring the Company to install additional safety
components could increase the cost of its equipment and, therefore, adversely impact its operating costs
and financial results.
In addition, the Company engaged a third-party labor provider to hire temporary employees during periods
of rapid increases in the demand for the Companys services. As a result, the Company could be considered
responsible for meeting any employment obligations relating to such professionals, or deemed to be their
employer under the terms of existing laws and regulations, and would be subject to potential costs associated
with failure to comply with workplace safety regulations with respect to such professionals. Besides, the
editing of stricter legal and regulatory provisions regarding the use of outsourced personnel, or of provisions
imposing additional obligations on the contractor of outsourced services, could increase the Companys labor
costs and have a negative effect on its financial condition and results of operations.
The technical requirements and the use of the Companys equipments, as well as, the way which the
Company renders its services, may suffer relevant changes due to the incident of drastic climate
change. Moreover, the Companys inability to adapt to climate change may adversely affect its
business and financial results. Additionally, the Company is subjected to several environmental laws
and regulations that may become stricter in the future, as a response to the drastic climate changes,
and may result in higher duties and greater capital investment.
Climate change, including flooding or erosion caused by increased rainfall, could adversely affect the
technical requirements in the projects and equipment to which the Company is subjected to, the way in which
the Company uses its equipment and the way it render its services. In addition, variations in weather caused
by climate change may lead to postponements in project schedules, which in turn may lead to a decrease in
the demand for the Companys services. The Companys inability to adapt its operations to such climate
change and maintain its quality standards from our equipment and services, may lead to a decrease in its
market share, adversely affecting its business and financial results.
The Companys operations are subject to several federal, state and municipal environmental laws and
regulations, including protocols and international treaties to which Brazil is party. Such regulatory framework
may become more stringent in the future due to, among other things, climate change.
i.
Operations are subject to extensive federal, state and local legislation on environmental
protection, which covers even the normative introduced in the legal system in international
function of agreements and treaties to which Brazil is or may become a party. The occurrence or
perception about climate change at national and international level can lead to the issue of more
stringent environmental standards.
Compliance with the provisions of these laws and regulations is monitored by certain governmental bodies
and agencies that are responsible for applying administrative sanctions in the event of the breach of any
relevant provisions. These sanctions may consist of fines ranging from R$500 to R$50,000,000, result in the
cancelation of our licenses and, ultimately, the temporary or permanent suspension of the Companys
operations, among other penalties. Environmental laws and regulations may become stricter in the future,
which may require the Company to make additional investments in compliance and, as a result, affect its
existing investment program. Such changes may cause an adversely affect to its financial condition and
results of operations. Besides, the failure to comply with such laws and regulations, such as operating without
the necessary environmental licenses and permits, or failing to adequately dispose of residues arising from
the Companys painting and equipment maintenance services, may result in the application of criminal and
administrative sanctions, as well as the obligation to repair the alleged harm or pay penalties for any potential
damage to the environment. Criminal sanctions may include, among other things, the arrest of the persons
responsible for the breach, the revocation or restriction of tax incentives and the cancelation or suspension
of credit facilities provided by public financial institutions. The Company could also be prohibited from
providing services to the public sector. The application of any of these sanctions could have an adverse
effect on the Companys revenues and prevent us from being able to raise capital in the financial markets.
The introduction of additional environmental obligations in the future as a result of legal or regulatory changes
or as a consequence of an increase in the environmental impact of the Companys operations, or failure to
obtain any necessary environmental licenses and permits, may result in additional and substantial
compliance costs and have an adverse effect on its business, financial condition and results of operations.
4.2
Comments on the Companys expectations to reduce or increase its exposure to the risks
factors
Mills Estrutura e Servios de Engenharia S.A. (Mills or Company) is exposed, in particular, to
the following marketing risks: risks of interest rates and monetary, credit, currency and liquidity
risk.
Sensitivity analysis
Below, the analysis chart of sensitivity of financial instruments, describing the risks that may
result in material losses for the Company, with the most probable scenario (scenario I)
according to an evaluation carried out by management, considering a horizon of one year. In
addition, two other scenarios are presented in terms determined by the Brazilian Securities
Commission, through Instruction No. 475/2008 in order to provide 25% and 50% deterioration in
the risk variable considered, respectively (scenarios II and III) :
Cash equivalents
Financial investments
Debt
BNDES
1 Issuance of debentures
2 Issuance of debentures
1st Serie
2nd Serie
3rd Issuance of debentures
Indicator
Atual
CDI
Total
231.867
231.867
24.775
24.775
25,00%
16.517
16.517
50,00%
Indicator
Atual
TJLP
CDI
(15.116)
(92.751)
(1.023)
(4.115)
CDI
IPCA
CDI
Total
(169.629)
(142.277)
(202.527)
(622.300)
(19.156)
(19.016)
(29.925)
(73.235)
Variao
(1.072)
(5.075)
(1.119)
(6.018)
(23.427)
(27.635)
(21.880)
(24.806)
(37.056)
(44.093)
(88.510) (103.671)
20,86%
41,56%
The sensitivity analysis presented above considers changes relating to the risk of interest rate,
holding constant other variables associated with other risks.
References
Prospective
Taxes
CDI (%) (i)
TJLP (%) (ii)
IPCA(%) (iii)
14,25%
7,50%
7,57%
12/31/15
Scenario
II
25%
Scenario
III
50%
17,81%
9,38%
9,46%
21,38%
11,25%
11,36%
(I) As regards the interest rate risk, the Company's Management considered as the probable premise (Scenario I) for its
financial instruments a rate of 14.25%, extracted from the FOCUS report information released by the Central Bank of
Brazil on 26 February 2016 considering an increase in the CDI rate in line with the expected increase in the Selic rate,
since there is a direct relationship between charges, and an increased rate as the premise for the other two scenarios,
according to the impairment scenario.
(Ii) For financial liabilities related to loans and financing - BNDES, the Company's Management considered as the
probable premise (Scenario I) would be the maintenance of the TJLP rate, since there is no evidence of change in the
rate in the short term and increased rate as the premise for the other two scenarios.
(Iii) For financial liabilities related to the second series debentures, the Company's Management considered as the
probable premise (Scenario I) the expectation of the IPCA in 2016 described the FOCUS report released by the Central
Bank of Brazil on February 26, 2016, since there is no evidence of change in the rate in the short term and increasing
rate as the premise for the other two scenarios.
Credit Risk
Credit risk arises from the possibility of the Company suffering financial loss if a customer or
counterparty to a financial instrument fails to meet its contractual obligations arising from its
operating activities (primarily with respect to trade receivables) and financing, including deposits
in banks and financial institutions.
The Company periodically invoices values for leases and sales due by its customers by overdue
periods ranging typically from 30 to 60 days, the average collection period in 2015 was 63 days.
Thus, it is subject to default risk with respect to accounts receivable. Primarily, the portfolio of the
Company's commercial credit is focused on domestic clients. The Company establishes a
provision for impairment when understands that there is a risk of not receiving the amounts due.
The customer credit risk management is exercised by the Company's financial management,
which assesses the financial ability to pay customers. This analysis is carried out before the
actual trade agreement between the parties and such, are individually analyzed each client,
taking mainly into consideration the following information: (i) registration data; (Ii) information
and financial indicators; (Iii) risk classes (SERASA methodology); (Iv) majority controller; and (v)
disputes and protests in Serasa.
The Company believes that the credit risk concentration is limited because the customer base is
comprehensive and there is no relationship between customers. The Company has no
customer concentration in its revenue and accounts receivable, there is no single customer or
economic group that represents 10% or more of their accounts receivable in any of its business
units.
The table below shows the items Accounts Receivable Gross and Allowance for Doubtful
Accounts (PDD) of the Company open for business unit and consolidated the dates indicated:
2013
(in
Bills to
Construction
Receive
150.962
PDD
29.786
On December, 31
2014
R $ thousands)
Bills to
Receive
150.520
PDD
51.117
2015
Bills to
Receive
132.357
PDD
75.932
Buildings
Infrastructure
Industrial services
Rental
Events
Total
82.177
68.785
16.071
13.715
62.407
88.113
25.428
25.689
4.408
73.468
3.769
232.634
4.408
18.637
1.030
53.861
3.992
93.079
2.022
249.613
3.992
36.313
91.422
3.551
91.967
227.875
3.551
48.673
128.156
Remaining amount receivable of Industrial Services business unit operations, discontinued on November 30, 2013.
Amount receivable from the sale of the asset segment events that was discontinued in 2008.
In addition, the risk of credit balances with banks and financial institutions is managed by the
Company's treasury in accordance with the policy established by this. Excess funds are
invested only in approved counterparties.
The Company's practice to use only large financial institutions, which are among the 10 largest
banks with assets in Brazil. Management does not expect any counterparty to fail to meet its
obligations.
Cambial Risk
The Company's policy is to reduce the risk related to the cash exchange rate, conservatively,
since all its revenues are in reais. To this end, the Company enters into contracts NDF (nondeliverable forward) with financial institutions for hedging purposes. All of these agreements
provide for the establishment of the future exchange rate of reais for dollars.
Operationally, the Company is exposed to foreign exchange risk associated, in particular the US
dollar and the euro. Notably, this risk is found in equipment imports (mainly of aerial platforms
and forms) that the Company may hold.
At December 31, 2015, the Company doesnt have significant foreign exchange exposure or
derivative instrument open. The commercial dollar (sale) was R $ 2.3 R $ 2.7 and R $ 3.9,
December 31, 2013, 2014 and 2015, respectively.
Liquidity Risk
Liquidity risk arises from the possibility that the Company encounters difficulties in meeting the
obligations associated with its financial liabilities that are settled with cash payments or other
financial assets. The Company's approach to managing liquidity is to ensure, as much as
possible, you always have sufficient liquidity to meet its obligations as they fall due under normal
and stress conditions, without causing unacceptable losses or risk damaging the reputation of the
Company.
The Company's finance department monitors rolling forecasts of the Company's liquidity
requirements to ensure it has sufficient cash to meet operational needs. The monthly forecasts
take into account the plans of our debt financing, compliance with contract terms and compliance
with internal goals as the Company's strategic plan. In addition, the Company has credit lines with
major financial institutions operating in Brazil.
The chart below analyzes the main financial liabilities by maturity, corresponding to the remaining
period in the balance sheet to the contractual maturity when the Company expects to make
payment:
Up to
one
month
Between
one and
three
months
355
6.844
700
11.464
-
Between
three
months
and one
year
Between Between
one and two and
two
Five
years
years
3.088
3.914
226.833 192.054
-
7.150
347.308
-
More
than 5
years
Total
2.658
-
17.865
777.659
6.844
Interest rates (CDI and TJLP) estimated for the future commitments reflect market rates for each
period.
4.3 Judicial, administrative or arbitral awards, which are not under confidentiality, in
which the company or its subsidiaries are part and whose apelles are administrators or
former administrators, owners or ex-owners or investors of the company or its
subsidiaries.
Mills Estrutura e Servios de Engenharia S.A. (Company) is a party to judicial and administrative
proceedings in the civil, tax, social security, labor as described below. Its reserves are recorded
in the financial statements the total amount of probable losses. At December 31, 2015, the total
value of cases involving contingent liabilities was R $ 118.6 million, and the total amount involved
in processes with probable loss, according to an evaluation of the Company and its legal counsel,
was R $ 16 6 million, as indicated below:
Fiscal year ended
December, 31:
Contingencies
2013
2014
2015
(R$ thousand)
Civil
Probable Losses
Possible Losses
Remote Loss
Fiscais e
Previdencirias
Probable Losses
Possible Losses
Remote Loss
467
4.812
11
787
5.191
13
2.419
5.198
2.560
6.518
26.442
17.878
7.815
31.559
24.692
7.958
40.461
33.215
Trabalhistas
Probable Losses
Possible Losses
Remote Loss
3.588
10.944
3.303
3.978
15.232
4.655
6.235
18.006
2.620
Others
Probable Losses
Possible Losses
Remote Loss
Provisions
10.573
12.580
16.612
Judicial Deposits
10.053
10.422
11.023
The Company believes that the provisions for judicial and administrative contingencies are
sufficient to cover probable losses. The main processes in which the Company is a defendant are
described below.
Civil Proceedings
The Company is defendant in 35 proceedings concerning civil liability and indemnification payments,
regarding, above all, contract terminations and indemnification payments, whose total value was of R$ 10.2
million on December 31, 2015. Based on the advice of the Companys external legal counsel, as of December
31, 2015 it has recorded provisions of R$ 2.4 million to cover probable losses arising from these proceedings.
Process n 0053271-19.2013.8.17.0001
Jurisdiction
Instance
1st Instance
Date of filing
7/4/2013
Mills Estruturas e Servios de Engenharia S.A. e
Habitacional Empreendimentos LTDA.
R$ 3.671 thousand (materials damage updated on
12/31/2015)
Object: This is Indemnity action filed by Housing
Empreendimentos Ltda. against the company seeking
payment by way of damages in the amount of R $
3,671,000 (property damage) updated on 31/12/2015,
and moral damages, because the contract to provide
concrete structure for implementing service signed the
Housing and Reserva do Paiva Company Residence
South Real Estate Development Ltda.
Possible
In the event of an unfavorable decision, the Company
will have to collect fiscal credit subject matter of the
administrative procedures in question, in the updated
amount of R$3.671 thousand (until December 31,
2015). Since this is an isolated fact, which is not a
habitual practice of the Company, the Company does
not believe that an unfavorable decision would have a
material adverse effect on its financial situation or on its
operating results.
goods
or
rights
Main facts
Chances of loss
Estadual Justice
Instance
1st instance
Date of filing
6/29/2001
Aluma Systems Formas e Escoramentos
(sucedida pela Companhia) and Federal District
goods
or
rights
Main facts
Chances of loss
Ltda.
Process n 0505089-94.2008.4.02.5101
Jurisdiction
Federal Justice
Instance
1st Instance
Date of filing
6/7/2006
Mills do Brasil Estruturas e Servios Ltda. (sucedida
pela Companhia) and Unio Federal
goods
or
rights
IRS
Instance
Date of filing
5/23/2005
Mills do Brasil Estruturas e Servios Ltda. (sucedida
pela Companhia) e INSS
goods
or
rights
Main facts
Chances of loss
Process n 0026197-47.2005.4.02.5101
Jurisdiction
Federal Justice
Instance
2nd Instance
Date of filing
9/21/2005
Mills do Brasil Estruturas e Servios Ltda. (sucedida
pela Companhia) e INSS
goods
or
rights
Main facts
Chances of loss
Process n E-04/062000/2011
Secretaria de Fazenda do Estado do Rio de Janeiro
(Esfera Administrativa Estadual)
1st Instance (Administrative)
1/31/2011
Mills Estruturas e Servios de Engenharia S.A. e
Secretaria de Fazenda do Estado do Rio de Janeiro
Jurisdiction
Instance
Date of filing
Parties in the suit
Amounts,
involved
goods
or
rights
Main facts
Chances of loss
Process n 12259.000998/2008-65
Jurisdiction
Administrative Instance
Instance
Administrative Instance
Date of filing
5/23/2005
goods
or
rights
Main facts
Chances of loss
Process n 4019432-32.2013.8.26.0405
2 Vara de Fazenda Pblica da Comarca de Osasco do
Jurisdiction
Tribunal de Justia de So Paulo.
Instance
1st Instance
Date of filing
10/31/2013
Secretaria de Fazenda do Estado de So Paulo e Mills
Parties in the suit
Estruturas e Servios de Engenharia S.A
Amounts, goods or rights
R$ 3.167 thousand on 12/31/2015
involved
It is common share to cancel the collection of debt
embodied in the Notice of Violation no. 4.017.635. due
to the illegality of the ICMS requirement on lease
agreements.
Latest Progress on 2/4/2015: Delivered dispatch: "The
Main facts
feat has been cleaned up and is determined to carry out
technical expertise, given the controversial point
regarding the nature of commercial operation. No more,
before the deposit for the provisional fees and submitted
questions, the expert indicated if intime will fl. 415 to
start the work. "
Chances of loss
Remote
The Company shall collect credit in the amount of R $
3,167,000 (updated to 12/31/2015). Given the amount
Analysis of impact in the case involved in the demand, the Company believes that an
of losing the suit
unfavorable decision would not cause a material
adverse effect on its financial condition or results of
operations.
Amount
provisioned (if any)
Process n 2001.51.01.017629-0
Jurisdiction
Tribunal Regional Federal da Segunda Regio
Instance
2nd Instance
Date of filing
9/14/2001
Mills Estruturas e Servios de Engenharia S.A e Unio
Parties in the suit
Federal
Amounts, goods or rights
R$ 4.384 thousand on 12/31/2015
involved
It is the absence of Tax Legal Relationship Declaratory
action Precept damning the Misuse repeat. Action was
Main facts
presented with the objective of removing the fine on
installment credits of voluntary disclosure.
Chances of loss
Possible
Process n 2009.01.1.057971-6
Jurisdiction
Instance
[2nd Instance]
Date of filing
5/5/2009
Distrito Federal e Mills Estruturas e Servios de
Engenharia S.A
goods
or
rights
Main facts
Chances of loss
Process n 2004.51.01.004267-5
Jurisdiction
12 Vara Federal do Rio de Janeiro
Instance
2nd Instance (Sobrestados)
Date of filing
4/11/2004
Petitioner: Mills Estruturas e Servios de Engenharia
S.A., sucessora por incorporao de JAH INDSTRIA
E
COMRCIO.
Parties in the suit
Fileds: Delegado da Delegacia da Receita Federal de
Administrao Tributria (DERAT) e Delegado da
Delegacia da Receita Federal de Fiscalizao (DEFIC).
Amounts, goods or rights
R$ 3.655 thousand on 12/31/2015
involved
This is a Writ of Mandamus aiming away from the
increase in COFINS PIS rate imposed, respectively, by
Main facts
Law No. 10,637 / 02 and 10,833 / 03, on the grounds of
offense to several constitutional provisions.
Chances of loss
Possible
The Company will not have to collect the tax credit of R
$ 3.655 thousand, as of 12/31/2015, given that the
amount involved in the lawsuit was filed in court until
September 2005.
Analysis of impact in the case distributed action on 3/11/2004. Decision favorable 1st
of losing the suit
instance. Decision of 2nd unfavorable instance. In
07.01.2010 was brought Extraordinary Appeal (RE)
against decision of the Federal Regional Court of the
2nd Region (TRF of the 2nd Region). In 2/28/2012,
decision was rendered by the Federal Court of the 2nd
Process n 5240450/2013
Secretaria de Fazenda de Estado do Mato Grosso
(Esfera Administrativa Estadual)
1st Administrative Instance
10/18/2013
Petitioner: Mills Estruturas e Servios de Engenharia
S.A.
Fileds: Secretaria de Fazenda de Estado do Mato
Grosso
Jurisdiction
Instance
Date of filing
Parties in the suit
Amounts,
involved
goods
or
rights
Main facts
Chances of loss
Labor Claims
The Company is defendant in 402 labor claims, and with the advisory of an external legal counsel, the
Company has recorded provisions on the amount of R$ 26.7 million (corresponding to probable losses) on
December 31, 2014, to cover probable losses resulting from the labor claims filed against the Company, and
net legal and appellate provision amount was of R$ 4 million.
The labor claims filed against the Company relate to the following matters: (i) payment of indemnifications
for material damages; (ii) payment of risk, hazard, transfer and night shift allowances; (iii) length of lunch and
shift breaks; (ix) payment of equal pay for equal work; (v) workplace accidents; (vi) re-hiring as a result of
the development of professional illness; (vii) recognition of employment relationships; and (viii) existence of
subsidiary (or joint and several) responsibility between the Company and its services providers, with respect
to outsourced workers employed by such providers and allocated to providing services for the Company.
Below, the Company included a structured summary of the major labor claims that it is part:
Process n 0001793-43.2013.5.05.0134
Jurisdiction
16 Vara do Trabalho de Salvador/BA
Instance
Execution 1st Instance
Date of filing
8/22/2013
Autor: N. N. S. Jr
Parties in the suit
Sought: Mills Estruturas e Servios de Engenharia
S.A.
Amounts, goods or rights
involved
R$ 1.220 thousand on 12/31/2015
In the present action, was granted to the Complainant
the overtime pay and profit sharing for the year 2012, in
Main facts
addition to salary increases provided for in the collective
agreement, from January to April 2012 and regulatory
fines.
Chances of loss
Analysis of impact in the case
of losing the suit
Amount provisioned (if any)
Started
running,
the
Complainant
submitted
calculations of R $ 175.665,48, which were approved by
the judge.
Mills secured the amount of R $ 168.507,37, given the
existence of an appeal bond in the case, which
supplemented the total amount of R $ 175.665,48.
Guaranteed judgment, Mills presented motions to stay
execution in which he argued to be due, only the amount
of R $ 53.041,38.
Before the motions to stay execution, the author
presented manifestation and this time, it claimed that
the amount due to him was R $ 103,774.77.
Current position: Still no trial of motions to stay
execution.
Possible
Judged the motions to stay execution, the Company's
sentencing will be in an amount of R $ 53,041.38 and R
$ 103,774.77, which amount must be updated to the
date of payment.
-
Process n 020691-64.2013.5.04.0124
Jurisdiction
4th Vara do Trabalho de Rio Grande/RS
Instance
3rd Instance
Date of filing
11/21/2013
Autor: STMMMERG
Parties in the suit
Sought: Mills Estruturas e Servios de Engenharia S.A.
Amounts, goods or rights
R$ 952 thousand on 12/31/2015
involved
Sentence extinguished the action 20/6/2014 and
judgment dismissing ordinary appeal remained
Main facts
decision, extinguishing the action, on 24/9/2014.
Current position: Waiting unappealable.
Chances of loss
Remote
Payment amount claimed by way of unhealthiness and
Analysis of impact in the case
reflexes to scaffolders, estimated at $ 952,000 on
of losing the suit
12/31/2015.
Amount provisioned (if any)
Process n 00114.2008.131.05.00-4
Jurisdiction
1st Vara do Trabalho de Camaari-BA
Instance
3rd Instance
Date of filing
2/13/2008
Autor: V. R. D. S.
Parties in the suit
Sought: Mills Estruturas e Servios de Engenharia S.A.
Amounts, goods or rights
R$ 564 thousand on 12/31/2015
involved
Judgment recognized the right of realization of
compensation in the amount of R $ 50 thousand as a
moral damages, and R $ 316 thousand by way of
Main facts
damages.
The Judgment dismissing the Ordinary Appeal ruled the
conviction for property damage.
Current position: Brought review appeal. not tried yet.
Chances of loss
Probable
To be refereed to compensation for moral and material
damages. Such values can be modified by the TST,
Analysis of impact in the case
however, in the face of today's existing conviction,
of losing the suit
reaches the approximate amount of R $ 90 thousand on
12/31/2015.
Amount provisioned (if any)
Process n 0120300-11.2009.5.19.0005
Jurisdiction
5th Vara do Trabalho de Macei/AL
Instance
1st Instance
Date of filing
9/10/2009
Autor: C. F.
Parties in the suit
Sought: Mills Estruturas e Servios de Engenharia S.A.
Main facts
Chances of loss
Analysis of impact in the case
of losing the suit
Amount provisioned (if any)
Process n 0002070-07.2014.5.09.0084
Jurisdiction
22nd Vara do Trabalho de Curitiba/PR
Instance
2nd Instance
Date of filing
12/11/2014
Autor: M. A. J. D. A.
Parties in the suit
Sought: Mills Estruturas e Servios de Engenharia S.A.
Amounts, goods or rights
R$ 550 thousand on 12/31/2015
involved
Sentence sentenced Mills to pay the fold 23 days of
vacation and compensation for moral damages in the
Main facts
amount of R $ 70 thousand. Current position: Brought
ordinary appeal. Awaiting trial.
Chances of loss
Possible
The Claimed shall pay to the former employee, of the
value of enforceable as compensation for moral
Analysis of impact in the case damages and folded vacation, updated to 31/12/2015,
of losing the suit
reach the amount of approximately R $ 133 thousand.
Awaiting judgment of the ordinary appeal, which can
interfere with the conviction installments.
Amount provisioned (if any)
Process n 0117200-48.2008.5.17.0002
Jurisdiction
2nd Vara do Trabalho de Vitria/ES
Instance
1st Instance
Date of filing
10/20/2008
Autor: Sindicato dos Trabalhadores nas Indstrias
Metalrgicas Mecnicas de Material Eltrico e
Parties in the suit
Eletrnico no Estado do Esprito Santo SINDIMETAL
Sought: Mills Estruturas e Servios de Engenharia S.A.
e Arcellormittal Brasil S.A.
Amounts, goods or rights
R$ 729 thousand on 12/31/2015
involved
The union author postulates the conviction of the
defendants to pay commuting time, the argument that,
every day, or every scale of toil, the opportunity of
joining the drudgery, and also during office hours end,
replaced would, by considerable time (fifty-five to
seventy minutes every day), to provide its services
makers, on the way between the gate of the industrial
unit of the second defendant and the construction site
Main facts
(where would the point marking), and vice versa, this
route it would be difficult to access and devoid of regular
public transport, other means not providing the workers
for said displacement but the transportation provided by
the defendants. The defendants denied the peremptory
manner that the time consumed by substituted in the
path taken in the inner area of the plant may be the one
alluded to in the play ticket, saying he did not spend
fifteen minutes a day, at most, and say they are
Chances of loss
Analysis of impact in the case
of losing the suit
Amount provisioned (if any)
Process n 0001836-27.2013.5.03.0007
Jurisdiction
7th Vara do Trabalho de Belo Horizonte
Instance
1st Instance
Date of filing
9/4/2013
Autor: R. F. E.
Parties in the suit
Defendant: Mills Estruturas e Servios de Engenharia
S.A
Amounts, goods or rights
R$ 600 thousand on 12/31/2015
involved
Action involving work accident claim for reinstatement
Main facts
to work with application of moral and aesthetic damages
beyond pension.
Chances of loss
Remote
The Company shall collect credit in the amount of R $
Analysis of impact in the case
600 thousand (updated until 12/31/2015). Given the
of losing the suit
amount involved in demand.
Amount provisioned (if any)
Process n 00000801420115020384
Jurisdiction
4th Vara do Trabalho de Osasco
Instance
Superior
Date of filing
1/19/2011
Autor: Esplio de A. V. F.
Parties in the suit
Defendant: Mills Estruturas e Servios de Engenharia
S.A
Amounts, goods or rights
R$ 1.072 thousand on 12/31/2015
involved
Action involving claim for compensation for material and
moral damages for the death of the worker hiccup. The
lawsuit was dismissed in 1st instance, but the decision
was revised and amended by the Regional Court, which
Main facts
ordered the Company to pay a compensation for moral
damages over a lifetime monthly pension for the widow.
The Company appealed to the Superior Court, and is
still waiting for final decision.
Chances of loss
Possible
According to its legal advisors, if maintained the
decision of the Regional Labor Court - SP, the
Company shall pay to the former employee Estate the
estimated amount of R $ 1.073 thousand on
Analysis of impact in the case
31/12/2015. It has fired the liability insurance company.
of losing the suit
Last progress:. In 04/25/2015 concluded for voting with
Min Claudio Mascarenhas Brando. In 10/20/2015
issued settlement sentence in judgment provisionally
enforceable.
Amount provisioned (if any)
Process n 00000801420115020384
Jurisdiction
3rd Vara do Trabalho de Piracicaba
Instance
1st Instance
Date of filing
Parties in the suit
Amounts, goods or rights
involved
Main facts
Chances of loss
Analysis of impact in the case
of losing the suit
Amount provisioned (if any)
2/28/2014
Autor: V. D. S. D. e Outros
Defendant: Mills Estruturas e Servios de Engenharia
S.A
R$ 1.261 thousand on 12/31/2015
Action involving claim for compensation for material and
moral damages for the death of the worker in a typical
work accident (bridge fall over the river Piracicaba). The
action was upheld in part in 1st instance, being the Mills
ordered to indemnify the claimants for damages (R $
450 thousand) plus a monthly pension. On 04/06/16 the
Company appealed to the TRT-Campinas, and the
plaintiffs also brought an action seeking the increase of
compensation. Still awaits final decision
Possible
According to its legal advisors, if maintained the lower
court decision, the Company shall pay the complainants
the estimated value in the judgment of R $ 500
thousand. It has fired the liability insurance company.
-
Process n 00000801420115020384
Jurisdiction
39th Vara do Trabalho de Belo Horizonte
Instance
1st Instance
Date of filing
12/5/2014
Autor: A. C. M.
Parties in the suit
Defendant: Mills Estruturas e Servios de Engenharia
S.A
Amounts, goods or rights
R$ 572 thousand on 12/31/2015
involved
Process involving application for reinstatement and
payment of all salaries and other benefits of the
withdrawal period or compensatory damages of salaries
and all other benefits from the exemption until the end
Main facts
of the stability period; compensation for moral damages
and invalidity non-compete agreement. Process has not
tried in the first instance, pending for instruction hearing
for the day 05/06/2016.
Chances of loss
Possible
According to its legal advisors, it upheld the action may
Analysis of impact in the case
result in the company's conviction to pay about R $ 572
of losing the suit
thousand on 12/31/2015.
Amount provisioned (if any)
4.4
Judicial, administrative or arbitral awards, which are not under confidentiality, in which the
company or its subsidiaries are part and whose appellees are administrators or former
administrators, owners or ex-owners or investors of the company or its subsidiaries.
Not applicable, since the Company or its subsidiaries are not parties to proceedings in which
the opposing parties are managers or former managers, controlling shareholders or former
controlling shareholders or investors of the Company or its subsidiaries.
4.5 In relation to the relevant confidential proceedings to which the issuer or its
subsidiaries are a party and which have not been disclosed in items 4.3 and 4.4 above,
analyze the impact in case of loss and inform the amounts involved.
On December 31, 2015 the Company was not part of any confidential lawsuit.
4.6
Judicial, administrative or arbitral lawsuits, repetitive or related, non confidential and based
on similar legal facts and causes, which are not under confidentiality and which together, are
relevant.
[Not applicable, since the Company or its subsidiaries are not parties to the repetitive or related
processes based on similar facts and legal causes, which are not confidential and that are
collectively relevant.] [NOTA PG-A: FAVOR CONFIRMAR]
4.7
4.8
Rules of the country of origin of foreign issuer and rules of the country in which the foreign
Company's securities are held in custody, if different from the country of origin.
Not applicable, as the Company is not a foreign issuer.
if the issuer has a formal policy of risk management, highlighting, if so, the organ which
approved it and the date of its approval, and if negative, the reasons why the issuer has not
adopted a policy.
Risk management is carried out by the Financial Department, under policies approved by the Board
of Directors, if applicable. The Financial Department identifies, evaluates and protects the Company
against possible financial risks in cooperation with the Company's operating units. The Finance
Department establishes principles for overall risk management, as well as for specific areas such as
currency risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative
and investment of excess liquidity.
b.
The Company's activities expose it to various financial risks (including the risk of interest rate,
inflation risk, exchange rate, price risk of raw materials and imported equipment and credit risk). The
risk management program focuses on the unpredictability of financial markets and seeks to minimize
potential adverse effects on the Company's financial performance. The Company uses derivative
financial instruments to hedge against certain exposures to risk and has a policy not to participate in
any trading of derivatives for speculative purposes.
(ii) the instruments used for protection;
[]
(ii)
Policies and risk control procedures are defined directly by the Board of Directors and implemented
by the Finance Director. The Board of Directors is also responsible to supervise compliance with
these practices.
b.
Adequacy of operating structure and internal controls to verify the effectiveness of the policy
adopted
The Company's management analyzes its operating structure and internal controls, and believes
that the policies and adopted control procedures are adequate for the company's operational
structure. In the fiscal years ended December 31, 2013, 2014 and 2015, the reports of the
independent auditors did not identify any material deficiency in these controls.
The Company's activities expose it to various financial risks: market risk (including currency risk,
interest rate risk, cash flow risk and price risk), credit risk and liquidity risk. The risk management
program focuses on the unpredictability of financial markets and seeks to minimize potential
adverse effects on the Company's financial performance. The Company uses derivative financial
instruments to hedge certain risk exposures and has a policy not to participate in any trading of
derivatives for speculative purposes.
Risk management is carried out by the Financial Department, under policies approved by the
Board of Directors, if applicable. The Financial Department identifies, evaluates and protects the
Company against possible financial risks in cooperation with the Company's operating units.
Financial Department establishes principles for overall risk management, as well as for specific
areas such as currency risk, interest rate risk, credit risk, use of derivative financial instruments
and non-derivative and investment of excess liquidity.
(i)
Sensitivity analysis
Below is the analysis chart of sensitivity of financial instruments, describing the risks that may
result in material losses for the Company, with the most probable scenario (scenario I) according
to an evaluation carried out by management, considering a horizon of one year. In addition, two
other scenarios are presented in terms determined by the Brazilian Securities Commission,
through Instruction No. 475/2008 in order to provide 25% and 50% deterioration in the risk
variable considered, respectively (scenarios II and III):
Effect on the outcome
Cash equivalents
Indicator
Atual
Probable 25%
50%
Financial aplications
CDI
Total
231.867
231.867
33.034
33.034
Variao
24.775
24.775
25,00%
16.517
16.517
50,00%
Debt
Indicator
Atual
50%
BNDES
1 Issuance of debentures
2 Issuance of debentures
1 Serie
2 Serie
3 Issuance of debentures
TJLP
CDI
(15.116)
(92.751)
(1.023)
(4.115)
(1.072)
(5.075)
(1.119)
(6.018)
CDI
IPCA
CDI
Total
(169.629)
(142.277)
(202.527)
(622.300)
(19.156)
(19.016)
(29.925)
(73.235)
Variation
(23.427)
(21.880)
(37.056)
(88.510)
20,86%
(27.635)
(24.806)
(44.093)
(103.671)
41,56%
The sensitivity analysis presented above considers changes in relation to a particular risk,
maintaining constant the other variables associated with other risks.
31/12/15
References
Probable I
Scenario II
Scenario III
25%
50%
Taxes
CDI (%) (i)
14,25%
17,81%
21,38%
TJLP (%) (ii)
7,50%
9,38%
11,25%
IPCA(%) (iii)
7,57%
9,46%
11,36%
(i)
(ii)
For financial liabilities related to loans and financing - BNDES, the Company's
Management considered as the probable premise (Scenario I) would be the
maintenance of the TJLP rate, since there is no evidence of change in the rate in
the short term and rate increase as a premise for the other two scenarios.
(iii)
For financial liabilities related to the second series debentures, the Company's
Management considered as the probable premise (Scenario I) the expectation of the
IPCA in 2016 described the FOCUS report released by the Central Bank of Brazil
on February 26, 2016, as there is no evidence of change in the rate in the short term
and increasing rate as the premise for the other two scenarios.
b) Market risk
(i)
Cambial risk
The Company's policy is to reduce the risk related to the cash exchange rate,
conservatively, since all its revenues are in reais. To this end, the Company enters into
contracts NDFs with financial institutions for hedging purposes. At December 31, 2015, the
Company had significant currency exposure or derivative instrument open.
(ii)
c)
Credit risk
Credit risk is the risk of financial loss the Company if a customer or counterparty to a financial
instrument fails to meet its contractual obligations arising from its operating activities (primarily
with respect to bills to receive) and financing, including deposits banks and financial institutions.
(i)
Bills to receive
The Company periodically invoice values for leases and sales due by its customers for
periods ranging typically from 30 to 60 days, the average collection period in 2015 was 63
days. Thus, it is subject to default risk with respect to accounts receivable. Primarily, the
portfolio of the Company's commercial credit is focused on domestic clients. The Company
establishes a provision for impairment when, believes that there is risk of not receiving the
amounts due.
The customer credit risk management is exercised by the Company's financial
management, which assesses the financial ability to pay customers. This analysis is carried
out before the actual trade agreement between the parties and such, are individually
analyzed each client, taking mainly into consideration the following information: (i)
registration data; (Ii) information and financial indicators; (Iii) risk classes (SERASA
methodology); (Iv) controller and major; (V) disputes and protests in Serasa.
(ii)
c) Liquidity risk
Liquidity risk is the risk of the Company encountering difficulties in fulfilling its obligations associated
with its financial liabilities that are settled with cash payments or with another financial asset. The
Companys approach to managing liquidity is to ensure, to the greatest extent possible, that there is
always sufficient liquidity to fulfill its obligations as they fall due, under normal and stress conditions,
without causing unacceptable losses or risking harming the Companys reputation.
The financial department monitors ongoing forecasts of the Companys liquidity requirements to ensure
that it has sufficient cash to meet its operating needs. The monthly forecasts take into consideration the
plans for financing the Companys debt, fulfillment of contractual clauses and the meeting of internal
targets in accordance with the Companys strategic plan. In addition, the Company maintains lines of
credit with the main financial institutions operating in Brazil.
The table below presents the Companys non-derivative financial liabilities per maturity bracket,
corresponding to the remaining period in the balance sheet until the contractual date of maturity.
More
than
More
three
than one months
month
and
and less less
Up to than
than
one
three
one
month months
year
December 31, 2015
Borrowings and financial
debentures
Debentures
Providers
December 31, 2014
Borrowings and financing
Debentures
Derivative financial
instruments
Providers
Between
Between two and Over
one and Five
Five
two years years
years
355
700
6.844
11.464
-
226.833 192.054
-
347.308
-
46.378
-
998
9.227
3.215 4.100
150.140 230.266
11.002
2.652 68.345
458.685 64.069 912.387
(1.166)
16.510
3.088
3.914
7.150
Total
2.658 17.865
- 777.659
- 6.844
- (1.166)
- 16.510
The interest rates (CDI, IPCA and TJLP) projected for the future compromises reflect the market rates
in each period.
e) Credit quality of financial assets
(i)
12/31/2014
144
144
182
182
231.867
231.867
232.011
193.477
193.477
193.659
(1) Leading financial institutions with extensive operations in Brazil and among the 10
largest banks with total assets of Brazil.
(i)
The Company intends on using financial derivative instruments locally and abroad to manage the
exchange and interest rate fluctuation risks. In accordance with the accounting principles generally
accepted in Brazil, the derivative contracts are going to be recorded in the balance sheet based on
the fair market value recognized in the revenues statements, unless in cases when the specific
hedging criteria are met. The market value estimations are going to be held on a specific date, usually
based on the mark-to-market.
(ii)
imported. Similarly, swap or NDF contracts should be contracted to guarantee the payment flow
(amortization of principal and interest) of foreign currency financing. Under the Company's by-laws,
any contract or assumption of obligation in excess of R$ 10.0 million) must be approved by the Board
of Directors, unless foreseen in the Business Plan. It is not necessary to contract hedge operations
for amounts of less than R$ 100,000, with maturities of less than 90 days. Other commitments should
be protected against foreign exchange exposure.
Swap and NDF transactions are carried out to translate future foreign currency financial
commitments into reais. By contracting these operations, the Company minimizes the foreign
exchange risk by leveling both the amount of the commitment and the exposure period. The cost of
contracting the derivative is tied to the interest rate, normally to the CDI (Interbank deposit certificate)
percentage. Swaps and NDFs maturing before or after the final maturity of the commitments may, in
time, be renegotiated so that their final maturities are the same as - or close to - the final maturity of
the commitment. In this way, on the settlement date, the result of the swap and the NDF may offset
part of the impact of the exchange variation of the foreign currency against the real, assisting
stabilization of the cash flow.
As derivatives, the monthly position is calculated by the fair value methodology, calculating the
present value by applying the market rates that are impacted on the determination dates. This widely
used methodology may result in monthly distortions in relation to the curve of the derivative
contracted, however, the Company is of the opinion that this is the best methodology to use, as it
measures the financial risk in the event of the need for early settlement of the derivative.
By monitoring the commitments assumed and the monthly valuation of the fair value of the
derivatives, it is possible to monitor the financial results and the impact on the cash flow and to
ensure that the original objectives are achieved. The calculation of the fair value of the positions is
provided monthly for management supervision.
The derivative instruments contracted by the Company are intended to protect its placing the order
and the corresponding formal receipt in Brazil. They are not used for speculative purposes.
(b)
The following table shows details of future contracts open currency at the end of the
reporting period:
Average Exchange
rate
Open
contracts
Cash flow
hedge
Menos de
trs meses
Total
(c)
Foreign currency
National value
Fair value
2,61
US$ thousand
R$ thousand
R$ thousand
499
499
1.299
1.299
26
26
Swap
The operation of the foreign exchange swap contracts, contracted by the Company, aimed at
protection against exposure of US $ 16.9 million loan (see note 17) to exchange variation. The
foreign exchange swap for this operation consisted of the exchange of the exchange variation
charges plus interest of 2.31% pa by CDI plus 0.29% pa In January 2015, the Company paid
the fair value recorded R $ 43 in this operation (until December 31, 2014 - R $ 1,166
receivable).
(d)
(e)
(f)
(g)
Embedded derivatives
All contracts with possible clauses for derivative instruments or securities to be made are
evaluated by Financial Management in conjunction with the legal team, prior to signing, so
there is guidance on the eventual realization of the effectiveness tests, establishment of
policy accounting to be adopted and the methodology for calculating the fair value.
The Company currently holds contracts with open embedded derivatives.
(h)
(iii)
(iv)
If the Company uses various financial instruments with various objectives for asset
protection (hedge) and what these objectives are
The Company operates financial instruments in order to maintain the price of imported
equipments and, consequently with foreign currency prices, in Brazilian reais, solely for hedge
purposes.
(v)
a. Adequacy of the operational structure and internal controls to verify the effectiveness of the
adopted policy
The Companys Board of Directors analyzes its operational structure and intern controls, and
believes that the policies and procedures of adopted controls are appropriate to the Companys
operational structure. In fiscal years ended in December 31, 2013, 2014 and 2015, the opinion of
independent auditors did not identify deficiencies in those controls.
5.3 Regarding the controls adopted by the issuer to ensure the preparation of
reliable financial statements, indicate:
a. The main internal control practices and the degree of efficiency of such controls, indicating
any imperfections and measures adopted to correct them.
The board of the Company believes that its internal controls and trade policies, operational, financial,
tax and accounting and human resources are adequate to ensure the preparation of reliable financial
statements.
b. Organizational structures involved
All the Company's organizational structures are involved in the practices of internal controls, are
business units are the areas of business support.
c.
If and how the effectiveness of internal control is supervised by the issuer's management,
indicating the position of the persons responsible for such monitoring.
The effectiveness of internal controls is supervised by management constantly and reviewed at least
annually by the Board and Board of Directors, upon the issuance of Control Deficiencies of Internal
Communication by the Independent Auditors.
d.
Formalizing Need for Internal Control Procedures and Improving Accounting Policy
We found that the Company has no formalized internal control policies and should improve
certain aspects of its policy of accounting procedures. The standardization of internal control
policies, together with the improvement of the accounting procedures and policy filling disclosure
checklists allow standardization of procedures allowing the Administration has a better view and
control over financial information. A procedures manual must be easily accessible to the
accounting staff to ensure that the accounting policies are followed and consistently applied.
This manual also benefit the Company when key staff turnover. Policy formalized internal
controls provide management with greater assurance of the effectiveness of compliance with
the adopted policies consistently.
Recommendation
Implementation and formalization of internal control policies;
Improvement of accounting policies formalized by the company, the following:
Revenue recognition, including practice revenue provisions;
Hedge accounting;
Critical analysis of information received from external lawyers in relation to contingent liabilities;
Approval Policy for all unusual transactions, including manual entries;
Cancellations and remission of invoices;
Disclosures and records related parties;
Contract Monitoring aiming to identify embedded derivatives, and
Disclosure checklists Fill each closing (quarterly or yearly);
Accounting manual elaboration for the accounting staff. This manual should even include the main
requirements for closure, as well as address the disclosure requirements for significant notes in
the Company's business environment.
1.
Risk
Revenue recognition not respecting the accrual period, thus distorting the presentation of the
Financial Statements.
Recommendation
Implement controls and more accurate accounting routines in order to recognize revenue only when
it meets the CPC accounting standards 30 (R1).
e. Management comments on the shortcomings identified in the comprehensive report prepared
by the independent auditor and on the corrective measures taken
Comment in relation to point 1 above:
Numerous improvements are made in the formalization of internal controls and on over the
Company's accounting policies 2015 policies, which led to a considerable reduction in the points
reported in the comment letter of 2014. The remaining outstanding points of improvement above, will
be subject to analysis for improvement purposes throughout 2016.
Comment in relation to point 2 above:
Sales of leases only after the approval of Measurement Reports are a procedure that needs to be
improved, due to difficulties with customers. In order to correct this procedure, the 2015 closure,
accounting recognize the value of R $ 4.5 million as a provision for deferred revenue.
5.4 Inform if compared to the last fiscal year, there were significant changes in the main risks to
which the issuer is exposed or in the risk management policy adopted, commenting yet, any
reduction or increase in expectations issuer's exposure to such risks
In the fiscal years ended December 31, 2013, 2014 and 2015, there were no events that significantly
alter the main risks to which the Company is exposed or in the risk management policy adopted.
5.5
6.1 / 6.2 / 6.4 - Constitution of the Company, Company Lifetime and Date of registration with the
CVM
12/01/1980
Constitution of the Company The Company was established on December 1, 1980 as a limited liability
company. On January 29, 2009, the Companys shareholders approved a
corporate transformation of the Company, which became a privately held
corporation. The first company of Mills group, named Aos Firth Brown SA
was established in 1952 in the city of Rio de Janeiro, State of Rio de Janeiro,
in the form of privately held corporation.
Country of the Constitution
Brazil
Company Lifetime
Undetermined.
6.3
04/14/2010
The Company was formed in 1952 by the Nacht family, as a scaffold and shoring company which
provided services to the civil construction sector. Mr. Andres Cristian Nacht was a member of the Companys
management team from 1969 to 1998, being President Director from 1978 until 1998. In 1998, Mr. Andres
Cristian Nacht became Chairman of the Board of Directors of the Company, position that occupies until this
Reference Forms date.
In the 70s and 80s, the Company had substantial growth due to the significant civil construction and
industrial sectors expansion in Brazil. Among its activities from this period can be highlighted the construction
of the Rio-Niteroi Bridge (1971), the Itaipu Hydroelectric Plant (1979) and the first Brazilian oil drilling platform
(1983), among other projects.
During this period the Company made important partnerships with international companies that
cooperated with the Companys development. From 1974 to 1986, GKN plc, a large British conglomorate,
was the Companys shareholder, strengthening the beginning of good governance and credibility. In 1980,
the Company signed a partnership with the Canadian company Aluma Systems Inc., the Aluma Systems
Concrete Forms and Formwork Ltda., which had as main objective the introduction of aluminum formworks
in the civil construction sector in Brazil which lasted until 2001.
In the 90s, while seeking to expand the Companys portfolio of services, it made new strategic
partnerships. In 1996, the Company entered into a licensing contract with the German company NOESchaltechnik Georg Meyer-Keller GmbH, to produce and supply modular steel and aluminum panels
formwork to the Brazilian civil construction market. In 1997, the Company entered into a joint venture
partnership with the American company JLG Industries, Inc., to begin activities in the equipment rental sector
in Brazil.
In 2001, the Argentine company Sullair Argentina S.A., replaced JLG Industries, Inc. as the
Companys partner in the in the industrial equipment rental venture, and subsequently acquired its stake in
2003.
In 2007, the private equity funds, Peninsula FIP, managed by IP, and the Natipriv Global L.L.C.,
managed by the Axxon Group, became the Companys shareholders, acquiring, each one, 10% of the
Company for R$ 20 million. The resources from these investments were used, mainly, to acquire equipment.
In 2008, the Company returned to its activities in the rental unit in an organic way, with the
establishment of the Rental business unit, and suspended the operations of its Events business unit, which
was responsible for providing temporary structures, such as outdoor stages and grandstands for the sports
and entertainment segment, as an objective to focus on the segments where it has competitive advantages.
Also in 2008, the Company acquired Jahu Indstria e Comrcio Ltda. (Jahu), which became the Real Estate
business unit, focused on providing engineering services to the residential and commercial civil construction
industry, complementing its activities in the Heavy Construction segment.
The Companys IPO was on April 2010, with a transaction totaling R$ 685 million, of which R$ 411
million related to the primary offering that, consequently, were used to enable its growth plan. Shortly after
the offer, the Companys free float was of 48%.
In October 2010, after the expiration from the lock-up period, due to the IPO, the private equity funds,
Peninsula FIP and Natipriv Global L.L.C., sold the joint participation of 6.2% of the Companys capital,
increasing its free float to 57.2%.
On January 19, 2011, the Company entered into a purchase and sales agreement to acquire 25.0%
of the voting and total capital stock of Rohr S/A Estrutura Tubulares (Rohr), a privately held company
specialized in access engineering and solutions for civil construction, for R$90.0 million. This strategic
acquisition will enable the Company to broaden its exposure to the sectors it serves, especially in the areas
of infrastructure and the oil and natural gas industry. In September 2011, there was a rise in the stake held
in Rohr to 27.5%, resulting from the repurchase by Rohr of 9% of its shares held as treasury stock.
In May 2011, the Company entered into a purchase and sales agreement to acquire 100% of the
voting and total capital stock of GP Sul, one of the largest players in the suspended scaffold rental market to
residential and commercial construction in the state of Rio Grande do Sul, for R$5.5 million, which was
merger into the Company in August 2011. This strategic acquisition, according to Managements opinion,
enabled the Company to become the leader in the suspended scaffold rental market in the state of Rio
Grande do Sul and to broaden its exposure to the residential and commercial construction market in the
South region, in line with the geographic expansion plan of the Real Estate business unit.
In July 10, 2013, the company entered into an agreement for the sale of its Industrial Services
business unit for a total sum of R$102 million, through the sale of their participation in the company
Albuquerque Participaes Ltda. On November 30, 2013, the transaction was completed and the Company
recorded a net gain of R$8,3 million. This sale was made in line with the Company's strategy to focus on
businesses where their skills are able to generate greater value for its shareholders and customers.
Therefore, the Company ceased to operate in the Industrial Services sector where they were offered access
services, industrial painting, surface treatment and thermal insulation, both during construction and in the
maintenance phase of large industrial plants.
6.5 Bankruptcy filings based on relevant values, judicial or extrajudicial recovery of the Company
Not applicable.
6.6 Other information that the Company deems relevant
There is no further relevant information about this item "6.
7.1
The Company holds as purpose: (a) the rental, commercial intermediation and sale, with or without assembly,
of mobile goods of its own manufacturing or acquired from third-parties, comprising forms, shoring,
scaffolding, pressurized dwellings, floors, structures and similar equipment, steel, aluminum, metal, plastic
and wood, as well as its parts, components, accessories and raw materials; (b) the rental, with or without an
operator, commercial intermediation and sale of aerial work platforms and telescopic handlers, personnel
training for the respective equipments operation, maintenance and technical assistance of its own equipment
or third-party; (c) import and export of the above described goods, including its parts, components and raw
materials; (d) the provision of painting, blasting, thermal insulation, surface treatment, passive protection
against fires, cargo movement, boiler, refractory, inspection and nondestructive testing, including the access
by rope used by the industrial climbers and other equipment and services inherent to such activities, as wll
as manufacturing, assembly and marketing of proprietary products for such activities; (e) consulting and sale
of engineering projects; (f) roofing construction in structured tent with closing a plastic or similar; (g) low
voltage electrical installations; and (h) participation as a shareholder or partner in other companies or
corporations.
According to information released in 2015 by the magazine "O Empreiteiro" and by the IRN - 100
(International Rental News) publication, the Company believes to be one of the specialty engineering
services company and the largest provider of temporary concrete formwork and tubular structures and
motorized access equipment for the Brazilian market. The Company offers its clients specialized engineering
services, providing differentiated solutions, skilled labor and equipment that are essential to large
infrastructure projects, residential and commercial construction and industrial. Customized engineering
solutions include planning, design and implementation of the temporary structures for civil construction (such
as concrete forms, shoring and scaffolding) and motorized access equipments (such as aerial platforms and
telescopic handlers), as well as technical assistance and skilled labor.
During 60 years of history, the Company has developed relationships with most of the largest and most
active Brazilian companies in heavy construction, residential and commercial construction and industry
sector. The Company enjoys strong reputation in accordance to the provision of services on a consistent,
timely, reliable, and quality manner, observing the high safety standards.
The services are offered by four business units: (i) Heavy Construction Business unit (heavy construction,
large-sized, such as infrastructure), (ii) Real Estate Business unit (residential and commercial construction)
and (iii) Rental Business unit (rental of motorized access equipment).
As described in Section 6, the Company entered into an agreement for the sale of its Industrial Services
business unit on July 10, 2013.
Heavy Construction
The Company estimates, according to data published by the O Empreiteiro magazine in 2015, that its
Heavy Construction business unit is Brazils leading provider of specialty engineering solutions and
equipment in revenue. In this unit, the Companys focus is directed to large engineering projects, including
infrastructure projects toward the logistics sectors (specially railways, underground urban networks,
highways, airports, ports and shipyards), social and urban infrastructure (including sanitation networks) and
energy (primarily regarding hydroelectric, thermoelectric and nuclear plants), besides the industrial and large
building construction projects. Such projects are characterized by long-term (usually over one year), usually
developed by the major construction companies in Brazil.
The Heavy Construction business unit offers its clients specific and customized engineering solutions for
every type of construction, considering all the peculiarities and specificities inherent to the location and
complexity of the construction works, with the objective of facilitating the project execution, ensuring safety,
cost, speed and schedule compliance optimization. In many situations, due to its vast experience, the
Company is looked for by its clients to participate in preliminary studies that will provide structuring for its
proposals in the biddings for the construction of large engineering projects.
The Company believes that its main competitive advantages are its expertise, agility, reliability, quality and
safety standards, as well as its ability to provide equipment on a large scale, factors that contribute to the
reduction of overall duration and costs from its clients projects. The Company provides services throughout
the Brazilian territory and also in international projects from its customers, providing high value service and
providing equipment.
The Company's extensive track record includes participation in several of the largest and most important
infrastructure projects in Brazil, such as the construction of the city of Brasilia, the Rio de Janeiro-Niteri Bridge
and the Itaipu Hydroelectric Power Plant. Recently, the Company participated in the construction of the Ring Road,
in So Paulo, the subway systems in the cities of Rio de Janeiro and Sao Paulo, airports and renovated stadiums
or built for the World Cup in 2014, the hydroelectric plant of Estreito, located in northern Brazil, in the Joo
Havelange Olympic Stadium and Olympic Park in the city of Rio de Janeiro. Typical contractual terms of this
business unit ranging from six to 24 months, since the services are critical for a large portion of the construction
project.
In order to facilitate the implementation of the solutions that the Company idealizes, it offers customers through
leasing contracts and in some cases selling a wide range of equipment, including concrete formwork and shoring
structures, including projects and technical studies, technical support and training necessary for its correct use.
Taking into account the specific needs of a particular project, there is flexibility to hire the manufacture of specially
modeled equipment for the work in question.
In general, customers use their own employees to implement solutions designed and assembly of the Company's
equipment. However, in the case of more complex assemblies, the client's discretion, company employees may
be allocated for the assembly and disassembly of structures.
Real State
While the Heavy Construction business unit is focused on large engineering and infrastructure projects, the
Real Estate Business unit attends, primarily, the residential and commercial construction contractors,
developing projects and providing services of concrete formwork, scaffolding, shoring and access equipment.
The Company also provides engineering services in connection with building refurbishing and maintenance,
primarily through the provision of suspended scaffolding. Inside of this business unit's activities, the Company
provides planning, project development, technical supervision, equipment and related services.
In the third quarter of 2015, the commercial management of Infrastructure and Buildings was
unified into one board. The Operational boards and Engineering were also consolidated. As a
result, business units Infrastructure and Buildings are now reported in a unified way, now called
"Construction". We will continue following the recipes of Infrastructure and Buildings separately,
given the different dynamics of each market.
The business unit Construction held on December 31, 2015, 17 operational units located in the
states of Amazonas, Bahia, Cear, Distrito Federal, Esprito Santo, Gois, Maranho, Mato
Grosso, Minas Gerais, Par, Paran, Pernambuco, Rio de Janeiro, Rio Grande do Sul and So
Paulo.
Rental
The Company is one of the largest providers of motorized access equipment, in Brazil, supplying
aerial work platforms and telescopic handlers, to lift people and cargo to considerable heights,
based on data published in the O Empreiteiro magazine in 2015. The equipment enables safe,
fast, versatile and precise access for professionals to perform tasks safely and efficiently at
heights from two to 56 meters. The handlers allows materials weighing up to 5.000 kg to be lifted,
transported and delivered to heights of over 21 meters, at a job site or within an industrial plant.
The main objective of this segment is to increase productivity and security, it is also offered to
customers operating training certified by IPAF (world authority air access) and we serve all the
rules of NR 18.
Indications and Awards
- 2012 - Nominated for the award for Best Training Center
- 2012 - Winner of the Year Access Company award
- 2013 - Nominated as the company that invested in security
- 2014 - Winner of the Best Training Center award
- 2014 - Nominated as the Year Access Company
-2015 - Indicated as pioneer company in Motorized Access
- 2016 - Nominated as a Company with Contribution to secure access height
7 nominations in five years. 2 awards.
The Rental business unit serves the same sectors as the other business units, such as heavy or residential
and commercial construction and industrial construction, as well as other economic sectors, as the
automotive, retail and logistics sectors, among others. Therefore, its client base is diverse, including clients
from the other business units. Generally, the Company rents equipment on a monthly basis, being the
average contract length from two to three months, although 18-month or even longer contracts.
The Company introduced the large-scale use in Brazil of motorized access equipment specific for height
purposes in 1997, when it entered into a joint venture agreement with the American company JLG Industries
Inc., world leader in access equipment manufacturing, to rent aerial platforms and telescopic handlers, the
first joint venture in JLGs history.
In 1999, the Company introduced the large-scale use of telescopic handlers in the Brazilian market. This
motorized equipment can be used to transport loads to various heights and replaces a number of other
pieces of equipment traditionally used at construction sites, such as cranes, munck trucks and service lifts,
among other equipment. In 2001, Sullair, an Argentine equipment rental company, replaced JLG as the
Companys partner. In 2003, due to unfavorable market conditions in Brazil and the lack of capital necessary
to carry out essential investments, the Company suspended its equipment rental operations and transferred
the joint venture to Sullair.
In December 2007, as part of its diversification strategy and based on favorable market and credit conditions,
the Company established its Rental business unit and began renting aerial platforms and telescopic handlers
again.
According to the Companys estimates, based on data of 2011 from Terex and Brazilian import statistic of
2011, there are currently 34 thousands aerial platforms and telescopic handlers in Brazil. In comparison,
789,000 aerial platforms and telescopic handlers are available in the United States based on data provided
by Yengst Associates. The Company believes that this gap, together with the current favorable economic
conditions in Brazil, indicates that this rental market is incipient in Brazil, offering significant opportunities for
expansion in the segment. The Company believes that its scale, specific industrial sector expertise, reliability
and safety record have been the primary factors driving the growth of the Rental business unit since the
beginning of its activities in 2008.
In addition, the Company may benefit from the introduction of stricter technical norms and procedures, in
particular with respect to safety regulations for work performed at significant heights or in areas that are
difficult to access. Among other provisions, Regulatory Norm 18 establishes that workers must be lifted with
the use of motorized access equipment, rather than manual equipment, which has resulted in an expansion
of the potential market for rental of its equipment.
As of December 31, 2015, the Equipment Rental business unit was present through 32
operational branches, in the states of Amazonas, Bahia, Cear, Esprito Santo, Gois, Maranho,
Mato Grosso, Mato Grosso do Sul, Minas Gerais, Par, Paran, Pernambuco, Rio de Janeiro,
Rio Grande do norte, Rio Grande do Sul, Santa Catarina, So Paulo and Sergipe and the Federal
District.
Industrial Services
The Industrial Services business unit is focused on the provision of services to the oil and gas sector, as well
as to the chemical and petrochemical, naval, steel, pulp and paper, and mining industries. The Industrial
Services business unit was established in the 1980s with the recognition that certain equipment used in its
civil construction projects could also be employed to provide access to the structures and facilities of large
industrial plants. At that time, the Company began renting access equipment, such as scaffolding systems,
to carry out maintenance work in industrial plants, rapidly, expanding its services in the industrial sector to
include assembly and disassembly, a sector that the Company believed could easily exploit in view of its
past expertise in civil construction, and in sequence, it also began offering specialized maintenance services,
in particular, industrial painting and thermal insulation, which started to compete with companies that had
regularly rented the Companys access equipment for these purposes of providing such surface treatment
services and helping its clients manage their costs more effectively as they were able to reduce the number
of suppliers contracted for the provision of such services. This way, the Industrial Services business unit
provides the equipment and also the labor required for the provision of its services, being labor-intensive.
Based on data published on 2013 by the O Empreiteiro magazine, the Company believes to be one of
Brazils major players in providing structures designed to provide access for personnel and materials during
the assembly of equipment and pipes, during the construction of industrial plants, as in the maintenance
phase, preventive and corrective. The Company also offers industrial painting services, surface treatments
and thermal insulation.
The Industrial Services business unit works, generally, together with the industrial contractor or the plants
maintenance department in planning, erecting and dismantling structures, when and where they are needed,
and performing painting and insulation, with own labor, as a way to guarantee the quality and safety of its
execution.
The contracts from the Industrial Services business unit with its clients are usually long-term, from one to
three years, being able to be renewed at the end of the contracted period. On most cases, this Business unit
is generally paid based on units of finished services or in service levels, such as meters of erected
scaffolding, or square meters of painted or insulated surface, being able to hire on a man-hour based price.
The Industrial Services business unit is present in the main industrial centers in Brazil, through seven
branches, in the states of Rio de Janeiro, So Paulo, Minas Gerais, Bahia, Pernambuco and Rio Grande do
Sul, and has a long history of developing innovative solutions and making on-time or early delivery of
projects, including with respect to deep sea oil platforms.
Customers of Industrial Services business unit prized for its reliability, quality, consistency and the
Company's award-winning performance in the security area. These factors ensured a high rate of contract
renewal and allowed to develop lasting relationships with customers such as Dow Brazil and Braskem
groups, which are the Company's customers for over 16 years. Customers looking for the Company for
expert, fast and flexible delivery of equipment and highly skilled installation, as well as deep understanding
of local needs.
The main sectors served by the Industrial Services business unit are oil and gas, petrochemicals,
steel, paper and pulp, mining, and naval. Oil and gas represented 61% of the Industrial Services
Business units revenue in 2013. The Companys clients include some of the largest industrial
groups in Brazil, such as Braskem, Camargo Corra, Dow do Brasil, Petrobras, Queiroz Galvo,
among others. The Industrial Services business unit has significant synergies with the Heavy
Construction business unit. After the completion of the concrete structures in large industrial
projects, such as plants or refineries, its clients often engage the Industrial Services business unit
to support the industrial construction of the plant and subsequently to provide preventive and
corrective maintenance.
The Companys commitment to safety, which is reflected in all of its operations, is particularly critical to the
clients from this business unit, many of which operate according to international safety standards established
by their headquarters. Many of its clients operations involve the use of flammable and toxic substances.
Seeking continuous improvement, along the years, the Industrial Services business unit has secured several
international safety certifications, such as OHSAS 18001, ISO 9001 and ISO 14001. The Companys
commitment to the application of robust safety standards has also been recognized by its clients, as
demonstrated by the following awards: Destaque Petrobrs, Braskem Ouro, TOP Copene, Prmio Isopol de
Segurana, Prmio DOW for 14 consecutive years of providing services without work loss time injuries,
Prmio 5 Estrelas Arcelor Mittal (five star award), Prmio Excelncia na Construo Bahia (excellency in
construction), Prmio Performance SSMA Millennium Cristal , Prmio Reconhecimento pelos resultados
de SSMA in the Braskem unit at Alagoas, Prmio Zero Acidente Reportvel - Dow.
The sale of the Industrial Services business unit was completed on November 30, 2013 and the
Company earned net income of R $ 8.3 million from the sale. The agreed sale value of R $ 102
million, R $ 25 million was received in the contract signing date, in July, and the balance will be
paid in installments corrected by CDI, discounting the generation of this business case for Mills
between 1 June 2013 and the closing date, which was equal to R $ 6.8 million. This divestment
is in line with Mills's strategy to focus on businesses where their skills are able to generate
greater value for its shareholders and customers.
7.2 Regarding each operational segment(s) disclosed in the consolidated financial statements for the past
fiscal years
a. Commercialized products e services
Heavy Construction
Usually, the company employs a workforce only in the design of engineering solutions and equipment
use of surveillance, leaving it to their customers to assembly and disassembly. However, in more
complex situations, the Company allocates own labor also in the assembly and disassembly of
equipment.
Offered equipment:
The main equipment offered by the Company to the clients of the Heavy Construction business unit includes:
Steel Shoring Equipment: The primary shoring equipment the Company provides are Millstour shoring posts, a
versatile system capable of supporting loads ranging from 24 to over 156 tons per post, depending on the
configuration. In accordance with the Companys market perception, its shoring equipment is considered the most
flexible and versatile shoring system in Brazil. This system provides for ease of assembly with its heaviest
component parts weighing less than 13 kilograms. Each shoring post has an automatic locking element and can
support loads of up to six tons. Load-bearing capacity may be doubled or even tripled with the use of connecting
trusses. In addition, these telescopic shoring posts are fully adjustable to meet nearly any height requirement and
may be used in multiple applications. Millstour is typically used in the construction of bridges, viaducts and dams,
as well as in large-scale industrial projects.
Shoring Aluminium: The main equipment used is the Alu-Mills, a system of aluminum shoring with load capacity
up to 14 tons, which can be connected by trusses forming isolated towers of different heights. This system also
allows total displacement of the joint without the need for disassembly also bringing significant labor savings.
Compared to the shoring post systems or conventional steel shoring, this system is the one with the lightest weight
/ resistance ratio, being up to 2.5x lighter, saving very much in the amount of equipment deployed in the works.
The Alu-Mills can be used in buildings and even heavy construction works reaching a wide range of application.
Trusses: The Aspen Launching is a motorized horizontal truss able to transport and position precast beams
weighing up to 140 tons and spanning up to 45 meters. This truss may be used during all stages of a construction
project, from the delivery of the beams at the construction site to positioning the beams on permanent supports.
The truss may also be used to launch braces for the construction of viaducts with a high degree of safety and
minimum labor. No additional equipment is required to launch such braces, as the Aspen Launching Truss also
transports the supports, stands and other accessories required for launching such braces. Moreover, the truss may
be operated at inclines as steep as 6% without additional components and without any deterioration in its loadbearing capacity. The Aspen Launching Truss is typically used in the construction of bridges, viaducts and industrial
structures. The M150 Truss is a horizontal heavy duty truss used for laying concrete. The Company believes that
the M150 Truss has the highest load-bearing capacity among similar products in the market, while remaining as
light as conventional trusses. The M150 can bear positive stress of 150 tons per meter and negative stress of 100
tons per meter, thus requiring fewer modules than for conventional trusses and less movement of materials, which
reduces costs for labor and secondary equipment. The Company believe that the M150 Truss is the only truss
available in the market which is able to absorb negative stress and which includes a curvature adjustment
mechanism. The lower rail supports the truss via an exclusive connecting post, eliminating the need for additional
supports. The Companys Truss can be operated either with the use of supporting structures, or through the even
distribution of weight, providing it with the capacity to be operated at significant heights over great spans.
Balanced Cantilevers: Balanced Cantilevers are used to build bridges and overpasses under conditions where the
constructive approach does not allow for shoring directly from the ground, when there is a need to implement large
spans, and when work has to be carried out without interrupting the traffic on urban roads. The principle behind
the Balanced Cantilever is the use of specific equipment (Mills' metal trusses and profiles) implementing portions
of the superstructure "hanging" right on the transversal section (staves) that go on swings, from the pillars, stave
to stave, until the entire span has been completed. The trusses are always anchored on the previous, already
prestressed staves, and all forces coming from the concrete are transferred to and then supported by them.
Reusable metallic formwork systems: The formworks are used as molds for concrete. There are two different
formworks: vertical walls and pillars and horizontal beams and slabs for such as: SL 2000, ALU-L, ALUMA, Mills
Light, TOP MILLS, climbing, automatic climbing and special.
SL 2000: Using the German NOE technology, and with easy application and handling as its main feature, the 2000
SL formwork system allows a single worker to assemble and disassemble the panels.
It was designed especially for work for which there is no equipment available, such as cranes and hoists. It consists
of panels made of steel and coated with a plasticized 12-mm plywood plate that can withstand concrete pouring
pressures of up to 55 KN/sq.m. The SL 2000 formwork panel is light, 33 kgf/sq.m, and affords quick and easy
assembly (few components) in any situation and on any surface. It also allows any geometry to be formed, whether
rectangular or circular, with varying heights and radii. It is ideal for blocks and straps, adjustment layers, gutters,
beam sides and for pillars and walls. The SL 2000 supersedes any conventional formwork of the same nature and
can be used even for the simplest concrete tasks, cutting labor costs by up to 70% compared to conventional
formwork.
Top Mills: The Top Mills system consists of industrialized panels, made in steel and coated with a 21-mm plywood
plate specially designed to withstand concrete pressures of up to 80 KN/sq.m. It is ideal for broad area formwork
and is very efficient not only for use with reservoir walls, powerhouses and spillways, elevator shafts and stairwells,
but also to build large pillars. Panel modulation is smart and allows one to form a large variety of heights and
widths, significantly reducing the use of wood and conventional formwork complements and, thus, allowing for
excellent concrete surface finishing. With Top Mills, no complement needs to be larger than 15 cm. The panels are
interconnected by means of staples and may be transported to the next stage of the work in isolation or coupled to
form a rigid assembly providing a reduction of up to a third of the time in the concrete pouring cyclic. Formwork
assembly takes place at a rate of 0.22 Mh/sq.m, while the disassembly rate is 0.11 Mh/sq.m.
ALU-L: ALU-L is an aluminum formwork system manufactured in Brazil using the cutting-edge German NOE
technology. It is a large-area formwork panel system made with special aluminum profiles and coated with a 15mm high-resistance plasticized plywood plate that can withstand concrete pouring pressures of up to 60 KN/sq.m,
affording excellent concrete finishing. It is self-alignable and ideal for application on large wall formwork, whether
in reservoirs, canals, galleries, cooling towers, rectangular silos or any other structure that has large concrete
pouring sides and repetitive formwork cycles. It is also used as a formwork solution for pillars. This formwork system
was developed for work that requires large cranes or hoists, but it can also be used manually. The lightweight
panels (average weight = 20 kg/sq.m) can be handled individually or joined to form a single panel measuring up to
30 sq.m, and then transported to the next concrete pouring stage. The large panels that are put together, as long
as they are assembled at the application site, do not require full support from the hoist, which can be used to tend
to other needs at the construction site. Hoist support is only required when the panels are positioned and/or
transported. This affords great savings, not only in assembly and disassembly (0.17 Mh/sq.m - assembly and 0.08
Mh/sq.m), but also in machine usage time, freeing them for other activities at the site. ALU-L can also form circular
walls using the same accessories as SL 2000. It is also compatible with the SL 2000 formwork system and it is
possible to join panels from both of these two systems using joining clamps.
Aluma System: The Aluma Formwork System comprises broad area panels made with highly resistant aluminum
beams and headers that afford the work multiple applications in several geometries: walls, pillars, galleries, tunnels
and slabs. Its lightweight components allow broad panels to be built in any dimension with little weight (40 kg/sq.m),
high load capacity and easy assembly, doing away with the need for specialized labor and allowing for excellent
productivity. Its aluminum beams and headers have high impact absorption capacities, performing three times
better than steel. The advantage of aluminum, combined with the best weight/strength ratio afforded by the Aluma
panels, is that it allows for greater flexibility in projects that require speed. It is necessary to use a machine to
operate the panels.
Mills Light: Mills Light is a system of self-aligning panels, structured with steel profiles, covered with hardboard
plate, and with load capacity of 50 KN/m. It is indicated for all concrete structures of a large construction.
Climbing Formwork System: The Mills Climbing System was conceived to address the challenge of very high walls
and pillars, having been designed for vertical concrete structures where a single concrete pouring operation is not
feasible. It should be applied, preferably, in similar and repetitive stages, although this is not essential. Its
application is recommended for special industrial building structures, bridges and overpass pillars and, especially,
hydroelectric power plants. It can also be used to build elevator boxes and stairwells and for blind gables in
residential and commercial buildings. The basic principle behind the climbing formwork is its reuse in a subsequent
concrete pouring stage, always supported on an anchor made in the previous poured layer. A first concrete pouring
stage is carried out leaving a concrete anchorage point in the concrete, typically formed by a small steel tail and a
positioning cone (recoverable). After the removal of the formwork, the positioning cone is substituted for a support
cone, which will serve as a support for the next layer. The set will be raised when the concrete has hardened. It is
moved with the aid of the crane. The next stage is raised, formwork and scaffolding both, with no need for additional
scaffolding. It is compatible with all Mills panels: ALU-l, Top Mills and Aluma.
Automatic Climbing Formwork System: Mills' Automatic Climbing Formwork System comprises metal platforms
and form panels that move vertically, driven by a special hydraulic system, with no need for a crane. The process
takes place with maximum safety and the whole set (platforms and forms) is lifted to the next phase of the work all
at once. The Self-climbing System has advantages over the sliding formwork system: (a) When necessary, the
concrete pouring can be interrupted and then restarted; (b) It allows for labor cost reductions as it does not use
uninterrupted work processes (overtime) and specialized teams; (c) Improved final looks of the finished concrete,
with improved geometric control and greater accuracy; (d) Does not require special concrete, accelerators and
steel frame reinforcements; (e) Greater operating safety.
Modular Formwork and Shoring System: The SM Mills modular system is the new formwork and shoring solution
in a single system. This equipment has high load capacity and it is indicated for complex geometries and can be
moved, making the reuse without disassembly possible, with great labor savings. The SM Mills is formed by the
combination of metallic sections, that, when unified through special connections and combined with aluminum
beams, can form a variety of geometrical formations, attending various types of concrete structures, such as
tunnels, galleries, inclined slabs, suction, diversion and transition tunnels in big hydroelectric plants. The modular
steel composition, in the above described situations, replaces advantageously the traditional shoring systems
made of towers, tubes and clamps, increasing productivity and safety in the construction site. SM Mills is ideal for
repetitive sections, because it allows vertical shoring and horizontal formwork in a single system, and, with the help
of deformation and displacement equipment it is possible to lower it after the concreting and displace it to the next
work phase without the need for disassembly.
Carrelone is an equipment destined to transport pre-molded beams up to 45.00m of interspace and up to 140 tons
of weight. This equipment is composed of two mobile gantries mounted above the tires, devoid of engine for its
self-handling, needing a loader type cat. 930 or 966 for traction of the set and longitudinal transportation of the
beams. Carrelone has a hydraulic system for direction of the set and lifting of the beams in the pre-molded building
side and its capacity is up to 70 tons per gantry.
Stave lifting cart car equipment: This is an equipment destined to lift pre-molded staves in bridge and viaduct
constructions. This equipment has a hydraulic system for levelling ADN adjustment of the cars and of the stave
and electric winches equipped with secure braking system.
Access Scaffolding: The Company offers a scaffolding system called Elite, which is a tubular metal tower system
that can be assembled into access structures of varying heights and dimensions. Elite is a simple system composed
of only three types of pieces: support posts, transverse pieces and diagonal supports, manufactured from
galvanized steel. Each post can bear loads of up to three tons. No tools, bolts or screws are required to assemble
the scaffolding system as each part is simply slotted into each other part. On average, a single worker is generally
able to assemble 15 linear meters of scaffolding per hour.
Mills Lock: a system of towers with multidirectional fittings that enables several geometric forms of towers and can
be used as Access scaffold, scaffold of facade, platforms and other ways.
Another access product are the assembled stairs, measuring 2.00 m x 3.30 m, with flat areas every 1.50 m
vertically, railing at heights of 0.70 and 1.20, and measuring 80 cm in working width. All measurements comply
with Standard NR18. Assembly (0.5 m in height/MH) and disassembly (1.0 m in height/MH) productivity exceeds
customer expectations.
Finally, the steel floor has the lightness demanded to build scaffolds, with the robustness proportioned by the steel,
ensuring a high resistant floor and reliability. The floors top coat is made of electrolytic galvanizing that ensures
long use in aggressive environments without suffering oxidation.
For the Buildings sector, projected to shoring solutions, forms and access providing special equipment for light
constructions such as residential and commercial buildings. The main equipment that the Company offers to its
customers through the business unit Construction for Building sector include:
Steel shoring: The main steel shoring system is the metallic modular towers, formed by the fitting of braced tubular
frames, which allows loads of up to 8 tons per tower. Connecting brackets make it possible to aggregate additional
frames to the tower, increasing its load capacity, and adjustable shoes and brackets allow the millimetric adjustment
of the top and base of the towers, providing great time reduction not only in the leveling but also in the formwork
removal. Metallic sections complete the system, allowing the perfect union of the slab structure, providing great
savings to the shoring. The shoring and bracing system for of buckets enables form removal keeping the slab reshored. It consists of metal guides to support buckets and drop heads on the heads of the struts for quick formwork
removal without strut removal. Re-shoring and conventional shoring for towers and struts. Greater alignment and
ease in positioning of the buckets. The system provides for the locking of the buckets, preventing them from moving
during the framework assembly, thus increasing safety.
Shoring aluminum: The flying table Aluma Light is a shoring system designed in aluminum trlias, highly resistant,
designed to speed up the construction of residential and commercial buildings with large cloths smooth slab and
preferably. The great advantage of Aluma Light is the labor savings in operations because it does not require disassembly
and reassembly of shoring every concreting. It is possible to form tables of up to 80 m fully ready for implementation of
the frame and the entire assembly is lifted by the crane and positioned in the upper level of the slab, in the case of
repeating vertical or slid forward, in the case of horizontal repetition. The Aluma Light System is ideal for short schedule
of works or structural design with many repetitions, whether vertical or horizontal, such as large commercial and
residential buildings, shopping centers and industrial facilities. The Alumills is an aluminum shoring system with a load
capacity up to 14 tons, which can be connected by trusses forming isolated towers units of different heights. The towers
may be mounted horizontally, allowing a much more productive process and subsequently placed in a vertical position.
The sets can be reused without disassembly, allowing horizontal movement and vertical lifting with a crane or hoist. This
system also allows the total displacement of the assembly without disassembly also bringing much labor saving. The
light weight and high load capacity are the major attributes of Alumills system. These features provide much lighter
solutions and, in turn, more productive in the assembly, disassembly and reaproveitamentos. Compared with the shoring
towers or conventional steel stanchions systems, this system is the one with the lowest weight / resistance, reaching 2.5
times lighter, saving a lot on the amount of equipment deployed in the works. The Alumills can be used in buildings since
even in heavy works reaching a wide range of application.
Formwork for concrete in modular reusable panels: The formwork is used as molds for the concrete. There are two
types of formwork: vertical, for walls and pillars, and horizontal, for beams and slabs, such as: SL 2000 and Mills
Deck.
SL 2000: The SL 2000 Formwork was designed to expedite concrete pouring for pillars, curtains, walls, stairwells
or elevators, suspended or buried reservoirs, foundation blocks, beams and walls in general. It affords increased
safety and a substantial reduction in time and labor costs thanks to its ease of assembly. Design based on
technology provided by the German company NOE; Easy to assemble, disassemble and transport, this framework
requires no training or skilled labor, a fact that affords gains in safety and finish quality; Its use enables a 50 to 70%
reduction in labor compared with conventional wooden formwork; Manufactured under strict quality controls, this
framework allows for superior concrete finishing; Because it is a highly versatile product made in different
dimensions, the SL 2000 Formwork allows for a simple, safe application for assemblers in any work situation and
geometry.
Mills Deck Light: The Mills Deck Light is a system of forms of flat slab formworks for the residential and commercial
segment. Formed by struts, aluminum panels and "dropheads" which allow the removal of the bottom panels from
the slabs keeping them shored, the Deck System provides the economy of a form set to the builder and also
provides more speed to the construction work.
Easy-set Formwork (used in the government program Minha Casa, Minha Vida): Easy-Set is a formwork system
that was conceived and developed by Aluma Systems Canada for residential, house and multiple floor building
work and withstands pressures of up to 60 KN/sq.m. With the Easy-Set system, execution time is reduced to less
than half compared with the traditional construction system. It allows for daily concrete pouring cycles, resulting in
a home per day.
Tubular Scaffolding: Real Estate business units scaffolding, of great tradition in the Brazilian civil construction
market, are present in the daily lives of countless workers in Brazil, which doubtlessly makes for a big operational
advantage un the development of the construction work. With fast and simple assembly, the scaffolding towers are
put together through the fitting of tubular frames, braced by diagonals embedded in the frames through extremely
functional latches. All types of frames used by the Company are a result of technological and market research,
aiming to ensure maximum safety and versatility upon use. As an example, the access stairs are embedded to the
tubular frame, making the workers access easier and contributing to the structural rigidity. They are also equipped
of frames and trusses that makes it ideal for use in urban centers, allowing the pedestrian to walk freely, without
being blocked by the tubular structure.
Suspended Scaffolding: Suspended scaffolding are systems that use steel cables fixed to the buildings faades.
The electric suspended scaffolding is meant for the execution of services that require extreme speed and agility
without any effort from its user, since it has a powerful engine and a simplified operation that allows a constant
speed of approximately ten meters/minute. The platforms have a non slip flooring and can be modulated in various
lengths with a minimum configuration of 2 meters and a maximum of 8 meters, and cable lengths that reach up to
150 meters. The Real Estate Light Lifter/Puller Cable suspended scaffolding is suitable for work that requires
extreme speed and agility, but not a high load capacity. Using it in painting, wall cleaning and waterproofing jobs
or in facility or external piping renovation speeds the work up.
Mast Climbing Platform: The mast climbing platform, as it is automatic, allows greater speed in faade works than
traditional scaffolding, also providing much greater safety in its operation.
Rental
Offered equipament
The Rental business unit offers aerial platforms, new or semi-used, which allow workers to perform tasks at different
altitudes, and telescopic handlers, which are used to lift loads to varying heights.
Boom Platforms: Offered both telescopic and articulated boom platforms, which provide access to heights ranging
from 10 to 56.7 meters. Offered with several options, as two or four-wheel, all-terrain kits, models with a narrow or
wide base, and either diesel or electric engines.
Scissor Platforms: Scissor platforms provide an alternative to boom platforms that allow access to narrow spaces.
These platforms have a platform extension sliding system, and are available with either diesel or silent electric
engines. These platforms are available in a number of models which may be used in various types of terrain and
provide access to heights ranging from 6.4 to 18 meters.
Telescopic Handlers: Telescopic handlers are an extremely versatile type of equipment able to lift loads weighting
up to 5.000 kilos to a height of up to 21 meters.
Technical Assistance: To provide support both to rentals and equipment sales, the Company has highly qualified
technical staff trained to deal with the entire line of aerial work platforms and tele handlers. The staff is constantly
trained by equipment manufacturers and take regular refresher courses through an internal training program. The
Company owns a fleet of workshop vehicles, equipped with the tooling needed to carry out preventive and minor
corrective maintenance , thereby speeding up technical services and ensuring greater equipment availability.
IPAF Training: Mills is the first company to provide training for IPAF Operators and demonstrators in Brazil, and
the second to do so in Latin America. Additionally, it is a member of CBI - the Brazilian Council of the IPAF. One
of the main goals of this initiative pioneered by Mills is to instruct these professionals on the concepts of risk
perception/assessment and drive their ability to ensure the proper and efficient operation of Aerial Work Platforms,
increasing productivity and compliance with standards related to safety at work.
Industrial Services
The Company operated in two fronts:
Maintenance: The majority of revenue of this business came from the services that provided maintenance in a
continuous way in plants and installations already built, when the majority of the contracts had duration between
one and three years and, in large number of the cases, had been renovated during several years. Also, part of the
revenue came from interruptions in operational activities for longer periods for maintenance, which usually occur
once a year in industries that operated continuously. This interruption meant lower revenue to our clients, which
emphasized the performance of the Company in comparison to the competitors by demonstrating capacity to
conduct the labors properly with safety and punctuality, reasons why the Company was repeatedly hired.
New Plants: The Company offered services in assembly of access structures in new industrial plants, and also
for platforms and ships which operated in the Oil and Gas market. Many times the Company continued the
service with the Heavy Construction unit, that operates in civil works.
b. Revenue from the segment and its participation in the Company's net revenues
The table below indicates the net revenue from each of the business units and its share in the total net revenue
on the indicated periods:
Business unit
2013
Heavy Construction
Real State
Rental
Industrial Services
Total
Net
Revenue
% of
Total
Net Revenue
216,9
258,0
357,3
208,3
1.040,6
20,8%
24,8%
24,3%
20,0%
100%
2015
Net Revenue
% of
Total
Net Revenue
165,7
117,2
293,2
576,1
28,8%
20,3%
50,9%
100,0%
Pro-forma results consolidated data considering the Industrial Services business unit, until its sale date.
c. Profit or loss resulting from the segment and its participation in the Company's net income.
The table below indicates the net income from each of the business unit and its share in the total net income
on the indicated periods:
Business unit
2013*
% Net
Net Revenue Revenue
Heavy Construction
74.414
43,10%
Rental
87.460
50,70%
Industrial Services
4.918
2,80%
Others
5.800
3,40%
Total
172.592
100%
2015
% Net
Net Revenue Revenue
8.125
12,60%
58.783
91,50%
-2.640
-4,10%
64.268
100%
% Net
Net Revenue Revenue
-94.094
96,2%
13.634
-13,9%
-17.341
17,7%
-97.801
100,0%
Pro-forma results consolidated data considering the Industrial Services business unit, until its sale date .
7.3 Products and services that correspond to the operating segments disclosed in
item "7.2
a. Characteristics of the production process
The Company outsources the entire process of production of the equipment used in their operations. See
item 7.3(e) below.
The Company believes to be Brazils leading provider of specialty engineering solutions and equipment, such
as formwork, shoring and scaffolding, and in the access motorized equipment rental for the for the Brazilian
market. However, there is no public information about the exact market share of the Company and its
competitors.
(ii)
Heavy Construction
The Company believes that its Heavy Construction business unit enjoys an established leading
presence in its segments. The competition is highly qualified with companies which have been in
the market for a long time. However, the competitive environment presents stability, with few new
entrants.
Real State
The sector of residential and commercial construction in Brazil is highly fragmented. In comparison with the
Heavy Construction unit, the Real Estate projects are spread, generally, through the whole country in
different cities, with smaller in physical dimension terms and have lower duration with average between four
to six months. The recognized reputation of the Company in the Brazilian market is very important for the
success in activities in this business unit. The Companys biggest advantage is the high velocity to answer
the clients. With regional coverage, the Real Estate unit is closer to its clients, attending their needs with
agility and with a variety of equipment taking to better solutions.
In this market, the ability to reduce construction costs and to provide solutions for reducing execution time
and the use of labor is crucial to attracting new clients and securing participation in new construction projects.
The Company believes that its Real Estate business unit is a leader in the residential and commercial
construction market.
Rental
Due to the participation in a still minor market with great potential for expansion, the Rental market presents
more dynamism, typified by the entry and exit of new companies and high investments of the established
competitors.
The Company believes that its Rental business unit is one of the major providers of motorized access
equipment, aerial platforms and telescopic handlers, both for lifting personnel and cargo to considerable
heights in Brazil. Besides the lack of public information about its competitors, the Company believes to be
leader in this segment.
Industrial Services
The Industrial Services business unit operated in highly competitive market segments. While in the access
segment the Company believed to have solid leadership, in the industrial painting and, in particular, the
insulation market, the Company competed with larger competitors.
The Company believes that the competitive in this sector consists on offering solutions both innovative and
high level of excellence at low cost, building long-term commercial relationships with its clients.
The information above related to Industrial Services is limited to the Companys evaluation up to the
conclusion of business unit sale, in November 2013.
d.
Seasonality
b. environmental policy of the Company and costs incurred for compliance with
environmental regulation and, where appropriate, other environmental practices,
including adherence to international standards of environmental protection.
Considering the nature of the Companys activities, it does not adopt environmental policies and regulations
and is not subjected to specific environmental regulations.
The main environmental impacts of the Company regard the maintenance process of its equipment, which
involves, among others, hardboard, paint and lubricant oils. The Company seeks to mitigate the possible
environmental impacts coming from its activities through the survey of the aspects and research of its proper
disposal. As an example, the proper disposal of lubricant oils through separation and disposal in licensed
companies. Investments are also made in the separation systems of water and oil from the lubrication and
washing of machines.
With the objective of reducing use of oils in the lubrication of its equipment, the Company has invested
expressive resources in docking scaffolding for the industrial environment, which exempts the use of clamps
and bolted connection sleeves, and uses instead a system of fitting wedges, which, other than dismissing
the need for maintenance with lubricant oils, also provide gains in productivity and competitiveness.
Since early 2003, the Company has invested expressive amounts of resources to gradually replace wooden
scaffolding floors with aluminum ones, that are more durable and environmentally correct, thus contributing
to the reduction of the extraction of trees, helping to raise a greener planet. Beyond that, the Company has
products that reduce environmental impact, especially the new formwork and shoring systems and the
metallic structures, which reduce the use of wood in the construction process.
The Company acts with environmental responsibility when acquiring the wood that will be used in the
execution of its services. All of the wood used in its equipment come from legal sources licensed by the
Brazilian Ministry Of Environment Brazilian Environment and Natural Renewable Resources Institute, and
the Company maintains archived copies of all the legal documentation regarding the origin, transport and
registry of its suppliers, with focus on: (2) DOF Forest Origin Document; (b) CTF Federal Technical
Certificate of Regularity for the use of Natural Resources; and (c) GF3 Forest Guide for the transport of
forest products.
The equipment that is damaged in the construction work, when classified as improper for reuse, are turned
into pieces of smaller sizes or discarded and sent to further recycling. In the discarding, carbon steel pieces
are sent to steel makers and turn into other metallic products; aluminum beams and floors are sent for
reprocessing in plants, returning to the Company in the form of new products with the same characteristics;
and the wooden floors are sent to accredited partners who transform this residue into an energy source.
c. reliance on patents, trademarks, licenses, concessions, franchises, contracts,
royalties for the development of relevant activities.
In case the Company may not use its main brand, Mills, or if such brand loses distinctiveness, the Company
may have problems in relationships with their clients to tailor their services and equipment in the market,
which may prevent the development from its activities in a satisfactory condition. The development from its
activities does not dependent on secondary brands, patents, concessions, franchises and contracts,
royalties.
The Company has contracts of technology transfer for the exclusive manufacturing of several equipment, as
detailed in Item 9.1b. In case any of these contracts are discontinued or the regulation on patents or on the
use of technology changes, the Company may have its portfolio of products reduced and its competitiveness
affected.
7.6
a) revenue from the clients assigned to the host country and their participation share in the
Companys total net revenue;
The Company only operates in Brazil. The fiscal year ended on December 31, 2015, 98% of the
Company's revenue came from clients located in Brazil.
b) revenue from the clients assigned to each foreign country and their participation share in the
Companys total net revenue;
In the fiscal year ended December 31, 2015, 2.0% of our revenues came from clients in other
countries:
Country
AUSTRALIA
0.09%
BOLIVIA
0.13%
CANAD
0.00%
HOLANDA
0.96%
PERU
0.41%
REINO UNIDO
0.30%
REPBLICA DOMINICANA
0.09%
Grand total
1.98%
c) total revenue from foreign countries and their participation share in the Company's total net
revenue.
The fiscal year ended on December 31, 2015, 2.0% of the Company's revenue came from clients
located outside of Brazil.
7.7
7.9
On May 21st, 2015, the Companys Board of Directors approved its new code of
conduct, available in
http://ri.mills.com.br/ptb/1936150521_CDIGO_DE_CONDUTAMILLS_p.pdf.
8. Extraordinary Business
8.1 Indicate the acquisition or disposal of any relevant asset that does not
fit as normal operation in the issuer's business.
In the fiscal years ended December 31, 2013, 2014 and 2015, there was no
acquisition or disposal of any relevant asset that does not qualify as the
Company's normal operation, except for the sale of the Industrial Services unit,
as described in item 6.3 of this Form of reference.
8.2 Indicar alteraes significativas na forma de conduo dos negcios do
emissor.
In the last three years, there was no significant change in the conduct of business in
order.
8.3 Identify the relevant agreements entered into by the issuer and its
subsidiaries not directly related to its operating activities
In the fiscal years ended December 31, 2013, 2014 and 2015, there was no
celebration of relevant contracts that were not related to the Company's operating
activities.
8.4 Other information which the Company judges to be relevant.
There is no other relevant information pertaining to this item 8.
10.1
a.
The company presented, in 2015, net revenue of R$ 576.1 million and free cash
flow (net cash generated by the operating activities minus net cash applied in
investment activities) of R$ 202.4 million. This is the second time Mills achieved
positive cash generation, after years of high investments, which enabled its
organic growth, geographic expansion, and mainly, the consolidation of its
leadership in its markets. Net revenue amounted R$ 794.2 million in 2014 and R$
832.3 million in 2013.
Applying the premises of Technical Pronouncement CPC-01 - Impairment of
Assets, the Company performed impairment tests on its assets. After said tests,
it was verified that it was necessary to establish an impairment provision
amounting to R$ 26.2 million for the investment in Rohr and R$ 30.9 million for
the Construction Cash Generating Unit. For the assets of the Rental business unit
and other assets of the Company, no need to perform impairment tests were
identified.
The recoverable amount of those assets was determined based on economic
forecasts for determining the market value of the investee, upon through a
revenue approach, through a 10-year term discounted cash flow forecast, for
purposes of substantiating the amount paid, considering the long maturity period
of infrastructure and civil construction investments. The main assumptions
included: (i) revenues were forecast based on historical data and growth
prospective for the segment and Brazilian economy; (ii) negative operating loss
for 2015, resulting from the reduced activity of the industry; (iii) performance of a
continuous productivity improvement program and reduction of costs and
expenses will cause the evolution thereof to be lower than revenue growth
percentage, (iii) the corresponding cash flows are discounted at the average
discount rate, obtained using a methodology typically applied by the market,
taking into account the weighed average cost of capital (WACC); (iv) a strict
working capital evolution control policy, during the forecasted period.
In 2015 there were non-recurring items with a negative effect of R$ 82.7 million,
of which: (i) R$ 57.1 million related to the impairment for Construction business
unit and for the investment in Rohr; (ii) Reorganization costs of R$ 9.0 million; (iii)
ADD related to clients involved with ongoing investigations of Lava Jato (R$ 12.9
million); and (iv) R$ 3.7 million from the Industrial Services business unit due to
the payment of indemnity, related to events that happened before the completion
of the sale.
The cash generation, measured by EBITDA, reached R$ 104.1 million in 2015.
Excluding non-recurring items listed above, EBITDA would reach R$ 186.7
million. In 2014, EBITDA amounted R$ 326.2 million and, in 2013, R$ 438.8
million.
Net loss amounted to R$ 97.8 million in 2015, versus R$ 64.3 million of net
earnings from continuing operations in 2014 and R$ 167.7 million in 2013. In 2013
there was a net positive effect of R$ 8.2 million due to the sale of the Industrial
Services business unit.
Mills total debt was R$ 620.8 million as of December 31, 2015 versus R$ 745.4
million at the end of 2014 and R$ 632.6 million at the end of 2013. At the end of
the year our net debt position was R$ 388.8 million, versus R$ 551.7 million at
the end of 2014 and R$ 606.5 million at the end of 2013. The debt amortization
schedule includes payment of R$ 430 million of principal until 2018, and the first
issuance of debentures will end in April, 2016. We will amortize R$ 90 million of
principal, reducing our gross debt.
Considering non-recurring items to determine the adjusted EBITDA, all covenants
have been complied with, as of December 31, 2015. Our leverage, as measured
by net debt/LTM EBITDA, was at 2.1 times as of December 31, 2015, while
interest coverage, as measured by LTM EBITDA/LTM interest payments, was 3.0
times, excluding non-recurring items for both.
The Companys leverage, in 2014, was at 1.6 time, while interest coverage was
4.8 times. In 2013, the Companys leverage was 1.5 time, while interest coverage
was 8.3 times.
b.
According to the Company's balance sheet on December 31, 2015, the capital
structure of Mills was 58.7% equity, measured by the stockholders equity, and
41.3% capital from third party, measured by total liabilities.
According to the Company's balance sheet on December 31, 2014, the capital
structure of Mills was 56.0% equity, measured by the stockholders equity, and
44.0% capital from third party, measured by total liabilities.
According to the Company's balance sheet on December 31, 2013, the capital
structure of Mills was 56.4% equity, measured by the stockholders equity, and
43.6% capital from third party, measured by total liabilities.
On December 31, 2015, our debt was 31% short-term and 69% long-term, with
an average maturity of 2.8 years, at an average cost of CDI+1.21%. In terms of
currency, 100% of Mills debt is in Brazilian Reais. On December 31, 2014, our
debt was 21% short-term and 79% long-term, with an average maturity of 2.4
years, at an average cost of CDI+0.68%. On December 31, 2013, our debt was
20% short-term and 80% long-term, with an average maturity of 2.1 years, at an
average cost of CDI+1.00%.
The management of the Company believes that the existing resources and the
cash flow to be generated from its operations, along with its borrowing capacity,
with proper leverage, will be sufficient to cover its investment plan and the need
for working capital during the same period.
f.
2013
2014
2015
CDI+0.29%
40.2
44.72
TJLP+0.2% to 0.9%
23.4
18.7
15.1
8.2
112.5% of CDI
274.4
184.4
92.8
165.9
168.1
169.7
120.6
128.7
142.3
108.75% of CDI
202.0
202.5
632.6
746.6
622.3
Total
On December 31, 2014.
Including loans with financial institutions indexed to the U.S. dollar plus 2.13% interest per year in the amount of R$ 39.9 million contract or $16.9 million
and a swap operation to cancel the risk of exchange rate variation of this loan.
Short-Term Debt
As of December 31, 2015, short-term debt amounted to R$ 189.8 million,
compared to R$ 155.0 million as of December 31, 2014, an increase of R$ 34.9
million or 22.5%. This increase was due to, mainly: (i) loan agreement with the
Nassau Branch of Banco Ita BBA S.A. totaling US$ 16.9 million (equivalent to
R$ 40.0 million, with dollar rate of December 6th, 2013); and (ii) transfer from longterm debt to short-term debt of the first portion of the amortization, in August,
2016, of the second issuance of debentures, CDI first series, launched in August,
2012. In April 2015 there was an amortization, and the last one will occur in April,
2016.
As of December 31, 2014, short-term debt amounted to R$ 155.0 million,
compared to R$ 125.3 million as of December 31, 2011, an increase of R$ 29.7
million or 23.7%. This increase was due to the interest and monetary adjustment
of Companys 3rd debentures issuances issued in May, 2014.
Long-Term Debt
As of December 31st, 2015, the Companys long-term debt amounted to R$ 431.0
million, compared to R$ 590.4 million as of December 31, 2014, an reduction of
R$ 159.4 million or 27.0%. This decrease was mainly due to following points: (i)
to the transfer of long-term debt to short-term debt of third installment amortization
of the first issuance of debentures issued in April 2011; and (ii) transfer from longterm debt to short-term debt of the first portion of the amortization, in August,
2016, of the second issuance of debentures, CDI first series, launched in August,
2012.
As of December 31st, 2014, the Companys long-term debt amounted to R$ 590.4
million, compared to R$ 507.3 million as of December 31, 2013, an increase of
R$ 83.2 million or 16.4%. This increase was mainly due to following points: (i) the
liquid effect of 3rd debentures issuances in May 2014; and (ii) to the transfer of
long-term debt to short-term debt of 2nd installment amortization in April 2014, of
debentures issued in April 2011.
Relevant Financial Contracts
Borrowings were used for financing the expansion of Companys investments and
for its general expenses and uses, being indexed to CDI, TJLP and US dollars.
For borrowings in foreign currency, financial instruments were contracted to
hedge the Company against fluctuations in foreign exchange rates.
Financing agreement for rental equipment were agreed based on Long-Term
Interest Rate (TJLP in Brazil) plus interest of 0.2% to 0.9% per year, with monthly
amortization through June 2021.
The financial institutions with which the Company has borrowings as at December
31, 2014 are as follows:
Banco do Brasil
Ita BBA
On December 31st, 2015, the Company did not have any purchase orders with
foreign suppliers of equipment, being the value presented US$ 0.2 million in
foreign suppliers account related basically to installment purchase of equipment
(in 2014 these orders totaled US$ 0.3 million, and in 2013 these orders totaled
US$ 71.3 million).
(iii) degree of subordination between the debts
The Debentures issued by the Company are all unsecured debentures.
Most of the guarantees offered by the Company refers to loans contracted in
previous years, prior to the Initial Public Offering (IPO), when the financial
situation required that the Company offered substantial guarantees to facilitate its
access to credit.
After its initial public offer of shares held in April 2010, the Company conducted
financing operations with real guarantee only for FINAME, credit line from BNDES
to finance investments in manufacturing portion of its equipment, where, at the
request of the financing contract, the equipment manufactured is disposed to the
end of the financing contract, presenting a balance of R$ 27.1 million in
guarantees on 31st of December, 2015.
The management of the Company believes that the existing terms relating to
the provision of guarantees does not significantly restrict the ability to contract
new debt to meet our capital needs.
(iv) any restrictions imposed on the issuer, in particular, for limits of indebtedness
and contracting of new debts, the distribution of dividends, disposal of assets, the
issuance of new securities or disposal of corporate control
Some of the Companys long-term financial instruments contain obligations
relating to the maintenance of certain levels for determined financial indicators.
The main conditions imposed on financial instruments entered into by the
Company are: (i) the ratio between EBITDA and net debt (total bank debt minus
cash equivalents); and (ii) the ratio between EBITDA and net financial expenses.
Thus, the Company is required to maintain a relatively low indebtedness and a
satisfactory capacity to pay its financial obligations, and the hiring of new
borrowings should meet these prerequisites. On the fiscal years ended December
31st, 2013, 2014 and 2015, the Company was in compliance with the required
levels for the indicators.
Additionally, some of the Companys long term financial instruments have
restrictions related to (i) change of transfer of the controlling stake (direct or
indirect) and (ii) asset disposals when the amount represents more than 15% of
the total assets of the Company, based on the consolidated Financial Statements
of the Company. In the case the Company is in default of any of its financial
obligations, it will not be able to distribute any profits to its shareholders above
the minimum mandatory dividend as determined by Law, as defined in the
relevant documents.
The management of the Company believes that the current provisions will not
significantly restrict the ability to recruit new debt to meet its capital needs.
g.
In accordance with the existing accounting policies adopted in Brazil, the revenue
reported in the income statement should include only the gross inflows of
economic benefits received and receivable by the Company, when originating
from their own activities. Amounts collected on behalf of third parties - such as
sales taxes, taxes on goods and services and from taxes on added value - do not
generate benefits for the Company and do not result in an increase in equity and
therefore are excluded from revenue. Thus, the comments below relating to
variations between the results for the years ended December 31 st, 2013, 2014
and 2015 refer only to net revenue, not to the gross revenue.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
2013
AV(1) (%)
AH(2) (%)
2014
AV(1) (%)
AH(2) (%)
2015
AV(1) (%)
AH(2) (%)
832.3
100.0%
-5.3%
794.2
100.0%
-4.6%
576.1
100.0%
-27.5%
Heavy Construction
217.0
26.1%
24.6%
211.0
26.6%
-2.7%
165.7
28.8%
-21.5%
Real Estate
258.0
31.0%
8.4%
212.4
26.7%
-17.7%
117.2
20.3%
-44.8%
-100.0%
357.3
42.9%
41.0%
370.8
46.7%
3.8%
293.2
50.9%
-20.9%
-334.9
40.2%
-18.5%
-362.4
45.6%
8.2%
-343.8
-59.7%
-5.1%
497.3
59.8%
6.2%
431.8
54.4%
-13.2%
232.3
40.3%
-46.2%
8.3
1.0%
-57.1
-225.4
27.1%
3.2%
-273.8
34.5%
21.5%
-240.8
-41.8%
-12.1%
Operating Profit
280.2
33.7%
12.1%
157.9
19.9%
-43.6%
-65.6
-11.4%
-141.5%
Financial Expenses
-60.0
7.2%
17.2%
-92.8
11.7%
54.6%
-100.1
-17.4%
7.8%
Financial Income
13.2
1.6%
9.1%
25.2
3.2%
90.9%
36.9
6.4%
46.4%
233.4
28.0%
10.8%
90.3
11.4%
-61.3%
-128.7
-22.3%
-242.6%
Industrial Services
Rental
Gross Profit
Operating Revenues
(Expenses)
General and
Administrative
7.9%
11.0%
-26.1
3.3%
-60.3%
30.9
5.4%
-218.5%
167.7
20.1%
10.7%
64.3
8.1%
-61.7%
-97.8
-17.0%
-252.2%
4.9
0.6%
172.6
20.7%
13.9%
64.3
8.1%
-62.8%
-97.8
-17.0%
Contribution
-252.1%
(1)
Year ended December 31st, 2015 compared with year ended December 31st,
2014
Revenue of Products Sold and Services Provided
In the year ended December 31st, 2015 the Companys net revenue from sales
and services reached R$ 576.1 million. For comparison purposes, there was a
reduction of R$ 218.1 million, or 27.9% yoy. This decrease comes mainly from
the lower rental revenue, with a contribution of 82% of this reduction. The analysis
of the Company's management regarding the factors that led to these changes is
listed below.
In September 2015, Heavy Construction and Real Estate commercial
management have been brought together in a single business unit. Engineering
and operational Officers functions were also consolidated. As a result, the Heavy
Construction and Real Estate business units will now be reported together, under
the label Construction. We will continue to monitor Heavy Construction and Real
Estate revenues separately, due to its different market dynamics.
Heavy Construction
Net revenue from the Heavy Construction business unit totaled R$ 165.7 million
in 2015, with a drop of 21.5% compared to 2014. The management of the
Company attributed this reduction as a result of the 24.1% drop in rental
revenues, due to a less number of contracts.
Real Estate
Net revenue from the Real Estate business unit, totaled R$ 117.2 million in 2015,
with a drop of 44.8% compared to 2014, negatively impacted by a decrease of
55.8% in sales revenues and of 40.9% in rental revenues. The sales of semi-new
equipment related to Easyset product represented 78% of sales in 2014. The
management of the Company attributed this reduction as a result of a
deterioration of the Real Estate market in Brazil, influenced by political and
economic uncertainties, higher interest rates and weakness of economic activity.
Rental
Net revenue from the Rental business unit totaled R$ 293.2 million in 2015, being
20.9% lower yoy. On the evaluation of the management of the company, this
decrease is mainly associated with market retraction, with consequent higher
idleness and pressure on prices.
Cost of products sold and services rendered and general and administrative
expenses
The table below shows the Companys cost of goods sold and services rendered
by nature in fiscal years ended December 31, 2014 and 2015.
2015
2014
2015 x 2014
Nature
Direct
General
Direct
General
Direct
General
project
and
project
and
project
and
and administrative
and administrative
and administrative
rental
expenses
rental
expenses
rental
expenses
costs
and others
Total costs
and others
Total costs
and others
-74.2
Personnel
-4.9
Third parties
-12.1
Freight
Construction/maintenance
-42.3
and repair materials
Equipment rental
-5.8
and others
-2.4
Travel
0.0
Cost of
-34.7
sales
Depreciation and amortization -151.9
-12.8
Write-off of assets
Allowance for doubtful debts
Stock option plan
Provisions
Provision for impairment
-2.6
Others
-343.8
-97.6
-20.5
-3.3
-171.8
-25.4
-15.4
-63.0
-6.5
-16.3
-113.3
-28.2
-0.6
-176.4
-34.7
-16.9
-5.8
-48.2
-44.5
-7.0
-51.5
-19.5
-25.4
-5.3
-18.2
-23.6
-6.4
0.0
-8.8
0.0
-34.7
-169.6
-12.8
-38.2
-9.6
-4.4
-57.1
-20.2
-641.7
-3.8
0.0
-53.2
-152.9
-13.7
-10.5
0.0
-42.3
-9.5
-2.5
-14.3
0.0
-53.2
-168.3
-13.7
-42.3
-9.5
-2.5
-26.2
-273.8
-29.4
-636.2
-17.7
-38.2
-9.6
-4.4
-57.1
-17.6
-297.9
-15.4
-3.2
-362.4
The table below shows the Companys cost of goods sold and services rendered
and general and administrative expenses by business unit in fiscal years ended
December 31st, 2014 and 2015. The information provided in this table does not
reflect the effects of depreciation on such costs.
Year ended December 31st
2014
(%) (1)
2015 x 2014
(%) (1)
(281.6)
59.6%
-1.0%
2015
(in R$ million)
Construction
(284.4)
60.8%
Heavy Construction
(122.1)
26.1%
Real Estate
(162.3)
34.7%
(174.1)
37.2%
(160.6)
34.0%
-7.8%
(9.5)
2.0%
(30.9)
6.4%
216.0%
(468.0)
100.0%
(472.0)
100.0%
0.9%
Industrial Services
Rental
Total
(1)
Percentage share of the business unit of goods sold and services provided and general and administrative
expenses
(2)
Percentage increase (decrease) of the total registered from one period to another.
N.A. Not applicable
Cost of goods sold and services provided and General and Administrative
expenses, excluding the effects of depreciation, went from R$ 468.0 million in the
year ended December 31, 2014 to R$ 472.0 million year ended December 31,
2015, an increase of R$ 4.1 million, or 0.9%. Excluding the impairment cost of R$
30.9 million in Construction business unit, the total costs would be R$ 441.1
million, 5.7% lower when compared to 2014.
The depreciation of assets used in services rendered, which is part of the costs
of goods sold and services rendered increased, from R$ 168.3 million for the year
ended on December 31, 2014 to R$ 169.6 million in the fiscal year ended
December 31, 2015, maintaining the average depreciation period of 10 years.
The ratio between the Companys operating, general, and administrative
expenses in relation to the net operating income went from 27.1% in the fiscal
year ended December 31, 2013 to 34.5% in the fiscal year ended December,
2014 and to 41.8% in the fiscal year ended December, 2015.
Operating Profit
-11.2
1.6
4.2
2.2
0.0
-0.5
0.0
1.4
0.0
18.5
1.0
0.9
0.0
0.0
0.0
0.0
0.6
18.6
15.7
7.7
-2.7
1.2
0.0
-1.3
0.0
4.1
0.0
0.0
-2.3
0.0
4.1
-0.1
-1.9
-57.1
8.6
-24.1
Total
4.5
9.3
1.5
3.3
0.0
-1.8
0.0
5.5
0.0
18.5
-1.4
0.9
4.1
-0.1
-1.9
-57.1
9.2
-5.5
Operating profit before financial result decreased from R$ 157.9 million in the
fiscal year ended December 31, 2014 to a net loss of R$ 65.6 million in the fiscal
year ended December 31, 2015. Such reduction was a consequence of the
impairment in Construction business unit and investment on Rohr of R$ 57.1
million, and lower rental revenues.
Financial Results
Net financial expenses decreased from R$ 67.6 million in the fiscal year ended
December 31, 2014 to R$ 63.1 million in the fiscal year ended December 31,
2015, representing a decrease of R$ 4.5 million. The Company's bank debt, which
was R$ 745.4 million in December 31, 2014 decreased to R$ 620.8 million in
December 31, 2015.
Income Tax and Social Contribution
Expenditure on income tax and social contribution went from R$ 26.1 million in
the fiscal year ended December 31, 2014 to a positive value of R$ 30.9 million in
the fiscal year ended December 31, 2015. As of December 31, 2015, the
Company has not determined taxable income from income tax and social
contribution. The amounts prepaid in 2015 and withheld at source on invoices
and financial investments make up the negative balance of IRPJ and CSLl that
will be used during 2016.
In the fiscal year ended December 31, 2014, the Companys deducted from its
income tax and social contribution the amount of R$ 8.5 million, due to the
provisioning of interest on equity for distribution of part of the annual results, while
in fiscal year ended December 31, 2013 this deduction totaled R$ 14.6 million.
Moreover, the effective rate of 2014 was of 28.9%, after non-deductible tax items
adjustment, against 28.2% in 2013.
Net Income
For 2015, the Company reported a net loss of R$ 97.8 million, compared to R$
64.3 million net profit in 2014.
In 2015, net profit was negatively impacted by non-recurring effects amounting to
R$ 82.7 million, relating to (i) R$ 8.6 million restructuring indemnities, (ii) R$ 12.9
million in ADD expenses related to on going investigations of Lava Jato, and (iii)
R$ 0.4 million related to branch office relocation/closing.
In 2014 there were non-recurring items with a negative effect of R$ 21.7 million,
of which (i) R$ 7.1 million from the Industrial Services business unit due to the
payment of indemnity, related to events that happened before the completion of
the sale, although the request for indemnity occurred this year; (ii) R$ 12.3 million
from Easy Set formwork cost adjustment, due to higher raw material use than
technical specifications and to customized equipment sale as scrap ate the end
of the rental contract ; and (iii) R$ 2.3 million in cost provision and adjustments
from the raw material and goods for resale inventories. The increase of
depreciation (R$ 37.3 million) and negative financial result (R$ 20.8 million)
figures also contributed to the Net Income decrease.
Year ended December 31st, 2014 compared with year ended December 31st,
2013
Revenue of Products Sold and Services Provided
In the year ended December 31st, 2014 the Companys net revenue from sales
and services reached R$ 794.2 million. For comparison purposes, there was an
reduction of R$ 38.1 million, or 4.6% yoy. This decrease comes mainly from the
lower revenue from sales and technical assistance. The analysis of the
Company's management regarding the factors that led to these changes is listed
below.
Heavy Construction
Net revenue from the Heavy Construction business unit totaled R$ 211.0 million
in 2014, with a slight drop of 2.7% compared to 2013. The management of the
Company attributed this reduction as a result of the 29.7% drop in sales revenues,
technical assistance and others, due to projects not favorable to equipment
purchase, instead of renting.
Real Estate
Net revenue from the Real Estate business unit, totaled R$ 212.4 million in 2014,
with a drop of 17.7% compared to 2013, negatively impacted by a decrease of
17.9% in rental revenues and of 25.3%, in sales revenues. The management of
the Company attributed this reduction as a result of a deterioration of Real Estate
market in Brazil, influenced by political and economic uncertainties, higher
interest rates and weakness of economic activity.
Rental
Net revenue from the Rental business unit totaled R$ 370.8 million in 2014, new
annual record, being 3.8% greater than that 2013. On the evaluation of the
management of the company, this increase is mainly associated with increasing
fleet of equipment and, therefore, in rented volume due to investments in organic
growth since 2010.
Cost of products sold and services rendered and general and administrative
expenses
The table below shows the Companys cost of goods sold and services rendered
by nature in fiscal years ended December 31, 2013 and 2014.
Year ended on December
31st, 2013
Direct
Gener
cost of
al and
constru
Admini
ction
strative
and
Expen
renting
ses
Total
(in R$ million)
Labor
Third-party
Services
Freight
Construction
Material /
Maintanance and
Repair
Rent Equipment
-58.8
-107.4
-166.2
Travel
Cost of Sales
Depreciation ad
Amortization
Asset impairment
Allowance for
Doubtful Debts
Stcok Option
Update
provisions
Profit sharing
Others
Total
(1)
-63.0
-113.3
-176.4
-4.3
-5.9
-10.2
-5.0
-20.4
-25.5
-6.5
-28.2
-34.7
-1.5
-7.8
-9.2
-15.5
-0.8
-16.2
-16.3
-0.6
-16.9
-0.8
0.1
-0.7
-43.5
-6.1
-49.6
-44.5
-7.0
-51.5
-1.0
-0.9
-1.9
-5.9
-15.0
-20.8
-5.3
-18.2
-23.6
0.5
-3.3
-2.8
-5.0
-11.6
-16.5
-3.8
-10.5
-14.3
1.2
1.0
2.2
-68.0
0.0
-68.0
-53.2
0.0
-53.2
14.9
0.0
14.9
-122.6
-8.4
-131.0
-152.9
-15.4
-168.3
-30.3
-7.0
-37.3
-8.9
0.0
-8.9
-13.7
0.0
-13.7
-4.9
0.0
-4.9
0.0
-16.2
-16.2
0.0
-42.3
-42.3
0.0
-26.1
-26.1
0.0
-9.0
-9.0
0.0
-9.5
-9.5
0.0
-0.6
-0.6
0.0
0.2
0.2
0.0
-2.5
-2.5
0.0
-2.7
-2.7
0.0
-1.9
-18.8
-12.0
-18.8
-13.8
0.0
-3.2
0.0
-26.2
0.0
-29.4
0.0
-1.3
18.8
-14.2
18.8
-15.6
-334.9
-225.4
-560.4
-362.4
-273.8
-636.2
-27.4
-48.4
-75.8
The table below shows the Companys cost of goods sold and services rendered
and general and administrative expenses by business unit in fiscal years ended
December 31st, 2013 and 2014. The information provided in this table does not
reflect the effects of depreciation on such costs.
Year ended December 31st
2013
(%) (1)
2014
(%) (1)
(in R$ million)
2014 x
2013
Var.
(%) (2)
Heavy
Construction
...........................................................
Real
Estate
...........................................................
Industrial
Services
...........................................................
Rental
...........................................................
Total
...........................................................
(108.9)
25.9%
(122.1)
26.1%
12.1%
(164.2)
39.0%
(162.3)
34.7%
-1.2%
(156.1)
37.1%
(174.1)
37.2%
11.6%
8.2
-1.9%
(9.5)
2.0%
N.A.
(421.0)
100.0%
(468.0)
100.0%
11.2%
(1)
Percentage share of the business unit of goods sold and services provided and general and administrative
expenses
(2)
Percentage increase (decrease) of the total registered from one period to another.
N.A. Not applicable
Cost of goods sold and services provided, excluding the effects of depreciation,
went from R$ 421.0 million in the year ended December 31, 2013 to R$ 468.0
million year ended December 31, 2014, a increase of R$ 47.0 million, or 11.2%,
mainly due to a greater allowance for doubtful debts (ADD).
The depreciation of assets used in services rendered, which is part of the costs
of goods sold and services rendered increased 28.4% due to higher investments
in the past years, from R$ 131.0 million for the year ended on December 31, 2013
to R$ 168.3 million in the fiscal year ended December 31, 2014, maintaining the
average depreciation period of 10 years.
The ratio between the Companys operating, general, and administrative
expenses in relation to the net operating income went from 27.1% in the fiscal
year ended December 31, 2013 to 34.5% in the fiscal year ended December,
2014.
Operating Profit
Operating profit before financial result increased from R$ 280.2 million in the fiscal
year ended December 31, 2013 to R$ 157.9 million in the fiscal year ended
December 31, 2014, a reduction of R$ 122.3 million, or 43.6%. Such reduction
was a consequence of higher depreciation, and General, administrative and
operating expenses, both mainly impacted by increase in ADD of the fiscal year.
Operating profit represented 19.9% of net revenues in December 31, 2014,
compared to 33.7% of net revenues in December 31, 2013.
Financial Results
Net financial expenses decreased from R$ 46.8 million in the fiscal year ended
December 31, 2013 to R$ 26.1 million in the fiscal year ended December 31,
2014, representing decrease of R$ 20.8 million due to higher gross debt level and
interest rates in the period. The Company's bank debt, which was R$ 632.6 million
in December 31, 2013 increased to R$ 745.4 million in December 31, 2014.
Income Tax and Social Contribution
Expenditure on income tax and social contribution went from R$ 65.7 million in
the fiscal year ended December 31, 2013 to R$ 26.1 million in the fiscal year
ended December 31, 2014, decreasing R$ 39.6 million, or 60.3%.
In the fiscal year ended December 31, 2014, the Companys deducted from its
income tax and social contribution the amount of R$ 8.5 million, due to the
provisioning of interest on equity for distribution of part of the annual results, while
in fiscal year ended December 31, 2013 this deduction totaled R$ 14.6 million.
Moreover, the effective rate of 2014 was of 28,9%, after non-deductible tax items
adjustment, against 28.2% in 2013.
Net Income
The net profit increased from R$ 172.6 million in the fiscal year ended December
31, 2013 to R$ 64.3 million in the fiscal year ended December 31, 2014, a R$
108.3 million decrease. In 2013 there was a net positive effect of R$ 8.2 million
in the net earnings from continuing operations due to the sale of the Industrial
Services business unit. In 2014 there were non-recurring items with a negative
effect of R$ 21.7 million, of which (i) R$ 7.1 million from the Industrial Services
business unit due to the payment of indemnity, related to events that happened
before the completion of the sale, although the request for indemnity occurred
this year; (ii) R$ 12.3 million from Easy Set formwork cost adjustment, due to
higher raw material use than technical specifications and to customized
equipment sale as scrap ate the end of the rental contract ; and (iii) R$ 2.3 million
in cost provision and adjustments from the raw material and goods for resale
inventories. The increase of depreciation (R$ 37.3 million) and negative financial
result (R$ 20.8 million) figures also contributed to the Net Income decrease.
Year ended December 31st, 2015 compared to year ended December 31st,
2014
Current Assets
The Companys current assets increased from R$ 425.3 million as of December
31, 2014 to R$ 435.5 million as of December 31, 2015, an increase of R$ 10.2
million or 2.4%. The main reasons for such increase, in the assessment of the
management of the Company, were:
Non-current Assets
The Companys non-current assets of R$ 103.7 million as of December 31, 2014
was decreased to R$ 90.4 million as of December 31, 2015, a reduction of R$
13.3 million or 12.9%.
Investment
The investment dropped from R$ 87.4 million as of December 31, 2014 to R$
61.2 million as of December 31, 2015, a reduction of R$ 26.2 million, or 30.0%,
related to the impaiment in investment on Rohr.
PP&E Property, Plant and Equipment
The Companys PP&E decreased from R$ 1,200.1 million as of December 31,
2014 to R$ 1,004.1 million at December 31, 2015, a decrease of R$ 196.1 million,
or 16.3%.
Intangible assets
The Companys intangible assets decreased from R$ 76.1 million as of December
31, 2014 to R$ 46.8 million as of December 31, 2015.
In the beginning of 2014, the Company concluded SAP implementation, unifying
and standardizing its information systems aiming at achieving a higher efficiency
level for its internal controls, mainly on the financial and operational sides.
Current liabilities
The Companys current liabilities decreased from R$ 221.2 million as of
December 31, 2014, to R$ 218.9 million as of December 31, 2015, a reduction of
R$ 2.3 million. The main factors that led to this change, according to the
managements opinion, were:
Non-current liabilities
The non-current liabilities decreased from R$ 612.1 million as of December 31,
2014 to R$ 456.8 million as of December 31, 2015, a reduction of R$ 155.3
million, or 25.4%. On the Companys management evaluation, the main factor
that led to this variation was:
Reduction of R$ 156.5 million in the long-term debentures balance, as a
result of the reclassification of the third installment of the first issuance of the
debentures, the first installment of the second issue of the long to the short
term and also the proceeds from the third issuance of debentures.
Stockholders Equity
Shareholders equity decreased from R$ 1,059.4 million as of December 31, 2014
to R$ 962.2 million as of December 31, 2015, a reduction of R$ 97.2 million, or
9.2%. On the Companys management evaluation, the main factor that led to this
variation was:
Year ended December 31st, 2014 compared to year ended December 31st,
2013
Current Assets
The Companys current assets increased from R$ 319.5 million as of December
31, 2013 to R$ 425.3 million as of December 31, 2014, an increase of R$ 105.8
million or 33.1%. The main reasons for such increase, in the assessment of the
management of the Company, were:
Non-current Assets
The Companys non-current assets of R$ 101.5 million as of December 31, 2013
was increased to R$ 103.7 million as of December 31, 2014, a growth of R$ 2.2
million or 2.2%.
Investment
In 2014 the Company maintained the same registered investment value as 2013
of R$ 87.4 million. In January, 2011 it acquired 25.0% of the total voting capital
of Rohr for R$ 90.0 million.
PP&E Property, Plant and Equipment
The Companys PP&E increased from R$ 1,224.5 million as of December 31,
2013 to R$ 1,200.1 million at December 31, 2014, a decrease of R$ 24.4 million,
or 1.99% reflecting investments in line with book depreciation and sale of seminew equipment.
Intangible assets
The Companys intangible assets increased from R$ 68.4 million as of December
31, 2013 to R$ 76.1 million as of December 31, 2014, mainly due to R$ 7.7 million
in software acquisition.
In the beginning of 2014, the Company concluded SAP implementation, unifying
and standardizing its information systems aiming at achieving a higher efficiency
level for its internal controls, mainly on the financial and operational sides.
Current liabilities
The Companys current liabilities increased from R$ 255.0 million as of December
31, 2013, to R$ 221.2 million as of December 31, 2014, a reduction of R$ 33.8
million. The main factors that led to this change, according to the managements
opinion, were:
Non-current liabilities
The non-current liabilities increased from R$ 529.7 million as of December 31,
2013 to R$ 612.1 million as of December 31, 2014, an increase of R$ 82.4 million,
or 15.6%. On the Companys management evaluation, the main factor that led to
this variation were:
Stockholders Equity
Shareholders equity increased from R$ 1,016.51 million as of December 31,
2013 to R$ 1,059.4 million as of December 31, 2014, an increase of R$ 42.9
million, or 4.2%. On the Companys management evaluation, the main factor that
led to this variation were:
CASH FLOW
Year ended December 31st
2013
2014
2015
(in R$ millions)
Cash flow from operating services ............................................
263.4
120.9
200.3
(258.1)
(4.7)
2.1
(23.7)
51.7
(164.1)
(18.4)
167.9
38.4
In 2015 the Company changed the accounting method for acquisition of fixed
assets for rental in its cash flow from investment activities to operational activities.
The cash flow values of 2014 and 2015 already reflect this change. The main
reason is that the company considers as operational activities sales of fixed
assets, and, therefore, its cash flow should reflect this reality.
For comparison purposes, below is the 2013 adjusted cash flow reflecting this
change:
Cash Flow
DFs 2013
Cash flow from operating services..............................................
Cash flow from investment activities............................
changes
263.4
538.4
-258.1
-538.4
801.8
-796.5
-23.7
-23.7
-18.4
-18.4
2013
DFs 2013
adjusted
2014
2015
(in R$ millions)
Gross investments, before PIS and COFINS credits .......................................
(489.4)
(186.7)
(21.3)
(489.4)
(186.7)
(21.3)
43.4
18.2
1.0
(446.0)
(168.5)
(20.3)
The gross investments in intangible assets in the years ended December 31st
2013, 2014 and 2015 totaled, R$ 16.5 million, R$ 12.4 million and R$ 6.9 million,
respectively.
Cash Flow from Financing Activities
2013
2014
2015
(in R$ millions)
Capital contributions.................................................................
15.6
10.1
(11.0)
(8.7)
(41.8)
(46.7)
(21.8)
(38.5)
(300.6)
(133.5)
41.0
400.0
The cash flow from financing activities includes new loan agreements, the
amortization of the principal and payment of interest on existing loans, as well as
increases in the capital stock, and dividend payment.
In 2014, the Company issued promissory notes totaling R$ 200 million, and its
third debentures issuance, in May, amounting to R$ 200 million, which were used,
in June, to fully pay the promissory notes issued in April.
On April 11, 2014 the Company issued in a single series 20 commercial
promissory notes with unit face value of R$10,000, totaling R$200,000 and with
maturity on August 8, 2014. The unit value of the promissory notes bears interest
equivalent to 106% of the accumulated fluctuation of the average daily interbank
deposit (DI) rates. On June 18, 2014 the Company fully paid these promissory
notes with the proceeds from its third issue of debentures.
In 2014, the Company captured R$ 200.0 million through its third issue of
Company debentures simple, nonconvertible, registered, unsecured, in a single
series with unit face value of R$10.00. These debentures mature on May 30, 2019
and pay interest equivalent to 108.75% of the CDI, payable semiannually, and
amortized in three annual, consecutive installments, commencing on May 30,
2017. The proceeds obtained by the Company with the third issue of debentures
were fully used to settle the commercial promissory notes amounting R$ 200
million of the Companys fourth issue, issued on April 11, 2014.
10.2
a.
(i)
2014
2015
81.0%
83.5%
84.1%
12.2%
10.1%
9.4%
2.6%
1.0%
1.4%
Indemnifications ........................................................
4.2%
5.3%
5.1%
(ii)
Cost of Products Sold and Services Rendered and Operational, General and
Administrative Expenses
The main cost of products sold and services rendered relates to costs for
executing the projects in which the Company are involved, including (i) personnel
for assembly and disassembly of equipment rented to its clients when such tasks
are carried out by the Company; (ii) cost of the equipment sub-leased from third
parties when the Companys inventories are insufficient to meet demand; (iii)
expenses with materials used in the provision of its services, which include
individual safety equipment, wood, paint and insulation material; and (iv) freight
costs relating to the transportation of equipment between its branches and
eventually to its clients. Costs related to the execution of its projects represented
43.7%, 43.9% and 45.1% of its principal costs of sales and services rendered,
excluding depreciation, in the years ended December 31, 2013, 2014 and 2015,
respectively.
The Companys main general and administrative expenses refer to contract
coordination, encompassing the project teams and engineers in the commercial
area, responsible for the management and supervision of each of its projects,
which correspond basically to salaries, payroll charges and benefits, with the rest
relating to travel, representation and communications expenses, as well as the
overhead of the administrative areas. Other material general and administrative
expenses include: (i) administrative expenses incurred with respect to its
financial, investor relations, and human resources departments, as well as its
executive management, including salaries and benefits, (ii) expenses in
connection with the Companys employee profit-sharing plans and expenses
related to its stock option plans, and (iii) other administrative expenses, which
include, in particular, expenses resulting from adjustments to its provisions for
contingencies.
ADD represented 6.6% of net revenues in 2015, versus 5.3% in 2014 and 2.0%
in 2013.
With equipment and maintenance operational synergy from Heavy Construction
and Real Estate, we will see improvement in operational efficiency and,
consequently, a reduction in unit costs for maintenance. In 2014, we had intense
maintenance activities, despite of weaker demand, to equalize deferred
maintenance of our equipment.
Furthermore, we have some initiatives underway in order to reduce Company
expenses, such as (i) a leaner corporate structure and, thus, the disposal of some
administrative and management positions; (ii) procurement centralization; and (iii)
insourcing of some third-party services, such as IT; (iv) Closure of three branches
in the Rental business unit and five branches in the Construction business unit;
and (v) In October, we moved our head office from Barra da Tijuca to our address
in Jacarepagu, where our warehouse is located.
Financial Results
The Companys financial results consist of its financial expenses, net of financial
revenues. The Companys main financial expenses include interest payments on
loans, leasing operations, and costs associated with discounting to present value
certain long-term receivables derived from the sale of equipment owned by its
former Events division. Its main financial revenues consist of income from its
financial investments and interest in connection with late payments by its clients.
The net financial result was a negative R$ 46.8 million, R$ 67.6 million and R$
63.1 million in 2013, 2014 and 2015, respectively.
Impact of public politics
b.
The Companys revenues have a direct correlation with changes in price and
volume of equipment rented to clients. Introduction of new products and services
also directly impacts revenue. As for inflation, the correlation of its revenue is
indirect, in the extent that the adjustments take place only in the renewal or
closing of new contracts, reflecting the past inflation. As regards to the exchange
rate fluctuation, currently there is no correlation to its revenue, except that the
Rental segments equipment are imported and hence have their acquisition cost
in foreign currency. Consequently, in the future, the rental revenue from this
division may be influenced by possible in exchange rates variations. The increase
in revenues in 2013 was due to an increase in rented and sales volume, given
the favorable market conditions and its geographic expansion. In 2014, rental
revenues were stable compared to 2013, being the consolidated revenues
affected by lower sales volume in the year. In 2015, there was a reduction of
27.5% in revenues, of which 82% from rental revenues.
C.
Impact of inflation, price variations of main inputs and products,
exchange rate and interest rate on operating profit and the issuer's financial
result.
Companys operations and results are directly impacted by variations of: (i)
Inflation rates, which index are used to adjustment of Companys long-term
contracts; (ii) Interest rates, that affect interest-bearing debt of the Company; and
(iii) cost of material used in construction works or equipment maintenance of the
Company.
The Companys expenses are subject to impact of inflation via wage increases
for employees, a raise in the cost of the hired services, such as freight, and inputs
used in the provision of services and through financial expenditure due to the
remuneration of the debentures which are subject to monetary restatement by the
accumulated variation of IPCA. Moreover, the equipment the Company invests in
to use at its services are also subject to increases due to inflation and changes in
commodity prices, mainly steel and aluminum. In the case of Rental business
unit, the prices of the equipment the Company uses can increase according to
the fluctuation of the exchange rate, because they are imported.
The indebtedness of the Company is subject to floating interest rates, especially
CDI rate, IPCA (inflation) and TJLP. There is a risk of the Company come to incur
losses due to fluctuations in interest rates, which increases financial expenses
related to loans, financings and debentures obtained on the market
10.3
The directors must comment on the relevant effects that the events
listed below may have caused or are expected to cause on the Companys
financial statements or its results
a.
In 2013, the Company sold, through the sale of the company Albuquerque
Participaes Ltda., the Industrial Services business unit, as described in item (b)
below. The Company did not introduce or dispose of any segment in fiscal years
2014 and 2015.
b.
for the nine months ended September 2013 (end of the last quarter before
the actual sale), net profit of R$ 6.1 million 30 representing in the same period,
4.8% of total net profit of Mills, and net income of R$ 168.4 million, over the same
period, 21.3% of consolidated net revenue of Mills;
in fiscal year 2012, net income of R$ 2.3 million, in the same period, 1.2%
of total net profit of the Mills, and net income of R$ 213.8 million, over the same
period, 24.3% of consolidated net revenue of Mills.
The sale is aligned with the Companhys strategy to focus on businesses in which
its competencies are able to add higher value to its shareholders and clients.
Therefore, the Company ceased to operate in the Industrial Services sector, in
which were offered access services, industrial painting, surface treatment and
thermal insulation, during both construction and maintenance phase of large
industrial plants.
The sale of the Industrial Services business unit was concluded in November 30,
2013, and the Company recorded gain of R$ 8.3 million with the sale. Of the
agreed sales price of R$ 102 million, (i) R$ 25 million was received on the date
of the sale agreement, in July; (ii) R$ 17 million were paid in April 2014, net of R$
6.8 million related to adjusts settled between the Buyer and the Company; and
(iii) the outstanding amount of R$ 60 million will be paid in installments adjusted
by the Interbank Deposit Certificate CDI rate. This disposal is in line with Mills
strategy to focus on businesses in which its competences are able to add higher
value for its shareholders and clients.
c.
There were no unusual transactions or events in fiscal years 2013 and 2014,
except as described above.
In 2015, the Company recognized R$ 57.1 million of impairment in Construction
business unit and in the investment on Rohr.
Applying the premises of Technical Pronouncement CPC-01 - Impairment of
Assets, the Company performed impairment tests on its assets. After said tests,
it was verified that it was necessary to establish an impairment provision
amounting to R$ 26.2 million for the investment in Rohr and R$ 30.9 million for
the Construction Cash Generating Unit. For the assets of the Rental business unit
and other assets of the Company, no need to perform impairment tests were
identified.
The recoverable amount of those assets was determined based on economic
forecasts for determining the market value of the investee, upon through a
revenue approach, through a 10-year term discounted cash flow forecast, for
purposes of substantiating the amount paid, considering the long maturity period
of infrastructure and civil construction investments. The main assumptions
included: (i) revenues were forecast based on historical data and growth
prospective for the segment and Brazilian economy; (ii) negative operating loss
for 2015, resulting from the reduced activity of the industry; (iii) performance of a
continuous productivity improvement program and reduction of costs and
expenses will cause the evolution thereof to be lower than revenue growth
percentage, (iii) the corresponding cash flows are discounted at the average
discount rate, obtained using a methodology typically applied by the market,
taking into account the weighed average cost of capital (WACC); (iv) a strict
working capital evolution control policy, during the forecasted period.
10.4
a.
(i)
An asset is impaired when its carrying amount exceeds its recoverable amount,
which is the higher of an asset's fair value less costs to sell and its value in use.
The value in use calculation is based on the discounted cash flow model. Cash
flows derive from the budget and Managements expectations for the next five
years and do not include reorganization activities to which the Company has not
yet committed or significant future investments that will improve the asset base
of the cash-generating unit or investment subject to testing. The recoverable
amount is sensitive to the discount rate used in the discounted cash flow method,
as well as to the expected future cash receipts and to the growth rate used for
extrapolation purposes.
(ii)
Taxes
When the fair value of financial assets and liabilities, such as stock options,
securities and hedging instruments presented in the statement of financial
position, cannot be obtained from active markets, it is determined by using
valuation techniques, including the discounted cash flow method. Inputs for these
methods are based on market inputs, when possible; however, when this is not
feasible, a certain level of judgment is required to establish the fair value.
Judgment includes considerations on the inputs used, such as liquidity risk, credit
risk and volatility. Changes in assumptions on these factors could affect the
reported fair value of the financial instruments.
(v)
The Company recognizes a provision for tax, civil and labor risks. The
assessment of the likelihood of loss includes examining available evidence, the
hierarchy of laws, former court decisions, the most recent court decisions and
their relevance in the legal system, and the assessment of the outside legal
counsel. The provision is reviewed and adjusted to take into account any changes
The Company reviews the estimated useful lives of its property, plant and
equipment annually at the end of each reporting period. During the year the
Company assessed the useful lives of its assets and concluded that the ten-year
period adopted in prior years reasonably represents the average useful life of the
Company's assets and should be maintained for its equipment in 2015.
(viii)
Revenue recognition
Financial Instruments
Financial assets and liabilities are recognized when the Company becomes a
party to the contractual provisions of the respective instrument.
Financial assets and financial liabilities are initially measured at fair value.
Transaction costs that are directly attributable to the acquisition or issue of
financial assets and financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or deducted from the fair
value of the financial assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the acquisition of financial
assets or financial liabilities at fair value through profit or loss are recognized
immediately in profit or loss.
ii)
Income tax expense comprises current and deferred taxes. Taxes on income are
recognized in the income statement, except when they relate to items that are
recognized directly in equity or in other comprehensive income, in which case,
the tax is also recognized in equity or in other comprehensive income.
The current income tax and social contribution expense is calculated based on
tax rates prevailing in Brazil at the end of the reporting period, which are 15% for
income tax, plus a 10% surtax on taxable profit exceeding R$240 thousand, and
9% on taxable profit for social contribution. Management periodically reviews
positions taken in respect of tax matters that are subject to interpretation and
recognizes a provision when the payment of income tax and social contribution
according to the tax bases is expected.
Deferred income tax and social contribution are calculated on temporary
differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit. The tax rates currently defined are 25% for income tax and 9% for social
contribution.
Deferred tax assets are recognized to the extent that it is probable that future
taxable profits will be sufficient against which the deductible temporary
differences can be utilized, based on projections of future results prepared on the
basis of internal assumptions and future economic scenarios that are, therefore,
subject to changes.
The carrying amount of deferred tax assets is reviewed at the end of each
reporting period and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset to be
recovered.
Current and deferred taxes are recognized in profit or loss, except when they
relate to items that are recognized in Other comprehensive income or directly in
equity, in which case, current and deferred taxes are also recognized in Other
comprehensive income or directly in equity, respectively Where current and
deferred taxes arise from the initial accounting for a business combination, the
tax effect is included in the accounting for the business combination.
(iii)
A majority of the Company revenues come from property, plant and equipment
for operational rental and use, either solely through rental, or rental combined
with assembly and disassembly.
Property, plant and equipment for own use consists mainly of facilities to store
equipment, office, improvements, furniture and equipment necessary for the
operation of these facilities.
Property, plant and equipment are carried at historical cost, less accumulated
depreciation and accumulated impairment losses. Historical cost includes
expenditure directly attributable to the acquisition of the property, plant and
equipment items.
The items of PP&E are valued at historic cost, less accumulated depreciation.
The historic cost includes expenditures as well as any exchange rate hedge gain
or loss cash flow directly attributed to the acquisition of such fixed assets.
Subsequent costs are added to the residual value of property, plant and
equipment or recognized as a specific item, as appropriate, only if the future
economic benefits associated to these items are probable and the amounts can
be reliably measured.
Depreciation is calculated under the straight-line method, taking into
consideration the estimated economic useful lives of assets. Land is not
depreciated.
Assets held under finance leases are depreciated over their expected useful lives
on the same basis as owned assets or, where shorter, the term of the relevant
lease.
Any gain or loss arising on the disposal of an item of property, plant and
equipment is determined as the difference between the sales proceeds and the
carrying amount of the asset and is included in operating income or expense.
The residual values and estimated useful lives of assets are reviewed at the end
of each reporting period, with the effect of any changes in estimate accounted for
on a prospective basis.
(iv)
Goodwill
Impairment of assets
At the end of each reporting period, the Company reviews the carrying amount of
its tangible and intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of
the impairment loss (if any). Where it is not possible to estimate the recoverable
amount of an individual asset, the Company estimates the recoverable amount
of the cash-generating unit to which the asset belongs, for this purpose the
Company considers its divisions as cash-generating units. When a reasonable
and consistent basis of allocation can be identified, corporate assets are also
allocated to individual cash-generating units, or otherwise they are allocated to
the smallest group of cash-generating units for which a reasonable and consistent
allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available
for use are tested for impairment at least annually, and whenever there is an
indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in
use, and the latter is the method used by the Company in testing the impairment
of the goodwill recognized in the cash-generating unit Construction. In
assessing value in use, the estimated future cash flows are discounted to their
present value using a pretax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted. If the
recoverable amount of an asset (or cash-generating unit) is estimated to be less
than its carrying amount, the carrying amount of the asset (or cash-generating
unit) is reduced to its recoverable amount. An impairment loss is recognized
immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the
asset (or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognized for the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognized immediately in profit or loss.
(vi)
Provisions
Provisions are recognized when the Company has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Company will be
required to settle the obligation, and a reliable estimate can be made of the
amount of the obligation.
The provisions for tax, civil and labor claims are recognized at the amount of
probable losses, according to the nature of each provision. Based on the opinion
of its legal counsel, management believes that the recognized provisions are
sufficient to cover any losses on ongoing lawsuits. Provisions are measured at
the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the
time value of money and the risks specific to the obligation. The increase in the
provision due to passage of time is recognized as expense.
(vii)
The Company offers stock option plans to certain employees and executives. The
fair value of the options granted is recognized as an expense during the period
over which the right is vested, that is, period during which specific vesting
conditions should be met. At the end of the reporting period, the Company
reviews its estimates of the number of options whose rights must be vested based
on the conditions.
This recognizes the impact of the revision of the initial estimates, if any, in the
statement of profit or loss, as a balancing item to the capital reserve in equity.
The amounts received, net of any directly attributable transaction costs, are
credited to capital when options are exercised.
(viii)
Revenue recognition
In the evaluation of the management, there are no significant items not included
in the balance sheet of the Company in the years 2013, 2014 and 2015.
10.7
For each of the items that are not evidenced in the financial
statements listed in item 10.6, management must comment:
a.
how such items change or may change the revenues, expenses,
operating results, financial expenses or other items of the financial
statements of the company
In the evaluation of the Management, there are no relevant items not evidenced
in the financial statements of the company of in the years 2013, 2014 and 2015.
a. nature and the purpose of the operation
In the evaluation of the Management, there are no relevant items not evidenced
in the financial statements of the company of in the years 2013, 2014 and 2015.
b.
In the evaluation of the Management, there are no relevant items not evidenced
in the financial statements of the company of in the years 2013, 2014 and 2015.
10.8
Management shall indicate and comment on key elements of the
Company's business, specifically exploring the following topics:
a.
Investments, including: (i) quantitative and qualitative description
of investments in progress and forecasted investments; (ii) financing
sources of investments and (iii) relevant alienations in progress and
forecasted alienations
The Company plans its investment policy in accordance with its demand
prospects, cash flow and credit availability in the market. The Companys internal
policy is to maintain its leverage around 1.0x net debt to EBITDA. To ensure the
necessary amount of capital for the implementation of its investment plan, the
Company constituted a statutory reserve, of which the shareholders may allocate
up to 75% of net income, provided that such reservation does not exceed the limit
of 80% of the capital. The cash generation of the Companys normal operations,
from the retention of profits was used to partially finance the investments made
in 2013, 2014 and 2015.
In 2015 the Company recognized net loss, therefore no reserve constitution was
necessary.
In 2014, the amount of R$ 2.4 million were designated to this reservation,
whereas there was not any amount for this reservation in 2013.
The management presents below the major investments made in the course of
the years ended December 31, 2013, 2014 and 2015, and highlight the
investment budget for fiscal year 2016.
b.
If already disclosed, indicate the purchase of plants, equipment,
patents or other assets that could influence materially the productive
capacity of the company.
In 2016, the Company does not plan to invest to purchase rental equipment in
2016.
c.
New products and services, by indicating: (i) description of
researches in progress already disclosed; (ii) total amounts paid by the
issuer in researches for development of new products or services; (iii)
projects under development already disclosed and (iv) total amounts paid
by the issuer for the development of new products or services
The Companys management believes that providing innovative solutions is a
constant mark of its activities and a key aspect to retain its customers. In this
sense, although the Company does not carry out in-house research and
development activities, it annually visits the main national and international fairs
of equipment from the industrial and construction sectors to meet the main
technological innovations available to the industry in which the company
operates. Furthermore, the Companys representatives visit the factories of
leading national and international manufacturers of equipment and construction
sites around the world to assess the functioning and operation of advanced
equipment available for purchase.
The Company does not develop new products and services, so it does not incur
expenses related to the research and development department. All the
technology and innovation present in its equipment and offered to its clients come
from its suppliers. For this, the Company seeks to acquire or license new
technologies from third parties on acceptable terms in the domestic and
international market, preferably with usual suppliers with whom the Company
seeks to establish long term partnerships. As an example of such partnerships,
the Company entered into a licensing contract in 1996 with the German company
NOE Schaltechnik, to produce and supply modular steel and aluminum panel
formwork (replacing the wood) for the Brazilian construction market, an innovation
in the Brazilian market.
10.9
Management is expected to discuss and analyze other material
factors that influenced operating performance, which were not discussed
under previous items in this section.
There are no other factors to comment on about operational performance of 2013,
2014 and 2015 results.
For being a service company with its main target audience quite segmented,
advertising investments are focused on targeted actions, whether they are direct
marketing, email marketing, relationship actions or online advertising.
Furthermore, as the services provided by the Company are, for the most part, in
activities related to construction, the Company prioritizes the sponsorship of
projects focused on reconstruction and development of the urban space or using
the Companys equipment. Following this line, in 2015, the Company sponsored
actions related to urban art with graffiti, in projects in Rio de Janeiro, Sao Paulo,
Fortaleza, Belo Horizonte, Brasilia and Salvador. The Company also sponsored
the show "pera do Malandro", which used the Company's equipment as
scenario and had presentation in nine of the locations where the Company
operates, providing relationships with clients who were invited to watch the show.
Projections
Name
Date of
Birth
Profession
CPF
Title
Date of
Last
Election
Date of
office
Termo f
office
Other titles
in the
Company
Elected by
the
controling
shareholders
If independent
member,
criterion used to
determine the
independence
Number of
consecutive
terms
Andres
Cristian
Nacht
8/1/1942
Business
Administrator
098.921.33749
Chairman
4.28.2016
4.28.2016
2 years
No
Yes
Not applicable.
Elio
Demier
1/28/1951
Bachelor of
Social
Communication
260.066.50720
Vice
Chairman
4.28.2016
4.28.2016
2 years
Yes, is
member of
the Human
Resources
Yes
Not applicable.
Francisca
Kjellerup
Nacht
12/28/1970
Business
Administrator
124.175.65706
Advisor
Tutelary
4.28.2016
4.28.2016
2 years
No
Yes
Not applicable.
Jorge
Marques
de
Toledo
Camargo
4/28/1954
Geologist and
Physicist
114.400.15104
Independent
Director
4.28.2016
4.28.2016
2 years
No
Yes
Aymar
Ferreira
de
Almeida
Junior
6/16/1971
Production
Engineer
098.052.72877
Independent
Director
4.28.2016
4.28.2016
2 years
No
No
Roberto
Pedote
2/24/1967
Lawyer and
Public
Administration
115.324.29827
Independent
Director
4.28.2016
4.28.2016
2 years
No
Yes
Is an
independent
member. The
criteria used by
the Company to
determine its
Independence
was established
by the Listing
Regulation of the
Novo Mercado of
BM&FBOVESPA.
Is an
independent
member. The
criteria used by
the Company to
determine its
Independence
was established
by the Listing
Regulation of the
Novo Mercado of
BM&FBOVESPA.
Is an
independent
member. The
criteria used by
the Company to
determine its
Independence
was established
by the Listing
Regulation of the
Novo Mercado of
BM&FBOVESPA.
According to the Novo Mercado Listing Rules and the Companys bylaws, the companys board of directors must have at least 20% independent members.
Whenever the percentage of 20% mentioned above results in fractional number of members, the number shall be rounded to reach a whole number: (i)
immediately above, if fractional number is equal to or higher than 0.5; or (ii) immediately below, if fractional number is lower than 0.5. Since the Companys
Board of Directors is composed of six members, it should have at least one independent director. The Independent director should be identified as such in the
minutes of the General Shareholders meeting that elects him. Currently Mr. Nicolas Arthur Jacques Wollak and Mr. Jorge Camargo are the Companys
Independent Directors.
The decisions of the Companys Board of Directors are taken by a majority vote of the members that are present. Under Brazilian corporate law, members of
the board of directors are prohibited to vote in any meeting ou General Meeting, on any matter or intervene in any transaction that would create a conflict of
interest between the Company and that board member.
EXECUTIVE BOARD
The Companys Executive Officers are responsible for the management of daily operations of the business and for implementing the general policies and
guidelines established by the Board of Directors.
The Brazilian corporate law provides that executive officers must reside in Brazil and that they may or may not be shareholders of the company in which they
serve. In addition, up to one-third of the members of a companys Board of Executive Officers may also serve as members of the Board of Directors.
The Companys board of directors elects the members of the board of executive officers for one-year term and they may be reelected. Any executive officer may
be removed by the board of directors before the expiration of his or her term. According to the Companys bylaws, the board of executive officers must be
comprised of four to eleven officers, including one chief executive officer, one chief financial officer and the remaining without specific designation.
All the members of the Board of executive officers must a sign a Consent Agreement of the Administrators, in which their respective position will depend on the
signing of the document. Through the Consent Agreement, the Companys new members of the Board of executive officers are personally responsible to act in
accordance with the Contract of Novo Mercado, Regulation of the Market Arbitration Chamber and the Rules of the Novo Mercado.
The table below indicates the name, age and title of the board of executive officers.
Name
Date of Birth
3/2/1974
Profession
Engineer
CPF
197.064.378-19
9/28/1965
Engineer
857.596.607-30
9/6/1968
Engineer
987.271.927-68
12/26/1975
Economist
078.413.147-36
Srgio Kariya
Title
Chief Executive Officer
Officer
Officer
Chief Financial and Investor
Relations Officer
Date of Last
Election
3.9.2015
Date of office
3.9.2015
4.28.2015
4.28.2015
9.17.2015
4.26.2016
Termo f Office
Until August, 2017
Until August, 2017
Other titles
No
No
Yes
9.18.2015
No
Yes
4.26.2016
No
Yes
FISCAL COUNCIL
Under the Brazilian Corporate Law, the Fiscal Council is responsible for: (i) reviewing, by any of its members, the actions of management and verify compliance
with its legal and statutory duties; (ii) opine on management's annual report, including in its opinion the additional information it deems necessary or useful to
the General Meeting decision; (iii) give their opinion on the administrations proposals, to be submitted to the General Meeting, relating to changes in capital,
issuance of debentures or warrants, capex plans or capital budget, capital distribution, dividend distribution, transformations, incorporations, merger or split up;
(iv) report, by any of its members, to the administrators or, if they do not take the necessary action to protect the interests of the company, to the general meeting,
the mistakes, fraud or crimes they find out, and suggest necessary measures to the company; (v) convene the ordinary shareholder meeting, if the administrative
bodies delay for more than one month calling, and extraordinary, whenever there are serious or urgent matters, including in the agenda the subjects they deem
relevant; (vi) analyze, at least quarterly, the balance sheet and other financial statements periodically prepared by the company; (vii) review and give an opinion
on the financial statements of the fiscal year; and (viii) exercise those powers during the settlement, in view of the special rules that govern it.
According to the Company's Bylaws, the Fiscal Council works on a permanent basis, and consists of three members and an equal number of alternates,
shareholders or not, resident in Brazil and elected at the General Meeting, when will determine their remuneration. The Chairman of the Fiscal Council is elected
at the General Meeting.
All new members of the Fiscal Council must sign a Fiscal Council Compliance Statement, conditioned on possession in their respective offices the signing of
this document. Through the Compliance Agreement, new members of its Board of Directors are personally responsible to act in accordance with the Novo
Mercado, with the Rules of the Arbitration Chamber and the Novo Mercado Listing Rules.
At the Ordinary and Extraordinary General Meeting held on April 19, 2011, the Company's shareholders requested the installation of the Fiscal Council and
elected three members and three alternates. At the Extraordinary General Meeting held on April 20, 2012, the Audit Committee became a permanent body. The
members of the Supervisory Board appointed by the controllers were elected at the Annual General Meeting held on 28 April 2016, in which the Lords Isabella
Saboya de Albuquerque (holder) and Walter Luis Bernardes Albertoni (alternate) were elected separately by minority shareholders.
The table below presents name, age and title of the Fiscal Council members:
Name
Eduardo
Botelho
Kiralyhegy
Leonardo
Roslindo
Pimenta
Marcus
Vincius
Dias
Severini
Vera Lucia
de Almeida
Pereira Elias
Isabella
Saboya de
Albuquerque
Walter Luis
Bernardes
Albertoni
ADVISORY COMMITTEES
Date of
Birth
Profession
CPF
Title
President
of the
Fiscal
Council
3/13/1979
Lawyer
082.613.21703
5/25/1976
Lawyer
016.749.90766
Substitute
10/2/1957
Accountant/
Engineer
632.856.06720
Member
492.846.49749
Substitute
8/11/1958
Accountant
8/25/1970
Consultant
017.919.00755
Member
9/29/1968
Lawyer
147.427.46848
Substitute
Other titles
Elected by
the
Controlling
Shareholder
If independent
member,
criterion used
to determine
the
independence
1 year
No
Yes
Not applicable.
4.28.2016
1 year
No
Yes
Not applicable.
4.28.2016
1 year
No
Yes
Not applicable.
4.28.2016
1 year
No
Yes
Not applicable.
No
No
Not applicable.
No
No
Not applicable.
Date of
Last
Election
Date of
office
Office
term
4.28.2016
4.28.2016
4.28.2016
4.28.2016
Number of
consecutive
terms
4.28.2016
1 year
4.28.2016
4.28.2016
4.28.2016
4.28.2016
1 year
With the goal of improving the decision-making process, sustaining the execution of our growth plan, and supporting it in its functions, the Board of Directors
has approved the creation of the Human Resources Committee, in line with the best practices of corporate governance.
The Human Resources Committee is responsible for: (a) supervision and support during the development, planning and execution of strategies that enable the
company to attract and retain talent, as well as the improvement of the work environment, and (b) proposals for the remuneration of Mills executive officers for
analysis and approval by the Board of Directors.
The current members of the Human Resources Committee are Elio Demier (Vice-Chairman of Mills Board of Directors) and Jos Felipe Vieira de Castro.
Committees of this type are non-permanent and therefore can be either created or extinguished anytime by the Board of Directors.
The table below presents the names, ages and positions of the Human Resources members:
Human Resources Committee
Date of Last
Election
Name
Age
Elio Demier
64
Profession
Bachelor of Social
Communication
Srgio Kariya
41
Engineer
CPF
Title
260.066.507-20
Member
197.064.378-19
Member
5.21.2015
4.26.2016
Starting Date
Term of Office
Other positions
Elected by
Controlling
Shareholder
5.21.2015
1 year
Yes
Yes
4.26.2016
1 year
Yes
Yes
Is the responsibility of the Chief Executive Officer: (i) to convene and chair meetings of the Executive Officers meetings; (ii) to maintain permanent coordination
between the Executive Board and the Board of Directors; (iii) To Comply with and enforce, within his authority, these Articles provisions and the resolutions
made by the Executive Board, Board of Directors and Shareholders Meetings.
The Director of Investor Relations is responsible: (i) release and inform CVM and BM&FBOVESPA, if necessary, any act or relevant fact occurred or related to
the Companys business. As well as, ensure the immediate dissemination, simultaneously in all markets where such securities are negotiated, besides other
duties established by the Board of Directors; (ii) provide information to the investors; and (iii) keep the registration of the Company in accordance with the
applicable rules of the CVM.
The remaining Directors will have the assignments that may be established by the Board of Directors upon his election, as set forth in the Company's Bylaws.
e. Mechanisms for evaluating the performance of the Board of Directors, committees and the Executive Board
See item 12.1(c).
12.12 Other relevant information
a) Positions held by the members of the Board of Directors in other companies or entities.
Administrative positions occupied in other companies / entities: Member of the Board, Finance Committee and leader of WWF's governance
committee Brazil (since 2015) and member of the ENOX Council (since 2015). Since 2015 is Academic Director of Executive Education Insper a
non-profit institution whose mission is to be a center of excellence in education and knowledge generation in the areas of administration, economics,
law and engineering.
b) Information about the General Meetings held by the Company, after its IPO, on April 2010:
Ordinary General Meeting
First Call
Realization date: 04/28/2015
Quorum: Shareholders representing 58.42% of the capital
Ordinary General Meeting
First Call
Realization date: 04/28/2015
Quorum: Shareholders representing 63.40% of the capital
Ordinary General Meeting
First Call
Realization date: 04/25/2014
Quorum: Shareholders representing 61.66% of the capital
Extraordinary General Meeting
First Call
Realization date: 02/25/2014
Quorum: Shareholders representing 53.90% of the capital
Ordinary General Meeting
First Call
Realization date: 04/26/2013
Quorum: Shareholders representing 61.23% of the capital
Ordinary and Extraordinary General Meeting
First Call
Realization date: 04/20/2012
Quorum: Shareholders representing 72.48% of the capital
12.3
12.4
2015
Publicated
Newspaper
Date(s) of Newspaper
publication
Publicated
Newspaper
Date(s) of Newspaper
publication
Publicated Newspaper
3/21/2014
DOE-RJ
Valor Econmico RJ
3/27/2015
DOE-RJ
Valor Econmico RJ
3/29/2015
DOE-RJ
Valor Econmico RJ
5/13/2014
DOE-RJ
Valor Econmico RJ
5/26/2015
DOE-RJ
Valor Econmico RJ
5/4/2015
DOE-RJ
Valor Econmico RJ
3/20/2014
DOE-RJ
Valor Econmico RJ
3/19/2015
DOE-RJ
Valor Econmico RJ
3/21/2015
DOE-RJ
Valor Econmico RJ
2014
Date(s) of Newspaper
publication
The Board of Directors shall consist of a minimum of five (5) and a maximum of eleven (11) members, shareholders or not, of which 20% shall be independent,
elected at a General Meeting for a unified 2-year term of office and who may be reelected. In the event of a fractional number of independent directors as a
result, due to the compliance with this percentage, the fractional number shall be rounded off to: (i) the next higher whole number, where the fraction is equal or
higher than 0.5 (five tenths); or (ii) next lower whole number, where the fraction is lower than 0.5 (five tenths).
a.
Frequency of meetings
The Board of Directors holds ordinary meetings once a month, and extraordinary meetings, whenever corporate interests so require.
b.
Doesnt exist.
c.
Directors Insurance
The Company has held civil responsibility insurance since 2009, for administration and proxy holders acting on behalf of them, with full cover for fines and civil
penalties, statutory responsibilities, regulatory risks, responsibility for errors and omissions, among others, excluding intentional acts, complaints arising from
acts known about prior to the policy date, responsibilities associated with product failures (already covered by civil responsibility insurance), among other events.
The policy contract was renewed for the period December 31, 2015 until December 31, 2016.
12.5
Administrative Council
Currently, the Board of Directors is composed of six regular members, who were elected by the Company's controlling shareholders at the Annual General
Meeting held on 25 April 2014. The mandate of these directors is unified two years, ending in date of the Annual General Meeting in 2016.
The table below shows the information on the candidates nominated by the controlling shareholders to the Board of Directors.
Until the date of submission of this proposal, there is no definition of the name of all members who join the sheet to be submitted to the shareholders. Below,
we present the information indicated in items 12.5 to 12.10 of the reference form, as required by Art. 10 of CVM Instruction 481/09, referring to the three members
have indicated. The definition of the remaining names depends, among other factors, the completion of the capital increase approved at the meeting of board
of directors held on February 5, 2016.
Name
Date of
Birth
Profession
CPF
Title
Date of
last
election
Date of
office
Termo f
office
Other titles
Ellected by
the
controlling
shareholder
If independent
member,criterion used to
determine the independence
Number of
consecutive
terms
Andres
Cristian
Nacht
8/1/1942
Business
administrator
098.921.337Chairman
49
No
Yes
Not applicable.
Elio
Demier
1/28/1951
Bachelor in
260.066.507- Vice
social
20
Chariman
communication
Yes, He is member
of the Human
Yes
Resources Comitee
Not applicable.
Francisca
Kjellerup
Nacht
12/28/1970
Business
administrator
No
Not applicable.
124.175.657Counselor
06
Yes
Fiscal Council
At the Ordinary General Meeting held on April 20, 2012, the Fiscal Council became a permanent body.
For the purposes of article 10 of CVM Instruction 481/2009, the controlling shareholders of the company support the reelection, in the fiscal year of 2016, of the
members of the Fiscal Council elected in the fiscal year as indicated below, with the Company's minority shareholders to decide on the election of the other
members.
The table below shows the information on the candidates nominated by the controlling shareholders to members of the Supervisory Board.
1.
Name
Eduardo
Botelho
Kiralyhegy
Leonardo
Roslindo
Pimenta
Marcus
Vincius Dias
Severini
Vera Lucia de
Almeida
Pereira Elias
Date of birth
3/13/1979
5/25/1976
Profession
Lawyer
Lawyer
CPF
Title
Date of last
election
Date of
office
Termo f
office
Other titles
Ellected by
the
controlling
shareholder
If independent
member,criterion
used to determine
the independence
Number of
consecutive
terms
082.613.217-03 President
4.28.2015
4.28.2015
1 year
No
Yes
Not applicable.
016.749.907-66 Alternate
1 year
No
Yes
Not applicable.
10/2/1957
Accountant/
Engineer
632.856.067-20 Member
4.28.2015
4.28.2015
1 year
No
Yes
Not applicable.
8/11/1958
Accountant
492.846.497-49 Alternate
4.28.2015
4.28.2015
1 year
No
Yes
Not applicable.
2.
Summary of the business experience
Board of Directors
Andres Cristian Nacht - 098.921.337-49
Mr. Andres Cristian Nacht has been the Chairman of the Companys Board of Directors since 1998. The son
of Mr. Jose Nacht, one of the founders of the Company, Mr. Nacht has a degree in Engineering from
Cambridge University, England. In 1965, Mr. Nacht joined GKN, a British engineering company, where he
worked during three years, holding engineering posts in the UK. In 1967, he worked during one year as an
Engeneer in Echafaudages Tubulaires Mills from France. Mr. Nacht became a director of the Company in
1969 and was appointed managing director in 1978, a position he held until 1998 when he became the
Chairman of the Board of Directors.
Mr. Andres Cristian Nacht has not been involved in any criminal conviction, in any conviction in a CVM
administrative proceeding and in any final unfavorable judicial or administrative decision, which has resulted
in his suspension or impediment to the exercise of any professional or commercial activity, being thus
qualified to practice his professional activities.
Francisca Kjellerup Nacht - 124.175.657-06
Mrs. Francisca Kjellerup Nacht holds a degree in Business Administration and Economy from the
Copenhagen Business School, Denmark, since 1995. The granddaughter of Mr. Jose Nacht, one of the
founders of the Company, and daughter of Andres Cristian Nacht, Chairman of the Board of Directors of the
Company, has built her career in Europe, where she lives since 1990. Francisca worked for Procter & Gamble
Nordic between 1997 and 2010, mainly in the fields of leadership and business development. Among other
positions, Francisca was responsible for the commercial integration after Gillettes acquisition, as well as for
the business with the largest retailer of Denmark. In her last position at P&G, she was responsible for initiating
and leading the pharmaceutical division in the Nordic region. Since 2011, is a member of the Board of
Directors for the foreign social business Bybi. In the last five years, besides her position at P&G, Francisca.
Nos ltimos cinco anos, alm de sua posio na P&G, Francisca works in the area of social entrepreneurship,
in Denmark, and in Family governance in Brazil. Mrs. Francisca Kjellerup Nacht has not been involved in any
criminal conviction, in any conviction in a CVM administrative proceeding and in any final unfavorable judicial
or administrative decision, which has resulted in her suspension or impediment to the exercise of any
professional or commercial activity, being thus qualified to practice her professional activities.
Elio Demier - 260.066.507-20
Mr. Elio Demier is a graduate of Social Communication from the Fluminense Federal University. He also
holds an MBA degree from the Institute of Post-Graduation and Research in Administration of the Rio de
Janeiro Federal University (COPPEAD). He served as the Companys
127
chairman from 1998 to 1999 and has been a member of the Companys Board of Directors since 1998. Mr.
Demier was President of the Bomtexto Publisher, company in the book publishing business located in Rio
de Janeiro.
Mr. Elio Demier has not been involved in any criminal conviction, in any conviction in a CVM administrative
proceeding and in any final unfavorable judicial or administrative decision, which has resulted in his
suspension or impediment to the exercise of any professional or commercial activity, being thus qualified to
practice his professional activities.
Fiscal Council
Eduardo Botelho Kiralyhegy - 082.613.217-03
Mr. Eduardo Botelho Kiralyhegy graduated in Law from Universidade Cndido Mendes, a member of the
Order of Lawyers of Brazil, and founding partner of Negreiro Office, Medeiros & Kiralyhegy Advogados, in
Rio de Janeiro, specializing in Tax Law, Administrative and Regulatory. On the date hereof works as Tax
Inspector of external control the Department of Finance. Mr. Eduardo Botelho Kiralyhegy not held any
management position in public companies.
Mr. Eduardo Botelho Kiralyhegy was not subject to the effects of any criminal conviction, any conviction or
penalty in administrative proceedings before the CVM and no unappealable conviction at judicial or
administrative level, which had caused the suspension or disqualification for practice of any professional or
commercial activity, and are thus duly authorized to practice their professional activities.
Leonardo Roslindo Pimenta - 016.749.907-66
Mr. Leonardo Roslindo Pimenta, graduated in law at PUC/RJ, has more than 20 years of experience in
corporate law, banking and capital markets law, contracts in general and negotiation, having worked for more
than 11 years at the head of the Legal Department of some of the main institutions of asset mangement of
Board of Directors
Andres Cristian Nacht
Elio Demier
Francisca Kjellerup Nacht
Fiscal Council
Eduardo Botelho Kiralyhegy
Leonardo Rosnildo Pimenta
Marcus Vincius Dias Severini**
Vera Lucia de Almeida Pereira
Elias
11
11
0*
* Members of the Supervisory Board alternates who have not been invited to attend any meetings during the year.
** He was elected in April / 2015
12.7 Provide the information referred to in item 12.5 in respect of members of the statutory committees, as well as
audit committees, risk, and financial remuneration, even if these committees or structures are non-statutory
Currently, the Company has only a Human Resources Committee, whose members are elected by the Board of Directors.
For the purposes of art. 10 of CVM Instruction 481/2009, the appointed member of Board of Directors, Elio Dernier, is a
member of that Committee, and his information is on item 12.5 above.
12.8 For each person who acted as a member of the statutory committees and the audit, risk, financial and
compensation committees, even if such committees or structures are not statutory, inform, in table format, the
percentage participation in the meetings held by the respective body in the same period, which occurred after
taking office
Currently, the Company has only a Human Resources Committee, whose members are elected by the Board of Directors.
For the purposes of Art. 10 of CVM Instruction 481/2009, it is stated below, the applicant's participation percentage of the
Board of Directors member, Elio Dernier, in meetings of the Committee:
Total meetings held by the
agency since taking office
Board of Directors
Elio Dernier
12.9 Relationship (as a spouse or significant other) or relationship to the second degree between:
a. Members of the Board of Directors
Administrator of the Company or Controlled Company:
Name: Andres Cristian Nacht / CPF: 098.921.337-49
Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. /
CNPJ: 27.093.558/0001-15
Title: Chairman of the Board of Directors
Related Person:
Name: Francisca Kjellerup Nacht / CPF: 124.175.657-06
Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. /
CNPJ: 27.093.558/0001-15
Type of relationship: Father/Daughter
b. (i) members of the Board of Directors, Executive Board and Fiscal Council and (ii) members of management
of entities controlled by the Company, either directly or indirectly
Not applicable. The Company does not control, directly or indirectly, any society.
c. (i) members of management of entities controlled by the company, either directly or indirectly; and (ii)
Companys direct or indirect controlling shareholders
Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. /
CNPJ: 27.093.558/0001-15
Title: Membro do Conselho de Administrao
Related Person:
Name: Pedro Kjellerup Nacht / CPF: 127.276.837-66
Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. /
CNPJ: 27.093.558/0001-15
Title: Controlador direto da Companhia
Type of relationship: Irmos
-------------------------------------Administrator of the Company or Controlled Company:
Mr. Eduardo Kiralyhegy, by the entity Negreiro, Medeiros & Kiralyhegy Advogados, provided in the last three fiscal years
legal services to Mr. Andres Cristian Nacht and Ms. Jytte Kjellerup Nacht, controlling shareholders of the Company, by
means of the Nacht Participaes S.A., also controlled by Mr. Andres Cristian Nacht.
c.
In case its relevant, supplier, client, debtor or creditor of the Company or its controlled or controlling
shareholders
Mr. Eduardo Kiralyhegy is an associate of Negreiro, Medeiros & Kiralyhegy Advogados, which provided services of legal
advisory to the Company over the past three fiscal years.
12.11
A Companhia mantm, desde 2009, seguro de responsabilidade civil para os membros do Conselho de Administrao, da
Diretoria, do Conselho Fiscal ou qualquer outro rgo estatutrio ou rgo criado pelo contrato ou estatuto social do
tomador do seguro ou de qualquer das controladas ou subsidirias ou qualquer pessoa fsica que tenha poderes de
representao perante terceiros ou cujo cargo ou funo implique na representao de fato ou direito na prtica de ato
prprio de administrao, com cobertura para custos, encargos, honorrios (advocatcios, de assistentes tcnicos e
pericias) depsitos recursais e todas as demais despesas necessrias e razoveis na defesa ou investigao de uma
reclamao em processos judiciais, arbitrais e administrativos entre outros, excluindo atos dolosos, reclamaes
decorrentes de atos j conhecidos anteriormente data da aplice, responsabilidades advindas de falhas em produtos (j
cobertas pelo seguro de responsabilidade civil), entre outros eventos.
A aplice contratada foi renovada para o perodo de 31 de dezembro de 2015 a 31 de dezembro de 2016.
12.12
2013
2014
2015
604
838
43
238
239
423
-
492
844
357
371
622
227
2.092
220
2.076
217
1.567
The conclusion of the sale of the Industrial Services business unit was on November 30, 2013.
In December 31, 2013, 2014 e 2015, all employees were allocated in Brazil. The table below
indicates the location of the employees of the Company, considering the business units and
departments to which they belong, as indicated below:
2015
States
Construction
Operations
Alagoas
Amazonas
Rental
Corporate
Total
13
Bahia
18
50
17
92
Distrito Federal
28
67
108
Espirito Santo
12
29
Fortaleza
16
48
14
83
Gois
15
Maranho
12
19
12
45
Mato Grosso
Mato Grosso do Sul
15
Minas Gerais
20
24
42
95
Para
12
12
31
Paran
19
14
42
Pernambuco
13
27
25
73
Rio de Janeiro
68
122
62
124
376
15
28
12
63
113
31
463
371
217
1567
144
175
Sergipe
Total
357
622
2014
Employees
States
Heavy Construction
And Real State - Heavy Construction Real State Operations Rental Corporate Total
Shared
Alagoas
Amazonas
Bahia
Cear
Distrito
Federal
Espirito
Santo
Goiais
Maranho
Mato
Grosso
Mato
Grosso do
Sul
Minas
Gerais
Par
Paran
Pernambuco
0
0
2
4
13
28
11
55
27
108
11
12
68
19
116
25
16
104
161
10
16
13
41
20
11
18
12
43
13
15
33
15
11
43
36
113
13
21
43
0
0
3
17
19
14
52
17
11
53
22
111
33
29
149
61
108
386
21
32
17
77
3
0
0
0
0
0
Rio de
Janeiro
Rio Grande
do Norte
Rio Grande
do Sul
Santa
Catarina
So Paulo
0
21
Sergipe
118
62
240
199
79
Total
43
238
2013
States
719
4
239
844
492
220
2076
Employees
Industrial
Amazonas
Bahia
Cear
Distrito
Federal
Esprito
Santo
Gois
Maranho
Mato
Grosso
Mato
Grosso do
Sul
Minas
Gerais
Par
Paran
Pernambuc
o
Rio de
Janeiro
Rio Grande
do Sul
Santa
Catarina
So Paulo
Sergipe
Total
Heavy
Construction
31
26
Services
-
Real State
26
51
44
Rental
7
26
14
Corporate Total
33
6
114
1
85
75
87
174
26
13
41
28
28
1
8
10
36
39
24
29
16
54
39
10
119
24
40
26
14
50
56
54
43
28
129
113
119
77
162
471
60
26
89
261
604
211
838
114
2
423
29
227
615
2
2.092
The conclusion of the sale of the Industrial Services business unit was on November 30, 2013
b. the number of outsourced employees (total, by groups based on activity and by geographic
location)
The Company has outsourced certain activities which are not directly related to its core business, such as
janitorial services, security, transport, meal preparation, and IT support, among others. In addition, the Company
signs short-term employment contracts in accordance with the fluctuation in demand for their services. In December
31, 2013, 2014 and 2015, the Company had, respectively, 241, 247 and 199 outsourced workers, as detailed below:
2015
Janitorial
Services
Security
Transport
Catering
IT Support
Total
Alagoas
Amazonas
Bahia
Distrito Federal
Espirito Santo
Fortaleza
Goias
Maranho
Mato Grosso
States
Minas Gerais
11
18
Para
12
Paran
Pernambuco
11
Rio de Janeiro
Rio Grande do
Norte
15
29
12
17
Santa Catarina
So Paulo
14
32
49
Sergipe
Total
70
117
199
2014
Janitorial
Services
States
Alagoas
Amazonas
Bahia
Distrito Federal
Espirito Santo
Fortaleza
Goias
Maranho
Mato Grosso
Mato Grosso
do Sul
Minas Gerais
Par
Paran
Pernambuco
Rio de Janeiro
Rio Grande do
Norte
Rio Grande do
Sul
Santa Catarina
So Paulo
Sergipe
Total
Security
Transport
Catering
IT Support
Total
1
2
3
4
3
3
2
2
1
1
8
2
7
2
10
4
4
4
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
1
0
1
0
2
10
5
12
5
14
6
7
5
1
5
3
2
4
17
4
12
8
4
2
14
0
2
0
0
0
7
0
0
0
0
0
4
0
1
0
0
1
9
5
20
11
6
7
51
4
1
21
1
10
0
30
4
0
0
3
0
0
0
2
0
0
0
3
0
14
1
59
5
81
131
12
17
247
2013
States
Rio de Janeiro
So Paulo
Minas Gerais
Esprito Santo
Bahia
Cear
Pernambuco
Paran
Rio Grande do Sul
Distrito Federal
Gois
Par
Manaus
Mato Grosso
Rio Grande do
Norte
Janitorial
Services
17
19
5
3
4
3
4
1
4
5
2
2
2
1
2
Security
11
15
12
2
8
8
7
2
15
6
2
6
8
2
3
Transport
4
2
2
-
Catering
4
-
IT Support
24
3
1
1
2
1
2
1
1
1
-
Total
60
39
18
6
14
12
15
4
20
12
4
8
10
3
5
Sergipe
Maranho
Total
c.
2
76
4
4
115
1
38
4
7
241
14.2 Comments about any relevant change that occurred with regard to the figures in the item 14.1" above
In 2014 and 2015, the decrease of the Company's workforce is mainly related to centralization of Real Estate and
Heavy Construction maintenance operations, as well as the flattening of the organizational structure and the elimination of
administrative and managerial positions for greater synergy between these two units business.
In 2013, the reduction in the Companys workforce is mainly related to the sale of the Industrial Services business
unit.
14.3 Description of Company employee remuneration policies
a. Salary and variable remuneration policy
The Company believes one of its key competitive advantages is the quality of its skilled labor. The
Company has developed, over the years, a human resources development culture based on achievement,
employee participation and transparency. The Company also has profit sharing programs and offer
opportunities for professional development. The Company believes this culture promotes the loyalty,
engagement and enthusiasm of the employees, which leads to a historically low rate of substitution of skilled
labor (turnover) and increases our ability to provide quality services to our customers.
The Companys compensation policy includes the payment of salaries consistent with those in the
market. Additionally, the Company offers the Profit Sharing Program to all its employees.
b.
Benefits Policy
As a standard policy, the Company offers its employees the following benefits and facilities, which may
change due to contracts executed with its clients:
health insurance with coverage for hospital stays: employees contribute part of the cost of this benefit
(15% to 35%, according to their salary);
group life insurance fully funded by the Company;
dental care fully funded by the employees opting in for this benefit;
essential food baskets partially funded by the Company (50%) for employees who receive up to six times
the minimum wage, and that have not missed a workday or arrived late in the month. Each of these
employees receives one food basket per month. In 2015 the Company distributed 17,768 food baskets to
our employees, of which 1,387 were in December.
meal allowance: 10% to 20% of the cost of the benefit is discounted from the employee's paycheck;
loans to employees under the "Desafogo" Project: the funds should be allocated to specific purposes
and cannot exceed one nominal salary of the employee, limited to the amount of 6 minimum wages;
pharmacy benefit agreement;
lending of a car to the executives, who must bear all maintenance costs of the vehicle (except for
insurance and IPVA property tax); and
stock option plan (only for our directors and executives).
c.
Characteristics of compensation plans based on stock options of non-administrator
employees
[atualizar com novo plano]
The Company has one stock option plan that benefits their employees, Plan of stock options 2010,
previously granted purchase options remaining.
Plano f Stock Options 2010
At the Extraordinary General Shareholders meeting held on February 8, 2010, the Stock Option Plan
for Shares Issued by the Company was approved called Plano de Opes de Compra de Aes 2010
(Stock Option Plan - 2010), with amendments approved by the Board of Directors Meeting held on May
31, 2010 and by the Extraordinary General Shareholders meeting held on April 20, 2012. The Board of
Directors approved (i) on March 11th, 2010, the Companys Program 1/2010 Stock Options Plan (1/2010
Program); (ii) on March 25th, 2011, the Program 1/2011 Stock Options Plan (1/2011 Program); (iii) on May
30th 2012, the Program 1/2012 Stock Options Plan (1/2012 Program); and (iv) on March 25 th 2013, the
Program 1/2013 Stock Options Plan (1/2013 Program).
a.
Groups of beneficiaries
The 2010 Stock Options Plan is managed by the Companys Board of Directors, which considers the
contribution of each beneficiary to achieving the targets designed to create added value, the development
potential of each, and the essential nature of their jobs among other characteristics considered strategically
relevant, elected as beneficiaries of the 2010 Stock Options Plan (i) for the 1/2010 Program, all the directors
(or executives with similar roles) of the Company, and Company managers who have held their positions in
2009 for more than 6 (six) months; (ii) for the 1/2011 Program, all the directors (or executives with similar
roles) of the Company, and Company managers who have held their positions in 2010 for more than 6 (six)
months; (iii) for the 1/2012 Program, all the directors (or executives with similar roles) of the Company, and
Company managers who have held their positions in 2011 for more than 6 (six) months; and (iv) for the
1/2013 Program, all the directors (or executives with similar roles) of the Company, and 170 Company
managers who have held their positions in 2012 for more than 6 (six) months.
b. Conditions for the exercise
To receive the stock options in the 1/2010 Program, each beneficiary must use at least of 33% of
the variable portion of their compensation under the Company's Profit Sharing Program, net of taxes, which
were received related to the 2009 financial year, to acquire shares issued by the Company.
To receive the stock options in the 1/2011 Program, each beneficiary must use at least of 33% of
the variable portion of their compensation under the Company's Profit Sharing Program, which were received
related to the 2010 financial year, to acquire shares issued by the Company.
To receive the stock options in the 1/2012 Program, each beneficiary must use at least of 33% of
the variable portion of their compensation under the Company's Profit Sharing Program, which were received
related to the 2011 financial year, to acquire shares issued by the Company.
To receive the stock options in the 1/2013 Program, each beneficiary must use at least of 33% of
the variable portion of their compensation under the Company's Profit Sharing Program, which were received
related to the 2011 financial year, to acquire shares issued by the Company.
To receive the stock options in the 1/2014 Program, each beneficiary must use at least of 33% of
the variable portion of their compensation under the Company's Profit Sharing Program, which were received
related to the 2013 financial year, to acquire shares issued by the Company.
Additionally, the Board of directors approved grants within the 1/2010, 1/2011, 1/2012, 1/2013 and
1/2014 Programs, independent of the investment in the Companys shares to certain employees of the
Company, due to its performance in the exercise of their jobs.
For as long as the exercise price is not fully paid, the shares acquired through the exercise of the
option under the Plan cannot be sold to third parties, except upon prior authorization from the Board of
Directors, in which case the sale proceeds will be mainly used to settle the beneficiary's debt with the
Company.
Pursuant to the respective Option Agreement, each beneficiary is prohibited to trade their acquired
shares for a period of 5 years, respecting the following rules:
(i)
After one year as of the execution of the respective Option Agreement, beneficiaries are
free to trade up to 25% of their acquired shares;
(ii)
After one year as of the term defined in item i, beneficiaries are free to trade another
25% of their acquired shares;
(iii)
After one year as of the term defined in item ii, the beneficiary is free to trade another
25% of the acquired shares; and
(iv) After one year as of the term defined in item iii, each beneficiary is free to trade the remainder
of their acquired shares;
c.
Exercise price
Until April 20, 2012, the price of the ordinary shares to be acquired by the beneficiaries, by exercising
their option rights were determined by the Companys Board of Directors or committee based exclusively on
the average share price on the BM&FBOVESPA, weighted by the trading volume in the month or the two
months prior to the granting of the stock option, monetarily adjusted by the inflation index IPCA (ndice de
Preos ao Consumidor Amplo), and deducting the value of dividends and interest on equity per share paid
by the Company as from the stock option date. On April 20, 2012, according to the resolution of the General
Meeting held on that date, the criterion for fixing the exercise price of the options that have as a counterpart
the acquisition of shares by its beneficiary was changed and was defined as the equity value of the 171
shares on the last day of the subsequent fiscal year. This change does not affect the options granted prior
to that General Meeting and the new criterion does not apply to options granted that have no counterpart of
the acquisition of shares by the beneficiary, which continues to be applied the criterion of market price,
described above.
For the 1/2010 Program, the exercise price of the options will be based on the value of the shares
issued at the Companys Initial Public Offering (R$11.50), monetarily adjusted by the inflation according to
the IPCA, deducting the value of dividends and interest on equity per share paid by the Company as from
the stock option date.
For the 1/2011 Program, the exercise price of the options will be (i) the average share price acquired
according to brokerage invoice sent by the beneficiary to the Board of Directors or Human Resources
Committee of the Company (R$ 19.28), (ii) monetarily adjusted by the inflation according to the IPCA,
disclosed by the Brazilian Institute of Geography and Statistics (IBGE), or by another index determined by
the Board of Directors or committee, according to the case, from the date of conclusion of the stock option
agreement until the date the option is exercised, (iii) deducting the value of dividends and interest on equity
per share paid by the Company as from the stock option date.
For the 1/2012 Program, regarding the Basic Grant, the exercise price of the options will be the
amount of the shares net worth in December 31 of the fiscal year immediately after the stock option date of
the Company (R$5.86), monetarily adjusted by the inflation according to the IPCA, or by another index
determined by the Board of Directors or committee, according to the case, from the date of conclusion of the
stock option agreement until the date the option is exercised, deducting the value of dividends and interest
on equity per share paid by the Company as from the stock option date.
For the 1/2012 Program, regarding the Discretionary Grant, the exercise price of the options will be the average, weighed by the trading volume, of the ordinary shares of the
Company in BM&FBOVESPA, during the fiscal year of 2011 (R$19.22), monetarily adjusted by the inflation according to the IPCA, or by another index determined by the Board of
Directors or committee, according to the case, from the date of conclusion of the stock option agreement until the date the option is exercised, deducting the value of dividends and
interest on equity per share paid by the Company as from the stock option date.
For the 1/2013 Program, regarding the Basic Grant, the exercise price of the options will be the amount of the shares net worth in December 31 of the fiscal year immediately
after the stock option date of the Company (R$6.81), monetarily adjusted by the inflation according to the IPCA, or by another index determined by the Board of Directors or committee,
according to the case, from the date of conclusion of the stock option agreement until the date the option is exercised, deducting the value of dividends and interest on equity per share
paid by the Company as from the stock option date.
For the 1/2013 Program, regarding the Discretionary Grant, the exercise price of the options will be the average, weighed by the trading volume, of the ordinary shares of the
Company in BM&FBOVESPA, during the fiscal year of 2011 (R$26.16), monetarily adjusted by the inflation according to the IPCA, or by another index determined b y the Board of
Directors or committee, according to the case, from the date of conclusion of the stock option agreement until the date the option is exercised, deducting the value of dividends and
interest on equity per share paid by the Company as from the stock option date.
For the 1/2014 Program, regarding the Basic Grant, the exercise price of the options will be the amount of the shares net worth in December 31 of the fiscal year immediately
after the stock option date of the Company (R$7.98), monetarily adjusted by the inflation according to the IPCA, or by another index determined by the Board of Directors or committee,
according to the case, from the date of conclusion of the stock option agreement until the date the option is exercised, 172 deducting the value of dividends and interest on equity per
share paid by the Company as from the stock option date.
For the 1/2014 Program, regarding the Discretionary Grant, the exercise price of the options will be the average, weighed by the trading volume, of the ordinary shares of the
Company in BM&FBOVESPA, during the fiscal year of 2013 (R$30.94), monetarily adjusted by the inflation according to the IPCA, or by another index determined by the Board of
Directors or committee, according to the case, from the date of conclusion of the stock option agreement until the date the option is exercised, deducting the value of dividends and
interest on equity per share paid by the Company as from the stock option date.
The options granted under this plan will be subject to vesting periods of up to 72 months for the conversion of options into shares.
d. Numbers of shares in the plain
In the 2010/1 Program: Up to 1,475,234 common shares issued by the Company, which 795,345 designated to non-administrators employees. By December, 31, 2014, 834,320
shares were exercised (options of non-administrators employees).
In the 2011/1 Program: Up to 1,184,229 common shares issued by the Company, which 648,741 designated to non-administrators employees. By December, 31, 2014, 427,886
shares were exercised (options of non-administrators employees).
In the 2012/1 Program: Up to 1,257,467 common shares issued by the Company, which 930,410 designated to non-administrators employees. By December, 31, 2014, 338,295
shares were exercised (options of non-administrators employees).
In the 2013/1 Program: Up to 768,335 common shares issued by the Company, which 473,087 designated to non-administrators employees. By December, 31, 2014, 56,338
shares were exercised (options of non-administrators employees).
In the 2014/1 Program: Up to 259,909 common shares issued by the Company, which 158,057 designated to non-administrators employees. By December, 31, 2014, no shares
were exercised.
14.4 Description of the relationships between the Company and trade unions
At December 31, 2015, approximately 0.3% of the Companys employees were represented by a trade union, especially the Civil Construction Trade Union and the Commerce
Union. The Company has agreements with each trade union, and renegotiates them every year. The Company maintains a good relationship with the main trade unions its employees
are represented by.
14.5
15.1 / 15.2
Controling Group
4/19/2016
Individual
098.921.337-49
Argentinian
Yes
Yes
20.703.976
11.8%
%
Capita
l
Stock
12.18
%
4/19/2016
Individual
289.858.347-20
Brazilian
Yes
Yes
7.151.672
4.10%
4.18%
4/19/2016
Individual
042.695.577-37
Brazilian
Yes
Yes
2.971.857
1.70%
1.68%
NAME
Date of last
amendment
Type of
Person
CNPJ/CPF
Nationality
UF
Participates
in
shareholder
agreement
Controlling
shareholder
Quantity
of
common
shares
Antonia Kjellerup
4/19/2016
Individual
073.165.257-62
Brazilian
Yes
Yes
2.971.857
1.70%
1.68%
4/19/2016
Individual
127.276.837-66
Brazilian
Yes
Yes
3.060.357
1.70%
1.75%
Francisca Kjellerup
Nacht
4/19/2016
Individual
124.175.657-06
Brazilian
Yes
Yes
1.337
0.00%
14.740.333/0001
-61
Espanish
Yes
Yes
23.676.659
13.50%
American
No
No
6.710.804
5.24%
Brazilian
No
No
7.705.300
6.02%
Brazilian
No
No
7.038.900
5.50%
No
No
2.278.422
1.30%
1.78%
No
No
91.315.301
47.44%
52.79
%
4/19/2016
Entity
Brandes Investment
Partners
4/19/2016
Entity
Fama Investimentos
4/19/2016
Entity
BTG Pactual WM
4/19/2016
Entity
Shares in Treasury
4/19/2016
Entity
00.156.956/0001
-87
60.451.242/0001
-23
Other
Total
15.3
175.586.442
0.00%
13.84
%
4.94%
5.11%
100%
1000
61
230
Shares in Circulation
Shares in circulation corresponding to all shares of the issuer with the exception of the controlling ownership, people linked to it, the issuer's management and treasury shares.
15.4
111.988.576
63,8
Controlling
shareholders
34.5%
BTG Pactual
WM
5.5%
BRANDES
FAMA
Others
5.24%
6.02%
47.4%
5,50%
15.5
Shareholders Agreements
I. 2014 Agreement
On February 28, 2014, a Shareholders Agreement was signed concerning the Company, without changing its control group, to regulate the relationship between
the Companys controlling shareholders, as indicated in item 8.1(a) of this Reference Form ("2014 Agreement"). The 2014 Agreement provides for, among other
provisions and as detailed below, clauses related to (i) exercise of voting rights and control; (ii) appointment of directors; and (iii) transfer of shares and preferential rights
for acquiring them.
The 2014 Agreement was amended on May 5, 2014 due to Francisca Kjellerup Nachts adhesion to said instrument. The main characteristics of the 2014
Agreement are described below.
a.
Parties
Andres Cristian Nacht, Jytte Kjellerup Nacht, Tomas Richard Nacht, Antonia Kjellerup Nacht, Pedro Kaj Kjellerup Nacht e Francisca Kjellerup
Nacht (em conjunto, "Famlia Nacht");
b.
c.
d.
Term: 3 anos
The vote of the parties in general meetings will be made by shareholder Andres Cristian Nacht, except in case any other signatory of the
2014 Agreement requests the adoption of the preliminary meeting procedure, in which case the decision will be made by majority vote within
the control block, subject to veto rights in specific matters:
mergers, spin-offs, acquisitions, and any other corporate reorganization transaction involving the Company;
reduction of the Companys mandatory dividends, in order to make it less than 25% of the net profit calculated in accordance with Act 6.404/76;
increase or decrease of the Companys capital stock, except for capital increases under the Board of Directors authority;
cancelation of registration as a publicly held company and discontinuation of Novo Mercados differentiated practices of corporate governance;
approval of valuation reports submitted for the approval of the Companys general meeting;
amendment of the minimum or maximum number of members of the Board of Directors, as provided for in the Companys Bylaws, or amendment
of the matters under the Board of Directors authority;
e.
amendment of the provisions in the Companys Bylaws relating to the distribution of income, establishment of reserves and retention of earnings;
amendments to Chapter VII of the Companys Bylaws; and
liquidation and dissolution of the Company, cessation of its condition of liquidation, and approval of the accounts of liquidators.
The 2014 Agreement does not bind the vote of members of the Board of Directors or other Company bodies.
Description of clauses related to appointment of directors or members of committees established in the Companys Bylaws
In the absence of a motion for holding a preliminary meeting, Andres Cristian Nacht shall appoint all members of the Companys Board of
Directors that the control block has the right to elect.
Should a preliminary meeting be requested in order to appoint the members of the Companys Board of Directors:
of the total number of members of the Board of Directors that the Parties, together, have the right to elect at the Companys general meeting, each
Party may elect a number of members proportional to their interest in the Companys capital stock (disregarding shares held by shareholders who are not
parties to the 2014 Agreement);
in the event a fractional number is found when determining the number of directors to be appointed by each Party pursuant to the item above,
fractions equal to or higher than 0.5 will be rounded up to 1.0;
regardless of the rounding provided for in the item above, the member of the control block with the highest interest will have the right to appoint
the majority of the members of the Board of Directors that the control block are allowed elect.
Whenever the Parties, or the members of the Board of Directors appointed by them, are allowed to appoint the Chairperson of the Companys Board of Directors,
such appointment will be carried out by Andres Cristian Nacht.
The rules described above apply, mutatis mutandis, to the appointment of members of the Audit Committee.
The 2014 Agreement does not contain provisions relating to the appointment of members of the executive board.
f.
Description of the clauses related to transfer of shares and preferential rights for acquiring them
The 2014 Agreement establishes, as a general rule, that the Parties shares may not be disposed of (lock-up) during its term.
As an exception to the general rule of lock-up, each party may release from the 2014 Agreement, during its term, up to 10% of their shares for purposes of disposition
("Released Shares").
In case of disposition of Released Shares, non-selling shareholder shall have right of first offer, which will allow them to acquire the Released Shares at the price offered
by the selling shareholder. 177
If non-selling shareholders do not acquire the Released Shares through the exercise of the preferential rights, the selling shareholder may sell them on the stock market
at a price not lower than that offered to the non-selling shareholders.
g.
g. Description of the clauses that restrict or bind the voting rights of members of the Board of Directors
There are no provisions relating to the restriction or binding of the vote of directors.
II. 2016 Agreement
On April 7, 2016, a new shareholders agreement was signed concerning the Company, to regulate the relationship between the Companys controlling
shareholders and the shareholder Fundo de Investimento em Participaes Axxon Brazil Private Equity Fund II ("2016 Agreement"). The 2016 Agreement provides for,
among other provisions and as detailed below, clauses relating to (i) exercise of voting rights and control; (ii) appointment of directors and committee members; (iii)
transfer of shares and preferential rights for acquiring them; and (iv) restriction or binding of voting rights of members of the Board of Directors. The main characteristics
of the 2016 Agreement are described below.
a.
Parties
Andres Cristian Nacht, Jytte Kjellerup Nacht, Tomas Richard Nacht, Antonia Kjellerup Nacht, Pedro Kaj Kjellerup Nacht, Snow Petrel S.L. e
Fundo de Investimento em Participaes Axxon Brazil Private Equity Fund II ("Axxon" and, collectively with the Controlling Shareholders,
"Shareholders" or "Parties"); and
b.
c.
Term: From the execution date of the 2016 Agreement until the Date of Acquisition of Political Rights (defined in item "d" below) and, after this
period, for 8 years. Note that the 2016 Agreement shall automatically terminate if Axxon does not become the holder of shares representing at least 7%
of the Companys capital stock by the 5th August, 2016 (120 days from the execution of the 2016 Agreement).
d.
If Axxon, within 120 days from the execution date of the 2016 Agreement, becomes the holder of shares representing at least 7% of the Companys capital
stock, Axxon will acquire rights relating to (i) Qualified Matters Under the Meetings Authority and Qualified Matters Under the Boards Authority (defined
below), and (ii) appointment of members of the Board of Directors and advisory committees to the Board of Directors (as detailed in item "e" below) ("Date
of Acquisition of Political Rights").
Preliminary Meeting
The Shareholders or members of the Board of Directors appointed by the Shareholders shall vote together in general meetings and in
meetings of the Board of Directors. For this purpose, the Shareholders shall meet prior to: (i) each general meeting of the Company; (ii)
each meeting of the Board of Directors voting on Qualified Matters Under the Boards Authority (defined below); (iii) any meeting of the
Board of Directors, regardless of the matter to be voted, if requested by any of the Shareholders; and (iv) each general meeting, meeting of
the Board of Directors,meeting of executive board, or meeting of shareholders of Companys subsidiaries that have Qualified Matters Under
the Meetings Authority or Qualified Matters Under the Boards Authority (defined below) among the matters to be decided ("Preliminary
Meeting").
The resolutions of the Preliminary Meetings shall be made by majority vote, except in cases of Qualified Matters Under the Boards Authority
and Qualified Matters Under the Boards Authority (defined below), whose approval requires the favorable vote of the representative of
Axxon and of the Controlling Shareholders. Even if Axxon holds, directly or indirectly, interest higher than 15% of the Companys capital
stock, Axxons votes in the Preliminary Meetings shall be limited to those to which it would be entitled with 15% of the capital stock.
The resolutions passed at Preliminary Meetings shall bind the Parties and the members of the Board of Directors appointed by them, who shall follow the
voting instructions received, pursuant to Article 118 of Act 6.404/76 ("Stock Corporations Act"), even if the Shareholders (or the shareholders who appointed
them, in the case of members of the Board of Directors) (i) dissented from the resolution passed at the Preliminary Meeting; (ii) abstained in relation to the
resolution passed; or (iii) did not attend the Preliminary Meeting.
Qualified Matters Under the Meetings Authority
The favorable vote of the Shareholders in the Companys general meetings regarding the matters listed below shall require the prior approval
of Controlling Shareholders and Axxon in a Preliminary Meeting ("Qualified Matters Under the Meetings Authority"):
amendments to the Companys bylaws and/or bylaws or articles of incorporation of any subsidiary of the Company on the following matters: (i)
corporate purpose; (ii) list of matters under the Board of Directors authority; and (iii) list of matters under the general meetings or shareholders meetings
authority, to the extent that they affect the Qualified Matters Under the Meetings Authority or the Qualified Matters Under the Boards Authority (as defined
below);
any corporate reorganization, including mergers, acquisitions, spin-offs, or transformation involving the Company or its subsidiaries, except for
transactions made exclusively between the Company and its wholly owned subsidiaries (or companies that have 99% of their capital held by the Company);
reduction of the capital stock of the Company or of a subsidiary of the Company, except if carried out exclusively for the absorption of losses;
creation of new classes of shares or modification of the current rights and preferential rights of shares issued by the Company or a subsidiary of
the Company;
issuance of any security that grants its holder the right to subscribe or acquire new shares or securities (i) convertible into shares with or without
voting rights in the Company or a subsidiary of the Company; or (ii) exchangeable for shares of the Company or its subsidiaries, except for public offerings
for the issuance of shares of the Company or a subsidiary of the Company and in the scope of any plans involving options to purchase shares issued by
the Company or a subsidiary of the Company;
approval of plans involving options to purchase shares issued by the Company or a subsidiary of the Company;
conversion of the Company into a closely held corporation or its exit from the Novo Mercado segment of BM&FBOVESPA;
participation of the Company in groups of companies, in accordance with Article 265 of the Stock Corporations Act; and
application for bankruptcy, court-supervised or out-of-court reorganization of the Company or of a Subsidiary, as well as liquidation and dissolution,
or cessation of its condition of liquidation.
The favorable vote of representatives appointed by the Shareholders in meetings of the Board of Directors regarding the matters listed below
require the prior approval of Controlling Shareholders and Axxon in a Preliminary Meeting ("Qualified Matters Under the Boards Authority"):
granting any type of encumbrance on any asset (including rights) of the Company or of of its subsidiaries as guarantee of any indebtedness,
provided that (i) it is not provided for in the Companys annual budgets; and (ii) in an amount exceeding 3 times the adjusted EBITDA of the Company for
the current budgeted year, in any case, except for the creation of encumbrances to finance the acquisition of any asset, provided that the encumbrance
is created solely over the asset acquired;
execution, by the Company or any of its subsidiaries, of contracts with (i) any party related to the Shareholders; (ii) members of the Board of
Directors; or (iii) officers of the Company, except, with respect to the Companys directors, through contracts exclusively related to stock-based
compensation plans or employment contracts for directors under usual market conditions and consistent with the past practices of the Company;
contracting of any new indebtedness or changes in conditions, restructuring, agreements or advance payments of any indebtedness of the
Company and/or its subsidiaries (i) not provided for in the annual budget; and (ii) in an amount exceeding 3 times the Companys Adjusted EBITDA for
the current budgeted year;eleio ou destituio do Diretor Administrativo Financeiro e de Relaes com Investidores;
approval of the Companys annual budget if (i) the disposition of lease equipment is provided for, outside the normal course of business, whose
net value exceeds 10% of the Companys fixed assets; or (ii) the sale of assets represents a net loss, in the aggregate, exceeding 10% of the Companys
Adjusted EBITDA of the immediately preceding year;
sale, exchange, or any other form of disposition to third parties of any relevant assets owned by the Company or its subsidiaries (i) if total sales
or net loss have reached the ceiling approved in the annual budget; and (ii) whose total aggregate value (a) is equal to or greater than BRL 5,000,000.00;
or (b) represents a net loss of BRL 1,000,000.00;
during the lock-up period (as described in item "f" below), any investment in any company (i) that conducts, at the time of investment, the same
activity conducted by any investee of funds managed by The Axxon Group Private Equity Assessoria Ltda., or its controlling members, direct or indirect,
or companies under common control; and (ii) (a) whose activities are not included in items (a) to (g) of Article 2 of the Companys bylaws; or (b) that do
not operate the business practiced by the Company; or
approval or modification of the Companys annual budget, if, in the 12 months preceding the annual budget being prepared, a negative difference
of more than 20% has been verified between the projected Adjusted EBITDA and the actual Adjusted EBITDA.
e.
Description of clauses related to appointment of directors or members of committees established in the Companys Bylaws
The Controlling Shareholders and Axxon may appoint a number of members of the Board of Directors proportional to their percentage in the
total number of shares bound by the 2016 Agreement, provided that: (i) while Axxon is the holder of shares representing at least 13% of the
Companys capital stock, Axxon shall have the right to appoint and elect at least one member of the Board of Directors; and (ii) to the extent
that the Controlling Shareholders are holder of shares of the Companys capital stock representing at least 50% of the shares plus one share
(i.e. the majority of shares that make up the block bound by the 2016 Agreement), the Controlling Shareholders shall have the right to
appoint and elect at least the same number of members of the Board of Directors that Axxon elects, plus one member.
The chairperson of the Board of Directors shall be appointed by the Controlling Shareholders.
The Controlling Shareholders and Axxon undertake to conduct a Preliminary Meeting to determine the names to be appointed at the
Companys general meeting to elect the members of the Board of Directors.
The Companys executive board will be composed of qualified and experienced professionals, who have all the necessary qualifications for
the positions held by them. The members of the executive board shall be appointed by the Board of Directors, by majority vote, and the CEO
will be heard before the choice of the other officers.
While Axxon is the holder of shares representing at least 13% of the Companys capital stock, Axxon will have the right to appoint and elect
one representative for any existing committee or any committee that may be created to advise the Board of Directors.
f.
Description of the clauses related to transfer of shares and preferential rights for acquiring them
The 2016 Agreement has clauses on the transfer of shares and preferential rights for acquiring them, such as lock-up, right of first offer,
right of first refusal, tag along rights and drag along rights, as described below.
Lock-up
As a general rule, the shares of the Parties may not be sold (lock-up) during (i) the period between the execution date of the 2016 Agreement and the Date
of Acquisition of Political Rights, and, after this period, (ii) for a period of 30 months.
If Axxon, after 6 months from the Date of Acquisition of Political Rights, has not become the holder of at least 13% of the Companys capital stock, the
percentage of shares subject to lock-up will be reduced to up to: (i) 10% of the Companys capital stock between the 7th month and the 12th month from
the Date of Acquisition of Political Rights; and (ii) 5% of the capital stock between the 13th month and the 24th month from the Date of Acquisition of Political
Rights. After the 24th month from the Date of Acquisition of Political Rights, Axxon may sell its shares without complying with the lock-up.
After the end of the lock-up, Axxon will be entitled to sell at BM&FBOVESPA, every 12 months from the Date of Acquisition of Political Rights, 2% of the
shares owned by Axxon, without the restrictions of right of first offer and right of first refusal, detailed below.
As an exception to the general rule of lock-up, the following are considered permissible:
the sale, at BM&FBOVESPA, of up to 10% of the shares of the Controlling Shareholders existing at the execution date of the 2016 Agreement;
the sale of Axxon shares exceeding 15% of the Companys capital stock, without the need to observe the right of first offer and the right of first
refusal, described below;
the sale of shares (i) between the Controlling Shareholders and their controlling members/shareholders and/or affiliates, or, in the case of
individuals, their heirs and successors, provided that the acquirer executes the 2016 Agreement, through an instrument of adhesion, without any
restrictions; or (ii) between the Shareholders without the need to observe the tag along rights, described below; and
the sale of shares between Axxon and other investment vehicles managed by The Axxon Group Private Equity Assessoria Ltda., its direct or
indirect controlling members/shareholders or companies under common control, provided that the acquirer executes the 2016 Agreement, through an
instrument of adhesion, without any restrictions.
If Axxon intends to dispose of all or part of its shares it must always grant the Controlling Shareholders the right of first offer for the acquisition of such
shares, in accordance with the terms and procedures provided for in the 2016 Agreement.
Right of First Refusal
If Axxon intends to sell all or part of its shares to one or more third parties (i) that are competitors of the Company or an investment fund holding interest
equal to or higher than 10% of the capital of and/or controls or has the right to appoint directors in a competitor of the Company ("Competitor"); or (ii) in the
scope of a Public Offer for Acquisition of Shares, Axxon shall grant the Controlling Shareholders the right of first refusal for acquisition of all the shares to
be sold by Axxon (i) at the same price and conditions offered by the Competitor, or (ii) in the case of a Public Offer for Acquisition of Shares, offering the
shares at the same price offered in the Public Offer with a 5% discount, adjusted by the variation of the DI Rate, in accordance with the terms and procedures
provided for in the 2016 Agreement.
If the Controlling Shareholders receive an offer from one or more third parties for the sale of at least 41% of the shares held by them on the execution date
of the 2016 Agreement in a transaction outside the stock exchange environment, Axxon will have the right to sell, to the third party, the same proportion of
the shares held by Axxon, at the same price and under the same terms and conditions provided for in the offer made by the third party, in accordance with
the terms and procedures provided for in the 2016 Agreement.
Drag Along Rights
If the Controlling Shareholders make or receive an offer from one or more third parties for the acquisition of at least 50% of their shares, the Controlling Shareholders
shall have the right to demand that Axxon sell to the third party, together with the Controlling Shareholders, all shares held by Axxon, limited to the percentage of 15%
of the Companys capital stock, under the same pricing terms and conditions they were offered, provided that the transaction results in the receipt, by Axxon, of an
amount of their updated investment equivalent to at least 2.5x the amount invested by Axxon until reaching an interest of 15% (or, if such interest has not been reached,
the interest effectively reached), and limited, in any case, to 15% of the Companys capital stock, for which the conditions, terms, and procedures provided for in the
2016 Agreement shall be observed.
g.
Description of the clauses that restrict or bind the voting rights of members if the Board of Directors
As described in item "d" above, the favorable vote of representatives appointed by the Shareholders in the decisions of the meetings of the Companys Board of
Directors regarding Qualified Matters Under the Boards Authority require the prior approval of the Controlling Shareholders and Axxon in a Preliminary Meeting.
The resolutions passed in Preliminary Meetings shall bind the members of the Board of Directors appointed by the Parties, who shall follow the voting instruction
received regarding the matter in question, pursuant to Article 118 of the Stock Corporations Act, even if the Shareholders who appointed them (i) dissented from the
resolution passed at the Preliminary Meeting; (ii) abstained in relation to the resolution passed; or (iii) did not attend the Preliminary Meeting.
15.6 Significant Changes in the shareholdings of Members of the Control Group and directors of the Company in the last 3 financial years
Corporate rearrangements involving Nacht Participaes
The company, in December 28, 2012, was notified by Nacht Participaes S.A. about the effectiveness of its capital stock reduction, with the delivery of the totality of its previously held
shares issued by Mills to its shareholders, following the correspondence sent by Nacht Participaes in October 30, 2012, which informed of such capital reduction approval
According to that notices terms, with the effectiveness of the aforementioned capital stock reduction, Andres Cristian Nacht and his family began to hold 27,421,713 (twenty-seven
million, four hundred and twenty-one thousand, seven hundred and thirteen) shares issued by Mills, representing 21.7% of corporate capital in that time.
Still within the notices terms, neither the capital reduction nor the related transfer of the shares issued by Mills resulted in any change of Mills corporate control, which, before the capital
reduction, was formerly exercised jointly by Nacht Participaes, its shareholders and Snow Petrel S.L., and, after the capital reduction, will be exercised by Nacht Participaes
shareholders jointly with Snow Petrel S.L.. Furthermore, this operation did not change the number of shares or the value of the share capital of the Company.
Liquidation of Jeroboam Investments LLC
The Company was informed, on March 14, 2012, by Snow Petrel S.L., a company headquartered in Barcelona, Spain, at Calle Johann Sebastian Bach 20, 3rd floor, and registered with
the CNPJ/MF under n. 14.740.333/0001-61 (Snow Petrel), of the transfer of all common shares, book-entry shares, with no par value issued by Mills held by Jeroboam Investments
LLC (Jeroboam) for Snow Petrel, due to the dissolution and consequent extinction of its wholly owned subsidiary Jeroboam. Therefore, Snow Petrel came to hold 19,233,281 (nineteen
million, two hundred thirty-three thousand, two hundred eighty-one) shares of Mills, representing 15.3% of its capital stock.
The dissolution of Jeroboam and the corresponding transfer of Mills's shares did not cause any change in the administrative structure or the control of the Company, since the Snow
Petrel, as well as Jeroboam to extinction, is controlled by Mr. Nicolas Nacht . Additionally, this operation did not involve change in the number of shares or the capital value of the
Company.
15.7 Describe the main corporate transactions in the group which have had a material effect to the issuer, such as takeovers, mergers, stock acquisitions, disposals and
corporate takeovers, acquisitions and disposals of important assets, indicating when to involve the issuer or any of its subsidiaries and affiliates
Sale of Industrial Services business unit
On July 10, 2013, the Company entered into an agreement for the sale of its business unit Industrial Services for R $ 102 million through the sale of its stake in Albuquerque Participaes
Ltda.
This sale was made in line with the Company's strategy to focus on businesses where their skills are able to generate greater value for its shareholders and customers. Thus, the
Company ceased to operate in the industrial services sector, in which were offered access services, industrial painting, surface treatment and thermal insulation, both in the construction
phase, as in the maintenance phase of large industrial plants.
The transaction was closed on November 30, 2013 and the Company earned income of R $ 8.3 million. The agreed sale value of R $ 102 million was received R $ 25 million in contract
signing date, in July, and the balance will be paid in installments corrected by CDI, discounting the generation of this business case for Mills between 1 June 2013 and the closing date,
which was equal to R $ 6.8 million.
Capital increases
The Company carried out capital increases within the limit of authorized capital through the issuance of common, registered shares with no par value, due to the exercise by
beneficiaries of purchase options granted pursuant to the Stock Option Program Options 01/2010 , 01/2011, 01/2012, 01/2013 and 01/2014. The dates of approvals, programs, number
of shares, the share price and the amounts of these exercises are detailed in item 17.
In compliance with the provisions of Instruction of the Securities and Exchange Commission No. 358, of January 3, 2002, as amended, that its Board of Directors approved, in a
meeting held on February 5, 2016, the completion of an increase in Company's capital stock, within the authorized capital limit, with the possibility of partial approval, through the
issuance, for private subscription of at least 40,089,472 (forty million, eighty-nine thousand, four hundred and seventy-two) and a maximum of 47,528,517 (forty-seven million, five
hundred and twenty-eight thousand, five hundred and seventeen) new common shares, at an issue price of R $ 2.63 (two reais and sixty-three cents) per share, amounting to at least
R $ 105,435,311.36 (one hundred and five million, four hundred thirty-five thousand, three hundred and eleven reais and thirty-six cents) and a maximum of R $ 124,999,999.71 (one
hundred twenty-four million, nine hundred ninety-nine thousand, nine hundred and ninety-nine reais and seventy one cents) ( "Increase Capital"). The issue price was fixed without
undue dilution for the existing shareholders of the Company, pursuant to Article 170, paragraph 1, item III, of Law No. 6404 of December 15, 1976, as amended ( "the Companies Act
by shares "), taking into account the average price (average of the weighted daily closing prices by trading volume) of the Company's shares on the BM & FBOVESPA SA - Securities,
Commodities and Futures Exchange in trading sessions between November 27, 2015 ( inclusive) and February 4, 2016 (inclusive). The price of such shares on the stock exchange is,
in the opinion of the Board, the most appropriate criteria in the current reality of the Company. The raising of funds through the capital increase aimed to (i) strengthen the Company's
capital structure, strengthening its cash to meet the medium and long-term capital needs for the development of its activities; (Ii) strengthen its liquidity levels, reducing the Company's
debt margins; and (iii) take advantage of market consolidation opportunities that may arise in the medium term. Because it was reached the maximum subscription of the Capital
Increase, it was held on April 19, 2016, the Board of Directors meeting which approved the ratification of the capital increase with the issuance of 47,528,517 ( forty-seven million, five
hundred and twenty-eight thousand, five hundred and seventeen) new common shares, totaling R $ 124,999,999.71 (one hundred twenty-four million, nine hundred ninety nine
thousand, nine hundred ninety-nine reais and seventy one cents). Due to the approval of the Capital Increase, the Company's share capital shall be R $ 688,318,462.91 (six hundred
eighty-eight million, three hundred and eighteen thousand four hundred and sixty-two reais and ninety-one cents), divided in 175,586,442 (one hundred seventy-five million, five
hundred and eighty-six thousand, four hundred and forty two) common shares.
15.8
16.1
The business and transactions with related parties of the Company are always performed by observing price and usual market conditions and they do not generate any benefit or
detriment to the Company or any other party.
Under the Companys bylaws, the Board must approve any transaction with any of the Company's shareholders.
As of December 31, 2015, the Company did not hold any consulting services contracts with members from the Board of Directors. There has not been any loans between the Company
and its administrators during the fiscal year of 2015.
16.2 Information on Transactions with Related Parties
There has not been any transactions with related parties during the last three fiscal years.
16.3 Measures Taken to Address the Conflict of Interest
The Company adopts corporate governance practices and those recommended and/or required by applicable regulations including those set out in Novo Mercado regulations. The Board
of Directors must approve the policies and make necessary arrangements for directors and shareholders to not be involved in conflict of interest situations. Additionally, pursuant to the
Companys by-laws, the Board of Directors must approve any transaction with any of the Company's shareholders.
8/15/2014
47,528,517
47,528,517
124,999,999.71
47,528,517
47,528,517
47,528,517
47,528,517
563,318,463.20
128,057,925
128,057,925
563,318,463.20
128,057,925
128,057,925
124,999,999.71
Subscribed Capital
8/15/2014
Type of Capital
124,999,999.71
Authorized Capital
2/5/2016
Type of Capital
Paid-up Capital
4/19/2016
Type of Capital
Quantity of common
shares (Units)
Subscribed Capital
4/19/2016
Type of Capital
Payment term
Paid-up Capital
Decision
Date
Body that
decided the
increase
2/8/2013
Board of
Directors
Criteria for
determining the
issue price
Manner of Payment
2/8/2013
Board of
Directors
Criteria for
determining the
issue price
Manner of Payment
Manner of Payment
Board of
Directors
Private
Subscrip
tion
600
Subscription /
previous capital
Total shares
(units)
Preferred
(Units)
Price Issue
0
600
0.00140000
Factor Price
12.49
R$ per unit
Cash
2/8/2013
37,820.00
Private
Subscrip
tion
3,050
3,050
0.00700000
12.40
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less
the amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2010)
Cash
1,819,309.96
Board of
Directors
Criteria for
determining the
issue price
4/10/2013
7,494.00
Common
(Units)
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less
the amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2010)
2/8/2013
2/8/2013
(Reais)
Type of
increase
Private
Subscrip
tion
88,574
88,574
0.33840000
20.54
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less
the amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2011)
Cash
4/10/2013
169,264.59
Private
Subscrip
tion
66,903
66,903
0.03140000
2.53
R$ per unit
5/9/2013
Board of
Directors
Criteria for
determining the
issue price
Manner of Payment
5/9/2013
Board of
Directors
Criteria for
determining the
issue price
Manner of Payment
Values as the stock option plan of the Company (Special Plan Top Mills).
Cash
5/9/2013
2,973,204.90
Private
Subscrip
tion
230,481
230,481
0.55090000
12.90
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less
the amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2010)
Cash
5/9/2013
2,919,849.05
Private
Subscrip
tion
138,185
138,185
0.53810000
21.13
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less
the amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2011)
Em espcie
Decision
Date
5/9/2013
Body that
decided
the
increase
Board of
Directors
5/9/2013
Board of
Directors
Criteria for
determining the issue
price
Manner of Payment
5/22/2013
Board of
Directors
8/15/2013
Board of
Directors
Criteria for
determining the
issue price
Date of issue
Type of
increase
Common
(Units)
Preferred
(Units)
Total shares
(units)
Subscription /
previous capital
Price Issue
Factor price
(Reais)
5/9/2013
143,307.36
Private
Subscrip
tion
24,372
24,372
0.02630000
5.88
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2012)
Cash
5/9/2013
3,072,963.25
Private
Subscrip
tion
153,265
153,265
0.56310000
20.05
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2012)
Cash
5/22/2013
39,555.60
Private
Subscrip
tion
15,512
15,512
0.00720000
2.55
R$ per unit
101,395
101,395
0.23670000
12.81
R$ per unit
Values as the stock option plan of the Company (Special Plan Top Mills).
Cash
8/15/2013
1,298,869.95
Private
Subscrip
tion
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2010)
Manner of Payment
8/15/2013
Board of
Directors
8/15/2013
Board of
Directors
Cash
8/15/2013
1,180,587.20
Private
Subscrip
tion
55,952
55,952
0.21460000
21.10
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2011)
Cash
8/15/2013
41,029.52
Private
Subscrip
tion
7,148
7,148
0.00740000
5.74
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2012)
Cash
Decision
Date
8/15/2013
Body that
decided
the
increase
Board of
Directors
11/1/2013
Board of
Directors
11/1/2013
Board of
Directors
11/14/2013
Board of
Directors
Criteria for
determining the
issue price
Date of issue
8/15/2013
Private
Subscrip
tion
Common
(Units)
29,335
Total shares
(units)
Preferred
(Units)
0
Subscription /
previous capital
29,335
0.10640000
Price Issue
20.00
Factor price
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2012)
Cash
11/1/2013
109,892.16
Private
Subscrip
tion
5,152
5,152
0.01990000
21.33
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2011)
Cash
11/1/2013
19,117.35
Private
Subscrip
tion
945
945
0.00350000
20.23
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2012)
Cash
11/14/2013
248,118.00
Private
Subscrip
tion
19,086
19,086
0.01500000
13.00
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2010)
Manner of Payment
11/14/2013
Board of
Directors
Cash
11/14/2013
368,743.40
Private
Subscrip
tion
17,231
17,231
0.01400000
21.40
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2011)
11/14/2013
Conselho de
Administrao
Cash
11/14/2013
10,377.40
Private
Subscrip
tion
1,780
1,780
0.00100000
5.83
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2012)
Cash
Decision
Date
11/14/2013
Body that
decided
the
increase
Board of
Directors
11/14/2013
Manner of Payment
Manner of Payment
1/10/2014
124,155.72
Board of
Directors
27,600
0.02200000
Price Issue
Factor price
20.28
R$ per unit
Private
Subscrip
tion
5,772
5,772
0.00450000
21.51
R$ per unit
Cash
4,095.36
Board of
Directors
Subscription /
previous capital
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2011)
1/10/2014
1/10/2014
27,600
Total shares
(units)
Preferred
(Units)
Cash
Board of
Directors
Private
Subscrip
tion
Common
(Units)
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2012)
1/10/2014
1/10/2014
559,728.00
Type of
increase
Private
Subscrip
tion
711
711
0.00060000
5.76
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2012)
Cash
1/10/2014
61,170.00
Private
Subscrip
tion
3,000
3,000
0.00240000
20.39
R$ per unit
1/10/2014
Board of
Directors
2/5/2014
Board of
Directors
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2012)
Cash
1/10/2014
78.12
Private
Subscrip
tion
0.00000500
13.02
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2010)
Cash
2/5/2014
658,784.62
Private
Subscrip
tion
50,174
50,174
0.03940000
13.13
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2010)
Cash
Decision
Date
2/5/2014
Body that
decided
the
increase
Board of
Directors
2/5/2014
Board of
Directors
2/5/2014
Board of
Directors
Criteria for
determining the issue
price
Manner of Payment
2/5/2014
Board of
Directors
Date of issue
2/5/2014
Type of
increase
Private
Subscrip
tion
Common
(Units)
13,825
Preferred
(Units)
Subscription /
previous capital
Total shares
(units)
0
13,825
0.01090000
Price Issue
Factor price
21.70
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2011)
Cash
2/5/2014
231,300.00
Private
Subscrip
tion
11,250
11,250
0.00880000
20.56
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2011)
Cash
2/5/2014
52,273.80
Private
Subscrip
tion
7,710
7,710
0.00610000
6.78
R$ per unit
Book value of the shares on December 31 of the fiscal year immediately preceding the date of grant, adjusted for inflation according to the IPCA, minus the amount of dividends and interest on equity per share
declared by the Company from the date of grant (Programme 1/2013)
Cash
2/5/2014
20,648.74
Private
Subscrip
tion
3,554
3,554
0.00280000
5.81
R$ per unit
Criteria for
determining the issue
price
Manner of Payment
2/14/2014
Board of
Directors
Criteria for
determining the
issue price
Manner of Payment
2/14/2014
Board of
Directors
Book value of the shares on December 31 of the fiscal year immediately preceding the date of grant, adjusted for inflation according to the IPCA, minus the amount of dividends and interest on equity per share
declared by the Company from the date of grant (Programme 1/2012)
Cash
2/14/2014
23,951.20
Private
Subscrip
tion
1,820
1,820
0.00140000
13.16
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2010)
Cash
2/14/2014
84,568.60
Private
Subscrip
tion
3,890
3,890
0.00310000
21.74
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, from the execution date of the option contract, less the
amount of dividends and interest on capital own per share paid by Mills, until the exercise date (Plan 1/2011)
Cash
Decision
Date
2/14/2014
Body that
decided
the
increase
Board of
Directors
5/15/2014
Board of
Directors
Criteria for
determining the
issue price
Manner of Payment
5/15/2014
Board of
Directors
5/15/2014
Board of
Directors
Date of issue
2/14/2014
Type of
increase
Private
Subscrip
tion
Common
(Units)
2,800
Subscription /
previous capital
Total shares
(units)
Preferred
(Units)
Price Issue
2,800
0.00220000
Factor Price
20.60
R$ per unit
The average price of the Shares Acquired restated according to the IPCA, from the execution date of the Option Agreement to the Option exercise date, deducting the value of dividends and interest on capital per
share paid by the Company from the grant date. (Plan 1/2012)
Cash
5/15/2014
3,360,053.76
Private
Subscrip
tion
250,004
250,004
0.19610000
13.44
R$ per unit
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, less dividends and interest on equity per share paid by
Mills, until the exercise date (Plan 1/2010).
Cash
5/15/2014
2,117,680.20
Private
Subscrip
tion
95,391
95,391
0.07480000
22.20
R$ per unit
The average price of the Shares Acquired restated according to the IPCA, from the execution date of the Option Agreement to the Option exercise date, deducting the value of dividends and interest on capital per
share paid by the Company from the grant date. (Plan 1/2011)
Cash
5/15/2014
147,064.00
Private
Subscrip
tion
24,800
24,800
0.01950000
5.93
R$ per unit
Criteria for
determining the issue
price
Book value of the shares on December 31 of the fiscal year immediately preceding the date of grant, adjusted for inflation according to the IPCA, minus the amount of dividends and interest on equity per share
declared by the Company from the date of grant (Programme 1/2012)
Manner of Payment
Cash
5/15/2014
Board of
Directors
5/15/2014
2,135,596.50
Private
Subscrip
tion
101,550
101,550
0.07970000
21.03
R$ per unit
The average price of the Shares Acquired restated according to the IPCA, from the execution date of the Option Agreement to the Option exercise date, deducting the value of dividends and interest on capital per
share paid by the Company from the grant date. (Plan 1/2012)
Manner of Payment
Cash
5/15/2014
Board of
Directors
Criteria for
determining the issue
price
Manner of Payment
5/15/2014
443,597.65
Private
Subscrip
tion
63,827
63,827
0.05010000
6.95
R$ per unit
Book value of the shares on December 31 of the fiscal year immediately preceding the date of grant, adjusted for inflation according to the IPCA, minus the amount of dividends and interest on equity per share
declared by the Company from the date of grant (Programme 1/2013)
Cash
Decision
Date
8/15/2014
Body that
decided
the
increase
Board of
Directors
Criteria for
determining the
issue price
Manner of Payment
Date of issue
8/15/2014
Manner of Payment
Board of
Directors
8/15/2014
Board of
Directors
Private
Subscrip
tion
Common
(Units)
4,800
Preferred
(Units)
Subscription /
previous capital
Total shares
(units)
0
4,800
0.00370000
Price Issue
Factor Price
13.36
R$ per unit
Cash
33,901.00
Board of
Directors
Criteria for
determining the issue
price
8/15/2014
64,128.00
Type of
increase
The price is based on the value of the launch of Mills shares upon completion of the first public distribution, adjusted for inflation according to the IPCA, less dividends and interest on equity per share paid by
Mills, until the exercise date (Plan 1/2010).
8/15/2014
8/15/2014
Private
Subscrip
tion
5,845
5,845
0.00460000
5.80
R$ per unit
Book value of the shares on December 31 of the fiscal year immediately preceding the date of grant, adjusted for inflation according to the IPCA, minus the amount of dividends and interest on equity per share
declared by the Company from the date of grant (Programme 1/2012)
Cash
8/15/2014
32,581.00
Private
Subscrip
tion
1,550
1,550
0.00120000
21.02
R$ per unit
The average price of the Shares Acquired restated according to the IPCA, from the execution date of the Option Agreement to the Option exercise date, deducting the value of dividends and interest on capital per
share paid by the Company from the grant date. (Plan 1/2012)
Cash
8/15/2014
134,013.00
Private
Subscrip
tion
19,650
19,650
0.01530000
6.82
R$ per unit
year immediately preceding the date of grant, adjusted for inflation according to the IPCA, minus the amount of dividends and interest on equity per share declared by the Company from the date of grant
(Programme 1/2013)
Manner of Payment
Cash
19/04/2016
05/02/2016
Board of
Directors
Criteria for
determining the
issue price
Manner of Payment
124,999,999.71
Private
Subscrip
tion
47,528,571
47,528,571
37.10000000
2.63
R$ per unit
The Company considered the weighted average of the daily closing prices by the trading volume in the trading sessions between November 27, 2015 (inclusive) and February 4, 2016 (inclusive).
Cash
At the Ordinary and Extraordinary General Meeting held on April 19, 2011, it was approved the
amendment of the caput of Article 5 of the Company's Bylaws, to adjust it to the deliberations of
the Board of Directors taken on April 14, 2010 and November 30, 2010, which approved the
increase of capital stock within the limit of authorized capital.
At the Extraordinary General Meeting held on April 20, 2012, it was approved the amendment of
the caput of Article 5 of the Company's Bylaws, to adjust it to the deliberations of the Board of
Directors taken on July 27, 2011, September 23, 2011, October 24, 2011, January 24, 2012 and
February 28, 2012, which approved the increase of capital stock within the limit of authorized
capital.
At the Extraordinary General Meeting held on February 25, 2014, it was approved the
amendment of the caput of Article 5 of the Company's Bylaws, to adjust it to the deliberations of
the Board of Directors taken on April 2, 2012, April 24, 2012, June 21, 2012, July 2, 2012,
August 9, 2012, November 12, 2012, February 8, 2013, April 10, 2013, May 9, 2013, May 22,
2013, August 15, 2013, November 1, 2013, November 14, 2013 and January 10, 2010, which
approved the increase of capital stock within the limit of authorized capital, passing the relevant
article to henceforth as the following wording:
5th Article - The capital, fully subscribed and paid, is R$553,420,638.63 (five hundred fifty-three
million, four hundred twenty thousand, six hundred thirty eight reais and sixty-three centavos),
represented by 127.395.485 (one hundred twenty-seven million, three hundred ninety-five
thousand, four hundred, eighty-five) common, nominative, inscribed and without par value
shares.
18.1 Description of the rights of each class and type of share issued
Type of shares: Common
Tag Along: 100,00%
Dividend rights: At each Ordinary Shareholder Meeting, the Board of Directors should make a
recommendation on the allocation of net income for the preceding fiscal year, which will be
subject to approval by the shareholders. The Company's Bylaws provides that an amount
equivalent to 25% of the adjusted net income for the year should be available for the payment of
dividends or interest on equity in any fiscal year. This amount represents the compulsory
dividends. If the mandatory dividend exceeds the realized portion of net income, the excess
may be allocated to an unrealized profit reserve. The calculation of net income and allocations
to reserves and the amounts available for distribution are made based on financial statements
prepared pursuant to the Brazilian Corporate Law.
Voting rights: Full
Convertibility to other class or type of share: No
Right to reimbursement of capital: Yes
Description of the reimbursement of capital: The Company's statutory provisions follow, in this
subject, the rules established in the Corporate Law Act and applicable legislation.
Restrictions regarding outstanding shares: No
Circumstances where guaranteed rights of said securities may be altered: Under the Brazilian
Corporate Law, the Bylaws, or resolutions adopted by shareholders in General Meetings can
restrict the shareholders from the following rights: (i) Right to profit sharing; (ii) Right to participate
in the distribution of any remaining assets in case of Company liquidation, proportionately to their
interest in the capital stock; (iii) Preemptive rights in the subscription of shares, convertible
debentures or subscription rights, except in certain circumstances provided in the Brazilian
Corporate Law; (iv) The right to supervise the management of corporate businesses, as provided
by the Brazilian Corporate Law; (v) The right to vote in Shareholders General Meeting; (vi) The
right to leave the Company, in the cases provided in the Brazilian Corporate Law. Changes in
rights assured by shares other than those listed above (e.g.: change in the minimum compulsory
dividend, change in the reimbursement amount, limitations to the exercise of voting rights, etc.)
may be modified by decisions made in general shareholders meetings, by simple or qualified
majority of the Company's shareholders, depending on the nature of the matter to be resolved.
Other Relevant Characteristics: No further relevant information pertaining to this item 18.
18.2 Statutory regulations which limit the right to vote of relevant shareholders or which
cause them to hold a public offering.
According to Article 32, Chapter 7 of the Companys bylaws, the transfer of shareholding Control
of the Company, directly or indirectly, whether through a single transaction, or through successive
transactions, shall be contracted under a condition precedent or subsequent that the acquiring
party shall obligate itself to make a Public Tender Offer for the remaining shares of the other
shareholders of the Company, subject to the conditions and periods provided for in applicable
legislation and the Novo Mercado Rules, such that they are assured treatment equal to that given
to the Selling Controlling Shareholder.
Paragraph 1 The public offering referred to in this article shall also be required: (a) when there
is encumbered assignment of subscription rights or an option to acquire shares or other securities
or rights relating to securities convertible into shares, or that give the right to their subscription or
acquisition, as applicable, which comes to result in the sale of Control of the Company, and (b) in
the case of a transfer of control of company(ies) holding the Power of Control of the Company, in
which case, the Selling Controlling Shareholder shall be obliged to declare to the
BM&FBOVESPA the value assigned to the Company in such transaction and provide supporting
documentation.
18.3 Description of exceptions and suspension clauses relative to ownership or political
rights set forth in the bylaws
Not applicable, as there are no exceptions or suspension clauses relative to ownership or political
rights set forth in the Companys bylaws.
18.4 Information on the volume of trading as well as minimum and maximum values for
securities traded on the stock exchange or the over-the-counter market, in each of the
quarters in the last 3 fiscal years.
Date
ending
quarter
Securities
Type
Class
3/31/2013
Shares
Common
Stock
Exchang
e
6/30/2013
Shares
Common
Stock
Exchang
e
9/30/2013
Shares
Common
Stock
Exchang
e
12/31/2013
Shares
Common
Stock
Exchang
e
3/31/2014
Shares
Common
Stock
Exchang
e
6/30/2014
Shares
Common
Stock
Exchang
e
9/30/2014
Shares
Common
Stock
Exchang
e
12/31/2014
Shares
Common
Stock
Exchang
e
3/31/2015
Shares
Common
Stock
Exchang
e
6/30/2015
Shares
Common
Stock
Exchang
e
9/30/2015
Shares
Common
Stock
Exchang
e
12/31/2015
Shares
Common
Stock
Exchang
e
Marketpl
ace
Administrative Body
BM&FBOVESPA Bolsa de Valores,
Mercadorias e
Futuros
BM&FBOVESPA Bolsa de Valores,
Mercadorias e
Futuros
BM&FBOVESPA Bolsa de Valores,
Mercadorias e
Futuros
BM&FBOVESPA Bolsa de Valores,
Mercadorias e
Futuros
BM&FBOVESPA Bolsa de Valores,
Mercadorias e
Futuros
BM&FBOVESPA Bolsa de Valores,
Mercadorias e
Futuros
BM&FBOVESPA Bolsa de Valores,
Mercadorias e
Futuros
BM&FBOVESPA Bolsa de Valores,
Mercadorias e
Futuros
BM&FBOVESPA Bolsa de Valores,
Mercadorias e
Futuros
BM&FBOVESPA Bolsa de Valores,
Mercadorias e
Futuros
BM&FBOVESPA Bolsa de Valores,
Mercadorias e
Futuros
BM&FBOVESPA Bolsa de Valores,
Mercadorias e
Futuros
Total financial
volume funded
(R$)
Highest
Price
(R$)
Lower
price
(R$)
Factor
Price
(R$)
664.392.189
35,00
29,81
R$ per
unit
971.831.194
35,99
27,21
R$ per
unit
890.684.261
32,00
26,28
R$ per
unit
893.622.222
33,24
28,47
R$ per
unit
963.809.173
32,85
24,49
R$ per
unit
754.418.847
29,85
24,75
R$ per
unit
795.428.358
25,68
17,9
R$ per
unit
757.968.011
9,55
8,21
R$ per
unit
385.275.761
9,41
5,26
R$ per
unit
389.790.979
9,45
6,54
R$ per
unit
244.853.913
7,36
4,5
R$ per
unit
163.451.037
5,95
2,2
R$ per
unit
Promissory notes of fourth issue, issued in a single series, already fully redeemed.
b Quantity
20 commercial notes.
c Total Amount
Issue date
Maturity Date
August 8, 2014
e Restrictions on trading
The commercial notes were the subject of public distribution with restricted placement efforts, pursuant
to CVM Instruction 476, under the firm commitment and, consequently, can only be traded between
qualified investors. The trading restriction period laid down in article 13 of that 90 days after the
statement expired date of issue
Not applicable. The second issue of promissory notes are not convertible into shares issued by the
company.
Convertibility
g Possibility of redemption:
The Company shall, unilaterally, and that, for the purposes of the paragraph 2, article 7, CVM
Instruction 134, the holders will have given their express prior consent, irrevocably and irreversibly, at
the moment of the subscription of the Notes in the primary market or acquisition in the secondary
market, as appropriate, perform, at any time, from the 31st (thirty first) day counted from the Issue
Date. In case of partial early redemption, the same will take place by lot, pursuant paragraph 4, article
7, CVM Instruction 134, and all the steps in this process, such as license, qualification, verification and
validation of the number of Notes to be redeemed will be held outside of CETIP. The Company shall
communicate the holders, the Payment Agent and CETIP, about the redemption with at least 2 (two)
business days of the date of the event.
The amount to be paid by the Company to the holder of each commercial note of the fourth issue
(ii) Assumptions and method
corresponds to the nominal value of the commercial notes plus the remuneration, calculated pro rata
of calculating the redemption
temporis since the date of issue until the date of effective payment, but without payment of prize or
value
penalty, according to the terms and conditions set forth in the notes.
h
The remuneration shall be paid in full by the due date or the date of any anticipated payment.
In case of payment after the deadline of any amount due in respect of any obligation under the
Commercial Papers, on any and all amounts in arrears would address, without notice, notification or
judicial or extrajudicial, and subject to the Remuneration, calculated pro rata from the date of default to
the date of actual payment, (i) fines of 2% (two percent), and (ii) interest of 1% (one percent) per month
or fraction of a month, calculated pro rata from the date of default until the date of actual payment
(v)
possible
restrictions
imposed on the issuer
The dividend distribution
The sale of certain assets
None
b Quantity
27.000
c Total amount
(i)
Issue date
(ii)
Maturity date
e Restrictions on trading
The debentures were the subject of public distribution with restricted placement efforts, pursuant to
CVM Instruction 476, under the firm commitment and, consequently, can only be traded between
qualified investors. The trading restriction period laid down in article 13 of that 90 days after the
statement expired date of issue
Not applicable.
Convertibility
g Possibility of redemption:
(i) Possibility of redemption
Not applicable.
Not applicable.
For more information on maturity date, please refer to item 18.10 below.
The face value of the debentures of the first issue will not be monetarily updated.
Interest paid semi-annually will account for 112.5% of the accumulated variation of the interest rate
of CDI.
(ii) interest
The remuneration provided above shall be paid every six months from the date of issue, being the
first payment on October 18, 2011, and the last payment of the maturity date, or on the date of any
settlement.
In case of payment after the deadline of any amount due in respect of any obligation under the
Commercial Papers, on any and all amounts in arrears would address, without notice, notification
or judicial or extrajudicial, and subject to the Remuneration, calculated pro rata from the date of
default to the date of actual payment, (i) fines of 2% (two percent), and (ii) interest of 1% (one
percent) per month or fraction of a month, calculated pro rata from the date of default until the date
of actual payment.
(iii)
guarantee and, if in the
form of collateral, description of Not applicable. The first issue of debentures does not have collateral or surety.
the goods used as collateral
(iv)
in the absence of a
guarantee, if the credit is The Debentures will be unsecured, in accordance with Article 58, caput of the Law No. 6,404/76.
secured or subordinate
(v)
possible restrictions
imposed on the issuer
the dividend distribution
the sale of certain assets
During deliberations of the General Meetings of debenture holders for each of the series, for each
outstanding Debenture one vote will be granted, permitting the establishment of proxy, whether
Debenture holder or not. Except for the provisions below, all deliberations to be taken in the General
Meeting of debenture holders will depend on approval of debenture holders representing at least
conditions for amendment of the 75% of outstanding Debentures. Not included in the quorum above are: I. quorums expressly
rights conferred
by such provided for in other clauses of the deed of issue; and II. changes, which should be approved by
securities
debenture holders representing at least 90% of outstanding Debentures: (a) of the provisions of this
clause; (b) of the quorums for approval provided for in the Deed of issue; (c) the remuneration,
except as provided in Clause of the Deed of issuance; (d) any dates for payment of any amounts
provided for in the Deed of issuance; (e) of the term of the Debentures; (f) of the type of Debentures;
(g) creation of a repricing event; (j) of any Event of Default.
None
Identification of securities
Quantity
27.000
Total Amount
Issue date
Maturity Date
Restrictions on trading
e
Yes. The debentures were subject of public distribution with restricted placement efforts, pursuant
to CVM Instruction 476, under the firm commitment to the placement of 20,000 debentures, and
under the best-efforts placement in relation to the remaining debentures. The debentures can only
be traded between qualified investors and after a 90 days period from the date of subscription or
purchase according to the articles 13 and 15 of CVM Instruction 476, and compliance by the
Company of its obligations under Article 17 of CVM Instruction 476.
Convertibility
Not applicable.
Possibility of redemption:
Not applicable.
For more information on maturity date, please refer to item 18.10 below.
(ii)
Interest
Not applicable. The second issue of debentures does not have collateral or surety.
The Debentures will be unsecured, in accordance with Article 58, caput of the Law No. 6,404/76.
For more information on the fiduciary agent, please refer to item 18.10 below.
During deliberations of the General Meetings of first series debenture holders and General
Meetings of second series debenture holders, for each outstanding Debenture one vote will be
granted, permitting the establishment of proxy, whether Debenture holder or not. Except for the
provisions below, (i) all deliberations to be taken in the General Meeting of debenture holders will
depend on approval of debenture holders of the first series representing at least 75% of outstanding
First Series Debentures; and (ii) all deliberations to be taken in the General Meeting of debenture
holders will depend on approval of debenture holders of the second series representing at least
75% of outstanding Second Series Debentures.
Not included in the quorum above are: (i) quorums expressly provided for in other clauses of the
deed of issue; and (ii) changes, which should be approved by debenture holders of the first series
representing at least 90% of outstanding first series debentures and by debenture holders of the
second series representing at least 90% of outstanding second series debentures, (a) of the
provisions of this clause; (b) of the quorums for approval provided for in the Deed of issue; (c) the
remuneration, except for changes resulting from extinction, limitation and / or non-disclosure of the
DI rate or IPCA, as provided in Clause of the Deed of issuance; (d) any dates for payment of any
amounts provided for in the Deed of issuance; (e) of the term of the Debentures; (f) of the type of
Debentures; (g) creation of a repricing event; (h) the provisions relating to optional early
redemption; (i) the provisions relating to early amortization (j) of any Event of Default.
Other relevant
characteristics
None.
Total Amount
Issue date
Maturity Date
Restrictions on trading
e
f
g
Convertibility
Possibility of
redemption:
Assumptions and
method of calculating
the redemption value
Yes. The debentures were subject of public distribution with restricted placement efforts, pursuant to
CVM Instruction 476, under the firm commitment to the placement of 20,000 debentures, and under
the best-efforts placement in relation to the remaining debentures. The debentures can only be traded
between qualified investors and after a 90 days period from the date of subscription or purchase
according to the articles 13 and 15 of CVM Instruction 476, and compliance by the Company of its
obligations under Article 17 of CVM Instruction 476.
Not applicable.
Yes
The Company may, at its sole discretion, make, at any time, optional early redemption offer, total or
partial, of the outstanding Debentures, with the consequent cancellation of such Debentures, which
will be sent to all Bondholders, without distinction, assured equal conditions to all Bondholders to
accept the early redemption of the Debentures held by them, through an Optional Early Redemption
Offer. The amount to be paid in respect of each Debenture indicated by their respective holders into
joining the Optional Early Redemption Offer will be equal to the outstanding balance of the Par Value,
plus (a) Remuneration, calculated pro rata from the date issuance or payment date immediately
preceding Compensation, as appropriate, until the date of actual payment; and (b) if applicable, the
redemption premium to be offered to the Bondholders, at the sole discretion of the Company, which
cannot be negative redemption.
if debt securities,
indicate where
applicable:
Conditions for
acceleration
For more information on maturity date, please refer to item 18.10 below.
(ii) interest
I. Monetary Adjustment: The nominal value of the debentures of the third issue will not be monetarily
updated.
II. Compensatory Interest: on the outstanding balance of the Nominal Value of the Debentures
outstanding focus interest corresponding to 108.75% (one hundred and seventy-eight point five
percent) of the accumulated variation of average daily DI - Interbank Deposits one day, calculated
and published daily by CETIP in the daily bulletin on its website (http:// www.cetip.com.br) calculated
exponentially and cumulatively pro rata by days elapsed from the Issue Date or payment date
immediately preceding Compensation form as the case until the date of actual payment. Without
prejudice to the payments related to early redemption of the Debentures and / or early maturity of
obligations on the Debentures, the remuneration will be payable semiannually from the Issue Date,
on the 30th of May and November of each year, with the first payment on November 30, 2014 and
the last on the Maturity Date.
For more information on the fiduciary agent, please refer to item 18.10 below.
During deliberations of the General Meetings of debenture holders, for each outstanding Debenture
one vote will be granted, permitting the establishment of proxy, whether Debenture holder or not.
Except for the provisions below, (i) all deliberations to be taken in the General Meeting of debenture
holders will depend on approval of debenture holders of the first series representing at least 75% of
outstanding First Series Debentures; and (ii) all deliberations to be taken in the General Meeting of
debenture holders will depend on approval of debenture holders of the second series representing at
least 75% of outstanding Second Series Debentures.
Not included in the quorum above are: (i) quorums expressly provided for in other clauses of the deed
of issue; and (ii) changes, which should be approved by debenture holders representing at least 90%
of outstanding debentures, (a) of the provisions of this clause; (b) of the quorums for approval provided
for in the Deed of issue; (c) the remuneration, except for changes resulting from extinction, limitation
and / or non-disclosure of the DI rate or IPCA, as provided in Clause of the Deed of issuance; (d) any
dates for payment of any amounts provided for in the Deed of issuance; (e) of the term of the
Debentures; (f) of the type of Debentures; (g) creation of a repricing event; (h) the provisions relating
to optional early redemption; (i) the provisions relating to early amortization (j) of any Event of Default.
Other relevant
characteristics
None
18.6 Description of the Brazilian markets where the company's securities are admitted for
trading
Shares
The Companys common shares are traded at the BM&FBOVESPA.
Commercial Paper
The Companys first, second, third and fourth issuance of commercial paper, described in table
18.5 of this Reference Form, were registered for trading in the secondary market, through
CETIP21 - Ttulos e Valores Mobilirios, managed and operated by CETIP, trading being settled
through CETIP and electronic custody of the commercial paper by CETIP. The second issue of
commercial papers were already fully redeemed on November 30, 2012. The third issue of
commercial papers were already fully redeemed on December 3, 2012. The fourth issuance of
commercial paper was fully redeemed in June 20, 2014.
Debentures
The debentures issued by the Company, first, second and third issuance, described at table
18.5 of this Reference Form, were registered for trading in the secondary market and electronic
custody SND Mdulo Nacional de Debntures, managed and operated by CETIP.
18.7 Description of the securities admitted to trading in foreign markets
a. Country
United States of America.
b. Market
The ADRs of Mills are traded in the over-the-counter market (OTC) under CUSIP 60114T103,
ISIN BRMILSACNOR2 and ticker MILTY.
c. Administrative entity for the market in which securities are listed for trading
OTC (Over-The-Counter)
d. Date of listing for trading
Trading on OTC started on December 18, 2013.
e. Trading segment, if any
The ADRs of Mills are traded in the over-the-counter (OTC) market in the OTC Pink Current
Information segment.
f. Date of first listing on trading segment
On October 29, 2013, the Board of Directors approved the decision to establish the Sponsored
Level 1 American Depositary Receipt Program (Level I ADR Program), having Mills shares as
underlying assets.
The Level I ADR Program was approved by the Brazilian Securities and Exchange Commission
(CVM) on December 9, 2013 and by the U.S. Securities and Exchange Commission (SEC) on
December 11, 2013, with start of trading on December 18, 2013.
g. Percentage of trading volume overseas when compared to the total trading volume
for each class and type of security last year
There were no ADR trading in 2013. During 2014, 68,500 Mills ADRs were issued and 68,500
Mills ADRs were cancelled, according to total volume of trades of 68,500 ADRs.
h.
i.
Depositary bank, if any
JPMorgan Chase Bank
j.
18.9
Description of the public offerings made by the Company or by third parties,
including controlling companies and subsidiaries, relating to the Companys securities
Public offerings of distribution of commercial promissory notes and debentures, with restricted
placement efforts
Promissory notes of first, second, third and fourth issue and the debentures of the first, second
and third issue were subject of public offerings, with restricted efforts of placement, in accordance
with CVM Instruction No. 476, of January 16, 2009, intended exclusively for qualified investors.
The first issue of commercial papers were already fully redeemed on April 28, 2011. The second
issue of commercial papers were already fully redeemed on November 30, 2012. The third issue
of commercial papers were already fully redeemed on December 3, 2012. The third issue of
commercial papers were already fully redeemed on June 20, 2014. All relevant characteristics of
these securities are described in section 18.5 of this Reference Form.
[18.10 If the issuer has made a public offering of securities, indicate: (a) how the proceeds
from the offering were used; (b) if there were relevant differences between the effective
use of resources and the proposals disclosed in the prospectus of distribution; (c) if there
were deviations, reasons for such deviations]
18.11
Description of takeover bids made by Company for shares issued by third parties
Not applicable, as the Company did not make takeover bids for shares issued by third parties.
18.12
Promissory notes of the first issue, issued in a single series, now fully redeemed
a Identification of securities Forth issuance of commercial papers in a single series, now fully redeemed.
b Quantidade
20 Commercial Notes
c Total amount
Issue Date
Maturity Date
August 8, 2014
e Restrictions on trading
The commercial notes were the subject of public distribution with restricted placement
efforts, pursuant to CVM Instruction 476, under the firm commitment and, consequently,
can only be traded between qualified investors. The trading restriction period laid down
in article 13 of that 90 days after the statement expired date of issue.
Not applicable. The fourth issue of promissory notes are not convertible into shares
issued by the company.
Convertibility
g Possibility of redemption:
(i)
Possibility
redemption
The Company shall, unilaterally, and that, for the purposes of the paragraph 2, article
7, CVM Instruction 134, the holders will have given their express prior consent,
irrevocably and irreversibly, at the moment of the subscription of the Notes in the primary
market or acquisition in the secondary market, as appropriate, perform, at any time, from
of the 31st (thirty first) day counted from the Issue Date. In case of partial early redemption,
the same will take place by lot, pursuant paragraph 4, article 7, CVM Instruction 134,
and all the steps in this process, such as license, qualification, verification and validation
of the number of Notes to be redeemed will be held outside of CETIP. The Company
shall communicate the holders, the Payment Agent and CETIP, about the redemption
with at least 2 (two) business days of the date of the event.
(ii) Assumptions and The amount to be paid by the Company to the holder of each commercial note of the
method of calculating the fourth issue corresponds to the nominal value of the commercial notes plus the
redemption value
remuneration, calculated pro rata temporis since the date of issue until the date of
effective payment, but without payment of prize or penalty, according to the terms and
conditions set forth in the notes.
h
(ii) interest
of
certain
See accelerated maturity conditions described above.
of
new
Conditions
for
amendment of the rights The amendment of any rights conferred by each note issuance depends on commercial
conferred
by
such second holder approval.
securities
Other
characteristics
relevant
None.
Identification of securities
Quantity
27.000
Total amount
Restrictions on trading
Yes. The debentures were the subject of public distribution with restricted placement efforts,
pursuant to CVM Instruction 476, under the firm commitment and, consequently, can only be traded
between qualified investors. The trading restriction period laid down in article 13 of that 90 days
after the statement expired date of issue
Convertibility
Not applicable.
Possibility of redemption
Not applicable.
(i) Conditions
acceleration
Deed of Issue are maintained, in the occurrence of any of the events summarized below: I. Default
by non-payment of the Nominal Value, of Remuneration, premium, or any other amounts owed to
the debenture holders; V. assignment or pledge any form of transfer or promise of transfer to third
parties in whole or in part by the Company, any of its obligations under the Deed, without the prior
consent in writing of Debenture Holders representing at least 75% of the outstanding; VI. invalidity,
unenforceability or invalidity of the deed and / or the Distribution Agreement, is not remedied within
for 10 days from the date of the respective event; VII. (a) bankruptcy of the Company, and /or any of
its subsidiary or controlling Company; (b) voluntary bankruptcy application made by the Company
and / or any of its subsidiary or controlling Company; (c) bankruptcy filing by the Company, and /or
any of its subsidiary or controlling Company, formulated by others, not elided within legal; (d) petition
for judicial or extrajudicial recovery of the Company and /or any of its subsidiary or controlling
Company, regardless of approval of the request; or (e) liquidation, dissolution or extinction of the
Company, and /or any of its subsidiary or controlling Company, unless the liquidation, dissolution
and / or extinction during the course of a corporate transaction which does not constitute an Event
of Default; VIII. changing the company into a limited liability company, pursuant to articles 220 to
222 of Law No. 6,404/76;IX. approval of incorporation, merger or split of the company or sale, by
the company, of all or substantially all of its assets or its mining properties, with some exceptions:
(a) if the transaction has been approved in advance by the Debenture Holders representing at least
75% of the outstanding Debentures; or (b) if the Debenture Holders that wish to do so, be assured
that, during the minimum period of six months from the date of publication of the minutes of
corporate acts in the transaction, the redemption of the Debentures held by them, by paying the
outstanding balance of the Nominal Value, plus Remuneration, calculated pro rata from the Issue
Date or the date of payment of compensation immediately preceding, whichever is applicable until
the date of actual payments; or (c) by the incorporation of the Company (so that the Company is
the remaining entity), of any Subsidiary; or (d) if the operation is carried out solely between
Subsidiaries; X. capital reduction, except if previously approved by Debenture Holders representing
at least 75% of the outstanding Debentures, pursuant to Article 174, paragraph 3, of Law No.
6,404/76; XI. change or transfer of control (as defined under Article 116 of Law No. 6,404/76), direct
or indirect, of the Company, from any Controlling Company and / or any Subsidiary, except if
previously approved by Debenture Holders representing at least 75% of the outstanding
Debentures; XV. early maturity of any financial obligation of the Company and / or any Subsidiary,
which amount, individual or aggregate, is equal to or greater than R$ 5,000,000.00 or its equivalent
in other currencies, and/or occurrence of any event or default of any obligation which, after the
expiration of any period provided in their document, or in other cases, within 10 days from the date
of their default, give rise to the declaration of acceleration any financial obligation of the Company
and / or any Subsidiary, which amount, individual or aggregate, is equal to or greater than R$
5,000,000.00 or its equivalent in other currencies.
The face value of the debentures of the first issue will not be monetarily updated.
Interest paid semi-annually will account for 112.5% of the accumulated variation of the interest rate
of CDI.
(iii)
interest
The remuneration provided above shall be paid every six months from the date of issue, being the
first payment on October 18, 2011, and the last payment of the maturity date, or on the date of any
settlement.
In case of payment after the deadline of any amount due in respect of any obligation under the
Commercial Papers, on any and all amounts in arrears would address, without notice, notification
or judicial or extrajudicial, and subject to the Remuneration, calculated pro rata from the date of
default to the date of actual payment, (i) fines of 2% (two percent), and (ii) interest of 1% (one
percent) per month or fraction of a month, calculated pro rata from the date of default until the date
of actual payment
on the value specified in item i, readjusted as the paragraph iii; and (vi) plus, where lives in your
payment, regardless of notice, judicial or extrajudicial notification or notification, on the values
arrears, (a) fine 2 moratorium; and (b) interest on arrears of 1 month, calculated pro rata temporis
since the date of default until the payment date.
Reimbursement of expenses: the Trustee shall be repaid by the company for all reasonable costs
incurred that have proven to protect the rights and interests of the debenture holders or to perform
their claims within 30 (thirty) days from the delivery of the evidentiary documents accordingly,
provided that, where possible, the costs have been approved in advance by the company, which
shall be deemed to be approved if the company does not appear within 2 (two) working days from
the date of receipt of their request by fiduciary agent.
Obligations: The fiduciary agent, as provided for in the deed of issue, will have the functions laid
down in the law and in accordance with the rules and regulations of the Securities and Exchange
Commission, and use of any action to protect rights or defend interests of the debenture holders.
Replacement: In case of absence, temporary impediments, renunciation, intervention, judicial or
extrajudicial settlement, bankruptcy, or any other case of vacancy in the fiduciary agent, the
following rules shall apply: (i) is provided to debenture holders, after the closing of the offer of the
debentures of the first issue, proceed with the replacement of the trustee and the indication of his
replacement, general meeting of debenture holders especially convened for this purpose; (ii) if the
Trustee is unable to continue to perform their duties by supervening circumstances to the deed of
issue, shall immediately communicate the fact to debenture holders, requesting his replacement
and convene a general meeting of debenture holders for this purpose; (iii) if the fiduciary agent,
renounces functions, should remain in the exercise of their duties until a replacement is indicated
by the institution and approved by general meeting of debenture holders, and assume their functions
effectively; (iv) shall be performed, within the maximum period of 30 (thirty) days from the date of
the event that determine, general meeting of debenture holders, for choosing the new fiduciary
agent; (v) replacement, on a permanent basis, the fiduciary agent (a) shall be subject to prior
notification to the CVM and its manifestation on the attendance to the requirements provided for in
article 9 of CVM Instruction No. 28, November 23, 1983, as amended, and (b) shall be subject to
the addition to the deed of issue; payments to the trustee replaced shall be effected in accordance
with the proportionality to the period of effective service delivery; (vi) the trustee will be entitled to
the same salary replacement perceived by the previous, if (a) the company has not agreed with the
new value of the remuneration of the trustee proposed by general meeting of debenture holders, or
(b) the general meeting of debenture holders does not act on the matter; (vii) the fiduciary agent
should substitute, immediately after his appointment, communicate it to the company and to
debenture holders; and (viii) shall apply to cases of substitution of Trustee the norms and precepts
from the Securities and Exchange Commission.
During deliberations of the General Meetings of debenture holders for each of the series, for each
outstanding Debenture one vote will be granted, permitting the establishment of proxy, whether
Debenture holder or not. Except for the provisions below, all deliberations to be taken in the General
Meeting of debenture holders will depend on approval of debenture holders representing at least
75% of outstanding Debentures.
i
relevant
None.
Identification of securities
Quantity
27.000
Total amount
15 de agosto de 2012
1st series: August 15, 2017.
Restrictions on trading
Yes. The debentures were subject of public distribution with restricted placement efforts, pursuant
to CVM Instruction 476, under the firm commitment to the placement of 20,000 debentures, and
under the best-efforts placement in relation to the remaining debentures. The debentures can only
be traded between qualified investors and after a 90 days period from the date of subscription or
purchase according to the articles 13 and 15 of CVM Instruction 476, and compliance by the
Company of its obligations under Article 17 of CVM Instruction 476.
f
Convertibility
Not applicable.
Possibility of redemption
Not applicable.
(i) Conditions
acceleration
The obligations may be declared mature in advance, on the terms and conditions set forth in the
Deed of Issue, in the occurrence of any of the events summarized below: I. Default by the Company
of any financial obligation on the Debentures, due under the Deed of Issue, at the date of payment
provided for in the Deed of Issue; II. Default by the Company of any non-financial obligation on the
Debentures foreseen in the Deed of Issue (a) that is not properly solved within specific remedy; or
(b) not having specific term remediation, if it is not properly solved within 15 days from the date of
such default, being the period provided in this subsection does not apply to obligations to which it
has a deadline stipulated or specific cure for which the period of cure has been expressly excluded;
III. judicial questioning by the Company for any controlling company, directly or indirectly (controlling
as defined in article 116 of the Corporate Law) of the Company (Controlling), and / or controlled
company (controlled as defined in article 116 of the Corporate Law) by the Company (Controlled),
for
of the Issue of Deed; IV. judicial questioning by any person not mentioned in section III above, the
Issue of Deed, suspended or not remedied within 15 days from the date on which the Company
becomes aware of the judging of such legal challenge; V. assignment or pledge any form of transfer
or promise of transfer to third parties in whole or in part by the Company, any of its obligations
under the Deed, without the prior consent in writing of Debenture Holders representing at least 75%
of the outstanding; VI. invalidity, unenforceability or invalidity of the Deed and/or the Distribution
Agreement, is not remedied within 15 days from the date of the respective event; VII. (a) bankruptcy
of the Company, and/or any of its subsidiary or controlling Company; (b) voluntary bankruptcy
application made by the Company and / or any of its subsidiary or controlling Company; (c)
bankruptcy filing by the Company, and/or any of its subsidiary or controlling Company, formulated
by others, not suppressed within the legal deadline; (d) petition for judicial or extrajudicial recovery
of the Company and /or any of its subsidiary or controlling Company, regardless of approval of the
request; or (e) liquidation, dissolution or extinction of the Company, and/or any of its subsidiary or
controlling Company, unless the liquidation, dissolution and/or extinction during the course of a
corporate transaction which does not constitute an Event of Default, pursuant to section IX below;
VIII. changing the company into a limited liability company, pursuant to articles 220 to 222 of Law
No. 6,404/76; IX. approval of incorporation, merger or split of the company or sale, by the company,
of all or substantially all of its assets or its mining properties, with some exceptions: (a) if the
transaction has been approved in advance by the Debenture Holders representing at least 75% of
the outstanding Debentures; or (b) if the Debenture Holders that wish to do so, be assured that,
during the minimum period of 6 months from the date of publication of the minutes of corporate acts
in the transaction, the redemption of the Debentures held by them, by paying the outstanding
balance of the Nominal Value, plus Remuneration, calculated pro rata from the Issue Date or the
date of payment of compensation immediately preceding, whichever is applicable until the date of
actual payments; or (c) by the incorporation of the Company (so that the Company is the remaining
entity), of any Subsidiary; or (d) if the operation is carried out solely between Subsidiaries; X. capital
reduction, except if previously approved by Debenture Holders representing at least 75% of the
outstanding Debentures, pursuant to Article 174, paragraph 3, of Law No. 6,404/76; XI. change or
transfer of control (as defined under Article 116 of Law No. 6,404/76), direct or indirect, of the
Company, from any Controlling Company and / or any Subsidiary, except if previously approved by
Debenture Holders representing at least 75% of the outstanding Debentures; XII. amendment of
the Company's purposes and / or any Subsidiary, as provided in its bylaws or social contract as
applicable, in effect on the Issue Date, unless such amendment: (a) if the transaction has been
approved in advance by the Debenture Holders representing at least 75% of the outstanding
Debentures; (b) does not lead to a change in the principal activity of the Company or its Subsidiary;
XIII. non-renewal, cancellation, revocation or suspension of licenses and permits, including
environmental, required by the competent bodies to carry out regular activities of the Company,
since its effects have not solved or suspended within 15 days from the date of its non-renewal,
cancellation, revocation or suspension respective (s) permit (s) or license (s); XIV. occurrence of
any event that causes (a) in relation to the Company, (i) any material adverse effect on the condition
(financial or of any nature), business, property, results of operations and/or prospects; (ii) any
adverse effect on the powers or legal capacity and/or economic-financial to fulfill any of the
obligations under the Deed of Issue, and/or (iii) any event or condition that, after the deadline,
formal notice, or both, may result in a Default event, or (b) with respect to Deed of Issue, any
adverse effect on (i) the proper execution, legality, validity and / or enforceability of the obligations
documents, and / or (ii) the rights contained in the Debenture Deed of Issue, since it has not solved
its effects or suspended within 15 days from the date of knowledge of event the Company ("Material
Adverse Effect"); XV. non maintenance by the Company and/or any Subsidiary, insurance, as the
current best practices in the market segment of the Company with respect to its material operating
assets, not solved within 15 days from whatever happens first: (a) the date on which the Company
becomes aware of the event, and promptly notifies the Fiduciary Agent or (b) the date on which the
Company receives written notice from the Fiduciary Agent; XVI. early maturity of any financial
obligation of the Company and/or any Subsidiary, which amount, individual or aggregate, is equal
to or greater than R$ 10,000,000.00, annually updated, from the Issue Date, by the positive
variation of the IPCA, or its equivalent in other currencies, and / or the occurrence of any event or
default of any obligation which, after the expiration of any cure period provided for in the respective
document, may give rise, immediately the declaration of acceleration of any financial obligation of
the Company and/or any Subsidiary, which amount, individual or aggregate, is equal to or greater
than R$ 10,000,000.00, annually updated, from the Issue Date, by the positive variation of the
IPCA, or its equivalent in other currencies XVII. securities protest against the Company and / or
any Subsidiary, which amount, individual or aggregate, is equal to or greater than R$
10,000,000.00(ten million reais), annually updated, from the Issue Date, by the positive variation of
the IPCA, or its equivalent in other currencies, unless, within 10 (ten) days from the date of their
protest has been proven that (a) the protest has been made in error or bad faith of the third and
was taken to the appropriate judicial order restraining or cancellation of their effects; b) the protest
was canceled, or (c) the value (s) of title (s) protested (s) was deposited in court; XVIII. default by
the Company and / or any subsidiary of any decision or final court judgment or any judgment or
arbitral award not subject to appeal against the Company and / or any Subsidiary, which amount,
individual or aggregate, is equal to or greater than R$ 10,000,000.00, annually updated, from the
Issue Date, by the positive variation of the IPCA, or its equivalent in other currencies, not paid within
the stipulated payment for their decision or judgment XIX. attachment or sequestration of assets of
the Company and / or any Subsidiary, which amount, individual or aggregate, is equal to or greater
than R$ 10,000,000.00, annually updated, from the Issue Date, by the positive variation of the
IPCA, or its equivalent in other currencies, unless, within ten days from the date of their arrest or
abduction, has been proven that the arrest or abduction was challenged or replaced by other
security; XX. expropriation, confiscation or any other measure of any governmental entity in any
jurisdiction that results in loss by the Company and / or any Subsidiary of the property and / or the
direct or indirect ownership of a substantial portion of its assets; XXI. sale, assignment, or alienation
in any form or constitution of mortgage, pledge, lien, Fiduciary assignment agreement, usufruct,
trust, promise to sell, purchase option, right of first refusal, charge, encumbrance or onus, judicial
or extrajudicial, voluntary or involuntary, or any other action which has the practical effect similar to
any of the above expressions ("Onus"), whether in a single transaction or a series of transactions,
related or not, on assets of the Company and/or any subsidiary amounting more than 15% of the
total assets of the Company, based on the latest Company's Consolidated Financial Statements
(as defined in Section 7.1 of Deed of Issue), unless (a) if the transaction has been approved in
advance by the Debenture Holders representing at least 75% of the outstanding Debentures; or (b)
the establishment of liens on any asset acquired by the Company or any Subsidiary, provided that
the lien consists exclusively on assets acquired and to finance the acquisition of such asset; XXII.
verifying that any of the statements made by the Company in the Issue Deed and / or the
Underwriting Agreement is false, inconsistent, inaccurate, incomplete, insufficient or incorrect in
any material respect, not cured within ten (10) days from the earlier of (a) the date upon which the
Company is aware of the incorrectness or (b) the date upon which the Company receives written
notice from the Fiduciary Agent; XXIII. non-use by the Company, the net resources obtained of the
Issue strictly in terms the Deed of Issue; XXIV. distribution and/or payment by the Company of
dividends, interest on capital or other distributions of profits to shareholders, if the Company is in
default of any of its obligations under the Issuance Deed, except for the payment of dividend must
not exceed 25% of net income under Article 202 of the Corporations Act, except for the payment of
the mandatory dividend of no more than 25% of net income under Article 202 of the Law No.
6,404/76, and XXV. non-compliance by the Company of any financial ratios below ("ndices
Financeiros"), to be determined by the Company under the Deed of Issue and verified by the
Fiduciary agent within 10 days from the date of receipt by the Fiduciary agent, the information
referred to the Deed of Issue based on the Consolidated Financial Statements of the Company for
each quarter of the calendar year, from and including the Consolidated Financial Statements of the
Company on December 31, 2012: (a) the financial index due to the quotient of dividing Net Debt
(as defined in the Issue Deed) to EBITDA (as defined in the Issue Deed), which must be less than
or equal to 3 and (b) the financial index due to the quotient of dividing EBITDA by Net Financial
Expenses (as defined in the Issue Deed), which should be equal or higher than 2.
(ii) interest
Notwithstanding the payments due to early redemption of the First Series Debentures and/or
acceleration of the obligations under the Debentures, pursuant to the Deed of Issue, the First Series
Compensation will be paid semiannually from the Issue Date, with the first payment on February
15, 2013 and the last, on the maturity date of the First Series.
The remuneration of each of the Second Series Debentures will be as follows:
I. Monetary Adjustment: The nominal of each Second Series Debentures will be adjusted by the
National Index of Consumer Prices Broad, released by the Brazilian Institute of Geography and
Statistics ("IPCA"), since the Issue Date until the date of actual payment, being the update
incorporated into the Nominal value of each Second Series Debentures automatically ("Second
Series Monetary Adjustment"). Notwithstanding the payments due to early redemption of the
Debentures and/or acceleration of the obligations under the Debentures, pursuant to the Deed of
Issue, the Second Series Monetary Adjustment will be paid on the same dates and the same
amount of amortization of nominal value of each Second Series Debentures, as provided in the
Deed of Issue.
During deliberations of the General Meetings of first series debenture holders and General
Meetings of second series debenture holders, for each outstanding Debenture one vote will be
granted, permitting the establishment of proxy, whether Debenture holder or not. Except for the
provisions below, (i) all deliberations to be taken in the General Meeting of debenture holders will
depend on approval of debenture holders of the first series representing at least 75% of outstanding
First Series Debentures; and (ii) all deliberations to be taken in the General Meeting of debenture
holders will depend on approval of debenture holders of the second series representing at least
75% of outstanding Second Series Debentures.
i
relevant
None.
Debentures
Non-convertible
of Unsecured Debentures of
third issuance single
series
Quantity
20,000
Total amount
R$ 200,000,000.00
Issue date
Maturity date
Restrictions
trading
Convertibility
Possibility
redemption
Not applicable
of
Yes
ii.
Interest
remuneration
will
be
payable
semiannually
from the Issue Date, on
the 30th of May and
November of each year,
with the first payment on
November 30, 2014 and
the last on the Maturity
Date.
iii.
guarantee
and, if in the form of
collateral,
description of the
goods used as
collateral
iv.
in
the
absence
of
a
guarantee, if the
credit is secured or
subordinate
v.
possible
restrictions
imposed on the
issuer
dividend
distribution
the
the
possibility of
debt
new
the issue
of new securities
vi the fiduciary
For more information on
agent, indicating
the fiduciary agent, please
the key terms of the
refer to item 18.10 below.
contract
During deliberations of the
General
Meetings
of
debenture holders, for
each
outstanding
Debenture one vote will
be granted, permitting the
establishment of proxy,
whether Debenture holder
or not. Except for the
provisions below, (i) all
deliberations to be taken
in the General Meeting of
debenture holders will
depend on approval of
Conditions
for
debenture holders of the
amendment of the
first series representing at
rights conferred by
least 75% of outstanding
such securities
First Series Debentures;
and (ii) all deliberations to
be taken in the General
Meeting of debenture
holders will depend on
approval of debenture
holders of the second
series representing at
least 75% of outstanding
Second
Series
Debentures.
Not included in the
quorum above are: (i)
quorums
expressly
provided for in other
clauses of the deed of
issue; and (ii) changes,
which should be approved
by debenture holders
representing at least 90%
of
outstanding
debentures, (a) of the
provisions of this clause;
(b) of the quorums for
approval provided for in
the Deed of issue; (c) the
remuneration, except for
changes resulting from
extinction, limitation and /
or non-disclosure of the DI
rate or IPCA, as provided
in Clause of the Deed of
issuance; (d) any dates for
payment of any amounts
provided for in the Deed of
issuance; (e) of the term
of the Debentures; (f) of
the type of Debentures;
(g) creation of a repricing
event; (h) the provisions
relating to optional early
redemption;
(i)
the
provisions relating to early
amortization (j) of any
Event of Default.
Other
relevant
None
characteristics
a
Identification of securities
Quantity
20.000
Total Amount
Restrictions on trading
Yes. The debentures were subject of public distribution with restricted placement
efforts, pursuant to CVM Instruction 476, under the firm commitment to the
placement of 20,000 debentures, and under the best-efforts placement in relation to
the remaining debentures. The debentures can only be traded between qualified
investors and after a 90 days period from the date of subscription or purchase
according to the articles 13 and 15 of CVM Instruction 476, and compliance by the
Company of its obligations under Article 17 of CVM Instruction 476.
Convertibility
Not applicable.
Possibilidade de resgate,
Como descrito no item 18.5.
indicando:
(i) hipteses de resgate e
forma de clculo do valor Como descrito no item 18.5.
de resgate
Quando
os
valores
mobilirios
forem
de
dvida, indicar, quando
aplicvel:
para o regular exerccio das atividades desenvolvidas pela Companhia, desde que
no tenha seus efeitos sanados ou suspensos no prazo de 15 (quinze) dias
contados da data de no renovao, cancelamento, revogao ou suspenso da(s)
respectiva(s) autorizao(es) ou licena(s); XIV. ocorrncia de qualquer evento
que cause (a) em relao Companhia, (i) qualquer efeito adverso relevante na
situao (financeira ou de outra natureza), nos negcios, nos bens, nos resultados
operacionais e/ou nas perspectivas; (ii) qualquer efeito adverso nos poderes ou
capacidade jurdica e/ou econmico-financeira de cumprir qualquer das obrigaes
nos termos da Escritura de Emisso; e/ou (iii) qualquer evento ou condio que,
aps o decurso de prazo ou envio de notificao, ou ambos, possa resultar em um
Evento de Inadimplemento; ou (b) em relao a Escritura de Emisso, qualquer
efeito adverso (i) na correta formalizao, legalidade, validade e/ou exequibilidade
dos Documentos das Obrigaes; e/ou (ii) nos direitos dos Debenturistas
constantes da Escritura de Emisso, desde que no tenha seus efeitos sanados ou
suspensos no prazo de 15 (quinze) dias contados da data de cincia do evento pela
Companhia ("Efeito Adverso Relevante"); XV. no manuteno, pela Companhia
e/ou por qualquer Controlada, de seguro, conforme as melhores prticas correntes
no mercado de atuao da Companhia, com relao a seus ativos operacionais
relevantes, no sanado no prazo de at 15 (quinze) dias contados do que ocorrer
primeiro entre (a) a data em que a Companhia tenha conhecimento do evento, e
tempestivamente notifique o Agente Fiducirio; ou (b) a data em que a Companhia
receba aviso por escrito neste sentido do Agente Fiducirio; XVI. vencimento
antecipado de qualquer obrigao financeira da Companhia e/ou de qualquer
Controlada, cujo valor, individual ou agregado, seja igual ou superior a
R$10.000.000,00 (dez milhes de reais), atualizados anualmente, a partir da Data
de Emisso, pela variao positiva do IPCA, ou seu equivalente em outras moedas,
e/ou ocorrncia de qualquer evento ou inadimplemento de qualquer obrigao que,
aps o decurso de qualquer prazo de cura previsto no respectivo documento, possa
ensejar, imediatamente, a declarao de vencimento antecipado de qualquer
obrigao financeira da Companhia e/ou de qualquer Controlada, cujo valor,
individual ou agregado, seja igual ou superior a R$10.000.000,00 (dez milhes de
reais), atualizados anualmente, a partir da Data de Emisso, pela variao positiva
do IPCA, ou seu equivalente em outras moedas; XVII. protesto de ttulos contra a
Companhia e/ou qualquer Controlada, cujo valor, individual ou agregado, seja igual
ou superior a R$10.000.000,00 (dez milhes de reais), atualizados anualmente, a
partir da Data de Emisso, pela variao positiva do IPCA, ou seu equivalente em
outras moedas, exceto se, no prazo de at 10 (dez) dias contados da data do
respectivo protesto, tiver sido comprovado que (a) o protesto foi efetuado por erro
ou m-f de terceiro e tenha sido tomada medida judicial adequada para a anulao
ou sustao de seus efeitos; (b) o protesto foi cancelado; ou (c) o valor do(s)
ttulo(s) protestado(s) foi depositado em juzo; XVIII. inadimplemento, pela
Companhia e/ou por qualquer Controlada, de qualquer deciso ou sentena judicial
transitada em julgado ou de qualquer deciso ou sentena arbitral no sujeita a
recurso contra a Companhia e/ou qualquer Controlada, em valor, individual ou
agregado, igual ou superior a R$10.000.000,00 (dez milhes de reais), atualizados
anualmente, a partir da Data de Emisso, pela variao positiva do IPCA, ou seu
equivalente em outras moedas, no sanado no prazo para pagamento estipulado
na respectiva deciso ou sentena; XIX. arresto ou sequestro de bens da
Companhia e/ou de qualquer Controlada, cujo valor, individual ou em conjunto, seja
igual ou superior a R$10.000.000,00 (dez milhes de reais), atualizados
anualmente, a partir da Data de Emisso, pela variao positiva do IPCA, ou seu
equivalente em outras moedas, exceto se, no prazo de 10 (dez) dias contados da
data do respectivo arresto ou sequestro, tiver sido comprovado que o arresto ou o
sequestro foi contestado ou substitudo por outra garantia; XX. desapropriao,
confisco ou qualquer outra medida de qualquer entidade governamental de
qualquer jurisdio que resulte na perda, pela Companhia e/ou por qualquer
Controlada, da propriedade e/ou da posse direta ou indireta de parte substancial de
seus ativos; XXI. venda, cesso, ou alienao, de qualquer forma, ou constituio
de hipoteca, penhor, alienao fiduciria, cesso fiduciria, usufruto, fideicomisso,
promessa de venda, opo de compra, direito de preferncia, encargo, gravame ou
nus, judicial ou extrajudicial, voluntrio ou involuntrio, ou outro ato que tenha o
efeito prtico similar a qualquer das expresses acima ("nus"), seja em uma nica
operao ou em uma srie de operaes, relacionadas ou no, sobre ativos da
Companhia e/ou de qualquer Controlada cujo valor represente mais de 15% (quinze
por cento) do valor total dos ativos da Companhia, tendo por base as
Demonstraes Financeiras Consolidadas da Companhia (conforme definido na
Clusula 7.1 da Escritura de Emisso) mais recentes, exceto se (a) a operao tiver
sido previamente aprovada por Debenturistas representando, no mnimo, 75%
(setenta e cinco por cento) das Debntures em circulao; ou (b) pela constituio
de nus sobre qualquer ativo adquirido pela Companhia ou por qualquer
Controlada, desde que o nus seja constitudo exclusivamente sobre o ativo
adquirido e para financiar a aquisio de tal ativo; XXII. comprovao de que
qualquer das declaraes prestadas pela Companhia na Escritura de Emisso e/ou
no Contrato de Distribuio falsa, inconsistente, imprecisa, incompleta, incorreta
ou insuficiente em qualquer aspecto relevante, no sanado no prazo de at 10 (dez)
dias contados do que ocorrer primeiro entre (a) a data em que a Companhia tenha
(ii) juros
(iii) garantia e, se real, No aplicvel. As Debntures de terceira emisso no contam com garantia real ou
descrio do bem objeto
fidejussria.
(iv) na
ausncia
de
garantia, se o crdito As Debntures sero da espcie quirografria, nos termos do artigo 58, caput, da
quirografrio
ou Lei das Sociedades por Aes.
subordinado
(v) eventuais restries
impostas ao emissor em Vide condies de vencimento antecipado descritas acima.
relao:
distribuio
dividendos
de
alienao
determinados ativos
de
contratao de novas
dvidas
emisso de novos
valores mobilirios
perodo da efetiva prestao dos servios; (vii) o agente fiducirio substituto far
jus mesma remunerao percebida pelo anterior, caso (a) a Companhia no
tenha concordado com o novo valor da remunerao do agente fiducirio proposto
pelas assembleias gerais de Debenturistas a que se refere o inciso "iv" acima, ou
(b) as assembleias gerais de Debenturistas a que se refere o inciso "iv" acima no
deliberem sobre a matria; (viii) o agente fiducirio substituto dever,
imediatamente aps sua nomeao, comunic-la Companhia e aos Debenturistas
nos termos da Escritura de Emisso; e (ix) aplicam-se s hipteses de substituio
do Agente Fiducirio as normas e preceitos emanados da Comisso de Valores
Mobilirios.
Nas deliberaes das assembleias gerais de Debenturistas a cada Debnture em
circulao caber um voto, admitida a constituio de mandatrio, Debenturista ou
no. Exceto pelo disposto abaixo, todas as deliberaes a serem tomadas (i) em
assembleia geral de Debenturistas dependero de aprovao de Debenturistas
representando, no mnimo, 75% das Debntures da Primeira Srie em circulao.
No esto includos no qurum acima: (i) os quruns expressamente previstos nas
clusulas da Escritura de Emisso; e (ii) as alteraes, que somente podero ser
aprovadas por Debenturistas representando, no mnimo, 90% das Debntures, (a)
das disposies da Escritura de Emisso; (b) de qualquer dos quruns previstos na
Escritura de Emisso; (c) da Remunerao, exceto no caso de alterao decorrente
de extino, limitao e/ou no divulgao da Taxa DI ou do IPCA, conforme
previsto na Escritura de Emisso; (d) de quaisquer datas de pagamento de
quaisquer valores previstos na Escritura de Emisso; (e) do prazo de vigncia das
Debntures; (f) da espcie das Debntures; (g) da criao de evento de
repactuao; (h) das disposies relativas a resgate antecipado facultativo; (i) das
disposies relativas a amortizaes antecipadas facultativas; ou (j) da redao de
qualquer Evento de Inadimplemento.
Outras
caractersticas
No h.
relevantes
19.1
Meeting
date
Buy-back
Outras caracter.
11/10/2014
11/10/2014
to
11/09/2014
Available
reserves
and profits
(Reais)
Type
Common
Class
Quantity
envisaged
(units)
4.000.000
Percentage
in relation to
outstanding
5.069199%
Approved
amount
purchased
(units)
2,285,300
Weighted
Average
Price
8.65
Quote
factor
R$ per
unit
%
purchased
57%
For the purposes of article 8 of CVM Instruction 10/80 the Directors determined and clarify that: (a) the Companys objective in the Repurchase Program is to
acquire shares of the Company's issuance, for treasury and subsequent cancellation or alienation, including in the context of any exercise of options under the
Company's stock option plan; (b) up to 4,000,000 common shares of the Companys issuance, all book-entry and without par value, may be acquired under the
Repurchase Program, subject to maintaining the minimum float of 25% of the shares (as required by the BM&FBovespa Novo Mercado Listing Regulations)
and to the requirement under article 3 of CVM Instruction 10/80 that the number of shares held in treasury shall not exceed 10% of the shares in circulation in
the market; (c) the deadline for effecting transactions in the context of the Program is 365 days as of the date hereof; (d) the number of common shares of the
Companys issuance that are in circulation in the market, as defined by CVM Instruction 10/80, is 82,907,932 (eighty-two million, nine hundred seven thousand,
nine hundred thirty-two), according to the registry for the share deposit account on November 3, 2014, as reported by the depositary institution; and (e) the
purchases in the context of the Repurchase Program will be effected over the exchange at market prices, with the intermediation of any of the following brokers:
(i) Votorantim Corretora de Ttulos e Valores Mobilirios Ltda., headquartered in the City and State of So Paulo at Avenida das Naes Unidas 14171, Torre
A, 14 andar, CEP 04794-000, registered with the CNPJ/MF under n. 01.170.892/0001-31; (ii) J.P. Morgan Corretora de Cmbio e Valores Mobilirios S.A.,
headquartered in the City and State of So Paulo at Avenida Brigadeiro Faria Lima 3.729, 13 andar, CEP 04538-905, registered with the CNPJ/MF under n.
32.588.139/0001-94; (iii) Bradesco S.A. Corretora de Ttulos e Valores Mobilirios, headquartered in the City and State of So Paulo at Avenida Paulista 1.450,
7 andar, CEP 01310-100, registered with the CNPJ/MF under n. 061.855.045/0001-32; (iv) BTG Pactual Corretora de Ttulos e Valores Mobilirios S.A.,
headquartered in the City and State of So Paulo at Avenida Brigadeiro Faria Lima 3.477, 14 andar, CEP 04538-133, registered with the CNPJ/MF under n.
43.815.158/0001-22; (v) Ita Corretora de Valores S.A., headquartered in the City and State of So Paulo at Avenida Brigadeiro Faria Lima 3.500, 3 andar,
parte, CEP 04538-132, registered with the CNPJ/MF under n. 61.194.353/0001-64; (vi) Credit Suisse (Brasil) S.A. CTVM, headquartered in the City and State
of So Paulo at Rua Leopoldo Couto de Magalhes Jr. 700, 12 andar, CEP 04542-000, registered with the CNPJ/MF under n. 42.584.318/0001-07; and (vii)
J. Safra Corretora de Valores e Cmbio Ltda., headquartered in the City and State of So Paulo at Avenida Paulista 2.100, 19 andar, CEP 01310-930,
registered with the CNPJ/MF under n. 60.783.503/0001-02.
19.2 In relation to securities held in treasury, in tabular form, segregating by type and
class, indicate: (a) the initial amount; (B) quantity purchased; (C) the weighted average
purchase price; (D) amount sold; (E) weighted average price of alienation
Fiscal year endend on December 31, 2015.
Class of stock: Common
Quantity
(Units)
1.276.300
1.009.000
(6.878)
2.278.422
Movement
Beginning balance
Acquisitions
Disposal
Cancellations
Ending balance
Relationship outstanding
securities
Total amount
(R$ thousand)
7.910
-
4,73
Movement
Beginning balance
Acquisitions
Disposal
Cancellations
Ending balance
Relationship outstanding
securities
Total amount
(R$ thousand)
11.856
11.856
1,61%
19.3.
Quantity
(Units)
-
Total amount
(R$ thousand)
-
Weighted average
price (R$)
-
Quantity
(Units)
1.009.000
(6.878)
-
Total amount
(R$ thousand)
7.910
-
Weighted average
price (R$)
7,84
-
Movement
Beginning balance
Acquisitions
Disposal
Cancellations
Ending balance
Quantity
(Units)
1.276.300
1.276.300
Total amount
(R$ thousand)
11.856
11.856
Weighted average
price (R$)
9,29
9,29
Total amount
(R$ thousand)
-
Weighted average
price (R$)
-
Quantity
(Units)
-
On November 10, 2014, the Board of Directors approved the establishment of a buyback program
of common shares issued by the Company and authorized the directors to determine the
opportunity and the number of shares to be effectively acquired under the Repurchase Program
.
The Company's objective with the buyback program was to acquire up to 4,000,000 shares issued
within a maximum of 365 (three hundred and sixty five) days to the date of approval by the Board
of Directors, to be held in treasury and subsequent disposal or cancellation, including under the
Company's stock option program, in case of exercise of such options. Until March 31, 2015,
2,285,300 shares were purchased in the amount of R $ 19,777, recorded in the capital reserve.
The minimum cost, weighted average and maximum of these shares acquired by the first quarter
of 2015 were, respectively, R $ 5.32 R $ 8.65 and R $ 11.30.
On May 21, 2015, the Board of Directors approved the sale of 5,434 Company's treasury shares
to meet the exercise of stock option beneficiaries under the Plan Granting of Share Purchase
Options (for more information on the plan, see item 13 of this Form).
On June 17, 2015 the Board of Directors approved the sale of 1,444 Company's treasury shares
to meet the exercise of stock option beneficiaries under the Stock Option Plan of the Company's
Stock Options (for more information on the plan, see item 13 of this Form).
Acquisition date
Approved purchased
(units)
1.276.300
1.009.000
2.285.300
Approved
purchased (R$
thousands)
11.856
7.910
19.777
Weighted Average
Price (R$/share)
9,29
7,84
8,65
20.1
Description of the Companys policy for trading of securities by major
shareholders, direct or indirect, directors, members of the Board of Directors, or of any
body with consultative or technical functions, created by any statutory provision
a. Date of approval
February 8, 2010
b. Related parties
The Company, the Controlling Shareholder, the Administrators, members of the Fiscal Council,
employees (when they have insider information regarding the Company) and any person who
adopted this trading policy (Securities Trading Policy) due to their title, job or position in
companies that control or are controlled by the Company (Persons Bound to the Trading Policy).
c. Main characteristics
The main characteristics of the Trading Policy are:
I.
prohibiting the trading of securities issued by the Company by Bound Persons who have
material information about the Company;
II.
prohibiting the trading of securities issued by the Company by Bound Persons who leave
board positions, for the period of six months after they leave the position or until the
material information is disclosed;
III.
prohibiting the trading of securities issued by the Company by Related Parties whenever
a purchase or sale of shares issued by the Company is in progress, or execution of any
agreement or contract for the transfer of Companys share control, existence of intention
of promoting amalgamation, total or partial spin-off, transformation or corporate
restructuring involving the Company. This restriction only applies to controlling
shareholders, direct or indirect, and administrators when the ongoing purchase or sale of
shares of the Company by the Company; and
IV.
The full version of Mills Securities Trading Policy can be obtained in the following address:
http://mills.infoinvest.com.br/static/enu/arquivos/Politica_de_Negociacao_MILL_RCA_2010_02_
08_i.pdf
21.1
Rules, bylaws or procedures adopted to ensure that information to be disclosed
publicly is collected, processed and reported accurately and in a timely manner
It is incumbent on the Investor Relations Officer to report and communicate the Material
Information to CVM and Market Entities, through the institutional media, as well as adopting the
procedures described under this policy.
Material Information will be disclosed to the public, as permitted by CVM Instruction 358/02, in
the news portal of the newspaper Valor Econmico (www.valor.com.br/valor-ri) and at the
Companys Investor Relations website (www.mills.com.br/ri), both on the world wide web
(Internet), without prejudice to its communication to the CVM and BM&FBOVESPA, in the form
required by current regulations.
At the discretion of the Investor Relations Officer, the announcement referred to at paragraph
above can be made in addition, upon publication in newspapers of wide circulation normally used
by the company, provided, in this case, the adoption of a summary indicating that the full report
can be accessed at the electronic address www.mills.com.br/ri.
At the discretion of the Investor Relations Officer, the announcement referred to in item above
can be a summarized description of the information in question in which case reference shall be
made to the webpage www.mills.com.br/ri, where a full description of the Material Information can
be found.
The information should be presented in a clear and precise manner, in language accessible to
the investing public. Whenever a technical concept that used at the discretion of the Investor
Relations Officer, is considered more complex, an explanation of its meaning must be on the
information disclosed.
Whenever Material Information is released by any means of communication, including information
to the press or in meetings with professional associations, investors, analysts or selected public,
in the Country or abroad, that Investor Relations Officer shall release the Material information
simultaneously to the market.
The controlling shareholders, the members of the Board of Directors and Fiscal Council, and any
employee, who have knowledge of the information related to the Material Information, and signed
the adherence instrument containing the policy on disclosure of Material Information, shall
immediately notify the Investor Relations Officer about such Material information, in case the
Officer is not yet aware of the information, as well as verify that the Investor Relations Officer
have taken the measures described in this document.
The communication to the Investor Relations Officer mentioned in item 4.4 above, must be carried
out by email, to the email address ri@mills.com.br.
If the groups mentioned in item above certify that there has been omission in the disclosure of
that Material Information by the Investor Relations, and the terms provided by the policy on
disclosure of Material Information, such group must immediately communicate the Material
information to CVM for their exemption from liability imposed by non-compliance with the rules on
disclosure.
Whenever the CVM or any market entity require further explanation from the Investor Relations
Officer about the disclosed Material Information, or if an atypical variation in price or trading
volume of securities issued by the Company or related thereto, the Investor Relations Officer
should inquire persons with access to Material Information, in order to establish whether they are
aware of information that must be disclosed to the market.
The administrators and employees inquired in item above, should respond to the request of the
Investor Relations Officer immediately. If not able to meet personally or talk on telephone with the
Investor Relations Officer on the same day of the request, administrators and employees in
question should send an email with the information to the address ri@mills.com.br regarding the
information relevant to.
The disclosure of any Material information, should be simultaneously to CVM and Market entities,
and shall take place before the opening or after the closing of trading on the Stock Exchanges,
and in case of hour incompatibility with other markets, the Brazilian market trading hours shall
prevail.
If, exceptionally, it is imperative that the communication of Material information occurs during
trading hours, the Investor Relations Officer when disclosing the Material information, may
simultaneously request the Market entities in Brazil and abroad, the suspension of trading of
securities issued by the Company or related thereto, the time necessary to properly disclose their
information. The Investor Relations Officer must prove to Brazilian Market entities that the
requested suspension of trading also was accomplished in foreign Market entities.
The Company can disclose to the market expectations of future performance (guidance), for short
and long term, especially with regard to financial and operational figures of their businesses, by
decision of the board of directors, noted that such guidance shall be in accordance with CVM
regulations, paragraph 4 of article 13 of CVM Instruction No. 358/02.
In the event that disclosure of such expectations, should be subject to the following
assumptions:
(i) The anticipated dissemination of results may be accepted in the case of preliminary
information, not yet audited, clearly presented for each of the items and timeframes,
memories of the assumptions and calculations used;
(ii) The results or information prepared in accordance with foreign accounting standards
should provide a reconciliation to the Brazilian accounting practices, as well as
reconciliation with the accounting items expressed directly in the financial statements of
the Company and, therefore, obtained by the accounting principles adopted in Brazil;
(iii) If disclosures involves the preparation of projections, a comparison with the actual
results must be submitted, on the occasion of the release of Form ITR of the Company;
(iv) If the projections are discontinued, it should be informed, together with the reasons that
led to its loss of validity in the form of Material Information.
(v) to disclose full information to shareholders and investors;
(vi) to ensure prompt widespread dissemination of Material information;
(vii) to allow equity access to public information on the Company by every shareholder and
investor;
(viii)
to protect secrecy of any undisclosed Material information;
(ix) to contribute to the stabilization and fostering of the Brazilian capital market; and
(x) to strengthen the Companys good corporate governance practices.
The controlling shareholder, directors, members of the board of directors and the fiscal council,
as well as other employees and agents of the Company, shall preserve the confidentiality of the
information pertaining Material Information to which they have privileged access due to the
position they hold, until their actual release to the market and ensure that subordinates and third
parties they trust to do the same, being jointly responsible with them in case of noncompliance.
For the purpose of maintaining confidentiality referred to in item 6.1 above, the individuals
mentioned therein shall observe and ensure observance of the following, without prejudice to
the adoption of other measures that are appropriate in front of each situation:
(i)
(ii)
(iii)
(iv)
disclose the confidential information strictly to those people who absolutely need
to know it;
not discuss confidential information in the presence of third parties who are not
aware of such information, though if expected that third party cannot understand
the meaning of the conversation;
not to discuss confidential information in conference calls in case one cannot be
sure of who actually will participate in it;
maintain documents of any kind relating to confidential information, including
handwritten personal notes in a safe, locked cabinet or file, to which only
authorized persons have access to the information;
(v)
(vi)
(vii)
(viii)
When confidential information needs to be disclosed to any employee of the Company or other
person holding title, function or position in the Company, its controlling shareholders,
subsidiaries or affiliates, other than a director, member of the Board of directors or the Fiscal
Council of the Company, the individual responsible for the transmission of information should
make sure that the person receiving it is aware of the Policy Disclosure of Material Information
of the Company, requiring even to sign the Policy Disclosure of Material Information before
providing access to information.
21.3
Administrators responsible for implementation, maintenance, evaluation and
supervision of the information disclosure policy
Investor Relations Officer.
21.4
The full version of Mills Policy on Disclosure of Material Information can be obtained in the
following address:
http://ir.mills.com.br/fck_temp/12_4/file/Politica%20de%20Divulga%C3%A7%C3%A3o_2016_0
3_28_i.pdf