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2. INDEPENDENT AUDITORS
4. RISK FACTORS
14
5. MARKET RISKS
37
6. COMPANY HISTORY
46
7. COMPANYS ACTIVITIES
50
8. ECONOMIC GROUP
68
9. RELEVANT ASSETS
72
81
11. PROJECTIONS
113
115
133
160
15. OWNERSHIP
170
175
177
18. SECURITIES
186
216
220
222
226
1.
1.1
Officer
Srgio Karyia
Chief Executive
2. INDEPENDENT AUDITORS
(PwC)
to assist the company in the choice of ERP software, with hiring date of September 1,
2009 and duration of twelve months and (b) monitoring of the implementation of the ERP
(PA-Project assurance and QA-quality assurance)dated December 8, 2010 and term
lasting less than twelve months.
Total amount of remuneration of auditors separated by offered services: PwC
did not receive fees in the year 2014.
Possible replacement of auditor:
(i)
Replacement justification: Periodic rotation of auditors, in the form of CVM
308/99 Instruction.
(ii)
Reason presented by the auditor in the event of a discrepancy between
the statement of issuer: Not applicable.
2.3 Other information that the Company deems relevant:
At the Board of Directors meeting held on April 8, 2011, was approved the replacement
of Price Waterhouse Coopers Auditores Independentes, by Deloitte Touche Tohmatsu
Auditores Independentes, already from the first quarter of the fiscal year of 2011, as
independent auditors of the Company, in compliance with CVM Instruction 308 of of May
14, 1999, as amended.
2014
859,326
1,016,513
1,059,397
1,664,061
879,274
468,345
151,516
1,801,245
832,262
497,328
172,592
1,892,723
794,166
431,786
64,268
126,399,430
126,955,111
127,816,990
6.80
1.20
7.98
1.35
8.27
0.50
EBITDA
EBITDA is a non-accounting measurement adopted by the Company, reconciled with its financial
statements, in accordance with CVM Instruction n o 527/2012 of October 4th, 2012, as applicable.
The Company has calculated its EBITDA as net earnings before financial results, the effect of
depreciation of assets and equipment used for rental, and the amortization of intangible assets.
EBITDA is not a measure recognized under BR GAAP, IFRS or US GAAP. It is not significantly
standardized and cannot be compared to measurements with similar names provided by other
companies. The Company has reported EBITDA because it is used to measure its performance.
EBITDA should not be considered in isolation or as a substitute for "net income" or "operating
income" as indicators of operational performance or cash flow, or for the measurement of liquidity
or Companys debt repayment capacity.
Reconciliation of EBITDA with Operational Earnings:
For the Year ended December 31
2012
2013
2014
249,884
293,853
157,938
108,619
136,888
168,259
(8,159)
9,496
358,503
422,582
335,693
1 Includes industrial services business unit, that was sold and discontinued in 2013.
ROIC: (Annual Operational Income (30% Income Tax Rate) + remuneration from affiliates) /
Average Invested Capital of the last thirteen months.
For the Company, invested capital is defined as the sum of its own capital (net equity or
shareholders equity) and capital from third parties (total loans and other liabilities that carry
interest, from banks or not), both being average capital from the beginning to the end of the
period considered.
1.
2. ROIC calculation from the Operating Income
207,238
110,557
1,206,266
801,123
510,813
105,671
1,471,402
943,023
619,452
91,073
1,675,840
1,058,376
722,302
104,838
14.70%
14.10%
6.6%
________________________________________
(1) Theoretical rate of 30%.
There were not subsequent events related to financial statements ended in 12/31/2014.
3.4
Rules on
retention of
profits
2014
In addition to the cases
provided by the law, as
provision
introduced
on
February
8,
2010,
the
Companys bylaws provide that
up to 75% of the adjusted net
income for the year could be
allocated to the expansion
reserve, as long as the
recorded amount in such
10
Amounts of
the retention
of profits
Arrangements
for distribution
of dividends
3.5
In R$
2012
2013
143,939,936.54
163,962,523.9
0
41,780,000.00
46,497,455.75
61,054,456.2
3
25,081,000.0
0
3,483,455.75
2014
04/30/2014
41,780,000.00
43,014,000.00
06/14/2013
04/30/2014
25,081,000.0
0
05/06/2015
25.0%
25.0%
39.03%
17.6%
17.0%
118,273,166.0
8
04/25/2014
5.76%
33,567,832.0
0
04/28/2015
103,680,234.67
04/26/2013
11
Includes completion of the special goodwill reserves in the amount of R$1,520 thousand in the year of 2012 and R$ 808 thousand in
2013.
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
For the Year ended December 31, 2014:
in R$ thousands, except percentages
Gross Debt.................................................................................
(-) Availabilities............................................................................
Net debt ..............................................................................
747,791
-193,659
554,132
() EBITDA .........................................................................
350,164
158.2%
Collateral
Floating Guarantee
Unsecured obligations
Total
Less than 1
year
Between 1
and 3
years
25,745
195,469
221,214
3,138
172,479
175,617
Prazo de Vencimento
Between 3
and 5
Over 5 years
years
(in R$ thousands)
9,414
2,516
367,025
57,540
376,439
60,056
Total
40,813
792,513
833,326
Includes FINAME, BNDES and leasing, secured by chattel mortgage on the financed assets.
Includes debntures, loans in foreign currencies with swap and other unsecured debts (liabilities and obligations), without collateral or
floating guarantees, besides Suppliers, Dividends and Interest on Capital, Provisions, Tax refinancing program (REFIS), Taxes payable and
other assets.
12
3.9
13
4. RISK FACTORS
14
4.1
Risk Factors
a.
to the Company.
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
15
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 2014, total debt of
R$ 745.4 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.
16
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.
17
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, 2014, 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 the last three years, 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.
18
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 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
19
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, 2014, the BM&FBOVESPA represented, with an average daily trading volume
of R$ 13.2 million during the year.
20
The Company may need additional funds in the future and may issue additional
securities to secure such funds. This may adversely affect the price of the shares and
result in a dilution of the investors percentage interest in the Companys shares.
The Company may need to raise funds in the future through an additional public or private
offering of shares or securities convertible into or exchangeable for shares. Any additional funds
raised by the distribution of shares or securities convertible into or exchangeable for shares may
impact their price and dilute the investors percentage interest.
Provisions in the Companys bylaws may discourage, delay or make more difficult a
change of control of the company or the approval of transactions that might
otherwise in the best interests of its shareholders.
The Companys bylaws contain provisions intended to avoid the concentration of ownership of its
shares in small groups of investors and to foster a dispersed ownership. These provisions require
that any shareholder that: (a) acquires or becomes the holder, of the Companys shares with
20% (twenty percent) or more of emited shares of the company shall, within sixty (60) days from
the date of acquisition or event that resulted in the ownership of shares in an amount equal to
or exceeding 20% (twenty percent) of the total shares issued by the Company; (b) acquires or
becomes the holder of other rights such as (i) other Corporate Rights over a volume equal to or
greater than 20% (twenty percent) of the total shares issued by the Company or that might result
in the acquisition of shares issued by the Company in an amount equal to or greater than 20%
(twenty percent) of the total shares issued by the Company, or (ii) derivatives that give the right
to shares of the Company representing 20% (twenty percent) or more of the shares of the
company, or that 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.
a fiscal council member and exercise the rights of shareholders provided for in corporate law.
Consequently, the Company is exposed to various risks, such as (i) does not receive dividends
beyond the minimum required in Rohrs bylaws, the corresponding amount, in each fiscal year of
6% of its capital, (ii) to not be able to influence the executive administration and management
of Rohr, including the case of disagreeing with decisions made by its officers, and (iii) eventual
difficulty to access Rohrs documents and information, or related to its operations.
e.
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 third-parties. 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.
22
f.
to its clients.
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.
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 38% of Heavy Construction billings in fiscal year
ended on December 31st, 2014.
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.
23
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.
g.
The demand for the Companys services is directly linked to the volume of public
investment in the engineering, construction and infrastructure sectors.
24
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$1.5
trillion between 2015 and 2018, of which R$ 598 billion in infrastructure sector that may present
higher growth, comparing to 2010-2013 period, driven by package of logistics launched in 2012
by Federal Government, which foresees 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.
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, 2014, the Company had 2,076 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
25
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.
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.
i.
26
monitoring changes in the macroeconomic and sector scenarios that can influence its activities
through monitoring of key performance indicators.
Uncertainties in economy and politics impacted markets where the Company and many of its
clients act, in 2014. Many of those clients decreased its investments, discontinued investments
and slowed down the pace of constructions. This kind of market behavior impacted directly
Companys performance, which reflected in higher idleness of our equipment and lead to a
revision in investment and expansion plans.
With that said, the Company adjusted previously announced investments to this new market
reality and focused its efforts in operational efficiency. If these forecasts continue being met,
Companys operation can continue to be affected.
To further information about Market risks that the Company is exposed, refer to item 5 in this
Reference Form.
4.3
The Company is part of a judicial and administrative proceedings in the civil, tax and social
security, labor and environment, as described below. The Companys contingency provisions are
recorded in the financial statements for the total amount of probable losses. As of December 31,
2014, the total value of cases involving contingent liabilities was R$ 93.9 million and the total
value involved in processes with probable loss, according to its assessment and its legal counsel,
was R$ 12.6 million, as indicated below:
Proceeding/Contingency
2012
Civil proceedings
Possible losses
Probable losses
444
596
11
467
4,812
11
787
5,191
13
7,013
13,218
17,029
6,518
26,442
17,878
7,815
31,559
24,692
2,462
6,791
808
3,588
10,944
3,303
3,978
15,232
4,655
5,000
-
9,919
10,573
12,580
11,853
10,053
10,422
Possible losses
Probable losses
Labor claims
Possible losses
Probable losses
Other
Possible losses
Probable losses
Provisions
Judicial deposits
Civil proceedings
Possible losses
Probable losses
The Company believes that its provisions for legal and administrative contingencies are sufficient
to cover probable losses. The Company describes below the main legal and administrative
proceedings in which it is involved.
Civil Proceedings
27
Federal Justice
Instance
1st Instance
Date of filing
03/21/2006
Main facts
Chances of loss
Possible
Process n 0505089-94.2008.4.02.5101
Jurisdiction
Federal Justice
Instance
1st Instance
Date of filing
06/07/2006
Main facts
28
Possible
If the claim is held to be invalid, the Company will have to pay the
tax liability disputed, in the adjusted amount of R$2,309 million
(until December 31, 2014). Since this is an isolated fact, which is
not a habitual practice of the Company, the Company does not
believe that an unfavorable decision would have a material
adverse effect on its financial situation or on its operating results.
Process n 12267.000047/2007-14
Jurisdiction
Instance
1st Instance
Date of filing
May/23/2005
Main facts
Chances of loss
Possible
The Company will have to pay the tax liability in question, in the
adjusted amount of R$ 2,470 thousand (on December 31, 2014),
if it does succeed in proving that it has been deposited into court.
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.
Processo n 0026197-47.2005.4.02.5101
Jurisdiction
Federal Justice
Instance
2nd Instance
Date of filing
September/21/2005
Main facts
29
Chances of loss
Possible
The Company will have to pay the tax liability subject matter of
NFLD No. 35.102.802-1, in the adjusted amount of R$1,967
million (on December 31, 2014). The Company already duly pays
the education-salary. Taking into account the amount involved in
the lawsuit, the Company does not believe that an unfavorable
decision will have a material adverse effect on its financial
condition or operating results.
Processo n E-04/062000/2011
Jurisdiction
Instance
Date of filing
01/31/2011
Main facts
Chances of loss
Possible
Process n 12259.000998/2008-65
Jurisdiction
Administrative Authority
Instance
Administrative Authority
Date of filing
05/23/2005
Main facts
Chances of loss
Possible
Process n 4019432-32.2013.8.26.0405
Jurisdiction
Instance
1st Instance
Date of filing
10/31/2013
30
Main facts
Chances of loss
Remote
Instance
Date of filing
09/19/2014
Main facts
Chances of loss
Remote
Processo n 2009.01.1.057971-6
Jurisdiction
Instance
2nd Instance
Date of filing
05/05/2009
Main facts
31
Remote
Processo n 2004.51.01.004267-5
Jurisdiction
Instance
Date of filing
04/11/2004
Main facts
Chances of loss
Possible
R$ 3,122 thousand
Labor Claims
The Company is defendant in 359 labor claims, and with the advisory of an external legal counsel,
the Company has recorded provisions on the amount of R$ 4 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$ 2 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 01106.2005.134.05.00.1
Jurisdiction
Instance
Date of filing
Parties in the suit
32
Chances of loss
Analysis of impact in the case of
losing the suit
Amount provisioned (if any)
Process n 0120300-11.2009.5.19.0005
Jurisdiction
Instance
1st Instance
Date of filing
09/05/2009
Author: C.F.
Defendant: Mills Estruturas e Servios de Engenharia S.A.
Main facts
Chances of loss
Possible
The Company will have to collect the amount in favor of the former
employee, which is estimated by its advisors in the amount of
R$506 thousand (in 12/31/2014). The Company does not believe
that an unfavorable outcome can have any adverse effects on its
financial condition or its operational results.
Process n 0001793-43.2013.5.05.0134
Jurisdiction
4th Vara do Trabalho (4th Labor Staff) of Camaari/BA
Instance
1st Instance
Date of filing
08/22/2013
Parties in the suit
Author: N.N. S Jr.
Defendant: Mills Estruturas e Servios de Engenharia S/A.
Amounts, goods or rights involved
R$ 1,110 thousand em 12/31/2014
Main facts
This is a lawsuit envolving overtime works, moral damages,
adjustment to salary ranges, meal tickets, fuel tickets, differences
in profit share program (PSP), rectifying of work permit, normative
fines. Expense displayed. Sentence condemned Mills to pay
overtime Works, difference of PSP in 2012, readjustment in salary
range coming from Collective Labor Agreement from January to
April, 2012, and normative fines. Interposed appeal by Mills.
Chances of loss
Possible
33
Process n 0020691-64.2013.5.04.0124
Jurisdiction
4th Vara do Trabalho (4th Labor Staff) of Rio Grande/RS
Instance
2nd Instance
Date of filing
11/21/2013
Parties in the suit
Author: STMMMERG.
Defendant: Mills Estruturas e Servios de Engenharia S/A.
Amounts, goods or rights involved R$ 864 thousand on 12/31/2014
Main facts
This is a lawsuit involving Salary Accretion for Unhealthy and
Hazardous Work Conditions to scaffolding assemblers UNION.
Defense introduced. Sentence was published extinguishing process
in trial from merit so each employee should judge it for his own.
Public sentence maintaining sentence which prohibited action
without trial of merit, confirming sentence of each assembler group
should enter with own action searching these advantages, because
when the Sentence is from the union there is no way to confirm
the work condition of all the participants.
Chances of loss
Remote
Analysis of impact in the case of
Company may pay to former employee of which legal advisors
losing the suit
forecast an amount about R$ 864 thousand (on 12/31/2014).
Latest update on 06/11/2014: It was submitted the response to the
lawsuit. Currently awaiting for appeal trial.
Amount provisioned (if any)
Process n 00114.2008.131.05.00-4
Jurisdiction
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
Process n 0001836-27.2013.5.03.0007
Jurisdiction
7th Vara do Trabalho (7th Labor Staff) of Belo Horizonte/MG
Instance
1st Instance
Date of filing
09/04/2013
Parties in the suit
Author: Robson Fernando Estorco
Defendant: Mills estruturas e Serv. de Eng. S/A
Amounts, goods or rights involved R$ 600 thousand on 12/31/2014
Main facts
Action involving an accident at work, with alleged loss of working
capacity and right to stability. Defense denying the facts.
Chances of loss
Possible
Analysis of impact in the case of
Company may pay to former employee of which legal advisors
losing the suit
forecast an amount about R$ 600 thousand (on 12/31/2014).
Latest update on 03/04/2015: Concluded to submit sin parts
already, manifested about the expert clarifications.
The process involves following requirements:
- Nullity contractual termination and salary payment and further
advantages until the author reestablish its labor capacity.
- Indemnity for moral damages summing R$ 300,000.00;
34
Chances of loss
Analysis of impact in the case of
losing the suit
Chances of loss
Analysis of impact in the case of
losing the suit
Processo n 00012042220105150023
Jurisdiction
7th Vara do Trabalho (4th Labor Staff) of Belo Horizonte/MG
Instance
2nd. Instance
Date of filing
12/11/2010
Parties in the suit
Author: L. C. C.
Defendant: Mills estruturas e Serv. de Eng. S/A
Amounts, goods or rights involved
R$ 972 thousand on 12/31/2014
Main facts
This lawsuit involves work accident, with reintegration demand, life
monthly pension and indemnity by moral and aesthetic damages.
35
Chances of loss
Analysis of impact in the case of
losing the suit
Chances of loss
Analysis of impact in the case of
losing the suit
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 to the Company.
4.5
On December 31, 2014 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 to the Company.
4.7
36
5. MARKET RISKS
37
5.1
interest rates;
exchange controls and restrictions on remittances abroad;
fluctuations in exchange rates;
inflation;
social and political instability;
expansion or contraction of the global or Brazilian economies;
liquidity of domestic capital and financial markets;
tax burden and policy; and
other political, social and economic developments in or affecting Brazil.
Uncertainty over whether the Brazilian government will implement changes in policy or regulation
affecting these or other factors in the future may contribute to economic uncertainty in Brazil and
heightened volatility in the Brazilian securities markets.
The Company cannot predict whether the current or future Brazilian government will implement
changes to existing policies on taxation, exchange controls, monetary strategy and social
security, among others, nor estimate the possible impact of any such changes on the Brazilian
economy or the Companys operations.
Federal Government's efforts to reduce inflation may delay the Brazilian economys
growth and affect the Company's business negatively.
In the past, Brazil experienced extremely high inflation rates and, consequently, adopted
monetary policies that resulted in one of the largest real interest rates in the world. In 2014, the
SELIC medium rate was 10.86%. The annual inflation calculated by the IGP-M was of 7.82%,
5.51% and 3.39% in 2012, 2013 and 2014, respectively, and by the IPCA was of 5.84%, 5.91%
and 6.41% in 2012, 2013 and 2014, respectively. Inflation and measures taken by the Federal
Government to combat it, especially through the Central Bank, had and can return to have
significant impact on the Brazilian economy and on the Company's business. The strict monetary
policy with high interest rates may limit the Brazilian growth and the credit availability. Conversely,
looser government and monetary policies, the decline in interest rates and the intervention in the
exchange and stock markets to adjust or fix the real value may trigger increases in inflation rates
and, consequently, the volatility of growth and the need for sudden and significant interest rate
increases. Besides this, 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 adversely affect the Companys
business.
Exchange rate instability may affect the Brazilian economy, as well as the Companys
operations and the market value of its shares.
The Company is exposed to foreign exchange due to expositions of some currencies, essentially
to U.S. dollar and to Euro. The exchange risk elapses from the future importation of equipment,
mainly the aerial platforms and formworks.
38
The companys policy is reduce the cash risk related to the exchange variation, in a conservative
form, since all revenues are obtained in Brazilian Real. For this purpose, the company concludes
contracts of NDFs with financial institutions with hedging purposes. All of these contracts predict
the future exchange rate. The commercial U.S. dollar was R$ 2.04, R$ 2.30 and R$ 2.70 at
December 31, 2012, 2013 and 2014 respectively.
Debt
(in R$ thousands, except %)
BNDES
Working Capital
Swap
Debentures - 1 issuance
Debentures - 2 issuance, 1st series
Debentures - 3 issuance
Index
Present
TJLP
USD
CDI x USD
CDI
CDI
CDI
Total
18,667
45,860
(1,166)
184,412
168,121
201,984
617,878
Scenario I
(Probable)
Debt balance
Scenario II
25%
1,200
4,039
(3,965)
16,179
21,210
26,982
65,645
Variation
1,204
16,495
(16,466)
20,034
25,935
33,443
80,644
22.9%
Scenario III
50%
1,208
28,950
(28,967)
23,826
30,581
39,807
95,406
45.3%
The sensitivity analysis presented above considers changes in relation to the interest rate risk,
maintaining constant other variables, associated with other risks.
Reference
CDI (%)
TJLP (%)
US$ 3
Scenario I
Probable
12.9%
5.0%
R$ 2.9
Scenario II
+25%
16.1%
6.9%
R$ 3.6
Scenario III
+50%
19.3%
8.3%
R$ 4.3
Regarding interest risk, the Company's management considered as a probable premise (scenario I) for its financial instruments a 10,5% rate,
considering an increase in the CDI rate in line with the expected increase in the Selic rate, since there is a direct relationship between the rates,
and a rate increase as premise for the other two scenarios.
39
For financial liabilities related to loans and financing - BNDES, the Company's management considered as a probable premise (scenario I) would
be the maintenance of the TJLP, since there is no evidence of a change in the short term, and a rate increase as a premise for the other two
scenarios.
3 The Companys administration considered as probable premise (scenario I) the maintanance of exchange rate and a increase of the rate as a
premise for the other two scenarios.
Inflation risk
The Company seeks to reflect inflation rates in the prices that are charged for its products and
services. However, Brazilian laws and regulations provide that long-term agreements may only
be adjusted for inflation once every 12 months. The main inflation indexes used by the Company
to adjust prices under long-term agreements are IGP-M and IPCA, released by the Brazilian
Institute of Geography and Statistics (IBGE). In addition, the Companys payroll is affected by
salary increases negotiated under collective bargaining agreements, which are usually in line with
increases in the main Brazilian inflation indexes.
In low demand periods and, therefore, of pressure on prices, the Company probably will not pass
the inflation effects to the prices that charges for its products and services and, consequently,
may suffer reduction of profitability.
In 2012, the Company issued debentures with an interest rate linked to the inflation index IPCA.
This way, there is a risk that the Company will incur losses due to fluctuations in the IPCA index,
which increase financial expenses relating to the second series of the 2nd issue of debentures
issued by the Company.
In the years 2012, 2013 and 2014, the IGP-M ndex reported by FGV was of 7.8%, 5.5% and
3.7%, respectively, and the IPCA index announced by IBGE was of 5.8%, 5.9% and 6.4%,
respectively.
Sensitivity analysis
The following table shows the sensitivity analysis of the financial instruments, describing the risks
that could generate material losses for the Company, with the most probable scenario (scenario
I), as assessed by the management, considering an annual horizon. Two other scenarios are also
shown, as required by the Brazilian Securities Commission - CVM, in Instruction No. 475/2008, in
order to show deterioration of 25% and 50% of the risk variable considered, respectively
(scenarios II and III):
Outstanding debt in R$ thousand
Debt
2 Emisso de debntures 2 Srie
Index
Present
IPCA
Total
128,747
128,747
Scenario I
(probable)
17,563
17,563
Variao
Scenario II
25%
20,211
20,211
15.0%
Scenario III
50%
22,916
229,16
30.5%
The sensitivity analysis presented above considers changes in relation to the particular risk,
maintaining constant other variables, associated with other risks.
Referncia
IPCA(%)
Scenario I
Rate
Maintenance
7.8%
Scenario II
+25%
9.7%
Scenario III
+50%
11.7%
For financial liabilities related to the second issue of the debntures, the Company's management considered as likely premise (scenario I),
expectation of IPCA for 2015 described the FOCUS report released by the Central Bank of Brazil on March 06, 2015 since there is no evidence of a
change in the short term, and a rate increase as a premise for the other two scenarios.
40
The Company periodically bills amounts for rentals and sales due by its customers, for past due
periods that normally vary from 30 to 60 days, with an average payment term of 60 days. Thus,
it is subject to the risk of default on trade receivables.
Client credit risk is managed by the Companys financial management, which evaluates clients
financial capacity to pay. This analysis is performed before the actual commercial agreement
between the parties, and for this purpose, each client is analyzed individually, taking into
consideration mainly the following information: (i) registration information; (ii) financial
information and indicators; (iii) risk ratings (methodology of credit bureau SERASA); (iv)
controlling shareholder; and (v) pending issues and protests at Serasa.
The Company believes that the concentration of credit risk is
broad and there is no relationship between clients. The
concentration in its revenue and accounts receivable, not
representing 10% or more of its accounts receivable in any of
The table below shows the items from Gross Trade Receivables and Allowance for Doubtful Debts
from the Company detailed by business unit and consolidated on the indicated dates:
2012
Heavy
Construction
Industrial
Services
Real Estate
Rental
Events
Total
2014
Trade Receivables
ADD
52,867
10,402
66,585
8,576
4,408
4,408
3,992
3,992
59,041
51,290
4,247
234,030
3,807
12,888
1,030
36,703
82,177
73,468
3,796
232,634
16,071
18,637
1,030
53,861
62,407
93,079
2,022
249,613
25,428
36,313
91,422
68,785
Trade Receivables
ADD
88,113
25,689
13,715
Remaining amount receivable from the operations of the Industrial Services business unit, which was discontinued on November 30, 2013.
Value to receive for the sale of the fixed asset from the Business unit events that was discontinued in 2008.
41
As a result from hedging operations, the Company had no exposure to exchange rate fluctuations
as of December 31, 2012, 2013 and 2014.
The Company had no exposure to the exchange rate for the motorized equipments already
bought. However, since these equipments are not produced in Brazil, the Company is exposed to
exchange rate for future investments in such equipment either to replace and/or increase its fleet.
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.
Less
than
one
month
Between
one months
and
three
months
Between
Three months
and
one year
Between
one and
two years
Between two
and five
years
Over five
years
46,378
-
998
9,227
3,215
150,140
4,100
230,266
11,002
458,685
2,652
64,069
(1,166)
16,510
61,722
10,225
153,355
234,366
469,687
66,721
The interest rates (CDI, IPCA and TJLP) projected for the future compromises reflect the market
rates in each period.
5.2
a.
The Companys activities are exposed to several financial risks (including risks of interest rate,
inflation, exchange rate, price fluctuation from raw materials and imported equipment and credit
42
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 risk exposures and has a
policy not to participate in any trading of derivatives for speculative purposes.
Risk management is carried out by the Finance department, under policies approved by the Board
of Directors. The Finance department identifies, evaluates and protects the Company from
financial risks in co-operation with the Company's operating units. The Finance department
establishes principles for overall risk management, as well as for specific areas, such as foreign
exchange risk, interest rate risk, credit risk, use of derivative financial instruments and nonderivative financial instruments, and investment of cash surplus.
b.
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.
c.
In order to protect shareholders equity from exposure to foreign currency commitments, the
Company developed a strategy to mitigate the market risk. When applied, the objective of the
strategy is to reduce the volatility of the desirable cash flow, maintaining the planned
disbursement of resources.
The Company considers management of these risks essential to support its growth strategy
without potential financial losses reducing its operating income, as the Company does not seek
financial gains from derivatives. Foreign currency risk management is carried out by the Financial
Management and Director, who assess the potential exposure to risks and establish guidelines
for measurement, monitoring and management of the risks of the Company's operations.
Based on this objective, the Company contracts derivative operations, normally swaps and NDF
(Non Deliverable Forwards), with prime financial institutions (brAAA credit rating - national scale,
Standard & Poor's or similar), to guarantee the commercial value agreed on ordering the item to
be 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
43
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 equipment
import operations against fluctuations in the exchange rate in the interval between placing the
order and the corresponding formal receipt in Brazil. They are not used for speculative purposes.
As of December 31, 2014, the Company had equipment purchase orders with foreign suppliers
amounting approximately to US$ 500 thousands (in December 31, 2013, such orders amounted
to US$ 71.8 million), all of them with payments expected during 2015.
In order to reduce the Companys exposure to exchange rate fluctuations between the date of
the order and the date of the settlement of these obligations, the Company hired derivative
instruments represented by swap contracts, which fair value on December 31, 2014, totalized R$
26 thousand, as presented in the table below.
Type
Notional
Value
Fair
Value
Receiva
ble/
Payable
Values
Notional
Value
Fair
Value
Receiva
ble/
Payable
Values
Notiona
l Value
Fair
Valu
e
Receiva
ble/
Payable
Values
152,868
(800)
(800)
152,868
(800)
(800)
168,419
7,516
7,516
168,419
7,516
7,516
1,299
26
26
1,299
26
26
The derivatives are evaluated by the market rate present value, in the base data of future flow
determined by the application of contractual rates until maturity. For contracts with limiter or
double index were considered, in addition, the embedded option in the swap contract.
The Companys hedge operations are realized in order to seek protection against fluctuations in
foreign currency of its equipments and machines importations. Such operations are classified as
hedge accounting.
The company ensures it effectiveness of these instruments with the Dollar offset methodology,
which is commonly used by derivative market participants, and consists in comparing the present
value, net of foreign currency exposure and Company commitments with the derivatives hired for
such hedge.
On December 31, 2014, there was no inefficiency in the results of the hedge operations of the
Company.
Considering the fact that the Company ensures the effectiveness of the realized hedge accounting
operations, the gains and losses observed in these derivative operations are recognized in
counterpart of the hedged asset (fixed asset) as part of the initial cost of the asset in the same
moment of the accounting. In December 31, 2014, the amount of R$ 1.2 million were transferred
from the net equity and deducted in equipments initial cost.
44
d.
Regarding the exchange rate risk, The Company's policy is to not be exposed to any commitments
in foreign currency. For the interest rate risk, the Companys policy is to operate with floating
interest rates, since their revenues also grow along with inflation. The Company does not use
protection against the inflation risk caused by momentary mismatch between its revenues and
costs.
e.
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.
f.
The risk control politics and procedures are defined directly through the Companys Board of
Directors and are implemented by the Companys Executive Officers. The Board of Directors are
also responsible for monitoring the fulfillment of these practices.
g.
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, 2012, 2013 and 2014, the opinion
of independent auditors did not identify deficiencies in those controls.
5.3
In the fiscal years ended December 31, 2012, 2013 and 2014, there were no events that could
significantly change the main market risks to which the Company is exposed.
5.4
45
6. COMPANY HISTORY
46
6.1
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.
6.2
Company Lifetime
Undetermined.
6.3
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
NOE-Schaltechnik 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.
47
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.
6.4
48
Nacht Participaes S.A.", executed on February 11, 2011, as amended, which also applies to
Mills.
49
7. COMPANYS ACTIVITIES
50
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 2014 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 6.5, the Company entered into an agreement for the sale of its Industrial
Services business unit on July 10, 2013.
2014
Heavy Construction
Net revenue
EBITDA
EBITDA margin
Net income
Net margin
174,059
84,365
48.5%
36,014
20.7%
216,956
108,104
49.8%
48,303
22.3%
210,996
88,919
42.1%
23,155
11.0%
Real Estate
Net revenue
EBITDA
EBITDA margin
Net income
Net margin
237,955
113,472
47.7%
49,289
20.7%
257,964
93,771
36.4%
26,111
10.1%
212,361
50,163
23.6%
(15,030)
-7.1%
51
Rental
Net revenue
EBITDA
EBITDA margin
Net income
Net margin
253,460
141,256
55.7%
61,774
24.4%
357,342
201,212
56.3%
87,460
24.5%
370,809
196,673
53.0%
58,783
15.9%
Industrial Services
Net revenue
EBITDA
EBITDA margin
Net income
Net margin
213,800
19,410
9.1%
1,225
0.6%
208,295
19,494
9.4%
4,918
2.4%
n.a.
n.a.
n.a.
n.a.
n.a.
EBITDA is a non-accounting measurement prepared by the Company in accordance with CVM Instruction 527/2012, when
applicable. The calculation of the EBITDA consists of our operating results before financial expenses, from the depreciation and
goodwill. The EBITDA is not a Brazilian, IFRS or US GAAP measure, have no standardized meaning and our definition may not
be comparable to that used by other companies. The Company uses the EBITDA to measure its performance. The EBITDA
should not be considered as alternatives to net income, as an indicator of our operating performance, or as alternatives to cash
flow as an indicator of liquidity or debt payment capability.
Heavy Construction
The Company estimates, according to data published by the O Empreiteiro magazine in 2013,
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 has a
history of long-standing relationships with almost all of the largest and best-known companies in
the construction sector, including Construtora Norberto Odebrecht S.A., Camargo Corra S.A.,
Andrade Gutierrez S.A., Construtora OAS Ltd. and Construtora Queiroz Galvo S.A., Barbosa
Mello, Construcap, and many others.
The Companys extensive track record includes participation on several of the largest and most
important infrastructure projects in Brazil, such as the construction of the city of Braslia (Brazils
capital), the Rio de Janeiro-Niteri Bridge and the Itaipu hydroelectric plant. More recently, the
Company assisted in the construction of the State of So Paulo Beltway (Rodoanel), the subway
systems in the cities of Rio de Janeiro and So Paulo, the airports and the renovated e constructed
stadiums for the World Cup, the Estreito hydroelectric plant in the north of Brazil, the Joo
Havelange Olympic Stadium and the Olympic Park in Rio de Janeiro. Typical contract terms for
this business unit range from six to 24 months, as the services that the Company provides are
critical during an extended phase of major civil construction projects.
52
In order to facilitate the implementation of solutions that the Company idealizes, its offered to
the clients, through rental contracts and in some cases sales, a wide range of equipment,
including concrete forms and shoring structures, which include projects and technical studies,
technical support and necessary training for its proper use. Taking into account the specific needs
from a particular project, there is flexibility to hire the manufacture of special shaped equipment
for specific construction works.
The Companys clients generally use their own employees to implement the solutions developed
by the Heavy Construction business unit. However, for complex projects or at the request of its
clients, the Company is able provide labor for the assembly and disassembly of its equipment.
As of December 31, 2014, the Heavy Construction Business unit had eight operational branches,
located in the states of Rio de Janeiro, So Paulo, Minas Gerais, Bahia, Pernambuco, Cear and
Maranho also in the Federal District.
Real Estate
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.
With outstanding performance in the sector for over 50 years and being one of the major leaders
for ten years in net revenue terms, Jahu was a recognized company in the residential and
commercial construction market, acquiring an extensive client base along its history. Due to that,
as part of its expansion and diversification strategy, in June 2008 the Company acquired Jahu,
which was incorporated to the Group and became one of the business units, called Real Estate.
Since then the Company has been improving Real Estate performance by introducing the concrete
formwork in the product portfolio, increasing significantly the equipment inventory, capitalizing
on the strong brand name of Mills and therefore increasing its client base.
This business unit comprises, on December 31, 2014, 17 operational branches, 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 e 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 2014. The equipment enables safe,
fast, versatile and precise access for professionals to perform tasks safely and efficiently at
heights from two to 48 meters. The handlers allows materials weighing up to 4,500 kg to be
lifted, transported and delivered to heights of over 17 meters, at a job site or within an industrial
plant.
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
53
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.
With the Equipment Rental business unit, the Company won in 2014 the IAPA Awards, in the
category Best IPAF training center of the year. IPAF is an international association that promotes
the safe use of motorized access equipment. In 2012, the Company also won the IAPA award for
Best Company of the Access World, which is considered to be the Oscars equivalent in this
business unit.
As of December 31, 2014, the Equipment Rental business unit was present through 30 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
54
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.
The Company believes that the Industrial Services business units clients value its reliability,
consistent quality and award-winning safety performance. These qualifications have yielded high
client renewal rates (80% in 2012), and have allowed us to develop long-lasting relationships
with clients such as the corporate groups Dow do Brasil and Braskem, for whom the Company
has worked continually for up to 16 years. Clients seek the Company for expert, fast and flexible
delivery of equipment and highly skilled installation, as well as in-depth 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 65.5% of the Industrial Services
Business units revenue in 2012. 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 Companys strategy for this business unit is to raise its profitability through the identification
of complementary services with higher added value, and, as a consequence, of higher
55
profitability, to offer its clients, mainly on the offshore market. The investments in the Oil and
gas sector in Brazil are the main growth drivers for this business unit. The 2013 business plan
form Petrobras estimates investments amounting to US$ 236.7 billion for the period of 20132017, of which US$ 147.5 billion in Exploration and Production (E&P) in Brazil, seeking to raise
production from 2 million bpd (Mbpd) in 2011 to 2.75 Mbpd in 2017, of which 1.0 Mbpd related
to the Pr-Sal.
7.2
Regarding each operational segment(s) disclosed in the consolidated financial
statements for the past fiscal years
a.
Heavy Construction
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
56
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 12mm 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 cuttingedge German NOE technology. It is a large-area formwork panel system made with
special aluminum profiles and coated with a 15-mm 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
57
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
58
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.
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.
Real Estate
Offered Equipment
The Real Estate business unit offers specialty engineering solutions and equipment,
such as concrete formwork, access and maintenance scaffolding and shoring equipment.
The Companys employees are generally responsible for the development of engineering
solutions, as well as for supervising the use of its equipment, while its clients are usually
in charge of the assembly and disassembly of such equipment. However, for more
complex projects, the Company may provide the labor for the assembly and disassembly
of equipment.
59
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
re-shored. 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.
Aluminum shoring. The Aluma Light Flying Table form is a shoring system designed with
highly resistant aluminum trusses conceived to expedite residential and commercial
building construction with large pieces of flagstone, preferably smooth. The major benefit
offered by this form is that it saves labor in operations, as it does not require the shoring
to be disassembled and later reassembled for concrete pouring. We can make these flying
tables of up to 80 square meters fully ready to execute the frames. The set is hoisted by
the crane and positioned on the upper level of the slab, in the case of vertical repetition,
or slid forward, in the case of horizontal repetition. The system is ideal for a short work
schedule or for work involving a structural design that has a lot of repetitions, whether
vertical or horizontal, such as large commercial and residential buildings, shopping
centers and industrial facilities. It allows any type of slab to be made, with or without
beams, with higher productivity and with all of the indirect gains resulting from a
reduction in the schedule. Aluma Light Flying Table form is 50% lighter than anything on
the market (only 35 kg/sq.m).
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). EasySet 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
60
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 Equipment
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 2 to 56 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 4,500 kilos to a height of up to 17 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.
61
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.
In the Companys thirteen Training Centers there are courses of operation certified by
IPAF in accordance with ISO18.878, with instructors trained by IPAF and equipment
manufacturers.
The Company believes that the equipment that make up your portfolio increases the productivity
of its clients and contributes to cut down delays and increase the safety of their operations.
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
2012
Net
% of Total
Revenue
Net Revenue
Heavy Construction
Real Estate
Rental
Industrial Services
Total
131,638
155,761
175,410
214,783
677,592
19.4%
23.0%
25.9%
31.7%
100%
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:
62
Business unit
2012
Heavy Construction
Real Estate
Rental
Industrial Services
Others
Total
Net Revenue
% of Total
Net Revenue
36,014
49,289
61,774
1,225
151,516
23.8%
32.5%
40.8%
0.8%
100%
2014
Net Revenue
% of Total
Net Revenue
23,155
(15,030)
58,783
(2,640)
64,268
36.0%
(23.4%)
91.5%
(4.1%)
100%
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.
The Company outsources the entire process of production of the equipment used in their
operations. See item 7.3(e) below.
b.
The Company rents its equipment and provides their services according to the needs from their
clients. As of December 2014, the Company was present in 19 states with 55 branches.
Amap
Roraima
Amazonas
Par
Cear
Maranho
Rio Grande
do Norte
Paraiba
Piaui
Pernambuco
Acre
Alagoas
Tocantins
Rondnia
Bahia
Sergipe
Mato Grosso
Distrito
Federal
Goias
Heavy Construction
Real Estate
Rental
Mato Grosso
do Sul
Minas
Gerais
So Paulo
Parana
Espirito
Santo
Rio de
Janeiro
(sede)
Santa Catarina
Rio Grande
do Sul
For greater details about our equipment, see item 7.2 above.
c.
(i)
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)
63
Each of the Companys business units faces significant competition in the segments in which it
operates. However, the Company believes its ability to offer innovative solutions at competitive
prices and its capacity to meet or beat client deadlines are a significant competitive advantages
in the segments in which it operates.
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 Estate
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
e.
Key inputs and raw materials: (i) description of the relationships with
suppliers, including whether they are subject to governmental control or regulation,
identifying the bodies and the respective legislation; (ii) potential dependence on few
suppliers; and (iii) possible volatility in their prices
To the Heavy Construction, Industrial Services and Real Estate business units are acquired from
habitual suppliers, the raw material necessary for the manufacture of equipment offered by the
Company, primarily steel and aluminum sheets, which prices paid for such materials are directly
impacted by fluctuations in commodity prices. The Company has a large number of options when
choosing its raw material suppliers and the choice is influenced mainly by the charged price.
After purchasing the raw materials, the Company outsources the entire manufacturing process to
third parties, as well as subsequent to the assembly. In this manner, all of the equipment
manufactured is done by third-parties. Due to the very high quality standards that are needed
from the equipment, the Company has very careful restricted selected companies to perform the
manufacturing. To catch up with demand, equipment is also imported from China, through
carefully verified suppliers, which must be within the Companys high-quality standards.
Regarding the Equipment Rental unit, the aerial platforms and telescopic manipulators used are
acquired from third parties. The criterion that guides the choice of suppliers for these products is
based on its quality and on after-sale services. The main suppliers of finished products are JLG,
Terex and Skyjack, of whom the Company is partially dependent on, due to the small number of
suppliers in the market. Furthermore, motorized components and pieces are acquired from others
suppliers, either national or foreign.
Regarding the inputs, gasoline and diesel are regularly acquired for the motorized equipment in
the Rental division. For the Heavy Construction and Real Estate unit, hardboards for the
maintenance and industrialization of the equipment are acquired, with the plasticized hardboards
used to equip the formwork in the aluminum chassis systems (Mills Deck-Light, Mills Deck and
ALU-L), and in the steel chassis systems, (SL 2000 formworks). Additionally, the Company buys
spare parts for its motorized equipment from other Brazilian and foreign supliers.
Generally, the agreements with the suppliers are short-term. The charged prices by the suppliers
may experience volatility as a result from the labor prices, and commodities that are used in the
equipment manufacturing, especially steel and aluminum. The Rental Business unit equipment,
are impacted by the exchange rate fluctuations.
The information above related to Industrial Services is limited to the Companys evaluation up to
the conclusion of business unit sale, in November 2013.
7.4
Clients accounted for more than 10% of total net revenues of the Company
In the fiscal years ended December 31, 2012, 2013 and 2014, the Company had no sole clients
accounting for more than 10% of the total net revenue.
7.5
a.
The need for government authorization to exercise the activities and longstanding relationships with the government to obtain such permits
There is no specific regulation on the activities that the Company carries. The Company does not
need to obtain permission or license in addition to those required to all commercial companies.
On July 5, 2006, environmental authorities in the state of Rio de Janeiro, the Delegacia de
Proteo ao Meio Ambiente, launched an investigation against the Company for the alleged
65
breach of articles 54 and 60 from the Environmental Crimes Law (Lei de Crimes Ambientais)
resulting from the alleged inadequate disposal of solid and liquid waste. The investigation has not
yet been completed, though the Company has started the necessary works to remedy the
irregularities appointed by the authorities and requested the environmental licenses required for
the works carried out at the construction site. For further information regarding relevant nonconfidential judicial, administrative or arbitrary lawsuits, see item 4.3 from this Reference Form.
The Delegacia de Meio Ambiente e produtos controlados of Osasco initiated the Police inquiry,
based on the Police report dated October 18, 2011, to investigate the alleged practice of crime
against the environment, provided for in Article 56 of Law 9.605/98, due to (i) irregularities in
the artesian well, (ii) irregular use and storage of chemicals and (iii) irregular disposal of waste
in the Company's subsidiary in Osasco/SP. The investigation is not complete, but the Company is
now taking all measures to search, verify and correct the deficiencies pointed out, together with
the police authority and the environmental agencies of the State of Sao Paulo.
For more information on the Companys relevant legal, administrative or arbitration processes,
see item 4.3 in this Reference Form.
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
66
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, 2014, 99.6% 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;
The fiscal year ended on December 31, 2014, 0.3% of the Company's revenue came from clients
located in Angola, 0.08% in Trinidad and Tobago and 0.03% in Venezuela.
c) total revenue from foreign countries and their participation share in the
Company's total net revenue.
The fiscal year ended on December 31, 2014, 0.4% of the Company's revenue came from clients
located outside of Brazil.
7.7
Regulation of foreign countries in which the Company obtains relevant
revenue
Not applicable.
7.8
Description of long-term relationships relevant to the Company that are not
listed in this form
The company does not publish sustainability report or similar. Considering the significant increase
of transparency about the sustainability issue, the Company is considering formalizing a process
of analysis (diagnosis) and action plan to improve its sustainability practices.
7.9
On May 21st, 2015, the Companys Board of Directors approved its new code of conduct, available
in
http://mills.infoinvest.com.br/enu/1936/150521_CDIGO%20DE%20CONDUTA%20MILLS_i.pdf
67
8. ECONOMIC GROUP
68
8.1
a.
The Companys capital stock is comprised exclusively of common shares. The table below presents
the Companys ownership structure, highlighting the amount of shares held by the Company, its
main shareholders and its Administrators:
Date of last
amendment
Participates in
shareholder
agreement
Controlling
shareholder
Quantity of
common shares
% Capital Stock
05/05/2014
Yes
Yes
15,595,249
12.2%
28/02/2014
Yes
Yes
5,354,929
4.2%
28/02/2014
Yes
Yes
2,156,845
1.7%
Antonia Kjellerup
28/02/2014
Yes
Yes
2,156,845
1.7%
28/02/2014
Yes
Yes
2,245,345
1.8%
05/05/2014
Yes
Yes
1,000
0.0%
28/02/2014
Yes
Yes
17,728,280
13.8%
NAME
Share
Ownership
(%)
100.0
100.0
Share
Ownership
(%)
100.0
100.0
Snow Petrel S.L. is a company with headquarter in Barcelona, Spain, at Calle Johann Sebastian
Bach 20, 3rd floor, registered under CNPJ/MF n 14.740.333/0001-61. Snow Petrel is a part of the
Companys controlling group and its entire capital stock is held by Malachite Limited, a holding
company organized under the laws of Malta and whose shares are fully held by: (i) Mr. Nicolas
Nacht, the brother of Mr. Andres Cristian Nacht; (ii) Mrs. Helen Anne Margaret Ahrens, the wife
of Mr. Nicolas Nacht; and (iii) other shareholders, also members of the Nacht family.
Shareholders' agreement of the Company
On February 28, 2014 a new Shareholders Agreement was celebrated without any change in Mills
corporate control structure, in order to regulate controlling shareholders relationship, as indicated
in item 8.1(a) above. The agreement provides, among other measures, clauses on (i) the right
69
to vote by means of a representative, and control power; (ii) nomination of Officers; (iii) share
transfer and priority to buy them.
On May 5th, 2014, the Shareholders Agreement was amended, as to include Francisca Kjellerup
Nacht.
b.
c.
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 for R$90.0 million, paid fully on February 8,
2011.
Rohr is a privately held company specialized in access engineering and solutions for civil
construction and has 45 years of experience in this market. The company serves the following
sectors: heavy construction and infrastructure, residential and commercial construction, industrial
maintenance and events.
The Company does not participate in Rohrs administration, once this was a strategic acquisition,
in which enables the Company to broaden its exposure to the sectors it serves - infrastructure,
residential and commercial construction, the oil and gas industry, among others.
In September 2011, there was a rise in the stake held in Rohr to 27.5%, resulting from the
repurchase by Rohr of 9% of its shares held as treasury stock.
d.
Not applicable.
e.
Officers
Others
2.6%
62.0%
MILLS ESTRUTURAS E
SERVIOS DE ENGENHARIA
S.A.
8.3
Description of the restructuring operations, such as additions, mergers, splits,
incorporation of shares, corporate divestitures and acquisitions, corporate
70
governance, acquisitions and disposals of important assets, which may have taken
place in the Group.
Date of Operation
Corporate Event
Operation Description
Date of Operation
Corporate Event
Description of Corporate Event
Operation Description
Date of Operation
Corporate Event
Description of Corporate Event
Operation Description
8.4
7/10/2013
Sale
On July 10, 2013, the Company entered into an
agreement to sell its Industrial Services business unit
for R$ 102 million through the sale of its stake for the
company Albuquerque Participaes Ltda. This sale
was in line with the Company's strategy to focus on
businesses in which its competences are able to add
higher value for its shareholders and clients.
12/28/2012
Other
Capital Reduction of Nacht Participaes S.A.
At the Extraordinary General Meeting held on October
29, 2012, the shareholders of Nacht Participaes
S.A. approved its capital reduction.
The
aforementioned capital reduction occured through
the delivery of the totality of its previously held
shares issued by Mills to its shareholders (27,421,713
shares), after the 60-day statutory period provided
by article 174 of Law 6,404, of December 15, 1976,
as amended. There was no change in the Companys
corporate control.
3/14/2012
Other
Capital Reduction of Jeroboam Investments LLC
Transference of the totality of Mills shares under
Jeroboam Investments LLC (Jeroboam) to Snow
Petrl, due to the dissolution and consequent
extinction of its subsidiary Jeroboam. Therefore,
Snow Petrel now holds 19,233,281 Mills shares,
representing 15.3% of its capital stock. There was no
change in the Companys shareholder control.
71
9. RELEVANT ASSETS
72
9.1
Description of noncurrent relevant assets for the development of the
Companys activities
a.
Fixed assets, including those subject to rent or lease, indicating its location.
Most of the Companys revenues are generated by the rental and use of equipment, as well the
provision of services related to such equipment, including insulation, industrial painting and
equipment assembly and disassembly.
The Company also owns several fixed assets for its own use; mainly warehouses to storage the
equipment described above, offices, furniture, fixtures, and other general equipment used at the
Companys facilities.
The Companys main fixed assets are listed in the table below:
Assets
2012
Accumulat
ed
Depreciati
on
Cost
Net
2013
Accumulat
ed
Depreciati
on
Cost
Net
Buildings and
Land
Facilities
Equipment
IT Equipment
Others
Subtotal
Construction
in Progress
25.156
(1.080)
24.076
24.274
(1.526)
22.748
24.274
(2.196)
22.078
1.457
1.219.336
9.501
25.906
1.281.356
(654)
(308.424)
(5.718)
(8.699)
(324.575)
803
910.912
3.783
17.207
956.781
5.470
1.491.854
13.886
31.625
1.567.109
(1.051)
(362.749)
(6.594)
(9.799)
(381.719)
4.419
1.129.105
7.292
21.826
1.185.390
7.058
1.623.268
16.003
40.961
1.711.564
(1.590)
(489.835)
(8.937)
(14.090)
(516.648)
5.468
1.133.433
7.066
26.871
1.194.916
46.566
46.566
39.086
39.086
5.232
5.232
Total
1.327.922
(324.575)
1.003.347
1.606.195
(381.719)
1.224.476
1.716.796
(516.648)
1.200.148
Facility
Plot Size
Office/
5,000 m
Warehouse
Office/
Warehouse
14,984
m
Office/
4,200 m
Warehouse
Constructed
Area
1,639 m
City
State
Location
Rented
End of Term of
Lease
08/07/2019
Macei
AL
,2428 m
Rented
05/01/2016
Manaus
AM
1,200 m
Rented
01/01/2016
Manaus
AM
AV Deputado
Serzedelo de
BarrosCorreia,
6839, Clima Bom
- Macei / AL
Av. Colantino
Aleixo, n1.849,
Puraquequara,
Distrito Industrial
II
Av. Rio Negro,
n1.170, entrada
suplementar em
Trav. Paran,
n01 - Quadra I,
Lote 01, Ncleo 4,
LT Rio Piorini,
Colnia Terra
Nova, bairro Novo
Israel.
Status
73
Office/
6,975 m
Warehouse
1,558 m
Rented
04/12/2015
Camaari
BA
Av. Concntrica,
137 Centro
Office/
4,644 m
Warehouse
,2,000 m
Rented
306/31/2015
Simes Filho
BA
DICA - Distrito
Industrial do
Calado, Quadra
5, Lote 1, CIA
Office/
4,500 m
Warehouse
,1,286 m
Rented
06/31/2015
Simes Filho
BA
QD.05 LT.02 ,
dica ,Cia - Sul
Office/
3,636 m
Warehouse
1,200 m
Rented
07/31/2019
Sorocaba
BH
Office/
Warehouse
4,360 m
Rented
01/01/2016
Fortaleza
CE
Office/
3,900 m
Warehouse
1,750 m
Rented
05/05/2023
Braslia
DF
Office/
Warehouse
20,000
m
17,011 m
Rented
10/25/2021
Braslia
DF
Office/
Warehouse
10,000
m
3,675 m
Rented
09/03/2017
Serra
ES
Office/
Warehouse
11,689
m
1,849 m
Rented
10/27/2015
Goinia
GO
Rodovia BR 153,
s/n Quadra CH
Lote 11 e 12
Chcaras Retiro
Office/
Warehouse
47,076
m
3,388 m
Rented
01/03/2018
So Lus
MA
Office/
5,258 m
Warehouse
,2,750 m
Rented
10/29/2013
Belo
Horizonte
MG
Office/
3,386 m
Warehouse
,1,351 m
Rented
12/31/2013
Belo
Horizonte
MG
Office/
2,000 m
Warehouse
2,000 m
Rented
Belo
Horizonte
MG
Av. Engenheiro
Emiliano Macieira,
116, BR 135, Km
2,5, Galpo 04,
Disol, Bairro Tibiri
Rodovia Anel
Rodovirio Celso
Mello Azevedo,
24.139, So
Gabriel.
Rodovia Anel
Rodovirio BR
262, n 24277,
Km 24- Dom
Silvrio
Rua Jacu, So
Gabriel, 8090
Office/
2,869 m
Warehouse
64 m
Rented
01/11/2016
Uberlndia
MG
Rua Nicargua,
1656 Tibery, Lote
01, 02, 03, 04 ,05
,06.
4,179 m
Rented
01/31/2023
Contagem
MG
AV Helena
Vasconcelos
Costa, 785,
Office/
Warehouse
13,552
m
25,000
m
Rodovia DF 290,
KM 1,2 Ncleo
Rural
Hortigranjeiro de
Santa Maria
Rodovia DF 290,
KM 1,2 Ncleo
Rural
Hortigranjeiro de
Santa Maria
Rua 7, n 170,
Quadra XIV G,
Lotes 01 ao 04
Civit II
74
Contagem - Minas
Gerais
Office/
3,452 m
Warehouse
1,200 m
Rented
01/07/2019
Juiz de Fora
MG
Office/
Warehouse
2,511 m
Rented
10/06/2019
Pouso Alegre
MG
Office/
3,750 m
Warehouse
848 m
Rented
08/26/2018
Trs Lagoas
MS
Office/
3,600 m
Warehouse
940 m
Rented
05/01/2016
Cuiab
MT
Office/
4,320 m
Warehouse
Obra em
andamento
Rented
05/05/2016
Cuiab
MT
Office/
7,500 m
Warehouse
1,280 m
Rented
11/01/2018
Parauapebas
PA
Rented
05/25/2019
Ananindeua
PA
Rua Leopoldo
Teixeira, s/n Lt 44
e 46, Centro,
Ananindeua - Par
Rua Jardim
Providnia, 242,
BR 316, KM 4,
Distrito 2, Qd 8,
Lt 255 guas
Lindas
Rua Interna 07,
n 645 Pontezinha
83 e 85
(Estacionamento),
(Mdulos 128 e
129), (Mdulos
15, Parte e 130 a
133)
Rua Interna 07,
n 645 Pontezinha
(Mdulos 15,
Parte e 130 a
133)
Rua Interna 07,
n 645 Pontezinha
(Mdulos 128 e
129)
48,370
m
Office/
2,632 m
Warehouse
Office/
Warehouse
17,500
m
1,100 m
Rented
09/30/2017
Ananindeua
PA
Office/
Warehouse
19,740
m
,3,888 m
Rented
09/15/2019
Cabo de
Santo
Agostinho
PE
Office/
Warehouse
12,640
m
1,700 m
Rented
10/30/2015
Cabo de
Santo
Agostinho
PE
Office/
5,000 m
Warehouse
2,188 m
Rented
09/19/2016
Cabo de
Santo
Agostinho
PE
Office/
Warehouse
7,365 m
Rented
04/30/2018
Curitiba
PR
17,982
m
Rua Paul
Granfunkel,
n1625, Cidade
Industrial,
Curitiba, PR
75
Office/
2,880 m
Warehouse
1,331m
Rented
02/09/2016
Itabora
RJ
Avenida 22 de
Maio, n. 4.100,
Manoel dos
Santos Cid
Office/
Warehouse
74,551
m
1,000 m
Rented
01/23/2017
Itatiaia
RJ
Rodovia
Presidente Dutra,
KM 316, Galpo 2,
rea A, Centro
Office/
Warehouse
54,793
m
11,032 m
Owned
N.A.
Rio de
Janeiro
RJ
Estrada do
Guerengu, 1381
- Taquara
Office/
Warehouse
N.A.
293 m
Owned
N.A.
Rio de
Janeiro
RJ
Office/
Warehouse
N.A.
216 m
Rented
01/24/2015
Rio de
Janeiro
RJ
Office/
2,000 m
Warehouse
972 m
Rented
05/09/2018
Maca
RJ
Office/
8,173 m
Warehouse
226 m
Rented
01/01/2018
Parnamirim
RN
Office/
8,064 m
Warehouse
1,882 m
Rented
12/01/2014
Porto Alegre
RS
Office/
Warehouse
3,015 m
Rented
07/10/2018
Cachoerinha
RS
Office/
4,800 m
Warehouse
700 m
Rented
01/09/2016
Rio Grande
do Sul
RS
Office/
5,105 m
Warehouse
687 m
Rented
09/14/2016
Itaja
SC
Office/
6,480 m
Warehouse
883 m
Rented
07/20/2018
Aracaju
SE
R O (Distrito
Industrial de
Aracaju), 185,
Incio Barbosa
Office/
Warehouse
850 m
,350 m
Rented
08/31/2015
So Jos dos
Campos
SP
Office/
Warehouse
49,620
m
18,841 m
Rented
01/31/2018
Osasco
SP
Rodovia
Presidente Dutra,
s/n KM 154,7
Edifcio 36 Rio
Comprido
Rua Humberto de
Campos, 271, Vila
Yolanda
23,316
m
Rua Engenheiro
Agrnomo
Bonifcio
Bernardes, 220,
Qd M, Lt 1 Cachoerinha - Rio
Grande do Sul
AV Itlia, 2240,
Parte, Carreiros,
Rio Grande/RS
76
Office/
Warehouse
30,941
m
2,415 m
Rented
10/05/2017
Campinas
SP
Rodovia
Anhanguera, s/n,
km 103,5
Jardim Aparecida
Office/
5,060 m
Warehouse
2,998 m
Rented
06/01/2018
Bauru
SP
Filial - Rodovia
Marechal Rondon,
Km 348, Bauru-SP
Office/
1,170 m
Warehouse
343 m
Rented
01/01/2017
So Vicente
SP
Office/
4,764 m
Warehouse
160 m
Rented
02/28/2015
Ribeiro
Preto
SP
Avenida Joo
Franciso Bendorp,
803, Qd 135, Lt
01 a 03, Cidade
Nutica - So
vicente
Estrada das
Palmeiras, 1150,
Bairro das
Palmeiras
Office/
2,291 m
Warehouse
929 m
Rented
10/19/2019
Guarulhos
SP
Estrada Municipal
(Vila Dinamarca),
n 642, LT 19 Guarulhos / SP
All facilities used by the Company, whether they are owned or leased from third parties, are free
of liens and charges.
Description of the fixed asset
Real property
Land
Equipment for rent (formwork, shoring and equipment machines)
IT Equipment
Facilities
Construction in progress
Country of
Location
Municipality
of Location
Type of
propriety
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Rio de Janeiro
Rio de Janeiro
Owned
Owned
Owned
Owned
Owned
Owned
REGISTRATION COVERAGE
#
TERRITORY
NATIONAL
740164244
780190670
NATIONAL
03/25/2020
7200595
NATIONAL
12/07/2022
800121546
NATIONAL
08/30/2021
829369724
NATIONAL
02/08/2019
812940792
NATIONAL
12/18/2021
821121316
NATIONAL
12/18/2021
821121324
NATIONAL
12/18/2021
200018167
NATIONAL
10/31/2015
10/31/2015
817692177
NATIONAL
817692215
NATIONAL
10/31/2015
817692223
NATIONAL
10/31/2015
817692231
NATIONAL
09/25/2019
6989454
NATIONAL
09/25/2019
6989462
NATIONAL
77
NATIONAL
Awaiting approval for extension
200065726
608965065
800221737
09/27/2018
812987683
NATIONAL
05/30/2019
812987691
NATIONAL
09/13/2018
813141010
NATIONAL
05/30/2019
813782414
NATIONAL
815236662
02/12/2024
830724915
830724931
04/24/2017
824647548
NATIONAL
04/24/2017
824647556
NATIONAL
NATIONAL
NATIONAL
NATIONAL
NATIONAL
NATIONAL
NATIONAL
03/25/2016
6268625
REGISTRATION COVERAGE
#
TERRITORY
DURATION
Order Status: Awaiting for
granting
In requirement Status
06/13/2018
Order Status: Awaiting for
granting
Requirement compliance In
order status
Concession term expired
Concession term expired
PI0705035-6
BR 30 2013
002803-8
BR 30 2013
002802-0
BR 10 2013
013430-9
BR 30 2013
002801-1
MU7801603-7
MU7903337-7
NATIONAL
NATIONAL
NATIONAL
NATIONAL
NATIONAL
NATIONAL
NATIONAL
MU7902162-0
NATIONAL
MU7903347-4
NATIONAL
MU8901783-8
NATIONAL
09/11/2024.
Order Status: Awaiting
granting
Order Status: Awaiting
granting
Order Status: Awaiting
granting
Order Status: Awaiting
granting
Order Status: Awaiting
granting
for
for
for
for
MU8901887-7
PI1004014-5
PI1101068-1
PI1003939-2
for
NATIONAL
NATIONAL
NATIONAL
NATIONAL
NATIONAL
MU9101029-2
Consequently, the
Company would have to
incur the costs related
to the creation and
promotion of any new
brand, extraordinary
marketing initiatives and
use of human resources
and managements time
to deal with this
situation.
78
payments to the
INPI.
c.
9.2
Discontinued Operations
In July 10, 2013, the company entered into a sale agreement of its Industrial Services business
unit to FIP Leblon Equities Partners V, a fund managed by Leblon Equities Gesto de Recursos
Ltda., through the sale of its stake in the company Albuquerque Participaes Ltda. The sale price
set on May 31, 2013, trading date base, was R$ 102,0 million. During the 3-year period, beginning
on the closing date, the parties entered into a mutual agreement not to compete.
The transaction was closed on November 30, 2013, and the price was updated based on CDI,
adjusted by partial performance of the business and settled, after adjustments, in local currency.
Investments
On January 19, 2011, the Company entered into a purchase and sale agreement to acquire 25%
of the voting and total capital of Rohr for R$ 90 million, paid on February 8, 2011.
Rohr is a private company specializing in access engineering and the provision of construction
solutions, with more than 45 years of experience in the market. The company operates in the
heavy construction and infrastructure, building construction, industrial maintenance and events
sector.
The Company does not participate in the management of Rohr, as this is a strategic acquisition,
whereby the Company aimed to increase its presence in its areas of activity - infrastructure,
residential and commercial construction, oil and gas, etc. In September 2011, Rohr acquired 9.0%
of its own stock, and, as a result, the Company expanded its participation from 25.0% to 27.5%
in Rohr.
(i) Company Name: Rohr S.A. Estruturas Tubulares
(ii) Headquarter: Avenida Francisco Matarazzo, 1400 Conjunto 181, cidade de So Paulo,
Estado de So Paulo, Brasil.
(iii) Activities developed: Rohr is a private company specializing in access engineering and
the provision of construction solutions, with more than 45 years of experience in the market. The
company operates in the heavy construction and infrastructure, building construction, industrial
maintenance and events sector.
(iv) Ownership: 27.5%
(v) Ownership profile: investment recorded at the cost of acquisition.
(vi) CVM registration: not applicable
(vii) Book value of participation: R$87.4 million (as of December 31, 2014)
(viii) Market value of ownership according to stock price at the date of the fiscal year,
when such stocks are traded on organised markets of securities: not applicable
79
(ix) Appreciation or depreciation of such ownership, over the last 3 fiscal years,
according to the book value: not applicable. On January 19, 2011, the Company entered into
a purchase and sale agreement to acquire 25.0% of the voting and total capital of Rohr for R$90.0
million. In September 2011, there was a rise in the stake held in Rohr to 27.5%, resulting from
the repurchase by Rohr of 9.0% of its shares held as treasury stock.
(x) Appreciation or depreciation of such ownership, over the last 3 fiscal years,
according to the market value, to stock price at the date of the fiscal year, when such
stocks are traded on organised markets of securities: not applicable
(xi) Dividends received in the 3 last fiscal years:
2014 -> R$ 1,818 thousand as interest on capital related to the fiscal years of 2014,
registered as financial revenue of 2014.
2013 -> R$ 1,648 thousand as interest on capital related to the fiscal years of 2013,
registered as financial revenue of 2013.
2012 > R$ 3,214 thousand as interest on capital related to the fiscal years of 2011 and
2012, registered as financial revenue of 2012.
(xii) reasons for the ownership acquisition and its maintenance: through this acquisition,
the Company aimed to increase its presence in its areas of activity - infrastructure, residential
and commercial construction and oil and gas.
80
10.
MANAGEMENT COMMENTS
81
10.1
a.
The Company presented ownership and financial favorable conditions, presenting operational
profit generation, operational cash generation and reasonable leverage level. The management
of the Company believes that current cash level together with cash generation capacity, even in
a negative scenario, are sufficient for the Company to honor its financial obligations.
Mills presented in 2014 R$ 794.2 million of net revenues and free cash flow of R$ 116.1 million.
This is the first time Mills achieved positive cash generation, after years of high investments,
which enabled its organic growth, geographic expansion, and manly, the consolidation of its
leadership in its markets. Net revenues amounted to R$ 832.3 million in 2013 and R$ 879.3 million
in 2012.
Net earnings amounted to R$ 64.3 million in 2014, versus R$ 167.7 million of net earnings from
continuing operations 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. Excluding extraordinary items for both periods,
net earnings in 2014 would total R$ 81.7 million, against net earnings from continuing operations
of R$ 159.5 million in 2013. In 2012, net earnings totaled 151.1 million.
Mills total debt was R$ 745.4 million as of December 31, 2014 versus R$ 632.6 million at the end
of 2013 and R$ 622.5 million at the end of 2012. At the end of the year our net debt position was
R$ 551.7 million, versus R$ 606.5 million at the end of 2013 and R$ 400.7 million at the end of
2012. The debt amortization schedule includes payment of R$ 206 million as principal and interest
in 2015, of which a payment of R$ 44 million was already made in January, without rolling over,
reducing our gross debt.
Our leverage, as measured by net debt/LTM EBITDA, was at 1.6 times as of December 31, 2014.
The total debt/enterprise value was 42%, while interest coverage, as measured by LTM
EBITDA/LTM interest payments, was 4.8 times. At the end of 2013, our leverage, was at 1.5
times, while interest coverage (LTM EBITDA/LTM) was 8.3 times. In 2012, net debt/LTM EBITDA
ratio was at 1.2%. The total debt/enterprise value was 13.2%, while interest coverage was 7.6
times.
b.
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.
According to the Company's balance sheet on December 31, 2012, the capital structure of Mills
was 51.6% equity, measured by the stockholders equity, and 48.4% capital from third party,
measured by total liabilities.
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%. In terms of currency, 100% of Mills
debt is in Brazilian Reais. On December 31, 2013, our debt was 20% short-term and 80% longterm, with an average maturity of 2.1 years, at an average cost of CDI+1.00%. On December
31, 2012, our debt was 9% short-term and 91% long-term, with an average maturity of 3.0
years, at an average cost of CDI+1.45%.
On November 10th, 2014 Mills Board of Directors approved a program to repurchase common
shares of Mills issuance, with the objective of acquiring up to 4,000,000 shares, with a deadline
of 365 days as of the date of approval, for treasury and subsequent cancellation or alienation,
82
including in the context of any exercise of options under its stock option program, in the case of
exercise of options. Up to December 31st, 2014, the Company acquired and kept in treasury
1,182,900 shares, with a total value of R$ 11 million.
The management of the Company typically use both equity, from operating cash generation, and
capital from third-party, though the contraction of new loans and/or the issuance of debt
securities, to finance the needs for investments in non-current assets and working capital of the
company. For strategic operations, when necessary, the company may resort to the capital from
their shareholders or third parties, through the issuance of shares.
There are no hypotheses of redemption of shares issued by the Company in addition to the legally
provided for.
c.
The Companys EBITDA for the year ended December 31 st 2014, was R$ 335.7 million and its
financial expenses, net of financial revenue in the same period were R$ 67.6 million. Thus, the
Companys EBITDA for year ended December 31st 2014 presented a coverage ratio of 5.0 times
its net financial expenses during the same period. Only considering its financial expenses, which
amounted to R$ 67.6 million as of December 31st, 2014, the coverage ratio would be 3.6 times.
The Companys total indebtedness for the year ended December 31st 2014, amounted to R$ 745.4
million, or 2.2 times the Companys EBITDA for the year ended December 31st 2014. The flow of
payment from this debt, considering the debt profile as of that date, will take place in a period of
seven years, of which R$ 153.8 million in less than one year, R$ 172.8 million from 1 to 3 years,
R$ 373.2 million in a period between 3 to 5 years and R$ 44.5 million in more than five years.
The Companys long-term debt profile has a policy for contracting loans and financing aimed at
ensuring that all financial commitments are honored, if necessary, through its cash generation.
In addition, on December 31st 2014, the Company had registered on its balance sheet the amount
of R$ 10.1 million, which refers to the Tax Recovery Program (REFIS) with a maturity of 180
months. The Company is compliant to the remainder installments amounting R$ 10.1 million, of
which the last installment matures in December, 2024.
This way, the Company's management believes that its cash generation is sufficient to meet its
financial commitments. In 2014, cash generated was above investment needs for the first time
since its IPO, with a net balance of R$ 116.1 million.
The Companys EBITDA for the year ended December 31 st 2013, was R$ 403.1 million and its
financial expenses, net of financial revenue in the same period were R$ 46.8 million. Thus, the
Companys EBITDA for year ended December 31st 2013 presented a coverage ratio of 8.6 times
its net financial expenses during the same period. Only considering its financial expenses, which
amounted to R$ 60.0 million in the year ended December 31st 2013, the coverage ratio would be
6.7 times.
The Companys total indebtedness for the year ended December 31st 2013, amounted to R$ 632.6
million, or, 1.6 times the Companys EBITDA for the year ended December 31st 2013. In addition,
on December 31st 2013, the Company had registered on its balance sheet liabilities in the amount
of R$ 10.4 million, which refers to the Tax Recovery Program (REFIS).
The Companys EBITDA for the year ended December 31st 2012, was R$ 358.4 million and its
financial expenses, net of financial revenue in the same period were R$ 39.2 million. Thus, the
Companys EBITDA for year ended December 31st 2012 presented a coverage ratio of 9.1 times
its net financial expenses during the same period. Only considering its financial expenses, which
amounted to R$ 51.2 million in the year ended December 31st 2012, the coverage ratio would be
7.0 times.
83
The Companys total indebtedness for the year ended December 31st 2012, amounted to R$ 622.5
million, or, 1.7 times the Companys EBITDA for the year ended December 31 st 2012. In addition,
on December 31st 2012, the Company had registered on its balance sheet liabilities related to
the Tax Recovery Program (REFIS), which amounted to R$ 10.7 million.
With regard to contractual limitations for assumption of new debt, there are clauses in the
Company's bank credit contracts that require adherence to certain financial indicators, among
which: the ratio between EBITDA and net debt, the ratio of net short-term debt and total net
debt, and the ratio between net financial expenses and EBITDA.
On December 31st of 2012, 2013 and 2014, the Company was within the limits of contractual
financial indicators.
d.
The investments from the Company in non-current assets and working capital are financed by its
own cash generation and third party capital, through the contraction of new loans and/or the
issuance of debt securities. For strategic operations, when necessary, the Company can turn to
capital from its shareholders or third parties, through the issuance of shares.
On April 23rd, 2012 the Company issued a single series of thirty commercial promissory notes with
unit face value of R$ 1.0 million, for a total amount of R$ 30.0 million with maturity on December
3rd, 2012. Remuneration interest charges will fall due corresponding to 100% of the accumulated
variation in the average daily Domestic Demand (DI) rates, plus 4.9% per annum. Remuneration
will be fully paid upon the maturity date.
On August 15th, 2012, the Company held its second issuance, in two series of simple debentures,
non convertible into shares, unsecured, public offering object with limited placement efforts,
pursuant to CVM Instruction 476. 27,000 debentures were issued, each with a nominal value of
R$ 10,000.00, of which: i) 16,094 debentures of the first series, amounting to R$ 160.9 million,
with maturity date on August 15, 2017, not subject to monetary adjustment. The nominal value
of the first series debentures will be amortized in two annual installments starting on the fourth
year of the issuance, and the interest paid semi-annually and equal to surtax of 0.88% per annum
of 100% of DI accrued variation; ii) 10,906 debentures of the second series, amounting to R$
109.1 million, with maturity date on August 15, 2020, subject to monetary adjustment by the
accrued variation of the IPCA. The nominal value of the second series debentures will be
amortized in three annual installments starting on the sixth year of the issuance, and the interest
paid annually and equal to 5.50% per annum of the above mentioned monetarily adjusted
amount.
On December 6, 2013 the Company entered into a loan agreement with the Nassau Branch of
Banco Ita BBA S.A. totaling US$ 16.9 million (equivalent to R$40.0 million). The settlement of
the loan will be made in a single installment, paid on January 30, 2015, without rolling over.
Payment of interest will occurred twice a year. In order to eliminate the foreign exchange risk on
this borrowing, on the same date a swap was contracted with Banco Ita BBA S.A. in the amount
of R$ 40 million so that the obligations (principal and interest) are fully converted into local
currency and carried out on the same maturity dates.
On April 11th, 2014 the Company issued commercial promissory notes with a total amount of R$
200.0 million. Remuneration interest charges will fall due corresponding to 106% of the
accumulated variation in the average daily Domestic Demand (DI) rates. The net proceeds of the
offering were used for: (a) refinancing of Companys debt, (b) rental equipment acquisition and
(c) Companys general uses and expenses.
On May 30th, 2014 the Company issued a series of simple debentures for a total amount of R$
200 million, non-convertible into shares, unsecured, with maturity date on May 30 rd, 2019. The
nominal value of the this series debentures will be amortized in three annual installments starting
on the third year of the issuance, and the interest paid semi-annually and equal to surtax of
84
108.75% per annum of 100% of DI accrued variation. The liquid resources obtained by the
Company through the third debenture issuance were fully used to settlement of Companys 4 th
edition promissory notes, issued on 11th April, 2014.
e.
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.
2012
CDI+0.29%
TJLP+0.2% to 0.9%
27.3
26.7
As of December 31st,
2013
(in R$ million)
40.2
23.4
2014
44.7
18.7
18.0
8.2
112.5% of CDI
1st series: CDI + 0.88%
2nd series: IPCA + 5.5%
108.75% of CDI
272.5
164.7
113.3
274.4
165.9
120.6
622.5
632.6
184.4
168.1
128.7
202.0
746.6
Short-Term Debt
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 3 rd debentures issuances issued in May,
2014.
As of December 31, 2013, short-term debt amounted to R$ 125.3 million, compared to R$ 54.8
million as of December 31, 2012, an increase of R$ 70.5 million or 128.7%. This increase was
primarily due to the payment of the 1st installment amortization, in April 2014, of the 1st issuance
85
of the Debentures issued in April 2011 with maturity in April 2014. Remaining amortization will
be in April 2015 and April 2016.
Long-Term Debt
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 3 rd 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.
As of December 31st, 2013, the Companys long-term debt amounted to R$ 507.3 million,
compared to R$ 567.7 million as of December 31, 2012, a decrease of R$ 60.4 million or 10.6%.
This reduction was due to the transfer of long-term debt to short-term debt of the 1st installment
amortization, in April 2014, of the 1st issuance of debentures, issued in April 2011.
Banco do Brasil
Ita BBA
Ita BBA S.A, Sucursal Nassau
On December 6, 2013 the Company entered into a borrowing agreement with Banco Ita BBA
S.A., Nassau Branch, in the amount of US$16.9 million (equivalent to R$40.0 million). The
settlement of the loan will be made in a single installment, paid on January 30, 2015, without
rolling over. Payment of interest will occurred twice a year. In order to eliminate the foreign
exchange risk on this borrowing, on the same date of the borrowing the Company entered into a
swap transaction with Banco Ita BBA S.A. in the amount of R$40.0 million in order to convert
the obligations (principal and interest) into local currency and on the same maturity dates.
Debentures
On April 8, 2011 approval was granted for the issuance by the Company of a total of 27,000
debentures in a single tranche, of non-convertible unsecured debentures, of a total amount of R$
270.0 million, and unit face value of R$ 10,000, issued on April 18, 2011. The debentures have
maturity on April 18, 2016, with remuneration equivalent to 112.5% of the CDI rate and semiannual payments of interest and amortization in three consecutive installments, with the first
maturity date on April 18, 2014. The transaction costs associated with this issue, in the amount
of R$ 2.4 million, are being recognized as Company funding expenses, in accordance with the
contractual terms of the issue.
On August 3, 2012 approval was granted for the issuance by the Company, in two series of simple
debentures, non convertible into shares, unsecured, public offering object with limited placement
efforts, pursuant to CVM Instruction 476. On August 15, 2012, 27,000 debentures were issued,
each with a nominal value of R$ 10,000.00, of which: i) 16,094 debentures of the first series,
amounting to R$ 160.9 million, with maturity date on August 15, 2017, not subject to monetary
adjustment. The nominal value of the first series debentures will be amortized in two annual
86
installments starting on the fourth year of the issuance, and the interest paid semi-annually and
equal to surtax of 0.88% per annum of 100% of DI accrued variation. ii) 10,906 debentures of
the second series, amounting to R$ 109.1 million, with maturity date on August 15, 2020, subject
to monetary adjustment by the accrued variation of the IPCA. The nominal value of the second
series debentures will be amortized in three annual installments starting on the sixth year of the
issuance, and the interest paid annually and equal to 5.50% per annum of the above mentioned
monetarily adjusted amount. Transaction costs related to this issuance are recognized as capital
funding expenses, according to contract terms.
On April 23, 2014 approval was granted for the issuance by the Company of a total of 20,000
debentures in a single tranche, of non-convertible unsecured debentures, of a total amount of R$
200.0 million, and unit face value of R$ 10,000, issued on June 18, 2014. The debentures have
maturity on May 30, 2019, with remuneration equivalent to 108.75% of the CDI rate and semiannual payments of interest and amortization in three consecutive installments, with the first
maturity date on May 30, 2017. The transaction costs associated with this issue, in the amount
of R$ 0.7 million, are being recognized as Company funding expenses, in accordance with the
contractual terms of the issue.
As of December 31, 2014 the balance of debentures including transaction costs is R$ 106.3 million
in current liabilities and R$ 577.1 million in non-current liabilities, and R$ 105.3 million and R$
575.5 million, net of transaction costs, respectively.
Promissory Notes
On December 7, 2011 the Company issued a single series of three commercial promissory notes
with unit face value of R$ 9.0 million, for a total amount of R$ 27.0 million with maturity on
December 1st, 2012. Remuneration interest charges will fall due corresponding to 100% of the
accumulated variation in the average daily Domestic Demand (DI) rates, plus 1.10% per annum.
Remuneration was fully paid upon the maturity date.
On April 23, 2012 the Company issued a single series of thirty commercial promissory notes with
unit face value of R$ 1.0 million, for a total amount of R$ 30.0 million with maturity on December
3, 2012. Remuneration interest charges will fall due corresponding to 100% of the accumulated
variation in the average daily Domestic Demand (DI) rates, plus 4.9% per annum. Remuneration
was fully paid upon the maturity date.
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.
Finance leases
Referred basically to agreements for purchase of rental equipment with periods between 36 and
60 months, maturities through 2015 and indexed to the CDI plus interest of 2.50% to 3.80% per
year. This obligation was collateralized by the its own leased assets. The Company settled in
advance all the existing finance lease agreements during the third quarter of 2014.
87
These derivative instruments contracted by the Company have the intention to protect it, on their
equipment import operations, in the interval between the placing of orders and nationalization
against the risk of fluctuation in the exchange rate, and are not used for speculative means.
The Company has also borrowing agreements in dollars and in order to cover substantially the
foreign exchange risk it entered into swap transactions.
On December 6, 2013 the Company entered into a borrowing agreement with Banco Ita BBA
S.A., Nassau Branch, in the amount of US$16.9 million (equivalent to R$40.0 million). Principal
was settled in a bullet payment on January 30, 2015 without rolling over. In order to eliminate
the foreign exchange risk on this borrowing, on the same date of the borrowing the Company
entered into a swap transaction with Banco Ita BBA S.A. in the amount of R$40.0 million in order
to convert the obligations (principal and interest) into local currency and on the same maturity
dates.
On December 31st, 2014, the Company did not possessed purchase orders with foreign suppliers
of equipment valued, being the value presented (US$ 0.3 million) in foreign suppliers account
related basically to installment purchase of equipment (in 2013 these orders totaled US$ 71.3
million, and in 2012 these orders totaled US$ 72.8 million).
(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, 2012, 2013 and 2014, 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.
88
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.
On December 31, 2014, the Company had no limits to use in financing transactions already
contracted. At the same date the Company had unsecured overdraft account, not used, reviewed
annually of 570.2 million and Secured bank credit account used of R$ 64.5 million, with varying
maturities and that can be extended in a common agreement.
On December 31, 2013, the Company had no limits to use in financing transactions already
contracted. At the same date the Company had unsecured overdraft account, not used, reviewed
annually of 477.5 million and Secured bank credit account used of R$ 71.5 million, with varying
maturities and that can be extended in a common agreement.
On December 31, 2012, the Company had no limits to use in financing transactions already
contracted. At the same date the Company had unsecured overdraft account, not used, reviewed
annually of 492 million and Secured bank credit account used of R$ 72 million, with varying
maturities and that can be extended in a common agreement.
The Company maintains relationships with major financial institutions operating in Brazil and, the
evaluation of its board has conditions and the risk rating of credit that enable the Company to
contract new debt in the amount required to meet the current needs of cash for short and long
term.
h.
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 31st, 2012, 2013 and 2014 refer only to net revenue,
not to the gross revenue.
89
2012
AV(1)
(%)
879.3
100.0%
29.8%
832.3
100.0%
-5.3%
794.2
100.0%
-4.6%
174.1
238
213.8
253.5
19.8%
27.1%
24.3%
28.8%
32.3%
52.8%
-0.5%
44.5%
217
258
357.3
26.1%
31.0%
42.9%
24.6%
8.4%
-100.0%
41.0%
211.0
212.4
370.8
26.6%
26.7%
46.7%
-2.7%
-17.7%
3.8%
-410.9
46.7%
20.7%
-334.9
40.2%
-18.5%
-362.4
45.6%
8.2%
Gross Profit
468.3
53.3%
38.9%
497.3
59.8%
6.2%
431.8
54.4%
-13.2%
-218.5
24.8%
24.7%
8.3
-225.4
1.0%
27.1%
3.2%
-273.8
-34.5%
21.5%
Operating Profit
249.9
28.4%
54.3%
280.2
33.7%
12.1%
157.9
19.9%
-43.6%
Financial Expenses
Financial Income
-51.2
12.1
5.8%
1.4%
9.9%
-17.7%
-60
13.2
7.2%
1.6%
17.2%
9.1%
-92.8
25.2
11.7%
3.2%
54.6%
90.9%
210.7
24.0%
62.0%
233.4
28.0%
10.8%
90.3
11.4%
-61.3%
-59.2
6.7%
55.8%
-65.7
7.9%
11.0%
-26.1
3.3%
-60.3%
8.1%
8.1%
-61.7%
-62.8%
AH(2)
(%)
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.
90
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
General
cost of
and
constructi
Administr
on and
ative
renting
Expenses
Total
(in R$ million)
Labor
-58.8
-107.4
-166.2
-63.0
-113.3
-176.4
-4.3
-5.9
-10.2
Third-party Services
-5.0
-20.4
-25.5
-6.5
-28.2
-34.7
-1.5
-7.8
-9.2
Freight
Construction Material
/ Maintanance and
Repair
Rent Equipment
-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
Travel
-5.0
-11.6
-16.5
-3.8
-10.5
-14.3
1.2
1.0
2.2
Cost of Sales
Depreciation ad
Amortization
Asset impairment
Allowance for
Doubtful Debts
Stcok Option
-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
0.0
-1.9
0.2
-18.8
-12.0
0.2
-18.8
-13.8
0.0
0.0
-3.2
-2.5
0.0
-26.2
-2.5
0.0
-29.4
0.0
0.0
-1.3
-2.7
18.8
-14.2
-2.7
18.8
-15.6
-334.9
-225.4
-560.4
-362.4
-273.8
-636.2
-27.4
-48.4
-75.8
Update provisions
Profit sharing
Others
Total
(1)
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.
2013
2014 x 2013
(%)
(1)
Var. (%)
(2)
(in R$ million)
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
Percentage increase (decrease) of the total registered from one period to another.
N.A. Not applicable
(2)
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
91
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.
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, 2013 compared with year ended December 31st, 2012
Revenue of Products Sold and Services Provided
The following table shows the Companys net revenue by business unit for the years ended
December 31st, 2012 and 2013:
92
VA (%)(1)
2013
VA (%)(1)
HA (%) (2)
Heavy
Construction
.........................................................
Real
Estate
.........................................................
Industrial
Services
.........................................................
Rental
.........................................................
Total
.......................................................
174.1
19.8%
217.0
26.1%
24.6%
238.0
27.1%
258.0
31.0%
8.4%
213.8
24.3%
0.0%
(100.0%)
253.5
28.8%
357.3
42.9%
41.0%
879.3
100.0%
832.3
100.0%
(5.3%)
(1)
In the year ended December 31st, 2013 the Companys net revenue from sales and services
totaled R$ 832.3 million. For comparison purposes, excluding the result of the Industrial Services
business unit, which was sold in 2012, there was an increase of R$ 166.8 million, or 25.1%. This
increase comes mainly from the incremental revenue from the Rental and Heavy Construction
business units. 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$ 217.0 million in 2013, with
an increase of 24.6% or R$ 42.9 million compared to the previous year. The management of the
Company attributed this expansion as a result of the investments in organic growth made in this
business unit, since 2010.
Real Estate
Net revenue from the Real Estate business unit, totaled R$ 258.0 million in 2013, with an increase
of 8.4% or R$ 20.0 million compared to 2012, including expansion of 15.9% of the revenue from
equipment rental. The branches opened since November 2009 contributed with 55% of this
business units revenue in the year 2013. The management of the Company attributed this
expansion as a result of the investments in organic growth made in this business unit, since 2010.
Industrial Services
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 annual 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.
Rental
Net revenue from the Rental business unit totaled R$ 357.3 million in 2013, which was 41.0% or
R$ 103.8 million greater than that 2012. The branches opened since 2010 contributed with 69%
of 2013 revenue. On the evaluation of the management of the company, this increase is mainly
associated with increasing fleet of equipment, with investments in organic growth since 2010.
In accordance with existing accounting policies adopted in Brazil, the revenue reported in the
financial 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 Company has not reported for the years ended
December 31, 2012 and 2013, figures comparable to this item.
Cost of products sold and services rendered and general and administrative expenses
Since 2010, the Company began to detail its costs of goods sold and general and administrative
expenses by business segment and by nature, and the information by business segment has been
presented only on a consolidated basis, excluding the effects of depreciation.
The table below shows the Companys cost of goods sold and services rendered by nature in
fiscal years ended December 31, 2012 and 2013.
Year ended on December 31st,
2012
Direct
General
cost of
and
constructi
Administr
on and
ative
renting
Expenses
Total
(in R$ million)
Labor
Third-party Services
Freight
Construction Material
/ Maintanance and
Repair
Rent Equipment
Travel
Cost of Sales
Depreciation ad
Amortization
Asset impairment
Allowance for
Doubtful Debts
Stcok Option
Update provisions
Profit sharing
Others
Total
(179.2)
(6.3)
(15.0)
(109.3)
(22.1)
(0.8)
(288.6)
(28.4)
(15.8)
(58.8)
(5.0)
(15.5)
(107.4)
(20.4)
(0.8)
(166.2)
(25.5)
(16.2)
120.4
1.3
(0.5)
1.9
1.7
0.0
122.4
2.9
(0.4)
(41.7)
(4.8)
(46.5)
(43.5)
(6.1)
(49.6)
(1.8)
(1.3)
(3.1)
(8.3)
(8.6)
(41.0)
(11.3)
(11.5)
-
(19.5)
(20.1)
(41.0)
(5.9)
(5.0)
(68.0)
(15.0)
(11.6)
-
(20.8)
(16.5)
(68.0)
2.4
3.6
(27.0)
(3.7)
(0.1)
-
(1.3)
3.6
(27.0)
(104.2)
(4.4)
(108.6)
(122.6)
(8.4)
(131.0)
(18.4)
(4.0)
(22.4)
(4.9)
(4.9)
(8.9)
(8.9)
(4.0)
(4.0)
(16.1)
(16.1)
(16.2)
(16.2)
(0.1)
(0.1)
(1.6)
(410.9)
(5.8)
4.0
(20.1)
(16.3)
(218.5)
(5.8)
4.0
(20.1)
(17.9)
(629.4)
(1.9)
(334.9)
(9.0)
0.2
(18.8)
(12.0)
(225.4)
(9.0)
0.2
(18.8)
(13.8)
(560.4)
(0.2)
76.0
(3.2)
(3.8)
1.3
4.3
(6.9)
(3.2)
(3.8)
1.3
4.1
69.0
(1)
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 31 st, 2012 and 2013.
The information provided in this table does not reflect the effects of depreciation on such costs.
Year ended December 31st
2012 x 2013
Var. (%)
2012
(%)
(1)
2013
(%)
(1)
(2)
(in R$ million)
94
Heavy
Construction
.........................................................
Real
Estate
.........................................................
Industrial
Services
.........................................................
Rental
.........................................................
Total
......................................................
(89.7)
17.2%
(108.9)
25.4%
21.4%
(124.5)
23.9%
(164.2)
38.3%
31.9%
(194.4)
37.3%
0.0%
(100.0%)
(112.2)
21.5%
(156.1)
36.4%
39.2%
(520.8)
100.0%
(429.2)
100.0%
(17.6%)
(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.
Cost of goods sold and services provided, excluding the effects of depreciation, went from R$
520.8 million in the year ended December 31, 2012 to R$ 492.2 million year ended December 31,
2013, a decrease of R$ 91.6 million, or 17.6%, mainly due to the sale of the Industrial Services
business unit.
The depreciation of assets used in services rendered, which is part of the costs of goods sold and
services rendered increased 17.7% due to higher investments in the past years, from R$ 104.2
million for the year ended on December 31, 2012 to R$ 122.6 million in the fiscal year ended
December 31, 2013, maintaining the average depreciation period of 10 years.
Considering the depreciation costs, the Companys cost of goods sold and services rendered
totaled R$ 334.9 million in the fiscal year ended December 31, 2013, compared with R$ 410.9
million in the fiscal year ended December 31, 2012, representing a decrease of 18.5%, mainly
due to the sale of the Industrial Services business unit.
As a result of the sale of the Industrial Services business unit, compared to net revenues, the
total cost of goods sold and services provided, excluding the effects of depreciation, decreased
from 34.9% in the year ended December 31, 2012 to 25.5% in the year ended December 31,
2013. Including the effects of depreciation, the same ratio decreased from 46.7% in the year
ended December 31, 2012 to 40.2% in the fiscal year ended December 31, 2013.
The general and administrative expenses increased from R$ 218.5 million in the fiscal year ended
December 31, 2012 to R$ 225.4 million in the fiscal year ended December 31, 2013, an increase
of R$ 6.9 million, or 3.2%. In 2013, we continued the technical and commercial team expansion
and improvement and some branches were transferred to larger spaces, consistent with the
growth of the companys businesses. Despite the Company, at a first glance, incurred in greater
general and administrative expenses and consequent compression of margin, the management
of the Company believes that these are fundamental measures to enable its growth with
productivity improvements in the operation of its warehouses and maintaining the high technical
quality of its services.
The ratio between the Companys operating, general, and administrative expenses in relation to
the net operating income went from 24.8% in the fiscal year ended December 31, 2012 to 27.1%
in the fiscal year ended December, 2013.
Operating Profit
Operating profit before financial result increased from R$ 249.9 million in the fiscal year ended
December 31, 2012 to R$ 280.2 million in the fiscal year ended December 31, 2013, an increase
of R$ 30.3 million, or 12.1%. Companys management believes that such increase was a
consequence of the maturity of the investments made, as mentioned above. Operating profit
represented 33.7% of net revenues in December 31, 2013, compared to 28.4% of net revenues
in December 31, 2012.
Financial Results
95
Net financial expenses increased from R$ 39.2 million in the fiscal year ended December 31, 2012
to R$ 46.8 million in the fiscal year ended December 31, 2013, representing an increase of R$
7.6 million. The Company's bank debt, which was R$ 622.5 million in December 31, 2012
increased to R$ 632.6 million in December 31, 2013.
Net Income
The net profit increased from R$ 151.5 million in the fiscal year ended December 31, 2012 to R$
172.6 million in the fiscal year ended December 31, 2013, an increase of R$ 21.1 million, or
13.9%. This expansion is due to the decrease of cost of goods sold and services provided and
general and administrative expenses (R$ 69.0 million), partially offset by the decrease of net
revenue (R$ 47.0 million) and negative net financial result (R$ 7.6 million).
Year ended December 31st, 2014 compared to year ended December 31 st, 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:
increase of R$ 167.9 million in cash and cash equivalents, due to higher liquidity mainly
derived from the slower pace of investments in rental equipment.
decrease of R$ 29.9 million in accounts receivable, including revenue from the sale of the
investee;
reduction of R$ 14.5 million in inventories;
reduction of R$ 10 million in recoverable taxes;
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.
Intangible assets
96
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:
increase of R$ 36.9 million in the short-term loans and financing balance, due to a
reclassification from long to short-term referring to installment to be settled in 2015.
reduction of R$ 21.4 million in suppliers account, due to installment purchase of rental
equipment of our PPE.
reduction of R$ 19.2 million in dividends and payable interest on capital, due to the lower
level of profit distribution of 2014;
decrease of R$ 18.7 million in the profit sharing payable account, since there will not be
profit sharing in 2014;
reduction of R$ 7.2 million, in the short-term debentures balance, due to the amortization
of part of the debentures in 2014.
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:
increase of R$ 201.2 million referring to the third issuance of Debentures held by the
Company;
reduction of R$ 90 million referring to amortization of principal of first Debentures
issuance;
reduction of R$ 43.9 million in long-term borrowings and financing due to its transfer to
short-term.
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:
increase of R$ 39.1 million in earnings reserve account referring to the net earning
registered in 2014 of R$ 64.3 million deducted R$ 25.1 million of dividends and payable
interest on capital registered in 2014;
increase of R$ 10.1 million in stockholders equity due to the exercise of options by the
beneficiaries;
reduction of R$ 1.4 million in capital reserve account, due to R$ 11.0 million in buyback
of shares and to R$ 9.5 in stock option premium reserve amounting; and
reduction of R$ 5.0 million in valuation adjustment to equity, due to cash flow hedges in
2014.
Year ended December 31st, 2013 compared to year ended December 31 st, 2012
97
Current Assets
The Companys current assets increased from R$ 473.7 million as of December 31, 2012 to R$
319.5 million as of December 31, 2013, a decrease of R$ 154.2 million or 32.6%. The main
reasons for such decrease, in the assessment of the Management of the Company, were:
a reduction of R$ 159.6 million in securities and marketable securities, due to the use of
the proceeds from the Companys second offering of non convertible debentures held
in September 2012;
a reduction of R$ 17.4 million in accounts receivable, due to the sale of the Industrial
Services business unit;
an increase of R$ 26.8 million in other accounts receivable sale o investee due to the
outstanding receivable amount related to the sale of the Industrial Services business unit;
Non-current assets
The Companys non-current assets increased from R$ 45.1 million as of December 31, 2012 was
increased to R$ 101.5 million as of December 31, 2013, an increase of R$ 56.4 million or 125.0%.
The main variations in the non-current assets was in other accounts receivable sale o investee
due to the outstanding receivable amount related to the sale of the Industrial Services business
unit.
Investment
In December 31, 2013, the Company maintained the same registered investment value as of
December 31, 2012, R$ 87.4 million.
Intangible assets
The Companys intangible assets increased from R$ 54.5 million as of December 31, 2012 to R$
68.4 million as of December 31, 2013, mainly due to R$16.5 million in software acquisition.
Current liabilities
The Companys current liabilities increased from R$ 214.5 million as of December 31, 2012, to R$
255.0 million as of December 31, 2013, an increase of R$ 40.5 million. The main factors that led
to this change, according to the Managements opinion, were:
increase of R$ 18.6 million in the short-term loans and financing balance, due to the issuance
of promissory notes in December 2011, to enable the Companys investments in 2011;
a reduction of R$ 11.5 million in taxes payable, due to lower taxes on revenues, such as PIS,
COFINS and ICMS;
increase of R$ 99.5 million, in the short-term debentures balance, due to the reclassification
from long-term debentures to short-term liability related to a debt amount to be paid in
2014;
decrease of R$ 29.0 million in the short-term borrowing and financing account, due to the
settlement of debt due in 2013;
Non-current liabilities
98
The non-current liabilities increased from R$ 590.2 million as of December 31, 2012 to R$ 529.7
million as of December 31, 2013, a reduction of R$ 60.5 million, or 10.3%. The main factor that
led to this variation, according to the managements opinion, was the R$ 89.2 million decrease in
the long-term debenture account, due to the reclassification from long-term debentures to shortterm liability related to a debt amount to be paid in 2014, and the R$ 28.5 million increase in the
long-term borrowing and financing account, due to a new borrowing contract of R$ 40.0 million
signed in December 2013.
Stockholders Equity
Shareholder's equity increased from R$ 859.3 million as of December 31, 2012 to R$ 1,016.5
million as of December 31, 2013, an increase of R$ 157.2 million, or 18.3%, substantially due to
the increase of the Companys income reserve that aims retain financial resource to support its
budget investment.
11.
2012
Cash flow from operating services ...................................................
Cash flow from investment activities ................................................
Cash flow from (used in) financing activities .....................................
Increase (decrease) in liquidity .......................................................
(in R$ millions)
202.3
(393.1)
199.8
9.0
263.4
(258.1)
(23.7)
(18.4)
2014
241.4
(125.3)
51.7
167.9
The table below shows the investments in PP&E made in 2012, 2013 and 2014:
Year ended December 31st,
2012
2013
2014
(in R$ millions)
Gross investments, before PIS and COFINS credits ..........................................
Acquisition of GP Sul
Total Gross investments ...............................................................................
PIS and COFINS credits ................................................................................
Net Investments ..........................................................................................
(287.4)
(287.4)
25.6
(261.8)
(489.4)
(489.4)
43.4
(446.0)
(186.7)
(186.7)
18.2
(168.5)
The gross investments in intangible assets in the years ended December 31 st 2012, 2013 and
2014 totaled, R$ 10.1 million, R$ 16.5 million and R$ 12.4 million, respectively.
2012
2013
2014
99
(in R$ million)
10.0
(21.9)
(95.2)
306.9
15.6
(41.8)
(38.5)
41.0
10.1
(11.0)
(46.7)
(300.6)
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 2012, the Company captured R$ 270.0 million through its second non-convertible debentures
issuance, made in two series. The first series, at the value of R$ 160.9 million, has a 5-year term,
with amortization starting from the fourth year, and interest rates equivalent to CDI + 0.88%.
The second series, at the value of R$ 109.1 million, has an 8-year term, with amortization starting
from the sixth year, and interest rates equivalent to IPCA + 5.50%. The net proceeds of the
offering will be used for the financing of investments in 2013, general uses and expenses and for
the payment of debts, allowing the reduction of cost and expansion of its average term. The
Company also issued, in April 2012, promissory notes at the amount of R$ 30.0 million, with
maturity date in December 3rd, 2012.
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)
100
All of these areas are directly affected by macroeconomic conditions changes in Brazil, specially
the growth of Gross Domestic Product GDP, interest rates, inflation, credit availability, level of
unemployment, exchange rates and commodities prices, the last two affect costs of equipment
used in companys activities. Consequently, these factors affect, indirectly, its operation and
results.
The net revenues from sales and services are denominated in reais, and are derived from the
rental and sale of equipment, the provision of technical support services, and penalty payments
for unreturned or damaged equipment. The table below sets forth the participation of the net
revenue for the periods indicated:
Equipment Rental....................................................
Sale of Equipment ...................................................
Technical Support Services ......................................
Indemnifications .....................................................
(ii)
Cost of Products Sold and Services Rendered and Operational, General and
Administrative Expenses
Its 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 73.4%, 43.7% and 44.0% of its principal costs of sales
and services rendered, excluding depreciation, in the years ended December 31, 2012, 2013 and
2014, respectively. On the evaluation of the company's management, this reduction from 2012
to 2014 was due to the expansion of equipment sales costs, mainly in the Real estate and Rental
business units and, and to the sale of the Industrial Services business unit.
In addition, the Company incurred in (i) costs deriving from the sale of equipment; (ii)
depreciation of equipment rented; (iii) expenses with equipment storage; and (iv) cost of assets
sales and write-offs of assets.
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 profitsharing 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.
101
In 2014 there were an increase in Allowances for Doubt Debt (ADD) account due to deterioration
of economic environment and the downgrading of corporate credit rating of several clients, that
lead the Company to adopt a more conservative approach. In addition, there are the
investigations ongoing in Heavy Construction Brazilian market. ADD represented 5.3% of net
revenues in 2014, versus 2.0% in 2013 and 2.1% in 2012.
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, in spite of weaker demand, to
equalize deferred maintenance of our equipment. From the second half of 2015, we should
normalize the maintenance activity, with a respective cost reduction.
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; among others.
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$ 34.3 million, R$ 46.8 million and 67.6 million in 2012,
2013 and 2014, respectively. YOY variation is explained by an increase in gross debt and higher
interest rates in the period.
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 impact
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
2012 and 2013 was due to an increased 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.
c.
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.
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 2012, 2013 and 2014.
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.
103
c.
There were no unusual transactions or events in fiscal years 2012, 2013 and 2014, except as
described above.
10.4
a.
a) New standards and interpretations and amendments to existing standards that are effective
since January 1, 2014:
IFRIC 21 - Levies New interpretation that addresses the issue as to when to recognize
a liability to pay a levy imposed by a government both for levies that are recognized in
accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and
those in which the amounts and taxation period are clear. Management has not
identified any impact of this new standards.
IAS 36 Impairment of Assets (CPC 01) The amendments to IAS 36 provide guidance
on recoverable amount disclosures for nonfinancial assets. Management has not
identified any impact of these amendments to existing standards.
IFRS 10, IFRS 12 and IAS 27 - the amendments to IFRS 10 define an investment entity
and require a reporting entity that meets the definition of an investment entity not to
consolidate its subsidiaries but instead to measure its subsidiaries at fair value through
profit or loss in its consolidated and separate financial statements. Management has
not identified any impact of these amendments to existing standards.
obtain funds from one or more investors for the purpose of providing them with
investment management services;
commit to its investor(s) that its business purpose is to invest funds solely for returns
from capital appreciation, investment income, or both; and
measure and evaluate performance of substantially all of its investments on a fair value
basis.
Consequential amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure
requirements for investment entities.
Management has not identified any impact of these amendments to existing standards.
104
b) New standards, interpretations of and amendments to existing standards that are not yet
effective at December 31, 2014:
Effective for annual periods beginning on or after July 1, 2014:
IAS 19/CPC 33 Employee Benefits The amendments clarify how an entity should
account for contributions made by employees or third parties based on whether those
contributions are dependent on the number of years of service provided by the
employee.
Annual Improvements to IFRSs 2010-2012 and 2011-2013 Cycles Minor amendments
to existing pronouncements.
IAS 16 and IAS 38 Amendments to these standards to clarify the acceptable methods
of depreciation and amortization.
IFRS 10 and IAS 28 Amendments to standards to clarify how to account for the sale or
contribution of assets between an investor and its associate or joint venture whose
requirements are applicable independent of the legal type of the operation.
IFRS 10, IFRS 12 and IAS 28 Amendments to address specific issues arisen in the
context of the application of the consolidation exception for investment entities.
105
IFRS 9 Financial Instruments New standard that introduces new requirements for the
classification, measurement, impairment, hedge accounting and derecognition of
financial assets and liabilities.
The Company has analyzed the impacts of these standards and so far no material impact on
its financial statements has been identified.
b.
c.
Following, the Companys Management presents a discussion about what they consider relevant
as accounting practices for the presentation of Companys financial information.
(i)
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, 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.
107
(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, minus 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
Property, plant, equipment, and other non-current assets, including goodwill and intangible
assets, are tested to identify evidences of impairment on an annual basis or whenever events or
changes in circumstances indicate that their carrying amount may not be recoverable. When
applicable, the recoverable amount is calculated to determine if there is an impairment loss.
When an impairment loss is identified, it is recognized in the amount by which the carrying
amount of the asset exceeds its recoverable amount, which is the higher of the net selling price
and the value in use of an asset. For impairment testing purposes, assets are grouped at the
lowest levels for which there are separately identifiable cash flows (cash-generating units - CGUs).
Non-financial assets other than goodwill that suffered impairment are reviewed for the analysis
of a possible reversal of the impairment at the reporting date.
(vi)
Provisions
108
Provisions are recognized when the Company has a present obligation (legal or constructive)
because 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.
A provision for onerous contracts is recognized where the Company has a contract under which
the unavoidable costs of meeting the obligations under the contract exceed the economic benefits
expected to be received from the contract. The provision is measured at present value at the
lower of the expected cost of terminating the contract and the expected net cost of continuing
with the contract.
(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. It recognizes the impact of the review of
the initial estimates, if any, in the income statement, 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
Revenue from a contract to provide services is recognized by reference to the stage of completion
of the contract at the end of the reporting period.
Revenue from the sale of goods is recognized when the Company has transferred to the buyer
the significant risks and rewards of ownership of the goods. Therefore, the Company adopts as
revenue recognition policy the date in which goods are delivered to the buyer.
Rental income is recognized on a straight-line basis over the term of the equipment lease
agreements.
The Company separates the identifiable components of a single contract or a group of contracts
to reflect the essence of the contract or group of contracts, recognizing the revenue of each of
the elements proportionally to its fair value. Thus, the Company's revenue is split into lease,
technical assistance, sales and indemnities/recoveries of expenses.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the
effective interest rate through maturity, when it is determined whether such income will accrue
to the Company.
Dividend income from investments is recognized when the shareholders right to receive such
dividends has been established (provided that it is probable that future economic benefits will
flow to the Company and the amount of income can be measured reliably).
109
a.
Efficiency of such controls, indicating any flaws and the steps taken to correct
them
The management of the Company believes that its internal controls are adequate to ensure the
elaboration of reliable financial statements.
b.
Weaknesses and recommendations on internal controls present in the report
of the independent auditor
No deficiencies or recommendations were submitted by the independent auditors in their report
about the effectiveness of internal controls adopted by the Company.
10.7 Management comments on the use of resources from public offerings for
distribution of securities
In April 23rd, 2012, the Company issued a single series of 30 promissory notes with par value of
R$ 1.0 million, totaling R$ 30.0 million. The net proceeds of the issue were fully used to: (i)
reinforcement of working capital of the company; and (ii) debt refinancing of the company.
In August 15th, 2012, the Company held its second issue of simple, non-convertible, unsecured
debentures subject to public offering with restricted placement efforts. A total of 27,000
debentures were issued, each with par value of R$ 10,000.00. The net proceeds of the offering
were fully utilized for: (a) the financing of investments to be made by the Company, (b) the
payment of Companys debts, and (c) general uses and expenses of the Company. The realized
investments in renting goods amounted to R$463.6 million in 2013.
On April 11, 2014, the Company issued promissory notes, totaling R$ 200 million and bearing
interest at 106% of the DI rate, to be settled with the debentures offering proceeds. The proceeds
of these offerings were used to (a) refinance indebtedness of the Company; (b) purchase rental
equipment and (c) general corporate purposes and expenses of the Company.
On May 18th, 2014, the Company held its third issue of simple, non-convertible, unsecured
debentures subject to public offering with restricted placement efforts. A total 20,000 debentures
were issued, each with par value of R$ 10,000.00. The net proceeds of the offering will be fully
utilized for fully settlement of commercial promissory notes of Companys fourth issuance, issued
in April 11th, 2014.
10.8 Managements comments on significant items not included in the balance
sheet and their effects on the consolidated financial statements
In the evaluation of the management, there are no significant items not included in the balance
sheet of the Company.
10.9 Managements comments about the obligations not accounted in financial
statements.
In the evaluation of the management, there are no significant obligations not included on the
financial statements of the Company.
10.10 Management shall indicate and comment on key elements of the Company's
business, specifically exploring the following topics:
110
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 finance the investments made in 2012, 2013 and 2014. In 2014, the
amount of R$ 2.4 million were designated to this reservation, whereas there was not any amount
for this reservation in 2012 and 2013. The management presents below the major investments
made in the course of the years ended December 31, 2012, 2013 and 2014, and highlight the
investment budget for fiscal year 2015.
Heavy Construction
In the fiscal years ended by December, 31st, 2012, 2013 and 2014, the Heavy Construction
business unit invested, mainly, in shoring structures and industrialized steel and aluminum
formwork acquisition, amounting to R$ 50.5 million in 2012, R$ 106.3 million in 2013 and R$ 47.5
million in 2013.
Real Estate
Over the past three fiscal years ended by December, 31st, 2012, 2013 and 2014, the Real Estate
business unit invested mainly in acquisition of shoring equipment, suspended scaffolding and
industrialized formworks, having disbursed R$ 59.8 million in 2012, R$ 90.1 million in 2013 and
R$ 19.3 million in 2014.
Rental
In 2012, 2013 and 2014, the Company continued to implement its strategy of expanding its
portfolio of aerial work platforms and telescopic handlers, investing R$ 160.9 million, R$ 267.2
million and R$ 105.3 million in the acquisition of such equipment, respectively.
The Company intends to finance its investments with (i) cash generated in its own activities, and
(ii) indebtedness.
b.
Since it has already disclosed, indicate the purchase of plants, equipment,
patents or other assets that should materially affect the productive capacity of the
Company
In 2015, we will reduce significantly our investment levels to a maximum amount of R$ 40 million,
being the majority of it for maintenance processes and facilities of our branches. In the Heavy
Construction and Real Estate business units, we will invest to maintain the actual fleet, with the
111
acquisition of necessary spare parts to keep the equipment mix. In the Rental business unit, we
will continue the geographic expansion, using the existing fleet.
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.
10.11 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 2012, 2013 and
2014 results.
112
11.
PROJECTIONS
113
11.1
Identification of projections
Projection monitoring
114
12.
115
12.1
Administrative Structure
a.
BOARD OF DIRECTORS
The Board of Directors is a decision-making body responsible for both formulating and monitoring
the implementation of the general guidelines and policies of its business, including long-term
strategies, and appointing and supervising the Executive Officers.
In accordance with the Companys bylaws, the Board of Directors shall be comprised of a
minimum of five and a maximum of 11 members, shareholders or not, in accordance with the
Novo Mercado Listing Rules. Members of the Board of Directors are to be elected for a continuous
two-year term at the General Shareholders meeting. Further, such members may be reelected
and removed from office at any time by a decision of the Companys shareholders, at the General
shareholders meeting.
Pursuant to the Brazilian corporate law and CVM Instruction No. 282, dated June 26, 1998, the
minimum percentage of voting capital required to adopt cumulative voting in publicly-held
companies is 5%. If the adoption of cumulative voting is not required, the directors will be elected
by a majority vote of the shareholders that are present, or represented by proxy. Additionally,
2005 established that shareholders who, individually or collectively, represent at least 10% of the
total capital of publicly-held companies, are entitled to appoint a director and its substitute in
separate voting.
All new members of the Board of Directors 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 Directors 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.
Currently the Companys Board of Directors is comprised of seven members (without any
substitutes), of which were elected at Ordinary Shareholders Meeting held on April 25, 2014. The
members were elected for a two-year term expiring in the 2016 Ordinary General Meeting. The
table below indicates the name, age and title of the board of directors.
The table below presents the information related to the members of the Board of Directors.
Date of
Office
Term of
Office
Other
Titles
Elected by the
Controlling
Shareholder
Age
Profession
CPF
Title
Date of Last
Election
Andres
Cristian Nacht
72
Business
Administration
098.921.337
-49
Chairman
4.25.2014
4.25.2014
2 years
No
Yes
Elio Demier
64
Bachelor of
Social
Communicatio
n
260.066.507
-20
Vice
Chairman
4.25.2014
4.25.2014
2 years
Yes
Yes
44
Business
Administration
124.175.657
-06
Director
4.25.2014
4.25.2014
2 years
No
Yes
53
Executive
057.378.217
-22
4.25.2014
4.25.2014
2 years
Yes
Yes
72
Economist
028.897.227
-91
4.25.2014
4.25.2014
2 years
No
Yes
61
Geologist and
Physicist
4.25.2014
4.25.2014
2 years
No
Yes
Name
Francisca
Kjellerup
Nacht
Nicolas Arthur
Jacques
Wollak
Pedro
Sampaio
Malan
Jorge Marques
de Toledo
Camargo
114.400.151
-04
Independ
ent
Director
Independ
ent
Director
Independ
ent
Director
116
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. Pedro Malan, 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 oneyear 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
Age
Profession
CPF
197.064.37819
Srgio Kariya
41
Engineer
Frederico tila
Silva Neves
57
Engineer
595.166.40710
Avelino Pinto
da Silva Garzoni
49
Engineer
857.596.60730
Ricardo de
Araujo Gusmo
47
Engineer
987.271.92768
Date of Last
Election
Date of
Office
9.3.2015
9.3.2015
9.17.2015
9.18.2015
Officer
4.28.2015
Officer
9.17.2015
Title
Chief Executive
Officer
Administrative
Financial and IR
Officer
Term of
Office
Until OSM
2016
Other
Titles
Elected by the
Controlling Shareholder
No
Yes
Until OSM
2016
Yes
Yes
4.28.2015
Until OSM
2016
No
Yes
9.18.2015
Until OSM
2016
No
No
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
117
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 Fiscal Council became a
permanent body. The Fiscal Council members indicated by the controlling shareholders were reelected
at the General Shareholders' Meeting held on April 25, 2014, when Mr. Hlio Carlos de Lamare Cox
(member) and Mr. Massao Fabio Oya (substitute) were separately elected by minority shareholders.
The table below presents name, age and title of the Fiscal Council members:
Name
Eduardo Botelho
Kiralyhegy
Maria Cristina
Pantoja da Costa
Faria
Marcus Vincius Dias
Severini
Vera Lucia de
Almeida Pereira
Elias
Helio Carlos de
Lamare Cox
Massao Fbio Oya
Age
Profession
CPF
Title
President of
the Fiscal
Council
36
Lawyer
082.613.217-03
38
Lawyer
886.793.577-15
Substitute
57
Accountant
/ Engineer
632.856.067/20
Member
56
Accountant
/Lawyer
492.846.497-49
Substitute
64
Engineer
298.152.157-87
Member
33
Accountant
297.396.878-06
Substitute
Date of
Last
Election
4.28.2015
Date of
Office
4.28.2015
Office
Term
1 year
Other
Titles
No
Elected by
the
Controlling
Shareholder
Yes
4.28.2015
4.28.2015
1 year
No
Yes
4.28.2015
4.28.2015
1 year
No
Yes
4.28.2015
4.28.2015
1 year
No
Yes
4.28.2015
4.28.2015
1 year
No
4.28.2015
1 year
No
4.28.2015
No
Yes
ADVISORY COMMITTEES
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.
118
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
Name
Age
Elio Demier
64
62
Profession
Bachelor of Social
Communication
Economist
CPF
260.066.50720
402.760.74734
Title
Date of
Last
Election
Startin
g Date
Term
of
Office
Member
5.22.2015
5.22.2015
1 year
Yes
Yes
Member
5.22.2015
5.22.2015
1 year
No
Yes
Other
positions
Elected by
Controlling
Shareholder
INTERNAL AUDIT
The Company is currently structuring its internal audit, which will respond directly to Risk
management and Compliance internal committee, comprising CEO, chief financial and
Administrative Officer and Investor Relations officer. The internal audit will be an internal control
body that will aim to assist the audit process in Companys Income Statement.
b.
c.
The activities of the Executive Officers are supervised and evaluated by the Board of Directors,
whose performance is an object of appreciation by its shareholders.
Until the end of 2010, the Company did not adopt mechanisms or pre-set valuation methods to
measure the performance of its Administration. In 2011 a Performance Management Program
was established, aiming to map the competence gaps and guide the development programs to
improve the attributes that lead to high performance, and establish and evaluate individual goals,
which continues in effect until the date of this Reference Form.
For compensation and calculation purposes of the aggregated economic value that will determine
the output participation, the organs of its Administration are, jointly with its employees, evaluated
based on the results obtained by the Company.
Each member of the Committee shall be entitled to individual compensation equivalent to 50%
(fifty percent) of the Board of Directors monthly payment. The members of the Committee who
are Executive Officers or employees of the Company shall not be entitled to any compensation.
d.
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.
119
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).
12.2
a.
Terms of Notification
Brazilian Corporate Law for listed companies requires that all general shareholders meetings are
called after three publications of the same in the Federal Gazette (Dirio Oficial da Unio) or of
the State in which the company is based, as well as in another newspaper with a wide circulation.
The Companys publications are currently placed in the Rio de Janeiro State Gazette (Dirio Oficial
do Rio de Janeiro), the official means of communication used by the state government of Rio de
Janeiro, as well as in the daily newspaper in Rio de Janeiro, Valor Econmico, with the first call
made at least 15 days before the meeting, and the second eight days before, as stipulated in its
bylaws. However, the CVM can, in specified circumstances, determine that the first call for a
general shareholders meeting be made with 30 days prior notification from the date on which
the documents related to the issues to be decided upon are made available to shareholders. The
Company, when possible, seeks to anticipate the term of the first convocation of the General
Assembly, allowing shareholders having information of the General Meeting in advance to that
required by law.
b.
Powers
Without prejudice to the other matters provided for by law, General Shareholders Meeting solely
shall:
120
d.
See item 16.3 for a description of the mechanisms the Company uses to avoid and mitigate
conflicts of interest.
e.
Requests for power of attorney and proxy are based on the legal and regulatory requirements.
To date, its management has never made any public request for power of attorney or proxy.
f.
Necessary formalities to accept powers-of-attorney granted for shareholders,
indicating if the Company receives powers from shareholders electronically
Subject to the provisions of Article 126 of Law 6404/76, to shareholders who are represented by
proxy, are requested to deliver at the Companys headquarter the documents that prove the
powers of the legal representative, preferably with advance of 2 (two) days from the date of the
Meeting.
As defined in the Companys bylaws, shareholders may be represented at General Meetings of
the Company by a proxy appointed less than 1 year, who is a shareholder or officer of the
Company, attorney or financial institution.
In case of power of attorney by legal entity, the proxy instrument may be accompanied by
supporting documentation of powers of representatives that signed it. Foreign documents must
be notarized in its country of origin, consularized, translated by a public sworn translator and
registered in Registry of Deeds and Documents office of Brazil.
The Company does not accept powers of attorney granted by electronic means.
g.
The Company does not keep Internet forums and pages for shareholders to receive and share
comments.
h.
i.
121
12.3
Notice to shareholders
announcing the
availability of the
Financial Statements
General Shareholders
Meeting Convening
Notice
Date(s) of
Newspaper
publication
-
3/22/2013
5/15/2013
Financial Statements
3/13/2013
12.4
2013
Publicated
Newspaper
Date(s) of
Newspaper
publication
DOE-RJ
Valor
Econmico RJ
DOE-RJ
Valor
Econmico RJ
DOE-RJ
Valor
Econmico RJ
3/21/2014
5/13/2014
3/20/2014
2014
Publicated
Newspaper
Date(s) of
Newspaper
publication
Publicated
Newspaper(1)
DOE-RJ
Valor
Econmico RJ
DOE-RJ
Valor
Econmico RJ
DOE-RJ
Valor
Econmico RJ
3/27/2015
5/27/2015
3/19/2015
DOE-RJ
Valor Econmico
RJ
DOE-RJ
Valor Econmico
RJ
DOE-RJ
Valor Econmico
RJ
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.
Shareholder provisions establishing voting restrictions on members of the
Board of Directors
Does not exist.
c.
122
term expiring in the 2016 Ordinary General Meeting. The table below indicates the name, age
and title of the board of directors.
Name
Andres Cristian
Nacht
Elio Demier
Francisca
Kjellerup Nacht
Nicolas Arthur
Jacques Wollak
Pedro Sampaio
Malan
Jorge Marques de
Toledo Camargo
Age
72
64
44
53
Profession
Business
Administration
Bachelor of
Social
Communication
Business
Administration
Executive
72
Economist
61
Geologist and
Physicist
CPF
098.921.337/
49
260.066.50720
124.175.65706
057.378.21722
028.897.22791
114.400.15104
Title
Date of
Last
Election
Chairman
4.25.2014
Vice Chairman
4.25.2014
Director
4.25.2014
Independent
Director
Independent
Director
Independent
Director
4.25.2014
4.25.2014
4.25.2014
Date of
Office
4.25.201
4
4.25.201
4
4.25.201
4
4.25.201
4
4.25.201
4
4.25.201
4
Term
of
Office
Oth
er
Title
s
Elected by
the
Controllin
g
Sharehold
er
2 years
No
Yes
2 years
Yes
Yes
2 anos
No
Sim
2 years
Yes
Yes
2 years
No
Yes
2 years
No
Yes
Name
Ag
e
Professio
n
Srgio Kariya
41
Engineer
57
Engineer
49
Engineer
47
Engineer
CPF
197.064.37819
595.166.40710
857.596.60730
987.271.92768
Title
Date of
Last
Election
Date of
Office
9.3.2015
9.3.2015
Administrative Financial
and IR Officer
9.17.2015
Officer
04.28.2015
Officer
9.17.2015
9.18.201
5
4.28.201
5
9/18.201
5
Term of
Office
Until OSN
2016
Until OSM
2016
Until OSM
2016
Until OSM
2016
Other
Titles
Elected by
the
Controllin
g
Sharehold
er
No
Yes
No
Yes
No
Yes
No
Yes
123
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 2015, of the members of the Fiscal Council
elected in the fiscal year 2014 (as indicated below), with the Company's minority shareholders to
decide on the election of the other members.
The table below presents name, age and title of the Fiscal Council members, elected on the
Ordinary General Meeting held on April 25, 2014.
Name
Eduardo Botelho
Kiralyhegy
Maria Cristina
Pantoja da Costa
Faria
Marcus Vincius Dias
Severini
Vera Lucia de
Almeida Pereira Elias
Helio Carlos de
Lamare Cox
Age
Profession
36
Lawyer
38
Lawyer
57
Controller/E
ngineer
Accountant/
Lawyer
64
Engineer
33
Accountant
56
CPF
082.613.21703
886.793.57715
632.856.067/
20
492.846.49749
298.152.15787
297.396.87806
Other
titles
Ellected by
the
controlling
shareholder
Position
Date of last
election
Date of
office
Term
of
office
President
4.28.2014
4.28.2014
1 year
No
Yes
Alternate
4.28.2014
4.28.2014
1 year
No
Yes
Member
4.28.2014
4.28.2014
1 year
No
Yes
Alternate
4.28.2014
4.28.2014
1 year
No
Yes
Member
4.28.2014
4.28.2014
1 year
No
No
Alternate
4.28.2014
4.28.2014
1 year
No
No
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 for three years, holding engineering posts in the UK. In
1967, has worked for one year as 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.
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. In the last five years, besides her position at P&G,
Francisca has
Elio Demier is a graduate of Social Communication from the Fluminense Federal University. He
also holds an MBA from the Institute of Post-Graduation and Research in Administration of the
Rio de Janeiro Federal University. He served as the Companys 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.
124
Nicolas Arthur Jacques Wollak has been a member of the Companys Board of Directors since
2007. Graduated from Harvard University, Mr. Wollack is a founder of the Axxon Group in Brazil,
where is Managing Partner since 2001. Mr. Wollak has nearly 20 years of private equity
investment experience having already been a partner of BISA fund (Argentina) prior to founding
the Axxon Group. Current chairman of the board of directors from Guerra S.A (manufacturer of
road implements), member of Luxxon S.A., which controls Aspro Ltda (manufacturer of
compressed natural gas), director of MV Investimentos S.A. (investment vehicle which controller
of the franchise network of Mundo Verde), and also a member of the Deliberative Board of the
Brazilian Private Equity Association (ABVCAP). In the past five years, Mr. Wollack has been (i)
managing partner of the Axxon Group in Brazil, as one of the responsible for its investments in
their Investment Funds, (ii) Chairman of the Board of Director from Guerra S.A (as described
above) since July 2008 until the present date, (iii) director in MV Investimentos S.A. (as described
above) since August 2009 until the present date, (iv) member of the Deliberative Board from
ABVCAP since March 2010 until the present date, (v) member of the Board of Directors from
Luxxon S.A (as described above) since December 2007 until the present date, and (vi) member
of the Board of Directors from Lupatech S.A. (equipment and services supplier mainly for the oil
and gas industry) sinde March 2005 until October 2007.
Pedro Sampaio Malan obtained a degree in electrical engineering in 1965 from Polytechnic School
at Pontifical Catholic University of Rio de Janeiro (PUC-RJ). He holds a PhD in economics from
the University of Berkeley. Mr. Malan is a professor at the Department of Economics at PUC-RJ,
has published essays and articles in economic journals and books, both in Brazil and abroad and
is a member of the Board of Trustees of the IFRS Foundation. He served as Brazils Minister of
Finance for eight years, from 1995 to 2002. President of the Central Bank of Brazil from 1993 to
1994. Special Counsel and Chief External Debt Negotiator of the Ministry of Finance from 1991
to 1993. Executive Director of the World Bank from 1986 to 1990, and again from 1992 to 1993.
Executive Director of the Inter-American Development Bank from 1990 to 1992. Director of the
Center of Transnational Corporations of UN in New York from 1983 to 1984. Director of the UN
Department of International Economic and Social Affairs in New York from 1985 to 1986. Mr.
Malan has been an independent member of the board of director since March 2010. In the last
five years, Mr. Malan has been a member of the advisory board of ALCOA Latin America (since
2004); member of the board of directors of Globex Ponto Frio (since 2004); Chairman of the
board of directors of Unibanco (from 2004 until 2008); member of the board of directors of EDP
Energias do Brasil (since 2006); member of the board of directors of OGX (since 2008);
chairman of the advisory board of Unibanco-Itau (since august 2009); member of the board of
directors of Souza Cruz S.A. (since March 2010), director of Thomson Reuters Founders Share
Company (since 2011); member of the advisory board of BUNGE - Brazil (since 2012); and
member of Temasek International Panel (since 2012).
Jorge Marques de Toledo Camargo has been for 37 years in the oil industry. He is graduated in
geology from the University of Brasilia and obtained a masters degree in geophysics from the
University of Texas. Currently, he is serving as a senior consultant at Statoil in Brazil, at Karoon
Oil and Gas and at McKinsey&Company in Brazil. Mr. Camargo is also a member of of the board
of directors of the Brazilian Oil Institute (IBP) and of Ultrapar Group, member of Nexans do Brasil
S.A. Strategic Advisory Council, and a member of the advisory board and associate in Brazil of
Energy Ventures. Previously, he has worked for 27 years in Petrobras in Brazil and abroad, holding
various technical and management positions, such as Superintendent of Cear-Potiguar
Exploration Districts, General Manager of Petrobras in the UK, Director of Exploration and
Production and then President of Braspetro, and, from 2000 to 2003, a member of the Executive
Board as Director of the International Sector. In 2003, he worked for Statoil, initially as VicePresident at the headquarter in Stavanger, Norway, and, from 2005 to 2009, as president of
Statoil in Brazil. Mr. Camargo was appointed to become a member of the Prumo Logsticas Board
of Directors in March 14, 2014 and his election is pending the annual general meeting of the
company.
12.8.2 Board of Executive Officers
125
Srgio Kariya joined the Company in 2009 and has been the Chief Executive Officer since January
2015. Prior to that, worked in the company Elevadores Otis for more than 10 years. Mr. Kariya
has a degree in Mechanical Engineering from Escola Politcnica da Universidade de So Paulo
(Poli-USP) and a graduate degree in Marketing from Escola Superior de Propaganda e Marketing
(ESPM). Mr. Kariya also holds an Masters degree in Business Administration from IBMEC/SP and
a specialization course in Finance awarded by INSPER/SP. In the last five years Mr. Kariya
occupied position of Executive Officer responsible fot the business unit Rental. He was elected to
Companys Chief Executive Officer on December of 2014.
Frederico tila Silva Neves currently holds the position Administrative Financial and IR Officcer.
Mr. Neves took over as Director in the Company in 1997, being named in 1999 the Chief Financial
Officer, and has accumulated, until July 2010 the position of Investor Relations Officer. Mr. Neves
has a degree in Civil Engineering from the Rio de Janeiro Federal University (Universidade Federal
do Rio de Janeiro - UFRJ), and in 1984 was awarded a Masters Degree in Business Administration
by the Institute of Post-Graduation and Research in Administration (COPPEAD) of the Federal
University of Rio de Janeiro. Mr. Neves worked for six years at large multinational companies in
the industrial and financial sectors, before before joining Ceras Johnson Ltda. in 1990, last
position held as a controller
Avelino Garzoni joined Mills as an engineer in the Heavy Construction business unit and
accumulates more than 19 years of experience in the Company. He holds a degree in Civil
Engineer from PUC/RJ and an MBA in Project Management from FGV RJ. In the last five years,
he has held relevant positions at the Company, acting as the Engineer Officer for Heavy
Construction and Real Estate business units since 2011.
Ricardo Gusmo is currently the Officer of Heavy Construction Division since August 1st 2013. In
September 17th also Statutory Officer at Mills. He holds an undergraduate degree in Civil
Engeneering and a postgraduate degree in Economic Engeneering both from Universidade Veiga
de Almeida/RJ. He joined Mills in 1993, where he worked as Regional Manager, Contracts
Superintendent, Commercial and Operations Officer.
12.8.3 Fiscal Council
Eduardo Botelho Kiralyhegy graduated in Law from the Candido Mendes University, a member of
the Brazilian Lawyers Association, and founding partner of the Negreiro Office, Medeiros &
Kiralyhegy Lawyers, in Rio de Janeiro, specializing in Tax Law, Administrative and Regulatory. On
the date hereof, acts as Tax Corregidor of external control, integrating the External Control
Authority of the State Secretary of Finance of Rio de Janeiro, acting on inspection of the activities
of members of the State Department of Finance, including tax auditors, pointing out mistakes,
abuses, omissions and distortions, recommending its correction and, if applicable, the application
of the relevant sanctions. Mr. Eduardo Botelho Kiralyhegy does not hold any management position
in listed companies.
Maria Cristina Pantoja da Costa Faria graduated in law from the Pontifical Catholic University of
Rio de Janeiro (Pontifcia Universidade Catlica do Rio de Janeiro - PUC), specializing in corporate
finance for lawyers by the Foundation Institute of Management from the University of So Paulo
(Fundao Instituto de Administrao da Universidade de So Paulo), and earned her masters
degree in executive management of insurances at IBMEC. Member of the Brazilian Lawyers
Association. At the date of this Reference Form, is a member of the Negreiro Office and Medeiros
& Kiralyhegy Lawyers. Ms. Maria Crustina does not hold any management position in listed
companies.
Marcus Vincius Dias Severini graduated in Accounting and Electric Engineering, post graduated
in Economic Engineering. He acted as Controller Director of Vale S.A. until March 26, 2015, having
entered the Company in 1994, coming from Arthur Andersen S/C, where he worked in auditing.
Member of IBGC with fiscal advisor certification and acted as effective or alternate member of
fiscal councils of the following companies: Fertilizantes Fosfatados S/A- Fosfrtil, Associal
Brasileira de Alumnio ABAL, Uninas Minas Gerais S/A USIMINAS, Companhia Siderrgica de
126
Tubaro - CST e Caemi Minerao S.A. He was president of the deliberative council of Fundao
Vale do Rio Doce de Seguridade Social VALIA from May 2007 to March 2015.
Vera Lucia de Almeida Pereira Elias graduated in Accounting and Law, post graduated in Finance.
Mrs. Vera Lucia de Almeida Pereira Elias acted as accountant of Vale S.A. until September 2013.
Since December 2013 she holds the position of International Standards Officer and CPC in the
Associao Nacional dos Executivos de Finanas, Administrao e Contabilidade ANEFAC. Mrs.
Vera Lucia de Almeida Pereira acted and/or act as effective or alternate member of the fiscal
council of the following companies: Norte Energia S.A., Vale do Rio Doce de Seguridade VALIA,
Fundao Vale do Rio Doce, Ferrovia Centro-Atlntica, Caemi Minerao e Metalurgia AS and
Associao Mulheres Geniais.
Helio Carlos de Lamare Cox is graduated in Civil Engineering from the State University of Rio de
Janeiro - UERJ, is specialized in Accounting and Financial Management at the Superior Institute
of Accounting Studies - ISEC / FGV, and has a postgraduate degree in Capital Markets from School
of Postgraduate Degree in Economics - EPGE/FGV and holds an MBA in Finance from IBMEC. Mr.
Helio has worked for over 25 years as Financial and Administrative Officer responsible for
managing areas such as Finance, Accounting, Technology Information, Legal and Human
Resources. In the period from 1995 to 2010 was Officer of Usiminas and ThyssenKrupp Groups,
working in companies as Dufer S/A, Thyssen Trading S/A, Rio Negro Steel Trade S/A and
Zamprogna NSG Technology Steel S/A, all focused on production, marketing and distribution of
flat steel products. Over the past four years he has been working in financial and business
consulting as Managing Partner of Delamare Financial Advisory and Consultancy Ltd., specially in
providing industrial relations services to the Association of Maritime Support Companies - ABEAM.
Mr. Helio is also member of the Fiscal Council of AW Faber-Castell S/A.
Massao Fbio Oya is graduated in Accounting and postgraduate in Financial Management and
b.
Description of any of the following events which have occurred in the last 5
years:
i.
There is not any criminal conviction involving members of the Administration and of the
Fiscal Council listed above.
ii.
There is not any conviction in a CVM administrative proceeding involving members of the
Administration and of the Fiscal Council listed above.
iii.
of the
There is not any final unfavorable decision involving members of the Administration and
Fiscal Council listed above.
127
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.
Mills Estruturas e
Mills Estruturas e
Mills Estruturas e
Mills Estruturas e
Mills Estruturas e
128
129
d. (i) members of the Board of Directors, Executive Board and Fiscal Council and (ii)
Mills direct or indirect controlling shareholders
Administrator of the Company:
Name: Andres Cristian Nacht / CPF: 098.921.337-49
Corporate name of the issuer or controlled company: Mills Estruturas e Servios de
Engenharia S.A. / CNPJ: 27.093.558/0001-15
Title: Chairman of the Board of Directors
Related Person:
Name: Nicolas Nacht/ CPF: 734.150.811-68
Corporate name of the issuer company, controlled or controlling: Snow Petrel SL / CNPJ:
14.740.333/0001-61
Title: Controlling company and shareholder
Type of relationship: Brother
Additionally, Mr. Andres Cristian Nacht is the Chairman of the Board of Directors of the Company
since 1998 and is a shareholder of the Company.
Administrator of the Company:
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
Title: Member of the Board of Directors
Related Person:
Name: Nicolas Nacht/ CPF: 734.150.811-68
130
Corporate name of the issuer company, controlled or controlling: Snow Petrel SL / CNPJ:
14.740.333/0001-61
Title: Controlling company and shareholder
Type of relationship: Niece/Uncle
12.10 Subordination, rendering of services or control relationships for the previous
three fiscal years between administrators and:
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.
A Sra. Maria Cristina Faria 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 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, 2014 until December 31, 2015.
12.12 Other relevant information
a) Positions held by the members of the Board of Directors in other companies or entities.
Nicolas Wollak - Member of the Board of Directors
Administrative positions occupied in other companies / entities: Co-founder of Axxon
Group in Brasil, serving as Managing Partner since 2001 where he manages by corporate control
enterprises such as Mundo Verde LLC, Tolstoy Investments LLC and Dickens Investments LLC;
Chairman of the Board of Directors of Luxxon S.A; Integrates Board of Directors of Knijnik
Participaes S.A. and of Projeto Texas Participaes Ltda.; Acts as Chairman of Board of
Directors and CEO of Tolstoi Investimentos S.A. and is a member of Investment Committee of
Fundo de Investimento em Participaes Axxon Brazil Private Equity Fund II.
131
132
13.
133
13.1 Description of the compensation policy or practices for the Executive Board,
the Statutory and Non-Statutory Boards, the Fiscal Committee, the Statutory
Committees and the Audit, Risk, Finance and Compensation Committees, covering the
following topics:
a.
Board of Directors
For the Board of Directors of the Company, the total remuneration is fixed in a discretionary
amount determined by the general meeting, with no relationship with the remuneration policy
applicable to officers and other employees of the Company and, therefore there is no goal of the
policy or specific remuneration practice of this body defined by the human resources department
of the Company.
As part of total discretionary remuneration approved by the general meeting, there is a fixed
component and a variable component, according to the results of the Company. The Company
believes that the variable remuneration of the members of the Board of Directors is a way to
encourage them to successfully lead the Company's business by aligning the interests of members
of the Board of Directors with those of shareholders.
Statutory Directors and Non-Statutory Directors
For statutory directors and non-statutory directors of the Company, the remuneration policy aims
to attract and guarantee that the qualified professionals required remain in the Company and
have a proper remuneration. The fixed amount of the remuneration of the Directors includes the
salary and direct and indirect benefits tailored for statutory directors and non-statutory directors.
In addition to the fixed compensation, there is a variable component, which includes profitsharing in the Companys results and the granting of stock options or subscribing to shares issued.
The Company believes that the profit-sharing and stock option programs benefiting statutory
directors and non-statutory directors is a way to motivate them to carry out the Companys
business in its best interest, thus stimulating an entrepreneurial and results orientated culture in
line with the interests of both shareholders and management.
Fiscal Council
Members of the Fiscal Council are entitled to remuneration equivalent to 10% of the average
remuneration of the statutory directors, corresponding to the minimum set by law. In this way,
their remuneration is not correlated to the remuneration policy applicable to officers and other
employees of the Company and therefore there is no objective of the policy or practice of
remuneration for that body.
Advisory Committee
The members of the Human Resources Committee and Strategic Committee will be entitled to
remuneration equivalent to 50% of the monthly remuneration of the members the Board of
Directors. The Committee members who are officers, managers or employees of the Company
shall not be entitled to remuneration. The remuneration of members of the Committee may be
amended at any time by the Board. The purpose of this remuneration policy is to adequately
compensate Committee members for time spent in office, except by those who are already paid
by the Company as its directors or employees.
134
b.
Composition of compensation packages: (i) description of the different
elements of the compensation packages and the objectives of each of them; (ii)
proportion of each element to make up the total compensation package; (iii) the
method for calculating and adjusting each of the elements in the compensation
packages; and (iv) reasons for the composition of remuneration
(i) Description of the different elements of the compensation packages:
best interest, thus stimulating an entrepreneurial and results orientated culture in line with the
interests of both shareholders and management.
Members of the Board of Directors, Fiscal Council and Advisory Committees are not entitled to
stock option or subscription to shares.
(ii) Proportion of each element to make up the total remuneration package:
According to the table below the ratio for the year 2014 were:
% Compared to the total compensation amount paid to
Board of Directors
Executive Officers
Human Resources Committee
Fiscal Council
Including taxes.
Salary and
Pro-labore
100.00%
62.73%
100.00%
100.00%
Bonus
0.00%
0.00%
Profit sharing
0.00%
0.00%
Grant of
options
0.00%
33.11%
Total
100.00%
100.00%
100.00%
100.00%
(iii) Method for calculating and adjusting each of the elements in the compensation packages:
The fixed portion of compensation paid to statutory directors and non-statutory directors is
determined based on market standards, and readjusted annually at regular levels to account for
the loss in currency value or for merit by performance.
In terms of the profit-sharing program granted to statutory directors and non-statutory directors,
and to bonus, payed to the members of Board of Directors, this plan is based on the aggregate
economic value, which consists of the adjusted net profit deducted from shareholder
remuneration. If positive, a percentage between 20% and 30%, which will be annually decided
by the Board of Directors starting from 2012, of the Economic Value Added (EVA) will be
distributed to management and employees, and whose portion will be defined in an increasing
manner in accordance with their hierarchical level in the Company and results obtained by their
respective business segments. i.e. in a proportion of 75% in 2012 and 60% from 2013 based on
the segments results that the manager or employee in question is linked to, and 25% in 2012
and 40% from 2013 based on the result of our Company as a whole. For the employees of
corporate areas, the program considers the total result of the company. In 2013 the Company
distributed R$ 20.1 million for the results of 2012 and in 2014 will be distributed R$ 18.7 million
for the results of 2013. In 2015, the Company will not distribute any amount related to the results
of 2014.
Regarding the to the stock option plan to purchase or subscribe shares, granted to the statutory
directors and non-statutory directors, the number of options granted is proportional to the
investment made in the Company's shares with resources obtained from the profit sharing
program described above. Additionally, the Board of Directors may distribute discretionary stock
options or subscription shares to statutory directors and non-statutory directors, that is,
independent of the investment made in the Company's shares with resources obtained from the
profit sharing program described above, based on merit, performance and/or outcome.
For the Board of Directors of the Company (and the Advisory Committees), the remuneration is
discretionary determined by the general meeting with no relation with the remuneration policy
applicable to officers and other employees of the Company and therefore there is no goal at the
policy or remuneration practice of this body. Members of the Fiscal Council are entitled to
remuneration equivalent to 10% of the average remuneration of the statutory board,
corresponding to the minimum set by law. In this way, their remuneration is not correlated to the
remuneration policy applicable to officers and other employees of the Company and therefore
there is no aim of policy or practice of remuneration for that body. So, there is no method of
calculation and adjustment of each element of remuneration.
136
c.
Main performance indicators that are taken into consideration when
determining each element of the compensation package
The main performance indicator used to determine the variable component of management
remuneration is the Companys Economic Value Added (EVA), which is calculated from the net
profit of the Company, deducting from this remuneration the capital invested in the Company by
the shareholders, which is the invested capital in the Company at book value multiplied by the
weighted average cost of capital of the Company. The variable portion of remuneration is
determined from the economic value generated in the Company and in the business segment,
under its responsibility.
d.
How the compensation package is structured to reflect the development of the
performance indicators
The remuneration consists of a significant variable portion, represented by profit-sharing of the
Companys results, and the values to be distributed are directly proportionate to the Companys
Economic Value Added (EVA), calculated annually in accordance with the formula described in
item (c) above.
e.
How the compensation policy is aligned with the Companys short-, mediumand long-term interests
The remuneration monthly paid to statutory directors and non-statutory directors is in line with
the short-term interests of the Company to attract and retain qualified professionals. The profitsharing and stock options plan are aligned with the medium-to-long-term interests of the
Company to motivate management to carry out the Companys business, stimulating an
entrepreneurial and results-orientated culture, to the extent that both shareholders and directors
benefit from improvements in the results and increases in the price of the shares.
For the Board of Directors of the Company (and consequently the Advisory Committees), the
remuneration is fixed in discretionary amount determined by the general meeting with no relation
with the remuneration policy applicable to officers and other employees of the Company, and
therefore there is no goal at the policy or remuneration practice of this body. The members of
the Fiscal Council are entitled to remuneration equivalent to 10% of the average remuneration of
the statutory board, corresponding to the minimum set by law. In this way, their remuneration is
137
not correlated to the remuneration policy applicable to officers and other employees of the
Company and therefore there is no aim of policy or practice of remuneration for that body.
For the Board of Directors, the bonus, which is based on profit-sharing, being also directly
proportional to the Economic Value Added (EVA), is in line with the Companys mid and long term
best interest of stimulating an entrepreneurial and results orientated culture.
f.
Existence of compensation supported by subsidiaries, and direct or indirect
affiliates or holding companies
Not applicable. There is not any remuneration supported by subsidiaries, and direct or indirect
affiliates or holding companies.
g.
Existence of any compensation or benefits connected to the occurrence of a
given corporate event, such as the sale of the Companys controlling interest
Not applicable. There is no remuneration or benefits connected to the occurrence of a given
corporate event, such as the sale of the Companys controlling interest.
13.2 With respect to compensation acknowledged in the results of the last 3
accounting reference periods and the estimated compensation for the current
accounting reference period for the Executive Board, the Statutory Board and the
Fiscal Council:
Estimated for Current Fiscal Year (2015)
Number of members
Board of
Directors
Board of
Executive
Officers
Fiscal Council
Total
4.08
14.08
928,012
5,247,727
260,000
6,435,739
457,291
92,573
Others
177,602
457,291
92,573
1,994,136
52,000
2,223,739
Variable Compensation
Bonus
830,322
Profit sharing
830,322
2,492,436
2,492,436
166,064
166,064
Post-employment benefits
Employment cessation benefits
Stock-based compensation
Total Compensation
3,236,926
2,194,574
3,236,926
13,428,516
312,000
15,935,090
(1) Amount based on the annual amortization rate of all curent plans, by the cost of call option. The number of options granted on the
discretionary plan 2014 is estimated.
Number of members
Annual fixed
compensation
Board of Directors
6.67
Board of Executive
Officers
6
Fiscal Council
3
Total
15.67
138
1,031,559
4,715,612
232,961
448,315
448,315
112,707
207,513
5,980,132
112,707
2,046,833
46,592
2,300,938
Variable Compensation
Bonus
Profit sharing
Compensation for
participation in meetings
Comissions
Others
Post-employment
benefits
Employment cessation
benefits
Stock-based
compensation
Total Compensation
3,570,000
1,351,778
3,570,000
10,780,760
279,553
12,412,091
(1) Amount based on the annual amortization rate of all curent plans, by the cost of call option. The number of options granted on the
discretionary plan 2014 is estimated.
Number of members
Annual fixed
compensation
Salaries or pro-labore fees
Direct and indirect
benefits
Compensation for
participation in
Committees
Others
Board of Directors
6.08
Board of Executive
Officers
5.17
Fiscal Council
3.00
Total
14.25
893,619
4,360,016
207,288
5,460,923
323,743
323,743
164,423
164,423
211,608
1,658,550
41,458
1,911,616
Variable Compensation
Bonus
383,066
383,066
Profit sharing
Compensation for
participation in meetings
Comissions
1,224,640
1,224,640
Others
Post-employment
benefits
Employment cessation
benefits
Stock-based
compensation
Total Compensation
76,613
76,613
2,694,144
2,694,144
1,729,329
10,261,094
248,746
12,239,169
(1) Amount based on the annual amortization rate of all curent plans, by the cost of call option. The number of options granted on the
discretionary plan 2013 is estimated.
Number of members
Annual fixed
compensation
Salaries or pro-labore fees
Direct and indirect
benefits
Board of Directors
7
Board of Executive
Officers
5
Fiscal Council
3
Total
15
933,005
3,278,531
187,200
4,398,736
304,444
304,444
139
Compensation for
participation in
Committees
Others
111,926
111,926
208,986
1,185,772
37,440
1,432,198
Variable Compensation
Bonus
168,737
168,737
Profit sharing
Compensation for
participation in meetings
Comissions
637,433
637,433
Others
Post-employment
benefits
Employment cessation
benefits
Stock-based
compensation
33,747
33,747
1,690,083
1,690,083
1,456,401
7,096,263
224,640
8,777,304
Total Compensation
(1) Amount based on the annual amortization rate of all curent plans, by the cost of call option.
Board of Executive
Officers
Fiscal Council
Total
Number of Members
Bonus
Minimum amount
estimated by
compensation plan
Maximum amount
estimated by
compensation plan
Amount estimated by the
compensation plan if preestablished goals are met
4.08
14.08
Profit sharing
Minimum amount
estimated by
compensation plan
Maximum amount
estimated by
compensation plan
Amount estimated by the
compensation plan if preestablished goals are met
Board of Executive
Officers
Fiscal Council
Total
Number of Members
Bonus
Minimum amount
estimated by
compensation plan
6.67
140
Maximum amount
estimated by
compensation plan
Amount estimated by the
compensation plan if preestablished goals are met
Value effectively
recognized in results of
the fiscal year
Profit sharing
Minimum amount
estimated by
compensation plan
Maximum amount
estimated by
compensation plan
Amount estimated by the
compensation plan if preestablished goals are met
Value effectively
recognized in results of
the fiscal year
0 (negative EVA)
0 (negative EVA)
0 (negative EVA)
0 (negative EVA)
Board of Executive
Officers
Fiscal Council
Total
Number of Members
Bonus
Minimum amount
estimated by
compensation plan
Maximum amount
estimated by
compensation plan
Amount estimated by the
compensation plan if preestablished goals are met
Value effectively
recognized in results of
the fiscal year
Profit sharing
Minimum amount
estimated by
compensation plan
Maximum amount
estimated by
compensation plan
Amount estimated by the
compensation plan if preestablished goals are met
Value effectively
recognized in results of
the fiscal year
6.08
5.17
14.25
25% of Eva
25% of Eva
383.0
383.0
25% of Eva
25% of Eva
1,224.6
1,224.6
Board of Executive
Officers
Fiscal Council
Total
Number of Members
Bonus
Minimum amount
estimated by
compensation plan
Maximum amount
estimated by
compensation plan
15
141
30.0% of EVA
30.0% of EVA
168.7
168.7
30.0% do EVA
30.0% of EVA
637.4
637.4
13.4 With respect to the stock-based compensation plan for the Executive Board
and the Board of Executive Officers, which was in force in the last accounting
reference period and which is estimated for the current accounting reference period:
On December 31st, 2014, the Company had a single stock option plan for the benefit of its
managers, that being the Plano de Opes de Compra de Aes , as described below. This plan
will remain for the fiscal year 2015, with no expectation for the creation of new plan this year.
Until December 31st of 2014, a total of 764,756 options had been exercised associated with this
plan, with 659,500 previously granted but not yet redeemed purchase options remaining.
All the stock-based compensation plans created before the Companys IPO, held in April 15 th,
2010 had its granted options redeemed.
Program, all the directors (or executives with similar roles) of the Company, and Company
managers who have held their positions in 2012 for more than 6 (six) months; and (v) for the
1/2014 Program, all the directors (or executives with similar roles) of the Company, and Company
managers who have held their positions in 2013 for more than 6 (six) months .
b. Major Plan Objectives:
The aim of the Stock Options Plan is to allow for the Companys managers or employees or those
in any of its subsidiaries, subject to determined conditions, to acquire shares in the Company, for
the purpose of (i) stimulating expansion, determining and implementing the Companys corporate
guidelines; (ii) align the interests of the Companys shareholders with those of its managers and
employees or other entities it controls; and (iii) allow the Company or its subsidiaries to attract
and retain the managers and employees it requires.
c.
As most of the options are available over the long term, the beneficiaries tend to stay with the
Company until at least the time they can contribute to its long-term results.
d. How the plan is included in the Companys compensation policy
As mentioned in Item 13.1b, this plan is part of the variable compensation package paid to the
Companys officers.
e. How the plans promote the alignment between management and the
Company interests at short, mid and long term
The stock option plan, in general, aligns the medium and long term interests to encourage the
Administration to conduct the company's business success, stimulating entrepreneurial and
results-oriented culture, to the extent that both the shareholders and the directors benefit from
improvements in income and increases in stock market quotation. The establishment of a waiting
period before which the options cannot be exercised (vesting period), ensures that this alignment
is found in the short, medium and long term.
f.
The stock options granted within the scope of this plan confer the rights to acquire up to 5% of
shares of the Companys capital stock, throughout the period of validity of the plan, considering
all the options already granted under the Plan, exercised or not, except those which have been
extinct and not exercised as long as the total number of shares issued or can be issued under the
Plan is always within the boundary the authorized capital of the company. In addition, the aim of
the Plan is to grant share purchase options in an amount that does not exceed 1% of shares of
the Companys total capital each year, as verified on the date the plan was approved.
As part of the 1/2010 Program, 538,714 options have been granted that will be converted into
ordinary shares in the Company. Up to December 31st, 2013, 528,077 options have been
exercised.
As part of the 1/2011 Program, 392,046 options have been granted that will be converted into
ordinary shares in the Company. Up to December 31st, 2014, 161,771 options have been
exercised.
As part of the 1/2012 Program, 232,462 options have been granted that will be converted into
ordinary shares in the Company. Up to December 31st, 2014, 53,181 options have been
exercised.
143
As part of the 1/2013 Program, 210,770 options have been granted that will be converted into
ordinary shares in the Company. Up to December 31st, 2014, 21,727 options have been
exercised.
As part of the 1/2014 Program, 101,852 options have been granted, which will be converted into
ordinary shares in the Company once they are exercised. Up to December 31st, 2014, no options
have been exercised.
g. The maximum number of stock options to be granted
As a result of the number of shares that can be acquired within the scope of the stock option
plan. The maximum total number of shares to be issued is up to 5% of total stock.
h. Conditions for acquiring the shares
To receive the stock options in the 1/2010 Program, each beneficiary had to use at least 33% of
the variable component of their compensation associated with the Companys 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 had to use at least 33% of
the variable component of their compensation associated with the Companys Profit-Sharing
Program, net of taxes, 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 will have to use at least
33% of the variable component of their compensation associated with the Companys ProfitSharing Program, net of taxes, 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 will have to use at least
33% of the variable component of their compensation associated with the Companys ProfitSharing Program, net of taxes, which were received related to the 2012 financial year, to acquire
shares issued by the Company.
To receive the stock options in the 1/2014 Program, each beneficiary will have to use at least
33% of the variable component of their compensation associated with the Companys ProfitSharing Program, net of taxes, 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 1/2011, 1/2012, 1/2013 and
1/2014 Programs, independent of the investment in the Company's shares to certain employees
of the Company, due to its performance in the exercise of their jobs.
i.
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
created for this purpose 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 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
144
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$11.50), monetarily adjusted by the inflation
according to the IPCA, which is disclosed by the Brazilian Institute of Geography and Statistics
(IBGE), deducting the value of dividends and interest on equity per share paid by the Company
as from the stock option date.
Regarding the 1/2011 Program, the exercise price of the options will be the average share price
acquired according to brokerage invoice sent by the beneficiary to the Board of Directors or
Human Resources Committee of the Company (R$ 19.28), 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.
Regarding the 1/2012 Basic Program, the exercise price of the options will be 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$ 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.
Regarding the 1/2012 Discricionary Program, the exercise price of the options will be the average
share price on the BM&FBOVESPA in the year of 2011 (R$19.22), weighted by the trading volume,
monetarily adjusted by the inflation according to the IPCA or by another index determined by the
Board of Directors or committee, according to the case, from the date of conclusion of the stock
option agreement until the date the option is exercised, deducting the value of dividends and
interest on equity per share paid by the Company as from the stock option date.
Regarding the 1/2013 Basic Program, the exercise price of the options will be equal to the book
value of shares on December 31st of the fiscal year of the Company immediately preceding the
stock option date (R$ 6.80), monetarily adjusted by the inflation according to the IPCA or by
another index determined by the Board of Directors or committee created for this purpose,
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.
Regarding the 1/2013 Discricionary Program, the exercise price of the options will be the average
share price on the BM&FBOVESPA in the year of 2012 (R$26.16), weighted by the trading volume,
monetarily adjusted by the inflation according to the IPCA or by another index determined by the
Board of Directors or committee created for this purpose, according to the case, from the date of
conclusion of the stock option agreement until the date the option is exercised, deducting the
value of dividends and interest on equity per share paid by the Company as from the stock option
date.
Regarding the 1/2014 Basic Program, the exercise price of the options will be equal to the book
value of shares on December 31st of the fiscal year of the Company immediately preceding the
stock option date (R$ 7.98), monetarily adjusted by the inflation according to the IPCA or by
another index determined by the Board of Directors or committee created for this purpose,
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.
Regarding the 1/2014 Discricionary Program, the exercise price of the options will be the average
share price on the BM&FBOVESPA in the year of 2013 (R$30.94), weighted by the trading volume,
145
monetarily adjusted by the inflation according to the IPCA or by another index determined by the
Board of Directors or committee created for this purpose, 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.
j.
The options granted under the terms of this plan will be subject to grace periods of up to 72
(seventy two) months for the conversion of options into shares.
k.
Form of liquidation/settlement
The shares resulting from the exercising of purchase options will be integrated and/or acquired
by their respective beneficiaries in cash, in current national currency.
l.
Until the exercise price is fully paid, the shares acquired through exercising the option rights
under the terms of the Plan cannot be sold to third parties, except with the prior authorization of
the Board, based on the hypothesis that the product of the sale will preferably be used to settle
any debt the beneficiary has with the Company.
Based on the terms of the respective Option Contract, no beneficiary will be allowed to trade the
shares acquired for a period of 5 (five) years, observing the following rules:
(i) after a period of one year after signing the respective Option Contract, beneficiaries will be
free to trade up to 25% of the shares acquired;
(ii) after a period of one year after the term defined in item i, beneficiaries will be free to trade
an
additional 25% of the shares acquired;
(iii) after a period of one year after the term defined in item ii, beneficiaries will be free to trade
an additional 25% of the shares acquired; and
(iv) after a period of one year after the term defined in item iii, beneficiaries will be free to trade
the outstanding balance of the shares acquired.
m. criteria and events that, when verified, will lead to the suspension, alteration
or extinction of the plan
The stock option rights granted under the terms of the Plan will automatically all be cancelled in
the following cases: (i) on the complete and full exercising of the same; (ii) after the option term
has expired; (iii) through the mutual rescission of the stock option; (iv) if the Company is
dissolved, liquidated or files for bankruptcy; or (v) if the beneficiary fails to observe the trading
restriction rules described in item n below.
In addition, in the event the beneficiary is laid off, with or without just cause, resigns or steps
down from their job, retires, or suffers from permanent disability, or dies, the option rights
granted can either be cancelled or modified, as described in item n below.
n.
If at any time during the validity of the Stock Options Plan, the beneficiary:
146
(i)
resigns voluntarily from the Company or leave their management role: (a) the rights not
exercised in accordance with the respective Option Contract on the date they leave the Company
will automatically all be cancelled, with no need for any prior warning or notification, and with no
right to any indemnity; and (b) the rights already exercised in accordance with the respective
Option Contract on the date they leave the Company may be exercised within a period of 30 days
from the same date, after which all rights will automatically all be cancelled, with no need for any
prior warning or notification, and with no right to any indemnity;
(ii)
leaves the Company as a result of being fired with due cause, or failure to fulfill their
duties adequately as a manager, all the right (exercised and not exercised) in accordance with
the respective Option Contract on the date they leave the Company will automatically all be
cancelled, with no need for any prior warning or notification, and with no right to any indemnity;
(iii)
leaves the Company as a result of being fired without due cause, or failure to fulfill their
duties adequately as a manager: (a) the rights not exercised in accordance with the respective
Option Contract on the date they leave the Company will automatically all be cancelled, with no
need for any prior warning or notification, and with no right to any indemnity; except if the Board
decides to anticipate the grace period term for some or all of these rights, and the beneficiary
leaves the Company within a period of up to 12 (twelve) months after the change in share control
in the Company all the unexercised rights in accordance with the respective Option Contract on
the date they leave the Company may be exercised within a period of 30 days from the same
date, after which all rights will automatically all be cancelled, with no need for any prior warning
or notification, and with no right to any indemnity, will have their grace period anticipated; and
(b) the rights already exercised in accordance with the respective Option Contract on the date
they leave the Company may be exercised within a period of 30 days from the same date, after
which all rights will automatically all be cancelled, with no need for any prior warning or
notification, and with no right to any indemnity;
(iv)
on retiring from the Company: (a) the rights not exercised in accordance with the
respective Option Contract on the date they leave the Company will automatically all be cancelled,
with no need for any prior warning or notification, and with no right to any indemnity, except if
the Board decides to anticipate the grace period term for some or all of these rights; and (b) the
rights already exercised in accordance with the Options Contract on the date of leaving the
Company will have their grace period anticipated, allowing the Beneficiary to exercise the
respective stock option, as long as this is within a period of 12 (twelve) months from the date of
retirement, after which all the remaining rights will automatically all be cancelled, with no need
for any prior warning or notification, and with no right to any indemnity;
(v)
leaving the Company due to death or permanent disability: (a) the rights not exercised
in accordance with the respective Option Contract on the date they leave the Company will
automatically all be cancelled, with no need for any prior warning or notification, and with no
right to any indemnity, except if the Board decides to anticipate the grace period term for some
or all of these rights; and (b) the rights already exercised in accordance with the Options Contract,
on the date of passing away, can be exercised by the Beneficiarys legal successors, as long as
this is done within a period of 12 (twelve) months from the aforementioned date, after which all
the remaining rights will automatically all be cancelled, with no need for any prior warning or
notification, and with no right to any indemnity.
Over and above mentioned item, the Board or Committee (whichever is the case) can, at their
exclusive criteria, whenever they deem social interests are better met by this approach, chose
not to abide by the rules stipulated above, and treat a determined beneficiary in a differentiated
and individual manner.
13.5
Number of stocks or direct or indirect stock holdings, either in Brazil or
overseas, and other securities that might be converted into stock or quotas, issued
by the Company, direct or indirect affiliates, subsidiaries or companies under common
control, by members of the Executive Board, of the Board of Executive Officers or the
147
Fiscal Board, grouped per board or committee, on the closing date of the last
accounting reference period:
The table below indicates the number of our shares held directly by our administrators and the
percentage that their direct individual contributions represent of the total number of shares issued
by our Company, in the last fiscal year, December 31st, 2014.
On December 31st, 2013
Board of Directors
Board of Executive Officers
Number of shares
(%)
18,945,742
14.8%
383,560
0.30%
Fiscal Council
1 Andres Cristian Nacht and Francisca Kjellerup Nacht, the Companys controlling shareholders and members of the Board of Directors,
were not considered. Their position as of December 31st, 2014, was 15,685,349 shares and 1,000 shares, respectively
2012
2013
2014
2015
5.17
6.00
4.08
05/31/2010
269,357
18,639
25% by year,
from the year
after the date
of the Grant
05/31/2016
05/31/2010
134,678
3,769
25% by year,
from the year
after the date of
the Grant
05/31/2016
05/31/2010
144,575
25% by year,
from the year
after the date of
the Grant
05/31/2016
05/31/2010
10,628
25% by year,
from the year
after the date of
the Grant
05/31/2016
250,718
400,267
534,574
534,574
R$ 12.22
R$ 12.63
R$ 13.01
R$ 13.89
R$ 12.42
R$ 12.86
R$ 13.44
0.23%
0.11%
0.11%
0.01%
1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and
total amount of redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year.
2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated
on the resigning terms available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013.
3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers
the total shares of the Company's capital at beginning of year. At the end of fiscal year 2012, the amount of shares were 126,399,430, at the end of
fiscal year 2013, the total number of shares was equal to 127,385,996 and at the end of fiscal year 2014, the total number of shares was equal to
128,057,925.
4. Fair value of R$ 3.84 per option. Assumptions available in item 13.9 (b).
1/2011 Program
Number of Members of the Board of
Executive Officers
Grant Date
2012
2013
2014
2015
5.17
6.00
4.08
04/16/2011
04/16/2011
04/16/2011
04/16/2011
148
294,034
196,023
143,442
56,546
65,742
170,385
164,465
25% by year, from
25% by year, from
25% by year, from
25% by year, from
the date of the
the date of the
the date of the Grant the date of the Grant
Grant
Grant
04/16/2016
41,466
130,281
169,080
169,080
R$ 19.77
R$ 20.60
R$ 21.50
R$ 23.02
R$ 20.15
R$ 20.82
R$ 22.20
0.28%
0.21%
0.25%
0.13%
1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and
total amount of redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year.
2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated
on the resigning terms available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013.
3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers
the total shares of the Company's capital at beginning of year. At the end of fiscal year 2012, the amount of shares were 126,399,430, at the end of
fiscal year 2013, the total number of shares was equal to 127,385,996 and at the end of fiscal year 2014, the total number of shares was equal to
128,057,925.
4. Fair value of R$6.57 per option. Assumptions available in item 13.9 (b).
2012
2013
2014
2015
5.17
4.08
06/30/2012
38,462
06/30/2012
-
06/30/2012
06/30/2012
38,462
28,847
25,190
8,583
8,583
25% by year, from 25% by year, from 25% by year, from 25% by year, from
the date of the
the date of the
the date of the
the date of the
Grant
Grant
Grant
Grant
30/06/2018
30/06/2018
30/06/2018
30/06/2018
9,615
22,210
22,210
R$ 5.74
R$ 5.75
R$ 6.03
R$ 5.82
R$ 5.93
R$ 815,394
0.03%
0.02%
0.02%
0.01%
1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and
total amount of redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year.
2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated
on the resigning terms available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013.
3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers
the total shares of the Company's capital at beginning of year. At the end of fiscal year 2012, the amount of shares were 126,399,430, at the end of
fiscal year 2013, the total number of shares was equal to 127,385,996 and at the end of fiscal year 2014, the total number of shares was equal to
128,057,925.
4. Fair value of R$ 21.20 per option. Assumptions available in item 13.9 (b).
149
2012
2013
2015
2014
5.17
4.08
06/30/2012
194,000
06/30/2012
-
06/30/2012
-
06/30/2012
194,000
145,500
164,000
48,000
31,500
91,500
89,000
25% by year,
from the date of
the Grant
06/30/2018
17,000
39,000
39,000
R$ 19.57
R$ 20.37
R$ 21.79
R$ 20.60
R$ 21.03
R$ 2,362,920
0.15%
0.14%
0.20%
0.11%
1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and
total amount of redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year.
2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated
on the resigning terms available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013.
3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers
the total shares of the Company's capital at beginning of year. At the end of fiscal year 2012, the amount of shares were 126,399,430, at the end of
fiscal year 2013, the total number of shares was equal to 127,385,996 and at the end of fiscal year 2014, the total number of shares was equal to
128,057,925.
4. Fair value of R$ 12.18 per option. Assumptions available in item 13.9 (b).
2013
2014
2015
5.17
4.08
04/30/2013
105,770
105,770
104,153
35,072
17,536
25% by year, from the
date of the Grant
04/30/2019
34,717
34,717
R$ 6.72
R$ 7.04
R$ 6.95
R$ 2,620,981
0.08%
0.11%
0.04%
150
1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and
total amount of redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year.
2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated
on the resigning terms available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013.
3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers
the total shares of the Company's capital at beginning of year. At the end of fiscal year 2012, the amount of shares were 126,399,430, at the end of
fiscal year 2013, the total number of shares was equal to 127,385,996 and at the end of fiscal year 2014, the total number of shares was equal to
128,057,925.
4. Fair value of R$ 24.78 per option. Assumptions available in item 13.9 (b).
2013
5.17
2014
2015
4.08
04/30/2013
105,000
105,000
157,500
90,000
52,500
90,000
04/30/2019
04/30/2019
04/30/2019
R$ 26.78
R$ 28.67
0.16%
0.14%
R$ 1,251,600
0.08%
1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and
total amount of redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year.
2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated
on the resigning terms available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013.
3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers
the total shares of the Company's capital at beginning of year. At the end of fiscal year 2012, the amount of shares were 126,399,430, at the end of
fiscal year 2013, the total number of shares was equal to 127,385,996 and at the end of fiscal year 2014, the total number of shares was equal to
128,057,925.
4. Fair value of R$ 11.92 per option. Assumptions available in item 13.9 (b).
2014
2015
4.08
04/30/2014
101,852
101,852
04/30/2014
36,489
12,163
25% by year, from the date of the 25% by year, from the date of the
Grant
Grant
04/30/2020
04/30/2020
151
R$ 8.17
R$ 2,299,818
0.08%
0.04%
1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and
total amount of redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year.
2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated
on the resigning terms available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013.
3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers
the total shares of the Company's capital at beginning of year. At the end of fiscal year 2012, the amount of shares were 126,399,430, at the end of
fiscal year 2013, the total number of shares was equal to 127,385,996 and at the end of fiscal year 2014, the total number of shares was equal to
128,057,925.
4. Fair value of R$ 22.58 per option. Assumptions available in item 13.9 (b).
13.7 With respect to outstanding options for the Board of Directors and the Board
of Executive Officers at the closing of the last accounting reference period
Number of members
Non-Outstanding
options
Number
Program
1/2010
Program
1/2011
Program
1/2012 Basic
Program
1/2012 Discretiona
ry
Program
1/2013 Basic
Program
1/2013 Discretion
ary
Program
1/2014
Basic
5.17
5.17
5.2
143,442
25,190
164,000
104,153
157,500
101,852
696,137
143,442
opes se
tornam
exercveis a
cada ano
at 2015
04/16/2017
12,595
opes se
tornam
exercveis a
cada ano at
2016
05/31/2018
82,000
opes se
tornam
exercveis a
cada ano at
2016
05/31/2018
34,717
opes se
tornam
exercveis a
cada ano at
2017
04/30/2019
52,500
opes se
tornam
exercveis a
cada ano
at 2017
04/30/2019
25,463
opes se
tornam
exercveis a
cada ano
at 2018
04/30/2020
R$ 0
R$ 103,531
R$ 16,400
R$ 399,948
R$ 18,900
R$ 378,889
R$ 917,668
325,013
Deadline for
options to become
redeemable
Deadline for
redeeming options
Grace period for
stock transfer
Weighted average
exercise price
Fair value of
options on the last the
of the fiscal year
Outstanding
options
Number
Deadline for
redeeming options
Grace period for
stock transfer
Weighted average
exercise price
Fair value of
options on the last the
of the fiscal year
Total fair value of
the options on the
last day of the
fiscal year
05/31/201
6
-
Total
10,628
170,385
91,500
52,500
05/31/201
6
04/16/2017
05/31/2018
05/31/2018
04/30/2019
04/30/2019
04/30/2020
R$ 13.44
R$ 22.20
R$ 5.93
R$ 21.03
R$ 6.95
R$ 26.78
R$ 7,865
R$ 0
R$ 9,150
R$ 6,300
R$ 23,315
R$ 7,865
R$ 0
R$ 103,531
R$ 25,550
R$ 399,948
R$ 25,200
R$
378,889
R$ 940,983
Board of Directors
Board of Directors has no stock-based compensation.
13.8 With respect to redeemed and delivered options for the Board of Directors and
the Board of Executive Officers, in the past three accounting reference periods
152
Number of
Members
Redeemable
Options
Number of shares
Pondered average
price within
accounting reference
period
Total value of the
difference between
the exercise value and
market value of
shares related to
options exercised1
Shares Granted
Number of granted
shares
Pondered average
price of acquisition
Total value of the
difference between
the exercise value and
market value of
shares related to
options exercised 1
Program
1/2010
Program
1/2011
Program
1/2012
- Basic
Program
1/2012 Discretionary
Program
1/2013
- Basic
Program
1/2013 Discretionary
Total
5.17
5.17
5.06
134,307
38,799
12,595
22,000
34,717
242,418
R$ 13.44
R$ 22.20
R$ 5.93
R$ 21.03
R$ 6.95
R$ 26.78
R$ 5.96
R$
903,886
-R$
78,762
R$
179,353
-R$ 18,920
R$
458,959
R$ 0.00
R$
1,444,516
134,307
38,799
12,595
22,000
34,717
242,418
R$ 13.44
R$ 22.20
R$ 5.93
R$ 21.03
R$ 6.95
R$ 26.78
R$ 5.96
R$
903,886
-R$
78,762
R$
179,353
-R$ 18,920
R$
458,959
R$ 0.00
R$
1,444,516
1 Average market price, pondered by volume, in the last trading day of the fiscal year, equals R$ 20.17 at the end of 2014.
Number of Members
Redeemable Options
Number of shares
Pondered average price within
accounting reference period
Total value of the difference between
the exercise value and market value of
shares related to options exercised1
Shares Granted
Number of granted shares
Pondered average price of acquisition
Total value of the difference between
the exercise value and market value of
shares related to options exercised 1
Program
1/2010
5.17
Program
1/2011
5.17
Program
1/2012 Basic
5.17
Program
1/2012 Discretionary
5.17
149,549
88,815
9,615
17,000
264,979
R$ 12.86
R$ 20.82
R$ 5.82
R$ 20.06
R$ 15.73
R$
2,703,846
R$ 898,808
R$ 241,529
R$ 184,960
R$
4,029,143
149,549
R$ 12.86
88,815
R$ 20.82
9,615
R$ 5.82
17,000
R$ 20.06
264,979
R$ 15.73
R$
2,703,846
R$ 898,808
R$ 241,529
R$ 184,960
R$
4,029,143
Total
5.17
1 Average market price, pondered by volume, in the last trading day of the fiscal year, equals R$ 30.94 at the end of 2013.
Number of Members
Redeemable Options
Number of shares
Pondered average price within accounting reference
period
Program
1/2010
5
Program
1/2011
5
199,467
41,466
240,993
R$ 12.42
R$ 20.15
R$ 13.75
Total
5
153
R$ 4,190,802
R$ 550,668
R$ 4,741,470
199,467
R$ 12.42
41,466
R$ 20.15
240,933
R$ 13.75
R$ 4,190,802
R$ 550,668
R$ 4,741,470
1 Average market price, pondered by volume, in the last trading day of the fiscal year, equals R$ 33.43 at the end of 2012.
Board of Directors
Board of Directors has no stock-based compensation.
13.9 Summary of relevant information aiming at a broader understanding of data
presented under items 13.6 through 13.8 above, as well as an explanation of the
pricing method used for stock and option values
a. Pricing model
The programs granted from 2010 onwards were classified as equity instruments, which the
weighted average fair value of options is determined using the Black-Scholes valuation model
using as premises: (a) weighted average share price, (b) exercise price, (c) expected volatility,
(d) dividend yield, (e) expected option life and (f) annual risk-free interest rate. The equity portion
is priced only at the grant date and the fair value is not measured again on every reporting date.
The portions of equity and debt are appropriated plan by plan, taking into consideration the
respective lock up periods (period in which shares are blocked for trading), based on
management's best estimate as to their end dates.
R$11.50
R$11.95
31%
1,461
1.52%
6.60%
R$3.86
R$11.50
R$14.10
31%
1,461
1.28%
6.37%
R$5.49
R$11.65
R$20.55
34.92%
1,247
1.71%
6.08%
R$10.49
R$11.59
R$20.55
34.92%
1,282
1.71%
6.08%
R$10.56
R$12.22
R$17.55
38.68%
882
1.06%
4.81%
R$7.27
R$12.16
R$17.55
38.68%
917
1.06%
4.83%
R$7.37
R$12.63
R$33.43
35.92%
516
0.70%
R$12.57
R$33.43
35.92%
551
0.70%
154
1.04%
R$20.69
1.08%
R$20.75
R$13.01
R$33.00
33.86%
182
0.64%
3.06%
R$20.08
R$13.01
R$33.00
33.86%
186
0.64%
3.12%
R$20.09
R$13.70
R$9.55
36.00%
548
0.54%
5.47%
R$0.74
R$13.70
R$9.55
36.00%
552
0.54%
5.47%
R$0.75
1/2012
Basic (06/30/2012)
1/2012
Discretionary (06/30/2012)
R$5.86
R$27.10
R$19.22
R$27.10
155
Expected volatility1
37.41%
Expected option life (days)
1,461
Dividend yield
0.87%
Risk-free interest rate
3.92%
Fair value per share
R$21.20
At the end of 2012
Exercise price
R$5.74
Weighted average share price
R$33.43
Expected volatility1
35.92%
Expected option life (days)
1,277
Dividend yield
0.70%
Risk-free interest rate
2.15%
Fair value per share
R$27.30
At the end of 2013
Exercise price
R$5.75
Weighted average share price
R$33.00
Expected volatility1
33.86%
Expected option life (days)
882
Dividend yield
0.64%
Risk-free interest rate
4.84%
At the end of 2014
Exercise price
R$5.95
Weighted average share price
R$9.55
Expected volatility1
36.00%
Expected option life (days)
517
Dividend yield
0.54%
Risk-free interest rate
5.30%
Fair value per share
R$4.11
Measured by the historical behavior of the value of the stock of the Company
1/2013
Calculation of fair value
Basic (04/30/2013)
Grant Date
Exercise price
R$6.81
Weighted average share price
R$31.72
Expected volatility1
35.34%
Expected option life (days)
1,461
Dividend yield
0.82%
Risk-free interest rate
3.37%
Fair value per share
R$24.78
At the end of 2013
Exercise price
R$6.72
Weighted average share price
R$33.00
Expected volatility1
33.86%
Expected option life (days)
1,216
Dividend yield
0.64%
Risk-free interest rate
5.48%
At the end of 2014
Exercise price
R$6.95
Weighted average share price
R$9.55
Expected volatility1
36.00%
Expected option life (days)
851
Dividend yield
0.54%
Risk-free interest rate
5.72%
Fair value per share
R$3.84
Measured by the historical behavior of the value of the stock of the Company
37.41%
1,461
0.87%
3.92%
R$12.18
R$19.57
R$33.43
35.92%
1,277
0.70%
2.15%
R$16.14
R$20.37
R$33.00
33.86%
882
0.64%
4.84%
R$21.51
R$9.55
36.00%
517
0.54%
5.30%
R$0.10
1/2013
Discretionary (04/30/2013)
R$26.16
R$31.72
35.34%
1,461
0.82%
3.37%
R$11.92
R$26.78
R$33.00
33.86%
1,216
0.64%
5.48%
R$28.31
R$9.55
36.00%
851
0.54%
5.72%
R$0.12
1/2014
Basic (04/30/2013)
1/2014
Discretionary (04/30/2013)
R$7.98
R$28.12
33.45%
1,461
0.75%
12.47%
R$22.58
R$30.94
R$28.12
35.34%
1,461
0.75%
12.47%
R$11.16
R$8.06
R$31.83
156
R$9.55
36.00%
1,216
0.54%
6.02%
R$0.26
c. Method used and assumed premises to incorporate the effects from expected early exercise
There was no early exercise.
Board of Directors
Number of members
Highest individual compensation value
Lowest individual compensation value
Average individual compensation value
7
270,222
190,251
208,057
6.08
334,510
248,544
284,429
6.67
350,098
257,612
280,080
5
2,287,911
822,193
1,419,253
5.17
3,843,450
1,066,639
1,984,738
6
4,027,230
1,147,781
1,796,793
3
74,880
74,880
74,880
3
82,915
82,915
82,915
3
93,184
93,184
93,184
_______________________________________________
(1)
(2)
The Executive Officer occupied the position for the 12 months of the year.
Compensation paid for the Executive Officers who occupied the position for the 12 months of the year.
The Companys Fiscal Council was installed in the Ordinary General Meeting of April 19th, 2011,
and became a permanent body in the Ordinary and Extraordinary General Meeting of April 20th,
2012.
13.12 Contract agreements, insurance policies or other instruments that might
underlie the compensation or indemnity mechanisms applicable to managers in the
occurrence of dismissal or retirement
157
Not applicable. The Company has no contract agreements, insurance policies or other instruments
that might underlie the compensation or indemnity mechanisms applicable to managers in the
occurrence of dismissal or retirement.
13.13 With respect to the last three accounting reference periods, disclose the
percentage of total compensation for each board or committee as acknowledged in
the Company results and which applies to members of the Executive Board, of the
Board of Executive Officers or the Fiscal Board, that are somehow connected to direct
or indirect affiliates, in compliance with the accounting rules that govern this matter.
Board or Committee
Board of Directors
Board of Executive Officers
Fiscal Council
2012
17%
81%
2%
2014
11%
87%
2%
13.14 With respect to the last three accounting reference periods, disclose the
amounts as acknowledged in the Company results for compensation paid to members
of the Executive Board, of the Board of Executive Officers or the Fiscal Board, grouped
by board or committee, for any purpose other than the function they perform, such
as commissions, consulting or advisory services.
Not Applicable. There were no compensation of the Board of Directors, Executive Officers and
Fiscal Council members recognized in the results of the Company in the fiscal years ended in
2012, 2013 and 2014, grouped by board or committee, for any purpose other than the function
they perform, such as commissions, consulting or advisory services.
13.15 In the last 3 fiscal years, indicate the amounts recognized in the result of direct
or indirect companies under common control and subsidiaries of the issuer, related
compensation of Executive Officers and Fiscal Council members of Company
members, grouped by body, specifying why these amounts were assigned to these
individuals
Not Applicable. There were no compensation of Executive Officers and Fiscal Council members
recognized in the results of controlling companies, direct or indirect, of companies under common
control of subsidiaries of the Company in the fiscal years ended in 2012, 2013 and 2014.
13.16 Other relevant information
The number of members of the Management Board, Fiscal Council and Board of Executive Officers
of the Company specified in this Section 13 have been calculated in line with the requirements of
Ofcio-Circular/CVM/SEP / No. 002/2015, as detailed in the following spreadsheet for each fiscal
year:
Fiscal year 2015 (estimated)
January
February
March
April
May
June
July
August
September
October
November
December
Number of members of
Board of
Board of Directors
Executive Officers
7
5
7
4
7
4
7
4
7
4
7
4
7
4
7
4
7
4
7
4
7
4
7
4
Fiscal Council
3
3
3
3
3
3
3
3
3
3
3
3
158
Total
Number of Members (Total
divided by the number of months)
84
49
36
4.08
Number of members of
Board of
Board of Directors
Executive Officers
6
6
6
6
6
6
6
6
7
6
7
6
7
6
7
6
7
6
7
6
7
6
7
6
80
72
6.67
Board of Directors
7
6
6
6
6
6
6
6
6
6
6
6
73
6.08
Board of Directors
7
7
7
7
7
7
7
7
7
7
7
7
84
7
6
Number of members of
Board of
Executive Officers
5
5
5
5
5
5
5
5
5
5
5
7
62
5.17
Number of members of
Board of
Executive Officers
5
5
5
5
5
5
5
5
5
5
5
5
60
5
Fiscal Council
3
3
3
3
3
3
3
3
3
3
3
3
36
3
Fiscal Council
3
3
3
3
3
3
3
3
3
3
3
3
36
3
Fiscal Council
3
3
3
3
3
3
3
3
3
3
3
3
36
3
159
14.
HUMAN RESOURCES
160
a.
the number of employees (total, by groups based on activity and by geographic
location)
The chart below shows the number of our employees in the financial years ended December
2012, 2013 and 2014:
Year ended December 31
Operations
Corporate
Total
2012
2013
2014
43
597
2.651
852
346
-
604
838
423
-
238
239
492
844
310
4,756
227
2,092
220
2,076
The conclusion of the sale of the Industrial Services business unit was on November 30, 2013 .
In December 31, 2012, 2013 and 2014, 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:
2014
States
Alagoas
Amazonas
Bahia
Cear
Distrito Federal
Espirito 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
Sergipe
Total
Employees
Construo
Heavy
Construction
Real
Estate
43
0
0
8
11
25
0
0
11
0
0
15
0
0
17
33
0
0
0
118
0
238
0
9
11
12
16
10
6
2
13
0
11
9
17
11
29
0
21
0
62
0
239
0
0
2
4
3
0
0
0
0
0
3
0
0
3
6
0
1
0
21
0
0
13
55
68
104
16
6
18
15
0
43
13
19
53
149
0
32
0
240
0
844
1
6
27
19
7
13
8
12
5
7
36
21
14
22
61
8
17
5
199
4
492
0
0
5
2
6
2
0
0
0
0
5
0
2
5
108
0
6
0
79
0
220
1
28
108
116
161
41
20
43
33
7
113
43
52
111
386
8
77
5
719
4
2076
2013
Employees
States
Amazonas
Heavy
Construction
Industrial
Services
Real
Estate
Rental
Corporate
26
Total
33
161
Bahia
Cear
Distrito Federal
Esprito Santo
Gois
Maranho
Mato Grosso
Mato Grosso do Sul
Minas Gerais
Par
Paran
Pernambuco
Rio de Janeiro
Rio Grande do Sul
Santa Catarina
So Paulo
Sergipe
Total
31
26
75
28
16
54
113
261
604
51
44
87
26
28
1
24
54
24
40
43
119
60
211
838
26
14
4
13
8
10
5
6
39
26
14
28
77
26
4
114
2
423
6
1
8
2
10
2
4
162
3
29
227
114
85
174
41
36
39
29
6
119
50
56
129
471
89
4
615
2
2,092
The conclusion of the sale of the Industrial Services business unit was on November 30, 2013
2012
Employees
States
Amazonas
Bahia
Cear
Distrito
Federal
Esprito Santo
Gois
Maranho
Mato Grosso
Minas Gerais
Par
Paran
Pernambuco
Rio de Janeiro
Rio Grande do
Sul
So Paulo
Total
Heavy
Construction
Industrial
Services
Real Estate
Rental
Corporate
45
-
750
-
27
52
38
20
9
23
1
Total
27
890
48
71
116
196
24
49
130
12
654
460
26
25
6
21
66
49
42
120
9
4
43
31
14
30
65
4
7
2
17
182
51
25
10
21
140
31
65
792
957
338
65
16
428
274
597
437
2.651
199
852
105
346
60
310
1.075
4.756
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, 2012, 2013 and 2014, the Company
had, respectively, 223, 241 and 247 outsourced workers, as detailed below:
2014
State
Alagoas
Amazonas
Bahia
Distrito Federal
Espirito Santo
Fortaleza
Gois
1
2
3
4
3
3
2
1
8
2
7
2
10
4
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
1
0
2
10
5
12
5
14
6
162
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
2
1
1
5
3
2
4
17
1
4
1
21
1
4
4
4
12
8
4
2
14
1
10
0
30
4
0
0
0
2
0
0
0
7
0
0
0
3
0
0
0
0
0
0
0
0
4
0
0
0
2
0
1
0
0
1
0
0
1
9
0
0
0
3
0
7
5
5
20
11
6
7
51
2
14
1
59
5
Total
81
131
12
17
247
2013
State
Rio de Janeiro
17
11
24
60
So Paulo
19
15
39
Minas Gerais
12
18
Esprito Santo
Bahia
14
Cear
12
Pernambuco
15
Paran
15
20
Distrito Federal
12
Gois
Par
Manaus
10
Mato Grosso
Sergipe
Maranho
Total
76
115
38
241
2012
State
Rio de Janeiro
18
23
48
So Paulo
26
29
59
Minas Gerais
10
Esprito Santo
Bahia
20
33
Cear
10
Pernambuco
13
Paran
163
12
Distrito Federal
Gois
Par
Manaus
Mato Grosso
77
103
23
20
223
Total
c.
The index of employee turnover (churn) in financial years ending in 2014, 2013 and 2012 was
3.13%, 3.2% and 4.6%, respectively, excluding the employees allocated in the Industrial Services
business unit in 2013, when the business unit was sold
d.
a.
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
164
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 2014 the
Company distributed 18,762 food baskets to our employees, of which 1,523 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 nonadministrator employees
The Company has one stock option plan that benefits their employees, Plano de Opes de
Compra de Aes 2010, previously granted purchase options remaining.
The Company has two stock option plans that benefit their employees, namely, " Plano Especial
Top Mills and Plano de Opes de Compra de Aes 2010, previously granted purchase options
remaining.
165
Company managers who have held their positions in 2012 for more than 6 (six)
months.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;
b. 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
166
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.
167
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 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 1/2014 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,
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
168
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.
c.
14.4
At December 31, 2014, 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.
169
15.
OWNERSHIP
170
15.1/15.2
Controling Group:
Participates in
shareholder
agreement
Controlling
shareholder
Quantity
of
common
shares
%
Capital
Stock
Argentinian
Yes
Yes
15,685,349
12.18%
289.858.347-20
Brazilian
Yes
Yes
5,354,929
4.18%
Individual
042.695.577-37
Brazilian
Yes
Yes
2,156,845
1.68%
Individual
073.165.257-62
Brazilian
Yes
Yes
2,156,845
1.68%
02/28/2014
Individual
127.276.837-66
Brazilian
Yes
Yes
2,245,345
1.75%
05/05/2014
Individual
124.175.657-06
Brazilian
Yes
Yes
1,000
0.00%
02/28/2014
Entity
14.740.333/0001-61
Spanish
Yes
Yes
17,728,280
13.84%
Brandes Investment
Partners
09/21/2015
Entity
American
No
No
6.710.804
5,24%
10/02/2012
Entity
Brazilian
No
No
6,323,300
5.00%
Shares in Treasury
03/31/2015
Entity
No
No
2,278,422
1.78%
Yes
Yes
67,416,806
52.67%
Date of last
amendment
Type of
Person
CNPJ/CPF
Nationality
05/05/2014
Individual
098.921.337-49
02/28/2014
Individual
02/28/2014
Antonia Kjellerup
02/28/2014
Name
01.701.201/0001-89
U
F
Outros
Total
128,057,925
Date of last
amendment
Type of
Person
CNPJ/CPF
Nationality
3/14/2014
Entity
N/A
Malta
Data da
ltima
alterao
Tipo
Pessoa
CNPJ/CPF
Nacionalidade
3/14/2014
Individual
734.150.811-68
Argentino
U
F
Participates in
shareholder
agreement
Controlling
shareholder
Quantity
of
common
shares
%
Capital
Stock
Yes
Yes
100%
Participa do
acordo de
acionistas
Acionista
Controlador
Qtd aes
ordinrias
Partici
pao
Yes
Yes
100%
Malachite Limited
Name
Nicolas Nacht
15.3
U
F
1066
399
344
79,839,249
62.35
171
15.4
Acionistas
Controladores
HSBC
Brandes
Others
5.00%
5.24%
57.91%
35.39%
MILLS ESTRUTURAS E
SERVIOS DE ENGENHARIA
S.A.
Members:
Andres Cristian Nacht, Jytte Kjellerup Nacht, Tomas Richard Nacht, Antonia Kjellerup
Nacht, Pedro Kjellerup Nacht and Francisca Kjellerup Nacht (jointly, Nacht Family);
Snow Petrel S.L. (together with the Natch Family, Members, and
b.
Date: 02.28.2014
c.
Term: 3 years
d.
Description of the clauses concerning the exercise of voting rights and control power.
-
The vote of the parties with respect to general meetings will be done by shareholder
Andres Cristian Nacht, unless any member of the agreement requires a previous meeting,
when the resolution will be set by the majority of votes within the controlling block,
subject to veto rights for specific matters:
172
Reduction of the mandatory dividend paid by the Company, if below the 25%
over net earnings, as determined by Law 6.404/76;
Capital increase or reduction, apart from when the capital increase is the Board
of Directors responsibility;
Cancelling the register of public company and discontinuing the best practices in
corporate governance as determined by Novo Mercado;
Request from judicial reorganization or voluntary bankruptcy
Approval of evaluation reports to be sent to general shareholders meeting
approval
Change in the corporate object of the Company
Change in the minimum or maximum number of members of the Board of
Directors, as stated on the Companys Bylaws, or change in the matters within
the Board of Directors competence;
Change in the provisions established on the Companys Bylaws related to
distribution of profits, profits reserves and retained earnings.
Change in the Chapter VII of the Companys Bylaws
Dissolution, liquidation or suspension of the condition of liquidation of
the Company and accounts approval by the settling participants.
The agreement does not bind the votes of the Board of Directors members or of other bodies of
the Company.
e.
When a previous meeting is not requested, Andres Cristian Nacht will be responsible for
appointing all members of the Companys Board of Directors that the controlling block is allowed
to elect.
-
In the case a previous meeting is requested for the appointment of the members of the
Board of Directors:
Out of the total number of members of the Board of Directors that the parts,
altogether, can elect on the General Shareholders Meeting, each member of the
agreement is entitled to elect a number of members that is proportional to its
stake in the share capital of the Company (regardless of the shares of
shareholders who are not part of the Shareholders Agreement);
In the case the result of the calculation above is a fraction, the ones superior to
0.5 will be rounded up to 1.0;
Regardless of the rounding above mentioned, the member of the agreement with
the highest stake will have the right to appoint the majority of members of the
Board of Directors which the controlling group is entitled to elect.
Whenever the Chairman is appointed by the members of the controlling group or by the
Board of Directors, the appointment will be under Andres Cristian Nachts responsibility.
The rules abovementioned shall apply mutatis mutandis to the Fiscal Council,
The Shareholders Agreement does not contain prepositions related to the appointment
of the Board of Officers members.
f.
Description of the clauses concerning the transfer of shares and the preference for buying
them.
-
The Shareholders Agreement states that the shares of its members cannot be sold (lockup) during its term.
As an exception from the general lock-up rule, each member of the Agreement can sell,
during its term, up to 10% of its shares (Released Shares).
173
In the case Released Shares are being sold by one member, the other members shall
have the preemptive right to acquire the shares for the price asked by the selling member.
In the case the non-selling shareholders do not acquire Released Shares using their
preemptive rights, the selling shareholders may sell them on the stock exchange at a
price which is not less than that offered to non-selling members of the Agreement.
g.
Description of the clauses restricting or binding the voting rights of members of the board.
See item d. There are no prepositions concerning the transfer of shares and the preference for
buying them.
15.6 Significant Changes in the shareholdings of Members of the Control Group
and directors of the Company in the last 3 financial years
174
Snow Petrel also reported that: (a) it does not hold, directly or indirectly, including through a
person connected to it, other shares issued by the Company, subscription warrants or convertible
debentures, subscription rights or an option to purchase shares issued by the Company; (b) due
to the transfer of the shares, Snow Petrel will succeed Jeroboam as a party to the Nacht
Participaes S.A. Shareholders Agreement executed on February 11, 2011; (c) Snow Petrel, as
was Jeroboam until its extinction, is controlled by Sr. Nicolas Nacht; (d) Snow Petrel intends to
continue to hold shared control of the Company, this being the main objective of its participation;
and (e) since all of the capital of Jeroboam was already held by Snow Petrel, the transfer
discussed in this notice does not impact, in any way, control of the Company.
15.7
175
16.
176
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, 2013, 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 2013.
16.2
There has not been any transactions with related parties during the last three fiscal years.
16.3
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.
177
17.
SHARE CAPITAL
178
17.1
17.2
1/24/2012
Board of
Directors
1/24/2012
R$ 398,490.09
Private
Subscription
32,583
0.0755
R$
12.23
R$
Unit
2/28/2012
Board of
Directors
2/28/2012
R$ 4,227.33
Private
Subscription
339
0.0008
R$
12.47
R$
Unit
4/2/2012
Board of
Directors
4/2/2012
R$ 112,171.78
Private
Subscription
47,131
0.0212
R$
2.38
R$
Unit
4/24/2012
Board of
Directors
4/24/2012
R$
4,613,384.16
Private
Subscription
371,448
0.8736
R$
12.42
R$
Unit
4/24/2012
Board of
Directors
4/24/2012
R$ 892,862.10
Private
Subscription
44,421
0.1691
R$
20.10
R$
Unit
179
Cash
Cash
Cash
Cash
Cash
7/2/2012
Board of
Directors
7/2/2012
R$ 31,276.80
Private
Subscription
13,032
0.0059
R$2.40
R$
Unit
8/9/2012
Board of
Directors
8/9/2012
R$ 886,108.00
Private
Subscription
70,550
0.1660
12.56
R$
Unit
8/9/2012
Board of
Directors
8/9/2012
R$ 20,000.00
Private
Subscription
1,600
0.0037
12.50
R$
Unit
8/9/2012
Board of
Directors
8/9/2012
R$
1,633,370.82
Private
Subscription
80,422
0.3056
20.31
R$
Unit
11/12/2012
Board of
Directors
11/12/2012
R$ 445,178.37
Private
Subscription
35,529
0.0830%
12.53
R$
Unit
11/12/2012
Board of
Directors
11/12/2012
R$ 18,660.00
Private
Subscription
1,500
0.0035%
12.44
R$
Unit
11/12/2012
Board of
Directors
11/12/2012
R$ 982,280.40
Private
Subscription
48,151
0.1830%
20.40
R$
Unit
2/8/2013
Board of
Directors
2/8/2013
R$ 7,494.00
Private
Subscription
600
0.0014%
12.49
R$
Unit
purchased as brokerage
note sent by the beneficiary
to the human resources
Department
of
the
company, (ii) restated
according to the IPCA, from
the date of
The
price
is
based
according to the Companys
stock option plan (Special
TopMills Plan, Special Plan)
The price is based on the
issue price of Mills shares
during the IPO, adjusted
monetarily by the IPCA, as
from the option contract
date
(05/31/2011),
deducted from the dividend
and interest on capital
values per share paid by
Mills, until the fiscal date
(2010/1 Plan)
The price is based on the
issue price of Mills shares
during the IPO, adjusted
monetarily by the IPCA, as
from the option contract
date
(05/31/2011),
deducted from the dividend
and interest on capital
values per share paid by
Mills, until the fiscal date
(2010/1 Plan)
The price is based on the
issue price of Mills shares
during the IPO, adjusted
monetarily by the IPCA, as
from the option contract
date
(05/31/2011),
deducted from the dividend
and interest on capital
values per share paid by
Mills, until the fiscal date
(2010/1 Plan)
The price is based on the
issue price of Mills shares
during the IPO, adjusted
monetarily by the IPCA, as
from the option contract
date, deducted from the
dividend and interest on
capital values per share
paid by Mills, until the fiscal
date (2010/1 Plan)
The price is based on the
issue price of Mills shares
during the IPO, adjusted
monetarily by the IPCA, as
from the option contract
date, deducted from the
dividend and interest on
capital values per share
paid by Mills, until the fiscal
date (2010/1 Plan)
The exercise price of
options granted under this
program is equal to (i) the
average price of shares
purchased as brokerage
note sent by the beneficiary
to the human resources
Department
of
the
company, (ii) restated
according to the IPCA, as
from the option contract
date, (2011/1 Plan)
The price is based on the
issue price of Mills shares
during the IPO, adjusted
monetarily by the IPCA, as
from the option contract
date, deducted from the
180
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
2/8/2013
Board of
Directors
2/8/2013
R$ 37,820.00
Private
Subscription
3,050
0.0070%
12.40
R$
Unit
2/8/2013
Board of
Directors
2/8/2013
R$
1,819,309.96
Private
Subscription
88,574
0.3384%
20.54
R$
Unit
4/10/2013
Board of
Directors
4/10/2013
R$ 169,264.59
Private
Subscription
66,903
0.0314%
2.53
R$
Unit
5/9/2013
Board of
Directors
5/9/2013
R$
2,973,204.90
Private
Subscription
230,481
0.5509%
12.9
R$
Unit
5/9/2013
Board of
Directors
5/9/2013
R$
2,919,849.05
Private
Subscription
138,185
0.5381%
21.13
R$
Unit
5/9/2013
Board of
Directors
5/9/2013
R$ 143,307.36
Private
Subscription
24,372
0.0263%
5.88
R$
Unit
5/9/2013
Board of
Directors
5/9/2013
R$
3,072,963.25
Private
Subscription
153,265
0.5631%
20.05
R$
Unit
5/22/2013
Board of
Directors
5/22/2013
R$ 39,555,60
Private
Subscription
15,512
0.0072%
2.55
R$
Unit
8/15/2013
Board of
Directors
8/15/2013
R$
1,298,869.95
Private
Subscription
101,395
0.2367%
12.81
R$
Unit
181
Cash
Cash
Cash
Cash
Cash
8/15/2013
Board of
Directors
8/15/2013
R$
1,180,587.20
Private
Subscription
55,952
0.2146%
21.10
R$
Unit
8/15/2013
Board of
Directors
8/15/2013
R$ 41,029.52
Private
Subscription
7,148
0.0074%
5.74
R$
Unit
8/15/2013
Board of
Directors
8/15/2013
R$ 586,700.00
Private
Subscription
29,335
0.1064%
20.00
R$
Unit
11/01/2013
Board of
Directors
11/01/2013
R$ 109,892.16
Private
Subscription
5,152
0.0199%
21.33
R$
Unit
11/01/2013
Board of
Directors
11/01/2013
R$ 19,117.35
Private
Subscription
945
0.0035%
20.23
R$
Unit
11/14/2013
Board of
Directors
11/14/2013
R$ 248,118
.00
Private
Subscription
19,086
0.015%
13.00
R$
Unit
11/14/2013
Board of
Directors
11/14/2013
R$ 368,743.40
Private
Subscription
17,231
0.014%
21.40
R$
Unit
182
Cash
Cash
Cash
Cash
Cash
Cash
Cash
11/14/2013
Board of
Directors
11/14/2013
R$ 10,377.40
Private
Subscription
1,780
0.001%
5.83
R$
Unit
11/14/2013
Board of
Directors
11/14/2013
R$ 559,728.00
Private
Subscription
27,600
0.022%
20.28
R$
Unit
01/10/2014
Board of
Directors
01/10/2014
R$ 78.12
Private
Subscription
0.000005
13.02
R$
Unit
01/10/2014
Board of
Directors
01/10/2014
R$ 124,155.72
Private
Subscription
5,772
0.0045
21.51
R$
Unit
01/10/2014
Board of
Directors
01/10/2014
R$ 4,095.36
Private
Subscription
711
0.0006
5.76
R$
Unit
01/10/2014
Board of
Directors
01/10/2014
R$ 61,170.00
Private
Subscription
3,000
0.0024
20.39
R$
Unit
02/05/2014
Board of
Directors
02/05/20147
R$ 658,784.62
Private
Subscription
50,174
0.0394
13.13
R$
Unit
purchased as brokerage
note sent by the beneficiary
to the human resources
Department
of
the
company, (ii) restated
according to the IPCA, as
from the option contract
date, (2011/1 Plan)
The exercise price of
options granted under this
program is equal to (i) the
average price of shares
purchased as brokerage
note sent by the beneficiary
to the human resources
Department
of
the
company, (ii) restated
according to the IPCA, as
from the option contract
date, (2012/1 Plan)
The exercise price of
options granted under this
program is equal to (i) the
average price of shares
purchased as brokerage
note sent by the beneficiary
to the human resources
Department
of
the
company, (ii) restated
according to the IPCA, as
from the option contract
date, (2012/1 Plan)
The price is based on the
issue price of Mills shares
during the IPO, adjusted
monetarily by the IPCA, as
from the option contract
date, deducted from the
dividend and interest on
capital values per share
paid by Mills, until the fiscal
date (2010/1 Plan)
The exercise price of
options granted under this
program is equal to (i) the
average price of shares
purchased as brokerage
note sent by the beneficiary
to the human resources
Department
of
the
company, (ii) restated
according to the IPCA, as
from the option contract
date, (2011/1 Plan)
The exercise price of
options granted under this
program is equal to (i) the
value of the shareholders
equity of the shares on
December 31 of the tax
year immediately preceding
the date of the award (ii)
restated according to the
IPCA, as from the option
contract date, (2012/1
Plan)
The exercise price of
options granted under this
program is equal to (i) the
average price of shares
purchased as brokerage
note sent by the beneficiary
to the human resources
Department
of
the
company, (ii) restated
according to the IPCA, as
from the option contract
date, (2012/1 Plan)
The price is based on the
issue price of Mills shares
during the IPO, adjusted
monetarily by the IPCA, as
183
Cash
Cash
Cash
Cash
Cash
Cash
Cash
02/05/2014
Board of
Directors
02/05/20147
R$ 300,002.50
Private
Subscription
13,825
0.0109
21.70
R$
Unit
02/05/2014
Board of
Directors
02/05/20147
R$ 20,648.74
Private
Subscription
3,554
0.0028
5.81
R$
Unit
02/05/2014
Board of
Directors
02/05/20147
R$ 231,300.00
Private
Subscription
11,250
0.0088
20.56
R$
Unit
02/05/2014
Board of
Directors
02/05/20147
R$ 52,273.80
Private
Subscription
7,710
0.0061
6.78
R$
Unit
02/14/2014
Board of
Directors
02/14/2014
R$ 23,951.20
Private
Subscription
1,820
0.0014
13.16
R$
Unit
02/14/2014
Board of
Directors
02/14/2014
R$ 84,568.60
Private
Subscription
3,890
0.0031
21.74
R$
Unit
02/14/2014
Board of
Directors
02/14/2014
R$ 57,680.00
Private
Subscription
2,800
0.0022
20.60
R$
Unit
184
Cash
Cash
Cash
Cash
Cash
Cash
Cash
05/15/2014
Board of
Directors
05/15/2014
R$
3,360,053.76
Private
Subscription
250,004
0.1961
13.44
R$
Unit
05/15/2014
Board of
Directors
05/15/2014
R$
2,117,680.20
Private
Subscription
95,391
0.0748
22.20
R$
Unit
05/15/2014
Board of
Directors
05/15/2014
R$ 147,064.00
Private
Subscription
24,800
0.0195
5.93
R$
Unit
05/15/2014
Board of
Directors
05/15/2014
R$
2,135,596.50
Private
Subscription
101,550
0.0797
21.03
R$
Unit
05/15/2014
Board of
Directors
05/15/2014
R$ 443,597.65
Private
Subscription
63,827
0.0501
6.95
R$
Unit
08/15/2014
Board of
Directors
08/15/2014
R$ 64,128.00
Private
Subscription
4,800
0.0037
13.36
R$
Unit
08/15/2014
Board of
Directors
08/15/2014
R$ 33,901.00
Private
Subscription
5,845
0.0046
5.80
R$
Unit
185
Cash
Cash
Cash
Cash
Cash
Cash
Cash
08/15/2014
Board of
Directors
08/15/2014
R$ 32,581.00
Private
Subscription
1,550
0.0012
21.02
R$
Unit
08/15/2014
Board of
Directors
08/15/2014
R$ 134,013.00
Private
Subscription
19,650
0.0153
6.82
R$
Unit
17.3
Not applicable, as there wasnt any reductions in the Companys capital in the last three fiscal
years.
17.5
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$553,420,638.63 (five hundred fifty-three
million, four hundred twenty thousand, six hundred thirty eight reais and sixty-three centavos),
represented by 127.395.485 (one hundred twenty-seven million, three hundred ninety-five
thousand, four hundred, eighty-five) common, nominative, inscribed and without par value
shares.
186
Cash
Cash
18.
SECURITIES
187
18.1
or rights relating to securities convertible into shares, or that give the right to their subscription
or acquisition, as applicable, which comes to result in the sale of Control of the Company, and
(b) in the case of a transfer of control of company(ies) holding the Power of Control of the
Company, in which case, the Selling Controlling Shareholder shall be obliged to declare to the
BM&FBOVESPA the value assigned to the Company in such transaction and provide supporting
documentation.
18.3 Description of exceptions and suspension clauses relative to ownership or
political rights set forth in the bylaws
Not applicable, as there are no exceptions or suspension clauses relative to ownership or political
rights set forth in the Companys bylaws.
18.4 Information on the volume of trading as well as minimum and maximum
values for securities traded on the stock exchange or the over-the-counter market, in
each of the quarters in the last 3 fiscal years.
Data
Trmino
Trimestre
Valor
Mobilirio
Espcie
Classe
Mercado
03/31/2012
Shares
Common
Stock
Exchange
Bolsa de Valores,
Mercadorias e
Futuros
Stock
Exchange
Bolsa de Valores,
Mercadorias e
Futuros
Stock
Exchange
Bolsa de Valores,
Mercadorias e
Futuros
Bolsa de Valores,
Mercadorias e
Futuros
Entidade
Administrativa
Volume
financeiro total
negociado
(R$)
Valor
maior
cotao
(R$)
Valor
menor
cotao
(R$)
474,013,331
23.78
16.97
R$ per
unit
503,547,358
27.60
22.08
R$ per
unit
708,267,760
30.00
25.25
R$ per
unit
654,291,178
34.00
28.28
R$ per
unit
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
Fator
cotao
(R$)
BM&FBOVESPA -
BM&FBOVESPA -
06/30/2012
Shares
Common
BM&FBOVESPA -
09/30/2012
Shares
Common
BM&FBOVESPA -
12/31/2012
Shares
Common
Stock
Exchange
03/31/2013
Shares
Common
Stock
Exchange
Bolsa de Valores,
Mercadorias e
Futuros
Stock
Exchange
Bolsa de Valores,
Mercadorias e
Futuros
Stock
Exchange
Bolsa de Valores,
Mercadorias e
Futuros
Bolsa de Valores,
Mercadorias e
Futuros
06/30/2013
09/30/2013
Shares
Shares
Common
Common
BM&FBOVESPA -
BM&FBOVESPA -
BM&FBOVESPA -
BM&FBOVESPA -
12/31/2013
Shares
Common
Stock
Exchange
03/31/2014
Shares
Common
Stock
Exchange
Bolsa de Valores,
Mercadorias e
Futuros
06/31/2014
Shares
Common
Stock
Exchange
Bolsa de Valores,
Mercadorias e
Futuros
Stock
Exchange
Bolsa de Valores,
Mercadorias e
Futuros
09/30/2014
Shares
Common
BM&FBOVESPA -
BM&FBOVESPA -
BM&FBOVESPA -
189
12/31/2014
Shares
Common
Stock
Exchange
BM&FBOVESPA -
Bolsa de Valores,
Mercadorias e
Futuros
757,968,011
9.55
8.21
b Quantity
3 Commercial Notes
c Total amount
Issue date
December 7, 2011
Maturity date
December 1, 2012
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.
e Restrictions on trading
f Convertibility
g Possibility of redemption:
(i) Possibility of redemption
Not applicable. The Company may not redeem the promissory notes in advance.
if debt securities,
where applicable:
indicate
(ii) interest
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, Not applicable. The second issue of promissory notes does not have collateral or
description of the goods used surety.
as collateral
(iv)
in the absence of a
guarantee, if the credit is The credit of the promissory note is unsecured.
secured or subordinate
v.
possible restrictions
imposed on the issuer
distribution
assets
the dividend
See terms of acceleration described in item 18.10 below.
the sale of certain
190
R$ per
unit
new debt
the possibility of
securities
vi
the
fiduciary
agent,
indicating the key terms of the Not applicable.
contract
i
Promissory notes of the third issue, issued in a single series, now fully redeemed.
a Identification of securities
b Quantity
30 Commercial Notes
c Total amount
Issue date
Maturity date
December 3, 2012
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.
e Restrictions on trading
f Convertibility
g Possibility of redemption:
(i) Possibility of redemption
Not applicable. The Company may not redeem the promissory notes in advance.
if debt securities,
where applicable:
indicate
(ii) interest
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
(iii) .
guarantee and, if in
the
form
of
collateral, Not applicable. The third issue of promissory notes does not have collateral or
description of the goods used surety.
as collateral
191
(iv)
in the absence of a
guarantee, if the credit is The credit of the promissory note is unsecured.
secured or subordinate
(v)
possible restrictions
imposed on the issuer
distribution
assets
debt
the dividend
securities
(vi)
the fiduciary agent,
indicating the key terms of the Not applicable.
contract
i
None
Promissory notes of the fourth issue, issued in a single series, now fully redeemed.
a Identification of securities
b Quantity
20 Commercial Notes
c Total amount
Issue date
Maturity date
August 8, 2014
e Restrictions on trading
f Convertibility
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.
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
(ii) Assumptions and method the fourth issue corresponds to the nominal value of the commercial notes plus the
of calculating the redemption remuneration, calculated pro rata temporis since the date of issue until the date of
value
effective payment, but without payment of prize or penalty, according to the terms
and conditions set forth in the notes.
192
(ii) interest
(iii) .
guarantee and, if
in the form of collateral, Not applicable. The fourth issue of promissory notes does not have collateral or
description of the goods used surety.
as collateral
(iv)
in the absence of a
guarantee, if the credit is The credit of the promissory note is unsecured.
secured or subordinate
(v)
possible restrictions
imposed on the issuer
distribution
assets
the dividend
new debt
the possibility of
securities
None
Debentures
Identification of securities
Issue date
Maturity date
Quantity
27,000
Total amount
270,000,000.00
Restrictions on trading
Description
restrictions
of
yes
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
193
Convertibility
Not applicable
Possibility of redemption
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 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
the dividend
distribution
Not applicable. The first 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 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.
conditions for amendment of
Not included in the quorum above are: I. quorums expressly provided for in other
the rights conferred by such
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.
Other relevant characteristics
None
Debentures
Identification of securities
Quantity
27,000
194
Total amount
R$ 270,000,000.00
Issue date
Maturity date
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
Possibility of redemption
Not applicable
For more information on maturity date, please refer to item 18.10 below.
The remuneration of each of the First Series Debentures will be as follows:
I. Monetary Adjustment: The nominal value of the debentures of the first issue will
not be monetarily updated.
II. Compensatory Interests: On the nominal value of each of the First Series
Debentures will incur interest corresponding to 100% of the cumulative variation of
the DI rate plus surcharge of 0.88% (eighty-eight per cent) per year.
ii.
Interest
iii.
guarantee and, if in
the
form
of
collateral,
Not applicable. The second issue of debentures does not have collateral or surety.
description of the goods used as
collateral
iv.
in the absence of a
The Debentures will be unsecured, in accordance with Article 58, caput of the Law
guarantee, if the credit is
No. 6,404/76.
secured or subordinate
v.
possible restrictions
imposed on the issuer
distribution
assets
debt
the dividend
195
securities
None
Debentures
Identification of securities
Quantity
20,000
Total amount
R$ 200,000,000.00
Issue date
Maturity date
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
Possibility of redemption
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
Assumptions and method of
Offer. The amount to be paid in respect of each Debenture indicated by their
calculating the redemption
respective holders into joining the Optional Early Redemption Offer will be equal to
value
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:
i. Conditions for acceleration
For more information on maturity date, please refer to item 18.10 below.
ii.
I. Monetary Adjustment: The nominal value of the debentures of the third issue will
not be monetarily updated.
Interest
196
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.
iii.
guarantee and, if in
the
form
of
collateral,
Not applicable. The third issue of debentures does not have collateral or surety.
description of the goods used
as collateral
iv.
in the absence of a
The Debentures will be unsecured, in accordance with Article 58, caput of the Law
guarantee, if the credit is
No. 6,404/76.
secured or subordinate
v.
possible restrictions
imposed on the issuer
distribution
assets
debt
securities
the dividend
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
197
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
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)
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.
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.
18.9 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.
18.10 Other information which the Company deems relevant
Promissory notes of the first issue, issued in a single series, now fully redeemed
Promissory notes of the second issue, issued in a single series, now fully redeemed.
a Identification of securities
b Quantity
3 Commercial Notes
c Total amount
d Issue date
December 7, 2011
Maturity date
e
Restrictions on trading
f
Convertibility
December 1, 2012
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.
g Possibility of redemption:
(i) Possibility of redemption
(ii) Assumptions and method
of calculating the redemption
value
Not applicable. The Company may not redeem the promissory notes in advance.
199
Subject to the provisions of the cartouches in Commercial Notes, the holder could
declare early maturity of the obligations under the Commercial Paper, and may
demand immediate payment of the Nominal Amount plus the remuneration, the
occurrence of any of the following events, provided in addition to other cartouches
and those provided by law (each event, an "Event of Default"): (i) declaration of
acceleration of any other Commercial Paper; (ii) default by the Company of any
monetary obligation due under the Commercial Paper; (iii) default by the Company
of any non-pecuniary obligation due under the Commercial Paper; (iv) sale,
assignment or pledge any form of transfer or promise to transfer to third parties
in whole or in part, by the Company of any of the Obligations, without the prior
consent in writing of the Holder; (v) transformation of the Company into a privately
held Company or any other social arrangement; (vi) approval of any corporate
reorganization involving the Company, without the prior consent in writing of the
Holder; (vii) change in the Company's Control; (viii) Changing the corporate
purpose, unless such change does not result in changing the company's main
activity; (ix) acceleration of any financial obligation of the Company and/or any
Subsidiary of the Company, the value of which, individually or in aggregate, be
less than R$ 5,000,000.; (x) default by the Company due to mandatory early
redemption of subscription and payment of the Debentures, as provided under
"Early Redemption" above, or (xi) the Company does not use the net proceeds of
the offering as described under "Use of Proceeds" in the cartouche.
The nominal value of the promissory note will not be updated monetarily.
Over the nominal value of each note there will be remuneration interest of 100%
of accumulated variation of the DI rate plus spread 1.10% per annum from the
date of issue until the date of the effective payment of their commercial note.
The remuneration shall be paid in full by the due date or the date of any anticipated
payment.
(ii) interest
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, Not applicable. The second issue of promissory notes does not have collateral or
description of the goods used surety.
as collateral
(iv)
in the absence of a
guarantee, if the credit is The credit of the promissory note is unsecured.
secured or subordinate
v.
possible restrictions
imposed on the issuer
distribution
assets
the dividend
new debt
the possibility of
securities
vi
the
fiduciary
agent,
indicating the key terms of the Not applicable.
contract
None.
Promissory notes of the third issue, issued in a single series, now fully redeemed
200
a Identification of securities
b Quantity
30 Commercial Notes
c Total amount
d Issue date
Maturity date
December 3, 2012
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.
Restrictions on trading
f
Convertibility
g Possibility of redemption:
(i) Possibility of redemption
(ii) Assumptions and method of
calculating the redemption
value
h if debt securities,
where applicable:
Not applicable. The Company may not redeem the promissory notes in advance.
indicate
Regular maturity on December 3, 2012, when should be paid the value of the
principal and the remuneration (interest).
Subject to the provisions of the cartouches in Commercial Notes, the holder could
declare early maturity of the obligations under the Commercial Paper, and may
demand immediate payment of the Nominal Amount plus the remuneration, the
occurrence of any of the following events, provided in addition to other cartouches
and those provided by law (each event, an "Event of Default"): (i) declaration of
acceleration of any other Commercial Paper; (ii) default by the Company of any
monetary obligation due under the Commercial Paper; (iii) default by the
Company of any non-pecuniary obligation due under the Commercial Paper; (iv)
(i) maturity date, including sale, assignment or pledge any form of transfer or promise to transfer to third
conditions for acceleration
parties in whole or in part, by the Company of any of the Obligations, without the
prior consent in writing of the Holder; (v) transformation of the Company into a
privately held Company or any other social arrangement; (vi) approval of any
corporate reorganization involving the Company, without the prior consent in
writing of the Holder; (vii) change in the Company's Control; (viii) Changing the
corporate purpose, unless such change does not result in changing the company's
main activity; (ix) acceleration of any financial obligation of the Company and/or
any Subsidiary of the Company, the value of which, individually or in aggregate,
be less than R$ 5,000,000.; (x) default by the Company due to mandatory early
redemption of subscription and payment of the Debentures, as provided under
"Early Redemption" above, or (xi) the Company does not use the net proceeds of
the offering as described under "Use of Proceeds" in the cartouche.
The nominal value of the promissory note will not be updated monetarily.
Over the nominal value of each note there will be remuneration interest of 100%
of accumulated variation of the DI rate plus spread 4.9% per annum from the
date of issue until the date of the effective payment of their commercial note.
(ii) interest
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
(iii) .
guarantee and, if in
the
form
of
collateral, Not applicable. The second issue of promissory notes does not have collateral or
description of the goods used surety.
as collateral
201
(iv)
in the absence of a
guarantee, if the credit is The credit of the promissory note is unsecured.
secured or subordinate
(v)
possible restrictions
imposed on the issuer
distribution
assets
debt
the dividend
securities
(vi)
the fiduciary agent,
indicating the key terms of the Not applicable.
contract
None
Promissory notes of the fourth issue, issued in a single series, now fully redeemed
a Identification of securities
b Quantity
20 Commercial Notes
c Total amount
Issue date
Maturity date
August 8, 2014
e Restrictions on trading
f Convertibility
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.
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
202
Subject to the provisions of the cartouches in Commercial Notes, the holder could declare early maturity
of the obligations under the Commercial Paper, and may demand immediate payment of the Nominal
Amount plus the remuneration, the occurrence of any of the following events, provided in addition to
other cartouches and those provided by law (each event, an "Event of Default"): (i) declaration of
acceleration of any other Commercial Paper; (ii) default by the Company of any monetary obligation
due under the Commercial Paper; (iii) default by the Company of any non-pecuniary obligation due
under the Commercial Paper; (iv) sale, assignment or pledge any form of transfer or promise to transfer
to third parties in whole or in part, by the Company of any of the Obligations, without the prior consent
in writing of the Holder; (v) transformation of the Company into a privately held Company or any other
social arrangement; (vi) approval of any corporate reorganization involving the Company, without the
prior consent in writing of the Holder; (vii) change in the Company's Control; (viii) Changing the
corporate purpose, unless such change does not result in changing the company's main activity; (ix)
acceleration of any financial obligation of the Company and/or any Subsidiary of the Company, the
value of which, individually or in aggregate, be less than R$ 5,000,000.; (x) default by the Company
due to mandatory early redemption of subscription and payment of the Debentures, as provided under
"Early Redemption" above, or (xi) the Company does not use the net proceeds of the offering as
described under "Use of Proceeds" in the cartouche.
The Principal of each of the Notes shall not be subject to monetary adjustment. The outstanding
balance of the Principal of each Note shall bear interest at the rate of 106% (one hundred and six
percent) of accumulated variation of daily average rates of the Interbank Deposits DI (DI Depsitos
Interfinanceiros) for one day, over extra-group, denominated in percentage form per annum, based
on 252 (two hundred and fifty-two) business days, calculated and disclosed by CETIP in its daily report
available at its website (http://www.cetip.com.br) ("DI Rate") ("Interest"), calculated on an
exponential and cumulative basis, pro rata temporis based on the number of business days elapsed
from the Date of Issuance to the effective payment date, and shall comply with the calculation criteria
of the "Caderno de Frmulas de Notas Comerciais e Obrigaes CETIP21", available at CETIP's
website (http://www.cetip.com.br). The Interest shall be fully paid on the Maturity Date or on the
date of the eventual early maturity, according to the terms and conditions set forth in the Notes.
(ii) interest
(iii) .
guarantee and, if
in the form of collateral,
Not applicable. The fourth issue of promissory notes does not have collateral or surety.
description of the goods used
as collateral
(iv)
in the absence of a
guarantee, if the credit is The credit of the promissory note is unsecured.
secured or subordinate
(v)
possible restrictions
imposed on the issuer
distribution
assets
the dividend
new debt
the possibility of
securities
None
Debentures
Identification of securities
Issue date
Maturity date
203
Quantity
27,000
Total amount
270,000,000.00
Restrictions on trading
Description
restrictions
of
Yes
The debentures were the subject of public distribution with restricted placement
efforts, pursuant to CVM Instruction 476, under the firm commitment and,
trading
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
The obligations may be declared mature in advance, if the terms and conditions set
forth in the
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 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
204
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.
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.
Interest
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,
Not applicable. The first issue of debentures does not have collateral or surety.
description of the goods used as
collateral
iv.
in the absence of a
The Debentures will be unsecured, in accordance with Article 58, caput of the Law
guarantee, if the credit is
No. 6,404/76.
secured or subordinate
v.
possible restrictions
imposed on the issuer
distribution
assets
debt
securities
the dividend
205
None
Debentures
Identification of securities
Issue date
Maturity date
206
27,000
Total amount
R$ 270,000,000.00
Restrictions on trading
Description
restrictions
of
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
trading
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
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), 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
207
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. nonrenewal, 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,
208
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.
iii.
the
guarantee and, if in
Not applicable. The first issue of debentures does not have collateral or surety.
form
of
collateral,
209
distribution
assets
debt
securities
the dividend
the sale of certain
210
purpose; (iii) if the fiduciary agent, renounces its functions, should remain in the
exercise of its duties until another institution is indicated by the Company for its
replacement and approved by general meeting of debenture holders, and assume
their functions effectively; (iv) shall be performed, within the maximum period of 30
days from the date of the event that determine, general meeting of debenture
holders, for choosing the new fiduciary agent, that may be called by the fiduciary
agent to be replaced, by the Company, by debenture holders of the first series
representing at least 10% of the debentures of the first series in circulation, or for
debenture holders of the second series representing at least 10% of the second
series ' debentures in circulation, or by CVM; in the event of convocation notice do
not occur within 15 days before the expiration of the time limit here predicted, it will
be up to the Company making it, being sure that the CVM may appoint interim
replacement pending consummating the process of choosing the new trustee; (v)
replacement, on a permanent basis, of the fiduciary agent (a) shall be subject to
prior notice 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; (vi) payments to the
fiduciary agent replaced shall be effected in accordance with the proportionality to
the period of effective service delivery; (vii) the fiduciary agent will be entitled to the
same compensation of the perceived by the previous, if (a) the company has not
agreed with the new value of the remuneration of the fiduciary agent proposed by
general meeting of the debenture holders, referred to in item iv above, or (b) the
general meeting of debenture holders referred to in item iv above does not act on
the matter; (vii) the fiduciary agent should replace, immediately after his
appointment, communicate it to the company and to debenture holders; and (viii)
shall apply to cases of substitution of fiduciary agent the norms and precepts from
the Brazilian Securities and Exchange Commission (CVM).
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.
Conditions for amendment of
Not included in the quorum above are: (i) quorums expressly provided for in other
the rights conferred by such
clauses of the deed of issue; and (ii) changes, which should be approved by
securities
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 nondisclosure 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
Debentures
Identification of securities
Issue date
Maturity date
Quantity
20,000
Total amount
R$ 200,000,000.00
Restrictions on trading
Description
restrictions
of
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
trading
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
211
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
212
213
Interest
For more information on maturity date, please refer to item 18.10 below.
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 iii.
guarantee and, if in
Interbank Deposits one day, calculated and published daily by CETIP in the daily
the
form
of
collateral,
bulletin on its website (http:// www.cetip.com.br) calculated exponentially and
description of the goods used
cumulatively pro rata by days elapsed from the Issue Date or payment date
as collateral
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.
iv.
in the absence of a
The Debentures will be unsecured, in accordance with Article 58, caput of the Law
guarantee, if the credit is
No. 6,404/76.
secured or subordinate
v.
possible restrictions
imposed on the issuer
distribution
assets
the dividend
214
debt
securities
215
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; (vi)
payments to the fiduciary agent replaced shall be effected in accordance with the
proportionality to the period of effective service delivery; (vii) the fiduciary agent will
be entitled to the same compensation of the perceived by the previous, if (a) the
company has not agreed with the new value of the remuneration of the fiduciary
agent proposed by general meeting of the debenture holders, referred to in item iv
above, or (b) the general meeting of debenture holders referred to in item iv above
does not act on the matter; (vii) the fiduciary agent should replace, immediately after
his appointment, communicate it to the company and to debenture holders; and (viii)
shall apply to cases of substitution of fiduciary agent the norms and precepts from
the Brazilian Securities and Exchange Commission (CVM).
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.
Conditions for amendment of
Not included in the quorum above are: (i) quorums expressly provided for in other
the rights conferred by such
clauses of the deed of issue; and (ii) changes, which should be approved by
securities
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 nondisclosure 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
216
19.
217
19.1
Meeting
date
Buy-back
Available
reserves
and profits
(Reais)
Type
Class
Quantity
envisaged
(units)
Percentage
in relation
to
outstanding
Approved
amount
purchased
(units)
Weighted
Average
Price
Quote
factor
%
purchased
Outras caracter.
11/10/2014
R$ per
11/10/2014
to
Common
4.000.000
5.069199%
2,285,300
8.65
57%
unit
11/09/2014
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.
218
19.2
Quantity
(Units)
4,000
(4,000)
-
Total amount
(R$ thousand)
23.4
(23.4 )
-
Weighted average
price (R$)
5.86
5.86
-
Total amount
(R$ thousand)
-
Weighted average
price (R$)
-
Total amount
(R$ thousand)
10,985
10,985
Weighted average
price (R$)
9.29
9.29
Quantity
(Units)
-
Quantity
(Units)
1,182,900
1,182,900
19.3 Indicate shares held in treasury as of the last fiscal year-end, in tabular format,
segregated by type and class.
Acquisition
date
11/10/2014
19.4.
Approved
purchased
(units)
Approved
purchased (R$
thousands)
Weighted
Average Price
(R$/share)
Outstanding
shares in the
end of period
1,181,900
10,985
9.29
81,726,032
% in relation to
outstanding
shares in the
end of period
1.45%
As a result of the exercise of the right of withdrawal by dissident shareholder of the deliberations
of the Extraordinary General Meeting held on April 20, 2012, the Company repaid to the unrealized
profit reserve, issuing 4,000 of its own shares, for R$ 23.4 thousand, and these shares were
subsequently cancelled, as the approval of the Board of Directors on June 21, 2012.
As a result of the exercise of the right of withdrawal by dissident shareholder of the deliberations
of the Extraordinary General Meeting held on November 10, 2014, the Company reimburse to the
unrealized profit reserve, 2,285,300 of its own shares, for R$ 19.76 million, and these shares
await for cancelation or alienation, as the approval of the Board of Directors on November 10,
2014.
After the end of fiscal year 2014 and the publication date of this Reference form, the Company
acquired and held in treasury 1,102,400 shares, summing R$ 8.8 million, totaling 2,285,300
219
shares bought and held in treasury respecting the share buyback program approved in November
10, 2014.
In May 21, 2015, the Board of Directors approved alienation of 5,434 Companys shares held in
treasury to serve the exercise of stock option under the option plan of Company's Stock Option
Program (Program 2010).
In June 17, 2015, the Board of Directors approved alienation of 1,444 Companys shares held in
treasury to serve the exercise of stock option under the option plan of Company's Stock Option
Program (Program 2012).
Date of acquisition
4th quarter 2014
1st quarter 2015
2nd quarter 2015
Total
Total amount
of acquisition/
alienation
1,181,900
1,102,400
-6,878
2,278,422
Total amount
of acquisition
(R$ thousand)
10,985
8,792
19,777
Total amount
of
alienation
(R$ thousand)
-59
-59
Weighted
average
price (R$)
9.29
7.98
8.65
8.65
220
20.
221
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
222
21.
DISCLOSURE POLICY
223
224
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)
(ii)
(iii)
(iv)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
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
225
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)
(v)
(vi)
(vii)
(viii)
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;
create documents and electronic files related to confidential information always
with password protection systems;
to circulate internally documents containing confidential information in sealed
envelopes, which should always be delivered directly to the recipient;
not to send confidential documents through facsimile, unless there is certainty
that only authorized personnel to take notice of such information will have access
to the receiver, and
without prejudice to the responsibility of those who are transmitting confidential
information, require a third party outside the Company who need access to
information to sign a confidentiality agreement, which shall specify the nature of
information and include in the statement that it recognizes its confidential nature,
pledging not to disclose it to anyone else and do not trade securities issued by
the Company prior to disclosure of information to the market.
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://mills.infoinvest.com.br/fck_temp/12_1//Politica_de_Divulgacao_MILLS_RCA_2010_02_08
_i.pdf
226
22.
EXTRAORDINARY BUSINESS
227
22.1 Acquisition or disposal of any significant asset which does not belong to the
normal operations of the Company
In fiscal years ended in December 31, 2012, 2013 and 2014, there was no acquisition or disposal
of any significant assets which does not belong to the normal operations of the Company, except
for the sale of the Industrial Services business unit, as described in item 6.5 of this Reference
Form.
22.2
In fiscal years ended in December 31, 2012, 2013 and 2014, there were no significant changes
in the running of the Companys business.
22.3 Identify relevant contracts concluded by the Company and its subsidiaries
which are not directly connected to its operations
In fiscal years ended in December 31, 2012, 2013 and 2014, no relevant contracts were concluded
by the Company and its subsidiaries which are not directly connected to its operations.
22.4
228