2. BR Properties S.A.
Unconsolidated and Consolidated Quarterly Financial Information
September 30, 2009
Contents
Review report of independent auditors............................................................................ 1
Quarterly financial information
Balance sheets ............................................................................................................... 2
Statements of income ..................................................................................................... 4
Statements of cash flows ............................................................................................... 5
Statements of value added ............................................................................................ 6
Notes to quarterly financial information ........................................................................... 7
3. 1
A free translation from Portuguese into English of Review Report of Independent Auditors on quarterly
financial information prepared in Brazilian currency in accordance with the accounting practices
adopted in Brazil and specific standards established by IBRACON, CFC and CVM
Review Report of Independent Auditors
The Board of Directors and Shareholders
BR Properties S.A.
1. We have performed a review of the quarterly financial information - ITR (unconsolidated and
consolidated) of BR Properties S.A. and its subsidiaries for the quarter ended September 30,
2009, including the balance sheets, the related statements of income, changes in
shareholders’ equity, cash flows and value added, and accompanying notes, prepared under
the responsibility of the management.
2. We conducted our review in accordance with specific standards established by the Brazilian
Institute of Independent Auditors (IBRACON), together with the National Association of State
Boards of Accountancy (CFC), which consisted principally of: (a) inquiries of and discussions
with persons responsible for the accounting, financial and operating areas of the Company
and its subsidiaries as to the criteria adopted in preparing the quarterly financial information,
and (b) review of the information and subsequent events that had, or could come to have,
material effects on the financial position and the results of the Company’s operations and
those of its subsidiaries.
3. Based on our review, we are not aware of any material modification that should be made to
the quarterly financial information referred to in paragraph 1 for it to be in conformity with the
standards established by the Brazilian Securities Commission (CVM), applicable to the
preparation of quarterly financial information, including CVM Rule No. 469/08.
4. As mentioned in Note 2, the accounting practices adopted in Brazil were changed in 2008 and
the effects of their first-time adoption were recorded by the Company and its subsidiaries in
the fourth quarter of 2008 and disclosed in the December 31, 2008 financial statements. The
statements of income, changes in shareholders’ equity, cash flows and value added for the
quarter ended September 30, 2008, presented together with the information for the current
quarter, were not adjusted for purposes of comparison, as allowed by Circular/CVM/SNC/SEP
No. 02/2009.
São Paulo, October 20, 2009.
ERNST & YOUNG
Auditores Independentes S.S.
CRC-2SP015199/O-6
Antonio Humberto Barros dos Santos
Accountant CRC-1SP161745/O-3
4. 2
A free translation from Portuguese into English of quarterly financial information prepared in Brazilian
currency in accordance with the accounting practices adopted in Brazil
BR Properties S.A.
Balance sheets
September 30, 2009 and June 30, 2009
(In thousands of reais)
September 30, June 30, September 30, June 30,
2009 2009 2009 2009
Assets
Current assets
Cash and cash equivalents (Note 5) 17 9 992 973
Short-term investments (Note 5) 82,097 83,905 136,273 136,446
Trade accounts receivables (Note 6) - - 11,717 11,906
Advances for acquisition of real estate - - 122 122
Taxes recoverable (Note 7) 2,961 3,057 4,162 4,271
Prepaid expenses 85 130 261 291
Other accounts receivable 6 300 266 779
85,166 87,401 153,793 154,788
Noncurrent assets
Judicial deposits - - 92 92
Investments in subsidiaries(Note 8) 617,608 607,226 - -
Goodwill (Note 9) 8,080 8,080 9,487 9,487
Propertyand equipment (Note 10) 453 460 1,167,991 1,167,826
626,141 615,766 1,177,570 1,177,405
Total Assets 711,307 703,167 1,331,363 1,332,193
Company Consolidated
5. 3
September 30, June 30, September 30, June 30,
2009 2009 2009 2009
Liabilities
Current liabilities
Loans and financing (Note 11) - - 69.812 68.423
Derivatives (Note 18) 437 464 437 464
Trade accounts payable 223 104 1.388 3.544
Provision for employee and management
bonuses 2.250 1.500 2.250 1.500
Salaries and social charges payable 548 409 789 755
Taxes payable 12 - 767 1.251
Provision for income and social contribution
taxes (Note 13) - 90 833 859
Payables for acquisition of real estate (Note
12) 134 - 2.124 1.990
Advances - - 1.184 1.167
Other accounts payable - 163 98 243
3.604 2.730 79.682 80.196
Noncurrent liabilities
Provision for income and social contribution
taxes (Note 13) - - 48.960 49.167
Loans and financing (Note 11) - - 495.018 502.430
Derivatives ( Note 18) - 37 -
- 37 543.978 551.597
Shareholders’ equity
Capital:
Paid-in capital (Note 15) 598.310 597.422 598.310 597.422
Capital reserve 3.297 3.113 3.297 3.113
Revaluation reserve – subsidiaries 95.041 95.441 95.041 95.441
Retained earnings (accumulated losses) 11.055 4.424 11.055 4.424
707.703 700.400 707.703 700.400
Total liabilities 711.307 703.167 1.331.363 1.332.193
Company Consolidated
See accompanying notes,
6. 4
BR Properties S.A.
Statements of income
None month periods ended September 30, 2009 and 2008
(In thousands of reais)
None months period ended None months period ended None months period ended None months period ended
September 30, 2009 September 30, 2008 September 30, 2009 September 30, 2008
Gross revenues:
Lease - - 95.032 68.983
Services rendered - - 1.476 626
Taxes on revenues - - (9.622) (7.424)
Net revenues - - 86.886 62.185
Cost of leased properties and services
rendered - - (12.292) (11.507)
Gross profit - - 74.594 50.678
Operating income (expenses) - - - -
General and administrative expenses (10.811) (8.840) (15.974) (12.362)
Financial income (Note 16) 8.707 15.804 12.077 16.831
Financial expenses (Note 16) (1.067) (666) (44.829) (51.511)
Equity pick-up in subsidiaries (Note 8a) 26.990 (3.431) - -
Other operating income 230 282 488 496
Operating and pretax loss 24.049 3.149 26.356 4.132
Income and social contribution taxes (Note
13) (266) (1.534) (2.573) (2.517)
23.783 1.615 23.783 1.615
Net Income for the period 23.783 1.615 23.783 1.615
Company Consolidated
See accompanying notes
7. 5
BR Properties S.A.
Statements of cash flows
None month period ended September 30, 2009
(In thousands of reais)
Company Consolidated
Cash flow from operating activities
Net income for the period 23.783 23.783
Adjustment to reconcile net income for the period with cash
generated by operating activities - -
Depreciation 75 12.292
Equity pickup (26.990) -
Interest and monetary variation - 43.567
Share purchase option plan 785 785
Reversal of revaluation reserve (2.971) (2.971)
Changes in assets and liabilities: - -
Trade accounts receivable - -
Taxes recoverable - (2.178)
Other assets 1.142 773
Provision for employee and management bonuses 409 586
Payables for acquisition of real estate (2.345) (2.345)
Other liabilities (37) (7.970)
(1.285) (4.761)
(7.434) 61.561
Cash flow from investing activities
Capital increase 888 888
Other investments (11.483) -
Fixed asset purchases (28) (9.022)
- 20.170
(10.623) 12.036
Cash flow from financing activities
Payment of borrowings and financing - (59.039)
- (59.039)
Increase (decrease) in cash and cash equivalents (18.057) 14.558
Cash and cash equivalents at the beginning of the period 100.170 122.707
Cash and cash equivalents at the end of the period 82.114 137.265
Increase (decrease) in cash and cash equivalents (18.056) 14.558
Net cash generated by (used in) operating activities
Fixed asset disposal
Cash used in investing activities
Cash used in financing activities
See accompanying notes.
8. 6
BR Properties S.A.
Statements of value added
None month period ended September 30, 2009
(In thousands of reais)
9/30/2009 9/30/2008 9/30/2009 9/30/2008
Revenues - 94.855 68.141
Nonoperating income 230 282 488 496
Allowance for doubtful accounts - (128)
Cost of services - (12.217) (11.507)
Inputs acquired from third parties (4.039) (3.110) (8.079) (6.311)
Gross value added (3.809) (2.828) 74.919 50.819
Retentions (depreciation, amortization and depletion) (75) (167) (75) (171)
Net value added generated (3.884) (2.995) 74.844 50.648
Net value added received in transfer 35.697 12.373 12.077 16.831
Equity pickup 26.990 (3.431) - -
Financial income 8.707 15.804 12.077 16.831
Value added to be distributed 31.813 9.378 86.921 67.479
- -
Distribution of value added
Government (1.301) (2.047) (11.551) (8.985)
Employees (5.662) (5.050) (6.758) (5.368)
Remuneration of capital to third parties/ financing institutions (interest and rent) (1.067) (666) (44.829) (51.511)
Retained income (losses) 23.783 1.615 23.783 1.615
Total distributed and retained 31.813 9.378 86.921 67.479
Nine month period ended
Company Consolidated
See accompanying note
9. 7
1. Operations
The Company was incorporated on May 26, 2004, as a corporation under the
company name Itarema Participações S.A. On December 22, 2006, its
company name was changed to BR Properties S.A. (“BR Properties” or
“Company”).
On December 22, 2006, the Company received capital contributions from new
and existing shareholders amounting to R$ 53,000. The main new shareholders
included GP Investments Ltd, Private Equity Partners A. LLC, Private Equity
Partners B. LLC, Reic Brasil Holding LLC, Castlerigg Latin American
Investments LLC, Peter L, Malkin Family 2000 LLC, Talisman Special Purpose
Fund Ltd, Tudor Proprietary Trading LLC and Tudor Brazil Investments LLC.
Shareholders drew up the Company’s business plan and decided to operate it
as a holding mainly engaged in the acquisition, management, lease and sale of
commercial properties - mainly commercial buildings, office space, stores and
warehouses in Brazil, provided that these properties are existing assets or are
built to suit.
The Company started operations in April 2007 by establishing Specific Purpose
Companies (SPC) to acquire properties to lease commercially, having invested
more than R$ 1 billion up to December 31, 2008. The Company has also
invested approximately R$ 54 million in real estate enterprising development
and the expansion of properties already included in its portfolio.
2. Basis of preparation and presentation of the quarterly financial
information
The quarterly information was prepared based in Brazilian Securities and
Exchange Commission (CVM) standards applicable to the preparation of the
Quarterly Information (ITR) in light of the accounting guidelines contained in
Corporation Law (Law No. 6404/76) which includes the provisions introduced,
amended and repealed by Law No. 11638, of December 28, 2007, Provisional
Executive Order (MP) No. 449, of December 3, 2008, accounting practices,
applicable to the Company, from the Brazilian Financial Accounting Standards
Board (CPC) approved by the CVM and the Federal Board of Accountancy
(CPC).
10. 8
2. Basis of preparation and presentation of the quarterly financial
information (Continued)
The quarterly information for the quarter ended September 30, 2008, presented
together with information for the current quarter, was prepared in accordance
with accounting practices adopted in Brazil in force up to December 31, 2007,
and as allowed by Circular Official Notice/CVM/SNC/SEP No. 02/2009, are not
being restated with the adjustments for comparative purposes.
As also required by the Circular Office Notice mentioned in the previous
paragraph, the Company estimated the effects of the accounting practices
effective in 2009 on shareholders’ equity at September 30, 2008, and on P&L
for the quarter then ended, as follows:
Consolidated
Brief
description
Shareholders’
equity
Income for the
quarter
Balances before changes introduced by
Law No. 11.638/07 and MP No. 449/08 689,394 615
Fair value of share based payments (a) (i) (1,797) (194)
Fair value of and derivative financial
instruments (ii) (2,800) 3,435
Net effects stemming from full application
of Law No. 11638/07 and MP No. 449/08 (4,597) 3,241
Balances with the changes introduced by
Law No. 11638/07 and MP No. 449/08 684,797 3,856
(i) CPC Technical Pronouncement 10 – Share-based Payment: determines that
the effects of share-based payment transactions be reflected in a Company’s
P&L and in the balance sheet, including expenses related to transactions in
which share options are granted to employees. As mentioned in Note 15 (c),
the Company has a plan for granting share options to its management
members and main executive officers.
(ii) CPC Technical Pronouncement 14 – Financial instruments determines that
financial instruments, including derivatives, be recorded at the lower value
between: (i) their market or equivalent value, when they are investments for
trading or available for sale; and (ii) acquisition cost or issuance value. The
Company’s instruments are considered as fair value hedge intended to offset
risks of fair value variation exposure of the hedged item (Note 18).
11. 9
3. Consolidated financial statements
The consolidated financial statements include the Company’s operations and the
following subsidiaries, whose percentage of equity interest at the balance sheet date
are summarized as follows:
Percentage of
direct interest
Consolidation
criterion
BRPR I Empreendimentos e Participações Ltda. 99.99% Full
BRPR II Empreendimentos e Participações Ltda. 99.99% Full
BRPR III Empreendimentos e Participações Ltda. 99.99% Full
BRPR IV Empreendimentos e Participações Ltda. 99.99% Full
BRPR V Empreendimentos e Participações Ltda. 99.99% Full
BRPR VII Empreendimentos e Participações Ltda. 99.99% Full
BRPR VIII Empreendimentos e Participações Ltda. 99.99% Full
BRPR IX Empreendimentos e Participações Ltda. 99.99% Full
BRPR X Empreendimentos e Participações Ltda. 99.99% Full
BRPR XI Empreendimentos e Participações Ltda. 99.99% Full
BRPR XII Empreendimentos e Participações Ltda. 99.99% Full
BRPR XIII Empreendimentos e Participações Ltda. 99.99% Full
BRPR XIV Empreendimentos e Participações Ltda. 99.99% Full
BRPR XV Empreendimentos e Participações Ltda. 99.99% Full
BRPR XVI Empreendimentos e Participações Ltda. 99.9% Full
BRPR XVII Empreendimentos e Participações Ltda. 99.99% Full
BRPR XVIII Empreendimentos e Participações Ltda. 99.9% Full
PP II SPE Empreendimentos Imobiliários Ltda. 50% Proportional
BRPR XX Empreendimentos e Participações Ltda. 99.99% Full
BRPR XXI Empreendimentos e Participações Ltda. 99.99% Full
BRPR XXII Empreendimentos e Participações Ltda. 99.9% Full
BRPR XXIII Empreendimentos e Participações Ltda. 99.90% Full
BRPR XXIV Empreendimentos e Participações Ltda. 99.9% Full
BRPR XXV Empreendimentos e Participações Ltda. 99.9% Full
BRPR A Administração de Ativos Imobiliários Ltda. 99.9% Full
BRPR Participações S/A 100% Full
The accounting policies were uniformly applied to the subsidiaries.
For consolidation purposes, the subsidiary BRPR I consolidates the operations of
its wholly-owned subsidiary BRPR VI and the subsidiary BR PR XI proportionally
consolidates the operations of SPE Cidade Jardim in accordance with its equity
interest of 50%.
The main consolidation procedures are the:
- Elimination of the balance of intercompany assets and liabilities balances;
- Elimination of ownership interest, reserves and retained earnings in
consolidated companies;
- Elimination of revenues and expenses resulting from intercompany
transactions.
12. 10
4. Summary of significant accounting practices
a) Determination of P&L
Lease revenues are state on a gross basis i.e. include taxes and discounts
levied thereon which are presented as accounts reducing accounts.
Revenue and expenses are determined on the accrual basis of accounting
for the computation period. Revenues are not recognized if there is
significant uncertainty as to their collection.
b) Reporting and functional currency of the financial statements:
The functional currency is the Real, which is the same currency for the
preparation and presentation of the financial statements of both the
controlling shareholders (Company) and subsidiaries.
c) Financial assets and liabilities
The main financial assets recognized by the Company are: cash and cash
equivalents and trade accounts receivable. The main financial liabilities are
loans and trade accounts payable.
Financial assets and liabilities are stated at cost value plus the
corresponding allocation of income and expenses up to the balance sheet
date, which approximate market value.
d) Hedge operations:
Derivative financial instruments which are used to hedge against risk
exposure or to change the characteristics of financial assets and liabilities,
unrecognized firm commitments, highly probable transactions or net
investments in foreign operations, which are also: (i) are highly correlated
as regards changes in their market value in relation to the market value of
the hedged item both at the beginning and while the contract is effective
(effectiveness between 80% to 125%); (ii) have documentary identification
of the hedge operation, the item being hedged, the risk management
process and the methodology used in the assessment of its effectiveness
and (iii) are considered effective in reducing the risk related to the
exposure to be hedged; are classified and recorded as hedge operations in
accordance to their nature:
• Fair value hedge – there shall be classification of derivative financial
instruments intended to offset risks from the exposure to variation in fair
value of the hedged item. Hedged items and the corresponding derivative
financial instruments are recorded with due consideration for the
corresponding entries in revenue or expense accounts in P&L for the
period.
13. 11
4. Summary of significant accounting practices (Continued)
e) Cash and cash equivalents:
These include cash, positive balances in bank accounts, short-term
investments redeemable within 90 days from the balance sheet dates and
with insignificant risk of changes in their market values. Short-term
investments included in cash equivalents are mostly classified in the
category “financial assets at fair value through P&L”.
f) Trade accounts receivable:
These are stated at realizable values. An allowance for doubtful accounts
was set up by management at an amount considered sufficient to cover
doubtful receivables.
g) Investments
Investments in subsidiaries are stated by the equity pickup method.
h) Property, plant and equipment
These are recorded at acquisition cost, plus revaluation of buildings and
land, recognized in December 2007 by subsidiaries, based on a valuation
report prepared by independent appraisers. Property and equipment
depreciation is calculated by the straight-line method at the rates
mentioned in Note 10. Revaluation was recognized against the revaluation
reserve in shareholders’ equity, net of tax effects. The revaluation reserve
will be realized against retained earnings upon depreciation and write-off of
the respective revalued assets.
Expenses incurred with maintenance and repairs are only recorded if the
economic benefits related to these items are probable and amounts are
reliably measured, whereas other expenses are recorded directly in P&L
when incurred.
i) Intangible assets
Goodwill on investment acquisitions took place up to December 31, 2008,
based on future economic profitability that was not fully amortized and up to
January 1, 2009, began to be subjected to annual impairment testing.
j) Impairment of assets:
Management annually reviews the net book value of assets, including
goodwill, in order to assess events or changes in operating, economic or
technological circumstances that may indicate impairment. When such
evidence is identified, and net book value exceeds recoverable value, a
provision for impairment is established by adjusting the net book value to
the recoverable value.
14. 12
4. Summary of significant accounting practices (Continued)
k) Other assets and liabilities:
Liabilities are recognized in the balance sheet when the Company has a
legal or constructive obligation arising from past events, the settlement of
which is expected to result in an outflow of economic benefits, Provisions
are recorded reflecting the best estimates of the risks involved. Assets are
recognized in the balance sheet when their future economic benefits are
likely to be appropriated by the Company and their cost or value can be
safely measured.
Assets and liabilities are classified as current whenever their realization or
settlement is likely to occur within the following twelve months. Otherwise,
they are stated as noncurrent.
l) Taxation
Property lease revenues are subject to the following taxes and contributions
at the statutory rates below:
Taxes and contributions Abbreviation Rates
Contribution for Social Integration Program PIS 1.65% and 0.65%
Contribution for Social Security Financing
COFINS 7.6% and 3%
These charges are presented as deductions from lease revenues in the
statements of income. Credits arising from non-cumulative taxation by
PIS/COFINS are recorded as deductions from the cost of leased properties
and services rendered in the statements of income.
Taxation on profit comprises both income and social contribution taxes.
Income tax is computed at a 15% rate, plus a surtax of 10% on taxable profit
exceeding R$ 240 over 12 months, whereas social contribution tax is
computed at a rate of 9% on taxable profit, both recognized on an accrual
basis.
As allowed by tax legislation, certain subsidiaries have opted for the regime
of taxable profit computed as a percentage of the relevant entity’s gross
revenues.
m) Share based payment:
The main executive officers and management earn fees based on a share
option plan. The cost of these transactions is recognized in P&L for the
period in which the services were received, matched against a reserve in
shareholders’ equity and measured at their fair value when the options are
granted.
15. 13
4. Summary of significant accounting practices (Continued)
n) Statements of cash flows and value added:
The statements of cash flows were prepared and are presented in
accordance with CVM Rule No. 547, of August 13, 2008 which approved
Accounting Pronouncement CPC 03 – Statement of Cash Flows, issued by
the CPC. The statements of value added were prepared and are presented
in accordance with CVM Rule No. 557, of November 12, 2008, which
approved Accounting Pronouncement CPC 09 - Statement of Value Added,
issued by CPC.
5. Cash and cash equivalents
30/9/2009 30/6/2009 30/9/2009 30/6/2009
Caixa e bancos 17 9 992 973
Aplicações financeiras e CDB’s (a) 82.097 83.905 136.273 136.446
82.114 83.914 137.265 137.419
Controladora Consolidado
(a) Short-term investments substantially refer to Bank Deposit Certificates (CDB) that are highly liquid and
placed with or acquired from top-tier banks. These short-term investments are remunerated at rates
ranging between 90% and 103.8% of the Interbank Deposit certificate (CDI).
6. Trade accounts receivable
9/30/2009 630/2009
Lease payments receivable 12.217 11.961
Refundable condominium expenses 95 492
Allowance for doubtful accounts (500) (547)
11.812 11.906
Consolidated
According to agreements executed with customers, lease payments are usually
received up to the tenth working day of the subsequent month.
7. Taxes recoverable
9/30/2009 9/30/2009 9/30/2009 6/30/2009
Withholding income tax (IRRF) 2.675 2.779 3.280 3.410
Prepayment of income and social contribution taxes 284 277 859 812
Other 1 1 24 49
2.961 3.057 4.162 4.271
Company Consolidated
16. 14
8. Investments
9/30/2009 6/30/2009
Equity interest in subsidiairies 617.608 607.226
617.608 607.226
Company
a) Information on subsidiaries at September 30, 2009
Interest in subsidiaries valued by the equity method was determined based on
balances at September 30, 2009. The book value of the investment at September
30, 2009 and the equity pickup amounting to R$ 26,990 in 2009, are stated as
follows:
Subsidiaries
BRPR I Empreend. e Part. Ltda. 101.241.500 101.242 30.697 134.172 7.470 134.172 7.470
BRPR II Empreend.e Part. Ltda. 33.016.000 33.016 27.265 60.459 1.907 60.459 1.907
BRPR III Empreend. e Part. Ltda. 23.785.000 23.785 14.011 40.560 1.500 40.560 1.500
BRPR IV Empreend. e Part. Ltda. 66.896.620 66.897 4.232 73.797 2.204 73.797 2.204
BRPR V Empreend. e Part. Ltda. 56.869.000 56.869 1.071 61.716 2.571 61.716 2.571
BRPR VII Empreend. e Part. Ltda. 23.799.400 23.799 5.800 30.633 861 30.633 861
BRPR VIII Empreend. e Part. Ltda. 15.001.000 15.001 - 15.408 1.418 15.408 1.418
BRPR IX Empreend. e Part. Ltda. 15.208.771 15.209 11.965 30.334 1.955 30.334 1.955
BRPR X Empreend. e Part. Ltda. 68.851.000 68.851 - 73.768 4.694 73.768 4.694
BRPR XI Empreend. e Part. Ltda. 28.071.000 - - 28.083 4 28.083 4
BRPR XII Empreend. e Part. Ltda. 151.000 151 - 186 (0) 186 (0)
BRPR XIII Empreend. e Part. Ltda. 5.701.000 5.701 - 7.187 255 7.187 255
BRPR XIV Empreend. e Part. Ltda. 22.131.000 26.931 - 26.121 1.125 26.121 1.125
BRPR XV Empreend. e Part. Ltda. 8.671.000 8.671 - 8.755 213 8.755 213
BRPR XVI Empreend. e Part. Ltda. 2.000 2 - 41 (34) 41 (34)
BRPR XVII Empreend e Part. Ltda. 5.501.000 5.501 - 5.792 260 5.792 260
BRPR XVIII Empreend e Part Ltda 1.000 1 - 46 (1) 46 (1)
PP II Empreend Imobiliários Ltda. 19.423.500 19.424 - 19.837 229 9.919 114
BRPR XX Empreend e Part. Ltda. 21.000 21 - 18 (1) 18 (1)
BRPR XXI Empreend e Part. Ltda. 9.301.000 9.301 - 10.130 493 10.130 493
BRPR XXII Empreend e Part. Ltda. 1.000 1 - 19 (1) 19 (1)
BRPR XXIII Empreend e Part. Ltda. 1.000 1 - 19 (1) 19 (1)
BRPR XXIV Empreend e Part. Ltda. 1.000 1 - 19 (1) 19 (1)
BRPR XXV Empreend e Part. Ltda. 1.000 1 - 19 (1) 19 (1)
BRPR A Adm. de Ativos Imob. Ltda 401.000 401 - 357 (6) 357 (6)
BRPR Participações S/A 51.000 51 - 52 (9) 52 (9)
95.041 617.608 26.990
Company
Shares / units
of interest Capital
Revaluation
reserve
Members'/
Shareholders'
equity
P&L for the
period
Book value of
investment Equity pickup
The percentage of the Company’s ownership interest in subsidiaries is stated in Note 3.
17. 15
8. Investments (Continued)
b) Information on the main assets, liabilities and P&L items for subsidiaries at
September 30, 2009 (Continued)
BRPR I Empreend. e Part. Ltda. 22.382 92 291.013 313.487 23.055 156.260 134.172 313.487
BRPR II Empreend.e Part. Ltda. 3.531 - 150.125 153.655 10.205 82.992 60.459 153.655
BRPR III Empreend. e Part. Ltda. 3.118 - 92.463 95.581 6.135 48.886 40.560 95.581
BRPR IV Empreend. e Part. Ltda. 8.831 - 134.101 142.932 9.200 59.934 73.797 142.932
BRPR V Empreend. e Part. Ltda. 6.844 - 156.005 162.849 12.404 88.729 61.716 162.849
BRPR VII Empreend. e Part. Ltda. 788 - 57.707 58.495 3.187 24.675 30.633 58.495
BRPR VIII Empreend. e Part. Ltda. 1.942 - 39.639 41.581 3.206 22.967 15.408 41.581
BRPR IX Empreend. e Part. Ltda. 2.403 - 34.320 36.723 226 6.164 30.334 36.723
BRPR X Empreend. e Part. Ltda. 3.711 - 70.699 74.410 641 - 73.768 74.410
BRPR XI Empreend. e Part. Ltda. 200 - 27.886 28.086 3 - 28.083 28.086
BRPR XII Empreend. e Part. Ltda. 119 - 85 204 18 - 186 204
BRPR XIII Empreend. e Part. Ltda. 711 - 15.320 16.031 792 8.053 7.187 16.031
BRPR XIV Empreend. e Part. Ltda. 1.884 - 54.029 55.913 4.436 25.355 26.121 55.913
BRPR XV Empreend. e Part. Ltda. 581 - 21.219 21.800 1.535 11.510 8.755 21.800
BRPR XVI Empreend. e Part. Ltda. 41 - - 41 0 - 41 41
BRPR XVII Empreend e Part. Ltda. 398 - 14.632 15.030 786 8.452 5.792 15.030
BRPR XVIII Empreend e Part Ltda 46 - - 46 0 - 46 46
PP II Empreend Imobiliários Ltda. 561 - 19.292 19.854 16 - 19.837 19.854
BRPR XX Empreend e Part. Ltda. 18 - - 18 - - 18 18
BRPR XXI Empreend e Part. Ltda. 10.136 - - 10.136 6 - 10.130 10.136
BRPR XXII Empreend e Part. Ltda. 19 - - 19 - - 19 19
BRPR XXIII Empreend e Part Ltda 19 - - 19 - - 19 19
BRPR XXIV Empreend e Part Ltda 19 - - 19 - - 19 19
BRPR XXV Empreend e Part. Ltda. 19 - - 19 - - 19 19
BRPR A Adm. de Ativos Imob Ltda 537 - 56 594 237 - 357 594
BRPR Participações S/A 52 - 0 52 - - 52 52
68.911 92 1.178.591 1.247.594 76.089 543.978 627.526 1.247.594
Members' equity Total
ASSETS LIABILITIES
Current Noncurrent
Permanent
assets Total Current Noncurrent
18. 16
8. Investments (Continued)
c) Information on the main assets, liabilities and P&L items for subsidiaries at
September 30, 2009
BRPR I Empreend. e Part. Ltda. 26.666 (4.907) (13.572) (716) (7.470)
BRPR II Empreend.e Part. Ltda. 11.647 (3.392) (6.433) 84 (1.907)
BRPR III Empreend. e Part. Ltda. 7.245 (1.865) (3.780) (99) (1.500)
BRPR IV Empreend. e Part. Ltda. 9.804 (2.398) (5.229) 26 (2.204)
BRPR V Empreend. e Part. Ltda. 13.310 (3.074) (7.447) (217) (2.571)
BRPR VII Empreend. e Part. Ltda. 4.555 (1.243) (2.498) 47 (861)
BRPR VIII Empreend. e Part. Ltda. 3.540 (957) (901) (264) (1.418)
BRPR IX Empreend. e Part. Ltda. 2.963 (823) (16) (169) (1.955)
BRPR X Empreend. e Part. Ltda. 6.201 (863) 40 (683) (4.694)
BRPR XI Empreend. e Part. Ltda. - - 5 (1) (4)
BRPR XII Empreend. e Part. Ltda. - - (0) - 0
BRPR XIII Empreend. e Part. Ltda. 1.208 (242) (697) (15) (255)
BRPR XIV Empreend. e Part. Ltda. 4.726 (1.253) (2.347) (1) (1.125)
BRPR XV Empreend. e Part. Ltda. 1.665 (393) (1.059) - (213)
BRPR XVI Empreend. e Part. Ltda. - - (34) - 34
BRPR XVII Empreend e Part. Ltda. 1.305 (267) (752) (27) (260)
BRPR XVIII Empreend e Part. Ltda. - - (1) - 1
PP II Empreend Imobiliários Ltda. 396 (37) (40) (91) (229)
BRPR XX Empreend e Part. Ltda. - - (1) - 1
BRPR XXI Empreend e Part. Ltda. - - 719 (226) (493)
BRPR XXII Empreend e Part. Ltda. - - (1) - 1
BRPR XXIII Empreend e Part. Ltda. - - (1) - 1
BRPR XXIV Empreend e Part. Ltda. - - (1) - 1
BRPR XXV Empreend e Part. Ltda. - - (1) - 1
BRPR A Adm. de Ativos Imob. Ltda 1.477 (219) (1.265) - 6
BRPR Participações S/A - - (9) - 9
96.707 (21.932) (45.319) (2.352) (27.104)
Statements of income
Gross
revenues from
rent and
services
Taxes
deduction and
cost of leased
property
Operating
expenses
Income tax
and social
contribution
Income for
the year
19. 17
9. Intangible assets
Company Consolidated
Goodwill in the acquisition of DVR V Empreendimentos Imobiliários Ltda. (i) 8.080 1.407
Goodwill in the acquissition of Icomap Industria e Comércio Ltda. (ii) - 8.080
8.080 9.487
(i) This company owns two industrial warehouses located in the city of Jandira, in the state of São Paulo., After
its acquisition by the Company, its corporate name was changed to BRPR VI Empreendimentos e
Participações Ltda.
(ii) This company owns Edifício ICOMAP in Rio de Janeiro. After its acquisition by the Company its corporate
name was changed to BRPR IX Empreendimentos Participações Ltda.
Goodwill on investment acquisition is based on future profitability. Based on
the projected discounted cash flows arising out of assets maintained by
these subsidiaries, the Company’s management did not identify any
indication of impairment of the goodwill recorded at September 30, 2009.
In accordance with CPC 01 item 107, CPC 02 item 32 and CPC 13 item 49
and 50, as from January 1, 2009, goodwill balances are no longer
amortized, and are subject to annual impairment analysis.
9. Property and equipment
Company
6/30/2009
Annual Accumulated
rate of Cost depreciation Net Net
depreciation
Software 20% 103 (43) 60 66
Facilities 10% 182 (40) 142 147
Fixtures and fittings 10% 148 (34) 114 114
IT equipment 20% 229 (107) 122 133
Construction in progress 15 - 15 -
677 (224) 453 460
9/30/2009
Consolidated
6/30/2009
Annual rate of Accumulated
depreciation Cost depreciation Net Net
Land - 293.119 - 293.119 293.119
Land revaulation - 42.880 - 42.880 42.880
Buildings * 734.392 (30.395) 703.997 707.779
Revaluation of buidings * 105.335 (4.213) 101.122 101.728
Software 10% 121 (48) 74 78
Facilities 10% 182 (40) 142 147
Fixtures and fittings 10% 159 (36) 123 124
IT equipment 20% 280 (118) 161 165
Construction in progress - 26.373 26.373 21.806
1.202.841 (34.850) 1.167.991 1.167.826
9/30/2009
* Depreciation is calculated considering the period over which properties are expected to be used by the
Company, for periods ranging from 33 to 50 years, and in accordance with the remaining useful lives of the
assets items set out in valuation reports issued by independent appraisers.
20. 18
10. Property and equipment (Continued)
At December 31, 2007, the Company’s subsidiaries, based on a valuation
report issued by independent appraisers, recorded a revaluation of buildings
and land amounting to R$ 155,847 against a revaluation reserve in
shareholders’ equity. Deferred income tax liabilities, amounting to R$ 52,988,
were recorded in noncurrent liabilities thereby reducing the balance of that
reserve in shareholders’ equity. Their realization is upon disposal, sale and/or
depreciation of the revalued assets. During the quarter ended September 30,
2009, depreciation amounting to R$ 607 was carried out.
11. Loans and financing
Purpose Financial charges Maturity 9/30/2009 6/30/2009
Acquisition of Edifício KPMG Tower (*) IGP M+8.84% p.a. 4/17/17 11.394 11.731
Acquisition of Condomínio Panamérica Park and Ed. Plaza
Centenário TR+9.90% p.a. 5/25/17 48.764 49.163
Acquisition of Condomínio Ed. Glória (RJ), a building on Av.
Piraporinha, 1280, Alphaville Centro Empresarial, an industrial
building in Jundiaí, and a group of industrial warehouses in Itapevi TR+9.90% p.a. 8/17/17 136.870 138.618
Acquisition of two properties in Jandira CDI+1.27% p.a. 8/17/17 36.195 36.701
Acquisition of Edifício Henrique Schauman TR+10.15% p.a. 10/17/17 30.290 30.421
Acquisition of Ed. Generali (SP) and Edifício da Bovespa RJ TR+9.9% p.a. 8/17/17 24.094 24.495
Acquisition of suites in Ed. Paulista Park, Ed. Berrini, Condomínio
Ed. Isabella Plaza, 3rd floor of Ed. Olympic Tower, Ed. Joaquim
Floriano, Cond. Ed. Midas, Ed. Number One and suite No. 31 do Ed.
Network Empresarial, Ed. Celebration, Ed. Athenas, Ed. Paulista
Plaza TR+10.15% p.a. 8/17/17 66.104 66.457
Acquisition of buildings MV9, Sylvio Fraga, Raja Hills, Ericsson and
Coveright industrial warehouse TR+9.9% p.a. 12/20/17 100.340 100.560
Acquisition of buildings Avaya and Presidente Vargas TR+10.15% p.a. 9/18/17 24.786 25.213
Acquisition of buildings São José and Santo Antônio IGPM+6% p.a. 1/17/18 26.099 26.646
Acquisition of buildings Ericsson São José dos Campos TR+10.15% p.a. 1/17/18 28.813 29.406
Acquisition of building Souza Aranha TR+10.15% p.a. 1/17/21 8.832 8.918
Acquisition of Trisoft industrial warehouse TR+10.15% p.a. 4/9/18 13.028 13.178
Acquisition of Tecsis industrial warehouse TR+10.15% p.a. 9/4/21 9.221 9.308
564.830 570.815
Portion maturing over 12 months (69.812) (68.423)
Noncurrent liabilties 495.018 502.392
* Financing transferred to the Icomap property (SPE BRPR IX Empreendimentos e Participações Ltda.) during the 3rd
quarter 2009 under the same contractual terms and conditions as the original agreement.
As disclosed in Note 18, for the purpose of hedging the loans indexed to TR
and those bearing fixed interest rates, the Company contracted derivative
financial instruments in order to index these loans to the variation in the
General Market Price Index (IGPM) rate.
Properties acquired were used as the main guarantees (mortgage) for the
repayment of loans. In addition, guarantees were offered in the form of chattel
mortgage of units of interest in borrowing subsidiaries, and also of assignment
in trust of credit rights under lease agreements signed with the respective
properties lessees.
21. 19
Long-term loans and financing mature as follows:
9/30/2009
2010 15.289
2011 61.281
2012 54.619
2013 to 2021 363.829
495.018
12. Payables for real estate acquisition
At September 30, 2009, the consolidated balance amounting to R$ 2,124 comprises
payables on the acquisition of commercial properties as follows:
9/30/2009 6/30/2009
Galpão Jandira 1.740 1.740
Twin Towers 250 250
Other 134 -
2.124 1.990
Consolidated
13. Income and social contribution taxes
The Company did not record taxable profit during the quarter ended September 30,
2009, and did not record deferred income and social contribution tax losses. These will
be recognized only when there is a consistent expectation of their realization.
Breakdown of income and social contribution tax expenses charged to P&L for
the period are stated as follows:
Company
9/30/2009
Income before income and social contribution taxes 23.783
Positive equity pickup (26.990)
Additions 3.132
Exclusions (4.530)
Income and social contribution calculation base (4.605)
Expenses with income and social contribution taxes amounting to R$ 2,573
recorded in consolidated P&L comprises of R$ 266 (Company) and R$ 2,307
(net of R$ 202 in deferred income tax and R$ 476 in deferred social contribution
tax) paid by certain subsidiaries based on determination of profit computed as a
percentage of respective subsidiary’s gross revenues. At September 30, 2009,
the balance of income and social contribution tax loss carryforwards amounted
to R$ 5.170.
Deferred income and social contribution tax liabilities amounting to R$ 48,960
thousand at September 30, 2009, were computed on the revaluation reserve of
property and equipment items (land and buildings).
22. 20
14. Contingencies
The Company’s operations started in April 2007. At September 30, 2009, the
Company and its subsidiaries were involved in a limited number of eviction or
judicial proceedings related to its properties, always as plaintiff in these civil
proceedings stemming from the normal course of its business activities, which
do not involve significant amounts on an individual basis. Based on the advice
of the Company’s legal counsel and on management’s assessment, no
provisions for contingencies have been set up because there were no
proceedings involving probable loss.
15. Shareholders’ equity
a) Capital
On July 21, 2009, a capital increase amounting to R$ 887 was approved comprised
of 432,868 registered common shares with no par value with an issue price of
approximately R$ 2.05. The increase was due to the exercise of share option plan
of certain beneficiaries granted under the share option plan approved by the
Ordinary and Extraordinary Meeting held on April 16, 2007, and the first Share
Option Program approved by the Board of Directors on July 17, 2007.
At September 30, 2009, fully paid-up capital amounts to R$ 598,310 and is divided
into 241,467,569 registered common shares with no par value. Of the total paid-up
capital, R$ 591,132 comprises shares owned by shareholders domiciled abroad.
At September 30, 2009, the limit of authorized capital is 400,000,000 common
shares.
b) Capital reserve
Upon enactment of Law No. 11638/07, the “recognized options granted”
account was created for the recognition of payments of this sort made to
management members as variable compensation, in accordance with CPC
10.
c) Stock option plan
The Special and General Meeting held on April 16, 2007 approved the
Stock Option Plan, according to which the Board of Directors can grant
stock options to the Company’s management and employees. Options will
represent no more than 10% of total capital shares of the Company
existing on the grant date and the exercise price shall be the amount in
local currency equivalent to US$ 1,00 (one US dollar), restated in
accordance with 6-month Libor rates).
23. 21
15. Shareholders’ equity (Continued)
c) Stock option plan (Continued)
On July 17 and August 31, 2007 respectively the first and second Stock Option
Plans, were approved for 2007, including the number of options granted (totaling
13,956,935), the price and other conditions to exercise the corresponding options,
whose beneficiaries are the Company’s Executive Board members. Options
granted to management members may be exercised as from July 17, 2008 for the
First Program and as from August 31, 2008 for the Second, in five equal annual
lots, each one equivalent to 20% of the total options granted. On August 11, 2008,
some Executive Board members exercised part of the first lot of stock options
granted under the First Stock Option Program.
The Special and General Meeting held on April 30, 2008, approved the 2008 Stock
Purchase Option Plan, whereby the Board of Directors may grant stock options to
the Company’s management members and employees. Options will represent no
more than 10% of the Company’s total capital stock existing on the grant date and
the exercise prices will be the amount in local currency equivalent to R$ 3.09 per
share, plus interest of 4% p.a. and restatement in accordance with the IGPM/FGV
index.
The Board of Directors approved the First Stock Option Program for 2008 and the
granting of 3,559,871 stock options in a meeting held on May 30, 2008. The option
exercise price is fixed at R$ 3.09 per share, plus interest of 4% p.a. and
restatement in accordance with IGPM/FGV.
On August 29, 2008, the Company’s Board of Directors approved the
Second Stock Option Program under the auspices of the Share Option Plan
approved by the Special and General Meeting held on April 30, 2008,
relating to 647,248 shares, as well as granting such rights to certain
employees of the Company.
24. 22
15. Shareholders’ equity (Continued)
c) Stock option plan (Continued)
The chart below presents the changes in the granting of stock options,
option values and share market values on this date:
In thousands 1st Grant 2nd Grant 3rd Grant 4th Grant Total
Total share options issued 9.440 4.517 3.560 647 18.164
(-) Share options exercised (230) (433) - - (663)
(=) Current share options balance 9/30/2009 9.209 4.084 3.560 647 17.501
Option exercise price 9/30/2009 - R$ 1,90 1,90 3,25 3,17
Market share value 9/30/2009 - R$ 3,09 3,09 3,09 3,09
The following economic assumptions were used when determining the fair
value of stock options:
Risk free interest period 7,47% 7,47% 4,24% 4,24%
Vesting period 3,54 years 3,66 years 4,41 years 4,66 years
Number of options 9.440 4.517 3.560 647
Fair value on the grant date 3.183 1.491 0 0
Option exercise price 9/30/2009 - R$ 1,90 1,90 3,25 3,17
The expense recorded corresponds to the fair value of the corresponding
financial instruments, calculated on the grant date, based on the Black &
Scholes model, recorded on a pro rata temporis basis, during the period
the services are rendered, from the grant date up to the date on which
option exercise vests on the beneficiary, In the quarter ended September
30, 2009, the Company recognized this expense at R$ 184 in P&L for the
period.
c) Revaluation reserve
At December 31, 2007, a “Revaluation reserve in subsidiaries” was set up
on the amounts recorded by subsidiaries, net of tax effects. This reserve
will be released to retained earnings/ (accumulated losses) upon
realization of the assets revalued by the subsidiaries through their
depreciation, write-off or disposal.
25. 23
16. Financial income (expenses) net
30/9/2009 30/9/2008 30/9/2009 30/9/2008
Financial income
Short-term investments 6.979 15.800 9.799 16.580
Mark to market of derivative financial instruments 1.728 - 1.728 -
Other 0 4 550 251
8.707 15.804 12.077 16.831
Financial expenses
Interest and financial charges on loans - - 43.623 50.802
Losses on derivatives operations (swap) 788 - 788 -
IOF - - 51 -
Other 279 666 367 709
1.067 666 44.829 51.511
Company Consolidated
17. Related parties
Transactions with related parties correspond to intercompany current accounts that
basically stem from the payments of expenses to be refunded within a short period of
time. At September 30, 2009 there are no outstanding balances for transactions with
related parties.
Total management fees for the period ended September 30, 2009, amounted to R$
2,142 which are considered to be short-term benefits.
Expenses incurred in from the share option plan to management and
employees amounted to R$ 785 in the 9 month period ended September 30,
2009.
18. Financial instruments and risk management
The Company and its subsidiaries are engaged in transactions involving
financial instruments with a view to financing their own activities or investing
available funds. These risks are managed by setting conservative strategies,
in terms of liquidity, profitability and reliability.
The Company mitigates its exposure to credit risk related to banks and
investments by making short-term investments with top-tier financial
institutions. Credit risk is also minimized since lease agreements were
executed with selected tenants.
At September 30, 2009, there was no significant credit risk concentration
relating to tenants.
26. 24
18. Financial instruments and risk management (Continued)
The Company and its subsidiaries do not have significant debts, liabilities or
costs stated in foreign currency.
The Company maintained positions in derivatives during the first half of 2009,
in order to provide hedge against possible negative mismatching between the
Referential Rate (TR) variation, the index used to restate most bank financing
contracts, and the General Market Price Index (IGP-M), used for monetary
restatement of most lease agreements. The hedging derivative transactions
(swaps) were entered into in February 2008 for a period of 30 months with a
notional value of R$ 39,421 thousand, which resulted in an unrealized loss of
R$ 437 (fair value) at September 30, 2009
The main financial risks are:
Interest rate risk
The Company’s revenues and expenses are affected by changes in interest
rates due to the impacts of such changes on interest expenses arising from
debt instruments with variable rates and interest income accrued from short-
term investment balances.
Liquidity risk
The Company manages its liquidity risk based on cash flows, so as to
maintain a strong capital structure, In addition, mismatching, if any, between
assets and liabilities is consistently monitored.
The financial instruments are presented in accordance with CVM Rule No. 566
of December 17, 2008, which approved CPC Technical Pronouncement 14,
and CVM Rule No. 475, of December 17, 2008.
Asset position
Index (TR + 10%) 25.145 32.297 30.380 38.094
Liabiltiies position -
Index (IGP-M + 7.06%) (25.145) (32.297) (30.817) (38.596)
- - (437) (502)
Swap contracts measured at fair value through P&L
Notional value Fair value
Current
quarter Prior quarter Current quarter Prior quarter
Realized and unrealized gains and losses on these contracts are recorded in
Net Financial income/ expenses and total losses amounted to R$ 940 (Note
16). The balance payable at September 30, 2009 at the fair value of R$ 437
is fully recorded in the derivatives transactions account under current
liabilities.
27. 25
18. Financial instruments and risk management (Continued)
Analysis of sensitivity of derivative financial instruments
CVM Rules establish that publicly-held companies, in addition to the
provisions set forth in item 59 of CPC 14 – Financial Instruments: Recognition,
Measurement and Disclosure, shall disclose a sensitivity analysis chart for
each type of market risk considered to be significant by management,
generated by financial instruments, to which the entity is exposed at the end of
each period, including all operations with derivative financial instruments.
The chart below presents the sensitivity analysis prepared by the Company’s
management and the cash effect of outstanding operations at September 30, 2009:
Operation Risk Probable Possible Remote
Payable
Index (TR + 10%) Increase TR/ Decrease IGPM 6.235 6.229 6.224
Index (IGP-M + 7.06%) Increase IGPM/ Decrease TR (6.898) (7.004) (7.110)
Net effects of scenario variations (663) (775) (886)
Scenario
Payable Payable
At September 30, 2009, outstanding contracts have various maturities up to
July 2010.
In accordance with the aforementioned provision, the most probable scenario
considered in management’s evaluation was IGP-M and TR variations of
0.35% and 0.7% respectively in 2009 and 6.22% and 0.37% in 2010. The
possible scenario considers a deterioration of 25% in index variations. As such
IGP-M and TR variations of 0.39% and 0.61% respectively were assumed in
2009 and 7% and 0.33% in 2010. The remote scenario considers a
deterioration of 50% in the index variation. As such, an IGP-M and TR
variations at 0.44% and 0.53% respectively were assumed in 2009 and 7.77%
and 0.28% in 2010. Management believes that, irrespective of scenario,
derivative operations do not significantly impact the Company’s financial
position.
19. Insurance coverage
At September 30, 2009, insurance taken out by property lessees is considered
sufficient by the Company’s management to cover claims, if any, The scope of
our independent auditors’ services does not include a review of the sufficiency
of such insurance coverage, which was determined by the Company’s
management.
28. 26
20. Subsequent events
On October 2, 2009, the Company through its subsidiary BRPR XVIII
Empreendimentos e Participações Ltda., acquired all units of interest in MGM –
Empresa de Participações e Empreendimentos Imobiliários Ltda. (now known as
BRPR XXVI Empreendimentos e Participações Ltda.) owner of a commercial property
of approximately 49 thousand square meters in Itapevi in the state of São Paulo. The
total price of the units of interest in the company formerly known as MGM after
adjustments forecast in the purchase and sale agreement was R$ 14,137 thousand of
which R$ 1,850 thousand are withheld as established in the agreement. For BRPR
XVIII the acquisition represented a payment of R$ 79,000 thousand which also
includes the provision of funds for the settlement of bank loans held by the company
formerly known as MGM of approximately R$ 64,863 thousand.
On October 6, 2009, a capital increase amounting to R$ 220,900 thousand was
approved by the Company through the issue of 84,961,539 new common shares at
the issue price of R$ 2.60 per share. These were fully paid-up in cash on October 13,
2009 by a group of already existing shareholders and new investors. Accordingly, the
new investors became owners of 15.14% of the Company’s capital and signed,
together with the existing shareholders, the Third Amendment and Consolidated
Agreement of Company Shareholders on the date the capital increase was approved.
The funds of this capital increase are to be used to continue the implementation of the
business purposes of the BR Properties Group which are: the purchase, sale,
development, management and lease of commercial properties in Brazil (with the
exception of shopping centers). As a result of this capital increase the capital limit of
the Company increased to 400,000,000 shares.
