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CORPORATE PRESENTATION
April 2017
Disclaimer
2
The material that follows is a presentation of general background information about MRV Engenharia e Participações S.A. and its subsidiaries (collectively, “MRV” or the “Company”) as of
the date of the presentation. It is information in summary form and does not purport to be complete. No representation or warranty, express or implied, is made concerning, and no
reliance should be placed on, the accuracy, fairness, or completeness of this information.
This presentation may contain certain forward-looking statements and information relating to MRV that reflect the current views and/or expectations of the Company and its
management with respect to its performance, business and future events. Forward looking statements include, without limitation, any statement that may predict, forecast, indicate or
imply future results, performance or achievements, and may contain words like “believe,” “anticipate,” “expect,” “envisages,” “will likely result,” or any other words or phrases of similar
meaning. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause actual results to differ
materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation. In no event, neither the Company nor any of its affiliates, directors, officers,
agents or employees shall be liable before any third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements
contained in this presentation or for any consequential, special or similar damages.
This presentation does not constitute an offer, or invitation, or solicitation of an offer to purchase any securities. Neither this presentation nor anything contained herein shall form the
basis of any contract or commitment whatsoever.
The market and competitive position data, including market forecasts, used throughout this presentation was obtained from internal surveys, market research, publicly available
information and industry publications. Although we have no reason to believe that any of this information or these reports are inaccurate in any material respect, we have not
independently verified the competitive position, market share, market size, market growth or other data provided by third parties or by industry or other publications. MRV does not
make any representation as to the accuracy of such information.
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without MRV’s prior written consent.
Summary
1. Company Overview............................................................................................................................................... 4
2. Consistent Results ……….......................................................................................................................................16
Operational................................................................................................................................................................. 17
Financial ..................................................................................................................................................................... 25
3. Market Opportunities & Company’s Strategy....................................................................................................... 37
4. MCMV ................................................................................................................................................................ 42
5. Brazilian Economy / Homebuilding Industry ....................................................................................................... 48
6. Business Areas.................................................................................................................................................... 59
7. Sustainability ..................................................................................................................................................... 70
8. Management...................................................................................................................................................... 81
9. Financials ........................................................................................................................................................... 84
10. Subsidiaries
LOG CP ....................................................................................................................................................................... 88
URBAMAIS ............................................................................................................................................................... 112
3
COMPANY OVERVIEW
Shareholders’ Structure
Free float represents
62% of shareholders’ equity.
444,139,684 common shares
* December 31, 2016
“Novo Mercado”,
the highest level of Corporate Governance
BM&FBovespa Novo Mercado : MRVE3
ADR OTCQX : MRVNY
MRVNY
Cusip code 553479106
ISIN code US5534791067
5
Daily average of negotiation in 4Q16 –
R$27.3 million
Rubens Menin T.
de Souza 35.3%
Executives and
Board Members
2.3%
Treasury Shares
0.6%
Orbis Investment
Management
Limited 11.6%
Prudential Plc.
5.0%
Other
Shareholders;
50.2%
37 years of success
6
3.000 units per year 25.000 units per year 40.000 units per year
ADRs Level1
MRV
Foundation
Beginning of
relationship
Beginning of
Geographic
diversification
Enactment of
Correspondent
of Trust by
Financial
Institutions
Banks take over
housing credits
Private Equity
IPO
1st Negotiation
Correspondent
MRV LOG
Foundation
Equity Follow-On
MCMV 1
MCMV 2
MCMV 3
ADRs Level1
Business, Mission, Vision and Values
BUSINESS
Development, construction and housing sales.
MISSION
Make the home ownership dream possible by offering houses with the best cost-benefit ratio for clients.
VISION
Be the best company in the development, construction and sales of low-income housing projects in Brazil.
VALUES
7
Organizational Structure
Board of Directors
7 members (4 independents)
Chairman: Rubens Menin
Chief Executive
Officer
Rafael Menin
Chief Administrative
and SSC Officer
Júnia Galvão
Chief Financial and
Investor Relations
Officer
Leonardo Corrêa
Chief Production
Officer
Homero Paiva
Chief Comercial
Officer
Eduardo Barretto
Chief Real Estate
Development Officer
Hudson Gonçalves
Chief Real Estate
Financing Officer
José Adib
Chief Executive
Officer
Eduardo Fischer
Chief Legal Officer
Maria Fernanda Maia
Investor Relations
and Financial
Planning Director
Ricardo Paixão
9
Directors
23
Managers
128
Chief Officers
Chief Officers Board
Director 8
Our products
9
from 31 to
35 years
20%
more than 35
years
26%
Up to 25
years
24%
from 26 to
30 years
30%
Single
77%
Married
14%
Others
9%
Source: CRM MRV – 31/03/2017
1) Minimum wage 2016: R$ 880,00
Most of our clients are
searching for their first
apartment.
Our Clients
Young clients:
60% is up to 30 years old.
10
High school -
concluded
46%Degree -
concluded
30%
Degree - not
concluded
14%
High school -
not
concluded
2%
Outros
8%
The majority of our clients
have at least completed high school degree.
Up to R$ 2,350
43%
from R$ 2,350
to R$ 3,600
17%
from R$ 3,600
to R$ 6,500
20%
from R$
3,600 to R$
6,500
16%
more than
R$ 6,500
4%
1 or 2
inhabitants
38%
3 inhabitants
26%
4 inhabitants
21%
Over 5
inhabitants
15%
Cities where we operate
1: In 2014
2: In 2012
Education Degree1
Average household income1
Number of habitants per household2
Age Ranges1
Data from cities where MRV operates.
Source: Geofusion
11
Withoutinstructionto
incomplete highschool
62%
Complete highschool
to incomplete
graduation
25%
Complete
graduation
12%
Others
1%
Up to R$ 1,896
40%
From R$ 1,896 to
R$ 3,328
26%
From R$ 3,328
to R$ 6,490
19%
Over R$ 6,490
15%
Up to 19 years
28%
From 20 to 34 years
25%
From 35 to 59 years
34%
Over 60 years
13%
Our investments in urbanization and infrastructure
12
# of Cities x Gross Margin
Competitive Advantages and Market Potential
Note: *Information from Statistics and Information Center, from João Pinheiro Foundation.
MRV inhabitants x Landbank in PSV
1.5 million
(R$ 2.7 bi)
2.4 million
(R$ 4.7 bi)
11.5 million
(R$ 27.8 bi)
3.5 million
(R$ 5.6 bi)
Southeast
South
Middle-west
Northeast
Potential market penetration per month
13,719
MRV Actual
Performance
Additional
Potential
Total
Potential
Sales increment (0.72/1000 habitants)
Average sales / month (2016)
Nationwide Footprint
- Present in 22 States and Federal District
- 145 cities attended by the Company
10,704
3,015
28
7
12
15
17
11
1
9
6
11
36.6%
37.9%
35.1%
32.3%
31.1%
28.0%
26.4%
28.3%
30.2%
32.6%
2
2
2
2
2
3
3
3
3
3
4
0
5
10
15
20
25
30
35
40
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
79 cities 38 cities
13
Operational Efficiency: focus on processes
14
6
Sales
Quality in
prospecting land
bank
9 directors with
average of 16
years at MRV
Chanel Effectiveness
- 4,772 brokers *
- 84% of sales through
the internal broker in
the 4Q16
Credit quality:
- Pre-screening process
Construction
- # of Employees: 18,782*
- 340 engineers*
- 204 sites
- Experienced Management
Scale and Margins
- Standardization: bargaining
power in supply chain
- Cost control per project
1,450 dedicated
professionals*
Simultaneous
Sales (SICAQ / SAC)
Shared
Services Center
MRV
One of the
lowest G&A cost
of the sector
IT Systems
(SAP, MRV Obras)
Net debt / Equity¹: 5.4%
Short cycle
One of the best S&P and
Fitch Ratings Corporate
Rates in the industry
(brAA- , stable outlook)
Note (1) Net Debt as of 12/31/2016.
* Team numbers are composed by own and outsourced employees.
As of Dec/16.
Organic Growth: metrics
Production Headcount2
Geographic Diversification (# cities) Construction sites in progress
Administrative Headcount1
15
(1) Team numbers are composed by own and outsourced employees. (2) Annual average employees’ number. Last update: June 30, 2016.
28
56
63
75
90
107
118 119
128
134
145
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
75
127
193 205
277
345 333
299
251
223
204
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
CONSISTENCY OF RESULTS
17
Operational Results: Landbank – Real Estate Development
Landbank - %MRV (R$ billion)
Landbank - %MRV (Thousand units)
% of Swaps –
(% MRV Land acquired)
% cost of land / PSV
Dec/16
Geographical distribution
Dec/16 (R$)
Geographical distribution
of land bank
By Brazilian Region
Dec/16 (R$)
Reduced competition allows us to:
Maintain the % of Swap
Dilating installment
payments
OPTIMIZATION
OF CASH FLOW
Launches %MRV (units)
18
Operational Results: Launches
Launches - %MRV (R$ million)
Launches 4Q16
By financing source (units)
Launches 4Q16
By Geographic Distribution (R$)
Pre-sales* - %MRV (R$ million)
19
* Sales net of swaps and gross of cancellations.
Operational Results: Pre-sales
Pre-sales* - %MRV (units)
Pre-sales 4Q16
By financing source (units)
Pre-sales 4Q16
By Geographic Distribution (R$)
Pre – Sales (% MRV – R$ million)
20
Pre-sales per launching period
Sales over Supply
Sales over Supply = Pre-sales / (Beginning Inventory + Launches)
Pre-sales per launching period
Inventory Duration
Simultaneous Sales: benefits
MRV’s Credit Policy (up to 2013):
Simultaneous Sales (SICAQ/SAC):
The Project consists in the pre-approval of the client’s mortgage with the bank before recording the sale.
Benefits:
 Speed up the client transfer process to the bank and, as a consequence, the receivable cycle;
 Significant reduction in cancellation risk.
Flow chart and term until the client transfer:
21
Unit
reservation
Credit
Analysis
(MRV)
Pre-sale
Registration
Credit
Analysis
(Bank)
Mortgage
Approval
Mortgage
Granting
Unit
reservation
Credit
Analysis
(Bank)
Mortgage
Approval
Pre-sale
Registration
Mortgage
Granting
2012 2013 2014 2015
Credit Policy 12 9 6 7
Simultaneous Sales 1 1 1
Period (in months) between the sale record and transfer
As of 2016, all sales
were done through
the new process.
Operational Results
Cancellations (% MRV)
22
Operational Results
(in units)
Construction
Financing
100% (units)
Client
Financing
100% (units)
Finished
units
100% (units)
Built units
100% (units)
23
Balanced Operation
24Operational accumulated data since 2007 until the referred period.
Data 100%.
*Construction financing: contracted projects at financial institutions.
Financial Results
Net Revenue (in R$ million)
25
Proportional Consolidation CPC 19 IFRS 11
Gross Profit (R$ million) and Gross Margin (%)
CPC 19 IFRS 11Proportional Consolidation
140
400
1,111
1,648
3,021
4,015 3,804 3,871
4,186
4,763
4,294
0
1
2
3
4
5
6
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
50
146
421
578
977
1,247
1,066 1,021
1,184
1,439
1,387
35.3%
36.6%
37.9%
35.1%
32.3%
31.1%
28.0%
26.4%
28.3%
30.2%
32.6%
0
200
400
600
800
1,000
1,200
1,400
1,600
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
84 98
147
201 215
244
259
280 289
5.4%
3.5% 3.9% 4.7% 5.4% 4.8% 4.3% 5.1% 5.5%
7.6% 5.9% 4.9% 5.0% 5.6% 6.3% 6.2% 5.9%
6.8%
-30.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
2008 2009 2010 2011 2012 2013 2014 2015 2016
G&A Expenses
G&A Expenses / Pre-sales
G&A Expenses / Net Revenues 26
Sales Expenses (R$ million)
G&A Expenses (R$ million)
Proportional Consolidation CPC 19 IFRS 11
Proportional Consolidation CPC 19 IFRS 11
Financial Results
31 93 105
163
224
251 270
356
458
365
4.3% 6.0%
3.7% 4.3% 5.2%
6.3% 5.3% 5.9%
8.3% 9.2%
8.1% 8.4%
6.4%
5.4% 5.6% 6.6% 7.0%
8.5% 9.6% 11.5%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Sales Expenses
Sales Expenses / Pre-sales
Sales Expensas / Net Revenues
27
Financial Results
Net Income (R$ million) and Net Margin (%)
EBITDA (R$ million) and EBITDA Margin(%)
Proportional Consolidation CPC 19 IFRS 11
Proportional Consolidation CPC 19 IFRS 11
2014 considers fair value gain of R$ 268 millions from LOG.
23
77
273
440
796
1,045
787
643
862
669 637
25.5%
19.3%
24.5%
26.7% 26.3% 26.0%
20.7%
16.6%
20.6%
14.0%
15.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
17
87
231
347
634
760
528
423
720
548 557
12.1%
21.8% 20.8% 21.1% 21.0%
18.9%
13.9%
10.9%
17.2%
11.5%
13.1%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
15.7%14.8%
18.0%17.7%
10.7%
7.9%
12.5%
8.3% 7.8%8.2% 8.6%
10.5%
8.8%
2008 2009 2010 2011 2012 2013 2014* 2015 2016
21.8%20.8%21.1%21.0%
18.9%
13.9%
10.9%
17.2%
11.5%
13.1%12.3%
10.9%12.1%
13.5% 14.5%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
19.3%
24.5%
26.7%26.3%26.0%
20.7%
16.6%
20.6%
14.0%
15.0%
19.1%
16.6%15.5%
16.0% 16.3%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
36.6%
37.9%
35.1%
32.3%
31.1%
28.0%
26.4%
28.3%
30.2%
32.6%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
11.9%
15.8%
17.2%
23.8% 23.8%
14.5%
10.6%
16.7%
11.9% 11.1%
10.6% 11.8%
13.6%
12.2%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Profitability Indicators
(2007-2011: Proportional Consolidation / 2012-2016: CPC 19 IFRS 11)
28
Gross Margin
(including financial expenses)
EBITDA Margin Net Margin
ROE (p.a.)¹
ROIC (p.a.)
¹ Equity: average of the last 5 quarters.
EPS (R$)
Ex-equity income
0.055
0.567
0.779
1.316
1.578
1.104
0.891
1.570
1.240
1.263
0.890
1.100
1.457
1.393
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2014 considers fair value gain of R$ 268 millions from LOG.
Cash Flow
MRV typical project and Financing mix
29
Evolution of Pre-sales by financing means (R$)
%MRV
MRV typical project
Cash Flow Assumptions
MRV typical project
30
MRV MODEL %PSV 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Operational Indicators
Construction Speed 11% 16% 18% 17% 15% 12% 8% 3%
Sales Speed 21% 13% 9% 9% 9% 9% 9% 9% 9% 1% 1% 0%
Cash Flow CEF + BB
Cash inflow 100.0% 0.6% 5.6% 5.6% 8.8% 12.5% 14.5% 14.1% 12.6% 12.3% 6.8% 2.4% 2.1% 0.9% 0.7% 0.5%
Taxes - PIS and COFINS 2.1% 0.0% 0.1% 0.1% 0.2% 0.3% 0.3% 0.3% 0.3% 0.3% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0%
Net Revenue 97.9% 0.6% 5.4% 5.5% 8.6% 12.3% 14.2% 13.8% 12.3% 12.0% 6.7% 2.3% 2.1% 0.9% 0.7% 0.5%
Financing inflow 18.2% 13.2% 2.3% 1.3% 0.7% 0.7%
Interest 1.9% 0.2% 0.3% 0.4% 0.4% 0.4% 0.2% 0.1% 0.0%
Financing amortization 18.2% 3.1% 7.9% 5.2% 1.9%
Land disbursement 4.4% 1.3% 1.3% 1.3% 0.4%
Production and public improvements 2.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%
Construction disbursement 50.9% 0.0% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 3.4% 7.4% 8.6% 8.6% 7.9% 6.5% 4.6% 2.2% 0.6% 0.6%
Result 35.6% -1.4% -1.4% -1.4% -0.5% -0.1% -0.1% -0.1% -0.1% -0.1% 1.5% -1.3% 0.1% 1.0% 5.6% 6.5% 7.0% 9.1% 5.7% 1.6% 2.0% 0.8% 0.6% 0.4%
Individual Cash Flow
Cash inflow 100.0% 0.3% 0.7% 0.9% 1.2% 1.4% 1.5% 1.6% 1.8% 1.8% 1.5% 55.5% 29.4% 1.2% 0.7% 0.5%
Taxes - PIS and COFINS 2.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1.2% 0.6% 0.0% 0.0% 0.0%
Net Revenue 97.9% 0.3% 0.7% 0.9% 1.1% 1.3% 1.5% 1.6% 1.7% 1.8% 1.5% 54.3% 28.8% 1.2% 0.7% 0.5%
Financing inflow 51.6% 4.9% 5.8% 8.3% 10.3% 9.4% 6.6% 3.6% 2.6%
Interest 7.4% 0.1% 0.2% 0.4% 0.6% 0.8% 1.0% 1.1% 1.2% 1.2% 0.8%
Financing amortization 51.6% 51.6%
Land disbursement 4.6% 1.4% 1.4% 1.4% 0.5%
Production and public improvements 2.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%
Construction disbursement 52.2% 0.0% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 3.4% 7.6% 8.8% 8.8% 8.1% 6.7% 4.8% 2.3% 0.9% 0.3%
Result 26.8% -1.4% -1.4% -1.4% -0.5% -0.1% -0.1% -0.1% -0.1% -0.4% 1.6% -1.5% -0.2% 1.7% 1.5% 0.0% -1.0% 0.4% -0.9% 0.3% 28.1% 1.1% 0.6% 0.4%
Focus on Cash Flow
31
Important highlights
15 quarters of consecutive cash generation
Improvement in CEF’s and BB’s processes and systems
Growth in the number of built units contributes to the higher cash generation.
Efficiency of the new sales process “Vendas Simultâneas”
Built Units and Client Financing
100% ( units)
*Cash Generation: ∆ net debt + adjustments
4 years of recurrent cash generation
151
724
1,198
1,127
1,539
1,689
1,372
1,596
1,764
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2008 2009 2010 2011 2012 2013 2014 2015 2016
265
441
796
1,045
787
643
862
669 637
104%
14%
93%
148%
211%
207% 131%
78% 46%
2008 2009 2010 2011 2012 2013 2014* 2015 2016
Cash Generation
(2006-2011: Proportional Consolidation/ 2012-2016: CPC 19 IFRS11)
32
Net debt (R$ million) and
Net debt / equity ratio(%)
EBITDA (R$ million) and
Net debt / EBITDA LTM*
Debt Repayment Schedule 1
(R$ million)
1)AsofDecember31,2016.
*Includeleases.
* 2014
considers fair
value gain of
R$ 268 million
from LOG.
Duration: 17 months1
Cash position
(R$ million)
276
63
741
1,550
1,663
1,329
1,130
525
293
16.9%
2.5%
24.3%
42.2%
40.7%
30.4%
24.2% 10.4%
5.4%
2008 2009 2010 2011 2012 2013 2014 2015 2016
Share Buyback Program
33
Since 2014:
36,784,500 shares were repurchased
R$ 267.7 millions of Financial Volume
39,081,659 shares were cancelled
Buyback average price (since 2014):
R$ 7.28
Book Value1:
R$ 12.2427
Discount of 59.5%
1 As of December 31, 2016.
# of Shares Eligible Dividends
Term 06/02/2016
Status Active
Approved Quantity 12,000,000
Share Buyback Plan - Plan VI
Debt details and Financial Covenants
Covenant
brAA- AA-(br)
34
Corporate Rating
Net Debt + Properties payable___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Net Equity
< 0.65
Receivables + Unearned Revenue + Inventories_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Net Debt + Properties payable + Unearned Cost
> 1.6
Covenants: 1Q08 to 4Q12 – Proportional consolidation; 1Q13 to 4Q16 – CPC 19 – IFRS 11.
Note: “Net Debt” excludes SFH financing. “Properties payable” excludes land part relative to swap
Total Debt
(R$ million)
Balance Due
Dec/16
Balance Due
/ Total (%)
CDI 1,139 49.2% CDI + 1.4%
TR 1,156 50.0% TR + 9.0%
Others (fixed rate) 18 0.8% 5.0%
Total 2,314 100.0% 13.11%
Average Cost
Shareholders’ base by region
% Free Float
MRV Shareholders base
35Source: MRV
*Annual shareholders' base average; Last update: February 28, 2017.
Analysts Estimates – Consensus
36Institutions: Bradesco, BTG Pactual, Citi, Credit Suisse, Goldman Sachs, Itaú, JP Morgan, Bank of America Merril Lynch, Morgan Stanley, Santander, e Banco do Brasil.
Market Opportunities
&
Company’s Strategy
Housing Sector – Launches and Pre-Sales
38
Launches x Pre-Sales
(R$ billion – %company)
2012 shows activity decelerationAccrued INCC
2008 to 2016:
59.2%
Nominal Values Real Value
Source: Company reports – MRV, Cyrela, Gafisa, Tenda,PDG, Rossi, Brookfield (up to 9M14), CCDI (up to 2011), Viver, Even, Rodobens, Trisul, Tecnisa, Direcional, Eztec, Helbor, JHSF, João Fortes, CR2.
Note: 2016 considers the period from January to December.
Housing Sector – Inventory
39
Source: Company reports – MRV, Cyrela, Gafisa, Tenda, PDG, Rossi, Brookfield (up to 9M14), CCDI (up to 2011), Viver, Even, Rodobens, Trisul, Tecnisa, Direcional, Eztec, Helbor, JHSF, João Fortes, CR2.
Due to the slow down of launches in the last years, the real estate market is focused on inventory sales.
In 2016 the sector’s inventory reduced 27.2% (Real Value)
Inventories
(R$ billion – %company)
Nominal Values Real Value
Accrued INCC
2008 to 2016:
59.2%
Other
Companies
62% Other
Companies
43%
Other
Companies
37%
Other
Companies
16%
Other
Companies
30%
Other
Companies
27%
Other
Companies
41%
MRV
38% MRV
57%
MRV
63% MRV
84%
MRV
70%
MRV
73%
MRV
59%
2010 2011 2012 2013 2014 2015 2016
Reduced Competition in the Low Income Segment
40
Launches eligible to MCMV
(R$ billion) (Groups II and III)
Note: The data are estimated and based on the listed Companies’ earnings releases.
Source: Company reports – MRV, Cyrela, Gafisa, Tenda, PDG, Rossi, Brookfield (up to 9M14), CCDI (up to 2011), Viver, Even, Rodobens, Trisul, Tecnisa, Direcional, Eztec, Helbor, JHSF, João Fortes, CR2.
Lower Competition in the MCMV Program
Change of % of launched units in MCMV
(Groups II and III)
• Other companies: Direcional, PDG, Gafisa, Tenda, Cyrela, Rodobens, Rossi,
Brookfield, CCDI, Even, Ez Tec, Tecnisa, Trisul, Viver and Helbor.
7.7
10.8
8.5
6.7
6.1
5.2 5.7
6.6
7.4
10.5
7.6
4.6
3.3
4.0
5.8
6.6
2009 2010 2011 2012 2013 2014 2015 2016
MCMV (Groups 1, 2 and 3) MCMV (Groups 2 and 3)
Financing Amortization Systems
* As of December 31, 2016.
92% of MRV’s sales are
made through PRICE
system*
41
Note:
Simulation of a new apartment acquisition in São Paulo / SP.
Source: Housing Simulator of Caixa Econômica Federal.
SAC – Constant Amortization System
Fixed monthly financing amortization and decreasing installments.
PRICE – Constant Installments
Increasing monthly financing amortization and constant installments.
* Average conditions observed in MRV’s sales.
Tenor: 360 months
PRICE
Family Income R$ 2,500
Loan to value 80%
Interest Rates 5.5%
Unit Price R$ 159,000
Subsidy* R$ 6,722
FGTS* R$ 5,300
Down Payment* R$ 3,180
MRV Installments* R$ 23,850
Financed value R$ 119,948
Banck first Installment R$ 708.37
Apartment price: R$ 159,000
MCMV
Programa Minha Casa Minha Vida
84% das vendas MRV são
realizadas pelo sistema
PRICE*
2
APRIL/09 TO DEC/10 JAN/11 TO DEC/15
¹ Included 350,000 units added on September 2014.
² Amounts refers to the units to be built in 2016
³ MCMV 1 and 2: Amounts referring to each program.
⁴ Details not yet released
2017-20182016
43
Minha Casa Minha Vida: Subsidies
2
SUBSIDIES
44
Group Monthly Income Metropolitan regions of SP, RJ, DF Other cities
Group 1
Up to R$ 1,800 Up to 90% Up to 90%
Up to R$ 2,350 47,500R$ Up to R$ 40,000
Up to R$ 2,600 15,835R$ Up to R$ 12,665
Group 2 Up to R$ 2,350 29,000R$ Up to R$ 27,420
Up to R$ 2,790 14,765R$ Up to R$ 11,810
Up to R$ 3,275 6,115R$ Up to R$ 4,895
Up to R$ 4,000 2,585R$ Up to R$ 2,535
Group 3 Up to R$ 7,000 -R$ -R$
Group 3 Plus Up to R$ 9,000 -R$ -R$
M CM V 3 - (2 0 1 7 -2 0 1 8 )
Group 1,5
Group Monthly Income Metropolitan regions of SP, RJ, DF Other cities
Group 1 Up to R$ 1,800 Up to 90% Up to 90%
Group 1,5 Up to R$ 2,350 45,000R$ Up to R$ 40,000
Up to R$ 2,350 27,500R$ Up to R$ 26,000
Up to R$ 2,790 14,000R$ Up to R$ 11,200
Up to R$ 3,275 5,800R$ Up to R$ 4,640
Up to R$ 3,600 2,450R$ Up to R$ 2,405
Group 3 Up to R$ 6,500 -R$ -R$
Group 2
M CM V 3 - (2 0 1 6 )
Group Monthly Income Metropolitan regions of SP, RJ, DF Other cities
Group 1
Up to R$ 1,600 Up to 95% Up to 95%
Group 1,5 - -R$ -R$
Up to R$ 2,325 25,000R$ 17,960R$
Up to R$ 2,790 10,783R$ 2,113R$
Up to R$ 3,275 2,113R$ 2,113R$
- -R$ -R$
Group 3 Up to R$ 5,000 -R$ -R$
Group 2
M CM V 2
2
Minha Casa Minha Vida: Units Price
Group 1,5:
Group 2 and 3:
Group 3 plus:
MCMV 3 – (2017 - 2018)MCMV 3 – (2016)
45
Regions DF, RJ e SP SUL, ES e MG CO NE e N
Capitals - Metropolitan areas 240,000 215,000 190,000 190,000
Other Capitals and metropolitan areas 230,000 190,000 180,000 180,000
Cities < 250 thousand habitants 180,000 170,000 165,000 160,000
Cities ≥ 50 thousand < 100 thousand habitants 145,000 140,000 135,000 130,000
Cities ≥ 20 thousand < 50 thousand habitants 110,000 105,000 105,000 100,000
Other cities 95,000 95,000 95,000 95,000
Regions DF, RJ e SP SUL, ES e MG CO NE e N
Capitals - Metropolitan areas 144,000 133,000 128,000 128,000
Other Capitals and metropolitan areas 133,000 128,000 122,000 122,000
Cities < 250 thousand habitants 122,000 117,000 112,000 106,000
Cities ≥ 50 thousand < 100 thousand habitants 106,000 101,000 96,000 90,000
Cities ≥ 20 thousand < 50 thousand habitants 85,000 80,000 80,000 74,000
Other cities 74,000 74,000 74,000 74,000
Regions DF, RJ e SP SUL, ES e MG CO NE e N
Capitals - Metropolitan areas 300,000 268,000 237,000 237,000
Other Capitals and metropolitan areas 287,000 237,000 225,000 225,000
Cities < 250 thousand habitants 225,000 212,000 206,000 200,000
Cities ≥ 50 thousand < 100 thousand habitants 181,000 175,000 168,000 162,000
Cities ≥ 20 thousand < 50 thousand habitants 137,000 131,000 131,000 125,000
Other cities 118,000 118,000 118,000 118,000
Regions DF, RJ e SP SUL, ES e MG CO NE e N
Capitals - Metropolitan areas 225,000 200,000 180,000 180,000
Other Capitals and metropolitan areas 215,000 180,000 170,000 170,000
Cities < 250 thousand habitants 170,000 160,000 155,000 150,000
Cities ≥ 50 thousand < 100 thousand habitants 135,000 130,000 125,000 120,000
Cities ≥ 20 thousand < 50 thousand habitants 105,000 100,000 100,000 95,000
Other cities 90,000 90,000 90,000 90,000
Regions DF, RJ e SP SUL, ES e MG CO NE e N
Capitals - Metropolitan areas 135,000 125,000 120,000 120,000
Other Capitals and metropolitan areas 125,000 120,000 115,000 115,000
Cities < 250 thousand habitants 115,000 110,000 105,000 100,000
Cities ≥ 50 thousand < 100 thousand habitants 100,000 95,000 90,000 85,000
Cities ≥ 20 thousand < 50 thousand habitants 80,000 75,000 75,000 70,000
Other cities 70,000 70,000 70,000 70,000
Resources invested in the program
2
 Group I – According to Ministry of Planning Budget (PAC)
 Group II – According to FGTS
• Until 2015: In Group II, subsidy has contribution of 17.5% from National Treasury and 82.5% from FGTS.
• After 2015: In Group II, National Treasury contribution is of 10% and of FGTS is 90%.
**MCMV3: investments estimated for 2015 to 2018
- FGTS has complementary subsidies (up to R$ 27,500 per unit) + Interest Rates subsidy.
- OGU: National General Budget
* The number of units to be contracted remains the same as that proposed at the beginning of the MCMV 3.
Source: http://www.cgu.gov.br/
46
Program Groups Family Income
Contracted
Units
Resources (R$ million) Family Income
Units up to
Ago./2015
Resources (R$
million)
Family Income
Units up to
Jan/2017
Resources (R$
million)
Family Income
Estimated
Units
Resources (R$
million)
Group 1 Up to R$1,395 482,741 R$ 17,999 (OGU) Up to R$ 1,600 1,226,605 R$ 63,158 (OGU) Up to R$ 1,800 53,748 R$ 1,976 Up to R$ 1,800 170,000
Group 1.5
From R$ 1,800 to
R$ 2,350
From R$ 1,800 to R$
2,600 80,000
Group 2
From R$ 1,395 to
R$ 2,790
375,764
R$ 2,047 (OGU) +
R$ 2,764 (Complement) +
R$ 2 (Interest Subsidy)
From R$ 1,600 to
R$ 3,275
1,213,341
R$ 5,037 (OGU) +
R$ 10,681
(Complement) + R$
7,822 (Subsidy)
From R$ 2,350 to
R$ 3,600
645,692 R$ 6,593 (FGTS)
From R$ 2,600 to R$
4,000
800,000 R$ 8,900 (FGTS)
Group 3
From R$ 2,790 to
R$ 4,650
146,623 -
From R$ 3,275 to
R$ 5,000
307,054 -
From R$ 3,600 to
R$ 6,500
113,930 -
From R$ 4,000 to R$
7,000
200,000 -
Group 3 Plus
-
From R$ 7,000 to R$
9,000
Not Available -
TOTAL 1,005,128 R$ 25,20 2,750,000 R$ 86,70 813,370 R$ 97,145 2,000,000* 97,145*
MCMV 1 (Apr/2009 - Dec/2010) MCMV 2 (Jan/2011 - Ago/2015) MCMV 3 (Jan/2017 - Dec/2018)**
Not available
MCMV 3 (Jan/2016 - Jan/2017)**
Minha Casa, Minha Vida
Minha Casa Minha Vida 1 (2009-2010)
Minha Casa Minha Vida 2 (2011- Nov/15)*
2
47
MRV leadership on the Government Program and good relationship with CEF
Source: Ministério das Cidades – 11/30/2015
Group I: monthly income up to R$1,600; Group II: monthly income from R$1,600 to R$3,275; Group III: monthly income from R$3,275 to R$5,000.
Total Contracts
(R$ million)
Nr of
Projects
Average
(R$ million)
MRV ENGENHARIA 6,553 519 12.6
DIRECIONAL ENGENHARIA 3,900 50 78.0
EMCCAMP 2,233 71 31.5
CURY CONSTRUTORA 1,900 60 31.7
SERTENGE SERVIÇOS 1,462 58 25.2
CONSTRUTORA TENDA 1,715 137 12.5
GRÁFICO ENGENHARIA 1,073 38 28.2
HF ENGENHARIA 934 28 33.3
CONSTRUTORA EMCASA 860 26 33.1
CANOPUS 846 46 18.4
BROOKFIELD 945 39 24.2
NOVOLAR 895 34 26.3
CASALTA CONSTRUÇÕES 779 56 13.9
AURORA CONSTRUTORA 651 44 14.8
AMORIMCOUTINHO 596 30 19.9
L MARQUEZZO 667 46 14.5
BAIRRO NOVO 669 35 19.1
JC GONTIJO 862 7 123.1
REALIZA 674 33 20.4
CCMCONSTRUTORA 682 22 31.0
Ranking MCMV
Source:MinistériodasCidades–Jul/2009toApr/14
Total MRV %
Contracted Units 1,005,128 50,384 5%
482,741 0 0%
522,387 50,384 10%
MCMV 1 (2009-2010)
Group I
Groups II and III
Total MRV %
Contracted Units 3,115,269 221,403 7%
1,242,745 3,180 0%
1,872,524 218,223 12%
Group I
Groups II and III
MCMV 2 (2011 - 11/30/2015)
Study from FGV: “Permanent Policies for Housing”
In 5 years of operation, the MCMV:
• Generated important results for the Brazilian economy.
• Contributed to reduce the housing deficit (- 8.04% from 2009 to 2012).
DEMAND FOR HOUSING
STATE POLICY - Challenges:
• Land price
• Allocation of areas for housing of social interest
• Work force qualification
• Improvement of the construction productivity
Source: http://blog.planalto.gov.br/minha-casa-minha-vida-contribuiu-para-reduzir-deficit-habitacional-no-brasil/
MCMV x Habitational Deficit
48
MCMV contributed to the reduction of housing deficit in Brazil
BRAZILIAN ECONOMY:
HOMEBUILDING INDUSTRY
Structural Demand
Growth, regardless of government program
Source: IBGE, January 2016.
Source: IBGE, 2013
50
17%
17%
18%
15%
13%
9%
6%
3%
1%
11%
13%
14%
15%
15%
13%
10%
6%
3%
0 a 9
10 a 19
20 a 29
30 a 39
40 a 49
50 a 59
60 a 69
70 a 79
80 +
2010 2030
Class A/B: Above 10 M.W.
Class C: 2 to 10 M.W.
Class D/E: up to 2 M.W.
M.W. – minimum wages: lowest monthly remuneration
that employers must legally pay to workers.
2016 M. W.: R$ 880.00
Families per
Income Level
Real Salary Growth
Population per Age Group
Source : IBGE, 2013
Smaller families = higher demand
Evolution of inhabitants per apartment
52%
38%
19%
16%
21%
21%
15%
19%
25%
12% 15%
22%
5% 7% 12%
1970 1991 2010
Five inhabitants Four inhabitants
Three inhabitants Two inhabitants
One inhabitant
4.0%
9.4% 10.1%
7.4%
1.8%
8.8%
3.8%
8.6%
-0.8%
2.5%
-9.6%-11.4%
ClassC
ClassC
ClassC
ClassC
Habitational demand and Credit Supply
Units (thousand) financed by FGTS + SPBE (Saving Accounts)
Housing Shortgage of 6.2 million of units in 2014
Source: Presentation, Dec/16
51
Source : CBIC – FGTS: Dec/16; SBPE: Dec/16
78
60
53
41
37
31
22
24
11
10
USA
Netherlands
Spain
France
Germany
South Africa
Italy
Chile
Mexico
Brazil
Real Estate Financing as % of GDP
Mortgage
Source : Industry Department of Construction of Fiesp - Feb/2016
SFH - Brazilian Housing Finance System
FUNDING
Employers deposit 8% of
the monthly salary of all
workers (Nov/16)
Source: Caixa
Balance of
R$ 502
billion
Borrowers may use the
account balance linked to the
FGTS for
Mortgage
Termination of work
Retirement
Others
12%
66%
14%
8%
Interest Rate from
5% to 9.16% a.a +
TR
Units up to:
R$ 300,000
sbpe
Deposits made on the
savings of commercial banks
Real Estate Credit
Legal Reserves
Free Resources
65%
30%
5%
SBPE Resources
Market Rate
Interest Rate from
9.75% 1 to 11% +TR
Units of R$300,000 to
R$950,000*
Borrowers can go to any bank and
apply for a real estate loan
according to their credit rating
Interest Rate from 12.252 % +TR
Units above:
R$950,000Notes:
1) If the client has a salary account in CEF the interest rate can reach 9.75%. In BB it can reach 9.65%+TR.
2) If the client has a salary account in the bank, the interest rate can reach 10.7%+TR.
3) 20% for compulsory deposit (remunerated by SELIC) and 10% for additional compulsory (corrected by TR)
* States of DF, MG, RJ, SP: R$ 950,000; other states: R$ 750,000.
3% per year+TR
52
FGTS
¹ Source up to 2011: PME Unemployment rate and source from 2012: PNAD due to its better sensibility and comprehensiveness.
Net Collection (billion)
From 2017 to 2020 the FGTS budget is R$ 254 billion to be
invested in Housing.
Obs: In 2007, retirement withdrawals increased significantly due to the spontaneous
retirement approval by Federal Supreme Court, reducing the net collection in the period.
Source: IBGE, CAGED e FGTS – Dec/16
Withdrawals (R$ billion)
Budget (R$ billion)
53
Breakdown 2017 2018 2019 2020
Housing 70.5 63.5 63.5 63.5
Basic Sanitation 7.0 9.5 9.75 9.75
Infrastructure 9.0 8.0 8.0 7.0
Others 0.5 0.5 0.5 0.5
TOTAL 87.0 81.5 81.75 80.75
Low impact from tighter Monetary Policy on mortgages
54
Assumptions:
Unit value: R$ 159,000
LTV: 80%
Income: R$ 2,500
Note : TR = Reference Rate for the Brazilian Housing Financing System and for the Savings Accounts. TR is a floating rate.
FGTS’s remuneration of 3%p.a.+ TR allows the low
interest rates on mortgages
Interest rates and Inflation
INCC = Construction Inflation Index
IPCA = Brazilian Official Inflation Rate
Source: IBGE, BCB, FGV – February 2017
20 % Income 30 % Income
4.50% 0.60% 5.10% 900.24 45.0% 776.72 38.8%
4.50% 1.21% 5.71% 900.45 45.0% 776.93 38.8%
4.50% 1.81% 6.31% 900.56 45.0% 777.04 38.9%
4.50% 2.43% 6.93% 900.73 45.0% 777.21 38.9%
* 13th Installment
RealInterest
Rate(%p.a)
Interest
Rate
Nominal
Rate
Monthly Installments (R$)*
FGTS
TR a.a.
Price
0%
5%
10%
15%
20%
25%
30%
TR 12M
IPCA 12M
SELIC 12M
INCC 12M
2.0
0.4
2.0
2.9
5.5
1.1
0.4
1.7
1.4
7.0
1.6
1.2
2.0
1.7
6.4
1.8
2.4
1.6
2.7
5.3
1.6
2.4
1.8
3.0
5.2
Rural Corporate Housing Retail Housing BNDES Funding Microcredit
dec/11 dec/12 dec/13 dec/14 dec/15 dec/16 feb/17
Housing Credit
Credit Default of Economic Sectors
Source: BCB – February, 2017
55
39% of the Credit is destined to the Housing
Sector, which covers construction, renovation
or acquisition of residential units.
Housing Credit
(R$ billion)
99
154
222
298
395
502
572
606 610
Crescent destination of credit to housing sector which has one of the lowest credit default in the market.
Dec-07Dec-08Dec-09Dec-10Dec-11Dec-12Dec-13Dec-14Dec-15Dec-16Feb-17
Evolutionof credit protfolio
(R$ billion)
Retail Housing
Corporate Housing
BNDES Funding
Rural
Others
Microcredit
316
401
518
657
804
972
1,205
1,441
1,582 1,550 1,541
RET – Special Tax Regime
56
Source : RFB Regulatory Instruction n° 934; repealed by RFB Regulatory Instruction n° 1,435
RET
Special Taxation 6%
(up to 2012)
Special Taxation 4%
(as of 2013)
Special Taxation 1% Presumed Income Taxable Income
PIS / COFINS
Basis of calculation
Gross revenue received from
real estate activities
Gross revenue received from
real estate activities
Gross revenue received from
real estate activities
Gross revenue received from
real estate activities and
other revenues
Gross revenue received from
real estate activities and
other revenues
Rate 3.13% 2.08% 0.53% 3.65% 9.25%
IRPJ/CSLL
Basis of calculation
Gross revenue received from
real estate activities
Gross revenue received from
real estate activities
Gross revenue received from
real estate activities
Gross revenue received from
real estate activities
Adjusted net income. Gross
profit in the real estate is
taxed as received.
Rate 2.87% 1.92% 0.47% 3.08% 34.00%
TOTAL 6.00% 4.00% 1.00% 6.73%
Additional Comments
Taxation of project subject to
"Patrimônio de Afetação"
Taxation of project subject to
"Patrimônio de Afetação"
Taxation of project subject to
"Patrimônio de Afetação".
Only units up to R$100k and
elegible to MCMV are subject
to 1%. (Price increase from
R$85k to R$100k in December
2012)
-
Possibility to establish credit
on some costs. Credit
estimated at 3.75% of
revenue received
Other revenues are taxed by
the tax regime of the
developer
Other revenues are taxed by
the tax regime of the
developer
Other revenues are taxed by
the tax regime of the
developer
- -
Brazilian Economic Outlook
SELIC Rate and Inflation Rate (IPCA)
Data base: Fev/2017
Inflation Rate – IPCA
* Source: IBGE – Jul/16
57
GDP Growth (% yoy)
4.0%
6.0%
5.0%
-0.2%
7.6%
3.9%
1.8%
2.7%
0.1% -3.7% -3.5% 0.5%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Data base: Oct/2016.
Indexes 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Nominal GDP (R$ trillion) 2.369 2.661 3.032 3.185 3.675 4.158 4.403 5.332 5.779 6.001 6.266 n.d.
Real GDP Growth 4.0% 6.1% 5.2% -0.3% 7.5% 2.7% 0.9% 2.7% 0.1% -3.7% -3.5% 0.5%
Unemployment rate (YTD) 10.0% 9.3% 7.9% 8.1% 6.7% 6.1% 5.5% 5.4% 6.8% 9.0% 12.0% 13.2%
Bank Credit (% GDP) 30.7% 33.4% 40.8% 44.4% 46.4% 50.2% 54.2% 56.1% 58.0% 53.8% 51.1% 52.7%
Inflation (IPCA) 3.1% 4.5% 5.9% 4.3% 5.9% 6.5% 5.8% 5.7% 6.4% 10.7% 6.3% 4.8%
Nominal Interest Rate - TR 2.0% 1.4% 1.6% 0.7% 0.7% 1.2% 0.3% 0.2% 0.9% 1.8% 2.0% 0.4%
INCC (Construction inflation) 5.0% 6.2% 11.9% 3.3% 7.8% 7.5% 7.1% 8.1% 6.9% 7.5% 6.1% 6.2%
Average Central Bank Target Rate (Selic) 15.3% 12.0% 12.4% 10.0% 9.8% 11.7% 8.5% 8.4% 11.0% 15.4% 14.2% 10.4%
Source: IBGE-Mar/2017; BCB -Mar/2017; FGV e CMN -Mar/2017
*Estimates : BCB -Focus Report -March 31, 2017
58
Brazilian Economic Outlook
Composition of Bovespa index, by Weight(1)
Note:
(1) Source: BM&F Bovespa (May - Aug 2017)
(2) Source: IBGE (excl. taxes, considering GDP Jan/16-Dec/16)
Composition of Brazilian GDP, by Sector(2)
A misconception about the Brazilian economy is that its performance is heavily dependent on global commodity markets.
The statement is correct for the stock market, but not for the real economy.
1%
6%
3%
11%
73%
6%
Ind. - Commodities
Ind. - Utilities
Ind. - Real Estate
Ind. - Manufacturing
Services
Agribusiness
9%
5%
3%
16%
67%
Commodities
Utilities
Construction
Industry
Services
BUSINESS AREAS
Corporate Governance – Committees
60
Risks and Compliance Committee
• Evaluate and to monitor Company‘s risk exposures, monitoring and supervising the risk management process.
• Comprised of Chairman, two Chief Executive Officers and two Chief Officers.
Governance, Ethics and Sustainability Committee
• Ensure and to disseminate the Company‘s commitment to management based on the pillars of corporate governance, sustainability and corporate ethics
• Comprised of Chairman, two Chief Executive Officers and two Chief Officers.
Human Resources Committee
• Evaluate and to propose improvements to people development, training, remuneration, benefits, incentives and talents retention methods
• Comprised of Chairman, two Chief Executive Officers, one Chief Officer and one Board of Directors member.
Commercial and Credit Committee
• Define the commercial and real estate financing strategy of the Company, composed, among others, sales mix, pricing, team profile, market agents mix, etc.
• Comprised of Chairman, two Chief Executive Officers, three Chief Officers and one Director.
Real Estate Development Committee
• Define strategies of geographical expansion of the Company’s activities and land acquisitions.
• Comprised of Chairman, two Chief Executive Officers and one Chief Officer.
Production Committee
• Ensure the correct production planning and control, evaluating the several elements that need to be managed and their respective impacts, so the Company’s goals can be reached.
• Comprised of Chairman, two Chief Executive Officers and one Chief Officer.
Juridical Committee
• Establish the Company’s legal strategy in relation to main causes and mass litigation
• Establish the fiscal planning strategy;
Communication Committee
• Establish the Company’s communication strategy with the stakeholders;
• Interact with communication outlets in general;
Pricing
24%
Location
23%
Payment
Conditions
19%
Security
10%
Confidencein
Homebuilder
9%
Materials quality
7%
Others
9%
Development Strategy
What are our clients looking for?
61
Market research and
analysis
Demography,
Income,
Expectations, etc
- Land acquisition
- Development phase
- Sales strategy
Client oriented strategy
Source : Research with MRV’s Clients – Data Popular - 2011
Landbank and Project location
Cuiabá, MT – 912 units Valparaíso de Goiás, GO – 2,256 units
Recife, PE – 860 units Taguatinga, DF – 2,748 units
62
Production: New Technologies
Hydraulic Kit
Reduced workforce
Less generated waste
Greater production rationalization
Better site organization
Standardized projects
Higher speed of production
Strategic team of equipment
Simplification of projects
Economically viable
Greater environmental sustainability
Increased work security
Standardization, Mechanization
and Intelligent Processes
Concrete
Prefabricated and
standardized door
Aluminum Forms Hoisted Slab
63
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
MRV Other Homebuilders (average)
Sales Channels
* Períod: June 2016
Sales Channels
Força de Vendas
Website visits
64
 85,6 million of Brazilians with internet access.
 56% of C Class has internet access
Source: Portal EBC (Apr/2015) and L3CRM (Aug/2015)
Source : Similar Web, Mar 2017
Other companies: Rossi, Gafisa, PDG, Tenda, Living, Tecnisa, Even, Direcional, Brookfield, Cury, Helbor, Eztec
Sales Force
• R$ 4.5 Billion in payments in 2016
• 55.8 thousand Invoices received
in December 2016.
• 20.5 thousand Employees paid
per month
• 260 Employees
SSC – Shared Service
Center
• + 5 million views of
#MeuMundoMelhor videos.
• + 1.4 million accesses to the
Relationship Portal in 2015
• + 54 thousand estimated calls
answered in 2015
• 166 thousand active clients
• R$ 400 million collected per month
• + 3,000 current accounts
reconciled per month
• + 3,000 new registered contracts
per month
• 218 employees
• R$ 80 million of investment in IT (5 years)
• +5.5 thousand work stations
• 33 million of scanned documents since
2010
• +300 tablets in work sites
Administrative Structure
Lower
G&A/Net
Revenue in
the sector
Client Relationship
and Internal
Communication
Information of
Technology
Specialized Services
65
66
SSC – Shared Service Center
• 285 employees
• Lower Operating Cost
• Qualified workers
• Optimized workspace
• Work in shifts
124 Thousand payment per month. 34 payments per minute.
Total transactions of 1 billion reais per month
89% of payment through account credit
14,257 payroll managed
Material Facts - SSC
Administrative
Process of 56 Thousand invoices per month
Management of 3,000 mobile accounts
Enter of 3,800 invoices per month
Management of 1,000 travel request per month
200 rented vehicles
4,800 monthly processed documents
Invoices Centre
Accounts Payable
Personal Department
Social Responsibility
30,967 Released units in 2014
250 new contracts per month
Data-base: March/16
Volume of processed invoices
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Mar16 Jan17 Feb17 Mar17
Note: does not include Prime and MRL
Source: SAP
2,414 new registered contracts per month
Resolved demands on 1st contact
91.92%
2016
Relationship Portal
General Accesses:
1,459,545
2016
54,836
Number of
Answered
Calls
Monthly Average –
March 2016
Costumer Service
“Conexão MRV”
+178,000
Views of the videos
“Conexão MRV”
#MeuMundoMelhor
+5,000,000
Views of the videos
#MeuMundoMelhor
Complaints:
0.32%*
Year 2016
MRV in Midias
361,186 followers in Twitter
607,601 followers in Google +
3 million of Facebook fans
*Number of complaints over total clients (5 years) – Annual view
Client Relationship
67
Client Access:
67,246
Monthly Average of Single
Calls
Information Technology
• Mobility: Technical Assistance, Keys delivery, Client APP.
• Automatization of sales force: WEB Commercial System WEB integrated to the
BackOffice.
• Social Media: Monitoring and collaboration (PODIO).
• GED and BPM: Automatization of processes and paper elimination.
MANAGEMENT PRACTICES
• Prioritization of projects focused in return for the business.
• Fast development, along with the speed of delivery and
strategy.
• DATACENTER structure (internal and active) guaranteeing the security of the
information, the performance and availability of the systems.
SECURITY AND CONTINUITY OF BUSINESS
• Global Integrated Systems: SAP, MICROSOFT, ORACLE and IBM
• Internal development to increase competitive advantages: MRVObras,
MRVComercial, MRVCrédito and MRVDI
INTEGRATED MULTIPLATAFORM SOLUTION
RECOGNITION
68
2013 – Winner in Construction
and Engineering category.
2012 – Winner in Construction and
Materials category.
Production Team
 Approximately 18 thousand people dedicated to Production
 Employees on a leadership position (directors, managers and
coordinators) have been working in the company for an average of 9 years.
 At this time, we have 204 sites under construction, located in the following
areas:
Northeast 29 (14.2%)
Middle-west
11 (5.4%)
South 32 (15.7%)
Southeast 132 (64.7%)
10
Director
24 Managers
55 Coordinators
340 Engineers
439 Engineering Auxiliary and
Building Technicians
465 interns
18,782 in other positions, being 9,903 MRV
employees and 8,879 third part employees.
Data-base: Dec/2016
Data-base: Feb/2017 69
SUSTAINABILITY
Social Investment
Education
Health
Urbanization
Environment
2011 2012
11.9 6.8
3.2 4.7
49.3 83.0
1.1 2.8
R$ million
2013
0.2
2.4
80.0
10.6
2014
1.3
0.0
88.2
13.9
2015
1.7
0.2
110.7
15.8
71
2016
3.4
1.6
167.7
19.6
Work Safety and Health
PODIO
72
Frequent inspections, with photographic report and integrated electronic record
MRV uses the corporate social networking Pódio for the registration and follow-up of construction sites and its accommodations, where it has
employees and service providers.
All inspections are available online for research, consultation and follow-up.
73
Work Safety, Health and Literacy
Contractors admission follows a Standard Operating Procedure
requiring complete legal documents from contractors.
Security Dialogue
Continuous employee training
Continuous improvement
29 literacy/training schools in operation at MRV’s
construction sites, with more than 3,200 students.
Since 2012, we already maintained more than 134 schools.
MRV Production Schools → Qualification of Labor Force
Training Courses
Education Site
Literacy Course
Campaigns
Vaccination
Oral health
Tuberculosis Prevention
Work Safety and Health
74
OSHAS 18001 Certificate –
Occupational Health and Safety
Consists on a management system that the certified
company should follow guidelines regarding to
occupational health and safety procedures
MRV joined in 2012 and is the only company of lightweight
construction in the country to join the National Commitment and is
the leader in number of building sites included in the project
Social Responsibility
Website: http://www.institutomrv.com.br/
75
Officially launched in December 2014, MRV Institute is focused on investing in projects and works
aiming education, health, safety at work, professional training, culture and leisure, always seeking
for the well-being of all stakeholders.
Sponsorship for Criança Esperança Project, in Belo Horizonte.
Project MRV Vida implementation, intended to promote social-environmental
responsibility actions in the cities where MRV operates.
Volunteer group development, aiming to promote the engagement of employees in
social causes.
Sponsorship for Minas pela Paz Institute.
Sponsorship for Junior Achievement: non-profit educational association that seeks to
promote an entrepreneurial spirit in young people.
Escola Nota 10 Program.
Environment
More than 758 thousands of trees were planted since 2010*
*In Mar/2017
76
IS0 14001 - Environmental Management
Certified companies should develop
and control procedures for relevant
issues in the environmental area
Environmental –Certification Seal
The construction sites shall follow specifically items to be
certified
77
Certifications “Selo + Verde” and “Obra Verde MRV”
Our constructions sites certifications have the following purposes:
Standardize and monitor the execution of sustainable actions at construction sites;
Increase the clients' satisfaction;
Be a homebuilder company recognized as sustainable.
78
Environmental –Certification Seal
Required items for certification
 Surrounds improvements
 Landscaping
 Specific place for selective collection
 Leisure, social and sportive equipment
 Thermal performance - Seals
 Acoustic performance - Seals
 Land physical conditions adaptations
 Industrialized components or prefabricated
 Concrete with optimization dosage
 Orientation for the residents
 Low consume lamps
 Saving devices – Flushing system
 Saving devices – Outflow system
 Saving devices – Presence detector
 Masonry
 Modular masonry coordination
 Construction and demolition waste management
 Planted or certified wood
 Employees environmental education
 Bicycle Stand
 Reuse of water from sinks to urinals.
 Lightning of construction sites through translucid
roof tiles
 Reuse of water from concrete mixer
 PPE cleaning
 Rainwater harvesting
 Anticipated execution of the project division wall
MRV + Verde Obra Verde MRV
Sustainability
Code of Conduct and
Confidential Channel
Sept/2015
Sustainability Report 2015
http://mrv.com.br/mrvsustentavel/en
Click here to download the Code
79
“Amigo do Clima” Program:
This program certifies MRV
Engenharia by its
compensation of greenhouse
gases generated by
sustainability website.
Earth Hour 2016:
The company has participated
in the promotion of
awareness and contributed to
a greater global alert against
global warming.
0.45 0.46
0.43
1.69
1.53
1.55
1.53
0.50
0.33
0.35
1.05 0.99
0.95
0.93 0.93 1.05 1.12 1.14
0.96
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
sep-13
May/14
sep/14
jan/15
may/15
sep/15
jan/16
may/16
sep/16
jan/17
MRVE3 in the ICO2 Index
80
GHG Protocol
In 2015 , MRV joined the GHG Protocol, an agreement whereby disclose reports
with the Greenhouse Gases (GHG) emissions from our activities.
In August 2016, we received the gold seal that guarantees even more credibility
in when it comes to sustainability .
Sustainability
United Nations Global Compact
By supporting the Compact, MRV Engenharia joins more than 12,000 signatory organizations around the world
committed to make responsible businesses, and take strategic actions to advance broader social goals, with
emphasis on cooperation and innovation.
Commitments: to fundamental and internationally accepted values, defined in ten principles derived from the
Universal Declaration of Human Rights, the International Labor Organization Declaration on Fundamental Principles
and Rights at Work, the Rio Declaration on Environment and Development, and the United Nations Convention
against Corruption.
MANAGEMENT
MRV Management
Board of Directors
82
Rubens Menin Teixeira de Souza – 59 years old
Chairman of our board of directors. He holds a degree in civil engineering from the Federal University of Minas Gerais,
where he graduated in 1978. He is a founding partner of the MRV group, chairman of the board of directors and was
MRV’s Chief Executive Officer until March 2014. He is also a founding partner of Banco Intermedium S.A. and has been
chairman of its board of directors since the company was established in 1994. Mr. Menin is also the Chairman of the Board
of Directors of LOG Commercial Properties S.A. and Urbamais Properties e Participações S.A..
Fernando Henrique da Fonseca – 75 years old
holds a degree in economics from the Federal University of Minas Gerais, having pursued specialized courses in the areas
of finance, economics and business. He is a member of the Board of Directors from Celulose Nipo-Brasileira S.A. (CENIBRA)
and he was the chief executive officer from 2001 to 2011. He has 42 years of experience in the financial sectors of public
and private companies, having held the following positions: president of the financial companies Intermedium and
Credicon from 1994 to 2001; vice president of BEMGE Bank from 1987 to 1988; president of Agrimisa Bank from 1988 to
1993; executive director of Minas Gerais State Financial Policy Committee (Conselho de Política Financeira do Estado de
Minas Gerais) from 1983 to 1985, and manager of the Companhia Siderúrgica Belgo-Mineira from 1967 to 1975.
Levi Henrique – 75 years old
holds an engineering degree from the Instituto Tecnológico de Aeronáutica – ITA. After graduating, he entered
Cofap S.A. in 1959, where he reached the position of director of the shock absorber factory and remained with the
company for 19 years. In 1978, he joined Eluma S.A., where he reached the position of superintendent of the non-
ferrous division. He worked at that company for 8 years, and then, between 1985 and 1993, he worked as a
superintendent at LaFonte Fechaduras S.A., Metalpó Indústria e Comércio Ltda. and Protendit Indústria e Comércio
Ltda. He established Geminids, his business management consulting firm, in 1994.
Marcos Alberto Cabaleiro Fernandez – 64 years old
graduated with a law degree from the Milton Campos Law School in 1981. He founded Construtora Becker
Cabaleiro in 1977, and CVG company in 1986. He was Vice Chairman of the Real Estate Market Chamber (Câmara
do Mercado Imobiliário) of Belo Horizonte and the Civil Construction Union (Sindicato da Construção Civil) from
1999 to 2002. He is a founding partner of Banco Intermedium S.A. and has been a member of its board of directors
since the company was established in 1994. Mr. Fernandez is the Chief Executive Officer of LOG Commercial
Properties S.A. and Urbamais Properties e Participações S.A. e accumulate the position of Chief Executive Officer of
both Companies.
Rafael Nazareth Menin Teixeira de Souza – 35 years old
Mr. Souza was elected at the meeting of the Board of Directors held on March 08, 2010. Since April 30, 2013 he is a
member of the Company’s Board of Directors. He holds a degree in civil engineering from Federal University of
Minas Gerais in 2003. He joined MRV Serviços de Engenharia Ltda. in 1999, as a civil engineer intern. He has large
experience in real estate homebuilding sector. During this period, he worked as site engineer, coordinator of
engineering and technical director. He is currently Chief Executive Officer in charge of the regions Midwest and
Northeast and States of Minas Gerais, Rio de Janeiro and Espirito Santo of MRV Engenharia e Participações S/A and
member of the Board of Directors of Urbamais Properties e Participações S.A..
Eduardo Rocha Brant – 64 years old
Graduated in economic and civil engineering, with specialization in economics and business strategy, Paulo
Eduardo Rocha Brant exercised the leadership of various academic and financial institutions, having served as
Secretary of State of Minas Gerais for Culture. He held the positions of Chief Superintendent, Chief Economist,
Director of Area of Operations and Finance and Superintendent of the planning area of the Banco de
Desenvolvimento de Minas Gerais (BDMG). He was also Chief Officer of BEMGE Distribuidora and Vice President
Executive Officer and Investor Relations Director of the Banco do Estado de Minas Gerais (BEMGE). Paulo also was
CEO of Celulose Nipo-Brasileira S.A. – CENIBRA. Among Paulo Brant's other activities there are also the presidency
of the Brazilian Institute of Planning, the vice presidency of the Deliberative Council of the América Futebol Clube,
and he was also Director of the Museum Clube da Esquina. Paulo Brant also served as Assistant Secretary of the
Secretaria de Estado de Indústria e Comércio de Minas Gerais.
Marco Aurélio de Vasconcelos Cançado – 65 years old
He was elected member of the Board of Directors on Extraordinary Shareholders Meeting on February 20, 2015, position
which he holds until today. He received a degree in business administration from Faculdade de Ciências Econômicas,
Administrativas e Contábeis at FUMEC in 1974, and received a graduate degree in financial administration from Fundação
João Pinheiro/Columbia University in 1975 and a specialization qualification in finance from the Wharton School of the
University of Pennsylvania in 1992. He has more than 35 years of professional experience in the financial and capitals
markets, having held executive positions in several institutions. He was CFO at Banco Mercantil do Brasil (2000–2007); CEO
at Eletrosilex S.A., a manufacturer of metallic silicate (1998–2000); Partner and Chief Officer at MAVC – Consultoria e
Participações Ltda. (2007– up to date); member of the Board of Directors at Araújo Fontes, a company operating in the
corporate finance industry and mergers and acquisitions (2007– up to date). Moreover, during his career, he worked at
other public companies: at Banco do Brasil as Chied Financial and Services Officer (1985-1987), at Eletrosilex as CEO (1997-
1998) and MRV.(2008 – up to date) as member of the Board of Directors.
Executive Officers
83
Eduardo Fischer Teixeira de Souza – Chief Executive Officer Regio II – 42 years old
Mr. Souza was elected MRV´s Chief Executive Officer – Region II at the meeting of the Board of Directors held on March 27,
2014. He holds a degree in civil engineering from FUMEC in 2000. He holds a MBA in finance from IBMEC MG in 2003. He
joined MRV Serviços de Engenharia Ltda. in 1993, as a civil engineer intern. He has large experience in real estate
homebuilding sector. During this period, he worked as site engineer, coordinator of development sites and production
director of Campinas and São Paulo. He is currently Chief Executive Officer in charge of the region South and State of São
Paulo of MRV Engenharia e Participações S/A.
Rafael Nazareth Menin Teixeira de Souza – Chief Executive Officer Region I - 35 years old
See “Board of directors” above.
Eduardo Paes Barretto – Chief Commercial Officer – 58 years old
Mr. Barretto was elected our Chief Commercial Officer at the meeting of the Board of Directors held on June 2, 2006. He
has a degree in business administration from FMU - Faculdades Metropolitanas Unidas, having specialized in market
administration and marketing at both FGV and ESPM. He was director of the Association of Sales Managers of Brazil - ADVB
and Chairman of the Retail Commission of that association. He is a lecturer and speaker at seminars of the Brazilian
Advertisers Association. He was Chief Operating Officer of the Companhia Brasileira de Distribuição - Grupo Pão de Açúcar,
from May 1986 to July 1993. He has been working with companies of the MRV group since September 2000, being in
charge of commercial policy, supervision of real estate sales, market research, development of new business and corporate
strategy.
Leonardo Guimarães Corrêa – Chief Financial Officer – 58 years old
Mr. Correa was elected as our Vice-President of the Executive Board, Chief Financial Officer and Investor Relations
Officer at the meeting of the Board of Directors held on June 2, 2006. He earned a degree in economics from the
Federal University of Minas Gerais – UFMG in 1980, and a post graduate degree in finance from FGV in 1986. He
worked from 1982 to 1990 at Lloyds Bank as Treasury Manager. From 1990 to 2000 he worked at JP Morgan, where
his last position held was treasury officer for Brazil. He was a partner at Banco Pactual from 2000 to 2003. Between
2003 and 2006 he was a partner at Perfin Administração de Recursos, an independent fund manager, specialized in
investment funds. He joined us in March 2006. He is a member of the Board of Directors of LOG Commercial
Properties and Urbamais Properties e Participações S.A..
Homero Aguiar Paiva – Chief Production Officer – 54 years old
Mr. Paiva was elected our Chief Production Officer at the meeting of the Board of Directors held on June 2, 2006. In
1984, he received a degree in civil engineering from PUC - MG, and in 1991 he received a graduate degree in quality
and productivity engineering from the Sociedade Mineira de Engenharia - MG. He earned an MBA in business
management from IBMEC/BH in 2000. He joined the MRV Group in 1987 as an engineer, and became supervisor of
engineering in 1989. In 1996, he became technical director, and since 2004 he has served as our Chief Production
Officer.
Hudson Gonçalves de Andrade – Chief Real Estate Development Officer – 55 years old
Mr. Andrade was elected our Chief Real Estate Development Officer at the meeting of the Board of Directors held
on June 2, 2006. He earned a degree in civil engineering from the Kennedy School of Engineering in 1993. He began
his career in 1980 at the MRV Group as buildings technician. He was appointed Projects Officer in 2000, and
occupied the position of Chief Real Estate Development Officer in 2005.
Jose Adib Tomé Simão – Chief Real Estate Financing Officer – 69 years old
Mr. Simão was elected our Chief Real Estate Credit Line Officer at the meeting of the Board of Directors held on June 2,
2006. He earned a degree in civil engineering in 1969 from the Engineering School of the Federal University of Minas
Gerais. In 1972, he was professor of the former Kennedy School of Engineering in Belo Horizonte. From 1973 to 1986, he
was the director of the São Paulo branch of Delphos Engenharia S.A., which is based in Belo Horizonte. From 1987 to 1988,
he was a special advisor to the Chief Minister for the Secretariat of Planning and Co-ordination of the Presidency of the
Republic. He joined the MRV Group in 1989, working in the technical, administrative and commercial sectors, becoming our
chief administrative officer in 1999.
Júnia Maria de Sousa Lima Galvão – Chief Management and Shared Service Center Officer – 45 years old
Ms. Lima was elected our Chief Management and Shared Service Center Officer at the meeting of the Board of Directors
held on January 24, 2007. She holds a degree in accounting and a graduate degree in financial management and
international business from the Fundação Dom Cabral, as well as in human resources and in information systems. She
worked at RM Sistemas between 1996 and January 2007, recently sold to Totvs S.A., as administrative and financial
executive officer, in the administration, finance and accounting sectors, having been the responsible officer and attorney-
in-fact for RM Sistemas between 1996 and 2006.
Maria Fernanda Nazareth Menin Teixeira de Souza Maia – Chief Legal Officer – 36 years old
Mrs. Maia was elected MRV’s Chief Legal Officer at meeting of the Board of Directors held on May 4, 2010. She
earned a law degree from Milton Campos Law School in 2001, and postgraduate in Economics and Business Law
from FGV in 2003. She is an effective member of the Commission's Corporate Advocacy OAB / MG. She joined MRV
Serviços de Engenharia Ltda. in 1997, as an intern of Billing Department. During this period she held positions as an
intern in the Legal Department, Legal Assistant, Coordinator of the Legal Department, Legal Superintendent and
Legal Manager. Nowadays she occupies the position of Chief Legal Officer in MRV Engenharia e Participações S/A
member of the Board of Directors of Urbamais Properties e Participações S.A..
MRV Management
FINANCIALS
Consolidated Income Statement (R$ million)
(CPC 19 – IFRS 11)
85
R$ million 4Q16 3Q16 4Q15
Chg. 4Q16 x
3Q16
Chg. 4Q16 x
4Q15
2016 2015
Chg. 2016 x
2015
NET OPERATING REVENUE 1,067 1,096 1,208 2.7% ↓ 11.7% ↓ 4,249 4,763 10.8% ↓
COST OF PROPERTIES SOLD AND SERVICES (710) (743) (833) 4.4% ↓ 14.8% ↓ (2,862) (3,324) 13.9% ↓
GROSS PROFIT 357 353 375 1.1% ↑ 5.0% ↓ 1,387 1,439 3.6% ↓
Gross Margin 33.4% 32.2% 31.1% 1.2 p.p. ↑ 2.4 p.p. ↑ 32.6% 30.2% 2.4 p.p. ↑
OPERATING INCOME (EXPENSES)
Selling expenses (133) (128) (117) 4.4% ↑ 14.4% ↑ (499) (458) 9.0% ↑
General & Administrative Expenses (69) (77) (77) 10.0% ↓ 10.3% ↓ (287) (280) 2.8% ↑
Other operating income (expenses), net (24) (17) (29) 47.6% ↑ 16.3% ↓ (88) (107) 17.6% ↓
Equity Income (16) (13) (25) 23.6% ↑ 33.4% ↓ (57) (96) 40.2% ↓
INCOME BEFORE FINANCIAL INCOME (EXPENSES) 113 118 128 4.2% ↓ 11.4% ↓ 455 498 8.7% ↓
FINANCIAL RESULTS
Financial expenses (14) (12) (14) 9.0% ↑ 2.1% ↓ (63) (78) 19.4% ↓
Financial income 59 54 52 9.6% ↑ 14.2% ↑ 228 196 16.3% ↑
Financial income from receivables from real estate development 10 17 14
42.6% ↓ 26.5% ↓
48 82 41.0% ↓
INCOME BEFORE INCOME TAX AND SOCIAL CONTRIBUTION 169 177 179 4.7% ↓ 5.8% ↓ 668 699 4.3% ↓
Income Tax and Social Contribution (26) (24) (26) 7.8% ↑ 0.7% ↓ (94) (103) 8.9% ↓
NET INCOME 143 153 153 6.6% ↓ 6.7% ↓ 574 595 3.5% ↓
PROFIT ATTRIBUTABLE TO NON-CONTROLLING INTERESTS 2 4 14 0.0% ↑ 0.0% ↑ 17 48 0.0% ↑
PROFIT ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY 142 150 140 5.4% ↓ 1.2% ↑ 557 548 1.7% ↑
Net Margin 13.3% 13.7% 11.6% 0.4 p.p. ↓ 1.7 p.p. ↑ 13.1% 11.5% 1.6 p.p. ↑
BASIC EARNINGS PER SHARE 0.321 0.340 0.317 5.4% ↓ 1.3% ↑ 1.263 1.240 1.8% ↑
R$ million 4Q16 3Q16 4Q15
Chg. 4Q16 x
3Q16
Chg. 4Q16 x
4Q15
2016 2015
Chg. 2016 x
2015
Income before taxes 169 177 179 4.7% ↓ 5.8% ↓ 668 699 4.3% ↓
Depreciation and Amortization 12 11 10 18.0% ↑ 29.2% ↑ 42 37 13.3% ↑
Financial Results (56) (59) (52) 5.7% ↓ 7.9% ↑ (214) (200) 6.7% ↑
Financial charges recorded under cost of sales 35 34 37 2.5% ↑ 4.7% ↓ 140 133 5.3% ↑
EBITDA 160 162 174 1.4% ↓ 7.7% ↓ 637 669 4.7% ↓
EBITDA Margin 15.0% 14.8% 14.4% 0.2 p.p. ↑ 0.7 p.p. ↑ 15.0% 14.0% 1.0 p.p. ↑
EBITDA Adjusted (ex. Equity Income) 177 176 198 0.5% ↑ 10.9% ↓ 694 764 9.2% ↓
EBITDA Margin adjusted (ex. Equity Income) 16.6% 16.0% 16.4% 0.5 p.p. ↑ 0.2 p.p. ↑ 16.3% 16.0% 0.3 p.p. ↑
86
Consolidated Balance Sheet (R$ million)
(CPC 19 – IFRS)
ASSETS 12/31/16 9/30/16 12/31/15
Var. Dec/16 x
Sep/16
Var. Dec/16 x
Dec/15
CURRENT ASSETS
Cash and cash equivalents 1,764 1,661 1,596 6.2% ↑ 10.5% ↑
Short-term investments 258 133 128 93.0% ↑ 100.5% ↑
Receivables from real estate development 1,658 1,953 2,069 15.1% ↓ 19.9% ↓
Receivables from services provided 4 3 6 28.3% ↑ 39.9% ↓
Real estate for sale and development 3,077 2,748 2,726 12.0% ↑ 12.9% ↑
Recoverable current taxes 229 205 196 11.9% ↑ 16.8% ↑
Deferred expenses 57 54 44 6.3% ↑ 30.0% ↑
Other assets 74 57 54 30.3% ↑ 37.6% ↑
Total Current Assets 7,120 6,813 6,820 4.5% ↑ 4.4% ↑
NONCURRENT ASSETS
Receivables from real estate development 991 935 1,204 6.0% ↑ 17.6% ↓
Real estate for sale and development 3,059 3,036 2,256 0.8% ↑ 35.6% ↑
Due from related parties 37 38 88 4.3% ↓ 58.5% ↓
Deferred expenses 36 40 32 9.5% ↓ 11.2% ↑
Other noncurrent assets 73 71 62 1.8% ↑ 16.8% ↑
Investment property 783 676 740 16.0% ↑ 5.9% ↑
Property and equipment 140 127 105 10.1% ↑ 32.9% ↑
Intangible Assets 86 87 84 0.6% ↓ 2.1% ↑
Total Noncurrent Assets 5,207 5,010 4,573 3.9% ↑ 13.9% ↑
TOTAL ASSETS 12,327 11,823 11,392 4.3% ↑ 8.2% ↑
LIABILITIES AND SHAREHOLDERS' EQUITY 12/31/16 9/30/16 12/31/15
Var. Dec/16 x
Sep/16
Var. Dec/16 x
Dec/15
CURRENT LIABILITIES
Trade accounts payable 315 310 254 1.6% ↑ 23.9% ↑
Payables for purchase of investments 35 41 40 15.8% ↓ 3.6% ↑
Loans and financing 937 1,105 1,119 15.2% ↓ 16.2% ↓
Payables for purchase of land 515 610 348 15.6% ↓ 47.9% ↑
Advances from customers 675 702 852 3.9% ↓ 20.8% ↓
Labor and social liabilities 110 128 110 13.9% ↓ 0.4% ↑
Tax liabilities 57 44 56 29.9% ↑ 2.6% ↑
Accrual for maintenance of real estate 40 40 37 0.3% ↑ 8.5% ↑
Deferred tax liabilities 59 72 67 18.6% ↓ 12.9% ↓
Proposed dividends 132 - 130 - 1.7% ↑
Other payables 49 51 38 4.0% ↓ 29.7% ↑
Total Current Liabilities 2,924 3,103 3,050 5.8% ↓ 4.1% ↓
NONCURRENT LIABILITIES
Payables for purchase of investments - 4 32 100.0% ↓ 88.4% ↓
Loans and financing 1,377 1,001 1,131 37.6% ↑ 21.7% ↑
Payables for purchase of land 1,695 1,372 1,166 23.6% ↑ 45.4% ↑
Advances from customers 629 659 717 4.7% ↓ 12.3% ↓
Accrual for maintenance of real estate 100 97 99 2.8% ↑ 1.1% ↑
Accrual for civil, labor, and tax risks 98 96 92 2.0% ↑ 6.6% ↑
Deferred tax liabilities 40 34 42 16.6% ↑ 4.7% ↓
Other liabilities 27 20 13 37.3% ↑ 106.6% ↑
Total Noncurrent Liabilities 3,965 3,282 3,292 20.8% ↑ 20.4% ↑
SHAREHOLDERS' EQUITY
Equity attributable to the shareholders of the
Company
5,184 5,173 4,776 0.2% ↑ 8.5% ↑
Non-controlling Interests 254 264 274 3.9% ↓ 7.5% ↓
Total Shareholders' Equity 5,437 5,437 5,050 0.0% ↑ 7.7% ↑
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 12,326 11,823 11,392 4.3% ↑ 8.2% ↑
87
Consolidated Statement of Cash Flow (R$ million)
(CPC 19 – IFRS 11)
Consolidated (R$ million) 4Q16 3Q16
Chg. 4Q16 x
3Q16
2016 2015
Chg. 2016 x
2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 143 153 6.6% ↓ 574 595 3.5% ↓
Adjustments to reconcile net income to cash used in operating activities 109 130 15.9% ↓ 458 382
20.0% ↑
Decrease (increase) in operating assets 55 (29) 287.7% ↓ 146 477 69.4% ↓
Increase (decrease) in operating liabilities (133) (185) 28.2% ↓ (603) (427) 41.2% ↑
Net cash used in operating activities 174 69 153.9% ↑ 576 1,028 44.0% ↓
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in investment securities (111) 15 834.0% ↓ (105) 43 340.8% ↓
Advances to related parties (90) (31) 190.1% ↑ (363) (305) 18.8% ↑
Receipts from related parties 93 39 137.2% ↑ 422 283 49.2% ↑
Decrease in (acquisition of/contribution to) investments (124) 15 952.8% ↓ (101) (10) 899.3% ↑
Payment for acquisition of subsidiary (11) (42) 73.5% ↓ (44) (38) 15.0% ↑
Acquisition of fixed and intangible assets (27) (27) 0.0% ↓ (90) (74) 21.4% ↑
Net cash used in investing activities (271) (31) 770.2% ↑ (310) (101) 205.8% ↑
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from shares issuance - - - - - -
Proceeds from stock options' exercise 0 1 (88.3%) 1 3 67.2% ↓
Treasury shares - (1) 100.0% ↓ (3) 4 166.5% ↓
Treasury shares - - - - (39) 100.0% ↓
Proceeds from loans, financing and debenture 795 440 80.6% 1,928 1,178 63.7% ↑
Payment of loans, financing and debenture (584) (470) 24.2% ↑ (1,863) (1,465) 27.2% ↑
Capital transaction 0 (0) 241.5% ↓ (1) 0 435.0% ↓
Net contributions (distributions) of noncontrolling interests (12) (309) 96.0% ↓ (34) (58) 40.5% ↓
Advanced payment from related companies - - - - - -
Net cash (used in) generated by financing activities 199 (339) 158.7% ↓ (128) (548) 76.6% ↓
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS, NET 102 (301) 133.9% ↓ 138 378 63.5% ↑
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of the period 1,661 1,628 2.1% ↑ 1,596 1,217 31.1% ↑
Cash and cash equivalents at end of the period 1,764 1,661 6.2% ↑ 1,764 1,596 10.5% ↑
CORPORATE PRESENTATION
December 2016
32 51 113
750
1,300
2,700
2008 2009 2010 2011 2012/13 2015/16
Assets Value R$ million
1st Warehouse deliveryMRV LOG Foundation 1St Private Equity Round 2nd Private Equity RoundName change
Presence in 18
cities and 8 states
1st Debenture
Issuance
2nd
Debenture
Issuance
Presence in 26
cities and 9
states
4th, 5th and
6th
Debentures
Issuance
7th, 8th and
Debentures
Issuance
9th and
Debentures
Issuance and
1st Commercial
Notes issuance
89
Timeline
LOG Commercial Properties business
LOG CP is a commercial properties Company that has in its portfolio beyond the projects for logistics and industry, the Company's core
business, Shopping Centers, Strip Mall and Industrial Lots.
Logistics Complexes
100% Greenfield
Full control of cycle, from land
acquisition to project delivery.
Multi-tenant
Projects in modules
Flexible architecture
2 to 10 year contracts
Shopping Centers Strip Malls Industrial Lots
100% Greenfield
Regional Strip Malls
100% Greenfield
Full control of cycle, from land
acquisition to project delivery
100% Greenfield
Comprehensive shopping centers
Operated by specialized
companies
90
LOG’s National Footprint
LOG I - Contagem
Present in 25 cities and 9 states
LOG Hortolândia
Hortolândia-SPLOG Juiz de Fora
Juiz de Fora - MG
LOG
Goiânia
Goiânia-GO
LOG Fortaleza
Maracanaú - CE
Shopping Contagem
Contagem-MG
LOG São José dos Pinhais
São José dos Pinhais -PR
91
Integrated Business Model
Extended experience in creating business and developing assets.
Our integrated model is unique in the market, from land identification to project delivery.
Asset Creation – Integrated Business Model Logistics Complexes
Identification of
Demand
Land Acquisition
Delivery of Project
Construction
Experience
Dedicated Team of Professionals
Dedicated Team to capture new
opportunities
Extended shared data base with
MRV.
Know-how and experience
LOG CP – MRV synergy
Cost reduction by material
acquisition with MRV
Multitenant strategy to
maximize returns
Retail strategy
Offices
Warehouses
Acquisition
Development
Multitenant Strategy
Financial Players
Pension funds
Highly Competitive Environment
LOG Commercial Properties controls complete cycle of development, construction and administration of its assets
Managing
Tenant managed
Condominium administrated by
specialized companies.
92
Logistics Complex Model – Warehouses
Factors of Success:
I. Strong demand and lack of available infrastructure
II. Experience in the distribution center market – 35 years experience in Brazil
and abroad
III. Expertise in land acquisition
IV. Low costs & integrated supply chain
V. Nationwide coverage: one-stop-shop for clients seeking logistics solutions
LOG Jundiaí
+ Multi-tenant
strategy
Business Model
1m 2m 3m 4m
15
m
16
m
17
m
18
m
19
m
20
m
22
m
23
m
10 to 25
years
Commercial Negotiation
Land Acquisition
Development
Construction
(negotiation with potential tenants)
Operation/management
and lease
13
m
14
m
Real Perspective LOG Jundiaí (aerial
picture)
Real Perspective LOG Jundiaí (aerial
picture) )
21
m
Estimated LOG Warehouses Occupancy Curve
Project 1º Q 2º Q 3º Q 4º Q
Warehouses 0% 30% 60% 90%
93
0.3%
0.7%
0.7%
0.8%
0.9%
1.1%
1.1%
1.1%
1.4%
1.9%
3.5%
4.0%
4.1%
5.4%
6.0%
8.3%
8.9%
9.0%
11.2%
14.8%
14.8%
Retail
Productsfor Animals
Entertainment
IT
RefrigeratedProducts
Transportation
Construction
Packaging
Energy/Telecom
Chemical
Beauty
Domestic Utilities
E-commerce
Logistics
Other
Clothing
Documents
Automotive
Pharmacist
Consumer Goods
Foodand Beverage
18.0%
23.0% 25.0% 25.0% 25.0%
13.5% 15.1% 15.5% 14.4% 13.5%
4Q15 1Q16 2Q16 3Q16 4Q16
Brazil LOG
23%
27%
29%
5%
16%
Until 12 months 12 to 24 months 24 to 36 months 36 to 48 months Over 48 months
Commercial Activity
Portfolio by warehouses sector Renters(in GLA sq.m)
94
The current contracts range from 2
to 10 years with an average term of
66 months;
Lease contracts are indexed to the
IGP M or IPCA and have contractual
review every three years;
One atypical rental model Built to
Suit (BTS);
Base Dec 31, 2016
Contract’s Maturity (per GLA) Brazil X LOG Vacancy
95
6.6 8.6
30.9
22.4
31.3 34.9
91.7%
31.0%
68.1%
32.9% 33.7% 36.1%
2011 2012 2013 2014 2015 2016
Adjusted Net Income Adjusted Net Income Margin
1.0
16.6
28.4
50.0
74.4 78.1
13.6%
59.8% 62.5%
73.6%
80.1% 80.7%
2011 2012 2013 2014 2015 2016
Adjusted Ebitda Adjusted Ebitda Margin
7,2
27,7
89.3
68.0
92.9 96.8
2011 2012 2013 2014 2015 2016
Historical figures
Adjusted FFO & Margin Adjusted Net Earnings & Margin
(R$ mm)(R$ mm and %)
(R$ mm and %)(R$ mm)
Net Revenues Adjusted EBITDA & Margin
CAGR
2011-2015
68.1 %
8.1
15.2
20.4 22.4
31.5 35.1
112.5%
55.1%
44.9%
33.0% 33.9% 36.3%
2011 2012 2013 2014 2015 2016
Adjusted FFO Adjusted FFO Margin
31.0
44.2
196.3 191.4
95.3
16.2
38,.
2010 2011 2012 2013 2014 2015 2016
ConstructedGLA (thou. sq. m. - %LOG)
Quality and premium localization according with the Brazilian market growth.
Experient construction team, with growth scale and cost control.
High capability of growth and new area identification.
LOG’s Growth
96
903
1,045
1,400
1,318 1,359
1,276
1,574
2010 2011 2012 2013 2014 2015 2016
Portfolio in GLA (thou. sq.m - %LOG)
15.0
108.5
131.9
231.0
150.9
108.8
2011 2012 2013 2014 2015 2016
Located GLA (thou sq.m. - %LOG)
Portfolio Evolution
LOG Portfolio Evolution - % LOG
(in GLA sq.m.)
LOG Potential Portfolio in Dec -
31-16
MG
24%
SP
53%
ES
3%
PR
2%
GO
9%
RJ
9%
.... in 2010
SP
51%
MG
14%
GO
8%
PR
7%
CE
8%
RJ
7%
ES
3%
BA
2%
... in 2011
LOG Potential Portfolio Geographical Distribution (sq.m.)
... In December, 2016 LOG had 67% of its Portfolio
approved
97
* In April 2016 LOG incorporated new project to its portfolio
MG
38%
SP
22%
RJ
10%
PR
10%
ES
5%
GO
5%
CE
6%
SE
3%
BA
1%
Approved
67%
Not
Approved
33%
Operational Information
Accumulated Built GLA (in sq.m) %LOG Accumulated Delivered GLA (in sq.m) - % LOG
98
LOG delivers higher return rates to the shareholders
Assets evaluated in December 31, 2016 in R$2.7
billion.
LOG’s high cap rate compression capacity
LOG Drivers Value generation
Some Projects delivered until December- 31, 2016
LOG I, in
Contagem/MG
GLA: 58,417 sq.m
LOG Goiânia (G1,
G2, G3, G7 e G8),
in GO
GLA: 40,365 sq.m
LOG Hortolândia,
in SP
GLA: 53,492 sq.m
LOG São José dos
Pinhais, in PR
GLA: 24,929 sq.m
LOG Fortaleza, in
CE
GLA: 17,132 sq.m
LOG Feira de
Santana, in BA
GLA: 17,725 sq.m
616,404 621,968
621,968 627,251
627,251
Dec-15 Mar-16 Jun-16 Sep-16 Dec-16
665,177
670,181
687,542
698,776
703,290
Dec-15 Mar-16 Jun-16 Sep-16 Dec-16
13.5%
15.9%
Warehouses Retail
17.71
27.89
48.42
Warehouses Strip Mall Shopping Center
Operating Indicators - Commercialization
Portfolio´s Average Price
(R$/GLA/Month)
Commercialization of the lots (PIB) (sq.m. and R$ thousand)
GSV: General Sale Value
Portfolio´s physical vacancy
by Segment (%)
+ 1 Logistic Park: Rio Campo Grande
Date of Delivery: 4Q16
100% Located
25,000 sq.m. of GLA + 28,000 sq.m. possibility of expansion
+ 1 Strip Mall
Date of Delivery : 4Q16
GLA: 2,524 sq.m.
LOG Portfolio:
99
Project Marketable Area%LOG (sq.m)
Sales Speed
(month)
GSV %LOG
(R$ thousand)
Lots 1,064,380 5% 227,712
0.006
0.039
0.015
1 2 3
250,000
44,376
10,804
1
2
3
The global context and growth potential of the Brazilian market - 2015
Industrial Condominium Inventory + Isolated
warehouses (thousand sq.m.)
GDP (US$ billion) Territorial Extension (thousand km2)
The Brazilian logistics and
infrastructure market has
great potential of growth..
The road modal is the
major type in Brazil, with
nearly 75% of the total...
The Union´s budget for
logistics infrastructure in
2017 is approximately
R$13 billion
Elevated index of growth
in the BRICS, upcoming
sport events in the next
years, PAC/PAC2.
Logistics Inventory (sq.m.)
per GDP (US$ million)
Logistics Inventory (sq.m.)
per Population (# habitants)
Logistics Inventory (sq.m.)
per Territorial Extention (km²)
Theglobalcontext
Growthpotentialtobe
explored
100
9,373
1,958
8,515
1
2
3
Source: Brazilian Federal Bank Source: insa.gov.brSource: Colliers International
16,770
1,144
1,773
1
2
3
PotentialGrowth
0.05
0.48
0.78
1 2 3
PotentialGrowth
0.001
0.030
0.025
1 2 3
PotentialGrowth
The e-commerce in Brazil
101
Actually Brazil is the 9th most buying country through internet, and in 2019 the e-commerce shall move over R$70 billion.
The most sold products through internet are aligned with the most stored by our customers.
Creating a demand raise for warehouses.
Fonte: Ebit e E-marketer
Most sold through internet
Logistic infrastructure feed for the consumption goods
market development
Opportunities identification among developing markets
Strategy
Alignment
Challenges:
14%
Books/
Signatures
13%
Domestic
Utilities
12%
Clothing
12%
Heath/
Pharmacist
9%
Phones/
Smart Phones
9%
Home
Decor
6%
IT
5%
Electronics
4%
Sports/
Leisure
2%
Toys/
Games
22.5
28.8
35.8
41.3
44.6
2012 2013 2014 2015 2016
Online Sales in Brazil (R$ billion)
5,117
6,789
8,494
9,727
10,840
11,989 12,061 12,205 12,473
983 991 1,158 1,104 811 31
-6
176 279
6.9%
14.9%
18.0% 17.0% 18.0%
23.0% 25.0% 25.0% 25.0%
2011 2012 2013 2014 2015 1Q16 2Q16 3Q16 4Q16
Inventory Net Absorption Vacancy Rate - Brazil
The current industrial condominiums market (cont.)
According to Colliers International there was 837 thousand m² of GLA in construction in the 4Q16.
Distribution of existing inventory by region (%) in 4Q16
Distribution of the inventory in project
phase by region (%) – 3Q16
Distribution of the inventory under
construction by region (%) in 3Q16
102Source: Colliers Market Report
Brazilian Inventory, Net Absorption and
Vacancy Rate
80%
6%
10%
3% 1%
Southeast
South
Northeast
North
Mid-West
Southeast
74.1%
South
9.8%
Northeast
15.4%
Mid-West
0.3%
North 0.4%
Southeast
82.6%
South
14.2% Northeast
2.5%
North
0.7%
The Brazilian market of industrial parks is highly concentrated
in the Southeast, with 80% of the total. The other regions of
the country lack for commercial/industrial areas, and with
investment in infrastructure being made in these states, the
market to industrial condominiums will expand.
Southeast
80%
South
6%
Northeast
10%
Mid-West
1%
North
3%
The current industrial condominiums market
Source:ColliersMarketReport
The five regions in Brazil has existing inventory of
condominiums class A logistics of 12.5 million sq.m
versus 10.8 million sq.m in the fourth quarter of 2015.
Forte demanda e as taxas de absorção
elevada são indicadores do mercado com
elevada liquidez....
The delivery of the inventory
under construction will be
represented by 85% in the
Southeast and 15% in other
regions of the country, being
such regions opportunities
for expansion and new
business.
Inventory in
Construction (sq.m)
103
3.4 3.9
5.1
6.8
8.4
9.6 9.8
10.5 10.7 10.8
11.7 12.1 12.2 12.5
2009 2010 2011 2012 2013 2014 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16
Evolution of Industrial Parks in Brasil (million - sq. M)
The current industrial condominiums market (cont.)
The warehouses market in Brazil has
International Class specs. They have from
1,000 to 50,000 sq.m. average size, ceiling
height from 11 to 12 meters and floor capacity
from 5 to 6 ton/sq.m. Location, freight costs
and bigger leasable areas are the main features
requested by the actual costumers.
Fragmented Industry in Brazil
(in terms of GLA):
The large majority of the companies in
Brazil still own their real estate…
… and in the USA, only 20% of the
companies own their real estate assets
Source: Itaú Securities and others
91%
9%
Non-organized Market
Organized Companies
20%80%
Leased
Own Buildings
80%
20%
Leased
Own Buildings
Existing warehouses
average size
(in sq.m.)
Share in existing
inventory (%)
< 1,000 0.3%
1,000 to 5,000 9.7%
5,001 to 10,000 6.7%
10,001 to 50,000 48.8%
> 50,000 34.5%
Source: Colliers Industrial Market Report
LOG I Warehouse
104
PIB – Betim lots
www.parqueindustrialbetim.com.br
The only LOG project whose units are
intended for sale: shorter cash cycle;
Potential vendible area of + 2.1
million sqm.
Construction of roads and infrastructure at a
rapid pace.
Potential area for construction of more
than 1 million GLA;
Betim Industrial lots:
• Total area: + 6 million sq.m
• Lots intended for sale
• Strategic Location
• Possibility of developing
warehouses
105
Consolidated Financial Statements Balance Sheet (in R$ thousand)
106
ASSETS 31/Dec/16 30/Sep/16 31/Dec/15
Chg. %
Dec-16 x
Sep-16
Chg. %
Dec-16 x
Dec-15
LIABILITIES & SHAREHOLDER'S
EQUITY
31/Dec/16 30/Sep/16 31/Dec/15
Chg. %
Dec-16 x
Sep-16
Chg. %
Dec-16 x
Dec-15
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash equivalents 146,941 18,259 17,258 704.8% 751.4% Accounts Payable 3,561 10,010 6,601 -64.4% -46.1%
Accounts receivable 24,094 24,998 19,119 -3.6% 26.0% Loans and financing 337,250 355,859 150,579 -5.2% 124.0%
Recoverable taxes 7,476 7,504 8,532 -0.4% -12.4% Salaries, payroll taxes and benefits 2,523 2,576 2,401 -2.1% 5.1%
Deferred selling expenses 6,785 6,100 4,329 11.2% 56.7% Taxes and contributions 2,680 2,241 2,559 19.6% 4.7%
Other assets 442 111 187 298.2% 136.4% Advances from customers - Swap 1,570 1,587 3,518 -1.1% -55.4%
Total current assets 185,738 56,972 49,425 226.0% 275.8% Payable Dividends 8,466 - 1,634 0.0% 418.1%
Credits on related parties 948 1,053 965 -10.0% -1.8%
NON-CURRENT ASSETS Other liabilities 632 728 722 -13.2% -12.5%
Trade accounts receivable 12,800 13,290 14,641 -3.7% -12.6% Total current liabilities 357,630 374,054 168,979 -4.4% 111.6%
Deferred selling expenses 3,694 3,540 7,862 4.4% -53.0%
Recoverable taxes 40,953 41,265 38,403 -0.8% 6.6% Non-current liabilities
Deferred taxes 90,213 56,381 51,052 60.0% 76.7% Loans and financing 651,834 715,591 814,379 -8.9% -20.0%
Other assets 1,049 867 608 21.0% 72.5% Advances from Customers - Swap 41,073 41,085 42,406 0.0% -3.1%
Investment in subsidiaries and jointly
controlled
247,220 242,734 237,314 1.8% 4.2% Deferred taxes 54,958 55,298 51,125 -0.6% 7.5%
Investment property 2,298,800 2,295,228 2,174,413 0.2% 5.7% Others 2,319 2,674 2,756 -13.3% -15.9%
Property and equipment 1,631 1,640 1,800 -0.5% -9.4% Total Non-current liabilities 750,184 814,648 910,666 -7.9% -17.6%
Total non-current assets 2,696,360 2,654,945 2,526,093 1.6% 6.7% Total Liabilities 1,107,814 1,188,702 1,079,645 -6.8% 2.6%
SHAREHOLDER´S EQUITY
Equity atributable to the
shareholder´s of the company
1,774,157 1,523,089 1,495,765 16.5% 18.6%
Non-controlling interest 127 126 108 0.8% 17.6%
Total Shareholder´s Equity 1,774,284 1,523,215 1,495,873 16.5% 18.6%
TOTAL ASSETS 2,882,098 2,711,917 2,575,518 6.3% 11.9%
TOTAL LIABILITIES &
SHAREHOLDER'S EQUITY
2,882,098 2,711,917 2,575,518 6.3% 11.9%
Consolidated Financial Statements Income Statement (R$ thousand)
107
INCOME STATEMENT 4Q16 3Q16 4Q15
Chg. %
4Q16 x 3Q16
Chg. %
4Q16 x 4Q15
12M16 12M15
Chg. %
12M16 x
12M15
NET OPERATINGREVENUES 24,521 23,961 24,169 2.3% 1.5% 96,774 92,911 4.2%
Cost - - - 0.0% 0.0% - - 0.0%
GROSS PROFIT 24,521 23,961 24,169 2.3% 1.5% 96,774 92,911 4.2%
OPERATINGEXPENSES (30,675) (4,304) (14,346) 612.7% 113.8% (42,323) (48,566) -12.9%
Selling expenses (2,836) (2,998) (2,219) -5.4% 27.8% (10,961) (10,146) 8.0%
General & Administrative expenses (2,364) (2,509) (2,634) -5.8% -10.3% (9,543) (9,555) -0.1%
Other operatin expenses, net (185) (49) 352 277.6% -152.6% (528) (2,307) -77.1%
Investment Property Fair Value Variation (27,151) 802 (8,866) -3485.4% 206.2% (24,477) (30,997) -21.0%
Equity in subsidiaries and JV´s 1,861 450 (979) 313.6% -290.1% 3,186 4,439 -28.2%
OPERATINGINCOME BEFORE FINACIAL RESULTS (6,154) 19,657 9,823 -131.3% -162.6% 54,451 44,345 22.8%
FINANCIAL RESULTS (16,313) (15,311) (14,730) 6.5% 10.7% (51,555) (43,489) 18.5%
Financial expenses (17,351) (18,760) (18,174) -7.5% -4.5% (60,672) (63,384) -4.3%
Financial income 1,038 3,449 3,444 -69.9% -69.9% 9,117 19,895 -54.2%
INCOME BEFORE INCOME TAX AND SOCIAL
CONTRIBUTION
(22,467) 4,346 (4,907) -617.0% 357.9% 2,896 856 238.3%
INCOME TAX AND SOCIAL CONTRIBUTION 32,657 2,092 18,714 1461.0% 74.5% 32,760 16,335 100.6%
Current (1,405) (1,082) (1,368) 29.9% 2.7% (5,078) (5,999) -15.4%
Deferred 34,062 3,174 20,082 973.2% 69.6% 37,838 22,334 69.4%
NET INCOME 10,190 6,438 13,807 58.3% -26.2% 35,656 17,191 107.4%
PROFIT ATRIBUTABLE TO
Shareholder´s of the company 10,189 6,436 13,819 58.3% -26.3% 35,647 17,196 107.3%
Non-controlling interests 1 2 (12) -50.0% -108.3% 9 (5) -280.0%
Consolidated Financial Statements Cash Flow (in R$ thousand)
108
CASH FLOW STATEMENT 12M16 12M15
Chg. %
12M16 x 12M15
CASH FLOWS FROM OPERATINGACTIVITIES
Net income 35,656 17,191 107.4%
Adjustments to reconcile profit to net cash used in operating
activities
42,526 65,688 -35.3%
Decrease (increase) in operating assets (7,115) (13,994) -49.2%
Increase (decrease) in operating liabilities 4,246 4,885 -13.1%
Income tax and social contribution paid (4,728) (5,488) -13.8%
Land sale receiving 4,540 105,954 -95.7%
Dividends received from subsidiaries - 20,000 -100.0%
Net cash used in operating activities 75,125 194,236 -61.3%
CASH FLOWS FROM INVESTINGACTIVITIES
Decrease (Increase) of investments (3,887) (5,544) -29.9%
Acquisition of investment property (65,705) (39,821) 65.0%
Other (753) (983) -23.4%
Net cash used in investing activities (70,345) (46,348) 51.8%
CASH FLOWS FROM FINANCINGACTIVITIES
Proceeds from loans and debentures, net 305,782 209,716 45.8%
Payment of loans (301,697) (297,604) 1.4%
Derivative financial instrument redemption or acquisition (5,115) 6,073 -184.2%
Interest paid (122,891) (126,038) -2.5%
Contributions from shareholders 251,634 25,856 873.2%
Payment of obligations with related companies (111,387) - -100.0%
Increase in obligations with related companies 110,201 - -100.0%
Dividend payments (1,634) (25,856) -93.7%
Contributions from noncontrolling shareholders 10 (111) -109.0%
Net cash provided by financing activities 124,903 (207,964) -160.1%
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS,
NET
129,683 (60,076) -315.9%
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of year 17,258 77,334 -77.7%
Cash and cash equivalents at end of year 146,941 17,258 751.4%
Contacts:
Felipe Enck Gonçalves
CFO and Investor Relations Director
Tel.: +55 (31) 3615-8400
E-mail: ri@logcp.com.br
http://www.logcp.com.br/ri
Diogo Dias Gonçalves
Investor Relations and Financial Planning Manager
Tel: +55(31) 3615-8818 – diogo.goncalves@logcp.com.br
Carlos Guilherme Souza
Investor Relations Analyst
Tel: +55(31) 3615-7401 – carlos.guilherme@logcp.com.br
Isabela Saede Gazire
Investor Relations Analyst
Tel: +55(31) 3615-8416 – isabela.saede@logcp.com.br
109
Mrv apresentação institucional   april 17 - eng
OUR BUSINESS
Urbamais is the urban development company of MRV Group. Our business is to develop
raw land into open and closed residential subdivisions for the economic segment.
The pillars that differentiate us are:
• allotments strategicaly located,
• Operational Excellence,
• optimized projects offering affordable prices,
• infrastructure quality and urban planning,
• environmental awareness,
• Customer relationship and professional management.
Allotment
Idealization and
Feasibility
Jun. 2012
Urbamais
Incorporation
Launch of Parque
Atlanta
2011
Aug. 2014
Launch of Bem
Viver Campos
May 2015
Launch of Jardim
das Tulipas
Dec. 2015
Launch Jardins
de Campos
Jun. 2016
Launch of Jardins
dos Girassóis
Dec. 2016
Parque Atlanta
delivery
TIMELINE
• Present em 5 estados
• 15 cities
• Minas Gerais
- Contagem
- Matozinhos
- Pedro Leopoldo
- Ribeirão das Neves
- Uberaba
• São Paulo
- Araraquara
- Álvares Machado
- Cotia
- Ribeirão Preto
- São Carlos
- São José do Rio Preto
• Rio de Janeiro
- Campos dos Goytacazes
- Itaboraí
- Rio das Ostras
- Rio de Janeiro
• Bahia
- Feira de Santana
• Paraíba
- Lagoa Seca
• Rio Grande do Norte
- Natal
GEOGRAPHICAL
FOOTPRINT
CONVENTIONAL RESIDENTIAL LOTS
Is composed by sets of lots with areas starting from 160sqm and
urbanization infrastructure, which includes for squares, and/or
community equipment.
GATED COMMUNITIES (“CLOSED CONDOS”)
Surrounded by walls, they offer controlled access by guardhouse,
leisure area restricted to residents, with lots starting from 160 m².
Allotments are also served by a complete urbanization infrastructure.
Both products offer treated water networks, electric power and
sanitary sewage, paved roads, green areas and areas destined to
future implantation of commercial enterprises.
PRODUTCS
JARDIM DOS GIRASSÓIS
Complex composed by 5 allotments, conventional
and gated, totaling around 4 thousand lots for
comercialization. The second launch occured in
December 2016:
• Controlled access by guardhouse
• Total lots: 1,137
• Lots from 160sqm
• Leisure area
• Location: close to the city’s main avenue and 2
km away from the city center.
Ballroom
Barbecue area
Swiming pool
Kiosk
Fitness area
Grass field
Sand court
Playground
Trekking
JARDINS DE CAMPOS
• Launched in June 2016
• Conventional redidential lots
• Total units: 464
• Lots from 160sqm
• Sanitary sewage
• Water network
• Eletric power
• Paved streets
• Landscape design
• Location: Guarus district, next to a large
comercial area.
Road system Reserved area
for square
Green area
PARQUE ATLANTA
• Launched in August 2014
• Delivered in June 2016
• Gated comunity
• Controlled access by guardhouse
• Total lots: 335
• Lots from 200sqm
• Leisure area
• Located next to the main city’s shopping mall.
Kiosk
Fitness area
Balroom
Barbecue
Swiming pool
Grass court
Sports courts
Playground
Cooper
Reading area
OPERATIONAL RESULTS
LANDBANK
(2016)
SALES
(up to 2016)
LAUNCHES
(up to 2016)
LANDBANK
DISTRIBUTION
(2016)
253MILLION
R$2.4BILLION
R$
6.2MILLION SQM.
R$ 3,799UNITS
2,377UNITS
176MILLION
R$
MG
47%
RJ
25%
RN
4%
SP
8%
BA
16%
COMERCIAL RESULTS
7
58
64
2014 2015 2016
729%
10%
15
77
93
2014 2015 2016
413%
21%
Launches % Urbamais (R$ million) Pre-Sales % Urbamais (R$ million)
Source: Urbamais
RESULTADOS FINANCEIROS
• Net Profit (R$ million)
• Gross Profit (R$ million)
• EBITDA (R$ million)
• Net Revenue (R$ million)
1,6
13,1
30,364,98% 59,73%
54,65%
-90,00%
-70,00%
-50,00%
-30,00%
-10,00%
10,00%
30,00%
50,00%
70,00%
90,00%
0
5
10
15
20
25
30
35
2014 2015 2016
Lucro Bruto Margem Bruta
-1,5
4,8-59,68%
22,30%
28,50%
-70,00%
-50,00%
-30,00%
-10,00%
10,00%
30,00%
50,00%
2014 2015 2016
EBITDA
2014 2015
-1,7
4,4
-71,85%
20,2…
24,45%
-80,00%
-60,00%
-40,00%
-20,00%
0,00%
20,00%
-4
-2
0
2
4
6
8
2014 2015 2016
Lucro Líquido Margem Líquida
2014 2015
2
22
56
2014 2015 2016
813%
153%
2016
13,5
15,8
4,8
2016
229%
Source: Urbamais
EBITDA Margin
Gross profit Gross margin
Net profit Net margin
Contacts
Leonardo Corrêa
Chief Financial and Investor Relations Officer
Ricardo Paixão
Investor Relations and Financial Planning Director
Matheus Torga
Investor Relations Manager
Ph.: (+55 31) 3615-8153
E-mail: ri@mrv.com.br
This presentation is also available on our website : www.mrv.com.br/ri
121
Mrv apresentação institucional   april 17 - eng

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Mrv apresentação institucional april 17 - eng

  • 2. Disclaimer 2 The material that follows is a presentation of general background information about MRV Engenharia e Participações S.A. and its subsidiaries (collectively, “MRV” or the “Company”) as of the date of the presentation. It is information in summary form and does not purport to be complete. No representation or warranty, express or implied, is made concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of this information. This presentation may contain certain forward-looking statements and information relating to MRV that reflect the current views and/or expectations of the Company and its management with respect to its performance, business and future events. Forward looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like “believe,” “anticipate,” “expect,” “envisages,” “will likely result,” or any other words or phrases of similar meaning. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation. In no event, neither the Company nor any of its affiliates, directors, officers, agents or employees shall be liable before any third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements contained in this presentation or for any consequential, special or similar damages. This presentation does not constitute an offer, or invitation, or solicitation of an offer to purchase any securities. Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever. The market and competitive position data, including market forecasts, used throughout this presentation was obtained from internal surveys, market research, publicly available information and industry publications. Although we have no reason to believe that any of this information or these reports are inaccurate in any material respect, we have not independently verified the competitive position, market share, market size, market growth or other data provided by third parties or by industry or other publications. MRV does not make any representation as to the accuracy of such information. This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without MRV’s prior written consent.
  • 3. Summary 1. Company Overview............................................................................................................................................... 4 2. Consistent Results ……….......................................................................................................................................16 Operational................................................................................................................................................................. 17 Financial ..................................................................................................................................................................... 25 3. Market Opportunities & Company’s Strategy....................................................................................................... 37 4. MCMV ................................................................................................................................................................ 42 5. Brazilian Economy / Homebuilding Industry ....................................................................................................... 48 6. Business Areas.................................................................................................................................................... 59 7. Sustainability ..................................................................................................................................................... 70 8. Management...................................................................................................................................................... 81 9. Financials ........................................................................................................................................................... 84 10. Subsidiaries LOG CP ....................................................................................................................................................................... 88 URBAMAIS ............................................................................................................................................................... 112 3
  • 5. Shareholders’ Structure Free float represents 62% of shareholders’ equity. 444,139,684 common shares * December 31, 2016 “Novo Mercado”, the highest level of Corporate Governance BM&FBovespa Novo Mercado : MRVE3 ADR OTCQX : MRVNY MRVNY Cusip code 553479106 ISIN code US5534791067 5 Daily average of negotiation in 4Q16 – R$27.3 million Rubens Menin T. de Souza 35.3% Executives and Board Members 2.3% Treasury Shares 0.6% Orbis Investment Management Limited 11.6% Prudential Plc. 5.0% Other Shareholders; 50.2%
  • 6. 37 years of success 6 3.000 units per year 25.000 units per year 40.000 units per year ADRs Level1 MRV Foundation Beginning of relationship Beginning of Geographic diversification Enactment of Correspondent of Trust by Financial Institutions Banks take over housing credits Private Equity IPO 1st Negotiation Correspondent MRV LOG Foundation Equity Follow-On MCMV 1 MCMV 2 MCMV 3 ADRs Level1
  • 7. Business, Mission, Vision and Values BUSINESS Development, construction and housing sales. MISSION Make the home ownership dream possible by offering houses with the best cost-benefit ratio for clients. VISION Be the best company in the development, construction and sales of low-income housing projects in Brazil. VALUES 7
  • 8. Organizational Structure Board of Directors 7 members (4 independents) Chairman: Rubens Menin Chief Executive Officer Rafael Menin Chief Administrative and SSC Officer Júnia Galvão Chief Financial and Investor Relations Officer Leonardo Corrêa Chief Production Officer Homero Paiva Chief Comercial Officer Eduardo Barretto Chief Real Estate Development Officer Hudson Gonçalves Chief Real Estate Financing Officer José Adib Chief Executive Officer Eduardo Fischer Chief Legal Officer Maria Fernanda Maia Investor Relations and Financial Planning Director Ricardo Paixão 9 Directors 23 Managers 128 Chief Officers Chief Officers Board Director 8
  • 10. from 31 to 35 years 20% more than 35 years 26% Up to 25 years 24% from 26 to 30 years 30% Single 77% Married 14% Others 9% Source: CRM MRV – 31/03/2017 1) Minimum wage 2016: R$ 880,00 Most of our clients are searching for their first apartment. Our Clients Young clients: 60% is up to 30 years old. 10 High school - concluded 46%Degree - concluded 30% Degree - not concluded 14% High school - not concluded 2% Outros 8% The majority of our clients have at least completed high school degree. Up to R$ 2,350 43% from R$ 2,350 to R$ 3,600 17% from R$ 3,600 to R$ 6,500 20% from R$ 3,600 to R$ 6,500 16% more than R$ 6,500 4%
  • 11. 1 or 2 inhabitants 38% 3 inhabitants 26% 4 inhabitants 21% Over 5 inhabitants 15% Cities where we operate 1: In 2014 2: In 2012 Education Degree1 Average household income1 Number of habitants per household2 Age Ranges1 Data from cities where MRV operates. Source: Geofusion 11 Withoutinstructionto incomplete highschool 62% Complete highschool to incomplete graduation 25% Complete graduation 12% Others 1% Up to R$ 1,896 40% From R$ 1,896 to R$ 3,328 26% From R$ 3,328 to R$ 6,490 19% Over R$ 6,490 15% Up to 19 years 28% From 20 to 34 years 25% From 35 to 59 years 34% Over 60 years 13%
  • 12. Our investments in urbanization and infrastructure 12
  • 13. # of Cities x Gross Margin Competitive Advantages and Market Potential Note: *Information from Statistics and Information Center, from João Pinheiro Foundation. MRV inhabitants x Landbank in PSV 1.5 million (R$ 2.7 bi) 2.4 million (R$ 4.7 bi) 11.5 million (R$ 27.8 bi) 3.5 million (R$ 5.6 bi) Southeast South Middle-west Northeast Potential market penetration per month 13,719 MRV Actual Performance Additional Potential Total Potential Sales increment (0.72/1000 habitants) Average sales / month (2016) Nationwide Footprint - Present in 22 States and Federal District - 145 cities attended by the Company 10,704 3,015 28 7 12 15 17 11 1 9 6 11 36.6% 37.9% 35.1% 32.3% 31.1% 28.0% 26.4% 28.3% 30.2% 32.6% 2 2 2 2 2 3 3 3 3 3 4 0 5 10 15 20 25 30 35 40 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 79 cities 38 cities 13
  • 14. Operational Efficiency: focus on processes 14 6 Sales Quality in prospecting land bank 9 directors with average of 16 years at MRV Chanel Effectiveness - 4,772 brokers * - 84% of sales through the internal broker in the 4Q16 Credit quality: - Pre-screening process Construction - # of Employees: 18,782* - 340 engineers* - 204 sites - Experienced Management Scale and Margins - Standardization: bargaining power in supply chain - Cost control per project 1,450 dedicated professionals* Simultaneous Sales (SICAQ / SAC) Shared Services Center MRV One of the lowest G&A cost of the sector IT Systems (SAP, MRV Obras) Net debt / Equity¹: 5.4% Short cycle One of the best S&P and Fitch Ratings Corporate Rates in the industry (brAA- , stable outlook) Note (1) Net Debt as of 12/31/2016. * Team numbers are composed by own and outsourced employees. As of Dec/16.
  • 15. Organic Growth: metrics Production Headcount2 Geographic Diversification (# cities) Construction sites in progress Administrative Headcount1 15 (1) Team numbers are composed by own and outsourced employees. (2) Annual average employees’ number. Last update: June 30, 2016. 28 56 63 75 90 107 118 119 128 134 145 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 75 127 193 205 277 345 333 299 251 223 204 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
  • 17. 17 Operational Results: Landbank – Real Estate Development Landbank - %MRV (R$ billion) Landbank - %MRV (Thousand units) % of Swaps – (% MRV Land acquired) % cost of land / PSV Dec/16 Geographical distribution Dec/16 (R$) Geographical distribution of land bank By Brazilian Region Dec/16 (R$) Reduced competition allows us to: Maintain the % of Swap Dilating installment payments OPTIMIZATION OF CASH FLOW
  • 18. Launches %MRV (units) 18 Operational Results: Launches Launches - %MRV (R$ million) Launches 4Q16 By financing source (units) Launches 4Q16 By Geographic Distribution (R$)
  • 19. Pre-sales* - %MRV (R$ million) 19 * Sales net of swaps and gross of cancellations. Operational Results: Pre-sales Pre-sales* - %MRV (units) Pre-sales 4Q16 By financing source (units) Pre-sales 4Q16 By Geographic Distribution (R$)
  • 20. Pre – Sales (% MRV – R$ million) 20 Pre-sales per launching period Sales over Supply Sales over Supply = Pre-sales / (Beginning Inventory + Launches) Pre-sales per launching period Inventory Duration
  • 21. Simultaneous Sales: benefits MRV’s Credit Policy (up to 2013): Simultaneous Sales (SICAQ/SAC): The Project consists in the pre-approval of the client’s mortgage with the bank before recording the sale. Benefits:  Speed up the client transfer process to the bank and, as a consequence, the receivable cycle;  Significant reduction in cancellation risk. Flow chart and term until the client transfer: 21 Unit reservation Credit Analysis (MRV) Pre-sale Registration Credit Analysis (Bank) Mortgage Approval Mortgage Granting Unit reservation Credit Analysis (Bank) Mortgage Approval Pre-sale Registration Mortgage Granting 2012 2013 2014 2015 Credit Policy 12 9 6 7 Simultaneous Sales 1 1 1 Period (in months) between the sale record and transfer As of 2016, all sales were done through the new process.
  • 23. Operational Results (in units) Construction Financing 100% (units) Client Financing 100% (units) Finished units 100% (units) Built units 100% (units) 23
  • 24. Balanced Operation 24Operational accumulated data since 2007 until the referred period. Data 100%. *Construction financing: contracted projects at financial institutions.
  • 25. Financial Results Net Revenue (in R$ million) 25 Proportional Consolidation CPC 19 IFRS 11 Gross Profit (R$ million) and Gross Margin (%) CPC 19 IFRS 11Proportional Consolidation 140 400 1,111 1,648 3,021 4,015 3,804 3,871 4,186 4,763 4,294 0 1 2 3 4 5 6 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 50 146 421 578 977 1,247 1,066 1,021 1,184 1,439 1,387 35.3% 36.6% 37.9% 35.1% 32.3% 31.1% 28.0% 26.4% 28.3% 30.2% 32.6% 0 200 400 600 800 1,000 1,200 1,400 1,600 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
  • 26. 84 98 147 201 215 244 259 280 289 5.4% 3.5% 3.9% 4.7% 5.4% 4.8% 4.3% 5.1% 5.5% 7.6% 5.9% 4.9% 5.0% 5.6% 6.3% 6.2% 5.9% 6.8% -30.0% -25.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 G&A Expenses G&A Expenses / Pre-sales G&A Expenses / Net Revenues 26 Sales Expenses (R$ million) G&A Expenses (R$ million) Proportional Consolidation CPC 19 IFRS 11 Proportional Consolidation CPC 19 IFRS 11 Financial Results 31 93 105 163 224 251 270 356 458 365 4.3% 6.0% 3.7% 4.3% 5.2% 6.3% 5.3% 5.9% 8.3% 9.2% 8.1% 8.4% 6.4% 5.4% 5.6% 6.6% 7.0% 8.5% 9.6% 11.5% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Sales Expenses Sales Expenses / Pre-sales Sales Expensas / Net Revenues
  • 27. 27 Financial Results Net Income (R$ million) and Net Margin (%) EBITDA (R$ million) and EBITDA Margin(%) Proportional Consolidation CPC 19 IFRS 11 Proportional Consolidation CPC 19 IFRS 11 2014 considers fair value gain of R$ 268 millions from LOG. 23 77 273 440 796 1,045 787 643 862 669 637 25.5% 19.3% 24.5% 26.7% 26.3% 26.0% 20.7% 16.6% 20.6% 14.0% 15.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 17 87 231 347 634 760 528 423 720 548 557 12.1% 21.8% 20.8% 21.1% 21.0% 18.9% 13.9% 10.9% 17.2% 11.5% 13.1% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
  • 28. 15.7%14.8% 18.0%17.7% 10.7% 7.9% 12.5% 8.3% 7.8%8.2% 8.6% 10.5% 8.8% 2008 2009 2010 2011 2012 2013 2014* 2015 2016 21.8%20.8%21.1%21.0% 18.9% 13.9% 10.9% 17.2% 11.5% 13.1%12.3% 10.9%12.1% 13.5% 14.5% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 19.3% 24.5% 26.7%26.3%26.0% 20.7% 16.6% 20.6% 14.0% 15.0% 19.1% 16.6%15.5% 16.0% 16.3% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 36.6% 37.9% 35.1% 32.3% 31.1% 28.0% 26.4% 28.3% 30.2% 32.6% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 11.9% 15.8% 17.2% 23.8% 23.8% 14.5% 10.6% 16.7% 11.9% 11.1% 10.6% 11.8% 13.6% 12.2% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Profitability Indicators (2007-2011: Proportional Consolidation / 2012-2016: CPC 19 IFRS 11) 28 Gross Margin (including financial expenses) EBITDA Margin Net Margin ROE (p.a.)¹ ROIC (p.a.) ¹ Equity: average of the last 5 quarters. EPS (R$) Ex-equity income 0.055 0.567 0.779 1.316 1.578 1.104 0.891 1.570 1.240 1.263 0.890 1.100 1.457 1.393 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2014 considers fair value gain of R$ 268 millions from LOG.
  • 29. Cash Flow MRV typical project and Financing mix 29 Evolution of Pre-sales by financing means (R$) %MRV MRV typical project
  • 30. Cash Flow Assumptions MRV typical project 30 MRV MODEL %PSV 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Operational Indicators Construction Speed 11% 16% 18% 17% 15% 12% 8% 3% Sales Speed 21% 13% 9% 9% 9% 9% 9% 9% 9% 1% 1% 0% Cash Flow CEF + BB Cash inflow 100.0% 0.6% 5.6% 5.6% 8.8% 12.5% 14.5% 14.1% 12.6% 12.3% 6.8% 2.4% 2.1% 0.9% 0.7% 0.5% Taxes - PIS and COFINS 2.1% 0.0% 0.1% 0.1% 0.2% 0.3% 0.3% 0.3% 0.3% 0.3% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% Net Revenue 97.9% 0.6% 5.4% 5.5% 8.6% 12.3% 14.2% 13.8% 12.3% 12.0% 6.7% 2.3% 2.1% 0.9% 0.7% 0.5% Financing inflow 18.2% 13.2% 2.3% 1.3% 0.7% 0.7% Interest 1.9% 0.2% 0.3% 0.4% 0.4% 0.4% 0.2% 0.1% 0.0% Financing amortization 18.2% 3.1% 7.9% 5.2% 1.9% Land disbursement 4.4% 1.3% 1.3% 1.3% 0.4% Production and public improvements 2.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% Construction disbursement 50.9% 0.0% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 3.4% 7.4% 8.6% 8.6% 7.9% 6.5% 4.6% 2.2% 0.6% 0.6% Result 35.6% -1.4% -1.4% -1.4% -0.5% -0.1% -0.1% -0.1% -0.1% -0.1% 1.5% -1.3% 0.1% 1.0% 5.6% 6.5% 7.0% 9.1% 5.7% 1.6% 2.0% 0.8% 0.6% 0.4% Individual Cash Flow Cash inflow 100.0% 0.3% 0.7% 0.9% 1.2% 1.4% 1.5% 1.6% 1.8% 1.8% 1.5% 55.5% 29.4% 1.2% 0.7% 0.5% Taxes - PIS and COFINS 2.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1.2% 0.6% 0.0% 0.0% 0.0% Net Revenue 97.9% 0.3% 0.7% 0.9% 1.1% 1.3% 1.5% 1.6% 1.7% 1.8% 1.5% 54.3% 28.8% 1.2% 0.7% 0.5% Financing inflow 51.6% 4.9% 5.8% 8.3% 10.3% 9.4% 6.6% 3.6% 2.6% Interest 7.4% 0.1% 0.2% 0.4% 0.6% 0.8% 1.0% 1.1% 1.2% 1.2% 0.8% Financing amortization 51.6% 51.6% Land disbursement 4.6% 1.4% 1.4% 1.4% 0.5% Production and public improvements 2.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% Construction disbursement 52.2% 0.0% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 3.4% 7.6% 8.8% 8.8% 8.1% 6.7% 4.8% 2.3% 0.9% 0.3% Result 26.8% -1.4% -1.4% -1.4% -0.5% -0.1% -0.1% -0.1% -0.1% -0.4% 1.6% -1.5% -0.2% 1.7% 1.5% 0.0% -1.0% 0.4% -0.9% 0.3% 28.1% 1.1% 0.6% 0.4%
  • 31. Focus on Cash Flow 31 Important highlights 15 quarters of consecutive cash generation Improvement in CEF’s and BB’s processes and systems Growth in the number of built units contributes to the higher cash generation. Efficiency of the new sales process “Vendas Simultâneas” Built Units and Client Financing 100% ( units) *Cash Generation: ∆ net debt + adjustments 4 years of recurrent cash generation
  • 32. 151 724 1,198 1,127 1,539 1,689 1,372 1,596 1,764 - 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 265 441 796 1,045 787 643 862 669 637 104% 14% 93% 148% 211% 207% 131% 78% 46% 2008 2009 2010 2011 2012 2013 2014* 2015 2016 Cash Generation (2006-2011: Proportional Consolidation/ 2012-2016: CPC 19 IFRS11) 32 Net debt (R$ million) and Net debt / equity ratio(%) EBITDA (R$ million) and Net debt / EBITDA LTM* Debt Repayment Schedule 1 (R$ million) 1)AsofDecember31,2016. *Includeleases. * 2014 considers fair value gain of R$ 268 million from LOG. Duration: 17 months1 Cash position (R$ million) 276 63 741 1,550 1,663 1,329 1,130 525 293 16.9% 2.5% 24.3% 42.2% 40.7% 30.4% 24.2% 10.4% 5.4% 2008 2009 2010 2011 2012 2013 2014 2015 2016
  • 33. Share Buyback Program 33 Since 2014: 36,784,500 shares were repurchased R$ 267.7 millions of Financial Volume 39,081,659 shares were cancelled Buyback average price (since 2014): R$ 7.28 Book Value1: R$ 12.2427 Discount of 59.5% 1 As of December 31, 2016. # of Shares Eligible Dividends Term 06/02/2016 Status Active Approved Quantity 12,000,000 Share Buyback Plan - Plan VI
  • 34. Debt details and Financial Covenants Covenant brAA- AA-(br) 34 Corporate Rating Net Debt + Properties payable___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Net Equity < 0.65 Receivables + Unearned Revenue + Inventories_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Net Debt + Properties payable + Unearned Cost > 1.6 Covenants: 1Q08 to 4Q12 – Proportional consolidation; 1Q13 to 4Q16 – CPC 19 – IFRS 11. Note: “Net Debt” excludes SFH financing. “Properties payable” excludes land part relative to swap Total Debt (R$ million) Balance Due Dec/16 Balance Due / Total (%) CDI 1,139 49.2% CDI + 1.4% TR 1,156 50.0% TR + 9.0% Others (fixed rate) 18 0.8% 5.0% Total 2,314 100.0% 13.11% Average Cost
  • 35. Shareholders’ base by region % Free Float MRV Shareholders base 35Source: MRV *Annual shareholders' base average; Last update: February 28, 2017.
  • 36. Analysts Estimates – Consensus 36Institutions: Bradesco, BTG Pactual, Citi, Credit Suisse, Goldman Sachs, Itaú, JP Morgan, Bank of America Merril Lynch, Morgan Stanley, Santander, e Banco do Brasil.
  • 38. Housing Sector – Launches and Pre-Sales 38 Launches x Pre-Sales (R$ billion – %company) 2012 shows activity decelerationAccrued INCC 2008 to 2016: 59.2% Nominal Values Real Value Source: Company reports – MRV, Cyrela, Gafisa, Tenda,PDG, Rossi, Brookfield (up to 9M14), CCDI (up to 2011), Viver, Even, Rodobens, Trisul, Tecnisa, Direcional, Eztec, Helbor, JHSF, João Fortes, CR2. Note: 2016 considers the period from January to December.
  • 39. Housing Sector – Inventory 39 Source: Company reports – MRV, Cyrela, Gafisa, Tenda, PDG, Rossi, Brookfield (up to 9M14), CCDI (up to 2011), Viver, Even, Rodobens, Trisul, Tecnisa, Direcional, Eztec, Helbor, JHSF, João Fortes, CR2. Due to the slow down of launches in the last years, the real estate market is focused on inventory sales. In 2016 the sector’s inventory reduced 27.2% (Real Value) Inventories (R$ billion – %company) Nominal Values Real Value Accrued INCC 2008 to 2016: 59.2%
  • 40. Other Companies 62% Other Companies 43% Other Companies 37% Other Companies 16% Other Companies 30% Other Companies 27% Other Companies 41% MRV 38% MRV 57% MRV 63% MRV 84% MRV 70% MRV 73% MRV 59% 2010 2011 2012 2013 2014 2015 2016 Reduced Competition in the Low Income Segment 40 Launches eligible to MCMV (R$ billion) (Groups II and III) Note: The data are estimated and based on the listed Companies’ earnings releases. Source: Company reports – MRV, Cyrela, Gafisa, Tenda, PDG, Rossi, Brookfield (up to 9M14), CCDI (up to 2011), Viver, Even, Rodobens, Trisul, Tecnisa, Direcional, Eztec, Helbor, JHSF, João Fortes, CR2. Lower Competition in the MCMV Program Change of % of launched units in MCMV (Groups II and III) • Other companies: Direcional, PDG, Gafisa, Tenda, Cyrela, Rodobens, Rossi, Brookfield, CCDI, Even, Ez Tec, Tecnisa, Trisul, Viver and Helbor. 7.7 10.8 8.5 6.7 6.1 5.2 5.7 6.6 7.4 10.5 7.6 4.6 3.3 4.0 5.8 6.6 2009 2010 2011 2012 2013 2014 2015 2016 MCMV (Groups 1, 2 and 3) MCMV (Groups 2 and 3)
  • 41. Financing Amortization Systems * As of December 31, 2016. 92% of MRV’s sales are made through PRICE system* 41 Note: Simulation of a new apartment acquisition in São Paulo / SP. Source: Housing Simulator of Caixa Econômica Federal. SAC – Constant Amortization System Fixed monthly financing amortization and decreasing installments. PRICE – Constant Installments Increasing monthly financing amortization and constant installments. * Average conditions observed in MRV’s sales. Tenor: 360 months PRICE Family Income R$ 2,500 Loan to value 80% Interest Rates 5.5% Unit Price R$ 159,000 Subsidy* R$ 6,722 FGTS* R$ 5,300 Down Payment* R$ 3,180 MRV Installments* R$ 23,850 Financed value R$ 119,948 Banck first Installment R$ 708.37 Apartment price: R$ 159,000
  • 42. MCMV
  • 43. Programa Minha Casa Minha Vida 84% das vendas MRV são realizadas pelo sistema PRICE* 2 APRIL/09 TO DEC/10 JAN/11 TO DEC/15 ¹ Included 350,000 units added on September 2014. ² Amounts refers to the units to be built in 2016 ³ MCMV 1 and 2: Amounts referring to each program. ⁴ Details not yet released 2017-20182016 43
  • 44. Minha Casa Minha Vida: Subsidies 2 SUBSIDIES 44 Group Monthly Income Metropolitan regions of SP, RJ, DF Other cities Group 1 Up to R$ 1,800 Up to 90% Up to 90% Up to R$ 2,350 47,500R$ Up to R$ 40,000 Up to R$ 2,600 15,835R$ Up to R$ 12,665 Group 2 Up to R$ 2,350 29,000R$ Up to R$ 27,420 Up to R$ 2,790 14,765R$ Up to R$ 11,810 Up to R$ 3,275 6,115R$ Up to R$ 4,895 Up to R$ 4,000 2,585R$ Up to R$ 2,535 Group 3 Up to R$ 7,000 -R$ -R$ Group 3 Plus Up to R$ 9,000 -R$ -R$ M CM V 3 - (2 0 1 7 -2 0 1 8 ) Group 1,5 Group Monthly Income Metropolitan regions of SP, RJ, DF Other cities Group 1 Up to R$ 1,800 Up to 90% Up to 90% Group 1,5 Up to R$ 2,350 45,000R$ Up to R$ 40,000 Up to R$ 2,350 27,500R$ Up to R$ 26,000 Up to R$ 2,790 14,000R$ Up to R$ 11,200 Up to R$ 3,275 5,800R$ Up to R$ 4,640 Up to R$ 3,600 2,450R$ Up to R$ 2,405 Group 3 Up to R$ 6,500 -R$ -R$ Group 2 M CM V 3 - (2 0 1 6 ) Group Monthly Income Metropolitan regions of SP, RJ, DF Other cities Group 1 Up to R$ 1,600 Up to 95% Up to 95% Group 1,5 - -R$ -R$ Up to R$ 2,325 25,000R$ 17,960R$ Up to R$ 2,790 10,783R$ 2,113R$ Up to R$ 3,275 2,113R$ 2,113R$ - -R$ -R$ Group 3 Up to R$ 5,000 -R$ -R$ Group 2 M CM V 2 2
  • 45. Minha Casa Minha Vida: Units Price Group 1,5: Group 2 and 3: Group 3 plus: MCMV 3 – (2017 - 2018)MCMV 3 – (2016) 45 Regions DF, RJ e SP SUL, ES e MG CO NE e N Capitals - Metropolitan areas 240,000 215,000 190,000 190,000 Other Capitals and metropolitan areas 230,000 190,000 180,000 180,000 Cities < 250 thousand habitants 180,000 170,000 165,000 160,000 Cities ≥ 50 thousand < 100 thousand habitants 145,000 140,000 135,000 130,000 Cities ≥ 20 thousand < 50 thousand habitants 110,000 105,000 105,000 100,000 Other cities 95,000 95,000 95,000 95,000 Regions DF, RJ e SP SUL, ES e MG CO NE e N Capitals - Metropolitan areas 144,000 133,000 128,000 128,000 Other Capitals and metropolitan areas 133,000 128,000 122,000 122,000 Cities < 250 thousand habitants 122,000 117,000 112,000 106,000 Cities ≥ 50 thousand < 100 thousand habitants 106,000 101,000 96,000 90,000 Cities ≥ 20 thousand < 50 thousand habitants 85,000 80,000 80,000 74,000 Other cities 74,000 74,000 74,000 74,000 Regions DF, RJ e SP SUL, ES e MG CO NE e N Capitals - Metropolitan areas 300,000 268,000 237,000 237,000 Other Capitals and metropolitan areas 287,000 237,000 225,000 225,000 Cities < 250 thousand habitants 225,000 212,000 206,000 200,000 Cities ≥ 50 thousand < 100 thousand habitants 181,000 175,000 168,000 162,000 Cities ≥ 20 thousand < 50 thousand habitants 137,000 131,000 131,000 125,000 Other cities 118,000 118,000 118,000 118,000 Regions DF, RJ e SP SUL, ES e MG CO NE e N Capitals - Metropolitan areas 225,000 200,000 180,000 180,000 Other Capitals and metropolitan areas 215,000 180,000 170,000 170,000 Cities < 250 thousand habitants 170,000 160,000 155,000 150,000 Cities ≥ 50 thousand < 100 thousand habitants 135,000 130,000 125,000 120,000 Cities ≥ 20 thousand < 50 thousand habitants 105,000 100,000 100,000 95,000 Other cities 90,000 90,000 90,000 90,000 Regions DF, RJ e SP SUL, ES e MG CO NE e N Capitals - Metropolitan areas 135,000 125,000 120,000 120,000 Other Capitals and metropolitan areas 125,000 120,000 115,000 115,000 Cities < 250 thousand habitants 115,000 110,000 105,000 100,000 Cities ≥ 50 thousand < 100 thousand habitants 100,000 95,000 90,000 85,000 Cities ≥ 20 thousand < 50 thousand habitants 80,000 75,000 75,000 70,000 Other cities 70,000 70,000 70,000 70,000
  • 46. Resources invested in the program 2  Group I – According to Ministry of Planning Budget (PAC)  Group II – According to FGTS • Until 2015: In Group II, subsidy has contribution of 17.5% from National Treasury and 82.5% from FGTS. • After 2015: In Group II, National Treasury contribution is of 10% and of FGTS is 90%. **MCMV3: investments estimated for 2015 to 2018 - FGTS has complementary subsidies (up to R$ 27,500 per unit) + Interest Rates subsidy. - OGU: National General Budget * The number of units to be contracted remains the same as that proposed at the beginning of the MCMV 3. Source: http://www.cgu.gov.br/ 46 Program Groups Family Income Contracted Units Resources (R$ million) Family Income Units up to Ago./2015 Resources (R$ million) Family Income Units up to Jan/2017 Resources (R$ million) Family Income Estimated Units Resources (R$ million) Group 1 Up to R$1,395 482,741 R$ 17,999 (OGU) Up to R$ 1,600 1,226,605 R$ 63,158 (OGU) Up to R$ 1,800 53,748 R$ 1,976 Up to R$ 1,800 170,000 Group 1.5 From R$ 1,800 to R$ 2,350 From R$ 1,800 to R$ 2,600 80,000 Group 2 From R$ 1,395 to R$ 2,790 375,764 R$ 2,047 (OGU) + R$ 2,764 (Complement) + R$ 2 (Interest Subsidy) From R$ 1,600 to R$ 3,275 1,213,341 R$ 5,037 (OGU) + R$ 10,681 (Complement) + R$ 7,822 (Subsidy) From R$ 2,350 to R$ 3,600 645,692 R$ 6,593 (FGTS) From R$ 2,600 to R$ 4,000 800,000 R$ 8,900 (FGTS) Group 3 From R$ 2,790 to R$ 4,650 146,623 - From R$ 3,275 to R$ 5,000 307,054 - From R$ 3,600 to R$ 6,500 113,930 - From R$ 4,000 to R$ 7,000 200,000 - Group 3 Plus - From R$ 7,000 to R$ 9,000 Not Available - TOTAL 1,005,128 R$ 25,20 2,750,000 R$ 86,70 813,370 R$ 97,145 2,000,000* 97,145* MCMV 1 (Apr/2009 - Dec/2010) MCMV 2 (Jan/2011 - Ago/2015) MCMV 3 (Jan/2017 - Dec/2018)** Not available MCMV 3 (Jan/2016 - Jan/2017)**
  • 47. Minha Casa, Minha Vida Minha Casa Minha Vida 1 (2009-2010) Minha Casa Minha Vida 2 (2011- Nov/15)* 2 47 MRV leadership on the Government Program and good relationship with CEF Source: Ministério das Cidades – 11/30/2015 Group I: monthly income up to R$1,600; Group II: monthly income from R$1,600 to R$3,275; Group III: monthly income from R$3,275 to R$5,000. Total Contracts (R$ million) Nr of Projects Average (R$ million) MRV ENGENHARIA 6,553 519 12.6 DIRECIONAL ENGENHARIA 3,900 50 78.0 EMCCAMP 2,233 71 31.5 CURY CONSTRUTORA 1,900 60 31.7 SERTENGE SERVIÇOS 1,462 58 25.2 CONSTRUTORA TENDA 1,715 137 12.5 GRÁFICO ENGENHARIA 1,073 38 28.2 HF ENGENHARIA 934 28 33.3 CONSTRUTORA EMCASA 860 26 33.1 CANOPUS 846 46 18.4 BROOKFIELD 945 39 24.2 NOVOLAR 895 34 26.3 CASALTA CONSTRUÇÕES 779 56 13.9 AURORA CONSTRUTORA 651 44 14.8 AMORIMCOUTINHO 596 30 19.9 L MARQUEZZO 667 46 14.5 BAIRRO NOVO 669 35 19.1 JC GONTIJO 862 7 123.1 REALIZA 674 33 20.4 CCMCONSTRUTORA 682 22 31.0 Ranking MCMV Source:MinistériodasCidades–Jul/2009toApr/14 Total MRV % Contracted Units 1,005,128 50,384 5% 482,741 0 0% 522,387 50,384 10% MCMV 1 (2009-2010) Group I Groups II and III Total MRV % Contracted Units 3,115,269 221,403 7% 1,242,745 3,180 0% 1,872,524 218,223 12% Group I Groups II and III MCMV 2 (2011 - 11/30/2015)
  • 48. Study from FGV: “Permanent Policies for Housing” In 5 years of operation, the MCMV: • Generated important results for the Brazilian economy. • Contributed to reduce the housing deficit (- 8.04% from 2009 to 2012). DEMAND FOR HOUSING STATE POLICY - Challenges: • Land price • Allocation of areas for housing of social interest • Work force qualification • Improvement of the construction productivity Source: http://blog.planalto.gov.br/minha-casa-minha-vida-contribuiu-para-reduzir-deficit-habitacional-no-brasil/ MCMV x Habitational Deficit 48 MCMV contributed to the reduction of housing deficit in Brazil
  • 50. Structural Demand Growth, regardless of government program Source: IBGE, January 2016. Source: IBGE, 2013 50 17% 17% 18% 15% 13% 9% 6% 3% 1% 11% 13% 14% 15% 15% 13% 10% 6% 3% 0 a 9 10 a 19 20 a 29 30 a 39 40 a 49 50 a 59 60 a 69 70 a 79 80 + 2010 2030 Class A/B: Above 10 M.W. Class C: 2 to 10 M.W. Class D/E: up to 2 M.W. M.W. – minimum wages: lowest monthly remuneration that employers must legally pay to workers. 2016 M. W.: R$ 880.00 Families per Income Level Real Salary Growth Population per Age Group Source : IBGE, 2013 Smaller families = higher demand Evolution of inhabitants per apartment 52% 38% 19% 16% 21% 21% 15% 19% 25% 12% 15% 22% 5% 7% 12% 1970 1991 2010 Five inhabitants Four inhabitants Three inhabitants Two inhabitants One inhabitant 4.0% 9.4% 10.1% 7.4% 1.8% 8.8% 3.8% 8.6% -0.8% 2.5% -9.6%-11.4% ClassC ClassC ClassC ClassC
  • 51. Habitational demand and Credit Supply Units (thousand) financed by FGTS + SPBE (Saving Accounts) Housing Shortgage of 6.2 million of units in 2014 Source: Presentation, Dec/16 51 Source : CBIC – FGTS: Dec/16; SBPE: Dec/16 78 60 53 41 37 31 22 24 11 10 USA Netherlands Spain France Germany South Africa Italy Chile Mexico Brazil Real Estate Financing as % of GDP Mortgage Source : Industry Department of Construction of Fiesp - Feb/2016
  • 52. SFH - Brazilian Housing Finance System FUNDING Employers deposit 8% of the monthly salary of all workers (Nov/16) Source: Caixa Balance of R$ 502 billion Borrowers may use the account balance linked to the FGTS for Mortgage Termination of work Retirement Others 12% 66% 14% 8% Interest Rate from 5% to 9.16% a.a + TR Units up to: R$ 300,000 sbpe Deposits made on the savings of commercial banks Real Estate Credit Legal Reserves Free Resources 65% 30% 5% SBPE Resources Market Rate Interest Rate from 9.75% 1 to 11% +TR Units of R$300,000 to R$950,000* Borrowers can go to any bank and apply for a real estate loan according to their credit rating Interest Rate from 12.252 % +TR Units above: R$950,000Notes: 1) If the client has a salary account in CEF the interest rate can reach 9.75%. In BB it can reach 9.65%+TR. 2) If the client has a salary account in the bank, the interest rate can reach 10.7%+TR. 3) 20% for compulsory deposit (remunerated by SELIC) and 10% for additional compulsory (corrected by TR) * States of DF, MG, RJ, SP: R$ 950,000; other states: R$ 750,000. 3% per year+TR 52
  • 53. FGTS ¹ Source up to 2011: PME Unemployment rate and source from 2012: PNAD due to its better sensibility and comprehensiveness. Net Collection (billion) From 2017 to 2020 the FGTS budget is R$ 254 billion to be invested in Housing. Obs: In 2007, retirement withdrawals increased significantly due to the spontaneous retirement approval by Federal Supreme Court, reducing the net collection in the period. Source: IBGE, CAGED e FGTS – Dec/16 Withdrawals (R$ billion) Budget (R$ billion) 53 Breakdown 2017 2018 2019 2020 Housing 70.5 63.5 63.5 63.5 Basic Sanitation 7.0 9.5 9.75 9.75 Infrastructure 9.0 8.0 8.0 7.0 Others 0.5 0.5 0.5 0.5 TOTAL 87.0 81.5 81.75 80.75
  • 54. Low impact from tighter Monetary Policy on mortgages 54 Assumptions: Unit value: R$ 159,000 LTV: 80% Income: R$ 2,500 Note : TR = Reference Rate for the Brazilian Housing Financing System and for the Savings Accounts. TR is a floating rate. FGTS’s remuneration of 3%p.a.+ TR allows the low interest rates on mortgages Interest rates and Inflation INCC = Construction Inflation Index IPCA = Brazilian Official Inflation Rate Source: IBGE, BCB, FGV – February 2017 20 % Income 30 % Income 4.50% 0.60% 5.10% 900.24 45.0% 776.72 38.8% 4.50% 1.21% 5.71% 900.45 45.0% 776.93 38.8% 4.50% 1.81% 6.31% 900.56 45.0% 777.04 38.9% 4.50% 2.43% 6.93% 900.73 45.0% 777.21 38.9% * 13th Installment RealInterest Rate(%p.a) Interest Rate Nominal Rate Monthly Installments (R$)* FGTS TR a.a. Price 0% 5% 10% 15% 20% 25% 30% TR 12M IPCA 12M SELIC 12M INCC 12M
  • 55. 2.0 0.4 2.0 2.9 5.5 1.1 0.4 1.7 1.4 7.0 1.6 1.2 2.0 1.7 6.4 1.8 2.4 1.6 2.7 5.3 1.6 2.4 1.8 3.0 5.2 Rural Corporate Housing Retail Housing BNDES Funding Microcredit dec/11 dec/12 dec/13 dec/14 dec/15 dec/16 feb/17 Housing Credit Credit Default of Economic Sectors Source: BCB – February, 2017 55 39% of the Credit is destined to the Housing Sector, which covers construction, renovation or acquisition of residential units. Housing Credit (R$ billion) 99 154 222 298 395 502 572 606 610 Crescent destination of credit to housing sector which has one of the lowest credit default in the market. Dec-07Dec-08Dec-09Dec-10Dec-11Dec-12Dec-13Dec-14Dec-15Dec-16Feb-17 Evolutionof credit protfolio (R$ billion) Retail Housing Corporate Housing BNDES Funding Rural Others Microcredit 316 401 518 657 804 972 1,205 1,441 1,582 1,550 1,541
  • 56. RET – Special Tax Regime 56 Source : RFB Regulatory Instruction n° 934; repealed by RFB Regulatory Instruction n° 1,435 RET Special Taxation 6% (up to 2012) Special Taxation 4% (as of 2013) Special Taxation 1% Presumed Income Taxable Income PIS / COFINS Basis of calculation Gross revenue received from real estate activities Gross revenue received from real estate activities Gross revenue received from real estate activities Gross revenue received from real estate activities and other revenues Gross revenue received from real estate activities and other revenues Rate 3.13% 2.08% 0.53% 3.65% 9.25% IRPJ/CSLL Basis of calculation Gross revenue received from real estate activities Gross revenue received from real estate activities Gross revenue received from real estate activities Gross revenue received from real estate activities Adjusted net income. Gross profit in the real estate is taxed as received. Rate 2.87% 1.92% 0.47% 3.08% 34.00% TOTAL 6.00% 4.00% 1.00% 6.73% Additional Comments Taxation of project subject to "Patrimônio de Afetação" Taxation of project subject to "Patrimônio de Afetação" Taxation of project subject to "Patrimônio de Afetação". Only units up to R$100k and elegible to MCMV are subject to 1%. (Price increase from R$85k to R$100k in December 2012) - Possibility to establish credit on some costs. Credit estimated at 3.75% of revenue received Other revenues are taxed by the tax regime of the developer Other revenues are taxed by the tax regime of the developer Other revenues are taxed by the tax regime of the developer - -
  • 57. Brazilian Economic Outlook SELIC Rate and Inflation Rate (IPCA) Data base: Fev/2017 Inflation Rate – IPCA * Source: IBGE – Jul/16 57 GDP Growth (% yoy) 4.0% 6.0% 5.0% -0.2% 7.6% 3.9% 1.8% 2.7% 0.1% -3.7% -3.5% 0.5% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Data base: Oct/2016. Indexes 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Nominal GDP (R$ trillion) 2.369 2.661 3.032 3.185 3.675 4.158 4.403 5.332 5.779 6.001 6.266 n.d. Real GDP Growth 4.0% 6.1% 5.2% -0.3% 7.5% 2.7% 0.9% 2.7% 0.1% -3.7% -3.5% 0.5% Unemployment rate (YTD) 10.0% 9.3% 7.9% 8.1% 6.7% 6.1% 5.5% 5.4% 6.8% 9.0% 12.0% 13.2% Bank Credit (% GDP) 30.7% 33.4% 40.8% 44.4% 46.4% 50.2% 54.2% 56.1% 58.0% 53.8% 51.1% 52.7% Inflation (IPCA) 3.1% 4.5% 5.9% 4.3% 5.9% 6.5% 5.8% 5.7% 6.4% 10.7% 6.3% 4.8% Nominal Interest Rate - TR 2.0% 1.4% 1.6% 0.7% 0.7% 1.2% 0.3% 0.2% 0.9% 1.8% 2.0% 0.4% INCC (Construction inflation) 5.0% 6.2% 11.9% 3.3% 7.8% 7.5% 7.1% 8.1% 6.9% 7.5% 6.1% 6.2% Average Central Bank Target Rate (Selic) 15.3% 12.0% 12.4% 10.0% 9.8% 11.7% 8.5% 8.4% 11.0% 15.4% 14.2% 10.4% Source: IBGE-Mar/2017; BCB -Mar/2017; FGV e CMN -Mar/2017 *Estimates : BCB -Focus Report -March 31, 2017
  • 58. 58 Brazilian Economic Outlook Composition of Bovespa index, by Weight(1) Note: (1) Source: BM&F Bovespa (May - Aug 2017) (2) Source: IBGE (excl. taxes, considering GDP Jan/16-Dec/16) Composition of Brazilian GDP, by Sector(2) A misconception about the Brazilian economy is that its performance is heavily dependent on global commodity markets. The statement is correct for the stock market, but not for the real economy. 1% 6% 3% 11% 73% 6% Ind. - Commodities Ind. - Utilities Ind. - Real Estate Ind. - Manufacturing Services Agribusiness 9% 5% 3% 16% 67% Commodities Utilities Construction Industry Services
  • 60. Corporate Governance – Committees 60 Risks and Compliance Committee • Evaluate and to monitor Company‘s risk exposures, monitoring and supervising the risk management process. • Comprised of Chairman, two Chief Executive Officers and two Chief Officers. Governance, Ethics and Sustainability Committee • Ensure and to disseminate the Company‘s commitment to management based on the pillars of corporate governance, sustainability and corporate ethics • Comprised of Chairman, two Chief Executive Officers and two Chief Officers. Human Resources Committee • Evaluate and to propose improvements to people development, training, remuneration, benefits, incentives and talents retention methods • Comprised of Chairman, two Chief Executive Officers, one Chief Officer and one Board of Directors member. Commercial and Credit Committee • Define the commercial and real estate financing strategy of the Company, composed, among others, sales mix, pricing, team profile, market agents mix, etc. • Comprised of Chairman, two Chief Executive Officers, three Chief Officers and one Director. Real Estate Development Committee • Define strategies of geographical expansion of the Company’s activities and land acquisitions. • Comprised of Chairman, two Chief Executive Officers and one Chief Officer. Production Committee • Ensure the correct production planning and control, evaluating the several elements that need to be managed and their respective impacts, so the Company’s goals can be reached. • Comprised of Chairman, two Chief Executive Officers and one Chief Officer. Juridical Committee • Establish the Company’s legal strategy in relation to main causes and mass litigation • Establish the fiscal planning strategy; Communication Committee • Establish the Company’s communication strategy with the stakeholders; • Interact with communication outlets in general;
  • 61. Pricing 24% Location 23% Payment Conditions 19% Security 10% Confidencein Homebuilder 9% Materials quality 7% Others 9% Development Strategy What are our clients looking for? 61 Market research and analysis Demography, Income, Expectations, etc - Land acquisition - Development phase - Sales strategy Client oriented strategy Source : Research with MRV’s Clients – Data Popular - 2011
  • 62. Landbank and Project location Cuiabá, MT – 912 units Valparaíso de Goiás, GO – 2,256 units Recife, PE – 860 units Taguatinga, DF – 2,748 units 62
  • 63. Production: New Technologies Hydraulic Kit Reduced workforce Less generated waste Greater production rationalization Better site organization Standardized projects Higher speed of production Strategic team of equipment Simplification of projects Economically viable Greater environmental sustainability Increased work security Standardization, Mechanization and Intelligent Processes Concrete Prefabricated and standardized door Aluminum Forms Hoisted Slab 63
  • 64. 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 MRV Other Homebuilders (average) Sales Channels * Períod: June 2016 Sales Channels Força de Vendas Website visits 64  85,6 million of Brazilians with internet access.  56% of C Class has internet access Source: Portal EBC (Apr/2015) and L3CRM (Aug/2015) Source : Similar Web, Mar 2017 Other companies: Rossi, Gafisa, PDG, Tenda, Living, Tecnisa, Even, Direcional, Brookfield, Cury, Helbor, Eztec Sales Force
  • 65. • R$ 4.5 Billion in payments in 2016 • 55.8 thousand Invoices received in December 2016. • 20.5 thousand Employees paid per month • 260 Employees SSC – Shared Service Center • + 5 million views of #MeuMundoMelhor videos. • + 1.4 million accesses to the Relationship Portal in 2015 • + 54 thousand estimated calls answered in 2015 • 166 thousand active clients • R$ 400 million collected per month • + 3,000 current accounts reconciled per month • + 3,000 new registered contracts per month • 218 employees • R$ 80 million of investment in IT (5 years) • +5.5 thousand work stations • 33 million of scanned documents since 2010 • +300 tablets in work sites Administrative Structure Lower G&A/Net Revenue in the sector Client Relationship and Internal Communication Information of Technology Specialized Services 65
  • 66. 66 SSC – Shared Service Center • 285 employees • Lower Operating Cost • Qualified workers • Optimized workspace • Work in shifts 124 Thousand payment per month. 34 payments per minute. Total transactions of 1 billion reais per month 89% of payment through account credit 14,257 payroll managed Material Facts - SSC Administrative Process of 56 Thousand invoices per month Management of 3,000 mobile accounts Enter of 3,800 invoices per month Management of 1,000 travel request per month 200 rented vehicles 4,800 monthly processed documents Invoices Centre Accounts Payable Personal Department Social Responsibility 30,967 Released units in 2014 250 new contracts per month Data-base: March/16 Volume of processed invoices 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Mar16 Jan17 Feb17 Mar17 Note: does not include Prime and MRL Source: SAP 2,414 new registered contracts per month
  • 67. Resolved demands on 1st contact 91.92% 2016 Relationship Portal General Accesses: 1,459,545 2016 54,836 Number of Answered Calls Monthly Average – March 2016 Costumer Service “Conexão MRV” +178,000 Views of the videos “Conexão MRV” #MeuMundoMelhor +5,000,000 Views of the videos #MeuMundoMelhor Complaints: 0.32%* Year 2016 MRV in Midias 361,186 followers in Twitter 607,601 followers in Google + 3 million of Facebook fans *Number of complaints over total clients (5 years) – Annual view Client Relationship 67 Client Access: 67,246 Monthly Average of Single Calls
  • 68. Information Technology • Mobility: Technical Assistance, Keys delivery, Client APP. • Automatization of sales force: WEB Commercial System WEB integrated to the BackOffice. • Social Media: Monitoring and collaboration (PODIO). • GED and BPM: Automatization of processes and paper elimination. MANAGEMENT PRACTICES • Prioritization of projects focused in return for the business. • Fast development, along with the speed of delivery and strategy. • DATACENTER structure (internal and active) guaranteeing the security of the information, the performance and availability of the systems. SECURITY AND CONTINUITY OF BUSINESS • Global Integrated Systems: SAP, MICROSOFT, ORACLE and IBM • Internal development to increase competitive advantages: MRVObras, MRVComercial, MRVCrédito and MRVDI INTEGRATED MULTIPLATAFORM SOLUTION RECOGNITION 68 2013 – Winner in Construction and Engineering category. 2012 – Winner in Construction and Materials category.
  • 69. Production Team  Approximately 18 thousand people dedicated to Production  Employees on a leadership position (directors, managers and coordinators) have been working in the company for an average of 9 years.  At this time, we have 204 sites under construction, located in the following areas: Northeast 29 (14.2%) Middle-west 11 (5.4%) South 32 (15.7%) Southeast 132 (64.7%) 10 Director 24 Managers 55 Coordinators 340 Engineers 439 Engineering Auxiliary and Building Technicians 465 interns 18,782 in other positions, being 9,903 MRV employees and 8,879 third part employees. Data-base: Dec/2016 Data-base: Feb/2017 69
  • 71. Social Investment Education Health Urbanization Environment 2011 2012 11.9 6.8 3.2 4.7 49.3 83.0 1.1 2.8 R$ million 2013 0.2 2.4 80.0 10.6 2014 1.3 0.0 88.2 13.9 2015 1.7 0.2 110.7 15.8 71 2016 3.4 1.6 167.7 19.6
  • 72. Work Safety and Health PODIO 72 Frequent inspections, with photographic report and integrated electronic record MRV uses the corporate social networking Pódio for the registration and follow-up of construction sites and its accommodations, where it has employees and service providers. All inspections are available online for research, consultation and follow-up.
  • 73. 73 Work Safety, Health and Literacy Contractors admission follows a Standard Operating Procedure requiring complete legal documents from contractors. Security Dialogue Continuous employee training Continuous improvement 29 literacy/training schools in operation at MRV’s construction sites, with more than 3,200 students. Since 2012, we already maintained more than 134 schools. MRV Production Schools → Qualification of Labor Force Training Courses Education Site Literacy Course Campaigns Vaccination Oral health Tuberculosis Prevention
  • 74. Work Safety and Health 74 OSHAS 18001 Certificate – Occupational Health and Safety Consists on a management system that the certified company should follow guidelines regarding to occupational health and safety procedures MRV joined in 2012 and is the only company of lightweight construction in the country to join the National Commitment and is the leader in number of building sites included in the project
  • 75. Social Responsibility Website: http://www.institutomrv.com.br/ 75 Officially launched in December 2014, MRV Institute is focused on investing in projects and works aiming education, health, safety at work, professional training, culture and leisure, always seeking for the well-being of all stakeholders. Sponsorship for Criança Esperança Project, in Belo Horizonte. Project MRV Vida implementation, intended to promote social-environmental responsibility actions in the cities where MRV operates. Volunteer group development, aiming to promote the engagement of employees in social causes. Sponsorship for Minas pela Paz Institute. Sponsorship for Junior Achievement: non-profit educational association that seeks to promote an entrepreneurial spirit in young people. Escola Nota 10 Program.
  • 76. Environment More than 758 thousands of trees were planted since 2010* *In Mar/2017 76 IS0 14001 - Environmental Management Certified companies should develop and control procedures for relevant issues in the environmental area
  • 77. Environmental –Certification Seal The construction sites shall follow specifically items to be certified 77 Certifications “Selo + Verde” and “Obra Verde MRV” Our constructions sites certifications have the following purposes: Standardize and monitor the execution of sustainable actions at construction sites; Increase the clients' satisfaction; Be a homebuilder company recognized as sustainable.
  • 78. 78 Environmental –Certification Seal Required items for certification  Surrounds improvements  Landscaping  Specific place for selective collection  Leisure, social and sportive equipment  Thermal performance - Seals  Acoustic performance - Seals  Land physical conditions adaptations  Industrialized components or prefabricated  Concrete with optimization dosage  Orientation for the residents  Low consume lamps  Saving devices – Flushing system  Saving devices – Outflow system  Saving devices – Presence detector  Masonry  Modular masonry coordination  Construction and demolition waste management  Planted or certified wood  Employees environmental education  Bicycle Stand  Reuse of water from sinks to urinals.  Lightning of construction sites through translucid roof tiles  Reuse of water from concrete mixer  PPE cleaning  Rainwater harvesting  Anticipated execution of the project division wall MRV + Verde Obra Verde MRV
  • 79. Sustainability Code of Conduct and Confidential Channel Sept/2015 Sustainability Report 2015 http://mrv.com.br/mrvsustentavel/en Click here to download the Code 79 “Amigo do Clima” Program: This program certifies MRV Engenharia by its compensation of greenhouse gases generated by sustainability website. Earth Hour 2016: The company has participated in the promotion of awareness and contributed to a greater global alert against global warming. 0.45 0.46 0.43 1.69 1.53 1.55 1.53 0.50 0.33 0.35 1.05 0.99 0.95 0.93 0.93 1.05 1.12 1.14 0.96 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 sep-13 May/14 sep/14 jan/15 may/15 sep/15 jan/16 may/16 sep/16 jan/17 MRVE3 in the ICO2 Index
  • 80. 80 GHG Protocol In 2015 , MRV joined the GHG Protocol, an agreement whereby disclose reports with the Greenhouse Gases (GHG) emissions from our activities. In August 2016, we received the gold seal that guarantees even more credibility in when it comes to sustainability . Sustainability United Nations Global Compact By supporting the Compact, MRV Engenharia joins more than 12,000 signatory organizations around the world committed to make responsible businesses, and take strategic actions to advance broader social goals, with emphasis on cooperation and innovation. Commitments: to fundamental and internationally accepted values, defined in ten principles derived from the Universal Declaration of Human Rights, the International Labor Organization Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development, and the United Nations Convention against Corruption.
  • 82. MRV Management Board of Directors 82 Rubens Menin Teixeira de Souza – 59 years old Chairman of our board of directors. He holds a degree in civil engineering from the Federal University of Minas Gerais, where he graduated in 1978. He is a founding partner of the MRV group, chairman of the board of directors and was MRV’s Chief Executive Officer until March 2014. He is also a founding partner of Banco Intermedium S.A. and has been chairman of its board of directors since the company was established in 1994. Mr. Menin is also the Chairman of the Board of Directors of LOG Commercial Properties S.A. and Urbamais Properties e Participações S.A.. Fernando Henrique da Fonseca – 75 years old holds a degree in economics from the Federal University of Minas Gerais, having pursued specialized courses in the areas of finance, economics and business. He is a member of the Board of Directors from Celulose Nipo-Brasileira S.A. (CENIBRA) and he was the chief executive officer from 2001 to 2011. He has 42 years of experience in the financial sectors of public and private companies, having held the following positions: president of the financial companies Intermedium and Credicon from 1994 to 2001; vice president of BEMGE Bank from 1987 to 1988; president of Agrimisa Bank from 1988 to 1993; executive director of Minas Gerais State Financial Policy Committee (Conselho de Política Financeira do Estado de Minas Gerais) from 1983 to 1985, and manager of the Companhia Siderúrgica Belgo-Mineira from 1967 to 1975. Levi Henrique – 75 years old holds an engineering degree from the Instituto Tecnológico de Aeronáutica – ITA. After graduating, he entered Cofap S.A. in 1959, where he reached the position of director of the shock absorber factory and remained with the company for 19 years. In 1978, he joined Eluma S.A., where he reached the position of superintendent of the non- ferrous division. He worked at that company for 8 years, and then, between 1985 and 1993, he worked as a superintendent at LaFonte Fechaduras S.A., Metalpó Indústria e Comércio Ltda. and Protendit Indústria e Comércio Ltda. He established Geminids, his business management consulting firm, in 1994. Marcos Alberto Cabaleiro Fernandez – 64 years old graduated with a law degree from the Milton Campos Law School in 1981. He founded Construtora Becker Cabaleiro in 1977, and CVG company in 1986. He was Vice Chairman of the Real Estate Market Chamber (Câmara do Mercado Imobiliário) of Belo Horizonte and the Civil Construction Union (Sindicato da Construção Civil) from 1999 to 2002. He is a founding partner of Banco Intermedium S.A. and has been a member of its board of directors since the company was established in 1994. Mr. Fernandez is the Chief Executive Officer of LOG Commercial Properties S.A. and Urbamais Properties e Participações S.A. e accumulate the position of Chief Executive Officer of both Companies. Rafael Nazareth Menin Teixeira de Souza – 35 years old Mr. Souza was elected at the meeting of the Board of Directors held on March 08, 2010. Since April 30, 2013 he is a member of the Company’s Board of Directors. He holds a degree in civil engineering from Federal University of Minas Gerais in 2003. He joined MRV Serviços de Engenharia Ltda. in 1999, as a civil engineer intern. He has large experience in real estate homebuilding sector. During this period, he worked as site engineer, coordinator of engineering and technical director. He is currently Chief Executive Officer in charge of the regions Midwest and Northeast and States of Minas Gerais, Rio de Janeiro and Espirito Santo of MRV Engenharia e Participações S/A and member of the Board of Directors of Urbamais Properties e Participações S.A.. Eduardo Rocha Brant – 64 years old Graduated in economic and civil engineering, with specialization in economics and business strategy, Paulo Eduardo Rocha Brant exercised the leadership of various academic and financial institutions, having served as Secretary of State of Minas Gerais for Culture. He held the positions of Chief Superintendent, Chief Economist, Director of Area of Operations and Finance and Superintendent of the planning area of the Banco de Desenvolvimento de Minas Gerais (BDMG). He was also Chief Officer of BEMGE Distribuidora and Vice President Executive Officer and Investor Relations Director of the Banco do Estado de Minas Gerais (BEMGE). Paulo also was CEO of Celulose Nipo-Brasileira S.A. – CENIBRA. Among Paulo Brant's other activities there are also the presidency of the Brazilian Institute of Planning, the vice presidency of the Deliberative Council of the América Futebol Clube, and he was also Director of the Museum Clube da Esquina. Paulo Brant also served as Assistant Secretary of the Secretaria de Estado de Indústria e Comércio de Minas Gerais. Marco Aurélio de Vasconcelos Cançado – 65 years old He was elected member of the Board of Directors on Extraordinary Shareholders Meeting on February 20, 2015, position which he holds until today. He received a degree in business administration from Faculdade de Ciências Econômicas, Administrativas e Contábeis at FUMEC in 1974, and received a graduate degree in financial administration from Fundação João Pinheiro/Columbia University in 1975 and a specialization qualification in finance from the Wharton School of the University of Pennsylvania in 1992. He has more than 35 years of professional experience in the financial and capitals markets, having held executive positions in several institutions. He was CFO at Banco Mercantil do Brasil (2000–2007); CEO at Eletrosilex S.A., a manufacturer of metallic silicate (1998–2000); Partner and Chief Officer at MAVC – Consultoria e Participações Ltda. (2007– up to date); member of the Board of Directors at Araújo Fontes, a company operating in the corporate finance industry and mergers and acquisitions (2007– up to date). Moreover, during his career, he worked at other public companies: at Banco do Brasil as Chied Financial and Services Officer (1985-1987), at Eletrosilex as CEO (1997- 1998) and MRV.(2008 – up to date) as member of the Board of Directors.
  • 83. Executive Officers 83 Eduardo Fischer Teixeira de Souza – Chief Executive Officer Regio II – 42 years old Mr. Souza was elected MRV´s Chief Executive Officer – Region II at the meeting of the Board of Directors held on March 27, 2014. He holds a degree in civil engineering from FUMEC in 2000. He holds a MBA in finance from IBMEC MG in 2003. He joined MRV Serviços de Engenharia Ltda. in 1993, as a civil engineer intern. He has large experience in real estate homebuilding sector. During this period, he worked as site engineer, coordinator of development sites and production director of Campinas and São Paulo. He is currently Chief Executive Officer in charge of the region South and State of São Paulo of MRV Engenharia e Participações S/A. Rafael Nazareth Menin Teixeira de Souza – Chief Executive Officer Region I - 35 years old See “Board of directors” above. Eduardo Paes Barretto – Chief Commercial Officer – 58 years old Mr. Barretto was elected our Chief Commercial Officer at the meeting of the Board of Directors held on June 2, 2006. He has a degree in business administration from FMU - Faculdades Metropolitanas Unidas, having specialized in market administration and marketing at both FGV and ESPM. He was director of the Association of Sales Managers of Brazil - ADVB and Chairman of the Retail Commission of that association. He is a lecturer and speaker at seminars of the Brazilian Advertisers Association. He was Chief Operating Officer of the Companhia Brasileira de Distribuição - Grupo Pão de Açúcar, from May 1986 to July 1993. He has been working with companies of the MRV group since September 2000, being in charge of commercial policy, supervision of real estate sales, market research, development of new business and corporate strategy. Leonardo Guimarães Corrêa – Chief Financial Officer – 58 years old Mr. Correa was elected as our Vice-President of the Executive Board, Chief Financial Officer and Investor Relations Officer at the meeting of the Board of Directors held on June 2, 2006. He earned a degree in economics from the Federal University of Minas Gerais – UFMG in 1980, and a post graduate degree in finance from FGV in 1986. He worked from 1982 to 1990 at Lloyds Bank as Treasury Manager. From 1990 to 2000 he worked at JP Morgan, where his last position held was treasury officer for Brazil. He was a partner at Banco Pactual from 2000 to 2003. Between 2003 and 2006 he was a partner at Perfin Administração de Recursos, an independent fund manager, specialized in investment funds. He joined us in March 2006. He is a member of the Board of Directors of LOG Commercial Properties and Urbamais Properties e Participações S.A.. Homero Aguiar Paiva – Chief Production Officer – 54 years old Mr. Paiva was elected our Chief Production Officer at the meeting of the Board of Directors held on June 2, 2006. In 1984, he received a degree in civil engineering from PUC - MG, and in 1991 he received a graduate degree in quality and productivity engineering from the Sociedade Mineira de Engenharia - MG. He earned an MBA in business management from IBMEC/BH in 2000. He joined the MRV Group in 1987 as an engineer, and became supervisor of engineering in 1989. In 1996, he became technical director, and since 2004 he has served as our Chief Production Officer. Hudson Gonçalves de Andrade – Chief Real Estate Development Officer – 55 years old Mr. Andrade was elected our Chief Real Estate Development Officer at the meeting of the Board of Directors held on June 2, 2006. He earned a degree in civil engineering from the Kennedy School of Engineering in 1993. He began his career in 1980 at the MRV Group as buildings technician. He was appointed Projects Officer in 2000, and occupied the position of Chief Real Estate Development Officer in 2005. Jose Adib Tomé Simão – Chief Real Estate Financing Officer – 69 years old Mr. Simão was elected our Chief Real Estate Credit Line Officer at the meeting of the Board of Directors held on June 2, 2006. He earned a degree in civil engineering in 1969 from the Engineering School of the Federal University of Minas Gerais. In 1972, he was professor of the former Kennedy School of Engineering in Belo Horizonte. From 1973 to 1986, he was the director of the São Paulo branch of Delphos Engenharia S.A., which is based in Belo Horizonte. From 1987 to 1988, he was a special advisor to the Chief Minister for the Secretariat of Planning and Co-ordination of the Presidency of the Republic. He joined the MRV Group in 1989, working in the technical, administrative and commercial sectors, becoming our chief administrative officer in 1999. Júnia Maria de Sousa Lima Galvão – Chief Management and Shared Service Center Officer – 45 years old Ms. Lima was elected our Chief Management and Shared Service Center Officer at the meeting of the Board of Directors held on January 24, 2007. She holds a degree in accounting and a graduate degree in financial management and international business from the Fundação Dom Cabral, as well as in human resources and in information systems. She worked at RM Sistemas between 1996 and January 2007, recently sold to Totvs S.A., as administrative and financial executive officer, in the administration, finance and accounting sectors, having been the responsible officer and attorney- in-fact for RM Sistemas between 1996 and 2006. Maria Fernanda Nazareth Menin Teixeira de Souza Maia – Chief Legal Officer – 36 years old Mrs. Maia was elected MRV’s Chief Legal Officer at meeting of the Board of Directors held on May 4, 2010. She earned a law degree from Milton Campos Law School in 2001, and postgraduate in Economics and Business Law from FGV in 2003. She is an effective member of the Commission's Corporate Advocacy OAB / MG. She joined MRV Serviços de Engenharia Ltda. in 1997, as an intern of Billing Department. During this period she held positions as an intern in the Legal Department, Legal Assistant, Coordinator of the Legal Department, Legal Superintendent and Legal Manager. Nowadays she occupies the position of Chief Legal Officer in MRV Engenharia e Participações S/A member of the Board of Directors of Urbamais Properties e Participações S.A.. MRV Management
  • 85. Consolidated Income Statement (R$ million) (CPC 19 – IFRS 11) 85 R$ million 4Q16 3Q16 4Q15 Chg. 4Q16 x 3Q16 Chg. 4Q16 x 4Q15 2016 2015 Chg. 2016 x 2015 NET OPERATING REVENUE 1,067 1,096 1,208 2.7% ↓ 11.7% ↓ 4,249 4,763 10.8% ↓ COST OF PROPERTIES SOLD AND SERVICES (710) (743) (833) 4.4% ↓ 14.8% ↓ (2,862) (3,324) 13.9% ↓ GROSS PROFIT 357 353 375 1.1% ↑ 5.0% ↓ 1,387 1,439 3.6% ↓ Gross Margin 33.4% 32.2% 31.1% 1.2 p.p. ↑ 2.4 p.p. ↑ 32.6% 30.2% 2.4 p.p. ↑ OPERATING INCOME (EXPENSES) Selling expenses (133) (128) (117) 4.4% ↑ 14.4% ↑ (499) (458) 9.0% ↑ General & Administrative Expenses (69) (77) (77) 10.0% ↓ 10.3% ↓ (287) (280) 2.8% ↑ Other operating income (expenses), net (24) (17) (29) 47.6% ↑ 16.3% ↓ (88) (107) 17.6% ↓ Equity Income (16) (13) (25) 23.6% ↑ 33.4% ↓ (57) (96) 40.2% ↓ INCOME BEFORE FINANCIAL INCOME (EXPENSES) 113 118 128 4.2% ↓ 11.4% ↓ 455 498 8.7% ↓ FINANCIAL RESULTS Financial expenses (14) (12) (14) 9.0% ↑ 2.1% ↓ (63) (78) 19.4% ↓ Financial income 59 54 52 9.6% ↑ 14.2% ↑ 228 196 16.3% ↑ Financial income from receivables from real estate development 10 17 14 42.6% ↓ 26.5% ↓ 48 82 41.0% ↓ INCOME BEFORE INCOME TAX AND SOCIAL CONTRIBUTION 169 177 179 4.7% ↓ 5.8% ↓ 668 699 4.3% ↓ Income Tax and Social Contribution (26) (24) (26) 7.8% ↑ 0.7% ↓ (94) (103) 8.9% ↓ NET INCOME 143 153 153 6.6% ↓ 6.7% ↓ 574 595 3.5% ↓ PROFIT ATTRIBUTABLE TO NON-CONTROLLING INTERESTS 2 4 14 0.0% ↑ 0.0% ↑ 17 48 0.0% ↑ PROFIT ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY 142 150 140 5.4% ↓ 1.2% ↑ 557 548 1.7% ↑ Net Margin 13.3% 13.7% 11.6% 0.4 p.p. ↓ 1.7 p.p. ↑ 13.1% 11.5% 1.6 p.p. ↑ BASIC EARNINGS PER SHARE 0.321 0.340 0.317 5.4% ↓ 1.3% ↑ 1.263 1.240 1.8% ↑ R$ million 4Q16 3Q16 4Q15 Chg. 4Q16 x 3Q16 Chg. 4Q16 x 4Q15 2016 2015 Chg. 2016 x 2015 Income before taxes 169 177 179 4.7% ↓ 5.8% ↓ 668 699 4.3% ↓ Depreciation and Amortization 12 11 10 18.0% ↑ 29.2% ↑ 42 37 13.3% ↑ Financial Results (56) (59) (52) 5.7% ↓ 7.9% ↑ (214) (200) 6.7% ↑ Financial charges recorded under cost of sales 35 34 37 2.5% ↑ 4.7% ↓ 140 133 5.3% ↑ EBITDA 160 162 174 1.4% ↓ 7.7% ↓ 637 669 4.7% ↓ EBITDA Margin 15.0% 14.8% 14.4% 0.2 p.p. ↑ 0.7 p.p. ↑ 15.0% 14.0% 1.0 p.p. ↑ EBITDA Adjusted (ex. Equity Income) 177 176 198 0.5% ↑ 10.9% ↓ 694 764 9.2% ↓ EBITDA Margin adjusted (ex. Equity Income) 16.6% 16.0% 16.4% 0.5 p.p. ↑ 0.2 p.p. ↑ 16.3% 16.0% 0.3 p.p. ↑
  • 86. 86 Consolidated Balance Sheet (R$ million) (CPC 19 – IFRS) ASSETS 12/31/16 9/30/16 12/31/15 Var. Dec/16 x Sep/16 Var. Dec/16 x Dec/15 CURRENT ASSETS Cash and cash equivalents 1,764 1,661 1,596 6.2% ↑ 10.5% ↑ Short-term investments 258 133 128 93.0% ↑ 100.5% ↑ Receivables from real estate development 1,658 1,953 2,069 15.1% ↓ 19.9% ↓ Receivables from services provided 4 3 6 28.3% ↑ 39.9% ↓ Real estate for sale and development 3,077 2,748 2,726 12.0% ↑ 12.9% ↑ Recoverable current taxes 229 205 196 11.9% ↑ 16.8% ↑ Deferred expenses 57 54 44 6.3% ↑ 30.0% ↑ Other assets 74 57 54 30.3% ↑ 37.6% ↑ Total Current Assets 7,120 6,813 6,820 4.5% ↑ 4.4% ↑ NONCURRENT ASSETS Receivables from real estate development 991 935 1,204 6.0% ↑ 17.6% ↓ Real estate for sale and development 3,059 3,036 2,256 0.8% ↑ 35.6% ↑ Due from related parties 37 38 88 4.3% ↓ 58.5% ↓ Deferred expenses 36 40 32 9.5% ↓ 11.2% ↑ Other noncurrent assets 73 71 62 1.8% ↑ 16.8% ↑ Investment property 783 676 740 16.0% ↑ 5.9% ↑ Property and equipment 140 127 105 10.1% ↑ 32.9% ↑ Intangible Assets 86 87 84 0.6% ↓ 2.1% ↑ Total Noncurrent Assets 5,207 5,010 4,573 3.9% ↑ 13.9% ↑ TOTAL ASSETS 12,327 11,823 11,392 4.3% ↑ 8.2% ↑ LIABILITIES AND SHAREHOLDERS' EQUITY 12/31/16 9/30/16 12/31/15 Var. Dec/16 x Sep/16 Var. Dec/16 x Dec/15 CURRENT LIABILITIES Trade accounts payable 315 310 254 1.6% ↑ 23.9% ↑ Payables for purchase of investments 35 41 40 15.8% ↓ 3.6% ↑ Loans and financing 937 1,105 1,119 15.2% ↓ 16.2% ↓ Payables for purchase of land 515 610 348 15.6% ↓ 47.9% ↑ Advances from customers 675 702 852 3.9% ↓ 20.8% ↓ Labor and social liabilities 110 128 110 13.9% ↓ 0.4% ↑ Tax liabilities 57 44 56 29.9% ↑ 2.6% ↑ Accrual for maintenance of real estate 40 40 37 0.3% ↑ 8.5% ↑ Deferred tax liabilities 59 72 67 18.6% ↓ 12.9% ↓ Proposed dividends 132 - 130 - 1.7% ↑ Other payables 49 51 38 4.0% ↓ 29.7% ↑ Total Current Liabilities 2,924 3,103 3,050 5.8% ↓ 4.1% ↓ NONCURRENT LIABILITIES Payables for purchase of investments - 4 32 100.0% ↓ 88.4% ↓ Loans and financing 1,377 1,001 1,131 37.6% ↑ 21.7% ↑ Payables for purchase of land 1,695 1,372 1,166 23.6% ↑ 45.4% ↑ Advances from customers 629 659 717 4.7% ↓ 12.3% ↓ Accrual for maintenance of real estate 100 97 99 2.8% ↑ 1.1% ↑ Accrual for civil, labor, and tax risks 98 96 92 2.0% ↑ 6.6% ↑ Deferred tax liabilities 40 34 42 16.6% ↑ 4.7% ↓ Other liabilities 27 20 13 37.3% ↑ 106.6% ↑ Total Noncurrent Liabilities 3,965 3,282 3,292 20.8% ↑ 20.4% ↑ SHAREHOLDERS' EQUITY Equity attributable to the shareholders of the Company 5,184 5,173 4,776 0.2% ↑ 8.5% ↑ Non-controlling Interests 254 264 274 3.9% ↓ 7.5% ↓ Total Shareholders' Equity 5,437 5,437 5,050 0.0% ↑ 7.7% ↑ TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 12,326 11,823 11,392 4.3% ↑ 8.2% ↑
  • 87. 87 Consolidated Statement of Cash Flow (R$ million) (CPC 19 – IFRS 11) Consolidated (R$ million) 4Q16 3Q16 Chg. 4Q16 x 3Q16 2016 2015 Chg. 2016 x 2015 CASH FLOWS FROM OPERATING ACTIVITIES Net income 143 153 6.6% ↓ 574 595 3.5% ↓ Adjustments to reconcile net income to cash used in operating activities 109 130 15.9% ↓ 458 382 20.0% ↑ Decrease (increase) in operating assets 55 (29) 287.7% ↓ 146 477 69.4% ↓ Increase (decrease) in operating liabilities (133) (185) 28.2% ↓ (603) (427) 41.2% ↑ Net cash used in operating activities 174 69 153.9% ↑ 576 1,028 44.0% ↓ CASH FLOWS FROM INVESTING ACTIVITIES Decrease (increase) in investment securities (111) 15 834.0% ↓ (105) 43 340.8% ↓ Advances to related parties (90) (31) 190.1% ↑ (363) (305) 18.8% ↑ Receipts from related parties 93 39 137.2% ↑ 422 283 49.2% ↑ Decrease in (acquisition of/contribution to) investments (124) 15 952.8% ↓ (101) (10) 899.3% ↑ Payment for acquisition of subsidiary (11) (42) 73.5% ↓ (44) (38) 15.0% ↑ Acquisition of fixed and intangible assets (27) (27) 0.0% ↓ (90) (74) 21.4% ↑ Net cash used in investing activities (271) (31) 770.2% ↑ (310) (101) 205.8% ↑ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from shares issuance - - - - - - Proceeds from stock options' exercise 0 1 (88.3%) 1 3 67.2% ↓ Treasury shares - (1) 100.0% ↓ (3) 4 166.5% ↓ Treasury shares - - - - (39) 100.0% ↓ Proceeds from loans, financing and debenture 795 440 80.6% 1,928 1,178 63.7% ↑ Payment of loans, financing and debenture (584) (470) 24.2% ↑ (1,863) (1,465) 27.2% ↑ Capital transaction 0 (0) 241.5% ↓ (1) 0 435.0% ↓ Net contributions (distributions) of noncontrolling interests (12) (309) 96.0% ↓ (34) (58) 40.5% ↓ Advanced payment from related companies - - - - - - Net cash (used in) generated by financing activities 199 (339) 158.7% ↓ (128) (548) 76.6% ↓ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS, NET 102 (301) 133.9% ↓ 138 378 63.5% ↑ CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of the period 1,661 1,628 2.1% ↑ 1,596 1,217 31.1% ↑ Cash and cash equivalents at end of the period 1,764 1,661 6.2% ↑ 1,764 1,596 10.5% ↑
  • 89. 32 51 113 750 1,300 2,700 2008 2009 2010 2011 2012/13 2015/16 Assets Value R$ million 1st Warehouse deliveryMRV LOG Foundation 1St Private Equity Round 2nd Private Equity RoundName change Presence in 18 cities and 8 states 1st Debenture Issuance 2nd Debenture Issuance Presence in 26 cities and 9 states 4th, 5th and 6th Debentures Issuance 7th, 8th and Debentures Issuance 9th and Debentures Issuance and 1st Commercial Notes issuance 89 Timeline
  • 90. LOG Commercial Properties business LOG CP is a commercial properties Company that has in its portfolio beyond the projects for logistics and industry, the Company's core business, Shopping Centers, Strip Mall and Industrial Lots. Logistics Complexes 100% Greenfield Full control of cycle, from land acquisition to project delivery. Multi-tenant Projects in modules Flexible architecture 2 to 10 year contracts Shopping Centers Strip Malls Industrial Lots 100% Greenfield Regional Strip Malls 100% Greenfield Full control of cycle, from land acquisition to project delivery 100% Greenfield Comprehensive shopping centers Operated by specialized companies 90
  • 91. LOG’s National Footprint LOG I - Contagem Present in 25 cities and 9 states LOG Hortolândia Hortolândia-SPLOG Juiz de Fora Juiz de Fora - MG LOG Goiânia Goiânia-GO LOG Fortaleza Maracanaú - CE Shopping Contagem Contagem-MG LOG São José dos Pinhais São José dos Pinhais -PR 91
  • 92. Integrated Business Model Extended experience in creating business and developing assets. Our integrated model is unique in the market, from land identification to project delivery. Asset Creation – Integrated Business Model Logistics Complexes Identification of Demand Land Acquisition Delivery of Project Construction Experience Dedicated Team of Professionals Dedicated Team to capture new opportunities Extended shared data base with MRV. Know-how and experience LOG CP – MRV synergy Cost reduction by material acquisition with MRV Multitenant strategy to maximize returns Retail strategy Offices Warehouses Acquisition Development Multitenant Strategy Financial Players Pension funds Highly Competitive Environment LOG Commercial Properties controls complete cycle of development, construction and administration of its assets Managing Tenant managed Condominium administrated by specialized companies. 92
  • 93. Logistics Complex Model – Warehouses Factors of Success: I. Strong demand and lack of available infrastructure II. Experience in the distribution center market – 35 years experience in Brazil and abroad III. Expertise in land acquisition IV. Low costs & integrated supply chain V. Nationwide coverage: one-stop-shop for clients seeking logistics solutions LOG Jundiaí + Multi-tenant strategy Business Model 1m 2m 3m 4m 15 m 16 m 17 m 18 m 19 m 20 m 22 m 23 m 10 to 25 years Commercial Negotiation Land Acquisition Development Construction (negotiation with potential tenants) Operation/management and lease 13 m 14 m Real Perspective LOG Jundiaí (aerial picture) Real Perspective LOG Jundiaí (aerial picture) ) 21 m Estimated LOG Warehouses Occupancy Curve Project 1º Q 2º Q 3º Q 4º Q Warehouses 0% 30% 60% 90% 93
  • 94. 0.3% 0.7% 0.7% 0.8% 0.9% 1.1% 1.1% 1.1% 1.4% 1.9% 3.5% 4.0% 4.1% 5.4% 6.0% 8.3% 8.9% 9.0% 11.2% 14.8% 14.8% Retail Productsfor Animals Entertainment IT RefrigeratedProducts Transportation Construction Packaging Energy/Telecom Chemical Beauty Domestic Utilities E-commerce Logistics Other Clothing Documents Automotive Pharmacist Consumer Goods Foodand Beverage 18.0% 23.0% 25.0% 25.0% 25.0% 13.5% 15.1% 15.5% 14.4% 13.5% 4Q15 1Q16 2Q16 3Q16 4Q16 Brazil LOG 23% 27% 29% 5% 16% Until 12 months 12 to 24 months 24 to 36 months 36 to 48 months Over 48 months Commercial Activity Portfolio by warehouses sector Renters(in GLA sq.m) 94 The current contracts range from 2 to 10 years with an average term of 66 months; Lease contracts are indexed to the IGP M or IPCA and have contractual review every three years; One atypical rental model Built to Suit (BTS); Base Dec 31, 2016 Contract’s Maturity (per GLA) Brazil X LOG Vacancy
  • 95. 95 6.6 8.6 30.9 22.4 31.3 34.9 91.7% 31.0% 68.1% 32.9% 33.7% 36.1% 2011 2012 2013 2014 2015 2016 Adjusted Net Income Adjusted Net Income Margin 1.0 16.6 28.4 50.0 74.4 78.1 13.6% 59.8% 62.5% 73.6% 80.1% 80.7% 2011 2012 2013 2014 2015 2016 Adjusted Ebitda Adjusted Ebitda Margin 7,2 27,7 89.3 68.0 92.9 96.8 2011 2012 2013 2014 2015 2016 Historical figures Adjusted FFO & Margin Adjusted Net Earnings & Margin (R$ mm)(R$ mm and %) (R$ mm and %)(R$ mm) Net Revenues Adjusted EBITDA & Margin CAGR 2011-2015 68.1 % 8.1 15.2 20.4 22.4 31.5 35.1 112.5% 55.1% 44.9% 33.0% 33.9% 36.3% 2011 2012 2013 2014 2015 2016 Adjusted FFO Adjusted FFO Margin
  • 96. 31.0 44.2 196.3 191.4 95.3 16.2 38,. 2010 2011 2012 2013 2014 2015 2016 ConstructedGLA (thou. sq. m. - %LOG) Quality and premium localization according with the Brazilian market growth. Experient construction team, with growth scale and cost control. High capability of growth and new area identification. LOG’s Growth 96 903 1,045 1,400 1,318 1,359 1,276 1,574 2010 2011 2012 2013 2014 2015 2016 Portfolio in GLA (thou. sq.m - %LOG) 15.0 108.5 131.9 231.0 150.9 108.8 2011 2012 2013 2014 2015 2016 Located GLA (thou sq.m. - %LOG)
  • 97. Portfolio Evolution LOG Portfolio Evolution - % LOG (in GLA sq.m.) LOG Potential Portfolio in Dec - 31-16 MG 24% SP 53% ES 3% PR 2% GO 9% RJ 9% .... in 2010 SP 51% MG 14% GO 8% PR 7% CE 8% RJ 7% ES 3% BA 2% ... in 2011 LOG Potential Portfolio Geographical Distribution (sq.m.) ... In December, 2016 LOG had 67% of its Portfolio approved 97 * In April 2016 LOG incorporated new project to its portfolio MG 38% SP 22% RJ 10% PR 10% ES 5% GO 5% CE 6% SE 3% BA 1% Approved 67% Not Approved 33%
  • 98. Operational Information Accumulated Built GLA (in sq.m) %LOG Accumulated Delivered GLA (in sq.m) - % LOG 98 LOG delivers higher return rates to the shareholders Assets evaluated in December 31, 2016 in R$2.7 billion. LOG’s high cap rate compression capacity LOG Drivers Value generation Some Projects delivered until December- 31, 2016 LOG I, in Contagem/MG GLA: 58,417 sq.m LOG Goiânia (G1, G2, G3, G7 e G8), in GO GLA: 40,365 sq.m LOG Hortolândia, in SP GLA: 53,492 sq.m LOG São José dos Pinhais, in PR GLA: 24,929 sq.m LOG Fortaleza, in CE GLA: 17,132 sq.m LOG Feira de Santana, in BA GLA: 17,725 sq.m 616,404 621,968 621,968 627,251 627,251 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 665,177 670,181 687,542 698,776 703,290 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16
  • 99. 13.5% 15.9% Warehouses Retail 17.71 27.89 48.42 Warehouses Strip Mall Shopping Center Operating Indicators - Commercialization Portfolio´s Average Price (R$/GLA/Month) Commercialization of the lots (PIB) (sq.m. and R$ thousand) GSV: General Sale Value Portfolio´s physical vacancy by Segment (%) + 1 Logistic Park: Rio Campo Grande Date of Delivery: 4Q16 100% Located 25,000 sq.m. of GLA + 28,000 sq.m. possibility of expansion + 1 Strip Mall Date of Delivery : 4Q16 GLA: 2,524 sq.m. LOG Portfolio: 99 Project Marketable Area%LOG (sq.m) Sales Speed (month) GSV %LOG (R$ thousand) Lots 1,064,380 5% 227,712
  • 100. 0.006 0.039 0.015 1 2 3 250,000 44,376 10,804 1 2 3 The global context and growth potential of the Brazilian market - 2015 Industrial Condominium Inventory + Isolated warehouses (thousand sq.m.) GDP (US$ billion) Territorial Extension (thousand km2) The Brazilian logistics and infrastructure market has great potential of growth.. The road modal is the major type in Brazil, with nearly 75% of the total... The Union´s budget for logistics infrastructure in 2017 is approximately R$13 billion Elevated index of growth in the BRICS, upcoming sport events in the next years, PAC/PAC2. Logistics Inventory (sq.m.) per GDP (US$ million) Logistics Inventory (sq.m.) per Population (# habitants) Logistics Inventory (sq.m.) per Territorial Extention (km²) Theglobalcontext Growthpotentialtobe explored 100 9,373 1,958 8,515 1 2 3 Source: Brazilian Federal Bank Source: insa.gov.brSource: Colliers International 16,770 1,144 1,773 1 2 3 PotentialGrowth 0.05 0.48 0.78 1 2 3 PotentialGrowth 0.001 0.030 0.025 1 2 3 PotentialGrowth
  • 101. The e-commerce in Brazil 101 Actually Brazil is the 9th most buying country through internet, and in 2019 the e-commerce shall move over R$70 billion. The most sold products through internet are aligned with the most stored by our customers. Creating a demand raise for warehouses. Fonte: Ebit e E-marketer Most sold through internet Logistic infrastructure feed for the consumption goods market development Opportunities identification among developing markets Strategy Alignment Challenges: 14% Books/ Signatures 13% Domestic Utilities 12% Clothing 12% Heath/ Pharmacist 9% Phones/ Smart Phones 9% Home Decor 6% IT 5% Electronics 4% Sports/ Leisure 2% Toys/ Games 22.5 28.8 35.8 41.3 44.6 2012 2013 2014 2015 2016 Online Sales in Brazil (R$ billion)
  • 102. 5,117 6,789 8,494 9,727 10,840 11,989 12,061 12,205 12,473 983 991 1,158 1,104 811 31 -6 176 279 6.9% 14.9% 18.0% 17.0% 18.0% 23.0% 25.0% 25.0% 25.0% 2011 2012 2013 2014 2015 1Q16 2Q16 3Q16 4Q16 Inventory Net Absorption Vacancy Rate - Brazil The current industrial condominiums market (cont.) According to Colliers International there was 837 thousand m² of GLA in construction in the 4Q16. Distribution of existing inventory by region (%) in 4Q16 Distribution of the inventory in project phase by region (%) – 3Q16 Distribution of the inventory under construction by region (%) in 3Q16 102Source: Colliers Market Report Brazilian Inventory, Net Absorption and Vacancy Rate 80% 6% 10% 3% 1% Southeast South Northeast North Mid-West Southeast 74.1% South 9.8% Northeast 15.4% Mid-West 0.3% North 0.4% Southeast 82.6% South 14.2% Northeast 2.5% North 0.7%
  • 103. The Brazilian market of industrial parks is highly concentrated in the Southeast, with 80% of the total. The other regions of the country lack for commercial/industrial areas, and with investment in infrastructure being made in these states, the market to industrial condominiums will expand. Southeast 80% South 6% Northeast 10% Mid-West 1% North 3% The current industrial condominiums market Source:ColliersMarketReport The five regions in Brazil has existing inventory of condominiums class A logistics of 12.5 million sq.m versus 10.8 million sq.m in the fourth quarter of 2015. Forte demanda e as taxas de absorção elevada são indicadores do mercado com elevada liquidez.... The delivery of the inventory under construction will be represented by 85% in the Southeast and 15% in other regions of the country, being such regions opportunities for expansion and new business. Inventory in Construction (sq.m) 103 3.4 3.9 5.1 6.8 8.4 9.6 9.8 10.5 10.7 10.8 11.7 12.1 12.2 12.5 2009 2010 2011 2012 2013 2014 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Evolution of Industrial Parks in Brasil (million - sq. M)
  • 104. The current industrial condominiums market (cont.) The warehouses market in Brazil has International Class specs. They have from 1,000 to 50,000 sq.m. average size, ceiling height from 11 to 12 meters and floor capacity from 5 to 6 ton/sq.m. Location, freight costs and bigger leasable areas are the main features requested by the actual costumers. Fragmented Industry in Brazil (in terms of GLA): The large majority of the companies in Brazil still own their real estate… … and in the USA, only 20% of the companies own their real estate assets Source: Itaú Securities and others 91% 9% Non-organized Market Organized Companies 20%80% Leased Own Buildings 80% 20% Leased Own Buildings Existing warehouses average size (in sq.m.) Share in existing inventory (%) < 1,000 0.3% 1,000 to 5,000 9.7% 5,001 to 10,000 6.7% 10,001 to 50,000 48.8% > 50,000 34.5% Source: Colliers Industrial Market Report LOG I Warehouse 104
  • 105. PIB – Betim lots www.parqueindustrialbetim.com.br The only LOG project whose units are intended for sale: shorter cash cycle; Potential vendible area of + 2.1 million sqm. Construction of roads and infrastructure at a rapid pace. Potential area for construction of more than 1 million GLA; Betim Industrial lots: • Total area: + 6 million sq.m • Lots intended for sale • Strategic Location • Possibility of developing warehouses 105
  • 106. Consolidated Financial Statements Balance Sheet (in R$ thousand) 106 ASSETS 31/Dec/16 30/Sep/16 31/Dec/15 Chg. % Dec-16 x Sep-16 Chg. % Dec-16 x Dec-15 LIABILITIES & SHAREHOLDER'S EQUITY 31/Dec/16 30/Sep/16 31/Dec/15 Chg. % Dec-16 x Sep-16 Chg. % Dec-16 x Dec-15 CURRENT ASSETS CURRENT LIABILITIES Cash and cash equivalents 146,941 18,259 17,258 704.8% 751.4% Accounts Payable 3,561 10,010 6,601 -64.4% -46.1% Accounts receivable 24,094 24,998 19,119 -3.6% 26.0% Loans and financing 337,250 355,859 150,579 -5.2% 124.0% Recoverable taxes 7,476 7,504 8,532 -0.4% -12.4% Salaries, payroll taxes and benefits 2,523 2,576 2,401 -2.1% 5.1% Deferred selling expenses 6,785 6,100 4,329 11.2% 56.7% Taxes and contributions 2,680 2,241 2,559 19.6% 4.7% Other assets 442 111 187 298.2% 136.4% Advances from customers - Swap 1,570 1,587 3,518 -1.1% -55.4% Total current assets 185,738 56,972 49,425 226.0% 275.8% Payable Dividends 8,466 - 1,634 0.0% 418.1% Credits on related parties 948 1,053 965 -10.0% -1.8% NON-CURRENT ASSETS Other liabilities 632 728 722 -13.2% -12.5% Trade accounts receivable 12,800 13,290 14,641 -3.7% -12.6% Total current liabilities 357,630 374,054 168,979 -4.4% 111.6% Deferred selling expenses 3,694 3,540 7,862 4.4% -53.0% Recoverable taxes 40,953 41,265 38,403 -0.8% 6.6% Non-current liabilities Deferred taxes 90,213 56,381 51,052 60.0% 76.7% Loans and financing 651,834 715,591 814,379 -8.9% -20.0% Other assets 1,049 867 608 21.0% 72.5% Advances from Customers - Swap 41,073 41,085 42,406 0.0% -3.1% Investment in subsidiaries and jointly controlled 247,220 242,734 237,314 1.8% 4.2% Deferred taxes 54,958 55,298 51,125 -0.6% 7.5% Investment property 2,298,800 2,295,228 2,174,413 0.2% 5.7% Others 2,319 2,674 2,756 -13.3% -15.9% Property and equipment 1,631 1,640 1,800 -0.5% -9.4% Total Non-current liabilities 750,184 814,648 910,666 -7.9% -17.6% Total non-current assets 2,696,360 2,654,945 2,526,093 1.6% 6.7% Total Liabilities 1,107,814 1,188,702 1,079,645 -6.8% 2.6% SHAREHOLDER´S EQUITY Equity atributable to the shareholder´s of the company 1,774,157 1,523,089 1,495,765 16.5% 18.6% Non-controlling interest 127 126 108 0.8% 17.6% Total Shareholder´s Equity 1,774,284 1,523,215 1,495,873 16.5% 18.6% TOTAL ASSETS 2,882,098 2,711,917 2,575,518 6.3% 11.9% TOTAL LIABILITIES & SHAREHOLDER'S EQUITY 2,882,098 2,711,917 2,575,518 6.3% 11.9%
  • 107. Consolidated Financial Statements Income Statement (R$ thousand) 107 INCOME STATEMENT 4Q16 3Q16 4Q15 Chg. % 4Q16 x 3Q16 Chg. % 4Q16 x 4Q15 12M16 12M15 Chg. % 12M16 x 12M15 NET OPERATINGREVENUES 24,521 23,961 24,169 2.3% 1.5% 96,774 92,911 4.2% Cost - - - 0.0% 0.0% - - 0.0% GROSS PROFIT 24,521 23,961 24,169 2.3% 1.5% 96,774 92,911 4.2% OPERATINGEXPENSES (30,675) (4,304) (14,346) 612.7% 113.8% (42,323) (48,566) -12.9% Selling expenses (2,836) (2,998) (2,219) -5.4% 27.8% (10,961) (10,146) 8.0% General & Administrative expenses (2,364) (2,509) (2,634) -5.8% -10.3% (9,543) (9,555) -0.1% Other operatin expenses, net (185) (49) 352 277.6% -152.6% (528) (2,307) -77.1% Investment Property Fair Value Variation (27,151) 802 (8,866) -3485.4% 206.2% (24,477) (30,997) -21.0% Equity in subsidiaries and JV´s 1,861 450 (979) 313.6% -290.1% 3,186 4,439 -28.2% OPERATINGINCOME BEFORE FINACIAL RESULTS (6,154) 19,657 9,823 -131.3% -162.6% 54,451 44,345 22.8% FINANCIAL RESULTS (16,313) (15,311) (14,730) 6.5% 10.7% (51,555) (43,489) 18.5% Financial expenses (17,351) (18,760) (18,174) -7.5% -4.5% (60,672) (63,384) -4.3% Financial income 1,038 3,449 3,444 -69.9% -69.9% 9,117 19,895 -54.2% INCOME BEFORE INCOME TAX AND SOCIAL CONTRIBUTION (22,467) 4,346 (4,907) -617.0% 357.9% 2,896 856 238.3% INCOME TAX AND SOCIAL CONTRIBUTION 32,657 2,092 18,714 1461.0% 74.5% 32,760 16,335 100.6% Current (1,405) (1,082) (1,368) 29.9% 2.7% (5,078) (5,999) -15.4% Deferred 34,062 3,174 20,082 973.2% 69.6% 37,838 22,334 69.4% NET INCOME 10,190 6,438 13,807 58.3% -26.2% 35,656 17,191 107.4% PROFIT ATRIBUTABLE TO Shareholder´s of the company 10,189 6,436 13,819 58.3% -26.3% 35,647 17,196 107.3% Non-controlling interests 1 2 (12) -50.0% -108.3% 9 (5) -280.0%
  • 108. Consolidated Financial Statements Cash Flow (in R$ thousand) 108 CASH FLOW STATEMENT 12M16 12M15 Chg. % 12M16 x 12M15 CASH FLOWS FROM OPERATINGACTIVITIES Net income 35,656 17,191 107.4% Adjustments to reconcile profit to net cash used in operating activities 42,526 65,688 -35.3% Decrease (increase) in operating assets (7,115) (13,994) -49.2% Increase (decrease) in operating liabilities 4,246 4,885 -13.1% Income tax and social contribution paid (4,728) (5,488) -13.8% Land sale receiving 4,540 105,954 -95.7% Dividends received from subsidiaries - 20,000 -100.0% Net cash used in operating activities 75,125 194,236 -61.3% CASH FLOWS FROM INVESTINGACTIVITIES Decrease (Increase) of investments (3,887) (5,544) -29.9% Acquisition of investment property (65,705) (39,821) 65.0% Other (753) (983) -23.4% Net cash used in investing activities (70,345) (46,348) 51.8% CASH FLOWS FROM FINANCINGACTIVITIES Proceeds from loans and debentures, net 305,782 209,716 45.8% Payment of loans (301,697) (297,604) 1.4% Derivative financial instrument redemption or acquisition (5,115) 6,073 -184.2% Interest paid (122,891) (126,038) -2.5% Contributions from shareholders 251,634 25,856 873.2% Payment of obligations with related companies (111,387) - -100.0% Increase in obligations with related companies 110,201 - -100.0% Dividend payments (1,634) (25,856) -93.7% Contributions from noncontrolling shareholders 10 (111) -109.0% Net cash provided by financing activities 124,903 (207,964) -160.1% INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS, NET 129,683 (60,076) -315.9% CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year 17,258 77,334 -77.7% Cash and cash equivalents at end of year 146,941 17,258 751.4%
  • 109. Contacts: Felipe Enck Gonçalves CFO and Investor Relations Director Tel.: +55 (31) 3615-8400 E-mail: ri@logcp.com.br http://www.logcp.com.br/ri Diogo Dias Gonçalves Investor Relations and Financial Planning Manager Tel: +55(31) 3615-8818 – diogo.goncalves@logcp.com.br Carlos Guilherme Souza Investor Relations Analyst Tel: +55(31) 3615-7401 – carlos.guilherme@logcp.com.br Isabela Saede Gazire Investor Relations Analyst Tel: +55(31) 3615-8416 – isabela.saede@logcp.com.br 109
  • 111. OUR BUSINESS Urbamais is the urban development company of MRV Group. Our business is to develop raw land into open and closed residential subdivisions for the economic segment. The pillars that differentiate us are: • allotments strategicaly located, • Operational Excellence, • optimized projects offering affordable prices, • infrastructure quality and urban planning, • environmental awareness, • Customer relationship and professional management.
  • 112. Allotment Idealization and Feasibility Jun. 2012 Urbamais Incorporation Launch of Parque Atlanta 2011 Aug. 2014 Launch of Bem Viver Campos May 2015 Launch of Jardim das Tulipas Dec. 2015 Launch Jardins de Campos Jun. 2016 Launch of Jardins dos Girassóis Dec. 2016 Parque Atlanta delivery TIMELINE
  • 113. • Present em 5 estados • 15 cities • Minas Gerais - Contagem - Matozinhos - Pedro Leopoldo - Ribeirão das Neves - Uberaba • São Paulo - Araraquara - Álvares Machado - Cotia - Ribeirão Preto - São Carlos - São José do Rio Preto • Rio de Janeiro - Campos dos Goytacazes - Itaboraí - Rio das Ostras - Rio de Janeiro • Bahia - Feira de Santana • Paraíba - Lagoa Seca • Rio Grande do Norte - Natal GEOGRAPHICAL FOOTPRINT
  • 114. CONVENTIONAL RESIDENTIAL LOTS Is composed by sets of lots with areas starting from 160sqm and urbanization infrastructure, which includes for squares, and/or community equipment. GATED COMMUNITIES (“CLOSED CONDOS”) Surrounded by walls, they offer controlled access by guardhouse, leisure area restricted to residents, with lots starting from 160 m². Allotments are also served by a complete urbanization infrastructure. Both products offer treated water networks, electric power and sanitary sewage, paved roads, green areas and areas destined to future implantation of commercial enterprises. PRODUTCS
  • 115. JARDIM DOS GIRASSÓIS Complex composed by 5 allotments, conventional and gated, totaling around 4 thousand lots for comercialization. The second launch occured in December 2016: • Controlled access by guardhouse • Total lots: 1,137 • Lots from 160sqm • Leisure area • Location: close to the city’s main avenue and 2 km away from the city center. Ballroom Barbecue area Swiming pool Kiosk Fitness area Grass field Sand court Playground Trekking
  • 116. JARDINS DE CAMPOS • Launched in June 2016 • Conventional redidential lots • Total units: 464 • Lots from 160sqm • Sanitary sewage • Water network • Eletric power • Paved streets • Landscape design • Location: Guarus district, next to a large comercial area. Road system Reserved area for square Green area
  • 117. PARQUE ATLANTA • Launched in August 2014 • Delivered in June 2016 • Gated comunity • Controlled access by guardhouse • Total lots: 335 • Lots from 200sqm • Leisure area • Located next to the main city’s shopping mall. Kiosk Fitness area Balroom Barbecue Swiming pool Grass court Sports courts Playground Cooper Reading area
  • 118. OPERATIONAL RESULTS LANDBANK (2016) SALES (up to 2016) LAUNCHES (up to 2016) LANDBANK DISTRIBUTION (2016) 253MILLION R$2.4BILLION R$ 6.2MILLION SQM. R$ 3,799UNITS 2,377UNITS 176MILLION R$ MG 47% RJ 25% RN 4% SP 8% BA 16%
  • 119. COMERCIAL RESULTS 7 58 64 2014 2015 2016 729% 10% 15 77 93 2014 2015 2016 413% 21% Launches % Urbamais (R$ million) Pre-Sales % Urbamais (R$ million) Source: Urbamais
  • 120. RESULTADOS FINANCEIROS • Net Profit (R$ million) • Gross Profit (R$ million) • EBITDA (R$ million) • Net Revenue (R$ million) 1,6 13,1 30,364,98% 59,73% 54,65% -90,00% -70,00% -50,00% -30,00% -10,00% 10,00% 30,00% 50,00% 70,00% 90,00% 0 5 10 15 20 25 30 35 2014 2015 2016 Lucro Bruto Margem Bruta -1,5 4,8-59,68% 22,30% 28,50% -70,00% -50,00% -30,00% -10,00% 10,00% 30,00% 50,00% 2014 2015 2016 EBITDA 2014 2015 -1,7 4,4 -71,85% 20,2… 24,45% -80,00% -60,00% -40,00% -20,00% 0,00% 20,00% -4 -2 0 2 4 6 8 2014 2015 2016 Lucro Líquido Margem Líquida 2014 2015 2 22 56 2014 2015 2016 813% 153% 2016 13,5 15,8 4,8 2016 229% Source: Urbamais EBITDA Margin Gross profit Gross margin Net profit Net margin
  • 121. Contacts Leonardo Corrêa Chief Financial and Investor Relations Officer Ricardo Paixão Investor Relations and Financial Planning Director Matheus Torga Investor Relations Manager Ph.: (+55 31) 3615-8153 E-mail: ri@mrv.com.br This presentation is also available on our website : www.mrv.com.br/ri 121