You are on page 1of 79

MILLS ESTRUTURAS E SERVIOS DE ENGENHARIA S.A. Publicly Held Company CNPJ n. 27.093.558/0001-15 NIRE 33.3.

.0028974-7 Avenida das Amricas 500, bloco 14, loja 108, salas 207 e 208, Barra da Tijuca, CEP 22640-100 Rio de Janeiro - RJ

Management Proposal Information provided to shareholders pursuant to Instruction CVM 481 of December 17, 2009, regarding the Ordinary Shareholders Meeting Convening Notice, to be held on April 25, 2014, at 11:00 am, with the following agenda: (i) appreciation of the Managements Report, the Managements accounts, the Companys Financial Statements along with the independent auditors report and the fiscal councils opinion for the fiscal year ended December 31, 2013; (ii) approval of the proposed capital budget for the 2014 fiscal year; (iii) approval of the Managements Proposal for the destination of net income for the fiscal year ended December 31, 2013; (iv) election of the members of the Board of Directors; (v) election of the members of the Fiscal Council; and (vi) establishment of the remuneration of the Companys administrators for 2014 fiscal year.

Documentation required by article 9 of CVM Instruction 481 (Instruo CVM 481), issued by CVM on December 17, 2009 Management comments on Companys Financial Status, pursuant to item 10 of Reference Form (free translation)

ITEM 10 OF REFERENCE FORM


10.1 The management should comment on.

a.

Financial status and general assets

The management of the Company believes that the Company is one of the largest providers of specialized engineering services, the leading supplier of concrete formwork and tubular structures and motorized access equipment for the Brazilian market. The company offers to its clients specialized engineering services, providing creative and differentiated solutions, specialized workforce and main equipment to major infrastructure projects and residential and commercial construction. The customized engineering solutions of the Company include planning, design and the temporary structures for civil construction (such as formwork, shoring and scaffolding) and motorized access equipment (such as aerial work platforms and telescopic handlers), as well as technical assistance and specialized workforce. The Company believes that the sectors in which it operates will have a strong growth in coming years due (i) the favorable macroeconomic fundamentals and the increasing availability of credit in Brazil; (ii) the significant investment in infrastructure projects like the new Logistics Investments Program, aimed at roads, railways, ports and airports; (iii) the Brazilian governments low income housing program (Minha Casa, Minha Vida); (iv) the investments required for the World Cup in 2014 and the 2016 Olympic Games; and (v) the growing concern of companies with safety and productivity, which can boost the use of services and equipment offered by the Company. The Company's revenues come mainly from rental of equipment which accounted to 81.0% of Companys total net revenues which correspond to an amount of R$ 832.3 million in the fiscal year ended December 31, 2013. The revenue from the performance of services is recognized based on the measurement of the stages for performance of the services carried out through the reporting date. Revenue from the sale of merchandise is recognized when the significant risks and benefits of ownership of the merchandise are transferred to the buyer. Accordingly, the Company adopts the date on which the product is delivered to the buyer as the basis for its revenue recognition policy. Rental revenue is recognized on a prorated basis in monthly results on a straight-line basis, according to the equipment lease agreements. The management of the Company believes that the current availabilities and its operational cash, together with its borrowing capacity, with proper leverage of EBITDA in relation to the Company's net

debt are sufficient to comply with the investment plan and the need for working capital during the same period. The Management of the Company believes that the Company has financial conditions and sufficient assets in order to implement its business plan and to comply with its short and medium term obligations.

Impact of Brazilian general macroeconomic conditions on its financial results of operations.

condition and

The Heavy Construction business unit offers customized solutions to companies involved in major construction and infrastructure projects, while the Real Estate business unit is dedicated to providing services to residential and commercial construction companies. The Rental business units products are focused on the rental, technical assistance and sale of motorized access equipment, these products are required by companies operating in various industries. All these sectors are directly affected by changes in macroeconomic conditions in Brazil, especially the growth of gross domestic product - GDP, interest rates, inflation, credit availability, unemployment level, exchange rates and commodity prices, the latter two because they affect the cost of equipment the Company uses in its activities. Consequently, these factors affect, indirectly, its operations and results. In addition, the Companys operations and results of operations are directly affected by changes in (i) inflation rates, which are used as a reference for the adjustment of the prices paid under longterm contracts; (ii) interest rates, which affect the Companys financial obligations; and (iii) prices of materials consumed in the construction job or fluctuating of the prices of maintenance of the equipment of the Company.

b.

Capital structure and stock redemption possibility

According to the Company's balance sheet on December 31, 2013, the capital structure of the Mills was 56.4% equity, measured by the stockholders equity, and 43.6% capital from third party, measured by total liabilities. The management of the Company typically use both equity, from operating cash generation, and capital from third-party, though the contraction of new loans and/or the issuance of debt securities, to finance the needs for investments in non-current assets and working capital of the company. For strategic operations, when necessary, the company may resort to the capital from their shareholders or third parties, through the issuance of shares. There are no hypotheses of redemption of shares issued by the Company in addition to the legally provided for.

c.

Financial commitments

The Companys EBITDA for the year ended December 31st 2013, was R$ 403.1 million and its financial expenses, net of financial revenue in the same period were R$ 46.8 million. Thus, the

Companys EBITDA for year ended December 31st 2013 presented a coverage ratio of 8.6 times its net financial expenses during the same period. Only considering its financial expenses, which amounted to R$ 60.0 million in the year ended December 31st 2013, the coverage ratio would be 6.7 times. The Companys total indebtedness for the year ended December 31st 2013, amounted to R$ 632.6 million, or, 1.6 times the Companys EBITDA for the year ended December 31st 2013. The flow of payment from this debt, considering the debt profile as of that date, will take place in a period of eight years, of which R$ 118.3 million in less than one year, R$ 303.5 million from 1 to 3 years, R$ 116.7 million in a period between 3 to 5 years and R$ 94.1 million in more than five years. The Companys long-term debt profile has a policy for contracting loans and financing aimed at ensuring that all financial commitments are honored, if necessary, through its cash generation. This way, the Company's management believes that its cash generation is sufficient to meet its financial commitments. In addition, on December 31st 2013, the Company had registered on its balance sheet the amount of R$ 10.4 million, which refers to the Tax Recovery Program (REFIS) with a maturity of 180 months, with 130 remaining installments. The Company is compliant to the aforementioned installment program. With regard to contractual limitations for assumption of new debt, there are clauses in the Company's bank credit contracts that require adherence to certain financial indicators, among which: the ratio between EBITDA and net debt, the ratio of net short-term debt and total net debt, and the ratio between net financial expenses and EBITDA. On the date of this Reference Form, the Company was within the limits of contractual financial indicators.

d.

Source of financing for working capital and investments in non-current assets.

The investments from the Company in non-current assets and working capital are financed by its own cash generation and third party capital, through the contraction of new loans and/or the issuance of debt securities. For strategic operations, when necessary, the Company can turn tocapital from its shareholders or third parties, through the issuance of shares. On March 29, 2011, the Company conducted its first issuance of 30 commercial promissory notes with a unit value of R$ 1.0 million, totaling R$ 30 million, each note with a maturity of 90 days as of the respective issue. Interest charges will fall due corresponding to 105% of the accumulated variation in the average daily Domestic Demand (DI) rate. Remuneration was fully paid upon the maturity date On April 18, 2011, the Company issued R$270 million in non-convertible unsecured debentures, with maturity on April 18th, 2016. The nominal value will be amortized in three annual installments starting on the third year of the issuance, and shall pay semi-annually interest of 112.5% of accrued variation of the CDI interest rate. The net proceeds from the Offering were used for (a) the redemption of all commercial papers, issued under the first public offering of the Company, totaling R$ 30 million, (b) investments defined in the Mills expansion plan, including estimated investments of R$ 337 million in 2011, (c) rearrangement of cash balance following disbursement of R$ 90 million in February 2011 in

connection with the acquisition of 25% of the Rohr S/A Estruturas Tubulares (Rohr) total capital stock, and (d) general corporate purposes and expenses of the Company. On December 7th, 2011 the Company issued a single series of 3 (three) commercial promissory notes with unit face value of R$ 9.0 million, for a total amount of R$ 27.0 million with maturity on December 1st, 2012. Remuneration interest charges will fall due corresponding to 100% of the accumulated variation in the average daily Domestic Demand (DI) rates, plus 1.10% per annum. Remuneration will be fully paid upon the maturity date. On April 23th, 2012, the Company issued a single series of 30 commercial promissory notes with unit face value of R$ 1.0 million, for a total amount of R$ 30.0 million with maturity on December 3 rd, 2012. Remuneration interest charges will fall due corresponding to 100% of the accumulated variation in the average daily Domestic Demand (DI) rates, plus 4.9% per annum. Remuneration will be fully paid upon the maturity date. On September 18th, 2012, the Company held its second issuance, in two series of simple debentures, non convertible into shares, unsecured, public offering object with limited placement efforts, pursuant to CVM Instruction 476. 27,000 debentures were issues, each with a nominal value of R$ 10,000.00, of which: i) 16,094 debentures of the first series, amounting to R$ 160.9 million, with maturity date on August 15, 2017, not subject to monetary adjustment. The nominal value of the first series debentures will be amortized in two annual installments starting on the fourth year of the issuance, and the interest paid semi-annually and equal to surtax of 0.88% per annum of 100% of DI accrued variation; ii) 10,906 debentures of the second series, amounting to R$ 109.1 million, with maturity date on August 15, 2020, subject to monetary adjustment by the accrued variation of the IPCA. The nominal value of the second series debentures will be amortized in three annual installments starting on the sixth year of the issuance, and the interest paid annually and equal to 5.50% per annum of the above mentioned monetarily adjusted amount. On December 6, 2013 the Company entered into a loan agreement with the Nassau Branch of Banco Ita BBA S.A. totaling US$ 16.9 million (equivalent to R$40.0 million). Principal and interest will be settled in a bullet payment on January 30, 2015. In order to eliminate the foreign exchange risk on this borrowing, on the same date a swap was contracted with Banco Ita BBA S.A. in the amount of R$ 25.4 million so that the obligations (principal and interest) are fully converted into local currency and carried out on the same maturity dates. e.

Potential sources of financing used for working capital and for investments in non-current assets.

The Companys main sources of liquidity are: cash flow from our operations; financing agreements and through capital market; and increases in its capital stock.

The Companys main liquidity requirements are: investments for maintenance and increase of the equipment inventory; working capital needs; investments in the Companys facilities and the technology center, which are necessary to support its operations; investments in the improvement of processes and controls; investments in training and occupational safety; and distribution of dividends and payment of interest on equity. The management of the Company believes that the existing resources and the cash flow to be generated from its operations, along with its borrowing capacity, with proper leverage, will be sufficient to cover its investment plan and the need for working capital during the same period.

f.

Debt level and composition:

(i) relevant loan and financing contracts


The table below shows the outstanding balances of the Companys loans and financings, organized by interest rate as of December 31st, 2011, 2012 and 2013:
Yearly Interest Rate Financings provided by financial institutions Financings provided by financial institutions Leasing agreements entered into with financial institutions Non-convertible debentures Non-convertible debentures Total CDI+0.29% TJLP+0.2% to 0.9% CDI + 2.5% to 3.8% 112.5% of CDI 1st series: CDI + 0.88% 2nd series: IPCA + 5.5% 2011 62.1 22.1 52.2 274.6 410.9 As of December 31st, 2012 2013 40.2 23.4 8.2 274.4 165.9 120.6 632.6

(in R$ million)
27.3 26.7 18.0 272.5 164.7 113.3 622.5

In December 31, 2013. Including loans with financial institutions indexed to the U.S. dollar plus 2.13% interest per year in the amount of R$ 39.9 million contract or $16.9 million, which was a swap operation to cancel the risk of exchange rate variation of this loan.

Short Term Debt


As of December 31, 2012, short-term debt amounted to R$ 54.8 million, compared to R$ 71.4 million as of December 31, 2011, a decrease of R$ 16.6 million or 23.2%. This decrease was due to the need to finance, among other uses, the commercial promissory notes that were issued in December 2011, in the amount of R$ 27.0 million, with maturity on December 1st, 2012. As of December 31, 2013, short-term debt amounted to R$ 125.3 million, compared to R$ 54.8 million as of December 31, 2012, an increase of R$ 70.5 million or 128.7%. This increase was primarily due to the payment of the 1st installment amortization, in April 2014, of the 1st issuance of

the Debentures issued in April 2011 with maturity in April 2014. Remaining amortization will be in April 2015 and April 2016.

Long Term Debt


As of December 31st, 2012, the Companys long-term debt amounted to R$ 567.7 million, compared to R$ 339.5 million as of December 31, 2011, an increase of R$ 228.2 million or 67.2%. This increase was mainly due to the need to finance, among other things, the investments to be made and the payment of the Companys debts, for what there was debentures issued, in September 2012, in the amount of R$ 270 million. As of December 31st, 2013, the Companys long-term debt amounted to R$ 507.3 million, compared to R$ 567.7 million as of December 31, 2012, a decrease of R$ 60.4 million or 10.6%. This reduction was due to the transfer of long-term debt to short term debt of the 1st installment amortization, in April 2014, of the 1st issuance of debentures, issued in April 2011.

Relevant Financial Contracts


As of December 31st, 2013, the Company's debt with financial institutions totaled R$ 71.8 million, of which the main debts are described below.

Ita Unibanco S.A.


International Loan Agreement n 201030.1. The Company signed, on May 27th, 2011, a borrowing agreement with Ita BBA S.A. Bank, branch Nassau, in the total amount of R$ 25.4 million. The agreement contains usual terms of early maturity and financial covenants. Settlement of the borrowing was in a single installment on May 28, 2013. In order to protect from the risk of exchange variation on this borrowing, originally contracted in foreign currency, on the same date as the borrowing, a swap was contracted with the same bank, so all the obligations are fully converted into local currency. The swap cost is already added to the debt cost. On December 6, 2013 the Company entered into a loan agreement with the Nassau Branch of Banco Ita BBA S.A. totaling US$ 16.9 million (equivalent to R$40.0 million). Principal and interest will be settled in a bullet payment on January 30, 2015. In order to protect from the foreign exchange risk on this borrowing, on the same date a swap was contracted with Banco Ita BBA S.A. in the amount of R$ 25.4 million so that the obligations (principal and interest) are fully converted into local currency and carried out on the same maturity dates.

BNDES
The Company celebrated with financial agents from Banco do Brasil and Ita BBA the financing contracts for the purchase of equipment through FINAME, as described on the table below:

Contract Number ITAU N 106509120003700 ITAU N 006950006211200 ITAU N 006950006221200 ITAU N 006950006221400 ITAU N 006950006211300 BRASIL 00399-X BRASIL 40-00402-3

Issue Date 06.22.2010 10.02.2011 03.09.2011 08.12.2011 12.15.2011 02.15.2010 06.22.2010

Maturity Date 03.16.2015 11.16.2020 09.30.2020 01.29.2021 04.15.2021 02.17.2020 03.16.2020

Original Value (in R$ thousands) 6,000 4,294 3,069 7,194 3,627 10,000 1,921

Outstanding as of Decemberst, 2013 (in R$ thousands) 2,020 3,901 2,619 3,843 1,809 7,727 1,504 23,427

Banco Bradesco S.A.


On April 18th, 2008, the Company issued a CCB in favor of Banco Bradesco S.A., in the amount of R$ 5.0 million. Payments on the note must be made in 48 monthly installments. The obligations assumed under the banking credit note above are secured by a pledge of receivables owed to the Company by Dow Chemical. The contract includes customary events of default, and provides for the acceleration of the debt upon a change of control, as well as in case of incorporation, spin-off, and merger or corporate reorganization of the Company. The amount was fully paid on the maturity date.

Banco do Brasil S.A.


The Company entered into two Bank Credit Notes (CCB) with Banco do Brasil for the provision of overdrafts to cover working capital needs. On February 27th, 2008, the Company issued a CCB in favor of Banco do Brasil S.A., in the amount of R$ 5.0 million, to be paid in 54 monthly installments with 5 years maturity and 6 months grace period, with maturity date of January 25th, 2013. The CCB includes customary events of default, and provides for the acceleration of the debt in case of a change of control, as well as in case of incorporation, spin-off, merger of our company, or on the occurrence of any event which may decrease our capacity to meet its obligations under the CCB. The amount was fully paid on the maturity date. On February 27th, 2008, the Company also issued a CCB in favor of Banco do Brasil S.A., in the amount of R$ 8.0 million, to be paid in 54 monthly installments with 5 years maturity and 6 months grace period, with maturity date of April 20th, 2013. The CCB includes customary events of default, and provides for the acceleration of the debt in case of a change of control, as well as in case of incorporation, spin-off, merger of our company, or on the occurrence of any event which may decrease our capacity to meet its obligations under the CCB. The amount was fully paid on the maturity date.

Banco Fibra S.A.


On April 11th, 2008, the Company issued a CCB in favor of Banco Fibra S.A., in the amount of R$ 6.0 million, to be paid in 48 monthly installments by April 10, 2013, when the amount was fully paid. The CCB includes customary events of default, and provides for the acceleration of the debt in case of a change of control, as well as in case of incorporation, spin-off, merger of our company, or on the occurrence of any event which may decrease our capacity to meet its obligations under the CCB.

Debentures
On April 8, 2011 approval was granted for the issuance by the Company of a total of 27,000 debentures in a single tranche, of non-convertible unsecured debentures, of a total amount of R$ 270.0 million, and unit face value of R$ 10,000, issued on April 18, 2011. The debentures have maturity on April 18, 2016, with remuneration equivalent to 112.5% of the CDI rate and semi-annual payments of interest and amortization in three consecutive installments, with the first maturity date on April 18, 2014. The transaction costs associated with this issue, in the amount of R$ 2.4 million, are being recognized as Company funding expenses, in accordance with the contractual terms of the issue. On August 3, 2012 approval was granted for the issuance by the Company, in two series of simple debentures, non convertible into shares, unsecured, public offering object with limited placement efforts, pursuant to CVM Instruction 476. On September 18, 2012, 27,000 debentures were issued, each with a nominal value of R$ 10,000.00, of which: i) 16,094 debentures of the first series, amounting to R$ 160.9 million, with maturity date on August 15, 2017, not subject to monetary adjustment. The nominal value of the first series debentures will be amortized in two annual installments starting on the fourth year of the issuance, and the interest paid semi-annually and equal to surtax of 0.88% per annum of 100% of DI accrued variation. ii) 10,906 debentures of the second series, amounting to R$ 109.1 million, with maturity date on August 15, 2020, subject to monetary adjustment by the accrued variation of the IPCA. The nominal value of the second series debentures will be amortized in three annual installments starting on the sixth year of the issuance, and the interest paid annually and equal to 5.50% per annum of the above mentioned monetarily adjusted amount. As at December 31, 2013 the balance of debentures including transaction costs is R$ 113.3 million in current liabilities and R$ 450.0 million in non-current liabilities, and R$ 112.5 million and R$ 448.2 million, net of transaction costs, respectively.

Promissory Notes
On March 29, 2011 the Company held its first issuance of 30 commercial promissory notes with unit face value of R$ 1.0 million, for a total amount of R$ 30.0 million with a maturity date of 90 days as of the respective date of issue. Remuneration interest charges will fall due corresponding to 105% of the accumulated variation in the average daily Domestic Demand (DI) rates. Remuneration was fully paid upon the maturity date. On December 7, 2011 the Company issued a single series of three commercial promissory notes with unit face value of R$ 9.0 million, for a total amount of R$ 27.0 million with maturity on December 1 st, 2012. Remuneration interest charges will fall due corresponding to 100% of the accumulated variation in the average daily Domestic Demand (DI) rates, plus 1.10% per annum. Remuneration was fully paid upon the maturity date. On April 23, 2012 the Company issued a single series of thirty commercial promissory notes with unit face value of R$ 1.0 million, for a total amount of R$ 30.0 million with maturity on December 3, 2012.

Remuneration interest charges will fall due corresponding to 100% of the accumulated variation in the average daily Domestic Demand (DI) rates, plus 4.9% per annum. Remuneration was fully paid upon the maturity date.

Leasing Agreements
Several leasing agreements which the Company entered are guaranteed through promissory notes. The table below shows the promissory notes which amounts are considered relevant:
Outstanding as of December 31st, 2013 (in R$ million) 587 1,312 308 647 1,538 774

Contract binding 615556-1 615800-5 615587-1 19340110471 19340115341 19340116534

Bank SANTANDER SANTANDER SANTANDER HSBC HSBC HSBC

Issue Date 07.27.2009 08.27.2009 05.08.2009 09.15.2009 12.29.2009 02.05.2010

Maturity Date 07.28.2014 08.25.2014 08.04.2014 09.15.2014 12.29.2014 02.02.2015

As of the date of this Reference Form, the Company is part of several leasing agreements with several financial entities, representing obligations of R$ 8.2 million as of December 31st, 2013. The Company entered into such agreements as lessee, with the purpose of leasing (or in certain cases purchasing) the equipment and other assets necessary for running its operations. Upon maturity of each leasing agreement, the Company has the option to return the equipment or assets to the respective lessor, or exercise an option to buy such equipment or asset, upon payment of a residual value. The amounts owed under these leasing agreements are repaid in monthly installments, subject to a minimum guaranteed payment corresponding to the lower amount for which the equipment or assets could be sold to a third-party.

(ii) other long-term relationships with financial institutions


The Company contracted with financial institutions, instruments for monetary exchange protection (hedge). These derivative instruments contracted by the Company have the intention to protect it, on their equipment import operations, in the interval between the placing of orders and nationalization against the risk of fluctuation in the exchange rate, and are not used for speculative means. On December 31st, 2013, the Company possessed purchase orders with foreign suppliers of equipment valued at approximately US$ 71.3 million (in 2012, these orders amounted to US$ 72.8 million, and in 2011, it amounted to US$ 69.2 million), all scheduled for payment until December, 2014.

(iii) degree of subordination between the debts


Usually the Companys loans and financings specifically contracted for the purchase of equipment are guaranteed by statutory lien.

10

Additionally, when the contraction of loans and bank financing, the company usually is requested to sign promissory notes representing the respective debts, to facilitate its execution in case of default. The debentures issued by the Company are all unsecured obligations type. Most of the guarantees offered by the Company refers to loans contracted in previous years, when the financial situation required that the Company offered substantial guarantees to facilitate its access to credit. After its initial public offer of shares held in April 2010, the Company conducted financing operations with real guarantee only for FINAME, credit line from BNDES to finance investments in manufacturing portion of its equipment, where, at the request of the financing contract, the equipment manufactured is disposed to the end of the financing contract. The Company believes that the existing terms relating to the provision of guarantees does not significantly restrict the ability to contract new debt to meet our capital needs.

(i) any restrictions imposed on the issuer, in particular, for limits of indebtedness and contracting of new debts, the distribution of dividends, disposal of assets, the issuance of new securities or disposal of corporate control
Some of the Companys long-term financial instruments contain obligations relating to the maintenance of certain levels for determined financial indicators. The main conditions imposed on financial instruments entered into by the Company are: (i) the ratio between EBITDA and net debt (total bank debt minus cash equivalents); and (ii) the ratio between EBITDA and net financial expenses. Thus, the Company is required to maintain a relatively low indebtedness and a satisfactory capacity to pay its financial obligations, and the hiring of new borrowings should meet these prerequisites. On the fiscal years ended December 31st, 2011, 2012 and 2013, the Company was in compliance with the required levels for the indicators. The management of the Company believes that the current provisions will not significantly restrict the ability to recruit new debt to meet its capital needs.

g.

limits of use of financing already concluded

On December 31, 2013, the Company had credit limits in the major financial institutions in Brazil, plus your debts already contracted of R$ 632 million, but had no limits to use in financing transactions already contracted. The Company maintains relationships with major financial institutions operating in Brazil and, the evaluation of its board has conditions and the risk rating of credit that enable the Company to contract new debt in the amount required to meet the current needs of cash for short and long term.

h.

significant changes in each item of the financial statements

In accordance with the existing accounting policies adopted in Brazil, the revenue reported in the income statement should include only the gross inflows of economic benefits received and receivable by the Company, when originating from their own activities. Amounts collected on behalf of third

11

parties - such as sales taxes, taxes on goods and services and from taxes on added value - do not generate benefits for the Company and do not result in an increase in equity and therefore are excluded from revenue. Thus, the comments below relating to variations between the results for the years ended December 31st, 2011, 2012 and 2013 refer only to net revenue, not to the gross revenue.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Year ended December 31st (in millions of R$, except percentage) 2011 Net revenue from sales and services Heavy Construction Real Estate Industrial Services Rental Cost of Sales and Services Gross Profit Operating Revenues (Expenses) Other operating income General and Administrative Operating Profit Financial Expenses Financial Income Profit Before Income Tax and Social Contribution Income Tax and Social Contribution 677.6 131.6 155.8 214.8 175.4 (340.4) 337.2 VA
(1)

(%)

HA(2) (%) 23.20% (14.7%) 48.2% 9.9% 84.5% 33.6% 14.3%

2012 879.3 174.1 238.0 213.8 253.5 (410.9) 468.3

VA(1) (%) 100% 19.8% 27.1% 24.3% 28.8% 46.7% 53.3%

HA(2) (%) 29.80% 32.3% 52.8% (0.5%) 44.5% 20.7% 38.9%

2013 832.3 217.0 258.0 357.3 (334.9) 497.3

VA(1) (%) 100.0% 26.1% 31.0% 42.9% -40.2% 59.8%

HA(2) (%) (5.3%) 24.6% 8.4% (100.0%) 41.0% (18.5%) 6.2%

100% 19.4% 23.0% 31.7% 25.9% 50.2% 49.8%

(175.2) 162.0 (46.6) 14.7

25.9% 23.9% 6.9% 2.2%

18.7% 9.8% 91.6% (21.3%)

(218.5) 249.9 (51.2) 12.1

24.8% 28.4% 5.8% 1.4%

24.7% 54.3% 9.9% (17.7%)

8.3 (225.4) 280.2 (60.0) 13.2

1.0% -27.1% 33.7% -7.2% 1.6%

3.2% 12.1% 17.2% 9.1%

130.1 (38.0)

19.2% 5.6%

-8.3% (1.4%)

210.7 (59.2)

24.0% 6.7%

62.0% 55.8%

233.4 (65.7) 167.7 4.9 172.6

28.0% -7.9% 20.1% 0.6% 20.7%

10.8% 11.0% 10.7% 13.9%

Profit from continuing operations 92.2 13.6% (10.7%) 151.5 17.2% 64.3% Profit from discontinued operations 92.2 13.6% (10.7%) 151.5 17.2% 64.3% Net Income for the Year (1) Vertical analysis, which is a percentage of total net sales and services (2) Horizontal analysis, which is the percentage of variation in the income statement accounts between fiscal years indicated.

Year ended December 31st, 2013 compared with year ended December 31st, 2012 Revenue of Products Sold and Services Provided
The following table shows the Companys net revenue by business unit for the years ended December 31st, 2012 and 2013:
Year ended December 31st 2012 VA (%)(1) 2013 VA (%)(1) HA (%) (2)

(in millions of R$, except percentage)

Heavy Construction .................................... Real Estate ................................................ Industrial Services ...................................... Rental ....................................................... Total .....................................................
(1) (2)

174.1 238.0 213.8 253.5 879.3

19.8% 27.1% 24.3% 28.8% 100.0%

217.0 258.0 357.3 832.3

26.1% 31.0% 0.0% 42.9% 100.0%

24.6% 8.4% (100.0%) 41.0% (5.3%)

Vertical analysis, which is a percentage of total net sales and services. Horizontal analysis, which is the percentage of variation in the income statement accounts between fiscal years of 2011 and 2012.

12

In the year ended December 31st, 2013 the Companys net revenue from sales and services totaled R$ 832.3 million. For comparison purposes, excluding the result of the Industrial Services business unit, which was sold in 2012, there was an increase of R$ 166.8 million, or 25.1%. This increase comes mainly from the incremental revenue from the Rental and Heavy Construction business units. The analysis of the Company's management regarding the factors that led to these changes is listed below. Heavy Construction Net revenue from the Heavy Construction business unit, totaled R$ 217.0 million in 2013, with an increase of 24.6% or R$ 42.9 million compared to the previous year. The management of the Company attributed this expansion as a result of the investments in organic growth made in this business unit, since 2010. Real Estate Net revenue from the Real Estate business unit, totaled R$ 258.0 million in 2013, with an increase of 8.4% or R$ 20.0 million compared to 2012, including expansion of 15.9% of the revenue from equipment rental. The branches opened since November 2009 contributed with 55% of this business units revenue in the year 2013. The management of the Company attributed this expansion as a result of the investments in organic growth made in this business unit, since 2010. Industrial Services The sale of the Industrial Services business unit was concluded in November 30, 2013, and the Company recorded gain of R$ 8.3 million with the sale. Of the agreed sales price of R$ 102 million, we received R$ 25 million on the date of the sale agreement, in July. We will receive the outstanding amount in installments adjusted by the Interbank Deposit Certificate CDI rate, discounting the cash generation of this business for Mills between June 1st, 2013 and the closing date, which was equal to R$ 6.8 million. This disposal is in line with Mills strategy to focus on businesses in which its competences are able to add higher value for its shareholders and clients. Rental Net revenue from the Rental business unit totaled R$ 357.3 million in 2013, which was 41.0% or R$ 103.8 million greater than that 2012. The branches opened since 2010 contributed with 69% of 2013 revenue. On the evaluation of the management of the company, this increase is mainly associated with increasing fleet of equipment, with investments in organic growth since 2010.

Taxes on Sales and Services


In accordance with existing accounting policies adopted in Brazil, the revenue reported in the financial statement should include only the gross inflows of economic benefits received and receivable by the Company, when originating from their own activities. Amounts collected on behalf of third parties - such as sales taxes, taxes on goods and services and from taxes on added value - do not generate benefits for the Company and do not result in an increase in equity and therefore are

13

excluded from revenue. Thus, the Company has not reported for the years ended December 31, 2012 and 2013, figures comparable to this item.

Cost of products sold and services rendered and general and administrative expenses
Since 2010, the Company began to detail its costs of goods sold and general and administrative expenses by business segment and by nature, and the information by business segment has been presented only on a consolidated basis, excluding the effects of depreciation. The table below shows the Companys cost of goods sold and services rendered by nature in fiscal years ended December 31, 2012 and 2013.
Year ended on December 31st, 2012 Direct cost of construction and renting Labor Third-party Services Freight Construction Material / Maintanance and Repair Rent Equipment Travel Cost of Sales Depreciation ad Amortization Asset impairment Allowance for Doubtful Debts Stcok Option Update provisions Profit sharing Others Total
(1)

Year ended on December 31st, 2013 Direct cost of construction and renting General and Administrati ve Expenses

Variation 2012 x 2013(1) Direct cost of construction and renting General and Administrati ve Expenses

General and Administrati ve Expenses

Total

Total

Total

(in R$ million)

(179.2) (6.3) (15.0) (41.7) (8.3) (8.6) (41.0) (104.2) (4.9) (1.6) (410.9)

(109.3) (22.1) (0.8) (4.8) (11.3) (11.5) (4.4) (16.1) (5.8) 4.0 (20.1) (16.3) (218.5)

(288.6) (28.4) (15.8) (46.5) (19.5) (20.1) (41.0) (108.6) (4.9) (16.1) (5.8) 4.0 (20.1) (17.9) (629.4)

(58.8) (5.0) (15.5) (43.5) (5.9) (5.0) (68.0) (122.6) (8.9) (1.9) (334.9)

(107.4) (20.4) (0.8) (6.1) (15.0) (11.6) (8.4) (16.2) (9.0) 0.2 (18.8) (12.0) (225.4)

(166.2) (25.5) (16.2) (49.6) (20.8) (16.5) (68.0) (131.0) (8.9) (16.2) (9.0) 0.2 (18.8) (13.8) (560.4)

120.4 1.3 (0.5) (1.8) 2.4 3.6 (27.0) (18.4) (4.0) (0.2) 76.0

1.9 1.7 0.0 (1.3) (3.7) (0.1) (4.0) (0.1) (3.2) (3.8) 1.3 4.3 (6.9)

122.4 2.9 (0.4) (3.1) (1.3) 3.6 (27.0) (22.4) (4.0) (0.1) (3.2) (3.8) 1.3 4.1 69.0

Increase (decrease) of the total recorded from one period to another.

The table below shows the Companys cost of goods sold and services rendered and general and administrative expenses by business unit in fiscal years ended December 31st, 2012 and 2013. The information provided in this table does not reflect the effects of depreciation on such costs.
2012 x 2013 (%)
(1)

Year ended December 31st 2012 Heavy Construction.................................... Real Estate................................................ Industrial Services ..................................... Rental ....................................................... Total .....................................................
(1) (2)

(%)

(1)

2013

Var. (%)

(2)

(in R$ million)
(89.7) (124.5) (194.4) (112.2) (520.8) 17.2% 23.9% 37.3% 21.5% 100.0% (108.9) (164.2) (156.1) (429.2) 25.4% 38.3% 0.0% 36.4% 100.0% 21.4% 31.9% (100.0%) 39.2% (17.6%)

Percentage share of the business unit of goods sold and services provided and general and administrative expenses Percentage increase (decrease) of the total registered from one period to another.

14

Cost of goods sold and services provided, excluding the effects of depreciation, went from R$ 520.8 million in the year ended December 31, 2012 to R$ 492.2 million year ended December 31, 2013, a decrease of R$ 91.6 million, or 17.6%, mainly due to the sale of the Industrial Services business unit. The depreciation of assets used in services rendered, which is part of the costs of goods sold and services rendered increased 17.7% due to higher investments in the past years, from R$ 104.2 million for the year ended on December 31, 2012 to R$ 122.6 million in the fiscal year ended December 31, 2013, maintaining the average depreciation period of 10 years. Considering the depreciation costs, the Companys cost of goods sold and services rendered totaled R$ 334.9 million in the fiscal year ended December 31, 2013, compared with R$ 410.9 million in the fiscal year ended December 31, 2012, representing a decrease of 18.5%, mainly due to the sale of the Industrial Services business unit. As a result of the sale of the Industrial Services business unit, compared to net revenues, the total cost of goods sold and services provided, excluding the effects of depreciation, decreased from 34.9% in the year ended December 31, 2012 to 25.5% in the year ended December 31, 2013. Including the effects of depreciation, the same ratio decreased from 46.7% in the year ended December 31, 2012 to 40.2% in the fiscal year ended December 31, 2013. The general and administrative expenses increased from R$ 218.5 million in the fiscal year ended December 31, 2012 to R$ 225.4 million in the fiscal year ended December 31, 2013, an increase of R$ 6.9 million, or 3.2%. In 2013, we continued the technical and commercial team expansion and improvement and some branches were transferred to larger spaces, consistent with the growth of the companys businesses. Despite the Company, at a first glance, incurred in greater general and administrative expenses and consequent compression of margin, the management of the Company believes that these are fundamental measures to enable its growth with productivity improvements in the operation of its warehouses and maintaining the high technical quality of its services. The ratio between the Companys operating, general, and administrative expenses in relation to the net operating income went from 24.8% in the fiscal year ended December 31, 2012 to 27.1% in the fiscal year ended December, 2013.

Operating Profit
Operating profit before financial result increased from R$ 249.9 million in the fiscal year ended December 31, 2012 to R$ 280.2 million in the fiscal year ended December 31, 2013, an increase of R$ 30.3 million, or 12.1%. Companys management believes that such increase was a consequence of the maturity of the investments made, as mentioned above. Operating profit represented 33.7% of net revenues in December 31, 2013, compared to 28.4% of net revenues in December 31, 2012.

Financial Results
Net financial expenses increased from R$ 39.2 million in the fiscal year ended December 31, 2012 to R$ 46.8 million in the fiscal year ended December 31, 2013, representing an increase of R$ 7.6

15

million. The Company's bank debt, which was R$ 622.5 million in December 31, 2012 increased to R$ 632.6 million in December 31, 2013.

Income Tax and Social Contribution


Expenditure on income tax and social contribution went from R$ 59.2 million in the fiscal year ended December 31, 2012 to R$ 65.7 million in the fiscal year ended December 31, 2013, an increase of R$ 6.5 million, or 11.0%. In the fiscal year ended December 31, 2013, the Companys deducted from its income tax and social contribution the amount of R$ 14.6 million, due to the provisioning of interest on equity for distribution of part of the annual results, while in fiscal year ended December 31, 2012 this deduction totaled R$ 14.3 million. Moreover, the effective rate of 2013 remained 28%.

Net Income
The net profit increased from R$ 151.5 million in the fiscal year ended December 31, 2012 to R$ 172.6 million in the fiscal year ended December 31, 2013, an increase of R$ 21.1 million, or 13.9%. This expansion is due to the decrease of cost of goods sold and services provided and general and administrative expenses (R$ 69.0 million), partially offset by the decrease of net revenue (R$ 47.0 million) and negative net financial result (R$ 7.6 million).

Year ended December 31st, 2012 compared with year ended December 31st, 2011 Revenue of Products Sold and Services Provided
The following table shows the Companys net revenue by business unit for the years ended December 31st, 2011 and 2012:
Year ended December 31st 2011 Heavy Construction ............................................ Real Estate ........................................................ Industrial Services .............................................. Rental .............................................................. 131.6 155.8 214.8 175.4 VA (%)(1) 19.4% 23.0% 31.7% 25.9% 2012 VA (%)(1) 19.8% 27.1% 24.3% 28.8% HA (%)
(2)

(in millions of R$)


174.1 238.0 213.8 253.5 32.3% 52.8% (0.5%) 44.5% 29.8%

Total ................................................................ 677.6 100% 879.3 100.0% (1) Vertical analysis, which is a percentage of total net sales and services. (2) Horizontal analysis, which is the percentage of variation in the income statement accounts between fiscal years of 2011 and 2012.

In the year ended December 31st, 2012 the Companys net revenue from sales and services totaled R$879.3 million, a new annual record, compared with R$677.6 million in the year 2011, an increase of R$201.7 million, or 29.8%. This increase comes from the incremental revenue from the Rental, Real Estate and Heavy Construction business units. The analysis of the Company's management regarding the factors that led to these changes is listed below. Heavy Construction Net revenue from the Heavy Construction business unit, totaled R$ 174.1 million in 2012, with an increase of 32.3% or R$ 42.5 million compared to the previous year. The management of the

16

Company attributes that this increase was mainly due to the recovery of the Heavy Construction market, which had been through a period of weakened demand during most of 2011. Real Estate Net revenue from the Jahu business unit, totaled R$ 238.0 million in 2012, with an increase of 52.8% or R$ 82.2 million compared to 2011, including expansion of 45.9% of the revenue with equipment rental. The branches opened since November 2009 contributed with 51% of this segments revenue in the year. The management of the Company attributed this expansion as a result of the investments in organic growth made in this segment, since 2010. Industrial Services Net revenues for the Industrial Services business unit totaled R$ 213.8 million in 2012, in line with the revenue for 2011, which was of R$ 214.8 million. On the evaluation of the management of the Company, this revenue increase is mainly due to the adopted strategy of optimizing existing contracts, prioritizing improvement of profitability over revenue growth. Rental Net revenue from the Rental business unit totaled R$ 253.5 million in 2012, which was 44.5% or R$ 78.1 million greater than that of 2011, with the larger volume of rented equipment contributed with 98.5% of the revenue expansion between years. The branches opened since 2010 contributed with 62% of this years revenue. On the evaluation of the management of the company, this increase is mainly associated with increasing fleet of equipment, with investments in organic growth since 2010.

Taxes on Sales and Services


In accordance with existing accounting policies adopted in Brazil, the revenue reported in the financial statement should include only the gross inflows of economic benefits received and receivable by the Company, when originating from their own activities. Amounts collected on behalf of third parties - such as sales taxes, taxes on goods and services and from taxes on added value - do not generate benefits for the Company and do not result in an increase in equity and therefore are excluded from revenue. Thus, the Company has not reported for the years ended December 31, 2011 and 2012, figures comparable to this item.

Cost of products sold and services rendered and general and administrative expenses
Since 2010, the Company began to detail its costs of goods sold and general and administrative expenses by business unit and by nature, and the information by business unit has been presented only on a consolidated basis, excluding the effects of depreciation. The table below shows the Companys cost of goods sold and services rendered by nature in fiscal years ended December 31, 2010 and 2011. A tabela abaixo mostra os custos dos produtos vendidos e servios prestados abertos da Companhia por natureza nos exerccios sociais encerrados em 31 de dezembro de 2011 e 2012.

17

Year ended on December 31st, 2011 General and Administrati ve Expenses

Year ended on December 31st, 2012 Direct cost of constructio n and renting General and Administrati ve Expenses

Variation 2011 x 2012(1) Direct cost of constructio n and renting General and Administrati ve Expenses

Direct cost of construction and renting Labor Third-party Services Freight Construction Material / Maintanance and Repair Rent Equipment Travel Depreciation Amortization of intangilbe assets Asset impairment Allowance for Doubtful Debts Stcok Option Update provisions Profit sharing Others Total
(1)

Total

Total

Total

(in R$ million)

(162.3) (7.0) (13.4) (35.2) (10.0) (8.6) (73.0) (4.6) (26.3) (340.4)

(89.9) (17.4) (0.6) (4.1) (9.5) (11.4) (2.5) (0.7) (11.4) (3.1) (1.7) (7.9) (15.0) (175.2)

(252.3) (24.4) (14.0) (39.3) (19.4) (20.0) (75.5) (0.7) (4.6) (11.4) (3.1) (1.7) (7.9) (41.3) (515.6)

(179.2) (6.3) (15.0) (41.7) (8.3) (8.6) (104.2) (4.9) (42.6) (410.9)

(109.3) (22.1) (0.8) (4.8) (11.3) (11.5) (3.3) (1.1) (16.1) (5.8) 4.0 (20.1) (16.3) (218.5)

(288.6) (28.4) (15.8) (46.5) (19.5) (20.1) (107.5) (1.1) (4.9) (16.1) (5.8) 4.0 (20.1) (58.9) (629.4)

(16.9) 0.7 (1.6) (6.5) 1.7 0.0 (31.2) (0.3) (16.3) (70.5)

(19.4) (4.7) (0.2) (0.7) (1.8) (0.1) (0.8) (0.4) (4.7) (2.7) 5.7 (12.2) (1.3) (43.3)

(36.3) (4.0) (1.8) (7.2) (0.1) (0.1) (32.0) (0.4) (0.3) (4.7) (2.7) 5.7 (12.2) (17.6) (113.8)

Increase (decrease) of the total recorded from one period to another.

The table below shows the Companys cost of goods sold and services rendered and general and administrative expenses by business unit in fiscal years ended December 31st, 2011 and 2012. The information provided in this table does not reflect the effects of depreciation on such costs.
2011 x 2012 (%)
(1)

Year ended December 31st 2011 Heavy Construction.................................... Real Estate................................................ Industrial Services ..................................... Rental ...................................................... Total .....................................................
(1) (2)

(%)

(1)

2012

Var. (%)

(2)

(in R$ million)
(73.8) (89.8) (194.1) (81.8) (439.4) 16.8% 20.4% 44.2% 18.6% 100.0% (89.7) (124.5) (194.4) (112.2) (520.8) 17.2% 23.9% 37.3% 21.5% 100.0% 21.5% 38.6% 0.2% 37.2% 18.5%

Percentage share of the segment of goods sold and services provided and general and administrative expenses Percentage increase (decrease) of the total registered from one period to another.

Cost of goods sold and services provided, excluding the effects of depreciation, went from R$ 439.4 million in the year ended December 31, 2011 to R$ 520.8 million year ended December 31, 2012, an increase of R$ 81.4 million, or 18.5%, mainly due to growth of the Companys business in 2012. The depreciation of assets used in services rendered, which is part of the costs of goods sold and services rendered increased 42.7% due to higher investments in the past years, from R$ 73.0 million for the year ended on December 31, 2011 to R$ 104.2 million in the fiscal year ended December 31, 2012, maintaining the average depreciation period of 10 years.

18

Considering the depreciation costs, the Companys cost of goods sold and services rendered totaled R$ 410.9 million in the fiscal year ended December 31, 2012, compared with R$ 340.4 million in the fiscal year ended December 31, 2011, representing an increase of 20.7%. As a result of the maturity of the Companys investments and the recovery in Heavy Construction demand, compared to net revenues, the total cost of goods sold and services provided, excluding the effects of depreciation, decreased from 39.5% in the year ended December 31, 2011 to 34.9% in the year ended December 31, 2012. Including the effects of depreciation, the same ratio decreased from 50.2% in the year ended December 31, 2011 to 46.7% in the fiscal year ended December 31, 2012. The general and administrative expenses increased from R$ 175.2 million in the fiscal year ended December 31, 2011 to R$ 218.5 million in the fiscal year ended December 31, 2012, an increase of R$ 43.3 million, or 24.7%. In 2012, the technical and commercial team was expanded and some branches were transferred to larger spaces, consistent with the growth of the companys businesses. Despite the Company, at a first glance, incurred in greater general and administrative expenses and consequent compression of margin, the management of the Company believes that these are fundamental measures to enable its growth with productivity improvements in the operation of its warehouses and maintaining the high technical quality of its services. The ratio between the Companys operating, general, and administrative expenses in relation to the net operating income went from 25.9% in the fiscal year ended December 31, 2011 to 24.8% in the fiscal year ended December, 2012.

Operating Profit
Operating profit before financial result increased from R$ 162.0 million in the fiscal year ended December 31, 2011 to R$ 249.9 million in the fiscal year ended December 31, 2012, an increase of R$ 87.9 million, or 54.3%. Companys management believes that such increase was a consequence of the recovery of the Heavy Construction segment and the maturity of the investments made, as mentioned above. Operating profit represented 28.4% of net revenues in December 31, 2012, compared to 23.9% of net revenues in December 31, 2011.

Financial Results
Net financial expenses increased from R$ 31.8 million in the fiscal year ended December 31, 2011 to R$ 39.2 million in the fiscal year ended December 31, 2012, representing an increase of R$ 7.4 million, as the increase in bank debt was partially compensated by lower interest rates. The Company's bank debt, which was R$ 410.9 million in December 31, 2011 increased to R$ 622.5 million in December 31, 2012. On August 2012, the Company issued its second debentures offering, a total amount of R$ 270.0 million. The Company used the net proceeds from the issuance for (a) the financing of investments to be made by the Company (b) the payment of the Companys debts (c) general uses and expenses.

19

Income Tax and Social Contribution


Expenditure on income tax and social contribution went from R$ 38.0 million in the fiscal year ended December 31, 2011 to R$ 59.2 million in the fiscal year ended December 31, 2012, an increase of R$ 21.2 million, or 55.8%. In the fiscal year ended December 31, 2012, the Companys deducted from its income tax and social contribution the amount of R$ 14.2 million, due to the provisioning of interest on equity for distribution of part of the annual results, while in fiscal year ended December 31, 2011 this deduction totaled R$ 8.3 million. Moreover, the effective rate of 2012 was 28.1% after adjustment of expenses not deductible, compared to 29.2% in 2011.

Net Income
The net profit increased from R$ 92.2 million in the fiscal year ended December 31, 2011 to R$151.5 million in the fiscal year ended December 31, 2012, an increase of R$ 59.3 million, or 64.3%. This expansion in due to the increase of net revenue (R$ 201.7 million), partially compensated by the expansion in the amounts of cost of goods sold and services provided and general and administrative expenses (R$ 113.8 million) and negative net profits (R$ 7.3 million).

Year ended December 31st, 2013 compared to year ended December 31st, 2012
Current Assets

The Companys current assets increased from R$ 473.7 million as of December 31, 2012 to R$ 319.5 million as of December 31, 2013, a decrease of R$ 154.2 million or 32.6%. The main reasons for such decrease, in the assessment of the Management of the Company, were: a reduction of R$ 159.6 million in securities and marketable securities, due to the use of the proceeds from the Companys second offering of non convertible debentures held in September 2012; a reduction of R$ 17.4 million in accounts receivable, due to the sale of the Industrial Services business unit; an increase of R$ 26.8 million in other accounts receivable sale o investee due to the outstanding receivable amount related to the sale of the Industrial Services business unit;

Non-current assets
The Companys non-current assets increased from R$ 45.1 million as of December 31, 2012 was increased to R$ 101.5 million as of December 31, 2013, an increase of R$ 56.4 million or 125.0%. The main variations in the non-current assets was in other accounts receivable sale o investee due to the outstanding receivable amount related to the sale of the Industrial Services business unit.

20

Investment
In December 31, 2013, the Company maintained the same registered investment value as of December 31, 2012, R$ 87.4 million. In January, 2011 the Company acquired 25.0% of the total voting capital of Rohr for R$ 90 million. The Company received in 2011, R$ 2.6 million of shareholder remuneration from Rohr related to previous fiscal years than 2011, and therefore was recorded as a reduction for the acquisition investment.

PPE Property, Plant and Equipment


The Companys PPE increased from R$ 1,003.3 million at December 31, 2012 to R$ 1,224.5 million at December 31, 2013, an increase of R$ 221.1 million, or 22.0%. On the evaluation of the Company, the increase in this category, plus depreciation and write-offs, reflects the investments made by the Company to meet the increasing demand in its markets.

Intangible assets
The Companys intangible assets increased from R$ 54.5 million as of December 31, 2012 to R$ 68.4 million as of December 31, 2013, mainly due to R$16.5 million in software acquisition.

Current liabilities
The Companys current liabilities increased from R$ 214.5 million as of December 31, 2012, to R$ 255.0 million as of December 31, 2013, an increase of R$ 40.5 million. The main factors that led to this change, according to the Managements opinion, were: increase of R$ 18.6 million in the short-term loans and financing balance, due to the issuance of promissory notes in December 2011, to enable the Companys investments in 2011; a reduction of R$ 11.5 million in taxes payable, due to lower taxes on revenues, such as PIS, COFINS and ICMS; increase of R$ 99.5 million, in the short-term debentures balance, due to the reclassification from long-term debentures to short-term liability related to a debt amount to be paid in 2014; decrease of R$ 29.0 million in the short-term borrowing and financing account, due to the settlement of debt due in 2013;

Non-current liabilities
The non-current liabilities increased from R$ 590.2 million as of December 31, 2012 to R$ 529.7 million as of December 31, 2013, a reduction of R$ 60.5 million, or 10.3%. The main factor that led to this variation, according to the managements opinion, was the R$ 89.2 million decrease in the long-term debenture account, due to the the reclassification from long-term debentures to short-term liability related to a debt amount to be paid in 2014, and the R$ 28.5 million increase in the long-term borrowing and financing account, due to a new borrowing contract of R$ 40.0 million signed in December 2013.

21

Stockholders Equity
Shareholder's equity increased from R$ 859.3 million as of December 31, 2012 to R$ 1,016.5 million as of December 31, 2013, an increase of R$ 157.2 million, or 18.3%, substantially due to the increase of the Companys income reserve that aims retain financial resource to support its budget investment.

Year ended December 31st, 2012 compared to year ended December 31st, 2011 Current Assets
The Companys current assets increased from R$ 224.9 million as of December 31, 2011 to R$ 473.7 million as of December 31, 2012, an increase of R$ 248.8 million or 110.6%. The main reasons for such increase, in the assessment of the management of the Company, were: an increase of R$ 159.6 million in securities and marketable securities, due to the proceeds from the Companys second offering of debentures held in September 2012; an increase of R$ 55.6 million in accounts receivable, reflecting an increase in the Companys revenue; an increase of R$ 15.7 million in inventories due to the expanding activities of the Company; an increase of R$ 13.0 million in recoverable taxes, due to PIS and COFINS credit over permanent asset acquisitions; a reduction of R$ 4.8 million in advanced payments to suppliers, as a consequence of the receiving payments.

Non-current Assets
The Companys non-current assets of R$ 50.0 million as of December 31, 2011 was decreased to R$ 45.1 million as of December 31, 2012, a decrease of R$ 4.9 million or 9.8%. The main variation in the non-current assets was in the deferred taxes account due to the settlements and to write-downs of financial leases.

Investment
In 2012 the Company maintained the same registered investment value as 2011 of R$ 87.4 million. In January, 2011 it acquired 25.0% of the total voting capital of Rohr for R$ 90.0 million. The Company received in 2011, R$ 2.6 million of shareholder remuneration from Rohr related to previous fiscal years than 2011, and therefore was recorded as a reduction for the acquisition investment.

PPE Property, Plant and Equipment


The Companys PPE increased from R$ 872.9 million as of December 31, 2011 to R$ 1,003.3 million at December 31, 2012, an increase of R$ 130.4 million, or 14.9%. On the evaluation of Companys management, the increase in this category, plus depreciation and write-offs, reflects the investments made by the Company to meet the increasing demands of their clients.

22

Intangible assets
The Companys intangible assets increased from R$ 45.5 million as of December 31, 2011 to R$ 54.5 million as of December 31, 2012, mainly due to R$ 9.2 million in software acquisition.

Current liabilities
The Companys current liabilities increased from R$ 177.7 million as of December 31, 2011, to R$ 214.5 million as of December 31, 2012, an increase of R$ 36.8 million. The main factors that led to this change, according to the managements opinion, were: increase of R$ 14.3 million in dividends and payable interest on capital, due to the good result of the Company and consequent increase in shareholder remuneration; increase of R$ 12.2 million in the profit sharing payable account, due to the expansion of the variable remuneration program EVA in the year of 2012, in comparison with 2011; increase of R$ 11.9 million in the trade payables account, due to the higher investment volume in 2012; increase of R$ 10.5 million in the taxes payables account, due to the tax revenues such as PIS, CONFINS and ICMS; increase of R$ 6.9 million, in the short-term debentures balance, due to the debentures offering in September 2012, in the amount of R$270 million; reduction of R$ 23.5 million in the short-term loans and financing balance, due to the liquidation of the promissory notes in December 2012.

Non-current liabilities
The non-current liabilities increased from R$ 366.7 million as of December 31, 2011 to R$ 590.2 million as of December 31, 2012, an increase of R$ 223.5 million, or 60.9%. On the Companys management evaluation, the main factor that led to this variation was the R$ 269.0 million increase in the long-term debenture account, due to the second debenture issuance in September 2012, in the amount of R$ 270 million.

Stockholders Equity
Shareholders equity increased from R$ 736.1 million as of December 31, 2011 to R$ 859.3 million as of December 31, 2012, an increase of R$ 123.2 million, or 16.7%, substantially due to the increase of the Companys income reserve. CASH FLOW
Year ended December 31st, 2011 Cash flow from operating services.................................................................................... Cash flow from investment activities ................................................................................ Cash flow from (used in) financing activities ..................................................................... Increase (decrease) in liquidity ........................................................................................ 140.6 (359.4) 247.8 29.0 2012 2013 263.4 (258.1) (23.7) (18.4)

(in R$ millions)
202.3 (393.1) 199.8 9.0

23

Cash Flow from Operating Activities


In the fiscal years fo 2011, 2012 and 2013, the company managed to substantially improve its operating results, as discussed above, thereby improving operating cash generation, which, in 2011, was R$ 140.6 million, increasing to R$ 202.3 million in 2012 and reaching R$ 263.4 million in 2013, a growth in 2012 and 2013 of 43.9% and 30.2%, respectively. According do managements opinion, the investments made were critical for this improvement, which allowed to significantly increase the Companys revenues and operational results.

Cash Flow from Investing Activities


The gross investments in PPE for the years ended December 31, 2011, 2012 and 2013 amounted to R$ 430.3 million, R$ 287.4 million, and R$ 489.4 million, respectively. In 2011, the Company maintained its level of investment in organic growth, in addition to the acquisition of 25.0% stake of Rohr and 100% of the capital of GP Sul of R$ 87.4 million and R$ 5.5 million, respectively. In 2012 and 2013, the Company invested to continue seizing attractive opportunities in its operating markets. The table below shows the investments in PPE made in 2011, 2012 and 2013:
Year ended December 31st, 2011 Gross investments, before PIS and COFINS credits ........................................................... Acquisition of GP Sul Total Gross investments ................................................................................................. PIS and COFINS credits .................................................................................................. Net Investments ............................................................................................................ (430.3) (2.8) (433.5) 29.5 (404.0) 2012 2013 (489.4) (489.4) 43.4 (446.0)

(in R$ millions)
(287.4) (287.4) 25.6 (261.8)

The gross investments in intangible assets in the years ended December 31st 2011, 2012 and 2013 totaled, R$ 2.6 million (excluding the goodwill from GP Suls acquisition), R$ 10.1 million and R$ 16.5 million, respectively.

Cash Flow from Financing Activities


The cash flow from financing activities includes new loan agreements, the amortization of the principal and payment of interest on existing loans, as well as increases in the capital stock, and dividend payment. In 2011, the Company completed its first debentures issuance on a total amount of R$ 270.0 million with maturity of five years, and issued commercial promissory notes totaling R$ 30.0 million and R$ 27.0 million, maturing on June 27, 2011 and December 1, 2012, respectively. In 2012, the Company captured R$ 270.0 million through its second non-convertible debentures issuance, made in two series. The first series, at the value of R$ 160.9 million, has a 5-year term, with amortization starting from the fourth year, and interest rates equivalent to CDI + 0.88%. The second series, at the value of R$ 109.1 million, has an 8-year term, with amortization starting from the sixth year, and interest rates equivalent to IPCA + 5.50%. The net proceeds of the offering will be used for the financing of investments in 2013, general uses and expenses and for the payment of debts, allowing the reduction of cost and expansion of its average term. The Company also issued, in

24

April 2012, promissory notes at the amount of R$ 30.0 million, with maturity date in December 3rd, 2012. 10.2 The directors must comment on

a. Results of the Companys operations, in particular: (i) description of important components of revenue Net Revenue from Sales and Services
The net revenues from sales and services are denominated in reais, and are derived from the rental and sale of equipment, the provision of technical support services, and penalty payments for unreturned or damaged equipment. The table below sets forth the participation of the net revenue for the periods indicated:
Year ended December 31st, 2011 Equipment Rental ...........................................................................67.0% Sale of Equipment........................................................................... 6.0% Technical Support Services ..............................................................23.6% Indemnifications ............................................................................. 3.4% 2012 69.2% 8.4% 19.8% 2.6% 2013 81.0% 12.2% 2.6% 4.2%

(ii) Factors that materially affected operational outcomes Cost of Products Sold and Services Rendered
Its main cost of products sold and services rendered relates to costs for executing the projects in which the Company are involved, including (i) personnel for assembly and disassembly of equipment rented to its clients when such tasks are carried out by the Company; (ii) cost of the equipment subleased from third parties when the Companys inventories are insufficient to meet demand; (iii) cost of materials used in the provision of its services, which include individual safety equipment, wood, paint and insulation material; and (iv) freight costs relating to the transportation of equipment between its branches and eventually to its clients. Costs related to the execution of its projects represented 78.5%, 73.4% and 43.7% of its principal costs of sales and services rendered, excluding depreciation, in the years ended December 31, 2011, 2012 and 2013, respectively. On the evaluation of the company's management, this reduction was due to the expansion of equipment sales costs, mainly in the Real estate and Rental business units and, and to the sale of the Industrial Services business unit. In addition, the Company incurred in (i) costs deriving from the sale of equipment; (ii) depreciation of equipment rented; (iii) expenses with equipment storage; and (iv) cost of write-offs of assets. The cost of products sold and services rendered by its Heavy Construction, Real Estate and Rental business units tends to grow less than their net revenues, as some components of these costs do not grow at the same rate of the revenue.

25

General and Administrative Expenses


The Companys main general and administrative expenses refer to contract coordination, encompassing the project teams and engineers in the commercial area, responsible for the management and supervision of each of its projects, which correspond basically to salaries, payroll charges and benefits, with the rest relating to travel, representation and communications expenses, as well as the overhead of the administrative areas. Due to the nature of its business, the Company does not have a department only dedicated to sales. Expenses related to the management of its contracts represented 57.3%, 50.1% and 51.9% of its total general and administrative expenses during the fiscal years ended December 31, 2011, 2012 and 2013, respectively. According to the Companys management, this decrease in 2013 was mainly due to structuring of technical and commercial teams to enable the growth of the Company. Other material general and administrative expenses include: (i) administrative expenses incurred with respect to its financial, investor relations, and human resources departments, as well as its executive management, including salaries and benefits, (ii) expenses in connection with the Companys employee profit-sharing plans and expenses related to its stock option plans, and (iii) other administrative expenses, which include, in particular, expenses resulting from adjustments to its provisions for contingencies.

Financial Results
The Companys financial results consist of its financial expenses, net of financial revenues. The Companys main financial expenses include interest payments on loans, leasing operations, and costs associated with discounting to present value certain long-term receivables derived from the sale of equipment owned by its former Events division. Its main financial revenues consist of income from its financial investments and interest in connection with late payments by its clients.

Income and Social Contribution Taxes


Income and social contribution taxes are calculated in accordance with Brazilian tax laws and regulations in force at the date of presentation of its financial statements. Deferred income and social contribution taxes are calculated in accordance with accumulated tax losses, accumulated bases of social contributions, and the corresponding temporary differences between the asset and liability tax bases and the accounting values entered in the financial statements. The current income and social contribution tax rates applicable to the calculation of such deferred credits are 25% and 9%, respectively.

b.

Changes attributable to changes in prices, volume changes and introduction of new products and services.

The Companys revenues have a direct correlation with changes in price and volume of equipment rented to clients. Introduction of new products and services also directly impact revenue. As for inflation, the correlation of its revenue is indirect, in the extent that the adjustments take place only in the renewal or closing of new contracts, reflecting the past inflation. As regards to the exchange rate fluctuation, currently there is no correlation to its revenue, except that the Rental segments

26

equipment are imported and hence have their acquisition cost in foreign currency. Consequently, in the future, the rental revenue from this division may be influenced by possible in exchange rates variations. In terms of volume, the revenue variation for the Heavy Construction business unit was affected by the volume decrease from the end of 2010, and only recovering at the second half of 2011. The increased revenue from the Real Estate and Rental business units over the past three years are the result of the increase in the volume of rented equipment and sales, given favorable market conditions and its geographic expansion.

c.

Impact of inflation, price variations of main inputs and products, exchange rate and interest rate on operating profit and the issuer's financial result.

The Companys expenses are subject to impact of inflation via wage increases for employees, a raise in the cost of the hired services, such as freight, and inputs used in the provision of services and through financial expenditure due to the remuneration of the debentures which are subject to monetary restatement by the accumulated variation of IPCA. Moreover, the equipment the Company invests in to use at its services are also subject to increases due to inflation and changes in commodity prices, mainly steel and aluminum. In the case of Rental business unit, the prices of the equipment the Company uses can increase according to the fluctuation of the exchange rate, because they are imported. 10.3 The directors must comment on the relevant effects that the events listed below may have caused or are expected to cause on the Companys financial statements or its results

a. Introduction or disposal of operating segment


In 2013, the Company sold, through the sale of the company Albuquerque Participaes Ltda., the Industrial Services business unit, as described in item (b) below. The Company did not introduce or dispose of any segment in fiscal years 2011, 2012 and 2013.

b. Constitution, acquisition or diverstiture of shareholdings Acquisition of 25% of Rohr S/A Estruturas Tubulares
On January 19, 2011, the Company entered into a purchase and sale agreement to acquire 25% of the voting and total capital of Rohr for R$ 90 million, paid on February 8, 2011. In September 2011, Rohr acquired 9% of its own stock, and as a consequence, the Companys share went from 25% to 27.5%. Rohr is a private company specializing in access engineering and the provision of construction solutions, with more than 45 years of experience in the market. The company operates in the heavy construction and infrastructure, building construction, industrial maintenance and events sector. The Company will not participate in the management of Rohr, as this is a strategic acquisition, whereby Mills aims to increase its presence in its areas of activity - infrastructure, residential and commercial construction, oil and gas, etc.

27

Acquisition of GP Sul
On May 27, 2011, the Company entered into a purchase and sale agreement to acquire 100% of the voting and total capital of GP Sul for R$ 5.5 million. GP Sul is a privately held company located in Porto Alegre, and one of the largest players in the suspended scaffold rental market to residential and commercial construction in the state of Rio Grande do Sul. On the evaluation of the Management of the Company, this strategic acquisition enabled the Company to become the leader in the suspended scaffold rental market in the state of Rio Grande do Sul and to broaden its exposure to the residential and commercial construction market in the South region, in line with the geographic expansion plan of Real Estate business unit. On August 1st, 2011, was approved, in Extraordinary Shareholders Meeting, the merger of GP Sul by the Company, in its protocol and merger justification terms. The objectives of the merger were (i) optimize and centralize the activities developed by GP Sul in the Companys management, therefore, rationalizing the operations and consequently reducing costs; and (ii) take advantage of the tax benefit resulting from the amortization of R$ 4.7 million generated in its acquisition of at least five years, as from the 2011 fiscal year.

Sale of the Industrial Services business unit


On July 10, 2013, the Company entered into an agreement for the sale of its Industrial Services business unit for $ 102 million through the sale of its stake in the company Albuquerque Participaes Ltda. For more information, see item 6.5 of this Reference Form. The Industrial Services business unit recorded: for the nine months ended September 2013 (end of the last quarter before the actual sale), net profit of R$ 6.1 million 30 representing in the same period, 4.8% of total net profit of Mills, and net income of R$ 168.4 million, over the same period, 21.3% of consolidated net revenue of Mills; in fiscal year 2012, net income of R$ 2.3 million, in the same period, 1.2% of total net profit of the Mills, and net income of R$ 213.8 million, over the same period, 24.3% of consolidated net revenue of Mills. The sale is aligned with the Companhys strategy to focus on businesses in which its competencies are able to add higher value to its shareholders and clients. Therefore, the Company ceased to operate in the Industrial Services sector, in which were offered access services, industrial painting, surface treatment and thermal insulation, during both construction and maintenance phase of large industrial plants. The sale of the Industrial Services business unit was concluded in November 30, 2013, with a net income of R$ 8.3 million. Of the agreed sales price of R$ 102 million, we received R$ 25 million on the date of the sale agreement, in July. We will receive the outstanding amount in installments

28

adjusted by the Interbank Deposit Certificate CDI rate, discounting the cash generation of this business for Mills between June 1st, 2013 and the closing date, which was equal to R$ 6.8 million.

c. Unusual transactions or events


There were no unusual transactions or events in fiscal years 2011, 2012 and 2013, except as described above. 10.4 The directors must comment on:

a. Significant changes in accounting practices


New and revised standards and interpretations issued and not yet adopted Several standards and amendments to standards and interpretations issued by IASB have not yet entered into force for the period ended December 31, 2013, these being: (i) IFRS 9 Financials Instruments2 Financial Instruments, establishes the principles of disclosure of assets and liabilities that will present relevant and useful for assessing values, timing and uncertainty of future cash flows of information. The Company's management expects that IFRS 9 to be adopted in the financial statements will not have a material effect on the balances reported in relation to financial assets and liabilities of the Company. However, the detailed review of potential impacts has not been completed. (ii) Amendments to IFRS 10, IFRS 12 and IAS 27 entities investment1 The amendments to IFRS 10 define an investment entity and require the reporting entity and which meets the definition of an investment entity not consolidated subsidiaries, but instead, measure its subsidiaries at fair value through profit or loss in their consolidated and separate financial statements. To be characterized as investment entity, a reporting entity must: (a) obtain funds from one or more investors in order to provide them with professional investment management services, (b) commit to their investors that their corporate purpose is to invest resources only for returns on capital appreciation and investment income, or both and (c) measure and evaluate the performance of substantially all of its investments based on fair value. Such changes do not cause effects on the financial statements. (iii) Amendments to IAS 321 Clarify the requirements related to the compensation of financial assets and liabilities. Specifically, these amendments clarify the meaning of "currently has the legal right to offset" and "simultaneous realization and settlement". Management does not believe that the adoption of the amendments to IAS 32 will have a material impact on the consolidated financial statements since the Company has no assets or financial liabilities that qualify for compensation.

29

Amendments to IFRSs mentioned above have not yet been issued by the CPC. However, due to the commitment of the CPC and CVM to keep the set of standards issued based on the updates and changes made by the IASB, it is expected that such changes and modifications are issued by the CPC and approved by CVM until the date of its mandatory.
(1) Effective for annual periods beginning on or after January 1, 2015. (2) Effective for annual periods beginning on or after January 1, 2014.

While it awaits the approval of the international standards by the CPC, the Company is analyzing the impacts of these new standards on its financial statements.

Transition Tax Regime


The Transition Tax Regime (RTT) shall remain in effective until the enactment of a law governing the tax impacts of the new accounting methods to ensure tax neutrality. On November 12, 2013 Provisional Act (MP) 627 was issued to repeal the Transitional Tax Regime (RTT) and the Corporate Income Tax Return (DIPJ) and create the Tax Accounting Recordkeeping Form (ECF) in exchange. The Accounting Recordkeeping Form (ECF) will consolidate the tax neutrality adjustments that were previously reported using the Transition Tax Accounting Control (FCONT). Under the MP, the adoption of the ECF is optional for taxable events recorded beginning January 2014 and becomes mandatory beginning 2015 for all corporate entities that elect taxation based on the actual taxable income. To date this statute had not yet been passed into law. The MP could be amended when it is passed into law. The Company is assessing the amendments to said MP together with its legal counsel, but it does not expect any material impacts on the profit for the year.

b. Significant changes in accounting practices


There was no change in significant accounting practices, methods of calculation, judgments, estimates and accounting assumptions in the financial statements of the company for the fiscal years ended December 31, 2011, 2012 and 2013.

c. Qualifications or points on the auditors opinion Restatement of values corresponding to the year ended December 31, 2012
Due to the adoption of the technical pronouncement CPC 31 - Non-current Assets Held For Sale and Discontinued Operations, the comparative values of the income statement, related to the year ended December 31, 2012, have been reclassified and are being restated as required by CPC 23 - Accounting Policies, changes in Accounting Estimates and Errors and CPC 26 (R1) - Presentation of Financial Statements. Our conclusion does not contain changes related to this subject. 10.5 The management shall indicate and comment on critical accounting policies adopted by the issuer, by exposing mainly the accounting estimates made by management on uncertain and relevant questions for description of the financial

30

situation and the results, which require subjective or complex judgments, such as: provisions, contingencies, recognition of revenue, fiscal credits, long-term assets, useful life of non-current assets, pension plans, conversion adjustments in foreign currency, recovery environmental costs, standards for testing the recovery of assets and financial instruments.

Estimates and judgments used in the preparation of Financial Statements


Preparation of the Companys financial statements requires Management to make judgments and estimates and adopt premises that affect the amounts of revenues, expenses, assets and liabilities, as well as disclosures of contingent liabilities as of the reporting date. Nevertheless, the uncertainty relating to such assumptions and estimates may lead to results that require significant adjustment to the carrying value of the asset or liability affected in future periods. The main assumptions relating to sources of uncertainties in the future estimates and other importance sources of uncertainty in estimates as of the reporting date, involving significant risk of causing a major change in the carrying value of assets and liabilities in the next financial year, are as set out below: Impairment of non-financial assets Transactions with payments based on shares Taxes Fair value of financial instruments Provisions for tax, civil and labor risks Useful life of fixed assets Revenue recognition Following, the Companys Management presents a discussion about what they consider relevant as accounting practices for the presentation of Companys financial information. (i) Financial Instruments

Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the respective instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

31

(ii)

Current and deferred income tax and social contribution

Income tax expense comprises current and deferred taxes. Taxes on income are recognized in the income statement, except when they relate to items that are recognized directly in equity or in other comprehensive income, in which case, the tax is also recognized in equity or in other comprehensive income. The current income tax and social contribution expense is calculated based on tax rates prevailing in Brazil at the end of the reporting period, which are 15% for income tax, plus a 10% surtax on taxable profit exceeding R$240, and 9% on taxable profit for social contribution. Management periodically reviews positions taken in respect of tax matters that are subject to interpretation and recognizes a provision when the payment of income tax and social contribution according to the tax bases is expected. Deferred income tax and social contribution are calculated on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. The tax rates currently defined are 25% for income tax and 9% for social contribution. Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be sufficient against which the deductible temporary differences can be utilized, based on projections of future results prepared on the basis of internal assumptions and future economic scenarios that are, therefore, subject to changes. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. For purposes of calculating income tax and social contribution, the Company adopted the Transition Tax Regime (RTT), as prescribed by Law 11,941/09, that is, in the determination of the taxable profit it considered the accounting criteria of Law 6,404/76, before the changes introduced by Law 11,638/07. Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in Other comprehensive income or directly in equity, in which case, current and deferred taxes are also recognized in Other comprehensive income or directly in equity, respectively Where current and deferred taxes arise from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination. (iii) PP&E: Company use and rental and operational use

A majority of the Company revenues come from property, plant and equipment for operational rental and use, either solely through rental, or rental combined with assembly and disassembly. Property, plant and equipment for own use consists mainly of facilities to store equipment, office, improvements, furniture and equipment necessary for the operation of these facilities.

32

Property, plant and equipment are carried at historical cost, less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditure directly attributable to the acquisition of the property, plant and equipment items. The items of PP&E are valued at historic cost, less accumulated depreciation. The historic cost includes expenditures as well as any exchange rate hedge gain or loss cash flow directly attributed to the acquisition of such fixed assets. Subsequent costs are added to the residual value of property, plant and equipment or recognized as a specific item, as appropriate, only if the future economic benefits associated to these items are probable and the amounts can be reliably measured. The residual value of the replaced item is derecognized. Other repair and maintenance costs are immediately recognized when incurred. Depreciation is calculated under the straight-line method, taking into consideration the estimated economic useful lives of assets. Land is not depreciated. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. Any gain or loss arising on the disposal of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is included in operating income or expense. The residual values and estimated useful lives of assets are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. (iv) Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any. Goodwill is allocated to cash-generating units (CGUs) for impairment testing purposes. Goodwill is allocated to each of the cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination and is identified according to the operating segment. (v) Impairment of assets

Property, plant and equipment and other non-current assets, including goodwill and intangible assets, are tested to identify evidences of impairment on an annual basis or whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. When applicable, the recoverable amount is calculated to determine if there is an impairment loss. When an impairment loss is identified, it is recognized in the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the net selling price and the value in use of an asset. For impairment testing purposes, assets are grouped at the lowest levels for which

33

there are separately identifiable cash flows (cash-generating units - CGUs). Non-financial assets other than goodwill that suffered impairment are reviewed for the analysis of a possible reversal of the impairment at the reporting date. (vi) Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The provisions for tax, civil and labor claims are recognized at the amount of probable losses, according to the nature of each provision. Based on the opinion of its legal counsel, management believes that the recognized provisions are sufficient to cover any losses on ongoing lawsuits. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognized as expense. A provision for onerous contracts is recognized where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. The provision is measured at present value at the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. (vii) Stock option plans

The Company offers stock option plans to certain employees and executives. The fair value of the options granted is recognized as an expense during the period over which the right is vested, that is, period during which specific vesting conditions should be met. At the end of the reporting period, the Company reviews its estimates of the number of options whose rights must be vested based on the conditions. It recognizes the impact of the review of the initial estimates, if any, in the income statement, as a balancing item to the capital reserve in equity. The amounts received, net of any directly attributable transaction costs, are credited to capital when options are exercised. (viii) Revenue recognition

Revenue from a contract to provide services is recognized by reference to the stage of completion of the contract at the end of the reporting period. Revenue from the sale of goods is recognized when the Company has transferred to the buyer the significant risks and rewards of ownership of the goods. Therefore, the Company adopts as revenue recognition policy the date in which goods are delivered to the buyer. Rental income is recognized on a straight-line basis over the term of the equipment lease agreements.

34

The Company separates the identifiable components of a single contract or a group of contracts to reflect the essence of the contract or group of contracts, recognizing the revenue of each of the elements proportionally to its fair value. Thus, the Company's revenue is split into lease, technical assistance, sales and indemnities/recoveries of expenses. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate through maturity, when it is determined whether such income will accrue to the Company. Dividend income from investments is recognized when the shareholders right to receive such dividends has been established (provided that it is probable that future economic benefits will flow to the Company and the amount of income can be measured reliably). Income, expenses and assets are recognized net of taxes on sales. 10.6 Regarding the internal controls adopted to ensure the preparation of reliable financial statements, the management shall comment on:

a. Efficiency of such controls, indicating any flaws and the steps taken to correct them
The management of the Company believes that its internal controls are adequate to ensure the elaboration of reliable financial statements.

b. Weaknesses and recommendations on internal controls present in the report of the independent auditor
No deficiencies or recommendations were submitted by the independent auditors in their report about the effectiveness of internal controls adopted by the Company. 10.7 Management comments on the use of resources from public offerings for distribution of securities In April, 2010, the Initial Public Offering of shares of the Company provided net proceeds of R$ 411 million, which enabled the Company to expand its investments in all business units to meet the growing demand in markets where it operates and to settle higher cost debts. In the fiscal years ended December 31st, 2010 and 2011, the Company invested R$ 348.5 million and R$ 430.4 million, respectively, mainly in equipment acquisition. The Company also invested the amount of R$ 95.5 million in acquisitions in 2011. On January 19th, 2011, the Company entered into a purchase and sale agreement to acquire 25% of the voting and total capital of Rohr, a private company specializing in access engineering and the provision of construction solutions, for R$ 90 million. On May 27th, 2011, the Company entered into a purchase and sale agreement to acquire 100% of the voting and total capital of GP Sul, one of the largest players in the suspended scaffold rental market to residential and commercial construction in the state of Rio Grande do Sul, for R$ 5.5 million.

35

To obtain sufficient resources for such investments, the Company used the resources from its Initial Public Offering, cash generation and debt issuance. On March 29th, 2011, the Company conducted its first issue of 30 promissory notes, each with par value of R$1.0 million, totaling R$30.0 million. The net proceeds were used to finance investments, as planned. On April 18th, 2011, the Company conducted its first issue of 27,000 debentures, each with par value of R$ 10,000.00, totaling of R$ 270.0 million. In terms of their deed of issuance, it was established the following destination for net resources of this offering (i) the redemption of commercial papers of 90 days issued in March 2011, totaling R$ 30 million, (ii) the investments defined in the expansion plan of Mills, including estimated investments of R$ 337 million in 2011, (iii) rearrangement of cash balance following disbursement of R$ 90 million in February 2011 in connection with the acquisition of 25% of the Rohr total capital stock, and (iv) general corporate purposes and expenses of the Company. Management used the funds raised in accordance with the planned allocation. On December 7th, 2011 the Company issued a single series of 3 (three) commercial promissory notes with unit face value of R$ 9.0 million, for a total amount of R$ 27.0 million. The net proceeds of the issue were fully used to: (i) rearrangement of cash balance following investments made in 2011, and finance (ii) general corporate purposes of the Company. In April 23rd, 2012, the Company issued a single series of 30 promissory notes with par value of R$ 1.0 million, totaling R$ 30.0 million. The net proceeds of the issue were fully used to: (i) reinforcement of working capital of the company; and (ii) debt refinancing of the company. In September 18th, 2012, the Company held its second issue of simple, non-convertible, unsecured debentures subject to public offering with restricted placement efforts. A total of 27,000 debentures were issued, each with par value of R$ 10,000.00. The net proceeds of the offering will be fully utilized for: (a) the financing of investments to be made by the Company, (b) the payment of Companys debts, and (c) general uses and expenses of the Company. The realized investments in renting goods amounted to R$463.6 million in 2013. The resources used for strategic acquisitions until December 31st, 2013, totaled R$ 95.5 million, R$ 61.7 million, or 39%, less than the amount estimated at the date of the prospectus for Initial Public Offering shares issued by the Company. 10.8 Managements comments on significant items not included in the balance sheet and their effects on the consolidated financial statements In the evaluation of the management, there are no significant items not included in the balance sheet of the Company.

36

10.9 Managements comments about the obligations not accounted in financial statements. In the evaluation of the management, there are no significant obligations not included on the financial statements of the Company. 10.10 Management shall indicate and comment on key elements of the Company's business, specifically exploring the following topics:

a. Investments, including: (i) quantitative and qualitative description of investments in progress and forecasted investments; (ii) financing sources of investments and (iii) relevant alienations in progress and forecasted alienations
The Company plans its investment policy in accordance with its cash flow and credit availability in the market. The Companys internal policy is to maintain its leverage around 1.0x net debt to EBITDA. To ensure the necessary amount of capital for the implementation of its investment plan, the Company constituted a statutory reserve, of which the shareholders may allocate up to 75% of net income, provided that such reservation does not exceed the limit of 80% of the capital. The cash generation of the Companys normal operations, from the retention of profits was used to partially finance the investments made in 2011, 2012 and 2013, without any value being allocated to the above mentioned reserve during that period. The management presents below the major investments made in the course of the years ended December 31, 2011, 2012 and 2013, and highlight the investment budget for fiscal year 2014.

Investments in 2011, 2012 and 2013


The Company experienced a period of rapid expansion in 2011, 2012 and 2013, mainly due to the investments and geographic expansion of Real Estate and Rental business units. Companys principal investments in this period are described below:

Heavy Construction
In the fiscal years ended by December, 31st, 2011, 2012 and 2013, the Heavy Construction business unit invested, mainly, in shoring structures and industrialized steel and aluminum formwork, amounting to R$ 47.3 million in 2011, R$ 50.5 million in 2012 and R$ 106.3 million in 2013.

Real Estate
Over the past three fiscal years ended by December, 31st, 2011, 2012 and 2013, the Jahu business unit invested mainly in acquisition of shoring equipment, suspended scaffolding and industrialized formworks, having disbursed R$ 185.0 million in 2011, R$ 59.8 million in 2012 and R$ 90.1 million in 2013. In 2011, there was the acquisition of GP Sul by R$ 5.5 million, amounting to R$ 190.5 million.

37

Rental
In 2011, 2012 and 2013, the Company continued to implement its strategy of expanding its portfolio of aerial work platforms and telescopic handlers, investing R$ 162.8 million, R$ 160.9 million and R$ 267.2 million in the acquisition of such equipment, respectively.

Acquisition of Rohr
On January 19, 2011, the Company entered into a purchase and sale agreement to acquire 25% of the voting and total capital of Rohr, a private company specializing in access engineering and the provision of construction solutions, for R$ 90 million. This strategic acquisition enabled the Company to broaden its exposure to the sectors it serves infrastructure, residential and commercial construction, oil & gas industry, among others.

Acquisition of GP Sul
On May 27, 2011, the Company entered into a purchase and sales agreement to acquire 100% of the voting and total capital stock of GP Sul, which the Companys Management believed to be one of the largest players in the suspended scaffold rental market to residential and commercial construction in the state of Rio Grande do Sul, by the time of the acquisition, for R$ 5.5 million. This strategic acquisition, as evaluated by the Management, enabled the Company to become the leader in the suspended scaffold rental market in the state of Rio Grande do Sul and to broaden its exposure to the residential and commercial construction market in the South region, in line with the geographic expansion plan of the Real Estate business unit. The Company intends to finance its investments through (i) cash generated from its own activities, and (ii) indebtedness.

Investments planned for 2014


In 2014, the Company aims to invest R$ 231 million in equipment acquisition for all business units. The investment budget for 2013 aims to continue capturing the attractive opportunities in its markets. The table below indicates the main applications of budgeted capital expenditures for 2013:
Business unit Heavy Construction Project Acquisition of equipment, primarily shoring structures and industrialized formwork. Acquisition of equipment, primarily expanding of its portfolio of shoring structures, industrialized steel and aluminum formwork and suspended access equipment. Acquisition of motorized access equipment. Investments (in R$ millions) 37

Real Estate

25

Rental

169

38

b. Since it has already disclosed, indicate the purchase of plants, equipment, patents or other assets that should materially affect the productive capacity of the Company
The Company has in its estimated budget the continued expansion of its operations, through the purchase of equipment, part of which orders have already been made, besides continuing its geographical expansion process, through the opening of new branches.

c. New products and services, by indicating: (i) description of researches in progress already disclosed; (ii) total amounts paid by the issuer in researches for development of new products or services; (iii) projects under development already disclosed and (iv) total amounts paid by the issuer for the development of new products or services
The Companys management believes that providing innovative solutions is a constant mark of its activities and a key aspect to retain its customers. In this sense, although the Company does not carry out in-house research and development activities, it annually visits the main national and international fairs of equipment from the industrial and construction sectors to meet the main technological innovations available to the industry in which the company operates. Furthermore, the Companys representatives visit the factories of leading national and international manufacturers of equipment and construction sites around the world to assess the functioning and operation of advanced equipment available for purchase. The Company does not develop new products and services, so it does not incur expenses related to the research and development department. All the technology and innovation present in its equipment and offered to its clients come from its suppliers. For this, the Company seeks to acquire or license new technologies from third parties on acceptable terms in the domestic and international market, preferably with usual suppliers with whom the Company seeks to establish long term partnerships. As an example of such partnerships, the Company entered into a licensing contract in 1996 with the German company NOE Schaltechnik, to produce and supply modular steel and aluminum panel formwork (replacing the wood) for the Brazilian construction market, an innovation in the Brazilian market. 10.11 Management is expected to discuss and analyze other material factors that influenced operating performance, which were not discussed under previous items in this section. There are no other factors to comment on.

39

Documentation required by article 10 of CVM Instruction 481 (Instruo CVM 481), issued by CVM on December 17, 2009 Information contained in items 12.6, 12.8, 12.9 and 12.10 of the Reference Form, concerning the nominee or supported by management or controlling shareholders

ITEMS 12.6, 12.8, 12.9 AND 12.10 OF THE REFERENCE FORM 12.6 Administration and members of the Fiscal Council Board of Directors The Companys Board of Directors is currently comprised of six members, elected at the Ordinary Shareholders Meeting held on April 20, 2012. The members were elected for a two-year term expiring in the next Ordinary General Meeting. The table below indicates the name, age and title of the candidates appointed for the board of directors by the controlling shareholders.
Date of last election 4.20.2012 4.20.2012 Not applicable 4.20.2012 4.20.2012 4.20.2012 4.20.2012 Date of office 4.20.2012 4.20.2012 Not applicable 4.20.2012 4.20.2012 4.20.2012 4.20.2012 Termo of office 2 years 2 years Not applicable 2 years 2 years 2 years 2 years Other titles No Yes No No No No No Ellected by the controlling shareholder Yes Yes Not applicable Yes Yes Yes Yes

Name Andres Cristian Nacht Elio Demier Francisca Kjellerup Nacht* Diego Jorge Bush Nicolas Arthur Jacques Wollak Pedro Sampaio Malan Jorge Marques de Toledo Camargo

Age 71 63 43 70 52 71 59

Profession Business Administration Bachelor of Social Communication Business Administration Business Administration Executive Economist Geologist and Physicist

CPF 098.921.337/49 260.066.507-20 124.175.657-06 060.903.038-87 057.378.217-22 028.897.227-91 114.400.151-04

Position Chairman Vice Chairman Director Director Director Independent Director Independent Director

*Ms. Francisca Kjellerup Nacht does not hold, at the present moment, any other title within the Companys management.

Fiscal Council At the the Ordinary and Extraordinary General Meeting held on April 19, 2011, the Company's shareholders requested the installation of the Fiscal Council and elected three members and three alternates. At the Ordinary General Meeting held on April 20, 2012, the Fiscal Council became a permanent body. The table below presents name, age and title of the Fiscal Council members, elected on the Ordinary General Meeting held on April 26, 2013. For the purposes of article 10 of CVM Instruction 481/2009, the controlling shareholders of the company support the reelection, in the fiscal year of 2014, of the members of the Fiscal Council elected in the fiscal year 2013 (as indicated below), with the Company's minority shareholders to decide on the election of the other members.

40

Name Rubens Branco da Silva Daniel Oliveira Branco Silva Eduardo Botelho Kiralyhegy Maria Cristina Pantoja da Costa Faria

Age 63 33 35 37

Profession Lawyer Lawyer Lawyer Lawyer

CPF 120.049.107-63 080.968.467-52 082.613.217-03 886.793.577-15

Position President Alternate Member Alternate

Date of last election 4.26.2013 4.26.2013 4.26.2013 4.26.2013

Date of office 4.26.2013 4.26.2013 4.26.2013 4.26.2013

Termo of office 1 year 1 year 1 year 1 year

Other titles No No No No

Ellected by the controlling shareholder Yes Yes Yes Yes

12.8 Summary of the business experience, activities and areas of expertise of members of administration and Fiscal Council 12.8.1 Board of Directors

Andres Cristian Nacht has been the Chairman of the Companys board of directors since 1998. The
son of Mr. Jose Nacht, one of the founders of the Company, Mr. Nacht has a degree in Engineering from Cambridge University, England. In 1965, Mr. Nacht joined GKN, a British engineering company, where he worked for three years, holding engineering posts in the UK. In 1967, has worked for one year as Engeneer in Echafaudages Tubulaires Mills from France. Mr. Nacht became a director of the company in 1969 and was appointed managing director in 1978, a position he held until 1998 when he became the Chairman of the Board of Directors.

Francisca Kjellerup Nacht holds a degree in Business Administration and Economy from the
Copenhagen Business School, Denmark, since 1995. The granddaughter of Mr. Jose Nacht, one of the founders of the Company, and daughter of Andres Cristian Nacht, Chairman of the Board of Directors of the Company, has built her career in Europe, where she lives since 1990. Francisca worked for Procter & Gamble Nordic between 1997 and 2010, mainly in the fields of leadership and business development. Among other positions, Francisca was responsible for the commercial integration after Gillettes acquisition, as well as for the business with the largest retailer of Denmark. In her last position at P&G, she was responsible for initiating and leading the pharmaceutical division in the Nordic region. In the last five years, besides her position at P&G, Francisca has been working in the field of social entrepreneurship in Denmark, and family governance in Brazil.

Elio Demier is a graduate of Social Communication from the Fluminense Federal University. He also
holds an MBA from the Institute of Post-Graduation and Research in Administration of the Rio de Janeiro Federal University. He served as the Companys chairman from 1998 to 1999 and has been a member of the Companys board of directors since 1998. Mr. Demier was President of the Bomtexto Publisher, company in the book publishing business located in Rio de Janeiro.

Diego Jorge Bush is a graduate in Business Administration from Yale University in 1967 and also holds
an MBA from Harvard Business School in 1971. Having worked as Chairman of the Boston Finance, Boston Distributor and Boston Leasing, companies connected to the Bank Boston, an office he held until 1973. After leaving Boston bank, Mr. Bush founded a specialist finance brokerage company, Edim Comercial e Imobiliria Ltda., which he manages to-date. Between 1988 and 1996 he has been Chairman of So Paulo Alpargatas S.A. Mr. Bush has been a member of the Companys Board of Directors since 1998.

41

Nicolas Arthur Jacques Wollak has been a member of the Companys Board of Directors since 2007.
Graduated from Harvard University, Mr. Wollack is a founder of the Axxon Group in Brazil, where is Managing Partner since 2001. Mr. Wollak has nearly 20 years of private equity investment experience having already been a partner of BISA fund (Argentina) prior to founding the Axxon Group. Current chairman of the board of directors from Guerra S.A (manufacturer of road implements), member of Luxxon S.A., which controls Aspro Ltda (manufacturer of compressed natural gas), director of MV Investimentos S.A. (investment vehicle which controller of the franchise network of Mundo Verde), and also a member of the Deliberative Board of the Brazilian Private Equity Association (ABVCAP). In the past five years, Mr. Wollack has been (i) managing partner of the Axxon Group in Brazil, as one of the responsible for its investments in their Investment Funds, (ii) Chairman of the Board of Director from Guerra S.A (as described above) since July 2008 until the present date, (iii) director in MV Investimentos S.A. (as described above) since August 2009 until the present date, (iv) member of the Deliberative Board from ABVCAP since March 2010 until the present date, (v) member of the Board of Directors from Luxxon S.A (as described above) since December 2007 until the present date, and (vi) member of the Board of Directors from Lupatech S.A. (equipment and services supplier mainly for the oil and gas industry) since March 2005 until October 2007.

Pedro Sampaio Malan obtained a degree in electrical engineering in 1965 from Polytechnic School at
Pontifical Catholic University of Rio de Janeiro (PUC-RJ). He holds a PhD in economics from the University of Berkeley. Mr. Malan is a professor at the Department of Economics at PUC-RJ, has published essays and articles in economic journals and books, both in Brazil and abroad and is a member of the Board of Trustees of the IFRS Foundation. He served as Brazils Minister of Finance for eigth years, from 1995 to 2002. President of the Central Bank of Brazil from 1993 to 1994. Special Counsel and Chief External Debt Negotiator of the Ministry of Finance from 1991 to 1993. Executive Director of the World Bank from 1986 to 1990, and again from 1992 to 1993. Executive Director of the Inter-American Development Bank from 1990 to 1992. Director of the Center of Transnational Corporations of UN in New York from 1983 to 1984. Director of the UN Department of International Economic and Social Affairs in New York from 1985 to 1986. Mr. Malan has been an independent member of the board of director since March 2010. In the last five years, Mr. Malan has been a member of the advisory board of ALCOA Latin America (since 2004); member of the board of directors of Globex Ponto Frio (since 2004); Chairman of the board of directors of Unibanco (from 2004 until 2008); member of the board of directors of EDP Energias do Brasil (since 2006); member of the board of directors of OGX (since 2008); chairman of the advisory board of Unibanco-Itau (since august 2009); member of the board of directors of Souza Cruz S.A. (since March 2010), director of Thomson Reuters Founders Share Company (since 2011); member of the advisory board of BUNGE Brazil (since 2012); and member of Temasek International Panel (since 2012).

Jorge Marques de Toledo Camargo has been for 37 years in the oil industry. He is graduated in
geology from the University of Brasilia and obtained a masters degree in geophysics from the University of Texas. Currently, he is serving as a senior consultant at Stateoil in Brazil, at Karoon Oil and Gas and at McKinsey&Company in Brazil. Mr. Camargo is also a member of of the board of directors of the Brazilian Oil Institute (IBP) and a member of the advisory board and associate in Brazil of Energy Ventures. Previously, he has worked for 27 years in Petrobras in Brazil and abroad, holding various technical and management positions, such as Superintendent of Cear-Potiguar

42

Exploration Districts, General Manager of Petrobras in the UK, Director of Exploration and Production and then President of Braspetro, and, from 2000 to 2003, a member of the Executive Board as Director of the International Sector. In 2003, he worked for Statoil, initially as Vice-President at the headquarter in Stavanger, Norway, and, from 2005 to 2009, as president of Statoil in Brazil. Mr. Camargo was appointed to become a member of the Prumo Logsticas Board of Directors in March 14, 2014 and his election is pending the annual general meeting of the company. Over the past five years, none of the members of our Board of Directors has suffered any (a) criminal conviction; (b) conviction in an administrative proceeding of CVM; or (c) any conviction that has become final in the judicial or administrative area, that has suspended or disqualified our members of the practice of professional or commercial activity whatsoever. 12.8.3 Fiscal Council

Rubens Branco da Silva obtained a degree in Law from the Federal University of Rio de Janeiro
(UFRJ) and in Accounting by the Accounting and Administrative School Moares Junior. He worked professionally at Arthur Andersen for 29 years, being 20 years as an associate responsible for the Tax and Legal area. Currently a member of the Advisory Board of the SR-Rating, the American Chamber of Commerce for Brazil-Rio de Janeiro, and the Board of Mediation and Arbitration of Rio de Janeiro. He is also a member of the Brazilian Institute of Financial Executives (IBEF), Brazilian Association of Financial Law (ABDF) and the International Fiscal Association (IFA), the Chamber of Commerce and Industry Brazil-Germany (AHK), Business Council of Commerce Association of RJ (ACRJ) and a vowel from the Board of Commerce of the State of Rio de Janeiro. He is currently a partner at the Branco Consultores Tributrios Ltda.

Eduardo Botelho Kiralyhegy graduated in Law from the Candido Mendes University, a member of the
Brazilian Lawyers Association, and founding partner of the Negreiro Office, Medeiros & Kiralyhegy Lawyers, in Rio de Janeiro, specializing in Tax Law, Administrative and Regulatory. Currently a member of the Special Committee of Tax Issues of the Brazilian Lawyers Association, the Special Committee of the Federal Justice of the Brazilian Lawyers Association, the Brazilian Academy of Tax Law, and the Brazilian Association of Financial Law and the International Fiscal Association.

Daniel Oliveira Branco Silva graduated in Law from the Pontifical Catholic University of Rio de Janeiro
(Pontifcia Universidade Catlica do Rio de Janeiro - PUC) in 2004 and has a post graduate degree in Corporate Law, specialization in tax Law at the fundao Getlio Vargas (FGV). Mr. Daniel is a legal manager at Branco Consultores Tributrios and a member of Branco Advogados since 2003.

Maria Cristina Pantoja da Costa Faria graduated in law from the Pontifical Catholic University of Rio de
Janeiro (Pontifcia Universidade Catlica do Rio de Janeiro - PUC), specializing in corporate finance for lawyers by the Foundation Institute of Management from the University of So Paulo (Fundao Instituto de Administrao da Universidade de So Paulo), and earned her masters degree in executive management of insurances at IBMEC. Member of the Brazilian Lawyers Association. At the date of this Reference Form, is a member of the Negreiro Office and Medeiros & Kiralyhegy Lawyers.

43

12.9 Relationship (as a spouse or significant other) or relationship to the second degree between:

a.

Members of the Board of Directors, Executive Board and Fiscal Council

Administrator of the Company or Controlled Company: Name: Andres Cristian Nacht / CPF: 098.921.337-49 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Chairman of the Board of Directors Related Person: Name: Francisca Kjellerup Nacht / CPF: 124.175.657-06 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Member of the Board of Directors Type of relationship: Father/Daughter

b. (i) members of the Board of Directors, Executive Board and Fiscal Council and (ii) members of management of entities controlled by the Company, either directly or indirectly
There is no marital relationship, stable union or any kind of relationship up to the second degree between the Administrators of the Company and any of the persons indicated in item (b) above.

c. (i) members of management of entities controlled by the company, either directly or indirectly; and (ii) Companys direct or indirect controlling shareholders
Administrator of the Company or Controlled Company: Name: Andres Cristian Nacht / CPF: 098.921.337-49 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Chairman of the Board of Directors Related Person: Name: Jytte Kjellerup Nacht/ CPF: 289.858.347-20 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15

44

Title: Direct Controlling Shareholder Type of relationship: Husband/Wife -------------------------------------Administrator of the Company or Controlled Company: Name: Andres Cristian Nacht / CPF: 098.921.337-49 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Chairman of the Board of Directors Related Person: Name: Tomas Richard Nacht / CPF: 042.695.577-37 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Direct Controlling Shareholder Type of relationship: Father/Son -------------------------------------Administrator of the Company or Controlled Company: Name: Andres Cristian Nacht / CPF: 098.921.337-49 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Chairman of the Board of Directors Related Person: Name: Antonia Kjellerup Nacht / CPF: 073.165.257-62 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Direct Controlling Shareholder Type of relationship: Father/Daughter -------------------------------------Administrator of the Company or Controlled Company:

45

Name: Andres Cristian Nacht / CPF: 098.921.337-49 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Chairman of the Board of Directors Related Person: Name: Pedro Kjellerup Nacht / CPF: 127.276.837-66 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Direct Controlling Shareholder Type of relationship: Father/Son -------------------------------------Administrator of the Company or Controlled Company: Name: Andres Cristian Nacht / CPF: 098.921.337-49 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Chairman of the Board of Directors Related Person: Name: Nicolas Nacht/ CPF: 734.150.811-68 Corporate name of the issuer company, controlled or controlling: Snow Petrel SL / CNPJ: 14.740.333/0001-61 Title: Controlling Company and shareholder Type of relationship: Brother -------------------------------------Administrator of the Company or Controlled Company: Name: Francisca Kjellerup Nacht / CPF: 124.175.657-06 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Member of the Board of Directors

46

Related Person: Name: Jytte Kjellerup Nacht/ CPF: 289.858.347-20 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Direct Controlling Shareholder Type of relationship: Daughter/Mother -------------------------------------Administrator of the Company or Controlled Company: Name: Francisca Kjellerup Nacht / CPF: 124.175.657-06 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Member of the Board of Directors Related Person: Name: Tomas Richard Nacht / CPF: 042.695.577-37 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Direct Controlling Shareholder Type of relationship: Sister/Brother -------------------------------------Administrator of the Company or Controlled Company: Name: Francisca Kjellerup Nacht / CPF: 124.175.657-06 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Member of the Board of Directors Related Person: Name: Antonia Kjellerup Nacht / CPF: 073.165.257-62 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15

47

Title: Direct Controlling Shareholder Type of relationship: Sisters -------------------------------------Administrator of the Company or Controlled Company: Name: Francisca Kjellerup Nacht / CPF: 124.175.657-06 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Member of the Board of Directors Related Person: Name: Pedro Kjellerup Nacht / CPF: 127.276.837-66 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Direct Controlling Shareholder Type of relationship: Sister/Brother -------------------------------------Administrator of the Company or Controlled Company: Name: Francisca Kjellerup Nacht / CPF: 124.175.657-06 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Member of the Board of Directors Related Person: Name: Nicolas Nacht/ CPF: 734.150.811-68 Corporate name of the issuer company, controlled or controlling: Snow Petrel SL / CNPJ: 14.740.333/0001-61 Title: Controlling Company and shareholder Type of relationship: Niece/Uncle

48

d. (i) members of the Board of Directors, Executive Board and Fiscal Council and (ii) Millss direct or indirect controlling shareholders
Administrator of the Company: Name: Andres Cristian Nacht / CPF: 098.921.337-49 Corporate name of the issuer or controlled company: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Chairman of the Board of Directors Related Person: Name: Nicolas Nacht/ CPF: 734.150.811-68 Corporate name of the issuer company, controlled or controlling: Snow Petrel SL / CNPJ: 14.740.333/0001-61 Title: Controlling company and shareholder Type of relationship: Brother Additionally, Mr. Andres Cristian Nacht is the Chairman of the Board of Directors of the Company since 1998 and is a shareholder of the Company. Administrator of the Company: Name: Francisca Kjellerup Nacht / CPF: 124.175.657-06 Corporate name of the issuer company, controlled or controlling: Mills Estruturas e Servios de Engenharia S.A. / CNPJ: 27.093.558/0001-15 Title: Member of the Board of Directors Related Person: Name: Nicolas Nacht/ CPF: 734.150.811-68 Corporate name of the issuer company, controlled or controlling: Snow Petrel SL / CNPJ: 14.740.333/0001-61 Title: Controlling company and shareholder Type of relationship: Niece/Uncle

49

12.10 Subordination, rendering of services or control relationships for the previous three fiscal years between administrators and:

a. Controlled entities, either directly or indirectly by the company


Not applicable. The company does not control, directly or indirectly, any entity.

b. Direct or indirect controlling shareholders of the company


Mr. Rubens Branco, by the entity Tax Consultants Ltda., provided in the last three fiscal years legal, accounting and tax services to Mr. Andres Cristian Nacht, controlling shareholder of the Company, by means of the Nacht Participaes S.A., also controlled by Mr. Nacht. Mr. Daniel Oliveira Branco Silva, by the entity Tax Consultants Ltda., provided in the last three fiscal years legal, accounting and tax services to Mr. Andres Cristian Nacht, controlling shareholder of the Company, by means of the Nacht Participaes S.A., also controlled by Mr. Nacht. Mr. Eduardo Kiralyhegy, by the entity Negreiro, Medeiros & Kiralyhegy Advogados, provided in the last three fiscal years legal services to Mr. Andres Cristian Nacht, controlling shareholder of the Company, by means of the Nacht Participaes S.A., also controlled by Mr. Nacht. Ms. Maria Cristina Faria, by the entity Negreiro, Medeiros & Kiralyhegy Advogados, provided in the last three fiscal years legal services to Mr. Andres Cristian Nacht, controlling shareholder of the Company, by means of the Nacht Participaes S.A., also controlled by Mr. Nacht.

c. In case its relevant, supplier, client, debtor or creditor of the Company or its controlled or controlling shareholders
Not applicable, as there is no information about relationships of subordination, provision of service or control over the past three fiscal years, between the Administrators of the Company and any of the persons indicated in items (a) to (c) above.

50

Documentation required by article 12 of CVM Instruction 481 (Instruo CVM 481), issued by CVM on December 17, 2009 Information contained in items 13 of the Reference Form

PROPOSAL FOR DIRECTORS REMUNERATION The proposal of global remuneration of the members of the Board of Directors and Executive Officers for the fiscal year 2013, totaling R$ 12,835,697.25 (twelve million, eight hundred and thirty five thousand, six hundred ninety seven reais and twenty five centavos), was approved in the Minutes of the Board of Directors Meeting, held on March 10, 2014. The approved amount does not consider the effects, on the Companys income statement, the recorded fair value of the options granted to its managers, which does not imply disbursement by the company.

ADDITIONAL INFORMATION INDICATED IN ITEM 13 OF THE REFERENCE FORM 13.1 Description of the compensation policy or practices for the Executive Board, the Statutory and Non-Statutory Boards, the Fiscal Committee, the Statutory Committees and the Audit, Risk, Finance and Compensation Committees, covering the following topics:

a.

Objectives of the compensation policy or practices

Board of Directors For the Board of Directors of the Company, the total remuneration is fixed in a discretionary amount determined by the general meeting, with no relationship with the remuneration policy applicable to officers and other employees of the Company and, therefore there is no goal of the policy or specific remuneration practice of this body defined by the human resources department of the Company. As part of total discretionary remuneration approved by the general meeting, there is a fixed component and a variable component, according to the results of the Company. The Company believes that the variable remuneration of the members of the Board of Directors is a way to encourage them to successfully lead the Company's business by aligning the interests of members of the Board of Directors with those of shareholders. Statutory Directors and Non-Statutory Directors For statutory directors and non-statutory directors of the Company, the remuneration policy aims to attract and guarantee that the qualified professionals required remain in the Company and have a proper remuneration. The fixed amount of the remuneration of the Directors includes the salary and

51

direct and indirect benefits tailored for statutory directors and non-statutory directors. In addition to the fixed compensation, there is a variable component, which includes profit-sharing in the Companys results and the granting of stock options or subscribing to shares issued. The Company believes that the profit-sharing and stock option programs benefiting statutory directors and nonstatutory directors is a way to motivate them to carry out the Companys business in its best interest, thus stimulating an entrepreneurial and results orientated culture in line with the interests of both shareholders and management. Fiscal Council Members of the Fiscal Council are entitled to remuneration equivalent to 10% of the average remuneration of the statutory directors, corresponding to the minimum set by law. In this way, their remuneration is not correlated to the remuneration policy applicable to officers and other employees of the Company and therefore there is no objective of the policy or practice of remuneration for that body. Advisory Committee The members of the Human Resources Committee and Strategic Committee will be entitled to remuneration equivalent to 50% of the monthly remuneration of the members the Board of Directors. The Committee members who are officers, managers or employees of the Company shall not be entitled to remuneration. The remuneration of members of the Committee may be amended at any time by the Board. The purpose of this remuneration policy is to adequately compensate Committee members for time spent in office, except by those who are already paid by the Company as its directors or employees.

b. Composition of compensation packages: (i) description of the different elements of the compensation packages and the objectives of each of them; (ii) proportion of each element to make up the total compensation package; (iii) the method for calculating and adjusting each of the elements in the compensation packages; and (iv) reasons for the composition of remuneration
(i) Description of the different elements of the compensation packages:

Salary and pro-labore


The fixed remuneration of the statutory directors and non-statutory directors is designed to recognize and reflect the value of the job position internally and externally, considering the competitors of the Company and companies of similar size in terms of their gross revenues. The comparison with the market remuneration is carried out by a hired market research consulting firm or through database purchased from a consultant. The Company conducted market research with companies Saliby RH in 2010 and Towers Watson in 2011, 2012 and 2013. Additionally, the Company uses the database of market remuneration from the consulting company Towers Watson. For the Board of Directors of the Company (and consequently the Advisory Committee), the remuneration, fixed and/or variable (the last as bonus), is discretionary determined by the general

52

meeting with no relationship with the remuneration policy applicable to officers and other employees of the Company and therefore there is no objetive of a policy or remuneration practice of this body. Members of the Fiscal Council are entitled to remuneration equivalent to 10% of the average remuneration of the statutory board, corresponding to the minimum set by law. In this way, their remuneration is not correlated to the remuneration policy applicable to officers and other employees of the Company and therefore there is no aim of policy or practice of remuneration for that body.

Direct and indirect benefits


Granted exclusively to statutory directors and non-statutory directors, the direct and indirect benefits include medical assistance, life insurance, vehicle leasing and food vouchers, aiming to ensure competitiveness in the market. The comparison with the benefits of the market is carried out by a market research conducted by a hired consulting firm or through database purchased from a consultant. The Company conducted market research with companies Saliby RH in 2010 and Towers Watson in 2011, 2012 and 2013. Additionally, the Company uses the database with market remuneration from the consulting company Towers Watson. The member of the Board of Directors, Fiscal Council and Advisory Committee are not entitled to any direct and indirect benefits.

Profit-sharing and bonus


Granted to statutory directors and non-statutory directors, the profit-sharing program aims to motivate management to carry out the Companys business in its best interest, thus stimulating an entrepreneurial and results orientated culture in line with the interests of both shareholders and management. Eventual bonuses paid to members of the Board of Directors, discretionary determined by the general meeting with no relation with the remuneration policy applicable to officers and other employees of the Company, have the same goal. The members of the Fiscal Council and Advisory Committee are not entitled to the profit-sharing program.

Stock options or subscription to shares


Granted exclusively to statutory directors and non-statutory directors, the stock option or subscription to shares aim to motivate management to carry out the Companys business in its best interest, thus stimulating an entrepreneurial and results orientated culture in line with the interests of both shareholders and management. Members of the Board of Directors, Fiscal Council and Advisory Committees are not entitled to stock option or subscription to shares. (ii) Proportion of each element to make up the total remuneration package: According to the table below the ratio for the year 2013 were:

53

% Compared to the total compensation amount paid to

Salary and Pro-labore Board of Directors Executive Officers Human Resources Committee Fiscal Council Including taxes. 73.4% 58.7% 100.0% 73.4%

Direct and indirect benefits

Bonus 26.6%

Profit sharing

Grant of options

Total 100.0% 100.0% 100.0% 100.0%

3.2% 26.6%

11.9%

26.3%

(iii) Method for calculating and adjusting each of the elements in the compensation packages: The fixed portion of compensation paid to statutory directors and non-statutory directors is determined based on market standards, and readjusted annually at regular levels to account for the loss in currency value or for merit by performance. In terms of the profit-sharing program granted to statutory directors and non-statutory directors, and to bonus, payed to the members of Board of Directors, this plan is based on the aggregate economic value, which consists of the adjusted net profit deducted from shareholder remuneration. If positive, 25% for 2011 and a percentage between 20% and 30%, which will be annually decided by the Board of Directors starting from 2012, of the Economic Value Added (EVA) will be distributed to management and employees, and whose portion will be defined in an increasing manner in accordance with their hierarchical level in the Company and results obtained by their respective business segments. i.e. in a proportion of 50% until 2011 and 75% starting from 2012, based on the segments results that the manager or employee in question is linked to, and 50% until 2011 and 75% starting from 2012 based on the result of our Company as a whole. For the employees of corporate areas, the program considers the total result of the company. In 2012 the Company distributed R$ 7.9 million related to the results of 2011, in 2013 distributed R$ 20.1 million for the results of 2012 and in 2014 will be distributed R$ 18.7 million for the results of 2013. Regarding the to the stock option plan to purchase or subscribe shares, granted to the statutory directors and non-statutory directors, the number of options granted is proportional to the investment made in the Company's shares with resources obtained from the profit sharing program described above. Additionally, the Board of Directors may distribute discretionary stock options or subscription shares to statutory directors and non-statutory directors, that is, independent of the investment made in the Company's shares with resources obtained from the profit sharing program described above, based on merit, performance and/or outcome. For the Board of Directors of the Company (and the Advisory Committee), the remuneration is discretionary determined by the general meeting with no relation with the remuneration policy applicable to officers and other employees of the Company and therefore there is no goal at the policy or remuneration practice of this body. Members of the Fiscal Council are entitled to remuneration equivalent to 10% of the average remuneration of the statutory board, corresponding to the minimum set by law. In this way, their remuneration is not correlated to the remuneration policy applicable to officers and other employees of the Company and therefore there is no aim of

54

policy or practice of remuneration for that body. So, there is no method of calculation and adjustment of each element of remuneration. (iv) Reasons for the composition of remuneration: For the statutory directors and non-statutory directors, the policy aims in the remuneration of professionals based on the responsibilities inherent in their job positions, market practices and the Companys level of competiveness. For the Board of Directors, the Advisory Committee and the Fiscal Council, the remuneration paid by the Company is fixed, in a discretionary amount determined by the general meeting, in case of Board of Directors (and consequently the Advisory Committee), and according to the law, in case of Fiscal Council. The remuneration of the members of these bodies has no relation with the remuneration policy applicable to officers and other employees of the Company and therefore there is no goal at the policy or remuneration practice of this body. For the statutory directors and non-statutory directors and the members of the Board of Directors, the variable portion is justified by the Companys focus on results and the target of aligning management interests with those of the shareholders of Company.

c. Main performance indicators that are taken into consideration when determining each element of the compensation package
The main performance indicator used to determine the variable component of management remuneration is the Companys Economic Value Added (EVA), which is calculated from the net profit of the Company, deducting from this remuneration the capital invested in the Company by the shareholders, which is the invested capital in the Company at book value multiplied by the weighted average cost of capital of the Company. The variable portion of remuneration is determined from the economic value generated in the Company and in the business segment, under its responsibility.

d. How the compensation package is structured to reflect the development of the performance indicators
The remuneration consists of a significant variable portion, represented by profit-sharing of the Companys results, and the values to be distributed are directly proportionate to the Companys Economic Value Added (EVA), calculated annually in accordance with the formula described in item (c) above.

e. How the compensation policy is aligned with the Companys short-, medium- and long-term interests
The remuneration monthly paid to statutory directors and non-statutory directors is in line with the short-term interests of the Company to attract and retain qualified professionals. The profit-sharing and stock options plan are aligned with the medium-to-long-term interests of the Company to motivate management to carry out the Companys business, stimulating an entrepreneurial and

55

results-orientated culture, to the extent that both shareholders and directors benefit from improvements in the results and increases in the price of the shares. For the Board of Directors of the Company (and consequently the Advisory Committee), the remuneration is fixed in discretionary amount determined by the general meeting with no relation with the remuneration policy applicable to officers and other employees of the Company, and therefore there is no goal at the policy or remuneration practice of this body. The members of the Fiscal Council are entitled to remuneration equivalent to 10% of the average remuneration of the statutory board, corresponding to the minimum set by law. In this way, their remuneration is not correlated to the remuneration policy applicable to officers and other employees of the Company and therefore there is no aim of policy or practice of remuneration for that body. For the Board of Directors, the bonus, which is based on profit-sharing, being also directly proportional to the Economic Value Added (EVA), is in line with the Companys mid and long term best interest of stimulating an entrepreneurial and results orientated culture.

f. Existence of compensation supported by subsidiaries, and direct or indirect affiliates or holding companies
Not applicable. There is not any remuneration supported by subsidiaries, and direct or indirect affiliates or holding companies.

g. Existence of any compensation or benefits connected to the occurrence of a given corporate event, such as the sale of the Companys controlling interest
Not applicable. There is no remuneration or benefits connected to the occurrence of a given corporate event, such as the sale of the Companys controlling interest. 13.2 With respect to compensation acknowledged in the results of the last 3 accounting reference periods and the estimated compensation for the current accounting reference period for the Executive Board, the Statutory Board and the Fiscal Council:
Estimated for Current Fiscal Year (2014) Board of Executive Officers 7

Board of Directors Number of members Annual fixed compensation Salaries or pro-labore fees Direct and indirect benefits Compensation for participation in Committees Others Variable Compensation Bonus Profit sharing 830,322 1,292,330 80,771 274,620 8

Fiscal Council 3

Total 18

5,247,727 457,291 1,994,136

260,000 52,000

6,800,057 457,291 80,771 2,320,757

2,492,436

830,322 2,492,436

56

Compensation for participation in meetings Comissions Others Post-employment benefits Employment cessation benefits Stock-based compensation Total Compensation

166,064 -

3,236,926

166,064 3,236,926

2,644,107

13,428,516

312,000

16,384,623

(1) Amount based on the annual amortization rate of all curent plans, by the cost of call option. The number of options granted on the discretionary plan 2014 is estimated.

Fiscal Year Ended December 31, 2013 Board of Directors 6.08 893.619 164.423 211.608 383.066 76.613 1.729.329 Board of Executive Officers 5.17 4.360.016 323.743 1.658.550 1.224.640 2.694.144 10.261.094 Fiscal Council 3.00 207.288 41.458 248.746 Total 14.25 5.460.923 323.743 164.423 1.911.616 383.066 1.224.640 76.613 2.694.144 12.239.169

Number of members Annual fixed compensation Salaries or pro-labore fees Direct and indirect benefits Compensation for participation in Committees Others Variable Compensation Bonus Profit sharing Compensation for participation in meetings Comissions Others Post-employment benefits Employment cessation benefits Stock-based compensation Total Compensation

(1) Amount based on the annual amortization rate of all curent plans, by the cost of call option. The number of options granted on the discretionary plan 2014 is estimated.

Fiscal Year Ended December 31, 2012 Board of Directors 7 933,005 111,926 208,986 168,737 33,747 Board of Executive Officers 5 3,278,531 304,444 1,185,772 637,433 Fiscal Council 3 187,200 37,440 Total 15 4,398,736 304,444 111,926 1,432,198 168,737 637,433 33,747

Number of members Annual fixed compensation Salaries or pro-labore fees Direct and indirect benefits Compensation for participation in Committees Others Variable Compensation Bonus Profit sharing Compensation for participation in meetings Comissions Others

57

Post-employment benefits Employment cessation benefits Stock-based compensation Total Compensation

1,456,401

1,690,083 7,096,263

224,640

1,690,083 8,777,304

(1) Amount based on the annual amortization rate of all curent plans, by the cost of call option.

Fiscal Year Ended December 31, 2011 Board of Directors 6.75 850,800 65,000 183,160 168,162 33,632 1,300,754 Board of Executive Officers 5 3,038,949 354,261 1,087,908 523,747 1,121,894 6,126,759 Fiscal Council 3 120,000 24,000 144,000 Total 14.75 4,009,749 354,261 65,000 1,295,068 168,162 523,747 33,632 1,121,894 7,571,513

Number of members Annual fixed compensation Salaries or pro-labore fees Direct and indirect benefits Compensation for participation in Committees Others Variable Compensation Bonus Profit sharing Compensation for participation in meetings Comissions Others Post-employment benefits Employment cessation benefits Stock-based compensation Total Compensation

(1) According to maximum total remuneration of R$9,100,000.00 for the Board of Directors and Executive Officers approved at the Ordinary General Meeting of April 19, 2011, excluding stock based compensation. (2) Based on salary or pro-labor average of the Executive Officers in April 2011. (3) Includes one month of occupation of the position of member of the Board of Directors by Gustavo Felizolla, who resigned in January 2011, and eight months in the same position occupied by Jorge Camargo, who took office in May 2011.

13.3 With respect to variable compensation in the last 3 accounting reference periods and compensation estimated for the current accounting reference period for the Board of Directors, the Board of Executive Officers and the Fiscal Council:
Estimated for Current Fiscal Year (2014) Board of Directors Board of Executive Officers 7 Fiscal Council Total

(in R$ thousand, except for number of members)

Number of Members Bonus Minimum amount estimated by compensation plan Maximum amount estimated by compensation plan Amount estimated by the compensation plan if preestablished goals are met Variable remuneration Minimum amount estimated by compensation plan Maximum amount estimated by compensation plan

8 20.0% to 30.0% of EVA

3 -

18 20.0% to 30.0% of EVA

58

Amount estimated by the compensation plan if preestablished goals are met

20.0% to 30.0% of EVA

20.0% to 30.0% of EVA

Variable remuneration of Fiscal Year ended December 31, 2013 Board of Directors Board of Executive Officers 5.17 Fiscal Council Total

(in R$ thousand, except for number of members)

Number of Members Bonus Minimum amount estimated by compensation plan Maximum amount estimated by compensation plan Amount estimated by the compensation plan if preestablished goals are met Value effectively recognized in results of the fiscal year Variable remuneration Minimum amount estimated by compensation plan Maximum amount estimated by compensation plan Amount estimated by the compensation plan if preestablished goals are met Value effectively recognized in results of the fiscal year

6.08 25% of Eva 383.0

3 -

14.25 25% of Eva 383.0

25% do Eva 1,224.6

25% do Eva 1,224.6

Variable remuneration of Fiscal Year ended December 31, 2012 Board of Directors Board of Executive Officers 5 30.0% do EVA 637.4 Fiscal Council Total

(in R$ thousand, except for number of members)

Number of Members Bonus Minimum amount estimated by compensation plan Maximum amount estimated by compensation plan Amount estimated by the compensation plan if preestablished goals are met Value effectively recognized in results of the fiscal year Variable remuneration Minimum amount estimated by compensation plan Maximum amount estimated by compensation plan Amount estimated by the compensation plan if preestablished goals are met Value effectively recognized in results of the fiscal year Number of Members

7 30.0% of EVA 168.7

3 -

15 30.0% of EVA 168.7 30.0% of EVA 637.4

59

Variable remuneration of Fiscal Year ended December 31, 2011 Board of Directors Board of Executive Officers 5 25.0% of EVA 523.7 Fiscal Council Total

(in R$ thousand, except for number of members)

Number of Members Bonus Minimum amount estimated by compensation plan Maximum amount estimated by compensation plan Amount estimated by the compensation plan if preestablished goals are met Value effectively recognized in results of the fiscal year Variable remuneration Minimum amount estimated by compensation plan Maximum amount estimated by compensation plan Amount estimated by the compensation plan if preestablished goals are met Value effectively recognized in results of the fiscal year Number of Members

6.75 25.0% of EVA 168.2

3 -

14.75 25.0% of EVA 168.2 25.0% of EVA 523.7

13.4 With respect to the stock-based compensation plan for the Executive Board and the Board of Executive Officers, which was in force in the last accounting reference period and which is estimated for the current accounting reference period: STOCK-BASED COMPENSATION PLANS On December 31st, 2013, the Company had a single stock option plan for the benefit of its managers, that being the Plano de Opes de Compra de Aes , as described below. This plan will remain for the fiscal year 2014, with no expectation for the creation of new plan this year. Until December 31st of 2013, a total of 557,163 options had been exercised associated with this plan, with 816,829 previously granted but not yet redeemed purchase options remaining. All the stock-based compensation plans created before the Companys IPO, held in April 15th, 2010 had its granted options redeemed.

Stock Option Plan of the Company


a. Terms and general conditions: At the Extraordinary General Shareholders meeting held on February 8, 2010, the Stock Option Plan for Shares Issued by the Company was approved called Plano de Opes de Compra de Aes 2010 (Stock Option Plan - 2010), with amendments approved by the Board of Directors Meeting held on May 31, 2010 and by the Extraordinary General Shareholders meeting held on April 20, 2012. The Board of Directors approved (i) on March 11th, 2010, the Companys Program 1/2010 Stock Options Plan (1/2010 Program); (ii) on March 25th, 2011, the Program 1/2011 Stock Options Plan (1/2011

60

Program); (iii) on May 30th, 2012, the Program 1/2012 Stock Options Plan (1/2012 Program); and (iv) on March 25th, 2013, the Program 1/2013 Stock Options Plan (1/2013 Program). The Stock Options Plan is managed by our Board of Directors, which considers the contribution of each beneficiary to achieving the targets designed to create added value, the development potential of each, and the essential nature of their jobs among other characteristics considered strategically relevant, elected as beneficiaries of the 2010 Stock Options Plan (i) for the 1/2010 Program, all the directors (or executives with similar roles) of the Company, and Company managers who have held their positions in 2009 for more than 6 (six) months; (ii) for the 1/2011 Program, all the directors (or executives with similar roles) of the Company, and Company managers who have held their positions in 2010 for more than 6 (six) months; (iii) for the 1/2012 Program, all the directors (or executives with similar roles) of the Company, and Company managers who have held their positions in 2011 for more than 6 (six) months; and (iv) for the 1/2013 Program, all the directors (or executives with similar roles) of the Company, and Company managers who have held their positions in 2012 for more than 6 (six) months. b. Major Plan Objectives: The aim of the Stock Options Plan is to allow for the Companys managers or employees or those in any of its subsidiaries, subject to determined conditions, to acquire shares in the Company, for the purpose of (i) stimulating expansion, determining and implementing the Companys corporate guidelines; (ii) align the interests of the Companys shareholders with those of its managers and employees or other entities it controls; and (iii) allow the Company or its subsidiaries to attract and retain the managers and employees it requires. c. How the plans contribute for the achievement of these objectives:

As most of the options are available over the long term, the beneficiaries tend to stay with the Company until at least the time they can contribute to its long-term results. d. How the plan is included in the Companys compensation policy As mentioned in Item 13.1b, this plan is part of the variable compensation package paid to the Companys officers. e. How the plans promote the alignment between management and the Company interests at short, mid and long term The stock option plan, in general, aligns the medium and long term interests to encourage the Administration to conduct the company's business success, stimulating entrepreneurial and resultsoriented culture, to the extent that both the shareholders and the directors benefit from improvements in income and increases in stock market quotation. The establishment of a waiting period before which the options cannot be exercised (vesting period), ensures that this alignment is found in the short, medium and long term. f. The maximum number of shares options to be granted:

61

The stock options granted within the scope of this plan confer the rights to acquire up to 5% of shares of the Companys capital stock, throughout the period of validity of the plan, considering all the options already granted under the Plan, exercised or not, except those which have been extinct and not exercised as long as the total number of shares issued or can be issued under the Plan is always within the boundary the authorized capital of the company. Options issued by the company granted until December 31, 2009 are not subject to the Plan or its limits. In addition, the aim of the Plan is to grant share purchase options in an amount that does not exceed 1% of shares of the Companys total capital each year, as verified on the date the plan was approved. As part of the 1/2010 Program, 538,714 options have been granted that will be converted into ordinary shares in the Company. Up to December 31st, 2013, 400,267 options have been exercised. As part of the 1/2011 Program, 392,046 options have been granted that will be converted into ordinary shares in the Company. Up to December 31st, 2013, 130,281 options have been exercised. As part of the 1/2012 Program, 232,462 options have been granted that will be converted into ordinary shares in the Company. Up to December 31st, 2013, 26,615 options have been exercised. As part of the 1/2013 Program, 210,770 options have been granted that will be converted into ordinary shares in the Company. Up to December 31st, 2013, no options have been exercised. g. The maximum number of stock options to be granted As a result of the number of shares that can be acquired within the scope of the stock option plan. The maximum total number of shares to be issued is up to 5% of total stock. h. Conditions for acquiring the shares To receive the stock options in the 1/2010 Program, each beneficiary had to use at least 33% of the variable component of their compensation associated with the Companys Profit-Sharing Program, net of taxes, which were received related to the 2009 financial year, to acquire shares issued by the Company. To receive the stock options in the 1/2011 Program, each beneficiary had to use at least 33% of the variable component of their compensation associated with the Companys Profit-Sharing Program, net of taxes, which were received related to the 2010 financial year, to acquire shares issued by the Company. To receive the stock options in the 1/2012 Program, each beneficiary will have to use at least 33% of the variable component of their compensation associated with the Companys Profit-Sharing Program, net of taxes, which were received related to the 2011 financial year, to acquire shares issued by the Company. To receive the stock options in the 1/2013 Program, each beneficiary will have to use at least 33% of the variable component of their compensation associated with the Companys Profit-Sharing Program, net of taxes, which were received related to the 2012 financial year, to acquire shares issued by the Company.

62

Additionally, the Board of Directors approved grants within the 1/2011, 1/2012 and 1/2013 Programs, independent of the investment in the Company's shares to certain employees of the Company, due to its performance in the exercise of their jobs. i. Criteria for determining the acquisition or exercise price

Until April 20, 2012, the price of the ordinary shares to be acquired by the beneficiaries, by exercising their option rights were determined by the Companys Board of Directors or committee created for this purpose based exclusively on the average share price on the BM&FBOVESPA, weighted by the trading volume in the month or the two months prior to the granting of the stock option, monetarily adjusted by the inflation index IPCA (ndice de Preos ao Consumidor Amplo), and deducting the value of dividends and interest on equity per share paid by the Company as from the stock option date. On April 20, 2012, according to the resolution of the General Meeting held on that date, the criterion for fixing the exercise price of the options that have as a counterpart the acquisition of shares by its beneficiary was changed and was defined as the equity value of the shares on the last day of the subsequent fiscal year. This change does not affect the options granted prior to that General Meeting and the new criterion does not apply to options granted that have no counterpart of the acquisition of shares by the beneficiary, which continues to be applied the criterion of market price, described above. For the 1/2010 Program, the exercise price of the options will be based on the value of the shares issued at the Companys Initial Public Offering (R$11.50), monetarily adjusted by the inflation according to the IPCA, which is disclosed by the Brazilian Institute of Geography and Statistics (IBGE), deducting the value of dividends and interest on equity per share paid by the Company as from the stock option date. Regarding the 1/2011 Program, the exercise price of the options will be the average share price acquired according to brokerage invoice sent by the beneficiary to the Board of Directors or Human Resources Committee of the Company (R$ 19.28), monetarily adjusted by the inflation according to the IPCA, which is disclosed by the Brazilian Institute of Geography and Statistics (IBGE), or by another index determined by the Board of Directors or committee, according to the case, from the date of conclusion of the stock option agreement until the date the option is exercised, deducting the value of dividends and interest on equity per share paid by the Company as from the stock option date. Regarding the 1/2012 Basic Program, the exercise price of the options will be the average share price acquired according to brokerage invoice sent by the beneficiary to the Board of Directors or Human Resources Committee of the Company (R$ 5.86), monetarily adjusted by the inflation according to the IPCA, which is disclosed by the Brazilian Institute of Geography and Statistics (IBGE), or by another index determined by the Board of Directors or committee, according to the case, from the date of conclusion of the stock option agreement until the date the option is exercised, deducting the value of dividends and interest on equity per share paid by the Company as from the stock option date.

63

Regarding the 1/2012 Discricionary Program, the exercise price of the options will be the average share price on the BM&FBOVESPA in the year of 2011 (R$19.22), weighted by the trading volume, monetarily adjusted by the inflation according to the IPCA, which is disclosed by the Brazilian Institute of Geography and Statistics (IBGE), or by another index determined by the Board of Directors or committee, according to the case, from the date of conclusion of the stock option agreement until the date the option is exercised, deducting the value of dividends and interest on equity per share paid by the Company as from the stock option date. Regarding the 1/2013 Basic Program, the exercise price of the options will be equal to the book value of shares on December 31st of the fiscal year of the Company immediately preceding the stock option date (R$ 6.80), monetarily adjusted by the inflation according to the IPCA or by another index determined by the Board of Directors or committee created for this purpose, according to the case, from the date of conclusion of the stock option agreement until the date the option is exercised, deducting the value of dividends and interest on equity per share paid by the Company as from the stock option date. Regarding the 1/2013 Discricionary Program, the exercise price of the options will be the average share price on the BM&FBOVESPA in the year of 2012 (R$26.16), weighted by the trading volume, monetarily adjusted by the inflation according to the IPCA, which is disclosed by the Brazilian Institute of Geography and Statistics (IBGE), or by another index determined by the Board of Directors or committee created for this purpose, according to the case, from the date of conclusion of the stock option agreement until the date the option is exercised, deducting the value of dividends and interest on equity per share paid by the Company as from the stock option date. j. Criteria used to determine the exercise term The options granted under the terms of this plan will be subject to grace periods of up to 72 (seventy two) months for the conversion of options into shares. k. Form of liquidation/settlement

The shares resulting from the exercising of purchase options will be integrated and/or acquired by their respective beneficiaries in cash, in current national currency. l. Restrictions on the transfer of shares

Until the exercise price is fully paid, the shares acquired through exercising the option rights under the terms of the Plan cannot be sold to third parties, except with the prior authorization of the Board, based on the hypothesis that the product of the sale will preferably be used to settle any debt the beneficiary has with the Company. Based on the terms of the respective Option Contract, no beneficiary will be allowed to trade the shares acquired for a period of 5 (five) years, observing the following rules: (i) after a period of one year after signing the respective Option Contract, beneficiaries will be free to trade up to 25% of the shares acquired;

64

(ii) after a period of one year after the term defined in item i, beneficiaries will be free to trade an additional 25% of the shares acquired; (iii) after a period of one year after the term defined in item ii, beneficiaries will be free to trade an additional 25% of the shares acquired; and (iv) after a period of one year after the term defined in item iii, beneficiaries will be free to trade the outstanding balance of the shares acquired. m. criteria and events that, when verified, will lead to the suspension, alteration or extinction of the plan The stock option rights granted under the terms of the Plan will automatically all be cancelled in the following cases: (i) on the complete and full exercising of the same; (ii) after the option term has expired; (iii) through the mutual rescission of the stock option; (iv) if the Company is dissolved, liquidated or files for bankruptcy; or (v) if the beneficiary fails to observe the trading restriction rules described in item n below. In addition, in the event the beneficiary is laid off, with or without due cause, resigns or steps down from their job, retires, or suffers from permanent disability, or dies, the option rights granted can either be cancelled or modified, as described in item n below. In addition, in the event the beneficiary is laid off, with or without just cause, resigns or steps down from their job, retires, or suffers from permanent disability, or dies, the option rights granted can either be cancelled or modified, as described in item n below. n. Effects generated by the Company`s Board and Committee Manager`s departure upon his/her rights as provided by the stock-based compensation plan If at any time during the validity of the Stock Options Plan, the beneficiary: (i) resigns voluntarily from the Company or leave their management role: (i) the rights not exercised in accordance with the respective Option Contract on the date they leave the Company will automatically all be cancelled, with no need for any prior warning or notification, and with no right to any indemnity; and (ii) the rights already exercised in accordance with the respective Option Contract on the date they leave the Company may be exercised within a period of 30 days from the same date, after which all rights will automatically all be cancelled, with no need for any prior warning or notification, and with no right to any indemnity; (ii) leaves the Company as a result of being fired with due cause, or failure to fulfill their duties adequately as a manager, all the right (exercised and not exercised) in accordance with the respective Option Contract on the date they leave the Company will automatically all be cancelled, with no need for any prior warning or notification, and with no right to any indemnity; (iii) leaves the Company as a result of being fired without due cause, or failure to fulfill their duties adequately as a manager: (i) the rights not exercised in accordance with the respective Option Contract on the date they leave the Company will automatically all be cancelled, with no need for any

65

prior warning or notification, and with no right to any indemnity; except if the Board decides to anticipate the grace period term for some or all of these rights, and the beneficiary leaves the Company within a period of up to 12 (twelve) months after the change in share control in the Company all the unexercised rights in accordance with the respective Option Contract on the date they leave the Company may be exercised within a period of 30 days from the same date, after which all rights will automatically all be cancelled, with no need for any prior warning or notification, and with no right to any indemnity, will have their grace period anticipated; and (ii) the rights already exercised in accordance with the respective Option Contract on the date they leave the Company may be exercised within a period of 30 days from the same date, after which all rights will automatically all be cancelled, with no need for any prior warning or notification, and with no right to any indemnity; (iv) on retiring from the Company: (i) the rights not exercised in accordance with the respective Option Contract on the date they leave the Company will automatically all be cancelled, with no need for any prior warning or notification, and with no right to any indemnity, except if the Board decides to anticipate the grace period term for some or all of these rights; and (ii) the rights already exercised in accordance with the Options Contract on the date of leaving the Company will have their grace period anticipated, allowing the Beneficiary to exercise the respective stock option, as long as this is within a period of 12 (twelve) months from the date of retirement, after which all the remaining rights will automatically all be cancelled, with no need for any prior warning or notification, and with no right to any indemnity; (v) leaving the Company due to death or permanent disability: (i) the rights not exercised in accordance with the respective Option Contract on the date they leave the Company will automatically all be cancelled, with no need for any prior warning or notification, and with no right to any indemnity, except if the Board decides to anticipate the grace period term for some or all of these rights; and (ii) the rights already exercised in accordance with the Options Contract, on the date of passing away, can be exercised by the Beneficiarys legal successors, as long as this is done within a period of 12 (twelve) months from the aforementioned date, after which all the remaining rights will automatically all be cancelled, with no need for any prior warning or notification, and with no right to any indemnity. Over and above mentioned item, the Board or Committee (whichever is the case) can, at their exclusive criteria, whenever they deem social interests are better met by this approach, chose not to abide by the rules stipulated above, and treat a determined beneficiary in a differentiated and individual manner.

66

13.5 Number of stocks or direct or indirect stock holdings, either in Brazil or overseas, and other securities that might be converted into stock or quotas, issued by the Company, direct or indirect affiliates, subsidiaries or companies under common control, by members of the Executive Board, of the Board of Executive Officers or the Fiscal Board, grouped per board or committee, on the closing date of the last accounting reference period: The table below indicates the number of our shares held directly by our administrators and the percentage that their direct individual contributions represent of the total number of shares issued by our Company, in the last fiscal year, December 31st, 2013.
On December 31st, 2013
Board of Directors Board of Executive Officers Fiscal Council Number of shares 18,311,429 505,531 (%) 14.4% 0.4%

13.6 With respect to stock-based compensation, as acknowledged in the past three accounting reference periods and as estimated for the current accounting reference period, for Executive Board and the Board of Executive Officers. The tables below show the impact of those stock option plans on the compensation of our statutory directors in the years 2011, 2012 and 2013 and the estimated impact for 2014. The Companys Board of Directors does not have stock based compensation.
Stock Option Plan
Program 1/2010 Number of Members of the Board of Executive Officers Grant Date Number of granted options Number of non-redeemable options Number of redeemable options Deadline for options to become redeemable Deadline for redeeming options Grace period for stock transfer Quantity of options exercised Pondered average price within accounting reference period for each of the following option groups Outstanding at the beginning of the accounting reference period Not redeemed throughout accounting reference period Redeemed within accounting reference period Expired within accounting reference period Fair option price on grant date Potential dilution in the event of exercise of all options granted3 2011 5 404,035 83,428 25% by year, from the year after the date of the Grant 05/31/2015 51,251 2012 5 269,357 18,639 25% by year, from the year after the date of the Grant 2013 5.17 134,678 3,769 25% by year, from the year after the date of the Grant 2014 7 144,575 25% by year, from the year after the date of the Grant

250,718

250,718

400,267

R$11.65

R$12.22

R$12.63

R$ 13.01

R$12.05 0.39%

R$12.42 0.39%

R$ 12.86 0.39%

0.43%

67

1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and total amount of redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year. 2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated on the resigning terms available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013. 3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers the total shares of the Company's capital at beginning of year. At the end of fiscal year 2011, the amount of shares were 125,656,724, at the end of fiscal year 2012, the total number of shares was equal to 125,399,430 and at the end of fiscal year 2013, the total number of shares was equal to 127,385,996.

1/2011 Program Number of Members of the Board of Executive Officers Grant Date Number of granted options Number of non-redeemable options Number of redeemable options() Deadline for options to become redeemable Deadline for redeeming options Grace period for stock transfer Quantity of options exercised Pondered average price within accounting reference period for each of the following option groups Outstanding at the beginning of the accounting reference period Not redeemed throughout accounting reference period Redeemed within accounting reference period Expired within accounting reference period Fair option price on grant date4 Potential dilution in the event of exercise of all options granted3

2011 5 04/16/2011 392,046 392,046 25% by year, from the date of the Grant 04/16/2016 -

2012 5 294,034 56,546 25% by year, from the date of the Grant

2013 5.17 196,023 65,742 25% by year, from the date of the Grant

2014 7 143,443 209,184 25% by year, from the date of the Grant

41,466

130,281

130,281

R$ 2,575,742 0.31%

R$ 19.77

R$ 20.60

R$ 21.50

R$ 20.15 0.31%

R$ 20.82 0.31%

0.38%

1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and total amount of redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year. 2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated on the resigning terms available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013. 3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers the total shares of the Company's capital at beginning of year. At the end of fiscal year 2011, the amount of shares were 125,656,724, at the end of fiscal year 2012, the total number of shares was equal to 125,399,430 and at the end of fiscal year 2013, the total number of shares was equal to 127,385,996. 4. Fair value of R$6.57 per option. Assumptions available in item 13.9 (b).

Program 1/2012 - Basic Number of Members of the Board of Executive Officers Grant Date Number of granted options Number of non-redeemable options Number of redeemable options() Deadline for options to become redeemable Deadline for redeeming options Grace period for stock transfer Quantity of options exercised Pondered average price within accounting reference period for each of the following option groups Outstanding at the beginning of the accounting reference period

2012 5 06/30/2012 38,462 38,462 25% by year, from the date of the Grant 06/30/2017 -

2013 5.17 28,847 0 25% by year, from the date of the Grant

2014 7 27,800 9,985 25% by year, from the date of the Grant

9,615

9,615

R$ 5.74

R$ 5.75

68

Not redeemed throughout accounting reference period Redeemed within accounting reference period Expired within accounting reference period Fair option price on grant date4 Potential dilution in the event of exercise of all options granted(3)

R$ 5.82

R$ 815,394 0.03%

0.03%

0.04%

1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and total amount of redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year. 2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated on the resigning terms available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013. 3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers the total shares of the Company's capital at beginning of year. At the end of fiscal year 2012, the total number of shares was equal to 125,399,430 and at the end of fiscal year 2013, the total number of shares was equal to 127,385,996. 4. Fair value of R$ 21.20 per option. Assumptions available in item 13.9 (b).

Program 1/2012 - Discretionary Number of Members of the Board of Executive Officers Grant Date Number of granted options Number of non-redeemable options Number of redeemable options() Deadline for options to become redeemable Deadline for redeeming options Grace period for stock transfer Quantity of options exercised Pondered average price within accounting reference period for each of the following option groups Outstanding at the beginning of the accounting reference period Not redeemed throughout accounting reference period Redeemed within accounting reference period Expired within accounting reference period Fair option price on grant date4 Potential dilution in the event of exercise of all options granted(3)

2012 5 06/30/2012 194,000 194,000 25% by year, from the date of the Grant 06/30/2017 -

2013 5.17 145,500 31,500 25% by year, from the date of the Grant

2014 7 167,750 109,750 25% by year, from the date of the Grant

17,000

17,000

R$ 19.57

R$ 20.37

R$ 20.60

R$ 2,362,920 0.15%

0.15%

0.23%

1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and total amount of redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year. 2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated on the resigning terms available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013. 3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers the total shares of the Company's capital at beginning of year. At the end of fiscal year 2012, the total number of shares was equal to 126,399,430 and at the end of fiscal year 2013, the total number of shares was equal to 127,385,996. 4. Fair value of R$ 12.18 per option. Assumptions available in item 13.9 (b).

Program 1/2013 - Basic Number of Members of the Board of Executive Officers Grant Date Number of granted options Number of non-redeemable options Number of redeemable options

2013 5.17 04/30/2013 105,770 105,770 -

2014 7 113,585 25,285

69

Deadline for options to become redeemable Deadline for redeeming options Grace period for stock transfer Quantity of options exercised Pondered average price within accounting reference period for each of the following option groups Outstanding at the beginning of the accounting reference period Not redeemed throughout accounting reference period Redeemed within accounting reference period Expired within accounting reference period Fair option price on grant date4 Potential dilution in the event of exercise of all options granted3

25% by year, from the date of the Grant 04/30/2018 -

25% by year, from the date of the Grant

R$ 6.72

R$ 2,620,981 0.08%

0.11%

1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and total amount of redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year. 2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated on the resigning terms available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013. 3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers the total shares of the Company's capital at beginning of year. At the end of fiscal year 2012, the total number of shares was equal to 126,399,430 and at the end of fiscal year 2013, the total number of shares was equal to 127,385,996. 4. Fair value of R$ 24.78 per option. Assumptions available in item 13.9 (b).

Program 1/2013 - Discretionary Number of Members of the Board of Executive Officers Grant Date Number of granted options Number of non-redeemable options Number of redeemable options Deadline for options to become redeemable Deadline for redeeming options Grace period for stock transfer Quantity of options exercised Pondered average price within accounting reference period for each of the following option groups Outstanding at the beginning of the accounting reference period Not redeemed throughout accounting reference period Redeemed within accounting reference period Expired within accounting reference period Fair option price on grant date4 Potential dilution in the event of exercise of all options granted3

2013 5.17 04/30/2013 105,000 105,000 25% by year, from the date of the Grant 04/30/2018 -

2014 7 157,500 52,500 25% by year, from the date of the Grant

R$ 26.78

R$ 1,251,600 0.08%

0.16%

1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and total amount of redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year. 2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated on the resigning terms available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013. 3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers the total shares of the Company's capital at beginning of year. At the end of fiscal year 2012, the total number of shares was equal to 126,399,430 and at the end of fiscal year 2013, the total number of shares was equal to 127,385,996. 4. Fair value of R$ 11.92 per option. Assumptions available in item 13.9 (b).

70

13.7 With respect to outstanding options for the Board of Directors and the Board of Executive Officers at the closing of the last accounting reference period

Board of Executive Officers


Fiscal Year ended December 31, 2013 Program 1/2010 Number of members Non-Outstanding options Number Deadline for options to become redeemable Deadline for redeeming options Grace period for stock transfer Weighted average exercise price Fair value of options on the last the of the fiscal year Outstanding options Number Deadline for redeeming options Grace period for stock transfer Weighted average exercise price Fair value of options on the last the of the fiscal year Total fair value of the options on the last day of the fiscal year 3,769 05/31/2015 65,742 04/16/2016 0 05/31/2017 31,500 05/31/2017 101,011 05/31/2017 134,678 134,678 options become redeemable every year until 2013 05/31/2015 196,023 98,011 options become redeemable every year until 2013 04/16/2016 28,847 9,616 options become redeemable every year until 2013 05/31/2017 145,500 48,500 options become redeemable every year until 2013 05/31/2017 105,770 26,442 options become redeemable every year until 2013 04/30/2018 105,000 26,250 options become redeemable every year until 2013 04/30/2018 715,818 5 Program 1/2011 5 Program 1/2012 Basic 5 Program 1/2012 Discretionary 5 Program 1/2013 Basic 5.17 Program 1/2013 Discretionary 5.17 Total 5.17

Until 2017

04/30/2018

R$ 2,704,443

R$ 2,505,174

R$ 789,831

R$ 2,213,055

R$ 2,825,117

R$ 1,336,650

R$ 12,374,269

R$ 12.86 R$ 75,685 R$ 2,780,127

R$ 20.82 R$ 840,183 R$ 3,345,357

R$ 5.82 R$ 0 R$ 789,831

R$ 20.06 R$ 479,115 R$ 2,692,170

R$ 2,825,117

R$ 1,336,650

R$ 20.29 R$ 1,394,982 R$ 13,769,252

Board of Directors
Board of Directors has no stock-based compensation. 13.8 With respect to redeemed and delivered options for the Board of Directors and the Board of Executive Officers, in the past three accounting reference periods

Board of Executive Officers


Exercised Options fiscal year ended in 12/31/2013
Program 1/2010 5.17 149,549 R$ 12.86 Program 1/2011 5.17 88,815 R$ 20.82 Program 1/2012 Basic 5.17 9,615 R$ 5.82 Program 1/2012 Discretionary 5.17 17,000 R$ 20.06 Total 5.17 264,979 R$ 15.73

Number of Members Redeemable Options Number of shares Pondered average price within accounting reference period

71

Total value of the difference between the exercise value and market value of shares related to options exercised1 Shares Granted Number of granted shares Pondered average price of acquisition Total value of the difference between the exercise value and market value of shares related to options exercised 1

R$ 2,703,846

R$ 898,808

R$ 241,529

R$ 184,960

R$ 4,029,143

149,549 R$ 12.86 R$ 2,703,846

88,815 R$ 20.82 R$ 898,808

9,615 R$ 5.82 R$ 241,529

17,000 R$ 20.06 R$ 184,960

264,979 R$ 15.73 R$ 4,029,143

1 Average market price, pondered by volume, in the last trading day of the fiscal year, equals R$ 30.94 at the end of 2013.

Exercised Options fiscal year ended in 12/31/2012


Program 1/2010 5 199,467 R$ 12.42 R$ 4,190,802 Program 1/2011 5 41,466 R$ 20.15 R$ 550,668 Total 5 240,933 R$ 13.75 R$ 4,741,470

Number of Members Redeemable Options Number of shares Pondered average price within accounting reference period Total value of the difference between the exercise value and market value of shares related to options exercised1 Shares Granted Number of granted shares Pondered average price of acquisition Total value of the difference between the exercise value and market value of shares related to options exercised 1

199,467 R$ 12.42 R$ 4,190,802

41,466 R$ 20.15 R$ 550,668

240,933 R$ 13.75 R$ 4,741,470

1 Average market price, pondered by volume, in the last trading day of the fiscal year, equals R$ 33.43 at the end of 2012.

Exercised Options fiscal year ended in 12/31/2011


2010/1 Program 2 51,251 R$12.05 R$281,881

Number of Members Redeemable Options Number of shares Pondered average price within accounting reference period Total value of the difference between the exercise value and market value of shares related to options exercised1 Shares Granted Number of granted shares Pondered average price of acquisition Total value of the difference between the exercise value and market value of shares related to options exercised 1

51,251 R$12.05 R$281,881

1 Average market price, pondered by volume, in the last trading day of the fiscal year, equals R$ 17.55 at the end of 2011.

Board of Directors
Board of Directors has no stock-based compensation.

72

13.9 Summary of relevant information aiming at a broader understanding of data presented under items 13.6 through 13.8 above, as well as an explanation of the pricing method used for stock and option values

a. Pricing model
The programs granted from 2010 onwards were classified as equity instruments, which the weighted average fair value of options is determined using the Black-Scholes valuation model using as premises: (a) weighted average share price, (b) exercise price, (c) expected volatility, (d) dividend yield, (e) expected option life and (f) annual risk-free interest rate. The equity portion is priced only at the grant date and the fair value is not remeasured on every reporting date. The portions of equity and debt are appropriated plan by plan, taking into consideration the respective lock up periods (period in which shares are blocked for trading), based on management's best estimate as to their end dates.

b. Data and assumptions used in the pricing model


The table below shows the data and assumptions of our pricing model:

Plans granted in 2010


Calculation of fair value Grant Date Exercise price Weighted average share price Expected volatility1 Expected option life (days) Dividend yield Risk-free interest rate Fair value per share At the end of 2010 Exercise price Weighted average share price Expected volatility1 Expected option life (days) Dividend yield Risk-free interest rate Fair value per share At the end of 2011 Exercise price Weighted average share price Expected volatility1 Expected option life (days) Dividend yield Risk-free interest rate Fair value per share At the end of 2012 Exercise price Weighted average share price Expected volatility1 Expected option life (days) Dividend yield Risk-free interest rate Fair value per share 1st Grant (05/31/2010) R$11.50 R$11.95 31% 1,461 1.52% 6.60% R$3.86 R$11.65 R$20.55 34.92% 1,247 1.71% 6.08% R$10.49 R$12.22 R$17.55 38.68% 882 1.06% 4.81% R$7.27 R$12.63 R$33.43 35.92% 516 0.70% 1.04% R$20.69 2nd Grant (07/05/2010) R$11.50 R$14.10 31% 1,461 1.28% 6.37% R$5.49 R$11.59 R$20.55 34.92% 1,282 1.71% 6.08% R$10.56 R$12.16 R$17.55 38.68% 917 1.06% 4.83% R$7.37 R$12.57 R$33.43 35.92% 551 0.70% 1.08% R$20.75

73

At the end of 2013 Exercise price Weighted average share price Expected volatility1 Expected option life (days) Dividend yield Risk-free interest rate Fair value per share 1 Based on the Companys historical EBITDA

R$13.01 R$33.00 33.86% 182 0.64% 3.06% R$20.08

R$13.01 R$33.00 33.86% 186 0.64% 3.12% R$20.09

Plans granted in 2011


Calculation of fair value 1st Grant (04/16/2010) Grant Date Exercise price R$19.28 Weighted average share price R$21.08 Expected volatility1 35.79% Expected option life (days) 1,461 Dividend yield 1.73% Risk-free interest rate 6.53% Fair value per share R$6.57 At the end of 2011 Exercise price R$19.77 Weighted average share price R$17.55 Expected volatility1 38.68% Expected option life (days) 1,202 Dividend yield 1.06% Risk-free interest rate 4.94% Fair value per share R$4.70 At the end of 2012 Exercise price R$20.60 Weighted average share price R$33.43 Expected volatility1 35.92% Expected option life (days) 836 Dividend yield 0.70% Risk-free interest rate 1.70% Fair value per share R$14.36 At the end of 2013 Exercise price R$21.50 Weighted average share price R$33.00 Expected volatility1 33.86% Expected option life (days) 471 Dividend yield 0.64% Risk-free interest rate 3.77% Fair value per share R$12.78 1 Measured by the historical behavior of the value of the stock of the Company

Plans granted in 2012


Calculation of fair value Grant Date Exercise price Weighted average share price Expected volatility1 Expected option life (days) Dividend yield Risk-free interest rate 1/2012 Basic (06/30/2012) R$5.86 R$27.10 37.41% 1,461 0.87% 3.92% 1/2012 Discretionary (06/30/2012) R$19.22 R$27.10 37.41% 1,461 0.87% 3.92%

74

Fair value per share R$21.20 At the end of 2012 Exercise price R$5.74 Weighted average share price R$33.43 Expected volatility1 35.92% Expected option life (days) 1,277 Dividend yield 0.70% Risk-free interest rate 2.15% Fair value per share R$27.30 At the end of 2013 Exercise price R$5.75 Weighted average share price R$33.00 Expected volatility1 33.86% Expected option life (days) 882 Dividend yield 0.64% Risk-free interest rate 4.84% Fair value per share R$27.38 1 Measured by the historical behavior of the value of the stock of the Company

R$12.18 R$19.57 R$33.43 35.92% 1,277 0.70% 2.15% R$16.14 R$20.37 R$33.00 33.86% 882 0.64% 4.84% R$15.21

Plans granted in 2013


Calculation of fair value 1/2013 Basic (04/30/2013) 1/2013 Discretionary (04/30/2013) R$26.16 R$31.72 35.34% 1,461 0.82% 3.37% R$11.92 R$26.78 R$33.00 33.86% 1,216 0.64% 5.48% R$12.73

Grant Date Exercise price R$6.81 Weighted average share price R$31.72 Expected volatility1 35.34% Expected option life (days) 1,461 Dividend yield 0.82% Risk-free interest rate 3.37% Fair value per share R$24.78 At the end of 2013 Exercise price R$6.72 Weighted average share price R$33.00 Expected volatility1 33.86% Expected option life (days) 1,216 Dividend yield 0.64% Risk-free interest rate 5.48% Fair value per share R$26.71 1 Measured by the historical behavior of the value of the stock of the Company

c. Method used and assumed premises to incorporate the effects from expected early exercise
There was no early exercise.

d. Way of determining the expected volatility


Expected volatility is determined by the volatility of the share price between April 15, 2010, date of initial public offering of the Company, and the reference date for calculating the fair value.

e. Other characteristics incorporated in the fair value measurement option


There are none.

75

13.10 Private Pension Funds in force granted to members of the Board of Directors and the Board of Executive Officers The Company does not sponsor or pay private pension funds for the members of the Board of Executive Officers and members of the Fiscal Council. 13.11 Remunerao Mdia dos Administradores
Compensation 2011 Year ended December 31, 2012 (in R$, except when number of members) Board of Directors Number of members Highest individual compensation value Lowest individual compensation value Average individual compensation value Board of Executive Officers Number of members Highest individual compensation value Lowest individual compensation value Average individual compensation value Board of Fiscal Council Number of members Highest individual compensation value Lowest individual compensation value Average individual compensation value
_______________________________________________

2013

6.75 261,336 180,732 192,704

7 270,222 190,251 208,057

6.08 334,510 248,544 284,429

5 2,009,980 687,584 1,232,078

5 2,287,911 822,193 1,419,253

5.17 3,843,450 1,066,639 1,984,738

3 48,000 48,000 48,000

3 74,880 74,880 74,880

3 82,915 82,915 82,915

(1)

Compensation paid for the Executive Officers who occupied the position for the 12 months of the year.

The Companys Fiscal Council was installed in the Ordinary General Meeting of April 19th, 2011, and became a permanent body in the Ordinary and Extraordinary General Meeting of April 20th, 2012. 13.12 Contract agreements, insurance policies or other instruments that might underlie the compensation or indemnity mechanisms applicable to managers in the occurrence of dismissal or retirement Not applicable. The Company has no contract agreements, insurance policies or other instruments that might underlie the compensation or indemnity mechanisms applicable to managers in the occurrence of dismissal or retirement.

76

13.13 With respect to the last three accounting reference periods, disclose the percentage of total compensation for each board or committee as acknowledged in the Company results and which applies to members of the Executive Board, of the Board of Executive Officers or the Fiscal Board, that are somehow connected to direct or indirect affiliates, in compliance with the accounting rules that govern this matter.
Year ended on December 31 Board or Committee Board of Directors Board of Executive Officers Fiscal Council 2011 16% 2012 13% 2013 14% -

13.14 With respect to the last three accounting reference periods, disclose the amounts as acknowledged in the Company results for compensation paid to members of the Executive Board, of the Board of Executive Officers or the Fiscal Board, grouped by board or committee, for any purpose other than the function they perform, such as commissions, consulting or advisory services. Not Applicable. There were no compensation of the Board of Directors, Executive Officers and Fiscal Council members recognized in the results of the Company in the fiscal years ended in 2011, 2012 and 2013, grouped by board or committee, for any purpose other than the function they perform, such as commissions, consulting or advisory services. 13.15 Compensation of Executive Officers and Fiscal Council members recognized in the results of controlling companies, direct or indirect, of companies under common control of subsidiaries of the issuer Not Applicable. There were no compensation of Executive Officers and Fiscal Council members recognized in the results of controlling companies, direct or indirect, of companies under common control of subsidiaries of the issuer in the fiscal years ended in 2011, 2012 and 2013. 13.16 Other relevant information The number of members of the Management Board, Fiscal Council and Board of Executive Officers of the Company specified in this Section 13 have been calculated in line with the requirements of OfcioCircular/CVM/SEP / No. 001/2014, as detailed in the following spreadsheet for each fiscal year:
Fiscal year 2014 (estimated) January February March April May June July August Board of Directors 8 8 8 8 8 8 8 8 Number of members of Board of Executive Officers 7 7 7 7 7 7 7 7 Fiscal Council 3 3 3 3 3 3 3 3

77

September October November December Total Number of Members (Total divided by the number of months)

8 8 8 8 96 8

7 7 7 7 84 7

3 3 3 3 36 3

Fiscal year 2013 January February March April May June July August September October November December Total Number of Members (Total divided by the number of months)

Number of members of Board of Board of Directors Executive Officers 7 5 6 5 6 5 6 5 6 5 6 5 6 5 6 5 6 5 6 5 6 5 6 7 73 62 6.08 5.17

Fiscal Council 3 3 3 3 3 3 3 3 3 3 3 3 36 3

Fiscal year 2012 January February March April May June July August September October November December Total Number of Members (Total divided by the number of months)

Number of members of Board of Board of Directors Executive Officers 7 5 7 5 7 5 7 5 7 5 7 5 7 5 7 5 7 5 7 5 7 5 7 5 84 60 7 5

Fiscal Council 3 3 3 3 3 3 3 3 3 3 3 3 36 3

Fiscal year 2011 January February March April May June July August

Number of members of Board of Board of Directors Executive Officers 7 5 6 5 6 5 6 5 7 5 7 5 7 5 7 5

Fiscal Council 3 3 3 3 3 3 3 3

78

September October November December Total Number of Members (Total divided by the number of months)

7 7 7 7 81 6.75

5 5 5 5 60 5

3 3 3 3 36 3

79

You might also like