Interim Financial Statements (ITR) MRV Engenharia e Participações S.A.

Transcription

1 Interim Financial Statements (ITR) MRV Engenharia e Participações S.A. Interim Individual and Consolidated Financial Statements for the Quarter ended March 31, 2018 and Report on Review of Interim Financial Statements

2 MRV Engenharia e Participações S.A. Interim Financial Statements (ITR) March 31, 2018 Contents Report on Review of Interim Financial Statements... 1 Reviewed Interim Financial Statements Individual Balance Sheets... 4 Statement of Income... 7 Statement of Comprehensive Income... 8 Statement of Cash Flows... 9 Statement of Changes in Equity Statements of Value Added Consolidated Balance Sheets Statement of Income Statement of Comprehensive Income Statement of Cash Flows Statement of Changes in Equity Statements of Value Added Notes to the Interim Financial Statements... 22

3 Net income of R$ 160 million in 1Q18, an increase of 22% as compared to 1Q17 Belo Horizonte, May 07 th, 2018 MRV Engenharia e Participações S.A. (B3: Brasil, Bolsa, Balcão: MRVE3 ADR OTCPINK: MRVNY), the largest homebuilder in Latin America announces its results for the first quarter of The financial information is presented in millions of Brazilian Reais (R$ million), save where otherwise indicated, and is based on the consolidated financial statements prepared and presented in accordance with International Financial Reporting Standards (IFRS), based on Guidelines CPC 04 on Technical Interpretation ICPC 02 for Brazilian Real Estate Development Entities, issued by the Accounting Pronouncements Committee (CPC) and approved by the Brazilian Securities and Exchange Commission (CVM) and the Federal Accounting Council (CFC), consistent with the standards issued by the CPC. HIGHLIGHTS Recurrent Dividends payment: R$ 1.0 billion in the last 3 years, plus an approved amount of R$ 310 million for 2018 (dividend yield: 4.5%). Net Revenue of R$ 1.2 billion, increasing 21.2% as compared to 1Q17. EBITDA of R$ 229 million, an increase of 44.1% as compared to 1Q17. ROE LTM of 12.5%, the highest level in the last 3 years. Cash Generation of R$ 86 million, increasing 21% as compared to 1Q17. Record high of net sales, net revenue and net income for a first quarter. 1

4 Message from Management Recurrent Growth of Sales Reflecting Higher Revenue During 2017, the Company rolled out its plan of growth targeting the launch of 50,000 units. This movement has already begun to show effects on the Company s results, showing an increase of net sales as compared to all quarters. In 1Q18, the company continued to report solid results, increasing 17.5% in net sales as compared to 1Q17. Consequently, we have reached record high net sales, net revenue and net profits for a first quarter, reaching R$ 1.24 billion, R$ 1.23 billion and R$ 160 million, respectively. 2

5 Cash Generation Cash generation has been positive for the 23 rd consecutive quarter, topping R$ 86 million in 1Q18. This quarter, we presented the greatest volume of transferred units recorded in the last 5 years, resulting in an increase of 21% of cash generation as compared to 1Q17. Return to shareholders Aligned with the Company s commitment to generate value to our shareholders, the company has begun to buyback shares and distribute dividends since 2014 as follows: The company posted extraordinary dividends of R$ 154,914,008.90, which was paid on April 27, 2018 at R$ 0.35 per share. The minimum mandatory dividends amounting to R$ 155,182, will be paid out on June 15, 2018, at a value of R$ 0, per share based on the shareholder s vote held on May 28, In 2018, the payment of R$ 310 million has already been approved, equaling a dividend yield of 4.5%. 3

6 Financial Performance - MRV 4

7 Operational Performance - MRV Land bank In 2018, the company will carry on with its land bank expansion strategy. However, this year the increase will be marginal as compared to We will maintain our focus on replenishing our land bank in the cities where we operate, as well as expand into large cities. After reaching a balance, we will focus on replenishing our land bank. 5

8 Gross Launches (%MRV) Launches are a consequence of the project approval flow, which are continually evolving. In this particular quarter, average prices increased due to the higher concentration of launches in capital cities and metropolitan regions. We accumulated 42,000 units in our land bank with construction licenses, totaling R$ 6.3 billion of PSV, of which R$ 3.4 billion have already acquired incorporation permits (IR) - totaling 22,000 units. In 1Q18, the number of approved projects has increased, particularly in cities where we maintain high enough numbers of units to meet current demand. The company remains focused on approving units located in regions with low supply and high demand. The company s strategy as regards launches remains unchanged; forecasting a higher volume of launches in 2018 than in

9 Pre-Sales (%MRV), net swaps The company's sales remain healthy due to the quality of launches and the strategy to increase market share in capitals and metropolitan regions. Sales reached R$ 1.5 billion in 1Q18, an increase of 13.7% as compared to 1Q17. We are pressing forward with the implementation of the "Zero Cancellation" process, adding 6 new regions in the 1Q18. Zero Cancellation In this process, sales are only registered when the mortgage is signed with the bank. As a result, pre-sales to be registered was valued at R$ million. 7

10 Sales over Supply SoS% Cancellations (%MRV) In the 1Q18, net sales amounted to 8,426 units, 22.1% higher as compared to 1Q17. While the implementation of the Zero Cancellation process is in place, the ratio will continue to trend toward zero in the upcoming quarters. 8

11 Real Estate Financing Construction and client financing processes have both been normalized in the 1Q18. The company was able to transfer the units pending from 4Q17, and record our highest volume in the last 5 years (11,457 units), increasing 58.3% as compared to 1Q17. Good performance in the client financing process will ultimately contribute to the company s recurrent cash generation. 9

12 Production Inventory at Market Value (%MRV) A slight increase in the company's finished inventory volume has resulted in the tightening of credit concessions from some financial institutions. 10

13 Financial Performance- MRV Net Operational Revenue Gross Profit Project performance is at a stable level and has shown low cost discrepancy which will consequently aid in consistent margin levels. Financial Cost recorded under COGS Selling, General and Administrative Expenses (SG&A) 11

14 In 1Q18, the company continued to improve efficiency in SG&A expenses which has contributed to the maintenance of its dilution. The ordinary increase of sales expenses as compared to 1Q17 has resulted in greater sales volume and payments of commissions, while the increase of G&A expenses has resulted in adjustments on profit share provisioning due to goal achievement. Financial Results The enhancement on financial results has been driven by lower SELIC rates in this period, as well as the increase of the amount to be capitalized. The following are the figures for overall adjusted financial results after financial charges under COGS: 12

15 EBITDA 1 The EBITDA increased by 44.1% as a result of improvements in the company s operational results, posting the highest levels of revenue for a 1 st quarter and controlled SG&A expenses. Net Income Unearned Results ³EBITDA: see definition at the Glossary 13

16 Balance Sheet Cash and Cash Equivalents and Short-term Investments Receivables from Real Estate Development In order to maintain a conservative approach and follow accounting regulations, the company promoted the adequacy of bad debt provision in the terms of CPC 48 / IFRS 9. 14

17 Previously, the company made provisions according to real default. Due to the change in accounting regulations as of 2018, the provision will be posted based on future default expectations; in other words, for the new sales receivables, provisions will be registered based on prediction. Advances from Customers Real Estate for Sale and Development Total Debt On March 31, 2018 our liability stood at R$ 3,365 million and in total of Brazilian reais, indexed mainly to the variation of the interbank deposit certificate and reference rate. The company actively seeks to extend its debt maturity term, and may opportunistically issue longer-term debt with attractive costs. Debt Maturity Schedule On March 31, 2018, the duration of MRV s debt stood at 26 months. 15

18 Debt Breakdown Weighted Average Debt Cost Net Debt Consolidated MRV Net Debt 16

19 Covenants & Corporate Risk braa- braa-- DebtCovenant 2 Receivables Covenant Net Debt + Properties Payable < 0.65 Equity Receivables + Unearned Income + Inventories Net Debt + Properties Payable + Unincurred Costs > Debt and Receivables Covenants calculated in accordance to new accounting consolidation rules as of 1Q13. 17

20 LOG Commercial Properties 18

21 Urbamais In 1Q18, Urbamais posted an increase of 32% of units sold and 18.8% of pre-sales PSV, both as compared to the same period of last year. Most of this increase has been driven by the project Jardim Bem Viver, launched in the 3Q17 in Alvares Machado, located in the metropolitan region of Presidente Prudente in state of São Paulo. Landbank (R$ million) 19

22 Pre-sales (R$ million) Production (R$ million) 20

23 Investor Relations Leonardo Corrêa Chief Financial and Investor Relations Officer Phone :+(55 31) Ricardo Paixão Investor Relations and Financial Planning Director Phone. :+(55 31) Matheus Torga Investor Relations Manager Phone.: +(55 31)

24 Attachment 01 Consolidated Statement of Income (R$ million) EBITDA (R$ million) 22

25 Attachment 02 Consolidated MRV Balance Sheet (R$ million) 23

26 Attachment 02 Consolidated MRV Balance Sheet (R$ million) continuation 24

27 Attachment 03 Consolidated Statement of Cash Flow (R$ million) 25

28 Attachment 04 Consolidated Income StatementLOG CP 100% (R$ thousands) 26

29 Attachment 05 Consolidated Balance Sheet LOG CP 100% (R$ thousands) 27

30 Attachment 06 Consolidated Statement of Cash Flow LOG CP 100% (R$ thousands) 28

31 Attachment 07 Glossary Built Units Recorded according to the progress of construction, equivalent construction. Cash Composed by the balance of cash and cash equivalents and financial investments (bonds and securities). Cash Burn cash burn as measured by the change in net debt, excluding capital increases, purchased shares held in treasury and dividend payments, when available. Construction financing Units from projects that have had construction financing approved by a financial institution within the period. Client financing Quantity of clients (individuals) that signed mortgages with a financial institution within the period Pre-Sales Every contract resulting from the sale of units over a certain period, including units being launched and units in stock. Crédito Associativo is a type of mortgage offered by Caixa Econômica Federal and Banco do Brasil to individuals that aim to finance their homes during the construction period. On the other hand, the homebuilders will also be paid by the banks according to the percentage of completion. According to this process, cash flow is faster and more efficient than the traditional method where the company is financed only when the project has been delivered. Duration Weighted average time of debt maturity. EBITDA - is equal to net income plus income tax and social contribution, net financial result, financial charges recorded under cost of goods sold, depreciation, amortization and minority interest. MRV believes that the reversion of the adjustment to present value of receivables from units sold and not yet delivered, that has been recorded as gross operating revenue is part of our operating activities and therefore we do not exclude these revenues from the calculation of EBIDTA. EBITDA is not a Brazilian GAAP measure and should not be considered alone; in addition, it should not be considered an alternative to net income as an indicator of our operating performance or cash flows, or as a measure of our liquidity. EBITDA does not have a standard definition and other companies may measure their EBITDA differently. Because the calculation of EBITDA does not take into consideration income tax and social contribution, net financial result, financial charges recorded under cost of goods sold, depreciation, amortization, minority interest, and expenses related to financial and legal advisory fees in connection with the entry of the selling shareholder and MRV initial public offering, EBITDA is an indicator of our general economic performance which is not affected by changes in interest rates, income tax and social contribution rates and rates of depreciation and amortization. Because EBITDA does not take into account certain costs related to our business which could materially affect our profits, such as financial result, taxes, depreciation, amortization and capital expenditures, among others, EBITDA is subject to limitations that impair its use as a measure of our profitability. EPS - Earnings Per Share - Basic earnings per share are calculated by dividing income for the period attributed to the holders of common shares of the parent entity by the weighted average number of common shares outstanding during the period, less treasury shares, if any. FFO Funds from Operations, Net Income minus depreciation. FFO Margin Margin calculated dividing the FFO by Net Operational Revenues. FIP M Plus Private Equity fund managed by Bradesco BBI. Finished Units Recorded at the conclusion of construction, full project at once. 29

32 GLA Gross Leasable Area, corresponding to areas available for lease. INCC Índice Nacional de Custos da Construção inflation index associated with construction costs of residential units. Land bank land held in stock with the estimated PSV. LOG Commercial Properties Subsidiary company, jointly controlled, in the business of industrial and commercial properties. LOG-CPPortfolio contemplates the GLA of the projects in operation, in construction and the potential GLA in development. Minha Casa Minha Vida (My House My Life) The Program Minha Casa Minha Vida, known as MCMV, is the national housing program of the Federal Government, which aims to reduce the housing deficit. The program envisages the construction of 3 million units for families earning up to 10 minimum wages. This program has two versions: Minha Casa Minha Vida, released in April 2009, with the goal of building one million houses to be contracted by 2010, and Minha Casa Minha Vida 2, released in 2010 with the goal of building two million additional homes, to be contracted between 2011 and NOI - Net Operating Income, equal to operating revenues less project direct expenses. Novo Mercado - Special listing segment of the BM&FBOVESPA, different corporate governance rules in which the company was included on July 23, OCPC 04 and PoC Method (Percentage of Completion) Revenues, as well as the costs and expenses relating to real estate development activity, are recognized over the period of the construction of the real estate project, in line with the evolution of costs incurred, according to OCPC 04. Most of our sales consist of credit sales carried out through installments. On an overall basis, we receive the value (or part of the value, in case of credit sales) in the sales contracts before revenue recognition. The revenue from real estate development, relative to a certain period, reflects the recognition of sales that were previously contracted. PSV Potential Sales Value - The PSV value is equivalent to the total number of units for potential launch, multiplied by average estimated sales price of unit. RET Special Tax Regime ROE Return on Equity ROE is defined as the ratio between net income (after interest and taxes) and the average shareholder s equity. SBPE Sistema Brasileiro de Poupança e Empréstimo real estate mortgage using funds from savings account. SFH Funds Funds from the National Housing System (SFH) are originated from the Government Severance Indemnity Fund for Employees (FGTS) and from savings accounts deposits (SBPE). Starwood Starwood is a private equity firm with headquarters in Greenwich, USA. Founded in 1991, Starwood has invested over US$ 8 billion of equity capital, representing over US$ 26 billion in assets. Starwood has approximately US$ 16 billion of assets under management, having invested in nearly every class of real estate on a global basis, including offices, retail, residential, golf, hotels, resorts and industrial assets. 30

33 Swap Agreements A system in which the land-owner gets a certain number of units to be built on the land in exchange for the land. Unearned Results the balance of real estate sale transactions already contracted, referring to uncompleted properties, non-incurred budgeted costs (according to budgets), and unearned revenue from sale of properties, not reflected in the financial statements. Yield on cost Defined as the Rent Revenues divided by Total Investment. Disclaimer Unless otherwise stated, the operating data refer to MRV s stake in projects. This presentation contains forecast statements relating to the prospects of the business, estimates for operating and financial results and those related to growth prospects of MRV. These are mere projections and, as such, are based exclusively on the management s expectations about the future of the business. These expectations are highly dependent upon required approvals and licenses for projects, market conditions, performance of the Brazilian economy, the sector and international markets and, therefore, are subject to changes without prior notice. This performance report includes accounting data and non-accounting data such as operating and financial results and outlooks based on the expectations of the Board of Directors. The non-accounting data such as values and units of Launches, Pre-Sales, amounts related to the housing program Minha Casa Minha Vida, Inventory at Market Value, Land bank, Unearned Results, Cash Disbursement and Guidance were not subject to review by the company s independent auditors. The EBITDA, in this report, represents the net income before income tax and social contribution, net financial result, financial costs recorded under cost of goods sold, depreciation, amortization and minority interest. MRV believes that the reversion of the adjustment to present value of receivables from units sold, and not yet delivered, that is recorded as gross operating revenue is part of our operating activities and therefore we do not exclude these revenues from calculation of EBIDTA. EBITDA is not a Brazilian GAAP and IFRS measure and should not be considered in isolation and should not be considered an alternative to net income, as an indicator of our operating performance or cash flows or as a measure of our liquidity. Because the calculation of EBITDA does not take into consideration income tax and social contribution, net financial result, financial charges recorded under cost of goods sold, depreciation, amortization and minority interest, EBITDA is an indicator of MRV general economic performance which is not affected by changes in interest rates, income tax and social contribution rates and rates of depreciation and amortization. Because EBITDA does not take into account certain costs related to our business which could materially affect our profits, such as financial result, taxes, depreciation, amortization and capital expenditures, among others, EBITDA is subject to limitations that impair its use as a measure of our profitability. Relationship with Independent Auditors Pursuant to the CVM Ordinance 381/03, we state that the company s independent auditors KPMG Auditores Independentes S/S ( KPMG ) did not provide services during the year of 2017, other than those relating to external auditing. The company s policy for hiring independent auditors ensures that there is no conflict of interest, loss of autonomy or objectivity. About MRV MRV Engenharia e Participações S.A. is the largest Brazilian real estate developer and homebuilder in the lower-income segment, with more than 38 years of experience, active in 149 cities, in 22 Brazilian states and in the Federal District. MRV is listed on the B3 s Novo Mercado, under the ticker MRVE3. The ADRs are traded on OTC PINK International Premier of the Over-The-Counter (OTC) Market, under the ticker MRVNY. 31

34 (Convenience Translation into English from the Original Previously Issued in Portuguese) Quarterly information - ITR - 3/31/ MRV Engenharia e Participações S.A. Individual / Balance Sheets Assets (In thousands of Brazilian reais R$) Code Description Current Quarter 3/31/2018 Previous year 12/31/ Total assets 12,351,244 12,345, Current assets 5,013,087 5,182, Cash and cash equivalents 444, , Cash and banks 267, , Short-term investments 177, , Receivables 787, , Trade accounts receivable 787, , Receivables from real estate development 785, , Receivables from services provided 2,144 1, Inventories 1,853,494 1,958, Real estate under construction 1,097,820 1,127, Completed units 71,435 68, Landbank 651, , Advances to suppliers 32,585 36, Material inventories Recoverable taxes 102,716 98, Recoverable current taxes 102,716 98, Prepaid expenses 44,149 35, Other current assets 1,780,165 1,888, Others 1,780,165 1,888, Other assets 64,303 70, Marketable securities 1,715,862 1,817, Noncurrent assets 7,338,157 7,163, Long-term assets 4,048,739 3,901, Receivables 414, , Trade accounts receivable 414, , Inventories 3,030,337 2,883, Landbank 3,030,337 2,883, Prepaid expenses 23,061 23, Prepaid expenses 23,061 23, Intercompany receivables 478, , Other related parties 478, , Other noncurrent assets 102,004 91, Escrow deposits and other 72,911 72, Derivative financial instruments 7,488 4, Marketable securities 21,605 15, Investments 3,024,015 3,017, Investments 3,024,015 3,017, Investments in subsidiaries 1,967,129 1,943, Interests in jointly controlled 1,056,886 1,073, Property and equipment 177, , Operating property and equipment 174, , Property and equipment under construction 3,435 3, Intangible assets 87,549 86, Intangible assets 87,549 86, Intangible assets 73,728 67, Intangible assets under development 13,821 19,136 4

35 (Convenience Translation into English from the Original Previously Issued in Portuguese) Quarterly information - ITR - 3/31/ MRV Engenharia e Participações S.A. Individual / Balance Sheets Liabilities and Equity (In thousands of Brazilian reais R$) Code Description Current Quarter 3/31/2018 Previous year 12/31/ Total liabilities 12,351,244 12,345, Current Liabilities 2,475,055 2,424, Labor and social liabilities 88,363 75, Social liabilities 9,224 10, Labor liabilities 79,139 65, Suppliers 206, , Domestic trade accounts payable 206, , Tax liabilities 40,164 39, Federal taxes 35,828 34, Income taxes and social contribution 4,905 4, Other federal taxes 30,923 30, Municipal taxes 4,336 4, Loans, financing and debentures 689, , Loans, financing and debentures 654, , Loans and financing in domestic currency 654, , Debentures 35,001 37, Others liabilities 1,428,561 1,410, Others 1,428,561 1,410, Mandatory minimum dividend payable 155, , Land payables 642, , Advances from customers 368, , Other payables 48,899 81, Deferred tax liabilities 26,832 25, Payables for investment acquisition 59,500 61, Net capital deficiency liability - Investments 127, , Accruals 22,025 25, Other accruals 22,025 25, Provision for maintenance of real estate 22,025 25, Noncurrent liabilities 4,291,299 4,379, Loans, financing and debentures 2,106,447 2,178, Loans, financing and debentures 687, , Loans and financing in domestic currency 687, , Debentures 1,419,208 1,442, Others liabilities 2,046,688 2,066, Others 2,046,688 2,066, Land payables 1,639,749 1,639, Advances from customers 402, , Other payables 4,228 9, Deferred tax liabilities 16,029 18, Accruals 122, , Provision for civil, labor and tax risks 74,152 70, Tax provisions Labor Provisions 33,613 32, Civil provisions 39,754 37, Other accruals 47,983 44, Provision for maintenance of real estate 47,983 44, Equity 5,584,890 5,541, Paid in capital 4,769,945 4,769, Capital reserves 36,694 35, Recognized options granted 63,003 61,773 5

36 Code Description Current Quarter 3/31/2018 Previous year 12/31/ Expenses on share issuance (26,309) (26,309) Earnings reserve 635, , Legal reserve 123, , Retained profit reserve 523, , Treasury shares (11,438) (16,954) Earnings/losses accumulated 142,751-6

37 (Convenience Translation into English from the Original Previously Issued in Portuguese) Quarterly information - ITR - 3/31/ MRV Engenharia e Participações S.A. Individual / Statement of Income (In thousands of Brazilian reais R$) Code Description 1/1/2018 to 3/31/2018 1/1/2017 to 3/31/ Revenue from sales and services 597, , Net operating revenue 597, , Cost of sales and services (406,226) (340,943) Cost of real estate sales and services (406,226) (340,943) 3.03 Gross profit 191, , Operating income (expenses) (39,675) (58,600) Selling expenses (76,166) (80,546) General and administrative expenses (76,565) (64,608) Other operating incomes 9,498 8, Other operating expenses (23,967) (22,783) Results from equity participation 127, , Income before financial income and taxes 151, , Financial income (expenses), net 19,506 36, Financial income 45,650 61, Financial income 34,391 53, Financial income from receivables from real estate development 11,259 8, Financial expenses (26,144) (24,702) 3.07 Income before taxes 171, , Income tax and social contribution (11,685) (10,166) Current (11,675) (12,109) Deferred (10) 1, Net income (loss) from continuing operations 159, , Net income (loss) for the period 159, , Earnings per share (In Reais - R$): Basic ON Diluted ON

38 (Convenience Translation into English from the Original Previously Issued in Portuguese) Quarterly information - ITR - 3/31/ MRV Engenharia e Participações S.A. Individual / Statement of Comprehensive Income (In thousands of Brazilian reais R$) Code Description 1/1/2018 to 3/31/2018 1/1/2017 to 3/31/ Net income 159, , Comprehensive income for the period 159, ,517 8

39 (Convenience Translation into English from the Original Previously Issued in Portuguese) Quarterly information - ITR - 3/31/ MRV Engenharia e Participações S.A. Code Individual / Statement of Cash Flows (In thousands of Brazilian reais R$) Description 1/1/2018 to 3/31/2018 1/1/2017 to 3/31/ Net cash used in operating activities (19,614) 217, Cash provided by operating activities 97,610 47, Net income for the period 159, , Depreciation and amortization 10,860 11, Recognized stock options granted 1,210 1, Property and equipment write off Financial result 11,661 (21,502) Results from equity participation (127,525) (100,372) Provision for maintenance of real estate 7,072 5, Provision for civil, labor and tax risks 5, Allowance for doubtful accounts 11,978 9, Amortization of prepaid expenses 19,121 17, Results from derivative financial instruments (2,661) (1,450) Deferred taxes on income (IRPJ and CSSL) 10 (1,943) Deferred taxes on revenue (PIS and COFINS) 684 (4,904) Increase (decrease) in assets and liabilities (117,224) 169, (Increase) decrease in receivables from real estate development 21, , (Increase) decrease in real estate for sale (14,259) 30, (Increase) decrease in prepaid expenses (27,202) (22,690) (Increase) decrease other assets 1,610 35, Increase (decrease) in trade payables Increase (decrease) in payroll and related taxes 12,467 7, Increase (decrease) in taxes, fees and contributions 15,526 (3,165) Increase (decrease) in advances from customers 4,194 (27,243) Increase (decrease) in other payables (20,307) (9,251) Interest paid (78,607) (47,696) IRPJ and CSSL paid (15,351) (468) Realization of accrual for maintenance of real estate (12,508) (12,773) Amounts paid for civil, labor and tax risks (4,917) (5,562) 6.02 Net cash provided in investing activities 108,117 (652,122) Increase in marketable securities (633,545) (1,140,613) Decrease in marketable securities 753, , Advances to related parties (285,985) (17,054) Receipts from related parties 233,269 13, (Increase) decrease in investments 76,131 (45,651) Acquisition of property and equipment and intangible assets (30,616) (12,851) Payment for acquisition of subsidiary/equity interest (5,000) (11,367) 6.03 Net cash provided by (used in) financing activities (47,339) 719, Loans from (to) related parties (15,550) 10, Proceeds from loans, financing and debentures 157,954 1,025, Repayment of loans, financing and debentures (191,600) (165,878) Paid dividends - (150,075) Proceeds from exercised stock options 4, Capital transaction (1,506) (234) Contracted and redeemed derivative financial instruments (655) (683) 6.05 Net decrease in cash and cash equivalents 41, , Cash and cash equivalents at beginning of period 403, , Cash and cash equivalents at end of period 444, ,692 9

40 (Convenience Translation into English from the Original Previously Issued in Portuguese) Quarterly information - ITR - 3/31/ MRV Engenharia e Participações S.A. Code Individual / Statement of Changes in Equity 1/1/2018 to 3/31/2018 (In thousands of Brazilian reais R$) Description Paid-in capital Capital reserves, recognized options granted and treasury shares Earnings reserves Earnings / losses accumulated Other comprehensive income Equity attributable to Company owners 5.01 Opening balance 4,769,945 35, , ,541, Prior years adjustments - - (104,871) - - (104,871) Effect of CPC 48 / IFRS 9 adoption - - (104,871) - - (104,871) 5.03 Adjusted opening balance 4,769,945 35, , ,436, Shareholders capital transaction - 1,230 4,018 (16,911) - (11,663) Recognized options granted - 1, , Capital transaction (16,911) - (16,911) Treasury shares disposed to beneficiaries of stock option plan - - 4, , Comprehensive income , , Net income , , Closing balance 4,769,945 36, , ,751-5,584,890 10

41 (Convenience Translation into English from the Original Previously Issued in Portuguese) Quarterly information - ITR - 3/31/ MRV Engenharia e Participações S.A. Code Individual / Statement of Changes in Equity 1/1/2017 to 3/31/2017 (In thousands of Brazilian reais R$) Description Paid-in capital Capital reserves, recognized options granted and treasury shares Earnings reserves Earnings / losses accumulated Other comprehensiv e income Equity attributable to Company owners 5.01 Opening balance 4,509,521 28, , ,183, Adjusted opening balance 4,509,521 28, , ,183, Shareholders capital transaction - 1,144 (149,428) (234) - (148,518) Recognized options granted - 1, , Capital transaction (234) - (234) Treasury shares disposed to beneficiaries of stock option plan Extraordinary dividends - - (150,075) - - (150,075) 5.05 Comprehensive income , , Net income , , Closing balance 4,509,521 30, , ,283-5,165,728 11

42 (Convenience Translation into English from the Original Previously Issued in Portuguese) Quarterly information - ITR - 3/31/ MRV Engenharia e Participações S.A. Individual / Statement of Value Added (In thousands of Brazilian reais R$) Code Description 1/1/2018 to 3/31/2018 1/1/2017 to 3/31/ Revenue 624, , Gross operating revenue 621, , Other revenue 9,497 8, Revenue related to construction of own assets 5,149 4, Allowance for doubtful accounts (11,978) (9,725) 7.02 Inputs purchased from third parties (407,459) (378,239) Inputs purchased from third parties (407,459) (378,239) 7.03 Gross value added 216, , Retentions (10,860) (11,343) Depreciation, amortization and depletion (10,860) (11,343) 7.05 Net value added generated 206, , Value added received in transfer 174, , Results from equity participation 127, , Financial income 47,207 64, Total value added for distribution 380, , Value added distributed 380, , Personnel 81,295 68, Salaries and wages 57,761 59, Benefits 17,183 6, Severance Pay Fund (FGTS) 6,351 2, Taxes, charges and contributions 67,524 49, Federal 49,966 35, State Municipal 17,248 14, Debt remuneration 72,318 52, Interest 57,426 41, Rentals 14,484 11, Others Shareholders 159, , Earnings retained in the period 159, ,517 12

43 (Convenience Translation into English from the Original Previously Issued in Portuguese) Quarterly information - ITR - 3/31/ MRV Engenharia e Participações S.A. Consolidated / Balance Sheets Assets (In thousands of Brazilian reais R$) Code Description Current Quarter 3/31/2018 Previous year 12/31/ Total assets 14,397,838 14,558, Current assets 8,128,620 8,315, Cash and cash equivalents 788, , Cash and banks 611, , Short-term investments 177, , Receivables 1,553,289 1,594, Trade accounts receivable 1,553,289 1,594, Receivables from real estate development 1,550,807 1,591, Receivables from services provided 2,482 2, Inventories 3,299,796 3,385, Real estate under construction 2,209,006 2,274, Completed units 123, , Landbank 914, , Advances to suppliers 51,671 57, Material inventories 292 2, Recoverable taxes 133, , Recoverable current taxes 133, , Prepaid expenses 88,076 75, Other current assets 2,264,809 2,417, Others 2,264,809 2,417, Other assets 60,752 51, Marketable securities 2,204,057 2,365, Noncurrent assets 6,269,218 6,242, Long-term assets 4,920,697 4,898, Receivables 930,577 1,022, Trade accounts receivable 930,577 1,022, Inventories 3,758,290 3,627, Landbank 3,758,290 3,627, Prepaid expenses 39,012 40, Prepaid expenses 39,012 40, Intercompany receivables 60,735 86, Other related parties 60,735 86, Other noncurrent assets 132, , Escrow deposits and other 102, , Derivative financial instruments 8,095 4, Marketable securities 21,872 15, Investments 1,056,886 1,073, Investments 1,056,886 1,073, Interests in jointly controlled 1,056,886 1,073, Property and equipment 203, , Operating property and equipment 195, , Property and equipment under construction 7,432 9, Intangible assets 88,576 87, Intangible assets 88,576 87, Intangible assets 73,915 67, Intangible assets under development 14,661 19,704 13

44 (Convenience Translation into English from the Original Previously Issued in Portuguese) Quarterly information - ITR - 3/31/ MRV Engenharia e Participações S.A. Consolidated / Balance Sheets Liabilities and Equity (In thousands of Brazilian reais R$) Code Description Current Quarter 3/31/2018 Previous year 12/31/ Total liabilities 14,397,838 14,558, Current Liabilities 3,164,698 3,249, Labor and social liabilities 137, , Social liabilities 15,245 16, Labor liabilities 122, , Suppliers 299, , Domestic trade accounts payable 299, , Tax liabilities 59,428 61, Federal taxes 53,092 54, Income taxes and social contribution 12,323 12, Other federal taxes 40,769 41, Municipal taxes 6,336 6, Loans, financing and debentures 852, , Loans, financing and debentures 817, , Loans and financing in domestic currency 817, , Debentures 35,001 37, Others liabilities 1,771,075 1,875, Others 1,771,075 1,875, Mandatory minimum dividend payable 155, , Land payables 790, , Advances from customers 482, , Other payables 136, , Deferred tax liabilities 56,866 54, Payables for investment acquisition 59,500 61, Net capital deficiency liability - Investments 90,557 88, Accruals 44,226 49, Other accruals 44,226 49, Provision for maintenance of real estate 44,226 49, Noncurrent liabilities 5,429,637 5,511, Loans, financing and debentures 2,512,397 2,630, Loans, financing and debentures 1,093,189 1,187, Loans and financing in domestic currency 1,093,189 1,187, Debentures 1,419,208 1,442, Others liabilities 2,678,466 2,647, Others 2,678,466 2,647, Land payables 2,000,716 2,032, Advances from customers 652, , Other payables 24,762 30, Deferred tax liabilities 38,026 41, Accruals 200, , Provision for civil, labor and tax risks 100,718 95, Tax provisions Labor Provisions 39,233 38, Civil provisions 60,591 56, Environment provisions Other accruals 100,030 95, Provision for maintenance of real estate 100,030 95, Equity 5,803,503 5,797, Paid in capital 4,769,945 4,769, Capital reserves 36,694 35,464 14

45 Code Description Current Quarter 3/31/2018 Previous year 12/31/ Recognized options granted 63,003 61, Expenses on share issuance (26,309) (26,309) Earnings reserve 635, , Legal reserve 123, , Retained profit reserve 523, , Treasury shares (11,438) (16,954) Earnings/losses accumulated 142, Noncontrolling shareholders 218, ,359 15

46 (Convenience Translation into English from the Original Previously Issued in Portuguese) Quarterly information - ITR - 3/31/ MRV Engenharia e Participações S.A. Consolidated / Statement of Income (In thousands of Brazilian reais R$) Code Description 1/1/2018 to 3/31/2018 1/1/2017 to 3/31/ Revenue from sales and services 1,229,206 1,014, Net operating revenue 1,229,206 1,014, Cost of sales and services (815,223) (672,177) Cost of real estate sales and services (815,223) (672,177) 3.03 Gross profit 413, , Operating income (expenses) (245,527) (232,846) Selling expenses (133,976) (127,668) General and administrative expenses (83,484) (71,182) Other operating incomes 9,989 10, Other operating expenses (30,025) (28,242) Results from equity participation (8,031) (15,817) 3.05 Income before financial income and taxes 168, , Financial income (expenses), net 36,226 49, Financial income 64,796 76, Financial income 44,612 64, Financial income from receivables from real estate development 20,184 11, Financial expenses (28,570) (27,286) 3.07 Income before taxes 204, , Income tax and social contribution (27,370) (24,150) Current (26,215) (24,872) Deferred (1,155) Net income (loss) from continuing operations 177, , Net income (loss) for the period 177, , Attributable to shareholders of the company 159, , Non-controlling interests 17,650 3, Earnings per share (In Reais - R$): Basic ON Diluted ON

47 (Convenience Translation into English from the Original Previously Issued in Portuguese) Quarterly information - ITR - 3/31/ MRV Engenharia e Participações S.A. Consolidated / Statement of Comprehensive Income (In thousands of Brazilian reais R$) Code Description 1/1/2018 to 3/31/2018 1/1/2017 to 3/31/ Net income 177, , Comprehensive income for the period 177, , Attributable to shareholders of the company 159, , Non-controlling interests 17,650 3,484 17

48 (Convenience Translation into English from the Original Previously Issued in Portuguese) Quarterly information - ITR - 3/31/ MRV Engenharia e Participações S.A. Code Consolidated / Statement of Cash Flows (In thousands of Brazilian reais R$) Description 1/1/2018 to 3/31/2018 1/1/2017 to 3/31/ Net cash used in operating activities 79,013 69, Cash provided by operating activities 285, , Net income for the period 177, , Depreciation and amortization 12,932 13, Recognized stock options granted 1,210 1, Property and equipment write off 544 1, Financial result 3,189 (27,864) Results from equity participation 8,031 15, Provision for maintenance of real estate 14,584 11, Provision for civil, labor and tax risks 8,231 3, Allowance for doubtful accounts 20,915 17, Amortization of prepaid expenses 38,592 33, Results from derivative financial instruments (2,743) (1,740) Deferred taxes on income (IRPJ and CSSL) 1,155 (722) Deferred taxes on revenue (PIS and COFINS) 1,732 (421) Increase (decrease) in assets and liabilities (206,671) (131,517) (Increase) decrease in receivables from real estate development 24,067 95, (Increase) decrease in real estate for sale (6,815) (72,304) (Increase) decrease in prepaid expenses (49,365) (43,907) (Increase) decrease other assets (14,119) 9, Increase (decrease) in trade payables (5,344) (348) Increase (decrease) in payroll and related taxes 20,893 12, Increase (decrease) in taxes, fees and contributions 22,524 5, Increase (decrease) in advances from customers (5,653) (29,099) Increase (decrease) in other payables (46,975) (10,367) Interest paid (91,313) (62,071) IRPJ and CSSL paid (24,980) (10,659) Realization of accrual for maintenance of real estate (22,269) (17,567) Amounts paid for civil, labor and tax risks (7,322) (7,585) 6.02 Net cash provided in investing activities 124,543 (573,625) Increase in marketable securities (1,233,360) (1,599,310) Decrease in marketable securities 1,418,466 1,051, Advances to related parties (12,150) (20,913) Receipts from related parties 46,047 14, (Increase) decrease in investments (56,350) 8, Payment for acquisition of subsidiary/equity interest (5,000) (11,367) Acquisition of property and equipment and intangible assets (33,110) (15,951) 6.03 Net cash provided by (used in) financing activities (127,990) 790, Proceeds from exercised stock options 4, Proceeds from loans, financing and debentures 305,980 1,208, Repayment of loans, financing and debentures (396,835) (265,324) Paid dividends - (150,075) Capital transaction 2,224 (234) Loans from (to) related parties (31,682) 7,429 Net contributions from (distribution to) noncontrolling shareholders (11,040) (9,435) Contracted and redeemed derivative financial instruments (655) (683) 6.05 Net decrease in cash and cash equivalents 75, , Cash and cash equivalents at beginning of period 713, , Cash and cash equivalents at end of period 788, ,386 18

49 (Convenience Translation into English from the Original Previously Issued in Portuguese) Quarterly information - ITR - 3/31/ MRV Engenharia e Participações S.A. Code Consolidated / Statement of Changes in Equity 1/1/2018 to 3/31/2018 (In thousands of Brazilian reais R$) Description Paid-in capital Capital reserves, recognized options granted and treasury shares Earnings reserves Earnings / losses accumulated Other comprehensive income Equity attributable to Company owners Noncontrolling interest 5.01 Opening balance 4,769,945 35, , ,541, ,359 5,797, Prior years adjustments - - (104,871) - - (104,871) (4,967) (109,838) Effect of CPC 48 / IFRS 9 adoption - - (104,871) - - (104,871) (4,967) (109,838) 5.03 Adjusted opening balance 4,769,945 35, , ,436, ,392 5,687, Shareholders capital transaction - 1,230 4,018 (16,911) - (11,663) (49,429) (61,092) Recognized options granted - 1, ,230-1, Capital transaction (16,911) - (16,911) (38,389) (55,300) Treasury shares disposed to beneficiaries of stock option plan - - 4, ,018-4, Net contributions from (distribution to) noncontrolling shareholders (11,040) (11,040) 5.05 Comprehensive income , ,662 17, , Net income , ,662 17, , Closing balance 4,769,945 36, , ,751-5,584, ,613 5,803,503 Total 19

50 (Convenience Translation into English from the Original Previously Issued in Portuguese) Quarterly information - ITR - 3/31/ MRV Engenharia e Participações S.A. Code Consolidated / Statement of Changes in Equity 1/1/2017 to 3/31/2017 (In thousands of Brazilian reais R$) Description Paid-in capital Capital reserves, recognized options granted and treasury shares Earnings reserves Earnings / losses accumulated Other comprehensive income Equity attributable to Company owners Noncontrolling interest 5.01 Opening balance 4,509,521 28, , ,183, ,758 5,437, Adjusted opening balance 4,509,521 28, , ,183, ,758 5,437, Shareholders capital transaction - 1,144 (149,428) (234) - (148,518) (9,435) (157,953) Recognized options granted - 1, ,144-1, Capital transaction (234) - (234) - (234) Treasury shares disposed to beneficiaries of stock option plan Extraordinary dividends - - (150,075) - - (150,075) - (150,075) Net contributions from (distribution to) noncontrolling shareholders (9,435) (9,435) 5.05 Comprehensive income , ,517 3, , Net income , ,517 3, , Closing balance 4,509,521 30, , ,283-5,165, ,807 5,413,535 Total 20