Capital composition 1. Balance sheet assets 2. Balance sheet liabilities and equity 3. Statement of income 5. Statement of comprehensive income 6

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1 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Contents Company information Capital composition 1 Parent company financial statements Balance sheet assets 2 Balance sheet liabilities and equity 3 Statement of income 5 Statement of comprehensive income 6 Statement of cash flows 7 Statement of changes in equity 1/1/2018 to 9/30/ /1/2017 to 9/30/ Statement of value added 10 Consolidated financial statements Balance sheet assets 11 Balance sheet liabilities and equity 12 Statement of income 14 Statement of comprehensive income 15 Statement of cash flows 16 Statement of changes in equity 1/1/2018 to 9/30/ /1/2017 to 9/30/ Statement of value added 19 Comments on company performance 20 Notes to the interim information 33 Reports and Declarations Report on review of quarterly information without exceptions 63 Report of Supervisory Board or equivalent body 64 Officers declaration on the financial statements 65 Officers declaration on the independent auditor s report 66

2 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Company information / Capital composition Number of shares (in thousands) Current quarter 9/30/2018 Paid-up capital Common shares 90,303 Preferred shares 0 Total 90,303 Treasury shares Common shares 52 Preferred shares 0 Total 52 PAGE: 1 of 66

3 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Parent company financial statements / Balance sheet assets (R$ thousand) Code Current quarter Prior year Description 9/30/ /31/ Total assets 1,087,729 1,032, Current assets 671, , Cash and cash equivalents 295 4, Cash investments 269, , Cash investments measured at fair value through profit or loss 269, , Cash investments measured at fair value through profit or loss 269, , Trade and other receivables 295, , Trade receivables 280, , Other receivables 15, Dividends receivable 15, Inventories 57,429 36, Taxes recoverable 32,907 36, Current taxes recoverable 32,907 36, Other current assets 16,328 13, Other 16,328 13, Non-current assets 416, , Long-term receivables 73,701 52, Trade and other receivables 11,764 11, Trade receivables 11,764 11, Deferred taxes 25,562 8, Deferred income tax and social contribution 25,562 8, Receivables from related parties 22,384 18, Receivables from subsidiaries 22,384 18, Other non-current assets 13,991 14, Judicial deposits 13,104 12, Other 887 1, Investments 282, , Equity interests 279, , Investments in subsidiaries 279, , Investment property 3,324 2, Investment property 3,324 2, Property, plant and equipment 26,377 21, Property, plant and equipment in operation 26,377 21, Intangible assets 33,104 38, Intangible assets 33,104 38, Trademarks and patents 4,508 3, Store use rights Software use rights 28,596 34,120 PAGE: 2 of 66

4 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Parent company financial statements / Balance sheet liabilities and equity (R$ thousand) Code Current quarter Prior year Description 9/30/ /31/ Total liabilities 1,087,729 1,032, Current liabilities 304, , Salaries, vacation pay and social charges payable 35,204 29, Social charges 2,337 3, Salaries and vacation pay 32,867 26, Trade payables 113,059 96, Domestic suppliers 112,994 96, Foreign suppliers Taxes payable 16,058 9, Federal taxes payable 15,146 8, Income tax and social contribution payable 2, Other federal taxes payable 12,329 8, State taxes payable Local taxes payable Borrowings 129, , Borrowings 129, , In local currency 8,908 8, In foreign currency 120,748 99, Other liabilities 10,142 24, Other 10,142 24, Dividends and interest on capital payable 0 18, Other 10,142 6, Non-current liabilities 70,592 99, Borrowings 10,868 17, Borrowings 10,868 17, In local currency 10,868 17, Other liabilities 53,012 76, Payables to related parties 53,012 76, Payables to other related parties 53,012 76, Provisions 6,139 6, Provisions for tax, social security, labor and civil contingencies 6,139 6, Provision for social security and labor contingencies 4,004 4, Provision for civil contingencies Provision for tax contingencies 1,675 1, Deferred profit and revenue Deferred revenue Equity 713, , Paid-up capital 341, , Capital reserves 45,525 44, Special reserve for goodwill arising from merger 21,470 21, Treasury shares -2,332-1, Share option and restricted stock plans 26,387 24, Revenue reserves 243, , Legal reserve 43,707 43, Retained profit reserve 135, , Tax incentive reserve 64,658 64,658 PAGE: 3 of 66

5 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Parent company financial statements / Balance sheet liabilities and equity (R$ thousand) Current quarter Prior year Code Description 9/30/ /31/ Proposed additional dividend 0 2, Investment reserve 0 2, Retained earnings/accumulated deficit 79, Other comprehensive income 3,614-1,986 PAGE: 4 of 66

6 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Parent company financial statements / Statement of income (R$ thousand) Current quarter YTD - current year Same quarter of YTD - Code Description 7/1/2018 to 9/30/2018 prior year prior year 1/1/2018 to 9/30/2018 7/1/2017 to 9/30/2017 1/1/2017 to 9/30/ Revenue from sales of goods and/or services 322, , , , Cost of sales and/or services -200, , , , Gross profit 122, , , , Operating income/expenses -68, ,521-62, , Selling expenses -44, ,352-43, , General and administrative expenses -26,841-80,880-23,208-71, Other operating expenses 182-3, Equity in the results of investees 2,351 7,879 4,090 9, Profit before finance result and taxes 53, ,036 50, , Finance result -5,126-20,892 3,194 14, Finance income 6,457 21,472 6,936 22, Interest income 5,273 16,666 6,936 22, Foreign exchange gains 1,184 4, Finance costs -11,583-42,364-3,742-7, Interest expense -4,945-14,930-1,894-6, Foreign exchange losses -6,638-27,434-1,848-1, Profit before income tax and social contribution 48, ,144 53, , Income tax and social contribution -8,076-6,743-16,171-30, Current -9,188-20,906-18,641-38, Deferred 1,112 14,163 2,470 7, Profit for the period from continuing operations 40, ,401 37,681 99, Profit for the period 40, ,401 37,681 99, Earnings per share (expressed in R$ per share) Basic earnings per share Common shares Diluted earnings per share Common shares PAGE: 5 of 66

7 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Parent company financial statements / Statement of comprehensive income (R$ thousand) Current quarter YTD - Same quarter of YTD - Code Description 7/1/2018 to 9/30/2018 current year prior year prior year 1/1/2018 to 9/30/2018 7/1/2017 to 9/30/2017 1/1/2017 to 9/30/ Profit for the period 40, ,401 37,681 99, Other comprehensive income 1,698 5,600 1, Foreign exchange differences arising from the translation of foreign operations 1,893 10,330 1, Net investment hedge , Comprehensive income for the period 41, ,001 38,909 99,806 PAGE: 6 of 66

8 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Parent company financial statements / Statement of cash flows indirect method (R$ thousand) YTD - YTD - Code Description current year prior year 1/1/2018 to 9/30/2018 1/1/2017 to 9/30/ Net cash inflow from operating activities 91, , Cash from operations 126, , Profit before income tax and social contribution 107, , Depreciation and amortization 15,612 14, Result on disposal of property, plant and equipment and intangible assets 1, Equity in results of investees -7,879-9, Provision for labor, tax and civil contingencies Interest and foreign exchange variation on 16,778 1,139 Borrowings Interest income on cash investments -12,680-18, Provision for impairment of trade receivables 1,470 7, Addition to provision for inventory losses 664 1, Share option and restricted stock plans 4,163 3, Changes in assets and liabilities -32,514 20, Trade receivables -32,182-27, Inventories -21,825-2, Changes in other current and non-current assets -1,553-1, Taxes recoverable -9, Judicial deposits , Trade payables 16,504 44, Salaries and vacation pay 6,389 9, Taxes and social charges payable 6,058-2, Other liabilities 3,981 2, Other -2,565-18, Income tax and social contribution paid -2,565-18, Net cash inflow from investing activities 24,454 21, Purchases of property, plant and equipment and intangible assets -16,125-5, Proceeds from sale of property, plant and equipment and intangible assets Cash investments -497, , Redemption of cash investments 538, , Capital contribution to subsidiaries 0-1, Dividends received 0 4, Net cash outflow from financing activities -120, , Repayments of borrowings -6,681-24, Payment of interest on borrowings -3,035-1, Related parties -27,258 16, Interest on capital -41,922-21, Distribution of profits -48, , Share capital increase share issue 10,698 20, Repurchase of shares -3, Increase (decrease) in cash and cash equivalents -3,967 1, Cash and cash equivalents at the beginning of the period 4, Cash and cash equivalents at the end of the period 295 1,220 PAGE: 7 of 66

9 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Parent company financial statements / Statement of changes in equity - 1/1/2018 to 9/30/2018 (R$ thousand) Paid-up Capital reserves, Revenue reserves Retained earnings or Other comprehensive Equity Code Description capital options granted and accumulated deficit income treasury shares 5.01 Opening balances 330,375 44, ,406 2,796-1, , Adjusted opening balances 330,375 44, ,406 2,796-1, , Equity transactions with shareholders 10,698 1,156-46,000-23, , Purchase of treasury shares 0-3, , Interest on capital , , Share options and restricted stock granted 0 4, , Share issue 10, , Proposed dividends , , Interim dividends , , Total comprehensive income ,401 5, , Profit for the period , , Other comprehensive income ,600 5,600 Foreign exchange differences arising from the translation of foreign operations ,330 10, Net investment hedge ,730-4, Closing balances 341,073 45, ,406 79,400 3, ,018 PAGE: 8 of 66

10 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Parent company financial statements / Statement of changes in equity - 1/1/2017 to 9/30/2017 (R$ thousand) Retained earnings or Paid-up Capital reserves, Revenue reserves accumulated Other comprehensive Equity Code Description capital options granted and deficit income treasury shares 5.01 Opening balances 310,008 39, , , , Adjusted opening balances 310,008 39, , , , Equity transactions with shareholders 20,367 3, ,975-58, , Options granted 0 3, , Dividends , , Interest on capital , , Interim dividends ,000-36, , Share issue 20, , Total comprehensive income , , Profit for the period , , Other comprehensive income Carrying value adjustments Closing balances 330,375 43, ,024 40,754-1, ,239 PAGE: 9 of 66

11 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Parent company financial statements / Statement of value added (R$ thousand) YTD - YTD - Code Description current year prior year 1/1/2018 to 9/30/2018 1/1/2017 to 9/30/ Revenue 1,025, , Sales of goods, products and services 1,026, , Provision for/reversal of impairment of trade receivables -1,470-7, Inputs acquired from third parties -790, , Cost of sales and services -704, , Materials, energy, outsourced services and other -83,327-70, Other -2,685-2, Gross value added 234, , Deductions -15,612-14, Depreciation, amortization and depletion -15,612-14, Net value added generated by the entity 218, , Value added received through transfer 32,358 35, Equity in the results of investees 7,879 9, Finance income 21,472 22, Other 3,007 3, Total value added to distribute 251, , Distribution of value added 251, , Personnel 89,621 79, Direct compensation 56,226 48, Benefits 6,022 5, Government severance indemnity fund for employees (FGTS) 4,970 4, Other 22,403 21, Employee profit sharing 10,227 12, Other 6,001 5, Share option and restricted stock plans 6,175 3, Taxes and contributions 14,267 45, Federal 40,922 70, State -26,994-24, Local Lenders and creditors 46,791 12, Interest 9,106 1, Rentals 4,427 4, Other 33,258 6, Finance cost 33,258 6, Shareholders 100,401 99, Interest on capital 21,001 21, Dividends 0 36, Profits reinvested / loss for the period 79,400 40,754 PAGE: 10 of 66

12 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Consolidated financial statements / Balance sheet assets (R$ thousand) Code Current quarter Description 9/30/2018 Prior year 12/31/ Total assets 1,110,961 1,049, Current assets 891, , Cash and cash equivalents 3,390 10, Cash investments 280, , Cash investments measured at fair value through profit or loss 280, , Cash investments measured at fair value through profit or loss 280, , Trade and other receivables 384, , Trade receivables 384, , Inventories 147, , Taxes recoverable 46,193 51, Current taxes recoverable 46,193 51, Other current assets 29,975 15, Other 29,975 15, Non-current assets 219, , Long-term receivables 62,443 44, Trade and other receivables 11,764 11, Trade receivables 11,764 11, Deferred taxes 27,263 11, Deferred income tax and social contribution 27,263 11, Other non-current assets 23,416 21, Judicial deposits 20,276 19, Other 3,140 2, Investments 3,324 2, Investment property 3,324 2, Investment property 3,324 2, Property, plant and equipment 81,843 67, Property, plant and equipment in operation 81,843 67, Intangible assets 71,499 79, Intangible assets 71,499 79, Trademarks and patents 5,659 4, Store use rights 34,960 39, Software use rights 30,880 35,539 PAGE: 11 of 66

13 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Consolidated financial statements / Balance sheet liabilities and equity (R$ thousand) Current quarter Prior year Code Description 9/30/ /31/ Total liabilities 1,110,961 1,049, Current liabilities 375, , Salaries, vacation pay and social charges payable 48,196 39, Social charges 3,841 5, Salaries and vacation pay 44,355 34, Trade payables 127, , Domestic suppliers 127, , Foreign suppliers Taxes payable 23,638 19, Federal taxes payable 19,934 13, Income tax and social contribution payable 6,699 2, Other federal taxes payable 13,235 11, State taxes payable 3,694 6, Local taxes payable Borrowings 161, , Borrowings 161, , In local currency 9,033 9, In foreign currency 152, , Other liabilities 14,775 29, Other 14,775 29, Dividends and interest on capital payable 0 18, Other 14,775 11, Non-current liabilities 22,606 28, Borrowings 11,241 18, Borrowings 11,241 18, In local currency 11,241 18, Other liabilities 1,492 1, Payables to related parties 1,492 1, Payables to controlling shareholders 1,492 1, Provisions 9,300 8, Provisions for tax, social security, labor and civil contingencies 9,300 8, Provision for social security and labor contingencies 6,760 6, Provision for civil contingencies Provision for tax contingencies 2,044 2, Deferred profit and revenue Deferred revenue Consolidated equity 713, , Paid-up capital 341, , Capital reserves 45,525 44, Special reserve for goodwill arising from merger 21,470 21, Treasury shares -2,332-1, Reserve for share option and restricted stock plans 26,387 24, Revenue reserves 243, , Legal reserve 43,707 43, Retained profit reserve 135, , Tax incentive reserve 64,658 64,658 PAGE: 12 of 66

14 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Consolidated financial statements / Balance sheet liabilities and equity (R$ thousand) Code Current quarter Description 9/30/2018 Prior year 12/31/ Proposed additional dividend 0 2, Investment reserve 0 2, Retained earnings/accumulated deficit 79, Other comprehensive income 3,614-1,986 PAGE: 13 of 66

15 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Consolidated financial statements / Statement of income (R$ thousand) Current quarter YTD - Same quarter of YTD - Code Description 7/1/2018 to 9/30/2018 current year prior year prior year 1/1/2018 to 9/30/2018 7/1/2017 to 9/30/2017 1/1/2017 to 9/30/ Revenue from sales of goods and/or services 410,404 1,114, , , Cost of sales and/or services -219, , , , Gross profit 190, , , , Operating income/expenses -130, , , , Selling expenses -96, ,267-86, , General and administrative expenses -33,941-99,725-27,009-81, Other operating expenses 141-3, Profit before finance result and taxes 60, ,162 56, , Finance result -6,300-17,956 1,996 11, Finance income 7,269 36,416 7,677 27, Interest income 5,636 17,801 7,677 25, Foreign exchange gains 1,633 18, , Finance costs -13,569-54,372-5,681-15, Interest expense -6,537-18,259-4,279-13, Foreign exchange losses -7,032-36,113-1,402-2, Profit before income tax and social contribution 53, ,206 58, , Income tax and social contribution -13,598-21,805-20,532-42, Current -15,554-34,544-23,390-50, Deferred 1,956 12,739 2,858 8, Profit for the period from continuing operations 40, ,401 37,681 99, Consolidated profit for the period 40, ,401 37,681 99, Attributable to owners of the parent 40, ,401 37,681 99, Earnings per share (expressed in R$ per share) Basic earnings per share Common shares Diluted earnings per share Common shares PAGE: 14 of 66

16 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Consolidated financial statements / Statement of comprehensive income (R$ thousand) Current quarter YTD - Same quarter of YTD - Code Description 7/1/2018 to 9/30/2018 current year prior year prior year 1/1/2018 to 9/30/2018 7/1/2017 to 9/30/2017 1/1/2017 to 9/30/ Consolidated profit for the period 40, ,401 37,681 99, Other comprehensive income 1,698 5,600 1, Foreign exchange differences arising from the translation of foreign operations 1,893 10,330 1, Net investment hedge , Consolidated comprehensive income for the period 41, ,001 38,909 99, Attributable to owners of the parent 41, ,001 38,909 99,806 PAGE: 15 of 66

17 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Consolidated financial statements / Statement of cash flows indirect method (R$ thousand) YTD - YTD - Code Description current year prior year 1/1/2018 to 9/30/2018 1/1/2017 to 9/30/ Net cash inflow from operating activities 85, , Cash from operations 164, , Profit before income tax and social contribution 122, , Depreciation and amortization 27,880 22, Result on disposal of property, plant and equipment and intangible assets 2, Provision for labor, tax and civil contingencies 434 1, Interest and foreign exchange variation on 17, Borrowings Interest income on cash investments -13,714-21, Provision for impairment of trade receivables 1,851 7, Addition to provision for inventory losses 912 3, Share option and restricted stock plans 4,163 3, Changes in assets and liabilities -64,066-3, Trade receivables -50,007-30, Inventories -34,924-9, Changes in other current assets -7, Taxes recoverable -8,171-8, Judicial deposits -1,158-3, Trade payables 23,129 42, Salaries and vacation pay 9,791 12, Taxes and social charges payable 612-5, Changes in other current liabilities 3, Other -13,996-27, Income tax and social contribution paid -13,996-27, Net cash inflow from investing activities 23,443 28, Purchases of property, plant and equipment and intangible assets -35,966-13, Proceeds from sale of property, plant and equipment and intangible assets Cash investments -730, , Redemption of cash investments 789, , Net cash outflow from financing activities -117, , Proceeds from borrowings 54,748 50, Repayments of borrowings -86,017-62, Payment of interest on borrowings -3, Interest on capital -41,922-21, Distribution of profits -48, , Receivables from (payables to) shareholders Share capital increase share issue 10,698 20, Repurchase of shares -3, Foreign exchange variation on cash and cash equivalents 1, Increase (decrease) in cash and cash equivalents -6, Cash and cash equivalents at the beginning of the period 10,156 5, Cash and cash equivalents at the end of the period 3,390 4,920 PAGE: 16 of 66

18 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Consolidated financial statements / Statement of changes in equity - 1/1/2018 to 9/30/2018 (R$ thousand) Retained earnings or Paid-up Capital reserves, Revenue reserves accumulated Other comprehensive Equity Non-controlling Consolidated Code Description capital options granted and deficit income interests equity treasury shares 5.01 Opening balances 330,375 44, ,406 2,796-1, , , Adjusted opening balances 330,375 44, ,406 2,796-1, , , Equity transactions with shareholders 10,698 1,156-46,000-23, , , Purchase of treasury shares 0-3, , , Interest on capital , , , Share options and restricted stock granted 0 4, , , Share issue 10, , , Proposed dividends , , , Interim dividends , , , Total comprehensive income ,401 5, , , Profit for the period , , , Other comprehensive income ,600 5, ,600 Foreign exchange differences arising from the translation of foreign operations ,330 10, , Net investment hedge ,730-4, , Closing balances 341,073 45, ,406 79,400 3, , ,018 PAGE: 17 of 66

19 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Consolidated financial statements / Statement of changes in equity - 1/1/2017 to 9/30/2017 (R$ thousand) Retained earnings or Paid-up Capital reserves, Revenue reserves accumulated Other comprehensive Equity Non-controlling Consolidated Code Description capital options granted and deficit income interests equity treasury shares 5.01 Opening balances 310,008 39, , , , , Adjusted opening balances 310,008 39, , , , , Equity transactions with shareholders 20,367 3, ,975-58, , , Options granted 0 3, , , Dividends , , , Interest on capital , , , Interim dividends ,000-36, , , Share issue 20, , , Total comprehensive income , , , Profit for the period , , , Other comprehensive income Carrying value adjustments Closing balances 330,375 43, ,024 40,754-1, , ,239 PAGE: 18 of 66

20 (A free translation of the original in Portuguese) Quarterly Information (ITR) 9/30/ AREZZO INDÚSTRIA E COMÉRCIO S.A. Version: 1 Consolidated financial statements / Statement of value added (R$ thousand) YTD - YTD - Code Description current year prior year 1/1/2018 to 9/30/2018 1/1/2017 to 9/30/ Revenue 1,297,038 1,168, Sales of goods, products and services 1,298,889 1,176, Provision for/reversal of impairment of trade receivables -1,851-7, Inputs acquired from third parties -895, , Cost of sales and services -702, , Materials, energy, outsourced services and other -187, , Other -5,106-3, Gross value added 401, , Deductions -27,880-22, Depreciation, amortization and depletion -27,880-22, Net value added generated by the entity 373, , Value added received through transfer 38,798 30, Finance income 36,416 27, Other 2,382 2, Total value added to distribute 412, , Distribution of value added 412, , Personnel 144, , Direct compensation 97,871 86, Benefits 13,520 12, Government severance indemnity fund for employees (FGTS) 8,745 7, Other 24,084 23, Employee profit sharing 10,290 12, Other 7,619 7, Share option and restricted stock plans 6,175 3, Taxes and contributions 74, , Federal 71,210 99, State 1,835 1, Local 1,343 1, Lenders and creditors 93,374 49, Interest 6,327 2, Rentals 39,002 34, Other 48,045 13, Finance cost 48,045 13, Shareholders 100,401 99, Interest on capital 21,001 21, Dividends 0 36, Profits reinvested / loss for the period 79,400 40,754 PAGE: 19 of 66

21 1. Company Overview About Arezzo&Co Arezzo&Co is Brazil s leading manufacturer of ladies footwear, handbags and accessories. With a history of over 45 years, it currently sells over 12 million pairs of shoes a year, in addition to handbags and accessories. It has six relevant brands - Arezzo, Schutz, Anacapri, Alexandre Birman, Fiever and Owme. Its product lines are distinguished by their innovation, design, comfort and excellent value for money. The multichannel strategy enhances the group s capillarity through owned stores, franchises, multibrand stores and Web Commerce, with a presence in every Brazilian state. Internationally, the brand products are also sold in franchises, owned stores, multibrand stores and department stores. The company ended 3Q18 with presence through 595 franchises and 54 owned stores in Brazil and U.S. and 2,450 multibrand stores in Brazil. Founded in 1972 by the brothers Anderson and Jefferson Birman, in addition to occupying top of mind of consumers of Brazilian ladies shoes, the brand is one of the most preferred in this segment and most consumed in Brazil. The brand has a trendy positioning, combining concept, high quality, contemporary design and consumer satisfaction. It is the benchmark in launching trends in Brazil and is always to be found in the editorials of the most prestigious magazines, newspapers and sites in Brazil as a reference for fast fashion in ladies footwear, handbags and accessories. The Schutz brand invests heavily in researching trends and developing materials and technology in order to create its portfolio. Its mission is to offer the public a concept of products where design, quality, fashion and freedom of expression all come together. The result is collections developed to reflect the spirit of the young, contemporary woman who makes na impact, is irreverent and has her own style. It is an invitation to be daring, to look for something different and to challenge the norm. The Anacapri brand, specializing in flats of the Arezzo&Co Group, was founded in 2008 with the purpose of simplifying the lives of its consumers with versatile fashion full of personality, but without relinquishing comfort. It produces diferente models and colors every year, which are presented in three large collections and in limited editions. The Alexandre Birman brand is a reference among Brazilian brands of ladies shoes, vying for room with the top fashion names in well-know retail chains around the world, such as in North America, Europe and Asia. The brand s hallmark is the concept of exclusiveness and sophistication, which is widely recognized abroad, and for which the Alexandre Birman brand was awarded the Vivian Infantino Emerging Talent Award as the 2009 talent in footwear creation (an award acknowledged as the Oscar of the international footwear industry). A wordplay on FIVE (the group s 5th brand) and FEVER was launched in December 2015 as an urban, cool, casual brand dedicated to a younger demographic. The path it has traveled includes engaging its customers in the brand s construction in an effort to always innovate and keep up with this generation s pace. Its icon is the white sole sneakers that translate the brand s essence: convenient, cool, and versatile. The OWME - composed by two words, own and me, which, together express the "owning herself" attitude - was created after a year of qualitative and quantitative research with consumers of different ages. The brand seeks to attend a growing demand of consumers that wants comfortable and beautiful shoes for all occasions.

22 2. Operational and Financial Performance Summary of Results 3Q18 3Q17 Δ 18 x 17 9M18 9M17 Δ 18 x 17 Net Revenues ,7% ,8% Gross Profit ,3% ,6% Grosss Margin 46,5% 45,8% 0,7 p.p. 46,3% 45,6% 0,7 p.p. EBITDA ,1% ,7% EBITDA Margin1 17,2% 17,6% -0,4 p.p. 15,1% 15,2% -0,1 p.p. Net Income ,6% ,3% Net Margin 9,8% 10,2% -0,4 p.p. 9,0% 9,9% -0,9 p.p. Indicadores Operacionais 3Q18 3Q17 Δ 18 x 17 9M18 9M17 Δ 18 x 17 # of pairs sold ('000) ,6% ,3% # of handbags sold ('000) ,2% ,5% # of employees ,0% ,0% # of stores* Owned Stores Franchises Outsourcing (as % of total production) 91,9% 90,7% 1,2 p.p 91% 90% 1,3 p.p SSS² Sell-in (franchises) -1,2% 7,2% -8,4 p.p 3,0% 6,5% -3,5 p.p SSS² Sell-out (owned stores + franchises + web) 1,6% 2,7% -1,1 p.p 4,4% 4,4% 0,0 p.p * Include international stores (1) EBITDA = Earnings before interest, income tax and social contribution on net income, depreciation and amortization. EBITDA is not a measure used in accounting practices adopted in Brazil (BR GAAP), does not represent cash flow for the periods presented and should not be considered as an alternative to net income, as an indicator of operating performance, or as an alternative to cash flow as an indicator of liquidity. EBITDA does not have a standardized meaning and Arezzo&Co's EBITDA definition may not be comparable to adjusted EBITDA of other companies. While EBITDA does not provide, in accordance with the accounting practices adopted in Brazil, a measure of operating cash flows, management uses it to measure operating performance. Additionally, the company believes that certain investors and financial analysts use EBITDA as an indicator of operating performance for a company and/ or its cash flow. (2) SSS (Same-store sales): Stores are included in comparable stores sales as of the 13th month of operation. Variations in comparable stores sales in the two periods are based on sales, net of returns, for owned stores, and on gross sales for franchises in operation during both periods under comparison. As of 4Q16, the Company started to report the SSS sell-in net of discounts. If a store is included in the calculation of comparable stores sales for only a portion of one of the periods under comparison, this store will be included in the calculation of the corresponding portion of the other period. When square meters are added to or deducted from a store included in comparable stores sales, with an impact of over 15% on the sales area, the store is excluded from comparable stores sales. When a store operation is discontinued, this store s sales are excluded from the calculation of comparable stores sales for the periods under comparison. As from this period, if a franchisee opens a warehouse, its sales will be included in comparable stores sales if its franchises operate during both periods under comparison. The so-called SSS of Franchises Sell In refers to comparison of Arezzo&Co s sales with those of each Franchised Store in operation for more than 12 months, serving as a more accurate indicator for monitoring the Group s revenue. On the other hand, SSS Sell Out is based on the point of sales performance, which, in the case of Arezzo&Co, is a better indicator of Owned Stores sales behavior and Franchises' sell out sales. The franchise sell-out figures represent the best estimate calculated on the basis of information provided by third parties. Starting in 1Q14, the Company begins to also report SSS sell-out including web commerce.

23 Gross Revenue 3Q18 Part% 3Q17 Part% Δ (%) 18 x 17 9M18 Part% 9M17 Part% Δ (%) 18 x 17 Total Gross Revenue ,4% ,5% Foreign market ,9% ,6% 39,4% ,9% ,2% 18,3% Exports ,9% ,1% 26,2% ,7% ,8% 9,6% US Operation ,1% ,9% 49,7% ,3% ,2% 24,6% Domestic Market ,1% ,4% 6,6% ,1% ,8% 9,7% By brand Arezzo ,3% ,2% 3,1% ,4% ,0% 8,5% Schutz¹ ,6% ,3% (6,2%) ,4% ,8% (2,4%) Anacapri ,6% ,0% 45,8% ,6% ,6% 43,9% Others² ,4% ,5% 85,1% ,7% ,6% 56,0% By channel Franchises ,5% ,5% 4,6% ,9% ,1% 9,2% Multibrand ,8% ,6% 7,2% ,2% ,7% 11,7% Owned Stores ,8% ,3% 3,3% ,2% ,6% 1,8% Web Commerce ,8% ,5% 23,3% ,6% ,3% 26,4% Others³ 294 0,1% 350 0,1% (16,0%) ,1% ,2% (45,7%) (1) Does not include the revenues from the international operation. (2) Includes only domestic markets for Alexandre Birman, Fiever and Owme brands and other revenues (not attributed to the brands). (3) Includes domestic market revenues that are not specific for distribution channels. Brands The third quarter of the year marks the transition between Arezzo&Co brands winter and summer collections. In July, the winter sales period finished, and the stores proceed with the transition collections (Cruise and Resort), always launched by the end of June. Transition collections enable a reading of the behavior and receptivity of the consumer to the new products in time of quick and assertive answers before the official launch of summer collections. August and September are marked by the launching and introduction of summer collections in the stores and the beginning of the campaigns of the brands, increasingly reinforcing Arezzo&Co's ability to keep the relevance in the market, strengthen connection and broaden the purchasing experience with its consumers. The Arezzo brand reached R$ million in revenues in the third quarter, a 3.1% increase compared to 3Q17, representing 55.3% of Arezzo&Co domestic gross sales. In July, the brand highlight was the active mobilization of customers and digital influencers around the #JuntasSomos (we are together ) communication, which aims to promote sorority among women. Combined with the communication, the brand also promoted a talk show, live broadcasted by social media with renowned TV hostesses. In August, Arezzo launched its summer campaign that once again had über model Gisele Bündchen as its poster girl. The month also featured the launching of "ZZ Astral" sneakers, a model linking the key footwear category of the season with the astrology/signs theme. "ZZ Astral" was the best seller product of the month, accounting for 12% of the brand gross revenues. In September, Arezzo launched the "Alice" sandal, which generated strong customer engagement, including through creative customized CRM actions. The Schutz brand maintained similar sales levels as 3Q17, with global revenues of R$ million (+0.2% versus 3Q17), representing 30.3% of the company's consolidated gross revenues. In the domestic market, the brand revenue amounted to R$ million, down 6.2% versus 3Q17. In the foreign market, Schutz's gross revenues showed a 33.7% growth in Brazilian Reais as compared to 3Q17, with a positive highlight for the U.S. operation - an important front for the brand international development, which achieved 59.9% growth in (Brazilian Reais) in the country versus 3Q17. In the quarter, the brand promoted several actions related to "BECAUSE SCHUTZ" - a statement that defines a new moment of Schutz globally and encourages behaviors of spontaneity, personality and irreverence among women, without losing the brand's sexy identity. Another concept that has been widely explored is "WE SAY DO BOTH", which aims at the freedom of style expression and the versatility of the customers - who can wear delicate high heels sandals in one occasion and sneakers in another. In this sense, it should be noted that the categories of sneakers and mules have been progressively increasing their representativeness in the brand sales, thus demonstrating Schutz's ability to follow a current trend in fashion.

24 During the period, Schutz proceeded with the refurbishments, now offering a differentiated purchasing experience to the customers, including the use of technology. Since the beginning of the year, the brand has revamped 15 stores, where 9 were owned stores and 6 franchises, which remain delivering better performance in Same Store Sales (SSS) compared to stores in the old concept. As a result, Schutz will continue to roll out such refurbishments throughout the fourth quarter and The Anacapri brand recorded revenues for R$ 60.5 million, a significant 45.8% growth vs. 3Q17, closing the quarter representing 13.6% of the Company's gross revenues in the domestic market, compared to 10.0% in 3Q17. The good performance in the franchise channel is the result of the opening of 5 stores in 3Q18 and 40 stores in the last 12 months. The multi-brand channel has gained new customers and an increased share of wallet of existing customers. Among the main achievements of the brand in the quarter, we highlight the summer campaign launching, which once again featured actress Isis Valverde as the brand's ambassador. In addition, Anacapri has promoted several actions in the sneakers category, currently one of the most relevant to the brand. The Alexandre Birman brand showed 29.5% growth, with a significant increase in SSS in the domestic market as well as in sales abroad. As a highlight of the quarter, the brand reached an important milestone in its history: the opening of its showroom in the heart of the fashion world: Milan. The space is located at Via Borgospesso, in the center of the famous Quadrilattero Della Moda. The opening of the showroom is an important step towards the expansion of Alexandre Birman brand to the European continent. Additionally, in September, the brand was once again present at New York Fashion Week and, this year, in addition to the traditional sales showroom, Alexandre Birman has developed exclusive models for the fashion show of the renowned designer Naeem Khan. The Fiever brand recorded a significant growth of 66.3% in 3Q18 compared to 3Q17, increasingly consolidating its presence as a sneakers brand in the Brazilian market. Among its action channels, Fiever showed an excellent performance in web commerce and its owned stores. In August, the brand's fifth store was inaugurated at Pátio Higienópolis mall in São Paulo, with a new architectural project that aims to integrate the growing line of men's products in its layout. The launching event of the store also featured the pocket show of singer Manu Gavassi, star of the summer campaign. Fiever continues to expand its line of men's shoes, thus increasing the size of its target market. The development of this line has been more and more accepted and potentially will become a significant growth driver for the brand in the future. The OWME brand, the sixth brand of the group, which seeks to meet women of the AB1 classes, above 35 years old and who have a growing demand for comfortable and stylish shoes, has opened its second store by the end of September at Patio Higienópolis mall in São Paulo. OWME continues to strengthen the bond with its consumers through innovative experiences related to women's well-being. Throughout the quarter, special events were held, generating broad repercussions in social media, such as pottery workshops. In July, for the first time, the brand was present in Francal, an important fair of the multibrand channel, offering the test drive of products to retailers and specialized press. The brand closed the quarter with a footprint in 176 multibrand clients. In September, the brand launched the striped sandal "Tarsila", a product that has already become a best seller.

25 Channels Monobrand - Franchises, Owned Stores and Web Commerce Reflecting the Company's strategy to strengthen monobrand stores, the Arezzo&Co point of sales network (Owned Stores + Franchises + Web Commerce) posted a 7.0% growth in sell-out sales in 3Q18 as compared to 3Q17, mainly due to the strong growth of the online channel and the net opening of 70 franchises and 3 owned stores in the last 12 months, in addition to the increase in same stores sales, which reached 1.6% in 3Q18. The sales area of stores in Brazil and abroad was 8.0% higher when compared to 3Q17, with the net addition of 39 Anacapri stores, 23 Arezzo, 7 Schutz, 1 Alexandre Birman, 1 Fiever and 2 Owme stores, amounting to 3,224 m² (excluding outlets). The Company's revenue from monobrand stores, as represented by sell-in at franchises and sell- out at owned stores and web commerce, posted a 6.4% growth in 3Q18 compared to 3Q17, mainly due to the 4.6% expansion in franchise channel and 23.3% growth in the Web Commerce channel. The franchise channel accounted for a 47.5% share of domestic sales in 3Q18 and recorded SSS sell-in at -1.2%. For comparison purposes, it is advisable that the SSS sell-in and SSS sell-out indicators should be analyzed over a period of 12 months, thus avoiding possible calendar effects usual to the Company's operation. In the last twelve months, Arezzo&Co showed a SSS sell-in of 2.5% and a SSS sell-out of 4.8%. Multibrand In 3Q18, gross revenues from the multibrand channel - an important tool for capillarity of our brands - posted a 7.2% growth versus 3Q17. The positive performance reflects the combination of the Company's actions in the channel, such as the attraction of new customers and the continuous effort to increase cross-sell. It is worth mentioning the excellent performance of Anacapri brand, which presents a high attractiveness to the merchants operating in this channel. The group's six brands are now distributed through 2,450 stores in 3Q18, up 7.0% compared to 3Q17, and are present in 1,324 cities. Foreign Market In 3Q18, the Company's revenues from the foreign market, which includes the US operation and exports to the rest of the world, was 39.4% higher versus 3Q17, representing 10.9% of total revenues, compared to 8.6% in the same period of the previous year. In the United States, through the brands Schutz and Alexandre Birman in Wholesale channels (department stores, third-party online stores and multibrand stores), Retail (flagship stores) and Web Commerce (own website), the revenues from operations recorded a 49.7% growth. As expressed in US dollars, such increase was 19.1%. The US operation closed the quarter representing 60.1% of the sales in the foreign market. All channels of both Schutz and Alexandre Birman showed growth in the period, with a highlight to the Wholesale channel. Footwear exports to the rest of the world expanded 23.6% in the period due to the good performance of Arezzo and Anacapri brands, as well as the exchange rate devaluation. Both brands had high acceptance by Latin American customers in the quarter.

26 Expansion of the Monobrand Channel We ended the quarter with 649 stores, 640 in Brazil and 9 abroad - an increase of 8.0%, with 73 net openings in the last 12 months. In 3Q18, 16 stores were opened (7 Arezzo stores - five of them in the Light concept, 5 Anacapri stores, 2 Schutz stores, 1 OWME store and 1 Fiever store). Store Information 3Q17 4Q17 1Q18 2Q18 3Q18 Sales area 1,3 - Total (m²) Sales area - franchises (m²) Sales area - owned stores² (m²) Total number of domestic stores # of franchises Arezzo Schutz Anacapri # of owned stores Arezzo Schutz Alexandre Birman Anacapri Fiever Owme 1 2 Total number of international stores # of franchises # of owned stores (1) Includes areas in square meters of the stores overseas (2) Includes seven outlet type stores with a total area of 1,961 m² (3) Includes areas in square meters of expanded stores (4) Includes Alexandre Birman and Schutz stores, 3 of them in NYC and 1 in Los Angeles

27 Key financial indicators 3Q18 3Q17 Δ (%) 18 x 17 9M18 9M17 Δ (%) 18 x 17 Gross Revenues ,4% ,5% Net Revenues ,7% ,8% COGS ( ) ( ) 9,4% ( ) ( ) 10,3% Depreciation and amortization (cost) (394) - n/a (1.047) - n/a Gross Profit ,3% ,6% Gross margin 46,5% 45,8% 0,7 p.p 46,3% 45,6% 0,7 p.p SG&A ( ) ( ) 14,9% ( ) ( ) 15,6% % of net revenues (31,8%) (30,6%) (1,2 p.p) (33,7%) (32,6%) (1,1 p.p) Selling expenses (89.084) (79.149) 12,6% ( ) ( ) 11,5% Owned stores and web commerce (32.102) (30.876) 4,0% (94.625) (91.132) 3,8% Selling, logistics and supply (56.982) (48.273) 18,0% ( ) ( ) 16,7% General and administrative expenses (31.360) (24.953) 25,7% (93.030) (75.560) 23,1% Other operating revenues (expenses) 142 (282) (150,4%) (3.794) (817) 364,4% Depreciation and amortization (expenses) (10.272) (9.218) 11,4% (26.832) (22.630) 18,6% EBITDA ,1% ,7% EBITDA Margin 17,2% 17,6% (0,4 p.p) 15,1% 15,2% (0,1 p.p) Net Income ,6% ,3% Net Margin 9,8% 10,2% (0,4 p.p) 9,0% 9,9% (0,9 p.p) Working capital 1 - as % of revenues 26,7% 23,5% 3,2 p.p 26,7% 23,5% 3,2 p.p Invested capital 2 - as % of revenues 36,7% 38,8% (2,1 p.p) 36,7% 38,8% (2,1 p.p) Total debt ,0% ,0% Net debt 3 ( ) ( ) (11,0%) ( ) ( ) (11,0%) Net debt/ebitda LTM -0,5x -0,6x - -0,5x -0,6x - (1) Working Capital: current assets minus cash, cash equivalents and financial investments less from current liabilities minus loans and financing and dividends payable. (2) Invested Capital: working capital plus fixed assets and other long term assets less income tax and deferred social contributions. (3) Net debt is equal to total interest bearing debt position at the end of a period less cash, cash equivalents and short-term financial investments. Gross Revenue The company's Gross Revenue in this quarter totaled R$ million, 9.4% increase against 3Q17. Among the primary factors driving this growth, worthy of mention are: i) growth of 23.3% in the Web Commerce channel, reaching 9.8% of gross sales in the domestic market, compared to 8.5% in 3Q17; ii) revenue increase of 45.8% in the Anacapri brand and 3.1% in the Arezzo brand compared to 3Q17; iii) growth of 4.6% in the Franchise channel and 7.2% in the Multibrand channel against 3Q17; iv) 39.4% increase in the Foreign Market, with the US Operation and Exports to the rest of the world. Gross Revenue (R$ million) 7

28 Gross Profit Gross profit for 3Q18 totaled R$ million, a 12.3% increase against 3Q17, with gross margin up by 70 bps, reaching 46.5% in 3Q18. Among the factors, the highlights are (i) the improvement in gross margin in the sell-out channels (Owned Stores and Web Commerce) and in the sell-in channels (Franchises and Multibrands), due to the exclusion of ICMS from the calculation base of PIS/Cofins, (ii) the increased share of the Web Commerce channel and the US Operation in the mix and (iii) negatively, the decrease in the gross margin of the Owned Stores channel due to higher sales volume in the sales period. Mg. Bruta Lucro Bruto (R$ mm) Operating Expenses The Company makes every effort to control its expenses levels and adjust them to the evolution of its sales. However, In 3Q18, expenses were affected by the following factors: (i) development of the US operation and (ii) expenses related to the Company's strategic projects. Selling Expenses In 3Q18, there was a 12.6% expansion of commercial expenses when compared to 3Q17, reaching R$89.1 million. It is worth mentioning that commercial expenses include: (i) Expenses of Own Stores and Web Commerce (sell-out channels), which totaled R$ 32.1 million - an increase of 4.0% in relation to 3Q17, below the 23.3% growth in the Web Commerce channel. (ii) Sales, Logistics and Supply expenses totaled R$57.0 million - an increase of 18.0% over 3Q17. Excluding incremental expenses related to the Company's strategic planning deliberations, such as the US Operation Expansion, development of the OWME and Fiever brands, Valorizza (front of CRM) and the roll-out of the Arezzo brand Light store concept - the increase in expenses would be 5.8%, lower then the growth in the sell-in channels (Multibrand, Franchises and Exports), which was 6.6%. General and Administrative Expenses In 3Q18, general and administrative expenses grew R$ 6.4 million, an increase of 25.4% compared to 3Q17. This amount includes expenses related to the Company's strategic planning, as follows: (i) development of the US operation, which mainly includes the new organizational structure; (ii) Alexandre Birman brand expansion in Europe; (ii) Other strategic corporate initiatives such as "Eternizze" (Sustainability Project).

29 ,16 0,14 0,12 0,1 0,08 0,06 0,04 0,02 0 0,14 0,12 0,1 0,08 0,06 0,04 0,02 0 EBITDA and EBITDA margin The Company's EBITDA totaled R$ 70.7 million in 3Q18, which represents a margin of 17.2% and increase of 8.1% against the results reported in 3Q17. Among the main reasons are: Net revenue growth of 10.7% over the same period of the previous year; Expansion of gross margin by 70bps, partially offset by a 14.9% an increase in operating expenses, as previously highlighted. Excluding the US Operation, the Company's consolidated EBITDA margin would have increased by 230 bps in the quarter, up from 120 bps recorded in 3Q17 - due to the continuous investment in structuring the Company's international expansion strategy. Mg. EBITDA EBITDA (R$ mm) 16,6% 15,3% 14,8% 14,3% 15,2% 159,5 161,3 165,5 177,1 206, Net income and net margin The Company posted a net margin of 9.8% in 3Q18 and a net income of R$ 40.2 million, 6.6% increase against 3Q17. Excluding the noncash effect, net income would have reached R$ 44.4 million, 17.9% higher than in 3Q17. It is worth highlighting that in 4Q17 the Company obtained an injunction exempting it from the payment of income and social contribution taxes (IR and CSLL) on an ICMS tax benefit retroactive to 2017, which remained valid during 9M18. On the other hand, net income was negatively impacted by the worsening of the financial result - due to (i) higher exchange rate variation in the period (non-cash effected in the Company's results); (ii) higher financial expenses, coupled with higher indebtedness compared to 3Q17 and (iii) lower financial income, due to the reduction of the Selic rate over the last 12 months. EBITDA Reconciliation 3Q18 3Q17 9M18 9M17 Net income (-) Income tax and social contribution (13.598) (20.532) (21.805) (42.021) (-) Financial results (6.300) (17.956) (-) Depreciation and amortization (10.272) (9.218) (26.832) (22.630) (=) EBITDA Mg. Líquida Lucro Líquido (R$ mm) 11,5% 10,7% 10,7% 9,4% 110,6 112,8 119,7 116,1 11,4% 154,

30 Operating cash flow Arezzo&Co generated R$ 38.5 million cash from operations in the 3Q18, higher than the amount presented in 3Q17. It is worth highlighting the payment of interest on equity related to 1st semester of 2018, on July 25th, in the amount of R$21.0 million. Operating Cash Flow 3Q18 3Q17 9M18 9M17 Profits before income tax and social contribution Depreciation and amortization Others (191) (2.925) (4.271) Decrease (increase) in assets / liabilities (28.596) (18.260) (64.066) (3.655) Trade accounts receivables (51.604) (50.078) (50.007) (30.567) Inventories (5.883) (34.924) (9.794) Suppliers Change in other noncurrent and current assets and liabilities (2.264) (5.869) Payment of income tax and social contribution (7.855) (13.040) (13.996) (27.911) Net cash flow generated by operational activities Investments - CAPEX The Company makes investments of three types: i) Investments in expansion and remodeling of owned stores; ii) Corporate investments that include IT, facilities, showrooms and offices; and iii) Other investments, which are related to the modernization of the industrial operations. In 3Q18, Arezzo&Co invested R$ 13.7 million in CAPEX, the main items being: Brazilian Operation: (i) Arezzo&Co new office in São Paulo, (ii) investments in technology in Alexandre Birman brand factory (iii) remodeling of Schutz stores in Brazil into the new Digital Store concept, (iv) design and construction of an additional owned factory, focused on sneakers and comfort shoes to Fiever and OWME (v) opening the Fiever store in Shopping Mall Pátio Higienópolis. U.S. Operation: (i) design and improvement in Alexandre Birman brand international web commerce and (ii) investments in branding for the Schutz brand. Summary of investments 3Q18 3Q17 Δ 18 x 17 (%) 9M18 9M17 Δ 18 x 17 (%) Total CAPEX ,2% ,9% Stores - expansion and refurbishing ,0% ,7% Corporate ,9% ,4% Other ,4% ,4%

31 Cash position and indebtedness The Company ended 3Q18 with R$ million in cash. The debt policy remains conservative, as follows: Total indebtedness of R$ million in 3Q18 against R$ 93.2 million in 3Q17; Net cash of 0.5x versus 0,6x EBITDA in 3Q17. Cash position and Indebtedness 3Q18 2Q18 3Q17 Cash Total debt Short term % total debt 93,5% 92,3% 78,3% Long-term % total debt 6,5% 7,7% 21,7% Net Debt ( ) ( ) ( ) ROIC (Return on Invested Capital) Return on invested capital (ROIC) presented growth in 3Q18, reaching 32.6%. Among the factors responsible for this improvement is the increase of 42,5% NOPAT against 3Q17. It is worth mentioning that part of this increase is due to an injunction obtained in 4Q17 exempting the company from the payment of income and social contribution taxes (IR and CSLL - 34%) on as ICMS tax benefit retroactive to 2017, which remained valid during 9M18. Income from operations 3Q18 3Q17 3Q16 Δ 18 x 17 (%) EBIT (LTM) ,6% + IR and CS (LTM) (8.247) (52.742) (38.381) (84,4%) NOPAT ,5% Working Capital¹ Permanent assets Other long-term assets² Invested capital Average invested capital³ ROIC 4 32,6% 23,9% ,3% ,4% ,9% ,6% ,5% (1) Working Capital: current assets minus cash, cash equivalents and financial investments less current liabilities minus loans and financing and dividends payable. (2) Less deferred income tax and social contribution. (3) Average invested capital in the period and same period previous year. (4) ROIC: NOPAT for the last 12 months divided by average invested capital.

32 3. Capital Markets and Corporate Governance On September 30, 2018, the Company's market capitalization was R$ 3.9 billion (R$ 42.86), a decrease of 14.3% when compared to the same period of ARZZ3 IBOV set-17 set-18 Projected payments ¹: Arezzo&Co Number of shares Ticker ARZZ3 Listing 02/02/2011 Share price (29/06/2018) 42,86 Market Cap Performance % % 2013 (24%) 2014 (9%) 2015 (22%) % % (24%) 2011: From 02/02/2011 to 12/29/ : From 12/29/2011 to 12/28/ : From 12/28/2012 to 12/30/ : From 12/30/2013 to 12/30/ : From 12/30/2014 to 12/30/ : From 01/04/2016 to 12/29/ : From 01/01/2017 to 12/28/ : From 02/01/2018 to 09/30/2018 To ensure greater predictability and transparency to shareholders, the Company has seminnanual distribution of dividends for its shareholders. Reference date Payment date Remuneration R$ /10/2018 Dividends R$ ,00 Gross amount byordinary share (R$) R$0, (1) Subject to tax withholding at a source rate of 15%, except for proven immune or exempt shareholders, or shareholders domiciled in countries or jurisdictions to which the rules establish different aliquot It also provides that the Company shall distribute the dividends, including interest on capital, dividends from other, equivalente to at least 25% of Net income to shareholders. For more information about Arezzo&Co s remuneration policy, please see:

33 4. Relationship with the Independent Auditors The audits of Arezzo & Co's financial statements for the period ended September 30, 2018 were performed by PricewaterhouseCoopers Auditores Independentes ("PwCAI"). No other services were provided to Arezzo by that firm or other related firms. 5. Investor Relations Shareholders, analysts and market participants have at their disposal information available on the Company s IRwebpage, CVM webpage, and at BM&FBovespa webpage, For further information, direct contact can be made with IR department by the ri@arezzoco.com.br, or telephone +55 (11) Officer s Statement The Officers of Arezzo Indústria e Comércio S.A. state to have reviewed, discussed and agreed upon the Independent auditors report and financial statements for the quarter ended on September 30, 2018, according and pursuant to CVM Normative Instruction No. 480/09. Disclaimer The information contained here may include forward-looking information and reflects the executive office s current perception and prospects for the macroeconomic environment, the industry situation, the Company's performance and financial results. Any statements, expectations, capacities, plans and projections contained here which do not describe historical facts, such as information about the dividend payment statement, the future course of operations, the introduction of relevant financial strategies, the investment program and the factors or trends affecting the financial condition, liquidity or the operating results are considered forward-looking information as defined by the U.S. Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. These results are not guaranteed to materialize. These statements are based on several factors and expectations, including the economic and market conditions, level of competition in the industry and operating factors. Any changes in these expectations and factors may lead to real results materially different from the current expectations. The consolidated financial information of Arezzo Indústria e Comércio S/A Arezzo&Co presented here complies with the International Financial Reporting Standards IFRS, issued by the International Accounting Standards Board IASB, based on audited financial information. The non-financial information, as well as other operating information, was not audited by the independent auditors.

34 (A free translation of the original in Portuguese) AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 1. Company information Arezzo Indústria e Comércio S.A. (the Company ) is a listed company headquartered at Rua Fernandes Tourinho, 147 sala 402, in the city of Belo Horizonte, State of Minas Gerais. The Company has shares traded on the Novo Mercado (New Market) listing segment of the São Paulo Commodities, Futures and Stock Exchange (BM&FBOVESPA) under the ticker symbol ARZZ3 since February 2, The Company and its subsidiaries manufacture, develop, mold and sell women s shoes, handbags, clothing and accessories. At September 30, 2018, the Company had 590 franchise-operated stores in Brazil and 5 abroad; 50 company-operated stores in Brazil and 4 abroad, one of which is a pop-up store opened in May 2018; and an e-commerce channel to sell its products of Arezzo, Schutz, Anacapri, Alexandre Birman, Fiever and Owme brands. The franchise system is controlled by the Company and company-owned stores form part of Company subsidiaries. Given its characteristics, the footwear industry is subject to variances in sales volume over the year. Second half-year sales tend to be higher than in the first half of the year. Because of this seasonality, accounts receivable, inventories and accounts payable are subject to significant changes between the periods according to customer orders placed and delivery schedule based on the calendar of collections and special sales. This information is being provided to develop a better understanding of the results and, in the management s judgment, the Company s business is not impacted by these effects to the extent of being regarded as highly seasonal, as defined in CPC 21 (R1)/IAS 34, which would require the Company to provide additional disclosures or information. 2. Accounting policies 2.1. Basis of preparation and presentation of the financial statements The condensed parent company and consolidated interim financial information included in the Quarterly Information Form (ITR) has been prepared and is being presented for the ninemonth period ended September 30, 2018, in accordance with the accounting standard CPC 21 (R1), Interim Financial Reporting, of the Brazilian Accounting Pronouncements Committee (CPC), and International Accounting Standard (IAS) 34, Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as according to the standards issued by the Brazilian Securities Commission (CVM), applicable to the preparation of the ITR. 1

35 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 2. Accounting policies (Continued) 2.1. Basis of preparation and presentation of the financial statements (Continued) The accounting principles, estimates, practices, methods of computation and standards adopted in preparing this condensed interim financial information included in the ITR are consistent with those reflected in the last annual financial statements at December 31, 2017, unless otherwise stated. The condensed interim financial information included in the ITR has been prepared under the historical cost convention, with the exception of certain financial assets measured at fair value. The condensed interim financial information included in the ITR has been prepared by the Company to keep users up to date with the relevant information for the period and should be read in conjunction with the complete financial statements for the year ended December 31, To avoid redundancy in the interim financial reporting and to comply with article 29 of CVM Instruction 480/09, the following notes to the annual financial statements at December 31, 2017 are not duplicated in part or in whole in this interim report: 2- Accounting policies (part), 9 Taxes recoverable, 10 Other receivables, 18 Salaries and vacation pay, 19 Taxes and social charges payable, 20 Provisions for labor, tax and civil contingencies, and 31 Insurance. The condensed interim financial information included in the ITR for the nine-month period ended September 30, 2018 was approved at the Board of Directors meeting on October 29, Basis of consolidation The condensed consolidated interim financial information contained in the ITR includes the operations of the Company and the following subsidiaries in which the Company directly or indirectly has a controlling financial interest, as summarized below: Total ownership interest - % Subsidiaries Direct Indirect Direct Indirect ZZAB Comércio de Calçados Ltda ZZSAP Indústria e Comércio de Calçados Ltda ZZEXP Comercial Exportadora S/A ARZZ International, INC ARZZ Co LLC Schutz 655 LLC Schutz Cali LLC

36 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 2. Accounting policies (Continued) 2.2. Basis of consolidation (Continued) Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date that control ceases. The interim financial information of subsidiaries is prepared for the same reporting period as the parent company, using consistent accounting policies for all consolidated entities. All intragroup balances, income and expenses and unrealized gains or losses resulting from intragroup transactions are fully eliminated. Changes in a parent s ownership interest in a subsidiary that do not result in a loss of control is accounted for as equity transactions within equity. The profit for the period is fully attributable to owners of the parent since non-controlling interests represent % of the consolidated equity. 3. Critical accounting judgments, estimates and assumptions Critical accounting judgments, estimates and assumptions are the same as those adopted for the preparation of the financial statements for the year ended December 31, New or revised pronouncements As from January 1, 2018 the accounting policies on revenue from contracts with customers and financial instruments are consistent with the new standards (CPC 47/IFRS 15 Revenue from Contracts with Customers and CPC 48/IFRS 9 Financial Instruments). IFRS 9/CPC 48 Financial Instruments In July 2014, the IASB published the final version of IFRS 9 Financial Instruments that replaces IAS 39/CPC 38 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 brings together all three aspects of the accounting for financial instruments project: (i) classification and measurement, (ii) impairment and (iii) hedge accounting. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early application permitted. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. The Company has reviewed its financial assets and liabilities and concluded that there will be no material impact on its equity and profit from the adoption of this standard. 3

37 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 4. New or revised pronouncements (Continued) IFRS 15/CPC47 Revenue from Contracts with Customers IFRS 15 was issued in May 2014 and establishes a new five-step model that applies to revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard superseded all prior revenue recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after January 1, Early adoption is permitted. The Company has assessed the effects of IFRS 15 and concluded that there will be no material impact on its equity and profit from the adoption of this standard. The amendments and revisions to existing standards by IASB, which became effective on January 1, 2018, did not have a material impact on the Company s financial statements. IFRS 16 Leases IFRS 16, issued in January 2016, requires companies to bring most leases onto the balance sheet, recognizing new assets and liabilities. All companies that lease major assets for use in their business will see an increase in reported assets and liabilities. This will affect a wide variety of sectors, from airlines that lease aircraft to retailers that lease stores. The larger the lease portfolio, the greater the impact on key reporting metrics. The new standard is effective for annual periods beginning on or after January 1, Early application is permitted if IFRS 15 is applied. The Company is currently assessing the impact that IFRS 16 will have on its financial statements and disclosures. 4

38 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 5. Cash and cash equivalents Parent company Consolidated 9/30/ /31/2017 9/30/ /31/2017 Cash Banks 103 4,148 2,659 9, ,262 3,390 10, Cash investments Parent company Consolidated 9/30/ /31/2017 9/30/ /31/2017 Current Fixed income (a) 524 2, ,784 Exclusive investment fund Certificates of bank deposit (CDBs) 21,696 16,821 22,585 18,394 Repurchase agreements - 7,961-8,706 Financial bills (CEF) 33,955 29,187 35,345 31,917 Financial Treasury bills (LFT) 212, , , , , , , ,764 (a) Include CDBs and marketable securities. Exclusive investment fund ZZ Referenciado DI Crédito Privado is a private fixed-income investment fund under management, administration and custody of Banco Santander S.A. There is no specified holding period for this investment fund and so shares can be redeemed without a material risk of loss. The investment fund does not have significant financial obligations. Financial obligations include asset management fees, custody fees, audit fees and expenses. The fund is solely for the benefit of the Company and its subsidiaries. Thus, in accordance with CVM Instruction 408/04, the investment fund in which the Company invests exclusively has been consolidated. At September 30, 2018, the average rate of return of the investment fund and other cash investments is 99.01% of the Interbank Deposit Certificate rate (CDI). LFTs account for 48% of the investment fund assets and 64.91% of the assets provide daily liquidity. The Company has cash investment policies in place that require it to concentrate its investments in low-risk securities that substantially provide a return based on the CDI variance and to place its investments with top-tier financial institutions (top 10 financial institutions in the country). At September 30, 2018, the Company has no investment pledged as collateral to financial institutions. 5

39 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 7. Trade receivables Parent company Consolidated 9/30/ /31/2017 9/30/ /31/2017 Trade notes domestic customers 271, , , ,686 Trade notes foreign customers 12,591 11,558 56,447 43,194 Trade notes related parties (Note 10.a) 12,105 18, Checks Credit cards ,429 73, , , , ,333 (-) Provision for impairment of trade receivables (4,313) (2,843) (4,740) (2,889) 292, , , ,444 Current 280, , , ,954 Non-current 11,764 11,490 11,764 11,490 Trade receivables from foreign customers by currency are as follows: Parent company Consolidated 9/30/ /31/2017 9/30/ /31/2017 USD 12,481 11,464 51,867 39,510 EUR ,580 3,684 12,591 11,558 56,447 43,194 Changes in the provision for impairment of trade receivables are as follows: Parent company Consolidated 9/30/ /31/2017 9/30/ /31/2017 At the beginning of the period (2,843) (1,723) (2,889) (1,769) Additions (2,511) (9,375) (2,892) (9,375) Realization 1,041 8,255 1,041 8,255 At the end of the period (4,313) (2,843) (4,740) (2,889) The Company assesses the risk of loss on outstanding accounts receivable on a periodic basis and recognized an additional provision of R$2,892 for the period ended September 30, 2018 (September 30, R$7,522). Management believes that the balance of the provision is sufficient to cover losses on uncollectible accounts. Also, in the period ended September 30, 2018, the Company recognized R$4,060 (September 30, R$2,381) of losses on accounts receivable, which was classified in selling expenses. 6

40 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 8. Inventories Parent company Consolidated 9/30/ /31/2017 9/30/ /31/2017 Finished products 48,045 30, ,707 90,444 Raw material 5,193 5,815 17,867 18,209 Work in progress - - 6,177 3,913 Advances to suppliers 5,875 3,355 7,276 4,471 (-) Provision for losses (1,684) (2,954) (2,526) (3,548) 57,429 36, , ,489 Changes in the provision for losses are as follows: Parent company Consolidated 9/30/ /31/2017 9/30/ /31/2017 At the beginning of the period (2,954) (2,229) (3,548) (2,731) Additions (664) (1,787) (912) (3,054) Realization 1,934 1,062 1,934 2,237 At the end of the period (1,684) (2,954) (2,526) (3,548) 9. Income tax and social contribution a) Deferred taxes Parent company Consolidated Basis of calculation of deferred income tax (IRPJ) and 9/30/ /31/2017 9/30/ /31/2017 social contribution (CSLL) Unrealized profit on inventories 15,984 10,996 15,984 10,996 Provision for employee profit sharing 14,401-14, Provision for foreign exchange variation 16,228 (602) 12,547 (566) Provision for labor, tax and civil contingencies 6,339 6,126 9,501 8,866 Foreign exchange hedge 8,798-8,798 - Provision for impairment of trade receivables 4,313 2,843 4,334 2,889 Tax loss - - 3,769 5,306 Provision for commissions 3,716 1,965 3,716 1,965 Bill-and-hold transactions, net 1,707-2, Provision for inventory losses 1,684 2,954 2,526 3,548 Other temporary differences 1, ,070 (65) Provision for interest on loans Basis of calculation of deferred tax assets 75,182 24,729 80,185 33,921 IRPJ rate - 25% 18,796 6,182 20,046 8,480 CSLL rate - 9% 6,766 2,226 7,217 3,053 Deferred income tax and social contribution 25,562 8,408 27,263 11,533 7

41 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 9. Income tax and social contribution (Continued) a) Deferred taxes (Continued) The reconciliation of deferred tax assets is as follows: Parent company Consolidated 9/30/ /31/2017 9/30/ /31/2017 Opening balance 8,408 5,551 11,533 8,405 Deferred tax recognized in the statement of income 14,163 2,857 12,739 3,128 Deferred tax recognized in other comprehensive income 2,991-2,991 - Closing balance 25,562 8,408 27,263 11,533 The studies and projections carried out by the Company s management indicate that there will be sufficient future taxable profit to allow the related tax benefit to be utilized in the next years. Based on projections of future taxable profits, deferred tax assets are expected to be recovered as follows: Parent company Consolidated 9/30/ /31/2017 9/30/ /31/ ,316 7,400 15,149 8, , ,057 2, , , Total 25,562 8,408 27,263 11,533 8

42 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 9. Income tax and social contribution (Continued) b) Reconciliation of tax charges between statutory and effective tax rates A reconciliation of tax expense calculated at the statutory tax rates to tax expense at the effective tax rate is as follows: Parent company Consolidated 9/30/2018 9/30/2017 9/30/2018 9/30/2017 Profit before income tax and social contribution 107, , , ,147 Statutory tax rate 34% 34% 34% 34% Expected income tax and social contribution expense at the statutory tax rate (36,429) (44,109) (41,550) (47,990) Deferred income tax and social contribution on unrecognized losses of subsidiaries - - (9,408) (2,842) Effect of income tax and social contribution on permanent differences: Government subsidies (*) 14,686-17,765 - Tax benefit from technological research and innovation expenses Law 11,196/05 4,609 3,080 4,609 3,080 Interest on capital 7,140 7,323 7,140 7,323 Equity in the results of investees 2,679 3, Share option plan expense (1,043) (1,263) (1,043) (1,263) Tax incentives (Workers Meal Program (PAT), Rouanet Law, other) Other permanent differences 1, (492) Income tax and social contribution expense (6,743) (30,606) (21,805) (42,021) Current (20,906) (38,407) (34,544) (50,523) Deferred 14,163 7,801 12,739 8,502 Total (6,743) (30,606) (21,805) (42,021) Effective tax rate 6.29% 23.59% 17.84% 29.77% (*) With the enactment of Complementary Law 160 on August 7, 2017, ICMS tax benefits are now considered to be investment subsidy and therefore no longer subject to income tax and social contribution. 9

43 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 10. Balances and transactions with related parties a) Balances and transactions with subsidiaries and controlling shareholders Current assets Trade receivabl es Receiva bles Current liabilities Dividends Noncurrent Transactions liabilities Trade payables Loans Revenues Purchases Parent company Subsidiaries ARZZ Co LLC - 8, ARZZ International INC - 13, , ZZAB Comércio de Calçados Ltda. 11, , ,291 - ZZSAP Ind. e Com.de Calç.Ltda , ,763 ZZEXP Comercial Exportadora S.A , Total Parent company 12,105 22,384 15,230 3,656 53, ,708 80,763 Consolidated Controlling shareholders , Total Consolidated , /31/2017 9/30/2017 Current assets Non-current assets Current liabilities Non-current liabilities Transactions Trade receivables Receivables Trade payables Loans Revenues Purchases Parent company Subsidiaries ARZZ Co LLC - 10, ARZZ International INC - 7,347-76, ZZAB Comércio de Calçados Ltda. 18,394-1, ,942 - ZZSAP Ind. e Com.de Calç.Ltda. 7-4, ,570 ZZEXP Comercial Exportadora S.A Total Parent company 18,655 18,236 5,375 76, ,154 64,570 Consolidated Controlling shareholders , Total Consolidated , b) Nature, terms and conditions of transactions - subsidiaries The transactions with related parties are conducted on commercial and financial terms agreed upon between the parties concerned. The most common transaction is the sale of shoes and accessories by the Company (parent) to ZZAB stores and to ARZZ International Inc. (subsidiaries) and the purchase of shoes and accessories from manufacturer ZZSAP (subsidiary). In September 2016, ZZEXP (subsidiary) began to purchase from ZZSAP and sell to ARZZ International Inc. The commercial transactions between such related parties follow price policies and specified terms established between the parties. The average collection period for receivables from related parties is 23 days while the average payment period for payables to related parties is 12 days. 10

44 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 10. Balances and transactions with related parties (Continued) c) Management compensation Management compensation is composed of management fees, profit sharing and share option plan. In the period ended September 30, 2018, the compensation paid to management totaled R$8,700 (September 30, R$6,185), as shown below: 9/30/2018 9/30/2017 Annual fixed compensation salary/management fees 4,570 3,418 Variable pay 3,338 1,816 Share option and restricted stock plans (Note 26) Total compensation 8,700 6,185 The expenses related to the share option and restricted stock plans (Note 26) are presented as operating expense before finance result. The Company and its subsidiaries do not provide post-employment benefits or termination benefits to their management and employees. d) Transactions or relationships with shareholders At September 30, 2018, certain Company officers, directors and related party directly own a total interest of 51.2% in the Company. e) Transactions with other related parties The Company has a service agreement with the firm Ethos Desenvolvimento S/C Ltda. owned by Mr. José Ernesto Beni Bolonha, a member of the Company s Board of Directors. In the nine-month period ended September 30, 2018, this firm received R$559 (September 30, R$559). 11

45 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 11. Investments Description Assets Liabilities Equity Capital Net revenue Profit (loss) for the period Investment Equity in results of investees Owners hip interest % 9/30/ /31/2017 9/30/2018 9/30/2017 ARZZ International Inc. 116,271 72,512 43, ,144 71,007 (27,670) ,759 61,098 (27,670) (8,360) ZZAB Com. de Calçados Ltda. 204,312 31, ,662 93, ,672 10, , ,793 10,867 3,134 ZZSAP Ind. e Com. de Calçados Ltda. 61,924 22,386 39,538 27,592 97,505 3, ,538 36,403 3,135 2,651 ZZEXP Comercial Exportadora S/A 88,922 65,277 23,645 2,000 79,475 21, ,645 17,331 21,547 12,000 Investments 279, ,625 7,879 9,425 Parent company 9/30/ /31/2017 Balance at the beginning of the period 276, ,808 Capital payment - 99,300 Distribution of dividends (15,230) (4,141) Equity in the results of investees 7,879 20,705 Cumulative translation adjustments (CTA) 10, Balance at the end of the period 279, ,625 The subsidiary ZZEXP Comercial Exportadora S.A. proposed to pay dividends of R$15,230 to the Company out of profits for the year ended December 31, 2017, after the transfer to legal reserve as required by the Brazilian Corporate legislation. 12

46 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 12. Property, plant and equipment Changes in property, plant and equipment are as follows: Parent company Computers and peripherals Furniture and fittings Machinery and equipment Facilities and showroom Vehicles Land Total At December 31, ,398 3,758 3,793 8, ,961 Purchases ,495 Depreciation (1,415) (499) (541) (1,134) (34) - (3,623) Write-offs (6) (2) - (25) - - (33) At September 30, ,910 3,605 3,699 8, ,800 At December 31, ,040 3,664 4,085 8, ,561 Purchases 1,342 1, , ,010 Depreciation (1,518) (556) (622) (1,339) (17) - (4,052) Write-offs (9) (413) (83) (637) - - (1,142) At September 30, ,855 4,431 3,890 13, ,377 Average depreciation rate 20% 10% 10% 10% 20% - Consolidated Computers and peripherals Furniture and fittings Machinery and equipment Facilities and showroom Vehicles Land Total At December 31, ,227 14,233 9,360 43, ,052 Purchases 1,456 1, , ,733 Depreciation (1,715) (2,007) (1,305) (5,614) (35) - (10,676) Write-offs (27) (110) (5) (651) - - (793) Foreign exchange variation (12) (68) - (282) - - (362) At September 30, ,929 13,292 8,856 40, ,954 At December 31, ,152 13,176 9,172 38, ,636 Purchases 1,967 7,287 4,028 14, ,847 Depreciation (1,938) (2,218) (1,492) (6,502) (16) - (12,166) Write-offs (18) (1,896) (83) (1,286) - - (3,283) Foreign exchange variation , ,809 At September 30, ,250 16,638 11,625 47, ,843 Average depreciation rate 20% 10% 10% 10% 20% - 13

47 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 13. Intangible assets Changes in intangible assets are as follows: Parent company Trademarks and patents Store use rights Store use rights Software licenses Total At December 31, ,521 1,078-41,939 46,538 Purchases ,390 3,465 Amortization (10,528) (10,528) At September 30, ,596 1,078-34,801 39,475 At December 31, , ,120 38,865 Purchases ,534 6,115 Amortization - - (694) (10,866) (11,560) Write-offs - (124) - (192) (316) At September 30, , ,596 33,104 Estimated average useful life Indefinite Indefinite Finite 5 years Consolidated Trademarks and patents Store use rights Store use rights Software licenses Total At December 31, ,644 39,781-42,536 85,961 Purchases 75 2,337-3,799 6,211 Amortization - (1,364) - (10,590) (11,954) Write-offs - (1) - - (1) Foreign exchange - variation (1) - (14) (15) At September 30, ,718 40,753-35,731 80,202 At December 31, ,051 36,045 3,558 35,539 79,193 Purchases 1, ,318 8,119 Amortization - - (4,719) (10,995) (15,714) Write-offs - (124) - (193) (317) Transfers - (2,819) 2, Foreign exchange - variation At September 30, ,659 33,302 1,658 30,880 71,499 Estimated average useful life Indefinite Indefinite Finite 5 years In the periodic review of its Expansion Plan, the Company revised the useful life of certain intangible assets classified as store use rights from indefinite to finite. The impairment test performed on the Company s intangible assets with an indefinite useful life did not reveal any need to recognize impairment losses for the year ended December 31, 2017, since the value in use exceeded the net carrying amount at the date of valuation. In preparing this condensed interim financial information, the Company assessed whether there were any factors that could impact the value of its assets and did not detect any indication that the assets may be impaired. The amount of R$22,592 (September 30, R$15,099) in expenses associated with the research and development of new products was recorded within General and administrative expenses in the parent company and consolidated statement of income for the nine-month period ended September 30,

48 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 14. Borrowings Borrowings can be summarized as follows: Parent company Consolidated 9/30/ /31/2017 9/30/ /31/2017 Equipment financing (FINAME) (i) Advance on foreign exchange contract (ACC) (ii) ,243 55,381 Study and project financing (FINEP) (iii) 19,775 26,456 19,775 26,456 Borrowing in foreign currency transaction 4131 (iv) 120,749 99, ,749 99,285 Export prepayment (PPE) (v) , , , , ,745 Current 129, , , ,729 Non-current 10,868 17,548 11,241 18,016 The interest rate and charges on borrowings are as follows: (i) FINAME: 6% p.a. (ii) ACC: denominated in U.S. dollars plus average interest rate of 3.66% p.a. at September 30, (iii) FINEP: rate of 4% and 5% p.a. limited to Long-Term Interest Rate (TJLP). (iv) Working capital loans in foreign currency: denominated in U.S. dollars plus average interest rate of 3.30% p.a. at September 30, Loan debts in foreign currency under Law (v) PPE: denominated in U.S. dollars plus average interest rate of 3.63% p.a. at September 30, Maturity of borrowing agreements FINAME (Santander and Badesul): monthly installments with final maturity in October 2024; ACC: various agreements with final maturity until October 2019; FINEP: maturities until September 2021; Working capital loans: two agreements with final maturity until December 2018; PPE: one agreement with final maturity in May

49 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 14. Borrowings (Continued) At September 30, 2018, the non-current borrowings mature as follows: Parent company Consolidated 9/30/ /31/2017 9/30/ /31/ ,912 8,592 1,934 8, ,118 5,118 5,191 5, ,838 3,838 3,910 3,910 After Total 10,868 17,548 11,241 18,016 Borrowings are secured by controlling shareholders guarantee and bank letters of guarantee, and do not contain restrictive covenants. Finame agreements are secured by the financed assets. Other guarantees and commitments The Company has a technical and financial cooperation agreement with Banco do Nordeste do Brasil S/A, to have borrowing facilities available for Arezzo franchisees that are located in the area where the Bank operates, using the funds from the Northeast Region Constitutional Finance Fund (FNE) to finance modernization of franchisees stores, according to the standards established by the Company, as well as to finance operations of franchisees through working capital loans, if needed. Under the terms of the agreement, the Company shall be the guarantor for these transactions through a surety bond when contracted by store owners. At September 30, 2018, these transactions amounted to R$1,448 (December 31, R$1,624). The Company has a technical and financial cooperation agreement with Banco Alfa, to have borrowing facilities available for Arezzo franchisees, using the funds from the National Bank for Economic and Social Development (BNDES) to finance modernization of franchisees stores, according to the standards established by the Company, as well as to finance operations of franchisees. The Company is the guarantor for these transactions. At September 30, 2018, the balance of transactions guaranteed by the Company was R$10,232 (December 31, R$11,912). The Company has no history of loss experience on such transactions. 16

50 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 15. Trade payables Breakdown of trade payables is as follows: Parent company Consolidated 9/30/ /31/2017 9/30/ /31/2017 Domestic suppliers 39,644 34,813 57,789 48,049 Reverse factoring 69,694 56,265 69,694 56,265 Related parties (Note 10.a) 3,656 5, Foreign suppliers ,059 96, , , Share capital and reserves Share capital At September 30, 2018, the Company s capital was divided into 90,303 thousand common shares. Number of shares Share capital - thousands R$ At December 31, , ,008 Issuance of shares under share option plan ,367 At December 31, , ,375 Issuance of shares under share option plan ,698 At September 30, , , Treasury shares At September 30, 2018, the balance of treasury shares is R$2,332 (December 31, R$1,199) consisting of 52,119 common shares at an average acquisition cost of R$ Dividends and interest on capital paid and proposed Dividends In accordance with the Company s bylaws, the shareholders are entitled to a mandatory minimum dividend of 25% of the profit for the year after transfer to legal reserve as required by the Brazilian Corporate legislation. Interest on capital, when calculated, is considered as distribution of profits for purposes of determination of the minimum dividend to be distributed. On April 20, 2018, the Annual General Meeting approved the payment of supplementary dividends of R$2,796, at R$ per share, which were paid on June 8,

51 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 17. Dividends and interest on capital paid and proposed (Continued) Dividends (Continued) On May 17, 2018, the Board of Directors approved the payment of interim dividends out of revenue reserve as per balance sheet at December 31, 2017, in the amount of R$46,000, at R$ per share. These dividends were paid on June 8, On October 2, 2018, the Board of Directors approved the payment of interim dividends out of profit for the year as per balance sheet at June 30, 2018, in the amount of R$25,000, at R$ per share. These interim dividends were paid on October 22, Interest on capital In order to comply with tax rules, the Company recorded interest on capital paid in the period in finance costs. For the purposes of this condensed interim financial information, when applicable this interest on capital was reversed from the statement of income to retained earnings, as determined by accounting practices. Income tax was withheld at the rate of 15% from the payment of this interest on capital, except for shareholders that are actually taxexempt or shareholders that are domiciled in countries or jurisdictions in which the tax legislation establishes a different tax rate. On June 25, 2018, the Board of Directors approved the payment of interest on capital of R$21,001 relating to the first half of 2018, which was paid on July 25, Earnings per share In compliance with CPC 41 (IAS 33), the Company presents below earnings per share information for the nine-month periods ended September 30, 2018 and a) Basic earnings per share 9/30/2018 9/30/2017 Profit for the period 100,401 99,126 Weighted average number of outstanding shares 89,905 89,258 Basic earnings per share - R$ b) Diluted earnings per share 9/30/2018 9/30/2017 Profit for the period 100,401 99,126 Weighted average number of outstanding shares 89,905 89,258 Adjustments for share options 3, Weighted average number of common shares for diluted earnings per share 92,907 89,921 Diluted earnings per share - R$

52 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 19. Net sales revenue Breakdown of net sales revenue is as follows: Parent company Consolidated 9/30/2018 9/30/2017 9/30/2018 9/30/2017 Gross sales revenue Domestic market 1,042, ,127 1,225,752 1,117,010 Foreign market 8,291 6, , ,678 Sales returns (22,900) (21,785) (59,643) (52,335) Discounts and rebates (1,726) (2,133) (1,725) (2,133) Taxes on sales (143,010) (137,344) (184,441) (179,347) Net sales revenue 883, ,314 1,114, , Segment reporting The Company has only one operating segment, which is defined as shoes, handbags and accessories. The Company is organized, and has its performance assessed, as a single business unit for operating, commercial, management and administrative purposes. This view is supported by the following factors: There is no segregation in its structure for the management of different product lines, brands or sales channels; Its manufacturing plant operates for more than one brand and sales channel; The Company s strategic decisions are based on studies that indicate market opportunities and not only on performance by product, brand or sales channel. The Company s products are distributed through different brands (Arezzo, Schutz, Anacapri, Alexandre Birman, Fiever and Owme) and multiple channels (franchises, multi-brand stores, company-owned stores and e-commerce), however they are controlled and run by management as a single operating segment, and the results therefrom are monitored and evaluated in a centralized way. 19

53 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 20. Segment reporting (Continued) For management purposes, management monitors the consolidated gross revenue by brand and sales channel, as shown below: Consolidated 9/30/2018 9/30/2017 Gross revenue 1,360,257 1,134,537 Foreign market 134, ,307 Domestic market 1,225,752 1,020,230 Domestic market by brand Arezzo 691, ,024 Schutz 335, ,756 Anacapri 154,137 79,601 Other 44,745 12,849 Domestic market by sales channel Franchises 587, ,035 Multi-brand stores 308, ,830 Company-owned stores 211, ,939 E-commerce 117,689 77,473 Other 1,394 1,953 The revenue from foreign market is not shown separately by geographic area as at September 30, 2018 it represents 9.9% of the gross revenue (September 30, %). No single customer accounts for more than 5% of the sales on the domestic and foreign markets. 21. Expenses by nature The Company elected to present the consolidated statement of income by function. As required by IFRS, additional disclosure of expenses by nature is as follows: Parent company Consolidated 9/30/2018 9/30/2017 9/30/2018 9/30/2017 Expenses by function Cost of sales (554,958) (499,060) (598,500) (542,659) Selling expenses (124,352) (115,744) (272,267) (242,651) General and administrative expenses (80,880) (71,452) (99,725) (81,593) Other operating expenses, net (3,168) (655) (3,794) (817) (763,358) (686,911) (974,286) (867,720) 20 Parent company Consolidated 9/30/2018 9/30/2017 9/30/2018 9/30/2017 Expenses by nature Raw materials and consumables used (558,111) (501,431) (603,189) (546,402) Personnel expenses (106,299) (93,941) (168,036) (150,837) Store occupancy expenses - - (30,968) (28,946) Depreciation and amortization (15,612) (14,151) (27,880) (22,630) Freight (17,896) (14,016) (24,118) (19,940) Other operating expenses (65,440) (63,372) (120,095) (98,965) (763,358) (686,911) (974,286) (867,720)

54 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 22. Financial risk management objectives and policies a) Fair value The table below shows the main financial instruments and their respective carrying amounts and fair values calculated by the Company s management. Carrying amount Consolidated 9/30/ /31/2017 Fair Carrying value amount Fair value Cash and cash equivalents 3,390 3,390 10,156 10,156 Cash investments 280, , , ,764 Trade receivables 384, , , ,444 Borrowings 172, , , ,717 Trade payables 127, , , ,416 At September 30, 2018, consolidated financial instruments by category are as follows: Fair value through profit or loss 9/30/2018 Amortized cost Assets Cash and cash equivalents - 3,390 Trade receivables - 384,438 Cash investments 280,355 - Liabilities Trade payables - 127,548 Borrowings - 172,503 The fair value of the financial instruments has been determined on the basis of the following methods and assumptions: Cash investments the carrying amounts stated in the balance sheet equal the fair value because the interest rates for the cash investments are based on the variation of the Interbank Deposit Certificate (CDI), Certificate of Bank Deposit (CDB) and Financial Treasury Bills (LFT) (Note 6). Cash and cash equivalents, trade and other receivables, trade and other payables These items derive directly from the operations of the Company and its subsidiaries and are measured at amortized cost. They are stated at original amount less provision for impairment and present value adjustment when applicable. The carrying amount approximates fair value due to the short-term nature of these instruments. 21

55 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 22. Financial risk management objectives and policies (Continued) a) Fair value (Continued) Borrowings These are classified as financial liabilities not measured at fair value and are carried at amortized cost according to the contractual terms. This classification was adopted because the amounts are not held for trading, which management understands is the most relevant financial information. The fair values of the borrowings are equivalent to their carrying amounts as these financial instruments are subject to rates equivalent to market rates and have specific characteristics. a.1) Fair value hierarchy The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data. The Company uses quoted prices in active markets (Level 1) and observable prices (Level 2) to measure the fair value of its financial instruments. b) Hedges of net investments in foreign operations (net investment hedge) There was no change in the method of accounting and measurement applied by the Company in relation to what was disclosed at December 31, The application of the effectiveness test described in accounting practices demonstrated that the hedges meet the hedge effectiveness criteria. Therefore, at September 30, 2018, no ineffectiveness was recognized in the income statement for net investment hedges and gains or losses were fully recorded in equity. 22

56 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 22. Financial risk management objectives and policies (Continued) c) Foreign exchange risk The results of operations of the Company and its subsidiaries are exposed to the U.S. dollar exchange rate risk because a portion of their sales revenue is linked to the U.S. dollar. To reduce the foreign exchange risk, almost all of their exports have financing pegged to the U.S. dollar. At September 30, 2018 and December 31, 2017, the net exposure to the U.S. dollar is as follows: 9/30/ /31/2017 Trade receivables 42,097 30,055 Borrowings (31,398) (55,381) Net exposure 10,699 (25,326) To measure the sensitivity of the Company s foreign currency-denominated assets and liabilities which expose it to foreign exchange risk at September 30, 2018, three different scenarios were simulated and a sensitivity analysis relating to exchange rate fluctuations was prepared. The table below shows three scenarios, being the probable scenario adopted by the Company. These scenarios were defined based on management s expectations of foreign exchange rate changes at the dates of maturity of the agreements exposed to foreign exchange risk. In addition to this scenario, the CVM through Instruction 475 of December 17, 2008 (CVM Instruction 475) determined that two other scenarios should be presented, applying an appreciation of 25% and 50% of the risk variable under analysis. These scenarios are being presented according to CVM regulation. Currenc y Probable scenario (Carrying amount) Operation Scenario A Scenario B Appreciation in the exchange rate Trade receivables in foreign currency R$ 42,097 52,621 63,146 Borrowings in foreign currency R$ (31,398) (39,248) (47,097) Appreciation in the exchange rate 25% 50% against the U.S. dollar Effect on pre-tax profit R$ 2,674 5,350 23

57 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 22. Financial risk management objectives and policies (Continued) d) Interest rate risk The Company is exposed to interest rate risk because of borrowings subject to the Long-term Interest Rate (TJLP). The rates are disclosed in Note 14. At September 30, 2018, borrowings are subject to the following interest rates: Consolidated 9/30/2018 % Fixed interest rate 31,897 18% Interest rate based on TJLP and Libor 140,524 82% 172, % To measure the sensitivity of the Company s borrowings to interest rates to which the Company was exposed at September 30, 2018, three different scenarios were simulated and a sensitivity analysis relating to interest rate shifts was prepared. The table below shows three scenarios, being the probable scenario adopted by the Company. Based on the amounts of TJLP and Libor in effect at September 30, 2018, the probable scenario for the year 2018 was defined, applying variances of 25% and 50% as required by CVM Instruction 475. For each scenario, gross interest expense was calculated, without taking into consideration taxes and the flow of maturities of each agreement. The base date used for borrowings was September 30, 2018, projecting the interest rates for one year and verifying the sensitivity of the same rates in each scenario. Operation Currency Probable Increase in interest expense scenario Scenario A Scenario B Borrowings TJLP R$ 1,297 1, Borrowings Libor R$ 3,478 4, ,775 5, Increase in the interest rate 25% 50% for financial liabilities TJLP 6.56% 8.20% 9.84% Libor 2.88% 3.60% 4.32% e) Financial instruments There has been no change in concepts and practices disclosed in the financial statements as of December 31,

58 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 22. Financial risk management objectives and policies (Continued) f) Credit risk There has been no change in concepts and practices disclosed in the financial statements as of December 31, g) Liquidity risk There has been no change in concepts and practices disclosed in the financial statements as of December 31, The table below shows contractual payments due under financial liabilities: Less than one year Projection including future interest From 1 to 5 years Over 5 years Total Borrowings 161,857 11, ,582 Trade and other payables 127, ,548 h) Capital management There has been no change in concepts and practices disclosed in the financial statements as of December 31, Finance result Parent company Consolidated 9/30/2018 9/30/2017 9/30/2018 9/30/2017 Finance income: Interest income on cash investments 12,090 17,956 13,082 20,377 Interest income on loans to related parties Interest income 2,810 3,479 2,828 3,487 Other finance income 1,662 1,006 1,891 1,468 16,666 22,441 17,801 25,332 Finance costs: Credit card administration fee - - (4,869) (4,784) Interest on borrowings (5,051) (1,188) (6,327) (2,330) Bank charges (2,472) (2,032) (3,348) (2,714) Interest on loans from related parties (4,055) Notary public fees (1,793) (1,587) (1,816) (1,598) Discounts granted (1,411) (1,295) (1,508) (1,337) Other finance costs (148) (227) (391) (494) (14,930) (6,329) (18,259) (13,257) Foreign exchange variation, net (22,628) (1,208) (17,498) (81) Total (20,892) 14,904 (17,956) 11,994 25

59 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 24. Other operating income (expenses), net Parent company Consolidated 9/30/2018 9/30/2017 9/30/2018 9/30/2017 Share option and restricted stock plans (Note 26) (6,175) (3,714) (6,175) (3,714) Result on disposal of property, plant and equipment and intangible assets (1,376) 7 (2,918) (121) Franchise fees 1,349 1,421 1,349 1,421 Recovery of expenses 864 1,644 1,111 1,686 Other income (expenses), net 2,170 (13) 2,839 (89) (3,168) (655) (3,794) (817) 25. Operating lease commitments store lease The future minimum lease payments under non-cancelable operating leases are as follows: Minimum lease payments at 9/30/2018 (Consolidated) Less than one year 23,463 More than one year and no later than 5 years 57,571 The average monthly rent expense for the nine-month period ended September 30, 2018 is R$3,131 (September 30, R$2,922). The lease terms are four to five years, and the lease agreements are subject to finance charges based on IGPM variance p.a., as specified in each agreement. For the nine-month period ended September 30, 2018, rent expense, net of taxes recoverable, amounted to R$28,183 (September 30, R$26,306). The balance of rents payable is R$144 (December 31, R$184). The Company s management is still evaluating the impact of the new accounting standard IFRS 16, which will come into effect on January 1,

60 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 26. Share-based compensation 26.1 Share option plan Changes in the share option plan are as follows: 1st grant 2nd grant 3rd grant 4th grant 5th grant At December 31, ,054 16,328 34, , ,508 Options exercised (755) (16,328) (33,436) (458,574) (27,431) Options written off (*) (299) - - (32,144) (5,939) At September 30, , ,138 (*) Options written off due to termination of employees who participated in the share option plan or non-exercise of options. In the nine-month period ended September 30, 2018, the share option plan expense of R$1,494 (September 30, R$2,644) was charged to the statement of income with a corresponding entry to a separate capital reserve account within equity Restricted stock plan On June 23, 2017, the extraordinary general meeting approved the design and implementation of a new restricted stock plan (the Plan ) for the Company. And on July 30, 2017, the Board of Directors approved the execution of restricted stock award agreements between the Company and Award Recipients under the Restricted Stock Plan and the Second Stock Award Program. The purpose of the Plan is permit grants of shares, subject to certain restrictions, to the Company s or a subsidiary s officers and employees ( Recipients ) selected by the Board of Directors, as a means of: (i) stimulating the expansion and success of the Company and its subsidiaries and the achievement of their business objectives; (b) promoting improvement in management of the Company and its subsidiaries, giving Recipients the opportunity to become shareholders in the Company, motivating them to optimize all aspects that can increase the Company s value over the long term; (c) aligning the interests of Recipients with those of shareholders; and (d) incentivizing officers and employees to remain with the Company or its subsidiaries. For purposes of this Plan, the Board of Directors may, upon prior recommendation of the Committee, grant a certain number of registered, book-entry common shares that must not exceed 5% of the Company s total share capital at the date of approval of the Plan. 27

61 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 26. Share-based compensation (Continued) 26.2 Restricted stock plan (Continued) Without affecting other terms and conditions laid out in the respective Award Agreements, Recipients shall become fully vested in the restricted stock grant only if they remain continuously employed by the Company or any subsidiary, as applicable, and achieve required performance goals stipulated in each Program and in the respective Award Agreements, in the period between the date of grant and the vesting dates of the respective vesting tranches: (i) up to 10% after the first anniversary of the grant date; (ii) up to 10% after the second anniversary of the grant date; (iii) up to 20% after the third anniversary of the grant date; and (iv) up to 60% after the fourth anniversary of the grant date. Notwithstanding the items (i) to (iv) above, a Recipient may receive an additional up to 10% of the total number of restricted shares granted by the Board of Directors if he/she exceeds the applicable performance goals specified in the Program and in the respective Award Agreement, as it may be determined by the Board of Directors, which may at its discretion establish various vesting dates with respect to the restricted shares granted. In order to satisfy the grant of restricted shares under the Plan, the Company, subject to applicable law and regulation, will dispose of treasury shares through a private transaction at no cost to Recipients, in accordance with CVM Instruction 567. In compliance with IFRS 2/ CPC 10, the Company determined the fair value of the shares, based on the stated vesting periods. In the period ended September 30, 2018, the Company determined R$4,681 in restricted stock plan expense, which was charged to the statement of income with a contra-entry to a separate capital reserve account within equity. 28

62 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 26. Share-based compensation (Continued) 26.2 Restricted stock plan (Continued) The following assumptions were adopted to determine the fair value of restricted shares: 1st grant 2nd grant Number of shares 607, ,664 1 st tranche 60,728 11,066 2 nd tranche 60,728 11,066 3 rd tranche 121,457 22,134 4 th tranche 364,370 66,398 Share price - (R$) Fair value per share - (R$) 1 st tranche nd tranche rd tranche th tranche Dividend yield 2.20% 3.14% Volatility of the share price 1 st tranche 32.21% 44.97% 2 nd tranche 36.51% 39.09% 3 rd tranche 36.55% 39.53% 4 th tranche 36.75% 38.82% Risk-free interest rate 1 st tranche 7.88% 7.32% 2 nd tranche 8.37% 8.50% 3 rd tranche 8.97% 9.32% 4 th tranche 9.40% 9.97% Expected time to maturity (years) 1 st tranche nd tranche rd tranche th tranche

63 AREZZO INDÚSTRIA E COMÉRCIO S.A. NOTES TO THE PARENT COMPANY AND CONSOLIDATED INTERIM INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 All amounts in thousands of reais unless otherwise stated 26. Share-based compensation (Continued) 26.2 Restricted stock plan (Continued) Changes in the restricted stock plan were as follows: 1st grant 2nd grant Grant (*) 607,283 - At December 31, ,283 - Grant (*) - 110,664 1st tranche (**) (51,764) - Write-offs (***) (89,643) - At September 30, , ,664 (*) Grant before tax effects and performance conditions of the restricted stock plan. (**) In view of the performance conditions of the restricted stock plan and tax effects, 38,281 shares were exercised against the 1st tranche. (***) Write-off due to termination of employees who participated in the restricted stock plan or non-exercise of stock. 27. Government subsidies Presumed tax credit of State Value-added Tax on Sales and Services (ICMS) In the nine-month period ended September 30, 2018, the Company received R$52,249 (September 30, R$48,702) in ICMS tax benefits, which were classified into net revenue, as shown below: Parent company Consolidated 9/30/2018 9/30/2017 9/30/2018 9/30/2017 ICMS tax benefits State of Espirito 51,790 48,406 Santo (a) 43,195 39,915 ICMS tax benefits State of Rio Grande do Sul (b) - - Total 43,195 39,915 52,249 48,702 a) Under Regulations 088-R of October 29, 2015 and 077-R of June 1, 2016, the State of Espirito Santo has registered the Company, through its parent and one subsidiary, respectively, to receive ICMS tax benefits under the tax benefit arrangement called Competitiveness Agreement. b) The State of Rio Grande do Sul, through state internal regulation, grants presumed credits of ICMS on sales of shoes to other states. 30

64 (A free translation of the original in Portuguese) Arezzo Indústria e Comércio S.A. Quarterly Information (ITR) at September 30, 2018 and Report on Review of Quarterly Information

65 Report on Review of Quarterly Information To the Board of Directors and Stockholders Arezzo Indústria e Comércio S.A. Introduction We have reviewed the accompanying parent company and consolidated interim accounting information of Arezzo Indústria e Comércio S.A. ("Company"), included in the Quarterly Information Form (ITR) for the quarter ended September 30, 2018, comprising the balance sheet as at that date and the statements of income and comprehensive income for the quarter and nine-month periods then ended, and the statements of changes in equity and cash flows for the nine-month period then ended, and a summary of significant accounting policies and other explanatory information. Management is responsible for the preparation of the parent company and consolidated interim accounting information in accordance with the accounting standard CPC 21, Interim Financial Reporting, of the Brazilian Accounting Pronouncements Committee (CPC) and International Accounting Standard (IAS) 34, Interim Financial Reporting issued by the International Accounting Standards Board (IASB), as well as the presentation of this information in accordance with the standards issued by the Brazilian Securities Commission (CVM), applicable to the preparation of the Quarterly Information (ITR). Our responsibility is to express a conclusion on this interim accounting information based on our review. Scope of review We conducted our review in accordance with Brazilian and International Standards on Reviews of Interim Financial Information (NBC TR Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Brazilian and International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying parent company and consolidated interim accounting information included in the quarterly information referred to above has not been prepared, in all material respects, in accordance with CPC 21 and IAS 34, applicable to the preparation of the Quarterly Information, and presented in accordance with the standards issued by the CVM. PricewaterhouseCoopers, Rua Mostardeiro, 800-9º andar, Bairro Independência, Porto Alegre-RS, Brasil Telefone: (51) , Fax: (51) ,

66 Arezzo Indústria e Comércio S.A. Other matters Statements of value added We have also reviewed the parent company and consolidated statements of value added for the quarter ended September 30, These statements are the responsibility of the Company's management, and are required to be presented in accordance with standards issued by the CVM applicable to the preparation of Quarterly Information (ITR) and are considered supplementary information under IFRS, which do not require the presentation of the statement of value added. These statements have been submitted to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that they have not been prepared, in all material respects, in a manner consistent with the parent company and consolidated interim accounting information taken as a whole. Porto Alegre, October 29, PricewaterhouseCoopers Auditores Independentes CRC 2SP000160/O-5 Mauricio Colombari Contador CRC 1SP195838/O-3 3