1Q17 EARNINGS REPORT. Message from the CEO

Transcription

1 1Q17 EARNINGS REPORT Rio de Janeiro, May 10, PRUMO LOGÍSTICA S.A. ( Company or PRUMO ) (Bovespa symbol: PRML3), a private Brazilian company responsible for the Açu Port venture, is today announcing its earnings for the first quarter of 2017 and providing its shareholders and the market with up-to-date information about its implementation and operation. The consolidated financial and operating information, stated in thousands of Brazilian reais, is being presented in accordance with international financial reporting standards (IFRS). Message from the CEO The year 2017 comes with renewed optimism on the macroeconomic front with the Brazilian economy beginning to show signs of recovery, with inflation under control and the central bank lowering the interest rate. The government is attempting to approve reforms which could boost business and investor confidence and the rate of investments in Brazil. Port of Açu stands to benefit if this scenario is confirmed along with a resumption of investments in the O&G sector, following the end of the commodity low price cycle. With its strategic location, operating terminals, ready infrastructure and plenty of land available, Port of Açu is the best alternative for the O&G industry. The oil terminal of its subsidiary Açu Petróleo has carried out 18 oil transshipment operations since it came into operation in August With a licensed capacity for 1.2 million barrels per day, the terminal is the only private terminal in sheltered waters carrying out this activity. The dredging works commencing last year to deepen the channel and terminal to up to 25 meters will enable the terminal to receive VLCCs (Very Large Crude Carriers) and make it even more competitive to attract new clients. BP Prumo, a joint venture between BP and Prumo Logistica, for distributing marine fuels also started its operations last year. Following the new macroeconomic outlook described above, especially relating to the resumption of the O&G sector, the client base and their 1

2 fuel distribution volumes are expected to rise. In the 1st quarter this year alone, the company has sold approximately 13,500 m 3 of marine diesel oil in 48 operations. Another Prumo business unit that could benefit from a change in the situation is land lease. With plenty of land available, including land with direct access to the T2 channel and ready infrastructure, clients can benefit from efficient logistics at competitive costs. Ferroport, a joint venture between Prumo and Anglo American, is expecting to handle between 16 and 18 million tonnes of Anglo's iron ore. In this quarter alone it reached 4.3 million tonnes. However, Ferroport has a take or pay contract with Anglo entailing the handling of 26.5 million tonnes per year valid until The Multicargo Terminal began its operations in 2015 with bauxite test cargo and last year began its permanent operations. The terminal has already handled several types of cargo such as solid bulk and project cargo. For this year, it is expected to increase its shipping volume with new clients who are getting familiar with new logistics for shipping and receiving consumables and products. Lastly, Prumo will keep investing over the year through its subsidiaries, in addition to attracting new investments aiming to provide greater efficiency for its client services. We expect this will help us create more jobs, income and development for northern Rio de Janeiro. 2

3 Headlines for the Quarter Summary of the Main facts related to the Mandatory Tender Offer ( MTO ) On October 14, 2016 Prumo announced that its controlling shareholder intended to make a public acquisition offering for the company s free float shares. On November 25, 2016 the Company held an Extraordinary General Meeting where the minorities shareholders chose Brasil Plural S.A. Banco Múltiplo as the specialized company responsible for preparing the appraisal report. Furthermore, this Meeting resolved to carry out the MTO subject to the following: (i) (ii) Withdrawal of the Company from the special listing segment of the BM&FBovespa New Market; Delisting of the Company's category A status at the CVM, subject to the terms and conditions of the MTO and applicable regulations. On January 9, 2017 the Company received the appraisal report prepared by Brasil Plural S.A. Banco Múltiplo, which stated the economic and fair value of the Company s shares ranged between R$ 9.98 and R$ per share. On January 13, 2017 Prumo's controlling shareholders filed MTO documents to the CVM and BM&FBovespa, raising the offering price from R$ 6,69 to R$ (ten reais and fifty-one cents) per share. On February 24, 2017 a new meeting was held at Prumo requested by minorities shareholders accounting for 10% of the Company s free float, to resolve the performance of a new appraisal report to determine the value of the Company s shares. Most of the shareholders at the Meeting rejected the performance of a new appraisal on the Company. On April 14, EIG wrote to the Company in respect of official letter 107/2017/CVM/SRE/GER-1 sent by the Brazilian Securities Commission CVM to EIG, the controlling shareholders of Prumo, the intermediary institutions and the Company, in which the CVM informs its opinion that the shares held by 9 West Finance S.A.R.L ( Mubadala ) should not be considered free float for the purpose of the public offering to acquire Company shares ( MTO and SRE Decision, respectively). In this letter EIG stated that it had filed a petition to the CVM stating that it will file an administrative appeal against the SRE Decision, pursuant to item I of CVM Resolution 3

4 463/03, and has requested the immediate suspension of the terms for performing the determination set out in the SRE Decision until the appeal has been examined by the CVM. The OPA process has therefore been suspended until the CVM has analyzed the appeal filed by EIG. T-MULT records four operations with project cargo in the January T-MULT received four project cargo vessels in January The vessel C.OURO unloaded 120 riser s joints at the terminal and the dredger PRINS DER NEDERLANDEN, 3 containers. The ship SBM INSTALLER moored at the T-MULT quay line to change its crew and handle materials of SBM, a leading producer of FPSOs and mooring cables. This ship also transported 5 containers at the terminal. SBMSBM INSTALLER vessel Record volumes in the first quarter of 2017 The Port started 2017 receiving a large number of vessels. In the first two months of the year 361 vessels entered the venture's two terminals (T1- offshore and T2 - onshore). In March 2017 alone, 137 vessels were received, the largest number ever recorded at Port of Açu. For the purpose of comparison, in 2016 Port of Açu received approximately 1,000 vessels, mostly for offshore support and the O&G industry. The port also received 4

5 convoys, oil tankers, bulk carriers and general cargo ships. This number is four times larger than that recorded in The vessels entering the terminals include Capesize, SuezMax, PSV and platforms, in addition to convoys consisting of tugboats and barges, amongst others. Handling of General Cargo at T-MULT Two drill rigs moor simultaneously at T-MULT For the first time, T-MULT has received two semi-submersible deep-water drill rigs simultaneously. Routine support maintenance services will be carried out on the rigs, which were supporting Petrobras exploration campaign. With a depth of 14.5 meters, the T-MULT terminal has the capacity to moor drill rigs equipped with DP- Dynamic Positioning, not require removal of the thrusters, thereby permitting a safe, efficient and economic mooring. 5

6 BP Prumo carries out the first import of marine fuel through Port of Açu In February 2017 the Maritime Fuel Terminal (TECMA) of BP Prumo carried out its first marine diesel import, through the Panamanian ship Fairchem Sword, coming from Houston (Texas). The product was stored at the BPort terminal to refuel clients at the port on an ex-pipe basis. T-MULT receives 1 st coke operation Between the end of February and start of March, T-MULT handled steel coal cargo for the first time. Three operations were conducted at the terminal, for a total of 100 thousand tonnes of coal. The cargo was unloaded from Handymax vessels and then transported to Minas Gerais by truck. First coal operation Dredging operation at the Oil Terminal The TSHD Leiv Eiriksson, one of the largest dredgers in the world, arrived at Port of Açu in March to work alongside three other TSHDs on the Oil Terminal dredging operation (T- 6

7 OIL). This vessel has a length of 223 meters and a 46 thousand m 3 cistern capacity, and is some three times larger than the other three already in operation at the Port. The four hoper dredgers are operating in the Terminal 1 (offshore terminal) approach channel, and the terminal s turning basin and in the mooring basins of two of T-OIL's three berths. Following the completion of the dredging, the depth of the north and central berths of T- OIL will be extended from 20.5 meters up to 25 meters, which will enable the terminal to receive VLCCs (Very Large Crude Carriers), with the capacity for 320 thousand tonnes. In operation since August 2016, T-OIL is licensed to handle 1.2 million barrels of oil per day. The dredging, which is being conducted by Dutch firm Boskalis, is expected to be completed by the end of this year. Dredging works at T-OIL Subsequent Events: Agreement with Port of Antwerp International NV On April 20, Prumo announced it had signed a preliminary agreement ( Agreement ) with Port of Antwerp International NV ( PAI ). 7

8 The agreement establishes the parties intention to look into a potential partnership ( Partnership ). The partnership consists of PAI providing Porto do Açu Operações S.A. consultancy services, operational services and/or a potential investment. The joint studies will focus on the development and exploration of the industrial complex of Port of Açu and will be conducted exclusively until June 30, The Agreement does not constitute a commitment to enter into and negotiate any transaction and the parties acknowledge and agree that either party may cease the negotiations for any reason. The Company clarified that discussions with PAI are at a very preliminary stage and there is no assurance that a definitive transaction will emerge at the end between the parties. However, the exclusiveness established in the Agreement is material and binding. Final agreement for the development of a Convenience Centre On April 24 Prumo announced that further to the Company Material Fact released on October 20, 2016, its subsidiary Porto do Açu Operações S.A. ( Porto do Açu ) had executed a definitive agreement with Euro Consult Engenharia Ltda. ( Euro ) for the development of a Convenience Center at Port of Açu Industrial Complex. The Convenience Center will be developed in an 8,000 sqm area, with 2,000 sqm of gross leasable area in its initial phase. After the conclusion of its construction, companies and workers of the Port of Açu Industrial Complex will have access to restaurants, pharmacies, banks, offices for maritime agents, accountants and others services providers. Euro is responsible for the construction of the project and will invest approximately R$ 2 million to conclude the construction works. The Company also informs that is still negotiating with RB Capital as well as with other companies for the development and implementation of the Logistic and Industrial Condominium, a project comprised by stockyards modular warehouses and built to suit. The Company will keep the market informed about the signing of a definitive agreement. 8

9 Financial Highlights: PRUMO CONSOLIDATED Consolidated Simplified Analysis of the Income Statement (R$ k) - PRUMO CONSOLIDATED Consolidated IFRS (R$ k) IS 1Q17 1Q16 Change Net Operating Revenue 58,741 30,53 28,211 Sales Cost -44,367-33,33-11,035 Gross Profit 14,374-2,802 17,176 General and Administrative Expenses -28,637-28, Impairment -10, ,961 Other operating income (expenses) -7 2,559-2,566 Financial Income/Loss -86,552-9,332-77,22 Equity in income of subsidiaries 5,057 17,653-12,596 Net income before income and social contribution taxes -106,73-20,35-86,376 Tax (IR and CS) -1,226 43,176-44,402 Net income (loss) for the period -107,952 22, ,778 9

10 In the first quarter of 2017, consolidated net revenue amounted to R$ 58.7 million, related to port services, land lease at Port of Açu and the Caruara Environmental Reserve and revenue from the company Águas Industriais do Açu relating to the water supply agreement for the clients Edison Chouest and Porto do Açu. The increase of R$ 28.2 million over the same period of 2016 primarily concerns the commencement of transshipment operations at the Oil Terminal and handling of cargo at T-MULT, in addition to two semi-submersible drill rigs anchored at the Multicargo Terminal. The initiation of operations at the terminals resulted in the inclusion of costs of R$ 11 million in the income statement, amounting to R$ 44.4 million in the quarter. The main consolidated costs are described below and refer to the start of the operation which explains the increase in depreciation and amortization for the investments made: R$ 31.8 million - Depreciation and amortization; R$ 4.1 million - Payroll and charges; R$ 3.6 million - Outsourced services; R$ 3.1 million - Port services; R$ 0.4 million - Other insurance; R$ 0.4 million - Leasing and rental; and R$ 1.0 million - Taxes and other expenses. The administrative expenses remain stable over the same period of 2016, amounting to R$ 28.6 million. The expenses break down as follows: R$ 17.2 million - Personnel expenses; R$ 4.6 million - Outsourced services ; R$ 1.5 million - Leasing and rental; R$ 1.4 million - Contingencies ; R$ 1.2 million - Depreciation and amortization; R$ 0.5 million - Travel and accommodation; R$ 0.4 million Taxes; and R$ 1.8 million - Other expenses. Asset impairment amounted to approximately R$ 11.0 million. Every quarter the Company reviews its assets for the purpose of impairment. On March 31, 2017 it decided to make a provision for losses of R$ million, relating to the loan ( DIP") awarded to OSX, given the uncertainty of the success of OSX s judicial reorganization plan. 10

11 Financial expenses amounted to R$ million, primarily consisting of interest, brokerage and monetary variance, and were impacted by the increase in the Company s debt and operational start-up. Financial revenue was R$ 59.3 million, primarily consisting of interest and exchange variance, mainly resulting from the conversion of the functional currency US dollar into the reporting currency Brazilian reais at Açu Petróleo, in relation to the loan from Brookfield at Prumo Participações and others. The consolidated net financial income in 1Q17 was accordingly a negative R$ 86.6 million. The loss in 1Q17 was R$ 108 million. 11

12 The table below presents the pro forma EBITDA for 1Q17 of R$ 56 million, consolidating Ferroport and BP Prumo as a Joint Operation and R$ 12.8 million without the consolidation of Ferroport and BP Prumo, both recorded by the equity income method as a Joint Venture: Pro forma Ebitda BP Prumo 50% Ferroport 50% Prumo _Consolidated without Ferroport and BP Prumo Adjustments ( BP Prumo 50% + Ferroport 50% + Elimination) Prumo _Consolidated with Ferroport and BP Prumo Gross revenue 17,697 73,046 67,628 89, ,698 Taxes on Revenue (1,945) (3,804) (8,887) (5,749) (14,636) Net revenue 15,752 69,242 58,741 83, ,062 Costs (13,288) (17,161) (44,368) (29,570) (73,938) Gross income 2,464 52,082 14,373 53,751 68,124 Operating revenue (expense) (8,287) (1,822) (39,605) (8,919) (48,525) Administrative and general expenses (8,287) (2,919) (28,637) (10,016) (38,653) Impairment - - (10,961) - (10,961) Other income/expenses - 1,096 (7) Equity in income of subsidiaries - - 5,057 (5,057) - Income before financial income/loss and taxes (5,823) 50,259 (20,175) 39,775 19,600 Finance income (41) (29,355) (86,552) (29,397) (115,949) Income before tax on net income (5,864) 20,904 (106,726) 10,379 (96,349) Current/deferred IR and CS - (6,790) (1,226) (6,934) (8,160) Net income (loss) for the year (5,864) 14,114 (107,952) 3,445 (104,508) Depreciation and amortization - (4,739) (32,982) (3,458) (36,440) Ebitda (5,823) 54,998 12,807 43,233 56,039 12

13 Simplified Analysis of the Financial Statement (R$ k) - PRUMO CONSOLIDATED Consolidated IFRS Financial Statement (R$ thousand) 1Q Change Current Assets 368, ,068 (200,738) Noncurrent Assets 7,317,097 7,239,038 78,059 Total Assets 7,685,427 7,808,106 (122,679) Current Liabilities 155, ,987 (71,957) Noncurrent Liabilities 4,279,552 4,191,774 87,778 Shareholders' equity 3,250,845 3,389,345 (138,500) Total Liabilities plus Shareholders' equity 7,685,427 7,808,106 (122,679) The Company's consolidated cash position in the first quarter of 2017 was R$ million. The company's net debt as of 3/31/2017 was R$ 4.4 billion including interest and monetary restatement. The consolidated property, plant and equipment rose from R$ 4.06 billion in 4Q16 to R$ 4.14 billion in 1Q17, and the increase was primarily due to infrastructure works, mainly the dredging of the Oil Terminal. 13

14 PORTO DO AÇU CAPEX The company Porto do Açu began its activities in 2011 by leasing out its landside yard and began operating the channel at T2 in November In 2015 T-MULT, also located at Terminal 2, became operational, making 3 shipments of bauxite in the year. The corresponding assets were accordingly reclassified to property, plant and equipment in use, and depreciation thereof commenced. As explained in press releases made last year, the interest on existing loans will no longer be capitalized from the first quarter of 2016 following the entry of Port of Açu's terminals into operation. Açu s Capex in the first quarter of 2017 was R$ 21.9 million. The main activities related to the investments made in the quarter are described below. South Mole R$ 6.8 million; Sustainability - R$ 4.5 million; Gas Terminal R$ 2.8 million; Engineering - R$ 1.4 million; Land Management - R$ 1.3 million; T2 Channel R$ 1.2 million; o o T2 Breakwater - R$ 0.9 million; Civil works management R$ 0.3 million; Personnel expenses - R$ 1.1 million; Operational Health and Safety R$ 0.9 million; Property Security R$ 0.7 million; TMULT R$ 0.6 million; Other - R$ 0.6 million. 14

15 15 The Capex estimated for 2017 is R$ million and will be invested by Porto do Açu and other Prumo subsidiaries, excluding Ferroport and Açu Petróleo.

16 FERROPORT Simplified Analysis of the Income Statement (R$ k) FERROPORT (100%) Income Statement (R$ thousand) 1Q17 1Q16 Change Net Operating Revenue 138, ,500 (13,015) Operating Cost (36,190) (37,014) 824 Gross income 102, ,486 (12,191) Administrative and general expenses (5,837) (6,782) 945 Other (income/ expenses) 2,193 7,240 (5,047) Financial Income/Loss (58,711) (65,687) 6,976 Net income before income and CSLL 39,940 49,257 (9,317) Tax (IR and CSLL) (13,580) (12,930) (650) Net income (loss) for the period 26,360 36,327 (9,967) In the first quarter of 2017, consolidated net revenue was R$ million, primarily deriving from the Take or Pay agreement with Anglo. The change of R$ 13.0 million in net revenue in the first quarter of 2017 over the same period of 2016 was primarily due to the devaluation of the US dollar against the Brazilian real. The Income Statement cost line, amounting to R$ 36.2 million in the quarter, decreased over the same quarter of the previous year primarily due to efficiency gains and sound expense management. The main consolidated costs have been described below: R$ 9.9 million - Depreciation and amortization; R$ 9.8 million - Payroll and charges; R$ 8.3 million - Consumption material; R$ 5.1 million - Outsourced service expenses; R$ 1.5 million - Leasing and rental; 16

17 R$ 1.0 million Insurance; and R$ 0.6 million - Taxes and other expenses. Administrative expenses contracted by approximately R$ 0.9 million over 1Q16, primarily due to the continued implementation of the revision plan of Ferroport's back-office setup. The expenses in the quarter break down as follows: R$ 3.2 million Personnel expenses; R$ 1.4 million Depreciation and amortization; R$ 1.0 million Outsourced services; and R$ 0.2 million Other expenses. Other operating revenue amounted to R$ 2.2 million in this quarter and refer to energy trading and the deferred right to use the access bridge. The net financial income in the first quarter of 2017 was a negative R$ 58.7 million, positively impacted by lower CDI costs on the loan with the shareholders. The net income in the first quarter of 2017 was R$ 26.4 million. The EBITDA accumulated through the first quarter of 2017 amounted to R$ 110 million, as per the graph below: 17

18 CAPEX FERROPORT In 1Q17 the Capex realized at the iron ore terminal was R$ 32.0 million, allocated as follows: R$ 27.6 million was invested in the Implementation Project, with its main items being construction of the breakwater and management and demobilization of works; R$ 2.4 million in forestry Offsets; R$ 1.1 million in projects improving operational efficiency and acquiring spare parts; Other expenses of R$ 0.9 million. The iron ore volume shipped in the first quarter of 2017 was approximately 4.26 million tonnes, with 26 shipments made. 18

19 19 The total position of the Condominium Assets as of March 31, 2017, including cash disbursement plus capitalized interest, net of depreciation and provisions, is R$ 3.6 billion. Of this amount, 58.8% denotes FERROPORT's interest of R$ 2.1 billion, 32.7% the interest of Anglo American Minério de Ferro do Brasil ( AAMFB ) in the total amount of R$ 1.2 billion and 8.5% to the interest of Açú Petróleo, equal to R$ million of property, plant and equipment.

20 AÇU PETRÓLEO Simplified Analysis of the Income Statement (R$ k) Açu Petróleo Income Statement (R$ thousand) 3/31/2017 3/31/2016 Change Net Operating Revenue 18,408-18,408 Operating Cost (12,950) (1,163) (11,788) Gross income 5,458 (1,163) 6,620 Administrative and general expenses (1,510) (816) (694) Other income/ expenses Financial Income/Loss 7,059 50,316 (43,256) Net income before income and CSLL 11,007 48,337 (37,330) Tax (IR and CSLL) 8,204 25,932 (17,728) Net income for the period 19,211 74,269 (55,058) The net revenue in the first quarter of 2017 was R$ 18.4 million referring to the take or pay contract with BG, a company of Shell Group, and a test operation conducted with the company Petrogal. The transshipment volume was 7.9 million barrels, and involved 16 Suezmax ships, 8 of which are equipped with dynamic positioning systems. The initiation of operations resulted in the inclusion of costs in the profit or loss statement in the quarter, amounting to R$ 12.9 million. The main consolidated costs have been described below: R$ 8.2 million - Depreciation and amortization; R$ 3.0 million - Port services; R$ 0.9 million - Outsourced services; R$ 0.8 million - Insurance, taxes and other expenses. Administrative expenses amounted to R$ 1.5 million. The expenses in the year break down as follows: R$ 1.3 million - Payroll and charges; 20

21 R$ 0.07 million - Depreciation and amortization R$ 0.05 million - Outsourced services; R$ 0.04 million Taxes; R$ 0.06 million - Other expenses. The net financial income in the first quarter of 2017 was a positive R$ 7.06 million. Financial expenses amounted to R$ 0.03 million, primarily consisting of fines, interest, IOF tax and bank expenses and exchange variance. While financial revenue was R$ 7.09 million, consisting primarily of yields on short-term investments and exchange variance on translating the Real to the US dollar, the functional currency of Açu Petróleo. The net income in the first quarter of 2017 was R$ 19.2 million. CAPEX AÇU PETRÓLEO Açu Petróleo's capex in the first quarter of 2017 amounted to R$ million. The main activities related to the investments made in 2016 are described below. Dredging R$ million; Electro-mechanical Assembly - R$ 7.6 million; Civil Works R$ 1.7 million; Sustainability - R$ 1.2 million; Maintenance - R$ 0.8 million; Breakwater - R$ 0.1 million; Other - R$ 0.1 million. The Capex estimated for 2017 that will be invested by Açu Petróleo is R$ million. 21

22 22

23 Social and Environmental Responsibility Prumo Logística is seriously committed to Sustainability. We believe this is a strategic value for an ongoing process of improving the Company s economic, environmental and social performance. Our activities always comply with environmental legislation, maintaining engagement and transparency with the communities we are a part of and all stakeholders. Our initiatives are underpinned by the concept of Sustainable Development, which is carried out to meet current requirements without compromising the ability of future generations to meet their own requirements. To bolster our commitment, the company created PorTodos (ForAll), a concept which brings together all initiatives of the venture related to the environment, the community and socioeconomic development. These solutions are developed for Business, the Environment and People. By all and ForAll. In the 1 st half of the year, the Company continued implementing initiatives aimed at the fishing sector. In order to gather data about productivity, the number and flow of fishing vessels and to further understanding about the sector s dynamics, the company voluntarily created the Fishing Monitoring Project. The initiative will last two years and aims to generate information that can be of use not only to Port of Açu, but to the fishing sector in the entire region. With the data obtained by the monitoring, the community will have a better idea of the fishing catch volume in each municipality, how the activity works in general and the importance it has on the local economy. The data generated by the fishing monitoring project will be shared with the government, sector institutions and fishing communities, through scheduled visits and printed information. Furthermore, Ferroport (a partnership between Prumo Logística and Anglo American) sponsored the good practices course for processing and handling fish catches, which aimed to encourage an entrepreneurial vision among students and demonstrate the business possibilities in the sector. The initiative is the fruit of an integrated project of Ferroport, the Artepeixe cooperative, Fundação Instituto de Pesca do Estado do Rio de Janeiro (FIPERJ) and the municipal fishing department of São João da Barra. The idea is that fishermen and families that rely on fishing can explore the activity as an actual business, transforming fish and crustaceans into more sophisticated products, like hamburgers, sausages, kibbe and fish balls. 23

24 On the environmental front, at the invitation of the environmental department of São João da Barra, Port of Açu held a series of lectures about Sustainability for youngsters and adolescents. The initiative was part of the Férias Ambiental project, which took place in February and aimed to teach and raise awareness of participants. The issues addressed included lectures about the turtle and dolphin monitoring programs in addition to explanations about the Caruara Private Natural Heritage Reserve (RPPN), created and maintained voluntarily by Port of Açu. Other initiatives conducted by the company were related to the sea turtle monitoring program, implemented since 2008 by Port of Açu with the support of the Tamar Project. In this breeding season alone, which ended in March this year, Port of Açu recorded more than 80 thousand hatchlings released into the sea, on a 62-km stretch of coastline from Pontal de Atafona to Farol de São Thomé, in Campos dos Goytacazes During the hatching season, from September to March, Porto do Açu Coordinated 8 releases open to the public, seen by more than 1,500 people, through a partnership with the municipal government of São João da Barra and the Tamar project. The sea turtle monitoring program meets the technical guidelines of Instituto Chico Mendes de Conservação da Biodiversidade (ICMBio) Tamar and the State Environmental Department (INEA). On the development area, the company in partnership with Sebrae/RJ opened a new class of the local suppliers development program (PDFL), aimed at business people in the region. PDFL aims to maximize the benefits resulting from installation of the Port Complex for suppliers located in the vicinity of the venture. Since the project was created in 2011, around 800 local companies were qualified. Over the course of 2016 some 200 local companies were hired to provide some kind of service at the Port of Açu Complex. 24

25 Capital Market and Corporate Governance Prumo's shares are listed on the New Market, the most rigorous level of corporate governance practices on the São Paulo Stock Exchange (Bovespa), reinforcing the importance of the capital market to the Company. In the first quarter of 2017 Prumo s stock enjoyed an average daily trading volume of R$ 1.69 million and 469 trades per day. We closed the quarter on March 30, 2017 with a share price of R$ Prumo has 376,016,801 (three hundred and seventy-six million sixteen thousand eight hundred and one) registered common shares with no par value, ratified at the Board of Directors' meeting held October 10, Prumo has a Board of Directors with 7 members, 2 of whom are independent. The Board meets quarterly, and extraordinarily whenever necessary. The Board of Directors is advised by an Audit Committee, a Strategic Committee, an Ethics and Compliance Committee and a Sustainability Committee. None of the aforesaid committees is statutory. During the last Ordinary Shareholders Meeting held on April 28, 2017 the Fiscal Council was installed and formed by 3 members. 25

26 Income Statement In thousands of reais Consolidated IFRS 1Q17 1Q16 Net service revenue 58,741 30,530 Cost of sales (44,367) (33,332) Gross income 14,374 (2,802) Operating revenue (expense) (39,605) (25,869) General and administrative expenses Impairment Other revenue Other expenses (28,637) (28,428) (10,961) - - 2,563 (7) (4) Net income before financial revenue (expenses) and tax (25,231) (28,671) Finance income (86,552) (9,332) Finance revenue Finance expenses Equity in income of subsidiaries 59, ,981 (145,852) (193,313) 5,057 17,653 Net income before tax (106,726) (20,350) Current income and social contribution taxes (16,853) (7,774) Deferred income and social contribution taxes 15,627 50,950 Net income from continued operations Net income (loss) for the period (107,952) 22,826 26

27 PRUMO Logística S.A. Statement of Financial Position (in thousands of reais) Consolidated Asset 1Q Current Assets 368, ,068 Cash and cash equivalents 203, ,799 Trade receivables 25,676 13,789 Prepaid expenses 21,857 16,665 Recoverable taxes 40,668 46,175 Other advances Escrow account Accounts receivable and loans with related parties 60,734 51,271 Inventory Income taxes and contributions recoverable 5,107 26,465 Third-party receivables 2,443 1,428 Other 6,695 6,390 Noncurrent Assets 7,317,097 7,239,038 Deferred taxes 450, ,691 Judicial deposits 23,173 22,696 Returnable down payments 88,998 87,619 Third-party receivables 64,802 62,664 Related-party transactions 817, ,667 Escrow account 64,138 63,988 Recoverable taxes 118, ,599 Trade receivables 63,554 61,354 Debentures 659, ,354 Investment 775, ,658 Property, plant and equipment 4,137,004 4,055,524 Intangible assets 53,858 55,224 Total Assets 7,685,427 7,808,106 27

28 PRUMO Logística S.A. Statement of Financial Position (in thousands of reais) Consolidated 1Q Current Liabilities 155, ,987 Trade accounts payable 60, ,797 Loans, financings, and debentures 28,037 32,782 Taxes and contributions payable 4,455 7,343 Income and social contribution taxes payable 16,850 26,005 Salaries and charges payable 21,668 15,980 Accounts payable and loans with related parties 20,923 22,950 Advances from customers 2,704 2,918 Other Noncurrent Liabilities 4,279,552 4,191,774 Loans, financings, and debentures 4,228,614 4,142,206 Provision for contingencies 3,458 2,036 Liabilities towards third parties 19,880 19,880 Advances from customers 27,116 27,168 Other Shareholders' equity 3,250,845 3,389,345 Share capital 3,232,034 3,232,034 Capital reserves 962, ,779 Equity appraisal adjustment (173,281) (145,953) Accumulated losses ( ) (899,840) Minority interest 237, ,325 Total Liabilities plus Shareholders' equity 7,685,427 7,808,106 28

29 Information about the Conference Call Thursday, May 11 at 11:00 AM (Brasília time); 10:00 AM (US-ET). Telephone number for participants: Dial-in with connections in Brazil: Dial-in with connections in Brazil: Toll-free with connections in the US: Dial-in with connections in the US: Password for participants: Prumo Data for access to the presentation: (English) (Portuguese) Participants should connect 10 minutes before the conference call starts. Investor Relations Contacts: Eugenio Leite de Figueiredo - CFO and Investor Relations Officer Luiz Felipe Jansen de Mello - Investor Relations Manager Luciane Teixeira - Investor Relations Analyst ri@prumologistica.com.br / Press: Bárbara Bortolin - barbara.bortolin@prumologistica.com.br /