Positivo Informática S.A.

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1 (Free Translation into English from the Original Previously Issued in Portuguese for the Convenience of Readers Outside Brazil) Positivo Informática S.A. Financial Statements December 31, 2015 and Independent Accountant s Review Report Deloitte Touche Tohmatsu Auditores Independentes

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4 (Convenience Translation into English from the Original Previously Issued in Portuguese) POSITIVO INFORMÁTICA S.A. AND SUBSIDIARIES BALANCE SHEET AS AT DECEMBER 31, 2015 AND 2014 (All amounts in thousands of reais) ASSETS Note Parent company Consolidated Parent company Consolidated 12/31/ /31/ /31/ /31/ /31/ /31/ /31/ /31/2014 LIABILITIES AND EQUITY Note CURRENT ASSETS Cash and cash equivalents 5 530, , , ,361 CURRENT LIABILITIES Derivative financial instruments 31 41,067 3,412 41,067 3,412 Trade payables , , , ,023 Trade receivables 6 276, , , ,646 Loans - third parties , , , ,931 Inventories 7 393, , , ,503 Derivative financial instruments 31-5,032-5,032 Related parties 10 8,548 41,774 32,970 18,319 Salaries and social charges payable 17,506 33,729 17,506 34,840 Recoverable taxes 8 188, , , ,471 Provision 17 97,218 76,275 97, ,192 Sundry advances 30,789 21,415 32,696 22,422 Provision for tax, labor and civil risks 21 5,500 8,297 5,500 8,297 Other receivables 9 27,893 26,684 27,893 29,021 Taxes payable 18 11,353 19,087 11,410 21,829 1,497,478 1,235,177 1,550,611 1,376,155 Dividends payable 22.e 2 5, ,821 Deferred revenue 8 and 19 12,834 16,785 12,834 15,085 Related parties 10 2,164 1,028 1, Other payables 5,113 6,619 5,243 6,883 1,045, ,311 1,101, ,417 NON-CURRENT LIABILITIES NON-CURRENT ASSETS Loans - third parties , , , ,218 Long-term receivables Provision 17 18,244 18,575 19,394 19,725 Recoverable taxes 8 118, , , ,390 Provision for tax, labor and civil risks 21 37,771 36,600 38,071 36,900 Deferred taxes 20 71,073 65,901 71,073 71,073 Net capital deficiency in subsidiaries 11 and , Other receivables 9 14,335 16,512 14,426 16,603 Other payables 1,939 2,540 1,961 2, , , , , , , , ,623 TOTAL LIABILITIES 1,285, ,724 1,342,645 1,099,040 EQUITY Investments in subsidiaries 11 11,068 44, Capital 22.a 389, , , ,000 Investment in joint venture 12 40,322 58,880 41,521 58,883 Capital reserve 22.b 121, , , ,389 Property, plant and equipment 13 53,203 48,996 53,203 50,556 Carrying value adjustment (12,785) (7,489) (12,785) (7,489) Intangible assets 14 55,568 47,530 69,741 68,136 Revenue reserve 22.d 116, , , ,323 Treasury shares 22.g (37,467) (37,467) (37,467) (37,467) 160, , , , , , , , , , , ,641 TOTAL ASSETS 1,861,512 1,635,480 1,919,040 1,759,796 TOTAL LIABILITIES AND EQUITY 1,861,512 1,635,480 1,919,040 1,759,796 The accompanying notes are an integral part of these financial statements. 3

5 (Convenience Translation into English from the Original Previously Issued in Portuguese) POSITIVO INFORMÁTICA S.A. AND SUBSIDIARIES INCOME STATEMENT YEARS ENDED IN DECEMBER 31, 2015 AND 2014 (All amounts in thousands of reais) Parent company Consolidated Note 12/31/ /31/ /31/ /31/2014 NET REVENUE 23 1,628,646 2,178,750 1,843,191 2,331,559 COST OF SALES AND SERVICES RENDERED 24 (1,321,650) (1,677,473) (1,496,034) (1,805,507) GROSS PROFIT 306, , , ,052 Selling expenses 24 (272,186) (323,269) (305,424) (352,847) General and administrative expenses 24 (102,111) (108,561) (107,276) (122,336) Other operating income (expenses), net (4,051) 11,994 (4,051) 13,970 Equity in the results of investees 11 and 12 (1,375) 3,051 7,642 22,066 (379,723) (416,785) (409,109) (439,147) OPERATING PROFIT(LOSS) BEFORE FINANCE RESULTS (72,727) 84,492 (61,952) 86,905 Finance income 26 66,062 37,822 70,310 40,489 Finance expenses 26 (116,819) (86,802) (122,644) (89,479) Foreign exchange variations, net 26 43,603 (12,241) 34,544 (14,610) (7,154) (61,221) (17,790) (63,600) PROFIT (LOSS) BEFORE TAXATION (79,881) 23,271 (79,742) 23,305 Income tax and social contribution (139) (34) PROFIT (LOSS) FOR THE YEAR (79,881) 23,271 (79,881) 23,271 EARNINGS (LOSS) PER SHARE - R$ Basic 28 (0.9373) N/A N/A Diluted 28 (0.9420) N/A N/A The accompanying notes are an integral part of these financial statements. 4

6 (Convenience Translation into English from the Original Previously Issued in Portuguese) POSITIVO INFORMÁTICA S.A. AND SUBSIDIARIES STATEMENT OF COMPREHENSIVE INCOME YEARS ENDED IN DECEMBER 31, 2015 AND 2014 (All amounts in thousands of reais) Parent company Consolidated Note 12/31/ /31/ /31/ /31/2014 Profit (Loss) for the year (79,881) 23,271 (79,881) 23,271 Other comprehensive income (loss) Items that can be reclassified subsequently to income statement Foreign exchange variations on foreign investments Crounal S.A. 11 (1,341) (288) (1,341) (288) Informática Fueguina S.A. 12 (8,475) (180) (8,475) (180) Positivo Inf. da Bahia / PBG Rwanda Limited Cash flow Hedges Adjustments of reclassification from amounts recognized in the results. 31.c 4,405-4,405 - (5,296) (468) (5,296) (468) Comprehensive income (loss) for the year (85,177) 22,803 (85,177) 22,803 The accompanying notes are an integral part of these financial statements. 5

7 (Convenience Translation into English from the Original Previously Issued in Portuguese) POSITIVO INFORMÁTICA S.A. AND SUBSIDIARIES STATEMENT OF CHANGE IN SHARHOLDERS EQUITY YEARS ENDED IN DECEMBER 31, 2015 AND 2014 (All amounts in thousands of reais) Note Capital Capital reserve Tax incentive reserves Options granted Parent company and Consolidated Profit reserves Carrying value Tax incentive adjustments reserves Legal reserve Treasury shares Accumulated profit (loss) Total equity AT DECEMBER 31, , ,305 2,004 (7,021) 178, (35,430) - 645,728 Profit for the year ,271 23,271 Other comprehensive income (loss): Cumulative translation adjustment 11 and (468) (468) Total comprehensive income (loss) (468) ,271 22,803 Recognized options granted Dividends proposed 22.e (5,818) (5,818) Other comprehensive income: Proposition of a profit retention reserve 22.d 17,453 (17,453) - Treasury shares 22.g (2,037) (2,037) AT DECEMBER 31, , ,305 2,084 (7,489) 196, (37,467) - 660,756 AT DECEMBER 31, , ,305 2,084 (7,489) 196, (37,467) - 660,756 Losses for the year (79,881) (79,881) Other comprehensive income (loss): Cash Flow Hedges 31.c , ,405 Cumulative translation adjustment 11 and (9,701) (9,701) Total comprehensive income (loss) , (79,881) (85,177) Options granted (stock options) 22.b and Reintegrated dividends 4-4 Appropriation of the loss for the year 22.f (79,881) 79,881 - AT DECEMBER 31, , ,305 2,896 (12,785) 116, (37,467) - 576,395 The accompanying notes are an integral part of these financial statements. 6

8 (Convenience Translation into English from the Original Previously Issued in Portuguese) POSITIVO INFORMÁTICA S.A. AND SUBSIDIARIES STATEMENT OF CASH FLOWS YEARS ENDED IN DECEMBER 31, 2015 AND 2014 (All amounts in thousands of reais) Parent company Consolidated 12/31/ /31/ /31/ /31/2014 CASH FLOWS FROM OPERATING ACTIVITIES (Loss) Profit for the year (79,881) 23,271 (79,881) 23,271 Reconciliation of (Loss) profit to cash provided by (used in) operating activities: Depreciation and amortization 24 64,436 47,752 66,749 50,501 Equity in the results of investees 11 and 12 1,376 (3,051) (7,642) (22,066) Fair value gain / (loss) on financial instruments (38,282) 729 (38,282) 729 Provision for tax, labor and civil risks (1,626) 1,982 (1,626) 1,982 Allowance for doubtful accounts 6 8,174 6,313 8,546 6,338 Provision (reversal) for inventories, net 11,920 (18,460) 11,015 (18,916) Stock options Gain / (loss) on disposal of fixed assets (1,740) - (1,909) - Interest on borrowings 78,272 44,873 79,589 45,511 Foreign exchange variation 5,398 18,903 18,067 19,348 Income tax and social contribution , ,392 55, ,812 (Increase) decrease in assets: Trade receivables 233,468 69, ,316 12,888 Inventories 72, ,184 75, ,091 Taxes recoverable (72,069) (40,183) (71,210) (41,540) Sundry advances (8,810) (5,714) (10,274) (5,574) Other receivables 6,930 (5,177) 1,964 (6,573) Increase (decrease) in liabilities: Trade payables (32,677) (119,673) (28,097) (86,468) Provisions and deferred revenue (25,374) (21,472) (16,340) (11,877) Tax obligations (10,015) (4,001) (10,419) (2,117) Income tax and social contribution paid - - (139) (34) Other payables (19,296) 248 (18,741) (3,530) Interests over borrowings paid (89,454) (54,479) (91,458) (55,793) 55,305 32,067 25,116 4,473 Net cash provided by operating activities 104, ,459 80, ,285 CASH FLOWS FROM INVESTING ACTIVITIES Dividends received 12 11,591 8,096 11,591 8,096 Payment of capital 11 (5,887) (25) - (28) Cash and cash equivalents - Merge Purchases of property, plant and equipment 13 (13,948) (6,062) (15,485) (6,711) Increase in intangible assets 14 (52,920) (16,141) (54,439) (16,598) Net cash used in investing activities (60,336) (14,132) (58,333) (15,241) CASH FLOWS FROM FINANCING ACTIVITIES Payment of dividends (5,815) (3,897) (5,815) (3,897) New borrowings 739, , , ,106 Borrowings from the National Bank for Economic and Social Development (BNDES) 63,240 53,239 65,870 53,368 Repayment of borrowings (474,690) (391,364) (475,316) (392,178) Related parties (54,845) (16,029) (14,651) 13,426 Repurchase of Company's shares - (2,037) - (2,037) Net cash provided by (used in) financing activities 267,420 (78,254) 309,618 (36,212) INCREASE IN CASH AND CASH EQUIVALENTS 311,248 62, ,978 59,832 Cash and cash equivalents at the beginning of the year 219, , , ,974 Exchange variation on cash and cash equivalents - - 1, Cash and cash equivalents at the end of the year 530, , , ,361 INCREASE IN CASH AND CASH EQUIVALENTS 311,248 62, ,525 59,387 The accompanying notes are an integral part of these financial statements. 7

9 (Convenience Translation into English from the Original Previously Issued in Portuguese) POSITIVO INFORMÁTICA S.A. AND SUBSIDIARIES STATEMENT OF VALUE ADDED YEARS ENDED IN DECEMBER 31, 2015 AND 2014 (All amounts in thousands of reais) Parent company Consolidated 12/31/ /31/ /31/ /31/2014 Revenue Sales of goods and services 1,768,297 2,399,836 1,995,982 2,572,602 Returns and commercial discounts (56,111) (80,112) (54,930) (85,101) Allowance for doubtful accounts (8,173) (6,313) (8,545) (6,338) Other revenues 2,767 14,490 2,826 16,510 1,706,780 2,327,901 1,935,333 2,497,673 Inputs acquired by third parties Cost of sales and services rendered (1,207,350) (1,682,400) (1,373,702) (1,815,791) Materials, electricity, outsourced services and other (147,839) (55,006) (165,031) (62,798) Commissions (22,854) (28,894) (25,122) (31,541) Marketing (53,798) (54,427) (69,531) (67,026) (1,431,841) (1,820,727) (1,633,386) (1,977,156) Gross value added 274, , , ,517 Depreciation and amortization (64,436) (47,752) (66,749) (50,501) Net value added generated by the entity 210, , , ,016 Value added received through transfer Equity in the results of investees (1,376) 3,051 7,642 22,066 Finance income 286,210 37, ,739 40, ,834 40, ,381 62,554 Total value added to distribute 495, , , ,570 Distribution of value added Personnel Salaries and social charges 119, , , ,437 Benefits 15,512 17,305 17,386 19,460 Government Severance Indemnity Fund for Employees 16,537 15,043 16,914 15, , , , ,349 Taxes, fees and contributions Federal 118, , , ,751 State (360) 12,274 (373) 12,177 Municipal , , , ,651 Third-party capital remuneration Interest and finance costs 116,819 86, ,486 89,479 Rentals 12,075 12,865 12,997 14,210 Foreign exchange variation 176,544 12, ,043 14, , , , ,299 Remuneration of own capital Dividends - 5,818-5,818 Retained (Losses) earnings (79,881) 17,453 (79,881) 17,453 (79,881) 23,271 (79,881) 23,271 Total value added distributed 495, , , ,570 The accompanying notes are an integral part of these financial statements. 8

10 (Convenience Translation into English from the Original Previously Issued in Portuguese) POSITIVO INFORMÁTICA S.A. AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In thousands of Reais, except where otherwise indicated) 1 GENERAL INFORMATION Positivo Informática S.A. (the Company), founded in 1989, has a technological complex of three units in the municipality of Curitiba, state of Paraná, one unit in the municipality of Ilhéus, state of Bahia, one direct subsidiarie in Ilhéus, state of Bahia, and also has a indirect subsidiary in São Paulo, State of São Paulo. In December 2010, the Company acquired the shared control of Informática Fueguina S.A., in Argentina. In February 2011, the Company acquired the control of Crounal S.A., in Uruguay. In April 2012, the Company acquired the direct subsidiary Portal Mundo Positivo Ltda. In May 2014, the Company acquired the jointly-controlled subsidiary BR Code Desenvolvimento de Software S.A. In October 2014, the Company opened the jointly-controlled subsidiary PBG Rwanda Limited. The Company is primarily engaged in the manufacture, sale and development of projects in the information technology (IT) area, the manufacture, sale and rental of software and hardware, the sale of IT equipment, pedagogic and school management application systems, technical-pedagogical planning and support, representation, sales, implementation, training and support, technical assistance for equipment and technical, technological and scientific teaching systems in several areas, and other related activities. The products manufactured and sold by the Company include: small and medium-sized computers, portable computers, tablets, monitors, electronic boards, computerized educational desks, servers, mobile phones, smartphones and educational software systems. The shares of Positivo Informática S.A. are listed on the São Paulo Stock Exchange (BM&FBovespa) in the New Market Corporate Governance segment. Corporate restructuring On August 28, 2015, the Company merged direct subsidiary Positivo Informática da Amazônia Ltda. and established a branch in the city of Manaus, State of Amazonas to engage in the same activities as the Company s. The amount of the subsidiary s net assets merged into the Company was determined based on the accounting records and is shown in Note 11.a. Issuance of the financial statements The issue of these financial statements was authorized by the Board of Directors on March 22,

11 2 ACCOUNTING POLICES The financial statements have been prepared in accordance with accounting practices adopted in Brazil, including the pronouncements issued by the Accounting Pronouncements Committee (CPC) and the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) Basis of preparation The individual and consolidated financial statements have been prepared based on the historical cost, except for financial assets and financial liabilities measured at fair value. The preparation of financial statements requires Management to use certain critical accounting estimates and to exercise judgment in the process of applying the Company s accounting policies. The areas involving a higher degree of judgment and with higher complexity, as well as those where assumptions and estimates are significant to the individual and consolidated financial statements, are disclosed in Note 3. (a) Parent company financial information The parent company financial information were prepared in accordance with accounting practices adopted in Brazil issued by the CPC. Because the accounting practices adopted in Brazil applied to the parent company's financial statements, as from 2014, do not differ from IFRS applicable to the separate financial statements, since it started to allow the adoption of the equity accounting method in subsidiaries in the separate financial statements, these are also in conformity with International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB). These parent company financial statements are disclosed together with the consolidated financial statements. (b) Consolidated financial information The consolidated financial information have been prepared and are being presented in accordance with accounting practices adopted in Brazil, including the pronouncements issued by the CPC, as well as according to International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board IASB. (c) Changes in accounting policies and disclosures There are no IFRS standards or IFRIC interpretations that are not yet effective and that could have a material impact on the Company s interim financial information. 10

12 (d) Statement of value added (DVA) The presentation of the parent company and consolidated Statement of Value Added is required by the Brazilian corporate legislation and the accounting practices adopted in Brazil applicable to listed companies. IFRS do not require the presentation of this statement. Consequently, according to IFRS, this statement is presented as supplementary information, without prejudice to the financial statements as a whole. The purpose of this statement is to disclose the wealth created by the Company and its distribution during a certain reporting period. The presentation of this statement is required by the Brazilian Corporate Law as an integral part of its individual financial statements and considered additional disclosure in the consolidated financial statements, since this statement is not required by IFRS. The statement of value added has been prepared using information obtained in the same accounting records used to prepare the financial statements and pursuant to the provisions of CPC 09 - Statement of Value Added. The first part of the DVA presents the wealth created by the Company, represented by revenues (gross sales revenue, including taxes levied thereon, other income and the effects of the allowance for doubtful debts), inputs purchased from third parties (cost of sales and purchases of materials, power and outside services, including taxes levied at the time of the purchase, the effects of impairment and recovery of assets, and depreciation and amortization) and the value added received from third parties (share in the profit of subsidiaries, finance income and other income). The second part of the DVA presents the distribution of wealth between personnel, taxes and contributions, lenders and lessors, and shareholders. 11

13 2.2. Consolidation The following accounting policies are applied in the preparation of the consolidated financial information: (a) Subsidiaries Subsidiaries are all entities (including structured entities) over which the Company has control. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are deconsolidated from the date that control ceases. Transactions, balances and unrealized gains on transactions between companies are eliminated. Unrealized losses are also eliminated, unless the transaction provides evidence of impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Company. Ownership interest - % 12/31/ /31/2014 Direct subsidiaries Positivo Informática da Amazônia Ltda Positivo Informática da Bahia Ltda Portal Mundo Positivo Ltda Crounal S.A Indirect subsidiaries Investee of Positivo Informática da Bahia Ltda. Boreo Comércio de Equipamentos Ltda Informática da Amazônia Ltda. Portal Mundo Positivo Ltda (b) Joint venture A joint venture is an entity over which the Company shares control with one or more parties. Investments in joint ventures are accounted for using the equity method and are initially recognized at cost. The Company's related share of profit or loss is recognized in the statement of income and its share of reserve movements is recognized in the Company's reserves. When the Company's share of losses in a joint venture equals or exceeds the carrying amount of the investment, including any other receivables, the Company does not recognize further losses, unless it has incurred obligations or made payments on behalf of the joint venture. 12

14 Unrealized gains on transactions between the Company and its joint venture are eliminated to the extent of the Company's interest. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint venture have been changed where necessary to ensure consistency with the policies adopted by the Company. Ownership interest - % 12/31/ /31/2014 Joint venture Informática Fueguina S.A BR Code Desenvolvimento de Software S.A Investee of Positivo Informática da Bahia Ltda. PBG Rwanda Limited Investee of Positivo Crounal S.A. Musfer S.A. 50, Segment Reporting The information for operating segments is presented in note 25 in a manner consistent with the internal report provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, is the Executive Board, which is also responsible for making the Company s strategic decisions. The Company s reportable segments are retail and government Foreign currency translation (a) Functional and reporting currency The items included in the financial statements of each of the Company s group companies are measured using the currency of the main economic environment in which the Company operates ("functional currency"). The individual and consolidated financial statements are expressed in Brazilian reais (R$), which is the Company s functional currency and also the reporting currency of the consolidated financial statements. (b) Transactions and balances Foreign currency-denominated transactions are translated into the functional currency at the exchange rates prevailing on the transaction dates or measurement dates, when items are remeasured. Exchange gains and losses resulting from the settlement of these transactions and the translation at the exchange rates effective at the balance sheet date, for foreign currencydenominated monetary assets and liabilities, are recorded in the income statement. Exchange gains and losses on borrowings and cash and cash equivalents are presented in the income statement as finance income or costs. 13

15 (c) Investees using a different functional currency The results of operations and financial position of all entities, the functional currency of which differs from the reporting currency, are translated into the reporting currency, as follows: (i) Assets and liabilities in the balance sheet are translated using the exchange rate at the balance sheet date. (ii) Income and expenses in the income statement are translated using the average exchange rates (unless such average does not reasonably approximate the cumulative effect of the exchange rates prevailing on the transaction dates and, in such case, income and expenses are translated using the exchange rate prevailing on the transaction dates). (iii) All exchange differences are recognized as a separate component in equity as Valuation adjustments to equity. Upon consolidation, exchange differences arising from translation of the net investment in foreign transactions are recognized in equity. When a foreign transaction is partially disposed of or sold, exchange differences recorded in equity are recognized in the income statement as part of the gain or loss on sale Cash and cash equivalents Cash and cash equivalents include cash, bank deposits and other highly liquid shortterm investments, with original maturities of up to three months and an insignificant risk of change in value; the balance is presented net of the balance of secured accounts in the statement of cash flows. Secured accounts are stated in the balance sheet as Borrowings, in current liabilities Financial assets Classification The Company classifies its financial assets, upon initial recognition, in the following categories: financial assets at fair value through profit or loss and loans and receivables. The classification depends on the purpose for which the financial assets have been obtained. (a) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if it has been acquired for the purpose of selling it in the short term. Assets in this category are classified as current assets. Derivatives are also classified as held for trading. 14

16 (b) Loans and receivables Loans and receivables are represented by non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are stated as current assets, except those with maturities exceeding twelve months after the balance sheet date (which are classified as noncurrent assets). The Company s loans and receivables include Trade receivables and other accounts receivable and Cash and cash equivalents. They also comprise intragroup transactions, which mature on demand and, consequently, determining the fair value is not required Recognition and measurement Purchases and sales of financial assets are normally recognized on the trading date. The investments are initially recognized at fair value, plus transaction costs for all financial assets not measured at the fair value through profit or loss. Financial assets at fair value through profit or loss are initially recognized at their fair value, and the transaction costs are charged to the income statement. Financial assets are derecognized when the rights to receive cash flows expire or are transferred; in the latter case, provided that the Company has substantially transferred all the risks and rewards of ownership. Financial assets measured at fair value through profit or loss are subsequently recognized at fair value. Loans and receivables are accounted for at amortized cost, using the effective interest method. Gains or losses arising from changes in the fair value of financial assets measured at fair value through profit or loss are presented in the income statement in line item Finance income (costs) in the period on which they are earned or incurred Offset of financial instruments Financial assets and financial liabilities are offset and the net amount is recorded in the balance sheet when there is a legally enforceable right to set off recognized amounts and the intent to either settle them on a net basis, or to realize the asset and settle the liability simultaneously Impairment of financial assets Assets measured at amortized cost The Company assesses if there is objective evidence that a financial asset or a group of financial assets might be impaired at the balance sheet date. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and such loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. 15

17 The criteria used to determine whether there is objective evidence of an impairment loss include: (i) (ii) significant financial difficulty of the issuer or obligor; a breach of contract, such as default or delinquency in interest or principal payments; (iii) the Company, for economic or legal reasons relating to the borrower s financial difficulty, grants to the borrower a concession that the lender would not otherwise consider; (iv) it is likely that the borrower will file for bankruptcy or another financial reorganization; (v) the disappearance of an active market for that financial asset because of financial difficulties; or (vi) observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of such assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including: Adverse changes in the payment status of borrowers in the portfolio; National or local economic conditions that correlate with defaults on the assets in the portfolio. The amount of the impairment loss is measured as the difference between the carrying amount of the asset and the present value of estimated future cash flows (excluding future credit losses that were not incurred) discounted at the original effective interest rate of the financial asset. The carrying amount of the asset is reduced and the loss amount is recognized in the income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate used to measure an impairment loss is the current effective interest rate determined pursuant to the contract. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an improvement in the debtor s credit rating), the reversal of such previously recognized impairment loss is recognized in the income statement. 16

18 2.7. Derivatives The Company enters into derivative instruments to manage its exposure to interest rate and foreign exchange risks, including foreign exchange forward contracts, interest rate swaps and cross-currency swaps. Notes 29 to 31 include more information on derivatives. Derivatives are initially recognized at fair value on the trade date and subsequently remeasured at fair value. The resulting gain or loss is recognized in profit or loss immediately, unless the derivative is designated and effective as a hedging instrument; in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship Trade receivables Trade receivables correspond to the amounts receivable for goods and products sold and services rendered in the normal course of the Company s activities. If the collection term corresponds to one year or less, trade receivables are classified in current assets. Otherwise, they are recorded in noncurrent assets. Trade receivables are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less the allowance for doubtful debts or allowance for impairment losses Inventories Inventories are carried at the lower of cost and net realizable value. Inventory costs are measured at average cost. The cost of finished products and work in process comprises costs on project, raw materials, direct labor, other direct costs and related overhead expenses (based on the normal operating capacity), excluding borrowing costs. The net realizable value corresponds to the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. The provision for obsolescence of inventories is recognized based on the assessment of raw materials, inventories for resale and finished products that are not clearly expected to be used and sold. This valuation is mainly based on the inventory turnover, separating the items intended for production from those allocated to technical support Property, plant and equipment Buildings, machinery and equipment, hardware, and furniture and fixtures are carried at cost, less accumulated depreciation and impairment losses. Professional fees are recorded as part of the costs of constructions in progress and, in case of qualifying assets, of the borrowing costs capitalized in accordance with the Company s accounting policy. These constructions in progress are classified into the proper categories of property, plant and equipment when completed and ready for the intended use. Depreciation of such assets starts when they are ready for the intended use on the same basis of other property, plant and equipment items. 17

19 Depreciation is recognized on a straight-line basis over the estimated useful life of each asset, so that cost less its residual value after its useful life is fully written off (except land and constructions in progress). The estimated useful life, residual values and depreciation methods are reviewed at the end of the reporting period and the effect of any change in estimates is recorded on a prospective basis. Property, plant and equipment Machinery and equipment Leasehold improvements Hardware Furniture and fixture Industrial facilities Buildings Other PP&B Useful lives 10 years 10 years 5 years 10 years 10 years 25 years 10 years Assets held through finance lease are depreciated over their expected useful lives, similarly to own assets, or for a lower period, if applicable, pursuant to the terms of the respective lease agreement. An item of property, plant and equipment is written off upon disposal or when no future economic benefits are expected from its continuing use. Any gain or loss from the sale or write-off of an item of property, plant and equipment is determined by the difference between the sales amount received and the carrying amount of the asset sold, and is recognized in profit or loss Intangible assets (a) Goodwill Goodwill represents the positive difference between the amount paid and/or payable for the acquisition of a business and the net fair values of the assets and liabilities of the acquired subsidiary. Goodwill arising on acquisitions of subsidiaries is recorded as Intangible assets in the consolidated financial statements. In case of negative goodwill, the amount is recognized as a gain in profit or loss for the period, on the acquisition date. Goodwill is annually tested for impairment. Goodwill is accounted at cost, less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the sale of an entity include the carrying amount of the goodwill related to the entity sold. Goodwill is allocated to the cash-generating units (CGUs) for impairment testing purposes. The allocation is made to cash-generating units or groups of cashgenerating units that are expected to benefit from the business combination that originated the goodwill, and are identified according to the operating segment. 18

20 (b) Expenditures on development costs internally generated intangible asset Expenditures on research activities are recognized as an expense when incurred. The internally generated intangible asset arising from development expenditures (or of an internal project development stage) is recognized if, and only if, all the following conditions are met: The technical feasibility of completing the intangible asset so that it will be available for use or sale; Its intention of completing the intangible asset and use it or sell it; Its ability to use or sell the intangible asset; How the intangible asset will generate probable future economic benefits; The availability of proper technical, financial, and other resources to complete the development of the intangible asset in order to use or sell it; and The ability to measure reliably the expenditure attributable to the intangible asset during its development. The amount originally recorded of internally generated intangible assets corresponds to the sum up of the costs incurred since the asset started to meet the abovementioned recognition criteria. When no internally generated intangible asset can be recognized, development expenditure is recognized in profit or loss for the period, when incurred. After initial recognition, internally generated intangible assets are stated at cost, less accumulated amortization and impairment losses, similarly to intangible assets acquired separately. (c) Software Software licenses are capitalized based on the costs incurred to acquire them and make them ready for use. These costs are amortized over their estimated useful lives. The costs on software maintenance are recognized as expenses, when incurred. Development costs directly attributable to the project and the testing of identifiable, exclusive software products controlled by the Company are recognized as intangible assets when the following criteria are met: The completion of the software to make it available for use is technically feasible; Management has the intention to complete the software and use or sell it; The software can be sold or used; It is probable that the software will generate future economic benefits; 19

21 Adequate technical, financial and other resources are available to complete the development and to use or sell the software; The expenditure attributable to the software during its development can be measured reliably. Directly attributable costs that are capitalized as part of the software include the costs on employees allocated to software development and an adequate portion of the applicable indirect expenditures. Costs also include financing costs incurred during the software development period. Other development costs that do not meet these criteria are recognized as expenses, when incurred. Previously expensed development costs are not recognized as assets in a subsequent period. Software development costs recognized as assets are amortized during their estimated useful life, which does not exceed five years Impairment of non-financial assets Assets with indefinite useful lives, such as goodwill, are not subject to amortization and are annually tested for impairment to identify the need of impairment. Assets subject to amortization are tested for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment loss is recognized when the asset's carrying amount exceeds its recoverable amount, which represents the higher of its fair value less costs to sell and its value in use. For impairment test, assets are grouped at the lowest levels for which there are separately identifiable cash flows (Cash-generating Units, or CGUs). Nonfinancial assets, except goodwill, that are impaired, are subsequently revised for a possible reversal of impairment at the balance sheet date Trade payables Trade payables are payables for goods or services acquired in the normal course of business, classified as current liabilities if payment is due within the period of one year. Otherwise, trade payables are recorded as noncurrent liabilities. They are initially recognized at fair value and, subsequently, measured at their amortized cost under the effective interest method. They also comprise intragroup transactions, initially recognized at fair value Leases (a) The Company as lessee Leases where the lessor retains a significant part of the risks and rewards incidental to ownership are classified as operating leases. Operating lease payments (net of any incentives received from the lessor) are recognized in the income statement on a straight-line basis over the lease term. 20

22 The Company leases certain items of property, plant and equipment. Leases of property, plant and equipment where the Company retains substantially all the risks and rewards incidental to ownership are classified as finance leases. These leases are capitalized at the inception of the lease term at the lower of the fair value of the leased asset and the present value of minimum lease payments. Each lease payment is apportioned between liabilities and finance charges so as to obtain a constant rate on the outstanding debt balance. The related obligations, net of finance charges, are included in other long-term liabilities. Interest on finance costs is recognized in the income statement over the lease term, so as to produce a constant, periodic interest rate on the remaining balance of the liability for each period. Property, plant and equipment acquired through finance leases are depreciated over the useful life of the asset. (b) The Company as lessor Borrowings Receivables from lessees under finance lease agreements are initially recognized based on the fair value of the leased asset. Income from finance leases income is allocated to the reporting periods so as to reflect the effective rate of return on the Company s outstanding net investment in relation to the leases. Revenue from operating leases is recognized on a straight-line basis over the lease period. Initial direct costs incurred in the negotiation and preparation of the operating lease are added to the carrying amount of leased assets and also recognized on a straight-line basis over the lease period. Borrowings are initially recognized at fair value, less transaction costs incurred, and subsequently stated at amortized cost. Any difference between the amounts raised (less transaction costs) and the total amount payable is recognized in the income statement over the period borrowings are outstanding, using the effective interest method. Borrowings are classified as current liabilities, unless the Company has an unconditional right to defer the liability settlement for at least 12 months after the balance sheet date Government grants For government grants, as mentioned in Note 8, the Company is eligible to tax benefits. The portion corresponding to the use of tax benefits related to the ICMS arising from the sale of industrialized products is recognized as follows: As revenue for the current year, the portion whose investment obligations related to the benefit was fully performed; Maintained in liabilities, in Deferred income, the portion whose investment obligations was not yet fully performed; Also maintained in liabilities, in Deferred income, the portion of investment related to an amortizable asset. Such portion will be recognized as revenue during the useful life of the asset, proportionally to its amortization; 21

23 As revenue for the current year, the portion without direct investment obligation; Government grants are recorded in profit or loss as revenues in "Taxes on sales". Pursuant to Law 11638/07 and CPC 7 - Accounting for Government Grants and Disclosure of Government Assistance, the Company s tax incentives are recognized in profit or loss in Taxes on sales. After determination of profit or loss for the year, if profit is recorded, tax incentives are allocated to line item Tax incentive reserve, in equity Provisions Provision for risks (labor, civil and tax) and other provisions are recognized when: (i) the Company has a legal or constructive obligation as a result of past events; (ii) it is probable that a disbursement of funds will be required to settle the obligation; and (iii) its value can be reliably estimated. In case of a series of similar obligations, the likelihood of settling them is determined, taking into consideration the class of obligations as a whole. A provision is recognized even if the likelihood of settlement related to any individual item included in the same class of obligations is small. When some or all the economic benefits required to settle a provision are expected to be recovered from a third party, an asset is recognized if, and only if, reimbursement is virtually certain and the amount can be reliably measured Current and deferred income tax and social contribution Income tax and social contribution expenses for the year include current and deferred taxes. Taxes on income are recognized in the income statement, except to the extent that they are related to items recognized directly in equity or comprehensive income. In this case, the tax is also recognized in equity or comprehensive income. Current and deferred income tax and social contribution are calculated based on tax laws already enacted or substantially enacted on the balance sheet date. Management periodically reviews the positions assumed by the Company in the calculation of taxes on income in cases where the applicable tax regulation gives rise to different interpretations and, where appropriate, recognizes provisions based on the estimated amounts payable to tax authorities. Current income tax and social contribution are carried at their net amounts by the taxpayer, in liabilities when there are amounts payable or in assets when prepaid amounts exceed the total amount due at the end of the reporting period. Deferred income tax and social contribution are recognized using the liability method on temporary differences arising from differences between the tax base of assets and liabilities and their carrying amounts in the financial statements. However, deferred income tax and social contribution are not accounted for if they arise from the initial recognition of an asset or liability in a transaction which is not a business combination and, at the time of the transaction, affects neither book profit nor taxable income (tax loss). 22

24 Deferred income tax and social contribution assets are recognized only to the extent that it is probable that future taxable income will be available, against which temporary differences can be offset. Deferred income taxes are recognized on temporary differences resulting from investments in subsidiaries, except when the timing of the reversal of temporary differences is controlled by the Company and provided that it is likely that the temporary difference will not be reversed in the foreseeable future. Deferred income tax assets and liabilities are stated at their net amount in the balance sheet when there is a legally enforceable right to set off them when current taxes are calculated; in general, when they relate to the same taxable entity and the same tax authority. Accordingly, deferred tax assets and liabilities in different entities or different countries are in general stated separately and not at their net amount Employee benefits (a) Share-based compensation The share-based compensation plan for employees and other similar service providers is measured at the fair value of the equity instruments at grant date. The details on the determination of the fair value of these plans are described in Note 32. The fair value determined at the grant date of the equity-settled share-based payments is recorded as expense on a straight-line basis over the vesting period, based on the Company s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimates on the number of equity instruments that will be acquired. The impact of revision in relation to original estimates, if any, is recognized in profit or loss for the period, so that the accumulated expense reflects revised estimates with the corresponding adjustment to equity in Recognized Granted Options which recorded the employees benefit. (b) Pension obligations The Company offers a defined contribution pension plan. A defined contribution plan is a pension plan according to which the Company makes fixed contributions to a separate entity and has no legal or constructive obligation to make contributions if the fund has no sufficient assets to pay to all employees the benefits related to the employee s service in the current and prior period. (c) Profit sharing The Company recognizes a profit sharing liability and expense based on the methodology that takes into consideration the profit attributable to the Company's shareholders after certain adjustment. The Company recognizes accrued profit sharing when it is contractually required or when there is a past practice that created a constructive obligation. 23

25 2.20. Capital Share Common shares are classified in equity. Incremental costs directly attributable to the issue of new shares or stock options are disclosed in equity as a deduction from the related proceeds, net of taxes. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized when proceeds are received, net of direct issue costs. The repurchase of the Company s own equity instruments is recognized and directly deducted from equity. No gain or loss is recognized in profit or loss arising from the purchase, sale, issue or cancellation of the Company's own equity instruments Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of products and services in the normal course of the Company s activities. Revenue is presented net of taxes, returns, rebates and discounts, as well as after the elimination of intragroup sales. (a) Sale of products Revenue from sale of products is recognized when all of the following conditions are met: The Company has transferred to the buyer the significant risks and rewards of ownership of products; The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the products sold; Revenue can be reliably measured; It is probable that the economic benefits associated with the transaction will flow to the Company; and Incurred or unincurred costs related to the transaction can be measured reliably. 24

26 (b) Provision of services Revenue from a services agreement is recognized based on the percentage of completion of the agreement. The percentage of completion of contracts is determined as follows: Installation fees are recognized in accordance with the percentage of completion of the installation services, determined proportionately between the total estimated time for completion of service and the time incurred through the end of each reporting period. Service fees included in the price of products sold are recognized proportionately to the total cost, considering the historical trends of the number of services effectively provided in products previously sold. Revenue from services based on the contracted time and materials is recognized at the contractual rates according to the hours worked and when direct expenses are incurred. (c) Finance income Finance income is recognized according to the period elapsed on an accrual basis, under the effective interest method Dividend distribution The distribution of dividends to the Company s shareholders is recognized as a liability in the Company s financial statements at the balance sheet date, pursuant to its bylaws. Any amount in excess of the mandatory minimum dividend is accrued on the date it is approved by the shareholders at the General Meeting. 3 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS Accounting estimates and judgments are continuously assessed and are based on past experience and other factors, including expected future events, that are deemed reasonable in the circumstances. 3.1 Critical accounting estimates and assumptions Based on assumptions, the Company makes forward-looking estimates. By definition, the resulting accounting estimates may differ from the respective actual results. The estimates and assumptions that present a significant risk and probably would cause a material adjustment to the carrying amounts of assets and liabilities for the next year are as follows. 25

27 (a) Impairment of goodwill Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units (CGUs) to which goodwill has been allocated. The calculation of the value in use requires Management to estimate the expected future cash flows arising from the cash-generating units and an adequate discount rate to calculate the present value. The carrying amount of goodwill as at December 31, 2015 and 2014 is R$14,173 and, based on Management s opinion, it was not necessary to recognize any allowance for impairment in 2015 and The calculation of the impairment loss is detailed in Note 14.b. (b) Measurement of financial instruments The Company uses valuation techniques that include the use of inputs that are not based on observable market data to estimate the fair values of certain types of financial instruments. Note 29 contains detailed inputs on the main assumptions used to measure the fair values of financial instruments and a sensitivity analysis of such assumptions. Management believes that the selected valuation techniques and the assumptions used are appropriate to determine the fair values of financial instruments. (c) Income tax, social contribution, and other taxes The Company and its subsidiaries and the joint venture are subject to income tax in all countries where they operate. Management makes significant judgment to determine the provision for taxes on income in such countries. In many transactions, the final tax calculation is uncertain. The Company also recognizes provisions as a result of circumstances where it is probable that additional taxes are due. When the final amount arising from these issues differs from the amounts initially estimated and recorded, these differences affect current and deferred tax assets and liabilities for the period in which the final amount is determined. 3.2 Critical judgments in the application of the entity s accounting policies (a) Tax benefits - ICMS As described in Note 8, the Company has ICMS tax incentives granted by the state government, without being supported by a Confaz agreement. However, the principles of legal security and administrative honesty, based on the opinion of the Company s legal counsel, which issued an opinion on the matter, require considering that, in the event of declaration of invalidity by the Brazilian courts, the concession grantors have been historically adopting the measure of validating them, and therefore, no liability must be recorded in the financial statements. 26

28 (b) Recoverable taxes - ICMS As described in Note 8, Management conducts periodic studies to assess the realization of credits related to recoverable taxes, by adopting preventive actions to realize these credits and avoid the balance to exceed the realization capacity. 4 NEW AND REVISED STANDARDS AND INTERPRETATIONS NOT YET EFFECTIVE The following standards were issued by IASB and will be mandatory for subsequent years, with no early adoption by the Company. They will be adopted after the corresponding CPCs are issued and approved by CVM. Management is evaluating the possible impacts of these standards on the financial statements: - IFRS 9 Financial Instruments Issued in July 2014 in final form, effective for periods beginning on or after January 1, 2018, to replace IAS 39 Financial Instruments: Recognition and Measurement and prior IFRS 9 versions. IFRS 9 establishes new requirements for the classification and measurement, impairment and accounting for hedge of financial instruments. - IFRS 15 Revenue from Contracts with Customers Issued in May 2014, effective for periods beginning on or after January 1, 2018, to replace the current standards in IAS 11 Construction Contracts, IAS 18 Revenues, IFRS 15 provides guidance for measurement, recognition and disclosure of revenues. There are no other standards and interpretations issued and not yet adopted which, in Management s opinion, may have a significant impact on profit or loss for the nine-month period then ended or the equity reported by the Company. 5 CASH AND CASH EQUIVALENTS Parent company Consolidated 12/31/ /31/ /31/ /31/ 2014 Banks 10,623 12,104 34,828 17,032 Financial investments linked to the Interbank Deposit Certificate (CDI) rate 520, , , , , , , ,361 As at December 31, 2015 and 2014, short-term investments consist of repurchase transactions and Bank Certificates of Deposit (CDBs) in private securities and local currency, yielding average interest of % of the Interbank Deposit (CDI) rate fluctuation (98.77% in 2014), which are immediately convertible into a known cash amount and subject to an insignificant risk of change in value. 27

29 6 TRADE RECEIVABLES Parent company Consolidated 12/31/ /31/ /31/ /31/2014 Falling due 160, , , ,235 Past-due up to 30 days 48,017 63,076 48,017 70,087 Overdue from 31 to 60 days 15,092 13,321 15,092 15,233 Overdue from 61 to 90 days 8,136 1,556 8,136 4,535 Overdue from 91 to 180 days 21,989 6,928 21,989 8,901 Overdue from 181 to 360 days 22,903 7,423 22,903 8,376 Overdue for more than 361 days 26,000 16,079 26,000 17,703 (-) Provision for impairment of trade receivables (23,423) (16,122) (23,423) (16,441) (-) Adjustment to present value (2,375) (3,665) (2,375) (4,983) 276, , , ,646 The fair values of trade receivables approximate the balances recorded. Past-due balances mainly refer to products sold to Government agencies, which are received following the respective agencies' internal approval processes. Historically, payment delays are usual in this sales segment and are considered by management in its business strategy; thus, they have not resulted in material losses for the Company. These past-due balances do not represent a significant risk and a provision was recognized only for those cases in which there is likelihood of loss for the Company. The receivables from Government agencies that are past-due in december 31, 2015 amounted to R$ 51,153 (R$ 41,489 at December 31, 2014). The average credit period for sales of products is 77 days, except for certain sales to Government agencies for which the term may extend to 180 days. Criteria for estimating the provision for impairment of trade receivables: - Due to the concentration of sales in a small number of customers (the 20 largest customers represented about 67% of total trade receivables at december 31, 2015, and around 74% at December 31, 2014), the Company evaluates the need for a provision for impairment mainly based on the individual analysis of past-due receivables, and the historical losses on these receivables. At December 31, 2015, the consolidated balance of this provision totaled R$ 23,423 (R$ 16,441 at December 31, 2014). The adjustment to present value of trade receivables is calculated to reflect the present value of future cash flows. The Company considers the payment term of each credit sale and calculates the discount of this transaction by using the CDI (Interbank Certificate of Deposit) rate as reference. Aging of past-due trade receivables not included in the provision for impairment of trade receivables is as follows: Parent company Consolidated 12/31/ /31/ /31/ /31/2014 Up to 30 days 48,017 63,076 48,017 70, to 60 days 15,092 13,321 15,092 15, to 90 days 8,136 1,556 8,136 4, to 180 days 21,989 6,851 21,989 8, to 360 days 18,159 4,438 18,159 5,357 Over 361 days 7,321 3,019 7,321 4, ,714 92, , ,394 28

30 Changes in the provision for impairment of trade receivables are as follows: Parent company Consolidated 12/31/ /31/ /31/ /31/2014 Balance at the beginning of period 16,122 16,798 16,441 17,107 Provision Balance built Recognized losses (1,389) (6,989) (1,564) (7,004) Provision for impairment of trade receivables 8,174 6,313 8,546 6,338 23,423 16,122 23,423 16,441 7 INVENTORIES Parent company Consolidated 12/31/ /31/ /31/ /31/2014 Materials 298, , , ,002 Finished products 108, , , ,588 Imports in progress 4,578 15,246 4,578 24,763 Advances to suppliers 27,750 40,214 27,750 51,440 Provision for obsolete inventories (46,305) (34,385) (46,305) (35,290) 393, , , ,503 The provision for obsolete inventories is set up based on the assessment of raw materials, inventory for resale and finished goods which do not have clear expectations regarding their use and sale. The main basis for this assessment is the inventory turnover, segregating goods for production from those for technical assistance. Management expects inventory to be realized in less than 12 months. 8 TAXES RECOVERABLE Parent company Consolidated 12/31/ /31/ /31/ /31/2014 ICMS 165, , , ,370 Excise Tax (IPI) 6,452 12,240 6,452 12,400 Social Integration Program (PIS) 10,871 5,287 10,879 5,486 Social Contribution on Revenues 56,354 (COFINS) 34,674 56,392 35,593 Social contribution 10,740 7,087 10,746 7,094 Income tax 54,807 29,979 54,951 30,514 Other taxes recoverable 2,535 2,402 3,238 2, , , , ,861 Current portion 188, , , ,471 Non-current portion 118, , , ,390 Tax credits are realized based on the corporate restructurings occurred in 2015, upon the merger of subsidiary Positivo da Amazônia Ltda. and changes occurred in the federal and state legislation. Such changes had two consequences on the transactions: the first is to reduce the generation of tax credits and the second is the generation of tax debts that will enable the utilization of accumulated tax credits. 29

31 ICMS The Company has the following benefits of ICMS: (i) (ii) State Law 13,214/2001, confirmed by State Law 15,542/2007, which establishes a reduction to 7% in the tax rate on IT products for sales inside the state. State Decree 5,375/2002, confirmed by the Special Taxation Agreement, which allows utilization of a deemed ICMS tax credit, resulting in a tax rate of 3% for specific products sold by the Company (effective period of Article 3 through July 31, 2011). (iii) State Decree 1,922/2011 which became effective on August 1, 2011, revoking Article 3 of State Decree 5,375/2002, and grants a deemed ICMS credit equivalent to the amount due on the sale, resulting in a tax rate of 0% for specific products sold by the Company. (iv) Paraná State Decree 2,175/2015, effective since September 1, 2015, amended article 1 of Decree 1,922/2011, limiting the deemed credit in an amount not exceeding the establishment s total ICMS debts on the computation period. As a result of the tax benefits above, the Company recorded at december 31, 2015 R$ 213,439 (R$ 250,244 at december 31, 2014) related to investment grants as Sales deductions - taxes on sales with respect to the sale of manufactured goods, and maintained R$ 12,834 in liabilities, under the caption Deferred revenue (R$ 16,785 in December 31, 2014), which will be allocated to the results of operations based on the amortization of the related assets and fulfillment of the obligations required as consideration for this tax benefit, as established in CPC 7 and disclosed in Note 14.a. This tax benefit has an indefinite term. IPI The IPI credit is due to the utilization of the tax benefit established by Law 8,248/1991, which granted IPI exemption, later converted into progressive reduction, on the shipment of new equipment, machinery, apparatuses and instruments, including industrial automation and data processing equipment produced in Brazil, combined with the maintenance and utilization of the IPI tax credit, related to raw materials, intermediate products and packaging materials used in the manufacture of goods. The progressive reduction in percentages of the benefit, established by law, follows the schedule below:. Reduction of 95% of the tax due, from January 1, 2004 to December 31, Reduction of 90% of the tax due, from January 1, 2025 to December 31, Reduction of 70% of the tax due, from January 1, 2027 to December 31, 2029, after which the benefit will be abolished. To be eligible for such benefit, the Company must invest annually about 5% of the gross revenue from sales of IT products and services with tax incentives in IT research and development activities calculated in accordance with Law 8,248/1991 and subsequent amendments. The Company must annually present to the Ministry of Science and Technology evidence that it is complying with this investment requirement. 30

32 PIS/ COFINS The Company recognized temporary PIS/COFINS credits in the nine-month period ended december 31, 2015, in conformity with prevailing law, in the amount of R$19, OTHER RECEIVABLES Parent company Consolidated 12/31/ /31/ /31/ /31/2014 Prepaid expenses (a) 10,799 10,804 10,799 13,093 Judicial deposits 19,569 15,187 19,660 15,294 Unearned interest 4,312 4,394 4,312 4,430 Other 7,548 12,811 7,548 12,807 42,228 43,196 42,319 45,624 Current portion 27,893 26,684 27,893 29,021 Non-current portion 14,335 16,512 14,426 16,603 (a) At december 31, 2015, the Company has credits to be offset against advertising expenses amounting to R$ 10,181 (R$ 9,326 at December 31, 2014), recorded under the caption "Prepaid advertising expenses". Management considers that the realization will occur in less than 12 months. 10 RELATED PARTIES Trading transactions Parent company Assets Liabilities Sales and services Purchases and services 12/31/ /31/ /31/ /31/ /31/ /31/ /31/ /31/2014 Current Centro de Estudos Superiores Positivo Ltda (a) ,208 1,236 (f) Sociedade Educacional Positivo Ltda (a) (j) Editora Positivo Ltda. 3,128 1,897 (c) (d) 13,167 11,736 (c) (d) Gráfica e Editora Posigraf S.A ,190 (a) 15 - (b) (a) (b) Positivo Educacional Ltda. - 6 (a) ,107 1,943 (j) Rosch Administração de Bens Ltda ,294 12,485 (e) Positivo Informática da Bahia Ltda ,464 (k) Boreo Com. de Equipamentos Ltda. 3,860 3,905 (k) Informática Fueguina S.A (l) Portal Mundo Positivo Ltda Crounal S.A ,541 - (h) BR.Code Desenvolvimento de Software S.A (m) ,727 - (m) Positivo Informática da Amazônia Ltda. - 21,515 (g) - 8 (i) 123, ,566 (h) 25,855 39,018 (i) 8,548 41,774 2,164 1, , ,859 50,383 54,473 (0) Consolidated Assets Liabilities Sales and services Purchases and services 12/31/ /31/ /31/ /31/ /31/ /31/ /31/ /31/2014 Current Centro de Estudos Superiores Positivo Ltda (a) ,208 1,236 (f) Sociedade Educacional Positivo Ltda (a) Editora Positivo Ltda. 3,128 1,897 (c) (d) 13,167 11,736 (c) (d) Gráfica e Editora Posigraf S.A ,190 (a) (a) (b) Positivo Educacional Ltda. - 6 (a) ,107 1,943 (j) Rosch Administração de Bens Ltda ,294 12,485 (e) BR Code Desenvolvimento de Software S.A ,249-4,727 - (m) PBG Rwanda Limited 17,513 - (h) ,249 - (h) - - Informática Fueguina S.A. 10,791 14,570 (l) ,017 61,275 (h) ,970 18,319 1, ,863 74,568 17,987 15,456 Related party transactions are made at prices and terms established between the parties. (a) Sale of microcomputers These transactions relate to sales of microcomputers manufactured by the Company, which it sells to all of its related parties. 31

33 (b) Printing products and services - Gráfica e Editora Posigraf S.A. Refer to purchases of printing products and services and sales of computers and IT equipment produced by the Company. (c) Copyrights - Editora Positivo Ltda. Copyrights refer to permissions by Positivo Informática S.A. for access to the websites named "Portal Positivo" and "Portal Aprende Brasil" and the multimedia platform named Positivo Digital for the customers indicated by Editora Positivo Ltda., access to e-books to the customers of the private education area and access to digital content through links inserted in printed books. Pursuant to agreements entered into The Company permits the access to "Portal Positivo" and e-books for all institutions linked through Editora Positivo to Sistema Positivo de Ensino, and the access to "Portal Aprende Brasil" for all institutions linked through Editora Positivo to Sistema de Ensino Aprende Brasil. Pursuant to independent agreements, the Company receives specific remuneration for access to "Portal Positivo" amounting to R$ 3,555 per year, divided into twelve monthly installments, and for access to "Portal Aprende Brasil" at R$ 945 per year, divided into four quarterly installments. On July 13, 2015, Editora Positivo Ltda engaged the Company to develop a multimedia platform with educational content called "Positivo Digital". The total contractual amount is R$ 9,390, of which R$ 7,500 for development services (remaining balance - 24 monthly installments of R$ 222) and R$ 1,890 for the transfer of copyrights and asset rights to the contracting party (remaining balance - 12 monthly installments of R$ 63). (d) Publishing services These refer to the contracting of publishing services, which are used in graphics products produced by Gráfica e Editora Posigraf S.A. and other printing firms contracted by the Company. (e) Rental - Rosch Administradora de Bens Ltda. The Company has a lease agreement for manufacturing units with a related party, which expires every six years and specifies a monthly rental of R$ 858, adjusted annually based on the index established in the agreement. The amount can be renegotiated, through an amendment to the agreement, in the event of expansion in the area to increase the production capacity and improvements made by the landlord. 32

34 (f) Arrangement - Centro de Estudos Superiores Positivo The Company entered into an arrangement with Universidade Positivo related to the cooperation and scientific and technology interchange program, supported by Brazilian legislation (Law 11,077/2004 and Decree 5,906/2006), for the empowerment and competitiveness of the IT industry, encompassing research, development and scientific and technology services activities, human resource development and training, technology absorption and transfer, as well as improvement and optimization of the use of the laboratory infrastructure. (g) Current account - Positivo Informática da Amazônia Ltda. The Company had a current account with the subsidiary Positivo Informática da Amazônia Ltda., for the purpose of controlling the multiples, credits and debits between the parties arising from trading transactions. Such transactions had not defined maturity, as well as incurred interests. Due to/from related parties were offset upon the subsidiary s merger in August (h) Sales The parent company and its subsidiaries sell inputs for production to its subsidiaries and joint ventures. (i) Purchases The parent company purchases finished products from the subsidiaries for resale to customers. (j) Apportionment of expenses Apportionment of administrative expenses and shared services with Sociedade Educacional Positivo Ltda., Gráfica e Editora Posigraf S.A. and Editora Positivo Ltda. These expenses refer to the shared use of the purchasing, personnel and IT departments, and the reimbursement of rental, electricity, water and telephone expenses of the premises where the Educational Technology area operates. The apportionment is calculated based on the actual cost, in accordance with the use of the available resources. (k) Current account - Positivo Informática da Bahia Ltda. The Company has a current account with Positivo Informática da Bahia Ltda., for the purpose of controlling the multiples, credits and debits between the parties arising from trading transactions. Such transactions have not defined maturity, as well as incurred interests. (l) Informática Fueguina S.A. Outstanding balances arise from sales of production inputs, in conformity with the terms of each transaction. 33

35 (m) Development Services Refer to the contracting of services for the development of software and applications used in production, sale and operating improvements. (n) Management remuneration The amount recognized at the nine-month period ended December 31, 2015 as management remuneration was R$ 7,197 (R$ 9,730 at December 31, 2014), relating to short-term benefits. At the Annual General Meeting held on April 30, 2015, the Company's stockholders approved, for 2015, maximum management remuneration of R$ 11,780 (R$ 11,500 in 2014). 11 INVESTMENTS IN SUBSIDIARIES Investiments At 12/31/2014 Payment of capital Patent Company Equity in the results of investees Carrying value adjustment Incorporation At 12/31/2015 Positivo Informática da Amazônia Ltda. (a) 43,478 - (8,964) - (34,514) - Portal Mundo Positivo Ltda. (d) Positivo Informática da Bahia Ltda. (b) - 7,088 2, ,314 Crounal S.A. (c) - 3,494 (1,084) (1,341) - 1,069 44,094 10,582 (7,937) (1,226) (34,445) 11,068 Provision for net capital deficiency Positivo Informática da Bahia Ltda. (b) (4,401) 4, Crounal S.A. (c) (2,393) 2, (6,794) 6, The Company s investments in subsidiaries (direct and indirect) are in the note 2.2(a). The Company's investments in assets, liabilities, equity and in the results of the direct and indirect subsidiaries, all of them closely-held, are as follows: Assets Liabilities Equity Net revenue Profit (loss) At December 31,2015 Positivo Informática da Amazônia Ltda ,961 (8,964) Positivo Informática da Bahia Ltda. 15,396 6,082 9,314 1,387 2,111 Portal Mundo Positivo Ltda Crounal S.A. 57,042 55,973 1,069 73,366 (1,084) Boreo Comércio de Equipamentos Ltda ,093 (5,978) - - At December 31, 2014 Positivo Informática da Amazônia Ltda. 165, ,274 43, ,144 (19,310) Positivo Informática da Bahia Ltda. 14,217 18,618 (4,401) Portal Mundo Positivo Ltda Crounal S.A. 26,552 28,945 (2,393) 61,275 (203) Boreo Comércio de Equipamentos Ltda ,381 (5,978) - (3,196) 34

36 (a) Positivo Informática da Amazônia Ltda. On August 28, 2015, the Company merged direct subsidiary Positivo Informática da Amazônia Ltda. and established a branch engaged in the Parent s activities as a result of the corporate restructuring. The amount of the subsidiary s net assets merged into the Company was determined based on the accounting records and is shown down as follows: Assets Liabilities Cash and cash equivalentes 828 Trade payables 48,657 Trade receivables 130,108 Loans - third parties 4,805 Inventories 59,058 Salaries and social charges payable 771 Taxes recoverable 308 Provision 42,035 Sundry advances 564 Taxes payable 2,281 Other receivables 5,963 Related parties 78,615 Deferred taxes 5,171 Other payables 194 Investments in subsidiaries 68 Property, plant and equipment 3,790 Embedded total Liabilities 177,358 Intangible assets 6,014 Positivo Informática da Amazônia Ltda Assets Merged on August 28, 2015 Embedded total assets 211,872 Net Assets Merged 34,514 (b) Positivo Informática da Bahia Ltda. On April 8, 2008, the Company established the direct subsidiary Positivo Informática da Bahia Ltda., which started operations in In that year, this direct subsidiary acquired Boreo Comércio de Equipamentos Ltda. On September 18, 2015, the Company increased capital of Positivo Informática da Bahia Ltda, by contributing R$11,489 through credits held against the subsidiary. (c) Crounal S.A. In February 2011, the Company acquired the direct subsidiary Crounal S.A., which is headquartered in Montevideo, Uruguay. This subsidiary has the same corporate purpose as the Company. On December 18, 2015, the Company made a capital contribution in the amount of R$ 5,887. (d) Portal Mundo Positivo Ltda. On April 9, 2012, the Company, in partnership with its subsidiary Positivo Informática da Amazônia Ltda., acquired Portal Mundo Positivo Ltda. No goodwill was paid on this acquisition. With the merge of Positivo Informática da Amazônia Ltda. the company holds the whole investment in this company. 35

37 12 INVESTMENT IN JOINT VENTURE a) Parent company Joint venture At 12/31/2014 Equity in the results of investees Carrying value adjustment Proposed dividends At 12/31/2015 Informática Fueguina S.A. (a) 58,880 6,654 (8,475) (16.737) 40,322 58,880 6,654 (8,475) (16,737) 40,322 In 2015 dividends were distributed by investee Informática Fueguina S.A. in the amount of R$16,737 which, due to currency fluctuations and taxes, resulted in a net cash inflow in the amount of R$11,591. Provision for net capital deficiency At 12/31/2014 Equity in the results of investees Carrying value adjustment Proposed dividends At 12/31/2015 BR Code Desenvolvimento de Software S.A. (b) (241) (93) - - (334) (241) (93) - - (334) b) Consolidated Joint venture At 12/31/2014 Equity in the results of investees Carrying value adjustment Proposed dividends At 12/31/2015 Informática Fueguina S.A. (a) 58,880 6,654 (8,475) (16.737) 40,322 PBG Rwanda Limited (c) 3 1, ,199 Musfer S.A ,880 7,735 (8,360) (16,737) 41,521 Provision for net capital deficiency At 12/31/2014 Equity in the results of investees Carrying value adjustment Proposed dividends At 12/31/2015 BR Code Desenvolvimento de Software S.A. (b) (241) (93) - - (334) (241) (93) - - (334) The investments in joint ventures are demonstrated in the note 2.2(b). (a) Informática Fueguina S.A. On December 3, 2010, the Company established a joint venture with the Argentine company BGH Sociedad Anónima (BGH), to manufacture and sell IT products (desktops, notebooks, all-in-ones, e-books and tablets) in Argentina and Uruguay. In order to establish the joint venture, the Company acquired 50% of the share capital of the Argentine company Informática Fueguina S.A., which was directly and indirectly owned by BGH. The amount paid on the acquisition was R$ 21 without payment of any premium. 36

38 (b) BR.Code Desenvolvimento de Software S.A. On May 23, 2014, the Company acquired an 100% equity interest in BR Code Desenvolvimento de Software S.A., whose capital amounts to R$ 50 and which is engaged in the development of software, maintenance and updating of software, and the licensing and assignment of rights to the use of software. No goodwill was paid on this acquisition. In October 2014, a stockholders' agreement with shared control with BORQS Group, and therefore, the investee's investment became an investment in a joint venture. (c) PBG Rwanda Limited On October 10, 2014, the Company established, in partnership with BGH Group, the jointly-controlled subsidiary PBG Rwanda Limited. On November 15, 2014, the jointly-controlled subsidiary entered into an agreement with the Government of Rwanda to produce and sell educational devices under the Positivo BGH brand in the local market; the agreement includes the construction of a plant with total area of 7,500 m² in Kigali, capital of Rwanda, with nominal production capacity of 60,000 PCs and tablets. The agreement with the local government forecasts the contracting of a minimum volume of 750,000 equipment items, with a delivery schedule distributed over five years. The Company's interest in the assets, liabilities, equity and results of the joint ventures is as follows: Net revenue Profit (loss) Assets Liabilities Equity December 31,2015 Informática Fueguina S.A. 167, ,535 40, ,382 6,654 BR Code Desenvolvimento de Software S.A (334) 2,105 (93) PBG Rwanda Limited 20,200 19,001 1,199 28,418 1,081 December 31,2014 Informática Fueguina S.A. 147,129 94,014 53, ,933 22,332 BR Code Desenvolvimento de Software S.A (480) 565 (530) PBG Rwanda Limited 4,620 4, PROPERTY, PLANT AND EQUIPMENT Parent Company 31/12/2013 Additions T ransfer 12/31/2014 Additions T ransfer / Write off Incorporation 12/31/2015 Cost Machinery and equipment 53,351 4, ,131 1,47 2 (1,568) 1, ,824 Leasehold improvements 18, , ,184 20,591 Hardware 34, ,491 1,662 (27 1) ,443 Furniture and fittings 6, , ,909 Industrial facilities 6, ,97 4 7,398-1, ,133 Buildings 2, , ,000 Other property, plant and equipme 1,530 - (430) 1,100 2,399 (233) 5 3, ,588 6, ,650 13,948 (1,067 ) 5, ,17 1 Depreciation Machinery and equipment (23,004) (6,431) - (29,435) (7,756) 764 (589) (37,016) Leasehold improvements (6,800) (1,7 04) - (8,504) (2,498) 36 (405) (11,37 1 ) Hardware (25,044) (7,760) - (32,804) (3,792) 2,320 (468) (34,744) Furniture and fittings (3,7 61) (634) - (4,395) (621) 31 (147 ) (5,132) Industrial facilities (3,124) (815) - (3,939) (1,033) 26 (239) (5,185) Buildings (467 ) (80) - (547 ) (467 ) Other property, plant and equipme (12) (18) - (30) (21) - (2) (53) (62,212) (17,442) - (7 9,654) (15,721) 3,257 (1,850) (93,968) - Net am ount 60,37 6 (11,380) - 48,996 (1,773) 2,190 3,790 53,203 37

39 Consolidated 12/31/2013 Additions T ransfer 12/31/2014 Additions T ransfer / Write off 12/31/2015 Cost Machinery and equipment 54,068 4, ,87 8 1,508 (562) 59,824 Leasehold improvements 18, , ,591 Hardware 35, ,042 1,662 (261) 37,443 Furniture and fittings 6, ,7 55 1, ,909 Industrial facilities 6, ,351 8,784 (2) 16,133 Buildings 2, , ,000 Other property, plant and equipme 1,536 - (430) 1,106 2,399 (234) 3, ,976 6, ,687 15,485 (1) 147,171 Depreciation Machinery and equipment (23,361) (6,507 ) - (29,868) (7,911) 763 (37,016) Leasehold improvements (7,004) (1,7 98) - (8,802) (2,606) 37 (11,37 1) Hardware (25,442) (7,804) - (33,246) (3,818) 2,320 (34,7 44) Furniture and fittings (3,844) (67 2) - (4,516) (647 ) 31 (5,132) Industrial facilities (3,253) (868) - (4,121) (1,090) 26 (5,185) Buildings (467 ) (80) - (547 ) - 80 (467 ) Other property, plant and equipme (12) (19) - (31) (22) - (53) (63,383) (17,7 48) - (81,131) (16,094) 3,257 (93,968) - Net amount 61,593 (11,037 ) - 50,556 (609) 3,256 53,203 In the years ended December 31, 2015 and 2014, the Company did not have property, plant and equipment items given in guarantee. 14 INTANGIBLE ASSETS Parent Company 12/31/2013 Additions 12/31/2014 Additions T ransfer / Write off Incorporation 12/31/2015 Cost Development projects (a) 124,015 14, ,305 50,355 1,413 13, ,039 System projects - ERS 45, , ,129 Software 14,614 1,627 16,241 2,296 (45) 85 18,57 7 Software licenses 6,026-6, (2,894) - 3, ,418 16, ,559 52,920 (1,522) 14, ,008 Am ortization Development projects (7 1,07 7 ) (24,360) (95,437 ) (44,894) (5,614) (7,987 ) (153,932) System projects - ERS (35,272) (8,907 ) (44,17 9) (3,266) 2,842 - (44,603) Software (11,47 0) (1,917 ) (13,387 ) (1,37 4) 46 (50) (14,7 65) Software licenses (5,917 ) (109) (6,026) (15) 2,901 - (3,140) (123,7 36) (35,293) (159,029) (49,549) 17 5 (8,037 ) (216,440) Net Amount 66,682 (19,152) 47,530 3,371 (1,347 ) 6,014 55,568 Parent Company 12/31/2013 Additions 12/31/2014 Additions T ransfer / Write off 12/31/2015 Cost Development projects (a) 125,410 14, ,143 51,856 12, ,039 Sy stem projects - ERS 45, , ,129 Software 14,656 1,641 16,297 2,314 (34) 18,57 7 Software licenses 6,026-6, (2,894) 3,263 Other 10,989-10,989 - (10,989) - Goodwill in subsidiary 14, , , ,659 16, ,257 54,439 (1,515) 286,181 Am ortization Development projects (7 1,97 2) (26,7 85) (98,7 57 ) (46,830) (8,345) (153,932) Sy stem projects - ERS (34,914) (8,907 ) (43,821) (3,266) 2,484 (44,603) Software (11,515) (1,920) (13,436) (1,37 6) 47 (14,7 65) Software licenses (5,917 ) (109) (6,025) (15) 2,900 (3,140) Other (3,082) - (3,082) - 3,082 - (127,400) (37,7 21) (165,121) (51,487 ) 168 (216,440) Net Amount 89,259 (21,123) 68,136 2,952 (1,347 ) 69,

40 (a) Project development costs The Company benefits from tax incentives granted for the IT and automation segments by Law 8,248/1991, known as the Information Technology Law, regulated by Decree 792 of October 23, This law was amended by Law 10,176 of January 11, 2001, regulated by Decree 3,800 of April 20, 2001, which was amended again in 2004 by Law 11,077 of December 30, 2004, regulated by Decree 5,906/2006 of September 26, To be entitled to these benefits, a company engaged in the development or sale of IT products and services must invest a minimum percentage of its revenue in IT development activities in Brazil. The minimum percentage to be invested is calculated based on 5% of the gross revenue from sales in the domestic market of IT products and services entitled to the incentives pursuant to the law, after deducting from gross revenue the resale of products, the related taxes, and the purchase costs of products entitled to the incentives. The percentages to be invested have their basis reduced by 20% until 2029, complemented by the additional reduction of 25% at December 31, The investment obligation related to 2015 is R$ 38,435. From January to December 2015, was invested and the total amount of the obligations. The amounts are invested in the improvement of existing products and development of new products and comprise basically: direct and indirect labor, payroll charges, software, consulting services, materials, infrastructure, travel and other related costs. The amortization period was set at three years based on the projects' recoverability history. The amortization of these projects was recorded under cost of sales. (b) Goodwill In December 2009, the subsidiary Positivo Informática da Bahia Ltda. completed the acquisition of Boreo Comércio de Equipamentos Ltda., generating goodwill of R$ 14,173, recorded in the books of the acquirer and based on expected future earnings. The recoverable amount of the goodwill is determined on the basis of its value in use derived from cash flow projections based on a financial budget of five years approved by management and the discount rate of 16,41% per year. 15 TRADE PAYABLES Parent company Consolidated 12/31/ /31/ /31/ /31/2014 Trade payables - foreign market 161, , , ,526 Trade payables - domestic market 67,027 51,966 67,711 62,686 Copyrights and licenses payable 26,010 11,362 26,010 11,362 Adjustment to present value of trade 6,748 6,748 payables 5,441 6,966 Unrecognized interest adjustment to present value (AVP) trade payables (2,522) (1,999) (2,522) (2,517) 258, , ,023 39

41 Copyrights and licenses payable represent obligations for the acquisition of Microsoft Corporation software licenses. These licenses are supported by license agreements entered into between the parties and are renewed periodically. The average payment term for trade payables is 64 days. The adjustment to present value of trade payables is calculated based on the future payment of cash flows discounted to present value. The Company considers the payment term of each credit sale and calculates the discount of this transaction by using the CDI ( Interbank Certificate of Deposit) rate as reference. 16 BORROWINGS Average Av erage swap Parent Com pany Consolidated Contractual rate in % CDI Maturity Guarantees 12/31/15 12/31/14 12/31/15 12/31/14 rate (a.a.) Atam ortizes cost Current Liabilities Working Capital 2.31% + VC % 11/03/2015 Promissory note - 23,313-23,313 Working Capital 2.21% + VC % 14/05/2015 Promissory note - 11, ,27 0 Working Capital 2.21% + VC % 21/05/2015 Promissory note - 18,052 18,052 Working Capital 2.56% + VC % 03/12/2015 Promissory note - 17, ,97 1 Working Capital 2.58% + VC % 08/12/2015 Promissory note - 50, ,7 31 Working Capital 2.38% + VC % 11/12/2015 Promissory note - 18,236-18,236 Working Capital 3.22% + VC % 04/03/2016 Promissory note 39,058-39,058 - Working Capital 3.03% + VC % 08/03/2016 Promissory note 32,321-32,321 - Working Capital 3.87 %+VC % 11/15/2016 Promissory note 15,827 15,827 Working Capital 3.98%+VC % 22/06/2016 Promissory note 39,101 39,101 Working Capital 5.24%+VC % 29/11/2016 Promissory note 27,445 27,445 Working Capital 5.27 %+VC % 06/12/2016 Promissory note 7 6, ,932 Working Capital 5.30%+VC % 09/12/2016 Promissory note 27,414 27,414 Working Capital 2.98%+VC % 13/05/2016 Promissory note 31,818 31,818 Working Capital 3.12% + VC % 08/08/2016 Promissory note 39,518 39,518 Working Capital 3.14%+VC % 20/05/2016 Promissory note 37,804 37,804 Working Capital 4.62% N/A From 03/02/2016 a 07/03/2016 Promissory note ,122 23,515 Working Capital 0.98% N/A 30/06/2015 Fir st loss 1 0% - 1,287-1,287 Working Capital 1.12%+CDI - From 18/06/2017 a 29/12/2017 Promissory note 7,512 7,867 7,512 7,867 Working Capital 2.04%+CDI - From 29/09/2019 a 19/12/2019 Promissory note 3,914-3,914 - Working Capital 2.7 0%+CDI - From 30/09/2018 a 31/12/2018 Promissory note 3,463-3,463 - Working Capital 122%CDI - 02/07 /2018 Inventory/invoice 20,250-20,250 - Securitization of payable (c) 19.84% N/A 04/01/2016 A 05/01/2016 N/A 6,029-6,029 Working Capital % % 16/02/2016 Promissory note 7 4, ,480 - Debêntures - interest (b) 2% + CDI % 27 /02/2015 Promissory note - 8,141-8,141 BNDES - FINAME 5.16% N/A Until 15/11/2016 Statutory lien 30,47 7 3, ,47 7 3,897 BNDES (a) 5.91% N/A Until 15/12/2016 Letter of guarantee 50,388 65,301 50,388 65,301 FINIMP 2.11%+VC % 05/02/2016 Promissory note 10,214-10,214 - FINIMP 2.19%+VC 92.00% 24/02/2016 Promissory note 3,989-3,989 - FINIMP 2.19%+VC % 02/03/2016 Promissory note 11,681-11,681 - FINIMP 2.81%+VC % 16/05/2016 Promissory note 22,514-22,514 - FINIMP 2.81%+VC % 23/05/2016 Promissory note 20,928-20,928 - Arrendamento mercantil financeiro 3.80%+CDI N/A 36 months Statutory lien 1, , , , , ,931 Non Current Liabilities Debêntures (b) 2% + CDI % 11/04/2016 Inventory/invoice - 100, ,340 BNDES (a) 5.91% N/A Until 15/04/2019 Letter of guarantee 100, , , ,97 2 Working Capital 1.12%+CDI - From 18/06/2017 a 29/12/2017 Promissory note 4,058 20,105 4,058 20,105 Working Capital 2.04%+CDI - From 29/09/2019 a 19/12/2019 Promissory note 8,324-8,324 - Working Capital 2.70%+CDI - From 30/09/2018 a 31/12/2018 Promissory note 4,274-4,274 - Working Capital 122%CDI - 02/07 /2018 Inventory/invoice 32,061-32,061 - FINEP 5%+TR - 15/05/2021 Letter of guarantee 11,192-11,192 - BNDES - FINAME 5.16% N/A Until 15/06/2018 Statutory lien 20,7 69 9,246 20,7 69 9, , , , ,218 T otal borrowings 816, , , ,149 The borrowings and financing agreements entered into by the Company do not contain any covenants requiring the achievement of financial ratios. The Company's loan and financing book values approximate their fair values, except for the credit lines obtained from BNDES, which have specific conditions regarding their terms and costs. (a) BNDES In 2010, the Company entered into an agreement for special credit lines with BNDES in the amount of up to R$ 147,000, which were fully obtained and used in innovative activities. 40

42 During 2013 the Company obtained a new financing facility from BNDES, at an amount of up to R$ 173,093 with a total repayment term of 6 years. The funds will be mainly used for the Company's innovation plan, focused on research and development activities, new products, digital convergence and smartphones. Additionally, some of these funds will be used for the modernization of the industrial and IT structures of the Company. The funds were fully released in tranches, in accordance with the progress of the projects and related support filed with BNDES, with a grace period during the first 24 months. During the period ended at December 31, 2015, R$ was released. (b) Debentures At February 13, 2015, the Board of Directors performed optional acquisition of the first issue of simple debentures, according to clause 6.19 of the indenture, to be held in treasury for subsequent cancellation. Therefore, on this date was performed the early payment of the total amount of debentures in amount of R$ 110,252. (c) Securitization of trade payables Comprises the payor risk, which consists of the prepayment by suppliers of outstanding securities, where the bank advances the amount to the supplier on the request date and subsequently receives on the maturity date the amount due by the Company. The long term borrowing s due date are as follow: Parent Company Year and consolidated , , , , Total 181, PROVISION Parent company Consolidated 12/31/ /31/ /31/ /31/2014 Current liabilities Provision for warranties and technical assistance (a) 52,846 39,741 53,062 58,640 Provision for commissions (c) 18,730 17,313 18,730 19,188 Provision for freight 151 3, ,408 Provision for rebates (d) 2,613 1,648 2,613 2,466 Provision for cooperative advertising (b) 9,699 8,288 9,699 9,070 Other provision 13,179 5,702 13,179 18,420 97,218 76,275 97, ,192 Non-current liabilities Provision for warranties and technical assistance (a) 18,244 18,575 19,394 19, ,462 94, , ,917 41

43 (a) Provision for warranties and technical assistance Based on the number of computers under warranty and the warranty period for such equipment, as well as the recent history of service frequency per machine and the average cost per technical assistance service, an estimate was made at the end of the reporting period of the provision required to settle the total obligation assumed in respect of the equipment under warranty. (b) Provision for cooperative advertising The amounts provided for cooperative advertising are calculated based on the percentages agreed between the parties and refer to promotion and advertising of the Company's products. The percentages are negotiated individually with each customer. (c) Provision for commissions The provision for commissions is calculated based on the individual percentage of commission recorded in the sales orders. (d) Provision for rebates The amounts provided for rebates are calculated based on historical percentages and other factors, negotiated individually with each customer. These amounts represent adjustments to the price, stimulating the retail sales. 18 TAXES PAYABLE Social Integration Program (PIS) and Social Contribution on Revenues (COFINS) Parent company Consolidated 12/31/ /31/ /31/ /31/2014 2,215 6,772 2,215 8,938 National Institute of Social Security (INSS) 2,982 3,714 2,986 3,902 Income Tax Withheld at Source (IRRF) and Social Contribution Withheld at Source (CSRF) 2,507 1,514 2,515 1,584 IPI 1, , ICMS ,000 Other taxes and contributions 1,922 5,713 1,967 5,763 11,353 19,087 11,410 21, DEFERRED REVENUE This refers to the portion of the investment grant for which the investment obligation has not yet been fulfilled, as mentioned in Note 8. As a result of the use of the ICMS tax benefits for the year ended December 31, 2015 and December 31, 2014, the Company recorded the amount in liabilities, under the caption "Deferred revenue", which will be allocated to the results of operations according to the amortization of the related assets and fulfillment of the obligations required as consideration for such tax benefit, as established in CPC 7 and disclosed in Note 14.a. 42

44 20 INCOME TAX AND SOCIAL CONTRIBUTION (a) Deferred Deferred income tax and social contribution assets and liabilities were calculated at the rates in effect at december 31, 2015 and December 31, 2014 and are comprised as follows: Parent company Consolidated Assets 12/31/ /31/ /31/ /31/2014 Deferred income tax and social contribution Provision for warranties 17,968 20,477 18,041 25,625 Provision for obsolete inventories 15,744 19,849 15,744 21,529 Provision for tax, labor and civil risks 14,712 15,265 14,814 15,265 Adjustment to present value 1,665 21,637 1,665 22,013 Provision for doubtful accouts 7,964 6,123 7,964 6,238 Provision for commissions 6,368 5,821 6,368 6,475 Provision for labor obligations - 3,699-3,834 Provision for rebates Provision for cooperative advertising 3,298-3,298 4,276 Other temporary differences Income tax and social contribution losses 363, , , ,282 Deferred taxes not recognized (350,325) (361,106) (350,500) (377,226) 82,218 76,112 82,218 82,219 Liabilities Deferred income tax and social contribution Product development projects (8,746) (15,089) (8,746) (15,964) Deferred taxes not recognized (2,399) 4,878 (2,399) 4,818 (11,145) (10,211) (11,145) (11,146) 71,073 65,901 71,073 71,073 The recognition of tax assets is supported by the Company's business plans, which take into account the expansion of the commercial activities, the management's decision to distribute dividends in Brazil and taxable income in foreign joint ventures, as well as on the assumptions of the reduction in the subvention effect for investment in the Company's results due to changes in legislation and corporate restructuring transactions occurred in 2015, which will generate sufficient taxable profits to offset these deferred tax credits. Technical feasibility studies, analyzed and approved by the Board of Directors, indicate the full recovery of the amounts of deferred taxes recognized, as defined in CVM Instruction 371, of June 27, 2002, and refer to management's best estimates of the future evolution of the Company and the market in which it operates. The expected realization of tax credits is as follows: Consolidated Expected realization Total Income tax 5,382 7,362 7,483 7,067 6,550 6,051 5,587 5,158 1,632 52,272 Social contribution 1,938 2,650 2,694 2,544 2,358 2,178 2,011 1, ,801 Total 7,320 10,012 10,177 9,611 8,908 8,229 7,598 7,015 2,203 71,073 Management reviews the actual results of these business plans for the generation of taxable profits each year and, accordingly, reassesses the expected realization of these tax credits. 43

45 As the taxable basis for income tax and social contribution on net income arises not only from the profit that may be generated, but also from the existence of non-taxable revenues, non-deductible expenses, tax incentives and other variables, there is no immediate correlation between the Company's and its subsidiaries' profit and the income tax and social contribution expense. Therefore, the expected utilization of tax credits should not be taken as the sole indication of the future profitability of the Company and its subsidiaries. Deferred tax liabilities refer to: (i) the deferral of receivables from Government agencies, and (ii) the tax incentives introduced by Law 10,637/2002 and subsequently amended by Law 11,196/2006, which allows the deductibility of expenses on development projects on a cash basis for income tax and social contribution purposes. This incentive is applicable to the Company's business activity and relates to expenses for product development projects that are recorded in intangible assets. The amount of deferred taxes will be reversed as the projects are amortized. (b) Tax benefit (expense) in the statement of income Reconciliation of the income tax and social contribution benefit (expense) is as follows: Period ended Parent company Consolidated 12/31/ /31/ /31/ /31/2014 Profit (loss) before income tax and social contribution (79,881) 23,271 (79,742) 23,305 Combined statutory rate 34% 34% 34% 34% Income tax and social contribution at the statutory rate 27,160 (7,912) 27,112 (7,924) Exclusion of investment grant 22,061 86,471 22,061 97,253 Exclusion of equity in the results of investees 468 (6,555) (2,598) (90) Other permanent exclusions (additions) 1,857-1,709 - Tax losses and temporary differences for which deferred taxes were not recorded (51,546) (72,004) (48,423) (89,205) Tax benefit (expense) recorded - - (139) (34) 21 PROVISION FOR TAX, LABOR AND CIVIL RISKS The Company has contingencies that are being discussed in court, including tax, labor and civil lawsuits. The Company's management believes that the outcome of these lawsuits will not have an effect significantly different from the amount provided for, which corresponds to the amounts of lawsuits considered "probable losses". These basically refer to: Parent Company Consolidated Civil T ax Labor T otal Civ il T ax Labor T otal At december 31, ,953 11,667 18,295 42,915 13,253 11,667 18,295 43,215 Provision recorded 1,7 39 6, ,353 1,7 39 7, ,502 Reductions through payments (4,139) (692) (1,540) (6,37 1) (4,439) (1,541) (1,540) (7,520) At december 31, ,553 17,202 17,142 44,897 10,553 17,502 17,142 45,197 Provision recorded 3,014 4,635 2, ,120 3,014 4,635 2, ,120 Reductions through payments (5,7 04) (3,186) (2,856) (11,7 46) (5,7 04) (3,186) (2,856) (11,7 46) At december 31, ,863 18,651 16,757 43,271 7,863 18,951 16,757 43,571 Current 5,500 5,500 Non-current 37, ,

46 The amount recorded in parent company in current liabilities was R$ 5,500 (R$ 8,297 as of December 31, 2014) and that recorded in noncurrent liabilities was R$ 37,771 (R$ 36,600 as of December 31, 2014). The balance recorded in consolidated, in current liabilities is R$ 5,500 (R$ 8,297 as at December 31, 2014) and the balance in in noncurrent liabilities is R$ 38,071 (R$ 36,900 as at December 31, 2014). Civil The Company is a party to lawsuits of a commercial and civil nature relating to consumers complaints about products and services provided by the Company. There is not any individual relevant lawsuit. Tax Administrative proceedings and lawsuits discussing the legality or constitutionality of municipal, state and federal taxes, contributions and fees. There is not any individual relevant lawsuit. Labor Lawsuits discussing employer-employee relationship issues. There is not any individual relevant lawsuit. Possible losses The amounts of contingencies assessed as possible losses by the Company's legal counsel, for which no provision was recorded in accordance with the accounting practices adopted, are as follows: Parent company consolidated 12/31/ /31/2014 Tax ICMS (a) 16,437 63,238 Other (b) 205, ,272 Labor Employees (c) Civil Government agencies (d) 6,704 32,213 Consumers (d) 1,088 2, , ,685 45

47 Tax (a) ICMS The Company takes ICMS credits on shipments of products by taxpayers located in tax-incentive areas to the Curitiba unit, pursuant to Articles 22 and 23 of the Paraná State ICMS Regulation, approved by State Decree 1,980/2007. The Company, together with its legal counsel, believes that there are strong legal arguments to sustain the taking of credits in accordance with prevailing legislation and prior court decisions in the event of challenge by the tax authorities. (b) Tax Other (principal in the total amount of R$ 145,192): (i) (ii) Economic Intervention Contribution (CIDE) - Tax assessment notice requiring the payment of the CIDE on remittances overseas of amounts related to royalties on software made in Import tax (II) and IPI - Tax assessment notice claiming differences of Import and Excise taxes, arising from the reclassification of the Mercosur Common Nomenclature (MCN) on imports of microprocessors carried out by the Company in the last five years. This reclassification arose from the change in tax classification criteria by the Federal Revenue Service. (iii) II and IPI - Tax assessment notice relating to differences of Import and Excise taxes, arising from the reclassification of the MCN on imports of LCD screens carried out by the Company's branch located in Ilhéus, State of Bahia, in the last three years. This reclassification arose from the change in tax classification criteria by the Federal Revenue Service. (iv) IRPJ and CSLL tax assessment notice discussing the grant of the State of Paraná and requiring the disallowance of tax losses related to No impact on the breakdown of the balance in the table above, since it will not give rise to the payment of taxes and impact profit or loss. (c) Labor Employees: Lawsuits discussing labor amounts and indemnities. (d) Civil (i) Government agencies (principal in the total amount of R$ 5,065): Federal Audit Court: Audit of Accounts Process in which the Federal Audit Court analyzes the legality or not of the economic and financial rebalancing granted by Companhia de Correios e Telégrafos ECT (the Brazilian Postal Service) to the Alpha Consortium, formed by the Company and Novadata Sistemas e Computadores S.A. 46

48 Public Prosecution Office of Araras, State of São Paulo: Administrative Misconduct Lawsuit filed by the Public Prosecution Office of the State of São Paulo, challenging the legality of the Administrative Act issued by the Municipal Mayor of Araras, State of São Paulo, related to the acquisition of Interactive Educational Boards through an Onsite Bidding process. São Paulo State Audit Court (TCE-SP): Audit of Accounts Process in which TCE-SP analyzes the legality or not of the agreement entered into at March 2008 with the Education Development Foundation also involving the Data Processing Company of the City of São Paulo (PRODAM). TCE-SP: Administrative procedure related to the adhesion of the city of São Bernardo do Campo to the One Computer per Student Program (PROUCA) in connection with the acquisition of Positivo Informática S.A. educational laptops for Government-funded schools in the states, Federal District and cities. TCE-SP: Administrative procedure related to the contracting of computers by Casa Foundation - Foundation Center of Social and Educational Service to the Adolescent - through adhesion to the minutes of PRODAM. TCE-SP: Administrative procedure relating to the contracting of educational laptops by the Municipal Authorities of the city of Cubatão, in the state of São Paulo, through adhesion to the Ministry of Education's PROUCA. Federal Public Prosecution Office: Administrative Misconduct Lawsuit filed by the Federal Public Prosecution Office claiming that the fifth amendment to contract 13,346/2002, entered into between Novadata and Positivo with the Brazilian Postal Service, be considered invalid, and also that the amounts paid as financial and economic rebalancing be returned. Administrative proceeding in connection with the supply of equipment to the State of Pernambuco Infrastructure Department for Digital Inclusion (DEID) under agreement 02/2007/STE-MC. (ii) Consumers: These are administrative procedures and lawsuits related to end consumers' complaints about products sold and services provided by the Company, claiming the replacement of the product or the refund of amounts paid. In the case of administrative procedures, these are filed by consumer protection agencies, with analysis of the existence of infringements of consumer relations and the possibility of receiving fines as determined in Decree 2,181/97. 47

49 22 EQUITY (a) Share capital The Company's share capital at December 31, 2015 and December 31, 2014 amounted to R$ 389,000. The Company's shares total 87,800,000, all of them common shares, and are held as follows: Number of shares (in units) Stockholders 12/31/ /31/2014 Controlling interests and related parties 62,093,094 62,093,094 Non-controlling interests, related parties and officers 32,225 32,225 Treasury shares 2,570,608 2,570,608 Shares outstanding in the market 23,104,073 23,104,073 87,800,000 87,800,000 Based on the Minutes of the Stockholders' Meeting held on August 17, 2006, the Company is authorized to increase its capital, regardless of amendment to the bylaws and stockholders' resolution, upon determination of the Board of Directors, up to the limit of the Company's authorized capital of 4,500,000 new common shares, without par value. The Company's direct controlling stockholders are as follows: Number of common shares (in units) Direct controlling stockholders 12/31/ /31/2014 Hélio Bruck Rotenberg 12,418,619 12,418,619 Cixares Líbero Vargas 12,418,618 12,418,618 Isabela Cesar Formighieri Mocelin 4,139,540 4,139,540 Daniela Cesar Formighieri Rigolino 4,139,540 4,139,540 Sofia Guimarães Von Ridder 4,139,540 4,139,540 Samuel Ferrari Lago 4,139,540 4,139,540 Paulo Fernando Ferrari Lago 4,139,540 4,139,540 Rodrigo Cesar Formighieri 4,139,539 4,139,539 Lucas Raduy Guimarães 4,139,539 4,139,539 Giem Raduy Guimarães 4,139,539 4,139,539 Thais Susana Ferrari Lago 4,139,539 4,139,539 Oriovisto Guimarães ,093,094 62,093,094 (b) Capital reserve - tax incentives Refers to tax incentives of the Company, which were recorded in this account up to December 31, After Law 11,638/07, these benefits started to be recorded in the caption "Revenue reserves". Parent company consolidated 12/31/ /31/2014 Stock option benefit reserve 2,896 2,084 Investment subvention reserve 118, , , ,389 48

50 (c) Purchase option granted under the employee stock option plan On November 27, 2014, the Board of Directors meeting approved a Program that totals up to 1,756,000 stock options divided into two equal batches. Currently, the plan has 1,416,000 stock options. Purchase options granted under the employee stock option plan do not grant voting rights or dividends. Further details on the employee stock option plan is described in Note 32 to this financial information. (d) Revenue reserve Parent company consolidated 12/31/ /31/2014 Tax incentive reserve and retained earnings 116, ,242 Legal reserve , ,323 (i) Tax incentive reserve As mentioned in Note 8, the amounts recorded in this account relate to the ICMS tax incentive, in conformity with State Decree 5,375/2002 (the effective period of Article 3 runs through to July 31, 2011), and State Decree 1,922/2011 effective from August 1, Pursuant to income tax legislation, this tax incentive reserve can only be utilized to increase capital and loss absorption, and cannot be distributed as dividends since it relates to a benefit granted by the State to the Company for a specific activity. (ii) Legal reserve The purpose of the legal reserve is to ensure the integrity of capital and it can be used only to offset losses and increase capital. The legal reserve is credited annually, provided that the balance of this reserve, plus the amount of capital reserves, does not exceed 30% of the share capital, with allocation of 5% of the profit for the year and cannot exceed 20% of the capital. (e) Dividends According to the minutes of the Annual and Extraordinary General Meeting of stockholders held on March 25, 2008, the Company may prepare semiannual or interim financial statements; decide on the distribution of dividends as a charge to the account of profit determined in these financial statements; declare interim dividends as a charge to retained earnings or to the revenue reserves existing in these financial statements or in the last annual financial statements; may pay or credit interest on capital, subject to approval at the Annual General Meeting that approves the financial statements for the year in which such interest was paid or credited, and interim dividends and interest on capital shall always be attributed to the mandatory dividend. 49

51 On April, 30, 2015, the Company approved the amount of R$ 5,818 relating to mandatory minimum dividends to be paid through exercise of (f) Allocation of profit/loss Any accumulated deficit will be deducted from the profit for the period, before any allocation. Management profit-sharing will be calculated on the remaining profit, up to the maximum legal limit, as set forth in Article 152, paragraph 1 of Law 6,404/76, after an appropriation to the legal reserve of 5%, the balance of which cannot exceed 20% of capital. The Company recognized loss in 2015 and, consequently, the amount was absorbed by the earnings reserve, as set forth in article 189, sole paragraph of Law 6,404/76. (g) Treasury shares To comply with the stock option plan for executives, the Company holds a total of 2,570,608 treasury shares, purchased under the repurchase program, at an average price of R$ in amount of R$ 37,467. If the shares were sold for R$ 1.70 at December 31, 2015 (price at the date), the effect on equity would be a loss of R$ 33,084 (loss of R$ 31,966 at December 31, 2014). (h) Other comprehensive income The Company recognized in this line item the effect from exchange rate changes on investments in foreign subsidiaries, actuarial gains and losses arising from the employee benefit plan and gain (loss) on cash flow hedge transactions. For exchange rate changes, the accrued effect is reversed to profit or loss for the year either as gain or loss only in case of disposal or write-off of the investment. For actuarial gains and losses, amounts are recognized when the actuarial liability is remeasured. Cash flow hedge transactions will be transferred to profit or loss for the year if an ineffective portion is identified and/or upon the end of the hedge relationship. 23 REVENUE The analysis of the Company's revenue in the nine months period ended December 31, 2015 and 2014 is as follows: Parent Company Consolidated 12/31/ /31/ /31/ /31/2014 Revenue from sale of products 1,721,879 2,340,239 1,948,012 2,511,928 Revenue from services 46,418 59,597 47,970 60,674 Gross revenue 1,768,297 2,399,836 1,995,982 2,572,602 Less: Taxes on sales and services (296,979) (391,218) (345,951) (436,630) Investment grant 213, , , ,688 Returns and rebates (56,111) (80,112) (54,931) (85,101) Net revenue 1,628,646 2,178,750 1,843,191 2,331,559 50

52 24 EXPENSES BY NATURE The Company classified expenses according to their function in the statement of income. The information on the nature of these expenses recorded in the statement of income is as follows: Parent Company Consolidated 12/31/ /31/ /31/ /31/2014 Raw materials and consumables used 1,210,900 1,595,065 1,377,390 1,713,689 Salaries and benefits 171, , , ,612 General expenses 45,333 66,052 49,629 70,784 Third-party services 50,177 53,885 50,743 61,642 Cooperative advertising expenses 26,868 24,793 37,988 33,920 Commissions 22,854 28,896 25,122 31,545 Depreciation and amortization 64,436 47,752 66,749 50,501 Other operating expenses, net 103, , , ,997 1,695,947 2,109,303 1,908,734 2,280,690 Cost of sales 1,321,650 1,677,473 1,496,034 1,805,507 Selling expenses 272, , , ,847 General and administrative expenses 102, , , ,336 1,695,947 2,109,303 1,908,734 2,280,690 Depreciation of property, plant and equipment items and amortization of intangible assets were charged as follows: Parent Company Consolidated 12/31/ /31/ /31/ /31/2014 Cost of sales 29,153 11,666 29,459 11,905 Selling expenses 23,359 22,086 24,430 23,424 General and administrative expenses 11,924 14,000 12,860 15,172 64,436 47,752 66,749 50, SEGMENT INFORMATION To manage its business and make decisions, the Company uses information that focuses on product and service sales channels, which are the basis on which it reports primary information by segment. The Company's main operating segments are: retail sales and sales to Government entities. The information by reportable segment of these units is presented below: Revenue and profit (loss) by segment Retail Consolidated 12/31/ /31/2014 Governm ent Reportable Segm ents Retail Governm ent Reportable Segm ents Net sales rev enue 806, ,621 1,47 9,988 1,100, ,321 1,949,534 Cost of Sales and Services (635,453) (561,050) (1,1 96,503) (856,406) (658,394) (1,51 4,800) Gross Profit 17 0, , , , , ,7 35 Operating expenses (208,202) (144,646) (352,848) (213,111) (150,839) (363,951 ) Profit before finance result (37,288) (32,07 5) (69,363) 30,696 40, ,7 84 Finance results, net (11,115) 8,261 (2,854) (23,545) (29,47 1 ) (53,016) Profit (loss) before taxation (48,403) (23,814) (7 2,217 ) 7,151 10,617 17,7 68 Current and deferred income tax (1 2) (19) (31) Net Profit (Loss) (48,403) (23,814) (72,217 ) 7,139 10,598 17,737 51

53 The reconciliation between the revenue of reportable segments and the Company and its subsidiaries' total revenue is as follows: Consolidated 12/31/ /31/2014 Net sales revenue Net sales revenue of reportable segments 1,479,988 1,949,534 Net sales revenue of non-reportable segments 363, ,025 1,843,191 2,331,559 The reconciliation between profit of the reportable segments and the Company and its subsidiaries' total results is as follows: Consolidated 12/31/ /31/2014 Profit (loss) for the year Profit (loss) for the year of reportable segments (72,217) 17,737 Profit (loss) for the year of non-reportable segments (7,664) 5,534 (79,881) 23,271 The revenue of the segments presented above does not include the revenue generated by subsidiaries. The relevant accounting policies for reportable segments are the same as those of the Company. The profit or loss of the segments corresponds to that of each segment, after allocation of all revenues, costs and expenses. (a) Revenue from main products and services Breakdown of net revenue by product is as follows: Consolidated 12/31/ /31/2014 Products Notebooks 581, ,380 Desktops 798, ,889 Tablets 107, ,455 Cell 218, ,225 Other 137, ,610 1,843,191 2,331,559 (b) Assets and liabilities per segment Although the Company's assets and liabilities are allocated to certain segments, they are not managed independently as they relate mainly to the production of IT equipment and mobile for the designated sales segments. (c) Geographical information In the nine-month period ended at December 31, 2015, the Company and its subsidiaries recorded sales to the foreign market of R$ 74,203 (R$ 64,517 in December 31, 2014). The remaining sales were made to the domestic market. 52

54 (d) Information on major customers Three of the Company's customers represented more than 30% of the total net revenue in exercise of FINANCE RESULTS Controladora Consolidated 12/31/ /31/ /31/ /31/2014 Finance income Adjustment to present value - customers 25,447 24,712 29,554 27,145 Income from financial investments 34,708 12,500 34,712 12,501 Other finance income 5, , ,062 37,822 70,310 40,489 Finance Costs Interest on borrowings (78,272) (44,873) (79,748) (45,511) Adjustment to present value - suppliers (28,691) (19,851) (32,352) (21,662) Discount - payment in advance (1,431) (6,489) (1,987) (6,620) Tax on financial transactions (1,250) (647) (1,252) (648) Contractual fines (576) (2,836) (576) (2,836) Other finance costs (6,599) (12,106) (6,729) (12,202) (116,819) (86,802) (122,644) (89,479) Finance income and costs, net (50,757) (48,980) (52,334) (48,990) Foreign exchange variation Gains on currency hedge 133,418 28, ,418 28,685 Losses on currency hedge (38,102) (31,355) (38,102) (31,355) Gains on foreigh exchange variations 86,729 51,218 95,010 53,614 Losses on foreign exchange variations (138,442) (60,789) (155,782) (65,554) 43,603 (12,241) 34,544 (14,610) Finance results, net (7,154) (61,221) (17,790) (63,600) Below is the cash effect of the exchange rate changes during 2015, in consolidated: Consolidated NDF / Options T otal /31/ /30/ /30/ /31/2015 Total 2014 (+) Opening balance 3,412 28,026 4,398 37,366 3,412 4,544 (+) Gain / (loss) recognized in profit or loss 95,316 (9,615) 60,87 5 (22,882) 66,938 (2,67 0) (-) Closing balance 11,944 11,944 28,026 4,398 37,366 3,412 (=) Cash effect 86,7 84 6,467 37,247 10,086 32,984 (1,538) Foreign variation paym ents (+) Opening balance (6,966) (19,27 6) (37 7 ) (19,146) (6,966) (5,161) (+) Gain / (loss) recognized in profit or loss (60,7 7 2) 3,7 99 (38,697 ) 6,408 (32,282) (11,940) (-) Closing balance (6,7 48) (6,7 48) (19,27 6) (37 7 ) (19,146) (6,966) (=) Cash effect (60,990) (8,7 29) (19,7 98) (12,361) (20,102) (10,135) Gains (losses) recognized 34,544 (5,816) 22,17 8 (16,47 4) 34,656 (14,610) Net effect on cash Increase/ (decrease) 25,7 94 (2,262) 17,449 (2,27 5) 12,882 (11,67 3) 53

55 27 INSURANCE - CONSOLIDATED At December 31, 2015, the insurance cover established by the Company's management to cover losses and civil liability can be summarized as follows: Area Insurance by event Insured amount Effectiveness Named and Operational risks Robbery and theft of assets and inventories 603,326 04/01/2015 to 04/01/2016 Loss of profits Loss of profits resulting from Fire 110,000 04/01/2015 to 04/01/2016 Legal guarantee Legal and/or administrative proceedings in progress 36,140 06/06/2004 to 06/06/2016 Named and Operational risks Credit insurance - Sale of IT equipment 100,800 09/30/2015 to 09/30/2016 Civil Responsability Civil liability - directors and officers 30,000 10/30/2014 to 10/30/2015 Civil Responsability Civil liability General 1,000 03/31/2015 to 03/31/2016 Named Risk Property damage 35,000 09/01/2015 to 04/01/2016 The independent auditors did not analyze the sufficiency of the amounts to cover probable losses. 28 EARNINGS (LOSS) PER SHARE Basic earnings per share are calculated by dividing the profit or loss attributable to stockholders of the Company by the weighted average number of common shares in power of the stockholders, excluding common shares purchased by the Company and held as treasury shares. Diluted earnings (loss) per share is calculated based on the adjustment of profit attributable to the Company s shareholders, as well as the weighted average number of total shares held by shareholders (outstanding), so as to reflect the effects of all dilutive common shares. Parent Company 12/31/ /31/2014 Basic Basic numerator Profit (loss) allocated to common shares (79,881) 23,271 Basic denominator Weighted average number of common shares (in thousands) 85,229 85,530 Basic earnings (loss) per share (0.9373) Diluted Diluted numerator Profit (loss) allocated to common shares (79,881) 23,271 Diluted denominator Weighted average number of common shares (in thousands) 84,797 85,530 Basic earnings per share (0.9420) The weighted average number of common shares used in the calculation of basic earnings per share is reconciled to the weighted average number of common shares used in the calculation of diluted earnings (loss) per share as follows: Parent Company 12/31/ /31/2014 Weighted average number of common shares used in the calculation of basic earnings per share 85,229 85,530 Weighted average number of common shares used in the calculation of diluted earnings per share 84,797 85,530 54

56 The following potential common shares are anti-dilutive and, therefore, have been excluded from the weighted average number of common shares for the calculation of the diluted earnings per share: Parent Company 12/31/ /31/2014 Employee stock options 1,416 1, FINANCIAL RISK MANAGEMENT 29.1 Financial risk factors The Company's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk), credit risk and liquidity risk. The Company manages the global risks relating to the unpredictability of financial markets and seeks to minimize potential adverse effects on its financial performance. The Company uses derivative financial instruments to hedge certain risk exposure, without the purpose of speculation to leverage its finance results. The quantitative information regarding each type of risk arising from financial instruments is described in the sections below, which represent the concentrations of risk monitored by the Company's management. Risk management is carried out by the Company's treasury department, following guidelines determined by the Company's officers and Board of Directors. (a) Market risk (i) Foreign exchange risk The Company mainly operates in the domestic market, but carries out significant imports of input materials from the foreign market, being therefore exposed to foreign exchange risk basically with regard to the U.S. Dollar. The main transactions relate to payables to foreign suppliers (Note 15) and working capital loan operations (Note 16). Management has established a policy to require the Company to manage its foreign exchange risk against its functional currency. The Company is required to hedge its foreign exchange risk exposure in accordance with the guidelines of the finance department. Its main objective is to hedge its U.S. Dollar-denominated commitments against future price fluctuations, so as to provide greater predictability in its operations. The Company enters into U.S. Dollar options and also non-deliverable forwards (NDFs) to hedge against exchange rate fluctuations, covering only the foreign exchange exposure over the payment term granted by suppliers for the purchase of imported components. Additionally, the Company carries out swap operations to hedge its borrowing in foreign currency against the fluctuations in future prices. The main analyses made by the finance department to contract derivative financial instruments are: 55

57 Based on the analysis of payables for imports, either in regard to materials already in inventory or materials in transit, the derivative contracts are reviewed and/or changed on a weekly basis. The amount and type to be contracted are defined in light of the specifics of each in relation to the volatility of the U.S. Dollar and the future prospects of the economy. Based on the sensitivity analysis of U.S. Dollar volatility against the types of hedge contracted over the months, it is possible to measure the possible cash requirements to cover the results of NDF transactions. December 31, 2015 Parent Company Consolidated Foreign currency Real Foreign currency Real Assets Trade and other receivables U.S. Dollar 382 1, ,491 Liabilities Trade Payables - foreigh market U.S. Dollar (49,432) (193,024) (49,432) (193,024) Borrowings U.S. Dollar (111,802) (436,564) (111,802) (436,564) Derivative financial instruments Swap - U.S. Dollar 111, , , ,564 NDF's - U.S. Dollar 69, ,747 69, ,747 Call options - U.S. Dollars 14,526 56,721 14,526 56,721 Net exposure 1 35, ,935 35, ,935 Government projects U.S. Dollar (42,378) (165,478) (42,378) (165,478) Net exposure 2 (7,309) (28,543) (7,309) (28,543) Assets Trade and other receivables December 31, 2014 Parent Company Consolidated Foreign currency Real Foreign currency Real U.S. Dollar Liabilities Trade Payables - foreigh market U.S. Dollar (72.223) ( ) (93.589) ( ) Borrowings U.S. Dollar (52.546) ( ) (56.837) ( ) Derivative financial instruments Swap - U.S. Dollar NDF's - U.S. Dollar Call options - U.S. Dollars Net exposure Government projects U.S. Dollar ( ) ( ) ( ) ( ) Net exposure 2 ( ) ( ) ( ) ( ) Net exposure 1 - refers to an exposure in foreign currency, considering the foreign exchange assets and liabilities held by the Company and accounted for in the balance sheet, net of derivative financial instruments contracted to hedge these liabilities. 56

58 Net exposure 2 - refers to an exposure in foreign currency, considering the foreign exchange assets and liabilities held by the Company and accounted for in the balance sheet and the future commitments arising from the Government Projects, net of derivative financial instruments contracted to hedge these liabilities. Government Projects refer to the Company's winning bids to provide computers in the next months. For this reason, the Company calculates the exposure to which it will be exposed with the acquisition of inputs abroad in order to meet these commitments. (ii) Cash flow and fair value interest rate risk The Company has no significant interest-earning assets, except the balance of financial investments. The Company's interest rate risk arises from long-term borrowings, as detailed in Note 16. Borrowings at floating rates expose the Company to cash flow interest rate risk. Borrowings at fixed rates expose the Company to fair value interest rate risk. At December 31, 2015 and December 31, 2014, the Company's borrowings at variable rates were denominated in reais and U.S. Dollars. The sensitivity analysis with the projected scenarios and related impacts on equity and results are presented in item "d" of this Note. (b) Credit risk Credit risk is managed on a corporate basis. Credit risk arises from cash and cash equivalents, derivative financial instruments, as well as credit exposure to customers in the Government and retail segments. For banks and other financial institutions, only independent rated parties usually classified as first-tier entities are accepted. The financial institutions with which the Company operates are evaluated by the rating agencies as a low risk. For the customers, the credit analysis area evaluates the quality of the customer's credit, taking into consideration financial position, past experience and other factors, as detailed in Note 6, which also discloses the customer's credit risk. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilization of credit limits is regularly monitored. Sales to retail customers are settled in cash. No credit limits were exceeded during the reporting period, and management does not expect any losses from non-performance by these counterparties. (c) Liquidity risk The final responsibility for the liquidity risk management lies with the Board of Directors, which prepared an appropriate liquidity risk management model to manage funding requirements and short-, medium- and long-term liquidity. The Company manages liquidity risks by maintaining adequate reserves, bank credit lines and other credit lines for obtaining borrowings, as deemed appropriate, through ongoing monitoring of forecast and actual cash flows, as well as through the combination of maturity profiles for financial assets and liabilities. 57

59 The following tables show details of the contractual maturity terms remaining for the Company's non-derivative financial liabilities and the contractual period for repayment. The tables were prepared according to the undiscounted cash flow method for financial liabilities based on the closest date in which the Company should settle the respective obligations. The tables include interest and principal cash flows. To the extent that the interest flows are at floating rates, the undiscounted amount was obtained based on the interest curves at the end of the reporting period. The contractual maturity is based on the most recent date on which the Company should settle the respective obligations. Derivative financial liabilities are included in the analysis if their contractual maturities are essential for an understanding of the timing of the cash flow. Financial liabilities Effective weighted average interest rate Less than one month One to three months Three months to one year Parent Company One to five years Over five years Total % of CDI R$ R$ R$ R$ R$ R$ December 31, 2015 Trade payables ,569 87,791 15, ,203 Borrowings at floating interest rates , , , , ,458 Derivative financial instruments Related parties - 2, , , , , , ,079,825 December 31, Trade payables 147,426 70,813 26, ,545 Borrowings at floating interest rates ,211 40, , , ,755 Derivative financial instruments 3,034 1, ,032 Related parties - 1, , , , , , ,359 Effective weighted average interest rate Less than one month One to three months Consolidated Three months to one year One to five years Over five years Total % of CDI R$ R$ R$ R$ R$ R$ December 31, 2015 Trade payables , ,191 15, ,603 Borrowings at floating interest rates , , , , ,580 Derivative financial instruments Related parties - 1, , , , , , ,135,478 December 31, 2014 Trade payables ,063 87,074 34, ,540 Borrowings at floating interest rates ,273 47, , ,218 9, ,137 Derivative financial instruments - 1,187 3, ,032 Related parties , , , ,218 9, ,193 58

60 Financial assets Effective weighted average interest rate Less than one month Parent Company One to three months Three months to one year % of CDI R$ R$ R$ R$ December 31, 2015 Cash and banks 10, ,623 Financial investiments at floating interest rates , ,058 Derivative financial instruments 5,914 11,503 24,807 42,224 Trade receivables , ,430 6, ,153 Related parties - - 8,548 8, , ,933 40, ,606 Total December 31, 2014 Cash and banks 12, ,104 Financial investiments at floating interest rates , ,329 Derivative financial instruments 180 2, ,412 Trade receivables , ,750 15, ,554 Related parties ,774 41, , ,158 58, ,173 Effective weighted average interest rate Less than one month Consolidated One to three months Three months to one year % of CDI R$ R$ R$ R$ December 31, 2015 Cash and banks 34, ,828 Financial investiments at floating interest rates , ,058 Derivative financial instruments 5,914 11,503 24,807 42,224 Trade receivables , ,859 6, ,582 Related parties ,970 32, , ,362 64, ,662 Total December 31, 2014 Cash and banks 17, ,032 Financial investiments at floating interest rates , ,329 Derivative financial instruments 180 2, ,412 Trade receivables , ,046 34, ,629 Related parties ,319 18, , ,454 53, ,721 (d) Additional sensitivity analysis required by the Brazilian Securities Commission (CVM) The table below presents the impacts that would arise from changes in significant risk variables to which the Company is exposed at the end of the period. The risk variables significant to the Company, taking into consideration a period of up to 12 months for this analysis, are its exposure to foreign currency fluctuations, mainly the U.S. Dollar, and its exposure to interest rate fluctuation. Management believes that the probable scenario reflects the Brazilian Central Bank s expectations of U.S. Dollar exchange rates and the CDI interest rate for the period ended December 31, The other risk factors were considered immaterial to the results of the financial instruments. 59

61 Consolidated Asset and Liability balances 12/31/ /31/ /31/ /31/2014 Scenarios Assets / Liabilities Assets / Liabilities Notional Notional Probable 25% 50% -25% -50% Derivative financial instruments Interest rate Swap - held for trading US$ para R$ (CDI) 29,123 (5,032) 111,802 56,837 (37,122) (46,403) (55,683) (27,842) (18,561) Borrowings In US$ (436,564) (139,573) (111,802) (56,837) Borrowings In CDI (83,856) - n/a n/a (30,736) (38,420) (46,104) (23,052) (15,368) Net exposure - - (67,858) (84,823) (101,787) (50,894) (33,929) 4,032 5,040 6,048 3,024 2,016 Derivative financial instruments Forward foreign exchange contracts - held for trading (NDF) R$ para US$ - NDF's and Options 11,944 3,412 84, ,447 14,364 17,955 21,546 10,773 7,182 Other financial liabilities Trade payables - foreign currency US$ to R$ (193,024) (248,590) (49,432) (93,589) (6,273) (7,841) (9,410) (4,705) (3,137) Net exposure 1 34,687 21,858 8,091 10,114 12,137 6,068 4,046 Trade payables - foreign currency - Government Projects US$ to R$ - - (42,378) (156,996) (5,378) (6,723) (8,067) (4,034) (2,689) Net exposure 2 - (7,691) (135,138) 2,713 3,391 4,070 2,035 1,357 Impact on the result (Effect appropriated to the result in the options and NDF contracts) (65,145) (81,432) (97,718) (48,859) (32,573) Net exposure 1 - refers to an exposure in foreign currency, considering the foreign exchange liabilities held by the Company and accounted for in the balance sheet, net of derivative financial instruments contracted to hedge these liabilities. Net exposure 2 - refers to an exposure in foreign currency, considering the foreign exchange liabilities held by the Company and accounted for in the balance sheet and the future commitments arising from the Government Projects, net of derivative financial instruments contracted to hedge these liabilities. Government Projects refer to the Company's winning bids to provide computers in the next months. For this reason, the Company calculates the exposure to which it will be exposed with the acquisition of inputs abroad in order to meet these commitments Financial Risk Factors The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for stockholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure of the Company, management can make, or may propose to the stockholders when their approval is required, adjustments to the amount of dividends paid to stockholders, return capital to stockholders, issue new shares or sell assets to reduce, for example, debt. 60

62 Parent Company Consolidated 12/31/ /31/ /31/ /31/2014 Net debt Debt Borrowings thirds 816, , , ,149 (-) Derivatives Swap (29,123) 5,032 (29,123) 5,032 Cash and banks (530,681) (219,433) (554,886) (224,361) Net debt (a) 256, , , ,820 Debt Borrowings - thirds 816, , , ,149 (-) Derivatives Swap (29,123) 5,032 (29,123) 5,032 (-) Derivatives Options and NDF (11,944) (3,412) (11,944) (3,412) Cash and banks (530,681) (219,433) (554,886) (224,361) Net debt (b) 244, , , ,408 Equity (c) 576, , , ,756 Debt ratio (a) Debt ratio (b) (a) (b) (c) The net debt is defined as short- and long-term borrowings, less cash and receivable and/or payable from swap derivative transactions (borrowing agreement hedge). The net debt is defined as short- and long-term borrowings, less cash and receivable and/or payable from swap derivative transactions (borrowing agreement hedge) and Options/NDF (payables hedge). The equity include all capital and reserves of the Company, managed as capital Fair value estimation The carrying values of trade receivables and payables, less impairment provision in the case of trade receivables, are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Company for similar financial instruments. The fair value of derivative instruments is calculated based on quoted prices. When these prices are not available, an analysis of the cash flow discounted through the yield curve is used, applicable over the life of the instruments for derivatives without options. Foreign exchange futures contracts are measured using foreign exchange rates and yield curves obtained based on quotations and for the same maturities of contracts. Swaps are measured at the present value of estimated future cash flows and discounted based on applicable yield curves, on the basis of interest rate quotations. For the Company's derivative financial instruments (currency futures contracts and cross-currency interest rate swaps) fair value measurements of Level 2 are used, through variables other than quoted prices included in Level 1, which are observable for the asset or liability directly (that is, as prices) or indirectly (that is, based on prices). 61

63 30 FINANCIAL INSTRUMENTS BY CATEGORY Parent Company Consolidated Assets at fair value through profit or loss Assets at fair value through equity Assets at fair value through profit or loss Assets at fair value through equity Loans and receivables Loans and receivables December 31, 2015 Assets per balance sheet Derivative financial instruments 11,944 29,123-11,944 29,123 - Trade and other receivables, excluding prepayments , ,103 Related parties - - 8,548-32,970 Cash and cash equivalents , ,886 11,944 29, ,812 11,944 29, ,959 December 31, 2014 Assets per balance sheet Derivative financial instruments 3, , Trade and other receivables, excluding prepayments , ,270 Related parties ,774-18,319 Cash and cash equivalents , ,361 3, ,292 3, ,950 Parent Company Consolidated Liabilities at fair value through profit or loss Liabilities at fair value through equity Liabilities at fair value through profit or loss Liabilities at fair value through equity Other financial liabilities Other financial liabilities December 31, 2015 Liabilities per balances sheet Derivative financial instruments Borrowings , ,580 Trade and other payables, excluding legal obligations , ,313 Related Parties - - 2, , ,084, ,140,188 December 31, 2014 Liabilities per balances sheet Derivative financial instruments 5, , Borrowings , ,149 Trade and other payables, excluding legal obligations , ,445 Related Parties - - 1, , ,488 5, , DERIVATIVE FINANCIAL INSTRUMENTS Parent company and Consolidated Notional amount (US$) 12/31/ /31/ /31/ /31/2014 Current Current Current Current assets liabilities assets liabilities NDF 69,593 25,843 8, U.S. Dollar options 14,526 89,604 3,332-2,707 - Interest rate swap 111,802 56,375 29, , , ,822 41,067-3,412 5,032 The Company operates with derivative financial instruments exclusively to hedge against certain exposure to risks, and therefore without any speculative purpose. (a) Forward foreign exchange contracts To protect itself against the volatility of the liability exposures in U.S. Dollars, due to the total exposure (cash flows), up to December 31, 2015, the Company entered into NDF contracts, in U.S. Dollars, in the following amounts and conditions: Contracting date Expiration date Counterparty Underlying Amount (US$ thousand) Average Target quotation Jul/15 to Aug/15 Jan/16 PINE 2,267 3,4756 May/15 to Jul/15 Jan/16 BTG 940 3,3548 Aug/15 to Dec/15 Jan/16 to Sep/16 BRADESCO 19,212 3,9906 Aug/15 to Nov/15 Jan/16 to May/16 HSBC 1,526 3,8784 Aug/15 a Nov/15 Jan/16 to Jul/16 SANTANDER 4,000 4,0542 Dec/15 Feb/16 to Jun/16 SAFRA 3,609 4,1324 Aug/15 to Dec/15 Jan/16 to Sep/16 FIBRA 17,703 3,8920 Aug/15 to Dec/15 Jan/16 to Aug/16 BANCO DO BRASIL 19,254 3,9403 Aug/15 Jan/16 to Feb/16 VOTORANTIM 1,082 3, ,593 3,

64 At December 31, 2015 the Company recognized R$ 65,741 as a net gain in the results, referring to settled contracts in the period (loss of R$ 6,528 at December 31, 2014). (b) US dollar option purchase agreements Also to hedge foreign currency-denominated transactions carried out with foreign suppliers against the US dollar volatility, the Company contracted US dollar purchase options. The outstanding notional amount as of December 31, 2015 was US$ 14,526. Agreements will be settled on the respective maturity dates, in the following amounts and under the following conditions: Contracting Date Expiration date Counterparty Underlying amount (USD thousands) Average target quotation Aug/15 to Dec/15 Jan/16 to Jun/16 VOTORANTIM 5, Aug/15 to Dec/15 Jan/15 to Aug/16 BRADESCO 9, , Net gain of R$ 29,575 was recognized in the period ended December 31, 2015 (gain of R$ 3,857 at December 31, 2014). (c) Interest rate swaps - CDI x US$ Interest rate swaps are settled according to their maturities stipulated in the contracts. The swapped interest rate is in line with the CDI rate. At December 31, 2015, the contracted average rate of CDI was % (at December 31, 2014, %). The Company will settle the contracts for the net value of the difference between swapped interest rates and the foreign exchange variations. Derivatives designated for hedge accounting Beginning June 1, 2015, the Company formally designated for hedge accounting the derivatives used to hedge foreign currency-denominated loans, comprising all swap contracts, including the following information: Hedge relationship; The Company s risk management purpose and strategy related to the hedge; Financial instrument identification; Hedged item or transaction; Hedged risk nature; Hedge relationship description; Hedge and hedged item correlation, when applicable; and Prospective hedge effectiveness. As of December 31, 2015, the outstanding position of the derivatives designated as cash flow hedge is broken down as follows: 63

65 Instrument designated as cash flow hedge parent / consolidated Hedge Reference currency (Notional) Reference value (Notional) Yield value Fair Value (1) Other income Profit (Loss) accumulated Currency Swap - US$/R$ Currency BRL 436,564 33,527 29,123 4,405 (1) The market value calculation method adopted by the Company consists of calculating the future value based on the contractual conditions and determining the present value based on the market curves reported by BM&FBOVESPA. The Company designates as cash flows hedge those derivatives used to offset fluctuations arising from exchange rate exposure, stated at the fair value of the contracted debts, other than the functional currency. Changes in the fair value of derivatives designated as cash flow hedge are recognized in equity as Other comprehensive income and reclassified to profit or loss for the periods in which the hedged transaction is carried out. When a hedge instrument ceases to satisfy the hedge accounting criteria, the gain or loss accumulated in equity will be fully reversed to profit or loss if the expected transaction is also recognized in profit or loss. As of December 31, 2015, instruments designated as cash flow hedge totaled US$111,802 relating to a notional amount of R$ 436,564. A gain of R$ 4,405 was recognized in Other comprehensive income and a gain on financial result of R$91, STOCK OPTION PLAN On November 3, 2006, the Company's stockholders approved at the Extraordinary General Meeting the general conditions of the Company's Share Option Plan (the Plan), as detailed below. The Plan established that the beneficiaries of the Plan may be the managers, employees and service providers of the Company (the Beneficiaries). It was also determined that the options granted will not exceed 3,5% ( three point five percent) of the total share capital of the Company existing on the date of their concession, plus the existing shares had all of the options granted under the terms of the Plan been exercised. Once the options have been exercised by the Beneficiary, the corresponding shares are issued by means of a capital increase. Treasury share options may also be offered. 64

66 The plan is administered by the Board of Directors or, at its option, by a Committee consisting of three members, of which at least one would be on the Board of Directors (a member or an alternate). The Board of Directors or Committee, according to the circumstances, will have full powers, provided that the terms of the Plan are followed, and, in the case of the Committee, the guidelines of the Company's Board of Directors for the organization and management of the Plan and of the grants of options. It may also, at any time: (i) alter or extinguish the Plan; (ii) establish the regulations applicable to unforeseen circumstances; (iii) postpone, but never anticipate, the deadline for the exercise of the options in effect; and (iv) anticipate the vesting period of the options in effect. The Board of Directors or the Committee, as the case may be, may periodically create Share Option Programs (Programs) for the Company, in which the following will be defined: (i) beneficiaries; (ii) total number of the Company's shares granted; (iii) acquisition price; (iv) the initial vesting period during which the option cannot be exercised; (v) the terms and deadlines for the exercise of the option, as well as the dates on which the rights resulting from the option will expire, subject to the Plan regulations; (vi) possible restrictions to the shares received upon the exercise of the option; and (vii) provisions on penalties. When options are granted under the Plan, each Beneficiary must enter into with the Company a Call Option Agreement, which contains the specific and individual conditions of each grant, such as number of shares the Beneficiary is entitled to acquire upon the option vesting, the strike price, and the term in which options can be vested. On November 27, 2014, the Board of Directors meeting approved the third Program (Program 2014). The program totals up to 1,756,000 options divided into two equal batches. After the departure of some beneficiaries in 2015 the program now totals 1,416,000 shares program R$ Thousand Lot Number of outstanding options 06/30/2015 Exercise Price Exercise Year Price adjusted based on IGPM through 21/31/2015 Grant date Option price Total options value thousand , /27/ , /27/ Total Apropriate expenduture The Company acquired share to Program 2014 by average price of R$ 14,88. The first lot can be exercised on the period of January 1 until December 31, 2016 and the second lot can be exercised on the period of January 1 until December 31, The exercise price of the first and second lots, was defined at R$ 2.44, adjusted based on the IGPM index from November 27, If the options were exercised at December 31, 2015, the effect on equity and profit or loss would be an expense of R$ 8,808 for each lot, as shown below: Plan/Lot Outstanding share by lot Purcashe price by the company Exercise price at 12/31/2015 Company's expense by lot related to the purchase cost. Plan 2014/Lot 1 708, ,808 Plan 2014/Lot 2 708, ,808 As the Company purchased shares to cover options eventually exercised, there will be no dilution of stockholders' interest upon the exercise of options. 65

67 33 EVENTS AFTER THE REPORTING PERIOD On January 4, 2016, an agreement was executed by the Company for the acquisition of 50% of the shares, for the amount of R$300, from Hit Tecnologia em Saúde Ltda, as authorized by the Board of Directors at the annual meeting held on December 15, The investee is engaged in the wholesale of equipment and IT-related supplies; provision of system development, IT solution and healthcare technology services; manufacturing and wholesale of IT equipment and products and medical equipment; manufacturing and wholesale of laboratory products and in vitro diagnosis kits; lease of equipment and software for the medical area and laboratory equipment; import and export of IT products in the healthcare area, medical and laboratory equipment and in vitro diagnosis kits. With respect to accounting policies, the investment will be treated by the Company as joint venture, and the investment amount will be increased or decreased upon the recognition of the investor s interest in the profit or loss for the year generated by the investee after the acquisition, under the equity method, in accordance with the provisions contained in CPC 18 - Investment in Associates, Subsidiaries and Joint Ventures. The Company will identify and measure on the acquisition date the goodwill based on expected future earnings or the gain arising from bargain purchase, using the fair value of its interest in the investee, as prescribed by CPC 15 Business Combinations. 66

68 POSITIVO INFORMÁTICA S.A MANAGEMENT REPORT MESSAGE TO SHAREHOLDERS The year 2015 will be remembered as one of the most challenging in the history of Positivo Informática. The recession in Brazil and the instability of the exchange rate significantly affected profitability and demand in the hardware devices market. These required the Company to adopt strict measures to protect cash flow, improve operational cost indicators and incentivize the diversification of revenue through the introduction of new businesses, brands, sales channels and geographical markets. The Company's commitment to achieve these goals was one of the main legacies of The effects of the economic crisis impacted the size of the Brazilian computer market, which is highly linked to the dynamics of credit and consumer confidence, the exchange rate, and public and private sectors investments. In 2015, virtually all the factors that influence the performance of the segment showed adverse trends, causing the market to register a volume of only 6.6 million PCs, down 36% from 2014, which it was incrementally throughout the year, reaching down 48% in 4T15, according to the International Data Corporation (IDC). The severity of the contraction in demand was not foreseen by the major market players, causing an accumulation of inventory in the industry and difficulty for manufacturers to pass through the exchange rate variations against the dollar, which affects 90% of the product costs. Given this scenario, the Company has taken steps to combat the accumulation of excess inventory, utilizing more conservative demand forecasting criteria and selling off on older inventory, favoring the generation of cash for the period, while temporarily sacrificing margins. Another measure implemented in 2015 with a focus on cash generation was the plan to monetize tax assets. This project involved the merger of the subsidiary Positivo Informática da Amazônia Ltda in September, followed by the relocation of the entire production of PCs and tablets from Curitiba to a new factory in Manaus, which was inaugurated in November. The Company expects the new factory arrangement will allow a significant cash inflow in the coming years, in addition to manufacturing efficiencies. The management of operational efficiency was also a focus in The Company opted for the deactivation of Ilhéus (BA) plant, generating indirect savings in production costs and better use of the synergies with other plants. In the post-sales area, unit efficiency gains, in the order of 25%, were achieved by optimizing the costs of parts distribution, centralizing repair services for large clients and reducing the cost of consumer disputes. In the administrative area, the workforce was downsized in order to make the Company s fixed structure simpler and more inexpensive. On the sales front, Positivo Informática ended 2015 with a 14.7% share of the computer market in Brazil, according to IDC, an unchanged level compared to previous years. The highlight among PCs was the licensing by the Company of VAIO products in Brazil, bringing back to the local market one of the most admired brands for discerning consumers worldwide. The biggest gains were seen in the mobile phones market. Sales exceeded 1 million devices, an increase of 127% over This volume ensured a 2.2% market share for the year, according to IDC, in an upward trend, indicating strong prospects for the growth of market share in Another highlight was the launch of the Quantum business unit, focused on direct sales of high-end smartphones, opening a new target market for the Company. The first device released under the new brand, called Quantum GO, had a surprising level of acceptance among consumers and industry media, earning an independent community of fans and a series of favorable reports highlighting its quality and value for money.

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