Financial Statements Ecorodovias Infraestrutura e Logística S.A.

Transcription

1 Financial Statements Ecorodovias Infraestrutura e Logística S.A. with Independent Auditor s Report

2 Ecorodovias Infraestrutura e Logística S.A. Financial statements Contents Independent auditor s report on financial statements... 1 Financial statements Statements of financial position... 9 Statements of profit or loss Statements of comprehensive income (loss) Statements of changes in equity Statements of cash flows Statements of value added Notes to financial statements... 17

3 A free translation from Portuguese into English of independent auditor s report on individual and consolidated financial statements prepared in Brazilian currency in accordance with accounting practices adopted in Brazil and the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) Independent auditor s report on individual and consolidated financial statements The Shareholders, Board of Directors and Officers Ecorodovias Infraestrutura e Logística S.A. São Paulo - SP Opinion We have audited the individual and consolidated financial statements of Ecorodovias Infraestrutura e Logística S.A. ( Company ), identified as Company and Consolidated, respectively, which comprise the statement of financial position as at December 31, 2017 and the statements of profit or loss, of comprehensive income (loss), of changes in equity, and of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting practices. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the individual and consolidated financial position of Ecorodovias Infraestrutura e Logística S.A. as at December 31, 2017, its individual and consolidated financial performance and its individual and consolidated cash flows for the year then ended, in accordance with accounting practices adopted in Brazil and the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). Basis for opinion We conducted our audit in accordance with Brazilian and International standards on auditing. Our responsibilities, under those standards, are further described in the Auditor s responsibilities for the audit of individual and consolidated financial statements" section of our report. We are independent of the Company and its subsidiaries and comply with the relevant ethical principles set forth in the Code of Professional Ethics for Accountants, the professional standards issued by the Brazil s National Association of State Boards of Accountancy (CFC) and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to support our opinion. 1 Uma empresa-membro da Ernst & Young Global Limited

4 Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current year. Those matters were addressed in the context of our audit of the overall individual and consolidated financial statements, and to form our opinion on these individual and consolidated financial statements. Therefore, we do not express a separate opinion on those matters. For each issue below, a description of how our audit addressed the matter, including any comments on the results of our procedures, is presented in the context of the overall financial statements. We fulfilled the responsibilities described in "Auditor's responsibilities for the audit of the individual and consolidated financial statements", including those relating to these significant audit issues. As such, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our procedures, including those performed to address the issues below, provide the basis for our audit opinion on the Company's financial statements. Realization of deferred income and social contribution tax assets of Ecoporto Santos S.A. Ecoporto Santos S.A. ( Ecoporto ) recognizes amounts related to income and social contribution taxes on (i) income and social contribution tax losses carryforward, and (ii) temporary differences arising from differences between the tax bases of assets and liabilities and their corresponding carrying amounts. At December 31, 2017, the amount of deferred tax assets presented in the financial statements is R$233,739 thousand (R$206,689 thousand at December 31, 2016), net of the provision for impairment recorded of R$244,010 thousand as of December 31, For 2017, the Company performed impairment tests and did not identify any adjustments. Ecoporto supports the recoverability of deferred taxes through projections of future taxable profits for the following ten years, discounted to present value. These projections are based on the review of subsidiary's business plan and on assumptions for the generation of future taxable profits of the port segment, subject to legal limitations. Such projections include uncertainties and professional judgment that may not materialize in the future, which can change the realization term and plan. This matter was considered a key audit matter given the materiality of amounts involved and the uncertainty inherent in this type of estimate and in the judgment necessary exercised by management in determining the assumptions and projecting future profits. How our audit has addressed this matter: Our audit procedures included, among others: (i) involvement of specialists to help us evaluate Ecoporto business plans; (ii) evaluation of assumptions and methodologies used by management in relation to estimated future taxable profits, and discounts rate applied; (iii) evaluation of projections for realization of referred to tax credits considering Ecoporto business plan; and (iv) evaluation of whether the business plan considered by the Company to prepare the projections was duly approved by the 2 Uma empresa-membro da Ernst & Young Global Limited

5 Board of Directors. In addition, we evaluated the respective disclosures in the financial statements, included in the Notes. Based on the result of the audit procedures performed on the recoverability of the asset, which is consistent with management's assessment, we consider that the recoverable amount criteria and assumptions for the respective Ecoporto's assets, as well as the respective disclosures in Notes 7 and 15, are acceptable in the context of the overall financial statements. Revenue recognition in the port and logistics segments Service rendering for certain agreements in the port and logistics segments involve multiple-element agreements, such as port operation, storage and logistics, and imply a more complex segregation and measurement of fair value of these services. The Company also estimates and records revenues on an accrual basis. However those estimates consider the past three months of billing, multiplied by the average volume (time of service rendered), which involve management judgment and are based on historical or contractual data. The revenue recognition criteria and amounts recognized (total revenue) in the port segment are disclosed in Note 25. The logistics segment is presented as assets held for sale. This matter was considered a key audit matter given the materiality of amounts involved, and the complexity of the process necessary to determine and record revenues from logistics and port services, which involves professional judgment by management, accounting estimates and appropriate evaluation of contractual conditions. How our audit has addressed this matter: In order to confirm whether revenues were properly recognized, our audit procedures included, among others: (i) evaluation of the adequacy of agreements and their multiple elements within the revenue recognition accounting policies of the Company and its subsidiaries, and adequacy thereof in relation to current accounting standards; (ii) evaluation of the design and operations of internal controls implemented by the Company for the revenue recognition process; (iii) documental test, on a sample basis, of service transactions conducted before and after year end, in order to check whether revenue was recognized for the appropriate reference period and whether revenues recorded were accurate. In addition, we evaluated the respective disclosures in the financial statements. Based on the audit procedures performed in the revenue recognition test in the port and logistics segments, which is consistent with management's assessment, we believe that the revenue recognition criteria and assumptions of the Company, as well as the respective disclosures, are acceptable, in the context of the overall financial statements. 3 Uma empresa-membro da Ernst & Young Global Limited

6 Capitalization of expenditures in concession intangible assets Road service concession arrangements represent the right to use the infrastructure, based on accounting standard ICPC 01 (R1) Service Concession Arrangements, which provides for the obligation to build and/or operate the infrastructure (concession intangible asset) to render utility services on behalf of the grantor, under the conditions set forth in the arrangement. The criteria to recognize these amounts, and amounts invested in the infrastructure, are disclosed in Notes 4, 14 and 21. This was considered a key audit matter, as capitalization in concession intangible assets involves the use of assumptions, judgment and maintenance of controls by road service concession managements, as such capitalization may not be in compliance with the obligations set forth in the service concession arrangement and, if it is, may be recorded at inappropriate amounts or be unduly capitalized. How our audit has addressed this matter: To confirm whether these assets were appropriately recorded and controlled, our audit procedures included, among others: (i) evaluation of adequacy of capitalization policies of investees concession intangible assets, including those related to the percentage-of-completion of work method; (ii) documental tests on additions to concession intangible assets, including validations with the engineering area of measurements made in accordance with the percentage of completion, crosschecking against service agreements and/or related invoices; (iii) evaluation of the nature of expenditures capitalized as concession intangible assets, considering the criteria and requirements established in the service concession arrangement, and (iv) physical inspection, on a sample basis, of work performed. In addition, we evaluated the respective disclosures in the financial statements. Based on the result of the audit procedures carried out on the expense capitalization test in concession intangible assets, which is consistent with management's assessment, we consider acceptable the expense capitalization policies considering the criteria and requirements established in the concession arrangement to support the judgments, estimates and information included in the context of the overall financial statements. Transactions with related parties The Company and its subsidiaries conduct transactions with related parties of different kinds, which include intercompany loan agreements, future capital contribution, and operational transactions, such as construction and road maintenance services, among others. Significant transactions, balances and contractual conditions are disclosed in Note 18. This was considered a key audit matter as these transactions are important, may be agreed or recorded for inappropriate amounts with relation to those established by the Company, outside the reference period, or not approved by the Company s governance bodies, particularly in asset construction services. 4 Uma empresa-membro da Ernst & Young Global Limited

7 How our audit has addressed this matter: To confirm whether these transactions were appropriately recorded and controlled, our audit procedures included, among others: (i) evaluation of the Company s related-party transaction policy and its application in significant transactions conducted for the year; (ii) analysis of supporting documentation for material transactions, including inspection of agreements and calculations prepared by management; (iii) checking of transaction approval by the Board of Directors, in accordance with the policy established by the Company; and (iv) confirmation letter procedures with the counterparties of the operations on the balances and agreements in force for the year ended December 31, Based on the result of the audit procedures carried out on the transactions with related parties, which is consistent with management's assessment, we consider acceptable the recognition and measurement policies for transactions with related parties of the Company to support the judgments, estimates and information included in the context of the overall financial statements. Other matters Statements of value added The individual and consolidated statements of value added (SVA) for year ended December 31, 2017, prepared under the responsibility of Company management, and presented as supplementary information for purposes of IFRS, were submitted to audit procedures conducted together with the audit of the Company s financial statements. To issue our opinion, we evaluated if these statements are reconciled to the financial statements and accounting records, as applicable, and if their form and content comply with the criteria defined by CPC 09 Statement of Value Added. In our opinion, these statements of value added were prepared fairly, in all material respects, in accordance with the criteria defined in above mentioned technical pronouncement, and are consistent in relation to the overall individual and consolidated financial statements. Other information accompanying the individual and consolidated financial statements and auditor s report Company management is responsible for such other information that is included in the Management Report. Our opinion on the individual and consolidated financial statements does not included the management s report and we do not express any audit conclusion on this report. In connection with the audit of the individual and consolidated financial statements, our responsibility is to read the management s report and consider whether it is significantly consistent with the financial statements or, based on our understanding of the audit, presents any material misstatement. If, based on the work performed, we conclude that there is any material misstatement in management s report, we are required to report this fact. We have nothing to report in this regard. 5 Uma empresa-membro da Ernst & Young Global Limited

8 Management and governance s responsibility for the individual and consolidated financial statements Management is responsible for the preparation and fair presentation of the individual and consolidated financial statements in accordance with accounting practices adopted in Brazil, and International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the individual and consolidated financial statements, management is responsible for assessing the Company s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no other realistic alternative but to do so. Those in charge of the Company s and its subsidiaries governance are responsible for overseeing the process of preparation of the financial statements. Auditor s responsibilities for the individual and consolidated financial statements Our objectives are to obtain reasonable assurance about whether the individual and consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Brazilian and International standards on auditing will always detect material misstatements when they exist. Misstatements may derive from fraud or error and are deemed material, individually or taken as a whole, whenever they can influence, within a reasonable perspective, the economic decisions of users made on the basis of referred to financial statements. As part of an audit in accordance with the Brazilian and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess risks of material misstatements of the individual and consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than one resulting from error, as fraud may involve override of internal controls, collusion, forgery, intentional omissions or misrepresentations. We obtain an understanding of the internal controls relevant to the audit to plan audit procedures appropriate to the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s and its subsidiaries internal controls. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 6 Uma empresa-membro da Ernst & Young Global Limited

9 Conclude on the appropriateness of management s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast substantial doubt as to the Companies and its subsidiaries ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the individual and consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Company and its subsidiaries to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the individual and consolidated financial statements represent the corresponding transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal controls that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Of the matters communicated to those in charge of governance, we determine those that are considered most significant in the audit of the financial statements for the current year and, therefore, constitute key audit matters. We describe these matters in our audit report unless the law or regulation has prohibited their public disclosure or when, in extremely rare circumstances, we determine that the issue should not be included in our report because the adverse consequences of such disclosure may, within a reasonable perspective, overcome the benefits of communication to the public interest. São Paulo, February 22, ERNST & YOUNG Auditores Independentes S.S. CRC-2SP034519/O-6 Luiz C. Passetti Accountant CRC-1SP144343/O-3 7 Uma empresa-membro da Ernst & Young Global Limited

10 A free translation from Portuguese into English of individual and consolidated financial statements prepared in Brazilian currency in accordance with accounting practices adopted in Brazil and the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) Ecorodovias Infraestrutura e Logística S.A. Statements of financial position (In thousands of reais - R$) Note Company Consolidated 12/31/ /31/ /31/ /31/2016 Assets Current assets Cash and cash equivalents 8 8,188 3,096 1,607, ,504 Marketable securities ,234 61,748 Trade accounts receivable , ,790 Taxes recoverable 27,176 33,337 55,686 60,882 Dividends and interest on equity receivable 8,801 34, Prepaid expenses ,977 18,194 Related parties 18 1,324 38, Other receivables 3, ,064 12,351 Assets held for sale 6.b 42, , ,248 Total current assets 91, ,784 2,139,393 1,150,717 Noncurrent assets Marketable securities ,602 7,371 Deferred taxes 15.a , ,784 Judicial deposits 11 2,299 2, , ,013 Related parties 18 38, Other receivables - - 7,598 8,322 Prepaid expenses , Investments: In subsidiaries and affiliates 12.a 1,294, ,056 1,071 1,017 Goodwill 12.a 382, , Property and equipment 13 2,975 3, , ,182 Intangible assets ,539,727 4,278,861 Total noncurrent assets 1,721,361 1,388,743 5,676,365 5,452,690 Total assets 1,812,428 1,498,527 7,815,758 6,603,407 8

11 Note Company Consolidated 12/31/ /31/ /31/ /31/2016 Liabilities and equity Current liabilities Trade accounts payable 520 1,784 89,544 76,626 Loans and financing , ,401 Debentures ,074, ,535 Taxes, charges and contributions payable 229 3,000 36,075 35,244 Social and labor liabilities 10,880 10,873 67,677 59,143 Tax Recovery Program REFIS - - 4, Related parties ,666 82,440 15,594 6,747 Concession rights payable ,488 25,014 Income and social contribution taxes payable ,551 32,516 Provision for maintenance ,503 87,531 Provision for future construction works ,568 38,124 Dividends payable Other accounts payable 2,346 2,062 21,177 11,572 Liabilities held for sale 6 b. - 6, , ,576 Total current liabilities 428, ,873 1,759,574 1,656,701 Noncurrent liabilities Loans and financing , ,231 Debentures 17 84,053-4,340,390 3,426,093 Tax Recovery Program REFIS Related parties , , Deferred taxes 15.a ,767 20,136 Provision for losses due to tax, labor and civil contingencies , ,368 Provision for maintenance , ,541 Provision for future construction works ,698 33,768 Concession rights payable ,427 Other accounts payable ,720 39,595 Total noncurrent liabilities 725, ,690 5,299,614 4,374,159 Equity Capital 24.a 360, , , ,900 Income reserve legal 24.c 27,415 7,791 27,415 7,791 Income reserve - additional dividends proposed 242, , , ,014 Capital reserve - stock option plan 51,472 50,285 51,472 50,285 Capital reserve disposal of noncontrolling shareholder interest 5,441 5,441 5,441 5,441 Treasury shares 24.e (29,467) (29,467) (29,467) (29,467) Allocated to controlling shareholders 658, , , ,964 Interest of noncontrolling shareholders in equity of subsidiaries 24.f ,947 72,583 Total equity 658, , , ,547 Total liabilities and equity 1,812,428 1,498,527 7,815,758 6,603,407 See accompanying notes. 9

12 Ecorodovias Infraestrutura e Logística S.A. Statements of profit or loss Years ended (In thousands of reais - R$, except basic/diluted earnings per share) Note Company Consolidated 12/31/ /31/ /31/ /31/2016 Net revenue ,200,704 2,828,996 Cost of services rendered (1,643,157) (1,545,436) Gross profit - - 1,557,547 1,283,560 Operating income (expenses) Selling expenses (134,345) (120,241) General and administrative expenses 26 (28,132) (25,289) (225,131) (90,520) Equity pickup 12.a 533, , (8) Interest on equity received 12.a 10,136 21, Amortization of goodwill investments 12.a (17,353) (21,983) - - Impairment investment Ecoporto - (300,997) - (300,997) Other income (expenses), net ,558 2,678 Operating income (loss) before finance income (costs) 498,277 (159,274) 1,211, ,472 Finance income (costs) Finance income 28 13,269 13, , ,537 Finance costs 28 (114,702) (130,287) (578,311) (692,897) (101,433) (116,342) (455,434) (554,360) Operating income (loss) for the year before income and social contribution taxes 396,844 (275,616) 756, ,112 Income and social contribution taxes Current 15.b 3,295 - (327,341) (278,924) Deferred 15.b (8,924) (201,021) 3, (336,265) (479,945) Income (loss) for the year from continuing operations 400,139 (275,321) 419,984 (259,833) Loss for the year resulting from discontinued operations 6 (7,653) (689,301) (7,653) (689,301) Net income (loss) for the year 392,486 (964,622) 412,331 (949,134) Attributable to: Controlling shareholders 392,486 (964,622) 392,486 (964,622) Noncontrolling interests ,845 15, ,486 (964,622) 412,331 (949,134) Earnings (loss) per share Basic income (loss) for the year attributable to controlling common shareholders (1.73) Diluted income (loss) for the year attributable to controlling common shareholders (1.71) Earnings (loss) per share resulting from continuing operations Basic income (loss) for the year attributable to controlling common shareholders (0.47) Diluted income (loss) for the year attributable to controlling common shareholders (0.46) See accompanying notes. 10

13 Ecorodovias Infraestrutura e Logística S.A. Statements of comprehensive income (loss) Years ended (In thousands of reais - R$) Company Consolidated 12/31/ /31/ /31/ /31/2016 Net income (loss) for the year 392,486 (964,622) 412,331 (949,134) Other comprehensive income (loss) Comprehensive income (loss) for the year 392,486 (964,622) 412,331 (949,134) Attributable to: Controlling shareholder 392,486 (964,622) Noncontrolling shareholder 19,845 15,488 See accompanying notes. 11

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15 Ecorodovias Infraestrutura e Logística S.A. Statements of cash flows Years ended (In thousands of reais - R$) Company Consolidated 12/31/ /31/ /31/ /31/2016 Cash flow from operating activities Net income (loss) for the year from continuing operations 400,139 (275,321) 419,984 (259,833) Discontinued operations net of cash (54,551) (99,449) (65,813) (119,584) Adjustments to reconcile net income (used in) generated by operating activities: Depreciation and amortization , ,966 Goodwill amortization 17,355 21, Capitalization of interest - - (18,472) (6,628) Premium - stock option plan 728 1,671 1,187 2,768 Stock option premium non-controlling shareholders Loss/disposal of property and equipment and intangible assets - 2 7,924 2,472 Financial charges and monetary restatement on loans, financing and debentures 4,108 55, , ,765 Monetary variation on concession rights - - (1,220) 4,497 Provision for losses due to tax, labor and civil contingencies - - 9,928 15,416 Monetary restatement on provision for civil, labor and tax contingencies ,850 5,967 Provision for maintenance and provision for construction works , ,729 Monetary restatement of provision for maintenance and provision for construction works ,770 30,135 Income from marketable securities - - (6,723) (7,290) Allowance for doubtful accounts (ADA) (2,177) Equity pickup and interest on equity received (543,162) (188,433) (54) 8 Withdrawal of judicial deposits (55) 5,401 4,719 Monetary restatement on judicial deposits (124) (144) (10,580) (3,329) Deferred taxes (295) 8, ,022 Interest on intercompany loans receivable (4,787) Interest on intercompany loans payable 40,877 (35,756) - - Impairment goodwill investment Ecoporto 300, ,997 Concession rights payable ,177 53,079 Provision for income and social contribution taxes , ,924 (Increase) decrease in operating assets: Trade accounts receivable - - 5,693 4,002 Related parties customers 3,587 (38,578) (582) (111) Taxes recoverable 6,161 1,906 5,196 3,153 Prepaid expenses 3 4 (3,444) (9,619) Judicial deposits paid (27) - (9,278) (10,041) Other receivables (3,314) 578 (12,990) 12,283 13

16 Ecorodovias Infraestrutura e Logística S.A. Statements of cash flows (Continued) Years ended (In thousands of reais - R$) Company Consolidated 12/31/ /31/ /31/ /31/2016 Increase (decrease) in operating liabilities: Trade accounts payable (1,264) , Social and labor liabilities 7 (3,079) 8,534 (4,195) Taxes, charges and contributions payable (2,771) 2, ,709 Related parties suppliers - 82,351 8,847 1,408 Payment of provision for civil, labor and tax contingencies - - (15,938) (11,353) Maintenance payments - - (147,017) (100,072) Payments of construction works - - (11,454) (25,139) Other accounts payable ,321 1,503 Concession rights payable - - (26,541) (26,515) Income and social contribution taxes - - (335,306) (261,731) Net cash (used in) generated by operating activities (135,656) (172,079) 1,285,785 1,126,594 Cash flow from investing activities Dividends and interest on equity received 509, , Capital contribution from noncontrolling shareholder ,060 4,200 Payment of dividends to noncontrolling shareholders (7,647) - (12,562) (3,126) Acquisition of property and equipment and intangible assets (181) (356) (596,117) (492,193) Related parties intercompany loans - 30, Investment in subsidiaries capital contribution (245,839) (210,985) - - Net cash (used in) generated by investing activities 255, ,456 (590,619) (491,119) Cash flow from financing activities Related parties intercompany loans 40, , Concession rights payable - - (45,369) (42,110) Marketable securities - - 6,006 (18,769) Loans, financing and debentures raised third parties 79,945-1,595, ,331 Payment of loans, financing and debentures - (625,782) (537,998) (615,461) Related parties Tax Recovery Program REFIS - - 3,404 (8,146) Payment of dividends and interest on equity (235,014) (146,538) (235,014) (146,538) Interest paid - (44,870) (462,910) (459,181) Net cash (used in) financing activities (114,727) (153,154) 323,309 (818,874) Net increase (decrease) in cash and cash equivalents 5,092 (59,777) 1,018,475 (183,399) Cash and cash equivalents at beginning of year 3,096 62, , ,903 Cash and cash equivalents at end of year 8,188 3,096 1,607, ,504 Net increase (decrease) in cash and cash equivalents 5,092 (59,777) 1,018,475 (183,399) See accompanying notes. 14

17 Ecorodovias Infraestrutura e Logística S.A. Statements of value added Years ended (In thousands of reais - R$) Company Consolidated 12/31/ /31/ /31/ /31/2016 Turnover From toll collection - - 2,533,994 2,261,451 From construction works , ,408 Port-related , ,502 Ancillary ,746 83,525 Bought-in inputs Cost of services - - (1,141,324) (974,943) Materials, energy, third-party services and other (6,484) (8,931) (78,851) (78,531) Gross value added (used) (6,484) (8,931) 2,272,733 2,033,412 Depreciation and amortization (674) (658) (418,506) (339,966) Amortization of investments (17,355) (21,983) - - Net value added produced (used) by the Company (24,513) (31,572) 1,854,227 1,693,446 Value added received in transfer Finance income 13,269 13, , ,537 Equity pickup 543, , (8) Other 602 (300,435) 2,225 (298,320) 557,033 (98,057) 125,156 (159,791) Total value added payable 532,520 (129,629) 1,979,383 1,533,655 Payment of value added 532,520 (129,629) 1,979,383 1,533,655 Personnel 20,073 14, , ,643 Direct compensation 17,735 13, , ,189 Benefits 1, ,870 51,252 Unemployment Compensation Fund (FGTS) ,096 18,202 Taxes, charges and contributions (3,295) (295) 617, ,834 Federal (3,295) (295) 475, ,335 State Local , ,302 Debt remuneration 115, , , ,011 Interest 71,625 54, , ,426 Lease 901 1,225 33,277 30,114 Other financial charges 43,077 75, , ,471 Equity remuneration 400,139 (275,321) 419,984 (259,833) Mandatory minimum dividends Noncontrolling interests ,845 15,488 Legal reserve 19,464 7,791 19,624 7,791 Profit or loss from discontinued operations 7, ,301 7, ,301 Absorption of loss through legal reserve - (160,791) - (160,791) Absorption of loss through capital - (959,649) - (959,649) Interim dividends paid 130,000 43, ,000 43,013 Dividends paid (payable) for the following year 242, , , ,014 See accompanying notes. 15

18 Notes to financial statements 1. Operations EcoRodovias Infraestrutura e Logística S.A. ( EcoRodovias, EcoRodovias Infraestrutura or Company ) is a joint-stock corporation listed on B3 S.A. - Brasil, Bolsa, Balcão, and the Company shares are traded under the ticker ECOR3. The Company is mainly engaged in operating road, port, and logistics service concession assets, and companies rendering services related to such activities. EcoRodovias current portfolio includes seven road service concession arrangements, one logistics platform (Ecopátio Cubatão) and one port asset (Ecoporto) in six states, located in the main commercial roads of Southern and Southeastern Brazil. The Company is headquartered at Rua Gomes de Carvalho, conjuntos 31 e 32, in the City and State of São Paulo (SP). The Company s direct and indirect subsidiaries ( EcoRodovias Group ) are listed in Note 2. Conclusion and issue of these financial statements were approved by the Company s Executive Board on February 19, Presentation of financial statements 2.1. Statement of compliance and basis of preparation The Company s financial statements comprise: a) Consolidated financial statements The Company s consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB), and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), implemented in Brazil through the Brazilian FASB (CPC) and its technical interpretations (ICPC) and guidance (OCPC), approved by the Brazilian Securities and Exchange Commission (CVM). b) Individual financial statements - Company The Company s individual financial statements were prepared in accordance with accounting practices adopted in Brazil, which comprise provisions set forth in the Brazilian Corporation Law (Law No. 6406/76), as amended by Laws No.11638/07 and No.11941/09, and accounting pronouncements, interpretations and guidance issued by the Brazilian Financial Accounting Standards Board (CPC), approved by the Brazilian Securities and Exchange Commission (CVM). 16

19 2. Presentation of financial statements (Continued) 2.1. Statement of compliance and basis of preparation (Continued) The financial statements were prepared based on historical cost, except for certain financial instruments measured at fair value. Significant accounting practices adopted by the Group are described in specific notes that relate to the items presented, and the ones that generally apply to different aspects in the financial statements are described below: The Company's financial statements present comparative information for the prior year. In addition, the Company considered the guidance issued by Technical Guidance OCPC07, issued by CPC in November 2014, in the preparation of its financial statements. As such, the relevant information specific to the financial statements is being evidenced and corresponds to that used by management in its management Basis of consolidation and investments in subsidiaries An affiliate is an entity on which the Company exercises significant influence. Significant influence is the power of participating in the decisions on the investees operating policies; however, it does not mean to control or have joint control on these policies. Joint venture is a joint business on which the parties that hold common control on the business have rights on the business net assets. Common control is the contractually agreed sharing of the business control that exists only when decisions on the significant activities require the unanimous consent from the parties that share the control. The Company s investment in its affiliate and joint venture is recorded under the equity method. The financial statements of the affiliates are prepared for the same reporting year as that of the Company. Whenever necessary, adjustments are made so that accounting practices are in line with those adopted by the Company. 17

20 2. Presentation of financial statements (Continued) 2.2. Basis of consolidation and investments in subsidiaries (Continued) The interest held in subsidiaries and jointly-controlled entities, all of which are domiciled in Brazil, is as follows: 12/31/ /31/2016 Core business activity Direct subsidiaries: Ecorodovias Concessões e Serviços S.A % % Interest in other companies, either as an owner or shareholder, in addition to providing administrative, financial, human resources, information technology, engineering, and corporate purchases services. EIL01 Participações Ltda % % Interest in other companies, either as an owner or shareholder. Ecoporto Santos S.A % % Port operations, handling and storage of import and export cargo in the port of Santos. Termares - Terminais Marítimos Especializados Ltda % % Handling and storage of import and export cargo under customs control. ELG-01 Participações Ltda % % Interest in other companies, either as an owner or shareholder. 12/31/2016 Core business activity Jointly-controlled entities: Consórcio Rota do Horizonte S.A % 20.00% Exploration of the Northern Beltway in the metropolitan region of Belo Horizonte 12/31/ /31/2016 Core business activity Indirect subsidiaries: Subsidiaries via Ecorodovias Concessões e Serviços S.A. Concessionária Ecovias dos Imigrantes S.A % % Operation under concession of the highway system consisting of the Anchieta-Imigrantes System. Concessionária das Rodovias Ayrton Senna e Carvalho Pinto S.A. - Ecopistas % % Operation through collection of tolls and subsidiary revenues under the terms and limits of the service concession arrangement. Concessionária Ecovia Caminho do Mar S.A % % Operation under concession of Lot 006 of the Highway Concession Program of the State of Paraná. Rodovia das Cataratas S.A. - Ecocataratas % % Operation under concession of Lot 003 of the Highway Concession Program of the State of Paraná. Empresa Concessionária de Rodovias do Sul S.A. - Ecosul 90.00% 90.00% Operation under concession of certain highway stretches comprising of the so-called Pelotas Hub. ECO101 Concessionária de Rodovias S.A. Concessionária Ponte Rio-Niterói S.A. Ecoponte 58.00% 58.00% Operation of BR-101 ES/BA Highway System under concession % % Operation of BR-101/RJ Highway System under concession access road to Ponte Presidente Costa e Silva (Niterói) - - access to RJ-071 (Linha Vermelha), Ponte Rio-Niterói. 18

21 2. Presentation of financial statements (Continued) 2.3. Service concession arrangements The Company s main service concession arrangements presented by entity are as follows: I) Concessionária Ecovias dos Imigrantes S.A. Runs the Anchieta-Imigrantes highway system, which is km long, which consists basically of the following highways: (a) Anchieta highway (SP from km 9.7 to km 65.6); (b) Imigrantes highway (SP from km 11.5 to km 70.0); (c) Planalto road link (SP km long); (d) Baixada road link (SP km long); (e) Padre Manoel da Nóbrega highway (SP-055/170) - from km to km 292.2); and (f) Cônego Domênico Rangoni highway (SP-055/248 - from km 0 to km 8.4 and km to km This service concession arrangement was recorded as an intangible asset and will be effective through October II) Concessionária das Rodovias Ayrton Senna e Carvalho Pinto S.A. - Ecopistas Ecopistas operates a set of highway lanes of Ayrton Senna-Carvalho Pinto corridor, related rights of way and buildings, facilities and equipment therein, which is km long. This arrangement was recorded as an intangible asset and will be effective through June III) Concessionária Ecovia Caminho do Mar S.A. Operates a highway totaling km, comprising: (a) BR-277 highway stretch between the City of Curitiba and the Port of Paranaguá, which is 85.7 km long; b) PR- 508 highway stretch linking BR-277 highway and the City of Matinhos, which is 32 km long; and c) PR-407 highway stretch linking BR-277 Highway and Praia de Leste, which is 19 km long. This arrangement was recorded as an intangible asset and will be effective through IV) Rodovia das Cataratas S.A. - Ecocataratas Operates a highway totaling km, located between the cities of Guarapuava and Foz do Iguaçu, both in the State of Paraná. This arrangement was classified as intangible assets and is effective for 24 years (the concession expires on November 13, 2021). 19

22 2. Presentation of financial statements (Continued) 2.3. Service concession arrangements (Continued) V) Empresa Concessionária de Rodovias do Sul S.A. - Ecosul Operates the following highways and stretches: Highway Stretch Length (km) BR-116 Pelotas/Camaquã BR-116 Pelotas/Jaguarão BR-392 Pelotas/Rio Grande BR-392 Pelotas/Santana da Boa Vista The service concession arrangement term classified as intangible asset is estimated for March Upon concession termination, all reversible assets, rights and rewards related to the operation of the highway system shall return to the Granting Authority. The Company will be entitled to indemnification corresponding to the balance not amortized or depreciated of assets or investments, whose acquisition or execution, duly authorized by the Granting Authority, occurred in the last five years of the concession period. VI) ECO101 Concessionária de Rodovias S.A. Operates, under concession, BR-101 ES/BA Federal Highway System, between BA- 698 highway (access to the city of Mucuri, State of Bahia - BA) up to the border of Espírito Santo (ES) and Rio de Janeiro (RJ) States. The 25-year concession (from the date of assumption and transfer of assets on May 10, 2013) comprises the operation of the infrastructure and provision of recovery, public operation, maintenance, monitoring and upkeeping services, implementation of improvements and extension of the capacity of BR101/EX/BA highway systems, between BA-698 (access to Mucuri-BA) until the border of ES/RJ, remunerated by the toll collection and other sources of ancillary revenue. In the event that the concession is terminated, in May 2038, all reversible assets, rights and rewards related to the operation of the highway system shall return to the Granting Authority. On December 22, 2015, the Company's Board of Directors approved the transfer, through sale, of all of its 87,000,058 shares representing 58% of the capital of ECO101 Concessionária de Rodovias S.A. to its direct subsidiary Companhia Ecorodovias Concessões e Serviços S.A. 20

23 2. Presentation of financial statements (Continued) 2.3. Service concession arrangements (Continued) VII) Ecoporto Santos S.A. The lease agreement entered into between Companhia Docas do Estado de São Paulo - CODESP and Ecoporto Santos S.A. is a 25-year agreement. Five addenda to the agreement were entered into, however; such terms do not change the term of the agreement, which shall mainly expire on June 12, The Sixteenth Clause to the agreement provides for its extension duly requested up to 12 months prior to the expiration date. The Granting Authority may grant such extension to the extent that Ecoporto Santos has met all legal and contractual obligations. After the establishment of the new sector regulatory framework, the Granting Authority will become the Special Secretariat of Ports (SEP), recently merged into the Brazilian Department of Transportation, Ports and Civil Aviation (MTPAC), and the National Water Transportation Agency (ANTAQ) will be responsible for the inspection and regulation of the sector. Additionally, concerning the agreement extension, compliance with provisions of SEP Ordinance No. 349/2014 and ANTAQ Resolution No. 3220/2014 is deemed necessary, which require that Ecoporto Santos request be accompanied by an Investment Plan, and Environmental, Technical and Economic Feasibility Study (EVTEA), as well as by information required to evaluate compliance with existing contractual obligations. Ecoporto Santos requested contract extension, and instructed the process with relevant documentation. The investment plan was preliminarily approved by the MTPAC through Administrative Rule No. 702, of December 8, 2016, and submitted to ANTAQ for analysis and deliberation. Pursuant to current legislation, and MTPAC Administrative Ruling No. 702, management considers that the changes to recognize the right to extend the lease agreement are high, provided that Ecoporto performance is maintained, and considering ANTAQ Resolution No. 3220/2014 and SEP Administrative Ruling No. 349/2014, particularly the feasibility study for the new agreement period. Therefore, the public interest in the continuance of the activities will be maintained and Ecoporto Santos will rely on it. It should be noted that two class actions and (1st Federal Court of Santos Subsection), now at the 3rd Region Federal Regional Court, challenging the validity of the agreement and its addenda. 21

24 2. Presentation of financial statements (Continued) 2.3. Service concession arrangements (Continued) VII) Ecoporto Santos S.A. (Continued) In 2015, the Federal Regional Court of the 3 rd Region dismissed the appeal filed by the Company. The proceeding has been suspended for 180 days. After this period, there are appeals requesting clarification of decisions pending judgment by the 3rd Region Federal Regional Court. Those decisions, if sustained, shall be appealed in higher courts. Company management maintains its belief in the end result of the proceedings based on opinions of renowned attorneys and the results of administrative proceedings on the same issue. Decisions were handed down under Representation No / of the Court of Federal Auditors and ANTAQ Administrative Litigation Proceeding No / on the same issue, recognizing the possibility of an extension of the lease agreement. The amortization and depreciation term considers the extension of the concession for more than 25 years (up to 2048) and management assesses this scenario on an annual basis. VIII) Concessionária Ponte Rio-Niterói S.A. Ecoponte On May 18, 2015, the Company, through its subsidiary Concessionária Ponte Rio- Niterói S.A. Ecoponte, entered into a service concession arrangement for the operation of the infrastructure and provision of public operation, maintenance, monitoring and upkeeping services and implementation of improvements of the highway system of BR-101/RJ, remunerated by the toll collection within 30 years beginning June 1, 2015: an access road leading to Ponte Presidente Costa e Silva (in the city of Niterói) - access to RJ-071 (Linha Vermelha), Ponte Rio-Niterói. On December 22, 2015, the Company's Board of Directors approved the transfer, through sale, of all of its 120,000,000 shares representing 100% of the capital of Concessionária Ponte Rio-Niterói S.A. - Ecoponte to its direct subsidiary Companhia Ecorodovias Concessões e Serviços S.A Functional and reporting currency The financial statements of the parent company and its subsidiaries, included in the consolidated financial statements, are stated in Reais, currency of the principal economic environment in which the Companies operate ( functional currency ). 22

25 3. Summary of significant accounting practices Significant accounting practices described below were applied consistently for the years presented and for the individual financial statements of Company and Consolidated: a) Transactions and balances denominated in foreign currency Foreign currency-denominated transactions are translated into the Company s functional currency (the Real) by the exchange rate prevailing on the transaction dates. Account balances in the statement of financial position denominated in foreign currency are converted at the exchange rate prevailing at the dates of the statements of financial position. Exchange gains and losses arising from the settlement of these transactions and from the conversion of monetary assets and liabilities denominated in foreign currency are recognized in profit or loss for the year. b) Financial instruments i) Financial assets Financial assets are classified as: (i) financial assets at fair value through profit or loss; (ii) loans and receivables; (iii) investments held to maturity; or (iv) financial assets available for sale. The Company determines the classification of its financial assets upon initial recognition, when they become a party to the contractual provisions of the instrument. The Company s financial assets include cash and cash equivalents, trade accounts receivable, other receivables and financial instruments. Subsequent measurement Measurement of financial liabilities depends on their classification: Loans and receivables Loans and receivables include cash and cash equivalents, accounts receivable and other receivables. Loans and receivables are measured at amortized cost, using the effective interest rate method, less any impairment loss. Amortization of the effective interest method or finance costs (impairment loss) is presented under finance income (costs) in the statement of profit or loss. 23

26 3. Summary of significant accounting practices (Continued) b) Financial instruments (Continued) i) Financial assets (Continued) Subsequent measurement (Continued) Financial assets measured at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if acquired to be sold within short term. Financial assets at fair value through profit or loss are stated in the statement of financial position at fair value, and their corresponding gains or losses are recognized in the statement of profit or loss. Derecognition A financial asset is mainly derecognized when: The rights to receive cash flows from the asset have expired; The Company has transferred its rights to receive cash flows of the asset or has assumed an obligation to fully pay the cash flows received, without significant delay to a third party under a pass-through arrangement, and (a) the Company transferred substantially all risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all risks and rewards related to the asset, but has transferred control over the asset. At December 31, 2017, except for the share-based payment plan (phantom stock/restricted stock), there are no financial assets at fair value. Impairment of financial assets The Company assesses, at the dates of the statements of financial position, whether there is any objective evidence of impairment of the financial asset or of a group of financial assets, based on one or more events that have occurred after the initial recognition of the asset with impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. 24

27 3. Summary of significant accounting practices (Continued) b) Financial instruments (Continued) ii) Financial liabilities Financial liabilities are initially recognized at fair value plus, in the case of loans and financing, debentures and accounts payable, transaction cost directly attributable thereto. The Company's financial liabilities include trade accounts payable, other accounts payable, loans and financing, debentures and financial guarantee agreements. Subsequent measurement Subsequent measurement of financial liabilities depends on their classification, which can be as follows: Loans and financing After initial recognition, loans and financing subject to interest are subsequently measured at amortized cost, using the effective interest rate method. Gains and losses are recognized in the statement of profit or loss when liabilities are derecognized, and through the amortization process by the effective interest method. Financial guarantee agreements Financial guarantee agreements issued by the Company refer to agreements requiring the payment for purposes of reimbursement of the holder due to losses incurred when specified debtor fails to perform the due payment under the terms provided for in the debt instrument. Financial guarantee agreements are initially recognized as a liability at fair value, adjusted by transaction costs directly related to the guarantee issuance. Subsequently, the liability is measured based on the best estimate of expense required to settle the obligation existing at the statement of financial position date or in the amount recognized less amortization, whichever is higher. 25

28 3. Summary of significant accounting practices (Continued) b) Financial instruments (Continued) ii) Financial liabilities (Continued) Derecognition A financial liability is derecognized when the liability has been revoked, cancelled or has expired. When an existing financial liability is replaced by another of the same lender with substantially different terms, or the terms of an existing liability are significantly changed, this replacement or change is treated as derecognition of the original liability with recognition of a new liability, the difference in the respective carrying amount being recognized in the statement of profit or loss. iii) Financial instruments, net Financial assets and liabilities are stated net in the statement of financial position if, and only if, there is a current enforceable legal right to set off the amounts recognized and if there is the intention to offset or realize the asset and settle the liability simultaneously. Through December 31, 2017, there were no significant indemnities. c) Impairment of non-financial assets Management annually tests the net carrying amount of assets in order to determine whether there are any events or changes in economic, operating or technological circumstances that may indicate deterioration or impairment loss. When such evidence is identified and the net carrying amount exceeds the recoverable amount, a provision for impairment is set up to adjust the net carrying amount to the recoverable amount. The following criteria are applied to assess the impairment loss of specific assets: Goodwill paid on expected future profitability Impairment testing of goodwill is performed at least once a year (at December 31) or when circumstances indicate impairment loss due to devaluation of carrying amount. 26

29 3. Summary of significant accounting practices (Continued) c) Impairment of non-financial assets (Continued) Intangible assets Intangible assets with indefinite useful lives are tested for impairment on an annual basis at December 31, either individually or at the cash generating unit level, as applicable or when circumstances indicate impairment of the carrying amount. d) General provisions Provisions are recorded when the Company has a present (legal or constructive) obligation arising from past events, the settlement of which is expected to result in an outflow of economic benefits, in an amount that can be reliably estimated. When the Company expects that the amount of a provision will be reimbursed, whether in full or in part, the reimbursement is recognized as a separate asset, but only when the amount is more likely than not to be reimbursed. The expense related to any provision is presented in the statement of profit or loss. e) Business combination Business combinations are recorded under the acquisition method. The cost of an acquisition is measured by the sum of the consideration transferred based on fair value on the acquisition date and the value of any equity held by noncontrolling members in the acquired party. For each business combination the acquirer shall measure noncontrolling interest in the acquiree at fair value or based on its interest in net assets identified in the acquiree. Costs directly attributable to the acquisition shall be recorded as expenses when incurred. Goodwill is initially measured as that which exceeds the consideration transferred in relation to net assets acquired (identifiable acquired net assets and liabilities assumed). If the consideration is lower than fair value of acquired net assets, the difference shall be recognized as gain in the statement of profit or loss. 27

30 3. Summary of significant accounting practices (Continued) f) Present value adjustment of assets and liabilities Long-term monetary assets and liabilities were stated at present value on the transaction dates due to its terms, using the average rate of financial charges incurred when they were raised, both for customers and for suppliers. The present value adjustment of current monetary assets and liabilities is calculated and only recorded when the effect is considered significant in relation to the overall financial statements. For purposes of recording and determining significance, present value adjustment is calculated taking into consideration the contractual cash flows and the explicit, and in certain circumstances implicit, interest rate of the respective assets and liabilities. g) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the underlying asset cost. All other borrowing costs are expensed in the year they are incurred. h) Assets and liabilities held for sale An operation is classified as discontinued at the earlier of its disposal or when it meets the criteria do be classified as held for sale. When an operation is classified as a discontinued operation, the comparative statements of profit or loss and cash flows are presented as if the operation had been discontinued since the beginning of the comparative year. Therefore, the reclassified observation was included in the comparative statements. These assets are measured at the lower of the carrying amount or fair value less costs to sell. When classified as held for sale, intangible assets and property and equipment are not amortized or depreciated. Profit or loss of the discontinued operation is presented in a single amount in the statement of profit or loss, including total profit or loss after income and social contribution taxes of those operations. 28

31 3. Summary of significant accounting practices (Continued) i) Standards, amendments and interpretations to standards (i) Standards and interpretations issued but not yet adopted until the date of issue of the Company s financial statements are disclosed as follows: The Company expects to adopt these standards, if applicable, when they become effective. Standard IFRS 9 - Financial Instruments IFRS 15 Revenue from Contracts with Customers IFRS 16 Lease agreements (Effective from 01/01/2019) Requirement The objective of IFRS 9 is ultimately to replace IAS 39. Main changes estimated are: (i) all financial assets shall be initially recognized at fair value; (ii) the standard divides all financial assets into: amortized cost and fair value; and (iii) the concept of embedded derivatives was extinguished. IFRS 15 (CPC 47 - Revenue from Contracts with Customers) was issued in May 2014, amended in April 2016, and establishes a five-step model for accounting for revenue from contracts with customers. In accordance with IFRS 15, revenue is recognized in an amount that reflects the consideration that an entity expects to be entitled in exchange for the transfer of goods or services to a customer. The new revenue standard will replace all current revenue recognition requirements under the IFRS. Full retrospective application or modified retrospective application will be required for annual periods beginning on or after January 1, The Group plans to adopt the new standard on the effective date required based on the full retrospective method. The new standard sets out the principles for both the customer (lessee) and the supplier (lessor) on the provision of relevant information about leases so that lease transactions are clearly stated in the financial statements. To achieve this objective, the lessee must recognize the assets and liabilities resulting from a lease agreement. Impact on financial statements Company management has assessed IFRS 9 impacts and understands that its adoption will anticipate no material impact on its financial statements. To this date, the Company has not identified significant impacts compared to current revenue standards in relation to revenue recognition required by IFRS 15 referring to services in the highway, port and logistics concession segments. The Company identified new presentation requirements for the reclassifications of variable consideration, volume rebate, and there is no expectation that the effect of these changes in amounts will be material for these segments, except for reclassification in the port segment under IFRS 15, and adjustments to the current year will reduce sales revenue by approximately R$134,345. Company management has assessed IFRS 16 impacts and understands that its adoption will anticipate no material impact on its financial statements. 29

32 3. Summary of significant accounting practices (Continued) i) New standards, amendments and interpretations to standards (Continued) Standard Amendment to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture IFRS 2 - Classification and Measurement of Share-based Payment Transactions - Amendments to IFRS 2 Requirement The amendments address the conflict between IFRS 10 and IAS 28 in the treatment of loss of control of a subsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that the gain or loss resulting from the sale or contribution of assets of a business, as defined in IFRS 3, between an investor and its associate or joint venture, are recognized in full. Any gain or loss resulting from the sale or contribution of assets that do not constitute a business, however, are recognized only in the extent of the interests of unrelated investors in the associate or joint venture. The IASB issued amendments to IFRS 2 Share-based Payments, which address three main areas: the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction; the classification of a share-based payment transaction with settlement characteristics by the net amount for withholding tax obligations; and accounting treatment when a change in the terms and conditions of a share-based payment transaction changes its cash settlement classification to share settlement. Impact on financial statements Company management has assessed IFRS 10 and IAS 28 impacts and understands that their adoption will anticipate no material impact on its financial statements. Company management has assessed IFRS 2 impacts and understands that its adoption will anticipate no material impact on its financial statements. IFRIC 23 - Uncertainty over Income Tax Treatments The Interpretation addresses the recognition of income taxes when the tax treatment involves uncertainty that affects the application of IAS 12 and does not apply to taxes or charges other than the scope of IAS 12, nor does it specifically include the requirements relating to interest and fines associated with uncertainties in the treatment applicable to taxes. Company management has assessed IFRS 23 impacts and understands that its adoption will anticipate no material impact on its financial statements. 4. Main uses of estimates and judgments Management of the Company and its subsidiaries makes estimates and assumptions regarding future events. Estimates and assumptions that present a significant risk, likely to cause a significant adjustment to carrying amounts of assets and liabilities for the next financial year are as follows: 30

33 4. Main uses of estimates and judgments (Continued) Discount rate: determination of discount rates to present value used in the measurement of certain current and noncurrent assets and liabilities; Amortization rate: determination of amortization rates of intangible assets obtained through economic studies of traffic projection; and Provisions: determination of provisions for maintenance, determination of provisions for future investments arising from service concession arrangements whose economic benefits are diluted in current toll fees, provisions for tax, labor and civil losses, losses on accounts receivable and preparation of projections to realize deferred income and social contribution taxes. Service concession arrangement accounting Upon recording the Service Concession Arrangement, the Company conducts analyses involving management judgment, substantially regarding the application of the Service Concession Arrangement interpretation, determination and classification of improvement and construction expenses as intangible assets, and assessment of future economic benefits for the purpose of determining the time to recognize intangible assets generated in the Service Concession Arrangement. Disclosures for each Company's service concession arrangement and their characteristics are described in Note 2.3. Recognition of intangible assets Company management assesses the moment intangible assets are to be recognized, based on economic characteristics of each service concession arrangement. Accounting for subsequent additions to intangible assets will only occur upon related services rendered representing potential generation of additional revenue. For these cases, for example, the construction liability is not recognized upon execution of the contract, but it will constitute a liability by the time the construction is carried out, matched against intangible asset. 31

34 4. Main uses of estimates and judgments (Continued) Determining annual amortization of intangible assets arising from service concession arrangements The Company recognizes the effect of amortizing intangible assets arising from the service concession arrangement limited to the respective concession term, except for direct subsidiary Ecoporto Santos S.A., for which the Company already considers the service concession arrangement assuming renewal. This is calculated according to the consumption standard of the economic benefit generated, usually based on the traffic curve. Thus, the amortization rate is determined through economic studies intended to reflect projected growth of highway traffic and the generation of future economic benefits arising from the service concession arrangement. The Company uses models to study and project traffic on highways under its concession. Determining construction revenues Construction revenue is recognized at its fair value, as well as related costs changed into expenses related to the construction service provided. In accordance with the Application of Accounting Interpretation (ICPC) 01, where a public service concessionaire performs construction works, even if contractually provided for, it performs construction services. The rendering of these services originate two types of compensation: either by receiving values from the Granting Authority (financial asset) or through payment of toll fees (intangible asset). For this last type, which is the case for all highway concession operators administered by the Company, the construction revenue shall be recognized at its fair value, and the costs changed into expenses for the construction service provided. Upon recording construction margins, Company management evaluates issues related to the primary responsibility for providing construction services, even in cases where there is outsourcing of services, management costs and/or monitoring of the work and EcoRodovias Group that carries out the construction services. Company management believes that the hiring of construction services are carried out at market value; therefore, the Company recognizes no profit margin on construction activities. Company management assesses and recognizes the effects of present value adjustment, taking into consideration the time value of money and uncertainties related thereto. At December 31, 2017 and 2016, assets and liabilities subject to present value adjustment and significant assumptions adopted by management to measure and recognize them are as follows: 32

35 4. Main uses of estimates and judgments (Continued) Determining construction revenues (Continued) (a) Provision for maintenance and future works arising from estimated expenses to comply with contractual obligations of the concession whose economic benefits are already being earned by the Company, and provision for maintenance stemming from estimated costs to meet the contractual obligations of the concession related to the use and maintenance of roads at predetermined levels of use. Measurement of present values of these provisions was calculated using cash flow projection method on the dates outflow of resources are estimated, to meet their respective obligations (estimated for the full concession period), and discounted by applying the discount rate, which varies between 9.50% and 11.85% p.a. Determination of the discount rate used by management is based on the weighted average of funding. Measurement and criteria of the respective values are detailed in Notes 19 and 20. (b) Concession rights payable arising from obligations incurred by the Company related to grant deed. Measurement and criteria of the respective values are described in Note Reclassifications made by management Commission expenses related to sales of storage services in direct investees Ecoporto Santos and Termares were segregated and reclassified from "General and administrative expenses" to "selling expenses" in the statements of profit or loss for the year ended December 31, 2016 at R$120,241. Such reclassification is intended to allow comparability and better presentation of the book balances. Management of indirect subsidiary Ecovia Caminho do Mar reclassified R$2,581 between "Property and equipment" and "Intangible assets" for the year ended December 31, 2016, thus reflecting on Company's Consolidated. The purpose of such reclassification is to adjust the presentation of "Buildings". Originally disclosed Reclassification Restated Property and equipment 616,763 (2,581) 614,182 Intangible assets 4,276,280 2,581 4,278,861 4,893,043-4,893,043 Company management reclassified (R$26,515) in the statement of cash flows for the year ended Such reclassification is intended to adjust the presentation of Concession rights payable. 33

36 5. Reclassifications made by management (Continued) Originally disclosed Reclassification Restated Cash flow from operating activities Concession rights payable - (26,515) (26,515) Cash flow from financing activities Concession rights payable (26,515) 26,515 - (26,515) - (26,515) 6. Discontinued operations a) Sale of equity interest According to the material fact notices published to the market on July 4, 2016, the Company through its subsidiary Elog S.A., entered into an Agreement for Purchase and Sale of Units of Interest on July 2, 2016, whereby the terms and conditions for disposal of 100% of Elog Logística Sul Ltda., Maringá Serviços Auxiliares de Transporte Aéreo Ltda and Maringá Armazéns Gerais Ltda. (jointly, Elog Sul Units ) capital to Multilog S.A. Completion of the disposal was subject to certain conditions precedent, which include communication and/or approval by the Brazilian IRS, and approval by the Administrative Council for Economic Defense (CADE), which was approved with no restrictions on July 29, The operation was completed on October 6, 2016, with effective transfer of units of interest and settlement for R$115,000. On February 1, 2017, as provided for in the purchase and sale agreement clauses, price was adjusted with payment of R$1,172 to the Company. The sale totaled R$116,172. The amount of loss on investment sale amounting to R$12,080 is carried under Net income from assets and liabilities held for sale, in the statement of profit or loss for the year ended December 31, Disposal of Elog Sul Units is in line with the EcoRodovias Group strategy to focus on road concession assets. 34

37 6. Discontinued operations (Continued) a) Sale of equity interest (Continued) The effects arising from the sale of these interests are as follows: Elog Goodwill Sul Maringás Total Assets Current assets Cash and cash equivalents 3,470 1,619-5,089 Trade accounts receivable 12, ,482 Related parties Taxes recoverable Prepaid expenses Other receivables Total current assets 16,855 2,216-19,071 Noncurrent assets Judicial deposits 9,803 1,095-10,898 Deferred taxes 3, ,552 Other receivables Goodwill recorded in Company ,282 88,282 Property and equipment and intangible assets 33,188 1,173-34,361 Total noncurrent assets 47,343 2,431 88, ,056 Total assets 64,198 4,647 88, ,127 Liabilities and equity Current liabilities Trade accounts payable 4, ,368 Taxes payable 1,666 1,150-2,816 Social liabilities 2, ,597 Dividends and interest on equity payable 5, ,978 Related parties 1, ,683 Provision for income and social contribution taxes Other accounts payable ,239 Total current liabilities 17,585 1,684-19,269 Noncurrent liabilities Provision for labor, tax and civil contingencies 9, ,566 Other accounts payable Total noncurrent liabilities 9, ,606 Equity 37,007 2,963 88, ,252 Total liabilities and equity 64,198 4,647 88, ,127 Total sale amount ,172 Loss on investment disposal (total equity sale amount) (12,080) 35

38 6. Discontinued operations (Continued) a) Sale of equity interest (Continued) The purchase and sale agreement has an indemnity clause, which provides for the Company s responsibility to indemnify the purchaser in the event of losses incurred, events after the sale closing date, including and litigations related to existing contingent liability. The agreement provides for the following limitations: (i) Indemnity obligation is limited to the minimum of R$10 per individual loss and maximum of 25% (twenty-five percent) of the acquisition price, only in certain hypotheses. In other cases, the amount is limited to 50% (fifty percent) of the acquisition price; (ii) The indemnity payment term is 10 (ten) working days from receipt of notification informing the indemnity; (iii) The time limit may be 3 (three), 5 (five), 6 (six) or 10 (ten) years, according to the nature of the respective loss. At December 31, 2017, no events that could lead to indemnity payment to purchasers were identified and, therefore no amount was provisioned. b) Assets and liabilities held for sale Based on the EcoRodovias Group strategy to focus upon road concession assets, in June 2016, the Company also classified as discontinued operations its investments in the logistics segment through companies Elog S.A. and Ecopátio Logística Cubatão Ltda. According to the material fact notices published to the market on December 13, 2017, the Company entered into an Agreement for Purchase and Sale of Shares, whereby the terms and conditions for disposal of 100% of Elog S.A. capital to Multilog S.A. were established. Disposal completion is subject to the analysis of certain conditions precedent, which include: (i) prior approval of the Brazilian IRS; (ii) approval of the Administrative Council for Economic Defense (CADE), which was carried out without restriction on December 27, 2017; (iii) transfer of the units of interest from Ecopátio Logística Cubatão Ltda. to the Company; and (iv) payment of the entire debt of Elog S.A. The total amount of the disposal is R$90,000 thousand and will be settled in 84 equal and successive monthly installments, restated by the CDI adjustment as of the closing date. The effects of the sale of this interest will be disclosed in a timely manner, upon fulfillment of all conditions precedent and consequent transfer of shares to Multilog S.A. 36

39 6. Discontinued operations (Continued) b) Assets and liabilities held for sale (Continued) In compliance with item 9 of CPC 31 - Noncurrent Assets Held for Sale and Discontinued Operations, the Company informs that it remains firmly committed to its plan to sell Ecopátio Logística Cubatão Ltda. Pursuant to CVM Rule No. 598/09, which approved accounting pronouncement CPC 31 Noncurrent Assets held for sale and Discontinued Operation, assets and liabilities of these units were classified under Assets and Liabilities from discontinued operations, and information thereon is no longer an integral part of the Company's consolidated information. These related assets and liabilities shall be measured at the lower of their carrying amounts and fair value less costs to sell. At December 31, 2017, assets and liabilities held for sale comprised: Assets Combined (*) 12/31/2017 Combined (*) 12/31/2016 Liabilities Combined (*) 12/31/2017 Combine d (*) 12/31/201 6 Cash and cash equivalents 7,691 15,647 Trade accounts payable 12,341 11,460 Trade accounts receivable 33,018 33,100 Loans and financing 668 2,187 Related parties 17 2,774 Debentures 124, ,788 Taxes recoverable 1,184 1,693 Taxes payable 2,273 2,902 Prepaid expenses Social and labor liabilities 6,932 6,502 Other receivables 9,564 5,185 Related parties Deferred taxes 59, ,738 Other accounts payable 6,890 22,719 Provision for labor, tax and civil Judicial deposits 48,407 43,909 contingencies 35,280 33,560 Provision for income and social contribution taxes - - Property and equipment 66,477 12,109 Intangible assets 5,606 14,597 Total assets held for sale 231, ,248 Total liabilities held for sale 189, ,576 (*) These amounts refer to combined assets and liabilities of companies Elog S.A. and Ecopátio Logística Cubatão Ltda., already adjusted to fair value. After classification, an impairment loss amounting to R$689,301 was recognized for the carrying amount of these assets to be reduced to fair value less costs to sell. This amount was recognized in profit or loss under "Loss for the year of discontinued operations". An evaluation was conducted to determine the fair values of companies Elog S.A. and Ecopátio Logística Cubatão Ltda, based on multiple recent transactions involving similar assets in the same market segment, and on the very transaction of Elog Sul with Multilog S.A. 37

40 6. Discontinued operations (Continued) The result of the fair value evaluation as a result of the classification as assets and liabilities held for sale is as follows: 12/31/ /31/2016 Selling amount (a) 160, ,000 Net debt (b) (117,882) (170,328) Amount in the statement of financial position of assets and liabilities held for sale (c) 42,118 (10,328) (a) Estimated cost of disposal for companies Elog S.A. and Ecopátio Logística Cubatão Ltda., totaling R$160,000. (b) Refers to net debt at December 31, 2017 of subsidiaries classified as discontinued operations. (c) Refers to net value between assets and liabilities measured at the lower of carrying amounts and fair value less costs to sell. Profit or loss for the years ended related to assets and liabilities held for sale is as follows: Profit or loss from discontinued operations 12/31/ /31/2016 Net revenue 197, ,533 Cost of services rendered (182,679) (262,906) Gross profit 14,841 29,627 Operating and finance income (costs) (24,243) (41,038) Finance income (costs) (17,593) (42,826) Operating income (expenses) (26,995) (54,237) Income and social contribution taxes (573) 51,218 Profit or loss from assets and liabilities held for sale (27,568) (3,019) Fair value measurement effect of assets and liabilities held for sale (*) 19,915 (686,282) Net loss from assets and liabilities held for sale (7,653) (689,301) (*) Statement of fair value adjustment of assets and liabilities held for sale: 38

41 6. Discontinued operations (Continued) 12/31/ /31/2016 Fair value adjustment of intangible assets and property and equipment 5,715 (572,502) Fair value adjustment of dividends and IOE - (12,336) Capital contributions (January to December) (62,200) (88,097) Fair value adjustment (Sale price x Net debt) (13,368) - Fair value adjustment of other assets and liabilities 89,768 (3,019) Fair value effect of assets and liabilities held for sale 19,915 (675,954) Expected contribution amounts necessary for maintenance of net working capital - (10,328) Fair value adjustment of assets and liabilities held for sale 19,915 (686,282) Cash flow from assets and liabilities held for sale 12/31/ /31/2016 Profit or loss for the year (27,568) (3,019) Items that do not affect cash 41,963 (92,650) Items that do not affect cash expected contribution (1,599) 3,614 Resulting from changes in financial position (4,488) (16,231) Used in investing activities (74,121) 211,308 Used in financing activities (65,813) (222,606) On December 13, 2017, the Company, through material fact notices, communicated to the market that it entered into a Share Purchase Agreement with Multilog S.A. relating to the sale by the Company of 100% of the capital of Elog. The total amount of the disposal is R$90,000 thousand and will be settled in 84 equal and successive monthly installments, restated by the CDI adjustment as of the closing date. Sale completion is subject to the analysis of certain conditions precedent, which include the prior approval of the Brazilian IRS, the Administrative Council for Economic Defense (CADE), received on December 27, 2017, transfer of units of interest from Ecopátio Logística Cubatão Ltda. ("Ecopátio") to the Company, on February 8, 2018, and payment of the entire debt of Elog. 39

42 7. Impairment of assets Net carrying amount Consolidated 06/30/2016 Net recoverable amount Net impairment adjustment to profit or loss for the year Goodwill port segment (a) 666, , ,997 Deferred taxes port segment (b) 450, , ,010 Assets and liabilities held for sale, net of cash 1,117, , ,007 Since the beginning of 2015, a fall in the volume of business in the port segment was noticed, as a result of the economic downturn that directly impacted the activities of the Company and its subsidiaries. During the second quarter of 2016, given the continuing fall in volume and prices, and the non-confirmation of a new shipowner, and considering the projections for the following periods, the Company recognized a R$545,007 impairment in its non-financial assets. (a) Value in use of goodwill was restated to reflect management s best estimates in relation to its business in Santos Port. The evaluation is still sensitive to changes, if any, in long-term expectations that may lead to future adjustments to the amount recognized. The discount rate applied in the future cash flow projection represents the WACC of the Company s port segment. The statutory rate used was 13.1% p.a., and the Company considered market sources to define inflation and foreign exchange rates used in future flow projections. (b) Tax credits arising from: (a) income and social contribution tax losses; and (b) downstream merger goodwill were reviewed based on the expected future taxable profit generation in the port segment, in light of legal limitations. Future taxable profit projections were prepared based on the review of the subsidiary s business plan. The review generated a R$244,010 write-off (see Deferred Taxes, in Note 15) (R$40,191 tax loss in 2016; R$140,808 tax losses prior to 2016, and R$63,011 downstream merger goodwill). The Company will physically keep amounts for future use. At December 31, 2017, the Company carried out impairment tests and did not identify any adjustments. 40

43 8. Cash and cash equivalents Accounting practice The Company considers cash equivalents a short-term investment readily convertible into a known cash amount and subject to insignificant risk of change in value. Company Consolidated 12/31/ /31/ /31/ /31/2016 Cash and banks ,078 32,806 Short-term investments: Investment fund (a) 8, ,528, ,844 Repurchase agreements (b) - 2,226 18,030 25,018 Automatic investments (c) ,782 13,836 8,188 3,096 1,607, ,504 Accounting practice (a) Fund organized as an investment fund, classified as private fixed income fund, pursuant to the prevailing regulation, whose investment policy s main risk factor is the variation in the domestic interest rate or price index, or both, and whose goal is to seek the appreciation of its shares through the investment of funds in a conservative portfolio, and may be redeemed at any time without significant loss of value. The Fund cannot invest in speculative transactions or transactions that expose it to liabilities higher than its net assets. The Fund cannot be exposed to certain assets, such as shares, share indices and derivatives indexed thereto. At December 31, 2017, the marketable securities Fund portfolio comprised 59.7% in Bank Deposit Certificate (CDB), 23.3% in Repurchase Agreements, 1.3% in Financial Bills (LF), 15.7% in Financial Treasury Bills (LFT). At December 31, 2016, the marketable securities Fund portfolio comprised 30.3% in Bank Deposit Certificate (CDB), 60.8% in Repurchase Agreements, 3.9% in Financial Bills (LF) and 5.0% in Government Bonds. The financial investments linked thereto bear interest at 98.9% (100.7% at December 31, 2016) of the Interbank Deposit Certificate (CDI), and reflect the market conditions at the statements of financial position dates. (b) The funds related to consolidated repurchase agreements bear interest at weighted average rate of 79.9% of CDI (89.9% at December 31, 2016), without risk of material change in value. This investment has immediate liquidity and a very short term, being used before 30 days, and IOF is not levied thereon. (c) The Company holds a short-term investment in Itaú Unibanco, in which the funds available in current accounts are automatically invested and bear interest pursuant to the period they remain invested and may vary from 2% to 100% of the CDI. The group maintains only a minimum balance in this type of investment and the exceeding volume is allocated to more profitable short-term investments, and this type is maintained at an average rate of 2% of CDI (short-term investments stay between one and 29 days), without the risk of significant change in value. The referred to investment is highly liquid. 41

44 9. Marketable securities Marketable securities consist of temporary high liquidity short-term investments: 12/31/ /31/2016 Investment fund (a) 69,068 66,430 Savings account (b) 768 2,689 69,836 69,119 Current 60,234 61,748 Noncurrent 9,602 7,371 (a) Investment funds bear interest of 97.9% of CDI (97.8% at December 31, 2016) and reflect market conditions at the statement of financial position dates. Although these investments are highly convertible to cash, they were classified as marketable securities since they are related to the Company s financing agreement with the Brazilian Development Bank (BNDES) and Debentures as a guarantee for part of the payment of interest and principal of indirect subsidiaries Concessionária de Rodovias Ayrton Senna e Carvalho Pinto S.A. and Eco101 Concessionária de Rodovias S.A. (b) This refers to the Environmental Compensation Commitment Instrument entered into by direct subsidiary Ecoporto Santos and indirect subsidiary Concessionaria de Rodovias Ayrton Senna e Carvalho Pinto S/A - Ecopistas and Companhia Ambiental do Estado de São Paulo (CETESB), which will use the funds as environmental compensation with respect to lawsuits to be determined and approved by the Environmental Compensation Chamber (CCA). On May 22, 2017, indirect subsidiary Concessionária de Rodovias Ayrton Senna e Carvalho Pinto S/A - Ecopistas transferred total balance in accordance with the agreement with CETESB. 10. Trade accounts receivable - Consolidated Breakdown of trade accounts receivable is as follows: 12/31/ /31/2016 Electronic toll (a) 123, ,792 Ancillary revenues (b) 5,849 3,145 Receivables from ports (c) 16,339 21,164 Other accounts receivable 5,061 4,057 Allowance for doubtful accounts (ADA) (d) (1,511) (1,368) 148, ,790 (a) Represented by services provided to users related to toll fees that will be passed on to the concessionaires and credits receivable arising from toll vouchers. (b) Represented substantially by lease of land along the highways, lease of billboards and other services provided for in the concession arrangements. (c) Represented by invoices receivable from customers for warehouse handling and empty container repairs. (d) Refers to the recognition of the allowance for doubtful accounts mainly for port operations, and the Company s policy credit determines that doubtful accounts relate to notes overdue for more than 120 days. 42

45 10. Trade accounts receivable - Consolidated (Continued) The aging list of receivables is as follows: 12/31/ /31/2016 Falling due 144, ,784 Past due: Within 30 days 1,727 2,389 From 31 to 90 days 789 1,060 From 90 to 120 days 1,824 1,557 Above 120 days 1,511 1, , ,158 Changes in allowance for doubtful accounts 12/31/ /31/2016 Balance at beginning of year 1,368 9,799 Discontinued operation - Elog (*) - (6,254) Amounts recovered and written off for the year (1,328) (2,919) Setup of allowance for doubtful accounts for the year 1, Balance at end of year 1,511 1,368 (*) As mentioned in Note 6, the Company classified company Elog S.A. and some of its subsidiaries as assets and liabilities held for sale. 43

46 11. Judicial deposits Judicial deposits representing the Company s restricted assets refer to amounts deposited in escrow and held in courts until the related litigation is resolved. Company Consolidated 12/31/ /31/ /31/ /31/2016 Balance at beginning of year 2,148 1, , ,119 Assets and liabilities held for sale (*) (45,757) Additions ,278 10,041 Write-offs (31) - (5,401) (4,719) Monetary restatement ,580 3,329 Balance at end of year 2,299 2, , ,013 (*) As mentioned in Note 6.b, the Company classified company Elog S.A. and some of its subsidiaries as assets and liabilities held for sale. 44

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59 15. Income and social contribution taxes Accounting practice Deferred income and social contribution taxes ("deferred taxes ) are recognized on temporary differences at the end of each statement of financial position date between the recognized asset and liability balances in the financial statements and the corresponding tax bases used in the computation of taxable profit, including tax loss carryforwards, when applicable. Deferred tax liabilities are generally recognized on all taxable temporary differences, and deferred tax assets are recognized on all deductible temporary differences only when the Company is likely to recognize future taxable profit at an amount sufficient for such deductible temporary differences to be used. Deferred tax assets and liabilities are measured at the tax rate expected to be applied in the year in which the asset or liability will be realized or settled, based on the tax rates (and tax law) in force as at the statement of financial position date. a) Deferred taxes The recovery of deferred tax assets balance is reviewed at the end of each reporting year and adjusted by the amount expected to be recovered. Deferred income and social contribution taxes are recognized as expense or income in P&L for the year, unless they relate to items recorded in other comprehensive income, where applicable. Deferred income and social contribution taxes were recorded using the effective rate of 34% (income and social contribution taxes), presented changes for the year, and are broken down as follows: Statement of financial position P&L Additions Writeoffs 12/31/ /31/ /31/2017 Goodwill realization on merger 215,424 - (9,582) 205,842 (9,582) Provision for losses due to tax, labor and civil contingencies 44,056 10,468 (7,081) 47,443 3,387 Income and social contribution tax losses (i) 51,663 4,407 (6,479) 49,591 (2,072) Provision for maintenance 95,177 19,103 (18,881) 95, Present value adjustment (PVA) burden concession 3,325 - (1,359) 1,966 (1,359) Allowance for doubtful accounts (ADA) (380) 83 (27) Accrual for vacation pay Executive Board 3,449 2,894 (128) 6,215 2,766 Effect of Law No /14 - Transition Tax Regime (RTT) ceased to exist (51,771) - 3,341 (48,430) 3,341 Corporate depreciation (9,808) (9,529) 279 Capitalized interest (2,977) (5,982) 103 (8,856) (5,879) Deferred income and social contribution taxes - 31,280 (40,204) assets/(liabilities) (ii) 348, ,724 (8,924) (i) Refers to indirect subsidiaries tax loss: ECO101 and Ecopistas.(ii) In compliance with CPC 32, item 73, the Company recorded R$356,491 under noncurrent assets and R$16,767 under noncurrent liabilities. 57

60 15. Income and social contribution taxes (Continued) Accounting practice (Continued) a) Deferred taxes (Continued) Based on the projections prepared by Company management, the deferred income and social contribution taxes are expected to be realized in the following years: Consolidated 12/31/ /31/ , ,279 68, ,086 60, ,459 60, ,856 49,683 From 2022 onwards 221,044 39, , ,648 Management prepared a study on the future realization of deferred tax assets, taking into consideration the probable capacity to generate future taxable profit, in the context of the main business variables, which may, therefore, suffer changes. Studies and projections conducted by the Company indicate that tax losses and goodwill on mergers of investees will be realized within 10 years. Company management believes that the assumptions utilized in the business plans are robust, feasible and in line with the current economic scenario. b) Reconciliation of income and social contribution tax income (expense) The following current and deferred income and social contribution taxes were recognized in P&L for the years: 58

61 15. Income and social contribution taxes (Continued) Accounting practice (Continued) b) Reconciliation of income and social contribution tax income (expense) (Continued) Company Consolidated 12/31/ /31/ /31/ /31/2016 Income (loss) for the year before income and social contribution taxes 396,844 (275,616) 756, ,112 Statutory rate 34% 34% 34% 34% Income and social contribution taxes at combined rate (134,927) 93,709 (257,125) (74,838) Adjustments to effective rate calculation: Bonuses chief officers (1,454) (2,370) (4,175) (6,106) Equity pickup 181,229 56, (3) Nondeductible expenses (28) (13) (349) (624) Goodwill amortization (5,900) (7,474) 22,893 (76,985) Tax incentives (Workers Meal Program - PAT) - - 1,574 1,700 Tax credits not established by the tax authorities (39,464) (38,250) (98,593) (79,851) PERT ECOSUL tax credit 3,295-3,295 - Other (1,201) (26) Write-off of prior-year tax credit (*) (140,873) Impairment of Ecoporto (CPC 01) not established (**) - (102,339) (2,602) (102,339) Income and social contribution tax expenses 3, (336,265) (479,945) Current income and social contribution taxes 3,295 - (327,341) (278,924) Deferred taxes (8,924) (201,021) Effective rate % n.m. (*) This refers to Company tax losses (Company) for which there is no expectation of realization in the next five years. (**) See Note 7. c) Income and social contribution taxes paid Consolidated 12/31/ /31/2016 Balance at beginning of year - income and social contribution tax provision 32,516 15,911 Assets and liabilities held for sale - (588) IRPJ/CSLL expense statement of profit or loss 327, ,924 Total IRPJ/CSLL paid for the year (335,306) (261,731) Balance at end of year - income and social contribution tax provision 24,551 32,516 59

62 16. Loans and financing - Consolidated Final Average Type Company maturity interest rate 12/31/ /31/2016 In local currency: Promissory note (j) Ecocataratas 05/2017 CDI % p.a ,631 Finame (i) Ecosul 11/2020 6% p.a Finame (b) Ecocataratas 05/2017 TJLP % p.a Finame (b) Ecocataratas 04/2017 TJLP % p.a Finame (e) Ecocataratas 10/ % p.a Finame (b) Ecocataratas 06/2018 3% p.a Finem (f) Ecocataratas 07/2018 TJLP + 2.1% p.a. 3,920 10,509 Finame (h) Ecocataratas 07/ % p.a Finem (a) Ecopistas 07/2025 IPCA % p.a. 34,597 33,497 Finem (a) Ecopistas 06/2025 TJLP % p.a. 117, ,819 Finame (d) Ecoporto Santos 06/ % p.a Finame (g) Ecoporto Santos 10/2020 6% p.a. 4,715 6,509 UMSELIC % p.a. - 55,402 Finem (c) ECO101 07/2017 Finem (m) ECO101 12/2028 TJLP % p.a. 178, ,271 Finem (m) ECO101 06/2030 TJLP % p.a. 67,761 66,020 Financing (l) ECO101 12/ % p.a Financing (m) ECO101 06/2030 TJLP % p.a. 39,261 - Finem (n) Ecoponte 06/2032 TJLP % p.a. 49,275 - Lease Ecosul 03/ % p.a In foreign currency: Finimp (d) Ecoporto Santos 05/2017 Libor 6M + 5.2% p.a Finimp (d) Ecoporto Santos 01/2023 Libor 6M + 2% p.a. 87, , , ,632 Current 74, ,401 Noncurrent 508, ,231 The aging list of noncurrent installments is as follows: 12/31/ /31/ , ,524 63, ,476 64, ,116 54, onwards 313, , , ,231 60

63 16. Loans and financing Consolidated (Continued) Changes in loans, financing and promissory notes are as follows: 12/31/ /31/2016 Balance at beginning of year 823, ,707 Assets and liabilities held for sale (*) - (3,637) Additions 91, ,592 Financial charges (see Note 28) 67,751 83,923 Payment of principal (307,713) (426,313) Payment of interest (91,603) (73,640) Balance at end of year 583, ,632 (*) See Note 6.b. 61

64 16. Loans and financing Consolidated (Continued) Main bank loan and financing agreements in effect are as follows: Item Company Financial institution Required financial ratios Guarantees (a) Ecopistas BNDES (i) Equity-to-total liabilities ratio shall be higher than 20%; (ii) the debt service coverage ratio shall be 1.20 or higher; and (iii) net debt-to-adjusted EBITDA ratio shall be lower than The required financial ratios were complied with at December 31, Assignment of credit rights of toll receivables as well as ancillary revenue arising from the concession, and any and all indemnities to be received under the terms of guarantees and insurance policies for loss of profit contracted under the service concession arrangement terms. (b) Ecocataratas Banco do Brasil/ Bradesco Maintenance of ratios is not required. Disposal of the asset. (c) ECO101 BNDES Maintenance of ratios is not required Guarantee - EcoRodovias Infraestrutura. (d) Ecoporto Santos Deutsche Bank AS (i) Equity shall be higher than 20,000; (ii) equity to total assets ratio of the Company shall be higher than 20%. Disposal of EcoRodovias Infraestrutura. (e) Ecocataratas Banco Itaú Maintenance of ratios is not required. Disposal of the asset. (f) Ecocataratas BNDES Maintenance of ratios is not required. Letter of guarantee. (g) Ecoporto Santos Banco Itaú Maintenance of ratios is not required. No guarantee. (h) Ecocataratas Itaú Maintenance of ratios is not required. Disposal of the asset. (i) Ecosul Itaú Maintenance of ratios is not required. Disposal of the asset. (j) Ecocataratas Bradesco Maintenance of ratios is not required No guarantee. (l) ECO101 Banco Volkswagen Maintenance of ratios is not required No guarantee. (m) ECO101 BNDES Maintenance of ratios is not required Assignment of credit rights. (n) Ecoponte BNDES (i) Equity-to-total liabilities ratio shall be higher than 20%; (ii) the debt service coverage ratio shall be 1.30 or higher; and (iii) net debt-to-adjusted EBITDA ratio shall be lower than Pledge of EcoRodovias shares. Assignment in trust of credit rights held by Ecoponte, arising from the concession agreements, the emerging concession rights arising from the concession, including those related to any indemnifications. Guarantee by EcoRodovias. 62

65 16. Loans and financing Consolidated (Continued) Financial ratios at December 31, 2017 are summarized as follows: Required Measured (*) Financial ratios Ecopistas (a) (i) Equity/total liabilities > 20% 33.92% (ii) Debt coverage (iii) Net debt/adjusted EBTIDA < Required Measured (*) Financial ratios - Ecoporto (d) (i) Tangible equity (Ecoporto) > 20, ,335 (ii) Equity/total assets (Company) > 20% 9.7% (***) Required Measured (*) Financial ratios - Ecoponte (n) (i) Equity/total liabilities > 20% 54.8 (ii) Debt coverage > 1.30 n.m. (**) (iii) Net debt/adjusted EBTIDA < (*) Ratio not examined by independent auditors. (**) ICSD not determined, pursuant to paragraph 6 c) It will be calculated one year after beginning of amortization (January 2019). (***) The ratio is backed by Waiver. Sub-loans and releases for the indirect subsidiary Eco101 are as follows: Amount Sub-loan Total Amortization Installments released A 188, ,473 (12,776) 150 installments B1 66,237 66, installments B2 52,483 28, installments B3 117,799 11, installments B4 28, installments B5 22, installments B6 50, installments C1 54, installments C2 28, installments C3 99, installments C4 50, installments C5 26, installments C6 92, installments C-SOCIAL 4, installments Total 882, ,361 (12,776) Sub-loan Total Amount released Amortization Installments C 50,878 50,878 (50,878) Lump sum Total 50,878 50,878 (50,878) 63

66 16. Loans and financing Consolidated (Continued) Sub-loans and releases for the indirect subsidiary Ecopistas are as follows: Sub-loan Total Amount released Amortization Installments a 99,200 99,200 (62,653) 114 monthly b 85,528 85,528 (47,216) 114 monthly c d 27,999 27,999 (11,789) 114 monthly e 21,769 21,769 (5,442) 10 annual f 21, annual g 21, annual h 22, monthly i 4, annual j 11,281 11,281 (2,375) 114 monthly k 29,846 22,438 (4,723) 114 monthly l 9,169 9,169 (1,834) 10 annual Total 355, ,384 (136,032) Sub-loans and releases for the indirect subsidiary Ecoponte are as follows: Sub-loan Total Amount released Amortization Installments a 107,466 51, monthly b 177, monthly c 118, monthly d 10, monthly e 2, monthly Total 417,000 51,719 - The Company has a financial plan to settle short-term debts through raising of new debentures and use of own resources to pay amortization installments maturing in Management is confident that its financial plan will be implemented in 2017 and understands that there will be no breach or default of the effective agreements. 64

67 17. Debentures Debentures are summarized as follows: Company Consolidated Description Maturity Average interest rate 12/31/ /31/ /31/ st issue - Ecovia Caminho do Mar May/ % CDI p.a , ,998 1 st issue - Ecosul May/ % CDI p.a , ,661 2 nd issue - Ecosul June/ % do CDI p.a. - 50,073-3 rd issue - Ecosul June/ % do CDI p.a. - 52,443 - IPCA + 3.8% p.a./ IPCA+ 4.28% p.a. - 1,194,291 1,158,134 2 nd issue - Ecovias dos Imigrantes April/ st issue - Ecocataratas May/ % CDI - 195,228-1 st issue - Ecopistas Jan/2023 IPCA % p.a , ,838 1 st issue - Eco101 Dec/2018 CDI % p.a. - 24,847-2 nd issue - EcoRodovias Infraestrutura June/ % CDI p.a. 84, st issue - Ecorodovias Concessões (Assignment) April/2020 CDI % a.a./ CDI % p.a , ,422 2 nd issue - Ecorodovias Concessões (1 st series) Oct/2018 CDI % p.a. - 80, ,239 2 nd issue - Ecorodovias Concessões (2 nd and 3 rd series) Oct/2022 IPCA + 5.0% p.a./ IPCA % p.a , ,359 3 rd issue - Ecorodovias Concessões Feb/ % do CDI p.a , ,554 5 th issue - Ecorodovias Concessões Dec/ % do CDI p.a ,574-6 th issue - Ecorodovias Concessões (1 st and 2 nd series) Nov/2020 and Nov/ % and % of the CDI - 1,070,399-6 th issue - Ecorodovias Concessões (3 rd series) Nov/2024 IPCA + 6.0% p.a. - 30,038-1 st issue - Ecoporto Santos June/2019 CDI % p.a , ,423 84,053 5,415,248 4,106,628 Current - 1,074, ,535 Noncurrent 84,053 4,340,390 3,426,093 Changes in debentures are as follows: Company Consolidated 12/31/ /31/ /31/ /31/2016 Balance at beginning of year - 615,113 4,106,628 4,293,504 Assets and liabilities held for sale (*) (345,768) Addition 79,945-1,503, ,739 Debt assignment (**) - (625,782) - - Financial charges (see Note 28) 4,108 55, , ,842 Payment of principal - - (230,285) (189,148) Payment of interest - (44,870) (371,307) (385,541) Balance at end of year 84,053-5,415,248 4,106,628 (*) As described in Note 6.b, the Company classified its logistics assets as Assets and liabilities held for sale. The amount of R$345,769 refers to the debenture balance at January 1, 2016 of assets and liabilities held for sale. (**) By virtue of the assignment, as from August 10, 2016, first-issue debenture holders of Ecorodovias Infraestrutura are now first-issue debenture holders of Ecorodovias Concessões (due to the assignment and assumption of debt of Ecorodovias Infraestrutura); 65

68 17. Debentures (Continued) Concessionária Ecovias dos Imigrantes S.A. The second issue of simple, registered, book-entry, non-convertible, non-privileged debentures occurred on April 15, 2013, in two series, in the total nominal amount of R$881 million, monetarily restated by the IPCA variation plus interest, as follows: (i) 1 st series - R$200 million, bearing interest of 3.80% p.a., paid annually from the issue date, every April 15 beginning April 15, 2014, and last payment upon maturity on April 15, 2020, with repayment in two annual and successive installments, on April 15 of 2019 and 2020; (ii) 2 nd series - R$681 million, bearing interest of 4.28% p.a., paid annually from the issue date, every April 15 beginning April 15, 2014, and last payment upon maturity on April 15, 2024, with repayment in three annual and successive installments, on April 15 of 2022, 2023 and The issue does not have guarantees of any nature, and is not subject to scheduled renegotiation. The Issuer has complied with all obligations set forth in the issue deed, on a regular and timely basis. Concessionária das Rodovias Ayrton Senna e Carvalho Pinto S.A. - Ecopistas 1 st issue The 1 st issue of simple, registered, book-entry, non-convertible debentures occurred on January 15, 2011, with security interest represented by pledge of shares and assignment in trust of credit rights in four series, in the total nominal amount of R$370 million, monetarily restated by the IPCA variation plus interest, as follows: (i) 1 st series - R$92,500 million, bearing interest of 8.25% p.a., paid annually from the issue date, every January 15 beginning April 15, 2013, and last payment upon maturity on January 15, 2023, with repayment in 11 annual and successive installments, from January 15, 2013 through 2023; 66

69 17. Debentures (Continued) Concessionária das Rodovias Ayrton Senna e Carvalho Pinto S.A. Ecopistas (Continued) 1 st issue (Continued) (ii) 2 nd series - R$92,500 million, bearing interest of 8.25% p.a., paid annually from the issue date, every April 15 beginning April 15, 2012, and last payment upon maturity on April 15, 2022, with repayment in 11 annual and successive installments, from April 15, 2012 through (iii) 3 rd series - R$92,500 million, bearing interest of 8.25% p.a., paid annually from the issue date, every July 15 beginning July 15, 2012, and last payment upon maturity on July 15, 2022, with repayment in 11 annual and successive installments, from July 15, 2012 through (iv) 3 rd series - R$92,500 million, bearing interest of 8.25% p.a., paid annually from the issue date, every October 15 beginning October 15, 2012, and last payment upon maturity on October 15, 2022, with repayment in 11 annual and successive installments, from October 15, 2012 through The issue is secured by pledge of 100% of the shares and assignment in trust of 100% of the receivables, shared with BNDES. The Issuer has complied with all obligations set forth in the issue deed, on a regular and timely basis. 2 nd issue The second issue of simple, registered, book-entry, non-convertible debentures occurred on July 12, 2017, in five series, in the total amount of R$300,000, for private placement. The direct controlling company Ecorodovias Concessões e Serviços S.A. acquired the totality of the debentures and settlement of the series will occur in accordance with the Company's cash requirements. Debentures will be remunerated as follows: 1 st series: 105.0% of the CDI; 2 nd, 3 rd, 4 th and 5 th series: 105.5% of the CDI. Principal and interest will be paid in full, on the maturity dates: 1 st series: July 14, 2025; 2 nd series: October 14, 2025; 3 rd series: January 14, 2026; 4 th series: April 14, 2026; and 5 th series: July 14, Settlements took place as follows: 67

70 17. Debentures (Continued) Concessionária das Rodovias Ayrton Senna e Carvalho Pinto S.A. Ecopistas (Continued) 2 nd issue (Continued) On July 14, 2017, the amount of R$100 thousand related to the first series was settled and compliance with financial indices is not required. On December 14, 2017, the amounts of R$70 thousand referring to the second series, R$40 thousand referring to the third series, and R$40 thousand relating to the fourth series were settled and compliance with financial indices is not required. The issue has no guarantee of any nature. The Issuer has complied with all obligations set forth in the issue deed, on a regular and timely basis. Concessionária Ecovia Caminho do Mar S.A. The 1 st issue of simple, registered, book-entry, non-convertible, non-privileged debentures occurred on November 4, 2014, in a single series, in the total nominal amount of R$143 million, not subject to monetary restatement. Interest on the nominal unit value of debentures is as follows: (i) from the issue date to 03/04/16: 105.7% of the CDI settled; (ii) from 03/04/2016 to 5/15/2017: 115.0% of the CDI settled; (iii) from 5/15/2017 to 5/15/2019: 106.5% of the CDI, and lump sum amortization on the maturity date of May 15, The issue does not have guarantees of any nature, and is not subject to scheduled renegotiation. The Issuer has complied with all obligations set forth in the issue deed, on a regular and timely basis. Empresa Concessionária de Rodovias do Sul S.A. - Ecosul 1 st issue The 1 st issue of simple, registered, book-entry, non-convertible, non-privileged debentures occurred on November 17, 2014, in a single series, in the total nominal amount of R$148 million, not subject to monetary restatement. Interest on the nominal unit value of debentures is as follows: (i) from the issue date to 03/04/16: 105.7% of the CDI over settled; (ii) from 03/04/2016 to 5/15/2017: 115.0% of the CDI over settled; (iii) from 5/15/2017 to 5/15/2020: 107% of the CDI over, and lump sum amortization on the maturity date of May 15,

71 17. Debentures (Continued) Empresa Concessionária de Rodovias do Sul S.A. - Ecosul (Continued) 1 st issue (Continued) The issue does not have guarantees of any nature, and is not subject to scheduled renegotiation. The Issuer has complied with all obligations set forth in the issue deed, on a regular and timely basis. 2 nd issue The 2 nd issue of simple, registered, book-entry, non-convertible, non-privileged debentures occurred on January 17, 2017, in a single series, in the total nominal amount of R$50 million, not subject to monetary restatement. The unit value of the debentures will bear interest of 107.5% of the CDI over, payable semiannually as from the issue date, every June 17 and December 17, beginning June 17, 2017 and ending on the maturity date, together with the amortization, on June 17, The issue does not have guarantees of any nature, and is not subject to scheduled renegotiation. 3 rd issue The 3 rd issue of simple, registered, book-entry, non-convertible, non-privileged debentures occurred on June 2, 2017, in a single series, in the total nominal amount of R$50 million, not subject to monetary restatement. The unit value of the debentures will bear interest of 107% of the CDI over, with lump sum payment of interest and amortization on the maturity date of June 2, The issue does not have guarantees of any nature, and is not subject to scheduled renegotiation. The Issuer has complied with all obligations set forth in the issue deed, on a regular and timely basis. 69

72 17. Debentures (Continued) Rodovias das Cataratas S.A. - Ecocataratas The 1 st issue of simple, registered, book-entry, non-convertible, non-privileged debentures occurred on May 17, 2017, in a single series, in the total nominal amount of R$185 million, not subject to monetary restatement. The unit value of the debentures will bear interest of % of the CDI over, with lump sum payment of interest and amortization on the maturity date of May 17, The issue does not have guarantees of any nature, and is not subject to scheduled renegotiation. The Issuer has complied with all obligations set forth in the issue deed, on a regular and timely basis. ECO101 Concessionária de Rodovias S.A. The 1 st issue of simple, registered, book-entry, non-convertible, non-privileged debentures occurred on June 29, 2017, in a single series, with additional personal guarantee, in the total nominal amount of R$25 million, not subject to monetary restatement. The unit value of the debentures will bear interest of 100% of the CDI over, plus 1.80% p.a., payable semiannually every June 29 and December 29, beginning December 29, 2017 and ending on the maturity date, together with the amortization, on December 29, The issue is backed by security interest and additional personal guarantee in the form of guarantee by Ecorodovias Concessões e Serviços S.A., not subject to scheduled renegotiation. The Issuer has complied with all obligations set forth in the issue deed, on a regular and timely basis. EcoRodovias Concessões e Serviços S.A. 1 st issue (EcoRodovias Infraestrutura Debt assignment) The 1 st issue of non-convertible, non-privileged debentures occurred on April 24, 2015, with additional personal guarantee, in two series, in the total nominal amount of R$600 million. 70

73 17. Debentures (Continued) EcoRodovias Concessões e Serviços S.A. (Continued) 1 st issue (EcoRodovias Infraestrutura Debt assignment) (Continued) On August 10, 2016, the 2 nd amendment to the Deed was signed, whereby the Issuer (EcoRodovias Infraestrutura e Logística S.A.) assigned all the Debenture-related rights acquired and obligations assumed to the Guarantor (Ecorodovias Concessões e Serviços S.A.), with substitution of the Issuer's contractual position for the Guarantor and assumption of the Debt represented by the Debentures by the Guarantor ("assignment"). As a result of the Assignment, the Guarantor became the new Debenture issuer and, as such, the Issue (after the Assignment) is no longer backed by the personal guarantee from the Guarantor or third parties. (i) 1 st series - R$232 million, not subject to monetary restatement; the nominal unit value of the debentures will bear interest of 100% of the CDI over, plus 1.18% p.a., paid semiannually from the issue date, every April 15 and October 15, beginning October 15, 2015 and ending April 15, 2018, with lump sum payment of amortization on April 15, 2018; (ii) 2 nd series - R$368 million, not subject to monetary restatement; the nominal unit value of the debentures will bear interest of 100% of the CDI over, plus 1.42% p.a., paid semiannually from the issue date, every April 15 and October 15, beginning October 15, 2015 and ending April 15, 2020, with payment of amortization in two installments, on April 15, 2019 and 2020; The issue does not have guarantees of any nature, and is not subject to scheduled renegotiation. The Issuer has complied with all obligations set forth in the issue deed, on a regular and timely basis. 2 nd issue The 2 nd issue of simple, registered, book-entry, non-convertible, non-privileged debentures occurred on May 17, 2017, in three series, in the total nominal amount of R$800 million, as follows: 71

74 17. Debentures (Continued) EcoRodovias Concessões e Serviços S.A. (Continued) 2 nd issue (Continued) (i) 1 st series - R$240 million, not subject to monetary restatement; the nominal unit value of the debentures will bear interest of 100% of the CDI over, plus 0.79% p.a., paid semiannually from the issue date, every April 15 and October 15, beginning April 15, 2013 and ending October 15, 2018, with payment of amortization in three annual installments, on October 15, 2016 through 2018; (ii) 2 nd series - R$160 million, monetarily restated based on IPCA variation, plus interest, on the restated amount of 5.0% p.a., paid annually from the issue date, every October 15, beginning October 15, 2013 and ending October 15, 2019, with payment of amortization in two annual and successive installments, on October 15, 2018 and 2019; (iii) 3 rd series - R$400 million, monetarily restated based on IPCA variation, plus interest, on the restated amount of 5.35% p.a., paid annually from the issue date, every October 15, beginning October 15, 2013 and ending October 15, 2022, with payment of amortization in three annual and successive installments, on October 15, 2020 to 2022; The issue does not have guarantees of any nature, and is not subject to scheduled renegotiation. The Issuer has complied with all obligations set forth in the issue deed, on a regular and timely basis. 3 rd issue The 3 rd issue of simple, registered, book-entry, non-convertible, non-privileged debentures occurred on November 18, 2016, in a single series, in the total nominal amount of R$215 million, not subject to monetary restatement. The unit value of debentures will bear interest of 114.0% of the CDI over, paid in two semiannual installments and a quarterly installment, beginning May 18, 2017 and ending on the maturity date, together with amortization, on February 19, The issue does not have guarantees of any nature, and is not subject to scheduled renegotiation. 72

75 17. Debentures (Continued) EcoRodovias Concessões e Serviços S.A. (Continued) 3 rd issue (Continued) The Issuer has complied with all obligations set forth in the issue deed, on a regular and timely basis. 4 th issue The 4 th issue of non-convertible, non-privileged debentures occurred on April , for private placement, in a single series, in the total nominal amount of R$300 million, not subject to monetary restatement. The unit value of the debentures will bear interest of 105.5% of the CDI over, with lump sum payment of interest and amortization on the maturity date of April 12, The issue does not have guarantees of any nature, and is not subject to scheduled renegotiation. The Issuer has complied with all obligations set forth in the issue deed, on a regular and timely basis. 5 th issue The 5 th issue of simple, registered, book-entry, non-convertible, non-privileged debentures occurred on June 22, 2017, in a single series, in the total nominal amount of R$100 million, not subject to monetary restatement. The unit value of the debentures will bear interest of 109.0% of the CDI over, with lump sum payment of interest and amortization on the maturity date of December 22, The issue does not have guarantees of any nature, and is not subject to scheduled renegotiation. The Issuer has complied with all obligations set forth in the issue deed, on a regular and timely basis. 73

76 17. Debentures (Continued) EcoRodovias Concessões e Serviços S.A. (Continued) 6 th issue The 6 th issue of simple, registered, book-entry, non-convertible, non-privileged debentures occurred on December 14, 2017, in three series, in the total nominal amount of R$1.100 million, as follows: (i) 1 st series - R$319,550 million, not subject to monetary restatement; the nominal unit value of the debentures will bear interest of 106% of the CDI p.a., paid semiannually from the issue date, every May 15 and November 15, beginning May 15, 2018 and ending November 15, 2020, with lump sum payment of amortization on the maturity date; (ii) 2 nd series - R$750,450 million, not subject to monetary restatement; the nominal unit value of the debentures will bear interest of % of the CDI p.a., paid semiannually from the issue date, every May 15 and November 15, beginning May 15, 2018 and ending November 15, 2022, with payment of amortization in two annual installments, on November 15, 2021 and 2022; (iii) 3 rd series - R$30,000 million, monetarily restated based on IPCA variation, plus interest, on the restated amount of 6% p.a., paid annually from the issue date, every November 15, beginning October 15, 2018 and ending October 15, 2024, with payment of amortization in two annual and successive installments, on October 15, 2023 and 2024; The issue does not have guarantees of any nature, and is not subject to scheduled renegotiation. The Issuer has complied with all obligations set forth in the issue deed, on a regular and timely basis. EcoRodovias Infraestrutura e Logística S.A. The 2 nd issue of non-convertible, non-privileged debentures occurred on June 2, 2017, for private placement, in a single series, in the total nominal amount of R$80 million, not subject to monetary restatement. The unit value of the debentures will bear interest of % of the CDI over, with lump sum payment of interest and amortization on the maturity date of June 2,

77 17. Debentures (Continued) EcoRodovias Infraestrutura e Logística S.A. (Continued) The issue does not have guarantees of any nature, and is not subject to scheduled renegotiation. The Issuer has complied with all obligations set forth in the issue deed, on a regular and timely basis. The issue does not require the maintenance of financial indices (covenants). Ecoporto Santos S.A. The 1 st issue of simple, registered, book-entry, non-convertible, non-privileged debentures occurred on June 15, 2012, in a single series, with security interest and additional personal guarantee, in the total nominal amount of R$600 million, not subject to monetary restatement. The unit value of the debentures will bear interest of 100% of the CDI over, plus 1.85% p.a., payable annually every June 15, from 2013 to Principal is amortized in six annual installments, on June 15, from 2014 to The issue is backed by security interest and additional personal guarantee in the form of guarantee by EcoRodovias Infraestrutura e Logística S.A., not subject to scheduled renegotiation. The Issuer has complied with all obligations set forth in the issue deed, on a regular and timely basis. The aging list of noncurrent installments is as follows: Consolidated 12/31/ /31/2016 Installment Cost Total Installment Cost Total (296) (296) 808,151 (8,570) 799, ,249 (7,583) 959, ,639 (6,223) 605, ,122,409 (6,138) 1,116, ,307 (4,981) 577, ,645 (5,231) 673, ,019 (4,416) 290, ,362 (2,954) 940, ,741 (2,574) 524, onwards 652,227 (1,300) 650, ,626 (1,626) 629,000 4,363,892 (23,502) 4,340,390 3,454,483 (28,390) 3,426,093 75

78 17. Debentures (Continued) The Company s agreements provide for covenants linked to financial ratios, as follows: Company Issue Description of covenant Ratio required Met Ecocataratas 1ª Net debt/adjusted Ebitda < 3.5x 0.69x Ecovias 2ª Net debt/adjusted Ebitda < 3.5x 1.35x Adjusted Ebitda/Net finance cost > 2.0x 13.15x Ecopistas 1ª Equity/Total liabilities > 20% 33.95% ICSD - Debt service coverage ratio 1.20x 1.21x Net debt/adjusted Ebitda < 4x 3.78x Ecosul 1ª Net debt/adjusted Ebitda < 3.5x 1.19x 2ª Net debt/adjusted Ebitda < 3.0x 1.19x 3ª Net debt/adjusted Ebitda < 3.5x 1.19x Ecorodovias Concessões 1ª Net debt/ebitda 3.75x 2.24x 2ª Net debt/ebitda < 3.5x 2.40x Adjusted Ebitda/Net finance cost > 2.0x 5.56x 3ª Net debt/adjusted Ebitda 3.75x 2.24x Ebitda/Net finance cost 2.0x 5.96x 4ª Net debt/adjusted Ebitda 3.75x 2.24x Ebitda/Net finance cost 2.5x 5.96x 5ª Net debt/adjusted Ebitda 3.5x 2.24x Ebitda/Net finance cost 2.0x 5.96x 6ª Net debt/adjusted Ebitda 3.75x 2.24x Ebitda/Net finance cost 2.0x 5.96x Ecoporto (*) 1ª Net debt/ebitda < 3.5x (-)81.02x Ebitda/Net finance cost > 2.5x (-)0.08x Ecovia 1ª Net debt/adjusted Ebitda < 3.5x 0.47x (*) Ratio backed by the Company s letter of guarantee. 76

79 17. Debentures (Continued) The Internal Return Rate (IRR) of transactions is as follows: Issuer Series Date Nominal value Interest rate IRR EcoRodovias Concessões e Serviços EcoRodovias Infraestrutura e Logística Debentures 1 st series 10/15/ ,000 CDI % 11.57% Debentures 2 nd series 10/15/ , % + IPCA 11.17% Debentures 3 rd series 10/15/ , % + IPCA 10.79% Debentures - 1 st series 05/24/ ,000 CDI % p.a % Debentures - 2 nd series 05/24/ ,000 CDI % p.a % Debentures Single series 11/18/ , % CDI 12.19% Debentures - Single series 04/12/ , % CDI 7.44% Debentures - Single series 06/22/ , % CDI 8.06% Debentures - 1 st series 12/14/ , % CDI 7.26% Debentures - 2 nd series 12/14/ , % CDI 7.57% Debentures - 3 rd series 12/14/ ,000 IPCA + 6.0% 8.99% Single series 06/02/ , % CDI 7.57% IPCA % Debentures - 1 Ecovias dos Imigrantes series 04/15/ ,000 p.a. 9.48% Debentures - 2 nd series 04/15/ ,000 IPCA % p.a. 9.14% Debentures - 1 st series 01/15/ ,500 IPCA % 14.42% Ecopistas Debentures - 2 nd series 01/15/ ,500 IPCA % 14.61% Debentures - 3 rd series 01/15/ ,500 IPCA % 14.54% Debentures 4 th series 01/15/ ,500 IPCA % 14.44% Debentures Private - 1 st series 17/14/ , % CDI 7.28% Debentures Private - 2 nd series 12/14/ , % CDI 7.25% Debentures Private - 3 rd series 12/14/ , % CDI 7.25% Debentures Private 4 th series 12/14/ , % CDI 7.25% Eco101 Single series 06/30/ ,000 CDI % p.a. 9.23% Ecoporto Santos Single series 06/15/ ,000 CDI % p.a % Ecocataratas Single series 05/17/ , % CDI 7.92% Ecosul Single series 11/17/ , % CDI 11.31% Ecosul Single series 01/17/ , % CDI 9.55% Ecosul Single series 06/02/ , % CDI 7.68% Ecovia Single series 11/04/ , % CDI 12.05% 5,897,000 77

80 18. Transactions with related parties The Company and its subsidiaries contract services from their shareholders or from related companies, both directly or through consortiums, for the performance of upkeep, improvement and expansion services in the highway system and administrative and financial services. According to the Company s articles of incorporation, the Board of Directors is responsible for approving contracts between the Company and any shareholder of Company or parent company of its shareholders, or companies that are subsidiaries or affiliates of the Company shareholders or of their controlling shareholders, and any member of the Board of Directors may request, previously and timely, the preparation of an independent assessment conducted by a specialized company that will review the terms and conditions of the proposed contract and analyze its adequacy to market conditions and practices (arm s length basis). The balances of related-party transactions at December 31, 2017 are as follows: 78

81