CONSOLIDATED INFORMATION Caxias do Sul, February 21 st 2018.

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1 2017 RESULTS - Management Report Dear Shareholders: The Management of Marcopolo S.A. ("Marcopolo" or "Company") hereby submits the Management Report and Financial Statements for the year closed on December 31 st 2017, accompanied by the independent auditors' report, for your consideration. The Financial Statements are presented according to the accounting policies adopted in Brazil and the IFRS International Financial Reporting Standards as established by IASB - International Accounting Standards Board. 1. OPERATIONAL CONTEXT Marcopolo is a publicly-held corporation with registered office in Caxias do Sul, Rio Grande do Sul, founded on August 6 th 1949 for the purpose of manufacturing buses, bus bodies and components. The product line encompasses a wide variety of models made up of intercity vehicles, urban vehicles, micro and minibuses, apart from the Volare family (fullyequipped bus with chassis and body). The buses are manufactured in sixteen plants, five of them located in Brazil (three plants in Caxias do Sul RS, one in Duque de Caxias RJ and one in São Mateus ES) and eleven in foreign countries, one in South Africa, three in Australia, one in China, one in Mexico, two in Argentina, one in Colombia and two in India. Marcopolo also has a 40% interest in the company SPHEROS (air-conditioning), 30% in WSUL (seat foam), 65% in Apolo (plastic), 20% in the bus body assembly facility GB Polo and 10.5% in the Canadian company New Flyer Industries. Marcopolo also has a controlling interest in Bank Moneo S.A., incorporated to provide financial support to the Company products. 1

2 2. PERFORMANCE INDICATORS The table below lists some of the relevant indicators for the management and analysis of the Company performance in For comparison purposes with the previous year, it is important to consider that the 2016 results were positively affected by a non-recurring effect regarding the partial sale of shares held by Marcopolo in New Flyer Industries, held in 3Q16. CONSOLIDATED FIGURES (BRL million and percentage variation, except where otherwise stated) Operational Performance Var. % Net Operating Revenue 2, , Revenue in Brazil 1, Exportation revenue from Brazil Revenue in foreign countries (5.5) Gross Profit EBITDA (1) (66.1) Net Profit (63.1) Earnings per share in BRL (68.0) Return on Invested Capital ROIC (2) 3.2% 11.9% (8.7)pp Return on Equity ROE (3) 4.5% 12.2% (7.7)pp Investments (26.1) Shareholders' Equity 1, , Financial Position: Industrial Segment Cash, Cash Equivalents and Financial Investments (4) 1, ,414.0 (18.8) Short Term Financial Liabilities (0.3) Long Term Financial Liabilities (20.0) Net Financial Liabilities Financial Position: Industrial and Financial Segments Cash, cash equivalents and financial investments 1, ,458.9 (20.4) Short Term Financial Liabilities (9.9) Long Term Financial Liabilities 1, ,374.2 (19.3) Net Financial Liabilities (6.9) Margins Gross Margin 14.0% 12.7% 1.3pp EBITDA Margin 4.2% 13.7% (9.5)pp Net Margin 2.9% 8.6% (5.7)pp Notes: (1) EBITDA = Earnings before interest, taxes, depreciation and amortization; (2) ROIC (Return on Invested Capital) = EBIT/(inventories + customers + property, plant and equipment + intangible assets - suppliers); (3) ROE (Return on Equity) = Net Profit/Beginning Shareholders' Equity; (4) The amount also includes the account "financial assets measured at the fair price by means of the result"; pp = percentage points. 2

3 3. BUS INDUSTRY PERFORMANCE IN BRAZIL The Brazilian production in reached 14,693 units in 2017, a volume which is 2.2% greater than the 14,372 units produced in Since the bus is sold fully-equipped, the Volare model is not computed in the Brazilian production of bodies. If the production of this kind of vehicle were considered, the domestic production would be 16,474 units per year, with a 5.5% increment compared to the 15,613 units produced in The domestic market demand reached 9,804 units, a 0.7% drop compared to 2016, while the production to the foreign market was of 4,889 units, 8.6% higher than exportation in the previous year. The chart below shows the evolution of the Brazilian bus body production in the last ten years: Internal Market Export Market BRAZILIAN BUS PRODUCTION TOTAL (in units) PRODUCTS (1) Intercity 10,216 7,977 5,679 4,185 4,768 Urbans 17,938 16,836 9,593 7,929 7,152 Micros 4,955 3,616 2,239 2,258 2,773 TOTAL 33,109 28,429 17,511 14,372 14,693 Sources: FABUS (National Bus Manufacturers Association) and SIMEFRE (Interstate Union of the Railroad and Road Material and Equipment Industry). Notes: (1) Includes exported KD (knocked down) units. BRAZILIAN BUS PRODUCTION DOMESTIC MARKET (in units) PRODUCTS (1) Intercity 7,666 5,644 3,382 1,654 2,116 Urbans 17,011 15,861 8,291 6,796 6,199 Micros 4,150 3,123 1,679 1,419 1,489 TOTAL 28,827 24,628 13,352 9,869 9,804 Note: (1) See notes on the table Brazilian Bus Production Total. 3

4 BRAZILIAN BUS PRODUCTION FOREIGN MARKET (in units) PRODUCTS (1) Intercity 2,550 2,333 2,297 2,531 2,652 Urbans ,302 1, Micros ,284 TOTAL 4,282 3,801 4,159 4,503 4,889 Note: (1) See notes on the table Brazilian Bus Production Total. 4. MARCOPOLO'S PERFORMANCE The results obtained by Marcopolo in 2017 demonstrated a gradual recovery of the Brazilian demand for buses and reinforced the Company's leading position in this market. While the domestic production grew 2.2% in 2017, breaking a three-year retreat cycle, Marcopolo had a 17.3% increase in produced units, which marked the beginning of the long-awaited recovery process. The main highlights of the year supporting this positive view were the return of volumes in the intercity bus segment in the domestic market, showing an express increase of 93.7% in the net revenue compared to 2016; the performance of the micro and Volare segments, whose revenue rose 155.5% and 27.0% respectively; and, finally, the increment in the Company's total market share, which closed 2017 at 48.1% against 41.3% in Simultaneously to the recovery in the domestic market, the Company continued its hard work to increase efficiency, reduce costs and optimizing its plants, seeking greater competitiveness. The results of the revitalization efforts of the Marcopolo Solidarity Production System through the application of the LEAN concepts were visible in the safety, quality and efficiency indicators. The adoption of the LEAN methodology was also essential in the case of the fire that burned the plastic plan (Ana Rech unit), enabling production to resume faster than initially predicted, with less cost and greater efficiency. Additionally, the adjustment of the organizational structure and reduction of fixed costs along the year contributed to the results. In the Company performance analysis by segment, we note the performance of intercity buses, which had a 77.7% increase in physical units produced in the domestic market compared to 2016, thus breaking a negative sequence started in The main growth drivers in this sector were (i) a more positive prospect regarding the economic activity in Brazil, adding greater security and predictability to investment decisions, (ii) interest tax reduction during 2017, (iii) the first signs of improvement in the labor market, mainly affecting the freight market, (iv) the long duration of the crisis, with resulting ageing of the fleet, (v) effects of the adjustment to the regulation of the average age for interstate and international lines and (vi) requirement of installation of elevators, postponed to July In the urban bus market, even with a drop in the annual production, the trend also moved upwards in the second half, especially because of a referral of export 4

5 opportunities from Brazil and a still modest recovery in the local demand, linked to the process of economic growth, normalization and an increase in fares all over the country and progress in the bidding process in the city of São Paulo, which should happen this year. In May 2017, Marcopolo launched a new urban bus model named Torino S, which combines greater operating efficiency, simplified and quicker maintenance with lower costs, while maintaining the quality, comfort and safety features of the Torino model. Also, a federal program named Refrota, which faced bureaucratic obstacles in early 2017, helped boost orders for this segment and now proves accessible to the customer. The Volare business also benefitted from the beginning of the economic recovery, with an increased confidence by small fleet owners. Thus, the segment closed the year with a 43.5% growth in physical units produced, with 27.0% greater revenue than the same period last year. Micro buses also had a positive year, with a 104.6% growth in physical units. Marcopolo has consolidated its leadership after acquiring the remaining interest in Neobus, a leading company in the segment. The industry was one of the first to suffer with the Brazilian economic crisis, but showed an important recovery, including in retail, for small and micro enterprises and city halls. In foreign units, Polomex, located in Monterrey, Mexico, was the great positive highlight in international operations. Its performance was marked by a 213.0% growth in net profit, which resulted from a customer diversification effort based on the possibility of assembling with other chassis brands and a better product mix, especially for intercity buses. In April 2017, Marcopolo reported the purchase of the remaining interest in the Australian company Volgren, headquartered in Melbourne, thus owning 100% of its capital. We further note that the TMML (India) operation had positive results, with a balanced performance during the year, suffering fewer effects from the Indian market's seasonality. The unit had a net profit of BRL 4.3 million, which is 51.6% greater than the same period last year. The exportation growth took place in alignment with the early 2017 forecast, with volumes growing 5.1% and evolving 5.2% in the annual comparison. The project to integrate the Commercial department Foreign Market with the International Business department with the opening of new offices in Kuala Lumpur and Dubai began to show its first results, with important new deals being prospected for in the African continent. Finally, we note the quick recovery of the Ana Rech unit, after the fire that burned the plastic plant on September 3 rd 2017 and affected the production in September and October. The Company concentrated its efforts in the recovery of volumes and the Ana Rech site normalized its production, manufacturing the same number of buses per day as it did before the fire after only five weeks, having worked six Saturdays during 4Q17 to compensate for the idle days resulting from the fire. 4.1 Units Recorded in Net Revenue In 2017, 10,591 units were recorded in net revenue, 5,587 of which were recorded in Brazil (52.8% of the total), 2,975 units exported from Brazil (28.0% of the 5

6 total) and 2,029 units (19.2% of the total) produced in foreign countries, as shown in the table below: OPERATIONS (in units) Var. % BRAZIL - Domestic market 5,587 4, Foreign market 3,311 2, SUBTOTAL 8,898 7, Exclusion exported KD s (1) TOTAL IN BRAZIL 8,562 7, FOREIGN - South Africa (2.2) - Australia (14.4) - Mexico 1,272 1, TOTAL FOREIGN 2,029 2,034 (0.3) GRAND TOTAL 10,591 9, Notes: (1) (Knock Down) = Partially or totally knocked down bodies. 4.2 Production In 2017, the consolidated Marcopolo production amounted to units, 21.0% higher the 8,810 manufactured in Out of these total figures, 81.0% have been produced in Brazil and the remaining 19.0% in foreign countries. Marcopolo's worldwide production figures are presented on the tables below: MARCOPOLO CONSOLIDATED WORLDWIDE PRODUCTION OPERATIONS (in units) Var. % BRAZIL (1) - Domestic market 5,581 4, Foreign market 3,271 3, SUBTOTAL 8,852 7, Exclusion exported KD s (2) (35.8) TOTAL IN BRAZIL 8,633 6, FOREIGN - South Africa Australia (14.4) - Mexico 1,272 1, TOTAL FOREIGN 2,029 1, GRAND TOTAL 10,662 8, Notes: (1) Includes the production of the Volare model, as well as the production of Marcopolo Rio; (2) (Knock Down) = Partially or totally knocked down bodies. 6

7 MARCOPOLO CONSOLIDATED WORLDWIDE PRODUCTION BY MODEL PRODUCTS/MARKETS (in units) DM FM (1) TOTAL DM FM (2) TOTAL Intercity 1,558 1,827 3, ,925 2,802 Urbans 1,713 2,148 3,861 1,963 2,005 3,968 Micros , SUBTOTAL 4,162 4,719 8,881 3,255 4,314 7,569 Volares (3) 1, , ,241 TOTAL PRODUCTION 5,581 5,081 10,662 4,070 4,740 8,810 Notes: (1) DM = Domestic Market; FM = Foreign Market; (2) The total FM production includes exported KD units (partially or totally knocked down bodies), which amounted to 219 units in 2017 against 341 units in 2016; (3) The production of Volares is not a part of the SIMEFRE and FABUS figures or the industry production. PRODUCTS/MARKETS (1) (in units) MARCOPOLO PRODUCTION IN BRAZIL DM FM TOTAL DM FM TOTAL Intercity 1,558 1,711 3, ,880 2,757 Urbans 1, ,177 1, ,386 Micros , SUBTOTAL 4,162 2,909 7,071 3,255 2,685 5,940 Volares (2) 1, , ,241 TOTAL PRODUCTION 5,581 3,271 8,852 4,070 3,111 7,181 Notes: (1) The Neobus units are computed in the table above only from August 2016 on; (2) The production of Volares is not a part of the SIMEFRE and FABUS figures or the industry production. 4.3 Market Share Marcopolo regained market share in all segments, thus keeping its leading position in the Brazilian market. The Company closed the year with a 48.1% share. Even though the Brazilian bus production had a 2.2% growth in 2017, the Company's general market share rose 6.8 percentage points compared to The table below shows Marcopolo's market share in the Brazilian production by product line: MARKET SHARE IN BRAZILIAN PRODUCTION (%) PRODUCTS (1) Intercity Urbans Micros TOTAL Source: FABUS and SIMEFRE Note: (1) Volare is not computed for market share purposes. 7

8 5. CONSOLIDATED NET REVENUE The consolidated net revenue achieved BRL 2,876.0 million in 2017, 11.7% higher than the BRL 2,574.1 million in The result is mainly an effect from the domestic market income, which was 37.8% greater than A highlight under this title is the intercity bus revenue for the domestic market, which rose 93.7% compared to the previous year. The domestic market sales yielded revenue of BRL 1,086.5 million or 37.8% of the total net revenue (30.6% in 2016). Exportation, added to foreign transactions, reached revenue of BRL 1,789.5 million or 62.2% of the total (69.4% in 2016). Revenue by product and destination market is shown on the table below: TOTAL CONSOLIDATED NET REVENUE BY PRODUCTS AND MARKETS (BRL million) PRODUCTS/MARKETS (1) DM FM TOTAL DM FM TOTAL Intercity , ,176.1 Urbans Micros Bodies subtotal , , , ,082.2 Volares (2) Chassis Bank Moneo, Parts and Others GRAND TOTAL 1, , , , ,574.1 Notes: (1) DM = Domestic Market; FM = Foreign Market; (2) The Volare revenue includes chassis. Out of the total consolidated net revenue in 2017, 81.8% came from the sale of bodies, 11.2% from the sale of Volares and 7.0% of the revenue from parts, Bank Moneo and chassis. The charts below show the source of the consolidated revenue in further detail (in %):

9 6. GROSS INCOME AND MARGINS In 2017, the gross profit totaled BRL million, amounting to 14.0% of the net revenue. The 1.3 percentage-point improvement compared to 2016 results from greater intercity bus revenue, exportation of products with greater added value and improved efficiency in all manufacturing plants, arising from the Company's efforts to revitalize its production system by making use of the LEAN principles. The year's gross result was affected by the non-recurring effect of terminations arising from the Company's internal restructuring in the amount of BRL 9.2 million conducted in 1Q SALE EXPENSES Sale expenses totaled BRL million in 2017 or 5.9% of the net income against BRL million, or 5.5% of the revenue in The increase in the absolute amount is mostly explained by the Neobus consolidation, by a greater expense volume with commissions as a result of a greater sales volume in the domestic market and by the constitution of an additional provision for doubtful debtors. In 2017, sale expenses were also affected by the non-recurring effect of terminations conducted in 1Q17 arising from the Company's internal restructuring in the amount of BRL 1.5 million. 8. GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses totaled BRL million in 2017 and BRL million in 2016, amounting to 5.8% and 6.4% of the net income respectively. The reduction in the revenue value results from actions conducted by the Company seeking to reduce indirect expenses and costs. The year's general and administrative expenses were impacted by non-recurring provisions concerning the Company's internal restructuring, in the amount of BRL 3.2 million, conducted in 1Q OTHER OPERATING REVENUE/EXPENSES In 2017, BRL 80.4 million was recorded as "Other Operating Expenses". This amount is made up of non-recurring amounts totaling BRL 48.3 million, including BRL 14.1 million for the Company's internal restructuring conducted in 1Q17; BRL 17.7 million for fixed and extraordinary costs arising from the fire that burned the Plastic plant; and BRL 16.5 due to the misapplication of funds found in Marcopolo China. The remaining amount of BRL 32.1 million is made up of BRL 16.5 million concerning employment claim payments; BRL 3.5 million for provision for loss of obsolete inventory; BRL 3.2 million for tax provision expenses; BRL 1.0 million for damages concerning contract termination with a commercial representative; BRL 0.8 million for consulting services, and; BRL 7.1 million in other expenses. 9

10 10. EQUITY METHOD RESULTS The equity method result in 2017 was BRL 86.9 million positive against BRL 94.0 million also positive in The main contribution came from New Flyer Industries, in the amount of BRL 53.7 million. The equity method result is described in detail in Explanatory Note no. 12 to the Financial Statements. 11. NET FINANCIAL INCOME 12. EBITDA The 2017 net financial income was BRL 18.7 million positive against BRL 66.3 million also positive in The smaller financial result compared to the previous year arises from a smaller change in exchange rate and smaller financial investment yield through a reduced interest rate. The financial income is described in detail in Explanatory Note no. 29 to the Financial Statements. EBITDA reached BRL million in 2017, with a 4.2% margin against BRL million and a 13.7% margin in For comparison purposes with the previous year, it is important to consider that the 2016 results were positively affected in BRL million, due to the partial sale of shares held by Marcopolo in New Flyer Industries. The year's EBITDA was affected by non-recurring events concerning the Company's internal restructuring conducted in 1Q17, which totaled BRL 28.0 million and was recorded as follows: - Gross Income and Margins: BRL 9.2 million; - Sale Expenses: BRL 1.5 million; - General and Administrative Expenses: BRL 3.2 million; - Other Net Operating Expenses/Revenue: BRL 14.1 million. Also in 2017, EBITDA was adversely affected by other non-recurring expenses, namely, BRL 17.7 million for the fire that burned the Plastic plant and BRL 16.5 million due to the misapplication of funds found in Marcopolo China. Thus, the adjusted EBITDA for 2017, excluding the aforementioned non-recurring effects, would be BRL million, with a 6.3% margin in the period. The table below shows the accounts that make up the EBITDA: (BRL million) Result before Income Tax and Social Contribution Financial Revenue (292.0) (577.5) Financial expenses Depreciation / Amortization

11 EBITDA NET PROFIT The 2017 net profit reached BRL 82.1 million, with a 2.9% net margin. The result was affected by "Other Operating Expenses", as already described. 14. FINANCIAL INDEBTEDNESS The net financial indebtedness amounted to BRL million on (BRL million on ). Out of this total, BRL million came from the financial segment, while the industrial segment had net liabilities in the amount of BRL million. It should be noted that the financial segment indebtedness comes from the consolidation of the Bank Moneo activities and must be analyzed separately, as it has different characteristics from the indebtedness arising from the Company's manufacturing activities. The financial liabilities of the Bank Moneo have a corresponding entry in the "Customers" account in the Bank's Assets. The credit risk is properly provisioned for. Since these are transfers from the FINAME, each disbursement BNDES has a corresponding entry in the customer receivables account of the Bank Moneo, both in term and fixed rate. See Explanatory Note 31 to the Financial Statements. On December 31st, the net financial indebtedness of the industrial segment amounted to 2.3 times the EBITDA of the last 12 months, or 1.5 times the adjusted EBITDA, excluding the non-recurring effects in the year. 15. CASH GENERATION In 2017, the operating activities raised funds in the order of BRL million. The investment activities demanded BRL 47.0 million while the financing activities consumed BRL million, BRL million net of loans and repayments, BRL 17,1 million consumed in the payment on dividend and interest on the shareholders' equity and BRL 0.7 million for the sale of treasury shares. As a result, the beginning cash balance of BRL 1,458.9 million, considering the unavailable financial investments and reducing BRL 41.8 million equivalent to the difference between foreign exchange variation and variation of unavailable financial investments rose to BRL 1,160.8 million at the end of the year. The cash flow statement of the industrial and financial segments is presented in detail in Explanatory Note 32 to the Financial Statements. 16. PERFORMANCE OF CONTROLLED AND ASSOCIATED COMPANIES 16.1 Controlled companies in foreign countries In 2017, the controlled units in foreign countries produced 2,029 units. This volume amounted to 19.0% of Marcopolo's consolidated production. We stress that 11

12 the Company remains engaged in expanding the application of the Lean principles in all its international operations. Below are some of the highlights of controlled companies in foreign countries: MARCOPOLO SOUTH AFRICA (MASA) In 2017, MASA, located in Johannesburg, produced 354 units with an 18.8% growth compared to the 2016 production (298 units). In that year, the unit began selling the Volare model imported from Brazil, but it also suffered with the cancellation of important bidding process and operating efficiency issues, which were corrected during POLOMEX Located in Monterrey, Mexico, Polomex produced 1,272 units in 2017 (1,201 units in 2016). Its performance was marked a customer diversification effort based on the possibility of assembling with other chassis brands and a better product mix, especially for intercity buses. The expectation for 2018 is for the growth of products with a lighter profile, especially micro buses. VOLGREN - Headquartered in Melbourne, Australia and produced 403 units in 2017 (417 units in 2016). Major municipal bids expected for 2017 were suspended and transferred to The expectation is for such transactions to be completed in 2018, with an important growth in volumes revenue and profitability. MARCOPOLO CHINA (MAC) MAC has an area for sourcing, production of parts, components and knocked down bus bodies, as well as production of PKD buses for exportation. MAC's result was adversely affected by a provision for the misapplication of funds, as reported in 3Q17. The controlled company's strategy continues to be that of serving as a basis for customer relationship in Asia and Oceania. The expectation for 2018 is to expand sales, reduce costs and improve operating efficiency Associated companies in foreign countries GB POLO On June 20 th 2017, Marcopolo reported the reduction of its interest in GB POLO's capital stock from 49% to 20%. From the beginning of the operation, Marcopolo has unsuccessfully search for alternatives to improve the unit's performance, mostly affected by foreign exchange, political and market factors. METALPAR/METALSUR The Argentinean operations of Metalpar and Metalsur showed good performance in 2017, benefitting from the good economic prospects for the country. In 2018, the urban bus segment, served by Metalpar, must continue to show good performance, supported by the fleet renewal announced by the capital Buenos Aires. Metalsur, in turn, must present a mix of lighter products in 2018 than the one produced in

13 NEW FLYER INDUSTRIES New Flyer Industries, a company in which Marcopolo has a 10.5% ownership interest, is the main manufacturer of urban buses in the United States and Canada. Located in Winnipeg, Canada, the New Flyer Industries is a leading company in technology and offers a wide range of products, including clean diesel, natural gas, diesel-electricity and electricity-powered vehicles. In 2016 and 2017, the results of New Flyer Industries were benefitted by the consolidation of Motor Coach Industries International - MCI. On October 12 th 2017, the company announced the opening of its new research center, devoted to advanced bus technology. The expectations are still positive for 2018, with New Flyer Industries having announced the purchase of ARBOC Specialty Vehicles, targeted at the freight vehicle segment. SUPERPOLO Located in Colombia, Superpolo had a stable year in The company began to adopt the Lean methodology, with the same index base as Marcopolo. The expectation for 2018 is to maintain volumes and performance. TATA MARCOPOLO MOTORS (TMML) 2017 was a year of good performance of TMML with stable results, suffering fewer effects from the Indian market's seasonality. The unity shall keep growing through the introduction of new products with greater added value Bank Moneo Bank Moneo S.A. began operating in July 2005 for the purpose of financing Marcopolo products. The Bank is authorized to operate in lease-purchase, credit, financing and investment. The Bank's corporate profit in 2017 was BRL 2.8 million. The credit and accommodation transactions totaled BRL million on against BRL million on The Bank maintained a policy of prioritizing the quality of its credit portfolio by means of a strict credit assessment and approval system. 17. CORPORATE GOVERNANCE Marcopolo seeks to adopt best Corporate Governance practices, following the principles of transparency, equity, accountability and corporate responsibility, and its actions are listed on Level 2 of B3's Corporate Governance since The Company is bound to the arbitration of the Market Arbitration Chamber, according to an Arbitration Clause contained in its Articles of Incorporation. Marcopolo's management is formalized on the basis of distinction between the roles and responsibilities of the Board of Directors, the Executive Committee and the Executive Board. The Board of Directors is made up of seven members, four of which are external and independent, one elected by the minority shareholders, one by shareholders holding preferred shares and the other two by controlling shareholders. The Chairman of the Board of Directors does not take part in the Executive Board. The Board of Directors has a consulting technical committee on a permanent basis, established by its Articles of Incorporation, named Executive Committee, which assists 13

14 and provides opinion on the conduct of business. The competences of each of these bodies are established by the Company's Articles of Incorporation. Furthermore, in order to support, opine and support the conduct of business, the Board of Directors also has the following Committees: (i) Audit and Risks; (ii) Human Resources and Ethics; and (iii) Strategy and Innovation. The roles of each of these supporting Committees can be found on the Company's website: on the menu Corporate Governance/Bylaws of the Committees. The Company also has an Audit Committee made up of three members, one appointed by the minority shareholders, one by shareholders holding preferred shares and one by the controlling shareholders. The competences of each body are established by the Company's Articles of Incorporation. The Company gives fair and equal treatment to all minority shareholders, either capital owners or other stakeholders. When reporting information, the company uses high transparency standards in order to establish an atmosphere of reliability, both internally and in the company relationship with third parties. In order to comply with legal provisions and improve the information provided to the market in general and foreign shareholders in particular, the Financial Statements are reported according to the standards established by the IFRS - International Financial Reporting Standard. In 2017, the Company held meetings with the Stock Market Investment Analysts and Professionals Association (APIMEC) in São Paulo and Porto Alegre and non-deal road shows in Brazil and foreign countries. Marcopolo's relationship with its shareholders and potential investors is conducted by the Investor Relations department. In 2017, analysts from Brazil and foreign countries were received and several phone calls were made. Marcopolo's Investor Relationship website ( has current information for the investing audience. 18. COMPLIANCE PRACTICES In order to supplement the good governance practices and risk management, Marcopolo implemented a Compliance department in 2014, the structure of which includes a Consulting Committee made up of the executive officers appointed by the Articles of Incorporation, by the chairman of the Board of Directors, by the Compliance Officer, a compliance analyst and internal agents. The Company revised its code of conduct to include integrity provisions, trained all its employees and representatives, enhances internal and external communication and report channels, created an integrity policy, began to include compliance clauses in all the agreements executed by the Company, performs due diligence of integrity in partners and third parties, among other practices. Apart from that, the compliance team has taken place in outside training and benchmarking events. 19. INDEPENDENT AUDITORS 19.1 Change of Independent Auditors 14

15 In 2017, the Company changed its auditors and engaged the services of Pricewaterhouse Coopers Auditores Independentes, with registered office in Porto Alegre, RS, Rua Mostardeiro, 800, 9º andar, replacing KPMG Auditores Independentes CVM Instruction 381/03 In compliance with the CVM Instruction 381/03, subdivisions I through IV of Section 2, Marcopolo hereby declares that it has agreements with its Independent Auditors other than for the auditing of the Company's Financial Statements. During 2017, a Pricewaterhouse Coopers Auditores Independentes was hired in May 2017 to provide assistance services and compliance and the fees were equivalent to BRL 904,600. The responsibility for the definitions inherent to the executed procedures and the application thereof are prerogatives of the Management, so both the Company and its external auditors understand that such services do not affect professional independence. 20. STOCK MARKET 20.1 Capital Stock The Company's capital stock is BRL 1,264,622,468 divided into 925,196,009 shares, 341,625,744 of them being common shares (36.9%) and 583,570,265 being preferred shares (63.1%), all of them registered, book-entry and without par value Performance of the Marcopolo Shares in B3 In 2017, 1,250.5 thousand transactions were conducted with Marcopolo shares and 1,146.2 million shares were traded. Transactions with shares issued by Marcopolo moved BRL 3.4 million in the year. The interest of foreign investors in Marcopolo's capital stock amounted to 56.3% of the preferred shares and 36.7% of the total capital stock on The table below shows the evolution of the main stock market indicators: INDICATORS Number of transactions (thousands) 1, ,265.0 Traded Shares (million) 1, Traded amount (BRL million) 3, ,338.3 Market value (BRL million) (1)(2) 3, ,535.0 Book value per share (BRL) POMO4 quotation (last business day) Interest on Equity Capital and dividends per share (BRL/share) Notes: (1) Quotation of the last transaction of the period of the Preference Book-entry share (PE), multiplied by the total number of shares (OE+PE) in the same period. (2) Out of this total, 4,699,801 preferred shares were in treasury on DIVIDENDS/INTEREST ON EQUITY CAPITAL 15

16 On December 21 st, 2017, the Board of Directors approved the distribution of interest on capital in the gross amount of BRL 17.1 million, equivalent to the BRL ratio for each share. At a meeting held on February 21 st, 2018, the Board of Directors approved the distribution of dividends related to 2017, of which BRL 0.1 million as mandatory dividend and BRL 19.2 million as complementary dividends, totaling the amount of BRL 19.3 million. The total amount proposed for payment of interest on equity and dividend payments for the year 2017 totaled BRL 36.4 million, of which BRL 17.1 million as interest on shareholders' equity and BRL 19.3 million as dividends. The total amount distributed equals 50.4% of the Company's adjusted net income in 2017 and represents a yield of 1.0%. 22. INVESTMENT/NON-CURRENT ASSETS In 2017, Marcopolo invested BRL 54.3 million, BRL 31.1 million of which was spent in the parent company and applied towards: BRL 24.6 million in machines and equipment, BRL 3.2 million in computer equipment and software and BRL 3.3 million in other non-current assets. In the controlled companies, BRL 8.7 million was invested in Neobus, BRL 7.0 million in Volare Espírito Santo, BRL 2.7 million in Polomex, BRL 2.5 million in Volgren, BRL 0.9 million in Marcopolo Rio and BRL 1.4 million in other units. 23. SOCIOENVIRONMENTAL RESPONSIBILITY In a constant search for best practices, Marcopolo seeks economic development, simultaneously improving the quality of life of its employees, their families and society as a whole. The Marcopolo Solidarity Production system (SIMPS) promotes industrial development for growth, market leadership, productivity, quality, workplace improvement and profitability of products and services. The system provides conditions for continuous improvement of the quality of its products, processes and services, controlling the dangers to the environment and the health and safety of the workers, eliminating waste wherever it is occurring and maintaining a fully integrated chain. Marcopolo remains with international management certifications ISO Environment, ISO 9001 Quality, and OHSAS Health and Safety Social Responsibility Marcopolo and its employees develop social responsibility by means of the Marcopolo Foundation. The projects are targeted at children and adolescents of the community in which we are present. The Schools Project is noteworthy for its purpose to contribute to the development of the entire school community. The project provides diversified opportunities of activities out of school hours such as music, choir, orchestra, sports and refresher clinic. The Marcopolo Foundation also contributes on a monthly basis to educational and healthcare charities. 16

17 Also with focus on education, all the employees' children get notebook kits through the Everyone in School project, also coordinated by the Marcopolo Foundation. The purpose is to help family economy and support in the education of their children. The program is targeted at children and adolescents aged 5-18 taking elementary or secondary school. Nearly 18,000 customized notebooks were delivered in The Marcopolo Foundation encourages and facilitates the allotment of 6% of their employees' Individual Income Tax to the Municipal Funds for the Rights of Children and Adolescents in the cities of Caxias do Sul (RS) and Duque de Caxias (RJ) by means of the Destine Você Também Project, creating benefits in professionalization actions for adolescents and a children connection strengthening center, serving nearly young people in social and personal risk situation Satisfaction of Employees The satisfaction of the Marcopolo's employees is measured by means of the Internal Organizational Climate Survey that is conducted every two years, the last one having been conducted in During 2017, the Action Plan that had been structured by representatives from various departments was implemented. The next survey shall take place in the third quarter of 2018, with the participation of all of Marcopolo's associated companies. The company provides both internal and external channels for employees to submit comments, criticism, ideas and suggestions about the several topics involving their work or related to the Code of Conduct guidelines and the Compliance rules, with specific segregation for reporting. The messages received are treated and answered according to a specific policy. In the year that closed, a revision was conducted in the ombudsman's office, which was widely disseminated to employees of all the units, representatives and suppliers Education and Training Marcopolo encourages the constant qualification of its employees. For this purpose, raining is provided focused on the development of skills for all professional levels, which results in an average of 25 hours of training for each employee. The managers took part in actions related to the evolution of the LEAN thinking, focused on communication among teams and problem solving. As a way to disseminate the concepts of this product and process quality, 210 thousand hours of technical training were provided to employees from all departments, including newly hired ones. Marcopolo also provides customer training, both in the Training Center and in clinics and facilities near the companies. The year 2017 contemplated 1,019 internal market participants and 563 external market participants. 17

18 The Marcopolo Professional Education School (EFPM) maintained industrial courses for young people in partnership with SENAI, University of Caxias do Sul and the Social Assistance Foundation (FAS). One of EFPM's main purposes is to prepare professionals for the labor market by means of the first paid job and access to the Company's career plan. In 2017, 115 young people completed their education and 25 more joined the program. The term papers had as reference the LEAN principles and the 7 Wastes, focusing on improving the company's productive processes. Marcopolo has had an Education Incentive Program since 1981, including scholarships for high school, technical courses, graduate and postgraduate courses for employees approved in a selection process. The company also provides for the development of skills for communication in English and Spanish for workers who require this skill in their position Quality of Life The quality of life programs targeted at employees and their families are coordinated by the Marcopolo Foundation, including educational, leisure, cultural and sports activities. The Caxias do Sul and Duque de Caxias units feature their own facilities with places for events, courts and kiosks Environment Marcopolo's commitment is to protect the environment in a sustainable and balanced manner, establishing rules to minimize the activities' impact in compliance with the applicable law. In 2017, it obtained the renewal of all the Operating Licenses from the environmental authority and migrated the ISO to the new version published in 2015, NBR ISO 14001:2015. The certification audit took place in January Compensation The employees' compensation is made up of a fixed part, connected to their competences and skills, and a variable part, contingent upon the attainment of the goals of the Profit-sharing Program. Wage researches are conducted periodically in order to assess whether the amounts paid to the employees are within the regional standards, so that the company can remain competitive in the labor market Share Purchase Option Plan The Regulation of the Share Purchase or Subscription Option Plan was approved by shareholders in the Extraordinary General Meeting held on December 22 nd 2005, changed by the O/EGM dated March 23 rd 2006 and by the Board of Directors in meetings held in the years 2006, 2007, 2011, 2012 and The plan, whose participants are executives of the Company and its controlled companies (except controlling officers) has as main purposes: (i) Align the interests of participants and shareholders; (ii) Get the participants committed to the company's short, mid and long 18

19 term results; (iii) Encourage a feeling of ownership; and (iv) Attract and retain talent. The Plan is monitored by the HR and Ethics committee and approved by the Board of Directors. The company also has a Long-Term Incentive Plan with Restricted Shares by Performance, proposed by the Board of Directors on February 12 th 2015 and approved by the General Meeting on March 26 th The plan has the purpose of composing the compensation package of the main executives of the company, obtain the participants' commitment to long-term results, maintain competitiveness within the market, attract and retain the best professionals and align the interests of executives and shareholders. 24. MANAGERS' COMPENSATION The aggregate amount of the fixed compensation is established by the General Meeting and paid to the managers by the Board of Directors. The greatest annual individual compensation of the Board of Directors/Executive Committee totaled BRL 1,963.2 thousand in 2017, the average compensation was BRL thousand and the smallest was BRL thousand. Among executive officers, the greatest individual compensation was BRL 4,034.1 thousand in 2017, the average was BRL 3,044.2 thousand and the smallest was BRL 2,339.9 thousand. In the Audit Committee, the greatest individual compensation was BRL thousand in 2017, the average was BRL thousand and the smallest was BRL thousand. 25. PERSONNEL NO. OF EMPLOYEES Controlling Company 6,255 6,125 6,236 7,883 8,158 Controlled Companies in Brazil 2,057 2,135 1,369 2,776 2,554 Controlled Companies in Abroad 1,645 1,921 1,666 1,889 2,105 Associated Companies 2,403 2,632 3,200 4,270 5,699 TOTAL (1) 12,360 12,813 12,471 16,818 18,516 GRAND TOTAL (2) 15,059 15,749 16,125 21,435 21,002 Notes: (1) Includes employees in the controlled/associated companies proportionally to their equity interest; (2) Refers to the total participation in controlled/associated companies. 26. PROSPECTS FOR 2018 The year 2017 broke a three-year sequence of a drop in the production of Brazilian buses. The year 2018 begins with even greater expectations for the domestic economy, with a projected growth of 2.7% for the year, a basic interest rate at its lowest historical level and a renewed confidence by customers and investors in general. For Marcopolo, this vision is confirmed by a more robust order backlog compared to the same period in the previous year, higher on-going business volume than in recent years and good prospects for bids, especially within the scope of the School Way program and exportation. 19

20 The domestic market demand must remain in its recovery path, with growing volumes compared to 2017, notably intercity models for the freight and interstate industries. The rule for renewal of the interstate and international road bus fleet is still in force and in 2018 the mandatory average age is 6 years (5 years in 2019). As for accessibility, a rule enters into force on July 1 st 2018 requiring the installation of elevators in all intercity buses. Such rule may positively affect the intercity bus market in the first half of As for urban buses, the partial settlement of the matter concerning municipal fare adjustments, with major state capitals, including São Paulo, authorizing raises close to the inflation rate, may point to a recovery also in this segment. Refrota, a credit facility targeted at financing urban buses, after a slow beginning, became an alternative for customers of the segment and has been fomenting sales. Exportation has been in a positive course since 2016, pointing to an increase in sales, especially in the urban bus segment markets traditionally served by the Company. A positive highlight was business targeted at the African continents, with large batches already confirmed for early With the beginning of the recovery process in the domestic urban bus market and a good moment for exportation of these models, the Marcopolo Rio unit maintains a healthy portfolio, especially compared to the last four years. The prospects are also positive for international transactions. Volgren must show good performance because of the transfer of bidding processes, which did not take place in 2017, to For Polomex an increase is expected for lighter model units to the detriment of intercity buses, with market share gains. As for the micro bus and Volare market, Marcopolo completed in January 2018 the transfer of Volare production from the Planalto plant to Neobus. Marcopolo's microbus production is still being performed in the Planalto unit because of the good sales volume linked to the School Way program and the unit must remain active until the end of Marcopolo, either directly or indirectly, by means of partnerships, has won bids for the production and sale of 4,400 units in the School Way program. We note that the actual sales of bid units are contingent upon the confirmation of the order by the public authority. We stress that the FINAME credit facility is still in force, having changed its index from LTIR to LTR. In practice, LTIR and LTR shall remain at the same level in 2018, allowing micro, small and medium enterprises to finance up to 100% of the asset as well as the LTR cost plus 2.1% p.a. and the spread of the transferring bank. Large enterprises may also finance up to 80% of the asset, 60.0% of this total amount via LTR plus 2.1% p.a. and 20.0% linked to the SELIC rate plus 2.36% p.a. increased by the spread of the transferring bank. In this context, the maintenance of the SELIC rate at a historically low level may give the domestic demand a further boost. In 2018, the Company will continue making efforts to recoup its historical performance level, believing that the growing volumes combined with the initiatives 20

21 and improvements implemented since 2014, especially those concerning the increase of operating efficiency, quality, stronger presence both in foreign and domestic markets, search for synergy and optimization of its plant will allow for the achievement of new excellence levels. We will remain attentive to new opportunities in the search for constant improvement. 27. ACKNOWLEDGEMENTS Marcopolo is honored to thank customers, suppliers, representatives, shareholders, financial institutions, government bodies, the communities and especially the employees for their effort, devotion and commitment. Marcopolo pays tribute to its President Emeritus. Mr. Paulo Pedro Bellini, who died on June 15 th 2017 at the age of 90. Apart from his outstanding entrepreneurial vision, which turned Marcopolo into a transnational company, Mr. Bellini was noteworthy for his constant breaking of paradigms, a strong determination for product quality and appreciation for the human being. He soon noticed that bus production demanded intensive, high-quality labor and that people were the soul of the business. For this reason, he was devoted to creating a reliable environment in order to ensure constant motivation of teams, which became one of Marcopolo's main competitive advantages, which resulted in the motto "The most important thing are people." The Management. 21

22 B A L A N C E S H E E T S A S S E T S 12/31/17 12/31/16 Current assets Cash and cash equivalents Short-term investments valued at fair value Derivatives financial instruments Trade accounts receivable Inventories Recoverable taxes Other accounts receivable Non-current assets Financial assets available for sale Recoverable taxes Deferred income tax and social contribution Judicial Deposits Trade accounts receivable Other accounts receivable , Investments Investment Property Property, plant and equipment Intangible assets TOTAL ASSETS L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y IFRS 10 E 11 (CPC 36 R3 E CPC 19 R2) - in thousands of reais Consolidated Consolidated 12/31/17 12/31/16 Current liabilities Suppliers Loans and financing Derivative financial instrucions Salaries and vacation pay Taxes and contributions payable Advances from customers Comissioned representatives Interest on own capital and dividends Management profit sharing Other accounts payable Non-current liabilities Loans and financing Provision Taxes contributions payable Obligations to purchase equity interests Other accounts payable Stockholders' equity Capital Capital reserves Revenue reserves Treasury stock (21.797) (22.957) Equity valuation adjustments Non-controling Interest TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY The consolidated financial statements including the notes to financial statements and the report of independent auditors PricewaterhouseCoopers Auditores Independentes - are available at the sites and 22