3Q14 Quarterly Financial Reports

8/10/2019 3Q14 Quarterly Financial Reports

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Mills Estruturas e Servios

de Engenharia S.A.

(Convenience Translation into English from theOriginal Previously Issued in Portuguese)

Presentation of Interim Financial Information for

the Quarter Ended September 30, 2014 andReport on Review of Interim FinancialInformation

Deloitte Touche Tohmatsu Auditores Independentes


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Deloitte Touche TohmatsuAv. Presidente Wilson, 231 - 22Rio de Janeiro - RJ - 20030-905Brasil

Tel: + 55 (21) 3981-0500Fax:+ 55 (21) 3981-0600www.deloitte.com.br

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its networ k of member firms,

each of which is a legally separate and independent e ntity. Please see www.deloitte.com/about f or a detailed description of the legal structure ofDeloitte Touche Tohmatsu Limited and its member firms.

2014 Deloitte Touche Tohmatsu. All rights reserved.

(Convenience Translation into English from the Original Previously Issued in Portuguese)

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

To the Board of Directors and Shareholders ofMills Estruturas e Servios de Engenharia S.A.Rio de JaneiroRJ

Introduction

We have reviewed the accompanying interim financial information, of Mills Estruturas e Serviosde Engenharia S.A. (Company) included in the Interim Financial Information Form (ITR), forthe three-month period ended September 30, 2014, which comprises the balance sheet as ofSeptember 30, 2014 and the related statements of income and comprehensive income, for thethree and nine-month periods then ended and the statement of changes in equity and statement ofcash flows for the nine-month period then ended, including the explanatory notes.

The companys management is responsible for the preparation of interim financial information inaccordance with technical pronouncement CPC 21 (R1) - Interim Financial Information and withinternational standard IAS 34 - Interim Financial Reporting, issued by the International

Accounting Standards Board (IASB), as well as for the presentation of such information inaccordance with the standards issued by the Brazilian Securities and Exchange Commission(CVM), applicable to the preparation of Interim Financial Information (ITR). Our responsibilityis to express a conclusion on this interim financial information based on our review.

Scope of review

We conducted our review in accordance with Brazilian and international standards on review ofinterim financial information (NBC TR 2410 and ISRE 2410 Review of Interim FinancialInformation Performed by the Independent Auditor of the Entity, respectively). A review ofinterim financial information consists of making inquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other review procedures. A reviewis substantially less in scope than an audit conducted in accordance with standards on auditingand, consequently, does not enable us to obtain assurance that we would become aware of allsignificant matters that might be identified in an audit. Accordingly, we do not express an auditopinion.

Conclusion on the interim financial information

Based on our review, nothing has come to our attention that causes us to believe that theaccompanying interim financial information included in the ITR referred to above was not

prepared, in all material respects, in accordance with technical pronouncement CPC 21(R1) and


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MILLS ESTRUTURAS E SERVIOS DE ENGENHARIA S.A.

BALANCE SHEETAS AT SEPTEMBER 30, 2014 AND DECEMBER 31, 2013

(In thousands of Brazilian reais - R$) - Unaudited

Note 9/30/2014 12/31/2013ASSETS

CURRENT ASSETSCash and cash equivalents 3 161,058 25,798Trade receivables 4 177,888 177,359Inventories 5 32,016 36,288Recoverable taxes 6 29,808 38,673Advances to suppliers 160 529

Derivative financial instruments 26 52 7,516Other receivables - sale of investee 7 16,998 26,785Other assets 4,730 6,516

422,710 319,464NON-CURRENT ASSETSTrade receivables 4 876 1,414Recoverable taxes 6 36,368 42,764Deferred taxes 16.d 20,006 -Judicial deposits 17.b 10,468 10,053Other receivables - sale of investee 7 33,996 47,290

101,714 101,521

Investments 8 87,392 87,392Property, plant and equipment 9 1,230,851 1,224,476intangible assets 10 76,039 68,392

1,394,282 1,380,260

TOTAL ASSETS 1,918,706 1,801,245

(continues)


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BALANCE SHEETAS AT SEPTEMBER 30, 2014 AND DECEMBER 31, 2013


Note 9/30/2014 12/31/2013LIABILITIES AND EQUITY

CURRENT LIABILITIESTrade payables 11 18,627 37,904Borrowings, financing and finance leases 12 46,405 12,764Debentures 13 109,581 112,532Payroll and related taxes 25,267 19,186Income tax and social contribution 16.a 2,947 -

Tax debt refinancing program (REFIS) 1,011 960Taxes payable 18 4,671 7,084Profit sharing payable 15.a - 18,697Dividends and interest on capital payable 20 21,810 40,990Derivative financial instruments 26 1,233 -Other liabilities 2,085 4,866

233,637 254,983NON-CURRENT LIABILITIESBorrowings, financing and finance leases 12 15,674 58,749Derivative financial instruments 26 - 267Debentures 13 573,288 448,238Tax debt refinancing program (REFIS) 9,186 9,444Deferred taxes 16.d - 2,478Provision for tax, civil and labor claims 17 12,806 10,573

610,954 529,749

TOTAL LIABILITIES 844,591 784,732

EQUITYIssued capital 19 563,319 553,232Capital reserves 19 17,265 10,231

Earnings reserves 19 447,862 447,862Valuation adjustments to equity 19 262 5,188Retained earnings 45,407 -Total equity 1,074,115 1,016,513

TOTAL LIABILITIES AND EQUITY 1,918,706 1,801,245

The accompanying notes are an integral part of this interim financial information.


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INCOME STATEMENT FOR THETHREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013


Note 9/30/2014 9/30/2013

Quarter YTD Quarter YTDCONTINUING OPERATIONSNet revenue from sales and services 22 191,487 612,275 222,006 622,208Cost of sales and services 23 (102,745) (271,730) (93,543) (249,233)

GROSS PROFIT 88,742 340,545 128,463 372,975General and administrative expenses 23 (66,059) (194,216) (56,042) (165,815)

PROFIT BEFORE FINANCE INCOME (COSTS) 22,683 146,329 72,421 207,160Finance income 24 10,394 21,871 2,485 9,641Finance costs 24 (28,203) (74,627) (14,809) (42,954)

PROFIT BEFORE TAXES 4,874 93,573 60,097 173,847Current income tax and social contribution (11,522) (43,030) (24,761) (54,797)Deferred income tax and social contribution 9,868 19,945 3,305 1,793

Income tax and social contribution 16.b (1,654) (23,085) (21,456) (53,004)

PROFIT FROM CONTINUING OPERATIONS 3,220 70,488 38,641 120,843

PROFIT FROM DISCONTINUED OPERATIONS - - 1,004 6,136

PROFIT FOR THE PERIOD 3,220 70,488 39,645 126,979Basic earnings per share - R$ 21 (a) 0.03 0.55 0.31 1.00Diluted earnings per share - R$ 21 (b) 0.03 0.55 0.31 0.99

EARNINGS PER SHARE FROM CONTINUINGOPERATIONS

Basic earnings per share - R$ 21 (a) 0.03 0.55 0.30 0.95Diluted earnings per share - R$ 21 (b) 0.03 0.55 0.30 0.94



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STATEMENT OF COMPREHENSIVE INCOME FOR THETHREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013


Note 9/30/2014 9/30/2013

Quarter YTD Quarter YTD

PROFIT FOR THE PERIOD 3,220 70,488 39,645 126,979

OTHER COMPONENTS OF COMPREHENSIVEINCOME

ITEMS THAT WILL NOT BE SUBSEQUENTLYRECLASSIFIED TO PROFIT FOR THE PERIOD

Cash flow hedge 26 497 (4,926) (2,368) 817

TOTAL COMPREHENSIVE INCOME FOR THEPERIOD 3,717 65,562 37,277 127,796



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STATEMENT OF CHANGES IN EQUITYFOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2013(In thousands of Brazilian reais - R$) - Unaudited

Earnings reserves Valuation

Note

Subscribed

capital

Capital

reserve Legal Expansion Special

Earnings

retention

adjustments

to equity

Retained

earnings Total

AT JANUARY 1, 2013 537,625 233 20,768 61,243 808 238,949 (300) - 859,326

Capital contribution - share issue 19 14,290 - - - - - - - 14,290Stock option plan 15.b - 6,945 - - - - - - 6,945Realization of special reserve - tax amortization of

Itapo merged goodwill - - - - (808) - - 808 -Comprehensive income for the period - cash flow

hedge19.e

- - - - - 817 - 817Profit for the period - - - - - - - 126,979 126,979Interest on capital proposed - - - - - - - (23,448) (23,448)

AT SEPTEMBER 30, 2013 551,915 7,178 20,768 61,243 - 238,949 517 104,339 984,909



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STATEMENT OF CHANGES IN EQUITYFOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2014(In thousands of Brazilian reais - R$) - Unaudited

Earnings reserves ValuationSubscribed Capital Earnings adjustments Retained

Note capital reserve Legal Expansion retention to equity earnings Total

AT JANUARY 1, 2014 553,232 10,231 29,398 61,243 357,221 5,188 - 1,016,513Capital contribution - share issue 19 10,087 - - - - - - 10,087Stock option premium 15.b - 7,034 - - - - - 7,034Comprehensive income for the period - cash flow hedge 19.e - - - - - (4,926) - (4,926)Profit for the period - - - - - - 70,488 70,488Interest on capital proposed 20 - - - - - - (25,081) (25,081)

AT SEPTEMBER 30, 2014 563,319 17,265 29,398 61,243 357,221 262 45,407 1,074,115



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STATEMENT OF CASH FLOWSFOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013


Note 9/30/2014 9/30/2013CASH FLOWS FROM OPERATING ACTIVITIESPROFIT FROM CONTINUING AND DISCONT. OPER.

BEFORE INCOME TAX AND SOCIAL CONTRIBUTION 93,573 182,671Adjustments:

Depreciation and amortization 9 and 10 124,908 99,221Provision for tax, civil and labor claims 17 2,846 1,240Accrued expenses on stock options 15 7,034 6,945Profit sharing payable 15 - 15,007Gain on sale of property, plant and equipment (33,450) (38,149)Interest, indexation and exchange differences on borrowings,

contingencies and judicial deposits 54,995 40,483Allowance for doubtful debts 4 20,078 12,897Other 12,317 -

188,728 137,644Changes in assets and liabilities:

Trade receivables (20,011) (31,245)Inventories (3,474) (4,001)Recoverable taxes 22,901 27,728Judicial deposits 254 2,181Other assets 2,155 2,799Trade payables 648 (276)Payroll and related taxes 6,081 12,958Taxes payable 3,340 (11,512)Other liabilities (2,988) (6,104)

8,906 (7,472)Lawsuits settled (613) (718)Interest paid (46,653) (35,062)Income tax and social contribution paid (31,266) (36,203)Profit sharing paid (18,607) (20,102)

NET CASH GENERATED BY OPERATING ACTIVITIES 194,068 220,758

Cash flows from investing activities:Marketable securities - principal - 159,606Purchases of property, plant and equipment and intangible assets (196,477) (395,738)Advance on assets held for sale 25,207Proceeds from sale of the Industrial Services business unit 27,905 -Proceeds from sale of property, plant and equipment and intangible assets 45,876 51,058

NET CASH USED IN INVESTING ACTIVITIES (122,696) (159,867)

(continues)


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STATEMENT OF CASH FLOWSFOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013


Note 9/30/2014 9/30/2013CASH FLOWS FROM FINANCING ACTIVITIES

Capital contributions 10,087 14,290Dividends and interest on capital paid (46,742) (39,198)Repayment of borrowings and debentures (299,457) (35,486)Borrowings raised and debentures 400,000 1,038

NET CASH GENERATED BY FINANCING ACTIVITIES 63,888 (59,356)

INCREASE IN CASH AND CASH EQUIVALENTS, NET 135,260 1,535

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 3 25,798 44,200

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 3 161,058 45,735



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STATEMENT OF VALUE ADDEDFOR THE PERIODS ENDED SEPTEMBER 30, 2014 AND 2013


9/30/2014 9/30/2013REVENUESSales of merchandise, products and services 821,007 993,868Cancelations and discounts (143,841) (118,797)Other revenues (sale of assets) 3,149 4,781Allowance for doubtful debts - Recognition (20,078) (12,897)

660,237 866,955INPUTS PURCHASED FROM THIRD PARTIESCost of sales and services (31,233) (38,996)Materials, energy, outside services and other (133,324) (151,917)Write-off of leased assets (21,262) (23,279)

(185,819) (214,192)

Gross value added 474,418 652,763Depreciation, amortization and depletion (124,908) (99,221)

Wealth created by the Company 349,510 553,542

Wealth received in transfer:Finance income 21,871 10,510

Wealth for distribution 371,381 564,052

DISTRIBUTION OF WEALTHPersonnel and payroll taxes 98,042 192,096

Salaries and wages 74,909 145,710Benefits 17,241 35,962Severance Pay Fund (FGTS) 5,892 10,424

Taxes and contributions 110,575 178,651Federal 103,654 164,131State 5,779 6,268Municipal 1,142 8,252

Lenders and lessors 92,276 66,326

Interest and exchange differences 74,615 47,404Leases 17,661 18,922

Shareholders 70,488 126,979Interest on capital and dividends 25,081 23,448Retained earnings/loss for the period 45,407 103,531

Wealth distributed 371,381 564,052



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NOTES TO THE INTERIM FINANCIAL INFORMATIONFOR THE QUARTER ENDED SEPTEMBER 30, 2014

(In thousands of Brazilian reais - R$, unless otherwise stated) - Unaudited

1. GENERAL INFORMATION

Mills Estruturas e Servios de Engenharia S.A. ("Mills" or "Company") is a publicly-tradedcorporation with registered offices at Avenida das Amricas, n 500, Bloco 14, Loja 108, salas207 e 208 - Barra da Tijuca, in the City of Rio de Janeiro, Brazil. The Company basicallyoperates in the construction, engaging in the following principal activities:

(a) Rental and sale, including import and export, of steel and aluminum tubular structures, andsteel and aluminum props and access equipment for construction works, as well as reusable

concrete formworks, along with the supply of related engineering projects, supervisory andoptional assembly services.

(b) Rental, assembly, and disassembling of access tubular scaffolding in industrial areas.

(c) Sale, rental and distribution of scissor lifts and telescopic handlers, as well as parts andcomponents, and technical assistance and maintenance services for such equipment.

(d) Holding of interests in other companies, as partner or shareholder.

The Companys operations are segmentedaccording to the new organization and managementmodel approved by Management, containing the following business units: Heavy Construction,

Real Estate and Rental. Each business unit is described in Note 25.

The accounting information contained in this interim financial information was approved by theCompanys Board of Directors and authorized for issue on October 28, 2014.

2. PRESENTATION OF INTERIM FINANCIAL INFORMATION

2.1. Basis of presentation

The Companys interim financial information comprises the interim financial statements

and has been prepared in accordance with Accounting Pronouncement CPC 21 (R1),which addresses interim financial reporting, and in accordance with InternationalAccounting Standard (IAS) 34.

This interim financial information does not include all the information and disclosuresrequired in annual financial statements and should, therefore, be read in conjunction withthe financial statements of Mills for the year ended December 31, 2013, which have been

prepared in accordance with accounting practices adopted in Brazil and InternationalFinancial Reporting Standards (IFRSs) issued by the International Accounting StandardsBoards (IASB).


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Mills Estruturas e Servios de Engenharia S.A.

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In compliance with Brazilian Securities and Exchange Commission (CVM) Circular003/2011, of April 28, 2011, we present below the notes to the most recent annualfinancial statements (for the year ended December 31, 2013), which, in view of the lackof significant changes this quarter, are not being reproduced in full in this interim

financial information:

The notes not included in the period ended September 30, 2014 are the Summary ofsignificant accounting policies, Critical accounting judgments and key estimates andassumptions, Financial risk management, Capital management and Tax debtrefinancing program (REFIS), represented, in the financial statements for 2013, by notes2, 3, 4, 5 and 22, respectively.

2.2. Basis of preparation

The accounting policies, calculation methods, significant accounting judgments,

estimates and assumptions used in this interim financial information are the same used inthe financial statements for the year ended December 31, 2013, disclosed in Notes 2 and3. These financial statements were published on March 20, 2014 on the newspaper ValorEconmico and the Official Gazette of the State of Rio de Janeiro.

Adoption of the new and revised International Financial Reporting Standards (IFRSs)without material impacts on the interim financial information.

The information related to the Accounting Pronouncements and Interpretations RecentlyIssued did not change significantly in relation to that disclosed in Note 2.4 to theFinancial Statements for the Year Ended December 31, 2013. Below is the list of new andrevised standards and interpretations already issued but not yet adopted:

IFRS 9 - Financial instruments (1);IFRS 15 - Revenue - contracts with customers (2);IAS 16 and IAS 38 - Clarification about the acceptable depreciation and amortizationmethods (3);

(1) Effective for annual periods beginning on or after January 1, 2015.(2) Effective for annual periods beginning on or after January 1, 2017.(3) Effective for annual periods beginning on or after January 1, 2016.

3. CASH AND CASH EQUIVALENTS

9/30/2014 12/31/2013

Cash and banks 1,408 2,049Short-term investments 159,650 23,749

161,058 25,798

The balances recorded as cash and cash equivalents refer to deposits and highly liquid short-term investments, readily convertible into a known amount of cash and subject to aninsignificant risk of change in value. As at September 30, 2014, financial investments refer to

paid repos average rate of 101.2% of the Interbank Deposit Certificate - CDI (Certificate ofBank Deposit paid an average rate of 101.5% of the CDI, December 31, 2013).


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The changes in the Companys allowance for doubtful debts are as follows:

9/30/2014 12/31/2013

Balance at the beginning of the year 53,861 36,703

Set up of allowance for doubtful debts 20,078 17,283Write-offs (4,370) (125)Balance at the end of the period 69,569 53,861

As at September 30, 2014, trade receivables totaling R$69,569 (As at December 31 -R$53,861) were accrued. The increase in the amount of this allowance refers basically to theaccrual of the balance receivable from specific customers that during the nine months of 2014were having difficulties to discharge their obligations.

5. INVENTORIES

9/30/2014 12/31/2013

Raw materials 4,121 6,617Goods for resale 15,680 15,015Spare parts and supplies 11,364 8,972Advances for inventories 299 5,140Other 552 544Total 32,016 36,288

Raw material inventories and advances for inventories are linked to toll manufacturing

processes, to meet Company and customer requirements. The spare parts inventories referbasically to access equipment. All inventories are carried at average cost.

6. RECOVERABLE TAXES

9/30/2014 12/31/2013

Taxes on revenue (PIS and COFINS) (*) 64,936 71,856Income tax (IRPJ) and social contribution (CSLL) (**) - 8,537State VAT (ICMS) (***) 717 909Other 523 135

66,176 81,437Current 29,808 38,673

Non-current 36,368 42,764

(*) PIS and COFINS credits refer basically to amounts recoverable on purchases ofproperty, plant and equipment, which will be offset at the rate of 1/48 per month againstnon-cumulative PIS and COFINS federal tax obligations. Mills expects that thesecredits will be realized by 2018.

(**) Refers to IRPJ and CSLL tax loss carryforwards determined at December 31, 2013,which will be adjusted for inflation monthly based on the SELIC rate and offset against

taxes of the same nature during 2014.(***) Refers to State VAT (ICMS) levied on the Company's operations due to purchase of

goods for resale.


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7. OTHER RECEIVABLES - SALE OF INVESTEE

9/30/2014 12/31/2013

2014 - 26,7852015 16,998 15,7632016 16,998 15,7632017 16,998 15,764Total 50,994 74,075

Current 16,998 26,785Non-current 33,996 47,290

50,994 74,075

On November 30, 2013 the Company completed the sale of its Industrial Services business unitto Fundo de Investimento em Participao (FIP) Leblon Equities Partners V, managed by

Leblon Equities Gesto de Recursos Ltda.

The agreement prescribes the payment of the purchase price in six (6) installments, all adjustedfor inflation based on the CDI variation from May 31, 2013 to the payment date as follows:

1. The first installment of R$25,000 (R$25,207 considering the adjustment for inflation basedon CDI through the payment date) was paid on the agreement execution date;

2. The second installment of R$17,000 (R$18,293 considering the adjustment for inflationbased on CDI through March 31, 2014) was paid in April 2014, in the amount of R$11,304.The second installment was adjusted on the basis of the partial business performance, which

comprised the business profit plus the depreciation of the assets acquired, less investments,plus the increase in trade payables (or less the decrease in trade payables, as applicable), andless the increase in trade receivables (or plus the decrease in trade receivables, asapplicable), from May 31, 2013 to the closing date, i.e., November 30, 2013. This amountwas determined using the same expense apportionment, allowance for doubtful debtsrecognition, and equipment derecognition accounting criteria currently used by theCompany. For profit calculation purposes, the income tax and social contribution rate usedwas identical to the average tax rate charged on Company operations in the twelve monthsimmediately prior to the closing date, and the following were disregarded: (i) allocated costsrelated to the Companys stock options and profit sharing, and (ii) finance income and costs. The accumulated amount of the partial business performance between June 1 and November

30, 2013, date when the Company completed the transaction, was R$6,789.3. Four installments of R$15,000 each (R$16,998 considering the adjustment for inflation

based on CDI through September 30, 2014), with annual maturity counted from theagreement execution date. The first of these installments was received on the maturity date,July 10, 2014, in the inflation-adjusted amount of R$16,601.


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9. PROPERTY, PLANT AND EQUIPMENT

Equipment forrental and

Rentalequipment

TotalRental Leasehold Buildings Computers

Furnitureand Construction Total assets Total

operational use Leasing in progress Equipment improvements and land and peripherals Vehicles Facilities fixtures in progress in use PP&EGross cost of PP&EBalances at December 31, 2013 1,409,698 82,156 38,506 1,530,360 19,040 24,274 13,886 3,640 5,470 8,945 580 75,835 1,606,195

Purchases 151,593 - 3,695 155,288 5,459 - 1,769 180 1,225 1,202 337 10,172 165,460Write-offs/ disposals (34,354) (5,179) - (39,533) - - (9) (258) - - - (267) (39,800)Adjustment for PIS and COFINScredits (16,331) - - (16,331) - - - - - - - - (16,331)

Transfers 34,864 - (34,864) - - - - - - - - - -Balances at September 30, 2014 1,545,470 76,977 7,337 1,629,784 24,499 24,274 15,646 3,562 6,695 10,147 917 85,740 1,715,524

Accumulated depreciationBalances at December 31, 2013 (320,309) (42,440) - (362,749) (4,169) (1,526) (6,594) (2,232) (1,051) (3,398) - (18,970) (381,719)

Deprecia tion (109,794) (5,855) - (115,649) (2,311) (503) (1,730) (337) (388) (545) - (5,814) (121,463)Write-offs/ disposals 15,236 3,077 - 18,313 - - 1 195 - - - 196 18,509Balances at September 30, 2014 (414,867) (45,218) - (460,085) (6,480) (2,029) (8,323) (2,374) (1,439) (3,943) - (24,588) (484,673)Annual depreciation rates - % 10 10 - - 20 4 20 20 10 10 - - -

Property, plant and equipment, netBalance at December 31, 2013 1,089,389 39,716 38,506 1,167,611 14,871 22,748 7,292 1,408 4,419 5,547 580 56,865 1,224,476Balance at September 30, 2014 1,130,603 31,759 7,337 1,169,699 18,019 22,245 7,323 1,188 5,256 6,204 917 61,152 1,230,851


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Rental equipment can be summarized as follows: access scaffolding (Mills and Elite tubularscaffolding), forms (Noe and Aluma forms), props (MillsTour and Aluma), aerial lifts (JLG andGenie) and telescopic manipulators.

We highlight below the main purchases up to September 2014, by group of assets:

Props 18,744Lifts 104,107Reusable concrete formworks 9,595Suspended scaffolding and access structures 19,050Other 13,964Total purchases 165,460

The depreciation for the period, allocated to direct project and rental costs and general andadministrative expenses, amounts to R$113,740 and R$7,723 as at September 30, 2014

(R$87,792 and R$5,755 as at September 30, 2013), respectively.

Certain items of the Companys property, plant and equipment are pledged as collateral ofborrowing and financing transactions (Note 12).

Property, plant and equipment are measured at historical cost, less accumulated depreciation.Historical cost includes costs directly attributable to the acquisition of items and may alsoinclude transfers from equity of any gains/losses on cash flow hedges qualifying as referring tothe purchase of property, plant and equipment in foreign currency.

Review of estimated useful life

Based on a valuation carried out by technical experts, the Company issued an internal report onthe estimated useful life, dated December 31, 2013, which was approved at an executive boardmeeting. In order to prepare the report, the technical experts considered the Company'soperational planning for the coming fiscal years, past experience, such as the level ofmaintenance and use of the items, external elements for benchmarking, such as availabletechnologies, manufacturers' recommendations and manuals, and the useful life rates of assets.

There was no change in the remaining estimated useful lives of property, plant and equipmentitems for 2013 and there were no events during the period ended September 30, 2014 that

would affect the valuation carried out in 2013.

The Company concluded that there were no events or changes in circumstances that wouldindicate that such assets might be impaired.


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10. INTANGIBLE ASSETS

TrademarksIntangibleassets in Goodwill on

Totalintangible

Software and patents progress investments assetsGross cost of intangible assetsBalances at December 31, 2013 20,943 895 12,626 44,294 78,758

Purchases 2,379 - 8,713 - 11,092Transfers 20,045 - (20,045) - -

Balances at September 30, 2014 43,367 895 1,294 44,294 89,850

Accumulated amortizationBalances at December 31, 2013 (5,839) (295) - (4,232) (10,366)Amortization (3,314) (131) - - (3,445)

Balances at September 30, 2014 (9,153) (426) - (4,232) (13,811)Annual amortization rates - % 10 20 - -

Intangible assets, netBalance at December 31, 2013 15,104 600 12,626 40,062 68,392Balance at September 30, 2014 34,214 469 1,294 40,062 76,039

Allowance for impairment of goodwill

Goodwill arose on the acquisition of Jahu in 2008 and the acquisition of GP Sul in 2011, theseare considered as contribution of the Real Estate business segment, which represents a cash-

generating unit (CGU) to which all the goodwill is allocated.

The goodwill of the CGU Real Estate was subject to an impairment test at December 31, 2013based on the budgeted cash flow for this segment in 2014, before income tax and socialcontribution, approved by Management. No need to recognize an allowance for impairment ofthis goodwill was identified.

Management believes that any type of change reasonably possible in key assumptions on whichthe recoverable amount is based would not lead the total carrying amount to exceed the totalrecoverable amount of the cash-generating unit.

11. TRADE PAYABLES

9/30/2014 12/31/2013

Domestic trade payables 15,276 32,229Foreign trade payables 3,351 5,675

18,627 37,904

As at September 30, 2014, the trade payables balances refer basically to installment purchase ofequipment.


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12. BORROWINGS, FINANCING AND FINANCE LEASES

Borrowings were used for financing the expansion of the Company's investments and for itsgeneral uses and expenses, being indexed to the CDI, TJLP and US dollars.

For borrowings in foreign currency, financial instruments were contracted to hedge theCompany against fluctuations in exchange rates.

The financing agreements for rental equipment were contracted at the Long-Term Interest Rate(TJLP) charges plus interest of 0.2% to 0.90% per year, with amortization on a monthly basisthrough June 2021.

Borrowings, financing and finance leases are as follows:

9/30/2014 12/31/2013Current:

Borrowings and financing 46,405 4,936Finance lease payables - 7,828

46,405 12,764Non-current:Borrowings and financing 15,674 58,423Finance lease payables - 326

15,674 58,749

Borrowings and financing

Current liabilities

9/30/2014 12/31/2013Financing from financial institutions:Indexed to US dollar plus interest of 2.13% per year 42,225 -Indexed to TJLP plus interest of 0.20% to 0.90% per year 4,180 4,936

46,405 4,936

Non-current liabilities

9/30/2014 12/31/2013Financing from financial institutions:Indexed to US dollar plus interest of 2.13% per year - 39,932Indexed to TJLP plus interest of 0.20% to 0.90% per year 15,674 18,491

15,674 58,423

The financial institutions with which the Company has borrowings and financing as atSeptember 30, 2014 are as follows:

Banco do Brasil

Banco Ita BBA

On December 6, 2013 the Company entered into a loan agreement with the Nassau Branch ofBanco Ita BBA S.A. totaling US$16.9 million (equivalent to R$40.0 million), under which

principal and interest will be settled in a bullet payment on January 30, 2015. In order tominimize the foreign exchange risk on this borrowing, on the same date a swap was contracted

with Banco Ita BBA S.A. in the amount of R$40.0 million whereby the obligations (principaland interest) are fully converted into local currency and carried out on the same maturity dates(see Note 26).


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On April 11, 2014 the Company issued a single series of 20 commercial promissory notes withunit face value of R$10,000, for a total amount of R$200,000 maturing on August 8, 2014. Theunit face value of the promissory notes bears interest corresponding to 106% of theaccumulated fluctuation of the average daily interbank deposit (DI) rates. On June 18, 2014 the

Company fully paid these promissory notes with the net proceeds from its third issue ofdebentures (see note 13).

The table below shows a breakdown of the contracted guarantees at the indicated dates:

9/30/2014 12/31/2013Guarantees provided:

Collateral sale (*) 33,103 65,858Total guarantees 33,103 65,858

Promissory notes - 20,128

(*) Refer to equipment acquired under the Federal Equipment Financing Program (FINAME)and leases.

The promissory notes are enforceable guarantees and used as additional guarantees forborrowings and financing.

The maturities of the non-current portions as at September 30, 2014 are as follows:

2015 6062016 3,1382017 3,138

2018 to 2021 8,79215,674

The Company's borrowings do not have restrictive covenants.

Finance leases

Refer basically to agreements for purchase of rental equipment with terms ranging from 36 to60 months, maturities through 2015 and indexed to CDI plus interest of 2.5% to 3.80% peryear. This obligation was guaranteed by the leased assets and the undiscounted debt paymentcash outflows were not presented because payments were calculated in advance according to

the CDI fluctuation. During the third quarter of 2014 the Company settled in advance all theexisting finance lease agreements.

9/30/2014 12/31/2013

2014 - 7,8282015 - 326Present value of minimum lease payments - 8,154

Current portion - 7,828Non-current portion - 326

There were no significant differences between the present value of minimum lease paymentsand the market value of these financial liabilities, interest charges are at floating rates andrecognized on a prorated basis.


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13. DEBENTURES

Description SeriesAmountissued Beginning Maturity Financial charges 9/30/2014 12/31/2013

1stissue Single 270,000 Apr/2011 Apr/2016 112.5% of CDI 189,563 275,530Issue cost (746) (1,100)

188,817 274,4302ndissue 1stseries 160,940 Aug/2012 Aug/2017 100% CDI + 0.88% p.a. 163,235 166,9382ndissue 2ndseries 109,060 Aug/2012 Aug/2020 IPCA + 5.50 p.a. 124,942 120,803Issue cost (1,178) (1,401)

286,999 286,3403rdissue Single 200,000 May/2014 May/2019 108.75% of CDI 207,765 -Issue cost (712) -

207,053 -Total debentures 682,869 560,770Current 109,581 112,532Non-current 573,288 448,238

1stissue of debentures

On April 8, 2011 the first issue by the Company of a total of 27,000 unsecure, nonconvertibleregistered debentures in single series was approved, totaling R$270,000 and unit face value ofR$10.00. The debentures mature on April 18, 2016 and their yield is equivalent to 112.5% ofthe CDI, with semiannual payment of interest and amortization in three annual consecutiveinstallments, commencing on April 18, 2014. The transaction costs associated with this issue,in the amount of R$2,358, are recognized as borrowing costs according to the contractual termsof this issue.

2ndissue of debentures

On August 3, 2013 the second issue by the Company of a total of 27,000 unsecure,

nonconvertible registered debentures in two series was approved, totaling R$270,000 and unitface value of R$10.00. The transaction costs associated with this issue, in the amount ofR$1,810, are recognized as borrowing costs according to the contractual terms of this issue.The debentures have their maturities according to the issue of each series, as follows:

1st series - 16,094 first series debentures, totaling R$160,940, with maturity on August 15,2017 and not subject to adjustment for inflation. The nominal amount of the first seriesdebentures will be amortized in two annual installments as from the fourth year of their issueand interest paid semiannually will correspond to a surcharge of 0.88% p.a. levied on 100%of the accumulated variation of the DI rate;

2nd

series - 10,906 second series debentures, totaling R$109,060, with maturity on August15, 2017 and subject to adjustment for inflation based on the accumulated variation of theIPCA index. The nominal amount of the second series debentures will be amortized in threeannual installments as from the sixth year of their issue and interest paid semiannually willcorrespond to 5.50% p.a. of the amount adjusted for inflation as indicated above.

3rdissue of debentures

On May 30,2014 the third issue by the Company of a total of 20,000 unsecure, nonconvertibleregistered debentures in a single series was approved, totaling R$200,000 and unit face value ofR$10.00. These debentures mature on May 30, 2019 and their yield is equivalent to 108.75% ofthe CDI, with semiannual payment of interest and amortization in three annual, consecutiveinstallments, commencing on May 30, 2017. The transaction costs associated with this issue, inthe amount of R$745, are recognized as borrowing costs according to the contractual terms ofthis issue.


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The net proceeds obtained by the Company with the third issue of debentures were fullyutilized to settle the commercial promissory notes of the Companys fourth issue, issued onApril 11, 2014 (see note 12).

As at September 30, 2014 the balances of debentures including transaction costs are R$110,469in current liabilities and R$575,036 in non-current liabilities, and R$109,581 and R$573,288,net of transaction costs, respectively. (As at December 31, 2013, the balances of debentures areR$113,271 in current liabilities and R$450,000 in non-current liabilities, and R$112,532 andR$448,238, net of transaction costs, respectively.)

Covenants

The debenture indentures require the compliance with debt and interest coverage ratios underpreset parameters, as follows:

(1) Net debt-to-EBITDA ratio equal to or less than three (3); and

(2) EBITDA-to-net financial expenses equal to or more than two (2).

At the end of the reporting period as at September 30, 2014 the Company is compliant withsuch ratios.

14. RELATED PARTIES

a) Transactions and balances

There were no loans between the Company and any of its officers during the period.

As at September 30, 2014 the Company did not have consulting service agreements withthe members of its Board of Directors.

b) Management compensation

The amounts relating to compensation paid to the Companys management personnel areas follows:

9/30/2014 9/30/2013


Salaries and payroll charges - officers 1,857 4,908 1,289 4,266Profit sharing (407) - 348 984Directors fees 375 1,106 471 1,359Share-based payments 823 2,747 657 1,848Total 2,648 8,761 2,765 8,457


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15. EMPLOYEE BENEFITS

a. Employee profit sharing

The provision for employee and management profit sharing is set up on an accrual basisand is accounted for as an expense. The calculation of the amount, which is paid in theyear following the year the provision is set up, takes into consideration the targetsestablished with the employees union under a collective labor agreement, in accordancewith Law 10,101/00 and the Companys Bylaws.

On March 27, 2012 the Companys Board of Directors decided that the amount of theprofit sharing will no longer be set at 25% of the profit and can vary between 20% and30% (*) of the economic value added (EVA), which is calculated based on operating profitless or plus non-recurring profits, less taxes, and interest on capital. The metrics for thiscalculation is approved by the Companys management.

The profit sharing is recognized over the year and paid in the following year. OnSeptember 30, 2014 the provision was reversed previously recorded in the quarter (inDecember 2013 - R$18,697 in current liabilities and in September 2013 - R$15,007 in

profit for the period) because until that date the targets had not been achieved.

b. Stock option plan

The Company has stock option plans approved by the General Shareholders Meetingaimed at integrating its executives in the Company development process over the mediumand long terms. These plans are managed by the Company and the options granted areapproved by the Board of Directors.

The information related to the Company's stock option programs is summarized below:

Plan pricing and accounting

Shares in thousands

Plans Grant dateFinal

exercise date Shares grantedShares

exercisedOutstanding

shares

Top Mills Special Plan 1/01/2008 7/10/2014 782 (782) -2010 Plan

2010 Program 5/31/2010 5/31/2016 1,475 (1,369) 1062011 Program 4/16/2011 4/16/2017 1,184 (592) 5922012 Program 6/30/2012 5/31/2018 1,258 (399) 8592013 Program 4/30/2013 4/30/2019 768 (92) 6762014 Program 4/30/2014 4/30/2020 234 - 234

In order to price the cost of the portions of the Top Mills Special Plan relating to its equitycomponent, the applicable volatilities, the risk-free rates and stock prices were determined

based on valuations corresponding to 6.6 times the EBITDA, less the net debt, and we used theBlack-Sholes model to calculate the fair value.


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The plans granted as from 2010 were classified as equity instruments and the weighted averagefair value of the options granted was determined based on the Black-Scholes valuation model,considering the following assumptions:

Program Grant

Weighted average

fair value byoption - R$

Weighted average

price of the share atthe grant date - R$ Exerciseprice - R$ Volatility Dividendyield

Annual

risk-freeinterest rate

Maximum

exerciseperiod

2010 First 3.86 11.95 11.50 31.00% 1.52% 6.60% 6 years2010 Second 5.49 14.10 11.50 31.00% 1.28% 6.37% 6 years2011 Single 6.57 19.15 19.28 35.79% 1.08% 6.53% 6 years2012 Basic 21.75 27.60 5.86 37.41% 0.81% 3.92% 6 years2012 Discretionary 12.57 27.60 19.22 37.41% 0.81% 3.92% 6 years2013 Basic 24.78 31.72 6.81 35.34% 0.82% 3.37% 6 years2013 Discretionary 11.92 31.72 26.16 35.34% 0.82% 3.37% 6 years2014 Basic 22.58 28.12 7.98 33.45% 0.75% 12.47% 6 years

The table below shows the accumulated balances of the plans in the balance sheet accounts andthe effects on profit for the period.

9/30/2014 12/31/20132002 PlanCapital reserve 1,446 1,446

Number of shares exercised (thousands) 3,920 3,920

Top Mills, Special CEO and EX-CEO PlansCapital reserve 1,148 1,148

Number of shares exercised (thousands) 1,055 1,055

Mills Rental Executives PlanCapital reserve 4,007 4,007

Number of shares exercised (thousands) 391 391

2010 PlanCapital reserve 5,727 5,303

Number of exercisable options (thousands) 106 413Number of shares exercised (thousands) 1,369 1,062

2011 Program (2010 Plan)Capital reserve 6,299 5,142

Number of exercisable options (thousands) 592 711Number of shares exercised (thousands) 592 473


Number of exercisable options (thousands) 859 1,015Number of shares exercised (thousands) 399 243


Number of exercisable options (thousands) 676 768Number of shares exercised (thousands) 92 -

2014 Program (2010 Plan)Capital reserve 678 -

Number of exercisable options (thousands) 234 -

Total recognized as equity (accumulated) 32,891 25,857

Effect on profit (*) (7,034) (9,998)

(*) As at September 30, 2013, the effect on profit was an expense of R$6,945.


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On March 31, 2014, the Company approved at the Board of Directors meeting: (i) the creationof the program 1/2014 of Grant of Stock Options; (ii) the definition of the criteria for settingthe exercise price of the options and their terms of payment; (iii) the definition of the terms andconditions of exercise of the options; and (iv) the authorization for the Board to make the grants

of the stock options to the beneficiaries eligible under the 2014 Program.

16. INCOME TAX AND SOCIAL CONTRIBUTION

a) Income tax and social contribution payable

As at September 30, 2014 the Company calculated taxable profit on income tax and socialcontribution payable of R$2,947, which is presented net of withholding income tax andsocial contribution on financial investments and services.

b) Reconciliation of the income tax and social contribution expense

Reconciliation between the income tax and social contribution expense at the statutory andeffective rates is as follows:

9/30/2014 9/30/2013


Profit before income tax and social contribution 4,874 93,573 60,097 173,847

Statutory income tax and social contribution rate 34% 34% 34% 34%Income tax and social contribution at statutory rate (1,657) (31,815) (20,433) (59,108)

Non-deductible provisions (*) and permanent differences (414) (1,451) (1,854) (3,874)Interest on capital - declared - 8,528 - 7,503Other 417 1,653 831 2,475Total current and deferred income tax and social

contribution (1,654) (23,085) (21,456) (53,004)Effective tax rate 34% 25% 36% 30%Current income tax (11,522) (43,030) (24,761) (54,797)Deferred income tax 9,868 19,945 3,305 1,793

(*) Non-deductible provisions comprise mainly write-off of non-deductible uncollectible receivables,expenses on gifts, debt waivers, and fines for tax infractions.

c) Income tax and social contribution recognized in other comprehensive income

The deferred tax recognized in other comprehensive income derives from the provision forgains/losses on cash flow hedging instruments transferred to the opening carrying amountsof the hedged items. The total income tax and social contribution recognized incomprehensive income as at September 30, 2014 is R$135.


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d) Breakdown of deferred income tax and social contribution

The breakdown of deferred income tax and social contribution is as follows:

Description December31, 2013 Additions Write-offs September30, 2014

Stock options - 2,392 - 2,392Discount to present value 77 - (28) 49Hedge on property, plant and equipment (1,434) - 427 (1,007)Provision for costs and expenses 815 4,187 - 5,002Allowance for doubtful debts 7,839 3,396 - 11,235Finance leases 2,244 893 - 3,137Provision for tax, civil and labor claims 3,637 760 - 4,397NDF derivatives (2,673) (135) 2,673 (135)Provision for discounts and cancelations 2,815 7,696 - 10,511Swap - 419 - 419Taxes with suspended payment requirement - 214 - 214Accelerated depreciation (753) (565) - (1,318)GP Andaimes Sul Locadora goodwill (325) (101) - (426)Jahu goodwill (12,949) - - (12,949)Adjustment for inflation of judicial deposits (921) (228) - (1,149)Exchange differences - 522 - 522Debentures (850) (38) - (888)

(2,478) 19,412 3,072 20,006

The rationale and expectations for realization of the deferred income tax and social contributionare shown below:

Nature Realization rationale

Stock option Exercise of optionsDiscount to present value Tax realization of loss/gainHedge on property, plant and equipment Depreciation of assetProvision for costs and expenses PaymentAllowance for doubtful debts Filing of lawsuits and past-due receivablesFinance leases Realization of asset over the straight-line

depreciation periodProvision for tax, civil and labor claims Tax realization of lossNDF derivatives Realization of provision

Provision for discounts and cancelations Reversal/realization of provisionSwap Settlement of loanTaxes with suspended payment requirement Payment or reversal of provisionAccelerated depreciation Tax depreciation over 5 yearsGP Andaimes Sul Locadora goodwill Asset disposal/impairmentJahu goodwill Asset disposal/impairmentAdjustment for inflation of judicial deposits Deposit withdrawalExchange differences Repayment of borrowingDebentures Amortization of borrowing cost


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The table below shows the expected realization of deferred income tax and social contributionas at September 30, 2014:

Deferred IR

and CSLL

Deferred IR

and CSLLassets liabilities

2014 2,841 (236)2015 11,035 (1,078)2016 6,343 (796)2017 6,343 (759)2018 6,343 (1,463)Beginning 2019 4,973 (13,540)Total 37,878 (17,872)

Transition Tax Regime

The Transition Tax Regime (RTT) will remain in effective until the enactment of a law thatgoverns the tax impacts of the new accounting methods to ensure tax neutrality.

On May 13, 2014, Law 12,973 was issued to repeal the Transitional Tax Regime (RTT) and theCorporate Income Tax Return (DIPJ) and create the Tax Accounting Recordkeeping Form(ECF).

The Tax Accounting Recordkeeping Form (ECF) will consolidate the tax neutralityadjustments that were previously reported using the Transition Tax Accounting Control

(FCONT). Under the mentioned Law, the adoption of the ECF is optional for taxable eventsrecorded beginning January 2014 and becomes mandatory beginning 2015 for all corporateentities that elect taxation based on the actual taxable income. The Company adhered to such

provisions in 2014, which was formalized through the option by means of the DCTF(Declaration of Federal Tax Debits and Credits) of August 2014 filed with the Brazilian FederalRevenue on October 28, 2014, as regards the prospective calculation of interest on capital,dividends and the tax treatment of stock option plans. The other measures contained in thatLaw did not bring significant impacts to the Company, according to an analysis made by theCompany with its tax advisors.

17. PROVISION FOR TAX, CIVIL AND LABOR CLAIMS AND JUDICIAL DEPOSITS

The Company is a party to tax, civil and labor lawsuits arising in the normal course of business,and is discussing these matters at both administrative and legal levels. These claims, whenapplicable, are backed by judicial deposits.

Based on the opinion of its outside legal counsel, management understands that the applicablelegal steps and measures already taken in each situation are sufficient to cover potential lossesand preserve the Companys equity, and they are periodically reassessed.


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The Company does not have any contingent assets recorded.

a) Breakdown of the provision for tax, civil and labor claims:

9/30/2014 12/31/2013

Tax (i) 3,965 3,818Civil (ii) 700 467Labor (iii) 4,722 3,588Success fees (iv) 3,419 2,700Total 12,806 10,573

Changes in the provision for tax, civil and labor claims:

9/30/2014 12/31/2013

Balance at January 1 10,573 9,919Amount recognized 3,348 3,107Reversals (502) (1,740)Write-offs (613) (713)Balance for the period 12,806 10,573

(i) Refers basically to a writ of mandamus filed by the Company when challenging theincrease in the PIS and COFINS rates (established by the non-cumulative regime ofthese contributions, with the enactment of Laws 10,637/2002 and 10,833/2003). TheCompany maintains a judicial deposit for this provision, related to the differences inrates.

(ii) The Company is a party to lawsuits filed against it relating to civil liability andcompensation claims.

(iii) The Company is a defendant in several labor lawsuits. Most of the lawsuits involveclaims for compensation due to occupational diseases, overtime, hazardous duty

premium and salary equalization.

(iv) The success fees are generally set in up to 10% of the amount pledged in each claim,payable to outside legal counsel depending on the success of the demand of eachcase. Payment is contingent upon a favorable outcome in the lawsuits.

b) Breakdown of judicial deposits:

9/30/2014 12/31/2013

Tax (i) 7,046 6,805Civil - 278Labor (ii) 3,422 2,970Total 10,468 10,053

(i) As at September 30, 2014, the breakdown of judicial deposits related to tax lawsuitstotaled R$7,046. The reconciliation of this amount refers basically to the challenge ofthe increase in the PIS and COFINS rates, totaling R$3,714, as informed in note 17,item a, subitem i, and, also, judicial deposits made on behalf of certainmunicipalities due to the understanding of our legal counsel as regards the levy of theISS (service tax) on revenues from rental of properties.


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The balance recorded in this line items is R$2,597. Starting 2003, with the enactmentof Supplementary Law 116 and based on the opinion of its legal counsel, the Companyhas not made judicial deposits of this nature.

(ii) The judicial deposits are linked to various labor lawsuits in which the Company is thedefendant. Most of the lawsuits involve claims for compensation due to occupationaldiseases, overtime, hazardous duty premium and salary equalization.

The Company is a party to tax, civil and labor lawsuits involving risks of loss classified bymanagement as possible based on the assessment of its legal counsel, for which no

provision was recognized as estimated below:

9/30/2014 12/31/2013

Tax (i) 30,700 26,442

Civil (ii) 5,118 4,812Labor (ii) 17,435 10,944Total 53,253 42,198

(i) Tax (main items):

a)Disallowance of supposedly non-deductible expenses by the Brazilian FederalRevenue, at former Mills Formas, due to agreements entered into with variouscustomers, under which Mills Formas was responsible for the execution ofservices carried out by the employees of the former Mills do Brasil;

b)Requirement of the Finance Department of the State of Rio de Janeiro related toICMS and fine supposedly due arising from transfers of goods without the

payment of the respective tax.

c)Non-recognition by the INSS (National Institute of Social Security) of thepossibility of offsetting payments unduly made as social security contribution,based on the method established by Law 9,711/98;

d)Requirements by the Brazilian Federal Revenue of fine supposedly due oninstallment payment of credits derived from voluntary reporting.

e)Requirement by the Brazilian Federal Revenue of supposed debts of ILL (tax onnet income), judged unconstitutional by the STF (Federal Supreme Court).

(ii) Civil

The Company has indemnification claims against it relating to the compensation formoral and material damage.

(iii) Labor

The Company is a defendant in several labor lawsuits. Most of the lawsuits involvecollection of termination amounts, compensation for pain and suffering, inclusion of

premium to compensation, reinstatement and salary adjustments, and related effects.


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18. TAXES PAYABLE

9/30/2014 12/31/2013

Withholding Income tax (IRRF) on interest on capital - 2,480Taxes on revenue (PIS and COFINS) 3,689 3,417Social Security Contribution (INSS) 99 321Service Tax (ISS) 502 586Other 381 280

4,671 7,084

19. EQUITY

a) Subscribed capital

The Companys fully subscribed and paid-up capital as at September 30, 2014 isR$563,319 (December 31, 2013 - R$553,232) represented by 128,058 registered commonshares without par value (December 31, 2013 - 127,386). Each common share correspondsto the right to one vote in decisions made by the shareholders.

Under the bylaws, the Board of Directors may increase the capital up to a ceiling of200,000,000 shares.

a.1) Share issue

The Company's shares have been issued as approved by the Companys Board ofDirectors due to the exercise of stock options by beneficiaries. The shares issued inthe period were fully subscribed and paid up by their respective beneficiaries and areas follows:

Stock option plan

Approval bythe Board of

Directors

Numberof shares

issuedIssue

price - R$

Capitalincrease

(in thousands)

2010 Program 1/10/2014 6 13.02 -2011 Program 1/10/2014 5,772 21.51 124

2012 Program 1/10/2014 711 5.76 42012 Program 1/10/2014 3,000 20.39 612010 Program 2/05/2014 50,174 13.13 6582011 Program 2/05/2014 13,825 21.70 3002012 Program 2/05/2014 3,554 5.81 212012 Program 2/05/2014 11,250 20.56 2312013 Program 2/05/2014 7,710 6.78 522010 Program 2/14/2014 1,820 13.16 242011 Program 2/14/2014 3,890 21.74 852012 Program 2/14/2014 2,800 20.60 582010 Program 5/15/2014 250,004 13.44 3,360

2011 Program 5/15/2014 95,391 22.20 2,1182012 Program 5/15/2014 24,800 5.93 1472012 Program 5/15/2014 101,550 21.03 2,135


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Stock option plan

Approval bythe Board of

Directors

Numberof shares

issuedIssue

price - R$

Capitalincrease

(in thousands)

2013 Program 5/15/2014 63,827 6.95 4442010 Program 8/15/2014 4,800 13.36 642012 Program 8/15/2014 5,845 5.80 342012 Program 8/15/2014 1,550 21.02 332013 Program 8/15/2014 19,650 6.82 134

671.929 10,087

The table below shows the shareholding structure at the reporting dates:

9/30/2014 12/31/2013

Number Number

of shares of shares(in thousands) % (in thousands) %ShareholdersAndres Cristian Nacht 15,595 12.18% 15,596 12.34%Snow Petrel S.L. 17,728 13.84% 17,728 13.90%HSBC Bank Brasil S.A. (*) 6,323 5.07% 6,323 5.07%Capital Group International, Inc (**) 7,056 5.50% 6,445 5.01%Capital Research Global Investors (**) 6,507 5.10% - -Other signatories of the Company

Shareholders Agreement(***) 11,826 9.24% 11,825 9.28%Other 63,023 49.07% 69,469 54.50%

128,058 100.00% 127,386 100.00%

(*) On October 2, 2012, it became the holder of a material ownership interest accordingto information officially received by the Company and disclosed to CVM.

(**) On June 5, 2014, according to information officially received by the Company anddisclosed to CVM.

(***) This amount does not consider the shares of Andres Cristian Nacht and FranciscaNacht, who are also Companys managers, and considers the number of sharesinformed in the last month, in accordance with CVM Instruction 358/02. Theseshareholders hold individual interests of less than 5% of the capital.

b) Earnings reserves

(b.1) Legal reserve

The legal reserve is set up annually by allocating 5% of the profit for the year until itreaches a ceiling of 20% of the share capital. The purpose of the legal reserve is toensure the integrity of the share capital and it can only be used to offset losses andincrease capital.

(b.2) Expansion reserve

The purpose of the expansion reserve is to ensure funds to finance additionalinvestments in fixed and working capital and expand corporate activities. Under theCompanys bylaws, the maximum ceiling of the expansion reserve is 80% of theCompanys total subscribed capital.


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(b.3) Special reserve

The special reserve referred to the tax benefit generated by the corporaterestructuring undertaken in 2009.

c) Capital reserve

The capital reserve incorporates the transaction costs incurred in capital funding,amounting to R$15,068, net of taxes, related to the distribution of shares under the IPO, the

premium reserve of the stock options amounting to R$32,891 related to the employeesstock option plans, and the cost of the cancelled shares amounting to R$558, totaling acapital reserve of R$17,265 as at September 30, 2014 (December 31, 2013 - R$10,231).

d) Earnings retention

This earnings retention refers to the remaining balance of retained earnings used to fundthe business growth project set out in the Companys investment plan, according to thecapital budget proposed by management, to be submitted to and approved at aShareholders Meeting, pursuant to Article 196 of the Brazilian Corporation Law.

e) Valuation adjustment to equity - cash flow hedge

The cash flow hedge reserve incorporates the effective portion of the cash flow hedgesthrough September 30, 2014, amounting to R$262, net of taxes (December 31, 2013 -R$5,188).

f) Mandatory minimum dividends

The Company's bylaws provide for the payment of mandatory minimum dividendsequivalent to 25% of the profit for the year, after the respective allocations, pursuant toarticle 202 of the Brazilian Corporation Law (Law 6,404).

20. DIVIDENDS AND INTEREST ON CAPITAL PROPOSED

The Board of Directors approved at the meeting held on June 23, 2014 the proposal forpayment of interest of capital in the amount R$25,081 as part of the minimum mandatory

dividend (R$21,810 net of taxes), equivalent to R$0.20 per share. The interest on capitalproposed will be part of the compensation to be paid at the end of 2014.


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21. EARNINGS PER SHARE

a) Basic

Basic earnings per share are calculated by dividing the profit attributable to owners of theCompany by the weighted average number of common shares issued during the period.

9/30/2014 9/30/2013

Quarter YTD Quarter YTDProfit attributable to owners of the

Company 3,220 70,488 39,645 126,979Weighted average number of common

shares issued (thousands) 128,048 127,745 127,249 126,833Basic earnings per share from

continuing and discontinued

operations 0.03 0.55 0.31 1.00

Basic earnings per share fromcontinuing operations 0.03 0.55 0.30 0.95

b) Diluted

Diluted earnings per share are calculated by adjusting the weighted average number ofcommon shares outstanding to assume conversion of all dilutive potential common shares.The Company has one category of dilutive potential common shares: stock options. Acalculation is made for the stock options to determine the number of shares that would be

acquired at fair value (determined as the annual average market price of the Companysshare), based on the monetary amount of the subscription rights linked to the outstandingstock options. The number of shares calculated as described above is compared with thenumber of shares issued, assuming exercise of the stock options.

9/30/2014 9/30/2013

Quarter YTD Quarter YTDProfit used to determine diluted earnings

per share 3,220 70,488 39,645 126,979Weighted average number of common

shares issued (thousands) 128,048 127,745 127,249 126,833

Adjustments for:Stock options (thousands) 232 546 1,017 1,141Weighted average number of common sharesfor diluted earnings per share (thousands) 128,280 128,291 128,266 127,974

Diluted earnings per share from continuingand discontinued operations 0.03 0.55 0.31 0,99

Diluted earnings per share from continuingoperations 0.03 0.55 0.30 0.94


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22. NET REVENUE FROM SALES AND SERVICES

The information on net revenue from sales and services below refers only to the nature of therevenue per type of service:

9/30/2014 9/30/2013


Rentals 215,646 682,994 216,755 613,839Sales 20,313 53,699 29,544 66,907Technical assistance 3,423 13,083 6,480 22,609Indemnities and recoveries 19,237 71,231 30,507 67,479Total gross revenue 258,619 821,007 283,286 770,834Taxes on sales and services (20,824) (64,891) (21,859) (61,634)Cancelations and discounts (46,308) (143,841) (39,421) (86,992)

Total net revenue 191,487 612,275 222,006 622,208


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23. COST OF SALES AND SERVICES AND GENERAL AND ADMINISTRATIVE EXPENSES (BY NATURE)

Costs refer mainly to personnel expenses for assembly and disassembly of Company-owned leased assets, when such assembly is carried out byMills itself, the equipment sublet from third parties when the Companys inventory is insufficient to meet demand, freight fo r transportation ofequipment between branches and occasionally to customers, and expenses on supplies consumed in the projects, from personal protectiveequipment (PPE) to wood, paint and thermal insulation.

General and administrative expenses refer to the management of each Company contract, encompassing the project teams and sales functionengineers, which correspond basically to salaries, payroll taxes and benefits, and other expenses on travel, representation and communications, as

well as the administrative function overheads.

At September 30, 2014 - Quarter At September 30, 2014 - YTD At September 30, 2013 - Quarter At September 30, 2013 - YTD

Nature

Directproject andrental costs

General andadministrative

expenses Total



expenses Total



expenses Total



expenses Total

Personnel (16,380) (29,683) (46,063) (46,045) (85,462) (131,507) (15,697) (27,540) (43,237) (42,525) (79,554) (122,079)Third parties (2,008) (8,216) (10,224) (4,796) (22,031) (26,827) (1,174) (5,153) (6,327) (3,600) (15,016) (18,616)Freight (4,420) (87) (4,507) (12,431) (504) (12,935) (4,108) (199) (4,307) (11,012) (465) (11,477)Construction/maintenance material

and repair (12,693) (1,514) (14,207) (33,849) (5,382) (39,231) (11,978) (1,736) (13,714) (33,087) (4,681) (37,768)Equipment and other rentals (1,340) (4,572) (5,912) (3,957) (13,705) (17,662) (1,503) (4,050) (5,553) (4,356) (10,859) (15,215)Travel (814) (2,529) (3,343) (3,109) (8,439) (11,548) (1,216) (3,002) (4,218) (3,912) (8,691) (12,603)Cost of

sales (19,073) - (19,073) (42,635) - (42,635) (22,080) - (22,080) (55,035) - (55,035)Deprecia tion and amortiza tion (39,114) (4,164) (43,278) (113,740) (11,168) (124,908) (31,509) (2,186) (33,695) (87,792) (5,755) (93,547)Write-off of assets (6,399) - (6,399) (9,795) - (9,795) (3,419) - (3,419) (6,544) - (6,544)Allowance for doubtful debts - (8,687) (8,687) - (20,078) (20,078) - (5,222) (5,222) - (12,319) (12,319)Stock option plan - (2,387) (2,387) - (7,035) (7,035) - (2,214) (2,214) - (6,022) (6,022)Adjustment for inflation of provisions - (1,265) (1,265) - (2,232) (2,232) - 388 388 - 228 228Profit sharing - 1,713 1,713 - 90 90 - (4,486) (4,486) - (15,007) (15,007)Other (504) (4,668) (5,172) (1,373) (18,270) (19,643) (859) (642) (1,501) (1,370) (7,674) (9,044)Total (102,745) (66,059) (168,804) (271,730) (194,216) (465,946) (93,543) (56,042) (149,585) (249,233) (165,815) (415,048)


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24. FINANCE INCOME (COSTS)

a) Finance income

9/30/2014 9/30/2013Quarter YTD Quarter YTD

Interest income 2,098 6,965 620 2,538Income from short-term investments 3,628 6,608 874 5,311Discounts obtained 13 81 102 188Foreign exchange and inflation gains 592 4,081 886 1,461Swap 4,053 4,053 - -Other 10 83 3 143

10,394 21,871 2,485 9,641

b) Finance costs

9/30/2014 9/30/2013


Borrowing costs (1,152) (7,363) (1,264) (3,983)Foreign exchange and inflation losses (4,971) (5,792) (710) (1,484)Interest on finance leases (77) (463) (337) (1,068)Interest - debentures (19,202) (49,895) (11,410) (33,304)Bank fees (595) (1,065) (121) (261)Tax on financial transactions

(IOF) (4) (13) (6) (14)Swap (779) (5,286) - -Other (1,423) (4,750) (961) (2,840)

(28,203) (74,627) (14,809) (42,954)

25. SEGMENT INFORMATION

Information by operating segment is presented in accordance with CPC 22 Operating Segments(IFRS 8).

The Companys reportable segments are business units that offer different products andservices and are managed separately since each business requires different technologies andmarket strategies. The main information used by management to assess the performance ofeach segment is as follows: total property, plant and equipment since these are the assets thatgenerate the Companys revenue and the profit of each segment to evaluate the return on theseinvestments. The information on liabilities by segment is not being reported since it is not used

by the Companys chief decision makers to manage the segments. Management does not useanalyses by geographic area to manage its businesses.

The Companys segments involve completely different activities, as described below, and thustheir assets are specific for each segment. The assets have been allocated into each reportable

segment according to the nature of each item.


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Heavy Construction business unit

Mills Heavy Construction operates in the heavy construction market, using cutting edgetechnology in formworks, props, and special equipment systems to perform construction works.

This business unit is present in several states and draws on a team of engineers and specializedtechnicians, acting as consultants, to meet deadline and optimize costs and safety.

Real Estate business unit

Mills Real Estate provides non-mechanized access equipment, mast climbing platforms, andscaffolds for the residential and office building construction sector. It has the largest productand service portfolio, with customized solutions that meet the specific needs of each projectand generate efficiency and cut costs. Mills Real Estate is present in several states, where it hasteams qualified to provide technical assistance and help planning works, detail projects, andoversee the assembly.

Industrial Services business unit

This division supplies structures developed to give access of personnel and supplies during theequipment and tubular scaffolding assembling phases, as well as for preventive and correctivemaintenance in large plants, including industrial painting, surface treatment and insulationservices.

On July 10, 2013 the Company entered into an agreement for sale of assets and liabilities ofthis business unit, this operation was concluded on November 30, 2013.

Rental business unit

Mills Rental operates in the scissor lifts and telescopic handlers lease and sale market, forheight works in all sectors of the construction, trade, and manufacturing markets. The BUensures productivity, profitability and safety, has the most advanced product line for lifting

people and cargo, and offers its customers operation training certified by the IPAF (world arealaccess authority). Its presence in several Brazilian cities not only reinforces only the agility ofits commercial service but it also broadens the technical assistance with certified professionals.

The accounting policies for the operating segments are the same as those described in thesummary of significant accounting policies. The Company assesses the performance bysegment based on pretax profit or loss as well as on other operating and financial indicators.


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Income statement by business segment - Year-to-date

Heavy Construction Real Estate Industrial Services Rental Other Total

9/30/2014 9/30/2013 9/30/2014 9/30/2013 9/30/2014 9/30/2013 9/30/2014 9/30/2013 9/30/2014 9/30/2013 9/30/2014 9/30/2013

Net revenue 158,478 158,307 166,922 203,722 - 168,430 286,875 260,179 - - 612,275 790,638(-) Costs and expenses (85,836) (79,466) (122,933) (127,031) - (150,330) (123,440) (115,001) (8,829) - (341,038) (471,828)(-) Depreciation and

amortization (29,632) (21,968) (35,340) (28,739) - (5,671) (59,936) (42,843) - - (124,908) (99,221)Profit before finance

income (costs) 43,010 56,873 8,649 47,952 - 12,429 103,499 102,335 (8,829) - 146,329 219,589

Finance income 3,779 2,441 5,523 3,411 - 869 7,757 3,789 4,812 - 21,871 10,510Finance costs (16,533) (9,846) (24,385) (15,585) - (4,474) (33,316) (17,523) (393) - (74,627) (47,428)Profit (loss) beforeIRPJ/SCL 30,256 49,468 (10,213) 35,778 - 8,824 77,940 88,601 (4,410) - 93,573 182,671(-) IRPJ/CSL (7,464) (15,082) 2,524 (10,909) - (2,688) (19,233) (27,013) 1,088 - (23,085) (55,692)Profit (loss) for the period 22,792 34,386 (7,689) 24,869 - 6,136 58,707 61,588 (3,322) - 70,488 126,979

Income statement by business segment - Quarter

Heavy Construction Real Estate Industrial Services Rental Other Total

9/30/2014 9/30/2013 9/30/2014 9/30/2013 9/30/2014 9/30/2013 9/30/2014 9/30/2013 9/30/2014 9/30/2013 9/30/2014 9/30/2013

Net revenue 51,904 55,704 48,585 72,374 - 57,200 90,998 93,928 - - 191,487 279,206(-) Costs and expenses (30,517) (26,279) (53,244) (48,006) - (53,941) (41,043) (41,606) (721) - (125,525) (169,832)(-) Depreciation and

amortization (10,245) (7,670) (12,173) (10,205) - (210) (20,861) (15,819) - - (43,279) (33,904)Profit before finance

income (costs) 11,142 21,755 (16,832) 14,163 - 3,049 29,094 36,503 (721) - 22,683 75,470

Finance income 2,077 850 2,789 642 - 182 4,121 993 1,407 - 10,394 2,667Finance costs (6,560) (3,527) (8,511) (4,965) - (1,509) (12,976) (6,317) (156) - (28,203) (16,318)Profit (loss) before

IRPJ/SCL 6,659 19,078 (22,554) 9,840 - 1,722 20,239 31,179 530 - 4,874 61,819(-) IRPJ/CSL (1,763) (6,653) 5,505 (3,716) - (718) (5,291) (11,087) (105) - (1,654) (22,174)Profit (loss) for the

period 4,896 12,425 (17,049) 6,124 - 1,004 14,948 20,092 425 - 3,220 39,645


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Assets by business segment

Heavy Construction Real Estate Rental Other Total

9/30/2014 12/31/2013 9/30/2014 12/31/2013 9/30/2014 12/31/2013 9/30/2014 12/31/2013 9/30/2014 12/31/2013Property, plant and equipment

Acquisition cost 416,559 393,691 478,430 487,013 820,535 725,491 - - 1,715,524 1,606,195(-) Accumulated depreciation (146,903) (122,006) (143,421) (117,444) (194,349) (142,269) - - (484,673) (381,719)

269,656 271,685 335,009 369,569 626,186 583,222 - - 1,230,851 1,224,476Other assets 163,747 99,088 193,059 179,693 189,298 133,976 141,751 164,012 687,855 576,769Total assets 433,403 370,773 528,068 549,262 815,484 717,198 141,751 164,012 1,918,706 1,801,245


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26. FINANCIAL INSTRUMENTS

26.1. Category of financial instruments

The classification of financial instruments, by category, can be summarized as shown inthe table below:

Carrying amount

9/30/2014 12/31/2013

Cash and cash equivalents 161,058 25,798Loans and receivables:

Trade receivables 178,764 178,773Judicial deposits 10,468 10,053Trade payables 18,627 37,904

Financial liabilities measured at amortized costBorrowings and financing 62,079 63,359Finance leases - 8,154Debentures 682,869 560,770

Financial liabilities at fair valueDerivatives - Swap 1,233 267

Financial assets at fair valueDerivatives - NDF 52 7,516

26.2. Fair value of financial instruments

Several Company accounting policies and disclosures require the determination of thefair value both for financial assets and liabilities and for non-financial assets andliabilities. The fair values have been determined for the purpose of measurement and/ordisclosure based on the methods below. When applicable, additional information on theassumptions used in calculating the fair values are disclosed in specific notes applicableto such asset or liability.

The Company applies CPC 40/IFRS 7 for financial instruments measured in the balancesheet at fair value, which requires the disclosure of fair value measurements by the

following levels of the fair value measurement hierarchy:

Quoted (unadjusted) prices in active markets for identical assets and liabilities(Level 1).

Inputs other than quoted prices, included in Level 1, which are adopted by the marketfor the asset or liability, either directly (e.g. as prices) or indirectly (e.g., derived from

prices) (Level 2).


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The Company does not have financial instruments measured at fair value that areclassified as Level 3, i.e., obtained based on valuation techniques that include variablesfor the asset or liability, but which are not based on observable market inputs.

The table below shows the Companys assets and liabilities measured at their fair valuesas at September 30, 2014.

Level 2 balances

9/30/2014 12/31/2013AssetsDerivatives used for hedging 52 7,516Total Assets 52 7,516

Financial liabilitiesDerivatives used for hedging - -

Derivatives used for borrowings (1,233) (267)Total Liabilities (1,233) (267)

(a) Fair value of trade receivables and payables

The fair value of trade and other receivables is estimated as the present value offuture cash flows, discounted at the market interest rate determined at the end of thereporting period.

The fair values of trade receivables and trade payables, considering as calculationcriterion the discounted cash flow method, are substantially similar to their carrying

amounts.

(b) Fair value of borrowings and financing

The fair value, which is determined for disclosure purposes, is calculated based onthe present value of principal and future cash flows, discounted at the market interestrate determined at the end of the reporting period. For finance leases, the interest rateis calculated by reference to similar lease agreements.

The fair value of borrowings from BNDES was not calculated since this type offinancing does not have observable fair value calculation as BNDES adopts

differentiated rates for borrowers.


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Borrowings and financing

Fair value Carrying amount

Debt Indicator 9/30/2014 12/31/2013 9/30/2014 12/31/2013

BNDES TJLP 19,855 23,427 19,855 23,427Working capital CDI 40,491 40,027 43,457 39,932Leasing CDI - 8,043 - 8,1541st issue of debentures CDI 184,904 275,483 189,563 275,5302nd issue of debentures

1st series CDI 159,550 166,208 163,235 166,9382nd series IPCA 122,726 119,718 124,942 120,803

3rd issue of debentures CDI 208,291 - 207,765 -

(c) Derivatives

The fair value of exchange forwards is calculated at present value, using market ratesthat are accrued on each measurement date.

The fair value of interest rate swaps is based on quotations obtained from brokers.These quotations are tested as to their reasonableness by discounting the estimatedfuture cash flows based on the terms and maturity of each contract and using marketinterest rates for a similar instrument calculated on the measurement date. The fairvalues reflect the credit risk of the instrument and include adjustments to consider thecredit risk of the entity and the counterparty, when appropriate.

26.3. Derivative financial instruments

(a) Derivative policy

In order to protect its assets from the exposure to commitments assumeddenominated in a foreign currency, the Company has developed its own strategy tomitigate such market risk. When applied, the strategy is carried out to reduce thevolatility of cash flows to the desirable level, i.e., to maintain the planneddisbursements.

Mills believes that the management of such risks is key to support its growth strategy

without potential financial losses that reduce its operating profits, as the Companydoes not aim at obtaining financial gains through the use of derivatives. Foreigncurrency risks are managed by the Finance Manager and the CFO, who evaluate

possible exposures to risks and set guidelines to measure, monitor and manage therisk related to the Companys activities.

Based on this objective, the Company contracts derivative transactions, usuallyNDFs (non-deliverable forwards) with prime financial institutions (with creditratings of brAAA - national scale, Standard & Poors or similar), in order toguarantee the agreed trading value at the time the imported goods are ordered.Likewise, swaps or NDFs are entered into to guarantee the flow of payments

(amortization of principal and interest) for foreign currency-denominated financing.


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Pursuant to the Companys bylaws, any contract or obligation assumed in amountsexceeding R$10,000 has to be approved by the Board of Directors, unless it isalready set out in the Business Plan. For amounts under R$100, for periods of lessthan 90 days it is not necessary to contract hedge transactions. Other commitments

should be hedged against foreign exchange exposure.

The swap and NDF transactions are carried out to convert into reais future financialcommitments in foreign currency. At the time such transactions are entered into, theCompany mitigates the foreign exchange risk by matching the commitment amountand the exposure period. The derivative cost is pegged to the interest rate, usually a

percentage of the CDI rate. The swaps and NDFs with maturities shorter or longerthan the final maturity of the commitments may, over time, be renegotiated so thattheir final maturities match or approximate the final maturity of the commitment.Accordingly, on the settlement date, the gain or loss on the swap or NDF can offset

part of the impact of the exchange fluctuation in relation to the real, thus helping to

stabilize cash flows.

As these transactions involve derivatives, the calculation of the monthly position iscarried out using the fair value method and they are valued by calculating their

present value using market rates that are impacted on the date of each calculation.This widely used methodology can present monthly distortions in relation to thecurve of the contracted derivative; however, the Company believes that this is the

best applicable method since it measures the financial risk should an early settlementof the derivative be required.

Monitoring the commitments assumed and the monthly valuation of the fair value of

the derivatives permits following up on the financial results and the impact on cashflows, and ensure that the initially planned objectives are achieved. The calculationof the fair value of positions is made available on a monthly basis for managementmonitoring purposes.

The derivatives contracted by the Company for certain equipment importtransactions are intended to hedge against exchange rate fluctuation risks during the

period between the time an order is placed and the time the equipment is delivered inBrazil and are not used for speculation purposes.

(b) The table below shows details of future currency agreements outstanding at the endof the reporting period:

Average exchange rate Foreign currency Notional value Fair value

Outstanding agreements 9/30/2014 12/31/2013 9/30/2014 12/31/2013 9/30/2014 12/31/2013 9/30/2014 12/31/2013

Cash flow hedge US$ thousand R$ thousand R$ thousand

Less than three months 2.33 2.29 401 42,263 936 99,090 52 7,372From three to six months - 2.31 - 21,856 - 51,200 - 132Over six months - 2.36 - 7,739 - 18,129 - 12Total 401 71,858 936 168,419 52 7,516

(c) Swap

The hedge transaction, for the exchange swap agreement, contracted by the Companyis intended to hedge against the exposure of the borrowing of US$16.9 million (see

Note 12) to exchange rate fluctuations. The exchange swap for this transactionconsisted in the swap of the exchange rate fluctuation plus interest of 2.31% p.a. forCDI plus 0.29% p.a. As at September 30, 2014, the fair value payable on thistransaction was R$1,233 (R$267 as at December 31, 2013).


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(d) Derivatives fair value calculation method

Derivatives are measured at present value at the market rate, on the base date of thefuture flow calculated using the contractual rates through maturity. For capped or

double-index contracts, the Company also takes into consideration the optionembedded in the swap contract.

(e) Hedge effectiveness calculation method

The Companys hedge transactions are aimed at hedging against foreign exchangefluctuations on its machinery and equipment imports. These transactions are classified ashedge accounting.

The Company evidences the effectiveness of these instruments using the Dollar offsetme

Documents

3Q14 Quarterly Financial Reports