SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of March, 2017
(Commission File No. 001-33356),
Gafisa S.A.
(Translation of Registrant's name into English)
Av. Nações Unidas No. 8501, 19th floor
São Paulo, SP, 05425-070
Federative Republic of Brazil
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F ______
Indicate by check mark if the registrant is submitting
the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)
Yes ______ No ___X___
Indicate by check mark if the registrant is submitting
the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes ______ No ___X___
Indicate by check mark whether by furnishing the information contained in this Form,
the Registrant is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes ______ No ___X___
If “Yes” is marked, indicate below the file number assigned
to the registrant in connection with Rule 12g3-2(b):
N/A
GAFISA S.A.
Corporate Taxpayer’s ID (CNPJ/MF) No. 01.545.826/0001-07
Corporate Registry (NIRE) No. 35.300.147.952
Publicly-held Company
MANAGEMENT PROPOSAL
ANNUAL GENERAL MEETING
APRIL 28, 2017
1
INDEX
proposAL FOR THE ANNUAL GENERAL
MEETING
|
3
|
APPENDIX I – MANAGEMENT
COMMENTS
|
5
|
APPENDIX II – FISCAL COUNCIL CANDIDATES’
PROFILE
|
36
|
appendix III – management
compensation
|
40
|
2
GAFISA S.A.
Corporate Taxpayer’s ID (CNPJ/MF) No.
01.545.826/0001-07
Corporate Registry (NIRE) No. 35.300.147.952
Publicly-held Company
Dear Shareholders,
Below we present for your appreciation the
management proposal for the matters on the agenda of the Company’s Annual
General Meeting to be held on April 28, 2017:
1. Review the management accounts and examine,
discuss and vote on the financial statements relative to the fiscal year ended
December 31, 2016.
We propose that the management accounts and
financial statements for the 2016 fiscal year, as disclosed on March 23, 2017 on
the websites of the Brazilian Securities and Exchange Commission
("
CVM
") and the BM&FBOVESPA S.A. - São Paulo Securities,
Commodities and Futures Exchange ("
BM&FBovespa
”) via the Periodic
Information System (IPE) and on March 24, 2017 in the newspapers
O Estado de São
Paulo
and
Official Gazette of the State of São Paulo
(“
Financial
Statements
”) be approved without reservations.
Since the Company recorded net loss in the
fiscal year ended December 31, 2016, there is no proposal for allocation of net
income, and the reporting required by Exhibit 9-1-II of CVM Instruction No. 481
of December 17, 2009 (“
CVM Instruction 481/09
”) is harmed. For this
same reason, this is not the case of mentioning distribution of
dividends.
As per Article 9, paragraph III of CVM
Instruction 481/09, the Management’s comments on the Company’s financial
situation are detailed in
Appendix I
of this proposal.
In compliance with the provisions of Article 9,
V and sole paragraph, III of CVM Instruction 481/09, the opinion of the Fiscal
Council and the Audit Committee are available at the Company’s headquarters, on
its Investor Relations website (www.gafisa.com.br/ri/) and on the websites of
the BM&FBOVESPA S.A. – São Paulo Stock, Commodities and Futures Exchange
(www.bmfbovespa.com.br) and the Brazilian Securities and Exchange Commission
(www.cvm.gov.br).
2. Establishment of Management’s overall
compensation for the 2017 fiscal year
.
We recommend that the Management’s overall
compensation for the 2017 fiscal year should be established at the limit of up
to R$18,739,227.00 for current fiscal year, from January to December 2017.
We clarify that according to Article 152 of Law
No. 6.404/76, this amount includes the fixed and short-term variable
compensation for the management, any benefits provided or supported by the
Company. Social security charges or expenses associated with the recognition of
the fair value of stock options that may be granted by the Company this year,
which are recognized gradually during grace period (usually three years) with
accounting and non-financial effects under the CPC 10 and derive from the Stock
Option Plan previously approved by the Company's shareholders at the General
Meeting.
The short-term variable compensation program
maintained by the Company is connected to achievement of specific goals that are
established, agreed upon and approved by the Board of Directors each year. For
the 2016 fiscal year, a series of goals was established, which were partially
achieved, this is the main reason of difference between the total amount of
compensation approved for 2016 compared to the amount effectively paid.
Therefore, the Annual General Meeting held in 2016 approved an overall limit of
Management compensation of up to R$19,823,318.01 and the effective payment
estimated would be approximately R$12.6 million, noting that this amount still
has been verified.
Pursuant to Article 12 of CVM Instruction
481/09, the information necessary to analyze the Management compensation
proposal is detailed in
Appendix III
hereto.
3. Installation and establishment of the number
of members that should compose the Company's Fiscal
Council
.
Considering that the term of office has ended,
we propose the installation of the Company's Fiscal Council. Once installed, in
compliance with the provisions of Article 40 of the Company's Bylaws, we propose
that the Company's Fiscal Council be composed of 3 (three) sitting members with
an equal number of alternates.
3
4. Considering that the term of office has
ended, election of the members of the Company’s Fiscal
Council
We propose the election of the following
members and their respective alternates for a term of office that will end on
the date of the 2018 Annual General Meeting, to wit, as
sitting
members
: (
i
)
Olavo Fortes Campos Rodrigues Junior
, Brazilian, business
administrator, married, identity card (RG) No. 9.369.027 issued by SSP/SP and
enrolled with the individual taxpayer register (CPF/MF) under no.
769.488.977-20, resident and domiciled in São Paulo, São Paulo State at Rua
Jesuíno Arruda 541, apto 1, CEP
04553-081
,
(ii) Peter Edward Cortes
Marsden Wilson
, Brazilian, economist, married, identity card (RG) No.
08.424.379-9 issued by IFP/RJ and enrolled with the individual taxpayer register
(CPF/MF) under no. 168.126.648-20, resident and domiciled in São Paulo, São
Paulo State at Rua Princesa Isabel 347, apartment 92, Campo Belo, CEP
046001-001, and
(iii) Laiza Fabiola Martins de Santa Rosa
, Brazilian, economist,
single, identity card (RG) No. 32.677.183-9 issued by SSP/SP and enrolled with
the individual taxpayer register (CPF/MF) under no. 294.953.408-29, resident and
domiciled in São Paulo, São Paulo State with offices at Avenida Paulista 2.300,
11º andar and as
alternates
:
(i) Marcello Mascotto Iannalfo
, Brazilian, economist,
married, identity card (RG) No. 16.994.226-0 issued by SSP/SP and enrolled with
the individual taxpayer register (CPF/MF) under no. 101.947.028-39, resident and
domiciled in the city of Campinas, São Paulo State at Rua Bacabá, 48,
Alphaville, Campinas - CEP 13098-339,
(ii) Marcelo Martins Louro
, Brazilian, business
administrator, married, identity card (RG) No. 19.994.703 issued by SSP/SP and
enrolled with the individual taxpayer register (CPF/MF) under no.
118.319.918-02, resident and domiciled in São Paulo, São Paulo State at Rua Iaiá
127, CEP 04542-060; and
(iii)
Alessandro de Oliveira Nascimento
,
Brazilian,
Brazilian Federal Savings Bank employee, single, identity
card (RG) No. 44350969-4 issued by SSP-SP and enrolled with the individual
taxpayer register (CPF/MF) under No. 335.489.628-07, resident and domiciled in
the City and State of São Paulo, with office at Avenida Paulista,
2300,11
o
andar.
As per Article 10 of CVM Instruction 481/09,
the information relative to the candidates to the position of member of the
Fiscal Council supported by the Company is detailed in
Appendix
II
of
this proposal.
5.
Establishment of overall compensation of
Members of the Fiscal Council for the 2017 fiscal year
We propose that the overall
compensation of Fiscal Council members for the 2017 fiscal year be established
in up to R$260,640.00.
We clarify that according to
Article 152 of Law No. 6.404/76, this amount includes the social security
charges besides the fixed compensation of Fiscal Council members.
As per Article 12 of CVM
Instruction 481/09, the information necessary for analysis of the Management
compensation proposal can be found in detail in
Appendix
III
of this proposal.
6. Additional Information and Where to Find
It
The documents provided for by CVM Instruction
481/09 were submitted to CVM on this present date, via the Periodic Information
System (IPE), pursuant to Article 6 of referred Instruction and are available to
shareholders, at the Company’s headquarters, at its Investor Relations website
(www.gafisa.com.br/ri/), and at the websites of BM&FBovespa
(www.bmfbovespa.com.br) and CVM (www.cvm.gov.br). The documents may be consulted
and examined at the Company’s headquarters, and if shareholders are interested,
they shall schedule date and time with the Investor Relations
Department.
Shareholders may
exercise their remote voting right, by completing the remote voting form for the
Annual General Meeting made available by the Company. Shareholders opting for
exercising their voting right via the Remote Voting Form shall comply with the
rules and formalities described in the Remote Voting From and item 12.2 of the
Company’s Reference Form (Rules, policies and practices referring to general
meetings), available at the website of CVM (www.cvm.gov.br).
São Paulo, March 27,
2017.
The
Management
Gafisa S.A.
4
APPENDIX I
(
As per Appendix 24, item 10 of CVM Instruction no. 480 of
December 17, 2009)
10.
MANAGEMENT COMMENTS
10.1.
a) general
financial and equity conditions
|
The Management believes that Company is one of
the leading players in the real estate development market, operating nationally
with a focus on high-quality residential undertakings targeting all income
brackets.
The Company’s revenue is largely derived from
the development and sale of real estate projects. The Company recognizes the
revenue from these real estate projects during the construction period, based on
a financial calculation related to the value of the project on completion, and
not when the sales contracts are signed. On a smaller scale, the Company also
generates revenue from the provision of real estate services, such as
construction, technical and real estate management, to third parties. The
Company structures some of its projects through its subsidiaries or jointly
controlled affiliates, set up as specific purpose enterprises
(SPE).
The Company’s current working capital is
sufficient for its present requirements and its cash position, including loans
to third parties, and enough to meet the financing of all its activities and
cover its capital requirement, for at least the next 12
months.
The Management
understands that the Company has sufficient financial and equity conditions to
implement its business plan and comply with its short-to-medium-term
obligations.
We point out that, due
to the Company’s release of material fact dated December 14, 2016, informing on
the signature of agreement to sell up to 30% shares issued by Tenda, and in line
with CPC 31 – Non-Current Asset Held for Sale and Income from Discontinued
Operation, the income statement information as of December 31, 2016, 2015 and
2014 was restated for comparison purposes. Hence, the income from discontinued
operation is reported as a single amount in the income statement, envisaging
total income after income tax of these operations less impairment loss. The
assets and liabilities of discontinued assets group are reported in single lines
under assets and liabilities for the fiscal year ended December 31,
2016.
The year of 2016 was
marked by continued macroeconomic challenges as the political and economic
crisis significantly impacted the Brazilian real estate market. At Gafisa, our
conservative new product development strategy and the focused business model on
the metropolitan regions of São Paulo and Rio de Janeiro allowed us to partially
offset the headwinds we experienced during this period. Launches ended the 4th
quarter of 2016 at R$299.4 million, consolidating R$920.8 million in 2016
launches. Net sales totaled R$355.8 million in 4Q16 and R$810.5 million in 2016.
2016 was a year marked by recession in Brazil. In view of negative economic
effects during the year, adjusted gross margin ended 2016 at 4.7% compared to
36.9% in 2015.
In view of uncertainties
in Brazilian economy in 2016, Gafisa assumed a most conservative position,
prioritizing higher liquidity cushion in its businesses, achieving a relevant
cash performance during 2016. Gafisa recorded an operating cash generation of
R$300.9 million in 2016, reaching free cash flow of R$70.0 million in
2016.
In 2016, the Company
maintained its conservative position always working with a balanced capital
structure. At the end of the year, the Company was impacted by the accounting
effect of Tenda discontinued operation, and net debt/equity ratio reached 71.8%.
Excluding project financing, the net debt/equity ratio recorded a ratio of
3.2%.
5
On December 31, 2016,
the Company’s cash position was R$253,180 thousand. On the same date, net debt
totaled R$1,385,624 thousand and net debt-to-equity ratio stood at
71.8%.
On December 31, 2015,
the Company’s cash position was R$712,311 thousand. On the same date, net debt
totaled R$1,443,377 thousand and the net debt-to-equity ratio stood at
46.6%.
On December 31, 2014,
the Company’s cash position was R$1,157,254 thousand. On the same date, net debt
totaled R$1,440,300 thousand and the net debt-to-equity ratio stood at 47.1%.
In 2016, the Company’s adjusted EBITDA margin was -26.6%,
15.8% in 2015, and 18.8% in 2014, due to the effects of the spin-off of Gafisa
and Tenda transaction and the pricing adjustments to inventory units, related to
current market prices level and to historical cost update at market value in
some lots of our landbank. Excluding these effects, 2016 adjusted EBITDA margin
was 9.1%.
On a consolidated basis,
net revenues for 2016, recognized by the “PoC” method, decreased 36.6%
year-over-year, totaling R$915.7 million, impacted especially by the following:
(i) lower operating volume; (ii) lower speed of inventory sales, which records
higher contribution to revenues, (iii) higher volume of dissolutions and, (iv)
result of assets pricing market conditions. Due to a recessive environment and
its negative impact on business development, gross margin stood at -12.4%, in
2016, compared to 26.4% in 2015 and 26.3% in 2014, decrease especially affected
by higher volume of dissolutions and pricing adjustments of units sold in view
of market conditions.
The liquidity ratio in
2016 was 1.49, compared to 2.11 in 2015 and 2.07, in 2014.
As per Material Fact
released on December 14, 2016, the Company entered into a stock purchase
agreement with Jaguar Growth Asset Management, LLC, to acquire up to 30% of
shares issued by Tenda, at the price of R$8.13 per share, representing within
the context of operation, cash receivable for Gafisa of R$231.7 million, with
total valuation of R$539.0 million for full payment of Tenda’s capital
stock.
It is worth mentioning
that the completion of referred transaction is subject to certain conditions
precedent, amongst them we point out:
(i) Tenda’s capital
stock reduction, without cancelation of shares, with refund to Gafisa,
currently, its sole shareholder, of R$100.0 million, adjusted by SELIC interest
rate, of which (a) R$50.0 million with payment until December 31, 2018; and (b)
the balance payable until December 31, 2019, with possibility of anticipation in
view of certain financial covenants provided for in the agreement;
(ii) Gafisa’s capital
stock reduction with distribution effects to its shareholders of shares
corresponding to 50% of Tenda’s capital stock; and
(iii) the conclusion of
exercise by Gafisa’s shareholders of preemptive right to acquire shares for the
price per share referred to in the operation, noting that, within this context,
Gafisa will offer its shareholders, 50% of shares representing Tenda’s capital
stock owned thereby, and not only the 30% purpose of the offer received from
Jaguar, considering its decision of selling these shares, even if in multiple
operations.
Over the last year, Gafisa and Tenda managed to strengthen
and improve their operational and financial cycles, ensuring greater stability
and preparation, given the challenges of 2017. The Gafisa segment continues with
its consistent and balanced operation, improving the level of capital employed,
while the Tenda segment is ready to increase the volume of new projects, based
on the good results verified in the projects launched in the mew model. The
Company continues working guided by capital discipline, towards profitability
goals and shareholder value generation, seeking continuous result improvements
over the year to come.
6
The table below shows
the total amount used by the Company to finance its operations (total
capitalization) and the segregation of such amounts between debt capital and
equity capital (both in real terms and as a percentage) for each fiscal year, as
follows:
|
Fiscal
Year ended December 31
|
|
2016
|
2015
|
2014
|
|
(in
thousands of Reais)
|
Total debt capital
|
3,279,636
|
3,663,096
|
4,147,449
|
Total equity capital
|
1,930,453
|
3,097,236
|
3,058,403
|
Total capitalization
|
5,210,089
|
6,760,331
|
7,205,852
|
|
|
|
|
Debt capital/total capitalization
ratio
|
62.9%
|
54.2%
|
57.6%
|
Equity capital/total capitalization
ratio
|
37.1%
|
45.8%
|
42.4%
|
On December 31, 2016, the Company’s cash position was
R$253,180 thousand. On the same date, net debt totaled R$1,385,625 thousand and
the net debt-to-equity ratio stood at 71.8%.
On December 31, 2015, the Company’s cash position was
R$712,311 thousand. On the same date, net debt totaled R$1,443,377 thousand and
the net debt-to-equity ratio stood at 46.6%.
On December 31, 2014, the Company’s cash position was
R$1,157,254 thousand. On the same date, net debt totaled R$1,440,300 thousand
and the net debt-to-equity ratio stood at 46.7%.
c) capacity for
payment in relation to the financial commitments assumed
|
On December 31, 2016,
the Company’s net debt was R$1,385,624 thousand, and the cash position and cash
equivalents amounted to R$253,180 thousand, compared to a total debt of
R$1,638,805 thousand, a net debt-to-equity ratio of 71.8%.
Additionally, the
Company had a total of R$2,197,046 thousand of real estate receivables and
R$631,833 thousand gross amount considering impairment, of unsold finished
units, representing R$592,616 thousand in PSV, compared to R$493,783 thousand of
properties payable and R$446,337 thousand of costs to be incurred. When
considering the sum of the total receivables and inventory of unsold finished
units, this exceeds 1.25 times the sum of Net Debt, properties payable and costs
to be incurred.
Furthermore, of the Company’s R$1,638,805 thousand of
total debt, R$1,022,038 thousand relates to Brazil’s Housing Finance System
contracts, which use funds to finance the construction of real estate projects,
and counts on fiduciary assignment or pledge of the real estate receivables of
each project, which mostly mature upon the project’s delivery. Therefore, when
finalizing the projects, the resources from the settlement of the outstanding
balance by clients are obligatorily used to amortize the balance of the
Company’s contracts. Out of total indebtedness of the Company, 80.8% are related
to the finance of construction of real estate projects.
7
On December 31, 2015,
the Company’s net debt was R$1,443,337 thousand, and the cash position and cash
equivalents amounted to R$712,311 thousand, compared to a total debt of
R$2,155,688 thousand with a net debt-to- equity ratio of 46.6%.
Additionally, the
Company had a total of R$2,595,332 thousand of real estate receivables and
R$333,036 thousand gross amount considering impairment, of unsold finished
units, representing R$591,797 thousand in PSV, compared to R$570,191 thousand of
obligations related to purchase of real estate
and
R$453,897 thousand of costs to be incurred. When considering the sum of the
Total Receivables and Inventory of unsold finished units, this exceeds 2.25
times the sum of Net Debt, Obligations Related to Construction and Costs to be
Incurred.
Furthermore, of the Company’s R$2,155,688 thousand of
total debt, R$1,161,707 thousand relates to Brazil’s Housing Finance System
contracts, which use funds to finance the construction of real estate projects,
and counts on fiduciary assignment or pledge of the real estate receivables of
each project, which mostly mature upon the project’s delivery. Therefore, when
finalizing the projects, the resources from the settlement of the outstanding
balance by clients are obligatorily used to amortize the balance of the
Company’s contracts. Out of total indebtedness of the Company, 84.2% are related
to the finance of construction of real estate projects.
On December 31, 2014,
the Company’s net debt was R$1,440,300 thousand, and cash and cash equivalents
amounted to R$1,157,254 thousand, compared to a total debt of R$2,597,554
thousand, with a net debt/ equity ratio of 47.1%.
Additionally, the
Company’s real estate receivables amounted to R$2,889,352 thousand, while
completed and unsold units amounted to R$260,808 thousand, gross amount
considering impairment, representing R$568,506 thousand in PSV, compared to a
total of R$570,506 thousand of real estate payables, and R$628,751 thousand of
costs incurred. When considering the sum of the total receivables and completed
and unsold units, it exceeds 2.62 times the sum of net debt, real estate
payables and costs incurred.
Furthermore, of the Company’s total debt, corresponding to
R$2,597,554 thousand, R$1,128,514 thousand is related to SFH contracts to
finance the construction of real estate projects that have fiduciary assignments
or pledges of the real estate receivables for each project, which, in most
cases, are due on the delivery of the project. When concluded, the funds from
the settlement of the balance due by the clients should be used in the
amortization of the balance of the Company's contracts. Out of the Company's
total indebtedness, 77.8% are related to the finance of construction of real
estate projects.
Considering the
Company's indebtedness profile, its most liquid assets against its obligations,
reflected or not reflected in the Balance Sheet, the officers believe there is
sufficient liquidity to meet the current contractual obligations on this date.
If needed, the Company
has capacity to take out additional loans to finance investments and
operations.
8
d) sources of
financing for working capital and investments in non-current assets used
|
As and when allowed, the
Company takes out debt for all projects it develops with Brazil’s Housing
Finance System (SFH/SFI), which offers lower interest rates than traditional
working capital facilities, with security interest and amortization connected
with the settlement by clients through the transfer of clients’ receivables to
banks. Using this credit facility, the Company intends to cover the cash
exposure for each project, which is not covered by monthly payments received. In
2016, the Company did not conduct SFI financing operations, but 52 SFH financing
operations were contracted, totaling R$626,754 thousand.
In 2015, the Company did
not conduct SFI financing operations, but 67 SFH financing operations were
contracted, totaling R$805,742 thousand. In 2014, the Company contracted 34 SFH
financing operations, totaling R$566,444 thousand, and signed one SFI contract
in the amount of R$194,000 thousand.
The increase in SFH/SFI
financing operations reflects the Company’s pursuit of a capital structure in
line with its operating cycle, prioritizing fundraising through debt instruments
aligned to its projects’ flow of receivables. Therefore, over the past three
years, the Company has given priority to financing sources directly linked to
the projects portfolio. As a result, 79.3% of the Company’s total debt in 2016
was related to debt linked to real estate project finance, a regression compared
to 84.2% recorded in 2015 and 77.8% in 2014.
Additionally, the
Company used credit assignment and securitization instruments when it perceived
a market demand for real estate receivables, and privileged definitive
assignment structures with no right to withdraw. The transactions are subject to
resolutive conditions, the main of which being the complete formalization of the
guarantee to the assignee by the assignor, and the current amount of these
transactions is recorded in the Company’s liabilities up to the resolution of
the guarantee. In 2016, the Company held a securitization operation in the
nominal amount of R$79,313 thousand. In 2015, the Company held a securitization
operation in the nominal amount of R$32,192 thousand and in 2014, the Company
also held a securitization operation in the nominal amount of R$15,200
thousand.
In 2016 and 2015, the
Company did not issue debentures, and in 2014 raised the total amount of
R$185,000 thousand with two private issues of debentures, both with security
interest.
Finally, also in 2016,
the Company issued bank bill of credit (CCB) totaling R$65,000 thousand, with a
view to complementing its financing strategy, without funding of this type in
2015 and 2014.
The Company does not make investments in non-current
assets.
e) sources of
financing for working capital needs and investments in non-current assets
intended to be used to cover liquidity shortfalls
|
The Company currently has a liquidity level and
cash generation prospects that allows for it to not use additional funding for
its operations. But this does not eliminate the possibility to structure or take
out new working capital facilities according to the instruments available and
market conditions at the time of contracting, as indicated in items 10.1.c and
10.1.d.
f) levels of
indebtedness and debt characteristics
|
i)
significant loan and
financing agreements
The Company's officers show in the table below
the Company’s total amount of debt of any consolidated nature, which is equal to
the sum of total Current Liabilities and total Non-current Liabilities on
December 31, 2016, 2015 and 2014:
9
|
Fiscal
Year ended December 31
|
|
2016
|
2015
|
2014
|
|
(in
thousands of Reais)
|
Total current liabilities
|
2,275,550
|
2,048,968
|
2,270,869
|
Total non-current
liabilities
|
1,004,086
|
1,614,128
|
1,876,580
|
Total amount of debt of any
nature
|
3,279,636
|
3,663,096
|
4,147,449
|
Below, the Company’s
officers show some key features of consolidated financings and loans of the
Company, grouped by type, on December
31,
2016, 2015 and 2014:
|
|
|
Fiscal
Year ended December 31
|
|
Average cost
|
Maturity
|
2016
|
2015
|
2014
|
|
(in
thousands of Reais)
|
|
|
Project Financing
(SFH/SFI)
|
TR +
8.30% to 14% / 120% and 129% CDI
|
February 2017 to August 2021
|
1,022,038
|
1,161,707
|
1,128,514
|
FGTS Debentures
|
10.38%
+ TR
|
December 2017
|
302,363
|
654,445
|
891,650
|
Debentures
|
1.90%
+ CDI / 8.22 + IPCA
|
July
2018 to January 2020
|
148,905
|
203,513
|
297,449
|
Working capital
|
125%
of CDI / 0.59% to 4.25% + CDI / INCC
|
June
2017 to June 2019
|
164,262
|
131,128
|
268,911
|
Obligations with Investors
|
CDI +
0,59%
|
June
2016 to June 2017
|
1,237
|
4,895
|
11,030
|
Total Debt
|
|
|
1,638,805
|
2,155,688
|
2,597,554
|
Project Financing (SFH and SFI)
Project financing is represented by loans from national
commercial banks to raise the necessary funds to develop the real estate
projects of the Company and its subsidiaries and affiliates. These
contracts have security interest represented by the land’s mortgage and by the
fiduciary assignment or pledge of receivables, and the funds are released upon
proof of physical and financial development of the construction works;
amortization begins after the construction works purpose of the contract are
completed. During the amortization of the contract, the proceeds from the
settlement of the outstanding balance by clients are used to amortize the debt.
One of the SFI contracts, in line with the Company’s risk strategy, was linked
to the contract of a hedge instrument to mitigate the risk of a fixed rate to
CDI percentage, aiming at leveling the debt remuneration against the use of
funds available by Treasury.
FGTS Debentures
These refer to the Company’s 7th Issue which relies on
FGTS resources, and the proceeds are used to fund the construction works of the
projects given as guarantee. For further information on these issues, please
refer to item 18.5 of the Reference Form.
Debentures
On December 31, 2016, these refer to the 9th Issue and
10th Issue of the Company, and the proceeds are allocated, respectively, to the
Company’s working capital and to the development of selected real estate
projects. In line with the Company’s risk strategy, the 9th and the 10th Issue
of the Company were linked to the contract of hedge instruments to mitigate the
risk of a CDI rate + to CDI percentage and IPCA to CDI percentage, respectively,
aiming at leveling the debt remuneration against use of funds available by
Treasury. For further information on these issues, please refer to item 18.5 of
the Reference Form.
10
Working Capital
It consists of Bank Credit Notes (CCB) and other banking
instruments that represent debt, and the proceeds are allocated to the Company’s
working capital. These instruments may have security interests or sureties, and
feature covenants that may result in the early maturity of the obligations if
not complied with. Due to the impacts of sale of subsidiary Tenda S.A., for a
provisional period, the Company defaulted one of the financial covenants
provided for in one of CCBs issued. However, the Company received, on March 22,
2017, a formal consent on such restrictive covenant, by means of which creditor
deliberated not to declare the acceleration in view of referred default, thus,
maintaining the Company’s performance with its contractual
liabilities.
Obligations with Investor
These are structured transactions that involved the
restructuring of Company subsidiaries to capture the distribution of results
from the development of selected real estate projects the investor holds an
interest in. These investments feature clauses of return on capital after a
certain period and priority in the distribution of results, reason why they are
recorded under “Obligations with Investors” in the Company’s financial
statements. For further information, please refer to item 6.5 of this Reference
Form.
ii)
other long-term arrangements with
financial institutions
There are no other long-term arrangements with financial
institutions but those detailed in this item.
iii) degree of Company debt
subordination
For the fiscal years ended December 31,
2016, 2015 and 2014
the Company's debts, contracted as financing and loans
with financial institutions, can be segregated according to the nature of their
guarantees, as follows
:
|
Fiscal
Year Ended December 31
|
|
2016
|
2015
|
2014
|
|
(in
thousands of Reais)
|
Total debt with Security
Interest
|
1,348,957
|
1,416,648
|
1,391,412
|
Total debt with Floating
Guarantee
|
302,363
|
654,445
|
891,650
|
Total Unsecured Debt
|
122,468
|
84,595
|
314,492
|
Total Debt
|
1,773,798
|
2,155,688
|
2,597,554
|
There is no degree of contractual subordination among the
unsecured debts. The Company’s debts with actual and floating guarantee have the
preferences and prerogatives provided for by the law. Therefore, in the event of
collective insolvency proceedings: (i) the debts with security interest have
payment priority over the Company's other debts, up to the value of encumbered
asset and (ii) the debts with floating guarantee have priority over unsecured
debts
.
iv) restrictions imposed to the issuer,
especially with regards to indebtedness limits, taking of new loans,
distribution of dividends, disposal of assets, issuance of new securities, and
sale of controlling interest as well as if issuer has been complying with these
restrictions;
11
The Company is party to agreements that set minimum and
maximum limits on specific topics, in addition to restricting the Company
regarding the taking of some actions. Noncompliance with the agreed ratios or
restrictions may result in the early maturity of the agreements.
The financial instruments’ major restrictions in the
fiscal years ended December 31, 2
016, 2015 and 2014, are as
follows:
·
request of any judicial or
extrajudicial reorganization plan to any creditor or class of creditors,
regardless of a judicial approval having been requested or obtained for said
plan; or file a court request for judicial reorganization
;
·
change in the direct or indirect
control of the Issuer, under article 116 of Law 6,404 of December 15, 1976, as
amended (“Brazilian Corporate Law”), that result in a downgrade in the Company’s
risk rating to a lower level than that at the time of the issue or, in some
cases, to a rating lower than A- or equivalent in national scale by the leading
rating agencies
;
·
payment by the Company of
dividends, interest on equity, or any other profit sharing provided for in the
Company’s bylaws, whenever it is in arrears regarding the issues in effect at
the time the event is declared, except for the payment of the minimum compulsory
dividend provided for in article 202 of the Brazilian Corporate Law
;
·
declaration of early maturity of
any financial obligation and debts of the Company and/or its Relevant
Subsidiaries, in the domestic or international market
;
·
amendment to or change in the
Company’s business purpose so that the Company no longer operates as a real
estate developer and construction Company
;
·
change in the corporate nature of
the Company to limited liability, under articles 220 through 222 of the
Brazilian Corporate Law;
·
spin-off, or merger of the Company
into another Company, unless such transaction is approved by the holders of debt
securities or holders are granted the right to withdraw;
·
reduction in the Company’s capital
stock that results in a capital stock lower than ninety-five percent (95%) of
the existing capital stock, except (i) in the case the capital reduction is
carried out to absorb losses under article 173 of the Brazilian Corporate Law,
or (ii) it is previously approved by the holders of debt securities;
·
Disposal, expropriation, seizure,
or any other form of disposal of fixed assets by the Company in equivalent
amount, as determined in indentures or contracts, and that may affect the
Company’s financial capacity.
The restrictions described above may not fully apply to
all agreements in effect on this date, and different limits may be determined to
each agreement
.
The Company has also committed to keeping the following
financial indicators within the limits set. The formulas and maximum and minimum
limits, as well as their indicators are presented below
:
12
|
December 31
|
|
2016
|
2015
|
2014
|
7th issue
|
|
|
|
Total accounts receivable plus
inventories must be less than zero or higher than 2.0 times net debt minus
project debt
(3)
.
|
53.98
times
|
-14.12
times
|
-9.33
times
|
Total debt, minus project debt
(3)
, minus
cash and cash equivalents
(1)
, should not exceed 75% of
shareholders’ equity plus non-controlling interest.
|
3.11%
|
-12.2%
|
-19.3%
|
Total receivables plus revenues to be
recognized plus inventory of finish units must be higher than 1.5 times
the net debt +obligations related to construction + costs to be
incurred
.
|
2.15
times
|
2.25
times
|
2.10
times
|
|
|
|
|
9th issue
|
|
|
|
Total accounts receivable plus total
inventory must be less than zero or higher than 2.0 times net debt
|
2.34
times
|
3.71
times
|
3.86
times
|
Net debt should not exceed 100% of shareholders’
equity plus non-controlling interest.
|
71.71%
|
46.4%
|
46.7%
|
|
|
|
|
10th issue
|
|
|
|
Total accounts receivable plus
inventory of finish units must be less than zero or higher than 2.0 times
net debt minus project debt
(3)
.
|
53.98
times
|
-14.12
times
|
n/a
|
Total debt, minus project debt
(3)
, minus
cash and cash equivalents
(1)
, should not exceed 75% of
shareholders’ equity plus non-controlling interest.
|
3.11%
|
-12.2%
|
n/a
|
|
|
|
|
CCBs and Other Instruments
|
|
|
|
Total accounts receivable plus
inventory of finish units must be less than zero or higher than 2.0 times
net debt minus project debt
(3)
|
33.62
times
|
-7.73
times
|
-5.32
times
|
Net debt should not exceed 70% of shareholders’
equity plus non-controlling interest.
|
71.71%
|
n/a
|
n/a
|
Total accounts receivable plus
inventory of finish units must be less than zero or higher than 2.0 times
net debt minus project debt
.
|
33.62
times
|
-7.73
times
|
-5.32
times
|
Total debt, minus project debt, minus cash and cash
equivalents
(1)
, should not exceed 75% of shareholders’ equity
plus non-controlling interest.
|
3.11%
|
-12.2%
|
-19.3%
|
|
|
|
|
(1)
(1) Cash refers to cash and cash equivalents and
marketable securities.
|
(2)
(2) Total receivables, whenever mentioned, refers to
the amount reflected in the Balance Sheet plus the amount not stated in
the Balance Sheet.
|
(3) Project debt and debt with security interest
refers to the Housing Finance System (SFH) debt, defined as the sum of all
loans contracts disbursed whose funds derive from the Housing Finance
System (SFH), and also the debt related to the seventh
issuance
|
On December 31,2016, the Company was complying with
restrictive covenants, except for a financial covenant of a CCB, pursuant to
item (i) above.
g) limits of
contracted financing and percentages already
used
|
In the fiscal years
ended December 31, 2014, 2015 and 2016, the proceeds of construction financing
contracted from national institutions considered by the Company as prime
institutions in the National Financial System are exclusively allocated to the
construction works of the relative projects. The funds are released to the
Company according to the physical/financial development of the construction
works. Besides, the Company also used other sources of funding, such as
Debentures, Housing Financing System and Bank Credit Notes and these funds are
released to the Company upon execution.
On December 31, 2016, the Company had contracted a total
of R$3,243 million; of this amount, R$2,556 million had already been released,
accounting for use of 68,04% of funds raised. Of this amount, the Company’s
total indebtedness corresponds to R$1,047 million, of which R$805 million refer
to SFH contracts.
13
h) significant
alterations in each item of the financial statements
|
Due to the Company’s
release of material fact dated December 14, 2016, informing on the signature of
agreement to sell up to 30% shares issued by Tenda, and in line with CPC 31 –
Non-Current Asset Held for Sale and Income from Discontinued Operation, the
information of the income statement as of December 31, 2016, 2015 and 2014 was
restated for comparison purposes. Hence, the income from discontinued operation
is reported as a single amount in the income statement, envisaging total income
after income tax of these operations less impairment loss. The assets and
liabilities of discontinued assets group are reported in single lines under
assets and liabilities for the fiscal year ended December 31, 2016.
CONSOLIDATED STATEMENT OF INCOME FOR THE FISCAL
YEAR
|
2016
|
Vertical Analysis % 2016
|
2015
|
Vertical Analysis % 2015
|
2014
|
Vertical Analysis % 2014
|
Chg.
R$000 2016 x 2015
|
Chg.
R$000 2015 x 2014
|
|
|
|
|
|
|
|
|
|
Net operating revenue
|
915,698
|
100%
|
1,443,357
|
100%
|
1,580,861
|
100%
|
(527,659)
|
(137,504)
|
Operating costs
|
|
|
|
|
|
|
|
|
Real estate development and
sale
|
(1,029,213)
|
-112%
|
(1,061,921)
|
-74%
|
(1,164,997)
|
-74%
|
32,708
|
103,076
|
|
|
|
|
|
|
|
|
|
Gross (loss) operating
profit
|
(113,515)
|
-12%
|
381,436
|
26%
|
415,864
|
26%
|
(494,951)
|
(34,428)
|
|
|
|
|
|
|
|
|
|
Operating income (expense)
|
(362,747)
|
-40%
|
(295,595)
|
-20%
|
(324,211)
|
-21%
|
(67,152)
|
28,616
|
Selling expenses
|
(94,946)
|
-10%
|
(97,949)
|
-7%
|
(95,063)
|
-6%
|
3,003
|
(2,886)
|
General and administrative
expenses
|
(106,585)
|
-12%
|
(97,442)
|
-7%
|
(124,833)
|
-8%
|
(9,143)
|
27,391
|
Equity pick-up on investments
Investments
|
(48,332)
|
-5%
|
40,015
|
3%
|
38,405
|
2%
|
(88,347)
|
1,610
|
Depreciation and
amortization
|
(33,892)
|
-4%
|
(32,585)
|
-2%
|
(63,607)
|
-4%
|
(1,307)
|
31,022
|
Other income/(expenses),
net
|
(78,992)
|
-9%
|
(107,634)
|
-7%
|
(79,113)
|
-5%
|
28,642
|
(28,521)
|
|
|
|
|
|
|
|
|
|
Income/(loss) before financial income
and expenses and income tax and union dues
|
(476,262)
|
-52%
|
85,841
|
6%
|
91,653
|
6%
|
(562,103)
|
(5,812)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial expenses
|
(84,118)
|
-9%
|
(127,728)
|
-9%
|
(114,371)
|
-7%
|
43,610
|
(13,357)
|
Financial income
|
58,439
|
6%
|
77,306
|
5%
|
98,121
|
6%
|
(18,867)
|
(20,815)
|
|
|
|
|
0
|
|
|
|
|
Income (loss) before income tax and
union dues
|
(501,941)
|
-55%
|
35,419
|
2%
|
75,403
|
5%
|
(537,360)
|
(39,984)
|
|
|
|
|
|
|
|
|
|
Current income tax and social
contribution
|
(10,722)
|
-1%
|
(14,763)
|
-1%
|
(25,304)
|
-2%
|
4,041
|
10,541
|
Deferred income tax and social
contribution
|
(89,358)
|
-10%
|
14,105
|
1%
|
16,355
|
1%
|
(103,463)
|
(2,250)
|
|
|
|
|
|
|
|
|
|
Total income tax and union dues
|
(100,080)
|
-11%
|
(658)
|
0%
|
(8,949)
|
-1%
|
(99,422)
|
8,291
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continued
operations
|
(602,021)
|
-66%
|
34,761
|
2%
|
66,454
|
4%
|
(636,782)
|
(31,693)
|
|
|
|
|
|
|
|
|
|
Net income (loss) from discontinued
operations
|
(559,704)
|
-61%
|
36,218
|
3%
|
(110,179)
|
-7%
|
(595,922)
|
146,397
|
|
|
|
|
|
|
|
|
|
Net income (loss) for the
year
|
(1,161,725)
|
-127%
|
70,979
|
5%
|
(43,725)
|
-3%
|
(1,232,704)
|
114,704
|
|
|
|
|
|
|
|
|
|
(-) Income / (loss)
attributable:
|
|
|
|
|
|
|
|
|
To non-controlling
interest
|
1,871
|
0%
|
(3,470)
|
0%
|
(1,176)
|
0%
|
5,341
|
(2,294)
|
To parent company
|
(1,163,596)
|
-126%
|
74,449
|
5%
|
(42,549)
|
-3%
|
(1,238,045)
|
116,998
|
14
Operating Results for
the Fiscal Years ended December 31, 2016 compared to 2015
Net Revenue from Sales
and/or Services
Consolidated net revenue
for 2016, recognized by the “PoC” method came to R$915.6 million, down 36.6%
year-over-year, especially impacted by: (i) lower operating volume; (ii) lower
speed of inventory sales, which records the highest contribution to revenue,
(iii) higher volume of dissolutions and, (iv) result of assets pricing market
conditions.
Cost of Development and Sale of
Property
Cost of development and
sale of property and physical swap agreements totaled R$1.0 billion in 2016,
down 3.1% over the R$1.1 billion recorded in 2015, result of lower operating and
sales volume in 2016.
Gross Profit
Gross profit reported in
2016 came negative at R$113.5 million, compared to R$381.4 million in 2015. As a
result of a recessive environment and its effects on the business development,
gross margin was -12.4%, in 2016, compared to 26.4% in 2015 and 26.3% in 2014, a
decrease especially impacted by higher volume of dissolutions and pricing
adjustments of units sold in view of current market conditions.
Selling
expenses
Selling expenses totaled
R$94.9 million in 2016, down 3.1% over R$97.9 million in 2015. Selling expenses
in 2016 accounted for 10.4% of its net operating revenue, compared to 6.8% in
2015. The nominal variation is a result of lower net sales volume in the period,
in relation to net revenue, the variation is an effect of lower revenue volume
in 2016.
General and Administrative Expenses, and Stock
Option Plan Expenses
General and
administrative expenses totaled R$106.6 million in 2016 compared to R$97.4
million in 2015, up 9.4%, or R$9.1 million, especially impacted by the last
quarter of the year due to the following factors: (i) R$2.7 million due to
severance pay and indemnity expenses as part of a year-end corporate
restructuring; (ii) R$2.9 million referring to final expenses related to the
separation of the Gafisa and Tenda units’ IT structure; and (iii) net effect of
R$9.3 million related to reversal of provision for profit sharing recorded in
2015.
Depreciation and Amortization
Depreciation and
amortization totaled R$33.9 million in 2016, up 4.0% over R$32.6 million
recorded in 2015, reflecting current Gafisa segment’s business volume, with a
volume of launches close to R$1.0 billion over the past four years.
Other Operating Expenses
In 2016, our results
reflected a negative impact of R$79.0 million, compared to R$107.6 million in
2015, due to lower expenses with litigation in the period.
Financial income
The financial income
decreased R$18.9 million, totaling R$58.4 million in 2016, due to lower balance
of cash and cash equivalents in the period.
15
Financial
expenses
Financial expenses
totaled R$84.1 million in 2016, compared to R$127.7 million in 2015, down 34.1%
year-over-year, due to decreased gross indebtedness in the period.
Provision for Income Tax
and Social Contribution and Deferred Income Tax
Income tax, social
contribution and deferred taxes totaled R$100.1 million in 2016, compared to
R$0.7 million in 2015, impacted by R$90.3 million due to the reversal of tax
credits previously recorded, in view of impact of the result from discontinued
operation (Tenda) over net income for the year.
Net income (loss) from
discontinued operations
Result from discontinued
operations was a loss of R$559.7 million in 2016, compared to a net income of
R$36.2 million in 2015. This variation is due to impairment of assets recorded
in the amount of R$610.1 million, related to the measurement at the lower of
carrying amount and fair value less costs to sell, based on the value of R$8,13
per share, according to the contract executed for the sale of Tenda’s
shares.
Non-Controlling Interest
The non-controlling
interest (minority shareholders of subsidiaries in which the Company holds
investment) came to R$1.9 million compared to a negative result of R$3.5 million
in 2015, due to variation of the Company’s associated companies’
results.
Net Income
(Loss)
Gafisa ended 2016 with a
net loss of R$1.2 billion, compared to a net income of R$74.4 million in 2015.
Net result for the year was impacted by accounting effects generated by the
execution of the stock purchase agreement with Jaguar Growth Asset Management,
LLC. The total effect amounted to R$680.2 million, and was comprised by the
following factors: (i) the price per share of Tenda, R$8.13, establishes a
valuation of R$439.0 million for 100% of the share capital of Tenda, lower than
Tenda’s shareholders’ equity (R$1.049 billion) and thus generating an impairment
of R$610.1 million and; (ii) reversal of R$90.3 million as tax credits,
previously recorded, due to the impact of the net result from this operation
over the net income for the year.
Additionally, inventory
and landbank adjustments which totaled R$159.9 million also impacted net
result.
Operating Results related to the Fiscal Years
ended December 31, 2015 compared to 2014
Net Revenue from Sales and/or
Services
Consolidated net revenue
for 2015, as recognized by the “PoC” method came to R$1.4 billion, down 8.7%
year-over-year, impacted by lower projects under development and higher
contribution from new projects to compose revenue.
Cost of Development and Sale of
Property
Cost of development and
sale of property and physical swap agreements totaled R$1.1 billion in 2015,
down 8.8% over the R$1.2 billion recorded in 2014, substantially impacted by
lower construction costs and new land, due to lower volume Gafisa’s launches
over the past three years.
16
Gross Profit
Gross profit reported in
2015 came to R$381.4 million, compared to R$415.9 million in 2014. The variation
is mainly due to the constancy seen in Gafisa segment’s results and projects
profitability of Gafisa segment projects concentrated in São Paulo and Rio de
Janeiro. Gross margin stood at 26.4% in 2015, compared to 26.3% in
2015.
Selling expenses
Selling expenses totaled
R$97.9 million in 2015, an increase of 3.0% compared to R$95.1 million in 2014.
Selling expenses in 2015 accounted for 6.8% of its net operating revenue,
compared to 6.0% in 2014. This variation is due to additional and necessary
efforts to increase sales volume, considering more challenging macroeconomic
scenario.
General and Administrative Expenses, and Stock
Option Plan Expenses
General and
administrative expenses totaled R$97.4 million in 2015 compared to R$124.8
million in 2014, down 21.9%, or R$27.4 million, due to a lower volume of old
projects and the adequacy of the Company’s operating expenses structure to
current market conditions. Aditionally:
(1) salaries and payroll
charges were down by R$5.3 million or 6.6% year-over-year;
(2) provision and profit
sharing decreased R$9.5 million or 27.1% year-over-year, totaling R$25.5 million
in 2015; and
(3) services expenses
were down R$6.2 million, or 20.3% year-over-year.
Depreciation and Amortization
Depreciation and
amortization totaled R$32.6 million in 2015, down 48.8%, over R$63.6 million
recorded in 2014, reflecting the Company’s lower business volume, with average
volume of launches close to R$1.0 billion over the past three years.
Other Operating Expenses
In 2015, our results
reflected a negative impact of R$107.6 million, compared to R$79.1 million in
2014, mainly due to increase in expenses with litigation, a consequence of the
large volume of deliveries related to delivery of old projects in 2012, 2013 and
2014.
Financial income
The financial income was
down R$20.8 million, totaling R$77.3 million in 2015, due to lower balance of
cash and cash equivalents in the period.
Financial expenses
Net financial expenses
totaled R$127.7 million in 2015, compared to R$114.4 million in 2014, down 11.7%
year-over-year, due to reduced gross indebtedness in the period.
Provision for Income Tax and Social
Contribution and Deferred Income Tax
Income tax, social
contribution and deferred taxes totaled R$0.7 million, compared to R$9.8 million
in 2014.
The variation is mainly due to the recognition of income
tax and social contribution credit of approximately R$7.2 million, as a result
of an update of the study on the Company's business plan, which shows the total
recovery capacity of the tax loss inventory and temporary differences over the
upcoming years.
17
Non-controlling interest
The increased
non-controlling interest (minority shareholders of subsidiaries the Company
holds investment), from R$1.2 million to R$3.5 million in 2015, was due to the
results variation of the Company’s associated companies.
Net Income (Loss)
Gafisa ended 2015 with a
net income of R$74.4 million, compared to a net loss of R$43.4 million in 2014,
reflecting the improvements implemented over the past years. The Company
achieved higher efficiency in its operating cycle, by reducing construction
period and a better financial management of its projects. In addition, higher
speed in the transfer process contributed to a positive net result.
CONSOLIDATED BALANCE
SHEET
|
2016
|
Vertical Analysis % 2016
|
2015
|
Vertical Analysis % 2015
|
2014
|
Vertical Analysis % 2014
|
Chg.
R$000 2016 x 2015
|
Chg.
R$000 2015 x 2014
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
29,534
|
1%
|
82,640
|
1%
|
109,895
|
2%
|
(53,106)
|
(27,255)
|
Securities
|
223,646
|
4%
|
629,671
|
9%
|
1,047,359
|
15%
|
(406,025)
|
(417,688)
|
Accounts receivable from development and
services provided
|
722,640
|
14%
|
1,395,273
|
21%
|
1,440,498
|
20%
|
(672,633)
|
(45,225)
|
Properties for sale
|
1,122,724
|
22%
|
1,880,377
|
28%
|
1,695,817
|
24%
|
(757,653)
|
184,560
|
Receivables from related
parties
|
57,455
|
1%
|
95,118
|
1%
|
142,732
|
2%
|
(37,663)
|
(47,614)
|
Assets from discontinued
operations
|
1,189,011
|
23%
|
-
|
0%
|
-
|
0%
|
1,189,011
|
-
|
Land for sale
|
3,306
|
0%
|
105,857
|
2%
|
110,563
|
2%
|
(102,551)
|
(4,706)
|
Prepaid expenses
|
2,548
|
0%
|
7,171
|
0%
|
15,442
|
0%
|
(4,623)
|
(8,271)
|
Other receivables
|
49,336
|
1%
|
120,657
|
2%
|
128,905
|
2%
|
(71,321)
|
(8,248)
|
Total current assets
|
3,400,200
|
65%
|
4,316,764
|
64%
|
4,691,211
|
65%
|
(916,564)
|
(374,447)
|
|
|
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
|
|
|
|
Accounts receivable from development and
services provided
|
271,322
|
5%
|
407,091
|
6%
|
384,821
|
5%
|
(135,769)
|
22,270
|
Property for sale
|
592,975
|
11%
|
750,240
|
11%
|
816,525
|
11%
|
(157,265)
|
(66,285)
|
Receivables from related party
transactions
|
25,529
|
0%
|
109,193
|
2%
|
107,067
|
1%
|
(83,664)
|
2,126
|
Derivatives
|
9,030
|
0%
|
0
|
0%
|
0
|
0%
|
9,030
|
-
|
Other receivables
|
58,917
|
1%
|
82,880
|
1%
|
112,241
|
2%
|
(23,963)
|
(29,361)
|
|
957,773
|
18%
|
1,349,404
|
20%
|
1,420,654
|
20%
|
(391,631)
|
(71,250)
|
|
|
|
|
|
|
|
|
|
Investments
|
799,911
|
15%
|
993,122
|
15%
|
968,393
|
13%
|
(193,211)
|
24,729
|
Property, plant and
equipment
|
23,977
|
0%
|
49,176
|
1%
|
48,691
|
1%
|
(25,199)
|
485
|
Intangible assets
|
28,228
|
1%
|
51,866
|
1%
|
76,903
|
1%
|
(23,638)
|
(25,037)
|
|
852,116
|
16%
|
1,094,164
|
16%
|
1,093,987
|
15%
|
(242,048)
|
177
|
|
|
|
|
|
|
|
|
|
Total non-current assets
|
1,809,889
|
35%
|
2,443,568
|
36%
|
2,514,641
|
35%
|
(633,679)
|
(71,073)
|
|
|
|
|
|
|
|
|
|
Total assets
|
5,210,089
|
100%
|
6,760,332
|
100%
|
7,205,852
|
100%
|
(1,550,243)
|
(445,520)
|
18
|
2016
|
Vertical Analysis % 2016
|
2015
|
Vertical Analysis % 2015
|
2014
|
Vertical Analysis % 2014
|
Chg.
R$000 2016 x 2015
|
Chg.
R$000 2015 x 2014
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
Loans and financing
|
669,795
|
13%
|
672,365
|
10%
|
550,058
|
8%
|
(2,570)
|
122,307
|
Debentures
|
314,139
|
6%
|
389,621
|
6%
|
504,387
|
7%
|
(75,482)
|
(114,766)
|
Obligations for property purchases and
advances to clients
|
205,388
|
4%
|
361,420
|
5%
|
490,605
|
7%
|
(156,032)
|
(129,185)
|
Material and service
providers
|
79,120
|
2%
|
57,335
|
1%
|
95,131
|
1%
|
21,785
|
(37,796)
|
Taxes and contributions
|
51,842
|
1%
|
102,057
|
2%
|
114,424
|
2%
|
(50,215)
|
(12,367)
|
Salaries, payroll charges and profit
sharing
|
28,880
|
1%
|
60,102
|
1%
|
65,039
|
1%
|
(31,222)
|
(4,937)
|
Minimum mandatory dividends and interest
on equity
|
-
|
0%
|
17682
|
0%
|
-
|
0%
|
(17,682)
|
17,682
|
Provision for court claims
|
79,054
|
2%
|
100,312
|
1%
|
103,034
|
1%
|
(21,258)
|
(2,722)
|
Payables to credit
assignment
|
34,698
|
1%
|
23,482
|
0%
|
24,135
|
0%
|
11,216
|
(653)
|
Payables to related party transactions
|
85,611
|
2%
|
87,100
|
1%
|
156,503
|
2%
|
(1,489)
|
(69,403)
|
Financial instruments
|
5,290
|
0%
|
14,056
|
0%
|
3,340
|
0%
|
(8,766)
|
10,716
|
Other liabilities
|
69,921
|
1%
|
163,437
|
2%
|
164,213
|
2%
|
(93,516)
|
(776)
|
Liabilities over assets from
discontinued operation
|
651,812
|
13%
|
-
|
0%
|
-
|
0%
|
651,812
|
-
|
Total current liabilities
|
2,275,550
|
44%
|
2,048,969
|
30%
|
2,270,869
|
32%
|
226,581
|
(221,900)
|
|
|
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
|
|
|
|
Loans and financing
|
516,505
|
10%
|
620,470
|
9%
|
847,367
|
12%
|
(103,965)
|
(226,897)
|
Debentures
|
137,129
|
3%
|
468,337
|
7%
|
684,712
|
10%
|
(331,208)
|
(216,375)
|
Obligations for property purchases and
advances to clients
|
90,309
|
2%
|
248,514
|
4%
|
101,137
|
1%
|
(158,205)
|
147,377
|
Deferred income tax and social
contribution
|
100,405
|
2%
|
16,489
|
0%
|
34,740
|
0%
|
83,916
|
(18,251)
|
Provision for court claims
|
83,904
|
2%
|
142,670
|
2%
|
136,540
|
2%
|
(58,766)
|
6,130
|
Payables to credit
assignment
|
64,332
|
1%
|
35,811
|
1%
|
31,994
|
0%
|
28,521
|
3,817
|
Payables to related party transactions
|
-
|
0%
|
41,002
|
1%
|
-
|
0%
|
(41,002)
|
41,002
|
Derivatives
|
-
|
0%
|
7,618
|
0%
|
4,833
|
0%
|
(7,618)
|
2,785
|
Other liabilities
|
11,502
|
0%
|
33,216
|
0%
|
35,257
|
0%
|
(21,714)
|
(2,041)
|
Total non-current
liabilities
|
1,004,086
|
19%
|
1,614,127
|
24%
|
1,876,580
|
26%
|
(610,041)
|
(262,453)
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
Capital stock
|
2,740,662
|
53%
|
2,740,662
|
41%
|
2,740,662
|
38%
|
-
|
-
|
Treasury shares
|
(32,524)
|
-1%
|
(25,980)
|
0%
|
(79,059)
|
-1%
|
(6,544)
|
53,079
|
Capital reserve and stock option
grant
|
81,948
|
2%
|
76,834
|
1%
|
69,897
|
1%
|
5,114
|
6,937
|
Legal reserve
|
-
|
0%
|
35,316
|
1%
|
31,593
|
0%
|
(35,316)
|
3,723
|
Statutory reserve
|
-
|
0%
|
268,659
|
4%
|
292,252
|
4%
|
(268,659)
|
(23,593)
|
Profit reserve (and accumulated
losses)
|
(861,761)
|
-17%
|
-
|
0%
|
-
|
0%
|
(861,761)
|
-
|
|
1,928,325
|
37%
|
3,095,491
|
46%
|
3,055,345
|
42%
|
(1,167,166)
|
40,146
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
|
2,128
|
0%
|
1,745
|
0%
|
3,058
|
0%
|
383
|
(1,313)
|
Total shareholders’ equity
|
1,930,453
|
37%
|
3,097,236
|
46%
|
3,058,403
|
42%
|
(1,166,783)
|
38,833
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’
equity
|
5,210,089
|
100%
|
6,760,332
|
100%
|
7,205,852
|
100%
|
(1,550,243)
|
(445,520)
|
19
Balance Sheet for the
Fiscal Year Ended December 31, 2016 compared to 2015
Current assets
Cash and Equivalents – Cash and Banks,
Marketable Securities
The Company’s cash and
cash equivalents on December 31, 2016 totaled R$253.2 million, compared to
R$712.3 million on December 31, 2015, a decrease of R$459.1 million, or 64.5%.
This decrease is mainly due to the reduced consolidated indebtedness of the
Company. Payments of R$1.4 billion were made in 2016, thus allowing a net
amortization of debt in the amount of R$651.7 million.
Accounts receivable from development and
services provided – Current and Non-Current
The following tables
show the client accounts receivable from development and the sale of the
Company’s properties, as well as the receivables to be appropriated, and the
maturity of the Company’s portfolio:
(in R$ million)
|
On December 31
|
Real estate development and sales
clients
|
2016
|
2015
|
2014
|
|
|
|
|
Current
|
723
|
1,395
|
1,440
|
Non-current
|
271
|
407
|
385
|
|
994
|
1,802
|
1,825
|
(in R$ million)
|
On December 31
|
Receivables for appropriation
|
2016
|
2015
|
2014
|
|
|
|
|
|
525
|
516
|
928
|
|
|
|
|
Total receivables
|
1,519
|
1,839
|
2,413
|
Current and non-current
amounts expire in the following fiscal years:
|
|
Maturity
|
|
|
|
Overdue
|
204
|
2017
|
544
|
2018
|
111
|
2019
|
120
|
2020
|
45
|
2021
onwards
|
15
|
|
1,039
|
( - ) Present
value adjustment
|
(26)
|
( - ) Allowance
for doubtful accounts and cancellations
|
(19)
|
|
994
|
On December 31, 2016,
the balance of clients by real estate development totaled R$993.9 million,
compared to R$1.8 billion on December 31, 2015. Such reduction reflects the
compliance with CPC 31 – Non-Current Asset Held for Sale and Discontinued
Operation, classifying the Tenda segment as asset held for sale.
All the balances of accounts receivable
presented herein are adjusted to present value, as required by Technical
Pronouncement CPC 12 “Present Value Adjustment.”
Property for Sale – Current and
Non-Current
The balance of property
for sale was comprised as follows in the periods indicated:
|
12/31/2016
|
12/31/2015
|
12/31/2014
|
|
|
|
|
Land bank
|
823,516
|
1,443,460
|
1,311,847
|
( - ) Provision for loss on realization
of land
|
(43,505)
|
-
|
-
|
( - ) Provision for goodwill based on
inventory surplus
|
(62,343)
|
-
|
-
|
( - ) Present value
adjustment
|
(8,781)
|
(16,771)
|
(5,503)
|
Property under
construction
|
509,049
|
857,619
|
905,190
|
Cost of property in recognition of
provision for cancellations
|
-
|
21,764
|
52,309
|
Finished units
|
557,426
|
333,036
|
260,808
|
( - ) Provision for loss on the
realization of properties for sale
|
(59,663)
|
(8,491)
|
(12,309)
|
|
1,715,699
|
2,630,617
|
2,512,342
|
|
|
|
|
Current
|
1,122,724
|
1,880,377
|
1,695,817
|
Non-current
|
592,975
|
750,240
|
816,525
|
20
On December 31, 2016,
the balance of properties for sale, both current and non-current, totaled R$1.7
billion, compared to R$2.6 billion on December 31, 2015. At the end of 2016,
36.8% of total inventory was represented by finished units, while units under
construction accounted for 43.0% of total inventory. The Company remains
focusing on inventory reduction.
Other accounts receivable – Current and
Non-Current
The balance of other
accounts receivable held by the Company on December 31, 2016 stood at R$108.3
million, 46.8% lower than the balance of same period in 2015, a result of lower
volume of escrow deposits.
Intangible assets
On December 31, 2016,
the balance of intangible assets reached R$28.2 million, compared to R$51.9
million on December 31, 2015, evidencing the alignment between additions and
write-offs/amortization of intangible assets in the year.
Assets from discontinued
operations
The amount of R$1,189.0
million is related to Tenda’s discontinued operation assets, net of
consolidation elimination items and impairment of R$610.1 million, which is
presented in a single line, according to CPC 31 – Non-current Assets Held for
Sale and Discontinued Operations.
Liabilities
Loans, Financing and Debentures - Current and
Non-Current
The Company’s total level of indebtedness on December 31,
2016 came to R$1.6 billion, a decrease of 23.9% over the balance of R$2.2
billion on December 31, 2015, reflecting the Company’s conservative position
concerning its capital discipline, and reduced gross indebtedness.
The table below shows the development of net
indebtedness and obligations with investors in the Company:
Total
Debt
(in R$
thousand)
|
|
Balance
in
|
Transaction
Type
|
Rate
|
2016
|
2015
|
2014
|
Bank Credit Note –
CCB
|
125% of CDI - 0.59% / 3.00% / 3.95% / 4.25% + CDI -
INCC
|
1,022,038
|
1,161,707
|
268,911
|
Housing Finance
(SFH)
|
8.30%
to 14.00% + TR
120% and 129% of CDI
|
164,262
|
131,128
|
1,128,514
|
|
|
1,186,299
|
1,292,835
|
1,397,425
|
Current
|
|
669,795
|
672,365
|
550,058
|
Non-current
|
|
516,505
|
620,470
|
847,367
|
Debentures
|
|
|
Consolidated
|
Program/Issuances
|
Principal -
R$
|
Annual
Compensation
|
Due
Date
|
2016
|
2015
|
2014
|
|
|
|
|
|
|
|
7th
issue
|
450,000
|
TR + 9.8205%
|
December 2017
|
302,363
|
452,568
|
502,033
|
8th issue/1st
issue
|
-
|
CDI + 1.95%
|
October 2015
|
-
|
-
|
147,640
|
8th issue/2nd
issue
|
5,787
|
IPCA + 7.96%
|
October 2016
|
-
|
8,395
|
15,185
|
9th
issuance
|
132,026
|
CDI + 1.90%
|
July 2018
|
79,693
|
130,394
|
134,624
|
10th
issuance
|
55,000
|
IPCA + 8.22
|
January 2020
|
69,212
|
64,724
|
-
|
1st issuance
(Tenda)
|
200,000
|
TR + 9.25%
|
October 2016
|
-
|
201,877
|
389,617
|
|
|
|
|
451,268
|
857,958
|
1,189,099
|
|
|
|
|
|
|
|
Current
|
|
|
|
314,139
|
389,621
|
504,387
|
Non-current
|
|
|
|
137,129
|
468,337
|
684,712
|
|
|
|
|
|
|
|
21
Obligations for property purchases and advances
to clients – Current and Non-Current
On December 31, 2016,
the Company’s obligations for the purchase of property and client advances
totaled R$295.7 million, down 51.5% year-over-year. This variation is mainly due
to higher liabilities with development client advances and services.
The following table
shows the development of obligations for the purchase of properties and client
advances, as well as its distribution between the short and long
terms.
Balance of obligations for the acquisition of
property and client advances
|
12/31/2016
|
12/31/2015
|
12/31/2014
|
Current
|
205,388
|
361,420
|
490,605
|
Non-current
|
90,309
|
248,514
|
101,137
|
Total
|
295,697
|
609,934
|
591,742
|
Material and service
providers
On December 31, 2016,
the balance of payables due to material and service providers came to R$79.1
million, up 38.0% over the balance of R$57.3 million on December 31, 2015. This
increased liability is chiefly due to the change in the Company’s payment
policy.
Taxes and contributions -
Current
The balance of taxes and
social contributions (current) on December 31, 2016 totaled R$51.8 million, down
49.2% over the R$102.1 million recorded on December 31, 2015. This decrease
derives from higher current results and their acquittance during 2016, with
income tax and social contribution previously withheld.
Deferred income tax and social contribution –
current and non-current
The balance of deferred
income tax and social contribution totaled R$100.4 million on December 31, 2016,
up 508.9% over the R$16.5 million recorded on December 31, 2015, impacted by the
effect of R$90.3 million refering to a reversal of a tax credit provision
previously recorded, which was reversed in view of the significant impact of
Tenda’s purchase and sale operation on the net income for the period, thus, not
allowing to maintain such amount of deferred tax asset in the Company’s balance
sheet.
Provision for Contingencies - Current and
Non-Current
The Company and its
subsidiaries are parties in legal actions and administrative processes in
various courts and with several government bodies, as a result of normal
business operations, involving tax, labor, and civil matters, among other
issues. The Company, based on information from its legal advisers, analysis of
the pending lawsuits and labor claims, based on its previous experience in terms
of the amounts claimed, made a provision considered sufficient to cover the
estimated losses as a result of the claims being made.
The table below shows
the evolvement of the Company’s provisions for contingencies.
Consolidated
|
Civil
|
Tax
|
Labor
|
Total
|
Balance on
December 31, 2014
|
157,842
|
414
|
81,318
|
239,574
|
Supplementary
provision (Note 23)
|
68,976
|
12,156
|
37,317
|
118,449
|
Payments and reversal of unutilized
provision
|
(77,197)
|
(12,170)
|
(25,674)
|
(115,041)
|
Balance on
December 31, 2015
|
149,621
|
400
|
92,961
|
242,982
|
Supplementary
provision (Note 23)
|
68,042
|
3,009
|
20,975
|
92,026
|
Payments and reversal of unutilized
provision
|
(88,627)
|
(237)
|
(38,235)
|
(127,099)
|
Operation held for
sale
|
(30,599)
|
(48)
|
(14,304)
|
(44,951)
|
Balance on
December 31, 2016
|
98,437
|
3,124
|
61,397
|
162,958
|
|
|
|
|
|
Current
|
53,867
|
1,369
|
23,818
|
79,054
|
Non-current
|
44,570
|
1,755
|
37,579
|
83,904
|
22
Consolidated
|
Civil
|
Tax
|
Labor
|
Total
|
Balance on
December 31, 2014
|
157,842
|
414
|
81,318
|
239,574
|
Supplementary
provision (Note 23)
|
68,976
|
12,156
|
37,317
|
118,449
|
Payments and reversal of unutilized
provision
|
(77,197)
|
(12,170)
|
(25,674)
|
(115,041)
|
Balance on
December 31, 2015
|
149,621
|
400
|
92,961
|
242,982
|
Reclassification
for discontinued operation
|
(29,982)
|
(180)
|
(25,554)
|
(55,716)
|
Supplementary provision (Note 23)
|
49,872
|
2,965
|
17,959
|
70,796
|
Payments and
reversal of unutilized provision
|
(71,332)
|
(61)
|
(23,711)
|
(95,104)
|
Balance on
December 31, 2016
|
98,179
|
3,124
|
61,655
|
162,958
|
|
|
|
|
|
Current
|
53,867
|
1,369
|
23,818
|
79,054
|
Non-current
|
44,570
|
1,755
|
37,579
|
83,904
|
The provision for
contingencies related to civil proceedings on December 31, 2016 totaled R$18.3
million (R$42.3 milion in 2015) in which the Company was included as defendant
with personal liability for collection of court and out-of-court debts in which
the original debtor is a former shareholder of the Company, Cimob Companhia
Imobiliária (“Cimob”), or involving other entities of same economic group of
Cimob. In these lawsuits, the claimant alleges the Company should answer for
Cimob’s debts, according to understanding that the requirements for disregard of
Cimob corporate entity to affect the Company would exist (corporate succession,
co-mingling of assets and/or the creation of same economic group involving the
Company and Cimob Group). This reduction in the provision is related to an
unfavorable court decision, which was settled with judicial deposit and with no
additional disbursement of cash by the Company
The Company does not
agree with the grounds through which it has been included in these lawsuits and
is still questioning in court its personal liability for third party company’s
debts, as well as the collection amount submitted by claimants. The Company
already obtained favorable and unfavorable court decisions related to this
issue, reason that it is not possible to estimate a consistent outcome for all
lawsuits. The Company also seeks in lawsuit filed against Cimob and its former
and current controlling shareholders the recognition that it should not be held
liable for Cimob’s debts, as well as the refund of amounts already paid by the
Company in lawsuits collecting debts only due by Cimob.
Other accounts payable – Current and
Non-current
On December 31, 2016,
the balance of other accounts payable came to R$81.4 million, down 58.6% over
the R$196.7 million on December 31, 2015. This decrease is due lower volume of
provisions and fines for construction work delays, long-term suppliers and
obligations with investors.
Liabilities over assets
from discontinued operation
The amount of R$651.8
million is related to Tenda’s discontinued operations liabilities, net of
consolidation elimination items, which is presented in a single line, according
to CPC 31 – Non-current Assets Held for Sale and Discontinued
Operations.
23
Shareholders’ equity
As at December 31, 2016,
the Company’s shareholders’ equity balance came to R$1.9 billion, compared to
R$3.1 billion in 2015. Such reduction reflects the compliance with CPC 31 –
Non-Current Assets Held for Sale and Discontinued Operation, classifying the
Tenda segment as asset held for sale.
Other
accounts
Other accounts on the
Company’s balance sheet not discussed in this analysis varied in the normal
course of the Company’s business or are of little importance in terms of the
consolidated balance sheet.
Balance Sheet for the Fiscal Year Ended
December 31, 2015 compared to 2014
Current assets
Cash and Equivalents – Cash and Banks,
Marketable Securities
The Company’s cash and
cash equivalents on December 31, 2015 totaled R$712.3 million, compared to R$1.2
billion on December 31, 2014, a decrease of R$444.9 million, or 38.4%. This
decrease is mainly due to the reduced consolidated indebtedness of the Company.
Payments of R$1.4 billion were made in 2015, thus allowing a net amortization of
debt in the amount of R$799.1 million.
Accounts receivable from development and
services provided – Current and Non-Current
The following tables
show the client accounts receivable from development and the sale of the
Company’s properties, as well as the receivables to be appropriated, and the
maturity of the Company’s portfolio:
(in R$ million)
|
On December 31
|
Real estate development and sale
clients
|
2015
|
2014
|
2013
|
|
|
|
|
Current
|
1,395
|
1,440
|
1,910
|
Non-current
|
407
|
385
|
314
|
|
1,802
|
1,825
|
2,224
|
(in R$ million)
|
On December 31
|
Receivables for appropriation
|
2015
|
2014
|
2013
|
|
|
|
|
|
516
|
928
|
1,609
|
|
|
|
|
Total receivables
|
1,839
|
2,413
|
3,272
|
Current and non-current amounts expire in the
following fiscal years:
|
|
Maturity
|
|
|
|
Overdue
|
492
|
2016
|
949
|
2017
|
325
|
2018
|
81
|
2019
|
33
|
2020
onwards
|
54
|
|
1,934
|
( - ) Present
value adjustment
|
(31)
|
( - ) Allowance
for doubtful accounts and cancellations
|
(101)
|
|
1,802
|
On December 31, 2015,
the balance of clients by real estate development totaled R$1.80 billion,
compared to R$1.83 billion on December 31, 2014. This decrease is the result of
launches average volume of approximately R$1 billion seen in the last three
years.
24
All the balances of
accounts receivable presented herein are adjusted to present value, as required
by Technical Pronouncement CPC 12 “Present Value Adjustment.”
Property for Sale –
Current and Non-Current
The balance of property
for sale was comprised as follows in the periods indicated:
|
12/31/2015
|
12/31/2014
|
12/31/2013
|
|
|
|
|
Land bank
|
1,443,460
|
1,311,847
|
1,077,762
|
( - ) Present value
adjustment
|
(16,771)
|
(5,503)
|
(883)
|
Property under
construction
|
857,619
|
905,190
|
630,407
|
Cost of property in recognition of
provision for cancellations
|
21,764
|
52,309
|
107,172
|
Finished units
|
333,036
|
260,808
|
291,232
|
( - ) Provision for loss on the
realization of properties for sale
|
(8,491)
|
(12,309)
|
(11,276)
|
|
|
|
|
|
2,630,617
|
2,512,342
|
2,094,414
|
|
|
|
|
Current
|
1,880,377
|
1,695,817
|
1,442,019
|
Non-current
|
750,240
|
816,525
|
652,395
|
On December 31, 2015,
the balance of properties for sale, both current and non-current, totaled R$2.6
billion, compared to R$2.5 billion on December 31, 2014. At the end of 2015,
12.7% of total inventory was represented by finished units, while units under
construction accounted for 32.6% of total inventory. The Company remains
focusing on inventory reduction, chiefly at Gafisa, which accounts for 72% of
total inventory.
Other accounts
receivable – Current and Non-Current
The balance of other
accounts receivable held by the Company on December 31, 2015 stood at R$203.5
million, 15.6% lower than the balance of same period in 2014, as a result of
lower volume escrow deposits.
Intangible
assets
On December 31, 2015,
the balance of intangible assets reached R$77.3 million, compared to R$76.9
million on December 31, 2014, evidencing the alignment between additions and
write-offs/amortization of intangible assets in the year.
Deferred income tax and
social contribution
On December 31, 2015,
the balance of deferred income tax and social contribution came to R$16.5
million, down 52.5% over the R$34.7 million on December 31, 2014. Liabilities
are stated net of assets.
Liabilities
Loans, Financing and
Debentures - Current and Non-Current
The Company’s total
level of indebtedness on December 31, 2015 came to R$2.2 billion, a decrease of
16.8% over the balance of R$2.6 billion on December 31, 2014, reflecting the
Company’s conservative position concerning its capital discipline, and reduced
consolidated gross debt.
The table below shows
the development of net indebtedness and obligations with investors in the
Company:
Total
Debt
(in R$
thousand)
|
|
Balance
in
|
Transaction
Type
|
Rate
|
2015
|
2014
|
2013
|
Bank Credit Note –
CCB
|
117.90% of
CDI
2.20% +
CDI
13.20%
fixed
|
131,128
|
268,911
|
550,052
|
Housing Finance
(SFH)
|
8.30% to 12.80% +
TR
117% to 120% of CDI
|
1,161,707
|
1,128,514
|
1,088,258
|
|
|
1,292,835
|
1,397,425
|
1,638,310
|
Current
|
|
672,365
|
550,058
|
590,386
|
Non-current
|
|
620,470
|
847,367
|
1,047,924
|
25
Debentures
|
|
|
|
Consolidated
|
Program/Issuances
|
Principal (R$)
|
Annual Compensation
|
Due
Date
|
2015
|
2014
|
2013
|
|
|
|
|
|
|
|
6th issuance
|
-
|
-
|
-
|
-
|
-
|
151,513
|
7th issuance
|
450,000
|
TR + 9.8205%
|
December
2017
|
452,568
|
502,033
|
551,855
|
8th issuance/1st issuance
|
-
|
CDI + 1.95%
|
October 2015
|
-
|
147,640
|
294,073
|
8th issuance/2nd issuance
|
5,787
|
IPCA + 7.96%
|
October 2016
|
8,395
|
15,185
|
14,216
|
9th issuance
|
132,026
|
CDI + 1.90%
|
July 2018
|
130,394
|
134,624
|
-
|
10th issuance
|
55,000
|
IPCA + 8.22
|
January 2020
|
64,724
|
-
|
|
1st issuance
|
200,000
|
TR + 9.25%
|
October 2016
|
201,877
|
389,617
|
409,561
|
|
200,000
|
TR + 9.02%
|
October 2016
|
857,958
|
1,189,099
|
1,421,218
|
|
|
|
|
|
|
|
Current
|
|
|
|
389,621
|
504,387
|
563,832
|
Non-current
|
|
|
|
468,337
|
684,712
|
857,386
|
|
|
|
|
|
|
|
Obligations for property purchases and advances
to clients – Current and Non-Current
On December 31, 2015,
the Company’s obligations for the purchase of property and client advances
totaled R$609.9 million, up 3.1% year-over-year. This variation is mainly due to
liabilities with development client advances and services.
The following table
shows the development of obligations for the purchase of properties and client
advances, as well as its distribution between the short and long
terms.
Balance of obligations
for the acquisition of property and client advances
|
12/31/2015
|
12/31/2014
|
12/31/2013
|
Current
|
361,420
|
490,605
|
408,374
|
Non-current
|
248,514
|
101,137
|
79,975
|
Total
|
609,934
|
591,742
|
488,349
|
Material and service
providers
On December 31, 2015,
the balance of payables due to material and service providers came to R$57.3
million, down 39.7% over the balance of R$95.1 million on December 31, 2014. The
decrease in this obligation is mainly due to a solid volume of deliveries and
resulting drop in the volume of projects under execution of Gafisa
segment.
Taxes and contributions
- Current
The balance of taxes and
social contributions (current) on December 31, 2015 totaled R$102.1 million,
down 10.8% over the R$114.4 million recorded on December 31, 2014. This decrease
is due to higher current results and their acquittance during 2015, with income
tax and social contribution previously withheld.
Income tax and social
contribution – current and non-current
The balance of deferred
income tax and social security totaled R$16.5 million on December 31,2015, down
52.5% over the R$34.7 million recorded on December 31, 2014, due to higher
active temporary differences, mainly over provision for contingencies,
impairment and cancellations. Liabilities are stated net of assets.
Provision for
Contingencies - Current and Non-Current
The Company and its
subsidiaries are parties in legal actions and administrative processes in
various courts and with several government bodies, as a result of normal
business operations, involving tax, labor, and civil matters, among other
issues. The Company, based on information from its legal advisers, analysis of
the pending lawsuits and, when concerning labor cases, based on its prior
experience in terms of the amounts claimed, made a provision considered
sufficient to cover the estimated losses as a result of the claims being
made.
26
The table below shows
the evolvement of the Company’s provisions for contingencies.
Consolidated
|
Civil
|
Tax
|
Labor
|
Total
|
Balance on December 31, 2013
|
134,483
|
173
|
63,272
|
197,928
|
Supplementary
provision (Note 23)
|
65,699
|
600
|
46,765
|
113,064
|
Payments and reversal of unutilized
provision
|
(42,340)
|
(359)
|
(28,719)
|
(71,418)
|
Balance on
December 31, 2014
|
157,842
|
414
|
81,318
|
239,574
|
Supplementary
provision (Note 23)
|
68,976
|
12,156
|
37,317
|
118,449
|
Payments and reversal of unutilized
provision
|
(77,197)
|
(12,170)
|
(25,674)
|
(115,041)
|
Balance on
December 31, 2015
|
149,621
|
400
|
92,961
|
242,982
|
|
|
|
|
|
Current
|
84,576
|
220
|
15,516
|
100,312
|
Non-current
|
65,045
|
180
|
77,445
|
142,670
|
The provision for
contingencies related to civil proceedings on December 31, 2015 totaled R$42,296
thousand in which the Company was included as defendant with personal liability
for collection of court and out-of-court debts in which the original debtor is a
former shareholder of the Company, Cimob Companhia Imobiliária (“Cimob”), or
involving other entities of same economic group of Cimob. In these lawsuits, the
claimant alleges the Company should answer for Cimob’s debts, according to
understanding that the requirements for disregard of Cimob corporate entity to
affect the Company would exist (corporate succession, co-mingling of assets
and/or the creation of same economic group involving the Company and Cimob
Group).
The Company does not
agree with the grounds through which it has been included in these lawsuits and
is still questioning in court its personal liability for third party company’s
debts, as well as the collection amount submitted by claimants. The Company
already obtained favorable and unfavorable court decisions related to this
issue, reason that it is not possible to estimate a consistent outcome for all
lawsuits. The Company also seeks in lawsuit filed against Cimob and its former
and current controlling shareholders the recognition that it should not be held
liable for that company’s debts, as well as the refund of amounts already paid
by the Company in lawsuits collecting debts only due by Cimob.
Other accounts payable – Current and
Non-current
On December 31, 2015,
the balance of other accounts payable came to R$196.7 million, down 1.4% over
the R$199.5 million on December 31, 2014. This decrease is due lower volume of
provisions and fines for construction work delays, long-term suppliers and
obligations with investors.
Shareholders’ equity
As at December 31, 2015,
the Company’s shareholders’ equity balance came to R$3.10 billion, compared to
R$3.06 billion in 2014, a slight variation due to lower volume of treasury
shares acquisition.
Other
accounts
Other accounts on the
Company’s balance sheet not discussed in this analysis varied in the normal
course of business or are of little importance in terms of the consolidated
balance sheet.
27
Cash Flow for the Fiscal
Year Ended December 31, 2016 compared to 2015
Operating activities
In 2016, net cash
verified in operations totaled R$132.6 million, compared to R$190.1 million in
2015. This decrease reflects Gafisa segment’s lower operating volume, due to the
recessive macroeconomic scenario. The R$132.6 million were mainly composed of:
(1) an R$73.6 million decrease in obligations for purchase of land and advances
from customers; (2) an R$288.9 million increase in receivables from clients; (3)
an increase in related parties transactions of R$100.2 million; (4) R$75.2
million in expenses which did not affect the working capital; and (5) other less
relevant variations in other operating categories.
Investment activities
The net cash verified in
investment activities, including the acquisition of assets, equipment and new
investments came to R$157.4 million in 2016. The cash applied in 2016 was mainly
related to investments in securities, sureties and credits.
Financing activities
The cash burn registered
by financing activities in 2016 totaled R$351.5 million, compared to R$339.7
million recorded in 2015. This cash burn is mainly due to the amortization of
loans and financing, net of new releases, totaling R$365.4 million, reiterating
the Company’s conservative position in relation to its capital
discipline.
Below is the change in
cash during the year:
|
4Q15
|
1Q16
|
2Q16
|
3Q16
|
4Q16
|
Cash and cash equivalents
|
478,037
|
457,154
|
304,351
|
355,389
|
253,180
|
Change in cash and cash equivalents
(1)
|
-
|
(20,883)
|
(152,803)
|
51,038
|
(102,210)
|
Total Debt + Obligation with Investors
|
1,907,358
|
1,914,131
|
1,807,989
|
1,853,755
|
1,638,804
|
Change in Total Debt + Obligation with
Investors (2)
|
-
|
6,773
|
(106,142)
|
45,766
|
(214,951)
|
Other investments
|
210,761
|
210,761
|
218,956
|
219,454
|
237,109
|
Change in other investments
(3)
|
|
-
|
8,195
|
498
|
17,654
|
Cash Generation in the Period
(1) - (2) + (3)
|
|
(27,656)
|
(38,466)
|
5,770
|
130,396
|
Final Cash Accumulated
Generation
|
|
(27,656)
|
(66,122)
|
(60,352)
|
70,044
|
Cash Flow for the Fiscal Year Ended December
31, 2015 compared to 2014
Operating activities
In 2015, net cash
verified in operations totaled R$190.1 million, compared to net cash used in
operations of R$31.9 million in 2014. This increase reflects better Gafisa’s
operating management, in spite of a more challenging macroeconomic scenario. The
R$190.7 million were mainly composed of: (1) decreased expenses which did not
affect the working capital totaling R$267.6 million in 2015; (2) a decrease in
properties for sale of R$159.6 million mainly imputed to landbank and properties
under construction; and (3) other less relevant variations in other operating
categories.
Investment
activities
The net cash verified in
investment activities, including the acquisition of assets, equipment and new
investments came to R$162.4 million in 2015. The cash applied in 2015 was mainly
related to investments in securities, sureties and credits.
28
Financing
activities
The net cash used in
financing activities in 2015 totaled R$339.7 million, compared to a generation
of R$686.0 million in 2014. This cash burn is mainly due to the amortization of
loans and financing, net of new releases, totaling R$334.3 million, reiterating
the Company’s conservative position in relation to its capital discipline and
the stock repurchase amounting to R$24.2 million.
Below is the change in
cash during the year:
|
4Q14
|
1Q15
|
2Q15
|
3Q15
|
4Q15
|
Cash and cash equivalents
|
662,682
|
680,412
|
541,684
|
596,589
|
478,037
|
Change in cash and cash equivalents
(1)
|
-
|
17,730
|
(138,728)
|
54,905
|
(118,552)
|
Total Debt + Obligation with Investors
|
2,159,003
|
2,218,657
|
2,095,614
|
2,149,115
|
1,907,358
|
Change in Total Debt + Obligation with
Investors (2)
|
-
|
59,654
|
(123,043)
|
53,500
|
(241,757)
|
Other investments
|
183,578
|
208,740
|
208,740
|
210,761
|
210,761
|
Change in other investments
(3)
|
|
25,161
|
-
|
2,022
|
-
|
Cash Generation in the Period
(1) - (2) + (3)
|
|
(16,762)
|
(15,685)
|
3,426
|
123,205
|
Final Cash Accumulated
Generation
|
|
(16,762)
|
(32,447)
|
(29,021)
|
94,183
|
10.2.
a) the company’s
operating results
|
Description of any significant revenue
items
The Company’s revenues
come mainly from the development and sale of real estate properties. To a lesser
extent, it also earns revenue from providing real estate services, such as
construction, technical and real estate management to third parties.
|
2016
|
2015
|
2014
|
Development, sale
of real estate properties and construction services
|
990,613
|
1,568,566
|
1,704,399
|
(Recording) reversal of provision for doubtful
accounts and dissolutions
|
(6,950)
|
(6,749)
|
1,424
|
Taxes
on sales of properties and services
|
(67,965)
|
(118,460)
|
(124,963)
|
Total net
revenue
|
915,698
|
1,443,357
|
1,580,860
|
Factors that materially affected the operating
results
Net operating revenues
were down 5.0% in the fiscal year ended December 31, 2014, year-over-year, due
to lower volume of launches over the past two years in the Gafisa
segment.
In the fiscal year ended
December 31, 2015, net operating revenue decreased by 8.7% compared to 2014, due
to lower volume of launches in the Gafisa segment.
In the fiscal year ended December 31, 2016, net
operating revenue went down 36.6% year-over-year, chiefly due to the following
items: (i) lower operating volume; (ii) lower speed of inventory sales,
which records the highest contribution to revenues, (iii) higher volume of
dissolutions and (iv) result of assets pricing current market conditions.
b) changes in
revenue attributable to variations in prices, exchange rates, inflation,
changes in volumes or the introduction of new products and services
|
The Company recognizes
revenue from real estate developments according to their construction, based on
a financial calculation of project completion and not at the moment that the
sale contract is signed. The main impacts on revenue variations between
the 2016, 2015 and 2014 fiscal years are changes in sales volumes and
introduction of new products and services of the Company, as well as a detailed
review of the Company’s operations and strategy defined in 2011.
29
The 36.6% decrease in
net revenues in 2016 compared to 2015, is chiefly due to: (i) lower operating
volume; (ii) lower speed of inventory sales, which records the highest
contribution to revenues, (iii) higher volume of dissolutions and (iv) result of
assets pricing current market conditions.
The 8.7% decrease in net
revenues in 2015 compared to 2014, is due to Gafisa segment’s lower volume of
launches in the last years and lower revenue recognition due to the progress of
projects for sale from previous periods.
The decrease of 5.0% in
net revenues in 2014 year-over-year is due to the lower volume of launches in
the last two years of the Gafisa segment the consequent lower revenue
recognition due to the progress of projects for sale from previous
periods.
R$’000
|
|
2016
|
2015
|
2014
|
|
2016 vs
2015
|
2015 vs
2014
|
Contracted Sales
|
|
810,464
|
914,796
|
811,032
|
|
-11.4%
|
12.8%
|
Launches
|
|
920,846
|
996,316
|
1,087,801
|
|
-7.6%
|
-8.4%
|
Net revenue
|
|
915,698
|
1,443,257
|
1,580,861
|
|
-36.6%
|
-8.7%
|
c) impact of
inflation, variation in the prices of the company’s main inputs and
products, exchange rates and interest rates on the company’s operating and
financial results, when relevant
|
As mentioned in item 5.1
of the Reference Form, the main indexes used in Company’s business plan are the
INCC, IGP-M, CDI and TR:
INCC (National Building
Cost Index): most of the Company’s costs and its entire revenue portfolio from
unfinished projects are adjusted according to this index. Hypothetically, an
increase of 1% in the INCC would represent an increase of R$15,621 thousand in
the Company's operating income based on the current level of assets linked to
this index.
IGP-M (General Market
Price Index) and IPCA (Extended Consumer Price Index): the Company’s entire
revenue portfolio from finished projects is adjusted according to these indexes.
Hypothetically, an increase of 1% in the IGP-M or IPCA would not represent a
significant variation in the Company's operating income based on the current
level of assets linked to these indexes.
CDI (Interbank Deposit
Certificate): all of the Company’s financial investments and roughly 37.6% of
total indebtedness are pegged to the CDI. Hypothetically, an increase of 1% in
the CDI would represent a decrease of R$91,794 thousand in the Company's
financial results based on the current level of indebtedness linked to this
index.
TR (Reference Rate):
Approximately 62.4% of the Company’s total debt is indexed to the TR.
Hypothetically, an increase of 1% in the TR would represent a decrease of
R$30.744 thousand in the Company's financial results based on the current level
of indebtedness linked to this index.
Exchange rates: the Company does not have any debts or
amounts receivable denominated in foreign currency, and none of the Company’s
significant costs are denominated in foreign currency.
30
10.3. Significant events and impacts on the company’s
financial statements and results:
a) introduction or disposal of operations
|
The officers inform that in the fiscal years ended
December 31, 2014, 2015 and 2016 there was no introduction or disposal of
operating segment so that to cause impacts on the Company’s financial
statements and results.
|
b) establishment, acquisition or disposal of
shareholdings
|
The officers inform that in the fiscal years ended
December 31, 2014 and 2015 no relevant shareholding was established, nor
acquired or disposed of to cause impacts on the Company’s financial
statements and results.
However, on February 7, 2014, the Company announced
preliminary studies for a potential separation of the Gafisa and Tenda
business units into two publicly-held and independent companies. The
Company assessed that the separation would be the next step within a broad
plan of Management aiming at improving and reinforcing the capacity of
generating value of both business units.
As per Material Fact released on December 14, 2016,
the Company entered into a stock purchase agreement with Jaguar Growth
Asset Management, LLC, to acquire up to 30% of shares issued by Tenda, at
the price of R$8.13 per share, representing, within the context of
operation, cash receivable for Gafisa of R$231.7 million, with a total
valuation of R$539.0 million for full payment of Tenda’s capital
stock.
It is worth mentioning that the completion of
referred transaction is subject to certain conditions precedent, amongst
them we point out:
(i) Tenda’s capital stock reduction, without
cancelation of shares, with refund to Gafisa, currently its sole
shareholder, of R$100.0 million, adjusted by SELIC interest rate, of which
(a) R$50.0 million with payment until December 31, 2018; and (b) the
balance payable until December 31, 2019, with possibility of anticipation
in view of certain financial covenants provided for in the agreement;
(ii) Gafisa’s capital stock reduction, with
distribution effects to its shareholders of shares corresponding to 50% of
Tenda’s capital stock; and
(iii) the conclusion of exercise by Gafisa’s
shareholder of preemptive right to acquire shares for the price per share
referred to in operation, noting that, within this context, Gafisa will
offer its shareholders, 50% of shares representing Tenda’s capital stock
held thereby, and not only the 30% purpose of the offer received from
Jaguar, considering its decision of selling these shares, even if in
multiple operations.
Such process has been in progress and currently,
Gafisa and Tenda already operate independently, with their own structures
and proper to specificities of their business models.
|
c) exceptional events or operations
|
There were no exceptional events or
operations.
|
31
10.4.
significant changes in the accounting practices –
reservations and emphasis in the auditor’s report
a) Significant changes in the accounting practices
|
There were no significant changes in the accounting
practices.
|
b) Material effects of changes in accounting
practices
|
There was no impact on the
Company’s individual and consolidated financial
statements.
|
c) Reservations and emphasis in the auditor’s report
|
The independent auditors’ report on the financial
statements for the fiscal year ended December 31, 2016, 2015 and 2014
contains emphasis related to the fact that the individual and consolidated
financial statements were prepared according to the accounting practices
adopted in Brazil. The consolidated financial statements prepared
according to the IFRS applicable to real estate development entities also
consider the Guidance OCPC04 issued by the Brazilian Accounting Standards
Committee. This guidance addresses the recognition of revenue from this
sector and covers issues related to the meaning and application of the
concept of continuous transfer of risks, benefits and sale control of real
estate units. The independent auditor’s opinion is not modified due to
this matter.
The Company's Management believes that this emphasis
paragraph is standardized between audit firms and is aligned with the
entities of the real estate industry and regulatory bodies due to the
application of the OCPC04 Guidance, in addition to International Financial
Reporting Standards (IFRS) and with no additional comments to the emphases
in question. The auditors reinforced that their opinion is not modified
due to this matter.
The Company's Management does not have any comments
on the auditors’ reservations, given there was no reservations in the
independent auditors’ report on the preparation of the financial
statements for the fiscal years ended on December 31, 2016, 2015 and
2014.
|
32
10.5.
Critical Accounting Policies of the Company:
The consolidated financial statements are
prepared and presented in accordance with accounting practices adopted in
Brazil, including the pronouncements issued by the Accounting Standards
Committee (CPC), endorsed by the Brazilian Securities Commission (CVM) and
according to the International Financial Reporting Standards (IFRS), issued by
the International Accounting Standards Board (IASB)).
Specifically, the consolidated financial
statements are in compliance with the International Financial Reporting
Standards (IFRS) applicable to real estate entities in Brazil, including
Guidance OCPC 04 – Application of Technical Interpretation ICPC 02 to Brazilian
real estate entities regarding to the processing of recognition of revenue from
this sector and involves matters relating to the application of the concept of
continuous transfer of risks, benefits and control in the sale of real estate
units.
The officers understand that t
he preparation of the Company’s individual and
consolidated financial statements requires that the Management makes certain
judgments and estimates, as well as adopts assumptions that affect the reported
values for revenue, expenses, assets and liabilities, and the amount of
contingent liabilities, on the base date of the financial statements
.
In this regard, the Company’s officers
understand that critical accounting policies, those if altered, would cause a
relevant accounting change, as described below:
a)
Impairment of assets
Management yearly reviews the assets’ net
carrying amount and/or when any specific event occurs, aiming at assessing
events or changes in economic, operating or technological circumstances, which
may indicate impairment or loss of their recoverable value. If this evidence is
identified and, if net
carrying amount exceeds the recoverable value,
a provision is recorded, adjusting the net carrying amount to the recoverable
value. These losses are recorded under net income for the year when
identified.
33
The fair value calculation less costs of sale
is based on information available on transactions of similar sale of assets or
market prices less additional costs to discard the asset. The value in use
calculation is based on the discounted cash flow model.
The cash flows are derived from the budget for
the next five years and do not include reorganization activities that the
Company has still not committed to, or significant future investment that would
improve the asset base of the cash generating unit subject to the test. The
recoverable value is sensitive to the discount value used in the discounted cash
flow method, as well as the future expected cash receivables and the growth rate
used for extrapolation purposes.
b)
Transactions with share-based
payments
The Company measures the cost of transactions
to be settled with shares with employees based on the fair value of the equity
instruments on the date they are granted. For share-based payments settled with
cash, the liabilities need to be remeasured at the end of each reporting period
until the settlement date, recognizing in results any variation in fair value,
which requires a reassessment of the estimates adopted at the end of each
reporting period. The estimated fair value of payments made with shares requires
the use of a valuation model more suited to the granting of such equity
instruments and that depends on the terms and conditions they are offered under.
This also requires the definition of more
adequate data for the valuation model, including the useful life of the option,
volatility, dividend yield and corresponding assumptions.
c)
Provision for lawsuits
The Company recognizes a provision for
ongoing/pending tax, labor and civil cases. The estimate of the probability of
loss includes the evaluation of all the evidence available, the legal hierarchy,
available jurisprudence, the most recent and pertinent decisions in the courts
and their relevance to the ruling in question, as well an opinion from external
counsel. The provisions are revised and adjusted to take any changes in
circumstances into account, such as the statute of limitations, completion of
tax audits or additional exposure identified based on new matters or court
rulings. The settlement of transactions involving these estimates may result in
amounts different from those estimated due to inaccuracies inherent to their
calculation process. The Company reviews the estimates and assumptions, at
least, yearly.
There are uncertainties concerning
interpretation of complex tax regulations and about the value and time of future
tax results. The Company and its subsidiaries are subject, in the normal course
of business, to investigations, audits, lawsuits and administrative proceedings
in civil, tax and labor matters. Depending on the purpose of investigations,
lawsuits or administrative proceedings filed against the Company and its
subsidiaries, we may be adversely affected, regardless of respective
outcome.
d)
Allowance for doubtful account and cancelled
contracts
34
The Company calculates its allowance for
doubtful accounts and cancelled contracts based on assumptions supported by
historical data from its current operations and estimates. These asumptions are
annually reviewed to evaluate eventual changes in circunstamces and update on
historical data.
e)
Warranty provision
Company’s warranty provision, which is recorded
to cover expenditures for repairing construction defects covered during the
warranty period, is calculated based on the estimate that considers the history
of incurred expenditures adjusted by the future expectation. These assumptions
are regularly reviewed.
f)
Budgeted Project Costs
The total budgeted costs, mainly comprised of
the costs incurred and expected to be complete when the construction work is
concluded, are regularly revised during the course of the project and the effect
of these revisions is reflected in the Company’s results.
g)
Realization of the deferred income
tax
The initial and following analyses of the
realization of deferred income tax occur when is it probable that the taxable
profit of the next years will be available for offsetting the deferred tax asset
based on results projections prepared and based on internal assumptions and
future economic scenarios that enable their total or partial use, if full credit
is recorded.
10.6. significant items not evidenced in the company’s
financial statements:
a) assets and liabilities held by the Company,
directly or indirectly, that do not appear on the balance sheet
|
The Company does not have any material assets or
liabilities that are not reflected in this Form and in the Company’s
financial statements and the notes thereto.
|
b) other items not evidenced in the financial
statements
|
The Company does not have any other items not
evidenced in its financial
statements.
|
10.7. Comments on items not evidenced in the financial
statements:
a) how such items altered or could alter the
revenue, expenses, operating results, net financial expenses or other
items in the Company’s financial statements
|
As explained in item 10.7 above, there is no item
not evidenced in the financial statements.
|
b) nature and purpose of the operation
|
As explained in item 10.7 above, there is no item
not evidenced in the financial statements.
|
c) nature and amount of obligations assumed and
rights generated for the company as a result of the operation
|
As explained in item 10.7 above, there is no item
not evidenced in the financial
statements.
|
35
10.8. business plan:
a) investments (including a quantitative and
qualitative description of investments in course and that are foreseen,
sources of investment financing and significant divestments that are in
course or that are foreseen)
|
i.
quantitative and qualitative description of
investments that are in course or are foreseen
Net cash for 2016, generated in investing
activities, including the acquisition of goods, equipment and new
investments totaled R$157.5 million, mainly due to net investments in
securities of R$193.4 million and investments in goods and equipment
totaling R$35.8 million.
Net cash for 2015, generated in investing
activities, including the acquisition of goods, equipment and new
investments amounted to R$162.4 million, mainly due to net investments in
securities of R$197.4 million and investments in goods and equipment in
the amount of R$34.3 million.
Net cash for 2014, generated in investing
activities, including the acquisition of goods, equipment and new
investments amounted to R$708.58 million, mainly due to net redemption of
securities of R$709.44 million.
The Company’s disbursements in 2016 were mainly
related to investments in goods, sales stands, software and improvements,
totaling R$35.8 million versus R$34.3 million in 2015.
The Company's disbursements in 2015 were mainly
related to investments in goods, sales stands, software, and improvements,
totaling R$34.3 million versus R$70.53 million in 2014.
ii.
Sources of investment financing
The Company relies on proceeds from the sale of
treasury shares, the abovementioned funding of corporate debts, debentures
issues and lines of credit from the SFH (National Housing Finance
System).
iii.
significant divestments that are in course or are
foreseen
No significant divestments are in course or
foreseen.
|
b) previously disclosed acquisitions of plant,
equipment, patents or other assets that can materially affect the
Company’s production capacity
|
There have been no acquisitions of plant, equipment,
patents or other assets that can materially affect the Company’s
production capacity.
|
c) new products and services
|
There are no new products or
services.
|
10.9. Other factors with relevant influence:
All relevant information referring to this topic has been
disclosed in the items above.
36
APPENDIX II
(
as per Appendix 24, items 12.6 and 12.9 of CVM Instruction
No. 480 of December 17, 2009)
12.5./6. Composition and professional experience of
candidates to the fiscal council appointed by the Company’s
Management
:
Management proposes to elect the following members of the
Fiscal Council, whose main information is as follows:
Name
|
Birth Date
|
Management Body
|
Date of election
|
Term of office
|
Nº of consecutive terms of
office
|
CPF
|
Profession
|
Position held
|
Date of investiture
|
Elected by controlling shareholder
|
Percentage of attendance at
meetings
|
Other positions and duties performed at the
issuer
|
Description of another
position/title
|
Olavo Fortes Campos Rodrigues
Junior
|
11/16/1961
|
Fiscal Council
|
Proposal to be elected at the Annual
General Meeting of April 28, 2017
|
If elected, until 2018 Annual General
Meeting
|
8 (if elected, this new term of office
will be the 9th consecutive)
|
769.488.977-20
|
Business
administrator
|
Sitting member of the Fiscal Council
elected by minority common shareholders
|
Not applicable
|
No
|
100%
|
No other positions or titles held at the
Company
|
|
Peter Edward Cortes Marsden
Wilson
|
02/05/1972
|
Fiscal Council
|
Proposal to be elected at the Annual
General Meeting of April 28, 2017
|
If elected, until 2018 Annual General
Meeting
|
3 (if elected, this new term of office
will be the 4th consecutive)
|
168.126.648-20
|
Business
administrator
|
Sitting member of the Fiscal Council
elected by minority common shareholders
|
Not applicable
|
No
|
100%
|
No other positions or titles held at the
Company
|
|
Laiza Fabiola Martins de Santa
Rosa
|
10/14/1980
|
Fiscal Council
|
Proposal to be elected at the Annual
General Meeting of April 28, 2017
|
If elected, until 2018 Annual General
Meeting
|
5 (if elected, this new term of office
will be the 6th consecutive, 2nd as sitting
member)
|
294.953.408-29
|
Economist
|
Sitting member of the Fiscal Council
elected by minority common shareholders
|
Not applicable
|
No
|
100%
|
No other positions or titles held at the
Company
|
|
Marcello Mascotto Iannalfo
|
06/24/1968
|
Fiscal Council
|
Proposal to be elected at the Annual
General Meeting of April 28, 2017
|
If elected, until 2018 Annual General
Meeting
|
8 (if elected, this new term of office
will be the 9th consecutive)
|
101.947.028-39
|
Economist
|
Deputy member of the Fiscal Council
elected by minority common shareholders
|
Not applicable
|
No
|
0%
|
No other positions or titles held at the
Company
|
|
Marcelo Martins Louro
|
07/24/1971
|
Fiscal Council
|
Proposal to be elected at the Annual
General Meeting of April 28, 2017
|
If elected, until 2018 Annual General
Meeting
|
4 (if elected, this new term of office
will be the 5th consecutive)
|
118.319.918-02
|
Business
administrator
|
Deputy member of the Fiscal Council
elected by minority common shareholders
|
Not applicable
|
No
|
0%
|
No other positions or titles held at the
Company
|
|
Alessandro de Oliveira
Nascimento
|
03/27/1984
|
Fiscal Council
|
Proposal to be elected at the Annual
General Meeting of April 28, 2017
|
If elected, until 2018 Annual General
Meeting
|
1 (if elected, this new term of office
will be the 2nd
consecutive)
|
335.489.628-07
|
Brazilian federal savings bank’s
employee
|
Deputy member of the Fiscal Council
elected by minority common shareholders
|
Not applicable
|
No
|
0%
|
No other positions or titles held at the
Company
|
|
37
Name
|
CPF
|
Professional Experience/ Declaration of Any
Conviction / Independence Criteria
|
Olavo Fortes Campos Rodrigues
Junior
|
769.488.977-20
|
Professional
experience
: Mr. Rodrigues Junior started his career
at Arthur Andersen in the audit and consulting areas. He has professional
experience in the management of services, industry and retail companies,
and worked at Carrefour, Pepsi-Cola Engarrafadora, Alcoa Brazil, Officer
at Alcoa Argentina,Siciliano Group and Papaiz Group, as Chief Executive
Officer. He also held positions of member of the Fiscal Council of Duke
Energy International, Geração Paranapanema S.A.; Over the past five years,
he acted as (i) member of the Board of Directors of Renova Energia S.A., a
publicly-held company operating in the production of renewable energy,
especially wind energy; (ii) deputy member of the Fiscal Council of São
Carlos Empreendimentos e Participações S.A., a commercial property
management company; and (iii) member of the Fiscal Council of Alphaville
Urbanismo S.A., a company operating in the urban project development, and
the Company holds 30% in the capital of Alphaville Urbanismo S.A..; and
(iv) member of the Fiscal Council of Usinas Paulista Lavrinhas and
Paulista Queluz de Energia S.A., closely-held companies operating in the
hydroelectric generation and energy trading sectors –
small hydroelectric plants
(PCHs).
Currently, Mr. Rodrigues Junior holds the
following positions:
(a) member of the Company’s Fiscal
Council; (b) member of the Fiscal Council of Construtora Tenda S.A., a
publicly-held company operating in the construction and development of
real estate projects and wholly-owned subsidiary of the
Company;
(c) member of the Board of
Directors of Maria Madá Com. E Serv. S.A., a closely-held company,
operating in the retail sector; (d) managing partner of
OREA Consultoria Empresarial, a business
management and corporate governance consulting firm; and (e) president of
São Isidoro Foundation, a non-profit organization.
None of these companies hold relevant
interest in the Company’s capital, is controlled by Company’s shareholder
holding direct or indirect interest of 5% or more of same class or type of
the Company’s securities or compose its economic group, except for
Construtora Tenda S.A. and Alphaville Urbanismo
S.A.
|
Declaration of Any
Conviction
: Mr.
Olavo Fortes Campos Rodrigues
Junior
, sitting member of the Fiscal Council to
be elected on April 28, 2017, declared for all legal purposes that over
the past five years, he was not subject to the effects of any criminal
conviction, any adverse judgment or application of penalty in the
Brazilian Securities and Exchange Commission (CVM) administrative
proceeding or any final and unappealable judgment, at the judicial or
administrative level to suspend or disqualify him to practice any
profession or business activity.
|
Independence
Criteria
: The criteria provided for by applicable
laws were observed for appointment of this member to the Company’s Fiscal
Council, especially the provisions of Article 162,
caput
and Paragraph 2 of Law No.
6.404/76.
|
Peter Edward Cortes Marsden
Wilson
|
168.126.648-20
|
Professional
Experience
: Over the past five years, Mr. Wilson
acted as partner in charge of the corporate finance area and restructuring
of medium-sized companies of Managrow Consultoria Estratégica em Finanças
Ltda. In addition, he held/holds the following managerial positions: (i)
current member of the fiscal council of the Company and of Construtora
Tenda S.A., a publicly-held company operating in the construction and
development of real estate projects and wholly-owned subsidiary of the
Company; (ii) current member of the Board of Directors of Banco Mercantil
do Brasil S.A., a financial institution; (iii) current member of the
fiscal council of B2W S.A., a retail company; (iv) member of the fiscal
council of Bradespar S.A., holding of investments in non-financial
institutions; (v) member of the fiscal council of Vivo S.A., a
telecommunications company; (vi) member of the fiscal council of Banco
Pine S.A., a financial institution; (vii) member of the Board of Directors
of Confab Industrial S.A., a metal company; (viii) member of the Board of
Directors of Minupar Participações S.A., a holding of investments with
interest in companies operating in the processing of pork and poultry
products; and (ix) member of the Fiscal Council of Trisul S.A., a real
estate development company, operating in the same sector of the
Company.
None of these companies hold relevant
interest in the Company’s capital, is controlled by Company’s shareholder
holding direct or indirect interest equal of 5% or more of same class or
type of the Company’s securities or compose its economic group, except for
Construtora Tenda S.A.
|
Declaration of Any
Conviction
: Mr.
Peter Edward Cortes Marsden
Wilson
, sitting member of the Fiscal Council to
be elected on April 28, 2017, declared for all legal purposes that over
the past five years, he was not subject to the effects of any criminal
conviction, any adverse judgment or application of penalty in the
Brazilian Securities and Exchange Commission (CVM) administrative
proceeding or any final and unappealable judgment, at the judicial or
administrative level to suspend or disqualify him to practice any
profession or business activity.
|
Independence
Criteria
: The criteria provided for by applicable
laws were observed for appointment of this member to the Company’s Fiscal
Council, especially the provisions of Article 162,
caput
and Paragraph 2 of Law No.
6.404/76.
|
Laiza Fabiola Martins de Santa
Rosa
|
294.953.408-29
|
Professional
Experience
: Currently, Mrs. Rosa is the Structured
Fund Development National Executive Manager of the Vice Chief Executive
Officer of the Brazilian Federal Savings Bank’s asset management. Mrs.
Rosa joined the Federal Savings Bank in 2006, working at the housing and
commercial loan departments, and in 2010 started working with the Federal
Savings Bank’s Vice Chief Executive Officer in the structuring,
prospecting, management and administration of Private Equity Funds, Credit
Rights Investment Funds and Real Estate Investment Funds, as well as the
management of portfolios concerned with investment in sanitation, urban
mobility, housing, debt and equity structrured operations. Manager of
Caixa Porto Maravilha Real Estate Investment Fund, also in charge of the
asset management concerned with investments in logistics infrastructure,
holding the position of deputy member of the Board of Directors of
Malucelli Energia S.A.., a closely-held company operating in the energy
sector.
In addition, (i) Mrs. Rosa was appointed
by Caixa Cyrela Private Equity Fund as officer of SPE Baronesa
Empreendimentos Imobiliários S.A. and SPE Pedrália Empreendimentos
Imobiliários S.A., fund’s investees operating in the real estate market;
and (ii) she was nominated by Caixa Imobiliária Private Equity Fund as
board member of SPE Odebrecht Realizações SP 54 - Empreendimento
Imobiliário S.A., fund’s investee operating in the real estate market.
None of these companies hold relevant
interest in the Company’s capital, is controlled by Company’s shareholder
holding direct or indirect interest of 5% or more of same class or type of
the Company’s securities or compose its economic
group.
|
Declaration of Any
Conviction
: Mrs. Laiza Fabiola Martins de Santa
Rosa, deputy member of the Fiscal Council to be elected on April 28, 2017,
declared for all legal purposes that over the past five years, he was not
subject to the effects of any criminal conviction, any adverse judgment or
application of penalty in the Brazilian Securities and Exchange Commission
(CVM) administrative proceeding or any final and unappealable judgment, at
the judicial or administrative level to suspend or disqualify her to
practice any profession or business activity.
|
Independence
Criteria
: The criteria provided for by applicable
laws were observed for appointment of this member to the Company’s Fiscal
Council, especially the provisions of Article 162,
caput
and Paragraph 2 of Law No.
6.404/76.
Note
: Candidate appointed by Federal Savings
Bank, as per obligation provided for in the 7th Issue of the Company’s
Debentures
|
Marcello Mascotto Iannalfo
|
101.947.028-39
|
Professional
Experience
: Currently, Mr. Iannalfo is the Chief
Executive Officer of Clic Metais Ltda., a limited liability company
operating in the sanitary metal sector; a deputy member of the Fiscal
Council of the Company and Construtora Tenda S.A., a publicly-held company
operating in the construction and development of real estate projects and
wholly-owned subsidiary of the Company. Over the past five years, Mr.
Iannalfo also held the positions of (i) Latin America chief administrative
and financial officer of El Tejar Group, an agribusiness company; (ii)
Chief financial officer of Trip Linhas Aéreas, an airline company; (iii)
Chief administrative and financial officer of Termomecânica São Paulo
S.A., a company whose main activity is the transformation of non-ferrous
metals; (iv) Chief administrative and financial officer and member of the
Board of Directors of Power Transmission Industries S.A., a manufacturer
of speed reducer and couplings and (v) deputy member of the fiscal council
of Alphaville Urbanismo S.A., during the period in which the Board was
instated. The Company holds 30% interest in the capital of Alphaville
Urbanismo S.A., a company operating in the urban project
development.
None of these companies hold relevant
interest in the Company’s capital, is controlled by Company’s shareholder
holding direct or indirect interest equal of 5% or more of same class or
type of the Company’s securities or compose its economic group, except for
Construtora Tenda S.A.and Alphaville Urbanismo
S.A.
|
Declaration of Any
Conviction
: Mr.
Marcello Mascotto
Iannalfo
, deputy member of the fiscal council to
be elected on April 28, 2017, declared for all legal purposes that over
the past five years, he was not subject to the effects of any criminal
conviction, any adverse judgment or application of penalty in the
Brazilian Securities and Exchange Commission (CVM) administrative
proceeding or any final and unappealable judgment, at the judicial or
administrative level to suspend or disqualify him to practice any
profession or business activity.
|
Independence
Criteria
: The criteria provided for by applicable
laws were observed for appointment of this member to the Company’s Fiscal
Council, especially the provisions of Article 162,
caput
and Paragraph 2 of Law No.
6.404/76.
|
Marcelo Martins Louro
|
118.319.918-02
|
Professional
Experience
: Mr. Louro started his career at Arthur
Andersen in the audit and consulting areas, currently he is a deputy
member of the Company’s fiscal council and Construtora Tenda S.A.. Over
the past five years, Mr. Louro held the positions of (i) Chief financial
officer and deputy member of the Fiscal Council of Alphaville Urbanismo
S.A., a company operating in the urban project development; (ii) planning
and control officer of Construtora Tenda S.A., a publicly-held company
operating in the construction and development of real estate projects and
wholly-owned subsidiary of the Company; (iii) chief financial officer of
Scalina S.A., a textile company; and (iv) investor relations officer of
T4F Entretenimento S.A., an entertainment company. The Company holds 30%
interest in the capital of Alphaville Urbanismo S.A., a company operating
in the urban project development and is the parent company of Construtora
Tenda S.A..
None of these companies hold relevant
interest in the Company’s capital, is controlled by Company’s shareholder
holding direct or indirect interest of 5% or more of same class or type of
the Company’s securities or compose its economic group, except for
Construtora Tenda S.A.and Alphaville Urbanismo
S.A.
|
Declaration of Any
Conviction
: Mr.
Marcelo Martins Louro
, deputy member of the Fiscal Council to
be elected on April 28, 2017, declared for all legal purposes that over
the past five years, he was not subject to the effects of any criminal
conviction, any adverse judgment or application of penalty in the
Brazilian Securities and Exchange Commission (CVM) administrative
proceeding or any final and unappealable judgment, at the judicial or
administrative level to suspend or disqualify him to practice any
profession or business activity.
|
Independence
Criteria
: The criteria provided for by applicable
laws were observed for appointment of this member to the Company’s Fiscal
Council, especially the provisions of Article 162,
caput
and Paragraph 2 of Law No.
6.404/76.
|
Alessandro de Oliveira
Nascimento
|
335.489.628-07
|
Professional
experience
: Currently, Mr. Alessandro de Oliveira
Nascimento is executive manager of the Brazilian Federal Savings Bank, a
banking company, he has been holding such position for more than five
years and is candidate to the position of deputy member at the Company’s
Fiscal Council.
The company mentioned above does not hold
relevant interest in the Company’s capital nor is controlled by Company’s
shareholder holding direct or indirect interest of 5% or more of same
class or type of the Company’s securities, and nor composes its economic
group.
|
Declaration of Any
Conviction
: Mr. Alessandro de Oliveira Nascimento,
candidate to the position of deputy member of the Fiscal Council to be
elected on April 28, 2017, declared for all legal purposes that over the
past five years, he was not subject to the effects of any criminal
conviction, any adverse judgment or application of penalty in the
Brazilian Securities and Exchange Commission (CVM) administrative
proceeding or any final and unappealable judgment, at the judicial or
administrative level to suspend or disqualify him to practice any
profession or business activity.
|
Independence
Criteria
- The criteria provided for by
applicable laws were observed for appointment of this member to the
Company’s Fiscal Council, especially the provisions of Article 162,
caput
and Paragraph 2 of Law No.
6.404/76.
Note:
Candidate appointed by Federal Savings
Bank, as per obligation provided for in the 7th Issue of the Company’s
Debentures
|
38
Percentage of Attendance at Meetings
Pursuant to provisions of Directive
Release/CVM/SEP/nº02/2016, below, total meetings held by the Fiscal Council and
Committees of the Company, as well the percentage of attendance of each
member:
Fiscal Council
|
Total meetings held by respective body
after investiture
|
% of member attendance at meetings held
after investiture
|
Olavo Fortes Campos Rodrigues Junior
|
4
|
100%
|
Peter Edward Cortes Marsden Wilson
|
4
|
100%
|
Laiza Fabiola Martins de Santa Rosa
|
4
|
100%
|
Marcello Mascotto Iannalfo
|
4
|
0% - not summoned while deputy
member
|
Marcelo Martins Louro
|
4
|
0% - not summoned while deputy
member
|
Alessandro de Oliveira Nascimento
|
4
|
0% - not summoned while deputy
member
|
12.7./8.
Composition of statutory committees and audit, financial
and compensation committees:
Fiscal Council members are not members of any Company’s
committee.
12.9.
Existence of marital relationship, common-law marriage or
kinship up to second degree related to Management of the issuer, subsidiaries
and controlling shareholders:
Justification for not completing the
chart:
Not applicable since there is no marital relationship,
common-law marriage or kinship up second degree between Management of the
Company or its direct or indirect subsidiaries.
In addition, the Company’s Code of Ethics does not allow
hiring 1
st
degree employees’ family members (father, mother,
siblings, and children), spouse, cousins, uncles and nephews to work for the
Company or at its direct or indirect subsidiaries.
The common-law marriage between the Company’s employees or
its direct or indirect subsidiaries is also not allowed.
Referring to direct or indirect controlling shareholders,
not applicable, since the Company has widely held stock and there are no
controlling shareholders.
12.10.
Subordination relations, services rendering or control
between Management and subsidiaries, controlling shareholders and
others:
Justification for not completing the
chart:
Not applicable, since there are no
subordination relations or controls between Management and subsidiaries, no
controlling shareholders, as this is a diffuse capital company.
39
Referring to services rendering, the Company’s
Code of Ethics forbids any services relations between the Company’s suppliers,
customers, debtors or creditors with its managers, employees and 1st degree
employees’
family members (father, mother, siblings,
children), spouse, cousins, uncles and nephews. The Company also forbids
engaging companies or consulting firms owned by former employees who left the
Company less than one year.
In addition, the Audit Committee is in charge
of setting forth the guidelines for the Company to hire employees or former
employees of the independent auditor.
40
APPENDIX III
(
As per Appendix 24, item 13 of CVM Instruction no. 480 of
December 17, 2009)
13. MANAGEMENT COMPENSATION
13.1.
Description of the compensation practice or
policy, Including the Non-Statutory Executive Officers
:
a. objectives of the compensation policy or
practice:
The compensation policy of the Company for its managers,
including members of the Board of Directors, statutory and non-statutory
officers, members of the Fiscal Council, in line with the best corporate
governance practices, aims to attract and retain the best professionals in the
market. Compensation is established based on market research and directly aligns
the interests of the executives in question and those of the Company's
shareholders.
In the case of officers, the existence of a variable
short-term and long-term incentives (the later in the form of grant of stock
option plans) practice permits the sharing of the Company's risks and results
with its main executives, being characteristic of a transparent policy and aimed
at achieving long-lasting results and the perpetuity of the Company.
b. breakdown of compensation,
indicating:
(i)
description of compensation elements and the objectives of each one
a) Board of Directors
The members of the Board of Directors are entitled to a
fixed compensation, which is established in accordance with market criteria and
aims to attract professionals who contribute effectively to the results of the
company.
b) Executive Board
The members of the statutory and non-Statutory Executive
Officers are entitled to fixed and variable short-term compensation, and
long-term incentive tranche, in the form of a stock option plan and phantom
shares, based on the Company shares. The amounts paid in fixed compensation are
close to the median market standards. The variable portion has significant
representation in the total compensation, which means that the officers share
risks and results with the Company, so providing a greater alignment of
interests between executives and shareholders
.
The objective of the short-term variable compensation is
to reward the results achieved for the year if the targets stipulated for the
period were reached. By the same token, long-term incentives, based on stock
options and phantom shares, aims at providing reward for results achieved over a
longer period (generally more than 2 years. This policy aims to align the
interests of the executives with those of the shareholders.
In addition to fixed and variable compensation,
the Company offers its directors health plan benefits and life insurance, which
are established in accordance with market standard.
41
It is important to emphasize that the Company has a
Compensation Committee that analyses the strategy for fixed and variable
compensation to be adopted, the models for granting of stock option models and
the recommendations of corresponding beneficiaries of the plan, for subsequent
approval by the Board of Directors.
c) Fiscal Council
The members of the Fiscal Council, in addition to
mandatory reimbursement for necessary travel and lodging expenses as a result of
their function, are entitled only to a fixed compensation based on the legal
minimum.
d) Committees
All the members of the Company's Committees are managers
or employees, and do not receive specific compensation for the fact that they
participate on the Committees.
(ii)
in relation to the last 3 fiscal years, which is the proportion of each element
in total compensation
In the case of the Fiscal Council and the Board of
Directors, fixed compensation corresponds to 100% of the total compensation, as
previously mentioned – both the assumption and realized.
In the case of the Statutory Executive Officers, fixed
compensation, in assumption, corresponds to approximately 30% of the total
compensation on average. Regarding the tranche referring to variable incentives,
the stock option plans and phantom shares (long-term) represent approximately
50%, while the part referring to the bonuses (short-term) represents
approximately the other 50% – in this case, for both the statutory and the
non-Statutory Executive Officers.
The variable incentives percentages may be modified due to
changes in the results presented by the Company in the period, given the
component of shared risks and results inherent in the variable compensation
amount. Referring to realized and according to the tables presented below, the
percentages assessed were, in 2014, fixed 20% and variable 80% (short-term
bonus, accounting for 26% of variable amount), in 2015, fixed 40% and variable
60% (short-term bonus accounting for 34% of variable amount), and, in 2016,
fixed 43% and variable 57% (short-term bonus accounting for 38% of variable
amount). Remind that the amounts reported for long-term incentives represent
accounting costs assessed and not effective gains deriving from these
programs.
(iii)
methodology for the calculation and readjustment of each of the compensation
elements
The amount of compensation paid by the Company to its
managers and employees are periodically compared with those in the market, based
on research carried out by external specialist consultants, so that they can
measure their competitiveness and evaluate the possible need to carry out any
adjustments to some of the components. The researches involve all positions in
the Company’s structure and include companies that can or cannot be from the
same segment and that have all or some of the following characteristics: similar
presence as the Company, publicly-held company, national capital, high level of
corporate governance and good practices of compensation and human
resources.
(iv)
reasons which justify the compensation breakdown
The Company adopts a compensation breakdown model, which
concentrates a significant tranche of the total compensation into variable
components (both short and long-term), which is part of its policy of sharing
risks and results with its main executives.
(v)
existence of non-remunerated members and reasons for this fact
42
There are no non-remunerated members at the
Board of Directors, at the Statutory Executive Board and at the Fiscal
Council.
c.
main performance indicators that are taken into
consideration in the calculation of each compensation element
:
For calculation of all the compensation items, the
performance of the employee and his individual targets are taken into
consideration, in accordance to what was achieved in comparison to the
proposition and agreed for the year. Variable compensation is directly linked to
the indicators contained in the Company's
Scorecard, which is approved by the Board of Directors and
which contains defined targets for the period, such as for example cash flow,
EBITDA and sales volume, among others.
d. how compensation is structured to reflect the
improvement in performance indicators:
Any changes to the compensation items is directly linked
to the performance of the individual and that of the Company and the reaching of
targets in the period in question, while salary increases, the variation in
salary multiples received in the form of bonuses and the quantity of options and
phantom shares granted under the option plan are all directly linked to the
performance demonstrated in the assessed period.
e. how compensation policy or practice is aligned with the
short, medium and long-term interests of the Company:
The practice adopted by the Company with regard
to the various components of the total compensation is directly aligned to the
short, medium and long-term interests of the Company. Fixed compensation
reflects compensation in line with market practices and, as the cycle in the
segment is medium and long term, the Company believes that a significant portion
of compensation and variable incentives should be remitted to these periods,
fully in line with the Company performance monitoring and, therefore,
reaffirming the sharing of risk and results between executives and the
Company.
f. Existence of compensation supported by subsidiaries,
controlled companies, or direct or indirect controlling
shareholders:
There is no compensation supported by
subsidiaries, controlled companies, or direct or indirect controlling
shareholders of the company.
g. Existence of any compensation or benefit linked to the
occurrence of any particular corporate event, such as the sale of control of the
Company:
There is no compensation or benefit linked to the
occurrence of any particular corporate event, such as the sale of control of the
Company.
13.2. Total compensation of the Board of Directors, the
Statutory Executive Board and the Fiscal Council:
43
Total compensation estimated for the fiscal year to end on December 31, 2017 – Annual Amounts
|
|
Board of Directors
|
Statutory Executive Officers
|
Fiscal Council
|
Total
|
Total No. of Members
|
7.00
|
6.00
|
3.00
|
16.00
|
No. of Compensated Members
|
7.00
|
6.00
|
3.00
|
16.00
|
Fixed Annual Compensation
|
|
|
|
|
-Salary or
Pro Labore
|
1,862,356.00
|
4,109,500.00
|
217,200.00
|
6,189,056.00
|
-Direct and indirect benefits
|
NA
|
314,000.00
|
NA
|
314,000.00
|
-Attendance at committees
|
NA
|
NA
|
NA
|
NA
|
-Other
|
372,471.20
|
821,900.00
|
43,440.00
|
1,237,811.20
|
Description of other fixed compensations
|
Payment of INSS (National Institute of Social Security) contribution (employer’s lien)
|
Payment of INSS (National Institute of Social Security) contribution (employer’s lien
|
Payment of INSS (National Institute of Social Security) contribution (employer’s lien
|
|
Variable Compensation
|
|
|
|
|
-Bonus
|
NA
|
5,855,000.00
|
NA
|
5,855,000.00
|
-Profit Sharing
|
NA
|
NA
|
NA
|
NA
|
-Attendance at meetings
|
NA
|
NA
|
NA
|
NA
|
-Commissions
|
NA
|
NA
|
NA
|
NA
|
-Other
|
NA
|
NA
|
NA
|
NA
|
Description of other variable compensation
|
|
|
|
|
Post-employment
|
NA
|
NA
|
NA
|
NA
|
Termination of office
|
NA
|
NA
|
NA
|
NA
|
Share-based compensation
|
NA
|
5,403,999.80
|
NA
|
5,403,999.80
|
Notes
|
1. No. of members: The
number of members of each body corresponds to the annual average of the number of members of each body, calculated monthly.
2.Salary or
pro labore
: The amounts reported as
pro labore
do not include payroll charges.
3.
Total Compensation: the information contained in the Financial Statements reported refers to
pro labore
and benefits (where applicable) of the Board of Directors.
4.
Note: the total volume referred in this management compensation proposal is the sum of the amounts of the Board of Directors and the Statutory Board of Executive Officers (R$18,739,227.00) and, separately, the Fiscal Council compensation (R$260,640.00).
|
1.No. of members: The
number of members of each body corresponds to the annual average of the number of members of each body, calculated monthly.
2.Salary or
pro labore
: The amounts reported as
pro labore
do not include payroll charges.
3. Share-based compensation: the amounts reported as s
hare-based compensation started to reflect the total potential book cost of the grant still to be approved in 2016 referring to the Statutory Executive Officers, to be recorded during grace period (3 years) according to the Monte Carlo (Traditional Stock Options and Phantom Shares Programs) pricing model.
4.
Total Compensation: the information contained in the Financial Statements reported refers to
pro labore
and benefits (where applicable) of the Statutory Executive Officers.
5.
Note: the total volume referred in this management compensation proposal is the sum of the amounts of the Board of Directors and the Statutory Board of Executive Officers (R$18,739,227.00) and, separately, the Fiscal Council compensation (R$260,640.00).
|
1. No. of members: The
number of members of each body corresponds to the annual average of the number of members of each body, calculated monthly.
2.Salary or
pro labore
: The amounts reported as
pro labore
do not include payroll charges.
3.
Total Compensation: the information contained in the Financial Statements reported refers to
pro labore
and benefits (where applicable) of the Fiscal Council.
4.
Note: the total volume referred in this management compensation proposal is the sum of the amounts of the Board of Directors and the Statutory Board of Executive Officers (R$18,739,227.00) and, separately, the Fiscal Council compensation (R$260,640.00).
|
|
Total Compensation
|
2,234,827.20
|
16,504,399.80
|
260,640.00
|
18,999,867.00
|
|
|
|
|
|
44
|
|
|
|
|
Total Compensation for the Fiscal Year as at December 31, 2016 – Annual Amounts
|
|
Board of Directors
|
Statutory Executive Officers
|
Fiscal Council
|
Total
|
Total No. of Members
|
7.00
|
5.00
|
3.00
|
15.00
|
No. of Compensated Members
|
7.00
|
5.00
|
3.00
|
15.00
|
Fixed Annual Compensation
|
|
|
|
|
-Salary or
Pro Labore
|
1,681,665.95
|
3,575,000.00
|
196,716.75
|
5,453,382.70
|
-Direct and indirect benefits
|
NA
|
345,051.00
|
NA
|
345,051.00
|
-Attendance at committees
|
NA
|
NA
|
NA
|
NA
|
-Other
|
297,323.59
|
715,000.00
|
39,343.35
|
1,051,666.94
|
Description of other fixed compensations
|
Payment of INSS (National Institute of Social Security) contribution (employer’s lien)
|
Payment of INSS (National Institute of Social Security) contribution (employer’s lien
|
Payment of INSS (National Institute of Social Security) contribution (employer’s lien
|
|
Variable Compensation
|
|
|
|
|
-Bonus
|
NA
|
2,275,000.00
|
NA
|
2,275,000.00
|
-Profit Sharing
|
NA
|
NA
|
NA
|
NA
|
-Attendance at meetings
|
NA
|
NA
|
NA
|
NA
|
-Commissions
|
NA
|
NA
|
NA
|
NA
|
-Other
|
NA
|
NA
|
NA
|
NA
|
Description of other variable compensation
|
|
|
|
|
Post-employment
|
NA
|
NA
|
NA
|
NA
|
Termination of office
|
NA
|
NA
|
NA
|
NA
|
Share-based compensation
|
NA
|
3,785,199.07
|
NA
|
3,785,199.07
|
Notes
|
1. No. of members: The
number of members of each body corresponds to the annual average of the number of members of each body, calculated monthly.
2.Salary or
pro labore
: The amounts reported as
pro labore
do not include payroll charges.
3.
Total Compensation: the information contained in the Financial Statements reported refers to
pro labore
and benefits (where applicable) of the Board of Directors.
|
1.No. of members: The
number of members of each body corresponds to the annual average of the number of members of each body, calculated monthly.
2.Salary or
pro labore
: The amounts reported as
pro labore
do not include payroll charges.
3. Share-based compensation: the amounts reported as s
hare-based compensation started to reflect the total potential book cost of the grant still to be approved in 2016 referring to the Statutory Executive Officers, to be recorded during grace period (3 years) according to the Monte Carlo (Traditional Stock Options and Phantom Shares Programs) pricing model.
4.
Total Compensation: the information contained in the Financial Statements reported refers to
pro labore
and benefits (where applicable) of the Statutory Executive Officers.
5. The bonus amount (short-term variable compensation) is still under verification).
|
1. No. of members: The
number of members of each body corresponds to the annual average of the number of members of each body, calculated monthly.
2.Salary or
pro labore
: The amounts reported as
pro labore
do not include payroll charges.
3.
Total Compensation: the information contained in the Financial Statements reported refers to
pro labore
and benefits (where applicable) of the Fiscal Council.
|
|
Total Compensation
|
1,978,989.54
|
10,695,250.07
|
236,060.10
|
12,910,299.71
|
|
|
|
|
|
|
|
|
|
|
Total Compensation for the Fiscal Year as at December 31, 2015 – Annual Amounts
|
|
Board of Directors
|
Statutory Executive Officers
|
Fiscal Council
|
Total
|
Total No. of Members
|
7.00
|
5.00
|
3.00
|
15.00
|
No. of Compensated Members
|
7.00
|
5.00
|
3.00
|
15.00
|
Fixed Annual Compensation
|
|
|
|
|
-Salary or
Pro Labore
|
1,693,044.00
|
3,575,000.00
|
198,000.00
|
5,466,044.00
|
-Direct and indirect benefits
|
NA
|
391,545.60
|
NA
|
391,545.60
|
-Attendance at committees
|
NA
|
NA
|
NA
|
NA
|
-Other
|
338,608.80
|
715,000.00
|
39,600.00
|
1,093,208.80
|
Description of other fixed compensations
|
Payment of INSS (National Institute of Social Security) contribution (employer’s lien)
|
Payment of INSS (National Institute of Social Security) contribution (employer’s lien
|
Payment of INSS (National Institute of Social Security) contribution (employer’s lien
|
|
Variable Compensation
|
|
|
|
|
-Bonus
|
NA
|
2,246,700.00
|
NA
|
2,246,700.00
|
-Profit Sharing
|
NA
|
NA
|
NA
|
NA
|
-Attendance at meetings
|
NA
|
NA
|
NA
|
NA
|
-Commissions
|
NA
|
NA
|
NA
|
NA
|
-Other
|
NA
|
NA
|
NA
|
NA
|
Description of other variable compensation
|
|
|
|
|
Post-employment
|
NA
|
NA
|
NA
|
NA
|
Termination of office
|
NA
|
NA
|
NA
|
NA
|
Share-based compensation
|
NA
|
4,428,112.65
|
NA
|
4,428,112.65
|
Notes
|
1. No. of members: The
number of members of each body corresponds to the annual average of the number of members of each body, calculated monthly.
2.Salary or
pro labore
: The amounts reported as
pro labore
do not include payroll charges.
3.
Total Compensation: the information contained in the Financial Statements reported refers to
pro labore
and benefits (where applicable) of the Board of Directors.
|
1.No. of members: The
number of members of each body corresponds to the annual average of the number of members of each body, calculated monthly.
2.Salary or
pro labore
: The amounts reported as
pro labore
do not include payroll charges.
3. Share-based compensation: the amounts reported as s
hare-based compensation started to reflect the total book cost of the grant in 2015 to the Statutory Executive Officers, to be recorded during grace period (3 years) according to the Monte Carlo (Traditional Stock Options and Phantom Shares Programs) pricing model.
4.
Total Compensation: the information contained in the Financial Statements reported refers to
pro labore
and benefits (where applicable) of the Statutory Executive Officers.
|
1. No. of members: The
number of members of each body corresponds to the annual average of the number of members of each body, calculated monthly.
2.Salary or
pro labore
: The amounts reported as
pro labore
do not include payroll charges.
3.
Total Compensation: the information contained in the Financial Statements reported refers to
pro labore
and benefits (where applicable) of the Fiscal Council.
|
|
Total Compensation
|
2,031,652.80
|
11,354,944.65
|
237,600.00
|
13,625,611.05
|
|
|
|
|
|
45
|
|
|
|
|
Total Compensation for the Fiscal Year
as at December 31, 2014 – Annual Amounts
|
|
Board of Directors
|
Statutory Executive
Officers
|
Fiscal Council
|
Total
|
Total No. of Members
|
7.67
|
5.17
|
3.00
|
15.83
|
No. of Compensated
Members
|
7.67
|
5.17
|
3.00
|
15.83
|
Fixed Annual
Compensation
|
|
|
|
|
-Salary or
Pro Labore
|
1,720,150.24
|
3,629,677.42
|
189,021.43
|
5,538,849.79
|
-Direct and indirect
benefits
|
19,049.32
|
374,147.80
|
NA
|
393,197.12
|
-Attendance at committees
|
NA
|
NA
|
NA
|
NA
|
-Other
|
344,030.19
|
725,935.48
|
37,804.29
|
1,107,769.96
|
Description of other fixed
compensations
|
Payment of INSS (National Institute of
Social Security) contribution (employer’s lien)
|
Payment of INSS (National Institute of
Social Security) contribution (employer’s lien
|
Payment of INSS (National Institute of
Social Security) contribution (employer’s lien
|
|
Variable Compensation
|
|
|
|
|
-Bonus
|
NA
|
3,412,500.00
|
NA
|
3,412,500.00
|
-Profit Sharing
|
NA
|
NA
|
NA
|
NA
|
-Attendance at meetings
|
NA
|
NA
|
NA
|
NA
|
-Commissions
|
NA
|
NA
|
NA
|
NA
|
-Other
|
NA
|
NA
|
NA
|
NA
|
Description of other variable
compensation
|
|
|
|
|
Post-employment
|
NA
|
NA
|
NA
|
NA
|
Termination of office
|
NA
|
NA
|
NA
|
NA
|
Share-based
compensation
|
NA
|
9,743,909.70
|
NA
|
9,743,909.70
|
Notes
|
1. No. of members: The
number of members of each body corresponds to the
annual average of the number of members of each body, calculated
monthly.
2.Salary or
pro labore
: The amounts reported as
pro labore
do not include payroll charges.
3.Direct and indirect benefits: payment
of benefits to a board member
, during few months, who is former officer of the
Company, therefore the Officer policy was maintained.
4.Bonus: the amounts reported as bonus
are still being calculated.
5.Share-based compensation: the amounts
reported as s
hare-based compensation reflect the book cost to be
verified in 2014 referring to all programs granted to the Statutory
Executive Officers, according to the Monte Carlo (Traditional Stock
Options Programs) and Binomial (Restricted Stock Options Programs) pricing
models.
6.
Total Compensation: the information contained in
the Financial Statements reported refers to
pro labore
and benefits (where applicable) of the Board of
Directors, Fiscal Council and Statutory Executive Officers
|
1. No. of members: The
number of members of each body corresponds to the
annual average of the number of members of each body, calculated
monthly.
2.Salary or
pro labore
: The amounts reported as
pro labore
do not include payroll charges.
3. Share-based compensation: the amounts
reported as s
hare-based compensation reflect the book cost to be
verified in 2014 referring to all programs granted to the Statutory
Executive Officers, according to the Monte Carlo (Traditional Stock
Options Programs) and Binomial (Restricted Stock Options Programs) pricing
models.
4.
Total Compensation: the information contained in
the Financial Statements reported refers to
pro labore
and benefits (where applicable) of the Board of
Directors, Fiscal Council and Statutory Executive Officer.
|
1. No. of members: The
number of members of each body corresponds to the
annual average of the number of members of each body, calculated
monthly.
2.Salary or
pro labore
: The amounts reported as
pro labore
do not include payroll charges.
3. Share-based compensation: the amounts
reported as s
hare-based compensation reflect the book cost to be
verified in 2014 referring to all programs granted to the Statutory
Executive Officers, according to the Monte Carlo (Traditional Stock
Options Programs) and Binomial (Restricted Stock Options Programs) pricing
models.
4.
Total Compensation: the information contained in
the Financial Statements reported refers to
pro labore
and benefits (where applicable) of the Board of
Directors, Fiscal Council and Statutory Executive Officers.
|
|
Total Compensation
|
2,083,230.45
|
17,886,170.40
|
226,825.72
|
20,196,226.56
|
|
|
|
|
|
13.3. Variable compensation of the Board of Directors,
the Statutory Executive Officers and the Fiscal council
:
Year 2017 – Estimated
|
Board of Directors
(1)
|
Fiscal Council
(1)
|
Statutory Executive
Officers
|
Total
|
Total No. of Members
(2)
|
7.00
|
3.00
|
6.00
|
16.00
|
No. of Compensated Members
(2)
|
7.00
|
3.00
|
6.00
|
16.00
|
Bonus
|
|
|
|
|
Minimum amount estimated in the
compensation plan
|
n.a.
|
n.a.
|
0
|
0
|
Maximum amount estimated in the
compensation plan
|
n.a.
|
n.a.
|
7,014,625.00
|
7,014,625.00
|
Estimated Amount in the Compensation
Plan, if targets are met
|
n.a.
|
n.a.
|
5,855,000.00
|
5,855,000.00
|
Amount Effectively Recognized in
Income
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Profit Sharing
|
|
|
|
|
Minimum amount estimated in the
compensation plan
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Maximum amount estimated in the
compensation plan
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Estimated Amount in the Compensation
Plan, if targets are met
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Amount Effectively Recognized in
Income
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Note:
1. The Board of Directors and Fiscal Council
are not eligible to short-term variable compensation
2. The number of members of each body
corresponds to the annual average of the number of members of each body measured
on a monthly basis.
Year 2016 – Under
verification
|
Board of Directors
(1)
|
Fiscal Council
(1)
|
Statutory Executive
Officers
|
Total
|
Total No. of Members
(2)
|
7.00
|
3.00
|
5.00
|
15.00
|
No. of Compensated Members
(2)
|
7.00
|
3.00
|
5.00
|
15.00
|
Bonus
|
|
|
|
|
Minimum amount estimated in the
compensation plan
|
n.a.
|
n.a.
|
0
|
0
|
Maximum amount estimated in the
compensation plan
|
n.a.
|
n.a.
|
6,581,250.00
|
6,581,250.00
|
Estimated Amount in the Compensation
Plan, if targets are met
|
n.a.
|
n.a.
|
5,265,000.00
|
5,265,000.00
|
Amount Effectively Recognized in Income
(3)
|
n.a.
|
n.a.
|
2,275,000.00
|
2,275,000.00
|
Profit Sharing
|
|
|
|
|
Minimum amount estimated in the
compensation plan
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Maximum amount estimated in the
compensation plan
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Estimated Amount in the Compensation
Plan, if targets are met
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Amount Effectively Recognized in
Income
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Note:
1. The Board of Directors and Fiscal Council
are not eligible to short-term variable compensation
2. The number of members of each body
corresponds to the annual average of the number of members of each body measured
on a monthly basis.
3. The bonus amount (short-term variable
compensation) is still under verification).
Year 2015
|
Board of Directors
(1)
|
Fiscal Council
(1)
|
Statutory Executive
Officers
|
Total
|
Total No. of Members
(2)
|
7.00
|
3.00
|
5.00
|
15.00
|
No. of Compensated Members
(2)
|
7.00
|
3.00
|
5.00
|
15.00
|
Bonus
|
|
|
|
|
Minimum amount estimated in the
compensation plan
|
n.a.
|
n.a.
|
0
|
0
|
Maximum amount estimated in the
compensation plan
|
n.a.
|
n.a.
|
5,687,500.00
|
5,687,500.00
|
Estimated Amount in the Compensation
Plan, if targets are met
|
n.a.
|
n.a.
|
4,550,000.00
|
4,550,000.00
|
Amount Effectively Recognized in
Income
|
n.a.
|
n.a.
|
2,246,700.00
|
2,246,700.00
|
Profit Sharing
|
|
|
|
|
Minimum amount estimated in the
compensation plan
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Maximum amount estimated in the
compensation plan
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Estimated Amount in the Compensation
Plan, if targets are met
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Amount Effectively Recognized in
Income
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Note:
1. The Board of Directors and Fiscal Council
are not eligible to short-term variable compensation
2. The number of members of each body
corresponds to the annual average of the number of members of each body measured
on a monthly basis.
46
Year 2014
|
Board of Directors
(1)
|
Fiscal Council
(1)
|
Statutory Executive
Officers
|
Total
|
Total No. of Members
(2)
|
7.67
|
3.00
|
5.17
|
15.83
|
No. of Compensated Members
(2)
|
7.67
|
3.00
|
5.17
|
15.83
|
Bonus
|
|
|
|
|
Minimum amount estimated in the
compensation plan
|
n.a.
|
n.a.
|
0
|
0
|
Maximum amount estimated in the
compensation plan
|
n.a.
|
n.a.
|
5,687,500.00
|
5,687,500.00
|
Estimated Amount in the Compensation
Plan, if targets are met
|
n.a.
|
n.a.
|
4,550,000.00
|
4,550,000.00
|
Amount Effectively Recognized in
Income
|
n.a.
|
n.a.
|
3,412,500.00
|
3,412,500.00
|
Profit Sharing
|
|
|
|
|
Minimum amount estimated in the
compensation plan
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Maximum amount estimated in the
compensation plan
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Estimated Amount in the Compensation
Plan, if targets are met
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Amount Effectively Recognized in
Income
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Note:
1. The Board of Directors and Fiscal Council
are not eligible to short-term variable compensation
2. The number of members of each body
corresponds to the annual average of the number of members of each body measured
on a monthly basis.
13.4. Share-based based compensation plan for the Board
of Directors and the Statutory Executive Officers
:
a. general terms and conditions:
Within the scope of the Company Stock Option Plan,
employees and managers (“Beneficiaries”) are eligible to receive call options on
common shares issued by the Company and/or phantom shares. In principle, all
managers and employees are eligible to participate, seeing that currently 61
people, among the managers and employees, hold stock options in the Company
and/or phantom shares, taking all the Option Programs together.
The first Stock Option Plan was approved at the Annual
General Meeting held on April 30, 2002, ratifying the terms and conditions
approved by the Board of Directors as a meeting held on April 3, 2000 (“Option
Plan 2002”). There are no further plans for options to be granted under the
Option Plan 2002, whose conditions are not applicable to the granting of options
currently carried out by the Company.
At a General Shareholders Meeting on February 3, 2006 a
second share option plan was approved (“Option Plan 2006”), and at a General
Shareholders Meeting on June 18, 2008, a third option plan was approved for
shares issued by the Company (“Option Plan 2008”). Option Plan 2006 and
Option Plan 2008 establish similar terms and conditions to each other, the most
important difference being the possibility instituted by Option Plan 2008 of the
granting of options in the form of Restricted Stock Options, as explained
further on in this report. Option Plan 2008 is applicable to options
currently granted by the Company, the general conditions of which are described
below.
The Plan (thus considering Option Plan 2006 and Option
Plan 2008, without distinction, except where otherwise indicated) is managed by
the Board of Directors, which has wide-reaching powers in terms of its
organization and option granting, observing the limits imposed by the Plan. The
Board of Directors is responsible for the granting of options, establishing the
specific terms and conditions applicable to each granting of A Options as part
of option programs (“Programs”), in which may be defined: (i) the beneficiaries;
(ii) the total number of shares in the Company that are the object of the
options granted, and their division into lots; (iii) the exercise price; (iv)
the lock up period during which the option may not be exercised, the periods for
the exercising A Options and the limits dates for the total or partial
exercising of the option and on which the option rights expire; (v) restrictions
on the
availability of shares received by the exercising of the
option; and (vi) targets related to the performance of the employees, managers
or the Company. The Board of Directors may also opt to delegate its functions to
a specific Committee. Currently, the Compensation Committee is responsible for
analyzing and recommending all the actions related to compensation and long term
incentives, for approval of the Board of Directors.
47
The Beneficiaries covered by the options granted must sign
a Contract for the Granting of Options with the Company (“Option Contracts”), by
which the Beneficiaries have the option of buying lots of shares issued by the
company, in accordance with the terms and conditions of the corresponding Plan
and Program. The option contracts may include specific conditions applicable to
a particular Beneficiary.
The general rule is that the option exercise price will be
equivalent to the average trading value of the shares over 30 days of trading on
BM&FBOVESPA S.A. (the stock exchange of Sao Paulo) prior to the option
granting date (”market value”), with the possibility of applying monetary
correction or interest to this figure, as decided by the Board of Directors for
each program. Option Plan 2008 introduced the possibility of the Board of
Directors authorizing differentiated options to particular Beneficiaries (“B
Options”) for the exercise price of R$0.01. The exercising of B Options,
if granted, will be always conditional and proportional to the previous
exercising of the other options in Option Plan 2008 and authorized for each
Beneficiary (“A Options”, whose exercise price will always be calculated in
accordance with Market Value) and during the course of the lock up period, of a
minimum of 2 years counting from the date of the respective option granting
date. Other conditions May be established for each Program (see item “h” below,
description of programs with regard to appreciation targets). With this,
Option Plan 2008 introduced the possibility of the granting of options in a new
format, known as “Restricted Stock Options”, under which B Options, inextricably
linked to A Options, serve as an adjustment factor in the initial granting of A
Options, so that the effective gain of the beneficiaries will depend on the
performance by the Company over the medium and long term.
Under Option Plan 2006, 2 programs were approved,
respectively at meetings of the Board of Directors on March 23, 2006 (“2006
Program”) and February 9, 2007 (“2007 Program”).
Under Option Plan 2008, 10 programs were approved,
respectively at meetings of the Board of Directors on May 9, 2008 (“2008
Program”), and June 26, 2009 (“2009 Program”), December 17, 2009 (“2009 Program
II”), August 4, 2010 (“2010 Program”), March 31, 2011 (“2011 Program”), July 13,
2011, in which 2 Programs were approved (“2011 Program II” and “Council Program
2011”), August 20, 2012 (“2012 Program”), May 10, 2013 (“2013 Program”) and
March 14, 2014 (“2014 Program”) and April 27, 2015 (“2015 Program”).
The 2008 Program, the 2009 Program, the 2010 Program, the
2011 Program II, the 2013 Program and the 2014 Program were divided into 2
grants, with distinct conditions for each, described in the items below, where
indicated. The 2012 Program was divided into 3 grants, also with distinct
conditions for each, described in the items below, where indicated. The 2015 and
2016 Programs establish a single stock option grant and also provides for a
long-term incentive model payable in cash, based on the share value (phantom
shares), without issuing the Company’s shares. The volume granted both of
Options and of Phantom Shares is based on previous investment by each
beneficiary in the Company’s shares in the market – basic condition so that they
become eligible to the Program. After the 3-year grace period, the beneficiary
may exercise the Options and shall become eligible to receive the cash amount
referring to the phantom shares market value.
All the Programs approved under the 2006 Option Plan, as
well as the first option grant under the 2008 Program, the two option
grants
under the 2009 Program, the first option grant under the
2010 Program and the first option grant under the 2011 Program II, second and
third option grants under the 2012 Program and the 2013 and 2015 Programs were
carried out in accordance with a conventional option grant model, which is to
say, options were
granted whose exercise price corresponds to the Market
Value of the Company's shares. This model was also used in the 2011 Board
Program, in which options were granted to the members of the Board of Directors.
While the second granting of the 2008 Program, the 2009 Program II, the second
granting of the 2010 Program, the 2011 Program, the second granting of the 2011
Program II, the first option grant under the 2012 Program, the first option
grant under the 2013 Program and the grants under the 2014 Program followed the
Restricted Stock Option model, so that each beneficiary received both A Options
and B Options.
48
The options granted to the members of the Statutory
Executive Officers under the 2006 Program, under the 2009 Program, under the
first granting of the 2010 Program and under the first granting of the 2011
Program II were replaced in their entirety by options granted under the 2012
Program, through the signing of corresponding Contracts with the Company.
In this way, no member of the Statutory Executive Officers
is currently a beneficiary of the 2006 Program, the 2007 Program, the 2008
Program, or the 2009 Program, first granting of the 2010 Program or first
granting of the 2011 Program II. It should also be observed that no member of
the Statutory Executive Officers is a beneficiary of the second granting of the
2010 Program, or the 2011 Program.
The options of the 2011 Board Program expired. According
to the rules of this Program, it would have been necessary the exercise at least
20% of the options of the allotment incorporated in 2012 for the allotments not
incorporated to be cancelled. Thus, currently, the members of the Board of
Directors are not beneficiaries in any Stock Option Plan of the
Company.
Furthermore, as a result of the incorporation of the
shares issued by Construtora Tenda S.A. by the Company, as approved at an
Extraordinary General Meeting held on December 30, 2009, certain of options
granted by Construtora Tenda S.A. were assumed by the Company, under the terms
set at the meeting of the Board of Directors held on January 4, 2010. With this,
the Board of Directors approved a further 3 Programs, these being Special Stock
Option Program I, Special Stock Option Program II and Special Stock Option
Program III (“Special Programs”). Each of the Special Programs had specific
conditions which sought to reconcile the conditions of the plan with the need to
maintain an economic balance of the options granted to the beneficiaries of the
corresponding programs of Construtora Tenda S.A., in such a way that their
conditions reflected, in so far as is possible under the terms of the plan, the
corresponding conditions previously applicable to the beneficiaries when they
exercised their roles at Construtora Tenda S.A. Special Program I and
Special Program III carried out option grants, which essentially reflected
conventional option models.
While Special Program II carried out 2 grants with
partially distinct conditions, both followed the Restricted Stock Option model,
which was also adopted by Construtora Tenda S.A. for certain of their option
grants. The difference between these grants is due to the fact that certain
Beneficiaries before being beneficiaries under the Tenda Plan, were
beneficiaries of the Company itself, having exercised roles in the then
subsidiary Fit Residencial Empreendimentos Ltda., which was incorporated by
Tenda in 2008, resulting in the migration of these beneficiaries to the Tenda
option plan. So that the conditions of the options that had been granted
to these beneficiaries under the Restricted Stock Option model could be
preserved, and additional lot of B Options were granted to them when they
migrated to the Tenda plan, with a lock up period and reflecting the respective
B Options to which each of them would have the right to exercise in the first
company, and because they had previously exercised A Options granted by the
Company. With the incorporation of the shares of Construtora Tenda S.A. by
the Company and the further migration as a result, the conditions applicable to
the beneficiaries of Restricted Stock Options were incorporated in the second
granting of Special Program II, which contained two Option B lots, with separate
and distinct lock up periods.
49
With regard to the exercise price of the options to be
granted by the Special Programs, the criteria of Market Value was not used for
the traditional options or for A Options: in order to reflect the conditions
previously applicable to beneficiaries of the programs of Construtora Tenda S.A.
who switched to the Company, the exercise price were used that was applicable
under the corresponding program of Construtora Tenda S.A. (which reflected the
market value of the shares in that company), adjusted for the swap ratio for the
shares established for the incorporation of the shares in Construtora Tenda S.A.
by the Company.
It should also be observed that none of these three
mentioned Programs are in force today. In the case of Special Programs I and
III, due to the termination of the beneficiaries, the options that were not
exercised in accordance with the rules of the Plan and the decisions of the
Board of Directors were cancelled. In the case of Program II, it was 100%
exercised in accordance with the rules of the Plan and of the Program in
question.
b. main objectives of the plan:
The Company's option plans and stock option and phantom
shares programs shares have the aim of: (1) encouraging expansion and success in
the development of its corporate objectives, permitting the beneficiaries to
acquire shares, encouraging their integration into the Company; (2) attracting
top level managers and employees to provide their services, offering them the
additional advantage of becoming shareholders in the Company on potentially
differentiated terms; and (3) aligning the interests of the top level managers
and employees with the interests of the Company's shareholders.
c.
the way in which the plan contributes to these
objectives:
In providing the possibility of employees and
managers becoming shareholders of the Company under potentially differentiated
conditions, it is expected that they will have a strong incentive to effectively
commit themselves to the creation of value and exercise their roles in a manner
integrated with the interests of the Company's shareholders, corporate
objectives and expansion plans, thus maximizing result. The offering of stock A
Options also encourages Beneficiaries, as a result of the commitment of their
own funds, to seek appreciation of the shares, without, however, compromising
the sustainable growth, equally relevant in view of the grant model adopted.
Furthermore, this type of model results in the sharing of the risks and gains of
the Company, through the appreciation of the shares acquired under the stock
option plan
.
In addition, the model adopted expects to be effective as
mechanism of retaining key managers and employees, especially in view of sharing
of the Company’s shares appreciation.
d. how the plan is inserted into the Company's
compensation policy
The Company Plan currently in force builds in a policy of
concentrating the incentives of top-level managers and employees in variable
components, linked to the performance of the Company. In fact most of the
compensation is concentrated in incentives, which aimed to share risks and
results with the Company's main executives. As explained in item 13.1
above, the option plans and long-term incentives are directly linked to this
alignment of interests.
e. how the plan outlines the interests of the managers
with those of the Company over the short, medium and long term
The options granted on the basis of the plans have
different mechanisms, which permit the alignment of the interests of the
managers over different time horizons.
50
Division into annual lots and the existence of lock-up
differentiated lock up periods (see item “h” below) means that the Beneficiaries
commit themselves to the constant appreciation of the Company's shares over the
short, medium and long term.
In certain cases (item “h”), it is required that the
Beneficiary earmarks a minimum amount of the value received by him in annual
bonus to the exercising of options, or yet that acquires a minimum amount of
options every year, under penalty of extinguishment of future options. The
Company believes that this requirement permits the alignment of interests both
in the short as well as long term, because it involves the commitment of the
Beneficiary's own funds to shares in the Company, which may only be sold after a
given period of time.
With regard to the Restricted Stock Option
model, under which options granted to the beneficiaries
are divided into A Options and B Options, a structure of distinct incentives is
created to align the interests of the managers and employees with those of the
Company. A Options, whose exercise price reflects Market Value, usually comprise
one lot and are exercisable over a relatively short time horizon, generating a
financial commitment by the Beneficiary over the short term. The corresponding
shares are subject to a period of unavailability, modulating the alignment of
interests over the medium-term.
The mechanism for the exercising of B Options, in turn, is
way of adjusting the gain in which the Beneficiary can realize, depending on the
Company's performance over a longer time horizon, thus aligning the interests of
the Beneficiary over a longer period. The exercising of B Options will be
obligatorily: (
i
) subject to a minimum lock up period of 2 years, with the
possibility of being divided into annual lots; (
ii
) proportional to the number of A Options exercised,
linking the short with the long term, while the possibility of exercising B
Options will depend on the commitment shown by the Beneficiary in the exercising
of A Options; and (
iii
) under the terms of the options granted up to now,
subject to an adjustment in accordance with variation in the market value
(“Appreciation ”) on the shares of the Company between the date of the program
and the exercising of B Options, with dividends and interest-on-equity added per
share (appreciation criteria - item “h” below). With this, it is expected that
the Beneficiary will have an interest in generating a return and creating value,
in such a way that the total gain for him will depend directly on the Company’s
performance, and therefore the gain obtained by its shareholders: B Options,
necessarily linked to A Options, represent an adjustment mechanism, whereby the
total number of shares which can be acquired by the Beneficiary will be adjusted
in the future, the better the Company's performance over the long term, the
higher the figure.
The Phantom Shares model also aims the medium and
long-term alignment, since the amount to be received by beneficiary, after
3-year grace period (period during which the shares acquired to integrate the
Program were blocked under the Company’s custody) reflects the Company’s share
value. In addition, these amounts only will be released to the extent and
proportionally to the amount of Options exercised in this same
Program.
f. maximum number of shares covered
The maximum quantity of shares that maybe subject to the
granting of options, taken together for all the Company's Programs, is
equivalent to 5% of the paid-up capital, already taking into account the effect
of dilution as a result of the exercising of all the options. On the date of
this document, this amount corresponds to 19,848,474 common shares issued by the
Company.
g. maximum number of options that will be
granted
Each option guarantees the beneficiary of the right to
acquire one common share of the Company. This being the case, the quantity of
options granted is linked to the limits of dilution described in item “f” above.
On the date of this document, this amount corresponded to 12,908,082
options.
51
h. conditions for the share acquisition
As a general rule, the options granted under the
conventional granting model, as well as A Options granted under the
Restricted Stock Option
model, must be acquired at an exercise price equivalent
to Market Value, with this price being subject to monetary correction and
interest, as stipulated by the Board of Directors for each Program. For the
Special Programs, due to the absorption of the options granted by Construtora
Tenda S.A. before the incorporation of its shares by the Company, however, the
exercise price was equivalent to the exercise price previously applicable to
Construtora Tenda S.A. (which would reflect the market value of the shares
issued by that company), duly adjusted in accordance with the share swap ratio
established in the Protocol and Justification for the Incorporation of the
Shares of Construtora Tenda S.A. by the Company.
B Options, when granted, may always be acquired at an
exercise price of R$0.01, and because they are options that represents an
adjustment factor applied to the total benefit which can eventually be received
by the Beneficiary, the following conditions apply: (
i
) a minimum lock up period of two years must be observed;
(
ii
) the exercising of B Options are conditional on the
number of A Options previously exercised; and (
iii
) the number of B Options exercisable is adjusted in
accordance with the variation in the Market Value of the Company, in addition to
the dividends and interest-on-equity paid, between the date of the program and
the date of the exercising of B Options (“Appreciation”). In the Programs in
force, approved under the
Restricted Stock Option
model up to the present day, except for the second 2014
Program grant, B Options were granted with an adjustment factor in the
proportion of until 2 B Options for every A Option, in the case of key employees
of the Company, and in the proportion of until 3 B Options for each A Option, in
the case of the Company’s officers. These adjustment proportions will be reduced
to 1.5 and 2.5, respectively if the Appreciation should be less than 10%, being
applied in full if the Appreciation is over 20%, and proportionally if the
Appreciation is between 10% and 20%.
In the second granting of the 2010 Program, A Options were
exercisable between August 4, 2010 and September 30, 2010, after which they were
cancelled. B Options were divided into 3 annual lots, each one of them
exercisable, respectively, from August 4, 2012, and on subsequent anniversaries
of this date, for a period of 30 days, after which they are cancelled. The
exercising of B Options was also subject to the conditions described
above.
In the 2011 Program, A Options were available for
exercising between April 01, 2011 and June 01, 2011, after which they were
cancelled. B Options were divided into 3 annual lots, each one of them
exercisable, respectively, from April 01, 2013, and on subsequent anniversaries
of this date, for a period of 30 days, after which they are cancelled. The
exercising of B Options is also subject to the conditions described
above.
In Program II 2011, A Options were available for
exercising between July 13, 2011 and August 12, 2011, after which they were
cancelled. B Options are divided into 3 annual lots, each one of them
exercisable, respectively, from July 13, 2013, and on subsequent anniversaries
of this date, for a period of 30 days, after which they are cancelled. The
exercising of B Options is also subject to the conditions described
above.
Under the first 2012 Program Grant, A Options were
available for exercising between May 1, 2013 and May 30, 2013 for executive
officers and between May 1, 2014 and May 30, 2014 for all others, after which
they were cancelled. For executive officers, B Options are divided into 3 annual
lots, each of which is exercisable, respectively, as of August 20, 2014 and on
the subsequent anniversaries of this date for a period of 30 days, after which
they will be cancelled. In all other cases, all the B Options were exercisable
as of August 20, 2014, for a period of 30 days, after which they will be
cancelled. The exercise of B Options is nonetheless subject to the conditions
above.
52
Under the second 2012 Program grant, the options of each
Beneficiary were divided into 3 annual lots, the first of which is exercisable
as of May 1, 2013, and the remainder of which on the subsequent anniversaries of
this date. Beneficiaries are furthermore required to allocate at least 50% of
the amount received as an annual bonus to the exercise of options, regardless of
the program under which they were granted, or shall lose the right to exercise
all options in subsequent lots.
Under the third 2012 Program grant, the Beneficiary`s
options were divided into 4 equal annual lots, the first of which is exercisable
as of 2014 and the remaining lots, on the subsequent anniversaries of this date.
To receive this grant, the Beneficiary, in addition to the minimum mention in
the paragraphs above, allocated 20% or 30% of the amount received as annual
bonus to the purchase of Company shares on the market. In this case, the Company
granted 2 times of 2.5 times the number of shares acquired by the Beneficiary as
stock options.
In the 2013 Plan, A Options were exercisable between May
10, 2013 and May 30, 2014. B Options are split into three annual batches, each
one exercisable starting on May 10, 2015 and on the subsequent anniversaries on
the same date, for a period expiring in 30 days.
Under the first 2014 Program grant, A and B Options to be
received by the beneficiaries varied according to the annual bonus investment
for the purchase of the Company's shares, a preliminary condition for receiving
the grant – a similar rule to the third 2013 Program grant. A and B Options
varied between 1 time and 5 times; and 0.5 times and 2 times, respectively –
according to the volume of shares acquired by the previous investment. A and B
Options will be available for exercise from March 14, 2017, for a period of 3
years (B Options will be available for exercise in the proportion that A Options
are exercised, within this period). At this time, the Company’s TSR (Total Share
Return) in the period will be analyzed, as well as its position in relation to a
group of competitors. Depending on the Company’s position, only the A Options
granted volume may be adjusted (up or down).
Under the second 2014 Program grant, A Options are
exercisable between March 14, 2014 and May 30, 2015. B options are divided into
3 annual lots, each of them exercisable respectively from May 1, 2016 and
subsequent anniversaries of this date, for an extinguishing period of 30
days.
In 2015 Program, the Options will be exercisable as of
April 27, 2018, for a three-year extinguishing term. During same period, the
amount corresponding to phantom share will be calculated and paid to
beneficiaries – in the proportion the Options of same Program are exercised (if
not exercised in full, just once).
In 2016 Program, the Options will be exercisable as of
April 11, 2019, for a three-year extinguishing term. During same period, the
amount corresponding to phantom share will be calculated and paid to
beneficiaries – in the proportion the Options of same Program are exercised (if
not exercised in full, just once).
i. criteria for determining purchase or exercise price
As a general rule, the exercise price of the options must
be equivalent to the average price of the Company's shares over the last 30
trading days on BM&FBOVESPA S.A. Sao Paulo stock exchange (“Market Value”),
and which may have monetary correction applied based on the variation in price
indices to be determined by the Board of Directors, as well as interest added,
in accordance with the determinations of the Board of Directors for each
Program. This price is deducted from dividends and interest-on-equity paid per
share of the Company, from the grant date until the options exercise effective
date.
It is understood that the setting of the exercise price to
market value is necessary to better align the interests of the Beneficiaries in
generating value for the Company's shareholders: gains on the B Options being
obtained to
the extent that the Company's shares appreciate in the
market. The possibility of interest being added exists because the
exercise price represents a minimum rate of return, so that the Beneficiaries
receive a gain only in the case of the shares guaranteeing a minimum return, at
the discretion of the Board of Directors.
53
It is important to observe that the exercise price of the
conventional options is subject to monetary correction, generally by the IGP-M
index, and the addition of interest, usually 3% to 6% per year. With the
objective of making the exercising of the options more attractive and to retain
executives over the long term, the Board of Directors decided on August 4, 2010,
that he terms of monetary correction and interest added for the Programs would
be applied up to May 6, 2010.
The deduction of interest-on-equity and dividends is a way
of guaranteeing that the Beneficiaries participate in the results obtained by
the Company during the period, seeing that they have already been granted
options, but have not yet become shareholders, because of the design of the
particular program (lock up periods). On the other hand, it ensures that the
results will only be received by the Beneficiary if he remains of the Company
and exercises his options, becoming an effective shareholder.
B Options granted under the
Restricted Stock Option
model may be exercised at the price of R$0.01, but are
mandatorily linked to A Options. The exercise price is justified in so far that
the B Options act an adjustment factor in the number of shares that the
Beneficiary will have the right to acquire over the long term (and consequently
the possible total capital gain that he will receive). And this
necessarily depends on the initial disbursement referring to the A Options,
adjusted in accordance with the performance of the Company, and therefore in
accordance with the gains provided to its shareholders.
The amount corresponding to the Phantom Share corresponds
to the average quote of the Company’s shares at 30 trading sessions of
BM&FBOVESPA S.A. – Securities, Commodities and Futures Exchange prior to
date of exercise of same Program Options (“Market Value”).
j. criteria for determining the option exercise period
In the 2011 Program, A Options were exercisable between
April 01, 2011 and June 01, 2011. This time limit was established as a way of
tying in the Beneficiary and demonstrating his commitment to the Company. B
Options are divided into 3 annual lots, each one of them exercisable,
respectively, from April 01, 2013, and on subsequent anniversaries of this date,
for a period of 30 days, after which they are cancelled, and only in the
proportion that the Beneficiary has previously exercised his A Options.
Regarding the exercise period of 30 days for the B Options, it is believed that
this period is reasonable seeing that the exercising of the options has already
been planned by the Beneficiary, representing the end of the program in
question.
Under the second granting of the 2011 Program II, A
Options were exercised between July 13, 2011 and August 12, 2011. As mentioned
above, this time limit was established as a way of tying in the Beneficiary and
demonstrating his commitment to the Company. B Options are divided into 3 annual
lots, each one of them exercisable, respectively, from July 13, 2013, and on
subsequent anniversaries of this date, for a period of 30 days, after which they
are cancelled, and only in the proportion that the Beneficiary has previously
exercised his A Options. The lock up periods for the exercising of the B Options
are fixed observing the same criteria and fundamentals described above regarding
the 2011 Program.
Under the first 2012 Program grant, A Options were
exercisable between May 1, 2013 and May 30, 2013 for executive officers and
between May 1, 2013 and May 30, 2014 for all others. As explained above, this
period was established as a means of linking the Beneficiary to evidenced
commitment to the Company. For executive officers, B Options are divided into 3
annual lots, each of which was exercisable, respectively, as of August 20,
2014 and the subsequent anniversaries of this date, for a
period of 30 days, after which they will be cancelled, and only in the
proportion that the Beneficiary has previously exercised A Options. In other
cases, all B Options were exercised as of August 20,2014, for a 30-day period,
also only in the percentage the Beneficiary previously had exercised A
Options.The vesting periods for B Options are established according to the same
criteria and fundamentals described above regarding the 2011 Program
grant.
54
Under the second and third 2012 Program grants, the
options of each Beneficiary were divided into 3 annual lots and 4 equal annual
lots, respectively. For the second grant, the first lot is exercisable as of May
1, 2013, and the remaining lots, on the anniversary of this date. For the third
grant, the first lot is exercisable as of 2014 and the remaining lots, on the
anniversary of this date. The division of the options in lots meets the goals of
linking the Beneficiary and aligning his or her short, medium and long term
interest to those of the Company. The options of each annual lot may be
exercised for a period of 10 years as of their vesting date, which will be
reduced to 3 years should the Beneficiary fail to use the portion of the
mandatory allocation of his or her bonus (only for the second grant). This
10-year period provides an opportunity for the Beneficiary to have a longer
period to choose the best time to apply his or her resources to offset the
effective allocation of his or her bonus.
Under the 2013 Program grant, A Options are exercisable
between May 10, 2014 and May 30, 2014. As explained above, this period was
established as a means of linking the Beneficiary to demonstrated commitment to
the Company. B Options are divided into 3 annual lots, each of which is
exercisable, respectively, as of May 10, 2015 and the subsequent anniversaries
of this date, for a period of 30 days, after which they will be cancelled, and
only in the proportion that the Beneficiary has previously exercised A Options.
The vesting periods for B Options are established according to the same criteria
and fundamentals described above regarding the 2011 Program second
grant.
Under the first 2014 Program grant, A Options may be
exercised from March 14, 2017, for a period of 3 years. As mentioned above, this
period was established to tie in the Beneficiary and as a demonstration of
commitment to the Company. B Options may be exercised in the same period of A
Options and in the proportion that the Beneficiary exercises A
Options.
Under the second grant of the 2014 Program, A Options may
be exercised between March 14, 2014 and May 30, 2015. As mentioned above, this
period was established to tie in the Beneficiary and as a demonstration of
commitment to the Company. Options B are divided into 3 annual lots, each one of
them being exercisable respectively from May 1, 2016 and subsequent
anniversaries of this date, for a period of 30 days, and only in the proportion
that the Beneficiary has previously exercised the A options. The lock up period
for the exercise of B Options are fixed subject to the same criteria and
fundamentals described above regarding the 2011 Program.
In 2015 and 2016 Programs, the Options may be exercised as
of April 27, 2018, and April 11, 2019, respectively, for a three-year period. As
mentioned above, such term was established as a way of linking Beneficiary and
evidencing his commitment to the Company. The amounts corresponding to Phantom
Shares are also valid for the same period and will be released to the extent and
proportionally to the exercise of same Program Options.
k. method of settlement
In general, the shares corresponding to the options
exercised by the Beneficiaries are issued, while the corresponding capital
increase, always within the authorized capital limit, is ratified by the Board
of Directors. The Company also uses the shares held in treasury to supply shares
for options exercised.
Under the programs approved up to the date of this
Reference Form, the general rule is that the exercise price be paid in cash, at
the time of the subscription or purchase of the corresponding shares.
55
In the Phantom Shares model, no shares are issued nor
treasury shares are transferred. The corresponding amount calculated is paid in
cash.
l. restrictions on the transfer of
shares
At the meeting of the Board of Directors held on July 13,
2011, all the restrictions to share transfer were eliminated as a consequence of
the grant of stock options under conventional model. Thus, all shares acquired
by the Beneficiaries of the Plan, within the ambit of the 2006 Program, the 2009
Program, the Granting 1 and the 2010 Program will be free and clear for the
transfer at any time. It is important to notice that the remaining grants under
conventional model, such as first granting of the 2011 Program II, the 2011
Board Program, and second and third granting of the 2012 Program, the options
were granted with no restrictions to the shares of the current
exercise.
In case of options granted under the model Restricted
Stock Options, the A Options are subject to lock-up. The second granting of the
2008 Program and the Special Program II had a lock up period of 2 years, counted
from the day of subscription or acquisition of the shares. In the 2009 Program
II, the shares subscribed or acquired as a result of exercising the A Options
could not be alienated by the beneficiary until December 17, 2010 (1 year
counted from the day of the 2009 Program II), notwithstanding the date of
acquisition. In the second granting of the 2010 Program, the 2011 Program and
the second granting of the 2011 Program II, the rule is similar: the lock up
period for the shares of A Option is of 1 year counted from the date of the
respective Program (respectively: August 4, 2011, April 1, 2012 and July 13,
2012), notwithstanding the date of acquisition of the shares.
Under the first 2012 Program Grant, A Options could only
be exercised in the period from May 1 to May 30, 3013 for executive officers and
between May 1 and May 30, 2014 for all others. In all cases, there was no lock
up period after the exercise of A Options, which were granted in
2012.
Under the 2013 Program Grant, the rule is similar: A
Options could only be exercised in the period from May 10 to May 30, 2014 and,
in this case, there was no lock up period after the exercise of A Options, which
were granted in 2013.
For the 2014 Program, there is also no lock up period
after the exercise of A Options. In the first grant, they may only be exercised
from March 14, 2017, for a period of 3 years; and in the second grant, between
March 14, 2014 and May 30, 2015.
The shares subscribed or acquired as a result of the
exercising of the B Options are not subject to any lock-up date.
For 2015 and 2016 Programs also there is no lock-up period
after Options exercise.
m. criteria and events which, when they occur, would
result in the suspension, alteration or cancellation of the option plan
The Option Plans for 2006 and 2008 may be altered or
cancelled by the Board of Directors. Notwithstanding the powers of the Board of
Directors, no decision may alter: (
i
) the limit of the number of shares which are the object
of the plan; and (
ii
) the rights and obligations acquired by the beneficiary,
related to any existing options granted under Option Plans 2006 and 2008.
Additionally, in the case of the dissolving,
transformation, incorporation, merger, demerger or reorganization of the
Company, under which the Company does not remain as an entity, or if it does
remain as an entity, no longer has
its shares traded on the stock exchange, the options may be transferred to the company of succession, or have their lock up periods brought forward for exercising during a given period.
56
n. effects of a manager leaving the governing bodies of the Company on his rights under the share-based compensation plan
Under the terms of Option Plans 2008 and 2006, if a Beneficiary leaves the Company this will have the following effects on the options granted to him, depending on his reason for leaving: (
i
) if there is just cause for his dismissal, all the options not exercise will are cancelled; (
ii
) if there is no just cause for dismissal, or if the employee resigns voluntarily or opts to take retirement, the options already exercisable may be exercised within a period of 30 days, with the other options being cancelled; (
iii
) in the case of the death or permanent disablement of the Beneficiary, all the options may be exercised by the Beneficiary or his successors within a period of 180 days. In all these cases, except for death or permanent disability, the restrictions on the transfer of shares to which they apply will remain in force.
The Board of Directors has the power to determine the treatment to be given to B Options granted to the Beneficiary under Option Plan 2008, in the event of leaving at the behest of the Company, provided there is no just cause for dismissal. Under the Programs approved under the Restricted Stock Option
model, the Board of Directors has established rules for exercising the B Options, in proportion to the period in which the Beneficiary remained in the carrying out of his functions at the Company and observing the other conditions for the exercising of the B Options contained in Option Plan 2008 and the respective Programs.
Also, on August 4, 2010, the Board of Directors decided to establish the possibility of bringing forward the lock up period date for all the options that had been granted to members of the Statutory Executive Officers (but not any other beneficiary of the plan), for an exercise period of 180 days, whenever the corresponding director is dismissed, without any just cause, for a period of 1 year counting from the relevant “corporate events”. Such corporate events are as follows: (
i
) operations involving corporate reorganization of the Company in which its shareholders’ equity comes to represent less than 50% of the shareholders’ equity of the resulting company; (
ii
) the acquisition, by any person or group, of a stake equivalent to 30% or more of the Company's paid-up capital; (
iii
) the obligatory public offering of shares of the Company, under the terms of Brazilian Corporation Law or the regulations of Novo Mercado; and (
iv
) a voluntary public offering for the purchase of shares in the Company which results in the acquisition of the majority of its paid-up capital. With this, it is expected that the members of the Statutory Executive Officers will not be unduly prejudiced by virtue of the occurrence of a relevant corporate operation, preventing the options from being lost as a result of the operations, which could imply a change in control of the Company. Thus, with continuing expectations for the future exercising of the options, the alignment of the interests of the Beneficiaries is maintained, while retaining the best talent.
In meeting held on July 13, 2011, the Board of Directors deliberated to extent this possibility to any options granted or to be granted, to Executive Directors and members of Board of Directors of the Company and its wholly-owned subsidiary Construtora Tenda S.A.
The possibility of bringing forward the lock-up date for options, referred to in the paragraph above, is also applicable in the event of the Company being dissolved.
13.5. Share-based compensation for the Board of Directors and Statutory Executive Officers
:
2014
|
Board of Directors
|
Statutory Executive Officers
|
a)Plans
|
|
2011
|
2012
|
2013
|
2014
|
b) Total No. of Members
|
0
|
6
|
6
|
6
|
5
|
c) No. of Compensated Members
|
0
|
6
|
6
|
6
|
5
|
d) In relation to each granting of stock options
|
|
|
|
|
|
Date of granting
|
n.a.
|
7/13/2011
|
8/20/2012
|
5/10/2013
|
3/14/2014
|
Quantity of options granted
|
n.a.
|
1,340,000 (A Options + B Options)
|
2,236,000
(Restricted Stock Options Program A + B Options) and 2,810,000 (Conventional Program)
|
1,884,000
(Restricted Stock Options Program A + B Options) and 1,177,247 (Conventional program)
|
3,686,763 (Restricted Stock Options Program A + B Options)
|
Term for options to become exercisable
|
n.a.
|
B Options- 4 years (0%, 30%, 30% and 40%)
|
Restricted Stock Options Program: 9 months for A Options and 4 years (0%, 30%, 30%, 40%) for B Options
Conventional Program
3 years (50%, 30% and 20%)
|
A Options: 1 year
B Options: 4 years (0%, 30%, 30%, 40%)
Conventional Program: 4 years (25% p.a.)
|
A and B Options: 3 years
|
Time limit for the exercising of options
|
n.a.
|
30 days
|
Restricted Stock Options Program: 30 days
Conventional Program:10 years
|
Restricted Stock Options Program: 1 year A Options and 30 days B Options
Conventional Program: 10 years
|
A and B Options: 3 years
|
Time limit on the restrictions for the transfer of shares
|
n.a.
|
Options A: 1 year Options B: n.a.
|
n.a.
|
n.a.
|
n.a.
|
Weighted average price for the exercising of each group of options
|
|
|
|
|
|
-open at the beginning of the fiscal year
|
n.a.
|
B Options: R$0.01
|
Restricted Stock Options Program:
A Options: R$2.73
B Options: R$0.01
Conventional Program: R$2.73
|
Restricted Stock Options Program:
A Options: R$4.05
B Options: R$0.01
Conventional Program: R$4.08
|
A Options: R$3.13
B Options: R$0.01
|
-lost during the fiscal year
|
n.a
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
-exercised during the fiscal year
|
n.a.
|
R$0.01
|
Restricted Stock Options Program
A Options: R$2.34
B Options: 0.01
Conventional Program: R$2.37
|
Restricted Stock Option Programs
A Options: R$3.73
B Options: 0.01
|
n.a.
|
-expired during the fiscal year
|
n.a.
|
n.a.
|
n.a.
|
Conventional Program: R$3.70
|
n.a.
|
e) Fair value of options on the date of granting
|
n.a.
|
A Options: R$7.71
B Options: R$0.01
|
Restricted Stock Options Program:
A Options: R$2.73
B Options: R$0.01
Conventional Program: R$2.73
|
Restricted Stock Options Program:
A Options: R$4.05
B Options: R$0.01
Conventional Program: R$4.08
|
A Options: R$3.13
B Options: R$0.01
|
f) Potential dilution in the event of all the options granted being exercised
(1)
|
n.a.
|
0.33%
|
1.22%
|
0.74%
|
0.90%
|
(1) Dilution based on total shares as at 12/31/2014.
|
|
|
|
|
|
|
|
|
|
57
2015
|
Board of Directors
|
Statutory Executive Officers
|
a)Plans
|
|
2011
|
2012
|
2013
|
2014
|
2015
|
b) Total No. of Members
|
0
|
6
|
5
|
5
|
5
|
5
|
c) No. of Compensated Members
|
0
|
6
|
5
|
5
|
5
|
5
|
d) In relation to each granting of stock options
|
|
|
|
|
|
|
Date of granting
|
n.a.
|
7/13/2011
|
8/20/2012
|
05/10/2013
|
03/14/2014
|
4/27/2015
|
Quantity of options granted
|
n.a.
|
1,340,000
(A Options A + B Options)
|
2,236,000
(Restricted Stock Options Program A + B Options) and 2,810,000 (Conventional Program)
|
1,884,000 (Restricted Stock Options Program A + B Options) and 1,177,247
(Conventional Program)
|
3,686,763 (Restricted Stock Options Program / A + B Options)
|
2,312,324 Options and 832,234 Phantom Shares
|
Term for options to become exercisable
|
n.a.
|
B Options - 4 years
(0%, 30%, 30% and 40%)
|
Restricted Stock Options Program: 9 months for A Options and 4 years (0%, 30%, 30%, 40%) for B Options
Conventional Program: 3 years (50%, 30% and 20%)
|
Options A: 1 year
Options B: 4 years (0%, 30%, 30%, 40%)
Conventional Program: 4 years (25% p.a.)
|
A and B Options: 3 years
|
3 years
|
Time limit for the exercising of options
|
n.a.
|
30 days
|
Restricted Stock Options Program:
30 days
Conventional Program: 10 years
|
Restricted Stock Options Program: A Options 1 year and B Options 30 days
Convention Program: 10 years
|
A and B Options: 3 years
|
3 years
|
Time limit on the restrictions for the transfer of shares
|
n.a.
|
A Options: 1 year
B Options: n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Weighted average price for the exercising of each group of options
|
|
|
|
|
|
|
-open at the beginning of the fiscal year
|
n.a.
|
B Options: R$0.01
|
Restricted Stock Options Program:
A Options: R$2.73
B Options: R$0.01
Conventional Program: R$2.73
|
Restricted Stock Options Program:
A Options: R$4.05
B Options: R$0.01
Conventional Program: R$4.08
|
A Options: R$3.13
B Options: R$0.01
|
Options: R$2.24
Phantom Shares: R$2.24
|
-lost during the fiscal year
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
-exercised during the fiscal year
|
n.a.
|
R$0.01
|
R$0.01
|
R$0.01
|
n.a.
|
n.a.
|
-expired during the fiscal year
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
e) Fair value of options on the date of granting
|
n.a.
|
A Options: R$7.71
B Options: R$0.01
|
Restricted Stock Options Program:
A Options: R$2.73
B Options: R$0.01
Conventional Program: R$2.73
|
Restricted Stock Options Program:
A Options: R$4.05
B Options: R$0.01
Conventional Program: R$4.08
|
A Options: R$3.13
B Options: R$0.01
|
R$2.24
|
f) Potential dilution in the event of all the options granted being exercised
(1)
|
n.a.
|
0.35%
|
1.32%
|
0.80%
|
0.97%
|
0.61%
|
(1) Dilution based on total shares on 12/31/2015 and does not include the phantom shares, since no share is issued in this model.
|
58
2016
|
Board of Directors
|
Statutory Executive Officers
|
Plans
|
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
b) Total No. of Members
|
0
|
6
|
5
|
5
|
5
|
5
|
5
|
c) No. of Compensated Members
|
0
|
6
|
5
|
5
|
5
|
5
|
5
|
d) In relation to each granting of stock options
|
|
|
|
|
|
|
|
Date of granting
|
n.a.
|
7/13/2011
|
8/20/2012
|
5/10/2013
|
3/14/2014
|
4/27/2015
|
4/11/2016
|
Number of options granted
|
n.a.
|
1,340,000 (A Options + B Options)
|
2,236,000 (Restricted Stock Options Program A + B Options) and 2,810,000 (Conventional Program)
|
1,884,000 (Restricted Stock Options Program A + B Options) and 1,177,247 (Conventional Program)
|
3,686,763 (Restricted Stock Options Program A + B Options)
|
2,312,324 Options and 832,234 Phantom Shares
|
2,209,869 Options and 1,143,145,00 Phantom Shares
|
Term for options to
become exercisable
|
n.a.
|
B Options - 4 years (0%, 30%, 30% and 40%)
|
Restricted Stock Options Program: 9 months for A Options and 4 years (0%, 30%, 30%, 40%) for B Options
Conventional Program: 3 years (50%, 30% and 20%)
|
A Options: 1 year
B Options: 4 years (0%, 30%, 30%, 40%)
Conventional Program: 4 years (25% p.a.)
|
A and B Options: 3 years
|
3 years
|
3 years
|
Time limit for the exercising of options
|
n.a.
|
30 days
|
Restricted Stock Options Program: 30 days
Conventional Program: 10 years
|
Restricted Stock Options Program: 1 year A Options and B Options 30 days
Conventional Program: 10 years
|
A and B Options: 3 years
|
3 years
|
3 years
|
Time limit on the restrictions for the transfer of shares
|
n.a.
|
A Options: 1 year
B Options: n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Weighted average price for the exercising of each group of options
|
|
|
|
|
|
|
|
- open at the beginning of the fiscal year
|
n.a.
|
B Options: R$0.01
|
Restricted Stock Options Program:
A Options: R$2.73
B Options: R$0.01
Conventional Program: R$2.73
|
Restricted Stock Options Program:
A Options: R$4.05
B Options: R$0.01
Conventional Program: R$4.08
|
A Options: R$3.13
B Options: R$0.01
|
R$2.24
|
R$2.62
|
- lost during the fiscal year
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
- exercised during the fiscal year
|
n.a.
|
R$0.01
|
R$0.01
|
R$0.01
|
n.a.
|
n.a.
|
n.a.
|
- expired during the fiscal year
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
e) Fair value of options on the date of granting
|
n.a.
|
A Options: R$7.71
B Options: R$0.01
|
Restricted Stock Options Program:
A Options: R$2.73
B Options: R$0.01
Conventional Program: R$2.73
|
Restricted Stock Options Program:
A Options: R$4.05
B Options: R$0.01
Conventional Program: R$4.08
|
A Options: R$3.13
B Options: R$0.01
|
R$2.24
|
R$2.62
|
f) Potential dilution in the event of all the options granted being exercised
(1)
|
n.a.
|
0.35%
|
1.32%
|
0.80%
|
0.97%
|
0.61%
|
0.58%
|
|
(1)
Dilution based on total shares as at 12/31/2016 and excludes phantom shares since shares are not issued in this model
|
59
2017 - Estimated
|
Board of Directors
|
Statutory Executive Officers
|
Plans
|
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
b) Total No. of Members
|
0
|
6
|
5
|
5
|
5
|
5
|
5
|
c) No. of Compensated Members
|
0
|
6
|
5
|
5
|
5
|
5
|
5
|
d) In relation to each granting of stock options
|
|
|
|
|
|
|
|
Date of granting
|
n.a.
|
7/13/2011
|
8/20/2012
|
5/10/2013
|
3/14/2014
|
4/27/2015
|
4/11/2016
|
Number of options granted
|
n.a.
|
1,340,000 (A + B Options)
|
2,236,000 (Restricted Stock Options Program A + B Options) and 2,810,000 (Conventional Program)
|
1,884,000 (Restricted Stock Program Options A + B Options) and 1,177,247 (Conventional Program)
|
3,686,763 (Restricted Stock Options Program A + B Options)
|
2,312,324 Options and 832,234 Phantom Shares
|
2,209,869 Options and 1,143,145,00 Phantom Shares
|
Term for options to
become exercisable
|
n.a.
|
B Options - 4 years (0%, 30%, 30% and 40%)
|
Restricted Stock Options Program: 9 months for A Options and 4 years (0%, 30%, 30%, 40%) for B Options
Conventional Program: 3 years (50%, 30% and 20%)
|
A Options: 1 year
B Options: 4 years (0%, 30%, 30%, 40%)
Conventional Program: 4 years (25% p.a.)
|
A and B Options: 3 years
|
3 years
|
3 years
|
Time limit for the exercising of options
|
n.a.
|
30 days
|
Restricted Stock Options Program: 30 days
Conventional Program: 10 years
|
Restricted Stock Options Program: 1 year A Options and 30 days B Options
Conventional Program: 10 years
|
A and B Options: 3 years
|
3 years
|
3 years
|
Time limit on the restrictions for the transfer of shares
|
n.a.
|
A Options: 1 year
B Options: n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
Weighted average price for the exercising of each group of options
|
|
|
|
|
|
|
|
- open at the beginning of the fiscal year
|
n.a.
|
B Options: R$0.01
|
Restricted Stock Options Program:
A Options: R$2.73
B Options: R$0.01
Conventional Program: R$2.73
|
Restricted Stock Options Program:
A Options: R$4.05
B Options: R$0.01
Conventional Program: R$4.08
|
A Options: R$3.13
B Options: R$0.01
|
R$2.24
|
R$2.62
|
- lost during the fiscal year
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
- exercised during the fiscal year
|
n.a.
|
R$0.01
|
R$0.01
|
R$0.01
|
n.a.
|
n.a.
|
n.a.
|
- expired during the fiscal year
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
e) Fair value of options on the date of granting
|
n.a.
|
A Options: R$7.71
B Options: R$0.01
|
Restricted Stock Options Program:
A Options: R$2.73
B Options: R$0.01
Conventional Program: R$2.73
|
Restricted Stock Options Program:
A Options: R$4.05
B Options: R$0.01
Conventional Program: R$4.08
|
A Options: R$3.13
B Options: R$0.01
|
R$2.24
|
R$2.62
|
f) Potential dilution in the event of all the options granted being exercised
(1)
|
n.a.
|
0.35%
|
1.32%
|
0.80%
|
0.97%
|
0.61%
|
0.58%
|
(1)
Dilution based on total shares as at 12/31/2016 and excludes phantom shares since shares are not issued in this model
(2)
Until the date of this Management Proposal, the share-based incentive model has not been approved for 2017
60
13.6. Information on outstanding options held by the Board of Directors and the Statutory Executive Officers
:
Financial Year of 2016
|
Board of Directors
|
Statutory Executive Officers
|
b) Total No. of Members
|
-
|
2012
|
2013
|
2014
|
2015
|
2016
|
c) No. of Compensated Members
|
0
|
5
|
5
|
5
|
5
|
5
|
d) Options still unexercised
|
0
|
5
|
5
|
5
|
5
|
5
|
i) Number of shares
|
n.a.
|
575,400
(Restricted Stock Options Program – B Options) and 260,000 (Conventional Program)
|
762,000
(Restricted Stock Options Program – B Options)
and 363,861 (Conventional Program)
|
3,686,763
(Restricted Stock Options Program – A + B Options)
|
2,312,324 Options and 832,234 Phantom Shares
|
2,209,869 Options and 1,143,145.00 Phantom Shares
|
ii) Date in which they will become exercisable
|
n.a.
|
5/1/2015
(Conventional Program - 20% of total volume total of options granted)
8/20/2015
(Restricted Program – B Options – 30% and 40% in the following anniversaries)
|
5/10/2015
(Conventional Program - 25% of total volume of options granted and 25% p.a. in the following anniversaries)
5/10/2015
(Restricted Program– B Options – 30% and in the following anniversaries 30% and 40% of total granted)
|
3/14/2017
|
4/27/2018
|
4/11/2019
|
iii) Maximum time limit for the exercising of options
|
n.a.
|
30 days (Restricted Program– B Options) and 10 years for the options of the Conventional Program
|
Restricted Stock Options Program: 30 days B Options
Conventional Program: 10 years
|
3 years
|
3 years
|
3 years
|
iv) Time limit on the restriction to the share transfer
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
v) Weighted average price for the exercising
|
n.a.
|
R$2.34 (Conventional Program)
R$0.01 (B Options of Restricted Program)
|
Restricted Stock Options Program:
B Options: R$0.01
Conventional Program: R$3.66
|
A Options: R$3.13
B Options: R$0.01
|
R$2.24
|
R$2.62
|
vi) Fair value of the options on the last day of the fiscal year
|
n.a.
|
R$2.34 (Conventional Program)
R$0.01 (B Options of Restricted Program)
|
Restricted Stock Options Program:
B Options: R$0.01
Conventional Program: R$3.66
|
A Options: R$3.13
B Options: R$0.01
|
R$2.24
|
R$2.62
|
e) Exercisable options
|
|
|
|
|
|
|
i) number of shares
|
n.a.
|
940,000
|
242,574 (Conventional Program)
|
n.a.
|
2,312,324
|
2,209,869
|
ii) maximum time limit for the exercising of options
|
n.a.
|
10 years
|
10 years
|
n.a.
|
3 years
|
3 years
|
iii) time limit on the restriction to the share transfer
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
n.a.
|
iv) weighted average price for the exercising
|
n.a.
|
R$2.34
|
R$3.66
|
n.a.
|
R$2.24
|
R$2.62
|
v) fair value of the options on the last day of the fiscal year
|
n.a.
|
R$2.34
|
R$3.66
|
n.a.
|
R$2.24
|
R$2.62
|
vi) fair value of total options on the last day of the fiscal year
|
n.a.
|
R$2.34
|
R$3.66
|
n.a.
|
R$2.24
|
R$2.62
|
61
13.7. The options exercised and shares delivered
referring to the share-based compensation for the Board of Directors and
Statutory Executive Officers
:
Fiscal Year 2014
|
Board of Directors
|
Statutory Executive
Officers
|
Program (Year)
|
|
2011
|
2012
|
2013
|
b) Total No. of Members
|
0
|
8
|
8
|
8
|
c) No. of Compensated
Members
|
0
|
8
|
8
|
8
|
d) Regarding exercised
options:
|
-
|
-
|
-
|
-
|
i) number of shares
|
n.a.
|
396,929
|
2,099,100
|
1,118,500
|
ii) weighted average exercise
price
|
n.a.
|
R$0.01
|
R$1.06
|
R$1.66
|
iii) total value of the difference
between exercise price and market value of the shares related to the
exercised options
|
n.a.
|
R$869,382
|
R$2,389,971
|
R$599,394
|
e) Regarding delivered shares, please
inform:
(1)
|
|
|
|
|
i) number of shares
|
n.a.
|
396,929
|
2,099,100
|
1,118,500
|
ii) weighted average acquisition
price
|
n.a.
|
R$0.01
|
R$1.06
|
R$1.66
|
iii) total value of the difference
between the acquisition price and market value of the acquired shares
|
n.a.
|
R$869,382
|
R$2,389,971
|
R$599,394
|
(1)
Under the model adopted by
the Company all the shares exercised are delivered.
(2)
All Statutory Officers who
exercised options during 2014 are being considered in this chart,
including 3 members who left the Company throughout the year of 2014,
thus, the number of members reported is 8.
|
Fiscal year 2015
|
Board of Directors
|
Statutory Executive
Officers
|
Program (Year)
|
|
2011
|
2012
|
2013
|
b) Total No. of Members
|
0
|
5
|
5
|
5
|
c) No. of Compensated
Members
|
0
|
5
|
5
|
5
|
d) Regarding exercised
options:
|
-
|
-
|
-
|
-
|
i) number of shares
|
n.a.
|
125,000
|
205,500
|
190,500
|
ii) weighted average exercise
price
|
n.a.
|
R$0.01
|
R$0.01
|
R$0.01
|
iii) total value of the difference
between exercise price and market value of the shares related to the
exercised options
|
n.a.
|
R$298,750
|
R$491,145
|
R$455,295
|
e) Regarding delivered shares, please
inform:
(1)
|
|
|
|
|
i) number of shares
|
n.a.
|
125,000
|
205,500
|
190,500
|
ii) weighted average acquisition
price
|
n.a.
|
R$0.01
|
R$0.01
|
R$0.01
|
iii) total value of the difference
between the acquisition price and market value of the acquired shares
|
n.a.
|
R$298,750
|
R$491,145
|
R$455,295
|
(1)
Under the model adopted by the Company
all the shares exercised are delivered.
|
Fiscal Year 2016
|
Board of Directors
|
Statutory Executive
Officers
|
Program (Year)
|
|
2012
|
2013
|
b) Total No. of Members
|
0
|
5
|
5
|
c) No. of Compensated
Members
|
0
|
3
|
5
|
d) Regarding exercised
options:
|
-
|
-
|
-
|
i) number of shares
|
n.a.
|
225,167
|
190,500
|
ii) weighted average exercise
price
|
n.a.
|
R$0.01
|
R$0.01
|
iii) total value of the difference
between exercise price and market value of the shares related to the
exercised options
|
n.a.
|
415,937
|
352,425
|
e) Regarding delivered shares, please
inform:
(1)
|
|
|
|
i) number of shares
|
n.a.
|
225,167
|
190,500
|
ii) weighted average acquisition
price
|
n.a.
|
R$0.01
|
R$0.01
|
iii) total value of the difference
between the acquisition price and market value of the acquired shares
|
n.a.
|
415,937
|
352,425
|
(1)
Under the model adopted by the Company
all the shares exercised are delivered.
|
|
|
|
|
|
|
62
13.8. Information required to understand the information
disclosed in items 13.5 to 13.7 - pricing method for the value of shares and
options
:
Brief Description of the Formats for the Granting of
Options
A. Traditional options in force (granted under Option Plan
2008, in the second and third granting of the 2012 and 2015
Programs)
Under this traditional option granting model, the options
granted to each beneficiary are divided into annual option lots, whose right to
exercise is acquired annually (except for 2015 Program, where lot is single,
with 3-year grace period as of the Program’s date of approval).
Every year, the Beneficiary must earmark a minimum
percentage of his annual bonus to the exercising of the option lot in force in
order to be able to acquire the right to exercise options in subsequent lots (in
other words, for the lots to be incorporated). If the bonus is not allocated to
the exercising of options, the future lots (not yet incorporated) of all the
Programs will are cancelled. Based on the partial exercising of options of a
given incorporated lot, the Beneficiary has a period of 10 years to exercise his
options partially or in full (except for 2015 Program, where the maximum term to
exercise the options is three years as of the expiration of the grace period).
In the case of the Beneficiary not allocating his bonus in the manner required
by the corresponding Program, this time limit is reduced to 3 years, in the case
of the lots already incorporated.
B. Restricted Stock Options (granted under Option Plan
2008, in the 2011 Program, the second set of options granted under the 2011
Program II, the first set of options granted under the 2012 Program, the 2013
Program and the 2014 Program).
The options granted are divided into A Options and B
Options. The lot of A Options is incorporated (that is to say, they become
exercisable) over the short term, and is available for exercising during a brief
period at an exercise price equivalent to the Market Value of the shares (except
in the case of the 2014 Program, when A Options are available for exercise after
3 years of the grant and along with the B Options). The B Options have an
exercise price equivalent to R$0.01 each and are divided into 3 annual lots,
available for exercising within 2, 3 and 4 years counting from the date of
granting, respectively. Exception to this rule is the first 2012 Program
Grant, where B Options, vested in 2 years counted from the grant date, in the
case of key employees; and in the 2014 Program first grant, destined to
Officers, where B Options are released for exercise within 3 years as of the
grant date, together with A Options, for 3-year extinguishing term.
The quantity of B Options available for exercise is
determined by the following factors:
·
Quantity of A options exercised, under the
terms described in item 13.4 above, and
63
·
Variation in the appreciation targets of
Company's shares in the period counting from the date of granting to the date of
affective exercising of the B Options (except for the 2014 Program, where the
adjustment will be in the A Options, according to TSR.
a.
pricing model
The models used by the Company for the pricing of the
options granted to its managers and employees are of the binomial model for the
traditional options and phantom shares and the Monte Carlo model for the format
of the Restricted Stock Options.
Binomial Model
The model is based on the premise that the behavior of the
share price in future periods can be approximated into two possible
trajectories: one ascending and the other descending. In this way it is
built on a “tree” of trajectories for the share price. The ascending factor and
the descending factor are determined based on the volatility of the share and
the interval of time between the steps of the “tree”. The trajectories for the
share price are determined up to the expiry date.
In parallel, the “tree” is also constructed representing
the value of the option for each period. The value of the option is determined
backwards, which is to say starting from maturity. At the end of period, it is
the owner of the option's decision whether to exercise it or not.
Monte Carlo Model
The Monte Carlo simulation is a popular alternative
method, which allows the incorporation of various sources of uncertainty. This
method comprises the execution of a number of steps: (1) determining the
processes of uncertainty and the generation of inputs based on a sample of the
distributions of the entry variables, (2) the carrying out of mathematical
operations with inputs so as to generate outputs
,
(3) repeating the previous steps
n
times, so as to obtain
n
outputs, and (4) through the results obtained, calculating
statistical data, such as average and standard deviation.
The calculation algorithm for the Monte Carlo simulation
consists of calculating the value of the option on its due-date for every
trajectory, so as to obtain an average of the values. The value of the option at
the starting time is given by the present value of the average found.
Bearing in mind that for the options granted under the
Restricted Stock Option format, the quantity of B Options depends on the
quantity of A Options exercised, as well as the application of a multiplier
adjustment calculated as a function of the variation of the Appreciation targets
for the Company's shares, the Monte Carlo method was adopted in the pricing of
the options under the format mentioned.
b. data and assumptions used in the pricing model,
including the weighted average share price, the exercise price, expected
volatility, life of the option, expected dividends and interest rates free of
risk
Date of calculation
According to Technical Pronouncement CPC 10, the options
must be valued on their respective granting date (in this case, the date of the
approval of the corresponding Program).
Weighted average share price
64
The price of the Company's shares considered as the basis
for the calculation of the respective options, is Market Value based on the
calculation of the exercise prices.
Exercise price
Traditional options granted:
The exercise price for the options granted under the
traditional format has been corrected in accordance with the variation in the
IGP-M index, with interest of 3% to 6% a year added up to May 6, 2010. So as to
incorporate this contractual condition, the exercise price has been corrected
periodically during the binomial “tree”, so that at the moment of exercising,
the value paid out refers to the corrected amount, up until the corresponding
rules were applied.
The inflation index curve was obtained from the Reference
Rates published by the
BM&FBOVESPA S.A. – São Paulo Stock
Exchange, having been interpolated for the respective due dates
. The method adopted was linear interpolation.
Options granted under the Restricted Stock Option
format:
The exercise price for the options granted under the
Restricted Stock Option format is: (i) calculated based on Market Value for A
Options and (ii) R$0.01 for B Options, without monetary correction over
time.
Grants in the Phantom Shares format:
An exercise price shall not apply to Phantom Shares, but
in order to the cost of Program be recorded, the price of R$0.00 was considered
in this model.
Expected volatility
For the calculation of expected volatility annualized
standard deviation was used taking the natural logarithms of the historic daily
variations in the Company's share price.
Option term
Traditional options granted:
For options granted following the traditional format, if
the Beneficiaries allocate a percentage of their annual bonus for the
acquisition of shares of a particular lot, the contractual period for the
exercising of the options in this lot is 10 years counting from the date that
the B Options become exercisable, in other words after their lock up period,
which may vary according to the Program in question (except for 2015 Program,
where the maximum term to exercise the options is three years as of the
expiration of grace period – the same treatment was given to the Phantom
Shares). If a percentage of the bonus is not allocated, the lots already
incorporated (that is to say, which are exercisable) will have a period of 3 to
be exercised.
Options granted under the Restricted Stock Option
format:
For these option grants, the life of the options was
obtained based on the contractual period of the option lock up period (that is
to say, based on the options that become available in the fiscal year), bearing
in mind that under the Restricted Stock Option, format, the options are of the
European type, that is to say exercisable only from a given date, and for a
relatively short period. For more information referring to the life of options
granted in accordance with the Restricted Stock Option format, see the other
sub-items in Item 13.
65
Dividends expected (dividend yield)
The dividend yield represents the ratio between the
dividend paid per share in a given period, and the price of the share in the
market. This variable was calculated based on the historic distribution of
dividends and interest on equity by the Company.
Risk-free interest rate
Risk-free interest rates were obtained with the Brazilian
Central Bank and referred to the Selic (Special System for Settlement and
Custody) rate on the respective option granting dates.
c. methods used and the assumptions assumed to incorporate
the expected effects of early exercise
It can be observed empirically that options are exercised
by their owners before the end of the life of the option, in the case of
traditional options. This behavior is due to various reasons, such as for
example, personal liquidity requirements and the impossibility of hedge
protection.
In this regard, the Company, so as to incorporate this
peculiarity, adopts the assumption that the options will be exercised from the
moment that the lots become exercisable, that is to say have been incorporated,
following the end of the respective lock up period. In this way, the option life
adopted in the calculations varies between 1 and 6 years, in accordance with the
number of lots and the corresponding lock up period is in which the options are
divided, seeing that the Beneficiaries may not exercise options of any type
before the end of the lock up period. In addition to this, for option pricing
purposes options exercised in advance as a result of the death or permanent
disability of the Beneficiary, or corporate events, have not been
considered.
d. calculation method of expected
volatility
For the calculation of expected volatility, the annualized
standard deviation has been used of the natural logarithms of the daily historic
variations in the Company's share price.
e. if there is any other characteristic of the option that
has been incorporated in the measuring of its fair value
Vesting period
During the vesting period, options may not be exercised by
the Beneficiaries. For options granted under the traditional format and phantom
shares, this condition was included in the calculations with respect to options
of the European type (which can only be exercised from a certain date) while
they have not yet been incorporated. After their incorporation, the options
become of the American type (that is to say, exercisable at any moment until the
cancellation date).
Restrictions on sale ("lock-up")
Contractually speaking, for A Options granted under the
Restricted Stock Option model there was a restriction that exists on the sale of
shares acquired to the exercising of options. This restriction, also known
as lock-up, varied between 1 and 2 years, in accordance with the specific
conditions of each Program.
This restriction implies the reduction in the value of the
shares for the Beneficiary considering that the shares are illiquid at the time
of exercising the options. So as to take these characteristics into account, a
discount has been applied due to lack of liquidity in the share price under the
“
protective put
” method. According to this method, the value of a
European type put option with a period equal to the lock up period is
calculated, assuming volatility and
interest rates free of risk identical to those used in
each plan. The value arrived at for this put option is therefore divided by the
value of the share price on the date of granting, so that there is a percentage
discount. This discount is finally applied to the option, reducing its
respective value.
66
This methodology is no longer applicable to the
Conventional Programs, as, under the terms of the Meeting of the Board of
Directors held on July 13, 2011, all restrictions for the transfer and sale were
released from this date for the shares already acquired and shares that might be
acquired, in such Programs.
13.9. Interest in shares or quotas and other convertible
securities, held by management and fiscal council members, grouped by
body
:
Shares issued by the Company
(1)
|
12/31/2016
|
|
Common Shares
|
|
Total Shares
|
|
|
|
|
|
|
Board of Directors
|
592,609
|
0.157%
|
|
592,609
|
0.157%
|
Fiscal Council
|
0
|
0.000%
|
|
0
|
0.000%
|
Executive Board
|
2,245,362
|
0.594%
|
|
2,245,362
|
0.594%
|
|
|
|
|
|
|
Total shares
|
378,066,162
|
100%
|
|
378,066,162
|
100%
|
(
1)
All shares are held directly.
13.10.
Information on the pension plan offered to members of the
Board of Directors and Statutory Executive Officers:
Not applicable, considering that no pension
plans have been offered either to members of the Board of Directors and
Statutory Executive Officers
.
13.11.
Maximum, minimum and average individual compensation of
the Board of Directors, the Statutory Executive Officers and the Fiscal
Council:
|
Statutory Executive
Officers
|
Board of Directors
|
Fiscal Council
|
12/31/2016
|
12/31/2015
|
12/31/2014
|
12/31/2016
|
12/31/2015
|
12/31/2014
|
12/31/2016
|
12/31/2015
|
12/31/2014
|
Total No. of members
|
5.00
|
5.00
|
5.17
|
7.00
|
7.00
|
7.67
|
3.00
|
3.00
|
3.00
|
No. of Compensated
members
|
5.00
|
5.00
|
5.17
|
7.00
|
7.00
|
7.67
|
3.00
|
3.00
|
3.00
|
Highest compensation amount
(R$)
|
3,200,555.23
|
3,588,078.04
|
3,909,593.35
|
365,140.80
|
365,140.80
|
366,832.12
|
79,200.00
|
79,200.00
|
76,200.00
|
Lowest compensation amount
(R$)
|
1,081,221.88
|
1,084,516.41
|
2,828,097.59
|
195,048.00
|
234,057.60
|
222,933.60
|
79,200.00
|
79,200.00
|
76,200.00
|
Average compensation amount
(R$)
|
2,109,274.53
|
2,271,271.65
|
3,459,607.43
|
282,712.79
|
290,236.11
|
271,607.62
|
78,686.07
|
79,200.00
|
75,609.00
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
Statutory Executive Officers
|
12/31/2016
|
The amounts reported above refer to
fixed compensation, short-term variable compensation, benefits and
long-term incentives, based on stock option programs of the Statutory
Executive Officers (book cost).
1.Value of the highest compensation: it
considers the highest annual individual compensation effectively received,
considering all members, and the member with the highest compensation
remained 12 months at the body.
2. Value of the lowest compensation: it
considers the lowest annual individual compensation effectively received,
only including the members who remained 12 months at the body, excluding
those who remained for shorter period.
3.Average value of compensation: total
compensation amount paid divided by the number informed of members in the
period under consideration.
|
12/31/2015
|
The amounts reported above refer to
fixed compensation, short-term variable compensation, benefits and
long-term incentives, based on stock option programs of the Statutory
Executive Officers (book cost).
1.Value of the highest compensation: it
considers the highest annual individual compensation effectively received,
considering all members, and the member with the highest compensation
remained 12 months at the body.
2. Value of the lowest compensation: it
considers the lowest annual individual compensation effectively received,
only including the members who remained 12 months at the body, excluding
those who remained for shorter period.
3.Average value of compensation: total
compensation amount paid divided by the number informed of members in the
period under consideration.
|
12/31/2014
|
The amounts reported above refer to
fixed compensation, short-term variable compensation, benefits and
long-term incentives based on stock option programs of the Statutory
Executive Officers.
1.Value of the highest compensation: it
considers the highest annual individual compensation effectively received,
considering all members, and the member with the highest compensation
remained 12 months at the body.
2. Value of the lowest compensation: it
considers the lowest annual individual compensation effectively received,
only including the members who remained 12 months at the body, excluding
those who remained for shorter period.
3.Average value of compensation: total
compensation amount paid divided by the number informed of members in the
period under consideration.
|
|
Board of Directors
|
12/31/2016
|
The amounts reported above refer to the
fixed compensation of the Board of Directors.
1.Value of the highest compensation: it
considers the highest annual individual compensation effectively received,
considering all members, and the member with the highest compensation
remained 12 months at the body.
2. Value of the lowest compensation: it
considers the lowest annual individual compensation effectively received,
only including the members who remained 12 months at the body, excluding
those who remained for shorter period.
3.Average value of compensation: total
compensation amount paid divided by the number informed of members in the
period under consideration.
|
12/31/2015
|
The amounts reported above refer to the
fixed compensation of the Board of Directors.
1.Value of the highest compensation: it
considers the highest annual individual compensation effectively received,
considering all members, and the member with the highest compensation
remained 12 months at the body.
2. Value of the lowest compensation: it
considers the lowest annual individual compensation effectively received,
only including the members who remained 12 months at the body, excluding
those who remained for shorter period.
3.Average value of compensation: total
compensation amount paid divided by the number informed of members in the
period under consideration.
|
12/31/2014
|
The amounts reported above refer to the
fixed compensation of the Board of Directors.
1.Value of the highest compensation: it
considers the highest annual individual compensation effectively received,
considering all members, and the member with the highest compensation
remained 12 months at the body.
2. Value of the lowest compensation: it
considers the lowest annual individual compensation effectively received,
only including the members who remained 12 months at the body, excluding
those who remained for shorter period.
3.Average value of compensation: total
compensation amount paid divided by the number informed of members in the
period under consideration.
|
|
|
Fiscal Council
|
12/31/2016
|
The amounts reported above refer to the
fixed compensation of the Fiscal Council.
1.Value of the highest compensation: it
considers the highest annual individual compensation effectively received,
considering all members, and the member with the highest compensation
remained 12 months at the body.
2. Value of the lowest compensation: it
considers the lowest annual individual compensation effectively received,
only including the members who remained 12 months at the body, excluding
those who remained for shorter period.
3.Average value of compensation: total
compensation amount paid divided by the number informed of members in the
period under consideration.
|
12/31/2015
|
The amounts reported above refer to the
fixed compensation of the Fiscal Council.
1.Value of the highest compensation: it
considers the highest annual individual compensation effectively received,
considering all members, and the member with the highest compensation
remained 12 months at the body.
2. Value of the lowest compensation: it
considers the lowest annual individual compensation effectively received,
only including the members who remained 12 months at the body, excluding
those who remained for shorter period.
3.Average value of compensation: total
compensation amount paid divided by the number informed of members in the
period under consideration.
|
12/31/2014
|
The amounts reported above refer to the
fixed compensation of the Fiscal Council.
1.Value of the highest compensation: it
considers the highest annual individual compensation effectively received,
considering all members, and the member with the highest compensation
remained 12 months at the body.
2. Value of the lowest compensation: it
considers the lowest annual individual compensation effectively received,
only including the members who remained 12 months at the body, excluding
those who remained for shorter period.
3.Average value of compensation: total
compensation amount paid divided by the number informed of members in the
period under consideration.
|
|
|
|
|
|
|
|
|
|
|
|
67
13.12. Mechanisms of compensation or indemnification for managers in the event of dismissal from their post or retirement:
None.
13.13. Percentage of total compensation of management and members of fiscal council who are related parties to the controlling shareholders:
None.
13.14. Compensation of management and members of the Fiscal Council, grouped by body, received for any reason rather than the position they hold:
None.
13.15. Compensation of management and members of the fiscal council recognized in the result of the direct or indirect controlling shareholders, company under common control and subsidiaries of the issuer:
None.
13.16. Other relevant information:
Long term incentives in the form of Granting of Options and Phantom Shares
The values presented as long-term incentives, based on stock options programs and Phantom Shares start to reflect the book costs of the program(s) granted this year or estimated to be granted - in this case, the 2017 fiscal year - which will be amortized gradually during grace period, therefore presented in our financial statements. These amounts are calculated upon the grant through Binomial (traditional Stock Option and Phantom Shares Programs) and Monte Carlo (Restricted Stock Option Programs) pricing models and the costs calculated are amortized during its duration (usually 4 years). The amounts reported do not represent the gains earned by the beneficiaries
.
68
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 27, 2017
Gafisa S.A.
|
|
|
By:
|
|
|
Name: Sandro Gamba
Title: Chief Executive Officer
|
Gafisa (PK) (USOTC:GFASY)
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