The year 2017 was marked by continuous growth of launches and sales, which reached, respectively, R$5.6 billion and R$6.1 billion. The results reflect the company’s ability to execute its strategy.

As a consequence, net profit reached R$653 million, 17.3% higher than in 2016. In the fourth quarter of the year, the company reached the highest level of Return on Equity (ROE) of the last three years, driven by increased revenue, improvement of gross margin and dilution of SG&A expenses. It reached the fifth consecutive year of cash generation, maintaining investment in land and low level of indebtedness.

Investment in land bank

The volume, quality and dispersion of land bank provide the company with a greater competitive advantage, which, in 2017, increased its presence in capitals and metropolitan regions where most of the housing demand and low supply are concentrated. The growth of investment in land bank was accompanied by an increase in launches and sales. The process of legalization of this portfolio continues to advance and increase the potential of launches.

The year ended with gross margin of 33.9%, an increase of 1.1 percentage point compared to the previous period. The performance of projects is at an appropriate level and with low discrepancy among them, which will contribute to maintenance of margins.

The higher efficiency in SG&A expenses was also maintained, which contributed to dilution. The nominal increase of commercial expenses was a reflex of the higher volume of sales and payment of commissions, while the increase in SG&A expenses translates the adjustment of provision of Profit Sharing (PLR) resulting from the achievement of targets.

The 40% increase of Ebitda, in turn, stems from evolution of the company’s operating income, with gross margin elevation, higher level of revenue and control of SG&A expenses.

At the end of 2017, MRV’s indebtedness was R$3,472 million, fully denominated in Brazilian Reais, indexed mainly based on the variation of the Interbank Deposit Certificate and the reference rate. The company actively seeks the elongation of the debt profile and, in due course, it may make issuances with longer maturities and adequate costs.

Negotiations to this purpose were conducted in 22 cities, in which the enterprises must comply with municipal legislation, which varies for each municipality, but it has factors in common as a principle, such as sustainable water management, energy efficiency and alternatives, sustainable design, reduction of Greenhouse Gas (GHG) emissions, among others. The benefit must be renewed annually, and the amount of the discount varies according to compliance with the requirements requested. In Curitiba (PR), the discount is already in force at Parque Challet, whose residents have a 50% discount in the tax due to maintenance by the company of a preserved forest area.

Another initiative that the company intends to extend to its residential enterprises is the installation of photovoltaic power trees for charging of mobile phones. The next tree is planned to be installed at Reserva Paulista’s square, an enterprise located in Pirituba.

The neighbors of works and municipalities in which the company operates are also benefitted by the actions of MRV, which, in 2017, invested more than R$223 million in urbanization projects, of which around 62 million in infrastructure and street paving services. Examples of such investment are Complexo Cachoeira, in Betim, where R$9.6 million were invested in construction of bridges and streets; the construction of roads in Urbanização dos Cantos II, in Campinas, which required R$6.2 million; and road paving at Urbanização Reserva Real, in Ribeirão Preto, which involved R$5.4 million.

MRV also invests in water, sewage and drainage networks (more than R$61.8 million in 2017, 55% of works concentrated in the State of São Paulo) and in school units and child care centers, whose executions amounted to R$6.9 million in the year. See the balance of investments in the tables below: 203-1

A demonstration of MRV’s commitment with reduction of GHG emissions was the achievement of the A- grade in the Carbon Disclosure Program (CDP) for performance and transparency in relation to climate change. The company was the only one in its industry to receive this score, together with seven other Brazilian companies, among 4,500 companies registered. There was also a case on training and management in the small suppliers chain by means of the Uniethos program, presented at the Ethos 360 Conference, held in Rio de Janeiro, and MRV presented a panel at the entity’s event in São Paulo on the photovoltaic power project in its enterprises.

In order to narrow ties with academy, the company optimized the Open Doors (Portas Abertas) action, in which students participate in guided visits to worksites to learn about not only the production processes, but also the focus on sustainability, which covers environment, innovation, waste management, climate change and sustainability seals contemplated by the company.

In 2017, the action promoted the planting of 181,366 trees, which means 66,000 (or 58%) above the target provided for the period, which was 115,000. Since 2010, 1 million trees have been planted by the company, a total of 550 thousand tons of CO₂ removed from the atmosphere, which corresponds to:

• CO₂ of 1,695,656 passengers flying between Rio and São Paulo.
• CO₂ emissions to drive 529,679,622 km by car.
• CO₂ emissions of 1,378 car trips equivalent to the distance between Earth and the Moon.
• CO₂ emissions of 94,976 car trips between Oiapoque (northernmost point in Brazil) and Chuí (southernmost point in Brazil).
• CO₂ volume absorbed by trees in an Atlantic Forest area of the size of 28 football fields.

The company also adopted Climas, a management platform for environmental indicators, such as GHG, waste, water and energy. The idea is to use technology to control eco-efficiency management, as the tool facilitates data governance, allows automation of calculations and provides strategic information for operation aligned with sustainability.

Despite adopting, in its works, some materials from recycling, such as ecological granite, MRV focuses on reuse. It maintains partnerships with six recycling entities in various municipalities to adequately allocate materials that can no longer be used. One of such entities is Coorlas, in Rio Grande do Sul, which, with only four months of partnership, resulted in a 40% reduction in the cost with dumpsters and disposal, in the Alameda dos Cristais enterprise.

All sites are equipped with boxes for storage of waste and in some of them there are bags to facilitate transportation of the material to partner cooperatives.

Moreover, the company makes efforts to have its large suppliers commit to the practice of reverse logistics. As a result of this work, it has entered into a contract, which is in force nationally, with companies that provide toners. In some municipalities, such as São Paulo, the practice is also applied to blocks waste – that return to production – and wood pallets in good state, reused for transportation of material.

The Sustainable Business Network [Rede de Negócios Sustentáveis] project, launched as a pilot in the previous year to allow the offer on online platform of material resulting from works, was replaced in 2017 by agreements with dumpsters suppliers so that they buy reusable or recyclable materials, such as carton, at a price lower than market price. In this system, the company no longer pays the cost of collection and also receives for the material discarded. The supplier, in turn, is benefited in so far as it pays less for the material and resells it, subsequently, at market value.

Materials used by weight/volume 301-1