CORPORATE PRESENTATION

August 2016

Disclaimer
The material that follows is a presentation of general background information about MRV Engenharia e Participaes S.A. and its subsidiaries (collectively, MRV or the Company) as of
the date of the presentation. It is information in summary form and does not purport to be complete. No representation or warranty, express or implied, is made concerning, and no
reliance should be placed on, the accuracy, fairness, or completeness of this information.
This presentation may contain certain forward-looking statements and information relating to MRV that reflect the current views and/or expectations of the Company and its
management with respect to its performance, business and future events. Forward looking statements include, without limitation, any statement that may predict, forecast, indicate or
imply future results, performance or achievements, and may contain words like believe, anticipate, expect, envisages, will likely result, or any other words or phrases of similar
meaning. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause actual results to differ
materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation. In no event, neither the Company nor any of its affiliates, directors, officers,
agents or employees shall be liable before any third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements
contained in this presentation or for any consequential, special or similar damages.
This presentation does not constitute an offer, or invitation, or solicitation of an offer to purchase any securities. Neither this presentation nor anything contained herein shall form the
basis of any contract or commitment whatsoever.
The market and competitive position data, including market forecasts, used throughout this presentation was obtained from internal surveys, market research, publicly available
information and industry publications. Although we have no reason to believe that any of this information or these reports are inaccurate in any material respect, we have not
independently verified the competitive position, market share, market size, market growth or other data provided by third parties or by industry or other publications. MRV does not
make any representation as to the accuracy of such information.
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without MRVs prior written consent.

Company Overview

36 years of history
MRV is the largest homebuilder in Brazil and one of the largest in the world. During the past 36 years, we achieved
important goals such as:

Over 300 thousand units launched.

MRV was also considered the company
the has built the most in 2015,
reaching 2.1 million sq. meters.

80 thousand keys were delivered in

2014 and 2015, with an important mark
of 1 key delivered every 3 minutes.

The most valuable brand in the sector,

according to Isto Dinheiro magazine.

Present in 142 cities.

1 out of 200 Brazilians is a MRV client.

More than 16,754 employees, that

together build 1 apartment every 3
minutes.

Certified by ISO 14001, OHSAS 18001.

GHG Protocol, MRV+Verde and Obra
Verde MRV seals.

MRV grows and never forgets its

compromise with the society and
the environment.
4

36 years of history
MCMV 3

MCMV 2
IPO

Start of
Geographic
Diversification

MRV
Foundation

Private Equity

Enactment of
Foreclosure /
Deed of Trust
by Financial
Institucions

MCMV 1

MRV LOG
foundation

Beginning of
relationship

Equity Follow-On
1st Negotiation
Correspondant
Banks Resume
Mortgage
Lending

3.000 units per year

ADRs Level1

25.000 units per year

40.000 units per year

Shareholders Structure
Free float represents
62% of shareholders equity.

Novo Mercado,
the highest level of Corporate Governance

Rubens Menin T.
de Souza 35,9%
Other
Shareholders;
49,5%

Orbis Investment
Management
Limited 11,6%

Executives and
Board Members
2,4%
Treasury Shares
0,7%

MRVE3
ADR OTCQX : MRVNY

BM&FBovespa Novo Mercado :

MRVNY
444,139,684 common shares
Daily average of negotiation in 2Q16
R$34.6 million

Cusip code

553479106

ISIN code

US5534791067

* June 30, 2016

Market Opportunities

In Brazil there is a significant housing demand, with rising and strengthening of low-income segment

Population by age group

Mortgage
Real Estate Financing as % of GDP

80 +

1%

70 to 79

3%

60 to 69

6%

50 to 59

40 to 49
30 to 39

9%
13%

15%

20 to 29

18%

10 to 19

17%

0 to 9

17%

2010
Period
Houses
(million)
Population
(million)

Source: FGV, OCDE, IBGE, United Nations, EY

2007

2017

2030

56.2

72.4

93.1

189.1

211.2

233.6

Brazilian population
in 2010:
190.755.799

3%
6%
10%
13%
15%

15%
14%

13%
11%

2030
Brazilian population
in 2030:
223.126.917

Source : Ita Presentation, jun/16

High potential of credit expansion

in Brazil.

SFH - Brazilian Housing Finance System

Funding

3% per year+TR
FGTS

Employers

After 05/03/2012:
If SELIC > 8.5% p.a.: TR + 6% p.a.
If SELIC 8.5% p.a.: 70% of
SELIC rate + TR

SFH
80%
65%

Saving
Deposits
30%3
R$ 493 billion
(Jul/16)
Source: Bacen

Other
Resources

5%

Mortgage
lending

Reserve
Requirements

Resources
Available

From 5% to
8.16% +TR

FGTS (CEF)
Resources

R$ 462.4 billion
(Jun/16)
Source: Caixa

Until 05/03/2012:
6% per year+TR

Unit prices

CEF
- Infrastructure
- Retirement
- Basic sanitation

20%
Outside
SFH

Borrowers

SBPE
Resources

Loans at Market
rate

From 9.4%
1 to 12%
+TR

Starting from
11.0% 2 +TR

Borrowers

MRV Focus

MRV Focus

Contributors

Units up to
R$225,000

Units up to
R$225,000 to
R$750,000*

Borrowers
Units up to
R$650,000*

Starting from 10% 2 +TR

Borrowers
Notes:
1) If the client has a salary account in CEF the interest rate can reach 9.0%+TR. In BB it can reach 9.65%+TR.
2) If the client has a salary account in the bank, the interest rate can reach 10.7%+TR.
3) 20% for compulsory deposit (remunerated by SELIC) and 10% for additional compulsory (corrected by TR)
* States of DF, MG, RJ, SP: R$ 750,000; other states: R$ 650,000.

FGTS
Net Collection (billion)

Withdrawals (R$ billion)

From 2016 to 2019 the FGTS budget is R$ 253.4 billion to

be invested in Housing.

Source: Caixa and FGTS Management Report

Obs: In 2007, retirement withdrawals increased significantly due to the spontaneous
retirement approval by Federal Supreme Court, reducing the net collection in the period.

10

Market Highlights

Competitive Advantages and Market Potential

Potential market penetration per month

MRV inhabitants x Landbank in PSV

(in units)

Northeast
3.5 million
(R$ 5.3 bi)

13,719

Nationwide Footprint
- Present in 20 States and Federal District
- 142 cities attended by the Company

Total
Potential
# of Cities x Gross Margin

Additional
Potential

Middle-west
1.5 million
(R$ 3 bi)

Southeast
11.5 million
(R$ 24.8 bi)

MRV Actual
Performance

Sales increment (0.72/1000 habitants)

Average sales / month (2015)

South
2.4 million
(R$ 3.9 bi)

12
Note: *Information from Statistics and Information Center, from Joo Pinheiro Foundation.

Market penetration in the MRV benchmark cities

Ribeiro Preto

Uberlndia

Rio Preto

In the MRV benchmark cities we have na average of 0.72 units per month/1000 inhabitants

Average Monthly Sales: 125

Average Monthly Sales: 100

Average Monthly Sales: 131

Inhabitants (MRV): 127,565 (28.83%)

Sales / 1000 MRV inhabitants: 0.98
Total population: 442,548

Inhabitants (MRV): 198,543 (29.98%)

Sales / 1000 MRV inhabitants: 0.50
Total population : 662,362

Inhabitantes (MRV): 174,625 (26.21%)

Sales / 1000 MRV Inhabitants: 0.75
Total population: 666,323

Increasing penetration in existing cities.

13

Competitive Advantages Market Leader in Brazil

% of launches in MCMV Program (Brackets II and III) in PSV
Launches Eligible to MCMV
Nominal Value (R$ billion) (Groups II and III)
10.8 10.5
8.5

7.7 7.4

7.6

6.7

6.1
4.6
3.3

2009

2010

2011

2012

MCMV (Groups 1, 2 and 3)

5.7 5.8

5.2

2013

4.0

2014

3.2 3.2

2015

2016

MCMV (Groups 2 and 3)

*2016 considers the period from January to June.

% of total launches in PSV

In 2Q16, MRV achieved important marks among the

listed companies:
63% of launches market share in bracket II and III of
MCMV Program;
42% of total launches in the year.
Note: The data are estimated and based on the listed Companies earnings releases.

14

Competitive Advantages Sales Structure

Sales channels:

We have over 3,000 internal brokers, 100% focused in MRV products.

We invest in training and sales techniques to enhance the productivity and quality of our sale process.
Management of commissioning policies of the internal team and definition of sales strategy.
15

Competitive Advantages Effective Marketing Campaigns

Marketing Investment:

ANNUAL INVESTIMENT
R$ 100 Million

REACHING
140 Million Brazilians (70% of population)

Investments Results:

R$ 2 Billion in virtual sales per year.

130 virtual attendant focused in high quality
attendance located in Belo Horizonte.

1,100 brokers focused in attending prospects that

have initiated contact through internet segregated in
80 virtual bases all over Brazil.

MAIN CHANNELS
Television 26%, Internet 20%, Trade MKT 19%, Newspaper 5%,
Other medias: 30%

16

Competitive Advantages Online and Social Midia leadership

Corporate
website

Sources: Google Analytics, MRV website, Blog, AppFacebook, App Android, App IOS and hotsites.

17

Client Relationship
#MeuMundoMelhor
+5,000,000
Views of the videos
#MeuMundoMelhor

Conexo MRV
+178,000
Views of the videos
Conexo MRV

Relationship Portal
General Accesses:

1,459,545
Client Access:

2016

67,246
Monthly Average of Single
Calls

Costumer Service

MRV in Midias

54,836
Number of
Answered
Calls
Monthly Average
March 2016

361,186 followers in Twitter

607,601 followers in Google +

Complaints:

0.32%*
Year 2016

Resolved demands on 1st contact

91.92%

+3 million of Facebook fans

2016

18
*Number of complaints over total clients (5 years) Annual view

Pre Sales (% MRV R$ million)

Pre-sales per launching period

Pre-sales per launching period

Launching
Period

Pre-sales %MRV (in %)

Before 2009 2009

2010

2011

2012

2013

2014

1Q15

2Q15

3Q15

4Q15

1Q16

2Q16

8%

1Q16
4Q15

17%

15%

11%

7%

8%

8%

17%

8%

8%

9%

8%

13%

9%

7%

5%

5%

27%

39%

31%

27%

24%

24%

23%

1Q15
2013

27%

24%

14%

15%

13%

14%

13%

9%

33%

26%

16%

13%

12%

10%

8%

5%

4%

38%

41%

22%

16%

13%

12%

11%

8%

7%

4%

55%

43%

18%

15%

11%

9%

6%

6%

4%

4%

3%

45%

27%

9%

3%

5%

4%

3%

2%

1%

1%

1%

1%

55%
100%

18%
100%

10%
100%

4%
100%

4%
100%

2%
100%

1%
100%

1%
100%

1%
100%

1%
100%

1%
100%

0%
100%

2012
2011
2010
Before 2009 100%
Total
100%

Inventory Duration

11%

13%

2Q15
2014

8%
5%

3Q15

2009

2Q16

Sales over Supply

19
Sales over Supply = Pre-sales / (Beginning Inventory + Launches)

Market leader in the main commercial indicators

20

Operational Advantages

Operational Advantages Landbank

ACCEDING CITIES *
Highlight to the growth of acceding cities. The purchases have been done strategically
in cities with potential demand and that will generate profitability to the company.
New acquisitions aim to balance inventory and reported cost reduction of 15% in
2015.

COMPETITIVE ADVANTAGES

Presence of an internal team responsible for prospection and legalization

Knowledge and assertiveness in acquisitions
Capacity of purchase in strategic locations
Agility in the legalization process

2Q16

Landbank (in units)

Landbank (in R$ billion)

22

*Accendin city is a city that has a sufficient inventory to ensure the estimated sales pace for the region is attained, i.e., the estimated potential for the city;

Production Team
10
Director
21 Managers

Approximately 16,574 people dedicated to Production

Employees

on

leadership

position

(directors,

managers

and

coordinators) have been working in the company for an average of 9 years.

At this time, we have 217 sites under construction, located in the following
areas:

42 Coordinators

340 Engineers

Northeast 38 (16.9%)

316 Engineering Auxiliary and

Building Technicians

461 interns

16,754 in other positions, being 7,631 MRV

employees and 9,123 third part employees.

Middle-west
15 (6.7%)

Southeast 145 (64.4%)

South 27 (12.0%)
23

Operational Advantages Mechanization and New Technologies

Hydraulic Kit

Concrete

Prefabricated and
standardized door

Standardization, Mechanization
and Intelligent Processes
Reduced workforce
Less generated waste
Greater production rationalization
Better site organization
Standardized projects
Aluminum Forms

Hoisted Slab

Higher speed of production

Strategic equipment team
Simplification of projects
Economically viable
Greater environmental sustainability
Increased work security
24

Operational Advantages - Cost Improvement

Sample
N dados

Average
Mdia

Stand.
Desvio
Deviation
Padro

Coef. of
Coeficiente
deVariation
Variao

2012

76

30,84

5,491

17,8%

2013

117

29,26

3,918

13,4%

2014

98

29,99

4,785

16,0%

2015

66

28,19

4,083

14,5%

Sum of the value of projection

cost

Boxplot of the Sum of the projection cost

Histogram of the Sum of the projection cost

Frequency

Years
Anos

Sum of projection cost value

It is possible to identify a decrease in average cost,

reaching the lowest level in 4 years.

Our change also decrease by comparing 2012 to

2014. Which means that our projects are getting
more consistent, with a lower cost.
Year

Increase of efficiency results in:

Less discrepancy in costs and quality;
Lower execution cost

26

Operational Advantages - Execution

Increase in production capacity in 1Q16, reflecting a decrease of 23% in PI (Productivity Index) in relation to 2015.
Increase of 23% in the PS (Production Speed), in 2015 compared to 2014.
Production in 1H16: over 17,045 units.

PI (Productivity Index): Shows how many people are necessary to

build one unit. The guideline is: the lower the indicator, the better
the result.
PS (Production Speed): Shows the monthly POC of the ongoing
projects. The guideline is: the higher the indicator, the better the
result.

27

Operational Advantages Gross Margin

Gross Margin evolution is due to:

Renegotiation with Suppliers

Increase of Productivity (PI)
Reduction of discrepancy between projects
Better conditions for land purchase

27

Operational Advantages Delivered Units

Delivered Units - 2015

Note: Units presented in (000) units.

28

Operational Advantage - Administrative Structure

Client Relationship
and Internal
Communication
+ 4.8 million views of
#MeuMundoMelhor videos.
+ 3.6 million acesses to the
Relationship Portal in 2015

+ 640 thousand estimated calls

answered in 2015
130 employees

Lower
G&A/Net
Revenue in
the sector

Specialized Services
R$ 450 million collected per
month
+ 3,000 current accounts
reconciled per month
+ 3,000 new registered contracts
per month
295 employees

166 thousand active clients

Information of
Technology
SSC Shared Service
Center
R$ 4.8 Billion in payments in 2015
55 thousand Invoices received per
month
18 thousand Employees paid per
month
285 Employees

R$ 86 million of investment in IT
(5 years)
11,000 IT users
15 million of scanned documents
99 employees
R$ 17,4 mn invested in inovation

29

Operational Advantage Efficient Administrative Structure

Productivity - G&A / Net Revenue 2Q16

1.03x

Due to our strong and

efficient operation, we
are able to dilute
expenses and report the
best G&A/Net Revenue
ratio in the sector.

1.15x
1.19x
1.25x
1.35x

2.19x
2.60x
2.62x
2.97x
4.16x
6.79x

30

Financial Advantages

Financial Advantages Crdito Associativo

Since simultaneous sales process started, MRV has

considerably decreased its collection period, contributing to
less working capital need per project launched.
Working Capital Need = Payables Receivables (inventory not included)

32

Financial Advantages
Consistent Cash Generation and low leverage

3 years of recurrent generation

Highlights:
Greater corporate rating in the sector (brAA-) by Fitch and Standard & Poors.
Enhancement of systems and processes from CEF in 2011 benefits since 2012;
Growth of operations from BB in Crdito Associativo model, started in 2013.

33

Consistency and stability of the Companys yields

Note: ROE excluding Equity income.

34

Financial Indicators
Net Revenue
(R$ million)

Gross Margin
%

35

Financial Indicators
Net Income
R$ million

Net Margin
%

36

Subsidiaries

Subsidiaries
Present in 25 cities and 9 estates

Extended experience in creating business and developing assets.

Controls complete cycle of development, construction and administration of its assets.
100% Greenfield

Full control of cycle,

Multi-tenant
Projects in modules
Flexible architecture
2 to 10 year contracts

Shopping Centers

Strip Malls

Industrial Lots

38

Subsidiaries

Development and commercialization of urban lots in residential, commercial and industrial segments, all
sustainably developed.
60%

Executives
40%

Urbamais operates (i) researching and identifying distinguished areas,

aiming to boost the success of its allotments, and (ii) planning and
executing the infrastructure and urbanism with high quality and
environmental awareness.

The companys advantages are based on the following pillars: strategic

location of its allotments, operational excellence, cost-benefit of the
projects, quality of infrastructure and urbanism, relationship with its clients
and professional management.
39

Results from Subsidiaries

1H16 Highlights

1H16 Highlights

Portfolio %LOG (in GLA) 151,574,610 sq. meters of GLA

Landbank with PSV of R$2.4 billion;

Approved GLA 1,028,328 sq. meters (%LOG)

565 commercialized units in 1H16, equivalents to a PSV of R$45.8 million;

Delivered GLA 627,251 sq. meters (%LOG)

SOS of 63% in 1H16

Net Revenue: R$ 48 million

Project delivery: 1st delivered allotment, the Parque Atlanta, with total

Adjusted Ebitda: R$ 36.5 million

PSV of R$354mn and 335 plots. By the end of 2Q16, 90% of its units were

Equity: R$1.5 Billion

already sold.

MRV share: 38%

Launches: During 2Q16, Urbamais launched its 4th project Jardim de

Campos, with 464 plots and a PSV of R$28mn. In only two weeks, 50% of
the plots were already sold.
Equity: R$ 24 million
MRV share: 60%
40

Contacts
Leonardo Corra
Chief Financial and Investor Relations Officer

Ricardo Paixo
Investor Relations and Financial Planning Officer

Matheus Torga
Investor Relations Manager
Phone:
E-mail:

(+55 31) 3615-8153

ri@mrv.com.br

This presentation is also available on our website:

ri.mrv.com.br
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