1q13 quarterly financial reports

7/30/2019 1Q13 Quarterly Financial Reports

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Mills Estruturas e Serviosde Engenharia S.A.(Convenience Translation into English fromthe Original Previously Issued in Portuguese)

Interim Financial Information for the

Quarter Ended March 31, 2013 andReport on Review of Interim FinancialInformation

Deloitte Touche Tohmatsu Auditores Independentes


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Mills Estruturas e Servios de Engenharia S.A.

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

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION


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MILLS ESTRUTURAS E SERVIOS DE ENGENHARIA S.A.

BALANCE SHEETAS AT MARCH 31, 2013 AND DECEMBER 31, 2012

(In thousands of Brazilian reais - R$)

Note 3/31/2013 12/31/2012ASSETS

CURRENT ASSETSCash and cash equivalents 3 24,510 44,200Marketable securities 4 138,039 159,606Trade receivables 5 199,379 194,778Inventories 6 29,946 26,938Recoverable taxes 7 26,504 35,021

Advances to suppliers 5,542 6,682Other assets 7,199 6,452

431,119 473,677NON-CURRENT ASSETSTrade receivables 5 2,072 2,549Recoverable taxes 7 31,169 30,717Judicial deposits 16 11,830 11,853

45,071 45,119

investments 8 87,392 87,392Property, plant and equipment 9 1,084,342 1,003,347

intangible assets 10 57,487 54,5261,229,221 1,145,265

TOTAL ASSETS 1,705,411 1,664,061

(continues)


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BALANCE SHEET

AS AT MARCH 31, 2013 AND DECEMBER 31, 2012(In thousands of Brazilian reais - R$) - Unaudited

Note 3/31/2013 12/31/2012LIABILITIES AND EQUITY

CURRENT LIABILITIESTrade payables 58,507 47,784Borrowings, financing and finance leases 11 38,501 41,796Debentures 12 17,772 12,994Payroll and related taxes 33,283 27,585

Income tax and social contribution 15 5,794 -Tax debt refinancing program (REFIS) 918 907Taxes payable 7,676 18,597Profit sharing payable 14 4,068 20,142Dividends and interest on capital payable 36,170 36,170Derivative financial instruments 23 1,570 800Other liabilities 8,846 7,752

213,105 214,527NON-CURRENT LIABILITIESBorrowings, financing and finance leases 11 30,506 30,203Debentures 12 537,654 537,459

Tax debt refinancing program (REFIS) 9,718 9,823Deferred taxes 15 1,849 2,381Provision for tax, civil and labor claims 16 10,342 9,919Other liabilities 296 423

590,365 590,208

TOTAL LIABILITIES 803,470 804,735

EQUITYIssued capital 17 539,490 537,625Capital reserves 17 2,230 233Earnings reserves 17 321,389 321,768Equity valuation adjustments 17 (809) (300)Retained earnings 39,641 -Total equity 901,941 859,326

TOTAL LIABILITIES AND EQUITY 1,705,411 1,664,061

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


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INCOME STATEMENTFOR THE PERIODS ENDED MARCH 31, 2013 AND 2012

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

Note 3/31/2013 3/31/2012

Net revenue from sales and services 19 239,889 199,140Cost of sales and services 20 (107,023) (87,380)

GROSS PROFIT 20 132,866 111,760General and administrative expenses (62,224) (50,194)

OPERATING PROFIT 70,642 61,566

Finance income 21 3,908 1,364Finance costs 21 (14,164) (12,619)

FINANCE COSTS, NET (10,256) (11,255)

PROFIT BEFORE INCOME TAX AND SOCIALCONTRIBUTION 60,386 50,311

Income tax and social contribution 15 (21,125) (17,646)

PROFIT FOR THE PERIOD 39,261 32,655Basic earnings per share - R$ 18(a) 0.31 0.26Diluted earnings per share - R$ 18(b) 0.31 0.25



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STATEMENT OF COMPREHENSIVE INCOMEFOR THE PERIODS ENDED MARCH 31, 2013 AND 2012(In thousands of Brazilian reais - R$, unless otherwise stated) - Unaudited

Note 3/31/2013 3/31/2012

PROFIT FOR THE PERIOD 39,261 32,665

OTHER COMPREHENSIVE INCOMECash flow hedge 23 (509) (1,926)

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 38,752 30,739



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STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED MARCH 31, 2012(In thousands of Brazilian reais - R$) - Unaudited

Share Earnings reserves Equitycapital

subscribedCapitalreserve Legal Expansion

Earningsretention Special

valuationadjustments

Retainedearnings Total

AT JANUARY 1, 2012 527,587 (5,581) 13,192 61,243 135,268 2,329 2,102 - 736,140

Capital contribution - share issue 403 - - - - - - - 403Stock option plan - 921 - - - - - - 921Realization of special reserve - Tax amortization

of Itapo merged goodwill - - - - - (380) - 380 -Comprehensive income for the period - cash flow

hedge - - - - - (1,926) - (1,926)Profit for the period - - - - - - - 32,665 32,665AT MARCH 31, 2012 527,990 (4,660) 13,192 61,243 135,268 1,949 176 33,045 768,203



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STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED MARCH 31, 2013(In thousands of Brazilian reais - R$) - Unaudited

Share Earnings reserves Equitycapital Capital Earnings valuation Retained

subscribed reserve Legal Expansion Special retention adjustments earnings Total

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

Capital contribution - share issue 1,865 - - - - - - - 1,865Stock option plan - 1,998 - - - - - - 1,998Realization of special reserve - tax amortization

of Itapo merged goodwill - - - - (380) - - 380 -Comprehensive income for the period - cash flow

hedge - - - - - - (509) - (509)Profit for the period - - - - - - - 39,261 39,261

- - - - - - - - -

AT MARCH 31, 2013 539,490 2,231 20,768 61,243 428 238,949 (809) 39,641 901,941



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STATEMENT OF CASH FLOWSFOR THE PERIODS ENDED MARCH 31, 2013 AND 2012

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

3/31/2013 3/31/2012CASH FLOWS FROM OPERATING ACTIVITIES

PROFIT BEFORE INCOME TAX AND SOCIAL CONTRIBUTION 60,386 50,311

Adjustments:Depreciation and amortization 31,323 24,675Provision for tax, civil and labor claims 486 1,040Accrued expenses on stock options 1,998 921

Profit sharing payable 3,974 3,600Gain on sale of property, plant and equipment and intangible assets (10,166) (7,386)Interest, indexation and exchange differences on borrowings,

contingencies and judicial deposits 12,644 11,500Allowance for doubtful debts 4,996 6,410

45,255 40,760Changes in assets and liabilities:

Trade receivables (9,120) (7,194)Inventories (3,008) (3,863)Recoverable taxes 14,949 3,397Judicial deposits 23 (77)Other assets 393 9,258Trade payables 2,445 (1,485)Payroll and related taxes 5,698 1,310Taxes payable (10,921) (48)Other liabilities 1.643 (1,006)

2,102 292Lawsuits settled (63) (2,585)Interest paid (7,919) (2,463)Income tax and social contribution paid (8,871) (15,132)Profit sharing paid (20,048) (7,917)

NET CASH GENERATED BY OPERATING ACTIVITIES 70,842 63,266

(continues)


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STATEMENT OF CASH FLOWS

FOR THE PERIODS ENDED MARCH 31, 2013 AND 2012(In thousands of Brazilian reais - R$) - Unaudited

3/31/2013 3/31/2012Cash flows from investing activities:

Marketable securities 21,567 -Purchases of property, plant and equipment and intangible assets (*) (119,525) (73,006)Proceeds from sale of property, plant and equipment and intangible assets 8,306 9,720

NET CASH USED IN INVESTING ACTIVITIES (89,652) (63,286)

Cash flows from financing activitiesCapital contributions 1,865 403Repayment of borrowings (3,733) (8,692)Borrowings raised 988 3,391

NET CASH GENERATED BY FINANCING ACTIVITIES (880) (4,898)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS, NET (19,690) (4,918)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THEPERIOD (Note 3) 44,200 35,179

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD(NOTE 3) 24,510 30,261

(*) PIS and COFINS credits are included in total purchases of property, plant and equipment andintangible assets.



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STATEMENTS OF VALUE ADDED

FOR THE PERIODS ENDED MARCH 31, 2013 AND 2012(In thousands of Brazilian reais - R$) - Unaudited

3/31/2013 3/31/2012REVENUES:Sales of merchandise, products and services 293,801 226,401Cancelations and discounts (28,123) (7,619)Other revenues (sale of assets) 773 1,758Allowance for doubtful debts - Recognition (4,996) (6,410)

261,455 214,130INPUTS PURCHASED FROM THIRD PARTIES

Cost of sales and services (7,424) (5,245)Materials, energy, outside services and other (42,972) (26,364)Write-off of leased assets (5,640) (2,266)Other - (11)

(56,036) (33,886)Gross value added 205,419 180,244

Depreciation, amortization and depletion (31,323) (24,675)Wealth created by the Company 174,096 155,569Wealth received in transfer:

Finance income 3,783 1,364Wealth for distribution 177,879 156,933

DISTRIBUTION OF WEALTHPersonnel and payroll taxes 58,752 58,225Salaries and wages 45,529 45,873Benefits 9,861 9,503Severance Pay Fund (FGTS) 3,362 2,849

Taxes and contributions 59,356 49,048Federal 55,372 45,723State 1,618 976Municipal 2,366 2,349

Lenders and lessors 20,510 16,995Interest and exchange differences 14,154 12,618Leases 6,356 4,377

Shareholders 39,261 32,665Retained earnings/loss for the period 39,261 32,665

Wealth distributed 177,879 156,933



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MILLS ESTRUTURAS E SERVIOS DE ENGENHARIA S.A.NOTES TO THE INTERIM FINANCIAL INFORMATIONFOR THE QUARTER ENDED MARCH 31, 2013

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

1. GENERAL INFORMATION

Mills Estruturas e Servios de Engenharia S.A. ("Mills" or "Company") is a publicly-tradedcorporation with registered offices in the City of Rio de Janeiro, Brazil. The Company

basically operates in the construction and industrial maintenance markets, engaging in thefollowing principal activities:

(a) Rental and sale, including export, of steel and aluminum structures for constructionworks, as well as reusable concrete forms, along with optional supply of related

engineering projects, supervisory and assembly services.(b) Rental, assembly, and dismantling of access tubular scaffolding in industrial areas.

(c) Performance of industrial painting, sand-blasting, heat insulation, boilermaker andrefractory services, as well as other services inherent in such activities.

(d) Sale, lease and distribution of aerial work platforms and telescopic manipulators, aswell as parts and components, and technical assistance and maintenance services forsuch equipment.

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

The accounting information contained in this interim financial information was approved bythe Companys Board of Directors and authorized for issue on May 3, 2013.

2. PRESENTATION OF INTERIM FINANCIAL INFORMATION

2.1. Basis of presentation

The Companys interim financial information comprises the interim financialstatements and has been prepared in accordance with Accounting Pronouncement CPC21, which addresses interim financial reporting, and in accordance with International

Accounting Standard (IAS) 34.

This interim financial information does not include all the information and disclosuresrequired in annual financial statements and should, therefore, be read in conjunctionwith the financial statements of Mills for the year ended December 31, 2011, whichhave been prepared in accordance with accounting practices adopted in Brazil andInternational Financial Reporting Standards (IFRSs) issued by the InternationalAccounting Standards Boards (IASB).

In compliance with Brazilian Securities Commission (CVM) Circular 003/2011, ofApril 28, 2011, we present below the notes to the most recent annual financial

statements (for the year ended December 31, 2012), which, in view of the lack ofsignificant changes this quarter, are not being reproduced in full in this interimfinancial information:


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The notes not included in the period ended March 31, 2013 are the Summary ofsignificant accounting policies, Critical accounting judgments and key estimates andassumptions, Financial risk management, Capital management and Tax debt

refinancing program (REFIS), represented, in the financial statements for 2012, bynotes 2, 3, 4, 5 and 19, respectively.

2.2. Basis of preparation

The accounting policies, calculation methods, significant accounting judgments,estimates and assumptions used in this interim financial information are the same usedin the financial statements for the year ended December 31, 2012, disclosed in Note 2.These financial statements were published on March 13, 2013 on the newspaper ValorEconmico and the Official Gazette of the State of Rio de Janeiro.

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

The information related to the Accounting Pronouncements and InterpretationsRecently Issued did not suffer significant changes in relation to that disclosed in Note2.4 to the Financial Statements for the Year Ended December 31, 2012. Below is thelist of new and revised standards and interpretations already issued but not yetadopted:

Amendments to IAS 32 Offseting Financial Assets and Financial Liabilities (1), andIFRS 9 Financial Instruments (2).

(1) Effective for annual periods beginning on or after January 1, 2014.(2) Effective for annual periods beginning on or after January 1, 2015.

3. CASH AND CASH EQUIVALENTS

3/31/2013 12/31/2012

Cash and banks 4,510 6,682Short-term investments 20,000 37,518

24,510 44,200

The balances recorded as cash and cash equivalents refer to deposits and highly liquid short-term investments, readily convertible into a known amount of cash and subject to aninsignificant risk of change in value. As at March 31, 2013, short-term investments refer to

bank deposit certificates (CDBs) issued by bank Santander , remunerated at a rate of 103.5%of the interbank deposit certificate (CDI) (103.5% at December 31, 2012).


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4. MARKETABLE SECURITIES

The balance of R$138,039 recognized as marketable securities as at March 31, 2013(R$159,606 as at December 31, 2012) refers to short-term investments with BancoSantander, through bank deposits, yielding 103.5% of the Certificate of Interbank Deposit(CDI). The balance of this account will be used mainly for purchase of the Company's

property, plant and equipment.

5. TRADE RECEIVABLES

3/31/2013 12/31/2012

Construction division 52,142 52,867Jahu division 76,477 66,585Industrial services division 54,177 59,041Mills rental division 56,234 51,290Events division (**) 4,120 4,247

243,150 234,030

Allowance for doubtful debts (*) (41,699) (36,703)

201,451 197,327Current 199,379 194,778

Non-current 2,072 2,549

(*) The allowance for doubtful debts is calculated based on the amount consideredsufficient to cover potential losses on the realization of receivables, considering anindividual analysis of the Companys major customers.

(**) Amount receivable from sale of property, plant and equipment of the events division,which was discontinued in 2008.

As at March 31, 2013, trade receivables totaling R$41,699 (2012 - R$36,703) were accrued.The increase in the amount of this allowance refers basically to the accrual of the balancereceivable from that during the first quarter of 2013 were having difficulties to discharge their

obligations.

Mills holds receivables corresponding to assets of the Events Division, whose activities havebeen discontinued. Part of these assets was sold in the course of 2008 and 2009 underagreements for sale of chattels with reserve of title entered into on May 20, 2008 and February18, 2009. The total amount will be received over a period not exceeding eight years, and theinstallments are adjusted using the percentage fluctuation of the Extended Consumer PriceIndex (IPCA). As at March 31, 2013, the asset is adjusted at present value and management,

based on the collaterals provided for in the agreement, believes that the amount will be fullyrealized by the due date of the last installment.


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To determine whether or not trade receivables are recoverable, the Company takes intoconsideration any change in the customers creditworthiness from the date the credit was

originally granted to the end of the reporting period. The credit risk concentration is limitedbecause the customer base is comprehensive and there is no relationship between customers.The Company does not have any customer concentration in its revenue or trade receivables asno single customer or corporate group represents 10% or more of its trade receivables in anyof its segments.

The aging list of the Companys trade receivables is as follows:

3/31/2013 12/31/2012

Current 130,754 130,420Current (bills with original due dates extended) 11,496 11,6881 to 60 days past due (*) 47,646 40,57761 to 120 days past due (*) 11,309 15,359More than 120 days past due (*) 41,945 35,986Total 243,150 234,030

(*) The analysis above was conducted considering the extended due dates of the bills.

In the accounts receivable is included in March 31, 2013, the balance of R$ 14,216 (R$ 10,228December 31, 2012) related to Jahu sales of raw materials to industrializers of the EasySetwhose payment terms, by their own characteristics, is more than 120 days, higher, therefore,

than the average payment terms of other clients of that Division.

6. INVENTORIES

3/31/2013 12/31/2012

Raw materials 7,093 7,327Finished goods 7,777 8,170Replacement parts and supplies 8,318 7,763Advances for inventories 6,129 3,202Other 629 476

Total 29,946 26,938

Inventories of raw materials, finished goods and advances for inventories are linked to made-to-order manufacturing processes to meet the demand of the Company and its customers.Inventories of spare parts are intended mainly for the access equipment. All inventories arestated at average cost.


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7. RECOVERABLE TAXES

3/31/2013 12/31/2012

Taxes on revenue (PIS and COFINS) (*) 56,219 54,724Income tax (IRPJ) and social contribution (CSLL) 791 6,453State VAT (ICMS) 98 3,618Other 565 943

57,673 65,738

Current 26,504 35,021Non-current 31,169 30,717

(*) PIS and COFINS credits refer basically to the amounts recoverable on purchases ofproperty, plant and equipment and that will be offset against non-cumulative PIS andCOFINS federal tax obligations. Mills expects that these credits will be realized by2016.

8. INVESTMENTS

a) Investment carried at cost

On February 8, 2011 the Company acquired 25% equity of Tubular Structures SA Rohr

("Rohr"), for 90,000. Rohr is a private company specializing in access engineering andsupply of construction solutions, which mainly operates in the heavy construction andindustrial maintenance.

During 2011, the Company received R $ 2,608 (net of tax) related to interest on capitalanteiores year, this amount was recorded as reducing the value of the investment, becauseit is Dividends from profits or reserves existing in date of purchase of shares.

In the fourth quarter of 2011 increased participation in Rohr SA Tubular Structure (Rohr)from 25% to 27.47%, resulting from the repurchase by Rohr 9% of its shares, which arecurrently in your treasury and it will be canceled or distributed pro rata to its shareholders.

The Company evaluated its influence on the administration of Rohr and concluded thatdespite owning 27.47% of the invested capital, such investment should be recorded at cost

by the following facts: Mills has no power to participate in the elaboration and thedecisions on financial policies, operational and strategic Rohr, not control individually ortogether these policies and has no representation in the management of the investee.

Additionally, there is no shareholders' agreement that might give Mills the right to haveinfluence in the Administration invested. Based on these factors, the Company hasconcluded that no significant influence on the investee and maintain the investment

recorded at cost.

In December 2012 the Company recorded interest income of R $ 3,214 interest on capital


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of Rohr, for the years 2011 and 2012.


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9. PROPERTY, PLANT AND EQUIPMENT

Equipmentfor rental and

Rentalequipment

Totalleased Leasehold Buildings Computers

Furnitureand Construction

Totalassets Total

operational use Leasing in progress equipment improvements and land and peripherals Vehicles Facilities fixtures in progress in use PP&EGross cost of PP&EBalances at December 31, 2012 1,123,154 96,182 46,566 1,265,902 12,767 25,156 9,501 4,274 1,457 7,174 1,691 62,020 1,327,922

Purchases 78,907 - 41,006 119,913 1,203 - 1,655 278 141 574 535 4,386 124,299Write-offs/ disposals (8,416) (1,818) - (10,234) - - - - - (5) - (5) (10,239)Adjustment for PIS and COFINS

credits (6,884) - - (6,884) - - - - - - - - (6,884)

Reclassification 706 (706) - - - - - - - - - - -Balances at March 31, 2013 1,187,467 93,658 87,572 1,368,697 13,970 25,156 11,156 4,552 1,598 7,743 2,226 66,401 1,435,098

Accumulated depreciationBalances at December 31, 2012 (295,534) (12,890) - (308,424) (3,104) (1,080) (5,718) (2,522) (654) (3,073) - (16,151) (324,575)

Deprecia tion (27,291) (2,340) - (29,631) (339) (177) (342) (128) (25) (138) - (1,149) (30,780)Write-offs/disposals 3,704 895 - 4,599 - - - - - - - - 4,599Reclassification 23,560 (23,560) - - - - - - - - - - -Balances at March 31, 2013 (295,561) (37,895) - (333,456) (3,443) (1,257) (6,060) (2,650) (679) (3,211) - (17,300) (350,756)

Annual depreciation rates - % 10 10 - - 10 4 20 20 10 10 - - -

Property, plant and equipment, netBalance at December 31, 2012 827,620 83,292 46,566 957,478 9,663 24,076 3,783 1,752 803 4,101 1,691 45,869 1,003,347Balance at March 31, 2013 891,906 55,763 87,572 1,035,241 10,527 23,899 5,096 1,902 919 4,532 2,226 49,101 1,084,342


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

We highlight below the main purchases during the first quarter of 2013, by group of assets:

Props 23,405Platforms 73,374Reusable concrete forms 2,057Suspended scaffolding and access structures 18,202Other 7,261Total purchases 124,299

As at March 31, 2013, depreciation for the period, allocated to direct costs of constructionworks and rentals and to general and administrative expenses, amounts to R$29,631 and

R$1,149 (R$23,754 and R$715 as at March 31, 2012), respectively.

Certain items of the Companys property, plant and equipment are pledged as collateral of

borrowing and financing transactions (Note 11).

Property, plant and equipment are measured at historical cost, less accumulateddepreciation. Historical cost includes costs directly attributable to the acquisition of itemsand may also include transfers from equity of any gains/losses on cash flow hedgesqualifying as referring to the purchase of property, plant and equipment in foreign currency.

Review of estimated useful life

For purposes of this review, based on a valuation conducted by technical experts theCompany issued an internal report on the estimated useful life, dated December 31, 2012,which was approved at an executive boards meeting. In order to prepare the report, thetechnical experts also considered the Companys operational planning for the coming fiscal

years, past experience, such as the level of maintenance and use of the items, externalelements for benchmarking, such as available technologies, manufacturers

recommendations and technical manuals, and the asset useful life rates.

There was no change in the remaining estimated useful lives of property, plant and

equipment items for 2012 and there were no events during the period ended March 31, 2013that would affect the valuation undertaken in 2012.

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


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10. INTANGIBLE ASSETS

SoftwareTrademarksand patents

Goodwill oninvestments

Total

intangibleassets

Gross cost of intangible assetsBalances at December 31, 2012 17,465 932 44,294 62,691Purchases 3,504 - - 3,504Balances at March 31, 2013 20,969 932 44,294 66,195

Accumulated amortizationBalances at December 31, 2012 (3,811) (122) (4,232) (8,165)Amortization (500) (43) - (543)Balances at March 31, 2013 (4,311) (165) (4,232) (8,708)

Annual amortization rates - % 20 20 - -

Intangible assets, netBalance at December 31, 2012 13,654 810 40,062 54,526Balance at March 31, 2013 16,658 767 40,062 57,487

Allowance for impairment of goodwill

Goodwill arose on the acquisition of Jahu in 2008 and the acquisition of GP Sul in 2011,which are considered business segments and cash-generating units (CGU) to which theentire goodwill is allocated.

The recoverable amount of the Jahu CGU was determined based on the actual cash flow ofthis segment in 2011, before income tax and social contribution, projected for a 10-year

period by the Company according to financial forecasts approved by management, at adiscount rate of around 12% per year and without taking into consideration any growth rate.

No need to recognize an allowance for impairment losses of this goodwill was identified.

The recoverable amount of the GP Sul CGU was determined based on a report at marketvalue issued by a specialized firm in August 2011.

The recoverable amount of this asset was determined based on economic projections to

determine the market value of GP Sul using the income approach by projecting discountedcash flows, in order to support the amount paid. The discount rate used to measure therecoverable amount was around 12% per year.

Management understands that any type of change reasonably possible in key assumptions,on which the recoverable amount is based, would not lead the total carrying amount toexceed the total recoverable amount of the cash-generating unit.


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11. BORROWINGS, FINANCING AND FINANCE LEASES

Borrowings were contracted by Mills for purchase of equipment and are being indexed tothe Certificate of Interbank Deposit (CDI) rate or at the Long-term Interest Rate (TJLP).

Borrowings indexed to the CDI rate also bear interest of between 1.70% and 4.5% per year,and principal and interest are amortized on a monthly basis.

The financing agreements for rental equipment have been contracted at TJLP charges plusinterest of 0.2% to 0.9% per year, with amortization on a monthly basis through June 2021.

Borrowings, financing and finance leases are as follows:

3/31/2013 12/31/2012Current:Borrowings and financing 31,293 31,672Finance leases 7,208 10,124

38,501 41,796Non-current:Borrowings and financing 22,013 22,314Finance leases 8,493 7,889Total 30,506 30,203

Borrowings and financing

Current liabilities

3/31/2013 12/31/2012Financing from financial institutions:Indexed to CDI plus interest of 1.70% to 4.5% per year 26,493 27,323Indexed to TJLP plus interest of 0.2% to 3.3% per year 4,800 4,349

31,293 31,672

Non-current liabilities

3/31/2013 12/31/2012

Financing from financial institutions:Indexed to TJLP plus interest of 0.2% to 3.3% per year 22,013 22,314

The financial institutions with which the Company has borrowing and financing transactionsas at March 31, 2013 are as follows:

Santander

Banco do Brasil

Banco Fibra

Ita BBA

HSBCBanco Alfa


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On May 27, 2011 the Company entered into a borrowing agreement with the Nassau Branchof Banco Ita BBA S.A. totaling US$15.8 million (equivalent to R$25.4 million). The

borrowing will be settled in a bullet payment on May 28, 2013 and interest will be paidsemiannually. In order to eliminate the foreign exchange risk on this borrowing, on the samedate a swap was contracted with Banco Ita BBA S.A. in the amount of R$25.4 million sothat the obligations (principal and interest) are fully converted into local currency andcarried out on the same maturity dates.

Accordingly, the financial instruments and related charges are considered in the Companys

balance sheet and income statement as a single financial instrument, thus reflecting in themost appropriate manner the amounts and indication of future cash flows, as well as therisks to which such cash flows will be exposed.

The table below shows a breakdown of the contractual guarantees outstanding on theindicated dates:

3/31/2013 12/31/2012Guarantees provided:

Receivables 231 904Collateral sale (*) 66,775 66,775

Total collaterals 67,006 67,679

Promissory notes 20,777 20,777

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

The promissory notes are enforceable guarantees and serve as additional guarantees inrelation to the borrowings and financing.

The maturities of the non-current portions as at March 31, 2013 are as follows:

2014 3,4402015 3,5352016 3,132

2017 3,1322018 to 2021 8,77422,013

Covenants

The financing agreement entered into with Banco Ita establishes limits for certain financialindicators linked to the Companys debt and interest payment capacity, as follows:

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

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

On the closing of the interim financial information for the quarter ended March 31, 2013 theCompany was compliant with all ratios.


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Finance leases

Refer basically to agreements for purchase of property, plant and equipment for rental forperiods between 36 and 60 months, with maturities through 2015 and indexed to the CDIplus interest of 2.5% to 3.80% per year. These obligations are collateralized by the leasedassets. The Company is not presenting the undiscounted debt payment cash outflows since

payments are calculated at a floating rate basis according to CDI fluctuation.

3/31/2013 12/31/2012

2013 7,208 10,1242014 7,420 6,7732015 1,073 1,116

Present value of minimum lease payments 15,701 18,013

15,701 18,013Current portion 7,208 10,124

Non-current portion 8,493 7,889

There are no significant differences between the present value of minimum lease paymentsand the market value of such financial liabilities. Interest charges are at floating rates and arerecognized on a prorated basis.

The Company has finance lease agreements with purchase option at the end of the

contractual term. The purchase option is based on the guaranteed residual value that can bepaid at the beginning of, end of or during the contractual term. There is also an option torenew the lease agreement for the period and under the terms agreed by the parties.

The Companys current finance leases do not contain any restrictive covenants.

12. DEBENTURES

1st issue of debentures

The first issue by the Company of a total of 27,000 unsecure, nonconvertible registereddebentures in single series was approved on April 8, 2011, totaling R$270,000 and unit facevalue of R$10.00. These debentures mature on April 18, 2016 and pay interest equivalent to112.5% of the CDI, payable semiannually, and will be amortized in three annual,consecutive installments, commencing on April 18, 2014. The transaction costs associatedwith this issue, in the amount of R$2,358, are being recognized as borrowing costs, inaccordance with the contractual terms of the issue.


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2nd issue of debentures

The second issue by the Company of a total of 27,000 unsecure, nonconvertible registereddebentures in two series was approved on August 3, 2012, totaling R$270,000 and unit facevalue of R$10.00. The transaction costs associated with this issue, in the amount of R$1,810,are being recognized as borrowing costs, in accordance with the contractual terms of theissue. The debentures have their maturities according to the issue of each series, as follows:

1st series - 16,094 debentures of the first series, totaling R$160,940, with maturity onAugust 15, 2017, not subject to adjustment for inflation. The nominal amount of thedebentures of the first series will be amortized in two annual installments as from thefourth year of their issue and interest paid semiannually will correspond to a surcharge of0.88% p.a. levied on 100% of the accumulated variation of the DI rate;

2nd series - 10,906 debentures of the second series, totaling R$109,060, with maturity onAugust 15, 2017, subject to adjustment for inflation based on the accumulated variationof the IPCA index. The nominal amount of the debentures of the second series will beamortized in three annual installments as from the sixth year of their issue and interest

paid semiannually will correspond to 5.50% p.a. of the amount adjusted for inflation asindicated above.

As at March 31, 2012 the balance of debentures including transaction costs is R$18,511 incurrent liabilities and R$540,000 in non-current liabilities, and R$17,772 and R$537,459,net of transaction costs, respectively. (As at December 31, 2012 the balance of debentures is

R$13,733 in current liabilities and R$540,000 in non-current liabilities, and R$12,994 andR$537,459, net of transaction costs, respectively.)

Covenants

The indentures of the debentures require the compliance of debt and interest coverage ratiosunder preset parameters, as follows:

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

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

On the closing of the interim financial information for the quarter ended March 31, 2013 theCompany was compliant with all ratios.


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13. RELATED PARTIES

a) Transactions and balances

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

As at March 31, 2013 the Company had no service agreements with members of itsBoard of Directors.

b) Management compensation

The amounts relating to compensation paid to the members of the Companys

management are as follows:

3/31/2013 3/312012

Salaries and payroll charges - officers 1,842 1,014Directors fees 460 529Profit sharing 320 356Share-based payments 425 327

3,047 2,226

14. EMPLOYEE BENEFITS

a) Employee profit sharing

The provision for profit sharing of employees and executives is set up on an accrualbasis and is accounted for as an expense. The determination of the amount, which ispaid in the year following the year the provision is set up, takes into consideration thetargets established together with the employees union under a collective laboragreement, in accordance with Law 10,101/00 and the Companys Bylaws.

The Companys Board of Directors decided on March 27, 2012 that the amount of the

profit sharing will no longer be set at 25% of profit and can vary between 20% and 30%

(*) of the economic value added (EVA), which is calculated based on operating profitdeducted from or added to non-recurring profits, less taxes and interest on capital. Themetrics for this calculation is approvedby the Companys management.

The profit sharing is recognized over the year and paid in the following year. Theamount recorded in current liabilities and profit as at March 31, 2013 is R$3,974(December 2012 - R$20,142 in current liabilities and March 2012 - R$3,600 in profit).

(*) The precise percentage within this band will be set by the last business day on therelevant year to generate the basis for the payment in the following year.


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b) Stock option plan

The Company has stock option plans approved by the shareholders meeting aimed atintegrating its executives in the Company development process over the medium andlong terms. These plans are managed by the Company and the options granted areapproved by the board of directors.

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

Shares in thousands

Plans Grantdate

Finalexercise

dateSharesgranted

Sharesexercised

Outstandingshares

Top Mills Special Plan 1/1/2008 7/10/2015 782 (700) 822010 Plan

2010 Program 5/31/2010 5/31/2016 1,475 (711) 7642011 Program 4/16/2011 4/16/2017 1,184 (261) 9232012 Program 6/30/2012 5/31/2018 1,258 - 1,258

Plan pricing and accounting

In order to price the cost of the portions of the plans relating to their equity component, thevolatilities applicable to each one were determined at the risk-free rates and stock prices

based on valuations of 6.6 times the EBITDA, less the net debt in the period of each plan,and the Company used the Black-Sholes model to calculate the fair values.

Program Grant

Weightedaverage

fair valueby option - R$

Weightedaverage fairvalue of theshare at the

grant date - R$Exercise

price - R$ VolatilityDividend

yield

Annualrisk-free

interest rate

Maximumperiod ofexercise

2010 First 3.86 11.95 11.50 31.00% 1.52% 6.60% 6 years2010 Second 5.49 14.10 11.50 31.00% 1.28% 6.37% 6 years2011 Only 6.57 19.15 19.28 35.79% 1.08% 6.53% 6 years2012 Basic 21.75 27.60 5.86 37.41% 0.81% 3.92% 6 years2012 Discretionary 12.57 27.60 19.22 37.41% 0.81% 3.92% 6 years

The plants granted as from 2010 were classified as equity instruments and the weightedaverage fair value of the options granted was determined based on the Black-Scholesvaluation model, considering the following assumptions:


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

3/31/2013 12/31/20122002 PlanCapital reserve 1,446 1,446

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

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

Number of exercisable options (thousands) 82 95Number of shares exercised (thousands) 973 960

Mills Rental Executives PlanCapital reserve 4,007 4,007Number of shares exercised (thousands) 391 391

2010 PlanCapital reserve 4,266 3,825

Number of exercisable options (thousands) 764 768Number of shares exercised (thousands) 711 670

2011 Plan (2010 Plan)Capital reserve 3,760 3,280

Number of exercisable options (thousands) 923 1,011Number of shares exercised (thousands) 261 125

2012 Plan (2010 Plan)Capital reserve 3,230 2,153

Number of exercisable options (thousands) 1,258 1,258

Total recognized as equity (accumulated) 17,857 15,859

Effect on profit (*) (1,998) (5,837)

(*) As at March 31, 2012, the effect on profit was an expense of R$921.


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15. INCOME TAX AND SOCIAL CONTRIBUTION

a) Reconciliation of the income tax and social contribution benefit (expense)

Reconciliation between the income tax and social contribution expense at the statutoryand effective rates is as follows:

3/31/2013 3/31/2012

Profit before income tax and social contribution 60,386 50,311Statutory income tax and social contribution rate 34% 34%Income tax and social contribution at statutory rate (20,531) (17,106)

Non-deductible provisions (*) and permanent differences (871) (456)Other 277 (84)Total current and deferred income tax and social contribution (21,125) (17,646)

Effective tax rate 34,98% 35,07%

Current income tax (21,395) (18,597)Deferred income tax 270 951

(21,125) (17,646)

(*) Non-deductible provisions consist of stock option expenses, gifts, debt waivers, andfines for tax infractions.

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

The deferred tax recognized in other comprehensive income is a result of the provisionfor gains/losses on cash flow hedging instruments transferred to the opening carryingamounts of the hedged items. The total income tax and social contribution recognized incomprehensive income as at March 31, 2013 is R$418.

c) Composition of income tax and social contribution deferred

The composition of the figures relating to income tax and social contribution taxes is asfollows:

DescriptionDecember31, 2012 Additions Write-offs

March31, 2013

Itapo goodwill 681 - (380) 301Discount to present value 129 - (43) 86Hedge on property, plant and equipment 1,252 - (854) 398Other provisions 470 - (134) 336Allowance for doubtful debts 6,059 447 - 6,506Finance leases (745) - 496 (249)Profit sharing - 1,485 - 1,485Provision for tax, civil and labor claims 3,415 144 - 3,559Swap derivatives 155 263 - 418Accelerated depreciation - (188) - (188)GP Andaimes Sul Locadora (190) (34) - (224)

Jahu goodwill (11,510) (720) - (12,230)Adjustment for inflation of judicial deposits (987) (21) - (1,008)Debentures (1,110) - 71 (1,039)


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(2,381) 1,376 (844) (1.849)The rationale and expectations for realization of the deferred income tax and socialcontribution are shown below:

Nature Realization rationale

Provision for tax, civil and labor claims Tax realization of lossAllowance for receivables impairment losses Filing of lawsuits and past-due creditsFinance leases Realization over straight-line depreciation

period of assetsProfit sharing For paymentDiscount to present value Tax realization of loss/gainOther provisions PaymentAccelerated depreciation For tax depreciation in five yearsItapo goodwill Tax amortization

Jahu goodwill/GP Sul goodwill Asset disposal/impairmentAdjustment for inflation of judicial deposits Deposit withdrawalDebentures Amortization of borrowing costDerivatives - Cash flow hedge Depreciation

The table below shows the expected realization of deferred income tax and socialcontribution as at March 31, 2013.

DeferredIR andCSLL

DeferredIR andCSLL

assets liabilities

2013 4,048 (238)2014 2,260 (308)2015 2,260 (308)2016 2,260 (201)2017 2,260 (107)Beginning 2018 - (13,775)Total 13,088 (14,937)

Transition Tax Regime

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


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

The Company is a party to tax, civil and labor lawsuits that have arisen in the normal courseof business, and is discussing these matters in both the administrative and legal spheres,which, when applicable, are backed by judicial deposits.

Based on the opinion of its outside legal counsel, management understands that the properlegal steps and measures already taken in each situation are sufficient to cover potentiallosses and preserve the Companys net assets, being reassessed periodically.

The Company does not have any contingent assets recorded.

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

3/31/2013 12/31/2012

Tax (i) 4,493 4,425Civil (ii) 396 444Labor (iii) 2,754 2,462Success fees (iv) 2,699 2,588Total 10,342 9,919

(i) Refers basically to a writ of mandamus filed by the Company when challengingthe increase in the PIS and COFINS rates (established by the non-cumulative

regime of these contributions, with the enactment of Laws 10,637/2002 and10,833/2003. The Company maintains a judicial deposit for this provision, relatedto the differences in rates.

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

(iii) The Company is a defendant in several labor lawsuits. Most of the lawsuitsinvolve claims for compensation due to occupational diseases, overtime,hazardous duty premium and salary equalization.

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

b)Breakdown of judicial deposits:

3/31/2013 12/31/2012

Tax (i) 8,541 8,440Labor (ii) 2,734 2,858Civil 555 555Total 11,830 11,853


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(i) In October 2001 the Company filed a lawsuit in the different cities where itoperates aimed at recovering the ISS paid since 1991 on the rental of its chattels.

The lawsuits are in progress, awaiting court decisions. After the enactment ofSupplementary Law 116/2003 in August 2003, Mills discontinued the payment ofISS on such rentals, although it continues taxing the assignment of its scaffoldingand other structures for temporary use.

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

17. EQUITY

a) Subscribed capital

The Companys fully subscribed and paid-in capital stock as at March 31, 2013 isR$539,490 (December 31, 2012 - R$537,625) represented by 126,491 registeredcommon shares without par value (December 31, 2012 - 126,399). Each common sharecorresponds to the right to one vote in decisions made by the shareholders.

Under the Companys bylaws, the Board of Directors may increase the capital up to a

ceiling of 200,000,000 shares, regardless of amendment to the bylaws or approval bythe shareholders, as well as stipulate the terms, issue price and form of payment of new

shares to be issued.

(a.2) Share issue

The Company's share issue has occurred as approved by the Companys Board of

Directors due to the exercise of stock options by beneficiaries. The shares issuedin the period were fully subscribed and paid up by their respective beneficiariesand are as follows:

Stock option plan

Approvalby the Board

of Directors

Numberof shares

issued Issue price

Capitalincrease

(in thousands)

2010 Program 2/8/2013 600 12.49 82010 Program 2/8/2013 3,050 12.40 382011 Program 2/8/2013 88,574 20.54 1,819

92,224 1,865


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

3/31/2013 12/31/2012

Numberof shares

(in thousands) %

Numberof shares

(in thousands) %

ShareholdersAndres Cristian Nacht 15,596 12,34% 15,596 12.34%Snow Petrel S.L. 17,728 14,03% 17,728 14.03%HSBC Bank Brasil S.A. 6,323 5,00% 6,323 5.00%Other signatories of the Company's

Shareholders' Agreement (*) 11,826 9,36% 11,826 9.36%Other 75,018 59,27% 74,926 59.27%

126,491 100,00% 126,399 100.00%

(*) The other signatories of the Company's Shareholders' Agreement, all holders of individualinterests of less than 5% of the Company's capital, are represented in the capacity asshareholders, including for voting right exercise purposes, by Andres Cristian Nacht.

b) Earnings reserves

(b.1) Legal reserve

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

(b.2) Expansion reserve

The purpose of the expansion reserve is to provide funding to finance additionalinvestments in fixed and working capital and expand corporate activities. Underthe Companys bylaws, the ceiling of the expansion reserve is 80% of totalsubscribed capital.

(b.3) Special reserve

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

c) Capital reserve

The capital reserve incorporates the transaction costs incurred in capital funding,amounting to R$15,068, net of taxes, related to the distribution of shares under the IPO,the premium reserve of the stock options amounting to R$17,857 related to theemployees stock option plans, and the cost of the cancelled shares amounting toR$558, totaling a capital reserve of R$2,231 as at March 31, 2013 (December 31, 2012 -R$233).

d) Earnings retention

This earnings retention reserve refers to the remaining balance of retained earnings usedto fund the business growth project set out in the Companys investment plan, according


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to the capital budget proposed by management, to be submitted to and approved at aShareholders Meeting, pursuant to Article 196 of the Brazilian Corporate Law.


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e) Equity valuation adjustment - cash flow hedge

The cash flow hedge reserve incorporates the effective portion of the cash flow hedges

through March 31, 2013, amounting to R$809, net of taxes (December 31, 2012 -R$300).

f) Mandatory minimum dividends

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

18. EARNINGS PER SHARE

a)Basic

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

period.

3/31/2013 3/31/2012

Profit attributable to owners of the Company 39,261 32,665Weighted average number of common shares issued (thousands) 126,477 125,689

Basic earnings per share 0.31 0.26

b)Diluted

Diluted earnings per share are calculated by adjusting the weighted average number ofcommon shares outstanding to assume conversion of all dilutive potential commonshares. The Company has one category of dilutive potential common shares: stockoptions. A calculation is made for the stock options to determine the number of sharesthat would be acquired at fair value (determined as the annual average market price ofthe Companys share), based on the monetary amount of the subscription rights linkedto the outstanding stock options. The number of shares calculated as described above is

compared with the number of shares issued, assuming exercise of the stock options.

3/31/2013 3/31/2012Profit

Profit used to determine diluted earnings per share 39,261 32,665Weighted average number of common shares issued (thousands) 126,477 125,689Adjustments for:

Stock options (thousands) 1,337 2,575Weighted average number of common shares for diluted earningsper share (thousands) 127,814 128,264

Diluted earnings per share 0.31 0.25


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19.NET REVENUE FROM SALES AND SERVICES

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

3/31/2013 3/31/2012

Rentals 206,704 157,716Sales 13,549 9,239Technical assistance 51,366 47,567Indemnities and recoveries 22,182 11,879Total gross revenue 293,801 226,401Taxes on sales and services (25,789) (19,642)

Cancelations and discounts (28,123) (7,619)Total net revenue 239,889 199,140

20. COST OF SALES AND SERVICES AND GENERAL AND ADMINISTRATIVEEXPENSES (BY NATURE)

The costs refer mainly to personnel expenses for assembly and dismantling of Company-owned leased assets, when such assembly is carried out by Mills itself, the equipment subletfrom third parties when the Companys inventory is insufficient to meet demand, freight for

transportation of equipment between branches and occasionally to customers, and expenses

on supplies consumed in the projects, from personal protective equipment (PPE) to wood,paint and thermal insulation.

General and administrative expenses refer to the management of each Company contract,encompassing the project teams and sales function engineers, which correspond basically tosalaries, payroll taxes and benefits, and other expenses on travel, representations andcommunications, as well as the administrative function overheads.

3/31/2013 3/31/2012

Nature

Directproject andrental costs

General andadministrative

expenses Total

Directproject andrental costs

General andadministrative

expenses Total

Personnel (42,691) (30,332) (73,023) (39,787) (24,183) (63,970)Third parties (1,601) (5,490) (7,091) (1,397) (4,553) (5,950)Freight (3,204) (64) (3,268) (3,070) (273) (3,343)Construction/ maintenance material and

repair (11,213) (1,826) (13,039) (7,808) (708) (8,516)Equipment and other rentals (2,727) (3,629) (6,356) (1,928) (2,449) (4,377)Travel (2,728) (3,450) (6,178) (1,812) (2,409) (4,221)Sales (CMS) (12,173) - (12,173) (6,243) - (6,243)Depreciation (29,631) (1,149) (30,780) (23,754) (715) (24,469)Amortization - (543) (543) - (206) (206)Write-off of assets (886) - (886) - - -Allowance for doubtful debts - (4,996) (4,996) - (6,410) (6,410)Stock option plan - (1,998) (1,998) - (921) (921)Provisions - (486) (486) - (1,040) (1,040)

Profit sharing - (3,974) (3,974) - (3,600) (3,600)Other (169) (4,287) (4,456) (1,581) (2,727) (4,308)

(107,023) (62,224) (169,247) (87,380) (50,194) (137,574)


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21. FINANCE INCOME (COSTS)

a) Finance income

3/31/2013 3/31/2012

Interest income on past-due bills 619 373Income from short-term investments 2,998 833Discounts obtained 20 156Foreign exchange and inflation gains 145 -Other 126 2

3,908 1,364

b) Finance costs

3/31/2013 3/31/2012

Borrowing costs (1,608) (7,272)Inflation losses (117) (235)Interest on finance leases (413) (1,638)Interest - debentures (11,064) (2,571)Bank fees (72) (292)Tax on financial transactions (IOF) (4) (3)Other (886) (608)

(14,164) (12,619)

22. SEGMENT REPORTING

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

The Companys reportable segments are business units that offer different products andservices and are managed separately since each business requires different technologies andmarket strategies. The main information used by management to assess the performance of

each segment is as follows: total property, plant and equipment since these are the assets thatgenerate the Companys revenue and the profit of each segment to evaluate the return onthese investments. The information on liabilities by segment is not being reported since it isnot used by the Companys chief decision makers to manage the segments. Managementdoes not use analyses by geographic area to manage its businesses.

The Companys segments involve completely different activities, as described below, andthus their assets are specific for each segment. The assets have been allocated into eachreportable segment according to the nature of each item.

The Companys operations are segmented according to the organization and management

model approved by the Board of Directors, containing the following divisions:


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Construction division

This division provides specific engineering and equipment solutions, specifically in relationto concrete forms and props used in the construction of large structures, planning, design,technical supervision, equipment and related services.

Jahu division

This division supplies forms and concrete, props and scaffolding in the context of theservices performed, involving specialized engineering construction solutions, with emphasison the residential and commercial construction sector, by supplying planning, design,technical supervision, equipment and related services.

Industrial services division

This division supplies structures developed to permit access of personnel and suppliesduring the equipment and tubular scaffolding assembling phases, as well as for preventiveand corrective maintenance in large plants, including industrial painting, surface treatmentand insulation services.

Rental division

This division supplies motorized access equipment (aerial working platforms) and telescopicmanipulators for lifting personnel and carrying loads at considerable heights.

The accounting policies for the operating segments are the same described in the summaryof significant accounting policies. The Company assesses the performance by segment basedon pretax profit or loss as well as on other operating and financial indicators.


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Income statement by business segment

Construction Jahu Industrial services Rental Total

3/31/2013 3/31/2012 3/31/2013 3/31/2012 3/31/2013 3/31/2012 3/31/2013 3/31/2012 3/31/2013 3/31/2012

Net revenue 47,467 39,319 64,857 52,481 51,461 50,875 76,104 56,465 239,889 199,140(-) Costs and expenses (23,120) (20,437) (37,108) (26,175) (45,164) (44,703) (32,532) (21,584) (137,924) (112,899)(-) Depreciation and amortization (7,108) (5,493) (8,895) (7,100) (2,738) (2,752) (12,582) (9,330) (31,323) (24,675)

Operating profit 17,239 13,389 18,854 19,206 3,559 3,420 30,990 25,551 70,642 61,566

Finance income 1,146 253 520 387 1,775 238 467 486 3,908 1,364Finance costs (3,307) (2,856) (4,027) (3,837) (2,829) (1,787) (4,001) (4,139) (14,164) (12,619)Profit before IRPJ/CSL 15,078 10,786 15,347 15,756 2,505 1,871 27,456 21,898 60,386 50,311(-) IRPJ/CSL (5,275) (3,777) (5,368) (5,534) (876) (658) (9,606) (7,677) (21,125) (17,646)

Profit for the period 9,803 7,009 9,979 10,222 1,629 1,213 17,850 14,221 39,261 32,665

Assets by business segment

Construction Jahu Industrial services Rental Other Total

3/31/2013 12/31/2012 3/31/2013 12/31/2012 3/31/2013 12/31/2012 3/31/2013 12/31/2012 3/31/2013 12/31/2012 3/31/2013 12/31/2012

PP&E 227,185 214,221 328,032 309,293 68,205 73,162 460,920 406,671 - - 1,084,342 1,003,347Other assets 102,323 117,365 205,240 195,548 103,170 133,393 122,944 127,016 87,392 87,392 621,069 660,714Total assets 329,508 331,586 533,272 504,841 171,375 206,555 583,864 533,687 87,392 87,392 1,705,411 1,664,061


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23. FINANCIAL INSTRUMENTS

23.1. Category of financial instruments

The classification of financial instruments, by category, can be summarized as shownin the table below:

Carrying amount

3/31/2013 12/31/2012

Cash and cash equivalents 24,510 44,200Loans and receivables:

Trade receivables 201,451 197,327Judicial deposits 11,830 11,853

Financial liabilities measured at amortized costBorrowings and financing 53,306 53,986Finance leases 15,701 18,013Debentures 555,426 550,453Trade payables 58,507 47,784

Financial liabilities at fair valueDerivatives 1,570 800

Financial assets at fair valueMarketable securities 138,039 159,606

Equity financial instrumentsStock option plans 17,857 15,859

23.2. Fair value of financial instruments

Several Company policies and accounting disclosures require the determination of thefair value both for financial assets and liabilities and for non-financial assets andliabilities. The fair values have been determined for the purpose of measurementand/or disclosure based on the methods below. When applicable, additionalinformation on the assumptions used in calculating the fair values are disclosed in

specific notes applicable to such asset or liability.

The Company applies CPC 40/IFRS 7 for financial instruments measured in thebalance sheet at fair value, which requires disclosure of fair value measurements at thelevel of the following fair value measurement hierarchy:

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

In addition to the quoted prices, included in Level 1, inputs used by the market forassets or liabilities, whether directly (e.g. prices) or indirectly (e.g., derived from

prices) (Level 2).


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The Company does not have financial instruments measured at fair value that areclassified as Level 3, i.e., obtained based on valuation techniques that include

variables for the asset or liability, but which are not based on observable marketinputs.

The table below shows the Companys assets and liabilities measured at fair values asat March 31, 2013.

Level 2 balances

3/31/2013 12/31/2012AssetsMarketable securities 138.039 159.606Financial liabilities

Derivatives used for hedging 1.570 800

(a) Fair value of securities

Available-for-sale securities consist of short-term investments made with primefinancial institutions that are indexed to the CDI fluctuation. Considering thatthe CDI rate already reflects the interbank market position, it is assumed that thecarrying amounts of securities approximate their fair values.

(b) Fair value of trade receivables and payables

The fair value of trade and other receivables is estimated according to thepresent value of future cash flows, discounted at the market interest ratedetermined at the end of the reporting period.

The fair values of trade receivables and trade payables, considering as thecriterion for calculation the discounted cash flow method, are substantiallysimilar to their carrying amounts.

(c) Fair value of borrowings and financing

Fair value determined for disclosure purposes is calculated based on the present

value of principal and future cash flows, discounted at the market interest ratedetermined at the end of the reporting period. For finance leases, the interest rateis determined by reference to similar lease agreements.

The Companys management believes that the carrying amounts of borrowingsand financing, which are stated in the interim financial information, aresubstantially similar to their fair values.


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Borrowings and financing

Fair value Carrying amountDebt Indicator 3/31/2013 12/31/2012 3/31/2013 12/31/2012BNDES TJLP 26,769 26,211 26,813 26,664Working capital CDI 26,054 27,134 26,492 27,322Leasing CDI 15,675 17,796 15,701 18,0131st issue of debentures CDI 268,900 275,283 279,025 274,0672nd issue of debentures

1st series CDI 159,301 162,395 162,413 165,6742nd series IPCA 115,561 113,783 117,073 113,992

(d) Fair value of share-based payments

The fair values of the employees stock options and rights to Company shareappreciation are measured using the Black-Scholes approach. Changes inmeasurement include share prices on measurement date, the strike price of therelated instrument, the expected volatility (based on the historical weightedaverage volatility adjusted for expected changes based on publicly availableinformation), the average weighted life of the instruments (based on historicalexperience and the overall behavior of option holders), expected dividends andrisk-free interest rate (based on government bonds). Service conditions and

performance conditions outside the market, which are inherent to thetransactions, are not taken into account in determining the fair value.

(e) Derivatives

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

The fair value of interest rate swaps is based on quotations obtained withbrokers. These quotations are tested as to their reasonableness by discounting theestimated future cash flows based on the terms and maturity of each contract andusing market interest rates for a similar instrument calculated on themeasurement date. The fair values reflect the credit risk of the instrument andinclude adjustments to consider the credit risk of the entity and the counterparty,

when appropriate.

23.3. Derivative financial instruments - hedging

(a) Derivative policy

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


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Mills believes that the management of such risks is key to support its growthstrategy without potential financial losses that reduce its operating profits, as the

Company does not aim at obtaining financial gains through the use ofderivatives. Foreign currency risks are managed by the Finance Manager and theCFO, who evaluate possible exposures to risks and set guidelines to measure,monitor and manage the risk related to the Companys activities.

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

financing. Pursuant to the Companys bylaws, any contract or obligationassumed in amounts exceeding R$10,000 (ten million reais) has to be approvedby the Board of Directors, unless it is already set out in the Business Plan. Foramounts under R$100 (one hundred thousand reais) for periods of less than 90days, it is not necessary to contract hedge transactions. Other commitmentsshould be hedged against foreign exchange exposure.

The swap and NDF transactions are carried out to convert into reais futurefinancial commitments in foreign currency. At the time such transactions areentered into, the Company mitigates the foreign exchange risk by matching thecommitment amount and the exposure period. The derivative cost is pegged tothe interest rate, usually a percentage of the CDI rate. The swaps and NDFs withmaturities shorter or longer than the final maturity of the commitments may,over time, be renegotiated so that their final maturities match or approximate thefinal maturity of the commitment. Accordingly, on settlement date, the gain orloss on the swap or NDF can offset part of the impact of the exchangefluctuation in relation to the real, thus helping to stabilize cash flows.

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

present value using market rates that are impacted on the date of eachcalculation. This widely used methodology can present monthly distortions inrelation to the curve of the contracted derivative; however, the Company

believes that this is the best applicable method since it measures the financialrisk should an early settlement of the derivative be required.

Monitoring the commitments assumed and the monthly valuation of the fairvalue of the derivatives permits following up on the financial results and theimpact on cash flows, and ensure that the initially planned objectives areachieved. The calculation of the fair value of positions is made available on amonthly basis for management monitoring purposes.


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The derivatives contracted by the Company are intended to hedge its equipmentimport transactions against exchange rate fluctuation risks during the period

between the time an order is placed and the time the equipment is delivered inBrazil.

(b) Derivatives can be summarized as follows:

3/31/2013

AmountsNotional Fair receivable/

Type amount value payable

NDF 63,426 (1,569) (1,569)Forward US dollar purchase contracted 1.98 to 2.15 rate (USD)NDF 582 (1) (1)Forward euro purchase contracted 2.67 rate (EURO) 64,008 (1,570) (1,570)

12/31/2012

AmountsNotional Fair receivable/

Type amount value payable

NDF 152,868 (800) (800)Forward US dollar purchase contracted 2.05 to 2.15 rate (USD)

(c) Derivatives fair value calculation method

Derivatives are measured at present value at the market rate, on the base date ofthe future flow calculated using the contractual rates through maturity. For

capped or double-index contracts, the Company also takes into consideration theoption embedded in the swap contract.

(d) Hedge effectiveness calculation method

The Companys hedges (swaps) are aimed at hedging against the impact offoreign exchange fluctuations on its machinery and equipment imports. Thesetransactions are classified as hedge accounting.

The Company evidences the effectiveness of these instruments using the Dollaroffset method, which is commonly used by derivatives market players. This

method consists of comparing the present value, net of future exposures inforeign currency, of commitments assumed by the Company with the derivativescontracted for such foreign exchange hedging.

As at March 31, 2013, no ineffectiveness was recognized in profit or loss as aresult of the Companys hedging transactions.

(e) Gains and losses for the period

Since the Company evidences the effectiveness of the conducted hedgeaccounting swap transactions, the losses and gains on these derivative

transactions are recognized as a balancing item to the hedged assets (property,plant and equipment) as part of the initial cost of the asset at the same time theasset is accounted for. As at March 31, 2013 the amount of R$2,693 was


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transferred from equity and deducted from the initial cost of the equipment.


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The allowance for unrealized losses/gains is recognized in other liabilities/assets,in the balance sheet, as a balancing item to Equity valuation adjustments, inequity.

As at March 31, 2013, total unrealized gains on currency futures, recognized inOther comprehensive income, accumulated in equity, in line item 'Equityvaluation adjustments' and related to such future purchases scheduled, amountedto R$809 (unrealized losses of R$300 in 2012). The Company expects that the

purchases will occur in the next period, when the amount then deferred in equitywill be included in the carrying amount of the imported equipment.

(f) Embedded derivatives

All contracts with potential derivative instrument clauses or securities are

assessed by the Companys Finance Manager together with the legal counselteam before their execution, for guidance regarding any effectiveness testing, thedefinition of the accounting policy to be adopted, and the fair value calculationmethod.

Currently, the Company is not party to any contracts with embedded derivatives.

(g) Value and type of margins pledged as guarantees

The current foreign currency-denominated derivative transactions do not requirethe deposit of any margin calls.

2.4. Sensitivity analysis

The following table shows a sensitivity analysis of financial instruments, includingderivatives, describing the risks that could lead to material losses for the Company, withthe most probable scenario (scenario I) according to management's assessment,considering a three-month horizon, when the next financial information containing suchanalysis should be disclosed. In addition, two other scenarios are provided, asestablished by the Brazilian Securities Commission (CVM), by means of Instruction475/2008, in order to present a 25% and 50% stress of the risk variable considered,respectively (scenarios II and III):

3/31/2013

Debt IndicatorScenario I(probable)

Scenario II25%

Scenario III50%

BNDES TJPL 26,813 27,148 27,483Leasing CDI 15,701 15,976 16,251Working capital CDI 26,492 26,957 27,422Debentures

1st issue of debentures CDI 279,025 283,915 288,8052nd issue of debentures

1st series CDI 162,413 165,259 168,106

2nd series IPCA 117,073 118,741 120,410627,518 637,997 648,476

Change 1.7% 3.4%


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Scenario I Scenario II Scenario IIIBenchmark rate maintenance 25% 50%

CDI 7.01% 8.76% 10.52%TJLP 5.00% 6.25% 7.50%IPCA 5.70% 7.13% 8.55%US$ 2.01 2.52 3.02Euro 2.59 3.23 3.88

The sensitivity analysis presented above takes into account changes in a certain risk,keeping the other variables, associated with other risks, constant.

24. INSURANCE

It is the Companys policy to constantly monitor the risks inherent in its operations. Accordingly, the Company takes out insurance, whose nature and coverage are indicated

below as at March 31, 2013.

Nature of the insuranceInsured amounts

(in thousands of reais)

Rental equipment 606,429Property 279,830Civil liability 50,600Civil liability of officers 30,000Vehicles 2,497

25.NON-CASH TRANSACTIONS

As at March 31, 2013, the Company made an installment purchase of equipment amountingto R$49,644 as part of its non-cash investing activities. Accordingly, this investment is notreflected in the statement of cash flows (December 31, 2012 - R$41,366).

26. EVENTS AFTER THE REPORTING PERIOD

At the meeting held on April 10, 2013 the Board of Directors approved the increase of theCompanys capital through the issue of 66,903 registered common shares without par value,within the authorized capital ceiling, at the issue price of R$2.53 per share, totalingR$169,264.59, in view of the exercise by beneficiaries of stock options granted under theTop Mills Special Stock Option Plan.

1q13 quarterly financial reports

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