Dados Econômico-Financeiros

1

MRV Engenharia e Participações S.A.

Financial Statements December 31, 2025

Independent auditor's report on financial statements 1

Management Report 9

Statements of financial position 19

Statements of profit or loss 20

Statements of Comprehensive Income 21

Statements of Changes in Equity 22

Statements of Cash Flows 23

Statements of Value Added 24

1. General information 25

2. Presentation of financial statements and material accounting policies 25

3. New standards and interpretations issued but not yet effective 37

4. Cash and cash equivalents 38

5. Marketable securities 38

6. Trade accounts receivable 40

7. Inventories (real estate for sale) 44

8. Equity interests in investees 45

9. Investment property 49

10. Property and equipment 51

11. Intangible assets 52

12. Loans, financing and debentures 53

13. Land payables 58

14. Advances from customers 59

15. Payroll and related liabilities 60

16. Tax payables 60

17. Provision for maintenance 61

18. Provision for civil, labor and tax risks 61

19. Related parties 63

20. Equity 66

21. Operating segment 72

22. Net operating revenue 73

23. Costs and expenses 74

24. Financial expenses and income 75

25. Financial instruments and risk management 75

26. Current and deferred taxes 82

27. Supplemental disclosures of cash flow information 84

28. Unrealized revenues, costs to be incurred and cancellations 85

29. Insurance 86

30. Approval of the Financial Statements 87

31. Approval of the Financial Statements 87

Comment on the behavior of business projections 88

Fiscal Council's Opinion 89

Audit Committee Report 90

Directors' Statement 99

Dear Shareholders,

In accordance with legal and statutory provisions, the Management of MRV Engenharia e Participações S.A. ("Company" or "MRV") submits for your consideration the Management Report and the Company's Financial Statements, accompanied by the independent auditors' report, for the fiscal year ended December 31, 2025.

In 2025, MRV Real Estate Development maintained its trajectory of consistent growth in profitability and capital discipline, driven by solid operational performance and significant advances across all key indicators.

Net Pre-Sales reached R$ 9.9 billion, an increase of 2.2% compared to 2024 and 17.8% compared to 2023. Launches totaled R$ 11.5 billion, up 23.2% from the previous year and 103.1% from 2023. The number of Built Units amounted to 40,128, representing an increase of 12.7% compared to 2024 and 27.6% compared to 2023, reinforcing the Company's commitment to operational efficiency.

Net Pre- Sales

MRV Real Estate Development

[R$ million] % MRV

Launches

MRV Real Estate Development

[R$ million] % MRV

Built Units

MRV Real Estate Development

% MRV

+17.8% 9,715

9,928

8,429

+2.2%

+103.1%

11,537

9,364 +23.2%

5,682

+27.6%

31,456

40 ,128

35,609 +12.7%

2023 2024 2025

2023 2024 2025

2023 2024 2025

Regarding financial metrics, MRV Real Estate Development's Net Revenue reached R$ 10.1 billion, representing 20% increase compared to 2024 and consolidating the best performance ever recorded by the Company. MRV's Gross Margin reached 31% in 4Q25, the highest in the last 26 quarters. EBITDA also showed significant growth, totaling R$

1.9 billion in 2025, an increase of 69.8% compared to the previous year, reflecting operational efficiency and a focus on profitability.

Another highlight was the SG&A/Net Revenue ratio which reached 13.9% in 2025, a reduction of 0.6 p.p. compared to 2024. This result reinforces the Company's ongoing commitment to expense dilution and the constant pursuit of greater efficiency in its cost structure.

The 2025 results mark the end of MRV Real Estate Development's turnaround, recording a remarkable improvement

in the main financial and operational indicators.

Net Revenue

MRV Real Estate Development

[R$ million] % MRV

EBITDA

MRV Real Estate Development

[R$ million] %MRV

SG&A/ Net Revenue

MRV Real Estate Development

16.3% - 2.4 p.p

- 0 .6 p.p

14.5%

13.9%

% MRV

+40 .2%

+20 .0 %

8,456

10 ,144

7,236

+226.3%

1.936

+69.8%

1.140

593

2023 2024 2025

2023 2024 2025

2023 2024 2025

In December 2024, Resia announced to the market its Divestment and Deleveraging Plan, aiming to adapt to the current economic environment by adopting a more conservative approach and prioritizing risk reduction in a challenging macroeconomic scenario. The changes are focused on simplifying operations, freeing up capital, and strengthening cash generation.

The divestment plan has been progressing as expected, with approximately US$ 167 million in assets already sold by the end of January 2026. The assets already negotiated include both completed projects and land plots, demonstrating the Company's commitment to executing this strategy.

RESIA DIVESTMENT PLAN

[THROUGH 2026]

~US$ 800 MILLION

ASSET SALES

~US$ 167 MILLION ALREADY SOLD

• Hutto Square (Project)

• Dallas West (Project)

• Marvida (Land bank)

• Weatherford (Land bank)

• Palmetto (Land bank)

• Forresta Village East (Land bank)

• Forresta Village West (Land bank)

• Peachtree Corners (Land bank)

• Cathedral North (Land bank)

• Marine Creek (Land bank)

• Tucker (Land bank)

At the same time, Resia continues to show a good leasing pace for ongoing projects, as demonstrated in the table below. This performance reinforces the confidence that the assets will be ready for sale within the schedule established for 2025 and 2026.

MRV&Co's Brazilian subsidiaries also ended 2025 demonstrating discipline and commitment to the strategy announced by MRV&Co's management in 2023. As previously stated, no new capital injections into the subsidiaries were or will be necessary, and both companies now operate in line with the current environment.

Luggo has a unique business model in the country, which represents a significant strategic advantage in the event of a potential interest rate cycle reversal. The company has three excellent, fully constructed projects currently being leased, featuring a strategic mix of Long and Short Stay units.

Urba, in turn, has also completed its turnaround and delivered significant improvements in its key indicators, such as Net Revenue of R$ 371 million in 2025, up 48% from 2024, as well as Net Income of R$ 20 million and Cash Generation of R$ 28 million for the year.

MRV&Co reafirms its commitment to the principles of Environmental Sustainability, Social Responsibility, and Corporate Governance through a robust and integrated ESG Agenda. The Company has implemented practices that incorporate ESG into its business, promoting positive impacts both in the real estate sector and in the communities where it operates. Inspired by the 2030 Agenda and the United Nations Sustainable Development Goals (SDGs), we mobilize resources, talent, and efforts at all levels and across all areas of the MRV&Co Group. This mobilization reinforces our dedication to contributing to a more sustainable and inclusive future.

ENVIRONMENTAL

MRV&Co recognizes the significant impact of the construction industry on greenhouse gas emissions and global climate change, especially due to the use of cement, concrete, and steel. For this reason, the topic is a priority in its Sustainability Strategy, with specific goals and instruments such as:

• Climate Change Policy for employees, partners, and suppliers;

• MRV 2030 Vision;

• Carbon Management Plan;

• Climate Vulnerability Studies in its developments, assessing risks and proposing solutions for impact mitigation.

The company's efforts have been recognized by independent organizations, such as the Brazilian GHG Protocol Program, the CDP for climate change, and ISO certifications, highlighting its commitment to sustainability and to reducing the environmental impacts of the sector.

SOCIAL

The MRV&Co Group has built a significant track record in social responsibility. Despite ongoing challenges, the company has achieved a more mature and ambitious vision, expanding the scope of its goals and strengthening its governance structure to lead its social initiatives.

Currently, MRV&Co promotes a range of affirmatives programs, as well as, actions aimed at training, access, and encouragement of opportunities. These initiatives reinforce the company's commitment to sustainable development and social inclusion.

MRV&Co INSTITUTE

MRV&Co, through the MRV Institute, reaffirms its commitment to contributing to a more supportive country, focusing on the development of and maintenance of educational programs throughout Brazil. The non-profit organization expands existing projects and creates new opportunities, relying on an engaged team and dedicated volunteers. Since its founding in 2014, more than 2.8 million people have been directly and indirectly benefited. The strong connection between the Institute, the MRV brand and social responsibility materializes the effective integration of sustainability into MRV&Co's objectives.

To learn more about the initiatives promoted, visit the official channel of the MRV&Co Institute.

VIZINHO DO BEM PROGRAM

Implemented by MRV since 2016, this is a strategic initiative aimed at managing the social and environmental impacts of its developments. Its mission is to go beyond the construction site, establishing constructive dialogue and promoting engagement actions with the communities and organizations located in the surrounding areas, in order to mitigate potential negative effects.

The program's activities cover various spheres, ranging from the improvement of local infrastructure to socioeconomic development. In addition, the initiative seeks to strengthen the local economy by training local labor and closely monitoring the commitments agreed upon with public authorities, ensuring that all obligations are fulfilled.

In 2025, the program maintained a strong presence in 16 active territories across 7 Brazilian states. During this period, more than 29,000 people were benefited, 109 crises were avoided, and 2,423 community requests were addressed. These figures reinforce MRV's commitment to sustainable development and the promotion of constructive relationships with the communities in which it operates.

ESCOLA NOTA 10 PROGRAM

The program promotes literacy, basic education, and training at MRV&Co construction sites, creating opportunities for personal and professional development for employees within their own work environment.

Coordinated by the Sustainability department and managed with the support of the MRV Institute, the program has graduated nearly 5,000 students across Brazil over more than a decade of activity. This initiative plays a fundamental role in the qualification of professionals and in promoting the full exercise of citizenship.

In 2025, the program received international recognition by winning the Bronze Lion in the Corporate Purpose - Social Responsibility category at Cannes Lions, one of the world's leading creativity festivals held annually in France. This recognition comes in a challenging context, in which about

9 million Brazilian aged 15 or older are still illiterate, according to the 2024 Continuous PNAD Education Survey

GOVERNANCE

Governance at MRV&Co Group is grounded in consistent ethical principles that are disseminated at all levels of the organization. These principles guide behaviors, direct business decisions, and underpin relationships based on fairness, balance, and respect, creating an environment conducive to sustainable development.

The main Governance, Risk, Compliance and Privacy (GRC&P) initiatives and results can be found in the 2025 GRC&P Annual Report, which brings together information on risk management, compliance, auditing, privacy and security, as well as key indicators and highlights of our practices.

In addition, our MRV&Co Ethics and Integrity Portal gathers reference documents, policies and whistleblowing channel, reinforcing our commitment to transparency and responsible conduct.

HUMAN RESOURCES

At MRV&Co, the development and appreciation of people are fundamental to building a solid, innovative, and sustainable organizational culture. The Company believes that business success is directly linked to the engagement, well-being, and growth of its employees, promoting an environment where everyone has the opportunity to develop their potential.

From this perspective, the promotion of diversity and inclusion stands out as a strategic commitment, reflecting respect for differences and the pursuit of more diverse and representative teams. MRV&Co has continuously invested in policies that ensure equal opportunities and value different profiles, experiences, and backgrounds.

Below are the main metrics, in accordance with Article 133, §6º of Law 6,404/76. Table 1: Distribution of women hired by hierarchical level and comparative evolution

The following data detail the female participation in hires made at each level of the organization, considering the percentage of women in relation to the total number of hires in each category.

Below are the data on the participation of women in statutory and governance positions, based on the total number of management positions in the Company.

The table below presents the ratio between the total compensation received by female employees, considering male compensation as the 100% reference in each category.

Our shares have been traded on the B3 S.A. - Securities, Commodities and Futures Exchange (B3) since 2007, held to the highest levels of governance - Novo Mercado, and are listed in the portfolio of 14 other indexes.

MRVE3 shares closed the year valued at R$ 7.79, at a Market Cap of R$ 4.4 billion, with an average trade volume of R$

130.7 million (average/day).

On December 31, 2025, the Company held 562,826,671 shares, with a trust of 1,348 shares.

Note: all values included in this report consider participation attributed to stockholders in the company, except where expressly indicated otherwise.

Note: The information contained and analyzed below is derived from the consolidated financial statements for the years ended December 31, 2025, 2024 and 2023, unless otherwise stated.

EBITDA

MRV&Co

Income Before Taxes

(840)

(334) (73) 151.9% ↑ 1045.2% ↑

Consolidated Net Debt

MRV&Co

Total debt

9,860

10,288 8,327 4.2% ↓ 18.4% ↑

In compliance with CVM Resolution No. 162/22, we hereby inform that our independent auditors, Ernst & Young Auditores Independentes ("EY"), provided comfort letter issuance services in addition to external audit services during the year 2025. The Company's policy in engaging the services of independent auditors ensures that there is no conflict of interest, loss of independence, or objectivity.

In accordance with Article 48 of Chapter VIII - Arbitration Chamber of the Company's Bylaws: The Company, its shareholders, executive officers and members of the Board of Directors are obliged to resolve, through arbitration, all and any disputes or controversies between them related to or arising from, in particular, the application, validity, efficacy, interpretation, violation and effects thereto of the provisions in Brazilian Corporation Law, the Company's Bylaws, the regulations of the National Monetary Council (CMN), the Central Bank of Brazil and the Brazilian Securities and Exchange Commission (CVM), as well as any other rules applicable to the functioning of the capital markets, including those provided for in the regulations of the Novo Mercado Special Corporate Governance, the Arbitration Regulations of the Market Arbitration Chamber and the Participation Agreement of the Novo Mercado.

In compliance with the provisions of CVM Resolution No. 80, the Board declares that it discussed, reviewed, and agreed with the opinions expressed in the report of the independent auditors and the financial statements for the fiscal year ended on December 31, 2025.

MRV Management thanks its shareholders, customers, suppliers and financial institutions for their support and confidence. It also thanks its employees for their dedication and efforts, who in great part were responsible for the results achieved.

Belo Horizonte, March 09, 2026. The Management

STATEMENT OF FINANCIAL POSITION AS OF DECEMBER 31, 2025 AND 2024

(In thousands of Brazilian reais - R$)

(1,042,704) (482,097)

STATEMENTS OF PROFIT OR LOSS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In thousands of Brazilian reais - R$, except earnings per share)

The accompanying notes are an integral part of these financial statements.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In thousands of Brazilian reais - R$)

The accompanying notes are an integral part of these financial statements.

MRV ENGENHARIA E PARTICIPAÇÕES S.A.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In thousands of Brazilian reais - R$)

Earnings

accumulated

Treasury shares

22

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 - INDIRECT METHOD

(In thousands of Brazilian reais - R$)

STATEMENT OF VALUE ADDED FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In thousands of Brazilian reais - R$)

Revenues

Other income

23,945

1,860

(413)

7,663

Allowance for expected credit loss

(221,495)

11,182,035

(238,573)

9,190,929

(99,765)

4,487,507

(117,847)

3,505,946

Inputs purchased from third-parties (includes the taxes PIS and COFINS)

Gross value added 2,926,692 2,583,481 1,416,340 455,554

Depreciation and amortization

(251,608)

(172,616)

(179,982)

(126,270)

Results from equity interest in investees

Financial income

8

Total value added for distribution

(113,948)

600,261

486,313

3,161,397

(140,460)

532,961

392,501

2,803,366

(467,646)

297,314

(170,332)

1,066,026

325,302

335,132

660,434

989,718

Personnel:

Salaries and wages Benefits

1,690,842

1,317,161

276,901

1,519,355

1,202,036

236,497

903,989

659,401

175,706

631,421

434,132

145,517

Taxes and fees:

Federal

1,061,252

756,539

744,957

587,846

529,214

402,423

390,424

322,275

State

208

(314)

118

191

Lenders and lessors:

Interest

Rentals / Leases

1,452,007

1,184,990

267,017

1,021,151

809,326

211,825

675,079

536,430

138,649

471,075

357,138

113,937

Shareholders:

Loss for the year Noncontrolling interests

20 (h)

(1,042,704)

(1,042,256)

(448)

(482,097)

(503,202)

21,105

(1,042,256)

(1,042,256)

-

(503,202)

(503,202)

-

Value added distributed 3,161,397 2,803,366 1,066,026 989,718

Net value added generated by the Company 2,675,084 2,410,865 1,236,358 329,284

Cost of real estate and services sold: supplies, land, power, outside services and other items (8,255,343) (6,607,448) (3,071,167) (3,050,392)

The accompanying notes are an integral part of these financial statements.

MRV Engenharia e Participações S.A.

Notes to the Financial Statements December 31, 2025.

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

1. ‌General information

   MRV Engenharia e Participações S.A. ("Company") and its subsidiaries ("Group") are engaged in the management of own and third-party assets, development, construction and sale of Company owned or third-party real estate, the provision of technical engineering services related to the functions of the technicians in charge, real estate consultancy services, dealing service of goods and services supply in residential real estate segment and holding equity interests in other companies as a shareholder. Real estate development and the construction of real estate are performed directly by the Company or other business partners. The direct and indirect subsidiaries are summarized in Note 8. Partners have a direct participation in the projects, through interest in special purpose entities ("SPE"), and silent partnerships ("SCP"), to develop the projects. The Company is a publicly held corporation listed in B3 S.A. (B3), under ticker MRVE3, with registered head office at 621 Professor Mário Werneck Ave.,1º floor, Belo Horizonte city, Minas Gerais, with CNPJ (taxpayer identification number) 08.343.492/0001-20.

   Sale of receivables

   In the year ended December 31, 2025, the Company carried out transactions of sale of receivables, transferring receivables in total amount of R$3.2 billion, with amounts received in cash of R$2.5 billion. The servicer role was retained by the Group in some of these transactions. See Note 6 (e) for more details.

   Resia

   In the year ended December 31, 2025, Resia completed the sale of assets for a total value of US$97.4 million (R$529.8 million), fully received during this year.

   As part of the strategic review of its indirect subsidiary Resia, the Company identified certain assets that would be included in the divestment plan and, consequently, their values would be recovered through a sale transaction. They were reclassified as "Investment properties - Noncurrent assets held for sale," recording an impairment loss of US$187 million (R$1.0 billion), recognized under "Other operating income (expenses), net". See Notes 9 and 23.

2. ‌Presentation of financial statements and material accounting policies

   1. Presentation of financial statements

      1. Statement of compliance

         The consolidated financial statements have been prepared and are presented in accordance with accounting practices adopted in Brazil (BRGAAP) and in accordance with the International Financial Reporting Standards (IFRS), applicable to real estate development entities, registered with Brazilian Securities and Exchange Commission (CVM). The parent company financial statements have been prepared and presented in accordance with accounting practices adopted in Brazil (BRGAAP), applicable to real estate development entities, registered with the CVM. Aspects related to transfer of control of real estate units follow the Company's management understanding aligned with that expressed by CVM in Circular Letter CVM/SNC/SEP n.º 02/2018, regarding the application of Technical Pronouncement CPC 47 / IFRS 15. The parent company financial statements are not in accordance with International Financial Reporting Standards (IFRS) since they considers the borrowing cost's capitalization on its investees' qualifying assets.

         The accounting practices adopted in Brazil comprise the policies set out in Brazilian Corporate Law, the CVM rules and the pronouncements, guidance and interpretations issued by the Accounting Pronouncements Committee (CPC), approved by the CVM and the Federal Accounting Council (CFC).

      2. Basis of measurement

         The consolidated and parent company financial statements have been prepared based on the historical cost basis, except for the balances of "Short-term investments", "Marketable securities", "Derivative financial instruments", some land payables and some loans and debentures (hedge accounting) measured at fair value, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

      3. Basis of consolidation

         The consolidated financial statements comprises the financial statements of the Company and entities controlled directly by the Company or indirectly through its subsidiaries. The Company's subsidiaries included in the consolidation are listed in Note 8.

         To determine whether the Company has control over the investees, Management used contractual agreements to evaluate the existing rights that give the Company the ability to direct the relevant activities of the investees, as well as exposure to, or rights to, variable returns from its involvement with them and the ability to use its power to affect the amount of returns.

         On consolidation, the assets, liabilities and profits or losses balances of subsidiaries are combined with the corresponding line items of the Company's financial statements, on a per line-item basis, and the parent company's interests in the subsidiaries' equity, as well as all intragroup transactions, balances, revenue, and expenses are eliminated.

         Noncontrolling interest (NCI) are measured initially at their proportionate share of the acquiree´s identifiable net assets at the date of acquisition. The changes in equity interests in subsidiaries not resulting in loss of control are recognized as capital transactions. The accounting balances of the Company's and non-controlling interests are adjusted to reflect changes in their respective interests in the subsidiaries. The difference between the amount based on which noncontrolling interests are adjusted and the fair values of considerations paid or received are recognized directly in equity and attributed to the Company´s shareholders.

         When the Group loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any related NCI and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair value when the control is lost.

   2. Material accounting policies

The material accounting policies described below have been consistently applied to all fiscal years presented in the consolidated and parent company financial statements for both the Company and its subsidiaries.

1. Revenue recognition

   The Group adopts CPC 47 / IFRS 15 - "Revenues from Contracts with Customers", also considering the guidelines contained in Circular Letter CVM/SNC/SEP nº 02/2018, of December 12, 2018, which establishes accounting procedures related to recognition, measurement and disclosure of certain types of transactions arising from sale contracts of uncompleted real estate units in Brazilian real estate development companies.

   According to CPC 47 / IFRS 15, revenue recognition from contracts with customers has a normative discipline based on the transfer of control of the promised good or service, which may be at a specific moment in time (at a point in time) or over time, depending on the satisfaction or otherwise of the so-called "contractual performance obligations". Revenue is measured at the amount that reflects the consideration to which it is expected to be entitled and is based on a five-step model detailed below: 1) contract identification; 2) identification of performance obligations; 3) determining the price of the transaction; 4) allocation of the transaction price to the performance obligations; 5) revenue recognition.

   The Company's business model is predominantly based on sale contracts of "off-plan" real estate units (around 89%). In this model the customer signs a "purchase contract of off-plan real estate unit" with the developer, already foreseeing the payment conditions, as follows:

   1. Direct payments to the developer

   2. Bank financing

   3. Funds from Fundo de Garantia do Tempo de Serviço - FGTS (government labor time guarantee fund)

   4. Eventual subsidies from government housing programs

      The amounts paid directly to the developer (item (i) above) represent approximately 15% to 15.5% of the real estate unit´s value price, and the remaining amount come from bank financing, FGTS funds and eventual subsidies (items

      (ii) to (iv) above). The customer then signs a bank financing agreement ("private contract with a public deed") with a financial institution, including the amounts of bank financing, FGTS funds and eventual subsidies from government housing programs. The release of these resources is conditioned to the work progress, according to the percentage of conclusion certified in the Relatório de Acompanhamento do Empreendimento (monitoring report of the residential complex), according to the physical-financial schedule approved by the financial institution. This monitoring, for purposes of release of the installments, is carried out by the engineering area of the financial institution. At the time of signature of the bank financing agreement, the under-construction unit´s ownership is transferred to the customer, being fiduciarily assigned to the respective financial institution.

      A summary of "off-plan" contract modality detailing involved parties, guarantees and existing risks is presented

      below:

      Contracts	Parties	Real guarantee of the unit	Credit risk	Market risk	Cancelation risk
      Sale	Buyer and Developer (Seller)	Developer	Developer: 100%	Buyer and Developer (in case of	Developer
      Bank financing	Buyer, Developer (Seller) and Financial institution (Fiduciary agent)	Financial institution (FI)	Developer: 15 to 15.5% and Financial institutions: 84.5 to 85%	Buyer and Financial institution	Not applicable. In a default event by the customer, the FI may consolidate the property on its behalf for subsequent sale to third parties, in accordance with the procedures set forth in art. 27 of Law 9.514/97. The collected amount will have as main objective to discharge the customer´s outstanding balance with the FI.

      In addition, the Company also enters into sale contracts of real estate units by bank financing at the final phase of the project (around 3%) or by its own financing (around 8%).

      Five-steps model for revenue recognition

      Steps	Addressed criteria
      Step 1: Identity the contract	The contracts detailed above were identified as within the scope of the standard, since:
      Step 2: Identity the performance obligations	Delivering the real estate unit to buyer.
      Step 3: Determine the transaction price	Represented by the sale value of the real estate units, explicitly established in the contracts.
      Step 4: Allocate the transaction price to the performance obligations	Direct and simple allocation of the transaction price, since the contracts detailed above have one single performance obligation (delivering the real estate unit).
      Step 5: Revenue recognition	Recognized over-time.

      • Have commercial substance;

      • It is probable that the consideration will be received;

      • Rights and payment conditions can be identified;

      • Are signed by the parties and they are committed to their obligations.

      Accordingly, the policies adopted for calculating and recognizing revenue and recording the amounts in the line items Revenue from real estate development, Real estate for sale, Receivables from real estate development, and Advances from customers follow the procedures above described and detailed as follows:

      • For sales of uncompleted units, income is recognized based on the following criteria:

        1. Sales revenues are allocated to profit or loss as construction progresses, as control is transferred on a continuous basis. Accordingly, the Company adopts the POC method (percentage of conclusion) which refers to the calculation of revenue based on percentage of completion for each project. The POC method uses the ratio of the incurred cost in relation to the budgeted cost of the respective projects, and the revenue is calculated by multiplying this percentage (POC) by the contracted sales. The total budgeted cost of projects is initially estimated at launching and regularly reviewed; any adjustments identified in this estimate based on these revisions are reflected in the Group's results. The related land and construction additional costs inherent to the related developments of the units sold are allocated to net income when incurred.

        2. Sales revenues calculated according to item (i), measured at fair value, including inflation adjustment, net of installments already received, are recognized as accounts receivable or advances from customers, according to the ratio between recognized revenues and received amounts.

      • For installment sales of completed units, income is fully recognized at the time the sale is completed, regardless of the term for receiving the amount established by contract, and revenue is measured at the fair value of the consideration receivable.

      • Interest and present value discount are allocated to profit or loss. Interest is recorded in line item "Revenue from real estate development" during the period before the delivery of the units and in line item "Financial income" during the period after the delivery of the units, on the accrual basis, regardless of actual receipts.

      • Revenues from bartered real estate units are recorded as the works progresses until the units are delivered, in accordance with the contracts.

      The Group recognizes as assets the incremental costs to obtain sale contracts, mainly represented by commissions and brokerage necessary to obtain the aforementioned contracts. These costs are recorded in line item "Prepaid expenses" and amortized using the percentage of completion method described above.

      Revenue and expenses are recorded on the accrual basis.

      The Group accounts for the effects of a contract only when: (i) the parties have approved the contract; (ii) can identify each party´s rights and the payment terms; (iii) the contract has commercial substance; and (iv) it is probable to receive the consideration that the Group is entitled to.

      The Group enters into sale contracts of real estate units, essentially classified into two types: "conventional" contracts and "guaranteed sale" contracts. The conventional contracts produce their effects since the signature date. "Guaranteed sale" contracts have suspensive clauses until the bank financing agreement´s signing date. In line with the legal effects described above, revenues from "Conventional contracts" are recognized from the execution date of the respective contracts and revenues from "Guaranteed sale" contracts are recognized since the bank financing agreement´s signing date, when the suspensive clause is satisfied, and the contract produces its effects.

      Cancellations

      The Group recognize a provision for cancellations when identifies cash inflow risks.

      Contracts are monitored to verify when these conditions are mitigated. While this does not occur, no revenue or cost is recognized in profit or loss, and amounts are only recognized in financial position line items.

2. Inventories (real estate for sale)

   Inventory of completed units, under construction and not yet sold and landbank is stated at the incurred cost, which does not exceed market value. The land acquired under barter agreements is valued, on initial recognition, for the portion of the general sales value to be transferred relating to the project to be developed or for the sales value of the units to be delivered. Classification of the landbank into current and noncurrent assets is based on the scheduled date to launch the project.

   Inventory of supplies is carried at the lower of average cost of purchase or their net realizable values.

3. Investment properties

   Investment property consists of properties held to earn rentals or for capital appreciation (including construction in progress for such purpose) and is measured at cost, including transaction costs. Financial charges incurred on loans linked to the development of projects are capitalized and recognized in profit or loss through the realization of the underlying assets.

   Depreciation is recognized based on the estimated useful life of each asset (other than land and constructions in progress) using the straight-line method, thus that cost less its residual value after its useful life is fully written off. The estimated useful lives, residual values and depreciation methods are reviewed at least annually, with the effect of any changes in estimate accounted for on a prospective basis. Eventual costs incurred on the maintenance and repair of investment property are capitalized in assets when, and only when, the economic benefits associated to these items are probable and the amounts can be reliably measured, while other costs are directly allocated to profit or loss when incurred.

   An investment property is derecognized on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal, where applicable. Any gain or loss arising on derecognition of the property, calculated by the difference between the net amount received on the sale and its book value, is recognized in profit or loss in the period in which the property is derecognized.

4. Noncurrent assets held for sale

   Noncurrent assets, or disposal groups comprising assets and liabilities, are classified as held-for-sales if it is highly probable that they will be recovered primarily through sales rather than through continuing use.

   Such assets, or disposal groups, are measured at the lower of price carrying amount and fair value less costs to sell. Impairment losses on initial classification as held-for-sale and subsequent gains or losses on remeasurements are recognized in profit or loss.

5. Financial instruments

   Financial assets and financial liabilities are recognized when the Group is a party to the contractual provision of the instruments and are initially measured at fair value.

   Transaction costs are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and liabilities at fair value through profit or loss) are added to or deducted from the fair value of financial assets and liabilities, if applicable, after their initial recognition. Transaction costs directly attributable to the acquisition of financial assets or liabilities at fair value through profit or loss are recognized immediately in profit or loss.

   Financial assets and financial liabilities are stated at their net amounts in the statement of financial position if, and only if, the Company has a legally enforceable right to offset the amounts recognized and if there is intent to simultaneously realize the asset and settle the liability.

   Financial assets

   Financial assets classifications are based on the business model which the asset is managed and its contractual cash flow characteristics (binomial contractual cash flow and business model), as summarized below:

   Categories / measurement	Conditions for category definition
   Amortized cost	Financial assets are held within a business model whose objective is to hold financial assets to collect contractual cash flows on specific dates.
   Fair value through other comprehensive income (FVTOCI)	There is not a specific definition within the business model about holding financial asset to collect contractual cash flows on specific dates or selling financial assets.
   Fair value through profit or loss (FVTPL)	All other financial assets.

   The Group's main financial assets are shown below, classified as amortized cost, FVTPL and FVTOCI and presented in Note 25 (a):

   • Cash and cash equivalents: Include amounts held as cash, bank accounts, and highly liquid short-term investments, redeemable within ninety days or less as of the acquisition date, and subject to insignificant risk of change in market value.

   • Marketable securities: The balances represent investments in: (i) restricted investment funds that include public and private securities (both post fixed rates) and investments in unrestricted investment funds, which in turn invest mainly in fixed income securities; (ii) unrestricted investment funds; (iii) bank deposit certificates;

     (iv) Investments from bank accounts and savings deposits, among others.

   • Derivative financial instruments: Derivative financial instruments for exposure management, as described in Note 25 (a).

   • Receivables from real estate development: Represents amounts receivable for the sale of real estate units, initially recognized as described in paragraph "a" above, adjusted as contractually set out, net of present value discount and allowance for expected credit loss, when applicable.

   • Intercompany loans: receivables from subsidiaries, joint ventures, associates and partners in real estate development.

   • Receivables from services provided, rents and other sales: Correspond to amounts receivable for property rentals, land sales and other sales.

   Ordinary purchases or sales of financial assets are recognized and derecognized on a trade date basis. Ordinary purchases or sales are purchases or sales of financial assets that require delivery of assets in accordance with regulation or market practice.

   The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to for third parties. On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

   Financial liabilities

   Classified at initial recognition as: (i) amortized cost; or (ii) measured at fair value through profit or loss.

   The Group's financial liabilities, are classified and are measured at amortized cost, using the effective interest rate method, and include loans, financing and debentures, suppliers, intercompany loan payables, land payables, payables for investment acquisition, credit assignment liability and other liabilities, except for some loans and debentures, once they were designated as hedged items, according to hedge accounting methodology, some derivative financial instruments and some land payables (financial barters), whose creditors are entitled to receive a portion of the general sales value of the projects to be incorporated, which are measured at fair value through profit or loss.

   Loans, financing and debentures are initially recognized when funds are received, net of funding costs, when applicable. At the end of the reporting period, they are carried at their initial recognition, less amortization of installments of principal and charges, when applicable, plus the related charges incurred. Funding costs are presented as a reduction of current and noncurrent liabilities and are recognized in profit or loss over the same repayment term of the financing from which they were originated based on the effective interest rate of each transaction.

   Financial liabilities are derecognized when, and only when, the Group' obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the sum of the consideration paid and payable is recognized in profit or loss.

   Derivative financial instruments and hedge accounting

   Derivatives are initially recognized at fair value. After initial recognition, derivatives are still measured at fair value and changes in fair value are recorded in profit or loss or in equity, depending on the type of hedge.

   At the inception of the hedging relationship, the Group assesses whether the hedge relationship qualifies for hedge accounting; if positive, it formally documents the relationship between the hedging instrument and the hedged item.

   The assessment of whether the relationship meets the hedge effectiveness requirements is made and documented at the inception of the hedge relationship, on each reporting date on a relevant change in circumstances that affect the effectiveness requirements. Adjustments to hedge relationships are permitted after designation, without being considered a "discontinuity" of the original hedge relationship.

   The Group discontinues hedge accounting only when the hedge relationship (or part thereof) no longer meets the qualifying criteria. This includes cases where the hedging instrument expires, is sold, terminated or exercised. Discontinuation is accounted for prospectively.

   Fair value hedge

   The Group contracts derivative financial instruments (swaps) to hedge its exposure to changes in indexes and interest rates in several loans, financing and debentures or aiming not being exposed to changes in the fair value of certain financial instruments. For avoiding accounting mismatch in the measurement of these instruments, opted for hedge accounting (designations classified as fair value hedge). Accordingly, changes in fair values of derivatives financial instruments and hedged items (contracted debts) are recognized in profit or loss.

   Cash flow hedge

   The Group contracts derivative financial instruments of the swap type to hedge interest payments on debt in US dollars or subject to floating rates, formally designating them as hedging instruments and the interest payments on mentioned debts as hedged items, respectively, establishing an economic relationship between them, according to the hedge accounting methodology. This designation was classified as a cash flow hedge, with the effects of changes recognized in equity.

   Impairment of financial assets

   The Group recognize allowance for expected credit loss for all sale contracts of real estate units based on data on historical losses, and amounts are recorded monthly matching the respective real estate revenue recognition. When these contracts do not present real guarantee of the real estate unit sold and the customers are in default in an installment over three hundred and sixty days, the Group recognize this allowance for 65% on the outstanding balance and when the installments reach maturity over seven hundred and twenty days, the Group completes the allowance for the 35% remaining on the outstanding balance. Such analysis is performed individually by sale contract. This simplified approach is in line with item 5.5.15 of CPC 48 / IFRS 9 - Financial Instruments.

   The Group's policy is to write-off amounts corresponding to real estate unit's sales contracts included in the allowance for expected credit loss that present maturing installments over two years. However, collection activities for recovery of these amounts continue to be carried out periodically.

   The Group did not identify impairment on the recoverable amount of short-term investments.

   The Group periodically reviews its assumptions to recognize allowance for expected credit loss considering revision of historical transactions and improvement of its estimates.

6. Borrowing costs

   Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset, which necessarily take a substantial amount of time to be ready for the intended use or sale, are capitalized until the date they are substantially ready for the intended use or sale. Since financing activities are centrally managed by the Company, interest incurred by the Company on the financing of its investees' qualifying assets are capitalized and presented under caption investment (parent company financial statements), net of gains obtained on the temporary investment of funds obtained on specific borrowings that have not yet been spent on the qualifying assets. In the consolidated financial statements, subsidiaries' amounts are presented under caption "Inventories (real estate for sale)" or "Investment properties". In the parent company financial statements, these costs are allocated to profit or loss proportionately to the units sold, by deducting the caption "Results from equity participation" and, in the consolidated financial statements, are reclassified to caption "Costs of real estate sold and services" for the case of "Inventories" and allocated to "Other operating income (expenses), net" for the case of "Investment properties" when assets sales occur. The capitalization of these costs ceases when the related assets are ready for the intended use or sale.

   All other loan costs are recognized in profit or loss for the period they are incurred.

7. Equity interest in investees

   In the Company's consolidated financial statements, investments in joint ventures and associates are recorded using the equity method, based on the investees' financial statements as of the Company's reporting period and following the same accounting practices in the Company's financial statements.

   Investments in subsidiaries, joint ventures and associates are recorded in Parent Company's financial statements using the equity method of accounting, based on the subsidiaries' financial statements as of the Company's reporting period and following the same accounting practices in the Company's financial statements.

   Profits and losses resulting from transactions between the Company and its joint ventures or associates are recognized in the financial statements only to the extent of third parties' interest in those joint ventures or associate. Profits and losses resulting from transactions between the Company and its subsidiaries are fully eliminated.

   Goodwill arising on a business combination is carried at cost on the date of the business combination net of accumulated impairment losses, if any.

8. Property, plant and equipment

   Stated at cost, less depreciation and accumulated impairment losses, where applicable. Additions are classified as construction in progress and transferred to the appropriate categories when completed and ready for the intended use. These assets start to be depreciated when ready for the intended use, using the same base as the other property, plant and equipment items already in use.

   Includes right-of-use assets, as per item (l) below.

9. Intangible assets

   Separately acquired intangible assets with finite useful lives are stated at cost less amortization and accumulated impairment losses.

   Research expenditure is recognized as an expense when incurred. An internally generated intangible asset arising from expenditure on development is recognized if, and only if, all the conditions prescribed by CPC 04 / IAS 38, paragraph 57, on intangible assets can be demonstrated.

   The amount initially recognized of internally generated intangible assets corresponds to the sum of the costs incurred since the time an intangible asset met the recognition criteria above. When no internally generated intangible asset can be recognized, development expenditure is recognized in profit or loss, when incurred.

10. Depreciation, amortization, and derecognition of property, plant and equipment and intangible assets Depreciation/amortization is recognized based on the estimated useful life of each asset on a straight-line basis, so

    that cost less its residual value after its useful life is fully written off, except for item "Aluminum forms", classified under caption "Machinery and equipment", which depreciation is calculated based on use and land and constructions/intangibles in progress that do not suffer depreciation. The estimated useful lives, the residual values, and the depreciation/amortization methods are reviewed at the end of the reporting period, and the effects from any change in estimates are recognized prospectively.

11. Impairment

    The Group assesses, at least annually, if there are any indications that its investment properties, property, plant and equipment and intangible items are impaired. Additionally, the Group tests for impairment, at least annually, goodwill on investment acquisitions, property, plant and equipment (works in progress), intangibles under development and inventories (real estate for sale).

12. Leases

    The Group as a lessor

    The Group classifies leases as financial or operational. The lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of the underlying asset and classified as operating if it does not transfer substantially all the risks and rewards incidental to ownership of the underlying asset.

    Revenues from operating leases (rental revenue) are recognized in the statement of profit or loss under the straight-line method over the lease period, if applicable.

    The Group does not have lease agreements in which it is a financial lessor.

    The Group as lessee

    The Group assesses whether a contract is or contains a lease if it conveys the right to control the use of the identified asset for a period of time in exchange for consideration. Such an assessment is performed at inception. Exemptions are applied for short-term leases and low-value items.

    The cost of the right-of-use asset comprises: (i) the amount of the initial measurement of the lease liability; (ii) any lease payments made until the commencement date; (iii) direct costs incurred; and (iv) estimated costs to be incurred in dismantling and removing the asset, when applicable and are recognized in "Property and equipment" and "Investment properties".

    Lease liability is measured at the present value of the lease payments, discounted by the implicit interest rate or by the incremental borrowing rate and represents the obligation to make lease payments and it is recognized in "Other liabilities".

    As a lessee, the Group identified lease agreements related to its head office, regional offices, commercial stores and project land. For the purpose of estimating the initial recognition of the lease liability and right-of-use asset were considered: the option to extend lease agreement for the same period for offices and the contractual term for commercial stores and land.

    In determining the lease term, the Group considers all the facts and circumstances that create an economic incentive to exercise the option of extension or not exercise a termination option. Extension options (or periods after the termination options) are included in the lease term only if the lease term is reasonably certain to be extended (or not terminated). The assessment is reviewed if there is a significant event or a significant change in circumstances that affects that assessment and is within the control of the Group. The contracts extension assessment affects the amounts of the recognized lease liabilities and rights-of-use assets.

    In the statement profit or loss, an expense for depreciation of the right-of-use asset and an interest expense for the lease liability are recognized.

13. Provisions

    Provisions, including provision for maintenance of real estate and provision for civil, labor and tax risks are recognized when there is a present obligation (legal or constructive) as a result of a past event, that can be reliably estimated, and it is probable that a disbursement will be required to settle the obligation.

    The amount recognized as a provision is the best estimate of the expenditure required to settle the obligation at the end of the reporting period, considering the risks and uncertainties inherent to such obligation.

    When some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognized when, and only when, it is certain that reimbursement will be received, and the amount can be reliably measured.

14. Provision for maintenance of real estate (Warranties)

    The Company and its subsidiaries offer warranty for construction defects limited to five years, in compliance with Brazilian legislation. To meet this commitment to the maintenance of real estate sold, without impacting future fiscal years and properly match revenues with costs, for each project under construction, it provides, on an estimated basis, amounts corresponding to a fixed percentage of the costs incurred in construction of real estate units or land development. This estimate is based on annually reviewed historical averages according to analysis by the Group's engineering department. The accruals are recognized in the profit or loss using the same criteria for the allocation of real estate development revenue, described in paragraph "a" above, from the date the related real estate units are sold.

15. Treasury shares

    Own equity instruments purchased by the Company are recognized at cost and deducted from equity. Transaction costs incurred on share buybacks are added to the purchase cost of such shares.

16. Earnings per share

    Basic earnings per share are calculated by dividing net profit (loss) attributed to the holders of common shares of the parent entity by the weighted average number of common shares outstanding during the year, less treasury shares, if any.

    Diluted earnings per share are calculated by dividing net profit (loss) attributed to the holders of common shares of the parent entity by the weighted average number of common shares outstanding during the year, less treasury shares, if any, plus the number of common shares that would be issued assuming that the stock options would be exercised at a price lower than the market price.

17. Long-term incentive programs

    The Company has long-term incentive programs as part of its employee retention plan.

    Stock option plan

    Stock option plan: The Company recognizes the issued options´ costs under the straight-line basis over the vesting period, from grant date to the date the options become exercisable, with a corresponding adjustment in equity. Costs were determined based on the fair value of the options on the grant date using the Black & Scholes pricing model (Note 20 (e)). The Company recognizes remuneration costs in profit or loss during the vesting period to the extent that services are received, with a corresponding increase in equity when settlement is expected to be made in equity instruments or in liabilities when settlement is expected to be made in cash. The aforementioned liability is remeasured at fair value at each annual reporting date and the expense adjusted as appropriate.

    Restricted shares

    The Company recognizes the costs of shares to be issued using the straight-line basis during the required service period (vesting period), from grant date to the date on which the beneficiary acquires the right to receive the shares, with a corresponding adjustment in equity. Costs were determined based on the share price on the grant date.

18. Use of estimates and judgements

    The preparation of the financial statements requires the Company's Management to make estimates and adopt assumptions in its best judgment and based on historical experience and other factors considered relevant, which impact the amounts presented for certain assets and liabilities, as well as the amounts of revenues, costs and expenses in the presented fiscal years. Since Management's judgment involves estimates regarding the probability of future events, the actual amounts may differ from these estimates.

    Significant estimates and assumptions are used on the accounting of revenue, that consider estimated budgeted cost of projects (item (a) above), provision for maintenance of real estate (item (n) above); depreciation and amortization on property and equipment and intangible asset items, subject to useful lives and the residual values estimates (items (h), (i) and (j) above); provisions for civil, labor and tax risks (item (m) above); long-term incentive programs (item (q) above), fair values of financial instruments and credit risk (item (e) above), goodwill on investments acquisitions (item

    (g) above) and the realization of deferred tax assets (item (t) below).

    The Group revises its estimates and assumptions at least annually. The effects arising from these revisions are recognized in the year when the estimates are revised if such revision impacts only such year, or also in subsequent years if the revision impacts both the current and future fiscal years.

19. Functional, reporting currency and currency conversion

    The Group's functional and presentation currency used in the consolidated and parent company financial statements is the Brazilian Real, except for the subsidiary MRV (US) Holdings Corporation and its subsidiaries whose functional currency is the US dollar. The Group translates the financial statements of this subsidiary, as follows:

    • For assets and liabilities, the closing exchange rate is used;

    • For income and expenses in the statement of income and comprehensive income and for cash flows, the average exchange rate for the period is used;

    • All resulting exchange variations were recognized in other comprehensive income and accumulated in currency translation adjustments in equity. If the subsidiary is not a wholly owned subsidiary, the corresponding portion of the translation differences is attributed to non-controlling interest.

    The financial information is presented in thousands of Brazilian reais, unless otherwise stated.

20. Taxation

Current and deferred income tax, social contribution and taxes on sales are recognized in profit or loss, except when they correspond to items recognized in "Other comprehensive income", or directly in equity, in which case current and deferred taxes are also recognized in "Other comprehensive income" or directly in equity, respectively.

The income tax and social contribution, and taxes on sales expenses represent the sum of current and deferred taxes.

Deferred tax assets and liabilities are measured using the tax rates applicable for the period in which the liability is expected to be settled, or the asset is expected to be realized, based on the tax rates set forth in the tax law prevailing at the end of each fiscal year, or when new legislation has been substantially approved. The measurement of deferred tax assets and liabilities reflects the tax consequences that would result from the way the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Income tax and social contribution Current taxes

As allowed by prevailing tax legislation, the Group adopts the cash basis to calculate income from real estate development, and this income is used to determine taxable income.

The provision for income tax and social contribution is based on taxable income for the year. Taxable income differs from the profit reported in the statement of profit or loss, since it excludes income or expenses that are taxable or deductible in other years, as well as permanently nontaxable or non-deductible items. The provision for income tax and social contribution is calculated separately for each company based on the prevailing tax rates.

The Company and its subsidiaries in Brazil calculate income tax (IRPJ) and social contribution (CSLL) based on actual taxable income, deemed income or special taxation regime (RET) as detailed below:

• Actual taxable income - adopted by the Company. Under this taxation system, the income tax is calculated at the rate of 15%, plus a 10% surtax on taxable income above R$240, and social contribution is calculated at the rate of 9%, and both take into consideration the offset of tax loss carryforwards, limited to 30% of taxable income per fiscal year.

• Special taxation regime (RET) - adopted by certain projects of the Company and subsidiaries. As allowed by Law 12024, of August 27, 2009, which amends Law 10931/2004 that created the RET, it was elected to submit these projects to the earmarked assets and opt for the RET. For these projects, the consolidated income tax and social contribution, and the security funding tax on revenue (COFINS) and the social integration program tax on revenue (PIS) charges are calculated at the total overall tax rate of 4% (1.92% for IRPJ and CSLL and 2.08% for PIS and COFINS) or 1% (0.47% for IRPJ and CSLL and 0.53% for PIS and COFINS) on gross revenue received.

• Deemed income - adopted by certain subsidiaries. Under the deemed income taxation system, each company's income for income tax and social contribution determination purposes is calculated on real estate revenue received at the 8 and 12 percent tax rates, respectively. The income tax and social contribution rates prevailing at the end of each fiscal year (15% plus a 10% surtax on income exceeding R$240 per year for income tax, and 9% for social contribution) are levied on deemed income.

The subsidiary MRV (US) Holdings Corporation and subsidiaries whose tax jurisdiction is the United States calculates income tax based on rate of 25.35% on taxable profit, which considers profit before income tax, plus and/or less deductible and/or taxable incomes/expenses.

Deferred taxes

Deferred income tax and social contribution ("Deferred taxes") are fully recognized as prescribed by CPC 32 and IAS 12 Income Tax on the temporary differences between assets and liabilities recognized for tax purposes and related amounts recognized in the financial statements by applying the statutory tax rates in effect on the date the financial statements were prepared and applicable when such temporary differences reverse.

Deferred tax assets are recognized only to the extent that it is probable that future taxable income will be generated to realize such deferred tax assets or loss carryforwards. The realization of deferred tax assets is assessed at the end of each annual reporting period and, when it is no longer probable that future taxable income will be available to recover of all or part of the assets, they are adjusted to the expected recoverable amount.

Taxes on revenue

Revenue is stated net of taxes on sales (PIS and COFINS). For PIS and COFINS calculation purposes, the total tax rate is 9.25% for taxation based on actual taxable income, 3.65% under the deemed income taxation and 2.08% under the RET.

Financial income earned by legal entities subject to the noncumulative calculation regime is subject to a 0.65% PIS tax rate and a 4% COFINS tax rate.