Financial
Statements
2023
MRV Engenharia e Participações S.A. | |
Financial Statements | |
December 31, 2023 | |
Contents | |
Independent Auditor's Report on the Consolidated and Individual Financial Statements | 1 |
Management Report | 8 |
Reviewed Financial Statements | |
Balance Sheets | 16 |
Statements of Income | 17 |
Statements of Comprehensive Income | 18 |
Statements of Changes in Equity | 19 |
Statements of Cash Flows | 20 |
Statements of Value Added | 21 |
Notes to the Financial Statements | |
1. General information | 22 |
2. Presentation of financial statements and significant accounting policies | 22 |
3. Adoption of new standards and new standards issued and not yet adopted | 34 |
4. Cash and cash equivalents | 34 |
5. Marketable securities | 35 |
6. Trade accounts receivable | 36 |
7. Inventories (real estate for sale) | 40 |
8. Equity interests in investees | 41 |
9. Investment Property | 45 |
10. Property and equipment | 47 |
11. Intangible assets | 48 |
12. Loans, financing and debentures | 49 |
13. Land payables | 54 |
14. Advances from customers | 55 |
15. Payroll and related liabilities | 56 |
16. Tax payables | 56 |
17. Provision for maintenance of real estate | 57 |
18. Provision for civil, labor and tax risks | 57 |
19. Related parties | 59 |
20. Equity | 63 |
21. Operating segment | 68 |
22. Net operating revenue | 69 |
23. Costs and expenses | 69 |
24. Financial expenses and income | 70 |
25. Financial instruments | 70 |
26. Current and deferred taxes | 78 |
27. Supplemental disclosures of cash flow information | 80 |
28. Unrealized revenues, costs to be incurred and cancellations | 81 |
29. Insurance | 82 |
30. Approval of the Financial Statements | 82 |
Fiscal Council's Opinion | 83 |
Audit Committee Report | 84 |
Directors' Statement | 92 |
MANAGEMENT REPORT - 2023
Management Report 2023
Dear Shareholders,
Pursuant to legal and statutory provisions, MRV Engenharia e Participações S.A. ("Company" or "MRV") Management submits for your consideration the Management Report and Financial Statements of the Company, accompanied by the report of independent auditors, for the fiscal year ended on December 31, 2023.
Management Report
MRV Real Estate Development
The year of 2023 was marked by the significant growth of MRV Real Estate Development´s operation, achieving important milestones such as a Net Revenue of R$ 7.2 billion and Net Pre-Salestotaling R$ 8.5 billion (%MRV).
This represents a 45% expansion in the Potential Sales Value (PSV) sold in 2023 compared to 2022, marking the highest growth in net pre-sales in the sector, with an increase of R$ 2.65 billion, or 45% compared to the previous year. The progress achieved during this period surpassed the combined growth of the main competitors.
Net Pre - Sales Growth
- 2,654 MM
8,548 | ||
+ 45% | ||
Σ Δ 2,289 MM | ||
5,894 | ||
+ 26% | ||
+ 33% | + 29% | 3,918 |
3,136 | 3,123 | 3,108 |
2,363 | 2,416 |
2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 |
MRV Real Estate Development | Competitor 1 | Competitor 2 | Competitor 3 |
The significant increase in sales volume was achieved with price increases above the accumulated inflation, explaining the consistent improvement in the Gross Margin of New Sales to levels equivalent to MRV's best operational years, confirming the success of the Company's turnaround.
8
MANAGEMENT REPORT - 2023
Accumulated Average Ticket (%) x Accumulated INCC-DI
70.0% 60.0% 50.0%
57.45% |
52.94% |
44.71% |
40.0% | ||
30.0% | ||
20.0% | ||
10.0% | 4.87% | |
1.74% | ||
0.0% | 2.55% | |
-0.74% | ||
-10.0% | ||
1Q20 | 2Q20 | 3Q20 |
39.33% | ||||
33.21% | 34.60% | 35.37% | ||
26.31% | 36.46% | |||
21.59% | 23.88% | 28.64% | 32.67% | |
19.40% | ||||
13.31% | 20.39% |
8.81% | |||||
6.56% | 8.15% | 11.49% | 8.22% | 11.58% | |
3.38% | |||||
4Q20 | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 1Q23 |
Accumulated INCC-DI | Accumulated Average Ticket (%) |
38.43% | 39.27% | 40.08% |
2Q23 | 3Q23 | 4Q23 |
In the current scenario of stabilized costs, the recovery of the Gross Margin of New Sales is gradually reflected in the accounting Gross Margin as the sold units are produced. In 4Q23, MRV showed an improvement of 4.4 percentage
points in Gross Margin compared to the same period of the previous year. This recovery is expected to persist until
the convergence of the accounting Gross Margin with MRV's vision of the future.
Considering the operation in December 2023, we are already selling with a Gross Margin on New Sales, excluding capitalized interest, of 37%, which puts us back at the top of profitability in the sector.
With the gradual improvement of the Gross Margin, coupled with the portfolio assignment strategy, the Company reported a cash generation of R$ 131 million in 4Q23, an evolution of R$ 262 million compared to the previous quarter.
MRV Real Estate Development
Cash Generation - R$ Million
131
4Q23
Δ + 262 million
1Q23 2Q23 3Q23 4Q23
(80)
(121)(131)
With the significant volume of sales reported during the year, MRV recorded an increase of R$ 1.05 billion in Unearned Revenues between 4Q22 and 4Q23, totaling R$ 2.53 billion. This substantial increase is composed of sales with a high Gross Margin on New Sales, a result of the price increase.
Housing Programs:
In addition to the strengthening of the MCMV Federal Program, various State and Municipal programs have gained relevance. This is extremely positive for MRV, which is the only company with the geographical spread that allows it
to benefit from all these programs.
9
MANAGEMENT REPORT - 2023
The following cities and states already have housing programs complementary to MCMV or are in the process of implementation, meaning that their housing subsidies will complement the program's subsidy. This will be an important lever for us to continue reducing the pro-solutogranted to customers.
Follow on:
On July 13, 2023, MRV concluded its public offering of shares (follow-on), totaling R$ 1 billion, with the aim of accelerating the deleveraging process of the Company.
The fundraising contributed to reducing the Net Debt / Equity ratio by 18 percentage points compared to 2022.
Financial Leverage Brazil´s Operation
7,000
6,000
5,000
4,00031.7%
3,000
2,000 1,748
1,000
0
57.0%
39.2%
3,074
2,399
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
2021 | 2022 | 2023 | |
Net Debt | Net Debt/Equity | ||
For more information about the offering, please refer to the "Public Offering Closing Announcement" and other documents available on the Investor Relations website.
10
MANAGEMENT REPORT - 2023
ESG
MRV&CO is a leader in the ESG agenda in the sector and one of the main references in the country, with a long history of investments in important projects related to Sustainability, Corporate Governance, and Environmental preservation. The company continued to strongly engage in these issues throughout 2023.
As a signatory of the UN Global Compact since 2016, MRV&Co's sustainability strategy is aligned with the Sustainable Development Goals (SDGs) and the 10 Principles of the Global Compact. In March 2023, MRV&Co, along with 45 other committed companies and participants in the UN Global Compact's Brazil Network, joined as a signatory to the Net Zero Movement. The collective goal is to reduce 2 gigatons of CO2 in cumulative emissions until 2030, committing to reduce greenhouse gas emissions in line with the criteria of the Science Based Targets initiative (SBTi).
Additionally, the company has been part of the Corporate Sustainability Index (ISE B3) for 8 consecutive years, which evaluates the performance of large companies listed on B3 and their practices in corporate governance, environmental sustainability, and social responsibility.
GOVERNANCE
MRV&CO started the year 2023 with active participation in the agendas of the UN Global Compact's 100% Transparency Movement, the Integrity Movement in the Engineering and Construction sector, and the UN Global Compact Anti- Corruption Platform.
Once again, we have been included, under the evaluation of the Office of the Comptroller General, in an exclusive group of companies approved for the 2022-2023 Pro-Ethicsinitiative. This recognition reinforces MRV&CO's commitment to implementing measures aimed at preventing, detecting, and remedying acts of corruption and fraud.
SOCIAL
500 Thousand Keys Delivered
As of the beginning of 2024, MRV&CO has achieved an unprecedented milestone in the Brazilian market with 500 thousand keys delivered. With half a million homes in our portfolio, we estimate that over 1.6 million people live in properties built by MRV&CO, surpassing the population of Recife, the ninth most populous capital in the country. Currently, 1 in every 133 Brazilians live in a property constructed by the company. In nearly 45 years of operation, the company has generated 370 thousand direct jobs and over
1.2 million indirect jobs. Additionally, the company has planted over 2 million trees and invested more than R$2 billion in
infrastructure projects in the vicinity of its developments.
11
MANAGEMENT REPORT - 2023
Capital Markets
Our shares have been traded on the B3 S.A. - Securities, Commodities and Futures Exchange (B3) since 2007, held to the highest levels of governance - Novo Mercado, and are listed in the portfolio of 16 other indices.
MRVE3 shares closed the year valued at R$ 11.23, at a Market Cap of R$ 6.3 billion, with an average trade volume of R$ 119.6 million (average/day).
On December 31, 2023, the Company held 561,970,557 shares, with a trust of 1,348 shares.
Operational Performance
Note: all values included in this report consider participation attributed to stockholders in the company, except where expressly indicated otherwise.
Operational Indicators (%MRV) | 2023 | 2022 | 2021 |
MRV&Co | |||
Land Bank (R$ billion) | 65.3 | 75.5 | 72.9 |
Launches (R$ million) | 6,178 | 9,146 | 9,442 |
Units | 21,359 | 36,086 | 44,651 |
Net Pre-Sales (R$ million) | 9,332 | 7,876 | 8,101 |
Units | 38,095 | 33,326 | 38,758 |
Built Units | 33,446 | 35,550 | 40,409 |
Transferred Units | 31,105 | 30,707 | 37,628 |
Chg. 2023 x | Chg. 2023 x | ||
2022 | 2021 | ||
13.5% | ↓ | 10.4% | ↓ |
32.5% | ↓ | 34.6% | ↓ |
40.8% | ↓ | 52.2% | ↓ |
18.5% | ↑ | 15.2% | ↑ |
14.3% | ↑ | 1.7% | ↓ |
5.9% | ↓ | 17.2% | ↓ |
1.3% | ↑ | 17.3% | ↓ |
Inventories at Market Value (R$ million) | 12,390 | 12,398 | 9,209 |
0.1% ↓ 34.5% ↑
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MANAGEMENT REPORT - 2023
Financial Performance - MRV&Co
Note: The information contained and analyzed below is derived from the consolidated financial statements for the years ended December 31, 2023, 2022 and 2021, unless otherwise stated.
Consolidated Financial Highlights - MRV&Co | 2023 | 2022 | 2021 | Chg. 2023 x | Chg. 2023 x | ||
(R$ million) | 2022 | 2021 | |||||
Total Net Revenue | 7,430 | 6,645 | 7,106 | 11.8% | ↑ | 4.6% | ↑ |
Gross Profit | 1,687 | 1,318 | 1,829 | 28.1% | ↑ | 7.7% | ↓ |
Gross Margin (%) | 22.7% | 19.8% | 25.7% | 2.9 p.p. ↑ | 3.0 p.p. ↓ | ||
Gross Margin ex. financial cost (%) | 26.2% | 23.4% | 27.8% | 2.9 p.p. ↑ | 1.6 p.p. ↓ | ||
EBITDA | 463 | 822 | 1,406 | 43.7% | ↓ | 67.1% | ↓ |
EBITDA Margin (%) | 6.2% | 12.4% | 19.8% | 6.1 p.p. ↓ | 13.6 p.p. ↓ | ||
Net Income | (30) | (177) | 779 | 83.1% | ↓ | 103.8% | ↓ |
Net Margin (%) | -0.4% | -2.7% | 11.0% | 2.3 p.p. ↑ | 11.4 p.p. ↓ | ||
Earnings per share (R$) | (0.057) | (0.350) | 1.613 | 83.6% | ↓ | 103.5% | ↓ |
ROE | -0.5% | -2.9% | 13.3% | 2.4 p.p. ↑ | 13.8 p.p. ↓ | ||
Unearned Gross Sales Revenues | 2,665 | 1,552 | 2,034 | 71.7% ↑ | 31.0% ↑ | ||
Unearned Costs of Units Sold | (1,607) | (1,016) | (1,334) | 58.2% ↑ | 20.5% ↑ | ||
Unearned Results | 1,058 | 536 | 700 | 97.3% ↑ | 51.1% ↑ | ||
% Unearned Margin | 39.7% | 34.5% | 34.4% | 5.2 p.p. ↑ | 5.3 p.p. ↑ | ||
Cash Generation | (1,419) | (2,232) | (554) | 36.4% ↑ | 156.1% | ↓ |
EBITDA
EBITDA (R$ million) | 2023 | 2022 | 2021 | Chg. 2023 x | Chg. 2023 x | ||
2022 | 2021 | ||||||
MRV&Co | |||||||
Income Before Taxes | (73) | 126 | 1,154 | 158.4% | ↓ | 106.4% | ↓ |
(+) Depreciation and Amortization | 133 | 176 | 129 | 24.4% | ↓ | 3.4% | ↑ |
(-) Financial Results | (143) | (237) | 25 | 39.5% | ↓ | 670.9% | ↓ |
(+) Financial charges recorded under cost of sales | 260 | 283 | 148 | 8.2% | ↓ | 75.3% | ↑ |
(+) Financial charges recorded under investment property | - | 49 | 0 | 100.0% | ↓ | 100.0% | ↓ |
EBITDA | 463 | 822 | 1,406 | 43.7% | ↓ | 67.1% | ↓ |
EBITDA Margin | 6.2% | 12.4% | 19.8% | 6.1 p.p. ↓ | 13.6 p.p. ↓ |
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MANAGEMENT REPORT - 2023
Consolidated Net Debt
Net Debt (R$ million) | Dec/23 | Dec/22 | Dec/21 | Chg. Dec/23 x Chg. Dec/23 x | |||
Dec/22 | Dec/21 | ||||||
MRV&Co | |||||||
Total debt | 8,327 | 7,429 | 5,364 | 12.1% | ↑ | 55.2% | ↑ |
(-) Cash and cash equivalents & Marketable Securities | (3,283) | (2,892) | (2,750) | 13.5% | ↑ | 19.4% | ↑ |
(-) Derivative Financial Instruments | 5 | 343 | 55 | 98.5% | ↓ | 90.3% | ↓ |
Net Debt | 5,050 | 4,667 | 2,669 | 8.2% ↑ | 89.2% ↑ | ||
Total Shareholders' Equity | 7,565 | 6,574 | 6,574 | 15.1% | ↑ | 15.1% | ↑ |
Net Debt / Total Shareholders' Equity | 66.8% | 71.0% | 40.6% | 4.2 p.p. ↓ | 26.2 p.p. ↑ | ||
EBITDA LTM | 463 | 822 | 1,406 | 43.7% ↓ | 67.1% | ↓ | |
Net Debt / EBITDA LTM | 10.90x | 5.68x | 1.90x | 92.0% ↑ | 474.6% | ↑ |
14
MANAGEMENT REPORT - 2023
Relationship with Independent Auditors
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 2023. The Company's policy in engaging the services of independent auditors ensures that there is no conflict of interest, loss of independence, or objectivity.
Arbitration Clause
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.
Message from the Executive Board
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, 2023.
Acknowledgements
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, February 29, 2024.
The Management
15
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MRV Engenharia e Participações SA published this content on 29 February 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 March 2024 00:53:56 UTC.