Condensed Interim Financial Information (Unaudited) Rede Or__30.09.2015_(Em_ing · Condensed Interim…

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<ul><li><p>Condensed InterimFinancial Information(Unaudited)</p><p>Rede DOr So Luiz S.A.September 30, 2015with Independent Auditors Review Report</p></li><li><p>Rede DOr So Luiz S.A.</p><p>Condensed interim financial information (unaudited)</p><p>September 30, 2015</p><p>Contents</p><p>Independent auditors review report ................................................................................................ 1</p><p>Condensed interim financial information</p><p>Condensed balance sheets ............................................................................................................. 3Condensed income statements ....................................................................................................... 5Condensed statements of comprehensive income .......................................................................... 6Condensed statements of changes in equity ................................................................................... 7Condensed statements of cash flows .............................................................................................. 8Condensed statements of value added ........................................................................................... 9Notes to condensed interim financial information .......................................................................... 10</p></li><li><p>Centro Empresarial PB 370Praia de Botafogo, 3705 ao 10 andares - Botafogo22250-040 - Rio de Janeiro, RJ, BrasilTel: (5521) 3263-7000Fax: (5521) 3263-7003ey.com.br</p><p>A member firm Ernst &amp; Young Global Limited</p><p>1</p><p>A free translation from Portuguese into English of Independent Auditors Review Report on Individual andConsolidated Condensed Interim Financial Information prepared in Brazilian currency</p><p>Independent auditors review report</p><p>The Shareholders, Board of Directors and OfficersRede DOr So Luiz S.A.So Paulo - SP</p><p>Introduction</p><p>We have reviewed the accompanying individual and consolidated condensed interim financialinformation of Rede DOr So Luiz S.A. (Company) for the nine-month period endedSeptember 30, 2015, which comprise the balance sheet as at September 30, 2015, and the relatedcondensed statements of income, of comprehensive income, of changes in equity and cash flowsfor the nine-month period then ended, including the explanatory notes.</p><p>Managements responsibility for the interim financial information</p><p>Management is responsible for the preparation and fair presentation of the individual andconsolidated condensed interim financial information in accordance with CPC 21 (R1) - InterimFinancial Reporting and with IAS 34 - Interim Financial Reporting issued by the InternationalAccounting Standards Board (IASB). Our responsibility is to express a conclusion on thiscondensed interim financial information based on our review.</p><p>Scope of review</p><p>We conducted our review in accordance with Brazilian and International Standards on ReviewEngagements (NBC TR 2410 and ISRE 2410 - Review of Interim Financial Information Performedby the Independent Auditor of the Entity, respectively). A review of interim financial informationconsists of making inquiries, primarily of persons responsible for financial and accounting matters,and applying analytical and other review procedures. A review is substantially less in scope thanan audit conducted in accordance with auditing standards and consequently does not enable us toobtain assurance that we would become aware of all significant matters that might be identified inan audit. Accordingly, we do not express an audit opinion.</p></li><li><p>2</p><p>Conclusion</p><p>Based on our review, nothing has come to our attention that causes us to believe that theaccompanying individual and consolidated condensed interim financial information referred toabove is not fairly presented, in all material respects, in accordance with CPC 21 (R1) and IAS 34.</p><p>Other matters - Statements of value added</p><p>We have also reviewed the individual and consolidated statements of value added for the nine-month period ended September 30, 2015, prepared under managements responsibility, thepresentation of which is required by the Brazilian Corporation Law for publicly-held companies,however not required for privately-held entities. These statements have been subject to the samereview procedures previously described and, based on our review, nothing has come to ourattention that causes us to believe that they are not fairly prepared, in all material respects, inrelation to the overall accompanying individual and consolidated condensed interim financialinformation.</p><p>Rio de Janeiro, November 16, 2015.</p><p>ERNST &amp; YOUNGAuditores Independentes S.S.CRC-2SP015199/F-6</p><p>Wilson J. O. MoraesAccountant CRC-1RJ 107.211/O-1</p></li><li><p>3</p><p>A free translation from Portuguese into English of Individual and Consolidated Condensed Interim FinancialInformation prepared in Brazilian currency</p><p>Rede DOr So Luiz S.A.</p><p>Condensed balance sheetsSeptember 30, 2015 (unaudited) and December 31, 2014(In thousands of reais)</p><p>Company ConsolidatedNote 09/30/2015 12/31/2014 09/30/2015 12/31/2014</p><p>AssetsCurrent assets</p><p>Cash and cash equivalents 4 32,127 38,042 79,361 55,182Marketable securities 4 683,587 619,703 911,501 848,646Trade accounts receivable 5 1,213,765 973,368 1,712,217 1,267,239Inventories 6 81,295 82,887 112,014 106,687Taxes recoverable 62,552 36,063 92,054 64,384Financial instrument - promissory note 18 944,435 - 944,435 -Related parties 7 17,341 23,870 - 10,715Dividends receivable 27,977 41,357 - -Receivables from disposal of properties 11 73,926 73,926 73,926 73,926Other 82,467 34,201 122,303 66,903</p><p>Total current assets 3,219,472 1,923,417 4,047,811 2,493,682</p><p>Noncurrent assetsRelated parties 7 587,823 461,403 25,833 125,924Marketable securities 4 - - 74,597 68,658Judicial deposits 16 59,724 50,752 73,294 61,184Deferred income and social contribution taxes 19 - - 57,216 8,864Derivative financial instruments 26 61,688 28,861 61,688 28,861Investments 8 1,088,503 585,774 94,450 157,806Property and equipment 9 1,634,472 1,217,691 2,070,265 1,546,318Intangible assets 10 1,836,030 1,556,715 2,652,410 1,803,646Others 2,403 2,403 2,718 2,754</p><p>Total noncurrent assets 5,270,643 3,903,599 5,112,471 3,804,015</p><p>Total assets 8,490,115 5,827,016 9,160,282 6,297,697</p></li><li><p>4</p><p>Company ConsolidatedNote 09/30/2015 12/31/2014 09/30/2015 12/31/2014</p><p>Liabilities and equityCurrent liabilities</p><p>Trade accounts payable 180,046 180,314 266,131 243,613Loans and financing 12 29,642 21,185 33,112 23,665Debentures 13 340,921 52,131 375,689 57,703Salaries, provisions and social charges 296,910 250,503 381,461 299,208Tax liabilities 14 114,062 68,597 177,632 99,359Taxes in installments 14 17,525 20,082 29,870 22,021Accounts payable for acquisitions 15 170,442 199,927 182,319 199,927Dividends payable 147,882 156,028 151,259 159,578Deferred gain on property disposal 11 3,920 3,920 3,920 3,920Other 49,873 45,220 66,772 63,029</p><p>Total current liabilities 1,351,223 997,907 1,668,165 1,172,023</p><p>Noncurrent liabilitiesLoans and financing 12 143,743 76,063 152,660 80,514Debentures 13 2,440,881 2,717,253 2,702,810 3,013,495Related parties 7 126,997 30,610 340 1,205Taxes paid in installments 14 123,131 122,671 153,279 148,511Accounts payable for acquisitions 15 28,108 66,455 58,275 66,455Deferred income and social contribution taxes 19 131,745 47,661 183,935 75,739Provision for contingencies 16 113,986 116,777 223,027 135,747Provision for losses on investments 8 79,868 64,495 - 5,560Deferred gain on property disposal 11 85,020 87,956 85,020 87,956Other 40,737 40,788 43,635 40,222</p><p>Total noncurrent liabilities 3,314,216 3,370,729 3,602,981 3,655,404</p><p>Equity 18Capital 867,776 452,530 867,776 452,530Capital reserves 2,348,505 259,408 2,348,505 259,408Treasury stock (165,727) (161,919) (165,727) (161,919)Income reserves 270,524 304,137 270,524 304,137Other reserves - 600,000 - 600,000Retained earnings 499,374 - 499,374 -</p><p>Total equity 3,820,452 1,454,156 3,820,452 1,454,156</p><p>Advances for future capital contribution 4,224 4,224 4,224 4,224Non-controlling interest - - 64,460 11,890Total equity 3,824,676 1,458,380 3,889,136 1,470,270</p><p>Total liabilities and equity 8,490,115 5,827,016 9,160,282 6,297,697</p><p>See accompanying notes.</p></li><li><p>5</p><p>Rede DOr So Luiz S.A.</p><p>Condensed income statements (unaudited)Nine-month periods ended September 30, 2015 and 2014(In thousands of reais)</p><p>Company ConsolidatedNote 09/30/2015 09/30/2014 09/30/2015 09/30/2014</p><p>Net revenue 20 3,399,967 2,864,185 4,730,625 3,659,162</p><p>Cost of services rendered 21 (2,439,735) (2,173,527) (3,528,184) (2,895,439)</p><p>Gross profit 960,232 690,658 1,202,441 763,723</p><p>General and administrative expenses 22 (156,756) (147,763) (155,707) (146,853)Equity pickup 8 171,805 56,669 26,563 26,354Other operating income (expenses), net 23 (8,307) (108,740) (11,900) (116,866)</p><p>Income before financial income and income and socialcontribution taxes 966,974 490,824 1,061,397 526,358</p><p>Financial income 24 198,606 48,008 217,766 66,443Financial expenses 24 (517,929) (286,456) (557,788) (325,888)</p><p>Income before income taxes 647,651 252,376 721,375 266,913</p><p>Income taxes 19 (148,277) (45,311) (211,637) (57,565)</p><p>Net income for the period 499,374 207,065 509,738 209,348</p><p>Net income attributable to controlling shareholders 499,374 207,065 499,374 207,065Net income attributed to non-controlling shareholders - - 10,364 2,283</p><p>Basic earnings per share 25 1.2908 0.8118Diluted earnings per share 25 1.1496 0.7865</p><p>See accompanying notes.</p></li><li><p>6</p><p>Rede DOr So Luiz S.A.</p><p>Condensed statements of comprehensive income (unaudited)Nine-month periods ended September 30, 2015 and 2014(In thousands of reais)</p><p>Company Consolidated09/30/2015 09/30/2014 09/30/2015 09/30/2014</p><p>Net income for the period 499,374 207,065 509,738 209,348Other comprehensive income - - - -</p><p>Total comprehensive income (losses) 499,374 207,065 509,738 209,348</p><p>Attributable to:Controlling shareholders 499,374 207,065 499,374 207,065Non-controlling shareholders - - 10,364 2,283</p><p>See accompanying notes.</p></li><li><p>7</p><p>Rede DOr So Luiz S.A.</p><p>Condensed statements of changes in equity (unaudited)Nine-month periods ended September 30, 2015 and 2014(In thousands of reais)</p><p>Capital reserve Income reserves</p><p>Description Capital</p><p>Goodwillreserve</p><p>(issue ofshares)</p><p>Goodwill oncapital</p><p>transactions</p><p>Share-basedpayment</p><p>reserveTreasury</p><p>sharesLegal</p><p>reserveInvestmentreserve</p><p>Otherreserves</p><p>Retainedearnings Total equity</p><p>Advance forfuture capital</p><p>increase</p><p>Non-controlling</p><p>interests Total</p><p>Balance as of December 31, 2013 261,531 185,353 (52,416) 38,347 (157,117) 8,666 272,485 600,000 - 1,156,849 4,224 9,413 1,170,486</p><p>Net income for the period - - - - - - - - 207,065 207,065 - 2,283 209,348Reserve for share-based payment - - - 23,071 - - - - - 23,071 - - 23,071Treasury stock - - - - (4,394) - - - - (4,394) - - (4,394)Dividends and interest on equity - - - - - - (208,648) - - (208,648) - (216) (208,864)</p><p>Balances at September 30, 2014 261,531 185,353 (52,416) 61,418 (161,511) 8,666 63,837 600,000 207,065 1,173,943 4,224 11,480 1,189,647</p><p>Balances at December 31, 2014 452,530 246,114 (52,416) 65,710 (161,919) 8,666 295,471 600,000 - 1,454,156 4,224 11,890 1,470,270</p><p>Capital increase 267,582 1,637,491 - - - - (33,613) - - 1,871,460 - - 1,871,460Conversion of debentures into shares 147,664 452,336 - - - - - (600,000) - - - - -Acquisition of controlling interest in jointly-controlled insubsidiary - - - - - - - - - - - 42,630 42,630Acquisition of no-controlling interests - - (13,797) - - - - - - (13,797) - - (13,797)Treasury shares - - - - (3,808) - - - - (3,808) - - (3,808)Capital transactions involving non-controlling interests - - - - - - - - - - - (310) (310)Reserve for share-based payment - - - 13,067 - - - - - 13,067 - - 13,067Payment of dividends to non-controlling shareholders - - - - - - - - - - - (114) (114)Net income for the period - - - - - - - - 499,374 499,374 - 10,364 509,738</p><p>Balances at September 30, 2015 867,776 2,335,941 (66,213) 78,777 (165,727) 8,666 261,858 - 499,374 3,820,452 4,224 64,460 3,889,136</p><p>See accompanying notes.</p></li><li><p>8</p><p>Rede DOr So Luiz S.A.</p><p>Condensed statements of cash flows (unaudited)Nine-month periods ended September 30, 2015 and 2014(In thousands of reais, unless otherwise stated)</p><p>Company Consolidated09/30/2015 09/30/2014 09/30/2015 09/30/2014</p><p>Cash flows from operating activitiesIncome before income and social contribution taxes 647,651 252,376 721,375 266,913Adjustments to reconcile income with cash from operating activities</p><p>Depreciation and amortization 83,657 71,995 105,266 98,815Gain on disposal of properties (2,936) (2,941) (2,936) (2,941)Gain on acquisition in stages (65,598) - (65,598) -Interest, monetary and foreign exchange gains (losses), net 346,394 219,941 360,210 241,198Share-based payment 13,067 23,071 13,067 23,071Provision for contingencies - 2,692 (1,051) 1,782Equity pickup (171,805) (56,669) (26,563) (26,354)Provision for disallowances 128,003 79,706 202,739 122,698Allowance for doubtful accounts 17,215 43,573 10,529 48,464</p><p>(Increase) decrease in assets and liabilitiesTrade accounts receivable (362,960) (246,329) (564,703) (356,817)Inventories 1,866 (19,077) 6,846 (25,277)Taxes recoverable (25,108) 9,256 (20,972) (12,278)Judicial deposits (6,434) (4,531) (9,967) (5,645)Other assets (32,743) (14,428) (55,284) (12,131)Trade accounts payable (5,781) 1,618 (10,017) 13,250Payroll and related charges 43,230 84,071 63,075 106,477Tax liabilities (2,717) 16,512 (18,297) 33,750Taxes paid in installments (2,097) (7,676) (2,203) 4,197Transactions with related parties 24,948 (65,799) 72,532 (1,590)Contingencies (30,811) (16,832) (31,013) (16,594)Other liabilities 6,662 25,321 17,603 (6,072)</p><p>603,703 395,850 764,638 494,916</p><p>Payment of interest (347,110) (206,312) (394,286) (224,214)Payment of income and social contribution taxes (431) (856) (29,391) (14,606)</p><p>Net cash generated by operating activities 256,162 188,682 340,961 256,096</p><p>Cash flows from investing activitiesBusiness acquisition (597,766) - (545,845) -Capital increase in subsidiaries (19,760) - - -Additions to property and equipment (487,129) (271,586) (556,045) (296,445)Additions to intangible assets (13,112) - (8,693) (30,002)Cash from acquisition of subsidiaries 9,551 - - -Marketable securities (3,623) 328,075 41,021 314,793</p><p>Net cash used in investing activities (1,111,839) 56,489 (1,069,562) (11,654)</p><p>Cash flows from financing activitiesCapital increase 913,228 - 913,228 -Treasury stock (3,808) (4,394) (3,808) (4,394)Payment of dividends and interest on equity 9,662 (216,272) 12,349 (216,345)Loans and financing taken out 246,802 - 246,802 -Payment of debentures (19,793) (19,347) (37,101) (19,347)Payment for acquisitions (87,805) - (87,805) -Repayments of loans and financing (208,524) (34,675) (290,885) (47,788)</p><p>Cash from (used in) financing activities 849,762 (274,688) 752,780 (287,874)</p><p>Increase (decrease) in cash and cash equivalents (5,915) (28,661) 24,179 (43,432)Cash and cash equivalents at beginning of period 38,042 57,788 55,182 89,522Cash and cash equivalents at end of period 32,127 29,127 79,361 46,090</p><p>See accompanying notes.</p></li><li><p>9</p><p>Rede DOr So Luiz S.A.</p><p>Statements of value added...</p></li></ul>

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