Glossary

ABRASCA:
Brazilian Association of Publicly-Held Companies. It is a civil, non-profit association of companies legally registered as publicly-traded corporations.

APIMEC:
Acronym for Association of Capital Market Investment Analysts and Professionals. The National Apimec was created in June 1988, designed to join together all Regional Apimec's - São Paulo, Rio de Janeiro, Minas Gerais, Northeast, South and Federal District.

Asset:
("Ativo" em Portuguese) are Assets, rights and amounts belonging to a company or an individual. Ex: real estate, invested money, stocks, jewelry, etc. In the financial market, the equivalent English synonym - asset - is commonly used.

Basel Accord:
Set of banking rules released by the Basel Committee on Banking Supervision in 1988, with the aim of strengthening the global financial system. Its main characteristic is the requirement of a minimum percentage resulting from the division of the capital of a financial institution by its respective assets weighted by the inherent risk.

Beta:
Risk measure of an asset, used to quantify the sensitivity of an asset in relation to a certain index.

BNDES:
National Bank for Economic and Social Development Public Company whose activities are: studying the problems of global economic development and examining specific projects, aiming to boost the country's economic sector, strengthen the national business sector, mitigate regional imbalances, promote the integrated development of agricultural, industrial and service activities, and promoting export growth and diversification.

Bonds/Eurobonds:
These are bonds that banks issue through institutions abroad, which will be used as funding for loan operations in Brazil. These bonds have maturities of three to eight years, fixed or floating rates and with inclusion of goodwill or discounts, depending on market demand.

B3:
The Brazilian stock exchange joins in a single institution the former São Paulo Stock Exchange (Bovespa), the Brazilian Mercantile & Futures Exchange (BM&F) and Cetip, bringing together the securities and derivatives trading markets into one system, in the formal and over-the-counter market; commodity, currency and interest futures contracts; in addition to the central registry of trades of public and private securities.

BR GAAP:
Accounting principles accepted in Brazil.

Bylaws:
Set of norms and rules establishing institutional or organic principles of a collective entity or corporation, public or private.

Brasil 50 Index - IBrX50:
It is an index that measures the total return of a theoretical portfolio composed of 50 publicly-held companies, selected among the most traded on the São Paulo Stock Exchange, in terms of number of trades and financial volume. The IBrX-50 has the same characteristics as the IBrX - Brazil/Bovespa Index, which is composed of 100 shares selected among the most traded on the São Paulo Stock Exchange.

Brazil/Bovespa Index - IBX:
It is a price index that measures the return of a theoretical portfolio, composed of shares of 100 publicly traded companies, selected among the most traded on the São Paulo Stock Exchange, in terms of number of trades and volume financial. The shares that make up the index are weighted by the respective number of shares that are available for trading on the market. The Brazil Index is considered an index that measures the total return on the stocks comprising its portfolio.

Basic Interest Rate - SELIC Rate:
Benchmark basic interest rate charged by the government, disclosed by the Monetary Policy Committee (Copom).

Current assets:
These are the company's most liquid assets; that is, these assets or rights can be converted relatively easily and speedily into cash. ex.: trade bills receivable. In the technical language of accounting, it is defined as an asset or right to be realized within a period of less than 365 days from the end of the fiscal year.

CAGR:
Compound annual growth rate.

Chamber of Arbitration:
It is a forum capable of resolving conflicts within the financial system, being an important step towards making market regulation more transparent and boosting confidence within the financial system.

Cash Yield:
Indicator that measures the annual financial return of a share.

Cash Flow:
Defines the movement of cash inflows and outflows in a company's cash positions. It also provides a demonstrative and chronological table for forecasting the inflows and outflows of cash resources in a future period (days, months, years) that is an instrument of fundamental importance for the financial programming of a company's operations or for the implementation of a project. In the latter case, the cash flow analysis allows the definition of the project's equilibrium point.

Circuit Breaker:
Rule adopted by stock exchanges in which, whenever the index presents a decrease of ten percentage points, the trading session is immediately interrupted.

Convertible Debentures:
Those that allow the holder to the debentures into shares, pursuant with predetermined conditions.

Commercial Dollar:
Dollar value used as a parameter for import and export operations as well as a large part of financial operations, such as: investments in the country, dividend remittance, capital inflows, interest payments, etc.

Corporate Governance:
these are the practices and relationships between the Shareholders/Quotaholders, Board of Directors, Executive Board, Independent Audit and Fiscal Council with the purpose of optimizing the company's performance and facilitating access to capital. The term is designed to cover matters relating to the power of control and direction of a company, as well as the different forms and spheres of its exercise and the diverse interests that, in some way, are linked to the life of commercial companies.

Central Bank Bill - LBC:
Post-fixed security whose yield is linked to the over-rate (one-day). If the Central Bank raises or lowers the interest rate, it will immediately absorb the new level of interest.

Corporate Governance Level 1:
It is a special B3 trading segment intended for the listing of companies whose administrators and controllers voluntarily commit themselves to comply with requirements additional to those existing in the legislation. It aims to improve the provision of information to the capital market and encourage good corporate governance practices. Among the various commitments required for a company to be classified as Level 1, the following stand out: maintaining a minimum 25% of the share capital in circulation; conducting public offerings for the placement of shares; increase in quarterly information; compliance with transparency rules; disclosure of shareholder agreements and stock option programs; provision of an annual calendar of corporate events.

Corporate Governance Level 2:
In order to be classified as a Level 2 Company, in addition to accepting the obligations contained in Level 1, the company and its controllers adopt a much broader set of governance practices and additional rights for minority shareholders. In summary, the listing criteria for Level 2 Companies are: Unified mandate of a maximum of 2 years for the entire Board of Directors and composition of at least five members; Provision of an annual balance sheet according to US GAAP or IFRS standards; Extension to all shareholders holding common shares under the same conditions obtained by the controlling shareholders when the sale of control of the company and at least 80% of this amount to holders of preferred shares; Right to vote on preferred shares in some matters, such as transformation, incorporation, spin-off and merger of the company and approval of contracts between the company and companies of the same group; Obligation to carry out an offer to purchase all outstanding shares, at economic value, in the event of delisting or cancellation of the Level 2 contract.

Credit Risk:
Represents the risk that the issuer of the security (Debenture, Promissory Note, Commercial Paper, etc.) may not honor the principal and/or the payment of interest.

Custodial Fee:
Fee charged by a securities broker for maintaining the shares of its clients under its responsibility.

Default:
Non-fulfilment of contractual obligations. This occurs when the debtor presupposes it will not be able to pay the debt under the conditions or date established, or that it will not be possible to comply with certain clauses contained in the contract.

Derivatives:
These are financial transactions carried out through the index, foreign exchange, interest and options futures markets, in order to obtain differentiated returns.

Disclosure:
Refers to the disclosure of information. It is transparency that must permeate all of a company's management acts that do not deal with strategy (hence confidential), and is a measure required or imposed by the official regulatory bodies of the capital markets, compelling the company to disclose all material information, both positive or negative, that may influence an investment decision in that company.

Dividend:
Portion of a company's earnings that is distributed to the shareholders. It can be a cumulative dividend (which, if not paid in one year, is transferred to another), integral or pro-rata (which affects only the shares issued during the year and which, therefore, become proportional within the year to what is distributed).

DRI - Investor Relations Officer:
Is a member of the executive board of publicly-held companies designated to establish and maintain relations with a company's investing public and shareholders. Responsible for disclosing material information to the market, in addition to communications, clarifications and offering assistance to shareholders.

Extraordinary Shareholders Meeting (ESM):
Meeting of the shareholders of a company on an extraordinary basis, is foreseen in the company's Bylaws. Its objective is to analyze and resolve unforeseen events or to deliberate the circumstances of an eventual occurrence.

Export Notes:
Bonds with remuneration linked to a foreign currency, issued in the domestic market by an exporter, who has a contract with an importer of future supply of goods. It is a financial product that permits companies to position themselves in the face of different market expectations, protecting or guaranteeing results in the arbitration of financial indexes.

Efficiency Ratio:
Indicator of operating expenses over revenues.

Earnings per Share - EPS:
Net Income divided by the company's number of shares.

Exchange or Currency Variation Risk:
This type of risk is associated with fluctuations in the exchange rate, mainly in the dollar. These fluctuations may increase or decrease the value of funds, depending on the strategy adopted.

Funding:
A transaction whose purpose is to raise funds, through the issuance of securities or by carrying out a credit operation, as borrower.

Fiscal Council:
Supervises the company's financial situation. It consists of at least three permanent members and three alternates with no connections to the company.

Financial statements:
Accounting statements and other information presented by companies, which report the economic and financial situation of a company. These statements are presented in nominal values and present, for comparison, the results of the previous year.

Floating Dollar:
Dollar value used as a parameter for the purchase and sale of foreign currency for tourism and some operations defined by the Central Bank, such as: execution of international guarantees, swaps, movement of non-resident accounts, etc.

Free Float:
Number of shares of a company available for trading in organized markets. It is commonly called “Outstanding Shares,” which are those that are outside the company’s “Control Group” and are not linked to any “Shareholders’ Agreement.”

Financial Treasury Bill - LFT:
Issued by the National Treasury, it is a post-fixed security whose profitability is linked to the over-rate (one-day). If the Central Bank raises or lowers the interest rate, it will immediately absorb the new level of interest.

Fluctuation:
Variation in the price of a given asset over a certain period of time.

Fixed Income:
Financial investments with pre-known terms and yields.

General Shareholders Meeting (AGO):
Mandatorily convoked by the board of directors of a corporation to verify results, read, discuss and vote on the reports of the board and election of the board's fiscal council. It must be held up to four months after the end of the preceding fiscal year.

GDP - Gross Domestic Product:
It is the combination of all goods and services produced in a country or region, during a given period.

Hedge:
It refers to the management of risk, or the act of taking a position in futures as opposed to a position in the spot market, to minimize the risk of financial losses deriving from an adverse price change. It is similar to insurance, which aims to protect companies from international crises.

Home broker:
Relationship channel between investors and brokerage firms, for trading in the stock market, allowing the sending of stock purchase and sale orders over the internet and allowing access to quotes and monitoring of stock portfolios, among other resources.

Investment Club:
Group of individuals (maximum one hundred and fifty), which invests resources in a diversified portfolio of shares managed by an authorized financial institution.

IBOVESPA:
Indicator of the average profitability of a theoretical portfolio, formed by the most traded shares in a representative manner in the B3's trading sessions. The Ibovespa is reviewed every 4 months and serves as an indicator of the market's behavior, bringing its composition as close as possible to the real configuration of the operations carried out in the spot market on the Brazilian stock exchange.

IFRS:
International Financial Reporting Standards, or internationally accepted accounting standard.

IGC - Corporate Governance Index:
The Corporate Governance Index assesses the performance of a theoretical portfolio composed of shares of companies that were admitted to Level 1 of Corporate Governance of the BOVESPA - São Paulo Stock Exchange. The composition of this portfolio will be reviewed every four months and its calculation considers the spot market prices practiced.

IOF
Tax on financial transactions. For fixed income funds with daily liquidity, a table was created by the Federal Revenue to collect the regressive IOF, which focuses on the gross income obtained up to the 29th day of investment.

IPO:
Acronym for Initial Public Offering. Expression that means first offering of securities to the public, which can be primary, when the funds fully converge to the company's cash, or secondary, when they are intended to remunerate the capital invested by the partners up to that moment, carried out by a publicly-held company that meets all legal requirements.

ITAG:
Stock Index with Differentiated Tag Along Index calculated and disclosed by B3, with the objective of measuring the performance of a theoretical portfolio composed of shares of companies that offer better conditions to minority shareholders, in the case of a sale of control.

Liabilities:
Set of values that designates the total of a company's debts and obligations. In the case of companies in general it includes bank loans, accounts payable, etc. In the case of banks, it is represented by funding operations, such as demand and time deposits, funds and resources related to issues. On the balance sheet, it is subdivided into current liabilities, long-term liabilities and shareholders' equity.

Majority shareholder or controlling shareholder:
One who holds a quantity of voting shares that permits maintaining stock ownership control of a company.

Minority Shareholder:
Owners of shares in a company without, however, having controlling interest or participating in the controlling group.

Monetary Policy Committee (Copom):
Central Bank Committee that meets periodically to make decisions regarding interest rates, among others.

Market Liquidity Risk:
Depending on economic conditions (usually during crises), asset markets may experience periods when there is a limitation in their liquidity; that is, there are no buyers and/or sellers for some of these assets, making the execution of orders difficult or impacting the prices of traded assets.

Market Risk:
This type of risk is associated with the possibility of devaluation or appreciation of an asset, due to general political and economic changes, both nationally and internationally, or as a result of the individual situation of a company or bank.

Management Fee:
Remuneration paid to the administrator for the provision of management and administration services for an investment fund.

Market Capitalization:
Is the company's market value. That is, hypothetically how much an investor would spend to buy all the company's shares at the current market price. To obtain this value, we multiply the price of each type

Market Capitalization of the Share:
The most up-to-date value of a share traded on the Stock Exchange, which may be higher or lower than its equity value.

National Treasury Bill - LTN:
Issued by the National Treasury, it is a prefixed security, whose exact redemption value is known in advance.

Net Profit:
It is the balance that results after deducting income tax, financial expenses and Gross Profit sharing deductions.

Net income per share:
Net earnings of a company in a given period, divided by the existing number of shares.

Novo Mercado:
Listing segment for trading shares issued by companies that voluntarily commit to the adoption of corporate governance practices and transparency in the disclosure of information, additional to what is required by law.

NYSE:
New York Stock Exchange. The largest and most important stock exchange in the world. Also known as the Big Board, it is self-regulated by a 20-member board that monitors and regulates the commercial activities of more than 3,000 companies, both U.S. and foreign.

Net equity:
Set of assets and rights of a person or company, which have economic value.

Over-the-counter market:
Market where transactions are not registered in organized markets (exchanges). They cover not only stock trading but also other assets, including derivatives. To the extent that they meet the specifications determined by the client - not foreseen in the stock market negotiations - operations carried out in the over-the-counter market are also called tailor-made or customized.

Publicly-held:
Characteristic of a corporation in which the capital is divided, in the form of shares, among several shareholders, in addition to those that represent the controlling group. Only publicly-traded companies registered with the CVM can trade their shares on the stock exchange.

Portfolio:
Holdings of shares, securities and contracts of an investor or investment fund.

Primary market:
Where shares, bonds and securities are traded for the first time, arising from new issues. Companies use the primary market to complete the resources they need, aiming to finance their expansion projects or their use in other activities.

P/E - Price to Earnings Ratio:
It is the result of dividing the company's market value by its net profit. Indicates the number of years that the company will take to provide a net profit in the same amount that the investor would pay for its shares, if the company maintained its current profitability.

P/BVR:
Book Value Ratio. This indicator is calculated by dividing the company's Market Value by its Net Equity, or, the share price by the Equity Per Share value (EPS). A P/BVR of 80% indicates that the company is worth 80% of the value of its Shareholders' Equity on the stock exchange; similarly, a company with a P/BVR of 140% has its market value 40% higher than its Shareholders' Equity. Thus, smaller P/BVR indicates companies with more depreciated prices.

Post-fixed rate:
Remuneration fee to be paid due to the investment in a certain asset, which will only be disclosed when the investment comes due.

Pre-fixed rate:
Remuneration rate established in advance, to be paid due to the investment in a certain asset.

Public Securities:
These are securities sold by governments to the financial market to obtain funds. They earn interest from the discount at which they are initially sold.

Rating:
Expression that designates a credit risk classification, which can be that of a company, a bank or a country, assigned by specialized agencies.

Rediscount:
It is a monetary policy instrument used by the Central Bank to regulate the banking system's liquidity system.

ROAA:
Acronym for Return on Average Assets. It is one of the measures of a company's profitability, obtained by dividing the net profit by the total asset, in the case of ROA, and by the average asset, in the case of ROAA. It presents the profit that was generated by the invested capital. The ROA of publicly-held companies can vary substantially, depending on the sector in which they operate.

ROE/ROAE:
Return on Equity/Return on Average Equity. It is one of the measures of a company's profitability, obtained by dividing net income by equity, in the case of ROE, and average equity, in the case of ROAE. It represents the profit that the company is being able to generate using the resources of its shareholders. Investors often look for companies with high and growing ROEs.

Share
It is a variable income security, issued by companies or corporations, representing the smallest fraction of the capital of the company that issued it.

Shareholder:
Anyone who owns shares in a corporation.

Stock Exchange:
Non-profit civil association through which securities are traded. Its main objectives are: to maintain an adequate place or electronic trading system for transactions involving the purchase and sale of bonds and securities; preserve high ethical standards in negotiations; make the disclosure of operations carried out quickly and in detail.

Stock Bonus:
Due to the incorporation of reserves and profits, through the free distribution of new shares in number proportional to the amount already owned by the shareholders. Since the stock price is readjusted in the same proportion, the company's equity does not change.

Securities and Exchange Commission - CVM:
Brazilian Federal agency that disciplines and supervises the securities market. It was created through the Law (6385/76) to regulate the functioning of the securities market and the performance of the participants (publicly-held companies, financial intermediaries and investors). It has powers to discipline, regulate and supervise the performance of the various market participants.

Simple Debentures:
Type of debentures that provide the investor with only a return on the investment amount.

Secondary Market:
Where securities purchased in the primary market are traded. B3 is the largest secondary stock market in Brazil.

Structured Transaction:
Combination of two or more financial instruments (for example, a repo + a Swap), with the objective of taking advantage of market opportunities or seeking protection against financial risks.

SEC - Securities and Exchange Commission:
The Securities and Exchange Commission is a body that regulates, controls and supervises the U.S. market, with the primary purpose of protecting investors and maintaining the integrity of the U.S. securities market.

SELIC:
Special Settlement and Custody System. Service provided by the Central Bank and ANDIMA (National Association of Open Market Institutions), used by banks and brokers to register transactions involving public securities. Affiliated institutions are connected to the SELIC central computer via a network of terminals. All transactions involving federal, state and municipal government bonds are recorded in the system. Created in November 1979.

SISBACEN:
Brazilian Central Bank Information System. It is the Central Bank's computerized communication tool with financial institutions, in which they receive information from the Central Bank and send data on their financial and foreign exchange operations.

Spread:
Difference between funding and investment rates. This difference may vary depending on the borrower's liquidity, volume of loans and the redemption operation maturity.

Subscription:
When a company launches new shares on the market, so that it can obtain the necessary resources for the investment. It can be Private or Public.

Swap:
It is a financial derivative whose purpose is to promote the exchange (simultaneously) of financial assets between the economic agents involved. For example: a company has a security indexed to the variation of the commercial dollar and wants to exchange the variation of this security for a certain pre-fixed rate without disposing of it. In this case, it may use a rate swap to carry out such a transaction. The swap is usually used to anticipate receivables in foreign currencies.

Selic Rate:
It is the average interest rate for 1-day interbank operations (overnight) registered in the Selic (Special System for Settlement and Custody of Public Securities).

Share Equity Value (SEV):
The Share Equity Value is the company's Equity Value divided by its number of shares. A company that owns 5 million shares and R$ 10 million in Equity would have an SEV of R$ 2.

Treasury shares:
Company shares held in the company's own treasury.

TAC:
Credit Opening Rate.

Tag Along:
Tag Along, in Brazil, is provisioned for in Law 10.303/01 (Brazilian Corporation Law) and ensures the extension of the conditions offered to the controlling shareholders, in the case of sale of control of a company, to other shareholders.

TJLP:
Long-term Interest Rate, expressed as a percentage per year, determined by the National Monetary Council (CMN).

TR - Referential Rate:
Rate calculated and disclosed by BACEN, based on the application of a "reductor" on the Basic Financial Rate (TBF). For each TBF calculated, BACEN discloses a corresponding TR. The TR is the basis for remunerating deposits in savings accounts and financing granted through the Financial Housing System (SFH).

Underwriting:
Financial institution that carries out operations for the launch of shares through public subscription, for which the company assigns a financial intermediary, who will be responsible for placing them in the market.

US GAAP:
United States Generally Accepted Accounting Principles. These accounting standards are known and used in the United States and must be followed by all companies in other countries that want to trade their shares and/or securities on U.S. stock exchanges.

Venture capital:
The part of capital that is invested in risk models; that is, where there is the possibility of losses and also of high gains.

VaR (Value at Risk):
It is the maximum potential loss expected from an investment portfolio, with a given probability in a given time horizon.