Edgar Filing: BRASKEM SA

Form 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13A-16 OR 15D-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of September 2017

Commission File Number: 1-14862

BRASKEM S.A.

(Exact Name as Specified in its Charter)

N/A

(Translation of registrant’s name into English)

Rua Eteno, 1561, Polo Petroquímico de Camaçari

Camaçari, Bahia – CEP 42810-000 Brazil

(Address of principal executive offices)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F: ☒ Form 40-F: ☐

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)):

Yes: ☐ No: ☒

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)):

Yes: ☐ No: ☒

(Indicate by check mark whether the registrant by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes: ☐ No: ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

Braskem S.A.

Condensed consolidated interim financial information (ITR) at

June 30, 2017

and Independent Auditors’ Report Review

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Braskem S.A.

We have reviewed the accompanying condensed consolidated balance sheet of Braskem S.A. and its subsidiaries (the “Company”) as of June 30, 2017, and the related condensed consolidated statements of operations and comprehensive income for the three-month and six-month periods ended June 30, 2017 and 2016 and the condensed consolidated statements of changes in shareholder’s equity and cash flows for the six-month periods ended June 30, 2017 and 2016. This condensed consolidated interim financial information is the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial information for it to be in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

As discussed in Note 2.3 to the condensed consolidated interim financial information, the Company has restated its 2016 and 2015 financial statements to correct misstatements.

We previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2016, and the related consolidated statement of operations, comprehensive income, of statement of changes in equity and of cash flows for the year then ended (not presented herein), and in our report dated September 22, 2017, which included a paragraph regarding the correction of an error in the 2015 and 2014 financial statements, we expressed an unqualified opinion on those consolidated financial statements.

/s/ PricewaterhouseCoopers

Auditores Independentes

Salvador, Brazil, September 27, 2017

Braskem S.A.

Unaudited condensed consolidated balance sheet

at June 30, 2017

All amounts in thousands of reais


Assets	Note	Jun/2017		Dec/2016
Current assets
Cash and cash equivalents	4		5,711,450		6,701,864
Financial investments	5		2,677,819		1,190,483
Trade accounts receivable	6		2,460,514		1,634,137
Inventories	7		5,907,679		5,238,014
Taxes recoverable	9		1,184,187		826,015
Dividends and interest on capital	8		20,729		14,986
Prepaid expenses			204,444		101,747
Derivatives operations	15.2.1				8,387
Other receivables			311,058		180,915

			18,477,880		15,896,548

Non-current assets held for sale	3				359,704
			18,477,880		16,256,252

Non-current assets
Trade accounts receivable	6		62,697		70,236
Advances to suppliers	7		53,998		61,533
Taxes recoverable	9		1,148,419		1,088,353
Deferred income tax and social contribution	17(b.ii)		1,026,328		1,653,115
Judicial deposits			243,349		233,320
Insurance claims			39,650		50,653
Derivatives operations	15.2.1		14,820		29,308
Other receivables			174,117		140,971
Investments	10(b)		96,880		92,313
Property, plant and equipment	11		30,448,082		29,336,710
Intangible assets	12		2,785,911		2,809,087

			36,094,251		35,565,599

Total assets			54,572,131		51,821,851

The Management notes are an integral part of the financial statements.


Braskem S.A.

Unaudited condensed consolidated balance sheet at June 30, 2017
All amounts in thousands of reais		Continued


Liabilities and shareholders’ equity	Note	Jun/2017			Dec/2016
Current liabilities
Trade payables			5,257,693			6,545,136
Borrowings	13		4,216,322			2,594,463
Braskem Idesa borrowings	14		10,195,823			10,437,791
Derivatives operations	15.2.1		41,350			29,042
Payroll and related charges			476,967			562,455
Taxes payable	16		947,680			624,080
Dividends			2,560			3,083
Advances from customers			219,267			203,216
Leniency agreement	19.3		985,630			1,354,492
Sundry provisions	18		78,875			112,891
Other payables			212,317			476,262

			22,634,484			22,942,911

Non-current liabilities held for sale	3					95,396
			22,634,484			23,038,307

Non-current liabilities
Trade payables			272,911			201,686
Borrowings	13		19,385,947			20,736,604
Derivatives operations	15.2.1		840,485			861,302
Taxes payable	16		40,424			24,097
Loan to non-controlling shareholders of Braskem Idesa			1,679,492			1,620,519
Deferred income tax and social contribution	17(b.ii)		1,025,736			510,523
Post-employment benefits			171,318			162,136
Advances from customers			75,186			162,955
Contingencies	19		1,015,882			985,237
Leniency agreement	19.3		1,328,714			1,498,738
Sundry provisions	18		207,100			206,245
Other payables			154,437			92,792

			26,197,632			27,062,834

Shareholders’ equity	20
Capital			8,043,222			8,043,222
Capital reserve			232,430			232,430
Revenue reserves			834,616			834,616
Other comprehensive income			(5,526,437	)		(6,321,859	)
Treasury shares			(49,819	)		(49,819	)
Retained earnings			2,911,851

Total attributable to the Company’s shareholders			6,445,863			2,738,590

Non-controlling interest in Braskem Idesa			(705,848	)		(1,017,880	)

			5,740,015			1,720,710

Total liabilities and shareholders’ equity			54,572,131			51,821,851

The Management notes are an integral part of the financial statements.

Braskem S.A.

Unaudited condensed consolidated statements of operations and of comprehensive income

at June 30, 2017

All amounts in thousands of reais


Continued operations	Note	2Q2017			YTD2017			2Q2016			YTD2016
								Restated			Restated
Net sales revenue	22		11,870,430			24,470,158			11,721,937			23,636,532
Cost of products sold			(8,979,357	)		(17,890,990	)		(8,460,914	)		(17,074,199	)

			2,891,073			6,579,168			3,261,023			6,562,333

Income (expenses)
Selling and distribution			(358,284	)		(704,586	)		(341,888	)		(648,644	)
General and administrative			(311,821	)		(622,384	)		(301,368	)		(586,624	)
Research and development			(38,483	)		(72,145	)		(40,034	)		(82,628	)
Results from equity investments	10(c)		10,642			22,851			11,690			13,377
Other income (expenses), net	23		118,316			16,807			(225,882	)		(363,505	)

			2,311,443			5,219,711			2,363,541			4,894,309

Financial results	24
Financial expenses			(820,578	)		(1,656,087	)		(901,777	)		(1,692,159	)
Financial income			151,550			316,530			210,261			375,755
Exchange rate variations, net			(8,431	)		276,604			(1,202,296	)		(2,062,692	)

			(677,459	)		(1,062,953	)		(1,893,812	)		(3,379,096	)

Profit before income tax and social contribution			1,633,984			4,156,758			469,729			1,515,213

Current and deferred income tax and social contribution	17(a)		(491,563	)		(1,108,963	)		(202,407	)		(463,225	)

Profit for the period of continued operations			1,142,421			3,047,795			267,322			1,051,988

	3
Discontinued operations results
Profit from discontinued operations						13,499			10,897			27,200
Current and deferred income tax and social contribution						(4,623	)		(3,512	)		(8,927	)

						8,876			7,385			18,273
Profit for the period			1,142,421			3,056,671			274,707			1,070,261

Attributable to:
Company’s shareholders			1,089,848			2,897,400			406,980			1,230,371
Non-controlling interest in Braskem Idesa			52,573			159,271			(132,273	)		(160,110	)

Profit for the period			1,142,421			3,056,671			274,707			1,070,261

The Management notes are an integral part of the financial statements.

Braskem S.A.

Unaudited condensed consolidated statements of operations and of comprehensive income

at June 30, 2017


All amounts in thousands of reais, except earnings or loss per share		Continued


	Note			2Q2017			YTD2017			2Q2016			YTD2016
										Restated			Restated
Profit for the period					1,142,421			3,056,671			274,707			1,070,261
Other comprehensive income or loss:
Items that will be reclassified subsequently to profit or loss
Fair value of cash flow hedge					(36,411	)		51,167			151,913			179,831
Income tax and social contribution					12,821			(15,650	)		(54,348	)		(68,307	)
Fair value of cash flow hedge from jointly-controlled					3,168			3,762			(2,761	)		(12,765	)

					(20,422	)		39,279			94,804			98,759
Exchange variation of foreign sales hedge		15.3	(a.i)		(711,317	)		(230,507	)		2,213,130			4,433,659
Sales Hedge - transfer to profit or loss		15.3	(a.i)		249,722			498,962			345,443			767,243
Income tax and social contribution on exchange variation					156,942			(91,275	)		(869,915	)		(1,768,307	)
Exchange variation of foreign sales hedge - Braskem Idesa		15.3	(a.ii)		496,071			1,403,603			(914,249	)		(1,093,972	)
Sales Hedge - transfer to profit or loss - Braskem Idesa		15.3	(a.ii)		42,992			73,910			14,297			14,297
Income tax on exchange variation - Braskem Idesa					(161,719	)		(443,254	)		274,275			328,192

					72,691			1,211,439			1,062,981			2,681,112
Foreign subsidiaries currency translation adjustment					10,846			(288,565	)		40,643			(23,989	)

Total					63,115			962,153			1,198,428			2,755,882

Total comprehensive income for the period					1,205,536			4,018,824			1,473,135			3,826,143

Attributable to:
Company’s shareholders					1,121,975			3,706,792			1,653,004			4,013,484
Non-controlling interest in Braskem Idesa					83,561			312,032			(179,869	)		(187,341	)

Total comprehensive income for the period					1,205,536			4,018,824			1,473,135			3,826,143


										Basic and diluted
										YTD2017			YTD2016
	Note												Restated
Profit per share attributable to the shareholders of the Company of continued operations at the end of the period (R$) (expressed in reais)		21
Earnings per share - common											3.6309			1.5206
Earnings per share - preferred shares class “A”											3.6309			1.5206
Earnings per share - preferred shares class “B”											0.6069			0.6065

Profit per share attributable to the shareholders of the Company of discontinued operations at the end of the period (R$)
Earnings per share - common											0.0112			0.0258
Earnings per share - preferred shares class “A”											0.0112			0.0258

Profit per share attributable to the shareholders of the Company at the end of the period (R$)
Earnings per share - common											3.6421			1.5463
Earnings per share - preferred shares class “A”											3.6421			1.5463
Earnings per share - preferred shares class “B”											0.6069			0.6065

The Management notes are an integral part of the financial statements.

Braskem S.A.

Unaudited condensed consolidated statements of changes in shareholder’s equity

All amounts in thousands of reais


			Attributed to shareholders’ interest
							Revenue reserves																Total
											Additional			Other						Retained			Braskem			Non-controlling			Total
					Capital		Legal		Retention		dividends			comprehensive			Treasury			earnings			shareholders’			interest in			shareholders’
	Note		Capital		reserve		reserve		of profits		proposed			income			shares			(losses)			interest			Braskem Idesa			equity
At December 31, 2015 - restated		2.4		8,043,222		232,430		229,992		2,404,663		247,364			(9,060,710	)		(49,819	)		(416,768	)		1,630,374			(684,885	)		945,489

Comprehensive income for the period:
Profit for the period - restated																					1,230,371			1,230,371			(160,110	)		1,070,261
Exchange variation of foreign sales hedge, net of taxes															2,868,983									2,868,983			(187,871	)		2,681,112
Fair value of cash flow hedge, net of taxes															130,105									130,105			(31,346	)		98,759
Foreign subsidiaries currency translation adjustment															(215,975	)								(215,975	)		191,986			(23,989	)

															2,783,113						1,230,371			4,013,484			(187,341	)		3,826,143
Equity valuation adjustments:
Realization of additional property, plant and equipment price-level restatement, net															(13,619	)					13,619
Realization of deemed cost of jointly-controlled investment, net of taxes															(482	)					482

															(14,101	)					14,101
Contributions to shareholders:
Additional dividends approved by the General Meeting												(247,364	)											(247,364	)					(247,364	)

												(247,364	)											(247,364	)					(247,364	)

At June 30, 2016 - restated		2.4		8,043,222		232,430		229,992		2,404,663					(6,291,698	)		(49,819	)		827,704			5,396,494			(872,226	)		4,524,268

At December 31, 2016				8,043,222		232,430		229,992		604,624					(6,321,859	)		(49,819	)					2,738,590			(1,017,880	)		1,720,710

Comprehensive income for the period:
Profit for the period																					2,897,400			2,897,400			159,271			3,056,671
Exchange variation of foreign sales hedge, net of taxes															952,874									952,874			258,565			1,211,439
Fair value of cash flow hedge, net of taxes															31,636									31,636			7,643			39,279
Foreign currency translation adjustment															(175,118	)								(175,118	)		(113,447	)		(288,565	)

															809,392						2,897,400			3,706,792			312,032			4,018,824
Equity valuation adjustments:
Realization of additional property, plant and equipment price-level restatement, net															(13,488	)					13,488
Realization of deemed cost of jointly-controlled investment, net of taxes															(482	)					482

															(13,970	)					13,970
Contributions to shareholders:
Lapsed dividends																					481			481						481

																				481			481						481

At June 30, 2017				8,043,222		232,430		229,992		604,624					(5,526,437	)		(49,819	)		2,911,851			6,445,863			(705,848	)		5,740,015

The Management notes are an integral part of the financial statements.

Braskem S.A.

Unaudited condensed consolidated statement of cash flows

at June 30, 2017

All amounts in thousands of reais


	Note			Jun/2017			Jun/2016
	2.4						Restated
Profit before income tax and social contribution and for the result with discontinued operations					4,156,758			1,542,413
Adjustments for reconciliation of profit
Depreciation, amortization and depletion					1,424,202			1,243,975
Results from equity investments		10	(c)		(22,851	)		(13,377	)
Interest and monetary and exchange variations, net					1,292,218			931,709
Gain from divestment in subsidiary		3			(276,816	)
Provision for losses and write-offs of long-lived assets					25,730			12,959

					6,599,241			3,717,679

Changes in operating working capital
Held-for-trading financial investments					(1,430,383	)		(466,498	)
Trade accounts receivable					(820,306	)		732,656
Inventories					(663,855	)		373,946
Taxes recoverable					184,040			686,777
Prepaid expenses					(102,697	)		7,922
Other receivables					(46,675	)		(25,407	)
Trade payables					(1,346,034	)		(2,364,352	)
Taxes payable					(177,213	)		(9,815	)
Advances from customers					(71,718	)		(47,148	)
Leniency agreement					(607,358	)
Sundry provisions					(2,516	)		5,043
Other payables					(227,315	)		(179,173	)

Cash from operations					1,287,211			2,431,630

Interest paid					(1,024,942	)		(938,968	)
Income tax and social contribution paid					(602,278	)		(668,126	)

Net cash (provided) generated by operating activities					(340,009	)		824,536

Proceeds from the sale of fixed assets					1,468			114
Funds received on the sale of investments		3			450,000
Acquisitions of property, plant and equipment and intangible assets		(i	)		(755,063	)		(1,233,146	)
Premuim in the dollar put option					(9,771	)
Held-for-maturity financial investments								38,353

Net cash used in investing activities					(313,366	)		(1,194,679	)

Short-term and Long-term debt
Obtained					1,486,963			1,937,284
Payments					(1,513,356	)		(1,865,492	)
Braskem Idesa borrowings
Obtained funds					187,959			153,126
Payment of borrowings					(448,525	)		(227,201	)
Dividends paid					(41	)		(998,982	)

Net cash provided by financing activities					(287,000	)		(1,001,265	)

Exchange variation on cash of foreign subsidiaries					(50,039	)		568,780

Decrease in cash and cash equivalents					(990,414	)		(802,628	)

Represented by
Cash and cash equivalents at the beginning of the period					6,701,864			7,043,262
Cash and cash equivalents at the end of the period					5,711,450			6,240,634

Decrease in cash and cash equivalents					(990,414	)		(802,628	)

(i)	In the period ended June 30, 2016, the capitalized interest paid that was included in this item (R$252,722) was reclassified to “Interest paid” (Note 2.4(a)).

The Management notes are an integral part of the financial statements.

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

1.	Operations

Braskem S.A. is a public corporation headquartered in Camaçari, Bahia (“BA”), which jointly with its subsidiaries (hereinafter “Braskem” or “Company”) is controlled by Odebrecht S.A. (“Odebrecht”), which directly and indirectly holds interests of 50.11% and 38.32% in its voting and total capital, respectively.

(a)

Significant operating events impacting these financial statements

(i)

In January 2017, Braskem’s new line to produce ultra-high molecular weight polyethylene (UHMWPE), known commercially as UTEC^®, started operations. Located in La Porte, Texas, United States, the plant will complement the production capacity of the existing line in Brazil at the petrochemical complex in Camaçari.

(ii)

On January 27, 2017, the Board of Directors of the Company authorized the execution of a purchase agreement with Odebrecht Utilities S.A., through which Braskem undertook to purchase all shares held by the seller in Cetrel S.A., which represent 63.7% of its voting capital, for the aggregate amount of R$610 million, to be paid upon the consummation of the transaction.

The consummation of the acquisition is subject to a vote by the Shareholders’ Meeting of Braskem, in accordance with Article 256 of Federal Law 6,404/76, and to the conditions precedent typical to transactions of this nature. The Shareholders’ Meeting has not yet to been called.

(iii)

On June 21, 2017, the Board of Directors approved the construction of a new polypropylene production facility in the city of La Porte, Texas, in the United States. The approximate amount is up to US$675 million(*) to the production of 450 thousand tons per year(*). Completion of this project is planned for 2020.

(*) unaudited

(b)

Net working capital

On June 30, 2017, in compliance with IAS 1—Presentation of Financial Statements, the subsidiary Braskem Idesa reclassified to current liabilities the finance obligations whose original maturities are long term, since certain contractual obligations (covenants) as of June 30, 2017 were in default (Notes 13(a) and 14). Consequently, the net working capital became negative R$4,156,604.

It should be noted that Braskem Idesa has been settling its debt service obligations in accordance with the original maturity schedule, none of the creditors has requested immediate repayment of such obligations and, without the above reclassification, consolidated net working capital is positive at R$5,030,520.

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

2.	Summary of significant accounting policies

There were no changes in the accounting practices used in the preparation of the condensed interim financial information in relation to those presented in the December 31, 2016 financial statements, except for what is disclosed in the footnotes 2.4 Change in accounting policy.

2.1.

Basis of preparation

This unaudited condensed interim financial information should be read together with the financial statements of Braskem as of December 31, 2016, which were prepared and presented in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

The preparation of the condensed interim financial information requires the use of certain critical accounting estimates. It also requires the Management of the Company to exercise its judgment in the process of applying its accounting policies.

There were no significant changes in the assumptions and judgments made by the Company’s management in the use of estimates for the preparation of the unaudited condensed interim financial information in relation to those used in the December 31, 2016 financial statements.

Issue of this unaudited condensed interim financial information was authorized by the Executive Board on September 27, 2017.

2.1.1

Unaudited consolidated condensed interim financial information

The unaudited condensed interim financial information was prepared and is being presented in accordance with the pronouncements IAS 34—Interim Financial Reporting, which establish the minimum content for interim financial statements.

All relevant information pertaining exclusively to these unaudited interim financial statements is presented herein and corresponds to the information used by the Management of the Company.

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

The condensed interim financial information includes the condensed interim financial information of Braskem S.A. and companies in which it, directly or indirectly, maintains a controlling equity interest or controls the activities, as presented below:


		Total and voting interest - %
		Headquarters		Jun/2017		Dec/2016
Direct and Indirect subsidiaries
Braskem America Finance Company (“Braskem America Finance”)			EUA		100.00		100.00
Braskem America, Inc. (“Braskem America”)			EUA		100.00		100.00
Braskem Argentina S.A. (“Braskem Argentina”)			Argentina		100.00		100.00
Braskem International GmbH (“Braskem Austria”)	(i)		Austria		100.00		100.00
Braskem Europe GmbH (“Braskem Alemanha”)			Germany		100.00		100.00
Braskem Finance Limited (“Braskem Finance”)			Cayman Islands		100.00		100.00
Braskem Idesa S.A.P.I. (“Braskem Idesa”)			Mexico		75.00		75.00
Braskem Idesa Servicios S.A. de CV (“Braskem Idesa Serviços”)			Mexico		75.00		75.00
Braskem Incorporated Limited (“Braskem Inc”)			Cayman Islands		100.00		100.00
Braskem Mexico Proyectos S.A. de C.V. SOFOM (“Braskem México Sofom”)			Mexico		100.00		100.00
Braskem Mexico, S. de RL de CV (“Braskem México”)			Mexico		100.00		100.00
Braskem Mexico Servicios S. RL de CV (“Braskem México Serviços”)			Mexico		100.00		100.00
Braskem Netherlands B.V. (“Braskem Holanda”)			Netherlands		100.00		100.00
Braskem Netherlands Finance B.V. (“Braskem Holanda Finance”)			Netherlands		100.00		100.00
Braskem Netherlands Inc. B.V. (“Braskem Holanda Inc”)			Netherlands		100.00		100.00
Braskem Petroquímica Chile Ltda. (“Braskem Chile”)			Chile		100.00		100.00
Braskem Petroquímica Ltda. (“Braskem Petroquímica”)			Brazil		100.00		100.00
Lantana Trading Co. Inc. (“Lantana”)			Bahamas		100.00		100.00
Specific Purpose Entity (“SPE”)
Fundo de Investimento Multimercado Crédito Privado Sol (“FIM Sol”)			Brazil		100.00		100.00
Fundo de Investimento Caixa Júpiter Multimercado
Crédito Privado Longo Prazo (“FIM Júpiter”)			Brazil		100.00		100.00

(i)	In the process of dissolution.

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

2.2.

Foreign and functional currency

The information on functional and foreign currency was presented in the 2016 annual financial statements of the Company, in Note 2.2.

Exchange variation effects

The main effects from exchange variation in this condensed interim financial information are shown below:


	Final rate							Average rate for period ended
	Jun/2017		Dec/2016		Variation			Jun/2017		Jun/2017		Variation
U.S. dollar - Brazilizan real		3.3082		3.2591		1.51	%		3.1807		3.7017		-14.08	%
U.S. dollar - Mexican peso		18.0820		20.6352		-12.37	%		19.4478		18.0712		7.62	%
U.S. dollar - Euro		0.8763		0.9479		-7.54	%		0.9239		0.8957		3.14	%

2.3.

Restatement

The statements of operations, of the starting balance of equity and of cash flows for the period ended June 30, 2016 and the starting balance of equity in December 2015 were restated due to the adjustment of taxes recognized from prior periods and other prior-year adjustments. The information related to this restatement was reported in the 2016 annual financial statements of the Company, in Note 2.4. The effect on the statement of income for the period ended June 30, 2016, corresponding to the update by the SELIC, recorded under “financial expenses”, was R$11,808.

Additionally, the statement of cash flows for the period ended June 30, 2016 was restated due to the reclassification of Brazilian government bonds from “cash and cash equivalents” to “financial investments” (negative variation of R$103,538 in the period ended June 30, 2016 as explained in Note 5.ii).

2.4.

Change in accounting policy

(a)

The Management of Braskem decided to change, in the statement of cash flows, the presentation of capitalized interest paid, which previously was presented under the group referred to as “cash used in investment activities.” These expenses are now recorded under the item “interest paid.” This change enables: (i) the direct identification of the total amount paid as interest; and (ii) greater accuracy in determining the net cash from operations. The amount reclassified in the period ended June 30, 2016 was R$252,722.

(b)

In 2017, the Company changed the classification of provision for profit sharing to standardize such classification among all companies, whether or not productive, and because it deemed the current classification more appropriate, since this provision does not present recurring elements or, even when recurring, the amounts differ from year to year.

In the period ended June 30, 2016, the amounts related to this item were reclassified from “costs of products sold” (R$83,363), “selling and distribution expenses” (R$3,994) and “general and administrative expenses” (R$96,515) to the item “other income (expenses), net” (Note 23).

3.	Available-for-sale assets and discontinued operations

On January 9, 2017, the Board of Directors approved the sale of the subsidiaries Quantiq Distribuidora Ltda and IQAG Armazens Gerais Ltda to the company GTM do Brasil Comércio de Produtos Químicos Ltda. The sale

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

agreement, in the amount of R$550 million, was signed on the following day, and in January the operation was approved by Brazil’s antitrust agency CADE (Conselho Administrativo de Defesa Econômica). The approval of the sale plan was made by Management during the second half of 2016. The transfer of control to the buyer company was concluded on April 3, 2017. On the same date, Braskem received R$450 million. The remaining R$100 million will be received within 12 months, subject to adjustments typical to operations of this nature. The capital gain from the operation was R$276,816 (Total income of R$550,000 (-) net assets of R$273,184) registered in the second quarter.

Assets and liabilities classified as held for sale and profit or loss from discontinued operations until the date of transfer of control are shown below:


	Mar/2017		Dec/2016
Assets and liabilities classified as held for sale
Assets
Cash and cash equivalents		40,216		76,146
Trade accounts receivable		119,076		65,626
Inventories		82,815		84,296
Taxes recoverable		46,858		45,859
Property, plant and equipment		61,591		61,037
Intangible assets		6,729		6,665
Other assets		17,932		20,075

Total assets		375,217		359,704

Liabilities
Trade payables		75,852		62,692
Payroll and related charges		7,099		11,170
Dividends		6,371		6,371
Taxes payable		9,668		7,064
Other payables		3,043		8,099

Total liabilities		102,033		95,396

Net assets (Assets (-) Liabilities)		273,184		264,308

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated


	Mar/2017			Dec/2016
Result with discontinued operations
Net sales revenue		212,238			211,915
Cost of products sold and services provided		(176,957	)		(169,739	)

Gross profit		35,281			42,176

Income (expenses)
Selling and distribution		(10,164	)		(11,617	)
General and administrative		(12,067	)		(20,021	)
Other income (expenses), net		(1,298	)		1,691

Operating profit		11,752			12,229

Financial results		1,747			4,074

Profit before income tax and social contribution		13,499			16,303

Current and deferred income tax and social contribution		(4,623	)		(5,415	)

Result with discontinued operations		8,876			10,888

4.	Cash and cash equivalents

The information on cash and cash equivalents were presented in the 2016 annual financial statements of the Company, in Note 6.


			Jun/2017		Dec/2016
Cash and banks	(i	)		2,567,561		2,178,611
Cash equivalents:
Domestic market				1,743,939		2,914,685
Foreign market	(i	)		1,399,950		1,608,568

Total				5,711,450		6,701,864

(i)	On June 30, 2017, it includes cash and banks of R$243,796 (R$172,390 on December 31, 2016) and cash equivalents of R$49,996 (R$29,169 on December 31, 2016) of the subsidiary Braskem Idesa, available for its exclusive use.

5.	Financial investments

The information on financial investments was presented in the 2016 annual financial statements of the Company, in Note 7.

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

Jun/2017

Dec/2016

Loans and receivables

Time deposit investments

)

440,568

434,015

Held-for-trading

LFT’s and LF’s

(ii

)

2,236,755

755,712

Other

496

756

Total

2,677,819

1,190,483

Current assets

2,677,819

1,190,483

Total

2,677,819

1,190,483

(i)	This investment was given as guarantee to cover Braskem’s obligation related to the constitution of a reserve account for the Project finance of the subsidiary Braskem Idesa.

(ii)

Government bonds held-for-trading refers to Brazilian floating-rate government bonds (“LFTs”) issued by the Brazilian federal government and Financial Bills (“LF’s”) are issued by financial institutions. These financial investments have maturity above three months, immediate liquidity and expected realization in the short term.

6.	Trade accounts receivable

The information on trade accounts receivable was presented in the 2016 annual financial statements of the Company, in Note 8.


	Jun/2017			Dec/2016
Customers
Domestic market		1,029,501			869,306
Foreign market		1,871,579			1,215,626
Allowance for doubtful accounts		(377,869	)		(380,559	)

Total		2,523,211			1,704,373

Current assets		2,460,514			1,634,137
Non-current assets		62,697			70,236

Total		2,523,211			1,704,373

7.	Inventories

The information on inventories was presented in the 2016 annual financial statements of the Company, in Note 9.


	Jun/2017		Dec/2016
Finished goods		3,789,850		3,444,898
Raw materials, production inputs and packaging		1,376,142		1,407,399
Maintenance materials		359,627		312,167
Advances to suppliers		409,468		103,267
Imports in transit and other		26,590		31,816

Total		5,961,677		5,299,547

Current assets		5,907,679		5,238,014
Non-current assets		53,998		61,533

Total		5,961,677		5,299,547

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

8.	Related parties

The information concerning related parties was presented in the 2016 annual financial statements of the Company, in Note 10.


	Balances at June 30, 2017											Balances at December 31, 2016
	Associated companies, Jointly-controlled investment and Related companies											Associated companies, Jointly-controlled investment and Related companies
	Odebrecht and subsidiaries			Petrobras and subsidiaries			Other		Total			Odebrecht and subsidiaries			Petrobras and subsidiaries			Other		Total
Balance sheet
Assets
Current
Trade accounts receivable		7,381			20,494			31,116		58,991			5,634			33,843			28,390		67,867
Inventories		155,507	8(a.iv)		37,625					193,132						5,434					5,434
Dividends and interest on capital								20,729		20,729									14,986		14,986
Other		42								42			50								50

Total assets		162,930			58,119			51,845		272,894			5,684			39,277			43,376		88,337

Liabilities
Current
Trade payables		42,704			478,921			333		521,958			77,461			904,090			1,226		982,777

Total liabilities		42,704			478,921			333		521,958			77,461			904,090			1,226		982,777


	Six-month period ended June 30, 2017											Six-month period ended June 30, 2016
	Associated companies, Jointly-controlled investment and Related companies											Associated companies, Jointly-controlled investment and Related companies
	Odebrecht and subsidiaries			Petrobras and subsidiaries			Other		Total			Odebrecht and subsidiaries			Petrobras and subsidiaries			Other		Total
Transactions
Sales of products		25,008			833,004			323,616		1,181,628			30,707			1,009,837			275,852		1,316,396
Purchases of raw materials, finished goods services and utilities		403,618	(i)		6,691,063			2,657		7,097,338			859,246	(i)		5,826,466			39,933		6,725,645
Financial income (expenses)		4,929			(36,110	)				(31,181	)		160			(104,399	)				(104,239	)
General and administrative expenses Post-employment benefits plan
Odebrecht Previdência Privada (“Odeprev”)								11,026		11,026									10,054		10,054

(i)	Includes expenses with the Braskem Idesa project, of which R$62,584 related to the period ended June 30, 2017, and R$539,096 related to the period ended June 30, 2016.

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

(a)

Agreements executed and/or renewed with related companies

In the period ended June 30, 2017, the following agreements were signed with related companies:

(i)

Sales of gasoil to Refinaria de Petróleo Riograndense (“RPR”) totaled R$26,077. The product is used as feedstock in the diesel production process.

(ii)

As from January 2017, Braskem will maintain monthly negotiations for the sale of gasoline to RPR. Sales in the period amounted to R$171,733.

(iii)

Since January 2017, Braskem has held agreements for the sale of gasoline to Petrobras Distribuidora S.A., which are renewed monthly. Sales in the period amounted to R$443,665.

(iv)

In March 2017, the Company entered into an agreement for supply of hydrous ethanol with Usina Conquista do Pontal S.A. and Agro Energia Santa Luzia S.A. Ethanol is the feedstock consumed by Braskem to produce green ethylene. The agreement is guaranteed by Odebrecht Agroindustrial Participações S.A. and Rio Claro Agroindustrial S.A.. The agreement also provides for a commercial discount and other flexibilities in the process of Braskem’s acquisition of the product. It also includes an advance of R$150,000, to be restated at market rates. The advance is guaranteed by a pledge of the sugarcane crop, its products and subproducts at net market value in an amount greater than the value of the advance, with the pledged asset insured through a policy contracted from a premium insurer and with a provision for subrogation. The agreement is valid through April 30, 2018.

(b)

Key management personnel


Income statement transactions	Jun/2017		Jun/2016
Remuneration
Short-term benefits		25,873		16,065
Post-employment benefit		219		174

Total		26,092		16,239

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

9.	Taxes recoverable

The information on taxes recoverable was presented in the 2016 annual financial statements of the Company, in Note 11.


	Jun/2017		Dec/2016
Parent Company and subsidiaries in Brazil
IPI		26,525		38,909
Value-added tax on sales and services (ICMS) - normal operations		523,473		495,339
ICMS - credits from PP&E		126,132		125,145
Social integration program (PIS) and social contribution on revenue (COFINS) - normal operations		26,740		32,823
PIS and COFINS - credits from PP&E		246,208		253,503
Income tax and social contribution (IR and CSL)		658,765		605,058
REINTEGRA program		66,618		53,129
Federal supervenience		161,494		155,533
Other		8,808		1,046
Foreign subsidiaries
Value-added tax		249,219		132,152
Income tax (IR)		233,125		19,103
Other		5,499		2,628

Total		2,332,606		1,914,368

Current assets		1,184,187		826,015
Non-current assets		1,148,419		1,088,353

Total		2,332,606		1,914,368

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

10.

Investments

The information related to investments was presented in the Company’s 2016 annual financial statements, in Note 12.

(a)

Impacts on consolidation of Braskem Idesa

In compliance with IFRS 12, the Company is presenting the financial statements of the subsidiary in which it holds non-controlling interest and the effects on the Company’s consolidated statements.

Balance sheet


	Consolidated Braskem
	Ex consolidated Braskem Idesa					Braskem Idesa consolidated (i)						Eliminations						Consolidated
Assets	Jun/2017		Dec/2016			Jun/2017			Dec/2016			Jun/2017			Dec/2016			Jun/2017			Dec/2016
Curent
Cash and cash equivalents		5,417,658		6,500,265			293,792			201,599									5,711,450			6,701,865
Financial investments		2,677,819		1,190,483															2,677,819			1,190,483
Trade accounts receivable		2,047,055		1,455,893			501,111			247,465			(87,652	)		(69,221	)		2,460,514			1,634,137
Inventories		5,520,262		4,862,571			387,417			375,443									5,907,679			5,238,014
Taxes recoverable		1,095,362		710,982			88,825			115,033									1,184,187			826,015
Other receivables		467,541		278,865			68,690			27,170									536,231			306,034

		17,225,697		14,999,059			1,339,835			966,710			(87,652	)		(69,221	)		18,477,880			15,896,548

Non-current assets held for sale				359,704																		359,704

		17,225,697		15,358,763			1,339,835			966,710			(87,652	)		(69,221	)		18,477,880			16,256,252

Non-current
Taxes recoverable		1,148,362		1,088,304			57			49									1,148,419			1,088,353
Deferred tax		133,746		189,613			892,582			1,463,502									1,026,328			1,653,115
Related parties		4,917,597		4,690,672							(ii)		(4,917,597	)		(4,690,672	)
Other receivables		650,855		648,511			34,656			29,823									685,511			678,334
Property, plant and equipment		18,553,724		18,814,175			12,622,298			11,171,400	(iii)		(727,940	)		(648,865	)		30,448,082			29,336,710
Intangible		2,621,169		2,667,708			164,742			141,379									2,785,911			2,809,087

		28,025,453		28,098,983			13,714,335			12,806,153			(5,645,537	)		(5,339,537	)		36,094,251			35,565,599

Total assets		45,251,150		43,457,746			15,054,170			13,772,863			(5,733,189	)		(5,408,758	)		54,572,131			51,821,851

Liabilities and shareholders’ equity
Current
Trade payables		5,100,510		6,335,452			244,835			278,905			(87,652	)		(69,221	)		5,257,693			6,545,136
Borrowings		4,216,322		2,594,463															4,216,322			2,594,463
Braskem Idesa Borrowings							10,195,823			10,437,791									10,195,823			10,437,791
Payroll and related charges		460,983		540,405			15,984			22,050									476,967			562,455
Taxes payable		935,411		611,231			12,269			12,849									947,680			624,080
Other payables		1,460,900		2,053,031			79,099			125,955									1,539,999			2,178,986

		12,174,126		12,134,582			10,548,010			10,877,550			(87,652	)		(69,221	)		22,634,484			22,942,911

Non-current liabilities held for sale				95,396																		95,396

		12,174,126		12,229,978			10,548,010			10,877,550			(87,652	)		(69,221	)		22,634,484			23,038,307

Non-current
Loan agreements		19,385,947		20,736,604															19,385,947			20,736,604
Accounts payable to related parties							4,869,590			4,698,881	(ii)		(4,869,590	)		(4,698,881	)
Loan agreement Etileno XXI project					(v)		1,679,492			1,620,519									1,679,492			1,620,519
Provision for losses on subsidiaries		2,117,544		3,053,637							(iv)		(2,117,544	)		(3,053,637	)
Other payables		5,127,670		4,698,937			4,523			6,774									5,132,193			4,705,711

		26,631,161		28,489,178			6,553,605			6,326,174			(6,987,134	)		(7,752,518	)		26,197,632			27,062,834

Shareholders’ equity
Attributable to the Company’s shareholders		6,445,863		2,738,590			(2,047,445	)		(3,430,861	)		2,047,445			3,430,861			6,445,863			2,738,590
Non-controlling interest in Braskem Idesa													(705,848	)		(1,017,880	)		(705,848	)		(1,017,880	)

		6,445,863		2,738,590			(2,047,445	)		(3,430,861	)		1,341,597			2,412,981			5,740,015			1,720,710

Total liabilities and shareholders’ equity		45,251,150		43,457,746			15,054,170			13,772,863			(5,733,189	)		(5,408,758	)		54,572,131			51,821,851

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

(i)	Consolidation of Braskem Idesa with its direct subsidiary Braskem Idesa Serviços.

(ii)	Loan from Braskem Holanda as part of shareholders’ contribution to Braskem Idesa’s project.

(iii)

Adjustment corresponding to the capitalization of a portion of financial charges of the loan mentioned above.

(iv)	Provision recorded in the subsidiary Braskem Holanda for the negative shareholders’ equity of Braskem Idesa.

(v)	Loan owed to the non-controlling shareholder as part of shareholders’ contribution to the project.

Statement of operations


	Consolidated Braskem
	Ex consolidated Braskem Idesa						Braskem Idesa consolidated						Eliminations						Consolidated
	Jun/2017			Jun/2016			Jun/2017			Jun/2016			Jun/2017			Jun/2016			Jun/2017			Jun/2016
Continued operations																						Restated
Net sales revenue		22,879,823			23,370,965			1,857,606			318,476			(267,271	)		(52,909	)		24,470,158			23,636,532
Cost of products sold		(17,126,516	)		(16,851,407	)		(1,038,061	)		(259,479	)		273,587			36,687			(17,890,990	)		(17,074,199	)

		5,753,307			6,519,558			819,545			58,997			6,316			(16,222	)		6,579,168			6,562,333

Income (expenses)
Selling and distribution		(619,997	)		(604,596	)		(84,589	)		(44,048	)								(704,586	)		(648,644	)
General and administrative		(575,857	)		(521,977	)		(61,369	)		(88,759	)		14,842			24,112			(622,384	)		(586,624	)
Research and development		(72,145	)		(82,628	)														(72,145	)		(82,628	)
Results from equity investments		500,665			(466,953	)								(477,814	)		480,330			22,851			13,377
Other income (expenses), net		35,910			(349,243	)		(19,103	)		(14,262	)								16,807			(363,505	)

		5,021,883			4,494,161			654,484			(88,072	)		(456,656	)		488,220			5,219,711			4,894,309

Financial results
Financial expenses		(1,293,569	)		(1,519,787	)		(494,436	)		(200,265	)		131,918			27,893			(1,656,087	)		(1,692,159	)
Financial income		445,771			497,102			2,677			1,876			(131,918	)		(123,223	)		316,530			375,755
Exchange rate variations, net		(446,018	)		(1,642,834	)		778,735			(510,952	)		(56,113	)		91,094			276,604			(2,062,692	)

		(1,293,816	)		(2,665,519	)		286,976			(709,341	)		(56,113	)		(4,236	)		(1,062,953	)		(3,379,096	)

Profit before income tax and social contribution		3,728,067			1,828,642			941,460			(797,413	)		(512,769	)		483,984			4,156,758			1,515,213

IR and CSL—current and deferred		(839,543	)		(616,545	)		(269,420	)		153,320									(1,108,963	)		(463,225	)

Profit for the period of continued operations		2,888,524			1,212,097			672,040			(644,093	)		(512,769	)		483,984			3,047,795			1,051,988

Discontinued operations results
Profit from discontinued operations		13,499			27,200															13,499			27,200
IR and CSL—current and deferred		(4,623	)		(8,927	)														(4,623	)		(8,927	)

		8,876			18,273															8,876			18,273

Profit for the period		2,897,400			1,230,370			672,040			(644,093	)		(512,769	)		483,984			3,056,671			1,070,261

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

Statement of cash flows


	Consolidated Braskem
	Ex consolidated Braskem Idesa						Braskem Idesa consolidated						Eliminations						Consolidated
	Jun/2017			Jun/2016			Jun/2017			Jun/2016			Jun/2017			Jun/2016			Jun/2017			Jun/2016
																						Restated
Profit before income tax and social contribution and for the result with discontinued operations		3,728,067			1,855,842			941,460			(797,413	)		(512,769	)		483,984			4,156,758			1,542,413
Adjustments for reconciliation of profit (loss)
Depreciation, amortization and depletion		1,091,056			1,192,158			354,304			59,707			(21,158	)		(7,890	)		1,424,202			1,243,975
Results from equity investments		(500,665	)		466,953									477,814			(480,330	)		(22,851	)		(13,377	)
Interest and monetary and exchange variations, net		1,360,610			721,003			(124,505	)		206,470			56,113			4,236			1,292,218			931,709
Gain from divestment in subsidiary		(276,816	)																	(276,816	)
Provision for losses and write-offs of long-lived assets		25,402			12,936			328			23									25,730			12,959

		5,427,654			4,248,892			1,171,587			(531,213	)								6,599,241			3,717,679

Changes in operating working capital
Held-for-trading financial investments		(1,430,383	)		(466,498	)														(1,430,383	)		(466,498	)
Trade accounts receivable		(585,091	)		741,723			(253,646	)		(27,197	)		18,431			18,130			(820,306	)		732,656
Inventories		(644,312	)		417,859			(19,543	)		(43,913	)								(663,855	)		373,946
Taxes recoverable		156,471			626,156			27,569			60,621									184,040			686,777
Prepaid expenses		(73,496	)		23,420			(29,201	)		(15,498	)								(102,697	)		7,922
Other receivables		(15,035	)		(17,521	)		(31,640	)		(7,886	)								(46,675	)		(25,407	)
Trade payables		(1,293,533	)		(2,141,753	)		(34,070	)		(204,469	)		(18,431	)		(18,130	)		(1,346,034	)		(2,364,352	)
Taxes payable		(21,779	)		(267,212	)		(155,434	)		257,397									(177,213	)		(9,815	)
Advances from customers		(63,951	)		(47,760	)		(7,767	)		612									(71,718	)		(47,148	)
Leniency agreement		(607,358	)																	(607,358	)
Other payables		(280,448	)		(333,998	)		50,617			159,868									(229,831	)		(174,130	)

Cash from operations		568,739			2,783,308			718,472			(351,678	)								1,287,211			2,431,630

Interest paid		(777,700	)		(663,335	)		(247,242	)		(275,633	)								(1,024,942	)		(938,968	)
Income tax and social contribution paid		(600,908	)		(668,126	)		(1,370	)											(602,278	)		(668,126	)

Net cash generated by operating activities		(809,869	)		1,451,847			469,860			(627,311	)								(340,009	)		824,536

Proceeds from the sale of fixed assets		450,000																		450,000
Acquisitions to property, plant and equipment and intangible assets		(701,863	)		(910,625	)		(62,971	)		(322,521	)								(764,834	)		(1,233,146	)
Other investiments		1,468			38,467															1,468			38,467

Net cash used in investing activities		(250,395	)		(872,158	)		(62,971	)		(322,521	)								(313,366	)		(1,194,679	)

Short-term and long-term debt
Obtained		1,486,963			1,937,284															1,486,963			1,937,284
Payments		(1,513,356	)		(1,865,492	)														(1,513,356	)		(1,865,492	)
Braskem Idesa borrowings
Obtained								187,959			153,126									187,959			153,126
Payments								(448,525	)		(227,201	)								(448,525	)		(227,201	)
Related parties
Obtained loans (payment of loans )		20,637			(925,183	)		(20,637	)		925,183
Dividends paid		(41	)		(998,982	)														(41	)		(998,982	)

Net provided (used) in financing activities		(5,797	)		(1,852,373	)		(281,203	)		851,108									(287,000	)		(1,001,265	)

Exchange variation on cash of foreign subsidiaries		(16,546	)		539,202			(33,493	)		29,578									(50,039	)		568,780

Increase (decrease) in cash and cash equivalents		(1,082,607	)		(733,482	)		92,193			(69,146	)								(990,414	)		(802,628	)

Represented by
Cash and cash equivalents at the beginning for the period		6,500,265			6,908,623			201,599			134,639									6,701,864			7,043,262
Cash and cash equivalents at the end for the period		5,417,658			6,175,141			293,792			65,493									5,711,450			6,240,634

Increase (decrease) in cash and cash equivalents		(1,082,607	)		(733,482	)		92,193			(69,146	)								(990,414	)		(802,628	)

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

11.

Property, plant and equipment

The information on property, plant and equipment was presented in the Company’s 2016 annual financial statements, in Note 13.


	Jun/2017							Dec/2016
	Cost		Accumulated depreciation/ depletion			Net		Cost		Accumulated depreciation/ depletion			Net
Land		481,773					481,773		471,655					471,655
Buildings and improvements		6,109,166		(1,313,069	)		4,796,097		5,530,714		(1,111,642	)		4,419,072
Machinery, equipment and installations		38,728,299		(17,768,071	)		20,960,228		36,804,409		(16,595,497	)		20,208,912
Projects and stoppage in progress		3,490,516					3,490,516		3,495,965					3,495,965
Other		1,450,691		(731,223	)		719,468		1,404,759		(663,653	)		741,106

Total		50,260,445		(19,812,363	)		30,448,082		47,707,502		(18,370,792	)		29,336,710

Capitalized charges in the six-month period ended June 30, 2017 were R$73,186 (R$298,804 on June 30, 2016).

There were no significant events or circumstances in this period that indicate the need for impairment testing on the property, plant and equipment.

12.

Intangible assets

The information on intangible assets was presented in the 2016 annual financial statements of the Company, in Note 14.


	Jun/2017							Dec/2016
	Cost		Accumulated amortization			Net		Cost		Accumulated amortization			Net
Goodwill based on future profitability		3,187,722		(1,128,848	)		2,058,874		3,187,722		(1,128,848	)		2,058,874
Trademarks and patents		361,059		(115,914	)		245,145		339,512		(110,880	)		228,632
Software and use rights		588,019		(384,481	)		203,538		566,673		(364,336	)		202,337
Contracts with customers and suppliers		780,645		(502,291	)		278,354		772,888		(453,644	)		319,244

Total		4,917,445		(2,131,534	)		2,785,911		4,866,795		(2,057,708	)		2,809,087

There were no significant events or circumstances in the period ended June 30, 2017 that indicated the need for updating the impairment testing of intangible assets with indefinite useful life made in the end of 2016, or that indicated the need to perform an impairment testing of intangible assets with definite useful life.

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

13.

Borrowings

The information on borrowings was presented in the 2016 annual financial statements of the Company, in Note 15.

(a)

The Company has borrowings contracted from financial institutions and the capital markets that include restrictive clauses (covenants) requiring the presentation of its audited financial statements within the legal deadline (or within 120 days from the end of the fiscal year).

On the base date for the condensed interim financial information of June 30, 2017, these clauses were not being complied with on the base date of these financial statements within de legal deadline for the following contracts. For this reason, the amounts indicated in the column “Reclassification to current liabilities” in the following table, have been reclassified to current liabilities, in compliance with accounting standard IAS 1 (Presentation of Financial Statements).

According to the standards mentioned above, such reclassification is required when a contractual breach entitles creditors to request the immediate repayment of the obligations in the short-term. In this context, note that none of the Company’s creditors requested such advance payment of the obligations and that Braskem has been settling these obligations in accordance with their original maturity schedule.

Additionally, said clauses will be automatically complied with once the audited financial statements are presented, as of when said creditors will no longer be entitled to request the immediate repayment of short-term obligations, with the amounts in the following table from current liabilities to non-current liabilities.

Original maturity – reclassified to current liabilities


Maturity	Local currency Government Agents
2018
2019		2,793
2020		5,255
2021		5,255
2022		5,149
2023		4,896
2024		4,896
2025		4,896
2026		4,893
2027 and thereafter		2,448

Total		40,481

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

(b)

Borrowings position


	Annual financial charges (% )			Jun/2017			Dec/2016
Foreign currency
Bonds	US dollar exchange variation + interest between 5.38 and 7.38				14,239,556			14,216,539
Advances on exchange contracts	US dollar exchange variation + 3.91%				1,511,401			362,779
Export prepayment	Note 13 (b)				590,378			777,801
BNDES	US dollar exchange variation + interest between 6.70 and 6.86				150,781			201,147
Export credit notes	US dollar exchange variation + interest between 7.30 and 8.10				1,190,301			1,173,127
Working capital	US dollar exchange variation + 1.77% above Libor				1,464,528			1,644,487
Transactions costs					(185,344	)		(199,570	)

					18,961,601			18,176,310

Current liabilities					2,848,157			1,128,525
Non-current liabilities					16,113,444			17,047,785

Total					18,961,601			18,176,310

Local currency
Export credit notes	8.00				302,652			381,632
Export credit notes	105.00 e 112.50 of CDI	(i	)		1,707,898			1,717,262
BNDES	TJLP + interest between 0.00 and 3.58				1,242,629			1,527,765
BNDES	SELIC + interest between 2.32 and 2.78				560,651			602,648
BNDES	Interest between 3.50 and 7.00				241,481			288,486
BNB/ FINEP/ FUNDES	6.21				524,486			580,647
FINAME	TJLP + 1.90				1,680			1,850
Fundo de Desenvolvimento do Nordeste (FDNE)	6.50				44,510			46,991
Other	CDI + 0.04				24,400			19,321
Transactions costs					(9,719	)		(11,845	)

					4,640,668			5,154,757

Current liabilities					1,368,165			1,465,938
Non-current liabilities					3,272,503			3,688,819

Total					4,640,668			5,154,757

Foreign currency and local currency
Current liabilities					4,216,322			2,594,463
Non-current liabilities					19,385,947			20,736,604

Total					23,602,269			23,331,067

(i)	The Company enters into swap transactions to offset the variation in the Interbank Certificate of Deposit (CDI) rate (Note 15.2.1 (a.ii)).

(c)

Export prepayments

Issue date

Initial amount
of the transaction
(US$)

Maturity

Charges (% per year)

Jun/2017

Dec/2016

Jan-2013

200,000

Nov-2022

US dollar exchange variation + semiannual Libor + 1.10

364,691

391,923

May-2016

50,000

May-2017

US dollar exchange variation + quarterly Libor + 3.25

163,564

Dec-2016

68,000

Nov-2019

US dollar exchange variation + quarterly Libor + 2.60

225,687

222,314

Total

318,000

590,378

777,801

(d)

Payment schedule

The payment schedule below shows the original long-term maturities, not including the reclassification to current liabilities arising from the breach of contractual covenants related to the presentation of audited financial statements within the legal term (Note 13(a)).

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated


	Jun/2017		Dec/2016
2018		1,015,015		2,379,757
2019		3,138,233		3,310,384
2020		2,479,107		2,442,493
2021		3,724,233		3,667,632
2022		1,771,643		1,745,936
2023		13,760		13,772
2024		2,497,899		2,461,086
2025		3,827		3,839
2026		1,379		1,391
2027 and thereafter		4,781,332		4,710,314

Total		19,426,428		20,736,604

(e)

Guarantees

Braskem gave collateral for part of its borrowings as follows:

Loans

Maturity

Total debt
Jun/2017

Total
guaranteed

Guarantees

BNB

Dec-2022

122,222

Mortgage of plants, pledge of machinery and equipment

BNB

Aug-2024

202,649

Bank surety

BNDES

Jan-2022

2,195,542

Mortgage of plants, land and property, pledge of machinery and equipment

FUNDES

Jun-2020

95,843

Mortgage of plants, land and property, pledge of machinery and equipment

FINEP

Jul-2024

103,772

Bank surety

FINAME

Feb-2022

1,680

Pledge of equipment

Total

2,721,708

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

14.

Braskem Idesa borrowings

The information on Braskem Idesa borrowings was presented in the 2016 annual financial statements in Note 16.

Identification

Initial value
of operation
US$

Maturity

Charges (% per year)

Jun/2017

Dec/2016

Project finance

(i)

Project finance I

700,000

Feb-2027

Us dollar exchange variation + quarterly Libor + 3.25

2,242,709

2,274,754

Project finance II

189,996

Feb-2027

Us dollar exchange variation + 6.17

642,356

663,856

Project finance III

600,000

Feb-2029

Us dollar exchange variation + 4.33

1,866,837

1,911,857

Project finance IV

680,004

Feb-2029

Us dollar exchange variation + quarterly Libor + 3.88

2,067,783

2,111,234

Project finance V

400,000

Feb-2029

Us dollar exchange variation + quarterly Libor + 4.65

1,246,933

1,276,449

Project finance VI

89,994

Feb-2029

Us dollar exchange variation + quarterly Libor + 2.73

279,729

286,480

Project finance VII

533,095

Feb-2029

Us dollar exchange variation + quarterly Libor + 4.64

1,661,814

1,701,229

Transactions costs

(110,906

)

(104,157

)

Total

3,193,089

9,897,255

10,121,702

Other borrowings

VAT borrowings

(ii)

Nov-2029

2.00% above TIIE (*)

13,500

Borrowings for working capital

Aug-2017

Usdollar exchange variation + quarterly Libor + 3.18

298,568

302,589

298,568

316,089

10,195,823

10,437,791

Current liabilities

10,195,823

10,437,791

Total

10,195,823

10,437,791

(*)	TIIE – “Tasa de Interés Interbancaria de Equilibrio” – basic interest rate in Mexico, similar to the CDI overnight rate in Brazil.

(i)	Financing without resource or with resource limited to shareholders.

(ii)	Financing obtained in Mexican peso and paid exclusively with IVA refund, settled in January 2017.

This kind of Project finance includes restrictive contractual clauses (covenants), among others, that require the presentation of the audited financial statements within the legal deadline (or within 120 days from the end of the fiscal year).

At the reporting date for the condensed interim financial information as of June 30, 2017, these clauses were not being complied with on the base date of these financial statements within the legal term, as well as other obligations customary in contracts of this nature. In this sense, the entire balance of non-current liabilities, in the amount of R$9,146,643, was reclassified to current liabilities, in accordance with accounting standard IAS 1 (Presentation of Financial Statements).

According to the standards mentioned above, such reclassification is required when a contractual breach entitles creditors to request the immediate repayment of the obligations in the short-term. In this context, note that none of the its creditors has requested said immediate repayment of obligations and Braskem Idesa has been settling this obligation in accordance with its original maturity schedule.

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

Additionally, Braskem Idesa has already entered into agreements with its creditors to obtain approvals for said contractual breach in order to return the entire amount reclassified from current liabilities to non-current liabilities.

The payment schedule below shows the original long-term maturities, excluding the reclassification to current liabilities arising from the breach of contractual covenants mentioned previously.


	Jun/2017		Dec/2016
2018		361,079		709,793
2019		736,980		736,885
2020		864,851		864,149
2021		988,253		986,914
2022		823,285		822,235
2023		1,090,310		1,088,155
2024		1,179,751		1,177,017
2025		1,179,390		1,176,346
2026		1,038,472		1,035,586
2027 and thereafter		884,272		894,606

Total		9,146,643		9,491,686

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

15.

Financial instruments

The information related to financial instruments was presented in the 2016 financial statements of the Company, in Note 17.

15.1.

Non-derivative financial instruments and leniency agreement (Note 19.3)

Fair value
hierarchy

Book value

Fair value

Note

Classification by category

Jun/2017

Dec/2016

Jun/2017

Dec/2016

Cash and cash equivalents

Cash and banks

2,567,561

2,178,611

2,567,561

2,178,611

Financial investments in Brazil

Loans and receivables

1,743,939

2,914,685

1,743,939

2,914,685

Financial investments abroad

Held-for-trading

Level 2

1,399,950

1,608,568

1,399,950

1,608,568

5,711,450

6,701,864

5,711,450

6,701,864

Financial investments

LFT’s and LF’s

Held-for-trading

Level 2

2,236,755

755,712

2,236,755

755,712

Time deposit investments

Loans and receivables

Level 2

440,568

434,015

440,568

434,015

Other

Held-to-maturity

Level 2

496

756

496

756

2,677,819

1,190,483

2,677,819

1,190,483

Trade accounts receivable

2,523,211

1,704,373

2,523,211

1,704,373

Trade payables

5,530,604

6,746,822

5,530,604

6,746,822

Borrowings

Foreign currency—Bond

Level 1

14,239,556

14,216,539

15,039,361

12,509,981

Foreign currency—other borrowings

4,907,389

4,159,341

4,907,389

4,159,341

Local currency

4,650,387

5,166,602

4,650,387

5,166,602

23,797,332

23,542,482

24,597,137

21,835,924

Braskem Idesa borrowings

10,306,729

10,541,948

10,306,729

10,541,948

Loan ton non-controlling shareholder of Braskem Idesa

1,679,492

1,620,519

1,679,492

1,620,519

Leniency agreement

19.3

2,314,344

2,853,230

2,314,344

2,853,230

Other payables (BNDESPAR)

176,846

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

15.2.

Derivative financial instruments designated and not designated for hedge accounting

15.2.1

Changes


						Operation characteristics						Net (Asset)/			Change						Net (Asset)/
Identification	Note			Fair value hierarchy		Principal exposure		Derivatives		Accumulated OCI (equity)		Liability Dec/2016			in fair value			Financial settlement			Liability Jun/2017
Hedge accounting transactions
Dollar put option		15.2.1	(a.i)		Level 2		Real		Dollar				(4,184	)		5,139						955
Exchange swap		15.2.1	(a.ii)		Level 2		CDI		Dollar + Interests		533,134		857,099			14,484			(9,148	)		862,435
Interest rate swaps					Level 2		Libor		Fixed rates		302,399		(266	)		(1,316	)		5,207			3,625

											835,533		852,649			18,307			(3,941	)		867,015

Derivatives operations
Current assets													(8,387	)
Non-current assets													(29,308	)								(14,820	)
Current liabilities													29,042									41,350
Non-current liabilities													861,302									840,485

													852,649									867,015

(a)

Operations designated for hedge accounting

(a.i)

U.S. dollar Put Options

In September 2016, Braskem launched a recurring currency hedge program to mitigate the exposure of its cash flows to liabilities denominated in Brazilian real and not pegged to the U.S. dollar (such as electricity, payroll, etc.).

As of June 30, 2017, Braskem held a total notional value of put options of R$3,258, with a maximum term of 18 months and average strike price of 2.97 R$/US$. Braskem also held a total notional value of short positions in call option contracts in the amount of R$2,261. The average strike price of the short position in call options was R$4.28.

This type of strategy involving options, called Collar, offers protection in the event the Brazilian real appreciates while simultaneously enabling the capture of competitiveness gains in the event of currency depreciation, until limited to the strike price of the options.

Such operations were designed for the hedge accounting of cash flows as from January 1, 2017, and seek to hedge future dollar-denominated revenues with maturities in months coinciding with the maturity of the derivatives and that said it’s been accounted in compliance with Company’s cash flow hedge accounting policy.

The US Dollar put options were initially recognized at fair value and is being subsequently remeasured to its fair value at the end of each reporting period. The gain or loss relating to the effective portion of US Dollar options in-the-money (intrinsic value) is recognized in other comprehensive income in equity. The gain or loss relating to the ineffective portion and the extrinsic value of the option is recognized immediately in profit or loss within financial expenses or financial income.

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

(a.ii)

Swaps related to export credit notes (NCE)

Nominal value

Hedge

Financial charges for year

Maturity

Fair value

Identification

Jun/2017

Dec/2016

Swap NCE I to III

400,000

Exchange variation + 6.15%

Aug-2019

439,611

438,201

Swap NCE IV to VII

450,000

Exchange variation + 4.93% to 7.90%

Apr-2019

422,824

418,898

Total

850,000

862,435

857,099

Derivatives operations

Current assets

(4,203

)

Current liabilities

21,950

Non-Current liabilities

840,485

861,302

Total

862,435

857,099

15.3.

Non-derivative liabilities designated for export hedge accounting

(a.i)

Future exports in U.S. dollars

On June 30, 2017, exports that were designated and not yet realized are shown below:


	Total nominal value US$
2017		420,273
2018		787,894
2019		733,980
2020		724,000
2021		716,000
2022		719,000
2023		718,372
2024		688,854

		5,508,373

The following table shows the changes in financial instruments designated for this hedge in the period:


	US$
	Dec/2016		Hedge discontinued			Jun/2017
Designated balance		5,301,099		(402,325	)		4,898,774

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

On June 30, 2017, the maturities of financial liabilities designated are as follows:


	Total nominal value US$
2017		889,595
2018		772,104
2019		449,736
2020		570,782
2021		1,017,703
2022		510,000
2024		688,854

		4,898,774

Considering the strong cash generation in recent quarters, the Management of the Company believed it was appropriate to advance the payment of dollar-denominated obligations, including liabilities designated for this hedge. As a result of the decision, the amount of US$609,598 was discontinued prospectively (US$402,325 for the period ended June 30, 2017). Exchange variation on the discontinued amount, of R$771,222 (R$495,860 for the period ended June 30,2017), which is recorded under Shareholders’ Equity as “Other comprehensive income” (“OCI”) will be taken to net financial income (expenses) as of July 2017, as the hedged exports are realized.


	Total nominal value US$		Conversion rate at Inception R$/US$		Closing rate R$/US$		Gross nominal value
Hedge descontinued - Third quarter 2017		207,273		2.0017		3.3302		275,362
Hedge descontinued - Fourth quarter 2017		213,000		2.0017		3.1684		248,507
Hedge descontinued - First quarter 2018		189,325		2.0017		3.3082		247,353

		609,598						771,222

The following table provides the balances of exchange variation recognized in the Company’s net financial income (expenses) due to the realization of exports designated for this hedge for the six-month period ended June 30, 2017:


	Total nominal value US$		Conversion rate at Inception MXN/US$		Closing rate MXN/US$		Gross nominal value
First quarter		201,277		2.0017		3.2400		249,241
Second quarter		208,135		2.0017		3.2015		249,721

		409,412						498,962

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

The changes in foreign exchange variation and Income Tax and Social Contribution under “Other comprehensive income” of this hedge are as follows:


	Exchange variation			IR and CSL			Net effect
At December 31, 2016		(7,439,927	)		2,529,575			(4,910,352	)
Exchange variation recorded in the period on OCI / IR and CSL		(230,507	)		78,372			(152,135	)
Exchange variation transferred to profit or loss / IR and CSL		498,962			(169,647	)		329,315

At June 30, 2017		(7,171,472	)		2,438,300			(4,733,172	)

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

(a.ii)

Liabilities related to the Project Finance of future sales in U.S. dollar

On June 30, 2017, sales designated and not yet realized are as follows:


	Nominal value US$
2017		106,182
2018		221,790
2019		229,270
2020		266,690
2021		303,392
2022		253,204
2023		333,093
2024		359,559
2025		357,903
2026		309,240
2027		152,103
2028		124,654
2029		31,164

		3,048,244

The following table shows the changes in financial instruments designated for these hedge operations in the period:


	US$
	Dec/2016		Sales in the year			Hedge discontinued			Jun/2017
Designated balance		3,125,315		(77,070	)		(12,091	)		3,036,154

On June 30, 2017, the maturities of financial liabilities designated were distributed as follows:


	Nominal value US$
2017		105,992
2018		221,390
2019		228,850
2020		266,187
2021		302,816
2022		252,723
2023		332,458
2024		358,788
2025		357,221
2026		308,650
2027		150,419
2028		124,348
2029		26,312

		3,036,154

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

The following table provides the balance of exchange variation of the discontinued amount, net of realization already occurred, on June 30, 2017, which is recorded in Braskem Idesa’s shareholders’ equity under “Other comprehensive income” and will be transferred to financial income (expenses) according to the schedule of future hedged sales:

Total nominal
value US$

Conversion rate
at Inception
MXN/US$

Closing rate
MXN/US$

Total nominal
value MXN

Gross nominal
value

Hedge descontinued

12,091

13.4541

17.9915

54,860

10,039

54,860

10,039

The following table provides the balances of exchange variation recognized in Braskem Idesa’s financial income (expenses) due to the realization of sales designated for this hedge over the course of the six-month period ended June 30, 2017:


	Total nominal value US$		Conversion rate at Inception MXN/US$		Closing rate MXN/US$		Total nominal value MXN		Gross nominal value
First quarter		29,174		13.6650		20.0871		187,361		30,918
Second quarter		47,896		13.6560		18.5659		235,167		42,992

		77,070						422,528		73,910

The changes in foreign exchange variation and Income Tax and Social Contribution under “Other comprehensive income” are as follows:


	Exchange variation			IR			Net effect
At December 31, 2016		(4,182,052	)		1,255,350			(2,926,702	)
Exchange variation recorded in the period on OCI / IR		1,403,603			(421,081	)		982,522
Exchange variation transferred to profit or loss / IR		73,910			(22,173	)		51,737

At June 30, 2017		(2,704,539	)		812,096			(1,892,443	)

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

15.4.

Credit quality of financial assets

(a)

Trade accounts receivable

On June 30, 2017, the credit ratings for the domestic market were as follows:


				(%)
				Jun/2017		Dec/2016
1	Minimum risk				12.58		8.92
2	Low risk				38.61		39.98
3	Moderate risk				25.63		30.51
4	High risk				18.60		16.48
5	Very high risk	(i	)		4.58		4.11

(i)	Most clients in this group are inactive and the respective accounts are in the process of collection actions in the courts. Clients in this group that are still active buy from Braskem and pay in advance.

Default indicators


	Last 12 months
	Domestic Market			Export Market
June 30, 2017		0.49	%		0.08	%
December 31, 2016		0.18	%		0.04	%
June 30, 2016		0.27	%		0.10	%

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

(b)

Other financial assets

In order to determine the credit ratings of counterparties in financial assets classified as cash and cash equivalents, held-for-trading, held-to-maturity and loans and receivables, Braskem uses credit rating from the following agencies: Standard & Poor’s, Moody’s and Fitch Ratings within the limits established in its financial policy approved by the Board of Directors.


		Jun/2017		Dec/2016
Financial assets with risk assessment
AAA			4,288,374		3,871,105
AA+			3,362		241,359
AA			60,023		5,370
AA-			638,249		654,232
A+			1,601,138		2,426,078
A			1,521,426		364,198
A-			147,455		209,175
BBB+			3,060		116,987
BBB			122,538

			8,385,625		7,888,504
Financial assets without risk assessment
Other financial assets with no risk assessment	(i)		3,644		3,843

			3,644		3,843

Total			8,389,269		7,892,347

(i)	Investments approved by the Management of the Company, as permitted by the financial policy.

15.5.

Sensitivity analysis

Financial instruments, including derivatives, may be subject to changes in their fair value as a result of the variation in commodity prices, foreign exchange rates, interest rates, shares and share indexes, price indexes and other variables. The sensitivity of the derivative and non-derivative financial instruments to these variables are presented below:

(a)

Selection of risks

On June 30, 2017, the main risks that can affect the value of Braskem’s financial instruments are:

•

Brazilian real/U.S. dollar exchange rate;

•

Brazilian real/Mexican peso exchange rate;

•

Libor floating interest rate;

•

Selic interest rate;

•

CDI interest rate; and

•

TJLP interest rate.

For the purposes of the risk sensitivity analysis, Braskem presents the exposures to currencies as if they were independent, that is, not reflecting in the exposure to a foreign exchange rate the risks of the variation in other foreign exchange rates that could be directly influenced by it.

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

(b)

Value at risk

The value at risk of the derivatives held by Braskem which is defined as the loss that could result in one month as from June 30, 2017, with a probability of 5%, and under normal market conditions, was estimated by the Company at US$28,144 for the NCE exchange rate swap (Note 15.2.1(a.ii)) and at US$2,489 for put and call options (Note 15.2.1(a.i)) and null for the swap of Libor related to Braskem Idesa’s project.

(c)

Selection of scenarios

(c.1)

Probable scenario

The Market Readout published by the Central Bank of Brazil was used to create the probable scenario for the U.S. dollar/Brazilian real exchange rate, Selic basic interest rate and the CDI interest rate, using the reference date of June 30, 2017. According to the Market Readout, at the end of 2017, the U.S. dollar will appreciate by 1.2% against the Brazilian real, compared to the closing PTAX rate at June 30, 2017, while the Selic rate will be 8.5% p.a. The Selic rate is used as a reference for analyses of sensitivity to the CDI.

The probable scenario for the TJLP is a decrease of 0.50% from the current rate of 7.0%, in line with the size of the government’s most recent decisions to increase or decrease the rate. The Market Readout does not publish forecasts for the Libor interest rate. Therefore, to determine the probable scenario, Braskem considered a 5% increase on current market levels.

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

(c.2)

Possible and extreme adverse scenarios

The sensitivity values in the table below are the changes in the value of the financial instruments in each scenario:


	Gain (losses)
Instrument / Sensitivity	Probable			Possible adverse (25%)			Extreme adverse (50%)
Brazilian real/U.S. dollar exchange rate
Bonds		(177,707	)		(3,516,094	)		(7,032,189	)
BNDES		(1,905	)		(37,695	)		(75,391	)
Working capital / structured operations		(33,544	)		(663,707	)		(1,327,415	)
Export prepayments		(7,331	)		(145,053	)		(290,107	)
Braskem Idesa borrowings		(128,827	)		(2,548,956	)		(5,097,911	)
Financial investments abroad		(19,097	)		(377,850	)		(755,700	)
Swaps		(21,787	)		(431,094	)		(840,350	)
Dollar put option		(1,852	)		(25,013	)		(77,752	)
Financial investments abroad		36,103			714,331			1,428,662
Selic interest rate
BNDES		33,842			(52,500	)		(108,648	)
Libor floating interest rate
Working capital / structured operations		(643	)		(3,217	)		(6,433	)
Export prepayments		(2,251	)		(11,254	)		(22,508	)
Swaps		2,060			10,233			20,300
CDI interest rate
Swaps NCE		32,076			(48,179	)		(97,805	)
Swaps NCA		60,205			(94,454	)		(196,790	)
Financial investments in local currency		(30,308	)		43,974			87,479

Instrument / Sensitivity	Probable 6.5%			Possible adverse 7.5%			Extreme adverse 8.0%
TJLP interest rate
BNDES		26,540			(26,993	)		(54,443	)
Other government agents		37			(37	)		(75	)

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

16.

Taxes payable

The information related to taxes payable was presented in the Company’s 2016 annual financial statements, in Note 18.


	Jun/2017		Dec/2016
Brazil
IPI		65,110		59,323
IR and CSL		219,653		222,680
ICMS		211,500		182,034
PIS and COFINS		98,816		59,105
Other		50,103		62,743
Other countries
IR		214,252		46,670
Value-added tax		128,670		15,622

Total		988,104		648,177

Current liabilities		947,680		624,080
Non-current liabilities		40,424		24,097

Total		988,104		648,177

17.

Income tax (“IR”) and social contribution (“CSL”)

The information related to income tax and social contribution was presented in the Company’s 2016 annual financial statements, in Note 20.

(a)

Reconciliation of the effects of income tax and social contribution on profit or loss


	Jun/2017			Jun/2016
				Restated
Income before IR and CSL		4,156,758			1,515,213
IR and CSL at the rate of 34%		(1,413,298	)		(515,172	)
Permanent adjustments to the IR and CSL calculation basis
IR and CSL on equity in results of investees		4,151			4,548
Tax loss and negative basis - Installment Rectification		38,403
Tax benefits (Sudene and PAT)		41,654
Difference of rate applicable to each country		166,406			(4,335	)
Other permanent adjustments		53,721			51,734

IR and CSL on results of operations		(1,108,963	)		(463,225	)

Breakdown of IR and CSL:
Current IR and CSL		(363,969	)		(551,597	)
Deferred IR and CSL		(744,994	)		88,372

Total		(1,108,963	)		(463,225	)

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

(b)

Breakdown of deferred income tax and social contribution

(b.i)

According to tax collection records


	Jun/2017		Dec/2016
Assets
Tax losses (IR) and negative base (CSL)		1,864,478		2,420,376
Goodwill amortized		4,270		4,624
Exchange variations		255,357		464,947
Temporary adjustments		336,775		717,868
Business combination		192,101		191,250

		2,652,981		3,799,065

Liabilities
Amortization of goodwill based on future profitability		783,659		767,277
Tax depreciation		919,228		867,922
Temporary adjustments		313,414		316,991
Business combination		179,353		198,381
Additional indexation PP&E		54,325		118,202
Amortization of fair value adjustments on the assets from the acquisiton of Braskem Qpar		398,904		263,808
Other		3,506		123,892

		2,652,389		2,656,473

(b.ii)

Offset for the purpose of presentation in the balance sheet


	Jun/2017
	Headquarters (Country)		IR and CSL					Balance
	Headquarters (Country)		Tax calculation		Compensation			Balance
Assets
Braskem S.A		Brazil		1,523,548		(1,523,548	)
Braskem Chile		Chile		90					90
Braskem Argentina		Argentina		4,291					4,291
Braskem Alemanha		Germany		25,420					25,420
Braskem Idesa		Mexico		892,582					892,582
Braskem México Serviços		Mexico		1,613					1,613
Braskem Petroquímica		Brazil		103,105		(103,105	)
Braskem Petroquímica—business combination effects		Brazil		102,332					102,332

				2,652,981		(1,626,653	)		1,026,328

Liabilities
Braskem S.A		Brazil		2,063,638		(1,523,548	)		540,090
Braskem America		USA		305,228					305,228
Braskem Petroquímica		Brazil		165,562		(103,105	)		62,457
Braskem Petroquímica—business combination effects		Brazil		117,961					117,961

				2,652,389		(1,626,653	)		1,025,736

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated


	Dec/2016
	Headquarters (Country)		IR and CSL					Balance
	Headquarters (Country)		Tax calculation		Compensation			Balance
Assets
Braskem S.A		Brazil		2,106,303		(2,063,844	)		42,459
Braskem Argentina		Argentina		6,745					6,745
Braskem Alemanha		Germany		36,932					36,932
Braskem Chile		Chile		135		(135	)
Braskem Idesa		Mexico		1,463,502					1,463,502
Braskem México Serviços		Mexico		1,994					1,994
Braskem Petroquímica		Brazil		81,971		(81,971	)
Braskem Petroquímica and Braskem Qpar—business combination effects		Brazil		101,483					101,483

				3,799,065		(2,145,950	)		1,653,115

Liabilities
Braskem S.A		Brazil		2,063,844		(2,063,844	)
Braskem America		USA		305,289					305,289
Braskem Chile		Chile		1,404		(135	)		1,269
Braskem Petroquímica		Brazil		162,241		(81,971	)		80,270
Braskem Petroquímica and Braskem Qpar—business combination effects		Brazil		123,695					123,695

				2,656,473		(2,145,950	)		510,523

(c)

Realization of deferred income tax and social contribution

In the six-month period ended June 30, 2017, there were no material events or circumstances that indicate any compromise of the realization of these deferred taxes.

18.

Sundry provisions

The information on sundry provisions was presented in the 2016 annual financial statements of the Company, in Note 22.


	Jun/2017		Dec/2016
Provision for customers rebates		32,123		41,475
Provision for recovery of environmental damages		229,397		254,040
Other		24,455		23,621

Total		285,975		319,136

Current liabilities		78,875		112,891
Non-current liabilities		207,100		206,245

Total		285,975		319,136

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

19.

Contingencies

19.1.

Claims with probable loss and arising from business combinations

The description of the main contingent liabilities of the Company was presented in the 2016 annual financial statements, in Note 23.1.


	Jun/2017		Dec/2016
Labor claims		200,193		207,827
Tax claims
Normal operations
IR and CSL		14,044		11,462
PIS and COFINS		208,444		204,516
ICMS		44,067		39,604
Other tax claims		18,578		19,586

		285,133		275,168

Business Combination
IR and CSL		48,158		45,656
PIS and COFINS		53,947		51,052
ICMS—interstate purchases		235,859		223,071
ICMS—other		17,308		16,379

		355,272		336,158

Corporate claims		110,084		105,175
Civil claims and other		65,200		60,909

		1,015,882		985,237

19.2.

Claims with possible losses

The amount of claims and a description of the main claims with possible losses are presented in the financial statements for fiscal year 2016, in Note 23.2.

(a)

Civil claims

In January 2017, the Company became defendant in a civil lawsuit filed by former reseller of solvents, claiming alleged breach of a tacit distribution agreement. On June 30, 2017, the damages claimed in the lawsuit amounted to R$140 million.

Based on the opinion of external legal counsel accompanying the case, the Management believes that the lawsuit has a possible risk of loss within an eight-year period.

No judicial deposit or other form of security was made for these suits.

(b)

Tax claims

In March 2017, the Company received a tax deficiency notice claiming that the methodology used to offset tax losses and tax loss carryforwards at Rio Polímeros failed to observe the limit of 30% of the Taxable Profit and Social Contribution calculation base when offsetting such liabilities with Income Tax and Social Contribution liabilities in its merger into Braskem Qpar S/A, in August 2013. On June 30, 2017, the restated value of the taxes recorded amounted to R$247 million.

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

The Company’s external legal advisors estimate that the administrative proceedings should be concluded by 2020.

Considering that the requirement to pay the tax liability has been suspended, currently no administrative, escrow or other type of guarantee deposit has been made for this proceeding.

19.3.

Reports of irregularities and global settlement with authorities

Complete information on the reports of irregularities and on the global settlement with authorities was presented in Note 23.3 to the Company’s annual financial statements for 2016.

(a)

Global Settlement with authorities

The Leniency Agreement (“Agreement”) with the Federal Prosecution Office (“MPF”) and with U.S. and Swiss authorities (“Global Settlement”), in the approximate amount of US$957 million (approximately R$3.1 billion), were definitively ratifying in the following manner:

In Brazil, the Agreement was ratified by the 5^th Coordination and Review Chamber of the MPF on December 15, 2016 and on June 6, 2017 by the Judge of the 13^th Federal Court of Curitiba.

The agreement with U.S. Department of Justice (“DoJ”) was confirmed by sentence by the American justice on January 26, 2017.

The U.S. Securities and Exchange Commission (“SEC”) confirmed the agreement on February 28, 2017.

The agreement with Swiss authorities did not require ratification to produce effect.

Of the total amount of the Global Agreement, the Company has already paid approximately R$1.3 billion in the following manner:

US$94,894 (R$296,591) to DoJ on February 8, 2017;

US$65,000 (R$206,460) to SEC on April 27, 2017;

CHF30,240 (R$104,307) to the Office of the Attorney General of Switzerland on June 27, 2017;

R$736,445 to MPF on July 6, 2017.

The outstanding amount of approximately R$1.7 billion will be paid in the following manner:

CHF64,260 to the Office of the Attorney General of Switzerland in four equal annual and successive installments of CHF16,065 due on June 30 of each year as from 2018;

R$1.5 billion to MPF in six annual installments adjusted for inflation by the variation in the IPCA inflation index due on January 30 of each year as from 2018. To guarantee payment of the installments coming due, Braskem offered fixed assets in an amount corresponding to one annual installment.

(b)

Reimbursement for damages and other considerations

A significant portion of the total amount of R$$2.2 billion to be paid to MPF will be made available for use in reimbursing third parties for any damages caused by the wrongdoings.

Under the Agreement, the MPF undertook to coordinate actions with other authorities or government agencies with which Braskem comes to negotiate for entering into agreements involving the facts uncovered in connection with the Agreement, the public prosecution offices of states and cities in Brazil, state-owned companies and state-controlled companies for entering into similar agreements with such organizations, including for the purpose of preventing duplicate restitution with regard to the amount paid under the Agreement.

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

The Agreement does not prevent any third party from filing proceedings to seek reimbursement for any damages caused by Braskem, which could result in payments other than those provided for in the Agreement. Therefore, the Company cannot guarantee that the total amount available for reimbursement will be sufficient to fully reimburse any third parties affected by the wrongdoings, which means that the Company may be subject to the payment of damages or financial penalties other than those provided for in the Global Settlement.

With the exception of the amount mentioned above, as well as of the other non-monetary obligations imposed on the Company under the Global Settlement, it may have a material adverse effect on our business, reputation, financial condition, financial instruments and operational results, as well as on the liquidity and price of the securities of Braskem. Furthermore, the negative publicity resulting from the Global Settlement, could have a material adverse impact on our businesses, including reducing the demand for our products, our financial instruments and other effects that currently cannot be estimated or measured. In addition, other authorities with jurisdiction over our company may seek to impose additional monetary sanctions or fines or commence new investigations against us. Finally, as a result of the Global Settlement, the Company may be barred from entering into certain agreements with government authorities and may be subject to increased operating costs in connection with its obligations to improve its governance and anti-corruption practices, including the cost of the external monitorship.

It is not possible to predict the impacts on Braskem of others investigations or of any decision or action taken by authorities involving its largest shareholders, namely Odebrecht S.A. and Petróleo Brasileiro S.A. – Petrobras, or any of their subsidiaries.

(d)

Class action

On July 1, 2015, a putative class action lawsuit was filed against the Company and its certain of its current and former officers in the United States District Court for the Southern District of New York. In the operative complaint, the Lead Plaintiff, Boilermaker-Blacksmith National Pension Trust, alleges that the Defendants made misrepresentations or omissions that inflated the price of the Company’s stock in violation of U.S. securities laws. The Company has engaged a U.S. law firm to represent it and filed motion to dismiss on July 6, 2016.

On March 31, 2017, the judge rendered a decision on the motion to dismiss granting it in part and denying it in part. With respect to the remaining claims, the class action is now in the discovery stage.

On August 29, 2017, the Lead Plaintiff, in agreement with the Company, has filed a letter requesting an amendment to the previously agreed schedule of the discovery, as the parties are currently engaged in settlement negotiations. Any definitive agreement that might be reached by the parties would be subject to a variety of conditions, including Court approval. The Company cannot foresee the outcome of this process, at this stage.

The Company may be named as a defendant in other legal actions. Furthermore, the Company may be required, in accordance with any applicable legal and regulatory limits, to indemnify directors, officers and employees that are defendants in the securities class action and any other related actions that may arise in the future. The litigation has required significant time and dedication of the Management of the Company and is expected to continue to require such time and attention in the future.

On September 14, 2017, the Company and the Lead Plaintiff in In re Braskem Securities Litigation (U.S. District Court for the Southern District of New York) have signed a proposed settlement agreement (“Proposed Settlement”) and submitted it to the mentioned Court for preliminary approval.

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

Under the terms of the Proposed Settlement, Braskem would pay US$10 million to resolve all claims of a settlement class consisting of purchasers of Braskem American Depositary Receipts (“ADRs”) traded on the New York Stock Exchange during the period of July 15, 2010 through March 11, 2015, that arise out of or relates to the subject matter of the Class Action, with the exception of any such claims belonging to purchasers who file valid and timely requests to opt out of the settlement class.

In accordance with IAS 37 (Provisions, Contingent Liabilities and Contingent Assets), the Company will record a provision in the amount of US$10 million, equivalent to approximately R$31 million, based on the fixed exchange rate of R$3.13 to US$1.00. The amount is deemed not material by management for the period ended June 30, 2017 and will be recognized in the statement of operations in the item “Other income (expenses), net” in the third quarter of 2017.

Braskem has made no admission of any wrongdoing or liability as part of the Proposed Settlement, and entered into the Proposed Settlement solely to avoid the risk, uncertainty, and expense of further litigation. The Proposed Settlement is subject to a number of conditions including Court approval.

20.

Shareholders’ Equity

The information related to the Company’s shareholders’ equity was presented in its 2016 annual financial statements, in Note 26.

(a)

Capital


			Amount of shares
			Common shares		%			Preferred shares class A		%		Preferred shares class B		%		Total		%
Odebrecht				226,334,623		50.11			79,182,498		22.95						305,517,121		38.32
Petrobras				212,426,952		47.03			75,761,739		21.96						288,188,691		36.15
ADR	(i	)				0.00	%		54,996,724		15.94						54,996,724		6.90
Other				12,907,077		2.86			133,834,903		38.79		578,330		100.00		147,320,310		18.48

Total				451,668,652		100.00			343,775,864		99.64		578,330		100.00		796,022,846		99.85

Treasury shares	(ii	)							1,234,758		0.36						1,234,758		0.15

Total				451,668,652		100.00			345,010,622		100.00		578,330		100.00		797,257,604		100.00

(i)	American Depositary Receipts traded on the New York Stock Exchange (USA);

(ii)	Includes 1,154,758 shares held by Braskem Petroquímica, considered “treasury shares” in the consolidated shareholders’ equity, amounting to R$48,892.

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

(b)

Other comprehensive income—shareholders’ equity


	Attributed to shareholders’ interest
							Defined									Foreign									Non-
	Additional			Deemed			benefit			Foreign						currency			Gain (loss)			Total			controlling
	indexation of			cost of			plans actuarial			sales			Fair value			translation			on interest			Braskem			interest in
	PP&E			PP&E			Gain (loss)			hedge			of hedge			adjustment			in subsidiary			shareholders’			Braskem
	(i)			(i)			(ii)			(iii)			(iii)			(iv)			(v)			interest			Idesa			Total
On December 31, 2015		217,595			17,309			(39,232	)		(9,666,973	)		(685,396	)		1,105,391			(9,404	)		(9,060,710	)		(476,708	)		(9,537,418	)

Additional indexation
Realization		(20,635	)																				(20,635	)					(20,635	)
Income tax and social contribution		7,016																					7,016						7,016
Deemed cost of jointly-controlled investment
Realization					(730	)																	(730	)					(730	)
Income tax and social contribution					248																		248						248
Foreign sales hedge
Exchange rate											3,613,180												3,613,180			(273,493	)		3,339,687
Transfer to result											777,966												777,966			3,574			781,540
Income tax and social contribution											(1,522,163	)											(1,522,163	)		82,048			(1,440,115	)
Fair value of Cash flow hedge
Change in fair value														239,487									239,487			(38,128	)		201,359
Transfer to result														(14,876	)								(14,876	)		(6,652	)		(21,528	)
Income tax and social contribution														(81,741	)								(81,741	)		13,434			(68,307	)
Fair value of cash flow hedge from jointly-controlled														(12,765	)								(12,765	)					(12,765	)
Foreign currency translation adjustment																	(215,975	)					(215,975	)		191,986			(23,989	)

On June 30, 2016		203,976			16,827			(39,232	)		(6,797,990	)		(555,291	)		889,416			(9,404	)		(6,291,698	)		(503,939	)		(6,795,637	)

On December 31, 2016		190,359			16,344			(43,351	)		(7,105,377	)		(539,518	)		1,169,088			(9,404	)		(6,321,859	)		(548,601	)		(6,870,460	)
Additional indexation
Realization		(20,437	)																				(20,437	)					(20,437	)
Income tax and social contribution		6,949																					6,949						6,949
Deemed cost of jointly-controlled investment
Realization					(730	)																	(730	)					(730	)
Income tax and social contribution					248																		248						248
Foreign sales hedge
Exchange rate											822,195												822,195			350,901			1,173,096
Transfer to result											554,394												554,394			18,478			572,872
Income tax and social contribution											(423,715	)											(423,715	)		(110,814	)		(534,529	)
Fair value of Cash flow hedge
Change in fair value														(7,979	)								(7,979	)		(880	)		(8,859	)
Transfer to result														48,227									48,227			11,799			60,026
Income tax and social contribution														(12,374	)								(12,374	)		(3,277	)		(15,651	)
Fair value of cash flow hedge from jointly-controlled														3,762									3,762						3,762
Foreign currency translation adjustment																	(175,118	)					(175,118	)		(113,447	)		(288,565	)

On June 30, 2017		176,871			15,862			(43,351	)		(6,152,503	)		(507,882	)		993,970			(9,404	)		(5,526,437	)		(395,841	)		(5,922,278	)

(i)	Transfer to retained earnings as the asset is depreciated or written-off.

(ii)	Transfer to retained earnings when the extinction of the plan.

(iii)

Transfer to the income statement when maturity, prepayment or loss of efficacy for hedge accounting.

(iv)	Transfer to the income statement when write-off of subsidiary abroad.

(v)	Transfer to the income statement when divestment or transfer of control of subsidiary.

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

21.

Earnings per share

The table below shows the reconciliation of profit or loss for the period adjusted for the amounts used to calculate basic and diluted earnings per share.


	Basic and diluted
	Jun/2017		Jun/2016
			Restated
Profit for the period attributed to Company’s shareholders of continued operations		2,888,524		1,209,880
Distribution of dividends attributable to priority:
Preferred shares class “A”		208,416		208,409
Preferred shares class “B”		351		360

		208,767		208,769

Distribution of 6% of unit value of common shares		273,827		273,824
Distribution of plus income, by class:
Common shares		1,366,133		412,971
Preferred shares class “A”		1,039,797		314,316

		2,405,930		727,287

Reconciliation of income available for distribution, by class (numerator):
Common shares		1,639,960		686,795
Preferred shares class “A”		1,248,213		522,725
Preferred shares class “B”		351		360

		2,888,524		1,209,880

Weighted average number of shares, by class (denominator):
Common shares		451,668,652		451,668,652
Preferred shares class “A”		343,775,864		343,768,220
Preferred shares class “B”		578,330		593,618

		796,022,846		796,030,490

Profit per share (in R$)
Common shares		3.6309		1.5206
Preferred shares class “A”		3.6309		1.5206
Preferred shares class “B”		0.6069		0.6065

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

22.

Net sales revenues


	Jun/2017			Jun/2016
				Restated
Sales revenue
Domestic market		17,004,059			15,918,691
Foreign market		11,778,506			11,430,701

		28,782,565			27,349,392
Sales and services deductions
Taxes
Domestic market		(4,158,457	)		(3,476,669	)
Foreign market		(15,165	)		(13,456	)
Costumers rebates
Domestic market		(3,415	)		(21,763	)
Foreign market		(24,655	)		(26,699	)
Sales returns
Domestic market		(61,683	)		(145,720	)
Foreign market		(49,032	)		(28,553	)

		(4,312,407	)		(3,712,860	)

Net sales and services revenue		24,470,158			23,636,532

23.

Other net income (expenses)


	Note			Jun/2017			Jun/2016
							Restated
Participation of members in profits and results		(i	)		(174,133	)		(183,872	)
Expense and depreciation with hibernate plants					(97,724	)		(100,613	)
Expenses from fixed assets					(30,911	)		(30,575	)
Capital gain—sale of Quantiq		3			276,816
Other					42,759			(48,445	)

					16,807			(363,505	)

(i)	In the period ended June 30, 2016, the amounts related to this item were reclassified from “costs of products sold” (R$83,363), “selling and distribution expenses” (R$3,994) and “general and administrative expenses” (R$96,515) (Note 2.5(b)).

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

24.

Financial results


	Jun/2017			Jun/2016
				Restated
Financial income
Interest income		286,111			352,879
Other		30,419			22,876

		316,530			375,755

Financial expenses
Interest expenses		(1,147,962	)		(1,192,252	)
Monetary variations on fiscal debts		(46,365	)		(45,433	)
Discounts granted		(60,255	)		(54,182	)
Loans transaction costs—amortization		(25,469	)		(29,392	)
Adjustment to present value—appropriation		(174,589	)		(273,615	)
Other		(201,447	)		(97,285	)

		(1,656,087	)		(1,692,159	)

Exchange rate variations, net
On financial assets		209,373			(1,010,274	)
On financial liabilities		67,231			(1,052,418	)

		276,604			(2,062,692	)

Total		(1,062,953	)		(3,379,096	)

The financial effects of the Leniency Agreement in the period ended June 30, 2017 were: R$ 26,493 (inflation recorded under financial expenses “Other”), R$ 5,130 (“Exchange rate variations on financial liabilities”) and R$36,849 (“Adjustment to present value—appropriation”).

25.

Expenses by nature and function


	Jun/2017			Jun/2016
				Restated
Classification by nature:
Raw materials other inputs		(14,509,167	)		(13,773,204	)
Personnel expenses		(1,074,155	)		(1,151,829	)
Outsourced services		(986,094	)		(965,353	)
Depreciation, amortization and depletion		(1,424,202	)		(1,241,299	)
Freights		(1,011,658	)		(1,008,150	)
Other expenses, net		(268,022	)		(615,765	)

Total		(19,273,298	)		(18,755,600	)

Classification by function:
Cost of products sold		(17,890,990	)		(17,074,199	)
Selling and distribution		(704,586	)		(648,644	)
General and administrative		(622,384	)		(586,624	)
Research and development		(72,145	)		(82,628	)
Other income (expenses), net		16,807			(363,505	)

Total		(19,273,298	)		(18,755,600	)

Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

26.

Segment information

The information by segment was presented in the 2016 annual financial statements, in Note 33.


	Jun/2017
										Operating expenses
	Net			Cost of						Selling, general			Results from
	sales			products			Gross			and distribuition			equity		Other income			Consolidated
	revenue			sold			profit			expenses			investments		(expenses), net			Braskem
Reporting segments
Basic petrochemicals		12,514,921			(10,166,902	)		2,348,019			(376,465	)				(79,907	)		1,891,647
Polyolefins		9,705,309			(7,603,727	)		2,101,582			(639,369	)				(62,170	)		1,400,043
Vinyls		1,457,179			(1,252,403	)		204,776			(76,209	)				(50,072	)		78,495
USA and Europe		4,734,490			(3,577,997	)		1,156,493			(296,192	)				(1,545	)		858,756
Mexico		1,821,095			(1,025,393	)		795,702			(134,618	)				(23,712	)		637,372

Total		30,232,994			(23,626,422	)		6,606,572			(1,522,853	)				(217,406	)		4,866,313
Other segments		7,220			(8,659	)		(1,439	)		(129	)				(1,639	)		(3,207	)
Corporate unit											63,612			22,851		235,852	(i)		322,315

Braskem consolidated before eliminations and reclassifications		30,240,214			(23,635,081	)		6,605,133			(1,459,370	)		22,851		16,807			5,185,421

Eliminations and reclassifications		(5,770,056	)		5,744,091			(25,965	)		60,255								34,290

Total		24,470,158			(17,890,990	)		6,579,168			(1,399,115	)		22,851		16,807			5,219,711


	Jun/2016
										Operating expenses
	Net			Cost of						Selling, general			Results from
	sales			products			Gross			and distribuition			equity		Other income			Consolidated
	revenue			sold			profit			expenses			investments		(expenses), net			Braskem
																		Restated
Reporting segments
Basic petrochemicals		12,105,795			(9,721,997	)		2,383,798			(306,891	)				(104,513	)		1,972,394
Polyolefins		10,407,556			(8,183,726	)		2,223,830			(619,844	)				(78,604	)		1,525,382
Vinyls		1,482,236			(1,393,112	)		89,124			(108,571	)				(15,362	)		(34,809	)
USA and Europe		4,832,660			(3,077,924	)		1,754,736			(219,771	)				(29,865	)		1,505,100
Mexico		334,324			(263,580	)		70,744			(91,797	)				(58,781	)		(79,834	)

Total		29,162,571			(22,640,339	)		6,522,232			(1,346,874	)				(287,125	)		4,888,233
Other segments		6,012			(86,116	)		(80,104	)		(48,075	)				20,367			(107,812	)
Corporate unit											(64,824	)		13,377		(11,279	)		(62,726	)

Braskem consolidated before eliminations and reclassifications		29,168,583			(22,726,455	)		6,442,128			(1,459,773	)		13,377		(278,037	)		4,717,695

Eliminations and reclassifications		(5,532,051	)		5,652,256			120,205			141,877					(85,468	)		176,614

Total		23,636,532			(17,074,199	)		6,562,333			(1,317,896	)		13,377		(363,505	)		4,894,309

(i)	Includes gain from sale of the former “chemical distribution” segment in the amount of R$276,816 (Note 3).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: September 28, 2017


BRASKEM S.A.

By:		/s/ Pedro van Langendonck Teixeira de Freitas
Name: Pedro van Langendonck Teixeira de Freitas
Title: Chief Financial Officer

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management’s current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words “anticipates”, “believes”, “estimates”, “expects”, “plans” and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.