gfaitr3q16_6k.htm - Generated by SEC Publisher for SEC Filing
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the month of November, 2016

(Commission File No. 001-33356),

 
Gafisa S.A.
(Translation of Registrant's name into English)
 


 
Av. Nações Unidas No. 8501, 19th floor
São Paulo, SP, 05425-070
Federative Republic of Brazil
(Address of principal executive office)



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

Form 20-F ___X___ 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 ___X___

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 ___X___

Indicate by check mark whether 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 ___X___

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


 
 

 

Gafisa S.A.

 

Quarterly information

September 30, 2016

(A free translation of the original report in Portuguese as published in
Brazil containing Quarterly Information (ITR) prepared in
accordance with accounting practices adopted in Brazil)

 

 


 
 

 

Company data

 

Capital Composition

1

Individual financial statements

 

Balance sheet - Assets

2

Balance sheet - Liabilities

3

Statement of income

4

Statement of comprehensive income (loss)

5

Statement of cash flows

6

Statements of changes in Equity

 

01/01/2016 to 09/30/2016

7

01/01/2015 to 09/30/2015

8

Statement of value added

9

Consolidated Financial Statements

 

Balance sheet - Assets

10

Balance sheet - Liabilities

11

Statement of income

12

Statement of comprehensive income (loss)

13

Statement of cash flows

14

Statements of changes in Equity

 

01/01/2016 to 09/30/2016

15

01/01/2015 to 09/30/2015

16

Statement of value added

17

Comments on performance

18

Notes to interim financial information

61

Other information deemed relevant by the Company

96

Reports and statements

 

Report on review of interim financial information

99

Management statement of interim financial information

101

Management statement on the report on review of interim financial information

102

 

 


 
 

 

COMPANY DATA / CAPITAL COMPOSITION

Number of Shares

CURRENT QUARTER

(in thousands)

9/30/2016

Paid-in Capital

 

Common

378,066

Preferred

-

Total

378,066

Treasury shares

 

Common

14,161

Preferred

-

Total

14,161

   

 

 

 

 

1


 
 

INDIVIDUAL FINANCIAL STATEMENTS - BALANCE SHEET - ASSETS (in thousands of Brazilian Reais)

CODE

DESCRIPTION

ACTUAL QUARTER 9/30/2016

PRIOR YEAR 12/31/2015

1

Total Assets

6,252,560

6,492,901

1.01

Current Assets

2,309,071

2,384,773

1.01.01

Cash and cash equivalents

73,248

44,044

1.01.01.01

Cash and banks

9,696

31,823

1.01.01.02

Short-term investments

63,552

12,221

1.01.02

Short-term investments

185,365

350,343

1.01.02.01

Fair value of short-term investments

185,365

350,343

1.01.03

Accounts receivable

608,837

723,950

1.01.03.01

Trade accounts receivable

608,837

723,950

1.01.03.01.01

Receivables from clients of developments

576,019

705,367

1.01.03.01.02

Receivables from clients of construction and services rendered

32,818

18,583

1.01.04

Inventories

1,321,927

1,135,137

1.01.04.01

Properties for sale

1,321,927

1,135,137

1.01.07

Prepaid expenses

1,907

1,901

1.01.07.01

Prepaid expenses and others

1,907

1,901

1.01.08

Other current assets

117,787

129,398

1.01.08.03

Other

117,787

129,398

1.01.08.03.01

Non current assets for sale

3,443

4,367

1.01.08.03.02

Other accounts receivable and others

47,265

46,621

1.01.08.03.03

Receivables from related parties

67,079

78,410

1.02

Non current assets

3,943,489

4,108,128

1.02.01

Non current assets

515,626

809,233

1.02.01.03

Accounts receivable

198,189

262,092

1.02.01.03.01

Receivables from clients of developments

198,189

262,092

1.02.01.04

Inventories

204,424

387,375

1.02.01.09

Others non current assets

113,013

159,766

1.02.01.09.03

Others accounts receivable and others

85,453

80,948

1.02.01.09.04

Receivables from related parties

18,457

78,818

1.02.01.09.05

Derivative Financial Instruments

9,103

-

1.02.02

Investments

3,374,189

3,242,765

1.02.02.01

Interest in associates and affiliates

3,285,909

3,154,946

1.02.02.02

Interest in subsidiaries

88,280

87,819

1.02.02.02.01

Interest in subsidiaries - goodwill

25,476

25,476

1.02.02.02.02

Goodwill based on inventory surplus

62,804

62,343

1.02.03

Property and equipment

25,201

22,819

1.02.03.01

Operation property and equipment

25,201

22,819

1.02.04

Intangible assets

28,473

33,311

1.02.04.01

Intangible assets

28,473

33,311

 

 

 

2


 
 

INDIVIDUAL FINANCIAL STATEMENTS - BALANCE SHEET - LIABILITIES AND EQUITY (in thousands of Brazilian Reais)

CODE

DESCRIPTION

ACTUAL QUARTER 9/30/2016

PRIOR YEAR 12/31/2015

2

Total Liabilities

6,252,560

6,492,901

2.01

Current liabilities

2,322,489

2,105,504

2.01.01

Social and labor obligations

28,268

26,758

2.01.01.02

Labor obligations

28,268

26,758

2.01.01.02.01

Salaries, payroll charges and profit sharing

28,268

26,758

2.01.02

Suppliers

29,421

32,115

2.01.02.01

Local suppliers

29,421

32,115

2.01.03

Tax obligations

34,975

40,902

2.01.03.01

Federal tax obligations

34,975

40,902

2.01.04

Loans and financing

858,615

783,561

2.01.04.01

Loans and financing

587,959

595,817

2.01.04.02

Debentures

270,656

187,744

2.01.05

Other obligations

1,272,521

1,121,856

2.01.05.01

Payables to related parties

991,882

801,375

2.01.05.02

Other

280,639

320,481

2.01.05.02.01

Dividends and interest on capital payable

17,682

17,682

2.01.05.02.04

Obligations for purchase of properties and advances from customers

167,875

148,989

2.01.05.02.05

Other obligations

65,154

127,123

2.01.05.02.07

Obligations assumed on the assignment of receivables

22,984

12,631

2.01.05.02.08

Derivative financial instruments

6,944

14,056

2.01.06

Provisions

98,689

100,312

2.01.06.01

Tax, labor and civil lawsuits

98,689

100,312

2.01.06.01.01

Tax lawsuits

233

220

2.01.06.01.02

Labor lawsuits

17,660

15,516

2.01.06.01.04

Civil lawsuits

80,796

84,576

2.02

Non current liabilities

1,003,620

1,291,906

2.02.01

Loans and financing

811,359

1,011,180

2.02.01.01

Loans and financing

524,862

542,843

2.02.01.01.01

Loans and financing in local currency

524,862

542,843

2.02.01.02

Debentures

286,497

468,337

2.02.02

Other liabilities

99,592

188,078

2.02.02.02

Other

99,592

188,078

2.02.02.02.03

Obligations for purchase of properties and advances from customers

46,439

143,216

2.02.02.02.04

Other liabilities

10,479

15,028

2.02.02.02.06

Obligations assumed on the assignment of receivables

42,674

22,216

2.02.02.02.07

Derivative financial instruments

-

7,618

2.02.03

Deferred taxes

10,085

10,085

2.02.03.01

Deferred income tax and social contribution

10,085

10,085

2.02.04

Provisions

82,584

82,563

2.02.04.01

Tax, labor and civil lawsuits

82,584

82,563

2.02.04.01.02

Tax and labor lawsuits

41,685

47,719

2.02.04.01.04

Civil lawsuits

40,899

34,844

2.03

Equity

2,926,451

3,095,491

2.03.01

Capital

2,740,662

2,740,662

2.03.02

Capital Reserves

48,242

50,854

2.03.02.04

Granted options

151,983

148,051

2.03.02.05

Treasury shares

-32,524

-25,980

2.03.02.07

Reserve for expenditures with public offering

-71,217

-71,217

2.03.04

Income Reserve

301,835

303,975

2.03.04.01

Legal Reserve

35,316

35,316

2.03.04.02

Statutory Reserve

266,519

268,659

2.03.05

Retained earnings/accumulated losses

-164,288

-

 

 

3


 
 

INDIVIDUAL FINANCIAL STATEMENTS - INCOME - (in thousands of Brazilian Reais)

CODE

DESCRIPTION

ACTUAL QUARTER 07/01/2016 to 09/30/2016

YEAR TO DATE 01/01/2016 to 09/30/2016

SAME QUARTER FROM PREVIOUS YEAR 07/01/2015 to 09/30/2015

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2015 to 09/30/2015

3.01

Gross Sales and/or Services

186,131

472,272

297,524

850,132

3.01.01

Revenue from real estate development

203,711

515,562

326,456

932,947

3.01.03

Taxes on real estate sales and services

-17,580

-43,290

-28,932

-82,815

3.02

Cost of sales and/or services

-200,429

-465,347

-221,069

-630,392

3.02.01

Cost of real estate development

-200,429

-465,347

-221,069

-630,392

3.03

Gross profit

-14,298

6,925

76,455

219,740

3.04

Operating expenses/income

-50,238

-156,541

-48,498

-108,851

3.04.01

Selling expenses

-21,455

-53,472

-18,620

-49,611

3.04.02

General and administrative expenses

-12,254

-58,779

-24,086

-80,436

3.04.05

Other operating expenses

-21,610

-68,294

-38,878

-102,059

3.04.05.01

Depreciation and amortization

-8,025

-22,125

-7,575

-22,972

3.04.05.02

Other operating expenses

-13,585

-46,169

-31,303

-79,087

3.04.06

Income from equity method investments

5,081

24,004

33,086

123,255

3.05

Income (loss) before financial results and income taxes

-64,536

-149,616

27,957

110,889

3.06

Financial

-8,086

-14,672

-22,200

-44,995

3.06.01

Financial income

3,696

41,405

17,002

52,434

3.06.02

Financial expenses

-11,782

-56,077

-39,202

-97,429

3.07

Income before income taxes

-72,622

-164,288

5,757

65,894

3.08

Income and social contribution taxes

-

-

7,729

7,729

3.08.01

Current

-

-

-383

-383

3.08.02

Deferred

-

-

8,112

8,112

3.09

Income (loss) from continuing operation

-72,622

-164,288

13,486

73,623

3.11

Income (loss) for the period

-72,622

-164,288

13,486

73,623

3.99

Earnings per Share – (Reais / Share)

-

-

-

-

3.99.01

Basic Earnings per Share

-

-

-

-

3.99.01.01

ON

-0.19970

-0.45180

0.03670

0.20030

3.99.02

Diluted Earnings per Share

-

-

-

-

3.99.02.01

ON

-0.19970

-0.45180

0.03646

0.19900

 

 

 

4


 
 

INDIVIDUAL FINANCIAL STATEMENTS - COMPREHENSIVE INCOME (LOSS) - (in thousands of Brazilian Reais)

   

CODE

DESCRIPTION

ACTUAL QUARTER 07/01/2016 to 09/30/2016

YEAR TO DATE 01/01/2016 to 09/30/2016

SAME QUARTER FROM PREVIOUS YEAR 07/01/2015 to 09/30/2015

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2015 to 09/30/2015

4.01

Income (loss) for the period

-72,622

-164,288

13,486

73,623

4.03

Comprehensive income (loss) for the period

-72,622

-164,288

13,486

73,623

 

 

5


 
 

INDIVIDUAL FINANCIAL STATEMENTS - CASH FLOWS - INDIRECT METHOD - (in thousands of Brazilian Reais)

CODE

DESCRIPTION

YEAR TO DATE 01/01/2016 to 09/30/2016

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2015 to 09/30/2015

6.01

Net cash from operating activities

58,155

-22,168

6.01.01

Cash generated in the operations

-54,238

134,309

6.01.01.01

Income (loss) before income and social contribution taxes

-164,288

65,894

6.01.01.02

Income from equity method investments

-24,004

-123,255

6.01.01.03

Stock options expenses

5,506

5,859

6.01.01.04

Unrealized interest and finance charges, net

72,727

49,017

6.01.01.05

Financial instruments

-13,525

17,610

6.01.01.06

Depreciation and amortization

22,125

22,972

6.01.01.07

Provision for legal claims

43,511

66,669

6.01.01.08

Provision for profit sharing

12,500

17,000

6.01.01.09

Warranty provision

-9,234

11,102

6.01.01.10

Write-off of property and equipment, net

279

146

6.01.01.11

Allowance for doubtful accounts

7,871

1,091

6.01.01.12

Provision for realization of non-financial assets - properties for sale

-6,302

-

6.01.01.14

Provision for penalties due to delay in construction works

-1,404

204

6.01.02

Variation in assets and liabilities

112,393

-156,477

6.01.02.01

Trade accounts receivable

155,261

-94,844

6.01.02.02

Properties for sale

2,463

-41,531

6.01.02.03

Other accounts receivable

-5,556

1,440

6.01.02.04

Prepaid expenses

-6

5,719

6.01.02.05

Obligations for purchase of properties and adv. from customers

-77,891

-53,176

6.01.02.06

Taxes and contributions

-5,927

-93

6.01.02.07

Suppliers

-2,694

-13,464

6.01.02.08

Salaries and payable charges

-10,990

-16,318

6.01.02.09

Transactions with related parties

169,196

132,804

6.01.02.10

Other obligations

-111,463

-76,631

6.01.02.11

Income tax and social contribution payable

-

-383

6.02

Net cash from investing activities

125,435

78,744

6.02.01

Purchase of property and equipment and intangible assets

-19,948

-21,978

6.02.02

Increase in investments

-19,595

-2,221

6.02.03

Redemption of short-term investments

867,144

2,379,746

6.02.04

Purchase of short-term investments

-702,166

-2,276,803

6.03

Net cash from financing activities

-154,386

-60,892

6.03.02

Increase in loans, financing and debentures

348,800

526,871

6.03.03

Payment of loans, financing and debentures

-546,294

-555,222

6.03.04

Repurchase of treasury shares

-8,693

-24,157

6.03.06

Loan transactions with related parties

7,530

-5,334

6.03.07

Obligation with investors

-2,433

-3,649

6.03.08

Disposal of treasury shares

2,149

3,023

6.03.09

Result of the disposal of treasury shares

-2,140

-2,424

6.03.10

Assignment of receivables

46,695

-

6.05

Net increase (decrease) of cash and cash equivalents

29,204

-4,316

6.05.01

Cash and cash equivalents at the beginning of the period

44,044

33,792

6.05.02

Cash and cash equivalents at the end of the period

73,248

29,476

 

 

6


 
 

INDIVIDUAL STATEMENT OF CHANGES IN EQUITY FROM 01/01/2016 TO 09/30/2016 (in thousands of Brazilian reais)

CODE

DESCRIPTION

Capital

Capital reserves, stock options and treasury shares

Profit reserves

Retained earnings

Other comprehensive income

Total Equity

5.01

Opening balance

2,740,662

50,854

303,975

-

-

3,095,491

5.03

Opening adjusted balance

2,740,662

50,854

303,975

-

-

3,095,491

5.04

Capital transactions with shareholders

-

-2,612

-2,140

-

-

-4,752

5.04.03

Stock option plan

-

3,932

-

-

-

3,932

5.04.04

Treasury shares acquired

-

-8,693

-

-

-

-8,693

5.04.05

Treasury shares sold

-

2,149

-2,140

-

-

9

5.05

Total of comprehensive income (loss)

-

-

-

-164,288

-

-164,288

5.05.01

Net income (loss) for the period

-

-

-

-164,288

-

-164,288

5.07

Closing balance

2,740,662

48,242

301,835

-164,288

-

2,926,451

 

 

 

7


 
 

INDIVIDUAL STATEMENT OF CHANGES IN EQUITY FROM 01/01/2015 TO 09/30/2015 (in thousands of Brazilian reais)

CODE

DESCRIPTION

Capital

Capital reserves, stock options and treasury shares

Profit reserves

Retained earnings

Other comprehensive income

Total Equity

5.01

Opening balance

2,740,662

-9,162

323,845

-

-

3,055,345

5.03

Opening adjusted balance

2,740,662

-9,162

323,845

-

-

3,055,345

5.04

Capital transactions with shareholders

-

58,584

-76,638

-

-

-18,054

5.04.03

Stock option plan

-

5,504

-

-

-

5,504

5.04.04

Treasury shares acquired

-

-24,157

-

-

-

-24,157

5.04.05

Treasury shares sold

-

3,023

-2,424

-

-

599

5.04.08

Treasury shares cancelled

-

74,214

-74,214

-

-

-

5.05

Total of comprehensive income (loss)

-

-

-

73,623

-

73,623

5.05.01

Net income (loss) for the period

-

-

-

73,623

-

73,623

5.07

Closing balance

2,740,662

49,422

247,207

73,623

-

3,110,914

 

 

 

8


 
 

INDIVIDUAL STATEMENT OF VALUE ADDED (in thousands of Brazilian Reais)

CODE

DESCRIPTION

YEAR TO DATE 01/01/2016 to 09/30/2016

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2015 to 09/30/2015

7.01

Revenues

515,562

932,947

7.01.01

Real estate development, sales and services

523,433

934,038

7.01.04

Allowance for doubtful accounts

-7,871

-1,091

7.02

Inputs acquired from third parties

-428,289

-627,878

7.02.01

Cost of Sales and/or Services

-371,342

-541,687

7.02.02

Materials, energy, outsourced labor and other

-56,947

-86,191

7.03

Gross value added

87,273

305,069

7.04

Retentions

-22,125

-22,972

7.04.01

Depreciation and amortization

-22,125

-22,972

7.05

Net value added produced by the Company

65,148

282,097

7.06

Added value received on transfer

65,409

175,689

7.06.01

Income from equity method investments

24,004

123,255

7.06.02

Financial income

41,405

52,434

7.07

Value added total to be distributed

130,557

457,786

7.08

Value added distribution

130,557

457,786

7.08.01

Personnel and payroll charges

82,318

98,560

7.08.02

Taxes and contributions

57,704

92,097

7.08.03

Compensation

154,823

193,506

7.08.03.01

Interest

150,082

186,135

7.08.03.02

Rent

4,741

7,371

7.08.04

Compensation

-164,288

73,623

7.08.04.03

Net income (Retained losses)

-164,288

73,623

 

 

 

9


 
 

CONSOLIDATED FINANCIAL STATEMENTS - BALANCE SHEET - ASSETS (in thousands of Brazilian Reais)

CODE

DESCRIPTION

ACTUAL QUARTER 9/30/2016

PRIOR YEAR 12/31/2015

1

Total Assets

6,353,318

6,760,332

1.01

Current Assets

4,138,994

4,316,764

1.01.01

Cash and cash equivalents

161,340

82,640

1.01.01.01

Cash and banks

64,321

69,560

1.01.01.02

Short-term investments

64,183

13,080

1.01.01.03

Funds deposited with third parties

32,836

-

1.01.02

Short-term investments

448,558

629,671

1.01.02.01

Fair value of short-term investments

448,558

629,671

1.01.02.01.02

Short-term investments avaliable for sale

448,558

629,671

1.01.03

Accounts receivable

1,129,351

1,395,273

1.01.03.01

Trade accounts receivable

1,129,351

1,395,273

1.01.03.01.01

Receivables from clients of developments

1,069,377

1,357,122

1.01.03.01.02

Receivables from clients of construction and services rendered

59,974

38,151

1.01.04

Inventories

2,118,652

1,880,377

1.01.07

Prepaid expenses

5,811

7,171

1.01.07.01

Prepaid expenses and others

5,811

7,171

1.01.08

Other current assets

275,282

321,632

1.01.08.03

Other

275,282

321,632

1.01.08.03.01

Non current assets

74,753

105,857

1.01.08.03.02

Other accounts receivable and others

120,032

120,657

1.01.08.03.03

Receivables from related parties

80,497

95,118

1.02

Non current assets

2,214,324

2,443,568

1.02.01

Non current assets

1,122,097

1,349,404

1.02.01.03

Accounts receivable

440,056

407,091

1.02.01.03.01

Receivables from clients of developments

440,056

407,091

1.02.01.04

Inventories

523,895

750,240

1.02.01.09

Others non current assets

158,146

192,073

1.02.01.09.03

Others accounts receivable and others

92,702

82,880

1.02.01.09.04

Receivables from related parties

56,341

109,193

1.02.01.09.05

Derivative financial instruments

9,103

-

1.02.02

Investments

964,700

967,646

1.02.02.01

Interest in associates and affiliates

964,700

967,646

1.02.03

Property and equipment

55,633

49,176

1.02.03.01

Operation property and equipment

55,633

49,176

1.02.04

Intangible assets

71,894

77,342

1.02.04.01

Intangible assets

46,418

51,866

1.02.04.02

Goodwill

25,476

25,476

 

 

10


 
 

CONSOLIDATED FINANCIAL STATEMENTS - BALANCE SHEET - LIABILITIES AND EQUITY (in thousands of Brazilian Reais)

CODE

DESCRIPTION

ACTUAL QUARTER 9/30/2016

PRIOR YEAR 12/31/2015

2

Total Liabilities

6,353,318

6,760,332

2.01

Current liabilities

1,964,444

2,048,969

2.01.01

Social and labor obligations

64,472

60,102

2.01.01.02

Labor obligations

64,472

60,102

2.01.01.02.01

Salaries, payroll charges and profit sharing

64,472

60,102

2.01.02

Suppliers

66,018

57,335

2.01.03

Tax obligations

81,677

102,057

2.01.03.01

Federal tax obligations

81,677

102,057

2.01.04

Loans and financing

1,024,422

1,061,986

2.01.04.01

Loans and financing

650,973

672,365

2.01.04.01.01

In Local Currency

650,973

672,365

2.01.04.02

Debentures

373,449

389,621

2.01.05

Other obligations

629,166

667,177

2.01.05.01

Payables to related parties

94,355

87,100

2.01.05.02

Other

534,811

580,077

2.01.05.02.01

Dividends and interest on capital payable

17,682

17,682

2.01.05.02.04

Obligations for purchase of properties and advances from customers

369,029

361,420

2.01.05.02.06

Other obligations

106,760

163,437

2.01.05.02.07

Obligations assumed on the assignment of receivables

34,396

23,482

2.01.05.02.08

Derivative financial instruments

6,944

14,056

2.01.06

Provisions

98,689

100,312

2.01.06.01

Tax, labor and civil lawsuits

98,689

100,312

2.01.06.01.01

Tax lawsuits

233

220

2.01.06.01.02

Labor lawsuits

17,660

15,516

2.01.06.01.04

Civil lawsuits

80,796

84,576

2.02

Non current liabilities

1,460,125

1,614,127

2.02.01

Loans and financing

1,025,589

1,088,807

2.02.01.01

Loans and financing

739,092

620,470

2.02.01.01.01

Loans and financing in local currency

739,092

620,470

2.02.01.02

Debentures

286,497

468,337

2.02.02

Other obligations

273,337

366,161

2.02.02.01

Liabilities with related parties

49,969

41,002

2.02.02.02

Other

223,368

325,159

2.02.02.02.03

Obligations for purchase of properties and advances from customers

131,149

248,514

2.02.02.02.04

Other liabilities

33,920

33,216

2.02.02.02.06

Obligations assumed on the assignment of receivables

58,299

35,811

2.02.02.02.07

Derivative financial instruments

-

7,618

2.02.03

Deferred taxes

22,173

16,489

2.02.03.01

Deferred income tax and social contribution

22,173

16,489

2.02.04

Provisions

139,026

142,670

2.02.04.01

Tax, labor and civil lawsuits

139,026

142,670

2.02.04.01.01

Tax lawsuits

3

180

2.02.04.01.02

Labor lawsuits

62,730

77,445

2.02.04.01.04

Civil lawsuits

76,293

65,045

2.03

Equity

2,928,749

3,097,236

2.03.01

Capital

2,740,662

2,740,662

2.03.01.01

Capital

2,740,662

2,740,662

2.03.02

Capital Reserves

48,242

50,854

2.03.02.04

Granted options

151,983

148,051

2.03.02.05

Treasury shares

-32,524

-25,980

2.03.02.07

Reserve for expenditures with public offering

-71,217

-71,217

2.03.04

Income Reserve

301,835

303,975

2.03.04.01

Legal Reserve

35,316

35,316

2.03.04.02

Statutory Reserve

266,519

268,659

2.03.05

Retained earnings/accumulated losses

-164,288

-

2.03.09

Non-controlling interest

2,298

1,745

 

 

 

11


 
 

CONSOLIDATED FINANCIAL STATEMENTS - INCOME - (in thousands of Brazilian Reais)

CODE

DESCRIPTION

ACTUAL QUARTER 07/01/2016 to 09/30/2016

YEAR TO DATE 01/01/2016 to 09/30/2016

SAME QUARTER FROM PREVIOUS YEAR 07/01/2015 to 09/30/2015

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2015 to 09/30/2015

3.01

Gross Sales and/or Services

538,780

1,417,685

624,043

1,735,073

3.01.01

Revenue from real estate development

574,650

1,524,385

674,771

1,882,552

3.01.03

Taxes on real estate sales and services

-35,870

-106,700

-50,728

-147,479

3.02

Cost of sales and/or services

-446,887

-1,160,100

-447,823

-1,251,110

3.02.01

Cost of real estate development

-446,887

-1,160,100

-447,823

-1,251,110

3.03

Gross profit

91,893

257,585

176,220

483,963

3.04

Operating expenses/income

-142,504

-378,260

-146,268

-384,990

3.04.01

Selling expenses

-50,255

-126,788

-38,826

-106,574

3.04.02

General and administrative expenses

-49,472

-136,195

-50,948

-143,686

3.04.05

Other operating expenses

-36,099

-113,501

-58,551

-148,387

3.04.05.01

Depreciation and amortization

-11,069

-32,451

-12,444

-35,674

3.04.05.02

Other operating expenses

-25,030

-81,050

-46,107

-112,713

3.04.06

Income from equity method investments

-6,678

-1,776

2,057

13,657

3.05

Income (loss) before financial results and income taxes

-50,611

-120,675

29,952

98,973

3.06

Financial

-17,465

-21,895

-19,689

-25,220

3.06.01

Financial income

11,918

72,359

23,122

100,004

3.06.02

Financial expenses

-29,383

-94,254

-42,811

-125,224

3.07

Income before income taxes

-68,076

-142,570

10,263

73,753

3.08

Income and social contribution taxes

-3,961

-19,679

3,150

-3,256

3.08.01

Current

-2,098

-15,114

-7,752

-14,984

3.08.02

Deferred

-1,863

-4,565

10,902

11,728

3.09

Income (loss) from continuing operation

-72,037

-162,249

13,413

70,497

3.11

Income (loss) for the period

-72,037

-162,249

13,413

70,497

3.11.01

Income (loss) attributable to the Company

-72,622

-164,288

13,486

73,623

3.11.02

Net income attributable to non-controlling interests

585

2,039

-73

-3,126

3.99

Earnings per Share – (Reais / Share)

-

-

-

-

3.99.01

Basic Earnings per Share

-

-

-

-

3.99.01.01

ON

-0.19970

-0.45180

0.03670

0.20030

3.99.02

Diluted Earnings per Share

-

-

-

-

3.99.02.01

ON

-0.19970

-0.45180

0.03646

0.19900

 

 

 

12


 
 

CONSOLIDATED FINANCIAL STATEMENTS - COMPREHENSIVE INCOME (LOSS) - (in thousands of Brazilian Reais)

CODE

DESCRIPTION

ACTUAL QUARTER 07/01/2016 to 09/30/2016

YEAR TO DATE 01/01/2016 to 09/30/2016

SAME QUARTER FROM PREVIOUS YEAR 07/01/2015 to 09/30/2015

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2015 to 09/30/2015

4.01

Consolidated Income (loss) for the period

-37,861

-163,697

13,413

70,497

4.03

Consolidated comprehensive income (loss) for the period

-37,861

-163,697

13,413

70,497

4.03.01

Income (loss) attributable to the Company

-38,438

-164,288

13,486

73,623

4.03.02

Net income attributable to the noncontrolling interests

577

591

-73

-3,126

 

 

13


 
 

CONSOLIDATED FINANCIAL STATEMENTS - CASH FLOWS - INDIRECT METHOD - (in thousands of Brazilian Reais)

CODE

DESCRIPTION

YEAR TO DATE 01/01/2016 to 09/30/2016

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2015 to 09/30/2015

6.01

Net cash from operating activities

93,287

-12,910

6.01.01

Cash generated in the operations

50,009

300,211

6.01.01.01

Income (loss) before income and social contribution taxes

-142,570

73,753

6.01.01.02

Stock options expenses

6,557

7,465

6.01.01.03

Unrealized interest and finance charges, net

94,769

59,754

6.01.01.04

Depreciation and amortization

32,451

35,674

6.01.01.05

Write-off of property and equipment, net

3,801

946

6.01.01.06

Provision for legal claims

64,928

87,006

6.01.01.07

Warranty provision

-11,837

8,541

6.01.01.08

Provision for profit sharing

22,821

25,449

6.01.01.09

Allowance for doubtful accounts

11,088

3,150

6.01.01.10

Provision for realization of non-financial assets - properties for sale

-19,296

-2,453

6.01.01.11

Provision for penalties due to delay in construction works

-953

-606

6.01.01.12

Financial instruments

-13,526

17,610

6.01.01.13

Income from equity methods investments

1,776

-13,657

6.01.01.15

Write-off of investments

-

-2,421

6.01.02

Variation in assets and liabilities

43,278

-313,121

6.01.02.01

Trade accounts receivable

216,811

-142,415

6.01.02.02

Properties for sale

23,102

-23,453

6.01.02.03

Other accounts receivable

-17,657

1,278

6.01.02.04

Transactions with related parties

82,128

16,465

6.01.02.05

Prepaid expenses

1,360

7,568

6.01.02.06

Suppliers

8,683

-16,335

6.01.02.07

Obligations for purchase of properties and adv. from customers

-109,756

-49,604

6.01.02.08

Taxes and contributions

-20,380

189

6.01.02.09

Salaries and payable charges

-18,451

-18,202

6.01.02.10

Other obligations

-102,883

-85,356

6.01.02.11

Income tax and social contribution paid

-19,679

-3,256

6.02

Net cash from investing activities

128,585

154,736

6.02.01

Purchase of property and equipment and intangible assets

-37,261

-37,523

6.02.02

Redemption of short-term investments

2,838,803

4,097,940

6.02.03

Purchase of short-term investments

-2,657,690

-3,904,527

6.02.04

Investments

-15,267

-1,154

6.03

Net cash from financing activities

-143,172

-183,839

6.03.02

Increase in loans, financing and debentures

704,252

643,937

6.03.03

Payment of loans and financing

-899,803

-805,510

6.03.06

Payables to venture partners

-1,752

-2,096

6.03.07

Loan transactions with related parties

8,987

3,388

6.03.08

Repurchase of treasury shares

-8,693

-24,157

6.03.09

Disposal of treasury shares

2,149

3,023

6.03.10

Result of the disposal of treasury shares

-2,140

-2,424

6.03.11

Assignment of receivables

53,828

-

6.05

Net increase (decrease) of cash and cash equivalents

78,700

-42,013

6.05.01

Cash and cash equivalents at the beginning of the period

82,640

109,895

6.05.02

Cash and cash equivalents at the end of the period

161,340

67,882

 

 

14


 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FROM 01/01/2016 TO 09/30/2016 (in thousands of Brazilian reais)

CODE

DESCRIPTION

Capital

Capital reserves, stock options and treasury shares

Profit reserves

Retained earnings

Other comprehensive income

Total Shareholders equity

Non Controlling interest

Total equity Consolidated

5.01

Opening balance

2,740,662

50,854

303,975

-

-

3,095,491

1,745

3,097,236

5.03

Opening adjusted balance

2,740,662

50,854

303,975

-

-

3,095,491

1,745

3,097,236

5.04

Capital transactions with shareholders

-

-2,612

-2,140

-

-

-4,752

-1,535

-6,287

5.04.01

Capital increase

-

-

-

-

-

-

1,383

1,383

5.04.03

Stock option plan

-

3,932

-

-

-

3,932

-

3,932

5.04.04

Treasury shares acquired

-

-8,693

-

-

-

-8,693

-

-8,693

5.04.05

Treasury shares sold

-

2,149

-2,140

-

-

9

-

9

5.04.06

Dividends

-

-

-

-

-

-

-2,918

-2,918

5.05

Total of comprehensive income (loss)

-

-

-

-164,288

-

-164,288

2,039

-162,249

5.05.01

Net income (loss) for the period

-

-

-

-164,288

-

-164,288

2,039

-162,249

5.06

Reserves

-

-

-

-

-

-

49

49

5.06.01

Constitution of reserves

-

-

-

-

-

-

49

49

5.07

Closing balance

2,740,662

48,242

301,835

-164,288

-

2,926,451

2,298

2,928,749

 

 

15


 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FROM 01/01/2015 TO 09/30/2015 (in thousands of Brazilian reais)

CODE

DESCRIPTION

Capital

Capital reserves, stock options and treasury shares

Profit reserves

Retained earnings

Other comprehensive income

Total Shareholders equity

Non Controlling interest

Total equity Consolidated

5.01

Opening balance

2,740,662

-9,162

323,845

-

-

3,055,345

3,058

3,058,403

5.03

Opening adjusted balance

2,740,662

-9,162

323,845

-

-

3,055,345

3,058

3,058,403

5.04

Capital transactions with shareholders

-

58,584

-76,638

-

-

-18,054

1,763

-16,291

5.04.01

Capital increase

-

-

-

-

-

-

1,763

1,763

5.04.03

Stock option plan

-

5,504

-

-

-

5,504

-

5,504

5.04.04

Treasury shares acquired

-

-24,157

-

-

-

-24,157

-

-24,157

5.04.05

Treasury shares sold

-

3,023

-2,424

-

-

599

-

599

5.04.08

Treasury shares cancelled

-

74,214

-74,214

-

-

-

-

-

5.05

Total of comprehensive income (loss)

-

-

-

73,623

-

73,623

-3,126

70,497

5.05.01

Net income (loss) for the period

-

-

-

73,623

-

73,623

-3,126

70,497

5.07

Closing balance

2,740,662

49,422

247,207

73,623

-

3,110,914

1,695

3,112,609

 

 

16


 
 

CONSOLIDATED STATEMENT OF VALUE ADDED (in thousands of Brazilian Reais)

CODE

DESCRIPTION

YEAR TO DATE 01/01/2016 to 09/30/2016

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2015 to 09/30/2015

7.01

Revenues

1,524,385

1,882,552

7.01.01

Real estate development, sales and services

1,520,105

1,857,595

7.01.04

Allowance for doubtful accounts

4,280

24,957

7.02

Inputs acquired from third parties

-1,156,845

-1,277,972

7.02.01

Cost of Sales and/or Services

-1,027,192

-1,131,609

7.02.02

Material, energy, outsourced labor and other

-129,653

-146,363

7.03

Gross value added

367,540

604,580

7.04

Retentions

-32,451

-35,674

7.04.01

Depreciation and amortization

-32,451

-35,674

7.05

Net value added produced by the Company

335,089

568,906

7.06

Value added received on transfer

70,583

113,661

7.06.01

Income from equity method investments

-1,776

13,657

7.06.02

Financial income

72,359

100,004

7.07

Total value added to be distributed

405,672

682,567

7.08

Value added distribution

405,672

682,567

7.08.01

Personnel and payroll charges

175,088

171,432

7.08.02

Taxes and contributions

157,714

182,073

7.08.03

Compensation

237,158

255,439

7.08.03.01

Interest

227,162

244,726

7.08.03.02

Rent

9,996

10,713

7.08.04

Compensation

-164,288

73,623

7.08.04.03

Net income (Retained losses)

-164,288

73,623

 

 

17


 
 

 

 

Conference Call
November 9, 2016

► 8:00 am US EST
In English (simultaneous translation from Portuguese)
+ 1-516-3001066 US EST
Code: Gafisa

► 11h00 am Brasilia Time
In Portuguese
Telephone:
+55-11-3728-5971 (Brazil)
Code: Gafisa

Replay:
+55-11-3127-4999 (Brazil)
Code: 90403548
+55-11-3127-4999 (US)
Code: 51184247
IR Website: www.gafisa.com.br/ri

IR Contacts
Danilo Cabrera
Mariana Suarez
Phone: +55 11 3025-9242 / 9978
E-mail: ri@gafisa.com.br
IR Website: www.gafisa.com.br/ri

Media Relations
Máquina da Notícia  - Comunicação Integrada
Giovanna Bambicini
Phone: +55 11 3147-7414
Fax: +55 11 3147-7900
E-mail: gafisa@grupomaquina.com

Shares
GFSA3 – Bovespa
GFA – NYSE
Total shares outstanding: 378,066,162
Average daily trading volume (90 days²):
R$17.2 million
(1) Including 14,160,533 treasury shares;
(2) Until September 30, 2016

FOR IMMEDIATE RELEASE - São Paulo, November 8, 2016 – Gafisa S.A. (Bovespa: GFSA3; NYSE: GFA), one of Brazil’s leading homebuilders, today reported financial results for the third quarter ended September 30, 2016.

 

GAFISA RELEASES
3Q16 RESULTS

 

MANAGEMENT COMMENTS AND HIGHLIGHTS

 

Conditions in the real estate sector remain impacted by Brazil’s recessive environment. The combination of the political crisis experienced since 2015 and economic contraction has had a severe impact on the Brazilian real estate market. Gafisa, due to the diversification of its operations, serving both the upper-middle income segment and the low-income segment, experiences different realities that have allowed us to partially mitigate the negative effects of this period.

Once again, the Gafisa and Tenda segments faced substantially different market environments throughout the quarter. The Gafisa segment, which continues to be impacted by a weak macroeconomic environment, remains committed to improved operational and business performance by searching for the adequate development of new projects. The Tenda segment, conversely, took advantage of the low-income market’s resilience and continued to expand the scale of its business model, despite macroeconomic conditions.

In keeping with more balanced supply and demand dynamics in the 3Q16, the Gafisa segment  advanced the development of new projects and launched four projects/phases in the city of São Paulo, accounting for R$411.0 million in PSV, ending the first nine months with R$621.4 million in new projects launched.

We would like to point out the solid  commercial performance of these launches, whose speed of sales reached 30.7% in the period, which may signal a slight improvement in consumer confidence.

 

 

18


 
 

 

We highlight in particular two new products: MOOV Vila Prudente and MOOV Freguesia do Ó, whose average speed of sales reached 51.6%, well above the industry average in recent years. It is worth mentioning that this trend is also evident in this quarter’s launches. Such evolution in the sales speed of launches attests not only a gradual increase in consumer confidence, but also the Company's success in improving its operating processes in recent years, with improvements in the areas of development, products, sales and construction.

Despite prevailing political and economic headwinds in the 3Q16, the segment achieved its best quarterly operating performance of the year. In addition to a 39.1% q-o-q increase in gross sales to R$364.4 million, another important driver of 3Q results was the reduction in the volume of dissolutions.

As a result of these factors, 3Q16 net pre-sales reached R$258.3 million, up 99.5% from the previous quarter, and accounting for 56.8% of total net pre-sales in 9M16.

Even taking into consideration the solid performance of projects launched in the period, the Gafisa segment’s SoS remains highly impacted by current market’s challenges, reflected in the low volume of net sales of some inventory products. In the 3Q16, Sos reached 11.5%, higher when compared to 2015. SoS in the last twelve months reached 26.1%. The volume of dissolutions in 3Q16, while slightly improved, continues to reflect the weak economic scenario and high volume of deliveries since the end of 2015. In 3Q16, the segment delivered R$935.7 million in PSV, totaling R$1.5 billion in delivered projects in 9M16.

The Gafisa segment ended 3Q16 with 19 projects under construction, all on schedule and within the delivery timeframe, reflecting Gafisa’s commitment to customers. The transfer volume reached R$126.0 million in 3Q16 and R$378.7 million in 9M16, showing an appropriate level of operational control and efficiency. Despite current credit restrictions, Gafisa maintains a strong relationship in partnering with banks for the transfer process.

The Company has maintained a focus on the sale of remaining units. As a result, 43.2% of net sales in 3Q16 and 58.0% in 9M16 were for products launched prior to current year. Considering the higher volume of dissolutions related to legacy projects, net sales were concentrated in more recent projects, impacting the Gafisa segment’s revenues.

Despite the first signs of stability in the market and the Company’s improved operating performance in the period, this improvement is not yet reflected in our financial results, which are still under pressure from the difficulty of selling some projects in inventory, and also from the effect of the long recession on the pricing of products. Continued recovery in the political and economic scenario over the next quarters, combined with the consequent upturn in the real estate market, should allow for a gradual recovery in the Company’s financial results over the coming periods.

In this regard, we will maintain a conservative approach, balancing the placement of new products on the market and prioritizing those with higher liquidity, so as to achieve an appropriate level of sales and profitability.

The Tenda low-income segment continues to demonstrate resilient performance, benefiting consolidated results in the period. Accordingly, the  segment continues to expand the scale of its new business model.

In 3Q16, Tenda further expanded the size of its operations, with launches totaling R$325.4 million. The launches were comprised of 9 projects/phases, in the states of São Paulo, Rio de Janeiro, Rio Grande do Sul, Pernambuco and Bahia. Launches accounted for 70.2% of the Tenda segment’s total sales and 38.4% of the segment’s total in 9M16.

The Tenda segment’s SoS reached 18.8%, lower than previous periods due to a higher volume of dissolutions.

3Q16 gross sales totaled R$318.7 million and dissolutions reached 25.1% of gross sales, resulting in net pre-sales of R$238.7 million. In the period, dissolutions were impacted by seasonality related to projects sold in “Feirão da Caixa” (2Q16), the introduction of in-person interviews in bank branches as an additional step in the process of analyzing and granting credit by financial agents, which led to annulments of already preapproved customers and the  review of Tenda’s unilateral dissolution process for sales not transferred after a period exceeding three months as the prior process allowed for some

 

 

 

19


 
 

 

units to remain beyond the deadline deemed appropriate by the Company. We estimate that this last factor should result in a temporary increase in the level of company dissolutions before returning to the average levels that we expect.

Since 2013, when Tenda started its new model operations, the segment has launched 81 projects, representing a total of R$3.0 billion in PSV. Of this total, Tenda has delivered R$1.4 billion, comprised of 42 projects/phases. Notably, all projects related to the first year of new model operations (2013) have been completed and delivered on schedule. In relation to the 2014 projects, only one project/phase of 14 projects launched is still awaiting delivery. In 3Q16, the Tenda segment delivered 10 projects/phases, corresponding to 1,811 units, and representing R$265.1 million in PSV. In 9M16, the Tenda segment delivered 23 projects/phases, comprising 4,170 units and R$602.2 million in PSV.

The Tenda segment remains focused on increasing its scale by growing launches and implementing strategies designed to ensure a strong sales pace. The consistency of recent results from new model projects reaffirms management’s confidence in the 2016 business plan.

On a consolidated basis, Gafisa and Tenda launched R$736.4 million in 3Q16, ending the first nine months with R$1.6 billion in new projects. The Gafisa segment accounted for 56% of 3Q16 launches while Tenda accounted for the remaining 44%. Third quarter 2016 net pre-sales totaled R$497.0 million, an increase of 9.4% q-o-q., reaching R$1.3 billion in the year.

 Consolidated adjusted gross profit totaled R$142.0 million with a gross margin of 26.4%, which  remained impacted by challenges in the upper-middle income market. In 9M16, adjusted gross profit totaled R$390.5 million, with a gross margin of 27.5%.

The Company remains focused on a stabilized cost and expense structure. Selling, general and administrative expenses were R$49.5 million in 3Q16, slightly down y-o-y, reflecting the Company’s efforts to more efficiently respond to adjustments and movements of the real estate market. In 9M16, selling, general and administrative expenses dropped by 5.2%.

 Gafisa reported a 3Q16 consolidated net loss of R$72.6 million, compared to a loss of R$38.4 million recorded in 2Q16 and net income of R$13.5 million in 3Q15.

As a result of the better environment for the low income segment, Tenda has achieved its best quarterly profit since 2012, as a result of the maintenance of a more efficient operating performance and the scale gains over the last quarters. Gafisa, in turn, remains impacted by the delicate market moment of the upper income segment.

At the end of the period, the Net Debt/ Shareholders’ Equity ratio reached 49.3%, a slight increase compared to 2Q16, although in line with the Company’s business plan. Excluding project finance, the Net Debt/Shareholders’ Equity ratio was negative at 8.1% .

Consolidated operating cash generation reached R$97.4 million in the quarter and R$232.9 million in 9M16. Net cash generation totaled R$13.0 million in 3Q16 and R$8.8 million YTD.

We expect to maintain a conservative approach in the last quarter of 2016 as we seek to attain adequate sales and profitability levels. The Gafisa segment, through its improved operational performance, seeks to overcome this period of economic weakness. The Tenda segment, guided by resilience in the low-income segment and backed by positive results from new model projects.

The Company continues to advance guided by capital discipline, its profitability goals, and value creation for all shareholders.

 

Sandro Gamba
Chief Executive Officer – Gafisa

Rodrigo Osmo
Chief Executive Officer – Tenda

 

 

 

 

20


 
 

 

MAIN CONSOLIDATED FIGURES

Table 1- Operating and Financial Highlights (R$ 000 and % Company)

 

3Q16

2Q16

Q/Q(%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Launches

736,359

545,038

35%

606,819

21%

1,590,043

1,402,352

13%

Launches, Units

3,170

3,166

0%

3,249

-2%

8,197

7,430

10%

Net Pre-sales

497,018

454,511

9%

492,803

1%

1,284,869

1,448,278

-11%

Pre-sales, Units

2,312

2,730

-15%

2,332

-1%

7,180

6,635

8%

Pre-sales of Launches

337,573

165,273

104%

233,976

44%

532,962

468,138

14%

Sales over supply (SoS)

14.2%

13.9%

30 bps

14.8%

-60 bps

31.5%

33.8%

-230 bps

Delivered projects (PSV)

1,200,766

687,726

75%

197,539

508%

2,054,992

1,937,747

6%

Delivered projects, Units

3,710

3,136

18%

1,304

185%

7,501

7,576

-1%

Net Revenue

538,780

473,371

14%

624,043

-14%

1,417,685

1,735,073

-18%

Adjusted Gross Profit1

141,980

138,276

3%

223,777

-37%

390,493

603,465

-35%

Adjusted Gross Margin1

26.4%

29.2%

-280 bps

35.9%

-950 bps

27.5%

34.8%

-730 bps

Adjusted EBITDA2

14,893

22,397

-34%

92,581

-84%

53,467

261,778

-80%

Adjusted EBITDA Margin2

2.8%

4.7%

-190 bps

14.8%

-1,200 bps

3.8%

15.1%

-1,130 bps

Net Income (Loss)

(72,622)

(38,439)

89%

13,486

-638%

(164,288)

73,623

-323%

Backlog Revenues

663,836

667,368

-1%

808,851

-18%

663,836

808,851

-18%

Backlog Results3

259,193

259,864

0%

324,850

-20%

259,193

324,850

-20%

Backlog Margin3

39.0%

38.9%

10 bps

40.2%

-120 bps

39.0%

40.2%

-120 bps

Net Debt + Investor Obligations

1,443,256

1,455,766

-1%

1,571,811

-8%

1,443,256

1,571,811

-8%

Cash and cash equivalents

609,898

618,569

-1%

921,828

-34%

609,898

921,828

-34%

Shareholders’ Equity

2,926,451

2,998,075

-2%

3,110,914

-6%

2,926,451

3,110,914

-6%

Shareholders’ Equity + Minority

2,928,749

3,001,290

-2%

3,112,609

-6%

2,928,749

3,112,609

-6%

Total Assets

6,353,318

6,548,124

-3%

7,059,524

-10%

6,353,318

7,059,524

-10%

(Net Debt +Obligations) / (SE + Minority)

49.3%

48.5%

80 bps

50.5%

-120 bps

49.3%

50.5%

-120 bps

1)    Adjusted by capitalized interests.

2)    Adjusted by expenses with stock option plans (non-cash), minority. Consolidated EBITDA considers the equity income from Alphaville.

3)    Backlog results net of PIS/COFINS taxes (3.65%), and excluding the impact of PVA (Present Value Adjustment) method according to Law 11.638.

4)    Cash and cash equivalents, and short-term investments.

5)    Backlog results comprise the projects restricted by condition precedent.

 

 

21


 
 

 

FINANCIAL RESULTS

§  3Q16 net revenue recognized by the “PoC” method was R$268.3 million in the Gafisa segment and R$270.5 million in the Tenda segment. This resulted in 3Q16 consolidated revenue of R$538.8 million, a decrease of 13.7% year-on-year and an increase of 13.8% from the previous quarter. In 9M16, consolidated net revenue was R$1.4 billion, a reduction of 18.3% compared with 9M15.

§  Adjusted gross profit for 3Q16 was R$142.0 million, higher than R$138.3 million in 2Q16 and lower than R$223.8 million recorded in the past year. Adjusted gross margin reached 26.4%, compared to 29.2% in 2Q16 and 35.9% in 3Q15. The Gafisa segment accounted for an adjusted gross profit of R$47.2 million, with an adjusted gross margin of 17.6%, while the Tenda segment accounted for an adjusted gross profit of R$94.8 million, with a margin of 35.0%. In 9M16, adjusted gross profit was R$390.5 million with adjusted gross margin of 27.5%, compared to R$603.5 million in 9M15.

§  Consolidated Adjusted EBITDA was R$14.9 million in 3Q16, with an adjusted EBITDA margin of 2.8%. The Gafisa segment reported adjusted EBITDA of R$15.7 million, while the Tenda segment’s adjusted EBITDA was positive with R$39.7 million. In 9M16, consolidated Adjusted EBITDA was R$53.5 million, 79.6% lower than R$261.8 million in 9M15. Please note that consolidated adjusted EBITDA includes Alphaville equity income, while the Gafisa segment’s adjusted EBITDA is net of this effect.

§  The Company reported a 3Q16 net loss of R$72.6 million compared to a net loss of R$38.4 million in 2Q16, and net profit of R$13.5 million in 3Q15. The Gafisa segment reported a net loss of R$95.7 million, while the Tenda segment reported a net profit of R$23.0 million. Year-to-date, the Company reported a consolidated net loss of R$164.3 million.

§  Operating cash generation totaled R$97.4 million in 3Q16, finishing the 9M16 with cash generation of R$232.9 million. Net cash generation in the quarter was R$13.0 million, with an accumulated cash generation of R$8.8 million in 9M16.

 

 

 

 

 

OPERATING RESULTS

§  Total Company launches were R$736.4 million in 3Q16, comprised of 13 projects in the states of São Paulo, Rio de Janeiro, Pernambuco, Bahia and Rio Grande do Sul, up from R$606.8 million launched in 3Q15. The Gafisa segment accounted for 56% of the quarter’s launches, while the Tenda segment accounted for the remaining 44%. 9M16 launches totaled R$1.6 billion.

§  Net pre-sales totaled R$497.0 million in 3Q16, an increase of 9.4% from the R$454.5 million recorded in 2Q16 and stable y-o-y. The Gafisa segment accounted for R$258.3 million and the Tenda segment for R$238.7 million in 9M16. Consolidated sales from launches in the quarter represented 63.2% of the total, while sales from inventory comprised the remaining 36.8%. The Company reached R$1.3 billion in net pre-sales in the first nine months of the year.

§  Consolidated sales over supply (SoS) reached 14.2% in 3Q16 compared to 13.9% in 2Q16 14.8% in 3Q15. On a trailing 12-month basis, Gafisa’s SoS was 26.1%, while Tenda’s SoS was 50.9%.

§  Consolidated inventory at market value increased 6.7% related to 2Q16, at R$3.0 billion. Gafisa’s inventory ended the quarter at R$2.0 billion, while Tenda’s inventory totaled R$1.0 billion.

§  Throughout the third quarter, the Company delivered 17 projects/phases, totaling 3,710 units, accounting for R$1.2 billion in PSV. In regards to the first nine months, the company delivered 36 projects/phases and 7,501 units, accounting for R$2.1 billion in PSV.

 

22


 
 

 

ANALYSIS OF RESULTS

Gafisa Segment

Sales Volume, Revenue Level and Profitability Impacted by the
 Challenging Market Environment

 

Table 2 – Gafisa Segment – Operating and Financial Highlights (R$ 000 and % Gafisa)

 

3Q16

2Q16

Q/Q(%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Launches

410,966

130,360

215%

288,234

43%

621,429

616,046

1%

Net pre-sales

258,332

129,519

99%

247,608

4%

454,693

669,599

-32%

Net pre-sales of launches

170,130

35,867

374%

71,433

138%

214,183

152,842

40%

Sales over Supply (SoS)

11.5%

6.3%

520 bps

11.0%

50 bps

18.7%

25.0%

-630 bps

Delivered projects (Units)

1,899

1,241

53%

0

-

3,331

3,345

0%

Net Revenue

268,271

212,628

26%

402,483

-33%

651,881

1,090,933

-40%

Adjusted Gross Profit1

47,221

65,325

-28%

152,627

-69%

148,522

405,229

-63%

Adjusted Gross Margin1

17.6%

30.7%

-1,310 bps

37.9%

-2,030 bps

22.8%

37.1%

-1,430 bps

Adjusted EBITDA 2

(15,693)

12,491

-226%

66,846

-123%

(21,346)

177,535

-

Adjusted EBITDA Margin 2

-5.8%

5.9%

-1,170 bps

16.6%

-2,240 bps

-3.3%

16.3%

-1,960 bps

Net Income (Loss)

(95,667)

(47,061)

103%

1,656

-

(200,749)

30,312

-

Backlog Revenues

394,475

366,368

8%

557,508

-29%

394,475

557,508

-29%

Backlog Results3

143,324

133,975

7%

215,810

-34%

143,324

215,810

-34%

Backlog Margin³

36.3%

36.6%

-30 bps

38.7%

-240 bps

36.3%

38.7%

-240 bps

1)         Adjusted by capitalized interests.

2)      Adjusted by expenses with stock option plans (non-cash), minority. Gafisa’s Consolidated EBITDA does not consider the equity income from Alphaville.

3)      Backlog results net of PIS/COFINS taxes (3.65%), and excluding the impact of PVA (Present Value Adjustment) method according to Law 11.638.

4)      Backlog results comprise the projects restricted by condition precedent

 

Despite the strong performance of projects launched in the quarter, ongoing recessive scenario in Brazil keeps negatively impacting Gafisa segment’s financial results in 3Q16, in particular the level of inventory gross sales, volume of dissolutions and prices of the inventory projects. Despite a greater share of projects launched before 2015 in the 3Q16 gross sales mix (48.2% of gross sales), the high volume of dissolutions related to these projects (96.3% of dissolutions in the quarter) ended up concentrating part of the net volume of sales from inventory of more recent projects. Thus, revenues in the quarter were once again impacted by the following items: (i) lower volume of net sales in the period; and (ii) higher concentration of net sales in projects with slower evolution of work in progress.

Reflecting the operational variables mentioned above, the Gafisa segment ended 3Q16 with a gross margin of 0.4% compared to 27.0% in 3Q15 and 12.3% in 2Q16. The result was impacted by the following effects: (i) R$16.3 million non-recurrent loss from the sale of a land parcel with potential development directed to the commercial segment; (ii) R$9.5 million referring to a higher provision for a guarantee due to the increased volume of projects delivered in 3Q16; (iii) pricing adjustments on the sale of remaining units in response to current market prices, and; (iv) accounting effect related to higher appropriation of financial costs of recently launched projects with good sales speed, which suspension clause (of projects that are no longer subject to restriction) occurred in the period. Adjusted gross margin reached 17.6% in the quarter and 22.8% in the last 9 months.

 

 

 

23


 
 

 

Excluding the non-recurring effect of the sale of the land parcel mentioned above, Gafisa segment’s gross margin would have reached 6.4% in the 3Q16, while adjusted gross margin would be 23.7% in 3Q16 and 25.3% in 9M16.

 

Net Income

Net loss for the period was R$95.7 million compared to a loss of R$47.1 million in 2Q16 and a profit of R$1.7 million in 3Q15. Excluding the net loss from Alphaville equity income, which totaled R$9.2 million in the quarter, the Gafisa segment reported a 3Q16 net loss of R$86.5 million, compared to a net loss of R$35.1 million in 2Q16 and net profit of R$0.5 million in 3Q15. In 9M16, the Gafisa segment posted a net loss of R$190.5 million.

 As previously stated, this was due to the following factors: (i) maintenance of lower level of revenues; (ii) lower gross margin level due to the factors detailed above; and (iii) the negative contribution of AUSA equity income. Alphaville performance is being affected by the Company’s lower operating volumes in 2016 (launches and sales), with direct reflect in the quarter's revenue level, besides the worsened net financial result, impacted by the higher cost of debt, compared to the previous year. In 9M16, Gafisa segment net loss including Alphaville equity income reached R$200.7 million.

 

Table 3 – Gafisa Segment – Net Income (R$ Million)

 

3Q16

2Q16

3Q15

9M16

9M15

Adjusted Gross Profit

47.2

65.3

152.6

148.5

405.2

Adjusted Gross Margin

17.6%

30.7%

37.9%

22.8%

37.1%

Net Income

(95.7)

(47.1)

1.7

(200.7)

30.3

Equity Income from Alphaville

(9.2)

(12.0)

1.2

(10.2)

23.3

Net Profit Ex-Alphaville

(86.5)

(35.1)

0.5

(190.5)

7.0

 

 

24


 
 

 

Tenda Segment

Operating and Financial Profitability Supported
by Increased Scale and the Improved Performance of the New Model

 

Table 4 – Tenda Segment – Operating and Financial Highlights (R$ 000 and % Tenda)

 

3Q16

2Q16

Q/Q(%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Launches

325,393

414,678

-22%

318,585

2%

968,614

786,306

23%

Net pre-sales

238,686

324,992

-27%

245,195

-3%

830,176

778,679

7%

Net pre-sales of Launches

167,443

129,406

29%

162,543

3%

318,778

315,296

1%

Sales over Supply ( SoS)

18.8%

26.4%

-760 bps

23.0%

-420 bps

44.7%

48.7%

-400 bps

Delivered projects ( Units)

1,811

1,895

-4%

1,304

39%

4,170

4,231

-1%

Net Revenue

270,509

260,743

4%

221,560

22%

765,804

644,140

19%

Adjusted Gross Profit1

94,759

72,951

30%

71,150

33%

241,971

198,235

22%

Adjusted Gross Margin1

35.0%

28.0%

700 bps

32.1%

290 bps

31.6%

30.8%

80 bps

Adjusted EBITDA2

39,744

21,858

82%

24,567

62%

85,042

60,902

40%

Adjusted EBITDA Margin2

14.7%

8.4%

630 bps

11.1%

360 bps

11.1%

9.5%

160 bps

Net Income ( Loss)

23,045

8,622

167%

11,830

95%

36,461

43,311

-16%

Backlog Revenues

269,361

301,000

-11%

251,343

7%

269,361

251,343

7%

Backlog Results3

115,869

125,889

-8%

109,040

6%

115,869

109,040

6%

Backlog Margin³

43.0%

41.8%

120 bps

43.4%

-40 bps

43.0%

43.4%

-40 bps

1) Adjusted by capitalized interests.

2) Adjusted by expenses with stock option plans (non-cash), minority. Tenda does not hold equity interest in Alphaville.

3) Backlog results net of PIS/COFINS taxes (3.65%), and excluding the impact of PVA (Present Value Adjustment) method according to Law 11.638.

4) Backlog results comprise the projects restricted by condition precedent.

 

 

During 3Q16, Tenda continued to increase the scale its operations, supported by sales and launch performance, thus enabling a solid level of net revenue.

3Q16 adjusted gross margin was up 35.0%, compared with 28.0% in 2Q16 and 32.1% in 3Q15, due to the accounting reclassification of R$11.1 million in the balance of provision for co-obligation of interest rates on construction works owed by customers transferred and charged by financial institutions during period of works, which is now accounted for under Financial Result. Excluding this impact, the adjusted gross margin would have been 32.2% in 3Q16.

                Selling, general and administrative expenses ended the 9M16 at R$127.2 million, 15.4% higher than 9M15, but in line with the expansion of Tenda’s operations; launch volumes increased by 23.2% in the period, compared to 9M15.

Adjusted EBITDA totaled R$39.7 million, with adjusted EBITDA margin of 14.7% in 3Q16. Adjusted EBITDA increased from R$24.6 million in 3Q15 and R$21.9 million in 2Q16. Year-to-date, adjusted EBITDA reached R$85.0 million with an adjusted EBITDA margin of 11.1%.

 

 

 

25


 
 

 

Net Income

Tenda’s 3Q16 net income was R$ 23.0 million, up from net income of R$11.8 million recorded in 3Q15 and R$8.6 million in 2Q16. In 9M16, net income was R$36.5 million.

The 3Q16 results are attributable to: (i) higher volume of revenues, (ii) higher gross margin level and adjusted EBITDA.

 

Table 5 –Tenda Segment – Net Income (R$ Million)

 

3Q16

2Q16

3Q15

9M16

9M15

Adjusted Gross Profit

94.8

73.0

71.2

242.0

198.2

Adjusted Gross Margin

35.0%

28.0%

32.1%

31.6%

30.8%

Net Income

23.0

8.6

11.8

36.5

43.3

 

 

 

26


 
 

 

RECENT EVENTS

 

 

UPDATE ON THE SEPARATION PROCESS OF THE GAFISA AND TENDA UNITS

On October 19, 2016, the Company disclosed a Significant Fact informing that the members of Gafisa Board of Directors approved the filing with the CVM of a public offering of secondary distribution of common shares issued by Tenda and owned by Gafisa.

The Offer will be subject to the conditions of the local and international capital markets. The request for registration of the Offer will be analyzed and, therefore, the Offer will commence only after the granting of the proper registration by the CVM.

The Company will keep its shareholders and the market informed about the process and any developments pertaining to the issues of the potencial offer.

 

TENDA EARNINGS RELEASE – 3Q16 AND 9M16

On October 18, 2016, Construtora Tenda published its interim financial statements for the nine-month period ended September 30, 2016, accompanied by the auditors' review report ( "ITR Tenda").

The ITR Tenda and the Earnings Release are available on the CVM (www.cvm.gov.br) and the Company (www.gafisa.com.br/ir and www.tenda.com/investors) websites.

 

               

 

27


 
 

 

GAFISA SEGMENT

Focuses on residential developments within the upper, upper-middle, and middle-income segments, with average unit prices above R$250,000.00. 00.

 

Operating Results | Launches and Pre-Sales

Third quarter launches totaled R$411.0 million and consisted of 4 projects/phases in São Paulo. The sales speed of these launches reached 30.7%. In 9M16, Gafisa segment launches reached R$621.4 million or 39.1% of consolidated launches.

 

Third quarter gross pre-sales in the Gafisa segment totaled R$364.4 million. Dissolutions in 3Q16 were R$106.1 million, yielding total net pre-sales of R$258.3 million, up 99.5% q-o-q and 4.3% y-o-y. Out of total dissolutions in the quarter, 24% were related to corporate projects, while residential dissolutions corresponded to the remaining 76%. In 9M16, net pre-sales totaled R$454.7 million.

Despite continued headwinds in Brazil’s political and economic scenario, and the resulting effects on inventory pricing, the segment achieved an improved sales performance in 3Q16 relative to the previous quarters. The improved performance of sales from launches reflects more efficient sales execution processes and new product development, and may signal a marginal improvement in consumer confidence. In addition to improved sales results, with gross sales increasing 39.1% versus 2Q16 to R$364.4 million, another positive trend in 3Q16 was the decrease in the volume of dissolutions y-o-y and q-o-q.

The Company continues to focus its efforts on the sale of remaining units. As a result, 43.2% of net sales for the quarter were related to projects with launches before 2016. Dissolutions, in turn, were concentrated in units launched prior to 2014, which have higher work evolution, and accordingly, an increased contribution to revenue and margins.

 

 

 

 

28


 
 

 

Table 6 – Gafisa Segment – Launches and Pre-sales (R$ 000)

 

3Q16

2Q16

Q/Q(%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Launches

410,966

130,360

215%

288,234

43%

621,429

616,046

1%

Pre- Sales

258,332

129,519

99%

247,608

4%

454,693

669,599

-32%

 

Sales over Supply (SoS)

The Gafisa segment’s SoS for the last twelve months reached 26.1% compared to 29.6% in the same period last year. In the 3Q16, SoS was 11.5% compared to 6.3% in 2Q16 and 11.0% in 3Q15.

Dissolutions

The macroeconomic uncertainty observed in 2016 and the recession have directly impacted consumer confidence and, accordingly, the level of gross sales and dissolutions. In the context of a challenging operating environment, the level of dissolutions in the Gafisa segment reached R$106.1 million in 3Q16, down sequentially compared to R$132.5 million in 2Q16 and down y-o-y from R$147.2 million in 3Q15. In 9M16, the total volume of dissolutions was R$408.9 million.

Over the last three years, the Company has been working on initiatives to strengthen the credit review component of its sale process. In doing so, the Company intends to reduce the level of dissolutions throughout the construction and delivery cycle. Given the current political and economic uncertainties and corresponding effects on the real estate market, the reduction in dissolutions has been slower than expected.

A comprehensive approach in the credit review process at the time of sale has generated a more efficient process of transferring Gafisa customers to financial institutions, even amid an unfavorable economic environment. As an example of the efficiency achieved in this process, only 9.5% of those who asked for transfers in 9M16 have been rejected by the bank’s credit analysis (i.e. out of the 915 units asking for transfers, only 87 were not accepted).

In recent quarters the Gafisa segment has been able to reduce the level of dissolutions by enabling customers facing financial pressure to swap their units for those that better match their financial position.  This exchange process reflects the flexibility of Gafisa’s product portfolio. Year-to-date, R$94.7 million of new sales were made to customers who opted for swaps.

In the quarter, 213 Gafisa units were cancelled and 133 units, representing R$63.6 million, were resold within the period. In 9M16, 713 units were cancelled, with the resale of 392 units in the same period, or R$198.9 million.

 

 

 

29


 
 

 

Inventory

Gafisa is maintaining its focus on inventory reduction initiatives. Projects launched prior to 2016 represented 58.0% of net sales in the year. The market value of the Gafisa segment’s inventory increased by 3.5% q-o-q, and decreased 1.5% y-o-y, totaling R$2.0 billion. The reduction reflects  the sale of units in the period, and price adjustments on some projects in inventory, as to reflect more efficiently the current market scenario. Finished units outside of core markets accounted for R$45.3 million, or 2.3% of total inventory.

 

Table 7 – Gafisa Segment – Inventory at Market Value (R$ 000)

 

Inventories BoP 2Q16

Launches

Dissolutions

Gross Sales

Adjustments¹

Inventories BoP 3Q16

Q/Q (%)

São Paulo

1,386,973

410,966

81,315

(318,224)

(42,210)

1,518,820

9.5%

Rio de Janeiro

475,491

-

21,773

(31,114)

(49,720)

416,430

-12.4%

Other Markets

51,160

-

3,035

(15,116)

6,179

45,258

-11.5%

Total

1,913,624

410,966

106,123

(364,454)

(85,751)

1,980,508

3.5%

¹ The Period Adjustments reflect the updates related to the project scope, launch date and pricing update in the period.

 

During the same period, finished units represented R$717.0 million, or 36.2% of total inventory. Inventory from projects launched outside core markets, which is comprised exclusively of finished units, represented R$45.3 million, a decrease of 53.2% when compared to R$96.6 million in 3Q15 and down 11.5% from 2Q16. The Company estimates that through the beginning of 2017, it will have monetized a large portion of its inventory in non-core markets, based on the strong sales rate observed in these markets over the past few quarters.

The inventory of concluded commercial projects accounts for approximately 53,5% of Gafisa segment total volume of concluded projects, not only due to the high volume of commercial projects delivered during the last 12 months, but also to the current low liquidity for these projects. Three commercial projects were delivered in 3Q16 with PSV of R$395.5 million. The challenging macroeconomic scenario and, mainly, the high interest rates, has strongly impacted commercial developments, causing higher likelihood of cancellation and lower sales speed. It is worth mentioning that in its current portfolio of projects under construction, the Company only has one commercial project, accounting for R$24.3 million in PSV, with delivery expected in 1H18.

In regards to Gafisa’s inventory, approximately 52% or R$1.0 billion, is concentrated in projects to be delivered after 3Q17 and will not significantly increase the segment’s inventory of finished units in the short term.

 

Table 8 – Gafisa Segment – Inventory at Market Value- Work Status - POC (R$ 000)

 

Not Initiated

Up to 30% built

30% a 70% built

More than 70% built

Finished Units

Total 3Q16

São Paulo

-

17,544

916,215

236,616

348,445

1,518,820

Rio de Janeiro

-

4,463

53,827

34,803

323,337

416,430

Other Markets

-

-

-

-

45,258

45,258

Total

-

22,007

970,042

271,419

717,040

1,980,508

Inventory at market value includes projects in partnership. This index is not comparable to the accounting inventory, due to the implementation of new accounting practices on behalf of CPCs 18, 19 and 36.

 

 

30


 
 

 

Inventory Delivery Schedule

Landbank

The Gafisa segment landbank, with a PSV of R$5.1 billion, is comprised of 30 land parcels, representing 41 potential projects/phases, and corresponding to nearly 11.4 thousand units. 65% of potential projects/phases are located in São Paulo and 35% are located in Rio de Janeiro. The largest portion of land acquired through swap agreements is located in Rio de Janeiro, bringing the total percentage of land acquired through swaps to 61.9%.

 

Table 9 – Gafisa Segment - Landbank (R$ 000)

 

PSV (% Gafisa)

% Swap
Total

% Swap Units

% Swap Financial

Potential Units
(% Gafisa)

Potential Units (100%)

São Paulo

3,321,410

53.6%

53.6%

0.0%

7,594

8,377

Rio de Janeiro

1,813,527

72.5%

72.5%

0.0%

2,967

3,021

Total

5,134,937

61.9%

61.9%

0.0%

10,561

11,398

¹ The swap percentage is measured compared to historical cost of land acquisition.

² Potential units are net of swaps and refer to the Gafisa’s and/or its partners’ stake in the project.

 

Table 10 - Gafisa Segment - Changes in the Landbank (2Q16 x 3Q16 - R$ 000)

 

Initial Landbank

Land Acquisition

Launches

Dissolutions

Adjustments

Final Landbank

São Paulo

3,838,867

-

(410,966)

(120,188)

13,697

3,321,410

Rio de Janeiro

1,728,250

73,425

-

-

11,852

1,813,527

Total

5,567,117

73,425

(410,966)

(120,188)

25,549

5,134,937

 

In 3Q16, the Company acquired a new land parcel with a potential PSV of R$73.4 million, and an acquisition cost of R$11.4 million. It was financed 22% by cash and 78% by swap agreements, with an initial disbursement of R$1.0 million. The disbursement schedule of the residual value is subject to the launch date.

The quarterly adjustments reflect updates related to project scope, expected launch date and other adjustments to landbank in the period.

 

 

31


 
 

 

Gafisa Sales

Gafisa Vendas, the Company’s independent sales unit, with operations in São Paulo and Rio de Janeiro, accounted for 59% of gross sales in 9M16.

Gafisa Vendas currently has a team of 514 highly trained, dedicated consultants, in addition to an online sales force.

 

Gafisa Segment Delivered Projects

During 3Q16, 7 projects/phases totaling 1,899 units were delivered, accounting for R$935.7 million in PSV. In 9M16, 13 projects/phases totaling 3,331 units were delivered, accounting for R$1.5 billion in PSV. Currently, Gafisa has 19 projects under construction, all of which are on schedule according to the Company’s business plan.

 

Table 11 – Gafisa Segment – Breakdown of Delivered Projects 9M16

 

Residential

Commercial

Total

São Paulo

781,531

395,470

1,177,001

Rio de Janeiro

189,601

86,225

275,826

Total

971,132

481,695

1,452,827

 

Transfers

Over the past few years, the Company has been taking steps to improve the performance of its receivables/transfer process, in an attempt to achieve higher rates of return on invested capital. Currently, the Company’s strategy is to transfer 90% of eligible units in a 90-day period after the delivery of the project. In accordance with this policy, transfers totaled R$126.0 million in PSV in the third quarter.

 

Table 12 – Gafisa Segment – Delivered Projects

 

3Q16

2Q16

Q/Q(%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

PSV Transferred ¹

126,013

142,697

-12%

153,646

-18%

378,733

521,489

-27%

Delivered Projects

7

4

75%

-

-

13

14

-7%

Delivered Units

1,899

1,241

53%

-

-

3,331

3,345

0%

Delivered PSV²

935,678

412,307

127%

-

-

1,452,827

1,346,716

8%

 

1) PSV refers to potential sales value of the units transferred to financial institutions.

2) PSV = Potential sales value of delivered units.

 

32


 
 

 

Financial Results

Revenue

 

3Q16 net revenues for the Gafisa segment totaled R$268.3 million, up 26.2% q-o-q and down 33.3% y-o-y. 3Q16 revenues were impacted by higher net sales volumes compared to 2Q16 and the sales mix, with a higher concentration of sales of launches. In 9M16, net revenue reached R$651.9 million.

In the quarter, 99% of Gafisa segment revenues derived from projects located in Rio de Janeiro and São Paulo. The table below provides additional details.

 

Table 13 – Gafisa Segment – Revenue Recognition (R$ 000)

 

 

3Q16

 

 

 

3Q15

 

 

Launches

Pre-Sales

% Sales

Revenue

% Revenue

Pre-Sales

% Sales

Revenue

% Revenue

2016

146,728

57%

57,865

22%

-

0%

-

0%

2015

38,110

15%

46,046

17%

71,433

29%

43,229

11%

2014

32,649

13%

92,382

34%

68,354

28%

73,763

18%

2013

18,806

7%

41,870

16%

79,054

32%

124,134

31%

≤ 2012

22,039

8%

30,107

11%

28,767

11%

161,357

40%

Total

258,332

100%

268,270

100%

247,608

100%

402,483

100%

SP + RJ

227,963

88%

264,897

99%

240,675

97%

401,549

100%

Other Markets

30,369

12%

3,373

1%

6,933

3%

934

0%

 

Gross Profit & Margin

3Q16 gross profit for the Gafisa segment was R$1.0 million, down from R$26.1 million in 2Q16, and down from R$108.8 million in the prior year period, resulting from the following effects: (i) a R$16.3 million loss on the sale of a land parcel with potencial development directed to the commercial segment; (ii) a R$9.5 million provision for guarantee due to a higher volume of projects delivered in 3Q16; and (iii) pricing adjustments in the sale of units in response to current market prices. Excluding the non-recurring effect of the sale of the land parcel mentioned above, Gafisa segment’s gross margin would have reached 6.4% in 3Q16, while  adjusted gross margin would be 23.7% in 3Q16  and 25.3% in 9M16.

Besides the issues mentioned above, gross margin in 3Q16 also reflects the accounting effect of increased appropriation of financial cost of recently launched projects with good sales speed, which suspensive clause (of projects that are no longer subject to restriction) has occurred in the period. This reflects accounting conventions which recognize financial costs in line with the percentage sold, and not recognizing revenues according to the PoC method. As a result, 3Q16 gross margin was 0.4%, compared to 12.3% in 2Q16 and 27.0% in 3Q15.

Excluding financial impacts, adjusted gross margin reached 17.6% in 3Q16 compared to 30.7% in 2Q16 and 37.9% in 3Q15.

The table below contains more details on the breakdown of 3Q16 Gafisa’s gross margin.

 

 

33


 
 

 

Table 14 - Gafisa Segment – Gross Margin (R$ 000)

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Net Revenue

268,271

212,628

26%

402,483

-33%

651,881

1,090,933

-40%

Gross Profit

963

26,084

-96%

108,830

-99%

30,503

297,245

-90%

Gross Margin

0.4%

12.3%

-1,190 bps

27.0%

-2,660 bps

4.7%

27.2%

-2,250 bps

(-) Financial Costs

46,258

39,241

18%

43,797

6%

118,019

107,984

9%

Adjusted Gross Profit

47,221

65,325

-28%

152,627

-69%

148,522

405,229

-63%

Adjusted Gross Margin

17.6%

30.7%

-1,310 bps

37.9%

-2,030 bps

22.8%

37.1%

-1,430 bps

 

 

Table 15 – Gafisa Segment – Gross Margin Breakdown (R$ 000)

 

SP + RJ

Other Markets

3Q16

Net Revenue

264,898

3,373

268,271

Adjusted Gross Profit

46,191

1,030

47,221

Adjusted Gross Margin

17.4%

30.5%

17.6%

 

Selling, General and Administrative Expenses (SG&A)

SG&A expenses totaled R$52.2 million in 3Q16, up 12.0% y-o-y and 31.4% q-o-q. In the 9M16, these expenses totaled R$135.8 million, 3.1% down from R$140.0 million in the past year.

Selling expenses increased 9.6% when compared to 3Q15 and 22.0% sequentially 2Q16, due to an increased level of launch volumes in the period and current market conditions requiring sales and marketing investments to stimulate demand. Year-to-date, selling expenses increased 3.5% compared to 9M15.

The segment’s general and administrative expenses reached R$27.5 million in 3Q16, an increase of 14.4% compared to the previous year and 41.1% compared to 2Q16. Given the absence of a provision for Profit Sharing in the previous quarter, the net effect in the 3Q16 was R$6.2 million. Year-to-date, G&A expenses reached R$74.1 million, compared to R$80.4 million in 9M15, a decrease of 7.9%.

SG&A levels reflect the Company's commitment to improving operational efficiency and achieving a level of costs and expenses that is consistent with the business cycle and current economic outlook.

 

Table 16 – Gafisa Segment – SG&A Expenses (R$ 000)

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Selling Expenses

(24,701)

(20,245)

22%

(22,543)

10%

(61,692)

(59,611)

3%

G&A Expenses

(27,544)

(19,524)

41%

(24,087)

14%

(74,070)

(80,438)

-8%

Total SG&A Expenses

(52,245)

(39,769)

31%

(46,630)

12%

(135,762)

(140,049)

-3%

Launches

410,966

130,360

215%

288,234

43%

621,429

616,046

1%

Net Pre-sales

258,332

129,519

99%

247,608

4%

454,693

669,599

-32%

Net Revenue

268,271

212,628

26%

402,483

-33%

651,881

1,090,933

-40%

 

 

 

34


 
 

 

Other Operating Revenues/Expenses reached R$14.5 million in 3Q16, a 52.6% decrease compared to 3Q15, and 23.4% compared to 2Q16.

The Company continues to be proactive in mitigating risks associated with potential contingencies.

The table below contains more details on the breakdown of this expense.

 

Table 17 – Gafisa Segment – Other Operating Revenues/Expenses (R$ 000)

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Litigation Expenses

(13,278)

(15,461)

-14%

(23,519)

-44%

(44,543)

(68,106)

-35%

Other

(1,243)

(3,496)

-64%

(7,087)

-82%

(3,511)

(12,399)

-72%

Total

(14,521)

(18,957)

-23%

(30,606)

-53%

(48,054)

(80,505)

-40%

 

A higher volume of deliveries over the past three years, due to the delivery of delayed projects in legacy regions, led to an increase in the level of contingencies. As a result, the Gafisa segment continues to concentrate its operations only in the metropolitan regions of São Paulo and Rio de Janeiro. This strategic geographical positioning, combined with improved internal processes, is expected to result in fewer future legal claims and a subsequent decrease in the amount of expenses related to contingencies in the following years.

 

Adjusted EBITDA

Adjusted EBITDA for the Gafisa segment was negative R$15.7 million in 3Q16, compared to the positive R$12.5 million result reported in 2Q16 and positive R$66.8 million result reported in 3Q15. Year-to-date adjusted EBITDA was negative R$21.3 million, compared to the positive result of R$177.5 million in 9M15. 3Q16 Adjusted EBITDA was mainly impacted year-over-year by the following factors: (i) lower gross profit in the quarter due to negative result from the sale of a land parcel located outside of the current business plan, (ii) higher volume of provisions for guarantee and effect of current market conditions; and (iii) higher levels of selling, general and administrative expenses compared to 2Q16. As a reminder, adjusted EBITDA for the Gafisa segment does not include equity income from Alphaville.

The adjusted EBITDA margin was negative 5.8%, compared to a positive margin of 16.6% in 3Q15, and a positive margin of 5.9% in 2Q16. The adjusted EBITDA margin YTD was negative 3.3%.

 

Table 18 – Gafisa Segment -  Adjusted EBITDA (R$ 000)

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Net Profit (Loss)

(95,667)

(47,061)

103%

1,656

-5877%

(200,749)

30,312

-762%

(+) Financial Results

5,292

2,039

160%

17,719

-70%

7,375

30,429

-76%

(+) Income Taxes

1,076

(421)

-

(5,143)

-

6,645

2,485

167%

(+) Depreciation & Amortization

8,180

5,644

45%

8,422

-3%

23,332

24,780

-6%

(+) Capitalized interests

46,258

39,241

18%

43,797

6%

118,019

107,984

9%

(+) Expense w stock Option Plan

2,316

1,300

78%

1,919

21%

5,506

5,859

-6%

(+) Minority Shareholders

7,694

(203)

-

(356)

-

8,296

(975)

-

(-) AUSA Income Effect

9,158

11,952

-23%

(1,168)

-

10,230

(23,339)

-

Adjusted EBITDA

(15,693)

12,491

-

66,846

-

(21,346)

177,535

-

Net Revenue

268,271

212,628

26%

402,483

-33%

651,881

1,090,933

-40%

Adjusted EBITDA Margin

-5.8%

5.9%

-1,170 bps

16.6%

-2,240 bps

-3.3%

16.3%

-1,960 bps

             

              1) EBITDA is adjusted by expenses associated with stock option plans, as this is a non-cash expense.

 

 

 

35


 
 

 

Backlog of Revenues and Results

The backlog of results to be recognized under the PoC method increased year-over-year to R$143.3 million in 3Q16. The consolidated margin was 36.3% in the quarter, compared to 38.7% posted in last year’s third quarter.

 

Table 19 – Gafisa Segment – Backlog Results (REF) (R$ 000)

 

3Q16

2Q16

Q/Q(%)

3Q15

Y/Y(%)

Backlog Revenues

394,475

366,368

8%

557,508

-29%

Backlog Costs (units sold)

(251,151)

(232,393)

8%

(341,698)

-26%

Backlog Results

143,324

133,975

7%

215,810

-34%

Backlog Margin

36.3%

36.6%

-30 bps

38.7%

-240 bps

¹ Backlog results net of PIS/COFINS taxes (3.65%), and excluding the impact of PVA (Present Value Adjustment) method according to Law 11.638.

² Backlog results comprise the projects restricted by condition precedent.

 

 

 

 

 

36


 
 

 

 TENDA SEGMENT

Focuses on affordable residential developments, classified within the Range II of Minha Casa Minha Vida Program.

 

 

Operating Results | Launches and Sales

Third quarter launches totaled R$325.4 million and included 9 projects/phases in the states of São Paulo, Rio de Janeiro, Pernambuco, Bahia and Rio Grande do Sul. In the first nine months of the year, launch volumes reached R$968.6 million.

 

 

During 3Q16, gross sales reached R$318.7 million and dissolutions were R$80.0 million, resulting in total net pre-sales of R$238.7 million, down 2.7% y-o-y and 26.6% q-o-q. In the 9M16, the volume of dissolutions was R$184.2 million and net pre-sales totaled R$830.2 million. In nine months, 61.6% of total net sales were related to remaining units.


 

 

Table 20 – Tenda Segment – Launches and Pre-sales (R$ 000)

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Launches

325,393

414,678

-21%

318,585

2%

968,614

786,306

23%

Pre-Sales

238,686

324,992

-27%

245,195

-3%

830,176

778,679

7%

 

 

 

 

37


 
 

 

Sales Over Supply (SoS)

In 3Q16, sales velocity (sales over supply) was 18.8%, and on a trailing 12-month basis, Tenda’s SoS was 50.9%.

 

 

 

Below is a breakdown of Tenda’s SoS, which includes both legacy and New Model projects.

 

 

Table 21. SoS Gross Revenue (Ex-Dissolutions)

 

3Q15

4Q15

1Q15

2Q16

3Q16

New Model

29.6%

27.4%

29.7%

32.2%

26.5%

Legacy

19.4%

13.3%

20.7%

25.0%

16.0%

Total

26.9%

24.4%

28.0%

31.1%

25.1%

 

Table 22. SoS Net Revenue

 

3Q15

4Q15

1Q15

2Q16

3Q16

New Model

27.1%

24.9%

26.9%

28.9%

21.2%

Legacy

11.4%

5.2%

10.7%

11.9%

3.2%

Total

23.0%

20.9%

23.9%

26.4%

18.8%

 

Dissolutions

The level of dissolutions totaled R$80.0 million in 3Q16, an increase of 90.4% compared to 3Q15 and 38.1% compared to 2Q16.

 

 

Tenda maintains its policy of immediately transferring a sale and the reduction in the legacy project portfolio. However, the percentage of dissolutions over gross sales reached 25.1% in 3Q16, higher than the average level seen in previous periods due to the following factors: (i) seasonality related to projects sold in “Feirão da Caixa” (2Q16); (ii) introduction of in-person interviews in bank branches as an additional step in the process of analyzing and granting credit by financial agents, which led to annulments of already preapproved customers and; (iii) review of Tenda’s unilateral dissolution process for sales not transferred after a period exceeding three months as the prior process allowed for some units to remain beyond the deadline deemed appropriate by the Company.

We estimate that this last factor should result in a temporary increase in the level of Company dissolutions before returning to the average levels that we expect.

 

 

38


 
 

 

Table 23. PSV Dissolutions  Tenda Segment (R$ 000 and % of total gross sales)

 

3Q15

% GS

4Q15

% GS

1Q15

% GS

2Q16

% GS

3Q16

% GS

New Model

19,576

6.8%

22,201

8.0%

20,490

6.6%

24,030

6.3%

58,802

18.5%

Legacy

22,447

7.8%

17,686

6.4%

25,736

8.2%

33,904

8.9%

21,194

6.7%

Total

42,023

14.6%

39,887

14.4%

46,226

14.8%

57,934

15.1%

79,995

25.1%

 

Tenda remained focused on the completion and delivery of legacy projects. In addition, the Company is dissolving contracts with ineligible clients to resell the related units to new, qualified customers.

During the quarter, 562 units were cancelled and returned to inventory, of which 294 units were resold to qualified customers during the same period. The sale and transfer process plays an important role in Tenda’s business model. It is expected that within a 90-day period, the effective sale and transfer process will be completed.

Tenda Segment Transfers

In the 3Q16, 1,632 units were transferred to financial institutions, representing R$208.8 million in net presales. It is worth noting that the banking strike that lasted throughout the month of September detracted from the performance of lending. The volume should normalize over the coming months.

Table 24 – Tenda Segment - PSV Transferred- Tenda (R$ 000)

 

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

2Q16

3Q16

New Model

59,736

67,621

114,939

199,423

194,719

165,691

236,120

205,410

179,807

Legacy

100,361

74,773

59,110

61,566

53,912

40,050

30,642

56,184

29,020

Total

160,097

142,393

174,049

260,989

248,631

205,741

266,762

261,594

208,827

 

1) PSV transferred refers to the conclusion of the transfer operation.
2) PSV = Potential sales volume of the units.

 

Tenda Segment Delivered Projects

During 3Q16, Tenda delivered 10 projects/phases and 1,811 units, accounting for a PSV of R$265.1 million. In 9M16, 23 projects/phases and 4,170 units were delivered, accounting for R$602.2 million in PSV.

 

Inventory

The market value of Tenda’s inventory was R$1.0 billion at the end of the 3Q16, up 13.5% compared to R$906.3 million at the end of 2Q16. Inventory related to the legacy units totaled R$159.9 million or 15.5% of the total Tenda inventory, down 13.0% versus 2Q16 and 35.2% compared to 3Q15. During the quarter, inventory units within the Minha Casa Minha Vida program totaled R$1.0 billion, or 97.9% of total inventory, while units outside the program totaled R$21.6 million, a decrease of 10.4% q-o-q and of 81.0% y-o-y.

 

 

 

39


 
 

 

Table 25 –Tenda Segment – Inventory at Market Value (R$ 000) – by Region

 

Inventory EP 2Q16

Launches

Dissolutions

Pre- Sales

Price

Adjustments

+ Others

Inventory

EP 3Q16

% Q/Q

São Paulo

208,474

34,043

12,805

(78,414)

10,047

186,955

-10%

Rio Grande do Sul

94,250

106,748

13,363

(48,119)

9,077

175,319

86%

Rio de Janeiro

237,802

97,232

24,188

(74,411)

7,882

292,693

23%

Bahia

165,720

53,450

9,410

(49,181)

5,234

184,633

11%

Pernambuco

51,615

33,920

4,514

(31,377)

1,658

60,330

17%

Minas Gerais

119,234

-

8,927

(28,659)

1,760

101,262

-15%

Other

29,228

-

6,788

(8,521)

(216)

27,279

-7%

Total Tenda

906,323

325,393

79,995

(318,682)

35,442

1,028,471

13%

MCMV

882,273

325,393

71,715

(308,512)

36,052

1,006,921

14%

Out of MCMV

24,050

-

8,280

(10,170)

(610)

21,550

-10%

1) The quarter adjustments reflect updates related to project scope, expected launch date and price adjustments in the period.

 

 

Table 26 – Tenda Segment – Inventory at Market Value – Work Status(R$ 000)

 

Not Initiated

Up to 30% built

30% to 70% built

More than 70% built

Finished Units¹

Total 3Q16

New Model – MCMV

281,143

234,226

242,117

63,680

47,439

868,605

Legacy – MCMV

-

-

62,503

-

75,813

138,316

Legacy – Out of MCMV

-

-

-

-

21,550

21,550

Total Tenda

281,143

234,226

304,620

63,680

144,802

1,028,471

             

1) Inventory at market value includes projects in partnership. This index is not comparable to the accounting inventory, due to the implementation of new accounting practices on behalf of CPC’s 18, 19 and 36.

 

Regarding inventory projects, the Tenda segment is still awaiting legal approval for a suspended project with a total PSV of R$62.5 million to move forward with construction.

 

 

 

40


 
 

 

Tenda Segment Landbank

The Tenda landbank, with a PSV of approximately R$4.2 billion, is comprised of 127 different projects/phases. Out of these projects/phases, 26% are located in Bahia, 24% in São Paulo, 22% in Rio de Janeiro, 14% in Rio Grande do Sul, 8% in Pernambuco and 6% in Minas Gerais. In total, these projects/phases reflect more than 31,000 units.

 

Table 27 – Tenda Segment - Landbank (R$ 000)

 

PSV

(% Tenda)

% Swap
Total

% Swap
Units

% Swap
Financial

Potential

Units
(% Tenda)

Potential

Units
(100%)

São Paulo

1,029,487

0.0%

0.0%

0.0%

6,688

6,688

Rio Grande do Sul

573,080

21.1%

10.6%

10.5%

4,292

4,340

Rio de Janeiro

920,234

20.1%

20.1%

0.0%

6,782

6,871

Bahia

1,090,939

5.6%

4.8%

0.8%

8,690

8,712

Pernambuco

334,677

26.8%

11.5%

15.3%

2,646

2,672

Minas Gerais

255,649

25.0%

25.0%

0.0%

1,806

1,840

Total

4,204,066

12.5%

9.1%

3.4%

30,904

31,123

¹ Swap percentage over the historical cost of land acquisition.

² Potential Units are net of swaps and refer to Tenda’s and/or its partners’ stake in the projects.

 

Table 28 –Tenda Segment – Changes in the Landbank (2Q16 x 3Q16 - R$ 000)

 

Initial Landbank

Land Acquisition

Launches

Adjustments

Final Landbank

São Paulo

1,022,885

46,834

(34,043)

(6,189)

1,029,487

Rio Grande do Sul

685,382

-

(106,748)

(5,554)

573,080

Rio de Janeiro

928,336

106,052

(97,232)

(16,922)

920,234

Bahia

1,146,693

23,907

(53,450)

(26,211)

1,090,939

Pernambuco

458,090

28,184

(33,920)

(117,677)

334,677

Minas Gerais

209,149

46,500

-

-

255,649

Total

4,450,535

251,477

(325,393)

(172,553)

4,204,066

 

In 3Q16, the Company acquired 8 new land plots with a potential PSV of R$232.0 million. These had an acquisition cost of R$18.2 million, 95% to be paid in cash and 5% to be paid via swap. Moreover, it has reinstated land parcels with potential PSV of approximately R$133.1 million, which were previously for sale; they were added to landbank, due to positive results from new feasibility studies.

 

New Model Update and Turnaround

Tenda is focused on expanding launch volumes under its New Business Model, which is based on three pillars: operational efficiency, risk management, and capital discipline.

The Company continues to operate in six macro regions: São Paulo, Rio de Janeiro, Belo Horizonte, Porto Alegre, Salvador and Recife. Tenda has a total of 81 projects/phases and a launched PSV of R$3.0 billion since 2013. Below is a brief description of the average performance of these projects, per region.

Notably, Tenda has delivered 42 projects/phases since 2013, totaling 9,853 units and R$1.4 billion in PSV, all of them maintaining the performance and profitability drivers established in the New Model.

 

 

41


 
 

 

Table 29. Tenda – New Model Monitoring 2013 – 2016

 

SP

RJ

BA

PE

MG

RS

2013

Number of Projects

4

1

2

-

-

-

7

Units launched

1,380

300

779

-

-

-

2,459

Total PSV (R$ 000)

189.7

40.4

83.9

-

-

-

314

Units Sold

1,379

281

771

-

-

-

2,431

% Sold

100%

94%

99%

-

-

-

99%

SoS Avg (Month)

11%

5%

6%

-

-

-

9%

Transfers

1,379

270

763

-

-

-

2,412

% Transferred (Sales)

100%

90%

98%

-

-

-

98%

Work Progress

100%

100%

100%

-

-

-

100%

 

 

 

SP

RJ

BA

PE

MG

RS

2014

Number of Projects

4

4

4

1

1

-

14

Units launched

720

1,511

1,220

432

432

-

4,315

Total PSV (R$ 000)

117.8

224.8

151.5

58.8

60.4

-

613

Units Sold

706

1,418

1,191

427

387

-

4,129

% Sold

98%

94%

98%

99%

90%

-

96%

SoS Avg (Month)

13%

5%

7%

6%

4%

-

7%

Transfers

705

1,319

1,171

413

378

-

3,986

% Transferred (Sales)

99%

88%

96%

96%

88%

-

92%

Work Progress

100%

100%

99%

100%

100%

-

100%

 

 

SP

RJ

BA

PE

MG

RS

2015

Number of Projects

10

7

5

3

2

3

30

Units launched

2,180

1,751

1,584

944

372

880

7,711

Total PSV (R$ 000)

338.2

252.6

198.5

122.3

53.2

123.6

1,088

Units Sold

2,125

1,208

1,309

829

338

814

6,623

% Sold

97%

69%

83%

88%

91%

93%

86%

SoS Avg (Month)

14%

5%

8%

6%

9%

10%

9%

Transfers

2,055

1,010

1,146

662

302

648

5,823

% Transferred (Sales)

95%

58%

74%

71%

81%

73%

76%

Work Progress

92%

83%

82%

92%

79%

87%

87%

 

 

 

42


 
 

 

 

SP

RJ

BA

PE

MG

RS

2016

Number of Projects

5

7

6

2

4

6

30

Units launched

1,057

1,738

1,520

576

780

1,400

7,071

Total PSV (R$ 000)

165.1

246.0

187.3

72.1

107.7

190.3

969

Units Sold

514

486

450

228

258

296

2,232

% Sold

49%

28%

30%

40%

33%

21%

32%

SoS Avg (Month)

11%

10%

8%

9%

7%

8%

9%

Transfers

306

257

311

125

103

124

1,226

% Transferred (Sales)

31%

19%

22%

21%

20%

9%

17%

Work Progress

33%

25%

32%

31%

38%

14%

27%

 

 

 

 

43


 
 

 

Financial Result

Revenues

 

Tenda’s 3Q16 net revenues totaled R$270.5 million, an increase of 22.1% y-o-y, reflecting an increased operational volume during the past quarters. As shown in the table below, revenue from new projects, which quarter after quarter has been increasing its contribution to total volume of revenues, represented the majority of total revenues in 3Q16. Tenda’s net revenues totaled R$765.8 million in 9M16, an increase of 18.9% y-o-y, due to the increased level of operations in the period.

 

 

Table 30. Tenda - Pre-Sales and Recognized Revenues (R$ 000)

 

3Q16

3Q15

Launches

Pre-Sales

% Sales

Revenue

% Revenue

Pre-Sales

% Sales

Revenue

% Revenue

2016

167,443

70%

92,765

34%

-

0%

-

0%

2015

71,246

30%

178,943

66%

162,543

66%

81,907

37%

2014

(4,648)

-2%

(7,654)

-3%

51,146

21%

98,808

45%

2013

(562)

0%

(844)

0%

(152)

0%

4,316

2%

≤ 2012

5,207

2%

7,299

3%

31,658

13%

36,529

16%

Total

238,686

100%

270,509

100%

245,195

100%

221,560

100%

New Model

233,478

98%

263,210

97%

213,537

87%

185,031

84%

Legacy

5,208

2%

7,299

3%

31,658

13%

36,529

16%

                 

 

Gross Profit and Margin

3Q16 gross profit totaled R$90.9 million, up from R$67.4 million in 3Q15 and 2Q16. Gross margin for the quarter reached 33.6%, compared to 30.4% in 3Q15 and 25.9% in 2Q16.The adjusted gross margin was up 35.0% in 3Q16, compared with 28.0% in 2Q16 and 32.1% y-o-y due to the accounting reclassification of R$11.1 million of the Company’s financial co-obligation balance in relation to transferred clients, required by financial institutions during construction period, which now is accounted for in Financial Results. Excluding this effect, the adjusted gross margin would remain in a healthy level of 32.2% in 3Q16.

 

The table below shows Tenda’s gross margin breakdown in 3Q16.

Table 31. Tenda – Gross Margin (R$ 000)

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Net Revenue

270,509

260,743

4%

221,560

22%

765,804

644,140

19%

Gross Profit

90,930

67,407

35%

67,390

35%

227,082

186,718

22%

Gross Margin

33.6%

25.9%

770 bps

30.4%

320 bps

29.7%

29.0%

70 bps

(-) Financial Costs

3,829

5,544

-31%

3,760

2%

14,889

11,517

29%

Adjusted Gross Profit

94,759

72,951

30%

71,150

33%

241,971

198,235

22%

Adjusted Gross Margin

35.0%

28.0%

700 bps

32.1%

290 bps

31.6%

30.8%

80 bps

44


 
 

 

Selling, General and Administrative Expenses (SG&A)

During 3Q16, selling, general and administrative expenses totaled R$47.5 million, an increase of 10.1% compared to R$43.1 million in 3Q15 and 11.9% compared to R$42.4 million in 2Q16. In 9M16, SG&A increased by 15.4%, totaling R$127.2 million, as a result of a higher volume of operations.

Selling expenses reached R$25.6 million in 3Q16, an increase of 20.1% from 2Q16 and 56.9% from 3Q15, due to a higher launch volume and increased gross sales. In addition, the increase of 20.1% in selling expenses reflects the current scenario of greater restriction of credit to customers, requiring a higher volume of investments related to marketing and sales expenses, so that to allow a higher volume of clients in our stores. In 9M16, selling expenses increased 38.6%, totaling R$65.1 million.

In 3Q16, general and administrative expenses decreased 18.4% compared to 3Q15 and increased 3.5% in the sequential comparison. In 9M16, general and administrative expenses totaled R$62.1 million, 1.8% down from R$63.2 million recorded in 2015 and in line with the current level of operations of the Company.

Since 2013, Tenda has been rebalancing its cost structure and expenses to levels that are adequate for the current stage of its business model. This is a key step in the Company’s ability to improve its operating and financial cycles, in order to achieve better profitability.

 

Table 32. Tenda – SG&A Expenses (R$ 000)

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Selling Expenses

(25,554)

(21,270)

20%

(16,283)

57%

(65,096)

(46,963)

39%

General & Admin Expenses

(21,928)

(21,177)

4%

(26,861)

-18%

(62,125)

(63,248)

-2%

Total SG&A Expenses

(47,482)

(42,447)

12%

(43,144)

10%

(127,221)

(110,211)

15%

Launches

325,393

414,678

-22%

318,585

2%

968,614

786,306

23%

Net Pre-Sales

238,686

324,992

-27%

245,195

-3%

830,176

778,679

7%

Net Revenue

270,509

260,743

4%

221,560

22%

765,804

644,140

19%

 

The Other Operating Revenues/Expenses totaled an expense of R$10.5 million, an increase of 44.6% compared to 2Q16, due to the higher impact of litigation expenses recorded last quarter.

Below, we present a breakdown of this expense.

 

Table 33 – Tenda Segment– Other Revenues/Operating Expenses (R$ 000)

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Litigation Expenses

(7,704)

(5,597)

38%

(7,999)

-4%

(20,385)

(18,900)

8%

Other

(2,805)

(1,673)

68%

(7,502)

-63%

(12,611)

(13,308)

-5%

Total

(10,509)

(7,270)

45%

(15,501)

-32%

(32,996)

(32,208)

2%

 

                Adjusted EBITDA

Adjusted EBITDA was R$39.7 million in 3Q16, compared to adjusted EBITDA of R$21.9 million in 2Q16 and R$24.6 million in 3Q15. In 9M16, adjusted EBITDA was R$85.0 million compared to R$60.9 million in the last year. Adjusted EBITDA margin was 14.7% in 3Q16 compared to an adjusted EBITDA margin of 11.1% in 3Q15 and 8.4% in the previous quarter. The y-o-y increase is attributable to: (i) higher volume of revenues in the period; and (ii) better gross margin level, benefited by accounting reclassification previously mentioned. In 9M16, adjusted EBITDA margin reached 11.1%.

 

 

45


 
 

 

Table 34. Tenda – Adjusted EBITDA (R$ 000)

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Net (Loss) Profit

23,045

8,622

167%

11,830

95%

36,461

43,311

-16%

(+) Financial results

12,173

450

2605%

1,970

518%

14,520

(5,209)

-379%

(+) Income taxes

2,885

3,394

-15%

1,993

45%

13,034

771

1591%

(+) Depreciation & Amortization

4,432

3,040

46%

4,186

6%

11,346

11,058

3%

(+) Capitalized interests

3,829

5,544

-31%

3,760

2%

14,889

11,517

29%

(+) Expenses with stock Option Plan

489

27

1711%

545

-10%

1,050

1,606

-35%

(+) Minority Shareholders

(7,109)

781

-

283

-

(6,257)

(2,151)

191%

Adjusted EBITDA

39,744

21,858

82%

24,567

62%

85,042

60,902

40%

Net Revenue

270,509

260,743

4%

221,560

22%

765,804

644,140

19%

Adjusted EBITDA Margin

14.7%

8.4%

630 bps

11.1%

360 bps

11.1%

9.5%

160 bps

1) EBITDA is adjusted by expenses associated with stock option plans, as this is a non-cash expense.

2) Tenda does not hold equity interest in Alphaville. In 4Q13, the result of the divestment n in Alphaville, which was allocated to Tenda, was excluded.

 

Backlog of Revenues and Results

The backlog of results to be recognized under the PoC method was R$115.9 million in 3Q16. The consolidated margin for the quarter was 43.0%.

 

Table 35. Tenda – Backlog Results (REF)  (R$ 000)

 

3Q16

2Q16

Q/Q(%)

3Q15

Y/Y(%)

Backlog Revenues

269,361

301,000

-11%

251,343

7%

Backlog Costs (units sold)

(153,492)

(175,111)

-12%

(142,303)

8%

Backlog Results

115,869

125,889

-8%

109,040

6%

Backlog Margin

43.0%

41.8%

120 bps

43.4%

40 bps

                                  ¹ Backlog results net of PIS/COFINS = 3.65%, taxes and excluding the impact of PVA (Present Value Adjustment) method according to Law 11.638

² Backlog results comprise the projects restricted by condition precedent.

 

 

46


 
 

 

Balance Sheet and Consolidated Financial Results

Cash and Cash Equivalents

 

On September 30, 2016, cash and cash equivalents and marketable securities totaled R$609.9 million, down 1.4% from June 30, 2016.

 

Accounts Receivable

At the end of 3Q16, total consolidated accounts receivable totaled R$2.3 billion, a decrease of 19.8% y-o-y and a decrease of 3.2% q-o-q.

The Gafisa and Tenda segments have approximately R$614.4. million in accounts receivable from finished units.

Table 36. Total Receivables (R$ 000)

 

3Q16

2Q16

Q/Q(%)

3Q15

Y/Y(%)

Receivables from developments (off balance sheet)

688,984

692,650

-1%

839,492

-18%

Receivables from PoC- ST (on balance sheet)

1,129,351

1,285,892

-12%

1,488,988

-24%

Receivables from PoC- LT (on balance sheet)

440,056

354,931

24%

487,007

-10%

Total

2,258,391

2,333,473

-3%

2,815,487

-20%

Notes: ST – Short term | LT- Long term | PoC – Percentage of Completion Method.

Receivables from developments: accounts receivable not yet recognized according to PoC and BRGAAP.

Receivables from PoC: accounts receivable already recognized according to PoC and BRGAAP.

 

Cash Generation

The Company’s operating cash generation reached R$97.4 million in 3Q16. The Gafisa segment contributed cash generation of R$89.7 million, with volume of transferred/received units sold to financing agents reaching R$126.0 million. It is worth noting that the impact on cash generation of the sale of land in the quarter was limited to R$5.0 million, since the remaining balance will only be received in 4Q16. The Tenda segment generated R$7.7 million in cash, with R$208.8 million transferred in 3Q16. In 9M16, the Company reported operating cash generation of R$232.9 million.

While consolidated operating cash generation reached R$97.4 million, the Company ended 3Q16 with net cash generation of R$13.0 million, totaling R$8.8 million in 9M16. This result does not include the disbursement related to the share buyback program carried out in the period.

 

Table 37. Cash Generation (R$ 000)

 

4Q151

1Q16

2Q16

3Q16

Availabilities2

712,311

792,076

618,569

609,898

Change in Availabilities2 (1)

 

79,766

(173,507)

(8,671)

Total Debt + Investor Obligations

2,155,688

2,207,114

2,074,335

2,053,154

Change in Total Debt + Investor Obligations (2)

 

51,425

(132,779)

(21,181)

Other Investments

210,761

210,761

218,956

219,454

Change in Other Investments (3)

 

-

8,195

498

Cash Generation in the period (1) - (2) + (3)

 

28,340

(32,534)

13,009

Cash Generation Final

 

28,340

(4,193)

8,815

1 The 4Q15 data refer only to the final balance of the period in order to assist in the reconciliation of the balance changes in 2016.

2 Cash and cash equivalents, and short-term investments.

 

 

47


 
 

 

Liquidity

At the end of September 2016, the Company’s Net Debt/Equity ratio reached 49.3% compared to 48.5% in the previous quarter. Excluding project finance, the Net Debt/Equity ratio was negative 8.1%.

The Company's consolidated gross debt reached R$2.1 billion at the end of 3Q16, stable q-o-q, and down 17.7% y-o-y. In the 3Q16, the Company amortized R$253.4 million in debt, of which R$222.9 million was project finance and R$30.6 million corporate debt. A total of R$226.6 million was disbursed, allowing for a net amortization of R$26.9 million. Considering the 9M16, 74.6% of total gross debt maturing in 2016 was amortized. New releases of R$584.2 million took place in the year, of which R$487.5 million related to project debt and R$96.7 million related to corporate debt, thus allowing a net amortization in the first nine months of R$210.7 million.

 

Table 38. Debt and Investor Obligations

 

3Q16

2Q16

Q/Q(%)

3Q15

Y/Y(%)

Debentures - FGTS (A)

492,498

551,968

-11%

808,532

-39%

Debentures – Working Capital (B)

167,448

186,075

-10%

364,900

-54%

Project Financing SFH – (C)

1,188,494

1,196,948

-1%

1,173,382

1%

Working Capital (D)

201,571

136,969

47%

137,891

46%

Total (A)+(B)+(C)+(D) = (E)

2,050,011

2,071,960

-1%

2,484,705

-17%

Investor Obligations (F)

3,143

2,375

32%

8,934

-65%

Total Debt (E)+(F) = (G)

2,053,154

2,074,335

-1%

2,493,639

-18%

Cash and Availabilities (H)

609,898

618,569

-1%

921,828

-34%

Net Debt (G)-(H) = (I)

1,443,256

1,455,766

-1%

1,571,811

-8%

Equity + Minority Shareholders (J)

2,928,749

3,001,290

-2%

3,112,609

-6%

(Net Debt) / (Equity) (I)/(J) = (K)

49.3%

48.5%

80 bps

50.5%

-120 bps

(Net Debt – Proj Fin) / Equity (I)-((A)+(C))/(J) = (L)

-8.1%

-9.8%

170 bps

-13.2%

510 bps

*Cash and cash equivalents and short-term investments.

 

The Company ended 9M16 with R$1.0 billion in total debt maturing in the short term. It should be noted, however, that 89.9% of this volume relates to debt linked to the Company's projects. Currently, the average cost of consolidated debt is 14.71% p.y., or 104.14% of the CDI.

 

Table 39. Debt Maturity

(R$ 000)

Average Cost (p.y.)

Total

Until Sep/17

Until Sep/18

Until Sep/19

Until Sep/20

After Sep/20

Debentures - FGTS (A)

TR + 9.00% - 10.38%

492,498

342,609

149,889

-

-

-

Debentures – Working Capital (B)

CDI + 1.90% / IPCA + 7.96% - 8.22%

167,448

30,840

94,044

21,279

21,285

-

Project Financing SFH (C)

TR + 8.33% - 11.82% / 120.0% - 129.0% CDI

1,188,494

581,128

455,721

111,669

28,930

11,046

Working Capital (D)

CDI + 3.00% / CDI + 3.95% / CDI + 4.25% / 125.0% CDI / INCC

201,571

69,845

78,535

53,191

-

-

Total (A)+(B)+(C)+(D) = (E)

 

2,050,011

1,024,422

778,189

186,139

50,215

11,046

Investor Obligations (F)

CDI + 0.59%

3,143

3,143

-

-

-

-

Total Debt (E)+(F) = (G)

 

2,053,154

1,027,565

778,189

186,139

50,215

11,046

% of Total Maturity per period

 

50.0%

37.9%

9.1%

2.4%

0.5%

Project debt maturing as % of total debt ((A)+ (C))/(G)

 

89.9%

77.8%

60.0%

57.6%

100.0%

Corporate debt maturing as % of total debt ((B)+(D)+(F))/(G)

 

10.1%

22.2%

40.0%

42.4%

0.0%

Ratio Corporate Debt / Mortgage

18.1%/81.9%

 

 

 

 

 

 

 

 

48


 
 

 

Consolidated Financial Result

Revenue

 

On a consolidated basis, 3Q16 net revenue totaled R$538.8 million, up 13.8% compared to 2Q16 and down 13.7% from 3Q15. In the quarter, the Gafisa segment represented 49.8% of consolidated revenues, while Tenda accounted for the remaining 50.2%. In 9M16, net consolidated revenue reached R$1.4 billion.

 

Gross Profit & Margin

Gross profit in 3Q16 was R$91.9 million, compared to R$93.5 million in 2Q16, and R$176.2 million in the prior year period. Gross margin for the quarter reached 17.1% compared to 19.8% in 2Q16 and 28.2% in 3Q15. Year-to-date gross profit was R$257.6 million, with a gross margin of 18.2%.

Adjusted gross profit totaled R$142.0 million, with a margin of 26.4 %, compared to 29.2% in the 2Q16 and 35.9% in the prior year period. In 9M16, adjusted gross profit totaled R$390.5 million with an adjusted gross margin of 27.5%.

Table 40. Gafisa Group– Gross Margin (R$ 000)

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Net Revenue

538,780

473,371

14%

624,043

-14%

1,417,685

1,735,073

-18%

Gross Profit

91,893

93,491

-2%

176,220

-48%

257,585

483,963

-47%

Gross Margin

17.1%

19.8%

-270 bps

28.2%

-1,110 bps

18.2%

27.9%

-970 bps

( - ) Financial Costs

50,087

44,785

12%

47,557

5%

132,908

119,502

11%

Adjusted Gross Profit

141,980

138,276

3%

223,777

-37%

390,493

603,465

-35%

Adjusted Gross Margin

26.4%

29.2%

-280 bps

35.9%

-950 bps

27.5%

34.8%

-730 bps

 

Selling, General and Administrative Expenses (SG&A)

SG&A expenses totaled R$99.7 million in 3Q16, up 11.1% compared to 3Q15 and 21.3% q-o-q. Year-to-date, SG&A totaled R$263.0 million, up 5.1% from 9M15.

 

Table 41.Gafisa Group – SG&A Expenses (R$ 000)

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Selling Expenses

(50,255)

(41,515)

21%

(38,826)

29%

(126,788)

(106,574)

19%

G&A Expenses

(49,472)

(40,701)

22%

(50,948)

-3%

(136,195)

(143,686)

-5%

Total SG&A Expenses

(99,727)

(82,216)

21%

(89,774)

11%

(262,983)

(250,260)

5%

Launches

736,359

545,038

35%

606,819

21%

1,590,043

1,402,352

13%

Net Pre- Sales

497,018

454,511

9%

492,803

1%

1,284,869

1,448,278

-11%

Net Revenue

538,780

473,371

14%

624,043

-14%

1,417,685

1,735,073

-18%

 

Other Operating Revenues/Expenses were an expense of R$25.0 million, a decrease of 4.6% from 2Q16 and down 45.7% y-o-y. Year-to-date, other Operating Revenues/Expenses were an expense of R$81.0 million, down 28.1% from 9M15.

The table below has more details on the breakdown of this expense.

 

49


 
 

 

Table 42 –Gafisa Group – Other Operating Revenues/Expenses (R$ 000)

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Litigation expenses

(20,982)

(21,058)

0%

(31,518)

-33%

(64,928)

(87,006)

-25%

Other

(4,048)

(5,169)

-22%

(14,589)

-72%

(16,122)

(25,707)

-37%

Total

(25,030)

(26,227)

-5%

(46,107)

-46%

(81,050)

(112,713)

-28%

 

Consolidated Adjusted EBITDA

Consolidated adjusted EBITDA, including Alphaville equity income, totaled R$14.9 million in 3Q16, down from R$22.4 million in the previous quarter and R$92.6 million in 3Q15. Consolidated adjusted EBITDA in 3Q16 was impacted by the following factors: (i) lower gross profit in the Gafisa segment; and (ii) higher selling, general and administrative expenses. Consolidated adjusted EBITDA margin was 2.8%, compared with 4.7% margin reported in 2Q16 and 14.8% in 3Q15. In 9M16, consolidated EBITDA reached R$53.5 million, with a margin of 3.8%.

 

Table 43. Gafisa Group – Consolidated Adjusted EBITDA (R$ 000)

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Net Profit (Loss)

(72,622)

(38,439)

89%

13,486

-638%

(164,288)

73,623

-323%

(+) Financial results

17,465

2,489

602%

19,689

-11%

21,895

25,220

-13%

(+) Income taxes

3,961

2,973

33%

(3,150)

-226%

19,679

3,256

504%

(+) Depreciation & Amortization

12,612

8,684

45%

12,608

0%

34,678

35,838

-3%

(+) Capitalized interests

50,087

44,785

12%

47,557

5%

132,908

119,502

11%

(+) Expenses with stock Option Plan

2,805

1,327

111%

2,464

14%

6,556

7,465

-12%

(+) Minority Shareholders

585

578

1%

(73)

-901%

2,039

(3,126)

-165%

Adjusted EBITDA

14,893

22,397

-34%

92,581

-84%

53,467

261,778

-80%

Net Revenue

538,780

473,371

14%

624,043

-14%

1,417,685

1,735,073

-18%

Adjusted EBITDA Margin

2.8%

4.7%

-190 bps

14.8%

-1,200 bps

3.8%

15.1%

-1,130 bps

          1) We adjust our EBITDA for expenses associated with stock options plans, as it is a non-cash expense;

          2) Consolidated EBITDA includes the effect of Alphaville equity income.

 

Depreciation and Amortization

Depreciation and amortization in 3Q16 reached R$11.1 million, up 27.5% compared to 2Q16 and down 11.0% compared to R$12.4 million in 3Q15. The level of D&A is consistent with the size of the Company’s operations.

 

Financial Results

3Q16 net financial result was negative R$17.5 million, compared to negative R$2.5 million in 2Q16 and R$19.7 million in 3Q15. Financial revenues were down 39.7% y-o-y, totaling R$13.9 million, due to the lower balance of funds available in the period. Financial expenses reached R$31.4 million, compared to R$42.8 million in 3Q15, due to lower gross debt and a higher share of project-related versus corporate debt, with lower funding costs. Year-to-date, the net financial result was negative R$21.9 million, compared to negative R$25.2 million in 3Q15. It is worth mentioning that in 9M16, there was a positive impact from the mark-to-market of hedging operations against IPCA and CDI-indexed debts.

 

50


 
 

 

Taxes

Income taxes, social contribution and deferred taxes for 3Q16 amounted to an expense of R$4.0 million, consistent with the size of the Company’s operations. In the year, the IR & CSLL expense totaled R$19.7 million.

 

Net Income

The Company ended the 3Q16 with a net loss of R$72.6 million. Excluding equity income from AUSA, the Company recorded a net loss of R$63.5 million, compared to a net loss of R$26.5 million in 2Q16 and net income of R$12.3 million in the same period last year. The Company ended the 9M16 with a net loss of R$164.3 million, including equity income from Alphaville, compared to net income of R$73.6 million in the same period last year.

 

Table 44 - Consolidated - Net Income - (R$ 000)

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Net Revenue

538,780

473,371

14%

624,043

-14%

1,417,685

1,735,073

-18%

Gross Profit

91,893

93,491

-2%

176,220

-48%

257,585

483,963

-47%

Gross Margin

17.1%

19.8%

-270 bps

28.2%

-1,110 bps

18.2%

27.9%

-970 bps

Adjusted Gross Profit1

141,980

138,276

3%

223,777

-37%

390,493

603,465

-35%

Adjusted Gross Margin1

26.4%

29.2%

-280 bps

35.9%

-950 bps

27.5%

34.8%

-730 bps

Adjusted EBITDA2

14,893

22,397

-34%

92,581

-84%

53,467

261,778

-80%

Adjusted EBITDA Margin

2.8%

4.7%

-190 bps

14.8%

-1,200 bps

3.8%

15.1%

-1,130 bps

Net Income

(72,622)

(38,439)

89%

13,486

-

(164,288)

73,623

-

( - ) Alphaville Equity Income

(9,158)

(11,952)

-23%

1,168

-

(10,230)

23,339

-

Net income ( ex-Alphaville equity income)

(63,464)

(26,487)

140%

12,318

-

(154,058)

50,284

-

1) Adjusted by capitalized interests.

2) EBITDA adjusted by expenses associated with stock option plans, as this is a non-cash expense.

3) Consolidated EBITDA includes the impact of Alphaville equity income.

 

Backlog of Revenues and Results

The backlog of results to be recognized under the PoC method reached R$259.2 million in 3Q16. The consolidated margin for the quarter was 39.0%.

 

Table 45.Gafisa Group – Backlog Results (REF) (R$ 000)

 

3Q16

2Q16

Q/Q %)

3Q15

Y/Y(%)

Backlog Revenues

663,836

667,368

-1%

808,851

-18%

Backlog Costs (units sold)

(404,643)

(407,504)

-1%

(484,001)

-16%

Backlog Results

259,193

259,864

0%

324,850

-20%

Backlog Margin

39.0%

38.9%

10 bps

40.2%

-120 bps

¹ Backlog results net of PIS/COFINS taxes (3.65%), and excluding the impact of PVA (Present Value Adjustment) method according to Law 11.638

² Backlog results comprise the projects restricted by condition precedent.

 

 

 

51


 
 

 

 

 

São Paulo, November 8th, 2016

 

Alphaville Urbanismo SA releases its 9M results of 2016.

 

 

Financial Results

In 9M16, net revenues totaled R$ 555 million, 27% below the previous year, and net profit was –R$ 34 million.

 

 

 

 

9M16

9M15

 

R$

Net revenue

555

762

-27%

Net profit

- 34

58

N/A

Net margin

-6%

8%

 

 

 

 

For further information, please contact our Investor Relations team at ri@alphaville.com.br or +55 11 3038-7164.

 

 

 

52


 
 
 

 

Financial Statements Gafisa Segment

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Net Revenue

268,271

212,628

26%

402,483

-33%

651,881

1,090,933

-40%

Operating Costs

(267,308)

(186,544)

43%

(293,653)

-9%

(621,378)

(793,688)

-22%

Gross Profit

963

26,084

-96%

108,830

-99%

30,503

297,245

-90%

Gross Margin

0.4%

12.3%

-1,190 bps

27.0%

-2,660 bps

4.7%

27.2%

-2,250 bps

Operating Expenses

(82,568)

(71,730)

15%

(94,954)

-13%

(208,936)

(234,994)

-11%

Selling Expenses

(24,701)

(20,245)

22%

(22,543)

10%

(61,692)

(59,611)

3%

General and Administrative Expenses

(27,544)

(19,524)

41%

(24,087)

14%

(74,070)

(80,438)

-8%

Other Operating Revenue/Expenses

(14,521)

(18,957)

-23%

(30,606)

-53%

(48,054)

(80,505)

-40%

Depreciation and Amortization

(8,180)

(5,644)

45%

(8,422)

-3%

(23,332)

(24,780)

-6%

Equity Income

(7,622)

(7,360)

4%

(9,296)

-18%

(1,788)

10,340

-117%

Operational Result

(81,605)

(45,646)

79%

13,876

-

(178,433)

62,251

-

Financial Income

7,479

14,208

-47%

20,975

-64%

48,493

60,230

-19%

Financial Expenses

(12,771)

(16,247)

-21%

(38,694)

-67%

(55,868)

(90,659)

-38%

Net Income Before taxes on Income

(86,897)

(47,685)

82%

(3,843)

2161%

(185,808)

31,822

-

Deferred Taxes

-

(1)

-100%

9,134

-100%

963

6,094

-84%

Income Tax and Social Contribution

(1,076)

422

-

(3,991)

-73%

(7,608)

(8,579)

-11%

Net Income After Taxes on Income

(87,973)

(47,264)

86%

1,300

-

(192,453)

29,337

-

Non controlling interests

7,694

(203)

-

(356)

-

8,296

(975)

-

Net Income

(95,667)

(47,061)

103%

1,656

-5877%

(200,749)

30,312

-

 

 

53


 
 

 

Financial Statements Tenda Segment

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Net Revenue

270,509

260,743

4%

221,560

22%

765,804

644,140

19%

Operating Costs

(179,579)

(193,336)

-7%

(154,170)

16%

(538,722)

(457,422)

18%

Gross Profit

90,930

67,407

35%

67,390

35%

227,082

186,718

22%

Gross Margin

33.6%

25.9%

770 bps

30.4%

320 bps

29.7%

29.0%

70 bps

Operating Expenses

(59,936)

(54,160)

11%

(51,314)

17%

(169,324)

(149,996)

13%

Selling Expenses

(25,554)

(21,270)

20%

(16,283)

57%

(65,096)

(46,963)

39%

General and Administrative Expenses

(21,928)

(21,177)

4%

(26,861)

-18%

(62,125)

(63,248)

-2%

Other Operating Revenue/Expenses

(10,509)

(7,270)

45%

(15,501)

-32%

(32,996)

(32,208)

2%

Depreciation and Amortization

(2,889)

(3,040)

-5%

(4,022)

-28%

(9,119)

(10,894)

-16%

Equity Income

944

(1,403)

-

11,353

-92%

12

3,317

-100%

Operational Result

30,994

13,247

134%

16,076

93%

57,758

36,722

57%

Financial Income

6,471

8,586

-25%

2,147

201%

23,866

39,774

-40%

Financial Expenses

(18,644)

(9,036)

106%

(4,117)

353%

(38,386)

(34,565)

11%

Net Income Before taxes on Income

18,821

12,797

47%

14,106

33%

43,238

41,931

3%

Deferred Taxes

(1,863)

(169)

1002%

1,768

-

(5,528)

5,634

-

Income Tax and Social Contribution

(1,022)

(3,225)

-68%

(3,761)

-73%

(7,506)

(6,405)

17%

Net Income After Taxes on Income

15,936

9,403

69%

12,113

32%

30,204

41,160

-27%

Non controlling interests

(7,109)

781

-

283

-

(6,257)

(2,151)

191%

Net Income

23,045

8,622

167%

11,830

95%

36,461

43,311

-16%

 

 

 

54


 
 

 

Consolidated Financial Statements

 

3Q16

2Q16

Q/Q (%)

3Q15

Y/Y(%)

9M16

9M15

Y/Y(%)

Net Revenue

538,780

473,371

14%

624,043

-14%

1,417,685

1,735,073

-18%

Operating Costs

(446,887)

(379,880)

18%

(447,823)

0%

(1,160,100)

(1,251,110)

-7%

Gross Profit

91,893

93,491

-2%

176,220

-48%

257,585

483,963

-47%

Gross Margin

17.1%

19.8%

-270 bps

28.2%

-1,110 bps

18.2%

27.9%

-970 bps

Operating Expenses

(142,504)

(125,890)

13%

(146,268)

-3%

(378,260)

(384,990)

-2%

Selling Expenses

(50,255)

(41,515)

21%

(38,826)

29%

(126,788)

(106,574)

19%

General and Administrative Expenses

(49,472)

(40,701)

22%

(50,948)

-3%

(136,195)

(143,686)

-5%

Other Operating Revenue/Expenses

(25,030)

(26,227)

-5%

(46,107)

-46%

(81,050)

(112,713)

-28%

Depreciation and Amortization

(11,069)

(8,684)

27%

(12,444)

-11%

(32,451)

(35,674)

-9%

Equity Income

(6,678)

(8,763)

-24%

2,057

-

(1,776)

13,657

-

Operational Result

(50,611)

(32,399)

56%

29,952

-

(120,675)

98,973

-

Financial Income

13,950

22,794

-39%

23,122

-40%

72,359

100,004

-28%

Financial Expenses

(31,415)

(25,283)

24%

(42,811)

-27%

(94,254)

(125,224)

-25%

Net Income Before taxes on Income

(68,076)

(34,888)

95%

10,263

-

(142,570)

73,753

-

Deferred Taxes

(1,863)

(170)

996%

10,902

-

(4,565)

11,728

-

Income Tax and Social Contribution

(2,098)

(2,803)

-25%

(7,752)

-73%

(15,114)

(14,984)

1%

Net Income After Taxes on Income

(72,037)

(37,861)

90%

13,413

-

(162,249)

70,497

-

Non controlling interests

585

578

1%

(73)

-

2,039

(3,126)

-

Net Income

(72,622)

(38,439)

89%

13,486

-

(164,288)

73,623

-

 

 

55


 
 

 

Balance Sheet Gafisa Segment

 

3Q16

2Q16

Q/Q %)

3Q15

Y/Y(%)

Current Assets

 

 

 

 

 

Cash and cash equivalents

100,563

41,190

144%

40,510

148%

Short term investments

254,826

263,161

-3%

556,079

-54%

Receivables from clients

780,968

873,183

-11%

1,024,269

-24%

Properties for sale

1,579,115

1,560,318

1%

1,312,099

20%

Other accounts receivable

99,165

106,207

-7%

162,934

-39%

Deferred selling expenses

2,321

1,489

56%

2,637

-12%

Land for sale

3,443

3,443

0%

6,075

-43%

 

2,820,401

2,848,991

-1%

3,104,603

-9%

Non-current Assets

 

 

 

 

 

Receivables from clients

313,802

287,401

9%

440,826

-29%

Properties for sale

324,336

412,917

-21%

539,175

-40%

Other

100,054

143,984

-31%

156,427

-36%

 

738,192

844,302

-13%

1,136,428

-35%

Intangible. Property and Equipment

55,757

55,238

1%

62,211

-10%

Investments

1,996,279

1,986,262

1%

1,975,988

1%

Total Assets

5,610,629

5,734,793

-2%

6,279,230

-11%

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Loans and financing

631,675

622,546

1%

598,530

6%

Debentures

270,656

255,771

6%

306,680

-12%

Obligations for Purchase of Land and

advances from customers

230,667

221,710

4%

253,741

-9%

Significant and service suppliers

39,040

42,903

-9%

55,790

-30%

Taxes and Contribution

13,520

23,370

-42%

59,703

-77%

Investor Obligations

3,143

2,375

32%

6,654

-53%

Other

349,343

383,128

-9%

402,894

-13%

 

1,538,044

1,551,803

-1%

1,683,992

-9%

Non-current liabilities

 

 

 

 

 

Loans and financings

661,785

619,501

7%

684,593

-3%

Debentures

286,497

307,797

-7%

550,378

-48%

Obligations for Purchase of Land and

advances from customers

45,307

87,646

-48%

88,183

-49%

Deferred taxes

10,085

10,226

-1%

19,454

-48%

Provision for legal claims and commitments

87,258

107,443

-19%

79,342

10%

Investor Obligations

-

-

0%

2,280

-100%

Other

51,572

47,750

8%

56,823

-9%

 

1,142,504

1,180,363

-3%

1,481,053

-23%

Equity

 

 

 

 

 

Equity attributable to Shareholders of the Company

2,926,449

2,998,074

-2%

3,110,912

-6%

Equity attributable to non-controlling interest

3,632

4,553

-20%

3,273

11%

 

2,930,081

3,002,627

-2%

3,114,185

-6%

Total Liabilities and Equity attributable

5,610,629

5,734,793

-2%

6,279,230

-11%

 

 

56


 
 

 

Balance Sheet Tenda Segment

 

3Q16

2Q16

Q/Q %)

3Q15

Y/Y(%)

Current Assets

 

 

 

 

 

Cash and cash equivalents

60,777

116,547

-48%

27,372

122%

Short term investments

193,732

197,671

-2%

297,867

-35%

Receivables from clients

348,383

412,709

-16%

464,720

-25%

Properties for sale

539,537

503,352

7%

459,852

17%

Other accounts receivable

104,856

104,090

1%

94,677

11%

Land for sale

71,310

84,060

-15%

127,242

-44%

 

1,318,595

1,418,429

-7%

1,471,730

-10%

Non-current Assets

 

 

 

 

 

Receivables from clients

126,254

67,530

87%

46,181

173%

Properties for sale

199,559

216,894

-8%

176,261

13%

Other

58,091

48,649

19%

63,286

-8%

 

383,904

333,073

15%

285,728

34%

Intangible, Property and Equipment

46,294

44,516

4%

38,810

19%

Investments

153,298

160,295

-4%

168,137

-9%

Total Assets

1,902,091

1,956,313

-3%

1,964,405

-3%

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Loans and financing

19,298

11,236

72%

5,390

258%

Debentures

102,793

174,475

-41%

216,374

-52%

Obligations for Purchase of Land and

Advances from customers

138,362

138,672

0%

129,169

7%

Significant and service suppliers

26,978

34,818

-23%

23,006

17%

Taxes and Contributions

68,157

65,564

4%

86,645

-21%

Other

70,814

65,201

9%

70,412

1%

 

426,402

489,966

-13%

530,996

-20%

Non-current liabilities

 

 

 

 

 

Loans and financings

77,307

80,634

-4%

22,760

240%

Debentures

-

-

0%

100,000

-100%

Obligations for Purchase of Land and

Advances from customers

85,842

97,870

-12%

71,044

21%

Deferred taxes

12,088

10,224

18%

2,725

344%

Provision for legal claims and commitments

51,768

52,760

-2%

56,528

-8%

Other

90,617

83,217

9%

42,610

113%

 

317,622

324,705

-2%

295,667

7%

Equity

 

 

 

 

 

Equity attributable to Shareholders of the Company

1,128,446

1,104,912

2%

1,103,393

2%

Equity attributable to non-controlling interest

29,621

36,730

-19%

34,349

-14%

 

1,158,067

1,141,642

1%

1,137,742

2%

Total Liabilities and Equity attributable

1,902,091

1,956,313

-3%

1,964,405

-3%

 

 

57


 
 

 

Consolidated Balance Sheets

 

3Q16

2Q16

Q/Q %)

3Q15

Y/Y(%)

Current Assets

 

 

 

 

 

Cash and cash Equivalents

161,340

157,737

2%

67,882

138%

Short term investments

448,558

460,832

-3%

853,946

-47%

Receivables from clients

1,129,351

1,285,892

-12%

1,488,988

-24%

Proprieties for Sale

2,118,652

2,063,670

3%

1,771,950

20%

Other accounts receivable

200,529

206,532

-3%

226,417

-11%

Prepaid expenses and others

5,811

5,255

11%

7,876

-26%

Land for Sale

74,753

87,503

-15%

133,317

-44%

 

4,138,994

4,267,421

-3%

4,550,376

-9%

Non-current Assets

 

 

 

 

 

Receivable from clients

440,056

354,931

24%

487,007

-10%

Properties for sale

523,895

629,811

-17%

715,436

-27%

Other

158,146

192,631

-18%

204,748

-23%

 

1,122,097

1,177,373

-5%

1,407,191

-20%

Intangible and Property and Equipment

127,527

125,230

2%

126,498

1%

Investments

964,700

978,100

-1%

975,459

-1%

Total Assets

6,353,318

6,548,124

-3%

7,059,524

-10%

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Loans and Financing

650,973

633,782

3%

603,920

8%

Debentures

373,449

430,246

-13%

523,054

-29%

Obligations for purchase of land and

Advances from customers

369,029

360,382

2%

382,910

-4%

Significants and service suppliers

66,018

77,721

-15%

78,796

-16%

Taxes and contributions

81,677

88,934

-8%

114,613

-29%

Other

423,298

450,702

-6%

485,738

-13%

 

1,964,444

2,041,767

-4%

2,189,031

-10%

Non-current Liabilities

 

 

 

 

 

Loans and Financing

739,092

700,135

6%

707,353

4%

Debentures

286,497

307,797

-7%

650,378

-56%

Obligations for purchase of land and

Advances from customers

131,149

185,516

-29%

159,228

-18%

Deferred taxes

22,173

20,450

8%

22,179

0%

Provision for legal claims and commitments

139,026

160,203

-13%

139,879

-1%

Other

142,188

130,966

9%

78,867

80%

 

1,460,125

1,505,067

-3%

1,757,884

-17%

Equity

 

 

 

 

 

Equity attributable to Shareholders of the Company

2,926,451

2,998,075

-2%

3,110,914

-6%

Equity attributable to non-controlling interest

2,298

3,215

-29%

1,695

36%

 

2,928,749

3,001,290

-2%

3,112,609

-6%

Total Liabilities and Equity attributable

6,353,318

6,548,124

-3%

7,059,524

-10%

 

 

58


 
 

 

Cash Flow

 

3Q16

3Q15

9M16

9M15

Income Before Taxes on Income and Social Contribution

(68,076)

10,263

(142,570)

73,753

Expenses/income not affecting cash and cash equivalents

67,934

90,095

192,579

226,458

Depreciation and amortization

11,069

12,444

32,451

35,674

Provision for realization of non - financial assets - Properties and land for sale

(2,075)

(6,828)

(19,296)

(2,453)

Expense with stock option plan and shares

2,806

2,464

6,557

7,465

Provision for penalty for over delayed projects

(1,684)

337

(953)

(606)

Unrealized interest and financial charges

42,041

22,091

94,769

59,754

Equity income

6,678

(2,057)

1,776

(13,657)

Disposal of fixed asset

448

(112)

3,801

946

Provision for guarantee

(1,871)

(288)

(11,837)

8,541

Provision for legal claims and commitments

20,982

31,518

64,928

87,006

Provision for profit share

10,353

13,411

22,821

25,449

Allowance for doubtful accounts and dissolutions

(19,503)

3,955

11,088

3,150

Write-off of Investment

-

(104)

-

(2,421)

Income from financial instruments

(1,310)

13,264

(13,526)

17,610

Customers

86,347

(64,381)

216,811

(142,415)

Properties for sale

60,471

19,664

23,102

(23,453)

Other accounts receivable

9,343

17,181

(17,657)

1,278

Pre-paid expenses

(556)

2,418

1,360

7,568

Obligations on land purchase and advances from customers

(45,720)

(19,702)

(109,756)

(49,604)

Taxes and contribution

(7,257)

7,130

(20,380)

189

Providers

(11,703)

(30,221)

8,683

(16,335)

Salaries and payroll charges

2,878

(805)

(18,451)

(18,202)

Other liabilities

(87,200)

(28,344)

(102,883)

(85,356)

Related parties transactions

63,890

26,487

82,128

16,465

Paid taxes

(3,961)

3,150

(19,679)

(3,256)

Net cash from Operating Activities

66,390

32,935

93,287

(12,910)

Investments Activities

 

 

 

 

Purchase of property and equipment and intangible assets

(13,814)

(15,140)

(37,261)

(37,523)

Investments in subsidiaries

(2,628)

(192)

(15,267)

(1,154)

Redemption of short-term investments

929,357

1,964,858

2,838,803

4,097,940

Purchase of short-term investments

(917,083)

(2,096,220)

(2,657,690)

(3,904,527)

Net cash from investing activities

(4,168)

(146,694)

128,585

154,736

Financing activities

 

 

 

 

Investor obligations

768

1,638

(1,752)

(2,096)

Increase in loans and financing

262,863

261,265

704,252

643,937

Amortization of loans and financing

(326,853)

(231,450)

(899,803)

(805,510)

Buyback of treasury shares

(498)

(2,022)

(8,693)

(24,157)

Assignment of credit receivables, net

12,019

-

53,828

-

Loan Operations with related parts

(6,922)

(2,024)

8,987

3,388

Sale of treasury shares

919

1,212

2,149

3,023

Result from the sale of treasury shares

(915)

(1,207)

(2,140)

(2,424)

Net cash from financing activities

(58,619)

27,412

(143,172)

(183,839)

Increase (decrease) in cash and cash equivalents

3,603

(86,347)

78,700

(42,013)

Opening balance of cash and cash equivalents

82,640

154,229

82,640

109,895

Closing balance of cash and cash equivalents

161,340

67,882

161,340

67,882

Increase (decrease) in cash and cash equivalents

3,603

(86,347)

78,700

(42,013)

 

59


 
 

 

About Gafisa

 

Gafisa is one Brazil’s leading residential and commercial properties development and construction companies. Founded over 60 years ago, the Company is dedicated to growth and innovation oriented to enhancing the  well-being, comfort and safety of an increasing number of households. More than 15 million square meters have been built, and approximately 1,100 projects delivered under the Gafisa brand - more than any other company in Brazil. Recognized as one of the foremost professionally managed homebuilders, Gafisa’s brand is also one of the most respected, signifying both quality and consistency. In addition to serving the upper-middle and upper class segments through the Gafisa brand, the Company also focuses on low income developments through its Tenda brand. And, it participates through its 30% interest in Alphaville, a leading urban developer, in the national development and sale of residential lots.  Gafisa S.A. is a Corporation traded on the Novo Mercado of the BM&FBOVESPA (BOVESPA:GFSA3) and is the only Brazilian homebuilder listed on the New York Stock Exchange (NYSE:GFA) with an ADR Level III, which ensures best practices in terms of transparency and corporate governance.

 

This release contains forward-looking statements about the business prospects, estimates for operating and financial results and Gafisa’s growth prospects. These are merely projections and, as such, are based exclusively on the expectations of management concerning the future of the business and its continued access to capital to fund the Company’s business plan. Such forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors; therefore, they are subject to change without prior notice.

 

 

60


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

1.    Operations

 

Gafisa S.A. ("Gafisa" or "Company") is a publicly traded company with registered office at Avenida das Nações Unidas, 8501, 19th floor, in the city and state of São Paulo, Brazil and commenced its operations in 1997 with the objectives of: (i) promoting and managing all forms of real estate ventures on its own behalf or for third parties (in the latter case, as construction company and proxy); (ii) selling and purchasing real estate properties; (iii) providing civil construction and civil engineering services; (iv) developing and implementing marketing strategies related to its own and third party real estate ventures; and (v) investing in other companies that share similar objectives.

 

The Company has stocks traded at BM&FBovespa S.A. – Bolsa de Valores, Mercadorias e Futuros and the New York Stock Exchange (NYSE), reporting its information to the Brazilian Securities Commission (CVM) and the U.S. Securities and Exchange Commission (SEC).

 

The Company enters into real estate development projects with third parties through specific purpose partnerships (“Sociedades de Propósito Específico” or “SPEs”) or through the formation of consortia and condominiums. Controlled entities substantially share managerial and operating structures, and corporate, managerial and operating costs with the Company. SPEs, condominiums and consortia operate solely in the real estate industry and are linked to specific ventures.

 

On October 19, 2016, the Company disclosed a material fact informing to its shareholders and the market in general that the members of Gafisa’s Board of Directors approved the request for registration with the CVM of a public offering for the secondary distribution of registered, book-entry, common shares, with no par value, issued by subsidiary Tenda and owned by Gafisa. Additionally, on the same date it was approved, in the Shareholders’ Meeting of Tenda, the submission of the application for listing the stocks it issues in the Novo Mercado segment of BM&FBovespa S.A. – Bolsa de Valores, Mercadorias e Futuros (Note 31(iii)).

 

 

61


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

2.    Presentation of quarterly information and summary of significant accounting policies

 

2.1.    Basis of presentation and preparation of individual and consolidated quarterly information

 

On November 8, 2016, the Company’s Board of Directors approved these individual and consolidated quarterly information of the Company and authorized their disclosure.

 

The individual quarterly information (Company) and consolidated quarterly information were prepared and are being presented based on the technical pronouncement CPC 21(R1) – Interim Financial Reporting, using the same accounting practices, judgments, estimates and assumptions adopted in the presentation and preparation of the financial statements for the year ended December 31, 2015. Therefore, the corresponding quarterly information shall be read together with the financial statements as of December 31, 2015.

 

The individual quarterly information, identified as “Company”, has been prepared and is being presented according to the accounting practices adopted in Brazil, including the pronouncements issued by the Accounting Pronouncement Committee (CPC), approved by the Brazilian Securities Commission (CVM) and are disclosed together with the consolidated quarterly information.

 

The consolidated quarterly information of the Company has been prepared and is being presented according to the accounting practices adopted in Brazil, including the pronouncements issued by the CPC, approved by the Brazilian Securities Commission (CVM), and according to the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), applicable to real estate development entities in Brazil, including the Guideline OCPC 04 - Application of the Technical Interpretation ICPC 02 to the Brazilian Real Estate Development Entities, in relation to the treatment of the recognition of revenue from this sector and involves certain matters related to application of the continuous transfer of the risks, rewards and control over the real estate units sold.

 

The individual quarterly information of the Company is not considered in compliance with the International Financial Reporting Standards (IFRS), once it considers the capitalization of interest on qualifying assets of investees in the separate quarterly information of the Company. In view of the fact that there is no difference between the Company’s and the consolidated equity and profit or loss, the Company opted for presenting the accompanying individual and consolidated information in only one set.

 

 

 

 


 

62


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

2.    Presentation of quarterly information and summary of significant accounting policies--Continued

 

2.1.    Basis of presentation and preparation of individual and consolidated quarterly information--Continued

 

The quarterly information has been prepared on a going concern basis. Management makes an assessment of the Company’s ability to continue as going concern when preparing the quarterly information.

All amounts reported in the accompanying quarterly information are in thousands of Reais, except as otherwise stated.

The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 2.1 to the individual and consolidated financial statements as of December 31, 2015.

 

 

2.1.1.    Consolidated quarterly information

 

The accounting practices were uniformly adopted in all subsidiaries included in the consolidated quarterly information and the fiscal year of these companies is the same of the Company. See further details in Note 9.

The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 2.1.1 to the individual and consolidated financial statements as of December 31, 2015.

 

 

3.    New standards, changes and interpretation of standards issued and not yet adopted

 

 

There is no other standard, change to standards or interpretation issued and not yet adopted that could, on the Management’s opinion, have significant impact arising from its adoption on its quarterly information.

 

The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 3 to the individual and consolidated financial statements as of December 31, 2015.

 

 

 

 

63


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

4.    Cash and cash equivalents and short-term investments

 

4.1.    Cash and cash equivalents

 

 

Company

Consolidated

 

09/30/2016

12/31/2015

09/30/2016

12/31/2015

 

 

 

 

 

Cash and banks

9,696

31,823

64,321

69,560

Securities purchased under resale agreements (a)

63,552

12,221

64,183

13,080

Funds deposited with third parties (b)

-

-

32,836

-

Total cash and cash equivalents (Note 20.ii.a and 20.iii)

73,248

44,044

161,340

82,640

 

(a)     As of September 30, 2016, the securities purchased under resale agreement include interest earned through the balance sheet date, ranging from 65% to 100% of Interbank Deposit Certificates (CDI) (from 75% to 100.5% of CDI in 2015). All investments are carried out with what management considers being top tier financial institutions.

 

(b)     Amount deposited with Itaú Corretora de Valores S.A., for settling, on October 03, 2016, the 17th interest installment and the 11th amortization installment related to the first debenture placement of the subsidiary Tenda (Note 31 (i)).

 

          The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 4.1 to the financial statements as of December 31 2015.

 

4.2.    Short-term investments

 

 

Company

Consolidated

 

09/30/2016

12/31/2015

09/30/2016

12/31/2015

 

 

 

 

 

Fixed-income funds

81,431

192,409

139,630

279,486

Government bonds (LFT)

5,431

10,081

15,509

18,631

Corporate securities (LF/DPGE)

19,447

51,835

55,538

95,801

Securities purchased under resale agreements (Note 4.1. (a))

10,856

11,890

22,493

25,548

Bank certificates of deposit (a)

35,343

54,491

99,872

101,733

Restricted cash in guarantee to loans

27,041

20,515

27,073

31,633

Restricted credits

5,816

9,122

88,443

76,839

Total short-term investments (Note 20.i.d, 20.ii.a and 20.iii)

185,365

350,343

448,558

629,671

         

 

(a)   As of September 30, 2016, Bank Certificates of Deposit (CDBs) include interest earned through the balance sheet date, varying from 72% to 104.5% (from 90% to 107% in 2015) of Interbank Deposit Certificates (CDI) rate. The CDBs earn an average income higher than those of securities purchased under resale agreements; however, the Company invests in short term (up to 20 working days) through securities purchased under resale agreements taking into account the exemption of IOF, which is not granted in the case of CDBs. 

 

          The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 4.2 to the financial statements as of December 31, 2015.

 

 

 

64


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

5.         Trade accounts receivable of development and services

 

 

Company

Consolidated

 

09/30/2016

12/31/2015

09/30/2016

12/31/2015

 

 

 

 

 

Real estate development and sales

811,221

1,001,351

1,634,510

1,895,795

( - ) Allowance for doubtful accounts and cancelled contracts

(20,236)

(12,365)

(96,250)

(100,530)

( - ) Present value adjustments

(16,777)

(21,527)

(28,827)

(31,052)

Services and construction and other receivables

32,818

18,583

59,974

38,151

Total trade accounts receivable of development and services

(Note 20.ii.a)

807,026

986,042

1,569,407

1,802,364

 

 

 

 

Current portion

608,837

723,950

1,129,351

1,395,273

Non-current portion

198,189

262,092

440,056

407,091

 

The current and non-current portions have the following maturities:

 

 

Company

Consolidated

Maturity

09/30/2016

12/31/2015

09/30/2016

12/31/2015

 

 

 

 

 

Overdue:

 

 

 

 

Up to 90 days

51,960

116,229

78,201

207,838

From 91 to 180 days

10,687

14,568

32,515

50,985

Over 180 days (a)

85,704

74,727

276,577

290,247

 

148,351

205,524

387,293

549,070

 

 

 

 

 

Maturity:

 

 

 

 

2016

199,059

543,781

348,600

925,543

2017

288,980

148,568

596,581

286,138

2018

97,799

62,256

168,620

83,266

2019

80,528

20,254

137,503

34,518

2020 onwards

29,322

39,551

55,887

55,411

 

695,688

814,410

1,307,191

1,384,876

 

 

 

 

 

( - ) Adjustment to present value

(16,777)

(21,527)

(28,827)

(31,052)

( - ) Allowance for doubtful account and cancelled contracts

(20,236)

(12,365)

(96,250)

(100,530)

 

807,026

986,042

1,569,407

1,802,364

 

(a)   Of the amount more than 180 days past due in the Consolidated balance, R$45,569 refers to the amounts in process of transfer from subsidiary Tenda to financial institutions (R$69,464 in 2015).

 

The change in the allowance for doubtful accounts and cancelled contracts for the period ended September 30, 2016 is summarized as follows:

 

 

 

Company

09/30/2016

 

 

Balance at December 31, 2015

(12,365)

Additions (Note 22)

(8,270)

Write-offs (Note 22)

399

Balance at September 30, 2016

(20,236)

 

 

Consolidated

 

Receivables

Properties for

sale (Note 6)

Net

 

 

 

Balance at December 31, 2015

(100,530)

21,764

(78,766)

Additions (Note 22 and 23)

(8,270)

-

(8,270)

Write-offs (Note 22 and 23)

12,550

(15,368)

(2,818)

Balance at September 30, 2016

(96,250)

6,396

(89,854)

 

 

 

 

65


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

5.    Trade accounts receivable of development and services--Continued

 

In the period ended September 30, 2016, the Company entered into the following Real Estate Receivables Agreement (CCI) transactions, which are aimed at the assignment by the assignor to the assignee of a portfolio comprising select business real estate receivables performed and to be performed arising out of Gafisa and its subsidiaries. The assigned portfolio, discounted to present value, is recorded under the heading “obligations assumed on the assignment of receivables”.

 

Transaction date

Assigned
accounting

portfolio

Portfolio discounted to present value

Transaction balance at September 30, 2016 (Note 14)

Company

Consolidated

 

 

 

 

 

03/04/2016

27,954

27,334

19,510

23,203

05/09/2016

17,827

17,504

12,328

15,573

08/16/2016 (a)

15,418

14,943

9,301

9,301

         

 

(a)     The consolidated balance of the transaction as of September 30, 2016 (Note 14) does not include joint ventures, which are recorded under the equity method, according to the CPCs 18(R2) and 19(R2).

 

In the transactions above, the Company and its subsidiaries are jointly responsible until the time of the transfer of the conditional sale to the securitization company.

 

The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 5 to the financial statements as of December 31, 2015.

 

6.    Properties for sale

 

 

Company

Consolidated

 

09/30/2016

12/31/2015

09/30/2016

12/31/2015

 

 

 

 

 

Land

663,169

775,814

1,347,759

1,443,460

( - ) Adjustment to present value

(8,194)

(9,639)

(21,333)

(16,771)

Property under construction

379,105

545,701

723,933

857,619

Real estate cost in the recognition of the provision

for cancelled contracts (Note 5)

-

-

6,396

21,764

Completed units

497,708

216,073

594,283

333,036

( - ) Provision for realization of properties for sale

(5,437)

(5,437)

(8,491)

(8,491)

Total properties for sale

1,526,351

1,522,512

2,642,547

2,630,617

 

 

 

 

Current portion

1,321,927

1,135,137

2,118,652

1,880,377

Non-current portion

204,424

387,375

523,895

750,240

 

In the period ended  September 30, 2016, there was no change in the provision for impairment of properties for sale.

 

The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 6 to the financial statements as of December 31, 2015.

 

7.    Other accounts receivable and others

 

 

Company

Consolidated

 

09/30/2016

12/31/2015

09/30/2016

12/31/2015

 

 

 

 

 

Advances to suppliers

4,521

1,578

8,744

7,102

Recoverable taxes (IRRF, PIS, COFINS, among other)

15,936

20,712

60,650

66,289

Judicial deposit (Note 16)

112,258

105,275

138,822

125,358

Other

3

4

4,518

4,788

Total other accounts receivable and others

132,718

127,569

212,734

203,537

 

 

 

 

Current portion

47,265

46,621

120,032

120,657

Non-current portion

85,453

80,948

92,702

82,880

 

 

 

 

66


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

8.    Assets held for sale

 

8.1 Land available for sale

        

       The changes in land available for sale are summarized as follows:

 

 

Company

Consolidated

 

Cost

Provision for impairment

Net balance

Cost

Provision for impairment

Net balance

 

 

 

 

 

 

 

Balance at December 31, 2015

19,457

(15,090)

4,367

147,673

(41,816)

105,857

Additions

2,264

-

2,264

4,489

-

4,489

Transfer from (to) properties for sale, net

-

-

-

(38,451)

-

(38,451)

Reversal/Write-offs

(9,490)

6,302

(3,188)

(16,438)

19,296

2,858

Balance at September 30, 2016

12,231

(8,788)

3,443

97,273

(22,520)

74,753

 

 

 

 

 

 

Gafisa segment

 

 

 

12,231

(8,788)

3,443

Tenda segment

 

 

 

85,042

(13,732)

71,310

 

The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 8.1 to the financial statements as of December 31, 2015.

 

67


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

9.    Investments in subsidiaries and jointly controlled investees

 

(i)      Ownership interest

 

(a)     Information on subsidiaries and jointly-controlled investees

 

 

 

 

 

 

 

 

 

 

 

Company

Consolidated

 

 

Interest in capital - %

Total assets

Total liabilities

Equity and advance for future capital increase

Profit (loss) for the period

Investments

Income from equity method investments

Investments

Income from equity method investments

Direct investees

 

09/30/2016

12/31/2015

09/30/2016

09/30/2016

09/30/2016

12/31/2015

 

09/30/2016

09/30/2015

09/30/2016

12/31/2015

09/30/2016

09/30/2015

09/30/2016

12/31/2015

09/30/2016

09/30/2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construtora Tenda S/A

-

100%

100%

1,807,568

679,122

1,128,446

1,090,935

 

36,461

43,311

1,128,446

1,090,935

36,461

44,389

-

-

-

-

Alphaville Urbanismo S.A

-

30%

30%

2,729,170

2,034,751

694,419

728,519

 

(34,100)

57,724

208,326

218,556

(10,230)

23,353

208,326

218,556

(10,230)

23,353

Gafisa SPE 26 Ltda.

-

100%

100%

177,036

10,018

167,018

167,361

 

(343)

495

167,018

167,361

(343)

495

-

-

-

-

Gafisa SPE- 130 Emp. Imob. Ltda.

-

100%

100%

154,595

72,615

81,980

53,323

 

4,890

4,043

81,980

53,323

4,890

4,043

-

-

-

-

Gafisa SPE-116 Emp. Imob. Ltda.

(a)

50%

50%

187,263

61,549

125,714

103,372

 

22,342

15,707

62,857

51,686

11,171

7,854

62,857

51,686

11,171

7,854

Gafisa SPE-111 Emp. Imob. Ltda.

-

100%

100%

119,802

57,292

62,510

79,764

 

(17,254)

14,594

62,510

79,764

(17,254)

14,594

-

-

-

-

Maraville Gafsa SPE Emp. Imob. Ltda.

-

100%

100%

109,039

51,560

57,479

48,883

 

8,596

1,255

57,479

48,883

8,596

1,255

-

-

-

-

Gafisa SPE-89 Emp. Imob. Ltda.

-

100%

100%

81,234

27,011

54,223

60,362

 

(2,939)

1,507

54,223

60,362

(2,939)

1,507

-

-

-

-

Gafisa SPE - 127 Emp. Imob. Ltda.

-

100%

100%

99,027

52,124

46,903

35,718

 

786

6,224

46,903

35,718

786

6,224

-

-

-

-

Gafisa SPE-51 Emp. Imob. Ltda.

-

100%

100%

54,312

7,970

46,342

46,825

 

(484)

543

46,342

46,825

(484)

543

-

-

-

-

Gafisa SPE - 121 Emp. Imob. Ltda.

-

100%

100%

90,971

45,756

45,215

46,897

 

(1,682)

17,334

45,215

46,897

(1,682)

17,334

-

-

-

-

Gafisa SPE 72 Emp. Imob. Ltda.

-

100%

100%

55,559

11,354

44,205

44,275

 

(70)

231

44,205

44,275

(70)

231

-

-

-

-

Gafisa SPE - 122 Emp. Imob. Ltda.

-

100%

100%

135,238

91,389

43,849

31,624

 

9,269

10,451

43,849

31,624

9,269

10,451

-

-

-

-

Gafisa SPE-110 Emp. Imob. Ltda.

-

100%

100%

44,784

4,686

40,098

40,879

 

(781)

(1,175)

40,098

40,879

(781)

(1,175)

-

-

-

-

Gafisa SPE - 120 Emp. Imob. Ltda.

-

100%

100%

41,911

4,388

37,523

36,621

 

903

6,163

37,523

36,621

903

6,163

-

-

-

-

Manhattan Square Em. Im. Res. 02 Ltda

-

100%

100%

36,059

635

35,424

35,424

 

-

(1)

35,424

35,424

-

-

-

-

-

-

SPE Parque Ecoville Emp. Imob. Ltda

-

100%

100%

90,098

55,299

34,799

34,984

 

(185)

(1,620)

34,799

34,984

(185)

(1,620)

-

-

-

-

Gafisa SPE-104 Emp. Imob. Ltda.

-

100%

100%

93,554

63,244

30,310

3,428

 

628

(918)

30,310

3,428

628

(918)

-

-

-

-

Gafisa SPE- 129 Emp. Imob. Ltda.

-

100%

100%

69,180

39,181

29,999

24,012

 

5,987

4,102

29,999

24,012

5,987

4,102

-

-

-

-

Gafisa SPE-107 Emp. Imob. Ltda.

-

100%

100%

32,557

3,031

29,526

29,442

 

84

95

29,526

29,442

84

95

-

-

-

-

Gafisa SPE-41 Emp. Imob. Ltda.

-

100%

100%

28,197

1,634

26,563

26,469

 

93

75

26,563

26,469

93

75

-

-

-

-

Verdes Pracas Incorp. Imob. SPE Ltda.

-

100%

100%

26,034

82

25,952

26,225

 

(273)

(7)

25,952

26,225

(273)

(7)

-

-

-

-

Gafisa E Ivo Rizzo SPE-47 Em. Im. Ltda.

(a)

80%

80%

32,612

479

32,133

31,749

 

5

(27)

25,706

25,399

4

(22)

25,706

25,399

4

(22)

Gafisa SPE - 126 Emp. Imob. Ltda.

-

100%

100%

73,618

50,665

22,953

22,834

 

118

5,487

22,953

22,834

118

5,487

-

-

-

-

Varandas Grand Park Em. Im. Spe Ltda

(a)(c)

50%

50%

109,533

63,749

45,784

43,587

 

(750)

(280)

22,892

21,794

101

(745)

22,892

21,794

101

(745)

Gafisa SPE-112 Emp. Imob. Ltda.

-

100%

100%

29,643

7,948

21,695

21,736

 

(42)

(429)

21,695

21,736

(42)

(429)

-

-

-

-

Gafisa SPE-134 Emp. Imob. Ltda.

-

100%

100%

43,092

23,237

19,855

2,083

 

429

2,175

19,855

2,083

429

2,204

-

-

-

-

Sitio Jatiuca Emp. Imob. SPE Ltda

(a)

50%

50%

43,229

4,225

39,004

41,470

 

3,934

2,555

19,502

20,735

1,967

1,278

19,502

20,735

1,967

1,278

Manhattan Square Em. Im. Com. 02 Ltda

-

100%

100%

17,958

-

17,958

17,955

 

-

(1)

17,958

17,955

-

(1)

-

-

-

-

Gafisa SPE 46 Emp. Imob. Ltda.

-

100%

100%

30,930

13,031

17,899

17,740

 

160

219

17,899

17,740

160

219

-

-

-

-

Parque Arvores Empr. Imob. Ltda.

(a)(c)

50%

50%

38,984

4,672

34,312

33,378

 

922

1,540

17,156

16,689

467

1,652

17,156

16,689

467

1,652

Gafisa SPE 30 Emp. Imob. Ltda.

-

100%

100%

63,787

47,439

16,348

16,196

 

152

16

16,348

16,196

152

16

-

-

-

-

Edsp 88 Participações S.A.

-

100%

100%

31,132

14,816

16,316

17,454

 

(1,138)

(1,145)

16,316

17,454

(1,138)

(1,145)

-

-

-

-

Gafisa SPE-92 Emp. Imob. Ltda.

-

100%

100%

16,739

1,111

15,628

15,474

 

155

169

15,628

15,474

155

169

-

-

-

-

Gafisa SPE-106 Emp. Imob. Ltda.

-

100%

100%

16,661

1,055

15,606

15,623

 

(17)

(13)

15,606

15,623

(17)

(13)

-

-

-

-

Diodon Participações Ltda

-

100%

100%

17,897

2,924

14,973

14,962

 

10

(80)

14,973

14,962

10

(80)

-

-

-

-

Gafisa SPE 71 Emp. Imob. Ltda.

-

100%

100%

16,385

2,421

13,964

14,060

 

(96)

58

13,964

14,060

(96)

58

-

-

-

-

Gafisa SPE- 132 Emp. Imob. Ltda.

-

100%

100%

55,752

41,954

13,798

-

 

(311)

(1)

13,798

-

(311)

(1)

-

-

-

-

Gafisa SPE 33 Emp. Imob. Ltda.

-

100%

100%

15,222

2,006

13,216

13,385

 

(168)

(859)

13,216

13,385

(168)

(859)

-

-

-

-

Gafisa SPE - 123 Emp. Imob. Ltda.

-

100%

100%

91,856

79,416

12,440

15,683

 

(3,243)

(6,605)

12,440

15,683

(3,243)

(6,605)

-

-

-

-

Gafisa SPE 65 Emp. Imob. Ltda.

-

100%

100%

20,038

8,335

11,703

11,601

 

102

172

11,703

11,602

102

172

-

-

-

-

Alto da Barra Sao Miguel Em. Im. Ltda

(a)

50%

50%

24,441

1,469

22,972

23,505

 

(534)

848

11,486

11,752

(267)

424

11,486

11,752

(267)

424

Blue I SPE-Plan. Prom.,Inc. e Venda Ltd

-

100%

100%

11,576

608

10,968

11,051

 

(83)

194

10,968

11,051

(83)

194

-

-

-

-

Città Ville SPE Emp. Imob. Ltda.

(b)

50%

50%

22,141

641

21,500

22,195

 

(696)

794

10,750

11,098

(348)

397

-

-

-

-

Fit 13 Spe Empr. Imob. Ltda.

(b)

50%

50%

23,367

2,483

20,884

34,487

 

(13,604)

424

10,442

17,244

(6,802)

212

3,556

17,840

283

429

 

 

 

 

 

68


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

9.      Investments in subsidiaries and jointly controlled investees--Continued

 

(i)      Ownership interest--Continued

 

(a)     Information on subsidiaries and jointly-controlled investees --Continued

 

 

 

 

 

 

 

 

 

 

 

Company

Consolidated

 

 

Interest in capital - %

Total assets

Total liabilities

Equity and advance for future capital increase

Profit (loss) for the period

Investments

Income from equity method investments

Investments

Income from equity method investments

Direct investees

 

09/30/2016

12/31/2015

09/30/2016

09/30/2016

09/30/2016

12/31/2015

 

09/30/2016

09/30/2015

09/30/2016

12/31/2015

09/30/2016

09/30/2015

09/30/2016

12/31/2015

09/30/2016

09/30/2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gafisa SPE 36 Emp. Imob. Ltda.

-

100%

100%

26,059

17,117

8,942

8,857

 

85

770

8,942

8,857

85

770

-

-

-

-

Gafisa SPE-81 Emp. Imob. Ltda.

-

100%

100%

85,785

77,037

8,748

8,978

 

(230)

3,078

8,748

8,978

(230)

3,078

-

-

-

-

Atins Emp. Imob.s Ltda.

(a)

50%

50%

30,632

13,326

17,306

15,777

 

(836)

(33)

8,653

7,888

(418)

(17)

8,653

7,888

(418)

(17)

Parque Aguas Empr. Imob. Ltda.

(a)(c)

50%

50%

17,386

1,438

15,948

15,263

 

1,075

715

7,974

7,632

343

343

7,974

7,632

343

343

Gafisa SPE-38 Emp. Imob. Ltda.

-

100%

100%

8,020

58

7,962

7,968

 

(6)

(5)

7,962

7,967

(6)

(5)

-

-

-

-

Gafisa SPE-109 Emp. Imob. Ltda.

-

100%

100%

8,992

1,835

7,157

7,189

 

(32)

(80)

7,157

7,189

(32)

(80)

-

-

-

-

Gafisa SPE-113 Emp. Imob. Ltda.

(a)

60%

60%

63,610

51,868

11,742

7,521

 

(9,375)

(8,999)

7,045

4,513

(5,625)

(5,399)

7,045

4,513

(5,625)

(5,399)

Gafisa SPE-37 Emp. Imob. Ltda.

-

100%

100%

7,842

1,075

6,767

6,727

 

40

85

6,767

6,727

40

85

-

-

-

-

Gafisa SPE-77 Emp. Imob. Ltda.

-

65%

65%

21,436

11,059

10,377

9,552

 

5,076

1,200

6,745

6,209

3,390

2,153

-

-

-

-

Gafisa SPE-90 Emp. Imob. Ltda.

-

100%

100%

11,402

4,926

6,476

6,477

 

(1)

(51)

6,476

6,477

(1)

(51)

-

-

-

-

Dubai Residencial Empr. Imob. Ltda.

(a)(c)

50%

50%

11,691

563

11,128

10,562

 

339

435

5,564

5,281

283

(2,145)

5,564

5,281

283

(2,145)

Gafisa SPE-87 Emp. Imob. Ltda.

-

100%

100%

23,606

18,334

5,272

5,393

 

(121)

2,432

5,272

5,393

(121)

2,432

-

-

-

-

Performance Gafisa General Severiano Ltda

(a)

50%

0%

26,230

15,979

10,251

-

 

(1)

-

5,126

-

-

-

5,126

-

-

-

OCPC01 Adjustment – capitalized interests

(d)

 

 

-

-

-

-

 

-

-

32,245

31,675

570

5,389

-

-

-

-

Other (*)

-

 

 

294,141

199,105

95,037

99,897

 

(5,164)

(8,160)

72,579

78,065

(1,335)

(5,777)

27,712

16,481

(184)

(3,082)

Subtotal

 

 

 

7,746,613

4,163,095

3,583,519

3,463,711

 

8,082

176,731

2,910,056

2,779,093

32,720

142,346

433,555

426,246

(2,105)

23,923

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Indirect investees - Gafisa:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Saí Amarela S.A.

(a)

50%

50%

2,064

118

1,946

2,314

 

(306)

(116)

-

-

-

-

973

1,126

(153)

(58)

Gafisa SPE-51 Emp. Imob. Ltda.

(a)

60%

60%

1,402

42

1,360

1,662

 

316

880

-

-

-

-

816

997

190

528

Other (*)

 

 

 

441

31

410

466

 

352

(734)

-

-

-

-

205

73

172

(286)

Indirect jointly-controlled investees Gafisa

 

 

 

3,907

191

3,716

4,442

 

362

30

-

-

-

-

1,994

2,196

209

184

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Indirect investees - Tenda:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acedio SPE Emp. Imob. Ltda.

-

55%

55%

4,726

4,016

710

676

 

34

(1,320)

-

-

-

-

391

372

19

(726)

Maria Inês SPE Emp. Imob. Ltda.

-

60%

60%

21,367

187

21,180

21,050

 

154

39

-

-

-

-

12,708

12,630

92

23

Fit 02 SPE Emp. Imob. Ltda.

-

60%

60%

10,274

262

10,012

9,882

 

427

(2,262)

-

-

-

-

6,006

5,929

256

(1,357)

Fit Jardim Botânico SPE Emp. Imob. Ltda.

-

55%

55%

10,111

240

9,871

9,999

 

(229)

(5,519)

-

-

-

-

5,429

5,554

(126)

(3,035)

Fit 11 SPE Emp. Imob. Ltda.

-

70%

70%

34,941

6,334

28,607

32,062

 

(874)

211

-

-

-

-

20,025

22,443

(612)

147

Fit 31 SPE Emp. Imob. Ltda.

-

70%

70%

15,535

863

14,672

16,455

 

(1,617)

(2,342)

-

-

-

-

10,270

11,518

(1,132)

(1,639)

Fit 34 SPE Emp. Imob. Ltda.

-

70%

70%

35,408

1,242

34,166

33,634

 

547

1,530

-

-

-

-

23,916

23,544

383

1,072

Fit 03 SPE Emp. Imob. Ltda.

-

80%

80%

11,571

369

11,202

11,404

 

(202)

567

-

-

-

-

8,962

9,123

(162)

454

Imbuí I SPE Emp. Imob. Ltda.

-

50%

50%

9,295

275

9,020

8,723

 

298

(52)

-

-

-

-

4,510

4,362

149

(26)

Città Ipitanga SPE Emp. Imob. Ltda.

-

50%

50%

12,802

777

12,025

11,761

 

266

(223)

-

-

-

-

6,013

5,880

133

(111)

Grand Park - Pq. Pássaros Em. Im. Ltda.

-

50%

50%

39,896

2,972

36,924

22,466

 

1,680

4,476

-

-

-

-

18,462

11,233

840

2,237

Citta Itapua Emp. Imob. SPE Ltda.

-

50%

50%

18,679

1,587

17,092

18,015

 

(924)

(176)

-

-

-

-

8,546

9,007

(462)

(88)

SPE Franere Gafisa 08 Emp. Imob. LTDA.

-

50%

50%

55,145

6,137

49,008

47,831

 

704

19,980

-

-

-

-

24,504

23,916

352

9,990

Fit 13 SPE Emp. Imob. Ltda.

(b)

50%

50%

23,367

2,484

20,883

34,487

 

(13,604)

424

-

-

-

-

3,556

17,840

283

429

Other (*)

-

 

 

118,814

22,972

95,842

69,986

 

25,854

17,925

-

-

-

-

-

-

(1)

(4,055)

Indirect jointly-controlled investees - Tenda

-

 

 

421,931

50,717

371,214

348,431

 

12,514

33,258

-

-

-

-

153,298

163,351

12

3,315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 

 

 

8,266,974

4,308,525

3,958,449

3,816,584

 

20,958

210,019

2,910,056

2,779,093

32,720

142,346

588,847

591,793

(1,884)

27,422

 

 

 

 

 

69


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

 

9.    Investments in subsidiaries and jointly controlled investees--Continued

 

(i)      Ownership interest--Continued

 

(a)     Information on subsidiaries and jointly-controlled investees --Continued

 

 

 

 

 

 

 

 

 

 

 

 

Company

Consolidated

 

 

Interest in capital - %

Total assets

Total liabilities

Equity and advance for future capital increase

Profit (loss) for the period

Investments

Income from equity method investments

Investments

Income from equity method investments

Direct investees

 

09/30/2016

12/31/2015

09/30/2016

09/30/2016

09/30/2016

12/31/2015

 

09/30/2016

09/30/2015

09/30/2016

12/31/2015

09/30/2016

09/30/2015

09/30/2016

12/31/2015

09/30/2016

09/30/2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill on acquisition of subsidiaries

(e)

 

 

 

 

 

 

 

 

 

25,476

25,476

 

 

-

-

 

 

Goodwill based on inventory surplus

-

 

 

 

 

 

 

 

 

 

62,804

62,343

 

 

-

-

 

 

Addition to remeasurement of investment in associate

(f)

 

 

 

 

 

 

 

 

 

375,853

375,853

 

 

375,853

375,853

 

 

Total investments

 

 

 

 

 

 

 

 

 

 

3,374,189

3,242,765

32,720

142,346

964,700

967,646

(1,884)

27,422

(*)Includes companies with investment balances below R$ 5,000.

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

Consolidated

 

Interest in capital - %

Total assets

Total liabilities

Equity and advance for future capital increase

Profit (loss) for the period

Investments

Income from equity method investments

Investments

Income from equity method investments

Direct investees

09/30/2016

12/31/2015

09/30/2016

09/30/2016

09/30/2016

12/31/2015

 

09/30/2016

09/30/2015

09/30/2016

12/31/2015

09/30/2016

09/30/2015

09/30/2016

12/31/2015

09/30/2016

09/30/2015

Provision for net capital deficiency (g):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gafisa Vendas Interm. Imobiliaria Ltda

100%

100%

26,790

39,819

(13,029)

(8,239)

 

(8,390)

(2,514)

(13,029)

(8,239)

(8,390)

(2,514)

-

-

-

-

Manhattan Comercial 01 Ltda. (h)

50%

50%

-

-

-

(7,887)

 

-

(8,395)

-

(4,350)

-

(4,198)

-

(4,350)

-

(4,198)

Manhattan Residencial 01 Ltda. (h)

50%

50%

-

-

-

(89,319)

 

-

(19,110)

-

(44,627)

-

(10,712)

-

(44,627)

-

(10,712)

Other (*)

 

 

22,717

23,303

(586)

(2,557)

 

(324)

(937)

(586)

(2,511)

(326)

(1,667)

(5,396)

(5,424)

108

1,145

Total provision for net capital deficiency

 

 

49,507

63,122

(13,615)

(108,002)

 

(8,714)

(30,956)

(13,615)

(59,727)

(8,716)

(19,091)

(5,396)

(54,401)

108

(13,765)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Income from equity method investments

 

 

 

 

 

 

 

 

 

 

 

24,004

123,255

 

 

(1,776)

13,657

(*) Includes companies with investment balances below (R$ 5,000).

 

(a)    Jointly-controlled entities.

(b)    Jointly-controlled entity with the subsidiary Tenda.

(c)    The Company recorded expense of R$287 in Income from equity method investments for the period ended September 30, 2016 related to the recognition, by jointly-controlled entities, of adjustments in the prior year, in accordance with the ICPC09 (R2) – Individual, Separate and Consolidated Financial Statements and the Equity Method of Accounting.

(d)    Charges of the Company not appropriated to the profit or loss of subsidiaries, as required by paragraph 6 of OCPC01.

(e)    See breakdown in Note 11.

(f)     Amount related to the addition to the remeasurement of the portion of the remaining investment of 30% in the associate AUSA, in the amount of R$375,853, arising from the sale of control over the entity.

(g)    The provision for net capital deficiency is recorded in the heading “Other payables” (Note 15).

(h)    In the period ended September 30, 2016, there was increase in paid-in capital with the loan balance in the amount of R$50,500 (Note 21 (a).

 

(b)    Change in investments

 

 

 

 

Company

Consolidated

 

 

 

Balance at December 31, 2015

3,242,765

967,646

Income from equity method investments

32,720

(1,884)

Capital contribution (decrease)

108,821

8,265

Acquisition of interests

5,586

5,124

Capital paid-in with Loan receivable (h)

50,500

50,500

Transfer from provision for net capital deficiency (h)

(48,977)

(48,977)

Dividends receivable

(13,721)

(8,806)

Usufruct of shares

(3,200)

-

Other investments

(305)

(7,168)

Balance at September 30, 2016

3,374,189

964,700

 

70


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

10Property and equipment

 

 

 

Company

Consolidated

 

Type

12/31/2015

Addition

Write-off

100% depreciated items

09/30/2016

12/31/2015

Addition

Write-off

100% depreciated items

09/30/2016

Cost

 

 

 

 

 

 

 

 

 

 

Hardware

14,018

2,800

-

(4,297)

12,521

28,143

8,116

(479)

(6,071)

29,709

Leasehold improvements and installations

9,367

451

-

(3,492)

6,326

17,449

2,049

-

(3,525)

15,973

Furniture and fixtures

675

-

-

-

675

5,503

1

-

(2)

5,502

Machinery and equipment

2,640

-

-

-

2,640

4,039

-

-

(1)

4,038

Molds

-

-

-

-

-

13,067

3,651

-

-

16,718

Sales stands

12,041

7,713

(279)

(795)

18,680

15,724

9,254

(1,501)

(1,333)

22,144

 

38,741

10,964

(279)

(8,584)

40,842

83,925

23,071

(1,980)

(10,932)

94,084

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

 

 

 

 

Hardware

(7,191)

(1,999)

-

4,297

(4,893)

(13,474)

(4,240)

-

6,071

(11,643)

Leasehold improvements and installations

(4,838)

(1,237)

-

3,492

(2,583)

(7,918)

(2,396)

-

3,525

(6,789)

Furniture and fixtures

(282)

(51)

-

-

(333)

(3,664)

(415)

-

2

(4,077)

Machinery and equipment

(1,344)

(198)

-

-

(1,542)

(1,898)

(305)

-

1

(2,202)

Molds

-

-

-

-

-

(3,379)

(2,228)

-

-

(5,607)

Sales stands

(2,267)

(4,917)

99

795

(6,290)

(4,416)

(5,934)

884

1,333

(8,133)

 

(15,922)

(8,402)

99

8,584

(15,641)

(34,749)

(15,518)

884

10,932

(38,451)

 

 

 

 

 

 

 

 

 

 

 

Total property and equipment

22,819

2,562

(180)

-

25,201

49,176

7,553

(1,096)

-

55,633

 

The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 10 to the financial statements as of December 31, 2015.

 

11.  Intangible assets

 

 

Company

 

12/31/2015

 

 

 

09/30/2016

 

Balance

Addition

Write-down / amortization

100% amortized items

Balance

 

 

 

 

 

 

Software – Cost

75,409

5,032

-

(17,325)

63,116

Software – Depreciation

(47,187)

-

(9,726)

17,325

(39,588)

Other

5,089

3,853

(3,997)

-

4,945

Total intangible assets

33,311

8,885

(13,723)

-

28,473

 

 

 

 

 

Consolidated

 

12/31/2015

 

 

 

09/30/2016

 

Balance

Addition

Write-down / amortization

100% amortized items

Balance

Goodwill

 

 

 

 

 

AUSA

25,476

-

-

-

25,476

 

 

 

 

 

 

Software – Cost

110,559

11,680

(1,821)

(29,582)

90,836

Software – Depreciation

(65,408)

-

(14,367)

29,582

(50,193)

Other

6,715

3,854

(4,794)

-

5,775

 

 

 

 

 

Total intangible assets

77,342

15,534

(20,982)

-

71,894

           

 

In the end of each fiscal year, the Company evaluates the recovery of the carrying value of goodwill and the addition to the remeasurement of the portion of the remaining investment of 30% in the associate AUSA, as disclosed in Note 9. In the period ended September 30, 2016, the Company did not find the existence of any indication of loss on the carrying value of goodwill.

 

The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 11 to the financial statements as of December 31, 2015.

 

 

 

 

 

71


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

12.  Loans and financing

 

 

 

 

Company

Consolidated

Type

Maturity

Annual interest rate

09/30/2016

12/31/2015

09/30/2016

12/31/2015

 

 

 

 

 

 

 

National Housing System - SFH /SFI

November 2016 to

April 2021

8.30% to 14.00% + TR

120% and 129% of CDI

949,373

1,014,092

1,188,494

1,161,707

Certificate of Bank Credit - CCB (i)

 

June 2017 to

September 2019

 

 

125% of CDI

0.59%/3.00%/3.95%/4.25% + CDI - INCC

 

163,448

124,568

201,571

131,128

Total loans and financing (Note 20.i.d, 20.ii.a and 20.iii)

1,112,821

1.138.660

1,390,065

1,292,835

 

 

 

 

 

 

Current portion

 

 

587,959

595,817

650,973

672,365

Non-current portion

 

 

524,862

542,843

739,092

620,470

 

 

(i)   In the period ended September 30, 2016, the Company made payments in the total amount of R$43,220, of which R$15,122 related to principal and R$28,098 related to the interest. Additionally, on September 28, 2016, the Company entered into a CCB transaction in the amount of R$65,000, with final maturity on September 27, 2019, amortization of principal in five equal quarterly installments as from the 24th month (including) or observed the possibility of extraordinary amortization, payment of quarterly interests from the issue date, with secured guarantee of the mortgage of the real estate pledged, adding an extra land of the landbank through conditional sale.

 

The maturities of the current and non-current installments are as follows:

 

 

Company

 

Consolidated

Maturity

09/30/2016

12/31/2015

 

09/30/2016

12/31/2015

 

 

 

 

 

 

2016

116,941

595,817

 

123,825

672,365

2017

589,365

385,555

 

665,345

440,418

2018

360,196

153,288

 

450,263

166,996

2019

46,319

4,000

 

115,007

12,049

2020 onwards

-

-

 

35,625

1,007

 

1,112,821

1,138,660

 

1,390,065

1,292,835

 

The Company and its subsidiaries have restrictive covenants under certain loans and financing that limit their ability to perform certain actions, such as the issuance of debt, and that could require the early redemption or refinancing of loans if the Company does not fulfill such covenants. The ratios and minimum and maximum amounts required under such restrictive covenants as of  September 30, 2016 and December 31, 2015 are disclosed in Note 13.

 

The following table shows the summary of financial expenses and charges and the capitalized rate in the account properties for sale.

 

 

Company

Consolidated

 

09/30/2016

09/30/2015

09/30/2016

09/30/2015

 

 

 

 

Total financial charges for the period

164,641

152,665

214,354

208,205

Capitalized financial charges

(133,606)

(99,759)

(171,437)

(142,271)

 

 

 

 

Financial expenses (Note 24)

31,035

52,906

42,917

65,934

 

 

 

 

Financial charges included in “Properties for sale”:

 

 

 

 

 

 

 

 

 

Opening balance

287,806

256,955

354,551

315,726

Capitalized financial charges

133,606

99,760

171,437

142,271

Charges recognized in profit or loss (Note 23)

(94,005)

(88,705)

(132,908)

(119,502)

 

 

 

 

Closing balance

327,407

268,010

393,080

338,495

 

The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 12 to the financial statements as of December 31, 2015.

 

 

72


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

13.  Debentures

 

 

 

 

 

Company

Consolidated

Program/placement

Principal - R$

Annual interest

Final maturity

09/30/2016

12/31/2015

09/30/2016

12/31/2015

 

 

 

 

 

 

 

 

Seventh placement (i)

375,000

TR + 10.384%

December 2017

389,705

452,568

389,705

452,568

Eighth placement / second series

5,787

IPCA + 7.96%

October 2016

9,450

8,395

9,450

8,395

Ninth placement (ii)

91,624

CDI + 1.90%

July 2018

90,535

130,394

90,535

130,394

Tenth placement (iii)

55,000

IPCA + 8.22

January 2020

67,463

64,724

67,463

64,724

First placement (Tenda) (iv)

100,000

TR + 9.00%

November 2016

-

-

102,793

201,877

 

 

 

 

 

 

 

 

Total debentures (Nota 20.i.d, 20.ii.a and 20.iii)

557,153

656,081

659,946

857,958

 

 

 

 

 

 

 

 

Current portion

 

 

 

270,656

187,744

373,449

389,621

Non-Current portion

 

 

 

286,497

468,337

286,497

468,337

               

 

 

In the period ended September 30, 2016, the Company made the following payments:

 

 

Principal

Interest payable

Total amortization

(i)

75,000

26,459

101,459

(ii)

40,402

12,844

53,246

(iii)

-

4,775

4,775

(iv)

100,000

11,702

111,702

 

215,402

55,781

271,183

 

 

The maturities of current and non-current portions are as follows:

 

 

 

Company

Consolidated

Maturity

09/30/2016

12/31/2015

09/30/2016

12/31/2015

 

 

 

 

 

2016

98,552

187,744

201,345

389,621

2017

321,432

344,690

321,432

344,690

2018

94,605

83,485

94,605

83,485

2019

21,279

20,078

21,279

20,078

2020

21,285

20,084

21,285

20,084

557,153

656,081

659,946

857,958

 

 

 

 

73


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

13.  Debentures--Continued

 

The Company is in compliance with the debt covenants at the reporting date of this quarterly information. The ratios and minimum and maximum amounts required under such restrictive covenants as of September 30, 2016 and December 31, 2015 are as follows:

 

 

09/30/2016

12/31/2015

Seventh placement

 

 

Total account receivable plus inventory required to be below zero or 2.0 times over net debt less venture debt (3)

-20.66 times

-14.12 times

Total debt less venture debt (3), less cash and cash equivalents and short-term investments (1), cannot exceed 75% of equity plus noncontrolling interests

-8.22%

-12.19%

Total receivables plus unappropriated income plus total inventory of finished units required to be 1.5 time over the net debt plus payable for purchase of properties plus unappropriated cost

2.54 times

2.25 times

 

 

 

Eighth placement - first and second series and Loans and Financing

 

 

Total account receivable plus inventory of finished units required to be below zero or 2.0 times over net debt less venture debt

-11.81 times

-7.73 times

Total debt less venture debt, less cash and cash equivalents and short-term investments (1), cannot exceed 75% of equity plus noncontrolling interests

-8.22%

-12.19%

 

 

 

Ninth placement

 

 

Total account receivable plus inventory required to be below zero or 2.0 times over net debt

3.46 times

3.71 times

Net debt cannot exceed 100% of equity plus noncontrolling interests

49.12%

46.44%

 

 

 

Tenth placement

 

 

Total account receivable plus inventory required to be below zero or 2.0 times over net debt less venture debt (3)

-20.66 times

-14.12 times

Total debt less venture debt (3), less cash and cash equivalents and short-term investments (1), cannot exceed 75% of equity plus noncontrolling interests

-8.22%

-12.19%

 

 

 

 

 

 

 

First placement – Tenda

 

 

Total accounts receivable plus inventory required to be equal to or 2.0 times over net debt less debt with secured guarantee (3) or below zero, considering that TR(4) plus TE (4) is always above zero.

-6.16 times

-6.79 times

Net debt less debt with secured guarantee (3) required to be not in excess of 50% of equity.

-22.55%

-21.47%

Total receivables plus unappropriated income plus total inventory of finished units required to be over 1.5 time the net debt plus payable for purchase of properties plus unappropriated cost or below zero

3.14 times

2.47 times

 

 

(1)   Cash and cash equivalents and short-term investments refer to cash and cash equivalents and marketable securities.

(2)   Total receivables, whenever mentioned, refers to the amount reflected in the Balance Sheet plus the amount not shown in the Balance Sheet

(3)   Venture debt and secured guarantee debt refer to SFH debts, defined as the sum of all disbursed borrowing contracts which funds were provided by SFH, as well as the debt related to the seventh placement.

 (4)   Total inventory.

 

 

The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 13 to the financial statements as of December 31, 2015.

 

 

74


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

14.  Obligations assumed on assignment of receivables

 

The Company’s transactions of assignment of receivables portfolio are as follows:

 

 

Company

Consolidated

 

09/30/2016

12/31/2015

09/30/2016

12/31/2015

 

 

 

 

 

Assignment of receivables:

 

 

 

 

Obligation CCI Jun/11

1,628

3,164

2,847

4,775

Obligation CCI Dec/11

1,845

2,071

1,909

2,236

Obligation CCI Jul/12

201

368

201

368

Obligation CCI Nov/12

-

-

3,705

4,351

Obligation CCI Dec/12

5,376

7,541

5,376

7,541

Obligation CCI Nov/13

1,848

2,858

4,813

6,362

Obligation CCI Nov/14

2,941

4,646

4,934

6,696

Obligation CCI Dec/15

10,074

13,053

19,564

24,558

Obligation CCI Mar/16 (Note 5)

19,510

-

23,203

-

Obligation CCI May/16 (Note 5)

12,328

-

15,573

-

Obligation CCI Aug/16 (Note 5)

9,301

 

9,301

 

FIDC obligation

606

1,146

1,269

2,406

Total obligations assumed on assignment of receivables

(Note 20.ii.a and 20.iii)

65,658

34,847

92,695

59,293

 

 

 

 

Current portion

22,984

12,631

34,396

23,482

Non-current potion

42,674

22,216

58,299

35,811

 

The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 14 to the financial statements as of December 31, 2015.

 

 

15.  Other payables

 

 

 

Company

Consolidated

 

2012

09/30/2016

12/31/2015

09/30/2016

12/31/2015

 

 

 

 

 

 

Provision for penalties for delay in construction works

8.883

-

1,404

2,260

3,213

Cancelled contract payable

2.363

10,779

11,014

26,256

24,053

Warranty provision

28.345

32,724

41,958

47,810

59,647

Deferred sales taxes (PIS and COFINS) in long term

21.772

5,262

8,368

15,409

13,129

Provision for net capital deficiency (Note 9 (g))

35.570

13,615

59,727

5,396

54,401

Long-term suppliers (Note 20.i.d)

 

2,753

5,652

5,170

7,508

Payables to venture partners (Note 20.i.d, 20.ii and 20.iii)

 

2,280

4,713

3,143

4,895

Share-based payment - Phantom Shares (Note 18.3)

 

2,464

889

2,464

889

Other liabilities

13.781

5,756

8,426

32,772

28,918

 

 

 

 

 

 

Total other payables

113.000

75,633

142,151

140,680

196,653

 

 

 

 

 

 

Current portion

90.953

65,154

127,123

106,760

163,437

Non-current portion

22.047

10,479

15,028

33,920

33,216

 

 

       The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 15 to the financial statements as of December 31, 2015.

 

 

 

75


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

16.  Provisions for legal claims and commitments

 

 

In the period ended September 30, 2016, the changes in the provision are summarized as follows:

 

 

Company

Civil lawsuits

Tax proceedings

Labor claims

Total

Balance at December 31, 2015

119,420

220

63,235

182,875

Additional provision (Note 23)

33,755

27

9,729

43,511

Payment and reversal of provision not used

(31,480)

(14)

(13,619)

(45,113)

Balance at September 30, 2016

121,695

233

59,345

181,273

 

 

 

 

Current portion

80,796

233

17,660

98,689

Non-current portion

40,899

-

41,685

82,584

         

 

Consolidated

Civil lawsuits

Tax proceedings

Labor claims

Total

Balance at December 31, 2015

149,621

400

92,961

242,982

Additional provision (Note 23)

43,846

37

21,045

64,928

Payment and reversal of provision not used

(36,378)

(201)

(33,616)

(70,195)

Balance at September 30, 2016

157,089

236

80,390

237,715

 

 

 

 

 

Current portion

80,796

233

17,660

98,689

Non-current portion

76,293

3

62,730

139,026

         

 

(a)     Civil lawsuits, tax proceedings and labor claims

 

As of September 30, 2016, the Company and its subsidiaries have deposited in court the amount of R$112,258 (R$105,275 in 2015) in the Company’s statement, and R$138,822 (R$125,358 in 2015) in the consolidated statement (Note 7).

 

   

Company

Consolidated

 

 

09/30/2016

12/31/2015

09/30/2016

12/31/2015

 

 

 

 

 

 

Civil lawsuits

 

71,972

71,327

89,800

81,919

Tax proceedings

 

21,743

13,744

24,722

14,222

Labor claims

 

18,543

20,204

24,300

29,217

Total

 

112,258

105,275

138,822

125,358

 

(i)   Lawsuits in which likelihood of loss is rated as possible

 

As of September 30, 2016, the Company and its subsidiaries are aware of other claims and civil, labor and tax risks. Based on the history of probable lawsuits and the specific analysis of main claims, the measurement of the claims with likelihood of loss considered possible amounted to R$767,423 (R$810,163 in 2015), based on average past outcomes adjusted to current estimates, for which the Company’s Management believes it is not necessary to recognize a provision for occasional losses. The change in the period was caused by the variation in the volume of lawsuits with smaller amounts and review of the involved amounts.

 

   

Company

Consolidated

 

 

09/30/2016

12/31/2015

09/30/2016

12/31/2015

 

 

 

 

 

 

Civil lawsuits

 

243,659

235,975

468,117

469,841

Tax proceedings

 

31,652

32,543

240,196

263,540

Labor claims

 

37,395

38,967

59,110

76,782

Total

 

312,706

307,485

767,423

810,163

 

 

 

76


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

16.  Provisions for legal claims and commitments--Continued

 

(b)     Payables related to the completion of real estate ventures

 

There was no significant change in relation to the information disclosed in Note 16(i)(b) to the financial statements as of December 31, 2015.

 

(c)      Other commitments

 

In addition to the commitments mentioned in Notes 6, 12 and 13, the Company has commitments related to the rental of 34 commercial properties where its facilities are located, at a monthly cost of R$1,029 indexed to the IGP-M/FGV variation. The rental term is from 1 to 8 years and there is a fine in case of contract cancellation corresponding to three-month rent or in proportion to the contract expiration time. The estimate of minimum future payments for commercial property rentals (cancellable leases) totals R$61,250, as follows.

 

 

Consolidated

Payment estimate

09/30/2016

 

 

2016

2,773

2017

10,860

2018

8,623

2019

7,195

2020 onwards

32,069

 

61,520

 

       The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 15 to the financial statements as of December 31, 2015.

 

 

17.  Payables for purchase of properties and advances from customers

 

 

 

Company

Consolidated

 

Maturity

09/30/2016

12/31/2015

09/30/2016

12/31/2015

 

 

 

 

 

 

Payables for purchase of properties

October 2016 to November 2021

103,817

139,320

323,039

362,800

Adjustment to present value

 

(8,283)

(9,723)

(22,577)

(17,039)

Advances from customers

 

 

 

 

 

Development and sales

 

21,404

19,337

34,821

39,743

Barter transaction - Land

 

97,376

143,271

164,895

224,430

Total payables for purchase of properties and advances from customers (Note 20.i.d and 20.ii.a)

214.314

292,205

500,178

609,934

 

 

 

 

 

 

Current portion

 

167,875

148,989

369,029

361,420

Non-current portion

 

46,439

143,216

131,149

248,514

 

The current and non-current portions fall due as follows:

 

 

Company

 

Consolidated

Maturity

09/30/2016

12/31/2015

 

09/30/2016

12/31/2015

 

 

 

 

 

 

2016

37,030

81,347

 

97,718

247,663

2017

150,980

191,482

 

302,763

295,152

2018

9,822

8,859

 

53,203

37,230

2019

9,043

8,306

 

31,107

21,010

2020 onwards

7,439

2,211

 

15,387

8,879

 

214,314

292,205

 

500,178

609,934

 

18.  Equity

 

18.1.  Capital

 

As of September 30, 2016 and December 31, 2015, the Company's authorized and paid-in capital amounts to R$2,740,662, in both periods represented by 378,066,162  registered common shares, with no par value, of which 14,160,533 (10,584,756 as of December 31, 2015) were held in treasury.

 

 

77


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

18.  Equity--Continued

 

18.1.  Capital--Continued

 

According to the Company’s articles of incorporation, capital may be increased without need of making amendment to it, upon resolution of the Board of Directors, which shall set the conditions for issuance up to the limit of 600,000,000 (six hundred million) common shares.

 

On March 3, 2016, the Company approved the creation of a new program to repurchase its shares to hold them in treasury and later selling or cancelling them, over a period of 18 months, up to the limit of 8,198,565 shares. In the period ended September 30, 2016, 4,503,600 shares in the total amount of R$8,693 were acquired. Additionally, the Company transferred 927,824 (1,221,860 in 2015) shares in the total amount of R$2,149 (R$3,022 in 2015) related to the exercise of options of the stock option plan comprising common shares by the beneficiaries, for which it received the total amount of R$9 (R$599 in 2015).

 

Treasury shares

 

 

Type

GFSA3

R$

%

Market value (*) R$ thousand

Carrying value R$ thousand

Acquisition date

Number

Weighted average price

% - on shares outstanding

09/30/2016

12/31/2015

09/30/2016

12/31/2015

11/20/2001

599,486

2.8875

0.17%

1,493

1,457

1,731

1,731

Changes in 2013:

 

 

 

 

 

 

 

Acquisition

18,500,000

3.8562

5.12%

46,065

44,955

71,339

71,339

Changes in 2014:

 

 

 

 

 

 

 

Acquisition

43,738,235

2.6353

12.11%

108,908

106,284

115,265

115,265

Transfer

(5,463,395)

3.2183

-1.51%

(13,604)

(13,276)

(17,583)

(17,583)

Cancellations

(27,493,039)

3.3351

-7.61%

(68,458)

(66,808)

(91,693)

(91,693)

Changes in 2015:

 

 

 

 

 

 

 

Acquisition

11,925,330

2.0257

3.30%

29,694

28,979

24,157

24,157

Transfer

(1,221,860)

2.4733

-0.34%

(3,042)

(2,970)

(3,022)

(3,022)

Cancellations

(30,000,000)

2.4738

-8.31%

(74,700)

(72,900)

(74,214)

(74,214)

Changes in 2016:

 

 

 

 

 

 

 

Acquisition

4,503,600

1.9302

1.25%

11,214

-

8,693

-

Transfer

(927,824)

2.3162

-0.26%

(2,310)

-

(2,149)

-

 

14,160,533

2.2968

3.92%

35,260

25,721

32,524

25,980

(*)                                   Market value calculated based on the closing share price on September 30, 2016 at R$2.49 (R$2.43 in 2015), not considering the effect of occasional volatilities.

 

The Company holds shares in treasury acquired in 2001 in order to guarantee the performance of lawsuits.

 

The change in the number of outstanding shares is as follows:

 

 

Common shares - In thousands

Outstanding shares as of December 31, 2015

367,481

Repurchase of treasury shares

(4,504)

Transfer related to the stock option plan

928

Shares held by the management members of the Company

(2,838)

Outstanding shares as of September 30, 2016

361,067

 

 

Weighted average shares outstanding

363,626

 

 

Expenses incurred with stock grants are recorded under the account “General and administrative expenses” (Note 23) and showed the following effects on profit or loss in the periods ended September 30, 2016 and 2015:

 

 

09/30/2016

09/30/2015

 

 

 

Gafisa (a)

5,506

5,859

Tenda

1,051

1,606

 

6,557

7,465

 

 

 

(a)     Of this total, R$1,574 (R$355 in 2015) refer to Phantom Shares (Note 18.3) and R$3,932 (R$5,504 in 2015) to equity-settled stock option plans.

 

 

 

 

 

78


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

18.  Equity--Continued

 

18.2.  Stock option plan--Continued

 

(i)    Gafisa

 

The Company has a total of five stock option plans comprising common shares, launched in 2012, 2013, 2014, 2015 and 2016 which follows the rules established in the Stock Option Plan of the Company.

 

The granted options entitle their holders (beneficiaries) to purchase common shares of the Company’s capital, after periods that vary from one to five years of employment in the Company (essential condition to exercise the option), and expire  six to ten years after the grant date.

 

The fair value of options is set on the grant date, and it is recognized as expense in profit or loss (as contra-entry to equity) during the grace period of the plan, to the extent the services are provided by employees and management members.

 

The changes in options outstanding in the period ended September 30, 2016 and year ended December 31, 2015, which include their respective weighted average exercise prices, are as follows:

 

 

2016

2015

 

Number of options

Weighted average exercise price (Reais)

Number of options

Weighted average exercise price (Reais)

Options outstanding at the beginning of the year

11,743,379

1.83

9,542,643

1.49

Options granted

2,209,869

2.62

3,567,201

2.24

Options exercised (i)

(930,449)

(0.01)

(1,221,860)

(0.49)

Options expired

-

-

(32,000)

(3.05)

Options forfeited

(114,717)

(0.01)

(112,605)

(0.01)

Options outstanding at the end of the period

12,908,082

2.11

11,743,379

1.83

 

(i) In the period ended September 30, 2016, the amount received for exercised options was R$9 (R$599 in the year ended December 31, 2015).

 

Options outstanding and exercisable as of September 30, 2016, are as follows:

Options outstanding

Options exercisable

Number of options

Weighted average remaining contractual life (years)

Weighted average exercise price (Reais)

Number of options

Weighted average exercise price (Reais)

12,908,082

7.09

2.11

1,927,083

2.68

 

 

 

 

 

During the period ended September 30, 2016,  the Company granted 2,209,869 options in connection with its stock option plans comprising common shares (3,567,201 options granted in 2015).

 

The fair value of the new granted options totaled R$1,265 (R$3,232 in 2015), which was determined based on the following assumptions:

 

 

2016

2015

Pricing model

Binomial

Binomial

Exercise price of options (R$)

R$2.62

R$2.24

Weighted average price of options (R$)

R$2.62

R$2.24

Expected volatility (%) – (*)

53%

52%

Expected option life (years)

5.78 years

5.58 years

Dividend income (%)

1.98%

2.24%

Risk-free interest rate (%)

14.13%

13.64%

 

               (*)The volatility was determined based on the regression analyses of the relation of the volatility of the Gafisa S.A.’s shares with the Ibovespa index.

 

 

79


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

18.  Equity--Continued

 

18.2.  Stock option plan--Continued

 

 (ii)   Tenda

 

The subsidiary Tenda has a total of two stock options comprising common shares for its employees and management members, launched in 2014 and 2016, that follows the rules established in its Stock Option Plan.

 

The changes in options outstanding in the period ended September 30, 2016 and year ended December 31, 2015, which include their respective weighted average exercise prices, are as follows:

 

 

2016

2015

 

Number of options

Weighted average exercise price (Reais)

Number of options

Weighted average exercise price (Reais)

Options outstanding at the beginning of the year

42,259,687

0.84

42,259,687

0.76

Options granted

1,637,067

0.88

-

-

Options forfeited

(1,100,400)

0.84

-

-

Options outstanding at the end of the period

42,796,354

0.84

42,259,687

0.76

 

The options outstanding and exercisable as of September 30, 2016, are as follows:

 

Options outstanding

Options exercisable

Number of options

Weighted average remaining contractual life (years)

Weighted average exercise price (Reais)

Number of options

Weighted average exercise price (Reais)

42,796,354

2.36

0.84

-

-

 

 

 

 

 

The fair value of the options granted in 2014 and 2016 totaled R$8,927, which was determined based on the following assumptions:

 

 

2016

2014

Pricing model

Black-Scholes

Black-Scholes

Exercise price of options (R$)

R$0.88

R$0.85

Weighted average price of options (R$)

R$0.88

R$0.84

Expected volatility (%) – (*)

26.70%

31.30%

Expected life of options (years)

4.51 years

2.55 years

Risk-free interest rate (%) – (**)

12.67% to 12.77%

12.77% to 12.84%

 

                          (*)The volatility was determined based on the history of the BM&FBOVESPA Real Estate Index (IMOBX).

                          (**)The market risk-free interest rate for the option term in the grant moment varied between 11.66% and 12.84%.

 

18.3.  Share-based payment – Phantom Shares

 

The Company has a total of two cash-settled share-based payment, with fixed terms and conditions, according to the plans approved by the Company, launched in 2015 and 2016.

 

In the plan approved in 2016, the beneficiaries were granted the right to receive an amount equivalent to 1,143,145 phantom shares, together with the stock option plan for the year 2016. The phantom shares have the same grace and expiration period of the options, and can be partially or fully exercised during the established period. 

 

As of September 30, 2016, the amount of R$2,464 (R$889 in 2015), related to the fair value of the phantom shares granted, is recognized in the heading “Other payables” (Note 15).

 

The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 18 to the financial statements as of December 31, 2015.

 

 

 

80


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

19.  Income tax and social contribution

 

(i)      Current income tax and social contribution

 

The reconciliation of the effective tax rate for the periods ended September 30, 2016 and 2015 is as follows:

 

 

Company

Consolidated

 

09/30/2016

09/30/2015

09/30/2016

09/30/2015

 

 

 

 

 

Profit (loss) before income tax and social contribution, and statutory interest

(164,288)

65,894

(142,570)

73,753

Income tax calculated at the applicable rate - 34%

55,858

(22,404)

48,474

(25,076)

Net effect of subsidiaries and ventures taxed by presumed profit and Special Taxation Regime (RET)

-

-

2,321

28,807

Tax losses (tax loss carryforwards used)

-

(2,042)

(1,515)

(2,387)

Income from equity method investments

8,161

41,389

(604)

4,126

Stock option plan

(2,493)

(2,045)

(2,850)

(2,591)

Other permanent differences

(2,302)

(8,195)

(7,516)

(12,992)

Charges on payables to venture partners

(514)

1,026

(46)

901

Tax credits recognized (not recognized)

(58,710)

-

(57,943)

5,956

Total

-

7,729

(19,679)

(3,256)

 

 

 

 

 

Tax expenses - current

-

(383)

(15,114)

(14,984)

Tax income - deferred

-

8,112

(4,565)

11,728

 

 (ii)   Deferred income tax and social contribution

 

As of September 30, 2016 and December 31, 2015, deferred income tax and social contribution are from the following sources:

 

 

Company

Consolidated

 

09/30/2016

12/31/2015

09/30/2016

12/31/2015

Assets

 

 

 

 

Provisions for legal claims

61,633

62,178

79,234

82,614

Temporary differences – PIS and COFINS deferred

7,171

10,636

13,190

16,404

Provisions for realization of non-financial assets

1,849

1,849

6,860

11,776

Temporary differences – CPC adjustment

22,012

40,089

26,516

44,748

Temporary differences – Cash versus accrual basis

83,040

47,442

83,040

47,442

Other provisions

21,364

13,303

64,555

38,470

Income tax and social contribution loss carryforwards

88,780

75,768

322,810

317,282

Tax benefits of subsidiaries

28,165

28,165

28,165

28,165

Tax credits not recognized

(58,710)

-

(330,940)

(272,997)

 

255,304

279,430

293,430

313,904

 

 

 

 

Liabilities

 

 

 

 

Negative goodwill

(92,385)

(92,385)

(92,385)

(92,385)

Temporary differences –CPC adjustment

(130,606)

(131,096)

(132,366)

(130,929)

Differences between income taxed on cash basis

and recorded on an accrual basis

(42,398)

(66,034)

(90,852)

(107,079)

 

(265,389)

(289,515)

(315,603)

(330,393)

 

 

 

 

Total net

(10,085)

(10,085)

(22,173)

(16,489)

 

 

The Company has income tax and social contribution loss carryforwards for offset in the following amounts:

 

 

Company

 

09/30/2016

 

12/31/2015

 

Income tax

Social contribution

 

Total

 

Income tax

Social contribution

 

Total

Balance of income tax and social contribution loss carryforwards

261,117

261,117

 

 

222,849

222,849

 

Deferred tax asset (25%/9%)

65,279

23,501

88,780

 

55,712

20,056

75,768

Recognized deferred tax asset

55,712

20,056

75,768

 

55,712

20,056

75,768

Unrecognized deferred tax asset

9,567

3,445

13,012

 

-

-

-

 

 

 

81


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

19.  Income tax and social contribution--Continued

 

(ii)      Deferred income tax and social contribution --Continued

 

 

 

Consolidated

 

09/30/2016

 

12/31/2015

 

Income tax

Social contribution

 

Total

 

Income tax

Social contribution

 

Total

Balance of income tax and social contribution loss carryforwards

949,440

949,440

 

 

933,182

933,182

 

Deferred tax asset (25%/9%)

237,360

85,450

322,810

 

233,296

83,986

317,282

Recognized deferred tax asset

55,712

20,056

75,768

 

55,712

20,056

75,768

Unrecognized deferred tax asset

181,648

65,394

247,042

 

177,584

63,930

241,514

 

Based on the estimate of projections for generation of future taxable profit of Gafisa, the estimated recovery of the Company’s balance of deferred income tax and social contribution is as follows:

 

 

Company

 

Income tax and social contribution loss

 

Income tax and social contribution loss

2016

16,484

 

5,604

2017

8,282

 

2,816

2018

3,056

 

1,039

2019

27,174

 

9,239

2020 to 2026

167,853

 

57,070

 

222,849

 

75,768

 

 

The other explanations related to this note were not subject to significant changes in relation to the disclosures in Note 19 to the financial statements as of December 31, 2015.

 

20.  Financial instruments

 

The Company and its subsidiaries engage in operations involving financial instruments. These instruments are managed through operational strategies and internal controls aimed at providing liquidity, return and safety. The use of financial instruments with the objective of hedging is achieved through a periodical analysis of exposure to the risk that the management intends to cover (exchange, interest rate, etc.) which is submitted to the corresponding Management bodies for approval and performance of the proposed strategy. The control policy consists of continuously monitoring the contracted conditions in relation to the prevailing market conditions. The Company and its subsidiaries do not use derivatives or any other risky assets for speculative purposes. The result from these operations is consistent with the policies and strategies devised by Company management. The Company and its subsidiaries operations are subject to the risk factors described below:

 

 (i)    Risk considerations

 

a)    Credit risk

 

There was no significant change in relation to the credit risks disclosed in Note 20(i)(a) to the financial statements as of December 31, 2015.

 

 

 

82


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

20.  Financial instruments--Continued

 

(i)     Risk considerations--Continued

 

b)    Derivative financial instruments

 

The Company holds derivative instruments to mitigate the risk arising from its exposure to index and interest volatility recognized at their fair value in profit or loss for the year. Pursuant to its treasury policies, the Company does not own or issue derivative financial instruments other than for hedging purposes.

 

As of September 30, 2016, the Company had derivative contracts for hedging purposes in relation to interest fluctuations, with final maturity between December 2016 and January 2020. The derivative contracts are as follows:

 

Consolidated

   

Reais

Percentage

Validity

Unrealized gain (loss) of derivative instruments - net

   

 

 

 

 

 

Companies

Swap agreements (Fixed for CDI)

Face value

Original Index – asset position

Swap – liability position

Beginning

End

09/30/2016

12/31/2015

 

 

 

 

 

 

 

 

 

Gafisa S/A

Banco Votorantim S.A.

55,000

Fixed 14.2672%

CDI + 1.6344%

12/21/2015

06/20/2016

-

(637)

Gafisa S/A

Banco Votorantim S.A.

27,500

Fixed 11.1136%

CDI + 0.2801%

06/20/2016

12/20/2016

(407)

(641)

Gafisa S/A

Banco Votorantim S.A.

27,500

Fixed 15.1177%

CDI + 1.6344%

12/20/2016

06/20/2017

86

(399)

Gafisa S/A

Banco Votorantim S.A.

130,000

CDI + 1.90%

118% CDI

07/22/2014

07/26/2018

(364)

(2,216)

Gafisa S/A

Banco HSBC

194,000

Fixed 12.8727%

120% CDI

09/29/2014

10/08/2018

(2,119)

(15,907)

Gafisa S/A

Banco Votorantim S.A.

55,000

IPCA + 8.22%

120% CDI

03/17/2015

01/20/2020

4,963

(1,874)

   

Total derivative financial instruments (Note 20 (i) (d) and Note 20 (ii) (a))

2,159

(21,674)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

(6,944)

(14,056)

 

 

 

 

 

Non-current

9,103

(7,618)

 

 

During the period ended September 30, 2016, the amount of R$13,526 (R$(17,610) in 2015) in the Company’s and consolidated statements, which refers to net result of the interest swap transaction, arising from the payment in the amount of R$10,308 and the positive value change based on the market of R$23,834, was recognized in the “financial income (expenses)” line in the statement of profit or loss for the year, allowing correlation between the impact of such transactions and the interest rate fluctuation in the Company’s balance sheet (Note 24).

 

       The estimated fair value of derivative financial instruments contracted by the Company was determined based on information available in the market and specific valuation methodologies. However, considerable judgment was necessary for interpreting market data to produce the estimated fair value of each transaction, which may vary upon the financial settlement of transactions.

 

c)    Interest rate risk

 

There was no significant change in relation to the interest rate risks disclosed in Note 20(i)(c) to the financial statements as of December 31, 2015.

 

 

 

 

83


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

20.  Financial instruments--Continued

 

(i)     Risk considerations--Continued

 

d)    Liquidity risk

 

There was no significant change in relation to the liquidity risks disclosed in Note 20(i)(d) to the financial statements as of December 31, 2015.

 

The maturities of financial instruments, loans, financing, suppliers, payables to venture partners and debentures are as follows:

 

 

Company

Period ended September 30, 2016

Less than 1 year

1 to 3 years

4 to 5 years

More than 5 years

Total

Loans and financing (Note 12)

587,959

524,862

-

-

1,112,821

Debentures (Note 13)

270,656

265,212

21,285

-

557,153

Payables to venture partners (Note 15)

2,280

-

-

-

2,280

Suppliers (Note 15 and Note 20.ii.a)

29,421

2,753

-

-

32,174

Payables for purchase of properties and advances from customers (Note 17)

167,875

39,000

7,439

-

214,314

 

1,058,191

831,827

28,724

-

1,918,742

 

 

Consolidated

Period ended September 30, 2016

Less than 1 year

1 to 3 years

4 to 5 years

More than 5 years

Total

Loans and financing (Note 12)

650,973

687,623

51,469

-

1,390,065

Debentures (Note 13)

373,449

265,212

21,285

-

659,946

Payables to venture partners (Note 15)

3,143

-

-

-

3,143

Suppliers (Note 15 and Note 20.ii.a)

66,018

5,170

-

-

71,188

Payables for purchase of properties and advances from customers (Note 17)

369,029

115,762

15,265

122

500,178

 

1,462,612

1,073,767

88,019

122

2,624,520

 

Fair value classification

 

The Company uses the same classification disclosed in Note 20(i)(d) to the financial statements as of December 31, 2015 to determine and disclose the fair value of financial instruments by the valuation technique.

 

The classification level of fair value for financial instruments measured at fair value through profit or loss of the Company as of September 30, 2016 and December 31, 2015 is as follows:

 

 

Company

Consolidated

 

Fair value classification

As of September 30, 2016

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

 

 

 

 

 

 

 

Financial assets

 

 

 

 

 

 

Short-term investments (Note 4.2)

-

185,365

-

-

448,558

-

Derivative financial instruments (Note 20.i.b)

-

2,159

-

-

2,159

-

 

 

Company

Consolidated

 

Fair value classification

As of December 31, 2015

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

 

 

 

 

 

 

 

Financial assets

 

 

 

 

 

 

Short-term investments (Note 4.2)

-

350,343

-

-

629,671

-

 

 

 

 

84


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

20.  Financial instruments--Continued

 

(i)     Risk considerations--Continued

 

d)    Liquidity risk--Continued

 

Fair value classification --Continued

 

       In addition, we show the fair value classification of financial instruments liabilities:

 

 

Company

Consolidated

 

Fair value classification

As of December 31, 2015

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

Derivative financial instruments (Note 20.i.b)

-

21,674

-

-

21,674

-

 

In the period ended September 30, 2016, there were no transfers between the Levels 1 and 2 fair value classifications, nor were transfers between Levels 3 and 2 fair value classifications.

 

 (ii)   Fair value of financial instruments

 

a)    Fair value measurement

 

The Company uses the same methods and assumptions disclosed in Note 20(ii)(a) to the financial statements as of December 31, 2015 to estimate the fair value for each financial instrument type for which the estimate of values is practicable.

 

The most significant carrying values and fair values of financial assets and liabilities as of September 30, 2016 and December 31, 2015, classified into Level 2 of the fair value classification, are as follows:

 

 

Company

 

09/30/2016

12/31/2015

 

Carrying value

Fair value

Carrying value

Fair value

 

 

 

 

Financial assets

 

 

 

 

Cash and cash equivalents (Note 4.1)

73,248

73,248

44,044

44,044

Short-term investments (Note 4.2)

185,365

185,365

350,343

350,343

Derivative financial instruments (Note 20(i)(b))

2,159

2,159

-

-

Trade accounts receivable (Note 5)

807,026

807,026

986,042

986,042

Loan receivable (Note 21.1)

18,457

18,457

78,818

78,818

 

 

 

 

 

Financial liabilities

 

 

 

 

Loans and financing (Note 12)

1,112,821

1,110,947

1,138,660

1,095,844

Debentures (Note 13)

557,153

574,524

656,081

633,238

Payables to venture partners (Note 15)

2,280

2,822

4,713

5,472

Derivative financial instruments (Note 20(i)(b))

-

-

21,674

21,674

Suppliers (Note 20(i)(d))

32,174

32,174

32,115

32,115

Obligations assumed on assignment of receivables (Note 14)

65,658

65,658

34,847

34,847

Payables for purchase of properties and advances from customers (Note 17)

214,314

214,314

292,205

292,205

Loan payable (Note 21.1)

8,149

8,149

10,480

10,480

 

 

 

 

85


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

20.  Financial instruments--Continued

 

(ii)    Fair value of financial instruments--Continued

 

a)      Fair value measurement--Continued

 

 

Consolidated

 

09/30/2016

12/31/2015

 

Carrying value

Fair value

Carrying value

Fair value

 

 

 

 

Financial assets

 

 

 

 

Cash and cash equivalents (Note 4.1)

161,340

161,340

82,640

82,640

Short-term investments (Note 4.2)

448,558

448,558

629,671

629,671

Derivative financial instruments (Note 20(i)(b))

2,159

2,159

-

-

Trade accounts receivable (Note 5)

1,569,407

1,569,407

1,802,364

1,802,364

Loan receivable (Note 21.1)

56,341

56,341

109,193

109,193

 

 

 

 

 

Financial liabilities

 

 

 

 

Loans and financing (Note 12)

1,390,065

1,371,727

1,292,835

1,237,222

Debentures (Note 13)

659,946

676,417

857,958

828,387

Payables to venture partners (Note 15)

3,143

2,822

4,895

5,472

Derivative financial instruments (Note 20(i)(b))

-

-

21,674

21,674

Suppliers (Note 20(i)(d))

71,188

71,188

57,335

57,335

Obligations assumed on assignment of receivables ( (Note 14)

92,695

92,695

59,293

59,293

Payables for purchase of properties and advances from customers (Note 17)

500,178

500,178

609,934

609,934

Loan payable (Note 21.1)

58,118

58,118

51,482

51,482

         

 

There was no significant change in relation to the other information disclosed in Note 20(ii)(a) to the financial statements as of December 31, 2015.

 

b)      Risk of debt acceleration

 

There was no significant change in relation to the risks of debt acceleration disclosed in Note 20(ii)(b) to the financial statements as of December 31, 2015.

 

c)      Market risk

 

There was no significant change in relation to the market risks disclosed in Note 20(ii)(c) to the financial statements as of December 31, 2015. 

 

 (iii)  Capital stock management

 

The explanations related to this note were not subject to significant changes in relation to the disclosures in Note 20(iii) to the financial statements as of December 31,2015.

 

The Company included in its net debt structure: loans and financing, debentures, obligations assumed on assignment of receivables and payables to venture partners less cash and cash equivalents and short-term investments (cash and cash equivalents and marketable securities):

 

 

 

Company

Consolidated

 

09/30/2016

12/31/2015

09/30/2016

12/31/2015

 

 

 

 

 

Loans and financing (Note 12)

1,112,821

1,138,660

1,390,065

1,292,835

Debentures (Note 13)

557,153

656,081

659,946

857,958

Obligations assumed on assignment of receivables (Note 14)

65,658

34,847

92,695

59,293

Payables to venture partners (Note 15)

2,280

4,713

3,143

4,895

( - ) Cash and cash equivalents and short-term investments (Notes 4.1 and 4.2)

(258,613)

(394,387)

(609,898)

(712,311)

Net debt

1,479,299

1,439,914

1,535,951

1,502,670

Equity

2,926,451

3,095,491

2,928,749

3,097,236

Equity and net debt

4,405,750

4,535,405

4,464,700

4,599,906

 

 

 

86


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

20.  Financial instruments--Continued

 

 (iv)  Sensitivity analysis

 

The sensitivity analysis of financial instruments for the period ended September 30, 2016, except swap contracts, which are analyzed through their due dates, describes the risks that may cause significant changes in the Company’s profit or loss, as provided for by CVM, through Rule No. 475/08, in order to show a 10%, 25% and 50% increase/decrease in the risk variable considered.

 

As of September 30, 2016, besides derivative instruments, the Company has the following financial instruments:

 

a)   Short-term investments, loans and financing, and debentures linked to Interbank Deposit Certificates (CDI);

b)   Loans and financing linked to the Referential Rate (TR) and CDI, and debentures linked to the CDI, National Consumer Price Index – Extended (IPCA) and TR;

c)   Accounts receivable, obligations for purchase of property, and loans and financing, linked to the National Civil Construction Index (INCC).

 

For the sensitivity analysis in the period ended September 30, 2016, the Company considered the interest rates of investments, loans and accounts receivables, the CDI rate at 14.13%, TR at 2.29%, INCC at 6.21%, and IPCA at 8.48%. The scenarios considered were as follows:

 

Scenario I – Probable: 10% increase/decrease in the risk variables used for pricing

Scenario II – Possible: 25% increase/decrease in the risk variables used for pricing

Scenario III – Remote: 50% increase/decrease in the risk variables used for pricing

 

The Company shows in the following chart the sensitivity to risks to which the Company is exposed, based on the above scenarios, as of September 30, 2016. The effects on equity are basically the same ones on profit or loss.

 

   

Scenario

   

I

II

III

III

II

I

Instrument

Risk

Increase 10%

Increase 25%

Increase 50%

Decrease 50%

Decrease 25%

Decrease 10%

 

 

 

 

 

 

 

Short-term investments

Increase/Decrease of CDI

5,279

13,197

26,395

(26,395)

(13,197)

(5,279)

Loans and financing

Increase/Decrease of CDI

(6,347)

(15,867)

(31,733)

31,733

15,867

6,347

Debentures

Increase/Decrease of CDI

(1,121)

(2,802)

(5,604)

5,604

2,802

1,121

Derivative financial instruments

Increase/Decrease of CDI

(2,572)

(6,387)

(12,466)

14,097

6,861

2,723

 

 

 

 

 

 

 

Net effect of CDI variation

 

(4,761)

(11,859)

(23,408)

25,039

12,333

4,912

 

 

 

 

 

 

 

Loans and financing

Increase/Decrease of TR

(1,926)

(4,816)

(9,631)

9,631

4,816

1,926

Debentures

Increase/Decrease of TR

(1,064)

(2,660)

(5,321)

5,321

2,660

1,064

 

 

 

 

 

 

 

Net effect of TR variation

 

(2,990)

(7,476)

(14,952)

14,952

7,476

2,990

 

 

 

 

 

 

 

Debentures

Increase/Decrease of IPCA

(601)

(1,503)

(3,006)

3,006

1,503

601

 

 

 

 

 

 

 

Net effect of IPCA variation

 

(601)

(1,503)

(3,006)

3,006

1,503

601

 

 

 

 

 

 

 

Accounts receivable

Increase/Decrease of INCC

9,124

22,810

45,620

(45,620)

(22,810)

(9,124)

Loans and financing

Increase/Decrease of INCC

(39)

(96)

(193)

193

96

39

Obligations for purchase of property

Increase/Decrease of INCC

(1,889)

(4,722)

(9,444)

9,444

4,722

1,889

 

 

 

 

 

 

 

Net effect of INCC variation

 

7,196

17,992

35,983

(35,983)

(17,992)

(7,196)

 

 

 

87


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

21.  Related parties

 

21.1.  Balances with related parties

 

The transactions between the Company and related companies are made under conditions and prices established between the parties.

 

 

Company

Consolidated

Current accounts

09/30/2016

12/31/2015

09/30/2016

12/31/2015

 

 

 

 

 

Assets

 

 

 

 

Current account:

 

 

 

 

Total SPEs

44,986

55,023

73,520

86,010

Condominium and consortia and third party’s works

6,977

9,108

6,977

9,108

Loan receivable (Note 20.ii.a)

18,457

78,818

56,341

109,193

Dividends receivable

15,116

14,279

-

-

 

85,536

157,228

136,838

204,311

 

 

 

 

Current portion

67,079

78,410

80,497

95,118

Non-current

18,457

78,818

56,341

109,193

 

 

 

 

Liabilities

 

 

 

 

Current account:

 

 

 

 

Total SPEs and Tenda

(983,733)

(790,895)

(86,206)

(76,620)

Loan payable (Note 20.ii.a)

(8,149)

(10,480)

(58,118)

(51,482)

 

(991,882)

(801,375)

(144,324)

(128,102)

 

 

 

 

Current portion

(991,882)

(801,375)

(94,355)

(87,100)

Non-current portion

-

-

(49,969)

(41,002)

 

The composition, nature and condition of loan receivable and payable by the Company are shown below. Loan maturities are from October 2016 and are tied to the cash flows of related ventures.

                  

 

Company

 

 

 

09/30/2016

12/31/2015

Nature

Interest rate

 

 

 

 

 

Tembok Planej. E Desenv. Imob. Ltda. (Vistta Laguna)

-

11,044

Construction

12% p.a. + IGPM

Acquarelle Civilcorp Incorporações Ltda.

129

287

Construction

12% p.a. + IGPM

Manhattan Residencial I (a)

2,486

53,862

Construction

10% p.a. + TR

Target Offices & Mall

11,728

3,105

Construction

12% p.a. + IGPM

Scena Laguna - Tembok Planej. e Desenv. Imob. Ltda.

4,114

10,520

Construction

12% p.a. + IGPM

Total receivable - Company

18,457

78,818

   

 

 

 

 

 

Gafisa Spe-113 Empr Imob

-

3,788

Construction

100% of CDI

Dubai Residencial

3,309

2,650

Construction

6% p.a.

Parque Arvores

2,399

2,270

Construction

6% p.a.

Parque Aguas

2,441

1,772

Construction

6% p.a.

Total payable - Company

8,149

10,480

Construction

6% p.a.

 

 

Consolidated

 

 

 

09/30/2016

12/31/2015

Nature

Interest rate

 

 

 

 

 

Tembok Planej. E Desenv. Imob. Ltda. (Vistta Laguna)

-

11,044

Construction

12% p.a. + IGPM

Acquarelle Civilcorp Incorporações Ltda.

129

287

Construction

12% p.a. + IGPM

Manhattan Residencial I (a)

2,487

53,862

Construction

10% p.a. + TR

Target Offices & Mall

11,728

3,105

Construction

12% p.a. + IGPM

Scena Laguna - Tembok Planej. e Desenv. Imob. Ltda.

4,114

10,520

Construction

12% p.a. + IGPM

Fit Campolim SPE Emp. Imob. Ltda.

16,924

14,097

Construction

113.5% of 126.5% of CDI

Acedio SPE Emp. Imob. Ltda.

3,940

3,260

Construction

113.5% of 126.5% of CDI

Interativa Emp. e Part. Ltda.

4,413

-

Construction

12% p.a.

Atua Construtora e Incorporadora S.A.

12,167

12,168

Construction

113.50% to 112% of CDI

Other

439

850

Construction

Several

Total receivable - Consolidated

56,341

109,193

 

 

 

 

 

 

 

Fit 34 SPE Empreendimentos Imobiliários Ltda.

23,179

21,925

Construction

6% p.a.

Fit 03 SPE Empreendimentos Imobiliários Ltda.

8,363

7,912

Construction

6% p.a.

Fit 11 SPE Empreendimentos Imobiliários Ltda.

6,247

5,910

Construction

6% p.a.

Gafisa Spe-113 Empr Imob

-

3,788

Construction

100% of CDI

Parque dos Pássaros

5,915

2,725

Construction

6% p.a.

Dubai Residencial

3,309

2,650

Construction

6% p.a.

Parque Arvores

2,399

2,270

Construction

6% p.a.

Parque Aguas

2,441

1,772

Construction

6% p.a.

Fit 31 SPE Empreendimentos Imobiliários Ltda.

1,372

1,298

Construction

6% p.a.

Araçagy

4,893

1,232

Construction

6% p.a.

Total payable - Consolidated

58,118

51,482

 

 

 

(a)      See change in Note 9 (h).

 

In the period ended September 30, 2016 the recognized financial income from interest on loans amounted to R$335 (R$7,056 in 2015) in the Company’s  statement and R$348 (R$14,393 in 2015) in the consolidated statement (Note 24).

 

 

88


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

21.  Related parties--Continued

 

21.1.  Balances with related parties--Continued

 

In the period ended September 30, 2016, the Company issued debit notes to the subsidiary Tenda and associate Alphaville, related to the apportionment of administrative expenses, in the total amount of R$13,499 (R$24,767 in 2015).

 

Information regarding management transactions and compensation is described in Note 25.

 

The other explanation related to this note was not subject to significant changes in relation to those disclosed in Note 21 to the financial statements as of December 31,  2015.

 

21.2.  Endorsements, guarantees and sureties

 

The financial transactions of the subsidiaries are guaranteed by the endorsement or surety in proportion to the interest of the Company in the capital stock of such companies, in the amount of R$1,342,330 as of September 30, 2016 (R$1,067,950 as of December 31, 2015).

 

 

22.  Net operating revenue

 

 

Company

Consolidated

 

09/30/2016

09/30/2015

09/30/2016

09/30/2015

Gross operating revenue

Real estate development, sale, barter transactions and construction services

523,433

934,038

1,520,105

1,857,595

(Recognition) Reversal of allowance for doubtful accounts and provision for cancelled contracts (Note 5)

(7,871)

(1,091)

4,280

24,957

Taxes on sale of real estate and services

(43,290)

(82,815)

(106,700)

(147,479)

Net operating revenue

472,272

850,132

1,417,685

1,735,073

 

 

23.  Costs and expenses by nature

 

These are represented by the following:

 

 

Company

Consolidated

 

09/30/2016

09/30/2015

09/30/2016

09/30/2015

Cost of real estate development and sale:

 

 

 

 

Construction cost

(201,677)

(349,191)

(654,471)

(743,662)

Land cost

(130,947)

(124,623)

(254,883)

(234,058)

Development cost

(24,464)

(29,477)

(82,659)

(81,102)

Capitalized financial charges (Note 12)

(94,005)

(88,705)

(132,908)

(119,502)

Maintenance / warranty

(14,254)

(38,396)

(19,811)

(44,679)

Provision for cancelled contracts (Note 5)

-

-

(15,368)

(28,107)

Total cost of real estate development and sale

(465,347)

(630,392)

(1,160,100)

(1,251,110)

 

 

 

 

Commercial expenses:

 

 

 

 

Product marketing expenses

(23,793)

(21,979)

(62,988)

(47,216)

Brokerage and sale commission

(15,321)

(9,254)

(46,504)

(19,879)

Customer Relationship Management (CRM) and corporate marketing expenses

(13,520)

(12,523)

(15,636)

(26,901)

Other

(838)

(5,855)

(1,660)

(12,578)

Total commercial expenses

(53,472)

(49,611)

(126,788)

(106,574)

 

 

 

 

General and administrative expenses:

 

 

 

 

Salaries and payroll charges

(18,751)

(29,181)

(55,411)

(56,835)

Employee benefits

(2,370)

(3,248)

(5,944)

(5,710)

Travel and utilities

(377)

(617)

(1,515)

(1,529)

Services

(5,595)

(6,831)

(18,134)

(17,664)

Rents and condominium fees

(4,741)

(7,371)

(9,996)

(10,713)

IT

(8,580)

(9,176)

(12,641)

(16,857)

Stock option plan (Note 18.2)

(5,506)

(5,859)

(6,557)

(7,465)

Reserve for profit sharing (Note 25.iii)

(12,500)

(17,000)

(22,821)

(25,449)

Other

(359)

(1,153)

(3,176)

(1,464)

Total general and administrative expenses

(58,779)

(80,436)

(136,195)

(143,686)

 

 

 

 

 

Other income (expenses), net:

 

 

 

 

Expenses with lawsuits (Note 16)

(43,511)

(66,668)

(64,928)

(87,006)

Expenses with the adjustment to the stock option plan balance of AUSA

(3,401)

-

(3,401)

-

Other

743

(12,419)

(12,721)

(25,707)

Total other income/(expenses), net

(46,169)

(79,087)

(81,050)

(112,713)

         

 

 

89


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

24.  Financial income (expenses)

 

 

Company

Consolidated

 

09/30/2016

09/30/2015

09/30/2016

09/30/2015

Financial income

 

 

 

 

Income from financial investments

26,137

44,569

52,027

78,374

Derivative transactions (Note 20 (i) (b))

13,526

-

13,526

-

Financial income on loans (Note 21)

335

7,056

348

14,393

Other financial income

1,407

809

6,458

7,237

Total financial income

41,405

52,434

72,359

100,004

 

 

 

 

 

Financial expenses

 

 

 

 

Interest on funding, net of capitalization (Note 12)

(31,035)

(52,906)

(42,917)

(65,934)

Amortization of debenture cost

(2,175)

(2,949)

(2,175)

(2,949)

Payables to venture partners

(951)

(1,524)

(951)

(1,524)

Banking expenses

(3,362)

(3,193)

(6,279)

(5,323)

Derivative transactions (Note 20 (i) (b))

-

(17,610)

-

(17,610)

Discount granted and other financial expenses

(18,554)

(19,247)

(41,932)

(31,884)

Total financial expenses

(56,077)

(97,429)

(94,254)

(125,224)

 

 

25.  Transactions with management and employees

 

(i)     Management compensation

 

In the periods ended September 30, 2016 and 2015, the amounts recorded in the account “general and administrative expenses”, related to the compensation of the Company’s key management personnel are as follows:

 

 

Management compensation

 

Period ended September 30, 2016

Board of Directors

Statutory Board

Fiscal Council

 

 

 

 

Number of members

7

5

3

Fixed compensation for the period (in R$)

 

 

 

Salary / Fees

1,256

2,475

147

Direct and indirect benefits

-

259

-

Monthly compensation (in R$)

140

304

16

Total compensation

1,256

2,734

147

Profit sharing (Note 25 (iii))

-

1,706

-

Total compensation and profit sharing

1,256

4,440

147

 

 

 

 

 

Management compensation

 

Period ended September 30, 2015

Board of Directors

Statutory Board

Fiscal Council

 

 

 

 

Number of members

7

5

3

Fixed compensation for the period (in R$)

 

 

 

Salary / Fees

1,270

2,475

149

Direct and indirect benefits

-

295

-

Monthly compensation (in R$)

141

308

17

Total compensation

1,270

2,770

149

Profit sharing (Note 25 (iii))

-

3,413

-

Total compensation and profit sharing

1,270

6,183

149

       

 

The amount related to expenses for granting stock options to the management members of the Company was R$3,048 for the period ended September 30, 2016 (R$3,787 in 2015).

 

The maximum aggregate compensation of the Company’s management members for the year 2016 was established at R$19,823, as approved at the Annual Shareholders’ Meeting held on April 25, 2016.

 

On the same occasion the compensation limit of the members of the Company’s Fiscal Council for their next term of office that ends in the Annual Shareholders’ Meeting to be held in 2017, was set at R$245.

 

 

90


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

25.  Transactions with management and employees--Continued

 

(i)     Management compensation--Continued

 

       The subsidiary Tenda has an administrative structure segregated from the Company, therefore, the amounts recorded in the heading “General and Administrative Expenses” in the consolidated balance are added by the compensation of its Management members and are as follows:

 

 

Management compensation

 

Period ended September 30, 2016

Board of Directors

Statutory Board

Fiscal Council

 

 

 

 

Number of members (a)

10

10

3

Fixed compensation for the period (in R$)

 

 

 

Salary / Fees

221

3,842

45

Direct and indirect benefits

-

538

-

Monthly compensation (in R$)

25

487

5

Total compensation

221

4,380

45

Profit sharing (Note 25 (iii))

-

4,247

-

Total compensation and profit sharing

221

8,627

45

 

 

 

 

 

Management compensation

 

Period ended September 30, 2015

Board of Directors

Statutory Board

Fiscal Council

 

 

 

 

Number of members (a)

10

10

3

Fixed compensation for the period (in R$)

 

 

 

Salary / Fees

66

3,677

43

Direct and indirect benefits

-

522

-

Monthly compensation (in R$)

27

467

5

Total compensation

66

4,199

43

Profit sharing (Note 25 (iii))

-

4,483

-

Total compensation and profit sharing

66

8,682

43

       

 

(a)     Of the ten members of the Board of Directors of Tenda, eight serve on both Gafisa and Tenda, while only two serve on the subsidiary Tenda.

 

The amount related to the stock compensation of the subsidiary Tenda’s management members was R$969 for the period ended September 30, 2016 (R$1,483 in 2015).

 

The maximum aggregate compensation of the subsidiary Tenda’s management members for the year 2016 was established at R$18,143, for fixed and share-based compensation, as approved at the Annual Shareholders’ Meeting held on April 27, 2016.

 

On the same occasion the compensation limit of the Company’s Fiscal Council members for their next term of office that ends in the Annual Shareholders’ meeting to be held in 2017 was approved at R$188.

 

 

(ii)    Sales

 

In the period ended September 30, 2016, there was no transaction in connection with units sold to the Management. The sales receivable is R$930 (R$1,610 in 2015).

                                                                                                                                                                             

 

91


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

25.  Transactions with management and employees--Continued

 

 

(iii)   Profit sharing

 

In the period ended September 30, 2016, the Company recorded a provision for profit sharing amounting to R$12,500 in the Company’s  statement (R$17,000 in 2015) and R$22,821 in the consolidated statement (R$25,449 in 2015) in the account “General and Administrative Expenses " (Note 23).

 

 

Company

Consolidated

 

09/30/2016

09/30/2015

09/30/2016

09/30/2015

 

 

 

 

 

Executive officers

1,706

3,413

5,953

7,896

Other employees

10,794

13,587

18,896

23,217

Reversal in subsidiary Tenda

-

-

(2,028)

(5,664)

 

12,500

17,000

22,821

25,449

 

The other explanation related to this note was not subject to significant changes in relation to those disclosed in Note 25 to the financial statements as of December 31, 2015.

 

 

26.  Insurance

 

       For the period ended September 30, 2016 insurance contracts were not subject to significant changes in relation to those disclosed in Note 26 to the financial statements as of December 31, 2015.

 

 

27.  Earning (loss) per share

 

The following table shows the calculation of basic and diluted earnings and loss per share. In view of the loss for the period ended September 30, 2016, shares with dilutive potential are not considered, because the impact would be antidilutive.

 

 

 

 

 

09/30/2016

09/30/2015

Basic numerator

 

 

Proposed dividends and interest on equity

-

-

Undistributed profit (loss)

(164,288)

73,623

Undistributed profit (loss), available for the holders of common shares

(164,288)

73,623

 

 

 

Basic denominator (in thousands of shares)

 

 

Weighted average number of shares

363,626

367,603

 

 

 

Basic earning (loss) per share in Reais

(0.4518)

0.2003

 

Diluted numerator

 

 

Proposed dividends and interest on equity

-

-

Undistributed earning (loss)

(164,288)

73,623

Undistributed earning (loss), available for the holders of common shares

(164,288)

73,623

 

 

 

Diluted denominator (in thousands of shares)

 

 

Weighted average number of shares

363,626

367,603

Stock options

1,408

2,316

Anti-dilutive effect

(1,408)

-

Diluted weighted average number of shares

363,626

369,919

 

 

 

Diluted earning (loss) per share in Reais

(0.4518)

0.1990

 

The other explanation related to this note was not subject to significant changes in relation to those disclosed in Note 27 to the financial statements as of December 31, 2015.

 

 

92


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

28.  Segment information

 

The quarterly information of the business segments of the Company is as follows:

 

 

   

Consolidated

 

Gafisa

Tenda

09/30/2016

Net operating revenue

651,881

765,804

1,417,685

Operating costs

(621,378)

(538,722)

(1,160,100)

 

 

 

Gross profit

30,503

227,082

257,585

 

 

 

Selling expenses

(61,692)

(65,096)

(126,788)

General and administrative expenses

(74,070)

(62,125)

(136,195)

Other income / (expenses), net

(48,054)

(32,996)

(81,050)

Depreciation and amortization

(23,332)

(9,119)

(32,451)

Financial expenses

(55,868)

(38,386)

(94,254)

Financial income

48,493

23,866

72,359

Tax expenses

(6,645)

(13,034)

(19,679)

 

 

 

Profit / (loss) for the period attributable to the shareholders of the Company

(200,749)

36,461

(164,288)

 

 

 

Customers (short and long terms)

1,094,770

474,637

1,569,407

Inventories (short and long terms)

1,903,451

739,096

2,642,547

Other assets

1,453,006

688,358

2,141,364

 

 

 

Total assets

4,451,227

1,902,091

6,353,318

 

 

 

 

Total liabilities

2,680,545

744,024

3,424,569

 

 

   

Consolidated

 

Gafisa

Tenda

09/30/2015

Net operating revenue

1,090,933

644,140

1,735,073

Operating costs

(793,688)

(457,422)

(1,251,110)

 

 

 

Gross profit

297,245

186,718

483,963

 

 

 

Selling expenses

(59,611)

(46,963)

(106,574)

General and administrative expenses

(80,438)

(63,248)

(143,686)

Other income / (expenses), net

(80,505)

(32,208)

(112,713)

Depreciation and amortization

(24,780)

(10,894)

(35,674)

Financial expenses

(92,626)

(34,565)

(125,224)

Financial income

62,197

39,774

100,004

Tax expenses

(2,485)

(771)

(3,256)

 

 

 

Profit / (loss) for the period attributable to the shareholders of the Company

30,312

43,311

73,623

 

 

 

Customers (short and long terms)

1,465,094

510,901

1,975,995

Inventories (short and long terms)

1,851,273

636,113

2,487,386

Other assets

1,778,752

817,391

2,596,143

 

 

 

Total assets

5,095,119

1,964,405

7,059,524

 

 

 

 

Total liabilities

3,120,252

826,663

3,946,915

 

The other explanations related to this note did not suffer significant changes in relation to the disclosures in Note 28 to the financial statements as of December 31, 2015.

 

 

93


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

29.  Real estate ventures under construction – information and commitments

 

In order to meet the provisions of paragraphs 20 and 21 of ICPC 02, the recognized revenue amounts and incurred costs are shown in the statement of profit or loss, and the advances received are shown in the account “Payables for purchase of property and advances from customer”. The Company shows the following information on the ventures under construction as of September 30, 2016 and December 31, 2015:

 

 

Consolidated

 

 

09/30/2016

12/31/2015

 

 

 

 

Unappropriated sales revenue of units sold

 

680,138

777,679

Estimated cost of units sold to be incurred

 

(400,585)

(445,265)

Estimated cost of units in inventory to be incurred

 

(769,450)

(795,995)

 

 

 

 

(i) Unappropriated sales revenue of units sold

 

 

 

Ventures under construction:

 

 

 

Contracted sales revenue

 

2,237,895

2,761,219

Appropriated sales revenue

 

(1,557,757)

(1,983,540)

Unappropriated sales revenue (a)

 

680,138

777,679

 

(ii) Estimated cost of units sold to be incurred

 

 

 

Ventures under construction:

 

 

 

Estimated cost of units

 

(1,346,070)

(1,626,339)

Incurred cost of units

 

945,485

1,181,074

Estimated cost to be incurred (b)

 

(400,585)

(445,265)

 

(iii) Estimated costs of units in inventory to be incurred

 

 

 

Ventures under construction:

 

 

 

Estimated cost of units

 

(1,516,938)

(1,724,372)

Incurred cost of units

 

747,488

928,377

Estimated cost to be incurred

 

(769,450)

(795,995)

 

(a)   The unappropriated sales revenue of units sold are measured by the face value of contracts, plus the contract adjustments and deducted from cancellations, not considering related taxes and adjustment to present value, and do not include ventures that are subject to restriction due to a suspensive clause (legal period of 180 days in which the Company can cancel a development) and therefore is not appropriated to profit or loss.

(b)   The estimated cost of units sold to be incurred does not include financial charges, which are appropriated to properties for sale and profit or loss (cost of real estate sold) in proportion to the real estate units sold to the extent they are incurred.

 

       As of September 30, 2016, the percentage of assets consolidated in the quarterly information related to ventures included in the equity segregation structure of the development stood at 45.2% (33.1% in 2015).

 

 

 

 

 

94


 
 

(A free translation of the original report in Portuguese as published in Brazil)

 

Gafisa S.A.

Notes to the individual and consolidated quarterly information--Continued

September 30, 2016

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

30.  Communication with regulatory bodies

 

The explanations related to this note were not subject to significant changes in relation to those disclosed in Note 30 to the financial statements as of December 31, 2015.

 

 

31.  Subsequent events

 

(i)   Funds deposited with third parties

 

As of October 03, 2016, the subsidiary Tenda made the payment of the 17th interest installment and the 11th amortization installment related to its first debenture placement, in the total amount of R$32,836, of which R$30,000 of principal and R$2,836 of interests (Note 4.1(b)).

 

(ii)  Extension of the maturity of the Tenda’s debenture installments

 

On October 10, 2016, at the Debentureholders’ Meeting, it was approved the extension of the maturity of the 12th installment of the face value amounting to R$70,000 to November 11, 2016,  new due date of the placement, and on such date, the interest related to the capitalization period beginning on October 11, 2016 and ending on November 11, 2016  will be paid (thus becoming the 19th interest installment). Additionally, in relation to the 18th interest installment payable until October 11, 2016, its requirement was maintained under the terms of the Indenture, and the same was settled for the total amount of R$352 on the respective due date.

 

(iii) Secondary Offering of Shares and Listing in Novo Mercado - Tenda

 

On October 19, 2016, the members of Gafisa’s Board of Directors approved the application for registration with the Brazilian Securities Commission (CVM) of a public offering for secondary distribution of registered book-entry common shares, with no par value, issued by Tenda and owned by Gafisa, all unrestricted and clear from any liens or encumbrances, and on the same it was approved, in the Shareholders’ Meeting of Tenda, the submission of the application for listing the stocks it issues in Novo Mercado segment of BM&FBovespa S.A. – Bolsa de Valores, Mercadorias e Futuros.

 

According to the disclosed significant fact, such communication should not be considered an announcement of stock offering. The carry out of the Offering is subject to domestic and international capital markets conditions. The application for Offering registration will be analyzed, thus the Offering will only begin after CVM grants the respective registration. Likewise, the submission of the Listing Application will be analyzed, so the listing of Tenda’s stock in the Novo Mercado segment of BM&FBovespa will begin only after BM&FBovespa grants the respective registration.

 

***

 

 

95


 
 

(A free translation from the original in Portuguese into English)

 

Gafisa S.A.

 

Other information deemed relevant by the Company

 

1.   SHAREHOLDERS HOLDING MORE THAN 5% OF THE VOTING CAPITAL AND TOTAL NUMBER OF OUTSTANDING SHARES

 

 

9/30/2016

 

Common shares

Shareholder

Shares

%

Treasury shares

14,160,533

3.75%

Polo Capital

55,135,486

14.58%

Pátria Investimentos

21,171,700

5.60%

Outstanding shares

287,598,443

76.07%

     

Total shares

378,066,162

100.00%

     

9/30/2015

 

Common shares

Shareholder

Shares

%

Treasury shares

10,584,757

2.80%

FUNCEF – Fundação dos Economiários Federais

23,835,800

6.30%

Pátria Investimentos

21,171,100

5.60%

Polo Capital

69,108,486

18.28%

Outstanding shares

253,366,019

67.02%

     

Total shares

378,066,162

100.00%

 

 

 

 

 

96


 
 

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Gafisa S.A.

 

Other information deemed relevant by the Company

 

2.   SHARES HELD BY PARENT COMPANIES, MANAGEMENT AND BOARD

 

 

9/30/2016

Common shares

Shares

%

Shareholders holding effective control of the Company

76,307,186

20.18%

Board of Directors

592,609

0.16%

Executive directors

2,245,362

0.59%

Fiscal council

-

-

Executive control, board members, officers and fiscal council

79,145,157

20.93%

Treasury shares

14,160,533

3.75%

Outstanding shares in the market (*)

284,760,472

75.32%

Total shares

378,066,162

100.00%

9/30/2015

Common shares

Shares

%

Shareholders holding effective control of the Company

114,115,386

30.18%

Board of Directors

592,609

0.16%

Executive directors

1,774,245

0.47%

Fiscal council

-

-

Executive control, board members, officers and fiscal council

116,482,240

30.81%

Treasury shares

10,584,757

2.80%

Outstanding shares in the market (*)

250,999,165

66.39%

Total shares

378,066,162

100.00%

 

(*) Excludes shares of effective control, management, board and in treasury.

 

 

 

97


 
 

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Gafisa S.A.

 

Other relevant information

 

3 – COMMITMENT CLAUSE

 

The Company, its shareholders, directors and board members undertake to settle, through arbitration, any and all disputes or controversies that may arise between them, related to or originating from, particularly, the application, validity, effectiveness, interpretation, breach and the effects thereof, of the provisions of Law No. 6404/76, the Company's By-Laws, rules determined by the Brazilian Monetary Council (CMN), by the Central Bank of Brazil and by the Brazilian Securities Commission (CVM), as well as the other rules that apply to the operation of the capital market in general, in addition to those established in the New Market Listing Regulation, Participation in the New Market Contract and in the Arbitration Regulation of the Chamber of Market Arbitration.

 

 

 

98


 
 

(A free translation from the original in Portuguese into English)

 

Gafisa S.A.

 

Report on the review of quarterly information - ITR

 

 

To

Board Members and Shareholders of

Gafisa S.A.

São Paulo - SP

 

 

We have reviewed the accompanying individual and consolidated interim financial information of Gafisa S.A. (“Company”), identified as Company and Consolidated, respectively, contained in the Quarterly Information (ITR) for the quarter ended September 30, 2016, which comprises the balance sheet as at September 30, 2016 and the respective statement of profit or loss and statement of comprehensive income (loss) for the quarter and nine-month period then ended, and the statement of changes in equity and statement of cash flows for the nine-month period then ended, including explanatory notes.

 

 

The Company’s management is responsible for the preparation of individual interim financial information in accordance with the Accounting Pronouncements Committee (CPC) Technical Pronouncement (CPC) 21 (R1) – Interim Financial Reporting and the consolidated interim financial information in accordance with CPC 21 (R1) and IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board (IASB) which considers the Technical Orientation - OCPC 04 - Application of the Technical Interpretation ICPC 02 to the Brazilian Real Estate Development Entities, edited by the Accounting Pronouncements Committee (CPC) and approved by the Brazilian Securities Commission (CVM) and the Federal Accounting Council (CFC), as well as for the presentation of these information in compliance with the rules issued by the CVM, applicable to the preparation of Quarterly Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review.

 

 

Scope of review

We conducted our review according to the Brazilian and international review standards of interim financial information (NBC TR 2410 – Review of Interim Financial Information Performed by the Auditor of the Entity, and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of inquiries, mainly of the people responsible for the financial and accounting matters, and the application of analytical and other review procedures. The scope of a review is significantly narrower than that of an audit conducted in accordance with audit standards and, accordingly, it did not permit us to obtain assurance that we took notice of all significant matters that could have been raised in an audit. Therefore, we did not express an audit opinion.

 

 

Conclusion from the individual and consolidated interim financial information prepared in accordance with CPC 21(R1)

Based on our review, we are not aware of any fact that makes us believe that the individual and consolidated interim financial information included in the Quarterly Information referred to above was not prepared, in all significant respects, in accordance with CPC 21 (R1) applicable to the preparation of Quarterly Information (ITR), and presented in compliance with the rules issued by the CVM.

 

 

 

 

99


 
 

(A free translation from the original in Portuguese into English)

 

Gafisa S.A.

 

Conclusion from the consolidated interim information prepared in accordance with IAS 34, which considers the Technical Orientation - OCPC 04 – Application of the Technical Interpretation ICPC 02 to the Brazilian Real Estate Development Entities, edited by the Accounting Pronouncement Committee (CPC) and approved by the Brazilian Securities Commission (CVM) and the Federal Accounting Council (CFC)

Based on our review, we are not aware of any fact that makes us believe that the consolidated interim financial information included in the Quarterly Information referred to above was not prepared, in all significant respects, in accordance with IAS 34, issued by the IASB, which considers the Technical Orientation - OCPC 04 - Application of technical interpretation ICPC02 to the Brazilian Real Estate Development Entities, issued by the CPC, and approved by the CVM and the CFC applicable to the preparation of Quarterly Information (ITR), and presented in compliance with the rules issued by the CVM.

 

Emphasis of matter

As described in Note 2, the individual (Company) and consolidated interim financial information has been prepared in accordance with the accounting practices adopted in Brazil  (CPC 21 (R1)). The consolidated interim financial information prepared in accordance with International Financial Reporting Standards (IFRS) applicable to real estate entities in Brazil also considers technical guideline OCPC 04 issued CPC. Such technical guideline addresses the recognition of real state revenues and involves issues related to meaning and application of the concept of continuous transfer of risks, rewards and control on the sale of real estate units, as detailed in Note 2. Our opinion is not qualified in this respect.

 

Other matters

 

Statements of value added

We have also reviewed the individual and consolidated statements of value added (DVA) for the nine-month period ended September 30, 2016, prepared under the responsibility of the Company’s management, whose presentation in the interim financial information is required by the rules of the CVM applicable to Quarterly Information (ITR) and as supplementary information under IFRS that do not require the presentation of DVA. These statements were subject to the same previously described review procedures and, based on our review, we are not aware of any fact that makes us believe that they were not prepared, in all significant respects, according to the individual and consolidated interim financial information taken as a whole.

 

São Paulo, November 8, 2016

 

KPMG Auditores Independentes

CRC 2SP014428/O-6

 

 

Giuseppe Masi

Accountant CRC 1SP176273/O-7

 

 

100


 
 

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Gafisa S.A.

 

Reports and statements \ Management statement of interim financial information

Management statement of interim financial information

 

STATEMENT

 

Gafisa S.A. management, CNPJ 01.545.826/0001-07, located at Av. Nações Unidas, 8501, 19th floor, Pinheiros, São Paulo, states as per article 25 of CVM Instruction 480 issued in December 07, 2009:

 

i)    Management has reviewed, discussed and agreed with the auditor’s conclusion expressed on the report on review interim financial Information for the period ended September 30, 2016; and

 

ii)   Management has reviewed and agreed with the interim information for the period ended September 30, 2016.

 

São Paulo, November 8, 2016

 

GAFISA S.A.

 

Management

 

 

101


 
 

(A free translation from the original in Portuguese into English)

 

Gafisa S.A.

 

Reports and Statements \ Management statement on the report on review of interim financial information

 

Management Statement on the Review Report

 

STATEMENT

 

Gafisa S.A. management, CNPJ 01.545.826/0001-07, located at Av. Nações Unidas, 8501, 19th floor, Pinheiros, São Paulo, states as per article 25 of CVM Instruction 480 issued in December 07, 2009:

 

i)    Management has reviewed, discussed and agreed with the auditor’s conclusion expressed on the report on review interim financial Information for the period ended September 30, 2016; and

 

ii)   Management has reviewed and agreed with the interim information for the period ended September 30, 2016.

 

São Paulo, November 8, 2016

 

GAFISA S.A.

 

Management

 

 

 

102

 

SIGNATURE

 
 
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: November 23, 2016
 
Gafisa S.A.
 
By:
/s/ Sandro Gamba

 
Name:   Sandro Gamba
Title:     Chief Executive Officer