gfaitr2q17_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 August, 2017

(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

June 30, 2017

(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 

3
Individual financial statements    

Balance sheet - Assets     

4

Balance sheet - Liabilities      

5

Statement of income          

6

Statement of comprehensive income (loss)      

7

Statement of cash flows        

8
Statements of changes in Equity  

01/01/2017 to 03/31/2017  

9

01/01/2016 to 03/31/2016      

10

Statement of value added   

11
Consolidated Financial Statements  

Balance sheet - Assets  

12

Balance sheet - Liabilities       

13

Statement of income    

14

Statement of comprehensive income (loss)        

15

Statement of cash flows         

16
Statements of changes in Equity  

01/01/2017 to 03/31/2017         

17

01/01/2016 to 03/31/2016       

18

Statement of value added  

19

Comments on performance    

20

Notes to interim financial information    

40

Other information deemed relevant by the Company       

75
Reports and statements   

Report on review of interim financial information        

78

Management statement of interim financial information 

80

Management statement on the report on review of interim financial information     

81
 

2

 


 
 

 

COMPANY DATA / CAPITAL COMPOSITION

 

Number of Shares

CURRENT QUARTER

(in thousands)

06/30/2017

Paid-in Capital

 

Common

28,040

Preferred

-

Total

28,040

Treasury shares

 

Common

973

Preferred

-

Total

973

     

 

 

 

 

 

 

 

 

3

 


 
 

 

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

 

CODE

DESCRIPTION

ACTUAL QUARTER 06/30/2017

PRIOR YEAR 12/31/2016

1

Total Assets

4,429,187

5,225,376

1.01

Current Assets

1,478,708

2,107,806

1.01.01

Cash and cash equivalents

13,405

19,811

1.01.01.01

Cash and banks

13,405

19,811

1.01.02

Short-term investments

149,052

163,562

1.01.02.01

Fair value of short-term investments

149,052

163,562

1.01.03

Accounts receivable

432,082

524,337

1.01.03.01

Trade accounts receivable

432,082

524,337

1.01.03.01.01

Receivables from clients of developments

416,341

503,923

1.01.03.01.02

Receivables from clients of construction and services rendered

15,741

20,414

1.01.04

Inventories

809,875

870,201

1.01.04.01

Properties for sale

809,875

870,201

1.01.07

Prepaid expenses

5,237

2,102

1.01.07.01

Prepaid expenses and others

5,237

2,102

1.01.08

Other current assets

69,057

527,793

1.01.08.01

Non current assets held for sale

3,270

3,306

1.01.08.02

Assets from discontinued operations

-

439,020

1.01.08.02.01

Disposal group held for sale

-

439,020

1.01.08.03

Others

65,787

85,467

1.01.08.03.01

Other assets

31,436

39,280

1.01.08.03.02

Derivative financial instruments

96

-

1.01.08.03.03

Receivables from related parties

34,255

46,187

1.02

Non current assets

2,950,479

3,117,570

1.02.01

Non current assets

864,959

951,563

1.02.01.03

Accounts receivable

175,618

225,270

1.02.01.03.01

Receivables from clients of developments

175,618

225,270

1.02.01.04

Inventories

496,860

535,376

1.02.01.09

Others non current assets

192,481

190,917

1.02.01.09.03

Other assets

172,549

156,358

1.02.01.09.04

Receivables from related parties

19,815

25,529

1.02.01.09.05

Derivative Financial Instruments

117

9,030

1.02.02

Investments

2,044,224

2,116,509

1.02.03

Property and equipment

20,489

21,720

1.02.03.01

Operation property and equipment

20,489

21,720

1.02.04

Intangible assets

20,807

27,778

1.02.04.01

Intangible assets

20,807

27,778

 

 

 

4

 


 
 

 

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

CODE

DESCRIPTION

ACTUAL QUARTER 06/30/2017

PRIOR YEAR 12/31/2016

2

Total Liabilities

4,429,187

5,225,376

2.01

Current liabilities

2,328,636

2,458,597

2.01.01

Social and labor obligations

37,121

28,041

2.01.01.02

Labor obligations

37,121

28,041

2.01.01.02.01

Salaries, payroll charges and profit sharing

37,121

28,041

2.01.02

Suppliers

60,759

61,177

2.01.02.01

Local suppliers

60,759

61,177

2.01.03

Tax obligations

34,308

35,819

2.01.03.01

Federal tax obligations

34,308

35,819

2.01.04

Loans and financing

764,314

953,872

2.01.04.01

Loans and financing

590,072

639,733

2.01.04.02

Debentures

174,242

314,139

2.01.05

Other obligations

1,344,189

1,300,634

2.01.05.01

Payables to related parties

1,099,823

1,073,255

2.01.05.02

Others

244,366

227,379

2.01.05.02.04

Obligations for purchase of properties and advances from customers

151,582

146,522

2.01.05.02.05

Other payables

64,712

50,660

2.01.05.02.07

Obligations assumed on the assignment of receivables

28,072

24,907

2.01.05.02.08

Derivative financial instruments

-

5,290

2.01.06

Provisions

87,945

79,054

2.01.06.01

Tax, labor and civel lawsuits

87,945

79,054

2.01.06.01.01

Tax lawsuits

975

1,369

2.01.06.01.02

Labor lawsuits

20,894

23,818

2.01.06.01.04

Civel lawsuits

66,076

53,867

2.02

Non current liabilities

726,204

838,454

2.02.01

Loans and financing

407,427

504,326

2.02.01.01

Loans and financing

299,962

367,197

2.02.01.01.01

Loans and financing in local currency

299,962

367,197

2.02.01.02

Debentures

107,465

137,129

2.02.02

Other liabilities

141,331

154,435

2.02.02.02

Others

141,331

154,435

2.02.02.02.03

Obligations for purchase of properties and advances from customers

71,150

90,311

2.02.02.02.04

Other liabilities

14,645

13,218

2.02.02.02.06

Obligations assumed on the assignment of receivables

55,536

50,906

2.02.03

Deferred taxes

100,405

100,405

2.02.03.01

Deferred income tax and social contribution

100,405

100,405

2.02.04

Provisions

77,041

79,288

2.02.04.01

Tax, labor and civel lawsuits

77,041

79,288

2.02.04.01.01

Tax lawsuits

2,227

1,755

2.02.04.01.02

Tax and labor lawsuits

34,904

33,350

2.02.04.01.04

Civel lawsuits

39,910

44,183

2.03

Equity

1,374,347

1,928,325

2.03.01

Capital

2,521,152

2,740,662

2.03.02

Capital Reserves

52,077

49,424

2.03.02.04

Granted options

155,501

153,165

2.03.02.05

Treasury shares

-30,172

-32,524

2.03.02.07

Reserve for expenditures with public offering

-71,217

-71,217

2.03.02.08

Result of transfers in treasury shares

-2,035

-

2.03.05

Retained earnings/accumulated losses

-1,198,882

-861,761

 

 

5

 


 
 

 

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

     

CODE

DESCRIPTION

ACTUAL QUARTER 04/01/2017 to 06/30/2017

YEAR TO DATE 01/01/2017 to 06/30/2017

SAME QUARTER FROM PREVIOUS YEAR 04/01/2016 to 06/30/2016

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2016 to 06/30/2016

3.01

Gross Sales and/or Services

110,274

214,301

159,168

286,141

3.01.01

Revenue from real estate development

121,179

234,721

173,838

311,851

3.01.03

Taxes on real estate sales and services

-10,905

-20,420

-14,670

-25,710

3.02

Cost of sales and/or services

-125,972

-232,431

-140,052

-264,918

3.02.01

Cost of real estate development

-125,972

-232,431

-140,052

-264,918

3.03

Gross profit

-15,698

-18,130

19,116

21,223

3.04

Operating expenses/income

-120,276

-238,353

-61,793

-119,718

3.04.01

Selling expenses

-18,444

-34,649

-17,606

-32,017

3.04.02

General and administrative expenses

-15,573

-33,973

-19,523

-46,525

3.04.05

Other operating expenses

-40,235

-68,336

-24,888

-46,683

3.04.05.01

Depreciation and amortization

-8,679

-17,168

-6,028

-14,100

3.04.05.02

Other operating expenses

-31,556

-51,168

-18,860

-32,583

3.04.06

Income from equity method investments

-46,024

-101,395

224

5,507

3.05

Income (loss) before financial results and income taxes

-135,974

-256,483

-42,677

-98,495

3.06

Financial

-34,485

-71,093

-6,612

-6,586

3.06.01

Financial income

8,292

14,721

11,820

35,677

3.06.02

Financial expenses

-42,777

-85,814

-18,432

-42,263

3.07

Income before income taxes

-170,459

-327,576

-49,289

-105,081

3.08

Income and social contribution taxes

-

-

2,228

-

3.08.01

Current

-

-

2,228

-

3.09

Income (loss) from continuing operation

-170,459

-327,576

-47,061

-105,081

3.10

Income (loss) from descontinuing operation

-9,545

98,175

8,622

13,416

3.10.01

Net income (loss) from discontinued operations

-9,545

98,175

8,622

13,416

3.11

Income (loss) for the period

-180,004

-229,401

-38,439

-91,665

3.99

Earnings per Share – (Reais / Share)

-

-

-

-

3.99.01

Basic Earnings per Share

-

-

-

-

3.99.01.01

ON

-6.70490

-8.54490

-1.42000

-3.38630

3.99.02

Diluted Earnings per Share

-

-

-

-

3.99.02.01

ON

-6.70490

-8.54490

-1.42000

-3.38630

 

 

6

 


 
 

 

 

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

   

CODE

DESCRIPTION

ACTUAL QUARTER 04/01/2017 to 06/30/2017

YEAR TO DATE 01/01/2017 to 06/30/2017

SAME QUARTER FROM PREVIOUS YEAR 04/01/2016 to 06/30/2016

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2016 to 06/30/2016

4.01

Income (loss) for the period

-180,004

-229,401

-38,439

-91,665

4.03

Comprehensive income (loss) for the period

-180,004

-229,401

-38,439

-91,665

 

 

7

 


 
 

 

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

CODE

DESCRIPTION

YEAR TO DATE 01/01/2017 to 06/30/2017

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2016 to 06/30/2016

6.01

Net cash from operating activities

69,718

12,245

6.01.01

Cash generated in the operations

-127,224

-35,597

6.01.01.01

Income (loss) before income and social contribution taxes

-327,576

-105,082

6.01.01.02

Income from equity method investments

101,395

-5,507

6.01.01.03

Stock options expenses

1,703

3,189

6.01.01.04

Unrealized interest and finance charges, net

32,441

41,752

6.01.01.05

Financial instruments

-646

-12,216

6.01.01.06

Depreciation and amortization

17,168

14,100

6.01.01.07

Provision for legal claims

46,691

30,405

6.01.01.08

Provision for profit sharing

8,357

6,250

6.01.01.09

Warranty provision

-3,315

-7,872

6.01.01.10

Write-off of property and equipment, net

-

99

6.01.01.11

Allowance for doubtful accounts

7,699

5,598

6.01.01.12

Write-down to net realizable value of properties for sale

-11,141

-6,302

6.01.01.14

Provision for penalties due to delay in construction works

-

-11

6.01.02

Variation in assets and liabilities

196,942

47,842

6.01.02.01

Trade accounts receivable

120,624

84,856

6.01.02.02

Properties for sale

109,983

-41,596

6.01.02.03

Other accounts receivable

364

-17,744

6.01.02.04

Prepaid expenses

-3,135

703

6.01.02.05

Obligations for purchase of properties and adv. from customers

-14,101

-47,658

6.01.02.06

Taxes and contributions

-1,511

-4,384

6.01.02.07

Suppliers

5,155

4,002

6.01.02.08

Salaries and payable charges

723

-12,154

6.01.02.09

Transactions with related parties

8,279

111,779

6.01.02.10

Other obligations

-29,439

-29,962

6.02

Net cash from investing activities

215,950

102,214

6.02.01

Purchase of property and equipment and intangible assets

-8,966

-12,309

6.02.02

Increase in investments

441

-16,997

6.02.03

Redemption of short-term investments

589,679

581,255

6.02.04

Purchase of short-term investments

-575,169

-449,735

6.02.05

Receipt preemptive right processes

219,510

-

6.02.06

Transaction cost

-9,545

-

6.03

Net cash from financing activities

-292,074

-139,337

6.03.02

Increase in loans, financing and debentures

151,888

205,790

6.03.03

Payment of loans, financing and debentures

-470,786

-378,622

6.03.04

Repurchase of treasury shares

-

-8,195

6.03.06

Loan transactions with related parties

6,268

9,448

6.03.07

Obligation with investors

-1,140

-2,433

6.03.08

Disposal of treasury shares

317

5

6.03.10

Assignment of receivables

21,379

34,670

6.05

Net increase (decrease) of cash and cash equivalents

-6,406

-24,878

6.05.01

Cash and cash equivalents at the beginning of the period

19,811

44,044

6.05.02

Cash and cash equivalents at the end of the period

13,405

19,166

 

8

 


 
 

 

INDIVIDUAL STATEMENT OF CHANGES IN EQUITY FROM 01/01/2017 TO 06/30/2017 (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

49,424

-

-861,761

-

1,928,325

5.03

Opening adjusted balance

2,740,662

49,424

-

-861,761

-

1,928,325

5.04

Capital transactions with shareholders

-219,510

2,653

-

-107,720

-

-324,577

5.04.03

Stock option plan

-

2,336

-

-

-

2,336

5.04.04

Treasury shares acquired

-

317

-

-

-

317

5.04.08

Capital reduction

-219,510

-

-

-107,720

-

-327,230

5.05

Total of comprehensive income (loss)

-

-

-

-229,401

-

-229,401

5.05.01

Net income (loss) for the period

-

-

-

-229,401

-

-229,401

5.07

Closing balance

2,521,152

52,077

-

-1,198,882

-

1,374,347

 

 

9

 


 
 

 

INDIVIDUAL STATEMENT OF CHANGES IN EQUITY FROM 04/01/2016 TO 06/30/2016 (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

-

-4,526

-1,225

-

-

-5,751

5.04.03

Stock option plan

-

2,694

-

-

-

2,694

5.04.04

Treasury shares acquired

-

-8,450

-

-

-

-8,450

5.04.05

Treasury shares sold

-

1,230

-1,225

-

-

5

5.05

Total of comprehensive income (loss)

-

-

-

-91,665

-

-91,665

5.05.01

Net income (loss) for the period

-

-

-

-91,665

-

-91,665

5.07

Closing balance

2,740,662

46,328

302,750

-91,665

-

2,998,075

 

 

 

 

10

 


 
 

 

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

CODE

DESCRIPTION

YEAR TO DATE 01/01/2017 to 06/30/2017

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2016 to 06/30/2016

7.01

Revenues

234,721

311,851

7.01.01

Real estate development, sales and services

242,420

317,449

7.01.04

Allowance for doubtful accounts

-7,699

-5,598

7.02

Inputs acquired from third parties

-154,906

-238,707

7.02.01

Cost of Sales and/or Services

-188,751

-208,028

7.02.02

Materials, energy, outsourced labor and other

-64,330

-44,095

7.02.04

Others

98,175

13,416

7.02.04.01

Result from descontinuing operation

98,175

13,416

7.03

Gross value added

79,815

73,144

7.04

Retentions

-17,168

-14,100

7.04.01

Depreciation and amortization

-17,168

-14,100

7.05

Net value added produced by the Company

62,647

59,044

7.06

Added value received on transfer

-86,674

41,184

7.06.01

Income from equity method investments

-101,395

5,507

7.06.02

Financial income

14,721

35,677

7.07

Value added total to be distributed

-24,027

100,228

7.08

Value added distribution

-24,027

100,228

7.08.01

Personnel and payroll charges

45,617

52,935

7.08.01.01

Direct remuneration

45,617

52,935

7.08.02

Taxes and contributions

28,446

35,406

7.08.02.01

Federal

28,446

35,406

7.08.03

Compensation – Interest

131,311

103,552

7.08.03.01

Interest

129,494

99,153

7.08.03.02

Rent

1,817

4,399

7.08.04

Compensation – Company capital

-229,401

-91,665

7.08.04.03

Net income (Retained losses)

-229,401

-91,665

 

 

11

 


 
 

 

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

CODE

DESCRIPTION

ACTUAL QUARTER 06/30/2017

PRIOR YEAR 12/31/2016

1

Total Assets

3,691,059

5,210,089

1.01

Current Assets

1,928,781

3,400,200

1.01.01

Cash and cash equivalents

37,979

29,534

1.01.01.01

Cash and banks

37,979

29,534

1.01.02

Short-term investments

176,594

223,646

1.01.02.01

Fair value of short-term investments

176,594

223,646

1.01.02.01.02

Short-term investments avaliable for sale

176,594

223,646

1.01.03

Accounts receivable

602,295

722,640

1.01.03.01

Trade accounts receivable

602,295

722,640

1.01.03.01.01

Receivables from clients of developments

585,752

701,906

1.01.03.01.02

Receivables from clients of construction and services rendered

16,543

20,734

1.01.04

Inventories

996,928

1,122,724

1.01.07

Prepaid expenses

5,903

2,548

1.01.07.01

Prepaid expenses and others

5,903

2,548

1.01.08

Other current assets

109,082

1,299,108

1.01.08.01

Non current assets for sale

3,270

3,306

1.01.08.02

Assets from discontinued operations

-

1,189,011

1.01.08.02.01

Disposal group held for sale

-

1,189,011

1.01.08.03

Others

105,812

106,791

1.01.08.03.01

Other accounts receivable and others

43,030

49,336

1.01.08.03.02

Receivables from related parties

62,686

57,455

1.01.08.03.03

Derivative financial instruments

96

-

1.02

Non current assets

1,762,278

1,809,889

1.02.01

Non current assets

985,555

957,773

1.02.01.03

Accounts receivable

208,230

271,322

1.02.01.03.01

Receivables from clients of developments

208,230

271,322

1.02.01.04

Inventories

582,445

592,975

1.02.01.09

Others non current assets

194,880

93,476

1.02.01.09.03

Other assets

174,948

58,917

1.02.01.09.04

Receivables from related parties

19,815

25,529

1.02.01.09.05

Derivative financial instruments

117

9,030

1.02.02

Investments

731,405

799,911

1.02.02.01

Interest in associates and affiliates

731,405

799,911

1.02.03

Property and equipment

23,624

23,977

1.02.03.01

Operation property and equipment

23,624

23,977

1.02.04

Intangible assets

21,694

28,228

1.02.04.01

Intangible assets

21,694

28,228

 

 

12

 


 
 

 

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

CODE

DESCRIPTION

ACTUAL QUARTER 06/30/2017

PRIOR YEAR 12/31/2016

2

Total Liabilities

3,691,059

5,210,089

2.01

Current liabilities

1,480,056

2,275,550

2.01.01

Social and labor obligations

39,051

28,880

2.01.01.02

Labor obligations

39,051

28,880

2.01.01.02.01

Salaries, payroll charges and profit sharing

39,051

28,880

2.01.02

Suppliers

73,249

79,120

2.01.03

Tax obligations

46,343

51,842

2.01.03.01

Federal tax obligations

46,343

51,842

2.01.04

Loans and financing

828,442

983,934

2.01.04.01

Loans and financing

654,200

669,795

2.01.04.01.01

In Local Currency

654,200

669,795

2.01.04.02

Debentures

174,242

314,139

2.01.05

Other obligations

405,026

400,908

2.01.05.01

Payables to related parties

90,375

85,611

2.01.05.02

Others

314,651

315,297

2.01.05.02.04

Obligations for purchase of properties and advances from customers

194,787

205,388

2.01.05.02.06

Other payables

83,173

69,921

2.01.05.02.07

Obligations assumed on the assignment of receivables

36,691

34,698

2.01.05.02.08

Derivative financial instruments

-

5,290

2.01.06

Provisions

87,945

79,054

2.01.06.01

Tax, labor and civel lawsuits

87,945

79,054

2.01.06.01.01

Tax lawsuits

975

1,369

2.01.06.01.02

Labor lawsuits

20,894

23,818

2.01.06.01.04

Civel lawsuits

66,076

53,867

2.01.07

Liabilities related to assets from discontinued operations

-

651,812

2.01.07.01

Liabilities on Non-current Assets for Sale

-

651,812

2.01.07.01.01

Liabilities held for sale

-

651,812

2.02

Non current liabilities

832,579

1,004,086

2.02.01

Loans and financing

498,534

653,634

2.02.01.01

Loans and financing

391,069

516,505

2.02.01.01.01

Loans and financing in local currency

391,069

516,505

2.02.01.02

Debentures

107,465

137,129

2.02.02

Other obligations

152,125

166,143

2.02.02.02

Others

152,125

166,143

2.02.02.02.03

Obligations for purchase of properties and advances from customers

71,149

90,309

2.02.02.02.04

Other payables

14,420

11,502

2.02.02.02.06

Obligations assumed on the assignment of receivables

66,556

64,332

2.02.03

Deferred taxes

100,405

100,405

2.02.03.01

Deferred income tax and social contribution

100,405

100,405

2.02.04

Provisions

81,515

83,904

2.02.04.01

Tax, labor and civel lawsuits

81,515

83,904

2.02.04.01.01

Tax lawsuits

2,227

1,755

2.02.04.01.02

Labor lawsuits

39,249

37,837

2.02.04.01.04

Civel lawsuits

40,039

44,312

2.03

Equity

1,378,424

1,930,453

2.03.01

Capital

2,521,152

2,740,662

2.03.01.01

Capital

2,521,152

2,740,662

2.03.02

Capital Reserves

52,077

49,424

2.03.02.04

Granted options

155,501

153,165

2.03.02.05

Treasury shares

-30,172

-32,524

2.03.02.07

Reserve for expenditures with public offering

-71,217

-71,217

2.03.02.08

Result of transfers in treasury shares

-2,035

-

2.03.05

Retained earnings/accumulated losses

-1,198,882

-861,761

2.03.09

Non-controlling interest

4,077

2,128

 

13

 


 
 

 

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

   

CODE

DESCRIPTION

ACTUAL QUARTER 04/01/2017 to 06/30/2017

YEAR TO DATE 01/01/2017 to 06/30/2017

SAME QUARTER FROM PREVIOUS YEAR 04/01/2016 to 06/30/2016

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2016 to 06/30/2016

3.01

Gross Sales and/or Services

147,253

283,792

212,628

383,610

3.01.01

Revenue from real estate development

159,357

306,878

228,838

411,704

3.01.03

Taxes on real estate sales and services

-12,104

-23,086

-16,210

-28,094

3.02

Cost of sales and/or services

-161,656

-315,362

-186,544

-354,070

3.02.01

Cost of real estate development

-161,656

-315,362

-186,544

-354,070

3.03

Gross profit

-14,403

-31,570

26,084

29,540

3.04

Operating expenses/income

-121,817

-231,811

-71,730

-126,368

3.04.01

Selling expenses

-21,184

-40,240

-20,245

-36,991

3.04.02

General and administrative expenses

-19,738

-47,107

-19,524

-46,525

3.04.05

Other operating expenses

-40,444

-68,854

-24,601

-48,686

3.04.05.01

Depreciation and amortization

-8,875

-17,583

-5,644

-15,152

3.04.05.02

Other operating expenses

-31,569

-51,271

-18,957

-33,534

3.04.06

Income from equity method investments

-40,451

-75,610

-7,360

5,834

3.05

Income (loss) before financial results and income taxes

-136,220

-263,381

-45,646

-96,828

3.06

Financial

-33,390

-61,950

-3,079

-4,187

3.06.01

Financial income

9,206

17,076

24,392

41,014

3.06.02

Financial expenses

-42,596

-79,026

-27,471

-45,201

3.07

Income before income taxes

-169,610

-325,331

-48,725

-101,015

3.08

Income and social contribution taxes

-949

-2,295

422

-5,569

3.08.01

Current

-949

-2,295

422

-6,532

3.08.02

Deferred

-

-

-

963

3.09

Income (loss) from continuing operation

-170,559

-327,626

-48,303

-106,584

3.10

Income (loss) from descontinuing operation

-9,545

98,175

10,442

16,372

3.10.01

Net income (loss) from discontinued operations

-9,545

98,175

10,442

16,372

3.11

Income (loss) for the period

-180,104

-229,451

-37,861

-90,212

3.11.01

Income (loss) attributable to the Company

-180,004

-229,401

-38,439

-91,665

3.11.02

Net income attributable to non-controlling interests

-100

-50

578

1,453

3.99

Earnings per Share – (Reais / Share)

-

-

 

 

3.99.01

Basic Earnings per Share

-

-

 

 

3.99.01.01

ON

-6.70490

-8.54490

-1.42000

-3.38630

3.99.02

Diluted Earnings per Share

-

-

 

 

3.99.02.01

ON

-6.70490

-8.54490

-1.42000

-3.38630

 

 

14

 


 
 

 

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

   
           

CODE

DESCRIPTION

ACTUAL QUARTER 04/01/2017 to 06/30/2017

YEAR TO DATE 01/01/2017 to 06/30/2017

SAME QUARTER FROM PREVIOUS YEAR 04/01/2016 to 06/30/2016

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2016 to 06/30/2016

4.01

Consolidated Income (loss) for the period

-180,104

-229,451

-37,861

-90,212

4.03

Consolidated comprehensive income (loss) for the period

-180,104

-229,451

-37,861

-90,212

4.03.01

Income (loss) attributable to the Company

-180,004

-229,401

-38,439

-91,665

4.03.02

Net income attributable to the noncontrolling interests

-100

-50

578

1,453

 

 

 

15

 


 
 

 

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

CODE

DESCRIPTION

YEAR TO DATE 01/01/2017 to 06/30/2017

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2016 to 06/30/2016

6.01

Net cash from operating activities

140,108

26,897

6.01.01

Cash generated in the operations

-139,969

-7,410

6.01.01.01

Income (loss) before income and social contribution taxes

-325,331

-76,598

6.01.01.02

Stock options expenses

1,703

3,189

6.01.01.03

Unrealized interest and finance charges, net

42,735

38,788

6.01.01.04

Depreciation and amortization

17,583

15,152

6.01.01.05

Write-off of property and equipment, net

-

1,182

6.01.01.06

Provision for legal claims

46,777

31,264

6.01.01.07

Warranty provision

-3,315

-7,872

6.01.01.08

Provision for profit sharing

8,357

6,250

6.01.01.09

Allowance for doubtful accounts

7,699

5,598

6.01.01.10

Write-down to net realizable of properties for sale

-11,141

-6,302

6.01.01.11

Provision for penalties due to delay in construction works

-

-11

6.01.01.12

Financial instruments

-646

-12,216

6.01.01.13

Income from equity methods investments

75,610

-5,834

6.01.02

Variation in assets and liabilities

228,118

-19,762

6.01.02.01

Trade accounts receivable

158,442

146,201

6.01.02.02

Properties for sale

147,467

-69,396

6.01.02.03

Other accounts receivable

401

2,408

6.01.02.04

Transactions with related parties

-9,703

25,825

6.01.02.05

Prepaid expenses

-3,355

599

6.01.02.06

Suppliers

-419

-764

6.01.02.07

Obligations for purchase of properties and adv. from customers

-29,761

-59,942

6.01.02.08

Taxes and contributions

-5,499

-9,191

6.01.02.09

Salaries and payable charges

1,814

-12,000

6.01.02.10

Other obligations

-28,974

-37,933

6.01.02.11

Income tax and social contribution paid

-2,295

-5,569

6.01.03

Others

51,959

54,069

6.01.03.01

Net cash from operating activities related to disposal group held for sale

51,959

54,069

6.02

Net cash from investing activities

295,425

132,753

6.02.01

Purchase of property and equipment and intangible assets

-10,696

-14,369

6.02.02

Redemption of short-term investments

687,475

849,852

6.02.03

Purchase of short-term investments

-640,423

-695,962

6.02.04

Investments

-

-12,639

6.02.06

Increase in investments

441

-

6.02.07

Receipt exercise right of first refusal

219,510

-

6.02.08

Transaction cost

-9,545

-

6.02.09

Net cash from investing activities related to disposal group held for sale

48,663

5,871

6.03

Net cash from financing activities

-302,377

-84,553

6.03.02

Increase in loans, financing and debentures

186,282

308,882

6.03.03

Payment of loans and financing

-539,609

-444,519

6.03.06

Payables to venture partners

-1,237

-2,520

6.03.07

Loan transactions with related parties

6,268

9,448

6.03.08

Repurchase of treasury shares

-

-8,195

6.03.09

Disposal of treasury shares

317

5

6.03.11

Assignment of receivables

21,513

41,809

6.03.12

Net cash from financing activities related to disposal group held for sale

24,089

10,537

6.04

Foreign Exchange Gains and Losses on Cash and Cash Equivalents

-124,711

-

6.05

Net increase (decrease) of cash and cash equivalents

8,445

75,097

6.05.01

Cash and cash equivalents at the beginning of the period

29,534

82,640

6.05.02

Cash and cash equivalents at the end of the period

37,979

157,737

 

 

16

 


 
 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FROM 01/01/2017 TO 06/30/2017 (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

49,424

-

-861,761

-

1,928,325

2,128

1,930,453

5.03

Opening adjusted balance

2,740,662

49,424

-

-861,761

-

1,928,325

2,128

1,930,453

5.04

Capital transactions with shareholders

-219,510

2,653

-

-107,720

-

-324,577

1,999

-322,578

5.04.03

Stock option plan

-

2,336

-

-

-

2,336

-

2,336

5.04.05

Treasury shares sold

-

317

-

-

-

317

-

317

5.04.08

Capital reduction

-219,510

-

-

-107,720

-

-327,230

-

-327,230

5.04.10

Low discontinued operation

-

-

-

-

-

-

1,999

1,999

5.05

Total of comprehensive income (loss)

-

-

-

-229,401

-

-229,401

-50

-229,451

5.05.01

Net income (loss) for the period

-

-

-

-229,401

-

-229,401

-50

-229,451

5.07

Closing balance

2,521,152

52,077

-

-1,198,882

-

1,374,347

4,077

1,378,424

 

17

 


 
 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FROM 01/01/2016 TO 06/30/2016 (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

-

-4,526

-1,225

-

-

-5,751

17

-5,734

5.04.03

Stock option plan

-

2,694

-

-

-

2,694

-

2,694

5.04.04

Treasury shares acquired

-

-8,450

-

-

-

-8,450

-

-8,450

5.04.05

Treasury shares sold

-

1,230

-1,225

-

-

5

-

5

5.04.09

Acquisition of non controlling interests

-

-

-

-

-

-

17

17

5.05

Total of comprehensive income (loss)

-

-

-

-91,665

-

-91,665

1,453

-90,212

5.05.01

Net income (loss) for the period

-

-

-

-91,665

-

-91,665

1,453

-90,212

5.07

Closing balance

2,740,662

46,328

302,750

-91,665

-

2,998,075

3,215

3,001,290

18

 


 
 

 

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

CODE

DESCRIPTION

YEAR TO DATE 01/01/2017 to 06/30/2017

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2016 to 06/30/2016

7.01

Revenues

306,878

411,704

7.01.01

Real estate development, sales and services

314,577

417,302

7.01.04

Allowance for doubtful accounts

-7,699

-5,598

7.02

Inputs acquired from third parties

-227,987

-313,520

7.02.01

Cost of Sales and/or Services

-250,562

-282,305

7.02.02

Materials, energy, outsourced labor and other

-75,600

-47,587

7.02.04

Others

98,175

16,372

7.02.04.01

Result from descontinuing operation

98,175

16,372

7.03

Gross value added

78,891

98,184

7.04

Retentions

-17,583

-15,152

7.04.01

Depreciation and amortization

-17,583

-15,152

7.05

Net value added produced by the Company

61,308

83,032

7.06

Value added received on transfer

-58,534

46,848

7.06.01

Income from equity method investments

-75,610

5,834

7.06.02

Financial income

17,076

41,014

7.07

Total value added to be distributed

2,774

129,880

7.08

Value added distribution

2,774

129,880

7.08.01

Personnel and payroll charges

51,009

56,101

7.08.01.01

Direct remuneration

51,009

56,101

7.08.02

Taxes and contributions

34,525

44,081

7.08.02.01

Federal

34,525

44,081

7.08.03

Compensation – Interest

146,641

121,363

7.08.03.01

Interest

143,826

116,964

7.08.03.02

Rent

2,815

4,399

7.08.04

Compensation – Company capital

-229,401

-91,665

7.08.04.03

Net income (Retained losses)

-229,401

-91,665

 

 

 

19

 


 
 

 

FOR IMMEDIATE RELEASE - São Paulo, August 10, 2017 – Gafisa S.A. (B3: GFSA3; NYSE: GFA), one of Brazil’s leading homebuilders, today reports its financial results for the second quarter ended June 30, 2017.

 

GAFISA  REPORTS RESULTS FOR   
2Q17

 

 

MANAGEMENT COMMENTS AND HIGHLIGHTS

 

During second quarter, we continued to execute our strategy of prioritizing the sale of inventory units, optimizing our cost structure and maximizing cash generation. In the coming quarters, Gafisa’s financial results will benefit from the increased contribution of higher-margin projects launched in 2015 and 2016 to the Company’s revenues. Recent interest rate cuts should also stimulate growth in the real estate sector, but we remain cautious and conservative about the timing of a market upturn.

Net pre-sales came to R$127.1 million in 2Q17, in line with R$129.5 million recorded in 2Q16. In 1H17, net pre-sales totaled R$244.5 million. In keeping with the prioritization of inventory sales, in 2Q17, 56% of net sales related to products launched prior to year-end 2014, enabling an improved inventory position. Consolidated inventory at market value totaled R$1.5 billion, down 10% q-o-q and 23% y-o-y.

Reflecting our improved sales model, SoS increased 10 percentage points to 36.8% for the last 12-month period, versus 26.5% in the previous year, despite the absence of new projects. Importantly, 2Q17 SoS was the highest level in 16 quarters, and has registered sequential increases since 3Q16.

Dissolutions were concentrated in projects launched up until 2013. These projects had higher work evolution, and accordingly, impacted revenue recognition and margin composition. The volume of dissolutions continues to decrease q-o-q (-4%) and y-o-y (-15%), due to a combination of improved market conditions, lower volume of deliveries and the absence of commercial project deliveries. During prior quarters, commercial units accounted for an important portion of dissolutions. It is worth noting that 54,6% of our inventory is comprised of commercial projects. With the delivery of the last commercial project in 3Q16, we expect to experience a continued downward trend in dissolutions over the next periods. In 2Q17, 4 projects were delivered comprising 1,389 units, or R$479.9 million in PSV. In 1H17, PSV delivered totaled R$744.9 million.

 

 

20

 


 
 

 

 

 

A steady volume of transfers and conservative cash management strategy supported our focus on cash generation in the quarter. Transfers in 2Q17 increased by 35.5% y-o-y, reaching R$342.5 million. As a result, operating cash generation totaled R$101.5 million in 2Q17, with a positive net generation of R$20.5 million. In 1H17, operating cash generation totaled R$197.1 million and net generation reached R$53.7 million.

Gafisa’s revenues remain impacted by a higher volume of dissolutions relating to legacy projects. In addition, the concentration of net sales in more recent projects and slower work evolution impacted the Company’s results. Net revenue came to R$147.3 million in 2Q17, up 8% q-o-q, but 31% lower than 2Q16. In 1H17, net revenue totaled R$283.8 million.

Consistent with our plan to right-size the Company and the scale of our current operations, we have been successful in decreasing expenses over the last periods. Alongside reducing expenses throughout the Company, we have implemented a more streamlined administrative structure that reflects future objectives. In 2Q17, sales, general and administrative expenses decreased 12% on a sequential basis.

Our debt was another highlight this quarter, as we achieved a substantial 36% y-o-y decrease in gross debt and a 16% q-o-q reduction. We ended 2Q17 with net debt of R$1.1 billion, 18% lower than 1Q17 and down 24% from R$1.5 billion in 2Q16. The reduction in debt also benefited leverage. With the receipt of proceeds totaling R$219.5 million from the sale of Tenda, the Company’s Net Debt/ Shareholders’ Equity ratio declined to 80.7%.

Due to the factors mentioned above, Gafisa reported a net loss of R$134.6 million in 2Q17 versus a net loss of R$36.9 million in 2Q16, excluding Alphaville equity income and the effects of the Tenda transaction.

Finally, we believe we are very close to an inflection point in our financial performance, with a potential gradual recovery in the Company’s results over the coming quarters. As the contribution of legacy projects to results decreases, and in keeping with the consistent average volume of launches of approximately R$1.0 billion over the last four years, we will start to recognize the positive results of more recent projects, including improved SoS and higher margins.

Based on a streamlined business model, solid operating platform and strong brand recognition, Gafisa is well positioned to capture value with an upswing in the Brazilian real estate market. We are ready to resume launches in the second half of the year, primarily in São Paulo, and remain committed to criteria ensuring a suitable level of sales and profitability.

We will closely follow market trends in the second half of 2017, seeking to balance of placement of new products in the market, and remain focused on inventory sales and cash generation. We are confident that Gafisa is well positioned to capitalize on a potential recovery in economic activity over the next periods.

 

Sandro Gamba

CEO

 

 

 

 

21

 


 
 

 

 

2Q17 QUARTERLY INFORMATION

 

FINANCIAL RESULTS

§       Operating cash generation totaled R$101.5 million in 2Q17, with net cash generation in the quarter of R$20.5 million. In 1H17, operating cash generation totaled R$197.1 million with net cash generation of R$53.7 million.

§        Gafisa’s 2Q17 net revenue recognized by the “PoC” method was R$147.3 million, a decrease of 31% year-on-year and up 8% from 1Q17. In 1H17, net revenue totaled R$283.8 million.

§        Adjusted gross profit for 2Q17 was R$12.4 million, compared to R$20.8 million in 1Q17 and R$65.3 million recorded in the past year, ending the 1H17 at R$33.2 million. Based on the same criteria, adjusted gross margin reached 8.4% compared to 15.2% in 1Q17, and 30.7% in 2Q16. In 1H17, adjusted gross margin reached 11.7%.

§        Adjusted EBITDA was negative R$65.0 million in 2Q17, down from negative EBITDA of R$47.3 million in 1Q17 and down from EBITDA of R$ 12.5 million in 2Q16.

§        Net income, excluding Alphaville equity income and the effects of Tenda operation, was negative at R$134.6 million in 2Q17 compared to a net loss of R$126.0 million in 1Q17 and R$36.9 million in 2Q16. In 1H17, net loss totaled R$260.6 million.

 

 

OPERATIONAL RESULTS

§  Consolidated sales over supply (SoS) reached 7.9% in 2Q17, compared to 6.7% in 1Q17 and 6.3% in 2Q16. On a trailing 12-month basis, Gafisa’s SoS was 36.8%.

§  Consolidated inventory at market value decreased 9.7% q-o-q to R$1.5 billion.

§  Net pre-sales totaled R$127.1 million in 2Q17, 1.8% lower than R$129.5 million recorded in 2Q16.In 1H17 net pre-sales totaled R$244.5 million.

§  Throughout the second quarter, the Company delivered 4 projects/phases, totaling 1,389 units accounting for R$479.9 million in PSV. In 1H17, PSV delivered was R$744.9 million.

 

 

RECENT EVENTS

 

CONCLUSION OF THE SEPARATION OF THE GAFISA AND TENDA UNITS

As previously informed, with the delivery of Tenda´s shares on May 4th, Gafisa received R$ 219.5 million and concluded the separation process of Gafisa and Tenda business units. It is worth mentioning, to complement the above values, that Gafisa still has R$ 100.0 million (SELIC corrected) to receive, which should be accounted in the next two years, according to the contract established. 

 

 

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OPERATING RESULTS

 

Launches and Pre-Sales

Gafisa maintained its operations in 2Q17 under the same bases of 1Q17, with dedication and concentration of efforts on the sale of inventory units. Accordingly, no new developments were started in the second quarter. Although several projects were approved and ready for launch, the Company chose to sustain a more conservative stance in view of current macroeconomic conditions.

 

 

 

Table 1. Gafisa Launches and Sales (R$ thousand)

 

2Q17

1Q17

Q/Q (%)

2Q16

Y/Y (%)

1H17

1H16

Y/Y (%)

Launches

-

-

-

130,360

-

-

210,464

-100%

Net Pre-Sales

127,146

117,398

8.3%

129,519

-1.8%

244,544

196,361

24.5%

Sales over Supply (SoS)

7.9%

6,7%

120 bps

6.3%

160 bps

14,2%

9.3%

490 bps

                 

                           

Net Pre-Sales

Gross sales in the 2Q17 totaled R$240.8 million, with dissolutions reaching R$113.6 million, resulting in R$127.1 million of net pre-sales, down 8.1% compared to the prior year period. In 1H17, gross sales totaled R$476.4 million.

In 2Q17, the Company concentrated its efforts on the sale of existing units. As a result, approximately 55.7% of net sales in the period were related to projects launched prior to the end of 2014, resulting in an improvement in the segment's inventory profile. Dissolutions, in turn, were concentrated in projects launched prior to 2013, which had higher work evolution, and accordingly, a greater impact on revenue recognition and margin structure.

In the quarter, SoS reached 7.9%, compared to 6.3% in the year-ago period and 6.7% in 1Q17.

 

 

                                                                                                               

 

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Sales over Supply (SoS)

The Company’s SoS for the last twelve months reached 36.8%, compared to 26.5% in 2Q16, as a result of the good sales performance in the second half of 2016 and sequential increase of inventory SoS. In the quarter, SoS was up again totaling 7.9%, compared to 6.3% in 2Q16 and 6.7% in 1Q17. SoS for the last 12 months continues to show consistent improvement, even without the benefit of launches over the last 6 months.


 

 

The macroeconomic uncertainty and economic recession observed since 2015 have directly impacted consumer confidence and, accordingly, the level of dissolutions. Given this backdrop, the reduction in the level of dissolutions has been incremental. As a result of this scenario, the volume of dissolutions in 2Q17 reached R$113.6 million. In 1H17, the level of dissolutions came to R$232.0 million, down 23.2% y-o-y.

 

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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. A comprehensive credit review at the time of sale has generated a more efficient process of transferring Gafisa customers to financial institutions, even amid an unfavorable economic environment.

 

Inventory (Property for Sale)

Gafisa is maintaining its focus on inventory reduction initiatives. Projects launched prior to the end of 2015 represented 85.2%.

The market value of inventory decreased by 9.7% q-o-q and 22.9% y-o-y to R$1.5 billion, effect of sales results in the period, and price adjustments on some projects in inventory, in keeping with current market conditions.

 

Table 2 – Inventory at Market Value 1Q17 x 2Q17 (R$ 000)

 

Inventories EoP 1Q17

Launches

Dissolutions

Gross Sales

Adjustments1

Inventories EoP 2Q17

Q/Q(%)

São Paulo

1,272,718

-

78,840

(195,111)

(6,660)

1,149,787

-9.7%

Rio de Janeiro

314,122

-

33,285

(38,667)

(28,343)

280,397

-10.7%

Other Markets

48,428

-

1,523

(7,017)

3,163

46,097

-4.8%

Total

1,635,268

-

113,648

(240,795)

(31,840)

1,476,281

-9.7%

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

 

Regarding Gafisa’s inventory, approximately 62% or R$910.1 million is concentrated in projects to be delivered after 2Q18 and will not significantly increase the segment’s inventory of finished units which totaled R$565.4 million in 2Q17, or 38.3% of total.

Commercial projects account for 54.6% which reflects not only the high volume of commercial projects delivered during the last 24 months, but also low liquidity on these projects at present.

Inventory from projects launched outside core markets, which is comprised exclusively of finished units, represented R$46.1 million or 3.1% of total inventory, a decrease of 9.9% when compared to R$51.2 million in 2Q16. The Company estimates that through the beginning of 2018, it will have monetized a large portion of its inventory in non-core markets, based on the strong sales observed in these markets over the past few quarters.

 

Table 3 – 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 2Q17

São Paulo

-

30,211

647,770

192,707

279,099

1,149,787

Rio de Janeiro

-

6,432

-

33,735

240,230

280,397

Other Markets

-

-

-

-

46,097

46,097

Total

-

36,643

647,770

226,442

565,426

1,476,281

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 account of CPCs 18, 19 and 36.

 

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Inventory Delivery Schedule

 

Delivered Projects

In 2Q17, projects totaling 1,389 units were delivered, accounting for R$479.9 million in PSV. In 1H17, deliveries totaled 1,999 units and R$744.9 million in PSV. Currently, Gafisa has 18 projects under construction, all of which are on schedule according to the Company’s business plan.

 

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$240.8 million in 2Q17. In 1H17, transfers went up 35.5% to R$342.5 million.

 

Table 4– Breakdown of Delivered Projects (R$000 and %)

 

2Q17

1Q17

Q/Q (%)

2Q16

Y/Y (%)

6M17

6M16

Y/Y (%)

PSV Transferred ¹

240,783

101,744

136.7%

142,697

68.7%

342,527

252,720

35.5%

Delivered Projects

4

3

33.3%

4

0.0%

7

6

16.7%

Delivered Units

1,389

610

127.7%

1,241

11.9%

1,999

1,432

39.6%

Delivered PSV²

479,869

265,058

81.0%

412,307

16.4%

744,927

517,149

44.0%

                   

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

2) PSV = Potential sales value of delivered units.

 

Landbank

The Company’ landbank, with a PSV of R$4.8 billion, represents 38 potential projects/phases, and corresponds to nearly 9.4 thousand units, 63% of potential projects/phases are in São Paulo and 37% are in Rio de Janeiro. The largest portion of land acquired through swap agreements is in Rio de Janeiro, bringing the total percentage of land acquired through swaps to 60%.

 

 

 

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Table 5 - Landbank (R$ 000)

 

PSV (% Gafisa)

% Swap
Total

% Swap
Units

% Swap
Financial

Potential Units
(% Gafisa)

Potential
Units (100%)

São Paulo

3,018,977

48.9%

48.9%

0.0%

6,811

7,482

Rio de Janeiro

1,778,752

72.4%

72.4%

0.0%

2,535

2,589

Total

4,797,729

60.0%

60.0%

0.0%

9,346

10,071

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 6 - Changes in the Landbank (1Q17 x 2Q17 - R$ 000)

 

Initial Landbank

Land Acquisition

Launches

Dissolutions

Adjustments

Final Landbank

São Paulo

3,019,766

-

-

-

(789)

3,018,977

Rio de Janeiro

1,783,749

-

-

-

(4,998)

1,778,752

Total

4,803,515

-

-

-

(5,787)

4,797,729

               

 

In 2Q17, the Company did not acquire new landbank. The quarterly adjustments reflect updates related to project scope, expected launch date and other adjustments to landbank in the period.

 

 

FINANCIAL RESULTS

 

Revenue

2Q17 net revenues totaled R$147.3 million, up 8% q-o-q and down 31% y-o-y. In 1H17, net revenue totaled R$283.8 million. 2Q17 revenues were impacted by the mix of net sales, with a higher concentration of sales from the most recent launches, and consequently lower revenue recognition, as well as a higher provision for dissolutions, reducing gross revenue by R$9.0 million.

In the quarter, 99.4% of revenues derived from projects located in Rio de Janeiro and São Paulo. The table below provides additional details.

 

Table 7 – Revenue Recognition (R$ 000)

 

2Q17

2Q16

Launches

Pre-Sales

%
Sales

Revenue

% Revenue

Pre-Sales

%
Sales

Revenue

%
Revenue

2017

-

-

-

-

-

-

-

-

2016

14,999

12%

18,546

13%

35,867

28%

5,713

3%

2015

41,331

33%

57,085

39%

39,924

31%

38,020

18%

2014

28,351

22%

36,141

25%

33,996

26%

93,970

44%

≤ 2013

42,466

33%

35,482

24%

19,732

15%

74,925

35%

Total

127,147

100%

147,254

100%

129,519

100%

212,628

100%

SP + RJ

121,653

96%

146,430

99%

118,835

92%

212,543

100%

Other Markets

5,494

4%

824

1%

10,684

8%

85

-

                 

 

 

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Gross Profit & Margin

Gafisa's adjusted gross income in 2Q17 was R$12.4 million, down from R$20.8 million in 1Q17 and R$65.3 million in 2Q16, totaling R$33.3 million in 1H17. In this second quarter, the main impacts on gross income were: (i) lower revenues due to the sales mix; (ii) higher volume of dissolutions, as a result of the economic environment; (iii) higher level of provision for dissolutions, with a net effect of R$9.0 million on gross revenue.

Gross margin came negative at 9.8%, higher than negative gross margin of 12.6% in 1Q17. Excluding these financial impacts, adjusted gross margin was 8.4% in the quarter, versus 15.2% in 1Q17 and 30.7% in the previous year.

Details of Gafisa's gross margin breakdown in 2Q17 are presented below.

 

Table 8 – Gross Margin (R$ 000)

 

2Q17

1Q17

Q/Q (%)

2Q16

Y/Y (%)

1H17

1H16

Y/Y%)

Net Revenue

147,253

136,539

8%

212,628

-31%

283,792

383,610

-26%

Gross Profit

(14,403)

(17,167)

-16%

26,084

-155%

(31,570)

29,540

-207%

Gross Margin

-9.8%

-12.6%

280 bps

12.3%

-2210 bps

-11.1%

7.7%

-1880 bps

(-) Financial Costs

26,824

37,975

-29%

39,241

-32%

64,800

71,764

-10%

Adjusted Gross Profit¹

12,421

20,808

-40%

65,325

-81%

33,230

101,304

-67%

Adjusted Gross Margin¹

8.4%

15.2%

-680 bps

30.7%

-2230 bps

11.7%

26.4%

-1470 bps

1) Adjusted by capitalized interests.

 

Selling, General and Administrative Expenses (SG&A)

SG&A expenses totaled R$40.9 million in 2Q17, down 12.0% q-o-q and up 3.0% y-o-y, mainly in line with inflation in the period. In 1H17, SG&A expenses totaled R$87.3 million.

Selling expenses increased 11.0% q-o-q and 5.0% y-o-y, due to higher sales in the period and current market conditions requiring higher sales and marketing investments.

G&A expenses totaled R$19.7 million in 2Q17, down 28.0% q-o-q and came in line with 2Q16.

It should be noted that over the last two quarters the Company has made an effort to adapt its personnel structure to the current market environment. Due to related severance costs, the full benefit of this adjustment could be partially seen in 2Q17.

The rightsizing of the SG&A structure reflects the Company's commitment to improved operational efficiency, allowing for an appropriate level of costs and expenses. The Company will continue to strive to maintain an efficient cost structure, and expects the recent redesign of its operational structure to better reflect the new cycle of market development.

 

Table 9 – SG&A Expenses (R$ 000)

 

2Q17

1Q17

Q/Q (%)

2Q16

Y/Y (%)

1H17

1H16

Y/Y(%)

Selling Expenses

(21,184)

(19,056)

11%

(20,245)

5%

(40,240)

(36,991)

9%

G&A Expenses

(19,738)

(27,369)

-28%

(19,524)

1%

(47,107)

(46,526)

1%

Total SG&A Expenses

(40,922)

(46,425)

-12%

(39,769)

3%

(87,347)

(83,516)

5%

Launches

-

-

-

(130,360)

-

-

210,464

-

Net Pre-sales

127,146

117,398

8%

129,519

-2%

244,544

196,361

25%

Net Revenue

147,253

136,539

8%

212,628

-31%

283,792

383,610

-26%

                 

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Other Operating Revenues/Expenses reached R$31.5 million in 2Q17, compared with R$19.7 million in the previous quarter.

In 2Q17, such increase was due to early conclusion of an arbitration proceeding, with negative net effect of R$18.2 million. If exclude this non-recurring process, this line was down 32.0% compared to 1Q17 and 29.3% y-o-y, keeping its tendency of a gradual reduction.

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

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

Table 10 – Other Operating Revenues/Expenses (R$ 000)

 

2Q17

1Q17

Q/Q (%)

2Q16

Y/Y (%)

1H17

1H16

Y/Y(%)

Litigation Expenses

(30,041)

(16,736)

79%

(15,461)

94%

(46,777)

(31,265)

50%

Other

(1,528)

(2,966)

-48%

(3,496)

-56%

(4,494)

(2,269)

98%

Total

(31,569)

(19,702)

60%

(18,957)

67%

(51,271)

(33,534)

53%

 

Adjusted EBITDA

Adjusted EBITDA was negative R$65.1 million in the quarter, compared with negative EBITDA of R$47.3 million in 1Q17 and lower than positive EBITDA of R$12.5 million in 2Q16.

Adjusted EBITDA in 2Q17 was mainly impacted by the following factors: (i) lower level of revenue due to the sales mix; (ii) lower gross income in the quarter, as a result of the current market environment; and (iii) higher Other Operating Expenses.

It is worth noting that Gafisa's adjusted EBITDA does not consider the impact of the income from discontinued operations (Tenda) and the effect of Alphaville's equity income.

 

Table 11 -  Adjusted EBITDA (R$ 000)

 

2Q17

1Q17

Q/Q (%)

2Q16

Y/Y (%)

1H17

1H16

Y/Y(%)

Net Income

(180,004)

(49,977)

260%

(38,439)

368%

(229,401)

(91,665)

150%

Discontinued Operation Result ¹

(9,545)

107,720

-109%

10,443

-191%

98,175

16,372

500%

Adjusted Net Income¹

(170,459)

(157,117)

369%

(48,882)

249%

(327,576)

(108,037)

203%

(+) Financial Results

33,390

28,560

17%

3,079

984%

61,950

4,187

1380%

(+) Income Taxes

949

1,346

-29%

(421)

-325%

2,295

5,569

-59%

(+) Depreciation & Amortization

8,875

8,708

2%

5,644

57%

17,583

15,152

16%

(+) Capitalized interests

26,824

37,975

-29%

39,241

-32%

64,800

71,764

-10%

(+) Expense w Stock Option Plan

(424)

2,128

-120%

1,300

-133%

1,703

3,191

-47%

(+) Minority Shareholders

(100)

50

-300%

578

-117%

(50)

1,453

-103%

(-) AUSA Income Effect

35,891

31,024

16%

11,952

200%

66,915

1,072

6142%

Adjusted EBITDA2

(65,054)

(47,326)

37%

12,491

-621%

(112,380)

(5,649)

1889%

Net Revenue

147,253

136,539

8%

212,628

-31%

283,792

383,610

-26%

Adjusted EBITDA Margin

-44.2%

-34.7%

-950 bps

5.9%

-5010 bps

-39.6%

-1.5%

-3810 bps

1) Sale of Tenda shares;

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2) Adjusted by expense with stock option plan (non-cash) and minority shareholders. EBITDA does not consider Alphaville's equity income.

Depreciation and Amortization

Depreciation and amortization reached R$8.9 million in 2Q17, up 2% q-o-q and 57% y-o-y, due to the lower volume of operations in the period. In 1H17 depreciation and amortization totaled R$17.6 million.

 

Financial Result

2Q17 net financial result was negative R$33.4 million, compared to negative result of R$28.6 million in 1Q17 and R$3.1 million in 2Q16. Financial revenues went down 62.3% y-o-y, totaling R$9.2 million, due to the lower balance of funds available in the period. Financial expenses, in turn, reached R$42.6 million, compared to R$27.5 million in 2Q16 and R$36.4 million in 1Q17, as a result of the accounting impact of incorporating the balance of interests, as principal, due to the repricing of SFH debts over the last months. In 1H17, net financial result came negative at R$61.9 million.

 

Taxes

Income taxes, social contribution and deferred taxes for 2Q17 amounted to an expense of R$0.9 million, slightly lower than 1Q17, reflecting the Company’s current operating cycle. In 1H17, Income taxes, social contribution and deferred taxes totaled R$2.3 million.

 

Net Income

The Company ended 2Q17 with a net loss of R$134.5 million, excluding Alphaville's equity income and the impacts of Tenda operation, higher than the net loss of R$126.1 million in 1Q17, and higher than the negative net result of R$36.9 million in 2Q16. In 1H17, net loss totaled R$260.6 million, following the same criteria.

The quarter’s results were impacted by: (i) higher level of dissolutions, due to the recessive economic environment; (ii) lower level of revenues due to the sales mix, which limited the dilution of costs and the expense structure; (iii) higher Other Operating Expenses; and (iv) the negative effect on financial result.

Table 12 – Net Income (R$ 000)

 

2Q17

1Q17

Q/Q (%)

2Q16

Y/Y (%)

1H17

1H16

Y/Y(%)

Net Revenue

147,253

136,539

8%

212,628

-31%

283,792

383,610

-26%

Gross Profit

(14,403)

(17,167)

-16%

26,084

-155%

(31,570)

29,540

-207%

Gross Margin

-9.8%

-12.6%

280 bps

12.3%

-2210 bps

-11.1%

7.7%

-1880 bps

Adjusted Gross Profit¹

12,421

20,808

-40%

65,325

-81%

33,230

101,304

-67%

Adjusted Gross Margin

8.4%

15.2%

-680 bps

30.7%

-2230 bps

11.7%

26.4%

-1470 bps

Adjusted EBITDA2

(65,054)

(47,326)

37%

12,491

-621%

(112,380)

(5,649)

1889%

Adjusted EBITDA Margin

-44.2%

-34.7%

-952 bps

5.9%

-5010 bps

-39.6%

-1.5%

-3810 bps

Income from Discontinued Operation3

(9,545)

107,720

-109%

-

-

98,175

16,372

500%

Adjusted Net Income4

(170,459)

(157,117)

8%

(48,882)

249%

(327,576)

(108,037)

203%

( - ) Equity income from Alphaville

(35,891)

(31,024)

16%

(11,952)

200%

(66,915)

(1,072)

6142%

Adjusted Net Income (ex-AUSA)

(134,568)

(126,093)

7%

(36,930)

264%

(260,661)

(106,965)

144%

1) Adjusted by capitalized interests;

2) Adjusted by note 1, by expense with stock option plan (non-cash) and minority shareholders. EBITDA does not consider Alphaville's equity income;

3) Sale of Tenda shares;

4) Adjusted by item 3.

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Backlog of Revenues and Results

The backlog of results to be recognized under the PoC method totaled R$161.3 million in 2Q17. The consolidated margin was 35.8% in the quarter, compared to 36.6% posted in 2Q16.

It is worth mentioning the recovery in backlog in recent quarters, impacted in this 2Q17 by the absence of launches, but also reflecting the good sales performance of launches at the end of 2016, signaling a positive outlook for revenue volume and gross profit in the next periods.

 

Table 13 – Backlog Results (REF) (R$ 000)

 

2Q17

1Q17

Q/Q (%)

2Q16

Y/Y (%)

Backlog Revenues

450,923

490,329

-8%

366,368

23%

Backlog Costs (units sold)

(289,632)

(312,503)

-7%

(232,393)

25%

Backlog Results

161,291

177,826

-9%

133,975

20%

Backlog Margin

35.8%

36.3%

-50 bps

36.6%

-80 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.

 

 

 

 

31

 


 
 

BALANCE SHEET

 

Cash and Cash Equivalents and Securities 3

On June 30, 2017, cash and cash equivalents and marketable securities totaled R$214.6 million, down 9.4% from March 31, 2017.

Receivables

At the end of 2Q17, total accounts receivable totaled R$1.3 billion, a decrease of 17.0% compared to R$1.5 billion in 2Q16, taking into consideration only Gafisa receivables.

Currently, the Company has approximately R$ 392.5 million in accounts receivable from finished units.

 

Table 14. Total Receivables (R$ 000)

 

2Q17

1Q17

Q/Q (%)

2Q16

Y/Y (%)

Receivables from developments (off balance sheet)

468,005

508,904

-8%

380,247

23%

Receivables from PoC- ST (on balance sheet)

602,295

665,071

-9%

873,183

-31%

Receivables from PoC- LT (on balance sheet)

208,230

241,563

-14%

287,401

-28%

Total

1,278,530

1,415,538

-10%

1,540,831

-17%

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

Operating cash totaled R$101.5 million in 2Q17, reflecting: (i) higher level of revenue related to sales in the quarter; (ii) higher transfer proceeds; and (iii) greater efficiency in the process, leading to lower cash disbursements. Operating cash flow resulted in strong net cash generation of R$20.5 million in 2Q17, excluding new funds from Tenda operation. Within same criterion, in 1H17, operating cash flow totaled R$197.0 million, with net cash generation of R$53.7 million.

 

Table 15. Cash Generation (R$ 000)

 

1Q17

2Q17

Availabilities2

236,934

214,572

Change in Availabilities1 (1)

(16,246)

(22,362)

Total Debt + Investor Obligations

1,589,312

1,326,977

Change in Total Debt + Investor Obligations (2)

(49,492)

(262,335)

Other Investments

237,109

237,109

Change in Other Investments (3)

-

-

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

-

219,510

Cash Generation Final

33,246

20,463

Availabilities2

33,246

53,710

1) Cash and cash equivalents, and marketable securities.

 

 

32

 


 
 

 

Liquidity

At the end of June 2017, the Company’s Net Debt/ Shareholders’ Equity ratio reached 80.7%, compared to 86.6% in the previous quarter, reflecting the 16.5% decrease of gross debt. In 2Q17, with new funds from Tenda operation, R$219.5 million, Gafisa reduced its debt, as signaled when this process began. It is worth mentioning that in referred operation, additional R$100.0 million will be received in the next periods, as contractually covenanted. Excluding project finance, the Net Debt/ Shareholders’ Equity ratio was 7.2%.

At the end of the 2Q17, the Company’s gross debt reached R$1.3 billion, down 16.5% q-o-q and 36.0% y-o-y. In 2Q17, with new funds from Tenda operation, the Company amortized R$391.1 million in debt, of which R$329.0 million was project finance and R$62.1 million in corporate debt. In the same period, R$36.7 million was disbursed, allowing for a net amortization of R$354.4 million.

 

Table 16. Debt and Investor Obligations (R$ 000)

 

2Q17*

1Q17*

Q/Q (%)

2Q16

Y/Y (%)

Debentures - FGTS (A)

150,890

311,202

-52%

551,968

-73%

Debentures – Working Capital (B)

130,817

140,485

-7%

186,075

-30%

Project Financing SFH – (C)

861,930

970,370

-11%

1,196,948

-28%

Working Capital (D)

183,339

165,256

11%

136,969

34%

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

1,326,976

1,587,313

-16%

2,071,960

-36%

Investor Obligations (F)

-

1,999

-100%

2,375

-100%

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

1,326,976

1,589,312

-17%

2,074,335

-36%

Cash and Availabilities (H)

214,573

236,934

-9%

618,569

-65%

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

1,112,403

1,352,378

-18%

1,455,766

-24%

Equity + Minority Shareholders (J)

1,378,424

1,562,141

-12%

3,001,290

-54%

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

80.7%

8.,6%

-590 bps

48.5%

3220 bps

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

7.2%

4.5%

270 bps

-9.8%

1700 bps

* Considers Gafisa only.

1) Cash and cash equivalents and marketable securities.

 

The Company ended 2Q17 with R$828.4 million in total debt maturing in the short term. It should be noted, however, that 76.3% of this volume relates to debt linked to the Company's projects. Currently, the average cost of consolidated debt is 12.69% p.y., or 125.14% of the CDI.

 

33

 


 
 

 

                                                    Table 17 – Debt Maturity

(R$ 000)

Average Cost (p.y.)

Total

Until Jun/18

Until Jun/19

Until Jun/20

Until Jun/21

After
Jun/21

Debentures - FGTS (A)

TR+10.38%

150,890

150,890

 

 

 

 

Debentures – Working Capital (B)

CDI+1.90%/
IPCA+8.22%

130,817

23,352

85,741

21,724

-

-

Project Financing SFH (C)

TR+8.30%-14% / 120%-129% CDI

861,930

573,373

235,503

34,144

18,910

-

Working Capital (D)

130% CDI / CDI +2.5%-5%

183,339

80,827

59,987

14,552

18,573

9,400

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

 

1,326,976

828,442

381,231

70,420

37,483

9,400

% of Total Maturity per period

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

 

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

 

62.4%

28.7%

5.3%

2.8%

0.7%

 

87.4%

28.4%

4.1%

2.3%

0.0%

 

 

12.6%

38.2%

51.5%

49.6%

100.0%

Ratio Corporate Debt / Mortgage

23.7%/76.3%

 

 

 

 

 

               

 

 

 

34

 


 
 

 

 

 

 

 

São Paulo, August 10, 2017.

 

Alphaville Urbanismo SA releases its results for the 2nd quarter of 2017

 

Financial results

In the 2nd quarter of 2017, net revenues were R$ 50 million, 68% lower than the same period of 2016, and the net loss was R$ 120 million.

 

2Q17

1H17

2Q16

1H16

2Q17 vs. 2Q16

1H17 vs. 1H16

Net Revenue

50

112

156

391

-68%

-71%

Net Profit/Loss

(120)

(223)

(40)

(4)

n/a

n/a

 

 

 

 

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

 

 

 

 

35

 


 
 

Consolidated Financial Statements

 

2Q17

1Q17

Q/Q (%)

2Q16

Y/Y (%)

1H17

1H16

Y/Y (%)

Net Revenue

147,253

136,539

8%

212,628

-31%

283,792

383,610

-26%

Operating Costs

(161,656)

(153,706)

5%

(186,544)

-13%

(315,362)

(354,070)

-11%

Gross Profit

(14,403)

(17,167)

-16%

26,084

-155%

(31,570)

29,540

-207%

Gross Margin

-9.8%

-12.6%

280 bps

12.3%

-2210 bps

-11.1%

7.7%

-1880 bps

Operating Expenses

(121,817)

(109,994)

11%

(71,730)

70%

(231,811)

(126,368)

83%

Selling Expenses

(21,184)

(19,056)

11%

(20,245)

5%

(40,240)

(36,991)

9%

General and Administrative Expenses

(19,738)

(27,369)

-28%

(19,524)

1%

(47,107)

(46,525)

1%

Other Operating Revenue/Expenses

(31,569)

(19,702)

60%

(18,957)

67%

(51,271)

(33,534)

53%

Depreciation and Amortization

(8,875)

(8,708)

2%

(5,644)

57%

(17,583)

(15,152)

16%

Equity Income

(40,451)

(35,159)

15%

(7,360)

450%

(75,610)

5,834

-1396%

Operational Result

(136,220)

(127,161)

7%

(45,646)

198%

(263,381)

(96,828)

172%

Financial Income

9,206

7,870

17%

24,392

-62%

17,076

41,014

-58%

Financial Expenses

(42,596)

(36,430)

17%

(27,471)

55%

(79,026)

(45,201)

75%

Net Income Before taxes on Income

(169,610)

(155,721)

9%

(48,725)

248%

(325,331)

(101,015)

222%

Deferred Taxes

-

-

-

(1)

-

-

963

-

Income Tax and Social Contribution

(949)

(1,346)

-29%

422

-325%

(2,295)

(6,532)

-65%

Net Income After Taxes on Income

(170,559)

(157,067)

9%

(48,304)

253%

(327,626)

(106,584)

207%

Continued Op. Net Income

(170,559)

(157,067)

9%

(48,304)

253%

(327,626)

(106,584)

207%

Discontinued Op. Net Income

(9,545)

107,720

-109%

10,443

-191%

98,175

16,372

500%

Minority Shareholders

(100)

50

-300%

578

-117%

(50)

1,453

-103%

Net Income

(180,004)

(49,397)

264%

(38,439)

368%

(229,401)

(91,665)

150%

 

 

36

 


 
 

Consolidated Balance Sheet

 

2Q17

1Q17

Q/Q(%)

2Q16

Y/Y(%)

Current Assets

 

 

 

 

 

Cash and cash equivalents

37,979

23,814

59%

157,737

-76%

Securities

176,594

213,120

-17%

460,832

-62%

Receivables from clients

602,295

665,071

-9%

1,285,892

-53%

Properties for sale

996,928

1,058,742

-6%

2,063,670

-52%

Other accounts receivable

105,812

76,656

38%

206,532

-49%

Prepaid expenses and other

5,903

6,839

-14%

5,255

12%

Land for sale

3,270

3,270

0%

87,503

-96%

Non-current assets for sale

-

1,412,682

-

-

-

Subtotal

1,928,781

3,460,194

-44%

4,267,421

-55%

 

 

 

 

 

 

Long-term Assets

 

 

 

 

 

Receivables from clients

208,230

241,563

-14%

354,931

-41%

Properties for sale

582,445

599,046

-3%

629,811

-8%

Other

194,880

93,983

107%

192,631

1%

Subtotal

985,555

934,592

5%

1,177,373

-16%

Intangible. Property and Equipment

45,318

47,113

-4%

125,230

-64%

Investments

731,405

764,852

-4%

978,100

-25%

 

 

 

 

 

 

Total Assets

3,691,059

5,206,751

-29%

6,548,124

-44%

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Loans and financing

654,200

650,152

1%

633,782

3%

Debentures

174,242

335,317

-48%

430,246

-60%

Obligations for purchase of land and

advances from customers

194,787

194,283

0%

360,382

-46%

Material and service suppliers

73,249

68,788

6%

77,721

-6%

Taxes and contributions

46,343

47,132

-2%

88,934

-48%

Other

337,235

399,735

-16%

450,702

-25%

Dividends in natura

-

327,230

-

-

-

Assets liabilities of discontinued operations

-

653,204

-

-

-

 

 

 

 

 

 

Subtotal

1,480,056

2,675,841

-45%

2,041,767

-28%

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

Loans and financings

391,069

485,474

-19%

700,135

-44%

Debentures

107,465

116,370

-8%

307,797

-65%

Obligations for Purchase of Land and

advances from customers

71,149

93,892

-24%

185,516

-62%

Deferred taxes

100,405

100,405

0%

20,450

391%

Provision for Contingencies

81,515

84,720

-4%

160,203

-49%

Other

80,976

87,908

-8%

130,966

-38%

Subtotal

832,579

968,769

-14%

1,505,067

-45%

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

Shareholders’ Equity

1,374,347

1,553,057

-12%

2,998,075

-54%

Minority Shareholders

4,077

9,084

-55%

3,215

27%

Subtotal

1,378,424

1,562,411

-12%

3,001,290

-54%

Total Liabilities and Shareholders’ Equity

3,691,059

5,206,751

-29%

6,548,124

-44%

 

 

37

 


 
 

Cash Flow

 

2Q17

2Q16

1H17

1H16

Income Before Taxes on Income and Social Contribution

(277,330)

(35,928)

(325,331)

(76,598)

Expenses/income not affecting working capital

205,663

30,413

185,362

69,188

Depreciation and amortization

8,875

5,644

17,583

15,152

Impairment

(4,097)

(6,302)

(11,141)

(6,302)

Expense with stock option plan and shares

(425)

1,298

1,703

3,189

Projects delay fines

-

(11)

 

(11)

Unrealized interest and financial charges

16,974

13,741

42,735

38,788

Equity income

40,451

7,361

75,610

(5,834)

Disposal of fixed asset

-

-

 

1,182

Provision for guarantee

(1,714)

(3,770)

(3,315)

(7,872)

Provision for lawsuits

30,041

15,460

46,777

31,264

Profit Sharing provision

4,120

-

8,357

6,250

Allowance for doubtful accounts and dissolutions

3,558

(974)

7,699

5,598

Income from financial instruments

160

(2,034)

(646)

(12,216)

Provision for impairment loss of discontinued operation

215,440

-

-

-

Update of obligation on stock sale

(107,720)

-

-

-

Clients

82,890

62,584

158,442

146,201

Properties held for sale

82,512

(24,745)

147,467

(69,396)

Other accounts receivable

(5,985)

8,014

401

2,408

Prepaid expenses

936

167

(3,355)

599

Obligations on land purchase and advances from clients

(22,239)

(35,316)

(29,761)

(59,942)

Taxes and contributions

(789)

(6,806)

(5,499)

(9,191)

Providers

9,455

(7,536)

(419)

(764)

Salaries and payroll charges

1,517

(13,918)

1,814

(12,000)

Other liabilities

(19,945)

(18,522)

(28,974)

(37,933)

Related party transactions

(4,130)

17,617

(9,703)

25,825

Taxes paid

(949)

422

(2,295)

(5,569)

Cash provided by/used in operating activities /discontinued operation

18,504

8,499

51,959

54,069

Net cash from operating activities

70,110

(15,055)

140,108

26,897

Investment activities

-

-

-

-

Purchase of fixed and intangible asset

(7,080)

(7,934)

(10,696)

(14,369)

Capital contribution in subsidiaries

518

(11,188)

441

(12,639)

Redemption of financial investment

471,458

546,710

687,475

849,852

Funding financial investments

(434,932)

(393,863)

(640,423)

(695,962)

Cash provided by/used in investment activities / discontinued operation

99,707

27,634

48,663

5,871

Dividends received

-

1,000

-

-

Discontinued operation transaction costs

(9,545)

-

(9,545)

-

Receivable from exercise of preemptive rights Tenda

219,510

-

219,510

-

Net cash from investment activities

129,671

162,359

295,425

132,753

Financing activities

-

-

-

-

Related party contributions

(1,999)

(4,107)

(1,237)

(2,520)

Addition of loans and financing

110,687

188,420

186,282

308,882

Amortization of loans and financing

(387,998)

(304,196)

(539,609)

(444,519)

Share buyback

-

(8,195)

-

(8,195)

Result from the sale of treasury shares

-

-

-

 

Assignment of credit receivables, net

-

13,835

21,513

41,809

Loan operations with related parties

1,933

15,908

6,268

9,448

Sale of treasury shares

7

5

317

5

Cash provided by/used in financing activities/ discontinued operation

(10,601)

(34,954)

24,089

10,537

Net cash from financing activities

(287,971)

(133,284)

(302,377)

(84,553)

Net cash variation/discontinued operation

(107,610)

-

(124,711)

-

Increase (decrease) in cash and cash equivalents

121,775

14,020

133,156

75,097

Opening balance of cash and cash equivalents

-

-

29,534

82,640

Closing balance of cash and cash equivalents

14,165

14,020

37,979

157,737

Increase (decrease) in cash and cash equivalents

121,775

14,020

133,156

75,097

 

 

 

38

 


 
 

 

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 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 (B3: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

 

39

 


 
 

 

 

 1.   Operations

 

Gafisa S.A. ("Gafisa" or "Company") is a publicly traded company with registered office at Avenida das Nações Unidas, 8.501, 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 B3 S.A. – Brasil, Bolsa, Balcão (former BM&FBovespa) and the New York Stock Exchange (NYSE), reporting its information to the Brazilian Securities and Exchange 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 December 14, 2016, the Company disclosed a material fact informing about the signature of the sale and purchase agreement with Jaguar Real Estate Partners LP for disposal of up to 30% of the shares issued by Tenda, for the price of R$ 8.13 per share, with a total estimate of R$539,020 for paying-in Tenda’s capital. The completion of the transaction is subject to the verification of certain conditions precedent, of which the following are worth noting: (i) decrease in the capital stock of the Company, by refunding its shareholders for the shares corresponding to 50% of the capital stock of Tenda; and (ii) the completion of the procedure related to the exercise by Gafisa’s shareholders of the preemptive right to acquire 50% of Tenda’s shares.

 

The deadline for creditors objecting the capital decrease was April 22, 2017, and no objection was made, so the decrease was made by delivering to the Company’s shareholders, as refund for the decreased capital, one common share of Tenda to each common share of Gafisa they owned, not including treasury shares. In relation to the preemptive right, the shareholders acquired the totality of shares made available, no share remaining for Jaguar. Accordingly, the shares representing 50% of Tenda’s capital were delivered to the shareholders who exercised the preemptive right, and the agreement that had been entered into with Jaguar was terminated.

 

The Company also obtained, during this period, all contractual authorizations required for carrying out the transaction. With this, the spin-off between Gafisa and Tenda was completed on May 4, 2017, with the effective delivery of the totality of the shares representing Tenda’s capital in the respective capital reduction and preemptive right processes. The inflow of funds from the Preemptive Rights, as well as the amount receivable from the refund of Tenda’s capital will contribute to improve the liquidity condition and capital structure of the Company.

 

40

 


 
 

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 August 10, 2017, 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, 2016. Therefore, the corresponding quarterly information shall be read together with the financial statements as of December 31, 2016.

 

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 and Exchange 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 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 individual 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.

 

 

 

 

 

41

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information

June 30, 2017

(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 material changes in relation to the disclosures in Note 2.1 to the individual and consolidated financial statements as of December 31, 2016.

 

 

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 material changes in relation to the disclosures in Note 2.1.1 to the individual and consolidated financial statements as of December 31, 2016.

 

2.1.2.    Statement of Cash Flows

 

In view of the disclosure of the discontinued operations related to Tenda, and in line with CPCs 03 – Statement of Cash Flows and CPC 31 - Non-current Assets Held for Sale and Discontinued Operations, the information on operating, financing and investing activities related to discontinued operations are presented in separated lines in the Statement of Cash Flows of the Company for the periods ended June 30, 2017 and 2016 (restated). Accordingly, the line item "Foreign Exchange Gains and Losses on Cash and Cash Equivalents", shown in the Statement of Cash Flows for the period ended June 30, 2017, refers to the net increase (decrease) in cash and cash equivalents of asset held for sale and is being presented in this line item as it is impossible to change the line item’s name in this Quarterly Information Form.

 

40

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

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

 

2.2.    Restatement of Quarterly Information as of June 30, 2016

 

As required by the CPC 31 – Non-current Assets Held for Sale and Discontinued Operations, for comparability purposes, the information of the statements of profit or loss and value added as of June 30, 2016 is being presented on the same basis of the current period, and its retrospective effects are shown below:

 

 

Company

Consolidated

 

Balances originally reported as of 06/30/2016

Impact of the adoption of CPC 31

Balances after the adoption of CPC 31

Balances originally reported as of 06/30/2016

Impact of the adoption of CPC 31 (a)

Balances after the adoption of CPC 31

Statement of profit or loss

         

Net operating revenue

286,141

-

286,141

878,905

(495,295)

383,610

Operating costs

(264,918)

-

(264,918)

(713,213)

359,143

(354,070)

Operating (expenses) income

(125,225)

-

(125,225)

(240,658)

108,456

(132,202)

Income from equity method investments

18,923

(13,416)

5,507

4,902

932

5,834

Financial income (expenses)

(6,586)

-

(6,586)

(4,430)

243

(4,187)

Income tax and social contribution

-

-

-

(15,718)

10,149

(5,569)

Non-controlling interests

-

-

-

1,453

-

1,453

Profit or loss of discontinued operations (Note 8.2)

-

13,416

13,416

-

16,372

16,372

Net income for the year

(91,665)

-

(91,665)

(91,665)

-

(91,665)

 

 

 

 

 

 

 

Statement of value added

 

 

 

 

 

 

Net value added produced by the entity

45,628

13,416

59,044

216,164

(133,132)

83,032

Value added received on transfer

54,600

(13,416)

41,184

63,311

(16,463)

46,848

Total value added to be distributed

100,228

-

100,228

279,475

(149,595)

129,880

 

(a)     Amounts after elimination of consolidation items.

 

 

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

 

 

There is no 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, besides those already disclosed in Note 3 to the individual and consolidated financial statements as of December 31, 2016.

 

Accordingly, the other explanations related to this note were not subject to material changes in relation to the disclosures in Note 3 to the individual and consolidated financial statements as of December 31, 2016.

 

 

 

41

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

(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

 

06/30/2017

12/31/2016

06/30/2017

12/31/2016

 

 

 

 

 

Cash and banks

13,405

19,811

37,979

29,534

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

13,405

19,811

37,979

29,534

 

 

          The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 4.1 to the financial statements as of December 31, 2016.

 

4.2.    Short-term investments

 

 

Company

Consolidated

 

 

06/30/2017

12/31/2016

06/30/2017

12/31/2016

 

 

 

 

 

Fixed-income funds

53,632

95,672

70,713

123,868

Government bonds (LFT)

3,282

3,762

5,348

6,018

Corporate securities (LF/DPGE)

5,852

19,845

9,537

31,742

Securities purchased under resale agreements (a)

2,965

11,600

3,762

11,935

Bank certificates of deposit (b)

36,605

17,332

39,009

27,834

Restricted cash in guarantee to loans (c)

38,463

10,669

38,463

10,669

Restricted credits

8,253

4,682

9,762

11,580

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

149,052

163,562

176,594

223,646

           

 

(a)   As of June 30, 2017, the securities purchased under resale agreement include interest earned ranging from 100.5% of Interbank Deposit Certificates (CDI) (from 75% to 101.5% of CDI in 2016). All investments are carried out with what management considers to be top tier financial institutions.

 

(b)   As of June 30, 2017, the Bank Certificates of Deposit (CDBs) include interest earned ranging from 90% to 100% of Interbank Deposit Certificates (CDI) (from 90% to 100.8% of CDI in 2016).

 

(c)   As of June 30, 2017, restricted cash in guarantee to loans includes interest earned from 75% to 100.5% of Interbank Deposit Certificates (CDI) (from 72% to 101.5% of CDI in 2016).

 

          The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 4.2 to the financial statements as of December 31, 2016.

 

 

 

42

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

5.         Trade accounts receivable of development and services

 

 

Company

Consolidated

 

06/30/2017

12/31/2016

06/30/2017

12/31/2016

 

 

 

 

 

Real estate development and sales

632,644

769,743

837,117

1,019,359

( - ) Allowance for doubtful accounts

(27,014)

(19,315)

(27,014)

(19,315)

( - ) Present value adjustments

(13,671)

(21,235)

(16,121)

(26,816)

Services and construction and other receivables

15,741

20,414

16,543

20,734

Total trade accounts receivable of development and services (Note 20.i.d and 20.ii.a)

607,700

749,607

810,525

993,962

 

 

 

 

Current

432,082

524,337

602,295

722,640

Non-current

175,618

225,270

208,230

271,322

 

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

 

 

Company

Consolidated

Maturity

06/30/2017

12/31/2016

06/30/2017

12/31/2016

 

 

 

 

 

Past due:

 

 

 

 

Up to 90 days

74,365

46,235

86,175

64,830

From 91 to 180 days

17,629

41,705

25,830

45,442

Over 180 days

90,548

73,652

110,760

93,265

 

182,542

161,592

222,765

203,537

 

 

 

 

 

Falling due:

 

 

 

 

2017

143,466

383,477

249,611

544,292

2018

168,698

94,231

196,850

111,007

2019

105,443

97,079

127,674

120,367

2020

39,195

41,775

44,918

45,552

2021 onwards

9,040

12,003

11,842

15,338

 

465,842

628,565

630,895

836,556

 

 

 

 

 

( - ) Present value adjustment

(13,671)

(21,235)

(16,121)

(26,816)

( - ) Allowance for doubtful accounts

(27,014)

(19,315)

(27,014)

(19,315)

 

607,700

749,607

810,525

993,962

 

The change in the allowance for doubtful accounts for the period ended June 30, 2017, is as follows:

 

 

Company and Consolidated

06/30/2017

 

 

Balance at December 31, 2016

(19,315)

Additions (Note 22)

(7,901)

Write-offs / Reversals (Note 22)

202

Balance at June 30, 2017

(27,014)

 

 

 

43

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

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

 

In the period ended June 30, 2017, 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 its present value, is classified into the line item “Obligations assumed on assignment of receivables”.

 

 

Transaction date

Assigned accounting portfolio

Portfolio discounted to present value

Transaction balance at

June 30, 2017 (Note 14)

Company

Consolidated

 

 

 

 

 

03/29/2017

23,748

22,993

19,814

19,950

 

 

 

 

 

         

 

In the transaction 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 material changes in relation to the disclosures in Note 5 to the financial statements as of December 31, 2016.

 

 

6.    Properties for sale

 

 

Company

Consolidated

 

06/30/2017

12/31/2016

06/30/2017

12/31/2016

 

 

 

 

 

Land

668,050

667,805

851,894

823,516

( - ) Write-down to net realizable value of land

(43,505)

(43,505)

(43,505)

(43,505)

( - ) Write-down to net realizable value of inventory surplus surplus

-

-

(62,343)

(62,343)

( - ) Present value adjustment

(7,460)

(8,089)

(7,778)

(8,781)

Property under construction (Note 29)

305,693

328,783

436,454

509,049

Completed units

432,479

520,246

453,173

557,426

( - ) Write-down to net realizable value of properties under construction and completed units

(48,522)

(59,663)

(48,522)

(59,663)

Total properties for sale

1,306,735

1,405,577

1,579,373

1,715,699

 

 

 

 

Current portion

809,875

870,201

996,928

1,122,724

Non-current portion

496,860

535,376

582,445

592,975

 

For the period ended  June 30, 2017, the change in the write-down to net realizable value of properties for sale is summarized as follows:

 

 

Company

Consolidated

 

 

 

Balance at December 31, 2016

(103,168)

(165,511)

Write-offs / Reversals

11,141

11,141

Balance at June 30, 2017

(92,027)

(154,370)

 

 

The amount of properties for sale offered as guarantee for financial liabilities are described in Note 12.

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 6 to the financial statements as of December 31, 2016.

 

 

7.    Other assets

 

 

Company

Consolidated

 

06/30/2017

12/31/2016

06/30/2017

12/31/2016

 

 

 

 

 

Advances to suppliers

2,605

1,758

3,903

2,567

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

19,242

15,708

29,265

25,901

Judicial deposit (Note 16)

80,522

78,172

83,194

79,785

Refund of capital receivable from Tenda (Note 20.i.d, 20.ii.a and 31)

101,616

100,000

101,616

-

Total other assets

203,985

195,638

217,978

108,253

 

 

 

 

Current portion

31,436

39,280

43,030

49,336

Non-current portion

172,549

156,358

174,948

58,917

 

44

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

(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 and Consolidated

 

Cost

Provision for impairment

Net balance

 

 

 

 

Balance at December 31, 2016

12,236

(8,930)

3,306

Reversals / Write-offs

(36)

-

(36)

Balance at June 30, 2017

12,200

(8,930)

3,270

 

 

 

 

 

 

 

 

8.2 Disposal group held for sale and profit or loss of discontinued operations

 

 

Company

Consolidated

 

06/30/2017

12/31/2016

06/30/2017

12/31/2016

 

 

 

 

 

 

 

 

 

 

Investment portion

-

1,049,125

-

-

Impairment loss (i)

-

(610,105)

-

(610,105)

Assets held for sale (ii)

-

-

-

1,799,116

Total assets held for sale

-

439,020

-

1,189,011

Refund of capital receivable (Note 7)

-

100,000

-

-

Total

-

539,020

-

1,189,011

 

 

 

 

Liabilities related to the assets of discontinued operations (ii)

-

-

-

651.812

 

 

 

 

 

 

06/30/2017

06/30/2016

06/30/2017

06/30/2016

 

 

 

 

 

Reversal of impairment loss (i)

215,440

-

215,440

-

Portion related to payable for sale of shares (iii)

(107,720)

-

(107,720)

-

Transaction costs

(9,545)

-

(9,545)

-

Impairment loss on Tenda’s profit or loss

(22,780)

-

(22,780)

-

Tenda’s profit or loss for the period ended May 4, 2017(ii)

22,780

13,416

22,780

16,372

Profit or loss of discontinued operations

98,175

13,416

98,175

16,372


(i) The measurement of non-current assets held for sale at the lower of the carrying value and the fair value less cost to sell. For the period ended May 4, 2017, the fair value of discontinued operations was adjusted, considering the weighted average price per share for exercising preemptive rights at R$12.12 (R$8.13 per share as of December 31, 2016, according to the agreement).

 

(ii) Amounts of assets held for sale, liabilities related to assets held for sale, and profit or loss of discontinued operations, net of the eliminations related to intercompany transactions.

 

(iii) Amount of R$107,720 related to the obligation to sell 50% of Construtora Tenda S.A.’s shares for the price of R$8.13 per share, settled on May 4, 2017, reflected in the profit or loss of discontinued operations, in order to reflect the difference between the fair value of the group of assets held for sale and the effective selling price.

 

For the period ended May 4, 2017, the Company carried out the remeasurement of the fair value of the disposal group held for sale, related to Construtora Tenda S.A., considering the weighted average value per share for exercising preemptive rights traded over the period between March 17 and 31, 2017, as measurement basis, leading to the price of R$12.12 per share, and, accordingly, valuing Construtora Tenda S.A. at R$754,460 (R$539,020 in 2016).

 

The remeasurement of the fair value of the disposal group held for sale is required by CPC 31 – Non-current Assets Held for Sale and Discontinued Operations, with changes recognized in gains or losses on discontinued operations, as well as by ICPC 07 – Distributions of Non-cash Assets to Owners, requires the adjustment of non-cash dividends related to the capital decrease at fair value until its settlement, with changes recognized in equity, as mentioned in Note 18.1.

 

45

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

8.    Assets held for sale --Continued

 

8.2 Disposal group held for sale and profit or loss of discontinued operations --Continued

 

For purposes of compliance with paragraph 38 of CPC 31 – Non-current Asset Held for Sale and Discontinued Operations, the Company shows below the main classes of assets and liabilities classified as held for sale of the subsidiary Tenda as of December 31, 2016, after eliminations of consolidation items, demonstrated as follows:

 

Assets

12/31/2016

 

 

Liabilities

12/31/2016

Current assets

 

 

 

Current liabilities

 

Cash and cash equivalents

28,414

 

 

Loans and financing

41,333

Short-term investments

195,073

 

 

Payables for purchase of properties and advance from customers

131,280

Trade accounts receivable

250,474

 

 

 

Properties for sale

563,576

 

 

Other payables

150,663

Land for sale

75,227

 

 

 

 

Other current assets

104,606

 

 

 

 

Total current assets

1,217,370

 

 

Total current liabilities

323,276

Non-current

 

 

 

Non-current liabilities

 

Trade accounts receivable

176,673

 

 

Loans and financing

93,661

Properties for sale

211,711

 

 

Payables for purchase of properties and advance from customers

104,343

Other non-current assets

60,556

 

 

 

Investments

84,798

 

 

Provisions for legal claims

44,951

Property and equity and intangible assets

48,008

 

 

Other payables

85,581

Total non-current assets

581,746

 

 

Total non-current liabilities

328,536

 

 

 

 

 

 

Total assets

1,799,116

 

 

Total liabilities

651,812

   

 

 

 

 

 

The main lines of the statements of profit or loss and cash flows of the subsidiary Tenda are as follows:

 

Statement of profit or loss

 

05/042017

06/30/2016

 

Cash flow

05/042017

06/30/2016

 

 

 

 

 

 

 

 

Net operating revenue

 

404,737

495,295

 

Operating activities

51,959

54,069

Operating costs

 

(269,144)

(359,143)

 

Investing activities

48,663

5,871

Operating expenses, net

 

(104,310)

(102,226)

 

Financing activities

24,089

10,537

Depreciation and amortization

 

(5,723)

(6,230)

 

 

 

 

Income from equity method investments

 

269

(932)

 

 

 

 

Financial income (expenses)

 

101

(2,347)

 

 

 

 

Income tax and social contribution

 

(4,519)

(10,149)

 

 

 

 

 

 

21,411

14,268

 

 

 

 

Non-controlling interests

 

(1,369)

852

 

 

 

 

Net income for the year

 

22,780

13,416

 

 

 

 

 

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 8 to the financial statements as of December 31, 2016.

46

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

(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, jointly-controlled investees and associates

 

 

 

 

 

 

 

 

 

 

 

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

Subsidiaries:

 

06/30/2017

12/31/2016

06/30/2017

06/30/2017

06/30/2017

12/31/2016

 

06/30/2017

06/30/2016

06/30/2017

12/31/2016

06/30/2017

06/30/2016

06/30/2017

12/31/2016

06/30/2017

06/30/2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gafisa SPE 26 Ltda.

-

100%

100%

174,518

8,497

166,020

166,487

 

(467)

(200)

166,020

166,487

(467)

(200)

-

-

-

-

Gafisa SPE- 130 Emp. Imob. Ltda.

-

100%

100%

100,527

26,418

74,109

82,572

 

(8,463)

2,776

74,109

82,572

(8,463)

2,776

-

-

-

-

Gafisa SPE-111 Emp. Imob. Ltda.

-

100%

100%

66,969

4,523

62,445

62,511

 

(66)

(14,754)

62,445

62,511

(66)

(14,754)

-

-

-

-

Maraville Gafsa SPE Emp. Imob. Ltda.

-

100%

100%

102,926

42,511

60,415

57,379

 

3,037

4,632

60,415

57,379

3,037

4,632

-

-

-

-

Gafisa SPE-89 Emp. Imob. Ltda.

-

100%

100%

61,144

9,911

51,233

52,713

 

21

(2,809)

51,233

52,713

21

(2,809)

-

-

-

-

Gafisa SPE - 122 Emp. Imob. Ltda.

-

100%

100%

122,869

72,562

50,307

49,632

 

675

4,150

50,307

49,632

675

4,150

-

-

-

-

Gafisa SPE - 127 Emp. Imob. Ltda.

-

100%

100%

46,828

649

46,179

46,413

 

(234)

3,017

46,179

46,413

(234)

3,017

-

-

-

-

Gafisa SPE-51 Emp. Imob. Ltda.

-

100%

100%

49,257

3,200

46,057

45,849

 

208

(176)

46,057

45,849

208

(176)

-

-

-

-

Gafisa SPE - 121 Emp. Imob. Ltda.

-

100%

100%

46,551

2,135

44,416

44,968

 

(552)

(990)

44,416

44,968

(552)

(990)

-

-

-

-

Gafisa SPE 72 Emp. Imob. Ltda.

-

100%

100%

44,483

575

43,908

43,832

 

76

(42)

43,908

43,832

76

(42)

-

-

-

-

Gafisa SPE-110 Emp. Imob. Ltda.

-

100%

100%

41,314

1,082

40,232

40,178

 

54

(357)

40,232

40,178

54

(357)

-

-

-

-

Gafisa SPE - 120 Emp. Imob. Ltda.

-

100%

100%

38,126

642

37,485

37,520

 

(35)

1,189

37,485

37,520

(35)

1,189

-

-

-

-

Manhattan Square Em. Im. Res. 02 Ltda.

-

100%

100%

36,087

61

36,026

35,949

 

-

-

36,026

35,949

-

-

-

-

-

-

Gafisa SPE-104 Emp. Imob. Ltda.

-

100%

100%

140,143

106,096

34,048

30,945

 

1,039

1,078

34,048

30,945

1,039

1,078

-

-

-

-

SPE Parque Ecoville Emp. Imob. Ltda

-

100%

100%

41,979

8,010

33,969

34,746

 

(777)

(91)

33,969

34,746

(777)

(91)

-

-

-

-

Gafisa SPE-107 Emp. Imob. Ltda.

-

100%

100%

29,666

143

29,524

29,529

 

(5)

84

29,524

29,529

(5)

84

-

-

-

-

Gafisa SPE- 129 Emp. Imob. Ltda.

-

100%

100%

28,171

1,181

26,990

29,539

 

(2,548)

4,406

26,990

29,539

(2,548)

4,406

-

-

-

-

Gafisa SPE-134 Emp. Imob. Ltda.

-

100%

100%

50,370

23,396

26,974

20,709

 

1,168

(388)

26,974

20,709

1,168

(388)

-

-

-

-

Gafisa SPE-41 Emp. Imob. Ltda.

-

100%

100%

26,570

6

26,564

26,568

 

(4)

9

26,564

26,568

(4)

9

-

-

-

-

Verdes Pracas Incorp. Imob. SPE Ltda.

-

100%

100%

26,262

32

26,230

25,929

 

301

10

26,230

25,929

301

10

-

-

-

-

Gafisa SPE- 132 Emp. Imob. Ltda.

-

100%

100%

29,634

5,549

24,085

10,856

 

(1,325)

(111)

24,085

10,856

(1,325)

(111)

-

-

-

-

Gafisa SPE-112 Emp. Imob. Ltda.

-

100%

100%

21,933

102

21,831

21,834

 

(3)

(31)

21,831

21,834

(3)

(31)

-

-

-

-

Gafisa SPE - 126 Emp. Imob. Ltda.

-

100%

100%

21,145

1,509

19,636

20,373

 

(737)

4,569

19,636

20,373

(737)

4,569

-

-

-

-

Manhattan Square Em. Im. Com. 02 Ltda

-

100%

100%

17,958

-

17,958

17,958

 

-

-

17,958

17,958

-

-

-

-

-

-

Gafisa SPE 46 Emp. Imob. Ltda.

-

100%

100%

17,846

271

17,576

17,912

 

(337)

157

17,576

17,912

(337)

157

-

-

-

-

Gafisa SPE 30 Emp. Imob. Ltda.

-

100%

100%

16,539

256

16,283

16,358

 

(75)

135

16,283

16,358

(75)

135

-

-

-

-

Edsp 88 Participações S.A.

-

100%

100%

28,744

12,543

16,200

16,068

 

132

812

16,200

16,068

132

812

-

-

-

-

Gafisa SPE-92 Emp. Imob. Ltda.

-

100%

100%

15,786

120

15,666

15,645

 

21

129

15,666

15,645

21

129

-

-

-

-

Gafisa SPE-106 Emp. Imob. Ltda.

-

100%

100%

15,611

6

15,605

15,606

 

(1)

(16)

15,605

15,606

(1)

(16)

-

-

-

-

Diodon Participações Ltda

-

100%

100%

15,185

254

14,931

14,914

 

17

46

14,931

14,914

17

46

-

-

-

-

Gafisa SPE 33 Emp. Imob. Ltda.

-

100%

100%

13,560

-

13,560

13,559

 

-

(247)

13,560

13,559

-

(247)

-

-

-

-

Gafisa SPE 71 Emp. Imob. Ltda.

-

100%

100%

12,965

373

12,593

13,763

 

(1,170)

(129)

12,593

13,763

(1,170)

(129)

-

-

-

-

Gafisa SPE 65 Emp. Imob. Ltda.

-

100%

100%

11,379

314

11,065

11,716

 

(651)

74

11,065

11,716

(651)

74

-

-

-

-

Blue I SPE - Pl., Pr., Inc. e Venda Ltda.

-

100%

100%

10,965

9

10,955

10,969

 

(14)

-

10,955

10,969

(14)

-

-

-

-

-

Gafisa SPE 36 Emp. Imob. Ltda.

-

100%

100%

9,302

426

8,876

8,930

 

(54)

46

8,876

8,930

(54)

46

-

-

-

-

Gafisa SPE-81 Emp. Imob. Ltda.

-

100%

100%

9,860

1,303

8,556

8,718

 

(161)

(142)

8,556

8,718

(161)

(142)

-

-

-

-

Gafisa SPE - 123 Emp. Imob. Ltda.

-

100%

100%

20,401

12,343

8,058

11,969

 

(4,944)

(2,395)

8,058

11,969

(4,944)

(2,395)

-

-

-

-

Gafisa SPE-38 Emp. Imob. Ltda.

-

100%

100%

7,956

-

7,956

7,954

 

2

(5)

7,956

7,954

2

(5)

-

-

-

-

Gafisa SPE-77 Emp. Imob Ltda.

-

65%

65%

21,069

9,420

11,649

11,282

 

367

3,868

7,572

7,334

238

2,605

-

-

-

-

Gafisa SPE-109 Emp. Imob. Ltda.

-

100%

100%

7,310

189

7,121

7,155

 

(34)

(6)

7,121

7,155

(34)

(6)

-

-

-

-

Gafisa SPE-37 Emp. Imob. Ltda.

-

100%

100%

7,162

492

6,669

6,752

 

(83)

30

6,669

6,752

(83)

30

-

-

-

-

Gafisa SPE-90 Emp. Imob. Ltda.

-

100%

100%

9,190

2,719

6,471

6,472

 

(1)

-

6,471

6,472

(1)

-

-

-

-

-

Gafisa SPE-87 Emp. Imob. Ltda.

-

100%

100%

5,631

521

5,110

5,254

 

(144)

(68)

5,110

5,254

(144)

(68)

-

-

-

-

OCPC01 Adjustment – capitalized interests

(a)

 

 

-

-

-

-

 

-

(1)

30,354

34,111

(3,757)

114

-

-

-

-

Other (*)

 

 

 

51,496

11,711

39,786

40,177

 

(385)

(639)

39,783

40,178

(790)

(1,139)

-

-

-

-

Subtotal Subsidiaries

 

 

 

1,673,387

372,060

1,301,327

1,296,162

 

(16,152)

7,620

1,327,601

1,326,326

(20,443)

5,972

-

-

-

-

 

 

47

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

(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, jointly-controlled investees and associates --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

Jointly-controlled investees:

 

06/30/2017

12/31/2016

06/30/2017

06/30/2017

06/30/2017

12/31/2016

 

06/30/2017

06/30/2016

06/30/2017

12/31/2016

06/30/2017

06/30/2016

06/30/2017

12/31/2016

06/30/2017

06/30/2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gafisa SPE-116 Emp. Imob. Ltda.

-

50%

50%

161,684

44,449

117,235

120,794

 

(3,559)

15,794

58,618

60,397

(1,780)

7,897

58,618

60,397

(1,780)

7,897

Gafisa E Ivo Rizzo SPE-47 Emp. Imob. Ltda.

-

80%

80%

32,646

329

32,317

32,151

 

5

3

25,854

25,721

4

2

25,854

25,721

4

2

Parque Arvores Empr. Imob. Ltda.

-

50%

50%

32,243

2,684

29,559

26,616

 

2,943

395

14,780

13,308

1,472

203

14,780

13,308

1,472

203

Sitio Jatiuca Emp. Imob. SPE Ltda

-

50%

50%

31,858

3,479

28,379

38,185

 

(9,805)

1,095

14,190

19,092

(4,903)

548

14,190

19,092

(4,903)

548

Varandas Grand Park Emp. Im. Spe Ltda

-

50%

50%

78,369

55,021

23,348

25,826

 

(2,478)

1,684

11,674

12,913

(1,239)

1,318

11,674

12,913

(1,239)

1,318

Fit 13 SPE Emp. Imob Ltda.

-

50%

50%

23,271

2,453

20,818

20,892

 

(74)

(771)

10,409

10,446

(37)

(385)

10,409

10,446

(37)

-

Atins Emp. Imob. Ltda.

-

50%

50%

27,697

9,519

18,178

18,201

 

(23)

(535)

9,089

9,101

(12)

(267)

9,089

9,101

(12)

(267)

Costa Maggiore Empr. Imob. Ltda.

(b)

50%

50%

14,877

3,380

11,497

9,052

 

2,659

1,348

5,749

4,526

1,223

439

5,749

4,526

1,223

439

Gafisa SPE-113 Emp. Imob. Ltda.

-

60%

60%

52,772

43,228

9,543

9,438

 

(1,520)

(6,849)

5,726

5,663

(912)

(4,110)

5,726

5,663

(912)

(4,110)

Performance Gafisa General Severiano Ltda

-

50%

50%

27,042

16,112

10,930

10,802

 

20

-

5,465

5,401

10

-

5,465

5,401

10

-

Other (*)

-

 

 

124,722

57,115

67,608

74,387

 

(2,018)

551

25,627

28,351

(311)

328

36,276

39,719

(1,251)

501

Subtotal Jointly-controlled investees

 

 

 

607,181

237,769

369,412

386,344

 

(13,850)

12,715

187,181

194,919

(6,485)

5,973

197,830

206,287

(7,425)

6,531

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Associates:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alphaville Urbanismo S.A.

-

30%

30%

2,583,139

2,183,336

399,802

596,620

 

(223,050)

(3,572)

119,941

178,986

(66,915)

(1,072)

119,941

178,986

(66,915)

(1,072)

Citta Ville SPE Emp. Imob. Ltda.

-

50%

50%

16,514

2,164

14,350

16,332

 

(1,982)

(279)

7,175

8,166

(991)

(139)

7,175

8,166

(991)

-

Other (*)

 

 

 

1,605

406

1,199

1,185

 

14

13,433

535

527

6

6

5,130

5,143

(11)

6

Indirect jointly-controlled investees Gafisa

 

 

 

2,601,258

2,185,906

415,351

614,137

 

(225,018)

9,582

127,651

187,679

(67,900)

(1,205)

132,246

192,295

(67,917)

(1,066)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 

 

 

4,881,826

2,795,735

2,086,090

2,296,643

 

(255,020)

29,917

1,642,433

1,708,924

(94,828)

10,740

330,076

398,582

(75,342)

5,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill on acquisition of associates

-

 

 

 

 

 

 

 

 

 

25,476

25,476

-

-

25,476

25,476

-

-

Goodwill based on inventory surplus

-

 

 

 

 

 

 

 

 

 

462

462

-

-

-

-

-

-

Goodwill from remeasurement of investment in associate

(c)

 

 

 

 

 

 

 

 

 

375,853

375,853

-

-

375,853

375,853

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total investments

 

 

 

 

 

 

 

 

 

 

2,044,224

2,116,509

(94,828)

10,740

731,405

799,911

(75,342)

5,465

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

48

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

(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, jointly-controlled investees and associates --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

06/30/2017

12/31/2016

06/30/2017

06/30/2017

06/30/2017

12/31/2016

 

06/30/2017

06/30/2016

06/30/2017

12/31/2016

06/30/2017

06/30/2016

06/30/2017

12/31/2016

06/30/2017

06/30/2016

Provision for net capital deficiency (d):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gafisa Vendas Interm. Imobiliaria Ltda

100%

100%

13,110

13,552

(443)

5,795

 

(6,238)

(5,947)

(443)

5,795

(6,238)

(5,947)

-

-

-

-

Gafisa SPE 69 Emp. Imob. Ltda.

100%

100%

-

289

(288)

(270)

 

(289)

(127)

(288)

(270)

(289)

(127)

-

-

-

-

Manhattan Square Em. Im. Com. 01 Ltda

50%

50%

6,733

6,782

(49)

-

 

(743)

92

(24)

-

(369)

46

(24)

-

(369)

46

Other (*)

 

 

-

9

(9)

(73)

 

(13)

(604)

(10)

(5,868)

329

795

-

-

101

323

Total provision for net capital deficiency

 

 

19,843

20,632

(789)

5,452

 

(7,283)

(6,586)

(765)

(343)

(6,567)

(5,233)

(24)

-

(268)

369

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Income from equity method investments

 

 

 

 

 

 

 

 

 

 

 

(101,395)

5,507

-

-

(75,610)

5,834

 

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

 

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

(b)    The Company recorded expense of R$142 in Income from equity method investments for the period ended June 30, 2017 related to the recognition, by jointly-controlled entities, of prior year adjustments, in accordance with the ICPC09 (R2) – Individual, Separate and Consolidated Financial Statements and the Equity Method of Accounting.

(c)    Amount related to the goodwill arising from 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.

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

 

(b)    Information on significant investees

 

 

Significant investee:

 

Other investees:

 

Alphaville Urbanismo S.A.

 

Subsidiaries

Jointly-controlled investees

Associates

 

06/30/2017

12/31/2016

 

06/30/2017

12/31/2016

06/30/2017

12/31/2016

06/30/2017

12/31/2016

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

Not available

171,136

 

40,577

48,879

42,440

59,495

397

597

Current assets

Not available

1,286,613

 

1,561,140

2,356,997

554,834

664,653

18,119

20,311

Non-current assets

Not available

1,321,381

 

112,247

125,872

52,347

60,002

-

-

Current liabilities

Not available

607,508

 

267,932

1,021,702

173,018

216,629

2,570

2,794

Non-current liabilities

Not available

1,403,866

 

104,128

165,059

64,751

121,682

-

-

 

 

 

 

 

 

 

 

 

 

 

06/30/2017

06/30/2016

 

06/30/2017

06/30/2016

06/30/2017

06/30/2016

06/30/2017

06/30/2016

Net revenue

111.603

389,702

 

74,754

104,188

22,806

53,016

(2,844)

241

Depreciation and Amortization

Not available

Not available

 

(259)

(877)

(391)

(4)

-

-

Financial income (expenses)

Not available

Not available

 

(1,959)

1,510

(4,798)

53

6

6

Income tax and social contribution

Not available

Not available

 

(2,280)

(3,627)

(395)

(1,064)

(17)

(7)

Profit (loss) from Continued Operations

(223,050)

(3,572)

 

(16,152)

7,620

(13,850)

12,715

(1,968)

13,154

 

(c)     Change in investments

 

 

 

 

 

 

Company

Consolidated

 

 

 

 

Balance at December 31, 2016

 

2,116,509

799,911

Income from equity method investments

 

(101,065)

(75,342)

Capital contribution (decrease)

 

30,144

7,199

Dividends receivable

 

-

(123)

Usufruct of shares (Note 15)

 

(1,500)

-

Other investments

 

136

(240)

Balance at June 39, 2017

 

2,044,224

731,405

 

49

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

10Property and equipment

 

 

 

Company

Consolidated

 

Type

12/31/2016

Addition

Write-off

100% depreciated items

06/30/2017

12/31/2016

Addition

Write-off

100% depreciated items

06/30/2017

Cost

 

 

 

 

 

 

 

 

 

 

Hardware

13,111

1,392

(4,888)

(653)

8,962

13,140

1,392

(4,888)

(653)

8,991

Leasehold improvements and installations

6,261

2,047

(3,468)

-

4,840

6,558

2,047

(3,468)

(235)

4,902

Furniture and fixtures

675

-

-

-

675

978

-

-

(13)

965

Machinery and equipment

2,640

-

-

-

2,640

2,639

-

-

-

2,639

Sales stands

12,527

3,195

-

(1,120)

14,602

15,974

4,411

-

(1,120)

19,265

 

35,214

6,634

(8,356)

(1,773)

31,719

39,289

7,850

(8,356)

(2,021)

36,762

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

 

 

 

 

Hardware

(5,516)

(1,384)

4,888

653

(1,359)

(5,481)

(1,424)

4,888

653

(1,364)

Leasehold improvements and installations

(2,903)

(440)

1,982

-

(1,361)

(3,128)

(467)

1,982

235

(1,378)

Furniture and fixtures

(350)

(35)

-

-

(385)

(612)

(48)

-

13

(647)

Machinery and equipment

(1,608)

(132)

-

-

(1,740)

(1,608)

(132)

-

-

(1,740)

Sales stands

(3,117)

(4,388)

-

1,120

(6,385)

(4,483)

(4,646)

-

1,120

(8,009)

 

(13,494)

(6,379)

6,870

1,773

(11,230)

(15,312)

(6,717)

6,870

2,021

(13,138)

 

 

 

 

 

 

 

 

 

 

 

Total property and equipment

21,720

255

(1,486)

-

20,489

23,977

1,133

(1,486)

-

23,624

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 10 to the financial statements as of December 31, 2016.

 

11.  Intangible assets

 

 

 

Company

 

12/31/2016

 

 

 

06/30/2017

 

Balance

Addition

Write-down / amortization

100% amortized items

Balance

 

 

 

 

 

 

Software – Cost

65,290

2,768

-

(16,535)

51,523

Software – Amortization

(42,820)

-

(6,175)

16,535

(32,460)

Other

5,308

1,050

(4,614)

-

1,744

Total intangible assets

27,778

3,818

(10,789)

-

20,807

 

 

 

 

 

 

Consolidated

 

12/31/2016

 

 

 

06/30/2017

 

Balance

Addition

Write-down / amortization

100% amortized items

Balance

 

 

 

 

 

 

Software – Cost

66,023

3,281

-

(16,541)

52,763

Software – Amortization

(43,102)

-

(6,252)

16,541

(32,813)

Other

5,307

1,051

(4,614)

-

1,744

Total intangible assets

28,228

4,332

(10,866)

-

21,694

           

 

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 11 to the financial statements as of December 31, 2016.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

50

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

12.  Loans and financing

 

 

 

 

Company

Consolidated

Type

Maturity

Annual interest rate

06/30/2017

12/31/2016

06/30/2017

12/31/2016

 

 

 

 

 

 

 

National Housing System - SFH /SFI

July 2017 to

April 2021

8.30% to 14.00% + TR

120% and 129% of CDI

706,695

842,678

861,930

1,022,038

Certificate of Bank Credit - CCB

 

May 2019 to

March 2021

 

 

130% of CDI

2.5%/ 3%/ 5%+CDI

 

183,339

164,252

183,339

164,262

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

890,034

1,006,930

1,045,269

1,186,300

 

 

 

 

 

 

Current portion

 

 

525,072

574,733

589,200

604,795

Current portion – reclassification for non-fulfillment of covenant

 

65,000

65,000

65,000

65,000

Current portion

 

 

590,072

639,733

654,200

669,795

Non-current portion

 

 

299,962

367,197

391,069

516,505

 

 

(i)   In the period ended June 30, 2017, the Company made payments in the total amount of R$51,511, of which R$24,353 related to principal and R$27,158 related to the interest due. Additionally, the Company entered into two CCB transactions in the total amount of R$59,000, with final maturities in October 2019 and March 2021.

 

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

 

 

Company

 

Consolidated

Maturity

06/30/2017

12/31/2016

 

06/30/2017

12/31/2016

 

 

 

 

 

 

2017

309,521

639,733

 

315,818

669,795

2018

451,431

354,770

 

527,892

422,523

2019

101,261

10,937

 

140,106

59,763

2020

18,497

1,490

 

45,029

27,126

2021 onwards

9,324

-

 

16,424

7,093

 

890,034

1,006,930

 

1,045,269

1,186,300

 

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 may require the acceleration 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 June 30, 2017 and December 31, 2016 are disclosed in Note 13. In view of the restrictive covenants and the non-fulfillment of the covenants of a CCB transaction, for which the Company has a waiver of the bank agreeing with the non-fulfillment of the net debt (Note 32(i)), the non-current portions of this transactions were reclassified into short term in the amount of R$65,000.

 

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

 

 

Company

Consolidated

 

06/30/2017

06/30/2016

06/30/2017

06/30/2016

 

 

 

 

Total financial charges for the period

85,709

112,858

98,763

130,180

Capitalized financial charges

(23,616)

(91,934)

(44,104)

(110,808)

Subtotal (Note 24)

62,093

20,924

54,659

19,372

 

 

 

 

Financial charges included in “Properties for sale”:

 

 

 

 

 

 

 

 

 

Opening balance

329,651

287,806

343,231

299,649

Capitalized financial charges

23,616

91,934

44,104

110,808

Charges recognized in profit or loss (Note 23)

(43,680)

(56,890)

(64,800)

(71,764)

Closing balance

309,587

322,850

322,535

338,693

 

The recorded amount of properties for sale offered as guarantee for loans, financing and debentures is R$978,654.

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 12 to the financial statements as of December 31, 2016.

 

51

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

13.  Debentures

 

 

 

 

 

Company and Consolidated

Program/placement

Principal - R$

Annual interest

Final maturity

06/30/2017

12/31/2016

 

 

 

 

 

 

Seventh placement (i)

150,000

TR + 10.38%

December 2017

150,890

302,363

Ninth placement (ii)

64,024

CDI + 1.90%

July 2018

63,393

79,693

Tenth placement (iii)

55,000

IPCA + 8.22

January 2020

67,424

69,212

 

 

 

 

 

 

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

281,707

451,268

 

 

 

 

 

 

Current portion

 

 

 

174,242

314,139

Non-Current portion

 

 

 

107,465

137,129

 

In the period ended June 30, 2017, the Company made the following payments:

 

 

Face Value placement

Interest payable

Total amortization

(i)

150,000

17,141

167,141

(ii)

16,369

5,099

21,468

(iii)

-

5,313

5,313

 

166,369

27,552

193,921

 

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

 

 

 

Company and Consolidated

Maturity

06/30/2017

12/31/2016

 

 

 

2017

150,634

314,139

2018

87,632

94,316

2019

21,718

21,404

2020

21,723

21,409

 

281,707

451,268

                                                                                                

 

52

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

13.  Debentures --Continued

 

As of June 30, 2017 and December 31, 2016, the Company exceeded the amount established in a restrictive covenant, as shown below, and for which it has a waiver from the bank agreeing with the non-fulfillment of the net debt for such periods (Note 32(i)). The Company analyzed the other debt agreements, and did not identify any impacts on the restrictive cross-covenants in relation to such non-fulfillment. The ratios and minimum and maximum amounts required under such restrictive covenants are as follows:

 

 

06/30/2017

12/31/2016

Seventh placement

 

 

Total account receivable(2) plus inventory required to be below zero or 2.0 times over net debt less venture debt (3)

28.36 times

53.98 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

-7.32%

3.11%

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

2.22 times

2.15 times

 

 

 

Ninth placement

 

 

Total account receivable(2) plus inventory required to be below zero or 2.0 times over net debt

2.57 times

2.34 times

Net debt cannot exceed 100% of equity plus noncontrolling interests

80.70%

71.71%

 

 

 

Tenth placement

 

 

Total account receivable(2) plus inventory required to be below zero or 2.0 times over net debt less venture debt(3)

28.36 times

53.98 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

-7.32%

3.11%

 

 

 

Loans and financing

 

 

Net debt cannot exceed 70% of equity plus noncontrolling interests

80.70%

71.71%

Total accounts receivable(2) plus inventory required to be below zero or 2.0 times over venture debt(3)

2.83 times

2.44 times

Total account receivable 2) plus inventory of completed units required to be below zero or 2.0 times over net debt less venture debt (3)

17.06 times

33.62 times

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

-7.32%

3.11%

 

 

 

 

 

 

(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.

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 13 to the financial statements as of December 31, 2016.

 

53

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

(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 are as follows:

 

 

Company

Consolidated

 

06/30/2017

12/31/2016

06/30/2017

12/31/2016

 

 

 

 

 

Obligation CCI - June /2011

836

1,208

1,599

2,148

Obligation CCI - December /2011

1,147

1,405

1,147

1,471

Obligation CCI - July/2012

41

68

41

68

Obligation CCI - November /2012

-

-

3,767

4,651

Obligation CCI - December/2012

4,398

5,402

4,398

5,402

Obligation CCI - November/2013

1,565

1,666

4,088

4,307

Obligation CCI - November /2014

2,145

2,530

3,804

4,344

Obligation CCI - December /2015

6,574

8,005

13,444

15,988

Obligation CCI - March/2016

12,720

16,091

13,695

17,178

Obligation CCI - May/2016

9,662

11,481

11,747

14,407

Obligation CCI - August /2016

8,053

9,164

8,053

9,164

Obligation CCI - December /2016

16,551

18,343

17,035

18,948

Obligation CCI - March/2017 (Note 5)

19,814

-

19,950

-

Obligation FIDC

102

450

479

954

Total obligations assumed on assignment of receivables

(Note 20.ii.a)

83,608

75,813

103,247

99,030

 

 

 

 

Current portion

28,072

24,907

36,691

34,698

Non-current potion

55,536

50,906

66,556

64,332

 

Current and non-current portions fall due as follows:

 

 

Company

 

Consolidated

Maturity

06/30/2017

12/31/2016

 

06/30/2017

12/31/2016

 

 

 

 

 

 

2017

15,239

24,907

 

21,307

34,698

2018

23,582

36,185

 

28,272

40,932

2019

17,358

13,845

 

20,895

20,000

2020

11,493

876

 

14,841

3,400

2021 onwards

15,936

-

 

17,932

-

 

83,608

75,813

 

103,247

99,030

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 14 to the financial statements as of December 31, 2016.

 

15.  Other payables

 

 

 

Company

Consolidated

 

2012

06/30/2017

12/31/2016

06/30/2017

12/31/2016

 

 

 

 

 

 

Cancelled contract payable

2.363

33,227

13,347

48,235

26,255

Warranty provision

28.345

26,253

29,568

26,253

29,568

PIS and COFINS in long term (deferred and payable)

21.772

4,834

6,282

7,082

8,739

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

35.570

765

343

24

-

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

 

7,847

2,274

9,498

4,046

Payables to venture partners (Note 20.ii a and 20.iii) (a)

 

-

1,140

-

1,237

Share-based payment - Phantom Shares (Note 18.3)

 

1,963

2,596

1,963

2,596

Other liabilities

13.781

4,468

8,328

4,538

8,982

 

 

 

 

 

 

Total other payables

113.000

79,357

63,878

97,593

81,423

 

 

 

 

 

 

Current portion

90.953

64,712

50,660

83,173

69,921

Non-current portion

22.047

14,645

13,218

14,420

11,502

 

(a)     In the period ended June 30, 2017, the Company settled this transaction, and the total amount of dividends paid to partners that held preferred shares through SPE-89 Empreendimentos Imobiliários S.A was R$1,500 (Note 9.a.d).

 

       The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 15 to the financial statements as of December 31, 2016.

 

 

54

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

16.  Provisions for legal claims and commitments

 

 

In the period ended June 30, 2017, the changes in the provision are summarized as follows:

 

Company

Civil lawsuits

Tax proceedings

Labor claims

Total

Balance at December 31, 2016

98,050

3,124

57,168

158,342

Additional provision (Note 23) (i)

39,836

96

6,759

46,691

Payment and reversal of provision not used (i)

(31,900)

(18)

(8,129)

(40,047)

Balance at June 30, 2017

105,986

3,202

55,798

164,986

 

 

 

 

Current portion

66,076

975

20,894

87,945

Non-current portion

39,910

2,227

34,904

77,041

 

Consolidated

Civil lawsuits

Tax proceedings

Labor claims

Total

Balance at December 31, 2016

98,179

3,124

61,655

162,958

Additional provision (Note 23) (i)

39,836

96

6,845

46,777

Payment and reversal of provision not used (i)

(31,900)

(18)

(8,357)

(40,275)

Balance at June 30, 2017

106,115

3,202

60,143

169,460

 

 

 

 

 

Current portion

66,076

975

20,894

87,945

Non-current portion

40,039

2,227

39,249

81,515

 

 

 

 

 

(i) Of this amount, R$18,171 refer to the recognition of the provision and payment in connection with unfavorable outcome of two arbitration cases brought by real estate venture partners, in which the main allegation was the delay in the completion of the ventures.

 

(a)     Civil lawsuits, tax proceedings and labor claims

 

As of June 30, 2017, the Company and its subsidiaries have deposited in court the amount of R$80,522 (R$78,172 in 2016) in the Company’s statement, and R$83,194 (R$79,785 in 2016) in the consolidated statement (Note 7).

 

   

Company

Consolidated

 

 

06/30/2017

12/31/2016

06/30/2017

12/31/2016

 

 

 

 

 

 

Civil lawsuits

 

40,086

31,700

41,052

33,313

Tax proceedings

 

25,367

24,806

26,455

24,806

Labor claims

 

15,069

21,666

15,687

21,666

Total (Note 7)

 

80,522

78,172

83,194

79,785

 

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

 

As of June 30, 2017, 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$285,683 (R$244,352 in 2016) in the Company’s statement  and R$290,733 (R$249,153 in 2016) in the consolidated statement, 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

 

 

06/30/2017

12/31/2016

06/30/2017

12/31/2016

 

 

 

 

 

 

Civil lawsuits

 

187,668

156,456

187,735

156,523

Tax proceedings

 

56,520

50,430

56,528

52,812

Labor claims

 

41,495

37,466

46,470

39,818

Total

 

285,683

244,352

290,733

249,153

 

 

55

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

(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 material change in relation to the information disclosed in Note 16(i)(b) to the financial statements as of December 31, 2016.

 

(c)      Other commitments

 

In addition to the commitments mentioned in Notes 6, 12 and 13, the Company has commitments related to the rental of three commercial properties where its facilities are located, at a monthly cost of R$394 indexed to the IGP-M/FGV variation. The rental term is from one to eight 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$31,781, as follows.

 

Consolidated

Payment estimate

06/30/2017

 

 

2017

2,017

2018

3,868

2019

4,431

2020

4,652

2021 onwards

16,813

 

31,781

 

       The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 16 to the financial statements as of December 31, 2016.

 

 

17.  Payables for purchase of properties and advances from customers

 

 

 

Company

Consolidated

 

Maturity

06/30/2017

12/31/2016

06/30/2017

12/31/2016

 

 

 

 

 

 

Payables for purchase of properties

July2017 to March 2021

88,191

96,888

106,671

118,257

Adjustment to present value

 

(7,502)

(8,167)

(8,412)

(9,469)

Advances from customers

 

 

 

 

 

Development and sales

 

23,736

24,295

31,681

35,024

Barter transaction - Land

 

118,307

123,817

135,996

151,885

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

 

236,833

265,936

295,697

 

 

 

 

 

 

Current portion

 

151,582

146,522

194,787

205,388

Non-current portion

 

71,150

90,311

71,149

90,309

 

 

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

 

 

 

Company

 

Consolidated

Maturity

06/30/2017

12/31/2016

 

06/30/2017

12/31/2016

 

 

 

 

 

 

2017

104,841

146,522

 

148,741

205,388

2018

53,421

71,121

 

52,742

71,119

2019

24,263

9,243

 

24,295

9,243

2020

12,613

8,116

 

12,622

8,116

2021 onwards

27,594

1,831

 

27,536

1,831

 

222,732

236,833

 

265,936

295,697

 

 

 

 

56

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

18.  Equity

 

18.1.  Capital

 

As resolved in the Extraordinary Shareholders’ Meeting held on February 20, 2017, the reverse split of the totality of common shares issued by the Company was carried out on March 23, 2017, at the ratio of 13.483023074 to 1, thus the 378,066,162 common shares issued by the Company started to represent 28,040,162 common shares, all registered and with no par value. Accordingly, all information related to the number of shares was retroactively adjusted to reflect such reverse split of shares.

 

As of June 30, 2017, the Company's authorized and paid-in capital amounts to R$2,521,152 (R$2,740,662 as of December 31,  2016), represented in both periods by 28,040,162 registered common shares, with no par value, of which 973,411 (1,050,249 in 2016) were held in treasury.

 

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 within the limit of 44,500,405 (forty four million five hundred thousand four hundred and five) common shares.

 

On February 20, 2017, the decrease in the Company’s capital was approved in the amount of R$219,510, without cancellation of shares, corresponding to 50% of Tenda’s capital for purposes of distribution to its shareholders (Note 8.2). In line with ICPC 07 – Distributions of Non-cash Assets to Owners, this amount was measured at the fair value of the assets distributed on May 4, 2017, resulting in an adjustment of R$107,720 in the period (Note 8.2).

 

In the period ended June 30, 2017 the Company transferred 76,836 shares (68,814 in 2016), in the total amount of R$2,532 (R$2,149 in 2016) related to the exercise of options under the stock option plan of common shares by the beneficiaries, for which it received the total amount of R$317 (R$9 in 2016).

 

Treasury shares

 

 

Type

GFSA3

R$

%

Market value (*) R$ thousand

Carrying value R$ thousand

Acquisition date

Number (i)

Weighted average price

% - on shares outstanding

06/30/2017

12/31/2016

06/30/2017

12/31/2016

11/20/2001

44,462

38,9319

0.17%

481

1,115

1,731

1,731

Changes in 2013:

 

 

 

 

 

 

 

Acquisitions

1,372,096

51,9927

5.10%

14,846

34,410

71,339

71,339

Changes in 2014:

 

 

 

 

 

 

 

Acquisitions

3,243,947

35,5323

12.06%

35,099

81,353

115,265

115,265

Transfers

(405,205)

43,3928

-1.51%

(4,384)

(10,162)

(17,583)

(17,583)

Cancellations

(2,039,086)

44,9677

-7.58%

(22,063)

(51,137)

(91,693)

(91,693)

Changes in 2015:

 

 

 

 

 

 

 

Acquisitions

884,470

27,3124

3.29%

9,570

22,181

24,157

24,157

Transfers

(90,622)

33,3473

-0.34%

(980)

(2,272)

(3,022)

(3,022)

Cancellations

(2,225,020)

33,3543

-8.27%

(24,075)

(55,800)

(74,214)

(74,214)

Changes in 2016:

 

 

 

 

 

 

 

Acquisitions

334,020

26,0254

1.24%

3,614

8,377

8,693

8,693

Transfers

(68,814)

31,2290

-0.26%

(745)

(1,726)

(2,149)

(2,149)

Changes in 2017:

 

 

 

 

 

 

 

Transfers

(76,836)

30,6106

-0.29%

(831)

-

(2,352)

-

 

973,411

30,9962

3.62%

10,532

26,339

30,172

32,524

(*)                                   Market value calculated based on the closing share price on June 30, 2017 at R$10.82 (R$25.08 in 2016, adjusted after reverse split) not considering the effect of occasional volatilities.

(i) Amount shown adjusted by the reverse split of shares at the ratio of 13.483023074 to 1, performed on March 23, 2017.

 

 

 

57

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

18.  Equity --Continued

 

18.1.  Capital --Continued

 

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, 2016

26,779

Transfer related to the stock option plan

77

Change in shares held by the management members of the Company

53

Outstanding shares as of June 30, 2017

26,909

 

 

Weighted average shares outstanding (Note 27)

26,847

 

18.2.  Stock option plan

 

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 June 30, 2017 and 2016:

 

 

Company and Consolidated

 

06/30/2017

06/30/2016

 

 

Equity-settled stock option plan

2,336

2,705

Phantom Shares (Note 18.3)

(633)

484

Total option grant expenses (Note 23)

1,703

3,189

 

 (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 June 30, 2017 and year ended December 31,  2016, which include their respective weighted average exercise prices, are as follows:

 

 

2017

2016

 

Number of options

Weighted average exercise price (Reais)

Number of options

Weighted average exercise price (Reais)

Options outstanding at the beginning of the year

957,358

28.50

870,975

24.69

Options granted

-

-

163,900

35.33

Options exercised (i)

(93,305)

(0.09)

(69,009)

(0.13)

Options forfeited and amount adjustment due to the discontinued operations of Tenda, net

78,148

15.87

(8,508)

(0.13)

Options outstanding at the end of the period

942,201

17.18

957,358

28.50

 

(i) In the period ended June 30, 2017, the amount received through exercised options was R$317 (R$9 in the year ended December 31, 2016).

 

58

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

18.  Equity --Continued

 

18.2.  Stock option plan --Continued

 

Options outstanding and exercisable as of June 30, 2017, 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)

942,201

4.48

17.18

440,994

17.93

 

 

 

 

 

During the period ended June 30, 2017, the Company did not grant any options in connection with its stock option plans comprising common shares (163,900 options granted in 2016).

 

 

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.

 

As of June 30, 2017, the amount of R$1,963 (R$2,596 in 2016), 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 material changes in relation to the disclosures in Note 18 to the financial statements as of December 31, 2016.

 

 

19.  Income tax and social contribution

 

(i)      Current income tax and social contribution

 

The reconciliation of the effective tax rate for the periods ended June 30, 2017 and 2016 is as follows:

 

 

Company

Consolidated

 

06/30/2017

06/30/2016

06/30/2017

06/30/2016

 

 

 

 

 

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

(327,576)

(105,081)

(325,331)

(101,015)

Income tax calculated at the applicable rate - 34%

111,376

35,728

110,612

34,345

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

 

-

(11,545)

(5,913)

Equity method investments

(33,196)

1,872

(24,429)

1,984

Stock option plan

(794)

(2,072)

(794)

(2,072)

Other permanent differences

(836)

(5,020)

(836)

(5,020)

Charges on payables to venture partners

(247)

(338)

(270)

(37)

Net effect on discontinued operations (a)

(25,413)

-

(25,413)

 

Tax credits recognized (not recognized)

(50,890)

(30,170)

(49,620)

(28,856)

Total

-

-

(2,295)

(5,569)

 

 

 

 

 

Tax expenses - current

-

-

(2,295)

(6,532)

Tax income (expenses) - deferred

-

-

-

963

 

(a)   Effect attributable to the discontinued operations not reflected in the base of profit before taxes, but with the effect of reducing the tax base of the entity.

 

 

59

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

19.  Income tax and social contribution --Continued

 

 (ii)   Deferred income tax and social contribution

 

As of June 30, 2017 and December 31, 2016, deferred income tax and social contribution are from the following sources:

 

 

Company

Consolidated

 

06/30/2017

12/31/2016

06/30/2017

12/31/2016

Assets

 

 

 

 

Provisions for legal claims

56,095

53,836

57,616

55,406

Temporary differences – PIS and COFINS deferred

10,922

11,302

10,922

11,333

Provisions for realization of non-financial assets

156,443

143,073

156,443

143,073

Temporary differences – CPC adjustment

21,623

24,044

21,626

24,044

Provision for impairment loss of asset held for sale

-

207,436

-

207,436

Other provisions

22,420

15,335

22,420

15,401

Income tax and social contribution loss carryforwards

270,696

114,730

283,001

129,163

Tax benefits of subsidiaries

49,174

49,174

49,174

49,174

 

587,373

618,930

601,202

635,030

 

 

 

 

 

Recognized tax credits of asset held for sale

-

(207,436)

-

(207,436)

Unrecognized tax credits of continued operations

(494,173)

(235,847)

(508,000)

(250,944)

 

(494,173)

(443,283)

(508,000)

(458,380)

Liabilities

 

 

 

 

Negative goodwill

(20,848)

(92,385)

(20,848)

(92,385)

Temporary differences –CPC adjustment

(140,732)

(143,436)

(140,734)

(143,436)

Differences between income taxed on cash basis

and recorded on an accrual basis

(32,025)

(40,231)

(32,025)

(41,234)

 

(193,605)

(276,052)

(193,607)

(277,055)

 

 

 

 

Total net

(100,405)

(100,405)

(100,405)

(100,405)

 

 

 

The balances of income tax and social contribution loss carryforwards for offset are as follows:

 

 

Company

 

06/30/2017

 

12/31/2016

 

Income tax

Social contribution

Total

 

Income tax

Social contribution

Total

Balance of income tax and social contribution loss carryforwards

796,164

796,164

-

 

337,440

337,440

-

Deferred tax asset (25%/9%)

199,041

71,655

270,696

 

84,360

30,370

114,730

Recognized deferred tax asset

41,191

14,829

56,020

 

41,191

14,829

56,020

Unrecognized deferred tax asset

157,850

56,826

214,676

 

43,169

15,541

58,710

 

 

Consolidated

 

06/30/2017

 

12/31/2016

 

Income tax

Social contribution

Total

 

Income tax

Social contribution

Total

Balance of income tax and social contribution loss carryforwards

832,357

832,357

-

 

379,892

379,892

-

Deferred tax asset (25%/9%)

208,089

74,912

283,001

 

94,973

34,190

129,163

Recognized deferred tax asset

41,191

14,829

56,020

 

55,712

20,056

75,768

Unrecognized deferred tax asset

166,898

60,083

226,981

 

39,261

14,134

53,395

 

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 19 to the financial statements as of December 31, 2016.

 

 

60

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

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 make investments in derivatives or any other risky assets for speculative purposes. The result from these operations is consistent with the policies and strategies devised by the Company’s management. The Company and its subsidiaries operations are subject to the risk factors described below:

 

 (i)    Risk considerations

 

a)    Credit risk

 

There was no material change in relation to the credit risks disclosed in Note 20(i)(a) to the financial statements as of December 31, 2016.

 

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 June 30, 2017, the Company had derivative contracts for hedging purposes in relation to interest fluctuations, with final maturity in July 2018. The derivative contracts are as follows:

 

 

 

Reais

Percentage

Validity

Unrealized gain (loss) of derivative instruments - net

 

 

 

 

 

 

Swap agreements (Fixed for CDI)

Face value

Original Index – asset position

Swap – liability position

Beginning

End

06/30/2017

12/31/2016

 

 

 

 

 

 

 

 

Banco Votorantim S.A. (a)

27,500

Fixed 15.1177%

CDI + 1.6344%

12/20/2016

06/20/2017

-

88

Banco Votorantim S.A.

130,000

CDI + 1.90%

118% CDI

07/22/2014

07/26/2018

213

(313)

Banco HSBC (b)

194,000

Fixed 12.8727%

120% CDI

09/29/2014

10/08/2018

-

(556)

Banco Votorantim S.A. (c)

55,000

IPCA + 8.22%

120% CDI

03/17/2015

01/20/2020

-

4.521

 

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

213

3.740

 

 

 

 

 

 

 

 

 

 

 

 

Current

96

(5,290)

 

 

 

 

Non-current

117

9,030

 

In the period ended June 30, 2017, the Company made the following early redemption of derivative contracts:

 

 

Date

Total amount

(a)

06/14/2017

153

(b)

04/17/2017

1,850

(c)

01/19/2017

4,259

 

 

6,262

 

 

61

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

20.  Financial instruments --Continued

 

(i)     Risk considerations --Continued

 

During the period ended June 30, 2017, income amounting to R$646 (R$12,216 in 2016) in the Company’s and consolidated statements, which refers to net result of the interest swap transaction, arising from the net receipt in the amount of R$4,173 and the downward change based on the market of R$3,526, 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 material change in relation to the interest rate risks disclosed in Note 20(i)(c) to the financial statements as of December 31, 2016.

 

d)    Liquidity risk

 

There was no material change in relation to the liquidity risks disclosed in Note 20(i)(d) to the financial statements as of December 31, 2016.

 

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

 

Period ended June 30, 2017

Company

Liabilities

Less than 1 year

1 to 3 years

4 to 5 years

More than 5 years

Total

Loans and financing (Note 12)

590,072

299,962

-

-

890,034

Debentures (Note 13)

174,242

107,465

-

-

281,707

Obligations assumed with assignment of receivables (Note 14)

28,072

34,988

15,297

5,251

83,608

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

60,759

7,847

-

-

68,606

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

151,582

48,044

23,106

-

222,732

 

1,004,727

498,306

38,403

5,251

1,546,687

Assets

 

 

 

 

 

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

162,457

-

-

-

162,457

Trade accounts receivable (Note 5)

432,082

165,335

10,283

-

607,700

Refund of capital receivable from Tenda (Note 7)

-

101,616

-

-

101,616

 

594,539

266,951

10,283

-

871,773

 

 

Consolidated

Period ended June 30, 2017

Less than 1 year

1 to 3 years

4 to 5 years

More than 5 years

Total

Loans and financing (Note 12)

654,200

391,069

-

-

1,045,269

Debentures (Note 13)

174,242

107,465

-

-

281,707

Obligations assumed with assignment of receivables (Note 14)

36,691

42,174

18,562

5,820

103,247

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

73,249

9,498

-

-

82,747

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

194,787

48,043

23,106

-

265,936

 

1,133,169

598,249

41,668

5,820

1,778,906

Assets

 

 

 

 

 

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

214,573

-

-

-

214,573

Trade accounts receivable (Note 5)

602,295

194,602

13,628

-

810,525

Refund of capital receivable from Tenda (Note 7)

-

101,616

-

-

101,616

 

816,868

296,218

13,628

-

1,126,714

 

 

 

 

 

 

 

62

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

(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

 

The Company uses the same classification disclosed in Note 20(i)(d) to the financial statements as of December 31, 2016 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 June 30, 2017 and December 31, 2016:

 

 

Company

Consolidated

 

Fair value classification

As of June 30, 2017

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

 

 

 

 

 

 

 

Financial assets

 

 

 

 

 

 

Short-term investments (Note 4.2)

-

149,052

-

-

176,594

-

Derivative financial instruments (Note 20.i.b)

-

213

-

-

213

-

 

 

Company

Consolidated

 

Fair value classification

As of December 31, 2016

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

 

 

 

 

 

 

 

Financial assets

 

 

 

 

 

 

Short-term investments (Note 4.2)

-

163,562

-

-

223,646

-

Derivative financial instruments (Note 20.i.b)

-

3,740

-

-

3,740

-

 

In the period ended June 30, 2017, 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, 2016 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 June 30, 2017 and December 31, 2016, classified into Level 2 of the fair value classification, are as follows:

 

 

Company

 

06/30/2017

12/31/2016

 

Carrying value

Fair value

Carrying value

Fair value

 

 

 

 

Financial assets

 

 

 

 

Cash and cash equivalents (Note 4.1)

13,405

13,405

19,811

19,811

Short-term investments (Note 4.2)

149,052

149,052

163,562

163,562

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

213

213

3,740

3,740

Trade accounts receivable (Note 5)

607,700

607,700

749,607

749,607

Refund of capital receivable from Tenda (Note 7)

101,616

101,616

100,000

100,000

Loan receivable (Note 21.1)

19,815

19,815

25,529

25,529

 

 

 

 

 

             

 

63

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

(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

 

 

Company

 

06/30/2017

12/31/2016

 

Carrying value

Fair value

Carrying value

Fair value

 

 

 

 

Financial liabilities

 

 

 

 

Loans and financing (Note 12)

890,034

917,725

1,006,930

1,014,809

Debentures (Note 13)

281,707

289,848

451,268

470,179

Payables to venture partners (Note 15)

-

-

1,140

1,414

Suppliers (Note 20(i)(d))

68,606

68,606

63,451

63,451

Obligations assumed on assignment of receivables ( (Note 14)

83,608

83,608

75,813

75,813

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

222,732

222,732

236,833

236,833

Loan payable (Note 21.1)

9,374

9,374

8,820

8,820

 

 

Consolidated

 

06/30/2017

12/31/2016

 

Carrying value

Fair value

Carrying value

Fair value

 

 

 

 

Financial assets

 

 

 

 

Cash and cash equivalents (Note 4.1)

37,979

37,979

29,534

29,534

Short-term investments (Note 4.2)

176,594

176,594

223,646

223,646

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

213

213

3,740

3,740

Trade accounts receivable (Note 5)

810,525

810,525

993,962

993,962

Refund of capital receivable from Tenda (Note 7)

101,616

101,616

-

-

Loan receivable (Note 21.1)

19,815

19,815

25,529

25,529

 

 

 

 

 

Financial liabilities

 

 

 

 

Loans and financing (Note 12)

1,045,269

1,071,360

1,186,300

1,188,603

Debentures (Note 13)

281,707

289,848

451,268

470,179

Payables to venture partners (Note 15)

-

-

1,237

1,414

Suppliers (Note 20(i)(d))

82,747

82,747

83,166

83,166

Obligations assumed on assignment of receivables ( (Note 14)

103,247

103,247

99,030

99,030

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

265,936

265,936

295,697

295,697

Loan payable (Note 21.1)

9,374

9,374

8,820

8,820

 

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, 2016.

 

 

b)      Risk of debt acceleration

 

 

As of June 30, 2017, the Company has loan and financing agreements in effect, with restrictive covenants related to cash generation, debt ratios, and other. These restrictive covenants have been observed by the Company and do not restrict its ability to continue as going concern. As mentioned in Notes 12 and 13, due to the non-fulfillment of the covenants related to the debt ratio of a CCB issue (Note 12), the non-current installments of this transaction were reclassified into short term. The Company obtained the bank’s agreement on the respective clause, so that it may reach up to the limit of 85% in the periods ended June 30, 2017 and September 30, 2017, and in the year ended December 31, 2017, thus not requiring the mandatory acceleration and/or acceleration declaration, and the non-current installments will reclassified again into long term in the following quarterly information. (Note 32 (i)).

 

 

64

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

20.  Financial instruments --Continued

 

 (iii)  Capital stock management

 

The explanations related to this note were not subject to material changes in relation to the disclosures in Note 20(iii) to the financial statements as of December 31, 2016.

 

The Company includes in its net debt structure: loans and financing, debentures and payables to venture partners less cash and cash equivalents and short-term investments (cash and cash equivalents and marketable securities):

 

 

Company

Consolidated

 

06/30/2017

12/31/2016

06/30/2017

12/31/2016

 

 

 

 

 

Loans and financing (Note 12)

890,034

1,006,930

1,045,269

1,186,300

Debentures (Note 13)

281,707

451,268

281,707

451,268

Payables to venture partners (Note 15)

-

1,140

-

1,237

( - ) Cash and cash equivalents and

short-term investments (Notes 4.1 and 4.2)

(162,457)

(183,373)

(214,573)

(253,180)

Net debt

1,009,284

1,275,965

1,112,403

1,385,625

Equity

1,374,347

1,928,325

1,378,424

1,930,453

 

 (iv)  Sensitivity analysis

 

The sensitivity analysis of financial instruments for the period ended June 30, 2017, except swap contracts, which are analyzed through their due dates, describes the risks that may cause material 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 June 30, 2017, 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, linked to the National Civil Construction Index (INCC) and General Market Price Index (IGP-M).

 

For the sensitivity analysis in the period ended June 30, 2017, the Company considered the interest rates of investments, loans and accounts receivables, the CDI rate at 10.14%, TR at 1.55%, INCC at 4.70%, IPCA at 3.00%, IGP-M at -0.78% and SELIC at 10.15%. 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.

 

 

 

65

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

20.  Financial instruments --Continued

 

(iv)   Sensitivity analysis --Continued

 

The Company shows in the following chart the sensitivity to risks to which the Company is exposed, based on the above scenarios, as of June 30, 2017. 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

1,536

3,840

7,680

(7,680)

(3,840)

(1,536)

Loans and financing

Increase/Decrease of CDI

(4,471)

(11,178)

(22,355)

22,355

11,178

4,471

Debentures

Increase/Decrease of CDI

(584)

(1,459)

(2,918)

2,918

1,459

584

Derivative financial instruments

Increase/Decrease of CDI

(109)

(263)

(515)

538

263

102

 

 

 

 

 

 

 

Net effect of CDI variation

 

(3,628)

(9,060)

(18,108)

18,131

9,060

3,621

 

 

 

 

 

 

 

Loans and financing

Increase/Decrease of TR

(492)

(1,229)

(2,459)

2,459

1,229

492

Debentures

Increase/Decrease of TR

(133)

(332)

(663)

663

332

133

 

 

 

 

 

 

 

Net effect of TR variation

 

(625)

(1,561)

(3,122)

3,122

1,561

625

 

 

 

 

 

 

 

Debentures

Increase/Decrease of IPCA

(196)

(491)

(981)

981

491

196

 

 

 

 

 

 

 

Net effect of IPCA variation

 

(196)

(491)

(981)

981

491

196

 

 

 

 

 

 

 

Accounts receivable

Increase/Decrease of INCC

1,870

4,675

9,351

(9,351)

(4,675)

(1,870)

Obligations for purchase of property

Increase/Decrease of INCC

(1,190)

(2,975)

(5,949)

5,949

2,975

1,190

 

 

 

 

 

 

 

Net effect of INCC variation

 

680

1,700

3,402

(3,402)

(1,700)

(680)

 

 

 

 

 

 

 

 

Accounts receivable

Increase/Decrease of IGP-M

310

775

1,550

(1,550)

(775)

(310)

 

 

 

 

 

 

 

 

Net effect of IGP-M variation

 

310

775

1,550

(1,550)

(775)

(310)

 

 

 

 

 

 

 

 

Refund of capital receivable

Increase/Decrease of SELIC

936

2,341

4,682

(4,682)

(2,341)

(936)

 

 

 

 

 

 

 

 

Net effect of SELIC variation

 

936

2,341

4,682

(4,682)

(2,341)

(936)

 

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

06/30/2017

12/31/2016

06/30/2017

12/31/2016

 

 

 

 

 

Assets

 

 

 

 

Current account:

 

 

 

 

Total SPEs

6,834

24,500

49,147

50,232

Subsidiaries

5,672

22,588

43,803

39,012

Jointly-controlled investees

992

1,594

5,174

10,902

Associates

170

318

170

318

Condominium and consortia and thirty party’s works

13,539

7,223

13,539

7,223

Loan receivable (Note 20.ii.a)

19,815

25,529

19,815

25,529

Dividends receivable

13,882

14,464

-

-

 

54,070

71,716

82,501

82,984

 

 

 

 

Current portion

34,255

46,187

62,686

57,455

Non-current

19,815

25,529

19,815

25,529

 

 

 

 

Liabilities

 

 

 

 

Current account:

 

 

 

 

Total SPEs and Tenda

(1,090,449)

(1,064,435)

(81,001)

(76,791)

Subsidiaries

(1,054,608)

(1,028,540)

(45,160)

(40,896)

Jointly-controlled investees

(35,620)

(35,513)

(35,620)

(35,513)

Associates

(221)

(382)

(221)

(382)

Loan payable (Note 20.ii.a)

(9,374)

(8,820)

(9,374)

(8,820)

 

(1,099,823)

(1,073,255)

(90,375)

(85,611)

 

 

 

 

Current portion

(1,099,823)

(1,073,255)

(90,375)

(85,611)

Non-current

-

-

-

-

66

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

 

21.  Related parties --Continued

 

21.1.  Balances with related parties —Continued

 

The composition, nature and condition of loan receivable and payable by the Company are shown below. Loan maturities are from July 2017 and are tied to the cash flows of related ventures.

         

 

Company and Consolidated

 

 

 

06/30/2017

12/31/2016

Nature

Interest rate

 

 

 

 

 

Square Ipiranga - Liga das Senhoras Católicas.

-

6,635

Construction

12% p.a. + IGPM

Lagunas - Tembok Planej. e Desenv. Imob. Ltda.

4,567

4,250

Construction

12% p.a. + IGPM

Manhattan Residencial I

1,906

2,486

Construction

10% p.a. + TR

Target Offices & Mall

13,342

12,158

Construction

12% p.a. + IGPM

Total receivable

19,815

25,529

   

 

 

 

 

 

Dubai Residencial

3,793

3,403

Construction

6% p.a.

Parque Arvores

3,829

2,437

Construction

6% p.a.

Parque Aguas

1,752

2,980

Construction

6% p.a.

Total payable

9,374

8,820

 

 

 

 

In the period ended June 30, 2017 the recognized financial income from interest on loans amounted to R$905 (R$2,617 in 2016) in the Company’s  and consolidated statement (Note 24).

 

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, 2016.

 

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$354,466 as of June  30, 2017 (R$424,966 in 2016).

 

22.  Net operating revenue

 

 

Company

Consolidated

 

06/30/2017

06/30/2016

06/30/2017

06/30/2016

Gross operating revenue

 

 

 

 

Real estate development, sale, barter transactions and construction services

242,420

317,449

314,577

417,301

(Recognition) Reversal of allowance for doubtful accounts (Note 5)

(7,699)

(5,598)

(7,699)

(5,598)

Taxes on sale of real estate and services

(20,420)

(25,710)

(23,086)

(28,093)

Net operating revenue

214,301

286,141

283,792

383,610

 

 

 

67

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

23.  Costs and expenses by nature

 

These are represented by the following:

 

 

Company

Consolidated

 

06/30/2017

06/30/2016

06/30/2017

06/30/2016

Cost of real estate development and sale:

 

 

 

 

Construction cost

(120,548)

(126,735)

(165,771)

(162,124)

Land cost

(41,073)

(59,650)

(54,428)

(92,831)

Development cost

(13,413)

(16,905)

(16,646)

(22,615)

Capitalized financial charges (Note 12)

(43,680)

(56,890)

(64,800)

(71,764)

Maintenance / warranty

(13,717)

(4,738)

(13,717)

(4,736)

Total cost of real estate development and sale

(232,431)

(264,918)

(315,362)

(354,070)

 

 

 

 

Commercial expenses:

 

 

 

 

Product marketing expenses

(12,389)

(14,519)

(14,521)

(16,812)

Brokerage and sale commission

(13,499)

(8,086)

(15,709)

(9,831)

Customer Relationship Management (CRM) and corporate marketing expenses

(8,545)

(8,801)

(9,814)

(9,685)

Other

(216)

(611)

(196)

(663)

Total commercial expenses

(34,649)

(32,017)

(40,240)

(36,991)

 

 

 

 

General and administrative expenses:

 

 

 

 

Salaries and payroll charges

(12,133)

(16,890)

(18,796)

(16,890)

Employee benefits

(1,146)

(2,171)

(1,776)

(2,171)

Travel and utilities

(115)

(356)

(178)

(356)

Services

(3,314)

(5,093)

(5,136)

(5,093)

Rents and condominium fees

(1,817)

(4,399)

(2,815)

(4,399)

IT

(5,142)

(7,836)

(7,965)

(7,836)

Stock option plan (Note 18.2)

(1,703)

(3,189)

(1,703)

(3,189)

Reserve for profit sharing (Note 25.iii)

(8,358)

(6,250)

(8,358)

(6,250)

Other

(245)

(341)

(380)

(341)

Total general and administrative expenses

(33,973)

(46,525)

(47,107)

(46,525)

 

 

 

 

 

Other income (expenses), net:

 

 

 

 

Expenses with lawsuits (Note 16)

(46,691)

(30,405)

(46,777)

(31,265)

Other

(4,477)

(2,178)

(4,494)

(2,269)

Total other income/(expenses), net

(51,168)

(32,583)

(51,271)

(33,534)

         

 

 

24.  Financial income (expenses)

 

 

Company

Consolidated

 

06/30/2017

06/30/2016

06/30/2017

06/30/2016

Financial income

 

 

 

 

Income from financial investments

11,319

19,592

13,519

24,499

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

646

12,216

646

12,216

Financial income from loans (Note 21)

905

2,617

905

2,617

Other financial income

1,851

1,252

2,006

1,682

Total financial income

14,721

35,677

17,076

41,014

 

 

 

 

 

Financial expenses

 

 

 

 

Interest on funding, net of capitalization (Note 12)

(62,093)

(20,924)

(54,659)

(19,372)

Amortization of debenture cost

(3,310)

(1,366)

(3,310)

(1,366)

Payables to venture partners

(314)

(761)

(314)

(761)

Banking expenses

(11,820)

(2,513)

(12,896)

(3,602)

Discount granted and other financial expenses

(8,277)

(16,699)

(7,847)

(20,100)

Total financial expenses

(85,814)

(42,263)

(79,026)

(45,201)

 

 

68

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

 

25.  Transactions with management and employees

 

(i)     Management compensation

 

In the periods ended June 30, 2017 and 2016, the amounts recorded in the line item “General and administrative expenses”, related to the compensation of the Company’s Management and Fiscal Council members are as follows:

 

 

Management compensation

 

Period ended June 30, 2017

Board of Directors

Statutory Board

Fiscal Council

 

 

 

 

Number of members

7

4

3

Fixed compensation for the period (in thousands of R$)

 

 

 

Salary / Fees

847

1,337

99

Direct and indirect benefits

-

100

-

Other (INSS)

169

267

20

Monthly compensation (in thousands of R$)

141

223

17

Total compensation

1,016

1,704

119

Profit sharing (Note 25 (iii))

-

1,822

-

Total compensation and profit sharing

1,016

3,525

119

 

 

 

 

 

Management compensation

 

Period ended June 30, 2016

Board of Directors

Statutory Board

Fiscal Council

 

 

 

 

Number of members

7

5

3

Fixed compensation for the period (in thousands of R$)

 

 

 

Salary / Fees

847

1,650

98

Direct and indirect benefits

-

173

-

Other (INSS)

169

330

20

Monthly compensation (in thousands of R$)

141

304

16

Total compensation

1,016

2,153

118

Profit sharing (Note 25 (iii))

-

1,138

-

Total compensation and profit sharing

1,016

3,291

118

       

 

The amount related to expenses for granting stock options to the management members of the Company was R$1,079 for the period ended June 30, 2017 (R$1,825 in 2016).

 

The maximum aggregate compensation of the Company’s management members for the year 2017 was established at R$18,739, as fixed and variable compensation, as approved at the Annual Shareholders’ Meeting held on April 28, 2017.

 

On the same occasion the compensation limit of the Fiscal Council members for their next term of office, which ends in the Annual Shareholders’ Meeting to be held in 2018, was approved at R$261.

 

(ii)    Sales transactions

 

In the periods ended June 30, 2017 and December 31, 2016, no transaction of units sold to Management was carried out. The total balance receivable of sales transactions made was R$17 (R$957 in 2016).

                                                                                                                                                         

 

69

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

 

25.  Transactions with management and employees --Continued

 

 

(iii)   Profit sharing

 

In the period ended June 30, 2017, the Company recorded a profit sharing expense amounting to R$8,358 (R$6,250 in 2016) in the consolidated balance, in the line item “General and Administrative Expenses " (Note 23).

 

 

Company and Consolidated

 

06/30/2017

06/30/2016

 

 

 

Executive officers

1,822

1,138

Other employees

6,536

5,112

 

8,358

6,250

 

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, 2016.

 

26.  Insurance

 

       For the period ended June 30, 2017 insurance contracts were not subject to significant changes in relation to those disclosed in Note 26 to the financial statements as of December 31,  2016.

 

27.  Earnings (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 June 30, 2017, shares with dilutive potential are not considered, because the impact would be antidilutive.

 

 

 

 

06/30/2017

06/30/2016

Basic numerator

 

 

Undistributed profit (loss) from continued operations

(327,576)

(105,081)

Undistributed profit (loss) from discontinued operations

98,175

13,416

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

(229,401)

(91,665)

 

 

 

Basic denominator (in thousands of shares)

 

 

Weighted average number of shares (Note 18.1)

26,847

27,069

 

 

 

Basic earnings (loss) per share in Reais

(8.545)

(3.386)

From continued operations

(12.202)

(3.882)

From discontinued operations

3.657

0.496

 

 

Diluted numerator

 

 

Undistributed profit (loss) from continued operations

(327,576)

(105,081)

Undistributed profit (loss) from discontinued operations

98,175

13,416

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

(229,401)

(91,665)

 

 

 

Diluted denominator (in thousands of shares)

 

 

Weighted average number of shares (Note 18.1)

26,847

27,069

Stock options

348

157

Anti-dilutive effect

(348)

(157)

Diluted weighted average number of shares

26,847

27,069

 

 

 

Diluted earnings (loss) per share in Reais

(8.545)

(3.386)

From continued operations

(12.202)

(3.882)

From discontinued operations

3.657

0.496

 

 

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, 2016.

 

70

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

28.  Segment information

 

 

With the completion of the discontinuation of Tenda’s operations (Note 8.2), the Company operates only in one segment, according to the nature of its products.

 

Accordingly, the reports used for making decisions are the consolidated financial statements, and no longer the analysis by operating segments. Therefore, in line with CPC 22 – Operating Segments, the Company understands that there is no reportable segment to be disclosed in the period ended June 30, 2017 and 2016.

 

 

 

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 June 30, 2017:

 

 

 

 

 

Consolidated

 

 

06/30/2017

 

 

 

Unappropriated sales revenue of units sold

 

453,265

Estimated cost of units sold to be incurred

 

(277,883)

Estimated cost of units in inventory to be incurred

 

(222,994)

 

 

 

(i) Unappropriated sales revenue of units sold

 

 

Ventures under construction:

 

 

Contracted sales revenue

 

1,200,446

Appropriated sales revenue

 

(747,181)

Unappropriated sales revenue (a)

 

453,265

 

(ii) Estimated cost of units sold to be incurred

 

 

Ventures under construction:

 

 

Estimated cost of units

 

(733,907)

Incurred cost of units

 

456,024

Estimated cost to be incurred (b)

 

(277,883)

 

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

 

 

Ventures under construction:

 

 

Estimated cost of units

 

(659,448)

Incurred cost of units (Note 6)

 

436,454

Estimated cost to be incurred

 

(222,994)

 

(a)   The unappropriated sales revenue of units sold are measured by the face value of contracts, plus the contract adjustments and deducted from cancellations, net of the levied 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 June 30, 2017, the percentage of assets consolidated in the financial statements related to ventures included in the equity segregation structure of the development stood at 29.4% (35.7% in 2016).

 

71

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

(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, 2016.

 

 

31.  Transactions that didn’t affect Cash and Cash Equivalents

 

The Company and its subsidiaries performed the following investing and financing activities that did not affect cash and cash equivalents, which were not included in the statements of cash flows:

 

 

 

Company

Consolidated

 

2012

06/30/2017

06/30/2016

06/30/2017

06/30/2016

 

 

 

 

 

 

Capital contribution (reduction)

 

(12,281)

83,270

(12,404)

83,270

Capitalized financial charges (Note 12)

 

(23,616)

(91,934)

(44,104)

(110,808)

Physical barter – Land (Note 17)

 

(5,510)

(26,542)

(15,889)

(29,446)

Refund of capital receivable from Tenda (Nota 7)

 

101,616

-

101,616

-

 

 

60,209

(35,206)

29,219

(56,984)

 

32.  Subsequent events

 

(i)      Obtaining waiver for non-fulfillment of restrictive covenant of CCB

 

As mentioned in Notes 12, 13 and 20, as at June 30, 2017, the Company exceeded the amount established in a restrictive covenant of a CCB issue. Immediately thereafter, the Company started negotiations with the creditor to obtain a waiver for the non-fulfillment of the ratio established in contractual clauses. So, on August 8, 2017, the Company obtained the agreement from the bank related to the non-fulfillment of such covenant so that it could reach up to the limit of 85% in the periods ended June 30, 2017 and September 30, 2017, and in the year ended December 31, 2017. Therefore, it was not required to accelerate and/or declare acceleration of the CCB, and the non-current installments reclassified into short term in view of the non-fulfillment of the covenant will be reclassified again into long term with its fulfillment in the following quarterly information.

 

 

***

 

 

72

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

Other information deemed relevant by the Company

 

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

 

 

6/30/2017

 

Common shares

Shareholder

Shares

%

Treasury shares

973,411

3.47%

Pátria Investimentos

1,570,204

5.60%

Wishbone Management, LP

4,378,650

15.62%

River and Mercantille Management, LLP

2,857,820

10.19%

Outstanding shares

18,260,077

65.12%

     

Total shares

28,040,162

100.00%

     

6/30/2016

 

Common shares

Shareholder

Shares

%

Treasury shares

1,071,007

3.82%

Polo Capital

5,125,593

18.28%

Pátria Investimentos

1,570,248

5.60%

FUNCEF – Fundação dos Economiários Federais

1,767,838

6.30%

Outstanding shares

18,505,476

66.00%

     

Total shares

28,040,162

100.00%

 

 

73

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

 

Other information deemed relevant by the Company

 

2.   SHARES HELD BY PARENT COMPANIES, MANAGEMENT AND BOARD

 

 

6/30/2017

Common shares

Shares

%

Shareholders holding effective control of the Company

8,806,674

31.41%

Board of Directors

43,951

0.16%

Executive directors

113,977

0.41%

 

 

 

Executive control, board members, officers and fiscal council

8,964,602

31.97%

Treasury shares

973,411

3.47%

Outstanding shares in the market (*)

18,102,149

64.56%

Total shares

28,040,162

100.00%

6/30/2016

Common shares (i)

Shares

%

Shareholders holding effective control of the Company

8,463,680

30.18%

Board of Directors

43,952

0.16%

Executive directors

149,296

0.53%

 

 

 

Executive control, board members, officers and fiscal council

8,656,928

30.87%

Treasury shares

1,071,007

3.82%

Outstanding shares in the market (*)

18,312,227

65.31%

Total shares

28,040,162

100.00%

 

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

 

(i) Post grouping, considering ratio of R$13.483023074 for comparability.

 

 

74

 


 
 

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

 

Gafisa S.A.

 

Notes to the quarterly information--Continued

June 30, 2017

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

 

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.

 

 

 

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Gafisa S.A.

Report on the review of quarterly information - ITR

 

 

The Board of Directors 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 June 30, 2017, which comprises the balance sheet as of June 30, 2017 and the respective statement of operations and statement of comprehensive income (loss) for the quarter and six-month period then ended, and the statement of changes in equity and statement of cash flows for the six-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 Technical Pronouncement of the Accounting Pronouncements Committee (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 and Exchange Commission (CVM) and the Brazilian 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 material 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.

 

 

 

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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 Accounting Pronouncements Committee (CPC) and approved by the Brazilian Securities and Exchange Commission (CVM) and the Brazilian 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 material 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 Accounting Pronouncements Committee (CPC), and approved by the CVM and the Brazilian Federal Accounting Council (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 was prepared in accordance with accounting practices adopted in Brazil (CPC21 (R1)). The consolidated interim financial information were prepared in accordance with the IFRS applicable to the Brazilian Real Estate development entities IAS34 for interim financial information also considers the Technical Orientation OCPC04, edited by the Accounting Pronouncements Committee (CPC). This Technical Orientation refers to the revenue recognition of this sector and comprises other matters related to the meaning and adoption of the concept of continuous transfer of the risks, benefits and control over real estate unit sales, as further described in Note 2. Our conclusion is not modified in view of this matter.

 

Other matters

Statement of value added

 

The individual and consolidated interim financial statements related to the statements of value added (DVA) for the six-month period ended June 30, 2017, prepared under the responsibility of the Company's management, presented as supplementary information for the purposes of IAS 34, were submitted to review procedures performed together with the review of the quarterly information - ITR of the Company. For the purposes of forming our conclusion, we assess if these statements are reconciled with the interim accounting information and accounting records, as applicable, and if their form and content were prepared according with Technical Pronouncement CPC 09 - Statement of value added. Based on our review, we are not aware of any fact that makes us believe that they were not prepared, in all material respects, consistent with the individual and consolidated interim financial statements taken as a whole.

 

São Paulo, August 10, 2017

 

KPMG Auditores Independentes

CRC 2SP014428/O-6

Original report in Portuguese signed by

Giuseppe Masi

Accountant CRC 1SP176273/O-7

77

 


 
 

 

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

 

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 June 30, 2017; and

 

ii)   Management has reviewed and agreed with the interim information for the period ended June 30, 2017.

 

São Paulo, August 10, 2017.

 

GAFISA S.A.

 

Management

 

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(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 June 30, 2017; and

 

ii)   Management has reviewed and agreed with the interim information for the period ended June 30, 2017.

 

São Paulo, August 10, 2017.

 

GAFISA S.A.

 

Management

 

79

 

 

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: August 25, 2017
 
Gafisa S.A.
 
By:
/s/ Sandro Gamba

 
Name:   Sandro Gamba
Title:     Chief Executive Officer