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Public meeting presentation with analysts and investors Public meeting presentation with analysts and investors Presentation Transcript

  • Public Presentation December 2008 1
  • IMPORTANT NOTICE We make forward-looking statements that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of our management, and on information currently available to us. Forward-looking statements include statements regarding our intent, belief or current expectations or that of our directors or executive officers. Forward-looking statements also include information concerning our possible or assumed future results of operations, as well as statements preceded by, followed by, or that include the words ''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,'‘ ''anticipates,'' ''intends,'' ''plans,'' ''estimates'' or similar expressions. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Our future results and shareholder values may differ materially from those expressed in or suggested by these forward- looking statements. Many of the factors that will determine these results and values are beyond our ability to control or predict. 2
  • AGENDA Wilson Amaral Chief Executive Officer, Gafisa Antonio Carlos Ferreira Rosa Development Director, Gafisa Mario Rocha Neto Construction Director, Gafisa Marcelo Martins Louro Chief Financial Officer, Alphaville Duilio Calciolari Chief Financial Officer, Gafisa 3
  • Wilson Amaral
  • OUR HISTORY 1954 1997 2004 2005 2006 2007 2008 • Gafisa is • GP Invests • GP takes • Equity • IPO • Follow-on • 60% Control founded control of International Equity- of Tenda • Creation of the (Sam Zell) Offering Gafisa Vendas • Equity Company Invests • NYSE Listing International • AlphaVille • Creation of increases Acquisition Fit interest by 5% Residencial • Gafisa joins Ibovespa and IBRX 50 • Cipesa Acquisition 5
  • DIVERSIFIED AND INTERNATIONAL SHARE BASE Free Float1 •Leading investor in the sector •Founded by Sam Zell 1 2% treasury shares 19% 79% • Sole Brazilian homebuilder listed on • Independent Board NYSE • Novo Mercado listing • Compliance with the Sarbanes-Oxley • US GAAP reconciliation Act requirements • 100% tag-along rights • Audit, Compensation, Finance and Governance Committees 7% 13% ADR Institutional - International 53% Institutional - Local 27% Individual 6
  • OUR STRATEGY Gafisa Strategy Create the leading residential development company in Brazil in terms of sales, profitability and product quality. Superior Focus on Maintain land Geographic Product Financial and revenue high-return bank of 2-3 diversification diversification investment growth opportunities years of future discipline sales 7
  • OUR PRODUCT LINES: MANAGEMENT FOCUSED ON EACH MARKET 60% owned by Gafisa 60% owned by Gafisa Mid, Mid-High and Own sales force Low affordable entry High Mid-High and High In São Paulo, Rio de level Vertical Horizontal (lots) Horizontal / Vertical Janeiro and Northeast Region Metropolitan areas Outside metropolitan Metropolitan areas and areas outskirts Sales machine Financing: Banks Financing: Direct Financing: CEF and Management of sales Unique Projects Banks channels and CRM Unique Projects Standardized projects Unit Price: > R$200K Management of Unit Price: R$70K – Unit price: R$50K – outsourced and local R$500K R$200K sales companies 8
  • OPERATING HIGHLIGHTS Launches (R$ million) Sales (R$ million) 2005-2007 CAGR 75% 2,293 2005-2007 CAGR 90% 2,235 São Paulo São Paulo 1,627 1,560 Rio de Janeiro 706 Rio de Janeiro 743 New Markets New Markets 635 610 467 995 562 1,005 263 575 399 652 498 450 1.200 340 931 230 219 686 239 540 186 140 126 268 201 80 2005 2006 2007 9M08 2005 2006 2007 9M08 Gafisa 69% Gafisa 67% AlphaVille 9% AlphaVille 12% Fit 21% Fit 19% Other 1% Other 2% 9M08 9M08 9
  • ONE OF THE MOST GEOGRAPHICALLY DIVERSIFIED HOMEBUILDERS States in which Gafisa or its subsidiaries have already launched developments: Diversified and high quality land bank, 222 sites throughout Brazil, 73% acquired by means of swaps. 10
  • TENDA CONSOLIDATES GAFISA’S POSITION IN LOW INCOME SEGMENT As of October 2008, Gafisa holds 60% of shares in Tenda, a residential real estate company exclusively focused on the low-income segment with its own sales force. Tenda is separately listed on Bovespa under ticker TEND3. October 2008 November 2008 - December 2008 2009 ► New CEO hired on November 26: Carlos Trostli ► On October 21, Tenda’s ► Hiring process for the CFO position underway EGM approved the merger of Fit, Gafisa’s ► Business plan development subsidiary, into Tenda. ► Strengthening relationship with public and private commercial banks ► Business Plan ► As a result, Gafisa Execution holds 60% of the ► Integration of the financial and human resources shares of Tenda + Fit. areas in progress ► Beginning of the ► Reviewing Commercial, Marketing and integration process. Operations structures to identify potential synergies 11
  • STRONG GROWTH IN MORTGAGE LENDING STILL DOES NOT MEET PENT-UP DEMAND Home Mortgages (R$ billion) Savings Account Balances (R$ billion) CAGR (2003-2007): 43% 35.4 Balance in Oct-2008 was 18% higher than in Oct-2007 10.2 25.3 55% 6.9 16.3 57% 206 10.4 7.0 25.2 51% 187 15% 18.4 6.9 6.0 5.5 150 3.9 9.3 135 3.8 126 4.9 115 2.2 3.0 2003 2004 2005 2006 2007 Savings through Oct 2008 2003 2004 2005 2006 2007 Oct 2008 FGTS through Nov 2008 Financing with Funds from Savings Financing with FGTS Funds Sources: ABECIP, Central Bank of Brazil, CEF and FGV. 12
  • FUNDAMENTALS SUPPORTING RECENT REAL ESTATE GROWTH CONTINUE 30% 65,000 60,000 25% 55,000 Loan availability at 20% 50,000 45,000 historically low rates and 15% 40,000 long terms 10% 35,000 30,000 5% 25,000 0% 20,000 dez-02 fev-04 dez-05 out-08 nov-04 mar-05 set-03 set-07 jun-04 abr-06 ago-06 abr-08 mai-03 mai-07 jul-05 jan-07 jan-08 jul-08 Interest Rate (Selic) Real Estate Credit (R$MM) Source: Central Bank of Brazil Housing deficit Pent-up demand for 7.8 million houses. Source: Brasil Sustentável, Ernst & Young, 2008 13
  • GOVERNMENT SUPPORT FOR THE HOME BUILDING SECTOR IS A PRIORITY In October the government announced an additional R$10 billion available to finance up to 20% of each development, at rates of TR+10% to TR+11%, within the limits of 65% of savings balances which must be used for real estate financing. In December the FGTS Oversight Board announced new financing conditions: • Builders– R$3 billion of FGTS to finance up to 80% of each development at TR+7% per annum for properties up to R$130 thousand, and TR+9% over this value • Clients– interest rate decreases to TR+5% for workers with up to R$2,000/month income (TR+4.5% if the worker has an FGTS account) 14
  • Antonio Carlos Ferreira
  • 2008 HIGHLIGHTS Launches Sales R$2.0 billion year to date R$1.3 billion year to date Land bank Deliveries R$7.8 billion PSV 20 Developments delivered Figures as of December 8, 2008. 16
  • LAUNCHES LAUNCHES TOTALED R$2.04 BILLION Region Number of Launches Number of Gafisa Units PSV R$ MM North, South, Center 6 514 198 Northeast 7 1,250 369 Cipesa 3 100 71 Rio de Janeiro 8 984 486 São Paulo 13 2374 918 Total 37 5,222 2,042 PSV R$ MM Units PSV R$ MM Units SP Verdemar - Guarujá 44.4 80 NM (NSCO) Magnific (Goiânia) 30.5 27 Granja Viana 25.9 35 Carpe Diem (Belém) 32.5 63 Nova Petrópolis 108.5 268 Mistral (Belém) 34.0 140 Terraças Alto da Lapa 72.7 182 Ecolive (Curitiba) 40.4 122 Cond. Clube Barueri 152.0 677 Reserva do Bosque F1 29.3 79 Terraças Tatuapé 48.6 105 Reserva do Bosque F2 32.4 86 Montblanc 106.4 90 Alegria 78.9 278 NM (NE) Horto F2 (Salvador) 87.8 92 Details 53.5 38 Pablo Picasso (João Pessoa) 12.6 11 Patio Condomínio Clube 59.4 192 G Park Calhau (São Luiz) 15.0 75 Chacara Santana 62.8 150 Manhatthan (Salvador) 168.3 771 Brink 46.4 192 G Park Arvores (São Luiz) 12.1 75 Mandala (Fortaleza) 41.7 107 RJ Costa Maggiore 24.0 30 Carpe Diem 29.5 91 NM (Cipesa) Dubai (São Luiz) 31.8 120 London Green 54.7 140 Res. Pq Maceió (Maceió ) 11.6 63 Reserva Laranjeiras 61.8 108 Beira Mar - Nouvelle 27.1 12 Reserva Santa Cecília F 2 23.8 92 Beira Mar - Lumiere 32.1 25 Lagua Di Mare 57.5 108 Quintas do Pontal 79.5 91 Alphaville Barra 155.0 324 Updated up to December 8. 17
  • LAUNCHES PARÁ – R$66.5 million MARANHÃO – R$58.9 million CEARÁ – R$41.7 million PARAÍBA – R$12.6 million ALAGOAS+SERGIPE– R$70.8 million BAHIA – R$256.1 million RONDÔNIA – R$61.7 million RIO DE JANEIRO – R$486.2 million GOIÁS – R$30.5 million PARANÁ – R$40.4 million SÃO PAULO – R$918 million 18
  • IMPORTANCE OF LOCAL PARTNERS Local market Local culture Access to local Access to Reduce Local knowledge knowledge government business barriers to operational bodies, opportunities entry support reducing time of appovals 19
  • LAUNCH GROWTH 2007 X 2008 PSV (Million) Launches 2,043 1,698 20.3% 2007 2008 Regional Launches 45.0% 918 23.8% 18.1% 9.7% 486 369 3.5% 198 71 NSCO NE CP RJ SP 20
  • DIFFERENTIATED BRAND POSITIONING New institutional campaign Research: Attributes which most motivate clients to purchase properties: Honest and Keeps its Tradition Innovative and Reliable promise Creative 21
  • DELIVERY ADVERTISEMENTS 22
  • CURRENT SCENARIO Financial crisis has impact on real estate sales velocity • Uncertain buyers; • Unemployment; • Financial health of homebuilders; • Delivery capacity. Measures adopted by Gafisa for launches: • Launch only after reaching a pre-reservation that assures 50% of sales; • Launches only after construction financing contracting is complete; • Institutional campaign “Safe Purchase”. 23
  • SAFE PURCHASE 24
  • LATEST LAUNCHES – CHÁCARA SANTANA CHÁCARA SANTANA Launch: 11/1 Pre-sale period: 30 days Sales: 60 % PSV 100%: R$ 120 million 25
  • LATEST LAUNCHES - BRINK BRINK Launch: 11/29 Pre-sale period: 40 days Sales: 67 % PSV 100%: R$ 46.4 million 26
  • LATEST LAUNCHES – ALPHAVILLE BARRA DA TIJUCA ALPHAVILLE BARRA Launch: 12/6 Pre-sale period: 30 days Sales: 62 % PSV 100%: R$ 300 million 27
  • Mario Rocha Neto
  • GAFISA - CONSTRUCTION Construction volume; National reach; Organization structure and recruiting; Reduction of construction time; Production management; Eldorado. 29
  • CONSTRUCTION VOLUME Monthly Area VOLUME DE OBRAS Área Mensal Total Area Área Total 135 3100 130 3000 2900 125 2800 120 2700 115 2600 110 2500 2400 Monthly Built Area (x1,000 sq.m) Total Built Area (x1,000sp.m) 105 2300 100 2200 95 2100 90 2000 1900 85 1800 80 1700 75 1600 70 1500 1400 65 1300 60 1200 55 1100 50 1000 Jun/08 Jul/08 Aug/08 Sep/08 Oct/08 Nov/08 Dec/08 Jan/09 Feb/09 Mar/09 Apr/09 May/09 Jun/09 30
  • NATIONAL REACH AMAZONAS 3 sites with 57.3 thousand sq.m RR AP PARÁ 6 sites with 162.8 thousand sq.m MARANHÃO 3 sites with 98.4 thousand sq.m AM III VIII CEARÁ 2 sites with 48.9 thousand sq.m PA MA CE PI V AC RO VI TO IV BA MT BAHIA 6 sites with 324.1 thousand sq.m MATO GROSSO 1 work with18.9 thousand sq.m GOIÁS 4 sites with 108.4 thousand sq.m GO II MS I I São Paulo - 51 sites with 1,756.0 sq.m RIO DE JANEIRO 30 sites with 794.3 thousand sq.m II Rio de Janeiro - 30 sites with 794.3 sq.m PR SÃO PAULO 51 sites with 1,756.0 thousand sq.m III Belém - 09 sites with 220.1 sq.m PARANÁ 3 sites with 65.0 thousand sq.m IV Salvador - 06 sites with 324.1 sq.m SC V Sergipe, Alagoas and PE – 05 sites with 189.2 sq.m VII VI VII Goiânia - 10 sites with 221.7 sq.m Maranhão, Piauí, Ceará, RN and Paraíba – 06 sites RIO GRANDE DO SUL 2 sites with 29.4 thousand sq.m VIII with 162.7 sq.m 31
  • ORGANIZATIONAL STRUCTURE – GAFISA CONSTRUCTION Construction/ Engineering Mário Rocha People and Planning Management Operations Karine Oliveira Mario Merolli DASSI Ewerton Bonetti SP, S, N and CO RJ and NE Operations Operations Supplies Director Technical Director Director Director Pércio Martins José Marmo Sérgio Cincurá Gerson Sallum 32
  • RECRUITING QUALIFIED PERSONNEL - CONSTRUCTION Lectures and fairs at SP and RJ universities Internship program: 2008 – 49 hires 2009 – 75 graduates Trainee Program: 2007 – 6 hired 2008 – 10 under training Partnerships: SENAI, Sintraconstr, CREA. Work with us: resumes posted on Gafisa’s website. Arte Campanha 33 33
  • REDUCTION OF LEAD TIMES We reduced construction time by 180 days and project time by 120 days. 45 15 n 2 months 2 months Launch -10 months 16 months Conditions for Project Start-up Conditions for construction A commitment to shortening the stages prior to A commitment to shortening the stages prior to launch through: launch through: • Faster incorporation • Earlier completion of initial construction tasks (form, foundations, and sitework) • Streamlining legal approvals (local • Streamlining legal approvals (local government) government, fire department, • Product standardization concessionaires, etc.) • Faster construction techniques (example: use of aluminum form) 34
  • REDUCTION OF CONSTRUCTION TIME 35
  • PRODUCTION MANAGEMENT QUALITY (Indicators) Standardization of procedures - Brazil Flow Conclusion Quality of services 36
  • PRODUCTION MANAGEMENT Fill out FVP – Product Verification Cards Tracking of recurring problems (critical) Use of analysis tools (statistical database) Action on causes 37
  • ELDORADO 38
  • Marcelo Martins Louro
  • ALPHAVILLE HISTORY 1974 - 1995 1995 - 2007 2007... ► AlphaVille is founded ► Start of geographical ► Gafisa acquires control by Construtora expansion ► 6 launches in 2007 and Albuquerque, Takaoka ► AlphaVille present in 8 launches in 2008 13 states in 2007 through September ► 14 developments launched in São Paulo ► In 2007, 116% growth metropolitan area in launches and 70% in sales over 2006 ► Approximately 10 ► Corporate Governance million sq m built – Management controls, SAP, SOX, Investment Committee 40
  • ALPHAVILLE CONCEPT Typical AlphaVille project Residential Area ► Transformation of large rural lots into high quality urbanized lots, involving: Special infrastructure – water and sewage network, paving, sidewalks, lighting. Residential Area Leisure Area – sports club, parks. Security – security plan, monitoring systems, wall. ► AlphaVille Projects as a generating source of local development – creation of new business opportunities ► AlphaVille Foundation – concern for social and environmental sustainability in the Commercial Area AlphaVille Club Residential Area surroundings of developments. Multi-family Area Commercial Center Example AlphaVille Graciosa (Curitiba, Paraná) 41
  • ALPHAVILLE: STRATEGIC COMPETITIVE ADVANTAGES AND SYNERGIES ► Largest urban developer ► Sole urban developer with national reach ► The company is focused on area identification, development and commercialization of high quality residential lots, targeting upper and upper middle class families in the surroundings of metropolitan regions throughout Brazil ► Strengths: • Strong brand recognition throughout Brazil (Top of Mind). • Broad market experience and financial stability. • Land bank acquired through swaps (no cash). • Strategic land bank hard to be replicated. • High growth potential with low risk. • Huge operational synergies and cross-selling opportunities within the Group’s companies. 42
  • OPERATING HIGHLIGHTS Projects Launches – R$ MM Sales – R$ MM 43
  • Duilio Calciolari
  • IMPROVING FINANCIAL INDICATORS Net Revenues (R$ million) Gross Profit (R$ million) 77% 41% 64% 89% 45% 388 1,172 1,150 43% 375 814 240 664 198 457 139 2005 2006 2007 9M07 9M08 2005 2006 2007 9M07 9M08 Adjusted EBITDA1 (R$ million) Net Income (R$ million) 54% 87% 89% 154% 67% 184 195 127 148% 14 140 98 76 4 59 55 55 31 2005 2006 2007 9M07 9M08 2005 2006 2007 9M07 9M08 ¹ Adjusted for IPO and Follow on expenses in 2006 and 2007. 9M07 adjusted for capitalized interest. 45
  • PERFORMANCE INDICATORS Sales vs. Launches Landbank vs. Launches 11,136 2,236 2,293 3.2 99% 1,627 1,560 2.6 2.2 69% 1,005 73% 69% 995 5,736 652 3,500 450 2,167 2,236 1,005 2005 2006 2007 9M08 2006 2007 2008 Launches (R$ million) Landbank1 (R$ millioin Landbank/Launches Launches (R$ million) Sales (R$ million) Sales/Launches ¹Landbank at the end of the period Gross Profit vs. Launches SG&A vs. Sales 2,236 2,293 16.1% 78% 69% 12.7% 1,218 6.8% 11.8% 1,195 10.4% 1,005 4.7% 697 54% 52% 5.2% 7.0% 652 513 9.3% 8.0% 5.2% 4.8% 2005 2006 2007 9M08 2005 2006 2007 9M08 General and Administrative Expenses/Pre-Sales Launches (R$ million) Gross Profit Gros ProfitLaunches Selling Expenses/Pre-Sales 46
  • GAFISA IS GROWING WITH INCREASING MARGINS Gross Margin EBITDA Margin 35.0% 32.0% 17.2% 30.4% 15.7% 29.8% 14.8% 12.9% 2005 2006 2007 9M08 2005 2006 2007 9M08 Net Margin ROE3 11.3% 11.4% 9.7% 9.4% 1,689 1,531 11.4% 12.3% 10.2% 814 6.7% 300 2005 2006 2007 9M08 2005 20061 20072 9M08 Shareholders’ Equity ROE (LTM)3 ¹ IPO in February 2006 with a capital increase of R$350 million; ² Follow-on in March 2007 with a capital increase of R$490 million ³ ROE = adjusted net income / shareholders’ equity 47
  • STRONG PRE-SALES POSITIVELY IMPACT BACKLOG OF REVENUES TO BE RECOGNIZED R$711 million of sales backlog (69% growth compared to 3Q07) 3Q08 2Q08 3Q07 3Q08 x 2Q08 3Q08 x 3Q07 Gross sales to be recognized 2,045.1 1,927.5 1,208.6 6% 69% Sales, net of 3.65% sales tax, to be recognized 1,970.4 1,857.1 1,164.5 6% 69% Cost of units sold to be recognized (1,259.9) (1,190.1) (743.5) 6% 69% Backlog of results to be recognized 710.5 667.0 421.0 7% 69% Backlog margin to be recognized 34.7% 34.6% 34.8% 14 pps 23 pps 48
  • INCREASED MORTGAGE PENETRATION Pre-Sales Financed by Gafisa vs. Financed by Banks 16% 14% 34% 12% 54% 20% 32% 74% 30% 64% 34% 16% 2005 2006 2007 9M08 Gafisa financing longer than 36 months Gafisa direct financing up to delivery of keys Mortgage loans Reduction in accounts receivable balances improves Gafisa’s working capital Higher returns Higher asset turnover Better terms for clients with lower rates at longer terms 49
  • GAFISA’S SOLID FINANCIAL POSITION AND OPTIMIZATION OF CAPITAL STRUCTURE SUPPORT EXPANSION 3Q08 2Q08 Total Debt 1,377 1,084 Obligation to Investors 300 300 Cash and Cash Equivalents 790 775 Net Debt & Obligation to Investors 887 609 Shareholders’ Equity 1,689 1,637 Total Capitalization 3,066 2,721 Net Debt & Obligation to Investors / Shareholders’ Equity 52.5% 37.3% 50
  • FINANCIAL HIGHLIGHTS R$790 million in cash and cash equivalents, in addition to R$250 million in receivables available for securitization. R$3.5 billion in construction financing lines made available by Brazil’s largest banks: R$1.6 billion in signed contracts R$1.2 billion contracts in progress R$682 million in lines available Ratings: Moody’s: international Ba2 and local Aa3.br Fitch: A(bra) local Standard & Poor’s: BrA local 51
  • EVOLUTION OF SOX CONTROLS IMPLEMENTATION As a company listed on the New York Stock Exchange (NYSE), Gafisa must comply with the requirements of the Sarbanes-Oxley Act (SOX). In 2007, when Gafisa was listed on NYSE, its Corporate Governance was evaluated according to Article 302 of SOX. The evaluation was analyzed by PricewaterhouseCoopers, which provided a letter of recommendations, which were quickly complied with. Such documents are part of form 20F, filed with the U.S. Securities and Exchange Commission (SEC) in June 2008. For the financial statements with reference date on December 31, 2008, Gafisa shall judge the effective operation of the environment of its internal controls (Article 404 of SOX), as well as under the Corporate Governance perspective (Article 302 of SOX). For that, Gafisa is testing the controls which guarantee the accuracy of its financial statements and information disclosed to the market. The controls are also tested by our certifiers, PricewaterhouseCoopers. The opinion of Gafisa’s management and the opinion of our certifiers will be disclosed through form 20F, to be filed with the SEC during the first half of 2009. The implementation of SAP information system in 2008 was an important step in the company’s operations management to meet SOX requirements. 52
  • 2008 OUTLOOK 2008 Launch Guidance: R$3.5 Billion ► Equivalent to R$3.3 billion excluding R$200 million of launches corresponding to Fit in the fourth quarter. EBITDA Margin for 2008: 16%-17% As of 4Q08, Gafisa’s financial statements will consolidate 100% of Construtora Tenda S.A., with the results of the stake Gafisa does not own flowing out through the minority shareholders line of the income statement. 53
  • CONSOLIDATED HIGHLIGHTS Tenda Gafisa Before Pro Forma Gafisa Provisions(1) Consolidated(2) Financial and Operating Highlights (R$000) 9M08 9M08 9M08 Launches (% Company) 2,293,032 1,396,665 3,689,697 Launches (Units) (% Company) 9,875 18,263 28,138 Pre-Sales (% Company) 1,559,656 891,618 2,451,274 Net Operating Revenues 1,149,879 504,629 1,654,508 Gross Profit 387,606 200,213 587,819 Gross Margin 33.7% 39.7% 35.5% EBITDA 195,154 84,463 279,617 EBITDA Margin 17.0% 16.7% 16.9% Ne Income 139,781 71,136 210,917 Net Margin 12.2% 14.1% 12.7% Earnings per Share (R$) 1.08 1.63 Weighted Average of the number of shares 129,591,117 129,591,117 Backlog of Revenues (After Provisions) (3) 2,045 737 2,782 Backlog of Results (After Provisions) (3) 711 291 1,002 Backlog Margin 34.7% 39.5% 36.0% Net Debt and Obligation to Investors (Cash) 886,822 -11,869 874,953 Cash 790,325 92,995 883,320 Minority Stake - - 267,832 Shareholders’ Equity After Provisions 1,688,596 669,580 1,688,596 Total Assets After Provisions 4,606,797 1,015,091 (1) Before Provisions Except: Backlog of Revenues and Results, Shareholders’ Equity and Total Assets. (2) Pro-forma numbers were not reviewed and should not be considered for analysis. (3) Backlog of results discounting 3.65% of the gross operating revenue related to taxes on sales. 54