Rossi Residencial S/A presented financial and operational information for 3Q06 and 9M06. Key highlights include:
- Significant growth in launches, contracted sales, and land bank compared to prior periods.
- Net revenues increased 20.95% in 3Q06 and 9.07% in 9M06. Gross income and margins remained stable.
- EBITDA and net income increased substantially in 3Q06 and 9M06 due to growth in operations.
- Backlog increased over 39.7% from the prior year and margins remained high, positioning the company for continued strong performance.
Financial Results for the 2nd Quarter of the Fiscal Year Ending March 2016KDDI
The figures included in the following brief,
including the business performance target and the
target for the number of subscribers are all
projected data based on the information currently
available to the KDDI Group, and are subject to
variable factors such as economic conditions, a
competitive environment and the future prospects for
newly introduced services.
Accordingly, please be advised that the actual
results of business performance or of the number of
subscribers may differ substantially from the
projections described here.
We are very satisfied with the strong nine month and third quarter results. They show that we are delivering on the promises of our Ambition 2018 strategic plan. The combined ratio, margins in guaranteed life, return on equity and solvency all exceed our targets.
Financial Results for the 2nd Quarter of the Fiscal Year Ending March 2016KDDI
The figures included in the following brief,
including the business performance target and the
target for the number of subscribers are all
projected data based on the information currently
available to the KDDI Group, and are subject to
variable factors such as economic conditions, a
competitive environment and the future prospects for
newly introduced services.
Accordingly, please be advised that the actual
results of business performance or of the number of
subscribers may differ substantially from the
projections described here.
We are very satisfied with the strong nine month and third quarter results. They show that we are delivering on the promises of our Ambition 2018 strategic plan. The combined ratio, margins in guaranteed life, return on equity and solvency all exceed our targets.
2. 1
Disclaimer
This material that follows is a presentation of general background information about Rossi
Residencial S/A as of the date of the presentation. It is information in summary form and does not
purport to be complete. It is not intended to be relied upon as advice to potential investors. This
presentation is strictly confidential and may not be disclosed to any other person. No representation
or warranty, express or implied, is made concerning, and no reliance should be placed on, the
accuracy, fairness, or completeness of the information presented herein
Investors are cautioned that any such forward-looking statements are and will be, as the case may
be, subject to many risks, uncertainties and factors relating to the operations and business
environments of Rossi Residencial S/A and its subsidiaries that may cause the actual results of the
companies to be materially different from any future results.
Although Rossi Residencial S/A believes that the expectations and assumptions reflected in this
presentation are reasonable based on information currently available to Rossi Residencial S/A
management, Rossi Residencial S/A cannot guarantee future results or events. Rossi Residencial
S/A expressly disclaims a duty to update any of the presented information.
This presentation does not constitute an offer, or invitation, or solicitation of an offer, to
subscribe for or purchase any securities. Neither this presentation nor anything contained
herein shall form the basis of any contract or commitment whatsoever.
5. 4
Rossi Residencial – Price Performance and Trading Volume
# of
Deals
Volume R$
mm
Standard Lot 5071 234,8
Term Market 86 9,8
Fractioned Market 341 0,3
Monthly Total 5498 244,9
Daily Average 250 11,13
Daily Average in USD mm 5,18
RR share / sector 16,90% 22,28%
Sector´s share / BOVESPA 1,65% 2,08%
October 2006
Total Negotiation
Stock Market
6. 5
Launches – 9M06
(1) Potential Sales Volume: (# units x price)
at launch: may vary according to sales turnover
Launches R$ million Rossi´s stakeLaunches R$ million Rossi´s stake
Regional Office # projects
Usable area
m2
PSV 100% PSV Rossi
Units
Launched
Units Sold
São Paulo 8 128.616 303.611 279.790 946 249
Campinas 17 113.603 216.867 146.831 1.093 359
Rio de Janeiro 4 27.986 72.512 51.942 314 257
Porto Alegre 6 74.369 169.207 127.666 471 209
Belo Horizonte - - - - - -
9M06 Total 35 344.574 762.197 606.229 2.824 1.074
762
Partners
Rossi´s stake
215
61
9M05 9M06
606
156
154
Growth: 393%
7. 6
Launches – Breakdown 9M06
Launches by price range in unitsLaunches by price range in units Launches by price range in R$ mmLaunches by price range in R$ mm
Total Units Launched: 2824Total Units Launched: 2824 R$ mm Launched: 762R$ mm Launched: 762
3 4 %
3 4 %
19 %
11%
2 %
966 0 - 200K
964 200,1 - 350K
545 350,1 - 500K
305 > 500,1K
44 Commercial
Launches
in units
19 %
3 7 %
2 7 %
16 %
1%
141 0 - 200K
292 200,1 - 350K
202 350,1 - 500K
123 > 500,1K
4 Commercial
in R$ mm
Launches
8. 7
Contracted Sales – Potential for Growth
CAGR
(Rossi´s stake)
2003-2006E
CAGRCAGR
(Rossi´s stake)
2003-2006E
Contracted Sales R$ mm
(2003-2006E)
Contracted Sales R$ mm
(2003-2006E)
32,35%
269
2003
248
433
82
2004
351
445
113
2005
332
650
75
2006E
57521
Partners
Rossi´s stake
305
79
9M05
226
428
9M06
378
50
66,8%
# of units per price range# of units per price range
R$ per price rangeR$ per price range
4 0 %
3 8 %
15 %
3 %
4 %
824 0 - 200K
765 200,1 - 350K
306 350,1 - 500K
64 > 500,1K
77 Commercial
Contracted Sales
in units
2 2 %
4 2 %
2 6 %
8 % 2 %
95 0 - 200K
178 200,1 - 350K
112 350,1 - 500K
36 > 500,1K
7 Commercial
in R$ mm
Contracted Sales
9. 8
Significant Growth in Land Bank
Land Bank PSV in R$ mmLand Bank PSV in R$ mm
Rossi´s share
Partners
Acquisition FormAcquisition Form
60%40%Cash Swap
Land Bank distributed throughout 22 cities, showing
less dependence on any specific region
3.3 million m2
in buildable area
1.7 million m2
added since IPO
Potential Sales Volume (100%): R$ 4.6 billion
Rossi´s share: R$3.46 billion
4.591
3.567
2.066
1.826
Dec 05 Mar 06 Jun 06 Sep 06
1128
3.463
939
500
1.326
1.472
594
2.628
261%
10. 9
Land Bank Distribution
Land Bank (Sep 2006) - PSV Breakdown : by price range and by regionLand Bank (Sep 2006) - PSV Breakdown : by price range and by region
Price Range
R$ m
São Paulo &
Metro
Campinas &
Sumare
RJ
&
Niteroi
Porto
Alegre
Other Total PSV
up to 200K 23.325 416.981 255.716 22.172 226.832 945.026 20,59%
200,1 - 350K 1.261.515 500.699 165.314 52.014 267.601 2.247.143 48,95%
350,1 - 500K 183.756 119.896 223.180 251.040 141.373 919.245 20,03%
> 500k 209.147 14.515 89.311 - 159.773 472.746 10,30%
Commercial - 6.324 - - - 6.324 0,14%
Total PSV 1.677.743 1.058.415 733.521 325.226 795.579 4.590.484
36,55% 23,06% 15,98% 7,08% 17,33%
* Average estimated sales price (R$/m 2
of usable area) : R$ 2.250,00
12. 11
Financial Information
Net Revenues R$ MMNet Revenues R$ MM
91.3
110.4
3Q05 3Q06
20,95 %
262.2
286.0
9M05 9M06
9,07 %
Gross Income – R$ MMGross Income – R$ MM
3Q05 3Q06
25.5
37.7
34.1%
27.9%
.
.
Gross Income Gross Margin. 9M05 9M06
77.3
83.9
29.5% 29.3%
. .
13. 12
Financial Information…continued
EBITDA (Adjusted) – R$ MMEBITDA (Adjusted) – R$ MM
EBITDA EBITDA Margin.
9M05 9M06
33.8
66.2
.
.12.9%
3Q05 3Q06
16.3%
14.3% .
13.0
17.9
.
23.2%
Net Income (Adjusted) R$ MMNet Income (Adjusted) R$ MM
Net Income Net Income Margin.
3Q05 3Q06
3.7
24.5
4.1%.
22.2%
.
9M05 9M06
12.9
52.5
5.0%
18.4%
.
.
14. 13
R$ % % R$ % R$ %
2006 202.170 54% 44.579 16% - 0% - 0%
2005 94.450 25% 43.529 15% 90.317 40% 12.375 5%
2004 35.620 9% 113.431 40% 56.388 25% 38.462 15%
2003 36.504 10% 73.093 26% 47.552 21% 119.230 45%
2002 8.983 2% 11.341 4% 32.124 14% 92.134 35%
Total 377.727 100% 285.973 100% 226.381 100% 262.201 100%
9M06 9M05
Period
Launched
Booked
Revenues
Contracted Sales
Booked
Revenues
Contracted Sales
Contracted Sales x Booked Revenues *
70% of Booked Revenues from old projects: current
contracted sales (79% from 05-06 launches)
partially reflected in income statement
70% of Booked Revenues from old projects: current
contracted sales (79% from 05-06 launches)
partially reflected in income statement
R$ % R$ % R$ % R$ %
2006 103.078 68% 30.158 27% - 0% - 0%
2005 23.960 16% 23.681 21% 28.470 43% 3.278 4%
2004 13.392 9% 42.216 38% 8.346 13% 15.807 17%
2003 8.746 6% 12.160 11% 17.693 27% 47.335 52%
2002 1.492 1% 2.173 2% 12.208 18% 24.853 27%
Total 150.668 100% 110.388 100% 66.717 100% 91.273 100%
3Q06 3Q05
Period
Launched
Booked
Revenues
Contracted Sales
Booked
Revenues
Contracted Sales
* Rossi´s share of contracted sales and booked revenues
15. 14
Backlog Breakdown
Backlog (as of Sep 2006)Backlog (as of Sep 2006)
sept-06 sept-05 Var (%) jun-06 mar-06
Revenues to be recognized 436.315 312.368 39,7% 388.364 351.699
Cost of real estate sold (284.731) (214.131) (247.411) (223.835)
Profits to be recognized 151.584 98.237 54,3% 140.953 127.864
Backlog Margin 34,7% 31,4% 10,5% 36,3% 36,4%
33,0%
16. 15
Indebtedness
3Q06 2Q06 Var (%)
Construction Financing 57.719 74.442 -22,50%
Working Capital Facilities 2.251 2.078 8,30%
Construction Financing 67.754 24.000 182,30%
Working Capital Facilities - 506 -100,00%
Total Debt 127.724 101.026 26,40%
Cash and Cash Equivalents 8.527 12.504 -31,80%
Investments - short term 431.359 541.520 -20,30%
Investments - long term 1.768 1.817 -2,70%
Total Cash Position 441.654 555.841 -20,50%
Net Debt -313.930 -454.815 -31,00%
Cash Position
Indebtedness - Short Term
Indebtedness - Long Term
21. 20
Main Activities
Residential Development (1)Residential Development (1)
Focus on project development (vertical and horizontal) for all income
segments, with a greater approach towards lower middle / middle upper
housing throughout 22 cities (7 states) in Brazil
18 launches in 2005, totaling R$ 304 milion in potential sales volume (R$ 606
million in 9M06)
Contracted Sales of R$ 332 million in 2005 (R$ 378 million in 9M06)
Land Bank with 3.3 million m2 to be launched, representing a potential sales
volume of R$ 4.6 billion
Commercial DevelopmentCommercial Development
Projects taken out by opportunity in diverse markets
Expertise in both vertical (triple A building in POA) and horizontal (Praça
Capital (CPS)
Average Contracted Sales: 3-5% of overall sales volume
Net Revenues - 2005
R$ 404 million
95%
5%
(1) Overall Figures account only for Rossi´s share
22. 21
Business Model: Working Capital Efficiency
Land
Acquisiton
Construction
Post-Key
Securitization
Swap Agreements (60%)
reduction in opportunity costs
boosting of project IRR
falling cash outlays
Construction partly financed by customers
17% of unit price cashed in before start of construction
44% of unit price cashed in at time of key delivery
Close to 80% of units sold before start of construction
Construction financing (SFH (1) funds @ TR + 11% p.a.)
Repayment of construction financing through securitization
of receivables originated by the project
True sale with cash in at par
Free cash flow plowed back into a new project
Construction costs locked in: monthly PMTs adjusted by
construction inflation (INCC) (2)
(1) Brazilian mortgage financing system backed by savings deposits: TR @ 2.9% p.a. in 2005
(2) Índice Nacional da Construção Civil: Construction Inflation Index
23. 22
Major Accomplishments Since Offering Feb. 2006
IPO Resources at Play
Expansion of
Management Team
&
IT Platform (SAP)
Expansion of
Management Team
&
IT Platform (SAP)
Growth Through
Partnerships / Joint
Ventures
Growth Through
Partnerships / Joint
Ventures
Growth through
Geographical
Expansion
Growth through
Geographical
Expansion
Sales TeamSales Team
Significant Growth in
Land Bank
Significant Growth in
Land Bank
24. 23
Growth Through Geographical Expansion
(% of pre-sales;3-year average)
(1) Regions covered by São Paulo Regional Office
Presence in 22 cities (7 states) within the main metropolitan regions
FYE 06 projects 26 cities
Regional offices - best knowledge of local markets
Regional diversification helps to minimize and hedge against supply and demand cycles
Region Urban Centers
Greater São Paulo (1) São Paulo
46% Osasco
São Caetano do Sul
Santo André
Santana do Parnaíba
Guarulhos
Vale do Paraíba / Coast (1) Guarujá
4% Santos
Jacareí
São José dos Campos
Campinas Campinas
20% Sumaré
Ribeirão Preto
Sorocaba (1)
São Carlos
Porto Alegre Porto Alegre (RS)
15% Curitiba (PR)
Florianópólis (SC)
Rio de Janeiro Rio de Janeiro (RJ)
15% Niterói
Vitória (ES)
Belo Horizonte Belo Horizonte (MG)
Porto Alegre
1999
Campinas
1996
Rio de Janeiro
2001São Paulo
1980
Belo Horizonte
2006
25. 24
0
1
2
3
4
5
6
7
8
1991 2000
Unitsinmillions
Rural
Urban
Boosting Core Markets: Low / Middle Income Segments
5.4
CAGR +3.3%
47m households
Consumption
19%A/B > 10 min wages - US$ 1,240 52%
4 – 10 min wages
US$ 500 - US$ 1,240
30%C 28%
< 4 min wages - US$ 500
51%D/E 20%
Income Segments in Brazil
Source: Fundação João Pinheiro - 2000, Losango
(1) SECOVI - Estimates in 2000
(2) IBGE - Growth rate during the period 1991 - 2000
Housing Deficit
7.2
Housing Deficit in Rossi’s Target Area
Housing deficit in the Rossi’s target markets:
3.3 million units
Rossi’s Target Area
RJ
SP
PR
Rossi’s target area represents:
80% of the Brazilian GDP
60% of country’s population
GDP per capita 30% higher than the
country’s average
46% of total housing deficit
RS
MG
SC
ES
DF
MS
26. 25
Growth Through Partnerships / Joint Ventures
4 joint ventures established along with other developers in regions where Rossi was either absent or xx
xxlacking a more extensive product mix
% Rossi City / State Segment Nº of projects
PSV in 12
months
Paraná
&
Santa Catarina
58015
70% All 2006
Total
50% High End
Medium HighSão Paulo
Porto Alegre
200
80
10050% Belo Horizonte All
70%
3
2
4
27. 26
40%
25%
12%
10%
8%
5%
Lopes
Abyara
Patrimóvel
Capucci Bauer
Dirani
Others
Sales Team – Rossi Vendas
Rossi Vendas will focus in ramping up sales turnover and zeroing in pre-delivery inventoriesRossi Vendas will focus in ramping up sales turnover and zeroing in pre-delivery inventories
Rossi is establishing an interface to better monitor its customer management, thus consistently building
xxup client relationship activities
Our expertise shows that a homebuyer´s dream begins at the very moment he makes the option for Rossi
From this point on it is essential to have our clients as our most relevant asset
Rossi Vendas is a pilot test for the city of São Paulo, extendable to other regions should results be
xxsatisfactory
Rossi Vendas will have the following core activities:
Inventories (6 months post launchings): full focus on speeding up sales turnover so as to not carry
xxthe burden of finished inventories by the time of project delivery
E-commerce channel: web based vehicle with trained team to help enrich homebuyer´s experience
xxwhen home-shopping with us
Pre Sales Breakdown by Brokerage Company 9M06Pre Sales Breakdown by Brokerage Company 9M06
28. 27
Expansion of Management Team & IT Platform (SAP)
Rossi has reinforced its management teams to better reflect growth opportunitiesRossi has reinforced its management teams to better reflect growth opportunities
Hired 30 new staff, notably in the areas of IT, Human Resources and New Business Development
Expanded operations to Minas Gerais through a regional office in Belo Horizonte
As Rossi takes out opportunities in the Belo Horizonte, Brasília and Campo Grande markets, team
xxshould be progressively built up
IT Platform (SAP) being upgraded to generate additonal controlling reports as operation growsx
29. 28
Decrease in interest rates
Credit expansion
Mortgage terms increasing
The Right Time
Leader in middle-income residential developments
Flexibility to adjust portfolio mix to market cycles
Exposure to different markets
The Right Product Mix
Geographic diversification
through presence in 22 cities
The Right Place
Presence in regions with large housing deficit and
economic growth
Regional offices extend the knowledge of local
markets
The Right
Management
Experienced management team
SAP - Integrated operations
Ability to manage wide portfolio of
developments
Strong brand recognition
The Rossi Advantage
30. 29
Foundations Behind a Successful Model
Decentralized
Operations -
5 Regional
Offices
Decentralized
Operations -
5 Regional
Offices
Centralized
Controls and
Financial
Management
Centralized
Controls and
Financial
Management
Successful
Development
Successful
Development
Over 30 officers with more than 15 years experience in real estate sector
Fully implemented cutting-edge technology (SAP)
Partnerships with
Local Developers
Partnerships with
Local Developers
31. 30
Typical Real Estate Project
1
Product Development
Legal Approvals
Registrations
Marketing Campaign
Sales Strategy
City Govt. Project
Financing Approval
Arrangements for customer
financing
LAUNCHING
Prospecting for
Land Areas
Market Surveys
Business
Analysis
6 12 24 42 162
Sales
Credit Score
Portfolio Management
Executive Projects
Contracting of Financing
Construction
Portfolio Management
Sales
Assignment for Bank
Financing (up to 20 years)
Securitization (Up to 20 years
LandAcquisitionLandAcquisition
ProjectLaunchingProjectLaunching
StartofConstructionStartofConstruction
KeyDeliveryKeyDelivery
32. 31
A Typical Rossi Project
0M 6M 12M 18M 24M 30M 36M
Accumulated Pre-Sales (a) 0% 60% 80% 85% 90% 95% 100%
60,00% 80,00% 85,00% 90,00% 95,00% 100,00%
% Budgeted Costs (b) 0% 20% 29% 56% 86% 100% 100%
Revenues Recognized (a x b) 0 12% 23% 48% 78% 95% 100%
% PMTs Received - 8% 17% 24% 33% 44% 100%
Assumptions
(1) Potential Sales Volume: R$ 100 million (nominal)
(2) Land Swap: R$ 15 million
(3) Does not include any financial revenues (INCC) during construction
Launch
Go
Ahead
Delivery Securitization
Construction
33. 32
Financing Flows in a Typical Project
(2.800.000)
(2.550.000)
(2.300.000)
(2.050.000)
(1.800.000)
(1.550.000)
(1.300.000)
(1.050.000)
(800.000)
(550.000)
(300.000)
(50.000)
200.000
450.000
700.000
950.000
1.200.000
1.450.000
1.700.000
1.950.000
2.200.000
PurchaseofLand
-5
-4
-3
-2
-1
CommercialLaunch
1
2
3
4
5
6
7
8
9
StartofConstruction
11
12
13
14
15
16
17
18
19
20
21
22
23
CompletionofConsrtuction
Deliveryofthekeys
26
27
Secutirization
29
30
31
32
33
34
35
36
With Construction Financing
Without Construction Financing
Investment financed with
Working Capital
• 30% of the Construction completed
• 80% of Units Sold
Months
Intensive use of
Capital to expand
Growth
34. 33
Contact IR
Rossi Residencial S.A.
Address: Av. Major Sylvio de Magalhães Padilha, 5200, Miami Building, 4th floor
Jardim Morumbi - São Paulo – SP – 05693-000
Brazil
Sérgio Rossi
Investor Relations Officer
Phone: +55 (11) 3759-7232
Fax : +55 (11) 3759-0559
e-mail : sergiorossi@rossiresidencial.com.br
www.rossiresidencial.com.br