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Gafisa corporate presentation eng_december10

Corporate Presentation for December 2010. 1. The presentation provides an overview of Gafisa's competitive advantages including its diversified product offerings across all income segments, national footprint capturing major markets, strategically located landbank, strong brand recognition, and proven track record of execution. 2. Financial highlights discussed include sustained growth in launches, contracted sales, revenues, EBITDA, and net income in recent years aligned with profitability increases. The company also has a solid balance sheet and favorable debt maturity profile. 3. Trading multiples indicate Gafisa trades at a discount to peers based on its liquidation value after accounting for receivables, taxes, and obligations from sold units.

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Corporate Presentation December 2010 1
Disclaimer 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
Shareholder Structure, Corporate Governance and Liquidity True corporation listed on the NYSE and the most liquid Brazilian Real Estate company GFSA3 Majority Independent Board of Directors; 100% Senior management with an average of over 20 years of experience and interests aligned with shareholders through Stock Option Plan; 80% 100% Permanent Fiscal Council, Audit, Compensation, Finance and Governance committees 100% free float; Avg. Daily Trading Volume (R$ mm) - Last 90 days1 100% tag along rights; 100% common shares (“Novo Mercado”); Full compliance with Sarbanes-Oxley; Only Brazilian real estate company listed on the NYSE. W' DZs Z 3 1. Source: Bloomberg as of November 12th, 2010
Solid Track Record of Value Creation Strong growth, value-creating transactions with a successful history in the capital markets 1 3,921 3,022 Net revenue (R$ mm) New Follow-on: Net Primary 1,740 proceeds of R$1.02 billion 1,204 664 R$600 mm 457 in FI-FGTS debentures (May/09) Acquisition of Follow-on: a 60% stake R$488 mm of primary R$600 mm Increase in IPO: proceeds stake from in FI-FGTS R$494 mm 60% to 80% debentures of primary (Dec/09) proceeds Equity International First Brazilian investment company in the sector to be listed in Acquisition the NYSE Acquisition of Foundation of a 60% the remaining stake 40% 1954 - 2004 2005 2006 2007 2008 2009 2010 1. Source: Consensus Bloomberg as of August 6th, 2010 4
SECTION 1 Competitive Advantages 5
Multifaceted Residential Products in All Income Segments Focused on the residential market, with 3 leading brands strategically positioned in all income segments Contribution Segment / Income Price Mid and Upper-Mid Mid and Upper-Mid Affordable Entry-Level Unit price: R$200 thousand Unit price: R$70 – R$500 thousand Unit price: R$50 – R$200 thousand Sales 9M10 49% 15% 36% Presence 44 cities in 14 states 60 cities in 22 states 92 cities in 14 states Completed Projects 17 projects/phases in 2009 5 projects/phases in 2009 130 projects/phases in 2009 Characteristics Vertical Horizontal lot development Horizontal / Vertical Metropolitan areas Suburban areas Metropolitan areas and surroundings Custom projects Custom projects Standardized products 6
Strong Demand Growth in All Segments Strong potential demand of around R$170 billion per year, being 58% in the mid and upper mid income segment and 42% in the affordable entry-level segment Income Bracket Number of Families (mm) New Families Gafisa Potential Demand per Year (Monthly) per Year Brands (R$ bn) 2007 2030 (thousand) Above R$ 32,000 0 0.3 13 Mid and Upper-Mid New Families R$ 16,000 - R$ 32,000 Income 0.3 1.3 43 530 (thousands) Potential Demand 101 R$ 8,000 - R$ 16,000 1.1 4.3 139 (R$ bn)1 R$ 4,000 - R$ 8,000 3.3 11.0 335 New Families R$ 2,000 - R$ 4,000 8.4 21.8 583 846 (thousands) Entry-Level Affordable Potential Demand 72 (R$ bn)2 R$ 1,000 - R$ 2,000 15.5 27.6 526 Up to R$ 1,000 31.7 29.1 (113) 1,526 TOTAL 60.3 95.4 1,526 Source: “O Brasil Sustentável”, FGV and Ernst Young, 2007 Notes: Gafisa: Positioned to capture growth in all 1. Assumes an average ticket of R$190,000 2. Assumes an average ticket of R$85,000 income segments demand 7
National Footprint National footprint captures both rapidly growing and large metropolitan regions Geographic Footprint Landbank Distribution vs. GDP Distribution Landbank 3Q10 GDP Distribution - 2006 ^ South D 16% ^ W São Paulo Midwest 34% 9% E Northeast 13% E North Z : Rio de Janeiro 5% 12% K ^ Others Southeast 11% R$ 16.6 Billion Real GDP Growth 1 8.0% 6.6% 6.9% Brand States2 Cities Legend 4.7% 14 44 3.1% 14 92 22 60 Consolidated 22 130 South Midw es t Southeas t Northeas t North Source: Company and IBGE Note: 1. Nominal GDP growth rate per year for 2003 – 2006 adjusted by the average consumer price index (IPCA) of the period 2. Does not Include Brasilia Federal District . 8
Strategically Located Land Bank Gafisa has a strategic land bank that allows for continued project launches Land bank distribution 9M10 Land bank PSV (R$ million) W 16,551 3,676 ^ 15,823 Z 1.6x ' 4,006 4,285 (2,948) 10,195 4,735 1,536 3,962 4.7x 2,930 7,576 7,810 5,729 d 2,167 IPO 2006 2007 2009 9M10 Net Actual 9M10 Launches Acquisitions ' d *Note: Tenda 2007 represents Fit + Bairro Novo 9
Proven Track Record of Execution Units Under Construction Projects under Construction 50,189 211 49,423 188 33,586 85 16,099 63 2007 2008 2009 3Q10 2007 2008 2009 3Q10 Units Completed Number of Engineers E: 15,000 919 880 10,831 674 309 352 8,206 9,995 459 241 58 59 47 186 3,108 31 513 508 386 242 2007 2008 2009 9M10/2010E 2007 2008 2009 3Q10 Intern Enginners Construction Architects On the Job 10 ^ '
Strong Brand Recognition and Solid Reputation Gafisa benefits from its strong brand recognition and solid reputation through: (i) a higher sales speed (VSO); (ii) commanding premium prices; and (iii) easier access to asset swaps / partnerships Leading Brands Strong Brands in Every Segment Maior Construtora do Brasil: Largest Construction 1st Company in Brazil – 2008 / 2009 (ITCnet) ► 55 years in the Real Estate industry ► Completed more than 985 developments and 11 million m2 ► Awards: Valor Top Management and Top Manager of the Year Top of Mind – 2008 (Diário do Grande ABC / 1st IBOPE) ► One of the best known brands in the affordable entry-level segment ► Completed more than 500 developments 1st Reference in Urban Development ► Completed more than 40 developments and 3.4 million m2 ► Awards: Best Social Responsibility and 2009 Top Social – Alphaville Foundation Source: ITCnet, Revista Marketing, Valor Econômico 11
SECTION 2 Operating and Financial Performance 12
Launches, Contracted Sales and Revenues High growth rates over the last years ... Launches (R$mm) Pre-Sales (R$mm) Net Revenues (R$mm) 1 4,200 to 4,600 4,196 3,248 3,022 2,792 1,970 2,949 2,766 2,578 1,361 988 932 2,301 1,007 2,236 1,068 932 1,740 277 300 313 617 1,627 284 237 377 276 60 406 549 300 238 1,204 250 420 7 1,005 995 193 1,913 664 1,757 1,698 1,510 1,576 1,329 1,345 1,352 1,215 1,265 1,332 995 1,004 1,005 664 2006 2007 2008 2009 9M10 2006 2007 2008 2009 9M10 2006 2007 2008 2009 9M10 Gafisa Alphaville Tenda Note: 1 2010E guidance range announced by the Company 13
EBITDA, Net Income and Results to be Recognized … aligned with sustained growth in profitability Adjusted EBITDA1 (R$ mm) and Net Income (R$ mm) and Results to be Recognized (Backlog4) Margin (%) Margin 2 (%) (R$ mm) and Margin (%) 18.5% to 20.5% 3 330 11.7% 12% 17.5% 38.2% 37.5% 15.0% 279 1,309 14.9% 604 19.7% 280 9.9% 35.1% 35.2% 9.6% 34.6% 13.4% 10% 75 1,066 230 8.1% 1,015 214 8% 6.9% 180 300 6% 41 130 530 550 110 528 92 4% 80 298 259 46 180 2% 30 89 2006 2007 2008 2009 9M10 -20 2006 2007 2008 2009 9M10 0% 2006 2007 2008 2009 9M10 EBITDA (R$ mm) Margin (%) REF (R$ mm) Margem (%) Lucro Líquido (R$ mm) Margem (%) Tenda’s goodwill net of provisions Notes: 1 Adjusted for stock options and excluding Tenda’s goodwill net of provisions 2 Net income before minority interests and non-recurring expenses 3 2010E guidance range announced by the Company 4 Gross Profit 14
Solid Balance Sheet 9M10 Leverage (R$ mm) Debt Composition (R$ mm) and Rates SFH / Net Debt / Project 1,846 8.2% - 11.5% (TR) 55.6% Finance Shareholders’ Equity Working CDI + (0.7% – 4.2%) 553 Capital Debentures CDI + (1.5 – 3.3%) 527 1,231 Investor CDI 380 Obligations Total 3,307 10.8% 3,307 Debt Maturity Schedule 1 (%) 2,076 54% 15% 33% 56% 85% 46% 67% 44% 100% Total Debt Cash Net Debt h ^ h ^ h ^ h ^ h ^ Note: W Z Z 1 Does not include investors obligations of R$380 mm 15
Trading Multiples Liquidation Value (R$mn) Blue Chips (3Q10) Company Gafisa Peer1 Peer2 Peer3 Peer4 Avg (1) Receivables from Sold Units 8,466 10,455 11,463 5,669 5,081 (-) Taxes (571) (706) (774) (383) (343) (-) Obligations from Sold Units (2,120) (3,022) (3,673) (1,462) (1,771) Mkt Value of Units for Sale 2,937 3,821 2,197 1,791 2,180 (-) Taxes (198) (258) (148) (121) (147) (-) Construction Obligations (790) (710) (329) (341) (986) Book Value of Land 751 2,315 2,448 1,115 687 (-) Swaps booked in Advances (94) (540) (1,756) (453) (68) (-) Payables from land acqs. (312) (557) (395) (304) (378) Other Assets 92 287 3 39 10 (-) Other liabilities (183) - - - - Cash and Equivalents 1,231 1,892 986 1,014 1,284 (-) Corporate Debt (1,461) (2,527) (1,201) (1,131) (1,012) (-) SFH and other Project Finance (1,846) (2,259) (1,785) (461) (1,148) (-) Minority Shareholders (62) (115) (399) (219) - (+) Invest. in Subsidiaries 194 134 15 - - Liquidation Value 6,035 8,209 6,653 4,754 3,389 BV Adjusted 4,959 7,876 6,012 4,015 3,102 BV 3,772 6,123 4,384 2,919 2,563 Deferred Incom e 1,203 1,780 1,747 1,159 540 Deferred Revenues 3,429 5,149 5,594 2,810 2,478 Deferred Costs and Expenses (2,120) (3,022) (3,673) (1,462) (1,771) Taxes (over Sales and Incom e) (106) (348) (173) (190) (167) Avg Stake 99% 98% 93% 95% 100% P/LV 0.95 1.45 1.34 1.64 1.23 1.41 P/BVAdj 1.16 1.51 1.48 1.94 1.34 1.57 P/BV 1.53 1.94 2.03 2.67 1.62 2.07 Market Cap 5,763 11,881 8,913 7,795 4,157 # of shares 437 1,142 426 490 269 Closing price (November 12th) 13.2 10.4 20.9 15.9 15.5 *Source: Barclays Capital Res earch and Com panies ' Inform ation / (1) Excluding Gafis a 16
Gafisa’s Differentiation Industry Leading Liquidity and Corporate Governance Multifaceted Residential Products in All Income Segments National Footprint Proven Track Record of Execution Strong Brand Recognition and Solid Reputation 17
APPENDIX A Tenda and Alphaville
Tenda: Differentiated Platform for the Affordable Entry- Level Segment Through Tenda, Gafisa has a differentiated and developed platform to capture growth in the affordable entry-level segment Sales Standardized Construction Process Centrally located and well diversified portfolio Duo Tower S Garden Life ► Hybrid construction model with in-house ► Well-trained and dedicated sales force and outsourced construction capabilities helps clients with home purchasing and financing decisions ► Standardized materials ► Sales force located in areas with constant flow of people ► 4 project options in each production line ► High variety of products and branch locations to best meet client needs ► Economies of Scale 19
Tenda: Blue-Print Mortgage (“Crédito Associativo”) The use of Crédito Associativo reduces the Working Capital requirement ^ d W W W ^W W^s W Typical Project Cash Flow for low-income project with land acquired for cash With Crédito Associativo Commercial Launch End of construction Land Acquisition there is little WC requirement Beginning of Key Delivery construction and the company cash flow % Cash exposure over PSV already moves from negative to positive during the No. of months construction period; With a traditional financing scheme, we have to use project finance to cover the W W negative WC, until the Assumes that the land represented 10% of the PSV and was paid for in 6 installments Crédito Associativo is provided by Caixa Econômica Federal (CEF) to finance low-income projects/units. delivery. 20
Z d Traditional Construction Months 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Foundation Traditional Brick blocks Construction Method; Building and Finishing Title Process Use of Ceramic and Concrete Blocs; Collection High demand for finishing repairs; Construction Cycle lasts 10-12 months; Aluminum Molds Construction Months 1 2 3 4 5 6 7 8 Foundation Building and Finis hing Construction based on Aluminum Molds Title Proces s Collection High constructions efficiency avoiding excessive wastes; Concrete walls done on site; Construction Cycle lasts 4-5 months; Effectiveness of the production process 21
Aluminum Mold Construction Method Tenda: Valle Verde Cotia, SP INCC Evolution (%) – Last 10 months % Oct-07 Oct-08 Oct-09 Oct-10 Consolidated INCC Materials e Equipments Labor Labor costs always tend to surpass the other INCC items 22
Alphaville: Differentiated Business for Residential Land Communities Alphaville Concept Steady Growth Leisure Residential Area Launches (R$ mm) Area 549 420 Residential Area 312 237 111 2006 2007 2008 2009 9M10 Alphaville Commercial Area Commercial Club Residential Area Multi-family Area Pre-Sales (R$ mm) and VSO (%) Areas 49% 59% Sustainable Business Model 59% 406 60% 377 ► Partnership contracts via land swaps 300 n.a. ► Construction only after pre-sales 238 ► High sales velocity 140 ► Alphaville Foundation enables sustainable integration with the surrounding communities 2006 2007 2008 2009 9M10 23
APPENDIX B Real Estate Market Overview
Housing FinanceSystem (SFH) – FundingSources Allocation Distribution Borrowers Funding Sources of of Resources Resources CEF Investments Companies in Infrastructure Registered 8% of their Income FGTS (MCMV) Workers TR + 3% Companies SFH TR+ Private Individuals Compulsory Housing Credit TR + 6.17% Companies Market Private Savings 30% Central Bank Individuals Accounts Compulsory Deposits TR+6.17% 20%(TR+6.2%).10%(Selic) Companies Resources for Lending Private Individuals 25
Brazilian Savings Loan System (SPBE) Growth in Brazilian Savings LTM Monthly Disbursements by the SBPE Z Z s z z s z z Brazilian savings are growing steadily, ensuring available credit for the coming years ^ ' ^ / Z z Housing Credit Sources guaranteed while new sources are under development Sources: Brazilian Central Bank and Banco Santander 26
Growing Credit Availability In recent years, the credit supply for real estate financing has increased substantially with lower interest rates and longer tenors Interest Rates vs. Housing Financing A favorable growth trend for credit availability began in 35% 160 2005, when the annual Selic was close to 20%; 30% 140 120 25% In 2008 the Central Bank increased the Selic from 100 20% 80 11.25% to 13.75% without any impact on home financing; 15% 60 10% 40 According to the Central Bank, the market is expecting 5% 20 a Selic of 10.75% by the end of 2010. 0% 0 Dec- Sep- Jul- Apr- Feb- Nov- Sep- Apr- Nov- Jun- Dec- Jul- 02 03 04 05 06 06 07 08 08 09 09 10 Selic (%a.a.) Real Estate Financing (R$ billion) Real Estate Financing – Amount Funded (R$ bn) Housing Financing vs. GDP1 85 101% 83% 30 50 40 16 25 10 15 55 18% 10 7 34 13% 6 6 30 3% 3 4 9 18 3 6 2004 2005 2006 2007 2008 2009 2010E Denmark UK Chile Mexico Braz il SBPE FGTS Source: Central Bank, IBGE and ABECIP Brazil: high growth potential for home financing 1. Data from 2006. For Brazil, consider data from 2009 27
Real Price Variation for New Units - MRSP 3 Bedrooms Real Variation (2005-10): 22% 22,38% 121,86% In 5 years, real prices have shown a 26% raise in the metropolitan area of São Paulo, mainly from small units; 10,43% Base 100 0,70% -5,79% -1,91% -3,95% This raise happened specially on the last 12 months, taking benefit from the quick post-crisis recovery; Despite the raise since 2005, this raise is still in line with the average real income raise. 2004 2005 2006 2007 2008 2009 Jan- 2010 Jun/10 Average Price SP Real Average PricesYoY Preços YOY 1 Bed 2 Bed 3 Bed Variation (YoY) Income 80% 2005 -1,93% 60% 40% 2006 -12,83% 20% 2007 7,70% 0% 2008 4,63% -20% 2009 2,50% -40% Jan-Jul/10 28,07% -60% jan/06 jul/06 jan/07 jul/07 jan /08 jul/08 jan /09 jul/09 jan/10 Cum ulate 26,4% Fonte: MCM Consultores – Região Metropolitana de São Paulo 28
Government Programs – MCMV I Government programs were created to reduce the significant housing deficit in the lower income segments Highlights Simulation of Potential Impact on Market Size ► Financing for one million houses with up to Average Unit Price: Before “Minha Casa, Minha R$23,000 in subsidies to families with income of R$80k Vida” Program up to 10x the monthly minimum wage (R$4,650) Subsidy 0 16,000 ► R$34 billion in subsidies (Federal Government, Mortgage 80,000 64,000 FGTS, BNDES) Cost (TR+) 7% 5% ► Financing of homes with a price range of Monthly installments 665 394 R$80,000 to R$130,000 Minimum monthly income 2,661 1,969 ► Interest Rates ranging from TR+5% – TR+8% Equivalent of minimum wages 6.4 4.2 ► Homebuilders can finance 100% of the property value Market Size (millions of homes) 13.4 23.4 ► No down payment and no installments during the construction period (for families with income up to 3x the minimum wage) Additional market of approx. 10 million houses Source: Market Reports 29
Government Programs – MCMV II Government renewed MCMV program, giving more visibility to the Real Estate sector: Highlights Income distribution ► MCMV II income distribution followed the same distribution of the contracted units from MCMV I: ► Financing for two million houses up to 2014; ► R$72 billion in subsidies; # of units: 1 million 2 million ► Continued growth for the next 4 years already committed; ► General details to come up to the beginning of 2011; ► It confirms the government commitment to provide financing for entry level homebuyers. DDs / DDs / D DDs // Dt Dt Dt Source: CS, UBS, CEF, Market reports 30
Efficiency Gains under “MCMV” Program Tenda contracted 22,914 units through September and has close to 8,000 units under CEF analysis d h DDs / D t Dt Dt dKd h K W W d DDs dKd Y Y Y Y dKd h ^ d W h DDs Y Y Y dKd 31
CEF Real Estate Financing Caixa Econômica Federal has reached historical records of real estate financing, and is responsible for 73% of the market contracts Housing Financing Contracts (R$ bn) CEF vs. Market – Financing of New Units (‘000 units) 606 897 143 759 503 515 47 48 425 443 312 267 276 326 251 223 23 92 167 132 47 409 13 15 118 9 5 6 29 38 55 177 176 187 145 88 94 39 17 2003 2004 2005 2006 2007 2008 2009 Up to Sep 10 2003 2004 2005 2006 2007 2008 2009 Sep/2010 Financing (R$ bn) Financing Am ount ('000) Caixa - MCMV Market Total MCMV Contracts Units (‘000) Inventory of Received Proposals (‘000 units) 5,602 Projects 3,966 1.048 3,219 188 186 814 1,868 17 149 656 140 266 42 110 495 96 33 114 193 364 1 149 60 10 96 57 78 130 33 596 27 8 95 481 22 394 8 53 52 75 20 191 8 12 30 24 25 26 Y Y Y Y Y : Jun-09 Sep-09 Dec-09 Apr-10 Sep-10 0 a 3 MW 3 a 6 MW 6 a 10 MW 0 a 3 SM 3 a 6 SM 6 a 10 SM 32 Source: Caixa Econômica Federal
APPENDIX C Operating and Financial Highlights 33
Main Financial and Operational Highlights 3Q10 vs. 9M10 vs. Operating and Financial Highlights (R$ million) 3Q10 3Q09 9M10 9M09 3Q09 (%) 9M09 (%) Launches 1.237 514 140% 2.949 1.301 127% Launches, units 6.210 3.333 86% 14.491 6.552 121% Contracted sales 1.018 800 27,3% 2.766 2.194 26,0% Contracted sales, units 5.082 5.545 -8% 14.811 15.540 -5% Contracted sales from Launches 579 288 101% 1.650 629 163% Contracted sales from Launches - % 46,8% 56,0% -922 bps 56,0% 48,3% 764 bps Net revenues 957 877 9% 2.792 2.125 31% Adjusted Gross profit (w/o capitalized interest) 310 277 12% 856 640 34% Adjusted Gross margin (w/o capitalized interest) 32,3% 31,6% 77 bps 30,7% 30,1% 53 bps Adjusted EBITDA (1) 197 174 13% 550 362 52% (1) Adjusted EBITDA margin 20,6% 19,8% 77 bps 19,7% 17,0% 265 bps (2) Adjusted Net profit 133 89 50% 326 227 44% Adjusted Net margin (2) 13,9% 10,1% 378 bps 11,7% 10,7% 102 bps Net profit 117 64 83% 279 158 76% EPS (R$/share) 0,27 0,24 11% 0,65 0,61 7% Number of shares ('000 final) 430.910 261.017 65% 430.910 261.017 65% Revenues to be recognized 3.429 2.905 18% 3.429 2.905 18% REF margin (3) 38,2% 35,0% 322 bps 38,2% 35,0% 322 bps Net debt and Investor obligations 2.076 1.732 20% 2.076 1.732 20% Cash and availabilities 1.231 1.100 12% 1.231 1.100 12% (Net debt + Obligations) / (Equity + Minorities) 55,6% 74,1% -1850 bps 55,6% 74,1% -1850 bps (1) Adjusted for stock option plans expenses (non-cash) and Tenda goodw ill net of provisions. 34
Ratings and Balance Sheet LIABILITIES AND SHAREHOLDERS' EQUITY R$ 000' 3Q10 3Q09 2Q10 ASSETS 3Q10 3Q09 2Q10 Cur re nt As s e ts Cur r e nt Liabilitie s Cash and c ash equivalents 570.718 948.350 1.136.765 Loans and financ ing 789.331 570.307 825.382 Restricted cash in guarantee to Debentures 214.561 80.781 123.608 loans and res ctricted credits 660.425 151.337 669.619 Obligations for purchase of Receiv ables f rom clients 2.727.930 1.718.110 2.470.944 land and advanc es from clients 460.470 488.935 466.078 Properties for s ale 1.447.266 1.376.236 1.446.760 Materials and s erv ice suppliers 292.444 194.302 244.545 Other ac counts receivable 155.795 93.722 141.740 Tax es and contributions 234.394 132.216 154.983 Deferred selling expenses 38.028 7.205 20.592 profit s haring 69.594 61.206 73.057 Deferred taxes - 13.099 - Provis ion for contingencies 8.001 10.512 6.312 Prepaid expens es 16.423 13.522 15.283 Dividends 52.287 26.106 52.287 5.616.585 4.321.581 5.901.703 Deferred taxes - 52.375 - Long-te r m As se ts Other 171.417 181.312 217.569 Receiv ables f rom clients 2.411.275 1.662.300 2.075.161 2.292.499 1.798.052 2.163.821 Properties for s ale 388.649 386.196 407.792 Long-te r m Liabilitie s Deferred taxes 367.788 250.846 311.693 Loans and financ ings 371.843 636.639 352.181 Other 177.182 52.140 131.035 Debentures 1.551.407 1.244.000 1.748.000 land 177.412 147.168 176.084 3.344.894 2.351.482 2.925.681 Deferred taxes 483.373 322.870 484.453 Investments 194.207 195.088 194.871 Provis ion for contingencies 51.185 59.509 52.670 Property, plant and equipment 63.825 53.698 59.659 Other 568.945 362.843 521.211 Intangible ass ets 15.480 9.690 16.280 Deferred income on acquis ition 6.757 12.499 8.045 273.512 258.476 270.810 0 Unearned inc ome f rom partial s ale of investment 11.594 0 3.210.922 2.797.122 3.342.644 Total As s e ts 9.234.991 6.931.539 9.098.194 Minor ity Shar e holde r s 51.565 552.889 46.316 Corporate Rating Shar e holde r s ' Equity FITCH Moody’s SP National Scale Capital 2.729.187 1.233.897 2.712.899 Treasury shares (1.731) (18.050) (1.731) Rating A- A1 A Capital reserves 251.489 190.585 290.507 Perspective Stable Stable Stable Revenue reserves 422.373 218.827 381.651 los ses 278.687 158.217 162.087 Last update September/2010 September/2010 October/2010 3.680.005 0 1.783.476 0 3.545.413 0 9.234.991 Liabilitie s and Shar e holde r s ' Equity 6.931.539 9.098.194 35
Why Cash Burn should change to positive in 2011? Cash burn continue high mainly due to Tenda’s units launched and sold mainly in 2007 and 2008 that are being built using it’s own capital, instead of the mechanism of Blue-Print mortgages (Crédito Associativo); Going forward, Tenda is gradually increasing the use of Associative Credit over current sales (that already reached 62% in the 3Q10), contributing to reduce the Working Capital needs; From now until June/11, Tenda will transfer approximately 7,000 units that did not contracted Blue-Print mortgage, meaning that the invested money will return to Company’s cash. Tenda is delivering units that did not contracted Blue-Print mortgage in the past. Tenda’s unit sales by type of finance Tenda’s Transferred of Concluded Units to CEF - Pipeline 9,505 11,576 15,871 9,733 3,039 2,922 2,236 2,075 757 D Y 3Q10 4Q10E 1Q11E 2Q11E W D d W Bank Mortgage 36
^' ^ (R$'000) 3Q10 3Q09 2Q10 3Q10 x 3Q09 3Q10 x 2Q10 Consolidated Selling expenses 53,887 55,556 61,140 -3% -12% GA expenses 59,317 57,601 55,125 3% 8% SGA 113,204 113,157 116,265 0% -3% Selling expenses / Launches 4.4% 10.8% 6.1% -644 bps -171 bps GA expenses / Launches 4.8% 11.2% 5.5% -640 bps -67 bps SGA / Launches 9.2% 22.0% 11.5% -1285 bps -238 bps Selling expenses / Sales 5.3% 6.9% 6.9% -165 bps -158 bps GA expenses / Sales 5.8% 7.2% 6.2% -137 bps -37 bps SGA / Sales 11.1% 14.1% 13.1% -303 bps -195 bps Selling expenses / Net revenue 5.6% 6.3% 6.6% -70 bps -96 bps GA expenses / Net revenue 6.2% 6.6% 5.9% -37 bps 25 bps SGA / Net revenue 11.8% 12.9% 12.5% -107 bps -71 bps SGA Expenses / Net Revenue GA Expenses / Net Revenue 60% Acquisition of Tenda 25.4% 13.5% 100% Incorporation of Tenda 18.9% 10.6% 10.3% 16.9% 17.3% 15.7% 15.2% 14.9% 8.4% 8.4% 12.9% 8.0% 12.0% 12.5% 11.8% 6.6% 6.7% 6.3% 5.9% 6.2% 37
d ' W D Launch Start Construction h D D D D D D D D Sales 30% 60% 70% 80% 87% 94% 100% % Costs - 2,5% 15% 35% 65% 85% 100% Revenues - 1,5% 10,5% 28% 57% 80% 100% Collections (cumulative) 1% 4% 9% 11% 18% 25% 85% 100% 38

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Gafisa corporate presentation eng_december10

  • 1.
  • 2.
    Disclaimer Wemake 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
  • 3.
    Shareholder Structure, CorporateGovernance and Liquidity True corporation listed on the NYSE and the most liquid Brazilian Real Estate company GFSA3 Majority Independent Board of Directors; 100% Senior management with an average of over 20 years of experience and interests aligned with shareholders through Stock Option Plan; 80% 100% Permanent Fiscal Council, Audit, Compensation, Finance and Governance committees 100% free float; Avg. Daily Trading Volume (R$ mm) - Last 90 days1 100% tag along rights; 100% common shares (“Novo Mercado”); Full compliance with Sarbanes-Oxley; Only Brazilian real estate company listed on the NYSE. W' DZs Z 3 1. Source: Bloomberg as of November 12th, 2010
  • 4.
    Solid Track Recordof Value Creation Strong growth, value-creating transactions with a successful history in the capital markets 1 3,921 3,022 Net revenue (R$ mm) New Follow-on: Net Primary 1,740 proceeds of R$1.02 billion 1,204 664 R$600 mm 457 in FI-FGTS debentures (May/09) Acquisition of Follow-on: a 60% stake R$488 mm of primary R$600 mm Increase in IPO: proceeds stake from in FI-FGTS R$494 mm 60% to 80% debentures of primary (Dec/09) proceeds Equity International First Brazilian investment company in the sector to be listed in Acquisition the NYSE Acquisition of Foundation of a 60% the remaining stake 40% 1954 - 2004 2005 2006 2007 2008 2009 2010 1. Source: Consensus Bloomberg as of August 6th, 2010 4
  • 5.
  • 6.
    Multifaceted Residential Productsin All Income Segments Focused on the residential market, with 3 leading brands strategically positioned in all income segments Contribution Segment / Income Price Mid and Upper-Mid Mid and Upper-Mid Affordable Entry-Level Unit price: R$200 thousand Unit price: R$70 – R$500 thousand Unit price: R$50 – R$200 thousand Sales 9M10 49% 15% 36% Presence 44 cities in 14 states 60 cities in 22 states 92 cities in 14 states Completed Projects 17 projects/phases in 2009 5 projects/phases in 2009 130 projects/phases in 2009 Characteristics Vertical Horizontal lot development Horizontal / Vertical Metropolitan areas Suburban areas Metropolitan areas and surroundings Custom projects Custom projects Standardized products 6
  • 7.
    Strong Demand Growthin All Segments Strong potential demand of around R$170 billion per year, being 58% in the mid and upper mid income segment and 42% in the affordable entry-level segment Income Bracket Number of Families (mm) New Families Gafisa Potential Demand per Year (Monthly) per Year Brands (R$ bn) 2007 2030 (thousand) Above R$ 32,000 0 0.3 13 Mid and Upper-Mid New Families R$ 16,000 - R$ 32,000 Income 0.3 1.3 43 530 (thousands) Potential Demand 101 R$ 8,000 - R$ 16,000 1.1 4.3 139 (R$ bn)1 R$ 4,000 - R$ 8,000 3.3 11.0 335 New Families R$ 2,000 - R$ 4,000 8.4 21.8 583 846 (thousands) Entry-Level Affordable Potential Demand 72 (R$ bn)2 R$ 1,000 - R$ 2,000 15.5 27.6 526 Up to R$ 1,000 31.7 29.1 (113) 1,526 TOTAL 60.3 95.4 1,526 Source: “O Brasil Sustentável”, FGV and Ernst Young, 2007 Notes: Gafisa: Positioned to capture growth in all 1. Assumes an average ticket of R$190,000 2. Assumes an average ticket of R$85,000 income segments demand 7
  • 8.
    National Footprint National footprint captures both rapidly growing and large metropolitan regions Geographic Footprint Landbank Distribution vs. GDP Distribution Landbank 3Q10 GDP Distribution - 2006 ^ South D 16% ^ W São Paulo Midwest 34% 9% E Northeast 13% E North Z : Rio de Janeiro 5% 12% K ^ Others Southeast 11% R$ 16.6 Billion Real GDP Growth 1 8.0% 6.6% 6.9% Brand States2 Cities Legend 4.7% 14 44 3.1% 14 92 22 60 Consolidated 22 130 South Midw es t Southeas t Northeas t North Source: Company and IBGE Note: 1. Nominal GDP growth rate per year for 2003 – 2006 adjusted by the average consumer price index (IPCA) of the period 2. Does not Include Brasilia Federal District . 8
  • 9.
    Strategically Located LandBank Gafisa has a strategic land bank that allows for continued project launches Land bank distribution 9M10 Land bank PSV (R$ million) W 16,551 3,676 ^ 15,823 Z 1.6x ' 4,006 4,285 (2,948) 10,195 4,735 1,536 3,962 4.7x 2,930 7,576 7,810 5,729 d 2,167 IPO 2006 2007 2009 9M10 Net Actual 9M10 Launches Acquisitions ' d *Note: Tenda 2007 represents Fit + Bairro Novo 9
  • 10.
    Proven Track Recordof Execution Units Under Construction Projects under Construction 50,189 211 49,423 188 33,586 85 16,099 63 2007 2008 2009 3Q10 2007 2008 2009 3Q10 Units Completed Number of Engineers E: 15,000 919 880 10,831 674 309 352 8,206 9,995 459 241 58 59 47 186 3,108 31 513 508 386 242 2007 2008 2009 9M10/2010E 2007 2008 2009 3Q10 Intern Enginners Construction Architects On the Job 10 ^ '
  • 11.
    Strong Brand Recognitionand Solid Reputation Gafisa benefits from its strong brand recognition and solid reputation through: (i) a higher sales speed (VSO); (ii) commanding premium prices; and (iii) easier access to asset swaps / partnerships Leading Brands Strong Brands in Every Segment Maior Construtora do Brasil: Largest Construction 1st Company in Brazil – 2008 / 2009 (ITCnet) ► 55 years in the Real Estate industry ► Completed more than 985 developments and 11 million m2 ► Awards: Valor Top Management and Top Manager of the Year Top of Mind – 2008 (Diário do Grande ABC / 1st IBOPE) ► One of the best known brands in the affordable entry-level segment ► Completed more than 500 developments 1st Reference in Urban Development ► Completed more than 40 developments and 3.4 million m2 ► Awards: Best Social Responsibility and 2009 Top Social – Alphaville Foundation Source: ITCnet, Revista Marketing, Valor Econômico 11
  • 12.
    SECTION 2 Operating andFinancial Performance 12
  • 13.
    Launches, Contracted Salesand Revenues High growth rates over the last years ... Launches (R$mm) Pre-Sales (R$mm) Net Revenues (R$mm) 1 4,200 to 4,600 4,196 3,248 3,022 2,792 1,970 2,949 2,766 2,578 1,361 988 932 2,301 1,007 2,236 1,068 932 1,740 277 300 313 617 1,627 284 237 377 276 60 406 549 300 238 1,204 250 420 7 1,005 995 193 1,913 664 1,757 1,698 1,510 1,576 1,329 1,345 1,352 1,215 1,265 1,332 995 1,004 1,005 664 2006 2007 2008 2009 9M10 2006 2007 2008 2009 9M10 2006 2007 2008 2009 9M10 Gafisa Alphaville Tenda Note: 1 2010E guidance range announced by the Company 13
  • 14.
    EBITDA, Net Incomeand Results to be Recognized … aligned with sustained growth in profitability Adjusted EBITDA1 (R$ mm) and Net Income (R$ mm) and Results to be Recognized (Backlog4) Margin (%) Margin 2 (%) (R$ mm) and Margin (%) 18.5% to 20.5% 3 330 11.7% 12% 17.5% 38.2% 37.5% 15.0% 279 1,309 14.9% 604 19.7% 280 9.9% 35.1% 35.2% 9.6% 34.6% 13.4% 10% 75 1,066 230 8.1% 1,015 214 8% 6.9% 180 300 6% 41 130 530 550 110 528 92 4% 80 298 259 46 180 2% 30 89 2006 2007 2008 2009 9M10 -20 2006 2007 2008 2009 9M10 0% 2006 2007 2008 2009 9M10 EBITDA (R$ mm) Margin (%) REF (R$ mm) Margem (%) Lucro Líquido (R$ mm) Margem (%) Tenda’s goodwill net of provisions Notes: 1 Adjusted for stock options and excluding Tenda’s goodwill net of provisions 2 Net income before minority interests and non-recurring expenses 3 2010E guidance range announced by the Company 4 Gross Profit 14
  • 15.
    Solid Balance Sheet 9M10Leverage (R$ mm) Debt Composition (R$ mm) and Rates SFH / Net Debt / Project 1,846 8.2% - 11.5% (TR) 55.6% Finance Shareholders’ Equity Working CDI + (0.7% – 4.2%) 553 Capital Debentures CDI + (1.5 – 3.3%) 527 1,231 Investor CDI 380 Obligations Total 3,307 10.8% 3,307 Debt Maturity Schedule 1 (%) 2,076 54% 15% 33% 56% 85% 46% 67% 44% 100% Total Debt Cash Net Debt h ^ h ^ h ^ h ^ h ^ Note: W Z Z 1 Does not include investors obligations of R$380 mm 15
  • 16.
    Trading Multiples Liquidation Value (R$mn) Blue Chips (3Q10) Company Gafisa Peer1 Peer2 Peer3 Peer4 Avg (1) Receivables from Sold Units 8,466 10,455 11,463 5,669 5,081 (-) Taxes (571) (706) (774) (383) (343) (-) Obligations from Sold Units (2,120) (3,022) (3,673) (1,462) (1,771) Mkt Value of Units for Sale 2,937 3,821 2,197 1,791 2,180 (-) Taxes (198) (258) (148) (121) (147) (-) Construction Obligations (790) (710) (329) (341) (986) Book Value of Land 751 2,315 2,448 1,115 687 (-) Swaps booked in Advances (94) (540) (1,756) (453) (68) (-) Payables from land acqs. (312) (557) (395) (304) (378) Other Assets 92 287 3 39 10 (-) Other liabilities (183) - - - - Cash and Equivalents 1,231 1,892 986 1,014 1,284 (-) Corporate Debt (1,461) (2,527) (1,201) (1,131) (1,012) (-) SFH and other Project Finance (1,846) (2,259) (1,785) (461) (1,148) (-) Minority Shareholders (62) (115) (399) (219) - (+) Invest. in Subsidiaries 194 134 15 - - Liquidation Value 6,035 8,209 6,653 4,754 3,389 BV Adjusted 4,959 7,876 6,012 4,015 3,102 BV 3,772 6,123 4,384 2,919 2,563 Deferred Incom e 1,203 1,780 1,747 1,159 540 Deferred Revenues 3,429 5,149 5,594 2,810 2,478 Deferred Costs and Expenses (2,120) (3,022) (3,673) (1,462) (1,771) Taxes (over Sales and Incom e) (106) (348) (173) (190) (167) Avg Stake 99% 98% 93% 95% 100% P/LV 0.95 1.45 1.34 1.64 1.23 1.41 P/BVAdj 1.16 1.51 1.48 1.94 1.34 1.57 P/BV 1.53 1.94 2.03 2.67 1.62 2.07 Market Cap 5,763 11,881 8,913 7,795 4,157 # of shares 437 1,142 426 490 269 Closing price (November 12th) 13.2 10.4 20.9 15.9 15.5 *Source: Barclays Capital Res earch and Com panies ' Inform ation / (1) Excluding Gafis a 16
  • 17.
    Gafisa’s Differentiation Industry Leading Liquidity and Corporate Governance Multifaceted Residential Products in All Income Segments National Footprint Proven Track Record of Execution Strong Brand Recognition and Solid Reputation 17
  • 18.
  • 19.
    Tenda: Differentiated Platformfor the Affordable Entry- Level Segment Through Tenda, Gafisa has a differentiated and developed platform to capture growth in the affordable entry-level segment Sales Standardized Construction Process Centrally located and well diversified portfolio Duo Tower S Garden Life ► Hybrid construction model with in-house ► Well-trained and dedicated sales force and outsourced construction capabilities helps clients with home purchasing and financing decisions ► Standardized materials ► Sales force located in areas with constant flow of people ► 4 project options in each production line ► High variety of products and branch locations to best meet client needs ► Economies of Scale 19
  • 20.
    Tenda: Blue-Print Mortgage(“Crédito Associativo”) The use of Crédito Associativo reduces the Working Capital requirement ^ d W W W ^W W^s W Typical Project Cash Flow for low-income project with land acquired for cash With Crédito Associativo Commercial Launch End of construction Land Acquisition there is little WC requirement Beginning of Key Delivery construction and the company cash flow % Cash exposure over PSV already moves from negative to positive during the No. of months construction period; With a traditional financing scheme, we have to use project finance to cover the W W negative WC, until the Assumes that the land represented 10% of the PSV and was paid for in 6 installments Crédito Associativo is provided by Caixa Econômica Federal (CEF) to finance low-income projects/units. delivery. 20
  • 21.
    Z d Traditional Construction Months 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Foundation Traditional Brick blocks Construction Method; Building and Finishing Title Process Use of Ceramic and Concrete Blocs; Collection High demand for finishing repairs; Construction Cycle lasts 10-12 months; Aluminum Molds Construction Months 1 2 3 4 5 6 7 8 Foundation Building and Finis hing Construction based on Aluminum Molds Title Proces s Collection High constructions efficiency avoiding excessive wastes; Concrete walls done on site; Construction Cycle lasts 4-5 months; Effectiveness of the production process 21
  • 22.
    Aluminum Mold ConstructionMethod Tenda: Valle Verde Cotia, SP INCC Evolution (%) – Last 10 months % Oct-07 Oct-08 Oct-09 Oct-10 Consolidated INCC Materials e Equipments Labor Labor costs always tend to surpass the other INCC items 22
  • 23.
    Alphaville: Differentiated Businessfor Residential Land Communities Alphaville Concept Steady Growth Leisure Residential Area Launches (R$ mm) Area 549 420 Residential Area 312 237 111 2006 2007 2008 2009 9M10 Alphaville Commercial Area Commercial Club Residential Area Multi-family Area Pre-Sales (R$ mm) and VSO (%) Areas 49% 59% Sustainable Business Model 59% 406 60% 377 ► Partnership contracts via land swaps 300 n.a. ► Construction only after pre-sales 238 ► High sales velocity 140 ► Alphaville Foundation enables sustainable integration with the surrounding communities 2006 2007 2008 2009 9M10 23
  • 24.
    APPENDIX B Real EstateMarket Overview
  • 25.
    Housing FinanceSystem (SFH)– FundingSources Allocation Distribution Borrowers Funding Sources of of Resources Resources CEF Investments Companies in Infrastructure Registered 8% of their Income FGTS (MCMV) Workers TR + 3% Companies SFH TR+ Private Individuals Compulsory Housing Credit TR + 6.17% Companies Market Private Savings 30% Central Bank Individuals Accounts Compulsory Deposits TR+6.17% 20%(TR+6.2%).10%(Selic) Companies Resources for Lending Private Individuals 25
  • 26.
    Brazilian Savings Loan System (SPBE) Growth in Brazilian Savings LTM Monthly Disbursements by the SBPE Z Z s z z s z z Brazilian savings are growing steadily, ensuring available credit for the coming years ^ ' ^ / Z z Housing Credit Sources guaranteed while new sources are under development Sources: Brazilian Central Bank and Banco Santander 26
  • 27.
    Growing Credit Availability Inrecent years, the credit supply for real estate financing has increased substantially with lower interest rates and longer tenors Interest Rates vs. Housing Financing A favorable growth trend for credit availability began in 35% 160 2005, when the annual Selic was close to 20%; 30% 140 120 25% In 2008 the Central Bank increased the Selic from 100 20% 80 11.25% to 13.75% without any impact on home financing; 15% 60 10% 40 According to the Central Bank, the market is expecting 5% 20 a Selic of 10.75% by the end of 2010. 0% 0 Dec- Sep- Jul- Apr- Feb- Nov- Sep- Apr- Nov- Jun- Dec- Jul- 02 03 04 05 06 06 07 08 08 09 09 10 Selic (%a.a.) Real Estate Financing (R$ billion) Real Estate Financing – Amount Funded (R$ bn) Housing Financing vs. GDP1 85 101% 83% 30 50 40 16 25 10 15 55 18% 10 7 34 13% 6 6 30 3% 3 4 9 18 3 6 2004 2005 2006 2007 2008 2009 2010E Denmark UK Chile Mexico Braz il SBPE FGTS Source: Central Bank, IBGE and ABECIP Brazil: high growth potential for home financing 1. Data from 2006. For Brazil, consider data from 2009 27
  • 28.
    Real Price Variationfor New Units - MRSP 3 Bedrooms Real Variation (2005-10): 22% 22,38% 121,86% In 5 years, real prices have shown a 26% raise in the metropolitan area of São Paulo, mainly from small units; 10,43% Base 100 0,70% -5,79% -1,91% -3,95% This raise happened specially on the last 12 months, taking benefit from the quick post-crisis recovery; Despite the raise since 2005, this raise is still in line with the average real income raise. 2004 2005 2006 2007 2008 2009 Jan- 2010 Jun/10 Average Price SP Real Average PricesYoY Preços YOY 1 Bed 2 Bed 3 Bed Variation (YoY) Income 80% 2005 -1,93% 60% 40% 2006 -12,83% 20% 2007 7,70% 0% 2008 4,63% -20% 2009 2,50% -40% Jan-Jul/10 28,07% -60% jan/06 jul/06 jan/07 jul/07 jan /08 jul/08 jan /09 jul/09 jan/10 Cum ulate 26,4% Fonte: MCM Consultores – Região Metropolitana de São Paulo 28
  • 29.
    Government Programs –MCMV I Government programs were created to reduce the significant housing deficit in the lower income segments Highlights Simulation of Potential Impact on Market Size ► Financing for one million houses with up to Average Unit Price: Before “Minha Casa, Minha R$23,000 in subsidies to families with income of R$80k Vida” Program up to 10x the monthly minimum wage (R$4,650) Subsidy 0 16,000 ► R$34 billion in subsidies (Federal Government, Mortgage 80,000 64,000 FGTS, BNDES) Cost (TR+) 7% 5% ► Financing of homes with a price range of Monthly installments 665 394 R$80,000 to R$130,000 Minimum monthly income 2,661 1,969 ► Interest Rates ranging from TR+5% – TR+8% Equivalent of minimum wages 6.4 4.2 ► Homebuilders can finance 100% of the property value Market Size (millions of homes) 13.4 23.4 ► No down payment and no installments during the construction period (for families with income up to 3x the minimum wage) Additional market of approx. 10 million houses Source: Market Reports 29
  • 30.
    Government Programs –MCMV II Government renewed MCMV program, giving more visibility to the Real Estate sector: Highlights Income distribution ► MCMV II income distribution followed the same distribution of the contracted units from MCMV I: ► Financing for two million houses up to 2014; ► R$72 billion in subsidies; # of units: 1 million 2 million ► Continued growth for the next 4 years already committed; ► General details to come up to the beginning of 2011; ► It confirms the government commitment to provide financing for entry level homebuyers. DDs / DDs / D DDs // Dt Dt Dt Source: CS, UBS, CEF, Market reports 30
  • 31.
    Efficiency Gains under“MCMV” Program Tenda contracted 22,914 units through September and has close to 8,000 units under CEF analysis d h DDs / D t Dt Dt dKd h K W W d DDs dKd Y Y Y Y dKd h ^ d W h DDs Y Y Y dKd 31
  • 32.
    CEF Real EstateFinancing Caixa Econômica Federal has reached historical records of real estate financing, and is responsible for 73% of the market contracts Housing Financing Contracts (R$ bn) CEF vs. Market – Financing of New Units (‘000 units) 606 897 143 759 503 515 47 48 425 443 312 267 276 326 251 223 23 92 167 132 47 409 13 15 118 9 5 6 29 38 55 177 176 187 145 88 94 39 17 2003 2004 2005 2006 2007 2008 2009 Up to Sep 10 2003 2004 2005 2006 2007 2008 2009 Sep/2010 Financing (R$ bn) Financing Am ount ('000) Caixa - MCMV Market Total MCMV Contracts Units (‘000) Inventory of Received Proposals (‘000 units) 5,602 Projects 3,966 1.048 3,219 188 186 814 1,868 17 149 656 140 266 42 110 495 96 33 114 193 364 1 149 60 10 96 57 78 130 33 596 27 8 95 481 22 394 8 53 52 75 20 191 8 12 30 24 25 26 Y Y Y Y Y : Jun-09 Sep-09 Dec-09 Apr-10 Sep-10 0 a 3 MW 3 a 6 MW 6 a 10 MW 0 a 3 SM 3 a 6 SM 6 a 10 SM 32 Source: Caixa Econômica Federal
  • 33.
    APPENDIX C Operating andFinancial Highlights 33
  • 34.
    Main Financial andOperational Highlights 3Q10 vs. 9M10 vs. Operating and Financial Highlights (R$ million) 3Q10 3Q09 9M10 9M09 3Q09 (%) 9M09 (%) Launches 1.237 514 140% 2.949 1.301 127% Launches, units 6.210 3.333 86% 14.491 6.552 121% Contracted sales 1.018 800 27,3% 2.766 2.194 26,0% Contracted sales, units 5.082 5.545 -8% 14.811 15.540 -5% Contracted sales from Launches 579 288 101% 1.650 629 163% Contracted sales from Launches - % 46,8% 56,0% -922 bps 56,0% 48,3% 764 bps Net revenues 957 877 9% 2.792 2.125 31% Adjusted Gross profit (w/o capitalized interest) 310 277 12% 856 640 34% Adjusted Gross margin (w/o capitalized interest) 32,3% 31,6% 77 bps 30,7% 30,1% 53 bps Adjusted EBITDA (1) 197 174 13% 550 362 52% (1) Adjusted EBITDA margin 20,6% 19,8% 77 bps 19,7% 17,0% 265 bps (2) Adjusted Net profit 133 89 50% 326 227 44% Adjusted Net margin (2) 13,9% 10,1% 378 bps 11,7% 10,7% 102 bps Net profit 117 64 83% 279 158 76% EPS (R$/share) 0,27 0,24 11% 0,65 0,61 7% Number of shares ('000 final) 430.910 261.017 65% 430.910 261.017 65% Revenues to be recognized 3.429 2.905 18% 3.429 2.905 18% REF margin (3) 38,2% 35,0% 322 bps 38,2% 35,0% 322 bps Net debt and Investor obligations 2.076 1.732 20% 2.076 1.732 20% Cash and availabilities 1.231 1.100 12% 1.231 1.100 12% (Net debt + Obligations) / (Equity + Minorities) 55,6% 74,1% -1850 bps 55,6% 74,1% -1850 bps (1) Adjusted for stock option plans expenses (non-cash) and Tenda goodw ill net of provisions. 34
  • 35.
    Ratings and BalanceSheet LIABILITIES AND SHAREHOLDERS' EQUITY R$ 000' 3Q10 3Q09 2Q10 ASSETS 3Q10 3Q09 2Q10 Cur re nt As s e ts Cur r e nt Liabilitie s Cash and c ash equivalents 570.718 948.350 1.136.765 Loans and financ ing 789.331 570.307 825.382 Restricted cash in guarantee to Debentures 214.561 80.781 123.608 loans and res ctricted credits 660.425 151.337 669.619 Obligations for purchase of Receiv ables f rom clients 2.727.930 1.718.110 2.470.944 land and advanc es from clients 460.470 488.935 466.078 Properties for s ale 1.447.266 1.376.236 1.446.760 Materials and s erv ice suppliers 292.444 194.302 244.545 Other ac counts receivable 155.795 93.722 141.740 Tax es and contributions 234.394 132.216 154.983 Deferred selling expenses 38.028 7.205 20.592 profit s haring 69.594 61.206 73.057 Deferred taxes - 13.099 - Provis ion for contingencies 8.001 10.512 6.312 Prepaid expens es 16.423 13.522 15.283 Dividends 52.287 26.106 52.287 5.616.585 4.321.581 5.901.703 Deferred taxes - 52.375 - Long-te r m As se ts Other 171.417 181.312 217.569 Receiv ables f rom clients 2.411.275 1.662.300 2.075.161 2.292.499 1.798.052 2.163.821 Properties for s ale 388.649 386.196 407.792 Long-te r m Liabilitie s Deferred taxes 367.788 250.846 311.693 Loans and financ ings 371.843 636.639 352.181 Other 177.182 52.140 131.035 Debentures 1.551.407 1.244.000 1.748.000 land 177.412 147.168 176.084 3.344.894 2.351.482 2.925.681 Deferred taxes 483.373 322.870 484.453 Investments 194.207 195.088 194.871 Provis ion for contingencies 51.185 59.509 52.670 Property, plant and equipment 63.825 53.698 59.659 Other 568.945 362.843 521.211 Intangible ass ets 15.480 9.690 16.280 Deferred income on acquis ition 6.757 12.499 8.045 273.512 258.476 270.810 0 Unearned inc ome f rom partial s ale of investment 11.594 0 3.210.922 2.797.122 3.342.644 Total As s e ts 9.234.991 6.931.539 9.098.194 Minor ity Shar e holde r s 51.565 552.889 46.316 Corporate Rating Shar e holde r s ' Equity FITCH Moody’s SP National Scale Capital 2.729.187 1.233.897 2.712.899 Treasury shares (1.731) (18.050) (1.731) Rating A- A1 A Capital reserves 251.489 190.585 290.507 Perspective Stable Stable Stable Revenue reserves 422.373 218.827 381.651 los ses 278.687 158.217 162.087 Last update September/2010 September/2010 October/2010 3.680.005 0 1.783.476 0 3.545.413 0 9.234.991 Liabilitie s and Shar e holde r s ' Equity 6.931.539 9.098.194 35
  • 36.
    Why Cash Burnshould change to positive in 2011? Cash burn continue high mainly due to Tenda’s units launched and sold mainly in 2007 and 2008 that are being built using it’s own capital, instead of the mechanism of Blue-Print mortgages (Crédito Associativo); Going forward, Tenda is gradually increasing the use of Associative Credit over current sales (that already reached 62% in the 3Q10), contributing to reduce the Working Capital needs; From now until June/11, Tenda will transfer approximately 7,000 units that did not contracted Blue-Print mortgage, meaning that the invested money will return to Company’s cash. Tenda is delivering units that did not contracted Blue-Print mortgage in the past. Tenda’s unit sales by type of finance Tenda’s Transferred of Concluded Units to CEF - Pipeline 9,505 11,576 15,871 9,733 3,039 2,922 2,236 2,075 757 D Y 3Q10 4Q10E 1Q11E 2Q11E W D d W Bank Mortgage 36
  • 37.
    ^' ^ (R$'000) 3Q10 3Q09 2Q10 3Q10 x 3Q09 3Q10 x 2Q10 Consolidated Selling expenses 53,887 55,556 61,140 -3% -12% GA expenses 59,317 57,601 55,125 3% 8% SGA 113,204 113,157 116,265 0% -3% Selling expenses / Launches 4.4% 10.8% 6.1% -644 bps -171 bps GA expenses / Launches 4.8% 11.2% 5.5% -640 bps -67 bps SGA / Launches 9.2% 22.0% 11.5% -1285 bps -238 bps Selling expenses / Sales 5.3% 6.9% 6.9% -165 bps -158 bps GA expenses / Sales 5.8% 7.2% 6.2% -137 bps -37 bps SGA / Sales 11.1% 14.1% 13.1% -303 bps -195 bps Selling expenses / Net revenue 5.6% 6.3% 6.6% -70 bps -96 bps GA expenses / Net revenue 6.2% 6.6% 5.9% -37 bps 25 bps SGA / Net revenue 11.8% 12.9% 12.5% -107 bps -71 bps SGA Expenses / Net Revenue GA Expenses / Net Revenue 60% Acquisition of Tenda 25.4% 13.5% 100% Incorporation of Tenda 18.9% 10.6% 10.3% 16.9% 17.3% 15.7% 15.2% 14.9% 8.4% 8.4% 12.9% 8.0% 12.0% 12.5% 11.8% 6.6% 6.7% 6.3% 5.9% 6.2% 37
  • 38.
    d ' W D Launch Start Construction h D D D D D D D D Sales 30% 60% 70% 80% 87% 94% 100% % Costs - 2,5% 15% 35% 65% 85% 100% Revenues - 1,5% 10,5% 28% 57% 80% 100% Collections (cumulative) 1% 4% 9% 11% 18% 25% 85% 100% 38