Even Construtora e Incorporadora S.A. and Subsidiaries

Transcription

1 (Convenience Translation into English from the Original Previously Issued in Portuguese) Even Construtora e Incorporadora S.A. and Subsidiaries Individual and Interim Financial Information for the Quarter Ended 30, 2016 and Report on Review of Interim Financial Information Deloitte Touche Tohmatsu Auditores Independentes

2 (Convenience Translation into English from the Original Previously Issued in Portuguese) REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION To the Management and Shareholders of Even Construtora e Incorporadora S.A. São Paulo - SP Introduction We have reviewed the accompanying individual and consolidated interim financial information of Even Construtora e Incorporadora Information Form (ITR) for the quarter ended 30, 2016, which comprises the balance sheet as at 30, 2016, and the related income statement and statement of comprehensive income for the three-month and nine-month periods then ended, and the statement of changes in equity and statement of cash flows for the nine-month period then ended, including the explanatory notes. Management is responsible for the preparation of the individual interim financial information in accordance with CPC 21 (R1) - Interim Financial Reporting and the consolidated interim financial information in accordance with CPC 21 (R1) and IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), which takes into consideration OCPC 04 on the application of ICPC 02 to real estate development entities in Brazil, issued by the Accounting Pronouncements Committee (CPC) and approved by the Brazilian Securities Commission (CVM) and the Federal Accounting Council (CFC), and for the presentation of such information in accordance with the standards issued by the CVM applicable to the preparation of Interim Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of review We conducted our review in accordance with Brazilian and international standards on review of interim financial information (NBC TR 2410 and ISRE Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the standards on auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion on the individual and consolidated interim financial information prepared in accordance with CPC 21 (R1) Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual and consolidated interim financial information included in the interim financial information referred to above is not prepared, in all material respects, in accordance with technical pronouncement CPC 21 (R1) applicable to the preparation of the Interim Financial Information (ITR), and presented in accordance with the standards issued by the Brazilian Securities Commission.

3 Conclusion on the consolidated interim financial information prepared in accordance with IAS 34, which considers technical instruction OCPC 04 on the application of technical interpretation ICPC 02 to real estate development entities in Brazil, issued by the CPC and approved by the CVM and the CFC Based on our review, nothing has come to our attention that causes us to believe that the consolidated interim financial information included in the interim financial information referred to above is not prepared, in all material respects, in accordance with IAS 34, considering technical instruction OCPC 04 on the application of technical interpretation ICPC 02 to real estate development entities in Brazil, issued by the CPC and approved by the CVM and CFC, applicable to the preparation of the Interim Financial Information (ITR), and presented in accordance with the standards issued by the CVM. Emphasis of matter We draw attention to note 2, which states that the individual (Company) and consolidated interim financial information has been prepared in accordance with accounting practices adopted in Brazil (CPC 21 (R1)). The consolidated interim financial information prepared in accordance with the International Financial Reporting Standards (IFRSs) applicable to real estate development entities in Brazil (IAS 34, for interim information) also considers technical guidance OCPC 04 issued by the CPC. This guidance addresses the recognition of revenue by real estate development entities, including matters related to the meaning and application of the concept of continuous transfer of risks, rewards and control on the sale of real estate units, as detailed in note 3. Our conclusion in not modified in respect of this matter. Other matters Statements of value added We have also reviewed the individual and consolidated statements of value added (DVA) for the nine-month period ended 30, 2016, prepared under the responsibility of the CVM applicable to the preparation of Interim Financial Information (ITR), and is considered as supplemental information for IFRSs, which does not require the presentation of a DVA. These statements were subject to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that they are not prepared, in all material respects, in relation to the individual and consolidated interim financial information taken as a whole. The accompanying interim financial information has been translated into English for the convenience of readers outside Brazil. São Paulo, November 9, 2016 DELOITTE TOUCHE TOHMATSU Auditores Independentes Ismar de Moura Engagement Partner DOCX 2016 Deloitte Touche Tohmatsu. All rights reserved. 2

4 (Convenience Translation into English from the Original Previously Issued in Portuguese) EVEN CONSTRUTORA E INCORPORADORA S.A. AND SUBSIDIARIES BALANCE SHEETS AS AT SEPTEMBER 30, 2016 AND DECEMBER 31, 2015 Company Company ASSETS Note 09/30/ /12/ /30/ /12/2015 LIABILITIES AND EQUITY Note 09/30/ /12/ /30/ /12/2015 CURRENT ASSETS CURRENT LIABILITIES Cash and cash equivalents Trade payables Financial assets Payables for land acquisition Restricted cash Borrowings and financing 10.a Trade receivables 6.a Assignment of trade receivables 6.b Properties for sale Debentures 10.b Taxes and contributions receivable Taxes and contributions payable Other accounts receivable Taxes payable Total current assets Advances from customers Current account with partners at the developments Related parties NONCURRENT ASSETS Allowance for losses on companies with equity deficiency Restricted cash Dividends payable Trade receivables 6.a Provisions Properties for sale Other accounts payable Current account with partners at the developments Total current liabilities Advances for future capital increase 8.b Related parties NONCURRENT LIABILITIES Other receivables Payables for land acquisition Investments Provisions Property, plant and equipment Taxes payable Intangible assets Borrowings and financing 10.a Total noncurrent assets Assignment of trade receivables 6.b Debentures 10.b Deferred income tax and social contribution Other accounts payable Total noncurrent liabilities EQUITY Capital Restricted shares and treasury 17.1 (85.844) ( ) (85.844) ( ) Transaction costs (15.775) (15.775) (15.775) (15.775) Stock option plans Earnings reserve Noncontrolling interest Total equity TOTAL ASSETS TOTAL LIABILITIES AND EQUITY The accompanying notes are an integral part of this interim financial information. 3

5 (Convenience Translation into English from the Original Previously Issued in Portuguese) EVEN CONSTRUTORA E INCORPORADORA S.A. AND SUBSIDIARIES STATEMENTS OF PROFIT AND LOSS FOR THE QUARTERS AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2016 AND 2015 (In thousands of Brazilian reais - R$, except (loss) earnings per share) Note 07/01/2016 to 09/30/2016 Company 01/01/ /01/2015 to to 09/30/ /30/ /01/2015 to 09/30/ /01/2016 to 09/30/ /01/ /01/2015 to to 09/30/ /30/ /01/2015 to 09/30/2015 OPERATIONS Revenue Cost of sales and services 19.a (18.102) (54.863) (20.947) (73.295) ( ) ( ) ( ) ( ) (LOSS) GROSS PROFIT (4.689) (13.731) (6.987) (24.106) OPERATING EXPENSES Selling expenses 19.b (764) (3.520) (2.278) (6.440) (38.262) ( ) (39.939) ( ) General and administrative expenses 19.b (24.677) (82.646) (35.663) ( ) (32.569) ( ) (42.519) ( ) Management fees 19.b and 26.b (1.432) (3.746) (1.906) (5.564) (1.432) (3.746) (1.906) (5.564) Other operating expenses, net 21 (13.304) (26.371) (12.448) (23.252) (16.198) (53.854) (14.414) (28.026) (40.177) ( ) (52.295) ( ) (88.461) ( ) (98.778) ( ) (LOSS) OPERATING INCOME BEFORE EQUITY INTERESTS AND FINANCE INCOME (COSTS) (44.866) ( ) (59.282) ( ) (14.432) (17.875) EQUITY INTERESTS 8 Share of profit (loss) of investees (494) Recognition of allowance for losses on subsidiaries (523) 8 (975) (6.947) (494) FINANCE INCOME (COSTS) Finance income (28.975) (91.558) (32.959) (93.055) (7.825) (22.522) (10.504) (31.832) Finance costs (27.085) (82.248) (31.285) (86.278) (LOSS) INCOME FROM OPERATIONS BEFORE INCOME TAX AND SOCIAL CONTRIBUTION (12.505) INCOME TAX AND SOCIAL CONTRIBUTION Current income tax and social contribution (11.045) (31.417) (10.545) (33.518) Deferred income tax and social contribution (1.879) 203 (LOSS) PROFIT FOR THE PERIOD (12.505) (LOSS) PROFIT ATTRIBUTABLE TO Company's owners (12.505) Noncontrolling interests (LOSS) EARNINGS PER SHARE ATRIBUTABLE TO COMPANY'S OWNERS IN THE PERIOD - R$ Basic earnings per share 24.1 (0,055) 0,129 0,147 0,497 (0,055) 0,129 0,147 0,497 Diluted earnings per share 24.2 (0,055) 0,129 0,147 0,497 (0,055) 0,129 0,147 0,497 The accompanying notes are an integral part of this interim financial information. 4

6 (Convenience Translation into English from the Original Previously Issued in Portuguese) EVEN CONSTRUTORA E INCORPORADORA S.A. AND SUBSIDIARIES STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2016 AND 2015 (In thousands of Brazilian reais - R$) Company 07/01/ /01/ /01/ /01/ /01/ /01/ /01/ /01/2015 to to to to to to to to 09/30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/2015 (LOSS) PROFIT FOR THE PERIOD (12.505) OTHER COMPREHENSIVE INCOME COMPREHENSIVE (LOSS) INCOME FOR THE PERIOD (12.505) COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO Company's owners (12.505) Noncontrolling interests The accompanying notes are an integral part of this interim financial information. 5

7 (Convenience Translation into English from the Original Previously Issued in Portuguese) EVEN CONSTRUTORA E INCORPORADORA S.A.AND SUBSIDIARIES STATEMENTS OF CHANGES IN EQUITY FOR THE THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2016 AND 2015 (In thousands of Brazilian reais - R$) Attributable to Company's owners Restricted and treasury shares Stock Earnings reserves Restricted shares Treasury Transaction option Earnings Retained Noncontrolling Total Note Capital granted shares costs plan Legal retention earnings Total interest equity BALANCES AS AT DECEMBER 31, (18.124) (43.316) (15.775) Transaction with noncontrolling shareholders: Capital decrease Profit sharing (28.924) (28.924) Other Capital increase Treasury stock Acquisition of treasury stock (33.186) (33.186) - (33.186) Treasury shares granted - Long-Term Incentive Plan (ILP) - (16.094) Shares granted Cancellation of restricted shares Acquisition of equity interests Stock option plan Profit for the period Profit allocation- Earnings retention reserve ( ) BALANCES AS AT SEPTEMBER 30, (34.218) (60.408) (15.775) BALANCE AS AT DECEMBER 31, (21.808) (85.215) (15.775) Transaction with noncontrolling shareholders: Capital decrease (30.229) (30.229) Profit sharing (23.345) (23.345) Capital increase Treasury stock: Acquisition of treasury stock - - (21.335) (21.335) - (21.335) Treasury shares granted - Long-Term Incentive Plan (ILP) - (51.721) Shares granted Shares granted - termination of long-term incentive Cancellation of restricted shares (5.672) Cancellation of treasury shares (38.000) Acquisition of equity interests (4.284) - (4.284) - (4.284) Additional dividends (10.925) - (10.925) - (10.925) Profit for the period Profit allocation: Legal reserve Interim dividends (2.345) - (2.345) - (2.345) Earnings retention reserve (27.932) BALANCES AS AT SEPTEMBER 30, (63.343) (22.501) (15.775) The accompanying notes are an integral part of this interim financial information. 6

8 (Convenience Translation into English from the Original Previously Issued in Portuguese) EVEN CONSTRUTORA E INCORPORADORA S.A AND SUBSIDIARIES STATEMENTS OF VALUE ADDED FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2016 AND 2015 (In thousands of Brazilian reais - R$) Company 09/30/ /30/ /30/ /30/2015 REVENUES Properties sold and services rendered INPUTS ACQUIRED FROM THIRD PARTIES Cost of sales and services (5.538) (15.473) ( ) ( ) Materials, electric power, outside services and other operating expenses (55.839) (52.282) ( ) ( ) (61.377) (67.755) ( ) ( ) GROSS VALUE (CONSUMED) ADDED (15.292) (13.003) RETENTIONS Depreciation and amortization (5.902) (6.258) (8.698) (8.645) Amortization of goodwill in subsidiaries - (400) - - (5.902) (6.658) (8.698) (8.645) WEALTH (CONSUMED) CREATED BY THE COMPANY (21.194) (19.661) WEALTH RECEIVED IN TRANSFER Share of profit (loss) of investees (494) Allowance for losses on subsidiaries 8 (6.947) - - Finance income, including inflation adjustments WEALTH DISTRIBUTION WEALTH DISTRIBUTED Payroll and related taxes (81.829) ( ) (94.985) ( ) Profit sharing (2.972) (10.850) (2.972) (10.850) Stock options plan - (1.419) - (1.419) Long-term incentive plan (5.237) (10.291) (5.237) (10.291) Management compensation (4.547) (5.564) (4.547) (5.564) Taxes, rates and contributions (10.529) (13.280) (72.452) (80.636) Finance costs, including inflation adjustments (91.558) (93.057) (22.521) (31.831) Rentals (3.705) (5.334) (3.705) (5.334) Noncontrolling interest - - (28.631) (36.582) Retained earnings (27.933) ( ) (27.933) ( ) ( ) ( ) ( ) ( ) The accompanying notes are an integral part of this interim financial information. 7

9 EVEN CONSTRUTORA E INCORPORADORA S.A AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2016 AND 2015 (In thousands of Brazilian reais - R$) 09/30/ /30/ /30/ /30/2015 CASH FLOW FROM OPERATING ACTIVITIES Income before income tax and social contribution Adjustments to reconcile income before income tax and social contribution to the cash (used in) provided by operating activities: Goodwill amortization Share of profit (loss) of investees ( ) ( ) (19.807) 494 Depreciation and amortization Write-off of property, plant and equipment and intangible assets Allowance for losses on subsidiaries (8) Stock option plan Profit sharing Provision for collaterals - - (302) Provision for civil and labor risks Interest Interest on short-term investments (6.600) (3.155) (57.488) (62.180) Changes in current and noncurrent assets and liabilities Company Restricted cash - - (27.182) - Trade receivables (84.814) Properties for sale ( ) ( ) Balances with project partners, net of installments recorded in liabilities (37) (14.546) Taxes and contributions to be offset (2.214) (1.909) (1.833) (2.237) Discount of trade receivables - - (1.061) (1.435) Other (1.862) (18.899) Trade payables (2.283) (6.751) Payables from acquisition of properties - - (34.642) Advances from customers - - (4.786) Taxes payables (517) (438) Other payables (7.237) (6.017) (17.811) Noncontrolling interests - - (53.574) (21.956) Cash (used in) provided by operating activities ( ) ( ) Interest (89.701) (22.717) ( ) (22.581) Income tax and social contribution - - (31.417) (33.518) Net cash used in operating activities ( ) ( ) ( ) (24.701) CASH FLOW FROM INVESTING ACTIVITIES Short-term investments Acquisition of property, plant and equipment and intangible assets (2.255) (6.550) (7.241) (11.442) (Decrease) Increase in investments (18.777) (11.884) Advance for future capital increase - (17.918) - (4.840) Earnings received Net cash provided by investing activities CASH FLOW FROM FINANCING ACTIVITIES Third parties: Borrowings and financing Payment of borrowings, financing and debentures ( ) ( ) ( ) ( ) ( ) ( ) (55.049) (45.887) Shareholders/related parties: Increase (payment) of related parties, net (11.542) 263 Acquisition of treasury shares, net of options exercised (21.107) (33.186) (21.107) (33.185) Net cash used in financing activities ( ) ( ) ( ) ( ) (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS, NET (43.078) - (50.787) CASH AND CASH EQUIVALENTS At the beginning of period At the end of period (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS, NET (43.078) - (50.787) The accompanying notes are an integral part of this interim financial information. 8

10 (Convenience Translation into English from the Original Previously Issued in Portuguese) EVEN CONSTRUTORA E INCORPORADORA S.A. AND SUBSIDIARIES NOTES TO THE INTERIM FINANCIAL INFORMATION FOR THE THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2016 (Amounts in thousands of Brazilian reais - R$, unless otherwise stated) 1. GENERAL INFORMATION EVEN Construtora e Incorporadora S.A. ( Company ) is a publicly-traded corporation headquartered in the city of São Paulo, State of São Paulo, and its shares are traded on the BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros - Novo Mercado - under ticker symbol EVEN3. The Company and its subsidiaries ( Group ) are engaged mainly in developing residential and commercial properties and holding interests in other companies. The Company develops real estate projects through its subsidiaries specifically organized for that purpose, whether individually (wholly-owned subsidiary) or together with other partners. The subsidiaries share the Company s corporate, managerial and operating structures and costs. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The main accounting practices applied in the preparation of this individual and consolidated Interim Financial Information (ITR) have not changed when compared to those disclosed in the financial statements for the year ended December 31, 2015, published in O Estado de São Paulo newspaper on April 22, 2016 and disclosed in CVM s website ( In those cases where the notes to this ITR are not presented in full, compared to those in the financial statements for the year ended December 31, 2015, the full information must be read in the respective explanatory notes to the financial statements for the year ended December 31, The individual (Company) and consolidated interim financial information has been prepared in accordance with CPC 21 - Interim Financial Reporting and presented in conformity with the standards issued by CVM applicable to the preparation of Interim Financial Information (ITR). Furthermore, the consolidated financial information has been prepared in accordance with IAS 34 - Interim Financial Reporting issued by the International Accounting Standards Board (IASB), which considers technical guidance OCPC 04 on the application of technical interpretation ICPC 02 to real estate development entities in Brazil, issued by the Accounting Pronouncements Committee (CPC) and approved by the Brazilian Exchange Commission (CVM) and the Federal Accounting Council (CFC), applicable to the preparation of ITR and presented consistently with the standards issued by the CVM. Technical guidance OCPC 04, issued by the CPC, addresses the recognition of revenue from real estate development activities, as further detailed in note 3 to the financial statements for the year ended December 31, Management asserts that all relevant information for the financial statements, and only such information, is being disclosed and that it corresponds to the information used by it in its management. 9

11 EVEN Construtora e Incorporadora S.A. e Controladas Reclassifications Statements of cash flows as at 30, 2015 In the preparation of the interim financial information for the three-month period ended 30, 2016, the Company revised the provisions set forth in CPC 03 R2 - Statement of Cash Flows and implemented some changes so as to better reflect the Company s operating, financing and investing activities. Consequently, the interim financial information for the three-month period ended 30, 2015, presented for purposes of comparison, was reclassified as follows: Company Nine-month period ended 30, 2015 Previously stated Reclassifications (*) Reclassified amounts Cash flow from operating activities (134,886) (3,154) (138,040) Cash flow from investing activities 473,910 3, ,064 Nine-month period ended 30, 2015 Previously stated Reclassifications (*) Reclassified amounts Cash flow from operating activities 37,479 (216,853) (179,374) Cash flow from investing activities 119,687 62, ,867 Cash flow from financing activities (138,757) 154,673 15,916 (*) Refer to revenue from short-term investments recorded as adjustment before income tax and social contribution, which were previously classified as investing activities and financing activities, respectively. 3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS Accounting estimates and judgments are continuously assessed and are based on past experience and other factors, including expected future events, that are deemed reasonable in the circumstances. The accounting estimates and judgments were not subject to changes in the period ended 30, 2016 as compared to those disclosed in the financial statements for the year ended December 31, Based on assumptions, the Company makes forward-looking estimates. By definition, the resulting accounting estimates may differ from actual results. The estimates and assumptions that represent a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next year are related to the recognition of revenue. The Group uses the percentage-of-completion (POC) method to account for its contracts for the sale of units of the real estate projects and provision of services. The use of the POC method requires the Company to estimate the costs to be incurred up to the completion of the construction and delivery of the completed real estate units in each real estate development project, to calculate the ratio in relation to costs already incurred. 10

12 EVEN Construtora e Incorporadora S.A. e Controladas 4. SHORT-TERM INVESTMENTS Company December December 30, , , , 2015 Bank Certificates of Deposit (CDB) (i) 752 3, , ,699 Debentures of financial groups ,217 Financial bills (ii) 1,131 6,536 62, ,398 Financial Treasury Bills (LFTs) (iii) 2,585 10, , ,089 4,468 20, , ,403 (i) Short-term investments in CDB yield an average interest rate of 99.83% of the CDI rate. (ii) Financial bills from private institutions yield an average interest rate of % of the CDI rate. (iii) Investment in National Treasury Bills, indexed to the SELIC rate. Balances are recorded as short-term investments since, on the date of the related investments, the Company s management had the intent to redeem them after 90 days, also based on the considerations made for each type of security. 5. RESTRICTED CASH Refers to the securitization of trade receivables by Habitasec Securitizadora S.A., through the assignment of trade notes, whose amounts will be released for use by the Company based on the percentage-of-completion within up to 18 months. 30, 2016 Melnick Even Carnauba Emp. Imobiliário Ltda. 6,459 Melnick Even Mogno Emp. Imobiliário Ltda. 20,723 27,182 Current 25,628 Noncurrent 1,554 11

13 EVEN Construtora e Incorporadora S.A. e Controladas 6. TRADE RECEIVABLES AND ASSIGNMENT OF RECEIVABLES a) Trade receivables December 30, , 2015 Completed projects 905, ,202 Projects under construction: Accrued revenue 2,354,961 2,742,999 Adjustment to present value (45,255) (52,124) Installments received (930,765) (996,303) Barter for land (371,052) (408,276) 1,007,889 1,286,296 Accrued trade receivables 1,902,463 2,055,498 Allowance for doubtful debts (1,884) (1,716) 1,900,579 2,053,782 Current 1,548,276 1,818,879 Noncurrent 352, ,903 Trade receivables are adjusted substantially based on the variation of the National Civil Construction Index (INCC) until delivery of the unit and, subsequently, the portion not received through onlending of financing obtained directly by the customers from financial institutions is adjusted based on the variation of the General Market Price Index (IGP-M) or the Extended Consumer Price Index (IPCA) plus interest of 12% per year, recorded on a pro rata basis after completion of construction and delivery of the unit sold. Thus, it is estimated that trade receivables from completed projects and accrued trade receivables from projects under construction, less the adjustment to present value, approximate their fair values. Trade receivables from units sold and not yet completed are fully reflected in the financial statements, to the extent that only the portion of revenue that has been recognized, net of installments already received, is recorded. Noncurrent trade receivables comprise the portion falling due within more than one year. The aging list of the total installments receivable from sale agreements for completed and uncompleted units, without considering the effects of adjustment to present value, is as follows: December Year 30, , 2015 Past due 40,900 51,598 Current: ,610 1,912, ,544,560 1,020, , , onwards 420, ,575 3,281,846 3,740,612 Accrued trade receivables 1,902,463 2,055,498 Unaccrued trade receivables 1,379,383 1,685,114 12

14 EVEN Construtora e Incorporadora S.A. e Controladas The aging list of the past-due balance of trade receivables is as follows: December 30, , 2015 Past due: Up to three months 13,262 22,147 Three to six months 14,715 4,985 Completed properties 27,977 27,132 Past due: Up to three months 6,738 20,538 Three to six months 6,186 3,928 Properties under construction 12,924 24,466 For agreements that are not secured by the fiduciary sale of the financed asset (certain sales transactions occurred prior to 2008 are covered), the Company recognized an allowance for doubtful debts. This allowance amounts to R$1,884 as at 30, 2016 and R$1,716 as at December 31, The Company s management has as an internal policy to monitor the portfolio of trade receivables on a monthly basis and terminate the contracts for units with default on payments. After the termination, those units are made available for sale at market value. This policy avoids a concentration of terminated contracts when the units are delivered and the transfer of portfolio to the financial institutions that are the trade receivables assignees. As at 30, 2016, trade receivables were decreased by R$123,819 (R$70,136 as at December 31, 2015) arising from the provision for termination. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of trade receivables as mentioned above. b) Assignment of trade receivables Funds obtained from trade receivables assignment transactions, in which not all risks and rewards were transferred, in the amount of R$1,744 in (R$2,805 as at December 31, 2015), are recorded in liabilities (current and noncurrent) and correspond to discounts on trade receivables from completed projects, at rates from 10% to 12% per year, plus IGP-M or IPCA. December 30, , 2015 Current 1,744 1,163 Noncurrent - 1,642 1,744 2,805 In addition, the discounted credits were pledged as collateral for the trade receivables assignment transactions and a commitment was made that any defaulted credits would be settled. 13

15 EVEN Construtora e Incorporadora S.A. e Controladas c) Credit quality of the financial assets The credit quality of financial assets may be assessed by reference to the respective collaterals: December 30, , 2015 Trade receivables 1,902,463 2,055,498 Allowance for doubtful debts (1,884) (1,716) 1,900,579 2,053,782 Delivered units: Collateralized 891, ,793 Not collateralized 1, Units under construction: Collateralized 1,007,889 1,286,296 1,900,579 2,053, PROPERTIES FOR SALE Represented by land for future developments and costs incurred on real estate units for sale (completed and under construction), as shown below: Company December December 30, , , , 2015 Advances for purchase of land ,124 18,265 Land 21,379 23, , ,948 Properties under construction - - 1,140,754 1,132,055 Advances to suppliers ,274 12,264 Completed properties 2, , ,837 23,689 24,584 2,342,119 2,232,369 Current 23,689 24,584 1,574,502 1,067,522 Noncurrent ,617 1,164,847 The noncurrent portion corresponds to land for projects scheduled to be launched within more than 12 months. Real estate for sale pledged as collateral is mentioned in note 10.(a). As at 30, 2016, the balances of properties under construction and completed properties are increased by the provision for termination in the total amount of R$29,769 and R$90,309 (R$13,609 and R$58,540 as at December 31, 2015), respectively. Properties related to contractual terminations will only be available for sale upon cancellation. 14

16 EVEN Construtora e Incorporadora S.A. e Controladas The variation in finance charges incurred arising from bank financing transactions and allocated to cost over the construction period is as follows: 30, , 2015 Opening balance of inventories 141, ,904 Finance charges incurred in the period (*) 173, ,727 Allocation of finance charges to cost of sales (142,586) (124,695) Closing balance of inventories 172, ,936 (*) Do not include finance charges on payables for purchase of land being limited to bank loans obtained for this specific purpose, mortgage loan, and debentures. 8. INVESTMENTS Company December December 30, , , , 2015 In subsidiaries 2,504,582 2,528, In associates 20,091 20,499 20,091 20,499 Other ,524,684 2,549,007 20,102 20,510 a) The variation in the Company s investments in subsidiaries and associates is as follows: December 31, 2015 Capital subscription, less capital decrease Dividends paid Share of profit (loss) of investees Other 30, 2016 Subsidiaries 2,528,497 23,977 (290,448) 218,476 24,080 2,504,582 Associates and others 20,510 (15,057) (3,502) 21,710 (3,559) 20,102 Period ended 30, ,549,007 8,920 (293,950) 240,186 20,521 2,524,684 Year ended December 31, ,755,922 (81,906) (574,072) 446,009 3,043 2,548,996 In the period ended 30, 2016, funds were transferred from the subsidiaries to the Company by means of distribution of dividends. b) Advances for future capital increase made and not yet capitalized involve the following subsidiaries: Asset Company December December 30, , , , 2015 Subsidiaries 359, , Associates 12,555 25,613 12,555 25, , ,010 12,555 25,613 No terms have been established for the conversion of advances for future capital increase into shares on the basis of a fixed advance amount for a fixed number of shares; accordingly, the balances are not being classified as investment or equity and continue to be classified as noncurrent assets/liabilities. 15

17 EVEN Construtora e Incorporadora S.A. e Controladas 9. PAYABLES FOR ACQUISITION OF PROPERTIES December 30, , 2015 Payables in local currency subject to: INCC variation 151, ,148 CDI variation 13,622 24,011 Other 20,035 27, , ,965 Current 76, ,779 Noncurrent 108, ,186 The noncurrent portion matures as follows: December 30, , , , ,737 26, onwards 60,358 91, , , BORROWINGS, FINANCING, AND DEBENTURES a) Borrowings and financing Company December December 30, , , , 2015 In local currency: Mortgage loans (i) - - 1,198,782 1,144,335 Bank Credit Note (CCB) (ii) 346, , , ,909 Certificate of Real Estate Receivables (CRI) (iii) 157, , , ,893 Resolution 4131 swapped to Brazilian reais (iv) 65,628 58,774 65,628 58,774 Other , ,713 1,796,471 1,860,047 Current 172, , , ,500 Noncurrent 396, ,414 1,149,322 1,156,547 All borrowings and financing are denominated in local currency and have the following features: (i) (ii) Mortgage loan transactions are adjusted based on the TR (a managed prime rate) variation plus 8.6% to 15% per year. The Bank Credit Note (CCB) transaction is subject to 115% to 116% of the CDI rate variation per month, falling due on October 20, (iii) The Certificate of Real Estate Receivables (CRI) transaction is subject to the Interbank Deposit (DI) rate plus 0.35% to 1.5% per year, falling due on April 21, (iv) Bank Credit Note of R$50,000 with interest and principal payable on October 13, 2016 and Fixed Swap X DI, where the Company holds a long position at a rate of 3.68% per year plus exchange rate changes and short position at CDI rate per year of the debt cost. 16

18 EVEN Construtora e Incorporadora S.A. e Controladas The carrying amounts of these current and noncurrent borrowings approximate their fair values. The following assets were pledged as collateral for the financing: December 30, , 2015 Inventories (cost incurred on unsold units of the projects) 1,286,522 1,168,312 The noncurrent portion matures as follows: Company December December 30, , , , , , , , , , , , onwards 172, , , , , ,713 1,796,471 1,860,047 The long-term mortgage loan agreements include acceleration clauses in case of nonperformance of obligations such as application of the funds in the subject of the contract, registration of mortgage on the project, compliance with the work schedule, and other obligations assumed thereunder. The Company has been complying with the obligations assumed in accordance with the contractual terms. b) Debentures (Company and ) Company and December 30, , 2015 Fifth issue - 41,667 Sixth issue 100, ,000 Principal 100, ,667 Unallocated transaction costs - (169) Interest payable 7,688 5, , ,108 Current 107,688 97,108 Noncurrent - 50,000 17

19 EVEN Construtora e Incorporadora S.A. e Controladas Features of debentures Fifth issue Sixth issue Registration date 03/10/ /10/2012 Convertible into shares No No Maturity dates 1st series - 03/10/14 (50%) and 03/10/15 (50%) 2nd series - 03/10/14 (33.33%), 03/10/2015 (33.33%) 03/10/2016 (33.33%) 03/10/2017 (33.33%) 03/10/15 (33.33%) and 03/10/16 (33.33%) Interest (annual rates) - % 1st series - CDI % spread CDI + 1.6% 2nd series - CDI % spread Collateral Subordinated Subordinated Par value 10 1,000 Number of debentures issued 25,000 (12,500-1st series and ,500-2nd series) Amount issued 250, ,000 There are restrictive covenants, as defined in the final prospectuses for the public offering of debentures issued by the Company dated April 10, 2011 and October , related mainly to corporate restructuring and business management aspects. The Company has been complying with the covenants under the prospectuses, in accordance with the terms set forth therein. Additionally, the debentures contain certain covenants that are periodically monitored by Management and are being complied with as at 30, 2016 and December 31, TAXES PAYABLE Represented by taxes (PIS and COFINS - taxes on revenue) levied on the difference between real estate development revenue recognized on an accrual basis and revenue taxed on a cash basis, which is realized consistently with the expected realization of trade receivables, as follows: December 30, , 2015 Current 37,428 42,251 Noncurrent 8,517 5,457 45,945 47, ADVANCES FROM CUSTOMERS 30, 2016 December 31, 2015 Amounts received from sales of projects yet to be developed and other advances 5,548 11,291 Units sold in projects under construction: Accrued revenue (15,302) (15,351) Installments received in cash 18,953 18,045 3,651 2,694 Balance at the end of period/year 9,199 13,985 18

20 EVEN Construtora e Incorporadora S.A. e Controladas When the revenues to be recognized exceed the balances receivable from customers, the difference is classified as advances from customers. The amounts relating to barters of land by real estate project are shown below: 30, 2016 December 31, 2015 Barter for land 371, ,276 Recognized barter for land (211,495) (256,404) Unrecognized barter for land 159, ,872 Physical barters intended for the delivery of a unit yet to be built are accounted for as a component of the land inventory as a balancing item to trade receivables for disclosure purposes. 13. PROVISIONS Collaterals Profit sharing Provision for labor and civil risks Provision for termination (a) (b) (c) (d) Total Balances as at December 31, ,397 22,500 32, , ,902 Charged against the statement of profit and loss 11,775 10,850 10,536 33,161 66,322 Payment for the year - (19,729) - (19,729) (39,458) Reversal of provision in profit or loss - (2,771) - (2,771) (5,542) Balance as at 30, ,172 10,850 43, , ,224 Balances as at December 31, ,111 3,500 50,727 28, ,147 Charged against the statement of - profit and loss (303) 5,195 11,714 16,606 Payment for the year - (3,500) - - (3,500) Reversal of provision in profit or loss (5,810) (5,809) Balance as at 30, ,808 5,195 62,441 22, ,444 Current 57,265 Noncurrent 91,179 (a) Collaterals The Group provides collateral for the real estate in accordance with the law for a period of five years. A provision is recognized at present value for the estimated costs to be incurred in the settlement of any possible claims. The provision for collateral is recognized in the subsidiaries over project construction as part of the total construction cost, and after its delivery the Group initiates the reversal of the provision pursuant to the curve of the historical costs defined by the Engineering area. The technical support service is provided by the Company and, on the date services are provided, is recognized in profit or loss, in line item Other operating expenses, net. (b) Profit sharing The profit sharing program was approved in May 2010 and is based on individual and Group-wide goals, as described in note 19.b). 19

21 EVEN Construtora e Incorporadora S.A. e Controladas (c) Labor and civil risks Certain subsidiaries are defendants, whether directly or indirectly, to labor lawsuits amounting to R$91,716 (R$76,174 as at December 31, 2015), of which the Company s management, as supported by its legal counsel, assesses R$33,036 (R$23,291 as at December 31, 2015) as a probable loss, R$48,187 (R$43,461 as at December 31, 2015) as a possible loss, and R$10,493 (R$9,422 as at December 31, 2015) as a remote loss, in the appeals filed by the Company. As reported by the legal counsel in charge, the probable future cash outflows resulting from lawsuits classified as a probable loss amount to R$22,975 as at 30, 2016 (R$23,456 as at December 31, 2015), based on the history of losses over the last years in relation to the claimed amounts. Civil lawsuits to which subsidiaries are defendants total R$221,506 (R$233,214 as at December 31, 2015) and refer mainly to: (i) revision of contractual clauses relating to adjustment and interest on amounts being collected; and (ii) delays in the delivery of real estate units. As reported by the legal counsel in charge, unfavorable court decisions are expected to be handed down for some of these lawsuits, in the amount of R$39,466 (R$27,271 as at December 31, 2015). The provision for civil and labor risks as at 30, 2016 totaled R$62,441 (R$50,727 as at December 31, 2015). (d) Provision for termination The Company recorded a provision for termination for those customers that show evidence of contract cancellation, both for properties recently delivered and properties under construction, also taking into consideration the percentage-of-completion of each construction, that is, the revenue recognition method adopted. As at 30, 2016, the returns of amounts received on the provision for termination amount to R$22,999 (R$28,809 in the year ended December 31, 2015). 14. DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION December 30, , 2015 Income tax 27,754 28,831 Social contribution 14,538 15,102 42,292 43,933 Special Purpose Entities ( SPEs ), i.e., the Company s subsidiaries, elected to adopt the deemed income tax regime or the Special Taxation Regime (RET) on cash basis. The difference between income tax and social contribution recognized based on income on a cash basis (due to trade receivables) and income on accrual basis (percentage of completion (POC)) is accounted for as deferred income tax and social contribution. 15. RETIREMENT BENEFIT OBLIGATIONS The social security plan was not changed compared to that disclosed in the financial statements for the year ended December 31, The Company s contributions in the period ended 30, 2016 amounted to R$37 (R$387 in the year ended December 31, 2015). 20

22 EVEN Construtora e Incorporadora S.A. e Controladas 16. BALANCES WITH PROJECT PARTNERS Company December December 30, , , , 2015 Imograpa Construtora S.A ,538 1,700 Consórcio Roseira 2,580 2,496 2,581 2,496 Consórcio Rossi Colinas do Morumbi Emp.Imob. Ltda Fazenda Roseira Kappa Emp. Imob. CPE S.A ,193 - Fazenda Roseira Beta Emp. Imob. CPE S.A ,071 - Fazenda Roseira Alpha Emp. Imob. CPE S.A Fazenda Roseira Delta Emp. Imob. CPE S.A ,295 - Fazenda Roseira Epsilon Emp. Imob. CPE S.A ,309 - Fazenda Roseira Zeta Emp. Imob. CPE S.A ,753 - Other 1,493 1,540 1, ,073 4,036 20,173 5,627 Noncurrent assets 4,088 4,051 20,173 5,632 Current liabilities (15) (15) - (5) 4,073 4,036 20,173 5,627 The balances of loans from partners Imograpa and Consórcio Roseira are subject to 100% of the CDI rate variation plus interest of 3.5% to 4% per year and maturities renegotiable to the long term, according to the average development and completion period of the related projects, except for balances with Fazendas Roseiras and Consórcio Rossi, which are not subject to any finance charges. 17. CAPITAL AND RESERVES Restricted and treasury shares The purpose of the Share Buyback Program is to generate value to the Company s shareholders based on the price of the Company s shares traded on the BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros, and the use within the context of the Company s stock option plan. The Board of Directors meeting held on August 15, 2013 approved the purchase of the Company s shares to be delivered to the employees under the variable compensation plan. In the period ended 30, 2016, the variation in treasury shares was as follows: Treasury shares Grant of restricted shares Balance in shares (R$) As at December 31, ,366,378 21,808 85,215 Share acquisition 5,235,677-21,335 Long-term Incentive Plan (13,615,442) 51,721 (51,721) Cancellation of restricted shares for dismissal 965,531 (5,672) 5,672 Cancellation of treasury shares (*) (8,293,408) - (38,000) Termination of vesting period of a portion of the Long-term Incentive Plan - (2,841) - Share grant agreement (410,212) (1,671) Balance as at 30, ,248,524 65,016 20,830 (*) On April 18, 2016, the Board of Directors approved the cancellation of 8,293,408 common shares, without decreasing capital. 21

23 EVEN Construtora e Incorporadora S.A. e Controladas On April 29, 2014, the first grant was made under the Long-term Incentive Plan (ILP) through the granting of the Company s shares to eligible employees - statutory and non-statutory officers and managers. The benefit was granted annually, beginning The ILP does not provide for cash payments, it being fully paid in shares, subject to trading restriction. For the 2014 and 2015 plans, the beneficiary must not transfer the shares acquired upon exercise of the option within a period of up to two years after the option contract execution. After this period, the transfer restriction will be subject to the following vesting period: (a) 1/3 of the acquired shares will be free from the transfer restriction as from the 2nd anniversary of the contract execution date; (b) additional 1/3 of the acquired shares will be free from the transfer restriction as from the 3rd anniversary of the contract execution date; and (c) remaining 1/3 of the acquired shares will be free from the transfer restriction as from the 4th anniversary of the contract execution date. The exercise price for each share is equivalent to the value of the average price of the Company s shares during the period of 60 days immediately before the grant of the stock options to the beneficiaries. In the event of dismissal of the beneficiary, the options not exercised will be automatically cancelled. In the event of termination of employment or dismissal by the Company, the beneficiary will be required to sell to the Company, under applicable law, all (but not less than all) the shares acquired by the beneficiary which are still subject to the transfer restriction on the date of the beneficiary s dismissal. For the 2016 plan, the beneficiary must not transfer the shares acquired upon exercise of the option within a period of up to five years after the option contract execution. The exercise price for each share is equivalent to the value of the average price of the Company s shares during the period of 60 days immediately before the grant of the stock options to the beneficiaries. In the event of dismissal of the beneficiary, the options not exercised will be automatically cancelled. In the event of termination of employment or dismissal by the Company, the beneficiary will be required to sell to the Company, under applicable law, all (but not less than all) the shares not vested by the beneficiary that are still subject to the transfer restriction on the date of the beneficiary s dismissal. The total ILP is recorded as restricted and treasury shares, and related amounts are accrued on a monthly basis through the maturity date of the plan, recorded in profit or loss in line item Administrative expenses Stock options At the Board of Directors meeting held on April 28, 2011, the Company granted stock options to employees, service providers and officers (beneficiaries), totaling 4,343,263 common shares issued by the Company, corresponding to 1.86% of the capital, with an exercise price of R$5.71 per share. The options may be exercised by the beneficiaries after the end of the following vesting periods: 22