CR2 ANNOUNCES ITS RESULTS FOR 4Q17

Transcription

1 CR2 ANNOUNCES ITS RESULTS FOR Rio de Janeiro, March 23 th, 2018 CR2 Empreendimentos Imobiliários S.A. (Bovespa: CRDE3; OTC: CREIY) announces its results for the fourth quarter of 2017 (). The company s consolidated financial statements are prepared according to accounting practices adopted in Brazil pursuant to the Law of Corporations and regulations issued by the Brazilian Securities and Exchange Commission (CVM). HIGHLIGHTS Net Cash of R$ 24.2 million; Conclusion of the sales procedure of the land Manaú; Net Increase in Cash and Cash Equivalents of R$ 3.2 million in the and R$ 7.0 million in EARNINGS AND CONFERENCE CALL INVESTOR RELATIONS Felipe Shalders CEO, Investor Relations and TechnicalOfficer Contact: Phone: +55 (21) / ri@cr2.com.br Portuguese Conference Call March 27 th, :00 pm (Brasília time) 1:00 pm (Eastern time) Phone.: Code: CR2 Replay: Replay Code: CR2 Website: ri.cr2.com.br English Conference Call March 27 th, :00 pm (Brasília time) 2:00 pm (Eastern time) Phone.: / Code: CR2 Replay: Replay Code: CR2 Website: ri.cr2.com.br OPERATING AND FINANCIAL HIGHLIGHTS 1/16

2 Consolidated Financials (R$'000) 4Q16 Δ4Q/4Q 3Q17 Δ4Q/3Q Net Operating Revenue ,7% ,1% Gross Profit ,5% % % Gross Profit Margin 43,5% 29,5% 14,0 p.p. 20,8% 22,7 p.p. Gross Profit (ex-sfh Interest) ,3% % %Gross Profit Margin (ex-sfh Interest) 44,0% 32,5% 11 p.p. 23,7% 20,3 p.p. EBITDA(1) 940 (27.492) - (2.931) - % EBITDA Margin 17% -759% 776 p.p. -193% 210 p.p. Net Profit before minority interest (47.930) - (2.034) - % Net Margin before minority interest 23,7% -1323% 1346 p.p. -133,6% 157 p.p. Net Profit (43.676) - (1.982) - % Net Margin 23% -1205% 1229 p.p. -130% 154 p.p. Basic Earnings per Share - EPS R$ 0,03 (0,90) - (0,04) - Revenues to be Recognized Results to be Recognized Margin to be Recognized 0,0% 0,0% 0,0 p.p. 0,0% 0,0 p.p. Cash ,3% ,2% Net Debt (ex-sfh) (24.204) (17.376) 39,3% (21.005) 15,2% Net Debt (ex-sfh) / Shareholders Equity -12,2% -8,6% -3,7 p.p. -10,7% -1,6 p.p. Net Debt (24.204) (17.375) 39,3% (21.005) 15,2% Net Debt / Shareholders Equity -12,2% -8,6% -3,7 p.p. -10,7% 0,0 p.p. Shareholders Equity ,6% ,5% Operating (R$'000) 4Q16 Δ4Q/4Q 3Q17 Δ4Q/3Q Total Contracted Sales (2) ,3% ,6% Total Contracted Sales (%CR2) (2) ,7% ,1% Sales over Suply - SoS (%CR2) (3) 8,8% 18,4% -10 p.p. 14,7% -5,9 p.p. Units Sold in the Period ,6% 13-84,6% (1) EBITDA adds back to Net Profit: minority interest, taxes and social tax, D&A, financial expense, SFH interest, sales stand amortization and ESOP. (2) Excluding financial income. Physical exchange net for Villaggio del Mare, Barra Allegro and Via Parque, and financial exchange net for the Verano project. (3) Sales over Supply (SoS): [contracted sales of the period / (inventory at the beginning of the period + physical exchange net entries of the period)]. 2/16

3 INDEX LETTER FROM MANAGEMENT... 4 CONTRACTED SALES... 5 INVENTORY AT MARKET VALUE AND RECEIVABLES... 6 LAND BANK... 9 ANALYSIS OF THE INCOME STATEMENT... 9 GENERAL AND ADMINISTRATIVE EXPENSES (G&A) CO-OBLIGATION GROSS PROFIT AND NET PROFIT STATEMENT OF CASH FLOW APPENDIX I INCOME STATEMENT APPENDIX II BALANCE SHEET GLOSSARY LEGAL NOTICES PUBLIC ACCOUNTANTS RELATIONSHIP /16

4 LETTER FROM MANAGEMENT Despite the political crisis still in progress, the brasilian economy exhibited signs of recovery in the end of the year 2017, with the inflation index bellow the target of 3.0%, the continously reduction of the basic interes rates determined by Brasil Central Bank (closing the year at its lowest historical rate of 7.0%) and the brasilian stock market Ibovespa reaching its historical maximum level. Notwithstanding these facts, the real state market have not recovered from the crisis, one of the most serious ever faced by the segment. The recovery was started by the popular segment, more specifically the properties financed by the governamental housing program Minha Casa, Minha Vida. The Company ended the fourth quarter of 2017 with a Net Revenue of R$ 5.5 million, mainly because the conclusion of the sales procedure of the land Manaú, located in Guarulhos São Paulo. The land sale value was R$ 5.2 million with the payment of half the value in cash and the other value in installment. Another highlight on this quarter, wich also have been pushed up by the sale of the Manaú land, was the Company s Net Cash wich ended the quarte at R$ 24.2 million. As informed on our previous releases the administration focus is to generate a continous cash flow with the monetization of assets and the reduction of the General Expenses. The Company works actively in the sale of the inventory and land bank, and in the cancellations of receivables that are unlikely to be transferred. Thank you for the confidence in our work. Felipe Shalders Diretor Presidente, Técnico e de Relações com Investidores 4/16

5 CONTRACTED SALES Contracted sales net of cancellations totaled R$ 0.5 million in, a 88% reduction in comparison to 4Q16. The net sales were impacted by the cancellations in the quarter R$ 1.2 million. The sales highlight in the were Campinho, Jardim Paradiso and Parque das Águas, wich represent most of the avaiable stocks. Gross Contracted Sales x Cancellations (R$ Millions) 20,7 14,5 15,1 10,3 8,0 7,1 8,0 6,2 2,3 7,4 8,2 6,2 4,3 3,1 6,1 5,1 2,0 2,7 3,9 2,2 2,4 10,8 5,9 2,8 4,9 1,9 0,9 1,7 0,4 1,2 1,9 1,5 0,5 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Sales Cancellations Net 5/16

6 INVENTORY AT MARKET VALUE AND RECEIVABLES We ended the with R$ 6 million of inventory at market value, a decrease of 33% compared to 4Q16. Receivables from clients totaled R$ 37 million in this quarter, a reduction of 8% over 4Q16, keeping in mind the impact of the provision for losses on Link s receivables occurred in the 4Q16. The assets are continusly converted into cash, with a reduction of 5% in the sum of Inventory (at market value) + Receivables, when compared to 3Q17, maintaining a stable flow int the asset monetization. Receivables + Inventory Evolutions (R$ Millions) % Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q16 Inventory at Market Value Receivables 6/16

7 The next three tables shows the breakdown of Inventory at Market Value per SPE, the statement of the main receivables and the breakdown of Receivables from Clients per SPE. As can be observed, 28% of the inventory is represented by Parque das Águas (R$ 1.8 million) and 18% (R$ 1.2 million) by Campinho. The company maintained the efforts on sales and transfers, having success throgh the last quarters, and as consequence presenting a reduction on the cost of the inventory. SPEs 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 % () Jardim Paradiso % Jardim Paradiso 1-A % Jardim Paradiso 1-B % Parque das Águas % Green % Verano I % Verano II % Verano III % Campinho % SP % Aqua Park % Aqua Park % Aqua Park % Top Life Itamaraty % Mirante Bonsucesso % Top Life Park % Residências Premium % HC Felicitá % Barra Allegro % Splendor Valqueire I % Splendore Valqueire II % Splendore Valqueire III % CIMOL % Total: % 7/16

8 At the end of, Receivable from Clients totaled R$ 37.4 million, of which R$ 27.9 million refers to Link financial swap, whose occupancy permit was issued in 2Q14. The increase on the Receivable Values ocurred due to the conclusion of the sales procedure of the land Manaú in october of Accounts Receivable from Transfer of Receivables is constituted when the credit is transferred to banks and turns into cash according to the registration of contracts in the Post-key Transfer of Receivables financial model, and according to construction works percentage of completion in the Crédito Associativo financing model. This account ended with R$ 0.8 million, while Direct Financing ended with R$ 465 thousand. (R$ '000) 2Q14 3Q14 4Q14 1Q15 2Q12 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Receivables from Real Estate Sales Revenues to be Recognized Advances from Clients (516) (477) (851) (998) (1.019) (1.031) (140) (116) (120) (128) (125) (125) (142) (145) (60) TOTAL Receivables from Clients Receivable from Transfer of Receivables Direct Finacing TOTAL Receivables SPEs 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Indexation SPE 23 (Link) IGP-M +12% a.a.* Jardim Paradiso IGP-M +12% a.a. Parque das Águas IGP-M +12% a.a. Green IGP-M +12% a.a. Campinho IGP-M SP IGP-M Acqua Park IGP-M Acqua Park IGP-M Acqua Park IGP-M Top Life Itamaraty IGP-M Mirante Bonsucesso IGP-M Top Life Park IGP-M Manaú INCC-DI Residências Premium IGP-M +12% a.a. HC Felicittá IGP-M +12% a.a. Barra Allegro IGP-M +12% a.a. Splendor Valqueire I IGP-M +12% a.a. Splendore Valqueire II IGP-M +12% a.a. Splendore Valqueire III IGP-M +12% a.a. CIMOL IGP-M +12% a.a. Total: * From July/14. INCC prior to this date. 8/16

9 LAND BANK The the sales procedure of the land Manaú (located in Guarulhos, São Paulo) were concluded in October 2017, and now is included as receivable. The land Cidade Paradiso and Parque das Águas represent 90% of the book value in the Company s land bank. Project City (State) Segment Book Value (R$'000) Book/m² (R$'000) %CR2 Cidade Paradiso Nova Iguaçu (RJ) Economy % Parque das Águas São Gonçalo (RJ) Economy % Diamond Campo Grande (RJ) Medium/Commercial % Sta. Cecília - Madureira Nova Iguaçu (RJ) Economy % Total ANALYSIS OF THE INCOME STATEMENT In, Net Revenue totaled R$ million, compared to R$ million in 4Q16. Gross profit ex-sfh interest totaled R$ 2,417 thousand, compared to R$ 1,177 thousand in 4Q16. (R$ '000) 4Q16 4Q/4Q 3Q17 4Q/3Q Net Revenue % % Gross Profit % % Gross Margin 43,5% 29,5% 14,0 p.p. 20,8% 22,7 p.p. SFH Interest Impact -11,0 p.p. 3,0 p.p ,9 p.p. 2,9 p.p ,0 p.p. Gross Profif (ex-sfh Interest) % % Gross Margin (ex-sfh Interest) 32,5% 32,5% 0,0 p.p. 23,7% 8,8 p.p. 9/16

10 GENERAL AND ADMINISTRATIVE EXPENSES (G&A) G&A was R$ 2.6 million in this quarter, with a 18% nominal reduction over 4Q16 (R$ 3.1 million) and marginal reduction of 11% over 3Q17 (R$ 2.9 million). (R$ '000) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 /4Q16 G&A % Personnel Expenses % Rent (HQ) % Condominium (SPEs) % Unit Sold % Inventory % Legal Expenses % Others % The SPEs Condominium cost of the units sol suffered the most expressive reduction (97%) in comparisom with the, confirming the success on the effort to sold the inventory. The Personnel Expenses were the only item who suffered an increase, of 5%, in the comparison with the 4Q16. CO-OBLIGATION CRI s co-obligation (Link) is on its final stage, presenting a value of R$ 0.1 million. The Company s expectation is to finish the co-obligation on the next quarters. Real State Credit Assignment- Link (R$ Millions) 15,3 13 7,1 3,9 3,3 2,8 1,3 0, ,9 0,9 0,5 0,4 0,1 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 10/16

11 GROSS PROFIT AND NET PROFIT In the the Company s Net Profit totaled R$ 1,290 thousand compared to Net Losses of R$ 43,676 thousand in 4Q16. Net Revenue incresead 52% in comparison with 4Q16, impacted by the receipt of part of the values of the Manaú land sale. Net Revenue (R$ '000) (2.755) (1.363) (8.342) Net Profit (R$ '000) 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q (2.729) (1.069) (1.982) Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q16 (43.676) (43.676) STATEMENT OF CASH FLOW The net cash in the was R$ 3,199 thousand, an increase of R$ 3,145 thousand when compared to 4Q16. Statement of Cash Flow (R$ '000) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Losses Before Corporate Income Tax and Social Tax on Net Income (2.619) (976) (26.615) (2.332) (1.662) (2.034) Reconcilliation of net income to net cash provided by operating activities (578) (223) (1.167) Assests' Variation Receivables from real estate development and sales (697) Receivables from third parties (7.858) Real estate for sale Others (267) (227) (4.883) (423) (286) (1.615) 684 Liabilities' Variation 332 (151) 96 (415) 897 (3) (150) (1.148) Net Cash Provided by Operating Activities (242) Corporate Income Tax and Social Tax on Net Income paid (241) (272) (192) (182) (304) 26 0 (398) Net Cash from investing activities (6) 29 (23) 10 0 (224) 1 0 Debt (1.045) (338) Debentures (net) (1.045) (338) Loans and financing (net) Real Estate Receivables Certificate - CRI (Link) (574) (1.496) (340) (41) (40) (342) (15) (277) Real estate credit assignments (567) (1.649) (335) (37) (37) (338) (188) (285) Secured amounts as collateral on the CRI (7) 153 (5) (4) (3) (4) Financing Activities with Shareholders 1 (129) 29 (11.744) (199) 2 (2) (645) Noncontrolling interest (2) (1) (199) 2 (3) (322) Others 3 (128) (14) (12.112) (323) Net Increase /(decrease) in Cash and Cash Equivalents (2.107) (7.119) /16

12 APPENDIX I INCOME STATEMENT Income Statement (R$ '000) 4Q16 4Q/4Q 3Q17 4Q/3Q Net Operating Revenue % % Cost of real estate development and sale (Ex-SFH Interest) (8.221) (12.390) -34% (1.161) 608% SFH Interest (28) % (44) -37% Gross Profit % % Gross Margin 43,5% 29,5% 14 p.p. 20,8% 22,7 p.p. Gross Margin(ex-SFH Interest) 44,0% 32,5% 11 p.p. 23,7% 20,3 p.p. Operating Revenue (Expenses) General and Administrative Expenses G&A (Ex-Stock Option Plan) (2.578) (3.129) -18% (2.897) -11% Expenses with Stock Option Plan Selling Expenses Selling Expenses (ex-stands Amortization) (27) (90) -70% (104) -74% Stands Amortization (87) (279) -69% (87) 0% Depreciation and Amortization (36) (48) -25% (44) -18% Tax Expenses (69) (829) -92% (35) 99% Other Operating Income (Expenses) (24.613) -105% (175) -796% Operating Revenue (Loss) before Financing Results 787 (27.863) -103% (3.033) -126% Net Interest Income (Expense): Interest on Equity - - 0% - 0 Financial Result % % Operating Revenue (Loss) after Financing Results (26.553) -106% (1.861) -180% Real State Assest Sales Income (Loss) ,00 - Employees Profit Sharing 0 (64) - (76) - Income and social contribution taxes (189) (21.313) -99% (97) 95% Net Income (Loss) before Minority Interest (47.930) -103% (2.034) -164% Net Margin Before Minority Interest 23,7% -1322,7% 1346 p.p. -133,6% 157,3 p.p. Minority Interest (13) % % Reversal on interest equity Net Income (Loss) in the Period (43.676) -103% (1.982) -165% Net Margin After Minority Interest 23,5% -1205,3% 1229 p.p. -130,2% 153,7 p.p. Weighted Average Shares Outstanding % % Basic Earnings per Share - EPS 0,03 (0,90) -103% (0,04) -165% EBITIDA (R$ '000) 3T17 4T16 3T/3T 3T17 3T/2T Net Profit (43.676) -103% (1.982) -165% Minority Interest 13 (4.254) -100% (52) -125% Income tax and Social Contribution % 97 95% Depreciation and Amortization % 44-18,2% Financial Result (706) (1.310) -46% (1.171) -39,7% SFH Interest % 44-37,4% Stands Amortization ,0% 87 - Expenses with Stock Option Plan EBITIDA 936 (27.492) -103% (2.934) -132% % EBITIDA Margin 17,0% -758,7% 776 p.p. -192,7% 210 p.p. 12/16

13 APPENDIX II BALANCE SHEET Assests (R$ '000) 3Q17 Liabilities and Shareholder's Equity (R$ '000) 3Q17 Current Assets Current Liabilities Cash and Cash Equivalents Debentures 0 0 Financial Investments 0 0 Bank Loans 0 0 Swap 0 0 Swap 0 0 Receivables from Real Estate Sales Construction Financig - SFH 0 0 Receivables from Third Parties Advances from Customers Properties for sale Real Estate Financing 0 0 Recoverable Taxes Cash Advances Financial Swap 0 0 Loan Operation with Related Parties Deferred Income and Social Contribution Taxes Receivables from Related Parties 0 0 Provision for Taxes Other Assets Provision for Matters Total Current Assets Accounts Payable Credit Assignments sold with guarantee Non-current Assets Dividend Payable 0 0 Receivables from Real Estate Sales Capital Decrease Receivables from Third Parties Total Current Liabilities Properties for sale Loan Operation with Related Parties Non-Current Liabilities Receivables from Related Parties Debentures 0 0 Tax Credits 0 0 Bank Loans 0 0 Other Non-Current Assets Construction Financing - SFH 0 0 Total Non-current Assets Deferred Income and Social Contribution Taxes Provision for Matters Investments Credit Assignments sold with guarantee Net Property and Equipment Advances for Future Capital Increase 2 2 Difered 0 0 Obligation to Build Intangible assets 7 10 Total Non-Current Liabilities Total Fixed Assets Total Assets Shareholders' Equity Capital Stock Capital Reserves 0 0 Profit Reserves 0 0 Retained Earnings/Losses (accumulated deficit) (4.490) (5.780) Other Compreheensive Results Shareholders' Equity - Holding Company Minority Interest Total Shareholders' Equity Total Liabilities and Shareholder's Equity /16

14 GLOSSARY Cash Consumption Measured by the change in net debt, less capital increases and dividends paid. CPC Accounting Pronouncements Committee - Created by CFC Resolution No /05, the objective of the CPC is to "study, prepare and issue Technical Standards regarding Accounting procedures and the dissemination of such information, to allow the issuance of regulations by the Brazilian regulator aimed at centralizing and standardizing accounting production processes, always taking into account the convergence of Brazilian Accounting practices with international standards." EBITDA Earnings before interest, income tax and social contributions on net income, depreciation and amortization, financial charges incurring on the cost of real estate sold. EBITDA is not a measure of financial performance in accordance with accounting practices adopted in Brazil, and should not be considered in isolation or as an alternative to net income as a measure of operating performance or an alternative to operating cash flows or as a measure of liquidity. Adjusted EBITDA Determined from the net income before interest, income tax and social contributions on net income, depreciation and amortization, financial charges in the cost of real estate sold, expenses for the issue of shares, expenses for option plans and other non-operating expenses. Adjusted EBITDA is not a measure of financial performance in accordance with accounting practices adopted in Brazil, should not be considered in isolation or as an alternative to net income as a measure of operating performance or an alternative to operating cash flows or as a measure of liquidity. IGP-M General Price Index Market, published by the Getúlio Vargas Foundation. INCC National Cost of Construction Index, measured by the Getúlio Vargas Foundation. Land Bank The total amount of land held by the Company for future development, acquired in cash or through financial exchange transactions. Income to Allocate Margin Equivalent to "Income to Allocate" divided by the "Revenues to be Recognized," to be recognized in future periods PoC Method Revenue, costs and expenses arising from real estate development activities are recognized in line with the cost incurred accounting method (Percentage of Completion method, or PoC), which measures the actual cost of the undertaking against the total budgeted cost for each phase of the project. Financial Exchange A land purchase method by means of which the site owner receives an exchange in a determined percentage of the units or the revenue from the future development to be built on the site. Acquiring land through such swaps, we seek to reduce the need for cash funding and consequently increase the returns. Sales to be Recognized - Unearned revenues correspond to sales contracts for which revenue is recognized in future periods, depending on the progress of the work and not at the time of the contract signing. Thus, the balance of Sales to be Allocated represents revenue to be recognized in future periods deriving from past sales. 14/16

15 SFH Funds SFH funds originate in the Workers Time of Service Guarantee Fund (FGTS) of savings deposits. Commercial banks are required to invest 65.0% of these deposits in real estate for the acquisition of property by an individual or by real estate developers at lower rates than the private sales market. CFC Resolution No. 963/03 and POC Method (Percentage of Completion) The revenues, and costs and expenses, relating to the real estate development activity are allocated to the income statement over the period of the construction period accompanying the progress of the costs incurred, pursuant to CFC Resolution 963/03. Results of Sales to be Recognized Due to the recognition of revenues and costs resulting from the pace of construction (PoC method) and not at the time of the signing of the contracts, we recognize revenue and expenses of incorporation of the signed contracts in future periods. Thus, the balance of Income to Allocate represents revenues less costs to be recognized in future periods from past sales Contracted Sales Refers to each contract resulting from the sale of a property unit during a given period, including those being launched. Contracted sales are recognized as revenue in line with the pace of the completion of the projects (PoC method). BR GAAP does not contain a definition of Contracted Sales. PSV Potencial Sales Value Launched PSV The Potencial Sales Value corresponding to the total amount that may be obtained by the Company from the sale of all the units of a real estate project launch at a certain price. CR2 PSV The Potencial Sales Value obtained or to be obtained by CR2 through the sale of all units of a given real estate project, at the pre-determined price at launch, proportional to its share in the venture. SoS Sales over supply. 15/16

16 LEGAL NOTICES The company has an arbitrage agreement with the Market Arbitrage Committee, according to the Commitment Clause in its Bylaws. Pursuant to Securities Exchange Commission Instructions 381 and 386, we report that no payment was made for services rendered by BDO RCS AUDITORES INDEPENDENTES, other than the fees for auditing of the financial statements. This presentation contains certain statements that are neither reported financial results or other historical information. They are forward-looking statements. Because these forward-looking statements are subject to risks and uncertainties, actual future results may differ materially from those expressed in or implied by the statements. Many of these risks and uncertainties relate to factors that are beyond CR2 s ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants, the actions of governmental regulators, the Company's ability to continue to obtain sufficient financing to meet its liquidity needs; and changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, inflation and consumer confidence, on a global, regional or national basis. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. CR2 does not undertake any obligation to publicly release any revisions to these forward looking statements to reflect events or circumstances after the date of this presentation. PUBLIC ACCOUNTANTS RELATIONSHIP Pursuant to Securities Exchange Commission Instructions 381/03, CR2 Empreendimentos Imobiliários informs the hiring of BDO RCS Auditores Independentes only for the due diligence of its financial statements which do not include any advisory or other types of services that would compromise the validation of the hired service with possible conflict of interests or the auditors impartiality commitments. 16/16