Quarterly information (ITR) LPS Brasil Consultoria de Imóveis S.A.

Transcription

1 Quarterly information (ITR) LPS Brasil Consultoria de Imóveis S.A. with Independent Auditor s Review Report (A free translation from Portuguese into English of Independent auditor s review report on Quarterly Information prepared in Brazilian currency in accordance with rules issued by the Brazilian Securities Commission (CVM) applicable to Quarterly Information (ITR))

2 Contents Company information Capital breakdown 3 Individual quarterly information Balance sheet Assets 4 Balance sheet Liabilities 5 Income statement 6 Statement of comprehensive income 7 Statement of cash flows Indirect method 8 Statement of changes in shareholders equity 1/1/2018 to 3/31/ /1/2017 to 3/31/ Statement of value added 11 quarterly information Balance sheet Assets 12 Balance sheet Liabilities 13 Income statement 14 Statement of comprehensive income 15 Statement of cash flows Indirect method 16 Statement of changes in shareholders equity 1/1/2018 to 3/31/ /1/2017 to 3/31/ Statement of value added 19 Management comments 20 Notes to the quarterly information 21 Other information deemed relevant by the Company 53 Opinions and declarations Independent auditor s review report on quarterly information 54 Executive Officers statement on quarterly information 56 Executive Officers statement on the independent auditor s report 57 2

3 Company information/capital breakdown Number of shares Current quarter (Units) 3/31/2018 Paid-in capital Common 125,143 Preferred 0 Total 125,143 Treasury shares Common 0 Preferred 0 Total 0 3

4 LPS Brasil - Consultoria de Imóveis S.A. Individual quarterly information / Balance sheet Assets (In thousands of Reais) Description Current quarter 3/31/2018 Prior year 12/31/2017 Total assets 247, ,440 Current assets 17,610 15,783 Cash and cash equivalents Receivables 12,838 14,045 Trade receivables Trade receivables 2,174 2,296 Allowance for doubtful accounts -2,087-2,189 Other receivables 12,751 13,938 Receivables from sale of entities 1,708 1,793 Dividends receivable 9,820 11,019 Other assets 1,223 1,126 Taxes recoverable 1,338 1,636 Current recoverable taxes 1,338 1,636 Taxes to offset 1,338 1,636 Prepaid expenses Other current assets 2,946 0 Non-current assets for sale 2,946 0 Assets classified as held for sale 2,946 0 Non-current assets 229, ,657 Long-term assets 31,859 56,054 Receivables 5,903 10,125 Other receivables 5,903 10,125 Receivables from related parties 3,505 22,778 Receivables from subsidiaries 3,505 22,778 Other non-current assets 22,451 23,151 Call options over non-controlling interest 22,451 23,151 Investments 146, ,455 Shareholdings 146, ,455 Interest in subsidiaries 146, ,455 Fixed assets 1, Property, plant and equipment in operation Property, plant and equipment in construction Intangible assets 50,995 51,239 Intangible assets 50,995 51,239 Other intangible assets 50,995 51,239 4

5 LPS Brasil - Consultoria de Imóveis S.A. Individual quarterly information / Balance sheet Liabilities (In thousands of Reais) Description Current quarter 3/31/2018 Prior year 12/31/2017 Total liabilities 247, ,440 Current liabilities 129, ,808 Social and labor liabilities Social liabilities Labor liabilities Trade payables 1,074 1,111 Domestic trade payables 1,074 1,111 Tax liabilities 7 10 Federal tax liabilities 7 10 Other federal taxes 7 10 Other liabilities 127, ,993 Other 127, ,993 Written put option for non-controlling interest 4,470 3,069 Investment acquisition to settle 123, ,886 Other payables Non-current liabilities 33,077 46,592 Deferred taxes 15,394 16,220 Deferred income tax and social contribution 15,394 16,220 Provisions 17,683 30,372 Tax, social security, labor and civil provisions 9,692 9,826 Social security and labor provisions 5,061 4,791 Civil provisions 4,631 5,035 Other provisions 7,991 20,546 Provision for losses in subsidiaries 7,991 20,546 Shareholders Equity 84,697 90,040 Paid-in capital 143, ,176 Capital reserves 8,442 8,272 Granted options 5,110 4,940 Other capital reserves 3,332 3,332 Retained earnings / Accumulated losses -68,880-63,367 Asset valuation adjustment 1,959 1,959 Business combination adjustment 1,959 1,959 5

6 LPS Brasil - Consultoria de Imóveis S.A. Individual quarterly information/ Income statement (In thousands of Reais) Description Year-to-date 1/1/2018 to 3/31/2018 Previous year 1/1/2017 to 3/31/2017 Operating expenses/income -2,801-6,851 Selling expenses General and administrative expenses -4,944-7,086 Administrative -2,156-3,712 Management compensation -1,250-1,167 Depreciation and amortization -1,538-2,207 Other operating income Other operating expenses Equity income 1, Income before financial income (expenses) and taxes -2,801-6,851 Financial income (expenses) -2,131 8,094 Financial income 13 8,102 Financial expenses -2,144-8 Income before taxes -4,932 1,243 Income tax and social contribution 826-1,302 Deferred 826-1,302 Net income from continuing operations -4, Net result from discontinued operations -1, Net income/loss from discontinued operations -1, Net income/loss in the period -5, Earnings per share - (in reais/share) Basic earnings per share Common Diluted earnings per share Common

7 LPS Brasil - Consultoria de Imóveis S.A. Individual quarterly information/ Statement of comprehensive income (In thousands of Reais) Description Year-to-date 1/1/2018 to 3/31/2018 Previous year 1/1/2017 to 3/31/2017 Revenue from sales and/or services -5, Gross profit -5,

8 LPS Brasil - Consultoria de Imóveis S.A. Individual quarterly information/ Statement of cash flows Indirect method (In thousands of Reais) Description Year-to-date 1/1/2018 to 3/31/2018 Previous year 1/1/2017 to 3/31/2017 Net cash from operating activities 2,536 2,694 Cash generated by operating activities -3,191-2,889 Loss in the period from continuing operations -4, Loss in the period from discontinued operations -1, Allowance for doubtful accounts and losses on Provision for legal risks, net ,376 Equity income Gains from investment and fixed assets Deferred income tax and social contribution ,302 Financial charges on debts and receivables 2,102-6,946 Stock option expenses Depreciation and amortization 1,538 2,207 Changes in assets and liabilities 5, Trade receivables Taxes to offset Prepaid expenses Other assets Trade payables Income tax and social contribution payable -3-6 Accrued payroll and related taxes Other liabilities 4, Other 340 6,428 Dividends received from subsidiaries 341 6,428 Interest paid -1 0 Net cash from investing activities -2,534-2,050 Net cash flow from acquired subsidiaries 0-1,693 Capital increase in subsidiaries -2, Acquisition of property, plant and equipment and intangible assets Net cash obtained from investee absorbed 0-83 Net cash provided by financing activities 0-83 Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period 48 35,931 Cash and cash equivalents at end of period 50 36,492 8

9 LPS Brasil - Consultoria de Imóveis S.A. Individual quarterly information/ Statement of changes in shareholders equity - 1/1/2018 to 3/31/2018 (In thousands of Reais) Description Paid-in capital Capital reserves, options granted and treasury shares Profit reserves Retained earnings/ Accumulated losses Other comprehensive income Shareholders equity Opening balances 143,176 8, ,367 1,959 90,040 Adjusted opening balances 143,176 8, ,367 1,959 90,040 Equity transactions with owners Recognized granted options Total comprehensive income , ,513 Net income for the period , ,513 Closing balances 143,176 8, ,880 1,959 84,697 9

10 LPS Brasil - Consultoria de Imóveis S.A. Individual quarterly information/ Statement of changes in shareholders equity - 1/1/2017 to 3/31/2017 (In thousands of Reais) Description Paid-in capital Capital reserves, options granted and treasury shares Profit reserves Retained earnings/ Accumulated losses Other comprehensive income Shareholders equity Opening balances 237,398 7, ,360 1, ,732 Adjusted opening balances 237,398 7, ,360 1, ,732 Equity transactions with owners Share issue expenses Recognized granted options Dividends Total comprehensive income Net income for the period Closing balances 237,315 8, ,320 1, ,020 10

11 LPS Brasil - Consultoria de Imóveis S.A. Individual quarterly information/ Statement of value added (In thousands of Reais) Description Year-to-date 1/1/2018 to 3/31/2018 Previous year 1/1/2017 to 3/31/2017 Revenue Other revenues Allowance for/reversal of doubtful accounts Input acquired from third parties -2,303-3,371 Materials, energy, outside services and other -2,294-2,899 Loss/recovery of values assets Gross value added -2,263-3,295 Retentions -1,538-2,207 Depreciation, amortization and depletion -1,538-2,207 Wealth created by the company -3,801-5,502 Wealth received through transfer 1,983 7,847 Equity income 1, Financial income 13 8,102 Total value added to distribute -1,818 2,345 Distribution of value added -1,818 2,345 Personnel 1,541 1,618 Direct compensation 1,420 1,501 Benefits Taxes, fees and contributions 2 1,598 Federal 0 1,595 Municipal 2 3 Lenders and lessors 2, Interest 2,144 8 Rental 8 88 Shareholders -5, Retained earnings/accumulated losses for the period -5,

12 LPS Brasil - Consultoria de Imóveis S.A. quarterly information / Balance sheet Assets (In thousands of Reais) Description Current quarter 3/31/2018 Prior year 12/31/2017 Total assets 280, ,276 Current assets 70,449 75,746 Cash and cash equivalents 31,072 39,195 Receivables 29,773 32,340 Trade receivables 18,553 21,225 Trade receivables 28,130 31,550 Allowance for doubtful accounts -9,577-10,325 Other receivables 11,220 11,115 Other assets 5,188 5,923 Receivables from sale of entities 6,032 5,192 Taxes recoverable 3,447 4,110 Current recoverable taxes 3,447 4,110 Prepaid expenses Other current assets 5,643 0 Non-current assets for sale 5,643 0 Assets classified as held for sale 5,643 0 Non-current assets 209, ,530 Long-term assets 50,470 50,095 Receivables 4,515 4,104 Trade receivables Other receivables 4,384 3,949 Other non-current assets 45,955 45,991 Call options over non-controlling interest 45,552 45,588 Receivables from related parties Investments 9,601 9,389 Shareholdings 9,601 9,389 Other shareholdings 9,601 9,389 Fixed assets 10,876 13,875 Property, plant and equipment in operation 9,731 13,055 Property, plant and equipment in construction 1, Intangible assets 138, ,171 Intangible assets 138, ,171 Intangible assets 66,952 67,366 Intangible assets from acquisitions of companies 65,167 67,087 Goodwill 6,718 6,718 12

13 LPS Brasil - Consultoria de Imóveis S.A. quarterly information/ Balance sheet Liabilities (In thousands of Reais) Description Current quarter 3/31/2018 Prior year 12/31/2017 Total liabilities 280, ,276 Current liabilities 39,740 51,286 Social and labor liabilities 5,116 8,842 Social liabilities 986 2,175 Labor liabilities 4,130 6,667 Trade payables 4,567 8,460 Domestic trade payables 4,567 8,460 Tax liabilities 3,593 7,621 Federal tax liabilities 2,666 6,374 Income tax and social contribution payable 1,350 1,168 Other federal taxes 1,316 5,206 Municipal tax liabilities 927 1,247 ISS tax payable 927 1,247 Other liabilities 23,767 26,363 Other 23,767 26,363 Dividends and interest on capital payable 1,026 2,844 Written put option over non-controlling interest 6,106 5,304 Unearned income, net 11,440 11,440 Investment acquisition to settle 1,200 1,200 Other payables 3,995 5,575 Liabilities on non-current assets for sale and discontinued 2,697 0 Liabilities on non-current assets for sale 2,697 0 Non-current liabilities 148, ,081 Other liabilities 109, ,492 Other 109, ,492 Unearned income, net 109, ,492 Deferred taxes 21,908 22,915 Deferred income tax and social contribution 21,908 22,915 Provisions 16,751 25,674 Tax, social security, labor and civil provisions 16,751 25,674 Labor and social security provisions 9,719 17,869 Civil provisions 7,032 7,805 equity 92,202 77,909 Paid-in capital 143, ,176 Capital reserves 8,442 8,272 Granted options 5,110 4,940 Other capital reserves 3,332 3,332 Retained earnings / Accumulated losses -68,880-63,367 Asset valuation adjustment 1,959 1,959 Business combination adjustment 1,959 1,959 Non-controlling interests 7,505-12,131 13

14 quarterly information/ Income statement (In thousands of Reais) LPS Brasil - Consultoria de Imóveis S.A. Description Year-to-date 1/1/2018 to 3/31/2018 Previous year 1/1/2017 to 3/31/2017 Revenue from sales and/or services 22,217 23,704 Cost of sales and/or services -4,167-5,943 Gross profit 18,050 17,761 Operating expenses/income -18,380-26,366 Selling expenses -3,664-5,914 General and administrative expenses -14,666-19,899 Administrative -8,353-12,584 Management compensation -2,167-2,285 Depreciation and amortization -4,146-5,030 Other operating income Other operating expenses ,298 Equity income Income before financial income (expenses) and taxes ,605 Financial income (expenses) ,549 Financial income ,703 Financial expenses Income before taxes ,944 Income tax and social contribution Current -1,601-1,642 Deferred charges 1, Net income from continuing operations -1,244 1,141 Net income from discontinued operations -2,759-1,781 Net income/loss from discontinued operations -2,759-1,781 net income/loss in the period -4, Attributed to owners of the Company -5, Attributed to non-controlling interests 1, Earnings per share - (in Reais/share) Basic earnings per share Common Diluted earnings per share Common

15 LPS Brasil - Consultoria de Imóveis S.A. quarterly information/ Statement of comprehensive income (In thousands of Reais) Description Year-to-date 1/1/2018 to 3/31/2018 Previous year 1/1/2017 to 3/31/2017 net income for the period -4, comprehensive income for the period -4, Attributed to owners of the Company -5, Attributed to non-controlling interests 1,

16 LPS Brasil - Consultoria de Imóveis S.A. quarterly information/ Statement of cash flows Indirect method (In thousands of Reais) Description Year-to-date 1/1/2018 to 3/31/2018 Previous year 1/1/2017 to 3/31/2017 Net cash from operating activities -4,143-2,968 Cash generated by operating activities -3,485-3,159 Loss in the period from continuing operations -1,244 1,141 Loss in the period from discontinued operations -2,759-1,781 Allowance for doubtful accounts and losses on trade receivables Provision for legal risks, net -2,774 2,569 Loss from investment and fixed assets Recognition of revenue -2,860-2,860 Income tax and social contribution recognized as profit or loss in the period 1,601 1,642 Deferred income tax and social contribution -1, Financial charges on debts and receivables 899-8,868 Stock option expenses Accrued profit sharing Depreciation and amortization 4,146 5,029 Equity income Changes in assets and liabilities 822 1,512 Trade receivables 1,291 5,198 Taxes to offset Prepaid expenses Other assets -2, Trade payables 835-2,208 Income tax and social contribution payable Payroll, provisions and related taxes Other liabilities Other -1,480-1,321 Income tax and social contribution paid -1,419-1,465 Dividends received from affiliates Interest paid Net cash from investing activities -1,354-2,468 Net cash flow from acquired subsidiaries 0-1,693 Acquisition of fixed and intangible assets -1, Net cash from financing activities -2,599-3,628 Payment of dividends, including prior years -2,993-3,638 Capital increase Share issue expenses 0-83 Increase (decrease) in cash and cash equivalents -8,096-9,064 Cash and cash equivalents at beginning of period 39,195 65,579 Cash and cash equivalents at end of period 31,099 56,515 16

17 LPS Brasil - Consultoria de Imóveis S.A. quarterly information/ Statement of changes in equity 1/1/2018 to 3/31/2018 (In thousands of Reais) Description Paid-In capital Capital reserves, options granted and treasury shares Profit reserve Retained earnings/ Accumulated losses Other comprehensive income Shareholders equity Non-controlling interest equity Opening balances 143,176 8, ,367 1,959 90,040-12,131 77,909 Adjusted opening balances 143,176 8, ,367 1,959 90,040-12,131 77,909 Equity transactions with owners ,882-2,712 Capital increases Recognized granted options Dividends ,276-3,276 Total comprehensive income , ,513 1,510-4,003 Net income for the period , ,513 1,510-4,003 Closing balances 143,176 8, ,880 1,959 84,697-13,503 71,194 17

18 LPS Brasil - Consultoria de Imóveis S.A. quarterly information/ Statement of changes in equity - 1/1/2017 to 3/31/2017 (In thousands of Reais) Description Paid-In capital Capital reserves, options granted and treasury shares Profit reserve Retained earnings/ Accumulated losses Other comprehensive income Shareholders equity Non-controlling interest equity Opening balances 237,398 7, ,360 1, ,732-4, ,813 Adjusted opening balances 237,398 7, ,360 1, ,732-4, ,813 Equity transactions with owners ,681-1,426 Capital increases Share issue expenses Recognized granted options Dividends ,472-1,465 Capital reduction Total comprehensive income Net income for the period Closing balances 237,315 8, ,320 1, ,020-6, ,747 18

19 LPS Brasil Consultoria de Imóveis S.A. quarterly information/ Statement of value added (In thousands of Reais) Description Year-to-date 1/1/2018 to 3/31/2018 Previous year 1/1/2017 to 3/31/2017 Revenue 24,333 26,378 Sales of goods, products and services 24,473 26,294 Other revenues Allowance for/reversal of doubtful accounts Input acquired from third parties -10,336-15,688 Cost of sales and services -4,167-5,943 Materials, energy, outside services and other -5,851-8,978 Loss/recovery of assets Gross value added 13,997 10,690 Retentions -4,146-5,029 Depreciation, amortization and depletion -4,146-5,029 Wealth created by the company 9,851 5,661 Wealth received through transfer ,101 Equity income Financial income ,703 Total value added to distribute 10,722 16,762 Distribution of value added 10,722 16,762 Personnel 7,552 9,902 Direct compensation 6,216 8,413 Benefits 973 1,050 Government Severance Pay Fund (FGTS) Taxes, fees and contributions 4,354 5,375 Federal 3,305 4,222 Municipal 1,049 1,153 Lenders and lessors 2,819 2,125 Interest Rental 1,840 1,971 Shareholders -4, Retained earnings/accumulated losses for the period -5, Non-controlling interests in retained earnings 1,

20 Management comments LPS Brasil (B3 S.A. LPSB3), a company providing integrated brokerage, consulting and mortgage solutions in Brazil s real estate sector, announces its results for the first quarter of The financial and operating information is presented in accordance with generally accepted accounting practices in Brazil and the managerial data provided by LPS Brasil Consultoria de Imóveis S.A. and its subsidiaries. 1Q18 HIGHLIGHTS Brokerage Own Operations PSV brokered by own operations in 1Q18 was up 7.5% from the same period in 2017, amounting to R$853 million. This was the first growth in brokerage operations after the market contraction that began in Brokerage - Franchise In the franchise segment, brokerage operations billed in the period grew 83% over 1Q17, reflecting the successful strategy of segment expansion. Costs and Expenses Costs and expenses of the Company decreased 33% compared to the same period in 2017 and stood at R$18.4 million in the period, the lowest since 2007, the first year after the Company went public. EBITDA and Net income of controlling shareholders Continuing Operations In the first quarter of 2018, the Company s adjusted EBITDA was R$3.8 million, up 207% from 1Q17.Under the same comparison basis, net income attributable to controlling shareholders before adjusted IFRS increased 49% in the period, amounting to -R$2.5 million in 1Q18. EBITDA Reconciliation ('000 R$) 1Q18 1Q17 Chg. % Net income (4,003) (640) -525% Income and social contribution taxes % Net financial result 320 (10,549) 103% Depreciation and amortization 4,146 5,030-18% EBITDA 1,057 (5,356) 120% EBITDA Margin 4.8% -20.4% 25.2 pp (Non-recurring) effects 2,759 1,781 55% Adjusted EBITDA 1 3,816 (3,575) 207% Ajusted EBITDA Margin % -13.6% 30.8 pp 1. Non-recurring effects from the result of Discontinued operations - subsidiary LPS Patrimóvel. 2. EBITDA is not an accounting measure and does not represent the cash flow for the reported periods and, therefore, should not be used as an alternative to cash flows as a measure of liquidity. 20

21 Notes to the quarterly financial information (In thousands of Brazilian reais - R$) 1 Operations LPS Brasil Consultoria de Imóveis S.A. ( Company or LPS Brasil ), headquartered at Rua Estados Unidos, São Paulo - SP. The Company s individual and consolidated quarterly information for the fiscal year ended cover the Company and its subsidiaries (jointly referred to as Group and individually as Group entities ). To meet its corporate objectives, the Group s purpose is as follows: (i) providing brokerage services for the sale and purchase of properties, especially in launches in Greater São Paulo; (ii) real estate consulting; (iii) the holding of equity interests in other companies; and (iv) providing bank correspondent services. The Company s subsidiaries are headquartered in several regions of Brazil, developing activities in the provision of brokerage services for the sale and purchase of third-party properties and properties in land subdivisions, consulting services, technical real estate advisory services, franchises, correspondent bank and other related services. The Company started operating under a new model in the secondary market (Note 25) as a service provider through associated real estate brokers, some of which are companies in which the Company divested its interest and were converted to franchises. The Company also holds an interest in the joint venture Olímpia Promoção e Serviços S.A. ( Olímpia ), which operates and promotes financial products services in the real estate market. The quarterly financial information of the joint venture are not consolidated. LPS Brasil s shares are traded on B3 S.A. Brasil, Bolsa, Balcão, under the ticker LPSB3. 21

22 2 Group entities, acquisition, sale, assignment and transfer of membership interests, termination and merger of subsidiaries Interest - % S ubsidiaries Apoio Serviços Documentais S.A EBC - Soluções Imobiliarias Ltda Itaplan Brasil Consultoria de Imóveis Ltda LIL - Intermediação Imobiliária Ltda LPS Administração de Locações Ltda LPS Bahia - Consultoria de Imóveis Ltda LPS Brasília - Consultoria de Imóveis Ltda LPS Campinas - Consultoria de Imóveis Ltda LPS Eduardo Consultoria de Imóveis S.A LPS Espírito Santo - Consultoria de Imóveis Ltda LPS Espírito Santo - Soluções Imob. e Participações Ltda. (iv) LPS Fortaleza - Consultoria de Imóveis Ltda LPS ONLINE Consultoria de Imóveis Ltda LPS Patrimóvel Consultoria de Imóveis S.A. (i) LPS Piccoloto Consultoria de Imóveis S.A. (ii) LPS Promoção de Consórcios Ltda LPS Raul Fulgêncio Consultoria de Imóveis S.A LPS Rio de Janeiro - Consultoria de Imoveis Ltda. (iii) LPS São Paulo Consultoria de Imóveis Ltda LPS Soluções Imobiliárias e Participações Ltda LPS Sul Consultoria de Imóveis Ltda Pronto Ducati Consultoria de Imóveis Ltda Pronto Erwin Maack Consultoria de Imóveis S.A Tha Pronto Consultoria de Imóveis S.A (i) LPS Patrimóvel was classified as Asset held for sale. (ii) Affiliate of LPS Campinas - Consultoria de Imóveis S.A. (iii) Interest held by LPS Patrimóvel Consultoria de Imóveis Ltda. (iv) LPS Espírito Santo Soluções Imobiliárias started its operations in

23 3 Basis for preparation of the quarterly information The individual and consolidated financial statements were prepared in accordance with Technical Pronouncement CPC 21(R1) - Interim Financial Reporting and with international standard IAS 34 Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), and presented in accordance with the rules issued by the Securities and Exchange Commission of Brazil ( CVM ). The main accounting policies adopted in the preparation of these individual and consolidated quarterly financial statements, contained in the Quarterly Information Form ITR ( quarterly information ), are being applied consistently throughout all reporting periods. The Company declares that any significant judgments, accounting estimates and assumptions, as well as key accounting practices, adopted in the preparation and presentation of these quarterly statements, are the same as those disclosed in Notes 3 and 4 to the individual and consolidated annual financial statements for the fiscal year ended December 31, 2017, and remain valid, except for the new accounting policies: Non-current assets held for sale of Discontinued operations (Note 10) and policies related to the adoption of IFRS 15/CPC 47 Revenue from Contracts with Customers and IFRS 9/CPC 48 Financial instruments, which are described below. These respective quarterly financial statements should be read jointly with said individual and consolidated annual financial statements. Based on the judgment and assumptions adopted by Management regarding the relevance and changes to be reported in the Notes, this quarterly information includes selected Notes and does not include all Notes presented in the annual financial statements, as permitted by CVM Official Letter 03/2011. The quarterly information was prepared in the regular course of business and assuming the continuity of the Company s operations. When preparing the quarterly statements, Management assesses the Company s capacity to continue to operate. The quarterly information was approved by the Board of Directors of the Company and its filing was authorized on May 10, a. Changes to IFRS and the new interpretations that must be applied as of January 1, 2018 The Company adopted CPC 47 / IFRS 15 Revenue from Contracts with Customers and CPC 48 /IFRS 9 Financial Instruments as of January 1, 2018.The adoption of the new pronouncements did not significantly impact the individual and consolidated financial statements of December 31, 2017.Below are the main topics analyzed in the Company and its subsidiaries: The measurement methods adopted to prepare the individual and consolidated quarterly financial information were the same as those adopted for the financial statements of December 31, 2017.Among the policies presented on December 31, 2017, the following policies underwent changes due to the new standards: 23

24 Recognition of income CPC 47 / IFRS 15 establishes a comprehensive structure to determine if, when and how much income will be recognized. It replaces CPC 30 / IAS 18 Revenues and CPC 17 / IAS 11 Construction Contracts and related interpretations. a) Real estate brokerage services The Group s entities formalize contracts with customers and recognize the revenue from services rendered measured at the fair value of the consideration received or receivable. Under this criterion, revenue is recognized after the owner s or developer s acceptance in property purchase, sale or rental agreements. Revenues earned are presented net and recognized as profit or loss when the economic benefits were probably earned by the Company and their amounts could be reliably measured. b) Franchises - Royalties Among its segments of operation (Note 26), the Company has franchise agreements with franchisees whose income is subdivided into the following items: Initial Fee The value of the transaction is fixed and defined under a contract; the fee is not returned in case of termination of contract, and this amount is recognized at the time the contract is signed. Variable Fee The periodic fee is defined by a contractual percentage that considers the real estate transactions of the franchisee in a given period. This revenue is recognized when the real estate brokerage or lease brokerage agreement is entered into between the parties. Fixed fees A fee is established in the contract as the minimum remuneration to be paid periodically by the franchisee to the Company if the variable fee does not exceed the minimum amount required under the agreement. In addition, the franchise agreement envisages a monthly fiduciary management fee as a prefixed amount. These revenues are recognized monthly on a straight-line basis, according to the values contracted. c) Financing promotion It refers to revenue from promotion and offer of financial products and services in the real estate market, to be recognized after the agreement for the acquisition of financial products and services is entered into between the parties. Revenue to be earned is recognized on a straight-line basis, depending on the term of the contract. Financial instruments CPC 48 / IFRS 9 establishes requirements for recognition and measurement of financial assets, financial liabilities and some contracts for purchase or sale of non-financial items. This standard replaces CPC 38 / IAS 39 Financial Instruments: Recognition and Measurement. The adoption of CPC 48 / IFRS 9 did not significantly impact the Company's accounting policies related to financial liabilities and derivative instruments, or the classification and measurement of financial assets. 24

25 Financial instruments are measured at amortized cost or fair value and classified into one of the three categories: Financial instruments measured at amortized cost; Financial instruments measured at fair value through comprehensive profit or loss; and Financial instruments measured at fair value through profit or loss. Subsequent measurement Their subsequent measurement occurs every balance sheet date according to the rules established for each type of financial assets of liabilities classification. a) Financial assets These are classified into the categories below according to the purpose for which they were acquired or issued: i) Financial assets at amortized cost: measured in a business model whose purpose is to receive contractual cash flows which, under the contractual terms, solely originate payments and interest on the principal amount. ii) iii) Financial assets at fair value through other comprehensive profit or loss: measured in a business model whose purpose is achieved through either receipt of contractual cash flows or sale of financial assets. Financial assets at fair value through profit or loss: any financial assets not classified into one of the two categories above must be measured and recognized at fair value through profit or loss. Financial assets held for trading and managed based on fair value are also included in this category. b) Financial liabilities The entity must classify all financial liabilities as measured at amortized cost, except for: (a) financial liabilities at fair value through profit or loss,(b) financial liabilities that arise when the transfer of the financial asset is not eligible for non-recognition or when the ongoing engagement approach is applicable,(c) financial guarantee contract, (d) commitment to grant loan at an interest rate below the market rate, (e) contingent consideration recognized by the buyer in a business combination to which CPC 15 must be applied. The Company evaluated the classification of its financial instruments on January 1, 2018 and reclassified them as required by IFRS 9/CPC 48; financial liabilities did not need to be reclassified. The changes in financial assets are as follows: 25

26 Loans and receivables Fair value through result Parent Company 12/31/17 - IAS 39 / CPC 38 1/1/18 - IFRS 19 / CPC 48 Amortized cost Fair value through result Financial assets: Trade receivables Financial investments Call option for non-controlling shareholders (Note 7) - 23,151-23, , ,159 Loans and receivables Fair value through result 12/31/17 - IAS 39 / CPC 38 1/1/18 - IFRS 19 / CPC 48 Amortized cost Fair value through result Financial assets: Trade receivables 21,380-21,380 - Financial investments - 34,974-34,974 Call option for non-controlling shareholders (Note 7) - 45,588-45,588 21,380 80,562 21,380 80,562 b. New standards and interpretations not yet adopted The standards and interpretations issued but not yet in force until the date of disclosure of the quarterly financial information of the Group are presented below. The Group intends to adopt these standards when they come into force. Pronouncement Description Valid for CPC 06(R2) Lease Refers to the definition and guidance of the lease agreement established in IFRS 16 / IAS 27 Fiscal years starting on January 1, The Company is assessing the potential effects of adopting this accounting standard and does not expect the amendments to have a significant impact on the consolidated financial statements. 4 Cash and cash equivalents 26

27 Parent Company Cash and banks ,902 4,221 Financial investments: Bank Deposit Certificates - CDBs ,170 34, ,072 39,195 The financial investments of the Company and its subsidiaries have daily liquidity and the balances are equivalent to the market value, yielding from 70% to 100% of the Overnight Interbank Deposit Rate ( CDI ). For purposes of statement of cash flow consolidated, the balance of cash and cash equivalents is composed of the following: Cash and banks 2,902 4,221 Financial investments: Bank Deposit Certificates - CDBs 28,170 34,974 Cash and cash equivalents attributable to Discontinued operations 27-31,099 39,195 5 Trade accounts receivable Parent Company Current: Trade accounts receivable 2,174 2,296 28,143 31,564 Present value adjustments - - (13) (14) Allowance for doubtful accounts (2,087) (2,189) (9,577) (10,325) ,553 21,225 Non-current: Trade accounts receivable Present value adjustments - - (6) (8) The breakdown of accounts receivable by maturity date is as follows: 27

28 Parent Company Falling due: Up to 60 days ,428 17,187 From 61 to 90 days From 91 to 180 days From 181 to 365 days - 8 1, Over 365 days Overdue: Up to 60 days ,130 1,736 From 61 to 90 days From 91 to 180 days From 181 to 365 days ,434 Over 365 days 2,039 2,115 8,385 8,434 2,174 2,296 28,280 31,727 To determine the constitution of the allowance for doubtful accounts on accounts receivable, the Company and its subsidiaries take into consideration the quality of credit through the capacity and timely payments by clients and, accordingly, receivables overdue more than 180 days are subject to provisioning, along with any receivables due or overdue of the respective client. The Company and its subsidiaries do not have guarantee on such receivables and believe the allowance constituted is sufficient to cover any losses. Breakdown of estimated losses on allowance for doubtful accounts: Parent Company 28 Balance on December 31, 2017 (2,189) (10,325) Reversals Final write-offs Additions (39) (414) Discontinued operations Balance on (2,087) (9,577) Breakdown per maturity of trade accounts receivable included in the estimated losses on allowance for doubtful accounts: Parent Company Falling due: - (8) (24) (46) Overdue: Up to 60 days (5) - (49) (158) From 61 to 90 days - - (24) (53) From 91 to 180 days (1) - (252) (200) From 181 to 365 days (42) (66) (843) (1,434) Over 365 days (2,039) (2,115) (8,385) (8,434) (2,087) (2,189) (9,577) (10,325)

29 6 Property and equipment Property and equipment comprise the following: Avg. annual deprec. rate - % Cum. Deprec. Parent Company Net Cost Net Cost Cum. Deprec. Description Cost Cost Property and equipment: Leasehold improvements 20 6,392 (6,153) ,129 (21,759) 4,370 5,394 IT equipment 20 4,594 (4,501) ,399 (10,893) 1,506 2,199 Furniture and fixtures (547) ,724 (6,737) 2,987 3,875 Other property and equipment (551) ,256 (3,388) 868 1,587 Construction in progress ,145-1, , ,876 13,875 Net Cost Net Cost Below is the breakdown of changes in property and equipment: Parent Company Balance at ,875 Additions Write-offs (9) (24) Depreciation (31) (950) Discontinued operations - (2,396) Balance at ,111 10,876 Based on Management s evaluation, there are no indications of depreciation of property, plant and equipment that require impairment. 7 Investments in subsidiaries and affiliates Below, the balance of investment: 29

30 Parent Company Investment in subsidiaries (b) 79,281 80, Investment in affiliates - - 9,601 9,389 Intangible assets in business combination (Note 9) 42,592 43, Transactions with non-controlling shareholders (a) 17,421 8, Goodwill (Note 8) 6,718 6, , ,455 9,601 9,389 (a) Corresponds basically to the non-controlling interest in the initial Written Put. (b) Below, the breakdown of investments in subsidiaries, stated in the individual financial statements: Parent Company Capital Increase Equity income (loss) Dividends received Provision for losses in subsidiaries (i) Subsidiaries: Apoio Serviços EBC 3, ,127 Itaplan Imóveis (553) LIL (69) LPS Adm.de Locações 1,331 - (91) - - 1,240 LPS Bahia 1,629 - (100) - - 1,529 LPS Brasília (505) LPS Campinas 20,967-1,134 (249) - 21,852 LPS Eduardo LPS Espírito Santo (102) LPS Fortaleza - - (66) LPS Online 2,836-1,749 (3,016) - 1,569 LPS Patrimóvel - - (1,407) - 1,407 - LPS Raul Fugêncio ,537 LPS São Paulo 45,344 - (1,463) ,881 LPS Soluções Imobiliárias (642) LPS Sul - 1, (754) 403 Pronto Ducati (119) - (485) - Pronto Erwin Thá Pronto (336) 43 - Total 80,104 2, (4,345) ,281 (i) Refers to changes in the investments in the subsidiaries LPS Brasília, LPS Fortaleza, LPS Patrimóvel, LPS Soluções, LPS Sul, Pronto Ducati and Thá Pronto, which currently have negative equity, recorded under provision for losses in subsidiaries. On, the provision amounted to R$21,213 (R$20,546 on December 31, 2017). 30

31 (c) Financial information on subsidiaries: Assets Liabilities Shareholders' equity Noncontrolling interest in equity Net income (loss) in the period Apoio Serviços EBC Consultoria 17,719 13,591 4,128-1,066 Itaplan Brasil 1, (553) LIL - Interm. Imob. 1,991 1, (69) LPS Administração 1, ,239 - (91) LPS Bahia 1, ,530 - (100) LPS Brasília 2,329 3,860 (1,531) (750) (991) LPS Campinas 33,139 3,639 29,500 7,649 1,531 LPS Eduardo 2,551 1,096 1, LPS Espírito Santo 1, , LPS Espírito Santo - Soluções LPS Fortaleza 2,822 4,469 (1,647) (659) 526 LPS Online Consultoria 124, ,896 2, ,423 LPS Raul Fulgêncio 4,523 1,510 3,013 1,476 1,505 LPS São Paulo 50,192 6,307 43,885 - (1,463) LPS Soluções Imobiliárias 3,247 7,872 (4,625) (729) 411 LPS Sul 2,990 2, Pronto Ducati 2,449 4,731 (2,282) - (119) Pronto Erwin Maack 1, Thá Pronto 1,402 1,474 (72) (29) Intangible by goodwill on acquisitions Goodwill was allocated to the following cash generating units: : LPS Fortaleza 2,419 2,419 LPS Eduardo 4,299 4,299 6,718 6,718 31

32 9 Other intangible assets Parent Company Avg. annual amortization rate - % Cost Amortization Net Net Acquired separately: "Lopes" trademark (ii) - 44,749-44,749 44,749 Exploration right 5 3,870 (1,646) 2,224 2,269 Non-competition ,657 (2,333) 2,324 2,421 Software 20 10,702 (9,004) 1,698 1,800 50,995 51,239 Identified in business combinations (i): Non-competition agreement ,771 (88,891) 8,880 9,709 Client portfolio ,626 (14,770) 16,856 17,026 Trademark ,587 (7,461) 10,126 10,224 Exploration right 5 15,672 (9,245) 6,427 6,587 Sales force 5 2,982 (2,679) ,592 43,855 93,587 95, Avg. annual amortization rate - % Cost Amortization Net Net Acquired separately: "Lopes" trademark (ii) - 44,749-44,749 44,749 Other trademarks ,137 (21) 1,116 1,120 Exploration right 5 6,793 (2,098) 4,695 4,776 Non-competition ,178 (2,756) 5,422 5,625 Client portfolio (10) Software 20 37,460 (27,793) 9,667 10,450 Software under development ,952 67,366 Identified in business combinations: Non-competition agreement ,500 (150,742) 14,758 16,044 Client portfolio ,496 (26,971) 25,525 25,776 Exploration right 5 32,207 (23,091) 9,116 9,342 Sales force 5 4,972 (4,467) Trademark ,977 (13,714) 15,263 15,410 65,167 67, , ,453 (i) Intangible assets in the parent company are recorded under investments in subsidiaries, see Note 7. 32

33 (ii) In economic valuations that determine the fair value of the acquired Lopes trademark, in the amount of R$44,749, cash flows of this intangible asset were considered until perpetuity and there was no foreseeable limit in relation to the period the trademark will generate net cash inflows, thus, this intangible asset is considered to have indefinite useful life. The Company assesses the recovery of the book value of assets on an annual basis or when there is any change indicator, and recognizes any reduction or recovery, as applicable, in the income statement for the year. The recoverability analysis of the respective Brand considered the market cap and liquidity of shares to corroborate that no evidence of impairment exists on the respective intangible asset. Below is the breakdown of changes in intangible assets: Parent Company Balance at , ,453 Additions Write-offs - - Amortization (1,507) (3,196) Discontinued operations - (121) Balance at , ,119 Intangible assets acquired separately represent rights related to the Lopes brand, acquired by the Company and without a defined useful life. The assets non-competition agreements, client portfolio and exploration right were acquired from the companies divested, along with software rights, substantially SAP and LopesNet, both of which have a defined useful life. Intangible assets identified in business combination refer to the period of non-competition, client portfolio, exploration right, sales rights and brand and were identified at the moment of acquisition of control of investees with defined useful life and monthly amortization. 10 Non-current assets held for sale - Discontinued operations The Group considers that assets are held for sale when the following criteria are met: (i) the asset must be available for immediate sale in its present conditions; (ii) sale of the asset must be highly probable; (iii) the hierarchical management level must be committed to the plan of selling the asset; In addition, a sale group is qualified as discontinued operation if it represents an entity component that was sold or classified as held for sale; and If it represents an important and separate business line or geographical area of operations; If it is part of a single coordinated plan to sell an important business line or geographical area of operations; If it is a subsidiary acquired exclusively to be sold. 33

34 On March 22, 2018, the Company Management approved a plan for the sale of its total interest (51%) in the subsidiary LPS Patrimóvel - Consultoria de Imoveis S.A. ("Patrimóvel"). Patrimóvel is a subsidiary that operates directly in the state of Rio de Janeiro and focuses on the provision of brokerage services in the sale of new and second-hand properties. The Company is actively working to identify buyers and to analyze proposals in order to maximize its result in the sale. The expectation is that this investment is sold within the next 12 months. The Company measured its discontinued operations, considered the net book value and compared it to the fair value of the investment, net of selling expenses, and recorded the lowest amount between the two. In addition, to disclose its individual and consolidated quarterly financial information, the Company presented below the assets, liabilities, results and cash flow transactions of the respective subsidiary to support the presentation of discontinued operations separately from continuing operations in the results of the year, as well as from the net assets directly associated with discontinued operations in the balance sheet. Note that, to present the net income from the period, the Company considered the restatement of the corresponding amounts on March 31, The discontinued operations are excluded from the result of continuing operations and are presented as a single amount in the result, after taxes, after discontinued operations in the statement of income. The result from LPS Patrimóvel in the period is as follows: Net income 1,237 2,499 Costs of services provided (873) (1,061) Gross profit 364 1,438 Operating expenses (3,214) (3,754) Financial result 91 (75) Loss from discontinued operations before taxes (2,759) (2,391) Income tax and social contribution on discontinued operations Loss from discontinued operations for the period (2,759) (1,781) The main classes of assets and liabilities of LPS Patrimóvel classified as held for sale in the periods are: 34

35 Assets Cash and cash equivalents 27 Receivables from clients 1,168 Taxes to offset 483 Property, plant and equipment 2,064 Intangible assets 159 Other assets 1,742 Assets classified as maintained for sale 5,643 Liabilities Trade payables 4,728 Social and labor obligations 4,052 Taxes and contributions payable 4,254 Dividends payable 2,101 Provision for legal risks 6,149 Other liabilities 2,420 Equity (21,007) Obligations directly associated with assets classified as maintained for sale 2,697 Net asset directly associated with the group of assets maintained for sale 2,946 The net cash flows incurred by LPS Patrimóvel are: Operating activities (59) (62) Investing activities 8 2,737 Financing activities - (2,101) Net cash generated (used) (51)

36 11 Related parties a. Breakdown of balances and transactions with related parties Parent Company Current assets: Dividends receivable (Note 11.d) 9,820 11, Non-current assets: Call Options (Note 11.b) 22,451 23,151 45,552 45,588 Receivables from related parties (Note 11.c) 3,505 22, Current liabilities: Written Put (Note 11.b) 4,470 3,069 6,106 5,304 Investment acquisition payable (Note 11.c) 123, ,886 1,200 1,200 Dividends payable (Note 11.d) - - 1,026 2,844 Parent Company Operating expenses and Financial result Rentals (8) (88) (510) (349) Financial result - Financial Instruments - (Note 18) 2,102 6, ,847 b. Breakdown of balances of Call Options and Written Put Parent Company Non-current assets Call Options LPS Brasília 3,481 3,481 3,481 3,481 LPS Eduardo 7,061 6,640 7,061 6,640 LPS Espírito Santo 707 1, ,426 LPS Fortaleza 6,000 6,000 6,000 6,000 LPS Piccoloto ,101 22,437 Pronto Erwin 4,603 5,005 4,603 5,005 Thá Pronto Total 22,451 23,151 45,552 45,588 Parent Company Current liabilities Written Put LPS Eduardo LPS Espírito Santo LPS Fortaleza 1,522 1,098 1,522 1,098 LPS Piccoloto - - 1,636 2,235 LPS Raul Fugêncio 1, , Pronto Erwin Total 4,470 3,069 6,106 5,304 The Company has call options of interests held by non-controlling shareholders of its subsidiaries ( Call Option ), which will only be realized when the Company exercises its right, within no more than 60 days from the exercise date. The amount payable from the exercise of the option is linked to multiples of the results in the last 12 months prior to the exercise of the option. 36

37 Additionally, the Company has the commitment to buy interest held by non-controlling shareholders from its subsidiaries ( Written Put ), whose amounts are estimated based on previously contracted calculations. The Written Put amounts only become enforceable when non-controlling shareholders exercise their option, then the Company will have a 60- day term to pay the amount due. All subsidiaries of the Company have already vested the call option and written put option but chose not to exercise it at this moment. There is no deadline for the exercise, which may occur at any time chosen by the interested party. c. Breakdown of the balances of Receivables from related parties and Investment acquisition payable Parent Company Non-current assets Receivables from related parties LPS Espírito Santo (iii) LPS Fortaleza (i) 3,102 3, LPS Patrimóvel - 19, Total 3,505 22, Parent Company Current liabilities Investment acquisitions payable EBC - Soluções 1, LPS Bahia 1,154 1, LPS Online (ii) 114, , LPS São Paulo 5, Pronto Erwin 1,200 1,200 1,200 1,200 Total 123, ,886 1,200 1,200 (i) (ii) (iii) It refers to balances regarding Asset Transfer Agreements related to initial investments in Property and Equipment, executed between the Company and its subsidiaries. R$114,499 balance payable refers to the acquisition of interest in LPS Patrimóvel on November 14, 2008 from the subsidiary LPS ONLINE, without monetary adjustment. The amount of R$403 refers to not adjusted loan and with indeterminate maturity with LPS Espírito Santo partners. 37

38 d. Breakdown of dividends receivable and dividends payable Parent Company Current assets Dividends receivable LPS Eduardo LPS Raul Fulgêncio Pronto Ducatti 2,643 2,643 Pronto Erwin Tha Pronto LPS Patrimóvel - 2,187 LPS Campinas LPS Soluções 5,112 4,471 Total dividends receivable 9,820 11,019 Current liabilities Dividends payable LPS Eduardo LPS Raul Fulgêncio Pronto Erwin Tha Pronto LPS Patrimóvel - 1,818 Total dividends payable 1,026 2,844 e. Management compensation The Annual and Extraordinary Shareholders Meeting has not yet approved the limit for global compensation of the managers of the Company for fiscal year For 2017, the amount approved was R$16,000, as follows: 2017 Fixed Variable Total Board of Directors Statutory Officers 4,287 11,162 15,449 4,837 11,163 16,000 The amounts recorded as Management fees and the amounts related to variable compensation are recorded in the Management Compensation item. The subsidiaries do not have an overall compensation limit for managers and are not included in the limits approved at the Annual and Extraordinary Shareholders Meeting. 38

39 12 Unearned income, net a. Partnership agreement with Itaú Holding On December 28, 2007, the subsidiary LPS ONLINE and Itaú Holding entered into a partnership agreement to organize a non-financial company to promote and offer financial products and services in the real estate market. This company will have as one of its main approaches a broader access to loans in the secondary real estate market (used properties, resale and properties recently built). As a result of the partnership, Itaú Holding advanced the amount of R$290,000, resulting from the assignment and transfer of the right to promote, offer and negotiate, exclusively, the financial products and financial real estate services to clients for a 20-year term. The amounts to appropriate on are R$121,072 (R$11,440 in Current Liabilities and R$109,632 in Non-current Liabilities) and on December 31, 2017 was R$123,932 (R$11,440 in Current Liabilities and R$112,492 in Non-current Liabilities), respectively. In addition, the partnership agreement provides for five additional payments totaling R$220,000 adjusted by CDI (interbank deposit rate) variation, between the signature of the agreement and effective payments. These additional payments are linked to the achievement of each performance target, corresponding to certain financial margins that shall be reached by the Company and its subsidiaries in five calculation periods over a 10-year period. The first payment was received in 2011 in the amount of R$22,000 and the second payment in the amount of R$ was received on March 11, 2014 due to the more challenging economic scenario and its impacts on mortgage loan indicators, the Company does not consider as significant the possibility of meeting the next targets in subsequent years. 13 Provision for legal risks a. Lawsuits classified as risk of probable loss The Company and its subsidiaries are parties in labor and civil lawsuits, which are undergoing administrative defense or legal proceedings. Below is the breakdown of the accrued amounts according to the nature of the respective lawsuits: Parent Company Labor (i) 5,061 4,791 9,719 17,869 Civil (ii) 4,631 5,035 7,032 7,805 9,692 9,826 16,751 25,674 Parent Company Balance on ,826 25,674 Net provisions (reversals) (134) (2,774) Discontinued operations - (6,149) Balance on ,692 16,751 (i) On, the Company and its subsidiaries were parties to 48 (65 on December 31, 2017) labor claims filed by former employees and third parties, whose claims mainly comprise payment of severance pay and overtime. (ii) On March 31, 2017, the Company and its subsidiaries were parties to 1,277 (1,363 on December 39

40 31, 2017) lawsuits and civil claims, within the scope of courts of general jurisdiction and small claims court, mainly filed by consumers, whose claims mainly comprise brokerage fee refund, payments of advisory services (SATI), contract termination, and indemnifications in general. Based on the ruling by the Superior Court of Justice (STJ) on lawsuits related to SATI charges, our legal counsel reviewed the lawsuits and updated the classification of losses from possible to probable. b. Lawsuits classified as risk of possible loss The Company and its subsidiaries are party to other labor, civil and fiscal claims with loss classified as possible by Management and based on its external legal counsels opinion. On March 31, 2018, these lawsuits amounted to R$32,856 for labor, R$157,864 for civil and R$622,958 for tax (i), (R$40,065, R$177,079 and R$570,930 on December 31, 2017, respectively). (i) Tax suits: The amounts relating to tax suits mainly refer to received deficiency notices from Brazil s Federal Revenue Service ( RFB ) requiring the collection of allegedly due amounts related to social security contributions and withholding income tax levied on the compensation received by individual taxpayers, which are independent agents (individual taxpayers), to which a reply was filed in the administrative sphere. However, the Company s Management, based on the opinion of its legal counsel, believes that the deficiency notices are groundless and classifies the likelihood of loss as possible; therefore, it did not record a provision for losses on and December 31, Shareholders equity a. Capital stock The Company s capital stock is represented by non-par, registered, book-entry common shares. Under the Company s Bylaws, by decision of the Board of Directors, the capital stock can be increased up to the limit of authorized capital, without the need to amend the bylaws, by issuing 40,000,000 common shares. The Company s shareholders must approve any capital increase exceeding the authorized limit in a Shareholders Meeting. Number of shares Capital Stock R$ Balance on ,143, ,176 Balance on ,143, ,176 b. Capital reserve It is recorded by the corresponding entry of Stock Option Plan expenses according to the respective plan, as described in Note 21. c. Legal reserve The legal reserve is established by appropriating 5% of the adjusted net income determined at the end of each year, until it reaches the limits set by the Brazilian Corporation Laws. d. Profit reserve The profit reserve corresponds to the profit remaining after its allocation to the legal reserve and the proposal for dividend distribution. 40

41 e. Asset valuation adjustment Balance of asset valuation adjustment is composed of transactions with shareholders deriving from the effects of changes in Company s interest in existing subsidiaries. On, the amount is R$1,959. f. Dividends and interest on equity Shareholders are entitled to 25% of the adjusted net income for the year, adjusted according to Article 202 of Law No. 6,404/ Non-controlling interest Balance on (12,131) Interest in profit for the period 2,862 Distribution of dividends (3,276) Capital increase 394 Discontinued operations 19,656 Balance on , Net operating revenue Gross operating revenue 24,473 26,481 (-) Taxes levied on services (2,256) (2,590) (-) Cancellation and rebates - (187) Total 22,217 23,704 41

42 17 Other operating revenues (expenses), net Other operating revenue: Parent Company Gains from divestment/investment acquisition Other revenue Other operating expenses: Loss from divestment and sale of property, plant and equipment (9) (696) (318) (1,002) Tax on other revenue (7) (60) (37) (73) Other expenses (67) (164) (4) (223) (83) (920) (359) (1,298) Total (17) (620) (262) (951) 18 Financial result Parent Company Financial income: Income from financial investments - 1, ,674 Present value adjustment on trade receivables Charges on accounts receivable Written Put (i) - 1,217-2,583 Call Option (i) - 5,683-6,221 Earn Out (i) Other financial income , ,703 Financial expenses: Discounts granted (2) Written Put (i) (1,402) - (802) - Call Option (i) (700) - (36) - Banking expenses and charges (33) (8) (125) (148) Other financial expenses (9) - (16) (4) (2,144) (8) (979) (154) Total (2,131) 8,094 (320) 10,549 (i) It refers to financial instruments gains and losses, see Note 11(a). 42

43 19 Expenses by nature Parent Company Personnel (1,541) (1,618) (7,553) (9,902) Depreciation and amortization (1,538) (2,207) (4,146) (5,030) Contracted services (355) (724) (4,688) (4,660) Rental and condominium expenses (8) (88) (1,706) (1,972) Other expenses (1,312) (2,247) (4,404) (10,192) Total (4,754) (6,884) (22,497) (31,756) Classified as: Cost of services provided - - (4,167) (5,943) Selling (3,664) (5,914) General and administrative (2,156) (3,712) (8,353) (12,584) Management compensation (1,250) (1,167) (2,167) (2,285) Depreciation and amortization (1,538) (2,207) (4,146) (5,030) Total (4,754) (6,884) (22,497) (31,756) 20 Income and social contribution taxes Parent Company Company levied by taxable income: (i) Accounting profit (loss) before income and social contribution taxes Expected expense from income and social contribution taxes at nominal rates (34%) (4,932) 1,243 1,677 (423) Adjustments to obtain the effective rate from permanent differences: Equity income Provision for the stock option plan (58) (112) Reversal of provision for allowance for doubtful accounts (710) - Effect of business combination (318) (1,400) Other exclusions/additions (435) 411 Income and social contribution tax benefits (expenses), taxable income basis 826 (1,302) Income and social contribution tax expenses 826 (1,302) Income and social contribution taxes - current - - Income and social contribution taxes - deferred 826 (1,302) 43

44 Companies levied by presumed profit: Service gross revenue 11,239 10,791 Canceled sales and write-offs of accounts receivable (346) (72) Net service revenues 10,893 10,719 Presumed profit (32%) 3,486 3,430 Other operating and financial income (ii) Calculation basis of income and social contribution taxes 3,690 3,810 IRPJ - 15% nominal rate (554) (572) IRPJ - 10% surtax (321) (316) CSLL - 9% nominal rate (332) (343) Income and social contribution tax expenses, presumed profit basis (1,207) (1,231) Companies levied by taxable income: (i) Accounting profit before income and social contribution taxes Expected expense from income and social contribution taxes at nominal rates (34%) (5,116) 695 1,739 (236) Adjustments to obtain the effective rate from permanent differences: Equity income (loss) Provision for the stock option plan (58) (112) Effect of business combination (360) (1,177) Reversal of allowance for doubtful accounts (2,567) - Revenue from assignment of exploration rights (1,188) 1,188 Other exclusions/additions 2, Income and social contribution tax benefits (expenses), taxable income basis Income and social contribution tax expenses (594) (803) Income and social contribution taxes - current (1,601) (1,642) Income and social contribution taxes - deferred 1, (594) (803) (i) The information stated refers to the combined reconciliation of the income and social contribution taxes for the effective rate of the Company and its subsidiaries that chose this taxation regime. 44

45 (ii) The consolidated amount of financial income and other operating income of subsidiaries, except for the companies levied by the taxable income. The following table corresponds to the analysis of deferred tax assets and liabilities recorded in the balance sheets: 19.1 Deferred tax assets and liabilities Assets Parent Company Calculated on: Temporary differences Business combinations - Financial liabilities 1, , , ,535 1,085 Liabilities Parent Company Effects from business combination - Intangible and financial assets 16,813 17,189 23,443 24,000 16,813 17,189 23,443 24,000 Income tax and social contribution, net (i) 15,394 16,220 21,908 22,915 (i) The Company is presenting net deferred income tax and social contribution under non-current liabilities. Considering the current context of the Company s operations, which solely consists of its interest in other entities, no tax credits on tax loss and temporary differences were recorded. Deferred income tax and social contribution on tax losses and temporary differences, which significantly consist of contingencies and losses with doubtful accounts, were not recorded in the Group entities, except in the subsidiary LPS Espírito Santo. 45

46 21 Stock option plan The Company s Extraordinary Shareholders Meeting held on March 3, 2011 approved a Stock Option Plan, applicable to fiscal year 2011, which aims at creating mechanisms favoring the identification, training, development and retention of talents in the Company. This Plan is managed by the Board of Directors, whose members cannot attend the meetings in which decisions referring to their participation in the Plan are discussed. The Plan participants are the professionals selected at the exclusive discretion of the Board of Directors, between the officers and executives of the Company and its subsidiaries. Options granted under this stock option plan and still in force refer to the Programs of May 8, 2012 (Second Program), May 8, 2013 (Third Program), July 10, 2014 (Fourth Program), April 10, 2015 (Fifth Program) and April 20, 2016 (Sixth Program) are nontransferable and can only be exercised: (i) within the maximum period of six years from the option grant date, after which they will expire; and (ii) four years after the options grant date, fully or partially, at the discretion of the participant who has acquired and held, with no encumbrance and throughout the entire vesting period, the Company s shares acquired with the portions of the annual net value receivable as profit sharing. In the event of termination of a participant, in the cases set forth by the Plan, unvested options granted, shall be automatically cancelled and vested options can be exercised within the period set forth by the Plan, depending on the reason for termination. The Board of Directors will also set the options strike price, which under no circumstance can be lower than the book value of shares corresponding to the division of Company s equity by its total number of shares, to be calculated in the balance sheet at the end of the year immediately before each grant. The assumptions used to measure the fair value of stock options on the related grant dates were as follows: 2nd 3rd 4th 5th 6th Program Program Program Program Program Strike price (R$) (i) (iv) Program's average strike price (iv) Volatility (ii) 47.19% 45.07% 43.73% 43.34% 45.12% Maturity 4 years 4 years 4 years 4 years 4 years Dividend yield 1.95% 1.92% 2.03% 1.82% 1.64% Risk rate (iii) 9.01% 5.49% 8.23% 9.52% 10.56% Share price on the grant date (iv) (i) (ii) (iii) Options strike price per share, on grant date, which under no circumstances can be lower than the book value of shares. Volatility comprises the period from the approval of the stock option plan to the grant date of each plan. SELIC rate. (iv) Amounts in Brazilian reais R$ The Company approved a new Stock Option Plan on August 25, 2016 at the Extraordinary Shareholders Meeting, applicable to fiscal year 2016, with the purpose of creating mechanisms that enable it to identify, train, develop and retain talent, as well as to encourage Executive 46

47 Officers to contribute decisively to the Company s and Subsidiaries success by granting options to subscribe to or acquire the shares issued by the Company. The Plan is managed by the Board of Directors, which may, at any time, set up an Advisory Committee to advise it on management and decision making. In exercising their powers, the Board of Directors and the Committee are subject to the limits established by law, the Bylaws of the Company, the applicable regulations, the Plan and the guidelines established by the Shareholders Meeting. Participants in the Program are professionals of the Company or Subsidiaries selected by the Board of Directors based on recommendation by the Advisory Committee, who signed up for the Plan after signing the Instrument of Consent. Adhering to the Plan implies automatic consent to the Program. In 2017, the 1st Program of the 2016 Plan was extinguished due to the exit of its participants. These options are credited to a special line item of equity, together with capital reserves, as recognized stock options granted, when the payment is based on shares and settled with equity instruments. The balancing item, according to CPC 10 (R1) Share-Based Payment is accounted for under General and administrative expenses. On, the Company recorded expenses, in the Personnel Expenses group, arising from said plans in the net amount of R$170 (R$331 on March 31, 2017). 22 Financial instruments The Company and its subsidiaries do not maintain derivative operations or operations of similar risks as of and December 31, a. Capital risk The capital of the Company and its subsidiaries is administered so that they can perform their regular activities, while maximizing return to all stakeholders, by optimizing the ratio between debt and equity. The Company s capital structure consists of other financial assets and liabilities (see Note 11.a), cash and cash equivalents (Note 4) and shareholders equity (which includes capital, profit reserves and non-controlling interest, as described in Notes 14 and 15, respectively). b. Categories of main financial instruments 47

48 Parent Company Financial assets: Amortized cost: Trade receivables (Note 5) ,684 21,380 Fair value through profit or loss: Financial investments (Note 4) ,170 34,974 Call option for non-controlling interest (Note 11.b) 22,451 23,151 45,552 45,588 22,546 23,266 92, ,942 Financial liabilities - Other liabilities: Measured through amortized cost: Trade accounts payable 1,074 1,111 4,567 8,460 Investment acquisition payable (Note 11.c) 123, ,886 1,200 1,200 Wages, provisions and social contribution ,116 8,842 Dividends payable - - 1,026 2,844 Fair value through profit or loss: Written put for non-controlling interest (Note 11.b) 4,470 3,069 6,106 5, , ,760 18,015 26,650 Accounts receivable balance is stated based on respective recording of revenues and charges. The balances of Call Option, Written Put and investment acquisition payable are measured at fair value. c. Measurements at fair value recognized in the balance sheet The Company has financial instruments measured at fair value after initial recognition, classified as Level 2 and Level 3, as follows: Parent Company Financial assets at fair value through profit or loss: Financial investments (i) ,170 34,974 Call option for non-controlling interest (ii) 22,451 23,151 45,552 45,588 22,459 23,159 73,722 80,562 Financial liabilities at fair value through profit or loss: Written put for non-controlling interest (ii) 4,470 3,069 6,106 5,304 4,470 3,069 6,106 5,304 (ii) Level 2 Quoted prices in active markets for similar instruments, quoted prices for identical or similar instruments in non-active markets and valuation models for which inputs are observable; 48

49 (iii) Level 3 Obtained through valuation techniques, which include variables to assets or liabilities but not based on observable market data (non-observable data). Its fair value is defined according to generally accepted pricing models, based on discounted cash flow analysis. Financial instruments classified as Level 3 are: Call Option, Written Put and debts with related parties ( Earn Out ), whose amounts are estimated based on previously contracted calculation basis and future estimates of return on investments acquired. The aforementioned calculations include assumptions, judgments and estimates on the future cash flows of investments acquired and growth projections based on the annual budget and long-term business plans of the Company and its subsidiaries. d. Credit risk The financial instruments that potentially subject the Company and its subsidiaries to credit risk concentration consist mainly of cash and banks, short-term investments and accounts receivable. The Company and its subsidiaries maintain checking accounts with financial institutions approved by the Management with the purpose of diversifying credit risk. The client base is widespread and the level of accounts receivable of the Companies is monitored through internal controls, and, for those in which there is no expected realization, an allowance for doubtful accounts is recognized, limiting the risk of default. e. Liquidity risk The final responsibility for liquidity risk management falls on the Company s Management, which prepared a proper liquidity risk management for fund raising and liquidity management in the short, medium and long terms. The Company manages liquidity risk keeping proper bank loan reserves and lines by continuously monitoring expected and actual cash flows, and combining maturity profiles of financial assets and liabilities. f. Market risk Exchange risk The Company is not exposed to exchange rate changes as it does not have foreign currencydenominated agreements. Interest rate risk The Company is exposed to interest rate risk, once it has the following transactions: Financial investments paid by CDI. g. Sensitivity analysis In compliance with the provisions in Normative Instruction CVM 475, of December 17, 2008, the Company conducted sensitivity analyses of the main risks to which its financial instruments are exposed, which are represented basically by variations of the CDI overnight rate. Projections for the CDI for 2017/2016 were calculated by the Management based on market indicators and determined according to the probable scenario. The charts below show the sensitivity analysis: 49

50 Operation Risk Scenario I Scenario II Scenario III Exposure to variable rates: Assets: CDI Rate decrease 1,602 1, Scenario I reflects the expectations for 360 days as of the balance sheet date, available in the financial market for calculation of future values of these operations, at 7.40% for the CDI. Scenario II considers a drop of variable indexes, depending on the nature of the risk of 25%. Scenario III considers a drop of variable indexes, depending on the nature of the risk of 50%. 23 Earnings per share According to CPC 41 - Earnings per Share, the following table reconciles net income for the period with amounts used to calculate net earnings per share basic and diluted: Continued operations Discontinued operations Basic and Diluted Net loss for the period available to common shares attributable to shareholders (4,106) (1,407) (5,513) Weighted average of outstanding common shares (thousand) 125, , ,143 Losses per share - R$ ( ) ( ) ( ) Basic and Diluted Continued operations Discontinued operations Net loss for the period available to common shares attributable to shareholders (59) (908) (967) Weighted average of outstanding common shares (thousand) 124, , ,731 Losses per share - R$ ( ) ( ) ( ) 24 Commitments a. Lease agreements The Company and its subsidiaries carry out its operating activities in rented properties. Lease agreements have annual restatement clauses pegged to the IGP-M, whose current validity period is longer than 12 months. These agreements represent a cost of R$1,706 for the period ended (R$2,808 for the period ended March 31, 2017). Below, the annual payment projection for upcoming years, considering maturity terms for outstanding agreements: 50

51 Year Annual payment , , , onwards 3, Insurance coverage On, the Company maintains the following insurance coverage agreements: Type Equity Coverage Any property damage to buildings, facilities, machinery, equipment and vehicles Amount insured 88,743 Directors & Officers' Civil Liability Administrative, arbitration and/or judicial lawsuits or proceedings resulting from losses and damages imposed to Management 100, , Segment information The Company intensified its strategy, investing in franchise expansion and the Management defined the following as operating segments: Brokerage, franchises and financing based on in-house reports used to make strategic decisions, regularly reviewed by Management. Operations of the Group are exclusively carried out in Brazil and due to its business characteristics services are not concentrated in certain clients; Each segment s main features: Brokerage - performance in the real estate launches market, or new real estate and resale of real estate; Franchises - performance in the real estate launches market, or new real estate and resale of real estate, through associated realtors; Financing promotion - Promotion and offering of financial products and services in the real estate market generated in the real estate resale brokerage services. (a) Statement of income by segment - 51

52 Brokerage Franchises Financing promotion Net revenue 18,730 1,634 1,853 22,217 Operating costs and expenses (21,282) (1,076) (401) (22,759) Equity income (loss) Financial result (376) 56 - (320) Income and social contribution taxes (170) (203) (221) (594) Discontinued operations (2,759) - - (2,759) Non-controlling interest (1,510) Net income (loss) (5,788) 411 1,374 (5,513) Brokerage Franchises Financing promotion Net revenue 21, ,504 23,704 Operating costs and expenses (31,193) (1,025) (489) (32,707) Equity income (loss) Financial result 10, ,549 Income and social contribution taxes (517) (98) (188) (803) Discontinued operations (1,781) - - (1,781) Non-controlling interest (327) Net income (loss) (1,442) (262) 1,064 (967) * * * 52

53 São Paulo Corporate Towers Av. Presidente Juscelino Kubitschek, Vila Nova Conceição São Paulo SP - Brasil Tel: ey.com.br Other information deemed relevant by the Company 1 Arbitration Clause The Company is bound by the Market Arbitration Chamber, as per the Arbitration Clause in its Bylaws. 53

54 São Paulo Corporate Towers Av. Presidente Juscelino Kubitschek, Vila Nova Conceição São Paulo SP - Brasil Tel: ey.com.br A free translation from Portuguese into English of Independent auditor s review report on Quarterly Information prepared in Brazilian currency in accordance with rules issued by the Brazilian Securities Commission (CVM) applicable to Quarterly Information (ITR) Independent auditor s review report on quarterly information The Shareholders, Board of Directors and Officers LPS Brasil Consultoria de Imóveis S.A. São Paulo - SP Introduction We have reviewed the individual and consolidated interim financial information contained in the Quarterly Information Form (ITR) of LPS Brasil Consultoria de Imóveis S.A. ( Company ) for the quarter ended, which comprises the balance sheet as of, and the related statements of income and comprehensive income and the statements of changes in equity and cash flows for the three-month period then ended, including explanatory notes. Management is responsible for the preparation of these individual interim financial information in accordance with the Technical Pronouncement CPC 21 (R1) Demonstração Intermediária ( CPC 21 ) and International Financial Reporting Standard IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB) ( IAS 34 ), as well as for the presentation of this information in conformity with the standards issued by the Brazilian Securities Commission ( CVM ) applicable to the preparation of Quarterly 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 Engagements (NBC TR Revisão de Informações Intermediárias Executada pelo Auditor da Entidade and ISRE Review of Interim Financial Information Performed by the Independent Auditor of the Entity 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 auditing standards 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 individual interim financial information 54

55 São Paulo Corporate Towers Av. Presidente Juscelino Kubitschek, Vila Nova Conceição São Paulo SP - Brasil Tel: ey.com.br Based on our review, nothing has come to our attention that causes us to believe that the individual and consolidated interim financial information included in the quarterly information referred above is not fairly presented, in all material respects, in accordance with CPC 21 (R1) and IAS 34, issued by IASB, applicable to the preparation of the Quarterly Information Form (ITR), and presented consistently with the standards issued by the CVM. Other matters Statements of value added We have also reviewed the individual and consolidated statements of value added for the three-month period ended, prepared under the responsibility of the Company's Management, whose presentation in the interim financial information is required by the standards issued by CVM, applicable to preparation of Quarterly Information Form (ITR), and considered supplementary information under IFRS, whereby no statements of value added presentation is required. These statements were submitted to the same review procedures previously described above and, based on our review, we are not aware of any fact that would make us believe that they were not prepared, in all material respects, in accordance with the overall individual and consolidated interim financial information taken as a whole. São Paulo, May 10, ERNST & YOUNG Auditores Independentes S.S. CRC-2SP034519/O-6 Marcos Kenji de Sá Pimentel Ohata Accountant CRC-1SP209240/O-7 55