DIRECIONAL ANNOUNCES RESULTS OF 3Q18 WITH CASH GENERATION OF BRL 287 MILLION AND 54% INCREASE IN NET REVENUE COMPARED TO 3Q17.

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1 RELEASE OF RESULTS

2 Belo Horizonte, November 08, The Direcional Engenharia S.A., one of the largest real estate development and construction companies in Brazil, with focus on the development of large-size popular ventures and activities in all regions of the domestic territory, discloses its operating and financial results for the 3rd quarter of 2018 (3Q18). Except as otherwise indicated, information in this document is expressed in domestic currency (Brazilian Reals) and the Overall Value of Sales ("OVS") demonstrates the consolidated value (100%). The Company's consolidated financial statements are prepared in accordance with accounting practices adopted in Brazil, based on the Corporation Law and CVM s regulations. DIRECIONAL ANNOUNCES RESULTS OF 3Q18 WITH CASH GENERATION OF BRL 287 MILLION AND 54% INCREASE IN NET REVENUE COMPARED TO 3Q17. 3Q18 and 9M18 - FINANCIAL AND OPERATING HIGHLIGHTS Launches and Net Sales - 3Q18: In the last 12 months, we reached PSV of BRL 1.9 billion in launches and net sales of BRL 1.3 billion. Launches in MCMV 2 and 3: In 3Q18, we reached PSV of BRL 480 million (BRL 375 million % Direcional), 317% of growth compared to 3Q17, reaching BRL 1.6 billion in the last 12 months. Net Sales: In 3Q18 we reached PSV of BRL 319 million (BRL 298 million % Direcional), growth of 61% compared to 3Q17. MCMV 2 and 3 Gross Revenue: reached share of 74% in 9M18 versus 47% in 9M17. The MCMV 2 and 3 Projects presented adjusted gross margin 2 of 36% in 9M18; Consolidated gross adjusted margin of 29% in 9M18, compared to 16% in 9M17; Net debt on Net Equity of 5.2%; Cash Generation ³ of BRL 287 million in 3Q18. Excluding the cash generation resulting from the sale of MUC projects to DMAC11 REIT, cash generation reached BRL 41 million. 1 - MCMV 2 and 3: projects carried out in the scope of the Minha Casa, Minha Vida Ranges 1.5, 2 and 3; 2 - Adjust excluding capitalized interest for financing the production; 3 - Cash Generation, variation of net adjusted debt for payment of dividends and stock repurchases. CODE: DIRR3 Quotation on 11/07/2018 BRL 7.04 Number of stocks (Ex-Treasury) million Market value: BRL 1,087 million / USD 289 million FreeFloat: 51% Average daily volume of 3Q18: 768 thousand stocks BRL 5,213 thousand. 2,587 business TELECONFERENCE (In Portuguese with simultaneous translation into English) Date: 11/09/ Friday Portuguese 09:30 - Brasilia s time English 06:30 - New York s time Phones for connection: Brazil: (+55 11) Other countries: PASSWORD: Direcional CONTACTS Carlos Wollenweber CFO DRI IR Team (31) (31) ri@direcional.com.br Rua dos Otoni, º andar Belo Horizonte MG CEP:

3 TABLE OF CONTENTS TABLE OF CONTENTS...3 MANAGEMENT s MESSAGE...4 MAIN INDICATORS...8 LAUNCHING...9 CONTRACTED SALES...11 Speed of sales (VSO¹)...13 Terminations INVENTORY...15 PROJECTS DELIVERED...17 TRANSFERS...18 LANDBANK...19 ECONOMIC-FINANCIAL PERFORMANCE...20 Gross Operational Income Revenue deductions Net Operational Income Gross profit General and Administrative Expenses (G&A) Commercial Expenses Ebitida Net Profit Deferred Revenue HIGHLIGHTS OF BALANCE SHEET...26 Cash and cash equivalents and investments Accounts Receivable Indebtedness Cash Generation (cash burn)¹ FII PUBLIC OFFE...29 CONSOLIDATED BALANCE SHEET...30 CONSOLIDATED INCOME STATEMENT...31 RECOMPOSITION OF EBITDA...31 CONSOLIDATED CASH FLOW STATEMENTS...32 ADDED VALUE STATEMENT...33 GLOSSARY

4 MANAGEMENT s MESSAGE The Management of the Direcional Engenharia is pleased to present the results for the third quarter (3Q18) and accumulated of the first 9 months of 2018 (9M18). The 3Q18 was marked by the sale of 11 SPEs, owners of ventures in the MAC (Medium Standard, Medium-High Standard and Commercial segment), representing one of the Company most important moves to focus its efforts on the low-income sector, mainly under the MCMV 2 and 3 program. Furthermore, this transaction resulted in the generation of cash of approximately R$ 246 million in the quarter. On analyzing our operation, during 3Q18, we maintained a strong pace of launchings that totaled PSV [Potential Sales Value] of R$ 528 million, a growth of 358% in relation to 3Q17. It is important to note that we had a new quarterly record of launchings in the MCMV segment 2 and 3, with a volume of R$ 480 million. In the accumulated of the first nine months of the year, the launchings reached R$ 1.4 billion, a growth of 123% compared to the same period last year. Net sales totaled PSV of R$ 319 million in the 3Q18, a growth of 61% compared to the 3Q17. Thus, the sales speed index (VSO Ex-MCMV Level1) reached 12% in the quarter. In MCMV 2 and 3, sales totaled R$ 251 million, resulting in VSO of 16%. It is worth mentioning that there was concentration of the launchings at the end of the quarter, with a oneoff impact on the sales of the period. Thus, on analyzing the VSO stock index separately, we notice the increase of 1 p.p. in relation to the previous quarter, reaching 23%. It is important to highlight the accelerated growth in the MCMV 2 and 3 segment, where the volume of launchings, sales and revenue reached R$ 1.6 billion, R$ 1.0 billion and R$ 722 million respectively in the last 12 months (), a growth of 88%, 74% and 141% over the same base period 3Q17. Launches (PSV 100% - R$ million) Sales (PSV 100% - R$ million) Net Revenue (R$ million) +88% +74% +141% Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 Our strategy for operation in MCMV 2 and 3 is based on three pillars: (i) adoption of the same industrialized and lowcost construction model used in MCMV Level 1, (ii) transfer of customers simultaneously to sales (Associative Model), which significantly reduces the probability of dissolutions and the volume of equity used in the ventures and (iii) funding from the FGTS, which provides funds to finance popular housing. On analyzing the MAC segment now, despite maintaining the high volume of dissolutions, in this quarter, we recorded a net sales of R$ 20 million (R$ 16 million % Direcional). In addition, as previously mentioned, we sold 11 SPVs that had volume of units in stock of approximately R$ 230 million. It is important to mention that, in the closing of 2T18, only 2 ongoing MAC projects remained, with PSV in inventory of R$ 44 million. We thus expect continuity in the improvement of net sales due to (i) conclusion of the last cycle of deliveries in the MAC segment, with consequent increase in sales of completed units, which occur simultaneously with approval 4

5 of the customer by the financing bank and respective transfer, (ii) increase in demand for MAC products, mainly based on the reduction of basic interests and increase in the savings balance. Despite the signs of recovery commented above, we have interrupted the launchings in the MAC segment since the year 2016, concentrating our efforts on the sale of units in inventory, mainly of finished units and monetization of assets. Regarding the financial result, the increase in sales added to the higher volume of execution of MCMV 2 and 3 works had a significant impact on the appropriation of Gross Revenue, which reached a volume of R$ 328 million in 3Q18, a growth of 56% in relation to the same quarter of the previous year. In 9M18, the gross revenue totaled R$ 832 million, 35% above that of the same period in The gross margin of the MCMV 2 and 3 segment reached a level of 36% in 9S18, substantially higher than the other segments. In the MAC, the gross margin continued to be negatively impacted by dissolutions and discounts, mainly because canceled sales had higher margins than current sales. The graph below shows the evolution of revenue share of each one of the segments. Evolution of Gross Revenue per Segment (% Total - R$ million) % 12% 64% 54% 47% 74% 28% 31% 34% 2015 Thus, the evolution of the operating results positively impacted the adjusted gross profit¹, which reached R$ 92 million in 3Q18, the best result since 1Q16, corresponding to the adjusted gross margin¹ of 29.6%, compared to 14.5% in 3Q17. In 9M18, the growth of the adjusted gross profit was 144%. It is also important to highlight the increase in stock of revenues to be appropriated for real estate sales (REF), which reached R$ 691 million in 3Q18, a growth of 39% in relation to 3Q17, according to the graph below, the increase in REF continues to support the growth of Direcional s revenue. 25% 14% 12% M18 MCMV 2 and 3 Service Provision MUC 5

6 Deferred Revenue (R$ million) MUC MCMV 2 and 3 39% % 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Consequently, the financial results continued to evolve positively in this quarter and the growth in volume of revenues will allow the dilution of expenses, with consequent improvement in the net margin in the coming quarters. As a result of the above performance, in 3Q18, we presented a net loss of about R$ 84 million. However, as mentioned above, the net result for this quarter was negatively impacted by the sale of 11 SPEs to REIT in the amount of R$ 95 million (despite the discount on book value, it is important to notice that the sale of these assets will reduce the commercialization and maintenance associated expenses), thus, adjusting the quarterly result due to this nonrecurring impact, we presented a net profit of R$ 12 million. We also highlight the Cash Generation of R$ 287 million in 3Q18, mainly impacted by the transaction involving sale of the 11 SPEs to REIT. It is important to note that, despite the neglecting the abovementioned transaction, the cash generation was R$ 41 million in 3Q18, accumulating R$ 92 million in 9M18. sfers Receivable Criterion) Cash Generation (cash burn) (R$ million) CMV DMAC11 REIT Cash Generation Cash Burn 131% % % M17 9M M18 The strong cash generation presented further strengthened our solid capital structure, which ended the quarter with a leverage ratio of 5.2% (net debt over equity). We ended the quarter with R$ 807 million in cash and financial investments and R$ 879 million in gross debt. Therefore, a net indebtedness of R$ 72 million. Lastly, according to a Material Fact published in 09/03/2018, the Board of Directors decided on the payment of Dividends in the amount of R$ 90 million, which were paid on October 11, We remain optimistic about Direcional s prospects for the coming quarters, especially in relation to the MCMV 2 and 3 segment, in which the demand remains strong. In addition, the land bank totals a potential GSV of R$ 15 billion, which 6

7 will allow the growth of launchings and the sales volume. In the MAC segment, our focus will continue to be the monetization of assets, mainly due to reduction of completed inventory. Finally, we reaffirm our confidence in Direcional s business model and our commitment to resume profitability, keeping the Company positioned among the most efficient and solid companies of the market, focused on generating cash and creating value for its customers and shareholders. Thank you. Management of Direcional Engenharia S.A 1. Adjust excluding capitalized interest for financing the production; 2. Cash Generation, variation of net adjusted debt for payment of dividends and stock repurchases. 7

8 MAIN INDICATORS 3Q18 2Q18 3Q17 9M18 9M17 (a) (b) (c) (a/b) (a/c) (d) (e) (d/e) Financial Indicators Net Income (In BRL million) ,4% 54,0% ,7% Gross Profit (BRL thousand) ,2% 494,8% ,7% Gross Margin 27,9% 25,9% 7,2% 2,0 p.p. 20,7 p.p. 26,8% 9,0% 17,8 p.p. Gross Adjusted Profit (BRL thousand) ,0% 214,7% ,8% Gross Adjusted Income¹ 29,6% 28,4% 14,5% 1,1 p.p. 15,1 p.p. 29,4% 16,0% 13,4 p.p. Adjusted¹ EBITDA (BRL thousand) ,8% -934,2% ,3% Adjusted EBITDA Margin¹ 11,8% 8,2% -2,2% 3,6 p.p. 13,9 p.p. 9,3% -2,2% 11,5 p.p. Net Profit (BRL thousand) ,6% -139,4% ,6% Net margin 3,7% -1,4% -14,6% 5,1 p.p. 18,3 p.p. 0,0% -14,1% 14,0 p.p. Launches VSO Recorded - 100% (BRL thousand) ,3% 358,3% ,7% MCMV Level 1 (BRL thousand) n/a n/a ,6% MCMV 2 and 3² (BRL thousand) ,2% 316,8% ,0% MUC³ (BRL thousand) n/a n/a 0 0 n/a VSO Recorded - % Direcional (BRL thousand) ,5% 267,0% ,7% MCMV Level 1 (BRL thousand) n/a n/a ,6% MCMV 2 and 3 (BRL thousand) ,5% 225,5% ,3% MUC (BRL thousand) n/a n/a 0 0 n/a Recorded Units ,7% 342,6% ,5% MCMV Level n/a n/a ,5% MCMV 2 and ,8% 269,1% ,8% MUC n/a n/a 0 0 n/a % Average Direcional 80,1% 100,0% 100,0% -19,9 p.p. -0,2 p.p. 89,1% 85,6% 3,5 p.p. Average Price (BRL/unit) ,3% 3,6% ,5% Sales VSO Net Contracted - 100% ,0% 61,1% ,1% MCMV Level 1 (BRL thousand) n/a n/a ,6% MCMV 2 and 3 (BRL thousand) ,3% 58,7% ,2% MUC (BRL thousand) ,1% -49,8% ,1% VSO Contracted - % Direcional ,0% 76,9% ,6% MCMV Level 1 (BRL thousand) n/a n/a ,6% MCMV 2 and 3 (BRL thousand) ,9% 77,0% ,5% MUC (BRL thousand) ,7% -54,7% ,7% Contracted units ,7% 93,6% ,0% MCMV Level n/a n/a ,5% MCMV 2 and ,1% 55,7% ,8% MUC ,1% -47,9% ,3% Average Price (BRL/unit) ,1% -16,8% ,6% VSO Consolidated - (% GSV) 12,2% 15,4% 12,2% -3,2 p.p. 0,0 p.p. 29,6% 26,5% 3,0 p.p. Other Indicators 3Q18 2Q18 1Q18 4Q17 3Q17 2Q17 1Q17 4Q16 Cash and Cash Equivalents (BRL thousand) Gross debt (BRL thousand) Net Debt (BRL thousand) Total Shareholders' Equity (BRL thousand) Net Debt / Equity 5,2% 22,9% 26,4% 25,6% 22,9% 21,5% 22,8% 19,4% Inventory % (BRL trousand) LandBank % (BRL thousand) LandBank - Units Adjust excluding capitalized interest for financing the production 2. MCMV 2 and 3: projects carried out in the scope of the Minha Casa, Minha Vida Ranges 1.5, 2 and 3; 3. MAC: Comprises the projects of Medium-Standard, High Medium Standard and Business 4. Cash Generation (Cash Bum) variation of net adjusted debt for payment of dividends and stock repurchases. 5. Adjustment due MUC projects sales to DMAC11 REIT 8

9 LAUNCHING In 3Q18, Direcional launched 9 projects /steps, totaling PVS of BRL 528 million (BRL 423 million % Direcional) and 3,275 units, 358% growth compared to 3Q17. Out of projects launched, two fall within the parameters of the MCMV Level 1 totaling PVS of BRL 48 million. In 9M18, the launching reached BRL 1.4 million (BRL 1.2 million % Directional), 122% growth in relation to 9M17. Highlight for the MCMV 2 and 3 segment, which totaled PSV launched from BRL 1.2 billion (BRL 1.0 billion % Direcional), with 135% growth compared to the same period of the previous year. It is important to highlight that the Direcional accrued in 12 months, the volume of launches of BRL 1.9 billion. Launches (PSV 100% - R$ million) Evolution Last 12 Months of Launches (PSV 100% - R$ million) +123% +92% % % % Q17 2Q18 3Q18 9M17 9M18 3Q17 4Q17 1Q18 2Q18 3Q18 The table below provides information on launches of 3Q18 and 9M18 compared to previous periods: Launches (PSV - R$ mil) MUC MCMV Level 1 3Q18 2Q18 3Q17 9M18 9M17 (a) (b) (c) (a/b) (a/c) (d) (e) (d/e) PSV Launched - 100% ,3% 358,3% ,7% MCMV Level n/a n/a ,6% MCMV 2 and ,2% 316,8% ,0% MUC³ n/a n/a 0 0 n/a PSV Launched - % Direcional ,5% 267,0% ,7% MCMV Level n/a n/a ,6% MCMV 2 and ,5% 225,5% ,3% MUC n/a n/a 0 0 n/a Recorded Units ,7% 342,6% ,5% MCMV Level n/a n/a ,5% MCMV 2 and ,8% 269,1% ,8% MUC n/a n/a 0 0 n/a % Average Direcional 80,1% 100,0% 100,0% -19,9 p.p. -0,2 p.p. 89,1% 85,6% 3,5 p.p. Average Price (BRL/unit) ,3% 3,6% ,5% MCMV Level n/a n/a n/a n/a ,0% MCMV 2 and ,1% 12,9% ,1% MUC n/a n/a n/a n/a n/a n/a n/a n/a 1. MCMV 2 and 3: projects carried out in the scope of the Minha Casa, Minha Vida Ranges 1.5, 2 and 3; 2. MUC: Comprises the projects of Medium-Standard, High Medium Standard and Business MCMV 2 and 3 9

10 Segmentation of Launching In 9M18, all projects launched were classified in the MCMV Program, as 65% on ranges 2 and 3 of the Program, 23% in the Range 1.5 and 13% in the MCMV 1 range. The geographical and economic segmentation of launching, disregarding the Projects of MCMV Level 1, are detailed in the charts below. Launches 9M18 (Ex - Level 1) Economic Segmentation (% PSV - 100%) Launches 9M18 (Ex - Level 1) Geographical Segmentation (% PSV - 100%) MCMV 1,5 26% SP 43% RJ 12% 74% 12% AM 23% 10% DF MCMV 2 e 3 MG 10

11 CONTRACTED SALES In the accrual of 9M18, net sales reached BRL 1.3 billion, 94% growth in relation to 9M17. The MCMV 2 and 3 segment reached PSV of BRL 806 million, 77% growth in relation to 9M17. Net sales in 3Q18 totaled PSV of BRL 549 million. highlighting that, out of this total, BRL 230 million relate to sale of projects carried out in the month of September to the DMAC11 REIT, as published in the material fact on 09/03/2018. Therefore, when comparing to the same quarter of the previous year, net sales recorded 177% growth. Highlighting that all launching of 3Q18 occurred in the month of September, with a concentration in the last fortnight of the month, leaving a reduced period for marketing these units. Thus, net sales of launch were only BRL 8 million. Net Sales (PSV 100% - R$ million) Net Sales Last 12 Months Evolution (PSV 100% - R$ million) +94% +52% % % % Q17 2Q18 3Q18 9M17 9M18 3Q17 4Q17 1Q18 2Q18 3Q18 Segmentation of Net Sales Inventory Sale to REIT¹ MUC² MCMV Level 1 MCMV 2 and 3 Assessing the geographic segmentation, it should be pointed out the diversification of sales among the regions where the company operates, highlighting the states outside RJ-SP route, which together accounted for 52% of net sales in 9M18. Net Sales 9M18 (Ex - Level 1) Economic Segmentation (% PSV - 100%) Net Sales 9M18 (Ex - Level 1) Geographical Segmentation (% PSV - 100%) MAC 3% RJ 24% SP 23% 97% MCMV 2 e 3 MG 17% 4% GO 10% DF 4% CE 18% AM 11

12 The table below consolidates sales information in 3Q18: Net sales contracted (BRL thousand) 3Q18 2Q18 3Q17 9M18 9M17 (a) (b) (c) (a/b) (a/c) (c) (d) (c/d) Gross PSV Contracted % Direcional 441, , , % 60.7% 1,345, , % Terminations -122, ,694-76, % 59.6% -323, , % PSV Net Contracted - 100% 319, , , % 61.1% 1,022, , % MCMV Level 1 47, n/a n/a 182, , % MCMV 2 and 3 251, , , % 58.7% 805, , % MUC 1 19,991 18,671 39, % -49.8% 34,242 79, % Gross PSV Contracted % Direcional 409, , , % 71.6% 1,245, , % Terminations -110,800-95,834-69, % 58.7% -286, , % Net PSV Contracted % Direcional 298, , , % 76.9% 958, , % MCMV Level 1 47, n/a n/a 182, , % MCMV 2 and 3 234, , , % 77.0% 744, , % MUC 1 16,475 16,928 36, % -54.7% 31,107 71, % Contracted units 2,151 1,997 1, % 93.6% 7,143 4, % MCMV Level n/a n/a 1,905 1, % MCMV 2 and 3 1,545 1, % 55.7% 5,097 2, % MUC % -47.9% % Average Price (BRL/unit) 148, , , % -16.8% 143, , % MCMV Level 1 88,007 n/a n/a n/a n/a 96,015 86, % MCMV 2 and 3 162, , , % 1.9% 158, , % MUC 1 n/a n/a n/a n/a n/a n/a n/a n/a VSO in PSV 12.2% 15.4% 12.2% -3.2 p.p. 0.0 p.p. 29.6% 26.5% 3.0 p.p. MCMV 2 and % 21.9% 18.8% -5.7 p.p p.p. 38.3% 36.9% 0.0% MUC 1 3.0% 2.7% 5.1% 0.3 p.p p.p. 4.6% 10.2% 0.0% 1 MUC: Comprises the projects of Medium-Standard, High Medium Standard and Business 12

13 Speed of sales (VSO¹) The speed of sales in 3Q18, measured by VSO index, totaled 12%. In the MCMV 2 and 3 segment, the VSO remained at 16%, impacted mainly by the VSO of launching that was only 2%, regarding the concentrated volume of launches in the last fortnight of September. The VSO of MCMV inventory reached 23%. The chart below shows the development of the VSO indicator of last quarters: 19% 19% 18% 11% 12% 11% 13% 5% 2% 0% -1% % 22% 23% % 3% 3% % % 2T17 3Q17-3 4Q17-4 1Q18 2Q18 3Q18 Sales MUC VSO of MUC VSO Consolidated Sales MCMV 2 and 3 VSO of MCMV 2 and 3 VSO of Inventory - MCMV 2 and 3 1- VSO = Net Sales for the Period / (Initial Stock + Launches of the Period). 13

14 Terminations In 3Q18, the terminations were BRL 122 million (BRL 111 million % Direcional), 13% increase compared to the previous quarter, accompanying the operating growth of the MCMV 2 and 3 segment. The table below consolidates information for 3Q18: Termination (BRL thousand) 3Q18 2Q18 3Q17 9M18 9M17 (a) (b) (c) (a/b) (a/c) (c) (d) (c/d) Consolidated Termination - 100% -122, ,694-76, % 59.6% -323, , % Gross PSV Contracted 393, , , % 43.3% 1,162, , % % Termination / Gross PSV Contracted 31.0% -25.2% -27.9% -5.8 p.p p.p. 27.8% -23.9% -3.9 p.p. Consolidated Termination -% Direcional -110,800-95,834-69, % 58.7% -286, , % Gross PSV Contracted 361, , , % 51.5% 1,062, , % % Termination / Gross PSV Contracted 30.7% -24.5% -29.3% -6.2 p.p p.p. 27.0% -25.1% -1.8 p.p. 1- In the PSV terminated the credit transfers were disregarded from customers of the unit originally purchased to another unit of our inventory. 14

15 INVENTORY The Direcional ended 3Q18 with 8,272 units in inventory, totaling PSV of BRL 1.7 billion. Pointing out the increased share of MCMV 2 and 3 segment in inventory, as consequence of the MUC projects sale to DMAC11 REIT in September and in line with the operating development of Direcional to concentrate its activities only in this segment. The table below shows the inventory at market value open per stage of construction and type of product. It should be pointed out that the MCMV 2 and 3 segment has only BRL 37 million in PSV of units completed, representing 2% of the total inventory. Opening the Inventory at Market Value (% Total - BRL million) MCMV 2 and 3 MUC 1 Consolidated (% of Total) Consolidated (% Direcional) In progress 1, ,301 1,127 % Total 74% 3% 77% 79% Concluded % Total 2% 21% 23% 21% Total 1, ,696 1,458 % Total 76% 24% 100% 100% Total Units 7, ,272 8,272 % Total Units 89% 11% 100% 100% The following tables show the development of the inventory at market value per segment and geographic region in 9M18. Pointing outs the performance of the MCMV 2 and 3 segment, which ended the quarter with 38% VSO index. Development of Inventory M18 Sales Adjustment (% Direcional - BRL million) Inventory Launches 9M18 1 9M18 VSO% Inventory MCMV 2 and , ,294 38% MUC² % Total 1,648 1, ,696 30% Development of Inventory M18 9M18 9M18 Sales Adjustment¹ VSO% (% Direcional - BRL million) Inventory Launches Inventory Southeast 1, ,241 27% Center West % North % Northeast % Total 1,648 1, ,696 30% The following charts show more information on the opening and development of the inventory The main highlights are: (i) 56% of PSV in inventory is on projects launched in 2018; (ii) 73% located in the southeastern region, and (iii) 28 p.p. reduction in the participation of the inventory of MUC segment in relation to 3Q17. Comparing with 2Q18, the reduction in the inventory share of MUC was 15 p.p. This reduction is related to sale of MUC projects carried out in the month of September to DMAC11 REIT, as published in the material fact on 09/03/

16 Inventory by Launch Period (% PSV - 100%) Inventory by Region (% PSV - 100%) Inventory Evolution (PSV 100% - R$ million) MCMV 2 and 3 MUC MCMV 2 and 3 MUC MCMV 2 and 3 MUC % 56% Southeast North 1% 15% 16% 51% 23% 73% 48% 62% 76% <2017 Finished 4% 2% 7% 3% 21% 23% Midwest 10% Northeast 1% 52% 38% -28 p.p. 24% Inventory Completed Direcional ended 3Q18 with 1,091 units completed, representing a market value of BRL 395 million (BRL 331 million % Direcional). The MUC segment represented 91% of this inventory with PSV of BRL 358 million. The chart below shows the geographical distribution of the inventory completed. Midwest North 8% 6% 3Q17 2Q18 3Q18 86% Southeast 16

17 PROJECTS DELIVERED Direcional delivered 2 projects/steps during 3Q18, totaling 346 units and PSV of BRL 88 million (BRL 69 million % Direcional), one in the MCMV 2 and 3 segment and one in MUC segment. Evolution of Deliveries - Development (PSV 100% - R$ million) % % Evolution of Deliveries - MCMV Level 1 (PSV 100% - R$ million) % % 3Q17 2Q18 3Q18 3Q17 2Q18 3Q18 The table below provides further details of the projects delivered during 3Q18: PSV Total PSV % Direcional Projects Delivered Month Region (BRL thousand) (BRL thousand) Units Segment Conquista Betim August Betim - SP 38,409 19, MAC Alto São Francisco Exclusive Life July São Paulo - SP 49,720 49, MCMV 2 and 3 Range Total 3Q18 88,130 68,

18 TRANSFERS In 3Q18, transfers volume totaled BRL 307 million, 8% growth compared to the previous quarter and 179% compared to the same period of last year. In 9M18, transfers totalized R$ 765 million. It is important to mention the increase in the volume of receipts in the MCMV mode, which showed 237% increase in 9M18 compared to the same period of the previous year and 13% in relation to the last quarter. Pointing out that Direcional returned to focus on new launches of projects classified in this model as of Thus, the volume of transfers of this mode will continue showing growth in the coming periods, accompanying the development of sales and works of these projects. Transfers (R$ million - Cash Receivable Criterion) SFH and Others MCMV 131% Q17 179% % % Q18 3Q18 9M17 9M18 The table below consolidates transfer information: Transfer 3Q18 2Q18 3Q17 9M18 9M17 (BRL thousand) (a) (b) (c) (a/b) (a/c) (d) (e) (d/e) Total Transfer 307, , , % 179.2% 764, , % MCMV 225, ,635 66, % 236.2% 522, , % SFH and others 82,131 83,553 43, % 90.7% 242,18 176, % 18

19 LANDBANK The land bank of Direcional closed the quarter with development potential of 115,706 units and PSV of BRL 19.9 billion (BRL 17.5 billion % Direcional), the MCMV 2 and 3 segment totaled BRL 15.4 billion (BRL 13.3 billion % Direcional) and 102,089 units. Development of LandBank Lands Lands % Acquisitions 9M18 9M18 Launches Adjustment² (Total GSV -BRL million) M18 VGV Units % Units MCMV 2 and 3 11,100 4,963 1, ,433 77% 102,089 88% MAC¹ 5, ,508 23% 13,617 12% Total 16,222 4,963 1, , % 115, % 1 - MAC: Comprises the projects of Medium-Standard, High Medium Standard and Business 2 - Adjust: updating the sales price and exchange. Geographical segmentation Lands % MCMV 2 and 3 Medium Medium-High Commercial (Total GSV -BRL million) 3Q18 VGV Units % Units Southeast 10,256 2, ,774 69% 72,739 63% Center West 3, ,940 20% 27,107 23% North 1, ,788 9% 12,704 11% Northeast % 3,156 3% Total 15,433 3, , % 115, % Acquisitions of land In 3Q18 nine plots were acquired aimed at MCMV 2 and 3, segment with potential for construction of 18,560 units and PSV of BRL 3.5 billion (BRL 3.5 billion % Direcional). These lands are located in the states of Rio de Janeiro, Ceará and São Paulo. The average acquisition cost was equivalent to 14.5% of potential PSV, and 93.4% of payment to be made via exchange, which does not cause impact on the Company's cash at short term. 19

20 ECONOMIC-FINANCIAL PERFORMANCE Gross Operational Income Direcional s gross revenue totaled BRL 328 million in 3Q18, 57% and 12% increase when compared to 3Q17 and 2Q18, respectively. The revenue growth is a reflection of the performance of the MCMV 2 and 3 segment, whose revenue reached BRL 249 million in 3Q18 and BRL 612 million in 9M18. This segment represented 74% of all apportioned revenues in accrual of nine months. As detailed in the table below, revenues from the rendering of services showed 53% increase compared to the previous quarter. This growth is explained mainly by the acceleration of works of projects of MCMV Level1 launched in last quarters % 12% 64% 54% 31% 34% 2015 Evolution of Gross Revenue per Segment (% Total - R$ million) 47% 28% 25% 74% 14% 12% M18 MCMV 2 and 3 Service Provision MUC The chart to the right illustrates the development of the participation of revenue for each segment. Gross revenue (BRL thousand) 3Q18 2Q18 3Q17 9M18 9M17 (a) (b) (c) (a/b) (a/c) (d) (e) (d/e) Gross Operational Income 327, , , % 56.5% 831, , % From sales of property 277, , , % 68.0% 713, , % From rendering of services 50,169 32,731 44, % 13.5% 117, , % Income from property sale Gross revenue from property sales consolidates the MCMV 2 and 3 and MUC segments, totaled BRL 278 million in 3Q18, 68% growth in relation to 3Q17 and 7% when compared to the previous quarter. This performance was mainly due to the higher volume of units sold in the MCMV 2 and 3, as well as acceleration in the construction of projects. The accrual in the 9M18, gross revenues of the incorporation segment totaled BRL 714 million, 70% growth compared to the same period of the previous year. Out of this total, the MCMV 2 and 3 segment reached BRL 612 million, 148% growth in relation to 9M17. Revenue with Sales of Real Estate MCMV 2 and 3 (R$ million) +148% 73% 76% 74% 44% 40% Revenue with Sales of Real Estate MUC (R$ million) -41% 35% 28% 16% 9% 12% % % % % Q17 2Q18 3Q18 9M17 9M18 3Q17 2Q18 3Q18 9M17 9M18 MCMV 2 and 3 % Gross Revenue MUC % Gross Revenue 20

21 Whereas the consistent growth in the volume of results to be apportioned (REF) of MCMV 2 and 3 segment (shown on the page. 22), continuity is expected in the trend of revenue growth in the coming quarters, to the extent that the construction of these projects continue. Income from Services rendering The gross revenues of the services segment represented 15% of total revenue recognized in 3Q18 and 14% in accrual of the 9M18, is composed by (i) revenue recognition of the works under the contract works mode (MCMV Level 1); (ii) administration fee of works and (iii) brokerage on sales earned by the broker company. In 3Q18, this revenue reached volume of BRL 50 million, 13% growth in relation to 3Q17 and 53% in relation to 2Q18. The growth of this revenue is due, mainly, to the acceleration of the works of the projects launched in last quarters The MCMV Level 1 segment was very positive for the company's results ( ), however, due to the restrictions of the Government s budget, there was no contracting between the years of 2015 and In the last 12 months we contracted PSV of BRL 254 million in this segment. The chart below shows the development of revenue from services. Revenue with Service Provision (R$ million) -39% 21% 11% 15% 32% 14% Service Provision Revenue Breakdown 9M18 77% MCMV Level 1 +13% +53% Q17 2Q18 3Q18 Revenue with Service Provision Revenue deductions M17 9M18 % Gross Revenue 17% Ventures Brokerage 6% Engineering Services In 3Q18, deductions from revenue totaled BRL 18 million, 17% reduction in relation to the one in in the previous quarter and 117% growth compared with the same period of last year, mainly impact of larger volume of terminations, as well as by the reduction of adjustment at present value of accounts receivable. Revenue Deductions (R$ thousand) 3Q18 2Q18 3Q17 9M18 9M17 (a) (b) (c) (a/b) (a/c) (d) (e) (d/e) Revenue Deductions ,7% 116,6% ,9% Adjustment to present value ,1% -82,1% ,7% Sales taxes ,0% 67,9% ,4% Canceled sales ,0% 46,9% ,5% % Deductions / Gross Revenue -5,5% -7,4% -4,0% 1,9 p.p. -1,5 p.p. -7,0% -5,2% -1,9 p.p. 21

22 Net Operational Income As a result of appropriation of gross revenue mentioned above, in 3Q18, the net revenue totaled BRL 310 million, 14% increase compared to 2Q18 and 54% in relation to 3Q17. In the accrual of 9M18, net revenue reached BRL 773, 32.7% growth in relation to 9M17. Net Revenue (PSV 100% - R$ million) % % Q17 2Q18 3Q18 9M17 9M18 Gross profit The adjusted gross profit¹ in 3Q18 totaled BRL 92 million, 215% growth compared to the same period of the previous year, resulting in a gross adjusted margin¹ of 30% in the quarter, mainly due to the increase in the participation of the MCMV 2 and 3 segment, which revenue represented 74% of the total apportioned to the period and gross adjusted margin of 36% in 9M18. Adjusted Gross Profit¹ (R$ million) 14% 28% 30% 16% 29% % +144% Q Q Q M M18 Capitalized Costs Gross Profit Adjusted Gross Margin 1 - Adjust excluding interest for financing the production capitalized in cost; 22

23 General and Administrative Expenses (G&A) The general and administrative totaled BRL 25 million in 3Q18, 3% reduction compared to the previous quarter and 12% compared to the same period of last year. Noting also the significant dilution of expenses in the period (-0.8 p.p. in relation to gross revenue in comparison with the previous quarter and -6 p.p. in comparison with 3Q17). This result is in line with the Company's strategy of seeking better operational efficiency. General and Administrative Expenses (G&A) (R$ million) 13,5% 8,7% 7,5% 13,6% 9,0% % -12% % 3Q17 2Q18 3Q18 9M17 General and Administrative Expenses 9M18 % Gross Revenue Commercial Expenses In 3Q18, the commercial expenses totaled BRL 27 million, 11% growth compared to 2Q18 and 66% compared to the same period of last year. This increase is in line with the growth of sales. The periods between 9M17 and 9M18 the Company's consolidated gross sales grew by 65%. Commercial Expenses (R$ million) 8,2% 7,6% 8,4% 6,4% 6,9% % % % 3Q17 2Q18 3Q18 9M17 9M18 Commercial Expenses % Net Sales 23

24 Ebitida In, Ebitda Adjusted¹ reached BRL 36 million, 64.8% growth in relation to 2T18. The EBITDA margin reached 11.8%, 3.6 p.p. increase in relation to the last quarter. The improvement of EBITDA resulted mainly, by a significant increase in gross profit, as commented above, resulting in a greater dilution of operating expenses. EBITDA BREAKDOWN (R$'000) 3Q18 2Q18 3Q17 % % 9M18 9M17 % (a) (b) (c) (a/b) (a/c) (d) (e) (c/d) Net Income 11,582-3,778-29, % 139.4% , % (+) Depreciation and Amortization 6,345 2,646 6, % -1.9% 13,902 18, % (+) Income Tax and Social Contribution 4,787 5,805 4, % 13.5% 15,145 11, % (+) Minority Interest 3,079 4, % 414.0% 7,510 5, % (+/-) Financial Results 5,545 6, % 762.5% 15,974-6, % (+) Cost of production financing 5,115 6,800 14, % -64.9% 19,607 40, % Adjusted¹ EBITDA 36,453 22,117-4, % 934.2% 71,849-12, % Adjusted EBITDA Margin 11.8% 8.2% -2.2% 3,6 p.p. 13,9 p.p. 9,3% -2,2% 11,5 p.p. 1. Adjusted by non-recurring result of the operation involving the sale of projects in block to the DMAC11 REIT 2. Adjust excluding capitalized interest for financing the production Net Profit With the result of the performance mentioned above, in 3Q18, the Company obtained accounting loss of BRL 84 million, however, excluding the non-cash effect of the MUC projects sale to DMAC11 REIT, the Company recorded an adjusted net profit of BRL12 million in the period, higher quarterly profit since 2Q16. 24

25 Deferred Revenue At the end of 3Q18, revenues to be apportioned (REF) of the incorporation segment totaled BRL 691 million, of which the majority (96%) refers to projects of MCMV 2 and 3 segment, while 4% refers to the MUC segment. Between 3Q18 and 2Q18 the inventory of revenue to appropriate of incorporation remained stable, with a drop of 1%, while in the annual comparison there was 39% growth. This performance reflects the growth of sales of MCMV 2 and 3 Projects. Deferred Revenue (R$ million) MUC MCMV 2 and 3 39% % 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 The table below shows the development of the result to be apportioned: Results to Apportion (BRL million) 3Q18 2Q18 3Q17 (a) (b) (c) (a/b) (a/c) Revenues to be apportioned (1+2) 1,598 1,601 1, % 10.7% Cost to incur (1+2) -1,117-1,125-1, % 10.1% Consolidated Result to be apportioned (1+2) % 11.9% Income Margin of Future Years (REF) 30.1% 29.7% 29.8% 0.4 p.p. 0.3 p.p. Revenues to be apportioned, Incorporation (+2) % 38.6% Cost to incur (1) % 38.6% Result to be apportioned, Incorporation (1) % 38.8% Income Margin of Future Years (REF) 40.4% 38.7% 40.3% 1.6 p.p. 0.0 p.p. Revenue to apportion, Works Contracts (2) % -4.1% Cost to incur, Works Contracts (2) % -1.7% Income to apportion, Works Contracts (2) % -11.6% Income Margin of Future Years (REF) 22.3% 22.7% 24.2% -0.4 p.p p.p. 1. Income to apportion of Works Contracts: approximately BRL 667 million corresponds to works not yet begun, in which, at the moment, the Company is working to adjust contractual parameters, finalize any regularization processes and negotiate dates for the beginning of the constructions. 25

26 HIGHLIGHTS OF BALANCE SHEET Cash and cash equivalents and investments The Direcional ended 3Q18, with a balance of cash, cash equivalents and investments of BRL 807 million, an 27% increase compared to the previous quarter and 42% in relation to 3Q17. This increase of balance is related mostly to inflow of resources from sale of MUC projects carried out in the month of September to the DMAC11 REIT, as published in the material fact on 09/03/2018. Cash and cash equivalents and investments 3Q18 2Q18 3Q17 (BRL thousand) (a) (b) (c) (a/b) (a/c) Cash and Cash Equivalents 634, , , % 43.09% Investments 172, , , % 38.22% Total 806, , , % 42.02% Accounts Receivable Direcional ended 3Q18 with bookkeeping balance of accounts receivable of BRL 495 million, 30% lower than 2Q18 and 45% lower compared to the same period of the previous year. The reduction of accounts receivable from sale of real estate, even with an increase in the volume of revenue in the quarter, due to (i) the higher volume of revenue of MCMV 2 and 3 segment, which transfers occur simultaneously to sales by reducing the average term of receipt and (ii) sale of MUC projects carried out in September to DMAC11 REIT, as published in material fact on 09/03/2018. The balance of accounts receivable of the segment of services remained at BRL 44 million, stable in relation to the previous quarter and 49% lower compared to 3Q17. Bookkeeping Accounts Receivable (BRL thousand) 3Q18 2Q18 3Q17 (a) (b) (c) (a/b) (a/c) Sale of Property 449, , , % -44.8% Rendering of services. 44,074 43,675 85, % -48.5% Sale of land 1,420 1,392 5, % -73.7% Total 495, , , % -45.3% Current portion 386, , , % -50.9% Non-current portion 108, , , % -8.5% 1. The bookkeeping accounts receivable in short term comprises the outstanding balances of customers adjusted and recognized in the result proportionally to the PoC ( Percent of Completion) regarding the date of the occupancy for the payment of the installment of financing by customers to the Direcional added by the revenue recognized of works projects. According to current accounting rules, the recognition of accounts receivable is proportional to the rate of performance of the respective works (Percentage of Completion - PoC). Thus, the balance of the accounts receivable of the units sold of incorporation and not completed is not fully reflected in the Financial Statements. In this respect, it shall be pointed out that the total balance of accounts receivable of the Direcional at the end of the 3Q18 was BRL 1.2 billion. 26

27 Indebtedness The gross balance of loans and financing closed the quarter in BRL 879 million, 11% reduction compared to the last quarter and 8% compared to the same period of the previous year. The debt reduction in the quarter is explained by (i) amortization of financing Agreement for the production, in line with the company's strategy to replace its operational debts by corporate debt and (ii) debts hold by the SPE sold in the sale operation of projects to DMAC11 REIT in September. The final object is a debt with reduced cost and longer profile. The Directional ended the quarter with net debt on net equity of 5.2%, representing one of the lower leverage ratios among peers in the industry. The following table and charts below show the opening of debt, as well as amortization schedule. Indebtedness (BRL thousand) 3Q18 2Q18 3Q17 (a) (b) (c) (a/b) (a/c) Loans and Financing 878, , , % -7.5% CRI 546, , , % 101.4% Financing to Production 210, , , % -59.5% CCB 108, , , % -27.1% FINAME and Leasing 14,208 11,736 10, % 32.7% Cash and Cash Equivalents 806, , , % 82.0% Net debt 72, , , % -85.8% Net Debt /Net Worth 5.2% 22.9% 22.9% p.p p.p. Loans and Financing by index 878, ,965 1,072, % -7.5% TR 203, , , % -59.5% CDI 675, , , % 55.3% Amortization Schedule¹ (R$ million) Loans and Financing (% of Debt) Corporate Finame and Leasing 2% Construction Financing 24% SFH CCB 12% 62% CRI Until Set/19 Until Set/20 Until Set/21 After Set/21 1. The amortization schedule of the debt is based exclusively on the amortization period agreed upon in the financing agreements with banks. In fact, the liquidation of financing should occur in shorter period, according to the transfer of the financing portion from customers to financing banks. 27

28 Cash Generation (cash burn)¹ In 3Q18, the Direcional presented Cash Generation of BRL 287 million. Excluding the cash generation resulting from the sale of MUC projects to DMAC11 REIT occurred in September, in the quarter, Direcional generated BRL 41 million. In the accrual for the first nine months of the year, cash generation totaled BRL 338 million. In the year, the good performance, disregarding the DMAC11 REIT operation, is mainly explained by the acceleration of the operation of the MCMV segment, after a significant increase of cash inflow volume of transferred units also by the increase of transfer in the MAC segment. The chart below shows the history of the company's cash generation in the past 5 years, in addition to the performance in 9M18. Cash Generation (cash burn) (R$ million) DMAC11 REIT Cash Generation Cash Burn M Cash Generation (Cash Burn) variation of net adjusted debt for payment of dividends and stock repurchases. 28

29 FII PUBLIC OFFE Direcional Engenharia S/A, on 09/03/2018 sold to MAC Fundo de Investimento Imobiliário ("FII"), the shares that correspond to 99.9% (ninety-nine and ninety-hundredths percent) of the total capital stock of the companies Lago da Pedra Participações S/A (CNPJ/MF / ) ("Lago da Pedra") and Vila Alba Participações S/A (CNPJ/MF / ) ( Vila Alba and Lago da Pedra herein defined as Invested Companies ), and, indirectly, its totality share of the operational companies ( SPE ) indicated in the Material News announced on July 18, 2018, by signing, on this date, the "Share Purchase Agreement" ("Agreement") with the FII. According to the Agreement, the FII paid to the Company, on this date, the first installment of the price, corresponding to one hundred and fifty-five million six hundred eight thousand Brazilian Reais (R$ 155,608,000.00) ("Acquisition Price"). In addition to the Acquisition Price, the following installments will be due to the Company, in accordance with the terms and conditions expressly set forth in the Agreement: - Initial Price Adjustment. Exclusively in the event that the sum of the amount effectively distributed by the Invested Companies to the FII, after the Closing Date, reaches an amount equal to the Acquisition Price plus the Cash Reserve (as defined in the FII s Regulation), monthly corrected by the IPCA plus a capitalized rate of 10% (ten percent) per year, based on a year composed of two hundred and twenty-two Business Days, counted from August 31 st, 2018, according to the formula set forth in the Agreement ("Reference Value"), the FII shall pay to the Company an amount corresponding to up to twenty-seven million five hundred forty-eight thousand Brazilian Reais (R$ 27,548,000.00), corrected by DI Rate as of this date ("Maximum Initial Price Adjustment Value"). - Final Price Adjustment. If the Maximum Initial Price Adjustment Value is reached and effectively paid by the FII to the Company, than the FII will have the obligation to pay the Company, a percentage equivalent to 90% (ninety percent) of the amount effectively distributed, for any reason, by the Invested Companies to the FII in the respective monthly period, after the deduction of the FII Expenses, until all the units of the real estate developments held by the SPE ("Developments") have been sold and the results from those sales distributed by the Invested Companies to the FII ( Final Price Adjustment"). In addition to the share purchase transaction, the Company announces that one of its subsidiaries ("Santana dos Montes Consultoria e Gestão de Empreendimentos Imobiliários Ltda.") has been hired by the FII, the Invested Companies and the SPE for the rendering of Specialized Consulting Services and Real Estate Management of the Projects. Statements contained in this release regarding business prospects, projections of operating and financial results and references to the Company's growth potential are mere forecasts and were based on Management's expectations and estimates regarding the Company's future performance. Although the Company believes that such forecasts are based on reasonable assumptions, it does not ensure that they are achieved. The expectations and estimates underlying the Company's future prospects are highly dependent on market behavior. Brazil's economic and political situation, existing and future state regulations, industry and international markets, and are therefore subject to change that run away from the control of the Company and its Management. The Company does not undertake to publish updates or revise the expectations, estimates and forecasts contained in this release arising from future information or events. 29

30 CONSOLIDATED BALANCE SHEET IFRS ASSETS 09/30/18 12/31/17 CURRENT ASSET Cash and cash equivalents Financial investments Trade receivables Inventory Related parties Taxes recoverable Accounts receivable from share sale transaction Other receivables Total Current Assets NONCURRENT ASSET Trade receivables Inventory Related parties Judicial deposits Accounts receivable from share sale transaction Other receivables Investments Property and equipment Intangible assets Total non-current assets Total Assets LIABILITIES AND SHAREHOLDER'S EQUITY 09/30/18 12/31/16 CURRENT LIABILITIES Loans and Financing Trade payables Labor obligations Tax liabilities Property commitments payable Advances from customers Proposed Dividends Other payables Provision for warranties Related parties Total Current Liabilities NONCURRENT LIABILITIE Loans and Financing Trade payables Provision for warranties Tax liabilities Property commitments payable Advances from Customers Provision for tax, labor and civil contingencies Other payables Related parties - - Total non-current liabilities Capital Capital reserves Stock options granted Equity valuation adjustment Treasury shares Retained earnings Earnings of the year - - Equity Non-controlling interests Total Equity Total liabilities and equity