Rodobens Negócios Imobiliários S.A.

Transcription

1 Rodobens Negócios Imobiliários S.A. (A free translation of the original report in Portuguese) KPDS

2 Contents Independent auditors' report on the financial statements 3 Balance sheets 9 Statements of income 10 Statements of comprehensive income 11 Statements of changes in shareholders' equity - Parent company and 12 Statements of cash flows 13 Statements of added value 14 Notes to the financial statements 15 Management report 66 2

3 KPMG Auditores Independentes Passeio das Castanheiras, Salas 407 a 411 Condomínio Tríade - Torre Nova York - Parque Faber Castell São Carlos/SP - Brasil Caixa Postal CEP São Carlos/SP - Brasil Telefone +55 (16) , Fax +55 (16) Independent auditors' report on the financial statements To the Shareholders and Management of Rodobens Negócios Imobiliários S.A. São José do Rio Preto - SP Opinion We have examined the individual and consolidated financial statements of Rodobens Negócios Imobiliários S.A. ( Company ), identified as Parent Company and, respectively, comprising the balance sheet as of and the related statements of income, comprehensive income, changes in shareholders' equity and cash flows for the year then ended, as well as the corresponding notes, comprising the significant accounting policies and other clarifying information. Opinion on the individual financial statements In our opinion, the individual aforementioned financial statements present fairly, in all material respects, the financial position of Rodobens Negócios Imobiliários S.A. as of, the performance of its operations and its cash flows, for the year then ended, in accordance with the accounting practices adopted in Brazil. Opinion on the consolidated financial statements In our opinion, the aforementioned consolidated financial statements present fairly, in all material respects, the consolidated financial position of Rodobens Negócios Imobiliários S.A. as of, the consolidated performance of its operations and its cash flows, consolidated for the year then ended, in accordance with the accounting practices adopted in Brazil and International Financial Reporting Standards (IFRS) applicable to real estate development entities in Brazil, as approved by the Accounting Pronouncement Committee (CPC), by the Securities Commission (CVM) and by the Federal Accounting Council (CFC). Basis for opinion Our audit was conducted in accordance with Brazilian and international standards on auditing. Our responsibilities, in compliance with such standards, are described in the following section, titled Auditor s Responsibility for the Auditing of Financial Statements. We are independent in relation to the Company, according to the relevant ethical principles KPMG Auditores Independentes, uma sociedade simples brasileira e firmamembro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative ( KPMG International ), uma entidade suíça. KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. 3

4 established in the Code of Professional Ethics and the professional standards issued by the Federal Accounting Council - CFC, and we comply with the other ethical responsibilities according to these standards. We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of matter OCPC 04 Guideline issued by the Accounting Pronouncements Committee As described in Note 2.1, the individual and consolidated financial statements were prepared in accordance with accounting practices adopted in Brazil. financial statements prepared in accordance with IFRSs applicable to real estate development entities also consider OCPC 4 Guideline issued by the Accounting Pronouncement Committee. This guideline addresses revenue recognition of this industry and involves matters related to the meaning and application of the risk and benefit continuous transfer concept and of the control on sale of real estate units concept, as further described in Note 3.12 of individual and consolidated financial statements. Our opinion is not qualified in this respect. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significant in our audit of the individual and consolidated financial statements of the current period. These matters were addressed in the context of our audit of individual and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Recoverable value of real estate inventories - Parent company and consolidated As mentioned in notes 3 and 7 to the individual and consolidated financial statements, the current economic scenario has been generating an increase in inventories and consequently a reduction of prices of properties, increasing the possibility of occurrence of real estate units accounted for at a cost higher than its net realizable value. In view of this scenario, the Company regularly evaluates the realizable value of properties in inventory so as to estimate the need to form provision for impairment loss. The determination of the recoverable value of inventories is documented in evaluation that includes judgments and assumptions by the Company, which considers projections for future events, such as schedule of launchings, sales values and cost estimate, associated to current market conditions. Any change in these assumptions may significantly affect the value of these assets in the individual and consolidated financial statements and the value of investment recorded under the equity method in the financial statements of the parent company, and therefore we considered this matter significant in our audit work. How our audit treated this matter We evaluated the design, implementation and operating effectiveness of the key internal controls related to the business plan, budget and feasibility studies of the projects, which are base for approval and launching of the real estate developments. We evaluated the methodology and assumptions adopted by the Company in the calculation of recoverable value of properties in inventory, including the review of the business plan, budgets of cost and market studies. We compared the realized value of similar assets for properties concluded and under construction. Based on a sample, we also made the analysis of the reasonableness of the mathematical calculations included in such documents. We also evaluated the fairness of the information disclosed by the Company concerning the analysis of the recoverable value of real estate assets. KPMG Auditores Independentes, uma sociedade simples brasileira e firmamembro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative ( KPMG International ), uma entidade suíça. KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. 4

5 Impairment of accounts receivable - Parent Company and As mentioned in notes 3 and 5 to the individual and consolidated financial statements, the Company defines criteria and methodologies for evaluation of the recoverable value of the balance of accounts receivable in order to determine the estimated amount subject to nonrealization and, consequently, the potential formation of allowance for doubtful accounts. In view of the current economic scenario, the risk of default or contract dissolution has increased. The evaluation of the recoverable value of these receivables involves a high degree of judgment by the Company, with potential relevant impact on the individual and consolidated financial statements and on the value of investment recorded under the equity method in the financial statements of the parent company, and, in respect to this, we considered this matter significant in our audit work. How our audit treated this matter We evaluated the design, implementation and operating effectiveness of the key internal controls of the Company related to credit evaluation upon sale of properties, as well as the key controls related to identification and recording of accounts receivable and recognition and measurement of the reduction to recoverable value. We evaluated the methodology and assumptions adopted by the Company to calculate the amount subject to non-realization, concerning the characteristics of the operations, guarantees, comparison with historical data of losses, default terms, potential contract dissolutions, history of contract dissolutions and market data. We compared the accuracy of the estimates made in prior years with the effective losses recognized in subsequent periods. Our evaluation also includes the information disclosed by the Company mainly in relation to the analysis of the amount subject to non-realization of the balance of accounts receivable. Provisions and contingent liabilities - Parent company and consolidated As mentioned in notes 3 and 19 to the individual and consolidated financial statements, the Company is defendant in civil lawsuits, derived from the normal course of business. The provisions are recognized when resulting from past events where there is probable financial disbursement and the value may be estimated on reliable basis. Contingent liabilities with chance of possible loss are not recognized but they are disclosed in the notes. Due to the increasing volume of civil lawsuits and considering the complexity and the judgment by the Company and outside legal advisors which may affect the evaluation, measurement and information disclosed concerning Provisions and Contingent liabilities in the individual and consolidated financial statements and in the value of investment recorded under the equity method in the financial statements of the parent company, we considered this matter significant in our audit. How our audit treated this matter We evaluated the provisions recognized and the values of contingencies disclosed, by means of analysis of criteria and assumptions adopted in the methodology of recognition, measurement and information disclosed of provisions and contingencies. We traced the position of provisions and contingent liabilities to the opinions of internal and outside legal advisors of the Company, obtained through confirmation, as well as information and historical data of similar lawsuits. For lawsuits involving higher values, we confirmed the evaluation made by internal and outside legal advisors with recent decisions for issues of the same nature. We also evaluated if the information disclosed in the financial statements complies with the applicable standards and provides information about the nature, exposure and values at risk on the principal disputes involving the Company. KPMG Auditores Independentes, uma sociedade simples brasileira e firmamembro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative ( KPMG International ), uma entidade suíça. KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. 5

6 Other matters Statements of added value The individual and consolidated statement of added value (DVA) for the year ended, prepared under responsibility of Company's management, and presented as supplementary information for IFRS purposes, has been subject to audit procedures jointly performed with the audit of Company s financial statements. In order to form our opinion, we assessed whether these statements are reconciled with the financial statements and accounting records, as applicable, and whether their form and content are in accordance with the criteria defined in Technical Pronouncement 09 (CPC 09) - Statement of Added Value issued by the Committee for Accounting Pronouncements (CPC). In our opinion, these statements of added value were prepared, in all material respects, in accordance with the criteria determined by the aforementioned Technical Pronouncement, and are consistent in relation to the individual and consolidated financial statements taken as a whole. Other information accompanying individual and consolidated financial statements and the auditor's report The Company's management is responsible for such other information that comprise the Management Report. Our opinion on the individual and consolidated financial statements does not include the Management Report and we do not express any form of audit conclusion on such report. Regarding the audit of individual and consolidated financial statements, our responsibility is to read the Management Report and, in doing so, consider whether this report is, in a material way, inconsistent with the financial statements or with our knowledge gained in the audit or otherwise appears to be materially misstated. If, based on the works performed, we conclude that there is a material misstatement in the Management Report, we are required to disclose this fact. We have nothing to report in this regard. Responsibilities of management and governance for the individual and consolidated financial statements The Management is responsible for the preparation and adequate presentation of the individual financial statements in accordance with the accounting practices adopted in Brazil and of the consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) applicable to real estate development entities in Brazil, as approved by the Accounting Pronouncement Committee (CPC), by the Securities Commission (CVM) and by the Federal Accounting Council (CFC), as well as for the internal controls that it deemed necessary to enable the preparation of financial statements free of significant distortions, regardless of whether the latter were caused by fraud or error. In the preparation of individual and consolidated financial statements, management is responsible for assessing the ability of the Company to continue as a going concern, disclosing, where applicable, the matters relating to its going concern and the use of this basis of accounting in preparing the financial statements, unless management intends to wind-up the Company and its subsidiaries or cease its operations, or has no realistic alternative to avoid the closure of operations. Those charged with governance of the Company and its subsidiaries are the people responsible for overseeing the process of preparation of the financial statements. KPMG Auditores Independentes, uma sociedade simples brasileira e firmamembro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative ( KPMG International ), uma entidade suíça. KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. 6

7 Auditor s responsibilities for the audit of individual and consolidated financial statements Our goals are to obtain reasonable assurance that the individual and consolidated financial statements, taken as a whole, are free from material misstatement, whether due to fraud or error, and issue the audit report with our opinion. Reasonable assurance is a high assurance level, but not a guarantee that the audit performed according to the Brazilian and international auditing standards always detect possible existing material misstatements. Misstatements may be due to fraud or error and are considered material when, individually or taken as a whole, can influence, within a reasonable perspective, the economic decisions of users taken based on these financial statements. As part of the audit conducted in accordance with Brazilian and international auditing standards, we exercise professional judgment and maintain our professional skepticism throughout the audit. Moreover: We identify and assess the risks of material misstatement of individual and consolidated financial statements, whether due to fraud or error, plan and perform audit procedures in response to such risks and obtain sufficient and appropriate audit evidence for expressing our opinion. The risk of not detecting material misstatement resulting from fraud is higher than that arising from error, once the fraud may involve the act of dodging the internal controls, collusion, falsification, omission or false intentional representations. We obtained an understanding of the internal controls relevant to the audit to plan appropriate audit procedures under the circumstances, but not with the objective of expressing opinion on the effectiveness of the internal controls of the company and its subsidiaries. We evaluated the adequacy of the accounting procedures used and the reasonableness of the accounting estimates and the respective disclosures made by the management. We concluded about the adequacy of the use, by management, of the accounting basis of going concern, and, based on the audit evidences obtained, whether there is a material uncertainty in relation to the events or conditions that may give rise to significant doubt in relation to the Company s and its subsidiaries ability to continue as a going concern. If we conclude that there is material uncertainty, we will call attention in our audit report to the respective disclosures in the financial statements or include any change in our opinion, if the disclosures are inappropriate. Our conclusions are based on the audit evidences obtained until the date of our report. However, future events or conditions may cause the Company and its subsidiaries to no longer continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including disclosures, and whether the financial statements represent the corresponding transactions and events in a manner that is consistent with the objective of proper reporting. We obtain appropriate and sufficient audit evidence regarding the financial information of the entities or business activities of the group to express an opinion on the individual and consolidated financial statements. We are responsible for directing, supervising and carrying out the group s audit and, therefore, for the audit opinion. We communicate with those charged with governance regarding, among other aspects, the planned scope, the audit timing, and the significant audit findings, including the possible any significant deficiencies in internal controls that we identify during our works. KPMG Auditores Independentes, uma sociedade simples brasileira e firmamembro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative ( KPMG International ), uma entidade suíça. KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. 7

8 We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the individual and consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. São Carlos, March 15, 2017 KPMG Auditores Independentes CRC 2SP014428/O-6 Original report in Portuguese signed by Rafael Henrique Klug Accountant CRC 1SP246035/O-7 KPMG Auditores Independentes, uma sociedade simples brasileira e firmamembro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative ( KPMG International ), uma entidade suíça. KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. 8

9 Balance sheets as of and 2015 (Amounts expressed in thousands of reais) Parent company Parent company Assets Note Liabilities Note Cash and cash equivalents 4 80, , , ,919 Suppliers 1,313 2,324 21,018 30,775 Interest earning bank deposits Trade receivables 5 15,214 19, , ,455 Loans and financing 11 19,824 99, , ,836 Accounts receivable from sale of lands 6 1,553 21,332 11,472 37,312 Debentures 12 52,201 53,604 52,201 53,604 Property for sale 7 2, , ,789 Social charges and labor legislation obligations 4,682 4,240 7,487 7,918 Accounts receivable from sales of corporate quotas Taxes payable ,606 7,345 Third-party receivables 14 43,345 79,519 48,518 63,940 Funds from partners ,737 1,184 1,733 Expenses to be transferred to SPEs 1,300 1,424 1,300 1,424 Accounts payable for acquisition of real estate 15-3,045 13,964 27,301 Unearned sales expenses - - 5,148 7,320 Deferred taxes 17 1,040 1,082 26,579 35,804 Prepaid expenses 765 2, ,611 Provision for guarantee ,171 13,541 Co-obligations ,358 3,258 Co-obligations ,358 3,258 Dividends receivable 8.a 40,401 5, Debts with related parties Other credits 3,621 4,384 20,779 26,390 Provision for losses in investees 8 10,800 7,080 2,543 2,083 Provision for profit sharing - 2,258-2,258 Total current assets 189, , ,105 1,142,891 Minimum compulsory dividends payable - 1,603-1,603 Accounts payable from acquisition of interest and anticipation of condominiums 13 5,665 12,333 5,665 12,333 Interest earning bank deposits 4 12,587 9,449 23,722 9,520 Advance from clients ,107 60,637 Trade receivables 5 6,638 7, , ,505 Other accounts payable 1,575 3,101 17,448 18,901 Accounts receivable from sale of lands 6 40,866 21, , ,829 Property for sale 7 34,808 34, , ,845 Total current liabilities 99, , , ,720 Judicial deposits 3,406 2,384 7,184 5,015 Related party credits 16 6,745 7, ,373 Deferred taxes ,963 11,285 Loans and financing 11 96, , ,895 Investments: Debentures 12 49,939 99,751 49,939 99,751 Investments in subsidiaries and jointly-controlled subsidiaries 8 665, ,971 93,315 32,477 Provision for tax, labor and civil risks 19 1,607 1,464 20,077 17,227 Property, plant and equipment 9 16,192 21,495 21,791 28,300 Accounts payable for acquisition of real estate ,734 14,392 Accounts payable from acquisition of interest and anticipation of condominiums Intangible assets 10 5,229 6,257 9,360 19,819 Total non-current liabilities 148, , , ,550 Total non-current assets 792, , , ,683 Shareholders' equity 20 Capital 512, , , ,438 Legal reserve 27,140 27,140 27,140 27,140 Profit retention 210, , , ,068 Treasury shares (16,020) (13,196) (16,020) (13,196) Accumulated losses Shareholders' equity attributable to controlling sharehol 734, , , ,450 Non-controlling interest in investees ,627 33,854 Total shareholders' equity 734, , , ,304 Total liabilities 247, , , ,270 Total assets 981,629 1,114,332 1,578,022 1,705,574 Total liabilities and shareholders' equity 981,629 1,114,332 1,578,022 1,705,574 See the accompanying notes to the financial statements 9

10 Statements of income Years ended December and 2015 (Amounts expressed in thousands of Reais, except net earnings per share - basic and diluted) Parent company Note Net income from real state development sold 23 5,222 3, , ,327 Cost of real state development sold 24 (5,846) (165) (347,960) (393,166) Gross (loss) / income (624) 2,897 38, ,161 Operating (expenses) income Commercial and sales 24 (4,589) (4,736) (53,178) (50,804) General and administrative 24 (44,628) (48,524) (69,362) (77,657) Employee profit sharing 24 - (2,258) - (2,258) Other operating income and expenses, net (5,755) 6,846 (14,221) (25,361) Income (loss) from fair value appraisal - (4,076) - (4,076) (54,972) (52,748) (136,761) (160,156) (Loss) income before net financial income (expenses) and taxes (55,596) (49,851) (98,737) 4,005 Net financial income (expenses) Net monetary variations 25 1,441 2,440 12,053 21,631 Financial income 25 15,358 20,930 48,105 61,308 Financial expenses 25 (38,662) (48,309) (52,588) (58,978) (21,863) (24,939) 7,570 23,961 Equity in income of subsidiaries 8 20,775 89,615 31,500 3,666 Provision for unsecured liability in investees 8 (19,042) (8,077) (572) (801) Profit sharing of investees by the equity method and allowance for unsecured liabilities, net of taxes 1,733 81,538 30,928 2,865 (Loss) income before taxes (75,726) 6,748 (60,239) 30,831 Income and social contribution taxes Current (17,404) (24,135) Deferred ,372 3, (15,032) (20,801) (Loss) net income for the year (75,726) 6,748 (75,271) 10,030 (Loss) net income attributed to: Controlling interest (75,726) 6,748 (75,726) 6,748 Non-controlling interest in investees ,282 (75,726) 6,748 (75,271) 10,030 Earnings per share Basic and diluted (Reais per share) 21 (1.795) (1.795) See the accompanying notes to the financial statements 10

11 Statements of comprehensive income Years ended December and 2015 (Amounts expressed in thousands of Reais) Parent company (Loss) net income for the year (75,726) 6,748 (75,271) 10,030 Other comprehensive income Comprehensive income for the year (75,726) 6,748 (75,271) 10,030 Comprehensive income attributed to: Controlling interest (75,726) 6,748 (75,726) 6,748 Non-controlling interest in investees ,282 (75,726) 6,748 (75,271) 10,030 See the accompanying notes to the financial statements 11

12 Statements of changes in shareholders' equity - Parent company and Years ended December and 2015 (Amounts expressed in thousands of Reais) Profit reserves Attributable to controlling shareholders Note Capital Legal reserve Profit retention Treasury shares Retained earnings (loss) Total Interest of noncontrolling shareholders in investees Total shareholders' equity Balances at January 1, ,438 26, , ,260 87, ,941 Purchase of shares to hold them in treasury (18,006) - (18,006) - (18,006) Exercised stock options - - 2, ,010-2,010 Reversal of exercised stock options - - (959) - - (959) - (959) Cancellation of shares (4,810) 4, Net income for the year ,748 6,748 3,282 10,030 Proposal for the use of net income Legal reserve 337 (337) - - Minimum compulsory dividends (1,603) (1,603) (1,603) Profit retention reserve 4,808 (4,808) - - Changes in shareholders equity of non-controlling interests in investees Capital increase from non-controlling shareholders ,324 5,324 Capital decrease from non-controlling shareholders (10,475) (10,475) Sale of corporate quotas by non-controlling shareholders (41,244) (41,244) Proposal for the use of net income of non-controlling shareholders: Income distributed to non-controlling shareholders (10,714) (10,714) Balances at December 31, ,438 27, ,068 (13,196) - 818,450 33, ,304 Purchase of shares to hold them in treasury (461) - (461) - (461) Exercised stock options Cancellation of stock options - - 2,363 (2,363) Approved additional dividends pursuant to Annual/Special Shareholders Meeting on April 26, (8,397) - - (8,397) - (8,397) Loss for the year (75,726) (75,726) 455 (75,271) Proposal for the use of net income Absorption of accumulated losses with reserve for profit retention (75,726) - 75, Changes in shareholders equity of non-controlling interests in investees Capital increase from non-controlling shareholders Capital decrease from non-controlling shareholders (8,025) (8,025) Proposal for the use of net income of non-controlling shareholders: Income distributed to non-controlling shareholders (6,712) (6,712) Balances at 512,438 27, ,925 (16,020) - 734,483 19, ,110 See the accompanying notes to the financial statements 12

13 Statements of cash flows Years ended December and 2015 (Amounts expressed in thousands of Reais) Parent company Cash flow from operating activities (Loss) net income for the year (75,726) 6,748 (75,271) 10,030 Adjustments to reconcile net profit to the net cash from (used in) operating activities: Deferred taxes (20) 97 (6,547) (5,470) Depreciation/amortization 6,343 5,994 6,670 6,316 Stock option plan expenses 617 1, ,051 Equity in income of subsidiaries (20,775) (89,615) (31,500) (3,666) Income (loss) from fair value - 4,076-4,076 Allowance for doubtful accounts 75-7,830 - Income (loss) from disposal of investment Provision for losses in subsidiaries 19,042 8, Write-offs of property, plant and equipment 1,063 2,845 1,262 4,673 Provision for tax, labor and civil risks ,850 4,692 Monetary restatement on loans and financing 37,553 42,733 81,638 70,202 Provisions for guarantees (48) Distribution of profit sharing - 2,258-2,258 Changes in operating assets Trade receivables 5, ,491 49,210 Accounts receivable from sale of lands 40 (3,489) 915 (16,512) Property for sale (2,967) 4,977 (19,773) 76,271 Third-party Receivables 36, ,381 18,953 14,263 Expenses to be transferred to SPEs 124 1, ,691 Unearned sales expenses - - 2,172 (951) Prepaid expenses 1, ,821 1,334 Other receivables ,611 (1,427) Clients - Co-obligations 597 5, ,514 Related party credits 1,044 43,152 2,276 22,114 Judicial deposits (1,022) (226) (2,169) 84 Variation in operating liabilities Suppliers (1,011) (1,821) (9,757) 3,880 Tax and social payable 318 (434) 8,991 14,792 Accounts payable for acquisition of real estate (3,045) (12,128) (2,995) (148,680) Advance from clients - - (38,530) 6,135 Funds from partners (1,261) (9,461) (549) (7,289) Distribution of profit sharing (2,258) (11,434) (2,258) (11,438) Debts with related parties 9 (9,363) 119 (336) Accounts payable from acquisition of interest (6,668) (16,919) (6,668) (16,919) Other accounts payable (1,526) (395) (1,453) (864) Clients - Co-obligations (597) (5,641) (900) (7,514) Net cash generated in operating activities (5,117) 74,277 31,671 82,054 Payment of interest on financing (36,118) (41,489) (72,766) (64,604) Payment of income and social contribution taxes - - (12,161) (18,310) Net cash flow (used in) from operating activities (41,235) 32,788 (53,256) (860) Cash flow from investment activities Acquisition of property, plant and equipment and intangible assets (1,760) (5,849) (11,928) (8,672) Decrease (increase) in investments 66, ,515 (12,717) 12,964 Decrease (increase) in investments at fair value Interest earning bank deposits (3,138) (9,290) (14,202) (9,322) Cash flow (used in) from investment activities 61,743 96,376 (38,847) (5,030) Cash flow from financing activities Payment of loans and financing (156,324) (135,522) (291,953) (287,708) Loans and financing 120, , ,362 Payment of repurchase of shares (461) (18,006) (461) (18,006) Income distributed (10,000) (16,240) (10,000) (16,240) Non-controlling shareholders Payment of dividends to non-controlling shareholders - - (6,712) (10,714) Capital increase from non-controlling shareholders ,324 Capital decrease from non-controlling shareholders - - (8,025) (10,475) Acquisition of corporate quotas by non-controlling shareholders Sale of corporate quotas by non-controlling shareholders (41,244) Net cash flow from (used in) financing activities (46,785) (169,768) 6,998 (101,701) Net decrease in cash and cash equivalents (26,277) (40,604) (85,105) (107,591) Cash and cash equivalents at January 1 106, , , ,510 Cash and cash equivalents at December 31 80, , , ,919 Difference (26,277) (40,604) (85,105) (107,591) See the accompanying notes to the financial statements 13

14 Statements of added value Years ended December and 2015 (Amounts expressed in thousands of Reais) Parent company Income Income from real state development sold 4,986 2, , ,759 Allowance for doubtful accounts (75) (1,651) (7,830) (29,458) Other income (185) (776) (176) (549) Inputs acquired from third parties Cost of real state development sold (5,846) (165) (347,960) (393,166) Materials, energy, outsourced services and other (20,742) (24,739) (88,870) (94,964) Gross added value (21,862) (24,490) (50,469) 51,622 Retentions Depreciation, amortization and depletion (6,343) (5,994) (6,670) (6,316) Net added value produced (28,205) (30,484) (57,139) 45,306 Added value received as transfer Equity in income of subsidiaries 20,775 89,615 31,500 3,666 Loss from fair value - (4,076) - (4,076) Provision for losses in subsidiaries (19,042) (8,077) (572) (801) Financial income (loss) (3,288) (4,988) 27,637 45,633 Other income (5,496) 9,273 (6,215) 4,646 Total added value payable (35,256) 51,263 (4,789) 94,374 Distribution of added value Personnel Direct remuneration 14,305 17,524 16,626 19,660 Benefits 3,375 2,607 3,749 2,865 F.G.T.S , ,038 Taxes, rates and contributions Federal 3,358 3,350 28,244 38,047 State Municipal ,060 Third-party capital remuneration Interest 18,575 19,951 20,067 21,672 Remuneration of own capital Income (loss) for the year (75,726) 6,748 (75,726) 6,748 Non-controlling interest in retained earnings ,282 Distributed added value (35,256) 51,263 (4,789) 94,374 See the accompanying notes to the financial statements 14

15 Notes to the financial statements 1 Operations Rodobens Negócios Imobiliários S.A. (the Company ), headquartered in the city of São José do Rio Preto, State of São Paulo, at Avenida Francisco das Chagas de Oliveira, nº 2.500, Higienópolis, CEP , is engaged in the purchase and sale of real estate, parceling or plotting of land, real estate development and construction of properties for sale, provision of services to third parties and management of own or third-party real estate financing receivables portfolio. With publicly-traded stock since January 2007, recorded under CVM code with shares in the new market with the trading code RDNI3, the Company is part of Empresas Rodobens and its real estate developments are established in the form of SPEs - Special Purpose Entities and can rely on the partnership of local partners through direct interests in the SPEs. The Company has two segments: Stillo Rodobens covers mid- and high-level condominiums designed as private clubs with large common areas and a number of leisure items and Rodobens Urbanismo, with a focus on managing extensive areas intended for property development. The Company s subsidiaries and jointly-controlled subsidiaries are summarized in Note 8. 2 Basis for preparation of the financial statements 2.1 Statement of compliance (in relation to IFRS standards and CPC standards) The consolidated financial statements were prepared in compliance with the International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) applicable to Real Estate Development Entities in Brazil, including Guidance OCPC 04 - Application of Technical Interpretation ICPC 02 to property development companies in Brazil with regard to revenue recognition in the activity and involving matters related to applying the concept of ongoing risk transfers, benefits and control of property units sold and also in compliance with the accounting practices adopted in Brazil (BR GAAP). The individual financial statements of the Parent company have been prepared in accordance with BR GAAP, and in the Company s case they differ from the financial statements prepared under IFRS regarding the recognition of equity in net income of subsidiaries in subsidiaries with a negative shareholders equity, pursuant to item 39A of CPC 18. These financial statements were approved by the Board of Directors of the Company on March 15, Functional and presentation currency These individual and consolidated financial statements are being presented in Reais, functional currency of the Company. All financial information presented in Brazilian Reais has been rounded to the nearest value, unless otherwise indicated. The Company did not perform transactions in foreign currency. 15

16 2.3 Presentation of segment information The operating segment information are disclosed in a consistent manner with the internal report provided to the main operating decision makers, represented by the Executive Board and Board of Directors, who are responsible for resource allocation, performance evaluation of the operating segments and strategic decision making. See details in Note Use of estimates and judgments The preparation of financial statements requires includes judgments, estimates and assumptions that affect the application of accounting policies and the reported values of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and assumptions are reviewed on a continuous basis. Revisions to accounting estimates are recognized in the year in which the estimates are revised and in any future periods affected. The most significant item subject to estimates and assumptions is the budgeted cost of real state developments recognize income under the percentage-of-completion method, as explained in item 3.12 below. Other significant items are provision for warranty, other provisions and expected useful lives of property, plant and equipment items. Judgments Information about judgment referring to the adoption of accounting policies which impact significantly the amounts recognized in the financial statements are included in the following note: Note Recognition of income in accordance with Guidelines OCPC 04 of the Accounting Pronouncements Committee, which refers to the application of Technical Interpretation ICPC 02 to Brazilian property development entities. Measurement at fair value A series of company accounting policies and disclosures requires the measurement of fair values, for financial and non-financial assets and liabilities. When measuring fair value of an asset or liability, the Company uses observable data as much as possible. Fair values are classified at different levels according to hierarchy based on information (inputs) used in valuation techniques, as follows: Level 1: Prices quoted (not adjusted) in active markets for identical assets and liabilities. Level 2: Inputs, except for quoted prices, included in Level 1 which are observable for assets or liabilities, directly (prices) or indirectly (derived from prices). Level 3: Inputs, for assets or liabilities, which are not based on observable market data (nonobservable inputs). The Company recognizes transfers between fair value hierarchic levels at the end of the financial statements period in which changes occurred. When the fair value of the financial assets and liabilities presented in the balance sheet cannot be obtained from active markets, it is determined by using valuation techniques, including the 16

17 discounted cash flow method. The data for these methods are based on those adopted by the market, when possible. However, when such data are not available, a certain level of judgment is required to establish the fair value. Judgment includes considerations on the data utilized, such as liquidity risk, credit risk and volatility. Changes in the assumptions related to these factors can affect the fair value presented for the financial instruments. Additional information about the assumptions used in the measurement of fair values are included in Note 22 - Financial instruments. 2.5 Measuring basis The financial statements were prepared based on the historical cost, except for certain financial instruments measured at its fair values, as described in the following accounting practices. The historical cost is usually based on the fair value of the payments made for the assets. 3 Significant accounting policies The accounting policies described in detail below have been consistently applied to all the periods presented in these individual and consolidated financial statements. 3.1 Consolidation basis Business combinations Business combinations are registered at the acquisition date, that is, the date on which control is transferred to the Company using the acquisition method. In the consolidated financial statements, acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred by the Company, liabilities incurred by the Company to the former owners of the acquiree and the equity interests issued by the Company in exchange for control of the acquiree. The costs related to the acquisition are often recognized in income (loss), when incurred Interest of non-controlling shareholders The Company chose to measure minority interests in the acquiree at their proportion in identifiable net assets on the acquisition date. Changes to the Company s interest in a subsidiary that do not result in loss of control are accounted for as transactions from shareholders equity Subsidiaries The Company controls an entity when it is exposed to, or has a right over the variable returns arising from its involvement with the entity and has the ability to affect those returns exerting its power over the entity. The financial statements of the subsidiaries are included in the consolidated financial statements as from the date they start to be controlled by the Company until the date such control ceases. The financial information of subsidiaries is recognized under the equity method in the individual financial statements of the parent company. 17

18 3.1.4 Goodwill Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any. For the purposes of impairment testing, goodwill is allocated to each of the Company's cashgenerating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination and every year is subject to impairment test. If the recoverable value of the cash-generating unit is less than its book value, the impairment loss is allocated first to reduce the book value of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the book value of each asset in the unit. Any impairment loss for goodwill is recognized directly in income (loss) for the period. An impairment loss recognized for goodwill is not reversed in subsequent periods. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal Investments in entities accounted for at the equity method The Company s investments in entities accounted for at the equity method include interest in associated companies and joint ventures. Associated companies are the entities in which the Company has, directly or indirectly, significant influence but not control or jointly-control on financial and operating policies. A jointly-owned subsidiary is established through a contract according to which the Company has shared control and is entitled to the contract s net assets, and not to specific assets and liabilities resulting from the agreement. Investments in associated companies and jointly-controlled subsidiaries are accounted for under the equity method. Such investments are initially recognized at cost, which includes expenses for the transaction. After initial recognition, consolidated financial statements include the Company s interest in investees income or losses for the year and other comprehensive income up to the date in which significant influence or joint control no longer exists Transactions eliminated in the consolidation The consolidated financial statements have been prepared in accordance with the following criteria: (i) elimination of the balances between the companies to be consolidated; () elimination of investments among the consolidated companies against the respective shareholders' equity of the investee; (iii) elimination of expense balances arising from consolidated intercompany transactions; (iv) elimination of profit in inventories, when applicable, originating from sales between or among the consolidated companies; and (v) calculation of interest of minority shareholders in the shareholders equity and in the consolidated income, when relevant. Differences in accounting practices between the subsidiaries and the Parent Company are adjusted to those of the Parent company for consolidation purposes, when applicable. 3.2 Financial instruments The Company classifies non-derivative financial assets in the following categories: financial instruments measured at fair value through profit or loss, financial assets held to maturity and loans and receivables. 18

19 The Company classified non-derivative financial liabilities into the following categories: financial liabilities measured at fair value through profit or loss and other financial liabilities Non-derivative financial assets and liabilities - Recognition and derecognition The Company initially recognizes the loans and receivables and debt instruments on the date that they are originated. All other financial assets and liabilities are recognized on the date of the negotiation when the Entity becomes a party to the contractual provisions of the instrument. The Company derecognizes a financial asset when the contractual rights to the cash flow of the asset expire, or when the Company transfers the rights to the reception of contractual cash flows over a financial asset in a transaction in which essentially all the risks and benefits of ownership of the financial asset are transferred. Any interest in such transferred financial assets that is created or retained by the Company is recognized as a separate asset or liability. The Company derecognizes a financial liability when its contractual obligations are discharged or canceled or expire. Financial assets and liabilities are offset and the net value reported in the balance sheet only when the Company has a legally enforceable right to offset and there is intention to settle on a net basis, or to realize the asset and settle the liability simultaneously Non-derivative financial assets - measurement Financial assets recorded at fair value through profit or loss A financial asset is classified as measured at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. The transaction costs are recognized in income (loss) as incurred. They are measured at fair value and changes in the fair value, including gains with interest and dividends, are recognized in the income for the year. Held to maturity financial assets Such assets are initially measured at fair value plus any transaction costs directly assignable. After their initial recognition, the financial assets held to maturity are measured at amortized cost using the effective interest rate method. Loans and receivables Such assets are initially measured at fair value plus any transaction costs directly assignable. After their initial recognition, loans and receivables are measured at amortized cost using the effective interest rate method. Cash and cash equivalents In cash flow statements, cash and cash equivalents include overdraft accounts negative balances that are immediately receivable and an integral part of the Company s cash management Non-derivative financial liabilities- Measurement A financial liability is classified as measured at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. The transaction costs are recognized in income (loss) as incurred. Financial liabilities recorded at fair value through profit or loss are 19

20 3.2.4 Capital measured at fair value and changes in the fair value of such liabilities, including gains with interest and dividends, are recognized in the income (loss) for the year. Other non-derivative financial liabilities are initially measured at fair value less any transaction costs directly assignable. After their initial recognition, these financial liabilities are measured at amortized cost using the effective interest rate method. Common shares Common shares are classified as shareholders' equity. Additional costs directly attributable to the issue of shares and share options are recognized as a deduction from shareholders' equity, net of any tax effects. Repurchase of shares When shares recognized as shareholders equity are repurchased, value of consideration paid, which includes any costs directly attributable, is recognized as a deduction to shareholders' equity. The repurchased shares are classified as treasury shares and presented as a deduction from shareholders' equity. When treasury shares are sold or reissued subsequently, value received is recognized as an increase to shareholders' equity, and gains or losses resulting from transactions are presented as capital reserve. 3.3 Impairment Non-derivative financial assets Financial assets not classified as financial assets at fair value through profit or loss, including investments accounted for under the equity method, are evaluated at each balance sheet date to determine if there are objective impairment evidence. Objective evidences of financial assets impairment include: debtor s default or delays; restructuring of an amount owed to the Company at conditions not considered as normal conditions; indications that the debtor or issuer will face bankruptcy/court-ordered reorganization; negative changes in payment situation of debtors or issuers; the disappearance of an active market for an instrument due to financial difficulty; or observable data indicating that expected cash flow measurement of a group of financial assets decreased. For investments in membership certificates, objective impairment evidences include a significant or prolonged decline in fair value, below cost. The Company considers a decline of 20% as significant and the period of 9 months as prolonged. 20

21 3.3.2 Financial assets measured at amortized cost The Company considers as evidence of impairment of assets measured by amortized cost both individually and on an aggregate basis. All individually significant assets are evaluated for impairment losses. Those that did not lose value individually are then collectively evaluated for loss in value that may have occurred but not yet identified. Assets that are not individually significant are collectively evaluated for impairment based on group of assets with similar risk characteristics. When assessing impairment on an aggregate basis the Company makes use of historical trends of the recovery term and the amounts of losses incurred, adjusted to reflect the management's judgment if the current economic and credit conditions are such that the actual losses will probably be higher or lower than those suggested by historical trends. An impairment loss is calculated as the difference between book and present value of estimated future cash flows discounted at the asset s original effective interest rate. The losses are recognized in an allowance in the income statement. When the Company considers that it is not possible to reasonably expect recovery, amounts are written-off. When a subsequent event indicates loss reduction, provision is reversed through profit or loss. Investees accounted for at the equity method A loss by a reduction to recoverable value referring to an investee recognized under the equity method is valuated by comparing the investment s recoverable value to its book value. An impairment loss is recognized in the statement of income and is reversed if there has been a favorable change in the estimates used to determine the recoverable value Non-financial assets The book values of the Company's non-financial assets, except for inventories and deferred tax assets are reviewed at each balance sheet date for indication of impairment. If such indication exists, the asset's recoverable value is estimated. In case of goodwill, recoverable value is tested on an annual basis. For tests of reduction in recoverable value, assets are grouped into the smallest identifiable group of assets that can generate cash inflows by continuous and those are mostly independent of the inflows of other assets or Cash Generating Units (CGU). Goodwill in business combinations is allocated to cash generating units or groups of cash generating units that are expected to benefit combination synergy. Recoverable value or CGU of an asset is the higher of value in use and fair value less selling costs. Value in use is based on estimated future cash flows discounted to present value using a discount rate before taxes that reflects current market evaluations of times value of money and the specific risks of the assets or CGU. An impairment loss is recognized when the book value of an asset or its CGU exceeds its recoverable value. Impairment losses are recognized in profit or loss. Recognized losses referring to CGUs are initially allocated to reduce any goodwill allocated to that CGU (or CGU group) and then to reduce the book value of other assets of that CGU (or CGU group) on a pro rata basis. 21

22 An impairment loss related to goodwill is not reversed. Regarding other assets, impairment losses are reversed only with the condition that the book value of the asset does not exceed the new book value that would have been calculated, net of depreciation or amortization, if the value loss had not been recognized. 3.4 Property for sale Represented by units completed or under construction but not yet sold, as well as land for future developments. Carried at acquisition cost plus costs incurred by reference to the stage of completion of the construction work, which do not exceed the market value. 3.5 Expenses to be passed on to SPEs (subsidiaries and joint operations) Represented by expenses on joint ventures in the launching stage, which are passed on to SPEs (special purposes entities) upon their formation, and recognized as expenses in the related SPEs or allocated to the cost of units sold adopting the same procedures described in item 3.12 below. 3.6 Unearned sales expenses Include commissions directly related to real estate developments, which are recognized under the same income recognition criterion described in item 3.12 below, except commissions on canceled sales, which are recognized in the event of cancellation or when it is probable that the contracted amounts will not be paid. 3.7 Property, plant and equipment Recognition and measurement Property, plant and equipment items are stated at historical acquisition or construction cost, net of accumulated depreciation and impairment losses. The cost includes expenditures that are directly attributable to the acquisition of the asset Subsequent costs Subsequent costs are capitalized in accordance with the probability that associated future economic benefits may be earned by the Company Depreciation Depreciation is calculated to amortize the cost of items of property, plant and equipment, net of their estimated residual values, using the straight-line method based on estimated useful lives of such items. The depreciation is recognized in income (loss). Leased assets are depreciated over the shorter of the estimated useful life of the asset and the contractual term, unless it is certain that the Company will become the owner of the asset at the end of the lease term. Land is not depreciated. 22

23 The estimated useful lives of the property, plant and equipment are as follows: Annual depreciation rate - % Sales stand 30 Machinery and tools 10 Computers and peripherals 20 Furniture and fixtures 10 Buildings 4 Facilities 10 Improvements in third-party property 20 Depreciation methods, useful lives and residual values are reviewed at each balance sheet date and adjusted if appropriate. 3.8 Intangible assets Intangible assets acquired separately Intangible assets with finite useful lives acquired separately, comprising mainly software licenses, are carried at cost less accumulated amortization. The amortization is recognized at the straight-line basis, based on assets' estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost. 3.9 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale as CPC 20 (R1) / IAS 23. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in the income (loss) for the year which they are incurred Employee benefits Short-term employee benefits Obligations for short-term employee benefits are measured on a non-discounted basis and incurred as expenses as the related service is rendered. The liability is recognized at the amount expected to be paid under the cash bonus plans or short-term profit sharing if the Company has a legal or constructive obligation to pay this amount as a result of prior service rendered by the employee, and the obligation can be reliably estimated. 23

24 Share-based payment agreements The Company measures the cost of transactions settled with employees shares based on fair value of equity instruments on grant date. Estimates of share-based payments fair values require the most adequate evaluation method for the granting of equity instruments, which depends on grant terms and conditions. Assumptions and models used in fair value estimates of share-based payments are explained in Note 27. Defined contribution plans Obligations for contributions to defined contribution pension plans are recognized as personnel expenses when the services are rendered by the employees. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is possible Provisions Provisions are determined by discounting the estimated future cash flows at a pre-tax rate which reflects the current market evaluations as to the value of the cash over time and the specific risks of the liability in question. Effects from derecognition of discount for elapsing of time are recognized in income (loss) as financial expenses Revenue recognition The practices adopted for the determination and appropriation of the result and record the values in the income accounts of real state development sold, properties for sale, for real estate clients and advances received from clients follow the procedures and guidelines established by the Guideline OCPC 04 of Pronouncements Committee statements, which addresses the application of Interpretation ICPC 02, the Brazilian real estate development entities, approved by CVM Resolution 653/10, which are: (i) (ii) For sales of uncompleted units, income is recorded based on the following criteria: Sales income, costs of land and construction inherent to the respective developments are recognized in income as the construction progresses, once the transfer of risks and benefits occurs continuously. Thus, the method adopted is called "POC", "percentage of completion or completion percentage" for each real state development, i.e. the recognition of income and costs occur as the construction progresses. The POC method is done using the ratio of costs incurred to total estimated cost of the respective real state developments on contracted sales; and Calculated sales income, according to item (i), including monetary restatement, net of installments received are accounted as accounts receivable or advances from clients, according to the relationship between recorded income and the amounts received. In the credit sales of concluded units, the result is allocated when the sale is consummated, regardless of the period of receipt of the contractual amount. The updates and the present value adjustments are recognized in income, on income heading of real state developments sold in pre-keys period, and updates under financial income on post-key period observing the accrual basis, regardless of their receipt. Income and expenses are recognized in income under the accrual method. 24

25 When the client does not get the mortgage with a financial institution, the respective unit is untreated and the accounting treatment adopted by the Company is the reversal of the balance of the client by deducting the income recorded in the statement of income for the period under the caption Net income from real state developments sold by contrast is reversed and also the cost of this unit under the caption "cost of real state developments sold against the inventory of the Company. The Company recognizes allowance for credit risk for values whose recovery is considered remote. Estimates used are based on contracts that are considered as difficult to collect and for which there are no actual guarantees and that, are directly related to the transfer of real estate unit to buyers. The Company periodically reviews its Assumptions for formation of allowance for credit risk, considering the review of the histories of its current operations and improvement of its estimates Adjustment to present value Assets and liabilities resulting from relevant short-term transactions (if relevant), and long-term transactions with no expected compensation or subject either to: (i) prefixed interest; (ii) rates known to be lower than prevailing market rates for similar transactions; and (iii) readjustments by inflation only, without interest, adjusted to their present value based on the average offer rate of the Company minus the Amplified Consumer Price Index (IPCA), with their reversals recognized in income/loss for the year under the heading of income from real estate development in the pre-key period. As of, the rate used by the Company to adjust these assets and liabilities to present value is 6.43% p.a. (6.66% p.a. in 2015) corresponding to the average funding rate Taxation Current taxes Provisions for income and social contribution taxes on taxable income are calculated by the Annual Taxable Income basis, at the rate of 15% plus an additional of 10% on the surplus installment at R$ 240 per year for Income Tax and 9% for Social Contribution. Certain companies determine these taxes on a taxable profit basis, and others on a deemed profit basis. Companies with total gross income in the prior calendar year equal to or lower than R$78,000 qualify to use the deemed profit basis. On the taxable profit basis, income tax and social contribution rates are applied to profit for the period, adjusted for additions and deductions as specified by tax legislation. On the deemed profit basis, income tax is calculated at the rate of 8% and social contribution at 12% of gross income from sales of real estate and 32% of income from services for both taxes. Regarding the Special Taxation System (RET), as of July 19, 2013, the Law was published, rewording Articles 4 and 8 of Law No /04, establishing that, for each real estate development project qualified under the Special Taxation System (RET), the real estate developer will be subject to a payment of 4% of the monthly income earned, corresponding to the unified monthly payment of corporate income tax (IRPJ), social contribution on net income - CSLL, of the Public service employee savings program - PIS/PASEP and Contribution for Social Security Funding - COFINS. For social interest residential development projects (units of up to R$ 75 on November 30, 2011, changed to R$ 85 under Provisional Measure 552 dated 25

26 December 1, 2011, and then changed to R$ 100 by Law 12,767 dated December 27, 2012), whose construction has been started as of March 31, 2009, the unified payment percentage is equivalent to 1% of the monthly income received Deferred taxes Deferred income tax, social contribution on profit and taxes on income (PIS and COFINS) are recognized in current and non-current liabilities based on the projected revenue realization, arising from the difference between recognition under the percentage of completion criterion described in item 3.12 above and under the tax criterion in which income is taxed when earned. The balance of deferred taxes to be realized in the following year is recognized in current liabilities Earnings per share - basic and diluted Basic earnings per share are calculated by dividing income for the year assigned to the Company s shareholders by the weighted average of the number of paid-in capital shares in respective period. The Company has no instruments that could potentially dilute earnings per share Statements of added value The Company prepared statements of added value in accordance with the rules of technical pronouncement CPC 9 - Statement of Added Value, which are presented as an integral part of the financial statements under BRGAAP applicable to publicly-held companies, whereas under IFRS they represent supplementary financial information New standards and interpretations not yet effective The standards and interpretations issued but not yet adopted to the date of issuance of the financial statements of the Group, are shown below. The Company intends to adopt these standards, if applicable, when they become effective. IFRS 9 - Financial instruments (CPC 48) IFRS 16 - Leases (not yet issued by CPC) In addition, in November 2016, CPC 47- Income from Contracts with Clients (IFRS 15) was issued by CPC. This pronouncement sets forth new rule to be applied to income from contracts with clients, as of the years beginning January 1, CPC 47 principles provide a more structured approach to measure and recognize income. The new standard is applicable to all entities and it will replace the current income recognition requirements under IFRS. The Company is currently evaluating the impact of these pronouncements and intends to adopt these standards on the date of effectiveness. There are no other standards and interpretations issued and not yet adopted that might, in management's opinion, have a significant impact on the income (loss) or shareholders equity disclosed by the Company. 26

27 4 Cash and cash equivalents and interest earning bank deposits Parent company Cash and banks (a) 2,074 2,038 32,250 54,982 Interest earning bank deposits (b) 78, , , ,937 Total cash and cash equivalents 80, , , ,919 Financial investments pledged as guarantee of lawsuits 12,587 9,449 23,722 9,520 Total interest earning bank deposits 12,587 9,449 23,722 9,520 Represented by: Non-current assets 12,587 9,449 23,722 9,520 (a) A large portion of the balance held at banks is remunerated by the savings indices. (b) Interest earning bank deposits are cash equivalents since they are promptly convertible into a known sum of cash and subject to an insignificant risk of change of value. These short-term investments refer to fixed-income securities yielding between 100% and 102% of the Interbank Deposit Certificate (CDI) rate and are available for use in the operations of the Company and its subsidiaries. 5 Trade receivables Trade receivables, discounted to present value under the terms mentioned in Note 3.13, are as follows: Parent company Credits to be settled with SFH (National Housing System) funds (a) 5,076 6, , ,733 Consumer financing , , ,936 Other credits payable 1,882 1,912 44,679 47,086 (-) Allowance for doubtful accounts (1,726) (1,651) (12,573) (4,795) Total 21,852 27, , ,960 Current assets 15,214 19, , ,455 Non-current assets 6,638 7, , ,505 Total 21,852 27, , ,960 (a) The credits for contracting of financing from the Housing Financial System (SFH) refers to the amount of amortization that is in the process of analysis before the agent of the Brazilian System of Savings and Loans (SBPE) or before the developer. In transfer process When the Company delivers its real state developments, most part of clients undergoes a bank financing process (also known as transfer) that is required for the delivery of keys and entering into possession of the unit. Clients that are not approved for bank financing will be analyzed on an individual basis and may be terminated; therefore, they will not receive the keys and will not enter into possession of the real estate. 27

28 Clients that do not address financing conditions will not receive the units and the Company will return, according to contract, a portion of received balance and will place units for sale again. Maturities of amounts in the process of being transferred refer to the original date included in the purchase and sale agreement, and the Company only changes maturity date upon effective renegotiation with clients. Allowance for doubtful accounts (PCLD) The Company recorded as PCLD the amount of R$1,726 in parent company (R$ 12,573 in consolidated), approximately 91% on parent company balance and 28% on consolidated balance of its direct portfolio, in arrears, as of. Overdue balances refer to pro-soluto cases (cases without appeal); I.e. units that were transferred to clients and have payables to the Company. When recognizing an estimate of doubtful accounts, the Company s management took into consideration analyses of market value of assets pledged in guarantee of accounts receivable, and considered amounts overdue for more than 180 days. The balances of current assets as at and 2015 are comprised by the following maturities: Parent company Credits to be settled with SFH (National Housing System) / FGTS funds Consumer financing Other credits payable Total Credits to be settled with SFH (National Housing System) / FGTS funds Consumer financing Other credits payable Total Overdue - in days: 4,849 8, ,574 6,866 10, ,153 Up to >121 3,929 8, ,183 6,086 9, ,787 Falling due - in days: 227 1, , , ,345 Up to , ,139 Total 5,076 9, ,214 7,432 11, ,498 28

29 Credits to be settled with SFH (National Housing System) / FGTS funds Consumer financing Other credits payable Total Credits to be settled with SFH (National Housing System) / FGTS funds Consumer financing Other credits payable Total Overdue - in days: 59,544 54,635 5, , ,851 34,255 3, ,609 Up to 30 6,048 6,740 1,063 13,851 14,406 3, , ,815 2, ,282 13,387 1, , ,647 1, ,400 9, , ,570 7, ,121 11, ,796 >121 39,464 37,282 2,883 79, ,558 27,570 1, ,567 Falling due - in days: 183,660 78,546 13, , ,214 76,060 16, ,846 Up to 30 55,018 37,102 1,836 93,956 15,293 3,444 1,543 20, ,695 5,287 1,099 20,081 16,228 1,825 1,502 19, ,258 9,091 1,080 20,429 24,023 2,269 1,448 27, ,353 4,641 1,073 29,067 6,598 2,016 1,414 10, ,336 22,425 8, , ,072 66,506 10, ,243 Total 243, ,181 18, , , ,315 20, ,455 The balances of non-current assets as at and 2015 are comprised by the following maturities: Credits to be settled with SFH (National Housing System) / FGTS funds Parent company Consumer financing Other credits payable Total Credits to be settled with SFH (National Housing System) / FGTS funds Consumer financing Other credits payable Total Year of maturity , , , ,126-1, , ,053-1,053-1, , ,071-1,071-1,256-1, ,015-1,015-2,587-2,587 After ,373-2, Total - 6, ,638-7, ,806 Credits to be settled with SFH (National Housing System) / FGTS funds Consumer financing Other credits payable Total Credits to be settled with SFH (National Housing System) / FGTS funds Consumer financing Other credits payable Total Year of maturity ,564 18,894 12,215 35, ,079 21,776 10,189 52, ,047 8,249 26, ,865 2,725 20, ,908 1,750 18, , , , , , , , ,711 After , , Total 20, ,049 13, ,260 4, ,621 22, ,505 29

30 The balances of trade receivables are adjusted for inflation based on the indexes below in conformity with contractual clauses: (i) (ii) Until delivery of the real estate units sold, based on the national civil construction index (INCC), and; After delivery of the real estate units sold, based on the variation of the general market price index (IGP-M) or the managed prime rate (TR). When the client does not get the mortgage with a financial institution, the respective unit is untreated and this time the accounting treatment is the reversal of the balance of the client by deducting the income for the period recorded in the income statement under the caption Net income from real state developments sold "by contrast is reversed and also the cost of this unit under the caption Cost of real state developments sold against the inventories of the Company. 6 Accounts receivable from sale of lands The Company and its subsidiaries carried out sales of land that are segregated dates as described in the contracts of purchase and sale. These operations were conducted with the commitments of payments in currency, payment in kind of units and Global Value Sales with guaranteed minimum. As of and 2015, the balances are represented as follow: Parent company Real state development Parent company Land - Palhoça (*) 15,000 15,000 15,000 15,000 Land - Rio Preto VIII Land - Cascavel II 5,891 6,426 5,891 6,426 Land - Ponta Grossa 19,395 18,689 19,395 18,689 Land - C&S 2,113 2,299 2,113 2,299 Subsidiaries Sistema Fácil São Paulo II - SPE Ltda ,988 Rodobens Urbanismo Ltda. (*) ,890 49,797 Terra Nova Rodobens Incorporadora Imobiliária - Residence IV - SPE Ltda Terra Nova Rodobens Incorporadora Imobiliária - Caxias do Sul I SPE Ltda ,176 - Sistema Fácil Incorporadora Imobiliária Campos dos Goytacazes I SPE Ltda Rodobens Administradora 414 Ltda. (*) ,019 50,006 Rodobens Malls Administração de Shoppings Centers Ltda ,139 - Total 42,419 42, , ,141 Total current assets 1,553 21,332 11,472 37,312 Total non-current assets 40,866 21, , ,829 Receipts by currency 2,113 2,299 21,329 27,955 Receipts by payment in kind of units ,988 Receipts by VGV 40,306 40, , ,198 (*) Such SPEs have an estimated term to make the payment of general sales value (VGV). 30

31 7 Property for sale Represented by properties for sale and land for future mergers as follows: Parent company Property concluded 2,365-25,500 10,896 Property under construction , ,417 Lands for future developments ,596 28,476 Total current assets 2, , ,789 Lands for future developments (*) 34,808 34, , ,845 Total non-current assets 34,808 34, , ,845 (*) Refers to lands to be launched after The book value of the land for a real state development is transferred to line item "Units under construction" when the real state development is launched. Compound interest Interest capitalized for the year ended totals R$ 42,995 (R$ 30,333 in 2015) in the consolidated. 8 Investments in subsidiaries and jointly-controlled subsidiaries Under the terms of CPC 45 / IFRS 12, the Company opted to add the information from the subsidiaries and jointly-controlled subsidiaries with a balance of investments lower than R$5,000. Investments in subsidiaries and jointly-controlled subsidiaries with balance of investments above R$5,000 are presented below by entity: 31

32 % RNI % RNI Total assets Shareholders' equity Net income Income (loss) for the year Investments Investments Equity in net income of subsidiaries Equity in net income of subsidiaries Dec 2016 Dec 2015 Dec 2016 Dec 2016 Dec 2016 Dec 2016 Dec 2016 Dec 2015 Dec 2016 Dec 2015 Positive investments Rodobens Administradora 414 Ltda % % 64,154 56,924 1,058 2,720 56,924 57,624 2,720 8,700 Rodobens Incorporadora Imobiliária SPE Ltda % % 80,130 10,448 15,076 (10,974) 10,458 34,230 (10,833) 17,869 Rodobens Incorporadora Imobiliária SPE Ltda % % 16,830 5,016 37,768 4,224 5,016 3,050 4,224 2,852 Rodobens Incorporadora Imobiliária SPE Ltda % % 91,898 16,988 43,995 (6,621) 16,988 32,011 (6,621) 5,582 Rodobens Incorporadora Imobiliária SPE Ltda % % 51,280 7,402 16,815 (10,729) 7,402 11,893 (10,729) 2,087 Rodobens Incorporadora Imobiliária SPE Ltda % % 28,455 6,181 20,912 2,983 6,181 3,710 2, Rodobens Incorporadora Imobiliária SPE Ltda % 60.00% 94,286 11,039 44,561 6,699 6,623 2,746 4,019 1,094 Rodobens Incorporadora Imobiliária SPE Ltda % % 60,251 5,483 33,889 4,261 5, ,261 (522) Rodobens Incorporadora Imobiliária SPE Ltda % % 8,940 8,423 - (2) 8,423 5,603 (2) - Rodobens Incorporadora Imobiliária SPE Ltda % % 11,948 11,262 - (1) 11,262 7,509 (1) - Rodobens Incorporadora Imobiliária SPE Ltda % % 10,168 10,164 - (1) 10,164 9,761 (1) (1) Rodobens Malls Administração de Shopping Centers Ltda % % 12,794 12,312 13,583 3,494 7,637 10,108 3, Rodobens Malls Incorporadora Imobiliária SPE Ltda % % 11,504 9,923 - (2) 9,923 9,469 (2) (37) Rodobens Stefani Nogueira Incorporadora Imobiliária SPE Ltda % 75.00% 37,651 11,210 (8,878) (4,973) 8,408 11,972 (3,730) 7,775 Rodobens Urbanismo Ltda % % 331, ,303 67,229 56, , ,335 56,621 40,010 Sistema Fácil Campos dos Goytacazes I SPE Ltda % % 6,924 6,230 1,540 (1,088) 6,230 14,320 (1,088) 183 Sistema Fácil Cuiabá III SPE Ltda % % 11,868 8,565 3,706 1,811 8,565 10,677 1, Sistema Fácil Tamboré 7 SPE Ltda % % 18,758 17,052 (1,260) (1,005) 17,052 20,892 (1,005) 1,931 Sistema Fácil Tamboré 8 SPE Ltda % % 15,509 12, ,395 12,253 16,836 1,395 1,796 Sistema Fácil Tamboré Houses II SPE Ltda % % 17,872 17,305 (403) ,305 19, (56) Terra Nova Rodobens Feira de Santana III SPE Ltda % % 9,450 5,520 8,246 3,815 5,520 8,324 3,815 14,033 Terra Nova Rodobens Presidente Prudente I SPE Ltda % % 13,574 10,189 6,436 (814) 10,189 12,898 (814) (1,874) Terra Nova Rodobens Residence IV SPE Ltda % % 18,347 18, ,335 18, Other (*) 331, ,210 88,458 (29,439) 143, ,933 (29,889) (12,363) Total 1,355, , ,319 22, , ,412 20,775 89,615 Goodwill in investment acquisitions Panamby 49.99% 50.00% 8,656 8, Rodobens Administradora 414 Ltda % % Sistema Fácil Tamboré 8 SPE Ltda % % 3,931 4, Santa Rita Loteadora Imobiliária SPE Ltda % 0.00% 3, Fazenda Desengano Loteadora Imobiliária SPE Ltda % 0.00% 2, Sítio do Morro Loteadora Imobiliária SPE Ltda % 0.00% 1, Total subsidiaries and jointly-controlled subsidiaries 20,790 13, Total investments 665, ,971 20,775 89,615 32

33 Positive investments % RNI % RNI Total assets Shareholders' equity Net income Income (loss) for the year Investments Investments Equity in net income of subsidiaries Equity in net income of subsidiaries Dec 2016 Dec 2015 Dec 2016 Dec 2016 Dec 2016 Dec 2016 Dec 2016 Dec 2015 Dec 2016 Dec 2015 Changes in consolidated investments: (-) Elimination of consolidated 568, ,935 (10,725) 85,949 (-) Transfer of goodwill to intangible assets 4,129 13, Balance of consolidated investments 93,315 32,477 31,500 3,666 Disinvestments Rodobens Incorporadora Imobiliária SPE Ltda % % 22,854 (5,627) 14,339 (12,679) (5,627) - (12,679) - Other (*) 22,297 (7,380) 2,908 (6,554) (5,173) (7,080) (6,363) (8,077) Total 45,151 (13,007) 17,247 (19,233) (10,800) (7,080) (19,042) (8,077) Total investments (10,800) (7,080) (19,042) (8,077) Changes in consolidated investments: Elimination of consolidated (8,257) (4,997) (18,470) (7,276) Balance of consolidated investments (2,543) (2,083) (572) (801) (*) Include companies with a balance of Investments below R$5,

34 The goodwill recognized is attributed to expected future profitability calculated on the additional interest acquired in these SPEs. In the consolidated financial statements goodwill is classified in intangible assets, according to note 9.1. a. Dividends receivable On January 4, 2016, the distribution of subsidiaries dividends to the Company was carried out, regarding the retained earnings up to December 31, 2015, as per the "Dividends receivable" account. The Management estimates the receipt of dividends up to the end of Investees Rodobens Incorporadora Imobiliária 304 SPE Ltda. 14,000 - Sistema Fácil Incorporadora Imobiliária Cuiabá III SPE Ltda. 2,340 - Terra Nova Rodobens Incorporadora Imobiliária Presidente Prudente I SPE Ltda. 2,335 - Terra Nova Rodobens Incorporadora Imobiliária Feira De Santana III SPE Ltda Rodobens Incorporadora Imobiliária 325 SPE Ltda. 3,000 - Sistema Fácil Tamboré 8 Villagio SPE Ltda. 1,045 - Rodobens Urbanismo Ltda. - 4,554 Rodobens Incorporadora Imobiliária 324 SPE Ltda. 3,070 - Sistema Fácil Incorporadora Imobiliária Uberlândia IV SPE Ltda. 3,050 - Rodobens Incorporadora Imobiliária 348 SPE Ltda. 2,300 - Terra Nova Rodobens Incorporadora Imobiliária Pelotas III SPE Ltda. 1,055 - Sistema Fácil Incorporadora Imobiliária Uberaba III SPE Ltda. 1,165 - Terra Nova Incorporadora Imobiliária Araçatuba II SPE Ltda. 1,414 - Sistema Fácil Incorporadora Imobiliária Cuiabá V SPE Ltda. 1,370 - Sistema Fácil Incorporadora Imobiliária Uberlândia II SPE Ltda. 1,065 - Terra Nova Rodobens Incorporadora Imobiliária Palhoça III SPE Ltda Sistema Fácil Incorporadora Imobiliária Porto Alegre II SPE Ltda Sistema Fácil Santa Maria I SPE Ltda Sistema Fácil Incorporadora Imobiliária Cuiabá IV SPE Ltda Sistema Fácil Gravataí II SPE Ltda Terra Nova Rodobens Marajó Incorporadora Imobiliária Londrina I SPE Ltda Terra Nova Rodobens Incorporadora Imobiliária Santa Maria III SPE Ltda Sistema Fácil Incorporadora Imobiliária Porto Alegre I SPE Ltda ,401 5,251 34

35 9 Property, plant and equipment Parent company Description 2014 Additions Decreases 2015 Additions Write-offs 2016 Cost Machinery and tools 37, (946) 36,239 - (55) 36,184 Computers and peripherals 3, , ,320 Furniture and fixtures 2, (100) 2, (38) 2,567 Buildings 3, , ,573 Facilities , ,060 Improvements in third-party property 1, (500) 1, ,785 Other (493) (262) ,296 1,645 (2,039) 48, (355) 48,710 Accumulated depreciation Machinery and tools (18,577) (4,003) 225 (22,355) (3,969) 27 (26,297) Computers and peripherals (1,785) (394) - (2,179) (394) - (2,573) Furniture and fixtures (783) (246) 40 (989) (227) 17 (1,199) Buildings (506) (150) - (656) (150) - (806) Facilities (337) (128) - (465) (134) - (599) Improvements in third-party property (392) (265) - (657) (287) - (944) Other (33) (122) 49 (106) (90) 96 (100) (22,413) (5,308) 314 (27,407) (5,251) 140 (32,518) 26,883 (3,663) (1,725) 21,495 (5,088) (215) 16,192 Description 2014 Additions Decreases 2015 Additions Write-offs 2016 Cost Sales stand 14,882 1,977 (2,479) 14,380 2,016 (5,884) 10,512 Machinery and tools 37, (950) 36,254 - (55) 36,199 Computers and peripherals 3, (115) 3, ,797 Furniture and fixtures 5, (962) 5, (45) 5,380 Buildings 3, , ,573 Facilities 1, (47) 1, ,227 Improvements in third-party property 1, (500) 1, ,889 Other (502) (263) ,930 4,468 (5,555) 66,843 2,327 (6,247) 62,923 Accumulated depreciation Sales stand (6,195) (3,861) 1,328 (8,728) (2,694) 5,689 (5,733) Machinery and tools (18,581) (4,008) 226 (22,363) (3,971) 27 (26,307) Computers and peripherals (2,229) (501) 86 (2,644) (403) - (3,047) Furniture and fixtures (2,288) (946) 483 (2,751) (552) 21 (3,282) Buildings (506) (150) - (656) (150) - (806) Facilities (386) (156) 8 (534) (150) - (684) Improvements in third-party property (496) (265) - (761) (286) - (1,047) Other (42) (122) 58 (106) (216) 96 (226) (30,723) (10,009) 2,189 (38,543) (8,422) 5,833 (41,132) 37,207 (5,541) (3,366) 28,300 (6,095) (414) 21,791 35

36 10 Intangible assets Parent company Description 2014 Additions Decreases 2015 Additions Decreases 2016 Cost Software licenses 20,628 4,203 (13,516) 11,315 1,598 (848) 12,065 Other ,896 4,203 (13,516) 11,583 1,598 (848) 12,333 Accumulated amortizations Software licenses (15,817) (1,775) 12,396 (5,196) (1,753) - (6,949) Other (106) (24) - (130) (25) - (155) (15,923) (1,799) 12,396 (5,326) (1,778) - (7,104) 4,973 2,404 (1,120) 6,257 (180) (848) 5,229 Description 2014 Additions Decreases 2015 Additions Decreases 2016 Adjusted cost Goodwill on acquisition of quotas 14,410 - (851) 13,559 8,004 (17,433) 4,130 Software licenses 20,908 4,204 (13,757) 11,355 1,598 (848) 12,105 Other ,586 4,204 (14,608) 25,182 9,602 (18,281) 16,503 Accumulated amortization Software licenses (16,086) (1,598) 12,451 (5,233) (1,755) - (6,988) Other (106) (24) - (130) (25) - (155) (16,192) (1,622) 12,451 (5,363) (1,780) - (7,143) 19,394 2,582 (2,157) 19,819 (7,822) (18,281) 9,360 Expenses on amortization of intangible assets are recognized in line item "General and administrative expenses" in the statement of income for the period. 11 Loans and financing 11.1 Breakdown of loans Parent company Current liabilities: Real estate credit (a) ,641 88,104 Bank Credit Note - CCB (b) 19,824 99,526 19,824 99,732 19,824 99, , ,836 Non-current liabilities: Real estate credit (a) , ,943 Bank Credit Note - CCB (b) 96,028-96,028 4,952 96, , ,895 Total 115,852 99, , ,731 36

37 a. Real estate credit Mortgage loans, which are collateralized by mortgage on properties in domestic currency, are obtained from the National Housing System (SFH) to finance the construction of properties, with interest between 8% and 10% per year, indexed to the TR (managed prime rate) and payable in monthly installments through On August 25, 2015, the Company held fundraising with the financial institution, through a CCB estate, issued by the subsidiary, Rodobens Incorporadora Imobiliária 363 SPE Ltda valued at R$22,000, subject to compensatory interest rate of 11.5% per annum + TR, with a maturity of five years and payment will occur on August 6, 2020 and collateralized by fidejussory guarantee of the Company, as guarantor of the transaction, as co- obligor, jointly with the issuer for all obligations assumed by it. The proceeds from this transaction will be used solely as a means of financing projects in the housing sector. On August 28, 2015, the Company held fundraising with the financial institution, through a CCB estate, issued by the subsidiary, Terra Nova Rodobens Incorporadora Imobiliária Feira de Santana V SPE Ltda valued at R$11,000, subject to compensatory interest rate of 11.5% per annum + TR, with a maturity of five years and payment will occur on September 09, 2020 and collateralized by fidejussory guarantee of the Company, as guarantor of the transaction, as coobligor, jointly with the issuer for all obligations assumed by it. The proceeds from this transaction will be used solely as a means of financing projects in the housing sector. On January 20, 2016, the Company held fundraising with the financial institution, through a CCB estate, issued by the subsidiary, Terra Nova Rodobens Incorporadora Imobiliária - Presidente Prudente II - SPE Ltda valued at R$ 18,085 subject to compensatory interest rate of 14.85% per annum, with a maturity of five years and payment will occur on January 5, 2021 and collateralized by fidejussory guarantee of the Company, as guarantor of the transaction, as coobligor, jointly with the issuer for all obligations assumed by it. The proceeds from this transaction will be used solely as a means of financing projects in the housing sector. On July 27, 2016, the Company held fundraising with the financial institution, through a CCB estate, issued by the subsidiaries, Rodobens Incorporadora Imobiliária 325 SPE Ltda. and Rodobens Incorporadora Imobiliária 348 SPE Ltda. valued at R$ 21,000, subject to compensation interest rate of 100% of CDI (Interbank Deposit Certificate) daily paid-in, plus rate of 2% p.a., with a maturity date on March 5, 2018 and collateralized by fidejussory guarantee of the Company, as guarantor of the transaction, as co- obligor, jointly with the issuer for all obligations assumed by it. The proceeds from this transaction will be used solely as a means of financing projects in the housing sector. On August 04, 2016, the Company held fundraising with the financial institution, through a CCB estate, issued by the subsidiary, Rodobens Incorporadora Imobiliária 304 SPE Ltda. and Rodobens Incorporadora Imobiliária 350 SPE Ltda. valued at R$ 9,000, subject to compensation interest rate of 100% of CDI (Interbank Deposit Certificate) daily paid-in, plus rate of 2% p.a., with a maturity date on March 19, 2018 and collateralized by fidejussory guarantee of the Company, as guarantor of the transaction, as co- obligor, jointly with the issuer for all obligations assumed by it. The proceeds from this transaction will be used solely as a means of financing projects in the housing sector. 37

38 On October 20, 2016, the Company held fundraising with the financial institution, through a CCB estate, issued by the subsidiary, Sistema Fácil Incorporadora Imobiliária - Uberaba II - SPE Ltda. valued at R$ 10,000, subject to compensatory interest rate of 115% of CDI (Interbank Deposit Certificate), with a maturity of five years and payment will occur on October 25, 2021 and collateralized by fidejussory guarantee of the Company, as guarantor of the transaction, as co- obligor, jointly with the issuer for all obligations assumed by it. The proceeds from this transaction will be used solely as a means of financing projects in the housing sector. The balances of mortgage loans refer to amounts already released by financial institutions, and total loans approved and contracted for the construction of the joint ventures are distributed as follows: Contracted credit Debit balance Joint venture Interest rate Sistema Fácil Marília III SPE Ltda. 27,424 27,424 1,077 1, % Sistema Fácil, Incorporadora Imobiliária São José do Rio Preto XX SPE Ltda. 19,828 19, % Terra Nova Rodobens Dourados I - SPE Ltda. 37,769 37, , % Sistema Fácil Santa Maria I SPE Ltda. 17,465 17, % Terra Nova Rodobens Alvorada IV - SPE Ltda. 30,223 30, % Sistema Fácil Incorporadora Imobiliária Cuiabá IV - SPE Ltda. 40,796 40, , % Sistema Fácil Incorporadora Imobiliária Cuiabá VI - SPE Ltda. 45,244 45, , % Sistema Fácil Incorporadora Uberaba III SPE Ltda. 46,867 46, , % Sistema Fácil Cuiabá III SPE Ltda. 28,919 28,919-8, % Sistema Fácil Cuiabá V SPE Ltda. 48,917 48, % Terra Nova Rodobens - Presidente Prudente I - SPE Ltda. 65,620 65,620-4, % Rodobens Incorporadora Imobiliária SPE Ltda. 16,510 16,510-4, % Rodobens Incorporadora Imobiliária SPE Ltda. 39,613 39,613 2,504 3, % Rodobens Incorporadora Imobiliária SPE Ltda. 68,640 68,640 19,744 57, % Rodobens Incorporadora Imobiliária SPE Ltda. 33,047 31,435 25,666 22, % Rodobens-Stefani Nogueira Incorporadora Imobiliária SPE Ltda. 40,049 34,574 25,008 30, % Rodobens Moradas - Pacatuba II - SPE Ltda. 38,424 38, , % Terra Nova Rodobens Incorporadora Imobiliária Feira Santana III SPE Ltda. 44,003 44, % Rodobens Incorporadora Imobiliária SPE Ltda. 69,864 69,864 1,972 6, % Rodobens Incorporadora Imobiliária SPE Ltda. 69,430 69,430 55,359 37, % Rodobens Incorporadora Imobiliária SPE Ltda. 48,400 48,400 40,543 36, % Rodobens Incorporadora Imobiliária SPE Ltda. 40,614 40,614-5, % Rodobens Incorporadora Imobiliária SPE Ltda. 25,441 25,441 18,739 4, % Rodobens Incorporadora Imobiliária SPE Ltda. 10,400 10,400 5,585 1, % Rodobens Incorporadora Imobiliária SPE Ltda. 94,688 94,688 46,448 16, % Rodobens Incorporadora Imobiliária SPE Ltda. 74,110 74,110 70,655 37, % Rodobens Incorporadora Imobiliária SPE Ltda. 22,000 22,000 20,903 22, % Terra Nova Rodobens Incorporadora Imobiliária Feira de Santana V SPE Ltda. 11,000 11,000 10,689 11, % Terra Nova Rodobens Incorpor. Imobiliária Presidente Prudente II SPE Ltda. 18,085-18, % Sistema Fácil, Incorporadora Imobiliária - Uberaba II - SPE Ltda. 10,000-10, % Rodobens Incorporadora Imobiliária 325 SPE Ltda. 11,000-11, % Rodobens Incorporadora Imobiliária 348 SPE Ltda. 10,000-10, % Rodobens Incorporadora Imobiliária 304 SPE Ltda. 5,500-5, % Rodobens Incorporadora Imobiliária 350 SPE Ltda. 3,500-3, % 1,213,390 1,148, , ,047 b. Bank Credit Bill (CCB) The balance payable by CCB to Banco Safra in the amount of R$100,000 was settled on September 18, 2016 and the balance payable by CCB to Banco Safra in the amount of R$70,000 was settled on November 25, In January 2016, the Company held fund-raising with Banco Votorantim S.A, through a CCB estate valued at R$50,000, subject to post-fixed compensatory interest rate of 2.30% per annum + CDI, with a maturity on July 27, The proceeds from that bond will be allocated for the 38

39 financing of real estate construction of housing units and/or residential developments currently undertaken by the SPEs investees. In September 2016, the Company held fund-raising with BR Partners, through a CCB valued at R$ 70,000, subject to post-fixed compensatory interest rate of 2.15% per annum + CDI, with a maturity on September 15, The proceeds from that bond will be allocated for the financing of real estate construction of housing units and/or residential developments currently undertaken by the SPEs investees. Security holders will have the option, on a individual basis and at their sole criterion, to require the Company to acquire securities held by them, fully or partially, every year, in accordance with established procedures, and the first exercise date of the right to require acquisition will be on September 2021 payment date, and others will be exercised on payment date of the same month in subsequent years. The Issuer s obligations contained in these Certificates may be declared due in advance and immediately enforceable by the banks and/or by the Creditor, regardless of notice, court summons or extrajudicial notification, upon the occurrence of the events established below: (i) (ii) (iii) Protests of bills against the Issuer and/or Guarantor and/or its subsidiaries, the individual amounts of which exceed R$5,000, or R$30,000 in the aggregate, where the appropriate and timely proof of stay of protest, cancellation, suspension of the effects or payments is not submitted to the Creditor within 15 (fifteen) business days from receipt of the notification of protest. Capital decrease of the Issuer in an amount above 10% (ten percent), except in cases of capital decrease performed with the objective of absorbing losses, under the terms of article 173 of law no. 6,404/76. Noncompliance, by the Issuer, with the Financial Ratios, as indicated below, at the related closing dates of the quarterly information and annual financial statements. Ratio 1 (Net Debt + Land Payable - Land Receivable - SFH and FGTS Debt) / Shareholders equity = 0.7 Ratio 2 (Total receivables + Finished inventory) / (Net Debt + Land Payable - Land Receivable + Costs and Unrecognized expenses on properties sold - SFH and FGTS debt) = < 0 or 1.3 On, all the contractual clauses were duly complied with. Expenses incurred and acquaintances with these borrowings were R$ 2,357, including fees, commissions and other costs and expenses. As of, the remaining balance is R$ 1,955. These amounts were accounted rectifying the liability and are amortized in the income statement in accordance with the amortization term debts. As of, the balances presented in current and non-current liabilities are recorded net of such costs. 39

40 Schedule of debt expiration: Up to 1 year 2-3 years 4 years Total Loans and financing 172, ,096 85, ,959 December 31, 2015 Up to 1 year 2-3 years 4 years Total Loans and financing 187, ,145 26, , Debentures The Company s debentures are comprised as follow: Debentures Issuance Quantity issued Active quantity Maturity Interest Remuneration rd Issue 04/15/ /29/2018 CDI + spread of 1.60% p.a. Semi-annual 102, ,355 Current liabilities 52,201 53,604 Non-current liabilities 49,939 99,751 The resources obtained in the 3 rd issue were set aside to improve the current debt profile of the Issuer and for other corporate uses. Expenses incurred and known with the 3rd issue totaled R$995, including fees, commissions and other costs and expenses. These amounts were accounted rectifying the liability and will be amortized in the income statement in accordance with the amortization term debts. The 3rd issue debentures are subject to certain restrictive covenants requiring that the Company and its subsidiaries comply with certain financial and operating ratios as shown below: (a) (b) (c) Protests of bills against the Issuer or its subsidiaries, the individual or joint amounts of which exceed R$5,000 (five million reais), or R$30,000 (thirty million reais) in the aggregate, where the appropriate and timely proof of stay of protest, cancellation, suspension of the effects or payments is not submitted to the Trustee within 15 (fifteen) business days from receipt of the notification of protest. Capital decrease of the Issuer in an amount above 10% (ten percent) except (i) in cases of capital decrease performed with the objective of absorbing losses, under the terms of Article 173 of the Brazilian Corporation Law; or (ii) if previously authorized by at least 75% (seventyfive percent) of the holders of the outstanding debentures gathered together at a General Debenture Holders Meeting. Payment of dividends, interest on own capital or any other profit sharing provided for in the Issuer s Bylaws, if the Issuer is at default with the pecuniary obligations described in the Indenture, except, however, for the payment of the compulsory minimum dividend provided for in article 202 of the Brazilian Corporation Law. 40

41 (d) (e) If the risk rating originally assigned to the Issuer is downgraded to a level below that equivalent to the "BBB+" rating by Standard & Poor's or by Fitch Ratings, or its equivalent by Moody's. Noncompliance, by the Issuer, with the Financial Ratios, as indicated below, at the related closing dates of the quarterly information and annual financial statements. Ratio 1 Ratio 2 Ratio 3 (Net debt - SFH and FGTS debt) / Shareholders equity = 0.7 Total receivables + Finished inventory / Net debt - SFH and FGTS debt = 1.3 Or (Total Receivables + Inventory Ready) / (Net debt - Debt SFH and FGTS) = 0 EBITDA / Net Financial Expense = 1.2 Or EBITDA / Net Financial Expense = < 0 (where EBITDA>0) As of, the Company is compliant with all restrictive covenants. Schedule of debt expiration: December 31, 2015 Up to 1 year 2-3 years 4 years Total Debentures 52,201 49, ,140 Up to 1 year 2-3 years 4 years Total Debentures 53,604 99, , Accounts payable from acquisition of interest On April 01, 2016, the Company acquired 50% of the capital quotas of the companies Sítio do Morro Loteadora Imobiliária SPE Ltda., Fazenda Desengano Loteadora Imobiliária SPE Ltda., Santa Rita Loteadora Imobiliária SPE Ltda., for the total value of R$ 10,584, of which R$ 2,580 paid on June 03, 2016 and the remaining R$ 8,004 will be paid in 18 (eighteen) consecutive monthly installments, monetarily restated at the rate of 112.5% of CDI from the base date January 01, 2016 to the date of effective payment Of the total value payable, seven (7) installments have already been paid, the restated remaining balance is R$ 5,665, which will be paid in eleven (11) monthly installments to November 03, Such balance is recorded under current liabilities in caption Accounts payable for acquisition of interest and anticipation of condominiums. 41

42 14 Receivables from third parties (current assets) and funds from partners (current liabilities) Parent company Assets - Receivables from third parties Advances (a) 19,646 49,010 7,150 11,438 Advances to third-parties (b) 3,402 5,225 15,111 20,480 Sundry debtors (c) 9,811 11,211 9,082 8,835 Recoverable taxes 6,002 9,699 12,276 18,144 Notes receivable (d) 4,053 4,037 4,053 4,037 Advance to employees Consortia acquired ,345 79,519 48,518 63,940 (a) (b) (c) (d) Advances made to SPEs for the purpose of supporting operations. Advances mainly to suppliers for acquisition of inputs and land. Receivables from expenses and/or costs paid by the parent company and subsidiaries passed on to joint ventures and others. Loan agreements with unrelated parties. Parent company Liabilities - Funds from partners Advances Sundry creditors (a) 473 1, ,483 Accounts payable - sundry ,737 1,184 1,733 (a) Expenses and/or costs passed on to joint ventures to the parent company and joint operations. The Company takes part in real estate development joint ventures together with other partners directly or through related parties, by means of ownership interest. The management of these projects and cash management are centralized in the joint venture's leading company, which inspects the progress of the construction work and budgets. Therefore, the joint venture's leader ensures that the necessary funds are used and allocated as planned. The sources and uses of the joint venture's funds are reflected in these balances, considering the related ownership interest percentage, which are not subject to adjustment for inflation or financial charges and do not have a pre-established maturity date, as established in the participation agreements. 15 Accounts payable for acquisition of real estate They are commitments assumed in the purchase of land recorded under Real estate for sale for real estate development, which will be paid off as follows: (a) with the transfer of a percentage of the Total Potential Sales Value (VGV) of the respective joint ventures, generally ranging between 4% and 35%, as the moneys are received; (b) in national currency according to 42

43 the conditions listed in the contracts of purchase and sale (not considered in the VGV category) and/or (c) by means of exchange value of real estate units. These commitments are discounted to present value pursuant to the terms mentioned in Note 3.13 and are comprised as follows: Parent company Joint venture Parent company Land - Zona Sul (SJRP - SP) - 3,045-3,045 Subsidiaries Sistema Fácil Incorporadora Imobiliária. Cascavel SPE Ltda Terra Nova Rodobens Incorporadora Imobiliária Feira De Santana I - SPE Ltda Terra Nova Rodobens Incorporadora Imobiliária Feira De Santana II - SPE Ltda Terra Nova Rodobens Incorporadora Imobiliária Feira de Santana III - SPE Ltda Terra Nova Rodobens Incorporadora Imobiliária Pres. Prudente I - SPE Ltda Terra Nova Rodobens Incorporadora Imobiliária Dourados I - SPE Ltda ,126 Rodobens Moradas Incorporadora Imobiliária Pacatuba II - SPE Ltda ,025 Rodobens Moradas Incorporadora Imobiliária Pacatuba I - SPE Ltda Rodobens Incorporadora Imobiliária SPE Ltda Rodobens Incorporadora Imobiliária SPE Ltda ,539 Rodobens Incorporadora Imobiliária SPE Ltda ,503 6,503 Rodobens Incorporadora Imobiliária SPE Ltda. - 3,593 Rodobens Incorporadora Imobiliária SPE Ltda ,732 7,532 Rodobens Urbanismo Ltda ,373 - Rodobens Incorporadora Imobiliária SPE Ltda ,667 Rodobens Incorporadora Imobiliária SPE Ltda ,902 Rodobens Incorporadora Imobiliária SPE Ltda ,457 3,457 Rodobens Incorporadora Imobiliária SPE Ltda ,579 1,654 Rodobens Incorporadora Imobiliária SPE Ltda Rodobens Incorporadora Imobiliária SPE Ltda.(*) - - 6,000 - Rodobens Administradora 432 Ltda CCDI JAW Holding Participações Ltda Camargo Corrêa Rodobens Emp. Imobiliária SPE Ltda Total - 3,045 38,698 41,693 Total current liabilities - 3,045 13,964 27,301 Total non-current liabilities ,734 14,392 Payments by currency - 3,045 6,867 20,015 Payments by payment in kind of units - - 7,215 5,473 Payments by VGV ,616 16,205 (*) At this SPE there was no entry of joint venture, as there were no payments for the purchase of the properties. The balance payable is adjusted under the same conditions of the purchase and sale agreements of the units subject or not to passing on the VGV percentage. 16 Related parties The Company, its controlling shareholders, subsidiaries and jointly-controlled subsidiaries carry out trading and financial transactions among them under prices, terms, financial charges and other conditions considered by Management as usual in the real estate development market. These transactions include the provision of funds for joint ventures, service agreements, controlling shareholders' guarantees for financing agreements, and installment sale of residential units to some of the current jointly controlling quotaholders. 43

44 The balances of transactions between related parties were eliminated in the consolidation. The balances of trading and financial transactions, represented by intercompany loan agreements are as follows: Parent company Assets Jointly-controlled subsidiaries and operations: SPEs 6,745 7, ,373 6,745 7, ,373 Parent company Liabilities Jointly-controlled subsidiaries and operations: SPEs Parent company Income (expenses) Jointly-controlled subsidiaries and operations: Marans Holdings Ltda SPEs 937 2, Joint venture partners: Capa Engenharia Ltda. - 1,352-1,474 Construtora Nogueira Porto Ltda SM Desenvolvimento e Incorporação Ltda , ,102 Parent company Income (expenses) Jointly-controlled subsidiaries and operations: SPEs Intercompany balances recognized in liabilities and expenses refer basically to loan agreements of the parent company with its subsidiaries and jointly-controlled subsidiaries, which are substantially remunerated at CDI - Interbank Deposit Certificate. As of, there are 2 subsidiaries with a balance (5 on December 31, 2015), while the most representative asset balances are as follows: Rodobens Incorporadora Imobiliária 369 SPE Ltda - R$ 6,646 (R$ 5,306 as of December 31, 2015). 44

45 Intercompany balances recognized in liabilities and expenses with related parties refer basically to loan agreements entered into with Rodobens Group Companies and partners in joint ventures related to jointly-controlled subsidiaries and operations. The balances of trading and financial transactions, represented by intercompany loan agreements are as follows: Parent company Income from services rendered Subsidiaries and jointly-controlled subsidiaries: SPEs 3,842 5,587 2,986 2,258 3,842 5,587 2,986 2,258 Expenses from services rendered Rodobens Group Companies 687 1, , , , Management remuneration The purpose of the remuneration policy for statutory officers and members of the Board of Directors is to attract and retain the best talents to work as administrators. Members of the Executive Board are entitled to a fixed and a variable remuneration. The fixed and variable remuneration adopted is approved by the Board of Directors and ratified at the Annual General Meeting. The Company offers to its directors a profit sharing plan linked to the achievement of budget goals and operating goals. Independent members of the Board of Directors are entitled only to a fixed monthly remuneration, regardless of the number of summons. The Board of Directors members indicated by controlling shareholders is not entitled to remuneration. In addition, effective members of the Tax Council are entitled only to fixed remuneration, established within the limits provided for in applicable law. As of and 2015, the Company and its subsidiaries bookkept expenses with remuneration of its management in the amount of R$ 5,890 (R$ 10,278 in 2015), including seven statutory officers (six statutory officers in 2015), six members of the Board of Directors (six members of the Board of Directors in 2015), three members of the Tax Council (three members of the Tax Council in 2015) and three of the Audit Committee (three members of the Audit Committee in 2015). Of this amount, R$ 628 (R$ 4,784 in 2015) correspond to the variable remuneration plan. 45

46 17 Deferred taxes 17.1 Deferred taxes Deferred income tax, social contribution on profit and PIS and COFINS (taxes on income) are calculated based on income recognized during the year that were not financially realized. Payment will be made as revenues are earned, pursuant to the tax criterion adopted by the Company. The tax basis for the years, under prevailing tax legislation, is as follows: Liabilities Income recognized under the percentage-of-completion method and not financially realized 875,734 1,008,353 Deferred income tax 12,650 15,260 Deferred social contribution 6,817 7,958 Deferred Tax for social security finance - COFINS 17,330 19,618 Deferred Employees profit participation program - PIS 3,745 4,253 40,542 47,089 Current liabilities 26,579 35,804 Non-current liabilities 13,963 11, Reconciliation of income and social contribution taxes The income and social contribution taxes are reconciled to the tax rate, as follows: 40,542 47,089 Parent company Income tax and social Income tax and social Income tax and social Income tax and social contribution contribution contribution contribution Income before income and social contribution taxes (75,726) 6,748 (60,239) 30,831 Exclusion of equity in net income of subsidiaries and fair value 1,733 77,462 30,928 (1,211) Income tax at nominal rate - 34% (26,336) (24,043) (30,997) 10,071 Net effect of companies taxed based on deemed profit (10,371) (54,915) Effect of the deferred income and social contribution taxes when is not formed on temporary differences and tax losses 26,336 24,043 26,336 24,043 Income and social contribution taxes for the period - - (15,032) (20,801) Current portion - - (17,404) (24,135) Deferred portion - - 2,372 3, (15,032) (20,801) 17.3 Tax losses from income tax and negative basis of social contribution The deductible temporary differences, accumulated tax losses and negative basis of social contribution do not lapse pursuant to the tax legislation in force. Deferred tax assets have not 46

47 been recognized in respect of these items because it is not probable that future taxable profits will be available so that the Company can utilize the benefits of these. The total tax losses from income tax negative basis of social contribution accumulated on at the parent company are R$ 86,536 and R$ 96,901 respectively (R$ 44,563 and R$ 44,927 on December 31, 2015) Segregation of assets of the merger All of the Company s real state developments are included in Asset Segregation structures set up in the form of SPEs (Special Purpose Entities). On, the Company consists of the Parent Company and the consolidation of 206 SPEs. Of the Company s 206 SPEs with active projects, 68 opted for RET Special Taxation System, and established the Termo de Patrimônio de Afetação (Related Property Term). The gross operating income for the year of the SPEs classified under RET in relation to the consolidated gross operating income for the year, are presented as follows: companies Special Taxation Regime (RET) companies % of RET on Total Gross operating income (loss) Net income from real state developments sold 385, ,562 72% Cost of properties sold (347,960) (273,600) 79% Gross income 38,024 5,962 16% 18 Provision for guarantee Parent company Provision for Guarantee: ,171 13,541 This provision is set up by applying a percentage between 1% and 2% on the cost of units sold. This percentage was determined by Management based on the Company's historical losses on the repair of properties sold. The provision for warranty is set up to cover the correction of structural (up to five years) and material defects and apparent defects (up to two years). Changes in the provision for contingencies are as follows: Parent company Balance at December 31, ,541 Provisioned for the year - 4,177 Consumed in the year (48) (3,547) Balance at - 14,171 47

48 19 Provision for tax, labor and civil risks The Company has lawsuits and administrative proceedings in progress of a labor and civil nature. The provision formation policy adopted by the Company is related to the procedural stage of lawsuits effectively filed by the plaintiffs, so that the probability of loss is changed, after announcement of the court decision, from "possible" to "probable", on which occasion provision is formed in the amount determined for the award. As of, the Company recognized a provision for contingencies in an amount considered sufficient to cover lawsuits and litigations that, in the opinion of Management and its legal advisors, may have unfavorable outcomes. Parent company Civil (a) ,158 11,627 Labor (a) 1,521 1,261 6,919 5,600 1,607 1,464 20,077 17,227 (a) Refer mainly to litigations involving labor and social security claims and compensation for loss and damage arising from consumption relationships not supported by insurance coverage. Changes in provisions for the period are as follow: Parent company Civil Labor Civil Labor Balance at December 31, ,261 11,627 5,600 Provisioned for the year 53 1,299 10,601 7,111 Reversed for the year (170) (1,039) (9,070) (5,792) Balance at 86 1,521 13,158 6,919 In addition, according to the opinion of the Company s legal advisors, there are other civil, labor and tax lawsuits with possible risk in the amount of R$ 1,328 (R$ 1,493 as of December 31, 2015) in parent company and R$ 23,360 (R$ 20,379 as of December 31, 2015) in consolidated. The Management of the Company and its subsidiaries understands that there are no future significant risks not covered by sufficient provisions in their financial statements. The Company's income tax returns are open to review and final approval by tax authorities for five years. Other tax and social security charges are also open to review and final approval by tax authorities for varying statutory periods. 48

49 20 Shareholders' equity - Parent company 20.1 Capital As of, subscribed and paid-up capital is R$512,438, represented by 43,769,808 nominative common shares (same as of December 31, 2015) with no par value Profit retention reserve Holders of common shares are entitled to dividends of at least 25%, calculated based on the profit for the year adjusted as required by law (Loss) net income for the year (75,726) 6,748 Legal Reserve (5%) - (337) Net income available - 6,411 Minimum compulsory dividends (25% on the calculation basis) - 1,603 Interim dividends paid out during the year 8,397 - Total 8,397 1, Treasury shares The Company holds in treasury 1,580,963 common shares of its own issue, acquired in the market up to for R$ 16,020 for future disposal or cancellation. The market value as at corresponds to R$ 8,616 (R$ 5.45 per share). 21 Earnings per share Reconciliation of net income and weighted average value per share used to calculate basic and diluted earnings are as follows: Parent company (Loss) net income for the year - continued operations (75,726) 6,748 Number of shares during the year (thousand) 42,189 42,480 Basic and diluted earnings (losses) per share (1.7949) For the year ended, the Company did not have potential dilutive common shares and, accordingly, diluted earnings per share is equivalent to basic earnings per share, as shown above. 49

50 22 Financial instruments a. Accounting classification and fair values Statement of financial instruments and their respective category classification The main financial instruments normally used by the Company and jointly-controlled subsidiaries and operations are presented and classified as follows: Parent company Book value Fair value Designated at fair value Loans and receivables Other financial liabilities Total Level 2 Total Financial assets measured at fair value Interest earning bank deposits 12, ,587 12,587 12,587 Total 12, ,587 12,587 12,587 Financial assets not measured at fair value Cash and cash equivalents - 80,488-80, Trade receivables - 21,852-21, Accounts receivable from sale of lands 42,419-42,419 Third-party Receivables - 43,345-43, Other credits - 3,621-3, Related party credits - 6,745-6, Total - 198, , Parent company Book value Fair value Designated at fair value Loans and receivables Other financial liabilities Total Level 2 Total Financial liabilities not measured at fair value Suppliers - - 1,313 1, Loans and financing , , , ,852 Debentures , , , ,140 Funds from partners Debts with related parties Accounts payable from acquisition of interest - - 5,665 5, Other accounts payable - - 1,575 1, Total , , , ,992 Parent company December 31, 2015 Book value Fair value Designated at fair value Loans and receivables Other financial liabilities Total Level 2 Total Financial assets measured at fair value Interest earning bank deposits 9, ,449 9,449 9,449 Total 9, ,449 9,449 9,449 Financial assets not measured at fair value Cash and cash equivalents - 106, , Trade receivables - 27,304-27, Accounts receivable from sale of lands 42,459-42,459 Third-party Receivables - 79,519-79, Other credits - 4,384-4, Related party credits - 7,789-7, Total - 268, ,

51 Parent company December 31, 2015 Book value Fair value Designated at fair value Loans and receivables Other financial liabilities Total Level 2 Total Financial instruments measured at fair value Suppliers - - 2,324 2, Loans and financing ,526 99,526 99,526 99,526 Debentures , , , ,355 Funds from partners - - 1,737 1, Accounts payable for acquisition of real estate - - 3,045 3, Debits with related parties Accounts payable from acquisition of interest ,333 12, Other accounts payable - - 3,101 3, Total , , , ,881 Book value Fair value Designated at fair value Loans and receivables Other financial liabilities Total Level 2 Total Financial assets measured at fair value Interest earning bank deposits 23, ,722 23,722 23,722 Total 23, ,722 23,722 23,722 Financial assets not measured at fair value Cash and cash equivalents - 199, , Trade receivables - 636, , Accounts receivable from sale of lands 151, ,226 Third-party Receivables - 48,518-48, Other credits - 20,779-20, Related party credits Total - 1,057,073-1,057, Book value Fair value Designated at fair value Loans and receivables Other financial liabilities Total Level 2 Total Financial instruments measured at fair value Suppliers ,018 21, Loans and financing , , Debentures , , , ,140 Funds from partners - - 1,184 1, Accounts payable for acquisition of real estate ,698 38, Debits with related parties Accounts payable from acquisition of interest - - 5,665 5, Other accounts payable ,448 17, Total , , , ,843 51

52 December 31, 2015 Book value Fair value Designated at fair value Loans and receivables Other financial liabilities Total Level 2 Total Financial assets measured at fair value Interest earning bank deposits 9, ,520 9,520 9,520 Total 9, ,520 9,520 9,520 Financial assets not measured at fair value Cash and cash equivalents - 284, , Trade receivables - 729, , Accounts receivable from sale of lands 152, ,141 Third-party Receivables - 63,940-63, Other credits - 26,390-26, Related party credits - 2,373-2, Total - 1,259,723-1,259, December 31, 2015 Book value Fair value Designated at fair value Loans and receivables Other financial liabilities Total Level 2 Total Financial instruments measured at fair value Suppliers ,775 30, Loans and financing , , , ,629 Debentures , , , ,355 Funds from partners - - 1,733 1, Accounts payable for acquisition of real estate ,693 41, Debits with related parties Accounts payable from acquisition of interest ,333 12, Other accounts payable ,901 18, Total , , , ,984 b. Measurement of fair value The book values referring to the financial instruments contained in the balance sheet, when compared with the amounts that could be obtained in their trading in an asset market or, in the absence hereof, with the net present value adjusted with a basis on the current interest rate in the market, are substantially close to their corresponding market values. Therefore, the fair value of accounts such as trade receivables is estimated as the present value based on the average offer rate of the Company minus the Amplified Consumer Price Index (IPCA) or at the rates of remuneration of government bonds (NTN-B), whichever is higher. The fair value of loans is estimated by method of discounted future cash flow, by using rates available for similar debt and terms. On the Company had total indebtedness of R$ 625,098 of which R$ 407,106 is related to Real Estate Credits with a weighted average remuneration of 10%. Considering that 33% of this debt is in the short term, and that the risk-free projected Interbank Deposit Certificate (CDI) is approximately 13% given the average period of indebtedness, Management understands that the fair value effects would not be representative, as the projected CDI should also be increased by the rate of risk. 52

53 c. Financial risk management Overview The Company is exposed to the following risks resulting from financial instruments: (iii) (iv) (v) (vi) Credit risk; Liquidity risk; Market risk; and Operating risk. This note presents information on the Company's exposure to each of the risks above, the Company's objectives, measurement policies, and the Company's risk and capital management proceedings. Risk management structure The Company's management has a policy of managing its risks, which considers the adoption of procedures that involve all its critical areas, ensuring that business conditions are risk-free real. The Company, its subsidiaries and jointly-controlled subsidiaries enter into transactions involving financial instruments in order to finance their activities or invest their available funds. The management of these risks is performed through the definition of conservative strategies aiming at liquidity, profitability and safety. The control policy consists of ongoing monitoring of contracted rates against market rates. Credit risks The Company restricts its credit risk exposure associated to banks and short-term investments by investing with reputable financial institutions. With respect to accounts receivable, the Company restricts its exposure to credit risks by selling to a broad client base and through ongoing credit analyses. As of, there was no significant concentration of credit risk associated with clients. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of bank balances, short-term investments and trade receivables. The balance of accounts receivable is spread out over a number of clients, with tangible guarantees consisting in the respective properties. Credit risk exposure The book value of financial assets classified as loans and receivables represents the maximum credit exposure. The maximum credit risk exposure on the date of financial statements was: 53

54 Book value Parent company Cash and cash equivalents 80, , , ,919 Interest earning bank deposits 12,587 9,449 23,722 9,520 Trade receivables 21,852 27, , ,960 Accounts receivable from sale of lands 42,419 42, , ,141 Accounts receivable from sales of corporate quotas Clients - Co-obligations ,358 3,258 Third-party Receivables 43,345 79,519 48,518 63,940 Other receivables 3,621 4,384 20,779 26,390 Related party credits 6,745 7, , , ,739 1,083,727 1,272,974 Liquidity risk Liquidity risk is the risk of the Company encountering difficulties in performing the obligations associated with its financial liabilities that are settled with cash payments or with another financial asset. The Company's approach in liquidity management is to guarantee, as much as possible, that it always has sufficient liquidity to perform its obligations upon maturity, under normal and stress conditions, without causing unacceptable losses or with a risk of sullying the Company's reputation. In subsidiaries, this risk is eliminated due to the compatibility of terms and amortization flows between issued securities and acquired backing. As regards the parent company, funds were raised for investment in new real state developments, whose future flow of real estate development operations will back settlement of loans. The Company manages liquidity risk by managing cash flows and maintaining a capital structure supported by financial assets, real estate receivables and real estate units, which allows a high level of leverage. In addition, the Company monitors assets and liabilities in order to mitigate risks of occasional mismatches. No cash flow expected, included in the analysis of the maturation of the Company, may occur significantly sooner or in amounts significantly different. The maturities of the financial instruments of loans, financing, debentures and suppliers are as follow: Year ended Up to 1 year 2-3 years 4-5 years Total Loans and financing 172, ,096 85, ,959 Debentures 52,201 49, ,140 Debts with related parties Accounts payable from acquisition of interest 5, ,665 Suppliers 21, , , ,035 85, ,691 54

55 Year ended December 31, 2015 Up to 1 year 2-3 years 4 years Total Loans and financing 187, ,145 26, ,731 Debentures 53,604 99, ,355 Debts with related parties Accounts payable from acquisition of interest 12, ,333 Suppliers 30, , , ,896 26, ,984 Market risk Market risk is the risk that alterations in market prices, such as interest rates, have in the Company's earnings, or in the value of its holdings of financial instruments. The objective of market risk management is to manage and control exposures to market risks, within acceptable parameters, and at the same time to optimize the return. In general, loans are denominated in currencies equal to the cash flows generated by the Company's basic operations, mainly in Brazilian reais. This provides a protection to business without contracting derivatives, and hedge accounting is not applied under such circumstances. Foreign exchange risk As of, the Company had no other debts or amounts receivable denominated in foreign currency. Moreover, none of the Company s relevant costs are in foreign currency. Accordingly, the Company did not have any foreign exchange exposure on that date. Interest rate risk The Company is exposed to floating interest rates, mainly: Variations in the CDI rate applied to short-term investments. Client portfolio and costs to incur, adjusted at INCC. Client portfolio adjusted at IGPM or TR, after handing over the keys. The compensation on loans receivable contracted at rate from 100% to 120% of CDI. Interest on the CCBs funding in of August 2015 at the fixed interest rate of 11.5 % p.a. + TR (reference rate) Interest on the CCBs funding in January 2016 at the fixed interest rate of 14.5 % p.a. + TR (reference rate) Interest on CCBs funding in October 2016 at the fixed interest rate of 115 % of CDI Interest on loans contracted with the National Housing System between TR + 8.0% p.a. to 10% p.a. Interest on the debentures - third issue - CDI % p.a. 55

56 Interest on the CCB with Banco Votorantim S.A., in January CDI % % p.a. Interest on CCB with BR Partners, of September CDI % p.a. Interest on CCB s fund raising in July and August CDI + 2% p.a. According to the interest rate risks above, the exposed balances are shown as follows: Parent company Financial assets Cash and cash equivalents (a) 80, , , ,919 Interest earning bank deposits 12,587 9,449 23,722 9,520 Trade receivables 21,852 27, , ,960 Accounts receivable from sale of lands 42,419 42, , ,141 Accounts receivable from sales of corporate quotas Clients - Co-obligations ,358 3,258 Related party credits 6,745 7, ,373 Total 164, ,836 1,014,430 1,182,644 Parent company Financial liabilities Loans and financing 115,852 99, , ,731 Debentures 102, , , ,355 Debts with related parties Total 218, , , ,876 (a) Considering only the money market investments that are classified as Cash and cash equivalents, according to note no. 4. The Company has no derivatives to mitigate interest rate risks since its Management considers that, due to the features of the indices to which its investments and financial obligations are indexed, it is not exposed to significant fluctuations. Sensitivity analysis on interest rate exposure Most of the Company's costs and all the portfolio of receivables from uncompleted projects are adjusted for inflation based on the National Civil Construction Index (INCC). As the balance of the receivables portfolio is higher than the costs to be incurred, the impact would occur in the event of a negative INCC index. All the Company's short-term investments and approximately 42% of its total indebtedness are tied to the CDI rate (43% as of December 31, 2015). As the balance of investments is lower than the balance of indebtedness, an increase of one percentage point in the CDI average rate for the year ended would represent a decrease in the Company's net income of R$ 695 (decrease by R$ 202 at December 31, 2015). The following tables show the sensitivity analysis prepared by Company s management and the effect of the transactions on December 31, 2015: 56

57 Loss scenario Probable scenario Gain scenario Decrease Decrease Increase Increase 50% 25% 25% 50% INCC 3.17% 4.76% 6.34% 7.93% 9.51% IGPM 3.60% 5.39% 7.19% 8.99% 10.79% Gain scenario Probable scenario Loss scenario CDI 6.50% 9.75% 13.00% 16.25% 19.50% TR 1.02% 1.52% 2.03% 2.54% 3.05% Net assets (and liabilities) Result expected with probable index Effect 25% increase 50% increase CDI (9,035) (11,293) (13,552) INCC 2,411 3,013 3,616 IGPM 13,817 17,271 20,726 TR (7,444) (9,305) (11,166) Operating risks Operating risk is the risk of direct or indirect losses arising from different causes related to the Company's processes, personnel, technology and infrastructure and external factors, except credit, market and liquidity risks, as those arising from legal and regulatory requirements and from generally accepted corporate behavior standards. The operating risk management aims at monitoring: (i) of the construction agreement, in relation to the quoted maximum construction work cost; (ii) of works, while we have engineers allocated to all the projects to supervise the services rendered by outsourced workers (quality and physical and financial schedule of the works); (iii) of the financial and accounting audits carried out by the main independent audit firms; (iv) of documentation and legal risks; and (v) of the credit risk of the buyers of units through the active management of the receivables of the real state developments. Risk control system In order to effectively manage the risk control system, the Company exercises the operating control over all real state developments of its portfolio, which allows, for example, reducing the construction cycle of projects, in order to reduce its risk exposure in certain real state developments. This reduction generally occurs through the development of new construction technologies, development and training of construction teams, use of inputs and pre-processed materials, etc. The risk control comprises the individual analysis of the risk of each real state development and the analysis of the risk of our investment portfolio. In the model, potential losses are calculated in a stress scenario for each individual real state development and for the portfolio as a whole, as well as the maximum cash exposure required by the portfolio. 57

58 Loss risk control The risk of a new real state developments is calculated considering how much a company may lose, in the extreme event that it decides to settle this investment. To this end a winding up price is defined, which may be estimated only in markets in which price formation is consistent, this consistency being defined as demand sensitivity to changes in price. The maximum loss expected in each project is calculated and a portion of company own capital is allocated to support this risk. The Company s total risk consists in the sum of each project's individual risks. After launching, the real state development risk is reduced to the extent of the disposal of the units. The Company seeks to obtain maximum efficiency for its capital, and believes that such efficiency is reached when the sum of the risk of individual projects is close to the total of its available capital. Control over maximum cash exposure The risk control system monitors the future cash requirement to develop the scheduled real state developments in our portfolio, based on the economic feasibility study of each real state development and the need of individual cash flows in relation to the projected cash flow of the portfolio as a whole. This projection assists in the definition of its financing strategy and in the decision-making as to which real state developments should be included in the portfolio. Operation in a liquid market Through its market knowledge and with the assistance of partners, the Company is able to define the need for new real state developments in different regions, as well as the income bracket of targeted potential purchasers. It concentrates its projects in accordance with the liquidity of each geographic location, i.e., the potential of each region to absorb a given number of real estate and react to price fluctuations. The Company does not intend to act in markets in which there are no data available and in which there are no partners with specific expertise on such markets. Accordingly, it believes that it reduces the risk of its investments since it operates in liquid regions based on known market data and associates with local partners. Capital management The Company manages its capital to ensure the continuity of its regular activities and, at the same time, maximizes return to all stakeholders or parties involved in its operation, through debt and equity balance optimization. The capital structure of the Company is formed by the net indebtedness, deducted of cash and bank balances, divided by the capital plus reserves. The Company is not subject to any external requirement on capital. The net financial debt as defined and used by the Company corresponds to the bank indebtedness, including loan with the controlling shareholder, less cash and cash equivalents and short-term investments. 58

59 Indebtedness ratio Bank indebtedness 625, ,086 (-) Cash and cash equivalents and interest earning bank deposits (223,536) (294,439) (=) Net debt (A) 401, ,647 Shareholders equity (b) 755, ,304 Net debt ratio (A) / (B) Net income from real state developments sold Parent company Income from real estate developments 5,087 3, , ,203 Returns of gross income (101) (529) (345,314) (273,444) Sales tax Current (681) (433) (10,937) (15,838) Deferred ,555 3,406 Net operating income 5,222 3, , ,327 a. Income from exchange of land Income from exchange of land comes from the exchange of land for built units and thus is measured at fair value, i.e., the sales value of units to be built and delivered. The sales income of these units is recognized in income by the percentage of completion (POC) method and also by their respective constructive costs. The table below shows the sum of income from this transaction, as provided for in item 35 of CPC 30 (R1) / IAS 18, following the criteria stipulated in items 21 and 22 of OCPC 01 (R1) Income from exchange of land 2,289 1,243 2,289 1,243 b. Information on construction in progress The result of property sales, which includes sales income, costs of land and construction costs and inherent in their real estate, is appropriate to the result using the method of percentage of completion of each real state development, and this percentage is measured based on the cost incurred in relation to total estimated contract cost for the real state development in accordance with the criteria established in OCPC 04, applicable to real estate entities. Amounts receivable arising from sales of units under construction, are presented under the same completion 59

60 percentage, with amounts received in excess of these receivables recorded in current liabilities as Advance from clients". Due to the accounting recognition described above, the balances of gross income not accounted for in real estate sales transactions already contracted, including its financial income, and costs to be incurred (or construction commitments) are not reflected in the financial statements for the conditions described above, as applicable, related to uncompleted properties, are as follows: Units in construction Accumulated balances at 12/13/2016 Contracted sales income (accumulated up to 12/31/2016) 3,480,343 Recognized sales income (3,334,354) Unearned gross sales: 145,989 Current assets 53,919 Non-current assets 69,963 Advance from clients (c) 22,107 Budged costs of units sold (2,357,004) Incurred cost of units sold (accumulated up to 12/31/2016) 2,257,029 Budgeted costs to be realized/construction commitments (a) (99,975) Income/loss in the sale of property to be appropriated (b) 46,014 Gross margin 32% (a) (b) Represent the estimated costs to be incurred in respect of construction in progress units already sold, deducted costs already incurred during the construction process. The financial costs of financing the construction and the costs of guarantees are not included in this statement. The net results on sale of properties consists of unrealized client credit subtracted from the balance of construction commitment. (c) The advance from clients is recorded in current liabilities as Advance from clients", where receipts are due to higher receivables from clients recorded as percentage of completion of work. 24 Information on nature of expenses recognized in the statement of income The Company presented the income statement using a classification of operating expenses based on their function. The information on the nature of these expenses recognized in the income statement is as follows: 60

61 Parent company Cost of real state developments sold Labor (2,338) (66) (139,184) (157,267) Inputs (3,508) (99) (174,101) (213,433) Financial cost - - (34,675) (22,466) Total (5,846) (165) (347,960) (393,166) Expenses, by nature: Commissions (153) (121) (29,050) (21,355) Marketing and advertising (4,436) (4,615) (24,128) (29,449) Personnel expenses (21,361) (23,405) (24,362) (26,071) Other taxes and rates (440) (347) (2,305) (2,335) Professional services engaged (3,423) (2,772) (4,790) (5,510) Traveling (622) (824) (683) (905) Use and consumption (12,439) (17,602) (30,552) (38,778) Depreciation/amortization (6,343) (5,994) (6,670) (6,316) Total (49,217) (55,680) (122,540) (130,719) Classified as: Commercial and sales (4,589) (4,736) (53,178) (50,804) General and administrative (44,628) (48,686) (69,632) (77,657) Employee profit sharing - (2,258) - (2,258) Total (49,217) (55,680) (122,540) (130,719) 25 Financial income (loss) Parent company Asset monetary variation 5,034 4,475 16,720 24,918 Liability monetary variation (3,593) (2,035) (4,667) (3,287) Net monetary variations 1,441 2,440 12,053 21,631 Interest received from clients ,742 31,268 Financial income on loan agreement 937 4, ,101 Yields from financial investments 15,807 17,310 32,465 33,237 Adjustment to present value - Urbanization portfolio (i) - - (3,373) (3,450) Taxes (1,725) (1,235) (1,943) (1,912) Other financial income Financial income 15,358 20,930 48,105 61,308 Financial expense on loan agreement (119) (577) (104) (120) Interest/charges on funding (37,629) (42,870) (38,731) (43,850) Discount on assignment of receivables (16) Discounts granted (533) (4,216) (9,415) (6,386) Other financial expenses (381) (484) (4,338) (8,606) Financial expenses (38,662) (48,147) (52,588) (58,978) Financial income (loss) (21,863) (24,777) 7,570 23,961 (i) This balance represents the adjustment to present value calculated in the Rodobens Urbanismo portfolio, in compliance with Accounting Technician Pronouncement - CPC 12 and is used for de-capitalization purposes, the rate published by NTN-B 10 (National Treasury Notes - Series B ), considered the rate that best reflects the average maturity of the portfolio. 61

62 26 Statements of cash flows a. Cash and cash equivalents The breakdown of the cash and cash equivalents balances included in the statements of cash flows is stated in Note 4. b. Supplementary information Non-cash transactions: Dividends proposed and not paid - 1,603 Provision for bonus 1,530 - Additional quotas of SPEs acquired for time payment 5,665 12, Share-based payment - Parent company 7,195 13,936 a. Description of share-based payment agreements As of, the Company had the following share-based payment agreements: On March 19, 2014, the Company approved the "Variable Remuneration Plan" authorizing the issuance of Company s shares to be delivered to its employees and officers, subject to the terms and limits set out in the Guidelines for Stock Option Plans, in particular to the provisions of Article 168, paragraph 3 and Article 171, paragraph 3 of Law 6404/76. The exercise price of these options was R$ On April 7, 2014, an option to purchase 517,000 common shares of the Company in the amount of R$ 5,827 was exercised. The fair value of these stock options is calculated by the average price of treasury shares on the date of purchase option. This amount is being amortized over the vesting period. Amortization expenses of stock options, recorded under caption Personnel expenses (Note 25) for the year ended December 31, 2016 was R$ 617. The balances to be recognized in the Company s income (loss), considering the plan, are as follows: Stock options expenses , Total 3,464 The main terms and conditions regarding the granting of the stock option program are presented below: 62

63 Grant date / beneficiaries Granting of options to key management personnel Number of shares (in thousands) April 07, April 07, April 07, Conditions for right acquisition It shall be automatically terminated if the beneficiary fails to render service to the Company in up to 2 years. It shall be automatically terminated if the beneficiary fails to render service to the Company in up to 3 years. It shall be automatically terminated if the beneficiary fails to render service to the Company in up to 4 years. Contractual life of the option 2 years 3 years 4 years Total stock options Segment information The Company reviewed the way to evaluate its business, and believes that its activities are now split into merger and allotment. Hence, information by operating segments have been disclosed for this quarter based on its relevance, as follows: Urbanism RNI Total Urbanism RNI Total Net income from real state developments sold 69, , ,984 82, , ,327 Cost of real state developments sold (34,967) (312,993) (347,960) (35,743) (357,423) (393,166) Gross income 34,558 3,466 38,024 46, , ,161 Operating (expenses) income 19,266 (125,099) (105,833) (7,879) (152,937) (160,816) Gross income (loss) before financial income 53,824 (121,633) (67,809) 38,573 (35,228) 10,395 Net financial income (expenses) 7, ,570 4,580 22,906 27,486 Income (loss) before taxes 60,872 (121,111) (60,239) 43,153 (12,332) 30,831 Income and social contribution taxes (3,653) (11,379) (15,032) (3,143) (17,658) (20,801) Net income for the year 57,219 (132,490) (75,271) 40,010 (29,980) 10,030 Total assets 331,445 1,246,577 1,578, ,916 1,492,658 1,705,574 Total liabilities 96, , ,912 52, , ,270 Shareholders' equity 235, , , , , ,304 Information on main clients In view of the residential real estate and plotting activity, the Company does not have any client that individually accounts for more than 10% of the total consolidated income. 63

64 29 Insurance coverage As of, the insurance coverage for the parent company and consolidated, was R$ 30,000 for civil liability, operating risks, material damage, bodily injury and/or pain and suffering and R$ 10,000 for assets. * * * Board of Directors Waldemar Verdi Júnior Aymar Ferreira de Almeida Junior Milton Jorge de Miranda Hage Alcides Lopes Tápias Mailson Ferreira da Nóbrega Roberto de Oliveira Lima Giuliano Finimundi Verdi Tax Council Marco Antônio Bacchi da Silva Roberto Lopes de Souza Junior Gustavo Adolfo Traub Audit Committee Flávio Leme Ferreira Filho Salim Furukawa Godoi Raymundo de Souza Neto Executive Board Mauro Pereira Bueno Meinberg Carlos Bianconi Clóvis Antônio Sant anna Filho Alexandre Firmo Mangabeira Albernaz César Augusto Signorini Faim José Walter Ferreira Junior Accountant Paulo Sergio Baldissera CRC - 1SP O/3 64

65 4Q16 Earnings Release Rodobens reports 4Q16 and 2016 results São Paulo, March 16, 2017: Rodobens Negócios Imobiliários (BM&FBovespa: RDNI3), a real estate developer and builder, announces today its audited results for the fourth quarter (4Q16) and fiscal year The following financial and operating information is presented on a consolidated basis in accordance with generally accepted accounting practices in Brazil based on Brazilian Corporation Law, International Financial Reporting Standards (IFRS) and the rules issued by the Brazilian Accounting Pronouncements Committee (CPC). Launches: 4 projects launched in 2016, with aggregate potential sales value (PSV) of R$273 million. The highlight was the launch of 4 phases of the project Recanto das Emas, 59% of which has already been sold. Net Sales: R$70 million in 4Q16. In 2H16, sales volume was double the amount in the prior-year period, reflecting the creation of the sales task force. SBPE Inventory: 9% decline compared to 3Q16, in line with the company s strategy of monetizing its assets. Treatment of Receivables Portfolio: During 2016, the Company canceled contracts worth R$368 million, which generated a negative effect on gross profit in the year of R$119 million. Excluding these cancellations, net income amounted to R$43 million. SBPE Transfers: R$33 million in 4Q16, 107% more than in 3Q16. General and Administrative Expenses: R$69 million in 2016, down 11% from the previous year, marking the fourth straight year of reductions in G&A Expenses. Reduction in corporate debt: from R$259 million in 3Q16 to R$218 million at end Solid cash position: cash (R$224 million) plus performed receivables free of debt (R$327 million) corresponded to 2.53x corporate debt at end Conference Call to discuss 4Q16 and 2016 Results: Portuguese (with simultaneous translation into English) March 17, at 11:00 a.m. (Brasília time) /10:00 a.m. (New York time) Brazil: +55 (11) or Replay in Portuguese: +55 (11) USA: (+1) Conference Call Number: ; Code: Other countries: (+1) Replay in English: +55 (11) Code: Rodobens Conference Call Number: ; Code: Page 1 of 29

66 4Q16 Earnings Release OPERATING AND FINANCIAL HIGHLIGHTS The complete consolidated financial statements for 4Q16, accompanied by the respective notes, can be found in the Standardized Financial Statements (DFP) available on our Investor Relations website and the website of the Securities and Exchange Commission of Brazil (CVM) Operating and Financial Information 4Q16 4Q Highlights 4Q16 3Q16 vs 4Q15 vs vs 3Q16 4Q Launches Project Launches - RNI PSV (R$ '000) 9,193 80,092-89% - N/A 214,510 58, % Project Launches - Total PSV (R$ '000) (1) 18,386 86,048-79% - N/A 272,947 98, % Project Launches - Total PSV - Development (R$ '000) - - N/A - N/A 81,937 70,755 16% Project Launches - Total PSV - Subdivision (R$ '000) 18,386 86,048-79% - N/A 191,010 27, % RNI's share of total launches 50% 93% p.p. - 79% 59% 19.6 p.p. # Projects Launched % - N/A % Units Launched - Development - - N/A - N/A % Units Launched - Subdivision % - N/A 1, % Average Price of Units Launched (R$/sqm) - Development - - N/A - N/A 4,300 5,280-19% Average Price of Units Launched (R$/sqm) - Subdivision % - N/A % Average Price of Units Launched (R$ '000/unit) - Developm - - N/A - N/A % Average Price of Units Launched (R$ '000/unit) - Subdivisi % - N/A % Contracted Sales Gross Contracted Sales RNI PSV (R$ '000) 163, ,452-21% 105,651 54% 555, ,181-2% Gross Contracted Sales Total PSV (R$ '000) 173, ,202-22% 123,422 40% 635, ,295-5% Net Contracted Sales RNI PSV (R$ '000) 66,800 96,814-31% 22, % 219, ,586-26% Net Contracted Sales Total PSV (R$ '000) (2) 70, ,006-32% 32, % 267, ,878-24% Contracted Sales (R$ '000) - Development 51,549 76,664-33% 28,075 84% 156, ,820-39% Contracted Sales (R$ '000) - Subdivision 18,649 26,342-29% 4, % 110,104 92,058 20% RNI's share of total Contracted Sales 95% 94% 1.2 p.p. 70% 24.9 p.p. 82% 85% -2.6 p.p. Units sold - Development % (15) N/A % Units sold - Subdivision % % 1,102 1,385-20% Financial Indicators in R$ '000 Net Revenue 76, ,750-48% 133,108-43% 385, ,327-31% Gross Profit (12,323) 23,629 N/A 51,823 N/A 38, ,161-77% % Gross Margin -16.2% 16.2% p.p. 38.9% p.p. 9.9% 29.5% p.p. Adjusted EBITDA (3) (42,547) 3,497 N/A 2,746 N/A (26,464) 35,653 N/A % Adjusted EBITDA Margin -55.9% 2.4% p.p. 2.1% N/A -6.9% 6.4% p.p. Net Income (55,647) (15,349) 263% 3, % (75,726) 6,748 N/A % Net Margin -73.1% -10.5% p.p. 2.4% p.p % 1.2% p.p. Earnings per Share (in R$) % 0.07 N/A N/A Shares Outstanding (4) 42,189 42,189 0% 42,399 0% 42,189 42,399 0% Backlog Revenue Backlog Revenue (R$ '000) 145, ,522-17% 353,009-59% 145, ,009-59% Backlog Results (R$ '000) 46,014 54,723-16% 122,487-62% 46, ,487-62% % Backlog Margin 31.5% 31.2% 0.3 p.p. 34.7% -3.2 p.p. 31.5% 34.7% -3.2 p.p. Balance Sheet Net Debt (R$ '000) 401, ,365 4% 289,647 39% 401, ,647 39% Net Debt ex Production Debt (R$ '000) (5,544) (40,275) -86% (36,400) -85% (5,544) (36,400) -85% Cash Position (R$ '000) 223, ,668-25% 294,439-24% 223, ,439-24% Shareholders' Equity (R$ '000) 754, ,229-7% 852,304-12% 754, ,304-12% Net Debt/Shareholders' Equity 53.2% 47.3% 5.9 p.p. 34.0% 19.3 p.p. 53.2% 34.0% 19.3 p.p. Net Debt ex Production Debt/Shareholders' Equity -0.7% -5.0% 4.2 p.p. -4.3% 3.5 p.p. -0.7% -4.3% 3.5 p.p. (1)Total PSV Launched, includig Rodobens' share added to partners (2) Total Contracted Sales value of all project that Rodobens participates, includig Rodobens' share added to partners'. Including cancelations of Contracted Sales. (3) Adjusted EBITDA: includes capitalized interest because it is an operating expenses. (4) Shares Outstanding: excludes treasury shares. Page 2 of 29

67 4Q16 Earnings Release CONTENTS MESSAGE FROM MANAGEMENT... 4 LAUNCHES... 6 Inventory Turnover Ratio INVENTORY* PROJECTS DELIVERED TRANSFER TO BANKS OF CLIENT BALANCES / OFF-PLAN PROPERTIES LANDBANK DEVELOPMENT LANDBANK SUBDIVISION FINANCIAL PERFORMANCE INCOME STATEMENT Cash Position Trade Accounts Receivable Loans and Financing RDNI3 Stock Performance Balance Sheet Statement of Income Cash Flow APPENDIX A: Supplementary Operating Data Launches Page 3 of 29

68 4Q16 Earnings Release MESSAGE FROM MANAGEMENT The year 2016, which proved more challenging than initially expected, was marked by political uncertainty, deteriorating economic indicators, mounting unemployment and tight credit. In this scenario, we remained focused on selling inventory and monetizing our assets. During the year, the Subdivision segment accounted for a higher share of our business, with the launch of 3 projects: Recanto da Emas (Goiânia, GO), Residencial Solares (Presidente Prudente, SP) and Terra Jardim Uberaba in (Uberaba, Minas Gerais); and with only one two-tower condominium in Sinop, MT in the Development segment; representing total potential sales value of R$273 million. In line with our strategy, in June 2016, we made additional efforts to sell units in inventory by setting up a sales task force led by key executives. The result was gross sales volume of R$395 million in 2H16, or 65% higher than in 1H16 and 52% higher than in 2H15. The active management of the receivables portfolio was one of management s constant concerns. During the year, we conducted an important profile mapping of the clients of our projects delivered in 2016 and with delivery slated for 1H17. In certain cases, we managed to start the transfer process even before the issue of the certificate of occupancy. For clients who had lost their capacity to obtain credit from financial institutions, we sought alternative solutions, such as incentives for settlement and exchanging the current unit for another unit compatible with the client s credit profile. When it was impossible to recover these clients, we accelerated the cancellation to mitigate the concentration of cancellations at the time of delivery. This active management enabled us to clean up our receivables portfolio, but increased the amount of cancellations in the year, especially in the SBPE segment, which generated a negative impact of R$119 million on gross profit. Without these cancellations, the Company would have reported net income of R$43 million., R$ '000 Reported Results Cancellations Impact Results ex Cancellations (A) (B) (A B) Gross Revenue 394,367 (350,565) 744,932 Deductions (8,382) 8,653 (17,035) Net Revenue 385,985 (341,911) 727,896 COGS (347,959) 222,214 (570,173) Gross Profit 38,026 (119,698) 157,724 Gross Margin 9.9% 35.0% 21.7% Net Income (75,726) (119,698) 43,972 Another important highlight was divestment of non-strategic assets. In 2016, we concluded the sale of 14 malls and 3 lots held for Development/Subdivision projects, located in non-core regions, which generated R$32 million in receivables. Of this amount, we received R$21 million during 2016 and will receive R$11 million over the coming years. For the fourth straight year, we reduced administrative expenses, which is the result of our constant optimization and review of processes and the streamlining of our organizational structure. In Page 4 of 29

69 4Q16 Earnings Release December 2016, we reduced the number of executive officers from nine to four. The restructuring of managerial and operations levels was carried out in February These adjustments are expected to reduce payroll expenses by more than 30%. The efficiency gains captured from this adjustment should be perceived as of the second quarter of Our goals for next year are well defined and distributed among departments: Sales, New Business and Development: sale of inventory units and maintenance of growth options. Despite a pipeline of promising projects ready for launch, we will execute projects only when we are confident in a market recovery. Projects: delivery of projects on time and on budget. As well as the long-term goal of developing a flexible construction platform capable of absorbing and adapting to potential changes in scenario. Administrative: monetizing the receivables portfolio and cutting costs, which boosts cash generation. In 2017, we are optimistic about cash generation. We have 6 SBPE projects with aggregate PSV of R$546 million whose certificates of occupancy are expected within the year. We believe 2017 will be another challenging year. However, the economy already has begun to show signs of a recovery, with expectations of lower interest rates, looser credit and slowing inflation. The Management Page 5 of 29

70 4Q16 Earnings Release LAUNCHES In 4Q16, we launched the fourth phase of the subdivision project Recanto das Emas in Goiânia, with aggregate potential sales value (PSV) of R$18 million (RNI s share R$9 million) and focused our efforts on selling units in inventory. In 2016, we launched four projects (one development project and three subdivision projects) with aggregate PSV of R$273 million. The highlight was the Subdivision segment, which accounted for 70% of launch volume in the year and has been demonstrating greater resilience than the Development segment given the current macroeconomic scenario. Page 6 of 29

71 4Q16 Earnings Release Launches - Units 2, Q15 1Q16 2Q16 3Q16 4Q16 1, SBPE Subdivision CONTRACTED SALES Gross sales amounted to R$173 million in 4Q16, an increase of 40% from 4Q15. Gross sales in 4Q16 compared to 3Q16 declined by 22%, which is explained by December being a seasonally weaker month for sales. In the year, gross sales amounted to R$635 million. The better performance of sales in the second half of 2016 was due to the efforts made between June and December by the task force, which is led by key executives, to sell units in inventory. During 2016, we identified certain clients in our project portfolio with delivery scheduled by midyear who had lost the capacity to obtain loans from financial institutions. Given this scenario, we opted to cancel the contracts of these clients and to resell the units, which increased the volume of cancellations in Of the total cancellations of R$103 million in 4Q16, 71% of these units were resold in the same quarter. In the year, canceled sales amounted to R$368 million, of which 85% was resold by December Page 7 of 29

72 4Q16 Earnings Release * Excludes the nonrecurring cancellation of the Ilumina project (R$11.8 million) Gross Sales Breakdown - Total PSV (R$MM) Q15 1Q16 2Q16 3Q16 4Q MHML SBPE Subdivision Page 8 of 29

73 4Q16 Earnings Release Gross Sales Breakdown - Units 4,650 3,941 1,337 1,647 1, ,302 2, Q15 1Q16 2Q16 3Q16 4Q MHML SBPE Subdivision Cancellations Breakdown - Total PSV (R$MM) Q15* 1Q16 2Q16 3Q16 4Q MHML SBPE Subdivision * Excludes the nonrecurring cancellation of the Ilumina project (R$11.8 million) Page 9 of 29

74 4Q16 Earnings Release Cancellations Breakdown - Units Q15* 1Q16 2Q16 3Q16 4Q16 2, , ,248 1, MHML SBPE Subdivision * Excludes the nonrecurring cancellation of the Ilumina project (10 units) Inventory Turnover Ratio The Inventory Turnover Ratio in 4Q16 stood at 11%, increasing 5 p.p. from 4Q15, supported by the efforts made by the sales task force during 2H16. SELECTED QUARTELY SALES DATA (R$MM) 4Q15 (2) 1Q16 2Q16 3Q16 (3) 4Q16 Inventory at Start of Period Project Launches Contracted Sales Sales from Same Period Launches Sales from Past Period Launches (3) Inventory Turnover Ratio (1) 6% 11% 3% 14% 11% Sales from Same Period Launches/Contracted Sales 0% 80% 117% 13% 1% Sales from Past Period Launches/Contracted Sales 100% 20% 17% 87% 99% Sales from Same PeriodL aunches/project Launches N/A 69% 26% 16% 4% (1) Inventory Turnover Ratio, calculated by: (Contrated Sales during the period)/(market Value of Initial Inventory) + (PSV of launches in the period). (2 ) In 4Q15 we excluded R$51.8 million of Ilumina (Santo André/SP) inventory from the initial inventory (3) In 3Q16 we excluded R$20,0 million from the initial inventory due to sale of Santa Cruz do Sul/RS Page 10 of 29

75 4Q16 Earnings Release INVENTORY* On, the total PSV of our inventory stood at R$598 million, represented by 1,979 units. The share of finished units in the Company s total inventory remained in line with 3Q16. Status Inventory Units % Market Value of Inventory (R$ '000) % Market Value of Inventory (R$ '000) RNI s share Projects Delivered % 126,852 21% 95,363 20% Under Construction 1,693 86% 471,185 79% 380,295 80% Total 1, % 598, % 475, % % Product Inventory Units % Market Value of Inventory (R$ '000) % Market Value of Inventory (R$ '000) RNI s share MHML 123 6% 20,137 3% 18,543 4% SBPE % 464,445 78% 370,694 78% Subdivision 1,019 51% 113,455 19% 86,421 18% Total 1, % 598, % 475, % % The total PSV of My Home, My Life (MHML) units in inventory fell by 23% compared to 3Q16. The total PSV of SBPE units in inventory decreased R$45 million from 3Q16, reflecting the higher sales in the period, but was still adversely affected by cancellations. Product The highest concentration of inventory is in the state of São Paulo, which accounted for 59% of total PSV. *Inventory net of commissions Inventory Units Market Value of Inventory (R$ '000) Inventory Units Market Value of Inventory (R$ '000) MHML , ,137 SBPE , ,445 Subdivision 1, ,715 1, ,455 Total 2, ,535 1, ,037 Region Inventory Units % 3Q16 Market Value of Inventory (R$ '000) % 4Q16 Market Value of Inventory (R$ '000) RNI s share BA % 15,442 3% 15,426 3% CE 39 2% 19,793 3% 18,609 4% GO % 53,948 9% 26,974 6% MG % 52,933 9% 52,092 11% MT % 66,394 11% 66,327 14% PR 12 1% 1,565 0% 1,563 0% RJ 29 1% 4,978 1% 4,973 1% RS 45 2% 8,012 1% 8,004 2% SC 8 0% 2,517 0% 2,515 1% SP % 372,456 62% 279,176 59% Total 1, % 598, % 475, % % PROJECTS DELIVERED Page 11 of 29

76 4Q16 Earnings Release In 4Q16, we concluded four projects (two subdivision projects and two MHML projects) with total PSV of R$179 million, with 2,342 units delivered. Projects Delivered - Total PSV (R$MM) Q15 1Q16 2Q16 3Q16 4Q MHML SBPE Subdivision Projects Delivered - Units 4, ,453 2, ,681 1, , , ,303 4Q15 1Q16 2Q16 3Q16 4Q MHML SBPE Subdivision Page 12 of 29

77 4Q16 Earnings Release TRANSFER TO BANKS OF CLIENT BALANCES / OFF-PLAN PROPERTIES Transfers of client balances and off-plan properties amounted to R$42 million in 4Q16, R$33 million of which was under the SBPE system, mainly due to: (i) the continued transfer of units in the Madison project, which was delivered in September 2016, with total Financed Value (FV) of R$7 million; (ii) the start of transfers of projects whose certificate of occupancy is expected in 1H17, which combined represent total FV of R$19 million; and (iii) the transfer of the units of concluded projects, with total FV of R$7 million. Individual Mortgages (R$MM) Transfers Off Plan (MHML) Transfers - Finished Units (MHML) Transfers - Finished Units (SBPE) Q15 1Q16 2Q16 3Q16 4Q LANDBANK DEVELOPMENT The aggregate PSV of the landbank for residential projects (acquired or secured by purchase option) stood at R$2.6 billion. Of this amount, R$2.3 billion (91% of the total) was in properties effectively acquired and R$0.2 billion (9% of the total) was in properties secured by purchase options, which were distributed across 13 cities in 5 states. Development Total PSV (in R$MM) State Cities Acquired Under Option Total % of Total MG % MS % MT % SC % SP 7 1,834 1,834 71% Total 13 2, , % Page 13 of 29

78 4Q16 Earnings Release The only change in the landbank in the quarter was the sale of a non-core property in São Paulo city with PSV of R$65 million. Changes in Landbank Acquired Landbank Reconciliation Total PSV (in R$MM) 3Q16 Acquired Position 2,400 ( ) Discarded / Sold Areas (65) 4Q16 Acquired Position 2,335 Changes in Landbank Under Option Total PSV (in R$MM) 3Q16 Under Option Position 242 ( ) Areas moved to acquired (+) New areas under option ( ) Discarded Options ( ) Project Revision 4Q16 Under Option Position 242 Total Landbank 4Q16 2,577 On, 50% of the Development landbank s PSV is settled through swap agreements and 50% is paid in cash. LANDBANK SUBDIVISION The following table shows the landbank for subdivision properties. State City Acquired Total PSV (in R$MM) Under Option Total %Total BA % GO % MT % SC % SP % Total % In the subdivision landbank, the changes in the period were mainly related to: (i) the acquisition of two properties, one in Mato Grosso state and the other in Bahia state, with aggregate PSV of R$144 million; and (ii) the launch of projects in the period with aggregate PSV of R$18 million. Page 14 of 29

79 4Q16 Earnings Release Changes in Landbank Acquired Landbank Reconciliation Total PSV (in R$ MM) 3Q16 Acquired Position 798 (+) Acquired New Areas 144 ( ) Launches (18) ( ) Sold Areas / Discarded (10) 4Q16 Acquired Position 914 Changes in Landbank Under Option 3Q16 Under Option Position Landbank Reconciliation Total PSV (in R$ MM) (+) New areas under option 145 4Q16 Under Option Position 145 Total Landbank 4Q On, 83% of the Subdivision landbank s PSV is settled through swap agreements and 17% is paid in cash. Page 15 of 29

80 4Q16 Earnings Release FINANCIAL PERFORMANCE INCOME STATEMENT 4Q16 4Q , R$ '000 4Q16 3Q16 vs 4Q15 vs vs 3Q16 4Q Net Operating Revenue 76, ,750 48% 133,107 43% 385, ,326 31% Net Operating Revenue Development 65, ,282 42% 104,164 37% 316, ,131 33% Net Operating Revenue Subdivision 10,624 33,468 68% 28,944 63% 69,525 82,196 15% COGS (88,426) (122,121) 28% (81,285) 9% (347,960) (393,166) 11% Cost of Real Estate and Land (77,645) (110,877) 30% (75,074) 3% (313,285) (370,699) 15% Financial Expenses (10,781) (11,244) 4% (6,211) 74% (34,675) (22,467) 54% Development Cost of Real Estate and Land (69,443) (96,401) 28% (68,485) 1% (283,336) (336,835) 16% Financial Expenses (8,900) (9,813) 9% (5,267) 69% (29,657) (20,588) 44% Subdivision Cost of Real Estate and Land (8,202) (14,476) 43% (6,589) 24% (29,949) (33,864) 12% Financial Expenses (1,881) (1,431) 31% (944) N/A (5,018) (1,879) 167% Gross Profit (12,323) 23, % 51,822 N/A 38, ,160 77% Gross Profit Development 12,863 6,068 N/A 30,412 N/A 3, ,708 97% Gross Profit Subdivision ,561 97% 21,411 97% 34,558 46,453 26% Gross Margin 16.2% 16.2% 32.4 p.p. 38.9% 55.1 p.p. 9.9% 29.5% 19.6 p.p. Operating Expenses (42,701) (33,052) 29% (56,969) 25% (105,833) (157,291) 33% Selling expenses (18,020) (18,509) 3% (11,697) 54% (53,178) (50,804) 5% Comission (9,870) (11,639) 15% (5,649) 75% (29,050) (21,343) 36% Other sellling expenses (8,150) (6,870) 19% (6,049) 35% (24,128) (29,463) 18% General and Administrative Expenses (20,679) (14,958) 38% (18,943) 9% (69,362) (77,657) 11% Employee Profit Sharing N/A (2,258) N/A (2,258) N/A Equity Income 1,637 2,843 42% 1,426 15% 30,928 2, % Other Operating Revenue (5,639) (2,428) 132% (25,497) 78% (14,221) (29,437) 52% Adjusted EBITDA (42,547) 3,497 N/A 2,746 N/A 26,464 35,653 N/A Adjusted EBITDA Margin 55.9% 2.4% 58.3 p.p. 2.1% 58.0 p.p. 6.9% 6.4% 13.3 p.p. Net Financial Income (Expenses) 2,488 (1,915) N/A 11,377 78% 7,570 23,961 68% Income tax and social contribution (3,724) (3,366) 11% (4,861) 23% (15,032) (20,801) 28% Net Income (55,647) (15,349) 263% 3,141 N/A (75,726) 6,748 N/A Net Margin 73.1% 10.5% 62.6 p.p. 2.4% 75.5 p.p. 19.6% 1.2% 20.8 p.p. Net Revenue amounted to R$76.1 million in 4Q16, down 43% from R$133.1 million in 4Q15. In 2016, net revenue amounted to R$386.0 million. The decline from R$557.3 million in 2015 was due to: a) the lower volume of ongoing projects; b) the higher volume of cancellations of units in an advanced stage of construction or concluded; and c) the discounts granted as part of the efforts to sell inventory. Gross Margin stood at 9.9% in 2016 and -16.2% in 4Q16. This margin compression is basically due to: a) the higher volume of cancellations of units whose margins are higher than those practiced in current market conditions; b) the discounts granted on the sale of completed units or those nearing completion; and c) the decline in revenue under the PoC method due to the high volume of completed projects. Page 16 of 29

81 4Q16 Earnings Release The following chart shows the impacts from the aforementioned factors on margins over the last eight quarters In the year, revenue including 100% of unconsolidated projects amounted to R$489.6 million, with gross margin of 21.3%. See the following table for details. Pro Forma (R$ '000) 2016 Recanto das Emas Results Pananby Results Other unconsolidated developments 2016 Pro Forma Net Income 385,984 73,853 22,679 7, ,640 Incorporation 316,460 22,679 7, ,263 Subdivision 69,525 73, ,378 COGS (347,960) (13,142) (18,159) (6,131) (385,392) Gross Profit 38,024 60,711 4, ,248 Gross Margin 9.9% 82.2% 19.9% 13.9% 21.3% Selling Expenses in 4Q16 amounted to R$18.0 million, in line with 3Q16. In 2016, selling expenses amounted to R$53.2 million, 5% higher than in This increase is mainly due to two factors that led to the immediate apportionment of sales commissions: a) the higher sales volume of units completed or with a high percentage of completion; and b) the higher absolute value of cancellations in the period. We also intensified our sales efforts. General and Administrative Expenses in 4Q16 amounted to R$20.7 million, 38% more than in 3Q16, which is explained by the restructuring carried out by the Company at year-end, whose effects should be felt in the first quarter of 2017, and by the bonus of R$1.5 million paid to executives for the performance of the sales task force. In 2016, General and Administrative Expenses amounted to Page 17 of 29