SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of April, 2017
(Commission File No. 001-33356),
Gafisa S.A.
(Translation of Registrant's name into English)
Av. Nações Unidas No. 8501, 19th floor
São Paulo, SP, 05425-070
Federative Republic of Brazil
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F ______
Indicate by check mark if the registrant is submitting
the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)
Yes ______ No ___X___
Indicate by check mark if the registrant is submitting
the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes ______ No ___X___
Indicate by check mark whether by furnishing the information contained in this Form,
the Registrant is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes ______ No ___X___
If “Yes” is marked, indicate below the file number assigned
to the registrant in connection with Rule 12g3-2(b):
N/A
Financial Statements
Gafisa S.A.
December 31, 2016
and Report of Independent Registered Public Accounting Firm
Gafisa S.A.
Financial Statements
December 31, 2016
Table of contents
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Management Report
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1
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Report of
Independent
Registered Public Accounting Firm
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8
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Audited financial statements
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Balance sheet
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13
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Statement of profit or loss
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15
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Statement of comprehensive income
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16
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Statement of changes in equity
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17
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Statement of cash flows
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18
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Statement of value added
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19
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Notes to the financial statements
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20
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Statement of executive officers on the financial statements
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87
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Statement of executive officers on the report of Independent Registered Public Accounting
Firm
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88
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Audit Committee’s meeting minutes
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89
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Fiscal Council’s meeting minutes
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90
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Board of Directors’ meeting minutes
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92
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4Q16 earnings release
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93
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(A free translation
from the original in Portuguese into English)
Dear
Shareholders,
The
Management of Gafisa S.A. ("Gafisa" or "Company") submits for your review the
Management Report and the related Financial Statements, accompanied by the
Independent Auditors and the Fiscal Council reports for the fiscal year ended
December 31, 2016. The Management Report information is reported on a
consolidated basis, unless if specified otherwise, and in accordance with the
accounting practices adopted in Brazil and pursuant to the International
Financial Reporting Standards (IFRS), issued by the International Accounting
Standards Board (IASB).
2016 was
marked by continued macroeconomic challenges as the political and economic
crisis significantly impacted the Brazilian real estate market. At Gafisa, our
conservative new product development strategy and metropolitan focused business
model, in SP and RJ, allowed us to partially offset the headwinds we experienced
during this period.
The
middle and upper-middle income segments were the most affected by the
deterioration of the macroeconomic environment in Brazil. In this context, the
Company focused on improving its operational performance and business
management, and prudently developed new projects despite current macroeconomic
conditions.
In the
year, the Company reached R$920.8 million in new projects launched. The
Company’s assertiveness in the development and marketing of these launches
resulted in a record sales speed of launches of 54.5% in 2016. It may also
reflect a slight improvement in the consumer confidence index.
We would
like to highlight Square Ipiranga’s, launched in the last quarter of the year,
with average speed of sales was well above the recent industry average. Such
evolution in the sales speed of launched projects is evidence of the Company’s
success in improving its operating processes over the past years, particularly
in development, sales and construction.
Net
pre-sales totaled R$810.5 million, with total cancelled PSV of R$508.8 million,
in line with R$512.9 million recorded in 2015. While the level of dissolutions
slightly improved, it continues to be impacted by current market conditions and
the solid volume of projects delivered during the past 18 months.
Despite
the good performance of projects launched in the period, the Gafisa segment’s
SoS continues to be impacted by current market conditions, as reflected by low
inventory sales volumes. In 2016, Gafisa’s SoS reached 31.5%, compared to 31.1%
in the last year.
The
Company also remained focused on the sale of existing units. As a result, 45.5%
of net sales in 12M16 comprised products launched prior to the current year.
Considering the higher volume of dissolutions related to legacy projects,
however, net sales were still concentrated in more recent projects, impacting
the Company segment’s revenues and gross sales.
It is
also important to note that backlog increased y-o-y, due to the good sales
performance, mainly in the last quarter of the year and the maintenance of
launch volumes over the past three years.
Gafisa
ended 2016 with 19 projects under construction, all on schedule and within the
delivery timeframe, reinforcing Gafisa’s commitment to its clients.
Conservative cash management remained an important area of
focus throughout the year. We delivered a PSV of R$1.7 billion in the period and
the volume of transfers reached R$515.3 million. These results show an
appropriate level of control and operating efficiency. Despite current credit
restrictions, Gafisa has an efficient transfer process, contributing mainly to a
4Q16 cash generation result that reached the highest level in three years.
As a
result of this transfer performance and conservative cash management strategy,
operating cash generation totaled R$300.9 million in the year.
Despite
the first signs of stability in the market and the Company’s improved operating
performance in the period, it will take time for better operating performance to
be reflected in financial results, as the protracted recession has taken its
toll on product pricing and inventory sales. The expectation of improved
1
(A free translation
from the original in Portuguese into English)
political
and economic conditions over the next quarters, combined with a likely upturn in
the middle and upper income segments, should allow a gradual recovery in the
Company’s financial results over the next periods.
In view
of these factors, we will maintain a conservative approach in early 2017,
seeking to balance the placement of new products on the market, prioritizing
those with higher liquidity to achieve an appropriate level of sales and
profitability, and maintaining focus on decreasing inventory.
The sale
of Tenda’s shares, as announced on December 14, 2016, had the following effects
on our financial results: (i) R$610.5 million impairment from discontinued
operations; and (ii) R$90.3 million due to the reversal of deferred tax assets
previously recorded, as a result of the fiscal loss generated by the
transaction, resulting in an impact of R$650.0 million on net income for the
year, excluding elimination effects and Tenda’s previous
result.
Besides
the impacts related to Tenda, adjusted gross profit in the period was impacted
by R$159.9 million related to pricing adjustments on inventory commercial units,
as the market price declined below accounting cost for commercial projects, as a
result of the market environment, and also to adjustments in the market value of
certain land that will not be developed in the coming years.
Given the
deconsolidation of Tenda, and the expected receipt of proceeds from the sale of
the 50% stake in Tenda by May 2017, Gafisa's Shareholders' Equity was impacted
excluding this cash consideration. The Net Debt/ Shareholders’ Equity ratio
reached 71.8%, however at the conclusion of the transaction, Gafisa should
receive approximately R$319.5 million in new funds, enabling the Company to
reduce leverage and increase liquidity.
2016’ net
cash generation reached R$70.0 million, underscoring management’s prudent
financial management. We will continue to focus on cash generation and capital
discipline in 2017. In this context, the Company was successful in reducing
gross debt by R$268.6 million.
The end
of 2016 marks the conclusion of a strategic shift for Gafisa, which commenced
three years ago with the sale of our 70% interest in Alphaville. In February
2014, we initiated studies to separate the Gafisa and Tenda segments, a process
which began when the Company’s management determined that these units would be
more efficient and profitable if they operated independently, and culminating in
the imminent Tenda spinoff.
We have
reaped the benefits of Tenda’s business restructuring and the strategy to
separate the business units. With a dedicated management team, Tenda refined its
business model and positioned itself to benefit from the growth in the
low-income market. At Gafisa, after the separation process and resulting cash
inflow providing a greater cushion and balance in the capital structure, the
segment will continue to focus on the middle and upper-middle income segments
concentrated in the markets of São Paulo and Rio de Janeiro. The maintenance of
launch volume over the past three years is already creating a foundation for
future years’ results.
We will
maintain our conservative approach in early 2017, seeking to balance the
placement of new products on the market while remaining focused on inventory
sales, both complete and under construction. Gafisa is navigating the
challenging economic conditions to be well positioned for a potential upswing in
the economy over the coming periods, while maintaining a conservative and
balanced approach.
The
Company continues to advance guided by capital discipline, its profitability
goals, and value creation for shareholders.
GAFISA
AND TENDA SEPARATION
Over the
past three years, the Company was able to advance with several steps concerned
with the effective separation of the Gafisa and Tenda administrative structures,
so that both would be ready to carry on their operations independently. The
conclusion of operations and resulting cash inflow deriving from this operation
will contribute to Gafisa’s improving liquidity condition and capital structure.
With the
conclusion of the purchase and sale of Tenda’s shares, subject-matter of the
agreement entered into with Jaguar Growth Asset Management, LLC, once all the
condition precedents are met, Gafisa
shall
monetize a total amount of at least R$231.7 million, including an amount of
R$100.0 million in Tenda capital reduction in favor of Gafisa, approved on
December 14, 2016.
2
(A free translation
from the original in Portuguese into English)
In
addition, and as one of the condition precedents mentioned above, we have the
consolidation of corporate separation and resulting distribution of 50% of
Tenda’s shares to Gafisa’s shareholders base, envisaging relevant interest in
Tenda’s capital stock after the operation is concluded.
Gafisa’s
current shareholder also relies on the option to exercise the preemptive right,
at the same price per share tendered and pursuant to prevailing laws over 50% of
Tenda’s shares currently held by Gafisa. Therefore, Gafisa’s shareholder
maximizes the capacity of generating value, due to the exposure to Tenda’s
operating excellence, reduced risk level, a consistent level of profitability,
expansion plan and development of Tenda’s businesses in the low-income
segment.
If the
20% additional to the offer submitted by Jaguar is also sold within the context
of this operation, Gafisa will receive additional funds of R$87.8 million,
reaching an overall amount of R$319.5 million in this operation.
The
conclusion of this operation and resulting distribution of Tenda’s capital stock
to Gafisa’s shareholders, settles the final stage of a process initiated in
2011, with the development of a new strategic plan for Gafisa and Tenda; sale of
70% equity interest in Alphaville which improved Gafisa’s liquidity condition
and capital structure, and finally, the effective operational and corporate
separation between the Gafisa and Tenda business units. The Company’s Management
estimates that the conclusion of this process over the upcoming months and the
resulting new corporate structure will deliver to Gafisa’s shareholders by means
of operating strength, brand recognition and strategic consolidation of both
business units a valuable opportunity to capture return in the Brazilian real
estate market.
OPERATING
AND FINANCIAL PERFORMANCE
The total
volume launched by the Company amounted to R$920.8 million in 2016, a decrease
of 7.6% over 2015, represented by 10 projects/phases in the State of São
Paulo.
Consolidated pre-sales totaled R$810.5 million in 2016,
down 11.4% compared to R$914.8 million recorded in 2015. Consolidated sales from
launches in the year represented 54.5% of the total, while inventory sales
comprised the remaining 45.5%. Inventory at market value decreased 11.1%,
reaching R$1.8 billion, compared to R$2.0 billion recorded at the end of
4Q15.
Consolidated sales over supply (SoS) was up 16.8% in 4Q16,
compared to 10.9% y-o-y. For the year, consolidated SoS was 31.5%, compared to
31.1% in 2015.
Throughout 2016, the Company delivered 16 projects/phases,
representing 3,747 units and R$1.7 billion in PSV.
In 2016,
our net revenue reached R$915.7 million, a decrease of 36.6% y-o-y. Reported
gross profit for the year was a loss of R$113.5 million, compared to a positive
result of R$381.4 million in 2015, impacted by R$159.9 million pricing
adjustments of inventory units, below the cost of accounting for commercial
developments, due to the current market price level, and in the result of
updating costs of some of our landbank (impairment). Adjusted gross margin was
4.7% compared to 36.9% in previous year.
Adjusted
EBITDA totaled a negative result of R$896.6 million in 2016, with a margin of
-97.9%, impacted by the impairment of discontinued operations, and by the
pricing adjustments mentioned above.
The
Company recorded a net loss R$1.2 billion in 2016. In addition to the factors
mentioned above, this result was impacted by: (i) lower revenues level due to
the higher volume of dissolutions in legacy units; (ii) sales mix with higher
concentration in the projects launched in 2016, and accordingly, lower capacity
to generate revenue, and; (iii) gross profit impacted by current market
conditions, impacting the products price level. Excluding Alphaville’s equity
income, we recorded a net loss of R$1.1 billion.
The
Company ended 2016 with R$253.2 million in cash.
The
Company's consolidated gross debt was reduced to R$1.6 billion at the end of
2016, compared to R$2.2 billion at the end of 2015, while net debt came in line
with 2014, at R$1.4 billion.
The
Company’s leverage, measured by the Net Debt/Equity ratio, reached 71.8% at the
end of 2016. Excluding project finance, the Net Debt/Equity ratio was
3.2%.
3
(A free translation from the original in Portuguese into English)
Gafisa’s personnel is its greatest asset. Our team is made up of individuals with a unique purpose, reflecting our corporate vision, values and culture, built up over 60 years of history. People’s commitment to delivering results, with quality and respect for customer, are the bases of the brand’s competitive advantage.
We have an experienced professional team who is at the forefront of the Brazilian real estate market. Many of our professionals of our workforce initiated their careers at the Company.
Approximately 70% of our leaders were trained at the Company through attraction and talent training programs.
Our CEO started his career as an intern of the Company and nearly half of the current officers followed the same path of success, starting in our Trainee Program.
Currently, our Trainee program relies on approximately 100 students and 90% of them are studying civil engineering. Although the great majority will become engineers and permanence at the construction sites is a natural way, we encourage them to work in other technical areas - such as budget, procurement, technical assistance, besides the cases where they become permanent employees in the development, commercial, financial and customer relationship areas.
The selection, evaluation and compensation of our employees are based on their daily commitment to our values, which must be perceived by everyone in daily attitudes, decision-making process, strategic actions and in the relationship with customers, suppliers, investors and the community.
The Company's compensation policy applies to its employees, including members of the Board of Directors, Fiscal Council and Executive Board (statutory and non-statutory), is in line with the best corporate governance practices. Thus, the Company aims attracting and retaining the best professionals of the market. Compensation is established based on market research and is directly related to the alignment of executives’ interest with the Company's shareholders.
The meritocracy model is based on the variable compensation. A significant percentage of total compensation is connected with the achievement of corporate results and individual goals. All employees have objective individual targets directly related to the Company's strategy and key indicators of its business.
In case of Officers and Managers, in addition to the short-term variable compensation, there is also long-term incentive amount (as stock option grant), allowing greater sharing of risk and the Company’s results with its top executives, a characteristic of a transparent policy concerned with achieving long-lasting results.
Occupational safety and accident prevention are vital. Therefore, we maintain an ongoing program to identify, prevent and mitigate risks, which aims at, besides preserving employees’ physical integrity, offering the foundation for a healthier life. For us, investing in safety is to ensure welfare inside and outside the workplace. We offer training programs for the field team (working at our construction sites) and for outsourced companies’ employees working at our construction sites.
The Company has 776 own employees (basis of Dec/16), as well as the trainees mentioned above
.
Gafisa, aiming at maintaining its leading position has and encourages multiple fronts concerned with innovation, such as fronts of work with multidisciplinary teams focused on project development and disruptive innovations, thus allowing the Company to play its leading role in the real estate market.
We understand that the multidisciplinary contribution is essential for evolution of new ideas at Gafisa.
Gafisa’s Board of Directors is the decision-making body responsible for formulating general guidelines and policies relating to the Company's business, including long-term strategies. In addition, the Board also appoints the executive officers and oversees their activities.
4
(A free translation
from the original in Portuguese into English)
The Board
of Directors' decisions are ratified by the majority vote of its members. In
case of tie vote, the casting vote shall be incumbent upon the Chairman of the
Board of Directors, in addition to his/her individual vote.
The Board
consists of seven members elected at the General Meeting, all of them are
independent members (100%), considering the concept of independent board member
of BM&FBOVESPA’
Novo Mercado
and New
York Stock Exchange (NYSE), which is more restricted and requires all listed
companies to have a board of directors mostly composed of independent members,
while BM&FBOVESPA’s
Novo Mercado
rules
establish a minimum of 20% of independent members. As required by the
Novo Mercado
Rules, the members’ term of
office is two years, re-election is allowed and they can be removed from office
by shareholders at the General Meeting.
The table
below shows the members of the Board of Directors.
Name
|
Position
|
Election Date
|
Term of Office
|
Odair Garcia
Senra
|
Sitting Member and Chairman of the Board of
Directors
|
04/25/2016
|
AGM 2018
|
Guilherme
Affonso Ferreira
|
Sitting Member
|
04/25/2016
|
AGM 2018
|
Maurício
Marcellini Pereira
|
Sitting Member
|
04/25/2016
|
AGM 2018
|
Cláudio José
Carvalho de Andrade
|
Sitting Member
|
04/25/2016
|
AGM 2018
|
José Écio
Pereira da Costa Junior
|
Sitting Member
|
04/25/2016
|
AGM 2018
|
Rodolpho
Amboss
|
Sitting Member
|
04/25/2016
|
AGM 2018
|
Francisco Vidal
Luna
|
Sitting Member
|
04/25/2016
|
AGM 2018
|
Gafisa’s
Bylaws provide for a non-permanent Fiscal Council, and the General Meeting may
determine its installation and members, as provided for by laws. The Fiscal
Council, if installed, will consist of 3 to 5 members, with equal number of
alternates.
The
operation of the Fiscal Council, when installed shall end at the first Annual
General Meeting ("AGM") held after its installation, and its members can be
re-elected. The Fiscal Council members’ compensation is established at the
General Meeting to elect them.
The
Fiscal Council was installed by the AGM of April 25,2016, which will operate
until the Company's next Annual General Meeting to be held in April
2017.
Currently, the Fiscal Council is composed of Messrs. Olavo
Fortes Campos Rodrigues Junior, Peter Edward Cortes Marsden Wilson and Laiza
Fabiola Martins de Santa Rosa as sitting members and Messrs. Marcello Mascotto
Iannalfo, Marcelo Martins Louro and Alessandro de Oliveira Nascimento as
alternate members.
Executive
Board
The
Executive Board is the Company's body mainly in charge of the daily management
and monitoring of the general policies and guidelines established at the General
Meeting and by the Board of Directors.
Gafisa’s
Executive Board must consist of a minimum of two and a maximum of eight members,
including the Chief Executive Officer, the Chief Financial Officer and the
Investor Relations Officer, elected by the Board of Directors for a three-year
term of office, re-election is allowed, pursuant to the Company’s Bylaws.
Currently, three members comprise the Executive Board:
5
(A free translation
from the original in Portuguese into English)
Name
|
Position
|
Date of Investiture
|
Term of Office
|
Sandro Rogério da Silva
Gamba
|
CEO
|
05/05/2014
|
05/04/2017
|
André Bergstein
|
CFO and Investor Relations Officer
|
05/05/2014
|
05/04/2017
|
Katia Varalla
Levy
|
Operating
Executive Officer
|
05/05/2014
|
05/04/2017
|
The
Company has two advisory committees to the Board of Directors, on a permanent
and statutory basis, which must be composed of three independent members of the
Board of Directors.
§
Compensation and Corporate Governance
Committee
: originated from the merger of the Compensation Committee
with the Nominating and Corporate Governance Committee, this committee
accumulates the role of the previous committees and aims at periodically
analyzing and reporting issues regarding the size, identification, selection and
appointment of the Board of Directors, Executive Board and candidates nominated
to the Board and its Committees, developing and recommending governance
principles applicable to the Company, evaluating and making recommendations to
the Board of Directors as to the compensation policies and all forms of bonus to
be offered to the Executive Officers and other Company’s employees. Currently,
the committee is presided over by Claudio José Carvalho de Andrade, and Rodolpho
Amboss and Guilherme Affonso Ferreira as members of this committee.
§
Audit
Committee
: it is in charge of planning and reviewing the Company’s
annual and quarterly reports and accounts with the involvement of auditors in
the process and is specially focused on the compliance with legal requirements
and accounting standards, ensuring the maintenance of an effective internal
controls system. This Committee must be composed of members experienced in
matters relating to accounting, auditing, finance, taxation and internal
controls, and one of the members must have vast experience in accounting and
financial management. It is currently presided over by Francisco Vidal Luna, and
José Écio Pereira da Costa Júnior and Odair Garcia Senra as members.
The
Company also has three non-statutory advisory committees to the Board of
Directors, composed of Officers and Managers of the Company:
§
Ethics
Executive Committee
: it is in charge of monitoring the
practices adopted by entire organization, ensuring that these are compatible
with Gafisa’s vision and values and with the principles and conduct guidelines
provided for in the Code of Ethics. This Committee is supervised by the Audit
Committee.
§
Investment Executive Committee
: it is
in charge of analyzing, discussing and advising on the acquisition of new
properties and real estate launches; advising the Officers in the negotiation of
new contracts and project structuring; monitoring releases of funds and the
Company’s cash flow; and, in special cases, participating in the negotiation and
structuring of new types of agreements. This Committee is only composed of the
Company’s statutory officers.
§
Finance
Executive Committee
: it is responsible for evaluating and
advising the Board of Directors on the risk policies and the Company’s financial
investments. This Committee is composed of the Company’s statutory
officers.
The
composition of these committees can be accessed at the Company’s Investor
Relations website:
www.gafisa.com.br/ri.
Dividends, Shareholder Rights and Shares Data
In order
to equally protect the interest of all its shareholders, the Company, pursuant
to prevailing laws and the best governance practices, sets forth the following
rights to Gafisa’s shareholders:
6
(A free translation
from the original in Portuguese into English)
§
vote at
the annual or extraordinary general meeting, make recommendations and guidelines
to the Board of Directors as to the decision-making process;
§
receive
dividends and participate in the profit sharing or other distributions relating
to shares, in proportion to their interest in the Company’s capital
stock;
§
oversee
Gafisa’s Management, pursuant to the Company’s Bylaws, and withdraw from the
Company in cases provided for by Brazilian Corporation Law; and
§
receive,
at least, 100% of the price paid per common share of the controlling interest,
according to the
Novo Mercado
rules, in case of public tender
offer due to the sale of the Company's control.
Under
Article 47, Paragraph 2 (b) of the Company’s Bylaws, 25% of the balance of net
income for the fiscal year, recorded after deductions provided for by the Bylaws
and adjusted pursuant to Article 202 of Brazilian Corporation Law, will be
destined to pay mandatory dividends to all the Company’s
shareholders.
Since the
Company recorded net loss in the fiscal year ended at Dece
mber 31, 2016, we
cannot mention a proposal for allocation of net income and distribution of
dividends.
The
Company with widely held stock remains as the sole Brazilian real estate company
to have its shares traded on ADRs Level 3 at the New York Stock Exchange (NYSE),
with the most liquid real estate stocks. In 2016, we reached an average daily
trading volume of R$12.8 million at BM&FBOVESPA, besides the equivalent
amount in US dollars of approximately US$1.5 million at NYSE, totaling R$14.3
million average daily trading volume.
In 2016,
the Bovespa index fell by 38.9%, and the Company's shares ended quoted at R$1.86
(GFSA3) and US$1.11 (GFA), a decrease of 23.5% and 1.8%, respectively, compared
to 2015.
Gafisa's
shares are included in the IBRA, IGCX, IGNM indexes, amongst others.
The
Company's operating policy when contracting services unrelated to external audit
with the independent auditors is based on the principles preserving the autonomy
of the independent auditor. These internationally accepted principles consist
of: (a) the auditor should not audit his/her own work, (b) the auditor should
not perform managerial duties for his/her client, and (c) the auditor should not
promote the interests of his/her clients.
According
to Article 2 of CVM Instruction nº 381/03, Gafisa informs that KPMG Auditores
Independentes, the independent auditor of the Company and its subsidiaries, did
not provide services unrelated to independent auditing in 2016.
The
Management declares, in compliance with Article 25, Paragraph 1, items V and VI
of CVM Instruction nº 480/2009, that they reviewed, discussed and agreed with
the Financial Statements contained herein and with the opinion expressed by the
Independent Auditors referring thereto.
Gafisa
thanks the valuable contribution of its employees, customers, suppliers,
partners, shareholders, financial institutions, governmental agencies,
regulators and other stakeholders for their support throughout 2016.
7
(A free translation
from the original in Portuguese into English)
Report of Independent
Registered Public Accounting Firm
To Board Members and
Shareholders of
Gafisa S.A.
São Paulo –
SP
Opinion
We have audited the
individual and consolidated financial statements of Gafisa S.A. (“Gafisa” or
“Company”), respectively referred to as Company and Consolidated, which comprise
the statement of financial position as of December 31, 2016, the statements of
profit or loss and other comprehensive income, changes in equity and cash flows
for the year then ended, and notes, comprising significant accounting policies
and other explanatory information.
Opinion on the
individual financial statements
In our opinion, the
accompanying individual financial statements present fairly, in all material
respects, the financial position of Gafisa S.A. as of December 31, 2016, and of
its financial performance and its cash flows for the year then ended in
accordance with Accounting Practices Adopted in Brazil.
Opinion on the
consolidated financial statements
In our opinion, the
accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of Gafisa S.A. as of December 31,
2016, and of its consolidated financial performance and its cash flows for the
year then ended in accordance with Accounting Practices Adopted in Brazil and
with International Financial Reporting Standards (IFRS), applicable to real
estate development entities in Brazil, and approved by the Accounting
Pronouncements Committee (CPC), the Brazilian Securities and Exchange Commission
(CVM) and the Federal Accounting Council (CFC).
Basis for
Opinion
We conducted our audit
in accordance with Brazilian and International Standards on Auditing. Our
responsibilities under those standards are further described in the Auditors’
Responsibilities for the Audit of the Individual and Consolidated Financial
Statements section of our report. We are independent of the Company and its
subsidiaries in accordance with the relevant ethical requirements included in
the Accountant Professional Code of Ethics (“Código de Ética Profissional do
Contador”) and in the professional standards issued by the Brazilian Federal
Accounting Council (“Conselho Federal de Contabilidade”) and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Emphasis - OCPC 04
Guideline issued by the Accounting Pronouncements Committee
As mentioned in Note
2.1, the individual and consolidated financial statements were prepared in
accordance with the accounting practices adopted in Brazil. The consolidated
financial statements prepared in accordance with the IFRS applicable to the
Brazilian Real Estate Development Entities, also considers the Technical
Orientation - OCPC 04 issued by the Accounting Pronouncements Committee (CPC).
This technical orientation refers to the revenue recognition of this sector and
involves matters related to the meaning and application of the concept of
continuous transfer of the risks, benefits and control over real estate unit
sales, as described in further details in Note 2.2.2 (i) (b). Our opinion is not
modified regarding this matter.
8
(A free translation
from the original in Portuguese into English)
Key audit
matters
Key audit matters are
those matters that, in our professional judgment, were of most significance 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 the
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.
§
Revenue recognition –
estimate of construction costs and Percentage-of-Completion (POC) – Company and
Consolidated
As mentioned in Note
2.2.1 (f) and 2.2.2 (i) (b), the Company uses the Percentage-of-Completion
method (POC) to account for real estate sales revenue. In view of the
materiality of construction costs to be incurred and the high judgment level
involved in determining this estimate, used for determining the calculation of
the percentage-of-completion of the construction, which is the basis for
recognizing revenue, we consider it a key audit matter. This estimate may affect
the individual and consolidated financial statements and the investment value
recorded using the equity method in the Company’s financial statements.
How our audit conducted
this matter
We evaluated the
design, implementation, and, on sampling basis, the operational effectiveness of
the key internal controls related to the approval and follow-up of estimates,
evaluation of the methodology, indexes and assumptions adopted by Gafisa for
calculating the budget of construction adjustment by project. Based on a sample
of projects, we inspected the construction budget and the respective approvals,
we also compared, on sampling basis, the amount of costs incurred with the
respective supporting documentation, evaluated the nature and reasonableness of
the changes made in the estimated cost, and made a substantive analysis of the
reasonableness of the percentage-of-completion of the work. With the assistance
of our experts in property appraisal, we evaluated the stage of completion of
the constructions. We also evaluated the adequacy of the disclosures made by the
Company.
§
Impairment of assets –
Company and Consolidated
The individual and
consolidated financial statements of Gafisa include goodwill arising from the
acquisition of investments which realization is supported by the estimates of
future profitability prepared by the Company based on its judgment and supported
by the business plan, according to the Notes 2.2.1 (a) and 9.
Additionally, as
mentioned in Notes 2.2.1.(d) and 2.2.22, the Company periodically reviews its
portfolio of trade accounts receivable and properties for sale aimed at
estimating the need for recognizing a provision for impairment loss in its
operations. The determination of the impairment of trade accounts receivable and
properties for sale is documented in internal policies and requires, due to its
nature, the use of judgment and assumptions by the Company.
In view of the
materiality of the goodwill amount, trade accounts receivable and properties for
sale, and the high judgment level to determine the assumptions related to the
test for impairment of such assets, which may affect the amounts recognized in
the individual and consolidated financial statements, and the investment amount
recorded using the equity method in the financial statements of the Company, we
consider it a key audit matter.
How our audit conducted
this matter
We evaluated the
design, implementation, and, on sampling basis, the operational effectiveness of
the key internal controls related to the approval and recognition of impairment
losses on the goodwill arising from acquisition of investments, trade accounts
receivable, and inventories. We analyzed, with the technical support of our
corporate finance experts, the reasonableness and consistency of data and
assumptions, such as the growth and discount rates used in the schedules for
calculating the recoverable value prepared by the Company, as well as the
business plans, budgets, cash flow projections, and technical studies supporting
such schedules, approved by the Board of Directors, regarding the recorded
goodwill, as well as evaluated the reasonableness of the criteria, assumptions
and data used by the Company for measuring impairment losses on trade accounts
receivable as a whole, including the mathematical recalculation of the
provisions for losses and evaluation of the history of default of trade accounts
receivable. For inventories, we analyzed, on sampling basis, the documentation
and the assumptions supporting the Company’s decision on the recoverable value
of such assets, including the comparison of estimates with the history of prices
adopted in the sales of real estate units, and independent quotations of land
value. We also evaluated the adequacy of the disclosures made by the
Company.
9
(A free translation
from the original in Portuguese into English)
§
Provisions and
contingent liabilities – tax, labor and civil – Company and
Consolidated
The measurement,
recognition and disclosure of Provisions and Contingent Liabilities, mentioned
in Notes.2.2.1 (c), 2.2.22 (i) and 16, requires Gafisa's professional judgment.
The classification of the risks of such claims involves significant judgments,
which may produce significant impacts on the amount recognized in the individual
and consolidated financial statements, including their disclosures, and on the
investment amount recorded using the equity method in the Company’s financial
statements. In view of the materiality, complexity and judgment involved in the
evaluation and measurement of Provisions and Contingent Liabilities, we consider
it a key audit matter.
How our audit conducted
this matter
We evaluated the
design, implementation, and, on sampling basis, the operational effectiveness of
the key internal controls related to the identification, evaluation, measurement
and disclosure of Provisions and Contingent Liabilities. Additionally, we
evaluated the sufficiency of the recognized provisions and disclosed contingent
amounts, the reasonableness of criteria and assumptions used in the methodology
for measuring provisioned and/or disclosed amounts, also considering the
evaluation of Gafisa's internal and external legal counsel, as well as history
data and information. We also analyzed the adequacy of the Company’s disclosures
related to the information on the nature, exposure and amounts of risks in the
main claims involving Gafisa.
§
Transaction of sale and
distribution of asset, shares of Tenda S.A., to respective shareholders– Company
and Consolidated
As mentioned in Note
8.2, in December 2016, Gafisa announced its plan for disposal from 30% to 50% of
its shares in the subsidiary Construtora Tenda S.A. (Tenda) aimed at maximizing
value to its shareholders. The completion of this transaction is estimated for
the first half of 2017. Additionally, Gafisa will deliver, as a capital
reduction (distribution of non-financial assets to own shareholders), 50% of the
remaining shares of Tenda to its current shareholders, which resulted in the
reclassification of the investment into non-current asset held for sale, and of
the income from equity method investments into discontinued operations in the
individual financial statements, and of the assets, liabilities and profit or
loss in the consolidated financial statements, into discontinued operations. As
it refers to a material fact in the year, and with impacts on individual and
consolidated financial statements, we consider this transaction a key audit
matter.
How our audit conducted
this matter
Our audit procedures
included, among others, periodical meetings with the Company and the Audit
Committee in order to understand the impact of such disposal on the Company’s
assets and liabilities in the individual and consolidated financial statements
as of December 31, 2016. We read the contract and other documentation related to
the transaction of sale of the subsidiary Tenda, and considered the existence of
clauses precedent not fulfilled on the reporting date of these financial
statements. We also conducted tests of the controls related to such
transactions. We evaluated (i) the reclassification of the investment (in Tenda)
and the respective income from equity method investments in the individual
statements, and the respective assets, liabilities and profit or loss in the
consolidated financial statements into the line item Non-current assets held for
sale/Discontinued operations, as well as (ii) the other accounting impacts
arising from such reclassification. We also analyzed the documentation and
assumptions regarding the market value of the asset that support the Company’s
decision on the recoverable value of such asset. We evaluated whether the
disclosures made in the individual and consolidated financial statements are in
accordance with the applicable rules.
10
(A free translation
from the original in Portuguese into English)
Other matters –
Statements of value added
The individual and
consolidated statements of value added (DVA) for the year ended December 31,
2016, prepared under the responsibility of the Company’s management, and
presented herein as supplementary information for IFRS purposes, have been
subject to audit procedures jointly performed with the audit of the Company's
financial statements. In order to form our opinion, we assessed whether
those statements are reconciled with the financial statements and accounting
records, as applicable, and whether their format and contents are in accordance
with criteria determined in the Technical Pronouncement 09 (CPC 09) - Statement
of Value Added issued by the Committee for Accounting Pronouncements (CPC). In
our opinion, the statements of value added have been fairly prepared, in all
material respects, in accordance with the criteria determined by the
aforementioned Technical Pronouncement, and are consistent with the overall
individual and consolidated financial statements.
Other information
accompanying the individual and consolidated financial statements and the
auditor's report
Management is
responsible for the other information comprising the management
report.
Our opinion
on the financial statements does not cover the Management Report and we do not
express any form of assurance conclusion about this report.
In connection with our
audit of the individual and consolidated financial statements, our
responsibility is to read the Management Report and, in doing so, consider
whether the other information is materially inconsistent with the individual and
consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement in the Management
Report, we are required to report that fact.
Responsibilities of
Management and Those Charged with Governance for the Individual and Consolidated
Financial Statements
Management is
responsible for the preparation and fair presentation of the individual and
consolidated financial statements in accordance with Brazilian accounting
practices and with International Financial Reporting Standards (IFRS), issued by
the International Accounting Standards Board (IASB) and for such internal
control as management determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the
individual and consolidated financial statements, management is responsible for
assessing the Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless management either intends to liquidate the Company and
subsidiaries or to cease operations, or has no realistic alternative but to do
so.
Those charged with
governance are responsible for overseeing the Company’s and subsidiaries
financial reporting process.
Auditors’
Responsibilities for the Audit of the Individual and Consolidated Financial
Statements
Our objectives are to
obtain reasonable assurance about whether the individual and consolidated
financial statements as a whole are free from material misstatement, whether due
to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with Brazilian and international standards on
auditing will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial
statements.
As part of an audit in
accordance with Brazilian and international standards on auditing, we exercise
professional judgment and maintain professional skepticism throughout the audit.
We also:
• Identify and assess
the risks of material misstatement of the individual and consolidated financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not
detecting a material
misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
11
(A free translation
from the original in Portuguese into English)
• Obtain an
understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s and its subsidiaries
internal control.
• Evaluate the
appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the
appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s
and its subsidiaries ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in our
auditors’ report to the related disclosures in the individual and consolidated
financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date
of our auditors’ report. However, future events or conditions may cause the
Company and subsidiaries to cease to continue as a going concern.
• Evaluate the overall
presentation, structure and content of the financial statements, including the
disclosures, and whether the individual and consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair
presentation.
• Obtain sufficient
appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the
consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with
those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our
audit.
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 Paulo, March 23,
2017
KPMG Auditores
Independentes
CRC
2SP014428/O-6
Giuseppe
Masi
CRC
1SP176273/O-7
(original report signed
in Portuguese)
12
(A free translation
from the original in Portuguese into English)
Gafisa
S.A.
Balance sheet
Years ended December
31, 2016 and 2015
(In
thousands of Brazilian Reais)
|
|
|
Company
|
|
Consolidated
|
|
Note
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
4.1
|
|
19,811
|
|
44,044
|
|
29,534
|
|
82,640
|
Short-term
investments
|
4.2
|
|
163,562
|
|
350,343
|
|
223,646
|
|
629,671
|
Trade accounts
receivable
|
5
|
|
524,337
|
|
723,950
|
|
722,640
|
|
1,395,273
|
Properties for
sale
|
6
|
|
870,201
|
|
1,135,137
|
|
1,122,724
|
|
1,880,377
|
Receivables from
related parties
|
21.1
|
|
46,187
|
|
78,410
|
|
57,455
|
|
95,118
|
Prepaid
expenses
|
-
|
|
2,102
|
|
1,901
|
|
2,548
|
|
7,171
|
Non-current assets held for sale
|
8.1
|
|
3,306
|
|
4,367
|
|
3,306
|
|
105,857
|
Assets from
discontinued operations
|
8.2
|
|
439,020
|
|
-
|
|
1,189,011
|
|
-
|
Other
assets
|
7
|
|
39,280
|
|
46,621
|
|
49,336
|
|
120,657
|
Total current
assets
|
|
|
2,107,806
|
|
2,384,773
|
|
3,400,200
|
|
4,316,764
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
|
Trade accounts
receivable
|
5
|
|
225,270
|
|
262,092
|
|
271,322
|
|
407,091
|
Properties for
sale
|
6
|
|
535,376
|
|
387,375
|
|
592,975
|
|
750,240
|
Receivables from
related parties
|
21.1
|
|
25,529
|
|
78,818
|
|
25,529
|
|
109,193
|
Derivative
financial instruments
|
20.i.b
|
|
9,030
|
|
-
|
|
9,030
|
|
-
|
Other
assets
|
7
|
|
156,358
|
|
80,948
|
|
58,917
|
|
82,880
|
|
|
|
951,563
|
|
809,233
|
|
957,773
|
|
1,349,404
|
|
|
|
|
|
|
|
|
|
|
Investments
|
9
|
|
2,116,509
|
|
3,242,765
|
|
799,911
|
|
993,122
|
Property and
equipment
|
10
|
|
21,720
|
|
22,819
|
|
23,977
|
|
49,176
|
Intangible
assets
|
11
|
|
27,778
|
|
33,311
|
|
28,228
|
|
51,866
|
|
|
|
2,166,007
|
|
3,298,895
|
|
852,116
|
|
1,094,164
|
|
|
|
|
|
|
|
|
|
|
Total non-current
assets
|
|
|
3,117,570
|
|
4,108,128
|
|
1,809,889
|
|
2,443,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
5,225,376
|
|
6,492,901
|
|
5,210,089
|
|
6,760,332
|
The accompanying notes
are an integral part of these financial statements.
13
(A free translation
from the original in Portuguese into English)
Gafisa
S.A.
|
|
|
Company
|
|
Consolidated
|
|
Note
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
Loans and
financing
|
12
|
|
639,733
|
|
595,817
|
|
669,795
|
|
672,365
|
Debentures
|
13
|
|
314,139
|
|
187,744
|
|
314,139
|
|
389,621
|
Payable for purchase of properties and advances from
customers
|
17
|
|
146,522
|
|
148,989
|
|
205,388
|
|
361,420
|
Payables for goods and service
suppliers
|
-
|
|
61,177
|
|
32,115
|
|
79,120
|
|
57,335
|
Taxes and
contributions
|
19
|
|
35,819
|
|
40,902
|
|
51,842
|
|
102,057
|
Salaries, payroll charges and profit
sharing
|
-
|
|
28,041
|
|
26,758
|
|
28,880
|
|
60,102
|
Minimum mandatory
dividends
|
18.2
|
|
-
|
|
17,682
|
|
-
|
|
17,682
|
Provision for legal claims and
commitments
|
16
|
|
79,054
|
|
100,312
|
|
79,054
|
|
100,312
|
Obligations assumed on the assignment of
receivables
|
14
|
|
24,907
|
|
12,631
|
|
34,698
|
|
23,482
|
Payables to
related parties
|
21.1
|
|
1,073,255
|
|
801,375
|
|
85,611
|
|
87,100
|
Derivative
financial instruments
|
20.i.b
|
|
5,290
|
|
14,056
|
|
5,290
|
|
14,056
|
Other
payables
|
15
|
|
50,660
|
|
127,123
|
|
69,921
|
|
163,437
|
Liabilities related to assets from discontinued
operations
|
8.2
|
|
-
|
|
-
|
|
651,812
|
|
-
|
Total current
liabilities
|
|
|
2,458,597
|
|
2,105,504
|
|
2,275,550
|
|
2,048,969
|
|
|
|
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
Loans and
financing
|
12
|
|
367,197
|
|
542,843
|
|
516,505
|
|
620,470
|
Debentures
|
13
|
|
137,129
|
|
468,337
|
|
137,129
|
|
468,337
|
Payables for purchase of properties and advances
from customers
|
17
|
|
90,311
|
|
143,216
|
|
90,309
|
|
248,514
|
Deferred income tax and social
contribution
|
19
|
|
100,405
|
|
10,085
|
|
100,405
|
|
16,489
|
Provision for legal claims and
commitments
|
16
|
|
79,288
|
|
82,563
|
|
83,904
|
|
142,670
|
Obligations assumed on the assignment of
receivables
|
14
|
|
50,906
|
|
22,216
|
|
64,332
|
|
35,811
|
Payables to
related parties
|
21.1
|
|
-
|
|
-
|
|
-
|
|
41,002
|
Derivative
financial instruments
|
20.i.b
|
|
-
|
|
7,618
|
|
-
|
|
7,618
|
Other
payables
|
15
|
|
13,218
|
|
15,028
|
|
11,502
|
|
33,216
|
Total non-current
liabilities
|
|
|
838,454
|
|
1,291,906
|
|
1,004,086
|
|
1,614,127
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Capital
|
18.1
|
|
2,740,662
|
|
2,740,662
|
|
2,740,662
|
|
2,740,662
|
Treasury
shares
|
18.1
|
|
(32,524)
|
|
(25,980)
|
|
(32,524)
|
|
(25,980)
|
Capital reserves and reserve for granting stock
options
|
-
|
|
81,948
|
|
76,834
|
|
81,948
|
|
76,834
|
Income reserve
|
-
|
|
-
|
|
303,975
|
|
-
|
|
303,975
|
Accumulated
losses
|
-
|
|
(861,761)
|
|
-
|
|
(861,761)
|
|
-
|
|
|
|
1,928,325
|
|
3,095,491
|
|
1,928,325
|
|
3,095,491
|
Noncontrolling
interest
|
|
|
-
|
|
-
|
|
2,128
|
|
1,745
|
Total
equity
|
|
|
1,928,325
|
|
3,095,491
|
|
1,930,453
|
|
3,097,236
|
Total liabilities
and equity
|
|
|
5,225,376
|
|
6,492,901
|
|
5,210,089
|
|
6,760,332
|
The accompanying notes
are an integral part of these financial statements.
14
(A free translation
from the original in Portuguese into English)
Gafisa
S.A.
Statement
of profit or loss
Years ended
December 31, 2016 and 2015
(In
thousands of Brazilian Reais, except if stated otherwise)
|
|
|
Company
|
|
Consolidated
|
|
Note
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Continuing
operations
|
|
|
|
|
|
|
|
|
|
Net operating
revenue
|
22
|
|
673,866
|
|
1,107,262
|
|
915,698
|
|
1,443,357
|
|
|
|
|
|
|
|
|
|
|
Operating
costs
|
|
|
|
|
|
|
|
|
|
Real
estate development and sales of properties
|
23
|
|
(821,892)
|
|
(832,236)
|
|
(1,029,213)
|
|
(1,061,921)
|
|
|
|
|
|
|
|
|
|
|
Gross
profit (loss)
|
-
|
|
(148,026)
|
|
275,026
|
|
(113,515)
|
|
381,436
|
|
|
|
|
|
|
|
|
|
|
Operating
(expenses) income
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
23
|
|
(79,528)
|
|
(82,550)
|
|
(94,946)
|
|
(97,949)
|
General and
administrative expenses
|
23
|
|
(84,961)
|
|
(97,440)
|
|
(106,585)
|
|
(97,442)
|
Income
from equity method investments
|
9
|
|
(63,901)
|
|
125,023
|
|
(48,332)
|
|
40,015
|
Depreciation and
amortization
|
10 and 11
|
|
(32,359)
|
|
(29,994)
|
|
(33,892)
|
|
(32,585)
|
Other income
(expenses), net
|
23
|
|
(77,031)
|
|
(104,121)
|
|
(78,992)
|
|
(107,634)
|
|
|
|
|
|
|
|
|
|
|
Profit
(loss) before financial income and expenses and income tax and social
contribution
|
-
|
|
(485,806)
|
|
85,944
|
|
(476,262)
|
|
85,841
|
|
|
|
|
|
|
|
|
|
|
Financial
expenses
|
24
|
|
(83,332)
|
|
(121,072)
|
|
(84,118)
|
|
(127,728)
|
Financial
income
|
24
|
|
49,317
|
|
67,530
|
|
58,439
|
|
77,306
|
|
|
|
|
|
|
|
|
|
|
Profit
(loss) before income tax and social contribution
|
|
|
(519,821)
|
|
32,402
|
|
(501,941)
|
|
35,419
|
|
|
|
|
|
|
|
|
|
|
Current income tax and social
contribution
|
-
|
|
-
|
|
(4,314)
|
|
(10,722)
|
|
(14,763)
|
Deferred income tax and social
contribution
|
-
|
|
(90,320)
|
|
16,041
|
|
(89,358)
|
|
14,105
|
|
|
|
|
|
|
|
|
|
|
Total
Income tax and social contribution
|
19.i
|
|
(90,320)
|
|
11,727
|
|
(100,080)
|
|
(658)
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) from continuing operations
|
-
|
|
(610,141)
|
|
44,129
|
|
(602,021)
|
|
34,761
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) from discontinued operations
|
8.2
|
|
(553,455)
|
|
30,320
|
|
(559,704)
|
|
36,218
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) for the year
|
-
|
|
(1,163,596)
|
|
74,449
|
|
(1,161,725)
|
|
70,979
|
|
|
|
|
|
|
|
|
|
|
(-) Attributable
to:
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
-
|
|
-
|
|
-
|
|
1,871
|
|
(3,470)
|
Owners
of Gafisa
|
-
|
|
(1,163,596)
|
|
74,449
|
|
(1,163,596)
|
|
74,449
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares (in
thousands)
|
27
|
|
26,921
|
|
27,262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earning (loss) per thousand shares - In Reais (Company)
|
27
|
|
(43.222)
|
|
2.731
|
|
|
|
|
From continuing
operations
|
-
|
|
(22.664)
|
|
1.619
|
|
|
|
|
From discontinued
operations
|
-
|
|
(20.558)
|
|
1.112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earning (loss) per thousand shares - In
Reais (Company)
|
27
|
|
(43.222)
|
|
2.712
|
|
|
|
|
From continuing
operations
|
-
|
|
(22.664)
|
|
1.608
|
|
|
|
|
From discontinued
operations
|
-
|
|
(20.558)
|
|
1.105
|
|
|
|
|
The accompanying notes
are an integral part of these financial statements.
15
(A free translation
from the original in Portuguese into English)
Gafisa
S.A.
Statement
of comprehensive income (loss)
Years ended
December 31, 2016 and 2015
(In
thousands of Brazilian Reais, except if stated otherwise)
|
Company
|
|
Consolidated
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Net
income (loss) for the year
|
(1,163,596)
|
|
74,449
|
|
(1,161,725)
|
|
70,979
|
|
|
|
|
|
|
|
|
Total
comprehensive income (loss), net of taxes
|
(1,163,596)
|
|
74,449
|
|
(1,161,725)
|
|
70,979
|
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
|
|
Owners of
Company
|
(1,163,596)
|
|
74,449
|
|
(1,163,596)
|
|
74,449
|
Noncontrolling
interests
|
-
|
|
-
|
|
1,871
|
|
(3,470)
|
The accompanying notes
are an integral part of these financial statements.
16
(A free translation
from the original in Portuguese into English)
Gafisa
S.A.
Statement of changes in
equity
Years ended December 31, 2016 and
2015
(In thousands of Brazilian
Reais)
|
|
Attributed to Owners of the
Company
|
|
|
|
|
|
|
|
Income Reserve
|
|
|
|
|
|
Note
|
Capital
|
Treasury shares
|
Reserve for granting shares
|
Legal reserve
|
Reserve for investments
|
Retained earnings (accumulated
losses)
|
Total Company
|
Noncontrolling interests
|
Total consolidated
|
Balances at
December 31, 2014
|
|
2,740,662
|
(79,059)
|
69,897
|
31,593
|
292,252
|
-
|
3,055,345
|
3,058
|
3,058,403
|
|
|
|
|
|
|
|
|
|
|
|
Capital
increase
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2,157
|
2,157
|
Stock option
plan
|
18.3
|
-
|
-
|
6,937
|
-
|
-
|
-
|
6,937
|
-
|
6,937
|
Treasury shares
acquired
|
18.1
|
-
|
(24,157)
|
-
|
-
|
-
|
-
|
(24,157)
|
-
|
(24,157)
|
Treasury shares
sold
|
18.1
|
-
|
3,022
|
-
|
-
|
(2,423)
|
-
|
599
|
-
|
599
|
Treasury shares
cancelled
|
18.1
|
-
|
74,214
|
-
|
-
|
(74,214)
|
-
|
-
|
-
|
-
|
Profit for the
year
|
-
|
-
|
-
|
-
|
-
|
-
|
74,449
|
74,449
|
(3,470)
|
70,979
|
Allocation:
|
18.2
|
|
|
|
|
|
|
|
|
|
Legal reserve
|
-
|
-
|
-
|
-
|
3,722
|
-
|
(3,722)
|
-
|
-
|
-
|
Declared
dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
(17,682)
|
(17,682)
|
-
|
(17,682)
|
Reserve for
investments
|
-
|
-
|
-
|
-
|
-
|
53,045
|
(53,045)
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Balances at
December 31, 2015
|
|
2,740,662
|
(25,980)
|
76,834
|
35,315
|
268,660
|
-
|
3,095,491
|
1,745
|
3,097,236
|
|
|
|
|
|
|
|
|
|
|
|
Capital
increase
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,382
|
1,382
|
Stock option
plan
|
18.3
|
-
|
-
|
5,114
|
-
|
-
|
-
|
5,114
|
-
|
5,114
|
Treasury shares
acquired
|
18.1
|
-
|
(8,693)
|
-
|
-
|
-
|
-
|
(8,693)
|
-
|
(8,693)
|
Treasury shares
sold
|
18.1
|
-
|
2,149
|
-
|
-
|
(2,140)
|
-
|
9
|
-
|
9
|
Loss for the
year
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,163,596)
|
(1,163,596)
|
1,871
|
(1,161,725)
|
Allocation:
|
18.2
|
|
|
|
|
|
|
|
|
|
Legal reserve
|
-
|
-
|
-
|
-
|
(35,315)
|
-
|
35,315
|
-
|
-
|
-
|
Reserve for
investments
|
-
|
-
|
-
|
-
|
-
|
(266,520)
|
266,520
|
-
|
49
|
49
|
Declared
dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(2,919)
|
(2,919)
|
|
|
|
|
|
|
|
|
|
|
|
Balances at
December 31, 2016
|
|
2,740,662
|
(32,524)
|
81,948
|
-
|
-
|
(861,761)
|
1,928,325
|
2,128
|
1,930,453
|
The accompanying notes are an integral part of
these financial statements.
17
(A free translation
from the original in Portuguese into English)
Gafisa
S.A.
Cash flow
statement
Years
ended December 31, 2016 and
2015
(In
thousands of Brazilian Reais)
|
Company
|
|
Consolidated
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Operating
activities
|
|
|
|
|
|
|
|
Income
(loss) before income tax and social contribution
|
(519,821)
|
|
32,402
|
|
(501,941)
|
|
35,419
|
Expenses/(income) not affecting cash and cash
equivalents
|
|
|
|
|
|
|
|
Depreciation and amortization (Notes 10 and
11)
|
32,359
|
|
29,994
|
|
33,892
|
|
32,585
|
Stock option
expense (Note 18.3)
|
6,821
|
|
7,826
|
|
6,821
|
|
7,826
|
Unrealized interests and charges, net
|
81,189
|
|
73,142
|
|
100,508
|
|
88,801
|
Warranty
provision (Note 15)
|
(12,390)
|
|
11,100
|
|
(12,390)
|
|
11,100
|
Provision for legal claims and commitments (Note
16)
|
69,605
|
|
88,067
|
|
70,796
|
|
91,193
|
Provision for profit sharing (Note 26
(iii))
|
18,750
|
|
14,000
|
|
18,750
|
|
14,000
|
Allowance for doubtful accounts and cancelled
contracts (Note 5)
|
6,950
|
|
6,749
|
|
6,950
|
|
6,749
|
Provision for realization of non-financial
assets:
|
|
|
|
|
|
|
|
Properties and land for sale (Note 6 and
8)
|
97,873
|
|
(618)
|
|
160,216
|
|
(618)
|
Income
from equity method investments (Note 9)
|
63,901
|
|
(125,023)
|
|
48,332
|
|
(40,015)
|
Financial
instruments (Note 20)
|
(13,404)
|
|
17,151
|
|
(13,404)
|
|
17,151
|
Provision for penalties due to delay in construction
works (Note 15)
|
(1,404)
|
|
(2,137)
|
|
(1,404)
|
|
(2,137)
|
Write-off of property and equipment and intangible
assets, net (Notes 10 and 11)
|
6,435
|
|
4,030
|
|
7,666
|
|
5,516
|
Write-off of
goodwill supported by inventory surplus (Notes 6 and 9)
|
62,343
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Decrease/(increase) in operating
assets
|
|
|
|
|
|
|
|
Trade
accounts receivable
|
205,413
|
|
18,948
|
|
288,999
|
|
133,674
|
Properties for sale and land available for
sale
|
19,062
|
|
(99,773)
|
|
21,759
|
|
(159,654)
|
Other
assets
|
39,718
|
|
16,646
|
|
29,471
|
|
18,883
|
Prepaid
expenses
|
(201)
|
|
6,135
|
|
(460)
|
|
7,622
|
|
|
|
|
|
|
|
|
Increase/(decrease) in operating
liabilities
|
|
|
|
|
|
|
|
Payables for purchase of properties and advances
from customers
|
(55,372)
|
|
(10,808)
|
|
(73,603)
|
|
9,243
|
Taxes and
contributions
|
(5,083)
|
|
2,516
|
|
(9,874)
|
|
(7,195)
|
Payables for goods and service
suppliers
|
25,684
|
|
(25,760)
|
|
31,991
|
|
(28,036)
|
Salaries, payroll charges and profit
sharing
|
(17,494)
|
|
(25,750)
|
|
(17,740)
|
|
(25,464)
|
Other
payables
|
(155,853)
|
|
(127,021)
|
|
(152,209)
|
|
(84,266)
|
Transactions with
related parties
|
252,038
|
|
192,047
|
|
100,207
|
|
72,444
|
Paid
taxes
|
-
|
|
(4,314)
|
|
(10,722)
|
|
(14,763)
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents from (used in) operating activities
|
207,119
|
|
99,549
|
|
132,611
|
|
190,058
|
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
|
Purchase of property and equipment and intangible
assets (Notes 10 and 11)
|
(32,162)
|
|
(29,319)
|
|
(35,838)
|
|
(33,340)
|
Purchase of short-term investments
|
(987,368)
|
|
(3,092,210)
|
|
(1,417,794)
|
|
(3,502,264)
|
Redemption of short-term investments
|
1,174,149
|
|
3,323,910
|
|
1,611,200
|
|
3,699,616
|
Investments
|
(4,468)
|
|
(2,917)
|
|
(110)
|
|
(1,636)
|
|
|
|
|
|
|
|
|
Cash
from (used in) investing activities
|
150,151
|
|
199,464
|
|
157,458
|
|
162,376
|
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
|
Increase in loans, financing and
debentures
|
403,262
|
|
680,737
|
|
579,391
|
|
734,552
|
Payment of loans, financing and debentures -
principal
|
(610,564)
|
|
(704,578)
|
|
(719,390)
|
|
(806,398)
|
Payment of loans, financing and debentures -
interest
|
(210,430)
|
|
(248,116)
|
|
(225,405)
|
|
(262,466)
|
Assignment of
receivables
|
65,038
|
|
13,053
|
|
72,776
|
|
24,558
|
Investors
obligations
|
(3,573)
|
|
(6,081)
|
|
(3,658)
|
|
(6,135)
|
Payment of dividends and interest on
equity
|
(17,682)
|
|
-
|
|
(17,682)
|
|
-
|
Loan
transactions with related parties
|
1,130
|
|
(218)
|
|
1,130
|
|
(280)
|
Disposal of treasury shares (Note
18.1)
|
2,149
|
|
3,022
|
|
2,149
|
|
3,022
|
Result
of the disposal of treasury shares (Note 18.1)
|
(2,140)
|
|
(2,423)
|
|
(2,140)
|
|
(2,423)
|
Repurchase of treasury shares (Note
18.1)
|
(8,693)
|
|
(24,157)
|
|
(8,693)
|
|
(24,157)
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents from financing activities
|
(381,503)
|
|
(288,761)
|
|
(321,522)
|
|
(339,727)
|
|
|
|
|
|
|
|
|
Net
increase/(decrease) in cash and cash equivalents
|
(24,233)
|
|
10,252
|
|
(31,453)
|
|
12,707
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
|
|
|
At the
beginning of the year
|
44,044
|
|
33,792
|
|
60,987
|
|
48,280
|
At the
end of the year
|
19,811
|
|
44,044
|
|
29,534
|
|
60,987
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
(24,233)
|
|
10,252
|
|
(31,453)
|
|
12,707
|
18
(A free translation
from the original in Portuguese into English)
Gafisa
S.A.
Statement
of value added
Years
ended December 31, 2016 and
2015
(In
thousands of Brazilian Reais)
|
Company
|
|
Consolidated
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Revenues
|
734,810
|
|
1,213,220
|
|
983,664
|
|
1,561,815
|
Real
estate development and sales
|
741,760
|
|
1,219,969
|
|
990,614
|
|
1,568,564
|
Reversal (recognition) of allowance for doubtful
accounts and cancelled contracts
|
(6,950)
|
|
(6,749)
|
|
(6,950)
|
|
(6,749)
|
Inputs acquired from third parties (including taxes
on purchases)
|
(1,358,313)
|
|
(810,320)
|
|
(1,569,281)
|
|
(1,010,112)
|
Operating costs - Real estate development and
sales
|
(697,626)
|
|
(707,515)
|
|
(872,401)
|
|
(910,736)
|
Materials, energy, outsourced labor and
other
|
(107,232)
|
|
(133,125)
|
|
(137,176)
|
|
(135,594)
|
Discontinued
operation result
|
(553,455)
|
|
30,320
|
|
(559,704)
|
|
36,218
|
|
|
|
|
|
|
|
|
Cross value
added
|
(623,503)
|
|
402,900
|
|
(585,617)
|
|
551,703
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
(32,359)
|
|
29,994)
|
|
(33,892)
|
|
(32,585)
|
|
|
|
|
|
|
|
|
Net
value added produced (distributed) by the Company
|
(655,862)
|
|
72,906
|
|
(619,509)
|
|
519,118
|
|
|
|
|
|
|
|
|
Value added received on transfer
|
(14,584)
|
|
192,553
|
|
10,107
|
|
117,321
|
Income from equity method investments
|
(63,901)
|
|
125,023
|
|
(48,332)
|
|
40,015
|
Financial
income
|
49,317
|
|
67,530
|
|
58,439
|
|
77,306
|
|
|
|
|
|
|
|
|
Total value added to be distributed
|
(670,446)
|
|
565,459
|
|
(609,402)
|
|
636,439
|
|
|
|
|
|
|
|
|
Value added
distribution
|
(670,446)
|
|
565,459
|
|
(609,402)
|
|
636,439
|
Personnel and
payroll charges
|
107,988
|
|
117,933
|
|
115,054
|
|
124,920
|
Taxes and
contributions
|
171,672
|
|
118,235
|
|
190,173
|
|
144,770
|
Interest and
rents
|
213,490
|
|
254,842
|
|
248,967
|
|
292,300
|
Dividends
|
-
|
|
17,682
|
|
-
|
|
17,682
|
Retained earnings attributable to noncontrolling
interests
|
-
|
|
-
|
|
(1,871)
|
|
3,470
|
Retained
earnings (incurred losses)
|
(1,163,596)
|
|
56,767
|
|
(1,161,725)
|
|
53,297
|
The accompanying notes are an integral part of
these financial statements.
19
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
1. Operations
Gafisa S.A. ("Gafisa" or "Company") is a publicly traded
company with registered office at Avenida das Nações Unidas, 8.501,
19
th
floor, in the city and state of São Paulo, Brazil and commenced
its operations in 1997 with the objectives of: (i) promoting and managing all
forms of real estate ventures on its own behalf or for third parties (in the
latter case, as construction company or proxy); (ii) selling and purchasing real
estate properties; (iii) providing civil construction and civil engineering
services; (iv) developing and implementing marketing strategies related to its
own and third party real estate ventures; and (v) investing in other companies
who share similar objectives.
The Company has stocks traded at BM&FBovespa S.A. –
Bolsa de Valores, Mercadorias e Futuros and the New York Stock Exchange (NYSE),
reporting its information to the Brazilian Securities and Exchange Commission
(CVM) and the U.S. Securities and Exchange Commission (SEC).
The Company enters real estate development projects with
third parties through specific purpose partnerships (“Sociedades de Propósito
Específico” or “SPEs”) or through the formation of consortia and condominiums.
Controlled entities substantially share managerial and operating structures, and
corporate, managerial and operating costs with the Company. The SPEs,
condominiums and consortia operate solely in the real estate industry and are
linked to specific ventures.
On December 14, 2016, the Company disclosed a material
fact informing about the signature of the contract for purchase and sale of
shares with Jaguar Real Estate Partners LP for disposal of up to 30% of the
shares issued by Tenda, for the price of R$ 8.13 per share, with a total
estimate of R$539,020 for paying-in Tenda’s capital. The completion of the
transaction is subject to the verification of certain conditions precedent (Note
8.2). The contract also has representations and guarantees, and indemnity
obligations typical of transactions of such nature, which may give rise to the
future obligation of a party to indemnify the other.
The completion of the transaction, expected to be due
until the end of the first half of 2017, and the consequent inflow of funds will
contribute to the improvement in the liquidity condition and capital structure
of the Company. This contract was entered into subsequently to the Board
of Directors’ decision on abandoning the efforts to carry out a secondary
offering of Tenda’s shares, with the consequent cancellation of the application
for registering such offering at CVM.
20
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
2.1.
Basis of presentation and preparation of individual and
consolidated financial statements
On March 23, 2017, the Company’s Board of Directors
approved these individual and consolidated financial statements of the Company
and authorized their disclosure.
The individual financial statements, identified as
“Company”, have been prepared and are being presented according to the
accounting practices adopted in Brazil, including the pronouncements issued by
the Accounting Pronouncements Committee (CPC), approved by the Brazilian
Securities and Exchange Commission (CVM) and are disclosed together with the
consolidated financial statements.
The consolidated financial statements of the Company have
been prepared and are being presented according to the accounting practices
adopted in Brazil, including the pronouncements issued by the CPC, approved by
the Brazilian Securities and Exchange Commission (CVM), and according to the
International Financial Reporting Standards (IFRS) issued by the International
Accounting Standards Board (IASB).
The individual financial statements of the Company are not
considered in compliance with the International Financial Reporting Standards
(IFRS), once they consider the capitalization of interest on qualifying assets
of investees in the financial statements of the Company. In view of the fact
that there is no difference between the Company’s and the consolidated equity
and profit or loss, the Company opted for presenting such individual and
consolidated information in only one set.
The consolidated financial statements are specifically in
compliance with the International Financial Reporting Standards (IFRS)
applicable to real estate development entities in Brazil, including the
Guideline OCPC 04 - Application of the Technical Interpretation ICPC 02 to the
Brazilian Real Estate Development Entities, in relation to the treatment of the
recognition of revenue from this sector, and involves
certain matters related
to application of the continuous transfer of the risks, rewards and
control
over the real estate units sold
.
All material information characteristic of the financial
statements, and only them, is being evidenced, and corresponds to those used by
Management in its administration.
The presentation of the individual and consolidated
Statement of Value Added (DVA) is required by the Brazilian corporate
legislation and the accounting practices adopted in Brazil applicable to
publicly-held companies and was prepared according to CVM Resolution
557, of
November 12, 2008
, which approved the accounting pronouncement
CPC 09 – Statement of Value Added. The IFRS does not require the presentation of
this statement. Consequently, under the IFRS, this statement is presented as
additional information, without causing harm to the financial statements as a
whole.
21
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.1.
Basis of presentation and preparation of individual and
consolidated financial statements
--Continued
The financial statements have been prepared on a going
concern basis. Management makes an assessment of the Company’s ability to
continue as going concern when preparing the financial statements.
All amounts reported in the accompanying financial
statements are in thousands of Reais, except as otherwise stated.
2.1.1.
Consolidated financial statements
The consolidated financial statements of the Company
include the financial statements of Gafisa and its direct and indirect
subsidiaries. The Company controls an entity when it is exposed or is entitled
to variable returns arising from its involvement with the entity and has the
ability to affect those returns through the power that it exerts over the
entity. The existence and the potential effects of voting rights, which are
currently exercisable or convertible, are taken into account when evaluating
whether the Company controls other entity. The subsidiaries are fully
consolidated from the date the control is transferred and the consolidation is
discontinued from the date control ceases.
The accounting practices were uniformly adopted in all
subsidiaries included in the consolidated financial statements, and the fiscal
year of these companies is the same of the Company. See further details in Note
9.
2.1.2.
Functional and presentation currency
The functional and presentation currency of the Company is
Real.
2.1.3.
Presentation of segment information
The presentation of operating segment information is
consistent with the internal reports provided to the main decision makers of
operational matters, the Board of Executive Officers and the Board of Directors,
who are responsible for allocating resources, assessing the performance of
operating segments, and making strategic decisions.
22
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
2.2.1.
Accounting judgments, estimates and
assumptions
Accounting estimates and judgments are evaluated on an
ongoing basis based on historical experience and other factors, including
expectations on future events, considered reasonable under the
circumstances.
The preparation of the individual and consolidated
financial statements of the Company requires management to make judgments,
estimates and assumptions that affect the reported amounts of revenue, expenses,
assets and liabilities, as well as the disclosure of contingent liabilities, at
the reporting date of financial statements.
Assets and liabilities subject to estimates and
assumptions include the provision for impairment of asset, transactions with
share-based payment, provision for legal claims, fair value of financial
instruments, measurement of the estimated cost of ventures, deferred tax assets,
among others.
The main assumptions related to sources of uncertainty
over future estimates and other important sources of uncertainty over estimates
at the reporting date, which may result in different amounts upon settlement are
discussed below:
a)
Impairment loss of non-financial assets
An impairment loss exists when the asset’s carrying amount
exceeds its recoverable amount, which is the higher of an asset’s fair value
less costs to sell and its value in use.
The calculation of the fair value less cost to sell is
based on available information on sale transactions of similar assets or market
prices less additional costs of disposal. The calculation of the value in use is
based on the discounted cash flow model.
Cash flows are derived from the budget for the following
five years, and do not include uncommitted restructuring activities or future
significant investments that will improve the asset basis of the cash-generating
unit being tested. The recoverable amount is sensitive to the discount rate used
under the discounted cash flow method, the estimated future cash inflows, and to
the growth rate used for purposes of extrapolation.
23
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.1.
Accounting judgments, estimates and
assumptions
--Continued
a)
Impairment loss of non-financial
assets
--Continued
Indefinite lived intangible assets and goodwill
attributable to future economic benefit are tested at least annually, and/or
when circumstances indicate a decrease in the carrying value. The main
assumptions used for determining the recoverable amount of cash-generating units
are detailed in Note 9.
b)
Share-based payment transactions
The Company measures the cost of transactions with
employees to be settled with shares based on the fair value of equity
instruments on the grant date. For cash-settled share-based transactions, the
liability is required to be remeasured at the end of each reporting period
through the settlement date, recognizing in profit or loss possible changes in
fair value, which requires revaluation of the estimates used at the end of each
reporting period. The estimate of the fair value of share-based payments
requires the determination of the most adequate pricing model to grant equity
instruments, which depends on the grant terms and conditions.
It also requires the determination of the most adequate
data for the pricing model, including the expected option life, volatility and
dividend income, and the corresponding assumptions. The assumptions and models
used for estimating the fair value of share-based payments are disclosed in Note
18.3.
c)
Provision for legal claims
The Company recognizes a provision for tax, labor and
civil claims (Note 16). The assessment of the probability of a loss includes the
evaluation of the available evidences, the hierarchy of laws, existing case law,
the latest court decisions and their significance in the judicial system, and
the opinion of external legal counsel. Provisions are reviewed and adjusted to
take into account the changes in circumstances, such as applicable statutes of
limitations, findings of tax inspections, or additional exposures found based on
new court issues or decisions.
24
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--
Continued
2.2.1.
Accounting judgments, estimates and
assumptions
--Continued
c)
Provision for legal claims
--Continued
There are uncertainties inherent in the interpretation of
complex tax rules and in the value and timing of future taxable income. In the
ordinary course of business, the Company and its subsidiaries are subject to
assessments, audits, legal claims and administrative proceedings in civil, tax
and labor matters.
d)
Allowance for doubtful accounts and cancelled
contracts
The Company measures the allowance for doubtful accounts
and cancelled contracts based on assumptions which consider the history of its
current operations and its estimates. Such estimates are annually reviewed to
consider any changes in circumstances and histories.
e)
Warranty provision
The measurement of the warranty provision, to cover
expenditures for repairing construction defects covered during the warranty
period, is based on the estimate that considers the history of incurred
expenditures adjusted by the future expectation, which is regularly
reviewed.
f)
Estimated cost of construction
Estimated costs, mainly comprising the incurred and
estimated costs for completing the construction projects, are regularly
reviewed, based on the progress of construction, and any resulting adjustments
are recognized in profit or loss of the Company. The effects of such estimate
reviews affect profit or loss.
g)
Realization of deferred income tax
The initial recognition and further analysis of the
realization of a deferred tax asset is carried out when it is probable that a
taxable profit will be available in subsequent years to offset the deferred tax
asset, based on projections of results, and based on internal assumptions and
future economic scenarios that enable its total or partial use.
The other provisions recognized in the Company are
described in Note 2.2.22.
25
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.2.
Recognition of revenue and expenses
(i)
Real estate development and sales
(a)
For the sales of
completed units, revenues are recognized upon completion of the sale, and the
transfer of significant risks and rewards, regardless of the timing of receipt
from the customer.
(b)
For the
pre-sale of completed units during construction phase:
·
The incurred cost (including cost of land, and other
directly related expenditure) that corresponds to the units sold is included in
profit or loss. For the units not yet sold, the incurred cost is included in
inventory (Note 2.2.7);
·
Sales revenues are appropriated to profit or loss, using
the percentage-of-completion method for each venture, this percentage being
measured in view of the incurred cost in relation to the total estimated cost of
the respective ventures;
·
Sales revenues recognized in excess of actual payments
received from customers is recorded as either a current asset or long-term
receivables in “Trade accounts receivable”. Any payment received in connection
with the sales of units that exceeds the amount of revenues recognized is
recorded as “Payables for purchase of land and advances from customers
";
·
Interest and inflation-indexation charges on accounts
receivable, as well as the adjustment to present value of account receivable,
are included in the real estate development and sales when incurred, on a pro
rata basis using the accrual basis of accounting;
·
Financial charges on account payable for acquisition of
land and those directly associated with the financing of construction are
capitalized and recorded in properties for sale, and included in the incurred
cost of units under construction until their completion, and follow the same
recognition criteria as the cost of real estate development for units sold while
under construction;
26
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.2.
Recognition of revenue and expenses
--Continued
(i)
Real estate development and sales
--Continued
·
The taxes levied and deferred on the difference between
real estate development revenues and the cumulative revenue subject to tax are
calculated and recognized when this difference in revenues is recognized;
and
·
Other expenses, including advertising and publicity, are
recognized in profit or loss when incurred.
(ii)
Construction services
Revenues from real
estate services are recognized as services are rendered and tied to the
construction management activities for third parties and technical advisory
services.
(iii)
Barter transactions
Barter transactions
have the objective of receiving land from third parties that are settled with
the delivery of real estate units or transfer of portions of the revenue from
the sale of real estate units of ventures. The land acquired by the Company and
its subsidiaries is determined based on fair value, as a component of
inventories, with a corresponding entry to advances from customers in
liabilities. Revenues and costs incurred from barter transactions are included
in profit or loss over the course of construction period of ventures, as
previously described in item (b).
2.2.3.
Financial instruments
Financial instruments are recognized from the date the
Company becomes a party to the contractual provisions of financial instruments,
and mainly comprise cash and cash equivalents, short-term investments, account
receivable, loans and financing, suppliers, and other debts.
After initial recognition, financial instruments are
measured as described below:
27
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.3.
Financial instruments
--Continued
(i)
Financial instruments through profit or
loss
A financial instrument is classified into fair value
through profit or loss if it is held for trading, or designated as such when
initially recognized.
Financial instruments are designated at fair value through
profit or loss if the Company manages these investments and makes purchase and
sale decisions based on their fair value in accordance with the Company’s
documented investment strategy or risk management. After initial recognition,
related transaction costs are recognized in profit or loss when incurred.
Financial instruments at fair value through profit or loss are measured at fair
value, and their fluctuations are recognized in profit or loss.
In the year ended December 31, 2016, the Company held
derivative financial instruments with the objective of mitigating the risk of
its exposure to the volatility of indices and interest rates, recognized at fair
value directly in profit or loss. In accordance with its treasury policies, the
Company does not have or issue derivative financial instruments for purposes
other than for hedging.
The Company does not adopt the hedge accounting
practice.
(ii)
Financial assets
Financial assets are
classified into financial assets at fair value through profit or loss,
receivables, held-to-maturity investments, and available-for-sale financial
assets. The Company determines the classification of its financial assets at
their initial recognition, when it becomes a party to the contractual provisions
of the instrument.
Financial assets are
initially recognized at fair value, plus, in the case of investments not
designated at fair value through profit or loss, the transaction costs are
directly attributable to their acquisition.
The financial assets
of the Company include cash and cash equivalents, short-term investments, trade
accounts receivable, and derivative financial instruments.
28
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.3.
Financial instruments
--Continued
(ii)
Financial assets
--Continued
Derecognition (write-off)
A financial asset
(or, as the case may be, a portion of a financial asset or portion of a group of
similar financial assets) is derecognized when:
·
The rights to receive cash inflows of an asset
expire;
·
The Company transfers its rights to receive cash inflows
of an asset or assume an obligation of fully pay the cash inflows received,
without significant delay, to a third party because of a “transfer” agreement;
and (a) the Company substantially transfers the risks and rewards of the asset,
or (b) the Company does not substantially transfer or retain all risks and
rewards related to the asset, but transfers the control over the
asset.
When the Company has transferred its rights to receive
cash inflows of an asset, and signed an agreement to pass it on, and has not
substantially transferred or has retained all risks and rewards related to the
asset, an asset is recognized to the extent of the continuous involvement of the
Company with the asset. In this case, the Company also recognizes a related
liability. The transferred asset and related liability are measured based on the
rights and obligations that the Company has maintained.
The continuous involvement by means of a guarantee on the
transferred asset is measured at the lower of the original carrying value of the
asset and the highest consideration that may be required from the
Company.
(iii)
Financial liabilities at fair value through profit or
loss
Financial liabilities at fair value through profit or loss
include financial liabilities for trading, and financial liabilities designated
at initial recognition as fair value through profit or loss.
Loans and financing
Subsequent to initial
recognition, loans and financing accruing interest are measured at amortized
cost, using the effective interest rate method. Gains and losses are recognized
in statement of profit or loss, at the time liabilities are derecognized, as
well as during the amortization process using the effective interest rate
method.
29
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.3.
Financial instruments
--Continued
(iii)
Financial liabilities at fair value through profit or
loss--Continued
Derecognition (write-off)
A financial liability
is derecognized when its contractual obligations are discharged, cancelled or
expire.
When an existing
financial liability is substituted for another from the same creditor, under
substantially different terms, or when the terms of an existing liability are
significantly modified, this substitution or change is treated as a
derecognition of the original liability, and recognition of a new liability, the
difference in the corresponding carrying values being recognized in profit or
loss.
2.2.4.
Cash and cash equivalents and short-term
investments
Cash and cash equivalents substantially comprise demand
deposits and bank certificates of deposit held under resale agreements,
denominated in Reais, with high market liquidity and original contractual
maturities of 90 days or less, and for which there are no penalties or other
restrictions for the immediate redemption thereof.
Cash equivalents are classified as financial assets at
fair value through profit or loss and are recorded at the original amounts plus
income earned, calculated on a “pro rata basis", which are equivalent to their
market values, not having any impact to be accounted for in the Company’s
equity.
Short-term investments include bank deposit certificates,
federal government bonds, exclusive investment funds that are fully
consolidated, and collaterals, which are classified at fair value through profit
or loss (Note 4.2).
30
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.5.
Trade account receivable
These are presented at present and realization values. The
classification between current and non-current is made based on the expected
maturity of contract installments, considering current those falling due in one
year or less.
The installments due are indexed based on the National
Civil Construction Index (INCC) during the period of construction, and based on
the General Market Prices Index (IGP-M) and interest at 12% p.a., after the
delivery of the units.
The adjustment to present value is calculated between the
contract signature date and the estimated date to transfer the completed
property’ keys to the buyer, using a discount rate represented by the average
rate of the financing obtained by the Company, net of inflation, as mentioned in
Note 2.2.19.
Considering that financing its customers is an important
part of the Company operations, the reversal of the present value adjustment was
carried out as contra-entry to the group of real estate development revenue,
consistently with interest incurred on the portion of receivables balance
related to the period subsequent to the handover of keys.
2.2.6.
Mortgage-backed Securities (CRIs) and Housing Loan
Certificate (CCI)
The Company and its subsidiaries carry out the assignment
and/or securitization of receivables related to receivables with collateral of
completed projects and those still under construction. This securitization is
carried out through the issuance of the Housing Loan Certificate (“Cédula de
Crédito Imobiliário” or “CCI”), which is assigned to financial institutions.
When there is no right of recourse, this assignment is recorded as reduction of
accounts receivable. When there is right of recourse against the Company, the
assigned receivable is maintained in the statement of financial position and the
funds from assignment are classified into the account “Obligations assumed on
assignment of receivable”, until certificates are settled by customers.
In this situation, the transaction cost is recorded in
“financial expenses” in the statement of profit or loss for the year in which it
is made.
When there are financial guarantees, represented by the
acquisition of subordinated CRI, they are recorded on the statement of financial
position as “short-term investments” at the realizable value, which is
equivalent to fair value.
31
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.7.
Properties for sale
The Company and its subsidiaries acquire land for future
real estate developments, on payment conditions in current currency or through
barter transactions. Land acquired through barter transaction is stated at fair
value of the units to be delivered, and the revenue and cost are recognized
according to the criteria described in Note 2.2.2 (iii).
Properties are stated at construction cost, and decreased
by the provision when it exceeds its net realizable value. In the case of real
estate under construction, the portion in inventories corresponds to the cost
incurred for units that have not yet been sold. The incurred cost
comprises construction costs (materials, own or outsourced labor, and other
related items), and legal expenses relating to the acquisition of land and
projects, land costs, and financial charges which relate to a project over the
construction period.
The classification of land between current and non-current
assets is made by Management based on the expected period for launching real
estate ventures. Management periodically revises the estimates of real estate
ventures launches.
2.2.8.
Prepaid expenses
These are recognized in profit or loss as incurred using
the accrual basis of accounting.
2.2.9.
Land available for sale
Land available for sale is measured at the lower of the
carrying value and the fair value less costs to sell, and is classified as held
for sale if its carrying value is to be recovered through a sale transaction of
the land. This condition is considered fulfilled only when the sale is highly
probable, and the asset is available for immediate sale under its current
condition. Management shall commit to sell it within one year of the
classification date.
32
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.10.
Investments in ownership interests
Investments in ownership interest are recorded in the
Company balance using the equity method.
When the Company's equity in the losses of investees is
equal to or higher than the amount invested, the Company recognizes the residual
portion in net capital deficiency since it assumes obligations and makes
payments on behalf of these companies. For this purpose, the Company recognizes
a provision at an amount considered appropriate to meet the obligations of the
investee (Note 9).
2.2.11.
Property and equipment
Items of property and equipment are measured at cost, less
accumulated depreciation and/or any accumulated impairment losses, if
applicable.
An item of property and equipment is derecognized when no
future economic benefits are expected from its use or disposal. The gain or loss
arising from derecognition of an asset (calculated as the difference between the
net disposal proceeds and the carrying value of the asset) is recognized in
profit or loss upon derecognition.
Depreciation is calculated based on the straight-line
method considering the estimated useful lives of the assets (Note 10).
Expenditures incurred in the construction of sales stands,
display apartments and related furnishings are capitalized as property and
equipment of the Company and its subsidiaries. Depreciation of these assets
commences upon launch of the development and is recorded over the average term
the stand is in use, and is written-off when it is retired.
Property and equipment are subject to periodic assessments
of impairment.
2.2.12.
Intangible assets
(i)
Expenditures related to the acquisition and implementation
of computer systems and software licenses are recorded at acquisition cost, and
amortized on straight-line basis over a period of up to five years, and are
subject to periodic assessments of impairment of assets.
(ii)
The Company’s investments in subsidiaries include goodwill
when the acquisition cost exceeds the market value of net assets of the
acquiree.
33
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.12.
Intangible assets
--Continued
Impairment testing of goodwill is performed at least
annually, or whenever circumstances indicate an impairment loss.
2.2.13.
Payables for purchase of properties and advances from
customer due to barter
Payables for purchase of land are recognized at the
amounts corresponding to the contractual obligations assumed. Subsequently they
are measured at amortized cost, plus interest and charges proportional to the
incurred period (“pro rata” basis), net of present value adjustment.
The obligations related to barter transactions of land in
exchange for real estate units are stated at fair value of the units to be
delivered.
2.2.14.
Income tax and social contribution
(i)
Current income tax and social contribution
Current tax is the expected tax payable or receivable/to
be offset in relation to taxable profit for the year.
Income taxes in Brazil comprise income tax (25%) and
social contribution (9%), for entities on the standard profit regime, for which
the composite statutory rate is 34%. Deferred taxes for these entities are
recognized on all temporary tax differences at the reporting date between the
tax bases of assets and liabilities, and their carrying values.
As permitted by tax legislation, certain subsidiaries
opted for the presumed profit regime, a method under which the taxable profit is
calculated as a percentage of gross sales. For these companies, the income tax
is calculated on estimated profits at rate of 8% and 12% of gross revenues,
respectively, on which the rates of the respective tax and contribution are
levied.
As permitted by legislation, the development of certain
ventures are subject to the “afetação” regime, based on which the land and its
features where a real estate will be developed, as well as other binding assets,
rights and obligations, are separated from the developer’s assets, and comprise
the “patrimônio de afetação” (detached assets), intended for the completion of
the corresponding development, and delivery of real estate units to the
respective buyers. In addition, certain subsidiaries made the irrevocable option
for the Special Taxation Regime (RET), according to which the income tax and
social contribution are calculated at 1.92% on gross revenues (4% also
considering PIS and COFINS on revenues).
34
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.14.
Income tax and social contribution
--Continued
(ii)
Deferred income tax and social contribution
Deferred taxes are recognized in relation to tax losses
and temporary differences between the amount of assets and liabilities for
accounting purposes and the corresponding amounts used for tax purposes.
They are recognized to the extent that it is probable that
future taxable profit will be available to be used for offsetting deferred tax
assets, based on profit projections made using internal assumptions, and
considering future economic scenarios that make it possible their full or
partial use, upon the recognition of a provision for the non-realization of the
balance. The recognized amounts are periodically reviewed, and the impacts of
realization or settlement are reflected in compliance with tax legislation
provisions.
Deferred tax on accumulated tax losses does not have an
expiration date, however, they can only be offset against up to 30% of the
taxable profit for each year. Companies that opt for the presumed profit tax
regime cannot offset tax losses for a period in subsequent years.
Deferred tax assets and liabilities are stated at net
amount in the statement of financial position when there is the legal right and
intention to offset them when determining the current taxes, related to the same
legal entity and the same tax authority.
2.2.15.
Other current and non-current liabilities
These liabilities are stated at their known or estimated
amounts, plus, when applicable, adjustment for charges and inflation-indexed
variations through the reporting date of the statement of financial position,
which contra-entry is recorded in profit or loss. When applicable, current and
non-current liabilities are recorded at present value based on interest rates
that reflect the term, currency and risk of each transaction.
35
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.16.
Stock option plans
As approved by its Board of Directors, the Company offers
executives and employees share-based compensation plans (“Stock Options”), as
payments for services received.
The fair value of options is determined on the grant date,
considering that it is recognized as expense in profit or loss (as contra-entry
to equity), to the extent services are provided by employees and management
members.
In an equity-settled transaction, in which the plan is
modified, a minimum expense is recognized corresponding to the expense as if the
terms have not been changed. An additional expense is recognized for any
modification that increases the total fair value of granted options, or that
otherwise benefits the employee, measured on the modification date.
In case of cancellation of a stock option plan, this is
treated as if it had been granted on the cancellation date, and any unrecognized
plan expense is immediately recognized. However, if a new plan substitutes the
cancelled plan, and a substitute plan is designated on the grant date, the
cancelled plan and the new plan are treated as if they were a modification of
the original plan, as previously mentioned.
The Company annually revises its estimates of the amount
of options that shall be vested, considering the vesting conditions not related
to the market and the conditions based on length of service. The Company
recognizes the impact of the revision of the initial estimates, if any, in the
statement of profit or loss, as contra-entry to equity.
2.2.17.
Share-based payment – Phantom Shares
The Company has a cash-settled share-based payment plan (phantom shares) under
fixed terms and conditions. There is no expectation of the effective negotiation
of shares, once there shall be no issue and/or delivery of shares for settling
the plan.
According to CPC 10 (R1) – Share-based Payment, these amounts are recorded as a
reserve payable, with contra-entry in profit or loss for the year, based on the
fair value of the phantom shares granted, and during the vesting period. The
fair value of this liability is remeasured and adjusted every reporting period,
according to the change in the fair value of the benefit granted and
vesting.
36
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.18.
Other employee benefits
The salaries and benefits granted to the Company’s
employees and executives include fixed compensation (salaries, social security
contributions (INSS), Government Severance Indemnity Fund for Employees (FGTS),
vacation pay, and 13th monthly salary, among other) and variable compensation
such as profit sharing, bonus, and stock option-based payments. These benefits
are recorded in profit or loss for the year, under the account “General and
administrative expenses”, as they are incurred.
The bonus system operates with individual and corporate
targets, structured based on the efficiency of corporate goals, followed by the
business goals and, finally, individual goals.
The Company and its
subsidiaries do not offer private pension or retirement plans.
2.2.19.
Present value adjustment – assets and
liabilities
Assets and liabilities arising from long or short-term
transactions are adjusted to present value if significant.
In installment sales of not completed units, real estate
development entities present receivables adjusted for inflation, including the
installment related to the delivery of units, without accrual of interest, and
shall be discounted to present value, as the agreed inflation rates do not
include interest.
Borrowing costs and those related to finance the
construction of real estate ventures are capitalized. Therefore, the reversal of
the present value adjustment of an obligation related to these items is included
in the cost of real estate unit sold or in the inventories of properties for
sale, as the case may be, until the period of construction of the project is
completed.
Accordingly, certain assets and liabilities are adjusted
to present value based on discount rates that reflect the best estimate of the
value of the money over time.
The applied discount rate’s underlying economic basis and
assumption is the average rate of the financing and loans obtained by the
Company, net of the inflationary effect (Notes 5 and 12).
37
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.20.
Debenture and public offering costs
Transaction costs and premiums on issuance of securities
are accounted for as a direct reduction in the amount raised by the Company. In
addition, transaction costs and premiums on issuance of securities are amortized
over the terms of the instrument and the net balance is classified as reduction
in the respective transaction (Note
13).
2.2.21.
Borrowing costs
The borrowing costs directly attributable to ventures
during construction phase, and to land during the development of assets for sale
are capitalized as part of the cost of that asset during the construction
period, since there is borrowings outstanding, which are recognized in profit or
loss to the extent units are sold. All other borrowing costs are recorded as
expense when incurred. Borrowing costs comprise interest and other related costs
incurred, including those for raising finance.
Charges that are not recognized in profit or loss of
subsidiaries are recorded in the financial statements of the Company, in the
account investments in non-current assets (Note 9).
2.2.22.
Provisions
(i)
Provision for legal claims
The Company is party to various lawsuits and
administrative proceedings. Provisions are recognized for all demands related to
lawsuits which expectation of loss is considered probable.
Contingent liabilities for which losses are considered
possible are only disclosed in a note to financial statements, and those for
which losses are considered remote are neither accrued nor disclosed.
Contingent assets are recognized only when there are
secured guarantees or favorable final and unappealable court decisions.
Contingent assets with probable favorable decisions are only disclosed in the
notes. As of December 31, 2016 and 2015 there are no claims involving contingent
assets recorded in the statement of financial position of the
Company.
38
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.22.
Provisions
--Continued
(ii)
Allowance for doubtful account and cancelled
contracts
The Company annually reviews its assumptions related to
the establishment of its allowance for doubtful account and cancelled contracts,
taking into account the review of the histories of its current operations and
improvement of estimates.
The Company records an allowance for doubtful accounts and
cancelled contracts for customers whose installments are past due, based on the
assumptions made about each segment of the Company. This allowance is calculated
based on the percentage-of-completion of the construction work, a methodology
adopted for recognizing profit or loss for the year (Note 2.2.2).
(iii) Provision for penalties due to delay in
construction work
As contractually provided, the Company has the practice of
provisioning the charges payable to eligible customers for projects whose
delivery is delayed over 180 days, in line with the respective contractual
clause and history of payments.
(iv) Warranty provision
The Company and its
subsidiaries recognize a provision to cover expenditures for repairing
construction defects covered during the warranty period, based on the estimate
that considers the history of incurred expenditures adjusted by the future
expectation, except for the subsidiaries that operate with outsourced companies,
which are the direct guarantors of the construction services provided. The
warranty period is five years from the delivery of the venture.
(v) Provision for impairment of
non-financial assets
When there is evidence of impairment of asset, and the net
carrying value exceeds the recoverable amount, a provision for impairment is
recorded, adjusting the net carrying value to the recoverable value. Goodwill
and intangible assets with indefinite useful lives have the recovery of their
amounts tested annually, regardless whether there is any indication of
impairment, by comparing to the realization value measured by cash flows
discounted to present value, using a discount rate before taxes, which reflects
the weighted average cost of capital of the Company.
39
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.23.
Sales taxes
For companies under the taxable profit regime, levied on
non-cumulative basis, the PIS and COFINS contribution rates levied at 1.65% and
7.6%, respectively, on gross revenue and discounting certain credits determined
based on incurred costs and expenses. For companies that opt for the presumed
profit taxation regime, under the cumulative taxation regime, the PIS and COFINS
contribution rates levied at 0.65% and 3%, respectively, on gross revenue,
without discounts of credits in relation to incurred
costs and
expenses.
2.2.24.
Treasury shares
Own equity instruments that are repurchased (treasury
shares) are recognized at cost and charged to equity. No gain or loss is
recognized in the statement of profit or loss upon purchase, sale, issue, or
cancellation of the Company’s own equity instruments.
2.2.25.
Interest on equity and dividends
The proposal for distributing dividends and interest on
equity made by Management that is in the portion equivalent to the minimum
mandatory dividend is recorded as current liabilities in the heading “Dividends
payable”, as it is considered a legal obligation provided for in the By-laws of
the Company.
2.2.26.
Earnings (loss) per share – basic and
diluted
Basic earnings (loss) per share are calculated by dividing
the net income (loss) available (allocated) to ordinary shareholders by the
weighted average number of common shares outstanding over the period.
Diluted earnings per share are calculated in a similar
manner, except that the shares outstanding are increased, to include the
additional shares that would be outstanding, in case the shares with dilutive
potential attributable to stock option had been issued over the respective
periods, using the weighted average price of shares.
40
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of
financial statements and summary of significant accounting
policies
--Continued
2.2. Summary of significant accounting
policies
--Continued
2.2.27.
Non-current asset for sale and profit or loss from
discontinued operations
The Company classifies a non-current asset as held for
sale if its carrying value is recovered by sale transaction. In such case, the
asset or group of assets held for sale shall be available for immediate sale on
its current conditions, subject only to the terms that are usual and
common for sale of such assets held for sale. With this, the sale shall be
highly probable.
For a sale to be highly probable, Management shall be
committed to the plan to sell the asset, and shall have initiated an active
program to locate a buyer and complete the plan. In addition, the asset held for
sale shall also be effectively marketed for sale at a sales price that is
reasonable in relation to its current fair value. Also, the sale is expected to
be completed within one year of the classification date, unless events beyond
the control of the Company change such period.
The asset held for sale is measured at the lower of its
carrying value and the fair value less cost to sell. In case the carrying value
is higher than the fair value, an impairment loss is recognized in statement of
profit or loss for the year. Any reversal or gain will only be recorded within
the limit of the recognized loss.
The assets and liabilities of the group of discontinued
assets are shown in single lines in assets and liabilities. The profit or loss
of discontinued operations is presented as a single amount in the statement of
profit or loss, contemplating the total post-tax profit or loss of such
operations less any impairment-related loss. The net cash flows attributable to
operating, investing and financing activities of discontinued operations are
shown in Note 8.2.
According to Note 1, on December 14, 2016, the Company
disclosed a material fact informing about the signature of the disposal of up to
30% of the shares issued by Tenda. The completion of the transaction is subject
to the verification of certain conditions precedent, among which the decrease in
the Company’s capital with effect of distribution to its shareholders of the
shares corresponding to 50% of Tenda’s capital, as detailed in Note
8.2.
As required by the CPC 31 – Non-current Assets Held for
Sale and Discontinued Operations, for comparability purposes, the information of
the statement of profit or loss as of December 31, 2015 is being presented on
the same basis of the current year, and its retrospective effects are shown in
Note 2.3.
41
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
2.
Presentation of financial statements and summary of
significant accounting policies
--Continued
2.3. Restatement of Financial
Statements
As required by CPC 31 – Non-current Assets Held for Sale
and Discontinued Operations, for comparability purposes, the information of the
statements of profit or loss, cash flows and value added as of December 31, 2015
are being presented on the same basis of the current year, and its retrospective
effects are as follows:
|
Company
|
Consolidated
|
|
Balances originally reported as of
12/31/2015
|
Impact of the adoption of CPC 31 (Note 2.2.27)
|
Balances after the adoption of CPC
31
|
Balances originally reported as of
12/31/2015
|
Impact
of the adoption of CPC 31 (Note 2.2.27) (a)
|
Balances after the adoption of CPC
31
|
Statement of profit or loss
|
|
|
|
|
|
Net
operating revenue
|
1,107,262
|
-
|
1,107,262
|
2,294,319
|
(850,962)
|
1,443,357
|
Operating costs
|
(832,236)
|
-
|
(832,236)
|
(1,667,505)
|
605,584
|
(1,061,921)
|
Operating (expenses) income
|
(314,105)
|
-
|
(314,105)
|
(552,294)
|
216,684
|
(335,610)
|
Income
from equity method investments
|
155,343
|
(30,320)
|
125,023
|
41,766
|
(1,751)
|
40,015
|
Financial income (expenses)
|
(53,542)
|
-
|
(53,542)
|
(38,127)
|
(12,295)
|
(50,422)
|
Income
tax and social contribution
|
11,727
|
-
|
11,727
|
(7,180)
|
6,522
|
(658)
|
Non-controlling interests
|
-
|
-
|
-
|
(3,470)
|
-
|
(3,470)
|
Profit
or loss of discontinued operations (Note 8.2)
|
-
|
30,320
|
30,320
|
-
|
36,218
|
36,218
|
Net
income for the year
|
74,449
|
-
|
74,449
|
74,449
|
-
|
74,449
|
|
|
|
|
|
|
|
Cash
flow
|
|
|
|
|
|
|
Operating activities
|
99,549
|
-
|
99,549
|
91,748
|
98,310
|
190,058
|
Investing activities
|
199,464
|
-
|
199,464
|
361,466
|
(199,090)
|
162,376
|
Financing activities
|
(288,761)
|
-
|
(288,761)
|
(480,469)
|
140,742
|
(339,727)
|
|
|
|
|
|
|
|
Statement of value added
|
|
|
|
|
|
|
Net
value added produced by the entity
|
342,586
|
30,320
|
372,906
|
709,284
|
(190,166)
|
519,118
|
Value
added received on transfer
|
222,873
|
(30,320)
|
192,553
|
165,897
|
(48,576)
|
117,321
|
Total
value added to be distributed
|
565,459
|
-
|
565,459
|
875,181
|
(238,742)
|
636,439
|
(a)
Amounts after elimination of
consolidation items.
Additionally for purposes of improving the presentation of
the consolidated financial statements for the year ended December 31, 2015, the
Company reclassified the goodwill supporting future profitability of Intangible
assets (Note 11) into Investments (Note 9) in the amount of R$25,476, as it
refers to an investment in associate.
42
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
3. New standards, changes and interpretation
of standards issued and not yet adopted
·
IFRS 9 – Financial Instruments (CPC 48)
IFRS 9
replaces the guidance of IAS 39 (CPC 38) Financial Instruments: Recognition and
Measurement, and includes the new models for classification and measurement of
financial instruments, and measurement of expected credit losses for financial
and contractual assets, as well as new requirements for hedge accounting. The
standard maintains the existing guidance on the recognition and derecognition of
financial instruments of IAS 39. IFRS 9 is effective for years beginning on or
after January 1, 2018.
The
effective impact of the adoption of IFRS 9 on the Company’s financial statements
in 2018 cannot be reliably estimated, because it will depend on the financial
instruments that the Company holds and the economic conditions in 2018, as well
as the accounting decisions and judgments that the Company will make in the
future. The new standard will require Management to review its accounting
processes and internal controls related to the classification and measurement of
financial instruments, and these changes has not been completed yet.
·
IFRS 15 – Revenue from Contracts with Customers (CPC
47)
This
standard introduces new requirements for measurement and recognition of revenue
under both IFRS and U.S. GAAP. The IFRS 15 – Revenue from Contracts with
Customers, requires an entity to recognize the amount of revenue reflecting the
consideration it expects to receive in exchange for the control over such goods
or services. The new standard is going to replace most of the detailed guidance
on the recognition of revenue that currently exists under the IFRS, including
the CPC 30 (IAS 18) Revenue and CPC 17 (IAS 11) Construction Contracts, and U.S.
GAAP when adopted. For the specific case of the real estate development sector,
maintaining the POC revenue recognition method or the adoption of the method of
keys, for example, will result of the contractual analyses made by Management.
The Company has evaluated the effects of such standard and not yet concluded its
analyses on the impact of its adoption.
The new
standard is applicable beginning on or after January 1, 2018. The standard can
be applied retrospectively, adopting a cumulative effect approach.
43
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
3. New standards, changes and interpretation
of standards issued and not yet adopted
--Continued
·
IFRS 16 – Leases
This
standard replaces the previous lease standard, IAS 17/CPC 06 (R1) – Leases, and
related interpretation, and establishes the principles for the recognition,
measurement, presentation and disclosure of leases for both parties to a
contract, that is, the customers (lessees) and providers (lessors).
Lessees are required to recognize a lease liability reflecting the future lease
payments and a “right-of-use assets” for practically all lease contracts, except
certain short-term leases and contracts of low-value assets. For lessors, the
criteria for recognition and measurement of leases in the financial statements
are substantially maintained. This standard is effective beginning on January 1,
2019.
The Company
is evaluating the effects of the IFRS 16 on its financial statements and has not
yet concluded its analysis on the impact of their adoption.
The
entities that disclose their financial statements according to the accounting
practices adopted in Brazil are not permitted to early adopt such
IFRS.
There is no
other standard, changes to standards or interpretation issued and not yet
adopted that could, on the Management’s opinion, have significant impact arising
from their adoption on its financial statements.
44
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
4.
Cash and cash equivalents and short-term
investments
4.1.
Cash and cash equivalents
|
Company
|
Consolidated
|
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Cash and
banks
|
19,811
|
31,823
|
29,534
|
69,560
|
Securities
purchased under resale agreements (a)
|
-
|
12,221
|
-
|
13,080
|
|
|
|
|
|
Total cash and
cash equivalents
(Note 20.ii.a and
20.iii)
|
19,811
|
44,044
|
29,534
|
82,640
|
|
|
|
|
|
|
(a)
Securities purchased under resale agreement
comprise securities issued by Banks with a repurchase commitment by the bank,
and resale commitment by the customer, at rates and terms agreed upon, backed by
corporate or government securities, depending on the bank, and are registered
with the CETIP
.
As of December 31,
2016,
the securities purchased under resale
agreement include interest earned through the reporting date of the statement of
financial position,
ranging from 75% to 101.5%
of Interbank Deposit Certificates (CDI)
(from
75% to 100.5% of CDI in 2015).
All investments are carried out with what
management considers to be top tier financial institutions
.
4.2.
Short-term investments
|
Company
|
Consolidated
|
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Fixed-income funds
(a)
|
95,672
|
192,409
|
123,868
|
279,486
|
Government bonds
(LFT) (a)
|
3,762
|
10,081
|
6,018
|
18,631
|
Corporate
securities (LF/DPGE) (a)
|
19,845
|
51,835
|
31,742
|
95,801
|
Securities
purchased under resale agreements (Note 4.1 (a))
|
11,600
|
11,890
|
11,935
|
25,548
|
Bank certificates
of deposit
(a) / (b)
|
17,332
|
54,491
|
27,834
|
101,733
|
Restricted cash in
guarantee to loans (c)
|
10,669
|
20,515
|
10,669
|
31,633
|
Restricted credits
(d)
|
4,682
|
9,122
|
11,580
|
76,839
|
|
|
|
|
|
Total short-term
investments
(Note 20.i.d,
20.ii.a and 20.iii)
|
163,562
|
350,343
|
223,646
|
629,671
|
|
|
|
|
|
|
(a)
Structure of exclusive Investment funds aimed at earning
interest on funds in excess of the variation in the Interbank Deposit
Certificate (CDI). These funds have mandates of risks that are periodically
monitored and observe the internal investment policies in effect.
(b)
As of December 31, 2016, Bank Certificates of Deposit
(CDBs) include interest earned through the reporting date of the statement of
financial position, varying from 90% to 100.8% (from 90% to 107% in 2015) of
Interbank Deposit Certificates (CDI) rate. The CDBs earn an average income in
excess of those from securities purchased under resale agreements; however, the
Company invests in short term (up to 20 working days) through securities
purchased under resale agreements taking into account the exemption of IOF,
which is not granted in the case of CDBs.
(c)
Restricted cash in guarantee to loans are investments in
fixed-income funds, with appreciation of shares through investments only in
federal government bonds, indexed to fixed rates or to price indexes, and
pledged to guarantee a portion of the Company’s issuances. These amounts are
periodically released, when there is a surplus of guarantee in the issuance
and/or as provided for in the indenture. See further information in Notes 13 and
16(b).
(d)
Restricted credits are represented by onlending of the
funds from associate credit (“
crédito associativo
”), a type of government real estate financing, which are
in process of approval at the Caixa Econômica Federal (a Federally owned
Brazilian bank used for real estate financing purpose). These approvals are made
to the extent the contracts signed with customers at the financial institutions
are regularized, which the Company expect to be in up to 90 days.
45
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
5.
Trade accounts receivable of development and
services
|
Company
|
Consolidated
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Real estate
development and sales
|
769,743
|
1,001,351
|
1,019,359
|
1,895,795
|
( - ) Allowance
for doubtful accounts and cancelled contracts
|
(19,315)
|
(12,365)
|
(19,315)
|
(100,530)
|
( - ) Present
value adjustments
|
(21,235)
|
(21,527)
|
(26,816)
|
(31,052)
|
Services and
construction and other receivables
|
20,414
|
18,583
|
20,734
|
38,151
|
|
|
|
|
|
Total trade
accounts receivable of development and services
(Note
20.ii.a)
|
749,607
|
986,042
|
993,962
|
1,802,364
|
|
|
|
|
|
Current
portion
|
524,337
|
723,950
|
722,640
|
1,395,273
|
Non-current
portion
|
225,270
|
262,092
|
271,322
|
407,091
|
The current and non-current portions fall due as
follows
:
|
Company
|
Consolidated
|
Maturity
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Overdue:
|
|
|
|
|
Up to 90
days
|
46,235
|
116,229
|
64,830
|
207,838
|
From 91 to 180
days
|
41,705
|
14,568
|
45,442
|
50,985
|
Over 180 days
|
73,652
|
74,727
|
93,265
|
290,247
|
|
161,592
|
205,524
|
203,537
|
549,070
|
|
|
|
|
|
Falling
due:
|
|
|
|
|
2016
|
-
|
543,781
|
-
|
925,543
|
2017
|
383,477
|
148,568
|
544,292
|
286,138
|
2018
|
94,231
|
62,256
|
111,007
|
83,266
|
2019
|
97,079
|
20,254
|
120,367
|
34,518
|
2020
|
41,775
|
39,551
|
45,552
|
55,411
|
2021
onwards
|
12,003
|
-
|
15,338
|
-
|
|
628,565
|
814,410
|
836,556
|
1,384,876
|
|
|
|
|
|
( - ) Present
value adjustment
|
(21,235)
|
(21,527)
|
(26,816)
|
(31,052)
|
( - ) Allowance
for doubtful account and cancelled contracts
|
(19,315)
|
(12,365)
|
(19,315)
|
(100,530)
|
|
|
|
|
|
|
749,607
|
986,042
|
993,962
|
1,802,364
|
The balance of accounts receivable from units sold and not
yet completed is not fully reflected in the financial statements. Its recording
is limited to the portion of the recognized revenues net of the amounts already
received, according to the accounting practice mentioned in
Note 2.2.2(i)(b).
As of December 31, 2016, the amount received from
customers in excess of the recognized revenues totaled R$24,295 (R$19,337 in
2015) in the Company’s statements, and R$35,024 (R$39,743 in 2015) in the
consolidated financial statements, and are classified in the heading “Payables
for purchase of properties and advances from customers" (Note 17).
Accounts receivable from completed real estate units
financed by the Company are in general subject to IGP-M variation plus annual
interest of 12%, with revenue being recorded in profit or loss in the account
“Revenue from real estate development and sale, barter transactions and
construction services". The interest amounts recognized in the Company and
consolidated statements for the year ended December 31,
2016
totaled
R$23,802 (R$29,866 in 2015), and R$28,230 (R$40,089 in
2015),
respectively
.
46
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
5.
Trade accounts receivable of development and
services
--Continued
The balances of allowance for doubtful accounts and
cancelled contracts
are considered sufficient by the Company’s management to
cover the estimate of future losses on realization of the accounts
receivable
.
During the years ended
December 31,
2016 and 2015,
the changes in the
allowance for doubtful accounts and cancelled contracts are summarized as
follows
:
|
Company
|
|
2016
|
2015
|
|
|
|
Balance at
December 31
|
(12,365)
|
(5,616)
|
Additions (Note
22)
|
(8,438)
|
(6,749)
|
Write-offs /
Reversals (Note 22)
|
1,488
|
-
|
Balance at
December 31
|
(19,315)
|
(12,365)
|
|
|
|
|
|
Consolidated
|
|
Receivables
|
Properties for
sale (Note 6)
|
|
Net
|
|
|
|
|
|
Balance at
December 31, 2014
|
(109,893)
|
52,309
|
|
(57,584)
|
Additions
|
(6,749)
|
-
|
|
(6,749)
|
Write-offs
|
16,112
|
(30,545)
|
|
(14,433)
|
Balance at
December 31, 2015
|
(100,530)
|
21,764
|
|
(78,766)
|
Reclassification
to discontinued operations
|
88,165
|
(21,764)
|
|
66,401
|
Additions (Note
22)
|
(8,438)
|
-
|
|
(8,438)
|
Write-offs /
Reversals (Note 22)
|
1,488
|
-
|
|
1,488
|
Balance at
December 31,
2016
|
(19,315)
|
-
|
|
(19,315)
|
The reversal of the present value adjustment recognized in
revenue from real estate development for the year ended December 31,
2016
totaled
R$(292) (R$4,432 in 2015),
in the Company’s statements and
R$(3,762) (R$6,106 in 2015)
in the consolidated statements
.
Receivables from units not yet completed were measured at
present value using a discount rate determined according to the criteria
described in Note 2.2.2. The discount rate applied by the Company and its
subsidiaries was
9.00% for the year 2016 (6.78% in 2015),
net of Civil Construction National Index
(INCC)
.
The Company entered into the following Housing Loan
Certificate (CCI) transactions, which are aimed at the assignment by the
assignor to the assignee of a portfolio comprising select residential and
business real estate receivables performed and to be performed arising out of
Gafisa and its subsidiaries. The assigned portfolios, discounted to present
value, are recorded under the heading “obligations assumed on the assignment of
receivables”.
47
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
5.
Trade accounts receivable of development and
services
--Continued
|
Transaction date
|
Assigned
accounting portfolio
|
Portfolio discounted to present
value
|
Transaction balance
Company (Nota 14)
|
Transaction balance
Consolidated (Note
14)
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
|
|
|
(i)
|
Jun
27, 2011
|
203,915
|
171,694
|
1,208
|
3,164
|
2,148
|
4,775
|
(ii)
|
Dec
22, 2011
|
72,384
|
60,097
|
1,405
|
2,071
|
1,471
|
2,236
|
(iii)
|
Jul
06, 2012
|
18,207
|
13,917
|
68
|
368
|
68
|
368
|
(iv)
|
Nov
14, 2012
|
181,981
|
149,025
|
-
|
-
|
4,651
|
4,351
|
(v)
|
Dec
27, 2012
|
72,021
|
61,647
|
5,402
|
7,541
|
5,402
|
7,541
|
(vi)
|
Nov
29, 2013
|
24,149
|
19,564
|
1,666
|
2,858
|
4,307
|
6,362
|
(vii)
|
Nov
25, 2014
|
15,200
|
12,434
|
2,530
|
4,646
|
4,344
|
6,696
|
(viii)
|
Dec
03, 2015
|
32,192
|
24,469
|
8,005
|
13,053
|
15,988
|
24,558
|
(ix)
|
Mar
04, 2016
|
27,954
|
27,334
|
16,091
|
-
|
17,178
|
-
|
(x)
|
May
09, 2016
|
17,827
|
17,504
|
11,481
|
-
|
14,407
|
-
|
(xi)
|
Aug
16, 2016 (a)
|
15,418
|
14,943
|
9,164
|
-
|
9,164
|
-
|
(xii)
|
Dec
21, 2016
|
21,102
|
19,532
|
18,343
|
-
|
18,948
|
-
|
(a)
The consolidated balance of the transaction as of December
31, 2016 (Note 14) does not include the jointly-controlled entities, which are
accounted for using the equity method, according to CPCs 18(R2) and
19(R2).
In the transactions above, the Company and its
subsidiaries are jointly responsible until the time of the transfer of the
collateral to the securitization company.
For the items
(i) to (iii) and (viii) to (xii)
above, the Company was engaged to perform, among other
duties, the management of the receipt of receivables, the assignment’s
underlying assets, collection of defaulting customers, among other, according to
the criteria of each investor, being paid for these services.
The difference between the face value of the portfolio of
receivables and the amount discounted to present value was recorded in profit or
loss in the account “Discount related to Securitization Transaction” under
financial expenses
.
6.
Properties for sale
|
Company
|
Consolidated
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Land
|
667,805
|
775,814
|
823,516
|
1,443,460
|
( - ) Provision
for loss on realization of land
|
(43,505)
|
-
|
(43,505)
|
-
|
( - ) Provision
for loss on realization of inventory surplus (Note 9)
|
-
|
-
|
(62,343)
|
-
|
( - ) Adjustment
to present value
|
(8,089)
|
(9,639)
|
(8,781)
|
(16,771)
|
Property under
construction
|
328,783
|
545,701
|
509,049
|
857,619
|
Real estate cost
in the recognition of the provision for cancelled contracts (Note
5)
|
-
|
-
|
-
|
21,764
|
Completed
units
|
520,246
|
216,073
|
557,426
|
333,036
|
( - ) Provision
for loss on realization of properties under construction and completed
units
|
(59,663)
|
(5,437)
|
(59,663)
|
(8,491)
|
|
|
|
|
|
Total properties
for sale
|
1,405,577
|
1,522,512
|
1,715,699
|
2,630,617
|
|
|
|
|
|
Current
portion
|
870,201
|
1,135,137
|
1,122,724
|
1,880,377
|
Non-current
portion
|
535,376
|
387,375
|
592,975
|
750,240
|
48
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
6.
Properties for sale
--Continued
In the years ended December 31,
2016 and 2015,
the change in the provision for loss on realization is
summarized as follows
:
|
Company
|
Consolidated
|
Balance at
December 31,2014
|
(7,760)
|
(12,309)
|
Additions
|
-
|
(1,236)
|
Write-offs /
Reversals
|
2,323
|
5,054
|
Balance at
December 31,2015
|
(5,437)
|
(8,491)
|
Reclassification
to discontinued operations
|
-
|
3,054
|
Additions:
|
|
|
Land (Note
23)
|
(43,505)
|
(43,505)
|
Property under
construction and completed units (Note 23)
|
(54,226)
|
(54,226)
|
Inventory surplus
(Notes 9 and 23)
|
-
|
(62,343)
|
|
|
|
Balance at
December 31,2016
|
(103,168)
|
(165,511)
|
As disclosed in Note 12, the balance of capitalized
financial charges as of December 31, 2016 amounts to
R$329,651 (R$287,806 in 2015) in the Company’s statements
and R$343,231 (R$299,649 in 2015) in the consolidated statements.
7.
Other accounts receivable and others
|
Company
|
Consolidated
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Advances to
suppliers
|
1,758
|
1,582
|
2,567
|
7,102
|
Recoverable taxes
(IRRF, PIS, COFINS, among other)
|
15,708
|
20,712
|
25,901
|
66,289
|
Judicial deposit
(Note 16)
|
78,172
|
105,275
|
79,785
|
125,358
|
Repayment of
Tenda’s capital (Notes 8.2 and 31(ii))
|
100,000
|
-
|
-
|
-
|
Other
|
-
|
-
|
-
|
4,788
|
|
|
|
|
|
Total other
accounts receivable and others
|
195,638
|
127,569
|
108,253
|
203,537
|
|
|
|
|
|
Current
portion
|
39,280
|
46,621
|
49,336
|
120,657
|
Non-current
portion
|
156,358
|
80,948
|
58,917
|
82,880
|
8. A
ssets held for sale
8.1
Land available for sale
The Company, in line with its strategic direction, opted
to sell land not included in the Business Plan approved for
2017.
Likewise, it devised a specific plan for the sale of such
land. The carrying value of such land, adjusted to market value when applicable,
after the test for impairment, is as follows
:
|
Company
|
|
Consolidated
|
|
|
Cost
|
Provision for impairment
|
Net balance
|
Cost
|
Provision for impairment
|
|
Net balance
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2014
|
19,457
|
(13,385)
|
6,072
|
161,737
|
(51,174)
|
|
110,563
|
Additions
|
-
|
-
|
-
|
9,735
|
(19,152)
|
|
(9,417)
|
Transfer from (to)
properties for sale, net
|
-
|
-
|
-
|
(617)
|
-
|
|
(617)
|
Reversal/Write-offs
|
-
|
(1,705)
|
(1,705)
|
(23,182)
|
28,510
|
|
5,328
|
Balance at
December 31, 2015
|
19,457
|
(15,090)
|
4,367
|
147,673
|
(41,816)
|
|
105,857
|
Reclassification
to discontinued operations
|
-
|
-
|
-
|
(128,216)
|
26,726
|
|
(101,490)
|
Additions
|
2,269
|
(142)
|
2,127
|
2,269
|
(142)
|
|
2,127
|
Reversal/Write-offs
|
(9,490)
|
6,302
|
(3,188)
|
(9,490)
|
6,302
|
|
(3,188)
|
Balance at
December 31, 2016
|
12,236
|
(8,930)
|
3,306
|
12,236
|
(8,930)
|
|
3,306
|
|
|
|
|
|
|
|
|
|
49
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
8. A
ssets held for sale
--Continued
8.2 Assets held for sale and profit or loss of
discontinued operations
|
Company
|
Consolidated
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
|
|
|
|
|
Investment
portion
|
1,049,125
|
-
|
-
|
-
|
Impairment loss
(i)
|
(610,105)
|
|
(610,105)
|
|
Assets of
discontinued operations (ii)
|
-
|
-
|
1,799,116
|
-
|
Total assets of
discontinued operations
|
439,020
|
|
1,189,011
|
|
Repayment of
capital receivable (Note 7)
|
100,000
|
-
|
-
|
-
|
Total (Nota 9
(h))
|
539,020
|
|
1,189,011
|
|
|
|
|
|
|
Liabilities
related to the assets of discontinued operations(ii)
|
-
|
-
|
651,812
|
-
|
|
|
|
|
|
Impairment loss
(i)
|
(610,105)
|
-
|
(610,105)
|
-
|
Tenda’s profit or
loss (ii)
|
56,650
|
30,320
|
50,401
|
36,218
|
Profit or loss of
discontinued operations
|
(553,455)
|
30,320
|
(559,704)
|
36,218
|
(i) The measurement of
non-current asset held for sale at the lower of its carrying value and the fair
value less cost to sell, considering the price of R$8.13 per share, according to
the contract.
(ii) The amounts of the
assets of discontinued operations, liabilities related to discontinued
operations, and profit or loss of discontinued operations, net of the
eliminations related to intercompany transactions.
According to Note 1, on December 14, 2016, the Company
disclosed a material fact informing about the contract for purchase and sale of
shares with Jaguar Real Estate Partners LP, aimed at the disposal of up to 30%
of the shares issued by Tenda, with the latter being estimated at R$539,020, at
the price of R$8.13 per share.
The completion of the transaction is subject to the
fulfillment of certain conditions precedent, among which the following is worth
noting: (i) decrease in Tenda’s capital, with no cancellation of shares, and
repayment to the Company, its only shareholder, of R$ 100,000, indexed to the
country’s base rate (Selic), of which (a) R$ 50,000 shall be paid until December
31, 2018, and (b) the remaining balance shall be paid until December 31, 2019,
with possibility of paying it in advance due to the fulfillment of certain
targets set in the contract (Note 31(ii)); (ii) decrease in Company’s capital,
with the effect of the distribution to its shareholders of the shares
corresponding to 50% of Tenda’s capital (Note 31(i)(c)); and (iii) the
completion of the procedure related to the exercise, by Gafisa’s shareholders,
of the preemptive right to share acquisition, for the price per share set for
the transaction, having observed that in this context the Company will offer to
its shareholders 50% of the shares representing Tenda’s capital that it holds,
and not only the 30% which had been the subject of Jaguar’s offer, given its
decision to make the disposal of such shares, even in multiple
transactions.
For purposes of compliance with paragraph 38 of CPC 31 –
Non-current Asset Held for Sale and Discontinued Operations, the Company shows
below the main classes of assets and liabilities classified as held for sale of
the subsidiary Tenda as of December 31, 2016, after eliminations of
consolidation items, demonstrated as follows:
50
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
8. A
ssets held for sale
--Continued
8.2 Assets held for sale and profit or loss of
discontinued operations
--Continued
Assets
|
|
2016
|
|
Liabilities
|
2016
|
Current assets
|
|
|
|
Current liabilities
|
|
Cash and cash
equivalents
|
|
28,414
|
|
Loans and financing
|
41,333
|
Short-term investments
|
|
195,073
|
|
Payables for purchase of properties
and advance from customers
|
131,280
|
Trade accounts
receivable
|
|
250,474
|
|
Properties for sale
|
|
563,576
|
|
Other payables
|
150,663
|
Land for sale
|
|
75,227
|
|
|
|
Other current assets
|
|
104,606
|
|
|
|
Total current assets
|
|
1,217,370
|
|
Total current
liabilities
|
323,276
|
Non-current
|
|
|
|
Non-current liabilities
|
|
Trade accounts
receivable
|
|
176,673
|
|
Loans and financing
|
93,661
|
Properties for sale
|
|
211,711
|
|
Payables for purchase of properties
and advance from customers
|
104,343
|
Other non-current assets
|
|
60,556
|
|
Investments
|
|
84,798
|
|
Provisions for legal claims
|
44,951
|
Property and equity and intangible
assets
|
|
48,008
|
|
Other payables
|
85,581
|
Total non-current
assets
|
|
581,746
|
|
Total non-current
liabilities
|
328,536
|
|
|
|
|
|
|
Total assets
|
|
1,799,116
|
|
Total liabilities
|
651,812
|
|
|
|
|
|
|
The main lines of the
statement of profit or loss and cash flow of the subsidiary Tenda are as
follows:
Statement of profit or loss
|
|
2016
|
2015
|
|
Cash
flow
|
2016
|
2015
|
|
|
|
|
|
|
|
|
Net
operating revenue
|
|
1,052,710
|
850,962
|
|
Operating activities
|
137,055
|
(85,495)
|
Operating costs
|
|
(729,705)
|
(605,584)
|
|
Investing activities
|
4,997
|
222,288
|
Operating expenses, net
|
|
(216,973)
|
(201,849)
|
|
Financing activities
|
(135,291)
|
(176,755)
|
Depreciation and amortization
|
|
(12,298)
|
(14,835)
|
|
|
|
|
Income
from equity method investments
|
|
(5,456)
|
1,751
|
|
|
|
|
Financial income (expenses)
|
|
(20,043)
|
5,774
|
|
|
|
|
Income
tax and social contribution
|
|
(20,966)
|
(6,522)
|
|
|
|
|
|
|
47,269
|
29,697
|
|
|
|
|
Non-controlling interests
|
|
(9,381)
|
(623)
|
|
|
|
|
Net
income for the year
|
|
56,650
|
30,320
|
|
|
|
|
51
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
9.
Investments in subsidiaries and jointly controlled
investees
(i)
Ownership interests
(a)
Information on subsidiaries and jointly-controlled
investees
|
|
|
|
|
|
|
|
|
|
|
Company
|
Consolidated
|
|
|
Interest in capital
-
%
|
Total assets
|
Total liabilities
|
Equity and advance for future capital
increase
|
Profit (loss) for the year
|
Investments
|
Income from equity method
investments
|
Investments
|
Income from equity method
investments
|
Direct investees
|
|
2016
|
2015
|
2016
|
2016
|
2016
|
2015
|
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construtora Tenda
S/A
|
-
|
100%
|
100%
|
1,862,148
|
813,023
|
1,049,125
|
1,090,935
|
|
56,650
|
30,320
|
-
|
1,090,935
|
-
|
-
|
-
|
-
|
-
|
-
|
Alphaville
Urbanismo S.A (AUSA)
|
-
|
30%
|
30%
|
2,607,994
|
2,011,373
|
596,620
|
728,519
|
|
(108,298)
|
148,144
|
178,986
|
218,556
|
(32,490)
|
50,478
|
178,986
|
218,556
|
(32,490)
|
50,478
|
Gafisa
SPE 26 Ltda.
|
-
|
100%
|
100%
|
176,469
|
9,982
|
166,487
|
167,361
|
|
(873)
|
(585)
|
166,487
|
167,361
|
(873)
|
(585)
|
-
|
-
|
-
|
-
|
Gafisa SPE- 130
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
167,238
|
84,666
|
82,572
|
53,323
|
|
5,481
|
6,236
|
82,572
|
53,323
|
5,481
|
6,236
|
-
|
-
|
-
|
-
|
Gafisa SPE-116
Emp. Imob. Ltda.
|
(a)
|
50%
|
50%
|
193,080
|
72,286
|
120,794
|
103,372
|
|
17,421
|
22,864
|
60,397
|
51,686
|
8,711
|
11,432
|
60,397
|
51,686
|
8,711
|
11,432
|
Gafisa SPE-111
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
121,352
|
58,841
|
62,511
|
79,764
|
|
(17,253)
|
13,127
|
62,511
|
79,764
|
(17,253)
|
13,127
|
-
|
-
|
-
|
-
|
Maraville Gafsa SPE Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
119,892
|
62,513
|
57,379
|
48,883
|
|
8,495
|
1,442
|
57,379
|
48,883
|
8,495
|
1,442
|
-
|
-
|
-
|
-
|
Gafisa SPE-89
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
81,230
|
28,517
|
52,713
|
60,362
|
|
(2,949)
|
2,361
|
52,713
|
60,362
|
(2,949)
|
2,361
|
-
|
-
|
-
|
-
|
Gafisa SPE - 122
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
150,335
|
100,703
|
49,632
|
31,624
|
|
15,052
|
20,420
|
49,632
|
31,624
|
15,052
|
20,420
|
-
|
-
|
-
|
-
|
Gafisa SPE - 127
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
98,945
|
52,532
|
46,413
|
35,718
|
|
296
|
8,386
|
46,413
|
35,718
|
296
|
8,386
|
-
|
-
|
-
|
-
|
Gafisa SPE-51
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
54,269
|
8,420
|
45,849
|
46,825
|
|
(976)
|
581
|
45,849
|
46,825
|
(976)
|
581
|
-
|
-
|
-
|
-
|
Gafisa SPE - 121
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
91,660
|
46,692
|
44,968
|
46,897
|
|
(1,929)
|
20,150
|
44,968
|
46,897
|
(1,929)
|
20,150
|
-
|
-
|
-
|
-
|
Gafisa SPE 72
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
55,398
|
11,566
|
43,832
|
44,275
|
|
(443)
|
172
|
43,832
|
44,275
|
(443)
|
172
|
-
|
-
|
-
|
-
|
Gafisa SPE-110
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
44,916
|
4,738
|
40,178
|
40,879
|
|
(701)
|
(1,223)
|
40,178
|
40,879
|
(701)
|
(1,223)
|
-
|
-
|
-
|
-
|
Gafisa SPE - 120
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
42,185
|
4,665
|
37,520
|
36,621
|
|
899
|
6,384
|
37,520
|
36,621
|
899
|
6,384
|
-
|
-
|
-
|
-
|
Manhattan Square Res. 02 SPE Ltda
|
-
|
100%
|
100%
|
36,165
|
216
|
35,949
|
35,424
|
|
-
|
(1)
|
35,949
|
35,424
|
-
|
(1)
|
-
|
-
|
-
|
-
|
SPE Parque
Ecoville Emp. Imob. Ltda
|
-
|
100%
|
100%
|
90,170
|
55,424
|
34,746
|
34,984
|
|
(238)
|
(1,689)
|
34,746
|
34,984
|
(238)
|
(1,689)
|
-
|
-
|
-
|
-
|
Gafisa SPE-104
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
106,122
|
75,177
|
30,945
|
3,428
|
|
116
|
(898)
|
30,945
|
3,428
|
116
|
(898)
|
-
|
-
|
-
|
-
|
Gafisa SPE- 129
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
52,774
|
23,235
|
29,539
|
24,012
|
|
5,526
|
6,260
|
29,539
|
24,012
|
5,526
|
6,260
|
-
|
-
|
-
|
-
|
Gafisa SPE-107
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
32,563
|
3,034
|
29,529
|
29,442
|
|
87
|
248
|
29,529
|
29,442
|
87
|
248
|
-
|
-
|
-
|
-
|
Gafisa SPE-41
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
28,203
|
1,635
|
26,568
|
26,469
|
|
98
|
83
|
26,568
|
26,469
|
98
|
83
|
-
|
-
|
-
|
-
|
Verdes Pracas
Inco. Imob. SPE Ltda.
|
-
|
100%
|
100%
|
26,024
|
95
|
25,929
|
26,225
|
|
(296)
|
(5)
|
25,929
|
26,225
|
(296)
|
(5)
|
-
|
-
|
-
|
-
|
Gafisa e Ivo
Rizzo SPE-47 Em. Im.
Ltda.
|
(a)
|
80%
|
80%
|
32,657
|
506
|
32,151
|
31,749
|
|
6
|
(26)
|
25,721
|
25,399
|
5
|
(21)
|
25,721
|
25,399
|
5
|
(21)
|
Varandas Grand Park Em. Im. SPE Ltda
|
(a)
(c)
|
50%
|
50%
|
88,517
|
62,692
|
25,826
|
43,588
|
|
(20,707)
|
(2,197)
|
12,913
|
21,794
|
(9,877)
|
(1,704)
|
12,913
|
21,794
|
(9,877)
|
(1,704)
|
Gafisa SPE-112
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
29,643
|
7,809
|
21,834
|
21,736
|
|
97
|
(6)
|
21,834
|
21,736
|
97
|
(6)
|
-
|
-
|
-
|
-
|
Gafisa SPE-134
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
49,193
|
28,484
|
20,709
|
2,083
|
|
1,284
|
2,082
|
20,709
|
2,083
|
1,284
|
2,111
|
-
|
-
|
-
|
-
|
Gafisa SPE - 126
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
71,372
|
50,999
|
20,373
|
22,834
|
|
(2,461)
|
8,904
|
20,373
|
22,834
|
(2,461)
|
8,904
|
-
|
-
|
-
|
-
|
Sitio Jatiuca
Emp. Imob. SPE Ltda
|
(a)
|
50%
|
50%
|
42,000
|
3,816
|
38,184
|
41,470
|
|
3,116
|
3,680
|
19,092
|
20,735
|
1,558
|
1,840
|
19,092
|
20,735
|
1,558
|
1,840
|
Manhattan Square Com. 02 SPE Ltda
|
-
|
100%
|
100%
|
17,958
|
-
|
17,958
|
17,955
|
|
-
|
(1)
|
17,958
|
17,955
|
-
|
(1)
|
-
|
-
|
-
|
-
|
Gafisa SPE 46
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
30,852
|
12,940
|
17,912
|
17,740
|
|
173
|
274
|
17,912
|
17,740
|
173
|
274
|
-
|
-
|
-
|
-
|
Parque Arvores
Empr. Imob. Ltda.
|
(a)
(c)
|
50%
|
50%
|
32,038
|
5,423
|
26,615
|
33,378
|
|
(6,774)
|
1,684
|
13,308
|
16,689
|
(3,381)
|
1,724
|
13,308
|
16,689
|
(3,381)
|
1,724
|
Gafisa SPE 30
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
63,834
|
47,476
|
16,358
|
16,196
|
|
162
|
56
|
16,358
|
16,196
|
162
|
56
|
-
|
-
|
-
|
-
|
Edsp
88 Participações S.A.
|
-
|
100%
|
100%
|
30,884
|
14,816
|
16,068
|
17,454
|
|
(1,386)
|
(1,292)
|
16,068
|
17,454
|
(1,386)
|
(1,292)
|
-
|
-
|
-
|
-
|
Gafisa SPE-92
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
16,766
|
1,121
|
15,645
|
15,474
|
|
171
|
(73)
|
15,645
|
15,474
|
171
|
(73)
|
-
|
-
|
-
|
-
|
Gafisa SPE-106
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
16,662
|
1,056
|
15,606
|
15,623
|
|
(18)
|
(19)
|
15,606
|
15,623
|
(18)
|
(19)
|
-
|
-
|
-
|
-
|
Diodon
Participações Ltda
|
-
|
100%
|
100%
|
17,862
|
2,948
|
14,914
|
14,962
|
|
(49)
|
(118)
|
14,914
|
14,962
|
(49)
|
(118)
|
-
|
-
|
-
|
-
|
Gafisa SPE 71
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
16,529
|
2,766
|
13,763
|
14,060
|
|
(297)
|
(183)
|
13,763
|
14,060
|
(297)
|
(183)
|
-
|
-
|
-
|
-
|
Gafisa SPE 33
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
15,170
|
1,611
|
13,559
|
13,385
|
|
175
|
(883)
|
13,559
|
13,385
|
175
|
(883)
|
-
|
-
|
-
|
-
|
Gafisa SPE - 123
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
94,132
|
82,163
|
11,969
|
15,683
|
|
(3,713)
|
(7,918)
|
11,969
|
15,683
|
(3,713)
|
(7,918)
|
-
|
-
|
-
|
-
|
Gafisa SPE 65
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
20,061
|
8,345
|
11,716
|
11,602
|
|
115
|
112
|
11,716
|
11,602
|
115
|
112
|
-
|
-
|
-
|
-
|
Blue I
SPE - Plan., Pr.,Inc.Venda Ltda.
|
-
|
100%
|
100%
|
11,568
|
599
|
10,969
|
11,051
|
|
(82)
|
189
|
10,969
|
11,051
|
(82)
|
189
|
-
|
-
|
-
|
-
|
Gafisa SPE- 132
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
55,415
|
44,559
|
10,856
|
-
|
|
(3,253)
|
-
|
10,856
|
-
|
(3,253)
|
(27)
|
-
|
-
|
-
|
-
|
Fit 13
Spe Empr. Imob. Ltda.
|
(b)
|
50%
|
50%
|
21,544
|
653
|
20,892
|
34,487
|
|
(13,596)
|
3,010
|
10,446
|
17,244
|
(6,798)
|
1,505
|
10,446
|
17,840
|
-
|
-
|
Atins Emp. Imob.s
Ltda.
|
(a)
|
50%
|
50%
|
25,316
|
7,114
|
18,202
|
15,777
|
|
58
|
(183)
|
9,101
|
7,888
|
29
|
(92)
|
9,101
|
7,888
|
29
|
(92)
|
Gafisa SPE 36
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
26,039
|
17,109
|
8,930
|
8,857
|
|
73
|
851
|
8,930
|
8,857
|
73
|
851
|
-
|
-
|
-
|
-
|
52
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
9.
Investments in subsidiaries and jointly controlled
investees
--Continued
(i)
Ownership interest
--Continued
(a)
Information on subsidiaries and jointly-controlled
investees
--Continued
|
|
|
|
|
|
|
|
|
|
|
Company
|
Consolidated
|
|
|
Interest in capital
-
%
|
Total assets
|
Total liabilities
|
Equity and advance for future capital
increase
|
Profit (loss) for the year
|
Investments
|
Income from equity method
investments
|
Investments
|
Income from equity method
investments
|
Direct investees
|
|
2016
|
2015
|
2016
|
2016
|
2016
|
2015
|
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gafisa SPE-81
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
85,777
|
77,059
|
8,718
|
8,978
|
|
(260)
|
2,946
|
8,718
|
8,978
|
(260)
|
2,946
|
-
|
-
|
-
|
-
|
Parque Aguas
Empr. Imob. Ltda.
|
(a)(c)
|
50%
|
50%
|
14,685
|
3,368
|
11,317
|
15,263
|
|
(3,558)
|
805
|
5,658
|
7,632
|
(1,973)
|
388
|
5,658
|
7,632
|
(1,973)
|
388
|
Città
Ville SPE Emp. Imob. Ltda.
|
(b)
|
50%
|
50%
|
18,363
|
2,031
|
16,332
|
22,195
|
|
(5,864)
|
1,071
|
8,166
|
11,098
|
(2,932)
|
536
|
8,166
|
-
|
-
|
-
|
Gafisa SPE-38
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
8,014
|
60
|
7,954
|
7,967
|
|
(13)
|
(4)
|
7,954
|
7,967
|
(13)
|
(4)
|
-
|
-
|
-
|
-
|
Gafisa SPE-77
Emp. Imob. Ltda.
|
-
|
65%
|
65%
|
21,056
|
9,773
|
11,283
|
9,552
|
|
5,981
|
1,401
|
7,334
|
6,209
|
3,979
|
2,283
|
-
|
-
|
-
|
-
|
Gafisa SPE-109
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
8,993
|
1,838
|
7,155
|
7,189
|
|
(34)
|
(103)
|
7,155
|
7,189
|
(34)
|
(103)
|
-
|
-
|
-
|
-
|
Gafisa SPE-37
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
7,846
|
1,094
|
6,752
|
6,727
|
|
25
|
34
|
6,752
|
6,727
|
25
|
34
|
-
|
-
|
-
|
-
|
Gafisa SPE-90
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
11,375
|
4,903
|
6,472
|
6,477
|
|
(4)
|
(60)
|
6,472
|
6,477
|
(4)
|
(60)
|
-
|
-
|
-
|
-
|
Gafisa Vendas
Interm. Imobiliaria Ltda
|
-
|
100%
|
100%
|
41,685
|
35,890
|
5,795
|
-
|
|
(10,505)
|
-
|
5,795
|
-
|
(10,505)
|
-
|
-
|
-
|
-
|
-
|
Gafisa SPE-113
Emp. Imob. Ltda.
|
(a)
|
60%
|
60%
|
59,616
|
50,178
|
9,438
|
7,521
|
|
(11,679)
|
(9,600)
|
5,663
|
4,513
|
(7,007)
|
(5,760)
|
5,663
|
4,513
|
(7,007)
|
(5,760)
|
Performance Gafisa General Severiano
Ltda
|
(a)
|
50%
|
0%
|
27,074
|
16,272
|
10,802
|
-
|
|
(172)
|
-
|
5,401
|
-
|
(86)
|
-
|
5,401
|
-
|
(86)
|
-
|
Gafisa SPE-87
Emp. Imob. Ltda.
|
-
|
100%
|
100%
|
23,605
|
18,351
|
5,254
|
5,393
|
|
(139)
|
2,278
|
5,254
|
5,393
|
(139)
|
2,278
|
-
|
-
|
-
|
-
|
OCPC01
adjustment – capitalized interest
|
(d)
|
|
|
-
|
-
|
-
|
-
|
|
-
|
-
|
34,111
|
31,675
|
2,436
|
4,438
|
-
|
-
|
-
|
-
|
Other
(*)
|
-
|
|
|
329,218
|
219,142
|
110,076
|
133,964
|
|
(17,226)
|
(4,874)
|
67,923
|
95,098
|
(6,451)
|
(7,037)
|
27,615
|
33,514
|
(4,991)
|
(4,255)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Saí
Amarela S.A.
|
(a)
|
50%
|
50%
|
2,061
|
119
|
1,942
|
2,314
|
|
(310)
|
(102)
|
-
|
-
|
-
|
-
|
971
|
1,126
|
(155)
|
(51)
|
Gafisa SPE-51
Emp. Imob. Ltda.
|
(a)
|
60%
|
60%
|
1,413
|
118
|
1,295
|
1,662
|
|
330
|
869
|
-
|
-
|
-
|
-
|
777
|
997
|
198
|
521
|
Other
(*)
|
|
|
|
248
|
78
|
170
|
466
|
|
358
|
(704)
|
-
|
-
|
-
|
-
|
14,367
|
73
|
175
|
(270)
|
Indirect jointly-controlled investees -
Gafisa
|
|
|
|
3,722
|
315
|
3,407
|
4,442
|
|
378
|
63
|
-
|
-
|
-
|
-
|
16,115
|
2,196
|
218
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acedio SPE Emp.
Imob. Ltda.
|
-
|
55%
|
55%
|
5,393
|
4,030
|
1,363
|
676
|
|
687
|
(1,973)
|
-
|
-
|
-
|
-
|
-
|
372
|
-
|
-
|
Maria Inês SPE
Emp. Imob.
Ltda.
|
-
|
60%
|
60%
|
21,058
|
42
|
21,016
|
21,050
|
|
(10)
|
137
|
-
|
-
|
-
|
-
|
-
|
12,630
|
-
|
-
|
Fit 02
SPE Emp. Imob. Ltda.
|
-
|
60%
|
60%
|
12,301
|
1
|
12,300
|
9,882
|
|
2,715
|
(2,060)
|
-
|
-
|
-
|
-
|
-
|
5,929
|
-
|
-
|
Fit Jardim
Botânico SPE Emp.
Imob. Ltda.
|
-
|
55%
|
55%
|
8,812
|
233
|
8,579
|
9,999
|
|
(1,521)
|
(5,639)
|
-
|
-
|
-
|
-
|
-
|
5,554
|
-
|
-
|
Fit 11
SPE Emp. Imob. Ltda.
|
-
|
70%
|
70%
|
33,339
|
4,384
|
28,955
|
32,062
|
|
(526)
|
253
|
-
|
-
|
-
|
-
|
-
|
22,443
|
-
|
-
|
Fit 31
SPE Emp. Imob. Ltda.
|
-
|
70%
|
70%
|
15,074
|
654
|
14,420
|
16,455
|
|
(1,869)
|
(2,529)
|
-
|
-
|
-
|
-
|
-
|
11,518
|
-
|
-
|
Fit 34
SPE Emp. Imob. Ltda.
|
-
|
70%
|
70%
|
35,719
|
1,332
|
34,387
|
33,634
|
|
768
|
2,131
|
-
|
-
|
-
|
-
|
-
|
23,544
|
-
|
-
|
Fit 03
SPE Emp. Imob. Ltda.
|
-
|
80%
|
80%
|
11,691
|
310
|
11,381
|
11,404
|
|
(23)
|
597
|
-
|
-
|
-
|
-
|
-
|
9,123
|
-
|
-
|
Imbuí I SPE Emp.
Imob.
Ltda.
|
-
|
50%
|
50%
|
9,263
|
294
|
8,968
|
8,723
|
|
246
|
(90)
|
-
|
-
|
-
|
-
|
-
|
4,362
|
-
|
-
|
Città Ipitanga
SPE Emp. Imob.
Ltda.
|
-
|
50%
|
50%
|
12,705
|
876
|
11,828
|
11,761
|
|
69
|
(2)
|
-
|
-
|
-
|
-
|
-
|
5,880
|
-
|
-
|
Grand
Park - Pq. dos Pássaros SPE Emp. Imob. Ltda.
|
-
|
50%
|
50%
|
39,608
|
2,219
|
37,389
|
22,466
|
|
2,146
|
(3,997)
|
-
|
-
|
-
|
-
|
-
|
11,233
|
-
|
-
|
Citta Itapua Emp.
Imob. SPE Ltda.
|
-
|
50%
|
50%
|
18,639
|
1,588
|
17,052
|
18,015
|
|
(964)
|
8,463
|
-
|
-
|
-
|
-
|
-
|
9,007
|
-
|
-
|
SPE
Franere Gafisa 08 Emp. Imob. LTDA.
|
-
|
50%
|
50%
|
54,920
|
6,089
|
48,832
|
47,831
|
|
527
|
18,180
|
-
|
-
|
-
|
-
|
-
|
23,916
|
-
|
-
|
Fit 13
SPE Emp. Imob. Ltda.
|
(b)
|
50%
|
50%
|
21,544
|
653
|
20,892
|
34,487
|
|
(13,596)
|
3,010
|
-
|
-
|
-
|
-
|
-
|
17,840
|
-
|
-
|
Other
(*)
|
-
|
|
|
97,349
|
2,409
|
94,940
|
69,986
|
|
(3)
|
41,128
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Indirect jointly-controlled investees -
Tenda
|
-
|
|
|
397,415
|
25,114
|
372,302
|
348,431
|
|
(11,354)
|
57,609
|
-
|
-
|
-
|
-
|
-
|
163,351
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
|
8,123,588
|
4,399,726
|
3,723,864
|
3,816,584
|
|
(125,165)
|
342,286
|
1,714,718
|
2,779,093
|
(63,824)
|
148,527
|
398,582
|
591,793
|
(49,284)
|
54,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill on
acquisition of subsidiaries
|
|
|
|
|
|
|
|
|
|
|
25,476
|
25,476
|
-
|
-
|
25,476
|
25,476
|
-
|
-
|
Goodwill based on inventory surplus
|
(e)
|
|
|
|
|
|
|
|
|
|
462
|
62,343
|
-
|
-
|
-
|
-
|
-
|
-
|
Goodwill on remeasurement of investment in
associate
|
(f)
|
|
|
|
|
|
|
|
|
|
375,853
|
375,853
|
-
|
-
|
375,853
|
375,853
|
-
|
-
|
Total
investments
|
|
|
|
|
|
|
|
|
|
|
2,116,509
|
3,242,765
|
(63,824)
|
148,527
|
799,911
|
993,122
|
(49,284)
|
54,230
|
(*)Includes companies with investment balances
below
R$ 5,000.
53
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
9.
Investments in subsidiaries and jointly controlled
investees
--Continued
(i)
Ownership interest
--Continued
(a)
Information on subsidiaries and jointly-controlled
investees
--Continued
|
|
|
|
|
|
|
|
|
|
|
Company
|
Consolidated
|
|
|
Interest
in capital -
%
|
Total assets
|
Total liabilities
|
Equity and advance for future capital
increase
|
Profit (loss) for the year
|
Investments
|
Income from equity method
investments
|
Investments
|
Income from equity method
investments
|
Direct investees
|
|
2016
|
2015
|
2016
|
2016
|
2016
|
2015
|
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
Provision for net capital deficiency
(g):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gafisa SPE 69 Emp. Imob.
Ltda.
|
|
100%
|
100%
|
819
|
1,089
|
(270)
|
(1,526)
|
|
(349)
|
(1,355)
|
(270)
|
(1,526)
|
(349)
|
(1,355)
|
-
|
-
|
-
|
-
|
Manhattan
Comercial 01 SPE Ltda.
|
(h)
|
50%
|
50%
|
-
|
-
|
-
|
(7,887)
|
|
-
|
(9,408)
|
-
|
(4,350)
|
-
|
(4,704)
|
-
|
(4,350)
|
-
|
(4,704)
|
Manhattan
Residencial 01 SPE Ltda.
|
(h)
|
50%
|
50%
|
-
|
-
|
-
|
(89,319)
|
|
-
|
(21,261)
|
-
|
(44,627)
|
-
|
(10,631)
|
-
|
(44,627)
|
-
|
(10,631)
|
Other
(*)
|
|
|
|
7,546
|
7,618
|
(73)
|
(9,270)
|
|
(94)
|
(7,236)
|
(73)
|
(9,224)
|
272
|
(6,814)
|
-
|
(5,424)
|
952
|
1,120
|
Total
provision for net capital deficiency
|
|
|
|
8,365
|
8,707
|
(343)
|
(108,002)
|
|
(443)
|
(39,260)
|
(343)
|
(59,727)
|
(77)
|
(23,504)
|
-
|
(54,401)
|
952
|
(14,215)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Income from
equity method investments
|
|
|
|
|
|
|
|
|
|
|
|
|
(63,901)
|
125,023
|
|
|
(48,332)
|
40,015
|
(a)
Jointly-controlled entities.
(b)
Entity jointly controlled with Tenda
associates.
(c)
The Company recorded expense of R$354 in Income from
equity method investments for 2016 related to the recognition, by
jointly-controlled entities, of adjustments in prior years, in accordance with
the ICPC09 (R2) – Individual, Separate, and Consolidated Financial Statements
and the Equity Method of Accounting.
(d)
Charges of the Company not appropriated to the profit or
loss of subsidiaries, as required by paragraph 6 of OCPC01.
(e)
The test of recovery of goodwill based on the inventory
surplus of the Company resulted in requirement for impairment at R$ 62,343 in
the year ended December 31, 2016 (Note 6). The main adopted assumptions are
detailed below.
(f)
Amount related to the goodwill resulting of the
remeasurement of the portion of the remaining investment of 30% in the associate
AUSA, in the amount of R$375,853, arising from the sale of control over the
entity. At December 31, 2016 and 2015, the impairment test, which is performed
annually based on the estimate of future profitability, or when circumstances
indicate impairment of carrying value, did not identify the need for recognizing
an impairment provision for loss on realization. The main assumptions adopted
for determining the recoverable amount of the remaining investment of AUSA are
detailed below.
(g)
The provision for net capital deficiency is recorded in
“Other payables” (Note 15).
(h)
In the year ended December 31, 2016, there was increase in
capital, paid-in with the balance of loan amounting to R$50,500 (Note 21
(a)).
(b)
Change in investments
|
|
|
|
|
|
Company
|
Consolidated
|
|
|
|
|
Balance at
December 31, 2015
|
|
3,242,765
|
993,122
|
Income
from equity method investment
|
|
(63,824)
|
(49,284)
|
income
from equity method investment of discontinued operations
|
|
56,651
|
-
|
Payment of (decrease in) capital
|
|
129,065
|
5,445
|
Payment of Loan receivable (h)
|
|
50,500
|
50,500
|
Transfer from provision for net capital deficiency
to Investment (h)
|
|
(50,342)
|
(45,726)
|
Acquisition/Sale of Interest
|
|
(9,980)
|
(10,442)
|
Dividends receivable
|
|
(21,483)
|
(16,009)
|
Usufruct of shares (Note 15)
|
|
(4,700)
|
-
|
Write-off of goodwill based on inventory
surplus
|
|
(62,343)
|
-
|
Asset
of discontinued operations (Note 8.2)
|
|
(539,020)
|
(120,527)
|
Impairment of asset of discontinued operations (Note
8.2)
|
|
(610,105)
|
-
|
Other
investments
|
|
(675)
|
(7,168)
|
Balance at
December 31, 2016
|
|
2,116,509
|
799,911
|
54
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
9
.
Investments in
ownership interests
--Continued
The presented goodwill arises from the difference between
the consideration and the equity of acquirees, calculated on acquisition date,
and is based on the expectation of future economic benefits
.
The Company evaluated
the recovery of the carrying value of goodwill using the “value in use” concept,
applying discounted cash flow models of the cash-generating units. The process
for determining the value in use involves the use of assumptions, judgments and
estimates relating to cash flows, such as growth rate of revenues, costs and
expenses, estimates of investment and future working capital, and discount
rates. The assumptions relating to projections of growth, cash flow and future
cash flows are based on the Company’s business plan, approved by the Management,
as well as on comparable market data, and represent the Management’s best
estimate of the economic conditions that will prevail during the economic life
of the different cash-generating units, group of assets that provides the
generation of cash flows. The future cash flows were discounted based on the
rate representative of the cost of capital. Consistent with the economic
valuation techniques, the evaluation of the value in use is made for a five-year
period, and after such period, considering the perpetuity of assumptions in view
of the capacity for indefinite business continuity. The main assumptions used in
the estimate of value in use are the following: (a) revenue – revenues were
projected between 2017 and 2021 considering the growth in sales and client base
of the different cash-generating units; (b) Operating costs and expenses – costs
and expenses were projected in line with the Company’s historical performance,
as well as the historical growth of revenues. The key assumptions were based on
the Company’s historical performance over the past five years, and on reasonable
macroeconomic assumptions, and supported by the financial market projections.
10
.
Property and equipment
|
|
Company
|
Consolidated
|
|
|
Type
|
2015
|
Addition
|
Write-off
|
100% depreciated items
|
2016
|
2015
|
Addition
|
Write-off
|
100% depreciated items
|
Reclassification discontinued
operations
|
2016
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
Hardware
|
14,018
|
3,409
|
(4,311)
|
(5)
|
13,111
|
28,143
|
3,408
|
(4,311)
|
(518)
|
(13,582)
|
13,140
|
Leasehold
improvements and installations
|
9,367
|
451
|
-
|
(3,557)
|
6,261
|
17,449
|
686
|
-
|
(3,557)
|
(8,020)
|
6,558
|
Furniture and
fixtures
|
675
|
-
|
-
|
-
|
675
|
5,503
|
-
|
-
|
(210)
|
(4,315)
|
978
|
Machinery and
equipment
|
2,640
|
-
|
-
|
-
|
2,640
|
4,039
|
-
|
-
|
-
|
(1,400)
|
2,639
|
Molds
|
-
|
-
|
-
|
-
|
-
|
13,067
|
-
|
-
|
-
|
(13,067)
|
-
|
Sales
stands
|
12,041
|
8,585
|
(1,510)
|
(6,589)
|
12,527
|
15,724
|
10,799
|
(2,730)
|
(6,220)
|
(1,599)
|
15,974
|
|
38,741
|
12,445
|
(5,821)
|
(10,151)
|
35,214
|
83,925
|
14,893
|
(7,041)
|
(10,505)
|
(41,983)
|
39,289
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
depreciation
|
|
|
|
|
|
|
|
|
|
|
|
Hardware
|
(7,191)
|
(2,641)
|
4,311
|
5
|
(5,516)
|
(13,474)
|
(2,722)
|
4,311
|
518
|
5,886
|
(5,481)
|
Leasehold
improvements and installations
|
(4,838)
|
(1,622)
|
-
|
3,557
|
(2,903)
|
(7,918)
|
(1,836)
|
-
|
3,557
|
3,069
|
(3,128)
|
Furniture and
fixtures
|
(282)
|
(68)
|
-
|
-
|
(350)
|
(3,664)
|
(110)
|
-
|
210
|
2,952
|
(612)
|
Machinery and
equipment
|
(1,344)
|
(264)
|
-
|
-
|
(1,608)
|
(1,898)
|
(264)
|
-
|
-
|
554
|
(1,608)
|
Molds
|
-
|
-
|
-
|
-
|
-
|
(3,379)
|
-
|
-
|
-
|
3,379
|
-
|
Sales
stands
|
(2,267)
|
(8,955)
|
1,516
|
6,589
|
(3,117)
|
(4,416)
|
(10,103)
|
2,302
|
6,220
|
1,514
|
(4,483)
|
|
(15,922)
|
(13,550)
|
5,827
|
10,151
|
(13,494)
|
(34,749)
|
(15,035)
|
6,613
|
10,505
|
17,354
|
(15,312)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property and
equipment
|
22,819
|
(1,105)
|
6
|
-
|
21,720
|
49,176
|
(142)
|
(428)
|
-
|
(24,629)
|
23,977
|
55
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
10
.
Property and equipment
--Continued
The following useful
lives and rates are used for calculating depreciation:
|
Useful life
|
Annual depreciation rate - %
|
Leasehold improvements and
installations
|
4 years
|
25
|
Furniture and fixture
|
10 years
|
10
|
Hardware
|
5 years
|
20
|
Machinery and
equipment
|
10 years
|
10
|
Molds
|
5 years
|
20
|
Sales
stands
|
1 year
|
100
|
The residual value, useful life, and depreciation methods
are reviewed at the end of each year; no change having been made in relation to
the information for the prior year.
Property and equipment are subject to periodic analysis of
impairment. At December 31, 2016 and 2015 there was no indication of impairment
of property and equipment.
11. Intangible
assets
|
|
Company
|
|
2015
|
|
|
|
2016
|
|
Balance
|
Addition
|
Write-down / amortization
|
100% amortized items
|
Balance
|
|
|
|
|
|
|
Software –
Cost
|
75,409
|
7,820
|
(614)
|
(17,325)
|
65,290
|
Software –
Depreciation
|
(47,187)
|
-
|
(12,958)
|
17,325
|
(42,820)
|
Other
|
5,089
|
6,070
|
(5,851)
|
-
|
5,308
|
Total intangible
assets
|
33,311
|
13,890
|
(19,423)
|
-
|
27,778
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
2015
|
|
|
|
|
2016
|
|
Balance
|
Addition
|
Write-down / amortization
|
100% amortized items
|
Reclassification discontinued
operations
|
Balance
|
|
|
|
|
|
|
|
Software –
Cost
|
110,559
|
8,261
|
(625)
|
(17,408)
|
(34,774)
|
66,023
|
Software –
Depreciation
|
(65,408)
|
-
|
(13,012)
|
17,408
|
17,915
|
(43,102)
|
Other
|
6,715
|
6,070
|
(5,845)
|
-
|
(1,628)
|
5,307
|
Total
i
ntangible assets
|
51,866
|
14,331
|
(19,482)
|
-
|
(18,487)
|
28,228
|
Other
intangible assets
comprise expenditures on the acquisition and
implementation of information systems and software licenses, amortized over the
average term of five years
(20% per year
).
The test of recovery of
the intangible assets of the Company resulted in the need for recognizing a
provision for impairment for the year ended December 31, 2016 in the amount of
R$614 (zero in 2015), related to the Company’s software.
56
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
12.
Loans and financing
|
|
|
Company
|
Consolidated
|
|
Type
|
Maturity
|
Annual interest rate
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
|
|
National Housing
System - SFH /SFI (i)
|
February 2017 to April 2021
|
8.30% to 14.00% +
TR
129% of
CDI
|
842,678
|
1,014,092
|
1,022,038
|
1,161,707
|
Certificate of
Bank Credit - CCB (ii)
|
June 2017 to September 2019
|
125% of
CDI
0.59%/ 3%/ 3.95/
4.25%+CDI
INCC
|
164,252
|
124,568
|
164,262
|
131,128
|
|
|
|
|
|
|
Total loans and
financing (Note 20.i.d, 20.ii.a and 20.iii)
|
1,006,930
|
1,138,660
|
1,186,300
|
1,292,835
|
|
|
|
|
|
|
|
Current
|
|
|
574,733
|
595,817
|
604,795
|
672,365
|
Current –
reclassification for non-fulfillment of covenant
|
|
65,000
|
-
|
65,000
|
-
|
Current
portion
|
|
|
639,733
|
595,817
|
669,795
|
672,365
|
Non-current
portion
|
|
|
367,197
|
542,843
|
516,505
|
620,470
|
|
|
|
|
|
|
|
|
(i)
The SFH financing is used for covering costs related to
the development of real estate ventures of the Company and its subsidiaries, and
backed by secured guarantee by the first-grade mortgage of real estate ventures
and the fiduciary assignment or pledge of receivables.
(ii)
In the year ended December 31, 2016, the Company made
payments in the total amount of R$48,827, of which R$15,122 related to principal
and R$33,705 related to the interest payable. Additionally, on September 28,
2016, the Company entered into a CCB transaction in the amount of R$65,000, with
final maturity on September 27, 2019, amortization of principal in five equal
quarterly installments as from the 24th month (including), or observed the
possibility of extraordinary amortization, payment of quarterly interests from
the issue date, with secured guarantee of the mortgage of the real estate
pledged.
Rates
·
CDI -
Interbank Deposit Certificate
;
·
TR -
Referential Rate
.
The current and non-current installments fall due as
follows
:
|
Company
|
|
Consolidated
|
Maturity
|
2016
|
2015
|
|
2016
|
2015
|
|
|
|
|
|
|
2016
|
-
|
595,817
|
|
-
|
672,365
|
2017
|
639,733
|
385,555
|
|
669,795
|
440,418
|
2018
|
354,770
|
153,288
|
|
422,523
|
166,996
|
2019
|
10,937
|
4,000
|
|
59,763
|
12,049
|
2020
|
1,490
|
-
|
|
27,126
|
1,007
|
2021
onwards
|
-
|
-
|
|
7,093
|
-
|
|
|
|
|
|
|
|
1,006,930
|
1,138,660
|
|
1,186,300
|
1,292,835
|
The Company and its
subsidiaries have restrictive covenants under certain loans and financing that
limit their ability to perform certain actions, such as the issuance of debt,
and that could require the early maturity or refinancing of loans if the Company
does not fulfill such restrictive covenants. The ratio and minimum and maximum
amounts required under such restrictive covenants as of December
31,
2016
and 2015 are disclosed in Note
13. In view of the restrictive covenants and the
non-fulfillment of the covenants of a CCB transaction, the non-current portions
of this transaction were reclassified into short term in the amount of R$65,000.
The Company obtained, on March 22, 2017, a waiver from the bank, agreeing with
the non-fulfillment of the limit of net debt in relation to the financial
statements as of December 31, 2016 and March 31, 2017, thus not requiring
mandatory early payment and/or declaration of early maturity (Note 31 (iii)).
57
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
12.
Loans and financing
--Continued
Financial expenses of
loans, financing and debentures (Note 13) are capitalized at the cost of each
venture and land, according to the use of funds, and recognized in profit or
loss for the year, according to the criteria for revenue recognition. The
capitalization rate used in the determination of costs of loans eligible to
capitalization ranges from 13.59% to 15.48% as of December 31, 2016 (10.54% to
14.42% in 2015).
The following table
shows the summary of financial expenses and charges and the capitalized rate in
the account properties for sale.
|
Company
|
Consolidated
|
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Total financial
charges for the year
|
209,875
|
256,413
|
235,153
|
279,632
|
Capitalized
financial charges
|
(166,111)
|
(191,568)
|
(200,394)
|
(223,396)
|
|
|
|
|
|
Financial
expenses (Note 24)
|
43,764
|
64,845
|
34,759
|
56,236
|
|
|
|
|
|
Financial
charges included in “Properties for sale”:
|
|
|
|
|
|
|
|
|
|
Opening
balance
|
287,806
|
220,959
|
299,649
|
227,438
|
Capitalized
financial charges
|
166,111
|
191,568
|
200,394
|
223,396
|
Charges
recognized in profit or loss (Note 23)
|
(124,266)
|
(124,721)
|
(156,812)
|
(151,185)
|
|
|
|
|
|
Closing balance
(Note 6)
|
329,651
|
287,806
|
343,231
|
299,649
|
|
|
|
|
|
|
13. Debentures
|
|
|
|
Company
|
Consolidated
|
|
Program/placement
|
Principal - R$
|
Annual interest
|
Final maturity
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
|
|
|
Seventh placement
(i)
|
300,000
|
TR +
10.38%
|
December
2017
|
302,363
|
452,568
|
302,363
|
452,568
|
Eighth placement /
second series (ii)
|
-
|
-
|
-
|
-
|
8,395
|
-
|
8,395
|
Ninth placement
(iii)
|
80,393
|
CDI +
1.90%
|
July
2018
|
79,693
|
130,394
|
79,693
|
130,394
|
Tenth placement
(iv)
|
55,000
|
IPCA +
8.22
|
January
2020
|
69,212
|
64,724
|
69,212
|
64,724
|
First placement
(Tenda) (v)
|
-
|
-
|
-
|
-
|
-
|
-
|
201,877
|
|
|
|
|
|
|
|
|
Total debentures
(Note 20.i.d, 20.ii.a and 20.iii)
|
451,268
|
656,081
|
451,268
|
857,958
|
|
|
|
|
|
|
|
|
Current
portion
|
|
|
|
314,139
|
187,744
|
314,139
|
389,621
|
Non-current
portion
|
|
|
|
137,129
|
468,337
|
137,129
|
468,337
|
|
|
|
|
|
|
|
|
|
In the year ended December 31, 2016, the Company made the
following payments:
|
Principal
|
Interest payable
|
Total amortization
|
(i)
|
150,000
|
49,658
|
199,658
|
(ii)
|
5,787
|
3,686
|
9,473
|
(iii)
|
51,634
|
15,743
|
67,377
|
(iv)
|
-
|
4,775
|
4,775
|
(v)
|
200,000
|
15,335
|
215,335
|
|
407,421
|
89,197
|
496,618
|
The maturities of current and non-current portions are as
follows:
|
Company
|
Consolidated
|
Maturity
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
2016
|
-
|
187,744
|
-
|
389,621
|
2017
|
314,139
|
344,690
|
314,139
|
344,690
|
2018
|
94,316
|
83,485
|
94,316
|
83,485
|
2019
|
21,404
|
20,078
|
21,404
|
20,078
|
2020
|
21,409
|
20,084
|
21,409
|
20,084
|
|
451,268
|
656,081
|
451,268
|
857,958
|
58
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
13. Debentures
--Continued
As mentioned in Note 4.2, as of December 31, 2016, the
balance of restricted cash in guarantee to loans in investment funds in the
amount of R$10,669 (R$20,515 in 2015) in the Company statements, and R$10,702
(R$31,633 in 2015) in the consolidated statements, is pledged as part of the
calculation of the guarantee of the 7
th
debenture placement of the
Company.
As of December 31, 2016, the Company exceeded the amount
established in the restrictive covenant, as shown below. The Company analyzed
the other debt contracts and did not identify any impact on the cross
restrictive covenants in relation to the aforementioned non-fulfillment. The
ratio and minimum and maximum amounts required by the restrictive covenants as
of December 31, 2016 and 2015 are as follows:
|
2016
|
2015
|
Seventh placement
|
|
|
Total account
receivable plus inventory required to be below zero or 2.0 times over net
debt less venture debt
(3)
|
53.98 times
|
-14.12 times
|
Total debt less
venture debt
(3)
, less cash and cash equivalents and short-term
investments
(1)
, cannot exceed 75% of equity plus
noncontrolling interests
|
3.11%
|
-12.19%
|
Total receivables
plus unappropriated income plus total inventory of finished units required
to be 1.5 time over the net debt plus properties payable plus
unappropriated cost
|
2.15 times
|
2.25 times
|
|
|
|
Eighth placement -
Second series
|
|
|
Total account
receivable plus inventory of finished units required to be below zero or
2.0 times over net debt less venture debt
|
Debt settled
|
-7.73 times
|
Total debt less
venture debt, less cash and cash equivalents and short-term
investments
(1)
, cannot exceed 75% of equity plus
noncontrolling interests
|
Debt settled
|
-12.19%
|
|
|
|
Ninth
placement
|
|
|
Total account
receivable plus total inventory required to be below zero or 2.0 times
over net debt
|
2.34 times
|
3.71 times
|
Net debt cannot
exceed 100% of equity plus noncontrolling interests
|
71.71%
|
46.44%
|
|
|
|
Tenth
placement
|
|
|
Total account
receivable plus inventory required to be below zero or 2.0 times over net
debt less venture debt
(3)
|
53.98 times
|
-14.12 times
|
Total debt less
venture debt
(3)
, less cash and cash equivalents and
short-term investments
(1)
, cannot exceed 75% of equity plus
noncontrolling interests
|
3.11%
|
-12.19%
|
|
|
|
Loans and
financing
|
|
|
Net debt required
to be not in excess of 70% of equity plus non-controlling
interests
|
71.71%
|
n/a
|
Total accounts
receivable plus inventory required to be below zero or 2.0 times over
venture debt (3)
|
2.44 times
|
2.91 times
|
Total accounts
receivable plus inventory of finished units required to be below zero or
2.0 times over net debt less venture debt
|
33.62 times
|
-7.73 times
|
Total debt, less
venture debt, less cash and cash equivalents and short-term
investments
(
1)
, required to be not in excess of 75%
of equity plus non-controlling interests
|
3.11%
|
-12.19%
|
|
|
|
First placement –
Tenda
|
|
|
Total account
receivable plus inventory required to be 2.0 times or more of net debt
less debt with secured guarantee
(3)
or below zero,
considering that TR
(2)
plus TE
(4)
always above
zero.
|
Debt settled
|
-6.79 times
|
Net debt less debt
with secured guarantee
(3)
required to not be in excess of 50%
of equity.
|
Debt settled
|
-21.47%
|
Total receivables
plus unappropriated income plus total inventory of finished units required
to be more than 1.5 times the net debt plus property payable plus
unappropriated cost, or below zero
|
Debt settled
|
2.47 times
|
(1)
Cash
and cash equivalents and short-term investments refer to cash and cash
equivalents and marketable securities.
(2)
Total
receivables, whenever mentioned, refers to the amount reflected in the Statement
of financial position plus the amount not shown in the Statement of financial
position
(3)
Venture debt and secured guarantee debt refer to SFH
debts, defined as the sum of all disbursed borrowing contracts which funds were
provided by SFH, as well as the debt related to the seventh
placement.
(4)
Total
inventory.
59
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
14.
Obligations assumed on assignment of
receivables
The Company’s transactions of assignment of receivables
portfolio are as follows
:
|
Company
|
Consolidated
|
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Assignment of
receivables:
|
|
|
|
|
Obligation CCI
Jun/11 - Note 5(i)
|
1,208
|
3,164
|
2,148
|
4,775
|
Obligation CCI
Dec/11 - Note 5(ii)
|
1,405
|
2,071
|
1,471
|
2,236
|
Obligation CCI
Jul/12 - Note 5(iii)
|
68
|
368
|
68
|
368
|
Obligation CCI
Nov/12 - Note 5(iv)
|
-
|
-
|
4,651
|
4,351
|
Obligation CCI
Dec/12 - Note 5(v)
|
5,402
|
7,541
|
5,402
|
7,541
|
Obligation CCI
Nov/13 - Note 5(vi)
|
1,666
|
2,858
|
4,307
|
6,362
|
Obligation CCI
Nov/14 - Note 5(vii)
|
2,530
|
4,646
|
4,344
|
6,696
|
Obligation CCI
Dec/15 - Note 5(viii)
|
8,005
|
13,053
|
15,988
|
24,558
|
Obligation CCI
Mar/16 - Note 5(ix)
|
16,091
|
-
|
17,178
|
-
|
Obligation CCI
May/16 - Note 5(x)
|
11,481
|
-
|
14,407
|
-
|
Obligation CCI
Aug/16 - Note 5(xi)
|
9,164
|
-
|
9,164
|
-
|
Obligation CCI
Dec/16 - Note 5(xii)
|
18,343
|
-
|
18,948
|
-
|
Obligation
FIDC
|
450
|
1,146
|
954
|
2,406
|
Total obligations
assumed on assignment of receivables
(Note
20.iii)
|
75,813
|
34,847
|
99,030
|
59,293
|
|
|
|
|
|
Current
portion
|
24,907
|
12,631
|
34,698
|
23,482
|
Non-current
portion
|
50,906
|
22,216
|
64,332
|
35,811
|
|
|
|
|
|
|
Regarding the above transactions
,
the assignor is required to fully formalize the guarantee
instruments of receivables in favor of the assignee. Until it is fully
fulfilled, these amounts will be classified into a separate account in current
and non-current liabilities
.
15.
Other payables
|
|
Company
|
Consolidated
|
|
2012
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
|
Provision for
penalties for delay in
construction
works
|
8.883
|
-
|
1,404
|
-
|
3,213
|
Cancelled contract
payable
|
2.363
|
13,347
|
11,014
|
26,255
|
24,053
|
Warranty
provision
|
28.345
|
29,568
|
41,958
|
29,568
|
59,647
|
Deferred sales
taxes (PIS and COFINS)
|
21.772
|
6,282
|
8,368
|
8,739
|
13,129
|
Provision for net
capital deficiency (Note 9 (g))
|
35.570
|
343
|
59,727
|
-
|
54,401
|
Long-term
suppliers (Note 20.i.d)
|
|
2,274
|
5,652
|
4,046
|
7,508
|
Payables to
venture partners (a) (Note 20.i.d, 20.ii and 20.iii)
|
|
1,140
|
4,713
|
1,237
|
4,895
|
Share-based
payment - Phantom Shares (Note 18.4)
|
|
2,596
|
889
|
2,596
|
889
|
Other
liabilities
|
13.781
|
8,328
|
8,426
|
8,982
|
28,918
|
|
|
|
|
|
|
Total other
payables
|
113.000
|
63,878
|
142,151
|
81,423
|
196,653
|
|
|
|
|
|
|
Current
portion
|
90.953
|
50,660
|
127,123
|
69,921
|
163,437
|
Non-current
portion
|
22.047
|
13,218
|
15,028
|
11,502
|
33,216
|
(a)
The Company entered in June 2011 into a private instrument
for establishing the usufruct of 100% preferred shares of SPE-89 Empreendimentos
Imobiliários S.A., over a period of six years, raising funds amounting to
R$45,000.
In the year ended December 31, 2016,
the total amount of dividends paid to the holders of
preferred shares by SPE-89 Empreendimentos Imobiliários S.A. amounted
to
R$ 4,700 (Note 9).
60
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
16.
Provisions for legal claims and commitments
The Company and its subsidiaries are parties to lawsuits
and administrative proceedings at various courts and government agencies that
arise from the ordinary course of business, involving tax, labor, civil, and
other matters. Management, based on information provided by its legal counsel
and analysis of the pending claims and, with respect to the labor claims, based
on past experience regarding the amounts claimed, recognized a provision in an
amount considered sufficient to cover the losses on pending decisions. The
Company does not expect any reimbursement in connection with these
claims.
In the years ended December 31, 2016 and 2015, the changes
in the provision are summarized as follows:
Company
|
Civil lawsuits(i)
|
Tax proceedings(ii)
|
Labor claims
|
Total
|
Balance at
December 31, 2014
|
124,175
|
218
|
45,447
|
169,840
|
Additional
provision (Note 23)
|
49,269
|
12,157
|
26,641
|
88,067
|
Payment and
reversal of provision not used
|
(54,024)
|
(12,155)
|
(8,853)
|
(75,032)
|
Balance at
December 31, 2015
|
119,420
|
220
|
63,235
|
182,875
|
Additional
provision (Note 23)
|
49,931
|
2,955
|
16,719
|
69,605
|
Payment and
reversal of provision not used
|
(71,301)
|
(51)
|
(22,786)
|
(94,138)
|
Balance at
December 31, 2016
|
98,050
|
3,124
|
57,168
|
158,342
|
|
|
|
|
|
Current
portion
|
53,867
|
1,369
|
23,818
|
79,054
|
Non-current
portion
|
44,183
|
1,755
|
33,350
|
79,288
|
Consolidated
|
Civil lawsuits(i)
|
Tax proceedings(ii)
|
Labor claims
|
Total
|
Balance at
December 31, 2014
|
157,842
|
414
|
81,318
|
239,574
|
Additional
provision (Note 23)
|
68,976
|
12,156
|
37,317
|
118,449
|
Payment and
reversal of provision not used
|
(77,197)
|
(12,170)
|
(25,674)
|
(115,041)
|
Balance at
December 31, 2015
|
149,621
|
400
|
92,961
|
242,982
|
(-)
Reclassification to discontinued operations
|
(29,982)
|
(180)
|
(25,554)
|
(55,716)
|
Additional
provision (Note 23)
|
49,872
|
2,965
|
17,959
|
70,796
|
Payment and
reversal of provision not used
|
(71,332)
|
(61)
|
(23,711)
|
(95,104)
|
Balance at
December 31, 2016
|
98,179
|
3,124
|
61,655
|
162,958
|
|
|
|
|
|
Current
portion
|
53,867
|
1,369
|
23,818
|
79,054
|
Non-current
portion
|
44,312
|
1,755
|
37,837
|
83,904
|
(a)
Civil lawsuits, tax proceedings and labor
claims
As of December 31,
2016, the Company and its subsidiaries have deposited in
court the amount of R$78,172 (R$105,275 in 2015) in the Company’s statement, and
R$79,785 (R$125,358 in 2015) in the consolidated statement (Note 7).
|
|
Company
|
Consolidated
|
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
|
Civil
lawsuits
|
|
31,700
|
71,327
|
33,313
|
81,919
|
Tax
proceedings
|
|
24,806
|
13,744
|
24,806
|
14,222
|
Labor
claims
|
|
21,666
|
20,204
|
21,666
|
29,217
|
Total (Note 7)
|
|
78,172
|
105,275
|
79,785
|
125,358
|
61
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
16.
Provisions for legal claims and
commitments
--Continued
(a)
Civil lawsuits, tax proceedings and labor
claims
--Continued
(i)
As of December 31,
2016, the provisions related to civil lawsuits include
R$18,337 (R$42,296 in 2015) related to lawsuits in which the Company is included
in the defendant side to be liable for in and out of court debts which original
debtor is a former shareholder of the Company, Cimob Companhia Imobiliária
(“Cimob”), or involve other companies of the same economic group of Cimob. In
these lawsuits, the plaintiff argues that the Company should be liable for
Cimob’s debts, because in its understanding the requirements for piercing of the
corporate veil of Cimob to reach the Company (business succession, merger of
assets and/or formation of a same economic group involving the Company and the
Cimob Group). In addition, there is judicial deposit in the amount of R$16,359
(R$44,099 in 2015) related to such lawsuits. The change in the amount of civil
lawsuits and judicial deposits in the year ended December 31, 2016 is caused by
the unfavorable outcome in a lawsuit, settled by means of judicial deposit, the
Company not having disbursed additional cash.
The Company does not agree with the statement of facts
based on which it has been included in these lawsuits and continues to dispute
in court its liability for the debts of a third company, as well as the amount
charged by the plaintiffs. The Company has already obtained favorable and
unfavorable decisions in relation to this matter, reason why it is not possible
to estimate a uniform outcome in all lawsuits. The Company also aims by filing a
lawsuit against Cimob, and its former and current parent companies the
recognition that it should not be liable for the debts of that company, as well
as indemnity of the amounts already paid by the Company in lawsuits relating to
the charge of debts owed by Cimob.
(ii)
Environmental risk
Considering the diversity of environmental legislation in
the federal, state and municipal levels, which may restrict or impede the
development of real estate ventures, the Company analyzes all environmental
risks, including the possible existence of hazardous or toxic materials,
residues, vegetation and proximity of the land to permanent preservation areas,
in order to mitigate risks in the development of ventures, during the process of
land acquisition for future ventures.
In addition, the
environmental legislation establishes criminal, civil and administrative
sanctions to individuals and legal entities for activities considered as
environmental infringements or offense. The penalties include the stop of
development activities, loss of tax benefits, confinement and fines. The
lawsuits in dispute by the Company in civil court are considered by the legal
advisor as possible loss in the amount of R$4,924 in the Company’s and
Consolidated statement and (R$4,829 in the Company’s statement and R$8,639 in
the Consolidated statement in 2015).
62
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
16.
Provisions for legal claims and
commitments
--Continued
(a)
Civil lawsuits, tax proceedings and labor
claims
--Continued
(iv)
Lawsuits in which likelihood of loss is rated as
possible
As of December 31,
2016,
the Company and its subsidiaries are aware of other
claims, and civil, labor and tax risks
. Based on the
history of probable processes and the specific analysis of
main claims
, the measurement of the claims with
likelihood of loss considered possible amounted to
R$249,153
(R$810,163 in 2015),
based on average past outcomes adjusted to current
estimates, for which the Company’s Management believes it is not necessary to
recognize a provision for occasional losses. The change in the period was caused
by
change
in the
volume of lawsuits with diluted amounts, and review of the
involved amounts, whereas in the Consolidated, it was caused by the disclosure
of the
discontinued operations related to the subsidiary
Tenda, which amounted to R$497,620 as of December 31, 2015.
|
|
Company
|
Consolidated
|
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
|
Civil lawsuits
|
|
156,456
|
235,975
|
156,523
|
469,841
|
Tax proceedings
|
|
50,430
|
32,543
|
52,812
|
263,540
|
Labor claims
|
|
37,466
|
38,967
|
39,818
|
76,782
|
|
|
244,352
|
307,485
|
249,153
|
810,163
|
(b)
Payables related to the completion of real estate
ventures
The Company commits to complete units sold and to comply
with the laws regulating the civil construction sector, including obtaining
licenses from the proper authorities, and compliance with the terms for starting
and delivering the ventures, being subject to legal and contractual
penalties.
As of December 31, 2016, the Company and its subsidiaries
have restricted cash in guarantee to loans, which will be released to the extent
the guarantee ratios described in Note 4.2 are met, which include land and
receivables pledged in guarantee of 120% of the debt outstanding.
(c)
Other commitments
In addition to the commitments mentioned in Notes 6, 12
and 13, the Company has commitments related to the rental of four business
office suites where its facilities are located, at a monthly cost of R$644
adjusted by the IGP-M/FGV variation. The rental term is from one to eight years
and there is a fine in case of cancelled contracts corresponding to three-month
rent, or in proportion to the contract expiration time. The estimate of minimum
future rent payment of the business office suites (cancellable leases) totals
R$32,639, considering until the maturity of contracts, as follows.
|
Consolidated
|
Estimate of payment
|
2016
|
|
|
2017
|
3,194
|
2018
|
3,827
|
2019
|
4,383
|
2020
|
4,602
|
2021
onwards
|
16,633
|
|
32,639
|
63
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
17.
Payables for purchase of properties and advances from
customers
|
|
Company
|
Consolidated
|
|
Maturity
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
|
Payables for
purchase of properties
|
January 2017 to March 2021
|
96,888
|
139,320
|
118,257
|
362,800
|
Present value
adjustment
|
|
(8,167)
|
(9,723)
|
(9,469)
|
(17,039)
|
Advances from
customers
|
|
|
|
|
|
Development and
sales (Note 5)
|
|
24,295
|
19,337
|
35,024
|
39,743
|
Barter transaction
- Land
|
|
123,817
|
143,271
|
151,885
|
224,430
|
|
|
|
|
|
|
Total payables for
purchase of properties and advance from customers (Notes 20.i.d and
20.ii.a)
|
|
236,833
|
292,205
|
295,697
|
609,934
|
|
|
|
|
|
|
Current
portion
|
|
146,522
|
148,989
|
205,388
|
361,420
|
Non-current
portion
|
|
90,311
|
143,216
|
90,309
|
248,514
|
Current and non-current portions fall due as
follows
:
|
Company
|
|
Consolidated
|
Maturity
|
2016
|
2015
|
|
2016
|
2015
|
|
|
|
|
|
|
2016
|
-
|
148,989
|
|
-
|
361,420
|
2017
|
146,522
|
123,840
|
|
205,388
|
181,395
|
2018
|
71,121
|
8,859
|
|
71,119
|
37,230
|
2019
|
9,243
|
8,306
|
|
9,243
|
21,010
|
2020
|
8,116
|
2,211
|
|
8,116
|
8,879
|
2021
onwards
|
1,831
|
-
|
|
1,831
|
-
|
|
|
|
|
|
|
|
236,833
|
292,205
|
|
295,697
|
609,934
|
18.
Equity
18.1. Capital
As of December 31, 2016 and 2015, the Company's authorized
and paid-in capital amounts to R$2,740,662, represented in both periods by
378,066,162 registered common shares, with no par value, of which 14,160,533
(10,584,756 in 2015) were held in treasury.
According to the Company’s articles of incorporation,
capital may be increased without need of making amendment to it, upon resolution
of the Board of Directors, which shall set the conditions for issuance within
the limit of 600,000,000 (six hundred million) common shares.
On March 3, 2016, the Company approved the creation of a
new program to repurchase its shares to hold them in treasury, and selling or
cancelling them later on, within a period of 18 months, within the limit of
8,198,565 shares. In the year ended December 31, 2016, 4,503,600 shares
were acquired totaling R$8,693. Additionally, the Company transferred 927,824
shares (1,221,860 in 2015) in the total amount of R$2,149 (R$3,022 in 2015)
related to the exercise of options under the stock option plan of common shares
by the beneficiaries, for which it received the total amount of R$9 (R$599 in
2015).
64
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
18.
Equity
--Continued
18.1. Capital
--Continued
Treasury shares
|
|
|
Type
|
GFSA3
|
R$
|
%
|
Market value (*)
R$ thousand
|
Carrying value
R$ thousand
|
Acquisition date
|
Number
|
Weighted average price
|
% - on shares outstanding
|
2016
|
2015
|
2016
|
2015
|
11/20/2001
|
599,486
|
2,8875
|
0.17%
|
1,115
|
1,457
|
1,731
|
1,731
|
Changes in 2013:
|
|
|
|
|
|
|
|
Acquisition
|
18,500,000
|
3,8562
|
5.12%
|
34,410
|
44,955
|
71,339
|
71,339
|
Changes in 2014:
|
|
|
|
|
|
|
|
Acquisition
|
43,738,235
|
2,6353
|
12.11%
|
81,353
|
106,284
|
115,265
|
115,265
|
Transfers
|
(5,463,395)
|
3,2183
|
-1.51%
|
(10,162)
|
(13,276)
|
(17,583)
|
(17,583)
|
Cancellations
|
(27,493,039)
|
3,3351
|
-7.61%
|
(51,137)
|
(66,808)
|
(91,693)
|
(91,693)
|
Changes in 2015:
|
|
|
|
|
|
|
|
Acquisition
|
11,925,330
|
2,0257
|
3.30%
|
22,181
|
28,979
|
24,157
|
24,157
|
Transfers
|
(1,221,860)
|
2,4733
|
-0.34%
|
(2,272)
|
(2,970)
|
(3,022)
|
(3,022)
|
Cancellations
|
(30,000,000)
|
2,4738
|
-8.31%
|
(55,800)
|
(72,900)
|
(74,214)
|
(74,214)
|
Changes in 2016:
|
|
|
|
|
|
|
|
Acquisition
|
4,503,600
|
1,9302
|
1.25%
|
8,377
|
-
|
8,693
|
-
|
Transfers
|
(927,824)
|
2,3162
|
-0.26%
|
(1,726)
|
-
|
(2,149)
|
-
|
|
14,160,533
|
2,2968
|
3.92%
|
26,339
|
25,721
|
32,524
|
25,980
|
(*) Market value calculated based
on the closing share price at December 31, of R$1.86 in 2016 and R$2.43 in
2015, not considering the effect of any volatilities.
The Company holds shares in treasury acquired in 2001 in
order to guarantee the performance of lawsuits (Note 16(a)(i)).
The change in the number of outstanding shares is as
follows:
|
Common shares - In thousands
|
Outstanding shares
as of December 31, 2014
|
378,184
|
Repurchase of
treasury shares
|
(11,925)
|
Transfer related
to the stock option plan
|
1,222
|
Outstanding shares
as of December 31, 2015
|
367,481
|
Repurchase of
treasury shares
|
(4,504)
|
Transfer related
to the stock option plan
|
928
|
Shares held by the
Management members of the Company
|
(2,838)
|
Outstanding shares
as of December 31, 2016
|
361,067
|
Reverse split of
shares (Note 31(i)(a))
|
(334,288)
|
Adjusted
outstanding shares as of December 31, 2016
|
26,779
|
|
|
Weighted average
shares outstanding (Note 27)
|
26,921
|
18.2. Allocation of profit (loss) for the
year
According to the
Company’s articles of incorporation, profit for the year is allocated as
follows
, after deduction for any accumulated losses and provision
for income taxes: (i)
5% to legal reserve, reaching up to 20% of paid-in
capital, or when the legal reserve balance plus capital reserves is in excess of
30% of capital
; (ii)
25% of the remaining balance to pay mandatory
dividends
; and (iii) amount not in excess of 71.25% to set up the
Reserve for Investments, with the purpose of financing the expansion of the
operations of the Company and its subsidiaries.
The Board of Directors, by resolution at the Annual
Shareholders’ Meeting, shall examine the accounts and financial statements
related to the year 2016.
65
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
18. Equity
--Continued
18.2. Allocation of profit (loss) for the
year
--Continued
The allocation of profit for the year 2015 and the loss
incurred for the year 2016 by the income reserve and legal reserve, according to
Article 189 of Act 6,404/76, are as follows:
|
|
Net
income for 2015
|
74,449
|
(-)
Legal
reserve
(5%)
|
(3,722)
|
(-)
Calculation basis
|
70,727
|
Minimum mandatory dividend (25%)
|
17,682
|
Reserve for investments
|
53,045
|
|
|
Minimum mandatory dividend (25%) per
share
|
0.048
|
|
|
Net
loss for 2016
|
(1,163,596)
|
(-)
Income reserve
|
266,520
|
(-)
Legal reserve
|
35,315
|
Balance of accumulated losses for
2016
|
(861,761
)
|
|
|
18.3. Stock option plan
Expenses for granting stocks are recorded under the
account “General and administrative expenses” (Note 23) and showed the following
effects on profit or loss in the years ended December 31, 2016 and
2015:
|
2016
|
2015
|
|
|
|
Equity-settled
stock option plans
|
5,114
|
6,937
|
Phantom Shares
(Note 18.4)
|
1,707
|
889
|
Total option grant
expenses (Note 23)
|
6,821
|
7,826
|
(i)
Gafisa
The Company has a total of five stock option plans
comprising common shares, launched in 2012, 2013, 2014, 2015 and 2016 which
follows the rules established in the Stock Option Plan of the
Company.
The granted options entitle their holders (employees) to
purchase common shares of the Company’s capital, after periods that vary from
one to four years of employment (essential condition to exercise the option),
and expire six to ten years after the grant date.
The fair value of options is set on the grant date, and it
is recognized as expense in profit or loss (as contra-entry to equity) during
the grace period of the plan, to the extent the services are provided by
employees and management members.
66
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
18. Equity
--Continued
18.3. Stock option plan
--Continued
(i)
Gafisa
--Continued
Changes in the stock options outstanding in the years
ended December 31, 2016 and 2015, including the respective weighted average
exercise prices are as follows:
|
2016
|
2015
|
|
Number of options
|
Weighted average exercise price
(Reais)
|
Number of options
|
Weighted average exercise price
(Reais)
|
Options
outstanding at the beginning of the year
|
11,743,379
|
1.83
|
9,542,643
|
1.49
|
Options
granted
|
2,209,869
|
2.62
|
3,567,201
|
2.24
|
Options exercised
(i)
|
(930,449)
|
(0.01)
|
(1,221,860)
|
(0.49)
|
Options
expired
|
-
|
-
|
(32,000)
|
(3.05)
|
Options
forfeited
|
(114,717)
|
(0.01)
|
(112,605)
|
(0.01)
|
|
|
|
|
|
Options
outstanding at the end of the year
|
12,908,082
|
2.11
|
11,743,379
|
1.83
|
(i)
In the year ended December 31, 2016, the amount received
through exercised options was R$9 (R$599 in 2015).
As of December 31, 2016, the stock options outstanding and
exercisable are as follows:
Outstanding options
|
Exercisable options
|
Number of options
|
Weighted average remaining contractual life
(years)
|
Weighted average exercise price
(R$)
|
Number of options
|
Weighted average exercise price
(R$)
|
|
|
|
|
|
12,908,082
|
4.03
|
2.11
|
1,927,083
|
2.68
|
During the year ended December 31, 2016, the Company
granted 2,209,869 options in connection with its stock option plans comprising
common shares (3,567,201 options granted in 2015).
The models used by the Company for pricing granted options
are the Binomial model for traditional options and the MonteCarlo model for
options in the Restricted Stock Options format.
The fair value of the new options granted totaled R$1,265
(R$3,232 in 2015), which was determined based on the following
assumptions:
|
2016
|
2015
|
Pricing model
|
Binomial
|
Binomial
|
Exercise price of options (R$)
|
R$2.62
|
R$2.24
|
Weighted average price of options (
(R$)
|
R$2.62
|
R$2.24
|
Expected volatility (%) – (*)
|
53%
|
52%
|
Expected option life (years)
|
5.78 years
|
5.58 years
|
Dividend income (%)
|
1.98%
|
2.24%
|
Risk-free interest rate (%)
|
14.13%
|
13.64%
|
(*)The volatility was determined based on regression analysis of the ratio
of the share volatility of Gafisa S.A. to the Ibovespa index.
67
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
18. Equity
--Continued
18.4. Share-based payment--Phantom
Shares
The Company has a total of two cash-settled share-based
payment plans with fixed terms and conditions, according to the plans approved
by the Company, launched in 2015 and 2016.
In the plan approved in 2016, the beneficiaries were
granted the right to receive an amount equivalent to 1,143,145 phantom shares,
together with the stock option plan for the year 2016. The phantom shares have
the same grace and expiration period of the options, and can be partially or
fully exercised during the established period.
As of December 31, 2016, the amount of R$2,596 (R$889 in
2015), related to the fair value of the phantom shares granted, is recognized in
the heading “Other payables” (Note 15).
19.
Income tax and social contribution
The reconciliation of the effective tax rate for the years
ended December 31, 2016 and 2015 is as follows:
|
Company
|
Consolidated
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Profit (loss)
before income tax and social contribution, and statutory
interest
|
(519,821)
|
32,402
|
(501,941)
|
35,419
|
Income tax
calculated at the applicable rate - 34 %
|
176,739
|
(11,017)
|
170,660
|
(12,043)
|
Net effect of
subsidiaries taxed by presumed profit
|
-
|
-
|
2,035
|
19,711
|
Tax
losses (tax loss carryforwards used)
|
-
|
(3,730)
|
-
|
(4,101)
|
Income
from equity method investments
|
(21,726)
|
42,508
|
(19,546)
|
13,605
|
Stock
option plan
|
(2,895)
|
(2,714)
|
(2,895)
|
(2,714)
|
Other permanent
differences
|
(5,702)
|
(14,203)
|
(5,702)
|
(14,203)
|
Charges on
payables to venture partners
|
(889)
|
883
|
(361)
|
761
|
R
ecognized (
unrecognized
) tax
credits
|
(235,847)
|
-
|
(244,271)
|
(1,674)
|
|
(90,320)
|
11,727
|
(100,080)
|
(658)
|
|
|
|
|
|
Tax expenses -
current
|
-
|
(4,314)
|
(10,722)
|
(14,763)
|
(Expenses ) Tax
income - deferred
|
(90,320)
|
16,041
|
(89,358)
|
14,105
|
(ii)
Deferred income tax and social contribution
The Company recognized deferred tax assets on tax losses
and income tax and social contribution carryforwards for prior years, which have
no expiration, and for which offset is limited to 30% of annual taxable profit,
to the extent the taxable profit is probable to be available for offsetting
temporary differences
, based on the assumptions and conditions established in
the business model of the Company
.
As of December 31, 2016 and 2015, deferred income tax and
social contribution are from the following sources:
68
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
19.
Income tax and social contribution
--Continued
(ii)
Deferred income tax and social
contribution
--Continued
|
Company
|
Consolidated
|
|
2016
|
2015
|
2016
|
2015
|
Assets
|
|
|
|
|
Provisions for
legal claims
|
53,836
|
62,178
|
55,406
|
82,614
|
Temporary
differences – Deferred PIS and COFINS
|
11,302
|
12,093
|
11,333
|
16,404
|
Provisions for
realization of non-financial assets
|
143,073
|
49,290
|
143,073
|
59,218
|
Temporary
differences – CPC adjustment
|
24,044
|
40,264
|
24,044
|
44,748
|
Provision for
impairment loss of discontinued operations
|
207,436
|
-
|
207,436
|
-
|
Other
provisions
|
15,335
|
11,670
|
15,401
|
38,469
|
Income tax and
social contribution loss carryforwards
|
114,730
|
75,769
|
129,163
|
317,282
|
Tax benefits from
subsidiaries
|
49,174
|
28,166
|
49,174
|
28,166
|
Unrecognized tax
credits of discontinued operations
|
(207,436)
|
-
|
(207,436)
|
-
|
Unrecognized tax
credits of continued operations
|
(235,847)
|
-
|
(250,944)
|
(272,997)
|
|
175,647
|
279,430
|
176,650
|
313,904
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Negative
goodwill
|
(92,385)
|
(92,385)
|
(92,385)
|
(92,385)
|
Temporary
differences –CPC adjustment
|
(143,436)
|
(131,096)
|
(143,436)
|
(130,929)
|
Differences
between income taxed on cash basis
and recorded on an
accrual basis
|
(40,231)
|
(66,034)
|
(41,234)
|
(107,079)
|
|
(276,052)
|
(289,515)
|
(277,054)
|
(330,393)
|
|
|
|
|
|
Total
net
|
(100,405)
|
(10,085)
|
(100,405)
|
(16,489)
|
The Company has income tax and social contribution loss
carryforwards for offset in the following amounts:
|
Company
|
|
2016
|
|
2015
|
|
Income tax
|
Social contribution
|
Total
|
|
Income tax
|
Social contribution
|
Total
|
Balance of income
tax and social contribution loss carryforwards
|
337,440
|
337,440
|
|
|
222,849
|
222,849
|
|
Deferred tax asset
(25%/9%)
|
84,360
|
30,370
|
114,730
|
|
55,712
|
20,056
|
75,768
|
Recognized
deferred tax asset
|
41,191
|
14,829
|
56,020
|
|
55,712
|
20,056
|
75,768
|
Unrecognized
deferred tax asset
|
43,169
|
15,541
|
58,710
|
|
-
|
-
|
-
|
|
Consolidated
|
|
2016
|
|
2015
|
|
Income tax
|
Social contribution
|
Total
|
|
Income tax
|
Social contribution
|
Total
|
Balance of income
tax and social contribution loss carryforwards
|
379,892
|
379,892
|
-
|
|
933,182
|
933,182
|
-
|
Deferred tax asset
(25%/9%)
|
94,973
|
34,190
|
129,163
|
|
233,296
|
83,986
|
317,282
|
Recognized
deferred tax asset
|
55,712
|
20,056
|
75,768
|
|
55,712
|
20,056
|
75,768
|
Unrecognized
deferred tax asset
|
39,261
|
14,134
|
53,395
|
|
177,584
|
63,930
|
241,514
|
As a result of the loss for the year, the Company made the
reversal of a portion of the previously recognized deferred tax assets. The
portion of remaining tax loss is limited to 30% of the payables related to the
goodwill arising from the remeasurement of the portion of remaining investment
of AUSA, and temporary differences to be taxed – CPC adjustments, which do not
have established realization term.
69
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
20.
Financial instruments
The Company and its subsidiaries engage in operations
involving financial instruments. These instruments are managed through
operational strategies and internal controls aimed at providing liquidity,
return and safety. The use of financial instruments for hedging purposes is
achieved through a periodical analysis of exposure to the risk that the
management intends to cover (exchange, interest rate, etc.) which is submitted
to the corresponding Management bodies for approval, and performance of the
proposed strategy. The control policy consists of continuously monitoring the
contracted conditions in relation to the prevailing market conditions. The
Company and its subsidiaries do not use derivatives or any other risky assets
for speculative purposes. The result from these operations is consistent with
the policies and strategies devised by the Company’s management. The Company and
its subsidiaries operations are subject to the risk factors described
below:
(i)
Risk considerations
a)
Credit risk
The Company and its subsidiaries restrict their exposure
to credit risks associated with cash and cash equivalents, investing only in
short-term securities of top tier financial institutions.
With regards to accounts receivable, the Company restricts
its exposure to credit risks through sales to a broad base of customers and
ongoing credit analysis. Additionally, there is no relevant history of losses
due to the existence of secured guarantee, represented by real estate unit, for
the recovery of its products in the cases of default during the construction
period. As of December 31, 2016 and 2015, there was no significant credit risk
concentration associated with customers.
b)
Derivative financial instruments
The Company holds derivative instruments to mitigate the
risk arising from its exposure to index and interest volatility recognized at
their fair value in profit or loss for the year. Pursuant to its treasury
policies, the Company does not own or issue derivative financial instruments
other than for hedging purposes.
As of December 31, 2016, the Company had derivative
contracts for hedging purposes in relation to interest rate fluctuations, with
final maturity between June 2017 e and January 2020. The derivative contracts
are as follows:
70
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
20.
Financial instruments
--Continued
(i)
Risk considerations
--Continued
b)
Derivative financial instruments
--Continued
Consolidated
|
|
|
Reais
|
Percentage
|
Validity
|
Gain (loss) not realized by derivative instruments -
net
|
|
|
|
|
|
|
|
Companies
|
Swap agreements (Fixed for CDI
)
|
Face value
|
Original Index – asset position
|
Swap – liability position
|
Beginning
|
End
|
2016
|
2015
|
|
|
|
|
|
|
|
|
|
Gafisa
S/A
|
Banco
Votorantim S.A.
|
55,000
|
Fixed 14.2672%
|
CDI +
1.6344%
|
12/21/2015
|
06/20/2016
|
-
|
(637)
|
Gafisa
S/A
|
Banco
Votorantim S.A.
|
27,500
|
Fixed 11.1136%
|
CDI +
0.2801%
|
06/20/2016
|
12/20/2016
|
-
|
(641)
|
Gafisa
S/A
|
Banco
Votorantim S.A.
|
27,500
|
Fixed 15.1177%
|
CDI +
1.6344%
|
12/20/2016
|
06/20/2017
|
88
|
(399)
|
Gafisa
S/A
|
Banco
Votorantim S.A.
|
130,000
|
CDI + 1.90%
|
118% CDI
|
07/22/2014
|
07/26/2018
|
(313)
|
(2,216)
|
Gafisa
S/A
|
Banco
Bradesco
|
194,000
|
Fixed 12.8727%
|
120% CDI
|
09/29/2014
|
10/08/2018
|
(556)
|
(15,907)
|
Gafisa
S/A
|
Banco Votorantim
S.A. (a)
|
55,000
|
IPCA + 8.22%
|
120% CDI
|
03/17/2015
|
01/20/2020
|
4,521
|
(1,874)
|
Total derivative financial instruments (Note 20 (i)
(d) and Note 20 (ii) (a))
|
3,740
|
(21,674)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
(5,290)
|
(14,056)
|
|
|
|
|
|
Non-current portion
|
9,030
|
(7,618)
|
During the year ended December 31, 2016, the revenue
amount of R$13,404 (R$(17,151) in 2015) in the Company’s and consolidated
statements, which refers to net proceeds of the interest swap transaction,
arising from the payment in the amount of R$12,009, and the positive change to
market of R$25,413, was recognized in the “financial income (expenses)” line in
the statement of profit or loss for the year, allowing correlation between the
effect of such transactions the and interest rate fluctuation in the Company’s
statement of financial position (Note
24).
The estimated fair
value of derivative financial instruments purchased by the Company was
determined based on information available in the market and specific valuation
methodologies. However, considerable judgment was necessary for interpreting
market data to produce the estimated fair value of each transaction, which may
vary upon the financial settlement of transactions.
c)
Interest rate risk
Interest rate risk arises from the possibility that the
Company and its subsidiaries may experience gains or losses because of
fluctuations in the interest rates of its financial assets and liabilities.
Aiming to mitigating this kind of risk, the Company and its subsidiaries seek to
diversify funding in terms of fixed and floating rates. The interest rates on
loans, financing and debentures are disclosed in Notes 12 and 13. The interest
rates contracted on financial investments are disclosed in Note 4. Accounts
receivable from real estate units completed (Note 5), are subject to annual
interest rate of 12%, appropriated on a
pro rata
basis.
d)
Liquidity risk
Liquidity risk refers to the possibility that the Company
and its subsidiaries do not have sufficient funds to meet their commitments in
view of the settlement terms of its rights and obligations.
71
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
20.
Financial instruments
--Continued
(i)
Risk considerations
--Continued
d)
Liquidity risk
--Continued
To mitigate liquidity risks, and to optimize the weighted
average cost of capital, the Company and its subsidiaries monitor on an on-going
basis the indebtedness levels according to the market standards, and the
fulfillment of covenants provided for in loan, financing and debenture
agreements, in order to guarantee that the operating-cash generation and the
advance funding, when necessary, are sufficient to meet the schedule of
commitments, not posing liquidity risk to the Company or its subsidiaries
(Notes12 and 13).
The maturities of financial instruments, loans, financing,
suppliers, payables to venture partners and debentures are as
follows:
|
Company
|
Year ended December 31,
2016
|
Less than 1 year
|
1 to 3 years
|
4 to 5 years
|
More than 5 years
|
Total
|
Loans and financing (Note 12)
|
639,733
|
367,197
|
-
|
-
|
1,006,930
|
Debentures (Note 13)
|
314,139
|
137,129
|
-
|
-
|
451,268
|
Payables to venture partners
(Note 15)
|
1,140
|
-
|
-
|
-
|
1,140
|
Suppliers (Note 15 and Note 20(ii)(a))
|
61,177
|
2,274
|
-
|
-
|
63,451
|
Payables for purchase of properties and advance from
customers (Note 17)
|
146,522
|
80,364
|
9,947
|
-
|
236,833
|
|
1,162,711
|
586,964
|
9,947
|
-
|
1,759,622
|
|
Consolidated
|
Year ended December 31,
2016
|
Less than 1 year
|
1 to 3 years
|
4 to 5 years
|
More than 5 years
|
Total
|
Loans and financing (Note 12)
|
669,795
|
509,412
|
7,093
|
-
|
1,186,300
|
Debentures (Note 13)
|
314,139
|
137,129
|
-
|
-
|
451,268
|
Payables to venture partners
(Note 15)
|
1,237
|
-
|
-
|
-
|
1,237
|
Suppliers (Note 15 and Note 20(ii)(a))
|
79,120
|
4,046
|
-
|
-
|
83,166
|
Payables for purchase of properties and advance from
customers (Note 17)
|
205,388
|
80,362
|
9,947
|
-
|
295,697
|
|
1,269,679
|
730,949
|
17,040
|
-
|
2,017,668
|
Fair value classification
The Company uses the following classification to determine
and disclose the fair value of financial instruments by the valuation
technique:
Level 1: quoted prices (without adjustments) in active
markets for identical assets or liabilities;
Level 2: inputs other than the quoted market prices within
Level 1 that are observable for asset or liability, either directly (as prices)
or indirectly (derived from prices); and
Level 3: inputs for asset or liability not based on
observable market data (unobservable inputs).
72
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
20.
Financial instruments
--Continued
(i)
Risk considerations
--Continued
d)
Liquidity risk
--Continued
The classification level of fair value for financial
instruments measured at fair value through profit or loss of the Company as of
December 31,
2016 and 2015 is as follows:
|
Company
|
Consolidated
|
|
Fair value classification
|
As of December 31, 2016
|
Level 1
|
Level 2
|
Level 3
|
Level 1
|
Level 2
|
Level 3
|
|
|
|
|
|
|
|
Financial
assets
|
|
|
|
|
|
|
Short-term
investments (Note 4.2)
|
-
|
163,562
|
-
|
-
|
223,646
|
-
|
Derivative
financial instruments (Note 20.i.b)
|
-
|
3,740
|
-
|
-
|
3,740
|
-
|
|
Company
|
Consolidated
|
|
Fair value classification
|
As of December 31, 2015
|
Level 1
|
Level 2
|
Level 3
|
Level 1
|
Level 2
|
Level 3
|
|
|
|
|
|
|
|
Financial
assets
|
|
|
|
|
|
|
Short-term
investments (Note 4.2)
|
-
|
350,343
|
-
|
-
|
629,671
|
-
|
In addition, we show the fair value classification of
financial instruments liabilities:
|
Company
|
Consolidated
|
|
Fair value classification
|
As of December 31, 2015
|
Level 1
|
Level 2
|
Level 3
|
Level 1
|
Level 2
|
Level 3
|
|
|
|
|
|
|
|
Financial
liabilities
|
|
|
|
|
|
|
Payables to venture partners
(Note
20.i.b)
|
-
|
21,674
|
-
|
-
|
21,674
|
-
|
In the years ended December 31, 2016 and 2015, there were
no transfers between the Levels 1 and 2 fair value classifications, nor were
transfers between Levels 3 and 2 fair value classifications.
(ii)
Fair value of financial instruments
a)
Fair value measurement
The following estimate fair values were determined using
available market information and proper measurement methodologies. However, a
considerable amount of judgment is necessary to interpret market information and
estimate fair value. Accordingly, the estimates presented in this document are
not necessarily indicative of amounts that the Company could realize in the
current market. The use of different market assumptions and/or estimation
methodology may have a significant effect on estimated fair values.
The following methods and assumptions were used in order
to estimate the fair value for each financial instrument type for which the
estimate of values is practicable.
(i)
The amounts of cash and
cash equivalents, short-term investments, accounts receivable, other
receivables, suppliers, and other current liabilities approximate to their fair
values, recorded in the financial statements.
73
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
20.
Financial instruments
--Continued
(ii)
Fair value of financial instruments
--Continued
a)
Fair value measurement-
-Continued
(ii)
The fair value of bank
loans and other financial debts is estimated through future cash flows
discounted using benchmark interest rates available for similar and outstanding
debts or terms.
The most significant
carrying values and fair values of financial assets and liabilities as of
December 31, 2016 and 2015 are as follows:
|
Company
|
|
2016
|
2015
|
|
Carrying value
|
Fair value
|
Carrying value
|
Fair value
|
|
|
|
|
Financial
assets
|
|
|
|
|
Cash and cash
equivalents (Note 4.1)
|
19,811
|
19,811
|
44,044
|
44,044
|
Short-term
investments (Note 4.2)
|
163,562
|
163,562
|
350,343
|
350,343
|
Derivative
financial instruments (Note 20(i)(b))
|
3,740
|
3,740
|
-
|
-
|
Trade accounts
receivable (Note 5)
|
749,607
|
749,607
|
986,042
|
986,042
|
Loans
receivable
(Note 21.1)
|
25,529
|
25,529
|
78,818
|
78,818
|
|
|
|
|
|
Financial
liabilities
|
|
|
|
|
Loans and
financing (Note 12)
|
1,006,930
|
1,014,809
|
1,138,660
|
1,095,844
|
Debentures (Note
13)
|
451,268
|
470,179
|
656,081
|
633,238
|
Payables to venture partners
(Note
15)
|
1,140
|
1,414
|
4,713
|
5,472
|
Derivative
financial instruments (Note 20(i)(b))
|
-
|
-
|
21,674
|
21,674
|
Suppliers
|
63,451
|
63,451
|
32,115
|
32,115
|
Obligations
assumed on assignment of receivables (Note 14)
|
75,813
|
75,813
|
34,847
|
34,847
|
Payables for
purchase of properties and advance from customers (Note 17)
|
236,833
|
236,833
|
292,205
|
292,205
|
Loans payables
(Note 21.1)
|
8,820
|
8,820
|
10,480
|
10,480
|
|
Consolidated
|
|
2016
|
2015
|
|
Carrying value
|
Fair value
|
Carrying value
|
Fair value
|
|
|
|
|
Financial
assets
|
|
|
|
|
Cash and cash
equivalents (Note 4.1)
|
29,534
|
29,534
|
82,640
|
82,640
|
Short-term
investments (Note 4.2)
|
223,646
|
223,646
|
629,671
|
629,671
|
Derivative
financial instruments (Note 20(i)(b))
|
3,740
|
3,740
|
-
|
-
|
Trade accounts
receivable (Note 5)
|
993,962
|
993,962
|
1,802,364
|
1,802,364
|
Loans
receivable
(Note 21.1)
|
25,529
|
25,529
|
109,193
|
109,193
|
|
|
|
|
|
Financial
liabilities
|
|
|
|
|
Loans and
financing (Note 12)
|
1,186,300
|
1,188,603
|
1,292,835
|
1,237,222
|
Debentures (Note
13)
|
451,268
|
470,179
|
857,958
|
828,387
|
Payables to venture partners
(Note
15)
|
1,237
|
1,414
|
4,895
|
5,472
|
Derivative
financial instruments (Note 20(i)(b))
|
-
|
-
|
21,674
|
21,674
|
Suppliers
|
83,166
|
83,166
|
57,335
|
57,335
|
Obligations
assumed on assignment of receivables (Note 14)
|
99,030
|
99,030
|
59,293
|
59,293
|
Payables for
purchase of properties and advance from customers (Note 17)
|
295,697
|
295,697
|
609,934
|
609,934
|
Loans payables
(Note 21.1)
|
8,820
|
8,820
|
51,482
|
51,482
|
b)
Risk of debt acceleration
As of December 31, 2016, the Company has loans and
financing, with restrictive covenants related to cash generation, indebtedness
ratios, and other. These restrictive covenants have been complied with by the
Company and do not limit its ability to conduct its business as usual. As
mentioned in Notes 12 and 13, in view of the non-compliance with the covenants
of a CCB issue (Note 12), the non-current portions of this operation were
reclassified into short term. The Company obtained the agreement from the bank
related to the non-fulfillment of the net debt limit in relation to the
financial statements as of December 31, 2016 and March 31, 2017, thus not
requiring the mandatory early payment and/or declaration of early maturity (Note
31 (iii)).
74
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
20.
Financial instruments
--Continued
(iii)
Capital stock management
The objective of the Company’s capital stock management is
to guarantee the maintenance of a strong credit rating in institutions, and an
optimum capital ratio, in order to support the Company’s business and maximize
value to shareholders.
The Company controls its capital structure by making
adjustments and adapting to current economic conditions. In order to maintain
its structure adjusted, the Company may pay dividends, return on capital to
shareholders, raise new loans and issue debentures, among others.
There were no changes in objectives, policies or
procedures during the years ended December 31, 2016 and 2015.
The Company included in its net debt structure: loans and
financing, debentures, obligations assumed on assignment of receivables, and
payables to venture partners less cash and cash equivalents and short-term
investments:
|
Company
|
Consolidated
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Loans and
financing (Note 12)
|
1,006,930
|
1,138,660
|
1,186,300
|
1,292,835
|
Debentures (Note
13)
|
451,268
|
656,081
|
451,268
|
857,958
|
Payables to
venture partners (Note 15)
|
1,140
|
4,713
|
1,237
|
4,895
|
( - ) Cash and
cash equivalents and
short-term
investments (Note 4.1 and 4.2)
|
(183,373)
|
(394,387)
|
(253,180)
|
(712,311)
|
Net
debt
|
1,275,965
|
1,405,067
|
1,385,625
|
1,443,377
|
Equity
|
1,928,325
|
3,095,491
|
1,930,453
|
3,097,236
|
(iv)
Sensitivity analysis
The sensitivity analysis of financial instruments for the
years ended December 31, 2016 and 2015, except swap contracts, which are
analyzed through their due dates, describes the risks that may incur material
losses on the Company’s profit or loss, as provided for by CVM, through Rule No.
475/08, in order to show a 25% and 50% increase/decrease in the risk variable
considered.
As of December 31, 2016, the Company has the following
financial instruments:
a)
Short-term investments, loans and financing, and
debentures linked to Interbank Deposit Certificates (CDI);
b)
Loans and financing and debentures linked to the
Referential Rate (TR) and CDI, and debentures indexed to the CDI, IPCA and
TR;
c)
Accounts receivable, linked to the National Civil
Construction Index (INCC) and General Market Price Index (IGP-M).
75
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
20.
Financial instruments
--Continued
(iv)
Sensitivity analysis
--Continued
For the sensitivity analysis in the year ended December
31, 2016, the Company considered the interest rates of investments, loans and
accounts receivables, the CDI rate at 13.63%, TR rate at 2.75%, INCC rate at
6.11%, IPCA rate at 6.29% and IGP-M rate at 7.19%. The scenarios considered were
as follows:
Scenario I – Probable:
10% increase/decrease in the risk variables used for
pricing
Scenario II – Possible:
25% increase/decrease in the risk variables used for
pricing
Scenario III –
Remote: 50% increase/decrease in the risk variables used
for pricing
The Company shows in the following chart the sensitivity
to risks to which the Company is exposed, taking into account that the possible
effects would impact the future results, based on the exposures shown at
December 31, 2016. The effects on equity are basically the same ones on profit
or loss.
|
|
Scenario
|
|
|
I
|
II
|
III
|
III
|
II
|
I
|
Instrument
|
Risk
|
Increase 10%
|
Increase 25%
|
Increase 50%
|
Decrease 50%
|
Decrease 25%
|
Decrease 10%
|
|
|
|
|
|
|
|
|
Short-term investments
|
Increase/decrease of CDI
|
2,544
|
6,359
|
12,719
|
(12,719)
|
(6,359)
|
(2,544)
|
Loans
and financing
|
Increase/decrease of CDI
|
(5,572)
|
(13,930)
|
(27,860)
|
27,860
|
13,930
|
5,572
|
Debentures
|
Increase/decrease of CDI
|
(956)
|
(2,390)
|
(4,780)
|
4,780
|
2,390
|
956
|
Derivative
financial instruments
|
Increase/decrease of CDI
|
(1,952)
|
(4,882)
|
(9,570)
|
10,751
|
5,257
|
2,101
|
|
|
|
|
|
|
|
|
Net
effect of CDI variation
|
|
(5,936)
|
(14,843)
|
(29,491)
|
30,672
|
15,218
|
6,085
|
|
|
|
|
|
|
|
|
Loans
and financing
|
Increase/decrease of TR
|
(1,928)
|
(4,821)
|
(9,641)
|
9,641
|
4,821
|
1,928
|
Debentures
|
Increase/decrease of TR
|
(808)
|
(2,020)
|
(4,040)
|
4,040
|
2,020
|
808
|
|
|
|
|
|
|
|
|
Net
effect of TR variation
|
|
(2,736)
|
(6,841)
|
(13,681)
|
13,681
|
6,841
|
2,736
|
|
|
|
|
|
|
|
|
Debentures
|
Increase/decrease of IPCA
|
(409)
|
(1,024)
|
(2,047)
|
2,047
|
1,024
|
409
|
|
|
|
|
|
|
|
|
Net
effect of IPCA variation
|
|
(409)
|
(1,024)
|
(2,047)
|
2,047
|
1,024
|
409
|
|
|
|
|
|
|
|
|
Accounts receivable
|
Increase/decrease of INCC
|
3,374
|
8,435
|
16,870
|
(16,870)
|
(8,435)
|
(3,374)
|
Payable for purchase of properties
|
Increase/decrease of INCC
|
(1,703)
|
(4,258)
|
(8,516)
|
8,516
|
4,258
|
1,703
|
|
|
|
|
|
|
|
|
Net
effect of INCC variation
|
|
1,671
|
4,177
|
8,354
|
(8,354)
|
(4,177)
|
(1,671)
|
|
|
|
|
|
|
|
|
Accounts receivable
|
Increase/decrease of IGP-M
|
2,738
|
6,846
|
13,692
|
(13,692)
|
(6,846)
|
(2,738)
|
|
|
|
|
|
|
|
|
Net
effect of IGP-M variation
|
|
2,738
|
6,846
|
13,692
|
(13,692)
|
(6,846)
|
(2,738)
|
76
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
21.
Related parties
21.1. Balances with related parties
The transactions between the Company and related companies
are made under conditions and prices established between the parties.
|
Company
|
Consolidated
|
Current accounts
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Assets
|
|
|
|
|
Current
account
(a):
|
|
|
|
|
Total
SPEs
|
24,500
|
55,023
|
50,232
|
86,010
|
Condominium and consortia (b) and thirty party’s
works (c)
|
7,223
|
9,108
|
7,223
|
9,108
|
Loan
receivable (d) (Note 20.ii.a)
|
25,529
|
78,818
|
25,529
|
109,193
|
Dividends receivable
|
14,464
|
14,279
|
-
|
-
|
Total
Current account
–
assets
|
71,716
|
157,228
|
82,984
|
204,311
|
|
|
|
|
|
Current portion
|
46,187
|
78,410
|
57,455
|
95,118
|
Non-current
|
25,529
|
78,818
|
25,529
|
109,193
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Current account (a):
|
|
|
|
|
Total
SPEs and Tenda
|
(1,064,435)
|
(790,895)
|
(76,791)
|
(76,620)
|
Loan
payable (d) (Note 20.ii.a)
|
(8,820)
|
(10,480)
|
(8,820)
|
(51,482)
|
Total
current account
–
liabilities
|
(1,073,255)
|
(801,375)
|
(85,611)
|
(128,102)
|
|
|
|
|
|
Current portion
|
(1,073,255)
|
(801,375)
|
(85,611)
|
(87,100)
|
Non-current portion
|
-
|
-
|
-
|
(41,102)
|
(a) The Company participates in
the development of real estate ventures with other partners, directly or through
related parties, based on the formation of condominiums and/or consortia. The
management structure of these ventures and the cash management are centralized
in the lead partner of the venture, which manages the construction schedule and
budgets. Thus, the lead partner ensures that the investments of the necessary
funds are made and allocated as planned. The sources and use of resources of the
venture are reflected in these balances, observing the respective interest of
each investor, which are not subject to indexation or financial charges and do
not have a fixed maturity date. Such transactions aim at simplifying business
relations that demand the joint management of amounts reciprocally owed by the
involved parties and, consequently, the control over the change of amounts
reciprocally granted which offset against each other at the time the current
account is closed. The average term for the development and completion of the
ventures in which the resources are invested is between 24 and 30 months. The
Company receives a compensation for the management of these ventures.
(b) Refers to transactions between
the lead partner, partners, and condominiums.
(c) Refers to operations in
third-party’s works.
(d) The loans of the Company with
its subsidiaries, shown below, are made to provide subsidiaries with cash to
carry out their respective activities, subject to the respective agreed-upon
financial charges. The businesses and operations with related parties are
carried out strictly at arm’s length, in order to protect the interests of the
both parties involved in the business.
The composition, nature and conditions of the balances of
loans receivable and payable of the Company are as follows. Loans have maturity
from January 2017, and are tied to the cash flows of the related
ventures.
|
Company
|
|
|
|
2016
|
2015
|
Nature
|
Interest rate
|
|
|
|
|
|
Scena Ipiranga
- Liga das Senhoras Católicas.
|
6,635
|
-
|
Construction
|
12%
p.a. + IGPM
|
Lagunas -
Tembok Planej. E Desenv.
Imob. Ltda.
|
4,250
|
-
|
Construction
|
12%
p.a. + IGPM
|
Tembok Planej.
E Desenv. Imob.
Ltda. (Vistta Laguna)
|
-
|
11,044
|
Construction
|
12%
p.a. + IGPM
|
Acquarelle Civilcorp Incorporações
Ltda.
|
-
|
287
|
Construction
|
12%
p.a. + IGPM
|
Manhattan Residencial I (a)
|
2,486
|
53,862
|
Construction
|
10%
p.a. + TR
|
Target Offices & Mall
|
12,158
|
3,105
|
Construction
|
12%
p.a. + IGPM
|
Scena Laguna -
Tembok Planej. e Desenv.
Imob. Ltda.
|
-
|
10,520
|
Construction
|
12%
p.a. + IGPM
|
Total Company receivable
|
25,529
|
78,818
|
|
|
|
|
|
|
|
Gafisa Spe-113 Empr Imob
|
-
|
3,788
|
Construction
|
100%
do CDI
|
Dubai Residencial
|
3,403
|
2,650
|
Construction
|
6%
p.a.
|
Parque Árvores
|
2,437
|
2,270
|
Construction
|
6%
p.a.
|
Parque Águas
|
2,980
|
1,772
|
Construction
|
6%
p.a.
|
Total Company payable
|
8,820
|
10,480
|
Construction
|
100%
of CDI
|
77
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
21.
Related parties
--Continued
21.1. Balances with related parties
--Continued
|
Consolidated
|
|
|
|
2016
|
2015
|
Nature
|
Interest rate
|
|
|
|
|
|
Scena Ipiranga
- Liga das Senhoras Católicas.
|
6,635
|
-
|
Construction
|
12%
p.a. + IGPM
|
Lagunas -
Tembok Planej. E Desenv.
Imob. Ltda.
|
4,250
|
-
|
Construction
|
12%
p.a. + IGPM
|
Tembok Planej.
E Desenv. Imob.
Ltda. (Vistta Laguna)
|
-
|
11,044
|
Construction
|
12%
p.a. + IGPM
|
Acquarelle Civilcorp Incorporações
Ltda.
|
-
|
287
|
Construction
|
12%
p.a. + IGPM
|
Manhattan Residencial I (a)
|
2,486
|
53,862
|
Construction
|
10%
p.a. + TR
|
Target Offices & Mall
|
12,158
|
3,105
|
Construction
|
12%
p.a. + IGPM
|
Scena Laguna -
Tembok Planej. e Desenv.
Imob. Ltda.
|
-
|
10,520
|
Construction
|
12%
p.a. + IGPM
|
Fit
Campolim SPE Emp. Imob. Ltda.
|
-
|
14,097
|
Construction
|
113.5% of 126.5% of CDI
|
Acedio SPE Emp.
Imob. Ltda.
|
-
|
3,260
|
Construction
|
113.5% of 126.5% of CDI
|
Atua
Construtora e Incorporadora S.A.
|
-
|
12,168
|
Construction
|
113.5% to 112% of CDI
|
Other
|
-
|
850
|
Construction
|
Several
|
Total Consolidated receivable
|
25,529
|
109,193
|
|
|
|
|
|
|
|
Fit 34 SPE
Empreendimentos Imobiliários Ltda.
|
-
|
21,925
|
Construction
|
6%
p.a.
|
Fit 03 SPE
Empreendimentos Imobiliários Ltda.
|
-
|
7,912
|
Construction
|
6%
p.a.
|
Fit 11 SPE
Empreendimentos Imobiliários Ltda.
|
-
|
5,910
|
Construction
|
6%
p.a.
|
Gafisa Spe-113 Empr Imob
|
-
|
3,788
|
Construction
|
100%
do CDI
|
Parque dos Pássaros
|
-
|
2,725
|
Construction
|
6%
p.a.
|
Dubai Residencial
|
3,403
|
2,650
|
Construction
|
6%
p.a.
|
Parque Árvores
|
2,437
|
2,270
|
Construction
|
6%
p.a.
|
Parque Águas
|
2,980
|
1,772
|
Construction
|
6%
p.a.
|
Fit 31 SPE
Empreendimentos Imobiliários Ltda.
|
-
|
1,298
|
Construction
|
6%
p.a.
|
Araçagy
|
-
|
1,232
|
Construction
|
6%
p.a.
|
Total Consolidated payable
|
8,820
|
51,482
|
|
|
(a)
See change in Note 9 (h).
In the year ended December 31, 2016 the recognized
financial income from interest on loans amounted to R$687 (R$10,049 in 2015) in
the Company’s and Consolidated statement (Note 25).
Information regarding management transactions and
compensation is described in Note
25.
21.2. Endorsements, guarantees and
sureties
The financial
transactions of the subsidiaries are guaranteed by the endorsement or surety in
proportion to the interest of the Company in the capital stock of such
companies, in the amount of
R$722,990
as of December 31,
2016 (R$1,067,950 in 2015).
22.
Net operating revenue
|
Company
|
Consolidated
|
|
2016
|
2015
|
2016
|
2015
|
Gross
operating revenue
|
|
|
|
|
Real
estate development, sale, barter transactions and construction
services
|
741,759
|
1,219,969
|
990,613
|
1,568,566
|
(Recognition) Reversal of allowance for doubtful
accounts and provision for cancelled contracts (Note 5)
|
(6,950)
|
(6,749)
|
(6,950)
|
(6,749)
|
Taxes
on sale of real estate and services
|
(60,943)
|
(105,958)
|
(67,965)
|
(118,460)
|
Net
operating revenue
|
673,866
|
1,107,262
|
915,698
|
1,443,357
|
78
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
23.
Costs and expenses by nature
These are represented by the following
:
|
Company
|
Consolidated
|
|
2016
|
2015
|
2016
|
2015
|
Cost
of real estate development and sale:
|
|
|
|
|
Construction cost
|
(244,202)
|
(455,793)
|
(346,827)
|
(587,636)
|
Land
cost
|
(296,399)
|
(168,010)
|
(296,008)
|
(225,984)
|
Development cost
|
(32,155)
|
(37,955)
|
(42,353)
|
(51,359)
|
Provision for loss on realization of properties for
sale (Note 6)
|
(97,873)
|
618
|
(160,216)
|
618
|
Capitalized financial charges (Note
12)
|
(124,266)
|
(124,721)
|
(156,812)
|
(151,185)
|
Maintenance / warranty
|
(26,997)
|
(46,375)
|
(26,997)
|
(46,375)
|
Total
cost of real estate development and sale
|
(821,892)
|
(832,236)
|
(1,029,213)
|
(1,061,921)
|
|
|
|
|
|
Selling expenses:
|
|
|
|
|
Product marketing expenses
|
(36,332)
|
(37,048)
|
(45,239)
|
(50,486)
|
Brokerage and sale commission
|
(23,652)
|
(12,182)
|
(28,214)
|
(18,194)
|
Customer Relationship Management (CRM) and corporate
marketing expenses
|
(18,502)
|
(18,641)
|
(20,351)
|
(28,094)
|
Other
|
(1,042)
|
(14,679)
|
(1,142)
|
(1,175)
|
Total
selling expenses
|
(79,528)
|
(82,550)
|
(94,946)
|
(97,949)
|
|
|
|
|
|
General and administrative
expenses:
|
|
|
|
|
Salaries and payroll charges
|
(27,533)
|
(38,125)
|
(37,558)
|
(37,579)
|
Employee benefits
|
(3,175)
|
(4,601)
|
(4,331)
|
(4,551)
|
Travel
and utilities
|
(456)
|
(730)
|
(622)
|
(713)
|
Services
|
(7,777)
|
(9,393)
|
(10,608)
|
(10,063)
|
Rents
and condominium fees
|
(5,892)
|
(9,049)
|
(8,037)
|
(8,984)
|
IT
|
(13,495)
|
(12,566)
|
(18,409)
|
(13,011)
|
Stock
option plan (Note 18.3)
|
(6,821)
|
(7,826)
|
(6,821)
|
(7,826)
|
Reserve for profit sharing (Note
25.iii)
|
(18,750)
|
(14,000)
|
(18,750)
|
(14,000)
|
Other
|
(1,062)
|
(1,150)
|
(1,449)
|
(715)
|
Total
general and administrative expenses
|
(84,961)
|
(97,440)
|
(106,585)
|
(97,442)
|
|
|
|
|
|
Other
income (expenses), net:
|
|
|
|
|
Expenses with lawsuits (Note 16)
|
(69,605)
|
(88,067)
|
(70,796)
|
(91,193)
|
Expenses with the adjustment to the stock option
plan balance of AUSA (Note 18.2)
|
(3,401)
|
-
|
(3,401)
|
-
|
Other
|
(4,025)
|
(16,054)
|
(4,795)
|
(16,441)
|
Total
other income/(expenses), net
|
(77,031)
|
(104,121)
|
(78,992)
|
(107,634)
|
24.
Financial income (expenses)
|
Company
|
Consolidated
|
|
2016
|
2015
|
2016
|
2015
|
Financial
income
|
|
|
|
|
Income from
financial investments
|
32,555
|
56,614
|
40,940
|
66,153
|
Derivative
transactions (Note 20 (i) (b))
|
13,404
|
-
|
13,404
|
-
|
Financial income
on loans (Note 21)
|
687
|
10,049
|
687
|
10,049
|
Other financial
income
|
2,671
|
867
|
3,408
|
1,104
|
Total financial
income
|
49,317
|
67,530
|
58,439
|
77,306
|
|
|
|
|
|
Financial
expenses
|
|
|
|
|
Interest on
funding, net of capitalization (Note 12)
|
(43,764)
|
(64,845)
|
(34,759)
|
(56,236)
|
Amortization of
debenture cost
|
(3,053)
|
(3,831)
|
(3,053)
|
(3,831)
|
Payables to
venture partners
|
(1,506)
|
(1,891)
|
(1,506)
|
(1,891)
|
Banking
expenses
|
(7,935)
|
(3,757)
|
(9,687)
|
(4,113)
|
Derivative
transactions (Note 20 (i) (b))
|
-
|
(17,151)
|
-
|
(17,151)
|
Offered discount
and other financial expenses
|
(27,074)
|
(29,597)
|
(35,113)
|
(44,506)
|
Total financial
expenses
|
(83,332)
|
(121,072)
|
(84,118)
|
(127,728)
|
79
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
25.
Transactions with management and employees
(i)
Management compensation
The amounts recorded in the account “general and
administrative expenses” for the years ended December 31, 2016 and 2015,
related to the compensation of the Company’s management members are as
follows:
|
Management compensation
|
|
Year ended December 31,
2016
|
Board of Directors
|
Statutory Board
|
Fiscal Council
|
|
|
|
|
Number of
members
|
7
|
5
|
3
|
Annual fixed
compensation
(in R$)
|
|
|
|
Salary /
Fees
|
1,682
|
3,575
|
197
|
Direct and
indirect benefits
|
-
|
345
|
-
|
Others (INSS)
|
297
|
715
|
39
|
Monthly
compensation
(in R$)
|
165
|
386
|
20
|
Total compensation
|
1,979
|
4,635
|
236
|
Profit sharing (Note 25 (iii))
|
-
|
2,275
|
-
|
Total compensation and profit
sharing
|
1,979
|
6,910
|
236
|
|
|
|
|
Management compensation
|
|
Year ended December 31,
2015
|
Board of Directors
|
Statutory Board
|
Fiscal Council
|
|
|
|
|
Number of
members
|
7
|
5
|
3
|
Annual fixed
compensation
(in R$)
|
|
|
|
Salary /
Fees
|
1,693
|
3,575
|
198
|
Direct and
indirect benefits
|
-
|
393
|
-
|
Others (INSS)
|
339
|
715
|
40
|
Monthly
compensation
(in R$)
|
169
|
390
|
29
|
Total compensation
|
2,032
|
4,683
|
238
|
Profit sharing (Note 25 (iii))
|
-
|
2,247
|
-
|
Total compensation and profit
sharing
|
2,032
|
6,930
|
238
|
|
|
|
|
|
The amount related to the expenses with the granting of
options of the Company’s management members was R$3,785 for the year ended
December 31, 2016 (R$4,861 in 2015).
The maximum aggregate compensation of the Company’s
management members for the year 2016, was established at R$19,823, as approved
at the Annual Shareholders’ Meeting held on April 25, 2016.
On the same occasion the compensation limit of the Fiscal
Council members for their next term of office that ends in the Annual
Shareholders’ Meeting to be held in 2017, was approved at R$245.
(ii)
Sales transactions
In the year ended December 31, 2016 and December 31, 2015,
no transaction of units sold to Management was carried out, and the total
balance receivable of sales transactions made was R$957 (R$1,610 in
2015).
80
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
25.
Transactions with management and employees
--Continued
(iii)
Profit sharing
The Company has a profit sharing plan that entitles its
employees and management members, and those of its subsidiaries to
participate in the distribution of profits the Company.
This plan is tied to the achievement of specific targets,
established, agreed-upon and approved by the Board of Directors at the beginning
of each year.
In the year ended December 31, 2016, the Company recorded
a reserve for profit sharing amounting to R$18,750 in the Company’s and
Consolidated statement (R$14,000 in 2015) in the account “General and
Administrative Expenses" (Note 23).
|
Company and Consolidated
|
|
2016
|
2015
|
|
|
|
Executive officers (Note 25(i))
|
2,275
|
2,247
|
Other employees
|
16,475
|
11,753
|
Total profit sharing
,
|
18,750
|
14,000
|
Profit sharing is calculated and reserved based on the
achievement of the Company’s targets for the period. An assessment is performed
subsequent to year-end of the achievement of the Company’s and its employees’
targets, and the payment shall be made in April
2017.
As shown in the previous tables and paragraphs, the
aggregate compensation of Management and Fiscal Council members of the Company
is according to the limit approved at the Annual Shareholders’ Meeting held on
April 27, 2016.
26.
Insurance
Gafisa S.A. and its subsidiaries maintain insurance
policies against engineering risk, barter guarantee, guarantee for the
completion of the work, and civil liability related to unintentional personal
damages caused to third parties and material damages to tangible assets, as well
as against fire hazards, lightning strikes, electrical damages, natural
disasters and gas explosion. The contracted coverage is considered sufficient by
management to cover possible risks involving its assets and/or
responsibilities.
The liabilities covered by insurance and the respective
amounts as of December 31, 2016 are as follows:
Insurance type
|
Coverage – R$
|
Engineering risks and guarantee for completion of
work
|
833,803
|
Civil liability (Directors and Officers –
D&O)
|
162,067
|
|
995,870
|
81
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
27. Earning (loss) per share
In accordance with CPC
41, the Company presents basic and diluted loss per share. The comparison data
of basic and diluted earnings/loss per share is based on the weighted average
number of shares outstanding for the year, and all dilutive potential shares
outstanding for each year presented, respectively.
Diluted earnings per
share is computed similarly to basic earnings per share except that the
outstanding shares are increased to include the number of additional shares that
would have been outstanding if the potential dilutive shares attributable to
stock options and redeemable shares of noncontrolling interest had been issued
during the respective periods, utilizing the weighted average stock
price.
As mentioned in Note
31(i)(a), on February 20, 2017, the reverse split of the totality of common
shares was approved, in the ratio of 13.483023074 to 1, changing from
378,066,162 common shares to 28,040,162 common shares. All information related
to the number of shares was retroactively adjusted to reflect such reverse split
of shares.
The following table
shows the calculation of basic and diluted earnings and loss per share. In view
of the loss for the year ended December 31, 2016, shares with dilutive potential
are not considered, because the impact would be antidilutive.
|
|
|
|
2016
|
2015
|
Basic
numerator
|
|
|
Proposed dividends and interest on
equity
|
|
-
|
Undistributed
profit (loss)
from continued operations
|
(610,141)
|
44,129
|
Undistributed
profit (loss)
from discontinued operations
|
(553,455)
|
30,320
|
Undistributed
profit (loss)
, available for the holders of common
shares
|
(1,163,596)
|
74,449
|
|
|
|
Basic denominator
(in thousands of shares
)
|
|
|
Weighted average
number of shares
(Note 18.1)
|
26,921
|
27,262
|
|
|
|
Basic
earning (loss) per share in Reais
|
(43.222)
|
2.731
|
From
continued operations
|
(22.664)
|
1.619
|
From
discontinued operations
|
(20.558)
|
1.112
|
Diluted
numerator
|
|
|
Proposed dividends and interest on
equity
|
-
|
-
|
Undistributed
earning (loss)
from continued operations
|
(610,141)
|
44,129
|
Undistributed
earning (loss)
from discontinued operations
|
(553,455)
|
30,320
|
Undistributed
earning (loss)
, available for the holders of common
shares
|
(1,163,596)
|
74,449
|
|
|
|
Diluted
denominator (in thousands of shares
)
|
|
|
Weighted average
number of shares
(Note 18.1)
|
26,921
|
27,262
|
Stock
options
|
95
|
186
|
Anti-dilution effect
|
(95)
|
-
|
Diluted weighted average number of
shares
|
26,921
|
27,448
|
|
|
|
|
|
|
Diluted earning (loss) per share in
Reais
|
(43.222)
|
2.712
|
From
continued operations
|
(22.664)
|
1.608
|
From
discontinued operations
|
(20.558)
|
1.105
|
82
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
28. Segment information
The Company's management assesses segment information on
the basis of different business segments rather than based on the geographical
regions of operations.
The Company operates in
the following segments: Gafisa (for ventures targeted at high and medium income)
and Tenda (for ventures targeted at low income. With the completion of the
discontinuation of Tenda’s operations, (Note 8.2), the Company will have only
one segment.
The Company's chief executive officer, who is responsible
for allocating resources to businesses and monitoring their progresses, uses
economic present value data, which is derived from a combination of historical
and projected operating results.
The Company provides below the main line items in the
statement of profit or loss and statement of financial position related to each
reporting segment.
Segment information does not segregate operating expenses.
No revenues from an individual client represented more than 10% of net sales
and/or services.
|
|
|
|
Consolidated
|
|
Gafisa S.A.
|
Tenda
|
(-) Discontinued operations (Note
8.2)
|
2016
|
Net operating
revenue
|
915,698
|
1,052,710
|
(1,052,710)
|
915,698
|
Operating
costs
|
(1,029,213)
|
(729,705)
|
729,705
|
(1,029,213)
|
|
|
|
|
|
Gross
profit
|
(113,515)
|
323,005
|
(323,005)
|
(113,515)
|
|
|
|
|
|
Selling
expenses
|
(94,946)
|
(90,490)
|
90,490
|
(94,946)
|
General and
administrative expenses
|
(106,585)
|
(89,739)
|
89,739
|
(106,585)
|
Other income /
(expenses), net
|
(78,992)
|
(49,042)
|
49,042
|
(78,992)
|
Depreciation and
amortization
|
(33,892)
|
(12,299)
|
12,299
|
(33,892)
|
Financial
expenses
|
(84,118)
|
(47,300)
|
47,300
|
(84,118)
|
Financial
income
|
58,439
|
27,257
|
(27,257)
|
58,439
|
Tax
expenses
|
(100,080)
|
(20,966)
|
20,966
|
(100,080)
|
|
|
|
|
|
Profit (loss) for
the year attributed to the owners of the Parent
|
(1,220,247)
|
56,651
|
-
|
(1,163,596)
|
|
|
|
|
|
Customers (short
and long term)
|
993,962
|
427,147
|
(427,147)
|
993,962
|
Inventories (short
and long term)
|
1,715,699
|
775,287
|
(775,287)
|
1,715,699
|
Other
assets
|
638,279
|
659,715
|
1,202,434
|
2,500,428
|
|
|
|
|
|
Total
assets
|
3,347,940
|
1,862,149
|
-
|
5,210,089
|
|
|
|
|
|
Total
liabilities
|
2,493,109
|
786,527
|
-
|
3,279,636
|
|
|
|
|
Consolidated
|
|
Gafisa S.A.
|
Tenda
|
(-) Discontinued operations (Note
8.2)
|
2015
|
Net operating
revenue
|
1,443,357
|
850,962
|
(850,962)
|
1,443,357
|
Operating
costs
|
(1,061,921)
|
(605,584)
|
605,584
|
(1,061,921)
|
|
|
|
|
|
Gross
profit
|
381,436
|
245,378
|
(245,378)
|
381,436
|
|
|
|
|
|
Selling
expenses
|
(97,949)
|
(65,311)
|
65,311
|
(97,949)
|
General and
administrative expenses
|
(97,442)
|
(83,971)
|
83,971
|
(97,442)
|
Other income /
(expenses), net
|
(107,634)
|
(52,567)
|
52,567
|
(107,634)
|
Depreciation and
amortization
|
(32,585)
|
(14,835)
|
14,835
|
(32,585)
|
Financial
expenses
|
(121,207)
|
(41,051)
|
41,051
|
(121,207)
|
Financial
income
|
77,306
|
46,825
|
(46,825)
|
77,306
|
Tax
expenses
|
(658)
|
(6,522)
|
6,522
|
(658)
|
|
|
|
|
|
Profit (loss) for
the year attributed to the owners of the Parent
|
44,129
|
30,320
|
-
|
74,449
|
|
|
|
|
|
Customers (short
and long term)
|
1,322,949
|
479,415
|
-
|
1,802,364
|
Inventories (short
and long term)
|
1,896,613
|
734,004
|
-
|
2,630,617
|
Other
assets
|
1,635,110
|
692,241
|
-
|
2,327,351
|
|
|
|
|
|
Total
assets
|
4,854,672
|
1,905,660
|
-
|
6,760,332
|
|
|
|
|
|
Total
liabilities
|
2,884,249
|
778,846
|
-
|
3,663,096
|
83
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
29. Real estate ventures under construction –
information and commitments
In order to meet the
provisions of paragraphs 20 and 21 of ICPC 02, the recognized revenue amounts
and incurred costs are shown in the statement of profit or loss, and the
advances received in the account “Payables for purchase of property and advances
from customer”.
The Company shows below information on the
ventures under construction as of December 31, 2016:
|
|
Consolidated
|
|
|
2016
|
|
|
|
Unappropriated sales revenue of units
sold
|
|
507,713
|
Unappropriated estimated cost of units
sold
|
|
(301,888)
|
Unappropriated estimated cost of units in
inventory
|
|
(389,237)
|
|
|
|
(i) Unappropriated sales revenue of units
sold
|
|
|
Ventures under construction:
|
|
|
Contracted sales revenue
|
|
1,447,860
|
Appropriated sales revenue
|
|
(940,147)
|
Unappropriated sales revenue (a)
|
|
507,713
|
(ii) Unappropriated estimated cost of units
sold
|
|
|
Ventures under construction:
|
|
|
Estimated cost of units
|
|
(862,887)
|
Incurred cost of units
|
|
560,999
|
Unappropriated estimated cost (b)
|
|
(301,888)
|
(iii) Unappropriated estimated costs of units in
inventory
|
|
|
Ventures under construction:
|
|
|
Estimated cost of units
|
|
(898,286)
|
Incurred cost of units
|
|
509,049
|
Unappropriated estimated cost
|
|
(389,237)
|
(a)
The unappropriated sales revenue of units sold are
measured by the face value of contracts, plus the contract adjustments and
deducted for cancellations, not considering the effects of the levied taxes and
adjustment to present value, and do not include ventures that are subject to
restriction due to a suspensive clause (legal period of 180 days in which the
Company can cancel a development), and therefore is not appropriated to profit
or loss.
(b)
The estimated cost of units sold and in inventory to be
incurred do not include financial charges, which are appropriated to properties
for sale and profit or loss (cost of real estate sold) in proportion to the real
estate units sold as they are incurred.
As of December 31,
2016, the percentage of assets consolidated in the financial statements related
to ventures included in the equity segregation structure of the development
stood at 35.7% (33.1% in 2015).
84
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
30. Communication with regulatory
bodies
On June 14, 2012, the
Company received a subpoena from the Securities Exchange Commission’s Division
of Enforcement related to the Matter of Certain 20-F Filer Home Builders listed
at SEC, Foreign Private Issuers (FPI). The subpoena requests that the Company
produces all documents from January 1, 2010 to July 10, 2012, the Company’s
reply date related to the preparation of our financial statements, including,
among other things, copies of our financial policies and procedures, board and
audit committee’s and operations committee’s meeting minutes, monthly closing
reports and financial packages, any documents relating to possible financial or
accounting irregularities or improprieties, and internal audit reports. The
SEC’s investigation is a non-public, fact-finding inquiry and is not clear what
action, if any, the SEC intends to take with respect to the information it
gathers. The SEC subpoena does not specify any charges. Until the publication of
these financial statements, SEC has not issued any opinion.
31. Subsequent events
(i)
Extraordinary
Shareholders’ Meeting
On February 20, 2017,
two Extraordinary Shareholders’ Meetings of the Company were held, and the
following main resolutions were taken:
a)
Reverse
split of the totality of common shares issued by the Company, in the ratio of
13.483023074 to 1, thus the 378,066,162 common shares issued by the Company
started to represent 28,040,162 common shares, all registered and with no par
value, and proportional adjustment of the authorized capital limit, changing
from 600,000,000 to 44,500,405 common shares.
b)
Registering of the offering to the Company’s shareholders
of the Preemptive Right to acquire, in proportion to their respective interests
in the Company’s capital, of up to 50% of Tenda’s capital, for the price of
R$8.13 per share, for cash payment, at the time the Preemptive Right is
exercised, subject to the completion of the decrease in capital of Gafisa. The
exercise period of the preemptive right is within 30 days counted as from March
17, 2017, until April 15, 2017.
c)
Approval
of the decrease in the capital of the Company in the total amount of
R$219,510,000, changing from R$2,740,661,187.74 to R$2,521,151,187.74, with no
cancellation of shares, delivering to the shareholders of the Company one common
share of Tenda to each common share of Gafisa that their own after the reverse
split, excluding the treasury shares, totaling 27,000,000 common shares of
Tenda, which represent the other 50% of its total capital.
85
Gafisa
S.A.
Notes to the financial
statements
December 31, 2016
(
Amounts in thousands of Brazilian Reais,
except as otherwise stated
)
31. Subsequent events
--Continued
As a result of the
resolutions taken above, the Company’s capital will amount to R$2,521,151,187.74
represented by 28,040,162 common shares, all registered, book-entry, and with no
par value. In case the decrease in Gafisa’s capital is not completed, the
Company may not proceed with the disposal of Tenda’s shares, in which case it
will return to the shareholders who exercised their preemptive rights the Price
per Share effectively paid, without any adjustment or indexation. This decrease
is subject to the fulfillment of the provisions of Article 174 of Act 6,404/76,
as well as obtaining the authorizations from other applicable
creditors.
(ii)
Decrease in the capital
of subsidiary Tenda
In view of the
expiration of the legal term of 60 days from the Extraordinary Shareholders’
Meeting of the subsidiary Tenda, held on December 14, 2016, with no opposition
from creditors, the following items are authorized:
a)
Decrease in the
Company’s capital, in the total mount of R$100,000,000, with no cancellation of
shares, so that the capital of subsidiary Tenda changes from R$1,194,000,000 to
R$1,094,000,000.
b)
The total
amount of the decrease in capital, adjusted by SELIC, will be fully allocated to
the parent Gafisa, for partial repayment of the invested capital, payable as
follows: R$50,000,000 plus indexation until December 31, 2018, and the remaining
balance until December 31, 2019,
with the possibility of advance in view of certain
covenants provided for in the contract.
(iii)
Waiver
for non-fulfillment of the restrictive covenant of the CCB
As mentioned in Notes
12 and 13, as of December 31, 2016, the Company exceeded the amount established
in a restrictive covenant of a CCB issue. Immediately thereafter, the Company
started negotiations with the creditor to obtain a waiver for the
non-fulfillment of the ratio established in contractual clauses. So, on March
22, 2017, the Company obtained the agreement from the bank related to the
non-fulfillment of the net debt limit in relation to the financial statements as
of December 31, 2016 and March 31, 2017. Therefore, no mandatory early payment
and/or declaration of early maturity of the CCB was required.
***
86
MANAGEMENT
STATEMENT ON THE FINANCIAL STATEMENTS
STATEMENT
Gafisa S.A. management, CNPJ
01.545.826/0001-07, located at Av. Nações Unidas, 8501, 19
th
floor,
Pinheiros, São Paulo, states as per article 25 of CVM Instruction 480 issued in
December 07, 2009:
i)
Management
has reviewed, discussed and agreed with the auditor’s conclusion expressed on
the report on review interim financial Information for the year ended December
31, 2016; and
ii)
Management
has reviewed and agreed with the interim information for the year ended December
31, 2016.
Sao Paulo, March 23
rd
,
2017
GAFISA S.A.
Management
87
MANAGEMENT
STATEMENT ON THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
REPORT
STATEMENT
Gafisa S.A. management, CNPJ
01.545.826/0001-07, located at Av. Nações Unidas, 8501, 19th floor, Pinheiros,
São Paulo, states as per article 25 of CVM Instruction 480 issued in December
07, 2009:
i)
Management
has reviewed, discussed and agreed with the auditor’s conclusion expressed on
the report on review interim financial Information for the period ended December
31, 2016; and
ii)
Management
has reviewed and agreed with the interim information for the period ended
December 31, 2016.
Sao Paulo, March 23
rd
,
2017
GAFISA S.A.
Management
88
GAFISA
S.A.
CNPJ/MF n°
01.545.826/0001-07
NIRE
35.300.147.952
Minutes of the Meeting of the Audit
Committee
held on March 23,
2017
1. DATE, TIME AND PLACE:
On March 23, 2017, at 3 p.m., in the city of
São Paulo, State of São Paulo, at Avenida das Nações Unidas 8,501, 19th
floor.
2. CALL NOTICE AND
ATTENDANCE:
As all members of this Audit Committee attended the
meeting, the instatement and approval quorum were verified, exempting,
therefore, its summoning.
3. RESOLUTIONS:
The opinion of all the present Audit Committee
members, without any restrictions, was to recommend for the Board of Directors
the approval of the Board of Directors of the final version of the documents
related to the fiscal year ended on 12.31.2016, as follows: administration
report, Company’s Financial Statements, along with the Explanatory Notes and the
Accounting Firm Report, which issued an opinion with no reservations, dated as
of March 23, 2017.
4. CLOSING:
As there were no further issues to be
addressed, the present Minutes were drawn up, approved and signed by all
Committee Members.
Signatures:
Renata de Carvalho Fidale, Secretary. José
Écio Pereira da Costa Júnior, Francisco Vidal Luna and Odair Garcia
Senra.
I certify that this is
a true copy of the minutes drawn up in the appropriate book.
Renata de Carvalho
Fidale
Secretary
89
GAFISA
S.A.
CNPJ/MF n°
01.545.826/0001-07
NIRE
35.300.147.952
Minutes of the Meeting of the Fiscal Council
held on March 23,
2017
1. DATE, TIME AND PLACE:
On March 23, 2017, at 6 p.m., in the city of
São Paulo, State of São Paulo, at Avenida das Nações Unidas, 8501, 19th
floor.
2. CALL NOTICE AND
ATTENDANCE:
As all members of the Fiscal Council attended the
meeting, the instatement and approval quorum were verified. Also present,
representatives of the Company and representatives of KPMG, external auditor of
the Company, for any clarification needed. As secretary of the Fiscal Council
was Ms. Renata de Carvalho Fidale.
3. RESOLUTIONS:
The present Fiscal Council members,
unanimously and without any restrictions, manifested in favor of the final
version of the documents related to the fiscal year ended on 12.31.2016, as
follows: Administration Report and Company’s Financial Statements, along with
the Explanatory Notes and the Accounting Firm Report, which issued an opinion
with no reservations, dated as of March 23, 2017.
4. CLOSING:
As there were no further issues to be
addressed, the present Minutes were drawn up, approved and signed by all Fiscal
Council members.
Signatures:
Renata de Carvalho Fidale, Secretary. Olavo
Fortes Campos Rodrigues Júnior, Peter Edward Cortes Marsden Wilson and Laiza
Fabiola Martins de Santa Rosa.
I certify that this is
a true copy of the minutes drawn up in the appropriate book.
Renata de Carvalho
Fidale
Secretary
90
GAFISA
S.A.
CNPJ/MF n°
01.545.826/0001-07
NIRE
35.300.147.952
Publicly-Held
Company
FISCAL COUNCIL
OPINION
The members of the Fiscal Council of Gafisa
S.A. (“Company”) hereunder signed, on the exercise of the powers conferred to
them by the Art. 163 of Law 6,404/76, after examining the Administration Report
and Company’s Financial Statements related to the fiscal year ended on
12.31.2016, along with the Explanatory Notes and the Accounting Firm Report (the
“Documents”), expressed an opinion in favor of the Documents and manifested in
favor of the approval by the Annual General Meeting of the Shareholders of the
Company to be summoned.
The Fiscal Council Opinion was executed by
Olavo Fortes Campos Rodrigues Júnior, Peter Edward Cortes Marsden Wilson and
Laiza Fabiola Martins de Santa Rosa. I certify that this is a true copy of the
minutes drawn up in the appropriate book.
São Paulo, March 23,
2017.
Renata de Carvalho
Fidale
Secretary
91
GAFISA
S.A.
CNPJ/MF n°
01.545.826/0001-07
NIRE
35.300.147.952
Publicly-Held
Company
Minutes
of the Board of Directors’ Meeting held on March 23, 2017
1. Date, Time and Place:
On March 23, 2017, at 5 p.m., in the City of
São Paulo, State of São Paulo, at Avenida das Nações Unidas 8,501, 19th
floor.
2. Call Notice and
Attendance
: Present all members of the Company’s Board of Directors,
instatement and approval quorum having been verified.
3. Presiding Board: Chairman:
Odair Garcia Senra.
Secretary: Renata de
Carvalho Fidale.
4. Resolutions:
The members of the Board of Directors
attending the meeting unanimously and with no restrictions decided, as set forth
in the terms of Article 142, V, Law 6,404/76 and Article 22 (m) of Company’s
Bylaws, the Board of Directors recommend the approval, by Company’s
shareholders, assembled in the annual shareholders’ general meeting, of (i)
administration report and Company’s financial statements related to the fiscal
year ended on 12.31.2016, along with explanatory notes and the accounting firm
report, which issued an opinion with no reservations, dated as of March 23,
2017; and (ii) proposal of this Board of Directors for not carrying out
dividends distribution, as Company has verified loss in the fiscal year ended on
12.31.2016.
5. Closing:
With no further matters to be discussed, these
minutes were prepared, approved and signed by all members of the Board of
Directors.
Signatures:
Presiding Board: Odair Garcia Senra
(Chairman), Renata de Carvalho Fidale (Secretary); Board members: Odair Garcia
Senra, Cláudio José Carvalho de Andrade, Francisco Vidal Luna, Guilherme Affonso
Ferreira, José Écio Pereira da Costa Júnior, Maurício Marcellini Pereira and
Rodolpho Amboss.
I hereby certify that
this is a true copy of the minutes drawn on the respective corporate
book.
Renata de Carvalho
Fidale
Secretary
92
|
|
FOR IMMEDIATE RELEASE
-
São Paulo, March 23, 2017 – Gafisa S.A. (Bovespa: GFSA3; NYSE: GFA), one of Brazil’s leading homebuilders, today reported financial results for the quarter and year ended December 31, 2016.
GAFISA RELEASES
4Q16 AND 2016 RESULTS
SoS of launches reached 67.3% in 4Q16
Net cash generation of R$130.4 million in the quarter
Adjusted net loss of R$156.0 million in 4Q16 and
R$ 350.5 million in the year, excluding effect of Tenda’s sale transaction and adjustments in inventory and landbank
MANAGEMENT COMMENTS
AND HIGHLIGHTS
2016 was marked by continued macroeconomic challenges as the political and economic crisis significantly impacted the Brazilian real estate market. At Gafisa, our conservative new product development strategy and metropolitan focused business model allowed us to partially offset the headwinds we experienced during this period.
The middle and upper-middle income segments were the most affected by the economic recession in Brazil. In this context, Gafisa focused on improving its operational performance and business management, and prudently developed new projects despite current macroeconomic conditions.
In 4Q16, Gafisa evolved in the development activity, with three new projects/phases launched in São Paulo. These launches totaled R$299.4 million in PSV, bringing the yearly total of new product launches to R$920.8 million.
The Company’s assertiveness in the development and marketing of these launches resulted in a record sales speed of launches of 67.3% in 2016. It may also reflect a slight improvement in the consumer confidence index.
We would like to highlight Square Ipiranga’s average speed of sales, which was well above the recent industry average. Such evolution in the sales speed of launched projects is evidence of the Company’s success in improving its operating processes over the past years, particularly in development, sales and construction.
|
93
Despite continued political and economic headwinds, the fourth quarter represented Gafisa’s best operating performance in 2016. In addition to improved sales results, with gross sales increasing 25.0% to R$455.7 million from the 3Q16, we noticed a reduction in the volume of dissolutions.
Net sales for the quarter totaled R$355.8 million, the highest quarterly sales volume in almost two years. In the second half of 2016, sales volumes were triple that of the first half.
The volume of dissolutions in 4Q16, in turn, declined to its lowest level in the last two years, reaching R$99.9 million versus R$106.1 million in 3Q16 and R$125.3 million in 4Q15. The improvement in dissolutions is still modest, constrained by the economic recession. In 2016, cancelled PSV totaled R$508.8 million, in line with R$512.9 million recorded in 2015. While the level of dissolutions improved in the quarter, it continues to be impacted by current market conditions and the solid volume of projects delivered during the past 18 months.
Despite the good performance of projects launched in the period, the Gafisa segment’s SoS continues to be impacted by current market conditions, as reflected by low inventory sales volumes. However, SoS increased year-on-year to 16.8% in 4Q16, representing the highest level since 4Q13. In 2016, Gafisa’s SoS reached 31.5%.
The Company also remained focused on the sale of existing units. As a result, 29.4% of net sales in 4Q16 and 45.5% in 12M16 comprised products launched prior to the current year. Considering the higher volume of dissolutions related to legacy projects, however, net sales were still concentrated in more recent projects, impacting the segment’s revenues.
It is also important to note that this was the first quarter where backlog increased versus prior quarters, up 28.3% q-o-q, due to the good sales performance in the last quarter of the year and the maintenance of launch volumes over the past three years. This positive trend was evident in the third quarter, but became more prominent in the last quarter of the year.
Gafisa ended 2016 with 19 projects under construction, all on schedule and within the delivery timeframe, reinforcing Gafisa’s commitment to its clients.
|
|
Conservative cash management remained an important area of focus throughout the year. Gafisa delivered R$292.7 million in PSV in the fourth quarter of 2016, bringing the full year number to R$1.7 billion. The volume of transfers reached R$136.6 million in 4Q16 and R$515.3 million in 2016. These results show an appropriate level of control and operating efficiency. Despite current credit restrictions, Gafisa has an efficient transfer process, contributing to a 4Q16 cash generation result that reached the highest level in three years.
As a result of this transfer performance and conservative cash management strategy, operating cash generation totaled R$150.8 million in the quarter and R$300.9 million in the year.
It is important to note that 55.6% of total finished inventory refers to commercial projects, due not only to the high volume of commercial projects delivered over the last 18 months, but also limited liquidity for this type of product.
Despite the first signs of stability in the market and the Company’s improved operating performance in the period, it will take time for better operating performance to be reflected in financial results, as the protracted recession has taken its toll on product pricing and inventory sales. The expectation of improved political and economic conditions over the next quarters, combined with a likely upturn in the middle and upper income segments, should allow a gradual recovery in the Company’s financial results over the next periods.
In view of these factors, we will maintain a conservative approach in early 2017, seeking to balance the placement of new products on the market, prioritizing those with higher liquidity to achieve an appropriate level of sales and profitability, and maintaining the focus on decreasing inventory.
The sale of Tenda’s shares, as announced on December 14, 2016, had the following effects on our financial results: (i) R$610.5 million impairment from discontinued operations; and (ii) R$90.3 million due to the reversal of deferred tax assets previously recorded, as a result of the fiscal loss generated by the transaction, resulting in an impact of R$680.3 million on net income for the quarter, excluding elimination effects and Tenda’s previous result.
|
94
Besides the impacts related to Tenda, adjusted gross profit in 4Q16 was impacted by R$159.9 million related to pricing adjustments on inventory commercial units, as the market price declined below accounting cost for commercial projects, as a result of the market environment, and also to adjustments in the market value of certain land that will not be developed in the coming years. Excluding these non-recurring impacts, gross profit was R$54.7 million in the period, and R$203.2 million for the year.
Given the deconsolidation of Tenda, and the expected receipt of proceeds from the sale of the 50% stake in Tenda by May 2017, Gafisa's Shareholders' Equity was impacted excluding this cash consideration. The Net Debt/ Shareholders’ Equity ratio reached 71.8%, however at the conclusion of the transaction, Gafisa should receive approximately R$319.5 million in new funds, enabling the Company to reduce leverage and increase liquidity.
Net cash generation reached an impressive R$130.4 million in 4Q16 and R$70.0 million in 2016, underscoring management’s prudent financial management. We will continue to focus on cash generation and capital discipline in 2017. In this context, the Company was successful in reducing gross debt by R$268.6 million.
The end of 2016 marks the conclusion of a strategic shift for Gafisa, which commenced three years ago with the sale of our 70% interest in Alphaville. In February 2014, we initiated studies to separate the Gafisa and Tenda segments, a process which began when the Company’s management determined that these units would be more efficient and profitable if they operated independently, and culminating in the imminent Tenda spinoff.
|
|
We have reaped the benefits of Tenda’s business restructuring and the strategy to separate the business units. With a dedicated management team, Tenda refined its business model and positioned itself to benefit from the growth in the low-income market. At Gafisa, after the separation process and resulting cash inflow providing a greater cushion and balance in the capital structure, the segment will continue to focus on the middle and upper-middle income segments concentrated in the markets of São Paulo and Rio de Janeiro. The maintenance of launch volume over the past three years is already creating a foundation for future years’ results.
We will maintain our conservative approach in early 2017, seeking to balance the placement of new products on the market while remaining focused on inventory sales, both complete and under construction. Gafisa is navigating the challenging economic conditions to be well positioned for a potential upswing in the economy over the coming periods, while maintaining a conservative and balanced approach.
The Company continues to advance guided by capital discipline, its profitability goals, and value creation for shareholders.
The Management
|
95
STANDARDIZED FINANCIAL STATEMENTS 4Q16 AND 2016
We point out, as per Material Fact of December 14, 2016, informing on the signature of the agreement to sell up to 30% of shares issued by Tenda, and in line with CPC 31 – Non-Current Asset Held for Sale and Income from Discontinued Operation, the financial information in this report reflects the effects of the recording of Tenda as discontinued operation. In the case of the Income Statement, the results of December 31, 2015 were also restated for comparability purposes and the result is presented in a single amount (Discontinued Operation Result). Referring to balance sheet, the information related to Tenda is presented in single lines, both under assets and liabilities.
FINANCIAL RESULTS
§
Operating cash generation totaled R$150.8 million in 4Q16 and R$300.9 million for the full year 2016. Net cash generation in the quarter was R$130.4 million, the highest level in 3 years, with an accumulated cash generation of R$70.0 million in the year.
§
Gafisa’s 4Q16 net revenue recognized by the “PoC” method was R$263.8 million, a 25.1% decrease year-on-year but an increase of 1.7% from the previous quarter. In 12M16, net revenue was R$915.7 million, a 36.6% reduction compared with 12M15.
§
Recurring adjusted gross profit for 4Q16 (excluding inventory and landbanks adjustments) was R$54.7 million compared to a gross profit of R$47.2 million in 3Q16 and R$127.4 million recorded in the past year. Based on the same criteria, adjusted gross margin reached 20.7%, compared to 17.6% in 3Q16, and 36.1% in 4Q15. For the full year, adjusted gross profit excluding this adjustments was R$203.2 million with a margin of 22.2%, compared to R$532.6 million in 12M15.
§
Recurring Adjusted EBITDA (excluding inventory and landbanks adjustments) was negative R$0.3 million in the fourth quarter, up from negative EBITDA of R$15.7 million in 3Q16 and down from the positive result of R$49.9 million in 4Q15. Based on the same criteria, accumulated adjusted EBITDA for the year was negative R$83.6 million, compared to a positive result of R$227.4 million in 2015.
§
Recurring net income, excluding the impact of discontinued operations (Tenda), and the inventory and landbanks adjustments, which impacted the gross profit, was negative R$156.0 million in 4Q16 compared to a net loss of R$72.6 million in 3Q16 and a net profit of R$0.8 million in 4Q15. Year-to-date, based on the same criteria, the Company reported an adjusted net loss of R$350.5 million.
OPERATING RESULTS
§
Consolidated sales over supply (SoS) reached 16.8% in 4Q16 compared to 11.5% in 3Q16 and 10.8% in 4Q15. On a trailing 12-month basis, Gafisa’s SoS was 31.5%.
§
SoS of 4Q16 launches totaled 67.3%, one of the highest levels in the Company’s history.
§
Consolidated inventory at market value decreased 11.1% q-o-q, to R$1.8 billion.
§
Net pre-sales totaled R$355.8 million in 4Q16, an increase of 45.1% from the R$245.2 million recorded in 4Q15 and 37.7% increase compared to 3Q16. Consolidated sales from launches in the quarter represented 56.7% of the total, while sales from inventory comprised the remaining 43.3%. The Company reached R$810.5 million in net pre-sales in the full year.
§
Overall Company launches were R$299.4 million in 4Q16, comprising 3 projects in the cities of São Paulo and Santos, a decrease of 21.3% compared to 4Q15 and 27.1% compared to last quarter.
Launched volumes in the year totaled R$920.8 million.
§
Throughout the fourth quarter, the Company delivered 3 projects/phases, totaling 416 units, accounting for R$292.7 million in PSV. In regards to 12M16, the company delivered 16 projects/phases and 3,747 units, accounting for R$1.7 billion in PSV.
96
RECENT EVENTS
UPDATE ON THE SEPARATION OF THE GAFISA AND TENDA UNITS
During 2016, Gafisa has continued working on the separation process of the Gafisa and Tenda business units. Since studies began in February 2014, several activities have been undertaken to enable these two business units to become independent, both from an operational viewpoint and in terms of capital structure.
In 4Q16, Gafisa initiated Tenda’s secondary tender offer, which did not materialize due to the turbulent market environment, and instead culminated in the sale of up to 30% of Tenda’s shares to the private equity firm Jaguar Growth Asset Management, LLC, at the price of R$8.13 per share. As part of this agreement, Gafisa’s shareholders, through the exercise of their preemptive rights to acquire Tenda’s shares at the same price per share determined in the transaction (R$8.13), will have the opportunity to acquire up to 50% of Tenda’s shares held thereby, considering an additional 20% related to Jaguar's offer.
As part of the agreement with Jaguar, Gafisa, as Tenda’s shareholder, approved on December 14, 2016 a capital reduction of R$100.0 million, without cancelling the shares and refunding the total amount to Gafisa, payable until December 31, 2018 and the remaining balance until December 31, 2019, with possibility of anticipation due to the cash performance. Thus, the potential cash receipt for Gafisa in the transaction context is of R$319.6 million.
REVERSE STOCK SPLIT AND CAPITAL REDUCTION
At the Extraordinary Shareholders’ Meeting held on February 20, 2017, Gafisa’s shareholders approved the reverse split of Gafisa’s shares, at a ratio of 13.483023074 to one share, as part of the procedures necessary to conduct Tenda’s spin-off process. Subsequently, a second Extraordinary Shareholders’ Meeting was held which approved Gafisa’s shareholders’ preemptive right in Tenda’s spin-off process and capital reduction, delivering to the Company’s shareholders one Tenda common share for each Gafisa common share held after the reverse split, excluding the treasury shares, which correspond to 50% of Tenda's shares. It is worth mentioning that, pursuant to prevailing laws, the capital reduction shall observe the 60-day term for creditors’ disagreement, as of the date of the meeting. As soon as that date lapses, the Company will inform the market.
PREEMPTIVE RIGHTS
Gafisa offered to its shareholders the preemptive right, at the proportion of their respective equity interest, to acquire up to 50% of the capital stock of Tenda for R$8.13 per share. All those registered as the Company’s shareholders as of March 16, 2017 were eligible to the Preemptive Right (after-hours trading).
The term to exercise the preemptive right shall be 30 days as of March 17, 2017 (inclusive), i.e., until April 15, 2017 (inclusive). The Company’s shareholders intending to trade their Preemptive Rights may do it once initiated the term to exercise, and they shall do it with the advance necessary, so that to allow that the subscription rights assigned still may be exercised within referred exercise term.
It is worth mentioning that the exercise of preemptive right is subject to the conclusion of Gafisa’s capital reduction (spin-off) and delivery of the remaining 50% of Tenda’s capital stock to its shareholders.
97
CONCLUSION OF OPERATION
Over the past three years, the Company was able to advance with several steps concerned with the effective separation of the Gafisa and Tenda administrative structures, so that both would be ready to carry on their operations independently. The conclusion of operations and resulting cash inflow deriving from this operation contribute to Gafisa’s improving liquidity condition and capital structure.
With the conclusion of the purchase and sale of Tenda’s shares, subject-matter of the agreement entered into with Jaguar, once all the conditions are met, Gafisa shall monetize a total amount of at least R$231.7 million, including an amount of R$100.0 million in Tenda capital reduction in favor of Gafisa, approved on December 14, 2016.
In addition, and as one of the precedent conditions mentioned above, we have the consolidation of corporate separation and resulting distribution of 50% of Tenda’s shares to Gafisa’s shareholders base, envisaging relevant interest in Tenda’s capital stock after the operation is concluded.
Therefore, Gafisa’s shareholder maximizes the capacity of generating value, due to the exposure to Tenda’s operating excellence, reduced risk level, a consistent level of profitability, expansion plan and development of businesses in the economic segment.
If the 20% additional to the offer submitted by Jaguar is also sold within the context of this operation, Gafisa will receive additional funds of R$87.8 million, reaching an overall amount of R$319.5 million in this operation.
The conclusion of this operation and resulting distribution of Tenda’s capital stock to Gafisa’s shareholders, settles the final stage of a process initiated in 2011, with the development of a new strategic plan for Gafisa and Tenda; sale of 70% equity interest in Alphaville which improved Gafisa’s liquidity condition and capital structure, and finally, the effective operational and corporate separation between the Gafisa and Tenda business units. The Company’s Management estimates that the conclusion of this process over the upcoming months and the resulting new corporate structure will deliver to Gafisa’s shareholders a valuable opportunity to capture the potential of the Brazilian real estate market by means of operating strength, brand recognition and strategic consolidation of both business units.
TENDA EARNINGS RELEASE – 4Q16 AND 2016
On March 13, 2017, Construtora Tenda S.A published its annual financial statements for the twelve-month period ended December 31, 2016, accompanied by the auditors' review report ( "DFP Tenda").
The DFP Tenda and the Earnings Release are available on the CVM (www.cvm.gov.br) and the Company (
www.gafisa.com.br/ir
and
ir.tenda.com
) websites.
98
|
GAFISA
Focuses on residential developments within the upper, upper-middle, and middle-income segments, with average unit prices above R$250,000.00.
00.
|
Operating Results | Launches and Pre-Sales
Fourth quarter launches totaled R$299.4 million and consisted of 2 projects/phases in São Paulo and 1 project in Santos. The sales speed of these launches reached 67.3%, the highest level of sales from launches in recent years. In the year, Gafisa launched 10 projects and reached R$920.8 million.
Table 1 – Launches and Pre-sales (R$ 000)
|
4Q16
|
3Q16
|
Q/Q(%)
|
4Q15
|
Y/Y(%)
|
2016
|
2015
|
Y/Y(%)
|
Launches
|
299,417
|
410,966
|
-27%
|
380,270
|
-21%
|
920,846
|
996,316
|
-8%
|
Pre- Sales
|
355,771
|
258,332
|
38%
|
245,196
|
45%
|
810,464
|
914,796
|
-11%
|
Despite continued political and economic headwinds in Brazil, and the resulting impact on inventory pricing, the Company’s 4Q16 sales performance improved relative to previous quarters, mainly due to the better performance of launches in the period.
Fourth quarter gross pre-sales in the Gafisa segment totaled R$455.7 million. Dissolutions in 4Q16 were R$99.9 million, yielding total net pre-sales of R$355.8 million, up 37.7% q-o-q and 45.1% y-o-y, due mainly to the strong sales performance of products launched in the fourth quarter, representing 56.7% of net pre-sales in the period.
Year to date,
net pre-sales totaled R$810.5 million.
Of the total, 54.5% relate to sales of launches in 2016, which have lower evolution.
99
The Company’s SoS for the last twelve months reached 31.5% compared to 31.1% in 2015. In the 4Q16, SoS reached its highest level since 4Q13, totalling 16.8% compared to 11.5% in 3Q16 and 10.9% in 4Q15.
Dissolutions
The macroeconomic uncertainty and economic recession observed in 2016 have directly impacted consumer confidence and, accordingly, the level of gross sales and dissolutions. In this context, the level of dissolutions in the Gafisa segment reached R$99.9 million in 4Q16, the lowest level in 24 months. Dissolutions have decreased from R$106.1 million in 3Q16 and R$125.3 million in 4Q15. In the year, the total volume of dissolutions was R$508.8 million.
The total dissolutions in the quarter represent 218 Gafisa cancelled units, out of which 144 units, representing R$61.9 million (62%), were resold within the period. Year-to-date, 931 units were cancelled, with the resale of 536 units in the same period, totaling R$260.8 million.
100
Over the last three years, the Company has been working on initiatives to strengthen the credit review component of its sale process. In doing so, the Company intends to reduce the level of dissolutions throughout the construction and delivery cycle. A comprehensive credit review at the time of sale has generated a more efficient process for transferring Gafisa customers to financial institutions, even amid an unfavorable economic environment. For example, only 7.6% of those who asked for transfers in 12M16 were rejected by the bank’s credit analysis (i.e. out of the 1,281 units asking for transfers, only 97 were not accepted).
In recent quarters the Company has been able to reduce the level of dissolutions by allowing customers facing financial pressure to swap their units for those that better match their financial position. This exchange process reflects the flexibility of Gafisa’s product portfolio.
In 2016, R$132.6 million in new sales were to customers who opted for swaps
.
Inventory
Gafisa is maintaining its focus on inventory reduction initiatives. Projects launched prior to 2016 represented 45.5% of net sales in the year.
The market value of inventory decreased by 11.1% q-o-q and 13.3% y-o-y to R$1.8 billion. The reduction reflects the sale of units in the period, and price adjustments on some projects in inventory, in keeping with current market dynamics.
Table 2 – Inventory at Market Value (R$ 000)
|
Inventories
EoP 3Q16
|
Launches
|
Dissolutions
|
Gross Sales
|
Adjustments¹
|
Inventories
EoP 4Q16
|
Q/Q (%)
|
São Paulo
|
1,518,820
|
299,417
|
76,423
|
(397,850)
|
(128,171)
|
1,368,639
|
-9.9%
|
Rio de Janeiro
|
416,430
|
-
|
20,162
|
(54,123)
|
(37,866)
|
344,603
|
-17.2%
|
Other Markets
|
45,258
|
-
|
3,383
|
(3,766)
|
2,044
|
46,919
|
3.7%
|
Total
|
1,980,508
|
299,417
|
99,968
|
(455,739)
|
(163,993)
|
1,760,161
|
-11.1%
|
1) Period Adjustments reflect the updates related to the project scope, launch date and pricing update in the period
In regards to Gafisa’s inventory, approximately 66% or R$1.2 billion is concentrated in projects to be delivered after 4Q17 and will not significantly increase the segment’s inventory of finished units in the short term. This component of inventory totaled R$592.6 million in 4Q16 or 34% of the total.
Commercial projects account for approximately 55.6% of Gafisa’s total volume of finished projects. This reflects
not only the high volume of commercial projects delivered during the last 18 months, but also low liquidity on these projects at present.
Inventory from projects launched outside core markets, which is comprised exclusively of finished units, represented R$46.9 million or 2.7% of total inventory, a decrease of 35.5% when compared to R$72.7 million in 4Q15 but up 3.7% from 3Q16. The Company estimates that through the beginning of 2018, it will have monetized a large portion of its inventory in non-core markets, based on the strong sales observed in these markets over the past few quarters.
Table 3 – Inventory at Market Value- Work Status - POC (R$ 000)
|
Not Initiated
|
Up to 30% built
|
30% a 70% built
|
More than 70% built
|
Finished Units
|
Total 4Q16
|
São Paulo
|
-
|
47,398
|
859,351
|
182,504
|
279,386
|
1,368,639
|
Rio de Janeiro
|
-
|
5,256
|
44,964
|
28,074
|
266,309
|
344,603
|
Other Markets
|
-
|
-
|
-
|
-
|
46,919
|
46,919
|
Total
|
-
|
52,654
|
904,315
|
210,578
|
592,614
|
1,760,161
|
1) Inventory at market value includes projects in partnership. This index is not comparable to the accounting inventory, due to the implementation of new accounting practices on behalf of CPCs 18, 19 and 36
101
Inventory Delivery Schedule
Landbank
The Company’ landbank, with a PSV of R$4.8 billion, represents 38 potential projects/phases, and corresponds to nearly 10.9 thousand units. 62% of potential projects/phases are located in São Paulo and 38% are located in Rio de Janeiro.
The largest
portion of land acquired through swap agreements is located in Rio de Janeiro, bringing the total percentage of land acquired through swaps to 60%.
Table 4 - Landbank (R$ 000)
|
PSV (% Gafisa)
|
% Swap
Total
|
% Swap
Units
|
% Swap
Financial
|
Potential Units
(% Gafisa)
|
Potential
Units (100%)
|
São Paulo
|
3,019,766
|
48.8%
|
48.8%
|
0.0%
|
7,217
|
7,888
|
Rio de Janeiro
|
1,819,493
|
72.5%
|
72.5%
|
0.0%
|
2,967
|
3,021
|
Total
|
4,839,259
|
60.1%
|
60.1%
|
0.0%
|
10,184
|
10,909
|
1) The swap percentage is measured compared to historical cost of land acquisition.
2) Potential units are net of swaps and refer to the Gafisa’s and/or its partners’ stake in the project.
Table 5 - Changes in the Landbank (3Q16 x 4Q16 - R$ 000)
|
Initial Landbank
|
Land Acquisition
|
Launches
|
Dissolutions
|
Adjustments
|
Final Landbank
|
São Paulo
|
3,321,410
|
-
|
(299,417)
|
-
|
(2,227)
|
3,019,766
|
Rio de Janeiro
|
1,813,527
|
-
|
-
|
-
|
5,966
|
1,819,493
|
Total
|
5,134,937
|
-
|
(299,417)
|
-
|
3,739
|
4,839,259
|
In 4Q16, the Company did not acquire new landbank. The quarterly adjustments reflect updates related to project scope, expected launch date and other adjustments to landbank in the period
.
Gafisa Sales
Gafisa Vendas, the Company’s independent sales unit, with operations in São Paulo and Rio de Janeiro, accounted for 59% of gross sales in 12M16. Gafisa Vendas currently has a team of 480 highly trained, dedicated consultants, in addition to an online sales force
.
102
Delivered Projects
During 4Q16, 3 projects totaling 416 units were delivered, accounting for R$292.7 million in PSV. In 2016, 16 projects/phases totaling 3,747 units were delivered, accounting for R$1.7 billion in PSV. Currently, Gafisa has 19 projects under construction, all of which are on schedule according to the Company’s business plan.
Table 6 – Breakdown of Delivered Projects 2016 (R$ 000)
|
Residential
|
Commercial
|
Total
|
São Paulo
|
1,074,267
|
395,470
|
1,469,737
|
Rio de Janeiro
|
189,601
|
86,225
|
275,826
|
Total
|
1,263,868
|
481,695
|
1,745,563
|
Transfers
Over the past few years, the Company has been taking steps to improve the performance of its receivables/transfer process, in an attempt to achieve higher rates of return on invested capital. Currently, the Company’s strategy is to transfer 90% of eligible units in a 90-day period after the delivery of the project. In accordance with this policy, transfers totaled R$136.6 million in PSV in the fourth quarter.
Table 7 – Delivered Projects (R$ 000 and %)
|
4Q16
|
3Q16
|
Q/Q(%)
|
4Q15
|
Y/Y(%)
|
2016
|
2015
|
Y/Y(%)
|
PSV Transferred ¹
|
136,608
|
126,013
|
8%
|
241,800
|
-44%
|
515,341
|
763,289
|
-32%
|
Delivered Projects
|
3
|
7
|
-57%
|
8
|
-63%
|
16
|
18
|
-11%
|
Delivered Units
|
416
|
1,899
|
-78%
|
1,641
|
-75%
|
3,747
|
4,986
|
-25%
|
Delivered PSV²
|
292,736
|
935,678
|
-69%
|
1,027,824
|
-72%
|
1,745,563
|
2,374,541
|
-26%
|
1) PSV refers to potential sales value of the units transferred to financial institutions.
2) PSV = Potential sales value of delivered units.
103
|
Financial Results
Revenue
|
4Q16 net revenues totaled R$263.8 million, down 25.1% y-o-y and 1.7% q-o-q
. 4Q16 revenues were impacted by the
mix of
net
sales, with a higher concentration of sales of launches, and consequently lower revenue recognition. In 12M16, net revenue reached R$915.7 million, a 37% decrease compared to 12M15.
In the quarter, 100% of revenues derived from projects located in Rio de Janeiro and São Paulo. The table below provides additional details.
Table 8 – Revenue Recognition (R$ 000)
|
4Q16
|
4Q15
|
Launches
|
Pre-Sales
|
% Sales
|
Revenue
|
% Revenue
|
Pre-Sales
|
% Sales
|
Revenue
|
% Revenue
|
2016
|
251,151
|
71%
|
29,772
|
11%
|
-
|
-
|
-
|
-
|
2015
|
54,754
|
15%
|
58,148
|
22%
|
129,227
|
53%
|
53,411
|
15%
|
2014
|
14,391
|
4%
|
83,746
|
32%
|
47,434
|
19%
|
96,876
|
27%
|
2013
|
21,414
|
6%
|
62,690
|
24%
|
50,322
|
21%
|
95,112
|
27%
|
≤ 2012
|
14,061
|
4%
|
29,461
|
11%
|
18,212
|
7%
|
107,025
|
31%
|
Total
|
355,771
|
100%
|
263,817
|
100%
|
245,196
|
100%
|
352,424
|
100%
|
SP + RJ
|
355,388
|
100%
|
264,958
|
100%
|
239,205
|
98%
|
347,715
|
99%
|
Other Markets
|
383
|
0%
|
(1,141)
|
0%
|
5,991
|
2%
|
4,709
|
1%
|
Gross Profit & Margin
In 4Q16, provisions of R$159.9 million were recorded as a result of: (i) pricing adjustments of units in inventory, with sales value below the accounting cost, heavily concentrated in commercial developments, as a result of the current market price level; and (ii) market value adjustment of some lots of our landbank not included in the Company's launch plan for the coming years. These adjustments generated a direct impact on Gafisa's gross profit and gross margin in the period. As a result, gross profit in the quarter was negative R$144.0 million, down from positive R$1.0 million in 3Q16 and R$84.2 million in the previous year. Based on the same criteria, excluding the effects mentioned above, recurring adjusted gross profit was R$54.7 million in 4Q16 and R$203.2 million in 12M16.
In addition to the factors mentioned before, gross margin in 4Q16 also reflects the accounting impact of increased recording of financial costs in recently launched projects which presented good sales speed. In these projects, the suspensive clause - reflecting the accounting conventions which recognize financial costs in line with the percentage sold, and not in line with the work-in-progress evaluation according to the PoC method - was effective within the same period.
It is worth noting that the negative adjustments recorded in 4Q16 reflect the current macroeconomic condition and its impact of real estate prices. Considering expectations for improved economic conditions in Brazil over the next 2 years, it is possible that the price of these assets will recover and the provisions will be partly reversed. The table below contains more details on the breakdown of Gafisa’s 4Q16 gross margin.
104
Table 9 – Gross Margin (R$ 000)
|
4Q16
|
3Q16
|
Q/Q (%)
|
4Q15
|
Y/Y(%)
|
2016
|
2015
|
Y/Y(%)
|
Net Revenue
|
263,817
|
268,271
|
-2%
|
352,424
|
-25%
|
915,698
|
1,443,357
|
-37%
|
Gross Profit
|
(144,018)
|
963
|
-
|
84,191
|
-
|
(113,515)
|
381,436
|
-
|
Gross Margin
|
-54.6%
|
0.4%
|
-5,500 bps
|
23.9%
|
-7,850 bps
|
-12.4%
|
26.4%
|
-3,880 bps
|
(-) Financial Costs
|
38,792
|
46,258
|
-16%
|
43,201
|
-10%
|
156,812
|
151,185
|
4%
|
Adjusted Gross Profit¹
|
(105,228)
|
47,221
|
-
|
127,392
|
-
|
43,295
|
532,621
|
-92%
|
Adjusted Gross Margin¹
|
-39.9%
|
17.6%
|
-5,750 bps
|
36.1%
|
-7,600 bps
|
4.7%
|
36.9%
|
-3,220 bps
|
(-) Inventory and Landbank Adjustments²
|
159,931
|
-
|
-
|
-
|
-
|
159,931
|
-
|
-
|
Recurring Adjusted Gross Profit¹ ²
|
54,703
|
47,221
|
16%
|
127,392
|
-57%
|
203,226
|
532,621
|
-62%
|
Recurring Adjusted Gross Margin¹ ²
|
20.7%
|
17.6%
|
310 bps
|
36.1%
|
1,540 bps
|
22.2%
|
36.9%
|
-1,470 bps
|
1)
Adjusted by capitalized interests.
2)
Pricing adjustments to inventory units, related to current market prices level and to historical cost update at market value in some lots of our landbank.
Selling, General and Administrative Expenses (SG&A)
SG&A expenses totaled R$65.8 million in 4Q16, up 18.8% y-o-y and 25.9% q-o-q. In the year, these expenses totaled R$201.5 million, up 3.1% from R$195.4 million in the past year.
Selling expenses decreased 13.3% when compared to 4Q15 and increased 34.6% sequentially, due to the recording of expenses related to 3Q16 launches in this quarter and also to current market conditions requiring higher sales and marketing investments to stimulate demand. In 2016, selling expenses decreased 3.1% compared to 2015.
The Company’s general and
administrative expenses reached R$32.5 million in 4Q16, up 18.0% compared to the previous quarter and
91.2% compared to 4Q15, and was impacted by the following factors: (i) R$2.7 million due to severance pay and indemnity expenses
as part of a year-end corporate restructuring
; (ii) R$2.9 million referring to final expenses related to the separation of the Gafisa and Tenda units’ IT structure; and (iii) net effect of R$9.3 million related to reversal of provision for profit sharing recorded in 2015. In 2016,
SG&A sales expenses reached R$106.6 million, compared to R$97.9 million in the previous year. In 4Q16, the R$6.2 million in provisions recorded are in line with the curve established at the beginning of the year, with the accounting record of such provision made in an uniform manner throughout the quarters. In 2016, G&A expenses reached R$106.6 million compared to R$97.4 million in the previous year.
Considering the same basis of comparison and excluding the non-recurring
impacts mentioned above, general and administrative (G&A) expenses came to R$17.7 million in 4Q16, in line with 4Q15; G&A totaled R$91.7 million in 2016, down 6.0% year-on-year.
SG&A levels reflect the Company's commitment to improving operational efficiency and achieving a level of costs and expenses that is consistent with its business cycle and current economic outlook
.
Table 10 – SG&A Expenses (R$ 000)
|
4Q16
|
3Q16
|
Q/Q (%)
|
4Q15
|
Y/Y(%)
|
2016
|
2015
|
Y/Y(%)
|
Selling Expenses
|
(33,254)
|
(24,701)
|
35%
|
(38,338)
|
-13%
|
(94,946)
|
(97,949)
|
-3%
|
G&A Expenses
|
(32,515)
|
(27,544)
|
18%
|
(17,004)
|
91%
|
(106,585)
|
(97,442)
|
9%
|
Total SG&A Expenses
|
(65,769)
|
(52,245)
|
26%
|
(55,342)
|
19%
|
(201,531)
|
(195,391)
|
3%
|
Launches
|
299,417
|
410,966
|
-27%
|
380,270
|
-21%
|
920,846
|
996,316
|
-8%
|
Net Pre-sales
|
355,771
|
258,332
|
38%
|
245,196
|
45%
|
810,464
|
914,796
|
-11%
|
Net Revenue
|
263,817
|
268,271
|
-2%
|
352,424
|
-25%
|
915,698
|
1,443,357
|
-37%
|
105
Other Operating Revenues/Expenses reached R$30.0 million in 4Q16, ending 2016 at R$79.0 million compared to R$107.6 million in the previous year, due to the impact of expenses related to lawsuits. A higher volume of deliveries over the past four years, due to the delivery of delayed projects in non-core regions, led to an increase in the level of contingencies.
The Company continues to be proactive in mitigating risks associated with potential contingencies. As a result, the Gafisa segment continues to concentrate its operations only in the metropolitan regions of São Paulo and Rio de Janeiro. This strategic geographic positioning, combined with improved internal processes, is expected to result in fewer future legal claims and a subsequent decrease in the amount of expenses related to contingencies in the following years.
The table below contains more details on the breakdown of this expense.
Table 11 – Other Operating Revenues/Expenses (R$ 000)
|
4Q16
|
3Q16
|
Q/Q (%)
|
4Q15
|
Y/Y(%)
|
2016
|
2015
|
Y/Y(%)
|
Litigation Expenses
|
(26,255)
|
(13,278)
|
98%
|
(23,087)
|
14%
|
(70,798)
|
(91,193)
|
-22%
|
Expenses related to the update of AUSA Stock Option Plan balance
|
-
|
-
|
-
|
-
|
-
|
(3,401)
|
-
|
-
|
Other
|
(4,683)
|
(1,243)
|
277%
|
(4,042)
|
16%
|
(4,793)
|
(16,441)
|
-71%
|
Total
|
(30,938)
|
(14,521)
|
113%
|
(27,129)
|
14%
|
(78,992)
|
(107,634)
|
-27%
|
Adjusted EBITDA
Recurring Adjusted EBITDA was negative R$160.2 million in 4Q16, totaling negative R$245.3 million in the year.
Excluding the effects of the Tenda transaction and the adjustments to inventory units and landbank, recurring EBITDA was negative R$0.3 million in 4Q16 compared to negative R$15.9 million in 3Q16 and positive R$49.9 million in 4Q15. Based on the same criteria, 2016 adjusted EBITDA
was negative R$83.6 million, compared to a positive result of R$227.4 million in 2015.
Compared to 4Q15, 4Q16 Recurring Adjusted EBITDA
was mainly impacted by the following factors: (i) lower level of revenues due to the
sales mix with higher concentration in projects launched in the quarter
; (ii) lower gross profit in the quarter due to the weak current market environment; and
(iii) higher levels of SG&A expenses.
As a reminder, Gafisa’s Adjusted EBITDA does not include the results of discontinued operations (Tenda) and equity income from Alphaville.
106
Table 12 - Adjusted EBITDA (R$ 000)
|
4Q16
|
3Q16
|
Q/Q (%)
|
4Q15
|
Y/Y(%)
|
2016
|
2015
|
Y/Y(%)
|
Net Income
|
(999,308)
|
(72,622)
|
1276%
|
826
|
-
|
(1,163,596)
|
74,449
|
-
|
Discontinued Operation Result ¹
|
(683,360)
|
(16,554)
|
-
|
(9,566)
|
-
|
(653,156)
|
36,218
|
-
|
Inventory and landbanks Adjustments²
|
(159,931)
|
-
|
-
|
-
|
-
|
(159,931)
|
-
|
-
|
Adjusted Net Income¹ ²
|
(156,017)
|
(89,176)
|
132%
|
10,392
|
-
|
(350,509)
|
38,231
|
-
|
(+) Financial Results
|
15,582
|
5,910
|
164%
|
15,368
|
1%
|
25,679
|
50,422
|
-49%
|
(+) Income Taxes
|
67,785
|
1,076
|
6200%
|
(1,829)
|
-
|
9,760
|
656
|
1388%
|
(+) Depreciation & Amortization
|
10,560
|
8,180
|
29%
|
7,804
|
35%
|
33,892
|
32,585
|
4%
|
(+) Capitalized interests
|
38,792
|
46,258
|
-16%
|
43,201
|
-10%
|
156,812
|
151,185
|
4%
|
(+) Expense w Stock Option Plan
|
1,313
|
2,316
|
-43%
|
1,966
|
-33%
|
6,821
|
7,825
|
-13%
|
(+) Minority Shareholders
|
(171)
|
588
|
-129%
|
(340)
|
-50%
|
1,871
|
(3,468)
|
-154%
|
(-) AUSA Income Effect
|
21,892
|
9,158
|
139%
|
(26,704)
|
-182%
|
32,122
|
(50,043)
|
-
|
Recurring Adjusted EBITDA³
|
(264)
|
(15,690)
|
983%
|
49,858
|
-
|
(83,552)
|
227,393
|
-
|
(+) Inventory and Landbanks Adjustments²
|
(159,931)
|
-
|
-
|
-
|
-
|
(159,931)
|
-
|
-
|
Adjusted EBITDA
4
|
(160,195)
|
(15,690)
|
-921%
|
49,858
|
-
|
(243,483)
|
227,393
|
-
|
Net Revenue
|
263,817
|
268,271
|
-2%
|
352,424
|
-25%
|
915,698
|
1,443,357
|
-37%
|
Recurring Adjusted EBITDA Margin
|
-0.1%
|
-5.9%
|
-60 bps
|
14.1%
|
-1,420 bps
|
-9.1%
|
15.8%
|
-670 bps
|
Adjusted EBITDA Margin
|
-60.7%
|
-5.9%
|
-6,660 bps
|
14.1%
|
-7,480 bps
|
-26.6%
|
15.8%
|
-4,240 bps
|
1)
Sale of Tenda shares.
2)
Pricing adjustments to inventory units, related to current market prices level and to historical cost update at market value in some lots of our landbank.
3)
Adjusted by notes 1 and 2, by expense with stock option plan (non-cash) and minority shareholders.
EBITDA does not consider Alphaville's equity income.
4)
Adjusted by expense with stock option plan (non-cash) and minority shareholders.
EBITDA does not consider Alphaville's equity income.
Depreciation and Amortization
Depreciation and amortization in 4Q16 reached R$10.6 million, up 29.1% over 3Q16 and 35.3% compared to 4Q15, effect of higher depreciation with sales booths and IT equipment In 2016, depreciation and amortization totaled R$33.9 million compared to R$32.6 million in 2015, which is in line with the current level of Company’s operations.
Financial Result
4Q16 net financial result was negative R$15.6 million, compared to negative R$5.9 million in 3Q16, and R$15.4 million in 4Q15. Financial revenues were down 41.8% year-on-year, totaling R$9.9 million, due to the lower balance of funds available in the period. Financial expenses reached R$25.5 million, compared to R$32.4 million in 4Q15, due to lower gross debt and a higher share of project-related debt versus corporate debt, resulting in lower funding costs.
The full year net financial result was negative R$25.7 million, compared to a net loss of R$50.4 million in the prior year. It is worth mentioning that the 2016 result included the benefit of the mark-to-market of hedging operations against IPCA and CDI-indexed debts.
Taxes
Income taxes, social contribution and deferred taxes for 4Q16 amounted to an expense of R$93.4 million, impacted by R$90.3 million due to the reversal of tax credits previously recorded, in view of impact of the result from discontinued operation (Tenda) over net income for the year. In 2016, income tax, social contribution and deferred taxes expenses totaled R$100.1 million or R$9.8 million, excluding the abovementioned impact.
107
Recurring Net Income
The Company ended 4Q16 with adjusted net loss of R$156.0 million, excluding the impact related to discontinued operations (Tenda) which totaled R$683.4 million
1
and were recorded in the last quarter of the year, as well as inventory and landbank adjustments which totaled R$159.9 million and impacted gross profit. Excluding equity income from AUSA, the Company recorded adjusted net loss of R$134.1 million, compared to a net loss of R$63.5 million in 3Q16. In 2016, and based on the same criteria, the Company recorded adjusted net loss of R$350.5 million. Excluding equity income from Alphaville, the Company recorded adjusted net loss of R$318.4 million.
In addition to the factors mentioned above, the year’s results were affected by: (i) lower level of revenues due to higher volume of dissolutions from legacy units, impacting revenues; (ii) sales mix with higher concentration in projects launched in 2016, and accordingly, lower ability of generating revenue; and (iii) current market conditions which impact products price and accordingly, gross profit.
Table 13 – Effects in Net income - (R$ 000)
Gafisa
|
4Q16
|
2016
|
Net Income
|
(999,308)
|
(1,163,596)
|
( - ) AUSA Equity
|
(21,892)
|
(32,122)
|
( - ) Inventory and landbank adjustments
|
(159,931)
|
(159,931)
|
( - ) Tenda Result
|
17,065
|
47,269
|
( - ) Impairment Tenda Operation
|
(610,105)
|
(610,105)
|
( - ) Adjustment Deferred Income Tax
|
(90,320)
|
(90,320)
|
Net Income Ex-Operation
|
(134,125)
|
(318,387)
|
Table 14 – Net Income - (R$ 000)
|
4Q16
|
3Q16
|
Q/Q (%)
|
4Q15
|
Y/Y(%)
|
2016
|
2015
|
Y/Y(%)
|
Net Revenue
|
263,817
|
268,271
|
-2%
|
352,424
|
-25%
|
915,698
|
1,443,357
|
-37%
|
Gross Profit
|
(144,018)
|
963
|
-
|
84,191
|
-
|
(113,515)
|
381,436
|
-
|
Gross Margin
|
-54.6%
|
0.4%
|
-5,500 bps
|
23.9%
|
-7,850 bps
|
-12.4%
|
26.4%
|
-3,880 bps
|
Inventory and Landbanks Adjustments¹
|
(159,931)
|
-
|
-
|
-
|
-
|
(159,931)
|
-
|
-
|
Recurring Adjusted Gross Profit¹
|
54,703
|
47,221
|
16%
|
127,392
|
-57%
|
203,226
|
532,621
|
-62%
|
Recurring Adjusted Gross Margin²
|
20.7%
|
17.6%
|
310 bps
|
36.1%
|
1,540 bps
|
22.2%
|
36.9%
|
-1,470 bps
|
Recurring Adjusted EBITDA³
|
(264)
|
(15,690)
|
983%
|
49,858
|
-
|
(83,552)
|
227,393
|
-
|
Recurring Adjusted EBITDA Margin
|
-0.1%
|
-5.9%
|
-60 bps
|
14.1%
|
-1,420 bps
|
-9.1%
|
15.8%
|
-670 bps
|
Income from Discontinued Operation
4
|
(683,360)
|
-
|
-
|
-
|
-
|
(653,156)
|
-
|
-
|
Adjusted Net Income
5
|
(156,017)
|
(72,622)
|
-115%
|
826
|
-
|
(350,509)
|
74,449
|
-
|
( - ) Equity income from Alphaville
|
(21,892)
|
(9,158)
|
-139%
|
26,704
|
-
|
(32,122)
|
50,043
|
-
|
Adjusted Net Income (ex-AUSA)
|
(134,125)
|
(63,464)
|
-111%
|
(25,878)
|
-418%
|
(318,387)
|
24,406
|
-
|
1)
Pricing adjustments to inventory units, related to current market prices level and to historical cost update at market value in some lots of our landbank.
2) Adjusted by note 1 and by capitalized interests.
3)
Adjusted by notes 1 and 2, by expense with stock option plan (non-cash) and minority shareholders. EBITDA does not consider Alphaville's equity income.
4) Sale of Tenda shares.
5) Adjusted by notes 1 and 4.
[1]
Accounting Impairment + Tenda Result + Reversal of deferred tax asset.
More information and reconciliation in Tables 20 and 21.
108
Backlog of Revenues and Results
The backlog of results to be recognized under the PoC method increased year-over-year to R$190.9 million in 4Q16. The consolidated margin was 37.7% in the quarter, compared to 38.7% posted in last year’s fourth quarter.
It is worth mentioning that this is the first quarter when future income is higher than previous quarters, with a 28.3% increase compared to 3T16, due to the maintenance of launches volume over the past three years and the Company’s assertiveness. Such variation was already seen in the third quarter, but came stronger in the last quarter of the year.
Table 15 – Backlog Results (REF) (R$ 000)
|
4Q16
|
3Q16
|
Q/Q(%)
|
4Q15
|
Y/Y(%)
|
Backlog Revenues
|
505,991
|
394,475
|
28%
|
497,561
|
2%
|
Backlog Costs (units sold)
|
(315,061)
|
(251,151)
|
25%
|
(305,206)
|
3%
|
Backlog Results
|
190,930
|
143,324
|
33%
|
192,355
|
-1%
|
Backlog Margin
|
37.7%
|
36.3%
|
140 bps
|
38.7%
|
-100 bps
|
1) Backlog results net of PIS/COFINS taxes (3.65%), and excluding the impact of PVA (Present Value Adjustment) method according to Law 11,638.
2) Backlog results comprise the projects restricted by condition precedent.
109
We point out, as per Material Fact of December 14, 2016, informing on the signature of the agreement to sell up to 30% of shares issued by Tenda, and in line with CPC 31 – Non-Current Asset Held for Sale and Income from Discontinued Operation, the financial information in this report reflects the effects of the disclosure as a discontinued operation relating to Tenda. In the case of the Income Statement, the results of December 31, 2015 were also restated for comparability purposes and the result is presented in a single amount (Discontinued Operation Result). Referring to balance sheet, the information related to Tenda is presented in single lines, both under assets and liabilities.
|
Balance Sheet
Cash and Cash Equivalents and Securities
|
On December 31, 2016, cash and cash equivalents and marketable securities totaled R$253.2 million, down 58.5% from September 30, 2016, reflecting Tenda allocation to Asset Held for Sale.
Receivables
At the end of 4Q16, total accounts receivable totaled R$1.5 billion, a decrease of 17.4% compared to R$1.8 billion in 4Q15, taking into consideration only Gafisa balances.
The Company had approximately R$408.2 million in accounts receivable from finished units by the end of the year.
Table 16. Total Receivables (R$ 000)
|
4Q16*
|
3Q16
|
Q/Q(%)
|
4Q15
|
Y/Y(%)
|
Receivables from developments (off balance sheet)
|
525,159
|
688,984
|
-24%
|
792,968
|
-34%
|
Receivables from PoC- ST (on balance sheet)
|
722,640
|
1,129,351
|
-36%
|
1,395,273
|
-48%
|
Receivables from PoC- LT (on balance sheet)
|
271,322
|
440,056
|
-38%
|
407,091
|
-33%
|
Total
|
1,519,121
|
2,258,391
|
-33%
|
2,595,332
|
-41%
|
*
Considers only Gafisa.
Notes: ST – Short term | LT- Long term | PoC – Percentage of Completion Method.
Receivables from developments: accounts receivable not yet recognized according to PoC and BRGAAP.
Receivables from PoC: accounts receivable already recognized according to PoC and BRGAAP.
Cash Generation
Operating cash totaled R$150.8 million in 4Q16, effect of: (i) higher level of revenue related to sales of 4Q16 launches; (ii) less financial disbursement with the development of landbank, and; (iii) greater efficiency in the process, leading to lower cash disbursements. The good operating cash flow resulted in a net cash generation of R$130.4 million in the period.
The
volume of transferred/received units sold to financing agents reached R$136.6 million.
In the year, the Company reported operating cash generation of R$300.9 million, with net cash generation of R$70.0 million.
This result does not include the disbursement related to the share buyback program carried out in the period.
110
Table 17. Cash Generation (R$ 000)
|
4Q15
1
|
1Q16
|
2Q16
|
3Q16
|
4Q16
|
Availabilities
2
|
478,037
|
457,154
|
304,351
|
355,389
|
253,180
|
Change in Availabilities
2
(1)
|
-
|
(20,883)
|
(152,803)
|
51,038
|
(102,210)
|
Total Debt + Investor Obligations
|
1,907,358
|
1,914,131
|
1,807,989
|
1,853,755
|
1,638,804
|
Change in Total Debt + Investor Obligations
(2)
|
-
|
6,773
|
(106,142)
|
45,766
|
(214,951)
|
Other Investments
|
210,761
|
210,761
|
218,956
|
219,454
|
237,109
|
Change in Other Investments
(3)
|
|
-
|
8,195
|
498
|
17,654
|
Cash Generation in the period
(1) - (2) + (3)
|
|
(27,656)
|
(38,466)
|
5,770
|
130,396
|
Cash Generation Final
|
|
(27,656)
|
(66,122)
|
(60,352)
|
70,044
|
1) The 4Q15 data refer only to the final balance of the period in order to assist in the reconciliation of the balance changes in 2016
2) Cash and cash equivalents, and short-term investments.
Liquidity
At the end of December 2016, the Company’s Net Debt/
Shareholders’ Equity
ratio reached 71.8% compared to 49.3% in the previous quarter, reflecting the allocation of Tenda as Asset Held for Sale, and consequent impact on Shareholders' Equity. Excluding project finance, the Net Debt/
Shareholders’ Equity
ratio was 3.3%.
Strong cash generation has enabled the Company to reduce its indebtedness. At the end of 4Q16, the Company's gross debt reached R$1.6 billion, decreasing 20.2% q-o-q and 24.0% y-o-y. In the 4Q16, the Company amortized R$303.6 million in debt, of which R$173.6 million was project finance and R$130.0 million corporate debt. In the same period, a total of R$43.1 million was disbursed, allowing for a net amortization of R$260.5 million.
Throughout the year,
new releases of R$438.9 million took place, of which R$373.9 million related to project debt and R$65.0 million related to corporate debt, while payments totaled R$953.0 million, thus allowing a net amortization in the year of R$514.1 million.
Table 18. Debt and Investor Obligations (R$ 000)
|
4Q16*
|
3Q16
|
Q/Q(%)
|
4Q15
|
Y/Y(%)
|
Debentures - FGTS (A)
|
302,363
|
492,498
|
-39%
|
654,445
|
-54%
|
Debentures – Working Capital (B)
|
148,905
|
167,448
|
-11%
|
203,513
|
-27%
|
Project Financing SFH – (C)
|
1,022,038
|
1,188,494
|
-14%
|
1,161,707
|
-12%
|
Working Capital (D)
|
164,261
|
201,571
|
-19%
|
131,128
|
25%
|
Total (A)+(B)+(C)+(D) = (E)
|
1,637,567
|
2,050,011
|
-20%
|
2,150,793
|
-24%
|
Investor Obligations (F)
|
1,237
|
3,143
|
-61%
|
4,895
|
-75%
|
Total Debt (E)+(F) = (G)
|
1,638,804
|
2,053,154
|
-20%
|
2,155,688
|
-24%
|
Cash and Availabilities (H)
|
253,180
|
609,898
|
-58%
|
712,311
|
-64%
|
Net Debt (G)-(H) = (I)
|
1,385,624
|
1,443,256
|
-4%
|
1,443,377
|
-4%
|
Equity + Minority Shareholders (J)
|
1,930,453
|
2,928,749
|
-34%
|
3,097,236
|
-38%
|
(Net Debt) / (Equity) (I)/(J) = (K)
|
71.8%
|
49.3%
|
2,250 bps
|
46.6%
|
2,520 bps
|
(Net Debt – Proj Fin) / Equity (I)-((A)+(C))/(J) = (L)
|
3.2%
|
-8.1%
|
1,130 bps
|
-12.0%
|
1,520 bps
|
*Considers only Gafisa.
1) Cash and cash equivalents and short-term investments
.
The Company ended 2016 with R$920.5 million in total debt maturing in the short term. It should be noted, however, that 90.8% of this volume relates to debt linked to the Company's projects. Currently, the average cost of consolidated debt is 15.05% p.y., or 116.87% of the CDI.
111
Table 19. Debt Maturity
(R$ 000)
|
Average Cost (p.y.)
|
Total
|
Until dec/17
|
Until Dec/18
|
Until Dec/19
|
Until Dec/20
|
After
Dec/20
|
Debentures - FGTS (A)
|
TR + 9.00% - 10.38%
|
302,363
|
302,363
|
-
|
-
|
-
|
-
|
Debentures – Working Capital (B)
|
CDI + 1.90% / IPCA + 7.96% - 8.22%
|
148,905
|
11,776
|
94,316
|
21,404
|
21,409
|
-
|
Project Financing SFH (C)
|
TR + 8.33% - 11.82% / 120.0% - 129.0% CDI
|
1,022,038
|
534,555
|
393,501
|
59,763
|
27,126
|
7,093
|
Working Capital (D)
|
CDI + 3.00% / CDI + 3.95% / CDI + 4.25% / 125.0% CDI / INCC
|
164,261
|
135,999
|
28,262
|
-
|
-
|
-
|
Total (A)+(B)+(C)+(D) = (E)
|
|
1,637,567
|
984,693
|
516,079
|
81,167
|
48,535
|
7,093
|
Investor Obligations (F)
|
CDI + 0.59%
|
1,237
|
1,237
|
-
|
-
|
-
|
-
|
Total Debt (E)+(F) = (G)
|
|
1,638,804
|
985,930
|
516,079
|
81,167
|
48,535
|
7,093
|
% of Total Maturity per period
|
|
60.2%
|
31.5%
|
5.0%
|
3.0%
|
0.4%
|
Project debt maturing as % of total debt
((A)+ (C))/(G)
|
|
84.9%
|
39.9%
|
6.1%
|
2.8%
|
0.7%
|
Corporate debt maturing as % of total debt (
(B)+(D)+(F))/(G)
|
|
15.1%
|
23.8%
|
26.4%
|
44.1%
|
0.0%
|
Ratio Corporate Debt / Mortgage
|
19.2% / 80.8%
|
|
|
|
|
|
112
|
Impacts of Tenda Operation
|
Summary
According to the Material Fact released on December 14, 2016, on that date the Company entered into a stock purchase agreement with Jaguar Growth Asset Management, LLC, aiming at the sale of up to 30% of shares issued by Tenda, at the price of R$8.13 per share, representing, within the context of operation, a cash inflow for Gafisa of R$231.7 million. It is worth mentioning that the implementation of referred transaction is subject to the verification of certain conditions precedent.
In view of the aforementioned, and pursuant to prevailing laws and accounting practices, the execution of such agreement gave rise to few accounting impacts on 4Q16 financial results, as pointed out below:
Tables 20 and 21. Main impacts (R$ 000)
Balance Sheet after operation effects
|
4Q16
|
Gross Debt
|
1,638,804
|
Cash
|
253,180
|
Net Debt
|
1,385,624
|
Shareholders’Equity + Minority
|
1,930,453
|
Net Debt / SE
|
71.8%
|
Result after operation effects
|
4Q16
|
2016
|
Discontinued Operation Impairment
|
(610,105)
|
(610,105)
|
Tenda Result
|
17,065
|
47,269
|
Reversal of Deferred Tax Asset
|
(90,320)
|
(90,320)
|
Result Discontinued Operation
|
(683,360)
|
(653,126)
|
Result ex-Discontinued Operation
|
(315,948)
|
(510,470)
|
Result after operation effects
Gafisa’s financial result in 4Q16 was impacted by accounting effects generated by the execution of the stock purchase agreement with
Jaguar Growth Asset Management, LLC
. The total effect amounted to R$680.2 million, and was comprised by the following factors: (i) the price per share of Tenda, R$8.13, establishes a valuation of R$439.0 million for 100% of the share capital of Tenda, lower than Tenda’s shareholders’ equity (R$1.049 billion) and thus generating an impairment of R$610.1 million and; (ii) reversal of R$90.3 million as tax credits, previously recorded, due to the impact of the net result from this operation over the net income for the year; and (iii) additional elimination effects between accounts in consolidation (R$3.1 million).
It is worth mentioning that the impairment effect of R$610.1 million refers to
100%
of Tenda’s shares. Out of this total, 50% of shares are being sold by Gafisa, within the context of the operation entered into with Jaguar and the offer of preemptive rights to shareholders, generating as final result, higher liquidity level and improvement of Gafisa’s capital structure. The remaining 50% of Tenda’s shares will be distributed to Gafisa’s shareholders by means of the capital reduction. Considering the price attributed to the sale of 50% (R$8.13 per share of Tenda), the capital reduction shall occur by the same price, i.e., the amount attributed to the capital reduction of shares representing 50% of Tenda’s capital was R$219 million. It is worth mentioning that Gafisa’s shareholders will receive these shares representing 50% of
Tenda’s capital
, which will then become a listed company at the stock exchange, allowing these shareholders to monetize them, according to their investment strategy, when they deem more appropriate
.
Taking into consideration the tax impact, the R$90.3 million refers to a reversal of a tax credit provision previously recorded, which was reversed in view of the significant impact of Tenda’s purchase and sale operation on the net income for the period, thus, not allowing to maintain such amount of deferred tax asset in the Company’s balance sheet. It is worth noting that despite the write-off of this current asset, this an accounting effect and eventually temporary, since in the future such deferred tax asset might constituted again, depending on the future outlook for the Company’s profitability.
113
Balance Sheet after operation effects
Additionally to the impact on results for the period, the operation of sale of Tenda’s shares, and its classification to “Asset Held for Sale”, also impacted Gafisa’s balance sheet, as follows: (i) reduced cash and cash equivalents to R$253.2 million and gross indebtedness to R$1.6 billion only referring to the Gafisa segment, and; (ii) shareholders’ equity reduction corresponding to the difference between Tenda’s shareholders’ equity recognized in balance sheet and operationpricing, reducing Gafisa’s shareholders’ equity to R$1.9 billion, impacting
leverage level (Net Debt/ Shareholders’ Equity), which ended 2016 at 71.8%. We point out that such leverage level is temporary, since upon conclusion of the transaction, Gafisa will have a cash inflow of up to R$319.5 million, thus, reducing its leverage level and underscoring the Company’s conservative cash management.
114
São Paulo, March 21, 2017
Alphaville Urbanismo SA releases its results for 2016.
Financial Results
In 2016, net revenues totaled R$716 million, 38% below the previous year, and net profit was R$108 million.
|
4Q16
|
2016
|
4Q15
|
2015
|
4Q2016 vs. 4Q2015
|
2016 vs. 2015
|
Net revenue
|
161
|
716
|
388
|
1150
|
-59%
|
-38%
|
Net Income
|
- 74
|
-108
|
90
|
148
|
n/a
|
n/a
|
Margin
|
-46%
|
-15%
|
2%
|
13%
|
|
|
For further information, please contact our Investor Relations team at ri@alphaville.com.br or +55 11 3038-5266.
115
Gafisa’s Financial Statements
|
4Q16
|
3Q16
|
Q/Q (%)
|
4Q15
|
Y/Y(%)
|
2016
|
2015
|
Y/Y(%)
|
Net Revenue
|
263,817
|
268,271
|
-2%
|
352,424
|
-25%
|
915,698
|
1,443,357
|
-37%
|
Operating Costs
|
(407,835)
|
(267,308)
|
53%
|
(268,233)
|
52%
|
(1,029,213)
|
(1,061,921)
|
-3%
|
Gross Profit
|
(144,018)
|
963
|
-15055%
|
84,191
|
-271%
|
(113,515)
|
381,436
|
-130%
|
Gross Margin
|
-54.6%
|
0.4%
|
-5,500 bps
|
23.9%
|
-7,850 bps
|
-12.4%
|
26.4%
|
-3,880 bps
|
Operating Expenses
|
(153,811)
|
(82,568)
|
86%
|
(60,601)
|
154%
|
(362,747)
|
(295,595)
|
23%
|
Selling Expenses
|
(33,254)
|
(24,701)
|
35%
|
(38,338)
|
-13%
|
(94,946)
|
(97,949)
|
-3%
|
General and Administrative Expenses
|
(32,516)
|
(27,544)
|
18%
|
(17,004)
|
91%
|
(106,585)
|
(97,442)
|
9%
|
Other Operating Revenue/Expenses
|
(30,938)
|
(14,521)
|
113%
|
(27,129)
|
14%
|
(78,992)
|
(107,634)
|
-27%
|
Depreciation and Amortization
|
(10,560)
|
(8,180)
|
29%
|
(7,805)
|
35%
|
(33,892)
|
(32,585)
|
4%
|
Equity Income
|
(46,544)
|
(7,622)
|
511%
|
29,675
|
-257%
|
(48,332)
|
40,015
|
-221%
|
Operational Result
|
(297,831)
|
(81,605)
|
265%
|
23,590
|
-1363%
|
(476,264)
|
85,841
|
-655%
|
Financial Income
|
9,946
|
7,479
|
33%
|
17,076
|
-42%
|
58,439
|
77,306
|
-24%
|
Financial Expenses
|
(25,118)
|
(12,771)
|
97%
|
(30,548)
|
-18%
|
(80,986)
|
(121,207)
|
-33%
|
Net Income Before taxes on Income
|
(313,003)
|
(86,897)
|
260%
|
10,118
|
-3194%
|
(498,811)
|
41,940
|
-1289%
|
Deferred Taxes
|
(90,320)
|
-
|
-
|
8,011
|
-1227%
|
(89,358)
|
14,105
|
-734%
|
Income Tax and Social Contribution
|
(3,115)
|
(1,076)
|
189%
|
(6,184)
|
-50%
|
(10,722)
|
(14,763)
|
-27%
|
Net Income After Taxes on Income
|
(406,438)
|
(87,973)
|
362%
|
11,945
|
-3503%
|
(598,891)
|
41,282
|
-1551%
|
Continued Op. Net Income
|
(406,438)
|
-
|
-
|
-
|
-
|
(598,891)
|
-
|
-
|
Descontinued Op. Net Income
|
(610,105)
|
-
|
-
|
-
|
-
|
(610,105)
|
-
|
-
|
Non controlling interests
|
2,955
|
7,694
|
-62%
|
(1,873)
|
-258%
|
11,251
|
(2,847)
|
-495%
|
Net Income
|
(1,019,498)
|
(95,667)
|
966%
|
13,818
|
-7478%
|
(1,220,247)
|
44,129
|
-2865%
|
116
Tenda’s Financial Statements
|
4Q16
|
3Q16
|
Q/Q (%)
|
4Q15
|
Y/Y(%)
|
2016
|
2015
|
Y/Y(%)
|
Net Revenue
|
286,906
|
270,509
|
6%
|
206,822
|
39%
|
1,052,710
|
850,962
|
24%
|
Operating Costs
|
(190,983)
|
(179,579)
|
6%
|
(148,162)
|
29%
|
(729,705)
|
(605,584)
|
20%
|
Gross Profit
|
95,923
|
90,930
|
5%
|
58,660
|
64%
|
323,005
|
245,378
|
32%
|
Gross Margin
|
33.4%
|
33.6%
|
-18 bps
|
28.4%
|
507 bps
|
30.7%
|
28.8%
|
185 bps
|
Operating Expenses
|
(65,403)
|
(59,936)
|
9%
|
(64,937)
|
1%
|
(234,727)
|
(214,933)
|
9%
|
Selling Expenses
|
(25,394)
|
(25,554)
|
-1%
|
(18,348)
|
38%
|
(90,490)
|
(65,311)
|
39%
|
General and Administrative Expenses
|
(27,614)
|
(21,928)
|
26%
|
(20,723)
|
33%
|
(89,739)
|
(83,971)
|
7%
|
Other Operating Revenue/Expenses
|
(3,747)
|
(10,509)
|
-64%
|
(20,359)
|
-82%
|
(36,743)
|
(52,567)
|
-30%
|
Depreciation and Amortization
|
(3,180)
|
(2,889)
|
10%
|
(3,941)
|
-19%
|
(12,299)
|
(14,835)
|
-17%
|
Equity Income
|
(5,468)
|
944
|
-679%
|
(1,566)
|
249%
|
(5,456)
|
1,751
|
-412%
|
Operational Result
|
30,520
|
30,994
|
-2%
|
(6,277)
|
-586%
|
88,278
|
30,445
|
190%
|
Financial Income
|
3,391
|
6,471
|
-48%
|
7,051
|
-52%
|
27,257
|
46,825
|
-42%
|
Financial Expenses
|
(8,914)
|
(18,644)
|
-52%
|
(6,486)
|
37%
|
(47,300)
|
(41,051)
|
15%
|
Net Income Before taxes on Income
|
24,997
|
18,821
|
33%
|
(5,712)
|
-538%
|
68,235
|
36,219
|
88%
|
Deferred Taxes
|
651
|
(1,863)
|
-135%
|
(2,321)
|
-128%
|
(4,877)
|
3,313
|
-247%
|
Income Tax and Social Contribution
|
(8,583)
|
(1,022)
|
740%
|
(3,430)
|
150%
|
(16,089)
|
(9,835)
|
64%
|
Net Income After Taxes on Income
|
17,065
|
15,936
|
7%
|
(11,463)
|
-249%
|
47,269
|
29,697
|
59%
|
Non controlling interests
|
(3,125)
|
(7,109)
|
-56%
|
1,528
|
-305%
|
(9,382)
|
(623)
|
1406%
|
Net Income
|
20,190
|
23,045
|
-12%
|
(12,991)
|
-255%
|
56,651
|
30,320
|
87%
|
117
Consolidated Financial Statements
|
4Q16
|
3Q16
|
Q/Q (%)
|
4Q15
|
Y/Y(%)
|
2016
|
2015
|
Y/Y(%)
|
Net Revenue
|
263,817
|
268,271
|
-2%
|
352,424
|
-25%
|
915,698
|
1,443,357
|
-37%
|
Operating Costs
|
(407,835)
|
(267,308)
|
53%
|
(268,233)
|
52%
|
(1,029,213)
|
(1,061,921)
|
-3%
|
Gross Profit
|
(144,018)
|
963
|
-15055%
|
84,191
|
-271%
|
(113,515)
|
381,436
|
-130%
|
Gross Margin
|
-54.6%
|
0.4%
|
-5,500 bps
|
23.9%
|
-7,850 bps
|
-12.4%
|
26.4%
|
-3,880 bps
|
Operating Expenses
|
(153,812)
|
(82,565)
|
86%
|
(60,601)
|
154%
|
(362,747)
|
(295,595)
|
23%
|
Selling Expenses
|
(33,254)
|
(24,701)
|
35%
|
(38,337)
|
-13%
|
(94,946)
|
(97,949)
|
-3%
|
General and Administrative Expenses
|
(32,516)
|
(27,543)
|
18%
|
(17,006)
|
91%
|
(106,585)
|
(97,442)
|
9%
|
Other Operating Revenue/Expenses
|
(30,938)
|
(14,519)
|
113%
|
(27,129)
|
14%
|
(78,992)
|
(107,634)
|
-27%
|
Depreciation and Amortization
|
(10,560)
|
(8,180)
|
29%
|
(7,804)
|
35%
|
(33,892)
|
(32,585)
|
4%
|
Equity Income
|
(46,544)
|
(7,622)
|
511%
|
29,675
|
-257%
|
(48,332)
|
40,015
|
-221%
|
Operational Result
|
(297,830)
|
(81,602)
|
265%
|
23,590
|
-1362%
|
(476,262)
|
85,841
|
-655%
|
Financial Income
|
9,945
|
7,480
|
33%
|
17,076
|
-42%
|
58,439
|
77,306
|
-24%
|
Financial Expenses
|
(25,527)
|
(13,390)
|
91%
|
(32,444)
|
-21%
|
(84,118)
|
(127,728)
|
-34%
|
Net Income Before taxes on Income
|
(313,412)
|
(87,512)
|
258%
|
8,223
|
-3911%
|
(501,941)
|
35,419
|
-1517%
|
Deferred Taxes
|
(90,321)
|
-
|
0%
|
8,011
|
-1227%
|
(89,358)
|
14,105
|
-734%
|
Income Tax and Social Contribution
|
(3,114)
|
(1,076)
|
189%
|
(6,182)
|
-50%
|
(10,722)
|
(14,761)
|
-27%
|
Net Income After Taxes on Income
|
(406,847)
|
(88,588)
|
359%
|
10,052
|
-4147%
|
(602,021)
|
34,763
|
-1832%
|
Continued Op. Net Income
|
(406,847)
|
(88,588)
|
359%
|
10,052
|
-4147%
|
(602,021)
|
34,763
|
-1832%
|
Descontinued Op. Net Income
|
(592,631)
|
16,554
|
-3680%
|
(9,566)
|
6095%
|
(559,704)
|
36,218
|
-1645%
|
Non controlling interests
|
(170)
|
588
|
-129%
|
(340)
|
-50%
|
1,871
|
(3,468)
|
-154%
|
Net Income
|
(999,308)
|
(72,622)
|
1276%
|
826
|
-
|
(1,163,596)
|
74,449
|
-
|
118
Gafisa’s Balance Sheet
|
4Q16
|
3Q16
|
Q/Q %)
|
4Q15
|
Y/Y(%)
|
Current Assets
|
|
|
|
|
|
Cash and cash equivalents
|
29,534
|
100,563
|
-71%
|
60,987
|
-52%
|
Short term investments
|
223,646
|
254,826
|
-12%
|
417,050
|
-46%
|
Receivables from clients
|
722,640
|
780,968
|
-7%
|
957,047
|
-24%
|
Properties for sale
|
1,122,724
|
1,579,115
|
-29%
|
1,389,893
|
-19%
|
Other accounts receivable
|
106,791
|
99,165
|
8%
|
140,610
|
-24%
|
Deferred selling expenses
|
2,548
|
2,321
|
10%
|
2,088
|
22%
|
Land for sale
|
3,306
|
3,443
|
-4%
|
4,367
|
-24%
|
Non-current assets destined for sale
|
1,189,011
|
-
|
-
|
-
|
-
|
|
3,400,200
|
2,820,401
|
21%
|
2,972,042
|
14%
|
Non-current Assets
|
|
|
|
|
|
Receivables from clients
|
271,322
|
313,802
|
-14%
|
365,902
|
-26%
|
Properties for sale
|
592,975
|
324,336
|
83%
|
506,719
|
17%
|
Other
|
93,476
|
100,054
|
-7%
|
161,683
|
-42%
|
|
957,773
|
738,192
|
30%
|
1,034,304
|
-7%
|
Intangible. Property and Equipment
|
52,205
|
55,757
|
-6%
|
57,926
|
-10%
|
Investments
|
799,911
|
1,996,279
|
-60%
|
1,962,153
|
-59%
|
Total Assets
|
5,210,089
|
5,610,629
|
-7%
|
6,026,425
|
-14%
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
Loans and financing
|
669,795
|
631,675
|
6%
|
663,466
|
1%
|
Debentures
|
314,139
|
270,656
|
16%
|
187,744
|
67%
|
Obligations for Purchase of Land and advances from customers
|
205,388
|
230,667
|
-11%
|
223,197
|
-8%
|
Material and service suppliers
|
79,120
|
39,040
|
103%
|
43,666
|
81%
|
Taxes and Contribution
|
51,842
|
13,520
|
283%
|
61,716
|
-16%
|
Investor Obligations
|
1,237
|
3,143
|
-61%
|
5,016
|
-75%
|
Other
|
302,217
|
349,343
|
-13%
|
385,623
|
-22%
|
Assets Liabilities of Descontinued op.
|
651,812
|
-
|
-
|
-
|
-
|
|
2,275,550
|
1,538,044
|
48%
|
1,570,428
|
45%
|
Non-current liabilities
|
|
|
|
|
|
Loans and financings
|
516,505
|
661,785
|
-22%
|
582,916
|
-11%
|
Debentures
|
137,129
|
286,497
|
-52%
|
468,337
|
-71%
|
Obligations for Purchase of Land and advances from customers
|
90,309
|
45,307
|
99%
|
146,102
|
-38%
|
Deferred taxes
|
100,405
|
10,085
|
896%
|
11,444
|
777%
|
Provision for legal claims and commitments
|
83,904
|
87,258
|
-4%
|
81,542
|
3%
|
Investor Obligations
|
-
|
-
|
0%
|
1,322
|
-100%
|
Other
|
75,834
|
51,572
|
47%
|
65,501
|
16%
|
|
1,004,086
|
1,142,504
|
-12%
|
1,357,164
|
-26%
|
Equity
|
|
|
|
|
|
Equity attributable to Shareholders of the Company
|
1,928,325
|
2,926,449
|
-34%
|
3,095,490
|
-38%
|
Equity attributable to non-controlling interest
|
2,128
|
3,632
|
-41%
|
3,343
|
-36%
|
|
1,930,453
|
2,930,081
|
-34%
|
3,098,833
|
-38%
|
Total Liabilities and Equity attributable
|
5,210,089
|
5,610,629
|
-7%
|
6,026,425
|
-14%
|
119
Tenda’s Balance Sheet
|
4Q16
|
3Q16
|
Q/Q %)
|
4Q15
|
Y/Y(%)
|
Current Assets
|
|
|
|
|
|
Cash and cash equivalents
|
28,414
|
60,777
|
-53%
|
21,653
|
31%
|
Short term investments
|
195,073
|
193,732
|
1%
|
212,621
|
-8%
|
Receivables from clients
|
250,474
|
348,383
|
-28%
|
438,226
|
-43%
|
Properties for sale
|
563,576
|
539,537
|
4%
|
490,484
|
15%
|
Other accounts receivable
|
104,606
|
104,856
|
0%
|
104,656
|
0%
|
Land for sale
|
75,227
|
71,310
|
5%
|
101,490
|
-26%
|
|
1,217,370
|
1,318,595
|
-8%
|
1,369,130
|
-11%
|
Non-current Assets
|
|
|
|
|
|
Receivables from clients
|
176,673
|
126,254
|
40%
|
41,189
|
329%
|
Properties for sale
|
211,711
|
199,559
|
6%
|
243,520
|
-13%
|
Other
|
60,556
|
58,091
|
4%
|
45,356
|
34%
|
|
448,940
|
383,904
|
17%
|
330,065
|
36%
|
Intangible, Property and Equipment
|
48,008
|
46,294
|
4%
|
43,116
|
11%
|
Investments
|
147,831
|
153,298
|
-4%
|
163,349
|
-9%
|
Total Assets
|
1,862,149
|
1,902,091
|
-2%
|
1,905,660
|
-2%
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
Loans and financing
|
41,333
|
19,298
|
114%
|
8,899
|
364%
|
Debentures
|
-
|
102,793
|
-100%
|
201,877
|
-100%
|
Obligations for Purchase of Land and Advances from customers
|
131,280
|
138,362
|
-5%
|
138,223
|
-5%
|
Material and service suppliers
|
31,664
|
26,978
|
17%
|
13,669
|
132%
|
Taxes and Contributions
|
30,510
|
33,415
|
-9%
|
40,341
|
-24%
|
Other
|
118,751
|
105,556
|
13%
|
99,940
|
19%
|
|
353,538
|
426,402
|
-17%
|
502,949
|
-30%
|
Non-current liabilities
|
|
|
|
|
|
Loans and financings
|
93,661
|
77,307
|
21%
|
37,554
|
149%
|
Obligations for Purchase of Land and Advances from customers
|
104,343
|
85,842
|
22%
|
102,412
|
2%
|
Deferred taxes
|
11,437
|
12,088
|
-5%
|
5,045
|
127%
|
Provision for legal claims and commitments
|
44,950
|
51,768
|
-13%
|
55,716
|
-19%
|
Other
|
178,598
|
90,617
|
97%
|
75,170
|
138%
|
|
432,989
|
317,622
|
36%
|
275,897
|
57%
|
Equity
|
|
|
|
|
|
Equity attributable to Shareholders of the Company
|
1,049,126
|
1,128,446
|
-7%
|
1,090,936
|
-4%
|
Equity attributable to non-controlling interest
|
26,496
|
29,621
|
-11%
|
35,878
|
-26%
|
|
1,075,622
|
1,158,067
|
-7%
|
1,126,814
|
-5%
|
Total Liabilities and Equity attributable
|
1,862,149
|
1,902,091
|
-2%
|
1,905,660
|
-2%
|
120
Consolidated Balance Sheet
|
4Q16
|
3Q16
|
Q/Q %)
|
4Q15
|
Y/Y(%)
|
Current Assets
|
|
|
|
|
|
Cash and cash Equivalents
|
29,534
|
161,340
|
-82%
|
82,640
|
-64%
|
Short term investments
|
223,646
|
448,558
|
-50%
|
629,671
|
-64%
|
Receivables from clients
|
722,640
|
1,129,351
|
-36%
|
1,395,273
|
-48%
|
Proprieties for Sale
|
1,122,724
|
2,118,652
|
-47%
|
1,880,377
|
-40%
|
Other accounts receivable
|
106,791
|
200,529
|
-47%
|
215,775
|
-51%
|
Prepaid expenses and others
|
2,548
|
5,811
|
-56%
|
7,171
|
-64%
|
Land for Sale
|
3,306
|
74,753
|
-96%
|
105,857
|
-97%
|
Non-Current Assets Destined for Sale
|
1,189,011
|
-
|
-
|
-
|
-
|
|
3,400,200
|
4,138,994
|
-18%
|
4,316,764
|
-21%
|
Non-current Assets
|
|
|
|
|
|
Receivable from clients
|
271,322
|
440,056
|
-38%
|
407,091
|
-33%
|
Properties for sale
|
592,975
|
523,895
|
13%
|
750,240
|
-21%
|
Other
|
93,476
|
158,146
|
-41%
|
192,073
|
-51%
|
|
957,773
|
1,122,097
|
-15%
|
1,349,404
|
-29%
|
Intangible and Property and Equipment
|
52,205
|
102,051
|
-49%
|
101,042
|
-48%
|
Investments
|
799,911
|
990,176
|
-19%
|
993,122
|
-19%
|
Total Assets
|
5,210,089
|
6,353,318
|
-18%
|
6,760,332
|
-23%
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
Loans and Financing
|
669,795
|
650,973
|
3%
|
672,365
|
0%
|
Debentures
|
314,139
|
373,449
|
-16%
|
389,621
|
-19%
|
Obligations for purchase of land and Advances from customers
|
205,388
|
369,029
|
-44%
|
361,420
|
-43%
|
Materials and service suppliers
|
79,120
|
66,018
|
20%
|
57,335
|
38%
|
Taxes and contributions
|
51,842
|
81,677
|
-37%
|
102,057
|
-49%
|
Other
|
303,454
|
423,298
|
-28%
|
466,171
|
-35%
|
Assets Liabilities of Descontinued op.
|
651,812
|
-
|
-
|
-
|
-
|
|
2,275,550
|
1,964,444
|
16%
|
2,048,969
|
11%
|
Non-current Liabilities
|
|
|
|
|
|
Loans and Financing
|
516,505
|
739,092
|
-30%
|
620,470
|
-17%
|
Debentures
|
137,129
|
286,497
|
-52%
|
468,337
|
-71%
|
Obligations for purchase of land and Advances from customers
|
90,309
|
131,149
|
-31%
|
248,514
|
-64%
|
Deferred taxes
|
100,405
|
22,173
|
353%
|
16,489
|
509%
|
Provision for legal claims and commitments
|
83,904
|
139,026
|
-40%
|
142,670
|
-41%
|
Other
|
75,834
|
142,188
|
-47%
|
117,647
|
-36%
|
|
1,004,086
|
1,460,125
|
-31%
|
1,614,127
|
-38%
|
Equity
|
|
|
|
|
|
Equity attributable to Shareholders of the Company
|
1,928,325
|
2,926,451
|
-34%
|
3,095,491
|
-38%
|
Equity attributable to non-controlling interest
|
2,128
|
2,298
|
-7%
|
1,745
|
22%
|
|
1,930,453
|
2,928,749
|
-34%
|
3,097,236
|
-38%
|
Total Liabilities and Equity attributable
|
5,210,089
|
6,353,318
|
-18%
|
6,760,332
|
-23%
|
121
Cash Flow
|
4Q16
|
4Q15
|
2016
|
2015
|
Income Before Taxes on Income and Social Contribution
|
(313,410)
|
8,224
|
(501,941)
|
35,419
|
Expenses/income not affecting cash and cash equivalents
|
238,380
|
39,466
|
426,733
|
232,150
|
Depreciation and amortization
|
10,560
|
7,804
|
33,892
|
32,585
|
Provision for realization of non
- financial assets - Properties and land for sale
|
166,518
|
(618)
|
160,216
|
(618)
|
Expense with stock option plan and shares
|
1,315
|
1,966
|
6,821
|
7,825
|
Provision for penalty over delayed projects
|
-
|
(2,341)
|
(1,404)
|
(2,137)
|
Unrealized interest and financial charges
|
11,657
|
31,750
|
100,508
|
88,801
|
Equity income
|
13,617
|
(29,675)
|
48,332
|
(40,015)
|
Disposal of fixed asset
|
6,165
|
5,296
|
7,666
|
5,516
|
Provision for guarantee
|
(3,156)
|
(2)
|
(12,390)
|
11,100
|
Provision for legal claims and commitments
|
26,254
|
23,087
|
70,796
|
91,193
|
Provision for profit sharing
|
6,250
|
(3,000)
|
18,750
|
14,000
|
Allowance for doubtful accounts and dissolutions
|
(921)
|
5,658
|
6,950
|
6,749
|
Income from financial instruments
|
121
|
(459)
|
(13,404)
|
17,151
|
Customers
|
89,117
|
131,789
|
288,999
|
133,674
|
Properties for sale
|
21,371
|
(43,012)
|
21,759
|
(159,654)
|
Other accounts receivable
|
(24,207)
|
19,016
|
29,471
|
18,884
|
Pre-paid expenses
|
(227)
|
548
|
(460)
|
7,622
|
Obligations on land purchase and advances from customers
|
19,723
|
27,374
|
(73,603)
|
9,243
|
Taxes and contribution
|
3,580
|
(4,081)
|
(9,874)
|
(7,195)
|
Providers
|
36,617
|
(12,156)
|
31,991
|
(28,036)
|
Salaries and payroll charges
|
(7,133)
|
(9,718)
|
(17,740)
|
(25,464)
|
Other liabilities
|
(12,254)
|
(28,103)
|
(152,209)
|
(84,266)
|
Related parties transactions
|
39,067
|
8,114
|
100,207
|
72,444
|
Paid taxes
|
(4,077)
|
(6,183)
|
(10,722)
|
(14,763)
|
Net cash from Operating Activities
|
86,547
|
131,278
|
132,611
|
190,058
|
Investments Activities
|
|
|
|
|
Purchase of property and equipment and intangible assets
|
(13,174)
|
(8,815)
|
(35,838)
|
(33,340)
|
Investments in subsidiaries
|
15,157
|
(482)
|
(110)
|
(1,636)
|
Redemption of short-term investment
|
409,009
|
1,031,432
|
1,611,200
|
3,699,616
|
Purchase of short-term investments
|
(377,828)
|
(892,403)
|
(1,417,794)
|
(3,502,264)
|
Net cash from investing activities
|
33,164
|
129,732
|
157,458
|
162,376
|
Financing activities
|
|
|
|
|
Investor obligations
|
(1,906)
|
(4,039)
|
(3,658)
|
(6,135)
|
Increase in loans and financing
|
76,322
|
165,688
|
579,391
|
734,552
|
Amortization of loans and financing
|
(301,024)
|
(431,855)
|
(944,795)
|
(1,068,864)
|
Buyback of treasury shares
|
-
|
-
|
(8,693)
|
(24,157)
|
Dividens paid
|
(17,682)
|
-
|
(17,682)
|
-
|
Assignment of credit receivables, net
|
18,948
|
24,558
|
72,776
|
24,558
|
Loan Operations with related parties
|
34,602
|
5,115
|
1,130
|
(280)
|
Treasury shares
|
-
|
-
|
2,149
|
3,023
|
Result from the sale of treasury shares
|
-
|
-
|
(2,140)
|
(2,424)
|
Net cash from financing activities
|
(190,740)
|
(240,533)
|
(321,522)
|
(339,727)
|
Increase (decrease) in cash and cash equivalents
|
(71,029)
|
20,477
|
(31,453)
|
12,707
|
Opening balance of cash and cash equivalents
|
100,563
|
40,510
|
60,987
|
48,280
|
Closing balance of cash and cash equivalents
|
29,534
|
60,987
|
29,534
|
60,987
|
Increase (decrease) in cash and cash equivalents
|
(71,029)
|
20,477
|
(31,453)
|
12,707
|
122
About Gafisa
Gafisa is one Brazil’s leading residential and commercial properties development and construction companies. Founded over 60 years ago, the Company is dedicated to growth and innovation oriented to enhancing the well-being, comfort and safety of an increasing number of households. More than 15 million square meters have been built, and approximately 1,100 projects delivered under the Gafisa brand - more than any other company in Brazil. Recognized as one of the foremost professionally managed homebuilders, Gafisa’s brand is also one of the most respected, signifying both quality and consistency. In addition to serving the upper-middle and upper class segments through the Gafisa brand, the Company also focuses on low income developments through its Tenda brand. And, it participates through its 30% interest in Alphaville, a leading urban developer, in the national development and sale of residential lots. Gafisa S.A. is a Corporation traded on the Novo Mercado of the BM&FBOVESPA (BOVESPA:GFSA3) and is the only Brazilian homebuilder listed on the New York Stock Exchange (NYSE:GFA) with an ADR Level III, which ensures best practices in terms of transparency and corporate governance.
This release contains forward-looking statements about the business prospects, estimates for operating and financial results and Gafisa’s growth prospects. These are merely projections and, as such, are based exclusively on the expectations of management concerning the future of the business and its continued access to capital to fund the Company’s business plan. Such forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors; therefore, they are subject to change without prior notice.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: April 7, 2017
Gafisa S.A.
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By:
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Name: Sandro Gamba
Title: Chief Executive Officer
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