gfapr4q10_6k.htm - Provided by MZ Technologies
 
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 March, 2011

(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

 
 

 

 

 

 

 

IR Contact 
Gafisa Reports Results for Fourth Quarter and Full Year 2010

--- Launches reached a record of R$1.5 billion in the quarter and R$4.5 billion for the full year, 54% and 95% higher, respectively, than 2009 ---

--- Pre-sales achieved levels of R$1.2 billion in the 4Q10 and R$4.0 billion in 2010, 18% and 23% higher, respectively, than 2009 ---

--- Net Income reached R$137 million in 4Q10 and R$416 million in 2010, 189% and 309% higher, respectively, than 2009, with a 4Q10 net margin of 14.8% ---

 

FOR IMMEDIATE RELEASE - São Paulo, March 28th, 2011 – Gafisa S.A. (Bovespa: GFSA3; NYSE: GFA), Brazil’s leading diversified national homebuilder, today reported financial results for 2010 full year and fourth quarter ended December 31, 2010.

Commenting on results, Wilson Amaral, CEO of Gafisa, said, “We are pleased to report strong full year and quarterly results led by record launches and pre-sales in the last quarter of the year enabling us to achieve full year launches of R$ 4.5 billion, close to the higher end of our guidance. Similarly, the operating performance resulted in a full year adjusted EBITDA margin of 20.1%, 60 bps higher than the mid-range of our guidance, with a full year net margin of 11.2%.

However, we are not yet satisfied with our operating margins and expect that we will see some pressure on EBITDA during the first half of 2011 due to lower expected revenues, as accounted for under the POC method, and in line with lower launch activity during 2009, as well as the delivery of the last of both higher cost legacy Tenda projects and lower margin Gafisa projects from our geographic expansionary period and from Rio de Janeiro. During the second half, we expect margins to recover resulting in what we believe will be a full year 2011 Adjusted EBITDA in a range of 18% - 22%, impacted by lower first half results.

Amaral added, “Gafisa has been able to keep pace with the extraordinary growth of the Brazilian economy and seize the unprecedented opportunities that exist in the homebuilding sector. With our highly respected brands that serve all sectors of the home-buying population, we are well positioned to continue to keep pace with the demand for new homes. While our cash burn rate has been impacted by the need to finance some of Tenda’s legacy units, we still maintained a cash and cash equivalent amount of R$ 1.2 billion at the end of 2010. As we move into a positive cash flow position at the second half of 2011, we expect to be able to improve our capital structure and reduce net debt/equity by the end of the year to a very comfortable level below 60%, setting the stage for continued robust expansion into the future.”

4Q10 - Operating & Financial Highlights

▲   Consolidated launches totaled a record of R$ 1.5 billion for the quarter, a 54% increase over 4Q09. Tenda’s reached R$ 528 million in the quarter, and R$ 1.6 billion in 2010, 159% higher than 2009.

▲   Pre-sales reached R$ 1.2 billion in the quarter, an 18% increase as compared to 4Q09 or 23% increase when comparing 2010 with 2009.

▲   Net operating revenues, recognized by the Percentage of Completion (“PoC”) method, rose 3.5% to R$ 928.7 million from R$ 897.5 million in the 4Q09, reflecting continued pace of execution.

▲   Adjusted Gross Profit (w/o capitalized interest) reached R$ 335.6 million, 8% higher than the same period of 2009, with 36.1% Adjusted Gross Margin.

▲   Adjusted EBITDA reached R$ 197.8 million with a 21.3% margin, a 17.8% increase when compared to the R$ 167.8 million reached in the 4Q09, mainly due to improved performance. Accumulated 2010 EBITDA of R$ 747.5 million (20.1% Margin) grew 41% when compared to 2009.

▲   Net Income was R$ 137.4 million for the 4Q10 (16% Adj. Net Margin) and R$ 416.1 for the full year of 2010 (12.8% Adj. Net Margin), an increase of 189% and 309%, when compared to 2009.

▲   As expected, Net Debt/Equity reached 65% at the end of the year. We expect it to increase to around 70% in the 1H11, before it revert, given positive cash flow generation in the 2H11 resulting in a Net Debt/Equity ratio below 60% by 2011 year end (Please refer to the “Outlook” section).

▲   2011 Launch Guidance´s range is from R$ 5.0 to 5.6 billion with an expected adjusted EBITDA Margin in the range of 18% – 22%.        

 
Luiz Mauricio Garcia 
Rodrigo Pereira 
Email: ri@gafisa.com.br 
IR Website: 
www.gafisa.com.br/ir 
 
 
4Q10 Earnings Results 
Conference Call 
Tuesday, March 29th , 2011 
 
> In English 
11:00 AM US EST 
12:00 PM Brasilia Time 
Phones: 
+1 (888) 700-0802 (US only) 
+1 (786) 924-6977 (Others) 
+55 (11) 4688-6361 (Brazil) 
Code: Gafisa 
> In Portuguese 
09:00 AM US EST 
10:00 AM Brasilia Time 
Phone: +55 (11) 4688-6361 
Code: Gafisa 
 
Shares 
GFSA3 – Bovespa 
GFA – NYSE 
Total Outstanding Shares: 
431,515,375 
 
Average daily trading volume 
(90 days1 ): R$ 104.6 million 
 
1) Up to March 25th , 2011. 
 

2

 

 

Index

CEO Comments and Corporate Highlights for 4Q10            

04

Recent Developments

06

Launches 

08

Pre-Sales 

09

Sales Velocity

10

Operations

10

Land Bank

11

Gross Profit

13

SG&A

13

EBITDA

14

Net Income

15

Backlog of Revenues and Results

15

Liquidity    

16

Outlook

18

 

3

 

 

 

CEO Comments and Corporate Highlights for 4Q10 and 2010

The Brazilian macroeconomic scenario remained extremely positive throughout 2010, with GDP growth of 7.5%. Other notable features were a gradual decline in the unemployment rate - to an historical low of 6% - and increased working class real income, credit supply and consumer confidence, as well as the renewal of tax incentives for the real estate sector and other factors that benefited, and should continue to benefit, the company and the sector.

Although the impact of the rapid economic growth threatened to undermine the government’s inflation control, with prices expected to rise by 5% to 6% in 2011, the Brazilian Central Bank has taken firm action to prevent any upsets that could significantly affect the country’s economic stability. It is expected that the Central Bank’s base rate, the SELIC, will reach 12.25% p.a. by the end of this year, which is a level that we do not believe will have an impact on housing demand. Surveys conducted by Data Popular at the end of 2010 indicate a purchase demand of 9.1 million homes over the next 12 months, almost double the buying intent registered in the survey at the end of 2008.

We understand that the federal government remains strongly committed to extending the MCMV program until 2014. The recent announcement of a reduction in the 2011 budget for MCMV2 was merely the postponing of some of the program’s disbursements to subsequent years, given that the total budget has not been altered.

The CEF (Caixa Economica Federal) continues to perform strongly as the country’s main provider of real estate financing, exceeding by R$ 6 billion its original plan to provide financing of R$ 70 billion in 2010, well above the R$ 47 billion in 2009. The balance of financing using the FGTS exceeded R$ 83 billion in 2010, an increase of 67% over the previous year. At the same time, financing using the resources of the poupança (basic savings accounts) increased by 65% in relation to 2009, reaching R$ 56 billion. We also noted the growing involvement of other financial institutions, such as Banco do Brasil, which has been authorized to join the MCMV program and had accumulated a credit portfolio of R$ 3 billion by the end of December 2010. It should be pointed out that financing indexed to the TR (referential interest rate) has a low correlation to increases in the SELIC rate and therefore do not have a significant impact on the sector or on the monetary correction of loan installments.

All these factors, together, contributed towards a significant improvement in demand within the sector, following the recovery that began in 2009, enabling Gafisa to launch R$ 4.5 billion worth of properties in 2010, 95% more than in the previous year, while sales amounted to R$ 4 billion and net revenue came to R$ 3.7 billion, both of which were 23% up on the 2009 amounts. The adjusted EBITDA margin rose from 17.5% in 2009 to 20.1% in 2010, and the net profit for the year was R$ 416.1 million, 309% more than in the previous year. As a result, in 2010 were declared R$ 98.8 million in dividends to be paid out during 2011, following GSM approval, representing a growth of 95% over the previous year, or R$ 0.229 per common share.

In recent years, the company has been consolidating its position in the country’s most important regions, following the process of geographical expansion that took place mainly between 2005 and 2008, and we now have a presence in 136 towns and cities in 22 of the nation’s 26 states, in addition to the Federal District. We have also learned a lot from this process and believe we are now well placed to continue reaping the benefits of the growth potential inherent in the entire Brazilian real estate market.

Gafisa will continue to develop all three of its brands (Gafisa, AlphaVille and Tenda) in the markets where it has a footing, maximizing the sales from its distinctive portfolio, which ranges from low-income developments to undertakings of the highest standard. The Gafisa brand, which serves the middle and high income segments, made a strong contribution to the 2010 results, launching R$ 2.2 billion worth of properties (70% more than in 2009) and accounting for almost half the total sales for the year. Gafisa reached an important milestone, with the delivery of development number 1,000, confirmation of its experience and execution capacity.

AlphaVille, which focuses on the development and sale of residential lots, launched 15 new projects in 2010 and expanded its presence into new metropolitan areas. As a result, the brand is already present in 64 towns and cities in 22 states, and the rapid pace of sales continues to be the norm for all its launches. The company expects this segment to represent an ever more significant portion of its portfolio, given that residential condominiums are likely to become increasingly prevalent throughout the country. In April 2010, Gafisa increased its stake in Alphaville from 60% to 80%, and we expect to complete the acquisition of the remaining 20% between late 2011 and early 2012.

4

 

 

 

Tenda, our brand serving the lower income segment and whose selling prices are amongst the lowest in the market, remains well positioned to help meet the Brazilian housing deficit, through the My House, My Life (MCMV) program – which, in its second phase, aims to deliver another 2 million low-income residences by 2014. During 2010, Tenda almost quadrupled the number of units contracted through financing by the CEF, the financial institution that is leading the MCMV program, to over 22,000 units, which also enabled it to nearly double the number of transferred units to nearly 10,000 units during the year. The good relationship that Tenda enjoys with the CEF, which places us amongst the companies with the best performances under the MCMV program, has only been possible due to the improvements made in the internal processes of the two organizations. It should be pointed out that, over the first half of 2011 and beginning of the second half of the year, we expect to deliver most of the units relating to old Tenda projects, which have lower margins and are financed with the company’s own capital. Add to this the introduction of new building technology, such as the use of aluminum moldings, and the continued efforts to optimize the key business procedures, and we can expect to see an improvement in the operational and financial results of this operation.

With the successful issuing of debt instruments and shares in 2010, which brought in funding of R$ 1.4 billion, which will be supplemented by the positive cash flow generation that is expected as of the third quarter of 2011, the company is very well placed to expand the volume of its business, while, at the same time, we intend to develop a healthy capital structure, bringing the Net Debt/Net Equity ration down to below 60% at the end of this year.

Our guidance for launches in 2011, of between R$ 5 billion and R$ 5.6 billion, reflects the expectation of an increased volume of business. With regard to profitability, we expect an adjusted EBTIDA margin for the full year of between 18% and 22%, with a first half figure of between 13% and 17%, compared to 20% to 24% for the second half of the year. This difference between the margins is due to: i) lower revenue resulting from fewer launches in 2009, compared to 2008 (2009: R$2.3 billion; 2008 R$4.2 billion), with lower recognition of revenue in respect of work in progress, resulting impact on the diluting of fixed costs; ii) delivery of lower margin products by Tenda, due to a lack of standardization among the older products, and by Gafisa, due to cost over-run associated with geographical expansion and projects in Rio de Janeiro; and iii) possible discounts on units that are ready but unsold, relating to launches in 2008 and earlier years.

As we can see, 2010 was a very positive year, both for Gafisa and for Brazil as a whole. However, the country suffered a major tragedy in January 2011, when abnormally heavy rain provoked much devastation in the mountain region of Rio de Janeiro state. We are pleased to be able to join other leading builders to help construct new homes for those who have suffered such terrible losses. We look upon this event as a reminder of our social responsibility towards society.

We thank all our clients, shareholders, suppliers, employees and other stakeholders and wish you all an excellent 2011.

 

Wilson Amaral, CEO -- Gafisa S.A.

5

 

 

Recent Developments and 2010 Highlights

Wilson Amaral to Retire from the Company by the End of 2011

Today, the Company announced that Chief Executive Officer Wilson Amaral advised the Board of Directors that he currently plans to retire from the Company towards the end of 2011. Mr. Amaral has served Gafisa for more than five years, taking it from a privately held company to one of the few fully public corporations, and the only NYSE-listed Brazilian real estate company, in Brazil. Mr. Amaral will remain on the Board of Directors of Gafisa and expect to play a more active role in the future.  He will work together with the Board to identify his successor and insure a smooth transition. (Please see more details on page 19).

 

Successful Fundraising

Gafisa’s successful fundraising during 2010, via a primary share offering on March 23rd, and a debt offering on October 5th, once again underscored the Company’s strong relationship with financial markets, leading market position and favorable growth prospects. These transactions permitted Gafisa to fortify its balance sheet in 2010, ahead of 2011 in which operating cash flows are expected to increase. Proceeds of the equity and debt offerings, which totaled approximately R$1.06 billion and R$300 million respectively, are being used for working capital, new developments, land acquisition, strategic joint ventures and acquisitions, allowing Gafisa to execute a robust business plan in 2011 and beyond.

Tenda Advances under Federal Housing Program

Tenda almost quadrupled the number of units it contracted with Caixa Economica Federal (Caixa), reaching over 22,000 units in 2010 as compared to 6,000 in 2009. The Company understands that it is among the top performing companies in the sector in this regard under the program. Tenda also almost doubled the number of mortgages transferred under the program (“repasse”) from 5,000 in 2009 to approximately 10,000 in 2010, another result that points to greater efficiency within Tenda and a streamlined working relationship with Caixa.

AlphaVille

Gafisa continues to pioneer innovative concepts in the homebuilding sector and a leading example of this is residential community living offered through its AlphaVille unit, which launched 15 new projects in 2010, extending its footprint to northern and northeastern Brazil.  Now present in 22 cities and 64 states, AlphaVille accounted for 16.5% of Gafisa’s launches and 14.9% of pre-sales in 2010. With demographics changing and significant investments in the country’s infrastructure, high quality suburban living is expected to become more common and the unit is expected to make a greater contribution to the Company’s overall business in future periods. 

 

Delivery of the 1000th Project

On October 19th, the Gafisa brand delivered its 1000th project, Terraças Alto do Lapa, a twenty-four story, 192-unit apartment building located in São Paulo. The reaching of this milestone is a testament to the deep real estate experience, execution capacity and dedication of Gafisa’s organization.

Supporting Greater Access to Ownership of Gafisa Shares

Gafisa’s management is committed to facilitating public access to the Company’s shares and, as a measure toward achieving that goal, implemented a 2-for-1 stock split on February 23rd. The Company remains the only publicly-traded Brazilian homebuilder to list its shares on the New York Stock Exchange, which has helped it to remain among the most liquid stocks in the sector.  In October, Gafisa also hired a market maker, ITAUVEST DTVM S.A., to further increase the liquidity of common shares issued by the Company on Bovespa, another measure which should facilitate public ownership of Gafisa stock.

2011 Guidance

For 2011, we are providing additional leverage metric under guidance given the expected positive evolution in cash flow between the first and second half of 2011. We expect launches of between R$ 5.0 – R$ 5.6 billion, an EBITDA margin of between 18% - 22%, and Net Debt/Equity target below 60% by year end.

 

6

 

 

 

Operating and Financial Highlights
(R$000, unless otherwise specified) 		 4Q10  4Q09    4Q10 vs. 
4Q09 (%)		 3Q10    4Q10 vs. 
3Q10 (%)		 2010  2009    2010 vs. 
2009 (%)
Launches (%Gafisa)  1,543,149  1,000,353  54.3%  1,236,947  24.8%  4,491,835  2,301,224  95.2% 
Launches (100%)  2,279,358  1,262,374  80.6%  1,450,961  57.1%  6,041,703  2,789,672  116.6% 
Launches, units (%Gafisa)  7,742  4,258  81.8%  6,210  24.7%  22,233  10,810  105.7% 
Launches, units (100%)  9,334  5,662  64.9%  6,710  39.1%  26,398  13,426  96.6% 
Contracted sales (%Gafisa)  1,240,818  1,053,810  17.7%  1,018,480  21.8%  4,006,380  3,248,065  23.3% 
Contracted sales (100%)  1,426,165  1,218,564  17.0%  1,373,620  3.8%  4,976,423  3,832,531  29.8% 
Contracted sales, units (% Gafisa)  5,933  6,413  -7.5%  5,082  16.7%  20,744  21,952  -5.5% 
Contracted sales, units (100%)  6,853  7,155  -4.2%  6,618  3.5%  24,962  24,751  0.9% 
Contracted sales from Launches (%Gafisa)  678,427  267,573  153.5%  409,160  65.8%  2,672,100  1,438,691  85.7% 
Contracted sales from Launches (%)  44.0%  26.7%  1722 bps  33.1%  1089 bps  59.5%  62.5%  -303 bps 
Completed Projects (%Gafisa)  435,818  366,400  18.9%  299,557  45.5%  1,692,493  1,394,700  21.4% 
Completed Projects, units (%Gafisa)  2,899  2,647  9.5%  2,498  16.1%  12,894  10,831  19.0% 
 
Net revenues  928,637  897,540  3.5%  957,196  -3.0%  3,720,860  3,022,346  23.1% 
Gross profit  278,235  277,418  0.3%  275,921  0.8%  1,086,304  878,584  23.6% 
Gross margin  30.0%  30.9%  -95 bps  28.8%  114 bps  29.2%  29.1%  13 bps 
Adjusted Gross Margin 1)  36.1%  34.7%  148 bps  32.3%  379 bps  32.9%  32.2%  73 bps 
Adjusted EBITDA 2)  197,769  167,826  17.8%  197,285  0.2%  747,483  530,029  41.0% 
Adjusted EBITDA margin 2)  21.3%  18.7%  260 bps  20.6%  69 bps  20.1%  17.5%  255 bps 
Adjusted Net profit 2)  148,464  58,356  154.4%  132,871  11.7%  474,813  157,390  201.7% 
Adjusted Net m argin 2)  16.0%  6.5%  949 bps  13.9%  211 bps  12.8%  5.2%  755 bps 
Net profit  137,363  47,607  188.5%  116,600  17.8%  416,050  101,740  308.9% 
EPS (R$)3)  0.3188  0.1427  123.3%  0.2706  17.8%  0.9655  0.3050  216.5% 
Number of shares ('000 final)3)  430,910  333,554  29.2%  430,910  0.0%  430,910  333,554  29.2% 
 
Revenues to be recognized  3,963  3,025  31.0%  3,429  15.6%  3,963  3,025  31.0% 
Results to be recognized 4)  1,540  1,066  44.5%  1,309  17.6%  1,540  1,066  44.5% 
REF m argin 4)  38.9%  35.2%  363 bps  38.2%  69 bps  38.9%  35.2%  363 bps 
 
Net debt and Investor obligations  2,468,961  1,998,079  24%  2,076,000  19%  2,468,961  1,998,079  24% 
Cash and cash equivalent  1,201,148  1,424,053  -16%  1,231,143  -2%  1,201,148  1,424,053  -16% 
Equity  3,783,669  2,384,181  59%  3,731,570  1%  3,783,669  2,384,181  59% 
Equity + Minority shareholders  3,783,669  2,384,181  59%  3,731,570  1%  3,783,669  2,384,181  59% 
Total assets  9,549,554  7,736,709  23%  9,310,133  3%  9,549,554  7,736,709  23% 
(Net debt + Obligations) / (Equity +                 
Minorities)  65.3%  83.8%  -1855 bps  55.6%  962 bps  65.3%  83.8%  -1855 bps 
 
1) Adjusted for capitalized interest
2) Adjusted for expenses on stock option plans (non-cash), m inority shareholders and non-recurring expenses
3) Adjusted for 1:2 stock split in the 4Q09
4) Results to be recognized net of PIS/Cofins - 3.65%; excludes the AVP method introduced by Law nº 11,638

7

 

 

Launches

In 4Q10, launches totaled R$ 1.54 billion, an increase of 54% compared to 4Q09, represented by 50 projects/phases, located in 28 cities.

63% of Gafisa launches represented a price per unit below R$ 500 thousand, while nearly 53% of Tenda’s launches had prices per unit below R$ 130 thousand. FIT, a unit of Tenda, launched 5 projects with an average price per unit of R$ 188 thousand. These projects represented a PSV of R$ 101 million or 19% of Tenda’s launches in the quarter. Excluding these projects, the average price per unit of Tenda was R$ 114 thousand, among the lowest average price for homebuilders listed on the Bovespa.

In the quarter, the Gafisa segment was responsible for 53% of launches, Tenda accounted for 34% and AlphaVille for the remaining 13%.

The tables below detail new projects launched during the 4Q and full year 2010:

Table 1 - Launches per company per region 
%Gafisa - (R$000)    4Q10  4Q09  Var. (%)  2010  2009  Var. (%) 
Gafisa São Paulo  582,269  436,837  33%  1,537,604  804,937  91% 
Rio de Janeiro  18,100  32,753  -45%  158,953  95,955  66% 
Other  223,053  107,994  107%  458,766  363,628  26% 
Total  823,422  577,584  43%  2,155,323  1,264,520  70% 
Units  2,109  1,472  43%  5,124  3,428  49% 
             
AlphaVille São Paulo  923  52,929  -98%  156,457  99,498  57% 
Rio de Janeiro  -  62,834  -100%  -  98,729  -100% 
Other  191,094  170,268  12%  584,135  221,285  164% 
Total  192,016  286,030  -33%  740,592  419,512  77% 
Units  1,359  1,451  -6%  3,607  2,096  72% 
             
Tenda São Paulo  84,419  69,032  22%  285,183  240,288  19% 
Rio de Janeiro  40,156  (29,250)  -  234,699  17,550  1237% 
Other  403,136  96,957  316%  1,076,037  359,354  199% 
Total  527,711  136,739  286%  1,595,919  617,192  159% 
Units  4,275  1,335  220%  13,502  5,286  155% 
             
Consolidated Total - R$000  1,543,149  1,000,353  54%  4,491,835  2,301,224  95% 
Total - Units  7,742  4,258  82%  22,233  10,810  106% 
 Table 2 - Launches per company per unit price
%Gafisa - (R$000)    4Q10  4Q09  Var. (%)  2010  2009  Var. (%) 
Gafisa <=R$500K  522,007  328,283  59%  1,103,066  739,590  49% 
> R$500K  301,415  249,301  21%  1,052,257  524,930  100% 
Total  823,422  577,584  43%  2,155,323  1,264,520  70% 
AlphaVille ~ R$100K; <= R$500K  192,016  286,030  -33%  740,592  419,512  77% 
Total  192,016  286,030  -33%  740,592  419,512  77% 
Tenda ≤ R$130K  280,509  102,507  174%  954,770  288,013  232% 
> R$130K ; < R$200K  247,202  34,232  622%  641,149  329,179  95% 
Total  527,711  136,739  286%  1,595,919  617,192  159% 
Consolidated    1,543,149  1,000,353  54%  4,491,835  2,301,224  95% 

 

8

 

 

Pre-Sales

Pre-sales in the quarter increased by 17.7% to R$ 1.24 billion when compared to 4Q09.

The Gafisa segment was responsible for 50% of total pre-sales, while Tenda and AlphaVille accounted for approximately 34% and 16% respectively. Among Gafisa’s pre-sales, 67% corresponded to units priced below R$ 500 thousand, while 55% of Tenda’s pre-sales came from units priced below R$ 130 thousand.

The tables below illustrate a detailed breakdown of our pre-sales for the 4Q and full year 2010:

 

Table 3 - Sales per company per region
%Gafisa - (R$000)  4Q10  4Q09  Var. (%)  2010  2009  Var. (%) 
Gafisa São Paulo  439,456  308,023  43%  1,350,362  829,795  63% 
Rio de Janeiro  61,282  75,311  -19%  220,027  268,209  -18% 
Other  121,294  83,245  46%  403,928  412,072  -2% 
AlphaVille Total  622,032  466,579  33%  1,974,317  1,510,075  31% 
Units  1,427  1,210  18%  4,773  4,210  13% 
São Paulo  5,792  55,344  -90%  119,906  110,200  9% 
Rio de Janeiro  9,594  10,006  -4%  38,183  43,061  -11% 
Other  177,584  138,986  28%  440,849  223,624  97% 
Tenda
 Total  192,971  204,336  -6%  598,938  376,885  59% 
Units  1,173  968  21%  2,906  1,871  55% 
São Paulo  58,607  131,232  -55%  295,527  496,808  -41% 
Rio de Janeiro  40,239  97,048  -59%  214,702  314,039  -32% 
Other  326,969  154,615  111%  922,896  550,257  68% 
Total  425,815  382,895  11%  1,433,125  1,361,105  5% 
Units  3,332  4,234  -21%  13,065  15,871  -18% 
Consolidated Total - R$000  1,240,818  1,053,810  17.7%  4,006,380  3,248,065  23% 
Total - Units  5,933  6,413  -7%  20,744  21,952  -6% 
 
Table 4 - Sales per company per unit price - PSV
%Gafisa - (R$000)  4Q10  4Q09  Var. (%)  2010  2009  Var. (%) 
Gafisa
 <= R$500K  418,520  185,480  126%  1,245,723  819,257  52% 
> R$500K  203,512  281,099  -28%  728,594  690,819  5% 
Total  622,032  466,579  33%  1,974,317  1,510,075  31% 
AlphaVille
 > R$100K; <= R$500K  192,971  204,336  -6%  598,938  376,885  59% 
Total  192,971  204,336  -6%  598,938  376,885  59% 
Tenda ≤ R$130K  234,321  311,403  -25%  941,574  1,168,616  -19% 
> R$130K ; < R$200K  191,493  71,491  168%  491,551  192,488  155% 
Total  425,815  382,895  11%  1,433,125  1,361,105  5% 
 Consolidated  Total  1,240,818  1,053,810  17.7%  4,006,380  3,248,065  23% 

 

9

 

 

Table 5 - Sales per company per unit price - Units
%Gafisa - Units 4Q10  4Q09  Var. (%)  2010  2009  Var. (%) 
Gafisa
 <= R$500K  1,195  250  378%  3,741  2,750  36% 
> R$500K  232  961  -76%  1,032  1,460  -29% 
Total  1,427  1,210  18%  4,773  4,210  13% 
AlphaVille
 > R$100K; <= R$500K  1,173  969  21%  2,906  1,872  55% 
Total  1,173  969  21%  2,906  1,872  55% 
Tenda
 ≤ R$130K  2,328  3,836  -39%  10,455  14,608  -28% 
> R$130K ; < R$200K  1,004  398  152%  2,609  1,262  107% 
Total  3,332  4,234  -21%  13,065  15,871  -18% 
Consolidated  Total  5,933  6,413  -7%  20,744  21,953  -6% 
 

Sales Velocity

On a consolidated basis, the Company attained a sales velocity of 27.4% in the 4Q10, compared to a velocity of 25.7% in 3Q10. Sales velocity increased when compared to the previous period, mainly due to improved performance of Tenda and AlphaVille during the quarter. Sales velocity in the fourth quarter and 2010 full year launches were 44% and 59%, respectively; this continues to be consistent with our strategy to optimize the equilibrium between sales velocity and margins/return, compensating for cost pressure driven mainly from labor. When compared to 4Q09, the sales velocity was 120 bps lower, since in the 4Q10 there was a much higher concentration of projects launched in December when compared to 2009. 65% of the total launch volume was concentrated in the last month of the year, compared to 29% in the same period of 2009.

  Table 6 - Sales velocity per company 
R$ million    Beginning of period 
Inventories 		 Launches  Sales    Price Increase + 
Other 		   End of period 
Inventories 		 Sales velocity 
Gafisa  1,644.8  823.4  622.0  11.0  1,857.2  25.1% 
AlphaVille  415.3  192.0  193.0  4.2  418.6  31.6% 
Tenda  877.2  527.7  425.8  40.6  1,019.7  29.5% 
Total  2,937.3  1,543.1  1,240.8  55.8  3,295.4  27.4% 
Table 7 - Sales velocity per launch date
4Q10
  End of period
 Inventories 		 Sales  Sales velocity 
2010 launches  1,899,788  1,083,078  36.3% 
2009 launches  316,129  71,861  18.5% 
2008 launches  649,962  20,503  3.1% 
≤ 2007 launches  429,556  65,375  13.2% 
Total  3,295,435  1,240,818  27.4% 

Operations

Gafisa’s geographic reach and execution capacity is substantial. The Company was present in 22 different states plus the Federal District, with 204 projects under development at the end of the fourth quarter. This diversified platform also helps to mitigate execution risk, since each region of the country has a different dynamic of growth, supply and costs. Some 460 engineers and architects were in the field, in addition to 460 intern engineers in training.

Gafisa and its subsidiaries continue to selectively launch successful projects in new regions and in multiple market segments, maximizing returns in accordance with market demand. Through the end of December, Tenda contracted 22,288 units with CEF, being 79% under the MCMV program.

 

10

 

 

Delivered Projects

During the fourth quarter, Gafisa delivered 18 projects with 2,899 units equivalent to an approximate PSV of R$ 436 million; the Gafisa segment delivered 5 projects; Tenda and AlphaVille delivered the remaining 11 and 2 projects/phases, respectively. The delivery date is based on the “delivery meeting” that takes place with customers, and not upon the physical completion which is prior to the delivery meeting.

For the 2010 full year, Gafisa completed 83 projects which includes 12,894 units and represents approximately R$ 1.7 billion in PSV. In 2011, we expect to almost double this number, to 25,000 units, mainly due to the delivery of older Tenda units along with some of Gafisa’s leveraged 2007 launches.

The tables below list the products delivered in the 4Q and full year 2010:

 

Table 8 - Delivered projects
Company  Project  Delivery  Launch  Local  % Gafisa  Units 
(%Gafisa) 		 PSV 
(%Gafisa) 
Gafisa 9M10             2,132  547,131 
               
AlphaVille 9M10             1,762  253,808 
                
Tenda 9M10             6,101  455,736 
                
Total 9M10             9,995  1,256,675 

Gafisa 4Q10 		          
591 
189,567 
           
Gafisa  Olimpic - Bosque da Saude  October - 10  October-2007  São Paulo - SP  100%  148  56,722 
Gafisa  Solares de Vila Maria  November - 10    December-2007 São Paulo - SP  100%  100  37,942 
Gafisa  Palm Ville  December - 10  April-2007  Salvador - BA  50%  56  30,211 
Gafisa  Raizes Granja Viana  December - 10  May-2008  São Paulo - SP  50%  35  25,994 
Gafisa  Secret Garden  December - 10  May-2007  Rio de Janeiro - RJ  100%  252  38,699 

AlphaVille 4Q10 		              
          388  74,810 
Alphaville  Caruaru  November  Mar-09  Caruaru-PE  70%  172  21,881 
Alphaville  Piracicaba (SP)  November  Nov-09  Piracicaba-SP  63%  216  52,929 
               
Tenda 4Q10
           1,920 171,441
         
Tenda  RESIDENCIAL JANGADEIRO LIFE - Fases I, II e III  October-10  March-2008  Guararapes - PE  100%  180  13,183 
Tenda  RESIDENCIAL ATELIE LIFE - Fases I e II  October-10  June-2008  Recife - PE  100%  108  7,467 
Tenda  RESIDENCIAL CIDADES DO MUNDO LIFE - Fases I  October-10  July-2008  Recife - PE  100%  144  10,000 
Tenda  CITTÁ LAURO DE FREITAS  October-10  May-2008  Lauro de Freitas - BA  50%  152  16,813 
Tenda  RESIDENCIAL PARQUE DO JATOBÁ  November-10  May-2007  Belo Horizonte - MG  100%  114  6,348 
Tenda  FIT JARDIM BOTÂNICO I  November-10  June-2008  São Paulo - SP  55%  216  20,755 
Tenda  FIT JARDIM BOTÂNICO II  November-10  June-2008  São Paulo - SP  55%  216  21,442 
Tenda  RESIDENCIAL SANTA LUZIA LIFE I  November-10  November-2007  Santa Luzia - MG  100%  128  16,800 
Tenda  RESIDENCIAL OSASCO LIFE  November-10  August-2007  Osasco - SP  100%  308  29,229 
Tenda  FIT COQUEIRO II  November-10  June-2008  Belém-PA  100%  254  22,504 
Tenda  FIGUEIREDO II - Fases 1A e 1B  December-10  June-2008  Porto Alegre - RS  100%  100  6,900 
               
Total 4Q10            2,899  435,818 
                
Total 2010            12,894  1,692,493 

Land Bank

The Company’s land bank of approximately R$ 18.1 billion is composed of 177 different projects in 22 states, equivalent to more than 93 thousand units. In line with our strategy, 38.5% of our land bank was acquired through swaps – which require no cash obligations.

During the 4Q10 we recorded a gross increase of R$ 3.05 billion in the land bank, reflecting acquisitions that more than compensate for R$ 1.54 billion launches in the quarter.

 

11

 

 

The table below shows a detailed breakdown of our current land bank:

Table 9 - Landbank per company per unit price
    PSV - R$ million 
(%Gafisa)		 %Swap 
Total		 %Swap
Units		 %Swap 
Financial		 Potential units 
(%Gafisa)
Gafisa
 <= R$500K  4,495  42.6%  36.9%  5.8%  15,222 
> R$500K  3,751  35.1%  30.8%  4.3%  4,836 
Total  8,245  37.9%  33.0%  4.9%  20,059 
           
AlphaVille
 <= R$100K;  552  100.0%  0.0%  100.0%  6,973 
> R$100K; <= R$500K  4,648  96.9%  0.0%  96.9%  22,976 
> R$500K  23  0.0%  0.0%  0.0%  26 
Total  5,223  97.0%  0.0%  97.0%  29,975 
           
Tenda ≤ R$130K  3,098  36.3%  36.3%  0.0%  33,646 
> R$130K ; < R$200K  1,488  49.9%  48.5%  1.4%  9,203 
Total  4,586  39.7%  39.1%  0.6%  42,849 
             
Consolidated    18,054  38.5%  34.5%  4.0%  92,882 
 
Number of projects/phases 
Gafisa  52 
AlphaVille  81 
Tenda  44 
Total  177 
 
Table 10 - Landbank Changes (based on PSV)
Land Bank (R$ million)  Gafisa  Alphaville  Tenda  Total 
Land Bank - BoP (4Q10)  7,810  4,735  4,006  16,551 
4Q10 - Net Acquisitions  1,258.9  679.5  1,108.2  3,047 
4Q10 - Launches  (823.4)  (192.0)  (527.7)  (1,543) 
Land Bank - EoP (4Q10)  8,245  5,223  4,586  18,054 

4Q10 - Revenues

On the strength of solid sales in the 4Q10 of  both newly launched projects and units from inventory as well as an accelerated pace of construction, the Company continued to recognize substantial net operating revenue for 4Q10, closing with R$ 928.6 million compared to R$ 897.5 million in the 4Q09, with Tenda contributing 38% of the consolidated full year revenues.

Revenues for the industry are recognized based on actual cost versus total budgeted costs of land and construction (Percentage of Completion method or PoC method).

The table below presents detailed information about pre-sales and recognized revenues by launch year:

 

Table 11 - Sales vs. Recognized revenues
    4Q10 4Q09
R$ 000    Sales  %Sales  Revenues  %Revenues  Sales  %Sales  Revenues  %Revenues 
Gafisa
 2010 launches  638,922  78%  144,491  25%  -  -  -  - 
2009 launches  56,244  7%  137,212  24%  504,794  75%  104,805  17% 
2008 launches  63,275  8%  190,278  33%  79,044  12%  138,549  22% 
≤ 2007 launches  56,562  0  101,448  18%  87,077  0  388,878  62% 
Total Gafisa  815,003  100%  573,428  100%  670,915  100%  632,232  100% 
                 
Tenda
 Total Tenda  425,815  ---  355,209  ---  382,895  ---  265,307  --- 
                   
Total    1,240,818    928,637    1,053,810    897,540   

12

 

 

4Q10 - Gross Profits

On a consolidated basis, gross profit for 4Q10 totaled R$ 278.2 million and R$ 1.1 billion for 2010, an increase of 23.6% over 2009. The gross margin for 4Q10 reached 30% (36.1% w/o capitalized interest).

In this quarter we had a non-recurring effect of taxes reconciliations (PIS/Cofins) of R$ 38.1 million, between revenues deductions and cost. Excluding this effect, our gross margin was in line with the previous quarter (32.0% w/o capitalized interest). 

Table 12 - Capitalized interest
(R$000)    4Q10  4Q09  3Q10 
Consolidated Opening balance  115,323  96,511  101,897 
Capitalized interest  88,591  28,763  47,105 
Interest transfered to COGS  (57,370)  (33,707)  (33,680) 
Closing balance  146,544  91,568  115,323 

4Q10 - Selling, General, and Administrative Expenses (SG&A)

In the fourth quarter 2010, SG&A expenses totaled R$ 141.1 million, 6% above the same period of 2009. When compared to 3Q10, SG&A increased from R$ 113.2 million to R$ 141.1 million. This was mainly due to an increase of selling expenses, which is in line with accelerated launches of new projects concentrated in the last quarter of 2010 as well as higher bonus expenses in the G&A.

When compared to 4Q09, the SG&A/Net Revenue ratio increased 32 bps and the SG&A/Sales ratio decreased 130 bps, also reflecting the gains in operating efficiency at Tenda and the synergy gains related to the merger of Tenda into Gafisa such as the integration of all the support and business development areas. With the reduction in launches during 2009, revenue growth will be less in 2011 when compared to the expected launch and sales growth amounts.  Due to this factor, we don’t expect further SG&A dilution during 2011, rather we expect it to maintain at similar annual SG&A ratios.

While we are in a comfortable level of SG&A/net revenues, we do foresee additional improvements in the long-term.

4Q10 - Other Operating Results

In 4Q10, our results reflected a negative impact of R$0.8 million, compared to R$ 13.9 million in 4Q09 mainly due to higher contingency provisions in the 4Q09.

 


Table 13 - Sales and G&A Expenses
(R$'000)    4Q10  4Q09  3Q10  2010  2009 
Consolidated Selling expenses  76,243  73,277  53,887  242,564  226,621 
G&A expenses  64,894  60,298  59,317  236,754  233,129 
SG&A  141,137  133,575  113,204  479,318  459,749 
Selling expenses / Launches  4.9%  7.3%  4.4%  5.4%  9.8% 
G&A expenses / Launches  4.2%  6.0%  4.8%  5.3%  10.1% 
SG&A / Launches  9.1%  13.4%  9.2%  10.7%  20.0% 
Selling expenses / Sales  6.1%  7.0%  5.3%  6.1%  7.0% 
G&A expenses / Sales  5.2%  5.7%  5.8%  5.9%  7.2% 
SG&A / Sales  11.4%  12.7%  11.1%  12.0%  14.2% 
Selling expenses / Net revenue  8.2%  8.2%  5.6%  6.5%  7.5% 
G&A expenses / Net revenue  7.0%  6.7%  6.2%  6.4%  7.7% 
SG&A / Net revenue  15.2%  14.9%  11.8%  12.9%  15.2% 
13
 

 

 



4Q10 - Adjusted EBITDA

Our Adjusted EBITDA for the 4Q10 totaled R$ 197.8 million, 17.8% higher than the R$ 167.8 million for 4Q09, with a consolidated adjusted margin of 21.3%, compared to 18.7% in 4Q09.

For the 2H11 we continue to expect an improved EBITDA margin. However, given the delivery of  Tenda’s older-low margin projects, along with some of Gafisa’s lower margin projects (related to the learning curve of geographic diversification and certain Rio de Janeiro projects coming in over budget ) being delivered during the 1H11/beginning of 2H11, we expect a negative impact on our first half operating results. On the other hand, we expect to see Gafisa delivering normalized operating margins in the 2H11, after this delivery of lower-margin projects is completed (please check the “Outlook” section).

We adjusted our EBITDA for expenses associated with stock option plans, as it represents a non-cash expense.

 

Table 14 - Adjusted EBITDA
(R$'000)  4Q10  4Q09  3Q10  2010  2009 
Consolidated

 Net Profit  137,363  47,607  116,600  416,050  101,740 
(+) Financial result  1,576  34,437  11,928  82,117  111,007 
(+) Income taxes  (16,133)  26,528  10,483  38,899  37,812 
(+) Depreciation and Amortization  6,492  10,004  8,305  33,816  34,170 
(+) Capitalized Interest Expenses  57,370  33,707  33,680  138,996  94,704 
(+) Minority shareholders and non           
recurring expenses  7,019  11,383  13,213  24,681  41,222 
(+) Stock option plan expenses  4,082  (634)  3,075  12,924  14,428 
(+) Provisions (1)  -  4,792  -  -  94,945 
Adjusted EBITDA  197,769  167,826  197,285  747,482  530,029 
  Net Revenue  928,637  897,540  957,196  3,720,860  3,022,346 
  Adjusted EBITDA margin  21.3%  18.7%  20.6%  20.1%  17.5% 
(1) Non cash provisions           


4Q10 - Depreciation and Amortization

Depreciation and amortization in the 4Q10 was R$ 6.5 million, a decrease of R$ 3.5 million when compared to the R$ 10.0 million recorded in 4Q09, and a decrease of R$ 1.8 million when compared to the previous quarter, mainly due to lower showroom amortizations.

 

4Q10 – Financial Result

Net financial expenses totaled R$ 28.4 million in 4Q10, compared to net financial expenses of R$ 57.6 million in 4Q09, mainly due to a higher amount of capitalized interest, related to capitalization of land investments.

 

4Q10 - Taxes

Income taxes, social contribution and deferred taxes for the 4Q10 amounted to a gain of R$ 16.1 million, compared to an expense of R$ 26.5 million in 4Q09. This result is due to optimization of tax planning that maximizes the reduction of tax liabilities, resulting in a reduction of net deferred tax accrued in the Company's balance sheet. Considering this, we reversed the excessive amount, which resulted in a positive 4Q10 deferred income tax provision of R$ 25.6 million. On the future, we expect income tax to represent approximately 2% of net revenue.

 

14

 

 

 
 

4Q10 - Adjusted Net Income

Net income in 4Q10 was R$ 137.4 million compared to R$ 47.6 million in the 4Q09 (already considering the IFRS impact over 2009 net income). However, net income on an adjusted basis (before deduction of expenses related to minority shareholders and stock options), reached R$ 148.5 million, with an adjusted net margin of 16%, representing growth of 154% when compared to R$ 58.3 million in 4Q09, mostly due to the income tax reversal and higher capitalized interest.

4Q10 - Earnings per Share

Earnings per share already adjusted for the 2:1 stock split in all comparable periods was R$ 0.32/share in the 4Q10 compared to R$ 0.14/share in 4Q09, a 123.3% increase. Shares outstanding at the end of the period were 430.9 million (ex. Treasury shares) and 333.6 million in the 4Q09.

 

Backlog of Revenues and Results

The backlog of results to be recognized under the PoC method reached R$ 1.54 billion in 4Q10, R$ 474 million higher than in 4Q09. The consolidated margin in 4Q10 was 38.9%, 363 bps higher than in 4Q09 and 69 bps higher than 3Q10, reflecting the fact that recent projects are having a greater impact on the company’s results to be recognized while the impact of our older-lower margin projects are beginning to diminish.

The table below shows our revenues, costs and results to be recognized, as well as the expected margin:

Table 15 - Results to be recognized (REF)
(R$ million)    4Q10  4Q09  3Q10  4Q10 x 4Q09  4Q10 x 3Q10 
Consolidated Revenues to be recognized  3,963  3,025  3,429  31.0%  15.6% 
Costs to be recognized  -2,423  -1,959  -2,120  23.7%  14.3% 
Results to be recognized (REF)  1,540  1,066  1,309  44.5%  17.6% 
REF margin  38.9%  35.2%  38.2%  363 bps  69 bps 
Note: Revenues to be recognized are net of PIS/Cofins (3.65%); excludes the AVP method introduced by Law nº 11,638

Balance Sheet

Cash and Cash Equivalents

On December 31, 2010, cash and cash equivalents reached R$ 1.2 billion, in line with the 3Q10, and 16% lower than the R$ 1.4 billion recorded at the end of 4Q09, reflecting cash burn in the period plus debt amortization that more than compensated for the R$ 1.1 billion equity offering in 1Q10.

Accounts Receivable

At the end of 4Q10, total accounts receivable increased by 8% to R$ 9.4 billion, compared to R$ 8.7 billion in 3Q10, and increased 36% as compared to the R$ 6.9 billion balance in 4Q09, reflecting increased sales activity.

 

 

Table 16 - Total receivables
(R$ million) 4Q10  4Q09  3Q10  4Q10 x 4Q09  4Q10 x 3Q10 
Consolidated Receivables from developments - ST  2,465.8  1,556.5  1,742.1  58%  42% 
  Receivables from developments - LT  1,646.9  1,583.1  1,816.8  4%  -9% 
  Receivables from PoC - ST  3,158.1  2,008.5  2,727.9  57%  16% 
  Receivables from PoC - LT  2,113.3  1,768.2  2,411.3  20%  -12% 
  Total  9,384.1  6,916.2  8,698.1  36%  8% 
Notes:
ST = short term; LT = long term
Receivables from developments: accounts receivable not yet recognized according to PoC and BRGAAP
Receivables from PoC: accounts receivable already recognized according do PoC and BRGAP

15

 

 

Inventory (Properties for Sale)

Inventory at market value totaled R$ 3.3 billion in 4Q10, an increase of 25% when compared to the R$ 2.6 billion registered in the 4Q09. On a consolidated basis, our inventory is at a comfortable level of 10 months of sales based on LTM sales figures.

Finished units of inventory at market value represented 12.7% by the end of the quarter, while 53% of the total inventory reflects units where construction is up to 30% complete.

Table 17 - Inventories
(R$000) 4Q10  4Q09  3Q10  4Q10x4Q09  4Q10x3Q10 
Consolidated  Land 837,510  732,238  750,771  14.4%  11.6% 
  Units under construction  956,733  895,085  873,672  6.9%  9.5% 
  Completed units 272,923  121,134  211,472  125.3%  29.1% 
  Total    2,067,166  1,748,457  1,835,915  18.2%  12.6% 
 
Table 18 - Inventories at market value
PSV - (R$000) 4Q10  4Q09  3Q10  4Q10x4Q09  4Q10x3Q10 
Consolidated  2010 launches 1,899,788  -  1,350,729  0  41% 
  2009 launches 316,129  892,875  332,836  -65%  -5% 
  2008 launches 649,962  1,078,935   713,622  -40%  -9% 
  2007 and earlier launches  429,556  658,664  540,142  -35%  -20% 
Consolidated  Total    3,295,435  2,630,473  2,937,330  25.3%  12.2% 
 
Table 19 - Inventories per completion status
Company  Not started    Up to 30% 
constructed		  30%to 70% 
constructed		 More than 70%
constructed 		 Finished units   Total 
Gafisa  510,930  620,977  452,272  357,148  334,440  2,275,767 
Tenda  395,363  219,315  227,764  93,490  83,737  1,019,668 
Total  906,292  840,293  680,036  450,637  418,177  3,295,435 

Liquidity

On December 31, 2010, Gafisa had a cash position of R$ 1.2 billion. On the same date, Gafisa’s debt and obligations to investors totaled R$ 3.7 billion, resulting in a net debt and obligations of R$ 2.5 billion. The net debt and investor obligation to equity and minorities ratio was 65.3% compared to 55.6% in 3Q10, mainly due to the R$ 342 million cash burn in the fourth quarter (R$ 393 million net debt change minus R$ 50.7 million dividends payment). When excluding Project Finance, this ratio reached only 13.5% net debt/equity, a comfortable leverage level with a competitive cost that is equivalent to the Selic rate.

Our 4Q10 cash burn was mainly explained by the over R$ 790 million in expenditures in construction and development payments and R$ 79 million in land acquisition payments. We expect cash burn to continue to reduce, reaching approximately 70% Net Debt/Equity in the 1H11. During the 2H11, this ratio should start to diminish, following expected positive cash flow generation, and is expected to close the year with a Net Debt/Equity below 60% (please refer to “Outlook” section). With the expected positive cash flow for full year 2011, we will be able to deleverage the Company, which together with a greater use of the Associative Credit - requiring no working capital - for Tenda’s MCMV units, should contribute to our ability to meet our higher launch volume targets and, at the same time, reduce current leverage and keep it at a comfortable level going forward.

16

 

 

 
 

In 4Q10, the company increased project finance debt by R$ 138 million, reflecting our ability to finance ongoing projects. Total project finance now represents 55% of the total debt. Currently we have access to a total of R$ 3.8 billion in construction finance lines of credit provided by all of the major banks in Brazil. At this time we have R$ 2.0 billion in signed contracts and R$ 802 million of contracts in process, giving us additional availability of R$ 1.0 billion.

We also have receivables (from units already delivered) of over R$ 200 million available for securitization. The following tables set forth information on our debt position as of December 31, 2010.

 

Table 20 - Indebtedness and Investor obligations
Type of obligation (R$000)  4Q10  4Q09  3Q10  4Q10 x 4Q09  4Q10 x 3Q10 
Debentures - FGTS (project finance)  1,211,304  1,206,981  1,238,486  0.4%  -2.2% 
Debentures - Working Capital  668,627  711,396  527,482  -6.0%  26.8% 
Project financing (SFH)  745,707  467,019  607,685  59.7%  22.7% 
Working capital  664,471  736,736  553,490  -9.8%  20.1% 
Total consolidated debt  3,290,109  3,122,132  2,927,143  5%  12% 
 
Consolidated cash and availabilities  1,201,148  1,424,053  1,231,143  -16%  -2% 
Investor Obligations  380,000  300,000  380,000  -  - 
Net debt and investor obligations  2,468,961  1,998,079  2,076,000  24%  19% 
Equity + Minority shareholders  3,783,668  2,384,181  3,731,570  59%  1% 
(Net debt + Obligations) / (Equity + Minorities)  65.3%  83.8%  55.6%  -1855 bps  962 bps 
(Net debt + Ob.) / (Eq + Min.) - Exc. Project Finance (SFH + FGTS Deb.)  13.5%  14%  6.2%  -6 bps  737 bps 
Table 21 - Debt maturity per company               
(R$ million) Average Cost (p.a.) Total Until
Dec/2011		 Until
Dec/2012 		 Until
 Dec/2013		 Until
Dec/2014		 After
Dec/2014
Debentures - FGTS (project finance)  (8.25% - 9.06%) + TR  1,211.3  15.4  150.0  596.7  449.2  - 
Debentures - Working Capital  CDI + (1.5% - 1.95%)  668.6  11.1  122.6  125.8  109.5  299.6 
Project financing (SFH)  (8.30% - 12%) + TR  745.7  548.3  156.8  40.6  -  - 
Working capital  CDI + (1.30% - 4.20%)  664.5  249.6  88.4  79.3  247.2  - 
sub-total consolidated debt  11.8%  3,290.1  824.4  517.7  842.5  805.9  299.6 
Investor Obligations  CDI  380  -  127  127  127  - 
Total consolidated debt    3,670.1  824.4  644.4  969.1  932.6  299.6 
% Total      22%  18%  26%  25%  8% 

17

 

 

Outlook 2010 vs Actual

In 2010, Gafisa achieved operating results within the previously stated guidance of launches (R$ 4.2 billion to R$ 4.6 billion) and an Adjusted EBITDA margin of 18.5% to 20.5%.

In full year 2010, Gafisa launches amounted to R$ 4.49 million, equivalent to 2% over of the mid-range of launch´s guidance. Gafisa also delivered a 20.1% EBITDA margin in 2010, well within the previously stated guidance range and 60 bps over the mid-range.

 

Launches 
(R$ million)		   Guidance
2010		 4Q10  %  2010  % 
Gafisa  Min.  4,200    37%    107% 
(consolidated)  Average  4,400  1,543  35%  4,492  102% 
  Max.  4,600    34%    98% 
 
EBITDA Margin (%)    Guidance
2010		 4Q10  %  2010  % 
Gafisa  Min.  18.5%    280 bps    160 bps 
(consolidated)  Average  19.5%  21.3%  180 bps  20.1%  60 bps 
  Max.  20.5%    80 bps    -40 bps 

Outlook 2011

Our guidance for launches in 2011, of between R$ 5.0 billion and R$ 5.6 billion, reflects the expectation of an increased volume of business. With regard to profitability, we expect an adjusted EBTIDA margin for the full year of between 18% and 22%, with a first half figure of between 13% and 17%, compared to 20% to 24% for the second half of the year. This difference between the margins is due to: i) lower revenue resulting from fewer launches in 2009, compared to 2008 (2009: R$2.3 billion; 2008 R$4.2 billion), with lower recognition of revenue in respect of work in progress and ensuing impact on the diluting of fixed costs; ii) delivery of lower margin products by Tenda, due to a lack of standardization among the older products, and by Gafisa, due to cost reallocation associated with geographical expansion and projects in Rio de Janeiro; and iii) possible discounts on units that are ready but unsold, relating to launches in 2008 and earlier years.

Exceptionally, this year, Gafisa is providing guidance for its Net Debt/Net Equity ratio. We think it is important to provide this additional guidance for the market at this time, principally in view of the company’s favorable operational cash flow generation over the course of the year, which should be positive as of the second half of 2011. We expect that the company’s leverage will reach a peak of around 70% during the 1H11, followed by a positive cash flow in the 2H11 that will bring the Net Debt/Net Equity ratio down below 60% at the end of the year.

As previously mentioned, we have a negative impact from old Tenda’s projects being delivered during the first 1H11 and beginning of 3Q11, is the negative impact on our operating results mainly for the 1H11. The margins are lower, due to the resolving of pending issues in relation to certain projects (water and sewage connections, questions of infrastructure, etc.). Once this process has been completed, during the 1H11 and early 3Q11, we expect to see Gafisa returning normalized margins over the course of the 2H11.

Considering the aforementioned, the guidance figures for 2011 are as follows:

  Guidance 2011 Launches
(R$ million) 		 EBITDA Margin
(%) 		 Net Debt/Equity (%) -
EoP 
Minimum  5,000  18.0%   
Average  5,300  20.0%   
Maximum  5,600  22.0%  < 60% 
 

 
EBITDA Margin (%) 
Guidance 2011 		 1H11  2H11  2011 
Minimum  13.0%  20.0%  18.0% 
Average  15.0%  22.0%  20.0% 
Maximum  17.0%  24.0%  22.0% 

18

 

 

Subsequent Event

Gaifsa CEO Announces Intention to Depart by End of 2011

Wilson Amaral to Remain on the Board of Directors and Expected to Play a More Active Role in the Future

Gafisa announced today that as part of its management transition plan, Chief Executive Officer Wilson Amaral de Oliveira, 58, plans to retire from the company by the end of 2011.

Wilson Amaral has spent more than five years at Gafisa, taking it from a privately held company to one of the few fully public corporations in Brazil, and the only NYSE-listed Brazilian real estate company. Under his leadership, the Company increased its net revenue from R$ 457 million in 2005 to over R$3.7 billion in 2010. He will remain on the Board of Directors of Gafisa and will work with the Board to identify his successor and ensure a smooth transition. 

Caio Racy Mattar, Chairman of Gafisa said, "On behalf of Gafisa's Board of Directors, we would like to thank Wilson for his invaluable leadership over the last five years in building a leading platform for growth and long-term success. He played a pivotal role in our transition to a public company.

We believe in our team and see a good future ahead, given that the company is operating in a very promising market that holds excellent prospect for the years to come, and that we are well placed to take advantage of the opportunities in all segments of the Brazilian residential market, due to our full and balanced platform."

Wilson said, "My five years as CEO of Gafisa have been both challenging and rewarding. Our team can be extremely proud of the accomplishments that we have achieved and I am confident that they will capitalize on the tremendous growth opportunity presented in the Brazilian homebuilding sector. I am committed to a smooth transition for the company and look forward to continuing in my role as an active member of the Board of Directors.”

An executive search firm will be hired to conduct a thorough evaluation of potential internal and external candidates to succeed Mr. Amaral that will remain at the head of the Executive Officers until the end of this process.

 

New Board Members

Gafisa also announced today that it intends to complement its Board of Directors with the appointment of three new members. This reflects the constant evolution of our corporate governance, adding to the team three more experienced independent members. The new members are:

- Henri Phillippe Reichstul, 62: Graduated in economics from the University of São Paulo (USP) and a post-graduate in economics at Oxford University’s Hertford College, Mr. Reichstul is a senior executive whose career includes both the public and private sector, as well as an extensive background as an independent board member. His professional background includes terms as CEO of Petrobras (1999 – 2001), Globopar (2002) and Brenco (2008 – 2010) and as a board member at the Pão de Açúcar Group, Vivo, TAM and Petrobras, among others. He is currently on the boards of companies such as Credit Agricole Group, Repsol YPF, Peugeot-Citroen do Brasil and Ashmore Energy International.

- Guilherme Affonso Ferreira, 59: Graduated in production engineering from the University of São Paulo (USP) a post-graduate in economics and politics at Macalester College, Mr. Ferreira is the CEO of Bahema Participações, an investment holding company that has been in the business for over 15 years, and has accumulated considerable experience as an independent board member at companies that have a history of success and are considered models of corporate governance. He has been on the board of several companies, including Unibanco, Submarino and B2W, and is currently on the boards of the Pão de Açúcar Group, Sul América, Eternit and Arezzo.

Leticia Costa, 51: Graduated in production engineering from the University of São Paulo (USP) and with an MBA from Cornell University, Leticia Costa has a career background in strategic consulting, having worked for 24 years at Booz Allen, first as senior consultant at their London office, then as vice-president and subsequently partner at their São Paulo office, and finally as president of Booz Allen Brasil. In 2010, Leticia Costa left Booz Allen and opened her own consulting firm – Prada Assessoria, and she is also on the boards of Localiza, Sadia and Technip.

19

 

 

 

Glossary

 

Affordable Entry Level

Residential units targeted to the mid-low and low income segments with prices below R$200 thousand per unit.

Backlog of Results

As a result of the Percentage of Completion Method of recognizing revenues, we recognize revenues and expenses over a multi-year period for each residential unit we sell. Our backlog of results represents revenues minus costs that will be incurred in future periods from past sales.

Backlog of Revenues

As a result of the Percentage of Completion Method of recognizing revenues, we recognize revenues over a multi-year period for each residential unit we sell. Our backlog represents revenues that will be incurred in future periods from past sales.

Backlog Margin

Equals to “Backlog of Results” divided “Backlog of Revenues” to be recognized in future periods.

Land Bank

Land that Gafisa holds for future development paid either in Cash or through swap agreements. Each decision to acquire land is analyzed by our investment committee and approved by our Board of Directors.

LOT (Urbanized Lots)

Land subdivisions, or lots, with prices ranging from R$ 150 to R$ 600 per square meter

PoC Method

Under Brazilian GAAP, real estate development revenues, costs and related expenses are recognized using the percentage-of-completion (“PoC”) method of accounting by measuring progress towards completion in terms of actual costs incurred versus total budgeted expenditures for each stage of a development.

Pre-sales

Contracted pre-sales are the aggregate amount of sales resulting from all agreements for the sale of units entered into during a certain period, including new units and units in inventory. Contracted pre-sales will be recorded as revenue as construction progresses (PoC method). There is no definition of "contracted pre-sales'' under Brazilian GAAP.

PSV

Potential Sales Value.

SFH Funds

Funds from SFH are originated from the Governance Severance Indemnity Fund for Employees (FGTS) and from savings accounts deposits. Banks are required to invest 65% of the total savings accounts balance in the housing sector, either to final customers or developers, at lower interest rates than the private market.

Swap Agreements

A system in which we grant the land-owner a certain number of units to be built on the land or a percentage of the proceeds from the sale of units in such development in exchange for the land. By acquiring land through this system, we intend to reduce our cash requirements and increase our returns.

20

 

 

 

About Gafisa

Gafisa is a leading diversified national homebuilder serving all demographic segments of the Brazilian market. Established over 56 years ago, we have completed and sold more than 1,000 developments and built more than 12 million square meters of housing only under Gafisa’s brand, more than any other residential development company in Brazil. Recognized as one of the foremost professionally managed homebuilders, "Gafisa" is also one of the most respected and best-known brands in the real estate market, recognized among potential homebuyers, brokers, lenders, landowners, competitors, and investors for its quality, consistency, and professionalism. Our pre-eminent brands include Tenda, serving the affordable/entry level housing segment, and Gafisa and AlphaVille, which offer a variety of residential options to the mid to higher-income segments. Gafisa S.A. is traded on the Novo Mercado of the BM&FBOVESPA (BOVESPA:GFSA3) and on the New York Stock Exchange (NYSE:GFA).

Investor Relations  Media Relations (Brazil) 
Luiz Mauricio de Garcia Paula  Patrícia Queiroz 
Rodrigo Pereira  Máquina da Notícia Comunicação Integrada 
Phone: +55 11 3025-9297 /  Phone: +55 11 3147-7409 
9242 / 9305  Fax: +55 11 3147-7900 
Email: ri@gafisa.com.br  E-mail: patricia.queiroz@maquina.inf.br 
Website: www.gafisa.com.br/ir   

 

This release contains forward-looking statements relating to the prospects of the business, estimates for operating and financial results, and those related to growth prospects of Gafisa. 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.

The fourth quarter financial statements were prepared and are being presented in accordance with the accounting practices adopted in Brazil (“Brazilian GAAP”), required for the years ended December 31, 2009. Therefore, they do not consider the early adoption of the technical pronouncements issued by CPC in 2009, approved by the Federal Accounting Council (“CFC”), required beginning on January 1, 2010. On November 10, 2009 the CVM, issued the deliberation nº 603 changed by deliberation nº 626, which provides the option for listed Companies to present 2010 quarterly information based on accounting practices in force at December  31, 2009.  

 

 

21

 

 

 

The following table sets projects launched during 2010:

Table 22 - Projects launched
Company  Project  Launch Date  Local  % Gafisa  Units
(%Gafisa)		 PSV
(%Gafisa)		 % sales
31/Dec/10
Gafisa  Reserva Ecoville  January  Curitiba - PR  50%  128  76,516  65% 
Gafisa  Pq Barueri Cond Clube F2A - Sabiá  February  Barueri - SP  100%  171  47,399  34% 
Gafisa  Alegria - Fase2B  February  Guarulhos - SP  100%  139  40,832  62% 
Gafisa  Pátio Condomínio Clube - Harmony  February  São José dos Campos - SP  100%  96  32,332  67% 
Gafisa  Mansão Imperial - Fase 2b  February  São Bernardo do Campo - SP  100%  89  62,655  61% 
Gafisa  Golden Residence  March  Rio de Janeiro - RJ  100%  78  22,254  70% 
Gafisa  Riservato  March  Rio de Janeiro - RJ  100%  42  27,310  78% 
Gafisa  Fradique Coutinho - MOSAICO  April  São Paulo - SP  100%  62  42,947  96% 
Gafisa  Pateo Mondrian (Mota Paes)  April  São Paulo - SP  100%  115  82,267  80% 
Gafisa  Jatiuca - Maceió - AL - Fase 2  April  Maceió - AL  50%  24  7,103  19% 
Gafisa  Zenith - It Fase 3  April  São Paulo - SP  100%  24  97,057  26% 
Gafisa  Grand Park Varandas - FI  April  São Luis - MA  50%  94  19,994  100% 
Gafisa  Canto dos Pássaros_Parte 2  May  Porto Alegre - RS  80%  90  16,692  16% 
Gafisa  Grand Park Varandas - FII  May  São Luis - MA  50%  75  16,905  100% 
Gafisa  Grand Park Varandas - FIII  May  São Luis - MA  50%  57  12,475  100% 
Gafisa  JARDIM DAS ORQUIDEAS  June  São Paulo - SP  50%  102  43,734  98% 
Gafisa  JARDIM DOS GIRASSOIS  June  São Paulo - SP  50%  150  44,254  98% 
Gafisa  Pátio Condomínio Clube - Kelvin  June  São José dos Campos - SP  100%  96  34,140  53% 
Gafisa  Vila Nova São José QF  June  São José dos Campos - SP  100%  152  39,673  36% 
Gafisa  CWB 34 - PARQUE ECOVILLE Fase1  June  Curitiba - PR  50%  102  33,392  62% 
Gafisa  Vistta Laguna  July  Rio de Janeiro - RJ  80%  103  91,289  36% 
Gafisa  GRAND PARK - GLEBA 05 - F4A  July  São Luis - MA  50%  37  8,890  89% 
Gafisa  Barão de Teffé - Fase1  August  São Paulo - SP  100%  142  51,255  95% 
Gafisa  Jardins da Barra Lote 3  August  São Paulo - SP  50%  111  32,707  99% 
Gafisa  Luis Seraphico  September  São Paulo - SP  100%  233  140,911  46% 
Gafisa  Smart Vila Mariana  September  São Paulo - SP  100%  74  39,173  100% 
Gafisa  Barão de Teffé - Fase 2  September  Jundiai - SP  100%  124  46,364  83% 
Gafisa  Parque Ecoville Fase 2A  September  Curitiba - PR  50%  101  34,713  17% 
Gafisa  GRAND PARK - GLEBA 05 - F4B  September  São Luis - MA  50%  37  9,032  75% 
Gafisa  Anauá  September  São Paulo - SP  80%  20  44,626  70% 
Gafisa  Igloo  September  São Paulo - SP  80%  147  33,010  100% 
Gafisa  Quadra C13 - direita - Jardim Goiás com outorga  October  Aracajú - SE  100%  111  38,237  9% 
Gafisa  Lumière  October  Goiânia - GO  100%  25  40,388  4% 
Gafisa  Pq Barueri Cond Clube F2B - Rouxinol  November  Barueri - SP  100%  171  46,213  37% 
Gafisa  Weekend (Vitória Régia)  November  Santo André - SP  100%  37  62,949  44% 
Gafisa  iGLOO  November  São Paulo - SP  50%  189  17,304  88% 
Gafisa  GRAND PARK - GLEBA 05 - F4C  November  São Luis - MA  50%  45  9,011  28% 
Gafisa  PA14 - SINDICATO - Fase 1  November  Belém - PA  80%  126  51,084  27% 
Gafisa  Lorian Qd2A  December  Osasco - SP  100%  131  139,438  16% 
Gafisa  Alta Vista - Fase 2  December  Maceio - AL  50%  118  5,364  4% 
Gafisa  Euclides da Cunha 2  December  Santos - SP  100%  174  78,123  65% 
Gafisa  Smart Perdizes  December  São Paulo - SP  100%  82  45,420  62% 
Gafisa  BOM RETIRO F1  December  São Paulo - SP  100%  252  94,073  80% 
Gafisa  BOM RETIRO F2  December  São Paulo - SP  100%  252  98,751  66% 
Gafisa  Prime - Gleba 6 - F1  December  São Luiz - MA  50%  111  19,135  51% 
Gafisa  Allegro  December  Natal - RN  85%  144  27,062  5% 
Gafisa  Horizonte - Stake Aqcuisition  December  Belém - PA  20%  6  4,235  103% 
Gafisa  Parc Paradiso - Stake Aqcuisition  December  Belém - PA  5%  16  6,325  97% 
Gafisa  Reserva Ibiapaba - Stake Aqcuisition  December  Belém - PA  20%  53  13,226  97% 
Gafisa  The Place - Stake Aqcuisition  December  Goiania - GO  20%  4  8,986  77% 
Gafisa  Privilege - Stake Aqcuisition  December  Rio de Janeiro - RJ  20%  39  8,894  95% 
Gafisa  Carpe Diem - Niterói - Stake Aqcuisition  December  Rio de Janeiro - RJ  20%  23  9,206  61% 
Gafisa          5,124  2,155,323  57% 
 
Alphaville  Alphaville Ribeirão Preto F1  March  Ribeirão Preto - SP  60%  352  97,269  91% 
Alphaville  AlphaVille Mossoró F2  May  Mossoró - RN  53%  93  10,731  51% 
Alphaville  Alphaville Ribeirão Preto F2  May  Ribeirão Preto - SP  60%  182  54,381  22% 
Alphaville  Alphaville Brasília  May  Brasília-DF  34%  170  73,974  85% 
Alphaville  Alphaville Jacuhy F3  May  Vitória - ES  65%  168  56,336  23% 
Alphaville  Brasília Terreneiro  May  Brasília-DF  13%  67  28,175  88% 
Alphaville  Living Solutions  May  São Paulo - SP  100%  4  3,884  100% 
Alphaville  Alphaville Teresina  September  Teresina - PI  79%  589  111,248  97% 
Alphaville  Alphaville Belém 1  September  Belém - PA  73%  337  63,234  80% 
Alphaville  Alphaville Belém 2  September  Belém - PA  72%  289  49,342  41% 
Alphaville  Living Solutions Burle  November  São Paulo - SP  100%  1  923  100% 
Alphaville  T.A Petrolina  November  Petroilna- PE  75%  366  47,424  96% 
Alphaville Alphaville  Reserva T.A Foz do Porto Iguaçu Alegre II  December December  Foz Porto do Alegre Iguaçu - - RS PR  92% 74%  342 19  30,781 33,069  18%4% 22 
Alphaville  Alphaville Porto Velho  December  Porto Velho - RO  76%  631  79,819  18% 
Alphaville          3,607  740,592  62% 

 

22

 

 

Tenda  Grand Ville das Artes - Monet Life IV  January  Lauro de Freitas - BA  100%  56  5,118  87% 
Tenda  Grand Ville das Artes - Matisse Life IV  January  Lauro de Freitas - BA  100%  60  5,403  93% 
Tenda  Fit Nova Vida - Taboãozinho  February  São Paulo - SP  100%  137  7,261  99% 
Tenda  São Domingos (Fase Única)  February  Contagem - MG  100%  192  17,823  93% 
Tenda  Espaço Engenho III (Fase Única)  February  Rio de Janeiro - RJ  100%  197  18,170  99% 
Tenda  Portal do Sol Life IV  February  Belford Roxo - RJ  100%  64  5,971  94% 
Tenda  Grand Ville das Artes - Matisse Life V  March  Lauro de Freitas - BA  100%  120  10,805  75% 
Tenda  Grand Ville das Artes - Matisse Life VI  March  Lauro de Freitas - BA  100%  120  10,073  80% 
Tenda  Grand Ville das Artes - Matisse Life VII  March  Lauro de Freitas - BA  100%  100  8,957  90% 
Tenda  Residencial Buenos Aires Tower  March  Belo Horizonte - MG  100%  88  14,226  100% 
Tenda  Tapanã - Fase I (Condomínio I)  March  Belém - PA  100%  274  26,543  62% 
Tenda  Tapanã - Fase I (Condomínio III)  March  Belém - PA  100%  164  15,926  54% 
Tenda  Estação do Sol - Jaboatão I  March  Jaboatão dos Guararapes - PE  100%  159  17,956  75% 
Tenda  Fit Marumbi Fase II  March  Curitiba - PR  100%  335  62,567  89% 
Tenda  Carvalhaes - Portal do Sol Life V  March  Belford Roxo - RJ  100%  96  9,431  72% 
Tenda  Florença Life I  March  Campo Grande - RJ  100%  199  15,720  71% 
Tenda  Cotia - Etapa I Fase V  March  Cotia - SP  100%  272  25,410  98% 
Tenda  Fit Jardim Botânico Paraiba - Stake Acquisition  March  João Pessoa - PB  100%  155  19,284  81% 
Tenda  Coronel Vieira Lote Menor (Cenário 2)  April  Rio de Janeiro - RJ  100%  158  16,647  97% 
Tenda  Portal das Rosas  April  Osasco - SP  100%  132  12,957  100% 
Tenda  Igara III  April  Canoas - RS  100%  240  23,601  21% 
Tenda  Portal do Sol - Fase 6  May  Belford Roxo - RJ  100%  64  6,146  62% 
Tenda  Grand Ville das Artes - Fase 9  May  Lauro de Freitas - BA  100%  120  11,403  31% 
Tenda  Gran Ville das Artes - Fase 8  May  Lauro de Freitas - BA  100%  100  9,433  54% 
Tenda  Vale do Sol Life  May  Rio de Janeiro - RJ  100%  79  8,124  85% 
Tenda  Engenho Life IV  June  Rio de Janeiro - RJ  100%  197  19,968  68% 
Tenda  Residencial Club Cheverny  June  Goiânia - GO  100%  384  52,414  48% 
Tenda  Assunção Life  June  Belo Horizonte - MG  100%  440  55,180  89% 
Tenda  Residencial Brisa do Parque II  June  São José dos Campos - SP  100%  105  12,786  43% 
Tenda  Portal do Sol Life VII  June  Belford Roxo - RJ  100%  64  6,188  45% 
Tenda  Vale Verde Cotia F5B  June  Cotia - SP  100%  116  11,984  95% 
Tenda  San Martin  June  Belo Horizonte - MG  100%  132  21,331  98% 
Tenda  Brisas do Guanabara  June  Vitória da Conquista - BA  80%  243  22,248  -1% 
Tenda  Jd. Barra - Lote 4  September  São Paulo - SP  50%  150  20,010  100% 
Tenda  Jd. Barra - Lote 5  September  São Paulo - SP  50%  112  14,533  100% 
Tenda  Jd. Barra - Lote 6  September  São Paulo - SP  50%  112  14,590  100% 
Tenda  ESTAÇÃO DO SOL TOWER - Fase 2  September  Jaboatão dos Guararapes - PE  100%  160  17,376  81% 
Tenda  Assis Brasil Fit Boulevard  September  Porto Alegre - RS  70%  223  38,897  29% 
Tenda  Cesário de Melo II - San Marino  September  Rio de Janeiro - RJ  100%  199  16,907  87% 
Tenda  Parque Arvoredo - F1  September  Curitiba - PR  100%  360  71,256  80% 
Tenda  GVA 10 a 14  September  Lauro de Freitas - BA  100%  559  52,149  56% 
Tenda  Portal do Sol - Consolidado  September  Rio de Janeiro - RJ  100%  448  43,993  37% 
Tenda  Flamboyant Fase 1  September  São José dos Campos - SP  100%  264  39,005  38% 
Tenda  Assunção Fase 3  September  Belo Horizonte - MG  100%  158  20,880  89% 
Tenda  Viver Itaquera (Agrimensor Sugaya)  September  São Paulo - SP  100%  199  24,359  28% 
Tenda  Estudo Firenze Life  September  Sete Lagoas - MG  100%  240  23,281  100% 
Tenda  Villagio Carioca - Cel Lote Maior  September  Rio de Janeiro - RJ  100%  237  27,279  46% 
Tenda  ICOARACI - Stake Acquisition  September  Belém - PA  10%  29  5,008  62% 
Tenda  FIT COQUEIRO I - Stake Acquisition  September  Belém - PA  100%  60  5,599  100% 
Tenda  FIT COQUEIRO II - Stake Acquisition  September  Belém - PA  100%  48  4,501  7% 
Tenda  FIT MIRANTE DO PARQUE - Stake Acquisition  September  Belém - PA  30%  126  20,507  100% 
Tenda  MIRANTE DO LAGO - Stake Acquisition  September  Ananindeua - PA  15%  20  3,156  100% 
Tenda  Alta Vista  September  São Paulo - SP  100%  160  17,869  84% 
Tenda  Estudo Bosque dos Pinheiros  November  Belo Horizonte - MG  100%  118  15,203  77% 
Tenda  Cassol F2a  November  Curitiba - PR  100%  180  37,441  58% 
Tenda  Araçagy - F1  November  Paço do Lumiar - MA  50%  186  23,580  92% 
Tenda  Vista Club (Estrada de Itapecerica)  December  São Paulo - SP  100%  157  21,494  43% 
Tenda  Estudo PORTO BELLO  December  Santa Luzia - MG  100%  256  27,258  40% 
Tenda  Vivendas do Sol  December  Feira de Santana - BA  100%  400  29,679  3% 
Tenda  Colubandê Life  December  Rio de Janeiro - RJ  100%  160  16,562  26% 
Tenda  Mirante do Lago F3  December  Belem - PA  100%  180  35,181  4% 
Tenda  Estudo Residencial Germânia Life F1  December  São Leopoldo - RS  100%  340  34,753  12% 
Tenda  Estudo Arpoador  December  Juiz de Fora - MG  100%  218  26,246  48% 
Tenda  Jardins do Horto  December  Santos - SP  100%  328  43,878  40% 
Tenda  São Matheus II  December  Rio de Janeiro - RJ  100%  160  15,723  40% 
Tenda  Estudo Ananindeua  December  Ananindeua - PA  80%  432  39,473  10% 
Tenda  FELICITÁ F1  December  Betim - MG  100%  126  20,989  69% 
Tenda  FELICITÁ F2  December  Betim - MG  100%  126  20,557  77% 
Tenda  FELICITÁ F3  December  Betim - MG  100%  126  20,944  13% 
Tenda  Estudo Vila Atlântico  December  Salvador - BA  100%  128  14,296  47% 
Tenda  Araçagy - F2  December  Paço do Lumiar - MA  50%  140  18,338  92% 
Tenda  Guaianazes Life  December  São Paulo - SP  100%  168  19,047  30% 
Tenda  Vivai - Stake Aqcuisition  December  Campos de Goytacazes - RJ  100%  64  7,871  86% 
Tenda  Mirante do Lago F2 - Stake Acquisition  December  Ananindeua - PA  15%  105  16,536  59% 
Tenda  MIRANTE DO LAGO - Stake Acquisition  December  Ananindeua - PA  15%  105  10,820  91% 
Tenda  ICOARACI - Stake Acquisition  December  Belém PA  10%  29  5,008  62% 
Tenda  FIT MIRANTE DO PARQUE - Stake Acquisition  December  Belém PA  10%  42  6,836  100% 
Tenda
   		         13,502  1,595,919  62% 
Total          22,233  4,491,835  59%

23

 

 

 

The following table sets forth the financial completion of the construction in progress and the related revenue recognized (R$000) during the fourth quarter ended on December 31, 2010.

Company  Project  Construction status    %Sold    Revenues recognized (R$ '000) 
    4Q10  3Q10  4Q10    3Q10  4Q10  3Q10 
Gafisa  PQ BARUERI COND - FASE 1  94%  82%  74%    70%  19,772  13,991 
Gafisa  ALEGRIA FASE 1  69%  57%  84%    68%  13,989  7,706 
Gafisa  BOM RETIRO F1  18%  0%  80%    0%  13,578  - 
Gafisa  iGLOO  42%  0%  93%    0%  12,117  - 
Gafisa  LAGUNA DI MARE - FASE 2  78%  60%  82%    78%  11,371  9,426 
Gafisa  Luis Seraphico  17%  0%  46%    0%  11,112  - 
Gafisa  SUPREMO  95%  89%  100%    100%  11,022  18,675 
Gafisa  BOM RETIRO F2  18%  0%  66%    0%  10,994  - 
Gafisa  Smart Perdizes  36%  0%  62%    0%  10,456  - 
Gafisa  TERRAÇAS TATUAPE  96%  84%  96%    88%  9,979  10,079 
Gafisa  Mansão Imperial - Fase 2b  65%  54%  61%    50%  8,748  6,427 
Gafisa  IT STYLE - FASE 1  53%  51%  91%    87%  8,717  6,136 
Gafisa  Chácara Santana  90%  81%  99%    96%  8,589  10,031 
Gafisa  ECOLIVE  94%  75%  99%    99%  8,514  7,554 
Gafisa  Details  87%  79%  96%    86%  8,201  4,530 
Gafisa  Supremo Ipiranga  57%  47%  99%    91%  7,531  7,459 
Gafisa  BRINK  100%  89%  95%    93%  7,047  9,139 
Gafisa  ACQUA RESIDENCIAL  100%  96%  76%    71%  6,815  1,456 
Gafisa  NOVA PETROPOLIS SBC - 1ª FASE  98%  94%  75%    72%  6,759  22,056 
Gafisa  Reserva do Bosque - Lauro Sodré - Phase 2  68%  55%  89%    84%  6,367  8,725 
Gafisa  GRAND VALLEY NITERÓI - FASE 1  79%  71%  92%    89%  6,365  6,141 
Gafisa  PENÍNSULA FIT  100%  100%  99%    93%  6,189  (373) 
Gafisa  Magno  56%  48%  0%    93%  6,017  2,796 
Gafisa  Alegria - Fase2A  69%  55%  87%    83%  5,526  7,556 
Gafisa  Mansão Imperial - F1  67%  57%  78%    80%  5,487  5,973 
Gafisa  Vila Nova São José - F1a  84%  74%  78%    77%  5,452  6,965 
Gafisa  RIV. PONTA NEGRA ED. NICE  99%  99%  78%    63%  5,095  451 
Gafisa  VISION BROOKLIN  50%  46%  97%    97%  4,878  6,934 
Gafisa  RESERVA STA CECILIA  88%  71%  30%    28%  4,782  4,858 
Gafisa  LONDON GREEN  100%  100%  45%    100%  4,678  11,481 
Gafisa  Gafisa Corporate - Jardim Paulista  79%  74%  97%    100%  4,581  8,141 
Gafisa  London Ville Avenida Copacabana - Barueri  31%  24%  62%    50%  4,535  2,295 
Gafisa  VP AGRIAS  100%  100%  99%    96%  4,366  1,863 
Gafisa  Others            142,782  282,367 
  Total Gafisa            412,412  490,835 
 
Alphaville  TERESINA  21%  5%  97%    96%  17,059  4,006 
Alphaville  RIBEIRÃO PRETO  41%  24%  93%    93%  16,486  8,614 
Alphaville  PIRACICABA  88%  63%  94%    94%  13,369  2,844 
Alphaville  BRASÍLIA  39%  22%  87%    86%  10,019  9,353 
Alphaville  RIO COSTA DO SOL  70%  53%  67%    60%  9,494  6,849 
Alphaville  PORTO ALEGRE  30%  22%  87%    86%  8,693  10,786 
Alphaville  MANAUS  100%  100%  99%    99%  8,495  10,811 
Alphaville  NOVA ESPLANADA  92%  70%  87%    86%  8,472  1,849 
Alphaville  TERRAS ALPHA FOZ  81%  45%  89%    82%  7,615  3,633 
Alphaville  Others  0%  0%  0%    0%  61,313  55,779 
  Total AUSA            161,016  114,523 
 
  Total Tenda            355,209  351,838 
 
  Consolidated Total            928,637  957,197 

24

 

 

Consolidated Income Statement

The Income Statement reflects the impact of IFRS adoption, also for 2009.

 

R$ 000  4Q10  4Q09  3Q10  4Q10 x 4Q09  4Q10 x 3Q10 
Gross Operating Revenue  1,058,567  930,411  1,028,530  13.8%  2.9% 
Real Estate Development and Sales  1,062,182  912,764  1,022,095  16.4%  3.9% 
Construction and Services Rendered  (3,615)  17,647  6,435  -120.5%  -156.2% 
Deductions  (129,930)  (32,871)  (71,334)  295.3%  82.1% 
Net Operating Revenue  928,637  897,540  957,196  3.5%  -3.0% 
Operating Costs  (650,402)  (620,122)  (681,275)  4.9%  -4.5% 
Gross profit  278,235  277,418  275,921  0.3%  0.8% 
Operating Expenses           
Selling Expenses  (76,243)  (73,277)  (53,887)  4.0%  41.5% 
General and Administrative Expenses  (64,894)  (60,298)  (59,317)  7.6%  9.4% 
Other Operating Revenues / Expenses  (781)  (13,884)  (2,205)  -94.4%  -64.6% 
Depreciation and Amortization  (6,492)  (10,004)  (8,305)  -35.1%  -21.8% 
Operating results  129,825  119,955  152,207  8.2%  -14.7% 
Financial Income  26,810  23,167  36,417  15.7%  -26.4% 
Financial Expenses  (28,387)  (57,604)  (56,431)  -50.7%  -49.7% 
Incom e Before Taxes on Income  128,248  85,518  132,193  50.0%  -3.0% 
Deferred Taxes  25,608  (22,040)  (823)  -216.2%  -3211.5% 
Income Tax and Social Contribution  (9,474)  (4,488)  (9,661)  111.1%  -1.9% 
Incom e After Taxes on Income  144,382  58,990  121,709  144.8%  18.6% 
Minority Shareholders  (7,019)  (11,383)  (5,109)  -38.3%  37.4% 
Net Income  137,363  47,607  116,600  188.5%  17.8% 
 
Net Income Per Share (R$)  0.31877  0.14273  0.27059  123.3%  17.8% 

25

 

 

 

Consolidated Income Statement

The Income Statement reflects the impact of IFRS adoption, also for 2009.

R$ 000  2010  2009  2010 x 2009 
Gross Operating Revenue  4,029,834  3,144,880  28.1% 
Real Estate Development and Sales  4,005,545  3,096,881  29.3% 
Construction and Services Rendered  24,289  47,999  -49.4% 
Deductions  (308,974)  (122,534)  152.2% 
Net Operating Revenue  3,720,860  3,022,346  23.1% 
Operating Costs  (2,634,556)  (2,143,762)  22.9% 
Gross profit  1,086,304  878,584  23.6% 
Operating Expenses       
Selling Expenses  (242,564)  (226,621)  7.0% 
General and Administrative Expenses  (236,754)  (233,129)  1.6% 
Other Operating Revenues / Expenses  (12,173)  (92,884)  -86.9% 
Depreciation and Amortization  (33,816)  (34,170)  -1.0% 
Operating results  560,997  291,780  92.3% 
Financial Income  128,085  129,566  -1.1% 
Financial Expenses  (210,203)  (240,572)  -12.6% 
Incom e Before Taxes on Income  478,879  180,774  164.9% 
Deferred Taxes  (2,041)  (17,665)  -88.4% 
Income Tax and Social Contribution  (36,858)  (20,147)  82.9% 
Income After Taxes on Income  439,980  142,962  207.8% 
Minority Shareholders  (23,930)  (41,222)  -41.9% 
Net Income  416,050  101,740  308.9% 
 
Net Income Per Share (R$)  0.96551  0.30502  216.5% 

26

 

 

 

Consolidated Balance Sheet


  4Q10  4Q09  3Q10  4Q10 x 4Q09  4Q10 x 3Q10 
ASSETS           
Current Assets           
Cash and cash equivalents  256,382  292,940  259,396  -12.5%  -1.2% 
Restricted cash in guarantee to loans and resctricted           
credits  944,766  1,131,113  971,747  -16.5%  -2.8% 
Receivables from clients  3,158,074  2,008,464  2,727,930  57.2%  15.8% 
Properties for sale  1,568,986  1,332,374  1,447,266  17.8%  8.4% 
Other accounts receivable  178,305  108,791  155,795  63.9%  14.4% 
Deferred selling expenses  2,482  6,633  38,028  -62.6%  -93.5% 
Prepaid expenses  18,734  12,133  16,423  54.4%  14.1% 
  6,127,729  4,892,448  5,616,585  25.2%  9.1% 
Long-term Assets           
Receivables from clients  2,113,314  1,768,182  2,411,275  19.5%  -12.4% 
Properties for sale  498,180  416,083  388,649  19.7%  28.2% 
Deferred taxes  337,804  281,288  367,788  20.1%  -8.2% 
Other  181,721  117,546  252,324  54.6%  -28.0% 
  3,131,019  2,583,099  3,420,036  21.2%  -8.5% 
 
Property, plant and equipment  80,852  56,476  63,825  43.2%  26.7% 
Intangible assets  209,954  204,686  209,687  2.6%  0.1% 
  290,806  261,162  273,512  11.4%  6.3% 
 
Total Assets  9,549,554  7,736,709  9,310,133  23.4%  2.6% 
 
LIABILITIES AND SHAREHOLDERS' EQUITY           
Current Liabilities           
Loans and financing  797,903  678,312  789,331  17.6%  1.1% 
Debentures  26,532  122,377  214,561  -78.3%  -87.6% 
Obligations for purchase of land and advances from           
clients  420,199  475,409  460,470  -11.6%  -8.7% 
Materials and service suppliers  190,461  194,331  292,444  -2.0%  -34.9% 
Taxes and contributions  243,050  177,392  234,394  37.0%  3.7% 
Taxes, payroll charges and profit sharing  72,153  61,320  69,594  17.7%  3.7% 
Provision for contingencies  14,155  11,266  8,001  25.6%  76.9% 
Dividends  102,767  54,279  52,287  89.3%  96.5% 
Other  149,952  205,657  171,417  -27.1%  -12.5% 
  2,017,172  1,980,343  2,292,499  1.9%  -12.0% 
Long-term Liabilities           
Loans and financings  612,275  525,443  371,843  16.5%  64.7% 
Debentures  1,853,399  1,796,000  1,551,407  3.2%  19.5% 
Obligations for purchase of land  177,860  146,401  177,412  21.5%  0.3% 
Deferred taxes  424,409  376,550  483,373  12.7%  -12.2% 
Provision for contingencies  124,537  110,073  126,327  13.1%  -1.4% 
Other  556,233  417,718  575,702  33.2%  -3.4% 
  3,748,713  3,372,185  3,286,064  11.2%  14.1% 
 
Shareholders' Equity           
Capital  2,729,198  1,627,275  2,729,187  67.7%  0.0% 
Treasury shares  (1,731)  (1,731)  (1,731)  0.0%  0.0% 
Capital reserves  295,879  318,439  251,489  -7.1%  17.7% 
Revenue reserves  698,889  381,651  422,373  83.1%  65.5% 
Retained earnings/accumulated losses  0  0  278,687  0.0%  -100.0% 
Minority Shareholders  61,434  58,547  51,565  4.9%  19.1% 
  3,783,669  2,384,181  3,731,570  58.7%  1.4% 
         
Liabilities and Shareholders' Equity  9,549,554  7,736,709  9,310,133  23.4%  2.6% 

 

27

 
 

Consolidated Cash Flows

 

  FY10  FY09 
Income Before Taxes on Income  478,879  180,774 
 
Expenses (income) not affecting w orking capital     
Depreciation and amortization  33,816  34,170 
Expense on stock option plan  12,924  14,427 
Unrealized interest and charges, net  217,626  171,326 
Disposal of fixed asset  -  5,251 
Warranty provision  14,869  7,908 
Provision for contingencies  31,044  63,975 
Profit sharing provision  36,612  28,237 
Allow ance (reversal) for doubtful debts  1,076  (974) 
 
Decrease (increase) in assets     
Clients  (1,495,818)  (1,657,128) 
Properties for sale  (318,709)  280,519 
Other receivables  (133,689)  56,565 
Deferred selling expenses and prepaid expenses  (2,450)  15,133 
 
Decrease (increase) in liabilities     
Obligations on land purchases and advances from customers  (23,751)  (38,881) 
Taxes and contributions  65,658  25,010 
Trade accounts payable  (3,870)  81,431 
Salaries, payroll charges  (25,779)  3,390 
Other accounts payable  14,958  36,783 
 
Cash used in operating activities  (1,096,604)  (692,084) 
 
Investing activities     
 
Purchase of property and equipment and deferred charges  (63,460)  (45,109) 
Securities inflow  (1,871,140)  (1,731,411) 
Securities outflow  2,057,488  1,014,356 
Cash used in investing activities  122,888  (762,164) 
 
Financing activities     
 
Capital increase  1,101,923  9,736 
Follow on expenses  (50,410)  - 
Alienação ações em tesouraria  -  82,045 
Contributions from venture partners  80,000  - 
Increase in loans and financing  1,138,232  2,259,663 
Repayment of loans and financing  (1,187,881)  (860,978) 
Assignment of credit receivables, net  (33,918)  860 
Proceeds from subscription of redeemable equity interest in securitization  (23,238)  41,308 
Cessão de Crédito Imobiliário - CCI  -  69,316 
Dividends paid  (50,692)  (26,058) 
Taxes paid  (36,858)  (20,147) 
Net cash provided by financing activities  937,158  1,555,745 
 
 
Net increase (decrease) in cash and cash equivalents  (36,558)  101,497 
 
 
Cash and cash equivalents     
 
At the beggining of the period  292,940  191,443 
At the end of the period  256,382  292,940 
 
Net increase (decrease) in cash and cash equivalents  (36,558)  101,497 

28

 
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: March 28, 2010
 
Gafisa S.A.
 
By:
/s/ Alceu Duílio Calciolari
 
Name:   Alceu Duílio Calciolari
Title:     Chief Financial Officer and Investor Relations Officer