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 December, 2020

(Commission File No. 001-33356),

 

Gafisa S.A.

(Translation of Registrant's name into English)

 


 

Av. Juscelino Kubitschek 1830 |03º andar| Conj. 32 Torre 2 - Cond. São Luiz

São Paulo, SP, 04543- 000

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

 

 
 

Gafisa S.A.

 

Quarterly information

September 30, 2020

(A free translation of the original report in Portuguese as published in
Brazil containing Quarterly Information (ITR) prepared in
accordance with the accounting practices adopted in Brazil).

 
 

 

 

Company data    
          
Capital Composition    3
     
Individual financial statements    
     
Balance sheet - Assets    4
     
Balance sheet - Liabilities   5
      
Statement of income   6
     
Statement of comprehensive income (loss)   7
     
Statement of cash flow   8
     
Statements of changes in equity    
     
01/01/2020 to 09/30/2020   9
     
01/01/2019 to 09/30/2019   10
     
Statement of value added   11
     
Consolidated financial statements    
     
Balance sheet - Assets   12
     
Balance sheet - Liabilities   13
     
Statement of income   15
     
Statement of comprehensive income (loss)   16
     
Statement of cash flow   17
     
Statements of changes in equity    
     
01/01/2020 to 09/30/2020    18
     
01/01/2019 to 09/30/2019   19
          
Statement of value added   20
     
Comments on performance   21
     
Notes to the quartely information   43
          
Other information deemed relevant by the Company                                    74
     
Reports and statements        
     
Independent auditors' report on the review of the quarterly information   77
    80
Management statement of interim financial information    
     
Management statement on the report n review of interim financial information   81

 
 

 

COMPANY DATA / CAPITAL COMPOSITION

 

Number of Shares CURRENT QUARTER
(in thousands) 09/30/2020
Paid-in Capital  
Common 290,732
Preferred                                                        0  
Total 290,732
Treasury shares  
Common 342
Preferred                                                           0  
Total 342
     

 

 

 

 

 
 

 

 

INDIVIDUAL FINANCIAL STATEMENTS - BALANCE SHEET - LIABILITIES AND EQUITY (in thousands of Brazilian Reais)

 

 

CODE

DESCRIPTION

ACTUAL QUARTER 9/30/2020

PRIOR YEAR 12/31/2019

1  Total Assets 2,954,304 2,504,512
1.01  Current Assets 1,652,693 1,334,900
1.01.01  Cash and cash equivalents 43 810
1.01.01.01  Cash and banks 43 810
1.01.02  Short-term investments 619,025 401,243
1.01.02.01  Fair value of short-term investments 619,025 401,243
1.01.03  Accounts receivable 340,903 361,649
1.01.03.01  Trade accounts receivable 340,903 361,649
1.01.03.01.01  Receivables from clients of developments   304,312 347,158
1.01.03.01.02  Receivables from clients of construction and services rendered 36,591 14,491
1.01.04  Inventories 528,437 490,419
1.01.04.01  Properties for sale 528,437 490,419
1.01.07  Prepaid expenses 416 1,227
1.01.07.01  Prepaid expenses and others 416 1,227
1.01.08  Other current assets 162,869 79,552
1.01.08.01  Non current assets held for sale 3,709 3,709
1.01.08.03  Others 159,160 75,843
1.01.08.03.01  Other assets 65,760 52,455
1.01.08.03.03  Receivables from related parties 93,400 23,388
1.02  Non current assets 1,302,611 1,169,612
1.02.01  Non current assets 348,567 469,268
1.02.01.04  Accounts receivable 73,142 98,368
1.02.01.04.01  Receivables from clients of developments   73,142 98,368
1.02.01.05  Inventories 116,194 230,049
1.02.01.05.01  Properties for sale 116,194 230,049
1.02.01.10  Others non current assets 159,231 140,851
1.02.01.10.03  Other assets 118,160 107,435
1.02.01.10.04  Receivables from related parties 41,071 33,416
1.02.02  Investments 942,229 681,645
1.02.02.01  Investments 942,229 681,645
1.02.03  Property and equipment 6,805 12,147
1.02.03.01  Operation property and equipment 6,805 12,147
1.02.04  Intangible assets 5,010 6,552
1.02.04.01  Intangible assets 5,010 6,552

 

 

 

 
 

 

 

INDIVIDUAL FINANCIAL STATEMENTS - BALANCE SHEET - LIABILITIES AND EQUITY (in thousands of Brazilian Reais)

 

CODE

DESCRIPTION

ACTUAL QUARTER 9/30/2020

PRIOR YEAR 12/31/2019

2  Total Liabilities 2,954,304 2,504,512
2.01  Current liabilities 1,153,854 1,237,207
2.01.01  Social and labor obligations 10,342 11,963
2.01.01.02  Labor obligations 10,342 11,963
2.01.02  Suppliers 65,995 79,106
2.01.03  Tax obligations 62,217 58,556
2.01.03.01  Federal tax obligations 62,217 58,556
2.01.04  Loans and financing 427,681 541,826
2.01.04.01  Loans and financing 300,534 383,647
2.01.04.01.01  Loans and financing in local currency 300,534 383,647
2.01.04.02  Debentures 127,147 158,179
2.01.05  Other obligations 396,987 406,133
2.01.05.01  Payables to related parties 186,301 191,364
2.01.05.02  Others   210,686 214,769
2.01.05.02.04  Obligations for purchase of properties and advances from customers 66,660 89,825
2.01.05.02.06  Other payables 132,183 110,189
2.01.05.02.07  Obligations assumed on the assignment of receivables 11,843 14,755
2.01.06  Provisions 190,632 139,623
2.01.06.01  Tax, labor and civil lawsuits 190,632 139,623
2.01.06.01.01  Tax lawsuits 44 1,995
2.01.06.01.02  Labor lawsuits 25,096 30,699
2.01.06.01.04  Civil lawsuits 165,492 106,929
2.02  Non current liabilities 290,826 373,597
2.02.01  Loans and financing 145,698 146,375
2.02.01.01  Loans and financing 120,118 107,029
2.02.01.01.01  Loans and financing in local currency 120,118 107,029
2.02.01.02  Debentures 25,580 39,346
2.02.02  Other liabilities 55,788 91,250
2.02.02.02  Others 55,788 91,250
2.02.02.02.03  Obligations for purchase of properties and advances from customers 40,692 68,515
2.02.02.02.04  Other liabilities 4,484 6,272
2.02.02.02.06  Obligations assumed on the assignment of receivables 10,612 16,463
2.02.03  Deferred taxes   12,114 12,114
2.02.03.01  Deferred income tax and social contribution   12,114 12,114
2.02.04  Provisions 77,226 123,858
2.02.04.01  Tax, labor and civel lawsuits 77,226 123,858
2.02.04.01.01  Tax lawsuits 1 687
2.02.04.01.02  Tax and labor lawsuits   4,478 3,149
2.02.04.01.04  Civil lawsuits 72,747 120,022
2.03  Equity 1,509,624 893,708
2.03.01  Capital 1,041,248 2,926,280
2.03.02  Capital Reserves 335,162 294,094
2.03.02.05  Treasury shares (2,634) (43,517)
2.03.02.07  Constitution of capital reserve 250,599 250,599
2.03.02.09  Reserve for granting stock options 87,197 87,012
2.03.05  Retained earnings/accumulated losses 133,214 (2,326,666)
       
 
 

 

INDIVIDUAL FINANCIAL STATEMENTS - INCOME - (in thousands of Brazilian Reais)

 

CODE

DESCRIPTION

ACTUAL QUARTER 07/01/2020 to 09/30/2020

YEAR TO DATE 01/01/2020 to 09/30/2020

SAME QUARTER FROM PREVIOUS YEAR 07/01/2019 to 09/30/2019

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2019 to 09/30/2019

3.01  Gross Sales and/or Services 96,026 215,419 69,329 235,665
3.01.01  Revenue from real estate development   105,150 235,487 75,946 256,393
3.01.03  Taxes on real estate sales and services   (9,124) (20,068) (6,617) (21,728)
3.02  Cost of sales and/or services (71,322) (157,819) (41,009) (162,614)
3.02.01  Cost of real estate development (71,322) (157,819) (41,009) (162,614)
3.03  Gross profit 24,704 57,600 28,320 73,051
3.04  Operating expenses/income (52,607) (122,562) (7,206) (86,612)
3.04.01  Selling expenses (2,022) (6,158) (1,633) (9,585)
3.04.02  General and administrative expenses (19,543) (51,136) (11,053) (26,136)
3.04.05  Other operating expenses (26,394) (61,608) (2,607) (55,877)
3.04.05.01  Depreciation and amortization (1,610) (5,373) (2,848) (10,625)
3.04.05.02  Other operating expenses (24,784) (56,235) 178 (45,252)
3.04.06  Income from equity method investments (4,648) (3,660) 8,150 (4,986)
3.05  Income (loss) before financial results and income taxes (27,903) (64,962) 21,114 (13,561)
3.06  Financial (28,590) (40,538) (22,782) (47,185)
3.06.02  Financial expenses, net (28,590) (40,538) (22,782) (47,185)
3.06.02.01  Financial expenses, net (28,590) (40,538) (22,782) (47,185)
3.07  Income before income taxes (56,493) (105,500) (1,668) (60,746)
3.09  Income (loss) from continuing operation (56,493) (105,500) (1,668) (60,746)
3.11  Income (loss) for the period (56,493) (105,500) (1,668) (60,746)
3.99  Earnings per Share – (Reais / Share) - - - -
3.99.01  Basic Earnings per Share - - - -
3.99.01.01  ON (0,39011) (0,72852) (0,03189) (1,16151)
3.99.02  Diluted Earnings per Share - - - -
3.99.02.01  ON (0,39011) (0,72852) (0,03189) (1,16151)

 

 

 
 

 

 

 

INDIVIDUAL FINANCIAL STATEMENTS - COMPREHENSIVE INCOME (LOSS) - (in thousands of Brazilian Reais)

 

CODE

DESCRIPTION

ACTUAL QUARTER 0701/2020 to 09/30/2020

YEAR TO DATE 01/01/2020 to 09/30/2020

SAME QUARTER FROM PREVIOUS YEAR 07/01/2019 to 09/30/2019

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2019 to 09/30/2019

4.01  Income (loss) for the period (56,493) (105,500) (1,668) (60,746)
4.03  Comprehensive income (loss) for the period (56,493) (105,500) (1,668) (60,746)

 

 

 

 

 
 

 

INDIVIDUAL FINANCIAL STATEMENTS - CASH FLOWS - INDIRECT METHOD - (in thousands of Brazilian Reais)

 

CODE

DESCRIPTION

YEAR TO DATE 01/01/2020 to 09/30/2020

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2019 to 09/30/2019

6.01  Net cash from operating activities (84,850) (32,500)
6.01.01  Cash generated in the operations (21,780) (59,275)
6.01.01.01  Income (loss) before income and social contribution taxes (105,500) (60,746)
6.01.01.02  Income from equity method investments (3,660) (4,986)
6.01.01.03  Stock options expenses (362) (2,698)
6.01.01.04  Unrealized interest and finance charges, net   1,382 1,902
6.01.01.06  Depreciation and amortization 5,373 10,625
6.01.01.07  Provision for legal claims 51,127 45,378
6.01.01.08  Provision for profit sharing   6,194 500
6.01.01.09  Warranty provision 1,102 (3,918)
6.01.01.11  Allowance for doubtful accounts   15,347 (17,116)
6.01.01.12  Provision for realization of non-financial assets - properties for sale (921) (28,222)
6.01.01.13  Provision for penalties due to delay in construction works 832 754
6.01.01.15  Payable for sale of shares 0 (748)
6.01.02  Variation in assets and liabilities (63,070) 91,775
6.01.02.01  Trade accounts receivable 21,862 117,528
6.01.02.02  Properties for sale 76,758 129,393
6.01.02.03  Other accounts receivable (17,806) (32,574)
6.01.02.04  Prepaid expenses 811 677
6.01.02.05  Obligations for purchase of properties and adv. from customers (50,988) (51,007)
6.01.02.06  Taxes and contributions    3,660 8,734
6.01.02.07  Suppliers (12,981) (13,126)
6.01.02.08  Salaries and payable charges (7,816) (1,898)
6.01.02.09  Transactions with related parties 380 4,763
6.01.02.10  Other obligations (76,950) (70,715)
6.02  Net cash from investing activities (216,217) (281,653)
6.02.01  Purchase of property and equipment and intangible assets 1,511 (4,333)
6.02.03  Redemption of short-term investments 262,076 34,040
6.02.04  Purchase of short-term investments (479.858) (311,360)
6.03  Net cash from financing activities 300,354 224,086
6.03.01 Capital increase 477.900 132,266
6.03.02  Increase in loans, financing and debentures 80,333 81,163
6.03.03  Payment of loans, financing and debentures (196,523) (193,285)
6.03.06  Loan transactions with related parties (80,607) (10,117)
6.03.08  Disposal of treasury shares 0 148
6.03.09  Result of the disposal of treasury shares 19,251 6,984
6.03.12 Constitution of reserves 0 206,927
6.05  Net increase (decrease) of cash and cash equivalents (767) (22,935)
6.05.01  Cash and cash equivalents at the beginning of the period 810 29,180
6.05.02  Cash and cash equivalents at the end of the period 43 4,112
 
 

 

 

INDIVIDUAL STATEMENT OF CHANGES IN EQUITY FROM 01/01/2020 TO 09/30/2020 (in thousands of Brazilian reais)  

 

CODE

DESCRIPTION

Capital

Capital reserves, stock options and treasury shares

Profit reserves

Retained earnings

Other comprehensive income

Total Equity

5.01 Opening balance 2,926,280 294,094 - (2,326,666) - 893,708
5.03 Opening adjusted balance 2,926,280 294,094 - (2,326,666) - 893,708
5.04 Capital transactions with shareholders (1,885,032) 41,068 - 2,565,380 - 721,416
5.04.01 Capital increase 700,001 - - - - 700,001
5.04.03 Stock option plan - 184 - - - 184
5.04.05 Treasury shares sold - 40,884 - (19,635) - 21,231
5.04.08 Capital reduction (2,585,033) - - 2,585,033 - -
5.05 Total of comprehensive income (loss) - - - (105,500) - (105,500)
5.05.01 Net income (loss) for the period - - - (105,500) - (105,500)
5.07 Closing balance 1,041,248 355,162 - 133,214 - 1,509,624

 

 
 

 

INDIVIDUAL STATEMENT OF CHANGES IN EQUITY FROM 01/01/2019 TO 09/30/2019 (in thousands of Brazilian reais)

 

CODE

DESCRIPTION

Capital

Capital reserves, stock options and treasury shares

Profit reserves

Retained earnings

Other comprehensive income

Total Equity

5.01 Opening balance 2,521,319 278,401 0 (2,308,403) 0 491,317
5.03 Opening adjusted balance 2,521,319 278,401 0 (2,308,403) 0 491,317
5.04 Capital transactions with shareholders 132,265 220,590 0 (3,267) 0 349,588
5.04.01 Capital increase 132,265 0 0 - 0 132,265
5.04.03 Stock option plan 0 355 0 - 0 355
5.04.05 Treasury shares sold 0 141 0 7 0 148
5.04.08 Treasury shares cancelled 0 5,747 0 (5,747) 0 -
5.04.09 Treasury shares reissued 0 (20,671) 0 20,671 0 -
5.04.10 Share repurchase program 0 28,091 0 (18,198) 0 9,893
5.04.11 Advance for future capital increase 0 206,927 0 (59,078) 0 206,927
5.05 Total of comprehensive income (loss) 0 0 0 (60,746) 0 (60,746)
5.05.01 Net income (loss) for the period 0 0 0 (60,746) 0 (60,746)
5.07 Closing balance 2,653,584 498,991 0 (2,372,416) 0 780,159
               

 
 

 

INDIVIDUAL STATEMENT OF VALUE ADDED (in thousands of Brazilian Reais)

CODE

DESCRIPTION

YEAR TO DATE 01/01/2020 to 09/30/2020

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2019 to 09/30/2019

7.01  Revenue 235,487 257,393
7.01.01  Real estate development, sales and services 250,834 240,277
7.01.04  Allowance for doubtful accounts (15,347) 17,116
7.02  Inputs acquired from third parties (218,867) (191,772)
7.02.01  Cost of Sales and/or Services (141,109) (140,857)
7.02.02  Materials, energy, outsourced labor and other (77,758) (50,915)
7.03  Gross value added 16,620 65,621
7.04  Retentions (5,373) (10,625)
7.04.01  Depreciation and amortization (5,373) (10,625)
7.05  Net value added produced by the Company 11,247 54,996
7.06  Added value received on transfer 17,962 16,448
7.06.01  Income from equity method investments (3,660) 4,986
7.06.02  Financial income 21,622 11,462
7.07  Value added total to be distributed 29,209 71,444
7.08  Value added distribution 29,209 71,444
7.08.01  Personnel and payroll charges 27.972 22,139
7.08.01.01  Direct remuneration 27.972 22,139
7.08.02  Taxes and contributions 25,686 26,971
7.08.02.01  Federal 25,686 26,971
7.08.03  Compensation – Interest 81.051 83,080
7.08.03.01  Interest 78.870 80,404
7.08.03.02  Rent 2,181 2,676
7.08.04  Compensation – Company capital (105,500) (60,746)
7.08.04.03  Net income (Retained losses) (105,500) (60,746)

 

 
 

 

CONSOLIDATED FINANCIAL STATEMENTS - BALANCE SHEET - ASSETS (in thousands of Brazilian Reais)

 

CODE

DESCRIPTION

ACTUAL QUARTER 9/30/2020

PRIOR YEAR 12/31/2019

1  Total Assets 3,445,750 2,551,887
1.01  Current Assets 2,648,455 1,800,168
1.01.01  Cash and cash equivalents 6,705 12,435
1.01.01.01  Cash and banks 6,705 12,435
1.01.02  Short-term investments 623,995 401,895
1.01.02.01  Fair value of short-term investments 623,995 401,895
1.01.03  Accounts receivable 544,147 445,303
1.01.03.01  Trade accounts receivable 544,147 445,303
1.01.03.01.01  Receivables from clients of developments   507,399 430,664
1.01.03.01.02  Receivables from clients of construction and services rendered 36,748 14,639
1.01.04  Inventories 1,317,144 786,660
1.01.04.01  Properties for sale 1,317,144 786,660
1.01.07  Prepaid expenses 1,405 1,860
1.01.07.01  Prepaid expenses and others 1,405 1,860
1.01.08  Other current assets 155,449 152,015
1.01.08.01  Non current assets for sale 7,014 7,014
1.01.08.03  Others 148,435 145,001
1.01.08.03.01  Other accounts receivable and others   146,125 67,395
1.01.08.03.03  Derivative financial instruments 2,310 77,606
1.02  Non current assets 797,305 751,719
1.02.01  Non current assets 503,511 591,674
1.02.01.04  Accounts receivable 86,843 112,135
1.02.01.04.01  Receivables from clients of developments   86,843 112,135
1.02.01.05  Inventories 191,985 279,207
1.02.01.05.01  Properties for sale 191,985 279,207
1.02.01.10  Others non current assets 224,683 200,332
1.02.01.10.03  Other assets 124,946 166,916
1.02.01.10.04  Receivables from related parties 99,737 33,416
1.02.02  Investments 272,497 138,802
1.02.02.01  Interest in associates and affiliates 272,497 138,802
1.02.03  Property and equipment 15,935 14,159
1.02.03.01  Operation property and equipment 15,935 14,159
1.02.04  Intangible assets 5,362 7,084
1.02.04.01  Intangible assets 5,362 7,084
             
 
 

 

CONSOLIDATED FINANCIAL STATEMENTS - BALANCE SHEET - LIABILITIES AND EQUITY (in thousands of Brazilian Reais)

CODE

DESCRIPTION

ACTUAL QUARTER 9/30/2020

PRIOR YEAR 12/31/2019

2  Total Liabilities 3,445,750 2,551,887
2.01  Current liabilities 1,440,307 1,252,402
2.01.01  Social and labor obligations 10,774 12,291
2.01.01.02  Labor obligations 10,774 12,291
2.01.02  Suppliers 1331,054 95,450
2.01.03  Tax obligations 82,979 69,868
2.01.03.01  Federal tax obligations 82,979 69,868
2.01.04  Loans and financing 476,495 584,303
2.01.04.01  Loans and financing 349,348 426,124
2.01.04.01.01  In Local Currency 349,348 426,124
2.01.04.02  Debentures 127,147 158,179
2.01.05  Other obligations 545,648 349,755
2.01.05.01  Payables to related parties 92,228 64,384
2.01.05.02  Others 453,420 285,371
2.01.05.02.04  Obligations for purchase of properties and advances from customers 259,336 129,353
2.01.05.02.06  Other payables 178,550 135,492
2.01.05.02.07  Obligations assumed on the assignment  of receivables 15,534 20,526
2.01.06  Provisions 193,357 140,735
2.01.06.01  Tax, labor and civel lawsuits 193,357 140,735
2.01.06.01.01  Tax lawsuits 2,131 1,995
2.01.06.01.02  Labor lawsuits 25,096 31,593
2.01.06.01.04  Civel lawsuits 166,130 107,147
2.02  Non current liabilities 491,553 404,342
2.02.01  Loans and financing 269,003 146,375
2.02.01.01  Loans and financing 153,340 107,029
2.02.01.01.01  Loans and financing in local currency 153,340 107,029
2.02.01.02  Debentures 115,663 39,346
2.02.02  Other obligations 124,186 121,975
2.02.02.02  Others 124,186 121,975
2.02.02.02.03  Obligations for purchase of properties and advances from customers 87,942 93,075
2.02.02.02.04  Other payables 21,884 9,065
2.02.02.02.06  Obligations assumed on the assignment  of receivables 14,360 19,835
2.02.03  Deferred taxes   12,114 12,114
2.02.03.01  Deferred income tax and social contribution   12,114 12,114
2.02.04  Provisions 86,250 123,878
2.02.04.01  Tax, labor and civel lawsuits 86,250 123,878
2.02.04.01.01  Tax lawsuits 98 707
2.02.04.01.02  Labor lawsuits   7,280 3,149
2.02.04.01.04  Civel lawsuits 78,872 120,022
2.03  Equity 1,513,890 895,143
2.03.01  Capital 1,041,248 2,926,280
2.03.01.01  Share Capital 1,041,248 2,926,280
2.03.02  Capital Reserves 2225,162 294,094
2.03.02.05  Treasury shares (2,634) (43,517)
2.03.02.07  Constitution of capital reserve 250,599 250,599
2.03.02.09  Reserve for granting stock options 87,197 87,012

 

 
 

 

 

 

CONSOLIDATED FINANCIAL STATEMENTS - BALANCE SHEET - LIABILITIES AND EQUITY (in thousands of Brazilian Reais)

 

 

CODE  DESCRIPTION  ACTUAL QUARTER 9/30/2020  PRIOR YEAR 12/31/2019
2.03.05  Retained earnings/accumulated losses 133,214 (2,326,666)
2.03.09  Non-controlling interest 4,266 1,435

 

 
 

 

CONSOLIDATED FINANCIAL STATEMENTS - INCOME - (in thousands of Brazilian Reais)

 

CODE

DESCRIPTION

ACTUAL QUARTER 07/01/2020 to 09/30/2020

YEAR TO DATE 01/01/2020 to 09/30/2020

SAME QUARTER FROM PREVIOUS YEAR 07/01/2019 to 09/30/2019

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2019 to 09/30/2019

3.01  Gross Sales and/or Services 148,632 304,135 89,212 284,292
3.01.01  Revenue from real estate development   159,579 327,637 96,438 307,534
3.01.03  Taxes on real estate sales and services   (10,947) (23,502) (7,226) (23,242)
3.02  Cost of sales and/or services (124,220) (112,327) (51,108) (202,770)
3.02.01  Cost of real estate development (124,220) (112,327) (51,108) (202,770)
3.03  Gross profit 24,412 43,176 38,104 81,522
3.04  Operating expenses/income (51,952) (79,516) (17,597) (98,950)
3.04.01  Selling expenses (3,909) (6,840) (2,170) (11,683)
3.04.02  General and administrative expenses (19,543) (31,593) (12,678) (31,918)
3.04.05  Other operating expenses (28,393) (36,807) (3,054) (57,438)
3.04.05.01  Depreciation and amortization (1,936) (4,048) (3,223) (11,739)
3.04.05.02  Other operating expenses (26,457) (32,759) 169 (45.699)
3.04.06  Income from equity method investments (107) (4,276) 305 2,089
3.05  Income (loss) before financial results and income taxes (27,540) (36,340) 20,507 (17,428)
3.06  Financial (28,049) (10,750) (21,548) (41,976)
3.07  Income before income taxes (55,589) (47,090) (1,041) (59,404)
3.08  Income and social contribution taxes   (1,064) (2,015) (508) (1,221)
3.08.01  Current (1,064) (2,015) (508) (1,221)
3.09  Income (loss) from continuing operation (57,193) (49,105) (1,549) (60,625)
3.11  Income (loss) for the period (57,193) (49,105) (1,549) (60,625)
3.11.01  Income (loss)  attributable to the Company (56,493) (49,007) (1,668) (60,746)
3.11.02  Net income attributable to non-controlling interests (700) (98) 119 121
3.99  Earnings per Share – (Reais / Share) - - - -
3.99.01  Basic Earnings per Share - - - -
3.99.01.01  ON (0,39011) (0,72852) (0,03189) (1,16151)
3.99.02  Diluted Earnings per Share - - - -
3.99.02.01 ON (0,39011) (0,72852) (0,03189) (1,16151)

 

 
 

 

CONSOLIDATED FINANCIAL STATEMENTS - COMPREHENSIVE INCOME (LOSS) -  (in thousands of Brazilian Reais)  

 

CODE

DESCRIPTION

ACTUAL QUARTER 07/01/2020 to 09/30/2020

YEAR TO DATE 01/01/2020 to 09/30/2020

SAME QUARTER FROM PREVIOUS YEAR 07/01/2019 to 09/30/2019

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2019 to 09/30/2019

4.01  Consolidated Income (loss) for the period (57,193) (106,299) (1,549) (60,625)
4.03  Consolidated comprehensive income (loss) for the period (57,193) (106,299) (1,549) (60,625)
4.03.01  Income (loss) attributable to the Company (56,493) (105,500) (1,668) (60,746)
4.03.02  Net income attributable to the noncontrolling interests (700) (799) 119 121

 

 

 
 

 

 

CONSOLIDATED FINANCIAL STATEMENTS - CASH FLOWS - INDIRECT METHOD -  (in thousands of Brazilian Reais)

 

CODE

DESCRIPTION

YEAR TO DATE 01/01/2020 to 09/30/2020

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2019 to 09/30/2019

6.01  Net cash from operating activities (218,444) 68,098
6.01.01  Cash generated in the operations 6,005 (47,507)
6.01.01.01  Income (loss) before income and social contribution taxes (102,681) (59,404)
6.01.01.02  Income from equity method investments 4,383 (2,089)
6.01.01.03  Stock options expenses (362) (2,698)
6.01.01.04  Unrealized interest and finance charges, net   2,130 4,302
6.01.01.06  Depreciation and amortization 5,984 11,739
6.01.01.07  Provision for legal claims 52,708 45,885
6.01.01.08  Provision for profit sharing   6,194 500
6.01.01.09  Warranty provision 1,102 (3,918)
6.01.01.11  Allowance for doubtful accounts   34,197 (17,116)
6.01.01.12  Provision for realization of non-financial assets - properties for sale (1,044) (28,221)
6.01.01.13  Provision for penalties due to delay in construction works 3.394 754
6.01.01.15  Payable for sale of shares 0 2,759
6.01.02  Variation in assets and liabilities (224,449) 115,605
6.01.02.01  Trade accounts receivable (83,182) 127,949
6.01.02.02  Properties for sale (27,289) 145,244
6.01.02.03  Other accounts receivable (88,096) (35,981)
6.01.02.04  Prepaid expenses 815 509
6.01.02.05  Obligations for purchase of properties and adv. from customers (32,744) (56,461)
6.01.02.06  Taxes and contributions    7,794 7,610
6.01.02.07  Suppliers 33,726 (2,189)
6.01.02.08  Salaries and payable charges (7,721) (12,366)
6.01.02.09  Transactions with related parties 47,135 26,045
6.01.02.10  Other obligations (71,268) (93,534)
6.01.02.11  Income tax and social contribution payable (3,619) (1,221)
6.02  Net cash from investing activities (228,193) (280,902)
6.02.01  Purchase of property and equipment and intangible assets (4,618) (4,361)
6.02.03  Redemption of short-term investments (287,594) 50,445
6.02.04  Purchase of short-term investments (511,169) (326,986)
6.03  Net cash from financing activities (439,392) 193,319
6.03.01 Capital increase 477,900 132,266
6.03.02  Increase in loans, financing and debentures 310,900 89,672
6.03.03  Payment of loans, financing and debentures (359,646) (232,561)
6.03.06  Loan transactions with related parties (9,013) (10,117)
6.03.08  Disposal of treasury shares 0 148
6.03.09  Result of the disposal of treasury shares 19,251 6,984
6.03.12  Constitution of reserves 0 206,927
6.04  Foreign Exchange Gains and Losses on Cash and Cash Equivalents 1,515 0
6.05  Net increase (decrease) of cash and cash equivalents (5,730) (19,485)
6.05.01  Cash and cash equivalents at the beginning of the period 12,435 32,304
6.05.02  Cash and cash equivalents at the end of the period 6,705 12,819
       

 
 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FROM 07/01/2020 TO 09/30/2020 (in thousands of Brazilian reais)

 

CODE

DESCRIPTION

Capital

Capital reserves, stock options and treasury shares

Profit reserves

Retained earnings

Other comprehensive income

Total Shareholders equity

Non Controlling interest

Total equity Consolidated

 

5.01

Opening balance 2,926,280 294,094 0 (2,326,666) 0 893,708 1,435 895.143
5.03 Opening adjusted balance 2,926,280 294,094 0 (2,326,666) 0 893,708 1,435 895.143
5.04 Capital transactions with shareholders (1,885,032) 41,068 0 2,565,380 0 721,416 3,630 725,046
5.04.01 Capital increase 700,001 0 0 0 0 700,001 0 700,001
5.04.03 Stock option plan 0 184 0 0 0 184 0 184
5.04.05 Treasury shares sold 0 40,884 0 (19,653) 0 21,231 0 21,231
5.04.08 Capital reduction (2,585,033) 0 0 2,585,033 0 0 0 0
5.04.10 Low discontinued operation 0 0 0 0 0 0 3,630 3,630
5.05 Total of comprehensive income (loss) 0 0 0 (105,500) 0 (105,500) (799) (106,299)
5.05.01 Net income (loss) for the period 0 0 0 (105,500) 0 (105,500) (799) (106,299)
5.07 Closing balance 1,041,248 355,162 0 133,214 0 1,509,624 4,266 1,513,890

 
 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FROM 07/01/2019 TO 09/30/2019 (in thousands of Brazilian reais)

 

CODE

DESCRIPTION

Capital

Capital reserves, stock options and treasury shares

Profit reserves

Retained earnings

Other comprehensive income

Total Shareholders equity

Non Controlling interest

Total equity Consolidated

5.01 Opening balance 2,521,319 278,401 0 (2,308,403) 0 491,317 1,847 493,191
5.03 Opening adjusted balance 2,521,319 278,401 0 (2,308,403) 0 491,317 1,847 493,191
5.04 Capital transactions with shareholders 132,265 220,590 0 (3,267) 0 349,588 0 349,588
5.04.01 Capital increase 132,265 - 0 0 0 132,265 0 132,265
5.04.03 Stock option plan - 355 0 0 0 355 0 355
5.04.05 Treasury shares sold - 141 0 7 0 148 0 148
5.04.08 Treasury shares cancelled - 5,747 0 (5,747) 0 0 0 0
5.04.09 Treasury shares reissued - (20,671) 0 20,671 0 0 0 0
5.04.10 Share repurchase program - 28.091 0 (18,198) 0 9,893 0 9,893
5.04.11 Advance for Future Increase of capital - 206,927 0 0 0 (206,927) 0 206,927
5.05 Total of comprehensive income (loss) - 0 0 (60,746) 0 (60,746) 121 (60,625)
5.05.01 Net income (loss) for the period - 0 0 (60,746) 0 (60,746) 121 (60,625)
5.06 Reserves - 0 0 - 0 9 (80) (80)
5.06.01 Constitution of reserves - 0 0 - 0 0 (80) (80)
5.07 Closing balance 2,653,584 298,991 0 (2,372,418) 0 780,159 1,915 782,074

 

 
 

 

 

 

CONSOLIDATED STATEMENT OF VALUE ADDED (in thousands of Brazilian Reais)

 

CODE

DESCRIPTION

YEAR TO DATE 01/01/2020 to 09/30/2020

YEAR TO DATE FROM PREVIOUS YEAR 01/01/2019 to 09/30/2019

7.01  Revenues 327,637 307,534
7.01.01  Real estate development, sales and services 361,834 290,418
7.01.04  Allowance for doubtful accounts (34,197) 17,116
7.02  Inputs acquired from third parties (293,587) (229,328)
7.02.01  Cost of Sales and/or Services (211,240) (172,414)
7.02.02  Materials, energy, outsourced labor and other (82,347) (56,914)
7.03  Gross value added 34,050 78,206
7.04  Retentions (5,984) (11,739)
7.04.01  Depreciation and amortization (5,984) (11,739)
7.05  Net value added produced by the Company 28,066 66,467
7.06  Value added received on transfer 18,195 14,052
7.06.01  Income from equity method investments (4,383) 2,089
7.06.02  Financial income 22,587 11,963
7.07  Total value added to be distributed 46,261 80,519
7.08  Value added distribution 46,261 80,519
7.08.01  Personnel and payroll charges 29,807 23,717
7.08.01.01  Direct remuneration 29,807 23,717
7.08.02  Taxes and contributions 33,089 30,022
7.08.02.01  Federal 33,089 30,022
7.08.03  Compensation – Interest 88,865 87,526
7.08.03.01  Interest 88,865 84,295
7.08.03.02  Rent 2,181 3,231
7.08.04  Compensation – Company capital (105,500) (60,746)
7.08.04.03  Net income (Retained losses) (105,500) (60,746)
       
 
 

 

 

 


 


 
 

 

 

FOR IMMEDIATE RELEASE - São Paulo, November 16, 2020 – Gafisa S.A. (B3: GFSA3; OTC: GFASY), a leading Brazilian homebuilder, announced today its operational and financial results for the third quarter ended September 30, 2020.

 

GAFISA ANNOUNCES
3Q20 RESULTS

 

Gafisa’s growth upturn is a reality, with 253% higher sales volume, R$1.1 billion in launches in 2020, and R$1 billion PSV in new acquisitions

 

 

The third quarter of 2020 was marked by Gafisa’s consistent recovery of operational performance, highlighting sales, launches, construction works delivery, and land acquisition. We recorded the best sales performance over the past two years, totaling R$144 million sales, reflecting a 253% quarter-on-quarter increase.

After two years without new launches, we resumed launches in the third quarter of 2020, with Chez Perdizes, High Line Jardins, and Normandie Moema projects, totaling a PSV of R$264 million, all of them located in high-valued regions, with good liquidity in the city of São Paulo. Subsequently to the end of the third quarter, all these three launches today report healthy levels of sales, 20% in Chez Perdizes, 45% in High Line Jardins, and 60% in Normandie Moema. For the fourth quarter, we have other three launches totaling R$875 million, highlighting the Cyano Barra project with R$570 million PSV and a project in Campo Belo, SP, with R$262 million PSV.

Again, we evidence the consistency of the Company’s planning and delivery capacity, with two other projects delivered, with a total PSV of R$140 million, the 7th project delivered in 2020. We obtained the occupancy permit for the 8th and 9th projects, now we have achieved 94% of PSV estimated to be delivered in 2020. With the conclusion of the Upcon acquisition, we added two projects to be delivered in 2020, reaching a total of 10 projects with nearly R$1 billion PSV and 1,474 units.

The evolution of construction works was maintained, as well as projects and sales, even during the pandemic. The Company, through its Management Committee – COVID-19, upheld the prevention measures necessary to ensure everyone’s safety, evidencing the focus and discipline of Gafisa’s new management, even amidst a more challenging international scenario.

Still referring to our operational performance, it is worth noting that we acquired in the quarter two excellent plots of land in the city of São Paulo, one in Vila Mariana district, with an estimated PSV of R$116 million and another in the Butantã district, with an estimated PSV of R$162 million. Upcon also brought to our landbank an estimated PSV of R$900 million. We also concluded negotiations to acquire four projects from Calçada S.A., with an approximate PSV of R$747 million, and the acquisition of the last plot of land at Av. Delfim Moreira, definitively sets Gafisa’s return to the city of Rio de Janeiro, through differentiated projects.

Concerning financial results, it is worth noting that we maintained the REF margin (backlog results) at approximately 35%. This evidences that backlog result sustains the Company’s margin at healthy levels in a continued and consistent improvement, despite a temporary reduction of adjusted gross margin (no financial cost), due to our conservative approach when recording provision for dissolutions and repricing of older inventories during the pandemic.

 

 

 

 
 

 

 

We also should point out a continuous improvement of the Company’s balance sheet and deleverage. Within one year, we went from a Net Debt/Shareholders’ Equity ratio of 162% in 1Q19 to current 7.6% in 3Q20, with a capital increase approved on August 7, 2020, injecting R$218.2 million into the Company’s cash.

We are confident that we are reaching a new cycle of high growth in the real estate market, with interest rates nearing the lowest historical levels, unparalleled credit market growth, and development. Furthermore, as fixed-income investments have very low yield, or even negative, real estate investment has increasingly become relevant in the investment portfolio of individuals and institutional investors.

Within this virtuous context of growth in the real estate market and the assertive actions in its real estate development core business, Gafisa is executing its transformation to become a real estate platform to go beyond its core activity of real estate development. From its solid balance sheet and strategic planning, Gafisa set up a new line of business, the Gafisa Properties. We are also developing partnerships and investments in startups to bring innovation, technology, and new services for Gafisa and its clients. Gafisa Properties will own real estate assets to become profitable through leasing flows across the real estate spectrum, such as offices, residential units, shopping malls, and hotels, and its portfolio will be composed of Gafisa’s built assets or under construction (e.g., offices, stores, and small residential units of up 50 m2)and new acquisitions with a focus on non-replicable locations and/or assets with turnaround opportunities. As far as innovation is concerned, we will apply our background and market expertise to pursue synergies and new business models according to a real estate Ecosystem vision that transforms Gafisa’s real estate assets into business platforms to be explored throughout real estate asset’s life cycle, whether assets held Gafisa Properties or sold by Gafisa to its end clients. We are confident that these actions will allow the Company to capture value for its shareholders.

Gafisa relies on a traditional brand and is recognized as a benchmark in the Brazilian market. We are refining our new management model with dynamism and discipline, to prepare the Company for a new development and growth cycle that will restore Gafisa’s history of success and value creation for our shareholders.

Ian Andrade

Chief Financial and Investor Relations Officer

 
 

 

 

OPERATIONAL RESULTS

 

Table 1 – Operational Performance (R$ 000)

  3Q20 2Q20 Q/Q (%) 3Q19 A/A (%) 9M20 9M19 Y/Y (%)
Launches 263,789 - - - - 263,789 - -
Gross sales 143,878 41,383 247.7% 39,963 260.0% 185,260 219,127 (15.5%)
Dissolutions (26,224) (21,543) 21.7% (10,210) 156.8% (47,767) (83,245) (42.6%)
Net Sales 117,654 19,840 493.0% 29,753 295.4% 137,494 135,881 1.2%
Speed of Sales (SoS) 10.57% 2.39% 8.2 p.p. 3.00% 7.6 p.p. 12.13% 11.60% 0.5 p.p.
Delivered PSV 140,255 543,720 (74.2%) - - 683,975 171,648 298.5%

 

Table 2 – Financial Performance (R$ 000)

 

 

1Adjusted by capitalized interest with stock option plan (non-cash) and minority shareholders.

2 Backlog results net of PIS/COFINS taxes (3.65%), excluding the impact of the PVA (Present Value Adjustment) method according to Law No. 11.638.

3 Backlog results comprise the projects restricted by a condition precedent.

4 Cash and cash equivalents and marketable securities.

 

Launches

In 3Q20, Gafisa resumed launches, three projects with an estimated total PSV of R$264 million. These launches are a result of a relevant restructuring process. It is worth noting that the social distancing rules inflicted by the pandemic of Covid-19, suspended the operation of sales stands, affecting the economic activity in the country. The Company also postponed for a few months the launches foreseen early in the year, evidencing our focus and commitment to the Company’s turnaround. As subsequent events, we already launched for 4Q20, other two projects, highlighting the Cyano Barra with R$570 million PSV, and we are already in the pre-launch of another project in Campo Belo, with an estimated PSV of R$262 million.

 

 
 

 

 

Sales

Gross sales soared 247.7% to R$143.8 million in 3Q20 versus 2Q20, even during the pandemic, sales grew by 260.0% year-on-year. The quarter-on-quarter increase reflects the restructuring of the sales area, with Gafisa Sales’ improved structure. The higher speed of sales compared to 3Q19 also reflects greater sales options available, with a resumption of launches and pre-launches in 3Q20.

 

Dissolutions reached R$24.2 million in 3Q20, surging 12.4% from 2Q20 and 156% year-on-year. The quarter-on-quarter increase partially stems from a higher volume of deliveries in the period (not a concern for Management) and the pandemic of COVID-19. Efforts endeavored in the 2019 restructuring process advanced, resulting in renegotiations with Gafisa’s clients, a more accurate credit analysis of potential clients, as well as the recovery of client confidence in the Company.

 

 

¹ It considers LTM.

 
 

 

Net sales totaled R$117.7 million in 3Q20.

 

 

¹ It considers LTM.

Sales Over Supply (SoS)

Sales Over Supply (SoS) reached 10.6% in 3Q20, an increase of 8.3 p.p. from 2Q20 and 7.6 p.p. from 3Q19. This increase reflects a higher volume of sales and launches in the quarter. We believe that this figure should improve with the Company’s next launches, which besides making available new products, usually has a significant impact on inventory units sale.

 
 

 

 

Inventory (Property for Sale)

The Company’s inventory at market value consolidated with projects acquired from Upcon totaled R$995.9 million in 3Q20.

Table 3 – Inventory at Market Value 2Q20 x 3Q20 (R$ 000)

  Inventories 2Q20 Launches Dissolutions Gross Sales UPCON Adjustments Inventories 3Q20 % Q/Q
 
São Paulo 686,125 45,553 22,749 (132,434) 215,563 4,193 841,749 22.7%
Rio de Janeiro 120,572 - 3,021 (5,134) - 5,225 123,684 2.6%
Other markets 35,032 - 454 (6,310) - 1,256 30,433 -13.1%
Total 841,729 - 26,224 (143,878) 215,563 10,675 995,866 18.3%
                           

¹ Adjustments in the period reflect the updates related to the project scope, launch date, and pricing.

 

Inventory turnover in the last 12 months dropped from 73 months in 2Q20 to 53 months in 3Q20, 27.7% lower than in the previous quarter, owing to higher sales volume in the period.

 

 
 

Approximately 73% of inventory is composed of residential units located in the State of São Paulo and with higher liquidity.

 

Table 4 – Inventory at Market Value– Financial Progress – POC - (R$ 000)

 

  Not initiated Up to 30% built 30% to 70% built More than 70% built Finished units Total 3Q20
 
São Paulo 129,376 72,461 229,018 168,826 242,069 841,749
Rio de Janeiro - - - - 123,684 123,684
Other markets - - - 8,599 21,834 30,433
Total 129,376 72,461 229,018 177,425 387,587 995,866

 

* % POC does not necessarily reveal the status of construction works, but the project’s financial progress.

 

Table 5 – Inventory at Market Value – Commercial x Residential Breakdown- (R$ 000)~

 

  Residential Comercial Total
SP 723,513 118,236 841,749
RJ 15,641 108,043 123,684
Others 30,433 - 30,433
Total 769,587 226,279 995,866

 

Delivered Projects and Transfer

In 3Q20, we delivered two projects, totaling 421 units, and a total PSV of R$140.3 million. It is also worth noting that besides delivering these two projects, in the third quarter, the Company obtained the occupancy permit for two projects with 160 units and PSV of R$166 million, besides projects delivered in 1H20 with 775 units and PSV of R$608.9 million. Total deliveries foreseen for 2020 is 10 projects with a PSV of R$971.8 million and 1,474 units. Therefore, out of the total, we already delivered/obtained occupancy permit for 9 projects or 94% of PSV.

 
 

 

 

Table 6 – Deliveries

Project Delivery date Launch date Location % share Units 100% (Ex. swap units) PSV % R$000
Vila Rica feb/20  2016  Santos/SP 50% 69 65,168
Total 1Q20         69 65,168
Moov Estação Vila Prudente abr/20 ago/16 São Paulo 100% 150 72,097
Gafisa Like Alto da Boa Vista mai/20 ago/16 São Paulo 100% 220 158,676
Gafisa Square Ipiranga mai/20 out/16 São Paulo 100% 224 263,490
Marquês 2900 mai/20 dez/16 São Paulo 50% 112 49,455
Total 2Q20         706 543,719
Moov Freguesia ago/20 set/16 São Paulo 100% 307 91,893
Uplife Interlagos ago/20 mai/15 São Paulo 100% 114 48,361
Total 3Q20         421 140,255
Total 2020         1,196 749,142

¹ Number of units corresponding to a 100% share in projects, net of swaps;

 

 

PSV transferred in 3Q20 was R$73.5 million, 3.6% lower than in 2Q20, and 48.7% higher than in 3Q19. The lower volume of transfer reflects a smaller amount of projects delivered this quarter compared to the previous quarter. We highlight that this result was achieved even amidst a pandemic, with restricted business hours at notary offices, banks, people’s movement, and our team in home office most of the time. We again reiterate the Company’s expectation of a significant increase in PSV transferred during 2020, due to the expected delivery of 10 projects in total.

 

Table 7 – Transfer and Delivery - (R$ 000)

  3Q20 2Q20 Q/Q (%) 3Q19 A/A (%) 9M20 9M19 Y/Y (%)
PSV Transferred¹ 70,468 76,244 -7.6% 49,426 42.6% 146,711 158,449 -7.4%
Delivered Projects 2 4 -50.0% - - 6 2 200.0%
Delivered Units² 421 716 -41.2% - - 1,137 365 211.5%
PSV delivered³ 140,255 543,719 -74.2% - - 683,974 171,648 298.5%

 

 

¹ PSV transferred refers to the effective cash inflow from units transferred to financial institutions;

² Number of units corresponding to a 100% share in projects, net of swaps;

³ PSV = Potential Sales Value of units, net of brokerage, and swap.

 

 
 

Landbank

With an estimated PSV of R$4.8 billion, the Company’s landbank represents potential 40 projects/phases totaling 9,599 units. Approximately 49% of the acquisition value of our land consists of most of which are located in the city of São Paulo. This quarter, the Company acquired two plots of land in São Paulo, in Vila Mariana and Butantã districts, with an estimated PSV of R$255 million.

 

 

Table 8 - Landbank (R$ 000)

 

  PSV¹ (%Cia.) % Swap Total % Swap Units %Swap Finan.

Potential Units

(%Cia.)

Potential Units

(100%)

 
   
São Paulo 2,901,083 38.7% 32.5% 6.2% 6,111 6,339    
Rio de Janeiro 1,282,715 72.2% 72.2% 0.0% 1,641 1,895    
Others 593,614 38.1% 38.1% 0.0% 1,089 1,366    
Total 4,777,412 48.6% 44.6% 4.0% 8,840 9,599    

¹ The PSV (% Gafisa) reported is net of swap and brokerage fee.

² The swap percentage is measured compared to the historical cost of land acquisition.

³ Potential units are net of swap and refer to the Gafisa’s and/or its partners’ interest in the project.

 

Table 9 – Changes in the Landbank (2Q20 vs. 3Q20 - R$ 000)

  Initial Landbank Land Acquisition Launches Dissolutions UPCON Adj. Final Landbank
 
São Paulo 2,015,053 255,265 45,553 (232,755) 879,345 (61,378) 2,901,083
Rio de Janeiro 1,282,715 - - - - - 1,282,715
Others 593,614 - - - - - 593,614
Total 3,891,382 255,265 45,553 (232,755) 879,345 (61,378) 4,777,412

FINANCIAL RESULTS

Revenue

Net revenue amounted to R$148.6 million in the third quarter of 2020, 77.4% higher than in 2Q20, reflecting higher sales and works in progress in the period. Year-on-year, net revenue soared 66.6%, due to higher sales volume and construction works evolution.

 
 

 

 

Table 10 – Revenue Recognition (R$ 000)

  3Q20 3Q19
Launches Contracted Sales1 % Sales Revenue % Revenue Contracted Sales % Sales Revenue % Revenue
2018 52,326 45.9% 50,769 34.2% (1,354) (4.5%) 3,057 3.4%
2017 27,241 23.9% 44,396 29.9% (472) (1.6%) 13,794 15.5%
2016 6,450 5.7% 10,739 7.2% 13,091 44.0% 39,625 44.4%
2015 18,260 16.0% 25,271 17.0% 13,021 43.8% 21,488 24.1%
<2014 9,671 8.5% 17,457 11.7% 5,467 18.4% 11,247 12.6%
Total 113,947 100.0% 148,632 100.0% 29,753 100.0% 89,211 100.0%

¹ Contracted sales exclude UPCON sales, as it does not have revenue recognized in the quarter

 

Gross Profit & Margin

Gafisa’s adjusted gross profit reached R$36.6 million in 3Q20, versus R$29.6 million in 2Q20 and R$45.3 million in 3Q19. The adjusted gross margin declined 10.7p.p. in the quarter to 24.6%, on the back of a greater conservative approach when recording provision for dissolutions, expected losses, and price variation in the period, amidst a challenging scenario of Covi-19 pandemic. Adjusted gross margin in 3Q20, excluding non-recurring items was 29.4%, higher than the margin of 2.3 p.p. recorded in 2Q20.

  3Q20 2Q20 Q/Q (%) 3Q19 Y/Y (%) 9M20 9M19 Y/Y (%)
Net Revenue 148,632 83,800 77.4% 89,212 66.6% 304,135 284,292 7.0%
Gross Profit 24,412 22,714 7.5% 38,104 (35.9%) 67,588 81,522 -17%
Gross Margin 16.4% 27.1% -10.7p.p. 42.7% -26.3p.p. 22.2% 28.7% -6.5p.p.
(-) Financial Costs (12,175) (6,857) 77.6% (7,147) 70.4% (25,307) (30,356) -17%
Adjusted Gross Profit ¹ 36,587 29,571 23.7% 45,251 (19.1%) 92,895 111,878 -17%
Adjusted Gross Profit Margin 24.6% 35.3% -10.7p.p. 50.7% -26.1p.p. 30.5% 39.4% -8.8p.p.

Table 11 – Gross Margin (R$ 000)

¹ Adjusted by capitalized interests.

 

Selling, General and Administrative Expenses (SG&A)

Selling, general and administrative expenses totaled R$23.5 million in 3Q20, 22.3% higher than in 2Q20, and 57.9% higher than in 3Q19.

General and administrative expenses came to R$19.5 million, 29.1% higher than the previous quarter, due to a provision for a bonus of R$3.0 million in the period. In 3Q20, recurring general and administrative expenses totaled R$12.1 million, 18% lower than the R$14.2 million recorded in 2Q20.

 

 
 

 

 

Table 12 – SG&A Expenses (R$ 000)

 

 

  3Q20 2Q20 Q/Q (%) 3Q19 Y/Y (%) 9M20 9M19 Y/Y (%)
Selling Expenses         (3,909)         (4,047) -3.4%         (2,170) 80.1%       (10,749)       (11,683) -8%
G&A Expenses       (19,543)       (15,133) 29.1%       (12,678) 54.1%       (51,136)       (31,918) 60%
Total SG&A Expenses       (23,452)       (19,180) 22.3%       (14,848) 57.9%       (61,885)       (43,601) 42%

 

Other Operating Income/Expenses totaled expenses of R$26.5 million. Out of this amount, R$21.3 million refers to the provision for litigation and settlements made by the Company, as part of its project to settle contingent liabilities.

 

Table 13 – Other Operating Income/Expenses (R$ 000)

 

  3Q20 2Q20 Q/Q (%) 3Q19 Y/Y (%) 9M20 9M19 Y/Y (%)
Litigation Expenses       (21,357)       (19,353) 10.4%                -    0.0%       (52,708)       (45,769) 15.2%
Others         (5,100)            (662) 670.4%             169 -3117.8%         (6,509)               70 -9398.6%
Total       (26,457)       (20,015) 32.2%             169 -15755.0%       (59,217)       (45,699) 29.6%

 

 

Adjusted EBITDA

Adjusted EBITDA came to R$7.9 million in 3Q20, 2.6% higher than the R$7.7 million reported in the previous quarter. Year-on-year, Adjusted EBITDA declined compared to R$31.1 million.

Table 14 – Adjusted EBITDA (R$ 000)

 

  3Q20 2Q20 Q/Q (%) 3Q19 Y/Y (%) 9M20 9M19 Y/Y (%)
Net Income (Loss) (56,493) (23,545) 139.9% (1,668) 3286.9% (105,500) (60,746) 73.7%
(+) Financial Results 28,049 2,354 1091.5% 21,548 30.2% 38,799 41,976 -7.6%
(+) Income Tax / Social Contribution 1,604 886 81.0% 508 215.7% 3,619 1,221 196.4%
(+) Depreciation and Amortization 1,936 1,882 2.9% 3,223 -39.9% 5,984 11,739 -49.0%
(+) Capitalized Interest 12,175 6,857 77.6% 7,147 70.4% 25,307 30,356 -16.6%
(+) Expenses w/ Stock Options Plans (6) 47 (112.7%) 174 -103.4% (362) (2,698) -86.6%
(+) Minority Shareholders (700) (112) 525.0% 119 -688.2% (799) 121 -760.3%
(+) Litigation Expenses 21,357 19,353 10.4% - 0.0% 52,708 45,769 15.2%
Adjusted EBITDA¹ 7,922 7,722 2.6% 31,051 -74.5% 19,756 67,738 -70.8%

 

¹ Adjusted by capitalized interests, with a stock option plan (non-cash) and minority shareholders.

Financial Result

Net financial result totaled (R$28.1) million in 3Q20 from (R$2.4) million in 2Q20, reflecting the volatility of certain securities in the period and the effect of swap operation contracted.

 

 
 

Net Result

Net result in 3Q20 came negative at R$56.5 million, compared to net losses of R$23.5 million and R$1.7 million recorded in 2Q20 and 3Q19, respectively.

 

Table 15 – Net Result (R$ 000)

  3Q20 2Q20 Q/Q (%) 3Q19 Y/Y (%) 9M20 9M19 Y/Y (%)
Net Revenue 148,632 83,800 77.4% 89,212 66.6% 304,135 284,292 7.0%
Gross Result 24,412 22,714 7.5% 38,104 -35.9% 67,588 81,522 -17.1%
Gross Margin 16.4% 27.1% -39.4% 42.7% -61.5% 22.2% 28.7% -22.5%
(-) Financial Costs 12,175 6,857 77.6% (7,147) -270.4% 25,307 (30,356) -183.4%
Recurring Adjusted Gross Result¹ 36,587 15,857 130.7% 45,251 -19.1% 92,895 111,878 -17.0%
Recurring Adjusted Gross Margin¹ 24.6% 18.9% 30.1% 50.7% -51.5% 30.5% 39.4% -22.4%
Adjusted EBITDA² 7,922 7,722 2.6% 31,051 -74.5% 19.756 21.969 -10.1%
Adjusted EBITDA Margin² 5.3% 9.2% -42.2% 34.8% -84.7% 6.5% 7.7% -15.9%
Adjusted Net Result³ (56,493) (23,545) 139.9% (1,668) 3286.9% (105,500) (60,746) 73.7%
( - ) Litigation Expenses (21,357) (19,353) 10.4% - 0.0% (52,708) (45,769) 15.2%
Net Result (ex-Litigation Expenses) (35,136) (4,192) 738.2% (1,668) 2006.5% (52,792) (14,977) 252.5%

1 Adjusted by capitalized interests.

2 Adjusted by capitalized interests, with a stock option plan (non-cash) and minority shareholders.

 

Revenue Backlog and Results

At the end of 3Q20, the balance of revenue backlog according to the PoC method totaled R$100.3 million, compared to R$109.6 million and R$166.1 million reported in the previous quarter and the same period last year, respectively. Margin to be recognized was 34.4%, in line with 2Q20.

 

 

Table 16 – Backlog Results (REF) (R$ 000)

 

  3Q20 2Q20 Q/Q (%) 3Q19 Y/Y (%)
Revenue Backlog 291,189 306,484 -5% 465,102 -37%
Backlog Costs (units sold) (190,878) (196,870) -3% (298,953) -36%
Backlog Results 100,311 109,614 -8% 166,149 -40%
Backlog Margin 34.4% 35.8% -132bps 35.7% -127bps

Notes: Backlog results net of PIS/COFINS taxes (3.65%) and excluding the impact of the PVA (Present Value Adjustment) method according to Law No. 11.638.

Backlog results comprise the projects restricted by a condition precedent.

 

 
 

 

BALANCE SHEET

Cash and Cash Equivalents and Marketable Securities

On September 30, 2020, cash and cash equivalents and marketable securities totaled R$630.7 million, compared to R$570.2 million in 2Q20, reflecting the inflow of funds from a capital increase of R$218.2 million and debt amortization in the period, so that to sustain a liquidity cushion and enable our growth resumption. The Company believes that disciplined cost control and the maintenance of a liquidity reserve are essential for the operation. This business vision and team’s readiness allowed the company to go through this period of uncertainty very consistently and smoothly.

 

Receivables

At the end of 3Q20, total accounts receivable came to R$933.2 million. Of this amount, R$630.9 million were already recognized in the balance sheet.

 

Table 17 – Total Receivables (R$ 000)

  3Q20 2Q20 Q/Q(%) 3Q19 Y/Y (%)
Receivables from developments - backlog 302,220 318,095 -5% 482,721 -37%
Receivables PoC - ST (on balance sheet) 544,147 445,811 22% 409,212 33%
Receivables PoC - LT (on balance sheet) 86,843 93,529 -7% 119,765 -27%
Total 933,210 857,435 9% 1,011,698 -8%

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.

 

Table 18 – Receivables Schedule (R$ 000)

  Total 2020 2021 2022 2023 2024 – Onwards
Receivables Backlog 302,222 106,367 105,594 76,631 3,690 9,940
Receivables PoC 630,990 260,387 360,332 5,334 1,310 3,627
Total 933,212 366,754 465,926 81,965 5,000 13,567

 

Cash Generation

Table 19 – Cash Generation (R$ 000)

 

  1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20
Cash 1 63,068 182,817 394,216 414,330 363,337 570,156 630,660
Change in Cash Available (1) (74,092) 119,749 211,399 20,114 (50,993) 206,819 60,504
Total Debt 790,172 770,715 750,826 730,678 710,169 673,649 745,499
Change in Total Debt (2) (99,241) (19,457) (19,889) (20,148) (20,509) (36,520) 71,850
Capital Increase (3) - 132,265 206,927 65,768 - 259,729 218,171
Cash Generation in the Period (1) - (2) - (3) 25,149 6,941 24,361 (25,506) (30,484) (16,390) (229,517)
Final Accumulated Cash Generation ² 25,149 32,090 56,451 30,945 461 (15,929) (245,446)
 
 

¹ Cash and cash equivalents and marketable securities.

² It considers LTM.

Liquidity

Advancing the work of strengthening the Company’s balance sheet, the Net Debt/Shareholders’ Equity ratio reached 7.6% at the end of 3Q20, compared to 8.8% reported in 2Q20, due to higher cash deriving from capital increase. Within one year, we went from a Net Debt/Shareholders’ Equity ratio of 45.6% in 3Q19 to current 7.6% in 3Q20. Net debt increased to R$123.5 million from R$114.8 million reported in the previous quarter.

Table 20 – Debt and Investor Obligation (R$ 000)

  3Q20 2Q20 Q/Q(%) 3Q19 Y/Y (%)
Housing Financial System - SFH 259,432 266,210 -2.5% 267,923 -3.2%
Real Estate Financial System - SFI 126,340 146,613 -13.8% 175,565 -28.0%
Debentures (Projects) 172,578 112,338 53.6% 194,625 -11.3%
Bank Credit Notes (Projects) 59,696 40,219 48.4% 37,794 58.0%
Subtotal Project Debt (A) 618,046 565,380 9.3% 675,907 -8.6%
Debentures (Working Capital) 70,232 33,529 109.5% 49,646 41.5%
Bank Credit Notes (Working Capital) 40,922 62,799 -34.8% 14,899 174.7%
Other operations (Working Capital) 16,299 11,941 36.5% 10,374 57.1%
Subtotal Working Capital Debt (B) 127,453 108,269 17.7% 74,919 70.1%
Total Debt (A)+(B)= (C) 745,499 673,649 10.7% 750,826 -0.7%
Cash and Cash Equivalents1 (D) 630,660 570,156 10.6% 394,216 60.0%
Net Debt (C) - (D) = (E) 114,839 103,493 11.0% 356,610 -67.8%
Shareholders’ Equity + Minority (F) 1,513,890 1,177,187 34.3% 782,074 93.6%
(Net Debt) / (SE) (E)/(F)=(G) 7.6% 8.8% -121bps 45.6% -3801bps
(Net Debt - Proj. Fin.) / (SE) ((E)-(A))/(F)=(H) (33.2%) (39.2%) 600bps (40.8%) 759bps

¹Cash and cash equivalents and marketable securities.

 

The Company ended 3Q20 with R$332.6 million indebtedness falling due this year, accounting for 44.6% of total debt. Note that approximately 82.9% of the Company’s debt is linked to projects, therefore, maturities are connected with the delivery of projects to still occur in 2020, and we already delivered or obtained the occupancy permit for 9 projects, or 94% of PSV estimated for this year’s deliveries. On September 30, 2020, the consolidated average cost of debt was 9,5% p.a.

 

 

 

 
 

 

 

Table 21– Debt Maturity (R$ 000)

  Average cost (a.a.) Total Until Dec/20 Until Dec/21 Until Dec/22 Until Dec/23 After Dec/23
Housing Financial System - SFH TR + 7,00% a 14,20% 259,432 187,455 - - - 71,977
Real Estate Financial System - SFI Pre +13,66% / 143% CDI 126,340 519 77,298 7,800 7,800 32,923
Debentures (Projects) CDI + 3% / CDI + 3,75% / CDI + 5,00% / CDI + 6,00% 172,578 73,669 8,361 465 - 90,083
Bank Credit Notes (Projects) CDI + 3,50% / Pre + 16,77% 59,696 12,292 23,027 19,660 4,717  -
Subtotal Project Debt (A)   618,046 273,935 108,686 27,925 12,517 194,983
Debentures (Working Capital) IPCA + 7,8% 70,232 42,279 11,426 10,670 5,857  -
Bank Credit Notes (Working Capital) CDI + 3,7%/ 4,25% 40,922 62 40,860 - -  -
Other operations (Working Capital) Pre + 11,36% 16,299 16,299 - - -  -
Subtotal Working Capital Debt (B)   127,453 58,640 52,286 10,670 5,857  -
Total Debt (A)+(B)= (C)   745,499 332,575 160,972 38,595 18,374 194,983
Total maturity per period %                   -   44.6% 21.6% 5.2% 2.5%
Project debt maturity as % of total debt (B)/ (E)                   - - 82.4% 67.5% 72.4% 68.1%
Working capital maturity as % of total debt ((A)+(C))/ (E) 44.6% 44.6% 17.6% 32.5% 27.6% 31.9%

 

 

 

 
 

 

Consolidated Income Statement

 

  3Q20 2Q20 Q/Q (%) 3Q19 Y/Y (%) 9M20 9M19 Y/Y (%)
Net Revenue 148,632 83,800 77.4% 89,212 66.6% 304,135 284,292 7.0%
Operational Costs (124,220) (61,086) 103.4% (51,108) 143.1% (236,547) (202,770) 16.7%
Gross Result 24,412 22,714 7.5% 38,104 (35.9%) 67,588 81,522 -17.1%
Gross Margin 16,4% 27,1% -10.7p.p. 42,7% -26.3p.p. 22,2% 28,7% -244.9%
Operational Expenses (51,952) (43,131) 20.5% (17,597) 195.2% (131,469) (98,950) -277.0%
Selling Expenses (3,909) (4,047) (3.4%) (2,170) 80.1% (10,749) (11,683) -8.0%
General and Administrative Expenses (19,543) (15,133) 29.1% (12,678) 54.1% (51,136) (31,918) 60.2%
Other Operating Revenue/Expenses (26,457) (20,015) 32.2% 169 (15755.0%) (59,217) (45,699) 29.6%
Depreciation and Amortization (1,936) (1,882) 2.9% (3,223) (39.9%) (5,984) (11,739) -49.0%
Equity Income (107) (2,054) (94.8%) 305 (135.1%) (4,383) 2,089 -309.8%
Operational Result (27,540) (20,417) 34.9% 20,507 (234.3%) (63,881) (17,428) -294.1%
Net Financial Result (28,049) (2,354) 1091.5% (21,548) 30.2% (38,799) (41,976) -252.9%
Financial Income (6,512) 21,091 (130.9%) 3,229 (301.7%) 22,578 11,963 88.7%
Financial Expenses (21,537) (23,445) (8.1%) (24,777) (13.1%) (61,377) (53,939) 13.8%
Net Income Before Taxes on Income (55,589) (22,771) 144.1% (1,041) 5240.0% (102,680) (59,404) -191.6%
Deferred Taxes - - - - - - - -
Income Tax and Social Contribution (1,604) (886) 81.0% (508) 215.7% (3,619) (1,221) 196.4%
Net Income After Taxes on Income (57,193) (23,657) 141.8% (1,549) 3592.3% (106,299) (60,625) 75.3%
Minority Shareholders (700) (112) 525.0% 119 (688.2%) (799) 121 -760.3%
Net Income (56,493) (23,545) 139.9% (1,668) 3286.9% (105,500) (60,746) 73.7%

 

 

 

 
 

Consolidated Balance Sheet

  3Q20 2Q20 Q/Q (%) 3Q19 Y/Y (%)
Current assets          
Cash and Cash Equivalents              6,705           19,512 -66%           12,819 -48%
Securities          623,955         550,644 13%         381,397 64%
Receivables from clients          544,147         445,811 22%         409,212 33%
Properties for sales       1,317,144         855,315 54%         820,892 60%
Other account receivable          148,435         178,058 -17%         119,897 24%
Prepaid expenses and other              1,045             1,131 -8%             2,159 -52%
Land for sale              7,014             7,014 0%           38,681 -82%
Subtotal       2,648,445      2,057,485 29%      1,785,057 48%
           
Non current assets          
Receivables from clients            86,843           93,529 -7%         119,765 -27%
Properties for sales          191,985         293,573 -35%         190,953 1%
Other account receivable          224,683         221,739 1%         145,232 55%
Subtotal          503,511         608,841 -17%         455,950 10%
Intangible, property and equipment            21,297           17,444 22%           24,465 -13%
Investments          272,497         138,566 97%         300,726 -9%
           
Total Asset       3,445,750      2,822,336 22%      2,566,198 34%
           
Current liabilities          
Loans and financing          349,348         283,923 23%         364,766 -4%
Debentures          127,147         119,367 7%         179,423 -29%
Obligation for purchase of land          259,336         111,790 132%         105,823 145%
Material and service suppliers          131,054         131,941 -1%         129,825 1%
Taxes and contributions            82,979           83,689 -1%           64,886 28%
Provision for contingencies          193,357         184,084 5%         179,681 8%
Other liabilities          297,086         253,603 17%         207,540 43%
Subtotal       1,440,307      1,168,397 23%      1,231,944 17%
           
Non current liabilities          
Loans and financing          153,340         243,859 -37%         141,789 8%
Debentures          115,663           26,500 336%           64,848 78%
Obligation for purchase of land            87,942           92,998 -5%         147,147 -40%
Deferred taxes            12,114           12,114 0%           49,372 -75%
Provision for contingencies            86,250           78,809 9%         110,564 -22%
Other liabilities            36,244           22,472 61%           38,460 -6%
Subtotal          491,553         476,752 3%         552,180 -11%
           
Shareholders’ Equity          
Shareholders’ equity       1,509,624      1,175,852 28%         780,159 94%
Minority Interest              4,266             1,335 220%             1,915 123%
Subtotal       1,513,890      1,177,187 29%         782,074 94%
Total Liabilities and Shareholders’ Equity       3,445,750      2,822,336 22%      2,566,198 34%
 
 

Balance Sheet by brand - Consolidated 3Q20

  Gafisa Upcon Consolidated
Current assets      
Cash and Cash Equivalents 5,190 1,515 6,705
Securities 623,955 - 623,955
Receivables from clients 512,367 31,780 544,147
Properties for sales 902,215 414,929 1,317,144
Other account receivable 210,381 9,656 148,435
Prepaid expenses and other 1,045 - 1,045
Land for sale 7,014 - 7,014
Subtotal 2,262,167 457,880 2,648,445
       
Non current assets      
Receivables from clients 83,588 3,255 86,843
Properties for sales 191,985 - 191,985
Other account receivable 223,848 835 224,683
Subtotal 499,421 4,090 503,511
Intangible, property and equipment 19,877 1,420 21,297
Investments 270,123 2,374 272,497
       
Total Asset 3,051,588 465,764 3,445,750
       
Current liabilities      
Loans and financing 312,371 108,579 349,348
Debentures 127,147 - 127,147
Obligation for purchase of land 128,280 131,056 259,336
Material and service suppliers 128,777 2,277 131,054
Taxes and contributions 77,662 5,317 82,979
Provision for contingencies 193,357 - 193,357
Other liabilities 280,023 17,063 297,086
Subtotal 1,247,617 264,292 1,440,307
       
Non current liabilities      
Loans and financing 128,881 24,459 153,340
Debentures 115,663 - 115,663
Obligation for purchase of land 61,404 26,538 87,942
Deferred taxes 12,114 - 12,114
Provision for contingencies 77,226 9,024 86,250
Other liabilities 20,686 15,558 36,244
Subtotal 415,974 75,579 491,553
       
Shareholders’ Equity      
Shareholders’ equity 1,387,362 122,262 1,509,624
Minority Interest 635 3,631 4,266
Subtotal 1,387,997 125,893 1,513,890
Total Liabilities and Shareholders’ Equity 3,051,588 465,764 3,445,750
 
 

 

Consolidated Cash Flow

  3T20 3T19 9M20 9M19
Net Income (Loss) before taxes (55,589) (1,041) (102,681) (59,404)
Expenses/revenues that do not impact working capital 31,713 1,522 108,686 11,897
Depreciation and amortization 1,936 3,223 5,984 11,739
Impairment - (2) (1,044) (28,221)
Expenses with stock option plans (5) 174 (362) (2,698)
Unrealized interest and fees, net (4) 1,216 2,130 4,302
Equity income 107 (305) 4,383 (2,089)
Warranty provision 1,998 (2,136) 1,102 (3,918)
Provision for contingencies 21,358 - 52,708 45,885
Profit sharing provision 3,107 - 6,194 500
Provision (reversal) for doubtful accounts 2,833 (5,342) 34,197 (17,116)
Provision for fine due to construction work delay 383 1,935 3,394 754
Quotas assignment   2,759   2,759
Receivables (62,895) 42,139 (83,182) 127,949
Properties for sale 54,688 14,765 (27,289) 145,244
Other receivables (22,053) (11,886) (88,096) (35,981)
Prepaid expenses 86 159 815 509
Obligations for purchase of land (15,104) (1,590) (32,744) (56,461)
Taxes and contribution (6,027) 4,528 7,794 7,610
Suppliers (2,960) (39,327) 33,726 (2,189)
Payroll, charges and bônus provision (2,834) (546) (7,721) (2,366)
Other accounts payable (110,900) 62,090 (71,268) (93,534)
Transactions with related parties 25,623 7,765 47,135 26,045
Paid taxes (1,604) (508) (3,619) (1,221)
Cash used in operating activities (167,856) 78,070 (218,444) 68,098
Acquisition of properties and equipment (4,369) 1,656 (4,618) (4,361)
Redemption of securities, collaterals, and credits 151,192 2,311 287,594 50,445
Investment in marketable securities and restricted credits (226,018) (209,548) (511,169) (326,986)
Equity Securities - (2,717) - -
Cash used in investing activities (79,195) (208,298) (228,193) (280,902)
Increase of loans and financing 192,447 37,885 310,900 89,672
Amortization of loans and financing (182,030) (58,990) (359,646) (232,561)
Loan operations (3,464) (759) (9,013) (10,117)
Sale of treasury shares - - - 148
Proceeds from sale of treasury shares 7,605 (53,389) 19,251 6,984
Capital increase 218,171 - 477,900 132,266
Subscription and payment of common shares - 206,927 - 206,927
Cash acquired from Upcon 1,515 - 1,515 -
Cash Flow from Financing Activities 234,244 131,674 440,907 193,319
Increase (Decrease) in cash and cash equivalents (12,807) 1,446 (5,730) (19,485)
Beginning of the period 19,512 11,373 12,435 32,304
End of the period 6,705 12,819 6,705 12,819

 

 

 

 
 

 

 

This release contains forward-looking statements about business prospects, estimates for operating and financial results, and Gafisa’s growth prospects. Readers can identify many of these statements when reading words such as “estimates,” “believes,” “expects,” and “will,” as well as similar words or their respective negatives. Although management believes the expectations conveyed in such statements to be reasonable, it is unable to guarantee that such expectations will come to fruition, and they should not be deemed as projections. By their nature, forward-looking statements require us to make assumptions and, as such, are subject to risks and uncertainties. They are mere expectations and therefore are based exclusively on what management expects 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 forward-looking statements included in this release are based on the assumption that our plans and operations will not be affected by such risks, but if our plans and operations happen to be affected by these risks, the forward-looking statements might become inaccurate. We do not commit to revising these forward-looking statements unless it is explicitly required by the applicable securities regulation.  

 

 
 

 

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(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 Presidente Juscelino Kubitschek, 1.830, conjunto comercial 32, 3o andar, Bloco 2, in the city and state of São Paulo, Brazil, and began 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 enters into real estate development projects with third parties through special purpose entities (SPE) or through the formation of consortia and condominiums. Subsidiaries significantly share the 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.

 

The Company has stocks traded on B3 S.A. – Brasil, Bolsa, Balcão (former BM&FBovespa), reporting its information to the Brazilian Securities and Exchange Commission (CVM) and the U.S. Securities and Exchange Commission (SEC). The ADSs were delisted on the NYSE on December 17, 2018, and are currently traded Over the Counter (OTC).

 

 

1.1 Coronavirus – COVID-19

 

In the period ended September 30, 2020, there has not been any significant impact from the outbreak of Coronavirus on the Company’s operations. A Crisis Management Committee has been created that holds daily meetings and total availability for discussing and taking important disease prevention measures.

Awareness campaigns to promote actions that mitigate transmission (frequent hygiene, distancing, meeting through virtual platforms, exclusive service channel, among others) have been created. We have implemented a series of educative and preventative measures targeted at our construction site employees, reducing the staff considered to be in the risk group. The sales activities have focused on digital interactions with prospective customers.

The Company will keep following the implementation of the necessary actions with the Government Authorities, Ministry of Health, and trade associations.

Until the disclosure date of this quarterly information, the Company has not noted a significant increase in customer default and contract cancellation or reduction in sales volume. Moreover, the construction of ventures has been according to the original schedule.

Also, due to the Covid-19 pandemic, the Company has postponed the launches planned for the second quarter to the second half of this year.

 

The Company has opted for deferring the payment of the federal taxes related to March, April and May 2020, collected later on, pursuant to Ordinances 139, 150 and 245. Under the terms of Provisional Measure 927, of March 22, 2020, the Company has also opted for deferring the FGTS deposits by employers, related to March, April and May 2020, with collection in six monthly installments from July 2020. Pursuant to Provisional Measure 936, of March 31, 2020, converted into Law 14,020 of 2020, the Company has reduced salaries by 25%, with proportional reduction in working hours, of a certain group of employees over a 90-day period. Additionally, there has been a voluntary 50% reduction in the salary of the Board of Director’s members over a 180-day period.

Thus far, there is a high volatility in the Company’s stock price traded on the stock exchange as a result of the global concern for this pandemic and its developments.

Management understands that at present, the projections used in the analysis of realization of its assets shall not suffer significant changes in the face of this event, and keeps the adopted assumptions.

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

2. Presentation of quarterly information and summary of significant accounting policies

 

2.1. Basis of presentation and preparation of individual and consolidated quarterly information

 

On November 16, 2020, the Company’s Board of Directors has approved the individual and consolidated quarterly financial information of the Company and authorized its disclosure.

 

The individual Quarterly Financial Information (ITR) has been prepared in accordance with the Accounting Pronouncements Committee (CPC) Technical Pronouncement 21 (R1) – Interim Financial Reporting, and the consolidated Quarterly Financial Information (ITR) has been prepared in accordance with such pronouncement and the International Accounting Standard (IAS) 34 – Interim Financial Reporting, applicable to the real estate development entities in Brazil, registered with the Brazilian Securities and Exchange Commission (CVM). The aspects related to the transfer of control in the sale of real estate units follow the understanding of the company’s management, aligned with that issued by the CVM in the Circular Letter /CVM/SNC/SEP 02/18 on the application of the Technical Pronouncement NBC TG 47 (IFRS 15), consistently with the rules issued by the CVM, applicable to the preparation of the ITR.

 

The quarterly financial information has been prepared using the same accounting practices, judgments, estimates and assumptions adopted in the presentation and preparation of the financial statements for the year ended December 31, 2019. Therefore, the corresponding quarterly financial information shall be read together with the financial statements as of December 31, 2019.

 

The individual quarterly financial information of the Company is not considered in compliance with the International Financial Reporting Standards (IFRS), once it considers the capitalization of interest on qualifying assets of investees in the individual quarterly financial information of the Company.

 

The quarterly financial information has been prepared on a going concern basis. Management periodically assesses the Company’s ability to continue as going concern when preparing the quarterly financial information.

 

All amounts reported in the accompanying quarterly financial information are in thousands of reais, except as otherwise stated.

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 2.1 to the individual and consolidated financial statements as of December 31, 2019.

 

All material information characteristic of the quarterly financial information, and only it, is being evidenced, and corresponds to those used by Management in its administration.

 

2.1.1. Consolidated quarterly financial information

 

The accounting practices were uniformly adopted in all subsidiaries included in the consolidated quarterly financial information, and the fiscal year of these companies is the same of the Company. See further details in Note 9.

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 2.1.1 to the individual and consolidated financial statements as of December 31, 2019.

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

 

2.1.2. Functional and presentation currency

 

The functional and presentation currency of the Company is the Brazilian real, mainly because of its revenues and the incurred costs of operations.

 

3. New standards, changes and interpretation of standards issued and adopted from 2020, and not yet adopted

 

 

The explanations related to this note were not subject to material changes in relation to the disclosures in Note 3 to the individual and consolidated financial statements as of December 31, 2019.

 

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 quarterly financial information.

 

4. Cash and cash equivalents and short-term investments

 

4.1. Cash and cash equivalents

 

 

  Company Consolidated
  09/30/2020 12/31/2019 09/30/2020 12/31/2019
         
Cash and banks 43 810 6,705 12,435

Total cash and cash equivalents

(Note 20.i.d, 20.ii.a and 20.iii)

43 810 6,705 12,435

 

4.2. Short-term investments

 

  Company Consolidated  
  09/30/2020 12/31/2019 09/30/2020 12/31/2019
         
Fixed-income funds (a) 135,445 125,961     135,444 125,962
Government bonds (LFT) (a) 90,598 231,725       90,597 231,725
Real estate investment fund (a) 221,451 -     221,451 -
Bank certificates of deposit (b) 143,788 10,460 147,378 10,523
Restricted credits (c) 27,743 32,972 29,085 33,560
Securities purchased under resale agreements - 125 - 125
         

Total short-term investments

(Note 20.i.d, 20.ii.a and 20.iii)

619,025 401,243 623,955 401,895
           

 

(a) Exclusive and open-end funds whose purpose is to invest in financial assets and/or fixed-income investment modalities that follow the fluctuations in interest rates in the interbank deposit market (CDI), by investing its funds mostly in investment fund shares and/or investment funds comprising investment fund shares. The Company entered into a swap contract to mitigate the risk of its exposure to index and interest rate volatility (Note 20(i)(b)).

 

(b) As of September 30 and December 31, 2019, Certificates of Bank Deposit (CDBs) include interest earned through the statement of financial position’s reporting date, ranging from 93.5% to 110% of Interbank Deposit Certificates (CDI).

 

(c) Restricted credits are represented by funds pledged to transactions with financial institutions.

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

5. Trade accounts receivable

 

  Company Consolidated
  09/30/2020 12/31/2019 09/30/2020 12/31/2019
         
Real estate development and sales 434,567 492,205 687,561 605,067
(-) Allowance for expected credit losses (11,346) (12,065) (14,032) (16,265)
( - ) Allowance for cancelled contracts (a) (43,547) (27,481) (73,912) (37,485)
( - ) Present value adjustment (2,220) (7,133) (5,375) (8,518)
Services and construction and other receivables 36,591 14,491 36,748 14,639
         

Total trade accounts receivable

(Note 20.i.d and 20.ii.a)

414,045 460,017 630,990 557,438
         
Current 340,903 361,649 544,147 445,303
Non-current 73,142 98,368 86,843 112,135
         

(a)      The increase in the allowance for cancelled contracts was mainly caused by the re-evaluation of the current contracts in relation to the uncertainty over cash inflows due to the impact of the Covid-19 pandemic on the Company’s portfolio of receivables.

 

The current and non-current portions have the following maturities:

 

  Company Consolidated
Maturity 09/30/2020 12/31/2019 09/30/2020 12/31/2019
         
Past due:        
Up to 90 days (a)       75,846 19,785       77,378 32,306
From 91 to 180 days       44,609 8,294       46,647 11,424
Over 180 days         98,247 90,216     137,154 115,619
      218,702 118,295     261,179 159,349
         
Falling due:        
2020       28,272 286,456       84,669 343,972
2021     155,615 83,082     298,155 97,213
2022       17.804 5,276       28,876 5,368
2023       13,444 3,180       13,627 3,247
2024 onwards       37,321 10,407       37,803 10,557
      252,456 388,401     463,130 460,357
         
( - ) Present value adjustment        (2,220) (7,133)        (5,375) (8,518)
( - ) Allowance for expected credit losses and cancelled contracts      (54,893) (39,546)      (87,944) (53,750)
         
  414,045 460,017 630,990 557,438

(a)      The increase in the period is due to the relevance of the delivery of six ventures in the period ended September 30, 2020. As reflection of the Covid-19 pandemic, the time required by banks and registry offices to process information for transferring the ownership of delivered units increased.

 

During the period ended September 30, 2020, the changes in the allowances for expected credit losses and cancelled contracts are summarized as follows:

 

   
  Company Consolidated
     
Balance as of December 31, 2019 (39,546) (53,750)
Additions (Note 22) (24,445) (69,893)
Write-offs / Reversals (Note 22) 9,098 35,742
Acquired balance Upcon - (43)
Balance as of September 30, 2020 (54,893) (87,944)

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 5 to the financial statements as of December 31, 2019. 

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

6. Properties for sale

 

  Company Consolidated
  09/30/2020 12/31/2019 09/30/2020 12/31/2019
         
Land 388,370 423,074 933,588 573,715
( - ) Provision for loss on realization of land (122,621) (122,621) (122,621) (122,621)
( - ) Present value adjustment (1,830) (5,200) (1,830) (5,198)
Properties under construction (Note 29) 162,075 190,383 386,489 355,980
Completed units 240,238 264,381 304,234 283,991
( - ) Provision for loss on realization of properties under construction and completed units (63,193) (65,627) (64,542) (67,099)
Allowance for cancelled contracts 41,592 36,078 73,811 47,099
         
Total properties for sale 644,631 720,468 1,509,129 1,065,867
         
Current         528,437 490,419   1,317,144 786,660
Non-current         116,194 230,049      191,985 279,207

 

In the period ended September 30, 2020, the change in the provision for loss on realization of properties for sale is summarized below:

 

  Company Consolidated
Balance as of December 31, 2019 (188,248) (189,720)
Write-offs (a) 2,434 2,557
     
Balance as of September 30, 2020 (185,814) (187,163)

(a)    The amount of write-offs refers to the respective units sold in the period.

 

The amount of properties for sale offered as guarantee for financial liabilities is described in Note 12.

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 6 to the financial statements as of December 31, 2019.

 

7. Other assets

 

  Company Consolidated
  09/30/2020 12/31/2019 09/30/2020 12/31/2019
         
Advances to suppliers           17,574 20,142        20,226 20,702
Recoverable taxes (IRRF, PIS, COFINS, among other)           8,320 11,733        14,163 17,285
Arbitration decision amount 5,777 5,777 66,391 66,391
Credits with the controlling shareholders of Calçada (a) 20,000 - 20,000 -
Judicial deposits (Note 16.a) 132,249 122,238 140,661 129,933
Other assets - - 9,630 -
Total other assets 183,920 159,890 271,071 234,311
         
Current 65,760 52,455 146,125 67,395
Non-current 118,160 107,435 124,946 166,916

(a)     Amount related to the advance made related to the acquisition of four ventures of Calçada Empreendimentos Imobiliários. The transaction was approved by the Administrative Council for Economic Defense (CADE) on November 3 (Note 31 (ii)).

 

 

 

 

8. Non-current assets 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 in effect. Likewise, it devised a specific plan for the sale of such land. The carrying amount 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 as of December 31, 2019 12,486 (8,777) 3,709   15,792 (8,778) 7,014
Additions - - -   - - -
Reversal / write-offs - - -   - - -
Balance as of September 30, 2020 12,486 (8,777) 3,709   15,792 (8,778) 7,014

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

9.       Investments in ownership interests

 

(i) Information on subsidiaries, associates and jointly-controlled investees

 

                      Company Consolidated
    Interest in capital - % Total assets Total liabilities Equity and advance for future capital increase Profit (loss) for the period Investments Income from equity method investments Investments Income from equity method investments
Subsidiaries:   09/30/2020 12/31/2019 09/30/2020 09/30/2020 09/30/2020 12/31/2019   09/30/2020 09/30/2019 09/30/2020 12/31/2019 09/30/2020 09/30/2019 09/30/2020 12/31/2019 09/30/2020 09/30/2019
                                     
UPCON S.A. (f) 100% 100% 465,763 342,931 122,832 -   - - 122,832 - - - - - - -
Novum Directiones SPE Ltda. - 100% 100% 177,253 98,294 78,959 44,120   (1,404) - 78,959 44,120 (1,404) - - - - -
Gafisa SPE-104 Emp. Imob. Ltda. - 100% 100% 93,723 25,130 68,594 55,422   12,951 4,670 68,594 55,422 13,172 4,670 - - - -
Gafisa SPE-89 Emp. Imob. Ltda. - 100% 100% 109,157 58,143 51,014 51,015   (1) (13) 51,014 51,015 (1) (13) - - - -
Gafisa SPE-81 Emp. Imob. Ltda. - 100% 100% 48,799 824 47,975 47,964   11 1,819 47,975 47,964 11 1,819 - - - -
GDU Loteamentos Ltda. - 100% 100% 43,206 19 43,187 43,206   (19) - 43,187 43,206 (19) - - - - -
Gafisa SPE- 132 Emp. Imob. Ltda. - 100% 100% 39,179 8,985 30,193 30,193   - - 30,193 30,193 - - - - - -
Nuove Direzioni SPE Ltda. - 100% 100% 41,364 11,202 30,162 30,887   (725) - 30,162 30,887 (725) - - - - -
Gafisa SPE-137 Emp. Imob. Ltda. - 100% 100% 25,608 42 25,567 25,567   - - 25,567 25,567 - - - - - -
Edsp 88 Participações S.A. - 100% 100% 29,474 12,682 16,792 16,724   68 175 16,792 16,724 68 175 - - - -
Gafisa SPE-111 Emp. Imob. Ltda. - 100% 100% 18,139 3,293 14,846 14,848   (2) 508 14,846 14,848 (2) 508 - - - -
Manhattan Square Em. Im.Res.02 SPE Ltd. - 100% 100% 15,960 1,238 14,722 14,722   (1) (809) 14,722 14,722 (1) (809) - - - -
Gafisa SPE 33 Emp. Imob. Ltda. - 100% 100% 196,161 182,632 13,530 13,227   302 138 13,530 13,227 302 138 - - - -
Maraville Gafisa SPE Emp. Imob. Ltda. - 100% 100% 14,553 1,050 13,503 13,257   246 1,504 13,503 13,257 246 1,504 - - - -
Gafisa SPE-134 Emp. Imob. Ltda. - 100% 100% 13,481 1,815 11,667 11,630   36 (129) 11,667 11,630 36 (129) - - - -
Gafisa SPE-78 Emp. Imob. Ltda.   100% 100% 8,685 2,730 5,955 6,479   (525) 1,215 5,955 6,479 (525) 1,215 - - - -
OCPC01 adjustment - capitalized interest (a)     - - - -   - - 20,307 21,923 - (2) - - - -
Other (*)       60,671 27,125 33,543 112,957   (2,468) (5,719) 32,927 71,998 (7,621) (4,929) - - - -
Subtotal Subsidiaries       1,401,176 778,135 623,041 532,220   8,469 3,359 642,732 513,182 3,537 4,147 - - - -
                                     
Jointly-controlled investees:                                    
Gafisa e Ivo Rizzo SPE-47 Emp. Imob. Ltda. - 80% 80% 34,093 1,746 32,346 32,347   1 6 25,878 25,877 - 5 25,878 25,877 - 5
Sitio Jatiuca Emp. Imob. SPE Ltda - 50% 50% 35,210 4,658 30,552 29,636   916 905 15,276 14,818 458 452 15,276 14,818 458 452
Varandas Grand Park Emp. Imob. SPE Ltda. (b) 50% 50% 34,004 5,238 28,767 28,773   165 1,526 14,383 14,387 (3) 1,309 14,383 14,387 (3) 1,309
Parque Arvores Empr. Imob. Ltda. (b) 50% 50% 28,876 3,157 25,719 24,616   1,524 2,411 12,860 12,308 552 1,054 12,860 12,308 552 1,054
Atins Emp. Imob. Ltda. - 50% 50% 25,289 1,333 23,955 20,813   3,142 1,823 11,978 10,406 1,571 911 11,978 10,406 1,571 911
Gafisa SPE-116 Emp. Imob. Ltda. - 50% 50% 25,133 4,273 20,860 25,111   (912) 2,749 10,430 12,555 (456) 1,375 10,430 12,555 (456) 1,375
FIT 13 SPE Emp. Imob. Ltda. - 50% 50% 21,501 1,798 19,703 19,779   (76) 103 9,851 9,889 (38) 51 9,851 9,889 (38) 51
Performance Gafisa Gen. Severiano Ltda - 50% 50% 11,658 28 11,631 11,631   - 166 5,815 5,816 - 83 5,815 5,816 - 83
Other (*) -     68,628 28,474 40,153 38,751   374 (3,220) 20,386 19,850 (3,527) (1,832) 32,544 29,122 (3,577) (1,587)
Subtotal jointly-controlled investees       284,392 50,705 233,686 231,457   5,134 6,469 126,857 125,906 (1,443) 3,408 139,015 135,178 (1,493) 3,653
                                     
Associates:                                    
Alphaville Urbanismo S.A. - - - - - - (1,479,312)   - (603,985) - - - - - - - -
Citta Ville SPE Emp. Imob. Ltda. - 50% 50% 5,512 1,135 4,377 4,272   105 1,622 2,188 2,136 53 811 2,188 2,136 53 811
Gafisa Tiner Campo Belo I Emp. Imob. Ltda - 45% 45% 1,142 25 1,117 1,189   (72) (6) 503 535 (32) (1) 503 535 (32) (3)
Other (*) -     (1) - (1) (1)   1 - - - (1) - 728 953 - -
Indirect jointly-controlled investees Gafisa       6,653 1,160 5,493 (1,473,852)   34 (602,369) 2,691 2,671 20 810 3,419 3,624 21 808
                                     
Goodwill arising from acquisition of subsidiary (c) -                   130,063 - - - 130,063 - - -
Goodwill based on inventory surplus (d) -                   39,886 39,886 - - - - - -
                                     
Total investments                     942,229 681,645 2,114 8,365 272,497 138,802 (1,472) 4,461
(*) Includes companies with investment balances below R$ 5,000.                            
                                     
                                     

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

9.       Investments in ownership interests--Continued

 

(i) Information on subsidiaries, associates 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 period Investments Income from equity method investments Investments Income from equity method investments
Provision for net capital deficiency (e): 09/30/2020 12/31/2019 09/30/2020 09/30/2020 09/30/2020 12/31/2019   09/30/2020 09/30/2019 09/30/2020 12/31/2019 09/30/2020 09/30/2019 09/30/2020 12/31/2019 09/30/2020 09/30/2019
                                   
Manhattan Square Emp. Imob. Res. 01 SPE Ltda 50% 50% 42,160 55,638 (13,477) (6,791)   (6,686) - (8,086) (4,075) (4,011) - (8,086) (4,075) (4,011) -
Gafisa SPE 113 Em. Imob. Ltda. 60% 60% 2,542 15,384 (12,841) (6,569)   (58) (230) (6,421) (3,284) (3,133) (1,130) (6,421) (3,284) (3,133) (1,130)
Manhattan Square Emp.Imob. Com. 01 SPE Ltda 50% 50% 3,254 9,800 (6,546) (6,558)   (4) (250) (3,273) (3,279) 4 (2,133) (3,273) (3,279) 4 (2,133)
Other (*)     424,021 435,533 (11,513) (4,483)   (8,306) (182) (11,183) (4,156) 1,366 (114) (328) (325) 4,229 891
Total provision for net capital deficiency     471,977 516,355 (44,377) (24,401) - (15,054) (662) (28,963) (14,794) (5,774) (3,377) (18,108) (10,963) (2,911) (2,372)
                                   
Total income from equity method investments                       (3,660) 4,986     (4,383) 2,089

(*) Includes companies with investment balances below (R$ 5,000).

(a) Financial charges of the Company not recorded in the profit or loss of subsidiaries, as required by paragraph 6 of OCPC01.

(b)    The Company recorded expense of R$386 in Income from equity method investments for the period ended September 30, 2020 related to the recognition, by jointly-controlled entities, of prior year adjustments, in accordance with the ICPC09 (R2) - Individual, Separate and Consolidated Financial Statements and the Equity Method of Accounting.

(c) Recognition of goodwill arising from the acquisition of the totality of UPCON S.A.’s shares. The Company commissioned a study from a company specialized in determining Purchase Price Allocation (PPA) for allocation of goodwill over a period of up to one year, according to CPC 15(R1) - Business Combinations.
(d) Amount related to the goodwill arising from purchase of the control of SPE GDU Loteamentos Ltda. granted on December 27, 2019 by Alphavile Urbanismo for the urban development business with acquired assets.
(e) The provision for net capital deficiency is recorded in the line item “Other payables” (Note 15).
(f) In view of the completion of the transaction of acquisition of the totality of Upcon S.A.’s shares on September 22, 2020 (Note 9.1), the Company did not recorded any income from equity method investments for the eight remaining days of the month.

 

 

(ii) Information on significant investees

 

  Significant investee:   Other investees:
  Alphaville Urbanismo S.A.   Subsidiaries Jointly-controlled investees Associates
  09/30/2020 12/31/2019   09/30/2020 12/31/2019 09/30/2020 12/31/2019 09/30/2020 12/31/2019
                   
Cash and cash equivalents - -   5,900 4,611 20,266 37,267 1,605 2,087
Current assets - -   979,389 636,457 251,345 265,219 6,472 6,702
Non-current assets - -   421,787 409,773 33,047 30,084 181 84
Current liabilities - -   605,272 550,908 31,902 42,975 1,090 1,159
Non-current liabilities - -   173,433 6,307 18,804 20,871 70 167
                   
  09/30/2020 09/30/2019   09/30/2020 09/30/2019 09/30/2020 09/30/2019 09/30/2020 09/30/2019
Net revenue - 27,107   32,913 54,505 27,497 53,271 (65) 228
Operating costs - -   (17,393) (34,056) (14,823) (38,467) - (26)
Depreciation and amortization - -   (3) (1,114) (5) (21) - -
Finance income (expenses) - -   (3,194) (793) 253 (2,374) 8 282
Income tax and social contribution - -   (495) (1,204) (850) (1,472) (12) (87)
Profit or loss from continued operations - (603,985)   8,469 3,359 5,134 6,469 33 (602,362)

 

 

(iii) Change in investments

 

    Company Consolidated
       
Balance as of December 31, 2019   681,645 138,802
Income from equity method investments   2,114 (1,472)
Capital contribution (reduction)   (1,150) 53
Recognition of goodwill (9.(i).(c))   130,063 130,063
Investment UPCON   122,832 -
Other investments   6,725 5,051
Balance as of September 30, 2020   942,229 272,497

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 9 to the financial statements as of December 31, 2019.

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

9. Investments in ownership interests--Continued

 

9.1 Business combination

 

(i) Acquisition UPCON S.A.

 

On September 23, 2020, the Company disclosed the completion of the acquisition of the totality of Upcon S.A.’s shares, settled with the Company’s shares. Such transaction gave rise to a goodwill in the amount of R$130,063, for which the Company commissioned a study from a company specialized in determining the Purchase Price Allocation (PPA) for allocation of goodwill over a period of up to one year, according to CPC 15(R1) - Business Combinations.

 

The following table shows the determination of the acquisition cost, pursuant to CVM Resolution 665/11:

 

Acquisition cost 252,895
Acquired net assets 122,832
Goodwill to be allocated 130,063

 

10. Property and equipment

 

      Company     Consolidated  
Description 12/31/2019   Additions Write-offs 100% depreciated items 09/30/2020 12/31/2019   Additions Write-offs Addition UPCON 100% depreciated items 09/30/2020
Cost                          
Hardware 8,922   - - (4,918) 4,004 9,111   - - - (4,946) 4,165
Leasehold improvements and installations 785   - - - 785 771   - - 10 - 781
Furniture and fixtures 637   - - - 637 741   - - 123 - 864
Machinery and equipment 2,561   - - - 2,561 2,561   - - 22 - 2,583
Right-of-use assets 3,235   - (217) - 3,018 3,235   - (217) 726 - 3,744
Sales stands 5,794   194 (2,188) - 3,800 11,638   6,328 (2,222) 3,069 - 18,813
  21,934   194 (2,405) (4,918) 14,805 28,057   6,328 (2,439) 3,950 (4,946) 30,950
                           
Accumulated depreciation                          
Hardware (3,826)   (1,915) - 4,918 (823) (3,905)   (1,948) - - 4,946 (907)
Leasehold improvements and installations (782)   (266) - - (1,048) (737)   (269) - (7) - (1,013)
Furniture and fixtures (511)   (48) - - (559) (604)   (49) - (75) - (728)
Machinery and equipment (2,315)   (192) - - (2,507) (2,315)   (192) - (7) - (2,514)
Right-of-use assets (1,711)   (710) - - (2,421) (1,711)   (710) - (715) - (3,136)
Sales stands (642)   - - - (642) (4,626)   (394) 29 (1,726) - (6,717)
  (9,787)   (3,131) - 4,918 (8,000) (13,898)   (3,562) 29 (2,530) 4,946 (15,015)
                           
Total property and equipment 12,147   (2,937) (2,405) - 6,805 14,159   2,766 (2,410) 1,420 - 15,935
                                 

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 10 to the financial statements as of December 31, 2019.

 

 

11. Intangible assets
      Company
  12/31/2019         09/30/2020
  Balance Additions Write-offs Amortizations 100% amortized items Balance
             
Software – Cost 15,953 - - - (1,807) 14,146
Software – Depreciation (9,401) - - (2,215) 1,807 (9,809)
Other - 700   (27) - 673
Total intangible assets 6,552 700 - (2,242) - 5,010
         
                     

 

      Consolidated
  12/31/2019         09/30/2020
  Balance Additions Write-offs Amortizations 100% amortized items Balance
             
Software – Cost 17,353 - - - (1,807) 15,546
Software – Depreciation (10,269) - - (2,395) 1,807 (10,857)
Other - 700   (27) - 673
Total intangible assets 7,084 700 - (2,422) - 5,362
         
                     

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 10 to the financial statements as of December 31, 2019.

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

12. Loans and financing

 

      Company Consolidated
Type Maturity Annual interest rate 09/30/2020 12/31/2019 09/30/2020 12/31/2019
             
National Housing System - SFH /SFI (i) (ii) May 2019 to July 2025

7.00% to 14.20% + TR

13.66% and 143% of CDI

365,146 421,382 385,772 456,247

Certificate of Bank Credit (CCB) (ii)

 

March 2021 to April 2022

 

 

Fixed 16.77%/12.68%/6.00%

2.5%/ 3.70%/ 4.25%+CDI

 

 

50,561

 

55,022

 

53,739

 

55,022

 

Other transactions     4,945 14,272 63,177 21,884
           
Total loans and financing (Note 20.i.d, 20.ii.a and 20.iii) 420,652 490,676 502,688 533,153
             
Total current     300,534 383,647 349,348 426,124
Non-current     120,118 107,029 153,340 107,029

 

 

(i)    On March 26, 2020, the Company completed the renegotiation of its financial liabilities with the financial institution Banco do Brasil S.A. in the total amount of R$138,355. This transaction enabled the Company to extend the final maturity of such debts until June 2025 and reduce the finance cost. Also in the scope of the renegotiation, the Company started to work on the time required to sell the units in inventory tied to this transaction.

(ii)   In the period ended September 30, 2020, the Company made payments totaling R$250,469, of which R$235,151 related to principal and R$15,318 related to the interest payable.

 

The current and non-current portions have the following maturities:

 

  Company   Consolidated
Maturity 09/30/2020 12/31/2019   09/30/2020 12/31/2019
           
2020 182,748 383,647   217,189 426,124
2021 122,406 103,269   140,620 103,269
2022 11,560 3,760   27,461 3,760
2023 7,800 -   12,517 -
2024 onwards 96,138 -   104,901 -
  420,652 490,676   502,688 533,153

 

The Company and its subsidiaries have restrictive covenants under certain loans and financing that limit their ability to perform certain actions, such as issuing debt, and that could require the acceleration or refinancing of loans if the Company does not fulfill certain restrictive covenants.

 

The ratios and minimum and maximum amounts required under restrictive covenants for loan and financing transactions are as follows:

 

  09/30/2020 12/31/2019
     
     
Loans and financing    
Total accounts receivable(1) plus inventories required to be below zero or 2.0 times over venture debt(2) 6.54 times 4.52 times
Total accounts receivable(1) plus inventories of completed units required to be below zero or 2.0 times over net debt less venture debt(2) (4.59) times (9.04) times
Total debt, less venture debt, less cash and cash equivalents and short-term investments(3), cannot exceed 75% of equity plus non-controlling interests -17.14% -15.81%
Total receivables(1) plus unrecognized income plus total inventories of completed units required to be 1.5 time over the net debt plus payable for purchase of properties plus unrecognized cost 5.40 times 3.79 times
     

 

(1) Total receivables, whenever mentioned, refer to the amount reflected in the Statement of Financial Position plus the amount not shown in the Statement of Financial Position.
(2) Venture debt and secured guarantee debt refer to SFH debts, defined as the sum of all disbursed borrowing contracts which funds were provided by the SFH.
(3) Cash and cash equivalents and short-term investments refer to cash and cash equivalents and marketable securities.

 

 

 

 

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

12. Loans and financing--Continued

 

The following table shows the summary of finance costs and charges and the capitalized portion in the line item properties for sale.

 

  Company Consolidated
  09/30/2020 09/30/2019 09/30/2020 09/30/2019
         
Total financial charges for the year 59,898 66,184 64,686 68,205
Capitalized financial charges (Note 30) (13,483) (17,756) (21,685) (25,229)
Subtotal  (Note 24) 46,415 48,428 43,001 42,976
         
Financial charges included in “Properties for sale”:        
         
Opening balance        193,798 211,465      206,935 223,807
Capitalized financial charges          13,483 17,756        21,685 25,229
Financial charges related to cancelled land sales contract (3,840) (8,955)         (3,840) (8,955)
Charges recognized in profit or loss (Note 23)        (16,710)           (21,757)       (25,307) (30,356)
Acquired balance UPCON                 -             17,408  
Closing balance        186,731          198,509      216,881 209,725
             

 

The recorded amount of properties for sale offered as guarantee for loans, financing and debentures is R$379,986 (R$421,120 in 2019).

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 12 to the financial statements as of December 31, 2019.

 

13. Debentures

 

        Company Consolidated
Program/placements Principal - R$ Annual interest Final maturity 09/30/2020 12/31/2019 09/30/2020 12/31/2019
               
Tenth placement (i) 22,453 IPCA + 7.8% December 2023            34,522 38,038 34,522 38,038
Eleventh placement – 1st Series A (ii) - - -                    -    52,008 - 52,008
Twelfth placement (iii) 39,843 CDI + 3.75 % December 2020            39,800 57,139 39,800 57,139
Thirteenth placement (iv) 17,777 CDI + 3.00% June 2022            16,671 33,792 16,671 33,792
Fourteenth placement (v) 22,835 CDI + 5.00% October 2020            26,024 16,548 26,024 16,548
Fifteenth placement (a) 33,750 IGPM - 0.50% July 2021            35,710 - 35,710 -
RB Capital (b) 90,083 CDI + 6.00% September 2024                    -    - 90,083 -
Total debentures (Note 20.i.d, 20.ii.a, 20.iii and 30.ii) 152,727 197,525 242,810 197,525
               
Current portion       127,147 158,179 127,147 158,179
Non-current portion       25,580 39,346 115,663 39,346

 

(a)      In the context of the acquisition of the totality of UPCON’s shares, on July 17, 2020, the Company signed the indenture of the 15th convertible debenture, of the subordinate type, into two series, in the total amount of R$33,750, maturing on July 15, 2020. The coupon rate applied to the face value corresponds to 0.50% per year and the index is the IGPM. The principal and coupon payments are only made on the respective maturity date, and may be settled by using the Company’s shares.

 

(b)      On September 15, 2020, the subsidiary Novum signed the indenture of the first non-convertible debenture issue, with secured guarantee, in sole series, in the total amount of R$190,000, maturing in September 2024. The net proceeds from this issue will be fully and only used to develop the real estate development ventures “Scena Tatuapé", "Parque Ecoville", "Moov Belém", "Moov Estação Brás", "Moov Parque Maia", "Belvedere" and "Upside Paraíso". The funds shall be released according to the construction works’ needs, amortization and interest payments shall be made at the end of the operation. The coupon rate applied to the face value corresponds to the cumulative change of Interbank Deposits (DI) plus a surcharge equivalent to 6% p.a.

 

In the period ended September 30, 2020, the Company made the following payments:

 

  Face value placement Interest payable Total amortization
(i) 4,771 1,366 6,137
(ii) 52,026 2,928 54,954
(iii) 17,639 2,451 20,090
(iv) 17,590 1,292 18,882
(v) 12,511 1,198 13,709
  104,537 9,235 113,772

 

The current and non-current portions have the following maturities:

 

  Company Consolidated
Maturity 09/30/2020 12/31/2019 09/30/2020 12/31/2019
         
2020 80,394 158,179 80,394 158,179
2021 56,131 23,119 56,131 23,119
2022 10,344 11,243 10,344 11,243
2023 5,858 4,984 5,858 4,984
2024 - - 90,083 -
  152,727 197,525 242,810 197,525

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

13. Debentures--Continued

 

The Company is compliant with the restrictive covenants of debentures at the reporting date of this quarterly information. The ratios and minimum and maximum amounts required under restrictive covenants are as follows:

 

  09/30/2020 12/31/2019
     
     
Tenth placement    
Total accounts receivable(1) plus inventories required to be below zero or 2.0 times over net debt less venture debt(2) (9.44) times (14.62) times
Total debt, less venture debt(2), less cash and cash equivalents and short-term investments(3), cannot exceed 75% of equity plus non-controlling interests -17.14% -15.81%
     
     
     

(a)         

(1) Total receivables, whenever mentioned, refer to the amount reflected in the Statement of Financial Position plus the amount not shown in the Statement of Financial Position.

(2) Venture debt and secured guarantee debt refer to SFH debts, defined as the sum of all disbursed borrowing contracts which funds were provided by the SFH.

(3) Cash and cash equivalents and short-term investments refer to cash and cash equivalents and marketable securities.

 

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 13 to the financial statements as of December 31, 2019.

 

14. Obligations assumed on the assignment of receivables

 

The transactions of assignment of the receivable portfolio are as follows:

 

  Company Consolidated
  09/30/2020 12/31/2019 09/30/2020 12/31/2019
         
Obligation CCI June/2011 152 322 294 412
Obligation CCI November/2012 - - 2,441 2,586
Obligation CCI December/2012 950 1,683 950 1,683
Obligation CCI November/2013 183 242 644 1,170
Obligation CCI November/2014 436 833 616 1,203
Obligation CCI December/2015 1,410 2,342 3,950 5,300
Obligation CCI February/2016 3,705 5,845 4,168 6,429
Obligation CCI May/2016 2,639 3,385 3,525 4,625
Obligation CCI August/2016 1,898 2,351 1,922 2,392
Obligation CCI December/2016 5,162 5,961 5,274 6,106
Obligation CCI March/2017 5,920 8,254 6,110 8,455

Total obligations assumed on assignment of receivables

(Note 20.i.d and 20.ii.a)

22,455 31,218 29,894 40,361
         
Current 11,843 14,755 15,534 20,526
Non-current 10,612 16,463 14,360 19,835

 

The current and non-current portions have the following maturities:

 

  Company   Consolidated
Maturity 09/30/2020 12/31/2019   09/30/2020 12/31/2019
           
2020 3,287 14,755   7,313 20,526
2021 8,036 5,193   10,962 7,020
2022 3,946 3,620   5,277 4,284
2023 2,066 1,895   2,916 2,221
2024 5,120 5,755   3,426 6,310
  22,455 31,218   29,894 40,361

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 14 to the financial statements as of December 31, 2019.

 

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

15. Other payables

 

  Company Consolidated
  09/30/2020 12/31/2019 09/30/2020 12/31/2019
         
Provision for penalties due to delay in construction work 4,491 3,659          8,677 5,283
Cancelled contract payable and allowance for cancelled contracts 74,305 71,549      107,428 97,255
Warranty provision 15,521 14,419        15,521 14,419
Long term PIS and COFINS (deferred and payable) 4,665 5,780          6,038 8,372
Provision for net capital deficiency (Note 9.i.e) 28,963 14,794        18,108 10,963
Long-term suppliers (Note 20.i.d) 1,311 1,179          1,781 1,382
Share-based payment - Phantom Shares (Note 18.3) 1,156 1,702          1,156 1,702
Other liabilities 6,255 3,379        41,725 5,181
Total other payables 136,667 116,461      200,434 144,557
         
Current 132,183 110,189 178,550 135,492
Non-current            4,484 6,272        21,884 9,065

 

 

16. Provisions for legal claims and commitments

 

In the period ended September 30, 2020, the changes in the provision are summarized as follows:

 

 

Company Civil lawsuits Tax proceedings Labor claims Total
Balance as of December 31, 2019 226,951 2,682 33,848 263,481
Additional provision (Note 23) 51,127 - - 51,127
Payment and reversal of provision not used (39,839) (2,637) (4,274) (46,750)
Balance as of September 30, 2020 238,239 45 29,574 267,858
         
Current 165,492 44 25,096 190,632
Non-current 72,747 1 4,478 77,226

 

 

 

Consolidated Civil lawsuits Tax proceedings Labor claims Total
Balance as of December 31, 2019 227,169 2,702 34,742 264,613
Additional provision (Note 23) 52,708 - - 52,708
Payment and reversal of provision not used (41,000) (570) (5,168) (46,738)
Acquired balance UPCON 6,125 97 2,802 9,024
Balance as of September 30, 2020 245,002 2,229 32,376 279,607
         
Current 166,130 2,131 25,096 193,357
Non-current 78,872 98 7,280 86,250

 

 

(a) Civil lawsuits, tax proceedings and labor claims

 

As of September 30, 2020, the Company and its subsidiaries have deposited in court the amount of R$132,249 (R$122,238 in 2019) in the Company’s statements, and R$140,661 (R$129,933 in 2019) in the consolidated statements (Note 7).

 

    Company Consolidated
    09/30/2020 12/31/2019 09/30/2020 12/31/2019
           
Civil lawsuits   60,782 50,308 66,000 54,706
Tax proceedings   37,161 40,516 38,535 41,989
Labor claims   34,306 31,414 36,126 33,238
Total (Note 7)   132,249 122,238 140,661 129,933

 

 

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

16. Provisions for legal claims and commitments--Continued

 

(i)      Lawsuits which likelihood of loss is rated as possible

 

As of September 30, 2020, the Company and its subsidiaries are aware of other claims, and civil, labor and tax risks. Based on the history of probable lawsuits and the specific analysis of main claims, the measurement of the claims with likelihood of loss considered possible amounted to R$487,235 (R$562,439 in 2019) in the Company’s statements and R$488,172 (R$565,410 in 2019) in the consolidated statements, 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 any losses. The change in the period was caused by the change in the volume of lawsuits with diluted amounts, and review of the involved amounts.

 

    Company Consolidated
    09/30/2020 12/31/2019 09/30/2020 12/31/2019
           
Civil lawsuits   312,790 398,325 312,790 398,676
Tax proceedings   110,167 97,871 110,486 98,186
Labor claims   64,278 66,243 64,896 68,548
    487,235 562,439 488,172 565,410

 

(b) Payables related to the completion of real estate ventures

 

There was no material change in relation to the information disclosed in Note 16(i)(b) to the financial statements as of December 31, 2019.

 

(c) Other commitments

 

In addition to the commitments mentioned in Notes 6, 12 and 13, the Company has commitments related to the rental of two commercial properties where its facilities are located, at a monthly cost of R$171 (including rent, condominium fees, and IPTU), indexed to the IGP-M/FGV change and termination of contract in August 2024.

The estimate of minimum future rent payments of this new contract for commercial property (cancellable leases) totals R$8,240, considering the above-mentioned contract expiration, as follows.

 

  Consolidated
Estimate of payment 09/30/2020
   
2020 766
2021 2,153
2022 2,239
2023 2,329
2024 onwards 753
  8,240

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 16 to the financial statements as of December 31, 2019.

 

 

 

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

17. Payables for purchase of properties and advances from customers

 

    Company Consolidated
  Maturity 09/30/2020 12/31/2019 09/30/2020 12/31/2019
         
Payables for purchase of properties October 2020 to November 2022 42,939 68,020 180,127 68,133
Present value adjustment   (1,855) (5,295) (1,859) (5,298)
Advances from customers          
Development and services   1,088 1,540 58,173 14,197
Barter transaction – Land (Note 30 (i))   65,180 94,075 110,837 145,396
           
Total payables for properties and advances from customers (Notes 20.i.d and 20.ii.a) 107,352 158,340 347,278 222,428
           
Current   66,660 89,825 259,336 129,353
Non-current   40,692 68,515 87,942 93,075
           

 

The current and non-current portions fall due as follows:

 

  Company   Consolidated
Maturity 09/30/2020 12/31/2019   09/30/2020 12/31/2019
           
2020 26,908 89,825   145,672 129,353
2021 45,985 28,352   78,072 40,219
2022 24,086 29,208   66,983 33,396
2023 8,843 10,599   45,842 10,597
2024 onwards 1,530 356   10,709 8,863
  107,352 158,340   347,278 222,428

 

 

18. Equity

 

 

18.1. Capital

 

 

At the Extraordinary Shareholders’ Meeting held on April 30, 2020, shareholders approved the absorption of the Company’s retained losses by its capital in the amount of R$2,585,033.

The Company’s Board of Directors ratified the following capital increases in the period ended September 30, 2020:

 

· On August 7, 2020: subscription and pay-in of 75,610,000 new common shares at the price of R$4.10, totaling R$ 310,001.
· On September 25, 2020: subscription and pay-in of 95,121,951 new common shares at the price of R$4.10, totaling R$390.000.

 

Accordingly, as of September 30, 2020, the Company's authorized and paid-in capital amounted to R$1,041,248 (R$2,926,280 in 2019), represented by 290,731,951 registered common shares, with no par value, of which 341,570 (2,981,052 in 2019) 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.

 

 

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(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 amount R$ thousand
Acquisition date Number (i) Weighted average price % - on shares outstanding 09/30/2020 12/31/2019 09/30/2020 12/31/2019
2001 11/20/2001 44,462 38.9319 0.04% 193 385 1,731 1,731
                   
2013 Acquisitions 1,372,096 51.9927 1.15% 5,941 11,896 71,339 71,339
                 
2014 Acquisitions 3,243,947 35.5323 2.71% 14,046 28,125 115,265 115,265
2014 Transfers (405,205) 43.3928 -0.34% (1,755) (3,513) (17,583) (17,583)
2014 Cancellations (2,039,086) 44.9677 -1.70% (8,829) (17,679) (91,693) (91,693)
                 
2015 Acquisitions 884,470 27.3124 0.74% 3,830 7,668 24,157 24,157
2015 Transfers (90,622) 33.3473 -0.08% (392) (786) (3,022) (3,022)
2015 Cancellations (2,225,020) 33.3543 -1.86% (9,634) (19,291) (74,214) (74,214)
                 
2016 Acquisitions 334,020 26.0254 0.28% 1,446 2,896 8,693 8,693
2016 Transfers (68,814) 31.2290 -0.06% (298) (597) (2,149) (2,149)
                 
2017 Transfers (112,203) 30.6320 -0.09% (487) (973) (3,435) (3,435)
                 
2018 Acquisitions 13,221,300 13.4953 11.06% 57,248 114,629 178,425 178,425
2018 Transfers (17,319) 30.6022 -0.01% (75) (150) (530) (530)
2018 Cancellations (1,030,326) - -0.86% (4,461) (8,933) - -
2018 Disposal (9,168,280) 16.1463 -7.67% (39,699) (79,489) (148,034) (148,034)
                 
2019 Acquisitions 6,794,011 14.7355 5.68% 29,418 58,904 100,113 100,113
2019 Transfers (9,174) 15.3695 -0.01% (40) (80) (141) (141)
2019 Cancellations (370,000) 15.5324 -0.31% (1,602) (3,208) (5,747) (5,747)
2019 Disposal (7,377,205) 14.5999 -6.17% (31,943) (63,960) (109,658) (109,658)
                 
2020 Disposal (2,639,482) 14.5979 -2.17% (11,430) - (40,882) -
    341,570 7.7116 0.33% 1,477 25,844 2,634 43,517
                                   
(*) Market value calculated based on the closing share price on September 30, 2020 of R$4.33 (R$8.67 in 2019) not considering the effect of occasional 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 shares outstanding is as follows:

 

  Common shares - In thousands
Shares outstanding as of December 31, 2019 117,005
Subscription of shares 170,732
Disposal of shares 2,639
Change in management’s shares (9,786)
Shares outstanding as of September 30, 2020 280,590
   
Weighted average shares outstanding (Note 27) 144,814

 

18.2. 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 periods ended September 30, 2020 and 2019:

 

  09/30/2020 09/30/2019
     
Equity-settled stock option plans 184 355
Phantom Shares (Note 18.3) (546) (3,053)
Total option grant expenses (Note 23) (362) (2,698)

 

Changes in the stock options outstanding in the period ended September 30, 2020 and year ended December 31, 2019, including the respective weighted average exercise prices are as follows:

 

  2020 2019
  Number of options Weighted average exercise price (reais) Number of options Weighted average exercise price (reais)
Options outstanding at the beginning of the year 1,230,383 16.64 1,239,557 15.58
 Options granted - - - -
 Options exercised (i) - - (9,174) (16.16)
Options outstanding at the end of the year 1,230,383 16.64 1,230,383 16.64

 

(i) In the year ended December 31, 2019, the amount received through exercised options was R$148.

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

18.       Equity--Continued

 

18.2. Stock option plan--Continued

 

As of September 30, 2020, the stock options outstanding and exercisable are as follows:

Options outstanding Options exercisable
Number of options Weighted average remaining contractual life (years) Weighted average exercise price (reais) Number of options Weighted average exercise price (reais)
         
1,230,383 5.50 16.64 682,964 23.27

 

During the period ended September 30, 2020 and year ended December 31, 2019, the Company did not grant any option in connection with its stock option plans comprising common shares.

 

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.

 

18.3. 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.

 

As of September 30, 2020, the amount of R$1,156 (R$1,702 in 2019), related to the fair value of the phantom shares granted, is recognized in the line item “Other payables” (Note 15).

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 18 to the financial statements as of December 31, 2019.

 

19. Income tax and social contribution

 

The reconciliation of the effective tax rate for the periods ended September 30, 2020 and 2019 is as follows:

  Company Consolidated
  09/30/2020 09/30/2019 09/30/2020 09/30/2019
         
Loss before income tax and social contribution, and statutory interest (105,500) (60,746) (102,680) (59,404)
Income tax calculated at the applicable rate - 34% 35,870 20,654 34,911 20,197
         
Net effect of subsidiaries and ventures taxed by presumed profit and RET - - (608) -
Income from equity method investments (1,245) (1,695) (1,245) (710)
Stock option plan (63) (121) (63) (121)
Other permanent differences 22,533 - 21,633 -
Charges on payables to venture partners - - - -
Recognized (unrecognized) tax credits (57,095) (18,838) (58,247) (20,587)
  - - (3,619) (1,221)
         
Tax expenses - current - - (3,619) (1,221)
Tax income (expenses) - deferred - - - -

 

 

 

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

19.       Income tax and social contribution--Continued

 

(ii) Deferred income tax and social contribution

 

As of September 30, 2020 and December 31, 2019, deferred income tax and social contribution are from the following sources:

 

  Company Consolidated
  09/30/2020 12/31/2019 09/30/2020 12/31/2019
Assets        
Provisions for legal claims 91,072 89,584 91,998 89,968
Temporary differences - deferred PIS and COFINS 15,396 14,997 15,396 14,997
Provisions for realization of non-financial assets 266,570 260,327 266,570 260,327
Temporary differences - CPC adjustment 6,654 12,114 6,654 12,114
Other provisions 13,575 6,489 13,575 6,479
Income tax and social contribution loss carryforwards 456,147 411,064 477,605 431,311
  849,414 794,575 871,798 815,196
         
Unrecognized tax credits of continued operations (781,081) (723,986) (803,465) (745,218)
  (781,081) (723,986) (803,465) (745,218)
Liabilities        
Discounts (2,069) (2,069) (2,069) (2,069)
Temporary differences - CPC adjustment (7,877) (42,273) (7,877) (41,671)
Income taxed between cash and accrual basis (70,501) (38,361) (70,501) (38,352)
  (80,447) (82,703) (80,447) (82,092)
           
Total, net (12,114) (12,114) (12,114) (12,114)

 

The balances of income tax and social contribution loss carryforwards for offset are as follows:

 

 

Company

  09/30/2020   12/31/2019
  Income tax Social contribution

 

Total

  Income tax Social contribution

 

Total

Balance of income tax and social contribution loss carryforwards 1,341,609 1,341,609 -   1,209,011 1,209,011 -
Deferred tax assets (25%/9%) 335,402 120,745 456,147   302,253 108,811 411,064
Recognized deferred tax assets 2,194 790 2,984   9,781 3,521 13,302
Unrecognized deferred tax assets 333,208 119,955 453,163   292,472 105,290 397,762

 

 

 

Consolidated

  09/30/2020   12/31/2019
  Income tax Social contribution

 

Total

  Income tax Social contribution

 

Total

Balance of income tax and social contribution loss carryforwards 1,404,723 1,404,723 -   1,268,563 1,268,563 -
Deferred tax assets (25%/9%) 351,181 126,425 477,606   317,141 114,170 431,311
Recognized deferred tax assets 2,194 790 2,984   9,781 3,521 13,302
Unrecognized deferred tax assets 348,987 125,635 474,622   307,360 110,649 418,009

 

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 19 to the financial statements as of December 31, 2019.

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(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 ongoing monitoring of 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

 

There was no significant change in relation to the credit risks disclosed in Note 20(i)(a) to the financial statements as of December 31, 2019.

 

b) Derivative financial instruments

 

In the period ended September 30, 2020, the Company entered into financial derivative instruments to mitigate the risk arising from its exposure to index and interest volatility recognized at fair value in profit or loss for the year.

 

As of December 30, 2020, the Company had derivative contracts to hedge the interest rate fluctuation, maturing in February 2021. The derivate contracts are as follows:

 

  Reais Percentage Maturity Unrealized gains/(losses) on derivative instruments, net
             
Interest rate swap contracts Face value   Swap – Liability position Beginning End 09/30/2020 12/31/2019
               
Swap 1 79,003   120% CDI 08/05/2020 02/04/2021 1,495 -
Swap 2 100,000   Fixed 7% 09/10/2020 02/16/2021 (878) -
Total derivative financial instruments 617 -
               

 

c) Interest rate risk

 

There was no significant change in relation to the interest rate risks disclosed in Note 20(i)(c) to the financial statements as of December 31, 2019.

 

d) Liquidity risk

 

There was no significant change in relation to the liquidity risks disclosed in Note 20(i)(d) to the financial statements as of December 31, 2019.

 

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

20. Financial instruments--Continued

 

(i) Risk considerations--Continued

 

d) Liquidity risk--Continued

 

The maturities of financial instruments of loans, financing, suppliers, debentures, forward transactions, obligations assumed on assignment of receivables, suppliers, payables for purchase of properties and advance from customers are as follows:

 

Year ended September 30, 2020 Company
Liabilities Less than 1 year 1 to 3 years 4 to 5 years Over 5 years Total
Loans and financing (Note 12) 300,534 120,118 - - 420,652
Debentures (Note 13) 127,147 25,580 - - 152,727
Obligations assumed on assignment of receivables (Note 14) 11,843 6,204 2,258 2,150 22,455
Suppliers (Note 15 and Note 20.ii.a) 65,995 1,311 - - 67,306
Payables for purchase of properties and advances from customers (Note 17) 66,660 38,478 2,214 - 107,352
  572,179 191,691 4,472 2,150 770,492
Assets          
Cash and cash equivalents and short-term investments (Notes 4.1 and 4.2) 619,068 - - - 619,068
Trade accounts receivable (Note 5) 340,903 68,591 4,551 - 414,045
  959,971 68,591 4,551 - 1,033,113

 

Year ended September 30, 2020 Consolidated
Liabilities Less than 1 year 1 to 3 years 4 to 5 years Over 5 years Total
Loans and financing (Note 12) 349,348 153,340 - - 502,688
Debentures (Note 13) 127,147 115,663 - - 242,810
Obligations assumed on assignment of receivables (Note 14) 15,534 8,480 4,961 919 29,894
Suppliers (Note 15 and Note 20.ii.a) 131,054 1,781 - - 132,835
Payables for purchase of properties and advances from customers (Note 17) 259,336 76,099 11,843 - 347,278
  882,419 355,363 16,804 919 1,255,505
Assets          
Cash and cash equivalents and short-term investments (Notes 4.1 and 4.2) 630,060 - - - 630,660
Trade accounts receivable (Note 5) 544,147 80,031 6,812 35,035 630,990
  1,174,807 80,031 6,812 35,035 1,261,650

 

The Company uses the following classification to determine and disclose the fair value of financial instruments by 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).

 

The classification level of fair value for financial instruments measured at fair value through profit or loss of the Company as of September 30, 2020 and December 31, 2019 is as follows:

 

  Company Consolidated
  Fair value classification
As of September 30, 2020 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
             
Financial assets            
Short-term investments (Note 4.2) - 619,025 - - 623,955 -

 

  Company Consolidated
  Fair value classification
As of December 31, 2019 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
             
Financial assets            
Short-term investments (Note 4.2) - 401,243 - - 401,895 -

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

20. Financial instruments--Continued

 

(i) Risk considerations--Continued

 

d) Liquidity risk--Continued

 

Fair value classification

 

In the period ended September 30, 2020 and year ended December 31, 2019, there was no transfer 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 Company uses the same methods and assumptions disclosed in Note 20(ii)(a) to the financial statements as of December 31, 2019 to measure fair value of each financial instrument classification for which the estimate of value is practicable.

 

The most significant carrying amounts and fair values of financial assets and liabilities as of September 30, 2020 and December 31, 2019, classified into Level 2 of the fair value classification, are as follows:

 

  Company  
  09/30/2020 12/31/2019  
  Carrying amount Fair value Carrying amount Fair value Classification
         
Financial assets          
Cash and cash equivalents (Note 4.1) 43 43 810 810 (*)
Short-term investments (Note 4.2) 619,025 619,025 401,243 401,243 (*)
Trade accounts receivable (Note 5) 414,045 414,045 460,017 460,017 (**)
Loans receivable (Note 21.1) 112,665 112,665 33,416 33,416 (**)
           
Financial liabilities          
Loans and financing (Note 12) 420,652 396,770 490,676 502,909 (**)
Debentures (Note 13) 152,727 186,482 197,525 278,727 (**)
Suppliers 67,306 67,306 80,285 80,285 (**)
Obligations assumed on assignment of receivables (Note 14) 22,455 22,455 31,218 31,218 (**)
Payables for purchase of properties and advances from customers (Note 17) 107,352 107,352 158,340 158,340 (**)
Loan payable (Note 21.1) 7,922 7,922 9,280 9,280 (**)

 

  Consolidated  
  09/30/2020 12/31/2019  
  Carrying amount Fair value Carrying amount Fair value Classification
         
Financial assets          
Cash and cash equivalents (Note 4.1) 6,705 6,705 12,435 12,435 (*)
Short-term investments (Note 4.2) 623,955 623,955 401,895 401,895 (*)
Trade accounts receivable (Note 5) 630,990 630,990 557,438 557,438 (**)
Loans receivable (Note 21.1) 41,070 41,070 33,416 33,416 (**)
           
Financial liabilities          
Loans and financing (Note 12) 502,688 403,210 533,153 542,909 (**)
Debentures (Note 13) 242,810 186,482 197,525 278,727 (**)
Suppliers 132,835 132,835 96,832 96,832 (**)
Obligations assumed on assignment of receivables (Note 14) 29,894 29,894 40,361 40,361 (**)
Payables for purchase of properties and advances from customers (Note 17) 347,355 347,355 222,428 222,428 (**)
Loan payable (Note 21.1) 7,922 7,922 9,280 9,280 (**)

 

 

(*) Fair value through profit or loss

(**) Amortized cost

 

There was no material change in relation to the information disclosed Note 20(ii)(a) to the financial statements as of December 31, 2019.

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

20. Financial instruments–Continued

 

(ii) Fair value of financial instruments--Continued

 

b) Risk of debt acceleration

 

As of September 30, 2020, the Company has loans and financing contracts with restrictive covenants related to cash generation, indebtedness ratios, capitalization, debt coverage, maintenance of shareholding position, and others. The breach of such obligations by the Company may give rise to the acceleration of its debts and/or acceleration of other debts of the Company, including due to the performance of any cross default or cross acceleration clauses, which may negatively impact the profit or loss of the Company and the value of its shares.

These restrictive covenants have been complied with by the Company and do not limit its ability to conduct its business as usual.

 

(iii) Capital stock management

 

The explanations related to this note were not subject to material changes in relation to the disclosures in Note 20(iii) to the financial statements as of December 31, 2019.

 

The Company included in its net debt structure: loans and financing, debentures, less cash and cash equivalents and short-term investments:

 

 

  Company Consolidated
  09/30/2020 12/31/2019 09/30/2020 12/31/2019
         
Loans and financing (Note 12) 420,652 490,676 502,688 533,153
Debentures (Note 13) 152,727 197,525 242,810 197,525
( - ) Cash and cash equivalents and short-term investments (Notes 4.1 and 4.2) (619,068) (402,053) (630,660) (414,330)
Net debt (45,689) 286,148 114,838 316,348
Equity 1,509,624 893,708 1,513,890 895,143

 

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

20. Financial instruments--Continued

 

(iv) Sensitivity analysis

 

The sensitivity analysis of financial instruments for the period ended September 30, 2020 describes the risks that may give rise to material changes in the Company’s profit or loss, as provided for by CVM, through Rule 475/08, in order to show a 10%, 25% and 50% increase/decrease in the risk variable considered.

 

As of September 30, 2020, the Company has the following financial instruments:

 

a) Financial investments, loans and financing and debentures linked to the Interbank Deposit Certificate (CDI);
b) Loans and financing linked to the Referential Rate (TR) and CDI, and debentures linked to the CDI and Broad Consumer Price Index (IPCA);
c) Accounts receivable and payables for purchase of properties, linked to the National Civil Construction Index (INCC) and General Market Price Index (IGP-M).

 

For the sensitivity analysis in the period ended September 30, 2020, the Company considered the interest rates of investments, loans and accounts receivable, the CDI rate at 3.54%, TR at 0%, INCC at 5.32%, IPCA at 3.14% and IGP-M at 14.40%. 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 - Possible: 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 as of December 31, 2019. The effects on equity are basically the same of the profit or loss ones.

 

    Scenario
    I II III III II I
Transaction Risk Increase 10% Increase 25% Increase 50% Decrease 50% Decrease 25% Decrease 10%
               
Financial investments Increase/decrease of CDI 2,036 5,089 10,178 (10,178) (5,089) (2,036)
Loans and financing Increase/decrease of CDI (442) (1,105) (2,209) 2,209 1,105 442
Debentures Increase/decrease of CDI (193) (483) (966) 966 483 193
               
Net effect of CDI change   1,401 3,501 7,003 (7,003) (3,501) (1,401)
               
Loans and financing Increase/decrease of TR - - - - - -
               
Net effect of TR change   - - - - - -
               
Debentures Increase/decrease of IPCA (105) (262) (525) 525 262 105
               
Net effect of IPCA change   (105) (262) (525) 525 262 105
               
Accounts receivable Increase/decrease of INCC 2,138 5,344 10,688 (10,688) (5,344) (2,138)
Payables for purchase of properties Increase/decrease of INCC (1,754) (4,385) (8,771) 8,771 4,385 1,754
               
Net effect of INCC change   384 959 1,917 (1,917) (959) (384)
               
Accounts receivable Increase/decrease of IGP-M 2,616 6,539 13,078 (13,078) (6,539) (2,616)
               
Net effect of IGP-M change   2,616 6,539 13,078 (13,078) (6,539) (2,616)

 

 

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(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 account 09/30/2020 12/31/2019 09/30/2020 12/31/2019
         
Assets        
Current account:        
Total SPEs 353 354 47,376 64,441
Subsidiaries - - 41,979 57,027
Jointly-controlled investees 320 321 5,364 7,381
Associates 33 33 33 33
  Condominium, consortia and third-party works 13,600 13,162 13,601 13,165
Loan receivable (Note 20.ii.a) 112,665 33,416 41,070 33,416
Dividends receivable 7,853 9,872 - -
  134,471 56,804 102,047 111,022
         
Current 93,400 23,388 2,310 77,606
Non-current 41,071 33,416 99,737 33,416
         
Liabilities        
Current account:        
 Total SPEs (178,379) (182,084) (84,306) (55,104)
Subsidiaries (130,980) (156,192) (36,908) (29,211)
Jointly-controlled investees (44,515) (23,228) (44,514) (23,229)
Associates (2,884) (2,664) (2,884) (2,664)
Loan payable (Note 20.ii.a) (7,922) (9,280) (7,922) (9,280)
  (186,301) (191,364) (92,228) (64,384)
         
Current (186,301) (191,364) (92,228) (64,384)
Non-current - - - -

 

The composition, nature and conditions of the balances of loans receivable and payable of the Company are as follows. Loans have maturity from July 2020 and are tied to the cash flows of the related ventures.

 

 

  Company Consolidated    
  09/30/2020 12/31/2019 09/30/2020 12/31/2019 Nature Interest rate
             
             
UPCON 71,595 - - - Working capital n/a
Lagunas - Tembok Planej. e Desenv. Imob. Ltda. 7,662 6,272 7,662 6,272 Construction 12% p.a. + IGPM
Manhattan Residencial I - OAS Empreendimentos 399 392 399 392 Construction 10% p.a. + TR
Target Offices & Mall- SPE Yogo Part. Emp. Im. e Comasa Const. 33,009 26,752 33,009 26,752 Construction 12% p.a. + IGPM
Total receivable 112,665 33,416 41,070 33,416    
             
Dubai Residencial - Franere, Com. Const. e Imob. Ltda. 1,189 1,025 1,189 1,025  Construction  6% p.a.  
Parque Árvores - Franere, Com. Const. e Imob. Ltda. 3,647 5,372 3,647 5,372  Construction  6% p.a.  
Parque Águas - Franere, Com. Const. e Imob. Ltda. 3,086 2,883 3,086 2,883  Construction  6% p.a.  
Total payable 7,922 9,280 7,922 9,280    

 

In the period ended September 30, 2020 the recognized finance income from interest on loans amounted to R$7,246 (R$2,731 in 2018) in the Company’s and Consolidated statement (Note 24).

 

The information regarding Management transactions and compensation is described in Note 25.

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 21 to the financial statements as of December 31, 2019.

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

21. Related parties--Continued

 

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$254,431 as of September 30, 2020 (R$132,336 in 2019).

 

22. Net operating revenue

 

  Company Consolidated
  09/30/2020 09/30/2019 09/30/2020 09/30/2019
         
Gross operating revenue        
Real estate development, sale, barter transactions and construction services 250,834 240,277 361,788 290,417
(Recognition) Reversal of allowance for expected losses and cancelled contracts (Note 5) (15,347) 17,116 (34,151) 17,116
Taxes on sale of real estate and services (20,068) (21,728) (23,502) (23,241)
Net operating revenue 215,419 235,665 304,135 284,292

 

 

23. Costs and expenses by nature

 

These are represented by the following:

 

  Company Consolidated  
  09/30/2020 09/30/2019 09/30/2020 09/30/2019
         
Cost of real estate development and sales:        
Construction cost (72,062) (106,354) (132,560) (128,487)
Land cost (53,565) (28,582) (61,170) (36,946)
Development cost (7,169) (4,260) (9,197) (5,627)
Capitalized financial charges (Note 12) (16,710) (21,757) (25,307) (30,356)
Maintenance/warranty (8,313) (1,661) (8,313) (1,354)
Total cost of real estate development and sales (157,819) (162,614) (236,547) (202,770)
         
Selling expenses:        
Product marketing (2,615) (3,134) (4,337) (3,794)
Brokerage and sale commission (1,734) (2,420) (2,821) (3,293)
Customer Relationship Management (CRM) and corporate marketing (1,809) (3,921) (2,871) (4,499)
Other - (110) (720) (97)
Total selling expenses (6,158) (9,585) (10,749) (11,683)
         
General and administrative expenses:        
Salaries and payroll charges (16,515) (10,060) (16,515) (12,150)
Employee benefits (2,852) (1,166) (2,852) (1,409)
Travel and utilities (395) (114) (395) (138)
Services (20,586) (8,393) (20,586) (10,138)
Rents and condominium fees (2,181) (2,676) (2,181) (3,231)
IT (2,836) (5,139) (2,836) (6,207)
Stock option plan (Note 18.2) 362 2,698 362 2,698
Reserve for profit sharing (Note 25.iii) (6,194) (500) (6,194) (500)
Other 61 (786) 61 (843)
Total general and administrative expenses (51,136) (26,136) (51,136) (31,918)
         
Other income (expenses), net        
Expenses with lawsuits (Note 16) (51,127) (45,378) (52,708) (45,769)
Other (5,108) 126 (6,509) 70
Total other income (expenses), net (56,235) (45,252) (59,217) (45,699)
           

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

24. Finance income (cost)

 

  Company Consolidated
  09/30/2020 09/30/2019 09/30/2020 09/30/2019
Finance income        
Income from financial investments 13,864 7,613 14,006 7,649
Finance income on loan (Note 21.1) 7,246 2,976 7,246 2,976
Other finance income 512 873 1,326 1,338
Subtotal finance income 21,622 11,462 22,578 11,963
         
Finance cost        
Interest on funding, net of capitalization (Note 12) (46,415) (48,428) (43,001) (42,976)
Amortization of debenture cost (1,991) (2,116) (1,991) (2,116)
Banking expenses (6,691) (5,871) (7,321) (7,212)
Offered discount and other finance expenses (7,063) (2,232) (9,064) (1,635)
Subtotal finance cost (62,160) (58,647) (61,377) (53,939)
         
Total finance income (cost), net (40,538) (47,185) (38,799) (41,976)

 

25. Transactions with management and employees

 

(i) Management compensation

 

In the periods ended September 30, 2020 and 2019, the amounts recorded in the line item “General and administrative expenses” related to the compensation of the Company’s Management are as follows:

 

  Management compensation  
Year ended September 30, 2020 Board of Directors Executive Management Fiscal Council
       
Number of members 10 8 -
Annual fixed compensation (in R$)      
Salary/fees 589 3,036 -
Direct and indirect benefits - 210 -
Other (INSS) 98 563 -
Average monthly compensation (in R$) - , -
Total compensation 687 3,809 -
Profit sharing (Note 25.iii) - 1,804 -
Total management compensation 687 5,613 -

 

 

   
  Management compensation  
Year ended September 30, 2019 Board of Directors Executive Management Fiscal Council
       
Number of members 7 3 3
Annual fixed compensation (in R$)      
Salary/fees 745 1,398 94
Direct and indirect benefits - 4 -
Other (INSS) 173 280 4
Monthly compensation (in R$) 102 187 24
Total compensation 918 1,681 98
Profit sharing (Note 25.iii) - - -
Total compensation and profit sharing 918 1,681 98
         

 

There is no amount related to expenses with option grant to current management members of the Company for the periods ended September 30, 2020 and 2019.

 

The maximum aggregate compensation of the Company’s management members for the year 2020 was established at R$16,527 (R$7,782 in 2019), as fixed and variable compensation, as approved at the Annual Shareholders’ Meeting held on April 30, 2020.

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

25.       Transactions with management and employees--Continued

 

(ii)       Sales transactions

 

In the periods ended September 30, 2020 and year ended December 31, 2019 no transaction of sale of units to current Management was carried out.

 

(iii)       Profit sharing

 

In the period ended September 30, 2020, the Company recorded a reserve for profit sharing expenses amounting to R$6,194 (R$500 in 2019) in the Company’s and Consolidated statement in the account “General and Administrative Expenses " (Note 23).

 

  Company and Consolidated
  09/30/2020 09/30/2019
     
Executive officers (Note 25.i) 1,804 -
Other employees 4,390 500
Total profit sharing 6,194 500

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 25 to the financial statements as of December 31, 2019.

 

26. Insurance

 

The liabilities covered by insurance and the respective amounts as of September 30, 2020 are as follows:

 

Insurance type Coverage
Engineering risks and completion bond 423,334
Civil liability (Directors and Officers – D&O) 205,600
  628,934

 

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 25 to the financial statements as of December 31, 2019.

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

27. Earnings and loss per share

 

The following table shows the calculation of basic and diluted earnings and losses per share. In view of the losses for the periods ended September 30, 2020 and 2019, shares with dilutive potential are not considered, because the impact would be antidilutive.

     
  09/30/2020 09/30/2019
Basic numerator    
Undistributed loss from continued operations (105,500) (60,746)
Undistributed loss, available for the holders of common shares (105,500) (60,746)
     
Basic denominator (in thousands of shares)    
Weighted average number of shares (Note 18.1) 144,814 52,299
     
Basic loss per share in reais (0.729) (1.162)
From continued operations (0.729) (1.162)

 

 

Diluted numerator    
Undistributed loss from continued operations (105,500) (60,746)
Undistributed loss, available for the holders of common shares (105,500) (60,746)
     
Diluted denominator (in thousands of shares)    
Weighted average number of shares (Note 18.1) 144,814 52,299
Stock options 865 447
Anti-dilution effect (865) (447)
Diluted weighted average number of shares 144,814 52,299
     
     
Diluted loss per share in reais (0.729) (1.162)
From continued operations (0.729) (1.162)

 

28. Segment information

 

The reports used for making decisions are the consolidated financial statements, and not the analysis by operating segments.

 

Therefore, in line with CPC 22 – Operating Segments, the Company understands that there is no reportable segment to be disclosed in the periods ended September 30, 2020 and 2019.

 

 

 

 

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

29. Real estate ventures under construction – information and commitments

 

In compliance with Circular Letter CVM/SNC/SEP 02/2018, related to the recognition of revenue from contracts for purchase and sale of real state units not yet completed in Brazilian real estate development companies, the Company reports information on the ventures under construction as of September 30, 2020:

 

    Consolidated
    09/30/2020
     
Unrecognized sales revenue of units sold   312,569
Unrecognized estimated cost of units sold   (179,316)
Unrecognized estimated cost of units in inventory   (124,476)
     
(i) Unrecognized sales revenue of units sold    
Ventures under construction:    
(a)     Contracted sales revenue   1,065,020
 Recognized sales revenue:    
Recognized sales revenue   773,400
Cancelled contracts - reversed revenue   (20,949)
(b)     Recognized sales revenue, net   752,451
Unrecognized sales revenue (a-b) (a)   312,569
     
(ii) Income from damages for cancelled contracts   1,727
     
(iii) Unrecognized sales revenue of contracts not eligible to revenue recognition   44,186

 

(iv) Allowance for cancelled contracts (liabilities)    
Adjustments in recognized revenue   116,142
Adjustments in trade accounts receivable   71,968
Income from damages for cancelled contracts   (17,670)
Liabilities – refund due to cancelled contracts   26,504
     
(v) Unrecognized estimated costs of units sold    
Ventures under construction:    
(a)     Estimated cost of units   (663,695)
 Incurred cost of units:    
Construction cost   (499,436)
Cancelled contracts – construction costs   15,057
(b)     Incurred cost, net   (484,379)
Cost to be incurred of units sold (a-b) (b)   (179,316)

 

(iii) Unrecognized estimated costs of units in inventory    
Ventures under construction:    
Estimated cost of units   (510,965)
Incurred cost of units (Note 6)   386,489
Unrecognized estimated cost   (124,476)

 

(a) The unrecognized 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 recognized in profit or loss.
(b) The estimated cost of units sold and in inventory to be incurred do not include financial charges, which are recognized in 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 September 30, 2020, the percentage of assets consolidated in the financial statements related to ventures included in the equity segregation structure of the development stood at 34.2% (29.0% in 2019).

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

30. Additional Information on the Statement of Cash Flows

 

(i) Transactions that did not affect Cash and Cash Equivalents

 

The Company and its subsidiaries performed the following investing and financing activities that did not affect cash and cash equivalents, which were not included in the statements of cash flows:

 

 
Company 		Consolidated
  09/30/2020 09/30/2019 09/30/2020 09/30/2019
         
Capital contribution (reduction) 1,150 - (53) -
Capitalized financial charges (Note 12) (13,483) (17,756) (21,685) (25,229)
Barter transaction – Land (Note 17) (28,895) (14,021) (34,559) (17,181)
  (41,228) (31,777) (56,297) (42,410)

 

(ii) Reconciliation of the asset and liability changes with the cash flows from financing activities:

 

    Transactions affecting cash Transactions not affecting cash  
Company

Opening balance

12/31/2019

Funding/

Receipt

Payment

Interest

Principal payment Interest and inflation adjustment Other Closing balance 09/30/2020
               
Loans, financing and debenture (Notes 12 and 13) (688,201) (23,651) (33,174) 173,015 (1,368) - (573,379)
Loans (Note 21.1) 24,136 - - 65,854 14,753 - 104,743
Paid-in capital (Note 18.1) (2,926,280) (477,899) - - - 2,361,931 (1,041,248)
Capital reserve (Note 18.1) (250,599) - - - - - (250,599)
  (3,840,944) (501,550) (33,174) 238,869 13,385 2,362,931 (1,760,483)

 

 

    Transactions affecting cash Transactions not affecting cash  
Consolidated

Opening balance

12/31/2019

Funding/

Receipt

Payment

Interest

Principal payment Interest and inflation adjustment Other Closing balance 09/30/2020
               
Loans, financing and debenture (Notes 12 and 13) (730,678) (253,642) (31,865) 334,251 (2,129) - (684,063)
Loans (Note 21.1) 24,136 - - (5,741) 14,753 - 33,148
Paid-in capital (Note 18.1) (2,926,280) (477,899) - - - 2,361,931 (1,041,248)
Capital reserve (Note 18.1) (250,599) - - - - - (250,599)
  (3,883,421) (731,541) (31,865) 328,510 12,624 2,362,931 (1,942,762)

 

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

31. Events after the reporting period

 

(i) Convertible debenture issue

 

On October 21, 2020, the Company disclosed a Material Fact informing that the Board of Directors approved the following items:

 

(i)            the launch of the public offering with restricted efforts for the placement of the sixteenth debenture issue of the Company, convertible into common shares, in two series, with secured guarantee, in the total amount of R$117,570, with unit value of R$10, and the signature of the respective trust indenture;

(ii)           increase in the capital of the Company upon debenture conversion, provided that the increase limit of 600 million common shares is observed.

 

On November 16, 2020, in view of the conversion of the Company’s Series I debentures of the sixteenth issue, the Board of Directors approved the following:

 

(i)            ratification of the issue of 9,944,150 common shares of the Company; and

(ii)           the consequent approval of the increase in the Company’s capital: increase in the number of shares from 290,731,951 registered book-entry common shares to 300,676,101 registered book-entry common shares, and the increase in the Company’s capital from R$ 1,041,248 to R$ 1,083,248.

 

(ii)     Approval of the transaction with Calçada S.A. by the Administrative Council for Economic Defense (CADE)

 

On November 3, 2020, the Company informed about CADE’s approval of the transaction made with Calçada for acquisition of the totality of its share in four real estate ventures located in the Southern and Western zones in the city of Rio de Janeiro.

 

(iii) Acquisition of assets in São Paulo

 

On November 10, 2020, the Company informed that it entered into a contract for acquisition of real estate assets located in the Western zone in the city of São Paulo. This acquisition depends on the fulfillment of conditions precedent, including due diligence, and is expected to be completed in December 2020.

 

(iv) Intention of making a business combination with Tecnisa

 

On August 19, 2020, the Company disclosed a Material Fact informing that it sent to Tecnisa’s Board of Directors a proposal for the potential integration of Tecnisa’s business with Gafisa, with transformational characteristics for both Tecnisa and Gafisa.

 

The management of both companies shall negotiate the establishment of the applicable procedures, which studies have already been initiated at Gafisa, as approved by its Board of Directors. There are many synergies between the two companies, the major players of the sector, particularly if we consider the possible combination of their potentials.

 

For these reasons, Gafisa understands that this operation will add value to all of its shareholders as well as to those of Tecnisa. Any alternative of this analyzed operation shall be voluntary and structured to ensure that all shareholders of Tecnisa receive equal treatment, and in case of exchange or barter, the economic condition is kept.

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

31. Events after the reporting period--Continued

 

(iv) Intention of making a business combination with Tecnisa

 

 

This operation includes the Gafisa’s request to make amendments to the Articles of Incorporation and management of Tecnisa, by resolution at the Shareholders’ Meeting, as Gafisa had acquired the required amount of shares in the market to request such meeting to be called, pursuant to CVM Instruction 627/2020, included in Note 4.2. Gafisa believes that an integration between the projects of these two companies shall potentially benefit the shareholders of both companies, particularly nowadays, when the real estate market is recovering.

 

(v) Coronavirus – COVID-19

 

As of the disclosure date of this quarterly information, the Company, through its Crisis Management Committee, continues to perform periodic analysis and monitoring of the actions to be taken to anticipate any impact on business.

Until the disclosure date of this quarterly information, the Company has not noted a significant increase in customer default or reduction in sales volume, having even recording a sales increase in the quarter. However, even though it has not noted a significant increase in default in the period, the Company recognized an increase in the allowance for cancelled contracts because of the revaluation of the contracts in effect in relation to the uncertainty over cash inflows during the pandemic. Moreover, the construction of ventures has been according to the original schedule.

However, due to the Covid-19 pandemic, the Company has postponed the launches planned for the second quarter to the second half of this year, currently having three projects in launch phase.

 

Therefore, even considering the scenario of uncertainty over the end of the pandemic for resuming activities and its negative impact on the country’s economy, management has evaluated the effects after the reporting period of the quarterly information as of September 30, including on its projections of profit or loss and cash generation, based on its best estimate, and has concluded that there is no need to recognize additional loss allowance, nor is any material adverse effect on its operations. The Company is going to keep monitoring the pandemic to continually update its projections and analysis on any effect on its financial information.

 

 

***

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

Other information deemed relevant by the Company

 

1. SHAREHOLDERS HOLDING MORE THAN 5% OF THE VOTING CAPITAL AND TOTAL NUMBER OF OUTSTANDING SHARES
  09/30/2020
  Common shares
     
Shareholder Shares %
     
Planner Redwood Asset Management S.A. 39,413,089 13,21%
Outstanding shares 251,977,292 86,67%
Treasury shares 341,570 0,12%
     
Total shares 290,731,951 100.00%
     
               09/30/2019
  Common shares
     
Shareholder Shares %
     
Planner Redwood Asset Management S.A. 19,238,010 27.08%
Wishbone Management, LP 3,629,058 5.11%
River and Mercantille Management, LLP 3,582,114 5,04%
Outstanding shares 41,456,093 58,36%
Treasury shares 3,126,601 4,40%
     
Total shares 71,031,876 100.00%

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

Other information deemed relevant by the Company

 

2. SHARES HELD BY PARENT COMPANIES, MANAGEMENT AND BOARD
  09/30/2020
  Common shares
     
Shareholder Shares %
     
Shareholders holding effective control of the Company 38,413,089 13,21%
Board of Directors 7,127,867 2,45%
Executive directors 2,670,999 0,92%
     
Executive control, board members, officers and fiscal council 48,211,955 16,58%
     
Treasury shares 341,570 0,12%
Outstanding shares in the market (*) 242,178,426 83,30%
     
Total shares 290,731,951 100.00%
     
  09/30/2019
  Common shares
     
Shareholder Shares %
     
Shareholders holding effective control of the Company 26,449,142 37,24%
Board of Directors 555 0.00%
Executive directors 12,800 0.02%
     
Executive control, board members, officers and fiscal council 26,462,497 37,25%
     
Treasury shares 3,126,601 4,40%
Outstanding shares in the market (*) 41,442,778 58,34%
     
Total shares 71,031,876 100.00%
     

 

(*) Excludes shares of effective control, management, board and in treasury.

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

Other relevant information

 

3 – COMMITMENT CLAUSE

The Company, its shareholders, directors and board members undertake to settle, through arbitration, any and all disputes or controversies that may arise between them, related to or originating from, particularly, the application, validity, effectiveness, interpretation, breach and the effects thereof, of the provisions of Law No. 6404/76, the Company's By-Laws, the rules determined by the Brazilian Monetary Council (CMN), by the Central Bank of Brazil and by The Brazilian Securities and Exchange Commission (CVM) as well as the other rules that apply to the operations of the capital market in general, in addition to those established in the New Market Listing Regulation, Participation in the New Market Contract and in the Arbitration Regulations of the Chamber of Market Arbitration.

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

REVIEW REPORT ON QUARTERLY FINANCIAL INFORMATION (ITR)

 

 

To Shareholders and Management of

Gafisa S.A.

São Paulo, SP

 

 

Introduction

 

We have reviewed the accompanying individual and consolidated interim financial information of Gafisa S.A. (“Company”), identified as Company and Consolidated, respectively, contained in the Quarterly Financial Information (ITR) for the quarter ended September 30, 2020, which comprises the statement of financial position as of September 30, 2020, and the respective statements of profit or loss and comprehensive income for the three and nine-month periods then ended, and the statements of changes in equity and cash flows for the nine-month period then ended, including the explanatory notes.

 

The Company’s management is responsible for the preparation of the individual interim financial information in accordance with the Accounting Pronouncements Committee (CPC) Technical Pronouncement (CPC) 21 (R1) – Interim Financial Reporting, and of the consolidated interim financial information in accordance with such pronouncement and the International Accounting Standard (IAS) 34 – Interim Financial Reporting, applicable to the real estate development entities in Brazil, registered with the Brazilian Securities and Exchange Commission (CVM), as well as the presentation of such information according to the rules issued by CVM, applicable to the preparation of Quarterly Financial Information (ITR). Our responsibility is to express a conclusion on such interim financial information based on our review.

 

Scope of review

 

We have conducted our review according to the Brazilian and international review standards of interim financial information (NBC TR 2410 – Review of Interim Financial Information Performed by the Auditor of the Entity, and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of the persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with standards on auditing and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

 

 


 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

 

Conclusion from the individual interim financial information

 

Based on our review, we are not aware of any fact that makes us believe that the individual interim financial information included in the quarterly financial information referred to above has not been prepared, in all material respects, in accordance with the Technical Pronouncement CPC 21 (R1), applicable to the real estate development entities in Brazil, registered with the Brazilian Securities and Exchange Commission (CVM), applicable to the preparation of Quarterly Financial Information (ITR), and presented according to the rules issued by CVM.

 

Conclusion from the consolidated interim financial information

 

Based on our review, we are not aware of any fact that makes us believe that the consolidated interim financial information included in the quarterly financial information referred to above has not been prepared, in all material respects, in accordance with the Technical Pronouncement CPC 21 (R1) and IAS 34, applicable to the real estate development entities in Brazil, registered with the Brazilian Securities and Exchange Commission (CVM), applicable to the preparation of Quarterly Financial Information (ITR), and presented according to the rules issued by CVM.

 

Emphasis of matter

 

As described in Note 2, the individual interim financial information contained in the Quarterly Financial Information (ITR) has been prepared in accordance with CPC 21, applicable to real estate development entities in Brazil, registered with CVM, and the consolidated interim financial information, contained in the ITR, has been prepared in accordance with CPC 21 and IAS 34, applicable to real estate development entities in Brazil, registered with CVM. Accordingly, the determination of the accounting policy adopted by the entity on recognition of revenue from purchase and sale of real estate unit not completed, on aspects related to transfer of control, follows the Company’s Management understanding of the application of CPC 47, aligned with that issued by CVM in the Circular Letter/CVM/SNC/SEP 02/2018. Our opinion does not contain exception in relation to this matter.

 

 


 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

 

Other matters

 

Statement of value added

 

The quarterly information referred to above includes the individual and consolidated statements of value added for the nine-month period ended September 30, 2020, the preparation of which is attributed to the Company’s management and is presented as supplementary information for IAS 34 purposes, applicable to real estate development entities in Brazil, registered with CVM. These statements have been submitted to the review procedures performed together with the review of the quarterly information, with the aim to conclude whether they are reconciled with the interim financial information and the accounting records, as applicable, and their format and content follow the criteria established in the Technical Pronouncement CPC 09 - “Statement of value added”. Based on our review, we are not aware of any fact that makes us believe that they have not been prepared, in all material respects, following criteria established in such Technical Pronouncement and consistently with the individual and consolidated interim financial information taken as a whole.

 

 

Rio de Janeiro, November 16, 2020.

  

 

Mário Vieira Lopes
Accountant - CRC-RJ-060.611/O-0

 

 

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

 

Reports and statements / Management statement of interim financial information

Management statement of interim financial information

 

STATEMENT

 

The management of Gafisa S.A., 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 on December 7, 2009 that:

 

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 September 30,2020; and

 

ii)   Management has reviewed and agreed with the interim information for the period ended September 30, 2020

 

 

São Paulo, November 16, 2020.

 

GAFISA S.A.

 

Management

 

 

(A free translation of the original report in Portuguese as published in Brazil)

 

 

Gafisa S.A.

 

Notes to the quarterly financial information

September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

Reports and Statements / Management statement on the report on review of interim financial information

 

Management Statement on the Review Report

 

STATEMENT

 

The management of Gafisa S.A., 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 7, 2009 that:

 

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 September 30, 2020; and

 

ii)   Management has reviewed and agreed with the interim information for the period ended September 30, 2020.

 

São Paulo, November 16, 2020.

 

GAFISA S.A.

 

Management

  

Rel294

 
 

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: December 18, 2020

 

Gafisa S.A.
 
 
By:

/s/ Ian Andrade

 

Name:   Ian Andrade

Title:     Chief Financial Officer

 

 

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