QUEIROZ GALVÃO DESENVOLVIMENTO IMOBILIÁRIO S.A.

Transcrição

1 QUEIROZ GALVÃO DESENVOLVIMENTO IMOBILIÁRIO S.A.

2 2 MANAGERIAL REPORT To the Stockholders, In accordance with the by-laws, we are submitting for your consideration the annual report of the management, and the related financial statements for the year ended December 31, 2009, of Queiroz Galvão Desenvolvimento Imobiliário S.A. Recife, April 27th, BOARD OF DIRECTORS Advisory council Fernando de Queiroz Galvão President Roberto de Queiroz Galvão Vice President Marcos de Queiroz Galvão Carlos de Queiroz Galvão Counselor EXECUTIVE BOARD Directors Frederico Jorge de Farias Pereira CEO Arno Stupp Managing Director Henrique Suassuna Fernandes Director of Engineering Accountant Joas Dias Oliveira CRC-PE /0-0

3 3 B A L A N C E S H E E T S At December 31 (in thousands of US dollars) PARENT COMPANY ASSETS Current assets Cash and cash equivalents (note 3) 4,371 3,166 24,298 15,142 Trade accounts receivable (note 4) 34,867 9,701 96,721 30,987 Real estate to be sold (note 5) 13,804 7,059 64,123 35,616 Taxes and contributions recoverable 885-2, Sales expenses to be appropriated Other accounts receivable 1, , ,589 20, ,692 83,480 Non-current assets Long-term receivables Trade accounts receivable (note 4) 5,795 12,803 43,691 44,441 Marketable securities - - 1,397 - Real estate to be sold (note 5) ,004 22,130 Related parties (note 9) 19,139 5,163 2, Judicial deposits (note 14) ,022 17,998 71,541 67,107 Investments (note 6) 122,591 78, Other investments Property and equipment (note 7) ,694 2,031 Intangible assets ,521 78,996 3,093 2, ,543 96,994 74,634 69,243 Total assets 204, , , ,723 The accompanying notes are an integral part of these financial statements. (continued)

4 4 B A L A N C E S H E E T S At December 31 (in thousands of US dollars) PARENT COMPANY LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities Loans and financing (note 8) 37,078 22,607 54,209 29,613 Suppliers ,516 1,394 Accounts payable for real estate acquisitions (note 11) - - 3,286 1,264 Liabilities for real estate development (note 12 (iii)) - - 2,271 - Provision for net capital deficiency (note 6) Advances from customers (note 10) ,203 1,384 Social and tax obligations 1,891 1,084 5,079 2,158 Taxes and contributions payable , Related parties (note 9) 5,395 1, Deferred income tax and social contribution (note 12) Deferred taxes 1, ,442 1,164 Accounts payable ,610 2,713 Proposed dividends (note 13(b)) , ,791 29,636 91,841 41,854 Non-current liabilities Loans and financing (note 8) 38,304 19,258 48,236 24,353 Accounts payable for real estate acquisitions (note 11) - - 3,808 5,056 Liabilities for real estate development (note 12 (iii)) 735-1,105 - Advances from customers (note 10) ,702 8,366 Related parties (note 9) 8,707-3,082 - Deferred income tax and social contribution (note 12) ,588 Deferred taxes ,166 1,442 Provision for contingencies (note 14) Other accounts payable ,275 48,117 20,810 67,261 43,399 Minority interest Stockholders equity (note 13) Capital 73,034 54,415 73,034 54,415 Revenue reserves 34,190 13,042 34,190 13, ,224 67, ,224 67,457 Total liabilities and stockholders equity 204, , , ,723 The accompanying notes are an integral part of these financial statements.

5 5 S TAT E M E N T S O F I N C O M E Years ended December 31 (in thousands of US dollars, unless otherwise indicated) PARENT COMPANY Gross operating revenue Real estate development and resale 43,817 29, ,819 88,685 Deductions from gross revenue (4,147) (938) (8,753) (3,338) Net operating revenue - 28,636-85,347 Costs incurred on realized sales (30,442) (17,600) (108,977) (51,896) Gross profit 9,228 11,036 42,089 33,451 Operating income (expenses) Commercial (988) (463) (3,291) (4,900) General and administrative (6,251) (3,939) (17,953) (10,327) Other operating income (expenses), net 411 (972) 922 (787) (6,827) (5,374) (20,322) (16,015) Operating profit before results from investments and financial result 2,401 5,662 21,767 17,436 Results from investments (note 6) Equity in the results of investees 18,592 10, Financial result Financial expenses (5,624) (11,255) (6,165) (12,281) Financial income 894 8,282 3,227 10,884 (4,731) (2,973) (2,939) (1,397) Profit before taxation 16,262 13,617 18,828 16,040 Income tax and social contribution Current - (1,348) (3,114) (3,190) Deferred 913 (45) 1,738 (614) 913 (1,392) (1,375) (3,804) Net income before minority interest 17,175 12,224 17,453 12,236 Minority interest - - (278) (12) Net income for the year 17,175 12,224 17,175 12,224 Outstanding shares at the end of the year 127, ,167 Net income per share at the end of the year US$ The accompanying notes are an integral part of these financial statements.

6 6 S TAT E M E N T S O F C H A N G E S I N S T O C K H O L D E R S E Q U I T Y Years ended December 31 (in thousands of US dollars) CAPITAL REVENUE RESERVES LEGAL PROFIT RETENTION RETAINED EARNINGS TOTAL At December 31, , ,161 20,822 Increase and payment of capital (note 13) 34, ,754 Net income for the year ,224 12,224 Appropriations of net income Legal reserve (603) - Proposed dividends (note 13(b)) (344) (344) Profit retention reserve (note 13(b)) ,439 (12,439) - At December 31, , ,439-67,456 Exchange rate adjustment (note 2.2(u)) 18, ,256-23,082 At December 31, adjusted 73, ,695-90,538 Net income for the year ,175 17,175 Appropriations of net income Legal reserve (859) - Proposed dividends (note 13(b)) (489) (489) Profit retention reserve (note 13(b)) ,827 (15,827) - At December 31, ,034 1,668 32, ,224 The accompanying notes are an integral part of these financial statements.

7 7 S TAT E M E N T S O F C A S H F L O W Years ended December 31 (in thousands of dollars) PARENT COMPANY Cash flows from operating activities Profit before taxation 16,262 13,617 18,828 16,040 Expenses (income) that do not affect the cash flow Equity in the results of investees (18,592) (10,928) - - Depreciation and amortization Adjustments from Law No (355) Interest, monetary and exchange variations on loans and financing and judicial deposits 4,713 1,474 4,468 (103) Deferred taxes Provisions for contingencies Changes in current and long-term assets and liabilities 2,551 4,004 23,862 17,718 Increase in accounts receivable (9,619) (3,048) (37,612) (46,141) Decrease (increase) in real estate to be sold (4,330) 524 (10,622) (12,469) Increase in taxes and contributions for offset (885) - (2,298) - Increase in other assets (386) (615) (2,192) (5,840) Increase (decrease) in suppliers (102) 199 1,645 (21,628) Increase (decrease) in accounts payable for real estate acquisitions - - (1,389) 6,320 Increase (decrease) in advances from customers (1,402) 1,115 7,818 9,667 Increase in taxes and contributions payable 1, , Increase (decrease) in liabilities for real estate development 735 (4,341) 3,376 (5,302) Increase (decrease) in accounts payable (592) 685-1,915 Increase (decrease) in other liabilities (791) 1,186 (3,328) 2,566 Decrease in the minority interest (2,062) Cash used in operations (13,333) 136 (17,114) (54,691) Interest paid (7,660) (2,510) (9,471) (2,510) Income tax and social contribution paid (511) - (2,761) - Net cash used in operating activities (21,504) (2,374) (29,346) (57,202) The accompanying notes are an integral part of these financial statements. (continued)

8 8 S TAT E M E N T S O F C A S H F L O W Years ended December 31 (in thousands of dollars) PARENT COMPANY Cash flows from investing activities Acquisitions of property and equipment (192) (453) (792) (2,653) Increase in investments (10,076) (67,666) - (1) Profit received 11, Others (33) 5,175 (1,398) (104) Net cash provided by (used in) investing activities 882 (62,944) (2,190) (2,758) Cash flows from financing activities From third parties New loans and financing 31,761 36,023 57,261 35,663 Payment of loans and financing (10,461) (2,383) (23,370) - 21,300 33,640 33,892 44,611 From stockholders/related parties Receipts (payments) related parties, net (555) - 1,618 - Capital subscription - 34,754-34,754 Net cash provided by financing activities 20,744 68,394 35,510 70,417 Increase in cash and cash equivalents 122 3,076 3,974 10,458 Balances of cash and cash equivalents At the beginning of the year 4, ,324 4,685 At the end of the year 4,371 3,166 24,298 15,142 The accompanying notes are an integral part of these financial statements.

9 9 1 > OPERATIONS Queiroz Galvão Desenvolvimento Imobiliário S.A. ( Company ) is a private limited company headquartered in Recife, State of Pernambuco, and it is controlled by Queiroz Galvão S.A. The main activity of the Company and its subsidiaries is the development of residential and commercial real estate, besides holding investments in other companies. The subsidiary companies share the corporate, management and operating structures and costs of the Company. The development of real estate is effected by the Company and by its subsidiary companies or together with other partners. The participation of third parties occurs directly in the venture or through participations in companies, created with the specific purpose of developing a venture. 2 > FINANCIAL STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING PRACTICES 2.1 Financial statement presentation These financial statements were approved by the Company s Management on April 21, The financial statements were prepared and are being presented in accordance with accounting practices adopted in Brazil, based on the provisions of Brazilian Corporation Law. The principal accounting practices adopted in the preparation of these financial statements are those applicable to the financial statements for the year ended December 31, 2009, which will be different from the practices to be utilized for the preparation of the financial statements for the year ending December 31, The preparation of financial statements requires the use of estimates to record certain assets, liabilities, revenue and expenses. Therefore, the Company s financial statements include estimates related to the selection of the useful lives of property and equipment, provisions for contingent liabilities, income tax and other similar liabilities. The actual results may differ from those estimated. a. Significant accounting practices Cash and cash equivalents Cash and cash equivalents comprise cash on hand and bank deposits, stated at cost, and applications in investment funds, stated at the quota value at the balance sheet date. b. Financial instruments Classification and measurement The Company classifies its financial assets according to the following categories: measured at fair value through profit or loss and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of the financial assets at the time they are initially recorded.

10 10 Financial assets measured at fair value through profit or loss These are financial assets held for active and frequent trading, classified as cash equivalents. Gains or losses arising from the changes in their fair value are recorded in the statement of income as financial income or expense in the period in which they occur. Loans and receivables Loans and receivables comprise loans granted and non-derivative receivables with fixed or determinable payments, that are not quoted in an active market. All loans and receivables which fall due within 12 months from the balance sheet date are included in current assets and the others are classified as non-current assets. The Companies loans and receivables comprise loans granted to related parties, trade accounts receivable, other accounts receivable and cash and certain cash equivalents, except for certain short-term investments. Loans and receivables are recorded at amortized cost, based on the effective interest rate method. c. Accounts receivable The sale of units is substantially realized during the launching and construction phases of the ventures. The trade accounts receivable, in these cases, are constituted by applying the percentage relationship between the incurred cost of the sold units (including land) and the total budgeted cost to the revenue from the sold units, adjusted according to the conditions contained in the sale agreements. Consequently, the accumulated revenue to be recognized is determined, and the installments received are deducted from it. The result on term sales of concluded units is appropriated at the time of the sale, regardless of the contracted payment terms of the sale. The interest and monetary variation on accounts receivable from concluded units are appropriated to the financial result when earned, in compliance with the accrual basis of accounting. The allowance for doubtful accounts is established when there is objective evidence that the Company will not be able to realize the amounts due under the original terms of the accounts receivable. The amount of the allowance is the difference between the book value and the recoverable value. The present value of the accounts receivable related to the sale of units not concluded is calculated based on the interest rate for the remuneration of government bonds indexed by reference to the Amplified Consumer Price Index ( Índice de Preços ao Consumidor Ampliado - IPCA ). This rate is compatible with the nature, term and risks of similar transactions under normal market conditions. The rate at December 31, 2009, corresponded to an average of 7.50% per annum (p.a.)( % p.a.). d. Inventories The real estate ready for sale is stated at construction cost, which does not exceed its net realizable value. In the case of real estate in construction, the portion in inventory corresponds to the incurred cost of the units not yet sold. The cost comprises materials, labor (own or contracted) and other related construction costs, including the financial cost of the capital applied (financial charges on accounts payable for the acquisition of land and on real estate credit operations, incurred during the construction period). The net realizable value is the estimated sales price in the normal course of business, net of the completion costs and selling expenses. When the construction cost of real estate to be sold, concluded or in construction,

11 11 exceeds the expected cash flow of the related sales, an impairment loss is recognized in the period for which it is determined that the book value is not recoverable. The recovery of the book value of each venture is reviewed when events or changes in the macroeconomic scenarios indicate that the book value may not be recoverable. If a loss is confirmed, a provision is constituted. Land is stated at acquisition cost, plus eventual financial charges generated by the related accounts payable. In the case of exchanges for units to be constructed, cost corresponds to the cash acquisition price of the land. The land is only recorded on the registration of the title deed of the real estate, not being recognized in the financial statements during the negotiation phase, regardless of the probability of success or the stage of progress of the negotiations. e. Income tax and social contribution on net income In 2009, the parent company opted for the taxable profit system, according to which the income tax and social contribution on net income are calculated at the regular rates of 15% plus a surcharge of 10% for income tax and 9% for social contribution, on the accounting profit for the year, adjusted in accordance with the criteria established by the fiscal legislation in force. The subsidiary companies opted for the presumed profit system, according to which the income tax is calculated based on 8%, and the social contribution on 12%, of gross revenue (32% of revenue when it derives from service rendering and 100% of financial income). The regular rates of 15% plus 10% for income tax and 9% for social contribution are applied to the presumed profits. f. Investments in subsidiary companies When the Company holds more than half of the voting capital of another company, it is considered to be the parent company. In the companies in which the Company holds less than 50% of the voting capital, agreements guarantee to the Company the right of veto in decisions that may significantly affect a company s business, thereby assuring shared control. Investments in subsidiary companies are recorded based on the equity accounting method, and the equity in the results of investees is recognized in the statement of income for the year as operating income (or expense). Unrealized gains on transactions between the Company and its subsidiary companies are eliminated in proportion to the Company s investment; unrealized losses are also eliminated, unless the transaction provides evidence of impairment of the asset transferred. When the Company s interest in the losses of subsidiary companies is equal to or exceeds the investment value, the Company recognizes the excess losses, classified as provision for net capital deficiency. When necessary, the accounting practices of the subsidiary companies are adjusted to be consistent with the practices adopted by the Company. g. Property and equipment Property and equipment are stated at acquisition cost, less depreciation calculated on the straight-line method, at the annual rates mentioned in Note 7. The headquarters of the Company, and its subsidiary companies are located in real estate rented from third parties.

12 12 h. Impairment of assets Property and equipment, other non-current assets and intangible assets are reviewed annually to identify evidence of impairment, and also whenever events or changes in circumstances indicate that the book value may not be recoverable. In this case, the recoverable value is calculated to verify if there is any loss. In the event of loss, it is recognized at the amount by which the book value of the asset exceeds its recoverable value, which is the higher between the net sales price and the value in use of an asset. For evaluation purposes, assets are grouped at the lowest level for which there are separately identifiable cash flows. i. Provisions Provisions are recognized when the Company has a legal or not formalized present obligation as a result of past events, it is probable that assets will be surrendered to settle the obligation, and a reliable estimate of the amount can be made. The Company recognizes a provision for onerous contracts when the benefits expected to be obtained from a contract are lower than the unavoidable costs to satisfy the obligations assumed in the contract. j. Employee and manager benefits The Company does not maintain option plans for share purchases, a private pension plan or any retirement plan or benefits after the employees leave the Company. k. Dividends According to the Company s by-laws, the holders of any class of shares are entitled each year to a minimum dividend of 3% of net income, calculated in accordance with corporation law. l. Loans and financing Loans and financing are initially recognized at fair value on the receipt of funds, net of transaction costs, and are subsequently presented at amortized cost, that is plus charges and interest in proportion to the period elapsed ( pro rata temporis ). m. Capital Capital is exclusively represented by common shares, classified in stockholders equity. n. Revenue reserves The legal reserve is calculated based on 5% of the net income for the year, according to Law No. 6404/76. The balance of the revenue reserves relates to the retention of the remaining balance of retained earnings and its appropriation will be determined at the Stockholder s Ordinary General Meeting. o. Recognition of the result on real estate development and sale and others On the sales of not-concluded units of ventures launched, which are no longer subject to the effects of the corresponding resolutive clause contained in the related real estate development memorandum, the procedures and standards established by CFC Resolution No. 963 of the Federal Accounting Council ( Conselho Federal de Contabilidade - CFC ) are observed, as follows:

13 13 the incurred cost (including the cost of land) corresponding to the units sold is wholly appropriated to the result; the percentage of the incurred cost of the units sold (including land) in relation to the total budgeted cost is computed, and this percentage is applied to the revenue from the units sold, adjusted according to the conditions contained in the sale agreements, in order that the amount of the revenue to be recognized can be determined; the amounts of the calculated sales revenues, including price-level restatements, net of the received installments, are recognized as accounts receivable or as advances from customers, when applicable; the financial charges directly related to the ventures, relating to accounts payable for the acquisition of land and real estate credit operations, as well as the financial charges on the other financing operations indirectly related to the ventures, incurred during the construction phase, are appropriated as cost incurred on the venture and reflected in the results at the time of the sale of the units of the corresponding venture; The financial charges on financing operations the resources of which are not used in the ventures are appropriated to the financial result when incurred. The financial charges on accounts payable for land and of real estate credit operations incurred after the conclusion of a construction are accounted for in a similar manner. p. Commercial expenses The charge related to the sale commission is the responsibility of the purchaser of the real estate, not constituting an expense of the Company or of its subsidiary companies. The charge which is responsibility of the Company is recognized in the result, observing the same criterion adopted for the recognition of the corresponding revenues. The expenditures incurred and directly related to the construction of a sales stand and of an apartmentmodel, when its estimated useful life is of more than one year, are primarily of the nature of tangible assets and, accordingly, are recorded in property and equipment, being depreciated in accordance with the term of its estimated useful life. The corresponding depreciation charge is allocated to sales expenses. The expenses with publicity, marketing, promotions and other correlated activities, directly or indirectly related to a venture, are recognized in the result, when incurred. q. Consolidated financial statements The consolidated financial statements comprise the financial statements of Queiroz Galvão Desenvolvimento Imobiliário S.A. and of its subsidiary companies (individually and under joint control or created for specific property venture management purposes), as mentioned in Note 6. In the consolidation of the financial statements, the revenues and expenses between the consolidated companies, as well as the investment, are eliminated, the minority interest being presented in a separate line. For the subsidiary companies under joint control, the financial statements are proportionally consolidated. r. Basis of translation The accounting records are maintained in reais. The financial information in U.S. dollars is presented solely for the convenience of the reader and has been translated from the amounts in the December 31, 2009 local currency financial statements, using the exchange rate prevailing on that date of R$ to US$ 1.00 ( R$ to US$ 1.00). Such translation should not be construed as representing that the amounts in reais represent, or have been, or could be, converted in U.S. dollars at that or at any other rate.

14 Accounting pronouncements and interpretations of standards that are not yet effective The accounting pronouncements, issued by the Brazilian Accounting Pronouncements Committee (CPC), and interpretations of standards listed below were published and are mandatory for years beginning on or after January 1, In addition, other pronouncements and interpretations were also published, which alter the accounting practices adopted in Brazil, within the process of convergence with international standards. The standards below are only those that could (or should) more significantly affect the Company s financial statements. Under the terms of these new standards, the amounts for 2009, presented herein, should be restated for comparison purposes when the 2010 financial statements are prepared. The Company did not opt for the early adoption of these standards for the year ended December 31, CCPC 22 - Segment Information CCPC 30 - Revenues and ICPC 02 - Real Estate Construction Contracts CCPC 36 - Consolidated Financial Statements CCPC 38 a 40 - Financial Instruments: Recognition, Measurement, Presentation and Disclosure The Company will prepare the information by segment, and alterations should occur in the presentation of the consolidated financial statements, one of which is the presentation of the minority interest in stockholders equity. ICPC 02, combined with CPC 30, brings significant changes regarding the accounting practices previously established by OCPC 01 for real estate development entities. The Company is evaluating the impact of these changes on the financial statements, which cannot be quantified at present. 3 > CASH AND CASH EQUIVALENTS PARENT COMPANY Cash and banks ,025 5,739 4,142 Investment funds - fixed-income (i) 3,514 2,141 18,558 11,001 4,371 3,166 24,297 15,143 (i) Average rates equivalent to between 99.5% and 100% of the variation of the Interbank Deposit Certificate ( Certificado de Depósito Interbancário - CDI ) rate.

15 15 4 > ACCOUNTS RECEIVABLE PARENT COMPANY Concluded ventures 20,895 4,250 56,943 18,908 Ventures in construction Appropriated financial revenue 29,689 48, , ,940 Present value adjustment (627) (506) (3,713) (2,968) Installments received (19,455) (29,703) (90,801) (60,452) 19,767 18,254 83,468 56,520 Appropriated accounts receivable 40,662 22, ,411 75,428 Long-term receivables (5,795) (12,803) (43,691) (44,441) Current assets 34,867 9,701 96,721 30,987 The accounts receivable are substantially updated by the variation of the National Civil Construction Index ( Índice Nacional da Construção Civil - INCC ) up to the possession of the unit and, subsequently, by the variation of the General Price Index - Market ( Índice Geral de Preços - Mercado - IGP-M ), plus interest of 12% per annum, appropriated on a pro rata temporis basis as from the conclusion of the construction and the delivery of the unit sold. Discounted receivables correspond to accounts receivable of concluded ventures, at rates between 9% and 10.5% per annum, plus IGP-M. The discounted receivables and the commitment to honor the payment of eventual delinquent accounts were granted as collateral. The balance of accounts receivable of the units sold and not yet concluded is not wholly reflected in the financial statements, since recognition is limited to that part of the revenue recorded in the books (according to criteria described in Note 2.1(c)), net of the installments received.

16 16 As complementary information, the total balance of accounts receivable regarding the real estate development activity, not considering the effects of the present value adjustment, can be summarized as follows: PARENT COMPANY Appropriated accounts receivable 40,662 22, ,411 75,428 Sales revenue to be appropriated (*) 13,043 31, , ,037 Total accounts receivable 53,705 53, , ,465 Installments receivable in one year (45,720) (30,974) 128,209 (75,167) Installments receivable in the long-term 7,985 22, , ,298 (*) Subject to the effects of the present value adjustment at the time of appropriation. The accounts receivable, not considering the effects of the present value adjustment, can be presented as follows, by year of maturity: PARENT COMPANY YEAR forward - 7,346-50,145 1,635 2,432 85,377 48,858 1,472 1,852 10,303 8, ,603 2,832 6, ,639 1,966 59,108 3,279-82,369-7,985 22, , ,298

17 17 5 > REAL ESTATE TO BE SOLD The real estate to be sold is represented by land for future development and by costs incurred for the real estate units (concluded and in construction), as presented below: PARENT COMPANY Concluded real estate 6, ,547 6,569 Real estate in construction Land ,004 22,130 Construction cost 32,367 43, , ,183 Cost of units sold (25,060) (36,862) 133,279 80,136 13,804 7,059 88,127 57,745 Non-current assets - - (24,004) (22,130) Current assets 13,804 7,059 64,123 35,616 The portion classified in long-term receivables corresponds to land of ventures expected to be launched in more than 12 months. The real estate to be sold granted as collateral is mentioned in Note 8.

18 18 6 > INVESTMENTS a. The main information on the corporate participations can be summarized as follows: HOLDING % NET INCOME (LOSS FOR THE YEAR) STOCKHOLDERS / QUOTAHOLDERS EQUITY INVESTMENT COMPANIES Queiroz Galvão Mac Cyrela Veneza Empreendimento Imobiliário S.A. (i) ,806 2,756 28,167 9,955 8,449 2,985 Queiroz Galvão Cyrela Empreendimentos Imobiliários S.A. (i) (868) 2,980 3,042 4,801 1,216 1,920 Queiroz Galvão Cyrela Oklahoma Empreendimento Imobiliário SPE Ltda. (i) ,037 1,313 10,077 8,573 5,040 4,288 Queiroz Galvão Poupec Empreendimentos Imobiliários Ltda (92) Queiroz Galvão Arlindo Gouveia Desenvolvimento Imobiliário Ltda (9) (21) Queiroz Galvão Itapuã Desenvolvimento Imobiliário Ltda (79) (3) 1, , Queiroz Galvão Sabiá Empreendimentos Imobiliários Ltda ,519 8,602 6,339 4,731 3,486 Queiroz Galvão Nature Etapa 2 Desenvolvimento Imobiliário Ltda ,347-11,579 5,719 11,579 5,719 Queiroz Galvão Reserva do Japí Desenvolvimento Imobiliário Ltda (233) (6) 7,361 4,580 7,361 4,580 Queiroz Galvão Caio Pereira Desenvolvimento Imobiliário Ltda Queiroz Galvão Vilas Boas Desenvolvimento Imobiliário Ltda (9) - 1, , Queiroz Galvão Demócrito de Souza Filho Desenvolvimento Imobiliário Ltda (21) (3) Queiroz Galvão Barra Desenvolvimento Imobiliário Ltda (6) (1) Queiroz Galvão Sumarezinho Desenvolvimento Imobiliário Ltda (76) (20) 1, , Queiroz Galvão Ibiapina Desenvolvimento Imobiliário Ltda Queiroz Galvão & Galvão Desenvolvimento Imobiliário Ltda (5) Queiroz Galvão Ipanema Desenvolvimento Imobiliário Ltda (79) - (79) - (79) - Queiroz Galvão Itaigara Desenvolvimento Imobiliário Ltda (171) Queiroz Galvão Morumbi Desenvolvimento Imobiliário Ltda (72) (continued)

19 19 HOLDING % NET INCOME (LOSS FOR THE YEAR) STOCKHOLDERS / QUOTAHOLDERS EQUITY INVESTMENT COMPANIES Queiroz Galvão Pacaembu Desenvolvimento Imobiliário Ltda (1) Queiroz Galvão Pituba Desenvolvimento Imobiliário Ltda (2) - (2) - (2) - Queiroz Galvão Barra Rio Desenvolvimento Imobiliário Ltda (79) - (79) - (79) - Queiroz Galvão Paulínia Desenvolvimento Imobiliário Ltda (11) (6) 5,749 3,949 5,748 3,949 Queiroz Galvão ACLF Aurora Desenvolvimento Imobiliário Ltda (311) Queiroz Galvão Santos Dumont Desenvolvimento Imobiliário Ltda (1) Queiroz Galvão Isla Desenvolvimento Imobiliário Ltda , ,820 4,905 10,820 4,905 Queiroz Galvão São Paulo Empreendimentos Imobiliários Ltda ,225 6,789 12,422 12,731 12,422 12,731 Queiroz Galvão Brotas Desenvolvimento Imobiliário Ltda ,738 1,582 8,604 4,370 8,604 4,370 Queiroz Galvão Poupec Desenvolvimento Imobiliário Ltda , , , Queiroz Galvão Ypiranga Desenvolvimento Imobiliário Ltda (5) (10) Novo Recife Empreendimentos Ltda (3) (2) 10,147 7,561 3,382 2,520 Queiroz Galvão Empreendimentos Ltda ,705 (1,204) 35,406 23,638 35,406 23,638 Queiroz Galvão Recife Desenvolvimento Imobiliário Ltda , Queiroz Galvão Boa Viagem Desenvolvimento Imobiliário Ltda (3) Queiroz Galvão Quality Desenvolvimento Imobiliário Ltda Queiroz Galvão Master Desenvolvimento Imobiliário Ltda Total investments -net 122,591 78,346

20 20 b. The changes in the investments in 2009 and 2008 were as follows: DECEMBER 31, 2008 GAIN OR LOSS ON TRANSLATION ADDITIONS REDUCTIONS EQUITY IN THE RESULTS DIVIDENDS DECEMBER 31, 2009 Queiroz Galvão Mac Cyrela Veneza Empreendimento Imobiliário S.A. 2, ,442-8,449 Queiroz Galvão Cyrela Empreendimentos Imobiliários S.A. 1, (459) (347) (555) 1,216 Queiroz Galvão Cyrela Oklahoma Empreendimento Imobiliário SPE Ltda. 4, ,018 (3,733) 5,040 Queiroz Galvão Poupec Empreendimentos Imobiliários Ltda Queiroz Galvão Poupec Desenvolvimento Imobiliário Ltda ,327 Queiroz Galvão Arlindo Gouveia Desenvolvimento Imobiliário Ltda (9) Queiroz Galvão Itapuã Desenvolvimento Imobiliário Ltda (79) - 1,215 Queiroz Galvão Sabiá Empreendimentos Imobiliários Ltda. 3, (75) - 4,731 Queiroz Galvão Nature Etapa 2 Desenvolvimento Imobiliário Ltda. 5,719-2,555-1,347-11,579 Queiroz Galvão Nature Reserva do Japí Desenvolvimento Imobiliário Ltda. 4,580-1,446 - (233) - 7,361 Queiroz Galvão Caio Pereira Desenvolvimento Imobiliário Ltda Queiroz Galvão Vilas Boas Desenvolvimento Imobiliário Ltda (8) - 1,060 Queiroz Galvão Demócrito de Souza Filho Desenvolvimento Imobiliário Ltda (20) Queiroz Galvão Barra Desenvolvimento Imobiliário Ltda (6) - 75 Queiroz Galvão Sumarezinho Desenvolvimento Imobiliário Ltda (76) - 1,336 Queiroz Galvão Ibiapina Desenvolvimento Imobiliário Ltda (1) - 32 Queiroz Galvão & Galvão Desenvolvimento Imobiliário Ltda Queiroz Galvão Ipanema Desenvolvimento Imobiliário Ltda (79) - (79) Queiroz Galvão Isla Desenvolvimento Imobiliário Ltda. 4,905-1,989-2,247-10,820 Queiroz Galvão Itaigara Desenvolvimento Imobiliário Ltda (171) Queiroz Galvão Morumbi Desenvolvimento Imobiliário Ltda (72) Queiroz Galvão Pacaembu Desenvolvimento Imobiliário Ltda (1) - 6 Queiroz Galvão Pituba Desenvolvimento Imobiliário Ltda (2) - (2) Queiroz Galvão Barra Rio Desenvolvimento Imobiliário Ltda (79) - (79) (continued)

21 21 DECEMBER 31, 2008 GAIN OR LOSS ON TRANSLATION ADDITIONS REDUCTIONS EQUITY IN THE RESULTS DIVIDENDS DECEMBER 31, 2009 Queiroz Galvão Paulínia Desenvolvimento Imobiliário Ltda. 3, (11) - 5,748 Queiroz Galvão ACLF Aurora Desenvolvimento Imobiliário Ltda (186) - 48 Queiroz Galvão Santos Dumont Desenvolvimento Imobiliário Ltda (1) - 6 Queiroz Galvão São Paulo Empreendimentos Imobiliários Ltda. 12, ,225 (6,895) 12,422 Queiroz Galvão Brotas Desenvolvimento Imobiliário Ltda. 4, ,738-8,604 Queiroz Galvão Ypiranga Desenvolvimento Imobiliário Ltda (5) Novo Recife Empreendimentos Ltda. 2, ,382 Queiroz Galvão Empreendimentos Ltda. 23, ,699-35,406 Queiroz Galvão Recife Desenvolvimento Imobiliário Ltda (10) - 28 Queiroz Galvão Boa Viagem Desenvolvimento Imobiliário Ltda (3) - 8 Queiroz Galvão Quality Desenvolvimento Imobiliário Ltda Total 2009 US$ 78,346 26,809 10,486 (459) 18,592 (11,183) 122,591 DECEMBER 31, 2007 ADJUSTMENTS FROM LAW NO GAIN OR ADJUSTED LOSS ON OPENING TRANSLATION BALANCE ADDITIONS EQUITY IN DECEMBER THE RESULTS DIVIDENDS 31, 2008 Queiroz Galvão Mac Cyrela Veneza Empreendimento Imobiliário S.A. 4,013 (340) - 2, (543) 2,985 Queiroz Galvão Cyrela Empreendimentos Imobiliários S.A. 2, ,584-1,192 (856) 1,920 Queiroz Galvão Cyrela Oklahoma Empreendimento Imobiliário SPE Ltda. 4,621 1,199-4, (1,070) 4,288 Queiroz Galvão Poupec Empreendimentos Imobiliários Ltda. 110 (1) (46) - 44 Queiroz Galvão Poupec Desenvolvimento Imobiliário Ltda. (4) Queiroz Galvão Arlindo Gouveia Desenvolvimento Imobiliário Ltda (21) Queiroz Galvão Itapuã Desenvolvimento Imobiliário Ltda (3) Queiroz Galvão Sabiá Empreendimentos Imobiliários Ltda. 3, , ,486 Queiroz Galvão Nature Etapa 2 Desenvolvimento Imobiliário Ltda , ,716 Queiroz Galvão Nature Etapa 3 Desenvolvimento Imobiliário Ltda ,586 (6) - 4,580 (continued)

22 22 DECEMBER 31, 2007 ADJUSTMENTS FROM LAW NO GAIN OR ADJUSTED LOSS ON OPENING TRANSLATION BALANCE ADDITIONS EQUITY IN DECEMBER THE RESULTS DIVIDENDS 31, 2008 Queiroz Galvão Caio Pereira Desenvolvimento Imobiliário Ltda Queiroz Galvão Vilas Boas Desenvolvimento Imobiliário Ltda (2) Queiroz Galvão Demócrito de Souza Filho Desenvolvimento Imobiliário Ltda (3) - 63 Queiroz Galvão Barra Desenvolvimento Imobiliário Ltda (1) - 43 Queiroz Galvão Sumarezinho Desenvolvimento Imobiliário Ltda (6) Queiroz Galvão Ibiapina Desenvolvimento Imobiliário Ltda Queiroz Galvão & Galvão Desenvolvimento Imobiliário Ltda (4) - 48 Queiroz Galvão Ipanema Desenvolvimento Imobiliário Ltda Queiroz Galvão Isla Desenvolvimento Imobiliário Ltda. (120) , ,905 Queiroz Galvão Itaigara Desenvolvimento Imobiliário Ltda Queiroz Galvão Morumbi Desenvolvimento Imobiliário Ltda Queiroz Galvão Pacaembu Desenvolvimento Imobiliário Ltda Queiroz Galvão Pituba Desenvolvimento Imobiliário Ltda Queiroz Galvão Barra Rio Desenvolvimento Imobiliário Ltda Queiroz Galvão Paulínia Desenvolvimento Imobiliário Ltda ,955 (6) - 3,949 Queiroz Galvão ACLF Aurora Desenvolvimento Imobiliário Ltda Queiroz Galvão Santos Dumont Desenvolvimento Imobiliário Ltda Queiroz Galvão São Paulo Empreendimentos Imobiliários Ltda. (58) (46) - (90) 8,172 6,789 (2,139) 12,731 Queiroz Galvão Brotas Desenvolvimento Imobiliário Ltda. (20) - - (18) 3,378 1,582 (574) 4,371 Queiroz Galvão Ypiranga Desenvolvimento Imobiliário Ltda (10) Novo Recife Empreendimentos Ltda ,521 (1) - 2,520 Queiroz Galvão Empreendimentos Ltda ,844 (1,204) - 23,638 Total 2008 US$ 13,844 1,235 (3,354) 11,725 60,875 10,928 (5,182) 78,346

23 23 c. The total balances of assets, liabilities, revenues and expenses of the jointly-controlled subsidiary companies, considered in the consolidated financial statements, proportionally to the shareholdings maintained, can be summarized as follows: At December 31, 2009 ASSETS HOLDING % CURRENT LONG-TERM TOTAL Queiroz Galvão Mac Cyrela Veneza Empreendimento Imobiliário S.A ,082 4,659 37,742 Queiroz Galvão Cyrela Empreendimentos Imobiliários S.A. 40 2,244 1,830 4,074 Queiroz Galvão Cyrela Oklahoma SPE Ltda , ,944 Queiroz Galvão Poupec Empreendimentos Imobiliários Ltda. 50 4,475 1,961 6,435 Queiroz Galvão Poupec Desenvolvimento Imobiliário Ltda , ,899 Queiroz Galvão Sabiá Empreendimentos Imobiliários Ltda , ,061 Queiroz Galvão ACLF Aurora Desenvolvimento Imobiliário Ltda Queiroz Galvão & Galvão Desenvolvimento Imobiliário Ltda. 81 7,776 6,021 13,797 Novo Recife Empreendimentos Ltda ,680-39,680 At December 31, 2008 Queiroz Galvão Mac Cyrela Veneza Empreendimento Imobiliário S.A ,552-17,552 Queiroz Galvão Cyrela Empreendimentos Imobiliários S.A. 40 3,270 2,481 5,751 Queiroz Galvão Cyrela Oklahoma SPE Ltda. 50 9,559 3,061 12,620 Queiroz Galvão Poupec Empreendimentos Imobiliários Ltda Queiroz Galvão Poupec Desenvolvimento Imobiliário Ltda. 50 6,931-6,931 Queiroz Galvão Sabiá Empreendimentos Imobiliários Ltda. 55 3,660 3,029 6,688 Queiroz Galvão ACLF Aurora Desenvolvimento Imobiliário Ltda Queiroz Galvão & Galvão Desenvolvimento Imobiliário Ltda ,139 2,599 Novo Recife Empreendimentos Ltda ,565-26,565

24 24 LIABILITIES AND STOCKHOLDERS EQUITY HOLDING % CURRENT LONG- TERM STOCKHOLDERS EQUITY TOTAL At December 31, 2009 Queiroz Galvão Mac Cyrela Veneza Empreendimento Imobiliário S.A. 30 8,181 1,394 28,167 37,742 Queiroz Galvão Cyrela Empreendimentos Imobiliários S.A ,042 4,073 Queiroz Galvão Cyrela Oklahoma SPE Ltda , ,077 23,944 Queiroz Galvão Poupec Empreendimentos Imobiliários Ltda. 50 2,363 3, ,435 Queiroz Galvão Poupec Desenvolvimento Imobiliário Ltda. 50 7,911 7,333 2,656 17,899 Queiroz Galvão Sabiá Empreendimentos Imobiliários Ltda. 55 1,766 3,693 8,602 14,061 Queiroz Galvão ACLF Aurora Desenvolvimento Imobiliário Ltda Queiroz Galvão & Galvão Desenvolvimento Imobiliário Ltda ,455 1, ,080 Novo Recife Empreendimentos Ltda. 33 9,871 19,662 10,147 39,680 At December 31, 2008 Queiroz Galvão Mac Cyrela Veneza Empreendimento Imobiliário S.A. 30 1,675 5,923 9, Queiroz Galvão Cyrela Empreendimentos Imobiliários S.A ,801 5,751 Queiroz Galvão Cyrela Oklahoma SPE Ltda ,474 8,573 12,620 Queiroz Galvão Poupec Empreendimentos Imobiliários Ltda Queiroz Galvão Poupec Desenvolvimento Imobiliário Ltda. 50 2, ,931 Queiroz Galvão Sabiá Empreendimentos Imobiliários Ltda ,339 6,688 Queiroz Galvão ACLF Aurora Desenvolvimento Imobiliário Ltda Queiroz Galvão & Galvão Desenvolvimento Imobiliário Ltda. 81 2, ,599 Novo Recife Empreendimentos Ltda. 33 3,831 15, ,565 For the jointly-controlled subsidiary companies together, the directors are elected by each of the stockholders, who are the responsible for the decisions of the operations of the subsidiary companies, equitably sharing the control.

25 25 RESULT FOR THE YEAR NET REVENUE COSTS OPERATING EXPENSES FINANCIAL RESULT INCOME TAX AND SOCIAL CONTRIBUTION NET INCOME (LOSS) FOR THE YEAR At December 31, 2009 Queiroz Galvão Mac Cyrela Veneza Empreendimento Imobiliário S.A. 33,453 (19,126) (199 1,524 (846) 14,806 Queiroz Galvão Cyrela Empreendimentos Imobiliários S.A. (110) (470) (700) 458 (45) (868) Queiroz Galvão Cyrela Oklahoma SPE Ltda. 19,358 (13,353) (177) 327 (119) 6,037 Queiroz Galvão Poupec Empreendimentos Imobiliários Ltda. 5,090 (3,973) (496) (224) (30) 367 Queiroz Galvão Poupec Desenvolvimento Imobiliário Ltda. 11,225 (8,684) (1,152) 224 (254) 1,359 Queiroz Galvão Sabiá Empreendimentos Imobiliários Ltda. 9,832 (8,104 (1,072) 101 (407) 349 Queiroz Galvão ACLF Aurora Desenvolvimento Imobiliário Ltda. (1) - ( (310) Queiroz Galvão & Galvão Desenvolvimento Imobiliário Ltda. 2,908 (2,690) (190) 213 (90) 151 Novo Recife Empreendimentos Ltda. - - (1) (2) - (3) At December 31, 2008 Queiroz Galvão Mac Cyrela Veneza Empreendimento Imobiliário S.A. 6,698 (3,547) (484) 1,191 (1,131) 2,727 Queiroz Galvão Cyrela Empreendimentos Imobiliários S.A. 9,347 (5,827) (406) 264 (400) 2,979 Queiroz Galvão Cyrela Oklahoma SPE Ltda. 2,804 (1,241) (184) 7 (72) 1,313 Queiroz Galvão Poupec Empreendimentos Imobiliários Ltda. 622 (411) (288) - (15) (92) Queiroz Galvão Poupec Desenvolvimento Imobiliário Ltda. 4,020 (2,736) (599) 195 (144) 736 Queiroz Galvão Sabiá Empreendimentos Imobiliários Ltda. 3,790 (2,129) (167) 138 (113) 1,519 Queiroz Galvão ACLF Aurora Desenvolvimento Imobiliário Ltda Queiroz Galvão & Galvão Desenvolvimento Imobiliário Ltda. - - (53) 49 - (4) Novo Recife Empreendimentos Ltda. - - (1) (1) - (2)

26 26 7 > PROPERTY AND EQUIPMENT PARENT COMPANY DEPRECIATION - ANNUAL RATE % Facilities ( - ) Accumulated depreciation - - (102) (58) 10 Computer equipment , ( - ) Accumulated depreciation (182) (88) (744) (371) 20 Furniture and fixtures ( - ) Accumulated depreciation (88) (40) (223) (110) 10 Vehicles ( - ) Accumulated depreciation (104) (42) (353) (195) 20 Field equipment , ( - ) Accumulated depreciation (101) (61) (543) (309) ,694 2,031 Review and adjustment of estimated useful lives As required by Technical Interpretation ICPC 10 of the Brazilian Accounting Pronouncements Committee ( Comitê de Pronunciamentos Contábeis - CPC ), approved by CVM Resolution No. 619/09, the Company s management must carry out periodical reviews of the estimated economic useful lives of the property and equipment items for the purpose of calculating depreciation, as well as to determine their residual values.

27 27 8 > LOANS AND FINANCING PARENT COMPANY Loans - swap (a) 7,136 13,880 7,136 31,309 Loans - working capital (b) 35,435 17,426 40,054 Real estate credit operations (c) 31,761 8,585 51,217 16,751 Other credit operations (d) 1,049 1,973 4,037 5,907 75,382 41, ,445 53,967 Current liabilities (37,078) (22,607) (54,209) (29,613) Non-current liabilities 38,304 19,258 48,236 24,353 Main data on loans and financing: (a) SWAP (US DOLLAR AND YEN TO CDI) NOMINAL VALUE ORIGINAL INDEX PERCENTAGE SWAP 2009 Banco Santander S.A. US$ 6,904 Yen % 100% US$ 7,136 In 2009, the Company raised loans (working capital) amounting to US$ 7,136 with Banco Santander S.A. Linked to this operation, and in order to minimize the exchange exposure risks of the loans, the Company entered into swap contracts, in the full amount of this debt, as disclosed in Note 15. (b) ANNUAL RATE OF INTEREST AND COMMISSIONS PARENT COMPANY US$ 2009 US$ Local currency (working capital) Santander ,384 21,384 Unibanco ,051 14,051 Unibanco ,018 Bradesco CDI - 1,601 35,435 40,054 Less Current liabilities (14,554) (13,430) Non-current liabilities 20,881 26,624

28 28 (c) The real estate credit operations are subject to the variation of the Referential Interest Rate ( Taxa Referencial de Juros - TR ), plus 9% to 12% per annum. The following assets were granted as collateral: 2009 PARENT COMPANY Inventories (incurred cost) 61, ,796 Land 21,481 36,296 Total US$ 82, ,092 The composition of the long-term amounts, by year of maturity, is as follows: YEAR PARENT COMPANY ,309 17,569 Total US$ 12,309 17,569 The long-term real estate credit operations have anticipated maturity clauses in the case of non-compliance with the commitments assumed in the contracts, such as the use of the funds in the objective of the contracts, registration of the mortgage of the venture, compliance with the construction schedule and others. The Company is complying with all the commitments agreed in the contracts. (d) The amount refers to the discount of receivables corresponding to the accounts receivable of concluded ventures, at the rates of 9% and 10.5% per annum, plus IGP-M. The discounted credits and the commitment to honor the payment of eventual delinquent accounts were granted as collateral.

29 29 9 > RELATED PARTIES a. Loan operations Subsidiary companies PARENT COMPANY ASSETS LIABILITIES ASSETS LIABILITIES Queiroz Galvão São Paulo Empreendimentos Imobiliário Ltda. 2, Queiroz Galvão Nature II Desenvolvimento imobiliário Ltda Queiroz Galvão Brotas Desenvolvimento Imobiliário Ltda. 1, Queiroz Galvão Isla Desenvolvimento Imobiliário Ltda Queiroz Galvão Reserva do Japi Desenvolvimento imobiliário Ltda Queiroz Galvão Mac Cyrela Veneza Empreendimentos imobiliário S.A Queiroz Galvão Poupec Desenvolvimento imobiliário Ltda Queiroz Galvão Cyrela Oklahoma Ltda Queiroz Galvão Arlindo Gouveia Desenvolvimento Imobiliário Ltda Queiroz Galvão Sabiá Empreendimentos Imobiliário Ltda. 2, Queiroz Galvão Poupec Empreendimentos Imobiliário Ltda Queiroz Galvão Empreendimentos Ltda , Queiroz Galvão Cyrela Empreendimentos Imobiliários S.A Queiroz Galvão Aclf Jardins Ltda. 1, Queiroz Galvão Aclf Aurora Ltda Queiroz Galvão Ibiapina Desenvolvimento Imobiliário Ltda Queiroz Galvão Morumbi Desenvolvimento Imobiliário Ltda Queiroz Galvão Pacaembu Desenvolvimento Imobiliário Ltda Queiroz Galvão Ipanema Desenvolvimento Imobiliário Ltda Queiroz Galvão Barra Rio Desenvolvimento Imobiliário Ltda Queiroz Galvão Pituba Desenvolvimento Imobiliário Ltda. 5,176 3, Queiroz Galvão Itaigara Desenvolvimento Imobiliário Ltda Novo Recife Empreendimentos Ltda. 2, (continued)

30 30 PARENT COMPANY ASSETS LIABILITIES ASSETS LIABILITIES Queiroz Galvão & Galvão Desenvolvimento Imobiliário Ltda ,662 1, Queiroz Galvão Recife Desenvolvimento Imobiliário Ltda Queiroz Galvão Boa Viagem Desenvolvimento Imobiliário Ltda Queiroz Galvão Sumarezinho Desenvolvimento Imobiliário Ltda Queiroz Galvão Demócrito de Souza Filho Desenvolvimento Imobiliário Ltda Queiroz Galvão Itapuã Desenvolvimento Imobiliário Ltda Queiroz Galvão Barra Desenvolvimento Imobiliário Ltda Queiroz Galvão Vilas Boas Desenvolvimento Imobiliário Ltda Queiroz Galvão Caio Pereira Desenvolvimento Imobiliário Ltda Queiroz Galvão Paulínia Desenvolvimento Imobiliário Ltda Queiroz Galvão Ypiranga Desenvolvimento Imobiliário Ltda ,139 5,163 11,336 1,823 2, ,049 - Parent company Construtora Queiroz Galvão S.A , ,765 - Current - - (5,395) (1,823) - - (732) - Balances presented in non-current 19,139 5,163 8,707-2, ,082 -