Financial Statements Direcional Engenharia S.A. Independent Auditor s Report on Financial Statements

Transcrição

1 Financial Statements Direcional Engenharia S.A. Independent Auditor s Report on Financial Statements

2 Direcional Engenharia S/A. Financial Statements Contents Report of Independent Auditors... 1 Financial Statements Balance Sheet... 3 Income Statement... 5 Statement of Changes in Equity... 6 Cash flow Statement... 7 Statement of Value Added... 8 Notes to Financial Statements... 9 Ernst & Young Terco 14

3 Edifício Phelps Offices Tower Rua Antonio de Albuquerque, º andar - Savassi Belo Horizonte, MG, Brasil Tel: (5531) Fax: (5531) A free translation from Portuguese into English of Independent Auditor's Report on individual financial statements in accordance with accounting practices adopted in Brazil and on consolidated financial statements in accordance with IFRS and also with accounting practices adopted in Brazil Independent Auditor s Report on Financial Statements Board of Directors and Shareholders of Direcional Engenharia S.A. Belo Horizonte/MG We have audited the accompanying individual and consolidated financial statements of Direcional Engenharia S.A. (Company), identified as Company and Consolidated, respectively, which comprise the balance sheet as at December 31, 2011 and the related income statements, statements of changes in equity and cash flow statements for the year then ended, and a summary of significant accounting practices and other explanatory information. Management's responsibility for the financial statements Management is responsible for the preparation and fair presentation of the individual and consolidated financial statements in accordance with the accounting practices adopted in Brazil and of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) applicable to real estate development entities, approved by the Brazilian FASB (CPC) and the Brazilian Professional Accounting Body (CFC), and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Independent auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit, which was conducted in accordance with Brazilian and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether these financial statements are free from material misstatement.. Ernst & Young Terco 1

4 Independent auditor s responsibility (Continued) An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the Company s financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of accounting practices used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion on the financial statements prepared in accordance with accounting practices adopted in Brazil In our opinion, the aforesaid individual (Company) and consolidated financial statements present fairly, in all material respects, the equity and financial position of Direcional Engenharia S.A. at December 31, 2011, its operating performance and cash flows for the year then ended, in accordance with accounting practices adopted in Brazil. Opinion on the consolidated financial statements prepared in accordance with international financial reporting standards (IFRS), applicable to real estate development entities in Brazil, as approved by the Brazilian FASB (CPC), the Brazilian Securities and Exchange Commission (CVM) and the Brazilian Professional Accounting Body (CFC) In our opinion, the aforesaid consolidated financial statements present fairly, in all material respects, the consolidated equity and financial position of Direcional Engenharia S.A. at December 31, 2011, its consolidated operating performance and cash flows for the year then ended, in accordance with international financial reporting standards (IFRS), applicable to real estate development entities in Brazil, as approved by the Brazilian FASB (CPC), the Brazilian Securities and Exchange Commission (CVM) and the Brazilian Professional Accounting Body (CFC). Ernst & Young Terco 2

5 Emphasis As described in Note 2.1, the individual (Company) and consolidated financial statements were prepared in accordance with accounting practices adopted in Brazil. Additionally, the consolidated financial statements prepared in accordance with the IFRS applicable to real estate development entities take into consideration Technical Guidance OCPC 04 issued by the CPC. This guidance refers to revenue recognition in this segment and includes matters relating to the meaning and use of the concept of continuous transfer of risks, rewards and control on sale of real estate units, as described in further detail in Note Our opinion has not been qualified as regards this matter. Other matters Statements of value added We have also audited the individual and consolidated statements of value added (SVA), for the years ended December 31, 2011, prepared under Company management responsibility, whose presentation is required by Brazilian corporation law for publiclytraded companies and as supplementary information under IFRS, which do not require SVA presentation. These statements were submitted to the same audit procedures previously described and, in our opinion, are fairly presented in all material respects, in relation to the overall financial statements prepared in accordance with accounting practices adopted in Brazil. Belo Horizonte, March 12, ERNST & YOUNG TERCO Auditores Independentes S.S. CRC 2SP015199/O-6 Antonio C. M. Lage Accountant CRC MG077995/O-1 Ernst & Young Terco 3

6 Balance Sheets : Company Consolidated Note 12/31/ /31/ /31/ /31/2010 Current assets: Cash and cash equivalents 3 122, , , ,851 Accounts receivable real estate development 4 4,319 5, , ,108 Accounts receivable services rendered 4-1, ,139 68,303 Land to be developed 5.1-9, , ,992 Completed real estate units ,365 43,898 19,527 Real estate units under construction , ,923 Related parties ,912 14,791 37,560 7,441 Taxes recoverable - 10,305 5,959 11,085 6,438 Prepaid Commercial expenses ,233 3,588 Other credits - 13,106 13,372 44,875 28,995 Total current assets 199, ,762 1,913,558 1,308,166 Non-current assets: Accounts receivable real estate development , ,403 Land to be developed ,988 27, , ,118 Related parties ,756 13,543 34,756 25,925 Other non-current credits - 8,770-14,701-73,609 42, , ,446 Investments 7 1,014, , Property and equipment 8 24,178 18,588 45,662 34,630 Intangible assets - 2,003 2,301 2,190 2,301 1,041, ,498 47,852 36,931 Total non-current assets 1,114, , , ,377 Total assets 1,313, ,276 2,451,913 1,679,543 Ernst & Young Terco 4

7 Company Consolidated Note 12/31/ /31/ /31/ /31/2010 Current liabilities: Loans and financing 9 4,843 3, , ,643 Trade accounts payable - 1, ,766 23,483 Labor liabilities 10 9,679 8,700 34,942 27,583 Tax liabilities ,547 43,268 Real estate commitments payable ,848 94,895 Advances from customers ,715 31,028 Proposed dividends - 41,614 40,272 42,346 40,272 Trade accounts payable 14 23,124 15,709 91,337 29,275 Related parties ,490-8,960 - Total current liabilities 110,322 69, , ,447 Non-current liabilities: Loans and financing 9 28,967 25, , ,731 Provision for guarantees ,555 6,327 Tax liabilities ,632 11,026 Real estate commitments payable ,666 83,887 Advances from customers , ,760 Provision for tax, civil and labor contingencies ,471 4,549 2,510 Trade accounts payable 14 17,022-17,022 - Total non-current liabilities 46,843 28, , ,241 Equity Common stock , , , ,247 Capital reserve , , , ,339 Treasury stocks (15,846) - (15,846) - Income reserve , , , ,891 1,156, ,477 1,156, ,477 Interest in SCPs and SPEs ,701 34,378 Total equity 1,156, ,477 1,232, ,855 Total liabilities and equity 1,313, ,276 2,451,913 1,679,543 See accompanying notes to financial statements. Ernst & Young Terco 5

8 Income statement Years ended Company Consolidated Note 12/31/ /31/ /31/ /31/2010 Net operating revenue ,190 7,957 1,072, ,907 Cost of real estate sold and services rendered 16.2 (1,916) (64) (771,739) (533,783) Gross profit 5,274 7, , ,124 Operating income (expenses): General and administrative expenses 16.3 (85,024) (59,134) (96,193) (59,872) Selling expenses 16.3 (1,711) - (27,673) (20,041) Equity income 7 226, , Other operating income and expenses ,092 1,063 4, , ,756 (122,803) (75,476) Financial income/expenses Financial Expenses 18 (4,611) (1,257) (15,876) (4,567) Financial income 18 34,142 23,160 44,794 33,172 29,531 21,903 28,918 28,605 Income before income and social contribution taxes 175, , , ,252 Income and social contribution taxes (25,098) (20,811) Net income for the year 175, , , ,441 Attributable net income: Non-controlling interest in SPEs and SCPs (6,374) (13,889) Attributable net income: Direcional Engenharia S.A. 175, , , ,552 Earnings per share Base Diluted Ernst & Young Terco 6

9 Statement of changes in equity Years ended Note Common Stock Treasury shares Issue of shares Capital reserve Stock options granted Legal Retained Income reserve For investment Retained earnings (accumulate d losses) Total - Company Noncontrolling interest Total - consolidated Balances at December 31, , ,489 6,042 8,252 70,962 56, ,413 20, ,858 Stock options granted and recognized , ,850-9,850 Realization of stock options granted (6,042) - 6, Net income for the year , ,552 13, ,441 Capital increase non-controlling shareholders Legal reserve , (8,332) Proposed dividends (40,272) (40,272) - (40,272) Income reserve ,948 - (117,948) Balances at December 31, , ,489 9,850 16, ,952 56, ,477 34, ,855 Capital increase from public offering of shares ,602-57, , ,802 Expenses with public offering of shares - - (7,524) (7,524) - (7,524) Capital increase from stock options granted Stock options granted and recognized , ,434-23,434 Realization of stock options granted (9,851) - 9, Treasury shares (15,846) (15,846) - (15,846) Capital increase non-controlling shareholders ,949 34,949 Net income for the year , ,216 6, ,590 Legal reserve , (8,761) Proposed dividends (41,614) (41,614) - (41,614) Income reserve ,841 - (124,841) Balances at December 31, ,686 (15,846) 241,165 23,433 25, ,644 56,355-1,156,782 75,701 1,232,483 See accompanying notes to financial statements.. Ernst & Young Terco 7

10 Cash flow statement Years ended Company Consolidated 12/31/ /31/ /31/ /31/2010 From operating activities Income before income and social contribution taxes 175, , , ,252 Adjustments to reconcile net income to cash and cash equivalents from operating activities: Depreciation and amortization 5,096 2,601 10,363 6,274 Equity investments (226,589) (191,798) - - Provision for guarantees (6) (18) 6,228 4,652 Interest on loans and financing - (3,520) - Provision for tax, civil and labor contingencies (1,673) 1,340 2,039 1,340 Income from barter transactions - - (56,791) (21753) Taxes - - 8,979 13,079 Net present value adjustment accounts receivable - - 9,112 21,315 Provision for stock option plan 23,434 9,850 23,434 9,850 Reversed provision Provision for profit sharing 1,416 5,308 8,693 10,536 Non-controlling interest - - (6,374) (13,889) (Decrease) increase in liabilities Trade accounts receivable 3,074 (3,285) (345,794) (429,721) Inventories 10,356 (13,241) (48,581) (214,960) Other credits (8,504) (8,407) (30,581) (16,478) Related parties (54,334) (1,908) (38,950) (7,441) Taxes recoverable (4,346) (3,788) (4,647) (3,714) Prepaid commercial expenses - - 1,355 1,559 Increase (decrease) in assets Trade accounts payable 415 (554) 19,283 11,507 Labor liabilities (437) 215 (1,334) 7,802 Tax liabilities 346 (219) 9,906 11,650 Real estate commitments payable - - (35,268) 141,364 Advances from customers Trade accounts payable 24,437-79,816 14,724 Related parties 29,490 8,657 8,960 - Cash used in operating activities (22,507) (28,695) (176,683) (250,707) Paid income and social contribution taxes - - (25,098) (20,811) Cash used in operating activities (22,507) (28,695) (201,781) (271,518) Cash flow from investing activities Increase in investments (SPCs and SPEs) (251,807) (211,499) - - Increase in property and equipment (8,264) (15,650) (18,973) (25,334) Increase in intangibles (416) (330) (603) (331) Dividends received 125,045 83, Net cash used in investing activities (135,442) (144,159) (19,576) (25,665) Cash flow from financing activities Capital contribution, net of expenses 222, , Treasury shares (15,846) - (15,846) - Dividends paid (40,272) (18,785) (40,272) (18,785) Inflows and loan amortization charges 7,412 25, , ,781 Interest paid (3,376) - (40,266) (17,709) Capital contribution non-controlling shareholders ,323 13,933 Cash flow generated by financing activities 170,033 7, , ,154 Net increase/(decrease) in cash and cash equivalents 12,084 (165,050) 160,261 (123,029) Cash and cash equivalents At the beginning of the year 110, , , ,881 At the end of the year 122, , , ,851 See accompanying notes to financial statements. Ernst & Young Terco 8

11 Statements of value added Years ended Company Consolidated 12/31/ /31/ /31/ /31/2010 Revenue Real estate sold and services rendered 7,979 10,363 1,098, ,338 Other 557 4,748 1,063 4,437 Allowance for doubtful accounts (addition) reversal (102) (222) (102) (222) 8,434 14,889 1,099, ,553 Inputs purchased from third parties Raw materials used (1,916) - (471,512) (360,736) Materials, electricity, third-party services and other expenses (42,924) (21,431) (89,560) (130,932) Other (1,609) (2,341) (68,444) (14,394) (46,449) (23,772) (629,516) (506,062) Gross value added (38,015) (8,883) 469, ,491 Depreciation and amortization, net (5,096) (2,601) (10,363) (6,274) Net value added produced by the Company (43,111) (11,484) 459, ,217 Value added received in transfer Equity investments 226, , Financial income 34,142 23,160 44,794 33, , ,958 44,794 33,172 Total value added to be distributed 217, , , ,389 Distribution of value added Personnel 37,004 33, , ,139 Taxes, charges and contributions 789 1,779 51,234 45,242 Debt interest 4,611 1,257 15,876 4,567 Net income 175, , , ,552 Net income attributable to non-controlling shareholders - - 6,374 13, , , , ,389 See accompanying notes to financial statements. Ernst & Young Terco 9

12 Notes to financial statements. 1. Operations Direcional Engenharia S.A. ( Direcional or Company ) is a publicly traded Company organized under the Brazilian corporation laws. Direcional shares are traded at BM&F BOVESPA under the ticker symbol DIRR3. The Company is domiciled in Brazil and headquartered at Rua Grão Pará, 466, Belo Horizonte, in Minas Gerais (MG) State. Direcional is a real estate development and construction company engaged in developing large low-income-oriented projects, primarily focused on the northern and mid-western regions of the State of Minas Gerais. Over its 30 years experience in developing and building low-income-oriented projects, the Company established a verticalized structure and a standardized construction process, which has allowed the construction of large-scale projects. The Company carries out its development and construction activities through Silent Partnerships (SCPs) and Special Purpose Entities (SPEs) used in the normal course of business as a way to enable the establishment of partnerships, allowing it to follow up on projects individually, ease obtainment of financing lines for production as well as financial accounting control. Both SCPs and SPEs are exclusively engaged in the real estate sector and, in most cases, associated with a specific venture. Public offering of shares On February 9, 2011, the Company completed its public offering of primary and secondary distribution of its shares, comprising the issue of 20.8 million common registered book-entry shares with no par value (Primary Offering), secondary distribution of 7.2 million common registered book-entry shares with no par value held by the Selling Shareholders, free and clear of any liens or encumbrances (Secondary Offering), totaling 28 million of shares. The share/unit price was R$11.00, totaling R$308,000 gross. In this regard, the net proceeds of commissions and certain fees related to the Primary Offering (in the amount of R$7,418) flowing into the Company totaled R$221,382. Company ownership structure is as follows: Number of outstanding shares and percentages at December 31, 2011 Shareholders Shares (%) Filadélphia Participações S.A. 72,469, % Funds managed by Tarpon Investimentos 23,175, % GIC Government of Singapore 11,098, % Ridgecrest LLC 10,653, % Managing officers 1,604, % Other 34,243, % Total 153,244, % Ernst & Young Terco 10

13 2. Presentation of the financial statements and most significant accounting practices 2.1. Basis of preparation and presentation of individual and consolidated financial statements The individual financial statements for the year ended December 31, 2011 and 2010 were prepared in accordance with accounting practices adopted in Brazil, which comprise the rules set forth by the Brazilian SEC (CVM) and the pronouncements, interpretations and guidance issued by the Brazilian FASB (CPC). The consolidated financial statements were also prepared in accordance with the rules set forth by the Brazilian SEC (CVM) and the pronouncements, interpretations and guidance issued by the Brazilian FASB (CPC) and comply with the International Financial Reporting Standards - IFRS applicable to real estate development entities in Brazil, as approved by the CPC, the CVM and Brazil s National Association of State Boards of Accountancy (CFC), including Guidance OCPC 04-Application of Technical Interpretation ICPC 02 to Brazilian Real Estate Development Entities - relating to revenue recognition and related costs and expenses from real estate operations in the course of the works (percentage of completion method POC). The statement of comprehensive income is not presented, since there are no amounts which should be presented under this concept, other than the net income for the year. As such, the net income for the year equals the total comprehensive income for the year. These financial statements were authorized in a Board meeting held on March 12, Consolidation The consolidated financial statements include the financial statements of Company and subsidiaries and jointly-controlled subsidiaries, as mentioned in Note 7. The Company participates in real estate ventures through Silent Partnerships (SCPs) and Special Purpose Entities (SPEs). SCP operations are conducted on behalf of the leading partner, and the Company usually stands as leading partner and manager. Ernst & Young Terco 11

14 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.1. Basis of preparation and presentation of individual and consolidated financial statements (Continued) Consolidation (Continued) The subsidiaries are fully consolidated as from their organization or acquisition date, which is the date when the Company obtains their control, and continue being consolidated through the date when such control ceases to exist. The financial statements of the subsidiaries are prepared for the same reporting period of the Company, using accounting practices that are consistent with those adopted by the consolidated subsidiaries. All intercompany balances, revenues and expenses as well as unrealized gains and losses from intercompany transactions are eliminated. Changes in ownership interest in a subsidiary which do not result in loss of control are accounted for as transactions between shareholders, in equity. Net income for the year is fully attributed to Company controlling shareholders and to non-controlling interest. Losses are attributed to noncontrolling interest, even if that results in a deficit balance. Jointly-controlled companies The Company recognizes its equity holding in jointly-controlled companies by using proportionate consolidation accounting. The subsidiaries are fully consolidated as from their organization or acquisition date, which is the date when the Company obtains their control, and continue being consolidated through the date when such control ceases to exist. The financial statements of the subsidiaries are prepared for the same reporting period of the Company, using accounting practices that are consistent with those adopted by the consolidated subsidiaries. All intercompany balances, revenues and expenses as well as unrealized gains and losses from intercompany transactions are eliminated. Ernst & Young Terco 12

15 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.1. Basis of preparation and presentation of individual and consolidated financial statements (Continued) Investments in subsidiaries and jointly-controlled companies (individual financial statements) (Continued) Investments in subsidiaries and jointly-controlled companies are accounted for under the equity method for purposes of Company individual financial statements. Based on the equity method, investments in subsidiaries and jointlycontrolled companies are accounted for in the balance sheet of the Company at cost, plus changes after the acquisition of ownership interest in the subsidiaries. The financial statement reflects the amount of profit or loss from the subsidiaries operations based on the equity method. When a change is directly recognized in subsidiaries equity, the Company shall recognize its portion in the changes occurred and disclose this fact, when applicable, in the statement of changes in equity. Unrealized gains and losses, resulting from direct or indirect transactions between the Company and its subsidiaries, are eliminated according to the equity held in referred to subsidiaries. The financial statements of the subsidiaries are prepared for the same reporting period of the Company. Adjustments are performed when necessary in order to align accounting policies to those adopted by the Company. After applying the equity method for purposes of financial statements of the Company, the Company determines if recognition of loss from impairment of the Company's investment in each of its subsidiaries is required. The Company determines, at each closing date, if there is objective evidence that such investments in subsidiaries and jointlycontrolled companies have been impaired. If so, the Company calculates the impairment loss as the difference between the recoverable amount of the subsidiary and/or jointly-controlled company and the book value and recognizes such amount in Company income statements. Ernst & Young Terco 13

16 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices Significant accounting judgments, estimates and assumptions Judgments The preparation of the individual and consolidated financial statements of the Company requires that Management make judgments and estimates and adopt assumptions that affect the amounts disclosed referring to revenues, expenses, assets and liabilities, as well as the disclosures of contingent liabilities, as at the date of the financial statements. However, the relative uncertainty of such assumptions and estimates could lead to results that require a significant adjustment to the book value of the assets or liabilities affected in future periods. The Company reviews its estimates and assumptions at least on a quarterly basis. Estimates and assumptions Significant assumptions regarding sources of uncertainty in future estimates and other major sources of uncertainty in estimates as at the balance sheet date, involving a significant risk that a significant adjustment to the book value of assets and liabilities may be required in the next financial year are discussed below: - Budgeted costs Total budgeted costs, which are costs incurred and costs to be incurred upon completion of construction, are reviewed on a regular basis, according to construction development, and the adjustments identified after this review are registered in Company Income Statements when determined. - Taxes There are uncertainties relating to the interpretation of complex tax regulations, the amount and timing of future taxable income. The Company and its subsidiaries are subject to tax inspections, audits, legal and administrative proceedings of a tax or labor nature arising in the normal course of business. Depending on the subject of the inspection, the legal or administrative proceedings filed may adversely impact the Company and its subsidiaries, independently of their final outcome. Ernst & Young Terco 14

17 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) Significant accounting judgments, estimates and assumptions (Continued) - Fair value of financial instruments When the fair value of financial assets and liabilities stated in the balance sheet cannot be obtained in active markets, this is determined using valuation techniques, including the discounted cash flow method. These methods use observable market data, whenever possible; otherwise, a given judgment call is required in order to determine the fair value. Judgment includes consideration about the data used such as, for instance, liquidity risk, credit risk and volatility. Changes in the assumptions regarding these factors could affect the stated fair value of the financial instruments. - Provision for tax, civil and labor contingencies The Company recognizes provisions for tax, civil and labor contingencies. Assessment of the likelihood of loss includes examination of available evidence, hierarchy of laws, available precedents, most recent court decisions and their significance to the legal system, as well as the assessment by external legal advisors. Provisions are revised and adjusted considering changes in existing circumstances, such as applicable period of limitation, tax audit conclusions or additional exposures identified based on new court issues or decisions. The Company and its subsidiaries are periodically reviewed by different authorities, including tax, labor, social security, environmental and sanitary surveillance. No guarantee may be given that these authorities will not serve the Company and its subsidiaries a delinquency notice, or that these infringements will not become administrative proceedings and future legal claims, or the final outcome of such judicial or administrative proceedings. Ernst & Young Terco 15

18 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) Significant accounting judgments, estimates and assumptions (Continued) - Impairment of non-financial assets Impairment losses exists when the book value of an asset or a cash generating unit exceeds its recoverable amount, which is the higher of fair value less costs to sell and value in use. The calculation of fair value less costs to sell the asset is based on available information about sales of similar assets or observable market prices less additional costs to sell the asset. The calculation of value in use is based on the discounted cash flow method. Cash flows derive from the budget for the next five years and do not include reorganization activities which the Company has not yet been committed to or significant future investments that will improve the asset base of the cash generating unit tested. The recoverable amount is sensitive to the discount rate used by the discounted cash flow method, as well as to expected future cash receipts and the growth rate used to extrapolate cash flow projections. - Share-based payments The Company measures the cost of transactions with employees settling their options with Company shares based on the fair value of the equity instruments at grant date. The fair value estimate of share-based payment requires determination of the most appropriate valuation model for granting equity instruments, which depends on the grant terms and conditions. This also requires determination of the most appropriate data for the valuation model, including expected useful life, volatility and dividend earnings and corresponding assumptions. The assumptions and models used in the calculation of fair value of sharebased payments are disclosed in Note 21. Ernst & Young Terco 16

19 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) Profit/Loss calculation and appropriation relating to real estate development and sale Revenue recognition Revenue from the rendering of services is recognized based on maturity period, income earned and services rendered on an accrual basis. Revenue and costs from real estate development and sale are recognized based on the financial position, which is the ratio between costs of work incurred vs. total budgeted costs, applied on the total sale agreements. Revenue from sale of units completed is recognized upon transfer of ownership and risks, which normally occurs when the keys are handed over to the buyer and the purchase and sale deed is issued. Recognition of costs and expenses Costs and expenses relating to real estate development are calculated and recognized on the accrual basis of accounting, that is, when measurable and incurred Functional, reporting and translation currency The consolidated financial statements are prepared and presented in Brazilian Reais (R$), which is the functional currency of the Company. Transactions in foreign currency are initially recorded at the functional currency exchange rate of the respective transaction date. Monetary assets and liabilities denominated in foreign currency are translated back into Reais at the exchange rate prevailing at balance sheet date. Monetary assets and liabilities denominated in foreign currencies were translated into Reais at the functional currency exchange rate of the balance sheet date. Gains and losses deriving from the translation of asset and liability balances into foreign currency at year closing date, and the initial translation of transaction amounts are recognized in the income statement. Ernst & Young Terco 17

20 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) Cash and cash equivalents These include cash, banks and short-term investments redeemable within ninety days of the respective transaction dates, readily convertible into cash and posing low risk of any change in market value Trade accounts receivable Current and non-current trade accounts receivable refer to the sale of residential units and accounts receivable deriving from the construction management services rendered; the agreements debt balance is restated in accordance with respective covenants. The credits deriving from sale agreements of non-completed (under construction) real estate units are recorded as required by the procedures described in Note The accounts receivable portion recognized in the balance sheet in accordance with the procedures described in Note is recorded at its present realizable value. An allowance for doubtful accounts is set up in an amount considered sufficient by Management (based on the risk analysis to cover probable losses) and recorded in net income for the year Inventories These refer to completed real estate units intended for sale. The inventories of land and real estate units are recorded at historical build-up cost including all correlated expenses, directly related and measurable, including barter transactions calculated at fair value. Inventories are classified into the following accounts: Land to be developed, Real estate to be sold (completed units) and Real estate under construction. Land to be developed whose use is expected to occur in over twelve months is classified as non-current assets. Ernst & Young Terco 18

21 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) Inventories (Continued) Barter transactions Fair value measurement of the land purchased through barter transactions is established in connection with the agreement commitments entered into and by the budgeted cost defined in the viability study of the venture, whose value calculation may vary until the moment when the project to be developed is defined, which is usually confirmed by the real estate development registry. The Company also recognizes the liability in the account named Advances from customers barter transactions Provision for guarantees This refers to a provision set up during construction aiming at covering expenses with repairs, for completed ventures which are guaranteed for an average period of five years, as from delivery date. Real estate projects are considered completed when their respective certificate of occupancy has been issued and registered Advances from customers and creditors relating to land acquisition In land acquisition transactions, commitments may be assumed for payment in cash or through delivery of future real estate units (barter transactions). Creditors are written off based on the sales receipt curve and in accordance with the construction financial performance for physical barters Selling expenses Expenses with advertising, publicity, marketing, promotion and other correlated commercial activities are not part of the construction cost and are recognized and posted to income as incurred, based on their broadcast. Expenses with sale stands, including construction, decoration, furniture and maintenance, are recognized under property and equipment, as long as their estimated useful life is within 12 months, and their depreciation is posted to income as commercial expenses during their useful life. Expenses with commissions paid to real estate agents relating to the sale of units in each venture are charged to income, following the same criterion adopted for the recognition of revenues and costs of the units sold, as described in Note Ernst & Young Terco 19

22 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) Property and equipment Property and equipment are recorded at cost, net of accumulated depreciation and/or impairment losses, if applicable. Depreciation is calculated by the straight-line method at the rates mentioned in Note 8 and recognized in the income statement for the year. The net book value and useful life of the assets are reviewed and adjusted, if so required, on the year-end date Commercial lease Financial leases are recognized in property and equipment by the value of the leased item and in the liabilities side, under loans and financing by the value of the mandatory installments as a reduction of implicit rates, which are charged to net income over the term of the agreement by the effective interest rate method. The amounts recorded in property and equipment are depreciated over the shorter of the estimated useful life of the asset or the lease term. Operating lease agreements are recognized as expense on a systematic base, which represents the period during which the benefit on the leased asset is obtained, even if payments are not made on that base Intangible assets Intangible assets acquired separately are measured upon initial recognition at acquisition cost and later deducted from accumulated amortization and impairment losses, when applicable. Indefinite-lived intangible assets are not amortized, but are submitted to annual impairment tests. Ernst & Young Terco 20

23 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) Other assets and liabilities (current and non-current) Assets are recognized in the balance sheet when they refer to funds controlled by the Company deriving from past events and from which future economic benefits are expected to flow. Provisions are recorded in the balance sheet when the Company has a present legal or constructive obligation arising from past events, the settlement of which is expected to result in an outflow of economic benefits Taxes Income and social contribution taxes - current Current tax assets and liabilities for last and prior years are measured at the estimated amount recoverable from or payable to tax authorities. Tax rates and laws used to calculate the amounts are those in force, or substantially in force, at balance sheet date. Management periodically reviews the tax position in situations in which interpretation of tax regulations is required, recording relevant provisions when appropriate. Tax legislation (Brazil s IRS Revenue Procedure No. 84/79) allows revenues from the sale of real estate units to be taxed and tax levies to be paid based on the cash basis rather than on the criterion described in Note regarding the recognition of these revenues. Income and social contribution taxes are calculated according to the criteria set forth by tax legislation currently in effect, at the statutory rates of 15%, plus a surtax of 10% for income tax and 9% for social contribution. Ernst & Young Terco 21

24 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) Taxes (Continued) In 2011, under the provisions of the tax legislation in force, the Company adopted a tax rule that takes into consideration taxable profit computed on the accounting records of the Company, while Company subsidiaries, jointly-controlled companies and affiliated companies substantially elected taxable profit computed as a percentage of gross revenue. For these companies (affiliated companies, subsidiaries and jointly-controlled companies), the income tax base is computed at 8% (real estate development, including monetary restatement) and 32% (service rendering), social contribution is calculated at 12% (real estate development) and 32% (service rendering) and 100% on financial income, on which the statutory rates for income and social contribution taxes are levied. For some ventures, the Company elected the Special Tax Rule (RET) applied to construction companies and developers. As such, some requirements must be satisfied, relating to segregated equity, such as the real estate development registry filed with the real estate registry office, a specific Federal Corporate Taxpayers Registration (CNPJ) for the development whose equity was segregated and the RET option statement filed with the Brazilian IRS. The tax burden then reaches 6% and may reach 1% for the Minha Casa Minha Vida program. Deferred income and social contribution taxes Deferred income and social contribution taxes deriving from income and social contribution tax losses and temporary differences are recorded, when applicable, in non-current assets and/or liabilities, calculated based on the expected realization rates and reviewed on an annual basis. Tax credits are recognized to the extent that taxable income is likely to be available so that the deductible temporary differences may be realized. Deferred tax assets and liabilities will be stated net if there is a legal or contractual right to offset the tax assets against tax liabilities, and when the deferred taxes are related to the same corporate taxpayer and subject to the same tax authority. Ernst & Young Terco 22

25 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) Provisions General considerations Provisions are recorded when the Company has a present (legal or constructive) obligation arising from past events, the settlement of which is expected to result in an outflow of economic benefits, in an amount that can be reliably estimated. When the Company expects to recover a provision amount, in total or in part, for instance by force of an insurance agreement, the recovery is recognized as a separate asset, but only when the recovery is practically certain. Expenses with any provision are recorded in the income statement, net of any reimbursement. Provision for tax, civil and labor contingencies The Company is party to various legal and administrative proceedings. Provisions are recorded for all litigation contingencies, the settlement of which is expected to result in an outflow of economic benefits, in an amount that can reliably estimated. Assessment of the likelihood of loss includes examination of available evidence, hierarchy of laws, available precedents, most recent court decisions and their significance to the legal system, as well as the assessment by external legal advisors. Provisions are revised and adjusted considering changes in existing circumstances, such as applicable period of limitation, tax audit conclusions or additional exposures identified based on new court issues or decisions. Ernst & Young Terco 23

26 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) Impairment test Management annually tests the net book value of assets in order to determine whether there are any events or changes in economic, operating, or technological circumstances that may indicate impairment. When such evidence is found and the net book value exceeds the recoverable amount, a provision for impairment is set up to adjust the net book value to the recoverable amount. In estimating the value in use of an asset, estimated future cash flows are discounted to present value, using a pre-tax discount rate, reflecting the weighted average capital cost for the industry in which the cash generating unit operates. The net sale price is determined, whenever possible, for firm sale contracts on an arm s length basis, between knowledgeable, willing parties, adjusted by costs to sell the asset, or, in the absence of firm sale contracts, based on the observable market price in an active market, or on the most recent transaction price involving similar assets. At, no impairment losses were identified Net present value adjustment Non-current monetary assets and liabilities are discounted to present value, taking into consideration contractual cash flows and the explicit, and sometimes implicit, interest rates of the respective assets and liabilities, and the market rates for similar transactions. Ernst & Young Terco 24

27 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) Derivative financial instruments a) Financial assets Initial recognition and measurement Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables, investments held to maturity, financial assets available for sale, or derivatives. The Company determines the classification of its financial asset at the time of inception, when it becomes part of the contractual provisions of the instrument. Financial assets are initially recognized at fair value plus, in the case of investments not designated at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of financial assets. Company financial assets include: cash and cash equivalents, trade accounts receivable, investments and other current assets. Subsequent measurement Subsequent measurement of financial assets depends on their classification, which can be as follows: Financial assets at fair value through profit or loss These include financial assets held for trading and financial assets designated upon initial recognition as at fair value through the Income Statements. Interest, monetary variation, exchange rate variation and variation arising from assessment at fair value are recognized in the Income Statetements under financial income or expenses when incurred. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments which, however, are not traded in an active market. After initial measurement, these financial assets are carried at amortized cost using the effective interest rate method (effective interest rate), less impairment Ernst & Young Terco 25

28 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) Derivative financial instruments (Continued) a) Financial assets (Continued) Investments held to maturity These are non-derivative financial assets with fixed or determinable payments/receipts with defined maturity dates and for which the Company has a positive intention and is able to hold to maturity. Interest and monetary variation, less impairment, when applicable, are recognized in the Income Statements under financial income or expenses when incurred. Financial assets available for sale Financial assets available for sale are those non-derivative financial assets which are not classified as (a) loans and receivables, (b) investments held to maturity or (c) financial assets at fair value through the Income Statements. Derecognition (write-off) Financial assets are written off when: - The rights to receive cash flows from the asset expire; and, - The Company has transferred its rights to receive cash flows of the asset or has assumed an obligation to fully pay the cash flows received, without significant delay, to a third party under an on lending agreement, and (a) the Company has transferred substantially all risks and rewards of the asset, or (b) the Company has not transferred nor retained substantially all risks and rewards related to the asset, but has transferred control over the asset. Ernst & Young Terco 26

29 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) Derivative financial instruments (Continued) a) Financial assets (Continued) Impairment of financial assets The Company evaluates at the balance sheet date whether there is any objective evidence to determine whether the financial asset or group of financial assets is not recoverable. A financial asset or group of financial assets is considered not recoverable if and only if there is objective evidence of impairment as a result of one or more events that have happened after the initial recognition of assets (a "loss event" incurred) and this loss event has an impact on estimated future cash flows of the financial asset or group of financial assets that can be reasonably estimated. b) Financial liabilities Initial recognition and measurement Financial liabilities are classified as financial liabilities at fair value through the Income Statements, loans and other financing agreements, such as, derivatives. The Company determines the classification of its financial liabilities upon initial recognition. Financial liabilities are initially recognized at fair value and, in the case of loans and financing agreements, plus the cost directly related to the transaction. Company financial liabilities include trade accounts payable and other accounts payable, loans and financing agreements. Subsequent measurement Measurement of financial liabilities depends on their classification, which can be as follows: Financial liabilities at fair value through the Income Statements Financial liabilities at fair value through the Income Statemets include financial liabilities usually traded before maturity, liabilities designated upon initial recognition as at fair value through the Income Statements and derivatives. Interest, monetary variation, exchange rate variation and variation arising from assessment at fair value are recognized in the Income Statements under financial income or expenses when incurred. Ernst & Young Terco 27

30 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) Derivative financial instruments (Continued) b) (iii) Financial liabilities (Continued) Loans and financing After initial recognition, interest-bearing loans and financing agreements are subsequently measured at amortized cost, using the effective interest rate. Gains and losses are recognized in the Income Statement upon write-off of the liabilities as well as during the amortization process under the effective interest rate method. Derecognition (write-off) A financial liability is written off when the obligation is revoked, canceled or expires. c) Financial instruments net Financial assets and liabilities are presented net in the balance sheet when, and only when, the entity currently has a legally enforceable right to offset the amounts recognized and intends to settle on a net basis, or to realize the asset and settle the liability simultaneously. The fair value of financial instruments for which there is no active market is determined using valuation techniques. These techniques can include using recent market transactions (on an arm s length basis); reference to the current fair value of another similar instrument, analysis of discounted cash flows or other valuation models. d) Fair value of financial instruments The fair value of financial instruments actively traded in organized financial markets is determined based on purchase prices quoted in the market at close of business at balance sheet date, without deduction of transaction costs. e) Derivative financial instruments As of, the Company has no derivative financial instruments. Ernst & Young Terco 28

31 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) Treasury shares Own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in the income statement on the purchase, sale, issue or cancellation of the Company s own equity instruments. Any difference between the carrying amount and the consideration is recognized as capital reserves Information by segment Operating segments are defined as components of a venture for which separate financial information is available and reviewed on a regular basis by the entity s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. Company management prepares its internal reports intended for decision making based on the consolidated financial statements, on the same basis upon which these statements are disclosed, that is, only one segment internally defined as Real Estate Business Borrowing costs Borrowing costs directly related to the acquisition, construction or production of an asset that necessarily requires significant time to be completed for commercial or sale purposes are capitalized as part of the cost of corresponding asset. All other borrowing costs are expensed in the period when they are incurred. Borrowing costs include interest and other costs incurred by an entity relating to loans or financing. Ernst & Young Terco 29

32 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) New IFRS and Interpretations from IFRIC (IASB International Financial Reporting Interpretations Committee) As from January 1, 2011, the following pronouncements and interpretations became effective: IAS 24 - Disclosure Requirements for State-owned Entities and Related Party Definition (as Revised), IFRIC 14 - Prepayments of a Minimum Funding Requirement; and IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments. The adoption of these pronouncements and interpretations did not impact the financial statements at December 31, New IASB pronouncements were published and are described as follows: IFRS 9 Financial Instruments Classification and Measurement - IFRS 9 Financial Instruments completes the first part of project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 uses a simple approach to determine whether a financial asset is measured at amortized cost or fair value, based on how the entity manages its financial instruments (its business model) and the contractual cash flow characteristics of the financial assets. The standard also requires the adoption of a single approach to determine impairment loss. This standard is effective for fiscal years beginning on or after January 1, Early adoption is allowed. IFRS 10 Consolidated Financial Statements - IFRS 10 establishes principles for presentation and preparation of consolidated financial statements when an entity controls one or more entities. IFRS 10 replaces the consolidation requirements established by SIC-12 Consolidation of Special Purpose Entities and IAS 27 Consolidated and Separate Financial Statements, and is effective for annual periods beginning on or after January 1, Early adoption is allowed. IFRS 11 Joint arrangements - IFRS 11 provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement rather than its legal form. The standard addresses inconsistencies in the treatment of a joint arrangement by requiring a single method to account for interests in jointly controlled entities by the equity method. IFRS 13 supersedes IAS 31 Joint Ventures and SIC-13 Jointly Controlled Entities - Non-Monetary Contributions by Shareholders, and is effective for annual periods beginning on or after January 1, Ernst & Young Terco 30

33 2. Presentation of the financial statements and most significant accounting practices (Continued) 2.2. Summary of significant accounting practices (Continued) New IFRS and Interpretations from IFRIC (IASB International Financial Reporting Interpretations Committee) (Continued) IFRS 12 Disclosures of Interests in Other Entities - IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of interest in other entities, including subsidiaries, joint ventures, affiliates and non-consolidated structured entities. IFRS 12 becomes effective for annual periods beginning on or after January 1, Early adoption is allowed. IFRS 13 Fair value measurement - IFRS 13 sets out new requirements on how to measure fair value and disclosures relating to IFRS. The standard is effective for annual periods beginning on or after January 1, The Company is assessing the impact of these new pronouncements on its consolidated financial statements. There are no other standards and interpretations issued but not yet adopted that may, in the opinion of Management, significantly impact the Company s disclosed net income or equity. 3. Cash and cash equivalents Company Consolidated Description 12/31/ /31/ /31/ /31/2010 Cash and banks 539 5,898 83,763 66,550 Short-term investments 122, , , ,301 Total 122, , , ,851 Company investments are made through exclusive investment funds or in transactions directly performed with first-tier financial institutions. Company policy consists of investing its resources in funds or directly in conservative, highly liquid financial instruments. The yields on these investments are tied to the Interbank Deposit Certificate (CDI), ranging from 100% to 104.2% of CDI, according to the nature and timing of each instrument. At December 31, 2011, the average annual profitability of Company financial investments corresponded to % of CDI. Ernst & Young Terco 31

34 4. Trade accounts receivable Company Consolidated Description 12/31/ /31/ /31/ /31/2010 Accounts receivable real estate development (a) Units completed 6,088 7, , ,082 Unit not completed , ,415 ( - ) Net present value adjustment - - (31,090) (21,315) (-) Discount for bond securitization (37) (137) (49) (137) ( - ) Allowance for doubtful accounts (ADA) (1,637) (1,534) (1,636) (1,534) Total 4,414 5,867 1,044, ,511 Current portion 4,319 5, , ,108 Non-current portion , ,403 Accounts receivable services rendered Real estate intermediation - - 2,981 2,458 Construction management - 1, Firm-price construction contract ,158 65,579 Total - current - 1, ,139 68,303 (a) As a result of the revenue recognition criteria mentioned in Note 2.2.2, the balance of trade accounts receivable from units sold and not completed is not fully reflected in the financial statements, since its recording is limited to the revenue portion accounted for, net of installments already received. Note 16.4 presents the balances receivable not recognized in the financial statements. At, the consolidated balance of trade accounts receivable is presented net of present value adjustment in the amounts of R$ 31,090 and R$ 21,315, respectively. The Company calculated the net present value of trade accounts receivable for units not completed and accounted for the respective amount under the criteria described in CPC 12. The average annual discount rate of 7.0% was applied, which corresponds to the Company s weighted average funding cost, net of inflation. Trade accounts receivable from real estate sales are restated according to the Civil Construction National Index (INCC) variation until the keys are handed over. After the keys are handed over, these amounts are restated by the General Market Price Index (IGPM) and bear interest of 12% p.a. Ernst & Young Terco 32

35 4. Trade accounts receivable (Continued) At, trade accounts receivable relating to real estate development and service rendering, which are recorded in current assets, mature as follows: Consolidated 12/31/ /31/2010 Receipt due 1st quarter/ , ,312 2nd quarter/ , ,254 3rd quarter/ , ,807 4th quarter/ , , , ,416 Overdue From 0 to 30 days 23,849 12,501 From 31 to 60 days 1,075 4,008 From 61 to 90 days 302 1,805 From 91 to 120 days From 121 to 150 days 2,102 2,774 From 151 to 180 days 162 1,068 From 91 to 120 days 5,685 10,963 33,476 33,995 Total current assets 964, ,411 Detailed information on accounts receivable due, recorded as non-current at December 31, 2011 is as follows: Year Until December/ ,041 Until December/ ,316 30,344 Until December/ ,592 6,045 Until December /2015 8,589 5,299 After December/ , Total 192, ,403 Ernst & Young Terco 33

36 5. Real estate for sale This refers to land to be developed, completed real estate units and real estate units under construction, as under: 5.1. Land to be developed Per venture (Company) 12/31/ /31/2010 Land unit Vicente Pires - Taguatinga/DF 28,124 25,202 Land unit MG/BH Pampulha Work No ,500 Land unit Valparaiso Serra/ES 834 1,632 Land unit Freg. Campo Grande/RJ. - 1,400 Lots 7 A 15R. Canoeiros - S. Monica - 1,327 Land unit Porto Velho/RO 1,030 1,031 Other Total 29,988 37,302 Per SCP, SPE or venture (Subsidiaries) 12/31/ /31/2010 Direcional Água Branca Empreendimentos Imobiliários Ltda 29,649 - Direcional Água Marinha Empreendimentos Imobiliários Ltda 26,757 26,505 Direcional Taguatinga Engenharia Ltda. (a) 23,598 25,386 Direcional Santo Antônio Empreendimentos Imobiliários Ltda (a) 23,226 21,462 Direcional Alegre Empreendimentos Imobiliários Ltda 22,380 22,000 Direcional Safira Empreendimentos Imobiliarios Ltda. (a) 18,899 18,899 Direcional Agua das Flores Empreendimentos Imobiliários Ltda 17,125 - Direcional Arapiraca Empreendimentos Imobiliários Ltda 16,320 8,011 Direcional Sena Madureira Empreendimentos Imobiliários Ltda 16,190 - Direcional Construtora Valparaíso Ltda. 15,505 7,328 Direcional Carneiros Empreendimentos Imobiliários Ltda 13,908 - Direcional Santa Rosa Empreendimentos Imobiliários Ltda 13,359 12,656 Direcional Xapuri Empreendimentos Imobiliários Ltda 13,134 12,796 Direcional Coruripe Empreendimentos Imobiliários Ltda 12,382 - Direcional Turquesa Empreendimentos Imobiliários Ltda 12,252 10,380 Direcional Azurita Empreendimentos Imobiliarios Ltda 11,937 16,031 Arinos Empreendimentos Imobiliários Ltda 10,591 5,717 Citrino Empreendimentos Imobiliários Ltda 9,932 9,594 Direcional Âmbar Empreendimentos Imobiliarios Ltda (a) 9,836 - Direcional Leopoldina Empreendimentos Imobiliários Ltda 9,675 - Direcional Diamante Empreendimentos Imobiliarios Ltda (a) 9,359 9,738 Coral Empreendimentos Imobiliarios Ltda 8,466 7,600 Direcional Riachos Empreendimentos Imobiliários Ltda 8,222 16,000 Direcional Rubi Empreendimentos Imobiliarios Ltda (a) 8,214 10,158 Direcional Trincheiras Empreendimentos Imobiliários Ltda 7,919 - Ônix Empreendimentos Imobiliários Ltda (a) 7,622 7,622 SPE 66 - Bom Sucesso Incorporação e Investimentos Imobiliários S.A. (a) 7,560 7,358 Direcional Malaquita Empreendimentos Imobiliarios Ltda 7,386 7,100 Direcional Cajueiro Empreendimentos Imobiliários Ltda 7,336 6,514 Direcional Igaci Empreendimentos Imobiliários Ltda 7,174 7,126 Direcional São Miguel Empreendimentos Imobiliários Ltda 6, Direcional Anadia Empreendimentos Imobiliários Ltda 6,122 5,370 Seabra Empreendimentos Imobiliarios Ltda - Total Ville Porto Velho 5,731 5,731 Direcional Campinas Engenharia Ltda. 5,409 4,612 Geminiano Projeto 01 Empreendimentos Imobiliários Ltda 4,378 - Direcional Rio Branco Empreendimentos Imobiliários Ltda 4,175 - Direcional Feijo Empreendimentos Imobiliários Ltda 3,817 - SPE 70 - Santa Margarida Empreendimentos Imobiliários Ltda (a) 3,445 - Direcional Ametista Empreendimentos Imobiliários Ltda - 12,096 Direcional Porto Acre Empreendimentos Imobiliários Ltda - 8,724 Abaré Empreendimentos - Brisas do Parque - 5,721 Direcional Tarauaca - TulipInn Savassi Hotel - 29,459 Other 15,925 18,218 Total 461, ,808 Total 491, ,110 Ernst & Young Terco 34

37 5. Real estate for sale (Continued) 5.1. Land to be developed (Continued) Company Consolidated Company 12/31/ /31/ /31/ /31/2010 Current - 9, , ,992 Non-current 29,988 27, , ,118 Total 29,988 37, , ,110 (a) The development of these land units by the Company will be carried out in phases; as such, this balance represents the amount of the remaining phases of the ventures yet to be developed Completed real estate units Per venture (Company) 12/31/ /31/2010 Units Completed Solares Quintas da Península e Aquarela - 5,350 Other Total 615 5,365 Per SCP, SPE or venture (Subsidiaries) 12/31/ /31/2010 Direcional Construtora Valparaíso Ltda. 10,014 - SCP - Direcional/DAN/Gontijo Fernandes - Jacundá 9,846 2,026 Capela Empreendimentos Imobiliários Ltda 8,310 - Direcional Âmbar Empreendimentos Imobiliarios Ltda 3,951 - SCP - Direcional/ACR - Lago 2,298 1,767 SCP - Direcional/ASCC/Diedro-Eliza Miranda 1,839 6,181 SCP - Direcional/ACR - Paradiso 1,814 - SCP 15 - Aterpa - Rio de Janeiro 1,379 1,317 Direcional TSC Rio Madeira Empreendimentos Imobiliarios Ltda 1,374 - SCP - Direcional/ACR - Gran Riserva SPE - Rubelita Empreendimentos Imobiliarios Ltda Ernane Agricola Empreendimentos Imobiliarios Ltda SCP - Direcional/Eólica - Retiro dos Artistas SCP 17 - V. Gontijo - Cisão Other 417 1,211 Total 43,283 14,162 Total - consolidated 43,898 19,527 Ernst & Young Terco 35

38 5. Real estate for sale (Continued) 5.3. Real estate units under construction SCP, SPE or venture 12/31/ /31/2010 Zircone Empreendimentos Imobiliários Ltda (a) 40,591 12,876 Direcional Âmbar Empreendimentos Imobiliários Ltda 16,625 16,869 Direcional Diamante Empreendimentos Imobiliários Ltda 14,899 5,923 Flourita Empreendimentos Imobiliários Ltda 13,280 14,444 Ônix Empreendimentos Imobiliários Ltda 13,131 5,034 Jonasa Empreendimentos Imobiliários Ltda. 12,830 4,348 Direcional Tarauaca Empreendimentos Imobiliários Ltda 11,872 - Direcional Safira Empreendimentos Imobiliários Ltda 10,710 3,942 Direcional Ametista Empreendimentos Imobiliários Ltda 9,051 1,073 Direcional Rubi Empreendimentos Imobiliários Ltda 8,929 7,464 Direcional TSC Jamari Empreendimentos Imobiliários Ltda 8,592 6,441 Direcional Taguatinga Engenharia Ltda. 8,194 5,599 Direcional Trincheiras Empreendimentos Imobiliários Ltda 6,773 - Direcional Porto Acre Empreendimentos Imobiliários Ltda 5,887 - Direcional TSC Jatuarana Empreendimentos Imobiliários Ltda 4,790 7,304 Direcional Abaré Empreendimentos Imobiliários Ltda 4, Andrade Valladares Residencial Ltda - SCP Floramar 3,485 - SPE 80 - Direcional Brasileia Empreendimentos Imobiliários Ltda 3,393 - Direcional Azurita Empreendimentos Imobiliários Ltda 3,129 1,064 SPE 31 - Direcional Silvestre Ltda 3,031 - SCP - Direcional/ASCC/Diedro-Eliza Miranda 2,608 3,247 Alexandrita Empreendimentos Imobiliários Ltda 2,572 1,170 Seabra Empreendimentos Imobiliários Ltda - A/C Consórcio Total Ville Porto Velho 2,095 1,531 Direcional Patrimar Maragogi Empreendimentos Imobiliarios Ltda 1,352 1,159 Direcional Opala Empreendimentos Imobiliários Ltda 1,043 - Direcional Esmeralda Empreendimentos Imobiliários Ltda 899 1,717 Direcional Construtora Valparaíso Ltda. - 5,474 Direcional Feijo Empreendimentos Imobiliários Ltda - 3,355 Direcional Arapiraca Empreendimentos Imobiliários Ltda Arinos Empreendimentos Imobiliários Ltda - 3,756 Direcional Santo Antônio Empreendimentos Imobiliários Ltda Direcional Turquesa Empreendimentos Imobiliários Ltda - 1,344 SCP - Direcional/DAN/Gontijo Fernandes - Jacundá - 5,724 Direcional Canário Engenharia Ltda. - 1,094 SPE 70 - Santa Margarida Empreendimentos Imobiliários Ltda - 1,455 Other 2,177 10,694 Total 216, ,923 (a) On August 9, 2011, the Company acquired 60% of the units of interest of Direcional Zircone Empreendimento Imobiliários Ltda. ( Zircone Empreendimentos ) from JHSF Participações S.A. for R$ 37,000, payable in 38 installments indexed by the INCC. After this acquisition, the Company now holds 100% of the venture. The acquisition amount was recorded at its net present value of R$ 27,909. Since this referred to acquisition of a sole finite-lived project at its initial stage, this transaction was treated as an asset purchase. Ernst & Young Terco 36

39 5. Real estate for sale (Continued) 5.4. Capitalized interest Interest paid referring to production financing is accounted for as Real estate under construction and Completed real estate in accordance with OCPC 01, and charged to income when real estate is sold. During 2011, interests amounting to R$ 4,498 (R$ 1,146 for the year ended December 31, 2010) were capitalized in the inventory accounts. The average annual rate used for interest capitalization was 10.92% in 2011 (10.98% for the year ended December 31, 2010). 6. Related parties 6.1. Related companies Company Consolidated Assets 12/31/ /31/ /31/ /31/2010 Credits - partners in projects (a) TSC ENGENHARIA LTDA 24,213 7,996 24,337 7,996 COMIM CONSTRUTORA LTDA ,343 - DAM INCORPORAÇÕES LTDA 5, , AGER INCORPORAÇÕES IMOBILIÁRIAS LTDA 4,334 4,211 4,334 4,211 SIENA PARTICIPAÇÕES LTDA - - 1,752 - L/V CONSULTORIA EMPRESARIAL LTDA - - 1,752 - EDIFICA EMPREENDIMENTO ARQ. E ENGENHARIA S/A - - 1,740 - Other 1, , ,929 13,508 63,115 13,508 Current account projects (b) SCP MANAUS - ELIZA MIRANDA 3,796 14,791 2,278 - ZIRCONE EMPREENDIMENTOS IMOB. LTDA 1,678-1,678 2,997 SANTA MARGARIDA 1,486-1,486 - DIRECIONAL OPALA EMPREENDIMENTOS LTDA 1,058-1,058 - CONSORCIO SEABRA TOTAL VILLE 17, ,687 SCP Meu Orgulho Infra 1, SCP PARQUE PRADO 4, ANDARAÍ EMPREENDIMENTOS IMOBILIARIOS ,382 DIRECIONAL CONSTRUTORA VALPARAISO LTDA ,245 SCP PARADISO 10, SCP SANTA MÔNICA 3, Other , ,708 14,826 9,169 19,858 Total 82,668 28,334 72,316 33,366 Current 47,912 14,791 37,560 7,441 Non-current 34,756 13,543 34,756 25,925 Ernst & Young Terco 37

40 6. Related parties (Continued) 6.1. Related companies (Continued) Company Consolidated Liabilities 12/31/ /31/ /31/ /31/2010 Liabilities - partners in projects (a) EDIFICA EMPREENDIMENTO ARQ. E ENGENHARIA S/A - - 1,794 - CAC ENGENHARIA LTDA Other ,708 - Current account projects (b) DIRECIONAL ENGENHARIA S.A. - SCP CLUB HOUSE - - 4,358 - DIRECIONAL OPALA EMPREENDIMENTOS IMOBILIARIOS LTDA - - 1,058 - SCP ALTEROSA 2, SEABRA - CONSORCIO TOTAL VILLE 2, DIRECIONAL AGUA BRANCA EMPREEND. IMOBILIARIOS LTDA 17, DIRECIONAL ESTRELA EMPREEND. IMOBILIARIOS LTDA 7, Other ,490-6,252 - Total current liabilities 29,490-8,960 - (a) Credits - partners in projects The Company carries out loans agreements with venture partners, usually noncontrolling shareholders of referred to SPEs. These transactions are settled upon completion of the construction. Such transactions are indexed by CDI average plus 4% p.a. The financial impact on the Company for the year ended December 31, 2011 was a net financial income of R$ 5,710 (R$ 2,283 in December 31, 2010). (b)current account projects (b) Such non-interest bearing operations are exclusively intended for contributing funds to construction. These agreements are currently under negotiation with partners. Ernst & Young Terco 38

41 6. Related parties 6.2. Management fees Total annual compensation provided to managing officers and directors in 2011 and 2010 is as follows: 2011 Board of Directors Statutory Board Total Number of members Annual fixed compensation (R$) 167,520 1,812,000 1,979,520 Variable compensation (R$) - 1,608,450 1,608, ,520 3,420,450 3,587, Board of Directors Statutory Board Total Number of members Annual fixed compensation (R$) 781,908 1,089,467 1,871,375 Variable compensation (R$) - 529, , ,908 1,618,547 2,400,455 The Company also provides its managing officers with a stock option plan, which is described in Note 21. The Company offers no private pension plans, retirement plans or postemployment benefits. Ernst & Young Terco 39

42 7. Investments in subsidiaries and jointly-controlled companies (individual financial statements) Changes in investments for the year ended December 31, 2011 are as under: Company Interest holding % 12/31/2010 Dividends/ amortization Equity income Capital increase (decrease)/fcc 12/31/2011 SCP - Direcional/MRV - Serra da Canastra (a) 50.00% (36) SCP - Direcional/Aterpa - Santa Inês (a) 50.00% 17 (1) (16) - - SCP - Direcional/Aterpa - Cidade Nova (a) 50.00% 51 - (30) - 21 SCP - Direcional/Lasa - Águas Claras II (a) 50.00% 662 (476) SCP - Direcional/Capla - Brasília % 85 (19) Direcional Engenharia S.A. - SCP Club House % 714 (833) (147) 54 (212) SCP - Direcional/SPL - Campinas (a) 50.00% 5,102 (3,400) (100) (600) 1,002 SCP - Direcional/Eólica - Quintas do Valqueire (a) 10.00% 8 (8) SCP - Direcional/Eólica - Retiro dos Artistas (a) 50.00% 6,215 (3,090) (437) (1,235) 1,453 SCP - Direcional/ACR - Green Village (a) 20.00% 2 (2) SCP - Direcional/ACR/Asacop - Província de Vicenza (a) 10.00% (5) SCP - Direcional/ASCC/Diedro-Eliza Miranda (a) 40.00% 23,475 (6,844) 3, ,202 SCP - Direcional/DAN/Gontijo Fernandes - Jacundá 88.00% 25,935 (6,547) 3,485 4,617 27,490 SCP - Direcional/ACR - Ouro Preto 97.19% 3,621 (2,400) 108-1,329 Direcional Taguatinga Engenharia Ltda % 55,523 (139) 41,884 (8,589) 88,679 Direcional Canário Engenharia Ltda % ,560 2,554 Altana Empreendimentos Imobiliarios Ltda. (a) 50.00% Direcional Campinas Engenharia Ltda % 4, ,696 Direcional Construtora Valparaíso Ltda % 15,524 (205) (3,847) 4,978 16,450 Jonasa Empreendimentos Imobiliários Ltda % 43,650 (7,448) 6,433 14,374 57,009 SCP - Direcional/Edifica - Edifico Chopin 79.00% 504 (20) Direcional Diamante Empreendimentos Imobiliarios Ltda 99.99% 38,248 (3,000) 4,601 23,674 63,523 Direcional Ametista Empreendimentos Imobiliarios Ltda 99.99% 2,658-1,887 3,756 8,301 Direcional Opala Empreendimentos Imobiliarios Ltda 98.10% 11,878 (1,058) 3,433 1,983 16,236 Direcional Esmeralda Empreendimentos Imobiliarios Ltda (a) 50.00% 11,579 (116) 7,998-19,461 Direcional Safira Empreendimentos Imobiliarios Ltda 99.99% 25,118 (12) 9,641 (6,093) 28,654 Direcional Rubi Empreendimentos Imobiliarios Ltda 99.99% 13,631 (6,203) 13,816 5,381 26,625 Direcional Âmbar Empreendimentos Imobiliarios Ltda 66.67% 18,127 (632) 160 9,674 27,329 SCP - Direcional/ACR - Gran Riserva 98.10% 9,026 (5,614) (513) (300) 2,599 SCP - Direcional/ACR - Paradiso 98.10% 22,327 (18,711) 64-3,680 SCP - Direcional/ACR - Maura Valadares 98.10% 2,753 (5,040) 82 2, SCP - Direcional/ACR - Lago 98.10% 9,065 - (8,179) 7,601 8,487 Direcional TSC Rio Madeira Empreendimentos Imobiliarios Ltda 80.00% 8,069 (454) (4,314) 19,223 22,524 Direcional TSC Jamari Empreendimentos Imobiliarios Ltda 80.00% 4,693 (1,616) 102 3,855 7,034 Direcional TSC Lauro Sodré Empreendimentos Imobiliários Ltda 80.00% Direcional TSC Jatuarana Empreendimentos Imobiliarios Ltda 80.00% 9,003 (295) 1,265 6,262 16,235 SCP - Direcional/ACR - Le Parc de France 98.10% 3,618 (3,634) (108) 1,282 1,158 SCP - Direcional/ACR - Santa Mônica 98.10% 4,392 (3,308) (610) (798) (324) Ônix Empreendimentos Imobiliários Ltda 99.90% 24,640 (5) 9,406 13,837 47,878 Direcional Malaquita Empreendimentos Imobiliarios Ltda 99.90% 6, (164) 948 7,383 Una Empreendimentos Imobiliarios Ltda 99.90% 2,630 (1) 6,091 (563) 8,157 Alexandrita Empreendimentos Imobiliarios Ltda (a) 50.00% 3,956 - (855) 1,478 4,579 Bujari Empreendimentos Imobiliarios Ltda 99.90% 2,936-4,533 3,008 10,477 Ernst & Young Terco 40

43 7. Investments in subsidiaries and jointly-controlled companies (individual financial statements) (Continued) Company Interest holding % 12/31/2010 Dividends/ amortization Equity income Capital increase (decrease)/fcc 12/31/2011 Coral Empreendimentos Imobiliarios Ltda 99.90% 4,633 - (91) Zircone Empreendimentos Imobiliarios Ltda % 6,831 (933) 12,069 23,516 41,483 Jaspe Empreendimentos Imobiliarios Ltda 99.90% Direcional Corretora de Imóveis S.A % 2,348 (1,791) 2,696 (384) 2,869 Direcional Azurita Empreendimentos Imobiliarios Ltda 99.90% 7,083-2,027 1,792 10,902 Direcional Abaré Empreendimentos Imobiliários Ltda 99.90% 814 (19) 1,006 1,105 2,906 Direcional Água Marinha Empreendimentos Imobiliários Ltda 99.90% 3, ,137 5,673 Direcional Anadia Empreendimentos Imobiliários Ltda 99.90% (102) 991 1,327 Andaraí Empreendimentos Imobiliários Ltda 99.90% 12, ,052 Direcional Turquesa Empreendimentos Imobiliários Ltda 99.90% 12, (9,849) 2,159 Flourita Empreendimentos Imobiliários Ltda 99.90% 35,189 (9) 18,104 (971) 52,313 Direcional Azeviche Empreendimentos Imobiliários Ltda 55.20% Arinos Empreendimentos Imobiliários Ltda 99.90% 1,475 - (1,329) Direcional Assis Brasil Empreendimentos Imobiliários Ltda (a) 50.00% Citrino Empreendimentos Imobiliários Ltda 99.90% Direcional Turmalina Empreendimentos Imobiliários Ltda 99.90% (5) 1,285 1,919 SCP - Direcional Petrópolis 99.90% 523 (78) (125) SCP - Direcional Ozias 99.90% 14,343 (5,572) (3,180) (4,792) 799 Seabra Empreendimentos Imobiliarios Ltda - A/C Consórcio Total Ville Porto Velho 99.90% 8,286-8,629 (6,571) 10,344 Direcional Patrimar Maragogi Empreendimentos Imobiliarios Ltda (a) 45.00% 2,492 (2,000) 1,671-2,163 SCP - Cidadão XI 99.90% 9,694-2,258 4,343 16,295 SCP - Pro Moradia II 99.90% 8,516-10,128 13,659 32,303 Capela Empreendimentos Imobiliários Ltda % - - (373) 12,998 12,625 Direcional Porto Acre Empreendimentos Imobiliarios Ltda 99.90% 215-1,161 2,944 4,320 Direcional Feijo Empreendimentos Imobiliarios Ltda 99.90% 1,349 - (5) 183 1,527 Direcional Capixaba Empreendimentos Imobiliarios Ltda 99.90% 7,272 (3) 9,239 1,295 17,803 SCP - Meu Orgulho 99.90% 12,973 (21,968) 29,876 6,908 27,789 Andrade Valladares Residencial Ltda - SCP Floramar (a) 50.00% - (158) 3,095 2,565 5,502 Geminiano Projeto 01 Empreendimentos Imobiliários Ltda (a) 50.00% 4,211 - (1) 123 4,333 Direcional Rio Branco Empreendimentos Imobiliários Ltda 99.90% SCP Direcional/Comim Meu Orgulho - Infra 62.00% 12,485 (3,991) ,715 35,191 SCP Sarandi - Andrade Valladares Residencial Ltda (a) 50.00% Direcional Santa Rosa Empreendimentos Imobiliários Ltda 99.90% 3,078 - (20) 2,179 5,237 Direcional Santo Antônio Empreendimentos Imobiliários Ltda 99.90% 1,613 (398) (374) 22,444 23,285 Direcional Arapiraca Empreendimentos Imobiliários Ltda 99.90% 3,471 - (19) 1,101 4,553 Direcional Xapuri Empreendimentos Imobiliários Ltda 99.90% Direcional São Miguel Empreendimentos Imobiliários Ltda 99.90% ,699 Direcional Tarauaca Empreendimentos Imobiliários Ltda 99.90% 1,605-13,059 2,729 17,393 Direcional Igaci Empreendimentos Imobiliários Ltda 99.90% 7, ,184 Direcional Cajueiro Empreendimentos Imobiliários Ltda 99.90% 1 - (6) 1,307 1,302 Direcional Riachos Empreendimentos Imobiliários Ltda (a) 50.00% Direcional Alegre Empreendimentos Imobiliários Ltda 99.90% 2, ,293 SCP Boa Casa % 1 - (2,514) 2, Direcional Carneiros Empreendimentos Imobiliários Ltda 99.90% Direcional Água Branca Empreendimentos Imobiliários Ltda 99.90% - - (1) 3,284 3,283 Direcional Coruripe Empreendimentos Imobiliários Ltda 99.90% - - (7) SCP Alterosa - Ribeirão das Neves 62.75% - - 5,911 (112) 5,799 Direcional Leopoldina Empreendimentos Imobiliários Ltda 99.90% Ernst & Young Terco 41

44 7. Investments in subsidiaries and jointly-controlled companies (individual financial statements) (Continued) Company Interest holding % 12/31/2010 Dividends/ amortization Equity income Capital increase (decrease)/fcc 12/31/2011 SCP Bairro Carioca % - - 5,840 13,107 18,947 Direcional Sena Madureira Empreendimentos Imobiliários Ltda 99.90% Direcional Trincheiras Empreendimentos Imobiliários Ltda 77.50% - - 1,263 1,830 3,093 Direcional Agua das Flores Empreendimentos Imobiliários Ltda 99.90% ,072 1,072 Direcional Estrela Empreendimentos Imobiliários Ltda 99.90% Direcional Jequia Empreendimentos Imobiliários Ltda 99.90% - - (6) Direcional Palmeira Empreendimentos Imobiliários Ltda 99.90% - - (26) SCP Aterrado do Leme 75.00% ,165 Empresa Direcional São Primiano Empreendimentos Imobiliarios Ltda (a) 50.00% - 46 (14) SCP 15 - Aterpa - Rio de Janeiro(a) 45.00% 9,323 (1,179) (318) (1,176) 6,650 SCP 16 - Patrimar Cl. Manoel (a) 31.15% 24 (19) (14) - (9) SPE 25 - SPE Maura Gontijo (a) 50.00% 2,670 (2,127) (129) SPE - Rubelita Empreendimentos Imobiliarios Ltda (a) 50.00% 4,267 (110) (255) 630 4,532 SPE 31 - Direcional Silvestre Ltda (a) 82.00% ,152 2,629 4,247 SPE 34 - Alexandria Empreendimentos Imobiliarios Ltda (a) 50.00% 6, ,372 (3,486) 4,561 SPE 50 - Direcional Sodalita Empreendimentos (a) 50.00% 1,287 (3) - - 1,284 SPE 61 - Direcional Oiti Empreendimentos Imobiliarios Ltda (a) 50.00% 1,048 (239) (35) SPE 66 - Bom Sucesso Incorporação e Investimentos Imobiliários S.A. (a) 28.00% 6,902 - (2) - 6,900 SPE 70 - Santa Margarida Empreendimentos Imobiliarios Ltda (a) 47.50% 2,118 (15) (3) 15 2,115 SPE 77 - Direcional Jordão Empreendimentos Imobiliarios Ltda (a) 50.00% SPE 80 - Direcional Brasileia Empreendimentos Imobiliarios Ltda (a) 50.00% 2,480 (386) 4,005 2,313 8,412 Empresa 94 - Direcional Belo Monte Empreendimentos Imobiliários Ltda (a) 50.00% Empresa Direcional SPL Ponciano Empreendimentos Imobiliarios Ltda (a) 50.00% SCP 17 - V. Gontijo - Cisão (a) 50.00% 313 (48) (54) SPE - Diresomattos Gutierrez Empreendimentos Imobiliarios Ltda (a) 50.00% 3,072 (1,942) 51 (858) 323 SCP - Direcional/Somattos - Bartira Mourão (a) 50.00% 1,012 (148) 74 (150) 788 SCP - Direcional/Somattos - Tereza Motta Valadares (a) 50.00% 937 (639) (136) (160) 2 Ernane Agricola Empreendimentos Imobiliarios Ltda (a) 50.00% 5,468 (356) (434) - 4,678 Total 661,609 (125,045) 226, ,807 1,014,960 Ernst & Young Terco 42

45 7. Investments in subsidiaries and jointly-controlled companies (individual financial statements) (Continued) (a) These represent jointly-controlled entities. Changes in investments at December 31, 2010 are as under: Company % - Equity holding Opening balance 12/31/2009 Capital increase (decrease)/fcc Equity income Dividends/ amortization Closing balance Direcional Taguatinga Engenharia Ltda ,123 21,765 19,635-55,523 Jonasa Empreendimentos Imobiliários Ltda ,279 2,341 23,030-43,650 Direcional Diamante Empreendimentos Imobiliarios Ltda ,122 22,673 6,287 (1,834) 38,248 Flourita Empreendimentos Imobiliários Ltda ,564 22,811 8,815-35,190 SCP - Direcional/DAN/Gontijo Fernandes - Jacundá ,766 (879) 9,048-25,935 Direcional Safira Empreendimentos Imobiliarios Ltda ,278 14,200 8,640-25,118 Ônix Empreendimentos Imobiliários Ltda ,353 14,790 4,497-24,640 SCP - Direcional/ASCC/Diedro-Eliza Miranda (a) ,114 (400) ,475 SCP - Direcional/ACR - Paradiso ,246 (4,448) 4,192 (663) 22,327 Direcional Âmbar Empreendimentos Imobiliarios Ltda ,942 3,857 6,677 (2,349) 18,127 Direcional Construtora Valparaíso Ltda ,706 3,954 4,452 (1,588) 15,524 SCP - Direcional Ozias ,298 3,530 8,515-14,343 Direcional Rubi Empreendimentos Imobiliarios Ltda ,982 (2,790) 2,439-13,631 SCP - Meu Orgulho ,100 6,873-12,973 SCP Direcional/Comim Meu Orgulho - Infra ,845 6,640-12,485 Andaraí Empreendimentos Imobiliários Ltda ,211-1,159-12,370 Direcional Turquesa Empreendimentos Imobiliários Ltda ,659 10,362 (13) - 12,008 Direcional Opala Empreendimentos Imobiliarios Ltda ,323 (1,529) 5,084-11,878 Direcional Esmeralda Empreendimentos Imobiliarios Ltda (a) ,488 1,556 6,535-11,579 SCP - Cidadão XI ,619 2,908-9,694 SCP 15 - Aterpa - Rio de Janeiro(a) ,010 (8,176) 1,489-9,323 SCP - Direcional/ACR - Lago ,334 (4,464) 12,546 (39,351) 9,065 SCP - Direcional/ACR - Gran Riserva ,171 (1,370) (775) - 9,026 Direcional TSC Jatuarana Empreendimentos Imobiliarios Ltda ,541 6,358 1,697 (593) 9,003 SCP - Pro Moradia II ,684 3,708-8,516 Seabra Empreendimentos Imobiliarios Ltda - A/C Consórcio Total Ville Porto Velho ,009 5,531 1,746-8,286 Direcional TSC Rio Madeira Empreendimentos Imobiliarios Ltda ,117 3,476 3,967 (1,491) 8,069 Direcional Capixaba Empreendimentos Imobiliarios Ltda ,803 3,469-7,272 Direcional Igaci Empreendimentos Imobiliários Ltda , ,182 Direcional Azurita Empreendimentos Imobiliarios Ltda ,968 (20) - 7,083 SPE 66 - Bom Sucesso Incorporação e Investimentos Imobiliários S.A. (a) , (35) - 6,902 Zircone Empreendimentos Imobiliarios Ltda ,690 1,979-6,831 Direcional Malaquita Empreendimentos Imobiliarios Ltda ,210 2, ,584 SPE 34 - Alexandria Empreendimentos Imobiliarios Ltda (a) ,879 2,383 (1,725) - 6,537 SCP - Direcional/Eólica - Retiro dos Artistas (a) ,863 (5,774) 126-6,215 Ernane Agricola Empreendimentos Imobiliarios Ltda (a) , ,947-5,468 SCP - Direcional/SPL - Campinas (a) ,393 (291) 209 (209) 5,102 Direcional TSC Jamari Empreendimentos Imobiliarios Ltda ,429 (386) 4,693 Ernst & Young Terco 43

46 7. Investments in subsidiaries and jointly-controlled companies (individual financial statements) (Continued) (a) These represent jointly-controlled entities. -- Continued Company % - Equity holding Opening balance 12/31/2009 Capital increase (decrease)/fc C Equity income Dividends/ amortization Closing balance Coral Empreendimentos Imobiliarios Ltda , ,633 Direcional Campinas Engenharia Ltda , (1) - 4,596 SCP - Direcional/ACR - Santa Mônica ,159-4,392 SPE - Rubelita Empreendimentos Imobiliarios Ltda (a) , ,250 (1,318) 4,267 Geminiano Projeto 01 Empreendimentos Imobiliários Ltda (a) , ,213 Alexandrita Empreendimentos Imobiliarios Ltda (a) ,057-1,899-3,956 SCP - Direcional/ACR - Ouro Preto ,635 (152) (454) (408) 3,621 SCP - Direcional/ACR - Le Parc de France ,288 (2,190) 761 (241) 3,618 Direcional Água Marinha Empreendimentos Imobiliários Ltda ,555 (32) - 3,523 Direcional Arapiraca Empreendimentos Imobiliários Ltda , ,471 Direcional Santa Rosa Empreendimentos Imobiliários Ltda ,078 (2) - 3,076 SPE - Diresomattos Gutierrez Empreendimentos Imobiliarios Ltda (a) ,139 (350) 283-3,072 Bujari Empreendimentos Imobiliarios Ltda ,752-2,936 SCP - Direcional/ACR - Maura Valadares ,990 (1,460) 223-2,753 SPE 25 - SPE Maura Gontijo (a) , (689) (2,215) 2,670 Direcional Ametista Empreendimentos Imobiliarios Ltda ,134 1,558 (34) - 2,658 Una Empreendimentos Imobiliarios Ltda , ,630 Direcional Alegre Empreendimentos Imobiliários Ltda , ,620 Direcional Patrimar Maragogi Empreendimentos Imobiliarios Ltda (a) (250) 1,961-2,492 SPE 80 - Direcional Brasileia Empreendimentos Imobiliarios Ltda (a) , ,480 Direcional Corretora de Imóveis S.A ,625 (2,754) 2,348 SPE 70 - Santa Margarida Empreendimentos Imobiliarios Ltda (a) ,122 (21) - 2,118 Direcional Santo Antônio Empreendimentos Imobiliários Ltda , ,613 Direcional Tarauaca Empreendimentos Imobiliários Ltda ,606 (1) - 1,605 Arinos Empreendimentos Imobiliários Ltda , ,475 Direcional Feijo Empreendimentos Imobiliarios Ltda , ,349 SPE 50 - Direcional Sodalita Empreendimentos (a) , (9) - 1,287 SPE 61 - Direcional Oiti Empreendimentos Imobiliarios Ltda (a) (65) 1,048 SCP - Direcional/Somattos - Bartira Mourão (a) ,277 (941) 675-1,011 Direcional Canário Engenharia Ltda (101) Direcional São Miguel Empreendimentos Imobiliários Ltda SCP - Direcional/Somattos - Tereza Motta Valadares (a) ,616 (1,013) Direcional Abaré Empreendimentos Imobiliários Ltda (75) Direcional Engenharia S.A. - SCP Club House ,057 6,207 2,910 (10,460) 714 SPE 77 - Direcional Jordão Empreendimentos Imobiliarios Ltda (a) SCP - Direcional/Lasa - Águas Claras II (a) ,585 (282) (93) (548) 662 Direcional Turmalina Empreendimentos Imobiliários Ltda (1) SCP - Direcional Petrópolis ,318 (1,669) SCP - Direcional/Edifica - Edifico Chopin , (3,258) 504 SPE 31 - Direcional Silvestre Ltda (a) Direcional Anadia Empreendimentos Imobiliários Ltda (2) SCP 17 - V. Gontijo - Cisão (a) (256) Citrino Empreendimentos Imobiliários Ltda Ernst & Young Terco 44

47 7. Investments in subsidiaries and jointly-controlled companies (individual financial statements) (Continued) (a) These represent jointly-controlled entities. -- Continued Company % - Equity holding Opening balance 12/31/2009 Capital increase (decrease)/fcc Equity income Dividends/ amortization Closing balance Altana Empreendimentos Imobiliarios Ltda. (a) Direcional Porto Acre Empreendimentos Imobiliarios Ltda Empresa 94 - Direcional Belo Monte Empreendimentos Imobiliários Ltda (a) SCP - Direcional/MRV - Serra da Canastra (a) , (2,537) 140 Direcional Rio Branco Empreendimentos Imobiliários Ltda (20) SCP - Direcional/Capla - Brasília , (5,865) 84 Direcional Riachos Empreendimentos Imobiliários Ltda (a) Direcional Assis Brasil Empreendimentos Imobiliários Ltda (a) SCP - Direcional/Aterpa - Cidade Nova (a) (13) (717) 52 Direcional Xapuri Empreendimentos Imobiliários Ltda SCP 16 - Patrimar Cl. Manoel (a) ,935 (26) (2,154) 24 SCP - Direcional/Aterpa - Santa Inês (a) (3) (812) 17 SCP - Direcional/Eólica - Quintas do Valqueire (a) (20) 8 Direcional TSC Lauro Sodré Empreendimentos Imobiliários Ltda (3) SCP - Direcional/ACR - Green Village (a) (131) 2 Direcional Cajueiro Empreendimentos Imobiliários Ltda SCP Boa Casa Masb 16 SPE Ltda ,553 (2,219) (108) (1,226) - SCP - Direcional/ACR/Asacop - Província de Vicenza (a) (1) (137) (5) Total 341, , ,798 (83,320) Summary of Company investees financial statements for the year ended December 31, 2011 is as follows: Ernst & Young Terco 45

48 7. Investments in subsidiaries and jointly-controlled companies (individual financial statements) (Continued) (a) These represent jointly-controlled entities. -- Continued Balance sheet Statements of operations Assets Liabilities Net sales Operating Financial Net Company Current Non-current Current Noncurrent Equity and service revenues Gross profit expenses, net income/ex penses Income Taxes income/l oss SCP Direcional/Comim Meu Orgulho Infra 62, , ,759 28,593 1,586 (10) 217 (208) 1,585 SCP Sarandi - Andrade Valladares Residencial Ltda Direcional Santa Rosa Empreendimentos Imobiliários Ltda 13, ,257 7,501 5, (19) (1) - (20) SCP Boa Casa 1, ,009 (1,633) (832) - (49) (2,514) SCP Bairro Carioca 22, , ,946 21,269 6, (242) 5,840 SCP - Direcional/MRV - Serra da Canastra (2) (90) 9 15 (6) (72) SCP - Direcional/Aterpa - Santa Inês (34) (32) SCP - Direcional/Aterpa - Cidade Nova (78) 8 11 (1) (60) SCP - Direcional/Lasa - Águas Claras II SCP - Direcional/Capla Brasília (27) Direcional Engenharia S.A. - SCP Club House 33, , (211) 10,440 2,781 (2,742) 211 (397) (147) SCP - Direcional/SPL Campinas 2, , (435) (75) (200) SCP - Direcional/Eólica - Quintas do Valqueire SCP - Direcional/Eólica - Retiro dos Artistas 4, ,106 2,906 1,748 (248) (724) 197 (100) (875) SCP - Direcional/ACR - Green Village SCP - Direcional/ACR/Asacop - Província de Vicenza SCP - Direcional/ASCC/Diedro-Eliza Miranda 53,409 9,673 8,525 1,553 53,004 24,669 13,156 (1,052) (1,973) (1,178) 8,953 SCP - Direcional/DAN/Gontijo Fernandes Jacundá 43,889 2,412 14, ,237 12,858 5,098 (793) 74 (419) 3,960 SCP - Direcional/ACR - Ouro Preto 1, , (9) (12) 169 (37) 111 Direcional Taguatinga Engenharia Ltda. 122,974 44,164 52,108 26,350 88, ,519 46,539 (2,440) 331 (2,546) 41,884 Direcional Canário Engenharia Ltda. 2, , (1) 1 Altana Empreendimentos Imobiliarios Ltda Direcional Campinas Engenharia Ltda. 1,029 5,295 1,624-4, Direcional Construtora Valparaíso Ltda. 24,049 16,681 4,371 15,797 20,562 1,923 (3,228) (1,520) (4) (57) (4,809) Jonasa Empreendimentos Imobiliários Ltda. 156,166 4,285 83,436 5,754 71,261 74,904 14,707 (4,669) 337 (2,334) 8,041 SCP - Direcional/Edifica - Edifico Chopin (39) Direcional Diamante Empreendimentos Imobiliarios Ltda 86,804 11,015 15,501 18,790 63,528 36,850 6,526 (864) 135 (1,196) 4,601 Direcional Ametista Empreendimentos Imobiliarios Ltda 11,592 8, ,400 8,302 9,961 3,521 (1,336) (4) (294) 1,887 Direcional Opala Empreendimentos Imobiliarios Ltda 31,734 1,900 9,973 7,111 16,550 17,390 4,329 (468) 155 (516) 3,500 Direcional Esmeralda Empreendimentos Imobiliarios Ltda 63,229 5,671 14,521 15,458 38,921 42,518 17,576 (589) 323 (1,314) 15,996 Direcional Safira Empreendimentos Imobiliarios Ltda 57,631 25,373 15,899 38,449 28,656 32,372 10,535 (483) 55 (465) 9,642 Direcional Rubi Empreendimentos Imobiliarios Ltda 57, , ,628 40,708 15,737 (754) (9) (1,157) 13,817 Direcional Âmbar Empreendimentos Imobiliarios Ltda 84,724 13,942 51,660 6,014 40,992 36,533 4,744 (3,377) (109) (1,018) 240 SCP - Direcional/ACR - Gran Riserva 1,862 1, ,649 (647) (593) (18) 100 (12) (523) SCP - Direcional/ACR Paradiso 3,774 20,552 16,041 4,534 3,751 2, (21) 69 (103) 66 SCP - Direcional/ACR - Maura Valadares (169) SCP - Direcional/ACR Lago 13,257 30,585 4,941 30,249 8,652 5,027 (196) (491) (7,500) (151) (8,338) Direcional TSC Rio Madeira Empreendimentos Imobiliarios Ltda 57,831 1,344 29,985 1,035 28,155 17,543 (4,415) (999) 837 (816) (5,393) Direcional TSC Jamari Empreendimentos Imobiliarios Ltda 21, , ,792 10, (311) 6 (290) 128 Ernst & Young Terco 46

49 7. Investments in subsidiaries and jointly-controlled companies (individual financial statements) (Continued) (a) These represent jointly-controlled entities. -- Continued Balance sheet Assets Liabilities Net sales Noncurrent and service Company Current Non-current Current Equity revenues Gross profit Statements of operations Operating Financial expenses, income/ex net penses Direcional TSC Lauro Sodré Empreendimentos Imobiliários Ltda Direcional TSC Jatuarana Empreendimentos Imobiliarios Ltda 38, ,238 9,915 20,294 25,518 2,614 (288) (11) (733) 1,582 SCP - Direcional/ACR - Le Parc de France 1, , (133) (7) 47 (17) (110) SCP - Direcional/ACR - Santa Mônica 1,909 1,363 3, (330) 893 (594) (24) 33 (37) (622) Ônix Empreendimentos Imobiliários Ltda 73,819 11,139 19,163 17,869 47,926 51,625 11,448 (790) 278 (1,521) 9,415 Direcional Malaquita Empreendimentos Imobiliarios Ltda 7, , (135) - (29) (164) Una Empreendimentos Imobiliarios Ltda 7,767 4, ,721 8,165 13,818 7,635 (1,237) 153 (454) 6,097 Alexandrita Empreendimentos Imobiliarios Ltda 32, ,067 2,489 9,159 18,917 (1,230) (74) 104 (509) (1,709) Bujari Empreendimentos Imobiliarios Ltda 22, ,285 4,294 10,488 16,654 4,959 (59) 116 (478) 4,538 Coral Empreendimentos Imobiliarios Ltda 8, ,988 5, (91) - - (91) Zircone Empreendimentos Imobiliarios Ltda 50,274 19,559 6,248 39,378 24,207 42,992 15,695 (2,445) 57 (1,238) 12,069 Jaspe Empreendimentos Imobiliarios Ltda Direcional Corretora de Imóveis S.A. 3, ,869 4,377 4,157 (921) (5) (535) 2,696 Direcional Azurita Empreendimentos Imobiliarios Ltda 22,957 3,272 3,168 12,149 10,912 5,622 2,244 (70) (2) (143) 2,029 Direcional Abaré Empreendimentos Imobiliários Ltda 8, , ,909 6,323 2,624 (1,431) 8 (194) 1,007 Direcional Água Marinha Empreendimentos Imobiliários Ltda , ,275 5, (4) 13 Direcional Anadia Empreendimentos Imobiliários Ltda 6, ,370 1, (101) (1) - (102) Andaraí Empreendimentos Imobiliários Ltda 13, , Direcional Turquesa Empreendimentos Imobiliários Ltda 12, ,386-2, Flourita Empreendimentos Imobiliários Ltda 24,438 50,000 3,568 18,504 52,366 43,869 20,256 (963) 282 (1,453) 18,122 Direcional Azeviche Empreendimentos Imobiliários Ltda Arinos Empreendimentos Imobiliários Ltda 10, , (779) (752) (594) (1) 17 (1,330) Direcional Assis Brasil Empreendimentos Imobiliários Ltda 339 6,560-6, Citrino Empreendimentos Imobiliários Ltda 337 9,595-9, Direcional Turmalina Empreendimentos Imobiliários Ltda 184 2, , (5) - - (5) SCP - Direcional Petrópolis (168) (8) (125) SCP - Direcional Ozias (34) (3,246) (41) (3,183) Seabra Empreendimentos Imobiliarios Ltda - A/C Consórcio Total Ville Porto Velho 63,913 4,365 50,430 7,494 10,354 36,588 9,932 (681) 133 (747) 8,637 Direcional Patrimar Maragogi Empreendimentos Imobiliarios Ltda 11,257 4,839 8,035 3,255 4,806 11,301 4,038 (269) 351 (406) 3,714 SCP - Cidadão XI 17, , ,311 17,373 2, (114) 2,260 SCP - Pro Moradia II 34, , ,334 27,963 10,312 (43) 6 (137) 10,138 Capela Empreendimentos Imobiliários Ltda 11,400 1, ,625 1,401 (696) (138) (373) Direcional Porto Acre Empreendimentos Imobiliarios Ltda 6,817 3,731 2,190 4,034 4,324 7,168 2,215 (950) (1) (102) 1,162 Direcional Feijo Empreendimentos Imobiliarios Ltda 3, ,300 1, (5) - - (5) Direcional Capixaba Empreendimentos Imobiliarios Ltda 21,004 (337) 2, ,819 20,514 10,781 (876) 20 (677) 9,248 Income Taxes Net income/l oss Ernst & Young Terco 47

50 7. Investments in subsidiaries and jointly-controlled companies (individual financial statements) (Continued) (a) These represent jointly-controlled entities. -- Continued Balance sheet Assets Liabilities Net sales Noncurrent and service Company Current Non-current Current Equity revenues Gross profit Statements of operations Operating Financial expenses, income/ex net penses SCP - Meu Orgulho 33, , , ,927 30,082 (5) 645 (816) 29,906 Andrade Valladares Residencial Ltda - SCP Floramar 23,573 (1,265) 10, ,004 19,394 7,200 (618) 2 (393) 6,191 Geminiano Projeto 01 Empreendimentos Imobiliários Ltda 8, , Direcional Rio Branco Empreendimentos Imobiliários Ltda 4, , Direcional Santo Antônio Empreendimentos Imobiliários Ltda 23, , (375) 1 - (374) Direcional Arapiraca Empreendimentos Imobiliários Ltda 16, ,005 4, (19) - - (19) Direcional Xapuri Empreendimentos Imobiliários Ltda 13,151-12, Direcional São Miguel Empreendimentos Imobiliários Ltda 6,202-4,501-1, Direcional Tarauaca Empreendimentos Imobiliários Ltda 23,434 6, ,991 17,411 33,322 14,624 (1,088) 52 (516) 13,072 Direcional Igaci Empreendimentos Imobiliários Ltda 7, , Direcional Cajueiro Empreendimentos Imobiliários Ltda 7, ,514 1, (6) - - (6) Direcional Riachos Empreendimentos Imobiliários Ltda 16,890-3,201 12, (1) - - (1) Direcional Alegre Empreendimentos Imobiliários Ltda ,912-22,000 3, Direcional Carneiros Empreendimentos Imobiliários Ltda 13, , Direcional Água Branca Empreendimentos Imobiliários Ltda 3,372 43,509 29,095 14,500 3, (1) - (1) Direcional Coruripe Empreendimentos Imobiliários Ltda 12, , (7) - - (7) SCP Alterosa - Ribeirão das Neves 14, , ,241 31,192 9,690 (180) 83 (174) 9,419 Direcional Leopoldina Empreendimentos Imobiliários Ltda 72 9, , Direcional Sena Madureira Empreendimentos Imobiliários Ltda - 16,190-16, Direcional Trincheiras Empreendimentos Imobiliários Ltda 7,995 9,361 5,356 8,009 3,991 4,621 1,964 (269) (1) (65) 1,629 Direcional Agua das Flores Empreendimentos Imobiliários Ltda 17, ,000 1, Direcional Estrela Empreendimentos Imobiliários Ltda - 7,000 7, Direcional Jequia Empreendimentos Imobiliários Ltda (6) - - (6) Direcional Palmeira Empreendimentos Imobiliários Ltda (26) - - (26) SCP Aterrado do Leme 1, ,554 1, (6) 289 Empresa Direcional São Primiano Empreendimentos Imobiliarios Ltda 1, (28) - - (28) SCP 15 - Aterpa - Rio de Janeiro 17, , ,778 - (544) (50) (113) - (707) SCP 16 - Patrimar Cl. Manoel (30) - (14) (5) (27) - (46) SPE 25 - SPE Maura Gontijo 1, (924) (279) 1,245 (300) (258) SPE - Rubelita Empreendimentos Imobiliarios Ltda 11,974-2, ,064 1,808 (234) (52) - (225) (511) SPE 31 - Direcional Silvestre Ltda 9, , ,179 5,633 1,728 (119) (80) (124) 1,405 SPE 34 - Alexandria Empreendimentos Imobiliarios Ltda 10,834-1, ,122 3,284 3,288 (435) 32 (142) 2,743 SPE 50 - Direcional Sodalita Empreendimentos 2, , (1) - - (1) SPE 61 - Direcional Oiti Empreendimentos Imobiliarios Ltda 1, , (196) (69) Income Taxes Net income/l oss Ernst & Young Terco 48

51 7. Investments in subsidiaries and jointly-controlled companies (individual financial statements) (Continued) (a) These represent jointly-controlled entities. -- Continued Balance sheet Assets Liabilities Net sales Noncurrent and service Company Current Non-current Current Equity revenues Gross profit Statements of operations Operating Financial expenses, income/ex net penses SPE 66 - Bom Sucesso Incorporação e Investimentos Imobiliários S.A. 27,015-2,374-24, (8) - - (8) SPE 70 - Santa Margarida Empreendimentos Imobiliarios Ltda 9,222-4,768-4, (5) (1) - (6) SPE 77 - Direcional Jordão Empreendimentos Imobiliarios Ltda 1, , SPE 80 - Direcional Brasileia Empreendimentos Imobiliarios Ltda 37, , ,823 27,709 8,666 (578) 24 (103) 8,009 Empresa 94 - Direcional Belo Monte Empreendimentos Imobiliários Ltda Empresa Direcional SPL Ponciano Empreendimentos Imobiliarios Ltda SCP 17 - V. Gontijo Cisão (209) (125) 12-5 (108) SPE - Diresomattos Gutierrez Empreendimentos Imobiliarios Ltda (2) (975) 1, (150) 102 SCP - Direcional/Somattos - Bartira Mourão 1, , (31) 148 SCP - Direcional/Somattos - Tereza Motta Valadares (411) 40 (14) (263) Ernane Agricola Empreendimentos Imobiliarios Ltda 10, , ,357 3,693 (1,495) (138) (867) Income Taxes Net income/l oss Ernst & Young Terco 49

52 7. Investments in subsidiaries and jointly-controlled companies (individual financial statements) (Continued) (a) These represent jointly-controlled entities. -- Continued Summary of Company investees financial statements for the year ended December 31, 2010 is as follows: Balance sheet Statement of operations Company Assets Liabilities Net sales Operating Net Current Non-current Current Non-current Equity and service revenues Gross profit expenses, net Financial income, net Income Taxes income/lo ss Direcional SCP Parque Prado - Club House 29,057 6,469 34, ,390 3, (51) 2,910 SCP Retiro dos Artistas - Mirante Campestre 13, ,430 8, (259) 588 SCP Quintas do Valqueire - Quintas do Valqueire SCP Águas Claras II - Life Residence 1, , (538) (8) (226) SCP Santa Inês (4) (6) 4 - (6) SCP Cidade Nova - Provincia de Ravena (61) (29) SCP Campinas Vivere 22, , ,204 12, (537) 503 SCP Brasília - Thomaz Starzl (15) SCP Serra da Canastra (9) (44) Direcional SCP Manaus - Eliza Miranda 90,923 1,205 32,608 1,319 58,201 24,356 5,751 (1,056) (2,019) (718) 1,958 SCP Edifício Chopin (10) SCP Província Vicenza - Provincia de Vicenza (51) - - (6) - - (6) SCP Green Village - Green Village Direcional SCP Cidadão XI - Cidadão XI 10, , ,696 10,786 2,983 (13) (7) (47) 2,916 SCP Rio de Janeiro - Vila Borghese e San Filipo 7,401 15,753 1,080 1,357 20,717 11,611 3,382 (105) 5 (404) 2,879 SCP Cláudio Manoel Chopin (96) (2) 17 (2) (84) SCP Valadares Gontijo - Cisão (55) - (17) 547 Direcioal SCP Jacundá - Equilibrium e Gran Vista 71, ,800 36,389 29,472 44,615 11,684 (293) 341 (1,317) 10,415 Direcional Campinas Engenharia Ltda 5, ,626-4, (1) - (1) Jonasa Empreendimentos Imobiliários Ltda - Weekend e Gran Vista 104, ,098 36,321 54,563 86,216 32,785 (1,783) 326 (2,478) 28,849 Direcional SCP Ouro Preto - Gran Parque 4, ,725 1,614 (466) (49) 132 (66) (448) Direcional Esmeralda GranFelicitá 16,379 24,610 10,399 7,432 23,158 44,689 19,251 (2,224) (14) (1,065) 15,948 Altana Empreendimentos Imobiliários Ltda Direcional TSC Rio Madeira - Garden Club 32, ,563 19,003 10,086 29,154 5,897 (131) (38) (758) 4,969 SPE Maura Valadares Gontijo 3,155 2, ,340 9,288 (807) (500) 169 (240) (1,378) Diresomattos Gutierrez Volare 7,971-1, ,144 5, (90) 314 (345) 581 SCP Bartira Mourão - Bartira Mourão 2, ,924 1, (57) 844 (52) 1,351 SCP Tereza Motta Valadares - Tereza Mota 3,175-1,310 (11) 1,876 1, (56) 684 (38) 694 Rubelita Empreendimentos - Al Mare 12,811 11,997 15, ,535 14,378 4,154 (224) (310) (682) 2,938 Ernani Agrícola Solares 13, ,319-10,700 11,225 3,607 (296) 911 (327) 3,895 Direcional Silvestre Ltda Direcional Âmbar - Águas, Brisas e Cachoeiras do Madeira 78,151 1,378 31,537 20,803 27,189 43,992 11,421 (1,047) (94) (1,202) 9,078 Direcional Valparaiso Dreenpark 34,727 4,539 12,807 7,054 19,405 18,804 4,704 (649) 21 (496) 3,581 Alexandria Empreendimentos Alegro 18,919-2,033 3,812 13,074 6,599 (964) (411) 372 (190) (1,194) Ernst & Young Terco 50

53 7. Investments in subsidiaries and jointly-controlled companies (individual financial statements) (Continued) (a) These represent jointly-controlled entities. -- Continued Summary of Company investees financial statements for the year ended December 31, 2010 is as follows: Balance sheet Statement of operations Company Assets Liabilities Net sales Operating Current Non-current Current Non-current Equity and service revenues Gross profit expenses, net Financial income, net Income Taxes Net income/lo ss Direcional SCP Maura Valadares Barter 1,945 1, , (1) Direcional SCP LagoSul - Lake View Resort 18,573 43,429 49,882 2,879 9,241 26,813 10,275 (104) 3,700 (913) 12,957 Direcional SCP GranRiserva GranRiserva 8,189 1, ,201 6,342 (530) (125) 129 (197) (724) Direcioal SCP Paradiso Paradiso 47, ,996 10,805 22,759 22,923 5,414 (488) 97 (634) 4,390 Direcional Opala - GranParadiso, Gran Ventura, Gran D'ouro 26, ,374 6,892 12,108 17,072 5,495 (86) 227 (451) 5,184 Direcional Taguatinga - Setor Total Ville 52,587 49,390 16,108 30,346 55,523 70,073 26,849 (4,175) (118) (2,688) 19,868 Direcional Diamante BellaCitta 38,729 11,409 6,339 5,547 38,252 29,735 9,144 (1,204) (696) (955) 6,290 Direcional Rubi - Allegro Residencial Club 15,770 12,860 4,486 10,511 13,633 9,142 3,615 (897) (9) (269) 2,440 Direcional TSC Jatuarana - Vita Bella 10,892 8,577 2,806 5,409 11,254 11,141 2,704 (271) (21) (288) 2,123 Direcional Canário EmpreendimentosImobilariosltda 1, (102) - - (102) Onix Empreendimentos - Total Ville Manaus 42,381 6,973 12,558 12,132 24,664 28,759 6,551 (1,218) (39) (785) 4,509 Direcional TSC Jamari Riviera 14, ,638 5,881 5,866 8,887 4,579 (81) (9) (201) 4,287 U N A Empreendimentos - Boulevard Esplanada 2, ,632 1, (68) - (37) 631 Direcional SCP Le Parc de France - Le Parce de France 3, ,688 2, (2) 133 (73) 814 Direcional Ametista Empreendimentos ImobiliariosLtda 1,111 12,383 1,688 9,148 2, (31) (4) - (35) Direcional Sodalita Empreendimentos ImobiliariosLtda 2, , Direcional TSC Lauro Sodré Direcional SCP Santa Mônica - Villagio Santa Mônica 6, , ,477 8,787 3,507 (19) (11) (254) 3,223 Alexandrita Empreendimentos 8,675 11,110 4,983 6,889 7,913 16,317 4,212 (134) 133 (412) 3,799 Malaquita Empreendimentos Imobiliários Ltda 7,683-1,093-6,590 2, (277) - (46) 528 Bujari Empreendimentos - Parque Verde 5, , ,939 7,151 2,229 (298) 15 (192) 1,754 Direcional Safira - Total Ville Marabá 34,791 17,645 10,669 16,647 25,120 29,565 10,933 (801) (58) (1,426) 8,647 Direcional Corretora de Imóveis 2, ,348 3,894 3,894 (57) (2) (210) 3,625 Direcional SCP Pró-Moradia II - Pró Moradis 9, ,520 11,806 3,771 (4) (1) (53) 3,712 Zircone Empreendimentos - Parque Ponta Negra 48,984 10,089 1,195 40,801 17,077 21,405 7,147 (1,458) (3) (678) 5,008 Direcional Turquesa - Jardins Life Residence 11, , (13) - - (13) Direcional Oiti Empreendimentos Imobiliários Ltda 1, ,096 6, (34) 20 (4) 502 Azurita Empreendimentos Imobiliários Ltda 23, ,286 14,749 7, (20) - - (21) Citrino Empreendimentos Imobiliários Ltda 307 9,595-9, Ernst & Young Terco 51

54 7. Investments in subsidiaries and jointly-controlled companies (individual financial statements) (Continued) (a) These represent jointly-controlled entities. -- Continued Summary of Company investees financial statements for the year ended December 31, 2010 is as follows: Balance sheet Statement of operations Company Assets Liabilities Net sales Operating Current Non-current Current Non-current Equity and service revenues Gross profit expenses, net Financial income, net Income Taxes Net income/lo ss Direcional Assis Brasil Empreendimentos Imobiliários Ltda 126 6,560-6, Bom Sucesso Incorporação 26,251-1,603-24, (1) (14) - (16) Turmalina Empreendimentos Imobiliários Ltda 1, (1) - (1) SCP Direcional Petropolis Petropolis , (32) 914 SCP Direcional Ozias - Ozias Monteiro 15, , ,352 33,593 8, (129) 8,109 Santa Margarida Empreendimentos Imobiliários Ltda 5, , (3) 7 Seabra Empreendimentos - Total Ville Porto Velho 12,063 7,596 11, ,154 12,169 3,059 (997) (28) (287) 1,747 Maragoggi Empreendimentos - Cap D'Antibes 7,963 3,022 2,731 2,717 5,537 10,646 5,310 (631) 149 (352) 4,476 Direcional Flourita Empreendimentos Imobiliários Ltda 19,939 17,673 1,038 1,358 35,216 25,887 10,929 (1,297) (1) (816) 8,815 Andaraí Empreendimentos Imobiliários Ltda 12, , ,161-1,161 Coral Empreendimentos Imobiliários Ltda 8, ,989 4, Água Marinha Empreendimentos ImobiláriosLtda 26,576-23,049-3, (30) (2) - (32) Direcional Jordão Empreendimentos Imobiliários Ltda 1, , Direcional Feijo Empreendimentos Imobiliários Ltda 3, ,300 1, Direcional Capixaba - Vila Verde 7, ,275 7,005 3,986 (299) - (218) 3,469 Direcional Brasileia 3,394 3,699 1, ,960 4,661 1,135 (86) - (118) 931 Direcional SCP Meu Orgulho - Residencial Meu Orgulho 15, , ,980 23,258 7,045 (45) (9) (111) 6,881 SCP - Floramar Andrade Valadares Arinos Empreendimentos - Chacaras das Oliveiras 9, ,524 6,231 1,476 1, (108) (1) (18) 393 Rio Branco Empreendimentos Imobiliários Ltda 36 4,000-3, (20) - - (20) Porto Acre Empreendimentos ImobiliariosLtda 8,852-1,039 7, Abaré Empreendimentos - Brisas do Parque 6, , (75) - - (76) Anadia Empreendimentos Imobiliários Ltda 5, , (2) - - (3) Direcional SCP Comim Meu Orgulho Infra 14, , ,485 13,948 6,706 - (1) (66) 6,640 Germiniano Projeto 01 Empreendimentos Imobiliários 8, , Direcional Santa Rosa Empreendimentos Imobiliários Ltda 13, ,956-3, Direcional Santo Antônio Empreendimentos Imobiliários Ltda 22, ,819-1, Ernst & Young Terco 52

55 7. Investments in subsidiaries and jointly-controlled companies (individual financial statements) (Continued) (a) These represent jointly-controlled entities. -- Continued Summary of Company investees financial statements for the year ended December 31, 2010 is as follows: Balance sheet Statement of operations Company Assets Liabilities Net sales Operating Current Non-current Current Non-current Equity and service revenues Gross profit expenses, net Financial income, net Income Taxes Net income/l oss Direcional Arapiraca Empreendimentos Imobiliários Ltda 8, ,005 3, Direcional Tarauaca - TulipInn Savassi Hotel 29, ,959 1, (1) - - (1) Direcional Belo Monte Empreendimentos Imobiliários Ltda Direcional Xapuri Empreendimentos Imobiliários Ltda 12, , Direcional São Miguel Empreendimentos Imobiliários Ltda Direcional Igaci Empreendimentos Imobiliários Ltda 7, , Direcional Alegre Empreendimentos Imobiliários Ltda 13 24,610-22,000 2, Direcional Cajueiro Empreendimentos Imobiliários Ltda 1 6,514-6, Direcional SCP Boa Casa Empreendimentos - Boa Casa Direcional Riachos Empreendimentos Imobiliários Ltda 16,078-3,212 12, Ernst & Young Terco 53

56 8. Property and equipment Changes in Company property and equipment in the period from December 2011 and December 2010 are as follows: Company a. Breakdown: 12/31/2011 Net property and Depreciation rates Cost Depreciation Net equipment at 12/31/2010 Machinery and equipment 10% 18,030 (1,956) 16,074 11,483 Furniture and fixtures 10% 760 (201) Land - 6,354-6,354 5,463 Vehicles 20% 832 (640) IT equipment 20% 1,537 (624) Other assets (64) Total 27,663 (3,485) 24,178 18,588 b. Changes in 2011 Cost Cost at 12/31/2010 Additions Writeoffs/Transfers Cost at 12/31/2011 Land 5,740 1,714 (1,100) 6,354 Machinery and equipment 12,307 5,722-18,029 IT equipment 1, ,538 Vehicles Furniture and fixtures (1) 759 Other assets (5) ,907 7,862 (1,106) 27,663 Depreciation (-) Depreciation at 12/31/2010 Depreciation in the period Write-offs (-) Depreciation at 12/31/2010 Furniture and fixtures (165) (69) 34 (200) Vehicles (548) (403) 311 (640) IT equipment (470) (296) 141 (625) Machinery and equipment (824) (1,636) 504 (1,956) Other assets (312) (270) 518 (64) (2,319) (2,674) 1,508 (3,485) Property and equipment, net 18,588 5, ,178 Ernst & Young Terco 54

57 8. Property and equipment (Continued) Company (Continued) b. Changes in 2010 Cost Cost at 12/31/2009 Additions Writeoffs/Transfers Cost at 12/31/2010 Land 1,100 4,640-5,740 Machinery and equipment 2,125 17,815 (7633) 12,307 IT equipment (178) 1,263 Vehicles (436) 784 Furniture and fixtures Other assets ,258 23,896 (8,247) 20,907 Depreciation (-) Depreciation at 12/31/2009 Depreciation in the period Write-offs (-) Depreciation at 12/31/2010 Land (125) (152) - (277) Furniture and fixtures (176) (648) - (824) Vehicles (243) (226) - (469) IT equipment (388) (160) - (548) Machinery and equipment (103) (62) - (165) Other assets (20) (16) - (36) (1,055) (1,264) - (2,320) Property and equipment, net 4,203 22,632 (8247) 18,588 Consolidated a. Breakdown: 12/31/2011 Net property and Depreciation equipment at Cost Depreciation Net rates 12/31/2010 Machinery and equipment 10% 23,860 (2,904) 20,956 15,387 Furniture and fixtures 10% 2,415 (464) 1,951 1,570 Land - 6,354-6,354 5,463 Vehicles 20% 2,209 (1,158) 1,051 1,136 IT equipment 20% 2,845 (1,038) 1,807 1,526 Sales stand (a) 22,489 (9,397) 13,092 9,288 Other assets (177) Total 60,800 (15,138) 45,662 34,630 (a) Sales booths are depreciated according to the flow of sales and expected sales of each project. Ernst & Young Terco 55

58 8. Property and equipment (Continued) Consolidated (Continued) b. Changes in 2011 Cost Cost at 12/31/2010 Additions Writeoffs/Transfers Cost at 12/31/2010 Machinery and equipment 16,733 7,060 (335) 23,458 Furniture and fixtures 1, (1) 2,415 Land 5,740 1,714 (1,100) 6,354 Vehicles 1, ,209 IT equipment 2, (2) 2,846 Sales stand 14,848 8,723 (1,082) 22,489 Other assets (9) 1,029 43,688 19,641 (2,529) 60,800 Depreciation (-) Depreciation at 12/31/2010 Depreciation in the period Write-offs (-) Depreciation at 12/31/2011 Machinery and equipment (1,346) (2,097) 544 (2,899) Furniture and fixtures (290) (243) 74 (459) Vehicles (848) (669) 359 (1,158) IT equipment (661) (439) 145 (955) Sales stand (5,560) (4,052) 216 (9,396) Other assets (353) (441) 523 (271) (9,058) (7,941) 1,861 (15,138) Property and equipment, net 34,630 11,700 (668) 45,662 The Company and its subsidiaries have entered into 5 financial lease agreements and 8 Machinery and Equipment Financing (FINAME) agreements, relating to machinery, equipment and vehicles. The book value of property and equipment held under finance lease commitments at December 31, 2011 was R$ 14,008. In 2011, items were added to property and equipment and the Finame financing, amounting to R$ 5,298, was guaranteed through chattel mortgage of the assets that were object of referred to agreements. Ernst & Young Terco 56

59 8. Property and equipment (Continued) Consolidated (Continued) c. Changes in 2010 Cost at 12/31/2009 Additions Write-offs Cost at 12/31/2010 Cost Machinery and equipment 4,238 20,136 (7,641) 16,733 Furniture and fixtures ,860 Land 1,100 4,640-5,740 Vehicles 1, (462) 1,984 IT equipment 1, (177) 2,187 Sales stand 10,468 5,486 (1,106) 14,848 Other assets ,334 33,718 (9,363) Depreciation (-) Depreciation at 12/31/2009 Depreciation in the period Write-offs (-) Depreciation at 12/31/2010 Machinery and equipment (390) (956) - (1,346) Furniture and fixtures (137) (153) - (290) Land (125) (152) - (277) Vehicles (529) (319) - (848) IT equipment (305) (356) - (661) Sales stand (3,582) (1,978) - (5,560) Other assets (32) (45) - (77) (5,100) (3,959) - (9,059) Property and equipment, net 14,234 29,759 (9,363) 34,630 Ernst & Young Terco 57

60 9. Loans and financing Company Consolidated Financing for Construction 12/31/ /31/ /31/ /31/2010 Jonasa Empreendimentos Imobiliários Ltda (e) ,658 35,448 Direcional Taguatinga Engenharia Ltda. (b) ,019 10,392 Direcional Âmbar Empreendimentos Imobiliários Ltda (h) ,066 33,440 Direcional Safira Empreendimentos Imobiliários Ltda (b) ,604 - Direcional Diamante Empreendimentos Imobiliários Ltda (b) ,193 5,479 Direcional TSC Rio Madeira Empreendimentos Imobiliários Ltda (e) ,124 17,420 Ônix Empreendimentos Imobiliários Ltda (b) ,254 6,502 Direcional Rubi Empreendimentos Imobiliários Ltda (h) ,555 6,770 Flourita Empreendimentos Imobiliários Ltda (e) ,818 - Direcional TSC Jatuarana Empreendimentos Imobiliários Ltda (b) ,248 3,879 Direcional Opala Empreendimentos Imobiliários Ltda (b) ,110 9,897 Direcional TSC Jamari Empreendimentos Imobiliários Ltda (h) ,029 5,806 Alexandrita Empreendimentos Imobiliários Ltda (d) - - 9,840 3,053 Seabra Empreendimentos Imobiliários Ltda - Total Ville Porto Velho (b) - - 9,645 - Bujari Empreendimentos Imobiliários Ltda (d) - - 9,302 - SPE - Direcional Brasileia Empreendimentos Imobiliários Ltda (b) - - 7,996 - Direcional Engenharia S.A. - SCP Club House (e) - - 7,898 - SCP - Direcional/DAN/Gontijo Fernandes - Jacundá (e) - - 7,550 35,981 Direcional Esmeralda Empreendimentos Imobiliários Ltda (e) - - 7,331 - SCP - Direcional/ACR - Paradiso (b) - - 7,078 20,957 SPE - Direcional Silvestre Ltda (b) - - 3,779 - Direcional Construtora Valparaíso Ltda. (h) - - 2,905 8,954 Direcional Patrimar Maragogi Empreendimentos Imobiliários Ltda (e) - - 2,778 - Una Empreendimentos Imobiliários Ltda (h) - - 2,432 - SCP - Aterpa - Rio de Janeiro (e) SPE - Rubelita Empreendimentos Imobiliários Ltda (e) ,310 Ernane Agricola Empreendimentos Imobiliários Ltda (f) Dirional Engenharia Engenharia (h) ,399 Other , , ,056 Securitization Direcional Engenharia S.A. - Plaza das Águas (Cibrasec) SCP - Direcional/ACR - Lago - Lake View (Safra) ,779 46,494 Other ,847 46,843 FINAME and finance leasing for equipment Direcional Engenharia S.A. (e) 4,205 2,634 4,205 2,634 Direcional Engenharia S.A. (h) 8,871 6,248 8,871 6,248 13,076 8,882 13,076 8,882 Working capital Direcional Engenharia S.A. (a) 20,666 20,593 20,666 20,593 20,666 20,593 20,666 20,593 Total 33,810 29, , ,374 Current 4,843 3, , ,643 Non-current 28,967 25, , ,731 Ernst & Young Terco 58

61 9. Loans and financing (Continued) The counterparties with which the Company obtained loans and financing are: (a) Banco Bradesco; (b) Caixa Econômica Federal; (c) CIBRASEC Companhia Brasileira de Securitização; (d) Banco HSBC S.A.; (e) Banco Itaú S.A.; (f) Banco Mercantil S.A.; (g) Banco Safra S.A.; and (h) Banco Santander S.A. Company loans and financing fall into four major categories, to wit: Financing for Construction: This type of loan is designed to fund projects during their construction. Interest rates applicable range from 8.3% to 12% p.a., depending on the operation, plus restatement by the Referential Rare (TR). These transactions are secured by mortgages of respective projects real estate; FINAME and Leasing: The purpose of these types of loan is to finance investments in machinery and equipment. Interest rates applicable are: (i) for FINAME, depending on the operation, fixed interest from 4.5% to 8.7% p.a. or variable interest indexed based on the Long-term Interest Rate (TJLP) variation or the Interest Rate set forth by Provisional Executive Order No. 462 (TJ 462) ranging from 2.94% to 6.0% p.a. and (ii) for Leasing, depending on the operation, fixed interest from 13.79% to 14.93% p.a. or variable interest indexed by CDI variation of 2.55% p.a. These operations are guaranteed by the machinery and equipment items purchased with these loans; Working capital: The purpose of this type of loan is to finance Company working capital requirements. The interest rate applicable to this type of loan is the CDI plus 1.75% p.a. Securitization of Receivables: In June 2010, the Company took out mortgage-backed securities for Lake View Resort project from the Companhia Brasileira de Securitização (CIBRASEC). In this operation, the Company securitized 176 contracts totaling R$54,314. The receivables assigned were adjusted by the National Index of Civil Construction (INCC) until the certificate of occupancy was granted in June/2011, and by the General Market Price Index published by Getúlio Vargas Foundation (IGP-M ) + 12% p.a. onwards until maturity. The outstanding debt balance of the operation will be adjusted by the IGP-M + 12% p.a. until maturity. The Company is jointly liable for and will be the principal payer of all obligations assumed in this transaction and shall remain jointly liable until actual receipt by CIBRASEC of the full amount securitized. Accordingly, the Company did not write off the accounts receivable relating to the securitized project. Ernst & Young Terco 59

62 9. Loans and financing (Continued) Company non-current loans have the following aging list: Period 12/31/ /31/2010 January/13 to December/13 23,728 2,554 January/14 to December/14 3,087 21,921 January/15 to December/15 1, From January/16 onwards Total 28,967 25,904 Consolidated non-current loans have the following aging list: Period 12/31/ /31/2010 January/13 to December/13 127,098 59,102 January/14 to December/14 39, ,894 January/15 to December/15 5,580 19,101 From January/16 onwards 20, Total 192, , Labor liabilities Company Consolidated Description 12/31/ /31/ /31/ /31/2010 Salaries payable ,891 6,794 Charges payable 1, ,762 4,829 Provision for vacation pay 2,426 1,028 10,317 5,442 Profit sharing 4,930 6,000 8,947 10,120 Other Total 9,679 8,700 34,942 27, Tax liabilities Company Consolidated Tax liabilities 12/31/ /31/ /31/ /31/2010 Corporate Income Tax (IRPJ) ,580 15,898 Social Contribution on Net Profit (CSLL) ,289 8,494 Social Contribution Tax on Gross Revenue for Social Integration Program 15 5,670 (PIS) 79 6,715 Social Contribution Tax on Gross Revenue for Social Security Financing 58 21,928 (COFINS) ,352 Other ,243 2, ,179 54,294 Current ,547 43,268 Non-current ,632 11,026 Ernst & Young Terco 60

63 12. Real estate commitments payable Accounts payable arising from the acquisition of land for real estate development purposes are as follows: Consolidated Company 12/31/ /31/2010 Zircone Empreendimentos Imobiliários Ltda 37,945 16,007 Direcional Safira Empreendimentos Imobiliarios Ltda 22,494 23,018 Direcional Água Marinha Empreendimentos Imobiliários Ltda 21,275 23,049 Direcional Água Branca Empreendimentos Imobiliários Ltda 17,490 - Seabra Empreendimentos Imobiliarios 9,221 9,544 Direcional Riachos Empreendimentos Imobiliários Ltda 8,000 16,000 Direcional Abaré Empreendimentos Imobiliários Ltda 5,543 5,721 Direcional Anadia Empreendimentos Imobiliários Ltda 5,370 5,370 Direcional Rio Branco Empreendimentos Imobiliários Ltda 3,900 3,900 Direcional Âmbar Empreendimentos Imobiliarios Ltda 1,856 6,455 Direcional Taguatinga Engenharia Ltda. - 25,153 Direcional Santo Antônio Empreendimentos Imobiliários Ltda - 20,712 Direcional Santa Rosa Empreendimentos Imobiliários Ltda 1,100 9,956 Other 9,320 13,897 Total 143, ,782 Current 32,848 94,895 Non-current 110,666 83,887 Ernst & Young Terco 61

64 13. Advances from customers These refer to (i) a commitment to deliver finished, completed real estate units purchased through barter of land to be developed; (ii) advances from customers deriving from sales of real estate units. Consolidated Advances from customers physical barter of land (i) 12/31/ /31/2010 Direcional Alegre Empreendimentos Imobiliários Ltda 22,000 6,514 Direcional Taguatinga Engenharia Ltda. 16,290 - Direcional Sena Madureira Empreendimentos Imobiliários Ltda 16,190 - Direcional Agua das Flores Empreendimentos Imobiliários Ltda 16,000 - Direcional Construtora Valparaíso Ltda. 15,476 7,923 Direcional Carneiros Empreendimentos Imobiliários Ltda 13,846 - Direcional Trincheiras Empreendimentos Imobiliários Ltda 13,096 - Direcional Xapuri Empreendimentos Imobiliários Ltda 12,797 12,798 Direcional Arapiraca Empreendimentos Imobiliários Ltda 12,005 5,005 Direcional Coruripe Empreendimentos Imobiliários Ltda 12,000 - Direcional Tarauaca Empreendimentos Imobiliários Ltda 11,474 27,959 Direcional Ametista Empreendimentos Imobiliarios Ltda 10,967 10,762 Ônix Empreendimentos Imobiliários Ltda 10,214 13,832 Direcional Leopoldina Empreendimentos Imobiliários Ltda 9,619 - Citrino Empreendimentos Imobiliários Ltda 9,595 9,594 Arinos Empreendimentos Imobiliários Ltda 9,385 8,653 Direcional Santa Rosa Empreendimentos Imobiliários Ltda 7,500 - Direcional Cajueiro Empreendimentos Imobiliários Ltda 6,514 22,000 Direcional Azurita Empreendimentos Imobiliarios Ltda 14,884 16,031 Andrade Valladares Residencial Ltda - SCP Floramar 5,166 - Direcional Rubi Empreendimentos Imobiliarios Ltda 4,430 3,526 Coral Empreendimentos Imobiliarios Ltda 3,600 3,600 Direcional Âmbar Empreendimentos Imobiliarios Ltda 3,339 5,104 Direcional Assis Brasil Empreendimentos Imobiliários Ltda 3,280 3,280 Direcional Porto Acre Empreendimentos Imobiliarios Ltda 5,737 8,633 Direcional Esmeralda Empreendimentos Imobiliarios Ltda 4,128 7,338 Direcional Campinas Engenharia Ltda. 1,621 1,621 Direcional Patrimar Maragogi Empreendimentos Imobiliarios Ltda 1,444 2,147 SPE 80 - Direcional Brasileia Empreendimentos Imobiliarios Ltda Other 1,259 9, , ,373 Advances from customers receipt (ii) Direcional Rubi Empreendimentos Imobiliários Ltda Una Empreendimentos Imobiliários Ltda Direcional Capixaba Empreendimentos Imobiliários Ltda SPE 34 - Alexandria Empreendimentos Imobiliários Ltda - 90 SPE 80 - Direcional Brasileia Empreendimentos Imobiliários Ltda TOTAL 275, ,788 Current 74,715 31,028 Non-current 200, ,760 Ernst & Young Terco 62

65 14. Trade accounts payable Company Consolidated Description 12/31/ /31/ /31/ /31/2010 Payables to customers 8,439 6,040 8,821 6,040 Payables to partners (a) ,300 13,341 Payables to legal entities ,111 - Accounts payable for equity investments acquired 30,089 8,476 30,689 8,476 Other 1, ,438 1,418 Total 40,146 15, ,359 29,275 Current 23,124 15,709 91,337 29,275 Non-current 17,022-17,022 - (a) On April 20, 2011, the Company entered into a commercial agreement with an investing partner, relating to the development of 4 land units located in the Federal District (DF) in exchange for R$ 44,300 received in cash. 15. Provision for tax, civil and labor contingencies The Company and its subsidiaries are exposed to certain contingencies and risks, relating to civil, tax and labor claims arising in the normal course of business. Based on the analysis of the risks identified and on the opinion of its legal advisors, the Company recorded a provision in an amount deemed sufficient to cover any losses for those cases whose likelihood of loss is estimated as probable. At December 31, 2011, these provision amounts were as follows: Company Consolidated Tax Labor Civil Total Tax Labor Civil Total Balance at December 31, ,151 1,269 2, ,190 1,269 2,510 Provision in the period ,376 1,048 3,283 Reversal in the period - (1,149) (833) (1,982) - (526) (718) (1,244) Balance at December 31, ,040 1,599 4,549 In addition, the Company is involved in other legal proceedings of a tax, civil and labor nature arising in the normal course of business, whose likelihood of loss, in the opinion of Company Management and its legal advisors, is assessed as possible in the amounts of approximately R$ 2,097 for labor, R$ 10 for tax and R$ 2,568 for civil proceedings, at December 31, As such, these proceedings were not subject to the establishment of provisions to cover any losses deriving from an unfavorable outcome. Ernst & Young Terco 63

66 16. Real estate development operations Operating revenue, net Consolidated 12/31/ /31/2010 Gross sales revenue 829, ,610 Gross service revenue 268, ,728 Total gross revenue 1,098, ,338 Taxes on sales (26,136) (24,431) Operating revenue, net 1,072, ,907. Ernst & Young Terco 64

67 16. Real estate development operations (Continued) Appropriated profit/loss relating to real estate sales (consolidated) 12/31/ /31/2010 Company Gross revenue units sold ( - ) Cost units sold Gross revenue units sold ( - ) Cost units sold SCP - Meu Orgulho 127,602 (96,844) 23,383 (16,213) Direcional Taguatinga Engenharia Ltda. 107,283 (57,980) 73,085 (43,224) Jonasa Empreendimentos Imobiliários Ltda. 77,284 (60,197) 88,836 (53,432) Ônix Empreendimentos Imobiliários Ltda 53,232 (40,177) 29,622 (22,208) Flourita Empreendimentos Imobiliários Ltda 45,510 (23,613) 26,868 (14,959) Zircone Empreendimentos Imobiliarios Ltda 44,589 (27,296) 8,886 (5,703) Direcional Rubi Empreendimentos Imobiliarios Ltda 41,916 (24,971) 9,407 (5,526) Seabra Empreendimentos Imobiliarios Ltda - A/C Consórcio Total Ville Porto Velho 37,344 (26,656) 12,485 (9,110) Direcional Diamante Empreendimentos Imobiliarios Ltda 38,095 (30,324) 30,855 (20,590) Direcional Âmbar Empreendimentos Imobiliarios Ltda 37,558 (31,789) 45,247 (32,571) Direcional Tarauaca Empreendimentos Imobiliários Ltda 33,879 (18,698) - - SCP Alterosa - Ribeirão das Neves 31,359 (21,502) - - Direcional Safira Empreendimentos Imobiliarios Ltda 32,772 (21,837) 31,124 (18,633) SCP Direcional/Comim Meu Orgulho - Infra 28,745 (27,007) 14,023 (7,242) SCP - Pro Moradia II 28,115 (17,651) 11,872 (8,036) Direcional TSC Jatuarana Empreendimentos Imobiliarios Ltda 26,308 (22,903) 11,452 (8,437) Direcional Esmeralda Empreendimentos Imobiliarios Ltda 21,911 (12,471) 23,013 (12,719) SCP Bairro Carioca 21,526 (15,266) - - Direcional Capixaba Empreendimentos Imobiliarios Ltda 21,259 (9,733) 7,270 (3,018) Direcional TSC Rio Madeira Empreendimentos Imobiliarios Ltda 18,051 (21,958) 29,968 (23,257) SCP - Cidadão XI 17,471 (15,162) 10,839, (7,804) Direcional Opala Empreendimentos Imobiliarios Ltda 17,826 (13,061) 17,535 (11,577) Bujari Empreendimentos Imobiliarios Ltda 17,095 (11,695) 7,362 (4,922) Direcional Azurita Empreendimentos Imobiliarios Ltda 5,791 (3,378) - - Una Empreendimentos Imobiliarios Ltda 14,277 (6,183) 1,383 (597) SPE 80 - Direcional Brasileia Empreendimentos Imobiliarios Ltda 13,976 (9,522) 2,394 (1,763) SCP - Direcional/DAN/Gontijo Fernandes - Jacundá 13,283 (7,760) 46,051 (32,931) Direcional Engenharia S.A. - SCP Club House 10,915 (7,660) 16,910 (13,254) Direcional Ametista Empreendimentos Imobiliarios Ltda 10,279 (6,440) - - SCP - Direcional/ASCC/Diedro-Eliza Miranda 10,239 (4,605) 10,065 (7,442) Direcional Porto Acre Empreendimentos Imobiliarios Ltda 7,329 (4,953) - - Direcional TSC Jamari Empreendimentos Imobiliarios Ltda 10,606 (9,569) 9,164 (4,309) Andrade Valladares Residencial Ltda - SCP Floramar 9,911 (6,097) - - Alexandrita Empreendimentos Imobiliarios Ltda 9,717 (10,073) 8,372 (6,053) Direcional Engenharia S.A. 7,979 (1,916) 8,749 - Direcional Abaré Empreendimentos Imobiliários Ltda 6,556 (3,700) - - SPE 31 - Direcional Silvestre Ltda 5,887 (3,906) - - Direcional Patrimar Maragogi Empreendimentos Imobiliarios Ltda 5,235 (3,268) 4,969 (2,401) SCP - Direcional/ACR - Lago 5,189 (5,223) 27,809 (16,539) Direcional Corretora de Imóveis S.A. 4,730 (220) 4,070 - Direcional Trincheiras Empreendimentos Imobiliários Ltda 4,698 (2,657) - - SCP - Direcional/ACR - Paradiso 2,308 (2,114) 23,614 (17,509) SCP Boa Casa 2,063 (3,642) - - Direcional Construtora Valparaíso Ltda. 1,985 (5,150) 19,404 (14,099) SPE 34 - Alexandria Empreendimentos Imobiliarios Ltda 1, ,372 (3,782) Capela Empreendimentos Imobiliários Ltda 1,550 (2,098) - - SCP Aterrado do Leme 1,160 (859) - - SPE - Rubelita Empreendimentos Imobiliarios Ltda 1,037 (1,021) 7,732 (5,112) SCP - Direcional/ACR - Santa Mônica 920 (1,487) 9,033 (5,280) SCP - Direcional/Eólica - Retiro dos Artistas 902 (998) 4,316 (3,824) SCP - Direcional/SPL - Campinas 274 (481) 6,594 (5,924) SCP - Direcional/ACR - Le Parc de France 163 (289) 2,438 (1,602) SCP - Direcional/ACR - Ouro Preto 65 (72) 1,672 (2,080) SCP - Direcional/ACR - Maura Valadares 17 (14) 4,774 (5,047) SCP 15 - Aterpa - Rio de Janeiro - (245) 5,423 (3,703) Malaquita Empreendimentos Imobiliarios Ltda - 0 2,253 (1,341) SCP - Direcional/ACR - Gran Riserva (668) 55 6,558 (6,873) Arinos Empreendimentos Imobiliários Ltda (798) 27 1,305 (766) SPE - Diresomattos Gutierrez Empreendimentos Imobiliarios Ltda 42 (486) 2,897 (2,317) SCP - Direcional/Somattos - Bartira Mourão 512 (415) 851 (509) Ernane Agricola Empreendimentos Imobiliarios Ltda 1,912 (2,594) 5,821 (3,809) Other (7) (3,937) 45,213 (35,737) Total 1,098,448 (771,739) 806,338 (533,784) Ernst & Young Terco 65

68 16. Real estate development operations (Continued) 16.3 Expenses by nature The Company elected to present the consolidated income statements by function. Detailed information on expenses by nature is as under: Consolidated 12/31/ /31/2010 Cost of real estate sold 570, ,184 Cost of services provided 201,166 73,600 Selling expenses 27,673 20,041 General and administrative expenses 96,193 59, , ,697 Raw material and materials for use and consumption 471, ,506 Personnel expenses 255, ,765 Depreciation and amortization 10,363 6,274 Third-party services 71,648 61,768 Electricity, water and telephone 17,912 4,454 General selling expenses 25,407 12,730 Sales commissions 2,266 4,501 Other 40,873 5, , ,697 Ernst & Young Terco 66

69 16. Real estate development operations (Continued) Contracted real estate sales (consolidated) The budgeted costs to be incurred referring to the sale of units under construction, and unearned revenue from real estate sales, relating to projects in progress not recorded in the financial statements are as follows: 12/31/ /31/2010 (-) Construction commitments to be incurred for Contracted sales contracted sales to be incurred (-) Construction commitments to be incurred for contracted sales Contracted sales Project to be incurred SCP - Meu Orgulho ( ) (87.248) Zircone Empreendimentos Imobiliarios Ltda (56.590) (10.965) SCP Bairro Carioca (65.169) - - Residencial Macapá - 1º fase (88.360) - - SCP Aterrado do Leme (55.878) - - SCP - Pro Moradia II (45.483) (67.238) Direcional Capixaba Empreendimentos Imobiliarios Ltda 52,080 (21,976) 53,713 (21,590) Zircone Empreendimentos Imobiliarios Ltda 47,203 (27,981) 9,649 (5,907) SCP Alterosa - Ribeirão das Neves 40,322 (27,429) - - SCP Direcional/Comim Meu Orgulho - Infra 39,398 (31,903) - - Una Empreendimentos Imobiliarios Ltda 39,341 (16,076) 14,312 (6,068) Ônix Empreendimentos Imobiliários Ltda 35,497 (21,011) 11,820 (7,014) Seabra Empreendimentos Imobiliarios Ltda - A/C Consórcio Total Ville Porto Velho 35,497 (20,274) 19,764 (11,752) Direcional Taguatinga Engenharia Ltda. 33,753 (16,566) - - Direcional Taguatinga Engenharia Ltda. 29,705 (22,774) 26,871 (16,520) Direcional Abaré Empreendimentos Imobiliários Ltda 28,849 (15,790) - - Direcional Rubi Empreendimentos Imobiliarios Ltda 28,602 (16,463) 10,214 (5,391) Jonasa Empreendimentos Imobiliários Ltda. 25,414 (18,065) 51,422 (27,623) Direcional Trincheiras Empreendimentos Imobiliários Ltda 24,640 (13,324) - - Direcional Esmeralda Empreendimentos Imobiliarios Ltda 24,318 (12,717) 73,600 (38,045) Direcional Tarauaca Empreendimentos Imobiliários Ltda 24,243 (12,909) - - Direcional Rubi Empreendimentos Imobiliarios Ltda 27,177 (16,212) 44,402 (25,514) Flourita Empreendimentos Imobiliários Ltda 21,624 (10,229) 34,440 (16,964) Direcional Porto Acre Empreendimentos Imobiliarios Ltda 14,519 (9,734) - - Andrade Valladares Residencial Ltda - SCP Floramar 18,435 (10,476) - - Direcional Taguatinga Engenharia Ltda. 18,163 (10,154) 25,156 (16,444) Direcional Azurita Empreendimentos Imobiliarios Ltda 16,236 (8,611) - - Direcional Ametista Empreendimentos Imobiliarios Ltda 15,118 (8,390) - - Direcional Taguatinga Engenharia Ltda. 13,352 (7,772) 26,171 (16,370) Direcional Diamante Empreendimentos Imobiliarios Ltda 11,535 (6,753) - - Ônix Empreendimentos Imobiliários Ltda 9,495 (6,297) 27,825 (18,115) SCP - Meu Orgulho 9,144 (6,899) 27,358 () Direcional Diamante Empreendimentos Imobiliarios Ltda 7,482 (4,866) 13,679 (8,371) Direcional Patrimar Maragogi Empreendimentos Imobiliarios Ltda 7,559 (4,000) 8,584 (3,944) Direcional Taguatinga Engenharia Ltda. 7,065 (3,467) 26,344 (13,545) Direcional Safira Empreendimentos Imobiliarios Ltda 6,537 (3,460) 5,832 (3,618) Direcional Rubi Empreendimentos Imobiliarios Ltda 5,317 (3,719) - - Seabra Empreendimentos Imobiliarios Ltda - A/C Consórcio Total Ville Porto Velho 5,029 (3,577) 35,105 (24,246) Direcional Âmbar Empreendimentos Imobiliarios Ltda 4,943 (3,089) 15,160 (8,715) SCP Boa Casa 2,887 (5,058) - - SCP - Direcional/ASCC/Diedro-Eliza Miranda 2,290 (1,952) - - Bujari Empreendimentos Imobiliarios Ltda 1,969 (1,299) 15,643 (10,248) Direcional Opala Empreendimentos Imobiliarios Ltda 1,738 (1,191) 3,792 (2,540) Alexandrita Empreendimentos Imobiliarios Ltda 1,576 (1,242) 9,869 (6,489) Direcional TSC Jatuarana Empreendimentos Imobiliarios Ltda 1,378 (1,072) 9,440 (6,341) SCP - Cidadão XI 1,191 (964) 18,661 13,474 Direcional Ametista Empreendimentos Imobiliarios Ltda 1,095 (908) - - SCP - Direcional/DAN/Gontijo Fernandes - Jacundá - - 5,737 (3,619) Direcional Taguatinga Engenharia Ltda ,262 (725) Direcional Taguatinga Engenharia Ltda ,242 (12,242) Direcional Construtora Valparaíso Ltda ,037 (1,727) Jonasa Empreendimentos Imobiliários Ltda ,873 (12,276) Direcional Diamante Empreendimentos Imobiliarios Ltda ,322 (10,456) Direcional Opala Empreendimentos Imobiliarios Ltda ,920 (7,118) Direcional Safira Empreendimentos Imobiliarios Ltda ,053 (10,772) Direcional Âmbar Empreendimentos Imobiliarios Ltda - - 3,068 (2,048) SCP - Direcional/ACR - Maura Valadares (516) Direcional TSC Rio Madeira Empreendimentos Imobiliarios Ltda ,326 (8,281) Direcional TSC Jamari Empreendimentos Imobiliarios Ltda - - 6,514 (4,141) SCP - Direcional/ACR - Santa Mônica (271) Ônix Empreendimentos Imobiliários Ltda ,223 (10,067) Arinos Empreendimentos Imobiliários Ltda - - 5,406 (2,959) SPE 34 - Alexandria Empreendimentos Imobiliarios Ltda (567) SPE 80 - Direcional Brasileia Empreendimentos Imobiliarios Ltda 18,366 (12,352) 6,428 (4,587) SPE 31 - Direcional Silvestre Ltda 12,332 (8,092) - - Ernane Agricola Empreendimentos Imobiliarios Ltda (90) Total 1,482,460 (922,076) 1,011,454 (579,942) Ernst & Young Terco 67

70 17. Equity Common Stock On March 19, 2010, May 11, 2010 and October 29, 2010 the Board of Directors approved an increase in Company capital in the amounts of R$ 727, R$ 131 and R$ 76 respectively, through issue of 606,245 common shares, 109,731 common shares, 63,920 common shares, respectively, at an issue price of R$1.20 per share, as set under Program I - Grant of Stock Options. After these shares were issued, Company capital increased to R$ 324,247, represented by 33,407,162 shares at December 31, On February 9, 2011 the Board of Directors approved a capital increase of R$171,600 through issue of 20.8 million shares at R$11.00 per share. After these shares were issued, capital increased to R$ 495,849. On April 25, 2011 the Board approved a capital increase of R$484.2 by issuing 403,541,000 shares at R$1.20, as set under the Program I - Grant of Stock Options. After this issue the Company s capital was increased to R$496, On July 8 and August 30, 2011 the Board of Directors approved a capital increase of R$ 28 and R$ 325 respectively, by issuing 24.5 and thousand shares respectively. After these shares were issued, Company capital increased to R$ 496,686, represented by 153,244,532 common shares at December 31, Company authorized capital on the date of disclosure of the financial statements is R$1,200, Capital reserve Capital reserve through issue of shares As discussed in Note 1, in 2011 the Company held a public offering, in which the unit value per share was R$ 11.00, totaling R$ 308,000 gross, R$ 228,802 of which relating to the primary offering. The Board of Directors determined that R$ 57,200 of this total amount be transferred to the Capital Reserve account through issue of shares Capital reserve through the granting of stock options As discussed in Note 21, the Company recognizes in this account the services received in exchange for the stock options granted. Upon exercise of these stock options, the reserve is transferred to retained earnings. Ernst & Young Terco 68

71 17. Equity (Continued) Capital Reserves (Continued) Share Buyback Plan Income reserve In a meeting held on August 11, 2011, the Board of Directors approved a Buyback Plan of the shares issued by the Company, aiming at holding these shares in treasury for subsequent disposal or cancellation, without capital reduction, in order to maximize shareholders value. Number of shares to be acquired: up to 4,500,000 common shares issued by the Company at BM&F BOVESPA market price, all registered bookentry shares with no par value, equivalent to approximately 5.57% of total shares outstanding, observing a minimum of 25% outstanding shares in the market, as required by the New Market Listing Rules, and subject to the number of shares to be held in treasury, pursuant to CVM Instruction No. 10, not exceeding 10% of common shares outstanding in the market. The 60-day Buyback Plan was carried out from August 12, 2011 to October 11, During this period, 1,660,200 shares were bought back, representing a disbursement of R$ 15,846 at the average price of R$9.54 per share Legal reserve The legal reserve was set up at 5% of the net income for the year, up to the limit of 20% of capital or of 30% of capital considering the legal reserve plus the capital reserve, under the terms of Corporate Law Retained earnings reserve This reserve is set up especially for the purpose of maintaining Company investment capacity and the performance of work in progress. Ernst & Young Terco 69

72 17. Equity (Continued) Income Reserve (Continued) Payment of dividends The shareholders are entitled to annual dividends of at least 25%, calculated based on net income, adjusted by the capital reserve variations, as required by Brazilian Corporation Law. 12/31/ /31/2010 Net income for the year 175, ,552 Legal reserve (5%) (8,761) (8,332) Adjusted net income 166, ,220 Dividends proposed by the Company 41,614 40,272 Mandatory minimum dividend (25%) (41,614) (39,555) Dividends proposed in excess of mandatory minimum dividend Dividends per share The remaining balance in the accumulated earnings account at December 31, 2011, amounting to R$ 124,841, was transferred, as proposed by management, to the Retained Earnings Reserve, upon approval obtained at a General Shareholders Meeting Earnings per share The Company calculates earnings per share using the weighted average number of total common shares outstanding in the period corresponding to P&L, pursuant to Accounting Pronouncement CPC 41 (IAS 33). Detailed information on the calculation of earnings per share for years ended December 31, 2011 and 2010 is as under: Earnings per share base 12/31/ /31/2010 Numerator: Net income for the year 175, ,552 Denominator: Weighted average number of shares 151,853, ,313,689 Base earnings per share, net R$ Earnings per share - diluted 12/31/ /31/2010 Numerator: Net income for the year 175, ,552 Denominator: Weighted average number of shares 151,853, ,313,689 Adjustment for stock option (1) 2,679,049 4,508,711 Weighted average number of shares (diluted) 154,532, ,822,400 Base earnings per share, net R$ Ernst & Young Terco 70

73 17. Equity (Continued) Earnings per share (Continued) (1) This is represented by in-the-money outstanding options, as per the stock option plan set out in Note Financial income/expenses Description Company Consolidated Financial Expenses 12/31/ /31/ /31/ /31/2010 Interest expenses (3,915) (148) (4,576) (844) Banking expenses (303) (31) (1,663) (1,400) Exchange losses (393) (1,004) (9,637) (1,917) Other - (74) - (406) (4,611) (1,257) (15,876) (4,567) Financial income Gains from short-term investments 22,522 17,411 29,722 20,726 Monetary restatement and contractual interest 11,620 5,749 15,072 12,446 34,142 23,160 44,794 33,172 Financial income/expenses Income taxes Breakdown of income and social contribution tax expenses for the years ended December 31, 2011 and December 31, 2010 shows the timing difference between the cash basis of accounting, used by the SCPs and SPEs, which are taxed based on taxable profit computed as a percentage of gross revenue and on the Special Taxation Basis (RET), and the tax provision on trade accounts receivable. A summary of this difference is as follows: Company Consolidated 12/31/ /31/ /31/ /31/2010 Income before income and social contribution taxes 175, , , ,252 IRPJ and CSLL at 34% (59,573) (56,628) (70,274) (68,426) Adjustments for effective rate calculation: Equity income 77,040 65, Unrecognized temporary differences (9,307) (6,523) (9,307) (6,523) Permanent additions (1,864) (899) (1,864) (899) Unrecognized tax losses and temporary differences (6,864) (1,161) (6,864) (1,161) Other Net effect of subsidiaries taxed under RET or based on taxable profit computed as a percentage of gross revenue ,643 56,198 IRPJ and CSLL expense - - (25,098) (20,811) Effective rate % 10.3% Ernst & Young Terco 71

74 19. Income taxes (Continued) The Company (controlling shareholder) has a balance of income and social contribution tax losses at December 31, 2011 in the amount of R$ 20,190 (R$ 6,388 at December 31, 2010), on which no deferred tax assets were recorded, since there is no expected realization through future taxable profits due to the Company s characteristic as a holding company. Due to the taxation basis adopted by the SCPs and SPEs (taxable profit computed as a percentage of gross revenue or the RET), these entities do not present temporary differences. 20. Financial instruments The Company and its subsidiaries enter into transactions involving financial instruments to fund their activities or invest their funds available. These risks are managed by setting conservative strategies aimed at liquidity, profitability and security. The control policy consists of actively monitoring the agreed-upon rates visà-vis market-observable rates. Financial instruments usually taken out by Direcional and its subsidiaries are those recorded under Cash and cash equivalents, as well as financing for construction of real estate projects and purchase of machinery and equipment. The Company did not operate with derivatives in the period from December 2010 to December 2011.The book value of financial instruments at balance sheet date, substantially represented by short-term investments and financing agreements, approximate their estimated market value, since these transactions are subject to floating rates. Interest rate risk The Company is exposed to interest rate risk, substantially the CDI rate variation, which remunerates its financial investments contracted in Reais (R$), interest on loans taken out from the National Housing System (SFH) pegged to the Referential Rate (TR), interest on loans for purchase of machinery and equipment from BNDES (FINAME) pegged to the TJLP, CDI-pegged interest on loans as a source of working capital, and interest on securitization of receivables pegged to the IGP-M. Liquidity risk Company manages liquidity risk based on cash flow, seeking to maintain funds available at a level sufficient to meet its short-term needs. Ernst & Young Terco 72

75 20. Financial instruments (Continued) Currency risk At December 31, 2011, the Company had no debts or receivables denominated in foreign currency. Additionally, none of Company significant costs is denominated in foreign currency. Credit risk Financial instruments that potentially subject the Company to credit risk concentration primarily consist of bank balances, short-term investments and trade accounts receivable. The Company limits its exposure to credit risk associated with banks and short-term investments by investing in short-term, highly liquid securities with first-tier financial institutions. With respect to trade accounts receivable, the Company limits its exposure to credit risk through sales to a broad client base and continuous credit analysis. At December 31, 2011, there was no significant concentration of credit risk associated with customers. Trade accounts receivable are secured by chattel mortgages on corresponding real estate. Fair value of financial instruments The book value of financial instruments, mainly represented by short-term investments and financing agreements are presented in the balance sheets at amounts that approximate market value for similar operations. The fair value used for recording short-term investments was determined based on prices quoted in active markets for similar operations and falls into level 1 of the fair value hierarchy. Ernst & Young Terco 73

76 20. Financial instruments (Continued) Sensitivity analysis The Company and its subsidiaries should present a sensitivity analysis for each type of market risk deriving from financial instruments and deemed relevant by management, which the Entity is exposed to at each year-end date. Since the Company has no derivative financial instruments, exposure only takes place with respect to changes in floating rates that affect both financial income from shortterm investments and financial expenses from loans. Therefore, the financial instruments of Company and subsidiaries under Assets are free from significant risk since they are remunerated at the CDI rate, and loans and financing are tied to changes in TR plus fixed spread, in the case of financing for production (SFH), to the variation in TJLP plus fixed spread, in the case of funding for equipment acquisition through BNDES (FINAME), to the CDI, in the case of loans for working capital purposes, and to the IGP-M for securitization of receivables. In order to conduct its sensitivity analysis, the Company used market projections for The positive and negative impacts are as follows: December 31, 2011 Increase/Reduction in percentages Effect on income before taxes -25% 4,954 25% -4,954 Business risk management Risk control system In order to efficiently manage its risk, the Company holds operational control over all projects in progress. Under this management model, the Company calculates potential losses in simulations of unfavorable conditions for each individual venture and for all projects as a whole, as well as the maximum cash exposure required. Maximum cash exposure control The risk control system monitors future cash requirements to deliver projects scheduled in Company portfolio, based on the economic feasibility study of each project, as well as on the need for individual cash flows in relation to the projected cash flow of projects as a whole. This projection helps define the strategy for financing and decision-making in regard to project selection. Ernst & Young Terco 74

77 20. Financial instruments (Continued) Demand risk management Through market knowledge and local partners insights, Direcional can identify the demand for new projects in different regions, as well as the income bracket of prospect buyers to be served. Launches are defined in terms of the potential each region has to absorb a certain number of property units and respond to price changes. The Company is not set on working in markets about which there is no reliable data available for market potential analysis, and thus believes that the demand risk referring to its launches is reduced. Operational risk Operational risk management is primarily conducted through continuous monitoring of the development of ventures as regards execution of the physical and financial schedule of works vis-à-vis the initial planning of financial and accounting audit performed by an independent audit firm, and through a judicious analysis of the legal and credit risk relating to buyers of real estate units, via active management of the project receivables. Capital management Capital management risk arises from the Company s choice to adopt a financing structure for its operations. The Company manages its capital structure, which consists of a debt-to-equity ratio (Equity, Retained earnings and Income reserves), based on internal policies and benchmarks. The key indicators related to this objective are as follows: Weighted Average Cost of Capital (WACC), Net Debt/EBITDA and Net Debt/Equity. Total debt consists of Loans and financings (Note 9). The Company may change its capital structure based on economic and financial conditions in order to improve its financial leverage and debt management. The Company includes loans and financing less cash and cash equivalents in its Net Debt structure. Consolidated 12/31/ /31/2010 Loans and financing 473, ,374 (-) Cash and cash equivalents (351,112) (190,851) Net debt 122, ,523 Equity 1,232, ,855 Equity and Net Debt 1,354, ,378 Ernst & Young Terco 75

78 21. Stock options plan Stock options compensation At a Special Shareholders Meeting (AGE) held on December 22, 2009, Company shareholders approved a stock option plan setting out the rules and conditions for granting stock purchase options to employees, managing officers, executives and employees, in order to attract, motivate and retain them, as well as to align their interests with those of the Company and its shareholders. Two programs were created, comprising a total of 8,674,673 options, representing the same number of shares. The Board of Directors has granted 7,592,590 options, 1,477,466 of which have already been effectively exercised. Changes in options are as under: Program 1 Program 2 Grant year and 2010 Total number of options 3,963,301 4,711,372 Exercise price (at 12/31/2011) * Term 25% p.a. 20% p.a. Changes in Options Options granted 3,752,590 3,840,000 Options exercised 1,477,466 - Options outstanding 2,275,124 3,840,000 Options exercisable until 12/31/ ,017 1,216,000 Balance of options to be granted 210, ,372 (*) The exercise price considers the issue price restatement by reference to the Extended Consumer Price Index (IPCA) until 12/31/2011, as well as an adjustment due to payment of dividends of R$0.141/share in May/2010, and R$ 0.30/share in February/2011 and dividends provisioned referring to 2011, in the amount of R$ 0.27/share. Ernst & Young Terco 76

79 21. Stock options plan (Continued) The fair value of the last options granted was calculated based on a binomial calculation, considering a historical volatility of 29.67%, average interest rate of 9.64% p.a., and the respective exercise prices of each program. The average value of Program 1 options was estimated at R$10.18, whereas that of Program 2 at R$5.18 each. The amount of R$ 23,434 was accrued for the year ended December 31, The future expense to be recognized in relation to the plans over the next 54 months totals R$19,218 at December 31, Should the beneficiaries to all options already granted and not exercised of Programs 1 and 2 exercise their options, the maximum dilution of participation of current shareholders will be 3.87%. Ernst & Young Terco 77

80 Earnings Release 4Q11 Belo Horizonte, March, 12 th, Direcional Engenharia S.A., one of the largest homebuilders in Brazil, focused on developing large scale and lowincome projects, operating in the North, Midwest and Southeast regions in Brazil, discloses hereby its operating and financial results for the fourth quarter of 2011 (4Q11) and the 2011 fiscal year. Unless otherwise indicated, the information included in this document is expressed in Brazilian Reais (R$) and the PSV is % Direcional. The Company s consolidated financial statements are prepared in accordance with accounting practices adopted in Brazil, based on Brazilian Corporate Law and CVM regulations. TICKER: DIRR3 Share price 03/09/2012: R$ Number of shares: 155,298,749 Market Cap: R$ 1,840.3 million / US$ 1,035.8 million Free Float: 51.1% 4Q11 average daily volume: 81.6 thousand shares R$ thousand TELECONFERENCE Date: 03/13/2012 Tuesday Portuguese 09:00 am Brasília time English 10:00 am New York time Contact telephone numbers Calling from Brazil: + 55 (11) Calling from other countries: +1 (412) PASSWORD: DIRECIONAL CONTACT: + 55(31) Carlos Wollenweber CFO DRI Lucas Bousas IR Analyst Paulo Sousa IR Analyst ri@direcional.com.br DIRECIONAL ANNOUNCES RECORD NET REVENUE OF R$ 1.1 BILLION IN 2011, A 37% YoY GROWTH. THE ADJUSTED NET INCOME¹ IN THE YEAR WAS R$ 199 MILLION, WITH NET MARGIN OF 18.5%. 4Q11 FINANCIAL AND OPERATING HIGHLIGHTS Record net revenue of R$ 1.1 billion in 2011, a 37.1% YoY growth. In the 4Q11, net revenue was R$ million, a 12.4% growth over 4Q10; Adjusted gross margin¹ of 30.5% in the 4Q11 and 31.0% in 2011; Adjusted EBITDA² of R$ 64.0 million in the 4Q11 and R$ million in 2011, with margins of 21.6% and 22.7%, respectively; Record adjusted net income² of R$ million in 2011 and R$ 47.9 million in the 4Q11, with margins of 18.5% and 16.2% respectively; Cash burn of R$ 27.7 million in the 4Q11 and R$ million in 2011, a 37.9% YoY decrease; Net debt/equity ratio of 9.9%; Record volume of contracts under Minha Casa, Minha Vida (My Home, My Life) 1 st Layer Program of R$ million in 2011; R$ million were contracted in the 4Q11; Record launches and sales in 2011, with launched Potential Sales Value (PSV) of R$ 1.4 billion³ and contracted PSV of R$ 1.2 billion³, a YoY growth of 35.7% and 19.1%, respectively; Sales over supply ratio (VSO) in the quarter was 31.8%, with 85% of the units launched in the quarter sold in the same quarter.

81 EARNINGS RELEASE Earnings Release 4Q11 4Q11 INDEX MESSAGE FROM THE MANAGEMENT KEY INDICATORS LAUNCHES MINHA CASA, MINHA VIDA (MCMV) PROJECTS CONTRACTED SALES SALES SPEED PROJECTS DELIVERED LAND BANK INVENTORY FINANCIAL PERFORMANCE Gross Operating Revenue Net Operating Revenue Gross Profit Selling, General & Administrative Expenses Adjusted EBITDA ¹ Adjusted Net Income¹ Deferred Results BALANCE SHEET HIGHLIGHTS Accounts Receivable Cash and Cash Equivalents Change in Net Debt or Cash Burn Indebtedness SHARE REPURCHASE PLANS CONSOLIDATED BALANCE SHEET CONSOLIDATED RESULTS STATEMENT EBITDA RECOMPOSITION CONSOLIDATED CASH FLOW STATEMENT ADDED-VALUE STATEMENT GLOSSARY...104

82 EARNINGS RELEASE Earnings Release 4Q11 4Q11 MESSAGE FROM THE MANAGEMENT We are extremely pleased to present our financial and operating results of 4Q11 and Our solid results were generated by means of our business model, which is based on four pillars: (i) focus on the low-income segment; (ii) operational expertise in areas where there is low competition and barriers to entry; (iii) large-scale projects; and (iv) an industrialized model that uses own workforce. In 2011 we reached a record net revenue of R$ 1.1 billion, a 37% YoY growth versus 2010, driven by turnkey project contracts under the Minha Casa, Minha Vida (MCMV) program, which targets families with monthly income of up to R$ 1.6 thousand ( MCMV 1 st Layer ). Our revenue from this segment was R$ million, an increase of 183% compared to Our gross profit was R$ 301 million, a 21% YoY growth, with an adjusted gross margin of 31.0%. Our lower gross margin was, to a large extent, due to the increased share of MCMV 1 st Layer projects in our revenue, since these projects, despite generating lower margins, provide better return on equity due to lower cash exposure. In 2011 we reached a record adjusted net income of R$ 199 million, a 13% YoY growth, with a net margin of 18.5%. Despite this impressive growth, we reduced our cash burn by 38%, from R$ 283 million in 2010 to R$ 176 million in This reduction was due to a greater participation of revenues from turnkey projects executed this year, which grew by R$152 million or 130% versus In 2011, revenues from turnkey projects accounted for 23.5% of Direcional s total revenues. That revenue is converted into cash in the very short term, since assessment and disbursement relative to these projects occur monthly. In 2012, we will continue to reduce our cash burn, given the increase of participation of turnkey projects in our revenues and the increase of delivery of concluded units. In line with Direcional s conservative stance, we ended the year with gross debt of R$ million and R$ million in cash, resulting in a net debt of R$ million, which corresponds to 9.9% of our equity, a very comfortable leverage level if compared to the homebuilding sector average. It is also worth noting that 93% of our debt corresponds to construction financing from the National Housing Finance System (SFH), in which debt amortization occurs by transfer of the debt from the client to the bank that is financing the project. The company launched a record 14,168 units in 2011, resulting on a PSV of R$ 1.4 billion, a 37% YoY growth launch highlights include the contracting of three large MCMV 1 st Layer projects, representing a total of 8,872 units and PSV of R$ million. We also registered record contracted sales in 2011, with a PSV of R$ 1.2 billion, 19% higher when compared to Our Sales Speed reached 32% in the 4Q11 and 59% in In 2011, we acquired six new plots of land with PSV of R$ 581 million and revised our land bank projections amounting to R$ million, as a result of which our land bank value increased by R$ million. We emphasize that for MCMV 1 st Layer projects it is not necessary any land acquisition, since these lands are purchased directly by Caixa Econômica Federal (CEF) or granted by the government. We remain very optimistic regarding our pipeline of projects awaiting CEF approval under MCMV Phase 2 and we are confident in our unique execution capability, which will allow us to capitalize on the high demand associated with

83 EARNINGS RELEASE Earnings Release 4Q11 4Q11 significant government incentives and to grow at an even faster pace in this segment, while maintaining low cash exposure. We believe that our strong track record of MCMV 1 st Layer and Residential Lease Program (PAR) projects consolidate our position as the most relevant player in Brazil s very low-income segment, since we have so far contracted approximately 20 thousand units in this segment, which equals to approximately R$ 1.1 billion in PSV. We reaffirm our confidence in our business model and our commitment to maintain Direcional s position as one of the most efficient and profitable companies in the market, as well as our focus on the creation of value for our clients and shareholders.

84 EARNINGS RELEASE Earnings Release 4Q11 4Q11 KEY INDICATORS 4Q11 4Q10 D % D % (a) (b) (a/b) (c) (d) (c/d) Launches Launched PSV (R$'000) 441, , % 1,411,774 1,272, % Launched PSV - % Direcional (R$'000) 427, , % 1,315,685 1,066, % Launched PSV (R$'000): MCMV 1st Layer 209, , % 522, , % Launched PSV (R$'000): ex MCMV 1st Layer projects 218, , % 793, , % Average Direcional Stake (%) 96.7% 74.1% 22.6 p.p. 93.2% 83.8% 9.4 p.p. Units Launched 4,470 5, % 14,168 12, % Launched Units: MCMV 1st Layer 3,488 3, % 8,872 7, % Launched Units: ex MCMV 1st Layer 982 1, % 5,296 4, % Average Price (R$/unit) 98, , % 99, , % Project Acquisition (R$'000) - - n/a 131,289 - n/a Launched PSV - % Direcional + Project Acquisition (R$'000) 427, , % 1,446,973 1,066, % Sales Contratcted PSV (R$'000) 405, , % 1,285,327 1,240, % Contracted PSV - % Direcional (R$'000) 367, , % 1,141,272 1,036, % Contracted PSV - % Direcional (R$'000): MCMV 1st Layer 209, , % 522, , % Contracted PSV - % Direcional (R$'000): ex MCMV 1st Layer 157, , % 618, , % Units 4,650 5, % 13,168 12, % # of Units: MCMV 1st Layer 3,488 3, % 8,872 7, % # of Units: ex MCMV 1st Layer 1,162 1, % 4,296 4, % Average Price (R$/unit) 87,287 91, % 97, , % Sales Over Supply (% PSV) 31.8% 38.3% -6.5 p.p. 58.8% 63.3% -4.6 p.p. Project Acquisition (R$'000) - - n/a 89,080 - n/a Contracted PSV - % Direcional + Project Acquisition (R$'000) 367, , % 1,230,352 1,036, % Financial Indicators Net revenue (R$'000) 295, , % 1,072, , % Gross Income (R$'000) 82,565 78, % 300, , % Gross Margin (%) 27.9% 29.9% -2.0 p.p. 28.0% 31.7% -3.7 p.p. Adjusted Gross Margin (%) 30.5% 31.3% -0.8 p.p. 31.0% 33.4% -2.4 p.p. Adjusted EBITDA (R$'000) 63,954 64, % 243, , % Adjusted EBITDA Margin (%) 21.6% 24.7% -3.1 p.p. 22.7% 25.8% -3.1 p.p. Adjusted Net Income (R$'000) 47,922 50, % 198, , % Adjusted net Margin (%) 16.2% 19.3% -3.1 p.p. 18.5% 22.6% -4.0 p.p. Other Indicators 4T11 3T11 2T11 1T11 4T10 3T10 Annualized ROE¹ (%) 15.8% 20.3% 14.4% 21.4% 25.8% 25.2% ROE LTM² (%) 16.6% 19.0% 19.8% 22.3% 23.6% 21.1% Cash and Cash Equivalent (R$'000) 351, , , , , ,075 Total Debt (R$'000) 473, , , , , ,724 Net Debt (R$'000) 122,040 94,090 26,862-7, ,522 10,649 Shareholder's Equity (R$'000) 1,232,483 1,198,297 1,145,298 1,106, , ,851 Net Debt / Shareholder's Equity (%) 9.9% 7.9% 2.3% -0.7% 14.1% 1.4% Net Debt / EBITDA last 12 months 0.5X 0.3X 0.1X 0.0X 0.5X 0.1X Revenues to be Rocognized (R$'000) 1,456,898 1,325,614 1,076, ,047 1,011, ,936 Results to be Recognized (R$'000) 555, , , , , ,825 Margin to be Recognized (%) 38.1% 37.7% 38.4% 39.5% 40.0% 38.9% Inventories (R$'000) 831, , , , , ,148 Inventories - % Direcional (R$'000) 720, , , , , ,730 Total LandBank (R$'000) 9,203,767 9,258,392 9,298,060 9,291,196 9,050,726 8,631,284 LandBank - % Direcional (R$'000) 6,948,338 6,991,495 6,985,975 7,004,063 6,756,876 6,224,460 LandBank - Units 66,906 67,361 68,007 68,115 67,348 66, Annualized ROE: Annualized Quarter s Net Profit / Average Shareholders' Equity in the same period 2. ROE LTM: Net profit in the last twelve months / Average Shareholders' Equity in the same period

85 EARNINGS RELEASE Earnings Release 4Q11 4Q11 LAUNCHES In 2011 Direcional launched 22 projects, consisting of 14,168 units, resulting on a total PSV of R$ 1.4 billion, a 37% YoY growth. Launches in the 4Q11 were R$ million, corresponding of eight projects, as presented below: Parque Ponta Negra Torre 5 AM (PSV R$ 53.9 MN) Parque Silvestre 2 nd Phase RJ (PSV R$ 10.8 MN) Bem Viver Residencial Clube DF (PSV R$ 62.8 MN) Aterrado do Leme RJ (PSV R$ 79,1 MN) Verano Residencial 2 nd Phase PA (PSV R$ 19.0 MN) Grand Ville SP (PSV R$ 41.1 MN) Monte Rey MG (PSV R$ 30.7 MN) Residencial Macapaba 1 st Phase AP (PSV R$ 130,0 MN) The following charts show the evolution of our launches: Launched PSV (R$ million) Launched PSV Track Record (R$ million) Project Acquisition MCMV 1st Layer Development % , % 1, Project Acquisition Launched PSV CAGR +69% 783 1,067 1, ,316 4Q10 4Q Breakdown of Launches Direcional remains focused on the low-income segment, which represented 56% of the company s Launched PSV in 2011, mainly in North and Southeast Brazil, which, taken together, accounted for 91% of the launched PSV in the year. The following charts detail the geographic and financial breakdown of the launches:

86 EARNINGS RELEASE Earnings Release 4Q11 4Q11 Launches by Segment (% PSV) Launches by Region (% PSV) Launches (Segment vs Region ) 2% 8% 44% 13% 36% 2% 5% 1% 30% 28% 7% 8% 29% 16% 67% 15% 38% 21% 30% 9% 30% 49% 100% 82% 46% 49% 36% 40% 33% 47% 49% 61% 51% 18% 4Q10 Commercial Upper-Middle 4Q Medium MCMV 1st Layer Low-Income 4Q10 Southeast 4Q11 Midwest 2010 North 2011 North Development Midwest MCMV 1st Layer Southeast The following table provides consolidated information of the projects launched in 2011: 2011 Projects Date City - State Total (R$'000) % Direcional (R$'000) # of Units Launched Total Units (All Phases) 1 Setor Total Ville - 6 th Phase February Santa Maria - DF 49,775 49, ,608 Low-Income 2 Condomínio Parque Silvestre - 1 st Phase February Rio de Janeiro - RJ 19,338 15, Low-Income 3 Allegro Mall February Manaus - AM 16,716 16, Commercial 4 Boulevard Esplanada March Belo Horizonte - MG 59,137 59, Medium 5 Brisas do Parque Residencial Club March Manaus - AM 81,998 81, Medium Total - 1Q11 226, ,337 1,243 3,923 6 Verano Residencial - 1 st Phase April Belém - PA 36,968 36, Medium 7 Total Ville Macaé - 2 nd Phase April Macaé - RJ 27,264 13, ,145 RET1 8 Parque Ponta Negra - 3 rd Phase April Manaus - AM 47,711 47, Upper-Middle 9 Tulip Inn Savassi - Hotel June Belo Horizonte - MG 86,238 85, Commercial 10 Total Ville Vida Nova - 3 rd Phase June Manaus - AM 56,400 56, ,848 RET1 11 Bella Città Algodoal - 2 nd Phase June Marituba - PA 48,000 47, ,938 RET1 Total - 2Q11 302, ,984 2,293 11, Portal Vistas do Horizonte September Belo Horizonte - MG 95,878 47, ,172 Medium 13 Total Ville Macaé - 3 rd Phase September Macaé - RJ 31,010 15, ,145 RET1 14 Residencial Meu Orgulho - 2 nd Phase September Manaus - AM 313, ,395 5,384 8,895 MCMV 1st Layer Total - 3Q11 440, ,839 6,162 11, Aterrado do Leme October Rio de Janeiro - RJ 79,060 79,060 1,340 1,340 MCMV 1st Layer 16 Parque Ponta Negra - 4 th Phase October Manaus - AM 53,915 53, Upper-Middle 17 Condomínio Parque Silvestre - 2 nd Phase October Rio de Janeiro - RJ 13,152 10, RET1 18 Bem Viver Residencial Clube November Ceilândia - DF 62,912 62, Medium 19 Verano Residencial - 2 nd Phase November Belém - PA 19,064 19, Medium 20 Residencial Macapaba December Amapá - AP 130, ,037 2,148 4,148 MCMV 1st Layer 21 Grand Ville December São Bernardo - SP 53,038 41, Medium 22 Monte Rey December Belo Horizonte - MG 30,766 30, Medium Total - 4Q11 441, ,525 4,470 8,211 1 Project Acquisition May Manaus - AM 131, ,289 n/a n/a - Total ,543,062 1,446,973 14,168 34,876 PSV Segment

87 EARNINGS RELEASE Earnings Release 4Q11 4Q11 The following table provides consolidated information of our launches in 4Q11 and 2011: Launches 4Q11 4Q10 D % D % (a) (b) (a/b) (c) (d) (c/d) Launched PSV (R$'000) 441, , % 1,411,774 1,272, % Launched PSV % Direcional (R$'000) 427, , % 1,315,685 1,066, % Direcional's share (%) 96.7% 74.1% 30.5% 93.2% 83.8% 11.2% Launched PSV (R$'000): MCMV Layer 1 209, , % 522, , % Launched PSV (R$'000): ex MCMV Layer 1 218, , % 793, , % Units Launched 4,470 5, % 14,168 12, % Units Launched: MCMV Layer 1 3,488 3, % 8,872 7, % Units Launched: ex MCMV Layer , % 5,296 4, % # of Projects % % Units Launched/# of Projects % % Total Units/# of Projects (all phases) 1, % - - n/a Usable Area Launched (sq. m) 209, , % 672, , % Average Area (sq. m / unit) % % Average Price (R$/unit) 98, , % 99, , % Average Price (R$/sq.m) 2,109 1, % 2,098 1, % Project Acquisition PSV (R$'000) - - n/a 131,289 - n/a Launched PSV % Direcional + Project Acquisition PSV (R$'000) 427, , % 1,446,973 1,066, % MINHA CASA, MINHA VIDA (MCMV) 1 st Layer PROJECTS Projects contracted in 2011 This year, Direcional contracted three MVMC projects, consisting of 8,872 units, resulting on a total PSV of R$ million, a 20% and 37% YoY growth, respectively. Average price per unit increased 15%, from R$ 51.4 thousand in 2010 to R$ 58.9 thousand in To build these units it will be used an industrialized construction model with aluminum molds and concrete walls, which will enable Direcional to deliver the projects in 15 to 18 months. Direcional s revenues from services reached R$ 82.1 million and R$ million in the 4Q11 and in 2011, respectively. This revenue includes turnkey projects, brokerage services and project management, which accounted for 27.2% of gross revenue, a 70% increase compared to 4Q10. Of the total of revenue from services, 96% corresponded to turnkey projects. The following charts display the evolution and the breakdown of the revenues from services:

88 EARNINGS RELEASE Earnings Release 4Q11 4Q11 Revenue from Services - Track Record (R$ million) 23.8% 23.0% 17.7% 15.2% 10.1% 12.2% % % 82 70% Breakdown of Revenue from Services (in %) MCMV 1st Layer 96.0% Management 2.3% Brokerage Fee 1.8% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 % Net revenue Revenue from Services CONTRACTED SALES Direcional achieved sales of R$ 1.2 billion in 2011, a 19% YoY growth. Contracted PSV in the 4Q11 was R$ 367,0 million, with R$ 209,1 million corresponding to MCMV 1 st Layer projects, in which all the units are sold to CEF at the moment of launch. Contracted PSV (R$ million) Contracted PSV Track Record (R$ million) Project Acquisition MCMV 1st Layer Development +19% 1, , Project Acquisition Development CAGR +76% 661 1,037 1, % ,141 4Q10 4Q Breakdown of sales In 2011, 46% of the PSV sold corresponded to MCMV 1 st Layer projects, a 9 p.p. increase compared to the previous year, further establishing Direcional as the most important and consistent player in this segment. The largest participation of the launched PSV in 2011 from the North Brazil 18 p.p versus 2010 was primarily from MCMV 1 st Layer, Residencial Meu Orgulho Phase 2 and Residencial Macapaba project contracts. The Residencial Macapaba project represents Direcional s entry in Amapá state. The following charts display the geographic and financial breakdown of sales in the 4Q11 and in 2011:

89 EARNINGS RELEASE Earnings Release 4Q11 4Q11 Sales by Segment (% PSV) Sales by Region (% PSV) Sales (Segment vs Region ) 11% 25% 16% 1% 5% 1% 22% 15% 13% 20% 30% 4% 6% 26% 18% 66% 37% 4% 34% 19% 26% 9% 41% 100% 73% 47% 57% 37% 46% 15% 19% 59% 47% 65% 59% 27% 4Q10 Commercial Upper-Middle 4Q11 Medium Low-Income MCMV 1st Layer 4Q10 Southeast 4Q11 Midwest 2010 North 2011 North Development Midwest Southeast MCMV 1st Layer The following table displays consolidated information relative to contracted PSV in the 4Q11 and in 2011: Contracted Sales SALES SPEED 4Q11 4Q10 D % D % (a) (b) (a/b) (c) (d) (c/d) Contratcted PSV (R$'000) 405, , % 1,285,327 1,240, % Contracted PSV % Direcional (R$'000) 367, , % 1,141,272 1,036, % Contracted PSV % Direcional (R$'000): MCMV 1st Layer 209, , % 522, , % Contracted PSV % Direcional (R$'000): ex MCMV 1st Layer 157, , % 618, , % # of Units 4,650 5, % 13,168 12, % # of Units: MCMV 1st Layer 3,488 3, % 8,872 7, % # of Units: ex MCMV 1st Layer 1,162 1, % 4,296 4, % Average Price (R$/unit) 87,287 91, % 97, , % VSO (Sales over total supply) 31.8% 38.3% -6.5 p.p. 58.8% 63.3% -4.6 p.p. Project Acquisition: PSV (R$'000) - - n/a 89,080 - n/a Contracted PSV % Direcional + Project Acquisition (R$'000) 367, , % 1,230,352 1,036, % In the 4Q11, our Sales over Supply ratio (VSO) reached 31.8%, indicative of strong sales speed. Excluding MCMV 1st Layer sales, VSO was 18.5%, 2.5 p.p. higher than in the 3Q11.

90 EARNINGS RELEASE Earnings Release 4Q11 4Q11 Sales-over-supply ratio (VSO) (In Total PSV) Sales-over-supply ratio (VSO) (In Units) 38.3% 36.7% 31.8% 53.2% 54.2% 47.4% 27.6% 22.1% 18.5% 16.0% 18.5% 23.7% 20.4% 15.0% 14.8% 18.4% 4Q10 1Q11 2Q11 3Q11 4Q11 4Q10 1Q11 2Q11 3Q11 4Q11 Without MCMV 1st Layer project With MCMV 1st Layer project Without MCMV 1st Layer project With MCMV 1st Layer project VSO = Sales in the Period / (Initial Inventory + Launches in the Period) The adjacent sales speed chart shows the sales by quarter of launch since 4Q10 and reflects the immediate recognition of sales of turnkey project units in 3Q11, 4Q10 and, most notably, 4Q11, including the Aterrado do Leme and Residencial Macapaba projects. Sales by Period of Launching - 4Q11 (% PSV Ex-MCMV 1 st Layer) 4Q11 3Q11 11% 33% 25% 2Q11 < % 10% % 1Q11 The analysis of sales per launch period reveals that 67% of the sold PSV, excluding the MCMV 1 st Layer segment, was launched in quarters before 4Q11, with 17% of the projects completed or in the advanced stages of construction, evidencing a significant focus on inventory sales, particularly through the sales fairs held in the main cities in which Direcional operates. PROJECTS DELIVERED Sales Speed (% Units) 4Q11 85% 3Q11 90% 92% 2Q11 20% 20% 18% 58% 2% 1Q11 48% 21% 9% 3% 81% 1% 4Q10 87% 4% 93% 3M 6M 9M 12M 15M Direcional delivered 9 projects consisting of 1,887 total units and PSV of R$ million, in Projects City - State Date PSV % Direcional (R$'000) # of Units 1 Equilibrium Manaus - AM 2T11 43, Águas do Madeira Porto Velho - RO 2T11 40, Grand Prix Manaus - AM 2T11 36, Lake View Resort Brasília - DF 2T11 87, Garden Club - 1st Phase Porto Velho - RO 2T11 27, Dream Park Serra - ES 2T11 35, Gran Paradiso Belo Horizonte - MG 3T11 13, Villagio Santa Mônica Belo Horizonte - MG 3T11 10, Vernissage Campinas - SP 3T11 8, Total 304,835 1,887 Deliveries by Region (% of PSV) AM 26.0% RO 22.0% ES 29.0% DF 3.0% SP 8.0% MG 12.0%

91 EARNINGS RELEASE Earnings Release 4Q11 4Q11 LAND BANK On December 31, 2011, the PSV of Direcional s land bank was R$ 6.9 billion, with estimated construction of 66,906 units. The average price of the units in the land bank was R$ thousand. The plots of land were acquired primarily through financial or physical swaps (76.0% of the acquisitions) at an average cost relative to PSV of 9.2%. Land Bank by Segment (% PSV) Land Bank by Region (% PSV) Low-Income 53% Commercial 5% AM 14% PA 13% 35% Medium 7% Upper-Middle 60.7% large scale projects (more than 1,000 units); 53.3% in the North and Midwest regions; 53.0% projects in the low-income segment; RO 5% DF 21% SP 6% MG 38% RJ 1% ES 2% 46.6% are eligible for the MCMV program.