Financial statements Direcional Engenharia S.A. June 30, 2010

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1 Financial statements Direcional Engenharia S.A. June 30, 2010

2 Financial statements June 30, 2010 Contents Independent auditor s report... 1 Audited financial statements Balance sheets... 4 Statements of income for the years... 6 Statement of changes in equity... 7 Statement of cash flows... 8 Statement of value added... 9 Notes to financial statements... 10

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 Review Report on individual and consolidated interim quarterly information prepared in accordance with accounting practices adopted in Brazil Report on review of quarterly information (ITR) The shareholders, board of directors and officers Direcional Engenharia S.A. Belo Horizonte - MG Introduction We have reviewed the accompanying interim, individual and consolidated financial information contained in the Quarterly Financial Information (ITR) of Direcional Engenharia S.A. ( Company ) as of the quarter ended June 30, 2011, comprising the balance sheet at June 30, 2011 and the related statements of income for the three- and six-month periods then ended, and changes in equity and cash flows for the six-month period then ended, including the explanatory notes. Management is responsible for the preparation of the individual interim financial information in accordance with CPC 21 Interim Financial Reporting, and of the consolidated interim financial information in accordance with CPC 21 and with IAS 34 Interim Financial Reporting, which considers OCPC 04 Guidance for application of Technical Interpretation ICPC 02 to Property Development Entities in Brazil, issued by the Brazilian FASB (CPC) and approved by the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários - CVM) and the National Association of State Boards of Accountancy (CFC), as well as for the fair presentation of this information in conformity with the standards issued by the CVM applicable to the preparation of Quarterly Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of review We conducted our review in accordance with Brazilian and International Standards on Review Engagements (NBC TR 2410 and ISRE Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Ernst & Young Terco 1

4 Conclusion on the individual and consolidated interim financial information prepared in accordance with CPC 21 Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual and consolidated interim financial information included in the quarterly information referred to above is not prepared, in all material respects, in accordance with CPC 21 applicable to the preparation of quarterly financial information (ITR), consistently with the rules issued by the Brazilian Securities and Exchange Commission. Conclusion on the consolidated interim financial information prepared in accordance with IAS 34, which considers OCPC 04 Guidance for application of Technical Interpretation ICPC 02 to Property Development Entities in Brazil, issued by the Brazilian FASB (CPC) and approved by the Brazilian Securities and Exchange Commission (CVM) and the National Association of State Boards of Accountancy (CFC) Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial information included in the quarterly information referred to above is not fairly presented, in all material respects, in accordance with IAS 34, which considers OCPC 04 Guidance for application of Technical Interpretation ICPC 02 to Property Development Entities in Brazil, issued by the Brazilian FASB (CPC) and approved by the Brazilian Securities and Exchange Commission (CVM) and the National Association of State Boards of Accountancy (CFC), applicable to the preparation of quarterly financial information (ITR), consistently with the rules issued by the Brazilian Securities and Exchange Commission. Emphasis of a matter As mentioned in Note 2, the individual and consolidated interim financial information was prepared in accordance with the accounting practices adopted in Brazil (CPC 21). The consolidated interim financial information prepared in accordance with IAS 34 also considers Guidance OCPC 04 issued by the Brazilian FASB, which addresses revenue recognition for this sector. Certain matters relating to the meaning and application of the concept of ongoing transfer of risks, rewards and control upon sale of real property units will be analyzed by the International Financial Reporting Interpretation Committee (IFRIC). The results of this analysis can cause the real property developers to review their accounting practices in connection with revenue recognition. Ernst & Young Terco 2

5 Other matters Interim value added information We have also reviewed the (individual and consolidated) interim statement of value added (SVA) for the six-month period ended June 30, 2011, under the responsibility of management, the presentation of which in the interim financial information is required in accordance with the rules issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of Quarterly Information - ITR, and considered supplementary information by IFRS, which do not require SVA presentation. This information was submitted to the same review procedures described above and based on our review, we are not aware of any facts that would cause us to believe it was not prepared, in all material respects, in accordance with the overall individual and consolidated interim financial information. Belo Horizonte, August 8, ERNST & YOUNG TERCO Auditores Independentes S.S. CRC 2SP015199/O-6 Antonio C. M. Lage Accountant CRC MG /O-1 Ernst & Young Terco 3

6 A free translation from Portuguese into English of individual and consolidated interim quarterly financial information prepared in accordance with accounting practices adopted in Brazil Direcional Engenharia S.A. Balance sheet Company Consolidated Notes 6/30/ /31/2010 6/30/ /31/2010 Current assets: Cash and cash equivalents 3 260, , , ,851 Accounts receivable for property development 4 1,474 5, , ,108 Accounts receivable for services rendered 4 1,454 1,723 92,276 68,303 Land units for development 5.1 2,728 9, , ,992 Real property units completed ,365 29,793 19,527 Real property units under construction , ,923 Sundry receivables - 9,318 13,372 26,518 28,995 Transactions with related parties ,328 14,791 21,415 7,441 Taxes recoverable - 8,047 5,959 8,423 6,438 Commercial expenses to be allocated ,680 3,588 Total current assets 338, ,762 1,819,740 1,308,166 Non-current assets: Accounts receivable for property development , ,403 Land units for development ,544 27, , ,118 Transactions with related parties ,007 13,543 23,007 25,925 Sundry receivables 98-5,564-59,861 42, , ,446 Investments 7 767, , Property, plant and equipment 8 18,975 18,588 37,502 34,630 Intangible assets - 2,036 2,301 2,036 2, , ,498 39,538 36,931 Total non-current assets 848, , , ,377 Total assets 1,186, ,276 2,178,193 1,679,543 Ernst & Young Terco 4

7 Company Consolidated Notes 6/30/ /31/2010 6/30/ /31/2010 Current liabilities: Loans and financing 9 3,436 3, , ,643 Trade accounts payable - 1, ,976 23,483 Labor obligations 10 5,689 8,700 28,715 27,583 Tax obligations ,015 43,268 Property commitments payable ,974 89,174 Advances from customers ,160 36,749 Proposed dividends ,272-40,272 Accounts payable 14 13,619 15,709 71,054 29,275 Transactions with related parties ,212-8,717 - Total current liabilities 50,192 69, , ,447 Non-current liabilities: Loans and financing 9 26,811 25, , ,731 Provision for warranty ,285 6,327 Tax obligations ,033 11,026 Property commitments payable ,020 83,887 Advances from customers , ,760 Provision for tax, labor and civil contingencies 16 2,936 2,471 2,975 2,510 Sundry payables Total non-current liabilities 29,803 28, , ,241 Equity: Capital , , , ,247 Capital reserves , , , ,339 Income reserves , , , ,891 Profit (loss) for the period - 75,903-75,903-1,106, ,477 1,106, ,477 Interest in SCPs and SPEs ,587 34,378 1,106, ,477 1,145, ,855 Total liabilities and equity 1,186, ,276 2,178,193 1,679,543 See accompanying notes. Ernst & Young Terco 5

8 Statements of income Company Consolidated Notes 6/30/2011 6/30/2010 6/30/2011 6/30/2010 Operating revenue, net ,756 4, , ,915 Cost of real property sale (270,923) (181,871) Cost of services rendered (28) (78,048) (20,464) Gross profit 3,756 4, , ,580 Operating income (expenses): General and administrative expenses 15.3 (41,131) (23,007) (49,003) (23,378) Selling expenses 15.3 (1,274) - (12,466) (8,414) Equity pick-up 7 93,125 81, Other operating income and expenses - 5, ,046 1,055 55,887 58,721 (56,423) (30,737) Financial income/expenses Financial expenses 18 (2,716) (173) (8,449) (1,378) Financial income 18 18,976 11,677 23,109 17,541 16,260 11,504 14,660 16,163 Income before Income and social contribution taxes 75,903 74,531 87,978 91,006 Income and social contribution taxes (10,816) (7,802) Net income for the period 75,903 74,531 77,162 83,204 Attributable net income Non-controlling interest in SPEs and SCPs - - (1,259) (8,673) Attributable net income: Direcional Engenharia S.A. 75,903 74,531 75,903 74,531 Net earnings per share Base Diluted See accompanying notes. Ernst & Young Terco 6

9 Statements of changes in equity Notes Capital From issue of shares Capital reserves From stock options granted Legal reserves Income reserves Retained profits For investment Retained earnings Non-controlling shareholders interest Total Balances at December 31, , ,489 6,042 8,252 70,962 56,355-20, ,858 Share-based payment equity instruments , ,538 Equity instruments realization per year (6,042) - 6, Net income for the period ,531 8,673 83,204 Non-controlling shareholders interest - 10,063 10,063 Balances at June 30, , ,489 3,538 8,252 77,004 56,355 74,531 39, ,521 Balances at December 31, , ,489 9,850 16,584 77, ,303-34, ,855 Capital increase from public offering of shares 171,600 57, ,800 Expenses with public offering of shares - (7,302) (7,302) Capital increase from stock options granted Share-based payment equity instruments , ,349 Equity instruments realization per year - - (9,850) - 9, Non-controlling shareholders interest ,950 2,950 Net income for the period ,903 1,259 77,162 Balances at June 30, , ,387 15,349 16,584 86, ,303 75,903 38,587 1,145,298 See accompanying notes. Ernst & Young Terco 7

10 Cash flow statements Company Consolidated 6/30/2011 6/30/2010 6/30/2011 6/30/2010 From operating activities Income before income and social contribution taxes 75,903 74,531 87,978 91,006 Adjustments to reconcile P&L with cash from operating activities: Depreciation and amortization 1,010 1,212 2, Equity pick-up (93,125) (81,272) - - Deferred indirect taxes - - 4,612 (4.820) Adjustment to present value on accounts receivable - - 1, Provision for stock options plan 15,349 3,538 15, Reversed provision (3,257) - (3,257) - Interest in SCPs and SPEs - - (1,259) (8.673) Decrease (increase) in assets Accounts receivable 4,450 (1,179) (193,126) ( ) Inventories 3,380 (7,550) (98,618) (5.508) Sundry receivables 3,956 (7,147) (3,087) (14.242) Transactions with related parties (50,001) - (11,056) - Taxes recoverable (2,088) (1,789) (1,985) (1.802) Commercial expenses to be allocated (Decrease)/increase in liabilities Trade accounts payable 480 (244) 9, Labor obligations 246 (709) 4, Tax obligations (55) (332) 2, Property commitments payable - - 1, Advances from customers ,958 (21.958) Accounts payable (1,631) (193) 44,237 (1.050) Transactions with related parties 26,212-8,717 - Cash used in operating activities (19,171) (21,134) (85,723) (100,280) Income and social contribution taxes paid - - (10,816) (8.673) Net cash used in operating activities (19,171) (21,134) (96,539) (108,953) Cash flow from investing activities Increase in investments (82,016) (77,508) - - Increase in property, plant and equipment (1,397) (3,044) (4,984) (6.580) Increase in intangible assets 265 (207) 265 (207) Dividends received 69,378 4, Net cash used in investing activities (13,770) (76,694) (4,719) (6,787) Cash flow from financing activities with shareholders Capital payment, net of expenses 221, , Dividends paid (40,272) (18,785) (40,272) (18.785) Cash flow from financing activities with shareholders Inflows and loan amortization charges 473 1, , Non-controlling shareholders interest Interest in SCPs and SPEs - - 4, Net cash from (used in) financing activities 182,183 (16,497) 292,175 97,895 Net increase (decrease) in cash and cash equivalents 149,242 (114,325) 190,917 (17,845) Cash and cash equivalents At the beginning of the period 110, , , At the end of the period 260, , , Net increase (decrease) in cash and cash equivalents 149,242 (114,325) 190,917 (17,845) See accompanying notes. Ernst & Young Terco 8

11 Statements of value added Company Consolidated Notes 6/30/2011 6/30/2010 6/30/2011 6/30/2010 Operating revenue, net ,756 4, , ,915 Cost of real property sale (270,923) (181,871) Cost of services rendered (28) (78,048) (20,464) Gross profit 3,756 4, , ,580 Operating income (expenses): General and administrative expenses 15.3 (41,131) (23,007) (49,003) (23,378) Selling expenses 15.3 (1,274) - (12,466) (8,414) Equity pick-up 7 93,125 81, Other operating income and expenses - 5, ,046 1,055 55,887 58,721 (56,423) (30,737) Financial income/expenses Financial expenses 18 (2,716) (173) (8,449) (1,378) Financial income 18 18,976 11,677 23,109 17,541 16,260 11,504 14,660 16,163 Income before income and social contribution taxes 75,903 74,531 87,978 91,006 Income and social contribution taxes (10,816) (7,802) Net income for the period 75,903 74,531 77,162 83,204 Attributable net income: Non-controlling interest in SPEs and SCPs - - (1,259) (8,673) Attributable net income: Direcional Engenharia S.A. 75,903 74,531 75,903 74,531 Net earnings per share Base Diluted See accompanying notes. Ernst & Young Terco 9

12 Notes to financial statements 1. Operations Direcional Engenharia S.A. ( Direcional or Company ) is a publicly held Company organized under the Brazilian corporation laws. Direcional shares are traded at BM&FBOVESPA 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 property development and construction company engaged in developing large low-income-oriented projects, primarily focused on Brazil s north and center-west regions. Over its 30 years experience in development and construction of low-income-oriented projects, the Company developed a vertical structure and a standardized construction process, which has enabled 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 ordinary 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, are associated with a specific venture. Public offering On February 9, 2011, the Company completed its public offering of primary and secondary distribution of its shares, comprising issuance of 20,800,000 common registered book-entry shares without par value ( Primary Offering ), secondary distribution of 7.2 million common registered book-entry shares without par value held by the Selling Shareholders, free and clear of any liens or encumbrances ( Secondary Offering and Shares, respectively), totaling 28 million shares. The unit value per share was R$11, totaling R$308,000 gross. In this regard, the net proceeds of commissions and certain fees related to primary offerings (in the amount of R$7,302) flowing into the Company totaled R$223,864. The Company s ownership structure can be summarized as follows: Number of shares and percentages In June 2011 Shareholders Shares (%) Filadélphia Participações S.A. 72,469, % Fundos sob Gestão da Tarpon Investimentos 23,190, % Ridgecrest LLC 10,653, % GIC Government of Singapore 10,658, % Managing officers 1,640, % Other 35,999, % Total 154,610, % Ernst & Young Terco 10

13 2. Presentation of quarterly information and summary of significant accounting practices The individual and consolidated financial information for the quarter and six-month period ended June 30, 2011 was prepared in accordance with accounting practices adopted in Brazil, which comprise the rules set forth by the Brazilian Securities and Exchange Commission (CVM) and the pronouncements, interpretations and guidance of the Brazilian FASB (CPC). Additionally, the consolidated financial statements was also prepared in accordance 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 - in relation to the recognition of revenues and related costs and expenses from real estate operations in the course of the works (percentage of completion method - POC). Certain matters relating to the meaning and application of the concept of ongoing transfer of risks, rewards and control upon sale of real property units will be analyzed by the International Financial Reporting Interpretation Committee (IFRIC). The results of this analysis can cause the Company to review its accounting practices in connection with revenue recognition. This Quarterly Information was prepared in accordance with the principles, practices and criteria consistent with those adopted for preparing the annual financial statements at December 31, 2010, and should therefore be read in conjunction with them. The preparation of financial information follows the guidance set down in CPC 21 - Interim Financial Reporting. The information contained in the notes that was not subject to significant changes or had immaterial information in comparison with December 31, 2010 was not presented in this ITR. On August 8, 2011, the Company s management approved the quarterly information and authorized its disclosure New IFRS and Interpretations from IFRIC (IASB International Financial Reporting Interpretations Committee) 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 quarterly information at June 30, Ernst & Young Terco 11

14 2. Presentation of quarterly information and summary of significant accounting practices--continued 2.1. New IFRS and Interpretations from IFRIC (IASB International Financial Reporting Interpretations Committee)--Continued IFRS 9 Financial Instruments - Classification and Measurement - IFRS 9 ends the first part of the 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 the manner by which an entity manages its financial instruments (business model), and the contractual cash flow characteristic of financial assets. The standard also requires the adoption of only one method to determine impairment losses on assets. This standard will become effective for periods beginning on or after January 1, Earlier adoption is permitted. 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 requirements for consolidation of 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, Earlier application is permitted. IFRS 11 Joint arrangements - IFRS 11 provides for a more realistic picture of joint arrangements, focusing on the rights and obligations of the arrangement rather than on its legal form. The standard addresses inconsistencies in the treatment of a joint arrangement, requiring one single method to treat 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, Earlier application is permitted. IFRS 12 Disclosures of Investments in Other Entities - IFRS 12 is a new and comprehensive standard on the disclosure requirements of all forms of interests 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, Earlier application is permitted. IFRS 13 Fair value measurement - IFRS 13 sets new requirements on how to measure fair value and disclosures relating to IFRS and US GAAP. The standard is effective for annual periods beginning on or after January 1, Earlier application is permitted. Ernst & Young Terco 12

15 2. Presentation of quarterly information and summary of significant accounting practices--continued 2.1. New IFRS and Interpretations from IFRIC (IASB International Financial Reporting Interpretations Committee)--Continued 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, have a significant impact on income or equity disclosed by the Company. 3. Cash and cash equivalents Company Consolidated Description 6/30/ /31/2010 6/30/ /31/2010 Cash and banks 6,731 5,898 54,083 66,549 Financial investments 253, , , ,302 Total 260, , , ,851 The Company s investments are made through exclusive investment funds or in transactions directly performed with first-tier financial institutions. The Company s policy consists of investing its resources in funds or directly in conservative, highly liquid financial instruments, including Certificates of Bank Deposit (CDB) from prime banks, Debentures under Repurchase Agreements backed by CDBs from first-tier banks, Financial Treasury Bills, Brazilian Treasury Notes, Brazilian Treasury Bills and other Federal Government Securities. The yields on these investments are tied to the Interbank Deposit Certificate (CDI), ranging from 100% to 105.5% of CDI, according to the nature and timing of each instrument. At June 30, 2011, the 12-month accumulated profitability of the Company s financial investments corresponded to % of CDI. Ernst & Young Terco 13

16 4. Accounts receivable Company Consolidated Description 6/30/ /31/2010 6/30/ /31/2010 Accounts receivable for property development (a) Units completed 3,476 7, , ,082 Units not completed , ,415 (-) Adjustment to present value - - (23,180) (21,315) (-) Discount for bond securitization (70) (137) (70) (137) (-) Allowance for Doubtful Accounts (ADA) (1,720) (1,534) (1,720) (1,534) Total 1,686 5, , ,511 Current 1,474 5, , ,108 Non-current , ,403 Receivables for services rendered Real estate intermediation - - 2,599 2,458 Works management 1,454 1, Firm-price construction contract ,927 65,579 Total 1,454 1,723 92,276 68,303 Current 1,454 1,723 92,276 68,303 (a) The Company and its subsidiaries and affiliates adopt the procedures and standards established by CFC Resolution No. 963/03 and OCPC 01 approved by the Brazilian FASB (CPC) for accounting recognition of income earned on real estate transactions carried out. As a result, the balance of receivables from units sold and not yet completed is not fully reflected in the financial statements, since its recording is limited to the revenue accounted for, net of installments already received. Note 15.4 states the balances of receivables not recognized in the financial statements. At June 30, 2011 and December 2010, the consolidated balance of receivables is net of the present value adjustment in the amounts of R$23,180 and R$21,315, respectively. The Company calculated the present value of receivables for units not completed and accounted for the respective amount under the criteria described in CPC 12. Accounts receivable is adjusted as from the initial transaction recording date, taking into consideration the contractual cash flows, the explicit and, in certain cases, implicit interest rates on the related assets and the observable market rates for similar transactions. Subsequently, this interest is reallocated into the real estate income lines, by using the effective interest rate method in relation to the contractual cash flows. The average discount rate of 7.0% p.a. was applied, which corresponds to the Company s weighted average funding cost, net of inflation. The accounts receivable from real properties sold are substantially restated by reference to the variation in the National Civil Construction Index (INSS) until handover of the keys. After delivery of the key, these amounts are restated by the General Market Price Index (IGPM) and bear interest of 12% p.a. Ernst & Young Terco 14

17 4. Accounts receivable--continued At June 30, 2011 and December 2010, the real estate development certificates and rendering of services receivable are classified as current assets and mature as follows: Consolidated 6/30/ /31/2010 Falling due 3Q/11 136, ,312 4Q/11 509, ,254 1Q/12 90, ,802 2Q/12 100, , , ,411 Overdue 0-30 days 7,859 12, days 3,026 4, days 1,881 1, days 2, days 1,226 2, days 670 1,068 above 180 days 14,540 10,963 32,107 34,000 Total current assets 868, ,411 Securities falling due classified as noncurrent at June 30, 2011 have the following flow of receipts: Year Consolidated Up to June/ ,569 Up to June/2014 8,773 Up to June/2015 5,554 After June/ ,441 Total 142, Properties for sale Represented by advances paid for acquisition of land, land for future developments, and costs of real property units completed and under construction, as shown below: 5.1. Land units for development SCP, SPE or project (Company) 6/30/ /31/2010 Vicente Pires land unit - Taguatinga/DF (a) 26,592 25,202 MG/BH Pampulha land unit Work 289-6,500 Valparaiso Serra land unit/es 1,719 1,632 Land unit Freg. Campo Grande/RJ 1,400 1,400 Lots 7 A 15 R. Canoeiros - S. Monica 1,327 1,327 Land unit in Porto Velho/RO 1,031 1,031 Batur e Skt Empreendimentos Imob. Ltda. 7,203 - Other ,272 37, Properties for sale--continued Ernst & Young Terco 15

18 5.1. Land units for development--continued SCP, SPE or project (Company) 6/30/ /31/2010 Água Marinha Empreendimentos Imobilários Ltda. 26,505 26,505 Direcional Água Branca Empreendimentos Imobiliários Ltda. 26,192 - Direcional Taguatinga - Total Ville Sector (a) 23,598 25,386 Direcional Alegre Empreendimentos Empreendimentos Imobiliários Ltda. 22,000 22,000 Direcional Santo Antônio Empreendimentos Imobiliários Ltda 21,462 21,462 DiDirecional Safira - Total Ville Marabárecional Safira (a) 19,020 18,899 Azurita Empreendimentos Imobiliários Ltda 16,031 16,031 Direcional Trincheiras Empreendimentos Imobiliários Ltda 14,690 - Direcional Xapuri Empreendimentos Imobiliários Ltda 12,797 12,796 Direcional Santa Rosa Empreendimentos Imobiliários Ltda 12,667 12,656 Direcional Coruripe Empreendimentos Imobiliários Ltda 12,000 - Direcional Arapiraca Empreendimentos Imobiliários Ltda 11,511 8,011 Direcional Turquesa - Jardins Life Residence 10,380 10,380 Direcional Diamante - Bella Citta (a) 9,738 9,738 Direcional Leopoldina Empreendimentos Imobiliários Ltda 9,615 - Citrino Empreendimentos Imobiliários Ltda 9,595 9,594 Porto Acre Empreendimentos Imobiliarios Ltda 8,729 8,724 Direcional Rubi - Allegro Residencial Club (a) 8,214 10,158 Direcional Riachos Empreendimentos Imobiliários Ltda 8,000 16,000 Onix Empreendimentos - Total Ville Manaus 7,622 7,622 Coral Empreendimentos Imobiliários Ltda 7,600 7,600 Direcional Valparaiso - Dreen park (a) 7,328 7,328 Direcional Ametista Empreendimentos Imobiliarios Ltda (a) 7,223 12,096 Direcional Igaci Empreendimentos Imobiliários Ltda 7,126 7,126 Malaquita Empreendimentos Imobiliários Ltda 7,100 7,100 Direcional Estrela Empreendimentos Imobiliários Ltda 7,000 - Direcional Carneiros Empreendimentos Imobiliários Ltda 6,923 - Direcional Cajueiro Empreendimentos Imobiliários Ltda 6,514 6,514 Seabra Empreendimentos - Total Ville Porto Velho (a) 5,731 5,731 Direcional São Miguel Empreendimentos Imobiliários Ltda 5, Arinos Empreendimentos - Chácaras das Oliveiras 5,717 5,717 Anadia Empreendimentos Imobiliários Ltda 5,370 5,370 Direcional Campinas Engenharia Ltda 4,612 4,612 Direcional Tarauaca - Tulip Inn Savassi Hotel - 29,459 Bom Sucesso Incorporação (a) - 7,358 Abaré Empreendimentos - Brisas do Parque - 5,721 Other 20,313 18, , ,808 Total consolidated 433, ,110 Company Consolidated Company 6/30/ /31/2010 6/30/ /31/2010 Current 2,728 9, , ,992 Non-current 36,544 27, , ,118 Total 39,272 37, , ,110 (a) The Company s development for these land units will be phased, therefore, the balance represents the amount of the other phases of projects to be developed. Ernst & Young Terco 16

19 5. Properties for sale--continued 5.2. Real property units completed SCP, SPE or project (Company) 6/30/ /31/2010 Direcional Engenharia - Residencial Plaza das Águas Capela Empreendimentos - Quintas da Península & Aquarela - 5, ,365 SCP, SPE or project (subsidiaries) 6/30/ /31/2010 Capela Empreendimentos - Quintas da Península & Aquarela 10,408 - Direcional SCP Manaus - Eliza Miranda 8,130 6,181 Direcional Âmbar - Águas, Brisas & Cachoeiras do Madeira 3,012 - Direcional SCP Jacundá - Equilibrium & Gran Prixta 1,832 2,026 Direcional SCP Lago Sul - Lake View Resort 1,645 1,767 Direcional SCP Paradiso Paradiso 1, SCP Rio de Janeiro - Vila Borghese & San Filipo 1,317 1,317 SCP Retiro dos Artistas - Mirante Campestre SCP Bartira Mourão - Bartira Mourão Direcional SCP Gran Riserva - Gran Riserva Rubelita Empreendimentos - Al Mare Other ,778 14,162 Total (consolidated) current 29,793 19, Real property units under construction SCP, SPE or project 6/30/ /31/2010 Direcional Âmbar - Águas, Brisas & Cachoeiras do Madeira 24,414 16,869 Direcional Tarauaca - Tulip Inn Savassi Hotel 19,393 - Direcional Flourita Empreendimentos Imobiliários Ltda 13,597 14,444 Jonasa Empreendimentos Imobiliários Ltda - Weekend & Gran Vista 11,495 4,348 Direcional Rubi - Allegro Residencial Club 11,270 7,464 Direcional Diamante - Bella Citta 9,992 5,923 Direcional SCP Jacundá - Equilibrium & Gran Vista 9,632 5,724 Zircone Empreendimentos - Parque Ponta Negra 8,550 12,876 Direcional TSC Jatuarana - Vita Bella 8,502 7,304 Onix Empreendimentos - Total Ville Manaus 7,935 5,034 Bom Sucesso Incorporação 7,482 - Direcional TSC Jamari Riviera 7,274 6,441 Direcional Safira - Total Ville Marabá 6,815 3,942 Direcional Valparaiso - Dreen park 5,828 5,474 Direcional Taguatinga - Total Ville Sector 5,780 5,599 Abaré Empreendimentos - Brisas do Parque 4, Direcional Feijo Empreendimentos Imobiliários Ltda 3,747 3,355 Arinos Empreendimentos - Chácaras das Oliveiras 3,488 3,756 Direcional Ametista Empreendimentos Imobiliarios Ltda 2,715 1,073 Alexandrita Empreendimentos 1,812 1,170 Santa Margarida Empreendimentos Imobiliários Ltda 1,666 1,455 Direcional Turquesa - Jardins Life Residence 1,619 1,344 Seabra Empreendimentos - Total Ville Porto Velho 1,607 1,531 Azurita Empreendimentos Imobiliários Ltda 1,495 1,064 Maragoggi Empreendimentos - Cap D'Antibes 1,294 1,159 Ernst & Young Terco 17

20 5. Properties for sale--continued 5.3. Real property units under construction--continued SCP, SPE or project 6/30/ /31/2010 Direcional Santo Antônio Empreendimentos Imobiliários Ltda 1, Direcional TSC Rio Madeira - Garden Club 1,197 - Direcional Canário Empreendimentos Imobilarios Ltda. 1,180 1,094 Direcional Água Branca Empreendimentos Imobiliários Ltda Direcional Arapiraca Empreendimentos Imobiliários Ltda Ernani Agrícola Solares Direcional Esmeralda - Gran Felicitá 790 1,717 Direcional Campinas Engenharia Ltda Direcional Brasileia Direcional Silvestre Ltda Bujari Empreendimentos - Parque Verde Scp Manaus Eliza Miranda Step 5-3,247 Direcional Oiti Empreendimentos Imobiliários Ltda Other 2,696 8,495 Total 194, , Capitalized interest Interest paid referring to production financing is accounted for under Properties under construction and Properties completed in accordance with OCPC 01, and they are posted to income based on sales. Until June 2011, interest was capitalized under inventory accounts in the amount of R$2,758 (R$1,146 for the year ended December 31, 2010). Ernst & Young Terco 18

21 6. Transactions with related parties 6.1. Related companies Company Consolidated Assets 6/30/ /31/2010 6/30/ /31/2010 Credits from partners of projects (a) TSC Engenharia Ltda 13,780 7,996 13,780 7,996 Citycasa Incorporações Imobiliários Ltda Seven Engenharia Ltda SPL Engenharia Ltda Ager Incorporações Imobiliárias Ltda 4,245 4,211 4,245 4,211 Dam Incorporações Ltda 4, , Current account with non-controlling shareholders ,491 13,543 23,491 13,543 Current account with projects (b) SCP Manaus - Eliza Miranda 12,085 14,791 - SCP Club House 4, Direcional TSC Jatuarana Empreend. Imobil. Ltda SCP Ouro Preto Direcional Construtora Valparaiso Ltda - - 2,719 2,245 Zircone Empreend. Imobil. Ltda ,997 Seabra Empreend. Imobil. Ltda ,687 Andaraí Empreend. Imobil. Ltda ,065 12,382 Jonasa Empreendimentos Imobilarios 6, SCP Santa Mõnica 3, SCP Paradiso 17, SCP Jacundá 6, SCP Gran Riserva 1, Direcional Opala 1, Direcional Jordão Direcional Riachos SCP Tereza Mota Rubelita Empreendimentos ,359 14,791 18,446 19,823 Advance for future interest acquisition (c) 2,485-2,485-2,485-2,485 - Total transactions with related parties 78,335 28,334 44,422 33,366 Current 55,328 14,791 21,415 7,441 Non-current 23,007 13,543 23,007 25,925 Company Consolidated Liabilities 6/30/ /31/2010 6/30/ /31/2010 Current account with projects (b) Direcional Água Branca 17, Direcional Estrela 7, Dan Incorporações 1,987-8,717 - Total transactions with related parties 26,212-8,717 - Current 26,212-8,717 - (a) Credits from project partners Ernst & Young Terco 19

22 6. Transactions with related parties--continued 6.1. Related companies--continued (a) The Company carries out loan agreement operations with certain venture partners, usually minority shareholders of referred to SPEs. These operations are settled upon completion of the construction. Such operations are adjusted on average by the CDI + 4% p.a. The financial impact on the Company at June 30, 2011 corresponds to R$3,464 (R$1,077 at June 30, 2010). (b) Current account with projects Such operations are exclusively intended for contributing funds for construction. A method to restate these amounts is currently negotiated with the partners. (c) Advance for interest acquisition On May 31, 2011 the Company entered into a binding memorandum of understanding with JHSF Participações S.A. ( JHSF ) relating to acquisition of 60% interest in Parque Ponta Negra project, in the city of Manaus AM, for a total of R$37,000. Since all conditions provided for in the memorandum of understanding between the parties have not yet been met, the transaction did not generate any accounting effects until the end of the quarter ended June 30, 2011, except for recognition of the advance paid cash to JHSF, amounting to R$2, Management compensation The table below sets out the annual compensation provided to our managing officers and directors for year 2011 and the effective annual compensation for year 2010: 2011 Board of Directors Statutory Board Total Total members Annual fixed compensation (R$) 500,000 2,000,000 2,500,000 Variable compensation (R$) - 4,000,000 4,000, ,000 6,000,000 6,500, Board of Directors Statutory Board Total Total members Annual fixed compensation (R$) 781,908 1,089,467 1,871,375 Variable compensation (R$) - 529, , ,908 1,618,547 2,400,455 The Company also pays its managing officers through a stock options plan, the details of which are described in Note 21. Ernst & Young Terco 20

23 7. Investments in subsidiaries and jointly controlled entities The summarized financial statements of investees prepared as of June 30, 2011 are as follows: Current Balance sheet Non-current Statement of income Net revenue from sales and services Operating expenses, net Financial income/ expenses, net Noncurrent Gross Net Companies Assets Liabilities Payables Equity profit IRPJ/CSLL income Direcional SCP Parque Prado - Club House 42, ,343 6,080 (48) 5,573 1,181 (939) 139 (127) 254 SCP Retiro dos Artistas - Mirante Campestre 7, ,951 1, (72) 135 (86) 20 SCP Quintas do Valqueire - Quintas do Valqueire SCP Águas Claras II - Life Residence 2, , , (41) SCP Santa Inês SCP Cidade Nova - Provincia de Ravena (19) (3) SCP Campinas - Vivere 7, , (414) (55) (307) SCP Brasília - Thomaz Starzl (24) SCP Serra da Canastra (1) (15) 8 7 (1) (2) Direcional SCP Manaus - Eliza Miranda 78,241 2,773 23,311 1,067 56,636 13,079 6,372 (460) (1,924) (403) 3,585 SCP Edifício Chopin 1, , (32) 4 (1) 529 SCP Província Vicenza - Provincia de Vicenza (49) SCP Green Village - Green Village Direcional SCP Cidadão XI - Cidadão XI 16, ,866 8,965 1,814 (39) ,826 SCP Rio de Janeiro - Vila Borghese & San Filipo(1) 7,659 11,333 1, ,883 - (162) (12) 4 - (169) SCP Cláudio Manoel - Chopin(1) (4) (3) 16-9 SCP Valadares Gontijo - Spinoff (1) (243) (159) 14-5 (140) Direcional SCP Jacundá - Equilibrium & Gran Vista 60,997 1,944 17,316 22,365 23,259 8, (267) 72 (309) 5 Direcional Campinas Engenharia Ltda 5, ,632-4, Jonasa Empreendimentos Imobiliários Ltda - Weekend & Gran Vista 143, ,617 22,376 65,791 43,007 10,594 (3,496) 142 (1,317) 5,923 Direcional SCP Ouro Preto - Gran Parque 3, , (8) 90 (4) 131 Direcional Esmeralda - Gran Felicitá 17,990 39,223 15,099 9,381 32,734 21,976 10,781 (460) 98 (611) 9,808 Altana Empreendimentos Imobiliários Ltda Direcional TSC Rio Madeira - Garden Club 40, ,609 7,302 12,141 12,361 (673) (52) (132) (353) (1,210) SPE Maura Valadares Gontijo (1) 2,021 1, ,301 - (1,970) (31) (1,533) Diresomattos Gutierrez - Volare(1) 2, , (769) 1, (124) 461 SCP Bartira Mourão - Bartira Mourão(1) 1, ,706 - (102) (1) 7 - (95) SCP Tereza Motta Valadares - Tereza Mota(1) 1, , (55) 23 Rubelita Empreendimentos - Al Mare 13,044 7,981 16, ,768 - (1,160) (1,065) 253 (285) (2,257) Ernani Agrícola Solares 12, ,317-10,394 2,109 (215) (78) 29 (43) (306) Direcional Silvestre Ltda 1, , (20) (7) (24) 47 Direcional Âmbar - Águas, Brisas & Cachoeiras do Madeira 87,278 1,353 33,027 24,009 31,595 18, (2,421) (125) (531) (2,702) Direcional Valparaiso - Dreen park 36,803 4,487 3,469 19,766 18,055 4,958 (1,259) (1,449) 3 (120) (2,826) Alexandria Empreendimentos - Alegro 20, ,369 3,698 14,811 1, (421) (72) (49) 433 Direcional SCP Maura Valadares - Barter 1, , (80) Direcional SCP Lago Sul - Lake View Resort 13,793 38,408 1,923 39,091 11,187 2,116 (341) (348) (3,615) (63) (4,367) Direcional SCP Gran Riserva - Gran Riserva 5, , ,961 (171) (50) (13) 49 (14) (28) Ernst & Young Terco 21

24 7. Investments in subsidiaries and jointly controlled entities--continued Balance sheet Statement of income Net revenue from sales and services Operating expenses, net Financial income/ expenses, net Gross Net Companies Current Non-current Equity profit IRPJ/CSLL income Direcional SCP Paradiso - Paradiso 44, ,156 11,156 4,538 2, (14) 24 (86) 852 Direcional Opala - Gran Paradiso, Gran Ventura, Gran D'ouro 27,472 1,111 8,078 8,904 11,600 8,816 2,178 (128) 115 (281) 1,884 Direcional Taguatinga - Total Ville Sector 90,794 40,262 47,770 21,717 61,569 47,932 17,600 (1,021) 68 (914) 15,733 Direcional Diamante - Bella Citta 67,588 9,208 9,214 9,334 58,249 22,562 5,903 (354) (10) (715) 4,825 Direcional Rubi - Allegro Residencial Club 38,756 1,115 4,714 17,520 17,638 12,377 3,883 (316) (1) (356) 3,210 Direcional TSC Jatuarana - Vita Bella 27, ,103 8,720 14,981 9,624 1,365 (91) (4) (272) 999 Direcional Canário Empreendimentos Imobilarios Ltda. 1, , Onix Empreendimentos - Total Ville Manaus 57,479 7,033 14,568 17,804 32,139 25,839 5,218 (296) 207 (777) 4,351 Direcional TSC Jamari Riviera 17, , ,624 5,569 1,237 (62) 4 (162) 1,017 U N A Empreendimentos - Boulevard Esplanada 4, ,733 4,110 2,329 (1,163) 87 (153) 1,099 Direcional SCP Le Parc de France - Le Parce de France 2, , (148) - 34 (19) (134) Direcional Ametista Empreendimentos Imobiliarios Ltda 11,607 4, ,158 4,788 4,081 1,223 (893) (1) (130) 199 Direcional Sodalita Empreendimentos Imobiliarios Ltda 2, , Direcional TSC Lauro Sodré Direcional SCP Santa Mônica - Villagio Santa Mônica 4, , , (508) (21) 7 (22) (544) Alexandrita Empreendimentos 24, ,874 11,621 7,017 9,131 (2,137) (19) 54 (249) (2,352) Malaquita Empreendimentos Imobiliários Ltda 7, , (135) - (28) (164) Bujari Empreendimentos - Parque Verde 16, ,545 4,006 9,580 8,414 2,744 (19) (8) (223) 2,494 Direcional Safira - Total Ville Marabá 57,250 19,547 13,236 34,717 28,844 21,473 8,960 (233) 33 (101) 8,659 Direcional Corretora de Imóveis 2, ,391 2,144 2,036 (385) (2) (227) 1,422 Direcional SCP Pró-Moradia II - Pró Moradis 19, , ,776 11,695 3,446 (41) 3 (59) 3,349 Zircone Empreendimentos - Parque Ponta Negra 40,476 14,828 8,975 39,572 6,757 20,080 7,861 (658) 33 (649) 6,588 Direcional Turquesa - Jardins Life Residence 12, ,380-1, Direcional Oiti Empreendimentos Imobiliários Ltda 1, , (47) Azurita Empreendimentos Imobiliários Ltda 23, ,327 14,749 7, (4) (1) - (5) Citrino Empreendimentos Imobiliários Ltda 319 9,595-9, Direcional Assis Brasil Empreendimentos Imobiliários Ltda 127 6,560-6, Jaspe Empreendimentos Imobiliários Ltda Bom Sucesso Incorporação 26,692-2,051-24, (6) - - (7) Turmalina Empreendimentos Imobiliários Ltda 2, , (1) - - (1) SCP Direcional Petropolis - Petrópolis (162) 20 4 (1) (139) SCP Direcional Ozias - Ozias Monteiro 5, ,228 (9) (3,038) (23) 39 (22) (3,044) Santa Margarida Empreendimentos Imobiliários Ltda 5,470-1,016-4, (5) - - (5) Seabra Empreendimentos - Total Ville Porto Velho 31, , ,839 14,998 4,573 (304) (27) (369) 3,872 Maragoggi Empreendimentos - Cap D'Antibes 10,093 2,073 3,048 5,532 3,586 3, (155) 131 (104) 271 Direcional Flourita Empreendimentos Imobiliários Ltda 25,729 31,829 2,112 9,596 45,850 19,269 8,832 (397) 88 (620) 7,902 Andaraí Empreendimentos Imobiliários Ltda 13, , Coral Empreendimentos Imobiliários Ltda 798 7, ,988 4, (29) - - (29) Água Marinha Empreendimentos Imobilários Ltda. 26,953-21,282-5, (2) 5 Ernst & Young Terco 22

25 7. Investments in subsidiaries and jointly controlled entities--continued Balance sheet Statement of income Net revenue from sales and services Operating expenses, net Financial income/ expenses, net Gross Net Companies Current Non-current Equity profit IRPJ/CSLL income Direcional Jordão Empreendimentos Imobiliários Ltda 1, , (2) (2) Direcional Feijó Empreendimentos Imobiliários Ltda 3, ,300 1, (1) - - (1) Direcional Capixaba - Vila Verde 6, , ,381 4,561 2,378 (649) 14 (135) 1,607 Direcional Brasileia 6,016 12,626 5, ,670 10,386 3,900 (187) 2 (67) 3,648 Direcional SCP Meu Orgulho - Residencial Meu Orgulho 25, , ,108 63,958 18,802 (577) 27 (314) 17,939 Capela Empreendimentos - Quintas da Península & Aquarela 13,689 1, ,946 (108) (108) (99) 47 Arinos Empreendimentos - Chácaras das Oliveiras 10, ,538 6,233 2, (307) (1) (25) (11) Rio Branco Empreendimentos Imobiliários Ltda 4, , Porto Acre Empreendimentos Imobiliários Ltda 9, ,047 7,597 1, (48) (1) - (49) Abaré Empreendimentos - Brisas do Parque 7, , ,479 3,059 1,074 (832) (2) (93) 147 Anadia Empreendimentos Imobiliários Ltda 6, , (101) (1) - (102) Direcional SCP Comim Meu Orgulho Infra 30, , ,516 16,639 7,766 - (2) (79) 7,685 Germiniano Projeto 01 Empreendimentos Imobiliários 8, , Direcional Santa Rosa Empreendimentos Imobiliários Ltda 13, ,701 7,500 3, Direcional Santo Antônio Empreendimentos Imobiliários Ltda 22, ,213-3, (294) 1 - (293) Direcional Arapiraca Empreendimentos Imobiliários Ltda 12, ,505 3, Direcional Tarauaca - Tulip Inn Savassi Hotel 27,687 5, ,469 4,188 13,458 2,938 (465) - (399) 2,073 Direcional Belo Monte Empreendimentos Imobiliários Ltda Direcional Xapuri Empreendimentos Imobiliários Ltda 12,879-12, Direcional São Miguel Empreendimentos Imobiliários Ltda 6,042-4,774-1, Direcional Igaci Empreendimentos Imobiliários Ltda 7, , Direcional Alegre Empreendimentos Imobiliários Ltda 67 24, ,000 2, Direcional Cajueiro Empreendimentos Imobiliários Ltda 6, , Direcional SCP Boa Casa Empreendimentos - Boa Casa (386) (2) - (3) (391) Direcional Riachos Empreendimentos Imobiliários Ltda 16,460-3,200 12, Direcional Água Branca Empreendimentos Imobiliários Ltda 44,316-29,612 14, Direcional Carneiros Empreendimentos Imobiliários Ltda 6, , Direcional Coruripe Empreendimentos Imobiliários Ltda 12,029-12, Ernst & Young Terco 23

26 7. Investments in subsidiaries and jointly controlled entities--continued Balance sheet Statement of income Net revenue from sales and services Operating expenses, net Financial income/ expenses, net Gross Net Companies Current Non-current Equity profit IRPJ/CSLL income Direcional SCP Alterosa - Residencial Alterosa 4, ,471 4,039 1,026 (12) - (19) 994 Direcionsl SCP Bairro Carioca - Bairro Carioca 2, ,013 1, (1) - (8) 507 Direcional SPL Ponciano Empreendimentos Imobiliários Ltda (23) - - (23) Direcional Leopoldina Empreendimentos Imobiliários Ltda 12 9,619-9, Direcional Estrela Empreendimentos Imobiliários Ltda 14,005-13, Direcional São Primiano Empreendimentos Imobiliários Ltda 1,244-1, (26) - - (27) Direcional Água das Flores Empreendimentos Imobiliários Ltda Direcional Sena Madureira Empreendimentos Imobiliários Ltda Direcional Trincheiras Empreendimentos Imobiliários Ltda 14,801-14, (1) The Company does not act as the leading partner in these SCPs and SPEs, however, control is shared. Ernst & Young Terco 24