Financial statements
Direcional Engenharia S.A.
June 30, 2010
Direcional Engenharia S.A.
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
Edifício Phelps Offices Tower
Rua Antonio de Albuquerque, 156
11º andar - Savassi
30112-010 – Belo Horizonte, MG, Brasil
Tel: (5531) 3232-2100
Fax: (5531) 3232-2106
www.ey.com.br
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 2410 - Review of Interim Financial
Information Performed by the Independent Auditor of the Entity, respectively). A review of
interim financial information consists of making inquiries, primarily of 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
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
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, 2011.
ERNST & YOUNG TERCO
Auditores Independentes S.S.
CRC 2SP015199/O-6
Antonio C. M. Lage
Accountant CRC – MG-077995/O-1
Ernst & Young Terco | 3
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
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
Notes
Current assets:
Cash and cash equivalents
Accounts receivable for property development
Accounts receivable for services rendered
Land units for development
Real property units completed
Real property units under construction
Sundry receivables
Transactions with related parties
Taxes recoverable
Commercial expenses to be allocated
Total current assets
Company
6/30/2011
12/31/2010
Consolidated
6/30/2011
12/31/2010
3
4
4
5.1
5.2
5.3
6.1
-
260,098
1,474
1,454
2,728
15
9,318
55,328
8,047
338,462
110,856
5,259
1,723
9,437
5,365
13,372
14,791
5,959
166,762
381,768
776,489
92,276
285,918
29,793
194,460
26,518
21,415
8,423
2,680
1,819,740
190,851
594,108
68,303
252,992
19,527
135,923
28,995
7,441
6,438
3,588
1,308,166
4
5.1
6.1
212
36,544
23,007
98
59,861
608
27,865
13,543
42,016
142,337
148,007
23,007
5,564
318,915
157,403
151,118
25,925
334,446
7
8
-
767,372
18,975
2,036
788,383
661,609
18,588
2,301
682,498
37,502
2,036
39,538
34,630
2,301
36,931
848,244
724,514
358,453
371,377
1,186,706
891,276
2,178,193
1,679,543
Non-current assets:
Accounts receivable for property development
Land units for development
Transactions with related parties
Sundry receivables
Investments
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Ernst & Young Terco | 4
Company
Notes
Current liabilities:
Loans and financing
Trade accounts payable
Labor obligations
Tax obligations
Property commitments payable
Advances from customers
Proposed dividends
Accounts payable
Transactions with related parties
12/31/2010
6/30/2011
12/31/2010
3,436
1,121
5,689
115
13,619
26,212
3,870
641
8,700
170
40,272
15,709
-
180,633
32,976
28,715
52,015
107,974
68,160
71,054
8,717
121,643
23,483
27,583
43,268
89,174
36,749
40,272
29,275
-
50,192
69,362
550,244
411,447
9
11
12
13
16
26,811
56
2,936
29,803
25,904
62
2,471
28,437
227,997
8,285
9,033
67,020
167,306
2,975
35
482,651
180,731
6,327
11,026
83,887
155,760
2,510
440,241
17
17
17
-
496,331
256,736
277,741
75,903
1,106,711
324,247
201,339
267,891
793,477
496,331
256,736
277,741
75,903
1,106,711
324,247
201,339
267,891
793,477
-
-
38,587
34,378
1,106,711
793,477
1,145,298
827,855
1,186,706
891,276
2,178,193
1,679,543
9
10
11
12
13
14
6.1
Total current liabilities
Non-current liabilities:
Loans and financing
Provision for warranty
Tax obligations
Property commitments payable
Advances from customers
Provision for tax, labor and civil contingencies
Sundry payables
Total non-current liabilities
Equity:
Capital
Capital reserves
Income reserves
Profit (loss) for the period
Interest in SCPs and SPEs
Total liabilities and equity
See accompanying notes.
Ernst & Young Terco | 5
Consolidated
6/30/2011
-
Direcional Engenharia S.A.
Statements of income
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
Notes
Company
6/30/2011
6/30/2010
Consolidated
6/30/2011
6/30/2010
Operating revenue, net
15.2
3,756
4,334
478,712
307,915
Cost of real property sale
Cost of services rendered
Gross profit
15.3
15.3
3,756
(28)
4,306
(270,923)
(78,048)
129,741
(181,871)
(20,464)
105,580
15.3
15.3
7
-
(41,131)
(1,274)
93,125
5,167
55,887
(23,007)
81,272
456
58,721
(49,003)
(12,466)
5,046
(56,423)
(23,378)
(8,414)
1,055
(30,737)
18
18
(2,716)
18,976
16,260
(173)
11,677
11,504
(8,449)
23,109
14,660
(1,378)
17,541
16,163
75,903
74,531
87,978
91,006
-
-
(10,816)
(7,802)
75,903
74,531
77,162
83,204
(1,259)
(8,673)
75,903
74,531
0.51
0.50
0.56
0.54
Operating income (expenses):
General and administrative expenses
Selling expenses
Equity pick-up
Other operating income and expenses
Financial income/expenses
Financial expenses
Financial income
Income before Income and social contribution
taxes
Income and social contribution taxes
19
Net income for the period
Attributable net income
Non-controlling interest in SPEs and SCPs
-
Attributable net income:
Direcional Engenharia S.A.
Net earnings per share
Base
Diluted
See accompanying notes.
Ernst & Young Terco | 6
75,903
17
17
74,531
Direcional Engenharia S.A.
Statements of changes in equity
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
Capital reserves
Notes
Capital
From issue
of shares
Income reserves
From stock
options granted
Legal
reserves
Retained
profits
For
investment
Non-controlling
shareholders
interest
Retained
earnings
Total
323,313
191,489
6,042
8,252
70,962
56,355
-
20,445
676,858
858
-
-
3,538
(6,042)
-
-
6,042
-
-
74,531
-
8,673
10,063
3,538
858
83,204
10,063
Balances at June 30, 2010
324,171
191,489
3,538
8,252
77,004
56,355
74,531
39,181
774,521
Balances at December 31, 2010
324,247
191,489
9,850
16,584
77,004
174,303
-
34,378
827,855
Capital increase from public offering of shares
Expenses with public offering of shares
Capital increase from stock options granted
Share-based payment equity instruments
Equity instruments realization per year
Non-controlling shareholders interest
Net income for the period
171,600
484
-
57,200
(7,302)
-
15,349
(9,850)
-
-
9,850
-
-
75,903
2,950
1,259
228,800
(7,302)
484
15,349
2,950
77,162
496,331
241,387
15,349
16,584
86,854
174,303
75,903
38,587
1,145,298
Balances at December 31, 2009
Share-based payment equity instruments
Equity instruments realization per year
Net income for the period
Non-controlling shareholders interest
Balances at June 30, 2011
See accompanying notes.
Ernst & Young Terco | 7
21
21
21
Direcional Engenharia S.A.
Cash flow statements
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
Company
6/30/2011
6/30/2010
From operating activities
Income before income and social contribution taxes
Adjustments to reconcile P&L with cash from operating activities:
Consolidated
6/30/2011
6/30/2010
75,903
74,531
87,978
91,006
1,010
(93,125)
15,349
(3,257)
-
1,212
(81,272)
3,538
-
2,112
4,612
1,838
15,349
(3,257)
(1,259)
2.468
(4.820)
13.702
3.538
(8.673)
Decrease (increase) in assets
Accounts receivable
Inventories
Sundry receivables
Transactions with related parties
Taxes recoverable
Commercial expenses to be allocated
4,450
3,380
3,956
(50,001)
(2,088)
-
(1,179)
(7,550)
(7,147)
(1,789)
-
(193,126)
(98,618)
(3,087)
(11,056)
(1,985)
907
(187.664)
(5.508)
(14.242)
(1.802)
3.366
(Decrease)/increase in liabilities
Trade accounts payable
Labor obligations
Tax obligations
Property commitments payable
Advances from customers
Accounts payable
Transactions with related parties
Cash used in operating activities
480
246
(55)
(1,631)
26,212
(19,171)
(244)
(709)
(332)
(193)
(21,134)
9,493
4,389
2,142
1,933
42,958
44,237
8,717
(85,723)
2.767
5.409
13.680
9.501
(21.958)
(1.050)
(100,280)
-
-
(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
Increase in property, plant and equipment
Increase in intangible assets
Dividends received
(82,016)
(1,397)
265
69,378
(77,508)
(3,044)
(207)
4,065
(4,984)
265
-
(6.580)
(207)
-
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
Dividends paid
221,982
(40,272)
858
(18,785)
221,982
(40,272)
858
(18.785)
Cash flow from financing activities with shareholders
Inflows and loan amortization charges
473
1,430
106,256
97.086
-
-
4,209
18.736
Depreciation and amortization
Equity pick-up
Deferred indirect taxes
Adjustment to present value on accounts receivable
Provision for stock options plan
Reversed provision
Interest in SCPs and SPEs
Income and social contribution taxes paid
Non-controlling shareholders interest
Interest in SCPs and SPEs
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
At the end of the period
110,856
260,098
275,906
161,581
190,851
381,768
313.881
296.036
Net increase (decrease) in cash and cash equivalents
149,242
(114,325)
190,917
(17,845)
See accompanying notes.
Ernst & Young Terco | 8
Direcional Engenharia S.A.
Statements of value added
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
Company
Notes
Consolidated
6/30/2011
6/30/2010
6/30/2011
6/30/2010
Operating revenue, net
15.2
3,756
4,334
478,712
307,915
Cost of real property sale
Cost of services rendered
Gross profit
15.3
15.3
3,756
(28)
4,306
(270,923)
(78,048)
129,741
(181,871)
(20,464)
105,580
15.3
15.3
7
-
(41,131)
(1,274)
93,125
5,167
55,887
(23,007)
81,272
456
58,721
(49,003)
(12,466)
5,046
(56,423)
(23,378)
(8,414)
1,055
(30,737)
18
18
(2,716)
18,976
16,260
(173)
11,677
11,504
(8,449)
23,109
14,660
(1,378)
17,541
16,163
75,903
74,531
87,978
91,006
-
-
(10,816)
(7,802)
75,903
74,531
77,162
83,204
(1,259)
(8,673)
75,903
74,531
0.51
0.50
0.56
0.54
Operating income (expenses):
General and administrative expenses
Selling expenses
Equity pick-up
Other operating income and expenses
Financial income/expenses
Financial expenses
Financial income
Income before income and social contribution taxes
Income and social contribution taxes
19
Net income for the period
Attributable net income:
Non-controlling interest in SPEs and SCPs
-
Attributable net income:
Direcional Engenharia S.A.
Net earnings per share
Base
Diluted
See accompanying notes.
Ernst & Young Terco | 9
75,903
17
17
74,531
Direcional Engenharia S.A.
Notes to financial statements
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
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:
Shareholders
Filadélphia Participações S.A.
Fundos sob Gestão da Tarpon Investimentos
Ridgecrest LLC
GIC – Government of Singapore
Managing officers
Other
Total
Ernst & Young Terco | 10
Number of shares and percentages
In June 2011
Shares
(%)
72,469,445
46.87%
23,190,324
15.0%
10,653,225
6.89%
10,658,249
6.89%
1,640,284
1.06%
35,999,176
23.28%
154,610,703
100.00%
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
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.
2.1. 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, 2011.
Ernst & Young Terco | 11
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
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, 2013. 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, 2013. 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, 2013. 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, 2013. 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, 2013.
Earlier application is permitted.
Ernst & Young Terco | 12
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
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
Description
Cash and banks
Financial investments
Total
Company
6/30/2011
12/31/2010
6,731
5,898
253,367
104,958
260,098
110,856
Consolidated
6/30/2011 12/31/2010
54,083
66,549
327,685
124,302
381,768
190,851
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 100.46% of CDI.
Ernst & Young Terco | 13
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
4. Accounts receivable
Description
Accounts receivable for property
development (a)
Units completed
Units not completed
(-) Adjustment to present value
(-) Discount for bond securitization
(-) Allowance for Doubtful Accounts (ADA)
Total
Company
6/30/2011
12/31/2010
Consolidated
6/30/2011
12/31/2010
3,476
(70)
(1,720)
1,686
7,538
(137)
(1,534)
5,867
245,223
698,573
(23,180)
(70)
(1,720)
918,826
248,082
526,415
(21,315)
(137)
(1,534)
751,511
1,474
5,259
776,489
594,108
212
608
142,337
157,403
Receivables for services rendered
Real estate intermediation
Works management
Firm-price construction contract
Total
1,454
1,454
1,723
1,723
2,599
750
88,927
92,276
2,458
266
65,579
68,303
Current
1,454
1,723
92,276
68,303
Current
Non-current
(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
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
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
6/30/2011
12/31/2010
Falling due
3Q/11
4Q/11
1Q/12
2Q/12
Overdue
0-30 days
31-60 days
61-90 days
91-120 days
121-150 days
151-180 days
above 180 days
Total current assets
136,971
509,052
90,398
100,237
836,658
162,312
106,254
119,802
240,043
628,411
7,859
3,026
1,881
2,905
1,226
670
14,540
32,107
12,506
4,008
1,805
876
2,774
1,068
10,963
34,000
868,765
662,411
Securities falling due classified as noncurrent at June 30, 2011 have the following flow
of receipts:
Year
Up to June/2013
Up to June/2014
Up to June/2015
After June/2015
Total
Consolidated
104,569
8,773
5,554
23,441
142,337
5. 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)
Vicente Pires land unit - Taguatinga/DF (a)
MG/BH Pampulha land unit – Work 289
Valparaiso Serra land unit/ES
Land unit 68-617 Freg. Campo Grande/RJ
Lots 7 A 15 R. Canoeiros - S. Monica
Land unit in Porto Velho/RO
Batur e Skt Empreendimentos Imob. Ltda.
Other
5. Properties for sale--Continued
Ernst & Young Terco | 15
6/30/2011
26,592
1,719
1,400
1,327
1,031
7,203
39,272
12/31/2010
25,202
6,500
1,632
1,400
1,327
1,031
210
37,302
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
5.1. Land units for development--Continued
SCP, SPE or project (Company)
Água Marinha Empreendimentos Imobilários Ltda.
Direcional Água Branca Empreendimentos Imobiliários Ltda.
Direcional Taguatinga - Total Ville Sector (a)
Direcional Alegre Empreendimentos Empreendimentos Imobiliários Ltda.
Direcional Santo Antônio Empreendimentos Imobiliários Ltda
DiDirecional Safira - Total Ville Marabárecional Safira (a)
Azurita Empreendimentos Imobiliários Ltda
Direcional Trincheiras Empreendimentos Imobiliários Ltda
Direcional Xapuri Empreendimentos Imobiliários Ltda
Direcional Santa Rosa Empreendimentos Imobiliários Ltda
Direcional Coruripe Empreendimentos Imobiliários Ltda
Direcional Arapiraca Empreendimentos Imobiliários Ltda
Direcional Turquesa - Jardins Life Residence
Direcional Diamante - Bella Citta (a)
Direcional Leopoldina Empreendimentos Imobiliários Ltda
Citrino Empreendimentos Imobiliários Ltda
Porto Acre Empreendimentos Imobiliarios Ltda
Direcional Rubi - Allegro Residencial Club (a)
Direcional Riachos Empreendimentos Imobiliários Ltda
Onix Empreendimentos - Total Ville Manaus
Coral Empreendimentos Imobiliários Ltda
Direcional Valparaiso - Dreen park (a)
Direcional Ametista Empreendimentos Imobiliarios Ltda (a)
Direcional Igaci Empreendimentos Imobiliários Ltda
Malaquita Empreendimentos Imobiliários Ltda
Direcional Estrela Empreendimentos Imobiliários Ltda
Direcional Carneiros Empreendimentos Imobiliários Ltda
Direcional Cajueiro Empreendimentos Imobiliários Ltda
Seabra Empreendimentos - Total Ville Porto Velho (a)
Direcional São Miguel Empreendimentos Imobiliários Ltda
Arinos Empreendimentos - Chácaras das Oliveiras
Anadia Empreendimentos Imobiliários Ltda
Direcional Campinas Engenharia Ltda
Direcional Tarauaca - Tulip Inn Savassi Hotel
Bom Sucesso Incorporação (a)
Abaré Empreendimentos - Brisas do Parque
Other
Total consolidated
Company
Current
Non-current
Total
Company
6/30/2011
12/31/2010
2,728
9,437
36,544
27,865
39,272
37,302
6/30/2011
26,505
26,192
23,598
22,000
21,462
19,020
16,031
14,690
12,797
12,667
12,000
11,511
10,380
9,738
9,615
9,595
8,729
8,214
8,000
7,622
7,600
7,328
7,223
7,126
7,100
7,000
6,923
6,514
5,731
5,730
5,717
5,370
4,612
20,313
394,653
12/31/2010
26,505
25,386
22,000
21,462
18,899
16,031
12,796
12,656
8,011
10,380
9,738
9,594
8,724
10,158
16,000
7,622
7,600
7,328
12,096
7,126
7,100
6,514
5,731
896
5,717
5,370
4,612
29,459
7,358
5,721
18,218
366,808
433,925
404,110
Consolidated
6/30/2011
12/31/2010
285,918
252,992
148,007
151,118
433,925
404,110
(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
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
5. Properties for sale--Continued
5.2. Real property units completed
SCP, SPE or project (Company)
Direcional Engenharia - Residencial Plaza das Águas
Capela Empreendimentos - Quintas da Península & Aquarela
SCP, SPE or project (subsidiaries)
Capela Empreendimentos - Quintas da Península & Aquarela
Direcional SCP Manaus - Eliza Miranda
Direcional Âmbar - Águas, Brisas & Cachoeiras do Madeira
Direcional SCP Jacundá - Equilibrium & Gran Prixta
Direcional SCP Lago Sul - Lake View Resort
Direcional SCP Paradiso – Paradiso
SCP Rio de Janeiro - Vila Borghese & San Filipo
SCP Retiro dos Artistas - Mirante Campestre
SCP Bartira Mourão - Bartira Mourão
Direcional SCP Gran Riserva - Gran Riserva
Rubelita Empreendimentos - Al Mare
Other
Total (consolidated) – current
6/30/2011
15
15
12/31/2010
15
5,350
5,365
6/30/2011
10,408
8,130
3,012
1,832
1,645
1,500
1,317
225
358
618
733
29,778
12/31/2010
6,181
2,026
1,767
771
1,317
747
382
280
691
14,162
29,793
19,527
5.3. Real property units under construction
SCP, SPE or project
Direcional Âmbar - Águas, Brisas & Cachoeiras do Madeira
Direcional Tarauaca - Tulip Inn Savassi Hotel
Direcional Flourita Empreendimentos Imobiliários Ltda
Jonasa Empreendimentos Imobiliários Ltda - Weekend & Gran Vista
Direcional Rubi - Allegro Residencial Club
Direcional Diamante - Bella Citta
Direcional SCP Jacundá - Equilibrium & Gran Vista
Zircone Empreendimentos - Parque Ponta Negra
Direcional TSC Jatuarana - Vita Bella
Onix Empreendimentos - Total Ville Manaus
Bom Sucesso Incorporação
Direcional TSC Jamari – Riviera
Direcional Safira - Total Ville Marabá
Direcional Valparaiso - Dreen park
Direcional Taguatinga - Total Ville Sector
Abaré Empreendimentos - Brisas do Parque
Direcional Feijo Empreendimentos Imobiliários Ltda
Arinos Empreendimentos - Chácaras das Oliveiras
Direcional Ametista Empreendimentos Imobiliarios Ltda
Alexandrita Empreendimentos
Santa Margarida Empreendimentos Imobiliários Ltda
Direcional Turquesa - Jardins Life Residence
Seabra Empreendimentos - Total Ville Porto Velho
Azurita Empreendimentos Imobiliários Ltda
Maragoggi Empreendimentos - Cap D'Antibes
Ernst & Young Terco | 17
6/30/2011
24,414
19,393
13,597
11,495
11,270
9,992
9,632
8,550
8,502
7,935
7,482
7,274
6,815
5,828
5,780
4,878
3,747
3,488
2,715
1,812
1,666
1,619
1,607
1,495
1,294
12/31/2010
16,869
14,444
4,348
7,464
5,923
5,724
12,876
7,304
5,034
6,441
3,942
5,474
5,599
541
3,355
3,756
1,073
1,170
1,455
1,344
1,531
1,064
1,159
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
5. Properties for sale--Continued
5.3. Real property units under construction--Continued
SCP, SPE or project
Direcional Santo Antônio Empreendimentos Imobiliários Ltda
Direcional TSC Rio Madeira - Garden Club
Direcional Canário Empreendimentos Imobilarios Ltda.
Direcional Água Branca Empreendimentos Imobiliários Ltda
Direcional Arapiraca Empreendimentos Imobiliários Ltda
Ernani Agrícola – Solares
Direcional Esmeralda - Gran Felicitá
Direcional Campinas Engenharia Ltda.
Direcional Brasileia
Direcional Silvestre Ltda.
Bujari Empreendimentos - Parque Verde
Scp Manaus – Eliza Miranda Step 5
Direcional Oiti Empreendimentos Imobiliários Ltda.
Other
Total
6/30/2011
1,269
1,197
1,180
897
855
822
790
773
717
693
291
2,696
194,460
12/31/2010
822
1,094
459
974
1,717
519
647
3,247
59
8,495
135,923
5.4. 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
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
6. Transactions with related parties
6.1. Related companies
Assets
Credits from partners of projects (a)
TSC Engenharia Ltda
Citycasa Incorporações Imobiliários Ltda
Seven Engenharia Ltda
SPL Engenharia Ltda
Ager Incorporações Imobiliárias Ltda
Dam Incorporações Ltda
Current account with non-controlling shareholders
Company
6/30/2011 12/31/2010
Consolidated
6/30/2011 12/31/2010
13,780
583
168
35
4,245
4,196
484
23,491
7,996
258
211
35
4,211
832
13,543
13,780
583
168
35
4,245
4,196
484
23,491
7,996
258
211
35
4,211
832
13,543
12,085
4,358
6,590
3,308
17,211
6,547
1,202
1,058
52,359
14,791
14,791
129
489
2,719
225
6
13,065
978
230
120
485
18,446
140
372
2,245
2,997
1,687
12,382
19,823
2,485
2,485
-
2,485
2,485
-
Total transactions with related parties
78,335
28,334
44,422
33,366
Current
Non-current
55,328
23,007
14,791
13,543
21,415
23,007
7,441
25,925
Current account with projects (b)
SCP Manaus - Eliza Miranda
SCP Club House
Direcional TSC Jatuarana Empreend. Imobil. Ltda
SCP Ouro Preto
Direcional Construtora Valparaiso Ltda
Zircone Empreend. Imobil. Ltda
Seabra Empreend. Imobil. Ltda
Andaraí Empreend. Imobil. Ltda
Jonasa Empreendimentos Imobilarios
SCP Santa Mõnica
SCP Paradiso
SCP Jacundá
SCP Gran Riserva
Direcional Opala
Direcional Jordão
Direcional Riachos
SCP Tereza Mota
Rubelita Empreendimentos
Advance for future interest acquisition (c)
Liabilities
Current account with projects (b)
Direcional Água Branca
Direcional Estrela
Dan Incorporações
Total transactions with related parties
Current
(a)
Credits from project partners
Ernst & Young Terco | 19
Company
6/30/2011 12/31/2010
Consolidated
6/30/2011 12/31/2010
17,225
7,000
1,987
26,212
-
8,717
8,717
-
26,212
-
8,717
-
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
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$2,485.
6.2. Management compensation
The table below sets out the annual compensation provided to our managing
officers and directors for year 2011 and the effective annual compensation for
year 2010:
2011
Board of
Directors
2010
Board of
Directors
Total members
Annual fixed compensation (R$)
Variable compensation (R$)
Total members
Annual fixed compensation (R$)
Variable compensation (R$)
7
500,000
500,000
7
781,908
781,908
Statutory Board
5
2,000,000
4,000,000
6,000,000
Statutory Board
5
1,089,467
529,080
1,618,547
Total
12
2,500,000
4,000,000
6,500,000
Total
12
1,871,375
529,080
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
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
7. Investments in subsidiaries and jointly controlled entities
The summarized financial statements of investees prepared as of June 30, 2011 are as follows:
Balance sheet
Non-current
Current
Companies
Direcional SCP Parque Prado - Club House
SCP Retiro dos Artistas - Mirante Campestre
SCP Quintas do Valqueire - Quintas do Valqueire
SCP Águas Claras II - Life Residence
SCP Santa Inês
SCP Cidade Nova - Provincia de Ravena
SCP Campinas - Vivere
SCP Brasília - Thomaz Starzl
SCP Serra da Canastra
Direcional SCP Manaus - Eliza Miranda
SCP Edifício Chopin
SCP Província Vicenza - Provincia de Vicenza
SCP Green Village - Green Village
Direcional SCP Cidadão XI - Cidadão XI
SCP Rio de Janeiro - Vila Borghese & San Filipo(1)
SCP Cláudio Manoel - Chopin(1)
SCP Valadares Gontijo - Spinoff (1)
Direcional SCP Jacundá - Equilibrium & Gran Vista
Direcional Campinas Engenharia Ltda
Jonasa Empreendimentos Imobiliários Ltda - Weekend
& Gran Vista
Direcional SCP Ouro Preto - Gran Parque
Direcional Esmeralda - Gran Felicitá
Altana Empreendimentos Imobiliários Ltda
Direcional TSC Rio Madeira - Garden Club
SPE Maura Valadares Gontijo (1)
Diresomattos Gutierrez - Volare(1)
SCP Bartira Mourão - Bartira Mourão(1)
SCP Tereza Motta Valadares - Tereza Mota(1)
Rubelita Empreendimentos - Al Mare
Ernani Agrícola – Solares
Direcional Silvestre Ltda
Direcional Âmbar - Águas, Brisas & Cachoeiras do
Madeira
Direcional Valparaiso - Dreen park
Alexandria Empreendimentos - Alegro
Direcional SCP Maura Valadares - Barter
Direcional SCP Lago Sul - Lake View Resort
Direcional SCP Gran Riserva - Gran Riserva
Ernst & Young Terco | 21
Statement of income
Gross
profit
1,181
43
(41)
(19)
(414)
(24)
(15)
6,372
558
1,814
(162)
(4)
(159)
509
-
Operating
expenses,
net
(939)
(72)
1
291
7
47
11
8
(460)
(32)
3
(39)
(12)
(3)
14
(267)
-
Financial
income/
expenses,
net
IRPJ/CSLL
139
(127)
135
(86)
8
2
2
8
116
(55)
15
7
(1)
(1,924)
(403)
4
(1)
36
16
4
16
5
72
(309)
-
Assets
42,247
7,836
88
2,129
36
119
7,745
85
368
78,241
1,111
10
16,757
7,659
202
426
60,997
5,620
Noncurrent
128
210
385
152
2,773
96
116
11,333
1,944
683
Liabilities
36,343
712
3
1,246
3
14
836
10
69
23,311
58
48
918
1,194
11
36
17,316
1,632
Payables
6,080
384
3
145
5
164
19
1,067
6
1
90
915
166
22,365
-
Equity
(48)
6,951
82
1,124
33
100
6,897
75
280
56,636
1,142
(49)
10
15,866
16,883
25
390
23,259
4,671
Net revenue
from sales and
services
5,573
1,695
79
1
692
(1)
13,079
558
8,965
(243)
8,972
-
143,037
3,846
17,990
29
40,752
2,021
2,692
1,743
1,558
13,044
12,705
1,820
747
29
39,223
415
300
1,792
7,981
6
33
55,617
49
15,099
21,609
354
858
37
403
16,298
2,317
93
22,376
73
9,381
7,302
158
29
959
13
65,791
3,754
32,734
445
12,141
3,301
1,805
1,706
1,154
3,768
10,394
1,746
43,007
96
21,976
12,361
101
2,109
783
10,594
53
10,781
(673)
(1,970)
(769)
(102)
(1,160)
(215)
99
(3,496)
(8)
(460)
(52)
40
1,282
(1)
26
(1,065)
(78)
(20)
142
90
98
(132)
428
72
7
52
253
29
(7)
(1,317)
(4)
(611)
(353)
(31)
(124)
(55)
(285)
(43)
(24)
5,923
131
9,808
(1,210)
(1,533)
461
(95)
23
(2,257)
(306)
47
87,278
36,803
20,742
1,860
13,793
5,769
1,353
4,487
136
38,408
978
33,027
3,469
2,369
205
1,923
1,579
24,009
19,766
3,698
39,091
207
31,595
18,055
14,811
1,655
11,187
4,961
18,254
4,958
1,140
44
2,116
(171)
375
(1,259)
974
44
(341)
(50)
(2,421)
(1,449)
(421)
(80)
(348)
(13)
(125)
3
(72)
53
(3,615)
49
(531)
(120)
(49)
37
(63)
(14)
(2,702)
(2,826)
433
55
(4,367)
(28)
Net
income
254
20
1
259
2
(3)
(307)
2
(2)
3,585
529
3
1,826
(169)
9
(140)
5
-
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
7. Investments in subsidiaries and jointly controlled entities--Continued
Balance sheet
Companies
Direcional SCP Paradiso - Paradiso
Direcional Opala - Gran Paradiso, Gran Ventura, Gran
D'ouro
Direcional Taguatinga - Total Ville Sector
Direcional Diamante - Bella Citta
Direcional Rubi - Allegro Residencial Club
Direcional TSC Jatuarana - Vita Bella
Direcional Canário Empreendimentos Imobilarios Ltda.
Onix Empreendimentos - Total Ville Manaus
Direcional TSC Jamari – Riviera
U N A Empreendimentos - Boulevard Esplanada
Direcional SCP Le Parc de France - Le Parce de
France
Direcional Ametista Empreendimentos Imobiliarios
Ltda
Direcional Sodalita Empreendimentos Imobiliarios Ltda
Direcional TSC Lauro Sodré
Direcional SCP Santa Mônica - Villagio Santa Mônica
Alexandrita Empreendimentos
Malaquita Empreendimentos Imobiliários Ltda
Bujari Empreendimentos - Parque Verde
Direcional Safira - Total Ville Marabá
Direcional Corretora de Imóveis
Direcional SCP Pró-Moradia II - Pró Moradis
Zircone Empreendimentos - Parque Ponta Negra
Direcional Turquesa - Jardins Life Residence
Direcional Oiti Empreendimentos Imobiliários Ltda
Azurita Empreendimentos Imobiliários Ltda
Citrino Empreendimentos Imobiliários Ltda
Direcional Assis Brasil Empreendimentos Imobiliários
Ltda
Jaspe Empreendimentos Imobiliários Ltda
Bom Sucesso Incorporação
Turmalina Empreendimentos Imobiliários Ltda
SCP Direcional Petropolis - Petrópolis
SCP Direcional Ozias - Ozias Monteiro
Santa Margarida Empreendimentos Imobiliários Ltda
Seabra Empreendimentos - Total Ville Porto Velho
Maragoggi Empreendimentos - Cap D'Antibes
Direcional Flourita Empreendimentos Imobiliários Ltda
Andaraí Empreendimentos Imobiliários Ltda
Coral Empreendimentos Imobiliários Ltda
Água Marinha Empreendimentos Imobilários Ltda.
Ernst & Young Terco | 22
Current
44,653
198
Statement of income
Non-current
29,156
11,156
Equity
4,538
Net revenue
from sales and
services
2,610
Gross
profit
928
Operating
expenses,
net
(14)
Financial
income/
expenses,
net
24
IRPJ/CSLL
(86)
Net
income
852
27,472
90,794
67,588
38,756
27,539
1,181
57,479
17,799
4,266
1,111
40,262
9,208
1,115
265
7,033
157
20
8,078
47,770
9,214
4,714
4,103
124
14,568
12,217
539
8,904
21,717
9,334
17,520
8,720
17,804
115
14
11,600
61,569
58,249
17,638
14,981
1,057
32,139
5,624
3,733
8,816
47,932
22,562
12,377
9,624
25,839
5,569
4,110
2,178
17,600
5,903
3,883
1,365
5,218
1,237
2,329
(128)
(1,021)
(354)
(316)
(91)
(296)
(62)
(1,163)
115
68
(10)
(1)
(4)
207
4
87
(281)
(914)
(715)
(356)
(272)
(777)
(162)
(153)
1,884
15,733
4,825
3,210
999
4,351
1,017
1,099
2,635
10
190
41
2,415
117
(148)
-
34
(19)
(134)
11,607
2,586
6
4,680
24,340
7,316
16,079
57,250
2,666
19,121
40,476
12,001
1,664
23,537
319
4,599
105
171
52
19,547
5
120
14,828
282
801
431
9,595
260
18
3,589
5,874
1
2,545
13,236
279
1,367
8,975
10,380
352
1,327
-
11,158
49
11,621
4,006
34,717
98
39,572
14,749
9,595
4,788
2,569
6
1,148
7,017
7,315
9,580
28,844
2,391
17,776
6,757
1,903
2,113
7,893
319
4,081
628
9,131
8,414
21,473
2,144
11,695
20,080
192
-
1,223
(508)
(2,137)
2,744
8,960
2,036
3,446
7,861
64
-
(893)
(21)
(19)
(135)
(19)
(233)
(385)
(41)
(658)
(47)
(4)
-
(1)
7
54
(8)
33
(2)
3
33
26
(1)
-
(130)
(22)
(249)
(28)
(223)
(101)
(227)
(59)
(649)
-
199
(544)
(2,352)
(164)
2,494
8,659
1,422
3,349
6,588
43
(5)
-
127
217
26,692
2,521
572
5,983
5,470
31,227
10,093
25,729
13,065
798
26,953
6,560
122
70
281
601
2,073
31,829
7,733
-
2,051
832
46
819
1,016
13,879
3,048
2,112
763
21,282
6,560
54
216
110
5,532
9,596
2,988
-
126
217
24,642
1,811
543
5,228
4,455
17,839
3,586
45,850
13,065
4,779
5,671
(9)
14,998
3,284
19,269
-
(162)
(3,038)
4,573
399
8,832
-
(6)
(1)
20
(23)
(5)
(304)
(155)
(397)
(29)
-
1
4
39
(27)
131
88
683
6
(1)
(22)
(369)
(104)
(620)
(2)
(7)
(1)
(139)
(3,044)
(5)
3,872
271
7,902
683
(29)
5
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
7. Investments in subsidiaries and jointly controlled entities--Continued
Balance sheet
Companies
Direcional Jordão Empreendimentos Imobiliários Ltda
Direcional Feijó Empreendimentos Imobiliários Ltda
Direcional Capixaba - Vila Verde
Direcional Brasileia
Direcional SCP Meu Orgulho - Residencial Meu
Orgulho
Capela Empreendimentos - Quintas da Península &
Aquarela
Arinos Empreendimentos - Chácaras das Oliveiras
Rio Branco Empreendimentos Imobiliários Ltda
Porto Acre Empreendimentos Imobiliários Ltda
Abaré Empreendimentos - Brisas do Parque
Anadia Empreendimentos Imobiliários Ltda
Direcional SCP Comim Meu Orgulho Infra
Germiniano Projeto 01 Empreendimentos Imobiliários
Direcional Santa Rosa Empreendimentos Imobiliários
Ltda
Direcional Santo Antônio Empreendimentos
Imobiliários Ltda
Direcional Arapiraca Empreendimentos Imobiliários
Ltda
Direcional Tarauaca - Tulip Inn Savassi Hotel
Direcional Belo Monte Empreendimentos Imobiliários
Ltda
Direcional Xapuri Empreendimentos Imobiliários Ltda
Direcional São Miguel Empreendimentos Imobiliários
Ltda
Direcional Igaci Empreendimentos Imobiliários Ltda
Direcional Alegre Empreendimentos Imobiliários Ltda
Direcional Cajueiro Empreendimentos Imobiliários
Ltda
Direcional SCP Boa Casa Empreendimentos - Boa
Casa
Direcional Riachos Empreendimentos Imobiliários Ltda
Direcional Água Branca Empreendimentos Imobiliários
Ltda
Direcional Carneiros Empreendimentos Imobiliários
Ltda
Direcional Coruripe Empreendimentos Imobiliários
Ltda
Ernst & Young Terco | 23
Current
1,906
3,763
7
6,967
661
6,016
12,626
Statement of income
Non-current
23
6
2,300
1,213
33
5,758
213
Equity
1,883
1,463
6,381
12,670
Net revenue
from sales and
services
4,561
10,386
Gross
profit
2,378
3,900
Operating
expenses,
net
(1)
(649)
(187)
Financial
income/
expenses,
net
IRPJ/CSLL
(2)
14
(135)
2
(67)
Net
income
(2)
(1)
1,607
3,648
25,885
412
4,821
367
21,108
63,958
18,802
(577)
27
(314)
17,939
13,689
10,150
4,040
9,337
7,629
6,046
30,759
8,686
1,458
663
486
800
325
87
-
103
2,538
1,047
5,879
99
1,233
197
98
6,233
3,900
7,597
70
5,370
97
-
14,946
2,043
139
1,179
2,479
903
29,516
8,490
(108)
840
3,059
16,639
-
(108)
321
1,074
7,766
-
(307)
(48)
(832)
(101)
-
255
(1)
(1)
(2)
(1)
(2)
-
(99)
(25)
(93)
(79)
-
47
(11)
(49)
147
(102)
7,685
-
13,024
14
1,701
7,500
3,836
-
-
-
-
-
-
22,737
55
19,213
-
3,579
-
-
(294)
1
-
(293)
12,371
27,687
5,617
33
647
8,505
28,469
3,833
4,188
13,458
2,938
(465)
-
(399)
2,073
910
12,879
-
500
12,799
-
410
80
-
-
-
-
-
-
6,042
7,190
67
24,728
4,774
2
22,000
1,268
7,190
2,793
-
-
-
118
-
118
6,588
-
2
6,514
72
-
-
-
-
-
-
604
16,460
5
-
244
3,200
6
12,800
360
460
601
-
(386)
-
(2)
-
-
(3)
-
(391)
-
44,316
-
29,612
14,500
204
-
-
-
-
-
-
6,935
-
-
6,923
12
-
-
-
-
-
-
12,029
-
12,025
-
3
-
-
-
-
-
-
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
7. Investments in subsidiaries and jointly controlled entities--Continued
Balance sheet
Companies
Direcional SCP Alterosa - Residencial Alterosa
Direcionsl SCP Bairro Carioca - Bairro Carioca
Direcional SPL Ponciano Empreendimentos
Imobiliários Ltda
Direcional Leopoldina Empreendimentos Imobiliários
Ltda
Direcional Estrela Empreendimentos Imobiliários Ltda
Direcional São Primiano Empreendimentos
Imobiliários Ltda
Direcional Água das Flores Empreendimentos
Imobiliários Ltda
Direcional Sena Madureira Empreendimentos
Imobiliários Ltda
Direcional Trincheiras Empreendimentos Imobiliários
Ltda
Current
4,063
2,430
247
43
Non-current
821
452
Statement of income
18
7
Equity
3,471
2,013
Net revenue
from sales and
services
4,039
1,773
Gross
profit
1,026
516
Operating
expenses,
net
(12)
(1)
Net
income
994
507
227
-
-
-
227
-
-
(23)
-
-
(23)
12
14,005
9,619
-
13,500
9,619
-
12
505
-
-
-
-
-
-
1,244
-
1,097
-
147
-
-
(26)
-
-
(27)
36
-
6
-
30
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,801
-
14,690
-
111
-
-
-
-
-
-
(1) The Company does not act as the leading partner in these SCPs and SPEs, however, control is shared.
Ernst & Young Terco | 24
Financial
income/
expenses,
net
IRPJ/CSLL
(19)
(8)
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
7. Investments in subsidiaries and jointly controlled entities--Continued
The summarized financial statements of investees prepared as of December 31, 2010 are as follows:
Balance sheet
Companies
Direcional SCP Parque Prado - Club House
SCP Retiro dos Artistas - Mirante Campestre
SCP Quintas do Valqueire - Quintas do Valqueire
SCP Águas Claras II - Life Residence
SCP Santa Inês
SCP Cidade Nova - Provincia de Ravena
SCP Campinas - Vivere
SCP Brasília - Thomaz Starzl
SCP Serra da Canastra
Direcional SCP Manaus - Eliza Miranda
SCP Edifício Chopin
SCP Província Vicenza - Provincia de Vicenza
SCP Green Village - Green Village
Direcional SCP Cidadão XI - Cidadão XI
SCP Rio de Janeiro - Vila Borghese & San Filipo(1)
SCP Cláudio Manoel - Chopin(1)
SCP Valadares Gontijo - Spinoff (1)
Direcional SCP Jacundá - Equilibrium & Gran Vista
Direcional Campinas Engenharia Ltda
Jonasa Empreendimentos Imobiliários Ltda - Weekend
& Gran Vista
Direcional SCP Ouro Preto - Gran Parque
Direcional Esmeralda - Gran Felicitá
Altana Empreendimentos Imobiliários Ltda
Direcional TSC Rio Madeira - Garden Club
SPE Maura Valadares Gontijo (1)
Diresomattos Gutierrez - Volare(1)
SCP Bartira Mourão - Bartira Mourão(1)
SCP Tereza Motta Valadares - Tereza Mota(1)
Rubelita Empreendimentos - Al Mare
Ernani Agrícola – Solares
Direcional Silvestre Ltda
Direcional Âmbar - Águas, Brisas & Cachoeiras do
Madeira
Direcional Valparaiso - Dreen park
Alexandria Empreendimentos - Alegro
Ernst & Young Terco | 25
Assets
Statement of income
Net revenue
from sales and
services
Liabilities
Current
29,057
13,548
88
1,397
35
151
22,740
132
378
90,923
520
10
10,843
7,401
215
629
71,026
5,544
Noncurrent
6,469
189
506
202
1,205
149
119
15,753
635
684
Current
34,972
917
3
155
1
34
12,574
47
70
32,608
22
48
1,218
1,080
61
2
5,800
1,626
Noncurrent
80
390
4
424
14
164
28
1,319
9
3
48
1,357
78
36,389
-
Equity
474
12,430
81
1,324
34
103
10,204
85
280
58,201
638
(51)
10
9,696
20,717
76
627
29,472
4,602
104,385
4,255
16,379
29
32,434
3,155
7,971
2,677
3,175
12,811
13,014
561
597
31
24,610
416
218
2,848
11,997
5
10
14,098
488
10,399
3,563
430
1,643
753
1,310
15,447
2,319
18
36,321
73
7,432
19,003
233
184
(11)
826
-
78,151
34,727
18,919
1,378
4,539
-
31,537
12,807
2,033
20,803
7,054
3,812
Operating
expenses,
net
Financial
income/
expenses,
net
IRPJ/CSL
L
Net
income
16,390
8,350
263
12,786
(9)
24,356
10,786
11,611
703
44,615
-
Gross
profit
3,136
703
(538)
(4)
(61)
938
(15)
(44)
5,751
2,983
3,382
(96)
619
11,684
-
84
94
12
97
(6)
10
10
63
14
(1,056)
(10)
(6)
3
(13)
(105)
(2)
(55)
(293)
-
37
50
223
4
22
92
38
49
(2,019)
106
(7)
5
17
341
(1)
(51)
(259)
(8)
(537)
(718)
(47)
(404)
(2)
(17)
(1,317)
-
2,910
588
12
(226)
(6)
(29)
503
86
20
1,958
96
(6)
3
2,916
2,879
(84)
547
10,415
(1)
54,563
3,725
23,158
445
10,086
5,340
6,144
1,924
1,876
8,535
10,700
553
86,216
1,614
44,689
29,154
9,288
5,336
1,632
1,766
14,378
11,225
-
32,785
(466)
19,251
5,897
(807)
702
615
105
4,154
3,607
-
(1,783)
(49)
(2,224)
(131)
(500)
(90)
(57)
(56)
(224)
(296)
-
326
132
(14)
(38)
169
314
844
684
(310)
911
-
(2,478)
(66)
(1,065)
(758)
(240)
(345)
(52)
(38)
(682)
(327)
-
28,849
(448)
15,948
4,969
(1,378)
581
1,351
694
2,938
3,895
-
27,189
19,405
13,074
43,992
18,804
6,599
11,421
4,704
(964)
(1,047)
(649)
(411)
(94)
21
372
(1,202)
(496)
(190)
9,078
3,581
(1,194)
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
7. Investments in subsidiaries and jointly controlled entities--Continued
Balance sheet
Companies
Direcional SCP Maura Valadares - Barter
Direcional SCP Lago Sul - Lake View Resort
Direcional SCP Gran Riserva - Gran Riserva
Direcional SCP Paradiso - Paradiso
Direcional Opala - Gran Paradiso, Gran Ventura, Gran
D'ouro
Direcional Taguatinga - Total Ville Sector
Direcional Diamante - Bella Citta
Direcional Rubi - Allegro Residencial Club
Direcional TSC Jatuarana - Vita Bella
Direcional Canário Empreendimentos Imobilarios Ltda.
Onix Empreendimentos - Total Ville Manaus
Direcional TSC Jamari – Riviera
U N A Empreendimentos - Boulevard Esplanada
Direcional SCP Le Parc de France - Le Parce de
France
Direcional Ametista Empreendimentos Imobiliarios
Ltda
Direcional Sodalita Empreendimentos Imobiliarios Ltda
Direcional TSC Lauro Sodré
Direcional SCP Santa Mônica - Villagio Santa Mônica
Alexandrita Empreendimentos
Malaquita Empreendimentos Imobiliários Ltda
Bujari Empreendimentos - Parque Verde
Direcional Safira - Total Ville Marabá
Direcional Corretora de Imóveis
Direcional SCP Pró-Moradia II - Pró Moradis
Zircone Empreendimentos - Parque Ponta Negra
Direcional Turquesa - Jardins Life Residence
Direcional Oiti Empreendimentos Imobiliários Ltda
Azurita Empreendimentos Imobiliários Ltda
Citrino Empreendimentos Imobiliários Ltda
Direcional Assis Brasil Empreendimentos Imobiliários
Ltda
Bom Sucesso Incorporação
Turmalina Empreendimentos Imobiliários Ltda
SCP Direcional Petropolis - Petrópolis
SCP Direcional Ozias - Ozias Monteiro
Santa Margarida Empreendimentos Imobiliários Ltda
Seabra Empreendimentos - Total Ville Porto Velho
Ernst & Young Terco | 26
Statement of income
Assets
Net revenue
from sales and
services
Liabilities
Operating
expenses,
net
Financial
income/
expenses,
net
IRPJ/CSL
L
Net
income
Current
1,945
18,573
8,189
47,323
Noncurrent
1,155
43,429
1,914
237
Current
216
49,882
641
13,996
Noncurrent
78
2,879
261
10,805
Equity
2,806
9,241
9,201
22,759
26,813
6,342
22,923
10,275
(530)
5,414
(1)
(104)
(125)
(488)
195
3,700
129
97
(913)
(197)
(634)
194
12,957
(724)
4,390
26,459
52,587
38,729
15,770
10,892
1,098
42,381
14,256
2,855
915
49,390
11,409
12,860
8,577
6,973
129
163
8,374
16,108
6,339
4,486
2,806
104
12,558
2,638
375
6,892
30,346
5,547
10,511
5,409
12,132
5,881
11
12,108
55,523
38,252
13,633
11,254
994
24,664
5,866
2,632
17,072
70,073
29,735
9,142
11,141
28,759
8,887
1,332
5,495
26,849
9,144
3,615
2,704
6,551
4,579
735
(86)
(4,175)
(1,204)
(897)
(271)
(102)
(1,218)
(81)
(68)
227
(118)
(696)
(9)
(21)
(39)
(9)
-
(451)
(2,688)
(955)
(269)
(288)
(785)
(201)
(37)
5,184
19,868
6,290
2,440
2,123
(102)
4,509
4,287
631
3,978
17
307
-
3,688
2,358
756
(2)
133
(73)
814
1,111
2,574
6
6,636
8,675
7,683
5,824
34,791
2,530
9,307
48,984
11,739
1,677
23,108
307
12,383
37
11,110
48
17,645
107
10,089
281
804
17
9,595
1,688
1,232
4,983
1,093
2,891
10,669
182
846
1,195
385
1,286
-
9,148
964
6,889
42
16,647
48
40,801
14,749
9,595
2,658
2,574
6
4,477
7,913
6,590
2,939
25,120
2,348
8,520
17,077
12,020
2,096
7,090
307
8,787
16,317
2,192
7,151
29,565
3,894
11,806
21,405
6,546
-
3,507
4,212
851
2,229
10,933
3,894
3,771
7,147
521
-
(31)
5
(19)
(134)
(277)
(298)
(801)
(57)
(4)
(1,458)
(13)
(34)
(20)
-
(4)
(11)
133
15
(58)
(2)
(1)
(3)
20
-
(254)
(412)
(46)
(192)
(1,426)
(210)
(53)
(678)
(4)
-
(35)
5
3,223
3,799
528
1,754
8,647
3,625
3,712
5,008
(13)
502
(21)
-
126
26,251
1,450
589
15,839
5,031
12,063
6,560
77
299
7,596
1,603
811
90
1,584
571
11,014
6,560
53
202
491
126
24,648
639
523
14,352
4,460
8,154
6,674
33,593
12,169
884
8,090
3,059
(1)
30
70
(997)
2
(14)
(1)
32
79
10
(28)
(32)
(129)
(3)
(287)
2
(16)
(1)
914
8,109
7
1,747
Gross
profit
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
7. Investments in subsidiaries and jointly controlled entities--Continued
Balance sheet
Companies
Maragoggi Empreendimentos - Cap D'Antibes
Direcional Flourita Empreendimentos Imobiliários Ltda
Andaraí Empreendimentos Imobiliários Ltda
Coral Empreendimentos Imobiliários Ltda
Água Marinha Empreendimentos Imobilários Ltda.
Direcional Jordão Empreendimentos Imobiliários Ltda
Direcional Feijó Empreendimentos Imobiliários Ltda
Direcional Capixaba - Vila Verde
Direcional Brasileia
Direcional SCP Meu Orgulho - Residencial Meu
Orgulho
SCP - Floramar Andrade Valadares
Arinos Empreendimentos - Chácaras das Oliveiras
Rio Branco Empreendimentos Imobiliários Ltda
Porto Acre Empreendimentos Imobiliários Ltda
Abaré Empreendimentos - Brisas do Parque
Anadia Empreendimentos Imobiliários Ltda
Direcional SCP Comim Meu Orgulho Infra
Germiniano Projeto 01 Empreendimentos Imobiliários
Direcional Santa Rosa Empreendimentos Imobiliários
Ltda
Direcional Santo Antônio Empreendimentos
Imobiliários Ltda
Direcional Arapiraca Empreendimentos Imobiliários
Ltda
Direcional Tarauaca - Tulip Inn Savassi Hotel
Direcional Belo Monte Empreendimentos Imobiliários
Ltda
Direcional Xapuri Empreendimentos Imobiliários Ltda
Direcional São Miguel Empreendimentos Imobiliários
Ltda
Direcional Igaci Empreendimentos Imobiliários Ltda
Direcional Alegre Empreendimentos Imobiliários Ltda
Direcional Cajueiro Empreendimentos Imobiliários
Ltda
Direcional SCP Boa Casa Empreendimentos - Boa
Casa
Direcional Riachos Empreendimentos Imobiliários Ltda
Statement of income
Assets
Net revenue
from sales and
services
Liabilities
Current
7,963
19,939
12,383
8,249
26,576
1,420
3,657
7,399
3,394
Noncurrent
3,022
17,673
548
3,699
Current
2,731
1,038
623
23,049
16
6
648
1,794
Noncurrent
2,717
1,358
2,989
2,300
24
339
Equity
5,537
35,216
12,383
4,637
3,527
1,404
1,351
7,275
4,960
15,143
9,809
36
8,852
6,277
5,579
14,030
8,466
303
422
4,000
466
308
71
-
2,367
2,524
1,039
5,928
79
1,572
44
99
6,231
3,901
7,598
5,370
44
-
13,024
13
9,956
22,381
53
20,819
8,479
29,621
-
810
12,830
IRPJ/CSL
L
Net
income
10,646
25,887
7,005
4,661
Gross
profit
5,310
10,929
3,986
1,135
(631)
(1,297)
(30)
(299)
(86)
149
(1)
1,161
(2)
-
(352)
(816)
(218)
(118)
4,476
8,815
1,161
(32)
3,469
931
12,980
1,476
135
215
815
438
12,485
8,422
23,258
1,284
13,948
-
7,045
519
6,706
-
(45)
(108)
(20)
(75)
(2)
-
(9)
(1)
(1)
-
(111)
(18)
(66)
-
6,881
393
(20)
(76)
(3)
6,640
-
-
3,081
-
-
-
-
-
-
-
1,615
-
-
-
-
-
-
55
5,005
27,959
3,474
1,607
-
-
(1)
-
-
(1)
-
400
4
12,796
410
30
-
-
-
-
-
-
940
7,189
13
24,610
-
22,000
940
7,189
2,623
-
-
-
42
-
42
1
6,514
-
6,514
1
-
-
-
-
-
-
1
16,078
-
3,212
12,800
1
66
-
-
-
-
-
-
(1) The Company does not act as the leading partner in these SCPs and SPEs, however, control is shared.
Ernst & Young Terco | 27
Financial
income/
expenses,
net
Operating
expenses,
net
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
7. Investments in subsidiaries and jointly controlled entities--Continued
Changes in investments in the 1st half of 2011 are as follows:
Company
Direcional Taguatinga - Total Ville Sector
Direcional Diamante - Bella Citta
Jonasa Empreendimentos Imobiliários Ltda - Weekend & Gran Vista
Direcional Flourita Empreendimentos Imobiliários Ltda
Onix Empreendimentos - Total Ville Manaus
Direcional SCP Comim Meu Orgulho Infra
Direcional Safira - Total Ville Marabá
Direcional SCP Manaus - Eliza Miranda
Direcional SCP Meu Orgulho - Residencial Meu Orgulho
Direcional Âmbar - Águas, Brisas & Cachoeiras do Madeira
Direcional SCP Jacundá - Equilibrium & Gran Prix
Seabra Empreendimentos - Total Ville Porto Velho
Direcional SCP Pró-Moradia II - Pró Moradis
Direcional Rubi - Allegro Residencial Club
Direcional Esmeralda - Gran Felicitá
Direcional SCP Cidadão XI - Cidadão XI
Capela Empreendimentos - Quintas da Península & Aquarela
Direcional Valparaiso - Dreen park
Andaraí Empreendimentos Imobiliários Ltda
Direcional TSC Jatuarana - Vita Bella
Direcional Opala - Gran Paradiso, Gran Ventura, Gran D'ouro
Direcional SCP Lago Sul - Lake View Resort
Direcional TSC Rio Madeira - Garden Club
Bujari Empreendimentos - Parque Verde
Azurita Empreendimentos Imobiliários Ltda
SCP Rio de Janeiro - Vila Borghese & San Filipo (1)
Alexandria Empreendimentos – Alegro (1)
Malaquita Empreendimentos Imobiliários Ltda
Direcional Igaci Empreendimentos Imobiliários Ltda
Bom Sucesso Incorporação (1)
Direcional Capixaba - Vila Verde
Direcional Brasileia (1)
Água Marinha Empreendimentos Imobilários Ltda.
SCP Direcional Ozias - Ozias Monteiro
Ernani Agrícola - Solares (1)
Direcional SCP Gran Riserva - Gran Riserva
Direcional Ametista Empreendimentos Imobiliarios Ltda
Coral Empreendimentos Imobiliários Ltda
Ernst & Young Terco | 28
Share (%)
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
40.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
50.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
45.0%
50.0%
100.0%
100.0%
28.0%
100.0%
50.0%
100.0%
100.0%
50.0%
100.0%
100.0%
100.0%
At beginning of year
12/31/2010
55,523
38,248
43,650
35,189
24,640
12,485
25,118
23,475
12,973
18,127
25,935
8,286
8,516
13,631
11,579
9,694
15,524
12,370
9,003
11,878
9,065
8,069
2,936
7,083
9,323
6,537
6,584
7,182
6,902
7,272
2,480
3,523
14,343
5,468
9,026
2,658
4,633
Capital subscription
(reduction)/Future
Capital Contributions
(AFAC)
(9,548)
15,171
11,693
2,729
3,125
9,345
(4,922)
(1,160)
12,157
5,376
1,076
5,957
5,907
795
4,343
14,898
1,188
2,478
(1,288)
6,193
3,066
4,143
807
(1,745)
872
(2,499)
1,213
2,137
(6,080)
(2,930)
1,931
170
Equity pick-up
15,594
4,824
4,738
7,885
4,343
7,685
8,658
1,433
17,921
(1,801)
5
3,869
3,346
3,210
4,788
1,824
48
(2,268)
682
799
1,848
(4,284)
(968)
2,491
(5)
19
869
(148)
(2)
1,606
2,642
5
(3,041)
(272)
(27)
199
(29)
Dividends/
amortization
(7,448)
(21,968)
(638)
(6,547)
(295)
(1,058)
(454)
(1,202)
-
At the end of 2Q/11
61,569
58,243
52,633
45,803
32,108
29,515
28,854
23,748
21,083
21,064
20,469
18,112
17,769
17,636
16,367
15,861
14,946
14,444
13,052
11,985
11,380
10,974
9,713
9,570
7,885
7,597
7,406
7,308
7,182
6,900
6,379
6,335
5,665
5,222
5,196
4,867
4,788
4,774
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
7. Investments in subsidiaries and jointly controlled entities--Continued
Company
Direcional Campinas Engenharia Ltda
Direcional TSC Jamari – Riviera
Direcional SCP Paradiso - Paradiso
Germiniano Projeto 01 Empreendimentos Imobiliários
Direcional Tarauaca - Tulip Inn Savassi Hotel
Direcional Santa Rosa Empreendimentos Imobiliários Ltda
Direcional Arapiraca Empreendimentos Imobiliários Ltda
U N A Empreendimentos - Boulevard Esplanada
Direcional SCP Ouro Preto - Gran Parque
Direcional Santo Antônio Empreendimentos Imobiliários Ltda
Alexandrita Empreendimentos
SCP Retiro dos Artistas - Mirante Campestre
Direcional SCP Alterosa - Residencial Alterosa
SCP Campinas - Vivere
Direcional Alegre Empreendimentos Imobiliários Ltda
Zircone Empreendimentos - Parque Ponta Negra
Abaré Empreendimentos - Brisas do Parque
Direcional Corretora de Imóveis
Direcional SCP Le Parc de France - Le Parce de France
Santa Margarida Empreendimentos Imobiliários Ltda (1)
Arinos Empreendimentos - Chácaras das Oliveiras
Direcionsl SCP Bairro Carioca - Bairro Carioca
Direcional Turquesa - Jardins Life Residence
Rubelita Empreendimentos - Al Mare (1)
Turmalina Empreendimentos Imobiliários Ltda
SPE Maura Valadares Gontijo (1)
Direcional SCP Maura Valadares - Barter
Maragoggi Empreendimentos - Cap D'Antibes
Direcional Feijó Empreendimentos Imobiliários Ltda
Direcional Silvestre Ltda (1)
Direcional Sodalita Empreendimentos Imobiliarios Ltda (1)
Direcional São Miguel Empreendimentos Imobiliários Ltda
Porto Acre Empreendimentos Imobiliários Ltda
Direcional SCP Santa Mônica - Villagio Santa Mônica
Direcional Oiti Empreendimentos Imobiliários Ltda
Direcional Canário Empreendimentos Imobilarios Ltda.
Direcional Jordão Empreendimentos Imobiliários Ltda (1)
SCP Edifício Chopin (1)
Diresomattos Gutierrez – Volare (1)
Anadia Empreendimentos Imobiliários Ltda
Ernst & Young Terco | 29
Share (%)
100.0%
100.0%
100.0%
50.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
50.0%
50.0%
100.0%
50.0%
100.0%
40.0%
100.0%
100.0%
100.0%
47.5%
100.0%
100.0%
100.0%
50.0%
100.0%
50.0%
100.0%
45.0%
100.0%
100.0%
50.0%
100.0%
100.0%
100.0%
50.0%
100.0%
50.0%
100.0%
50.0%
100.0%
At beginning of year
12/31/2010
4,596
4,693
22,327
4,213
1,605
3,076
3,471
2,630
3,621
1,613
3,956
6,215
5,102
2,620
6,831
814
2,348
3,618
2,118
1,475
12,008
4,267
639
2,670
2,753
2,492
1,349
453
1,287
939
215
4,392
1,048
993
702
504
3,072
438
Capital subscription
(reduction)/Future
Capital Contributions
(AFAC)
70
609
34
507
755
359
2
2,255
728
(1,685)
2,477
52
(6,763)
1,535
(1,379)
55
577
1,507
(10,107)
150
1,172
72
(1,205)
114
894
328
1,012
576
63
240
(16)
(2,450)
566
Equity pick-up
(607)
836
2,071
1,098
128
(293)
(1,176)
10
993
(154)
118
2,635
128
1,422
(131)
(1)
(11)
507
(2,408)
(1)
(242)
76
122
(1)
39
(48)
(534)
9
(1)
418
281
(102)
Dividends/
amortization
(196)
(18,711)
(100)
(1,065)
(1,500)
(1,173)
(125)
(850)
(1,000)
(3,308)
-
At the end of 2Q/11
4,666
4,499
4,452
4,247
4,183
3,831
3,830
3,730
3,649
3,575
3,508
3,475
3,470
3,448
2,790
2,703
2,477
2,391
2,369
2,117
2,041
2,014
1,901
1,884
1,810
1,650
1,624
1,614
1,462
1,386
1,287
1,267
1,179
1,126
1,057
1,056
941
906
903
902
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
7. Investments in subsidiaries and jointly controlled entities--Continued
Company
SCP Bartira Mourão - Bartira Mourão (1)
SCP Tereza Motta Valadares - Tereza Mota (1)
SCP Águas Claras II - Life Residence
SCP Direcional Petropolis - Petrópolis
Direcional Estrela Empreendimentos Imobiliários Ltda
Direcional SCP Boa Casa Empreendimentos - Boa Casa
Citrino Empreendimentos Imobiliários Ltda
Direcional Riachos Empreendimentos Imobiliários Ltda
Altana Empreendimentos Imobiliários Ltda
Jaspe Empreendimentos Imobiliarios
Direcional Belo Monte Empreendimentos Imobiliários Ltda
Direcional Água Branca Empreendimentos Imobiliários Ltda
SCP Valadares Gontijo - Spinoff (1)
SCP Serra da Canastra
Rio Branco Empreendimentos Imobiliários Ltda
Direcional SPL Ponciano Empreendimentos Imobiliários Ltda
Direcional Trincheiras Empreendimentos Imobiliários Ltda
Direcional São Primiano Empreendimentos Imobiliários Ltda (1)
Direcional Xapuri Empreendimentos Imobiliários Ltda
SCP Brasília - Thomaz Starzl
Direcional Cajueiro Empreendimentos Imobiliários Ltda
Direcional Assis Brasil Empreendimentos Imobiliários Ltda
SCP Cidade Nova - Provincia de Ravena
Direcional Água das Flores Empreendimentos Imobiliários Ltda
SCP Santa Inês
Direcional Carneiros Empreendimentos Imobiliários Ltda
Direcional Leopoldina Empreendimentos Imobiliários Ltda
SCP Cláudio Manoel – Chopin
SCP Quintas do Valqueire - Quintas do Valqueire
Direcional TSC Lauro Sodré
Direcional Coruripe Empreendimentos Imobiliários Ltda
SCP Green Village - Green Village
SCP Província Vicenza - Provincia de Vicenza
Direcional SCP Parque Prado - Club House
Total
Share (%)
50.0%
50.0%
50.0%
100.0%
100.0%
100.0%
100.0%
50.0%
50.0%
100.0%
50.0%
100.0%
50.0%
50.0%
100.0%
50.0%
100.0%
50.0%
100.0%
100.0%
100.0%
50.0%
50.0%
100.0%
50.0%
100.0%
100.0%
31.2%
10.0%
100.0%
100.0%
20.0%
10.0%
100.0%
At beginning of year
12/31/2010
1,011
938
662
523
306
66
222
205
313
140
135
30
84
1
63
52
17
24
8
5
2
(4)
715
661,609
Capital subscription
(reduction)/Future
Capital Contributions
(AFAC)
(1) The Company does not act as a lead partner in these SCPs and SPEs, however, control is shared.
Ernst & Young Terco | 30
(300)
35
157
504
751
13
164
217
203
1
4
127
111
98
50
8
71
30
12
12
4
42
82,016
Equity pick-up
(158)
(61)
130
(139)
(391)
(119)
(1)
(11)
(14)
2
(2)
1
(31)
252
93,125
Dividends/
amortization
(265)
(19)
(1)
16
(1.471)
(69,378)
At the end of 2Q/11
853
577
562
541
504
360
319
230
222
217
205
203
194
140
139
116
111
84
80
75
72
63
50
30
17
12
12
9
8
5
4
2
(4)
(462)
767,372
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
8. Property, plant & equipment
Changes in the Company’s PP&E in the period between June 2011 and December
2010 are as follows:
Company
a. Breakdown:
Machinery and equipment
Furniture and fixtures
Buildings
Vehicles
EDP equipment
Other assets
Total
Depreciation
rates
10%
10%
4%
20%
20%
-
Cost
12,320
736
6,872
810
1,436
130
22,304
6/30/2011
Depreciation
(1,440)
(201)
(402)
(629)
(609)
(48)
(3,329)
PP&E, net at
12/31/2010
11,483
521
5,463
236
794
91
18,588
Net
10,880
535
6,470
181
827
82
18,975
b. Changes:
Cost at
12/31/2010
12,307
686
5,740
784
1,264
126
20,907
Cost
Machinery and equipment
Furniture and fixtures
Buildings
Vehicles
EDP equipment
Other assets
Depreciation
Machinery and equipment
Furniture and fixtures
Buildings
Vehicles
EDP equipment
Other assets
Property, plant & equipment, net
Ernst & Young Terco | 31
(-)Depreciation
at 12/31/2010
(823)
(165)
(277)
(548)
(470)
(36)
(2,319)
18,588
Addition
s
13
50
1,132
26
172
4
1,397
Depreciation
for the period
(617)
(36)
(125)
(81)
(139)
(12)
(1,010)
387
Dispos
als
-
Depreciation
write-offs
-
Cost at
6/30/2011
12,320
736
6,872
810
1,436
130
22,304
(-)Depreciation
at 6/30/2011
(1,440)
(201)
(402)
(629)
(609)
(48)
(3,329)
18,975
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
8. Property, plant & equipment--Continued
Consolidated
a. Breakdown:
Machinery and equipment
Furniture and fixtures
Buildings
Vehicles
EDP equipment
Sales booth
Software
Other assets
Total
(a)
Depreciation
rates
10%
10%
4%
20%
20%
(a)
20%
-
6/30/2011
Cost
Depreciation
17,545
(2,187)
2,618
(729)
(315)
6,872
2,228
(999)
2,589
(876)
16,126
(5,943)
96
(9)
(112)
598
48,672
(11,170)
PP&E, net at
12/31/2010
15,387
1,570
5,463
1,136
1,526
9,288
260
34,630
Net
15,358
1,889
6,557
1,229
1,713
10,183
87
486
37,502
Sales booths are depreciated according to the flow of sales and expected sales of each venture.
b. Changes:
Cost at
12/31/2010
16,733
1,860
5,740
1,984
2,187
14,848
336
43,688
Cost
Machinery and equipment
Furniture and fixtures
Buildings
Vehicles
EDP equipment
Sales booth
Software
Other assets
Depreciation
Machinery and equipment
Furniture and fixtures
Buildings
Vehicles
EDP equipment
Sales booth
Software
Other assets
Property, plant & equipment, net
(-)Depreciation
at 12/31/2010
(1,346)
(290)
(277)
(848)
(661)
(5,560)
(76)
(9,058)
34,630
Addition
s
812
758
1,132
244
402
1,278
96
262
4,984
Depreciation
for the period
(841)
(439)
(38)
(151)
(215)
(383)
(9)
(36)
(2,112)
2,872
Dispos
als
-
Depreciation
write-offs
-
Cost at
6/30/2011
17,545
2,618
6,872
2,228
2,589
16,126
96
598
48,672
(-)Depreciation
at 6/30/2011
(2,187)
(729)
(315)
(999)
(876)
(5,943)
(9)
(112)
(11,170)
37,502
The company and its subsidiaries have 5 finance lease contracts for machinery,
equipment and vehicles.
The book value of PP&E held under finance lease commitments at June 30, 2011
was R$4,080. In the first half of 2011, there were no additions to PP&E of items
under finance lease commitments, which are guaranteed by the subject matters of
the contracts.
Ernst & Young Terco | 32
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
9. Loans and financing
Description
Financing for Construction
Jonasa – Weekend / Gran Vista (e)
Direcional Âmbar – Águas do Madeira / Brisas do Madeira (h)
Direcional Taguatinga – Total Ville (b)
Direcional Engenharia S.A. – Gran Prix / Equilibrium (e)
Direcional TSC Rio Madeira – Garden Club (e)
Direcional Engenharia S.A. – Paradiso Club (b)
Direcional Rubi – Allegro (h)
Ônix – Paraíso / Harmonia (b)
Direcional Valparaíso – Dream Park (h)
Direcional Safira – Total Ville Marabá (b)
Direcional Diamante – Bella Cittá (b)
Direcional Opala – Gran Paradiso / Gran Ventura (b)
Direcional TSC Jamari – Riviera (h)
Direcional TSC Jatuarana – Vita Bella (b)
Direcional Safira – Total Ville Itacaiúnas (h)
Flourita – Jardins Life (e)
Rubelita - Al Mare (e)
Alexandrita – Varandas Fazendas da Serra (d)
Botelho – Club House (e)
Bujari – Parque Verde (d)
Direcional Esmeralda – Gran Felicitá (e)
Direcional Engenharia S.A. – Eliza Miranda (h)
Alexandria – Conf. Edifício Allegro (a)
Direcional SPL Brasiléia – Total Ville Macaé (b)
Direcional Patrimar Maragogi – Cap Dantibes (e)
Ernani Agricola – Solares (f)
Aterpa – Vila Borguese (e)
Direcional Engenharia S.A. – SCP Campinas/Vivere (h)
Diresomattos – Volare (f)
Other
Securitization
Direcional Engenharia S.A. – Plaza das Águas (g)
Direcional Engenharia S.A. – Lake View (c)
Other
FINAME and equipment finance lease
Direcional Engenharia S.A. (e)
Direcional Engenharia S.A. (h)
Working capital
Direcional Engenharia S.A. (a)
Direcional Engenharia S.A. (h)
Current
Non-current
Ernst & Young Terco | 33
Company
6/30/2011 12/31/2010
Consolidated
6/30/2011 12/31/2010
-
-
57,793
41,614
30,131
26,781
24,390
19,996
13,865
13,743
12,746
11,850
11,663
11,660
9,652
8,019
7,498
7,264
5,919
5,745
5,640
3,946
3,339
2,313
1,960
1,816
1,310
333
283
20
15
341,304
35,448
33,440
10,392
35,981
17,420
20,957
6,770
6,502
8,954
5,479
9,897
5,806
3,879
7,310
3,053
4,399
10,369
226,056
137
137
299
299
137
37,079
37,216
299
46,494
50
46,843
2,437
6,712
9,149
2,634
6,248
8,882
2,437
6,712
9,149
2,634
6,248
8,882
20,661
300
20,961
20,593
20,593
20,661
300
20,961
20,593
20,593
3,436
26,811
30,247
3,870
25,904
29,774
180,633
227,997
408,630
121,643
180,731
302,374
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
9. Loans and financing--Continued
The counterparties related to loans and financing are: (a) Banco Bradesco; (b)
Federal Savings and Loans Bank (CEF), (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.; (h) Banco Santander S.A.; (i) Banco ABN Amro Real.
The Company loans and financing are divided into four main types, namely:
Financing for Construction: This type of loan is designed to fund projects during their
construction. Interest rates applicable to these loans range, according to the
operation, from 8.3% to 12% p.a., plus restatement by the Referential Rate (TR).
These transactions are secured by mortgages of real estate of the respective projects;
FINAME and Lease: These types of loans are intended to finance investments in
machinery and equipment. Interest rates applicable to these loans are: (i) for FINAME,
according to the operation, fixed interest of 4.5% to 7% p.a. or variable interest
margins on the Long-Term Interest Rate (TJLP) between 2.94% and 6.00% p.a.; and
(ii) for Lease, according to the operation, interest from 2.55% to 13.79% p.a. These
operations are guaranteed by the machinery and equipment items purchased with the
loans;
Working Capital: This type of loan is intended to finance the Company’s working
capital requirements. Interest rates applicable to these loans vary according to the
operation, with margins on the CDI rate between 1.75% and 2.75% p.a. There are no
guarantees tied to this type of loan.
Securitization of Receivables: in June 2010, the Company took out from CIBRASEC Companhia Brasileira de Securitização mortgage-backed securities for “Lake View
Resort” project. In this operation, the Company securitized 176 contracts for a total of
R$54,314.The receivables assigned will be adjusted by the INCC (National Index of
Civil Construction) until the certificate of occupancy is granted, the registration of
which is expected for July/2011, and by the IGP-M (General Market Price Index
published by Getulio Vargas Foundation) + 12% p.a. onwards until maturity. The
outstanding debt balance of the operation will be adjusted by the IGP-M (General
Market Price Index, Getulio Vargas Foundation) + 12% p.a. until maturity. The
Company is jointly liable to and will be the principal payer of all obligations assumed in
this transaction, and the joint liability shall remain in force until the actual receipt by
CIBRASEC of the full amount securitized. Accordingly, the Company did not write off
the accounts receivable related to the securitized project.
Ernst & Young Terco | 34
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
9.
Loans and financing--Continued
The Company’s non-current amount of loans matures as follows:
Period
July/12 to June/13
July/13 to June/14
July/14 to June/15
From July/15 onwards
Total
6/30/2011
2,893
22,280
1,512
126
26,811
12/31/2010
2,554
21,921
992
437
25,904
The non-current amount of loans (consolidated) matures as follows:
Period
July/12 to June/13
July/13 to June/14
July/14 to June/15
From July/15 onwards
Total
6/30/2011
143,478
55,386
5,492
23,641
227,997
12/31/2010
59,102
101,894
19,101
634
180,731
10. Labor obligations
Description
Salaries payable
Charges payable
Accrued vacation pay
Profit sharing
Other
Total
Company
6/30/2011
12/31/2010
750
844
591
572
2,089
1,028
2,065
6,000
194
256
5,689
8,700
Consolidated
6/30/2011
12/31/2010
6,957
6,794
5,490
4,829
11,064
5,442
4,772
10,120
432
398
28,715
27,583
Company
6/30/2011
12/31/2010
1
15
6
58
108
97
115
170
Consolidated
6/30/2011 12/31/2010
5,536
5,670
25,454
21,928
18,602
15,898
9,918
8,494
1,538
2,304
61,048
54,294
11. Labor obligations
Labor obligations
PIS
COFINS
IRPJ
CSLL
Other
Total
Current
Non-current
Ernst & Young Terco | 35
115
-
170
-
52,015
9,033
43,268
11,026
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
12. Property commitments payable
The accounts payable arising from the acquisition of land for development of real
estate projects are as follows:
Project
Direcional Taguatinga - Total Ville Sector
Direcional Safira - Marabá Total Ville
Água Marinha Empreendimentos Imobilários Ltda.
Direcional Santo Antônio Empreendimentos Imobiliários Ltda.
Direcional Água Branca Empreendimentos Imobiliários Ltda
Zircone Empreendimentos - Parque Ponta Negra
Seabra Empreendimentos - Total Ville Porto Velho
Direcional Riachos Empreendimentos Imobiliários Ltda.
Direcional Estrela Empreendimentos Imobiliários Ltda
Abaré Empreendimentos - Brisas do Parque
Direcional Anadia Empreendimentos Imobiliários Ltda.
Direcional São Miguel Empreend. Imobiliários Ltda
Direcional Rio Branco Empreendimentos Imobiliários Ltda.
Direcional Ambar – Águas, Brisas e Cachoeira do Madeira
Direcional Santa Rosa Empreendimentos Imobiliários Ltda.
Other
Total
Current
Non-current
Consolidated
6/30/2011
12/31/2010
25,153
25,153
22,884
23,018
21,275
23,049
19,212
20,712
18,000
15,394
16,007
9,427
9,544
8,000
16,000
6,500
5,689
5,370
5,370
4,774
3,900
3,900
1,856
6,455
1,700
9,956
5,860
13,897
174,994
173,061
107,974
67,020
89,174
83,887
Balances are adjusted based on contractual rates, substantially represented by the
Interbank Deposit Certificates (CDI).
Ernst & Young Terco | 36
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
13. Advances from customers
Refers to (i) commitment to deliver finished, completed real estate venture units from
acquisition through barter of land units for development; (ii) advances from customers
deriving from sales of real property units:
Advances from customers – physical barter of land (i)
Direcional Tarauacá – Tulip Inn Savassi Hotel
Direcional Alegre Empreendimentos Imobiliários Ltda.
Azurita Empreendimentos Imobiliários Ltda
Onix Empreendimentos - Total Ville Manaus
Direcional Xapuri Empreendimentos Imobiliários Ltda.
Direcional Ametista Empreendimentos Imobiliários. Ltda.– Brasex
Direcional Coruripe Empreendimentos Imobiliários Ltda
Citrino Empreendimentos Imobiliários Ltda. – Altíssimo
Arinos Empreendimentos - Chácaras das Oliveiras
Direcional Porto Acre Empreendimentos Imobiliários Ltda.
Direcional Santa Rosa Empreendimentos Imobiliários Ltda
Direcional Construtora Valparaiso - Dream Park
Direcional Esmeralda Empreendimentos Imobil. Ltda. - Gran Felicita
Direcional Cajueiro Empreendimentos Imobiliários Ltda.
Direcional Rubi Empreendimentos Imobil. Ltda - Allegro Residencial
Direcional Arapiraca Empreendimentos imobiliários Ltda.
Direcional Abaré Empreendimentos Imobiliários Ltda.
Direcional Âmbar Empre. Imobil. Ltda- Águas e Brisas do Madeira
Coral Empreendimentos Imobiliarios Ltda
Direcional Assis Brasil Empreendimentos Imobil. Ltda. - Elton Ville
Direcional Patrimar Maragogi Empreendimentos – Cap D’Antibes
Direcional Trincheiras Empreendimentos Imobiliários Ltda
Direcional Leopoldina Empreendimentos Imobiliarios Ltda
Direcional Carneiros Empreendimentos Imobiliarios Ltda
Other
Advances from customers – due to receipts (ii)
Rubelita Empreendimentos - Al Mare
Alexandria Empreendimentos Imobiliários Ltda.– Allegro
Una Empreendimentos – Boulevard Esplanada
Direcional Capixaba - Vila Verde
Total
Current
Non-current
6/30/2011
27,959
22,000
16,031
11,804
12,797
10,967
12,000
9,595
8,629
8,633
7,500
7,325
6,032
6,514
5,874
8,505
4,190
3,600
3,280
2,006
14,690
9,619
6,923
6,930
12/31/2010
27,959
22,000
16,031
13,832
12,798
10,762
9,594
8,653
8,633
7,923
7,338
6,514
3,526
5,005
5,721
5,104
3,600
3,280
2,147
11,674
1,943
120
235,466
90
205
120
192,509
68,160
167,306
36,749
155,760
14. Accounts payable
Description
Payables to customers
Payables to partners
Investment amounts (a)
Payables to legal entities
Accounts payable for investment acquisitions
Other
Total
Current
Non-current
Company
6/30/2011
12/31/2010
6,726
6,040
450
450
6,000
8,476
443
743
13,619
15,709
13,619
-
15,709
-
Consolidated
6/30/2011
12/31/2010
9,538
6,040
2,164
13,341
44,300
4,633
6,000
8,476
4,454
1,418
71,089
29,275
71,054
35
29,275
-
(a) On April 20, 2011 the Company entered into a commercial arrangement with an investing partner for
project developments in 4 land units located in the Federal District (DF) in exchange for R$ 44,300
received cash.
Ernst & Young Terco | 37
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
15. Property development operations
15.1. Appropriated income (loss) on real property sales (consolidated)
Project
Direcional Taguatinga - Total Ville Sector
Jonasa Empreendimentos – Weekend & Gran Vista
Ônix Empreendimentos – Total Ville Manaus
Direcional Diamante – Bella Cita
Direcional Safira - Total Ville Marabá
Direcional Flourita Empreendimentos Imobiliarios
Direcional Âmbar - Águas, Brisas e Cachoeira do Madeira
Seabra Consorcio - Total Ville Porto Velho
Direcional Tarauaca - Tulip Inn Savassi Hotel
Direcional Rubi - Allegro Residencial
Direcional TSC Rio Madeira - Garden Club
Direcional Esmeraldas - Gran Felicitá
Direcional Jatuarana – Vita Bella
Direcional SCP - Jacunda – Equilibrium & Gran Prix
Direcional Opala – Gran Paradiso, Gran Ventura & Gran D’ouro
Bujari Empreendimentos - Parque Verde
Zircone Empreendimentos - Parque Ponta Negra
Direcional SCP Parque Prado - Club House
Direcional TSC Jamari - Riviere
SCP Direcional Manaus - Eliza Miranda
Direcional Brasileia Empreendimentos Imobiliários
Direcional Valparaiso – Dreen Parque
Direcional Capixaba – Villa Verde
Alexandrita – Fazenda Varandas da Serra
Una Empreendimentos – Boulevard Esplanada
Direcional Ametista Empreendimentos Imobiliários Ltda
Abaré Empreendimentos Imobiliários Ltda
SCP Direcional Paradiso - Paradiso e Paradiso Club
Direcional SCP Lago Sul - Lake View Resort
Maragoggi Empreendimentos - Cap D'Antibes
Ernane Agricola - Solares
SCP Retiro dos Artistas - Mirante Campestre
Arinos Empreendimentos - Chácaras das Oliveiras
Ernst & Young Terco | 38
6/30/2011
6/30/2010
Revenue from units ( - ) Cost of units Revenue from units
( - ) Cost of units
sold
sold
sold
sold
49,042
(30,333)
23,392
(14,472)
44,379
(32,413)
25,645
(16,470)
26,649
(20,621)
10,865
(7,354)
23,383
(16,658)
10,405
(7,443)
21,573
(12,513)
8,564
(5,384)
19,991
(10,437)
4,314
(2,421)
18,818
(17,879)
16,762
(12,142)
15,393
(10,425)
2,628
(1,850)
13,886
(10,520)
12,734
(8,494)
4,462
(2,746)
12,733
(13,034)
12,420
(8,277)
11,321
(5,598)
3,845
(3,205)
9,915
(8,259)
3,654
(2,599)
9,284
(8,463)
27,247
(17,922)
9,027
(6,638)
7,282
(4,386)
8,658
(5,670)
3,179
(2,226)
8,336
(4,887)
5,825
(4,392)
9,997
(7,771)
5,745
(4,332)
2,309
(1,472)
5,407
(2,683)
7,565
(4,549)
5,228
(3,243)
5,136
(6,217)
8,717
(6,106)
4,719
(2,184)
4,691
(5,634)
3,576
(2,358)
4,266
(1,781)
4,235
(2,859)
3,175
(1,985)
2,695
(1,682)
19,638
(10,595)
2,184
(2,457)
18,986
(9,373)
1,512
(1,298)
3,372
(1,507)
1,092
(1,162)
2,954
(1,516)
875
(826)
2,487
(2,647)
871
(519)
-
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
15. Property development operations--Continued
15.1. Appropriated income (loss) on real property sales (consolidated)--Continued
Project
Direcional Silvestre Empreendimentos Imobiliários Ltda
Direcional SCP Santa Mônica – Villagio Santa Monica
Alexandria Empreendimentos - Alegro
Direcional SCP Edifício Chopin - Barter
SCP Direcional Campinas - Vivere
Direcional SCP Le Parc de France – Le Parc de France
Edificio Volare Gutierrez - Diresomattos
Direcional SCP Ouro Preto - Gran Parque
Direcional SCP Águas Claras – Life Residence
Direcional SCP Cidade Nova – Provincia de Ravena
Direcional SCP Brasilia – Thomaz Starzl
SCP Direcional Serra da Canastra
SCP Rio - Vila Borghese & San Filippo
SCP Claudio Manoel - Chopin
Maura Valadares Gontijo – Maura Valadares
SCP Bartira Mourão - Bartira Mourão
SCP Tereza Mota - Centauro
Rubelita Empreendimentos - Al Mare
Edifício Valadares Gontijo (Spin-off)
SCP Direcional Gran Riserva - Gran Riserva
Direcional SCP - Cidadão XI - Cidadão XI
Direcional Corretora de Imóveis
Direcional SCP - PRO MORADIA II – Pró Moradia
Direcional Oiti Empreendimentos Imobiliários Ltda
Direcional SCP Petropolis - Petropolis
Direcional SCP - Meu Orgulho – Meu Orgulho
Direcional SCP Ozias – Ozias Monteiro
Direcional SCP Comim meu orgulho - Infra
Direcional SCP Boa Casa – Boa Casa
Direcional SCP Alterosa - Residencial Alterosa
Direcional SCP Bairro Carioca - Bairro Carioca
Direcional Engenharia S.A.
Other
Total
Ernst & Young Terco | 39
6/30/2011
6/30/2010
Revenue from units ( - ) Cost of units Revenue from units
( - ) Cost of units
sold
sold
sold
sold
812
(684)
646
(1,136)
4,492
(2,112)
584
(83)
3,908
(2,757)
560
359
(553)
5,513
(3,465)
122
(266)
2,109
(1,191)
110
(435)
1,770
(1,197)
65
(43)
1,223
(1,656)
41
(60)
(290)
(28)
(10)
(24)
(7)
(73)
4,685
(3,093)
(1)
(196)
(40)
(985)
2,511
(1,203)
(51)
777
(368)
728
(479)
(580)
4,584
(2,395)
(125)
42
197
(42)
(176)
120
5,172
(5,351)
8,947
(7,151)
2,148
(1,448)
2,309
(108)
1,590
11,760
(8,248)
2,568
(1,784)
96
(64)
1,908
(1,039)
(162)
5,817
(4,600)
64,298
(45,156)
1,246
(849)
(3,029)
15,482
(10,160)
16,728
(8,873)
10
(5)
604
(987)
4,060
(3,013)
1,782
(1,257)
3,898
4,822
(211)
112
(71)
490,258
(348,973)
317,151
(202,335)
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
15. Property development operations--Continued
15.2. Net operating revenue
Gross sales revenue
Gross service revenue
Taxes levied on sales
Consolidated
6/30/2011
6/30/2010
375,775
281,561
114,482
35,590
(11,545)
(9,236)
478,712
307,915
Taxes on sales and services consist of Social Contribution Taxes on Gross
Revenue for Social Integration Program (PIS) and for Social Security Financing (PIS), levied at 1.65% and 7.6%, respectively, on revenues earned under the
noncumulative taxation regime, 0.65% and 3% on revenues earned under the
cumulative taxation regime, 0.56% and 2.57% on revenues earned under the
special taxation regime applied to construction companies and property
developers, and 0.09% and 0.44% on revenues related to the My Home, My Life
(PMCMV) program.
15.3. Expenses by nature
The Company has elected to present the consolidated statement of income by
function and discloses its details by nature as follows:
Cost of properties sold
Cost of services rendered
Selling expenses
General and administrative expenses
Raw materials and materials for use and consumption
Personnel expenses
Depreciation and amortization
Third-party services
Electricity, water and telephone
General selling expenses
Sales commission
Other
Consolidated
6/30/2011
6/30/2010
(270,923)
(181,871)
(78,048)
(20,464)
(12,466)
(8,414)
(49,003)
(23,378)
(410,440)
(234,127)
(226,629)
(82,088)
(2,112)
(69,811)
(8,033)
(8,550)
(2,199)
(11,018)
(410,440)
(127,989)
(46,825)
(2,468)
(30,503)
(2,612)
(2,780)
(716)
(20,234)
(234,127)
15.4. Contracted real property sales (consolidated)
The budgeted costs to be incurred in units sold under construction, and the
revenue from sales of properties to be appropriated from projects in progress
not reflected in the financial statements are as follows:
Ernst & Young Terco | 40
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
15. Property development operations--Continued
15.4. Contracted real property sales (consolidated)
Project
Abaré Empreendimentos - Brisas do Parque
Alexandria Empreendimentos - Alegro
Alexandrita Empreendimentos – Fazenda
Varandas da Serra
Direcional Âmbar - Águas do Madeira
Direcional Âmbar – Brisas do Madeira
Arinos Empreendimentos - Chácaras das Oliveiras
Bujari Empreendimentos - Parque Verde
Direcional SCP Cidadão XI - Cidadão XI
Direcional Diamante – Bella Cita
Direcional Diamante – Bella Cita
Direcional Ametista Empreendimentos imob. Ltda
Direcional Brasileia Empreendimentos Imob. Ltda
Direcional Capixaba - Vila Verde
Direcional SCP Comim meu orgulho - Infra
Direcional Esmeraldas - Gran Felicitá Step 1
Direcional Esmeraldas – Gran Felicitá Step 2
Direcional Flourita Empreendimentos Imob. Ltda
Direcional Jatuarana – Vita Bella
SCP Direcional Meu Orgulho Meu Orgulho
Direcional Rubi - Allegro Residencial Step 1
Direcional Rubi – Allegro Residencial Step 2
Direcional Safira – Total Ville Marabá – Step 1
Direcional Safira – Total Ville Marabá Step 2
Direcional silvestre Empreendimentos
Direcional Tarauaca Empreendimentos Imob. Ltda
Direcional TSC Jamari – Riviera
Direcional Valparaiso – Dreen Parque
Diresomattos Gutierrez - Volare
Ernane Agricola - Solares
Jonasa Empreendimentos – Weekend Step 1
Jonasa Empreendimetnos – Gran Vista Step 2
Maragogi Empreendimentos – Cap D’Antibes
Maura Valadares – Maura Valadares
Ônix Empreendimentos – Total Ville Manaus Step
1
Ônix Empreendimentos – Total Ville Manau Step 3
Ônix Empreendimentos – Total Ville Manau Step 6
Direcional Opala – Gran Paradiso Step 1
Direcional Opala – Gran Vista Step 2
Direcional Opala – Gran D’ouro Step 3
SCP Direcional Pro moradia – Pró Moradia
Direcional SCP Alterosa - Residencial Alterosa
Direcional TSC Rio Madeira - Garden Club
Rubelita Empreendimentos - Al Mare
Direcional SCP Campinas - Vivere
Direcional SCP - Jacunda - Equilibrium
Direcional SCP - Jacunda - Gran prix
SCP Direcional Lago Sul – Lake View Resort
Direcional SCP Manaus - Eliza Miranda Step 5
Direcional SCP Ouro Preto - Gran Parque
Direcional SCP Santa Mônica - Villagio Santa
Mônica
SCP - Tereza Mota – Tereza Mota
Direcional SCP Bairro Carioca - Bairro Carioca
Direcional SCP Boa Casa – Boa Casa
Ernst & Young Terco | 41
Contracted sales
to be incurred
22,309
-
6/30/2011
(-) Construction
commitments to be
incurred for
contracted sales
(10,282)
-
6/30/2010
(-) Construction
Contracted
commitments to be
sales to be
incurred for
incurred
contracted sales
797
(530)
5,906
(4,593)
13,902
(8,538)
15,490
8,666
9,918
9,714
4,253
13,271
13,459
17,470
66,504
10,630
9,614
24,100
33,724
6,839
61,536
39,498
17,335
3,525
8,939
8,841
10,502
2,856
4,303
42,371
9,099
-
(9,562)
(4,833)
(6,573)
(7,353)
(2,839)
(8,063)
(8,285)
(11,203)
(28,303)
(5,570)
(5,276)
(11,687)
(16,522)
(5,042)
(43,005)
(23,306)
(9,578)
(2,009)
(5,429)
(7,321)
(7,367)
(1,883)
(2,493)
(24,818)
(5,012)
-
13,181
16,953
18,540
24,727
32,280
8,401
41,370
48,384
8,688
13,261
147,971
46,204
8,935
29,526
8,255
8,469
938
1,767
57,569
50,219
5,875
1,327
(8,570)
(8,791)
(12,742)
(16,927)
(20,747)
(5,525)
(21,014)
(28,518)
(4,243)
(8,446)
(100,693)
(27,007)
(4,742)
(17,284)
(5,136)
(5,624)
(600)
(1,201)
(32,115)
(27,805)
(2,491)
(717)
-
-
26,808
(17,013)
23,014
5,723
3,838
87,573
67,620
2,895
2,125
-
(13,788)
(3,283)
(2,354)
(60,346)
(50,183)
(2,263)
(1,907)
-
26,155
8,784
1,821
18,399
97,985
30,855
3,312
325
2,963
17,241
6,059
111
(16,171)
(5,283)
(1,279)
(10,288)
(67,229)
(21,394)
(2,003)
(192)
(1,928)
(9,633)
(2,563)
(70)
-
-
4,780
(2,296)
112,368
4,346
(79,250)
(7,101)
38
-
(27)
-
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
15. Property development operations--Continued
15.4. Contracted real property sales (consolidated)--Continued
Project
Seabra Empreendimentos – Total Ville Porto velho Step 1
Seabra Empreendimentos – Total Ville Porto Step 2
Direcional Taguatinga – Total Ville Sector Step 1
Direcional Taguatinga – Total Ville Sector Step 2
Direcional Taguatinga – Total Ville Sector Step 3
Direcional Taguatinga – Total Ville Sector Step 4
Direcional Taguatinga – Total Ville Sector Step 5
Direcional Taguatinga – Total Ville Sector Step 6
Direcional Taguatinga – Total Ville Sector Step 7
Una Empreendimentos – Boulevard Esplanada
Zircone Empreendimentos – Parque Ponta Negra Step 1
Zircone Empreendimentos – Parque Ponta Negra Step 2
Total
Contracted
sales to be
incurred
21,658
27,464
6,581
17,851
21,665
26,053
31,621
33,598
48,046
34,965
17,153
1,076,829
6/30/2011
(-) Construction
commitments to be
incurred for
contracted sales
(14,546)
(16,229)
(3,572)
(9,304)
(13,116)
(16,651)
(21,481)
(19,420)
(20,012)
(20,362)
(9,978)
(663,353)
6/30/2010
(-) Construction
Contracted
commitments to be
sales to be
incurred for
incurred
contracted sales
38,056
(25,559)
7,912
(4,517)
28,047
(16,659)
22,191
(13,031)
17,960
(13,293)
967,341
(600,434)
The amounts previously indicated refer to commitments executed by and
between the parties and, additionally, the adjustments to present value, taxes,
restated accounts receivable and changes, if any, in the budgeted cost were not
considered.
16. Provision for tax, labor and civil contingencies
In the ordinary course of business, the Company and its subsidiaries are exposed to
certain contingencies and risks related to tax, labor and civil claims.
Based on the assessment of risks identified and as advised by its legal counsel, the
Company set up a provision for contingencies to meet any demands.
The amounts involved in these claims at June 30, 2011 were as follows:
Tax
Balance at December 31, 2010
Reversed in the year
Balance at June 30, 2011
51
27
78
Company
Labor
1,190
304
1,494
Civil
1,269
95
1,364
Tax
Consolidated
Labor
51
1,190
27
343
78
1,533
The Company is involved in other tax, labor and civil claims arising from the ordinary
course of business which chances of loss, in the opinion of Company’s management
and legal counsel are assessed as possible, in the amounts of approximately R$2,304
(labor), R$9 (tax) and R$1,924 (civil). Accordingly, no provision was set up to settle
any unfavorable outcome of such claims.
Ernst & Young Terco | 42
Civil
1,269
95
1,364
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
17. Equity
17.1. Capital
On March 19, 2010, May 11, 2010 and October 29, 2010 the Board of Directors
approved an increase in the Company’s capital in the amounts of R$727,000,
R$131,000 and R$77,000, respectively, through issuance of 606,245 shares,
109,731 shares, and 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 this
issue the Company’s capital was increased to R$324,247.
On February 9, 2011 the Board of Directors approved a capital increase of
R$171,600 through issuance of 20,800 million shares at R$11.00. After this
issue the capital was increased to R$495,848. On April 25, 2011 the Board
approved a capital increase of R$484,000, 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$496,331.
The authorized capital on the date of disclosure of the financial statements is
R$1,200,000.
17.2. Capital reserve by issue of shares
In 2009, the Company made a public offering and the unit value per share was
R$10.50, totaling R$273,999 gross. Of this amount, the Board of Directors
determined allocation of the amount of R$205,499 to the “Capital reserve”
account by issue of shares. As discussed in Note 1, in 2011 the Company held
one more public offering and the unit value per share was R$11.00, totaling
R$308,000 gross. Of this amount, the Board of Directors determined allocation
of the amount of R$57,200 to the “Capital reserve” account by issue of shares.
17.3. Capital reserve by grant of stock options
As mentioned in Note 20, the Company recognizes under this heading the
services received under a stock-option-based payment transaction. Concurrent
with the exercise of stock options, the reserve will be transferred to retained
earnings.
17.4. Earnings per share
The Company calculates earnings per share using the weighted average
number of total common shares outstanding in the period corresponding to P&L,
pursuant to accounting pronouncement CPC 41 (IAS 33).
Ernst & Young Terco | 43
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
17. Equity--Continued
17.4. Earnings per share-Continued
The following table presents calculation of earnings per share for the six-month
periods ended June 30, 2011 and 2010:
Base earnings per share
Numerator:
Net income for the six-month period
Denominator:
Weighted average number of shares
6/30/2011
6/30/2010
75,903
74,531
149,755,395
133,261,398
0.51
0.56
6/30/2011
6/30/2010
75,903
74,531
149,755,395
1,951,533
151,706,928
133,261,398
4,217,370
137,478,768
0.50
0.54
Base earnings per share, net – R$
Diluted earnings per share
Numerator:
Net income for the six-month period
Denominator:
Weighted average number of shares
Adjustment for stock option (1)
Weighted average number of shares (diluted)
Base earnings per share, net – R$
(1) Represented by in-the-money outstanding options, as per the stock options plan set out in
Note 21.
18. Financial income/expenses
Financial income
Financial investment yields
Monetary restatement and contractual
interest
Other income
Financial expenses
Interest expenses
Banking expenses
Monetary variation losses
Other expenses
Financial income/expenses
Ernst & Young Terco | 44
Company
6/30/2011
6/30/2010
12,232
9,570
Consolidated
6/30/2011
6/30/2010
14,683
11,030
6,744
18,976
2,106
1
11,677
7,971
455
23,109
2,959
3,552
17,541
(2,490)
(11)
(38)
(177)
(2,716)
(117)
(17)
(35)
(4)
(173)
(2,553)
(733)
(4,625)
(538)
(8,449)
(140)
(736)
(449)
(53)
(1,378)
16,260
11,504
14,660
16,163
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
19. Income taxes
The breakdown of income and social contribution tax expenses in the six-month
periods ended June 30, 2011 and June 2010 shows the timing difference between the
cash basis of accounting, which is used by the SCPs and SPEs taxed based on Profit
computed as a percentage of the Company’s gross revenue and by RET (Special
Taxation Regime), and the provision for tax on receivables. This difference is
summarized as follows:
Income before IRPJ and CSLL
IRPJ and CSLL at aggregate 34% rate
Equity pick-up
Unrecognized temporary differences
Net effect of subsidiaries taxed under special
taxation regime or based on profit computed
as a percentage of gross revenue
IRPJ and CSLL expense
Company
6/30/2011
6/30/2010
75,903
74,531
(25,807)
(25,341)
93,125
81,272
(67,318)
(55,931)
-
-
Consolidated
6/30/2011
6/30/2010
87,978
91,006
(29,913)
(30,942)
(67,318)
(55,931)
86,415
(10,816)
79,071
(7,802)
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 vis-à-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 acquisition of machinery and equipment, all in ordinarily
observable market conditions.
The Company did not operate with derivatives in the period from December 2010 to
June 2011. The book values of financial instruments at the balance sheet date,
substantially represented by financial investments and financing lines approach their
estimated market values, since these are floating-rate transactions.
Interest rate risk
The Company is exposed to floating interest rates, substantially the CDI rate, which
remunerates its financial investments in Bank Deposit Certificates, Repurchase
Agreements backed by Debentures contracted in reais (R$), interest on loans taken
out from the National Housing System pegged to the Referential Rate (TR), interest on
loans for acquisition of machinery and equipment from BNDES (FINAME) pegged to
the Long-Term Interest Rate (TJLP), CDI-pegged interest on loans as a source of
working capital, and interest on securitization of receivables pegged to the IGP-M or
INCC.
Ernst & Young Terco | 45
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
20. Financial instruments--Continued
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.
Currency risk
At June 30, 2011, the Company had no debts or receivables denominated in foreign
currency. Additionally, none of the Company’s significant costs is denominated in
foreign currency.
Credit risk
Financial instruments that potentially subject the Company to credit risk concentration
primarily consist of balances in banks, financial investments and trade accounts
receivable.
The Company limits its exposure to credit risks associated with banks and financial
investments by investing at first-tier financial institutions, in short-term, highly liquid
securities.
With respect to accounts receivable, the Company limits its exposure to credit risks
through sales to a broad base of customers and continuous credit analysis. At June
30, 2011, there was no significant concentration of credit risk associated with
customers. Trade accounts receivable are secured by chattel mortgages on the
corresponding real property.
Fair value of financial instruments
The book values of financial instruments, mainly represented by financial investments
and financing lines are presented in the balance sheets at amounts that approximate
market value considering similar operations.
The fair value used for recording financial investments was determined based on
prices quoted in active markets for similar operations, falling into level 1 of the fair
value hierarchy.
Ernst & Young Terco | 46
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
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, to which the Entity is exposed 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
investments and financial expenses from loans. Therefore, the financial instruments of
the Company and its 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, if financing for production (SFH), to the variation in TJLP plus fixed
spread, if funding for equipment acquisition through BNDES, to the CDI, if loans for
working capital purposes, and to the IGP-M or INCC if securitization of receivables.
To conduct its sensitivity analysis, the Company was based on market projections for
year 2011. The positive or negative impact is as follows:
Increase/decrease in percentages
-25%
25%
June 30, 2011
Effect on income before taxes
7,553
-7,553
Business risk management
Risk control system
In order to manage its risk efficiently, the Company holds operational control over all
projects in progress. In the management model we calculated the potential losses in
simulations of unfavorable conditions for each individual project 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 the Company’s 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 defining the strategy for
financing and decision-making in regard to selection of projects.
Ernst & Young Terco | 47
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
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. Launchings 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 where there are no reliable data
available for market potential analysis, and thus believes that the risk of demand for its
launchings is reduced.
Operational risks
Operational risk management is primarily conducted through ongoing monitoring of
the development of projects 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 the legal
and credit risks of buyers of property units, via active management of the project
receivables.
Capital management
Capital management risk arises from the Company’s choice for adopting 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: WACC (Weighted Average Cost of Capital), 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 to improve its
financial leverage and debt management.
The Company includes in its Net Debt structure Loans and financing less Cash and
cash equivalents.
Loans and financing
(-) Cash and cash equivalents
Net debt
Equity
Equity and Net debt
Ernst & Young Terco | 48
Consolidated
6/30/2011
12/31/2010
408,630
302,374
381,768
190,852
26,862
111,522
1,145,298
827,855
1,172,160
939,377
Direcional Engenharia S.A.
Notes to financial statements--Continued
June 30, 2011 and 2010
(Amounts expressed in thousands of Reais, unless otherwise indicated)
21. Stock options plan
Stock options compensation
At a Special General Meeting (SGM) held on December 22, 2009, the Company
shareholders approved a stock option plan setting 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 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 7,492,590 options, 1,183,437 of which have
already been effectively exercised.
The table below shows the changes in the options:
Grant Year
Total number of options
Exercise price (as at 6/30/2010)
Term
Changes in options:
Options granted
Options exercised
Options outstanding
Options exercisable until 6/30/2011
Balance of options to be granted
Program 1
2009
3,963,301
1.20
25% p.a.
Program 2
2009 and 2010
4,711,372
11.11*
20% p.a.
3,752,590
1,183,437
2,569,153
210,711
3,740,000
3,740,000
468,000
971,372
(*) Price (*) The exercise price considers the issue price restatement by reference to the Extended
Consumer Price Index (IPCA) until 6/30/2011, 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.
The fair value of the last options granted was calculated based on a binomial
calculation, considering a historical volatility of 29.67%, 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$5.19.
For the six-month period ended June 30, 2011, the amount of R$15,349 was accrued.
The future expense to be recognized in relation to the plans over the next 57 months
totaled R$26,374 at June 30, 2011. If 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 3.4%.
Ernst & Young Terco | 49