1Q06 Earnings Results Conference Call 0
Forward Looking Statements Notice Information and Outlook The material shown is a presentation of general information about Rossi Residencial S.A. s record until the present date. It s a summary of the information with no intention of being complete, that should not be taken under consideration by potential investors as a recommendation. We make no statements nor guarantee the correctness, the conformity or the scope of the following information and any investment decision should not be based on them. Although ROSSI believes in the expectation and assumption contained on this statement, as well as the prospective information to be reasonable and also based on current data available to its management, ROSSI could not guarantee results nor future events. ROSSI fully exempts itself from the duty of updating any one of the prospective statement and information.. 1
Agenda 1. Company s Highlights 2. Performance 1 st Quarter 2006 3. Financial Information 4. Closing Remarks 2
History In 1980, Grupo Rossi established Rossi Residencial, which enabled a new focus to the group s activities in the real estate market. Since then, Rossi Residencial became the leader, operating in all real estate segments and in several Brazilian regions. Plano 100 Launch Launch of the Vida Nova Product Line Launch of a new concept for housing: Villa Flora Acquisition of America Properties Public Offering above R$1 billion and adhesion to Bovespa s Novo Mercado 1980 1992 1996 1997 1999 2000 2002 2003 2006 Establishment of Rossi Residencial IPO: Listing at Bovespa and NYSE Beginning of the corporate restructuring per region. Implementation of the SAP system. Issuance of R$80 million in shares and adhesion to Bovespa s Corporate Governance Level 1 3
Ownership Structure After the IPO Free Float 56.59% Rossi Family 43.41% 78,851,814 Shares 4
Shares Price and Traded Volume Performance 5
PERFORMANCE 1Q06 6
Excellent Growth History Contracted Sales in R$ (million) 2001 2005 CAGR = 38% 63% 131,7 80,6 1Q05 1Q06 7
Contracted Sales Segmentation Per Region 52% Year 2005 1st Quarter 2006 29% 33% 34% 22% 15% 8% 6% SÃO PAULO CAMPINAS PORTO ALEGRE RIO DE JANEIRO 8
Contracted Sales Segmentation Per Property Price 9
Launches Launches 1Q06 TLV ( R$ 000 ) Usable area (m 2 ) Number of units % - Rossi's Share % Sold TLV Rossi's share Metropolitan Region of São Paulo Gran Vita Parque Club 35,632 15,674 152 100.0% 23.7% 35,632 Porto Alegre Terra Mater Club House 45,644 25,556 119 75.0% 83.2% 34,233 Campinas and Sumaré Praça Capital - Fase III 4,282 1,811 44 70.0% 75.0% 2,997 Condominio das Violetas 3,708 3,445 58 100.0% 27.6% 3,708 Condominio das Camomilas 5,038 4,743 80 100.0% 7.5% 5,038 T O T A L 94,303 51,229 453 86.5% 54.1% 81,608 10
Launches TLV - ( R$ million ) 94,3 HISTORY OF LAUNCHES SCHEDULED 2002 2003 2004 2005 Average 1st.Quarter 1.9% 7.5% 22.0% 1.5% 8.2% 2nd. Quarter 32.4% 33.1% 12.4% 36.4% 28.6% 3rd. Quarter 19.3% 54.4% 3.1% 16.4% 23.3% 5,8 1Q05 1Q06 HISTORY OF THE LAUNCHES SHCEDULE 2002 2003 2004 2005 Average 1Q. 1.9% 7.5% 22.0% 1.5% 8.2% 2Q. 32.4% 33.1% 12.4% 36.4% 28.6% 3Q. 19.3% 54.4% 3.1% 16.4% 23.3% 4Q 46.4% 5.0% 62.5% 45.7% 39.9% 11
Landbank Total constructible area ( m 2 ) Metropolitan Region of São Paulo Campinas and Sumaré Rio de Janeiro and Niterói Porto Alegre Curitiba Other cities T O T A L In December 2005 1,084,086 162,352 160,996 75,033 20,591 64,111 1,567,170 ( + ) Acquisitions (48,410) 63,461 182,735 27,385-5,714 230,885 ( - ) Launches (25,694) (11,973) - (28,182) (65,849) On March 31, 2006 1,009,982 213,840 343,731 74,236 20,591 69,825 1,732,206 12
FINANCIAL INFORMATION 13
Net Indebtedness Indebtedness 1Q05 1Q06 Chg (%) Indebtedness Short Term: Construction financing 43,229 67,974 57.2% Loans Working capital 30,381 1,882-93.8% Indebtedness Long Term: Construction financing 22,932 25,159 9.7% Loans Working capital 10,148 1,059-89.6% Total Indebtedness 106,690 96,074-10.0% Cash and Cash Position: Cash and banks 3,696 13,653 269.4% Short Term Investments 10,628 574,626 5,306.7% Long Term Investments 4,111 1,816-55.8% Total Cash Position 18,435 590,095 3,100.9% Net Debt 88,255-494,021 14
Solid Financial Positioning Net Debt in R$ (MM) Receivables X Development Costs in R$ (MM) Long Term Receivables 360,2 Short Term Receivables 279,6 35% Construction Cost Long Term 74,3 Construction Cost Short Term 148,5 15
Balance Sheet Balance Sheet ON MARCH 31, 2006 AND IN DECEMBER 2005 ( in thousand reais ) ASSETS Mar-06 AV% Dec-05 AV% LIABILITY Mar-06 AV% Dec-05 AV% CURRENT ASSETS CURRENT LIABILITIES Cash and Banks 13,653 1.0 9,641 1.2 Financing 69,856 5.1 121,938 15.4 Short term investments 574,626 42.3 6,108 0.8 Suppliers 12,645 0.9 11,118 1.4 Customers 133,914 9.8 149,651 18.9 Wages and payroll chrages 3,317 0.2 3,551 0.4 Inventories 302,473 22.2 299,226 37.7 Taxes and contributions receivables 7,304 0.5 11,346 1.4 Prepaid expenses 23,711 1.7 28,244 3.6 Land payable 40,440 3.0 45,799 5.8 Sundry receivables 53,736 4.0 47,780 6.0 Dividend payable 4,797 0.4 4,796 0.6 Associated companies - - 37,701 4.7 Advance to customers 18,310 1.3 34,751 4.4 Other payables 25,119 1.8 16,799 2.1 1,102,113 81.1 540,650 68.1 181,788 13.4 287,799 36.3 LONG TERM ASSETS LONG TERM LIABILITIES Customers 172,495 12.7 183,304 23.1 Financing 26,218 1.9 18,643 2.3 Long term investments 1,816 0.1 2,133 0.3 Land payable 75,211 5.5 85,908 10.8 Judicial deposits 28,841 2.1 28,373 3.6 Taxes and contributions receivables 26,993 2.0 27,356 3.4 Deferred social contributuion and income tax 47,349 3.5 29,813 3.8 Deferred social contributuion and income tax 19,314 1.4 15,098 1.9 Associated companies - - 4,508 0.6 Associated companies - - 28,076 3.5 Other receivables - - 182 0.0 250,501 18.4 248,313 31.3 147,736 10.9 175,081 22.1 MINORITY INTEREST - - 38,352 4.8 PERMANENT ASSET Shareholder's equity Investments 3,401 0.3 1,484 0.2 Capital stock 445,117 32.7 230,732 29.1 Fixed 1,695 0.1 1,757 0.2 Capital reserve 548,115 40.3 - - Deffered 2,009 0.1 1,676 0.2 Statutory reserve 5,902 0.4 5,902 0.7 Profit retention reserve 56,014 4.1 56,014 7.1 Period result (24,953) (1.8) - - 7,105 0.5 4,917 0.6 1,030,195 75.8 292,648 36.9 16
Income Statement ROSSI RESIDENCIAL S.A. RESULT STATEMENT (in R$ thousand) Mar-06 AV% Mar-05 AV% GROSS OPERATING REVENUE Real state and services sales 87,745 103 85,615 103 Sales deduction (2,535) (3) (2,861) (3) Operating net income 85,210 100 82,754 100 REAL STATE AND SERVICES SALES COST (59,667) (70) (57,148) (69) Gross profit 25,543 30 25,606 31 (EXPENSES) OPERATING INCOME Administrative (8,013) (9) (7,579) (9) Commercial (9,827) (12) (9,304) (11) Financial Income 20,552 24 18,951 23 Financial expenses (18,808) (22) (19,387) (23) Other Operating Income (Expenses) 13 0 16 0 Operational profit (Loss) 9,460 11 8,303 10 (EXPENSES) NON OPERATING INMCOME (46,870) (55) (130) (0) RESULT BERORE TAXATION AND INTEREST (37,410) (44) 8,173 10 INCOME TAX AND SOCIAL CONTRIBUTION 12,457 15 (1,354) (2) NET PROFIT (LOSS) BEFORE MINORITY INTEREST (24,953) (29) 6,819 8 17
Cash Flow CASH FLOW STATEMENTS ON MARCH 31, 2006 AND 2005 (in thousand reais) Consolidated 2006 2005 OF THE OPERATING ACTIVITIES Net profit (loss) (24,953) 6,819 Adjustments to the net profit (loss) Depreciation and amortization 218 399 Interest in a controlled company - - Goodwill amortization (729) 167 Deffered income tax and social contribution (12,977) 1,000 Net interests and financing charges (5,692) (15,353) Adjusted net profit (44,133) (6,968) Variation on asstes and liabilities Customers 6,713 3,151 Real state to be sold (28,505) (9,022) Prepaid expenses 201 (1,367) Advance for suppliers 1,196 821 Customers pass on (2,796) (310) Accounts receivables (13,362) (600) Judicial deposits (744) (41) Accounts payable for land acquisition 3,406 3,541 Accounts payable (25,722) 187 Taxes and contribution (2,542) (3,571) Advance from customers (13,873) (6,059) Others 4,380 9,890 Net cash deriving from operating activities (115,781) (10,348) 18
Cash Flow Consolidated 2006 2005 OF INVESTMENTS ACTIVITIES Investments increase - - Capital contribution in maneuver (28,797) 14,592 Minority interest - 2,735 Fixed asset acquisition (47) (209) Softwares acquisition and development (442) (107) Net cash deriving from investments activities (29,286) 17,011 OF FINANCING ACTIVITIES Capital increase 214,385 - Goodwill on shares issuing 548,115 - Debt Funding 41,876 24,600 Amortization (83,660) (32,269) Financial activities net flow 720,716 (7,669) Net increase (decrease) of cash 575,649 (1,006) CASH, BANKS AND FINIANCING INVESTMENTS At the beginning of the period 12,629 21,471 At the end of the period 588,278 20,465 19
CLOSING REMARKS 20
Why Rossi? The Right Time Adequate Product Mix Interest decrease Credit Expansion Leadership at the Middle Class Segment Flexibility to adjust according to demand Exposure to different markets The Right Place Experienced Management Geographical diversification Present in areas with high housing deficit 30 executives with, at least, 30-year experience in the sector SAP / Integrated operations Regional offices with great local knowledge Capacity of managing a high number of projects Strong market acknowledgment 21
ATTACHMENTS 22
Geographical Diversification Regional offices in São Paulo, Rio de Janeiro, Porto Alegre and Campinas. Projects in 19 of the main Brazilian cities (Rio de Janeiro, Niterói, São Paulo, Guarujá, Santos, Praia Grande, São José dos Campos, Santo André, São Caetano do Sul, Osasco, Santana do Parnaíba, Sorocaba, Jacareí, Campinas, São Carlos, Ribeirão Preto, Sumaré, Curitiba and Porto Alegre). Expantion plans focused at the States of Minas Gerais, Espírito Santo, Bahia, Santa Catarina, Goiás and Federal District, consolidating the Company s operations within the country. Hired (on April / 2006) Regional Officer for the development of new markets Brasília and Belo Horizonte. Regional Offices States where we operate Projects on going 23
A Typical Project Commercial Launch Incorporation Confirmation Construction Start Delivery of Keys End of Receivables CONSTRUCTION Repass Launch 6 th Month 12 th Month 18 th Month 24 th Month 30 th Month 36 th Month Accumulated Sales % 0% 60% 80% 85% 90% 95% 100% Cost Incurred % - - 5% 41% 82% 100% 100% Appropriated Revenues % - 14% 25% 47% 77% 100% 100% Collection % - 8% 17% 24% 33% 44% 100% 24
Cash Flow for a Typical Project With Financing for Development 2.200.000 1.950.000 1.700.000 Without Financing for Development Intensive use of capital for expanding growth 1.450.000 1.200.000 950.000 700.000 30% of developments completed 80% of units sold 450.000 200.000 (50.000) (300.000) (550.000) (800.000) (1.050.000) (1.300.000) (1.550.000) (1.800.000) Purchase of the site -5-4 -3-2 -1 Commercial Launch 1 2 3 4 5 6 7 8 9 Beginning of the developments 11 12 13 14 15 16 17 18 19 20 21 22 23 Conclusion of the developments Delivery of the keys 26 27 Securitization 29 30 31 32 33 34 35 36 Months (2.050.000) (2.300.000) (2.550.000) Investment financed with own cash or debt (2.800.000) 25