Economic-Financial Performance
In 2007, Rossi posted significant increases in launches, contracted sales, land bank, revenues and net income. Some of the year’s operating and financial highlights were:
- 52 projects launched, totaling a GSV of R$ 2.47 billion, of which R$ 1.98 billion was Rossi’s part and R$ 489 million belonged to its partners.
- R$ 1.58 billion in contracted sales, of which 79.3% was Rossi’s share in the amount of R$ 1.25 billion, and R$ 732.9 million in net revenues (78.2% higher than 2006’s revenues).
- R$ 132,1 milhões de (159,2% acima de 2006), com margem Ebitda de 18,0%, 5,6 pontos percentuais acima da margem de 2006.
- R$ 131.3 million net income, 200.5% higher than the net income of 2006. Adjusted net income for the year was R$ 133.2 million.
- R$ 14.7 billion in potential land bank GSV, of which 68.7% was Rossi’s share, encompassing 129 plots of land at the close of 2007.
Gross Operating Revenues
Gross operating revenues were up 81.1% over the previous year, going from R$ 425.0 million in 2006 to R$ 769.7 million in 2007. In the real estate development sector, sales revenues are allocated to income using the percentage of conclusion of each project method. The rise in revenues came about mainly as a result of the increase in the number of projects under construction and the sale of inventory.
Net Operating Revenues
Net operating revenues rose by 78.2%, going from R$ 411.3 million in 2006 to R$ 732.9 million in 2007.
Cost of Real Estate and Services Sold
O custo dos imóveis e serviços vendidos apresentou crescimento de 67,8%, passando de R$ 282,9 milhões em 2006 para R$ 474,6 milhões em 2007.
Gross Income
The cost of real estate and services sold grew by 67.8%, from R$ 282.9 million in 2006 to R$ 474.6 million in 2007.
Administrative Expenses
Administrative expenses rose 58.3% in nominal terms, up from R$ 38.6 million in 2006 to R$ 61.2 million in 2007. Compared to net operating revenues, the administrative expenses declined, from 9.4% in 2006 to 8.3% in 2007.
Selling Expenses
Selling expenses rose 33.1% in nominal terms, going from R$ 45.7 million in 2006 to R$ 60.8 million in 2007. Selling expenses represented 11.1% of net revenues in 2006 and 8.3% in 2007, a decline of 2.8 p.p.
EBITDA
The EBITDA totaled R$ 132.1 million, a gain of 159.2% over 2006. The EBITDA margin in 2007 was 18.0%, an increase of 5.6 p.p. over 2006. This increase was a result of the combination of an increase of the revenues allocated with the rise in gross margin and dilution of operating expenses.
Depreciation and Amortization
The depreciation and amortization expense presented an annual increase of 53.1%, going from R$ 0.9 million in 2006 to R$ 1.3 million in 2007. This rise came about mainly as a result of assets that were acquired for the geographical expansion of the company and the amortization of investments to improve information systems.
Net Financial Revenues (Expenses)
Net financial revenues declined 33.7%, from R$ 47.4 million in 2006 to R$ 31.5 million in 2007. This was mainly a result of a reduction in financial investments due to the use of cash for operating activities, as well as an increase in financial expenses for the issue of debentures.
Client Loan Revenues
Revenues from client loans remained stable, totaling R$ 7.4 million, an amount that was not particularly significant due to the company’s policy of not offering financing after the delivery of units.
Other Operating Income (Expenses)
On a conservative basis, during the fourth quarter of 2007 a supplement was made to the provision for several labor lawsuit contingencies in the amount of R$ 1.5 million and the constitution of a provision for delinquent accounts of R$ 0.8 million, totaling R$ 2.3 million for the year.
Income Tax and Social Contribution
The provision for income tax and social contributions went from R$ 2.1 million in 2006 (R$ 3.7 million in current year expenses and R$ 1.6 million for the realization of deferred taxes) to R$ 25.9 million in 2007, represented by a R$ 4.8 million provision for current year expenses and a R$ 21.1 million provision for deferred taxes referring to temporary differences. The provision for income tax and social contributions follows Brazilian company law, both for the companies taxed under the real profit regimen as well as for presumed profit, and differs from the tax legislation.
Net Income
Net income went from R$ 43.7 million in 2006 to R$ 131.3 million in 2007. The net margin increased from 10.6% in 2006 to 17.9%, a 7.3 p.p. rise.
Adjusted Net Income
The adjusted net income was up 42.4%, going from R$ 93.6 million in 2006 to R$ 133.2 million in 2007. The adjusted net margin declined from 22.8% in 2006 to 18.2% in 2007, due to the provisions for deferred taxes and employee profit sharing.
