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    GFSA3   BRGFSAACNOR3

GAFISA S.A.

(GFSA3)
  Report
Delayed Quote. Delayed Bolsa de Valores de Sao Paulo - 01/27 08:46:40 am
1.99 BRL   +2.58%
01/20GAFISA S A : Material Fact - Operational Preview 4Q21 and 2021
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2021GAFISA S A : Institutional presentation (portuguese only)
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2021GAFISA S A : 3Q21 - Quarter Results Videoconference
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Gafisa : 3Q20 ITR Free Translation

12/18/2020 | 01:05pm EST

Gafisa S.A.

Quarterly information

September 30, 2020

(A free translation of the original report in Portuguese as published in

Brazil containing Quarterly Information (ITR) prepared in accordance with the accounting practices adopted in Brazil).

1

Company data

Capital Composition

3

Individual financial statements

Balance sheet - Assets

4

Balance sheet - Liabilities

5

Statement of income

6

Statement of comprehensive income (loss)

7

Statement of cash flow

8

Statements of changes in equity

01/01/2020 to 09/30/2020

9

01/01/2019 to 09/30/2019

10

Statement of value added

11

Consolidated financial statements

Balance sheet - Assets

12

Balance sheet - Liabilities

13

Statement of income

15

Statement of comprehensive income (loss)

16

Statement of cash flow

17

Statements of changes in equity

01/01/2020 to 09/30/2020

18

01/01/2019 to 09/30/2019

19

Statement of value added

20

Comments on performance

21

Notes to the quartely information

43

Other information deemed relevant by the Company

74

Reports and statements

Independent auditors' report on the review of the quarterly information

77

Management statement of interim financial information

80

Management statement on the report n review of interim financial information

81

2

COMPANY DATA / CAPITAL COMPOSITION

Number of Shares

CURRENT QUARTER

(in thousands)

09/30/2020

Paid-in Capital

Common

290,732

Preferred

0

Total

290,732

Treasury shares

Common

342

Preferred

0

Total

342

3

INDIVIDUAL FINANCIAL STATEMENTS - BALANCE SHEET - ASSETS (in thousands of Brazilian Reais)

ACTUAL

QUARTER

PRIOR YEAR

CODE

DESCRIPTION

9/30/2020

12/31/2019

1

Total Assets

2,954,304

2,504,512

1.01

Current Assets

1,652,693

1,334,900

1.01.01

Cash and cash equivalents

43

810

1.01.01.01

Cash and banks

43

810

1.01.02

Short-term investments

619,025

401,243

1.01.02.01

Fair value of short-term investments

619,025

401,243

1.01.03

Accounts receivable

340,903

361,649

1.01.03.01

Trade accounts receivable

340,903

361,649

1.01.03.01.01

Receivables from clients of developments

304,312

347,158

1.01.03.01.02

Receivables from clients of construction and services rendered

36,591

14,491

1.01.04

Inventories

528,437

490,419

1.01.04.01

Properties for sale

528,437

490,419

1.01.07

Prepaid expenses

416

1,227

1.01.07.01

Prepaid expenses and others

416

1,227

1.01.08

Other current assets

162,869

79,552

1.01.08.01

Non current assets held for sale

3,709

3,709

1.01.08.03

Others

159,160

75,843

1.01.08.03.01

Other assets

65,760

52,455

1.01.08.03.03

Receivables from related parties

93,400

23,388

1.02

Non current assets

1,302,611

1,169,612

1.02.01

Non current assets

348,567

469,268

1.02.01.04

Accounts receivable

73,142

98,368

1.02.01.04.01

Receivables from clients of developments

73,142

98,368

1.02.01.05

Inventories

116,194

230,049

1.02.01.05.01

Properties for sale

116,194

230,049

1.02.01.10

Others non current assets

159,231

140,851

1.02.01.10.03

Other assets

118,160

107,435

1.02.01.10.04

Receivables from related parties

41,071

33,416

1.02.02

Investments

942,229

681,645

1.02.02.01

Investments

942,229

681,645

1.02.03

Property and equipment

6,805

12,147

1.02.03.01

Operation property and equipment

6,805

12,147

1.02.04

Intangible assets

5,010

6,552

1.02.04.01

Intangible assets

5,010

6,552

4

INDIVIDUAL FINANCIAL STATEMENTS - BALANCE SHEET - LIABILITIES AND EQUITY (in thousands of Brazilian Reais)

ACTUAL

QUARTER

PRIOR YEAR

CODE

DESCRIPTION

9/30/2020

12/31/2019

2

Total Liabilities

2,954,304

2,504,512

2.01

Current liabilities

1,153,854

1,237,207

2.01.01

Social and labor obligations

10,342

11,963

2.01.01.02

Labor obligations

10,342

11,963

2.01.02

Suppliers

65,995

79,106

2.01.03

Tax obligations

62,217

58,556

2.01.03.01

Federal tax obligations

62,217

58,556

2.01.04

Loans and financing

427,681

541,826

2.01.04.01

Loans and financing

300,534

383,647

2.01.04.01.01

Loans and financing in local currency

300,534

383,647

2.01.04.02

Debentures

127,147

158,179

2.01.05

Other obligations

396,987

406,133

2.01.05.01

Payables to related parties

186,301

191,364

2.01.05.02

Others

210,686

214,769

2.01.05.02.04

Obligations for purchase of properties and advances from customers

66,660

89,825

2.01.05.02.06

Other payables

132,183

110,189

2.01.05.02.07

Obligations assumed on the assignment of receivables

11,843

14,755

2.01.06

Provisions

190,632

139,623

2.01.06.01

Tax, labor and civil lawsuits

190,632

139,623

2.01.06.01.01

Tax lawsuits

44

1,995

2.01.06.01.02

Labor lawsuits

25,096

30,699

2.01.06.01.04

Civil lawsuits

165,492

106,929

2.02

Non current liabilities

290,826

373,597

2.02.01

Loans and financing

145,698

146,375

2.02.01.01

Loans and financing

120,118

107,029

2.02.01.01.01

Loans and financing in local currency

120,118

107,029

2.02.01.02

Debentures

25,580

39,346

2.02.02

Other liabilities

55,788

91,250

2.02.02.02

Others

55,788

91,250

2.02.02.02.03

Obligations for purchase of properties and advances from customers

40,692

68,515

2.02.02.02.04

Other liabilities

4,484

6,272

2.02.02.02.06

Obligations assumed on the assignment of receivables

10,612

16,463

2.02.03

Deferred taxes

12,114

12,114

2.02.03.01

Deferred income tax and social contribution

12,114

12,114

2.02.04

Provisions

77,226

123,858

2.02.04.01

Tax, labor and civel lawsuits

77,226

123,858

2.02.04.01.01

Tax lawsuits

1

687

2.02.04.01.02

Tax and labor lawsuits

4,478

3,149

2.02.04.01.04

Civil lawsuits

72,747

120,022

2.03

Equity

1,509,624

893,708

2.03.01

Capital

1,041,248

2,926,280

2.03.02

Capital Reserves

335,162

294,094

2.03.02.05

Treasury shares

(2,634)

(43,517)

2.03.02.07

Constitution of capital reserve

250,599

250,599

2.03.02.09

Reserve for granting stock options

87,197

87,012

2.03.05

Retained earnings/accumulated losses

133,214

(2,326,666)

5

INDIVIDUAL FINANCIAL STATEMENTS - INCOME - (in thousands of Brazilian Reais)

CODE DESCRIPTION

3.01Gross Sales and/or Services

3.01.01 Revenue from real estate development

3.01.03 Taxes on real estate sales and services

3.02Cost of sales and/or services

3.02.01 Cost of real estate development

3.03Gross profit

3.04Operating expenses/income

3.04.01 Selling expenses

3.04.02 General and administrative expenses

3.04.05 Other operating expenses

3.04.05.01 Depreciation and amortization

3.04.05.02 Other operating expenses

3.04.06 Income from equity method investments

3.05Income (loss) before financial results and income taxes

3.06Financial

3.06.02 Financial expenses, net

3.06.02.01 Financial expenses, net

3.07Income before income taxes

3.09Income (loss) from continuing operation

3.11Income (loss) for the period

3.99Earnings per Share - (Reais / Share)

3.99.01 Basic Earnings per Share

3.99.01.01 ON

3.99.02 Diluted Earnings per Share

3.99.02.01 ON

ACTUAL

SAME QUARTER

QUARTER

YEAR TO DATE

FROM PREVIOUS

YEAR TO DATE FROM

07/01/2020 to

01/01/2020 to

YEAR 07/01/2019 to

PREVIOUS YEAR 01/01/2019

09/30/2020

09/30/2020

09/30/2019

to 09/30/2019

96,026

215,419

69,329

235,665

105,150

235,487

75,946

256,393

(9,124)

(20,068)

(6,617)

(21,728)

(71,322)

(157,819)

(41,009)

(162,614)

(71,322)

(157,819)

(41,009)

(162,614)

24,704

57,600

28,320

73,051

(52,607)

(122,562)

(7,206)

(86,612)

(2,022)

(6,158)

(1,633)

(9,585)

(19,543)

(51,136)

(11,053)

(26,136)

(26,394)

(61,608)

(2,607)

(55,877)

(1,610)

(5,373)

(2,848)

(10,625)

(24,784)

(56,235)

178

(45,252)

(4,648)

(3,660)

8,150

(4,986)

(27,903)

(64,962)

21,114

(13,561)

(28,590)

(40,538)

(22,782)

(47,185)

(28,590)

(40,538)

(22,782)

(47,185)

(28,590)

(40,538)

(22,782)

(47,185)

(56,493)

(105,500)

(1,668)

(60,746)

(56,493)

(105,500)

(1,668)

(60,746)

(56,493)

(105,500)

(1,668)

(60,746)

-

-

-

-

-

-

-

-

(0,39011)

(0,72852)

(0,03189)

(1,16151)

-

-

-

-

(0,39011)

(0,72852)

(0,03189)

(1,16151)

6

INDIVIDUAL FINANCIAL STATEMENTS - COMPREHENSIVE INCOME (LOSS) - (in thousands of Brazilian Reais)

ACTUAL

SAME QUARTER

YEAR TO DATE

QUARTER

YEAR TO DATE

FROM PREVIOUS

FROM PREVIOUS

0701/2020 to

01/01/2020 to

YEAR 07/01/2019

YEAR 01/01/2019 to

CODE

DESCRIPTION

09/30/2020

09/30/2020

to 09/30/2019

09/30/2019

4.01

Income (loss) for the period

(56,493)

(105,500)

(1,668)

(60,746)

4.03

Comprehensive income (loss) for the period

(56,493)

(105,500)

(1,668)

(60,746)

7

INDIVIDUAL FINANCIAL STATEMENTS - CASH FLOWS - INDIRECT METHOD - (in thousands of Brazilian Reais)

CODE DESCRIPTION

6.01Net cash from operating activities

6.01.01 Cash generated in the operations

6.01.01.01 Income (loss) before income and social contribution taxes

6.01.01.02 Income from equity method investments

6.01.01.03 Stock options expenses

6.01.01.04 Unrealized interest and finance charges, net

6.01.01.06 Depreciation and amortization

6.01.01.07 Provision for legal claims

6.01.01.08 Provision for profit sharing

6.01.01.09 Warranty provision

  1. Allowance for doubtful accounts
  2. Provision for realization of non-financial assets - properties for sale
  3. Provision for penalties due to delay in construction works

6.01.01.15 Payable for sale of shares

6.01.02 Variation in assets and liabilities

6.01.02.01 Trade accounts receivable

6.01.02.02 Properties for sale

6.01.02.03 Other accounts receivable

6.01.02.04 Prepaid expenses

6.01.02.05 Obligations for purchase of properties and adv. from customers

6.01.02.06 Taxes and contributions

6.01.02.07 Suppliers

6.01.02.08 Salaries and payable charges

  1. Transactions with related parties
  2. Other obligations

6.02Net cash from investing activities

6.02.01 Purchase of property and equipment and intangible assets

6.02.03 Redemption of short-term investments

6.02.04 Purchase of short-term investments

6.03Net cash from financing activities

6.03.01 Capital increase

6.03.02 Increase in loans, financing and debentures

6.03.03 Payment of loans, financing and debentures

6.03.06 Loan transactions with related parties

6.03.08 Disposal of treasury shares

6.03.09 Result of the disposal of treasury shares

6.03.12 Constitution of reserves

6.05Net increase (decrease) of cash and cash equivalents

6.05.01 Cash and cash equivalents at the beginning of the period

6.05.02 Cash and cash equivalents at the end of the period

YEAR TO DATE

YEAR TO DATE

FROM PREVIOUS

01/01/2020 to

YEAR 01/01/2019 to

09/30/2020

09/30/2019

(84,850)

(32,500)

(21,780)

(59,275)

(105,500)

(60,746)

(3,660)

(4,986)

(362)

(2,698)

1,382

1,902

5,373

10,625

51,127

45,378

6,194

500

1,102

(3,918)

15,347

(17,116)

(921)

(28,222)

832

754

0

(748)

(63,070)

91,775

21,862

117,528

76,758

129,393

(17,806)

(32,574)

811

677

(50,988)

(51,007)

3,660

8,734

(12,981)

(13,126)

(7,816)

(1,898)

380

4,763

(76,950)

(70,715)

(216,217)

(281,653)

1,511

(4,333)

262,076

34,040

(479.858)

(311,360)

300,354

224,086

477.900

132,266

80,333

81,163

(196,523)

(193,285)

(80,607)

(10,117)

0

148

19,251

6,984

0

206,927

(767)

(22,935)

810

29,180

43

4,112

8

INDIVIDUAL STATEMENT OF CHANGES IN EQUITY FROM 01/01/2020 TO 09/30/2020 (in thousands of Brazilian reais)

Capital reserves,

Other

stock options and

Retained

comprehensive

Total

CODE

DESCRIPTION

Capital

treasury shares

Profit reserves

earnings

income

Equity

5.01

Opening balance

2,926,280

294,094

-

(2,326,666)

-

893,708

5.03

Opening adjusted balance

2,926,280

294,094

-

(2,326,666)

-

893,708

5.04

Capital transactions with shareholders

(1,885,032)

41,068

-

2,565,380

-

721,416

5.04.01

Capital increase

700,001

-

-

-

-

700,001

5.04.03

Stock option plan

-

184

-

-

-

184

5.04.05

Treasury shares sold

-

40,884

-

(19,635)

-

21,231

5.04.08

Capital reduction

(2,585,033)

-

-

2,585,033

-

-

5.05

Total of comprehensive income (loss)

-

-

-

(105,500)

-

(105,500)

5.05.01

Net income (loss) for the period

-

-

-

(105,500)

-

(105,500)

5.07

Closing balance

1,041,248

355,162

-

133,214

-

1,509,624

9

INDIVIDUAL STATEMENT OF CHANGES IN EQUITY FROM 01/01/2019 TO 09/30/2019 (in thousands of Brazilian reais)

Capital reserves,

Other

stock options and

Profit

Retained

comprehensive

Total

CODE

DESCRIPTION

Capital

treasury shares

reserves

earnings

income

Equity

5.01

Opening balance

2,521,319

278,401

0

(2,308,403)

0

491,317

5.03

Opening adjusted balance

2,521,319

278,401

0

(2,308,403)

0

491,317

5.04

Capital transactions with shareholders

132,265

220,590

0

(3,267)

0

349,588

5.04.01

Capital increase

132,265

0

0

-

0

132,265

5.04.03

Stock option plan

0

355

0

-

0

355

5.04.05

Treasury shares sold

0

141

0

7

0

148

5.04.08

Treasury shares cancelled

0

5,747

0

(5,747)

0

-

5.04.09

Treasury shares reissued

0

(20,671)

0

20,671

0

-

5.04.10

Share repurchase program

0

28,091

0

(18,198)

0

9,893

5.04.11

Advance for future capital increase

0

206,927

0

(59,078)

0

206,927

5.05

Total of comprehensive income (loss)

0

0

0

(60,746)

0

(60,746)

5.05.01

Net income (loss) for the period

0

0

0

(60,746)

0

(60,746)

5.07

Closing balance

2,653,584

498,991

0

(2,372,416)

0

780,159

10

INDIVIDUAL STATEMENT OF VALUE ADDED (in thousands of Brazilian Reais)

CODE DESCRIPTION

7.01Revenue

7.01.01 Real estate development, sales and services

7.01.04 Allowance for doubtful accounts

7.02Inputs acquired from third parties

7.02.01 Cost of Sales and/or Services

7.02.02 Materials, energy, outsourced labor and other

7.03Gross value added

7.04Retentions

7.04.01 Depreciation and amortization

7.05Net value added produced by the Company

7.06Added value received on transfer

7.06.01 Income from equity method investments

7.06.02 Financial income

7.07Value added total to be distributed

7.08Value added distribution

7.08.01 Personnel and payroll charges

7.08.01.01 Direct remuneration

7.08.02 Taxes and contributions

7.08.02.01 Federal

7.08.03 Compensation - Interest

7.08.03.01 Interest

7.08.03.02 Rent

7.08.04 Compensation - Company capital

7.08.04.03 Net income (Retained losses)

YEAR TO DATE

YEAR TO DATE

FROM PREVIOUS

01/01/2020 to

YEAR 01/01/2019 to

09/30/2020

09/30/2019

235,487

257,393

250,834

240,277

(15,347)

17,116

(218,867)

(191,772)

(141,109)

(140,857)

(77,758)

(50,915)

16,620

65,621

(5,373)

(10,625)

(5,373)

(10,625)

11,247

54,996

17,962

16,448

(3,660)

4,986

21,622

11,462

29,209

71,444

29,209

71,444

27.972

22,139

27.972

22,139

25,686

26,971

25,686

26,971

81.051

83,080

78.870

80,404

2,181

2,676

(105,500)

(60,746)

(105,500)

(60,746)

11

CONSOLIDATED FINANCIAL STATEMENTS - BALANCE SHEET - ASSETS (in thousands of Brazilian Reais)

ACTUAL

QUARTER

PRIOR YEAR

CODE

DESCRIPTION

9/30/2020

12/31/2019

1

Total Assets

3,445,750

2,551,887

1.01

Current Assets

2,648,455

1,800,168

1.01.01

Cash and cash equivalents

6,705

12,435

1.01.01.01

Cash and banks

6,705

12,435

1.01.02

Short-term investments

623,995

401,895

1.01.02.01

Fair value of short-term investments

623,995

401,895

1.01.03

Accounts receivable

544,147

445,303

1.01.03.01

Trade accounts receivable

544,147

445,303

1.01.03.01.01

Receivables from clients of developments

507,399

430,664

1.01.03.01.02

Receivables from clients of construction and services rendered

36,748

14,639

1.01.04

Inventories

1,317,144

786,660

1.01.04.01

Properties for sale

1,317,144

786,660

1.01.07

Prepaid expenses

1,405

1,860

1.01.07.01

Prepaid expenses and others

1,405

1,860

1.01.08

Other current assets

155,449

152,015

1.01.08.01

Non current assets for sale

7,014

7,014

1.01.08.03

Others

148,435

145,001

1.01.08.03.01

Other accounts receivable and others

146,125

67,395

1.01.08.03.03

Derivative financial instruments

2,310

77,606

1.02

Non current assets

797,305

751,719

1.02.01

Non current assets

503,511

591,674

1.02.01.04

Accounts receivable

86,843

112,135

1.02.01.04.01

Receivables from clients of developments

86,843

112,135

1.02.01.05

Inventories

191,985

279,207

1.02.01.05.01

Properties for sale

191,985

279,207

1.02.01.10

Others non current assets

224,683

200,332

1.02.01.10.03

Other assets

124,946

166,916

1.02.01.10.04

Receivables from related parties

99,737

33,416

1.02.02

Investments

272,497

138,802

1.02.02.01

Interest in associates and affiliates

272,497

138,802

1.02.03

Property and equipment

15,935

14,159

1.02.03.01

Operation property and equipment

15,935

14,159

1.02.04

Intangible assets

5,362

7,084

1.02.04.01

Intangible assets

5,362

7,084

12

CONSOLIDATED FINANCIAL STATEMENTS - BALANCE SHEET - LIABILITIES AND EQUITY (in thousands of Brazilian Reais)

ACTUAL

QUARTER

PRIOR YEAR

CODE

DESCRIPTION

9/30/2020

12/31/2019

2

Total Liabilities

3,445,750

2,551,887

2.01

Current liabilities

1,440,307

1,252,402

2.01.01

Social and labor obligations

10,774

12,291

2.01.01.02

Labor obligations

10,774

12,291

2.01.02

Suppliers

1331,054

95,450

2.01.03

Tax obligations

82,979

69,868

2.01.03.01

Federal tax obligations

82,979

69,868

2.01.04

Loans and financing

476,495

584,303

2.01.04.01

Loans and financing

349,348

426,124

2.01.04.01.01

In Local Currency

349,348

426,124

2.01.04.02

Debentures

127,147

158,179

2.01.05

Other obligations

545,648

349,755

2.01.05.01

Payables to related parties

92,228

64,384

2.01.05.02

Others

453,420

285,371

2.01.05.02.04

Obligations for purchase of properties and advances from customers

259,336

129,353

2.01.05.02.06

Other payables

178,550

135,492

2.01.05.02.07

Obligations assumed on the assignment

of receivables

15,534

20,526

2.01.06

Provisions

193,357

140,735

2.01.06.01

Tax, labor and civel lawsuits

193,357

140,735

2.01.06.01.01

Tax lawsuits

2,131

1,995

2.01.06.01.02

Labor lawsuits

25,096

31,593

2.01.06.01.04

Civel lawsuits

166,130

107,147

2.02

Non current liabilities

491,553

404,342

2.02.01

Loans and financing

269,003

146,375

2.02.01.01

Loans and financing

153,340

107,029

2.02.01.01.01

Loans and financing in local currency

153,340

107,029

2.02.01.02

Debentures

115,663

39,346

2.02.02

Other obligations

124,186

121,975

2.02.02.02

Others

124,186

121,975

2.02.02.02.03

Obligations for purchase of properties and advances from customers

87,942

93,075

2.02.02.02.04

Other payables

21,884

9,065

2.02.02.02.06

Obligations assumed on the assignment

of receivables

14,360

19,835

2.02.03

Deferred taxes

12,114

12,114

2.02.03.01

Deferred income tax and social contribution

12,114

12,114

2.02.04

Provisions

86,250

123,878

2.02.04.01

Tax, labor and civel lawsuits

86,250

123,878

2.02.04.01.01

Tax lawsuits

98

707

2.02.04.01.02

Labor lawsuits

7,280

3,149

2.02.04.01.04

Civel lawsuits

78,872

120,022

2.03

Equity

1,513,890

895,143

2.03.01

Capital

1,041,248

2,926,280

2.03.01.01

Share Capital

1,041,248

2,926,280

2.03.02

Capital Reserves

2225,162

294,094

2.03.02.05

Treasury shares

(2,634)

(43,517)

2.03.02.07

Constitution of capital reserve

250,599

250,599

2.03.02.09

Reserve for granting stock options

87,197

87,012

13

CONSOLIDATED FINANCIAL STATEMENTS - BALANCE SHEET - LIABILITIES AND EQUITY (in thousands of Brazilian Reais)

ACTUAL

QUARTER

PRIOR YEAR

CODE

DESCRIPTION

9/30/2020

12/31/2019

2.03.05

Retained earnings/accumulated losses

133,214

(2,326,666)

2.03.09

Non-controlling interest

4,266

1,435

14

CONSOLIDATED FINANCIAL STATEMENTS - INCOME - (in thousands of Brazilian Reais)

CODE DESCRIPTION

3.01Gross Sales and/or Services

3.01.01 Revenue from real estate development

3.01.03 Taxes on real estate sales and services

3.02Cost of sales and/or services

3.02.01 Cost of real estate development

3.03Gross profit

3.04Operating expenses/income

3.04.01 Selling expenses

3.04.02 General and administrative expenses

3.04.05 Other operating expenses

3.04.05.01 Depreciation and amortization

3.04.05.02 Other operating expenses

3.04.06 Income from equity method investments

3.05Income (loss) before financial results and income taxes

3.06Financial

3.07Income before income taxes

3.08Income and social contribution taxes

3.08.01 Current

3.09Income (loss) from continuing operation

3.11Income (loss) for the period

3.11.01 Income (loss) attributable to the Company

3.11.02 Net income attributable to non-controlling interests

3.99Earnings per Share - (Reais / Share)

3.99.01 Basic Earnings per Share

3.99.01.01 ON

3.99.02 Diluted Earnings per Share

3.99.02.01 ON

ACTUAL

SAME QUARTER

YEAR TO DATE

QUARTER

YEAR TO DATE

FROM PREVIOUS

FROM PREVIOUS

07/01/2020 to

01/01/2020 to

YEAR 07/01/2019 to

YEAR 01/01/2019

09/30/2020

09/30/2020

09/30/2019

to 09/30/2019

148,632

304,135

89,212

284,292

159,579

327,637

96,438

307,534

(10,947)

(23,502)

(7,226)

(23,242)

(124,220)

(112,327)

(51,108)

(202,770)

(124,220)

(112,327)

(51,108)

(202,770)

24,412

43,176

38,104

81,522

(51,952)

(79,516)

(17,597)

(98,950)

(3,909)

(6,840)

(2,170)

(11,683)

(19,543)

(31,593)

(12,678)

(31,918)

(28,393)

(36,807)

(3,054)

(57,438)

(1,936)

(4,048)

(3,223)

(11,739)

(26,457)

(32,759)

169

(45.699)

(107)

(4,276)

305

2,089

(27,540)

(36,340)

20,507

(17,428)

(28,049)

(10,750)

(21,548)

(41,976)

(55,589)

(47,090)

(1,041)

(59,404)

(1,064)

(2,015)

(508)

(1,221)

(1,064)

(2,015)

(508)

(1,221)

(57,193)

(49,105)

(1,549)

(60,625)

(57,193)

(49,105)

(1,549)

(60,625)

(56,493)

(49,007)

(1,668)

(60,746)

(700)

(98)

119

121

-

-

-

-

-

-

-

-

(0,39011)

(0,72852)

(0,03189)

(1,16151)

-

-

-

-

(0,39011)

(0,72852)

(0,03189)

(1,16151)

15

CONSOLIDATED FINANCIAL STATEMENTS - COMPREHENSIVE INCOME (LOSS) - (in thousands of Brazilian Reais)

ACTUAL

SAME QUARTER

YEAR TO DATE

QUARTER

YEAR TO DATE

FROM PREVIOUS

FROM PREVIOUS

07/01/2020 to

01/01/2020 to

YEAR 07/01/2019 to

YEAR 01/01/2019

CODE

DESCRIPTION

09/30/2020

09/30/2020

09/30/2019

to 09/30/2019

4.01

Consolidated Income (loss) for the period

(57,193)

(106,299)

(1,549)

(60,625)

4.03

Consolidated comprehensive income (loss) for the period

(57,193)

(106,299)

(1,549)

(60,625)

4.03.01

Income (loss) attributable to the Company

(56,493)

(105,500)

(1,668)

(60,746)

4.03.02

Net income attributable to the noncontrolling interests

(700)

(799)

119

121

16

CONSOLIDATED FINANCIAL STATEMENTS - CASH FLOWS - INDIRECT METHOD - (in thousands of Brazilian Reais)

CODE DESCRIPTION

6.01Net cash from operating activities

6.01.01 Cash generated in the operations

6.01.01.01 Income (loss) before income and social contribution taxes

6.01.01.02 Income from equity method investments

6.01.01.03 Stock options expenses

6.01.01.04 Unrealized interest and finance charges, net

6.01.01.06 Depreciation and amortization

6.01.01.07 Provision for legal claims

6.01.01.08 Provision for profit sharing

6.01.01.09 Warranty provision

  1. Allowance for doubtful accounts
  2. Provision for realization of non-financial assets - properties for sale
  3. Provision for penalties due to delay in construction works

6.01.01.15 Payable for sale of shares

6.01.02 Variation in assets and liabilities

6.01.02.01 Trade accounts receivable

6.01.02.02 Properties for sale

6.01.02.03 Other accounts receivable

6.01.02.04 Prepaid expenses

6.01.02.05 Obligations for purchase of properties and adv. from customers

6.01.02.06 Taxes and contributions

6.01.02.07 Suppliers

6.01.02.08 Salaries and payable charges

  1. Transactions with related parties
  2. Other obligations
  3. Income tax and social contribution payable

6.02Net cash from investing activities

6.02.01 Purchase of property and equipment and intangible assets

6.02.03 Redemption of short-term investments

6.02.04 Purchase of short-term investments

6.03Net cash from financing activities

6.03.01 Capital increase

6.03.02 Increase in loans, financing and debentures

6.03.03 Payment of loans, financing and debentures

6.03.06 Loan transactions with related parties

6.03.08 Disposal of treasury shares

6.03.09 Result of the disposal of treasury shares

6.03.12 Constitution of reserves

6.04Foreign Exchange Gains and Losses on Cash and Cash Equivalents

6.05Net increase (decrease) of cash and cash equivalents

6.05.01 Cash and cash equivalents at the beginning of the period

6.05.02 Cash and cash equivalents at the end of the period

YEAR TO DATE

YEAR TO DATE

FROM PREVIOUS

01/01/2020 to

YEAR 01/01/2019 to

09/30/2020

09/30/2019

(218,444)

68,098

6,005

(47,507)

(102,681)

(59,404)

4,383

(2,089)

(362)

(2,698)

2,130

4,302

5,984

11,739

52,708

45,885

6,194

500

1,102

(3,918)

34,197

(17,116)

(1,044)

(28,221)

3.394

754

0

2,759

(224,449)

115,605

(83,182)

127,949

(27,289)

145,244

(88,096)

(35,981)

815

509

(32,744)

(56,461)

7,794

7,610

33,726

(2,189)

(7,721)

(12,366)

47,135

26,045

(71,268)

(93,534)

(3,619)

(1,221)

(228,193)

(280,902)

(4,618)

(4,361)

(287,594)

50,445

(511,169)

(326,986)

(439,392)

193,319

477,900

132,266

310,900

89,672

(359,646)

(232,561)

(9,013)

(10,117)

0

148

19,251

6,984

0

206,927

1,515

0

(5,730)

(19,485)

12,435

32,304

6,705

12,819

17

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FROM 07/01/2020 TO 09/30/2020 (in thousands of Brazilian reais)

Capital reserves,

Other

Total

Non

stock options and

Profit

Retained

comprehensive

Shareholders

Controlling

Total equity

CODE

DESCRIPTION

Capital

treasury shares

reserves

earnings

income

equity

interest

Consolidated

5.01

Opening balance

2,926,280

294,094

0

(2,326,666)

0

893,708

1,435

895.143

5.03

Opening adjusted balance

2,926,280

294,094

0

(2,326,666)

0

893,708

1,435

895.143

5.04

Capital transactions with shareholders

(1,885,032)

41,068

0

2,565,380

0

721,416

3,630

725,046

5.04.01

Capital increase

700,001

0

0

0

0

700,001

0

700,001

5.04.03

Stock option plan

0

184

0

0

0

184

0

184

5.04.05

Treasury shares sold

0

40,884

0

(19,653)

0

21,231

0

21,231

5.04.08

Capital reduction

(2,585,033)

0

0

2,585,033

0

0

0

0

5.04.10

Low discontinued operation

0

0

0

0

0

0

3,630

3,630

5.05

Total of comprehensive income (loss)

0

0

0

(105,500)

0

(105,500)

(799)

(106,299)

5.05.01

Net income (loss) for the period

0

0

0

(105,500)

0

(105,500)

(799)

(106,299)

5.07

Closing balance

1,041,248

355,162

0

133,214

0

1,509,624

4,266

1,513,890

18

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FROM 07/01/2019 TO 09/30/2019 (in thousands of Brazilian reais)

Capital reserves,

Other

Total

Non

stock options and

Retained

comprehensive

Shareholders

Controlling

Total equity

CODE

DESCRIPTION

Capital

treasury shares

Profit reserves

earnings

income

equity

interest

Consolidated

5.01

Opening balance

2,521,319

278,401

0

(2,308,403)

0

491,317

1,847

493,191

5.03

Opening adjusted balance

2,521,319

278,401

0

(2,308,403)

0

491,317

1,847

493,191

5.04

Capital transactions with shareholders

132,265

220,590

0

(3,267)

0

349,588

0

349,588

5.04.01

Capital increase

132,265

-

0

0

0

132,265

0

132,265

5.04.03

Stock option plan

-

355

0

0

0

355

0

355

5.04.05

Treasury shares sold

-

141

0

7

0

148

0

148

5.04.08

Treasury shares cancelled

-

5,747

0

(5,747)

0

0

0

0

5.04.09

Treasury shares reissued

-

(20,671)

0

20,671

0

0

0

0

5.04.10

Share repurchase program

-

28.091

0

(18,198)

0

9,893

0

9,893

5.04.11

Advance for Future Increase of capital

-

206,927

0

0

0

(206,927)

0

206,927

5.05

Total of comprehensive income (loss)

-

0

0

(60,746)

0

(60,746)

121

(60,625)

5.05.01

Net income (loss) for the period

-

0

0

(60,746)

0

(60,746)

121

(60,625)

5.06

Reserves

-

0

0

-

0

9

(80)

(80)

5.06.01

Constitution of reserves

-

0

0

-

0

0

(80)

(80)

5.07

Closing balance

2,653,584

298,991

0

(2,372,418)

0

780,159

1,915

782,074

19

'

CONSOLIDATED STATEMENT OF VALUE ADDED (in thousands of Brazilian Reais)

CODE DESCRIPTION

7.01Revenues

7.01.01 Real estate development, sales and services

7.01.04 Allowance for doubtful accounts

7.02Inputs acquired from third parties

7.02.01 Cost of Sales and/or Services

7.02.02 Materials, energy, outsourced labor and other

7.03Gross value added

7.04Retentions

7.04.01 Depreciation and amortization

7.05Net value added produced by the Company

7.06Value added received on transfer

7.06.01 Income from equity method investments

7.06.02 Financial income

7.07Total value added to be distributed

7.08Value added distribution

7.08.01 Personnel and payroll charges

7.08.01.01 Direct remuneration

7.08.02 Taxes and contributions

7.08.02.01 Federal

7.08.03 Compensation - Interest

7.08.03.01 Interest

7.08.03.02 Rent

7.08.04 Compensation - Company capital

7.08.04.03 Net income (Retained losses)

YEAR TO DATE

YEAR TO DATE

FROM PREVIOUS

01/01/2020 to

YEAR 01/01/2019 to

09/30/2020

09/30/2019

327,637

307,534

361,834

290,418

(34,197)

17,116

(293,587)

(229,328)

(211,240)

(172,414)

(82,347)

(56,914)

34,050

78,206

(5,984)

(11,739)

(5,984)

(11,739)

28,066

66,467

18,195

14,052

(4,383)

2,089

22,587

11,963

46,261

80,519

46,261

80,519

29,807

23,717

29,807

23,717

33,089

30,022

33,089

30,022

88,865

87,526

88,865

84,295

2,181

3,231

(105,500)

(60,746)

(105,500)

(60,746)

20

'

22

FOR IMMEDIATE RELEASE - São Paulo, November 16, 2020 - Gafisa S.A. (B3: GFSA3; OTC: GFASY), a leading Brazilian homebuilder, announced today its operational and financial results for the third quarter ended September 30, 2020.

GAFISA ANNOUNCES

3Q20 RESULTS

Gafisa's growth upturn is a reality, with 253% higher sales volume, R$1.1 billion in launches in 2020, and R$1 billion

PSV in new acquisitions

The third quarter of 2020 was marked by Gafisa's consistent recovery of operational performance, highlighting sales, launches, construction works delivery, and land acquisition. We recorded the best sales performance over the past two years, totaling R$144 million sales, reflecting a 253% quarter-on-quarter increase.

After two years without new launches, we resumed launches in the third quarter of 2020, with Chez Perdizes, High Line Jardins, and Normandie Moema projects, totaling a PSV of R$264 million, all of them located in high-valued regions, with good liquidity in the city of São Paulo. Subsequently to the end of the third quarter, all these three launches today report healthy levels of sales, 20% in Chez Perdizes, 45% in High Line Jardins, and 60% in Normandie Moema. For the fourth quarter, we have other three launches totaling R$875 million, highlighting the Cyano Barra project with R$570 million PSV and a project in Campo Belo, SP, with R$262 million PSV.

Again, we evidence the consistency of the Company's planning and delivery capacity, with two other projects delivered, with a total PSV of R$140 million, the 7th project delivered in 2020. We obtained the occupancy permit for the 8th and 9th projects, now we have achieved 94% of PSV estimated to be delivered in 2020. With the conclusion of the Upcon acquisition, we added two projects to be delivered in 2020, reaching a total of 10 projects with nearly R$1 billion PSV and 1,474 units.

The evolution of construction works was maintained, as well as projects and sales, even during the pandemic. The Company, through its Management Committee - COVID-19, upheld the prevention measures necessary to ensure everyone's safety, evidencing the focus and discipline of Gafisa's new management, even amidst a more challenging international scenario.

Still referring to our operational performance, it is worth noting that we acquired in the quarter two excellent plots of land in the city of São Paulo, one in Vila Mariana district, with an estimated PSV of R$116 million and another in the Butantã district, with an estimated PSV of R$162 million. Upcon also brought to our landbank an estimated PSV of R$900 million. We also concluded negotiations to acquire four projects from Calçada S.A., with an approximate PSV of R$747 million, and the acquisition of the last plot of land at Av. Delfim Moreira, definitively sets Gafisa's return to the city of Rio de Janeiro, through differentiated projects.

Concerning financial results, it is worth noting that we maintained the REF margin (backlog results) at approximately 35%. This evidences that backlog result sustains the Company's margin at healthy levels in a continued and consistent improvement, despite a temporary reduction of adjusted gross margin (no financial cost), due to our conservative approach when recording provision for dissolutions and repricing of older inventories during the pandemic.

23

We also should point out a continuous improvement of the Company's balance sheet and deleverage. Within one year, we went from a Net Debt/Shareholders' Equity ratio of 162% in 1Q19 to current 7.6% in 3Q20, with a capital increase approved on August 7, 2020, injecting R$218.2 million into the Company's cash.

We are confident that we are reaching a new cycle of high growth in the real estate market, with interest rates nearing the lowest historical levels, unparalleled credit market growth, and development. Furthermore, as fixed-income investments have very low yield, or even negative, real estate investment has increasingly become relevant in the investment portfolio of individuals and institutional investors.

Within this virtuous context of growth in the real estate market and the assertive actions in its real estate development core business, Gafisa is executing its transformation to become a real estate platform to go beyond its core activity of real estate development. From its solid balance sheet and strategic planning, Gafisa set up a new line of business, the Gafisa Properties. We are also developing partnerships and investments in startups to bring innovation, technology, and new services for Gafisa and its clients. Gafisa Properties will own real estate assets to become profitable through leasing flows across the real estate spectrum, such as offices, residential units, shopping malls, and hotels, and its portfolio will be composed of Gafisa's built assets or under construction (e.g., offices, stores, and small residential units of up 50 m2)and new acquisitions with a focus on non-replicable locations and/or assets with turnaround opportunities. As far as innovation is concerned, we will apply our background and market expertise to pursue synergies and new business models according to a real estate Ecosystem vision that transforms Gafisa's real estate assets into business platforms to be explored throughout real estate asset's life cycle, whether assets held Gafisa Properties or sold by Gafisa to its end clients. We are confident that these actions will allow the Company to capture value for its shareholders.

Gafisa relies on a traditional brand and is recognized as a benchmark in the Brazilian market. We are refining our new management model with dynamism and discipline, to prepare the Company for a new development and growth cycle that will restore Gafisa's history of success and value creation for our shareholders.

Ian Andrade

Chief Financial and Investor Relations Officer

24

OPERATIONAL RESULTS

Table 1 - Operational Performance (R$ 000)

3Q20

2Q20

Q/Q (%)

3Q19

A/A (%)

9M20

9M19

Y/Y (%)

Launches

263,789

-

-

-

-

263,789

-

-

Gross sales

143,878

41,383

247.7%

39,963

260.0%

185,260

219,127

(15.5%)

Dissolutions

(26,224)

(21,543)

21.7%

(10,210)

156.8%

(47,767)

(83,245)

(42.6%)

Net Sales

117,654

19,840

493.0%

29,753

295.4%

137,494

135,881

1.2%

Speed of Sales (SoS)

10.57%

2.39%

8.2 p.p.

3.00%

7.6 p.p.

12.13%

11.60%

0.5 p.p.

Delivered PSV

140,255

543,720

(74.2%)

-

-

683,975

171,648

298.5%

Table 2 - Financial Performance (R$ 000)

3Q20

2Q20

Q/Q(%)

3Q19

Y/Y (%)

9M20

9M19

Y/Y (%)

Net Revenue

148.632

83.800

77,4%

89.212

66,6%

304.135

284.292

7,0%

Gross Profit

24.412

22.714

7,5%

38.104

(35,9%)

67.588

81.522

(17,1%)

Gross Margin

16,4%

27,1%

-10,7 p.p.

42,7%

-26,3 p.p.

22,2%

28,7%

-6,5 p.p.

Adjusted EBITDA²

7.922

7.722

2,6%

31.051

(74,5%)

19.756

21.969

(10,1%)

Adjusted EBITDA Margin²

5,3%

9,2%

-3,9 p.p.

34,8%

-29,5 p.p.

6,5%

7,7%

-1,2 p.p.

Net Income²

(56.493)

(23.545)

139,9%

(1.668)

3286,9%

(105.500)

(60.746)

73,7%

Revenue Backlog

291.189

306.484

(5,0%)

465.102

(37,4%)

291.189

465.102

(37,4%)

3 4

100.311

109.614

(8,5%)

166.149

(39,6%)

100.311

166.149

(39,6%)

Backlog Results

Backlog Results Margin

4 5

34,4%

35,8%

-1,3 p.p.

35,7%

-1,3 p.p.

34,4%

35,7%

-1,3 p.p.

Net Debt

114.839

103.493

11,0%

356.610

(67,8%)

114.839

356.610

(67,8%)

Cash and Cash Equivalents

5

630.660

570.156

10,6%

394.216

60,0%

630.660

394.216

60,0%

Equity + Minority Shareholders

1.513.890

1.177.187

28,6%

782.074

93,6%

1.513.890

782.074

93,6%

(Net Debt - Proj. Finance) / (Equity + Minority)

(33,2%)

(39,2%)

6 p.p.

(40,8%)

7,6 p.p.

(33,2%)

(40,8%)

7,6 p.p.

1Adjusted by capitalized interest with stock option plan (non-cash) and minority shareholders.

  1. Backlog results net of PIS/COFINS taxes (3.65%), excluding the impact of the PVA (Present Value Adjustment) method according to Law No. 11.638.
  2. Backlog results comprise the projects restricted by a condition precedent.
  3. Cash and cash equivalents and marketable securities.

Launches

In 3Q20, Gafisa resumed launches, three projects with an estimated total PSV of R$264 million. These launches are a result of a relevant restructuring process. It is worth noting that the social distancing rules inflicted by the pandemic of Covid-19, suspended the operation of sales stands, affecting the economic activity in the country. The Company also postponed for a few months the launches foreseen early in the year, evidencing our focus and commitment to the Company's turnaround. As subsequent events, we already launched for 4Q20, other two projects, highlighting the Cyano Barra with R$570 million PSV, and we are already in the pre-launch of another project in Campo Belo, with an estimated PSV of R$262 million.

25

Launches (R$ MM)

264

119

71

-

-

-

-

-

-

3T18

4T18

1T19

2T19

3T19

4T19

1T20

2T20

3T20

2017: R$554 MM

2018: R$729 MM

2020: R$44 MM

Sales

Gross sales soared 247.7% to R$143.8 million in 3Q20 versus 2Q20, even during the pandemic, sales grew by 260.0% year-on-year. The quarter-on-quarter increase reflects the restructuring of the sales area, with Gafisa Sales' improved structure. The higher speed of sales compared to 3Q19 also reflects greater sales options available, with a resumption of launches and pre-launches in 3Q20.

Dissolutions reached R$24.2 million in 3Q20, surging 12.4% from 2Q20 and 156% year-on-year. The quarter-on-quarter increase partially stems from a higher volume of deliveries in the period (not a concern for Management) and the pandemic of COVID-19. Efforts endeavored in the 2019 restructuring process advanced, resulting in renegotiations with Gafisa's clients, a more accurate credit analysis of potential clients, as well as the recovery of client confidence in the Company.

Dissolutions (R$ million)

52

58

41

32

22

24

10

13

10

3Q18

4Q18

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

2017: R$412 MM

2018: R$228 MM

2019: R$97 MM¹

¹ It considers LTM.

26

Net sales totaled R$117.7 million in 3Q20.

Net Sales Breakdown 3T20

(%)

29,7%

70,3%

Construction

Delivered units

Net Sales (R$ million)

136

95

114

50

56

60

30

29

20

3Q18

4Q18

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

2017: R$720 MM

2018: R$813 MM

2019: R$196 MM¹

¹ It considers LTM.

Sales Over Supply (SoS)

Sales Over Supply (SoS) reached 10.6% in 3Q20, an increase of 8.3 p.p. from 2Q20 and 7.6 p.p. from 3Q19. This increase reflects a higher volume of sales and launches in the quarter. We believe that this figure should improve with the Company's next launches, which besides making available new products, usually has a significant impact on inventory units sale.

27

SoS L12M

38,9%

39,9%

35,8%

24,1%

19,3%

18,2%

17,0%

14,1%

18,5%

3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20

SoS Quarterly

9,4%

10,6%

7,2%

5,0%

6,4%

4,3%

3,2%

3,0%

2,3%

3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20

Inventory (Property for Sale)

The Company's inventory at market value consolidated with projects acquired from Upcon totaled R$995.9 million in 3Q20.

Table 3 - Inventory at Market Value 2Q20 x 3Q20 (R$ 000)

Inventories 2Q20

Launches

Dissolutions

Gross Sales

UPCON

Adjustments

Inventories

% Q/Q

3Q20

São Paulo

686,125

45,553

22,749

(132,434)

215,563

4,193

841,749

22.7%

Rio de Janeiro

120,572

-

3,021

(5,134)

-

5,225

123,684

2.6%

Other markets

35,032

-

454

(6,310)

-

1,256

30,433

-13.1%

Total

841,729

-

26,224

(143,878)

215,563

10,675

995,866

18.3%

¹ Adjustments in the period reflect the updates related to the project scope, launch date, and pricing.

Inventory turnover in the last 12 months dropped from 73 months in 2Q20 to 53 months in 3Q20,

27.7% lower than in the previous quarter, owing to higher sales volume in the period.

Inventory Turnover LTM

73

50

54

59

53

38

20

25

20

16

19

18

21

3Q17

4Q17

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

28

Approximately 73% of inventory is composed of residential units located in the State of São Paulo and with higher liquidity.

Table 4 - Inventory at Market Value- Financial Progress - POC - (R$ 000)

Not initiated

Up to 30% built

30% to 70% built

More than 70% built

Finished units

Total 3Q20

São Paulo

129,376

72,461

229,018

168,826

242,069

841,749

Rio de Janeiro

-

-

-

-

123,684

123,684

Other markets

-

-

-

8,599

21,834

30,433

Total

129,376

72,461

229,018

177,425

387,587

995,866

* % POC does not necessarily reveal the status of construction works, but the project's financial progress.

Table 5 - Inventory at Market Value - Commercial x Residential Breakdown- (R$ 000)~

Residential

Comercial

Total

SP

723,513

118,236

841,749

RJ

15,641

108,043

123,684

Others

30,433

-

30,433

Total

769,587

226,279

995,866

Delivered Projects and Transfer

In 3Q20, we delivered two projects, totaling 421 units, and a total PSV of R$140.3 million. It is also worth noting that besides delivering these two projects, in the third quarter, the Company obtained the occupancy permit for two projects with 160 units and PSV of R$166 million, besides projects delivered in 1H20 with 775 units and PSV of R$608.9 million. Total deliveries foreseen for 2020 is 10 projects with a PSV of R$971.8 million and 1,474 units. Therefore, out of the total, we already delivered/obtained occupancy permit for 9 projects or 94% of PSV.

29

Table 6 - Deliveries

Project

Delivery

Launch

Location

%

Units 100% (Ex. swap

PSV %

date

date

share

units)

R$000

Vila Rica

feb/20

2016

Santos/SP

50%

69

65,168

Total 1Q20

69

65,168

Moov Estação Vila

abr/20

ago/16

São Paulo

100%

150

72,097

Prudente

Gafisa Like Alto da Boa

mai/20

ago/16

São Paulo

100%

220

158,676

Vista

Gafisa Square Ipiranga

mai/20

out/16

São Paulo

100%

224

263,490

Marquês 2900

mai/20

dez/16

São Paulo

50%

112

49,455

Total 2Q20

706

543,719

Moov Freguesia

ago/20

set/16

São Paulo

100%

307

91,893

Uplife Interlagos

ago/20

mai/15

São Paulo

100%

114

48,361

Total 3Q20

421

140,255

Total 2020

1,196

749,142

¹ Number of units corresponding to a 100% share in projects, net of swaps;

PSV transferred in 3Q20 was R$73.5 million, 3.6% lower than in 2Q20, and 48.7% higher than in 3Q19. The lower volume of transfer reflects a smaller amount of projects delivered this quarter compared to the previous quarter. We highlight that this result was achieved even amidst a pandemic, with restricted business hours at notary offices, banks, people's movement, and our team in home office most of the time. We again reiterate the Company's expectation of a significant increase in PSV transferred during 2020, due to the expected delivery of 10 projects in total.

Table 7 - Transfer and Delivery - (R$ 000)

3Q20

2Q20

Q/Q

3Q19

A/A

9M20

9M19

Y/Y (%)

(%)

(%)

PSV Transferred¹

70,468

76,244

-7.6%

49,426

42.6%

146,711

158,449

-7.4%

Delivered Projects

2

4

-50.0%

-

-

6

2

200.0%

Delivered Units²

421

716

-41.2%

-

-

1,137

365

211.5%

PSV delivered³

140,255

543,719

-74.2%

-

-

683,974

171,648

298.5%

  • PSV transferred refers to the effective cash inflow from units transferred to financial institutions; ² Number of units corresponding to a 100% share in projects, net of swaps;
    ³ PSV = Potential Sales Value of units, net of brokerage, and swap.

30

Landbank

With an estimated PSV of R$4.8 billion, the Company's landbank represents potential 40 projects/phases totaling 9,599 units. Approximately 49% of the acquisition value of our land consists of most of which are located in the city of São Paulo. This quarter, the Company acquired two plots of land in São Paulo, in Vila Mariana and Butantã districts, with an estimated PSV of R$255 million.

Table 8 - Landbank (R$ 000)

PSV¹ (%Cia.)

% Swap Total

% Swap Units

%Swap Finan.

Potential Units

Potential Units

(%Cia.)

(100%)

São Paulo

2,901,083

38.7%

32.5%

6.2%

6,111

6,339

Rio de Janeiro

1,282,715

72.2%

72.2%

0.0%

1,641

1,895

Others

593,614

38.1%

38.1%

0.0%

1,089

1,366

Total

4,777,412

48.6%

44.6%

4.0%

8,840

9,599

¹ The PSV (% Gafisa) reported is net of swap and brokerage fee.

  • The swap percentage is measured compared to the historical cost of land acquisition.
  • Potential units are net of swap and refer to the Gafisa's and/or its partners' interest in the project.

Table 9 - Changes in the Landbank (2Q20 vs. 3Q20 - R$ 000)

Initial Landbank

São Paulo

2,015,053

Rio de Janeiro

1,282,715

Others

593,614

Total

3,891,382

Land Acquisition

Launches

Dissolutions

UPCON

Adj.

Final Landbank

255,265

45,553

(232,755)

879,345

(61,378)

2,901,083

-

-

-

-

-

1,282,715

-

-

-

-

-

593,614

255,265

45,553

(232,755)

879,345

(61,378)

4,777,412

FINANCIAL RESULTS

Revenue

Net revenue amounted to R$148.6 million in the third quarter of 2020, 77.4% higher than in 2Q20, reflecting higher sales and works in progress in the period. Year-on-year, net revenue soared 66.6%, due to higher sales volume and construction works evolution.

31

Table 10 - Revenue Recognition (R$ 000)

3Q20

3Q19

Launches

Contracted Sales1

% Sales

Revenue

% Revenue

Contracted Sales

% Sales

Revenue

% Revenue

2018

52,326

45.9%

50,769

34.2%

(1,354)

(4.5%)

3,057

3.4%

2017

27,241

23.9%

44,396

29.9%

(472)

(1.6%)

13,794

15.5%

2016

6,450

5.7%

10,739

7.2%

13,091

44.0%

39,625

44.4%

2015

18,260

16.0%

25,271

17.0%

13,021

43.8%

21,488

24.1%

<2014

9,671

8.5%

17,457

11.7%

5,467

18.4%

11,247

12.6%

Total

113,947

100.0%

148,632

100.0%

29,753

100.0%

89,211

100.0%

¹ Contracted sales exclude UPCON sales, as it does not have revenue recognized in the quarter

Gross Profit & Margin

Gafisa's adjusted gross profit reached R$36.6 million in 3Q20, versus R$29.6 million in 2Q20 and R$45.3 million in 3Q19. The adjusted gross margin declined 10.7p.p. in the quarter to 24.6%, on the back of a greater conservative approach when recording provision for dissolutions, expected losses, and price variation in the period, amidst a challenging scenario of Covi-19 pandemic. Adjusted gross margin in 3Q20, excluding non-recurring items was 29.4%, higher than the margin of 2.3 p.p. recorded in 2Q20.

Table 11 - Gross Margin (R$ 000)

3Q20

2Q20

Q/Q (%)

3Q19

Y/Y (%)

9M20

9M19

Y/Y (%)

Net Revenue

148,632

83,800

77.4%

89,212

66.6%

304,135

284,292

7.0%

Gross Profit

24,412

22,714

7.5%

38,104

(35.9%)

67,588

81,522

-17%

Gross Margin

16.4%

27.1%

-10.7p.p.

42.7%

-26.3p.p.

22.2%

28.7%

-6.5p.p.

(-) Financial Costs

(12,175)

(6,857)

77.6%

(7,147)

70.4%

(25,307)

(30,356)

-17%

Adjusted Gross Profit ¹

36,587

29,571

23.7%

45,251

(19.1%)

92,895

111,878

-17%

Adjusted Gross Profit Margin

24.6%

35.3%

-10.7p.p.

50.7%

-26.1p.p.

30.5%

39.4%

-8.8p.p.

¹ Adjusted by capitalized interests.

Selling, General and Administrative Expenses (SG&A)

Selling, general and administrative expenses totaled R$23.5 million in 3Q20, 22.3% higher than in 2Q20, and 57.9% higher than in 3Q19.

General and administrative expenses came to R$19.5 million, 29.1% higher than the previous quarter, due to a provision for a bonus of R$3.0 million in the period. In 3Q20, recurring general and administrative expenses totaled R$12.1 million, 18% lower than the R$14.2 million recorded in 2Q20.

32

Table 12 - SG&A Expenses (R$ 000)

3Q20

2Q20

Q/Q (%)

3Q19

Y/Y (%)

9M20

9M19

Y/Y (%)

Selling Expenses

(3,909)

(4,047)

-3.4%

(2,170)

80.1%

(10,749)

(11,683)

-8%

G&A Expenses

(19,543)

(15,133)

29.1%

(12,678)

54.1%

(51,136)

(31,918)

60%

Total SG&A Expenses

(23,452)

(19,180)

22.3%

(14,848)

57.9%

(61,885)

(43,601)

42%

Other Operating Income/Expenses totaled expenses of R$26.5 million. Out of this amount, R$21.3 million refers to the provision for litigation and settlements made by the Company, as part of its project to settle contingent liabilities.

Table 13 - Other Operating Income/Expenses (R$ 000)

3Q20

2Q20

Q/Q (%)

3Q19

Y/Y (%)

9M20

9M19

Y/Y (%)

Litigation Expenses

(21,357)

(19,353)

10.4%

-

0.0%

(52,708)

(45,769)

15.2%

Others

(5,100)

(662)

670.4%

169

-3117.8%

(6,509)

70

-9398.6%

Total

(26,457)

(20,015)

32.2%

169

-15755.0%

(59,217)

(45,699)

29.6%

Adjusted EBITDA

Adjusted EBITDA came to R$7.9 million in 3Q20, 2.6% higher than the R$7.7 million reported in the previous quarter. Year-on-year, Adjusted EBITDA declined compared to R$31.1 million.

Table 14 - Adjusted EBITDA (R$ 000)

3Q20

2Q20

Q/Q (%)

3Q19

Y/Y (%)

9M20

9M19

Y/Y (%)

Net Income (Loss)

(56,493)

(23,545)

139.9%

(1,668)

3286.9%

(105,500)

(60,746)

73.7%

(+) Financial Results

28,049

2,354

1091.5%

21,548

30.2%

38,799

41,976

-7.6%

(+) Income Tax / Social Contribution

1,604

886

81.0%

508

215.7%

3,619

1,221

196.4%

(+) Depreciation and Amortization

1,936

1,882

2.9%

3,223

-39.9%

5,984

11,739

-49.0%

(+) Capitalized Interest

12,175

6,857

77.6%

7,147

70.4%

25,307

30,356

-16.6%

(+) Expenses w/ Stock Options Plans

(6)

47

(112.7%)

174

-103.4%

(362)

(2,698)

-86.6%

(+) Minority Shareholders

(700)

(112)

525.0%

119

-688.2%

(799)

121

-760.3%

(+) Litigation Expenses

21,357

19,353

10.4%

-

0.0%

52,708

45,769

15.2%

Adjusted EBITDA¹

7,922

7,722

2.6%

31,051

-74.5%

19,756

67,738

-70.8%

  • Adjusted by capitalized interests, with a stock option plan (non-cash) and minority shareholders.

Financial Result

Net financial result totaled (R$28.1) million in 3Q20 from (R$2.4) million in 2Q20, reflecting the volatility of certain securities in the period and the effect of swap operation contracted.

33

Net Result

Net result in 3Q20 came negative at R$56.5 million, compared to net losses of R$23.5 million and R$1.7 million recorded in 2Q20 and 3Q19, respectively.

Table 15 - Net Result (R$ 000)

3Q20

2Q20

Q/Q (%)

3Q19

Y/Y (%)

9M20

9M19

Y/Y (%)

Net Revenue

148,632

83,800

77.4%

89,212

66.6%

304,135

284,292

7.0%

Gross Result

24,412

22,714

7.5%

38,104

-35.9%

67,588

81,522

-17.1%

Gross Margin

16.4%

27.1%

-39.4%

42.7%

-61.5%

22.2%

28.7%

-22.5%

(-) Financial Costs

12,175

6,857

77.6%

(7,147)

-270.4%

25,307

(30,356)

-183.4%

Recurring Adjusted Gross Result¹

36,587

15,857

130.7%

45,251

-19.1%

92,895

111,878

-17.0%

Recurring Adjusted Gross Margin¹

24.6%

18.9%

30.1%

50.7%

-51.5%

30.5%

39.4%

-22.4%

Adjusted EBITDA²

7,922

7,722

2.6%

31,051

-74.5%

19.756

21.969

-10.1%

Adjusted EBITDA Margin²

5.3%

9.2%

-42.2%

34.8%

-84.7%

6.5%

7.7%

-15.9%

Adjusted Net Result³

(56,493)

(23,545)

139.9%

(1,668)

3286.9%

(105,500)

(60,746)

73.7%

( - ) Litigation Expenses

(21,357)

(19,353)

10.4%

-

0.0%

(52,708)

(45,769)

15.2%

Net Result (ex-Litigation Expenses)

(35,136)

(4,192)

738.2%

(1,668)

2006.5%

(52,792)

(14,977)

252.5%

  1. Adjusted by capitalized interests.
  2. Adjusted by capitalized interests, with a stock option plan (non-cash) and minority shareholders.

Revenue Backlog and Results

At the end of 3Q20, the balance of revenue backlog according to the PoC method totaled R$100.3 million, compared to R$109.6 million and R$166.1 million reported in the previous quarter and the same period last year, respectively. Margin to be recognized was 34.4%, in line with 2Q20.

Table 16 - Backlog Results (REF) (R$ 000)

3Q20

2Q20

Q/Q (%)

3Q19

Y/Y (%)

Revenue Backlog

291,189

306,484

-5%

465,102

-37%

Backlog Costs (units sold)

(190,878)

(196,870)

-3%

(298,953)

-36%

Backlog Results

100,311

109,614

-8%

166,149

-40%

Backlog Margin

34.4%

35.8%

-132bps

35.7%

-127bps

Notes: Backlog results net of PIS/COFINS taxes (3.65%) and excluding the impact of the PVA (Present Value Adjustment) method according to Law No. 11.638.

Backlog results comprise the projects restricted by acondition precedent.

34

BALANCE SHEET

Cash and Cash Equivalents and Marketable Securities

On September 30, 2020, cash and cash equivalents and marketable securities totaled R$630.7 million, compared to R$570.2 million in 2Q20, reflecting the inflow of funds from a capital increase of R$218.2 million and debt amortization in the period, so that to sustain a liquidity cushion and enable our growth resumption. The Company believes that disciplined cost control and the maintenance of a liquidity reserve are essential for the operation. This business vision and team's readiness allowed the company to go through this period of uncertainty very consistently and smoothly.

Receivables

At the end of 3Q20, total accounts receivable came to R$933.2 million. Of this amount, R$630.9 million were already recognized in the balance sheet.

Table 17 - Total Receivables (R$ 000)

3Q20

2Q20

Q/Q(%)

3Q19

Y/Y (%)

Receivables from developments - backlog

302,220

318,095

-5%

482,721

-37%

Receivables PoC - ST (on balance sheet)

544,147

445,811

22%

409,212

33%

Receivables PoC - LT (on balance sheet)

86,843

93,529

-7%

119,765

-27%

Total

933,210

857,435

9%

1,011,698

-8%

Notes: ST - Short term | LT- Long term | PoC - Percentage of Completion Method.

Receivables from developments: Accounts receivable not yet recognized according to PoC and BRGAAP.

Receivables from PoC: Accounts receivable already recognized according to PoC and BRGAAP.

Table 18 - Receivables Schedule (R$ 000)

Total

2020

2021

2022

2023

2024 - Onwards

Receivables Backlog

302,222

106,367

105,594

76,631

3,690

9,940

Receivables PoC

630,990

260,387

360,332

5,334

1,310

3,627

Total

933,212

366,754

465,926

81,965

5,000

13,567

Cash Generation

Table 19 - Cash Generation (R$ 000)

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

Cash 1

63,068

182,817

394,216

414,330

363,337

570,156

630,660

Change in Cash Available (1)

(74,092)

119,749

211,399

20,114

(50,993)

206,819

60,504

Total Debt

790,172

770,715

750,826

730,678

710,169

673,649

745,499

Change in Total Debt (2)

(99,241)

(19,457)

(19,889)

(20,148)

(20,509)

(36,520)

71,850

Capital Increase (3)

-

132,265

206,927

65,768

-

259,729

218,171

Cash Generation in the Period (1) - (2) - (3)

25,149

6,941

24,361

(25,506)

(30,484)

(16,390)

(229,517)

Final Accumulated Cash Generation ²

25,149

32,090

56,451

30,945

461

(15,929)

(245,446)

35

  • Cash and cash equivalents and marketable securities. ² It considers LTM.

Liquidity

Advancing the work of strengthening the Company's balance sheet, the Net Debt/Shareholders' Equity ratio reached 7.6% at the end of 3Q20, compared to 8.8% reported in 2Q20, due to higher cash deriving from capital increase. Within one year, we went from a Net Debt/Shareholders' Equity ratio of 45.6% in 3Q19 to current 7.6% in 3Q20. Net debt increased to R$123.5 million from R$114.8 million reported in the previous quarter.

Table 20 - Debt and Investor Obligation (R$ 000)

3Q20

2Q20

Q/Q(%)

3Q19

Y/Y (%)

Housing Financial System - SFH

259,432

266,210

-2.5%

267,923

-3.2%

Real Estate Financial System - SFI

126,340

146,613

-13.8%

175,565

-28.0%

Debentures (Projects)

172,578

112,338

53.6%

194,625

-11.3%

Bank Credit Notes (Projects)

59,696

40,219

48.4%

37,794

58.0%

Subtotal Project Debt (A)

618,046

565,380

9.3%

675,907

-8.6%

Debentures (Working Capital)

70,232

33,529

109.5%

49,646

41.5%

Bank Credit Notes (Working Capital)

40,922

62,799

-34.8%

14,899

174.7%

Other operations (Working Capital)

16,299

11,941

36.5%

10,374

57.1%

Subtotal Working Capital Debt (B)

127,453

108,269

17.7%

74,919

70.1%

Total Debt (A)+(B)= (C)

745,499

673,649

10.7%

750,826

-0.7%

Cash and Cash Equivalents1 (D)

630,660

570,156

10.6%

394,216

60.0%

Net Debt (C) - (D) = (E)

114,839

103,493

11.0%

356,610

-67.8%

Shareholders' Equity + Minority (F)

1,513,890

1,177,187

34.3%

782,074

93.6%

(Net Debt) / (SE) (E)/(F)=(G)

7.6%

8.8%

-121bps

45.6%

-3801bps

(Net Debt - Proj. Fin.) / (SE) ((E)-(A))/(F)=(H)

(33.2%)

(39.2%)

600bps

(40.8%)

759bps

¹Cash and cash equivalents and marketable securities.

The Company ended 3Q20 with R$332.6 million indebtedness falling due this year, accounting for 44.6% of total debt. Note that approximately 82.9% of the Company's debt is linked to projects, therefore, maturities are connected with the delivery of projects to still occur in 2020, and we already delivered or obtained the occupancy permit for 9 projects, or 94% of PSV estimated for this year's deliveries. On September 30, 2020, the consolidated average cost of debt was 9,5% p.a.

36

Table 21- Debt Maturity (R$ 000)

Average cost (a.a.)

Total

Until

Until

Until

Until

After

Dec/20

Dec/21

Dec/22

Dec/23

Dec/23

Housing Financial System - SFH

TR + 7,00% a 14,20%

259,432

187,455

-

-

-

71,977

Real Estate Financial System - SFI

Pre +13,66% / 143% CDI

126,340

519

77,298

7,800

7,800

32,923

Debentures (Projects)

CDI + 3% / CDI + 3,75% /

172,578

73,669

8,361

465

-

90,083

CDI + 5,00% / CDI + 6,00%

Bank Credit Notes (Projects)

CDI + 3,50% / Pre + 16,77%

59,696

12,292

23,027

19,660

4,717

-

Subtotal Project Debt (A)

618,046

273,935

108,686

27,925

12,517

194,983

Debentures (Working Capital)

IPCA + 7,8%

70,232

42,279

11,426

10,670

5,857

-

Bank Credit Notes (Working Capital)

CDI + 3,7%/ 4,25%

40,922

62

40,860

-

-

-

Other operations (Working Capital)

Pre + 11,36%

16,299

16,299

-

-

-

-

Subtotal Working Capital Debt (B)

127,453

58,640

52,286

10,670

5,857

-

Total Debt (A)+(B)= (C)

745,499

332,575

160,972

38,595

18,374

194,983

Total maturity per period %

-

44.6%

21.6%

5.2%

2.5%

Project debt maturity as % of total debt (B)/ (E)

-

-

82.4%

67.5%

72.4%

68.1%

Working capital maturity as % of total debt ((A)+(C))/ (E)

44.6%

44.6%

17.6%

32.5%

27.6%

31.9%

37

Consolidated Income Statement

3Q20

2Q20

Q/Q (%)

3Q19

Y/Y (%)

9M20

9M19

Y/Y (%)

Net Revenue

148,632

83,800

77.4%

89,212

66.6%

304,135

284,292

7.0%

Operational Costs

(124,220)

(61,086)

103.4%

(51,108)

143.1%

(236,547)

(202,770)

16.7%

Gross Result

24,412

22,714

7.5%

38,104

(35.9%)

67,588

81,522

-17.1%

Gross Margin

16,4%

27,1%

-10.7p.p.

42,7%

-26.3p.p.

22,2%

28,7%

-244.9%

Operational Expenses

(51,952)

(43,131)

20.5%

(17,597)

195.2%

(131,469)

(98,950)

-277.0%

Selling Expenses

(3,909)

(4,047)

(3.4%)

(2,170)

80.1%

(10,749)

(11,683)

-8.0%

General and Administrative Expenses

(19,543)

(15,133)

29.1%

(12,678)

54.1%

(51,136)

(31,918)

60.2%

Other Operating Revenue/Expenses

(26,457)

(20,015)

32.2%

169

(15755.0%)

(59,217)

(45,699)

29.6%

Depreciation and Amortization

(1,936)

(1,882)

2.9%

(3,223)

(39.9%)

(5,984)

(11,739)

-49.0%

Equity Income

(107)

(2,054)

(94.8%)

305

(135.1%)

(4,383)

2,089

-309.8%

Operational Result

(27,540)

(20,417)

34.9%

20,507

(234.3%)

(63,881)

(17,428)

-294.1%

Net Financial Result

(28,049)

(2,354)

1091.5%

(21,548)

30.2%

(38,799)

(41,976)

-252.9%

Financial Income

(6,512)

21,091

(130.9%)

3,229

(301.7%)

22,578

11,963

88.7%

Financial Expenses

(21,537)

(23,445)

(8.1%)

(24,777)

(13.1%)

(61,377)

(53,939)

13.8%

Net Income Before Taxes on Income

(55,589)

(22,771)

144.1%

(1,041)

5240.0%

(102,680)

(59,404)

-191.6%

Deferred Taxes

-

-

-

-

-

-

-

-

Income Tax and Social Contribution

(1,604)

(886)

81.0%

(508)

215.7%

(3,619)

(1,221)

196.4%

Net Income After Taxes on Income

(57,193)

(23,657)

141.8%

(1,549)

3592.3%

(106,299)

(60,625)

75.3%

Minority Shareholders

(700)

(112)

525.0%

119

(688.2%)

(799)

121

-760.3%

Net Income

(56,493)

(23,545)

139.9%

(1,668)

3286.9%

(105,500)

(60,746)

73.7%

38

Consolidated Balance Sheet

3Q20

2Q20

Q/Q (%)

3Q19

Y/Y (%)

Current assets

Cash and Cash Equivalents

6,705

19,512

-66%

12,819

-48%

Securities

623,955

550,644

13%

381,397

64%

Receivables from clients

544,147

445,811

22%

409,212

33%

Properties for sales

1,317,144

855,315

54%

820,892

60%

Other account receivable

148,435

178,058

-17%

119,897

24%

Prepaid expenses and other

1,045

1,131

-8%

2,159

-52%

Land for sale

7,014

7,014

0%

38,681

-82%

Subtotal

2,648,445

2,057,485

29%

1,785,057

48%

Non current assets

Receivables from clients

86,843

93,529

-7%

119,765

-27%

Properties for sales

191,985

293,573

-35%

190,953

1%

Other account receivable

224,683

221,739

1%

145,232

55%

Subtotal

503,511

608,841

-17%

455,950

10%

Intangible, property and equipment

21,297

17,444

22%

24,465

-13%

Investments

272,497

138,566

97%

300,726

-9%

Total Asset

3,445,750

2,822,336

22%

2,566,198

34%

Current liabilities

Loans and financing

349,348

283,923

23%

364,766

-4%

Debentures

127,147

119,367

7%

179,423

-29%

Obligation for purchase of land

259,336

111,790

132%

105,823

145%

Material and service suppliers

131,054

131,941

-1%

129,825

1%

Taxes and contributions

82,979

83,689

-1%

64,886

28%

Provision for contingencies

193,357

184,084

5%

179,681

8%

Other liabilities

297,086

253,603

17%

207,540

43%

Subtotal

1,440,307

1,168,397

23%

1,231,944

17%

Non current liabilities

Loans and financing

153,340

243,859

-37%

141,789

8%

Debentures

115,663

26,500

336%

64,848

78%

Obligation for purchase of land

87,942

92,998

-5%

147,147

-40%

Deferred taxes

12,114

12,114

0%

49,372

-75%

Provision for contingencies

86,250

78,809

9%

110,564

-22%

Other liabilities

36,244

22,472

61%

38,460

-6%

Subtotal

491,553

476,752

3%

552,180

-11%

Shareholders' Equity

Shareholders' equity

1,509,624

1,175,852

28%

780,159

94%

Minority Interest

4,266

1,335

220%

1,915

123%

Subtotal

1,513,890

1,177,187

29%

782,074

94%

Total Liabilities and Shareholders' Equity

3,445,750

2,822,336

22%

2,566,198

34%

39

Balance Sheet by brand - Consolidated 3Q20

Gafisa

Upcon

Consolidated

Current assets

Cash and Cash Equivalents

5,190

1,515

6,705

Securities

623,955

-

623,955

Receivables from clients

512,367

31,780

544,147

Properties for sales

902,215

414,929

1,317,144

Other account receivable

210,381

9,656

148,435

Prepaid expenses and other

1,045

-

1,045

Land for sale

7,014

-

7,014

Subtotal

2,262,167

457,880

2,648,445

Non current assets

Receivables from clients

83,588

3,255

86,843

Properties for sales

191,985

-

191,985

Other account receivable

223,848

835

224,683

Subtotal

499,421

4,090

503,511

Intangible, property and equipment

19,877

1,420

21,297

Investments

270,123

2,374

272,497

Total Asset

3,051,588

465,764

3,445,750

Current liabilities

Loans and financing

312,371

108,579

349,348

Debentures

127,147

-

127,147

Obligation for purchase of land

128,280

131,056

259,336

Material and service suppliers

128,777

2,277

131,054

Taxes and contributions

77,662

5,317

82,979

Provision for contingencies

193,357

-

193,357

Other liabilities

280,023

17,063

297,086

Subtotal

1,247,617

264,292

1,440,307

Non current liabilities

Loans and financing

128,881

24,459

153,340

Debentures

115,663

-

115,663

Obligation for purchase of land

61,404

26,538

87,942

Deferred taxes

12,114

-

12,114

Provision for contingencies

77,226

9,024

86,250

Other liabilities

20,686

15,558

36,244

Subtotal

415,974

75,579

491,553

Shareholders' Equity

Shareholders' equity

1,387,362

122,262

1,509,624

Minority Interest

635

3,631

4,266

Subtotal

1,387,997

125,893

1,513,890

Total Liabilities and Shareholders' Equity

3,051,588

465,764

3,445,750

40

Consolidated Cash Flow

3T20

3T19

9M20

9M19

Net Income (Loss) before taxes

(55,589)

(1,041)

(102,681)

(59,404)

Expenses/revenues that do not impact working capital

31,713

1,522

108,686

11,897

Depreciation and amortization

1,936

3,223

5,984

11,739

Impairment

-

(2)

(1,044)

(28,221)

Expenses with stock option plans

(5)

174

(362)

(2,698)

Unrealized interest and fees, net

(4)

1,216

2,130

4,302

Equity income

107

(305)

4,383

(2,089)

Warranty provision

1,998

(2,136)

1,102

(3,918)

Provision for contingencies

21,358

-

52,708

45,885

Profit sharing provision

3,107

-

6,194

500

Provision (reversal) for doubtful accounts

2,833

(5,342)

34,197

(17,116)

Provision for fine due to construction work delay

383

1,935

3,394

754

Quotas assignment

2,759

2,759

Receivables

(62,895)

42,139

(83,182)

127,949

Properties for sale

54,688

14,765

(27,289)

145,244

Other receivables

(22,053)

(11,886)

(88,096)

(35,981)

Prepaid expenses

86

159

815

509

Obligations for purchase of land

(15,104)

(1,590)

(32,744)

(56,461)

Taxes and contribution

(6,027)

4,528

7,794

7,610

Suppliers

(2,960)

(39,327)

33,726

(2,189)

Payroll, charges and bônus provision

(2,834)

(546)

(7,721)

(2,366)

Other accounts payable

(110,900)

62,090

(71,268)

(93,534)

Transactions with related parties

25,623

7,765

47,135

26,045

Paid taxes

(1,604)

(508)

(3,619)

(1,221)

Cash used in operating activities

(167,856)

78,070

(218,444)

68,098

Acquisition of properties and equipment

(4,369)

1,656

(4,618)

(4,361)

Redemption of securities, collaterals, and credits

151,192

2,311

287,594

50,445

Investment in marketable securities and restricted credits

(226,018)

(209,548)

(511,169)

(326,986)

Equity Securities

-

(2,717)

-

-

Cash used in investing activities

(79,195)

(208,298)

(228,193)

(280,902)

Increase of loans and financing

192,447

37,885

310,900

89,672

Amortization of loans and financing

(182,030)

(58,990)

(359,646)

(232,561)

Loan operations

(3,464)

(759)

(9,013)

(10,117)

Sale of treasury shares

-

-

-

148

Proceeds from sale of treasury shares

7,605

(53,389)

19,251

6,984

Capital increase

218,171

-

477,900

132,266

Subscription and payment of common shares

-

206,927

-

206,927

Cash acquired from Upcon

1,515

-

1,515

-

Cash Flow from Financing Activities

234,244

131,674

440,907

193,319

Increase (Decrease) in cash and cash equivalents

(12,807)

1,446

(5,730)

(19,485)

Beginning of the period

19,512

11,373

12,435

32,304

End of the period

6,705

12,819

6,705

12,819

41

This release contains forward-looking statements about business prospects, estimates for operating and financial results, and Gafisa's growth prospects. Readers can identify many of these statements when reading words such as "estimates," "believes," "expects," and "will," as well as similar words or their respective negatives. Although management believes the expectations conveyed in such statements to be reasonable, it is unable to guarantee that such expectations will come to fruition, and they should not be deemed as projections. By their nature, forward-looking statements require us to make assumptions and, as such, are subject to risks and uncertainties. They are mere expectations and therefore are based exclusively on what management expects concerning the future of the business and its continued access to capital to fund the Company's business plan. Such forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy, and the industry, among other factors; therefore, they are subject to change without prior notice. The forward-looking statements included in this release are based on the assumption that our plans and operations will not be affected by such risks, but if our plans and operations happen to be affected by these risks, the forward-looking statements might become inaccurate. We do not commit to revising these forward-looking statements unless it is explicitly required by the applicable securities regulation.

IR Contacts

Telephone: +55 11 3025-9242 / 9317

E-mail: ri@gafisa.com.br

IR Website: ri.gafisa.com.br

42

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

1. Operations

Gafisa S.A. ("Gafisa" or "Company") is a publicly-traded company with registered office at Presidente Juscelino Kubitschek, 1.830, conjunto comercial 32, 3o andar, Bloco 2, in the city and state of São Paulo, Brazil, and began its operations in 1997 with the objectives of: (i) promoting and managing all forms of real estate ventures on its own behalf or for third parties (in the latter case, as construction company or proxy); (ii) selling and purchasing real estate properties; (iii) providing civil construction and civil engineering services; (iv) developing and implementing marketing strategies related to its own and third party real estate ventures; and (v) investing in other companies who share similar objectives.

The Company enters into real estate development projects with third parties through special purpose entities (SPE) or through the formation of consortia and condominiums. Subsidiaries significantly share the managerial and operating structures, and corporate, managerial and operating costs with the Company. The SPEs, condominiums and consortia operate solely in the real estate industry and are linked to specific ventures.

The Company has stocks traded on B3 S.A. - Brasil, Bolsa, Balcão (former BM&FBovespa), reporting its information to the Brazilian Securities and Exchange Commission (CVM) and the U.S. Securities and Exchange Commission (SEC). The ADSs were delisted on the NYSE on December 17, 2018, and are currently traded Over the Counter (OTC).

1.1 Coronavirus - COVID-19

In the period ended September 30, 2020, there has not been any significant impact from the outbreak of Coronavirus on the Company's operations. A Crisis Management Committee has been created that holds daily meetings and total availability for discussing and taking important disease prevention measures.

Awareness campaigns to promote actions that mitigate transmission (frequent hygiene, distancing, meeting through virtual platforms, exclusive service channel, among others) have been created. We have implemented a series of educative and preventative measures targeted at our construction site employees, reducing the staff considered to be in the risk group. The sales activities have focused on digital interactions with prospective customers.

The Company will keep following the implementation of the necessary actions with the Government Authorities, Ministry of Health, and trade associations.

Until the disclosure date of this quarterly information, the Company has not noted a significant increase in customer default and contract cancellation or reduction in sales volume. Moreover, the construction of ventures has been according to the original schedule.

Also, due to the Covid-19 pandemic, the Company has postponed the launches planned for the second quarter to the second half of this year.

The Company has opted for deferring the payment of the federal taxes related to March, April and May 2020, collected later on, pursuant to Ordinances 139, 150 and 245. Under the terms of Provisional Measure 927, of March 22, 2020, the Company has also opted for deferring the FGTS deposits by employers, related to March, April and May 2020, with collection in six monthly installments from July 2020. Pursuant to Provisional Measure 936, of March 31, 2020, converted into Law 14,020 of 2020, the Company has reduced salaries by 25%, with proportional reduction in working hours, of a certain group of employees over a 90-day period. Additionally, there has been a voluntary 50% reduction in the salary of the Board of Director's members over a 180-day period.

Thus far, there is a high volatility in the Company's stock price traded on the stock exchange as a result of the global concern for this pandemic and its developments.

Management understands that at present, the projections used in the analysis of realization of its assets shall not suffer significant changes in the face of this event, and keeps the adopted assumptions.

43

(A free translation of the original report in Portuguese as published in Brazil)

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

2. Presentation of quarterly information and summary of significant accounting policies

2.1. Basis of presentation and preparation of individual and consolidated quarterly information

On November 16, 2020, the Company's Board of Directors has approved the individual and consolidated quarterly financial information of the Company and authorized its disclosure.

The individual Quarterly Financial Information (ITR) has been prepared in accordance with the Accounting Pronouncements Committee (CPC) Technical Pronouncement 21 (R1) - Interim Financial Reporting, and the consolidated Quarterly Financial Information (ITR) has been prepared in accordance with such pronouncement and the International Accounting Standard (IAS) 34 - Interim Financial Reporting, applicable to the real estate development entities in Brazil, registered with the Brazilian Securities and Exchange Commission (CVM). The aspects related to the transfer of control in the sale of real estate units follow the understanding of the company's management, aligned with that issued by the CVM in the Circular Letter /CVM/SNC/SEP 02/18 on the application of the Technical Pronouncement NBC TG 47 (IFRS 15), consistently with the rules issued by the CVM, applicable to the preparation of the ITR.

The quarterly financial information has been prepared using the same accounting practices, judgments, estimates and assumptions adopted in the presentation and preparation of the financial statements for the year ended December 31, 2019. Therefore, the corresponding quarterly financial information shall be read together with the financial statements as of December 31, 2019.

The individual quarterly financial information of the Company is not considered in compliance with the International Financial Reporting Standards (IFRS), once it considers the capitalization of interest on qualifying assets of investees in the individual quarterly financial information of the Company.

The quarterly financial information has been prepared on a going concern basis. Management periodically assesses the Company's ability to continue as going concern when preparing the quarterly financial information.

All amounts reported in the accompanying quarterly financial information are in thousands of reais, except as otherwise stated.

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 2.1 to the individual and consolidated financial statements as of December 31, 2019.

All material information characteristic of the quarterly financial information, and only it, is being evidenced, and corresponds to those used by Management in its administration.

2.1.1. Consolidated quarterly financial information

The accounting practices were uniformly adopted in all subsidiaries included in the consolidated quarterly financial information, and the fiscal year of these companies is the same of the Company. See further details in Note 9.

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 2.1.1 to the individual and consolidated financial statements as of December 31, 2019.

44

(A free translation of the original report in Portuguese as published in Brazil)

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

2.1.2. Functional and presentation currency

The functional and presentation currency of the Company is the Brazilian real, mainly because of its revenues and the incurred costs of operations.

3. New standards, changes and interpretation of standards issued and adopted from 2020, and not yet adopted

The explanations related to this note were not subject to material changes in relation to the disclosures in

Note 3 to the individual and consolidated financial statements as of December 31, 2019.

There is no other standard, changes to standards or interpretation issued and not yet adopted that could, on the Management's opinion, have significant impact arising from their adoption on its quarterly financial information.

4. Cash and cash equivalents and short-term investments

4.1. Cash and cash equivalents

Company

Consolidated

09/30/2020

12/31/2019

09/30/2020

12/31/2019

Cash and banks

43

810

6,705

12,435

Total cash and cash equivalents

(Note 20.i.d, 20.ii.a and 20.iii)

43

810

6,705

12,435

4.2. Short-term investments

Company

Consolidated

09/30/2020

12/31/2019

09/30/2020

12/31/2019

Fixed-income funds (a)

135,445

125,961

135,444

125,962

Government bonds (LFT) (a)

90,598

231,725

90,597

231,725

Real estate investment fund (a)

221,451

-

221,451

-

Bank certificates of deposit (b)

143,788

10,460

147,378

10,523

Restricted credits (c)

27,743

32,972

29,085

33,560

Securities purchased under resale agreements

-

125

-

125

Total short-term investments

(Note 20.i.d, 20.ii.a and 20.iii)

619,025

401,243

623,955

401,895

  1. Exclusive and open-end funds whose purpose is to invest in financial assets and/or fixed-income investment modalities that follow the fluctuations in interest rates in the interbank deposit market (CDI), by investing its funds mostly in investment fund shares and/or investment funds comprising investment fund shares. The Company entered into a swap contract to mitigate the risk of its exposure to index and interest rate volatility (Note 20(i)(b)).
  2. As of September 30 and December 31, 2019, Certificates of Bank Deposit (CDBs) include interest earned through the statement of financial position's reporting date, ranging from 93.5% to 110% of Interbank Deposit Certificates (CDI).
  3. Restricted credits are represented by funds pledged to transactions with financial institutions.

45

(A free translation of the original report in Portuguese as published in Brazil)

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

5.

Trade accounts receivable

Company

Consolidated

09/30/2020

12/31/2019

09/30/2020

12/31/2019

Real estate development and sales

434,567

492,205

687,561

605,067

(-) Allowance for expected credit losses

(11,346)

(12,065)

(14,032)

(16,265)

( - ) Allowance for cancelled contracts (a)

(43,547)

(27,481)

(73,912)

(37,485)

( - ) Present value adjustment

(2,220)

(7,133)

(5,375)

(8,518)

Services and construction and other receivables

36,591

14,491

36,748

14,639

Total trade accounts receivable

(Note 20.i.d and 20.ii.a)

414,045

460,017

630,990

557,438

Current

340,903

361,649

544,147

445,303

Non-current

73,142

98,368

86,843

112,135

  1. The increase in the allowance for cancelled contracts was mainly caused by the re-evaluation of the current contracts in relation to the uncertainty over cash inflows due to the impact of the Covid-19 pandemic on the Company's portfolio of receivables.

The current and non-current portions have the following maturities:

Company

Consolidated

Maturity

09/30/2020

12/31/2019

09/30/2020

12/31/2019

Past due:

Up to 90 days (a)

75,846

19,785

77,378

32,306

From 91 to 180 days

44,609

8,294

46,647

11,424

Over 180 days

98,247

90,216

137,154

115,619

218,702

118,295

261,179

159,349

Falling due:

2020

28,272

286,456

84,669

343,972

2021

155,615

83,082

298,155

97,213

2022

17.804

5,276

28,876

5,368

2023

13,444

3,180

13,627

3,247

2024 onwards

37,321

10,407

37,803

10,557

252,456

388,401

463,130

460,357

( - ) Present value adjustment

(2,220)

(7,133)

(5,375)

(8,518)

( - ) Allowance for expected credit losses and cancelled contracts

(54,893)

(39,546)

(87,944)

(53,750)

414,045

460,017

630,990

557,438

  1. The increase in the period is due to the relevance of the delivery of six ventures in the period ended September 30, 2020. As reflection of the Covid-19 pandemic, the time required by banks and registry offices to process information for transferring the ownership of delivered units increased.

During the period ended September 30, 2020, the changes in the allowances for expected credit losses and cancelled contracts are summarized as follows:

Company

Consolidated

Balance as of December 31, 2019

(39,546)

(53,750)

Additions (Note 22)

(24,445)

(69,893)

Write-offs / Reversals (Note 22)

9,098

35,742

Acquired balance Upcon

-

(43)

Balance as of September 30, 2020

(54,893)

(87,944)

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 5 to the financial statements as of December 31, 2019.

46

(A free translation of the original report in Portuguese as published in Brazil)

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

6.

Properties for sale

Company

Consolidated

09/30/2020

12/31/2019

09/30/2020

12/31/2019

Land

388,370

423,074

933,588

573,715

( - ) Provision for loss on realization of land

(122,621)

(122,621)

(122,621)

(122,621)

( - ) Present value adjustment

(1,830)

(5,200)

(1,830)

(5,198)

Properties under construction (Note 29)

162,075

190,383

386,489

355,980

Completed units

240,238

264,381

304,234

283,991

( - ) Provision for loss on realization of properties

under construction and completed units

(63,193)

(65,627)

(64,542)

(67,099)

Allowance for cancelled contracts

41,592

36,078

73,811

47,099

Total properties for sale

644,631

720,468

1,509,129

1,065,867

Current

528,437

490,419

1,317,144

786,660

Non-current

116,194

230,049

191,985

279,207

In the period ended September 30, 2020, the change in the provision for loss on realization of properties for sale is summarized below:

Company

Consolidated

Balance as of December 31, 2019

(188,248)

(189,720)

Write-offs (a)

2,434

2,557

Balance as of September 30, 2020

(185,814)

(187,163)

  1. The amount of write-offs refers to the respective units sold in the period.

The amount of properties for sale offered as guarantee for financial liabilities is described in Note 12.

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 6 to the financial statements as of December 31, 2019.

7.

Other assets

Company

Consolidated

09/30/2020

12/31/2019

09/30/2020

12/31/2019

Advances to suppliers

17,574

20,142

20,226

20,702

Recoverable taxes (IRRF, PIS, COFINS, among other)

8,320

11,733

14,163

17,285

Arbitration decision amount

5,777

5,777

66,391

66,391

Credits with the controlling shareholders of Calçada (a)

20,000

-

20,000

-

Judicial deposits (Note 16.a)

132,249

122,238

140,661

129,933

Other assets

-

-

9,630

-

Total other assets

183,920

159,890

271,071

234,311

Current

65,760

52,455

146,125

67,395

Non-current

118,160

107,435

124,946

166,916

  1. Amount related to the advance made related to the acquisition of four ventures of Calçada Empreendimentos Imobiliários. The transaction was approved by the Administrative Council for Economic Defense (CADE) on November 3 (Note 31 (ii)).

8. Non-current assets held for sale 8.1 Land available for sale

The Company, in line with its strategic direction, opted to sell land not included in the business plan in effect. Likewise, it devised a specific plan for the sale of such land. The carrying amount of such land, adjusted to market value when applicable, after the test for impairment, is as follows:

Company

Consolidated

Provision for

Provision for

Cost

impairment

Net balance

Cost

impairment

Net balance

Balance as of December 31, 2019

12,486

(8,777)

3,709

15,792

(8,778)

7,014

Additions

-

-

-

-

-

-

Reversal / write-offs

-

-

-

-

-

-

Balance as of September 30, 2020

12,486

(8,777)

3,709

15,792

(8,778)

7,014

47

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

9. Investments in ownership interests

  1. Information on subsidiaries, associates and jointly-controlled investees

Company

Consolidated

Total

Total

Equity and advance for future

Income from equity

Income from equity method

Interest in capital - %

assets

liabilities

capital increase

Profit (loss) for the period

Investments

method investments

Investments

investments

Subsidiaries:

09/30/2020

12/31/2019

09/30/2020

09/30/2020

09/30/2020

12/31/2019

09/30/2020

09/30/2019

09/30/2020

12/31/2019

09/30/2020

09/30/2019

09/30/2020

12/31/2019

09/30/2020

09/30/2019

UPCON S.A.

(f)

100%

100%

465,763

342,931

122,832

-

-

-

122,832

-

-

-

-

-

-

-

Novum Directiones SPE Ltda.

-

100%

100%

177,253

98,294

78,959

44,120

(1,404)

-

78,959

44,120

(1,404)

-

-

-

-

-

Gafisa SPE-104 Emp. Imob. Ltda.

-

100%

100%

93,723

25,130

68,594

55,422

12,951

4,670

68,594

55,422

13,172

4,670

-

-

-

-

Gafisa SPE-89 Emp. Imob. Ltda.

-

100%

100%

109,157

58,143

51,014

51,015

(1)

(13)

51,014

51,015

(1)

(13)

-

-

-

-

Gafisa SPE-81 Emp. Imob. Ltda.

-

100%

100%

48,799

824

47,975

47,964

11

1,819

47,975

47,964

11

1,819

-

-

-

-

GDU Loteamentos Ltda.

-

100%

100%

43,206

19

43,187

43,206

(19)

-

43,187

43,206

(19)

-

-

-

-

-

Gafisa SPE- 132 Emp. Imob. Ltda.

-

100%

100%

39,179

8,985

30,193

30,193

-

-

30,193

30,193

-

-

-

-

-

-

Nuove Direzioni SPE Ltda.

-

100%

100%

41,364

11,202

30,162

30,887

(725)

-

30,162

30,887

(725)

-

-

-

-

-

Gafisa SPE-137 Emp. Imob. Ltda.

-

100%

100%

25,608

42

25,567

25,567

-

-

25,567

25,567

-

-

-

-

-

-

Edsp 88 Participações S.A.

-

100%

100%

29,474

12,682

16,792

16,724

68

175

16,792

16,724

68

175

-

-

-

-

Gafisa SPE-111 Emp. Imob. Ltda.

-

100%

100%

18,139

3,293

14,846

14,848

(2)

508

14,846

14,848

(2)

508

-

-

-

-

Manhattan Square Em. Im.Res.02 SPE Ltd.

-

100%

100%

15,960

1,238

14,722

14,722

(1)

(809)

14,722

14,722

(1)

(809)

-

-

-

-

Gafisa SPE 33 Emp. Imob. Ltda.

-

100%

100%

196,161

182,632

13,530

13,227

302

138

13,530

13,227

302

138

-

-

-

-

Maraville Gafisa SPE Emp. Imob. Ltda.

-

100%

100%

14,553

1,050

13,503

13,257

246

1,504

13,503

13,257

246

1,504

-

-

-

-

Gafisa SPE-134 Emp. Imob. Ltda.

-

100%

100%

13,481

1,815

11,667

11,630

36

(129)

11,667

11,630

36

(129)

-

-

-

-

Gafisa SPE-78 Emp. Imob. Ltda.

100%

100%

8,685

2,730

5,955

6,479

(525)

1,215

5,955

6,479

(525)

1,215

-

-

-

-

OCPC01 adjustment - capitalized interest

(a)

-

-

-

-

-

-

20,307

21,923

-

(2)

-

-

-

-

Other (*)

60,671

27,125

33,543

112,957

(2,468)

(5,719)

32,927

71,998

(7,621)

(4,929)

-

-

-

-

Subtotal Subsidiaries

1,401,176

778,135

623,041

532,220

8,469

3,359

642,732

513,182

3,537

4,147

-

-

-

-

Jointly-controlled investees:

Gafisa e Ivo Rizzo SPE-47 Emp. Imob. Ltda.

-

80%

80%

34,093

1,746

32,346

32,347

1

6

25,878

25,877

-

5

25,878

25,877

-

5

Sitio Jatiuca Emp. Imob. SPE Ltda

-

50%

50%

35,210

4,658

30,552

29,636

916

905

15,276

14,818

458

452

15,276

14,818

458

452

Varandas Grand Park Emp. Imob. SPE Ltda.

(b)

50%

50%

34,004

5,238

28,767

28,773

165

1,526

14,383

14,387

(3)

1,309

14,383

14,387

(3)

1,309

Parque Arvores Empr. Imob. Ltda.

(b)

50%

50%

28,876

3,157

25,719

24,616

1,524

2,411

12,860

12,308

552

1,054

12,860

12,308

552

1,054

Atins Emp. Imob. Ltda.

-

50%

50%

25,289

1,333

23,955

20,813

3,142

1,823

11,978

10,406

1,571

911

11,978

10,406

1,571

911

Gafisa SPE-116 Emp. Imob. Ltda.

-

50%

50%

25,133

4,273

20,860

25,111

(912)

2,749

10,430

12,555

(456)

1,375

10,430

12,555

(456)

1,375

FIT 13 SPE Emp. Imob. Ltda.

-

50%

50%

21,501

1,798

19,703

19,779

(76)

103

9,851

9,889

(38)

51

9,851

9,889

(38)

51

Performance Gafisa Gen. Severiano Ltda

-

50%

50%

11,658

28

11,631

11,631

-

166

5,815

5,816

-

83

5,815

5,816

-

83

Other (*)

-

68,628

28,474

40,153

38,751

374

(3,220)

20,386

19,850

(3,527)

(1,832)

32,544

29,122

(3,577)

(1,587)

Subtotal jointly-controlled investees

284,392

50,705

233,686

231,457

5,134

6,469

126,857

125,906

(1,443)

3,408

139,015

135,178

(1,493)

3,653

Associates:

Alphaville Urbanismo S.A.

-

-

-

-

-

-

(1,479,312)

-

(603,985)

-

-

-

-

-

-

-

-

Citta Ville SPE Emp. Imob. Ltda.

-

50%

50%

5,512

1,135

4,377

4,272

105

1,622

2,188

2,136

53

811

2,188

2,136

53

811

Gafisa Tiner Campo Belo I Emp. Imob. Ltda

-

45%

45%

1,142

25

1,117

1,189

(72)

(6)

503

535

(32)

(1)

503

535

(32)

(3)

Other (*)

-

(1)

-

(1)

(1)

1

-

-

-

(1)

-

728

953

-

-

Indirect jointly-controlled investees Gafisa

6,653

1,160

5,493

(1,473,852)

34

(602,369)

2,691

2,671

20

810

3,419

3,624

21

808

Goodwill arising from acquisition of subsidiary

(c)

-

130,063

-

-

-

130,063

-

-

-

Goodwill based on inventory surplus (d)

-

39,886

39,886

-

-

-

-

-

-

Total investments

942,229

681,645

2,114

8,365

272,497

138,802

(1,472)

4,461

(*) Includes companies with investment balances below R$ 5,000.

48

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

9. Investments in ownership interests--Continued

  1. Information on subsidiaries, associates and jointly-controlledinvestees--Continued

Company

Consolidated

Total

Equity and advance for future capital

Income from equity method

Income from equity metho

Interest in capital - %

Total assets

liabilities

increase

Profit (loss) for the period

Investments

investments

Investments

investments

Provision for net capital deficiency (e):

09/30/2020

12/31/2019

09/30/2020

09/30/2020

09/30/2020

12/31/2019

09/30/2020

09/30/2019

09/30/2020

12/31/2019

09/30/2020

09/30/2019

09/30/2020

12/31/2019

09/30/2020

09/30/2019

Manhattan Square Emp. Imob. Res. 01 SPE Ltda

50%

50%

42,160

55,638

(13,477)

(6,791)

(6,686)

-

(8,086)

(4,075)

(4,011)

-

(8,086)

(4,075)

(4,011)

Gafisa SPE 113 Em. Imob. Ltda.

60%

60%

2,542

15,384

(12,841)

(6,569)

(58)

(230)

(6,421)

(3,284)

(3,133)

(1,130)

(6,421)

(3,284)

(3,133)

(1,13

Manhattan Square Emp.Imob. Com. 01 SPE Ltda

50%

50%

3,254

9,800

(6,546)

(6,558)

(4)

(250)

(3,273)

(3,279)

4

(2,133)

(3,273)

(3,279)

4

(2,13

Other (*)

424,021

435,533

(11,513)

(4,483)

(8,306)

(182)

(11,183)

(4,156)

1,366

(114)

(328)

(325)

4,229

89

Total provision for net capital deficiency

471,977

516,355

(44,377)

(24,401)

-

(15,054)

(662)

(28,963)

(14,794)

(5,774)

(3,377)

(18,108)

(10,963)

(2,911)

(2,37

Total income from equity method investments

(3,660)

4,986

(4,383)

2,08

  1. Includes companies with investment balances below (R$ 5,000).
    1. Financial charges of the Company not recorded in the profit or loss of subsidiaries, as required by paragraph 6 of OCPC01.
    2. The Company recorded expense of R$386 in Income from equity method investments for the period ended September 30, 2020 related to the recognition, by jointly-controlled entities, of prior year adjustments, in accordance with the ICPC09 (R2) - Individual, Separate and Consolidated Financial Statements and the Equity Method of Accounting.
    3. Recognition of goodwill arising from the acquisition of the totality of UPCON S.A.'s shares. The Company commissioned a study from a company specialized in determining Purchase Price Allocation (PPA) for allocation of goodwill over a period of up to one year, according to CPC 15(R1) - Business Combinations.
    4. Amount related to the goodwill arising from purchase of the control of SPE GDU Loteamentos Ltda. granted on December 27, 2019 by Alphavile Urbanismo for the urban development business with acquired assets.
    5. The provision for net capital deficiency is recorded in the line item "Other payables" (Note 15).
    6. In view of the completion of the transaction of acquisition of the totality of Upcon S.A.'s shares on September 22, 2020 (Note 9.1), the Company did not recorded any inco me from equity method investments for the eight remaining days of the month.
  1. Information on significant investees

Significant investee:

Other investees:

Alphaville Urbanismo S.A.

Subsidiaries

Jointly-controlled investees

Associates

09/30/2020

12/31/2019

09/30/2020

12/31/2019

09/30/2020

12/31/2019

09/30/2020

12/31/2019

Cash and cash equivalents

-

-

5,900

4,611

20,266

37,267

1,605

2,087

Current assets

-

-

979,389

636,457

251,345

265,219

6,472

6,702

Non-current assets

-

-

421,787

409,773

33,047

30,084

181

84

Current liabilities

-

-

605,272

550,908

31,902

42,975

1,090

1,159

Non-current liabilities

-

-

173,433

6,307

18,804

20,871

70

167

09/30/2020

09/30/2019

09/30/2020

09/30/2019

09/30/2020

09/30/2019

09/30/2020

09/30/2019

Net revenue

-

27,107

32,913

54,505

27,497

53,271

(65)

228

Operating costs

-

-

(17,393)

(34,056)

(14,823)

(38,467)

-

(26)

Depreciation and amortization

-

-

(3)

(1,114)

(5)

(21)

-

-

Finance income (expenses)

-

-

(3,194)

(793)

253

(2,374)

8

282

Income tax and social contribution

-

-

(495)

(1,204)

(850)

(1,472)

(12)

(87)

Profit or loss from continued operations

-

(603,985)

8,469

3,359

5,134

6,469

33

(602,362)

  1. Change in investments

Company

Consolidated

Balance as of December 31, 2019

681,645

138,802

Income from equity method investments

2,114

(1,472)

Capital contribution (reduction)

(1,150)

53

Recognition of goodwill (9.(i).(c))

130,063

130,063

Investment UPCON

122,832

-

Other investments

6,725

5,051

Balance as of September 30, 2020

942,229

272,497

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 9 to the financial statements as of December 31, 2019.

49

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

9. Investments in ownership interests--Continued

9.1 Business combination

  1. Acquisition UPCON S.A.

On September 23, 2020, the Company disclosed the completion of the acquisition of the totality of Upcon S.A.'s shares, settled with the Company's shares. Such transaction gave rise to a goodwill in the amount of R$130,063, for which the Company commissioned a study from a company specialized in determining the Purchase Price Allocation (PPA) for allocation of goodwill over a period of up to one year, according to CPC 15(R1) - Business Combinations.

The following table shows the determination of the acquisition cost, pursuant to CVM Resolution 665/11:

Acquisition cost

252,895

Acquired net assets

122,832

Goodwill to be allocated

130,063

10. Property and equipment

Company

Consolidated

100%

100%

Write-

depreciated

Write-

Addition

depreciated

Description

12/31/2019

Additions

offs

items

09/30/2020

12/31/2019

Additions

offs

UPCON

items

09/30/2020

Cost

Hardware

8,922

-

-

(4,918)

4,004

9,111

-

-

-

(4,946)

4,165

Leasehold improvements and

installations

785

-

-

-

785

771

-

-

10

-

781

Furniture and fixtures

637

-

-

-

637

741

-

-

123

-

864

Machinery and equipment

2,561

-

-

-

2,561

2,561

-

-

22

-

2,583

Right-of-use assets

3,235

-

(217)

-

3,018

3,235

-

(217)

726

-

3,744

Sales stands

5,794

194

(2,188)

-

3,800

11,638

6,328

(2,222)

3,069

-

18,813

21,934

194

(2,405)

(4,918)

14,805

28,057

6,328

(2,439)

3,950

(4,946)

30,950

Accumulated depreciation

Hardware

(3,826)

(1,915)

-

4,918

(823)

(3,905)

(1,948)

-

-

4,946

(907)

Leasehold improvements and

installations

(782)

(266)

-

-

(1,048)

(737)

(269)

-

(7)

-

(1,013)

Furniture and fixtures

(511)

(48)

-

-

(559)

(604)

(49)

-

(75)

-

(728)

Machinery and equipment

(2,315)

(192)

-

-

(2,507)

(2,315)

(192)

-

(7)

-

(2,514)

Right-of-use assets

(1,711)

(710)

-

-

(2,421)

(1,711)

(710)

-

(715)

-

(3,136)

Sales stands

(642)

-

-

-

(642)

(4,626)

(394)

29

(1,726)

-

(6,717)

(9,787)

(3,131)

-

4,918

(8,000)

(13,898)

(3,562)

29

(2,530)

4,946

(15,015)

Total property and equipment

12,147

(2,937)

(2,405)

-

6,805

14,159

2,766

(2,410)

1,420

-

15,935

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 10 to the financial statements as of December 31, 2019.

11. Intangible assets

Company

12/31/2019

09/30/2020

100% amortized

Balance

Additions

Write-offs

Amortizations

items

Balance

Software - Cost

15,953

-

-

-

(1,807)

14,146

Software - Depreciation

(9,401)

-

-

(2,215)

1,807

(9,809)

Other

-

700

(27)

-

673

Total intangible assets

6,552

700

-

(2,242)

-

5,010

Consolidated

12/31/2019

09/30/2020

100% amortized

Balance

Additions

Write-offs

Amortizations

items

Balance

Software - Cost

17,353

-

-

-

(1,807)

15,546

Software - Depreciation

(10,269)

-

-

(2,395)

1,807

(10,857)

Other

-

700

(27)

-

673

Total intangible assets

7,084

700

-

(2,422)

-

5,362

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 10 to the financial statements as of December 31, 2019.

50

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

12. Loans and financing

Company

Consolidated

Type

Maturity

Annual interest rate

09/30/2020

12/31/2019

09/30/2020

12/31/2019

7.00% to 14.20% + TR

365,146

421,382

385,772

456,247

National Housing System - SFH /SFI (i) (ii)

May 2019 to July 2025

13.66% and 143% of CDI

Fixed 16.77%/12.68%/6.00%

March 2021 to April

2.5%/ 3.70%/ 4.25%+CDI

50,561

55,022

53,739

55,022

Certificate of Bank Credit (CCB) (ii)

2022

Other transactions

4,945

14,272

63,177

21,884

Total loans and financing (Note 20.i.d, 20.ii.a and 20.iii)

420,652

490,676

502,688

533,153

Total current

300,534

383,647

349,348

426,124

Non-current

120,118

107,029

153,340

107,029

  1. On March 26, 2020, the Company completed the renegotiation of its financial liabilities with the financial institution Banco do Brasil S.A. in the total amount of R$138,355. This transaction enabled the Company to extend the final maturity of such debts until June 2025 and reduce the finance cost. Also in the scope of the renegotiation, the Company started to work on the time required to sell the units in inventory tied to this transaction.
  2. In the period ended September 30, 2020, the Company made payments totaling R$250,469, of which R$235,151 related to principal and R$15,318 related to the interest payable.

The current and non-current portions have the following maturities:

Company

Consolidated

Maturity

09/30/2020

12/31/2019

09/30/2020

12/31/2019

2020

182,748

383,647

217,189

426,124

2021

122,406

103,269

140,620

103,269

2022

11,560

3,760

27,461

3,760

2023

7,800

-

12,517

-

2024 onwards

96,138

-

104,901

-

420,652

490,676

502,688

533,153

The Company and its subsidiaries have restrictive covenants under certain loans and financing that limit their ability to perform certain actions, such as issuing debt, and that could require the acceleration or refinancing of loans if the Company does not fulfill certain restrictive covenants.

The ratios and minimum and maximum amounts required under restrictive covenants for loan and financing transactions are as follows:

09/30/2020

12/31/2019

Loans and financing

Total accounts receivable(1) plus inventories required to be below zero or 2.0 times

over venture debt(2)

6.54 times

4.52 times

Total accounts receivable(1) plus inventories of completed units required to be below

zero or 2.0 times over net debt less venture debt(2)

(4.59) times

(9.04) times

Total debt, less venture debt, less cash and cash equivalents and short-term

investments(3), cannot exceed 75% of equity plus non-controlling interests

-17.14%

-15.81%

Total receivables(1) plus unrecognized income plus total inventories of completed units

required to be 1.5 time over the net debt plus payable for purchase of properties plus

unrecognized cost

5.40 times

3.79 times

  1. Total receivables, whenever mentioned, refer to the amount reflected in the Statement of Financial Position plus the amount not shown in the Statement of Financial Position.
  2. Venture debt and secured guarantee debt refer to SFH debts, defined as the sum of all disbursed borrowing contracts which funds were provided by the SFH.
  3. Cash and cash equivalents and short-term investments refer to cash and cash equivalents and marketable securities.

51

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

12. Loans and financing--Continued

The following table shows the summary of finance costs and charges and the capitalized portion in the line item properties for sale.

Company

Consolidated

09/30/2020

09/30/2019

09/30/2020

09/30/2019

Total financial charges for the year

59,898

66,184

64,686

68,205

Capitalized financial charges (Note 30)

(13,483)

(17,756)

(21,685)

(25,229)

Subtotal (Note 24)

46,415

48,428

43,001

42,976

Financial charges included in "Properties for sale":

Opening balance

193,798

211,465

206,935

223,807

Capitalized financial charges

13,483

17,756

21,685

25,229

Financial charges related to cancelled land sales contract

(3,840)

(8,955)

(3,840)

(8,955)

Charges recognized in profit or loss (Note 23)

(16,710)

(21,757)

(25,307)

(30,356)

Acquired balance UPCON

-

17,408

Closing balance

186,731

198,509

216,881

209,725

The recorded amount of properties for sale offered as guarantee for loans, financing and debentures is R$379,986 (R$421,120 in 2019).

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 12 to the financial statements as of December 31, 2019.

13. Debentures

Company

Consolidated

Program/placements

Principal - R$

Annual interest

Final maturity

09/30/2020

12/31/2019

09/30/2020

12/31/2019

Tenth placement (i)

22,453

IPCA + 7.8%

December 2023

34,522

38,038

34,522

38,038

Eleventh placement - 1st Series A (ii)

-

-

-

-

52,008

-

52,008

Twelfth placement (iii)

39,843

CDI + 3.75 %

December 2020

39,800

57,139

39,800

57,139

Thirteenth placement (iv)

17,777

CDI + 3.00%

June 2022

16,671

33,792

16,671

33,792

Fourteenth placement (v)

22,835

CDI + 5.00%

October 2020

26,024

16,548

26,024

16,548

Fifteenth placement (a)

33,750

IGPM - 0.50%

July 2021

35,710

-

35,710

-

RB Capital (b)

90,083

CDI + 6.00%

September 2024

-

-

90,083

-

Total debentures (Note 20.i.d, 20.ii.a, 20.iii and 30.ii)

152,727

197,525

242,810

197,525

Current portion

127,147

158,179

127,147

158,179

Non-current portion

25,580

39,346

115,663

39,346

  1. In the context of the acquisition of the totality of UPCON's shares, on July 17, 2020, the Company signed the indenture of the 15th convertible debenture, of the subordinate type, into two series, in the total amount of R$33,750, maturing on July 15, 2020. The coupon rate applied to the face value corresponds to 0.50% per year and the index is the IGPM. The principal and coupon payments are only made on the respective maturity date, and may be settled by using the Company's shares.
  2. On September 15, 2020, the subsidiary Novum signed the indenture of the first non-convertible debenture issue, with secured guarantee, in sole series, in the total amount of R$190,000, maturing in September 2024. The net proceeds from this issue will be fully and only used to develop the real estate development ventures "Scena Tatuapé", "Parque Ecoville", "Moov Belém", "Moov Estação Brás", "Moov Parque Maia", "Belvedere" and "Upside Paraíso". The funds shall be released according to the construction works' needs, amortization and interest payments shall be made at the end of the operation. The coupon rate applied to the face value corresponds to the cumulative change of Interbank Deposits (DI) plus a surcharge equivalent to 6% p.a.

In the period ended September 30, 2020, the Company made the following payments:

Face value

Interest

Total

placement

payable

amortization

(i)

4,771

1,366

6,137

(ii)

52,026

2,928

54,954

(iii)

17,639

2,451

20,090

(iv)

17,590

1,292

18,882

(v)

12,511

1,198

13,709

104,537

9,235

113,772

The current and non-current portions have the following maturities:

Company

Consolidated

Maturity

09/30/2020

12/31/2019

09/30/2020

12/31/2019

2020

80,394

158,179

80,394

158,179

2021

56,131

23,119

56,131

23,119

2022

10,344

11,243

10,344

11,243

2023

5,858

4,984

5,858

4,984

2024

-

-

90,083

-

152,727

197,525

242,810

197,525

52

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

13. Debentures--Continued

The Company is compliant with the restrictive covenants of debentures at the reporting date of this quarterly information. The ratios and minimum and maximum amounts required under restrictive covenants are as follows:

09/30/2020

12/31/2019

Tenth placement

Total accounts receivable(1) plus inventories required to be below zero or 2.0 times

over net debt less venture debt(2)

(9.44) times

(14.62) times

Total debt, less venture debt(2), less cash and cash equivalents and short-term

investments(3), cannot exceed 75% of equity plus non-controlling interests

-17.14%

-15.81%

  1. Total receivables, whenever mentioned, refer to the amount reflected in the Statement of Financial Position plus the amount not shown in the Statement of Financial Position.
  2. Venture debt and secured guarantee debt refer to SFH debts, defined as the sum of all disbursed borrowing contracts which funds were provided by the SFH.
  3. Cash and cash equivalents and short-term investments refer to cash and cash equivalents and marketable securities.

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 13 to the financial statements as of December 31, 2019.

14. Obligations assumed on the assignment of receivables

The transactions of assignment of the receivable portfolio are as follows:

Company

Consolidated

09/30/2020

12/31/2019

09/30/2020

12/31/2019

Obligation CCI June/2011

152

322

294

412

Obligation CCI November/2012

-

-

2,441

2,586

Obligation CCI December/2012

950

1,683

950

1,683

Obligation CCI November/2013

183

242

644

1,170

Obligation CCI November/2014

436

833

616

1,203

Obligation CCI December/2015

1,410

2,342

3,950

5,300

Obligation CCI February/2016

3,705

5,845

4,168

6,429

Obligation CCI May/2016

2,639

3,385

3,525

4,625

Obligation CCI August/2016

1,898

2,351

1,922

2,392

Obligation CCI December/2016

5,162

5,961

5,274

6,106

Obligation CCI March/2017

5,920

8,254

6,110

8,455

Total obligations assumed on assignment of receivables

(Note 20.i.d and 20.ii.a)

22,455

31,218

29,894

40,361

Current

11,843

14,755

15,534

20,526

Non-current

10,612

16,463

14,360

19,835

The current and non-current portions have the following maturities:

Company

Consolidated

Maturity

09/30/2020

12/31/2019

09/30/2020

12/31/2019

2020

3,287

14,755

7,313

20,526

2021

8,036

5,193

10,962

7,020

2022

3,946

3,620

5,277

4,284

2023

2,066

1,895

2,916

2,221

2024

5,120

5,755

3,426

6,310

22,455

31,218

29,894

40,361

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 14 to the financial statements as of December 31, 2019.

53

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

15. Other payables

Provision for penalties due to delay in construction work Cancelled contract payable and allowance for cancelled contracts Warranty provision

Long term PIS and COFINS (deferred and payable) Provision for net capital deficiency (Note 9.i.e) Long-term suppliers (Note 20.i.d)

Share-based payment - Phantom Shares (Note 18.3) Other liabilities

Total other payables

Current

Non-current

Company

Consolidated

09/30/2020

12/31/2019

09/30/2020

12/31/2019

4,491

3,659

8,677

5,283

74,305

71,549

107,428

97,255

15,521

14,419

15,521

14,419

4,665

5,780

6,038

8,372

28,963

14,794

18,108

10,963

1,311

1,179

1,781

1,382

1,156

1,702

1,156

1,702

6,255

3,379

41,725

5,181

136,667

116,461

200,434

144,557

132,183

110,189

178,550

135,492

4,484

6,272

21,884

9,065

16. Provisions for legal claims and commitments

In the period ended September 30, 2020, the changes in the provision are summarized as follows:

Company

Civil lawsuits

Tax proceedings

Labor claims

Total

Balance as of December 31, 2019

226,951

2,682

33,848

263,481

Additional provision (Note 23)

51,127

-

-

51,127

Payment and reversal of provision not used

(39,839)

(2,637)

(4,274)

(46,750)

Balance as of September 30, 2020

238,239

45

29,574

267,858

Current

165,492

44

25,096

190,632

Non-current

72,747

1

4,478

77,226

Consolidated

Civil lawsuits

Tax proceedings

Labor claims

Total

Balance as of December 31, 2019

227,169

2,702

34,742

264,613

Additional provision (Note 23)

52,708

-

-

52,708

Payment and reversal of provision not used

(41,000)

(570)

(5,168)

(46,738)

Acquired balance UPCON

6,125

97

2,802

9,024

Balance as of September 30, 2020

245,002

2,229

32,376

279,607

Current

166,130

2,131

25,096

193,357

Non-current

78,872

98

7,280

86,250

  1. Civil lawsuits, tax proceedings and labor claims
    As of September 30, 2020, the Company and its subsidiaries have deposited in court the amount of
    R$132,249 (R$122,238 in 2019) in the Company's statements, and R$140,661 (R$129,933 in 2019) in the consolidated statements (Note 7).

Company

Consolidated

09/30/2020

12/31/2019

09/30/2020

12/31/2019

Civil lawsuits

60,782

50,308

66,000

54,706

Tax proceedings

37,161

40,516

38,535

41,989

Labor claims

34,306

31,414

36,126

33,238

Total (Note 7)

132,249

122,238

140,661

129,933

54

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

16. Provisions for legal claims and commitments--Continued

  1. Lawsuits which likelihood of loss is rated as possible
    As of September 30, 2020, the Company and its subsidiaries are aware of other claims, and civil, labor and tax risks. Based on the history of probable lawsuits and the specific analysis of main claims, the measurement of the claims with likelihood of loss considered possible amounted to R$487,235 (R$562,439 in 2019) in the Company's statements and R$488,172 (R$565,410 in 2019) in the consolidated statements, based on average past outcomes adjusted to current estimates, for which the Company's Management believes it is not necessary to recognize a provision for any losses. The change in the period was caused by the change in the volume of lawsuits with diluted amounts, and review of the involved amounts.

Company

Consolidated

09/30/2020

12/31/2019

09/30/2020

12/31/2019

Civil lawsuits

312,790

398,325

312,790

398,676

Tax proceedings

110,167

97,871

110,486

98,186

Labor claims

64,278

66,243

64,896

68,548

487,235

562,439

488,172

565,410

  1. Payables related to the completion of real estate ventures

There was no material change in relation to the information disclosed in Note 16(i)(b) to the financial statements as of December 31, 2019.

  1. Other commitments

In addition to the commitments mentioned in Notes 6, 12 and 13, the Company has commitments related to the rental of two commercial properties where its facilities are located, at a monthly cost of R$171 (including rent, condominium fees, and IPTU), indexed to the IGP-M/FGV change and termination of contract in August 2024.

The estimate of minimum future rent payments of this new contract for commercial property (cancellable leases) totals R$8,240, considering the above-mentioned contract expiration, as follows.

Consolidated

Estimate of payment

09/30/2020

2020

766

2021

2,153

2022

2,239

2023

2,329

2024 onwards

753

8,240

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 16 to the financial statements as of December 31, 2019.

55

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

17. Payables for purchase of properties and advances from customers

Company

Consolidated

Maturity

09/30/2020

12/31/2019

09/30/2020

12/31/2019

October 2020 to

Payables for purchase of properties

November 2022

42,939

68,020

180,127

68,133

Present value adjustment

(1,855)

(5,295)

(1,859)

(5,298)

Advances from customers

Development and services

1,088

1,540

58,173

14,197

Barter transaction - Land (Note 30 (i))

65,180

94,075

110,837

145,396

Total payables for properties and advances from

customers (Notes 20.i.d and 20.ii.a)

107,352

158,340

347,278

222,428

Current

66,660

89,825

259,336

129,353

Non-current

40,692

68,515

87,942

93,075

The current and non-current portions fall due as follows:

Company

Consolidated

Maturity

09/30/2020

12/31/2019

09/30/2020

12/31/2019

2020

26,908

89,825

145,672

129,353

2021

45,985

28,352

78,072

40,219

2022

24,086

29,208

66,983

33,396

2023

8,843

10,599

45,842

10,597

2024 onwards

1,530

356

10,709

8,863

107,352

158,340

347,278

222,428

18. Equity

18.1. Capital

At the Extraordinary Shareholders' Meeting held on April 30, 2020, shareholders approved the absorption of the Company's retained losses by its capital in the amount of R$2,585,033.

The Company's Board of Directors ratified the following capital increases in the period ended

September 30, 2020:

  • On August 7, 2020: subscription and pay-in of 75,610,000 new common shares at the price of R$4.10, totaling R$ 310,001.
  • On September 25, 2020: subscription and pay-in of 95,121,951 new common shares at the price of R$4.10, totaling R$390.000.

Accordingly, as of September 30, 2020, the Company's authorized and paid-in capital amounted to R$1,041,248 (R$2,926,280 in 2019), represented by 290,731,951 registered common shares, with no par value, of which 341,570 (2,981,052 in 2019) were held in treasury.

According to the Company's Articles of Incorporation, capital may be increased without need of making amendment to it, upon resolution of the Board of Directors, which shall set the conditions for issuance within the limit of 600,000,000 (six hundred million) common shares.

56

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

18. Equity--Continued

18.1. Capital--Continued

Treasury shares

Market value (*) R$

Carrying amount R$

Type

GFSA3

R$

%

thousand

thousand

Weighted

% - on shares

Acquisition date

Number (i)

average price

outstanding

09/30/2020

12/31/2019

09/30/2020

12/31/2019

2001

11/20/2001

44,462

38.9319

0.04%

193

385

1,731

1,731

2013

Acquisitions

1,372,096

51.9927

1.15%

5,941

11,896

71,339

71,339

2014

Acquisitions

3,243,947

35.5323

2.71%

14,046

28,125

115,265

115,265

2014

Transfers

(405,205)

43.3928

-0.34%

(1,755)

(3,513)

(17,583)

(17,583)

2014

Cancellations

(2,039,086)

44.9677

-1.70%

(8,829)

(17,679)

(91,693)

(91,693)

2015

Acquisitions

884,470

27.3124

0.74%

3,830

7,668

24,157

24,157

2015

Transfers

(90,622)

33.3473

-0.08%

(392)

(786)

(3,022)

(3,022)

2015

Cancellations

(2,225,020)

33.3543

-1.86%

(9,634)

(19,291)

(74,214)

(74,214)

2016

Acquisitions

334,020

26.0254

0.28%

1,446

2,896

8,693

8,693

2016

Transfers

(68,814)

31.2290

-0.06%

(298)

(597)

(2,149)

(2,149)

2017

Transfers

(112,203)

30.6320

-0.09%

(487)

(973)

(3,435)

(3,435)

2018

Acquisitions

13,221,300

13.4953

11.06%

57,248

114,629

178,425

178,425

2018

Transfers

(17,319)

30.6022

-0.01%

(75)

(150)

(530)

(530)

2018

Cancellations

(1,030,326)

-

-0.86%

(4,461)

(8,933)

-

-

2018

Disposal

(9,168,280)

16.1463

-7.67%

(39,699)

(79,489)

(148,034)

(148,034)

2019

Acquisitions

6,794,011

14.7355

5.68%

29,418

58,904

100,113

100,113

2019

Transfers

(9,174)

15.3695

-0.01%

(40)

(80)

(141)

(141)

2019

Cancellations

(370,000)

15.5324

-0.31%

(1,602)

(3,208)

(5,747)

(5,747)

2019

Disposal

(7,377,205)

14.5999

-6.17%

(31,943)

(63,960)

(109,658)

(109,658)

2020

Disposal

(2,639,482)

14.5979

-2.17%

(11,430)

-

(40,882)

-

341,570

7.7116

0.33%

1,477

25,844

2,634

43,517

  1. Market value calculated based on the closing share price on September 30, 2020 of R$4.33 (R$8.67 in 2019) not considering the effect of occasional volatilities.

The Company holds shares in treasury acquired in 2001 in order to guarantee the performance of lawsuits (Note 16(a)(i)).

The change in the number of shares outstanding is as follows:

Common shares - In thousands

Shares outstanding as of December 31, 2019

117,005

Subscription of shares

170,732

Disposal of shares

2,639

Change in management's shares

(9,786)

Shares outstanding as of September 30, 2020

280,590

Weighted average shares outstanding (Note 27)

144,814

18.2. Stock option plan

Expenses for granting stocks are recorded under the account "General and administrative expenses" (Note 23) and showed the following effects on profit or loss in the periods ended

September 30, 2020 and 2019:

09/30/2020

09/30/2019

Equity-settled stock option plans

184

355

Phantom Shares (Note 18.3)

(546)

(3,053)

Total option grant expenses (Note 23)

(362)

(2,698)

Changes in the stock options outstanding in the period ended September 30, 2020 and year ended December 31, 2019, including the respective weighted average exercise prices are as follows:

2020

2019

Weighted average

Weighted average

Number of options

exercise price (reais)

Number of options

exercise price (reais)

Options outstanding at the beginning of the year

1,230,383

16.64

1,239,557

15.58

Options granted

-

-

-

-

Options exercised (i)

-

-

(9,174)

(16.16)

Options outstanding at the end of the year

1,230,383

16.64

1,230,383

16.64

(i) In the year ended December 31, 2019, the amount received through exercised options was R$148.

57

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

18. Equity--Continued

18.2. Stock option plan--Continued

As of September 30, 2020, the stock options outstanding and exercisable are as follows:

Options outstanding

Options exercisable

Weighted average

Weighted

Weighted

remaining

average

average

contractual life

exercise price

Number of

exercise price

Number of options

(years)

(reais)

options

(reais)

1,230,383

5.50

16.64

682,964

23.27

During the period ended September 30, 2020 and year ended December 31, 2019, the Company did not grant any option in connection with its stock option plans comprising common shares.

The models used by the Company for pricing granted options are the Binomial model for traditional options and the MonteCarlo model for options in the Restricted Stock Options format.

18.3. Share-based payment - Phantom Shares

The Company has a total of two cash-settledshare-based payment plans with fixed terms and conditions, according to the plans approved by the Company, launched in 2015 and 2016.

As of September 30, 2020, the amount of R$1,156 (R$1,702 in 2019), related to the fair value of the phantom shares granted, is recognized in the line item "Other payables" (Note 15).

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 18 to the financial statements as of December 31, 2019.

19. Income tax and social contribution

The reconciliation of the effective tax rate for the periods ended September 30, 2020 and 2019 is as follows:

Company

Consolidated

09/30/2020

09/30/2019

09/30/2020

09/30/2019

Loss before income tax and social contribution, and statutory interest

(105,500)

(60,746)

(102,680)

(59,404)

Income tax calculated at the applicable rate - 34%

35,870

20,654

34,911

20,197

Net effect of subsidiaries and ventures taxed by presumed profit and RET

-

-

(608)

-

Income from equity method investments

(1,245)

(1,695)

(1,245)

(710)

Stock option plan

(63)

(121)

(63)

(121)

Other permanent differences

22,533

-

21,633

-

Charges on payables to venture partners

-

-

-

-

Recognized (unrecognized) tax credits

(57,095)

(18,838)

(58,247)

(20,587)

-

-

(3,619)

(1,221)

Tax expenses - current

-

-

(3,619)

(1,221)

Tax income (expenses) - deferred

-

-

-

-

58

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

19. Income tax and social contribution--Continued

  1. Deferred income tax and social contribution
    As of September 30, 2020 and December 31, 2019, deferred income tax and social contribution are from the following sources:

Company

Consolidated

09/30/2020

12/31/2019

09/30/2020

12/31/2019

Assets

Provisions for legal claims

91,072

89,584

91,998

89,968

Temporary differences - deferred PIS and COFINS

15,396

14,997

15,396

14,997

Provisions for realization of non-financial assets

266,570

260,327

266,570

260,327

Temporary differences - CPC adjustment

6,654

12,114

6,654

12,114

Other provisions

13,575

6,489

13,575

6,479

Income tax and social contribution loss carryforwards

456,147

411,064

477,605

431,311

849,414

794,575

871,798

815,196

Unrecognized tax credits of continued operations

(781,081)

(723,986)

(803,465)

(745,218)

(781,081)

(723,986)

(803,465)

(745,218)

Liabilities

Discounts

(2,069)

(2,069)

(2,069)

(2,069)

Temporary differences - CPC adjustment

(7,877)

(42,273)

(7,877)

(41,671)

Income taxed between cash and accrual basis

(70,501)

(38,361)

(70,501)

(38,352)

(80,447)

(82,703)

(80,447)

(82,092)

Total, net

(12,114)

(12,114)

(12,114)

(12,114)

The balances of income tax and social contribution loss carryforwards for offset are as follows:

Balance of income tax and social contribution loss carryforwards

Deferred tax assets (25%/9%) Recognized deferred tax assets Unrecognized deferred tax assets

Company

09/30/2020

12/31/2019

Income tax

Social

Income tax

Social

contribution

Total

contribution

Total

1,341,609

1,341,609

-

1,209,011

1,209,011

-

335,402

120,745

456,147

302,253

108,811

411,064

2,194

790

2,984

9,781

3,521

13,302

333,208

119,955

453,163

292,472

105,290

397,762

Consolidated

Balance of income tax and social contribution loss carryforwards

Deferred tax assets (25%/9%) Recognized deferred tax assets Unrecognized deferred tax assets

09/30/2020

Income tax

Social

contribution

Total

1,404,723

1,404,723

-

351,181

126,425

477,606

2,194

790

2,984

348,987

125,635

474,622

12/31/2019

Income tax

Social

contribution

Total

1,268,563

1,268,563

-

317,141

114,170

431,311

9,781

3,521

13,302

307,360

110,649

418,009

The other explanations related to this note were not subject to material changes in relation to the disclosures in Note 19 to the financial statements as of December 31, 2019.

59

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

20. Financial instruments

The Company and its subsidiaries engage in operations involving financial instruments. These instruments are managed through operational strategies and internal controls aimed at providing liquidity, return and safety. The use of financial instruments for hedging purposes is achieved through a periodical analysis of exposure to the risk that the Management intends to cover (exchange, interest rate, etc.) which is submitted to the corresponding Management bodies for approval and performance of the proposed strategy. The control policy consists of ongoing monitoring of the contracted conditions in relation to the prevailing market conditions. The Company and its subsidiaries do not use derivatives or any other risky assets for speculative purposes. The result from these operations is consistent with the policies and strategies devised by the Company's Management. The Company and its subsidiaries operations are subject to the risk factors described below:

  1. Risk considerations
    1. Credit risk
      There was no significant change in relation to the credit risks disclosed in Note 20(i)(a) to the financial statements as of December 31, 2019.
    2. Derivative financial instruments
      In the period ended September 30, 2020, the Company entered into financial derivative instruments to mitigate the risk arising from its exposure to index and interest volatility recognized at fair value in profit or loss for the year.
      As of December 30, 2020, the Company had derivative contracts to hedge the interest rate fluctuation, maturing in February 2021. The derivate contracts are as follows:

Unrealized gains/(losses) on

Reais

Percentage

Maturity

derivative instruments, net

Face

Swap -

Interest rate swap contracts

Liability

Beginning

End

09/30/2020

12/31/2019

value

position

Swap 1

79,003

120% CDI

08/05/2020

02/04/2021

1,495

-

Swap 2

100,000

Fixed 7%

09/10/2020

02/16/2021

(878)

-

Total derivative financial instruments

617

-

  1. Interest rate risk
    There was no significant change in relation to the interest rate risks disclosed in Note 20(i)(c) to the financial statements as of December 31, 2019.
  2. Liquidity risk
    There was no significant change in relation to the liquidity risks disclosed in Note 20(i)(d) to the financial statements as of December 31, 2019.

60

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

20. Financial instruments--Continued

  1. Risk considerations--Continued
    1. Liquidity risk--Continued
      The maturities of financial instruments of loans, financing, suppliers, debentures, forward transactions, obligations assumed on assignment of receivables, suppliers, payables for purchase of properties and advance from customers are as follows:

Year ended September 30, 2020

Company

Liabilities

Less than 1 year

1 to 3 years

4 to 5 years

Over 5 years

Total

Loans and financing (Note 12)

300,534

120,118

-

-

420,652

Debentures (Note 13)

127,147

25,580

-

-

152,727

Obligations assumed on assignment of receivables

(Note 14)

11,843

6,204

2,258

2,150

22,455

Suppliers (Note 15 and Note 20.ii.a)

65,995

1,311

-

-

67,306

Payables for purchase of properties and advances from

customers (Note 17)

66,660

38,478

2,214

-

107,352

572,179

191,691

4,472

2,150

770,492

Assets

Cash and cash equivalents and short-term investments

(Notes 4.1 and 4.2)

619,068

-

-

-

619,068

Trade accounts receivable (Note 5)

340,903

68,591

4,551

-

414,045

959,971

68,591

4,551

-

1,033,113

Year ended September 30, 2020

Consolidated

Liabilities

Less than 1 year

1 to 3 years

4 to 5 years

Over 5 years

Total

Loans and financing (Note 12)

349,348

153,340

-

-

502,688

Debentures (Note 13)

127,147

115,663

-

-

242,810

Obligations assumed on assignment of receivables

(Note 14)

15,534

8,480

4,961

919

29,894

Suppliers (Note 15 and Note 20.ii.a)

131,054

1,781

-

-

132,835

Payables for purchase of properties and advances from

customers (Note 17)

259,336

76,099

11,843

-

347,278

882,419

355,363

16,804

919

1,255,505

Assets

Cash and cash equivalents and short-term investments

(Notes 4.1 and 4.2)

630,060

-

-

-

630,660

Trade accounts receivable (Note 5)

544,147

80,031

6,812

35,035

630,990

1,174,807

80,031

6,812

35,035

1,261,650

The Company uses the following classification to determine and disclose the fair value of financial instruments by valuation technique:

Level 1: quoted prices (without adjustments) in active markets for identical assets or liabilities;

Level 2: inputs other than the quoted market prices within Level 1 that are observable for asset or liability, either directly (as prices) or indirectly (derived from prices); and

Level 3: inputs for asset or liability not based on observable market data (unobservable inputs).

The classification level of fair value for financial instruments measured at fair value through profit or loss of the Company as of September 30, 2020 and December 31, 2019 is as follows:

Company

Consolidated

Fair value classification

As of September 30, 2020

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

Financial assets

Short-term investments (Note 4.2)

-

619,025

-

-

623,955

-

Company

Consolidated

Fair value classification

As of December 31, 2019

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

Financial assets

Short-term investments (Note 4.2)

-

401,243

-

-

401,895

-

61

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

20. Financial instruments--Continued

  1. Risk considerations--Continued
    1. Liquidity risk--ContinuedFair value classification
      In the period ended September 30, 2020 and year ended December 31, 2019, there was no transfer between the Levels 1 and 2 fair value classifications, nor were transfers between Levels 3 and 2 fair value classifications.
  1. Fair value of financial instruments
    1. Fair value measurement
      The Company uses the same methods and assumptions disclosed in Note 20(ii)(a) to the financial statements as of December 31, 2019 to measure fair value of each financial instrument classification for which the estimate of value is practicable.
      The most significant carrying amounts and fair values of financial assets and liabilities as of September 30, 2020 and December 31, 2019, classified into Level 2 of the fair value classification, are as follows:

Company

09/30/2020

12/31/2019

Carrying

Carrying

Classification

amount

Fair value

amount

Fair value

Financial assets

Cash and cash equivalents (Note 4.1)

43

43

810

810

(*)

Short-term investments (Note 4.2)

619,025

619,025

401,243

401,243

(*)

Trade accounts receivable (Note 5)

414,045

414,045

460,017

460,017

(**)

Loans receivable (Note 21.1)

112,665

112,665

33,416

33,416

(**)

Financial liabilities

Loans and financing (Note 12)

420,652

396,770

490,676

502,909

(**)

Debentures (Note 13)

152,727

186,482

197,525

278,727

(**)

Suppliers

67,306

67,306

80,285

80,285

(**)

Obligations assumed on assignment of receivables

(Note 14)

22,455

22,455

31,218

31,218

(**)

Payables for purchase of properties and advances

from customers (Note 17)

107,352

107,352

158,340

158,340

(**)

Loan payable (Note 21.1)

7,922

7,922

9,280

9,280

(**)

Consolidated

09/30/2020

12/31/2019

Carrying

Carrying

Classification

amount

Fair value

amount

Fair value

Financial assets

Cash and cash equivalents (Note 4.1)

6,705

6,705

12,435

12,435

(*)

Short-term investments (Note 4.2)

623,955

623,955

401,895

401,895

(*)

Trade accounts receivable (Note 5)

630,990

630,990

557,438

557,438

(**)

Loans receivable (Note 21.1)

41,070

41,070

33,416

33,416

(**)

Financial liabilities

Loans and financing (Note 12)

502,688

403,210

533,153

542,909

(**)

Debentures (Note 13)

242,810

186,482

197,525

278,727

(**)

Suppliers

132,835

132,835

96,832

96,832

(**)

Obligations assumed on assignment of receivables

(Note 14)

29,894

29,894

40,361

40,361

(**)

Payables for purchase of properties and advances

from customers (Note 17)

347,355

347,355

222,428

222,428

(**)

Loan payable (Note 21.1)

7,922

7,922

9,280

9,280

(**)

(*) Fair value through profit or loss (**) Amortized cost

There was no material change in relation to the information disclosed Note 20(ii)(a) to the financial statements as of December 31, 2019.

62

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

20. Financial instruments-Continued

  1. Fair value of financial instruments--Continued
    1. Risk of debt acceleration

As of September 30, 2020, the Company has loans and financing contracts with restrictive covenants related to cash generation, indebtedness ratios, capitalization, debt coverage, maintenance of shareholding position, and others. The breach of such obligations by the Company may give rise to the acceleration of its debts and/or acceleration of other debts of the Company, including due to the performance of any cross default or cross acceleration clauses, which may negatively impact the profit or loss of the Company and the value of its shares.

These restrictive covenants have been complied with by the Company and do not limit its ability to conduct its business as usual.

  1. Capital stock management
    The explanations related to this note were not subject to material changes in relation to the disclosures in Note 20(iii) to the financial statements as of December 31, 2019.
    The Company included in its net debt structure: loans and financing, debentures, less cash and cash equivalents and short-term investments:

Company

Consolidated

09/30/2020

12/31/2019

09/30/2020

12/31/2019

Loans and financing (Note 12)

420,652

490,676

502,688

533,153

Debentures (Note 13)

152,727

197,525

242,810

197,525

( - ) Cash and cash equivalents and short-term

investments (Notes 4.1 and 4.2)

(619,068)

(402,053)

(630,660)

(414,330)

Net debt

(45,689)

286,148

114,838

316,348

Equity

1,509,624

893,708

1,513,890

895,143

63

Gafisa S.A.

Notes to the quarterly financial information September 30, 2020

(Amounts in thousands of Brazilian Reais, except as otherwise stated)

20. Financial instruments--Continued

  1. Sensitivity analysis
    The sensitivity analysis of financial instruments for the period ended September 30, 2020 describes the risks that may give rise to material changes in the Company's profit or loss, as provided for by CVM, through Rule 475/08, in order to show a 10%, 25% and 50% increase/decrease in the risk variable considered.
    As of September 30, 2020, the Company has the following financial instruments:
    1. Financial investments, loans and financing and debentures linked to the Interbank Deposit Certificate (CDI);
    2. Loans and financing linked to the Referential Rate (TR) and CDI, and debentures linked to the CDI and Broad Consumer Price Index (IPCA);
    3. Accounts receivable and payables for purchase of properties, linked to the National Civil Construction Index (INCC) and General Market Price Index (IGP-M).

For the sensitivity analysis in the period ended September 30, 2020, the Company considered the interest rates of investments, loans and accounts receivable, the CDI rate at 3.54%, TR at 0%, INCC at 5.32%, IPCA at 3.14% and IGP-M at 14.40%. The scenarios considered were as follows:

Scenario I - Probable: 10% increase/decrease in the risk variables used for pricing

Scenario II - Possible: 25% increase/decrease in the risk variables used for pricing

Scenario III - Possible: 50% increase/decrease in the risk variables used for pricing

The Company shows in the following chart the sensitivity to risks to which the Company is exposed, taking into account that the possible effects would impact the future results, based on the exposures shown as of December 31, 2019. The effects on equity are basically the same of the profit or loss ones.

Scenario

I

II

III

III

II

I

Increase

Increase

Decrease

Decrease

Decrease

Transaction

Risk

Increase 10%

25%

50%

50%

25%

10%

Financial investments

Increase/decrease of CDI

2,036

5,089

10,178

(10,178)

(5,089)

(2,036)

Loans and financing

Increase/decrease of CDI

(442)

(1,105)

(2,209)

2,209

1,105

442

Debentures

Increase/decrease of CDI

(193)

(483)

(966)

966

483

193

Net effect of CDI change

1,401

3,501

7,003

(7,003)

(3,501)

(1,401)

Loans and financing