Annual and Transition Report (foreign Private Issuer) (20-f)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012

(a)

Description of the GAAP differences

The Company’s accounting policies and its consolidated financial statements comply with and are prepared in accordance with Brazilian GAAP.

A summary of the Company’s principal accounting policies under Brazilian GAAP that differ significantly from US GAAP is set forth below.

Principles of consolidation

Under Brazilian GAAP, the consolidated financial statements include the accounts of Gafisa S.A. and those of all its subsidiaries as mentioned in Note 2. Starting from January 1, 2013 and applicable retrospectively to the comparative periods the proportional consolidation method for investments in jointly-controlled investees, previously applied by the Company, is no longer allowed under Brazilian GAAP. Consequently these jointly controlled investments are now accounted under the equity method.

Under US GAAP, because such investments provide substantive participating rights granted to the non-controlling shareholder, they preclude the Company from consolidating these entities. Accordingly, for purposes of US GAAP these investments are also accounted for based on the equity method of accounting.

In addition, under Brazilian GAAP, for the year ended in December 31, 2013, the disposal of the Company´s 70% controlling interest in Alphaville is classified as a “discontinued operation”, given the fact that it’s a major line of business that was disposed of during that year. For US GAAP purposes however, this disposal does not meet the definition of a “discontinued operation” given the fact that the Company continues to have significant influence over this entity through its 30% non-controlling interest. When a significant continuing involvement like this exists the operation cannot be seen as discontinued under US GAAP, consequently the results from operations of Alphaville in the period from January 1 to November 30, 2013 are presented in their separate respective line items instead of being grouped together under the header “Net income from discontinued operations”, as under Brazilian GAAP (Note 8.2). In addition the gain on disposal which for Brazilian GAAP purposes is part of the discontinued operations line item is part of results from continuing operations for US GAAP purposes.

F-90

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

(i)

Revenue recognition

Under Brazilian GAAP, real estate development and retail land sales revenues, costs and related expenses are recognized using the percentage-of-completion method of accounting, by project, measuring progress towards completion in terms of actual costs incurred versus total budgeted expenditures for each stage of a development. Land is treated as a portion of budgeted construction costs and is appropriated proportionally to each real estate development. Under the percentage-of-completion method of accounting, revenues for work completed are recognized prior to receipt of actual cash proceeds or vice-versa. Revenues start to be recognized under the percentage-of-completion when the Company is no longer able to cancel the launched project, after the sales period established by law.

Under US GAAP for sale of individual units in a building the Company follows the guidance of ASC 360-20-40-50 to recognize the sale by the percentage-of-completion method, only when the individual units in condominium projects are sold separately and all the following criteria are met:

a. Construction is beyond a preliminary stage: Construction is not beyond a preliminary stage if engineering and design work, execution of construction contracts, site clearance and preparation, excavation, and completion of the building foundation are incomplete.

b. The buyer is committed to the extent of being unable to require a refund except for non-delivery of the unit.

c. Sufficient units have already been sold to assure that the entire property will not revert to rental property.

d. Sales prices are collectible.

e. Aggregate sales proceeds and costs can be reasonably estimated.

Collectability of the sales price is demonstrated by the buyer’s commitment to pay for the property, and there is a reasonable likelihood that the Company will collect the receivable which in turn is supported by substantial initial and continuing investments. When determining if the buyer’s initial and continuing investments are adequate, the potentially refundable amount, through judicial or other means, determined based on contractual termination clauses is excluded, pursuant to U.S. GAAP ASC 360.20.40. This standard requires amounts potentially refundable to a customer to be excluded from the initial and continuing investment test required by ASC 306.20.20, applicable prospectively as from January 1, 2008.

F-91

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

(a)

AUSA Revenue Recognition

Under US GAAP, retail land sales of lots that are subdivisions of large tracts of land the Company recognizes the sale by the percentage-of-completion method following ASC 976 605-25-4 and 25-6 – Retail Land, which criteria are as follows:

a. The period of cancellation with refund has expired;

b. Cumulative payments equal or exceed 10 percent;

c. Receivables are collectible;

d. Receivables are not subject to subordination;

e. There has been progress on improvements. The project’s improvements have progressed beyond preliminary stages, and there are indications that the work will be completed according to plan;

f. Development is practical. There is a reasonable expectation that the land can be developed for the purposes represented and the properties will be useful for those purposes at the end of the normal payment period.

Additionally, as part of the analysis of this adjustment, the Company also determined the effect over the minority interest from their consolidated subsidiaries. The reclassification of income to the minority interest for this adjustment was R$895, R$5,232 and R$16,545 for the years ended December 31, 2014, 2013 and 2012, respectively (Note 33(b)(i)).

The Company also determined the effect for their investments in affiliates that are recognized through the equity method under US GAAP. This reclassification resulted in an equity pick-up of (R$1,902) in December 31, 2014, (R$(23,137) in 2013, and R$48,198 in 2012, as a consequence of the increased affiliated entities in 2013 and 2012 that are recognized under the equity method (Note 33(b)(i))).

(ii)

Stock option plan

Under Brazilian GAAP, the rights to acquire shares granted to employees and executive officers under the stock options programs were recorded as an expense as from January 1, 2006, the transition date for the adoption of Law 11638/2007. Previously, under Brazilian GAAP, stock option programs did not result in any expense being recorded. The purchase of the stock by the employees is recorded as an increase in capital stock for the amount of the purchase price. Under Law 11,638/2007 and the accounting guidance provided by CPC No. 10, the stock option programs are treated as equity awards and measured at fair value at the grant date, no further adjustments are made at the balance sheet dates to reflect changes in fair values.

F-92

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

Under US GAAP, beginning in 2006, the Company adopted the new US GAAP standard for Share-based Payment. Until December 31, 2011, as the awards were indexed to the IGP-M plus annual interest of 3%, the employee share options have been accounted for as liability awards under the terms of US GAAP. The liability-classified awards were remeasured at fair value through the statement of operations at each reporting period until settlement. Remeasurement of liability awards could either result in the recognition of additional, or the reversal of compensation expense. The fair value of employee share options and similar instruments is estimated using the Black-Scholes option-pricing model for the years ended December 31, 2008 and 2007, and thereafter using the Binomial and Monte Carlo models. As of December 31, 2014, 2013 and 2012, there are no differences between Brazilian GAAP and US GAAP, as the awards are no longer indexed to the IGP-M and annual interest.

For purposes of the US GAAP net income (loss) and equity reconciliations, stock option compensation expenses of R$7,804 were reversed for the period ended December 31, 2012.

(iii)

Earnings (loss) per share

Under US GAAP, the presentation of earnings (loss) per share is required for public companies, including earnings (loss) per share from continuing operations and net income (loss) per share on the face of the statement of income (loss), and the per share effect of changes in accounting principles, discontinued operations and extraordinary items either on the face of the income statement or in a note. A dual presentation is required: basic and diluted. Computations of basic and diluted earnings per share data should be based on the weighted average number of shares outstanding during the period and all dilutive potential shares outstanding during each period presented, respectively. There is no difference between Brazilian GAAP and US GAAP.

For the period ended in December 31, 2012, the Company had the option to settle the purchase of the AUSA non-controlling interest in shares there is a potential dilutive effect on earnings per shares. For the earnings per share calculation the company includes 100% of its share in the income or loss of AUSA, which affects the numerator. Also the denominator was affected by the increase in weighted numbers per share, incorporating the number of shares necessary to purchase the AUSA non-controlling interest dilutive.

F-93

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

The Company has issued employee stock options (Note 19.3), the dilutive effects of which are reflected in diluted earnings per share by application of the “treasury stock method”. Under the treasury stock method, earnings per share are calculated as if options were exercised at the beginning of the period, or at time of issuance, if later, and as if the funds received were used to purchase the Company’s own stock. When the stock options’ exercise price is greater than the average market price of shares, diluted earnings per share are not affected by the stock options. Under US GAAP and Brazilian GAAP, potentially dilutive securities are not considered in periods where there is a loss as the impact would be anti-dilutive. For three years ended December 31, 2014 potentially dilutive stock options were not considered.

The table below presents the determination of net income available (loss) allocated to common shareholders and weighted average common shares outstanding used to calculate basic and diluted earnings (loss) per share.

	2014		2013		2012

Basic numerator
Declared dividends		-		150,067		-
U.S. GAAP undistributed profit (loss)		42,305		1,172,401		(121,203	)
Allocated U.S. GAAP undistributed profit (loss) available for Common shareholders		42,305		1,172,401		(121,203	)


Basic denominator (in thousands of shares)
Weighted-average number of shares		401,905		426,300		432,246
Basic earnings (loss) per share – U.S. GAAP - R$		0.1053		3.1022		(0.2804	)

	2014			2013		2012

Diluted numerator
Dividends proposed		-			150,067		-
U.S. GAAP undistributed loss		42,305			1,172,401		(121,203	)

Allocated U.S. GAAP undistributed profit (loss) available for Common shareholders		42,305			1,322,468		(121,203	)

Diluted denominator (in thousands of shares)
Weighted-average number of shares		401,905			426,300		432,246
Stock options		1,681			2,584		3,868
Non-controlling interest shares		-			-		70,252
Antidilutive effect		(1,681	)		-		(74,120	)

Diluted weighted-average number of shares		401,905			428,884		432,246

Diluted earnings (loss) per share – U.S. GAAP - R$		0.1053			3.0835		(0.2804	)

F-94

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

(iv)

Business combinations

Up until December 31, 2008, under Brazilian GAAP, goodwill arose from the difference between the amount paid and the Brazilian GAAP book value (normally also the tax basis) of the net assets acquired. This goodwill was normally attributed to the difference between the book value and the market value of assets acquired or justified based on expectation of future profitability and is amortized over the remaining useful lives of the assets or up to ten years. Effective January 1, 2009, goodwill is no longer amortized under Brazilian GAAP as is the case in US GAAP. Negative goodwill arises under Brazilian GAAP when the book value of assets acquired exceeds the purchase consideration; negative goodwill is not generally amortized but is realized upon disposal of the investment. For US GAAP purpose, when a business combination process generates negative goodwill, this amount is allocated first to non-current assets acquired and any remaining amount is recognized as an extraordinary gain. Additionally, investments in affiliates, including the corresponding goodwill on the acquisition of such affiliates are tested, at least, annually for impairment.

Under US GAAP, fair values are assigned to acquired assets and liabilities in business combinations, including identifiable assets. Any residual amount is allocated to goodwill. Goodwill is not amortized but, instead, is assigned to an entity’s reporting unit and tested for impairment at least annually. The differences in relation to Brazilian GAAP arise principally from the measurement of the consideration paid under US GAAP using the fair value of shares and put options issued, and the effects of amortization which are not recorded for US GAAP purposes (goodwill amortization is also no longer recorded for Brazilian GAAP purposes effective January 1, 2009).

For Brazilian GAAP purposes, the net balance of goodwill at December 31, 2014 was R$25,476 (2013 was R$43,080 and 2012 was R$171,423), which had been amortized to income over a period of up to 10 years until December 31, 2008.

For US GAAP purposes, the total net balance of goodwill at December 31, 2014 was R$675 (R$18,279 in December 31, 2013 and R$39,469 in December 31, 2012).

F-95

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

(a)

Tenda transaction

Under Brazilian GAAP, the acquisition was consummated on October 21, 2008. As part of the acquisition of a controlling interest in Tenda, the Company contributed the net assets of FIT Residencial amounting to R$411,241, acquiring 60% of the shareholders’ equity of Tenda (book value of the 60% interest representing an investment in net assets of R$621,643), which had a total shareholders’ equity book value of R$1,036,072.

Under Brazilian GAAP, the sale of the 40% ownership interest in FIT Residencial to Tenda shareholders in exchange for the Tenda shares generated negative goodwill of R$210,402, reflecting the gain on the sale of the interest in FIT Residencial. From October 22 to December 31, 2008 under Brazilian GAAP, the Company amortized the total amount of R$210,402 of the negative goodwill, represented by the gain on the partial sale of Fit Residencial, as required by the adoption of the new CPC’s.

Under US GAAP, the Company recorded the transfer of Fit Residencial as a partial sale to the noncontrolling shareholders of Tenda and a gain of R$205,527 was recorded in the net income for the year ended December 31, 2008. The recognition of gain upon exchange of 40% ownership interest in FIT Residencial for 60% ownership interest in Tenda is presented as follows:

Tenda purchase consideration	367,703
FIT Residencial US GAAP book value (40%)	(162,176	)
	205,527

Under US GAAP, the total cost of the acquisition has been allocated to the assets acquired and the liabilities assumed based on their respective fair values. Acquired intangible assets include, R$73,038 assigned to existing development contracts, which were amortized in straight-line over the estimated useful lives up to 6 years. For the year ended December 31, 2014, the amount of R$11,447 was amortized and for the years ended December 31, 2013 and 2012, the amounts of R$11,851 were amortized per year. At December 31, 2014, the total accumulated amount R$73,038 was amortized. Also, R$54,741 was assigned to registered trademarks, which were determined to have indefinite useful lives, and are not amortized, but are tested for impairment at least annually.

F-96

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

The fair value allocation on the assets acquired and liabilities assumed at the acquisition date are as follows:

	Fair value
	At 100%			At 60%
Current assets		539,741			323,845
Long-term receivables		252,453			151,472
Properties for sale - non current		174,168			104,501
Intangible assets		42,449			25,469
Other assets		101,191			60,714

Total assets acquired		1,110,002			666,001

Total liabilities assumed		(497,164	)		(298,298	)

Net assets acquired		612,838			367,703

On December 31, 2009, the shareholders of Gafisa and Tenda approved the merger by Gafisa of total outstanding shares issued by Tenda. Because of the merger, Tenda became a wholly-owned subsidiary of Gafisa on this date.

(b)

AUSA transaction

On October 2, 2006, the Company signed an agreement to acquire 100% of the capital of AUSA, a company which develops and sells residential lots throughout Brazil. This transaction was consummated on January 8, 2007 and it was approved by the Brazilian anti-trust authority (CADE) on June 18, 2007, without any restrictions. The Company initially acquired 60% of AUSA’s shares for R$198,400, of which R$20,000 was paid in cash and the remaining R$178,400 in the Company’s own shares. In connection with the acquisition, the Company issued 6,358,616 new Common shares with a book value of R$134,029, which were contributed in full settlement of the amount due in shares as part of the purchase consideration. For the purpose of determining the purchase consideration, the fair value of these shares was based on the average BM&FBOVESPA quoted stock price over a thirty day period prior to the date the agreement was signed.

F-97

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

The Company reevaluated the AUSA purchase contract and determined that the non-controlling interest was redeemable. The non-controlling interest is redeemable in two blocks of 20% of the shares in 2010 and 2012. The company has the option to redeem the non-controlling interest either in shares or in cash. This redeemable non-controlling interest falls within the scope of ASC 480-10-S99-3A and was recorded as mezzanine equity for the years ended December 31, 2012. The initial recognition should be its issuance date for fair value, with a corresponding entry in retained earnings. Subsequent re-measurements to fair value of the redemption amount following the allocation of NCI profit or loss for the period are adjusted against retained earnings of the Company in accordance with ASC 480-10-S99-3A-15 and 3A-16C. On June 8, 2012, according to the material fact then disclosed, the third phase of the Investment Agreement and Other Covenants entered into on October 2, 2006 (“Investment Agreement”), established the rules and conditions for Gafisa related to the acquisition of the remaining 20% interest in the capital stock of AUSA not held by the Company. While the valuation of the capital stock was agreed by both parties, the number of shares that should be issued by the Company to settle this transaction was being discussed on an arbitration process initiated by the noncontrolling interests of AUSA, according to the material fact released on July 3, 2012. On June 6, 2013, the parties settled the arbitration process and the Company proceeded with the disposal of controlling interest in AUSA as explained in Note 1. There was an embedded derivative component to the Investment Agreement, relating to the Company's obligation to purchase the AUSA shares held by the non-controlling interest. The future settlement to be made in cash or shares represented an amount of R$358,985 as at December 31, 2012.

On March 8, 2010, the Company announced the increase of its participation in AUSA’s capital in 20%, as per the purchase agreement. The acquisition of 20% of Alphaville’s capital corresponds to an amount of R$126,490 which was paid based on issuance of 9,797,792 common shares (after the effect of the February 22, 2010 stock split) of Gafisa’s capital.

Under US GAAP, the total cost of the acquisition has been allocated to the assets acquired and the liabilities assumed based on their respective fair values. Goodwill, none of which is deductible for tax purposes, and other intangibles recorded in connection with the acquisition at the time totaled R$20,902 and R$184,656, respectively.

Under US GAAP, acquired intangible assets include, R$168,072 assigned to existing development contracts, which is being amortized as developments are sold and R$16,853 assigned to registered trademarks, which were determined to have indefinite useful lives, and are not amortized, but are tested for impairment at least annually.

F-98

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

The fair values of assets acquired and liabilities assumed at the acquisition date under US GAAP are as follows:

	Fair value
	At 100 %			At 60 %

Current assets		69,371			41,623
Long-term receivables		73,478			44,087
Other assets		17,379			10,427
Intangible assets		307,760			184,656

Total assets acquired		467,988			280,793

Total liabilities assumed		(144,064	)		(86,438	)

Income taxes		(28,095	)		(16,857	)

Total liabilities assumed		(172,159	)		(103,295	)

Net assets acquired		295,829			177,498

For the period ended December 09, 2013, the Company amortized R$10,874 (December 31, 2012 - R$24,490) of the fair value assigned in the purchase price allocation.

Acquisition of non-controlling interest in AUSA

As described above, we had an agreement to purchase the 20% non-controlling interest relating to AUSA in 2013. On July 3, 2013 we purchased such non-controlling interest for a purchase price of R$366,662. As we already had control of AUSA we recorded the difference between the recognized mezzanine equity line item of R$358,985 and the consideration paid of R$366,662, resulting in R$7,677 being accounted for directly in stockholders’ equity.

Disposal of controlling interest in AUSA

As described in note 8.1, on December 9, 2013 the Company disclosed a material fact informing the finalization of the disposal of 70% interest in AUSA. As a result of this disposal we recorded a gain of R$ 1,228,429. This gain is included in our income statement in the line item “Gain on disposal of controlling interest”. In addition to the gain on the disposal we also presented the profit for the year relating to AUSA up to the disposal date of December 9, 2013 in the line item.

As previously described we maintained a 30% equity interest in AUSA after disposal, which is classified as an associate (refer to Note 9). As a result we re-measured this investment to its fair value. This resulted in a gain of R$ 559,558, which was recorded in our income statement in the line item “remeasurement of investment in associate”.

F-99

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

The result of investments revalued to fair value is different for US GAAP purposes given the fact that the carrying amount of the net assets relating to Alphaville are different than the carrying amount under Brazilian GAAP, principally due to the cumulative revenue recognition adjustments. Consequently the gain recognized on re-measurement of the remaining investment in Alphaville (being the difference between carrying amount of the net assets and their fair value) is different as well in the amount of R$184,005.

(c)

Cipesa transaction

On October 26, 2007, the Company acquired 70% of Cipesa. The Company and Cipesa formed a new company, Cipesa Empreendimentos Imobiliários Ltda. (“Nova Cipesa”), in which Gafisa has 70% of the capital and Cipesa has 30%. Gafisa contributed to Nova Cipesa R$50,000 in cash and acquired shares of Cipesa in Nova Cipesa in the amount of R$15,000 payable over one year. Additionally, Cipesa is entitled to receive from the Company a variable portion of 2% of the Total Sales Value (“VGV”) of the projects launched by Nova Cipesa through 2014, not to exceed R$25,000 plus monetary correction (R$39,100 with accrued interest as of December 31, 2013), totaling the acquisition amount of R$90,000 and goodwill amounting to R$40,687 was recorded, based on expected future profitability under BR GAAP.

On November 21, 2014, the Company acquired the remaining portion of Cipesa Empreendimentos Imobiliários in the amount of R$6,354. As a result of this transaction, the Company recorded a net effect of the write-off of goodwill, in the amount of R$17,604. As a consequence of the acquisition of the remaining portion of Cipesa Empreendimentos Imobiliários and the consequent grant between the parties of irrevocable and irreversible settlement in relation to all rights, duties and obligations, the Company made the reversal of the above mentioned obligation in its totality.

Under US GAAP, the total cost of the acquisition has been allocated to the assets acquired and the liabilities assumed based on their respective fair values. Goodwill, none of which is deductible for tax purposes had a total amount of R$41,634. As of December 31, 2014, goodwill recorded in connection with the acquisition was totally written-off (R$17,604 as of December 31, 2013), and R$39,577 of obligation canceled due to the acquisition of the remaining portion of Cipesa Empreendimentos Imobiliários the Company, therefore there are no longer differences between Brazilian GAAP and US GAAP.

F-100

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

The fair values of assets acquired and liabilities assumed at the acquisition date under US GAAP are as follows:

	Fair value
	At 100%			At 70%

Current assets		96,675			67,673
Other assets		8			5

Total assets acquired		96,683			67,678

Total liabilities assumed		(2,527	)		(1,769	)

Income taxes		(25,061	)		(17,543	)

Total liabilities assumed		(27,588	)		(19,312	)

Net assets acquired		69,095			48,366

For the year ended December 31, 2014, the Company recognized in the statement of operations the amount of R$17,604, including impairment of goodwill, (R$963 in 2013 and R$30,458 in 2012) of the fair value assigned in the purchase price allocation.

(d)

Redevco transaction

Through November 2007, the Company held interests in investees together with Redevco through special purpose entities, as follows: Blue I (66.67%), Blue II (50%), Jardim Lorena (50%) and Sunplace (50%). In November 2007, the Company acquired the remaining interests in each entity for R$40,000. Under Brazilian GAAP, the Company amortized the total amount of R$21,925 of the negative goodwill, as required by the adoption of the new CPCs.

Under US GAAP, the total cost of the acquisition has been allocated to the assets acquired and the liabilities assumed based on their respective fair values. Negative goodwill for those entities totaled R$11,434, which was allocated as a pro rata reduction to the acquired assets. This negative goodwill results primarily from market and business conditions, in which the fair value assigned mainly to inventories and receivables exceeded the respective acquisition cost.

F-101

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

The combined fair values of assets acquired and liabilities assumed at the acquisition date under US GAAP are as follows:

	Combined fair value at 100%
Current assets		139,983
Long-term receivables		16,813
Other assets		170

Total assets acquired		156,966

Total liabilities assumed		(76,745	)

Net assets acquired		80,221

(v)

Classification of balance sheet line items

Under Brazilian GAAP, the classification of certain balance sheet items is presented differently from US GAAP. The Company has recast its consolidated balance sheet under Brazilian GAAP to present a condensed consolidated balance sheet in accordance with US GAAP (Note 33(d)(i)). The reclassifications are summarized as follows:

· Under Brazilian GAAP, restricted cash is presented as short-term investment in the balance sheet. For US GAAP purposes, restricted cash is presented separately outside of short-term investment.

· Under BR GAAP accounts receivable present value adjustment and monetary variation are recorded in the operating revenue. For US GAAP purpose the realization of accounts receivable present value adjustment and monetary variation are classified in the financial income/expense.

· Under Brazilian GAAP, debt issuance costs are netted against the loan balance, whereas under US GAAP such costs are presented net of accumulated amortization, as deferred expenses in current and non-current assets.

· Under Brazilian GAAP, deferred income taxes are netted and classified as non-current liabilities. For US GAAP purposes, deferred tax assets and liabilities are netted and classified as current or non-current based on the classification of the underlying temporary difference.

F-102

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

Temporary equity

Under BR GAAP, the Company has recorded the portion of AUSA’s capital stock for which it does not have legal ownership at December 31, 2010 as non-controlling interest. Although it has a forward contract to acquire these equity interests at set dates in the future at fair value, no liability has been recorded for the redemption value as there is no liability to transfer cash or financial assets as the Company can use its own equity instruments as consideration. The Company has therefore accounted for this transaction based on embedded derivative component. As the fair value of this embedded derivative has no significant value, no derivative asset or liability is recorded.

Under US GAAP, as described in Note 33 a) b), the redeemable noncontrolling interest falls within the scope of ASC 480-10-S99-3A and is recorded as temporary equity. At issuance the initial recognition based on fair value was recorded as temporary equity with a corresponding entry in retained earnings; subsequent re-measurements to fair value of the redemption amount are adjusted against retained earnings.

(vi)

Classification of statement of income (operations) line items

Under Brazilian GAAP, in addition to the issues noted above, the classification of certain income and expense items is presented differently from US GAAP. The Company has recast its statement of income (loss) prepared under the Brazilian GAAP to present a condensed consolidated statement of income (loss) in accordance with US GAAP (Note 33(d)(ii)). The reclassifications are summarized as follows:

· Under Brazilian GAAP, the disposal of the Company´s 70% controlling interest in Alphaville is classified as a “discontinued operation”, given the fact this it’s a major line of business that was disposed of during the year ended December 31, 2013. For US GAAP purposes however, this disposal does not meet the definition of a “discontinued operation” given the fact that the Company continues to have significant influence over this entity through its 30% non-controlling interest. When a significant continuing involvement like this exists the operation cannot be seen as discontinued under US GAAP, consequently the results from operations of Alphaville in the period January 1 to November 30, 2013, are presented in their separate respective line items instead of being grouped together under the header “Net income from discontinued operations”, as under Brazilian GAAP (Note 8.2). In addition the gain on disposal which for Brazilian GAAP purposes is part of the discontinued operations line item is part of results from continuing operations for US GAAP purposes.

F-103

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

· The net income differences between Brazilian GAAP and US GAAP (Note 33(b)(i)) were incorporated in the consolidated statement of operations in accordance with US GAAP.

(vii)

Deferred income tax

Deferred income tax differences between Brazilian GAAP and US GAAP are related to the recognition of deferred income tax on the adjustments mentioned above.

Under BR GAAP deferred tax assets are recognized for the estimated future tax effects of temporary differences and unused tax losses carried forward based on tax profitability history and estimated future taxable income, which takes into account all factors concerning entity´s expected future profitability. The deferred tax asset is derecognized to the extent that it is no longer probable that taxable profit will be available to compensate deferred tax assets.

Under US GAAP deferred tax assets are recognized for the estimated future tax effects attributable to temporary differences and carryforwards. A valuation allowance to reduce the deferred tax asset is recognized if upon available evidences, both positive and negative, and the weight of those evidences, the deferred tax asset is the more-likely-than-not that will not be recoverable (the amounts recognized as valuation allowance expense in the respective years are R$12,882 in 2014, R$35,363 in 2013 and R$62,175 in 2012).

F-104

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

(b)	Reconciliation of significant differences between Brazilian GAAP and US GAAP

(i)	Net income (loss)

	Note		2014			2013			2012

Net income (loss) under Brazilian GAAP attributable to owners of Gafisa S.A.				(42,549	)		867,443			(127,043	)
Revenue recognition - net operating revenue		33(a)(i)		295,550			(725,403	)		534,156
Revenue recognition - operating costs		33(a)(i)		(210,366	)		297,338			(491,167	)
Stock compensation reversal	33(a)(ii)			-			-			7,804
Business Combination of Tenda, Redevco and Cipesa	33(a)(iv)			28,130			(11,851	)		(54,431	)
Business Combination of Alphaville	33(a)(iv)			-			(10,874	)		(24,490	)
Non-controlling interests on adjustments above		33(a)(i)		895			5,232			16,545
Equity pick-up		33(a)(i)		(1,902	)		(23,137	)		48,198
Gain on disposal of Alphaville’s controlling interest	33(a)(iv)			-			764,272			-
Remeasurement of investment in associate	33(a)(iv)			-			184,005			-
Present value adjustment and other				(22,387	)		3,059			2,538
Deferred income tax on adjustments above, net of valuation allowance	33(a)(vii)			(5,066	)		(27,616	)		(33,314	)

Net income (loss) attributable to Gafisa under US GAAP				42,305			1,322,468			(121,203	)

Net income attributable to the non-controlling interests under US GAAP				(2,071	)		13,462			(32,048	)

Net income (loss) under US GAAP				40,234			1,335,930			(89,155	)
Weighted-average number of shares outstanding in the year (in thousands) (i)
Common shares				401,905			426,300			432,246
Earnings (loss) per share attributable to Gafisa Common
Basic	33(a)(iii)			0.1053			3.1022			(0.2804	)
Diluted	33(a)(iii)			0.1053			3.0835			(0.2804	)

F-105

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 – Continued

(ii)

Equity

	Note		2014			2013			2012

Equity under Brazilian GAAP				3,055,345			3,190,723			2,535,445
Revenue recognition - net operating revenue		33(a)(i)		(745,136	)		(1,017,849	)		(1,942,802	)
Revenue recognition - operating costs		33(a)(i)		502,365			712,731			1,313,745
Reversal of goodwill amortization of Alphaville	33(a)(iv)			-			-			18,234
Reversal of negative goodwill amortization of Redevco and Tenda	33(a)(iv)			(232,327	)		(232,327	)		(232,327	)
Gain on the transfer of FIT Residencial	33(a)(iv)			205,527			205,527			205,527
Business Combination – Tenda, Redevco and Cipesa	33(a)(iv)			83,066			(12,296	)		(444	)
Business Combination – Alphaville	33(a)(iv)			-			-			(123,686	)
Other, net		—		9,054			38,583			7,935
Non-controlling interests on adjustments above		33(a)(i)		1,580			38,401			80,213
US GAAP adjustment equity accounted investees		33(a)(i)		(14,818	)		(12,812	)		(11,760	)
AUSA – redeemable noncontrolling interest	33(a)(iv)			-			-			(319,802	)
Deferred income tax on adjustments above	33(a)(vii)			47,542			40,274			88,998
Deferred income tax valuation allowance	33(a)(vii)			(164,666	)		(151,784	)		-


Gafisa equity under US GAAP				2,747,532			2,799,171			1,619,276

Non-controlling interests under US GAAP				3,339			23,074			53,222

Equity under US GAAP				2,750,871			2,822,245			1,672,498

Condensed changes in total equity under US GAAP	2014			2013			2012

At beginning of the year		2,822,245			1,672,498			1,741,122
Changes in equity, BRGAAP		(108,344	)		(66,471	)		4,259
Stock options		15,514			17,419			17,377
Net profit (loss) attributable to Gafisa		42,305			1,322,468			(121,203	)
Declared mandatory dividend		-			(163,112	)		-
Non-controlling interests		(19,735	)		(30,148	)		32,048
AUSA – redeemable non-controlling interest		-			67,353			-
Other		(1,114	)		2,238			(1,105	)
At end of the year		2,750,871			2,822,245			1,672,498

Condensed equity under US GAAP	2014			2013			2012

Equity
Common shares, comprising 378,184,876 shares outstanding (2013 – 416,459,715; 2012 – 432,630,293)		2,740,662			2,740,662			2,735,794
Treasury shares		(79,059	)		(73,070	)		(1,731	)
Accumulated reserve (losses)		89,268			131,579			(1,114,787	)

Total Gafisa equity		2,750,871			2,799,171			1,619,276

Non-controlling interests		3,339			23,074			53,222

Total equity		2,750,871			2,822,245			1,672,498

F-106

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

(c)	Recent US GAAP accounting pronouncements

In July 2012, the FASB issued ASU 2012-02, “Intangible – Goodwill and Other” – Topic 350, which provides the option to perform a qualitative, rather than quantitative, assessment to determine whether it is more likely than not an indefinite-lived intangible asset is impaired. If the asset is considered impaired, an entity is required to perform the quantitative assessment under the existing guidance. The guidance is effective for our fiscal year beginning on January 1, 2013. The adoption of this guidance, which is intended to simplify the impairment testing, did not have a material impact on our consolidated financial statements.

In January 2013, the FASB issued ASU 2013-01, clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. The amendments in ASU 2013-01 to Topic 210, Balance Sheet, clarify that the scope of Update 2011-11, Disclosures about Offsetting Assets and Liabilities, applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. The amendments were effective for the Company on January 01, 2013 and the disclosures are required to be retrospectively applied for all comparative periods presented. The effective date is the same as the effective date of Update 2011-11. The adoption of this guidance, which is related to disclosure only, did not have a material impact on our consolidated financial statements.

F-107

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in ASU 2013-02 to Topic 220, Other Comprehensive Income, update, supersede and replace the presentation requirements for reclassifications out of accumulated other comprehensive income in ASUs 2011-05 and 2011-12. ASU 2013-02 requires either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. The new guidance was effective prospectively for the Company on January 01, 2013. The adoption of this guidance did not have a material impact on our consolidated financial statements. In February 2013, the FASB issued ASU 2013-04, Obligations Resulting From Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date. The amendments in ASU 2013-04 to Topic 405, Liabilities, provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the update is fixed at the reporting date, except for obligations addressed with existing U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on behalf of its co-obligors. The guidance also requires an entity to disclose the nature and amount of the obligation, as well as other information about those obligations. The amendment is effective retrospectively for reporting periods beginning after December 15, 2013. Early adoption is permitted. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In April 2013 the FASB issued ASU 2013-07, Liquidation Basis of Accounting. The amendments in ASU 2013-07 to Topic 205, Presentation of Financial Statements, clarify when an entity should apply the liquidation basis of accounting and provide principles for the recognition and measurement of associated assets and liabilities. In accordance with the amendments, an entity is required to prepare its financial statements using the liquidation basis of accounting when liquidation is imminent. Liquidation is considered imminent when the likelihood is remote that the organization will return from liquidation and either: (a) a plan for liquidation is approved by the person or persons with the authority to make such a plan effective and the likelihood is remote that the execution of the plan will be blocked by other parties; or (b) a plan for liquidation is being imposed by other forces. The amendments in ASU 2013-07 are effective prospectively for entities that determine liquidation is imminent for reporting periods beginning after December 15, 2013, with early adoption permitted. The adoption of this guidance did not have a material impact on our consolidated financial statements.

F-108

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

In July 2013 the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The amendments in ASU 2013-11 to Topic 740, Income Taxes, clarify that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction or the tax law of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in ASU 2013-11 are effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. Retrospective application is permitted. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In January, 2014, the FASB issued ASU 2014-01 - Investments - Equity Method and Joint Ventures (Topic 323). The amendments in this Update provide guidance on accounting for investments by a reporting entity in flow-through limited liability entities that manage or invest in affordable housing projects that qualify for the low-income housing tax credit. The amendments permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. The amendments in this Update should be applied retrospectively to all periods presented and are effective for public business entities for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. The adoption of this Update is not expected to have a material impact on our consolidated financial statements.

F-109

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

In April, 2014, the FASB issued ASU 2014-08 - Presentation of financial statements (topic 205) and property, plant, and equipment (Topic 360). The amendments in this Update change the requirements for reporting discontinued operations in Subtopic 205-20. A discontinued operation may include a component of an entity or a group of components of an entity, or a business or nonprofit activity. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when some criteria occurs. Examples of a strategic shift that has (or will have) a major effect on an entity’s operations and financial results could include a disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity. The amendments in this Update require an entity to present, for each comparative period, the assets and liabilities of a disposal group that includes a discontinued operation separately in the asset and liability sections, respectively, of the statement of financial position. The amendments in this Update require additional disclosures about discontinued operations. The amendments in this Update are effective to all disposals (or classifications as held for sale) of components of an entity and all businesses or nonprofit activities that, on acquisition, are classified as held for sale that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years. The adoption of this guidance, which is related to disclosure only, did not have a material impact on our consolidated financial statements.

In May, 2014, the FASB issued ASU 2014-09 - Revenue from contracts with customers (Topic 606). The amendments in this Update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendments supersede the cost guidance in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts, and create new Subtopic 340-40, Other Assets and Deferred Costs—Contracts with Customers. In summary, the core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. We are currently evaluating the impacts of the adoption of this Update on our consolidated financial statements.

F-110

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

In June, 2014, the FASB issued ASU 2014-12 - Compensation—stock compensation (Topic 718). Some share-based payment awards that require a specific performance target to be achieved before the employee can benefit from the award, also require an employee to render service until the performance target is achieved. In some cases, the terms of an award may provide that the performance target could be achieved after an employee completes the requisite service period. That is, the employee would be entitled to benefit from the award regardless of whether the employee is rendering service on the date the performance target is achieved. Some entities account for those performance targets as performance conditions that affect the vesting of the award and, therefore, do not reflect the performance target in the estimate of the grant-date fair value. Others treat them as nonvesting conditions that affect the grant-date fair value of the award. The amendments apply to reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target can be achieved after the requisite service period. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. We are currently evaluating the impacts of the adoption of this Update on our consolidated financial statements.

In August, 2014, the FASB issued ASU 2014-15 - Presentation of financial statements—going concern (Subtopic 205-40). The Update provides U.S. GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. We are currently evaluating the adoption of this Update on our consolidated financial statements.

F-111

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

In November, 2014, the FASB issued ASU 2014-16 - Derivatives and hedging (Topic 815) - Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. Certain classes of shares include features that entitle the holders to preferences and rights (such as conversion rights, redemption rights, voting powers, and liquidation and dividend payment preferences) over the other shareholders. Shares that include embedded derivative features are referred to as hybrid financial instruments, which must be separated from the host contract and accounted for as a derivative if certain criteria are met under Subtopic 815-10.One criterion requires evaluating whether the nature of the host contract is more akin to debt or to equity and whether the economic characteristics and risks of the embedded derivative feature are “clearly and closely related” to the host contract. In making that evaluation, an issuer or investor may consider all terms and features in a hybrid financial instrument including the embedded derivative feature that is being evaluated for separate accounting or may consider all terms and features in the hybrid financial instrument except for the embedded derivative feature that is being evaluated for separate accounting. The use of different methods can result in different accounting outcomes for economically similar hybrid financial instruments. Additionally, there is diversity in practice with respect to the consideration of redemption features in relation to other features when determining whether the nature of a host contract is more akin to debt or to equity. The amendments apply to all reporting entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share. The amendments in this Update are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption, including adoption in an interim period, is permitted. The adoption of this Update is not applicable to our consolidated financial statements.

In November, 2014, the FASB issued ASU 2014-17 - Business combinations (Topic 805) - Pushdown Accounting. The objective of this Update is to provide guidance for determining whether and at what threshold an acquiree (acquired entity) that is a business or nonprofit activity can reflect the acquirer's accounting and reporting basis (pushdown accounting) in its separate financial statements. Paragraphs 805-50-S99-1 through S99-4 of the Codification provide limited guidance for SEC registrants for determining whether and when a new accounting and reporting basis should be established in an acquiree's separate financial statements. However, because diversity in practice exists with respect to the application of pushdown accounting among entities that are not SEC registrants, the amendments provide guidance for entities that are SEC registrants and for those that are not. The amendments in this Update are effective on November 18, 2014. After the effective date, an acquired entity can make an election to apply the guidance to future change-in-control events or to its most recent change-in-control event. The adoption of this Update is not expected to have a material impact on our consolidated financial statements.

F-112

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

In December, 2014, the FASB issued ASU 2014-18 Business combinations (Topic 805) - Accounting for Identifiable Intangible Assets in a Business Combination. The objective of the amendments in this Update is to address the concerns of private company stakeholders that the benefits of the current accounting for identifiable intangible assets acquired in a business combination do not justify the related costs. The amendments provide guidance about an accounting alternative for recognizing or otherwise considering the fair value of identifiable intangible assets acquired as a result of certain specified transactions, including business combinations. The decision to adopt the accounting alternative in this Update must be made upon the occurrence of the first transaction within the scope of this accounting alternative in fiscal years beginning after December 15, 2015, and the effective date of adoption depends on the timing of that first in-scope transaction. Early application is permitted for any interim and annual financial statements that have not yet been made available for issuance. The adoption of this Update is not expected to have a material impact on our consolidated financial statements.

In January 2015, the FASB issued ASU 2015-01, Income statement - Extraordinary and unusual items (Subtopic 225-20). The objective of this Update is to simplify the income statement presentation requirements in Subtopic 225-20 by eliminating the concept of extraordinary items. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. Eliminating the extraordinary classification simplifies income statement presentation by altogether removing the concept of extraordinary items from consideration. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively and also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The adoption of this Update is not expected to have a material impact on our consolidated financial statements.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810) - Amendments to the Consolidation Analysis. The amendments in this Update affect the following areas: (i) Limited partnerships and similar legal entities, (ii) Evaluating fees paid to a decision maker or a service provider as a variable interest, (iii) The effect of fee arrangements on the primary beneficiary determination, (iv) The effect of related parties on the primary beneficiary determination and (v) Certain investment funds. The amendments in this Update affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Overall, the amendments in this Update are an improvement to current GAAP because they simplify the Codification and reduce the number of consolidation models through the elimination of the indefinite deferral of Statement 167 and because they place more emphasis on risk of loss when determining a controlling financial interest. The amendments in this Update are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. The adoption of this Update is not expected to have a material impact on our consolidated financial statements.

F-113

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 – Continued

In April 2015, the FASB issued ASU 2015-03 - Interest—Imputation of Interest (Subtopic 835-30). To simplify presentation of debt issuance costs, the amendments in this Update would require that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs would not be affected by the amendments in this Update.For public business entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted for financial statements that have not been previously issued. The adoption of this Update is not expected to have a material impact on our consolidated financial statements.

(d)	US GAAP condensed consolidated financial information

Based on the reconciling items and discussion above, the Gafisa S.A. consolidated balance sheets, statements of income (loss), and statement of changes in shareholders’ equity (see b(ii)) under US GAAP have been recast in condensed format as follows:

(i)	Condensed consolidated balance sheets under US GAAP

	2014		2013		2012
Assets
Current assets
Cash and cash equivalents		85,059		215,194		580,456
Short-term investments		998,208		1,637,602		690,053
Restricted short-term investments		73,987		171,367		295,533
Trade accounts receivable, net		1,016,806		1,515,648		1,970,051
Properties for sale		2,207,240		2,163,809		2,930,363
Prepaid expenses		15,997		35,126		59,785
Other		389,515		277,884		141,784
		4,786,812		6,016,630		6,668,025
Non-current assets
Investments in associates		943,289		1,068,238		466,094
Property and equipment, net		48,691		36,385		90,706
Intangibles assets		138,142		148,726		212,775
Goodwill		675		18,279		39,469
Trade accounts receivable, net		275,501		258,780		547,362
Properties for sale		816,525		652,395		330,348
Other		223,577		278,154		339,833
		2,446,400		2,460,957		2,026,587

Total assets		7,233,212		8,477,587		8,694,612

F-114

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

	2014		2013		2012
Liabilities
Current liabilities
Loans and financing		552,173		592,328		609,098
Debentures		506,103		566,048		349,059
Payables for purchase of properties		469,369		262,029		371,051
Payables for goods and services suppliers		95,131		79,342		154,657
Taxes and labor contributions		99,069		200,803		179,612
Advances from customers		203,189		813,289		890,016
Obligations assumed on the assignment of receivables		24,135		82,787		132,916
Payables for acquisition of investments		-		5,102		21,680
Declared dividends		-		150,067		12,667
Other		541,692		508,999		528,098
		2,490,861		3,260,794		3,248,854
Non-current liabilities
Loans and financing		848,861		1,051,034		1,292,060
Debentures		687,487		858,293		1,392,703
Deferred income tax and social contribution		151,864		168,162		116,069
Payables for purchase of properties		101,137		79,975		70,234
Obligations assumed on the assignment of receivables		31,994		37,110		155,976
Payables to venture partners		4,713		10,794		162,333
Provisions for legal claims		136,540		125,809		149,790
Other		28,884		63,371		75,110
		1,991,480		2,394,548		3,414,275

Alphaville redeemable non-controlling interest		-		-		358,985

Total Gafisa equity		2,747,532		2,799,171		1,619,276
Non-controlling interest		3,339		23,074		53,222

Total equity		2,750,871		2,822,245		1,672,498

Total liabilities and equity		7,233,212		8,477,587		8,694,612

F-115

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

(ii) Condensed consolidated statements of operations under US GAAP

	2014			2013			2012
Gross operating revenue
Real estate development and sales of properties		2,620,827			2,803,806			4,233,696
Taxes on services and revenues		(174,279	)		(237,818	)		(302,967	)

Net operating revenue		2,446,548			2,565,988			3,930,729
Operating costs		(1,819,612	)		(1,995,158	)		(3,008,345	)

Gross profit		626,936			570,830			922,384

Operating income (expenses)
Selling general and administrative expenses		(359,330	)		(602,767	)		(619,117	)
Remeasurement of investment in associate		-			559,858			-
Other		(192,470	)		(159,116	)		(240,540	)
Gain on disposal of controlling interest		-			1,228,429			-
Income before financial income and expenses and income tax and social contribution		75,136			1,597,234			62,727

Financial income		156,794			93,250			67,793
Financial expenses		(188,718	)		(280,548	)		(259,207	)
Income (loss) before income tax and social contribution		43,212			1,409,936			(128,687	)

Current income tax and social contribution		(33,330	)		(45,741	)		(30,662	)
Deferred income tax and social contribution		12,991			(6,470	)		(38,071	)
Total income tax and social contribution		(20,339	)		(52,211	)		(68,733	)

Income (loss) before equity in results and
non-controlling interests		22,873			1,357,725			(197,420	)
Income from equity method investments		17,361			(21,795	)		108,265

Net (loss) income for the year from continuing operations		40,234			1,335,930			(89,155	)

Net (loss) income attributable to the non-controlling interests		(2,071	)		13,462			32,048
Net (loss) income attributable to Gafisa		42,305			1,322,468			(121,203	)

F-116

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

(iii)

Condensed consolidated statements of comprehensive income (loss)

	2014			2013		2012
Net (loss) income for the year		40,234			1,335,930		(89,155	)

Total comprehensive (loss) income, net of taxes		40,234			1,335,930		(89,155	)

Attributable to:
Non-controlling interests		(2,071	)		13,462		32,048
Owners of Gafisa		42,305			1,322,468		(121,203	)

(iv)	Additional information – income taxes

Change in the valuation allowance for net operating losses and temporary differences was as follows:

	2014			2013			2012

Opening balance at January 1		(426,318	)		(657,130	)		(411,538	)
Benefit of the utilization of operating loss carryforwards		7,349			-			-
Change in valuation allowance		(22,455	)		230,812			(245,592	)
Closing balance at December 31		(441,424	)		(426,318	)		(657,130	)

The Company recognizes its deferred tax asset net of a valuation allowance such that the amount of the net deferred tax asset is more likely than not to be realized. During the year 2014, movements in the valuation allowance amounted to a net increase of R$15,106. This is primarily related to the continuing restructuring process implemented by management.

During the year 2013, movements in the valuation allowance related to changes in circumstances amounted to a reversal of R$230,812, mainly due to higher thanexpected taxable income. The aforementioned changes in circumstances primarily included a restructuring process implemented by management, which led to positive taxable income for fiscal year 2013 as well as a forecast of positive taxable income for fiscal year 2014.

The Company records the financial statement effects of an income tax position when it is more likely than not, based on the technical merits, that it will be sustained upon examination. A tax position that meets the more-likely-than-not recognition threshold value added is measured and recorded as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority.

F-117

Table of Contents

Gafisa S.A.

Notes to the consolidated financial statements--Continued
December 31, 2014
(Amounts in thousands of Reais, except as otherwise stated)

33.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014, 2013 and 2012 - Continued

As of December 31, 2014, 2013 and 2012, the Company has no amount recorded for any uncertainty in income taxes.

Gafisa S.A. and its subsidiaries file income tax returns in Brazil. Brazilian income tax returns are subject to inspections by tax authorities for the period beginning in 2009 and forward, i.e., within 5 years after the filing.

(v)

Statement of comprehensive income (loss)

Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income (loss) that include charges or credits directly to equity which are not the result of transactions with owners.

(vi) Statement of cash flows

For each period for which a statement of operations is presented and required to be reconciled to US GAAP, SEC rules require that the Company provide either a statement of cash flows prepared in accordance with US GAAP or IFRS; or furnish in a note to the financial statements a qualified description of the material differences between cash or funds flows reported in the primary financial statements and cash flows that would be reported in a statement of cash flows, prepared in accordance with US GAAP.

The Company’s primary differences in net income (loss) between Brazilian GAAP and net income (loss) for US GAAP are explained in items 33(a) (ii) to (vii) above. The statement of cash flows for Brazilian GAAP was prepared based on CPC 3(R2) - Statement of Cash Flows, which conforms with IAS 7.

(vii)

Statement of value added

The statement of value added for new Brazilian GAAP was prepared based on CPC 09 - “Demonstração do Valor Adicionado.” For US GAAP, this statement is not required.

* * *

	Note	2014		2013
Assets
Current assets
Cash and cash equivalents	4.1		161,082		293,099
Short-term investments	4.2		59,887		76,135
Accounts receivable	5		452,661		446,935
Properties for sale	6		495,433		358,003
Dividends receivable	16.1		1,262		1,150
Other accounts receivable	-		87,357		39,686
Total current assets			1,257,682		1,215,008

Non-current assets
Accounts receivable	5		665,873		524,815
Properties for sale	6		60,491		45,051
Other accounts receivable	-		13,073		15,177
			739,437		585,043


Investments in associates	7		32,424		36,984
Property and equipment	-		21,072		16,570
			53,496		53,554

Total non-current assets			792,933		638,597


Total assets			2,050,615		1,853,605

See accompanying notes to consolidated financial statements.

F-122

Table of Contents

Alphaville Urbanismo S.A.

Consolidated balance sheets

December 31, 2014 and 2013

(In thousands of Brazilian Reais)

	Note	2014			2013
Liabilities
Current liabilities
Loans and financing	8		234,177			79,634
Debentures	9		5,136			3,463
Payables for goods and service suppliers	15(i) (d)		36,850			64,009
Salaries, payroll charges, taxes and profit sharing	-		50,308			70,315
Payable for purchase of properties and advances from customers	10		59,348			130,367
Amounts to be transferred to venture partners	-		20,589			46,032
Dividends payable	16.1		1,489			-
Payables for venture partners	11		7,282			39,522
Obligations assumed on the assignment of receivables	-		20,245			30,228
Other payables	-		19,435			35,461
Total current liabilities			454,859			499,031

Non-current liabilities
Loans and financing	8		142,489			211,037
Debentures	9		650,000			500,000
Deferred income tax and social contribution	13.b		16,262			5,329
Payables for purchase of properties and advances from customers	10		11,057			-
Acquisition of ownership interests	-		20,924			19,725
Provision for legal claims	12		5,639			3,830
Warranty provision	-		26,594			11,504
Payables to venture partners	11		3,728			8,826
Obligations assumed on the assignment of receivables	-		21,069			37,701
Other payables	-		69,171			68,859
Total non-current liabilities			966,933			866,811

Equity
Capital	14(i)		290,447			285,806
Treasury shares	14(i)		(22,345	)		(17,704	)
Reserves for capital, income and granting stock options	14 (i) (ii)		313,630			185,582
			581,732			453,684
Noncontrolling interests			47,091			34,079
Total equity			628,823			487,763

Total liabilities and equity			2,050,615			1,853,605

See accompanying notes to consolidated financial statements.

F-123

Table of Contents

Alphaville Urbanismo S.A.

Consolidated statements of operations

Year ended December 31, 2014 and the twenty two-day period ended December 31, 2013

(In thousands of Brazilian Reais)

	Notes	2014			2013
					(Unaudited)
Net operating revenue	17		958,248			148,847
Operating costs
Development and sales of lots	18		(500,836	)		(95,134	)

Gross profit			457,412			53,713

Operating (expenses) income
Selling expenses	18		(80,578	)		(17,241	)
General and administrative expenses	18		(97,987	)		(1,612	)
Stock options programs	21		(318	)		(62	)
Profit sharing expenses	-		2,299			(11,601	)
Income from equity method investments	7		(2,850	)		(217	)
Depreciation and amortization	-		(5,497	)		(518	)
Other income (expenses), net	-		(656	)		214
Income before financial income and expenses and income tax and social contribution			271,825			22,676

Financial expenses	19		(111,399	)		(21,743	)
Financial income	19		23,724			2,461

Income before income tax and social contribution			184,150			3,394

Current income tax and social contribution	13.a		(26,973	)		(4,382	)
Deferred income tax and social contribution	13.a		(10,934	)		2,344

Total income tax and social contribution			(37,907	)		(2,038	)

Net income from continuing operations			146,243			1,356

Net income attributable to:
Owners of Alphaville			128,955			(786	)
Noncontrolling interests			17,288			2,142

See accompanying notes to consolidated financial statements.

F-124

Table of Contents

Alphaville Urbanismo S.A.

Consolidated statements of comprehensive income

Year ended December 31, 2014 and the twenty two-day period ended December 31, 2013

(In thousands of Brazilian Reais)

	2014		2013
			(Unaudited)
Net income for the year		146,243		1,356

Total comprehensive income for the year, net of taxes		146,243		1,356

Attributable to:
Owners of Alphaville		128,955		(786	)
Non-controlling interests		17,288		2,142

See accompanying notes to consolidated financial statements.

F-125

Table of Contents

Alphaville Urbanismo S.A.

Consolidated statements of cash flows

Year ended December 31, 2014 and the twenty two-day period ended December 31, 2013

(In thousands of Brazilian Reais)

	2014			2013
				(Unaudited)
Operating activities
Income before income tax and social contribution		184,150			3,764
Expenses/(income) not affecting cash and cash equivalents:
Depreciation and amortization		5,497			518
Stock option expenses		318			62
Unrealized interests and charges, net		109,225			5,476
Warranty provision		7,736			1,669
Provision for legal claims and commitments		1,050			-
Provision for profit sharing		(2,299	)		11,601
Income from equity method investments		2,850			217
Financial instruments		1,281			-

Decrease/(increase) in operating assets
Accounts receivable		(146,784	)		(60,889	)
Properties for sale		(152,870	)		423
Other accounts receivable and other		(46,846	)		6,025

Increase/(decrease) in operating liabilities
Payables for purchase of properties and advances from customers		(59,962	)		70,293
Taxes and contributions		(10,500	)		(16,313	)
Payables for goods and service suppliers		(27,159	)		3,466
Salaries, payable charges, taxes and profit sharing		(7,695	)		(2,408	)
Other payables		(18,066	)		42,923
Assignment of receivables, net		(26,616	)		(813	)

Income tax and social contribution paid		(26,486	)		(2,879	)

Cash and cash equivalents from (used in) operating activities		(213,176	)		63,135

Investing activities
Purchase of property and equipment and intangible assets		(9,999	)		(5,392	)
Purchase of short-term investments		(1,957,915	)		(84,291	)
Redemption of short-term investments		1,974,164			94,435
Dividends received		194			-
Increase in investments		-			136
Cash from (used in) investing activities		6,444			4,888

Financing activities
Capital increase		4,641			-
Increase in loans and financing		302,026			500,000
Payment of loans and financing - principal		(70,592	)		(4,832	)
Payment of loans and financing - interest		(102,990	)		(1,275	)
Payment of principal and dividends on payables to venture partners		(39,866	)		-
Repurchase of treasury shares		(18,504	)		-
Paid dividends		-			(290,378	)
Cash and cash equivalents from financing activities		74,715			203,515

Net increase/(decrease) in cash and cash equivalents		(132,017	)		271,538

Cash and cash equivalents
At the beginning of the year		293,099			21,561
At the end of the year		161,082			293,099

Net increase (decrease) in cash and cash equivalents		(132,017	)		271,538

See accompanying notes to consolidated financial statements.

F-126

Table of Contents

Alphaville Urbanismo S.A.

Consolidated statements of changes in equity

Year ended December 31, 2014 and the twenty two-day period ended December 31, 2013

(In thousands of Brazilian Reais)


									Income reserves
	Notes	Capital		Treasury shares			Reserve for capital and grant of shares		Legal reserve		Retained earnings and investments			Accumulated losses			Total parent company			Noncontrolling interests			Total consolidated
Balances at December 9, 2013 (unaudited)			285,806		(17,704	)		26,737		34,164		125,405			-			454,408			31,800			486,208

Capital increase:
Capital contribution	-		-		-			-		-		-			-			-			137			137
Stock option program	21		-		-			62		-		-			-			62			-			62
Net income (loss) for the period	-		-		-			-		-		-			(786	)		(786	)		2,142			1,356
Allocation:
Legal reserve	14 (ii)		-		-			-		-		-			-			-			-
Absorption of current period loss by income reserves	14 (ii)		-		-			-		-		(786	)		786			-			-			-
Retained earnings reserve	14 (ii)		-		-			-		-		-			-			-			-			-
Balances at December 31, 2013			285,806		(17,704	)		26,799		34,164		124,619			-			453,684			34,079			487,763

Capital increase:
Exercise of stock options			4,641		-			-		-		-			-			4,641			-			4,641
Capital contribution			-		-			-		-		-			-			-			1,324			1,324
Stock option program	21		-		-			318		-		-			-			318			-			318
Purchase of treasury shares	14(i)		-		(4,641	)		-		-		-			-			(4,641	)		-			(4,641	)
Net income for the year	-		-		-			-		-		-			128,955			128,955			17,288			146,243
Allocation:
Legal reserve	14 (ii)		-		-			-		6,448		-			(6,448	)		-			-
Proposed dividends	14 (ii)		-		-			-		-		-			(1,225	)		(1,225	)		(5,600	)		(6,825	)
Retained earnings reserve	14 (ii)		-		-			-		-		121,282			(121,282	)		-			-			-
Balances at December 31, 2014			290,447		(22,345	)		27,117		40,612		245,901			-			581,732			47,091			628,823

See accompanying notes to consolidated financial statements.

F-127

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

1.	Operations

Alphaville Urbanismo S.A. ("AUSA" or "Company") is a privately held corporation with registered office at Av. das Nações Unidas, 8,501, 9th floor, in the city and state of São Paulo, Brazil, and operates in the development and urbanization of residential lots. The Company is focused on identifying, developing and selling residential lots targeted at many markets throughout the Brazilian territory.

As of December 31, 2014, the Company is a subsidiary of Private Equity firm called AE Investimentos e Participações S.A., which holds a 70% interest in the capital of the Company, while the other 30% interest is held by Gafisa S.A..

2.	Presentation of financial statements and summary of significant accounting policies

2.1.	Basis of presentation and preparation of individual and consolidated financial statements

The consolidated financial statements were authorized for issue by the Company’s Board of Directors on April 27, 2015.

The consolidated financial statements of the Company have been prepared and are being presented according to the accounting practices adopted in Brazil, including the pronouncements issued by the CPC, approved by the Brazilian Securities and Exchange Commission (CVM).

Brazilian GAAP, or BR GAAP, differs from International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) in certain respects, including the fact that Brazilian GAAP permits the application of percentage of completion accounting by real estate companies in more circumstances than are permitted by IFRS. This application of Brazilian GAAP is commonly referred to in Brazil as “IFRS applicable to real estate development entities in Brazil, as approved by the Accounting Pronouncements Committee, or CPC, the CVM and the Federal Accounting Council, or CFC, including CPC Guideline 04 – Application of the Technical Interpretation ICPC 02 to the Brazilian Real Estate Development Entities – regarding revenue recognition, and the respective costs and expenses arising from real estate development operations by reference to the stage of completion (percentage of completion method)”. Accordingly, for the purpose of inclusion in a filing with the United States Securities and Exchange Commission, the consolidated financial statements prepared in accordance with BR GAAP have been reconciled to US GAAP as presented in Note 22. US GAAP condensed consolidated balance sheets have been included in Note 22 (d)(i) for 2014 and 2013 and US GAAP consolidated statement of operations and comprehensive income (loss) for the year ended December 31, 2014 and the twenty-two-day period ended December 31, 2013 have been included in Note 22 (d)(ii) and Note 22 (d)(iii), respectively.

The consolidated financial statements have been prepared in the normal course of business. Management makes an assessment of the Company’s ability to continue as a going concern when preparing the consolidated financial statements. The Company is in compliance with all of its debt covenants at the date of issue of these consolidated financial statements.

All amounts reported in the financial statements are in thousands of Reais, except as otherwise stated.

F-128

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

2.	Presentation of financial statements and summary of significant accounting policies -- Continued

2.1.	Basis of presentation and preparation of individual and consolidated financial statements -- Continued

a) Consolidated financial statements

The consolidated financial statements of the Company include the financial statements of Alphaville, and its direct and indirect subsidiaries. The control over these entities is obtained when the Company has the power to control its financial and operational policies, and can benefit from and is exposed to the risks of their activities. The subsidiaries are fully consolidated from the date that full control commences to the date it ceases to exist.

The accounting practices were uniformly adopted in all subsidiaries included in the consolidated financial statements and the fiscal year of these companies is the same as the Company. See further details in Note 7.

2.1.1.

Functional and presentation currency

The consolidated financial statements are presented in Reais (presentation currency), which is the functional currency of the Company and its subsidiaries.

2.2.1.

Accounting judgments, estimates and assumptions

Accounting estimates and judgments are evaluated on an ongoing basis based on historical experience and other factors, including expectations of future events, considered reasonable under the circumstances.

(i) Judgments

The preparation of the individual and consolidated financial statements of the Company requires management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, as well as the disclosure of contingent liabilities, at the reporting date.

(ii) Estimates and assumptions

The main assumptions related to sources of uncertainty over future estimates and other important sources of uncertainty over estimates at the reporting date, which may result in different amounts upon settlement are discussed below:

a) Impairment of assets

Management reviews annually and/or when a specific event occurs the carrying amount of assets with the objective of evaluating events or changes in the economic, operational or technological circumstances that may indicate an impairment. Should such evidences exist, and the carrying amount exceeds the recoverable amount, a provision for impairment is recognized by adjusting the carrying amount to the recoverable amount. These impairment losses are recognized in the statement of profit or loss when incurred.

F-129

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

2.	Presentation of financial statements and summary of significant accounting policies -- Continued

2.2.	Summary of significant accounting policies

2.2.1.

Accounting judgments, estimates and assumptions -- Continued

b) Share-based payment transactions

The Company measures the cost of transactions with employees to be settled with shares based on the fair value of equity instruments on the grant date.

The estimate of the fair value of share-based payments requires the determination of the most adequate pricing model to grant equity instruments, which depends on the grant terms and conditions. It also requires the determination of the most adequate data for the pricing model, including the expected option life, volatility and dividend income, and the corresponding assumptions. The assumptions and models used to estimate the fair value of share-based payments are disclosed in Note 21.

c) Fair value of financial instruments

When the fair values of the financial assets and liabilities presented in the balance sheet cannot be obtained in the active market, they are determined using valuation techniques, including the discounted cash flow method.

d) Estimated cost of construction and warranty provision

Estimated costs, mainly comprising the incurred and future costs for completing the construction projects, are regularly reviewed, based on the progress of construction, and any resulting adjustments are recognized in profit or loss of the Company. The effects of revisions to such estimates affect the statement of profit or loss. In addition, the Company and its subsidiaries recognize a provision to cover expenditures for repairing lots covered during the warranty period. The warranty period is five years from the delivery of the lot.

e) Taxes

There are uncertainties inherent in the interpretation of complex tax rules and in the value and timing of future taxable income. In the ordinary course of business, the Company and its subsidiaries are subject to assessments, audits, legal claims and administrative proceedings in tax and labor matters. Depending on the nature of such investigations, legal claims or administrative proceedings, the Company and its subsidiaries could be adversely affected, regardless of the respective final outcome.

f) Realization of deferred income tax

A deferred tax asset is recognized when it is probable that a taxable profit will be available in subsequent years to offset the deferred tax asset, based on projections of results and on internal assumptions and future economic scenarios that enable its total or partial use if the full amount is recorded.

F-130

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

2.	Presentation of financial statements and summary of significant accounting policies -- Continued

2.2.	Summary of significant accounting policies -- Continued

2.2.2.

Recognition of revenue and expenses

(i) Sale of lots

For the sales on credit, revenues are recognized upon completion of the sale, regardless of the timing of receipt from the customer. In the sale of lots not developed and residential units in construction, the following procedures were observed:

• The incurred cost that corresponds to the lots and units sold is included in profit or loss;

• The percentage of incurred cost (including land) is determined in relation to its total estimated cost; this percentage is applied to the total revenues of lots and units sold and adjusted for inflation in accordance with the terms established in the sales contracts, in order to determine the amount of revenue to be recognized in direct proportion to costs.

• Revenues recognized in excess of actual payments received from customers is recorded as either a current or non-current asset. Any payment received in connection with the sales of lots that exceeds the amount of revenues recognized is recorded as “Payables for purchase of property and advances from customers".

• Interest on accounts receivable, as well as the adjustment to present value of accounts receivable, are included in the lots development and sales when incurred, on a pro rata basis using the accrual basis of accounting.

• Taxes levied on the difference between real estate development revenues and the cumulative revenue subject to tax are calculated and recognized when this difference in revenues is recognized.

• Other expenses, including advertising and publicity are recognized in profit or loss when incurred.

(ii) ICPC 02 – paragraphs 20 and 21

In accordance with ICPC 02, the amounts of revenues recognized and costs incurred are recognized in profit or loss, and the advances received are recognized in the account “payables for purchase of property and advances from customers”.

F-131

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

2.	Presentation of financial statements and summary of significant accounting policies -- Continued

2.2.	Summary of significant accounting policies -- Continued

2.2.3.

Financial instruments

Financial instruments are recognized from the date the Company becomes a party to the contractual provisions of financial instruments, which mainly comprise cash and cash equivalents, short-term investments, accounts receivable, loans and financing, suppliers, and other debts. Financial Instruments not measured at fair value through profit or loss are recognized initially at fair value plus any directly related transaction costs.

After initial recognition, financial instruments are measured as described below:

(i) Financial instruments through profit or loss

A financial instrument is classified into fair value through profit or loss if it is held for trading, or designated as such when initially recognized.

Financial instruments are designated at fair value through profit or loss if the Company manages these investments and makes purchase and sale decisions based on their fair value in accordance with the investment strategy or risk management.

After initial recognition, related transaction costs are recognized in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and their changes therein are recognized in profit or loss.

In the year ended December 31, 2014, the Company held derivative financial instruments with the objective of mitigating the risk of its exposure to the volatility of indices and interest rates, recognized at fair value directly in profit or loss. In accordance with its treasury policies, the Company does not have or issue derivative financial instruments for purposes other than for hedging.

Subsequent to initial recognition, derivatives are measured at fair value and the changes are recognized in profit or loss - Note 15.

The Company does not adopt the hedge accounting practice.

F-132

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

2.	Presentation of financial statements and summary of significant accounting policies --Continued

2.2.	Summary of significant accounting policies -- Continued

2.2.3.

Financial instruments

(ii) Financial assets

Financial assets are classified into financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The Company determines the classification of its financial assets at their initial recognition, when the company becomes a party to the contractual provisions of the instrument.

Financial assets are initially recognized at fair value, plus, in the case of investments not designated at fair value through profit or loss, directly attributable transaction costs.

The financial assets of the Company include cash and cash equivalents, short-term investments, trade accounts receivable and other accounts receivable, loans and other receivables and derivative financial instruments.

Derecognition (write-off)

A financial asset (or, as the case may be, a portion of a financial asset or portion of a group of similar financial assets) is derecognized when:

• The rights to receive cash inflows of an asset expire;

• The Company transfers its rights to receive cash inflows from an asset or assume an obligation of fully paying the cash inflows received, without significant delay, to a third party because of a contractual agreement; and (a) the Company substantially transfers the risks and rewards of the asset, or (b) the Company does not substantially transfer or retain all risks and rewards related to the asset, but transfers the control over the asset.

When the Company has transferred its rights to receive cash inflows of an asset, or signed an agreement to pass it on, and has not substantially transferred or has retained all risks and rewards related to the asset, an asset is recognized to the extent of the continuous involvement of the Company with the asset. In this case, the Company also recognizes a related liability. The transferred asset and related liability are measured based on the rights and obligations that the Company has maintained.

The continuous involvement by means of a guarantee on the transferred asset is measured at the lower of the original carrying amount of the asset, and the highest consideration that may be required from the Company.

F-133

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

2.	Presentation of financial statements and summary of significant accounting policies --Continued

2.2.	Summary of significant accounting policies -- Continued

2.2.3.

Financial instruments

(iii) Financial liabilities at fair value through profit or loss

Financial liabilities through profit or loss include trading financial liabilities and financial liabilities designated as such upon initial recognition.

Financial liabilities are classified into held for trading when they are acquired with the objective of selling them in the short term.

Loans and financing

Subsequent to initial recognition, loans and financing accruing interest are measured at amortized cost, using the effective interest rate method. Gains and losses are recognized in statement of profit or loss, at the time liabilities are written-off, as well as during the amortization process using the effective interest rate method.

Derecognition (write-off)

When an existing financial liability is substituted by another from the same creditor, under substantially different terms, or when the terms of an existing liability are significantly modified, this substitution or change is treated as a derecognition of the original liability and recognition of a new liability. The difference in the corresponding carrying amounts is recognized in profit or loss.

Financial instrument – net presentation

Financial assets and liabilities are stated at their net amounts in the balance sheet when, and only when, there is a current and executable legal right to offset the amounts, and the Company intends to settle them on a net basis or realize the asset and settle the liability simultaneously.

(iv) Available-for sale financial instruments

For available-for-sale financial instruments, the Company assesses if there is any objective evidence of impairment at each reporting date. Subsequent to initial recognition, available-for-sale financial assets are measured at fair value, with unrealized gains and losses recognized in other comprehensive income, when applicable; except for impairment losses of interests calculated using the effective interest rate method, and the exchange gains or losses on monetary assets that are directly recognized in profit or loss.

F-134

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

2.	Presentation of financial statements and summary of significant accounting policies --Continued

2.2.	Summary of significant accounting policies -- Continued

2.2.4.

Cash and cash equivalents and short-term investments

Cash and cash equivalents substantially comprise demand deposits and bank certificates of deposit held under resale agreements, denominated in Reais, with high market liquidity and original contractual maturities of 90 days or less, and for which there are no penalties or other restrictions for the immediate redemption thereof.

Cash equivalents are classified as financial assets at fair value through profit or loss and are recorded at the original amounts plus income earned through the reporting dates of the financial statements, calculated on a “pro rata basis", which are equivalent to their market values, not having any impact to be accounted for in the Company’s equity.

Short-term investments include bank deposit certificates, restricted credits in view of the temporary blocked amounts due to the participation of partners (see Note 4.2) and are classified as financial assets at fair value through profit or loss.

2.2.5.

Accounts receivable

These are presented at present and realization amounts. The classification between current and noncurrent is made based on the expected maturity of contract installments. The installments outstanding are mainly adjusted based on the General Market Price Index (IGP-M).

2.2.6.

Mortgage-backed Securities (CRIs) and Housing Loan Certificate (CCI)

The Company carried out the assignment of real estate receivables for securitization and issue of CRIs (“Cédula de Recebível Imobiliário” – CRI). When there is no right of recourse, this assignment is recorded as a reduction of accounts receivable. When there is right of recourse against the Company, the assigned receivable is maintained in the balance sheet and as contra-entry an account in liabilities is recorded. The financial guarantees, when a participation is acquired (subordinated CRI), are recorded on the balance sheet in “non-current assets” in “short-term investments” at the realization amount, which is equivalent to fair value.

The Company and its subsidiaries carried out the assignment and/or securitization of receivables in 2012, related to receivables from the conditional sale of completed lots and those still under construction. This securitization is carried out through the issuance of the “Housing loan certificate” (“Cédula de Crédito Imobiliário” or “CCI”), which is assigned to financial institutions. The funds from assignment are classified into the account “Obligations assumed on assignment of receivable”, until certificates are settled by customers.

F-135

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

2.	Presentation of financial statements and summary of significant accounting policies --Continued

2.2.	Summary of significant accounting policies -- Continued

2.2.7.

Lots for sale

Lots for sale are measured at cost of land acquisition and include the accumulated costs of infrastructure and the financial costs eligible to subdivisions, not in excess of its net realization amount. In the case of lots in development, the portion in inventory corresponds to the incurred cost of lots not yet sold.

When the cost of lots for sale exceeds the expected cash flow from sales, completed or in development, an impairment charge is recognized in the period when it is determined that the amount shall not be recoverable.

2.2.8.

Selling expenses - Commissions

Brokerage expenditures are recorded in profit or loss under the account “Selling expenses” employing the same percentage-of-completion criteria used for revenue recognition. The charges related to sales commissions paid by the buyer to their broker are not recognized as revenue or an expense of the Company.

2.2.9.

Warranty provision

The Company and its subsidiaries recognize a provision to cover expenditures for repairing lots covered during the warranty period. The warranty period is five years from the delivery of the lot.

2.2.10. Investments

Investments in associates are recorded in the Company using the equity method.

When the Company's equity in the losses of associates is equal to or higher than the amount invested, the Company recognizes the residual portion in net capital deficiency since it assumes obligations, and makes payments on behalf of these companies. For this purpose, the Company recognizes a provision at an amount considered appropriate to meet the obligations of the associates (Note 7).

F-136

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

2.	Presentation of financial statements and summary of significant accounting policies--Continued

2.2.	Summary of significant accounting policies -- Continued

2.2.11.

Property and equipment

Items of property and equipment are measured at cost, less accumulated depreciation and/or any accumulated impairment losses, if applicable.

Depreciation is calculated based on the straight-line method considering the estimated useful lives of the assets, as follows:

(i) Vehicles – five years;

(ii) Furniture, fixtures and installations – ten years;

(iii) Computers and software licenses – five years.

The residual amount, useful life, and depreciation methods are reviewed when there are modifications in relation to the information from the prior year or in relation to the current status of assets.

Expenditures incurred in the construction of sales stands and related furnishings are used for the maximum term of one year, considered as expense upon the launch of the venture.

An item of property and equipment is derecognized when sold or no future economic benefits are expected from its use or disposal. Possible gain or loss arising from derecognition of an asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized in profit or loss upon derecognition.

Property and equipment are subject to periodic assessments of impairment.

F-142

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

3.	Pronouncements (new or revised) and interpretation adopted from January 1, 2014 and new and revised standards and interpretation already issued and not yet adopted

3.1	Pronouncements (new or revised) and interpretation adopted from 2014

The Company adopted all of the pronouncements (new or revised) and interpretations issued by the CPC which were effective as of December 31, 2014.

The pronouncements (new or revised) and the interpretation listed below, issued by CPC and approved by CVM, are mandatory for the years beginning January 1, 2014 or later. They are the following:

• OCPC 07 - Providing Evidence in the Disclosure of General Purpose Financial and Accounting Reports. This standard aims at addressing the basic requirements for preparing and providing evidence to be observed when disclosing general purpose financial and accounting reports. It specifically addresses the provision of evidence about information of annual and interim financial and accounting statements, particularly those contained in the accompanying notes. The standard establishes that the evidenced information shall be relevant to external users. And relevant are only those that influence the investors’ and creditors’ decision-making process. Consequently, the non-relevant ones shall not be disclosed.

• ICPC 09 (R2) - Individual, Separate and Consolidated Financial Statements and the Equity Method of Accounting - The objective of the ICPC 09 revision is substantially derived from the issue of the technical pronouncements CPC 18 (R2), CPC 19 (R2) and CPC 36 (R3), in view of the changes made by the International Accounting Standards Board (IASB) in the international accounting standards IAS 28, IFRS 10 and IFRS 11. Other items were also revised aimed at adjusting the text to the current needs and keeping them convergent with the international standards.

ICPC 19 - Levies – CVM Resolution 730 of November 27, 2014;

The Interpretation is correlated with the IFRIC Interpretation 21 – Levies, issued by the International Accounting Standards Board (IASB). The document provides for the accounting for a liability for a levy, if the liability is in the scope of the Technical Pronouncement CPC 25, and also deals with the accounting for the liability for levy which timing and amount are not certain.

• Amendment to the CPC 01/IAS 36 – Impairment of Assets about the disclosure of the recoverable amount of non-financial assets. This amendment eliminates certain disclosures of the recoverable amount of cash generating units that had been included in the IAS 36 with the issue of the IFRS 13.

• Amendment to the CPC 39/IAS 32 – Financial Instruments: Presentation, about the offsetting of financial assets and liabilities. This amendment clarifies that the right to offset shall not be contingent on a future event. It also shall be legally applicable to all counterparties in the normal course of business, as well as in the case of default, insolvency or bankruptcy. The amendment also considers liquidation mechanisms.

• Revision of Technical Pronouncement 7 – Equity Method in Separate Financial Statements, amends the wording of the CPC 35 – Separate Financial Statements to incorporate the modifications made by the IASB to the IAS 27 - Separate Financial Statements, which now permits the adoption of the equity method for subsidiaries in the separate financial statements, thus aligning the accounting practices adopted in Brazil with the international accounting standards. For the IFRS purposes, the modifications to the IAS 27 were early adopted.

There are no other standards and interpretations that were issued and not yet adopted that could, on the Management’s opinion, have significant impact on the profit or loss or equity disclosed by the Company.

F-143

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

3.	Pronouncements (new or revised) and interpretation adopted from January 1, 2014 and new and revised standards and interpretation already issued and not yet adopted -- Continued

3.2	New and revised interpretations already issued and not yet adopted

· IFRS 15 – Revenue from contracts with customers

On May 28, 2014, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) issued new requirements for recognition of revenue under both IFRS and U.S. GAAP, respectively. The IFRS 15 – Revenue from Contracts with Customers, requires an entity to recognize the amount of revenue reflecting the consideration it expects to receive in exchange for the control over such goods or services. The new standard is going to replace most of the detailed guidance on the recognition of revenue that currently exists under the IFRS and U.S. GAAP when it is adopted. Its application is required for annual years beginning on or after January 1, 2017, with early adoption permitted for the IFRS purposes, and not permitted locally before the harmonization and approval from the CPC and CVM.

The Company is evaluating the effects of the IFRS 15 on its financial statements and has not yet completed its analysis thus far, not being able to estimate the impact of the adoption of this standard.

There is no other IFRS standard or IFRIC interpretation that have not yet entered into effect that could have a significant impact on the Company.

F-144

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

4.	Cash and cash equivalents and short-term investments

4.1	Cash and cash equivalents

	2014		2013
Cash and banks		13,912		17,659
Securities purchased under resale agreements
(Note 15 (i) (e) and (a))		144,560		250,076
Amounts in transit (b)		2,610		25,364
Cash and cash equivalents		161,082		293,099

(a) Securities purchased under agreement to resale agreement comprise securities issued by Banks with a repurchase commitment by the bank, and resale commitment by the customer, at rates and terms agreed upon, backed by private or government securities, depending on the bank. The securities are registered with the CETIP.

(b) Amounts in transit are represented by checks in transit received upon launch of ventures and cashed in a subsequent period of up to 90 days

As of December 31, 2014, the securities purchased under resale agreement include interest earned from 90% to 102.0% of Interbank Deposit Certificates (CDI) (from 75% to 101.8% of CDI in 2013). All transactions are with what management considers being top tier financial institutions.

4.2	Short-term investments

	2014		2013
Investment funds (a)		16,461		-
Bank certificates of deposit (b)		37,072		23,005
Restricted credits (c)		6,354		53,130
Total short-term investments (Note 14 (i) e)		59,887		76,135

(a) In 2014, we started operations with Fund (PP Portfolio) with daily liquidity and earning interests at 102% CDI in average, with possible variations, but with the levy of IOF tax (for redemptions before 30 days).

(b) In 2014, Bank Certificates of Deposit (CDBs) include interest earned varying from 93% to 101% (from 93% to 101.3% in 2013) of Interbank Deposit Certificates rate (CDI). The Company invests in short term (up to 20 working days) through securities purchased under resale agreements in which the interest is lower (from 90% of CDI). On the other hand, this investment is exempt of IOF, which is not granted in the case of CDBs.

(c) Amounts related to credit to temporarily blocked checking accounts in view of the participation of the Partner, which the Company is expected to be cleared in 45 days or less.

F-145

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

5.	Accounts receivable

	2014			2013

Committed purchaser of lots		1,292,451			1,120,964
(-)Present value adjustments		(173,917	)		(149,214	)
		1,118,534			971,750
Current		452,661			446,935
Non-current		665,873			524,815

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

Maturity		2014			2013
	2014		-			446,935
	2015		452,661			184,004
	2016		214,585			138,215
	2017		162,247			102,080
	2018 onwards		462,958			249,730
Total			1,292,451			1,120,964
(-)Adjustment to present value			(173,917	)		(149,214	)
Total (Note 15 (i) e)			1,118,534			971,750

The balance of accounts receivable from lots sold and not yet delivered is not fully reflected in the financial statements. The recovery is limited to the portion of the recorded revenues net of the amounts already received.

Advances from customers in excess of the revenues recorded in the period are shown in Note 10.

Accounts receivable, financed by the Company, are in general subject to IGP-M variation, with revenue being recorded in profit or loss in the account “Revenue from sale of lots".

The net amount of the present value adjustment recognized in revenue from real estate development for the year ended December 31, 2014 was an expense of R$13,169 (R$26,624 in the twenty-two-day period ended December 31, 2013) in the consolidated financial statements.

Accounts receivables from lots not yet completed were measured at present value using a discount rate determined according to the criteria described in Note 2.2.16. The rate applied by the Company and its subsidiaries was 7.78% in 2014 (5.76% in 2013), net of IGP-M.

On November 14, 2012, the Company and its subsidiaries entered into an Assignment of Real Estate Receivables Agreement (CCI), which consists of an assignment by the Assignor to the Assignee of a portfolio comprising select residential real estate receivables performed and to be performed arising out of the Company and its subsidiaries and jointly-controlled investees. The portfolio continues to be recorded in accounts receivable until it is settled by the customer. As of December 31, 2014, the liability balance of this operation amounts to R$41,314 in the consolidated financial statements (R$67,929 in 2013).

F-146

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

6.	Properties for sale

	2014		2013
Land		92,568		70,066
Lots in development		270,537		243,258
Lots completed		192,819		89,730
		555,924		403,054

Current		495,433		358,003
Non-current		60,491		45,051

As mentioned in Note 8, the balance of consolidated capitalized financial charges as of December 31, 2014 is R$24,671 (R$11,640 in 2013).

F-147

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

7.	Investments in associates

(i) Ownership interest

a) Associates and jointly-controlled investees

The main full information on ownership interests held are summarized as follows:

	Ownership interests %		Total assets	Total liabilities	Equity and advance for future capital increase		Profit (loss) for the year (2014) and for the 22 day period ended December 31 (2013)		Investments		Income from equity method investments for the year (2014) and for the 22 day period ended December 31 (2013)
Direct investments	2014	2013	2014	2014	2014	2013	2014	2013	2014	2013	2014	2013
								(Unaudited)				(Unaudited)
SPE Leblon Incorporadora S.A.	40%	40%	36,443	7,505	28,938	32,780	(3,818)	(503)	11,575	13,112	(1,537)	(201)
Krahô Empr. Imob. S.A.	48%	48%	61,078	39,226	21,852	24,222	(2,370)	(371)	10,380	11,505	(1,126)	(176)
Alphaville Reserva Santa Clara Empr. Imob. Ltda.	25%	25%	16,843	23	16,820	16,849	(51)	(8)	4,205	4,212	(13)	(2)
Sociedade Loteadora	31%	31%	11,926	865	11,061	14,025	550	361	3,429	4,348	321	112
Gafisa SPE-77 Empr. Imob. Ltda.	35%	35%	25,751	17,600	8,151	9,565	(1,414)	143	2,853	3,348	(495)	50

Other (*)			1,062	6	1,056	1,136	(76)	-	(18)	459	-	-

Total investments			153,103	65,225	87,878	98,577	(7,179)	(378)	32,424	36,984	(2,850)	(217)

(*) Amount obtained from the sum of investments below R$14, except when it is required to make comparison with the year 2013.

F-148

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

7.	Investments in associates--Continued

(i) Ownership interest --Continued

a) Change in investments

	2014			2013
Balance at the beginning of the year / period		36,984			37,374
Income from equity method investments		(2,850	)		(217	)
Advance for future capital increase		6			-
Dividends receivable		(1,240	)		-
Other investments		(476	)		(173	)
Balance at the December 31,		32,424			36,984

F-149

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

8.	Loans and financing

Type	Maturity	Annual interest rate	2014		2013

		CDI+0.82% to CDI+3.04%
Working capital (a)	Mar/14 to Oct/23	IGP-DI+8.95%		376,666		290,671
		IPCA+8.38%
				376,666		290,671
Current portion				234,177		79,634
Non-current portion				142,489		211,037

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

13.	Income tax and social contribution

a) Current income tax and social contribution

The reconciliation of the effective tax rate for the year ended December 31, 2014 and the 22 day period ended December 31, 2013 is as follows:


	2014			2013
				(Unaudited)
Profit before income tax and social contribution, and statutory interest		184,151			3,394
Income tax calculated at the applicable rate – 34%		(62,611	)		(1,154	)
Net effect of subsidiaries taxed by presumed profit		87,725			3,780
Stock option plan		(108	)		(21	)
Other permanent differences		(8,859	)		(307	)
Changes in payables to venture partners		(1,016	)		(191	)
Income from equity method investments		(969	)		119
Tax benefits recognized (not recognized)		(52,069	)		(4,264	)
		(37,907	)		(2,038	)

Tax expenses – current		(26,973	)		(4,382	)
Tax income (expenses) – deferred		(10,934	)		2,344

b) Deferred income tax and social contribution

The Company recognized deferred tax assets on tax losses and income tax and social contribution carryforwards for prior years, which have no expiration, and for which offset is limited to 30% of annual taxable profit, to the extent the taxable profit is likely to be available for offsetting temporary differences, based on the assumptions and conditions established in the business model of the Company.

As of December 31, 2014 and 2013, deferred income tax and social contribution are from the following sources:

	2014			2013
Temporary differences				(Unaudited)
Taxation on income between cash and accrual basis		(47,608	)		(30,361	)
Other		-			(1,034	)
Temporary differences – PIS and COFINS deferred		3,406			3,047
Provisions for legal claims		1,917			1,536
CPC adjustment		17,249			12,982
Other provisions		1,804			6,218
		(23,232	)		(7,612	)
Deferred tax assets
Tax loss and income tax and social contribution loss carryforwards		123,446			66,690
Tax benefits not recognized		(116,476	)		(64,407	)
		6,970			2,283

Deferred tax asset		31,346			26,066
Deferred tax liability		(47,608	)		(31,395	)

Total net		(16,262	)		(5,329	)

As of December 31, 2014 and 2013, the Company had income tax and social contribution loss carryforwards in the amounts of R$363,076 and R$196,147, respectively.

F-156

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

14.

Equity

(i) Capital

As of December 31, 2014, the subscribed and paid-in capital amounts to R$290,447 (R$285,805 in 2013) represented by 117,510,769 shares, of which 115,347,000 are registered common shares, without par value, and 2,163,769 are registered common shares, without par value, held in treasury. The Board of Directors of the Company is authorized to take resolution on the issue of common shares, up to the authorized capital limit, not requiring amendment to bylaws.

On June 26, 2014, in the Extraordinary Shareholders’ Meeting, an increase in the Company’ capital was approved in the amount of R$4,641 by issuing 1,103,410 new registered common shares without par value, in view of the exercise of the acquisition of shares granted in the scope of the stock option plan of the company. Immediately thereafter, an approval was granted for the acquisition by the Company of such 1,103,410 new shares for cancellation or holding in treasury, without capital reduction.

The change in the amount of shares is as follows:

	Common							Preferred
	Shares – in thousands

	Capital R$ thousand		Registered			Treasury		Registered		Treasury		Total
December 09, 2013		285,806		115,347			1,060		-		-		116,407
Increase in capital without issue of shares		-		-			-		-		-		-
Exercise of stock options		-		-			-		-		-		-
Repurchase of shares		-		-			-		-		-		-
Cancellation of treasury shares		-		-			-		-		-		-
December 31, 2013		285,806		115,347			1,060		-		-		116,407
Increase in capital without issue of shares		-		-			-		-		-		-
Exercise of stock options		4,641		1,103			-		-		-		1,103
Repurchase of shares		-		(1,103	)		1,103		-		-		-
Cancellation of treasury shares		-		-			-		-		-		-
December 31, 2014		290,447		115,347			2,163		-		-		117,510

F-157

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

14.	Equity-- Continued

(ii) Allocation of net income (loss)

• Legal reserve

Legal reserve is annually recorded as allocation of 5% of net income for the year, reaching up to 20% of capital stock. The legal reserve is aimed at assuring the integrity of capital stock and may only be used to offset losses and increase capital.

• Proposed and distributed dividends

Proposed dividends are calculated under the bylaws terms approved in the Extraordinary Shareholders’ Meeting held on December 9, 2013, assuring the right to mandatory dividend of at least 1% on net income, calculated under the terms of the Brazilian Corporate Law.

On April 30, 2014, the minutes of the Annual and Extraordinary Shareholders’ Meeting took the resolution to allocate the net income for the year ended December 31, 2013, in the amount of R$175,651 as follows:

• R$8,783 to Legal Reserve;

• R$42,173 was declared as interim dividend to be allocated to the shareholders of the Company on December 9, 2013.

• R$124,696 was retained, according to the capital budget prepared by the management, then approved by the shareholders.

There was no distribution of dividends to shareholders in 2014, and the calculation of proposed dividends is as established in the company’s bylaws.

The calculation of legal reserve and proposed dividends is as follows:

	2014		FY2013
Net income (loss) for the year		128,955		(786	)
Legal reserve - 5%		6,448		-
		122,507		(786	)
Minimum mandatory dividend (1% in 2014)		1,225		-
Distributed dividends		-		-
Surplus of dividends distributed according to the bylaws		-		-
Absorption of current period loss by income reserves		-		786
Value of dividend per share - common		0.0106		-

• Income reserve

The Bylaws establishes that in case the income reserve is in excess of capital stock, the Shareholders’ Meeting shall take resolution on investing such surplus by paying-in or increasing capital, or even distributing an additional amount to shareholders.

F-158

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

15.	Financial instruments

The Company and its subsidiaries engage in operations involving financial instruments to hedge the volatility of price indexes and interest rates, the instruments being managed through operational strategies and internal controls aimed at providing liquidity, return and safety. The Company and its subsidiaries do not use derivatives or any other risky assets for speculative purposes. The Company and its subsidiaries operations are subject to the risk factors described below:

(i) Risk considerations

a) Credit risk

The Company and its subsidiaries restrict their exposure to credit risks associated with cash and cash equivalents, investing only short-term securities from top tier financial institutions.

With regards to account receivable, the Company restricts its exposure to credit risks through sales to a broad base of customers and ongoing credit analysis. Additionally, there is no relevant history of losses due to the existence of secured guarantee for the recovery of its products in the cases of default during the construction period. As of December 31, 2014 and 2013, there was no significant credit risk concentration associated with customers.

b) Derivative financial instruments

The Company holds derivative instruments (swap) to mitigate the risk arising from its exposure to index and interest volatility recognized at their fair value in profit or loss for the year. Pursuant to its treasury policies, the Company does not own or issue derivative financial instruments other than for hedging purposes.

As of December 31, 2014 and 2013, the Company had derivative instruments contracts for hedging purposes in relation to interest fluctuations, with final maturity in March 2017. The derivative contracts are as follows:

Swap agreements (fixed for CDI)	Face value	Original index – asset portion	Swap – liability portion	Beginning	End	2014	2013
Banco Votorantim S.A.	90,000	Fixed 14.2511%	CDI 2.41%	09/30/2013	03/28/2014	-	753
Banco Votorantim S.A.	67,500	Fixed 12.6190%	CDI 0.31%	03/28/2014	09/30/2014	-	504
Banco Votorantim S.A.	67,500	Fixed 15.0964%	CDI 2.41%	09/30/2014	03/30/2015	227	280
Banco Votorantim S.A.	45,000	Fixed 11.3249%	CDI 0.31%	03/30/2015	09/30/2015	(426)	(352)
Banco Votorantim S.A.	45,000	Fixed 14.7577%	CDI 2.41%	09/30/2015	03/31/2016	(217)	(200)
Banco Votorantim S.A.	22,500	Fixed 10.7711%	CDI 0.31%	03/31/2016	09/30/2016	(221)	(254)
Banco Votorantim S.A.	22,500	Fixed 17.2387%	CDI 2.41%	09/30/2016	03/30/2017	163	76
						(474)	807

					Current	(199)	807
					Non-current	(275)	-

During the year ended December 31, 2014, the amount of R$1,281 (zero amount in the 22 day period ended December 31, 2013) (Note 19), which refers to net result of the interest swap transaction, was recognized in the “financial income (expenses)” line, allowing correlation between the effect of such transactions and interest rate fluctuation in the Company’s balance sheet.

F-159

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

15.	Financial instruments--Continued

c) Interest rate risk

Interest rate risk arises from the possibility that the Company and its subsidiaries may experience gains or losses because of fluctuations in the interest rates of its financial assets and liabilities. Aiming to mitigating this kind, the Company and its subsidiaries seek to diversify funding in terms of fixed and floating rates. The interest rates on loans are disclosed in Note 8. The interest rates contracted on financial investments are disclosed in Note 4.

d) Liquidity risk

Liquidity risk refers to the possibility that the Company and its subsidiaries do not have sufficient funds to meet their commitments as they become due.

To mitigate liquidity risks, and to optimize the weighted average cost of capital, the Company monitor on an on-going basis the indebtedness level according to the market standards and the fulfillment of covenants provided for in loan contracts in order to guarantee that the operating-cash generation and the advance funding, when necessary, are sufficient to meet the schedule of commitments.

The maturities of financial instruments, loans, financing, suppliers and payables to venture partners are as follows:

As of December 31, 2014	Less than 1 year		1 to 3 years		4 to 5 years		More than 5 years		Total
Loans and financing (Note 8)		25,195		336,379		15,092		-		376,666
Debentures (Note 9)		5,136		182,000		468,000		-		655,136
Suppliers		36,850		-		-		-		36,850
Payables to venture partners (Note 11)		2,184		8,826		-		-		11,010

As of December 31, 2013	Less than 1 year		1 to 3 years		4 to 5 years		More than 5 years		Total
Loans and financing (Note 8)		79,634		196,821		14,216		-		290,671
Debentures (Note 9)		3,463		140,000		360,000		-		503,463
Suppliers		64,009		-		-		-		64,009
Payables to venture partners (Note 11)		39,522		8,826		-		-		48,348

F-160

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

15.	Financial instruments--Continued

(i) Risk considerations --Continued

e) Fair value classification

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

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

Level 2: input different from the quoted prices in active markets included in Level 1, which are observable, directly (as prices) or indirectly (prices derivate); and

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

The fair value classification of financial instruments assets measured at fair value through profit or loss of the Company presented in the financial statements for the year ended December 31, 2014 and 2013 is as follows.

	Fair value classification – 2014
	Level 1		Level 2		Level 3
Financial assets
Cash equivalents (Note 4.1)		-		161,082		-
Short-term investments (Note 412)		-		59,887		-

	Fair value classification – 2013
	Level 1		Level 2		Level 3
Financial assets
Cash equivalents (Note 4.1)		-		293,099		-
Short-term investments (Note 412)		-		76,135		-
Derivative financial instruments (Note 15.b)				807

In addition, the fair value classification of financial instruments liabilities is as follows:

	Fair value classification – 2014
	Level 1		Level 2		Level 3
Financial liabilities
Loans and financing (Note 8)		-		376,666		-
Debentures		-		655,136		-
Derivative financial instruments				474
Suppliers		-		36,850		-
Payables to venture partners (Note 11)				11,010

	Fair value classification – 2013
	Level 1		Level 2		Level 3
Financial liabilities
Loans and financing (Note 8)		-		290,671		-
Debentures		-		503,463		-
Suppliers		-		64,009		-
Payables to venture partners (Note 11)				48,348

F-161

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

15.	Financial instruments--Continued

(i) Risk considerations --Continued

In the years ended December 31, 2014 and 2013, there were no transfers between the levels 1 and 2 fair value valuation, nor were transfers between levels 3 and 2 fair value valuation.

(ii) Fair value of financial instruments

a) Fair value measurement

The following estimate fair values were determined using available market information and proper measurement methodologies. However, a considerable amount of judgment is necessary to interpret market information and estimate fair value. Accordingly, the estimates presented in this document are not necessarily indicative of amounts that the Company could realize in the current market. The use of different market assumptions and/or estimation methodology may have a significant effect on estimated fair values.

The following methods and assumptions were used in order to estimate the fair value for each financial instrument type for which the estimate of values is practicable:

(i) The amounts of cash and cash equivalents, short-term investments, accounts receivable and other receivables and other current liabilities approximate to their fair values, recorded in the financial statements, in view of their short-term natures.

(ii) The fair value of bank loans and other financial debts is estimated through future cash flows discounted using rates that are annually available for similar and outstanding debts or terms.

The carrying and fair values of the main financial assets and liabilities as of December 31, 2014 and 2013 are as follows:

F-162

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

15.	Financial instruments--Continued

(ii) Fair value measurement --Continued

	2014				2013
	Carrying amount		Fair value		Carrying amount		Fair value
Financial assets
Cash and cash equivalents (Note 4.1)		161,082		161,082		293,099		293,099
Short-term investments (Note 4,2)		59,887		59,887		76,135		76,135
Derivative financial instruments (Note 15 (i)(b))		-		-		807		807
Accounts receivable (Note 5)		1,118,534		1,118,534		971,750		971,750
Financial liabilities
Loans and financing (Note 8)		376,666		376,666		290,671		306,831
Debentures (Note 9)		655,136		711,392		503,463		526,494
Derivative financial instruments (Note 15 (i)(b))		474		474		-		-
Payables to venture partners (Note 11)		11,010		12,532		48,348		64,009

b) Risk of debt acceleration

As of December 31, 2014 and 2013, the Company has loans and financing, with restrictive covenants related to cash generation, indebtedness ratios and other. These restrictive covenants have been complied with by the Company and do not limit its ability to conduct its business as usual.

c) Market risk

The Company carries out the development, construction and sales of subdivisions. In addition to the risks that affect the real estate market as a whole, such as supply disruptions and volatility in the prices of construction materials and equipment, changes in the supply and demand for ventures in certain regions, strikes and environmental rules and zoning, the Company’s operations are particularly affected by the following risks:

• The state of the economy of Brazil, which may inhibit the development of the real estate industry as a whole, through the slowdown in economy, increase in interest rates, fluctuation of currency and political instability, besides other factors.

• Future impediments, as a result of a new regulation or market conditions, to adjust for inflation receivables using certain inflation indexes, as currently permitted, which could make a venture financially or economically unviable.

• The level of interest of buyers in a new venture launched or the sale price per unit necessary to sell all units may be below expectations, making the venture less profitable than expected.

• In the event of bankruptcy or significant financial difficulties of a large company of the real estate industry, the industry as a whole may be adversely affected, which could decrease the customer confidence in other companies operating in the industry.

F-163

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

15.	Financial instruments--Continued

(ii) Fair value measurement --Continued

c) Market risk --Continued

• Local and regional real estate market conditions, such as oversupply, land shortage or significant increase in land acquisition cost.

• Risk of buyers having a negative perception of the security, convenience and appeal of the Company’s properties, as well as about their location.

• The Company’s profit margins may be affected by the increase in operating costs, including investments, insurance premium, real estate taxes and government rates.

• The opportunities for development may decrease.

The building and sale of real estate units may not be completed as scheduled, thus increasing the construction costs or cancellation of sale contracts.

• Delinquency after the delivery of units acquired on credit. The Company has the right to file a collection action to receive the amounts due and/or repossess the real estate unit from the delinquent buyer, not being possible to guarantee that it will be able to recover the total amount of the debt balance or, once the real estate unit is repossessed, its sale in satisfactory conditions.

• Drop in the market value of land held in inventory, before the development of a real estate venture to which it was intended, and the incapacity to maintain the margins that were previously projected for such developments.

(iii) Capital stock management

The objective of the Company’s capital stock management is to guarantee that a strong credit rating is maintained in institutions and an optimum capital ratio, in order to support the Company’s business and maximize value to shareholders.

The Company controls its capital structure by making adjustments and adapting to current economic conditions. In order to maintain its structure adjusted, the Company may pay dividends, return on capital to shareholders, raise new loans.

The Company included in its net debt structure: loans and payables to venture partners less cash and cash equivalents and short-term investments (cash and cash equivalents and short-term investments):

	2014			2013
Loans and financing (Note 8)		376,666			290,671
Debentures (Note 9)		655,136			503,463
Payables to venture partners (Note 11)		11,010			48,348
(-) Cash and cash equivalents and short-term investments (Note 4.1 and 4.2)		(220,969	)		(369,234	)
Net debt		821,843			473,248
Equity		628,823			487,763
Equity and net debt		1,450,666			961,011

(iv) Sensitivity analysis

The sensitivity analysis of the financial instruments for one year, except swap contracts, which are analyzed through their due dates, describing the risks that may incur material losses on the

F-164

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

15.	Financial instruments--Continued

Company’s profit or loss in order to show a 25% and 50% increase/decrease in the risk variable considered is as follows.

As of December 31, 2014, the Company has the following financial instruments:

a) Short-term investments, loans and financing and derivative financial instruments linked to Interbank Deposit Certificates (CDI);

b) Accounts receivable linked to the IGP-M;

The scenarios considered were as follows:

Scenario I: 50% increase in the risk variables used for pricing

Scenario II: 25% increase in the risk variables used for pricing

Scenario III: 25% decrease in the risk variables used for pricing

Scenario IV: 50% decrease in the risk variables used for pricing

As of December 31, 2014:

		Scenario
		I			II			III			IV
Instrument	Risk	Increase 50%			Increase 25%			Decrease 25%			Decrease 50%
Short-term investments	Increase/Decrease of CDI		10,207			5,104			(5,104	)		(10,207	)
Loans and financing	Increase/Decrease of CDI		(14,756	)		(7,378	)		7,378			14,756
Debentures	Increase/Decrease of CDI		(33,757	)		(16,879	)		16,879			33,757
Derivative financial instruments	Increase/Decrease of CDI		(7,882	)		(5,904	)		(1,472	)		1,019
Net effect of CDI variation			(46,188	)		(25,057	)		17,681			39,325

Loans and financing	Increase/Decrease of IGP-DI		(662	)		(331	)		331			662
Net effect of IGP-DI variation			(662	)		(331	)		331			662

Accounts receivable	Increase/Decrease of IGP-M		20,266			10,133			(10,133	)		(20,266	)
Net effect of IGP-M variation			20,266			10,133			(10,133	)		(20,266	)

As of December 31, 2013:

		Scenario
			I		II			III			IV
Instrument	Risk	Increase 50%			Increase 25%			Decrease 25%			Decrease 50%
Short-term investments	Increase/Decrease of CDI		12,161			6,080			(6,080	)		(12,161	)
Loans and financing	Increase/Decrease of CDI		(5,055	)		(2,528	)		2,528			5,055
Debentures	Increase/Decrease of CDI		(22,420	)		(11,210	)		11,210			22,420
Derivative financial instruments	Increase/Decrease of CDI		(6,841	)		(3,567	)		3,567			6,841
Net effect of CDI variation			(22,155	)		(11,225	)		11,225			22,155

Payables to venture partners	Increase/Decrease of IGP-M		(762	)		(381	)		381			762
Accounts receivable	Increase/Decrease of IGP-M		11,570			5,785			(5,785	)		(11,570	)
Net effect of IGP-M variation			10,808			5,404			(5,404	)		(10,808	)

F-165

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

16.	Related parties

16.1 Balances with related parties

The balances between the Company and related companies are realized under conditions and prices established between the parties.

The transactions with related parties substantially refer to debit notes and financial contribution to SPEs and Consortia for development of real estate ventures, which balance is as follows:

	2014		2013
Dividends receivable
SPE Leblon Incorporadora S.A.		761		883
Krahô Empr. Imob. S.A.		195		267
Other (*)		306		-
		1,262		1,150
Total Assets		1,262		1,150

(*) Represented by diluted amounts of R$4,150 or less, except when required to compare with the year.

Related parties	2014		2013
Liabilities
Dividends payable
Private Equity AE Investimentos e Participações S.A.		858		-
Gafisa S.A.		367		-
Other		264		-
		1,489		-
Total Liabilities		1,489		-

16.2 Endorsements, guarantees and sureties

The financial transactions of wholly-owned subsidiaries or joint ventures of the Company have endorsement or surety in proportion to the interest of the Company in the capital stock of such companies, except certain specific cases in which the Company provides guarantees for its financial institutions, in which amount is R$1,527,296 as of December 31, 2014.

F-166

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

16.	Related parties--Continued

16.3 Management compensation

As of December 31, 2014 and 2013, the amounts recorded in the account “general and administrative expenses” related to the compensation of the Company’s key management personnel are as follows:

	As of December 31, 2014
	Management compensation
	Board of directors		Statutory board		Total		Fiscal council
Number of members		6		10		16		-
Annual fixed compensation (in R$)		-		5,214		5,214		-
Salary / Fees		-		4,652		4,652		-
Direct and indirect benefits		-		562		562		-
Monthly compensation (in R$)		-		358		358		-
Total compensation		-		5,214		5,214		-

	As of December 31, 2013
	Management compensation
	Board of directors		Statutory board		Total		Fiscal council
Number of members		5		6		11		1
Annual fixed compensation (in R$)		-		149		149		3
Salary / Fees		-		134		134		3
Direct and indirect benefits		-		15		15		-
Monthly compensation (in R$)		-		203		203		4
Profit sharing		-		2,160		2,160		-
Total compensation				149		149		3

Annual aggregate amount approved to be distributed among the Company’s management members for the year 2014 as fixed and variable compensation is up to R$15,201. The Board of Directors of the Company is not remunerated.

The share-based payment is described in Note 21.

16.4 Sales

As of December 31, 2014, no lot was sold to the management. The total balance receivable for lots sold is R$218 (R$562 in 2013).

16.5. Profit sharing

The Company has a profit sharing plan that entitles its employees and management members, and those of its subsidiaries to participate in the distribution of profits the Company.

This plan is tied to the achievement of specific targets, established, agreed-upon and approved by the Board of Directors at the beginning of each year.

In the year ended December 31, 2014, the Company did not meet the specific targets which were set, agreed and approved; accordingly, it did not recorded a reserve for profit sharing payment.

F-167

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

16.	Related parties--Continued

16.5. Profit sharing - Continued

	2014		22 day period ended December 31, 2013
			(Unaudited)
Statutory Board		-		2,160
Other employees		-		9,441
		-		11,601

Profit sharing is calculated and reserved based on the achievement of the Company’s targets for the period. An assessment is performed subsequent to year-end of the achievement of the Company’s targets, its employees targets.

17.	Net operating revenue

	2014			22 day period ended December 31, 2013
Gross operating revenue				(Unaudited)
Sale of lots		996,298			158,790
Services		5,051			187
Deductions from gross revenue		(43,101	)		(10,130	)
Net operating revenue		958,248			148,847

18.	Costs and expenses by nature

These are represented by the following:

	2014			22 day period ended December 31, 2013
Cost of real estate development and sale:				(Unaudited)
Construction cost		(452,013	)		(81,057	)
Land cost		(7,817	)		(4,121	)
Development cost		(19,852	)		(1,956	)
Maintenance / warranty		(7,736	)		(1,669	)
Development cost:		(487,418	)		(88,803	)
Capitalized financial charges		(13,418	)		(6,331	)
		(500,836	)		(95,134	)

Commercial expenses:
Marketing expenses		(64,638	)		(16,310	)
Brokerage and sale commission		(15,940	)		(931	)
		(80,578	)		(17,241	)

General and administrative expenses:
Salaries and payroll charges		(46,312	)		(779	)
Employee benefits		(3,819	)		(71	)
Travel and utilities		(4,848	)		(95	)
Services		(14,456	)		(237	)
Rents and condominium fees		(7,016	)		(63	)
IT		(13,179	)		(80	)
Expenses with organizational development		(3,605	)		(56	)
Other		(4,752	)		(231	)
		(97,987	)		(1,612	)

F-168

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

19.	Financial income (expenses)

	2014			22 day period ended December 31, 2013
				(Unaudited)
Financial income
Income from financial investments		18,122			1,025
Other financial income		5,602			1,436
		23,724			2,461
Financial expenses
Interest on funding, net of capitalization (Note 8)		(80,767	)		(4,332	)
Amortization of debenture cost		(214	)		(11,699	)
Payables to venture partners		(2,444	)		(561	)
Derivative transactions (Nota 15 (i)(b))		(1,281	)		-
Banking expenses		(2,927	)		(172	)
Offered discount and other financial expenses		(23,766	)		(4,979	)
		(111,399	)		(21,743	)

Net financial income (expenses)		(87,675	)		(19,282	)

20.

Insurance

The Company and its subsidiaries have insurance coverage for personal damages caused to third parties and material damages to tangible assets, as well as against fire hazards, lightning strikes, electrical damages, natural disasters and gas explosion. The contracted coverage has a maximum limit of R$10,480, considered sufficient by Management to cover possible risks involving its assets and/or responsibilities.

The adopted risk assumptions, given the nature and peculiarity are not part of the scope of the audit of the financial statements, accordingly, they were not audited by our independent auditors.

F-169

Table of Contents

Alphaville Urbanismo S.A.

Notes to the consolidated financial statements

December 31, 2014

(In thousands of Brazilian Reais, except as otherwise stated)

21.	Stock option plan

The Company has a total of two stock option plans comprising preferred shares, following the model of Phantom Stock Plans, which were launched in 2010 and 2011.

The granted options entitle their holders (employees) to purchase preferred shares of the Company’s capital, after periods that vary from one to five years of employment in the Company (essential condition to exercise the option), and expire ten years after the grant date.

Changes in the stock options outstanding in the year ended December 31, 2014 and in the 22 day period ended December 31, 2013, including the respective weighted average exercise prices are as follows:

	2014					22 day period ended December 31, 2013
	Number of options			Weighted average exercise price (Reais)		Number of options		Weighted average exercise price (Reais)
Options outstanding at the beginning of the year/period		876,743			2.99		876,743		2.99
Options exercised (i)		(465,684	)		4.21		-		-
Options expired		(107,338	)		4.93		-		-

Options outstanding at the end of the year / period		303,721			2.49		876,743		2.99

The options outstanding and the options exercisable as of December 31, 2014 are as follows:

Options outstanding				Options exercisable
Number of options		Weighted average remaining contractual life (years)		Weighted average exercise price (R$)		Weighted average exercise price (R$)

	303,722		3.87		2.49		2.49

During the year ended December 31, 2014 and in the 22 day period ended December 31, 2013, the Company did not grant any options in connection with its stock option plans comprising common shares.

The Company recorded expenses with stock option plans in the amount of R$318 in the year ended December 31, 2014 (R$62 in the twenty-two-day period ended December 31, 2013).

In the period ended December 31, 2014, the expenses with stock option plan are the responsibility of the former parent company Gafisa S.A., according to the agreement between the parties.

F-170

Table of Contents

22.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the year ended December 31, 2014 and the twenty-two-day period ended December 31, 2013

(a) Description of the GAAP differences

The Company’s accounting policies and its consolidated financial statements comply with and are prepared in accordance with Brazilian GAAP.

A summary of the Company’s principal accounting policies under Brazilian GAAP that differ significantly from US GAAP is set forth below.

(i) Revenue recognition

a. The period of cancellation with refund has expired;

b. Cumulative payments equal or exceed 10 percent;

c. Receivables are collectible;

d. Receivables are not subject to subordination;

e. There has been progress on improvements. The project’s improvements have progressed beyond preliminary stages, and there are indications that the work will be completed according to plan;

Additionally, as part of the analysis of this adjustment, the Company also determined the effect over the minority interest from their consolidated subsidiaries. The reclassification of income to the minority interest for this adjustment was R$3,852 and R$42,260 for the years ended December 31, 2014 and the twenty-two-day period ended December 31, 2013, respectively (Note 22(b)(i)).

The Company also determined the effect for their investments in affiliates that are recognized through the equity method under US GAAP. This reclassification resulted in an equity pick-up of R$8,795 in December 31, 2014 and (R$44,880) in the twenty-two-day period ended December 31, 2013 (Note 22(b)(i))).

F-171

Table of Contents

22.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014 and the twenty-two-day period ended December 31, 2013- Continued

(ii) Classification of balance sheet line items

Under Brazilian GAAP, the classification of certain balance sheet items is presented differently from US GAAP. The Company has recast its consolidated balance sheet under Brazilian GAAP to present a condensed consolidated balance sheet in accordance with US GAAP (Note 22(d)(i)). The reclassifications are summarized as follows:

· Under Brazilian GAAP, restricted cash is presented as short-term investment in the balance sheet. For US GAAP purposes, restricted cash is presented separately outside of short-term investment.

(iii) Classification of statement of income (operations) line items

Under Brazilian GAAP, in addition to the issues noted above, the classification of certain income and expense items is presented differently from US GAAP. The Company has recast its statement of income (loss) prepared under the Brazilian GAAP to present a condensed consolidated statement of income (loss) in accordance with US GAAP (Note 22(d)(ii)). The reclassifications are summarized as follows:

F-172

Table of Contents

22.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014 and the twenty-two-day period ended December 31, 2013- Continued

· The net income differences between Brazilian GAAP and US GAAP (Note 22(b)(i)) were incorporated in the consolidated statement of operations in accordance with US GAAP.

(iv) Deferred income tax

Deferred income tax differences between Brazilian GAAP and US GAAP are related to the recognition of deferred income tax on the adjustments mentioned above.

A valuation allowance to reduce the deferred tax asset is recognized if upon available evidences, both positive and negative, and the weight of those evidences, the deferred tax asset is deemed to be not recoverable.

(b) Reconciliation of significant differences between Brazilian GAAP and US GAAP

(i) Net income (loss)

	Note	2014			22 day period ended December 31, 2013
					(Unaudited)
Net income under Brazilian GAAP attributable to owners of Alphaville Urbanismo S.A.			128,954			(786	)
Revenue recognition - net operating revenue	22(a)(i)		(43,718	)		(78,051	)
Revenue recognition - operating costs	22(a)(i)		8,627			34,935
Equity pick-up	22(a)(i)		8,795			(44,880	)
Present value adjustment and other			10,998			10,076
Non-controlling interests on adjustments above	22(a)(i)		3,852			42,260
Deferred income tax on adjustments above, net of valuation allowance	22(a)(iv)		10,633			3,504

Net income (loss) attributable to Alphaville Urbanismo under US GAAP			128,141			(32,942	)

Net income attributable to the non-controlling interests under US GAAP			13,437			(40,119	)
Net income (loss) under US GAAP			141,578			(73,061	)

F-173

Table of Contents

22.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014 and the twenty-two-day period ended December 31, 2013- Continued

(ii) Equity

	Note		2014			2013
						(Unaudited)
Equity under Brazilian GAAP				581,732			453,684
Revenue recognition - net operating revenue		22(a)(i)		(1,349,493	)		(1,316,773	)
Revenue recognition - operating costs		22(a)(i)		584,217			575,590
US GAAP adjustment equity accounted investees		22(a)(i)		(6,138	)		6,471
Non-controlling interests on adjustments above		22(a)(i)		51,683			26,428
Deferred income tax on adjustments above	22(a)(iv)			53,411			42,778

Alphaville Urbanismo S.A. equity under US GAAP				(84,588	)		(211,822	)

Non-controlling interests under US GAAP				(4,591	)		7,651


Equity under US GAAP				(89,179	)		(204,171	)

Condensed changes in total equity under US GAAP	2014			22 day period ended December 31, 2013
				(Unaudited)
At beginning of the period		(211,822	)		(178,942	)
Changes in equity, BRGAAP					-
Stock options		318			62
Net profit (loss) attributable to Alphaville Urbanismo S.A.		128,141			(32,942	)
Declared mandatory dividend		(1,225	)		-
At end of the year / period		(84,588	)		(211,822	)

Condensed equity under US GAAP	2014			2013
				(Unaudited)
Equity
Common shares, comprising 117,510,769 shares (2013 - 116,407,359)		290,447			285,806
Treasury shares		(22,345	)		(17,704	)
Accumulated reserve (losses)		(352,690	)		(479,924	)

Total Alphaville Urbanismo equity		(84,588	)		(211,822	)

Non-controlling interests		(4,591	)		7,651

Total equity		(89,179	)		(204,171	)

F-174

Table of Contents

22.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014 and the twenty-two-day period ended December 31, 2013- Continued

F-175

Table of Contents

22.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014 and the twenty-two-day period ended December 31, 2013- Continued

F-176

Table of Contents

22.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014 and the twenty-two-day period ended December 31, 2013- Continued

F-177

Table of Contents

22.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014 and the twenty-two-day period ended December 31, 2013- Continued

F-178

Table of Contents

22.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014 and the twenty-two-day period ended December 31, 2013- Continued

F-179

Table of Contents

22.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014 and the twenty-two-day period ended December 31, 2013- Continued

F-180

Table of Contents

22.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014 and the twenty-two-day period ended December 31, 2013- Continued

In April 2015, the FASB issued ASU 2015-03 - Interest—Imputation of Interest (Subtopic 835-30). To simplify presentation of debt issuance costs, the amendments in this Update would require that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs would not be affected by the amendments in this Update. For public business entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted for financial statements that have not been previously issued. The adoption of this Update is not expected to have a material impact on our consolidated financial statements.

F-181

Table of Contents

22.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014 and the twenty-two-day period ended December 31, 2013- Continued

(d) US GAAP condensed consolidated financial information

Based on the reconciling items and discussion above, the Alphaville Urbanismo S.A. consolidated balance sheets, statements of income (loss), and statement of changes in shareholders’ equity (see b(ii)) under US GAAP have been recast in condensed format as follows:

(i) Condensed consolidated balance sheets under US GAAP

	2014		2013
Assets			(Unaudited)
Current assets
Cash and cash equivalents		132,912		17,659
Short-term investments		81,703		298,445
Restricted short-term investments		6,354		53,130
Trade accounts receivable, net		173,511		135,910
Properties for sale		1,079,650		950,707
Other		122,015		78,775
		1,596,145		1,534,626
Non-current assets
Investments in associates		26,287		40,773
Property and equipment, net		21,072		16,570
Trade accounts receivable		155,499		55,754
Properties for sale		60,491		45,051
Deferred income tax and social contribution		37,149		35,748
Other		13,073		15,176
		313,571		209,072

Total assets		1,909,716		1,743,698

F-182

Table of Contents

22.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014 and the twenty-two-day period ended December 31, 2013- Continued

	2014			2013
Liabilities				(Unaudited)
Current liabilities
Loans and financing		234,177			79,634
Debentures		5,136			3,463
Payables for purchase of properties		6,836			465
Payables for goods and services suppliers		36,850			64,009
Taxes and labor contributions		23,547			51,469
Advances from customers		672,638			736,103
Obligations assumed on the assignment of receivables		20,245			30,228
Payables for venture partners		7,282			39,522
Declared dividends		1,489			216
Other		40,024			81,277
		1,048,224			1,086,386
Non-current liabilities
Loans and financing		142,489			211,037
Debentures		650,000			500,000
Payables for purchase of properties		11,057			-
Obligations assumed on the assignment of receivables		21,069			37,701
Payables to venture partners		3,728			8,826
Provisions for legal claims		5,639			3,830
Warranty Provision		26,594			11,504
Acquisition of ownership interests		2,924			19,725
Other		87,171			68,860
		950,671			861,483

Total Alphaville equity		(84,588	)		(211,822	)
Non-controlling interest		(4,591	)		7,651
Total equity		(89,179	)		(204,171	)
Total liabilities and equity		1,909,716			1,743,698

F-183

Table of Contents

22.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014 and the twenty-two-day period ended December 31, 2013- Continued

(ii)	Condensed consolidated statements of operations under US GAAP

	2014			22 day period ended December 31, 2013
Gross operating revenue				(Unaudited)
Real estate development and sales of properties		954,730			104,936
Taxes on services and revenues		(40,200	)		(7,517	)

Net operating revenue		914,530			97,419
Operating costs		(492,208	)		(60,199	)

Gross profit		422,322			37,220

Operating income (expenses)
Selling general and administrative expenses		(176,584	)		(30,517	)
Other		(6,152	)		(304	)
Income before financial income and expenses and income tax and social contribution		239,586			6,399

Financial income		34,722			2,461
Financial expenses		(111,399	)		(38,290	)
Income (loss) before income tax and social contribution		162,909			(29,430	)

Current income tax and social contribution		(26,973	)		(4,382	)
Deferred income tax and social contribution		(302	)		5,848
Total income tax and social contribution		(27,275	)		1,466

Income (loss) before equity in results and
non-controlling interests		135,634			(27,964	)
Income from equity method investments		5,944			(45,097	)

Net (loss) income for the year/period from continuing operations		141,578			(73,061	)

Net (loss) income attributable to the non-controlling interests		(13,437	)		40,119
Net (loss) income attributable to Alphaville		128,141			(32,942	)

F-184

Table of Contents

22.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014 and the twenty-two-day period ended December 31, 2013- Continued

(iii)

Condensed consolidated statements of comprehensive income (loss)

	2014			22 day period ended December 31, 2013
				(Unaudited)
Net (loss) income for the year / period		141,578			(73,061	)

Total comprehensive (loss) income, net of taxes		141,578			(73,061	)

Attributable to:
Non-controlling interests		(13,437	)		40,119
Owners of Alphaville Urbanismo S.A.		128,141			(32,942	)

(iv)	Additional information – income taxes

Change in the valuation allowance for net operating losses and temporary differences was as follows:

	2014		22 day period ended December 31, 2013

Opening balance at January 1, 2014 and December 09, 2013		103,948		103,948
Change in valuation allowance		43,676		-
Closing balance at December 31		147,624		103,948

The Company recognizes its deferred tax asset net of a valuation allowance such that the amount of the net deferred tax asset is more likely than not to be realized. During the year 2014, movements in the valuation allowance amounted to a net increase of R$43,676. This is primarily related to the continuing restructuring process implemented by management.

As of December 31, 2014 and 2013, the Company has no amount recorded for any uncertainty in income taxes.

Alphavile Urbanismo S.A. and its subsidiaries file income tax returns in Brazil. Brazilian income tax returns are subject to inspections by tax authorities for the period beginning in 2009 and forward, i.e., within 5 years after the filing.

(v) Statement of comprehensive income (loss)

F-185

Table of Contents

22.	Supplemental Information - Summary of Principal Differences between Brazilian GAAP and accounting principles generally accepted in the United States “US GAAP” for the years ended December 31, 2014 and the twenty-two-day period ended December 31, 2013- Continued

(vi) Statement of cash flows

The Company’s primary differences in net income (loss) between Brazilian GAAP and net income (loss) for US GAAP are explained in items 22(a) (ii) to (iv) above. The statement of cash flows for Brazilian GAAP was prepared based on CPC 3(R2) - Statement of Cash Flows, which conforms with IAS 7.

* * *

F-186

Title of each class		Name of each exchange on which registered
Common Shares, without par value*		New York Stock Exchange

Title of Class		Number of Shares Outstanding
Common Stock		408,066,162*

INTRODUCTION	1
PRESENTATION OF FINANCIAL AND OTHER INFORMATION	1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	3
PART I	4
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	4
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE	4
ITEM 3. KEY INFORMATION	4
ITEM 4. INFORMATION ON THE COMPANY	22
ITEM 4A. UNRESOLVED STAFF COMMENTS	57
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS	57
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	93
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	108
ITEM 8. FINANCIAL INFORMATION	109
ITEM 9. THE OFFER AND LISTING	116
ITEM 10. ADDITIONAL INFORMATION	120
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	140
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	142
PART II	143
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	143
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	143
ITEM 15. CONTROLS AND PROCEDURES	143
ITEM 16. RESERVED	144
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT	144
ITEM 16B. CODE OF BUSINESS CONDUCT AND ETHICS	144
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES	145
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	145
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	145
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	145
ITEM 16G. CORPORATE GOVERNANCE	145
ITEM 16H. MINE SAFETY DISCLOSURE	145
PART III	146
ITEM 17. FINANCIAL STATEMENTS	146
ITEM 18. FINANCIAL STATEMENTS	146
ITEM 19. EXHIBITS	146

	As of and for the year ended December 31,
	2014			2013			2012			2011			2010(8)(9)

	(in thousands, except per share, per ADS and operating data)
Consolidated Income Statement Data:
Brazilian GAAP:
Net operating revenue		2,150,998			2,481,211			2,805,086			1,846,902			2,956,087
Operating costs		(1,609,246	)		(1,863,766			(2,276,804	)		(1,927,874	)		(2,209,742	)
Gross profit (loss)		541,752			617,445			528,282			(80,972	)		746,345
Operating expenses, net		(561,284	)		(215,574	)		(609,604	)		(719,232	)		(469.448	)
Financial expenses, net		(8,918	)		(162,503	)		(180,263	)		(166,728	)		(68,038	)
Income (loss) before income and social contribution taxes		(28,450	)		239,368			(261,585	)		(966,932	)		208,859
Income and social contribution taxes		(15,275	)		(2,812	)		(20,222	)		(105,850	)		(7,102	)
Net income (loss) from continuing operations		(43,725	)		236,556			(281,807	)		(1,072,782	)		201,757
Net income from discontinued operations .		—			631,122			204,128			167,759			86,727
Net income for the year attributable to non-controlling interest		(1,176	)		235			49,364			39,845			23,919
Net income (loss) for the year attributable to owners of Gafisa	R$	(42,549	)	R$	867,443		R$	(127,043	)	R$	(944,868	)	R$	264,565
Share and ADS data(1):
Per common share data—R$ per share:
Earnings (loss) per share—Basic		(0.1059	)		2.0348			(0.2939	)		(2.1893	)		0.6415
From continuing operations		(0.1059	)		0.7358			(0.6717	)		(2.5003	)		0.4732
From discontinued operations .		—			1.2990			0.3778			0.3110			0.1682

	As of and for the year ended December 31,
	2014			2013			2012			2011			2010(8)(9)

	(in thousands, except per share, per ADS and operating data)
Earnings (loss) per share—Diluted		(0.1059	)		2.0226			(0.2939	)		(2.1893	)		0.6109
From continuing operations		(0.1059	)		0.7315			(0.6717	)		(2.5003	)		0.4658
From discontinued operations		—			1.2911			0.3778			0.3110			0.1602
Weighted average number of shares outstanding—in thousands		401,905			426,300			432,246			431,586			412,434
Dividends and interest on shareholders’ equity declared— in thousands of reais		—			163,112			—			—			98,812
Earnings (loss) per share—R$ per share		(0.1125	)		2.0829			(0.2937	)		(2.1867	)		0.6140
Number of common shares outstanding as at end of period— in thousands*		378,185			416,460			432,630			432,099			430,915
Earnings (loss) per ADS—R$ per ADS(2)		(0.2250	)		4.1658			(0.5873	)		(4.3734	)		1.2279
U.S. GAAP:
Net operating revenue		2,446,548			2,565,988			3,930,729			3,250,227			1,929,130
Operating costs		(1,819,612	)		(1,955,158	)		(3,008,345	)		(2,743,144	)		(1,472,085	)
Gross profit		626,936			570,830			922,384			507,083			457,045
Operating expenses, net		(551,800	)		(202,025	)		(859,657	)		(862,975	)		(575,776	)
Financial expenses, net		(31,924	)		(187,298	)		(191,414	)		(97,370	)		(97,810	)
Income from disposal on controlling interests		—			1,228,429			—			—			—
Income (loss) before income and social contribution taxes and income from equity method investments		43,212			1,409,936			(128,687	)		(453,262	)		(216,541	)
Income and social contribution taxes		(20,339	)		(52,211	)		(68,733	)		(334,410	)		100,811
Equity pick-up		17,361			(21,795	)		108,265			59,687			42,161
Net income (loss) for the year		40,234			1,335,930			(89,155	)		(727,985	)		(73,569	)
Net income (loss) attributable to non-controlling interests		(2,071	)		13,462			32,048			27,784			21,214
Net income (loss) attributable to owners of Gafisa		42,305			1,322,468			(121,203	)		(755,769	)		(94,783	)
Per share and ADS data(1):
Per common share data—R$ per share:
Earnings (loss) per share—Basic		0.1053			3.1022			(0.2804	)		(1.7511	)		(0.2298	)
Earnings (loss) per share—Diluted		0.1053			3.0835			(0.2804	)		(1.7511	)		(0.2298	)
Weighted average number of shares outstanding — in thousands		401,905			426,300			432,246			431,586			412,434
Dividends declared and interest on equity		—			163,112			—			—			98,812
Per ADS data—R$ per ADS(2):
Profit (loss) per ADS —Basic(2)		0.2106			6.2044			(0.5608	)		(3.5023	)		(0.4596	)
Profit (loss) per ADS —Diluted(2)		0.2106			6.1670			(0.5608	)		(3.5023	)		(0.4596	)
Weighted average number of ADSs outstanding— in thousands		200,548			213,150			216,123			215,793			206,217
Dividends and interest on equity declared		—			163,112			—			—			98,812
Consolidated Balance Sheet Data:
Brazilian GAAP:
Cash, cash equivalents and short-term investments		1,157,254			2,024,163			1,567,755			858,351			1,201,148
Current and non-current properties for sale		2,512,342			2,094,414			2,166,424			2,463,374			2,206,072
Working capital(3)		2,420,342			2,996,884			3,764,756			1,848,311			4,808,337
Total assets		7,205,852			8,183,030			8,712,569			9,164,783			9,040,791
Total debt(4)		2,586,524			3,059,528			3,640,437			3,437,929			3,290,109
Total equity		3,058,403			3,214,483			2,685,829			2,743,576			3,632,172
U.S. GAAP:
Cash and cash equivalents, short-term investments and restricted short-term investments		1,157,254			2,024,163			1,566,042			858,351			1,127,382
Current and non-current properties for sale		3,023,765			2,816,204			3,260,711			3,847,858			3,690,328
Working capital(3)		2,295,951			2,755,836			3,419,171			3,353,108			3,940,576
Total assets		7,233,212			8,477,587			8,694,612			8,861,145			8,482,267
Total debt(4)		2,594,624			3,067,703			3,642,920			3,444,478			3,081,276
Total Gafisa equity		2,747,532			2,799,171			1,619,276			1,719,948			2,611,844
Equity of non-controlling interests		3,339			23,074			53,222			21,174			20,833
Total equity		2,750,871			2,822,245			1,672,498			1,741,122			2,632,677

	Period-end		Average for period(1)		Low		High
	(per U.S. dollar)
Year Ended:
December 31, 2010		1.665		1.759		1.655		1.880
December 31, 2011		1.876		1.718		1.535		1.902
December 31, 2012		2.044		1.907		1.702		2.112
December 31, 2013		2.342		2.199		1.925		2.445
December 31, 2014		2.656		2.469		2.197		2.740
Month Ended:
October 2014		2.444		2.463		2.391		2.534
November 2014		2.560		2.549		2.484		2.614
December 2014		2.656		2.651		2.561		2.740
January 2015		2.662		2.643		2.575		2.711
February 2015		2.878		2.785		2.689		2.881
March 2015		3.208		3.067		2.866		3.268
April 2015 (through April 24, 2015)		2.975		3.065		2.975		3.156

	For year ended December 31,
	2014				2013				2012
	(in thousands of reais)		(% of total)		(in thousands of reais)		(% of total)		(in thousands of reais)		(% of total)

Residential buildings		1,636,311		100.0		1,292,271		44.8		1,314,041		44.5
Land subdivisions(1)		—		N/A		1,462,087		50.6		1,343,313		45.5
Commercial		—		N/A		131,846		4.6		294,607		10.0
Potential sales		1,636,311		100.0		2,886,204		100.0		2,951,961		100.0

Project Description	Year Launched	Gafisa Participation (%)		Usable Area (m2) (1) (2)		Completion Year		Number of Units (2)		Units Sold (%) (As of December 31, 2014)
Delux	2013		100		9,751		2016		44		54	%
Follow	2013		100		15,800		2016		240		73	%
Duquesa-Lorian Qd2B	2012		100		34,429		2015		130		90	%
Like Brooklin	2012		100		13,298		2015		146		100	%
ECLAT (Ferreira de Araujo)	2012		100		13,017		2015		49		86	%
Energy	2012		100		9,666		2015		156		99	%
Scena Laguna	2012		80		13,728		2015		62.5		57	%
Like Saúde	2012		100		14,850		2015		144		70	%
Scena Santana	2012		100		17,548		2015		76		60	%
Alpha Land	2012		100		23,005		2015		210		63	%

		As of December 31, 2014
Project Description		Units Sold (%)
Alta Vista (1)		89
Canto dos Passaros (2)		87
Gran Park Árvores F2 (3)		86
Gran Park Árvores F4 (4)		79
Gran Park Árvores F5 (5)		87
Gran Park Árvores F6 (6)		65
Gran Park Varandas F1 (7)		79
Gran Park Varandas F2 (8)		80
ICON (9)		78
Manhattan Square - Wall Street (10)		75
Mistral (11)		87
Mundi (12)		85
O Bosque (13)		55
Reserva do Bosque (14)		77
Scena Laguna (15)		57
Zenith (16)		84

Project Description	As of December 31, 2014 Units Sold (%)
Residencial Cordoba (1)	61
Res Figueiredo II (2)	87
Residencial Morada de Ferraz (3)	83
Fit 16 SPE Emp. Imob./Mirante do Lago F2 (4)	53
Res Napoli I (5)	80
Fit 31 SPE Emp. Imob./Fit Giardino (6)	54
Fit 32 SPE Emp. Imob./Vista Flamboyant (7)	74
Fit 32 SPE Emp. Imob./Vista Flamboyant F2 (8)	69
Res Brisa do Parque III (9)	85
Residencial Michelangelo (10)	88
Positano Garden II (11)	75
Positano Garden IV (12)	50
Boulevard Das Palmeiras (13)	84
Viva Mais Campo Grande (14)	82
Res Vila Coimbra (15)	75
Nova Marica Life (16)	74
Residencial Da Vinci – Allegro (17)	72
Duo Valverde (18)	71
Residencial Vitale Tower (19)	39
Residencial Da Vinci – Giardino (20)	1

	Year	Gafisa		Usable
Project Desciption	Launched	Participation		Area (m2)
		(%)		(1)(2)		Completion Year		Number of Units(2)
Alphaville Castello	2013		69		80,475		2015		222
Terras Alphaville Maricá 2	2013		47		107,594		2014		596
Terras Alphaville Ponta Grossa	2013		77		183,413		2014		742
Terras Alphaville Vitória da ConquistaF2	2013		75		158,001		2014		565
Terras Alphaville Sergipe F2	2013		88		168,129		2014		614
Alphaville Feira de Santana F2	2013		72		172,713		2015		545
Alphaville Ribeirão Preto F3	2013		60		193,058		2015		584
Terras Alphaville Camaçari F2	2013		74		141,955		2015		616
Alphaville Volta Redonda	2013		72		133,286		2015		427
Terras Alphaville Dourados	2013		74		152,007		2015		604
Alphaville Anápolis	2013		67		106,165		2015		336
Terras Alphaville Linhares	2013		46		111,547		2015		576
Terras Alphaville Belém 3	2013		71		251,819		2015		976
Alphaville Dias Branco	2013		59		293,897		2015		1,020
Alphaville Litoral Norte 3	2013		68		145,443		2015		434
Alphaville Nova Esplanada F4	2013		30		68,216		2015		473
Alphaville D. Pedro 2	2013		58		75,803		2015		265
Alphaville D. Pedro 3	2013		58		76,704		2015		233
Alphaville Juiz de Fora	2012		65		350,649		2014		564
Alphaville Sergipe	2012		74		257,565		2014		693
Alphaville Mossoró F2	2012		52		33,764		2013		170
Terras Alphaville Anápolis	2012		73		169,15		2013		601
Alphaville Minas Gerais	2012		61		186,336		2014		557
Alphaville Brasília Residencial 2	2012		47		95,044		2014		426
Brasília Alpha Mall	2012		50		5,740		2014		26
Terras Alphaville Sergipe	2012		88		151,033		2014		546
Nova Esplanada 3	2012		30		94,806		2014		660
Terras Alphaville Teresina	2012		79		296,627		2014		1,075
Alphaville Pelotas	2012		74		183,370		2014		577
Alphaville Porto Velho	2012		76		73,126		2013		215
Terras Alphaville Vitória da Conquista	2012		75		160,195		2014		547
Terras Alphaville Resende F2	2012		76		129,818		2014		414
Alphaville Juiz de Fora 2	2012		65		99,646		2014		305
Alphaville Campo Grande 3	2012		64		152,549		2014		608
Alphaville Araçatuba	2012		42		92,722		2014		427
Alphaville Bauru	2012		65		155,335		2014		467
Terras Alphaville Camaçari	2012		74		139,819		2014		634

Project	First Year of Construction	Client	Type of Project
Viverde	2012	Reitzfeld Empreendimento Imobiliário Botânico SPE Ltda	Residential

Project	First Year of Construction	Gafisa Participation (%)	Partner	Type of Project
Adamas	2013	50	GTIS Partners	Residential

	Gafisa					Tenda
	Future Sales (% Gafisa) (1)		% Bartered			Future Sales (% Gafisa)		% Bartered
	(in millions of reais)					(in millions of reais)
São Paulo		4,876		42.9	%		665		3.1	%
Rio de Janeiro		1,301		89.0	%		1,091		7.5	%
Other states		—		—			2,199		78.0	%
Total		6,177		57.0	%		3,955		13.9	%

Sales Term	Luxury			Middle Income			Affordable Entry—Level(1)
Mortgage lending (delivery)		77	%		88	%		—
Caixa Econômica Federal		—			—			100	%
Gafisa 36 months		22	%		12	%		—
Gafisa 60 months		—			—			—
Gafisa 120 months		1	%		—			—

Credit Lines	Typical Interest rate	Maximum Home Value		Maximum Loan Value
Mortgage portfolio (Carteira Hipotecária) or CH	% annually + TR(1)	No limit		No limit
Housing Finance System (Sistema Financeiro da Habitação) or SFH	% annually + TR	R$	500,000	R$	450,000
Government Severance Indemnity Fund for Employees (Fundo de Garantia do Tempo de Serviços) or FGTS	16% annually + TR	R$	130,000	R$	130,000

	As of December 31, 2014						As of December 31, 2013						As of December 31, 2012 (3)
Year Segment	Number of contracts			Sales value (in thousands of reais)			Number of contracts			Sales value (in thousands of reais)			Number of contracts			Sales value (in thousands of reais)
Gafisa
Contracted sales		2,836			1,246,996			3,671			1,416,939			4,031			2,040,575
Volume/Sales value of terminations		(1,014	)		(435,964	)		(1,292	)		(455,738	)		(1,074	)		(441,047	)
Percentage		35.8	%		35.0	%		35.2	%		32.1	%		26.6	%		21.6	%
Sales value, net of termination		1,822			811,032			2,379			961,201			2,957			1,599,528
Tenda
Contracted sales		6,248			919,381			8.292			1,089,301			9,990			1,175,733
Volume/Sales value of terminations(1)		(3,561	)		(523,400	)		(4,278	)		(598,897	)		(10,852	)		(1,250,051	)
Percentage(1)		57.0	%		56.9	%		51.6	%		55.0	%		108.6	%		106.3	%
Sales value net of terminations		2,687			395,981			4,014			490,403			(862	)		(74,318	)
Alphaville (2)
Contracted sales		—			—			7,955			1,295,260			5,654			1,293,526
Volume/Sales value of terminations		—			—			(1,307	)		(233,005	)		(591	)		(185,633	)
Percentage		—			—			16.4	%		18.0	%		10.5	%		14.4	%
Sales value net of termination		—			—			6,648			1,062,260			5,063			1,107,893
Total sales value net of termination		4,509			1,207,013			13,041			2,513,860			7,158			2,633,103

São Paulo (1) — Gafisa’s Market Share
	Year ended December 31,
Year	2014			2013			2012
	(Launches in R$ million)
Local market		26,359			32,367			28,288
Gafisa(2)		770			1,125			1,306
Gafisa’s market share		2.9	%		3.5	%		4.6	%

Rio de Janeiro (1) — Gafisa’s Market Share
	Year ended December 31,
Year	2014			2013			2012
	(Launches in R$ million)
Local market		11,796			12,590			12,252
Gafisa(2)		253			51			347
Gafisa’s market share		2.1	%		0.4	%		2.8	%

	For the year ended December 31,
	2014			2013			2012
Land		15.1	%		14.2	%		17.4	%
Construction costs		68.6	%		70.6	%		70.5	%
Financial costs		10.0	%		8.2	%		6.6	%
Development costs		6.3	%		7.0	%		5.5	%
Total		100.0	%		100.0	%		100.0	%

Period of construction	Percentage of costs incurred(1)
1st to 6th month		16	%
7th to 12th month		25	%
13th to 18th month		31	%
19th to 24th month		20	%
25th to 30th month		8	%

	For Year Ended December 31, 2014
	Gafisa		Tenda		Total
	(millions of reais except for percentages)
Net operating revenue		1,580.9		570.1		2,150.8
Operating costs		(1,165.0)		(444.2)		(1,609.2)
Gross profit		415.9		125.9		541.6)
Gross margin		26.3%		22.1%		25.2%
Net income (loss) from continuing operations		66.9		(109.4)		(42.5)

	For Year Ended December 31, 2013
	Gafisa (1)		Tenda		Total
	(millions of reais except for percentages)
Net operating revenue		1,663.7		817.5		2,481.2
Operating costs		(1,111.6)		(752.2)		(1,863.8)
Gross profit		552.2		65.2		617.4
Gross margin		33.2%		8.0%		24.9%
Net income (loss) from continuing operations		363.7		(127.1)		236.6
Net income from discontinued operations		588.6		42.5		631.1

			For Year Ended December 31, 2012 (2)
	Gafisa (1)		Tenda		Alphaville (3)		(-) Discontinued operation (3)		Total
			(millions of reais except for percentages)
Net operating revenue		1,735.9		1,069.1		785.2		(785.2)		2,805.0
Operating costs		(1,338.1)		(938.7)		(377.1)		377.1		(2,276.8)
Gross profit (loss)		397.8		130.4		408.1		(408.1)		528.2
Gross margin		22.9%		12.2%		52.0%		—		18.8%
Net loss from continuing operations		(158.2)		(123.6)		—		—		(281.8)
Net income from discontinued operations		—		—		204.1		—		204.1

	As of December 31,
	2014		2013		2012 (1)
	(in millions of reais)
Real estate development receivables:
Current		1,440.5		1,909.9		2,493.2
Long-term		384.8		313.8		820.8
Total		1,825.3		2,223.7		3,314.0
Receivables to be recognized on our balance sheet according to percentage of completion method:
Current		—		—		—
Long-term		1,064.0		1,863.4		3,815.6
Total		1,064.0		1,863.4		3,815.6
Total receivables from clients		2,889.3		4,087.1		7,130.0

	As of December 31, 2014
Maturity	(in millions reais)
2015		1,440.5
2016		706.8
2017		422.4
2018		71.4
2019 onwards		248.2
Total		2,889.30

		At December 31, 2014
Seventh placement
Total account receivable plus inventory required to be below zero or 2.0 times over net debt less venture debt (3)		9.33 times
Total debt less venture debt (3), less cash and cash equivalents and short-term investments (1), cannot exceed 75% of equity plus non-controlling interests		(19.3)%
Total account receivable plus unappropriated income plus total inventory of finished units required to be 1.5 time over the net debt plus payable for purchase of properties plus unappropriated cost		2.10 times

Eighth placement — first and second series, second issuance of Promissory Notes, first and second series
Total accounts receivable plus inventory of finished units required to be below zero or 2.0 times over net debt less venture debt		(5.32 ) times
Total debt less venture debt, less cash and cash equivalents and short—term investments (1), cannot exceed 75% of equity plus non-controlling interests		(19.3)%
Ninth placement
Total accounts receivable plus total inventory required to be below zero or greater than 2.0 times over net debt		3.86 times
Net debt cannot exceed 100% of equity plus non-controlling interests		46.7%
First placement – Tenda
Total accounts receivable plus inventory required to be equal to or 2.0 times over net debt less debt with secured guarantee (3) or below zero, considering that TR(2) plus TE(4) is always above zero		(2.75) times
Net debt less debt with secured guarantee (3) shall not be in excess of 50% of equity		(46.7)%
Total account receivable plus unappropriated income plus total inventory of finished units required to be 1.5 times the net debt plus payable for purchase of properties plus unappropriated cost		2.89 times

	Balances reported in year ended December 31, 2012		Impact of the adoption of CPC 19 (R2) and CPC 36 (R3)			2012 balances, after the adoption of CPC 19 (R2) and CPC 36 (R3)
	(in thousands of reais)
Balance sheet
Current assets		7,218,690		(812,650	)		6,406,040
Non-current assets		1,575,371		(191,886	)		1,383,485
Investments		-		646,812			646,812
Property and equipment and intangible assets		276,933		(701	)		276,232
Total assets		9,070,994		(358,425	)		8,712,569

Current liabilities		2,879,590		(238,306	)		2,641,284
Non-current liabilities		3,499,037		(113,581	)		3,385,456
Total liabilities		6,378,627		(351,887	)		6,026,740
Equity		2,692,367		(6,538	)		2,685,829
Total liabilities and equity		9,070,994		(358,425	)		8,712,569

	Balances reported in year ended December 31, 2012			Impact of the adoption of CPC 19 (R2) and CPC 36 (R3)			Impact of the adoption of CPC 31			2012 balances, after the adoption of CPC 19 (R2) and CPC 36 (R3)
	(in thousands of reais)
Statement of operations
Net operating revenue		3,953,282			(363,014	)		(785,182	)		2,805,086
Operating costs		(2,941,025	)		287,150			377,071			(2,276,804	)
Operating (expenses) / income		(840,452	)		13,535			161,710			(665,207	)
Equity pick-up		—			63,335			(7,732	)		55,603
Financial income		(206,940	)		(8,911	)		35,588			(180,263	)
Income and social contribution taxes		(41,228	)		6,589			14,417			(20,222	)
Non-controlling interests		(48,141	)		(1,223	)		—			(49,364	)
Income from discontinued operation.		—			—			204,128			204,128
Net loss for the year		(124,504	)		(2,539	)		—			(127,043	)

Cash flow
Operating activities		650,945			(6,627	)		—			644,288
Financing activities		161,488			592			—			162,080
Investing activities		(322,894	)		34,934			—			(287,960	)

Summary statement of value added information
Net value added produced by the Company		1,020,761			(227,655	)		—			793,106
Value added received on transfer		80,629			30,793			—			111,422
Value added to be distributed		1,101,390			(196,862	)		—			904,528

	Balances originally reported in year ended December 31, 2011		Impact of the adoption of CPC 18(R2), 19(R2) and 36(R3)			Restated balances, after the adoption of CPC 18(R2), 19(R2) and 36(R3) as of 01/01/2012
Summary balance sheet information	(in thousands of reais)
Current assets		7,314,358		(790,798	)		6,523,560
Non-current assets		1,909,989		(177,932	)		1,732,057
Investments		—		629,323			629,323
Property and equipment and intangible assets		282,277		(2,434	)		279,843
Total assets		9,506,624		(341,841	)		9,164,783

Current liabilities		4,815,939		(140,690	)		4,675,249
Non-current liabilities		1,943,591		(197,633	)		1,745,958
Total liabilities		6,759,530		(338,323	)		6,421,207
Equity		2,747,094		(3,518	)		2,743,576
Total liabilities and equity		9,506,624		(341,841	)		9,164,783

	Maturity Schedule
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in millions of reais)
Loans and financing		1,397.5		550.1		758.8		88.6		—
Debentures		1,189.1		504.4		620.5		64.2		—
Interest (1)		503.0		263.0		255.0		33.0		—
Real estate development obligations (2)		1,639.2		1,247.1		391.9		0.2		—
Obligations for land purchase		570.5		469.3		101.2		—		—
Payables to venture partners (3)		11.0		6.0		5.0		—		—
Credit assignments		56.1		24.1		23.8		8.2		—
Obligations from operating leases		80.6		13.6		29.5		37.5		—
Acquisition of investments		2.4		2.4		—		—		—
Other accounts payable		186.0		155.5		30.5		—		—
Total		5,635.4		3,235.5		2,216.2		231.7		—

Name	Age	Position	Election Date	Term of Office(1)
Odair Garcia Senra	68	Chairman	April 25, 2014	Annual Shareholders’ General Meeting in 2016
Guilherme Affonso Ferreira(2)(3)	64	Director	April 25, 2014	Annual Shareholders’ General Meeting in 2016
Maurício Marcellini Pereira(2)(3)	41	Director	April 25, 2014	Annual Shareholders’ General Meeting in 2016
Cláudio José Carvalho de Andrade(2)(3)	43	Director	April 25, 2014	Annual Shareholders’ General Meeting in 2016
José Écio Pereira da Costa Junior(2)(3)	63	Director	April 25, 2014	Annual Shareholders’ General Meeting in 2016
Rodolpho Amboss(2)(3)	51	Director	April 25, 2014	Annual Shareholders’ General Meeting in 2016
Francisco Vidal Luna (2)(3)	68	Director	April 25, 2014	Annual Shareholders’ General Meeting in 2016

2013	Board of Directors (3)		Fiscal Council		Executive Officers
Number of members(1)		4.00		3.00		8.58
Annual highest individual compensation (in R$)		—		38,400		3,763,649
Annual lowest individual compensation (in R$)(2)		—		8,136		524,867
Annual average individual compensation (in R$)		—		18,224		1,299,961

2013	Board of Directors (3)		Fiscal Council(4)		Executive Officers
Number of members (1)		5.00		1.25		6.00
Annual highest individual compensation (in R$) (5)		—		16,300		9,741,730
Annual lowest individual compensation (in R$)(2)		—		16,300		540,229
Annual average individual compensation (in R$)(5)		—		16,300		3,232,127