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s達o car l os - 2010 annual r epor t

www. scsa. com.br

2 0 1 0 a n n u a l re p o rt


HIGHLIGHTS

2010 HIGHLIGHTS • São Carlos acquires R$450 million in commercial real estate with a high upside potential in sought-after regions of São Paulo and sells properties worth R$145 million. It was the Company’s best year in terms of real estate acquisitions • The Company’s portfolio has an estimated market value of R$2.23 billion, with a NAV (Net Asset Value) of R$1.71 billion, equivalent to R$30 per share • Net income totals R$92 million • The cash balance stood at R$321 million at year-end, more than sufficient leverage capacity to cover new investments and growth


TABLE OF CONTENTS

MESSAGE FROM THE CEO

03

PROFILE

04

OWNERSHIP STRUCTURE

05

Sテグ CARLOS TIMELINE

06

STRATEGIES AND COMPETITIVE ADVANTAGES

08

RISK MANAGEMENT

10

PORTFOLIO

11

EVENTS IN 2010

12

SUSTAINABILITY

28

CORPORATE GOVERNANCE

30

OPERATING AND FINANCIAL PERFORMANCE

36

SHARE PERFORMANCE AND MARKET CAP

38

HUMAN CAPITAL

40

FINANCIAL STATEMENTS

42

GLOSSARY

48

CREDITS

50

sテ」o car l os 2010 annual r epor t

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s達o ca rlos 2010 a nnua l re p o r t

C ent r o Em pr esar i al B ot af ogo, R i o de Janei r o ( R J)


MESSAGE FROM THE CEO 2010 was a record year for São Carlos, a year when we invested R$450 million in acquisitions and sold another R$145 million. Our acquisition highlights included the Brazilian Financial Center, the former headquarters of Banco Real, with an excellent location on Avenida Paulista, in the heart of one of São Paulo’s leading financial centers, and the SulAmérica building, in Morumbi. Another important acquisition was the Centro Administrativo Santo Amaro, with four class A office buildings, located in the Chácara Santo Antônio region of São Paulo. São Carlos also maintained its strategy of managing high-quality commercial buildings for occupation by major companies in São Paulo and Rio de Janeiro. We also established new initiatives for tackling sustainability more effectively within the Company. Inspired by the emblematic case of the Eldorado Business Tower, in whose development we played an active role and which is one of the few buildings in the world with the Platinum Seal, the highest level of environmental certification granted by LEED ® , we prepared a pilot project to implement sustainability in our older buildings through operations and maintenance certification. Thanks to all of the above, we closed the year with a net income of R$92 million and a cash balance of R$321 million, which, combined with our debt capacity, has provided us with excellent opportunities for continuing to grow and invest. This is our way of creating value for our shareholders, to whom we extend our thanks for their support and trust in 2010. We also would like to thank our employees, who are responsible for making São Carlos what it is today.

Rolando Mifano CEO

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PROFILE

With 22 years of operations, São Carlos Empreendimentos e Participações S.A. is one of Brazil’s largest and most traditional commercial real estate investment companies. Its portfolio comprises 39 high-quality projects with a current market value of R$2.23 billion, all of which are exceptionally well-located and have substantial appreciation potential. The Company’s business involves the acquisition, management, leasing and sale of high-end corporate buildings. Consequently, it continuously monitors real estate supply and demand in the domestic market, fluctuations in interest rates and Brazilian economic growth, with the aim of acquiring properties at attractive prices and a with high potential for appreciation. São Carlos manages the real estate it acquires to increase its rent revenue and the value of the properties by leasing vacant areas, identifying and obtaining ancillary revenue sources, investing in retrofits (renovations and improvements), and optimizing condominium management through strict control over expenses and the elimination of waste. The Company has a particularly strong presence in Rio de Janeiro and São Paulo, Brazil’s two biggest business centers, where demand for commercial properties is high and growth prospects are excellent. São Carlos’ client portfolio comprises around 170 large companies operating in a wide range of economic segments.

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OWNERSHIP STRUCTURE Controlling Shareholders

Management

S達o Carlos Treasury

Free-Float

1.09%

0.98%

47.92%

50.01% *Fr ee- f l oat : S har es f r eel y t r aded i n t he m ar ket

C e n tr o A d min is tr a tiv o R io Ne g r o , B a r u er i ( S P )

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Sテグ CARLOS TIMELINE 1985-1989

Constituted on October 10, 1985, Sテ」o Carlos effectively began operations at the end of 1989 as a subsidiary of the retailer Lojas Americanas S.A. Initially, it developed and managed shopping malls in order to support the expansion of the Lojas Americanas chain into the interior of the country.

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1998

The current business model was established in 1998, when Lojas Americanas transferred all its real estate assets , comprising stand-alone stores, distribution centers, shopping malls, office buildings, vacant properties and sites, to Sテ」o Carlos.


1999

The Company and its real estate assets were spun off from the rest of the group. The new São Carlos became a publicly-held Company listed on the Bovespa with no commercial relationship with Lojas Americanas, although the latter remains one of its main tenants.

2006

On December 13, 2006, São Carlos joined the BM&F Bovespa’s Novo Mercado corporate governance segment (ticker: SCAR3) and held a public offering of shares, through which the Company raised close to R$350 million to invest in the expansion of its operations.

2010

In 2010, São Carlos achieved record sale and purchase volume, totaling R$600 million, while revenue from leases totaled R$167 million, another record.

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STRATEGIES AND COMPETITIVE ADVANTAGES The Company’s outstanding market position is due to its focus on profitability over growth in relation to real estate transactions and leasing agreements, strict control over costs and risks, expertise in finding real estate solutions for corporate towers, and ample experience of street stores. São Carlos is a company that “has an owner,” with a long-term business vision and a management team with extensive and recognized experience in the real estate industry. São Carlos’ lease agreements are adjusted in line with inflation, and the vacancy rate of its projects is low and under control, shielding it against one of the greatest risks in the real estate market. Many of its properties also have expansion potential, i.e. the sites where they are installed have room for more buildings. These differentials are a result of the Company’s mission, strategies and competitive advantages, which are listed below:

MISSION To conduct successful businesses in Brazil through corporate and commercial properties that promote interaction, well-being and social and environmental responsibility, anticipating our clients’ needs.

STRATEGIES • • • •

Capitalizing on the growth potential of the markets where it operates Focusing on continuous property appreciation Maximizing condominium management efficiency and concentrating on increasing rent revenue Maintaining a responsible financial position

COMPETITIVE ADVANTAGES • • • • • • •

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High-quality real estate portfolio Long-term commercial relationship with large companies, tenants of the properties A team of experienced executives with an entrepreneurial approach Management model focused on results Self-sufficient business model Predictable and secure operations Publicly-held company committed to Novo Mercado corporate governance practices

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S達o Carlos stands out for its focus on profitable growth

E n tr a n c e h a ll of C ent r o Em pr esar i al B ot af ogo, R i o de Janei r o ( R J) s達o car l os 2010 annual r epor t

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RISK MANAGEMENT

São Carlos employs strict procedures for managing the risks inherent to the real estate business and market, especially vacancy, default, and those associated with property acquisitions, all of which require close monitoring. As a result, São Carlos is now one of the leading companies in the commercial real estate industry, capable of maintaining its profit-generating capacity even in adverse scenarios when property acquisitions have to be suspended.

Vacancy – Given the quality of its portfolio, São Carlos has maintained exceptionally low vacancy rates of 2.7%, 3.3% and 2.6% in the past 3 years, respectively.

Default – São Carlos is not subject to default as it only leases its properties to large companies. It also seeks to build a diversified client portfolio in terms of operational segment in order to prevent possible negative impacts due to individual sector variations and ensure greater security if any tenants are lost. Currently, no single tenant accounts for more than 8% of the Company’s revenue.

Acquisition risks – São Carlos is managed by experienced and specialized executives supported by an equally experienced Board and controlling block, which ensures that business is conducted in accordance with strict guidelines, underpinned by serious and transparent processes. In addition, São Carlos’ team is made up of professionals with extensive experience in the sector, thereby ensuring operations that add value within a longterm market vision.

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Vacancy rate in the last three years 3.3% 2.7%

2008

2.6%

2009

2010


PORTFOLIO

São Carlos’ portfolio is composed of 39 commercial properties, mainly office buildings and retail stores, totaling 412,897 sq.m. of gross leasable area, with an estimated market value of R$2.23 billion. Most of these projects are located in the states of São Paulo and Rio de Janeiro.

Profile of the current real estate portfolio 39 Commercial Properties

GLA: 412,897 sq.m.

4 27

10%

79% 8

Retail Stores Offices

Other

11%

Retail Stores Offices

Geographic Distribution (in market value) RJ 34%

MG 1%

Portfolio Value: R$2.23 million 3% 4% 93%

Retail Stores Offices

Other

Other

Company`s portfolio in the last three years 2,220

RS 3%

1,760

512.60 SP 62%

2008

1,470

391.9

412.9

2009

2010

Gross leasable area (thousand sq.m.) Portfolio value (R$ million)

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EVENTS IN 2010

Su lAmé ric a Building, São P a u lo ( S P )

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2010 was marked by new businesses. The Company acquired eight commercial properties, totaling 91,780 sq.m. of gross leasable area (GLA), four of which are noteworthy, all located in São Paulo: the Centro Administrativo Santo Amaro, situated close to the Marginal Pinheiros expressway, the SulAmérica Building, also in the Marginal region; part of the Brazilian Financial Center, on Avenida Paulista; and the Barros Loureiro Building, in Itaim. In addition to the acquisitions, the Company sold a group of retail stores and a corporate tower still under construction in the Centro Administrativo Rio Negro, in Alphaville (Barueri - SP). A total of 11 projects were sold, with 75,899 sq.m. of GLA.

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Acquisitions Centro Administrativo Santo Amaro – C.A.S.A São Carlos acquired the C.A.S.A (Centro Administrativo Santo Amaro) complex, located in the Chácara Santo Antônio district of São Paulo city, for R$165 million. C.A.S.A. comprises four class A office buildings with 38,150 sq.m. of GLA and 1,050 parking spaces. It is located close to the Marginal Pinheiros expressway, Avenida Santo Amaro, and the Granja Julieta train station. This is a highly attractive region for companies, with strong leasing demand for top-class corporate towers. Currently, the property is entirely leased to 18 major companies. Tenants: Baxter, Camargo Correia, CNEC Engenharia, Eletropaulo, Heidelberg, JP Morgan, Net, Oracle and Santander, among others.

SulAmérica Building Of the properties acquired in 2010, the SulAmérica building, located in the Morumbi neighborhood in São Paulo (SP), is one of the most important. The property, which was purchased for R$130 million, is an attractive class A office building with eight commercial floors, a ground floor/reception area, three basement levels and a penthouse, 488 parking spaces and 22,206 sq.m. of total leasable area. It is located in one of São Paulo’s major commercial centers, on the Marginal Pinheiros expressway, between the Cidade Jardim bridge and the Octavio Frias de Oliveira suspension bridge, where there is strong demand for office space. Tenant: SulAmérica Seguros.

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Brazilian Financial Center São Carlos acquired this property in association with Brazilian Finance & Real Estate. It is a class A office building with 5 basement levels, a ground floor/reception area, 2 mezzanine floors, 13 commercial floors, a penthouse, access floors, a heliport, 552 parking spaces and 38,830 square meters of GLA. Located on Avenida Paulista, in the heart of one of São Paulo’s main financial districts, the building was formerly the headquarters of Banco Real. São Carlos acquired 40% of the building, equivalent to 15,532 sq.m. of GLA, for R$108 million. Avenida Paulista has some of the lowest vacancy rates in São Paulo, given that demand for properties is enormous and supply is limited. Tenants: BV Financeira, Brazilian Finance & Real Estate, Goldfarb Construtora and Santander.

Barros Loureiro Building The Company acquired the Barros Loureiro building, located in the ltaim district of São Paulo (SP), for R$39.0 million. A class A corporate tower, with 11 floors, 8,130 sq.m. of GLA and 92 parking spaces, it is extremely sought-after by companies thanks to its location on Avenida Nove de Julho, one of São Paulo’s main thoroughfares, close to another major thoroughfare, Avenida Brigadeiro Faria Lima. São Carlos intends to carry out an overall retrofit to bring the property up to triple A standard, meeting LEED ® sustainability certification criteria, and construct parking deck on an adjoining site already owned by São Carlos. The retrofit is expected to absorb total investments of R$25 million with conclusion in 12 months.

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9 th floor of the Itaim Center Building São Carlos acquired the 9th floor of the Itaim Center Building for R$4.15 million, giving it 10 of the 12 floors. The 9th floor has 589 sq.m. of leasable area and is fully leased. Tenant: ITM

Sites São Carlos acquired two sites in the state of São Paulo to build convenience and service centers in the future. One, with an approximate area of 1,890 sq.m., was acquired in Pindamonhangaba for R$1.6 million, and the other with an approximate area of 5,000 sq.m., was acquired in Paulínia for R$4.9 million.

Suite 31 of the Mykonos Building São Carlos acquired another half floor, covering 283 sq. m, in the Mykonos building, located in the Vila Olímpia district of São Paulo, for R$2 million. The Company now owns 8 of the building’s 15 floors. Tenant: Total Lubrificantes

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Sales Jauaperi Building São Carlos sold the Jauaperi building, located in the Centro Administrativo Rio Negro, in Barueri (SP), for R$69.3 million, R$23.0 million of which in cash and the remainder in 12 installments. This is a class A office building, currently under construction, located near the access to the Castelo Branco freeway and Shopping Iguatemi de Barueri mall. It has 11,960 sq.m. of GLA, 15 floors and 296 parking spaces. São Carlos still owns two office towers and the parking deck in the Centro Administrativo Rio Negro.

Sacadura Cabral Building São Carlos sold the Sacadura Cabral building, with 5,814 sq.m. of leasable area, for R$7.25 million in cash. The property is a single-user office building located at Rua Sacadura Cabral, 102, in the port region of Rio de Janeiro, near the city center.

Street Stores In 2010, the Company sold street stores in Belém (PA), Maceió (AL), Nilópolis (RJ) and Taguatinga (DF), with a combined leasable area of 53,159 sq.m.

Campo Grande Store São Carlos sold the Campo Grande store, with 4,966 sq.m. of GLA, for R$10.5 million in cash. The store is located in Shopping Center Eldorado in Campo Grande (MS).

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Other Properties

Business Center (Business Space Tower + Logistic Space Center) Location: São Paulo (SP) São Carlos’ Share: 100% Own GLA: 9,270 sq.m. Acquisition Year: 2007 Tenants: Diasorin, Eaton, Incentel, Mabe and Pharmaster

Antonio Carlos Building Location: São Paulo (SP) São Carlos’ Share: 100% Own GLA: 4,419 sq.m. Acquisition Year: 2008 Tenant: Serasa Experian

Borges Lagoa Building Itaim Center Building Location: São Paulo (SP) São Carlos’ Share: 10 of 12 floors Own GLA: 5,851 sq.m. Acquisition Year: 2006 Locatários: AON and ITM

Location: São Paulo (SP) São Carlos’ Share: 100% Own GLA: 6,456 sq.m. Acquisition Year: 2007 Tenants: Tozzini Freire Advogados

Brasilprev Building Mykonos Building Location: São Paulo (SP) São Carlos’ Share: 8 of 15 floors Own GLA: 4,863 sq.m. Acquisition Year: 2007 Tenants: BRQ, Fischer, Lufthansa, Piramidal, Spring Wireless and Total Lubrificantes

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Location: São Paulo (SP) São Carlos’ Share: 100% Own GLA: 11,845 sq.m. Acquisition Year: 2006 Tenant: Brasilprev


B r asi l prcar ev lBos ui l2010 di ng, annual S 達o P aul o ( St P ) s達o r epor

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Corporate Plaza Building

São Paulo Office Park II Building

Location: São Paulo (SP) São Carlos’ Share: 13 of 17 floors Own GLA: 8,174 sq.m. Acquisition Year: 2007 Tenants: Advocacia Granda, Bematech, Buntech, CentroProjekt, Eldorado Celulose, I3, M2 Marketing, Mitsui Alimentos, Oster, Q-Med, Verisure, Willis and Wipro, among others

Location: São Paulo (SP) São Carlos’ Share: 100% Own GLA: 4,541 sq.m. Acquisition Year: 2006 Tenant: Deloitte Touche Tohmatsu

Ericsson Building Location: São Paulo (SP) São Carlos’ Share: 100% Own GLA: 24,788 sq.m. Acquisition Year: 2000 Tenant: Ericsson

São Paulo Office Park X Building Location: São Paulo (SP) São Carlos’ Share: 100% Own GLA: 3,091 sq.m. Acquisition Year: 2006 Tenant: Deloitte Touche Tohmatsu

Top Center Building Location: São Paulo (SP) São Carlos’ Share: 100% Own GLA: 12,706 sq.m. Acquisition Year: 2004 Tenants: Café Iguaçu, Consulate of Japan, Fox Latin American, Goodyear, Hitachi Ar, Marubeni, Melitta, Nikkei, Sumitomo Chemical and Wella, among others

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Er i csson B ui l di ng, S ão P aul o ( S P )


Eduardo Souza Aranha Site Location: São Paulo (SP) São Carlos’ Share: 100% Own GLA: 500 sq.m. Acquisition Year: 2006 Tenant: ROD Estacionamentos

Renato Paes de Barros Site Location: São Paulo (SP) São Carlos’ Share: 100% Own GLA: 475 sq.m. Acquisition Year: 2008 Tenant: RITI Estacionamentos

Centro Administrativo Rio Negro Location: Alphaville, Barueri (SP) São Carlos’ Share: 2 buildings and 1 parking deck Own GLA: 34,953 sq.m. Acquisition Year: 2006 Tenants: Adidas, Altran, Assurant Seguros, Atlantica Hotels, Bradesco, Campari, Citibank, Cleartech, Diveo Telecomunicações, Leaseplan, Paramount, Petraroli Advogados Associados, Smartnet, Unione Consulting and Warner Bros, among others

G l obat ech, C am pi nas ( S P ) Top C ent er B ui l di ng, S ão P aul o ( S P )

Centro de Distribuição Barueri Location: Barueri (SP) São Carlos’ Share: 100% Own GLA: 37,590 sq.m. Acquisition Year: 1998 Tenant: DHL

GlobalTech Location: Campinas (SP) São Carlos’ Share: 60% Own GLA: 9,481 sq.m. Acquisition Year: 2008 Tenants: Hidelbrando, HP and Venturus

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Centro Empresarial Arcos da Lapa

CityTower Building

Location: Rio de Janeiro (RJ) São Carlos’ Share: 8 of 14 floors Own GLA: 8,400 sq.m. Acquisition Year: 2009 Tenants: Serpro, Sinopec and Unisys

Location: Rio de Janeiro (RJ) São Carlos’ Share: 100% Own GLA: 18,727 sq.m. Acquisition Year: 2005 Tenants: Citibank, Ecology and Petrobras

Centro Empresarial Botafogo

Marrecas Parking Deck

Location: Rio de Janeiro (RJ) São Carlos’ Share: 100% Own GLA: 20,865 sq.m. Acquisition Year: 2007 Tenants: AES Eletropaulo, Ágora Corretora, Andrade Gutierrez, Banco Itaú BBA, Banco HSBC, Citibank, Ernst & Young, McKinsey, Mitsui Gás, Odebrecht, Repsol YPF, Telemar and Tishman Speyer, among others

Location: Rio de Janeiro (RJ) São Carlos’ Share: 100% Own GLA: 90 parking spaces Acquisition Year: 1998 Tenant: Citibank

Visconde de Ouro Preto Building Location: Rio de Janeiro (RJ) São Carlos’ Share: 62% Own GLA: 5,730 sq.m. Acquisition Year: 2008 Tenants: Andrade Gutierrez, Bozzano, BV Financeira, Essilor, Task Sistemas, etc

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Meier Building Location: Rio de Janeiro (RJ) São Carlos’ Share: 100% Own GLA: 3,153 sq.m. Acquisition Year: 1998 Tenant: CTIS


C ent r o Em pr esar i al A r s達o cos car da lLapa, R i o annual de Janei r o (tR J) os 2010 r epor

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Passeio Building, Rio de J a n e ir o ( R J ) Centro Empresarial Guaíba, Porto Alegre (RS)

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Passeio Building Location: Rio de Janeiro (RJ) São Carlos’ Share: 100% Own GLA: 22,023 sq.m. Acquisition Year: 2003 Tenants: Contax and Lojas Americanas

Pasteur 110 Building Location: Rio de Janeiro (RJ) São Carlos’ Share: 100% Own GLA: 6,350 sq.m. Acquisition Year: 2007 Tenants: Energisa, Fisher and Odebrecht

Venezuela 43 Building Location: Rio de Janeiro (RJ) São Carlos’ Share: 100% Own GLA: 4,488 sq.m. Acquisition Year: 2009 Tenant: undergoing renovation

Praça da Bandeira Site Location: Rio de Janeiro (RJ) São Carlos’ Share: 100% Own GLA: 1,205 sq.m. Acquisition Year: 1998 Tenant: vago

Centro Empresarial Guaíba Location: Porto Alegre (RS) São Carlos’ Share: 100% Own GLA: 12,463 sq.m. Acquisition Year: 2008 Tenant: Caixa Econômica Federal, IBM and Ipiranga

P ast eur 110 B ui l di ng, R i o Janei r o ( R J )

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Stores Belo Horizonte Store

Madureira Store

Location: Belo Horizonte (MG) São Carlos’ Share: 100% Own GLA: 12,153 sq.m. Acquisition Year: 1998 Tenant: Lojas Americanas

Location: Rio de Janeiro (RJ) São Carlos’ Share: 100% Own GLA: 3,116 sq.m. Acquisition Year: 1998 Tenant: Lojas Americanas

Copacabana Store

Niterói Store

Location: Rio de Janeiro (RJ) São Carlos’ Share: 100% Own GLA: 3,548 sq.m. Acquisition Year: 1998 Tenant: Lojas Americanas

Location: Niterói (RJ) São Carlos’ Share: 100% Own GLA: 7,482 sq.m. Acquisition Year: 1998 Tenant: Casa & Vídeo and MultiPark

Laranjeiras Store

Ouvidor Store

Location: Rio de Janeiro (RJ) São Carlos’ Share: 100% Own GLA: 10,645 sq.m. Acquisition Year: 1998 Tenant: Lojas Americanas

Location: Rio de Janeiro (RJ) São Carlos’ Share: 100% Own GLA: 2,395 sq.m. Acquisition Year: 1998 Tenant: Lojas Americanas

Petrópolis Store Location: Petrópolis (RJ) São Carlos’ Share: 100% Own GLA: 2,178 sq.m. Acquisition Year: 1998 Tenant: Lojas Americanas

Tijuca Store Location: Rio de Janeiro (RJ) São Carlos’ Share: 100% Own GLA: 5,240 sq.m. Acquisition Year: 1998 Tenant: Lojas Americanas

Ma dure ira S to r e , R io d e J a n e ir o ( R J )

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SUSTAINABILITY

São Carlos is at the forefront of sustainable developments in Brazil. Developed in association with the construction company Gafisa, the Eldorado Business Tower, which was inaugurated in 2008, was Latin America’s first building to receive Platinum Category Core & Shell certification from LEED ® (Leadership in Energy and Environmental Design), the organization’s highest level of environmental certification, which is based on the following criteria: sustainable construction, water saving, energy efficiency, material and resource selection, and internal environmental quality. It was also one of the first three buildings to receive this distinction outside of the United States, the headquarters of the United States Green Building Council (USGC), the non-profit organization responsible for the LEED ® system. Based on the concepts incorporated into the Eldorado Business Tower, São Carlos began preparing a project to improve the older buildings in its portfolio. After a thorough examination of the requirements, in 2010 the Company drew up a pilot project to obtain Existing Buildings: Operations & Maintenance (EB:O&M) LEED ® certification for all the buildings in its current portfolio. It will also seek LEED ® Core & Shell certification for each of its new developments, whether greenfield or retrofit. Examples include the Venezuela 43 building in Rio de Janeiro and the Barros Loureiro building in São Paulo. The Company adopts the best sustainability practices not only to demonstrate its commitment to society and the environment, but also as a strategy for increasing the value of its portfolio and attracting major clients. In this sense, São Carlos is a pioneer in the Brazilian market.

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The Eldorado Business Tower, which was naugurated in 2008, was Latin America’s first building to receive Platinum Category Core & Shell certification from LEED®

El dor ado B usi ness Tow er, S ão P aul o ( S P)

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CORPORATE GOVERNANCE São Carlos has been a publicly-held company since 1999. Aiming to increase its commitment to ethics and transparency, in 2006 it became the first company in the real estate industry to be included in the BM&FBovespa’s Novo Mercado listing segment, which contains only those firms whose corporate governance practices exceed those required by Brazilian legislation. For example, all Novo Mercado companies must issue common shares only and grant tag along rights to all their shareholders in case of transfer of control. São Carlos’ corporate structure comprises a Board of Directors and a Board of Executive Officers, which are responsible for managing the Company’s operations in accordance with its Bylaws.

BOARD OF DIRECTORS The Board of Directors is the Company’s collegiate decision-making body and is responsible for establishing its general guidelines, including its long-term strategy, and overseeing the activities of the Company’s executive officers. It holds meetings whenever necessary or when called by the Chairman or the majority of its members. São Carlos’ current Board of Directors is composed of six members and five alternates, with a twoyear term of office, which is automatically extended until the election of the new members. Name

Position

Beginning of term

Chairman

05/02/2011

Riccardo Arduini

Member

05/02/2011

Jorge Felipe Lemann

Member

05/02/2011

Rogério Ziviani

Member

05/12/2011

Abram Abe Szajman

Member

05/12/2011

Roberto Moses Thompson Motta

Member

05/02/2011

Rolando Mifano

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BOARD OF EXECUTIVE OFFICERS The executive officers are the legal representatives of the Company and are mainly responsible for its day-to-day management and the implementation of the policies and general guidelines established by the Board of Directors. In accordance with the Company’s Bylaws, the Board of Executive Officers must comprise a minimum of two and a maximum of five officers, one of which being the CEO and one the Investor Relations Officer, all elected for a two-year term of office, with the possibility of re-election. The officers may be removed from office by the Board of Directors at any time. Currently, the Board of Executive Officers is composed of five statutory officers. Name

Position

Beginning of term

Rolando Mifano

Chief Executive Officer

05/02/2011

Felipe Góes

Superintendent Officer

06/01/2011

Marcelo Faria Scarabotolo

Chief Operating Officer

04/08/2011

New Business Officer

04/08/2011

CFO and Investor Relations Officer

04/08/2011

Rubens Eduardo Campos Cardoso Fábio Russo Corrêa

CVs OF THE MEMBERS OF THE BOARD OF DIRECTORS AND BOARD OF EXECUTIVE OFFICERS Abram Abe Szajman – Born in July 1939, Mr. Szajman has a degree in accounting from the Escola de Comércio Álvares Penteado (FECAP). Currently, he is Chairman of the Board of Directors of Grupo VR, president of Fecomercio SP (São Paulo State Trade Federation), president of Cecomercio SP (São Paulo State Trade Center), president of the Regional Councils of SESC and SENAC SP, vice president of CNC (National Federation of Commerce), and a member of SEBRAE SP (Brazilian Small Business Support Service). Previously, he was active in trade associations and community action organizations, and has received many honors and honorary citizenships. He has been a member of the Board of Directors of São Carlos Empreendimentos since May 2011.

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Fábio Russo Corrêa – Before joining the Company, between 1997 and 2009, Mr. Corrêa was an executive in several areas of CCR (Companhia de Concessões Rodoviárias), including engineering at Concessionária NovaDutra, planning at Concessionárias AutoBAn, and finance structuring at CCR. He has a degree in Civil Engineering from the São Carlos Engineering School and completed the Business Specialization Course for Graduate Students (CEAG) at the Getulio Vargas Foundation (FGV) and the Master in Financial Management program at the Rotterdam School of Management, in the Netherlands. Felipe Góes – Previously, Mr. Góes was Rio de Janeiro City Development Secretary, where he was responsible for revitalizing the port region and attracting investments for major city projects. He was also president of the Pereira Passos Institute, a city planning body, and the Municipal Development Board. He also worked at McKinsey, a multinational consulting firm, for 10 years, during the last four of which as a partner, focusing on the infrastructure and financial sectors in Brazil, Europe and the United States. Mr. Góes has a degree in Business Administration from the Pontifical Catholic University of Rio de Janeiro (PUC/RJ) and an MBA from the University of Michigan. Jorge Felipe Lemann – Mr. Lemann completed the Owners Presidents Managers (OPM) program at Harvard Business School. He is a member of the Advisory Board of the Security Traders’ Association (Adeval) and of the Board of Directors of São Carlos Empreendimentos e Participações S.A. In 2003, he founded Flow Corretora de Câmbio, Títulos e Valores Mobiliários S/A and Flow Corretora de Mercadorias Ltda., in which he currently serves as an executive officer. Prior to this, he has worked since the 1990s for several financial and auditing firms, as well as other companies, including Price Waterhouse Coopers (assistant auditor), Célio Pelajo CCV (junior client operator), Ativa S/A CCTV (market trader), Banco Matrix (trainee), Andrade Gutierrez (project manager), Unibanco Corretora (special account operator), and Link CCTVM (partner responsible for the international area). Marcelo Faria Scarabotolo – Mr. Scarabotolo has worked for São Carlos Empreendimentos e Participações S.A. since 1999 as Shopping Center Superintendent, Administrative and Financial Manager, and Chief Financial and Investor Relations Officer. Currently, he is the Company’s Chief Operating Officer and responsible for the Commercial and Real Estate Management Departments. He has a degree in Public Administration from the Getulio Vargas Foundation (FGV-SP) and completed a post-graduate program in Real Estate at the Armando Álvares Penteado Foundation (FAAP-SP). Riccardo Arduini – Mr. Arduini has been a member of the Board of Directors of ALL América Latina Logística S.A. since 1999 and is also an executive officer at Cinpal (Companhia Industrial de Peças para Automóveis). He has a degree in Mechanical Engineering and completed postgraduate studies in Business Administration at the Getulio Vargas Foundation (FGV-SP).

32

são ca rlos 2010 a nnua l re p o r t


Roberto Moses Thompson Motta – Roberto Thompson Motta worked at the corporate finance department of Banco de Investimentos Garantia S.A. from 1986 to 1992, being responsible for mergers and acquisitions and international debt issues for clients such as Shell, Aracruz and IBM. In 1993, together with the controlling partners of Banco Garantia, he founded GP Investimentos S.A., which became the largest private equity firm in Latin America. At GP, he was responsible for raising over US$1.5 billion from foreign investors. He carried out acquisitions of controlling interests in various companies, notably Gafisa S.A., Multicanal S.A., Supermercados Sé, SuperMar S.A., Telemar S.A., ALL, Submarino S.A. and Ferrovia Centro Atlântico. In 2001, he withdrew from GP’s management, but remained a member of the Board of Directors until 2010. In 1999, Mr. Motta began to focus on activities related to AmBev S.A., Anheuser-Busch InBev S.A. (Belgium), Lojas Americanas S.A. and São Carlos Empreendimentos e Participações S.A. Mr. Motta is a board member of these companies and also a member of the finance committees of Anheuser-Busch InBev, Lojas Americanas and AmBev. As such, he has headed up many of the acquisitions made by these companies, notably the merger between Brahma and Antarctica to form AmBev in 1999, the acquisition of Quilmes (Argentina) by AmBev in 2002, the merger of AmBev and Interbrew (Belgium) in 2004 to form InBev S.A., the acquisition of Submarino by Americanas.com in 2006 and the acquisition of Anheuser-Busch Inc. by InBev in 2008 to form Anheuser-Busch InBev S.A. Mr. Motta has a degree in Engineering from the Pontifical Catholic University of Rio de Janeiro PUC/RJ, and an MBA from The Wharton School, University of Pennsylvania, USA. Rogério Ziviani – Born in November 1956, Mr. Ziviani has been a member of the Board of Directors of Marcopolo since May 2010 and of São Carlos Empreendimentos since May 2011. He was also a member of the Board of Directors of Duratex between 2009 and 2011. He has a degree in Business Administration from Mackenzie University (1980), and completed an MBA and specialization course on International Administration at the University of Southern New Hampshire, USA (1981 and 1983). In addition, he was an executive officer at Suzano Papel e Celulose between 2001 and 2008 and Bahia Sul Celulose between 1990 and 2001, and a manager at Aracruz Celulose between 1983 and 1990. Rolando Mifano – Mr. Mifano has been São Carlos’ Chief Executive Officer since 1998. He was head of the Real Estate Credit Department of Comind from 1970 to 1985, and worked at Unibanco as the Real Estate Investment Superintendent from 1985 to 1986. In 1987, he joined Carrefour, where he was Development and Expansion Officer for Latin America until moving to São Carlos. He has a degree in Business Administration from the Getulio Vargas Foundation (FVG-SP), and completed the Corporate I.T. course at Cepia and the General I.T. course at National des Artset Offices, both in Paris. Rubens Eduardo Campos Cardoso – Before becoming an executive officer with São Carlos, Mr. Cardoso was an executive officer in the real estate area at Carrefour Comércio e Indústria between 1987 and 1999, where he was responsible for the Shopping Mall and Arcade Department. He has a degree in Social Communications from the Escola Superior de Propaganda e Marketing (ESPM), with specialization in Marketing and Financial Mathematics, and completed a post-graduate program in Real Estate at the Armando Álvares Penteado Foundation (FAAP-SP).

são car l os 2010 annual r epor t

33


In 2010, 25% of the Company’s net income was distributed as dividends DIVIDEND POLICY Pursuant to Brazilian Corporation Law and the Company’s Bylaws, São Carlos is required to pay its shareholders at least 25% of annual net income as dividends or interest on equity. In 2010 the Company paid R$25 milion. Dividend Payout (R$ million) 36.2 30.0

2008

34

25.0

2009

2010

são ca rlos 2010 a nnua l re p o r t


Top C ent er B ui l di ng, S 達o P aul o ( S P )

s達o car l os 2010 annual r epor t

35


OPERATING AND FINANCIAL PERFORMANCE S達o Carlos recorded one of its best ever operating performances in 2010, a year in which it was exceptionally active in terms of real estate acquisitions and sales. Consequently, the financial results for this period have already captured part of the performance that will be consolidated in 2011.

GROSS REVENUE FROM LEASES Gross revenue from leases totaled R$167 million, 6.9% up on 2009 and a new Company record.

ADJUSTED EBITDA AND EBITDA MARGIN Adjusted EBITDA came to R$121.6 million, with an adjusted EBITDA margin of 78.1%, versus R$125.9 million and a margin of 84.3% in 2009.

Gross revenue from leases (R$ million) 153.8

159.3

167.0

2008

2009

2010

Adjusted EBITDA and EBITDA margin (R$ million) 122.4 84.7%

2008

36

s達o ca rlos 2010 a nnua l re p o r t

125.9 78.1%

2009

121.6 84.3%

2010


NET INCOME

Net Income (R$ million)

In 2010, the Company’s net income totaled R$92 million.

133.4 92.0 31.2

2008

NAV (NET ASSET VALUE) NAV stood at R$1.71 billion or R$30 per share, 28.7 up on the 2009.

2009

2010

NAV - Net Asset Value (R$ million) 1.71 1.28

1.31 30.00/share

22.17/share 22.79/share

2008

INVESTMENTS São Carlos posted record investments in 2010: R$492.1 million. Of this amount, approximately R$469 million was allocated to the acquisitions of properties with upside potential, R$17 million to the construction of the Jauaperi building, which has already been sold, and around R$6 million to renovating and improving the other properties in the portfolio.

2009

2010

Investments (R$ million) 492.1

487.8

139.9

2008

2009

2010

são car l os 2010 annual r epor t

37


SHARE PERFORMANCE AND MARKET CAP At the end of 2010, São Carlos’ capital stock comprised 57,737,319 common shares. São Carlos stock did well in 2010, especially in the fourth quarter. Thanks to the Company’s excellent performance throughout the year, the value of its properties moved up, which was reflected in the price of its shares, which climbed from R$15.95 at the end of 2009 to R$23.25 at the close of 2010.

440.0 410.0 380.0 350.0 320.0 290.0 260.0 230.0 200.0 170.0 140.0 110.0 80.0 50.0

Price – SCAR3

SCAR3

Dec 2008

1,400

IBOV

IMOB

Dec 2009

Dec 2010

Dec 2009

Dec 2010

Market Cap 1 – SCAR3

1,200 1,000 800 600 400 200 0 Dec 2008

1 . T h e tota l v a lue of the s h a r e s o f a c o mp a n y b a s e d o n th e ir m ar ket pr i ce.

38

são ca rlos 2010 a nnua l re p o r t


C ent r o A dm i ni st r at i vo S ant o A m ar o ( C . A . S . A . ) , S ão P aul o ( S P )

São Carlos’ share price increased from R$ 15.95 in 2009 to R$ 23.25 in 2010 são car l os 2010 annual r epor t

39


HUMAN CAPITAL

São Carlos closed 2010 with a lean workforce of 34 employees, each of whom with extensive experience in the sector and 95% of whom with a university degree. The headcount increased by 31% over 2009 in order to keep pace with the Company’s growth. All employees’ compensation is tied to performance and results, in accordance with corporate and individual targets. In order to show its appreciation for its professionals’ dedication and in addition to the regular benefits, the Company offers academic scholarships, which are based on individual performance, and participation in the profit sharing program (PLR), which is mainly calculated based on the targets established by Management for each department and position. Each employee’s professional development within the Company is based on merit. Growth in the number of employess

Profit sharing in the last three years (R$ thousand)

34 24

1.674

26 792

2008

40

2009

2010

são ca rlos 2010 a nnua l re p o r t

2008

949

2009

2010


S達o Carlos has 34 employees highly specialized in the sector and in the business, of which 95% have completed higher education s達o car l os 2010 annual r epor t

41


FINANCIAL STATEMENTS B A L A N C E S H E E T S AS AT DECEM BER 31, 201 0 A N D D E C E M B E R 31, 2009 AND JANUARY 1 , 2 0 0 9 (In thousands of Brazilian reais - R$) Company (BR GAAP) ASSETS

Consolidated (IFRSs and BR GAAP)

12.31.10

12.31.09

01.01.09

12.31.10

12.31.09

01.01.09

Cash and cash equivalents

146,748

358,249

88,766

149,136

358,837

92,455

Short-term investments

171,501

59,534

4,040

171,501

60,830

10,046

5,710

4,997

4,459

33,783

19,261

25,089

CURRENT ASSETS

Trade and other receivables Related-party transactions

3,003

4,580

5,061

3,111

4,683

5,061

16,035

15,939

-

19,480

18,793

532

216

251

126

3,704

1,155

21

-

-

-

33,917

-

238,015

343,213

443,550

102,452

414,632

463,559

371,219

2,855

1,279

5,893

-

-

-

Equity in subsidiaries

10,203

10,744

-

-

-

-

Escrow deposits

Taxes recoverable Other assets Properties for sale Total current assets NONCURRENT ASSETS Due from related parties, net

10,446

9,181

9,100

10,522

9,181

9,100

Taxes recoverable

-

-

9,101

-

-

9,101

Other receivables

-

-

1

-

43

41

Other assets

-

-

-

-

13

33

673,936

509,541

758,139

-

-

-

76,091

94,876

95,197

1,160,105

751,182

761,643

Investments in subsidiaries Investments property Property, plant and equipment Intangible assets Total noncurrent assets TOTAL ASSETS

42

s達o ca rlos 2010 a nnua l re p o r t

345

396

484

6,046

5,466

5,197

1,204

1,161

623

1,216

1,179

645

775,080

627,178

878,538

1,177,889

767,064

785,760

1,118,293

1,070,728

980,990

1,592,521

1,230,623

1,156,979


B A L A N C E SHEET S AS AT DECEM BE R 31 , 2 0 1 0 A N D D E C EM BER 31, 2009 AND JANUA RY 1, 2 0 0 9 (In thousands of Brazilian reais - R$) Company (BR GAAP) LIABILITIES AND SHAREHOLDERS' EQUITY

Consolidated (IFRSs and BR GAAP)

12.31.10

12.31.09

01.01.09

12.31.10

12.31.09

01.01.09

63,784

60,348

58,703

120,490

80,595

77,914

CURRENT LIABILITIES Borrowings and financing Advances from customers Payroll and related taxes Provision for income tax and social contribution Tax liabilities Dividends Provision for investment losses

-

-

-

24,880

-

-

14,934

5,571

3,883

14,957

5,581

3,947

5,086

6,908

-

10,924

12,931

3,263

822

869

749

3,823

1,069

1,529

-

6,179

8,019

-

6,179

8,019

719

512

-

-

-

-

Payables for property purchases

-

-

-

-

-

2,605

Interest on capital

-

12,000

-

-

12,000

-

Other liabilities Total current liabilities

779

1,069

792

3,052

5,019

5,071

86,124

93,456

72,146

178,126

123,374

102,348

NONCURRENT LIABILITIES Deferred taxes Borrowings and financing Contingent liabilities Total noncurrent liabilities

463

-

-

3,342

865

1,425

339,005

353,793

367,246

718,352

482,905

511,608

24,381

20,586

18,523

24,381

20,586

18,523

363,849

374,379

385,769

746,075

504,356

531,556

473,912

473,912

473,912

473,912

473,912

473,912

2,201

-

4,147

2,201

-

4,147

SHAREHOLDERS' EQUITY Issued capital Capital reserve

(3,892)

(24,789)

(24,789)

(3,892)

(24,789)

(24,789)

Reserves

196,099

153,770

69,805

196,099

153,770

69,805

Total shareholders' equity

668,320

602,893

523,075

668,320

602,893

523,075

1,118,293

1,070,728

980,990

1,592,521

1,230,623

1,156,979

Treasury stocks

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

são car l os 2010 annual r epor t

43


I NC O ME S TAT E MENT S AS AT DECEM BER 31, 2 0 1 0 AND DEC EMBER 31 , 2 0 0 9 (In thousands of Brazilian reais - R$, except for earnings per share)

Company (BR GAAP) 12.31.10

Consolidated (IFRSs and BR GAAP)

12.31.09

12.31.10

12.31.09

NET LEASE REVENUE

20,837

27,517

155,720

134,505

NET SALES REVENUE

75,514

107,000

75,517

396,578

Cost of property sales

(17,168)

(37,148)

(17,168)

(278,646)

Cost of leased properties

(3,555)

(2,879)

(21,023)

(22,264)

GROSS PROFIT

75,628

94,490

193,046

230,173

Administrative expenses

(17,050)

(20,161)

(22,412)

(29,830)

Management compensation

(16,070)

(6,985)

(16,143)

(7,052)

OPERATING REVENUE (EXPENSES)

Other operating revenues Equity INCOME FROM OPERATIONS BEFORE FINANCIAL INCOME (EXPENSES)

6,706

94

10,500

866

65,528

89,096

-

-

114,742

156,534

164,991

194,157

FINANCIAL INCOME (EXPENSES) Financial income

36,769

26,962

37,067

27,492

(54,402)

(43,203)

(91,531)

(59,163)

(17,633)

(16,241)

(54,464)

(31,671)

97,109

140,293

110,527

162,486

(4,811)

(6,908)

(16,670)

(29,432)

(364)

-

(1,923)

331

91,934

133,385

91,934

133,385

Basic (cents per share)

1.5939

2.3153

1.5939

2.3153

Diluted (cents per share)

1.5881

2.3153

1.5886

2.3153

Financial expenses

INCOME BEFORE INCOME TAX AND SOCIAL CONTRIBUTION

INCOME TAX AND SOCIAL CONTRIBUTION Income tax current Income tax deferred NET INCOME FROM CONTINUING OPERATIONS

EARNINGS PER SHARE

Note: There is no other comprehensive income for prior and current year.

44

s達o ca rlos 2010 a nnua l re p o r t


S TAT E M ENT S OF CHANGES IN SHAR EH O LD ER S ’ EQU I TY AS AT D EC EMBER 31 , 2 0 1 0 A N D DECEM BER 31, 2009 (In thousands of Brazilian reais - R$)

Capital reserves Capital

BALANCES AS AT JANUARY 01, 2009

473,912

Additional dividends for the year ended 2008

-

Reversal of forfeited dividends payable Equity-settled employee benefits reserve

Earnings reserves

Stock option plan

Treasury shares

Legal

Unrealized earnings

Retained earnings

Total

4,147 (24,789)

10,956

58,849

-

523,075

-

-

-

(21,981)

- (21,981)

-

-

-

-

183

-

183

-

4,410

-

-

-

-

4,410

Cancellation of the stock option plan

-

(8,557)

-

-

8,557

-

-

Net income

-

-

-

-

-

133,385

133,385

Legal reserve

-

-

-

6,669

-

(6,669)

-

Dividends and interest on capital

-

-

-

-

-

Unrealized retained earnings

-

-

-

-

90,537

(90,537)

-

- (24,789)

17,625

136,145

-

602,893

Allocation of net income:

BALANCES AS AT DECEMBER 31, 2009

473,912

(36,179) (36,179)

Equity-settled employee benefits reserve

-

2,201

-

-

-

-

2,201

Cancellation of the stock option plan

-

-

-

-

-

-

-

Acquisition of treasury stocks

-

- (12,633)

-

-

- (12,633)

Sale of treasury shares

-

-

8,925

-

-

-

Cancellation of buyback of treasury shares

-

-

24,605

-

(24,605)

-

-

Net income

-

-

-

-

-

91,934

91,934

Legal reserve

-

-

-

4,597

-

(4,597)

-

Dividends and interest on capital

-

-

-

-

-

Unrealized retained earnings

-

-

-

-

62,337

(62,337)

-

473,912

2,201

(3,892)

22,222

173,877

-

668,320

8,925

Allocation of net income:

BALANCES AS AT DECEMBER 31, 2010

(25,000) (25,000)

são car l os 2010 annual r epor t

45


STATEMENTS OF CASH FLOWS AS AT DECEMBER 31, 2010 AND DECEMBER 31, 2009 (In thousands of Brazilian reais - R$)

Company (BR GAAP) 12.31.10

12.31.09

91,934

133,385

91,934

133,385

2 3,555 (65,528) 3,112 2,201 (58,347) 53,756 30,685

2,879 (89,096) 1,402 4,410 (69,852) 38,435 21,563

4 21,023 3,112 2,201 (58,347) 84,574 144,501

239 22,264 1,402 4,410 (121,705) 55,455 95,450

(715) 1 (1,153) (96) 35

(538) 5,095 (81) (6,838) (124)

(14,470) 1,572 (1,229) (687) (2,549)

6,087 378 (81) (9,160) (1,136)

9,363 (1,822) (47) 463 (290) 36,424

1,688 6,908 120 (36) 277 28,034

24,880 9,376 (2,007) 2,754 2,477 (1,967) 162,651

1,634 9,668 (460) 102 (2,605) (36) (52) 99,789

57,785 (111,967) (179,490) 75,515 23,045 (1,182) (136,294)

88,993 (55,494) 107,000 238,469 (20,156) 358,812

(110,671) 75,418 (185,172) (220,425)

(50,784) 397,450 (28,667) 317,999

(64,744) 8,925 (12,633) (37,000) (6,179) (111,631)

(69,363) (18,000) (30,000) (117,363)

(105,040) 8,925 (12,633) (37,000) (6,179) (151,927)

(103,406) (18,000) (30,000) (151,406)

(211,501)

269,483

(209,701)

266,382

Cash and cash equivalents at beginning of period

358,249

88,766

358,837

92,455

Cash and cash equivalents at end of period

146,748

358,249

149,136

358,837

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(211,501)

269,483

(209,701)

266,382

CASH FLOW FROM OPERATING ACTIVITIES Net income Adjustments to reconcile net income to cash provided by operating activities: Allowance for doubtful accounts Depreciation and amortization Equity in subsidiaries Provision for tax risks Recognition of stock option plan Gain on disposal of assets available for sale Inflation adjustment of assets and liabilities Decrease (increase) in operating assets: Accounts receivable Due from related parties Escrow deposits Taxes recoverable Other assets Increase (decrease) in operating liabilities: Advances from customers Payroll and related taxes Provision for income tax and social contribution Tax liabilities Deferred taxes Payables for property purchases Contingent liabilities Other liabilities Net cash provided by operating activities CASH FLOW FROM INVESTING ACTIVITIES Equity in subsidiaries Short-term investments Additions to investments Gains on realization of properties for sale Capital reduction in subsidiaries Purchase of investment properties and fixed and intangible assets Net cash provided by (used in) investment activities CASH FLOW FROM FINANCING ACTIVITIES Repayment of loans Borrowings Sale of own shares Share buyback Interest on capital Dividends paid Net cash provided by (used in) financing activities (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

46

Consolidated (IFRSs and BR GAAP) 12.31.10 12.31.09

s達o ca rlos 2010 a nnua l re p o r t


S TAT E M ENT S OF VALUE ADDED AS AT D EC EMBER 31 , 2 0 1 0 A N D DECEM BER 31, 2009 (In thousands of Brazilian reais - R$)

Company (BR GAAP)

Consolidated (IFRSs and BR GAAP) 12.31.10 12.31.09

12.31.10

12.31.09

23,682 75,514 99,196

30,322 107,000 137,322

167,687 75,517 243,204

154,888 396,578 551,466

(3,555) (17,168) (8,814) (29,537)

(2,879) (37,148) (11,221) (51,248)

(21,023) (17,168) (13,945) (52,136)

(22,264) (278,646) (20,518) (321,428)

GROSS VALUE ADDED

69,659

86,074

191,068

230,038

WEALTH CREATED BY THE COMPANY

69,659

86,074

191,068

230,038

65,528 36,769 6,705 109,002

89,096 26,962 93 116,151

37,067 10,499 47,566

27,492 867 28,359

178,661

202,225

238,634

258,397

22,367 1,674 8,285 57,989 1,009 25,000 62,337

14,524 928 10,185 45,904 3,968 36,179 90,537

22,651 1,674 30,846 88,098 8,028 25,000 62,337

14,591 928 50,328 61,494 4,340 36,179 90,537

178,661

202,225

238,634

258,397

REVENUE Lease Sale of properties INPUTS ACQUIRED FROM THIRD PARTIES Cost of services provided Cost of properties sold Materials, electric power, outside services and others

WEALTH RECEIVED IN TRANSFER Equity in subsidiaries Financial income, including net exchange rate change Other income WEALTH FOR DISTRIBUTION WEALTH DISTRIBUTED Employees Profit sharing Taxes, rates and contributions Interest and inflation adjustments Other Dividends and interest on capital Retained earnings WEALTH DISTRIBUTED

s達o car l os 2010 annual r epor t

47


GLOSSARY Adjusted EBITDA: EBITDA calculation based on the Income Statement adjusted to exclude nonrecurring events. EBITDA: net income for the fiscal year, excluding the effects of financial and non-operating results, income tax, social contribution on net income, depreciation and amortization. EBITDA calculated by São Carlos may not be comparable with the EBITDA calculated by other companies. EBITDA Margin: the EBITDA Margin is calculated based on the ratio between the Company’s EBITDA and net revenue from sales. LEED ® : this acronym stands for Leadership in Energy and Environmental Design, an internationally recognized certification system for “green” (sustainable) buildings. Developed by the U.S Green Building Council (USGBC) in March 2000, LEED® provides building owners and managers with a system of identification and execution of feasible design, construction, operation and sustainable maintenance solutions which are also measurable. LEED ® Core & Shell: certification granted to the surrounding area of the building, its common areas, the air-conditioning system and elevators. LEED® Core & Shell is used by constructors and developers who are developing the project to subsequently lease its offices, thus guarantying future users that its installations provide all the conditions for high performance.

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são ca rlos 2010 a nnua l re p o r t


LEED ® Existing Buildings: Operations & Maintenance (EB:O&M): this system helps measure, improve and maintain operations aiming at maximizing operational efficiency, while mitigating environmental impacts. LEED for Existing Buildings comprises all the issues related to building cleaning and maintenance, including the use of chemicals, recycling programs and external maintenance. It may be adopted both in existing projects pursuing the LEED certification and in new projects. NAV (Net Asset Value): Market value of the real estate portfolio less the company’s net debt at a given date. NAV calculated by São Carlos may not be comparable with the NAV calculated by other companies. Own Gross Leasable Area: corresponds to the sum of all the leasable area in a project owned by São Carlos. Physical vacancy rate: vacant own gross leasable area divided by the portfolio’s own gross leasable area, excluding non-operational properties and Venezuela 43 and Barros Loureiro buildings. Retrofit: refers to the technological adaptation of electrical and hydraulic installations and the main equipment installed in the common areas of the buildings, such as elevators, lighting systems and furniture, aiming at revamping and upgrading the constructions to increase the property’s useful life. It envisages the incorporation of more modern technologies and high-quality material to add value to the property.

são car l os 2010 annual r epor t

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CREDITS

General Coordination Institutional Marketing Area Content and GRI Consulting BRIC Integrated Corporate Communications Graphic Project MZ Design Photos São Carlos’ image bank Shutterstock

We thank everyone involved in the preparation of this report.

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são ca rlos 2010 a nnua l re p o r t


C or por at e P l az a B ui l di ng, S 達o P aul o ( S P ) s達o car l os 2010 annual r epor t

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s達o ca rlos 2010 a nnua l re p o r t


HIGHLIGHTS

2010 HIGHLIGHTS • São Carlos acquires R$450 million in commercial real estate with a high upside potential in sought-after regions of São Paulo and sells properties worth R$145 million. It was the Company’s best year in terms of real estate acquisitions • The Company’s portfolio has an estimated market value of R$2.23 billion, with a NAV (Net Asset Value) of R$1.71 billion, equivalent to R$30 per share • Net income totals R$92 million • The cash balance stood at R$321 million at year-end, more than sufficient leverage capacity to cover new investments and growth


s達o car l os - 2010 annual r epor t

www. scsa. com.br

2010 annual report


São Carlos - 2010 Annual Report