EZTEC Empreendimentos e Participacoes : Notice to the Market - EZTEC announces Preliminary 4Q16 Operating Results

2016 finalized with a recovery in sales in the 4Q16
EZTEC concludes 2016 with launches of R$ 250 MN and gross sales of R$ 628 MN

São Paulo, January 20th, 2017 - EZTEC SA (BOVESPA: EZTC3; Bloomberg: EZTC3: BZ), announces its preliminary operating results for the third quarter of 2016 (3Q16). Note that the results presented here are managerial results and are subject to revision following the external audit. The complete and audited results for the 4Q16 are scheduled to be disclosed on March 22nd, 2017, after market closure.

Launches

In 2016, EZTEC adjusted its launching patterns to the current economic reality, taking into account the new
conjuncture for sales velocity and inventory. Thus, the Company launched a PSV of R$ 205 million in the year.

The launches carried out in 2016 were specifically directed to the middle-high and high-income segments, given that these are the ones exhibiting greatest resilience in the face of weaker income and credit for final consumers. Moreover, EZTEC has distanced itself from producing large projects, which had been predominant throughout the Company's launching boom. Instead, it opts for smaller-scale projects within the city of São Paulo. That is the case for the three projects launched in 2016, all of which are located in the South Zone of the city: the Le Premier Moema, launched in the 1Q16 with an EZTEC PSV of R$ 52 million; the Splendor Brooklin in the 2Q16, with a PSV of R$ 91 million; and, in the last quarter of the year, the Up home Vila Mascote, with a PSV of R$ 61 million.

The Company is in a position that allows it to capture opportunities that add value to its operations. In the last quarter of the year, it acquired 20% participation in the projects Royale Prestige, Tresor and Merit, as well as 45% participation in the Brasiliano project, adding up to a total participation of 80% and 90%, respectively. With that said, taking into account the increment in receivables for sold units, alongside the inventory to be sold, the Company has added a PSV of R$26 million to the year's launches, ultimately closing t2016 with a PSV of R$231 million.

Sales and Cancellations

In the 4Q16, EZTEC has shown discernible signs of improvement in its net sales figures, going back to its net positive condition. In 2016 as a whole, net sales reached R$ 76 million, from which R$ 39 million were from 4T16 alone, which therefore confirms itself as the best quarter of the year.

These results, marked by gross sales of R$ 628 million and cancellations of R$ 552 million, should be interpreted in the light of the following: [i] the velocity for gross sales has remained relatively stable throughout the period, with a maximum sales over supply speed of 16% in the 2Q16 and 12% in the 3Q16; [ii] given the cycle of lower launches, the inventory composition tends towards the direction of more ready units, which are not subject to cancellations; [iii] there is a constant effort from the Administration to reduce the incidence of delinquency in its receivables, be it through discounts, downgrades, or early cancellations.

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