Morning, ladies and gentlemen, and thank you for waiting. Welcome to the conference call of LPS Brasil to discuss the earnings release regarding the second quarter of 2019. Here with us we have Mr. Marcos Lopes, CEO. Francisco Lopes Neto, Vice President. Robson Paim, Acting CFO. Beatriz Machert, Investor Relations Officer. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the presentation by LPS Brasil. Following that, we will start the Q&A session when further instructions will be given. Should any of you need assistance during the call, please request the help of the operator by pressing star zero. This event is also being broadcast simultaneously via web, and can be accessed at the address www.lopes.com.br/ri, where the corresponding presentation is available. The selection of slides will be controlled by you.
The replay of this event will be available shortly after it ends. We remind you that participants of the webcast may record via the website questions to LPS that will be answered after the conference call is finished. Before proceeding, we would like to clarify that statements that may be made during this call regarding the business prospects of LPS, projections, operating and financial goals, are based on assumptions and beliefs of the company's management. Considerations about the future are not a guarantee of performance, since they involve risks, uncertainties, and assumptions that refer to future events, and therefore they depend on circumstances which may or may not occur. Investors and analysts should understand that general conditions, industry conditions, and other operating factors may affect the results of the company in the future and lead to results that differ materially from those assumptions about the future.
First, Mr. Marcos Lopes will present the operating results of the company, and then Francisco Lopes will present the CrediPronto results, and finally, Beatriz Machert will present the financial results. Finally, we will open for the Q&A session. Therefore, I would now like to hand the floor over to Mr. Marcos Lopes. Mr. Lopes, you may start.
Good morning, everyone, and thank you for attending one more conference call of LPS Brasil. Here with us in this presentation we have our Vice President, Francisco Lopes Neto, our Acting Investor Relations Officer, Beatriz Machert, and our Acting CFO and New Business Officer, Robson Paim. I will start the presentation by making a brief comment about the company and industry scenario in the first half of the year. 2019 had a timid start for the real estate market.
Despite the continuation in the number of launches, the instability related to economic growth of the country affected the upturn of demand, which combined to the quarter seasonality, which is unfavorable for the industry, resulted in a lower than expected performance. During the second quarter, the advance in negotiation of the reforms brought some optimism to the market, and the recovery of confidence was reflected directly in the construction and real estate market, in which we have shown by 209% increase in launches when compared to the first three months of the year. Under the same basis for comparison, we also verified an important response on demand side, leading to a growth of 54% in transactions in the period.
In breaking down the figures, we observed that the results were strongly driven by the city of São Paulo, which accounted for 82% of total launches and 55% of transactions made by Lopes, in line with the expectation generated by the good performance in this market in latest quarters. If we consider the state of São Paulo as a whole, the shares become 90% in launches and 68% in transactions intermediated. It's also important to highlight that in the second quarter, the prevailing launches were of products focused on middle and upper middle income class, where historically is our know-how in operations. Only looking at the city of São Paulo, the average ticket was BRL 843,000, 90% higher than the same period in 2018.
Therefore, we believe that this is an important indicator to demonstrate that the middle and upper middle class is feeling more confident with the current and economic prospects of Brazil. Therefore, in the second quarter, we had a good performance in transactions and an important growth in the segment of franchises, which combined to the good results of CrediPronto, allowed Lopes to show that it's prepared and has potential to return to the market, which is happening gradually. Moving on to the presentation, we'll start with slide number four, with the main highlights of the company in the second quarter of 2019. On the left, we see the main operating indicators. Launches made by the company totaled BRL 3.7 billion in the second quarter of this year, 69% higher than the same period in 2018.
When we look at the transactions in the same period, we see a growth of 28% when compared to the second quarter of 2018, closing the period at BRL 1.3 billion. As we have mentioned in the latest quarters, the segment of franchises continued its growth consolidation process with an improvement of 29% in businesses transactions, which reflected in an increase of 32% in royalties revenue received by Lopes. CrediPronto again presented solid results with BRL 413 million in real estate loans during the second quarter, a result which is 56% higher than the same period in last year. Looking at the financial highlights, we see a growth of 43% in net revenue, which added BRL 39 million in the period, a reduction of 18% in the level of operating costs and expenses, which reinforces the good leverage of the company.
As a consequence, we closed the second quarter of 2019 with an EBITDA of BRL 14.6 million and a margin of 38%. In the quarter, the controller's net income before IFRS totaled BRL 4.9 million, 168% higher than the second quarter of 2018. Finally, in this quarter, the cash generated from operating activities totaled BRL 8 million, as we'll see later on. Continuing with the presentation on slide number six, we'll present the operating results of the state of São Paulo, segmented between capital and the other cities. In the first charts on to the left of the screen, we see a growth of 173% and 88% in launches of transactions closed in the city of São Paulo, respectively, reinforcing the leadership of this location in the market recovery as mentioned.
When looking at the results of operations of other cities at the metropolitan area and interior of the state, we see that the level of launches was reduced by 65% in this quarter when compared to the same period of 2018. However, it's possible to notice a slight recovery of demand since transactions presented a positive variation of 3%. As a consequence, consolidating launches and intermediations in the state of São Paulo, we see a concentration of 91% and 80% in the capital of the state, respectively. Now continuing on slide eight, we see the total PSV launched by Lopes in the period. On the left, we see the comparison between PSV launched in the second quarter this year and the second quarter of last year. We see an improvement of 69% in this indicator, totaling BRL 3.7 billion distributed among 41 different projects that together totaled 5,325 units launched.
Looking at the regional distribution, 90% was concentrated in the state of São Paulo, 7% in Ceará, and 3% in Paraná. In the next slide, we see the total transactions closed by Lopes in the period. Looking at the first chart, we see a growth of 29% in business transacted by the company this quarter and compared to the second quarter of 2018, totaling BRL 2.1 billion, of which 61% refers to own operations and 39% were coming from franchises. This increase was possible due to the improvement in prospects, both for supply and demand in terms of the economic scenario in Brazil, especially at the capital of São Paulo. Considering our own operation, PSV intermediated was 28% higher than the second quarter of 2018, totaling BRL 1.3 billion.
As seen on slide four, this result is due to the improvement in intermediations in the state of São Paulo, since this is one of the most important regions when we talk about potential consumption. These regions such as Rio de Janeiro and Espírito Santo also improved in the same comparison differently from what we saw in the previous quarter. Looking at intermediation by operating franchises, which are those that are already adapted to the network, to Rede, and paying a fee over the business they make, we see a growth of 19% in the second quarter of 2019, adding up to BRL 698 million. Considering franchises in their grace period, this increase was 29%, totaling BRL 822 million in the period. On the following slide, number 10, we see the result of transactions segmented by region.
Looking at the geographic distribution of our own operations, there is a concentration of 68% of the volume of transactions in the state of São Paulo, followed by Paraná and Rio de Janeiro with 11% and 10% respectively. The other operations such as in the states of Espírito Santo and Ceará have accounted for 10% of the rest. Again, it's clear how representative São Paulo is, and it gained 11 percentage share points in the participation of the second quarter of this year when compared to the second quarter of last year. We have 15 stores distributed in these locations. On the chart on the right, we see the regional distribution of franchises with a predominance of those smaller in the state of São Paulo, 55% of share in the intermediations and 56 franchise stores.
Then comes Rio de Janeiro, that increased its participation to 30% when compared to 24% in the second quarter of 2018. Currently, it has six stores associated to Rede Lopes. It is worth mentioning that the representativeness of Rio in the PSV and not in number of stores, is due to the fact that one of the stores also sells launches, thus improving the potential of its results and reinforcing the influence of Lopes brand in other markets. The South region has 18 stores and 8% of transactions, and other locations having 7% and eight stores.
The highlights that we continue to grow Rede Lopes focus not only on capturing the largest number of stores possible, but creating a network of stores that is robust and solid with good real estate companies that add value to the business and our brand, but also to the owners of such companies and the final end customer. Now continuing, let us go to slide 11, where we will see the results of the speed of sales over supply and speed of sale over launches. First, we will look at the results of these indicators in the capital of São Paulo, where we see an increase of 8.3 percentage points in sales over supply, which can be explained by an increase in 88% of transactions in this region, which is a reflex of projects such as right pricing and good locations, thus allowing for higher liquidity of such launches.
At the same time, speed of sales over launches remained stable when compared to the same period of last year, closing the quarter at 29%. This fact is due to the solid performance in launches in the capital that has been happening since 2018. Now focusing on the results of the company as a whole, we see a significant growth in sales over supply of 6.5 percentage points in reply to the improvement in transactions in the second quarter of 2019 when compared to the same period of 2018, mainly driven by São Paulo. Looking at the sales over launches, we can see the same behavior with an increase of 7.5 percentage points, totaling 27% in the quarter. This result is due to the improvement of performance of launches in operations of the state of São Paulo as a whole.
Still in this slide, we can see the distribution of intermediations of Lopes among products recently launched and products in inventory. As we can see, both in the capital and in other regions, most of the transactions in this quarter are of launches. Once, in addition to being a market in which our know-how is concentrated, it is also the segment that is most adequate to the consumption standard of middle and upper middle income classes, given the differentiated payment conditions and loans. Now let us talk about CrediPronto. These were my comments about the operating results of the company, and now hand the floor over to Francisco, that will talk about CrediPronto results and make his remarks. Beatriz will talk about the financial results of the company.
Good morning, everyone. It's a pleasure to be here with you again to talk about the results of the second quarter of 2019. In terms of CrediPronto, it's a pleasure to comment on the indicators, both the growth of 56% year-on-year, second quarter of 2018 compared to the second quarter of 2019. It's important to highlight that the main indicators are maintained. The contracts remain in a very good pace. Our growth month-after-month offsets a lot of the prepayments in our portfolio. Therefore, what we can see on the chart on page 14 on the lower part on the left is that we have an average portfolio balance that is advancing constantly, and the profit sharing also is constant.
Talking about profit sharing, it's worth highlighting that when you add the five months, the result of the association with Itaú has reached almost BRL 22 million in these five months, and we see a result on the left bar at the top chart. We have 50% of that, which gives us a positive result of BRL 9.1 million. If we remove the profit, that would be BRL 3.2 million. When you look at this BRL 9.1 million, BRL 5.9 million account for the profit sharing of the association of the partnership in March, April, and May.
The previous months of January and February is BRL 3.2 million, as presented before. We have a delay in the data of 40 days. Therefore, the results of June will be presented in the disclosure of the earnings release of the third quarter. Thank you very much for the opportunity to speak. Now I hand the floor over to Beatriz, who will talk about the financial aspects. Thank you.
Thank you, Francisco. Good morning, everyone. We'll now talk about the financial results of the company, starting on slide 16 with the gross revenue reconciliation. Currently, there are three main sources of revenue: brokerage from the intermediation segment, royalties coming from franchises, and CrediPronto, which is divided in commissions of the financial volume and profit sharing of JV. Looking at the table on the left, intermediation revenue is calculated by multiplying PSV by net commissions, which accounted for 2.1% with a revenue of BRL 27 million. I would like to highlight the improvement in the net commission when compared to the previous quarter, mainly driven by the commission in the capital of São Paulo, which ended the quarter at 2.39%.
This result is a reflex of the increase in the average ticket of units closed in this region, showing the improvement in the confidence and sale of middle and upper middle-income developments. We can see also that recognition of revenues in franchises. The PSV of franchises added to BRL 822 million in the quarter, BRL 698 million coming from already implemented operations. When we look at BRL 3.1 million over operating franchises in average royalty of 0.44%. Other revenues comes to the commission of 1% of the financed volume of CrediPronto and profit sharing of JV, which added up to BRL 5.9 million in the quarter. The revenue from operations of Itaú doesn't get a cash effect since it's referred to the upfront received at the end of 2007, but recognized during 20 years of contract of CrediPronto.
In the next slide, we see the net revenue and the cost and expenses of the company. Looking at the net revenue, we see a growth of 43% in this indicator when compared to the second quarter 2018, totaling BRL 39 million in the period, of which 70% refer to transactions revenue, 23% CrediPronto, and 7% comes from franchises, which is an important channel for financing in real estate and has a strategic contribution to other segments of the company. On the table below, we see that all segments had a growth in revenue with a highlight of CrediPronto had an improvement of 270%, coming mainly from receiving the profit sharing of JV that did not happen in previous years. It is worth highlighting that this becomes a recurring revenue as of this year.
On your right, you see the cost and operating expenses of the quarter total BRL 24.3 million, in line with the budget projected by the company, and 18% lower than the second quarter of 2018. This reduction reflects the restructuring efforts implemented recently, considering in this quarter, especially the corporate reorganization of Patrimóvel as disclosed to the market. This result shows the good leverage of Lopes because even with the increase in 43% in revenue, we could reduce costs and expenses. Now on the following slide 18, we have the comparison of EBITDA and net income of controlled companies in the quarter. The company's EBITDA went from a BRL -2.6 million to BRL +14.6 million with an EBITDA margin of 38% in the period, which naturally reflects operating efficiency in all the segments that we will see in the following slides.
Net income of controlling companies before IFRS ended the quarter at BRL 4.9 million with an improvement of 168% when compared to the same period of last year, ending the quarter with a net margin of 13%. This result is a consequence of the combination of factors already mentioned. On the following slide 19, we see the result of the quarter by segment, and we can see the contribution of the various businesses of the company. As I mentioned before, in addition to the improvement in transactions and operations from franchises, there was a strong contribution of the revenue coming from CrediPronto that became recurring from profit-sharing point of view. This factor, combined to the adequate level of costs and expenses, resulted in a good operating margin in all segments of the business, with 38% of consolidated EBITDA margin.
All fronts were profitable, and we ended the quarter with a net margin of 22% before minority shareholders. On slide 20, we see the impact of IFRS effects on our income. This quarter, we had an impact of BRL 11.7 million in the cost and expenses of the company, referring to the restructuring of Patrimóvel and the write-off of Brasília operation discontinued in the beginning of this year. Other effects had variations in records of costs and puts in the period, as highlighted in the slide and talked about in previous quarters. It is worth highlighting the combination of business observed in IFRS 3 do not have a cash effect on the company, and we recommend analysis of our income without considering such effects. Finally, on slide 21, we have the cash variation in the period and the total available cash in the company at the end of the quarter.
On your left, we see the cash coming from operations, which was in BRL +8 million with an improvement in transactions, low costs, and receiving the profit share in CrediPronto. Looking at investment activities, we had a cash burn of BRL 1.3 million in the quarter due to purchase of fixed assets, in line with presented in previous quarters. Finally, we have the cash coming from financing and loans, which totaled BRL 2.8 million at the end of the second quarter.
It includes the credit loan with Banco Itaú in the amount of BRL 9 million and distribution and payment of dividends to our partners and shares in CrediPronto sharing. Therefore, we ended the quarter with a cash of BRL 18.6 million, 106% higher than the first quarter. In addition, as a reflex of increase in transactions, there was an increase in accounts receivable, which added up BRL 25.2 million.
Added to cash, we had a total cash and banks available of BRL 43.8 million at the end of June of 2019. These were my remarks about financial results. We can now move on to the Q&A session. Thank you.
Ladies and gentlemen, we will now start the Q&A session. To ask a question, please press star one. To remove your question from the queue, please press star two. Our first question is from Alex Ferraz from Itaú BBA.
Marcos, Francisco. Hello. Thank you for the presentation. I have two questions. Could you give us some more detail about the part of, there was an improvement of EBITDA of the company. I would like to understand whether it was a PSV transacted in the region. Looking at the results as a whole, the trend, where is the inflection point in the sense that looking forward, keeping this PSV, we will continue to see results similar to this? As of now, there will be more constant cash coming from activities or looking at a PSV from other regions, maybe not performing so well and decelerate the trend in income for the future.
Hello, Alex. This is Marcos Lopes speaking. Patrimóvel, we had come to negotiations with the partners that was mentioned, and along with that, there was a market share from Rio de Janeiro. Lopes is operating as a franchise, and Patrimóvel is a partner. As for the prospects of PSV for the second half of the year, is in line with its upward trend and number of launches. Now the improvement of the economic scenario, approval of the pension reform.
As you see in our earnings release call, we had a growth in market share. So this positioning of the company ensures a good continuity of PSV. As for cash, we are now resuming cash, and there is a digitalization project for the company which uses up some of our cash. It is a strategic project. It takes some of our cash, but we are looking at the upturn of sales and managing well our cash in the company.
Thank you.
Thank you.
Next question comes from Victor Tapia from Bradesco BBI.
Hello, everyone. Good morning. My first question is about expectations for pipeline of launches for the second half of the year. We saw that in the first quarter, the total volume of contracted sales was flat year-on-year. Now, in the second quarter, you had a significant improvement of almost 30% year-on-year. I would like to understand what can be the impact in the yearly figure in the volume of sales, given the expected pipeline of launches.
If you could add some color to that. In terms of launches, when you look at your sales over launches of almost 30%, we look at some developers of upper middle income, their launches is around 40%. I would like to understand if you have something more specific, why your sales over launches speed is not closer to the results in that segment that we see for other companies. The SG&A, this lower level of personnel expenses will remain for the future, or should we expect an increase in that line? Thank you.
Hello, Victor. This is Marcos Lopes speaking. As for the expected PSV, the second quarter is always closer, stronger than the first, and the first quarter of the year is the weakest of all historically. In addition to this impact of the second half of the year, which is stronger, it is also the economy. You see that the confidence factor in the real estate market has a strong effect on demand. So the recovery of confidence has a positive impact, and also the seasonality favors the second half of the year.
I would also like to highlight that our performance is the result of a mix of Brazil as a whole. In the state of São Paulo, if you look closely by region, there was a very strong growth in São Paulo, 173% in PSV launched in São Paulo. Also the PSV in terms of transactions in São Paulo, with an increase of 74%.
In this, the speed of sales oversupply was better. In other locations, the number of launches is still timid and the sales oversupply is a bit more complex, and we presented the mix as a whole. So this is the explanation because when you add rates to that, there is a reflect at the final figure. But we believe that the areas outside São Paulo will also resume growth. The first one is São Paulo because the economy is stronger, more lively in São Paulo. Also outside the metropolitan area, there were fewer launches and in the interior as well. As for cost, it is natural that when sales go up and also given this digitalization process of the company, there will be an increase. Not significant, but yes, some increase will happen, but nothing that will damage our margins.
Okay, thank you. Just a quick follow-up. I do not know if you will talk about that or not, but there is an expectation in the pipeline of launches for the second half of this year?
We do not give guidance about the pipeline, Victor, but it is in line with the market expectations. The market is going up and we are well-positioned. I just do not want to give any guidance right now because later on we can discuss that. This depends on approvals and things, and also the developers' willingness to do that and positioning. Therefore, we do not want to give any guidance right now at the earnings release call.
Okay, I understand. Thank you.
You are welcome. Good day.
We would like to remind you that to ask a question, please press star one. To remove your question from the queue, press star two. [inaudible]. This ends this Q&A session for the call. I would like to return the floor over to the chairman of the company, Mr. Marcos Lopes, for his comments.
Thank you all for attending this call for the results of the second quarter of 2019. During these years in downward trend and suffering the real estate market caused by the worsening of the economy as a whole, we've been working hard to improve the results of the company, and we're very happy to be able to present recovery results in line with the recovery of the market. Thank you very much and have a good day.
The conference call of LPS Brasil has now ended. We thank you all for attending and have a good day.