Good afternoon, ladies and gentlemen, and thanks for standing by. Welcome to the conference call of LPS Brasil to discuss the earnings regarding the first quarter of 2019. Today with us, we have Mr. Marcos Lopes, CEO, Francisco Lopes Neto, VP, Robson Paim, Interim CFO, and Beatriz Lavieri, Interim Investor Relations Officer. We would like to inform you that this event is being recorded, and that all participants are going to be in listen-only mode during LPS Brasil's presentation. We will then start the Q&A session when further instructions will be provided. Should any of you need assistance during the conference call, please reach the operator by pressing star zero. This event is also being simultaneous webcast on the company's website, www.lopes.com.br/ri. In there, you will also find the company's presentation. The slide selection will be controlled by you. The replay of this event will be available soon after it ends.
We would like to remind you that webcast participants may ask questions to LPS on the website. They will be answered at the end of the conference call. Before going on, we would like to let you know that any statements made during this conference call relative to LPS business outlooks, projections, operating and financial goals, are based on the beliefs and assumptions of the company's management. Forward-looking statements are not a guarantee of performance since they involve risks, uncertainties, and assumptions since they refer to future events and therefore depend on circumstances that may or may not occur. Investors and analysts should understand that general conditions, industry conditions, and other operating factors may affect the company's future results and lead to others that will materially differ from those in such forward-looking statements.
First, Mr. Marcos Lopes will present the operating results, then Mr. Francisco Lopes will present the results of CrediPronto. Finally, Mrs. Beatriz Lavieri will present the financial results. We will then open for your questions. With that, we would like to turn the call to Mr. Marcos Lopes. Please, Mr. Lopes, you may go on.
Good afternoon, everyone. Thanks once again to attending a conference call of LPS Brasil to discuss the earnings of the first quarter 2019. Today with us are VP Francisco Lopes, our Interim CFO, Robson Paim, and our Investor Relations Officer, Beatriz Lavieri. I would like to start saying that although the first quarter had a negative seasonal impact that is a bit more intense than the remaining of the year, we had growth of 78% in the number of listed venture, totaling 18 projects until March.
Analyzing the results better, we can see that it was mostly led by the city of São Paulo that alone launched 10 projects with a total value of launches of BRL 908 million. A result 150% above that of the same period 2018, and with transactions 50% higher. This fact reinforce our profession that the City of São Paulo is before the market recovery and has been showing consistent demand as already observed in the fourth quarter 2018. At the same time, we can see the difficulty of other cities to follow the same pace of growth, where demand and supply are heating up slowly. This movement, however, is natural because there was the crisis and each state and city were impacted in different ways, and therefore would have speeds of recovery that are also different.
In our franchise segment, we continue to show very good results and increase our share in the company's growth revenues as we can see further on. To close this introduction, I'd like to reinforce our trust in the pathways to be followed by the country in the coming months and consequent increase in the strength of economic growth, not only in Brazil, but in the whole of Brazil. We are certain that the company is ready and prepared to accelerate its pace as soon as expectations are met. We have one of the most renowned brands in the real estate market, a team of very qualified professionals, and we are focused on always offering the best experience to all our brokers and end customers. Also, we have the vision that if we put it all together, we can be even bigger and being acknowledged by all our partners.
We are undoubtedly the best platform to do business with. Now I'm going to start the presentation with slide number four, and I'm going to talk about the main highlights of the company in the period. The launches of Lopes in the first quarter total BRL 1.2 billion with growth of 45% compared to the first quarter 2018. This increase was possible due to a positive result in the city of São Paulo that in turn total launches in the amount of BRL 908 million, 150% above the same period 2018. This improvement in the capital can also be seen when we analyze transactions that were 50% higher quarter-on-quarter.
The franchise segment kept its growth in the comparison of this quarter with the same period 2018, with increase of 29% in invoice transactions, increasing the relevance of these operations both in the PSV as in the revenues of Grupo Lopes as a whole. I'd like to close the highlights commenting, of course, about CrediPronto that showed in this quarter, the largest volume of finances in the past three years, totaling BRL 324 million. As we already disclosing in previous quarter, due to a contract amendment with Banco Itaú, the prospects of this operation has improved substantially, and that can be seen in the results of the first quarter 2019, where the profit of the association was BRL 14.8 million. BRL 7.4 million of which the company shared in the business.
As we still had an accrued losses in December 2018, the total to be allocated to Lopes was BRL 5.6 million, of which BRL 3.2 million were received already in the first quarter regarding the months of January and February, and the remaining amount, BRL 2.4 million regarding March, will be recognized in the second quarter due to the profit-sharing payment schedule. Now we are going to go on to slide number six, where we show in more details the relevance of the city of São Paulo and the results of the company. To the left of the screen, we can see, as we mentioned, growth of launches and transactions in the city of São Paulo, reinforcing the leadership in the city in the recovery of the market and bringing us confidence that the movement of launches was not restricted to 2018.
However, we can see in the results of other cities in the metropolitan region and the inland of the state of São Paulo, and we can see that the level of launches was reduced by 74% in this quarter. However, with a much less steep drop in transactions. It is important to mention that the cities still have not increased their activities, and the reduced supply of launches as well in other states naturally hurts the volume transacted. As a consequence, consolidating launches and transactions in the state of São Paulo, we have a concentration of 94% and 80% in the capital, respectively. Going on to slide eight, we can see the total PSV launched by Lopes in the period. In the first chart, we can see an improve in 45% in the volume launched compared to the first quarter 2018, totaling BRL 1.2 billion in the period.
Growth was possible because of the positive results presented by São Paulo that accounted for 81% of this total, as evidenced on the chart to the site. It is important to highlight here that the volume presented by the state of São Paulo, 94% is regarding the capital, a relevance that is justified by what I just mentioned. Although the first quarter was not marked by an increase in launches outside the São Paulo capital, the company's pipeline has the launch of projects in other regions along the next months. We believe that with a concrete economic recovery, the other markets will also follow the movement that we see in the city of São Paulo. On slide nine, we show the total transactions conducted by Lopes in the period.
When we look at the first chart, we can see that we remained relatively stable compared to the first quarter 2018, totaling BRL 1.4 billion. Of which 58% are referred to our own operations and 42% come from franchises. The result is basically due to a reduction in transactions of our own operations and increase of the share of franchises, as we can see on the charts to the side. Considering our own operations, the transacted PSV had a reduction of 12% compared to the first quarter 2018, totaling BRL 838 million due to the impact of the units outside São Paulo that still did not show a reaction in the first quarter, as we said before, and also because of the discontinuity of an operation with partners in Brasília.
When we analyze transactions of our operating franchises, that is, those that are already adapted to our network and pay a fee on businesses performed, we see growth of 29% in the first quarter 2019, totaling BRL 595 million. Considering the franchises that are still in the grace period, the increase was 14%, totaling BRL 611 million in the period. That accounts in this quarter for 42% of the total transacted by Lopes vis-à-vis 36% in the same periods 2018. On the next slide 10, we show the result of a transaction segmented by region. If you think of the geographic distribution of our own operations, we have basically 66% of the volume in the state of São Paulo, followed by the South and Rio de Janeiro, with 18% and 8% respectively. Other operations like Espírito Santo and Ceará totaled 7%.
Again, it's clear that only São Paulo gained share compared to the other cities. Currently, our own operations are represented with 15 stores distributed in the cities already mentioned. Once again, we would like to remember that this quarter there was the discontinuity of the operation with our partners in Brasília. To your right, we see the regional distribution of franchises, also with a predominance in the state of São Paulo, with 57% of transactions distributed in 54 stores. Followed by Rio de Janeiro, that increased its share to 26% compared to the first quarter 2018, with only three stores. It's important to highlight that the representation of Rio in PSV, but not in the number of stores, is due to the fact that one of the stores also sells launches, therefore boosting its results and reinforcing the influence of Lopes brand in other markets in addition to São Paulo.
The South region has 19 stores, 9% of transactions, and the other cities had 8% in seven other stores. It's important to highlight that the expansion of the Lopes network continues, and we are focused on creating an increasingly robust network, solid with good real estate agents, adding value not only to our business and brands, but also to the owners of real estate agencies and the end consumers. Now we are going to slide 11 when we talk about the speed on sales on the supply and speed on sales over launches. First, we see the indicators in São Paulo, capital, where we see an increase of 7.5 percentage points that can be explained by the increase of transactions, as we mentioned before. The speed of launches, however, had a drop of 8.7 percentage points.
The company, although presenting a higher volume of launches, had a concentration of launches in the end of quarter because of vacation periods and Carnival. Now, thinking of the results of the company as a whole, we see a VSO that is stable compared to 2018, again led by São Paulo, and we see a reduction of the speed over launches due to the same factors explained before. Well, these were my remarks about the company's operating results. Now I'm going to turn the call to Francisco, that will talk about CrediPronto's results, and then Beatriz is going to talk about the company's financial results.
Good afternoon, everyone. It's a pleasure to show the results of CrediPronto. As Marcos mentioned in the introduction, we have quite positive results once again, and I'm going to start with page 13.
Here we see growth quarter on quarter of 56% with a record mortgage volume of BRL 324 million in this quarter. This is a quarter that we have the seasonality of the months of January, but we had a very large volume of mortgages with a number of contracts of almost 1,000 units. Average ATV, basically the same, and the rate also at the same level. It's important to mention that the mortgage volume is growing. This has a high representativeness in our portfolio. You know that we have some prepays. When we go to page 14, you can see that the portfolio has been quite stable. Our portfolio has been stable with a slight growth, although we have prepayments, as I mentioned. That has to do with our work strong every month.
Talking about what we get in terms of profits, what we accounted for in this quarter is only the result of the months January and February due to our payment schedule. We generally have 60 days after the months are closed. The results of March were not accounted for. If we normalize what was produced in the whole of the quarter, you are going to see this bar on the right side, which is BRL 7.4 million and BRL 2.4 million, that was the result of March, is going to be accounted for in the second quarter 2019. This is very much in line with what we had thought.
We even gave you some guidance about future results when we renegotiated contracts and our expectations of profits are very much in line, perhaps even a little higher than what we expected for CrediPronto as of the month it became positive in January this year after the negotiation in September 2018. These were my remarks about CrediPronto, and now I am going to turn to Beatriz, that is going to talk about financial results. Thank you very much.
Thanks, Francisco. Good afternoon, everyone. Now we are going to comment about the company's financial results to start on slide 18 with the consolidation of our gross revenues. If you take a look at the first table to the left, we have the transacted PSV in the period, multiplied by the net commission of 2.01%, and then you have the quarter's transaction revenues of BRL 16.9 million.
We had a reduction of 0.04 percentage points in the net commission, a result of an increase of share of low-end ventures, especially in the city of São Paulo. When we add this amount to the revenues of other segments, such as the upfront recognition of joint venture of BRL 3.6 million, the revenues from franchise royalties of BRL 2.4 million, the commission of 1% received by originations, and profit sharing of CrediPronto, we have BRL 28.7 million. On the table to the side, we show how we recognize revenues in the franchise segment. The total transacted volume by franchises was BRL 611 million. Almost all of them relative to already implemented operations that added up to BRL 595 million in the quarter. Considering the revenues of BRL 2.4 million over operating franchise, we have an average royalty of 0.41%.
On slide 17, we see net revenues in the quarter, in which we can see growth of 10%, totaling BRL 25.8 million. Although we see a decrease in the volume transacted in our own operations, we had an increase of net revenues because of an increase of revenues coming from CrediPronto. Such impact can be observed in the chart in when we see a relevant increase of CrediPronto's share from 8%- 22% in the quarter. On slide 18, we have the total cost and expenses in the quarter, BRL 27.7 million. In this period, we had the provisioning of BRL 5.5 million of labor and civil contingencies in line with what we have disclosed in previous quarters. We also had the payment of BRL 1.6 million in settlements, which enable us to have savings and efficiencies in terms of cash.
In terms of budget, the extra budget amount we had in the period was only BRL 2.2 million. If we isolate this impact, we have BRL 25.5 million of cost and expenses in line with our annual budget of BRL 100 million a year. After talking about revenues and expenses, on the next slide, we have the comparison of EBITDA and net income of the controlled company in the quarter. The company's EBITDA reached BRL -1.9 million, a reduction of BRL 3 million compared to last year, a reflex of the factors already mentioned. Likewise, the net income of controllers was by BRL -9 million, also with a reduction compared to last year. On the next slide 20, we have the quarter results per segment, and in there we can observe the contribution of each company business segment.
Transaction had a loss in the end of quarter of BRL 11 million as a result of a reduction of transactions and a slight increase in expenses. At the same time, the franchise operation continues profitable, showing net margin of 19% in the quarter. CrediPronto, in turn, had the best result among the business segments, with an increase in the volume of transactions and recognition of profits of the partnership regarding the months of January and February, as Francisco mentioned. That together added up to BRL 3.2 million growth as presented in the table. Combining all the segments and the share of minority partners, we have a negative result of BRL -9 million, as I mentioned in the previous slide. On slide 21, we have the impact of IFRS in our results.
As a whole, we had variations in the call put registrations in the period as highlighted in the slides and already informed in previous quarters. Again, for the combination of businesses that we have in IFRS, we have no cash effect for the company. Finally, on slide 22, we have the cash variation in the period and total cash availability. To the left, we have cash generated by operating activities, positive in BRL 900,000 in the quarter above that of 2018. Basically, because of the recognition of the profits from CrediPronto. When we add the activities of investment and financing, there was cash burn of BRL 5 million and closing the period with a cash position of BRL 9 million. If we add the BRL 9 million to the company's receivables, we have a total availability of BRL 28.5 million.
In addition, in the previous month, in April, we raised a credit for working capital from Banco Itaú in the amount of BRL 9 million. That, combined to the receivables of CrediPronto, will lead us to a very comfortable cash position. These were my remarks about the financial results, and now we can open for your questions. Thank you very much.
Ladies and gentlemen, we'll now start the Q&A session. To ask a question, please press star one. To withdraw your question from the list, press star two. Our first question comes from Alex Ferraz from Itaú BBA.
Good afternoon, Marcos, Francisco, Beatriz. Thanks for the presentation. I have two questions. First, provisions and contingencies, labor contingencies. Was there any reason for you to have a slightly higher provision? Anything that you were not expecting? And then about the pipeline for the second quarter this year. You show in the presentation approximately 60% of transactions in this quarter were projects launched until the fourth quarter last year. We still see a weak pipeline in the first quarter this year. What are you expecting? Was April an indeed stronger month?
Hi, Alex. This is Marcos Lopes speaking. In terms of contingencies that were provisioned for the first quarter, there was no material fact of things that were going on for some time already. It's important to say that the contingencies that are in our budget are not going to be higher than last year. That is, there will be no surprises in the sense. The number of labor lawsuits after the reform went down substantially. We had, two years ago, an average of 15 before the labor reform, on a base of 10,000 brokers. Now we have four on average.
That considering also our direct employees. This is something that is going down. Also civil contingencies. After the decision of the Supreme Court, things got better. There are lawsuits that are ongoing, but as they are completed, the trend is for this number to go on down.
Hi, Alex. Just to add to what Marcos is saying, the volume of civil lawsuits has been going down because of decision of the Supreme Court by 9,000. Today, we have an average of 10. We have no concerns about that. As for the pipeline, which is good news, you probably saw in the newspaper we have a very robust pipeline for this second quarter 2019, more than 200% higher than the same period last year. The city of São Paulo is leading the movement as you can see.
The great São Paulo area, we had no launches, but the first launches start by the end of May and June. Campinas also had not launched anything and we have almost four launches now. Rio de Janeiro with something, and other cities. Porto Alegre has something. The city of São Paulo really left before, but the pipeline for the second quarter is quite robust and we have already started pre-sales. Brokers are in full operation, so things are moving on.
Okay, thank you very much.
Our next question comes from Victor Tapia from Bradesco.
Good afternoon, everyone. I have one point that I would like to approach, which is the primary market. You mentioned that São Paulo had growth of about 50% year-on-year. But when we take a look at the total amount of the primary market, it's still going down.
When we compare to other developers that launched outside the city of São Paulo, we see some cities doing well in the South and Rio. I would like to try and understand from you what is going on in the primary market. If you could give us a bit more color of the regions in which you operate in terms of market dynamics, what is more difficult in each of the regions? The other point that I would like to understand, again, if you could give us a bit more color, is this working capital that you raised with Itaú, BRL 9 million. What will be the cost of this loan? That's it. Thank you.
Well, as for the first part of your question, launches outside the city of São Paulo. Well, in the case of public companies, launches in the south, in Porto Alegre, those were launches we were with them, with Cyrela. The same for Rio de Janeiro with Cyrela, with good return. Here in São Paulo, we have the highlight because the company that has been gaining market share with the most launches is Lopes. Launches are being recovered. Our pipeline is quite robust. Of course, it is going to be better homogeneously in the whole of Brazil as the macroeconomic reforms take place, especially the pension reform. We believe that there is some waiting in the air. But again, the market shows favorable signs and is moving on. Our expectation is that things are going to be better further on. As for the working capital, it is CDI +2.9%, no collaterals.
Okay, thank you very much.
Our next question comes from Luiz Mauricio Garcia from Bradesco.
Good afternoon. Just a follow-up for the question that Victor asked. Try to understand from you what kind of initiatives the company is engaged in to grow volumes, basically for growth to accompany the market. You very well said it, Marcos. You are still gaining share in the market other than the houses. But what kind of initiatives should we expect for Lopes growth to be even above the market? I think that would be interesting to know from you. The second question is the secondary market, where we have seen platforms of sales and leasing growing up. How do you see that, and can you talk about recent initiatives that you are taking to be more part of this online, more modern segment, and what we should expect in terms of performance?
Hi, Luiz Mauricio. Thank you very much. As for the volume of sales, what we can expect and what we have been doing are two important things. One, with regard to human resources, associated brokers. Lopes really focused on the training of new brokers entering the market, especially the primary market. As you know, with this crisis, there was a decrease in the size of the pie, and therefore the number of brokers in the market. We worked with them. This is one of the reasons for developers to understand and recognize our work. We have a very strong sales force, which is a differential of the company. We train people. Our associated brokers and other professionals are trained and recognized in the market for being quite competent and really delivering what they promise.
This is something that we worked quite intensely in the period, and now we are reaping the fruit with the volumes to be launched in the coming months. That is even going to be better as the country improves its macroeconomic conditions. This is one thing. Another thing that is very important that we talked about and we mentioned in the first quarter this year, is that we started the company's digital transformation process. We still have not opened the project. We have just closed our diagnosis, then we have planning and development. But this will have quite positive impact in our sales efficacy and in our conversion and attraction of new buyers. As well, I think it will make the work of brokers easier. Brokers will be able to have better performance with what we deliver to them.
We are a canon of buyers, really originating buyers to the market. When you talk about digital sales, online sales, we certainly have the best content of the Brazilian real estate network. Our initiatives have been coming up. Other competitors sometimes show very boutique initiatives, but in terms of volume, they are way below ours. Very soon we are going to present to the market our digital transformation initiative. So there is new news coming in terms of better efficiency and provision of services.
When do you think this is going to happen?
We should be talking about this in the beginning of June, I believe.
Okay, thank you very much.
You are welcome.
As a reminder, if you have a question, just press star one. We are now closing our Q&A session. We are going to turn the call back to the company CEO, Marcos Lopes, for his final remarks.
Well, we thank you very much for attending the presentation of our earnings of the first quarter 2019. Again, we are reinforcing our trust in the work of everyone that is part of this company, and we are moving on to the second quarter with excellent deliveries. Thank you very much.
LPS Brasil's conference call is now closed. We thank you very much for attending and wish you a good afternoon.