Good morning, ladies and gentlemen, and thanks for waiting. Welcome to the conference call of LPS Brasil to discuss the earnings regarding the fourth quarter and year 2018. Today with us are Mr. Marcos Lopes, CEO, Francisco Lopes Neto, Vice President, Beatriz Lavieri, Investors Relations Officer, Interim Director. 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 the company's presentation.
We will then open for your questions when further instructions will be provided. Should any of you need any 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 also find the company's presentation. You will be able to control the slides. The replay of this event will be available soon after its closing.
We would remind you that all webcast participants will be able to ask questions on the website to LPS, which will be answered after the end of the conference call. Before moving 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 beliefs and assumptions of the company management.
Forward-looking statements are no guarantee of performance. 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 future results of the company and lead to results 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, Ms. Beatriz Lavieri will present the financial results. Finally, we are going to open for the Q&A session. We will turn the call to Mr. Marcos Lopes. Please, Mr. Lopes, you may go on.
Good morning, everyone. Well, before I start, I would like to say that I thank you all for attending once again a conference call for us to release the earnings of LPS Brasil. In this conference, we will present the results of the fourth quarter and year 2018. Today with us are Francisco Lopes Neto, our Interim Officer of Investors Relations, Beatriz Lavieri. Before going to the presentation slides, I will make a brief comment contextualizing the market behavior along the year.
The first quarter showed good results for the company, mainly due to the continuity of sales of launches occurred in the end of 2017, thus bringing optimistic expectations about the next periods. However, in the end of February, the public prosecutor's office established an injunction suspending protocol rights in São Paulo.
Thus, several launches that were already scheduled were prevented from coming through, therefore having a significant impact in the market in São Paulo capital. Mid-May, the injunction was raised and the issue was settled. But then there was the truck driver strike that, in addition to affecting structural issues, affected consumers' trust about the country's economic and political issues.
Soon after the strike, there was the World Cup, an event that traditionally impacts launchings of new practice in the period. Then in August, September, and October, we had more intense electoral campaigns for the presidency.
Therefore, with the succession of events, we had a deceleration in the recovery of the real estate markets that was expected for 2018, creating uncertainties in terms of demand and supply.
However, after the elections, the month of November brought a new outlook for Brazil and for the real estate market that responded in an optimistic manner to this new scenario, enabling Lopes to present in the fourth quarter expressive growth in all its segments of operation.
An improvement in launches and in the volume sold, and also an expansion in the segment of franchise and increase of volumes funded by CrediPronto, as we are going to see later on. We started 2019 surrounded by optimism that was brought by the fourth quarter, confident that we have the possibility of starting a more solid recovery cycle during this year.
Here, I think it's important to highlight that this enthusiasm about 2019 is supported by several external elements, such as the stability in the interest rates at a lower level and increase the consumer trust and the forwarding of reforms and expectation of a drop in unemployment levels.
Internally, we also did our pension reform, and as we always try to enhance and improve our results, in September 2018, we signed an amendment to the contract of CrediPronto, which established a limit in the cost on capital allocated in the operation.
This renegotiation had a retroactive effect and changed completely the expectations of results for CrediPronto. Later on in this presentation, we are going to give you more details on the stance that was essential for CrediPronto to become profitable.
In addition, in the beginning of the year, the Patrimóvel operation started to be classified as an asset available for sale, considering that it was operating at a loss and partners were facing difficulties in negotiating about which would be the most efficient way to go on with the operation. Thus, during the first three quarters of the year, Patrimóvel results no longer became consolidated together with the companies.
After extensive discussions and negotiations along the year, Lopes decided it would be important to keep the Patrimóvel operation as a controlled company, considering its high penetration in the Rio de Janeiro market, historically one of the largest in Brazil, that although depressed right now, has great possibilities of recovery in the coming years. Thus, the financial and operating results that will be presented next will consolidate this operation once again.
Considering all these points, we are confident that the industry is starting a new cycle, and Lopes, with its structure and positioning, will have the possibility of expanding its market share in the sales segment, intensifying the expansion of its franchise network, and strengthen the growth of CrediPronto operation. In addition, it's important to highlight that the company remains watching new opportunities, always ahead of new industry initiatives and constantly aiming at maximizing results to all its stakeholders.
To conclude, I would like to highlight that it's necessary for us to have continuous progress in the political, economic, and social scenarios for the country to move towards a new phase of growth that consequently will reflect on the performance of the real estate market. Now, we'll start the presentation with slide number 5, commenting on the company's highlights in the period. Let's go to slide number 5.
First, I would like to show the relevant growth in sales of our own operations in the fourth quarter 2018, with total of BRL 1.4 billion, growth of 32% compared to the fourth quarter 2017 and 58% against the third quarter 2018. Considering sales in franchises, the total was BRL 2.1 billion in the period, growth of 30% year-on-year.
This result was made possible due to the relevant number of launches in the last two months of the year, a reflex of the market optimism with the result of our elections, as I just mentioned in the introduction.
When we analyze the results of the year as a whole, we can see stable results in sales performed by our own operations. Once the second and third quarter suffered negative impacts from the political-economic scenario.
Thus, these operations closed 2018 with BRL 4.2 billion of intermediated sales that added to the results of the franchises add up to BRL 6.9 billion, growth of 12% year-on-year. If we combine the concentration of launches of the fourth quarter, the strength of Lopes brands, and the know-how of a company that is more than 80 years old, it was possible to show a gain of four percentage points in the company's market share in the metropolitan region of São Paulo compared to 2017.
This reinforces the recovery of the market in this region and the company's strategic assertiveness in recent years enable us to continue to resume growth and well-positioned compared to the other players. Now, looking at the franchise segment, we would like to highlight a growth of sales both in the quarter and in the year of 27% and 44% respectively.
Thus, we closed 2018 with BRL 2.7 billion sales distributed in 83 stores. Franchises also increased their relevance in company's sales, accounting for 34% of the total sales in the fourth quarter 2018 and 38% considered the year of 2018. This result reflects a more intense process in expansion in the last months of the year.
Another point I would like to highlight is the evolution of CrediPronto. Since the first quarter 2018, the operation was showing growth in the volume that were funded compared to 2017. Closed the fourth quarter with increase of 55% compared to the fourth quarter last year and 77% above the results attained in the consolidated year.
Aligned to the scenario, we had the renegotiation of contracts that was performed in September, and it was possible to reverse the loss accrued in January 2019 with the receiving of BRL 1.2 million by Lopes regarding its share in the profits of the joint venture. Finally, I would like to make a side comment here to say that in the beginning of 2019, Lopes started a new project directed to technology and innovation.
The main objective here is to make the company more digital and to optimize the work of brokers and improve customers' experiences. Very soon, we'll release more information about the project that will transform Lopes' visibility in the market and raising the concept of real estate sales to a new level. Now, we are going to have the presentation of the company's operating data on slide number seven.
On slide number 7, we can see the results of sales in the period in the first chart. To the left, we have the company's global results. That is total sales of our own operations added by the franchises. Comparing the fourth quarter 2018 with the same period last year, we have growth of 30% with a total of BRL 2.1 billion in the period.
Year-on-year, we have an increase of 12%, closing 2018 with BRL 6.9 billion. Analyzing just the franchise segment, we can see an improvement both on the quarter and on the year. Considering just franchising operations, that is, those that are definitely implemented and adapted, sales volumes were of BRL 725 million, 37% above the same period 2017. In 2018, the values transacted amounted to BRL 2.4 billion, an increase of 72% year-on-year.
It's important to remind you that because franchises have to go through a period of adaptation to the network model, it's natural that operations, little by little, expand their operations in the market, therefore driving sales. Growth presented along the quarters shows, again, maturity and the strengthening of the network with more value added for franchisees and consequently for the company as a whole.
In the last chart, we can see the total sales by our own operations, as I mentioned, already considered the results of Patrimóvel. We can see an increase of 32% in the fourth quarter 2018 compared to fourth quarter 2017 with BRL 1.4 billion of sales.
I would like to highlight the growth of 83% in Lopes operation sales in São Paulo, capital, compared to the fourth quarter 2017, reinforcing our perception that the city of São Paulo is showing consistent signs of recovery.
Considering annual results, sales remain stable compared to 2017, closing 2018 with BRL 4.2 billion. On the next slide number 8, we show the historic evolution of market share compared to the 10 largest players in São Paulo Metropolitan region. As we can see in this chart, in the beginning of the crisis, 2013, 2014, Lopes market share had an impact with a more intense competition with other players, including Thá Pronto.
But the company soon recovered its share with increased hires and representativity of other brokers being reduced. In this last year, especially with a high number of launches in the last quarter, we saw a gain in market share of Lopes compared to houses and other brokers, and a stabilization in the share of the other players in 34%.
This result was extremely significant to us and reflects a company that is increasingly strong and prepared to serve the recovery of the Brazilian real estate market in São Paulo and Brazil. Next, on slide number 9, we have a breakdown of intermediated sales in our own operations.
In the first two charts to the left, we have quarterly results showing an increase of relevance of São Paulo with 71% of the total. An increase of 10 percentage points compared to the fourth Q 2017. The South region, Rio de Janeiro, both with 9% share, and the remaining 10% among Ceará, Distrito Federal, and Espírito Santo. To the right, we show the same information in the years of 2017 and 2018.
São Paulo continues with a highlight position closing the year with 59% of sales in the period, followed by Paraná, Rio de Janeiro, and Ceará with 18%, 9%, and 6% respectively. Brasília and Espírito Santo with the remaining 8%. On slide 10, we have the national representation of the franchise segment that currently has 83 stores, 72 in operation, 11 being implemented, distributed in seven states and in the Federal District.
Of the cities, first place, we have the state of São Paulo with 54 stores and 50% of intermediate sales in 2018, followed by Rio de Janeiro with only 3%, but responsible for 30% of transactions. South with 13% and 19 stores, and the remaining 7% distributed in seven stores in the states of Minas Gerais, Espírito Santo, Federal District, and Bahia.
On slide 11, we see to the left the distribution of transacted sales by own operations according to the segments of operation and company. Primary market accounted for 98% of transactions. The highlight here is the participation of non-listed broker with 70% in the period.
Due to the change of operation in the secondary market model, we currently have just one operation in the segment, in the secondary segment, which still had a share of 2%. All the other units are in the franchise model that work in the secondary model market.
To the right, we see a growth of 10 percentage points in the listed brokers in the company's intermediary transactions, closing the fourth quarter at 29%, compared to 19% in the same period 2017. Analyzing the annual outlook, non-listed had similar movement with increase of 5 percentage points compared to 2017, adding up to 26%.
Even non-listed being the majority among company businesses, the increase of listed had an important meaning for the industry, which shows more confidence in the recovery of economy and in the real estate market. Next, on slide 12, we have the comparison of the speed of sales and the speed of launches comparing the fourth quarter 2018 and the fourth quarter 2017.
First, speed over consolidated supply in Brazil, we see an improvement of 2.2 percentage points with 12.1% in the period. As for speed of launches, we also had an improvement closing the quarter at 27%, 7 percentage points above the same period last year. This evolution basically is due to optimism on the part of supply in the post-elections period that led to a very high level of transactions.
However, we believe that if launches were better distributed between months of October, November, and December, the speed would be certainly greater because in practice, we could just enjoy 60 days in the quarter, discounting the weekends where we had elections and the holidays in the period.
On slide 13, to conclude the initial presentation of operating results, we show the launches of the quarter and year of 2018. To the left, we can see the volume launched in the fourth quarter 2018 that was 27% above the fourth quarter 2017 with BRL 5 billion, reaching and overcoming the pipeline estimated for the period. This total accounts for the launch of 8,512 units distributed in 51 projects.
If you think of the total transaction in the regions, 92% was concentrated in the state of São Paulo, 90% of which in the capital, 6% in land, and 3% in other metropolitan region cities. This data is quite positive because since this is the largest market in the country, signs of improvement tends to reflect in other areas, leading to effective recovery in the Brazilian real estate market.
To the right, we show the total launched in the year with 10 billion BRL, growth of 31% compared to the total launched in 2017. Out of this total, it's important to highlight the concentration of 50% in the fourth quarter 2018.
As I mentioned, the other quarters had the impact of several external factors that were negative and affected the trust of brokers that decided to delay the projects until they had a better visibility of the Brazilian economic scenario.
Well, these were my considerations about the presentation of operating results of the company. Now, I'm going to turn the call to Francisco Lopes, that is going to talk about CrediPronto results. Then Beatriz will talk about the financial results of the company.
Well, thank you, Marcos. Good morning, everyone. It is a true pleasure to talk about the results of CrediPronto, especially because right now we are celebrating profitability of this joint venture.
As our shareholders and investors know, this is a joint venture agreement created in December 2007 in partnership with Itaú, and that has yielded exceptional results in volumes financed and recognition of its efficiency in terms of speed of the funds generated. Now we are finally seeing effective results already translated in numbers and consolidated in our balance sheet of profits of this association.
I would like to talk a bit about these results. If you go to page 16, on the lower right part, you see the profit was BRL 6.1 million . This is Itaú and Lopes altogether. With the contract amendment signed in September 2018 and released to the market, we re-suited the cost of capital allocated to this joint venture, limiting the variation of the costs or having a higher competitiveness so that we could have positive results of the association.
The 6.1 million result already reflects this cap on the capital cost. Therefore, the joint venture had this profit in January, and we still had a small balance to zero previous losses, and the balance in January was BRL 1.2 million for Lopes. With 6.1 altogether, you divide by two, you have BRL 3 million minus 1.2. That was the loss.
We had a positive balance in January. I'm sorry, minus the loss of 1.8, we had the balance of 1.2. I mentioned the BRL 6 million because that shows that subsequent months may have similar results, roughly BRL 6 million for both partners, and that may bring even higher volumes than what we disclosed in September 2018, when we talked about expectations of BRL 25 million in profit.
I say that because on page 15, the final balance of the portfolio is at BRL 5.7 billion . In addition to that, we see a growth in terms of originated mortgages from January 2018- 2019 of 35.8%. Added by the volume of mortgages that were originated in February, you can see that growth goes up to 59%, because in February, we originated approximately BRL 111 million .
You see the final balance of the portfolio that you can see on slide 15 grew a little, at least was stable. We had the payment of originated mortgages, but with the growth that we see in January and February of CrediPronto, 59% in terms of origination of mortgages, we might have growth in the portfolio balance.
To close, I would like to say that the Copom meeting yesterday maintained Selic interest rate at 6.5%, which is also very positive to the joint venture. Once this cap was established in the contract amendment of September 2018, is impacted by the Selic rate. It is great news. We see Selic rate being maintained at 6.5%, and with a possibility of drop as the market says, which will further benefit the results of the joint venture.
Thank you very much for your attendance, and we are quite happy with the moment CrediPronto is going through, being positive and bringing excellent results for the company in the year of 2019. Now I am going to turn the call to Beatriz, our interim Investors Relations Officer, to present the financial results of the company. Thank you very much.
Thank you, Francisco. Now we are going to the financial results of the company, and I will start talking about the renegotiation of Patrimóvel. As Marcos mentioned, because of the evolution of negotiations, the operation is no longer available for sale, and it was reconsolidated in the company's results. So we are going to show on the slides the main indicators of the business.
What is important to mention is that isolating the impact on the results, Lopes would have a positive EBITDA of BRL 1 million in the fourth quarter, and BRL 4.1 million in the year, especially with the relevant impact of Patrimóvel. As for the negotiation and the health of the company, considering as a whole, we are restructuring these operations, so we are not expecting a major impact on costs and expenses in our budget this year.
Finally, I would like to mention that the reconciliation was accounting only. There was no cash disbursement by Lopes in the fourth quarter 2018. On the next slide, we show the net commission quarter-on-quarter. You can see in this quarter an increase of the national commission, especially driven by the São Paulo operation.
As we can see on the right, there was an increase in the average ticket of São Paulo, our largest region, and because of median segment launches. These are the ones that generally have higher commission compared to the economical segment. That was increasing its share and gaining room in the company's portfolio.
On slide 20, we have the reconciliation of the company's gross revenue. In the first table, when we multiply the net commission by number of transactions, you see the total number, and we see the franchise revenue.
Total gross revenue is added by the amount paid by Itaú with CrediPronto that was fully received in 2017, but is being recognized along the years of contract. Therefore, in the fourth quarter, gross revenues reached BRL 38.7 million, and in the year of 2018, BRL 121 million. On the table on the right, we see how we reconcile the franchise revenue.
You have the transactions with 429 transactions with transactions already implemented. Then we have an average royalty of 0.42%. Considering the performance of 2018, we have net revenues of BRL 9.8 with an average royalty of 0.4%. On the next slide, we have net revenues of the company in the quarter and in the year of 2018. Quarter-on-quarter, we can see growth of 28% in this indicator with a total of BRL 34.3 million in the period.
This result reflects an increase of sales of transactions in the primary market, better franchise results, and a better origination of credit of mortgage in CrediPronto. Year-on-year, we have a stable number with BRL 109 million of net revenues. We had a slight reduction because of the macroeconomic impact in the second and third quarter.
We had a considerable amount of increase in royalties and in CrediPronto, which enabled us to show a result in line with last year. To the left, we have a net revenue by segment. You have transactions with most of it, then franchising and CrediPronto. CrediPronto and franchising.
On the next slide number 22, we have the results of our quarter per segment. Transactions had loss of BRL 11 million. Even with expressive growth of transactions in the period, we had the reconciliation of Patrimóvel that affected these results.
At the same time, the franchise operation remained positive with a relevant margin. CrediPronto, again, with a result of plus BRL 1.8 million in the period relative to the commissioning of 1% on originations. It's important to show that the results of CrediPronto are related to the commission paid to the bank.
On the next slide number 23, we also show results by segment on a year scenario. Again, the results are the reflexes of Patrimóvel. We see a loss of BRL 34.7 million. Out of this loss, the contribution of Patrimóvel accounted for BRL 15 million.
In addition to the reconciliation of Patrimóvel, we had an impact of legal expenses that affected the results in transactions. In the other segments, we have franchises with two-plus million and BRL 7 million for CrediPronto that together added to a consolidated result of BRL 24 million.
On slide 24, we have the total view of costs and expenses for the quarter and year with BRL 38 and BRL 118 million respectively. Thinking of expenses for 2018, we have an impact of legal expenses of BRL 28 million.
As I mentioned in the previous years, in legal expenses, we had BRL 18 million for the provision of contingencies that have been settled a long time, especially after the labor reform. Also, we had civil and litigation contingencies that affect the company but are in a way savers in practice because these are no longer future expenses. We also had the stock option program with no cash effect.
The level of the expenses of the company was 19% lower than 2017 due to the continuous effort of making the company more efficient. On the next slide number 25, we have EBITDA and net income in the year of 2018 and fourth quarter. To your left, we have the company's EBITDA with minus BRL 0.1 million, considering the effects of Patrimóvel. We still had an increase of 70% in this indicator because of increased revenues in the quarter.
Year on year, we had BRL 9.4 million, growth of 73% compared to 2017. In this case, this is mainly due to the aggressive reduction of expenses, even with Patrimóvel, as we mentioned before. To the right, we have the variation of net income attributed to controlling shareholders with growth of 75% in the quarter, reducing a loss of BRL 30 million to BRL 7.5 million.
On an annual view, we also had a reduction of loss closing 2018 with BRL 29 million compared to BRL 52 million in 2017. Thus, the results of 2018, as mentioned, had an effect of the reconsolidation of Patrimóvel and also special legal expenses that I mentioned in the previous slide. Finally. Sorry. On slide 26, we see the IFRS impact on our results. We had variations in all segments, but without cash effects as I mentioned before.
Once again, you should always analyze the numbers without the impact to have a better understanding of our results. Now, yes, the final slide, cash flow generated and cash equivalents in the end of the quarter and year. To the left, we have cash generating by operating activities that was positive by BRL 3.8 million, with the largest generation of operating cash since the fourth quarter 2017.
Basically because of better transactions in all operations that grew 58% compared to the third quarter 2018. When we think of investment and financing, there was cash burn of BRL 1.5 million in the quarter with a cash position of BRL 14.2 million. If we add the BRL 14.2 million and the accounts receivable, we have BRL 35 million in cash availability.
Finally, it is important to say that we are confident with the resumption of the market so that the company can invest cash and make the investments that are necessary for its growth. These were my comments, and now we are going to open for the questions. Thank you.
Ladies and gentlemen, we will 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 Gabriel Simões from Itaú BBA.
Hi, Marcos, Francisco, Beatriz. Good morning. Thanks for the presentation. I have two quick questions. First, about what Marcos mentioned about São Paulo and the listed brokers. I would like to know why you had this gain of share, if you can detect a reason, and if it is because the houses alone cannot deal with this increased number of launches.
What do you see from now on? Also about franchises. You opened several franchises along the year. I would like to know if you are getting close to a number that you consider stable, or if you think you can keep this pace of growth for the franchises. Thank you very much.
Good morning, Gabriel. This is Marcos Lopes. As for the gain of market share, I think it is a combination of the market, the way the company is positioned, and difficult times. There is a recognition of the company's work in terms of efficiency, therefore posing less risk in launches in the market.
I think we benefited from that in a difficult time of the market, and also because of the response that Lopes is showing in terms of speed of sales. I think that explains the market share. Houses, of course, cannot cope with all launches.
It's very important to have a sales force with a good amount of brokers and a good delivery like Lopes. We can see that this is a trend that is being confirmed and will certainly be true in 2019. As the market resumes, this is going to be even greater. The houses have a limitation in the number of brokers, and you know that in times of launch, this is very important. Liquidity is very important.
The earlier the better for the Company. It's very important to have a competent real estate broker that can help us in our targets to improve liquidity in launches. We are quite well-positioned, and I think that has a reflect in our pipeline of launches for 2019 that is better than that of 2018, increasing the visibility from now on. As for franchises, yes.
We continue to keep growing in the segment. There is a very high demand for other franchisees to work with Lopes. We try to be as selective as possible. We make less mistakes than you would expect. We are doing very well, and the company's strategy has been very correct. We are really enhancing this model, and it's working very well, bringing value added to the real estate companies that add to our platform.
It's not easy. Several American franchises tried to enter the São Paulo market, and it did not work. But with Lopes, we are doing very well. We treat our franchisees very well. They are people in the market. They have good support from us so that they can have a very good result in terms of sales, better than if they were on their own. They join the Lopes platform for three main reasons.
First, because we have a very strong brand that attracts businesses both on the sale and the supply side. We have the highest rates in the market. Also in the attraction of buyers, because the brand is a reference for buyers, so it makes sense. And content of sales.
You have launches, the secondary market, shelf products, and our experience with consumers. We have a group of brokers connected in a network with large efficiency. These are factors that have supported our model.
Thank you, Marcos.
Thank you very much. Our next question comes from Victor Sasia from Bradesco BBI.
Hello, everyone. Good morning. First question I would like to talk to you about is about what Marcos mentioned in the beginning about the technology and innovation project. I would like to have a bit more color on this project, if you could talk a bit about it and how it can impact your operation. And how does somehow talking to the current level of cash that the company holds.
The operation is generating cash, but then you're still having a cash burn. So the level of investment of this project, is it supported by what you have in your cash? So how do these lines talk? And the second question about the transacted volume in your own operations and in franchises.
If you think of the year as a whole in the transacted volume of franchises grew considerably. Of course, you had also a growth in the number of franchises, so you don't have the same base. It's not a comparison that is the same. And also the secondary market.
But in transactions of your own operations, basically the primary market, grew less than the secondary market in the year as a whole. We are observing a slightly different dynamic. If you consider the secondary market and ready-to-sell, we see a different dynamic. I would like to understand why this is happening in Lopes against other developers.
Hi, Victor. This is Marcos Lopes. Well, first, the company's digital transformation project is just starting. We finished a phase of diagnosis. We are going to planning. The project is moving well, quite solid, well-structured.
But we still do not know the level of investments of this project. Later on, we are going to release the information and inform the market about that. But it's a new mindset in the company. I think this is what is important.
We have a great belief that Lopes platform with a dose of digital transformation will become a lot more efficient and will put real estate brokerage in a new level and it will change really the level of operation in the sector. As for the existing operating units, we have no need to increase capital to move on with operating units.
We are in a moment of market inflection, and with the cash generation of the company, we have enough for the current units. What we can think about in the future are possible investment relations in the future, particularly in the digital area. So any increase of cash need would be to invest for the growth of the company.
As for the increase in franchises, the third part of your question, the number in the transaction amount of franchises is connected to the number of franchises and maturity of those franchises. They go into the network, they produce more, they have more transactions. But if you think of the launch market and the secondary market, they are homogeneous. A bit harder in the second and third quarter, a better scenario in the last 2 months of the year.
More or less in line in the market as a whole. It may be that a certain inventory, you might have a bit more difficulty of liquidity because the product is not so suitable to the market if you consider demand and supply.
But the market as a whole is regulated by demand and supply, and in the primary market, in the launches, it is cost of production versus demand. Sometimes the cost of production is a bit detached from demand. Adjust price, and then adapt to the market, it's going to follow the normal market curve.
Okay, it's very clear. Thank you very much.
The next question comes from Elvis Rezende from BTG Pactual.
Good morning, Marcos, Francisco, Beatriz. I have 2 questions. First, about Patrimóvel. Do you still want to sell the asset, and when would you complete the operation? Second question about CrediPronto, if you could talk about the origination of mortgages in the beginning of the year, and what is your expectation for dividends of CrediPronto this year, given the positive accrued results? Thank you.
Well, as for Patrimóvel, as we mentioned, we continue to negotiate with them. We are restructuring the company, and we do not want to sell Patrimóvel. As for CrediPronto, Francisco is going to talk to you.
Thank you, Elvis. As you can notice, we are very happy right now because we are starting to have a profit in this joint venture. To give you a bit more color on how this profit gets to the company, it is the following. First, you have to analyze what we signed in September 2018, where we have a cap in the cost of capital.
That reversed the curve that was completely decreasing, loss after loss, because it was a very high cost of capital. After there was a cap in this cost of capital, and we could reverse that the past, that is all mortgages originated as of 2017, we went from BRL 117 million in losses to BRL 25 million when we signed the contract. We already reversed. Mortgage values were kept.
That is, the balance of the portfolio was stable in the second quarter 2018, third quarter 2018, fourth quarter 2018, at about BRL 5.7 billion, which resulted into profit for these periods. It is still amortizing the accrued loss of BRL 117 million that went to BRL 25 million, as you can see now on page 16.
In the end of the year, we still had a small balance of loss to settle of this joint venture result. On our part, it was BRL 1.8 million. Because the profit in January was BRL 6.1 million for both companies, BRL 3 something for Itaú and BRL 3 something for Lopes, we settled the BRL 1.8 million of negative remaining balance, and the positive balance was BRL 1.2 million in January.
If you look further on and consider that the profit was BRL 6.1 million in January, and considering that the balance has been kept stable, and adding to the growth that we have seen in CrediPronto, as I mentioned, we had growth of 59% January and February together year-on-year. You can think the final balance should go up. With Selic stable, the profits can be even more than what we expected.
Remember, we expected BRL 25 million, but this is an expectation, not a guidance. It is something that we have to watch in financial models, but it is a reality. The official profit was BRL 6 million in January. February, we had BRL 207 million in originated mortgage, which is growth of 59%. Selic at this level will help in our profit, and if it goes further down, it will be even better. This is a bit more explaining for the results of CrediPronto.
Okay, Francisco.
Ladies and gentlemen, as a reminder, if you have a question, just press star one. To withdraw your question from the list, press star two. We are now closing the Q&A session. I would like to turn the call back to Mr. Marcos Lopes, the company CEO, for his final considerations.
Well, once again, I would like to thank you very much for joining us in the release of the earnings of the fourth quarter 2018 and year 2018 to reinforce our confidence in the future of Brazil, of the real estate market, and of the company. We are working very hard.
We are very proud of our position in the real estate market in Brazil, and we are very confident about the strategies that we have applied in the company and at this time in the market. We hope to have joys further on. Thank you, and I wish you a good day.
LPS Brasil's conference call is now closed. We thank you very much for joining us and wish you a good day.