Good afternoon, ladies and gentlemen. Thank you for waiting. Welcome to the conference call of LPS Brasil to discuss the results regarding the third quarter of 2018. Here with us we have Marcos Lopes, CEO, Francisco Lopes Neto, Vice President, Robson Paim, Executive Financial Officer, acting CFO, Beatriz Lavieri, acting IRO, and Marcello Leone, member of the Board of Directors. We inform that this event is being recorded, and all participants will be in listen-only mode during the call and presentation by LPS Brasil. After that, we will start this Q and A session when further instructions will be given. Should any of you need assistance during this call, please request the help of an operator by pressing star zero. This event is also being transmitted simultaneously via webcast and can be accessed at the address www.lopes.com.br/ri, where the corresponding presentation is available. The selection of slide will be controlled by you.
The replay of this event will be available soon after its end. We remind you that the webcast participants can record questions via website that will be answered at the end of the conference call. Before proceeding, we would like to clarify that statements that may be made during this conference call regarding the business prospects of LPS Brasil projections, financial and operation goals are based on beliefs and assumptions of the company's management. Considerations about the future are not guarantee of performance since they involve risks, uncertainties, and assumptions. They 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 future results of the company and lead to results that differ materially from those expressed in such future statements.
First, Mr. Marcos Lopes will present the operating results, and then Beatriz Lavieri will present the CrediPronto results and financial results. Finally, we will open for the Q and A session. Now, I would like to turn the floor over to Marcos Lopes. Please, Mr. Lopes, you may start.
Good afternoon. I start this presentation thanking you for the presence and in one more conference call to discuss the earnings of LPS Brasil in the third quarter of 2018. Here with us we have the Executive Officer and Vice President, Francisco Lopes Neto, our acting CFO, Robson Paim, our acting International Investor Relations Officer, Beatriz Lavieri, and our ex-CFO and now member of the Board of Directors, Marcello Leone. Before we analyze the company's results, I will make a brief comment to provide context about the macroeconomic scenario and its reflexes on the real estate market in the third quarter of this year.
The month of July historically has a reduced volume of launches and sales due to the school vacations period. This year especially, this seasonality was made stronger due to the World Cup. In addition, months of August and September were marked by more intense election campaigns, which raised the level of uncertainty in all markets, especially after the definition of the candidates for presidential elections. Considered one of the most important elections of the last decade, the market as a whole was expected to present an atypical behavior. Therefore, we did not notice changes in purchase intent. However, we noticed that consumers were taking more time to make decisions, which affected transactions in the period. Going into further detail, we noticed that visits to sales stands, for example, have grown considerably when compared to last year.
However, due to the uncertainty that remained because of the elections, a large part of people interested in purchasing a property decided to wait for a clear political scenario in order to make a decision. It is worth highlighting that purchasing a real estate is, for most people, one of the transactions that is most important carried out in one's life. Being confident about political economic scenario in the country is critical. After all, Brazilian families purchase 1.6 properties on average during their lifetime. Therefore, we will observe in the following slide a one-off negative impact on transactions of our own operations in this quarter. However, we highlight that the segment of franchises is becoming stronger, growing quarter after quarter and presenting good results as a consequence of the well-structured process of capturing, implementing, and consolidation transactions in the network.
Another topic we would like to highlight refers to our credit operation, CrediPronto. In September, we renegotiated the terms of the association agreement between Lopes and Banco Itaú, and the result of this renegotiation brought great expectations for this operation. Further on, Beatriz will explain in detail what were the changes and what are the impacts for the company. To wrap up, I think it is important to stress that the company is confident with the improvement of the short-term market based on positive trend for demand, along with a robust pipeline of launches by home builders for the last quarter of this year and next year.
I believe that with the return of stability, confidence, and prospects of economic growth for the coming years, the market will grow again at a faster pace, and Lopes, being one of the largest real estate companies, will follow this trend with its well-structured own operations and consolidated network of franchises, and the initiatives which aim always to offer the best customer experience, and therefore generate value for shareholders. Now I will start the presentation on slide five, commenting on the highlights of the company in the period. The global transactions closed by the company grew by 6% in the third quarter when compared to the same period of 2017, adding up to BRL 1.6 billion in the quarter. This improvement was possible due to the consolidation of franchise segment, which accounted for 49% of the amount sold in the period.
In this next topic, I would like to highlight the good positioning of Lopes in the primary market of São Paulo, showing a consistent gain in market share in one of the most challenging periods already faced by the real estate industry, with a very stiff competition and with the increase of in-house operations. Now, commenting on the performance of franchises, we had an increase of 73% in bill transactions and 71% in revenue from royalties. This result is a reflex of the growing adherence of franchises to Lopes network, strengthening the consolidation of the segment. Another point is the reduction of 14% in the level of costs and expenses. This improvement is a consequence of the restructuring process made to adapt the company to this new market condition, as well as based, presented on previous quarters.
Finally, we have seen a significant improvement in the volume of finances made by CrediPronto, which grew 128% at this quarter when compared to the same period of last year. This evolution can also be noticed in the previous quarters, totaling BRL 789 million in the first nine months of 2018, an increase of 86% when compared to the first nine months of 2017, and also higher to the total amount financed in 2017 as a whole. Continuing with the presentation on slide seven, we show more in detail the transactions made by the company in the third quarter of 2018. First, as I mentioned before, the total transactions increased 6% when compared to the third quarter of 2017, totaling BRL 1.6 billion. When we break down this total, we notice that almost half came from franchise segment.
In the chart, we see that the origin for type of operation. Looking at our own operations, we see a reduction of 19% when compared to the third quarter of 2017, ending up to BRL 800 million of transactions closed. It is worth reminding you that the impact of the elections for middle class, therefore the result of transactions was mainly due to consumers' fear to take a long-term financial obligation. We highlight, however, that the demand is present and indicates a possible improvement in transactions in the short term. On the above chart, it is possible to notice the improvement mentioned of 73% of results from franchises in the operation, meaning those that are already implemented and adapted, paying royalties to Lopes.
As franchises go through an adaptation period into the network model, it is natural that these operations can slowly and increase their market operations and therefore boosting sales.
Therefore, the growth presented throughout the quarters reflects the maturity and strengthening of the network, generating greater added value for franchisees and therefore for the company. On slide number eight, we show the growth of market share of Lopes, as mentioned already. Looking at the chart, we can see that in latest years, the company share among the 10 largest players in the industry has been growing consistently. This indicator is extremely relevant, because it signals that despite the difficulties presented to the market, given the economic crisis and the stiff competition, as well as the increase of competition by houses, Lopes kept its leadership, including with the growth of market share. Before moving on to the next slide, I would like to highlight, in the last two years, we have presented a market share higher than other brokerage companies of the metropolitan area added up. In São Paulo.
In the next slide, we see the regional segmentation of transactions made by our own operations. In the third quarter of 2018, we can see the significance of São Paulo and the South region that together accounted for 83% of total transactions closed, a growth of 6 percentage points when compared to the same period in 2017. This improvement was possible due to the increase of transactions in the South, led by Raul Fulgêncio operation in Londrina, in Paraná, which sold 70% more than the third quarter of 2017, consolidating advance of 9 percentage points in its share of the company's PSV. The other regions such as Fortaleza, Brasília, and Espírito Santo, added up 18% of the total transactions. On slide 10, we see the regional distribution of transactions made by franchises.
In the chart, we see that 42% of transactions were held in the state of São Paulo, which has 49 stores and 10 are being implemented. Then came Rio de Janeiro with 34% of transactions closed, with only three stores in operation, two in Niterói and one in Rio de Janeiro City. This last one operates as a launch franchise and therefore is still significant in Rio in terms of PSV despite having few stores. The third most significant region is represented by the states of Santa Catarina and Rio Grande do Sul, with 15% share in the PSV and 20 stores in total. The other franchises such as Minas Gerais, Bahia, Espírito Santo, and Brasília, that add up to six stores together, accounted for 9% of transactions in the period.
In the next slide, number 11, we see the chart on the left, the distribution of transactions closed by our own operations according to the company's segments. The primary market was responsible for 97% of transactions, with the highlight of non-listed home builders share, which reached 77% in the period. Due to the change in the way we operate in the secondary market, we currently have one operation only, and it had a lower participation with 3% of transactions value in the third quarter of 2018. The chart on the right, we see the distribution of transactions closed in the primary market between listed and unlisted home builders, which remains stable when compared to the third quarter 2017. In this quarter, home builders listed added 20% of the total transactions and non-listed, 80% of the remaining transactions.
On slide 12, we have the comparison of sales over supply and sales over launches indicators in the third quarter of 2018 and 2017. Looking at the sales over supply speed in Brazil, we see an improvement of 0.8 percentage points, totaling 10.4% in the period. However, the chart on the side shows a reduction of 11 percentage points in the speed of sales over launches in the city of São Paulo, which adds up to 19%. This reduction in the VSL in the capital is explained partly by the lower performance of sales in the quarter, a reflect of the impact of elections, in how long it takes for consumers to make decisions, and partly because of the concentration of launches at the end of the period.
When 62% of PSV in the capital was launched in September, the last month of the quarter, therefore, there was not enough time for projects to be sold in the quarter, which should have an impact on the result of the fourth quarter of 2018. Now on slide 13, we talk about the launches we made in the third quarter of 2018, and that will do according to the expected pipeline for the fourth quarter of 2018. In the first chart, we can see a growth of 28% in the volume launch in this quarter when compared to the same period of 2017. Reminding that the majority was concentrated in September, totaling BRL 2.1 billion in the period. This total accounts for 5,061 units launched in 41 different projects.
By region, we see that 86% of PSV was launched in the state of São Paulo, followed by Paraná with 8%, highlighting the significance of the operation of Londrina, which accounted for 62% of launches in the state. Finally, Espírito Santo and Fortaleza added up to 6% to the total in this quarter. On the right side of the slide, we have the total pipeline of launches for the fourth quarter. The expected volume to be launched in the fourth quarter is BRL 4.8 billion, of which 52% has been completed, considering the projects that have been launched until today. We have a remaining pipeline of BRL 2.3 billion to be launched until the end of this year, 98% of it located in the state of São Paulo.
When these launches are completed, Lopes will add BRL 9.7 billion of launched PSV, a growth of 26% when compared to last year on the same company base. Finally, as I mentioned, we have a robust pipeline for the fourth quarter of this year, and these projects launched and to be launched, cover the largest developments in the capital in terms of PSV. We can see on the slide some of the major examples of projects to be launched in São Paulo. With these launches and other very good projects that are in our pipeline, we are very optimistic about the transaction performance for the next quarter and also for 2019, because the instability and uncertainties about the future will be reduced after elections. Now let's talk about CrediPronto.
These were my initial remarks about the operating results, and I'll turn the floor to Beatriz, who will make her comments about the results of CrediPronto. Then she will talk about the company's financial statements. Thank you.
Thank you, Marcos. On slide 16, we see the main operating indicators of CrediPronto. First, we notice a significant increase in the number of contracts and finance volume, which grew 130% in the quarter. We also see an important reduction in the average interest rate in the new agreements, which was 9.2% in the period, reflecting the better credit conditions. We believe in the reduction of the interest rates, combined with increase in LTV and the average term of mortgages would allow for a strong growth finance volume in this year.
We see in the chart on the right that the accumulated volume of financed amount grew 86% in the first nine months of 2018, with a result of BRL 789 million, and exceeding the total finance done in the last year altogether, which amounted to BRL 610 million. Looking at the average portfolio, we see a reduction when compared to last year, and a small increase in 1% in the final balance regarding the second quarter. These effects are explained by the high volume of amortization of contracts, given the lower interest rate. Also, on slide 17, it's worth remembering that based on the contract signed between Banco Itaú, we're entitled to half of the results of this operation without the risk of a credit business.
Meaning that all the loss was absorbed by Itaú, and as the company starts to be profitable, we have some impact on its financial statements.
We also renegotiated some parameters related to the allocation of cost of capital at CrediPronto. This negotiation had a retroactive effect, which allowed us to envisage a profit scenario in a very near future. As we can see on the right, at the end of 2017, year-to-date losses for the company amounted to BRL 25.2 million, and with the profits of 2018, such losses reached BRL 7.3 million. Therefore, we enforce that we believe in a reverse of these losses in the near future with the distribution of profits for the company soon. We will give more guidance about that in a timely manner. On slide number 19, we see the financial results. Here, we remind you that Patrimóvel is classified as available for sale asset, and the loss presented by this operation of BRL 20.3 million is presented as separate from the other data of the company.
Therefore, the following slide does not consider the results of this operation. On slide number 20, you observe the evolution of net commissions and the contribution per market. We see in this quarter a one-off reduction in national commissions, mainly impacted by the operation of São Paulo. The reduction of the net rate of São Paulo is explained by the mix of products with increase of transactions of projects with a lower average ticket, which naturally have a lower commission, and increase in partnerships. A situation in which our customer desires a product that is not for sale by us, and we make a real estate fit to not to miss the transaction. We also highlighted we are now using HabitCasa brand to sell economic products, since we believe that the specialized team can increase our share in this segment with a recurring demand.
On slide 21, we present the conciliation of gross revenue. On the left, we see that the transacted volume of BRL 802 million, multiplied by the commission of 2.10%, results on a gross revenue from transaction of BRL 16.8 million, added to a revenue of BRL 3.6 million to the recognition of upfront from Itaú, and BRL 2.6 million from franchise royalties. Franchises VGV at PSV added BRL 758 million, BRL 616 million regarding implemented operations, and BRL 142 million are franchises with some type of payment of royalties period. Considering the revenue, BRL 2.6 million on operating franchises, we reach an average royalty of 0.4%. In addition, BRL 2.4 million with other revenues, we received a commission 1% of Itaú on the finance of CrediPronto. We total BRL 25.4 million of gross revenue in the quarter.
On slide 22, we have the net revenue in the quarter, BRL 23.1 million, with a reduction of 9% when compared to last year.
This variation is due to the reasons already presented by Marcos Lopes with the concentration in launches at the end of the quarter and the increase in time of decision it takes for consumers to make a decision. When breaking down rent revenue per segment, 62% started from operations of transactions, 27% in the real estate credit, including upfront recognition and 1% commissions paid by Itaú, and other 10% came from franchises already in operation. On slide 23, we have the quarter's result per segment. We had losses in our own operations, reaching BRL 7.9 million in the third quarter from the reduction in the transactions in the period. At the same time, the operation of franchises remained profitable, as well as CrediPronto, with a result of BRL 1.6 million in the period.
It's important to highlight that at CrediPronto, we see exclusively results receiving from the commission paid by Itaú and is not related to profit-sharing that we saw before and code virtual P&L. On slide 24, we see an overview of costs and expenses in the quarter totaling BRL 25 million, 14% lower than the same period in 2017 considering the same company base. In this quarter, we had payments related to labor and civil lawsuits. Although it seems from a deviation from budget, the payment of these amounts was success fee, includes that the company will not have to pay a contingency of much higher values in the future. On the following slide, 25, we have the EBITDA and net profit for the controlling companies in the quarter.
On the left, we have EBITDA company adding BRL 1.9 million with an improvement of 48% in this indicator, despite a reduction of 9% in net revenue. Therefore, this improvement in EBITDA is due exclusively to reduction of cost and expenses regarding the previous year. On the right, we see the variation of the net income or net result attributed to the controlling companies with a reduction of 15% in the quarter, BRL 7 million for the loss in the period. The points that explain the negative variation of profit or negative was a positive variation EBITDA, the increase in the depreciation and amortization, which don't have a cash effect, and the amount increase in the line of taxes.
On slide 26, we see the impact of IFRS on our result, and we had several call records and puts in the period with no cash effect accord as highlighted in the slide.
We recommend the analysis of our figures without this impact for a better understanding of the company's performance. On slide 27, we have the cash variation in the period and the total available funds at the end of the quarter. The cash position from operating activities amounted to BRL 1.8 million in the period, BRL 3.6 million lower than the previous quarter. The total cash burn in the period was BRL 6 million, and in the quarter, BRL 15.7 million available plus BRL 17.8 million accounts receivable, totaling BRL 33.5 million in cash in the banks. Considering the robust pipeline, we believe that the fourth quarter will be stronger in transactions. We can balance out the cash position of the company, which will give us a more comfortable cash position. These were my remarks about CrediPronto financial results. We can now start the Q and A session. Thank you.
Ladies and gentlemen, we'll now start the Q and A session. To ask a question, please press star one. To remove your question from the queue, please press star two. First question come from Roberto Waissmann from Bradesco BBI.
Hello. Thank you for the call. Good afternoon. The first question is regarding operational aspects. We've seen a growing volume of launches in a market that still wasn't able to recover, especially in the third quarter. For the fourth quarter, this 2.5 of already launched until fourth, do you see an improvement in sales for the fourth quarter 2018? My second question about CrediPronto. We clearly see in 2019 a very positive impact of the new terms with CrediPronto in terms of cost of capital. In addition, I would like to understand, in terms of revenue, how much CrediPronto could account for. We see that today it accounts for 7%, reducing minus the upfront. How much do you think it could reach? Thank you.
Hello, Roberto. This is Bea. Just to understand your first question, you would like to understand how the sales will be in the fourth quarter?
Is it better now?
I couldn't hear you very well. It's a bit better.
If you could, give us an idea of what the trend in sales for November and the fourth quarter of this year.
Roberto, this is Marcos Lopes. With regard to the fourth quarter, we're now talking about the third quarter, and you notice that most launches in the third quarter happened in September. In the last month, 72% close to the third quarter.
We have a pipeline for the fourth quarter of the same value in terms of number of launches that we have launched in the previous nine months, and half of them have been launched, which signals a market recovery concentrated towards the end of the year. These launches in September have a lower impact in the third quarter and a higher impact in the fourth quarter. Also, we noticed that these launches are very well adapted to the market, so we have a very good prospect for the fourth quarter.
As for CrediPronto, what we can say is that there has been a reversal now with the agreement with Itaú, from a very large loss to BRL 7 million in losses. It continued to be reverted in this fourth quarter to something close to break-even point, either at the end of this quarter or the beginning of next year. So next year, we expect to have profit.
Thank you.
It's worth mentioning that CrediPronto this year, they have accumulated profit of BRL 34.6 million. The part of Lopes, BRL 18.7 million in the nine months of 2019, or 2018, I'm sorry. This profit reduced the losses of Lopes shares. So 25 minus 18, so it amounts to BRL 7 million in losses accumulated year-to-date, which will impact the results for next year from now on.
Okay, thank you.
I would like to remind you that in order to ask a question, please press star one. This ends the Q and A session. I would like to return the floor to the chairman of the company, our CEO, Marcos Lopes, for his final remarks.
I would like to thank you all for attending the call to communicate the earnings of the company for the third quarter of 2018. I would like to reinstate the company's confidence on our future of the company. We have a significant market share in the main operation of the company in the state of São Paulo. We believe in the additional consolidation of the brand, the top-of-mind brand. We also expect a large consolidation that will provide liquidity for purchase of real estate throughout Brazil, as well as the franchise project.
This customer journey providing good feedback and this new cycle at the level of excellence that we have now, because we had the chance to increase the company profile, to enhance our profile in the last four years of challenge. That will provide us a good opportunity for the new cycle of sales that starts. Thank you all very much and have a good afternoon.
The LPS Brasil conference call has now ended. We thank you all for attending, and have a good day.