Good afternoon, ladies and gentlemen. Welcome to the Conference Call for Earnings for Q1 2023 for Plano & Plano. We inform that this event is being recorded, and all the participants will be in the listen mode only. Next, we will have the Q&A session when further instructions will be supplied. If you need any assistance during the conference call, please request the help of an operator dialing asterisk zero. This event is also being transmitted via internet by a webcast and can be accessed at ri.planoeplano.com.br and please click on the banner webcast. The slide presentation is available for download. The information is available in Brazilian reais, GAAP and IFRS applicable to entities for real estate projects in Brazil.
Before beginning, we would like to mention that any declarations made during this conference call concerning the business perspectives of Plano & Plano projections, operational and financial goals are based on assumptions of the company's board, as well as on information currently available. The few considerations about the future are not guarantees of performance. They involve risks, they refer to future events, and depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of the company and can lead to results that may differ materially from those expressed in such forward-looking statements.
Today, we have the presence of Mr. Rodrigo von, Rodrigo Luna, and João Hopp, respectively, CEO, Vice President, and CFO and Investor Relations Officer at Plano & Plano. Now to pass the floor to Mr. Rodrigo Luna, Director Vice President, who will begin the presentation. Mr. Rodrigo, you have the floor.
Good afternoon. Thank you very much for participating in our conference call for Q1 2023. Let's begin with slide number five. In accordance with the plan established in the last few years, Plano & Plano has delivered a sustainable growth, as well as improving its management, making the company more resilient and capable of using the opportunities in the real estate market. In the last two years, we had a challenging situation, and we have worked in an in-depth way in many fronts to mitigate the pressure on cost for construction and to deliver financial results in line with the history of the company.
Amongst other actions to overcome the challenges of the world economic crisis due to the pandemic, we reviewed the project specs, and we tried to find alternatives in construction techniques. We obtained gains in productivity. We defined new guidelines in the marketing and sales expenses, and also we passed on prices due to inflation to the prices for sale. We would like to highlight the gain in gross margin, adjusted gross margin 4.5 points above Q4, reaching 38.6%. We would also like to highlight the increase in our REF margin presented at the end of Q1, which reached 38.3%, representing an increase of 2 percentage points when compared to that of the end of Q4 2022. This improvement in profitability can also be seen in the net profit that grew 85% in relation to the profit of Q1 2022. Also, the net sales.
The company established once again a historical record, reaching BRL 547 million , 47.2% higher than the same period in the previous year. We sold 2,500 units. The launch is BRL 530 million in Q1, which represents a growth of 98% in relation to the same period 2022. The purchase of land continues in total in form of a partner to maintain our business light in assets. Even with the accelerated rhythm, our land bank for future projects is BRL 11.7 billion . It is part of our strategy to increase the portfolio in the middle class, reaching 30% of our portfolio in the future. We would like to also show the participation of Plano & Plano, the new housing plan of São Paulo. Our experience in engineering have translated into high levels of productivity and adequate products added to our focus in the metropolitan region of São Paulo.
These are factors that really helped us to have success in this period. Plano & Plano had the highest approval in projects with a potential VGV of BRL 1.3 billion . The program is being presented with the approval, and the contract will be signed in the following months according to the conditions in the bid. We hope to begin the construction soon. We would like to stress that with this new program, we are very cautious in looking at the construction and results. This way, our planning for launches in the market continues to follow exactly the growth plan that was established for 2023. When this happens, this VGV will be added to the launches already planned by Plano & Plano. The management continues to trust that we may continue to expand the company's operations in a profitable way and with controlled risks.
Now I would like to pass the floor to Mr. João Hopp, our financial director, who will talk about the operational highlights and financial highlights. João?
Thank you, Luna. Good afternoon. Please, slide number seven. Net sales, 100% Plano & Plano in Q1 2023 added BRL 543 million , 42% higher than in Q1 2022, and 5.5% higher than the BRL 519 million in Q4 2022. The result establishes a new record in quarterly sales. Next slide, please. The company launched in Q1 a total sales of BRL 530 million , which has an increase of 98% in relation to BRL 268 million in Q1 last year. Slide number nine. On March 31st, in the last months, when comparing, there was an increase of 5.4 increase in VSO, and on March 31st, 2023, VSO in the last 12 months was 48%.
In comparison with March 31st, 2022, there was an expressive increase of VSO with an increase of 6.8 percentage points. The increases of VSO were consistent and the result of better sales management and alignment of the products launched to the public. The company's net revenue represented. We can see here the net revenue of the company represented BRL 390 million in Q1 2023, 23.4% higher than BRL 316 million in Q1 2022. When compared with Q4 2022, the revenue had a drop of 10.6% due in part with other factors to vacation for the teams. The month of February had less days, and also there was a less loss of productivity due to a lot of rainfall that we had.
Obeying this, we are continuing and after pressure on gross margin due to an increase in construction costs, we have passed these extra costs, higher costs, on to the price of sales. We can see this in the results of Q1 2023. With this, the gross adjusted growth profit in Q1 reached BRL 151 million and gross adjusted margin was 38.6% in an expressive increase of 4.5% in relation to Q4 2022. This quarter shows an improvement in results in line with the trend in our REF margins. The company continues to work in the same direction and improving. In this quarter, REF margin had once again a growth going from 36.3% in Q4 2022 to 38.3% in Q1 2023, which represents an increase of 2 percentage points. During the last quarters, the company made several actions to recover the historical margins.
One of the actions is the increase in prices due to inflation in the products that were sold. The company also tried to price the launches considering the up-to-date budgets that are being used to get higher margins. The recognition of results of the company in these new sales has a greater weight because the respective projects are continuing to make progress, and the results show that we were on the right track. Another measure is the detailed follow-up of the projects, optimizing expenses and processes, and also renegotiation of contracts with key suppliers. Next slide. During Q1 2023, the sales expenses had a growth in relation to the previous year. This increase happened partially because of the expressive increase of net sales of the company, but also with non-recurring event. Due to the sales policy of the company, expenses with ITBI are not charged from buyers.
These expenses paid by the company are recognized in the result when we pass the real estate on to the buyers, which happens 40 days after the signature of the contract for purchase and sale. For the sales in Q1 2023, the company began to make a provision or accrual of this expense for the sales. So this generated a non-recurring effect of BRL 7.7 million in Q1 2023. Next slide, 15. The company has had solid and sustainable growth during the years and is making efforts to support the new levels. With the expectation of growth, we hired teams to help us with the new projects. In information technology, amongst other actions, we made upgrades. We activated new licenses from Salesforce and SAP HANA, increasing the productivity and offering more information. Increasing this way the efficiency of our actions, increasing the percentage of leads online.
Although we had an increase in administrative expenses in Q1 2023, we hope that during the year, maintaining the administrative expenses lower and increasing the revenue due to the increase in sales, we should end the year with administrative expenses that will be very close to the levels of last year, 6.3%. Next slide. Net profit reached BRL 40.8 million in Q1 2023, resulting in a growth of 85.1% in relation to Q1 2022. The company has been increasing prices, the prices it pays for raw materials to the new units, thus increasing gross and net margins. With this, in Q1 2022, the net margin grew 3.5 percentage points in relation to Q1 2022, reaching 10.4%. Next slide. The company had an adjusted EBITDA of BRL 70 million in Q1, an increase of 48% in relation to Q1, with a margin of 15.4%.
Slide 18. On March 31st, the gross debt of the company represented BRL 491 million . Considering cash and equivalent cash of BRL 264 million, the net debt reached BRL 228 million at the end of the quarter. The company wants to lower the net debt below 20%. Right now, it is 50.3%. Next slide, please. The company's operation had a cash consumption of BRL 35 million in Q1 2022. This variation comes due to the amount invested in the units sold as a consequence of a good performance in production of our projects.
We would like to conclude, and we are available for questions. Thank you.
Thank you, Mr. João Hopp. Now, we would like to begin the Q&A session. To ask questions, please dial asterisk one. If your question is answered, you may remove it from the queue dialing asterisk two. We have a question from Rafael Rehder from Safra Bank .
Good afternoon, Rodrigo Luna, João. Congratulations for the results. I have two questions, but first, I would like to explore the price dynamics. You had a relevant increase in the ticket in this quarter. Is there space for more price increases in the current format? Would you wait for the approval of the new contracts? Do you see any potential to increase prices?
My second question, the gross margin. You had a substantial increase. How much of this comes from the recognition of new projects, or did you have any impact in the projects?
Good afternoon, Rafael. Thank you for the question. Rodrigo Luna. First, on price increases. During the last months, with a very consistent strategic plan, we have increased prices to reflect the higher prices that we have been paying to our suppliers. We always did this in our history. This price equalization is dynamic, and it varies according to the product. The greatest increases have already been made. In some projects, we can still have some gains in margin, but most of the price increases have already been done in accordance with the possibilities and the projects that we had launched in the market. In relation to price increase, this is it.
Gross margin will be answered by João.
Hello, Rafael. Thank you. In relation to gross margin, we have gains in engineering. We do a follow-up of inflation internally. We have an index called ICPT, and our cost index and the government's, the difference is in 3.63 points. ICC was 8.5%, and we had ours, 8.28%. We have had many actions in engineering to increase productivity, many small decisions that helped us. Gains in engineering have contributed to the gross margin.
Looking forward, we believe we can have some gains in engineering this year, but not at the levels that we had in the last 12 months. We are looking at new technologies, new ways of doing things, and we may have a gain of 1 or 2 percentage points during the rest of this year. It is a combination of factors. Thank you.
Very clear. Thank you.
The next question is Pedro-- from Pedro Lobato, Bradesco BBI.
Good morning, Luna, João. What are the next steps? How are the perspectives for the resources that will come from the City Hall with the new housing program from the City Hall? When will you receive these resources? I would like to know what is the timing to receive the funds from the City Hall.
Pedro, João here. We are doing the following. We are delivering documentation to the City Hall. The first phase was the approval of the projects. After approval, and also we answered their questions. That is over. Now we are delivering documents. This is divided into four blocks, and Plano & Plano will participate in three. The first lot of documents was delivered last week, the next May 15, and on the 22nd for the third block. In the fourth block, we have nothing to deliver. 7,000 units, and the documentation will be delivered until May 22nd. After that, they have 180 days, we clarify everything for the City Hall. I believe that in the second semester, we will get the contract. As we begin, immediately, we will begin construction.
We are very interested in accelerating the projects because they are already 100% sold through the City Hall. If all goes well with the documents, and if we get the total volume in the second semester, we begin to build in the second semester. We should recognize something in the result this year, and most of this will come in 2024. Now, for each project, 15% is paid to us. 15% they give us as a down payment, and then we continue with production. This is the schedule. In the second semester, we expect to begin these projects, the construction of these projects.
Thank you, João. The second phase is more distant?
Yes. If I understood well, the second part, 20,000 units, we do not know when this will be signed. When they call us, we will evaluate what we have in terms of projects which are adequate. We will look at the conditions, if the profitability is right. We are waiting for instructions from the City Hall for the other 20,000 units. They were announced, but there is nothing in writing yet.
The next question is from Elvis Credendio from BTG Pactual.
Good afternoon. Two questions. First on sales. Can you give us the sales by month and the evolution of sales in Q2? Also, the accrual. You had an accrual, provisions for losses with credits. Will this continue, or will the amount go down?
Good afternoon, Elvis. Concerning sales, I will answer, and the rest João will answer. We had a Q4 that was very strong in new launches because there was a belief that World Cup and elections could affect us. Because of this, in Q1, we had a good portfolio of sales, and in January, February, we had strong sales and very similar to Q4.
Q1 was very good, very strong, and we continued with the perception of a lot of people interested, people coming to inquire, and the program from the City Hall with the government. We know that there is a deficit in housing in São Paulo, and this gives us a perception that we will have a second quarter that will be very strong in sales.
Elvis, good afternoon. João here. Concerning the PDD, every year at the end of the year, we look at the amount received. We had an increase in PDD. Everything over 30 days, past due over 30 days, we accrue, we make provisions, and this was a little higher than normal. With this, we had a recovery of this delay that was a little slower than we normally see. We analyze these factors. The indebtedness of the population was a little different this year.
We're not concerned, but what we see is a recovery that is a little slower than previous years. We should recover this increase in PDD in a slower way, but we will recover. This is our vision and also maybe a greater delay in annual installments, in annual payments.
Thank you.
Ladies and gentlemen, reminding you to ask questions, please dial asterisk one. We have a question from André Dibe, Itaú BBA.
Good afternoon, Luna. Thank you for the presentation. Congratulations for the strong results. I have two questions concerning this change. What is the impact of the change in the program on the part of the government? Also, how could this impact your strategy, the launches that you have planned for the year?
The second, the reviews in the program. Since the beginning of the year, we know that there will be reviews in the City Hall program, and there are some issues to be solved by the Supreme Court. Do you believe we can have changes in the short term? Thank you.
Hello, André . Thank you for the congratulations. Good to talk to you. The Supreme Court has paralyzed this issue. With our calculations, the fund delivers TR + 3% of this fund, and since the interest rate is very high in Brazil, they have paid more than the savings accounts. We don't see a great impact on our operations. Obviously, if this decision in the Supreme Court begins to pay the FGTS in line with savings, it'll be necessary to reevaluate the program to maintain the lower income bracket people to continue being able to buy. There have been adjustments in other programs.
This happens in many housing programs for low-income families. We've seen this before. With the importance, with the way Brazil handles this, and due to the capacity that companies have to adapt to these conditions, I don't see any reason to. I know that this has a cost for society because the more you change the income brackets, this can affect the families. But if you pay well, and if you have problems, you will hurt the whole country, especially the subsidies for low-income families. As I said to you, this fund has a result that is higher than the interest rate paid by savings accounts, and we will see this in the evolution.
Now, in terms of the reviews in the program, in the government, there was a conscience. They know. This new government believes in using these housing programs to expand the construction of housing units for low-income families. They are interested in this. This judgment, the government is following closely what the Supreme Court will do. It may take some time to implement the initiatives, the results. We have to wait to see the decision of the Supreme Court. But we were expecting a review due to the inflation that we had with the pandemic. In the Supreme Court, this may make things a little more expensive for the government because of the subsidies, but we don't see a great rupture. We don't see a significant rupture. We're not concerned with this.
For Plano & Plano specifically, we have a lot of projects in São Paulo, the largest capital in the country, and the most important region in the country. The impact will be even smaller in São Paulo. I can tell you that more than 50% of our plots of land can be adapted to lower income housing. When you have a higher income, you have to adapt your product and liquidity suffers an impact. But on a day-to-day basis, this can be absorbed. We are not concerned with this. I hope I answered your question. Thank you.
Thank you, Luna. Very clear. Thank you.
The next question from webcast is from Jair Matoso. "Congratulations for the results. I would like to know more about this new program called Pode Entrar . Do you intend to participate in the second phase?"
Hello, Jair. Good afternoon. Thank you for the question and for the congratulations for our results. Obviously, the company is always alert to opportunities that make sense with our new strategy and our positioning. Once again, our strong presence in São Paulo has been very good. We have an inventory of units that is very small, 15 days of sales only, our inventory. We are not very interested in this auction, but according to the City Hall, a new phase of the program may include also units that will be produced, not only those that are ready.
With the amount of land we have, with the plots of land we have, we are very well positioned in all the regions in São Paulo, and once again, Plano & Plano is probably the company that is best positioned in the city. We will analyze, and if things are in accordance with the parameters and what we believe is good for the company, we will certainly be part of the second phase.
Ladies and gentlemen, to ask questions, please dial asterisk one. We would like to conclude the Q&A session. Now I would like to pass the floor to Mr. Rodrigo Luna, Director Vice President, for his final comments.
Thank you. Thank you for your presence in our conference call for the earnings of Q1 2023. Our message is that the company is very well positioned, reaching our goals for margin, and we continue to work in a consistent way for growth within the parameters of safety and profitability. Also with this new program, Pode Entrar from the City Hall, we trust that 2023 will be another year of record results and record profitability for the company. Once again, thank you for participating, and we wish you a good Mother's Day and a good afternoon. Thank you.
The conference call of earnings of Plano & Plano is concluded. We thank you for participating, and we wish you a good afternoon.