JHSF Participacoes SA

BOVESPA:JHSF3

Earnings Call Transcript 2020-Q1

[Mara Dias, executive]

Good afternoon, everyone. Welcome to the earnings conference call of JHSF Participações. Hello. Here with us, we have Thiago de Oliveira, CEO, Investor Relations Officer; and I'm Mara Boaventura Dias, Investor Relations Manager. We inform you that this presentation is being recorded. [Operator Instructions] This event is being transmitted simultaneously on YouTube, on the web page of JHSF Participações and via webcast and can be accessed at the Investor Relations website of JHSF at ri.jhsf.com.br and through MZiQ platform where the presentation is also available for download. [Operator Instructions] Before proceeding, we would like to clarify that statements that may be made during this call relating to business prospects, operating and financial projections and goals of JHSF, our beliefs -- based on beliefs and assumptions of the company's management as well as any information currently available. They involve risks and uncertainties as they refer to future events and therefore, depend on circumstances which may or may not occur. Changes in the macroeconomic policy, legislation and other operating factors may affect the performance of JHSF in the future and lead to results that differ materially from those expressed in such future statements.

Now I will hand the floor over to Thiago. Thiago, you may proceed.

[Thiago de Oliveira, executive]

Good afternoon to all of you. I would like to start today's presentation with a message of support to the many families who have lost their members due to COVID. The JHSF team sends you solidarity message. And we have paid strict attention to our material resources and funds. So we can support -- give support to the communities. And we also try to make our team calmer by conveying the message that the company does not intend to fire anyone during this pandemic.

Our activity is based on the JHSF, which is based on long-term relationships and sustainable values without losing track of our purpose to surprise people. And our motivation is on quality, excellence and sustainability, and we place people at first. So on behalf of the management of JHSF, I would like to record that we are committed that we'll be -- after this pandemic, we'll be even better with stronger relationships with our business partners and our team.

Speaking of the team, I would like to thank all of you who have -- part of the team have made the necessary adjustments so that we could better position the business of JHSF to become -- come out stronger of this pandemic. Thank you all very much for your dedication to the company.

Now I would like to ask you to move on to Slide #3 of the presentation. You may notice during this presentation that we have some solidarity actions that we mentioned. And these are some of the organizations that we support by providing funds or material resources to help them overcome this pandemic. Whenever you want to make your donations easily by using your mobile phone or with the camera of your phone, you can access these QR codes and therefore, access the web page of these organizations and bringing comfort to those who need the help from us. So they can provide life with a minimum quality of living to those who are in difficulty. Now please move on to Slide #4. Now I would like to talk more in detail about what has happened in the operating context throughout this first quarter. In the business of Recurring Income, which is basically the malls and retail activities, we had, starting on the second half of March, suspension of activities in all the locations where we operate. This is temporary. And that has caused us to have to suspend the shopping malls activities temporarily. As a way to mitigate such effect, we emphasized the activities of CJ Fashion and CJ Concierge. And throughout the presentation, I'll explain a bit more what were the results attained so far.

In Real Estate Development, we had activities maintained with the exception of the sales stands, which were momentarily replaced by the app, JHSF Real Estate Sales. In Hospitality and Gastronomy, we also had activities suspended as of the second half of March, has happened without the malls and retail. And we emphasize the delivery activities. We've implemented Fasano Delivery. And more recently, we've reached an agreement with iFood to work in partnership with them.

In the Executive Airport, operations are now 24/7. We have our hangar capacity fully occupied, which cause us to start a growth process to increase such capacity because we do have an identified demand for additional hangar capacity. And from an operational point of view, in the airport, we implemented a series of hygiene and safety protocols in order to increase user safety for the airport.

As you may have noticed on this slide, we used a series of digital tools that I would like to explain more in detail on the next slide. For those who have been with us for some time now, since 2016, we have been investing in the digitization of JHSF. And these processes have been expedited recently. And we plan to continue on that note, and there are some new launches in that area.

In terms of figures, we have seen sales of CJ Fashion growth of almost 308% and orders grew 49% approximately. In CJ Concierge, for those who don't know, it's a service that is within CJ Fashion that allows us to take any product to the home of any customer in Brazil. And sales grew 240% when compared in April and March, when compared to January and February. The Delivery Fasano was implemented, the number of orders grew by 1,343%, comparing March and April to January and February. So what we can see so far as all those digital tools have presented significant growth rates, which is also the same to JHSF Real Estate Sales. The user base has grown 453% in the last 5 weeks.

In the same period, we also launched the magazine CJ at Home. This magazine takes in a very interactive and easy way to digital platforms, either Instagram or WhatsApp and many others, the easy access by clicking on the images of the page and that leads you directly to the platform of CJ Fashion. We've published 2 editions of the magazine in the last 2 weeks, and the shop owners are very pleased with the results.

The JHSF Labs, which has a robust pipeline with a few launches to be implemented in the coming weeks, and in terms of activities, the company really intensified communication on several platforms and using social media communication. All of this is based on a belief that we have that business will be stronger -- as strong as the capacity of uniting brick-and-mortar with digital initiatives. So strength and resilience will be benefited from the unification of these platforms. So we believe that in the -- on the [ strength ] and this is a route that we'll continue to pursue.

Now moving on to Slide #6. I would like to quick recap some of the measures that we took and other actions we took to strengthen the capital structure of the company. Last November, we had a capital increase of slightly over BRL 500 million. And throughout 2019 and in 2020, we've carried out several debt transactions that changed the debt profile of the company altogether.

Today, 90% of our debt is long term and 75% of this debt is in its grace period. Today, the net to debt -- the debt-to-equity ratio is very low, which adds as tranquility debt. We have a cushion of liquidity to support us. That was already present in the balance sheet of March 30.

In April, we've obtained an additional funding of BRL 300 million. This new debt is to mature in 6 years, so it's quite a long-term debt. And its cost is indexed to the CDI plus 1.55 percentage per year of spread. This adds liquidity and increases the medium term and decreases our spread. The chart below shows -- allows me to show you, on a pro forma point of view, what we project for the month of May? What will be the cash -- the company liquidity and debt profile considering this transaction that was closed in April? So with that, we can conclude that we have formed and created a beautiful liquidity cushion for the company. Our debt profile is long term. One is -- has been expanded considerably, and we are creating operating cash that's more than necessary to pay our financial liabilities. And that allows us to be peaceful have -- peace of mind that the company can go through this period with tranquility.

Now let's move on to Slide #7 of the presentation. Here, we are going to talk about the highlights of the first quarter of 2020. First, I would like to comment on the growth of 51% on our gross profit, which -- and the Real Estate Development played an important role in that. The adjusted EBITDA of the company has grown by 109%, which is quite healthy.

When we look at the Real Estate Development activity, we've seen sales growth of 130%. And we are very confident that the second home product is a product that will grow even more in the coming months because recently, in recent years, we have seen that the occupancy rate at Fazenda Boa Vista is growing and the interest of by new -- on new products there as well as Village Boa Vista also show that rising interest. And in terms of Real Estate Development, because we sold more, there was a gross profit growth of 150% and adjusted EBITDA of 319% higher. In terms of Recurring Income, net revenues compared to last year's and adjusted by the sales of minority interest in Catarina has grown almost 16%, with the gross profit growing 25% and the adjusted EBITDA, 16% growth. In Hospitality and Gastronomy, we've had a very strong quarter. We'll see the operational indicators soon, but due to the interruption of activities in the second half of March, in the quarter, there were some losses. So we highlight here what were the indicators we had up until February. So almost 20% average daily rate growth plus 22.4% in RevPAR and plus 2.5 percentage points in occupancy rate and 14% more -- 14.2% more couverts sold.

So up until the COVID, we had a very good quarter. And the Executive Airport that was opened at the end of 2019 had an occupancy rate that really exceeded our expectations. We are very much advanced in terms of occupancy. And this is why we've signed an agreement for -- to bring to the airport the company that makes the maintenance of the aircraft and build also 2 extra hangars for the airport because the demand that's been shown to us is there, present and exists. We're very happy because the Executive Airport project has proven to be a winning project that customers really adopted.

Now let's move on to Slide #8, talk about consolidated results. A 36% growth in net revenue, 51% growth in gross profit, adjusted EBITDA on a consolidated basis has grown by 109% and net profit has grown by 61%. I would like to call your attention to the fact that between EBITDA and net profit, we had a nonrecurring expense, a financial expense, of BRL 10.3 million. So if it wasn't for this expense, we would have had a net profit even higher.

Now on Slide #9, this is the Real Estate Development performance. We've seen an important growth in Fazenda Boa Vista as well as on the other 2 products that we started selling now Fasano Cidade Jardim in Sao Paulo, and Boa Vista Village, which is a prelaunch actually from -- in the end of 2019, we prelaunched it and we started to sell now in the first quarter of this year, and it's very well accepted by the market. In terms of gross revenue, we've had a growth of almost 93% within the Real Estate Development and 320% in the adjusted EBITDA.

On Slide #10, you may see the performance of our malls. In this quarter, we bring 2 comparisons, the quarterly comparison as well as the comparison of 2 months. And total sales have dropped 5.2% on a quarterly basis because the last 2 weeks of the quarter we had all the malls closed. So close -- something close to 20% of the sales of the quarter were lost. And despite this loss of 20% in terms of sales, the loss of money was only 5%.

So the chart on the right is, for 2 months, shows that we've seen a 14% above sales when compared to the same period of last year. And the reason behind it has a lot to do with the company's focus on the high income market, high-end market. Not only on real estate development, but also on restaurants and hotels, we see that since we're focused on high-end customers, the growth rates that the company is able to present is much higher than what we see for the GDP growth in Brazil.

Now on the lower left of the slide, you see that the occupancy cost has -- there is a difference between the 3-month and the 2-month period comparison. Here, we have an effect of lower sales for our shop owners and the costs of condominium fees of March were paid because at the beginning of the month, we did not expect the temporary suspension of activities the way that it was done. On the upper right, we see the operating indicators also for 2-month and 3-month periods. And in terms of occupancy rates, we see that the company has ended the quarter with a solid 97% of occupancy rate. And the 2 main developments of the company, Cidade Jardim Mall and Catarina Fashion Outlet, have a very high occupancy.

Now on the next slide, we look at the performance of Hospitality and Gastronomy. Here, we see a very similar characteristic to what happened on the malls. So we have indicators for 2 months and a different level than for indicators of the quarter because that has also been influenced by the suspension of activities for restaurants, for example. In restaurants, the kitchen can operate on the delivery mode, but the customers cannot come to restaurants personally.

On the next page is just additional detail on the messages I have highlighted in the beginning. The second bar chart at the top shows the decrease in the net debt of the company when compared to the same period of last year. Also, it's important to highlight the average maturity of the debt. We've made 3 important moves in the last quarter of last year and now in April that caused the 3.7 years of average maturity of this debt are already in 7 years. And this figure will be more constant now in our debt profile, given these 3 implementations that I mentioned.

And in terms of average cost incurred, 75% of the debt of the company is back to the CDI. So all this movement with the drop in the SELIC interest rate causes our debt to become less expensive. So 25% of our debt is back to the IPCA inflation index. And this scenario of low inflation rates helps to decrease the effective cost of our debt when you compare to previous cost.

In the lower part of the slide, I reinforce the message that we are at a very comfortable cash position. We have a debt profile that's quite comfortable as well. And therefore, we are calm because we can go through this period at a good comfort level because the current structure we have has allowed us to reach such level of comfort.

With this, I finish my presentation. Before we start the Q&A session, that Mara will help me to coordinate, I would like to leave you with this page on Slide #13, which are solidarity actions that we at the company support. And if you can contribute to those actions, we would be very helpful. And those will be benefited as well.

[Mara Dias, executive]

[Operator Instructions] We have a question from Carlos. He would like to understand a bit more about the Real Estate Sales App. Who are the users and the buyers?

[Thiago de Oliveira, executive]

Thank you for your question, Carlos. The real estate sales app is an app we have developed to have 3 phases. The first phase or Phase 1, which is the current one, is a phase where we sell only the products that are in the inventory of the company. So if you wish to download the app, you will find a part of available inventory of Fazenda Boa Vista, Fazenda Cidade Jardim and Boa Vista Village. And by doing that, we have customers that are being identified, being served, in terms of identifying the products that they are interested in. And then we -- the sales rep, gets in touch with the customer. So our goal in this Phase 1 is to continue to serve JHSF customers with our products.

The second phase of the product, which will take place in the future, is to bring former products of JHSF, something that belongs to us, but we sold to a customer. If a customer wants to sell that product for any reason, we want to bring this product to be sold and purchased within the platform and therefore, generate brokerage fees for the company. And Phase #3, which is a bit more distant from the present, but we're looking in that direction, is to open this app so that real estate properties that our target customers are interested in may also be sold in this platform, regardless of the fact that they have been developed by us.

Of course, there will be a screening process for that. And once the properties are approved, they would be then included in the platform.

[Mara Dias, executive]

There's another question from [ Jose Torres ]. He's asking whether the Delivery Fasano operations will be maintained after the COVID or not?

[Thiago de Oliveira, executive]

Well, the answer is yes. We understand that once we go back to our normal life, we intend to maintain the service active and we'll assess the demand level to make the necessary adjustments, either to expand it or adjust it if necessary. We, at the company, believe a lot more in this gastronomy area. And one of the apps that we are currently developing within JHSF Lab is about that.

[Mara Dias, executive]

There's a question by [indiscernible]. He asks you to comment on the growing demand for Fazenda Boa Vista product. You said that the second home could become the main home of people. Now during the pandemic. And congratulations on the team.

[Thiago de Oliveira, executive]

I would also congratulate the team on the results because we're very pleased with the activities of the first quarter. Your question is a very timely one, because we've seen in this last 2 months occupancy rate of Fazenda Boa Vista at very high rates. I'll give you a figure. Within Fazenda Boa Vista, there is a grocery store that's selling 4x more during these weeks than it used to sell on regular weeks. So that gives you a good idea of the occupancy of the Fazenda Boa Vista. This has caused us to accelerate or rather some customers have accelerated their decision process. So we're selling well at Fazenda Boa Vista and the price levels are robust. And the truth is that this is a very successful development and people are more and more inclined to have more room in their homes.

So understanding that this experience of the pandemic allowed those who have a second home to be more comfortable. So those who do not have a second home but who can afford it are now making the decision to do so. And so in other developments, we also have a growing demand. So when I was commenting on the growth of 450% in the users of the app is -- the reason is that because now people cannot travel so easily. So the first interactions of those who haven't yet visited Fazenda Boa Vista or Boa Vista Village, they're using the app.

[Mara Dias, executive]

You mentioned Bora Vista Village, Thiago. [ Jorge ] wants to know more about Boa Vista Village and he's asking whether It will be open to the general public and the shops.

[Thiago de Oliveira, executive]

Well, thank you for your question, [ Jorge ]. Yes, the shops, the commercial area of this development will be open to the general public, although this development is composed of closed areas, restricted access areas. As to the margin, yes, we understand that it's a very high-margin product and the margin should be very much in line with what we've seen to products -- similar products at Fazenda Boa Vista. The project as a whole has a cash margin that varies from 50% to 60% depending on the phase of the project.

[Mara Dias, executive]

[ Ronaldo Fernandes ] would like to understand more about the executive airport in terms of costs -- ramp-up costs and results.

[Thiago de Oliveira, executive]

Thank you for your question, Ronaldo. It's a very timely one as well. The airport has -- was opened at the end of last year, and it started its operations in January. Today, we have a fixed cost structure, but not all the revenue potential being generated. So the fact that we have a full occupancy rate at the end of the quarter, we didn't start with revenues generation since January 1. So the costs have started at the level that's given. So this comment is important, but it's also important to remind you that within our results of the first quarter, there are some expenditures that we made such with the launch of the project, for example, that were disregarded in the first quarter. So this growth in capacity that will promote by adding hangars will cause the revenue to grow without necessarily increasing costs in the same proportion. So there will be a leverage -- operating leverage gain when that happens.

The second aspect, which is important, is that despite the area of the hangar being occupied, the number of flights that are taking place is lower than what we expected before the COVID. And why is this important? Because there is a portion of revenues from the airport that come from what we call variable income which is the use of the runway, which only happens when there is a flight, and also the sale of fuel.

So if I had to summarize the airport, I would say that we are ahead of what we expected in terms of fixed revenue for the hangars. However, given the current COVID pandemic, we are lagging behind in variable income, which is use of runway or purchase of fuel. So these -- as the activities go back to normal in the country and worldwide, of course, the frequency of flights will increase, and that will be very helpful in terms of variable revenues or variable income. And we reinforce the fixed revenues with these additional revenues or the added capacity.

[Mara Dias, executive]

Someone asks if the reduction of net debt increasing extension in the maturity. What was the reason for that?

[Thiago de Oliveira, executive]

Well, that is resulting from a strategy we are adopting since the end of the second quarter of last year, then we -- 50% of the company debt was changed to a 15-year maturity term. And then in December, we issued that was mandatorily convertible into interest in development of Faria Lima, which is a 10-year debt. And there was a third movement that happened almost simultaneously, which was an increase in -- an extension of the debt profile provided by BNDS with this funding that happened in April. So part of the BRL 300 million funding will allow the company to prepay a series of debts that mature earlier than this debt of the BRL 300 million. And at the same time, their cost is higher than the debt of BRL 300 million.

Therefore, we may say that of this BRL 300 million, there is a cash -- excess of cash and that covers the liquidity. And in terms of average maturity term, it's longer for the BRL 300 million debt and the debts that are being prepaid. So everything helps us to strengthen the debt structure of the company, and at the same time reduce the financial cost.

[Mara Dias, executive]

On the same topic, Eduardo [indiscernible] is asking whether the extension of the debt profile was enough to face the pandemic or if you consider any additional funding?

[Thiago de Oliveira, executive]

The answer is yes. We are very comfortable with this latest transaction we made. And right now, we do not have any plans of additional funding or significant funding for the company.

[Mara Dias, executive]

Now lots of people asking Thiago about the resumption of activities after the pandemic. What is our opinion about that? When it will happen? And what would be the -- how will it relate to that pandemic?

[Thiago de Oliveira, executive]

Well, elaborating on that topic, I think the first message is that safety comes first in this process. We have developed a series of protocols. For example, these are protocols that we already adopted at the Real Estate Development activities that was working normally in these last weeks, protocols adopted at the airport, and protocols that were inspired on these 2, but with some adaptations that will be applied when the shopping malls reopen and the stores reopen, and will be applied as well when the restaurants open -- hotels and restaurants open. So the message that's important is the safety of our customers, our partners and our teams is the priority. And this is what our decisions are being based on.

The timing is not so much under our control. It is under the control of the government, but we'll certainly be ready when the day comes to reopen. We have not stood still during this period. We took this opportunity to make major maintenance works at the malls and restaurants. So when it's time to reopen, we resume activities safely in areas that have been well taken care of during this imposed period of pause. And at the same time, we are paying close attention to the cleaning level of these areas. And these hygiene procedures are working very well at the airport operations, not only on the physical facilities of the airport itself, but also in cleaning procedures inside the aircraft.

[Mara Dias, executive]

A strategic question by [ Robson. ] He's asking about the strategy of land acquisition and location that you think about when thinking about future projects.

[Thiago de Oliveira, executive]

Robson, I think we have to separate your question in 2 parts. First, I would like to remind you all that the company has a land back, a significant land bank. I was mentioning Village Project that will -- is going to take place in the land we already own. That's been paid for many years. Fasano Cidade Jardim is also around the mall. This is a piece of land we have paid, the land and other taxes, for some years now. And close to Cidade Jardim, we also own other land that will allow us to make launches with the sales of about BRL 5 billion in addition to BRL 5.5 billion debt we attribute to Cidade Jardim Fasano. So the company has a very significant land bank, not to mention what we have close to Catarina Fashion Outlet.

So on the other hand, we, as a company, are very much focused on the high-income public in Sao Paulo. So we could look at some land in the city where we could develop the type of development that we believe to be a winning one, multiusage for high-end customers. And if there is any opportunity, we envisage that it would make sense in Sao Paulo, high-income customers, multiusage will, of course, stop and look at those opportunities.

[Mara Dias, executive]

There are 2 questions about the inventory of Real Estate Development. [ Richardo ] is asking about the average value for which square meter of Fazenda Boa Vista. And any issues -- would like to understand what is the focus of the company.

[Thiago de Oliveira, executive]

I would first start with the Fazenda Boa Vista question, about the PSC. At Fazenda Boa Vista, we sell the land or, on top of the lands we already own, build a house and sell the land with the house on it. So if you think only about the land value, we could say that the average land value varies from BRL 800 to BRL 1,200. So there are some exceptions below and higher than that, but this is the range that we see sales happening at Fazenda Boa Vista, from BRL 800 to BRL 1,200.

It is not a strategy of the company to build and then keep that in inventory. That happens here and there rarely in which a very small amount of the gross cash generation is reserved in terms of inventory. So almost everything you see in terms of inventory in our balance sheet is the inventory of land -- is a land bank at Fazenda Boa Vista. They are booked according to the land acquisition cost plus the investments that were made in infrastructure.

Of course, these investments are attributed as costs to each piece of land, to each plot of land, as a proportion to what has been incurred. So comparing the balance sheet of Boa Vista value to the market value, the market value is about 4x higher than the booked value. The same can be said to the land bank that the company owns. As I mentioned before, those plots of land have been purchased many years ago. And the real estate value was different back then. And once developed according to our estimates, these land bank would allow us to have a PSV of above BRL 10 million.

[Mara Dias, executive]

There are 2 questions about the airport from [ Guilherme and Jose ]. Guilherme is asking how the oil prices impact the variable income from the airport and [ Jose ] asks about the growth prospects and sale of minority interest of the airport.

[Thiago de Oliveira, executive]

So [ Guilherme ], for us, if the oil price is still up or down, that would represent -- that would account for higher or lower prices of fuel. So if we have a higher price scenario, the prices go up as well as the cost. And at the end of the day, what matters to us is the margin. So regardless of the scenarios, we work with a nominal margin that's fixed. And therefore, we're less prone to be affected by changes in oil prices.

As to your second question, I'd like to remind you that the construction cost of the hangar is very low. It's a very low investment compared to the return level that's generated in terms of rental fees -- so -- rental rates. So the strategy of the company is to grow, to increase the usage of the areas adjoining the airport runway by building hangars so that we can maximize the value captured by the company in the future, and in the -- or captured by the company. In the future, we may sell a minority interest. That would be a capital divestiture strategy that's similar to that implemented recently in the shopping malls, in which by selling minority interest, we raised a lot more capital for the company than the capital that has been invested in such projects.

So the airport project is similar to the malls in that regard, and we are moving in that direction. But it's too early to talk about that in the short term.

[Mara Dias, executive]

There are some questions, Thiago, about relationship with the shop owners of the mall. How are they coping with the crisis? If we have cancellations or default and what's our strategy for coming months?

[Thiago de Oliveira, executive]

That's an interesting timely question, given the current times we're going through. We have adopted a position not to collect rent on a mandatory basis during this period in which stores are closed. I think this is a position of a company that sees shop owners, our partners, with a long-term view. And as soon as the situation goes back to normal, we'll find a situation that's a win-win situation for both parties. We have not had any significant communication about the store closure that we find important up to now. We work with companies that have a good financial status and -- so now I cannot anticipate any issues with vacancy.

The 2 main malls of the company account for slightly over 70% of our cash generation. Historically, they have had no vacancy. They are benchmark shopping malls in their positioning. Cidade Jardim is a fashion mall and Catarina Fashion Outlet is the largest and main outlet mall in Brazil. And that attracts a significant inflow of new stores that want to expose their products in these 2 malls. So in the previous crisis, of course, which was different from this one, we -- the 2 malls went through the crisis quite well because of their attractiveness, given that they are positioned for high-end customers and the good inflow of new stores.

[Mara Dias, executive]

There's a question about the plans for Fasano to get to New York if that's impacted by the high exchange rate.

[Thiago de Oliveira, executive]

Well, actually, no. We think it's quite the opposite. That will allow the company to generate income in dollars and the consolidated results in reals will increase. The Fasano New York project, in terms of the restaurants, appeal a lot to New Yorkers, although it will also appeal to tourists. But we will have local customers mainly. And so in that point of view, it could even be positive for the company to have a higher exchange rate in terms of expected future revenues from New York.

[Mara Dias, executive]

[ Jose Lias] would like to understand more about our trade receivables portfolio.

[Thiago de Oliveira, executive]

Well, this portfolio is mainly formed of trade receivables we have due to sales of the inventory of real estate. There is a smaller portion that comes from credit card receivables and an amount that is from leasing agreements.

[Mara Dias, executive]

We have 5 more minutes. William asks you to please summarize what are the nonrecurring expenses of the quarter.

[Thiago de Oliveira, executive]

William, we've had, mainly in the Real Estate Development activity, some marketing campaigns. I don't know if you watch TV, but we've made a lot of campaigns in the first quarter of the Village Boa Vista, some institutional campaigns, also the launching campaign of the airport. So in a nutshell, the main part of our adjusted result of the first quarter has to do with these campaigns that are not permanent. And they were helpful in the robust operating and sales performance we had.

But then this interruption of regular activities came about to something that is completely out of our control and it was caused by all the loss causing people to refrain from moving around. And so we've written off this investment from the accounting point of view, and this is what we show you as a part that -- of this extraordinary income that is part -- could be adjusted. There is financial results, BRL 10 million in losses that are nonrecurring ones or one-off events.

So if we add the nonrecurring expenses, that's around BRL 14 million plus BRL 10 million from the financial result. The -- when you add up the 2 figures, that would increase our profit before -- our earnings before taxes around -- by around BRL 24 million for a net income that we generated of BRL 19 million.

[Mara Dias, executive]

We have 3 more minutes. There are about 6 questions on dividends. They're asking whether you're going to pay out dividends.

[Thiago de Oliveira, executive]

In the last shareholders' meeting, there was a resolution to pay dividends. And the Board of -- it was delegated to the Board of Directors to define the date for dividend payment. As soon as we have more clarity regarding the pandemic and when we'll resume our activities, there will be a Board meeting. We'll call a Board meeting to discuss the best moment to make the dividends -- to pay the dividends. We -- people ask us this question quite frequently. This is not something we can answer previously because it depends on a decision by the Board of Directors.

And as soon as such a decision is made, we'll communicate the market by notice to shareholders to say the dividend rate as well as the date for the cutoff and payment of dividends. But the good news is that we do have dividends to pay to our shareholders.

[Mara Dias, executive]

One more question about the development, the real estate. Are you having any renegotiations or consolations?

[Thiago de Oliveira, executive]

Well, with regards to cancellations, there has been one very small cancellation and did -- which did not account for 3% of the total business transacted and there were a few renegotiations in terms of payment schedule. This is not worrisome or something out of the usual practices. I mean, we're used to that, either receiving an advance or asking for delayed payment in some cases. You can rest assured that right now, all these requests have been within the normal ranges of what we have done previously in other years or quarters.

And now since Mara has announced, we have to close this webcast. Before concluding, I would like to go back and thank the 3,000 people that are with us at the company on a daily basis that get up early in the morning and go to bed late. We work with a lot of dedication, the very determined people that want to continue to provide excellence in services to our customers. So on behalf of the management, I would like to thank you all again for all your energy and dedication.

And I would like to ask you, if you could contribute to our solidarity actions, please do so. We have left all these QR codes here on the screen so that it could be easier for you to reach these organizations. These are NGOs, movements, hospitals. So I would really ask you, if you could, to contribute. The company has contributed to them also.

And finally, I would like to thank the more than 100,000 shareholders that we have. Yesterday was a very happy day for us because we will receive the communication from the underwriter of shares that we've exceeded the symbolic number of more than 100,000 shareholders. So on behalf of the management and the entire company team, I would like to thank you for trusting us. I am sure that on this side of the table, you rest assured that we have a lot of energy, and we really want -- are committed to continue to deliver significant results.

We are a creative company that innovates and is capable to modernize what is traditional company that's focused on delivering results in a profitable way and a diversified environment. So our team is very well aligned in culture terms and the company believes that culture makes a difference. And I would also like to thank our customers for trusting us, whether in the Real Estate Development business or in other businesses that we develop and say that our team is really -- we're really eagerly -- we're eager to go back to regular activities. And as soon as we can, we'll go back and smiling even more than usual, okay? So thank you very much for attending this webcast.

The IR team led by Mara could be accessed at ri.jhsf.com.br. If you prefer to contact by phone, it's 113 7021 5473. And if you prefer to access on the social media channel both Mara and I, we are present at Twitter, my Twitter at @tiagoaoliveira, and Mara is @marabdias. So on behalf of everyone, I thank you again for your time. And if you have -- if you wish any additional information, let us know, and we'll be -- take care of it.

Have a good weekend. And don't forget, today at 9:00 p.m. on Instagram of Cidade Jardim, which is @cidadejardimshopping, there will be alive by Gusttavo Lima, singer, so that people can relax and have a good time. Okay. Have a good concert and good weekend.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]