Biosev SA

Transcrição

Biosev SA

(Convenience Translation into English from the
Original Previously Issued in Portuguese)
Biosev S.A.
Individual and Consolidated
Interim Financial Statements
For the three-month Period Ended
June 30, 2016
Deloitte Touche Tohmatsu
Interim Financial Statements
June 30, 2016
CONTENTS
AUDITOR’S REPORT ON REVIEW OF INTERIM FINANCIAL STATEMENTS................................................
03
BALANCE SHEET .............................................................................................................................................
05
STATEMENT OF OPERATIONS ......................................................................................................................
06
STATEMENT OF COMPREHENSIVE LOSS ...................................................................................................
07
STATEMENT OF CHANGES IN EQUITY ........................................................................................................
08
STATEMENT OF CASH FLOWS .....................................................................................................................
09
STATEMENT OF VALUE ADDED ...................................................................................................................
10
NOTES
1.
GENERAL INFORMATION .......................................................................................................................11
2.
SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES ....................................................................12
3.
CASH AND CASH EQUIVALENTS ...........................................................................................................14
4.
SHORT AND LONG -TERM INVESTMENTS ...........................................................................................15
5.
TRADE RECEIVABLES ............................................................................................................................15
6.
INVENTORIES ..........................................................................................................................................17
7.
BIOLOGICAL ASSETS ..............................................................................................................................18
8.
RECOVERABLE TAXES ...........................................................................................................................19
9.
ESCROW DEPOSITS ...............................................................................................................................19
10.
CURRENT AND DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION ..........................................20
11.
INVESTMENTS (PROVISION FOR INVESTMENT LOSS) .......................................................................23
12.
PROPERTY, PLANT AND EQUIPMENT ..................................................................................................25
13.
INTANGIBLE ASSETS ..............................................................................................................................27
14.
BORROWINGS AND FINANCING ............................................................................................................28
15.
TRADE PAYABLES...................................................................................................................................29
16.
TAXES AND CONTRIBUTIONS PAYABLE ..............................................................................................30
17.
PROVISION FOR TAX, LABOR, CIVIL AND ENVIRONMENTAL CONTINGENCIES ..............................30
18.
RELATED PARTIES..................................................................................................................................32
19.
EQUITY .....................................................................................................................................................39
20.
NET REVENUES AND COST OF SALES AND SERVICES .....................................................................40
21.
EXPENSES BY NATURE ..........................................................................................................................41
22.
FINANCE INCOME (EXPENSES) .............................................................................................................42
23.
OTHER OPERATING INCOME (EXPENSES) ..........................................................................................42
24.
LOSS PER SHARE ...................................................................................................................................43
25.
RISK MANAGEMENT AND FINANCIAL INSTRUMENTS ........................................................................43
26.
COMMITMENTS .......................................................................................................................................51
27.
INSURANCE .............................................................................................................................................53
28.
EMPLOYEES’ BENEFITS .........................................................................................................................53
29.
SEGMENT INFORMATION .......................................................................................................................53
30.
NON-CASH TRANSACTIONS ..................................................................................................................55
31.
SUBSEQUENT EVENTS ..........................................................................................................................55
32.
APPROVAL OF INTERIM FINANCIAL STATEMENTS .............................................................................55
(Convenience Translation into English from the Original Previously Issued in Portuguese)
REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION
To the Shareholders and Management of
Biosev S.A.
São Paulo - SP
Introduction
We have reviewed the accompanying individual and consolidated interim financial information
of Biosev S.A. (the “Company”), identified as Parent and Consolidated, respectively, which
comprises the balance sheet as of June 30, 2016 and the related statements of operations,
comprehensive income (loss), changes in equity and cash flows for the three-month periods then
ended, including the explanatory notes.
The Company’s Management is responsible for the preparation of the individual and
consolidated interim financial information in accordance with technical pronouncement
CPC 21 (R1) - Interim Financial Information and with international standard IAS 34 - Interim
Financial Reporting, issued by the International Accounting Standards Board - IASB. Our
responsibility is to express a conclusion on this interim financial information based on our
review.
Scope of review
We conducted our review in accordance with Brazilian and international standards on review of
interim financial information (NBC TR 2410 and ISRE 2410 - Review of Interim Financial
Information Performed by the Independent Auditor of the Entity, respectively). A review of
interim financial information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and of applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with standards on
auditing and, consequently, does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusion on the interim financial information
Based on our review, nothing has come to our attention that causes us to believe that the
accompanying individual and consolidated interim financial information referred to above was
not prepared, in all material respects, in accordance with technical pronouncement CPC 21 (R1)
and international standard IAS 34.
Deloitte Touche Tohmatsu
Other matters
Statements of value added
We have also reviewed the individual and consolidated interim statements of value added
(“DVA”) for the three-month period ended June 30, 2016, prepared under the responsibility of
the Company’s Management, the presentation of which is required by the standards issued by the
Brazilian Securities Commission (CVM) applicable to the preparation of Interim Financial
Information (ITR) and considered as supplemental information for International Financial
Reporting Standards - IFRSs, which do not require the presentation of DVA. These statements
were subject to the same review procedures described above, and, based on our review, nothing
has come to our attention that causes us to believe that they were not prepared, in all material
respects, consistently with the individual and consolidated interim financial information taken as
a whole.
The accompanying individual and consolidated interim financial information has been translated
into English for the convenience of readers outside Brazil.
São Paulo, August 10, 2016
DELOITTE TOUCHE TOHMATSU
Auditores Independentes
© Deloitte Touche Tohmatsu. All rights reserved.
João Eugenio Leitão Filho
Engagement Partner
Biosev S.A.
BALANCE SHEET
AS AT JUNE 30, 2016
(In thousands of Brazilian reais - R$)
Com pany
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Short-term investments
Derivative financial instruments
Trade receivables
Inventories
Biological assets
Recoverable taxes
Other receivables
Note
3
4
25
5
6
7
8
06.30.16
29,205
56,838
132,603
100,175
687,918
641,616
75,357
14,474
1,738,186
Assets held for sale
1,738,186
NON-CURRENT ASSETS
Long-term receivables
Advances to suppliers
Escrow deposits
Recoverable taxes
Deferred income tax and social contribution
Other receivables
4
9
8
10.1
Consolidated
03.31.16
860,087
150,732
46,077
83,616
506,577
556,819
72,177
17,025
2,293,110
2,293,110
06.30.16
242,382
306,694
132,603
250,751
1,353,018
979,640
117,956
102,902
Com pany
03.31.16
1,826,121
408,268
46,077
156,000
807,533
886,707
117,529
53,459
3,485,946
4,301,694
3,506
3,506
3,489,452
4,305,200
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Borrow ings and financing
Advances from domestic customers
Advances from foreign customers
Trade payables
Accrued payroll and related taxes
Taxes payable
Other payables
Note
14
18
15
16
25
Total current liabilities
06.30.16
Consolidated
03.31.16
06.30.16
03.31.16
1,364,359
8,224
562,311
228,530
75,027
9,638
162,612
70,046
872,813
16,144
626,928
225,783
71,200
14,703
180,189
82,745
3,358,562
13,485
732,230
542,560
134,855
18,416
182,686
141,860
1,830,913
29,389
637,884
572,483
124,720
46,035
201,882
159,651
2,480,747
2,090,505
5,124,654
3,602,957
858,745
681,851
964
164,743
110,933
3
539,114
587,195
1,652,310
736,389
641
106,201
3
551,337
646,517
2,693,243
1,769,427
1,802
208,961
48,434
349,928
3
56,138
-
4,881,016
2,149,690
1,233
44,719
47,668
338,301
3
72,885
-
2,943,548
3,693,398
5,127,936
7,535,515
NON-CURRENT LIABILITIES
9,438
136,404
149,206
11,777
4,823
8,887
126,252
140,577
1,141
11,952
26,770
252,248
269,261
42,577
19,994
4,831
21,404
237,877
253,388
263,963
19,545
Trade payables
Provision for tax, labor, civil and enviromental contingencies
Taxes payable
Other payables
Provision for investment loss
Total non-current liabilities
14
18
15
10.1
25
17
16
11
Investments
11
422,686
428,437
206,660
209,655
Property, plant and equipment
Intangible assets
12
13
2,328,547
15,168
2,336,375
16,826
4,417,414
931,754
4,489,503
934,163
EQUITY
3,073,226
3,075,270
6,166,678
6,434,329
Capital
19
2,618,214
2,618,214
2,618,214
2,618,214
Capital reserve
Accumulated losses
Other comprehensive loss
19
1,355,616
(3,901,616)
(685,097)
1,355,616
(3,548,466)
(840,887)
1,355,616
(3,901,616)
(685,097)
1,355,616
(3,548,466)
(840,887)
(612,883)
(415,523)
(612,883)
(415,523)
Total non-current assets
Total equity attributable to the Com pany's ow ners
Non-controlling interests
Total equity
TOTAL ASSETS
4,811,412
5,368,380
9,656,130
10,739,529
TOTAL LIABILITIES AND EQUITY
(612,883)
4,811,412
(415,523)
5,368,380
16,423
16,580
(596,460)
(398,943)
9,656,130
10,739,529
The accompanying notes are an integral part of these interim financial statements.
5
Biosev S.A.
STATEMENT OF OPERATIONS
FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2016
Com pany
Note
NET REVENUE
Cost of sales and services
20
20 e 21
GROSS PROFIT
Consolidated
Three-m onth period
Three-m onth period
ended
ended
06.30.16
06.30.15
06.30.16
06.30.15
1,672,682
(1,607,986)
1,362,426
(1,323,029)
789,046
(729,655)
663,370
(608,816)
59,391
54,554
64,696
39,397
OPERATING INCOME (EXPENSES)
General, administrative and selling
Equity in subsidiaries
Other operating income
Other operating expenses
21
11
23
23
(212,290)
(59,496)
(152,674)
7,432
(7,552)
(273,729)
(66,797)
(199,794)
10,612
(17,750)
(139,586)
(150,908)
(2,995)
25,078
(10,761)
(75,132)
(137,494)
(2,490)
99,233
(34,381)
OPERATING LOSS BEFORE FINANCE INCOME
Finance income
Finance expenses
Derivatives
Exchange rate changes
22
22
22
22
(152,899)
9,494
(101,609)
(72,984)
156,723
(219,175)
9,777
(56,821)
14,213
36,472
(74,890)
32,241
(184,994)
(137,380)
317,153
(35,735)
29,776
(141,383)
(10,108)
30,473
10.2
(161,275)
(191,875)
(215,534)
(118,394)
(47,870)
(305,437)
(126,977)
(206,609)
(353,150)
(333,928)
(353,307)
(333,586)
24
(353,150)
-
(333,928)
-
(353,150)
(157)
(333,928)
342
24
24
(1.66867)
(1.66867)
(1.60486)
(1.60486)
(1.66867)
(1.66867)
(1.60486)
(1.60486)
LOSS BEFORE TAXES
INCOME TAX AND SOCIAL CONTRIBUTION
LOSS FOR THE PERIOD
Attributable to:
Company's ow ners
LOSS PER SHARE - R$
Basic
Diluted
6
Biosev S.A.
STATEMENT OF COMPREHENSIVE LOSS
Com pany
Consolidated
Three-m onth period Three-m onth period
ended
Note
LOSS FOR THE PERIOD
OTHER COMPREHENSIVE INCOME (LOSS)
Items subsequently reclassified to profit or loss:
Financial instruments - hedge accounting of futures
Financial instruments - hedge accounting of Libor sw ap
Financial instruments - hedge accounting of Non-Deliverable Forw ard (NDF)
Financial instruments - hedge accounting of exchange differences
Deferred income tax and social contribution related to components of other comprehensive income (loss)
COMPREHENSIVE LOSS FOR THE PERIOD
Attributable to:
Company's ow ners
25
25
25
25
10.3
ended
06.30.16
06.30.15
06.30.16
06.30.15
(353,150)
(333,928)
(353,307)
(333,586)
(170,733)
2,904
107,601
296,274
(80,256)
(25,596)
13,481
100,105
134,520
(75,653)
(170,733)
2,904
107,601
296,274
(80,256)
(25,596)
13,481
100,105
134,520
(75,653)
155,790
146,857
155,790
146,857
(197,360)
(187,071)
(197,517)
(186,729)
(197,360)
-
(187,071)
-
(197,360)
(157)
(187,071)
342
7
Biosev S.A.
STATEMENT OF CHANGES IN EQUITY
Other com prehensive
Capital
Capital reserve
incom e (loss)
Accum ulated losses
equity
1,355,616
-
-
-
-
-
146,857
Com prehensive incom e (loss) for the period
-
-
146,857
BALANCES AS AT JUNE 30, 2015
2,618,214
1,355,616
(610,848)
(2,992,096)
370,886
11,162
382,048
BALANCES AS AT MARCH 31, 2016
(840,887)
(3,548,466)
(415,523)
16,580
(398,943)
(353,150)
(353,150)
2,618,214
1,355,616
-
-
-
-
-
155,790
Com prehensive incom e (loss) for the period
-
-
155,790
2,618,214
1,355,616
BALANCES AS AT JUNE 30, 2016
(685,097)
(333,928)
(333,928)
-
557,957
Total consolidated
interests
2,618,214
Loss for the period
Other comprehensive income (loss):
Adjusted derivatives (hedge accounting), net of taxes
(2,658,168)
Non-controlling
Profit (loss) for the period
Other comprehensive income (loss):
Adjusted derivatives (hedge accounting), net of taxes
BALANCES AS AT MARCH 31, 2015
(757,705)
Com pany's equity
(333,928)
146,857
(187,071)
155,790
(353,150)
(197,360)
(3,901,616)
(612,883)
10,820
342
342
(157)
(157)
16,423
568,777
(333,586)
146,857
(186,729)
(353,307)
155,790
(197,517)
(596,460)
8
Biosev S.A.
STATEMENT OF CASH FLOWS
Note
Com pany
Consolidated
Three-m onth period
Three-m onth period
ended
ended
06.30.16
06.30.15
06.30.16
06.30.15
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the period
Non-cash transactions:
Depreciation and amortization
Loss from sale of property, plant and equipment
Interest, exchange rate changes and inflation adjustments, net
Exchange, interest rate and commodities risk management
Provision (reversal) of provision for tax, labor, civil and enviromental contingencies
Provision of allow ance for doubtful accounts
Reversal of impaiment
Provision (reversal) of allow ance for negative margin and realization of storeroom inventories
Gains on changes in fair value less
estimated costs to sell biological assets
Loss on Hedge operations
Decrease (increase) in assets:
Trade receivables
Inventories
Biological assets
Recoverable taxes
Other receivables
Increase (decrease) in liabilities:
Trade payables
Taxes payable
Advances from domestic customers
Payments of labor, civil, tax and environmental contingencies
Other payables
(353,150)
(333,928)
(353,307)
(333,586)
5
12
6
152,371
2,762
152,674
(96,467)
110,415
6,138
226
(130)
2,053
160,505
1,495
199,794
(15,836)
19,954
(3,645)
218
(123)
(1,318)
270,539
2,913
2,995
(347,621)
111,268
20,177
984
(222)
(3,855)
244,390
2,741
2,490
(276,315)
28,371
(80,038)
295
(418)
9,313
20 e 21
(69,102)
(4,571)
(57,774)
(28,602)
10.2
191,875
129,799
-
136,657
164,931
-
305,372
236,046
157
224,976
222,510
(342)
229,464
324,133
187,672
15,785
(16,231)
(184,221)
(86,526)
(11,809)
(551)
2,726
63,427
(66,870)
(50,192)
9,266
(11,230)
(1,967)
128,115
(95,084)
(533,681)
(86,526)
(16,300)
(5,366)
(50,049)
(11,724)
(465,674)
(52,357)
(727)
9,266
(27,006)
(10,875)
31,088
(296,612)
70,549
(787,006)
(528,009)
3,070
(119,155)
3,827
(5,065)
(7,920)
(1,406)
(127,992)
(24,922)
(6,038)
(87,878)
(1,408)
(27,044)
(3,221)
(1,049)
(122,756)
(32,925)
(29,354)
(285,917)
10,135
(27,619)
(15,904)
(8,550)
(129,698)
(34,538)
(52,392)
115,869
5,746
(41,378)
(7,504)
(6,183)
(139,589)
(122,740)
21
23
11
5
6
7
25
8
15
16
17
25.1
(279,563)
(282,319)
(521,445)
(248,171)
Cash provided by (used in) operating activities, before dividends and interest
Interest paid on borrow ings and financing
(346,711)
(98,621)
112,363
(62,348)
(1,120,779)
(165,313)
(760,395)
(140,747)
Cash provided by (used in) operating activities
(445,332)
50,015
(1,286,092)
(901,142)
(10,152)
99,954
(206,245)
(97,884)
(60,916)
(766)
(8,677)
(41,939)
(111,769)
(37,446)
(98,933)
(669)
(14,371)
95,290
(125,123)
(104,088)
(954)
(18,176)
(793,240)
(56,570)
(171,368)
(1,089)
(276,009)
(299,433)
(149,246)
(1,040,443)
567,110
(676,651)
511,534
(672,846)
1,544,855
(1,693,256)
2,367,558
(1,734,646)
Cash used in financing activities
(109,541)
(161,312)
(148,401)
DECREASE IN CASH AND CASH EQUIVALENTS
(830,882)
(410,730)
(1,583,739)
(1,308,673)
CASH FLOW FROM INVESTING ACTIVITIES
Increase in escrow deposits
Decrease (increase) in short-term investments
Decrease in investments (provision for investment loss)
Additions to in property, plant and equipment
Additions to biological assets
Additions to intangible assets
9
4
11
12
7
13
Cash used in investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Payment of borrow ings and financing
14
14
632,912
Cash and cash equivalents at the beginning of period
3
860,087
577,625
1,826,121
1,946,971
Cash and cash equivalents at the end of period
3
29,205
166,895
242,382
638,298
9
Biosev S.A.
STATEMENT OF VALUE ADDED
Note
1 - REVENUE
1.1) Sales
20
1.2) Allow ance for doubtful accounts - Provision
23
1.3) Other operating revenues
23
2 - EXPENSES FROM FINANCIAL INTERMEDIATION
3 - INPUTS PURCHASED FROM THIRD PARTIES
3.1) Cost of products sold
Cost of products sold, net of taxes
21
Recoverable taxes
3.2) Materials, electric pow er, external services and other
3.3) Gains on changes in fair value of biological assets and other
4 - GROSS VALUE ADDEED (1-2-3)
5 - DEPRECIATION AND AMORTIZATION
21
6 - VALUE ADDED CREATED BY THE ENTITY (4-5)
Com pany
Consolidated
Three-m onth period
Three-m onth period
ended
ended
06.30.16
06.30.15
06.30.16
06.30.15
816,599
693,112
1,751,968
1,507,182
809,393
682,718
1,727,874
1,408,244
(226)
(218)
(984)
(295)
7,432
10,612
25,078
99,233
-
-
-
-
(499,373)
(342,112) (1,200,087)
(660,046)
(448,831) (1,405,031) (1,107,220)
(926,274)
(601,908)
(393,791) (1,291,253) (1,013,656)
(58,138)
(55,040)
(113,778)
(93,564)
(31,245)
191,918
(124,306)
231,025
(119,647)
324,591
(122,471)
303,417
317,226
351,000
551,881
580,908
(152,371)
(160,505)
(270,539)
(244,390)
164,855
190,495
281,342
336,518
1,020,261
1,133,181
197,824
(152,674)
1,172,935
(199,794)
191,155
(2,995)
1,136,176
(2,490)
200,314
8 - VALUE ADDED FOR DISTRIBUTION (6+7)
1,185,116
181,856
1,414,523
534,342
9 - DISTRIBUTION OF VALUE ADDED
1,185,116
181,856
1,414,523
534,342
7 - VALUE ADDED RECEIVED IN TRANSFER
7.1) Equity in subsidiaries
7.2) Finance income
11
22
(8,639)
70,472
85,456
151,935
140,088
Direct compensation
44,100
60,993
97,170
88,592
Benefits
17,802
16,250
38,354
35,919
8,570
8,213
16,411
15,577
9.2) Taxes, rates and contributions
218,902
190,029
372,110
331,822
Federal
190,081
163,208
322,612
290,700
28,783
26,790
49,402
41,028
38
31
96
94
1,248,892
240,299
1,243,785
396,018
67,581
52,785
134,629
104,462
1,181,311
187,514
1,109,156
291,556
9.1) Personnel and payroll taxes
21
Severance pay fund (FGTS)
State
Municipal
9.3) Third-party capital use
Rentals
Interest and exchange rate changes
22
9.4) Equity capital
(353,150)
(333,928)
(353,307)
(333,586)
Loss for the period
(353,150)
(333,928)
(353,307)
(333,586)
10
Biosev S.A.
Notes to the Interim Financial Statements
For the Three-month Period Ended June 30, 2016
(Amounts in thousands of Brazilian reais, unless otherwise stated)
1.
GENERAL INFORMATION
Biosev S.A. (“Company”), headquartered at Avenida Brigadeiro Faria Lima, 1355, 11º andar, Pinheiros, São Paulo, SP,
and its subsidiaries (collectively “Group”) are mainly engaged in the production, processing and sale of agricultural
products, primarily sugarcane and its by-products; the agricultural operations in Company-owned or third-party land; the
export, import and sale of petroleum by-products, lubricants, fuel, grease and hydrated ethyl alcohol; the purchase, sale,
import and export of agricultural products and its by-products; and the generation and sale of electricity and its byproducts.
The Group comprises the activities of Biosev S.A. and Biosev Bioenergia S.A. (“Biosev Bioenergia”), based in Brazil, and
Biosev Bioenergia International S.A. (“Biosev Bioenergia International”), based in Switzerland. Additionally, the Group
consists of the subsidiaries of such companies, including (i) Biosev Bioenergia Limited, based in the Cayman Island, which
was established for the purpose of conducting certain international business transactions of the Group, notably the sale of
sugar, but which never went into operation and which is currently in liquidation stage; (ii) Biosev Finance International B.V,
based in the Netherlands, is mainly engaged in the performance of short-term investments with own resources and
investment in other companies, either as partner or shareholder, in Brazil or abroad; and (iii) Biosev Comercializadora de
Energia S.A., a special-purpose entity established to hold and operate the electric power cogeneration assets of the Passa
Tempo unit, located in the State of Mato Grosso do Sul.
The Group is organized in industrial clusters, composed as follows, with their corresponding branches:




Ribeirão Preto Agri-Industrial Cluster: Santa Elisa, Vale do Rosário, MB (Morro Agudo), Jardest and Continental plants
(located in the State of São Paulo);
Mato Grosso do Sul Agri-Industrial Cluster: Maracaju, Passa Tempo and Rio Brilhante plants (located in the State of
Mato Grosso do Sul);
Northeast Agri-Industrial Cluster: Estivas (located in the State of Rio Grande do Norte) and Giasa (located in the State
of Paraíba) plants;
Leme/Lagoa da Prata Agri-Industrial Cluster: Leme (located in the State of São Paulo) and Lagoa da Prata (located in
the State of Minas Gerais) plants.
The Company is a subsidiary of the Louis Dreyfus Company Group, directly controlled by Sugar Holdings BV, which holds
59.58% of its shares.
The Company’s management has adopted measures to stabilize equity position, readjust the indebtness profile and
forward working capital improvements. In particular, the Company seeks to maximize the use of its assets without
impacting its strict financial discipline, in order to increase its operating efficiency and production to reach a positive free
cash flow.
In relation to the compliance with the Company’s financial obligations over the next 12 months, the Company’s
management considers the possibilities referred to in items (i) and (ii), as well as the assumptions set forth in item (iii), in
addition to the operating cash generation:
(i) Renewal of relevant installment (comparable to the renewals over the last years) of the available bank credit facilities.
The syndicated ACC financing facility in the amount of US$440,000 as of June 30, 2016, is disclosed in current liabilities
considering that its governing documentation expires in June, 2017. This financial facility is under negotiation with a
consortium of banks, and the Company’s management has already secured the extension, to June, 2019, of the availability
of substantial portion, equivalent to about 70% of the its originally committed amount, a process that is currently in final
stage of documentation Management currently assumes that the Company will be able to satisfactorily complete the
documentation process for the mentioned extended amount.
(ii) Use of the short-term investments relating to the financing operations, as referred to in item (iii), Note 4, mainly in
relation to the settlement of the principal installments of such financing, as set forth in the respective contractual clauses.
(iii) New raising of funds, taking into consideration the available and potential credit facilities.
11
Biosev S.A.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
2.1 Statement of compliance and basis of preparation
The individual and consolidated interim financial statements were prepared in accordance with CPC 21 (R1) Demonstrações Intermediarias and IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards
Board (IASB).
These interim financial statements are presented in accordance with the standards issued by the Brazilian Securities and
Exchange Commission (CVM) applicable to the preparation of the Interim Financial Information (ITR).
As there is no difference between the consolidated equity and the consolidated profit attributable to the Company’s
owners, disclosed in the consolidated interim financial statements prepared in accordance with CPC 21 (R1) and IAS 34,
and the Company’s equity and profit or loss disclosed in the individual interim financial statements prepared in accordance
with CPC 21 (R1), the Company opted for presenting these individual and consolidated interim financial statements in a
single set, using a side-by-side format.
The preparation of the individual and consolidated interim financial statements in accordance with CPC 21(R1) and IAS 34
requires the adoption of certain accounting estimates by the Company’s management. The interim financial statements
have been prepared based on the historical cost, except for certain financial instruments, held-for-sale assets, and
biological assets measured at their fair values. The historical cost is generally based on the fair value of the consideration
paid in exchange for assets on the transaction date.
The accounting practices and calculation methods adopted in the interim financial statements are similar to those adopted
in the financial statements as at March 31, 2016, except for CPC27/IAS16 and CPC29/IAS41, as described in item 2.1.1
(a2) below.
2.1.1 New and revised standards and interpretations
a) Standards, interpretations and revised standards not yet effective and which were not early adopted by the Company.
a1) The standards and amendments to the standards below were published and are mandatory for periods beginning after
June 30, 2016. However, the Company did not early adopt or amend them.
Standard
IFRS 15/CPC 30
IFRS 9
IFRS 16
Main requirements
Effective date
“Revenue Recognition”. IFRS 15 sets forth that the
revenue is recognized in order to reflect the
transfer of goods or services to the customers at an
amount representing the company’s expectations
to receive back the rights relating to such products
or services.
"Financial Instruments". IFRS 9 maintains but
simplifies the combined measurement model and
establishes two main categories to measure
financial assets: amortized cost and fair value.
The basis for classification depends on the
entity’s business model and the contractual cash
flow characteristics of the financial asset. The
new standard introduced a new expected-loss
impairment model and restructured the hedge
accounting model.
Effective for periods beginning
on or after January 1, 2017.
“Leases”. IFRS 16 replaces IAS 17 and related
interpretations and sets forth the principles for
lease recognition, measurement, presentation and
disclosure.
These standards, revised standards and interpretations are effective for annual financial statements beginning on or after
2016 and were not used in preparing these interim financial statements. The Company does not expect that these new
standards will have a material effect on the Group’s financial statements, except for IFRS 9 - Financial Instruments, which
may change the classification and measurement of the financial assets held by the Group and IFRS 16 – Leases, which
12
Biosev S.A.
may change the recognition, measurement, presentation and disclosure of leases. The Company does not intend to adopt
these standards in advance and the related effects have not been measured.
The CPC has not yet issued the pronouncements related to the IFRS 9 and IFRS 16 above. Considering the commitment
of CPC, CFC and CVM to keep the set of standards up-to-date as amendments are made by the IASB, these standards
are expected to be issued by CPC and approved by CFC and CVM by the date they become effective.
a2) The amendments to CPC 27/IAS 16 and CPC 29/IAS 41 are mandatory for the year beginning January 1, 2016 and
were adopted in the preparation of these interim financial statements.
Standard
CPC 27/IAS 16
and CPC 29/IAS
41
Main requirements
These pronouncements set forth that the plants
used in the production of agricultural products,
which can be remotely sold as agricultural
products, are to be measured at historical cost
instead of fair value.
Effective date
Under CPC 29 and CPC 27, sugarcane ratoons classified as the Bearer Plant for standing sugarcane, which is the
consumable biological asset. As a result, the sugarcane plantation (ratoons) will be reclassified to property, plant and
equipment, measured by the amortized cost and depreciated over its useful lives, in a descending order, based on the
expected productivity under CPC 27. The consumable biological assets continues to be measured at fair value less sales
cost, and become to be disclosed in current assets considering the maturity of sugarcane is twelve months, nonetheless
can be harvested up to eighteen months.
The Company adopted the transition rule that allows the companies to apply the fair value of the bearer plant as deemed
cost at the beginning of the earliest period present in the financial statements.
The adoption of the standard adjusted the equity balances and profit or loss disclosed in the financial statements for the
years ended March 31, 2015 and 2016, as follows:
Balance Sheet
Com pany
03.31.15
Disclosed
Adjustm ents
03.31.15
03.31.16
Ajusted
Disclosed
03.31.16
Adjustm ents
Ajusted
ASSETS
CURRENT ASSETS
Biological assets
-
381,330
381,330
-
556,819
556,819
1,141
NON-CURRENT ASSETS
-
-
-
-
1,141
Biological assets
1,083,387
(1,083,387)
-
1,836,758
(1,836,758)
-
1,766,427
702,057
2,468,484
1,693,140
643,235
2,336,375
-
-
-
215,338
(215,338)
-
Provision for investment loss
-
-
-
454,861
191,656
646,517
-
-
-
(2,936,585)
(611,881)
(3,548,466)
LIABILITIES
EQUITY
Accumulated losses
13
Biosev S.A.
Balance Sheet
Consolidated
03.31.15
Disclosed
Adjustm ents
03.31.15
03.31.16
Ajusted
Disclosed
03.31.16
Adjustm ents
Ajusted
ASSETS
CURRENT ASSETS
Biological assets
-
541,720
541,720
-
886,707
886,707
263,963
NON-CURRENT ASSETS
-
-
-
164,090
99,873
Biological assets
1,685,048
(1,685,048)
-
2,834,735
(2,834,735)
-
3,618,599
1,143,328
4,761,927
3,468,567
1,020,936
4,489,503
-
-
-
260,057
(215,338)
44,719
-
-
-
(2,936,585)
(611,881)
(3,548,466)
LIABILITIES
EQUITY
Accumulated losses
Com pany
Consolidated
Three-m onth period ended
Statem ent of Operations
06.30.15
Disclosed
Adjustm ents
06.30.15
06.30.15
Ajusted
Disclosed
06.30.15
Adjustm ents
Ajusted
(540,506)
(68,310)
(608,816)
(1,219,954)
(103,075)
(176,850)
(22,944)
(199,794)
-
-
Income tax and social contribution
(141,619)
23,225
(118,394)
(241,655)
-
35,046
(206,609)
Com pany
Consolidated
Statem ent of Cash Flow s
06.30.15
Disclosed
Loss for the period
(1,323,029)
Adjustm ents
06.30.15
06.30.15
Ajusted
Disclosed
06.30.15
Adjustm ents
Ajusted
(265,899)
(68,029)
(333,928)
(265,557)
(68,029)
(333,586)
149,332
178,850
11,173
22,944
160,505
201,794
225,807
-
18,583
-
244,390
-
(61,708)
57,137
(4,571)
(113,094)
84,492
(28,602)
Non-cash transactions:
Losses (gains) on changes in fair value of biological
assets, less estimated sales costs
3.
159,882
(23,225)
136,657
260,022
(35,046)
224,976
CASH AND CASH EQUIVALENTS
Com pany
06.30.16
Cash and banks
Debentures
03.31.16
Consolidated
06.30.16
03.31.16
9,794
4,772
14,639
685,271
106,502
68,314
174,239
22,601
45,542
1,520,727
135,888
169,506
29,205
860,087
242,382
1,826,121
Short-term investments refer to floating rate Certificates of Bank Deposit (CDBs) and/or CDBs indexed at rates ranging
from 10% to 102% of the Interbank Deposit Rate (CDI) as at June 30, 2016 (96% to 102% as at March 31, 2016). The
CDBs investments are subjected to repurchase commitments by the financial institutions issuers and/or custodians.
Debentures not subject to Tax on Financial Transactions (IOF) are issued from local prime financial institutions indexed to
rates ranging from 100% to 101% of CDI as at June 30, 2016 (80% to 101.5% as at March 31, 2016).
14
Biosev S.A.
4.
SHORT AND LONG -TERM INVESTMENTS
Com pany
06.30.16
Short and long-term investments
Fixed-income investment fund
Current assets
Non-current assets
Consolidated
03.31.16
06.30.16
03.31.16
56,838
155,555
305,369
-
-
1,325
411,802
1,297
56,838
155,555
306,694
413,099
56,838
150,732
306,694
408,268
-
4,823
-
4,831
Short and long-term investments refer to restricted deposits and are operations represented by (i) floating rate Certificates
of Bank Deposit (CDBs) and/or CDBs indexed at rates ranging from 90% to 102% of the Interbank Deposit Rate (CDI) as
at June 30, 2016 (90% to 102% as at March 31, 2016); (ii) margin deposits in derivative transactions; and (iii) foreign
currency-denominated deposits related to prepayments of export performed by subsidiary Biosev Bioenergia International
S.A., in the amount of R$136,567, as at June 30, 2016 (R$183,610 as at March 31, 2016), indexed at average rate of
0.49% p.a. These deposits may be considered, together with future agricultural production and sugar and ethanol
inventories, for purposes of calculation of the indices set forth in the prepaid export agreements.
The fixed-income investment funds are subject to the rates ranging from 13% to 14% p.a. as at June 30, 2016 (12.9% to
14% p.a. as at March 31, 2016).
5.
TRADE RECEIVABLES
Com pany
06.30.16
Consolidated
03.31.16
06.30.16
03.31.16
Related parties (Note 18)
In Brazil
Abroad
Third parties
In Brazil
Abroad
(-) Allow ance for doubtful accounts
2,477
27,552
5,498
38,497
158
50,159
154
30,296
30,029
43,995
50,317
30,450
71,415
27
40,308
383
135,132
79,952
90,202
49,014
71,442
40,691
215,084
139,216
101,471
84,686
265,401
169,666
(1,296)
(1,070)
(14,650)
(13,666)
100,175
83,616
250,751
156,000
Before recording transactions with new customers, the Group performs comprehensive risk analyses and assesses the
qualification of such counterparties. This analysis is carried out using balanced scorecard techniques, through the analysis
of financial statements, financial position and business references, taking into consideration quantitative and qualitative
aspects.
As at June 30, 2016, the balance of overdue items in the line “Trade receivables” (see the aging list below) amounts to
R$8,883, in Company, and R$35,829 in Consolidated (R$11,633 and R$22,497 as at March 31, 2016, respectively). Out of
this total, R$1,296, in Company, and R$14,650, in Consolidated, as at June 30, 2016 (R$1,070 and R$13,666 as at March
31, 2016, respectively) are recorded in allowance for doubtful accounts in the aging list below.
The remaining balance of R$7,587, in Company, and R$21,179, in Consolidated, as at June 30, 2016 (R$10,563 and
R$8,831 as at March 31, 2016 respectively) does not comprise the allowance for doubtful accounts, as there was no
significant change in the credit quality and the amounts are still considered recoverable.
15
Biosev S.A.
The aging list of trade receivables is as follows:
Com pany
06.30.16
Current
Overdue:
Up to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
Over 180 days
Consolidated
03.31.16
06.30.16
03.31.16
92,588
73,053
229,572
147,169
6,574
876
135
250
1,048
4,300
5,268
563
1,131
371
14,865
1,676
1,108
1,435
16,745
4,369
2,141
607
2,073
13,307
101,471
84,686
265,401
169,666
The change in the allowance for doubtful accounts is as follows:
Com pany
06.30.16
Balance at the beginning of period/year
Impairment losses recognized on receivables
Uncollectable amounts derecognized in the period/year
Amounts recovered in the period/year
Consolidated
03.31.16
06.30.16
03.31.16
(1,070)
(425)
199
(265)
(4,094)
47
3,242
(13,666)
(1,359)
375
(12,685)
(4,654)
75
3,598
(1,296)
(1,070)
(14,650)
(13,666)
The breakdown of the allowance for doubtful accounts per due date is as follows:
Com pany
06.30.16
61 to 90 days
91 to 180 days
Over 180 days
Consolidated
03.31.16
06.30.16
03.31.16
(1)
(250)
(1,045)
(3)
(875)
(192)
(65)
(1,016)
(13,569)
(45)
(954)
(12,667)
(1,296)
(1,070)
(14,650)
(13,666)
The overdue items not included in the allowance for doubtful accounts are broken down as follows:
Com pany
06.30.16
Up to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
Over 180 days
Consolidated
03.31.16
06.30.16
03.31.16
6,574
876
134
3
4,300
5,268
560
256
179
14,865
1,676
1,043
419
3,176
4,369
2,141
562
1,119
640
7,587
10,563
21,179
8,831
The income (expense) on the recognition of the allowance for doubtful accounts was recorded in line item “Other operating
income (expenses)” in the statement of operations. When recovery of additional cash is not expected, the amounts
credited to line item “Allowance for doubtful accounts” are in general reversed against the definite write-off of the
receivable and are recorded in profit or loss.
Maximum exposure to credit risk at the reporting dates is the carrying amount of each aging range, as shown in the aging
list above.
16
Biosev S.A.
6.
INVENTORIES
Com pany
06.30.16
Finished products
Sugar
Ethanol
Sugar syrup
Other (*)
Allow ance for negative inventory margin
Raw materials and packaging materials
Storeroom supplies
Allow ance for realization of storeroom inventories
Advances to suppliers (**)
Consolidated
03.31.16
06.30.16
03.31.16
72,224
120,899
2,377
85,260
(3,168)
77,807
98,216
2,654
30,983
(2,668)
154,630
190,599
7,389
136,271
(10,834)
89,525
151,992
4,943
39,882
(16,448)
277,592
206,992
478,055
269,894
2,271
73,625
(5,486)
339,916
1,886
58,631
(3,933)
243,001
3,826
114,433
(7,277)
763,981
2,724
92,795
(5,518)
447,638
410,326
299,585
874,963
537,639
687,918
506,577
1,353,018
807,533
(*) Out of total consolidated amount as at June 30, 2016, R$130,004 (R$29,665 as at March 31, 2016) refers to export of
commodities, as described in Note 18.
(**) Out of total amount as at June 30, 2016, R$66,267, in Company, and R$214,634 in Consolidated (R$57,769 and
R$208,243 as at March 31, 2016, respectively) refer to advances to sugarcane suppliers that are adjusted on a monthly
basis according to the specific conditions and indices set forth in the agreements, and R$273,649, in Company, and
R$549,347, in Consolidated (R$185,232 and R$239,395 as at March 31, 2016, respectively) refer to export
prepayment of commodities, as described in Note 18.
The changes in the allowance for negative inventory margin and realization of storeroom inventories are broken down as
follows:
Com pany
06.30.16
Negative inventory m argin
Opening balance
Additions
Reversals
Realization of storeroom inventories
Opening balance
Additions
Reversals
Consolidated
03.31.16
06.30.16
03.31.16
(2,668)
(3,168)
2,668
(6,321)
(2,668)
6,321
(16,448)
(10,834)
16,448
(13,028)
(16,448)
13,028
(3,168)
(2,668)
(10,834)
(16,448)
(3,933)
(2,908)
1,355
(12,919)
(7,022)
16,008
(5,518)
(3,647)
1,888
(19,598)
(10,344)
24,424
(5,486)
(3,933)
(7,277)
(5,518)
The allowance for negative inventory margin is calculated by analyzing the average production cost of finished products as
compared to their realizable value in the market, less costs to sell.
The allowance for realization of storeroom inventories, considered obsolete and slow-moving items is recognized on a
quarterly basis based on inventory management procedure of storeroom inventories duly approved by the Company.
The estimated storeroom inventories realizable after 12 months is R$4,812 as at June 30, 2016 (R$3,417 as at March 31,
2016).
The amount of the Company’s inventories recognized as cost of sales and services for the period ended June 30, 2016 is
R$729,655, in Company, and R$1,607,986 in Consolidated (R$608,816, in Company, and R$1,323,029, in Consolidated,
for the period ended June 30, 2015, respectively).
17
Biosev S.A.
7.
BIOLOGICAL ASSETS
Com pany
06.30.16
Opening balance
Increases arising from expenses on sugarcane crops and crop treatments
Gains on changes in fair value less estimated costs to sell
Sugarcane harvest at fair value in the year
Write-off
Consolidated
03.31.16
06.30.16
03.31.16
556,819
113,393
381,330
428,531
886,707
236,848
541,720
874,759
670,212
809,861
1,123,555
1,416,479
69,102
74,887
57,774
125,958
(97,698)
-
(327,599)
(330)
(201,689)
-
(655,400)
(330)
641,616
556,819
979,640
886,707
When determining the fair value, the Company takes the following into consideration:
Valuation methodology
The discounted cash flow is the method used for the economic and financial evaluation of sugarcane biological assets.
Discount rate
The discount rate used to calculate the discounted cash flow was 11.02%, which represents the weighted average cost of
capital (WACC), net of taxes. This rate is used as proper parameter to calculate the discount rate applicable to future cash
flows of the biological assets.
Market overview
Own or third-party sugarcane is processed by the plant or ethanol distillery. Its own sugarcane has two different origins:
(a) sugarcane grown in own land; and (b) sugarcane grown in leased land, where the plant leases the land from third parties
and is responsible for all farming activities. These lease agreements are for a six-year period (one cycle). The sugarcane from
third parties is acquired by the plant under supply contracts. Either the supplier or the plant itself can be responsible for the
transportation of sugarcane to the plant.
The formula of Conselho dos Produtores de Cana-de-Açúcar, Açúcar e Álcool (CONSECANA) calculates the consideration
per ton of sugarcane based on::
a)
The volume of ATR/KG delivered by the sugarcane supplier.
b)
The share of the sugarcane production cost as a percentage of the sugar, ethanol residue, anhydrous ethanol and
hydrated ethanol.
c)
The net prices of sugar in the domestic and foreign markets, and the prices of anhydrous ethanol and ethyl ethanol
fuel, hydrated ethanol, and ethanol for other purposes.
d)
The plant’s production mix for said crop.
CONSECANA’s reference price is published on monthly basis.
The following assumptions were used to determine the fair value:
Com pany
06.30.16
Consolidated
03.31.16
06.30.16
03.31.16
Estimated harvest area (in hectares)
Expected yields (in ton of sugarcane per hectare)
190,097
81.56
185,409
81.79
299,626
82.98
291,427
83.20
Total volume of recoverable sugar (in kilogram per ton of sugarcane)
Value of a kilogram of total recoverable sugar (in R$) - CONSECANA
Discount rate
125.13
0.78
11.02%
133.08
0.68
11.02%
126.87
0.77
11.02%
134.59
0.67
11.02%
As at June 30, 2016, the Company provided as guarantee for the export prepayment 226,034 hectares (226,034 hectares
as at March 31, 2016), equivalent to approximately 18,757,013 tons of sugarcane (18,806,632 as at March 31, 2016), at
fair value approximately of R$739,029 (R$687,740 as at March 31, 2016). Such prepayment falls due between April 2018
and September 2019.
18
Biosev S.A.
As at June 30, 2016, the amount allocated to inventory totaled R$9,355, in Company, and R$15,796, in Consolidated
(R$17,025 and R$18,558 as at March 31, 2016, respectively), related to sugarcane harvest at fair value.
8.
RECOVERABLE TAXES
Com pany
06.30.16
State VAT (ICMS)
Taxes on revenue (PIS and COFINS) (a)
Witholding income tax (IRRF) on short-term investments
and prepayments
Excise Tax (IPI) and other taxes
Current assets
Non-current assets
Consolidated
03.31.16
06.30.16
03.31.16
58,177
105,743
54,296
100,389
68,656
215,150
66,188
210,595
54,536
52,164
92,842
83,878
6,107
5,905
10,569
10,256
224,563
212,754
387,217
370,917
75,357
72,177
117,956
117,529
149,206
140,577
269,261
253,388
(a) Refers to PIS and COFINS credits relating to applicable legislation, mainly Laws 10637/02, 10833/03, 11774/2008 and
13043/14, the latter refers to the Regime Especial de Reintegração de Valores Tributários para Empresas
Exportadoras - REINTEGRA.
9.
ESCROW DEPOSITS
Com pany
06.30.16
Civil
Environmental
Tax law suits:
Federal VAT (IPI) payable
Income tax (IRPJ)/Social Contribution (CSLL)
ICMS, PIS e COFINS
Social security contributions
Other
Labor
Labor appeals
Consolidated
03.31.16
06.30.16
03.31.16
1,201
1,097
2,298
1,176
1,074
2,250
6,327
6,406
12,733
6,196
6,274
12,470
4,496
32,533
18,265
19,151
9
74,454
4,361
31,982
17,770
17,397
10
71,520
15,174
40,859
23,819
25,729
938
106,519
16,306
40,128
23,201
23,876
929
104,440
59,652
59,652
52,482
52,482
132,996
132,996
120,967
120,967
136,404
126,252
252,248
237,877
The changes in the Company’s escrow deposits are as follows:
Com pany
06.30.16
Opening balance
Additions
Offsets/redemptions
Consolidated
03.31.16
06.30.16
03.31.16
126,252
11,257
(1,105)
66,148
68,755
(8,651)
237,877
18,380
(4,009)
161,491
99,287
(22,901)
136,404
126,252
252,248
237,877
19
Biosev S.A.
10. CURRENT AND DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION
10.1 Deferred income tax and social contribution assets and liabilities disclosed in balance sheet
Company
06.30.16
Deferred income tax and social contribution assets
Deferred income tax and social contribution liabilities
Consolidated
03.31.16
06.30.16
03.31.16
(164,743)
1,141
-
42,577
(208,961)
263,963
(44,719)
(164,743)
1,141
(166,384)
219,244
10.2 Income tax and social contribution recognized in profit or loss
Com pany
06.30.16
Results from current income tax and social contribution
Results from deferred income tax and social contribution related to the origin and
reversal of temporary differences and tax loss carryforw ards
Consolidated
06.30.15
06.30.16
06.30.15
-
18,263
(65)
18,367
(191,875)
(136,657)
(305,372)
(224,976)
(191,875)
(118,394)
(305,437)
(206,609)
10.3 Income tax and social contribution recognized in other comprehensive income (loss)
Com pany
06.30.16
Results from deferred income tax and social contribution recognized in other
comprehensive income (loss):
Financial instruments - hedge accounting of futures
Financial instruments - hedge accounting of exchange rate changes
Effects on subsidiaries
06.30.16
06.30.15
58,049
18,456
58,049
8,703
-
-
(987)
(4,584)
(15,441)
(16,617)
(40,414)
3,884
(36,585)
(100,733)
(34,036)
(45,736)
(75,653)
Financial instruments - hedge accounting of Libor sw ap
Financial instruments - hedge accounting of Non-Deliverable Forw ard (NDF)
Consolidated
06.30.15
25,991
(18,074)
(80,256)
(106,247)
(57,579)
-
-
(80,256)
(75,653)
(80,256)
(75,653)
10.4 Reconciliation of income tax and social contribution expenses at statutory and effective rates
Com pany
06.30.16
06.30.15
Consolidated
06.30.16
06.30.15
Results before taxes
Statutory rate
(161,275)
34%
(215,534)
34%
(47,870)
34%
(126,977)
34%
Income (loss) from income tax and social contribution at statutory rate
Goodw ill amortization
Unrecognized deferred income tax and social contribution credits
Tax revenue (grants)
Foreign subsidiary rate differential
Thin Capitalization
Other
54,834
(51,909)
(189,941)
2,471
(7,061)
(269)
73,282
(67,930)
(122,993)
1,372
(2,125)
16,276
(1,018)
8,778
(311,483)
2,471
(1,402)
(16,105)
(2,954)
43,172
(847)
8,778
(257,652)
1,372
(1,945)
513
Results from incom e tax and social contribution at effective rate
(191,875)
(118,394)
(305,437)
(206,609)
20
Biosev S.A.
10.5 Balances of deferred income tax and social contribution assets and liabilities
Com pany
Temporary differences:
Provision for tax, labor, civil and environmental contingencies
Adjustment at fair value of biological assets
Adjustment to present value (AVP) - Law 11638
Hedge accounting of Libor sw ap, NDF and exchange rate changes
Effect of translation of functional currency
Unrealized exchange rate changes
Amortization of tax goodw ill
Encouraged accelerated depreciation (*)
Impairment
Mark-to-market of derivatives
Other
Unutilized tax losses and credits
Tax loss carryforw ards
Social contribution tax loss carryforw ards
Openning
Recognized in
Recognized in other
Closing
balance as at
profit or loss
com prehensive
balance as
03.31.16
for the year
incom e (loss)
at 06.30.16
36,389
(109,068)
93
80,371
(68,867)
162,495
(245,277)
(42,235)
26,570
(57,474)
38,671
1,609
(19,856)
(93)
(21,144)
1,302
(110,124)
3,039
424
(35,894)
(11,138)
25,991
-
37,998
(128,924)
85,218
(67,565)
52,371
(245,277)
(39,196)
26,994
(93,368)
27,533
(178,332)
(191,875)
25,991
(344,216)
131,615
47,858
-
-
131,615
47,858
1,141
(191,875)
25,991
(164,743)
(*) Refers to the adoption of accelerated depreciation coefficient, based on Law 4506/64.
Com pany
Provision for losses on advances to suppliers
Impairment
Other
Openning
Recognized in
Recognized in other
Closing
balance as at
profit or loss
com prehensive
balance as
03.31.15
for the year
incom e (loss)
at 06.30.15
36,071
8,045
(68,487)
469
80,422
(83,125)
200,998
(227,126)
(56,281)
28,565
56,758
(1,597)
(258)
(5,637)
(83)
(16,100)
2,114
(69,850)
(6,050)
3,972
(42)
(43,126)
(18,074)
-
34,474
7,787
(74,124)
386
46,248
(81,011)
131,148
(233,176)
(52,309)
28,523
13,632
(23,691)
(136,657)
(18,074)
(178,422)
131,615
47,858
-
-
131,615
47,858
155,782
(136,657)
(18,074)
1,051
21
Biosev S.A.
Consolidated
Impairment
Appreciation of acquired assets
Fair value of financial debts
Other
Recognized in
Recognized in other
Closing
Saldo inicial em
profit or loss
com prehensive
balance as
03.31.16
for the year
incom e (loss)
at 06.30.16
115,181
(172,288)
26
450,609
(68,856)
467,850
(245,277)
(310,814)
(42,235)
36,851
(317,135)
893
(16,315)
91,170
3,950
(23,241)
(116)
1,302
(317,837)
48,920
3,039
394
6,334
1,743
(30,728)
(80,256)
-
119,131
(195,529)
(90)
370,353
(67,554)
150,013
(245,277)
(261,894)
(39,196)
37,245
(310,801)
893
(14,572)
60,442
(10,340)
(306,240)
(80,256)
(396,836)
.
167,850
61,734
638
230
-
168,488
61,964
219,244
(305,372)
(80,256)
(166,384)
Consolidated
Provision for losses on advances to suppliers
Fair value of financial debts
Held-for-sale assets
Appreciation of acquired assets
Impairment
Other
Openning
Recognized in
Recognized in other
Closing
balance as at
profit or loss
com prehensive
balance as
03.31.15
for the year
incom e (loss)
at 06.30.15
147,510
8,539
(102,891)
1,038
407,757
(83,114)
(33,266)
466,718
(227,126)
1,276
(230,772)
(56,281)
(488,673)
38,658
116,381
(27,712)
(258)
(18,922)
(639)
2,114
2,490
(172,469)
(6,050)
40,692
3,972
6,521
(141)
(56,241)
(75,653)
-
119,798
8,281
(121,813)
399
332,104
(81,000)
(30,776)
294,249
(233,176)
1,276
(190,080)
(52,309)
(482,152)
38,517
60,140
(34,246)
(226,643)
(75,653)
(336,542)
168,900
62,112
1,226
441
-
170,126
62,553
196,766
(224,976)
(75,653)
(103,863)
As at June 30, 2016, the Company contains tax loss carryforwards in the amounts R$2,927,351 in Company, and
R$5,043,527 in Consolidated (R$2,368,701 and R$4,127,401 as at March 31, 2016, respectively) for which no deferred
income tax and social contribution assets have been recognized.
10.6 Management projections for the realization of deferred income tax and social contribution balances
According to the Company’s management projections, deferred income tax and social contribution arising from tax loss
carryforwards will be realized as shown below, based on taxable income projection.
22
Biosev S.A.
Com pany
06.30.16
Consolidated
03.31.16
06.30.16
03.31.16
2017/2018 crop
56,804
90,850
56,804
90,850
2018/2019 crop
2019/2020 crop
122,669
-
88,623
-
173,648
-
88,623
50,111
179,473
179,473
230,452
229,584
The Company’s deferred income tax and social contribution balances consist of tax loss carryforwards and temporary
differences. The study on the realization of these balances focuses exclusively on the expected realization (utilization) of
tax loss carryforwards.
The projections of future taxable income include several estimates related to the performance of the Brazilian and
international economies, exchange rate fluctuation, sales volume, sales price, tax rates, and others, which may change in
relation to actual data and amounts.
The Company’s projected earnings are based on the increase of own sugarcane availability, production capacity increase,
increase in sugarcane suppliers, specific projects for cost reduction and market price increase.
As income tax and social contribution depend not only on taxable income but also on the existence of non-taxable income,
non-deductible expenses and several other variables, there is no relevant correlation between the Group’s net profit and
income tax and social contribution on net profit.
11. INVESTMENTS (PROVISION FOR INVESTMENT LOSS)
Com pany
06.30.16
Investments in subsidiaries and jointly-controlled subsidiaries
Other investments
Investm ents
Provision for investm ent loss
Consolidated
03.31.16
06.30.16
03.31.16
420,184
425,935
204,158
2,502
2,502
2,502
207,153
2,502
422,686
428,437
206,660
209,655
(587,195)
(646,517)
-
-
a) Interest in subsidiaries and jointly-controlled entities
Com pany
Biosev
Consolidated
Biosev
Biosev
Bioenergia
Com ercializadora
Bioenergia S.A. International S.A.
de Energia S.A.
TEAG
Capital
Profit (loss) for the period
Equity
Elimination of gains on the sale of property, plant and equipment w ith related parties
843,603
(146,955)
(1,080,294)
(1,012)
175
(5,805)
5,657
-
2,501
54
3,161
-
64,702
(1,791)
68,153
-
Ow nership interest
Value of investm ents in subsidiaries under equity m ethod
100%
(1,081,306)
100%
5,657
100%
3,161
50%
34,077
494,079
32
-
-
170,081
204,158
Goodw ill/realization of concession value, net
Elimination of gains on the sale of property, plant and equipment w ith related parties
-
5,657
3,161
(587,195)
-
-
-
Equity pick up in subsidiaries
(146,923)
(5,805)
54
(895)
Investm ents
b) Changes in investments in subsidiaries, jointly-controlled entities and non-controlled entities
23
Biosev S.A.
Com pany
Goodw ill
Biosev
Bioenergia S.A.
(1,140,596)
(146,923)
Opening balance
Capital increase
Other comprehensive loss
Tavares de
Melo (*)
407,675
-
Am pla (*)
3,691
-
Other
2,502
-
06.30.16
(712,159)
(152,674)
03.31.16
(350,356)
2,500
(144,877)
206,245
-
-
-
-
-
-
206,245
(27,770)
-
-
-
-
-
-
(191,656)
(1,081,274)
5,657
3,161
407,675
3,691
2,502
(658,588)
(712,159)
494,079
-
-
-
-
-
494,079
494,079
-
5,657
3,161
407,675
3,691
2,502
422,686
428,437
(587,195)
-
-
-
-
-
(587,195)
(646,517)
Efects from changes in accounting standard - IAS 41
Value of investm ents in subsidiaries under equity m ethod
Biosev
Biosev
Bioenergia
Com ercializadora
International S.A. de Energia S.A.
11,462
3,107
(5,805)
54
Goodw ill
Value of investm ents
(*) Companies merged in prior years.
Consolidated
TEAG
Opening balance
Dividends
Profit (loss)
Realization of concession value, net
06.30.16
03.31.16
207,153
-
2,502
-
209,655
-
(2,995)
-
(2,995)
6,095
(895)
-
(895)
14,494
(2,100)
-
(2,100)
(8,399)
-
-
-
(488)
204,158
2,502
206,660
209,655
Other
Value of investm ents
Other
215,029
(10,981)
c) Investments in jointly-controlled entities

Terminal de Exportação de Açúcar do Guarujá Ltda. (TEAG)
Due to the Company’s control over Crystalsev Comércio e Representação Ltda. (Crystalsev) on December 28, 2011, the
Company recognized, through its indirect subsidiary Sociedade Operadora Portuária (SOP), for accounting purposes, 50%
of TEAG’s capital. This investment results from a joint venture between SOP and Cargill Agrícola S.A., a company
headquartered in Guarujá, SP, engaged in the undertaking of operations typical of a port operator and shipping agency;
road transportation of goods for own account or for third parties; the provision of services for own account or for third
parties, and the provision of specialized, commercial and industrial assistance to other local or foreign entities; and
holding interests in other entities as shareholder.
The respective balance sheet and statement of operations are broken down as follows:
TEAG
06.30.16
03.31.16
Balance Sheet
Assets
Total current assets
Long-term receivables
Property, plant and equipment and intangible assets
46,467
8,515
29,576
49,089
10,772
32,211
38,091
42,983
Total assets
Liabilities
Equity
Total equity
Total liabilities and equity
84,558
92,072
11,146
5,259
13,746
8,382
68,153
69,944
84,558
92,072
24
Biosev S.A.
TEAG
06.30.16
Statem ent of operations
Net revenue
Operating expenses
General, administrative and selling
Other operating income
06.30.15
19,934
12,961
(23,182)
(70)
(14,647)
27
Operating loss before finance incom e (expenses), net
Finance income, net
(3,318)
626
(1,659)
503
Loss before incom e taxes
(2,692)
901
(1,156)
374
Loss for the period
(1,791)
(782)
12. PROPERTY, PLANT AND EQUIPMENT
Com pany
Cost
Land
06.30.16
03.31.16
Accum ulated
Accum ulated
depreciation
16,863
Buildings
321,272
Improvements
Facilities
(109,336)
Net
Cost
16,863
26,953
211,936
323,296
depreciation
(108,471)
Net
26,953
214,825
51,915
(28,846)
23,069
51,897
(28,176)
23,721
402,647
(187,912)
214,735
400,839
(181,705)
219,134
7,086
Furniture and fixtures
15,375
(8,399)
6,976
15,270
(8,184)
IT equipment
35,518
(29,076)
6,442
35,388
(28,638)
6,750
2,293,375
(1,262,878)
1,030,497
2,259,931
(1,230,005)
1,029,926
Machinery and equipment (*)
Vehicles
15,035
(10,989)
4,046
15,064
(10,720)
4,344
729,673
(598,823)
130,850
710,125
(578,979)
131,146
1,660,715
(1,005,483)
655,232
1,605,375
(962,140)
643,235
5,542,388
(3,241,742)
2,300,646
5,444,138
(3,137,018)
2,307,120
Agricultural machinery and implements (**)
Bearer Plan
Construction in progress (Note 12.1)
27,901
5,570,289
(3,241,742)
27,901
29,255
2,328,547
5,473,393
(3,137,018)
29,255
2,336,375
Consolidated
06.30.16
03.31.16
Accum ulated
Cost
Land
19,419
(63,141)
91,422
154,289
(61,627)
92,662
(255,587)
319,399
563,656
(246,431)
317,225
(13,384)
10,174
22,780
(13,074)
9,706
(45,367)
14,494
58,642
(44,382)
14,260
5,135,545
(2,848,926)
2,286,619
5,078,231
(2,766,823)
2,311,408
49,665
(44,733)
4,932
48,487
(44,356)
4,131
1,183,576
(938,700)
244,876
1,159,331
(902,148)
257,183
2,705,102
(1,662,736)
1,042,366
2,608,975
(1,588,039)
1,020,936
10,435,291
(6,052,330)
4,382,961
10,264,039
(5,844,450)
4,419,589
34,453
69,914
4,417,414
10,333,953
154,563
574,986
Furniture and fixtures
23,558
IT equipment
59,861
Vehicles
Construction in progress (Note 12.1)
34,453
10,469,744
(179,756)
(6,052,330)
-
Net
40,036
Facilities
Bearer Plan
depreciation
529,612
Improvements
Agricultural machinery and implements (**)
Cost
19,419
529,016
-
Accum ulated
Net
349,260
Buildings
Machinery and equipment (*)
depreciation
(177,570)
(5,844,450)
40,036
352,042
69,914
4,489,503
(*) Includes deferred manufacturing costs.
(**) Includes deferred agricultural costs.
25
Biosev S.A.
Changes in the net value of property, plant and equipment are as follows:
Com pany
06.30.16
Opening balance
Consolidated
03.31.16
06.30.16
03.31.16
2,336,375
2,468,484
4,489,503
Acquisitions and additions
98,241
388,731
136,680
686,959
Residual value of w rite-offs
Impairment reversal (*)
(2,299)
(25,468)
(2,794)
(28,543)
130
(103,900)
8,176
(503,548)
222
(206,197)
8,764
(939,603)
2,328,547
2,336,375
4,417,414
4,489,503
Depreciation for the year/period
4,761,926
(*) See Note 12.3.
12.1 Construction in progress
Construction in progress is broken down by plant as follows:
Com pany
Plant
Leme
06.30.16
Consolidated
03.31.16
06.30.16
03.31.16
1,436
1,597
1,436
1,597
819
2,263
819
2,263
Giasa
4,745
2,569
4,745
2,569
Lagoa da Prata
4,639
8,406
4,639
8,406
215
2,947
215
2,947
Maracaju
5,493
4,164
5,493
4,164
Estivas
7,490
5,142
7,490
5,142
Santa Elisa
-
-
2,029
16,303
Vale do Rosário
-
-
2,987
17,450
MB
-
-
159
2,774
Continental
-
-
1,377
4,132
Corporativo
3,064
2,167
3,064
2,167
27,901
29,255
34,453
69,914
Passatempo
Rio Brilhante
The balance of construction in progress refers basically to the adaptation of industrial facilities, increase in sugar
production and refurbishment of administrative facilities.
12.2 Fixed assets given in guarantees and commitments for acquisition of fixed assets
As at June 30, 2016, the Company had agreements with suppliers for acquisition of fixed assets, amounting to R$22,990
(R$29,807 as at March 31, 2016), and total fixed assets given in guarantees in the amount of R$973,000 (R$912,942 as at
March 31, 2016).
12.3 Impairment
As at June 30, 2016, the impairment of the Company’s fixed assets resulted in a gain from reversal of impairment in the
amount of R$130 in Company, and R$222 in Consolidated.
As at June 30, 2016, the accumulated balance of impairment is R$71,698 in Company, and R$197,175 in Consolidated
(R$71,828 and R$197,387 as at March 31, 2016, respectively).
The main impaired assets comprise land, buildings, furniture and fixtures, computers, machinery and equipment, vehicles,
and agricultural machinery and implements.
26
Biosev S.A.
13. INTANGIBLE ASSETS
Com pany
06.30.16
Consolidated
03.31.16
06.30.16
03.31.16
Goodw ill
Biosev Bioenergia
-
-
494,079
494,079
Usinas Tavares de Melo
Ampla
-
-
407,675
3,691
407,675
3,691
-
-
905,445
905,445
15,168
16,826
18,854
20,724
15,168
16,826
18,854
20,724
-
-
7,455
7,994
Softw are
Licenses
Other
-
-
7,455
7,994
15,168
16,826
931,754
934,163
Changes in intangible assets are as follows:
Com pany
03.31.16
Additions
Am ortization
06.30.16
Softw are
Licenses
16,826
766
(2,424)
15,168
16,826
766
(2,424)
15,168
Com pany
03.31.15
Additions
Am ortization
06.30.15
Softw are
Licenses
19,308
669
(2,918)
17,059
19,308
669
(2,918)
17,059
Consolidated
03.31.16
Additions
Am ortization
06.30.16
Goodw ill
Biosev Bioenergia
494,079
-
-
494,079
407,675
-
-
407,675
3,691
-
-
3,691
(2,793)
18,854
Ampla
Softw are
Licenses
20,724
923
Other
Other
7,994
934,163
923
(539)
7,455
(3,332)
931,754
27
Biosev S.A.
Consolidated
03.31.15
Additions
Am ortization
06.30.15
Goodw ill
Biosev Bioenergia
494,079
-
-
494,079
407,675
-
407,675
3,691
-
-
3,691
21,973
1,090
(3,294)
19,769
Ampla
Softw are
Licenses
Other
Other
9,939
937,357
1,090
(704)
9,235
(3,998)
934,449
14. BORROWINGS AND FINANCING
Description
Advance on Foreign Exchange Contract (ACC)
(c)
Currency
US$
Weighted average financial charges
Maturity
Collaterals
Exchange rate change plus average interest rate of
5.56% p.a.
TJLP plus average interest rate of 3.68% p.a. or
currency basket plus average interest rate of 3.13%
p.a.
Exchange rate change plus Libor plus average
interest rate of 5.40% p.a.
From 08.03.16 to
06.15.18
Guarantee and promissory note
From 12.15.16 to
04.16.18
Mortgage, lien, guarantee and promissory
note
On 09.30.19
757,131
836,250
60,480
82,747
Guarantee, promissory note and
receivables
472,039
619,940
103,736
107,222
19,497
24,471
-
10,187
Financing - BNDES
R$
Export Prepayment - PPE (b)
US$
Constitutional Fund to Finance the the Midw est FCO
R$
Interest of 8.5% p.a.
On 12.01.23
Collateral and financed assets
Finame
R$
Average interest rate of 5.74% p.a. or TJLP plus
average interest rate of 2.85% p.a.
From 04.15.17 to
11.15.19
Mortgage, lien, guarantee and promissory
note
Constitutional Fund to Finance the Northeast
(FNE)
R$
Export Credit Note and Bill - NCE
R$
Offshore Loan - Proparco (e)
US$
Bank Credit Note - CCB
R$
Average interest rate of 136.77% of CDI or CDI plus
average rate of 4.25% p.a.
Average interest rate of 16.65% p.a. or average
interest rate of 120.90% of CDI rate
From 07.07.16 to
04.24.17
354,867
442,378
On 10.15.27
Mortgage, credit rights and machinery and
equipment
161,872
177,945
From 08.03.16 to
06.25.18
Collection and assignment of receivables
293,482
2,223,104
1,364,359
858,745
223,983
2,525,123
872,813
1,652,310
Current liabilities
Non-current liabilities
Descrição
Currency
Restructured debt (ex-Debentures) - R$ (c)
R$
Restructured debt - US$ (c)
US$
Restructured debt (Debenture) - R$ (a)/(c)
R$
Advance on Foreign Exchange Contract - ACC
(c)
US$
Financing - BNDES
R$
Weighted average financial charges
Com pany
06.30.16
03.31.16
Maturity
From 10.26.16 to
07.10.24
Exchange rate change plus Libor + average interest From 07.11.16 to
rate of 2.47% p.a.
07.10.24
CDI plus 1.72% p.a.
Collaterals
Consolidated
06.30.16
03.31.16
Guarantee, receivables, mortgage and
shares
shares
shares
261,983
252,437
1,057,175
1,162,546
317,372
303,478
1,972,998
2,215,713
60,480
82,747
1,314,833
1,557,375
CDI plus 1.72% p.a.
On 07.10.24
Exchange rate change plus average interest rate of
5.58% p.a.
TJLP plus average interest rate of 3.68% p.a. or
currency basket plus average interest rate of 3.13%
p.a.
Exchange rate change plus Libor + average interest
rate of 4.63% p.a.
From 08.03.16 to
06.15.18
From 12.15.16 to
04.16.18
Mortgage, financed assets, guarantee and
promissory note
From 10.26.17 to
09.30.19
Guarantee, promissory note and
receivables
Export Prepayment (PPE) (b)/(c)/(f)
US$
Constitutional Fund to Finance the the Midw est FCO
R$
Interest of 8.5% p.a.
On 12.01.23
Guarantee and financed assets
103,736
107,222
Finame
R$
Average interest rate of 6.81% p.a. or TJLP plus
average interest rate of 2.85% p.a.
From 04.15.17 to
04.15.21
Mortgage, financed assets, guarantee and
promissory note
38,059
34,606
Constitutional Fund to Finance the Northeast
(FNE)
R$
-
10,187
Rural Securitization Program (PESA)
R$
IGP-M plus 4% p.a.
From 05.01.18 to
08.02.19
Guarantee, promissory note and National
Treasury Certificate (CTN)
10,711
10,857
From 07.07.16 to
06.14.18
459,104
572,832
On 10.15.27
Mortgage, credit rights and machinery and
equipment
161,872
177,945
From 08.03.16 to
06.25.18
Collection and assignment of receivables
293,482
6,051,805
3,358,562
2,693,243
223,984
6,711,929
1,830,913
4,881,016
Export Credit Note and Bill - NCE (d)
Offshore Loan - Proparco (e)
Bank Credit Note - CCB
R$/US$
US$
R$
Average interest rate of 136.81% of CDI or
exchange rate change plus interest of 5.78% p.a. or
CDI plis average rate of 4.25% p.a.
Average interest rate of 16.65% p.a. or average
interest rate of 120.90% of CDI rate.
Current liabilities
28
Biosev S.A.
(a) Net of commission costs for the issuance of debentures, in the amount of R$3,015, as at June 30, 2016 (R$3,109 as at
March 31, 2016), monthly recorded in profit or loss through the maturity of such transaction.
(b) Net of commission costs for the issuance of PPE, in the amount of R$197, as at June 30, 2016 (R$224 as at March 31,
2016), monthly recorded in profit or loss through the maturity of such transaction.
(c) Net of deferred expenses, in the amount of R$24,553, as at June 30, 2016 (R$30,996 as at March 31, 2016), monthly
recorded in profit or loss through the maturity of such transaction.
(d) As at June 30, 2016, the US debt amounts to R$7,074 in Consolidated (R$25,756 as at March 31, 2016).
(e) Net of commission costs for the issuance of Offshore Loan – Proparco, in the amount of R$1,318, as at June 30, 2016
(R$1,347 as at March 31, 2016), monthly recorded in profit or loss through the maturity of such transaction.
(f) Include export prepayments, contracted on January 9, 2015, by subsidiary Biosev Bioenergia International S.A. with
the trade union of foreign financial institutions, in the amount of R$795,461, as at June 30, 2016 (R$866,799 as at
March 31, 2016). These operations are collateralized by a set of assets for settlement. As at June 30, 2016, the foreign
currency-denominated deposits referred to in item (iii), Note 4, comprise, together with the agricultural production
(sugarcane) of specific units and sugar and ethanol inventories, the ration of 141.42% of the obligations.
Non-current liabilities mature as follows (crop year):
Com pany
Consolidated
06.30.16
06.30.16
July 2017 to March 2018
354,899
896,262
April 2018 to March 2019
201,439
517,084
109,243
317,033
31,433
238,667
April 2021 to October 2027
161,731
724,197
858,745
2,693,243
Some of the financing agreements entered into by the Company contain restrictive covenants, including the debt
restructuring agreement of Biosev Bioenergia S.A., as set out in the Obligation Acknowledgment Master Agreement and
Other Covenants entered into on October 26, 2009, and the related agreements, as part of the acquisition process of
Biosev Bioenergia S.A.
These restrictive covenants, applicable beginning 2010 (inclusive), require compliance with a minimum current liquidity
ratio, net debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization) ratio, as defined in the terms of
contracts, and EBITDA-to-net financial expenses ratio.
The verification of compliance with the restrictive covenants occurs annual, at the close of Company’s year. As at March
31, 2016, the Company was compliant with the contractual provisions of its borrowings and financing.
15. TRADE PAYABLES
Com pany
06.30.16
Related parties (Note 18)
In Brazil
Abroad
Third parties
In Brazil
Abroad
Current liabilities
Consolidated
03.31.16
06.30.16
03.31.16
1,169
52,416
5,121
45,120
6,797
67,191
13,229
78,319
53,585
50,241
73,988
91,548
175,573
336
176,026
157
452,872
17,502
466,636
15,532
175,909
176,183
470,374
482,168
229,494
226,424
544,362
573,716
228,530
225,783
542,560
572,483
964
641
1,802
1,233
29
Biosev S.A.
16. TAXES AND CONTRIBUTIONS PAYABLE
Com pany
06.30.16
Installment plan (*)
IPI
State VAT (ICMS)
Tax on revenue (PIS and COFINS)
Social Securities Tax (INSS)
Income tax (IRPJ) and social contribution (CSLL)
Other
Current liabilities
Consolidated
03.31.16
06.30.16
03.31.16
841
159
790
518
4,056
517
2,760
1,201
392
768
231
7,280
391
4,443
2,653
695
792
856
8,093
2,447
2,883
9,937
799
14,737
322
12,642
2,402
5,199
9,641
14,706
18,419
46,038
9,638
14,703
18,416
46,035
3
3
3
3
(*) Refer to the adhesion of installments plans in the State of Mato Grosso do Sul, according to Attachment IX, of Decree
9203/1998 RICMS/MS, including the outstanding ICMS credits subject to reduction of interest and fines, and extension
of payment term.
17. PROVISION FOR TAX, LABOR, CIVIL AND ENVIRONMENTAL CONTINGENCIES
The Company is a party to various ongoing lawsuits involving tax, labor, civil and environmental matters arising in the
normal course of business.
Com pany
Inflation
03.31.16
adjustm ent
Additions
Reversals
Paym ents
06.30.16
Tax
ICMS
219
1
-
-
-
IRPJ/CSLL
801
12
-
-
-
813
12,163
343
1,102
-
-
13,608
13,183
356
1,102
-
-
14,641
Labor
(4,514)
(1,406)
220
79,811
598
8,072
Environmental
7,988
338
-
-
-
82,561
Civil
5,219
183
3
-
-
93,018
1,119
8,075
(4,514)
(1,406)
96,292
106,201
1,475
9,177
(4,514)
(1,406)
110,933
8,326
5,405
Com pany
Inflation
03.31.15
adjustm ent
Additions
Reversals
Paym ents
06.30.15
Tax
ICMS
247
(20)
-
IRPJ/CSLL
908
13
-
Labor
(11)
-
-
216
-
921
13,043
(1,479)
473
(2,962)
-
9,075
14,198
(1,486)
473
(2,973)
-
10,212
81,563
1,252
3,136
(5,411)
Environmental
6,150
251
-
(29)
Civil
3,355
142
1,000
91,068
1,645
4,136
(5,440)
(1,049)
90,360
105,266
159
4,609
(8,413)
(1,049)
100,572
-
(1,049)
-
79,491
6,372
4,497
30
Biosev S.A.
Consolidated
Inflation
03.31.16
adjustm ent
Additions
Reversals
Paym ents
06.30.16
Tax
IPI levied on sugar sales
IPI
PIS and COFINS (taxes on revenue)
ICMS
IRPJ/CSLL
Other
Trabalhistas
Ambientais
Cíveis
16,551
146
6,380
218
9,448
38,032
724
123
22
1
100
1,007
9
1,981
-
-
-
16,674
146
6,402
219
9,548
41,020
733
71,499
1,262
1,981
-
-
74,742
200,054
38,674
28,074
2,667
1,610
682
17,862
334
3
(6,224)
-
(8,550)
-
205,809
40,618
28,759
266,802
4,959
18,199
(6,224)
(8,550)
275,186
338,301
6,221
20,180
(6,224)
(8,550)
349,928
Consolidated
Inflation
03.31.15
adjustm ent
Additions
Reversals
Paym ents
06.30.15
Tax
IPI levied on sugar sales
IPI
PIS and COFINS (taxes on revenue)
ICMS
87,794
110
-
146
-
-
-
-
146
32,961
20
-
-
-
32,981
1,402
(831)
-
IRPJ/CSLL
10,855
91
-
52,965
Other
(1,479)
689
186,812
Labor
1,943
10
(71,718)
(11)
(4,692)
-
(2,079)
-
-
1,943
(76,421)
16,186
-
560
-
10,946
-
48,737
-
699
-
110,255
222,591
314
7,531
(14,292)
Environmental
31,604
1,368
-
(72)
(6,183)
-
209,961
Civil
27,583
682
1,001
(13)
-
281,778
2,364
8,532
(14,377)
(6,183)
272,114
468,590
285
10,475
(90,798)
(6,183)
382,369
32,900
29,253
Contingencies - court or out-of-court claims classified as possible losses and not provided for
Tax
The tax claims (court and out-of-court) existing as at June 30, 2016, with an acknowledged possible likelihood of loss and
not provided for are shown in the table below:
Com pany
06.30.16
Tax
Consolidated
03.31.16
06.30.16
03.31.16
483,142
474,825
1,258,427
1,224,529
483,142
474,825
1,258,427
1,224,529
Among the contingencies for which a provision has not been recognized and that have been assessed as possible loss is
the collection of ICMS due to an alleged difference identified in inventories. Additionally, there is a discussion also
involving ICMS on the reasonableness in levying ICMS on export of semi-finished products.
31
Biosev S.A.
Civil and labor
The civil and labor claims (court and out-of-court) as at June 30, 2016, with an acknowledged possible likelihood of loss
and not provided for are shown in the table below:
Com pany
06.30.16
Consolidated
03.31.16
06.30.16
03.31.16
Civil
21,638
19,565
36,321
33,238
Labor
21,189
24,479
47,729
50,164
42,827
44,044
84,050
83,402
As at June 30, 2016, the Group was a party to labor and civil lawsuits whose likelihood of loss is considered possible
based on the opinion of Group’s legal counsel.
18. RELATED PARTIES
There are no significant changes of transactions with related parties as disclosed in the financial statements as at March
31, 2016.
The related parties transactions present in the tables below, basically refer to: (i) product sales in the domestic and foreign
market by price agreed between the parties, based on market price; (ii) loans; (iii) cost-sharing related to mutual sharing
structures; (iv) provision of services related to market advisory and brokerage services related to derivative transactions;
(v) commodities exports performance; (vi) purchase of inputs operations, sugarcane, rural lease and/or agricultural
partnership, sugar elevation services and sugar storage.
The table below shows the balances and transactions as at June 30, 2016 between the Company and its subsidiaries,
which are consolidated in its balance sheet:
Com pany
Asset
Subsidiaries
Trade
receivables
Total
Biosev Bioenergia International S.A.
26,974
2,344
26,974
2,344
06.30.16
29,318
29,318
37,960
5,368
37,960
5,368
03.31.16
43,328
43,328
Com pany
Liability
Subsidiaries
Advances from
Trade payables
custom ers (*)
Loan (**)
Total
Sociedade Operadora Portuária de São Paulo Ltda.
52,396
720
-
302,475
-
527,476
9,322
354,871
528,196
9,322
06.30.16
53,116
302,475
536,798
892,389
25,268
1,376
-
262,997
-
521,829
9,064
288,265
523,205
9,064
03.31.16
26,644
262,997
530,893
820,534
(*)
As at June 30, 2016, the amount of R$192,542 (R$167,927 as at March 31, 2016) and R$109,933 (R$95,070 as at
March 31, 2016) was recorded in current liabilities and non-current liabilities, respectively.
32
Biosev S.A.
(**)
As at June 30, 2016, the amount of R$9,322 (R$1,555 as at March 31, 2016) and R$527,476 (R$529,338 as at
March 31, 2016) was recorded in current liabilities and non-currently liabilities, respectively, in line item "Other
payables".
Com pany
Profit or loss
Revenues
Expenses
Interest and
Interest and
exchange rate
Subsidiaries
Sales
changes
exchange rate
Total
Purchases
changes
Total
142,779
2,580
-
19,447
-
162,226
2,580
-
(5,900)
-
(3,051)
(21,306)
(303)
(3,051)
(27,206)
(303)
06.30.16
145,359
19,447
164,806
(5,900)
(24,660)
(30,560)
105,395
711
-
4,418
3,012
-
109,813
3,723
-
-
(726)
(70)
(265)
(726)
(70)
(265)
06.30.15
106,106
7,430
113,536
-
(1,061)
(1,061)
The table below shows the balances and transactions as at June 30, 2016 between the Company and other related
parties:
Com pany
Assets
Derivatives (*)
Com panies under com m on control
Louis Dreyfus Company Brasil S.A.
Louis Dreyfus Company Ethanol Merchandising LLC
Term Commodities Inc.
Com pany controlled by a relative of a Com pany's key
m anagem ent m em ber
Sermatec Industria e Montagens Ltda.
06.30.16
Louis Dreyfus Company Suisse S.A.
03.31.16
Trade
Advances to
receivables (**)
suppliers (***)
Total
24,475
133
578
-
273,649
-
273,782
578
24,475
24,475
711
273,649
298,835
-
4,846
-
4,846
-
4,846
-
4,846
24,475
5,557
273,649
303,681
109,923
130
537
-
185,232
-
185,362
537
109,923
109,923
667
185,232
295,822
-
5,081
-
5,081
-
5,081
-
5,081
109,923
5,748
185,232
300,903
(*) As at June 30, 2016, the amounts of R$16,580 (R$32,473 as at March 31, 2016), were recorded in line item
“Derivatives”, and R$7,895 (R$77,450 as at March 31, 2016), in line item “Short-term investments”, in current assets
relating to margin deposits in derivative transactions.
(**) As at June 30, 2016, out of total trade receivables, the amount of R$4,846 (R$5,081 as at March 31, 2016) was
recorded in line item “Other receivables” in non-current assets.
(***) As at June 30, 2016, out of total advances to suppliers, the amount of R$273,649 (R$185,232 as at March 31, 2016)
corresponds to export of commodities.
33
Biosev S.A.
Consolidated
Assets
Derivatives (*)
Louis Dreyfus Company Sucos S.A.
Anbisa Agricultura Ltda.
B5 Participações Ltda.
Beabisa Agricultura Ltda.
Beabisa Agro Comercial e Empreendimentos Ltda.
Carbisa Agricultura Ltda.
Edimasa Agricultura Ltda.
Elbel Comércio e Participações Ltda.
Usina Santa Elisa S.A.
Relative of a Com pany's key m anagem ent m em ber
Beatriz Biagi Becker
Edilah Faria Lacerda Biagi
Maurilio Biagi Filho
06.30.16
Alebisa Empreendimento e Participações Ltda.
Panorama Agricultura Ltda.
Maurilio Biagi Filho
03.31.16
Trade
Advances to
receivables (**)
suppliers (***)
Total
24,475
634
152
6
49,525
-
549,347
-
634
549,499
6
49,525
24,475
24,475
50,317
549,347
624,139
-
4,846
528
137
604
40
408
1,174
1,529
200
-
528
137
604
40
408
1,174
1,529
200
4,846
-
4,846
4,620
9,466
-
-
63
223
359
63
223
359
-
-
645
645
24,475
55,163
554,612
634,250
109,923
52
148
6
30,244
-
239,395
-
52
239,543
6
30,244
109,923
109,923
30,450
239,395
379,768
-
5,081
720
924
572
185
22
610
51
2,658
67
353
-
720
924
572
185
22
610
51
2,658
67
353
5,081
-
5,081
6,162
11,243
-
-
768
2,698
351
768
2,698
351
-
-
3,817
3,817
109,923
35,531
249,374
394,828
(*) As at June 30, 2016, the amounts of R$16,580 (R$32,473 as at March 31, 2016), were recorded in line item
“Derivatives”, and R$7,895 (R$77,450 as at March 31, 2016), in line item “Short-term investments”, in current assets
relating to margin deposits in derivative transactions.
(**) As at June 30, 2016, out of total trade receivables, the amount of R$4,846 (R$5,081 as at March 31, 2016) was
recorded in line item “Other receivables” in non-current assets.
(***) As at June 30, 2016, out of total advances to suppliers, the amount of R$549,347 (R$239,395 as at March 31, 2016)
corresponds to export of commodities.
34
Biosev S.A.
Com pany
Liabilities
Derivatives
Trade
Advances from
payables
custom ers (*)
Loan
Total
Sugar Netherlands Finance BV
-
20
449
-
873,894
65,194
-
20
449
873,894
65,194
06.30.16
-
469
939,088
-
939,557
13,662
15,982
3,472
3,870
273
-
993,092
71,567
-
12
-
15,982
3,484
996,962
71,567
273
13,662
13,662
23,597
1,064,659
12
1,101,930
Macrofértil Indústria e Comércio de Fertilizantes Ltda.
03.31.16
(*) Amounts recorded in advances from foreign customers, R$361,324 (R$423,340 as at March 31, 2016) in current
liabilities and R$577,764 (R$641,319 as at March 31, 2016) in non-current liabilities, relating to 2016/2017 to
2018/2019 crops.
35
Biosev S.A.
Consolidated
Liabilities
Derivatives
LDC Trading and Services Co. S.A.
Com panies controlled by a relative of a Com pany's key
Maubisa Agricultura Ltda.
Santa Elisa Participações S.A.
Trade
Advances from
payables
custom ers (*)
Loan
Total
-
509
65,924
653
150
464
1,974,177
494,882
-
-
509
2,040,101
494,882
653
150
464
-
67,700
2,469,059
-
2,536,759
-
410
478
87
268
170
1,014
229
2,884
236
99
3
-
-
410
478
87
268
170
1,014
229
2,884
236
99
3
-
5,878
-
-
5,878
Jointly-controlled entity
TEAG - Terminal Exp. Açúcar Guarujá Ltda.
06.30.16
LDC Trading and Services Co. S.A.
Maubisa Agricultura Ltda.
Renk Zanini S.A. Equipamentos Industriais
03.31.16
-
390
-
-
390
-
390
-
-
390
-
1
19
-
-
1
19
-
20
-
-
20
-
73,988
2,469,059
-
2,543,047
13,662
3,482
61,854
16,036
806
83
346
1,990,658
728,309
-
12
-
3,494
2,052,512
728,309
16,036
806
83
14,008
13,662
82,607
2,718,967
12
2,815,248
-
-
-
-
662
546
383
694
5
578
540
229
4,077
454
107
263
-
-
662
546
383
694
5
578
540
229
4,077
454
107
263
-
8,538
-
-
8,538
-
99
304
-
-
99
304
-
403
-
-
403
13,662
91,548
2,718,967
12
2,824,189
(*) Amounts recorded in advances from foreign customers, R$699.632 (R$569.277 as at March 31, 2016) in current
liabilities and R$1.769.427 (R$2.149.690 as at March 31, 2016) in non-current liabilities, relating to 2016/2017 to
2018/2019 crops.
36
Biosev S.A.
Com pany
Profit (loss)
Sales
Incom e
Expenses
Interest and
Interest and
exchange rate
Total
changes
incom e
Purchases
exchange rate
Total
changes
expenses
Louis Dreyfus Company Asia Pte. Ltd.
150,204
649
274,729
-
55,856
9,327
5
206,060
649
274,729
9,327
5
(551,537)
(50,660)
(274)
(9,343)
(1,011)
(319)
(551,811)
(9,343)
(1,011)
(50,979)
425,582
65,188
490,770
(602,197)
(10,947)
(613,144)
278
-
278
-
-
278
-
278
-
-
-
425,860
65,188
491,048
(602,197)
(10,947)
(613,144)
121,675
144,496
-
-
121,675
144,496
-
(1)
(293,743)
(1,126)
(383)
(390)
(6,283)
(57)
(1)
(294,133)
(1,126)
(6,283)
(440)
06.30.15
266,171
266,171
(295,253)
(6,730)
(301,983)
06.30.16
-
37
Biosev S.A.
Consolidated
Profit (loss)
Sales
LDC Trading and Services Co.S.A.
Teag-Terminal Exp. Açúcar Guarujá Ltda.
Incom e
Expenses
Interest and
Interest and
exchange rate
Total
changes
incom e
LDC Trading and Services Co.
Teag-Terminal Exp. Açúcar Guarujá Ltda.
Santa Elisa Participações S.A.
06.30.15
Total
changes
expenses
136,661
66,636
5
7
640,503
449,707
66,636
5
(16,397)
(220)
(893,479)
(18,863)
(50,660)
(15)
(274)
(23,358)
(9,505)
(474)
(16,397)
(235)
(893,753)
(42,221)
(9,505)
(51,134)
953,556
203,302
1,156,858
(979,619)
(33,626)
(1,013,245)
-
-
-
(4,217)
(84)
(4,301)
-
(4,217)
(84)
(4,301)
405
-
-
405
-
(1,998)
(1,870)
(1,214)
(834)
(1,257)
(734)
(9,348)
(1,425)
-
(1,998)
(1,870)
(1,214)
(834)
(1,257)
(734)
(9,348)
(1,425)
405
-
405
(18,680)
-
(18,680)
-
-
-
(866)
(3,019)
-
(866)
(3,019)
06.30.16
exchange rate
7
503,842
449,707
-
Purchases
953,961
-
-
-
203,302
(3,885)
1,157,263
-
-
(3,885)
(1,006,401)
(33,710)
(1,040,111)
(1,127)
(289)
(16,050)
(59)
(36,305)
(255)
(155)
(580,191)
(14,889)
(1,708)
(16,050)
(442)
(17,525)
(649,995)
15
409,582
311,476
-
1,415
-
15
410,997
311,476
-
(36,305)
(255)
(155)
(579,064)
(14,600)
(1,708)
(383)
721,073
1,415
722,488
(632,470)
-
6
6
(3,970)
-
(3,970)
-
6
6
(3,970)
-
(3,970)
-
-
-
(1,814)
(1,614)
(979)
(1,182)
(21)
(1,783)
(1,130)
(8,895)
(1,026)
(3)
(796)
(720)
-
(1,814)
(1,614)
(979)
(1,182)
(21)
(1,783)
(1,130)
(8,895)
(1,026)
(3)
(796)
(720)
-
-
-
(19,963)
-
(19,963)
-
-
-
(379)
-
(379)
-
-
-
(379)
-
721,073
1,421
722,494
(656,782)
(17,525)
(379)
(674,307)
38
Biosev S.A.
Compensation of key management personnel
The compensation of officers and other key management personnel for the period is as follows:
Com pany and
Consolidated
06.30.16
06.30.15
Short-term benefits
7,807
6,737
Long-term benefits
2,073
1,704
9,880
8,441
Short-term benefits of the key management personnel consist of salaries, social security and pension plan contributions,
payroll taxes, profit sharing, and short-term performance bonuses. Long-term benefits include performance bonus and
deferred benefits that expired in each financial statements.
19. EQUITY
Capital
Changes in capital are as follows:
Shares
Com m on
In reais (thousand)
Capital
Capital reserve
03.31.16
219,628,363
2,618,214
1,355,616
06.30.16
219,628,363
2,618,214
1,355,616
As at June 30, 2016, capital is represented by 219,628,363 common shares (219,628,363 common shares as at March 31,
2016), all registered and without par value. In accordance with the Company’s Bylaws, the Company is authorized to
increase its capital by up to 167,000,000 registered common shares, with no par value, regardless of any amendment to
the bylaws, based on a Board of Directors’ resolution, as well as define the price and other issuance terms and conditions.
39
Biosev S.A.
20. NET REVENUES AND COST OF SALES AND SERVICES
Com pany
Consolidated
Three-m onth period
Three-m onth period
ended
06.30.16
ended
06.30.15
06.30.16
06.30.15
Gross revenue
Dom estic m arket
Sugar
92,460
79,023
158,497
128,464
Ethanol
181,491
212,400
350,902
341,692
Energy
34,380
2,497
35,739
2,872
56,217
14,460
62,026
11,242
310,828
330,034
580,076
543,424
74,352
1,365
424,932
84,346
3,496
266,171
359,336
101,181
693,449
287,615
36,653
542,579
500,649
354,013
1,153,966
866,847
811,477
684,047
1,734,042
1,410,271
(20,347)
(2,084)
(19,348)
(1,329)
(55,192)
(6,168)
(45,818)
(2,027)
789,046
663,370
1,672,682
1,362,426
(70,067)
(158,691)
(8,219)
(3,568)
(63,162)
(183,887)
(10,196)
(2,795)
(107,301)
(326,210)
(15,762)
(14,748)
(100,646)
(325,354)
(16,624)
(10,307)
(240,545)
(260,040)
(464,021)
(452,931)
(121,631)
(1,945)
(434,636)
(86,134)
(2,558)
(264,655)
(384,997)
(108,534)
(708,208)
(314,332)
(51,198)
(533,170)
(558,212)
(353,347) (1,201,739)
(898,700)
Other
Foreign m arket
Sugar
Ethanol
Other (a)
Taxes (b)/(c)
Sales rebates
Net revenue
Cost of sales and services (d)/(f)
Dom estic m arket
Sugar
Ethanol
Energy
Other
Foreign m arket
Sugar (e)
Ethanol (e)
Other (a)
Gains on changes in fair value less estim ated costs to sell
biological assets
Sugar
Ethanol
37,597
31,505
69,102
(729,655)
3,516
1,055
30,680
27,094
21,957
6,645
4,571
57,774
28,602
(608,816) (1,607,986) (1,323,029)
(a) Amounts relating to the export of commodities, as described in Note 18.
(b) Includes government grants, which reduced the taxable base on sales by R$21,135, in Company, in the period ended
June 30, 2016 (R$20,319, in Company, in the period ended June 30, 2015).
(c) In the period ended June 30, 2016, revenues and expenses include PIS and COFINS credits in the amount of
R$11,812, in Company, and R$23,705, in Consolidated (R$16,952 and R$27,185 in the period ended June 30, 2015,
respectively), as deemed credit, as set forth in article 1, of Law 12859, of September 10, 2013, published in the Official
Gazette on September 11, 2013.
(d) Include PIS and COFINS credits in the amount of R$3,817, in Company, and R$5,864, in Consolidated, in the period
ended June 30, 2016 (R$3,326 and R$4,724, in the period ended June 30, 2015, respectively), as prescribed by article
3, of Law 10637/02, which addresses the non-cumulativeness of PIS/PASEP; and article 3, of Law 10833/03, which
addresses the non-cumulativeness of COFINS.
40
Biosev S.A.
(e) Include REINTEGRA credits, in the amount of R$154, in Company, and R$519, in Consolidated, in the period ended
June 30, 2016 (R$1,469 and R$3,353, in the period ended June 30, 2015, respectively), as set forth in article 21, of
Law 13043, of November 13, 2014, which addresses the REINTEGRA reintroducing.
(f) Include ICMS-ST credits on the acquisition of diesel fuel, in the amount of R$83, in Company, and R$663, in
Consolidated (R$73 and R$2,300, in the period ended June 30, 2015, respectively), as set forth in article 155,
paragraph 2, of CF88 and untimely ICMS credits on materials, in the amount of R$393, in Company, and R$1,702, in
Consolidated, in the period ended June 30, 2016.
21. EXPENSES BY NATURE
The information on the nature of cost of sales and services and general, administrative and selling expenses is as follows:
Com pany
Consolidated
Three-m onth period
Three-m onth period
ended
06.30.16
ended
06.30.15
06.30.16
06.30.15
Personnel (*)
(48,300)
(63,786)
(111,302)
(101,765)
(148,549)
(155,810)
(263,205)
(236,210)
Raw materials
(121,474)
(107,680)
(420,435)
(276,283)
Inputs
Products for resale
(27,749)
(452,685)
(16,990)
(269,121)
(57,730)
(813,088)
(35,055)
(702,318)
(601,908)
(393,791) (1,291,253) (1,013,656)
Depreciation and amortization (**)
Raw materials and inputs, net of taxes:
Gains on changes in fair value less estimated costs to sell biological
assets
69,102
(729,655)
4,571
57,774
28,602
(608,816) (1,607,986) (1,323,029)
General, administrative and selling expenses
Personnel (*)
(25,314)
(24,445)
(46,534)
Depreciation
(3,822)
(4,695)
(7,334)
(8,180)
(19,607)
(13,870)
(48,307)
(32,399)
(2,417)
(17,093)
(19,073)
(36,774)
89
(8,425)
(59,496)
(125)
(6,569)
(66,797)
(17,559)
(12,101)
(150,908)
(5,656)
(11,065)
(137,494)
Freight
Services
Shipping expenses
Other
(43,420)
(*) In the period ended June 30, 2016, the personnel expenses, in Company and Consolidated, in the amount of R$73,614
and R$157,836, respectively (R$88,231 and R$145,185, respectively, in the period ended June 30, 2015), comprise
R$70,472 and R$151,935, respectively (R$85,456 and R$140,088, respectively, in the period ended June 30, 2015)
relating to personnel expenses, and R$3,142 and R$5,901 (R$2,775 and R$5,097, respectively, in the period ended
June 30, 2015) relating to INSS contribution, respectively.
(**) Includes biological asset and agricultural produce.
41
Biosev S.A.
22. FINANCE INCOME (EXPENSES)
Com pany
Consolidated
Three-m onth period
Three-m onth period
ended
ended
06.30.16
Finance incom e
Derivative of Commodities
Derivative of exchange - Comercial transactions
Derivative of exchange - Financial transactions
Derivative of interest rate - Libor sw ap
Discounts obtained
Income from fixed-income investments
Interest
Other
Finance expenses
Derivative of Commodities
06.30.15
6
649,533
513,902
06.30.16
06.30.15
1,458
32,562
147,358
6
587,345
513,902
1,458
13,305
147,358
-
-
2,682
8,417
164
3,442
3,849
2,039
21
3,017
5,765
974
172
9,375
19,398
3,296
37
10,318
13,230
6,191
1,172,935
191,155
1,136,176
200,314
(1,127)
(7,954)
(1,283)
(7,954)
Derivative of exchange - Comercial transactions
(560,400)
(77,607)
(560,400)
(77,607)
Derivative of exchange - Financial transactions
(674,898)
(81,604)
(674,898)
(81,604)
(91,740)
(778)
(7,826)
(569)
(54,062)
(433)
(1,421)
(905)
(4,734)
(171,901)
(886)
(8,755)
(919)
(13,481)
(135,435)
(1,526)
(3,139)
(1,283)
-
(2,533)
-
(223,986) (1,426,309)
(322,029)
Derivative of interest rate - Libor sw ap
Interest
Discounts granted
Tax on financial transactions (IOF)
Other
PIS/COFINS on finance income
(696)
(1,338,034)
Exchange rate changes
Finance expenses
156,723
36,472
317,153
30,473
(8,376)
3,641
27,020
(91,242)
23. OTHER OPERATING INCOME (EXPENSES)
Com pany
Consolidated
Three-m onth period
Three-m onth period
ended
06.30.16
Reversal (recognition) of provision for tax, labor, civil and environmental contingencies
Contractual Fines and indemnities
Tax expenses
Impairment reversal - property, plant and equipment
(3,257)
(27)
(1,279)
ended
06.30.15
4,853
(9,607)
(779)
06.30.16
(5,406)
15,963
(1,459)
06.30.15
86,506
(18,610)
(1,241)
130
123
222
418
(2,762)
(226)
7,301
(1,495)
(218)
(15)
(2,913)
(984)
8,894
(2,741)
(295)
815
Total other operating incom e (expenses), net
(120)
(7,138)
14,317
64,852
Total other operating incom e
7,432
10,612
25,078
99,233
(7,552)
(17,750)
(10,761)
(34,381)
Loss on sale of property, plant and equipment
Recognition of allow ance for doubtful accounts
Other operating income (expenses), net
Total other operating expenses
42
Biosev S.A.
24. LOSS PER SHARE
The basic and diluted loss per share was calculated based on the loss attributable to the Biosev’s owners divided by the
weighted average number of outstanding common shares.
Com pany
06.30.16
Loss for the period attributable to the Company's ow ners
Weighted average number of shares used to calculate basic and
diluted earnings per share
Total basic and diluted loss per share
(353,150)
211,635,628
(1.66867)
Consolidated
06.30.15
(333,928)
208,072,484
(1.60486)
06.30.16
(353,150)
211,635,628
(1.66867)
06.30.15
(333,928)
208,072,484
(1.60486)
25. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
I - Risk management
The Company is exposed to risks arising from its operations and considers market, credit, liquidity, and capital risks as the
most significant risks to which it is exposed.
The objective of the Company’s risk management program is to hedge its results against fluctuations in sugar prices,
foreign exchange and interest rates. These risks are managed using hedging financial instruments available in the financial
market, such as: swaps and interest rate futures; currency forwards and futures; commodity forwards, futures and options.
Transactions carried out in the over-the-counter market are contracted through low-risk domestic and foreign banks, and
transactions contracted on the stock exchange market are mainly traded in futures and options markets at the New York
Commodities Exchanges (NYSE: ICE) and São Paulo Stock and Mercantile Exchange (BM&FBOVESPA).
The use of these instruments is guided by the Financial and Risk Management Policy approved and reviewed by the Board
of Directors on September 13, 2013 and on June 01, 2016, respectively. Additionally, the Company does not carry out
transactions with any type of leverage, as well as does not have transactions with exotic derivatives.
The risk management policies, practices and instruments are determined by the Executive Committee and the Strategic
Committee (the body that supports the Company’s Board of Directors).
The Executive Committee has the following responsibilities before the Board of Directors: (i) monitor the compliance with
the policy and report eventual non-compliances; (ii) inform about the indebtness of the Company and its subsidiaries, as
well as the related debt instruments; (iii) inform about the burdens on the assets of the Company and its subsidiaries; and
(iv) monitor the risk management instruments of the Company and its subsidiaries.
The Market Consultancy Service Agreement, between Biosev Bioenergia International S.A, Louis Dreyfus Company
Suisse S.A. and Biosev S.A, entered into on November 29, 2010 with due date on March, 31, 2024, and according to the
addition on July 30, 2013, assists the Executive Committee’s responsibilities in the Risk Management, based on the
information on the sugar and ethanol markets provided by Louis Dreyfus Company Suisse S.A., including historical
information, studies, analyses, credit risk advisory, as well as researches, opinions and estimates about several issues in
the main agricultural commodities markets, including the domestic and international sugar and ethanol markets.
The Risk Management Department is subject to the Chief Financial Officer and is responsible for the calculation,
measurement, analysis and monitoring of the exposure, by issuing daily reports based on which the necessary corrective
measures are taken. It is also responsible for monitoring the compliance with the risk management policies.
25.1 Market risk
The Company is mainly exposed to risks related to foreign exchange, interest rate and agricultural commodity price
fluctuations. In order to hedge against these market risks, the Company uses various derivative financial instruments,
including:

Forward, options and futures foreign exchange contracts to hedge fair value and cash flow items against exchange rate
changes;

Interest rate futures to supplement the hedging of mentioned items;
43
Biosev S.A.

Interest rate swap contracts to mitigate LIBOR fluctuation risk;

Derivative commodity contracts to hedge inventory and future agricultural commodity delivery transactions.
The parameters used to manage these risks are based on hedging strategy monitoring tools, such as sensitivity analysis,
stress tests, and a hedging scale, aimed at securing the future amount of sugar and ethanol sales, including the effects
from foreign exchange rate, as well as interest rate exposure.
As at June 30, 2016, the assets and liabilities relating to the derivative transactions are broken down as follows:
Com pany
06.30.16
Exchange risk management (Note 25.1.1)
Interest rate risk management (Note 25.1.2)
Agricultural commodities risk management (Note 25.1.3)
Current assets
Current liabilities
Consolidated
03.31.16
06.30.16
(45,167)
15,158
(152,465)
18,353
03.31.16
(45,167)
(68,508)
15,158
(152,465)
(69,361)
18,353
(203,473)
(30,009)
(134,112)
(98,517)
132,603
46,077
132,603
46,077
(162,612)
(180,189)
(182,686)
(201,882)
(48,434)
(47,668)
-
-
25.1.1 Foreign exchange risk management
Because the Company’s functional currency is the Brazilian real (R$), the foreign currency-denominated operations are
exposed to the foreign exchange risk. Foreign exchange positions are managed based on the Financial and Risk
Management Policy, approved by the Company’s Board of Directors on September 13, 2013. The Company carries out
transactions with currency derivatives in order to reduce variability in its profit or loss due to the existence of US dollardenominated net cash flows from exports.
The Company carries out transactions with interest rate derivatives traded on the BM&FBOVESPA (one-day DI futures) in
order to supplement foreign exchange rate hedges contracted under foreign exchange contracts traded on said exchange
— future dollar financial instruments (DOL) and exchange coupon futures (DDI). The consolidated use of such futures
contracts aims at having effects similar to those of one single DOL futures contract. This strategy is adopted by the
Company without leverage. This is necessary because an individually traded DOL futures contract does not have
significant liquidity for terms above three months and, therefore, could not meet the Company’s foreign exchange hedging
requirements.
This practice is regulated by the BM&FBOVESPA and has been widely disseminated among futures market participants in
Brazil for over a decade.
44
Biosev S.A.
The table below shows the Company’s NDF, DOL, DI and DDI forward currency sale instruments, used for purposes of
hedging foreign exchange risk and respective results:
Com pany and Consolidated
Notional value
Average exchange rate
contracted
06.30.16
Foreign currency
03.31.16
06.30.16
Local currency (*)
03.31.16
06.30.16
(Sale) purchase
Fair value
03.31.16
06.30.16
03.31.16
(Sale) purchase
Outstanding forw ard contracts – NDF US dollar
Hedge Accounting
Maturity:
Less than 3 months
3.722
-
(109,524)
-
(407,697)
-
52,528
-
3 to 6 months
3.659
3.876
Over 6 months
3.692
-
(94,991)
(177,981)
(24,531)
-
(347,559)
(657,179)
(95,086)
-
32,885
26,873
4,685
-
(382,496)
(24,531)
(1,412,435)
(95,086)
112,286
4,685
Non-Hedge Accounting
Maturity:
Less than 3 months
3.637
3.979
59,524
220,000
216,479
875,484
(25,405)
(87,495)
3 to 6 months
3.687
3.876
Over 6 months
4.155
4.155
(9)
199,981
(469)
200,000
(34)
830,837
(1,819)
3
830,910 (131,705)
30
(40,817)
259,496
419,531
1,047,282
(57,500)
8,750
(184,564)
31,140
7,745
10,595
(57,500)
8,750
(184,564)
31,140
7,745
10,595
Less than 3 months
363,544
133,894
1,166,902
476,515
(11,663)
(6,470)
3 to 6 months
(56,504)
(77,068)
68,751
(117,333)
(181,365)
(247,372)
244,679
(417,578)
2,010
1,659
(1,947)
2,963
229,972
85,312
738,165
303,616
(7,994)
(5,454)
(116,070)
(188,076)
(372,562)
(669,344)
2
1
71,774
78,014
(73,659)
81,500
230,379
250,409
(262,146)
290,052
(3)
(96)
24
59
33,718
(180,235)
108,226
(641,438)
(97)
84
1,704,575 (157,107) (128,282)
Outstanding futures contracts
DOL - dollar futures
Maturity:
Less than 3 months
DDI - futures exchange coupon
Maturity:
Over 6 months
DI - 1 day:
Less than 3 months
3 to 6 months
Over 6 months
US outstanding option contracts
Maturity:
-
3 to 6 months
100,000
-
-
100,000
355,890
-
-
355,890
-
(34,093)
(34,093)
(45,167) (152,465)
(*) Convenience conversion.
25.1.2 Interest rate risk management
The Company uses Libor derivatives to hedge against interest rate fluctuations. These derivatives are traded on the
Brazilian over-the-counter market with low-risk banks as counterparties, and are registered with CETIP S.A. - Balcão
Organizado de Ativos e Derivativos (Brazilian organized OTC market), as required by prevailing legislation.
The table below shows the Company’s Libor swap instruments with receipt of Libor interest and payment of fixed rates,
and presents the derivatives used for purposes of hedging Libor interest risk and respective results:
Consolidated
Notional value
Average fixed rate
contracted - %
06.30.16
03.31.16
3.15%
3.15%
3.15%
3.15%
3.15%
3.15%
3.15%
3.15%
Foreign currency
06.30.16
03.31.16
Local currency (*)
06.30.16
03.31.16
Fair value
06.30.16
03.31.16
Hedge Accounting
Outstanding position:
Less than 1 year
1 to 2 years
2 to 5 years
Over 5 years
39,967
39,967
119,900
95,968
39,967
39,967
119,900
95,968
128,285
128,285
384,855
308,039
142,237
142,237
426,712
341,542
(20,074)
(16,399)
(27,282)
(4,753)
(21,693)
(16,970)
(26,690)
(4,008)
295,802
295,802
949,464
1,052,728
(68,508)
(69,361)
45
Biosev S.A.
25.1.3 Agricultural commodities risk management
The Company carries out transactions with commodity derivatives (sugar and ethanol) in order to reduce the impact of the
changes in the market prices considering that these changes may significantly affect the Company’s future sales value.
These risks are managed according to the Company’s Risk Management Policy and the hedge strategy monitoring tool
which determines the hedge volume and timeframe.
The Company’s futures and options contracts in the period used for commodity risk hedging and the related results are as
follows:
Com pany and Consolidated
Notional value
Foreign currency
06.30.16
Local currency (*)
03.31.16
06.30.16
Fair value
03.31.16
06.30.16
03.31.16
Outstanding sugar futures contracts
ICE RAW Açúcar
Hedge Accounting
Maturity:
3 to 6 months
Over 6 months
(83,232)
(57,080)
(58,813)
(73,167)
(267,159)
(183,215)
(209,309)
(260,395)
10,585
8,629
7,879
8,521
(140,312)
(131,980)
(450,374)
(469,704)
19,214
16,400
8,949
(100,603)
137,230
(62,406)
(40,796)
38,424
28,725
(322,916)
440,481
(222,097)
(145,188)
136,746
(1,019)
(5,259)
3,645
8,380
4,638
3,216
45,576
(64,778)
146,290
(230,539)
(2,633)
16,234
-
120
(11,831)
-
427
(42,107)
-
(20)
(13,642)
-
(11,711)
-
(41,680)
-
(13,662)
(1,508)
(1,508)
(5,992)
(5,992)
(1,423)
(545)
(1,508)
(1,508)
(5,992)
(5,992)
(1,423)
(545)
(2,010)
2,252
-
Non-Hedge Accounting
Maturity:
Less than 3 months
3 to 6 months
Over 6 months
Outstanding sugar options contracts
Options - ICE RAW sugar
Maturity:
Less than 3 months
3 to 6 months
Outstanding forw ard contracts – NDF sugar
NDF - sugar
Maturity:
Above 6 months
Outstanding ethanol futures contracts
Futures Ethanol - BMF&Bovespa
Maturity:
Less than 3 months
3 to 6 months
-
(565)
633
-
-
68
-
242
87
-
-
87
-
176
(337)
Futures ethanol - CBOT
Maturity:
Less than 3 months
3 to 6 months
-
(2,804)
5,193
-
(9,978)
18,481
-
2,389
-
8,503
15,158
(161)
18,353
25.2 Credit risk
The credit risk is managed through the careful analysis of the customer portfolio, the definition of credit limits, and the
ongoing control of outstanding positions. In conformity with the Company’s credit policy, using a risk assessment
methodology, the Company adopted balanced scorecard techniques. The Company adopts hedging instruments, such as
collaterals, pledges and guarantees, to mitigate potential credit exposures. Historically, the Company does not record
significant losses in trade receivables.
46
Biosev S.A.
25.3 Liquidity risk
The Company operates with a liquidity level considered sufficient for its operations and uses a number of sources of funds
to finance its activities. In order to cover possible liquidity deficiencies or mismatches between cash and cash equivalents
with short-term maturities, the Company has good relationship with first-class banks, in Brazil or abroad, as well as a credit
line with its parent. Moreover, the products financed by the Company are highly liquid and can be easily sold to generate
cash or also be provided as a guarantee for financial transactions. In addition, part of the investments, especially those
related to sugarcane plantation treatments, is supported by short-term financing and will be realized in the following
harvest campaign.
25.3.1 Liquidity and interest rate tables
The tables below show in detail the expected maturity of the Group’s financial liabilities:
As at June 30, 2016
Trade payables
Taxes payable
Other payables
As at March 31, 2016
Trade payables
Taxes payable
Other payables
As at June 30, 2016
Trade payables
Taxes payable
Other payables
As at March 31, 2016
Trade payables
Taxes payable
Other payables
Less than 1
1 to
m onth
3 m onths
Com pany
3 m onths
to 1 year
1 to 5 years Over 5 years
Total
172,116
29,299
95,208
17,019
7,398
15,847
598,241
1,423
40,068
2,216
1,760
8,361
594,002
131,890
93,254
55,792
480
45,838
852,618
964
3
10,512
6,127
528,602
2,223,104
162,612
229,494
75,027
9,641
609,160
336,887
652,069
921,256
864,097
534,729
3,309,038
241,232
61,749
155,738
84,136
107,784
38,810
547,445
10,656
31,235
1,474,150
641
178,160
-
2,525,123
180,189
226,424
10,175
12,668
76,469
27,441
320
5,736
33,584
1,715
540
3
551,337
-
71,200
14,706
634,082
558,031
264,227
625,175
2,026,131
178,160
3,651,724
Less than 1
1 to
m onth
3 m onths
Consolidated
3 m onths
to 1 year
1 to 5 years
Over 5 years
Total
570,326
40,335
389,321
31,565
12,695
43,053
770,250
1,423
48,130
4,473
1,824
13,336
2,017,986
140,928
105,109
98,817
3,897
85,471
1,982,366
43,680
1,802
3
20,808
710,877
4,754
35,330
6,051,805
231,120
544,362
134,855
18,419
197,998
1,087,295
839,436
2,452,208
2,048,659
750,961
7,178,559
340,683
61,749
465,934
18,963
40,519
137,970
402,457
107,784
70,761
44,326
320
6,451
1,087,773
32,349
35,788
61,431
5,196
15,230
4,031,242
42,477
1,233
3
72,885
849,774
5,191
-
6,711,929
249,550
573,716
124,720
46,038
232,536
1,065,818
632,099
1,237,767
4,147,840
854,965
7,938,489
25.4 Capital risk
The Company manages its capital structure in order to safeguard a continuous return to the Company’s shareholders. The
Company monitors capital through financial leverage index analysis; these indexes include adjusted net debt to adjusted
EBITDA ratio. In turn, the net debt corresponds to total borrowings and financing (including short- and long-term
borrowings and financing), less cash, cash equivalents, short-term investments and highly liquid inventory (ethanol, sugar
and allowance for negative inventory margin).
The Company allocates the swap contracts designated as hedge accounting (see Note 25.1.2) to the adjusted net debt for
capital risk analysis purposes.
47
Biosev S.A.
The Company may change its capital structure, in conformity with economic and financial conditions, aiming at optimizing
its financial leverage and/or debt management.
25.5 Margin calls
Derivative transactions in commodity exchanges (ICE and BM&FBOVESPA) require an initial margin call in guarantee.
To trade on the ICE, as at June 30, 2016, the Company has R$28,277 (R$80,794 as at March 31, 2016), fully deposited by
the Company’s in cash, through fiduciary agent Term Commodities Inc, a company under common control.
To trade on the BM&FBOVESPA, the margin call required, as at June 30, 2016, is R$27,997 (R$68,429 as at March 31,
2016), deposited as Bank Deposit Certificate (CDB), in the amount of R$15,050 (R$68,400 as at March 31, 2016).
As at June 30, 2016, the Company’s derivative transactions on the over-the-counter market do not require margin calls.
25.6 Categories of financial instruments
The financial instruments recorded in the balance sheet, such as cash and cash equivalents and borrowings and financing,
are stated at contractual values, which approximates their fair values due to their short terms and characteristics.
Derivatives are specifically recorded at market value based on proper market information and/or evaluation methodologies
for each financial instrument. The methods used are a common fair value measurement practice of the financial market.
The use of different market inputs and/or valuation techniques might result in amounts different from the recognized
realizable value of financial instruments.
The fair value of financial instruments not traded in active markets (for example, over-the-counter derivatives) is
determined using valuation techniques. The Company uses several methods and makes assumptions that are based on
existing market conditions at the end of the interim financial statements. The fair value of foreign exchange forwards is
determined based on forward exchange rates quoted at the end of the interim financial statements.
Com pany
06.30.16
Financial assets:
Cash and cash equivalents (Note 3)
Fair value through profit or loss:
Held for trading
Held-to-maturity investments (Note 4)
Other financial assets
Derivatives designated as hedge accounting (Note 25.1)
Financial liabilities:
Fair value through profit or loss:
Held for trading
Derivatives designated as hedge accounting (Note 25.1)
Other financial liabilities (*)
Consolidated
03.31.16
06.30.16
03.31.16
29,205
860,087
242,382
1,826,121
7,745
56,838
262,828
131,500
26,998
155,555
238,845
21,085
7,745
306,694
625,893
131,500
26,998
413,099
466,881
21,085
169,254
3,146,426
182,195
3,471,535
169,254
68,508
6,947,439
182,195
69,361
7,688,939
(*) As at June 30, 2016, the balance of other financial liabilities consists basically of borrowings and financing, totaling
R$2,223,104 in Company and R$6,051,805 in Consolidated (R$2,525,123 and R$6,711,929 as at March 31, 2016,
respectively).
25.7 Measurements at fair value recognized in balance sheet
Technical pronouncement CPC 40 (R1) - Instrumentos Financeiros: Evidenciação/IFRS 7 – Financial Instruments:
Disclosure defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit
price) in the primary or most advantageous market for the asset or liability in an orderly transaction between market
participants on the measurement date. Technical pronouncement CPC 40 (R1)/IFRS 7 also establishes a three-level fair
value hierarchy which prioritizes inputs for fair value measurement by an entity in order to maximize the use of observable
data and minimize the use of unobservable data. Technical pronouncement CPC 40 (R1)/IFRS 7 describes the three
levels of inputs that should be used to measure fair value, which are the following:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities.
48
Biosev S.A.

Level 2 - Inputs other than the data included in Level 1, where prices are quoted (unadjusted).
Fair value measurements of Level 2 are obtained based on other variables besides quoted prices included in Level 1,
which are directly observable for an asset or liability, such as prices, or indirectly observable, i.e. based on prices.

Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs) because
market activity is insignificant or does not exist.
The Company’s financial assets and liabilities measured at fair value on a recurring basis and subject to disclosure as
required by CPC 40 (R1)/IFRS 7, as at June 30, 2016, are as follows:
Level 1
Financial assets at fair value through profit or loss
Derivative financial assets
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
19,813
132,603
112,790
132,603
(3,578)
(159,034)
(162,612)
(3,578)
(159,034)
(162,612)
41,362
41,362
112,790
Total
19,813
Level 1
Com pany
06.30.16
Level 2
03.31.16
Level 2
4,715
4,715
Total
46,077
46,077
(51,332)
(128,857)
(180,189)
(51,332)
(128,857)
(180,189)
Consolidated
Level 1
Total
19,813
112,790
132,603
19,813
112,790
132,603
(3,578)
(227,542)
(231,120)
(3,578)
(227,542)
(231,120)
Level 1
06.30.16
Level 2
03.31.16
Level 2
Total
41,362
4,715
46,077
41,362
4,715
46,077
(51,332)
(198,218)
(249,550)
(51,332)
(198,218)
(249,550)
25.8 Derivative and non-derivative financial instruments with the application of hedge accounting
In accordance with accounting practices adopted in Brazil, derivative financial instruments are accounted for at fair value
through profit or loss, unless a derivative is designated for hedge accounting. A derivative only qualifies for hedge
accounting when all the conditions set out by CPC 38/IAS 39 are met. The adoption of hedge accounting is optional and
aims at recognizing gains or losses on derivatives only when the hedged item is realized on an accrual basis and,
therefore, reducing the volatility of gains or losses from the mark-to-market of derivatives.
49
Biosev S.A.
The Company applies hedge accounting to account for part of its derivative and non-derivative financial instruments.
The Company’s derivatives designated for hedge accounting are: Libor swaps, contracted to mitigate the effect of interest
rate fluctuations on the long-term debt; sugar futures and currency forwards (NDFs), which hedge future sales and have
been classified as cash flow hedges of highly probable transactions (CPC 38/IAS 39, Item 78 b).
As prescribed by paragraph 72 of CPC 38/IAS 39, the Company also opted for using non-derivative financial instruments
for hedge accounting, by designating export debts as foreign exchange risk hedges (natural hedge), which hedge future
exports and are classified as cash flow hedges.
The effective portion of derivative and non-derivative financial instruments designated for hedge accounting to hedge
future sales is recorded in the balance sheet in line item “Other comprehensive income (loss)”, in equity, and recognized in
profit or loss, in line item “Net operating revenue” upon the recognition of the hedged sale. The ineffective portion is
recorded as a finance income (expenses) for the period when it is incurred.
25.9 Sensitivity analysis
The table below shows the Company’s sensitivity to the presented risk factor, based on changes in the risk factor
considered reasonably possible by Management (probable scenario).
The probable scenario is obtained based on future dollar, sugar and ethanol market curves (as at June 30, 2016) and the
Group’s expectations for each one of the variables indicated, over a twelve-month period.
As required by CVM Instruction 475/2008, the sensitivity analysis is also presented to changes in the fair value of financial
instruments for another two scenarios, in which market conditions are stressed by 25% and 50% (ethanol and sugar
options are included as delta equivalent in futures contracts).
The derivative financial instruments are provided to hedge against risks from future cash flows. The non-derivative
financial instruments must not be considered as the Company’s net exchange exposure because the table below does not
consider the biological asset, as it is not a financial instrument, but it is used in the production of sugar and ethanol for
future exports. See Notes 7 and 25.8.
Com pany
Effects on fair value
Notional am ount foreign currency
Effects on profit or loss
Exchange risk
Non-derivatives
Trade receivables
Advances from customers
Trade payables
Short- and long-term borrow ings and financing
Derivatives
Futures and forw ards contracts in foreign currency
Price risk
Sugar futures and options contracts (purchase)
Forw ards sugar contracts
Effects on equity
Exchange risk
Non-derivatives
Exchange rate change hedge accounting
Derivatives
NDF hedge accounting
Price risk
Derivatives
Futures hedge accounting
Probable
Risk factor
scenario
25% stress
50% stress
223
2,460
8,593
85,254
(16,435)
(399,010)
(293,373)
Decrease in US$
Decrease in US$
Decrease in US$
Decrease in US$
Increase in US$
Increase in US$
Increase in US$
(150)
(1,652)
(5,770)
(57,247)
(11,036)
(267,932)
(196,997)
(179)
(1,974)
(6,895)
(68,412)
(13,188)
(320,186)
(235,417)
(358)
(3,947)
(13,790)
(136,825)
(26,376)
(640,372)
(470,835)
431,968
Decrease in US$
(199,945)
(238,940)
(477,879)
45,576
(1,508)
Decrease in sugar price
Increase in sugar price
(21,220)
(4,150)
(25,358)
(6,683)
(50,716)
(9,215)
(140,000)
Increase in US$
(94,009)
(112,343)
(224,686)
(382,496)
Increase in US$
(230,963)
(276,008)
(552,016)
(140,312)
(167,790)
(117,834)
(235,667)
50
Biosev S.A.
Consolidated
Effects on fair value
Notional am ount foreign currency
Effects on profit or loss
Exchange risk
Non-derivatives
Trade receivables
Advances from customers
Trade payables
Short- and long-term borrow ings and financing
Derivatives
Futures and forw ards contracts in foreign currency
Price risk
Sugar futures and options contracts (purchase)
Forw ards sugar contracts
Effects on equity
Exchange risk
Non-derivatives
Exchange rate change hedge accounting
Derivatives
NDF hedge accounting
Interest rate risk
Derivatives
Sw ap LIBOR Hedge Accounting
Price risk
Derivatives
Futures Hedge Accounting
26.
Probable
Risk factor
scenario
25% stress
50% stress
26,187
2,460
70,323
171,147
(37,868)
(998,742)
(389,262)
Decrease in US$
Decrease in US$
Decrease in US$
Decrease in US$
Increase in US$
Increase in US$
Increase in US$
(17,584)
(1,652)
(47,221)
(114,923)
(25,428)
(670,645)
(261,386)
(21,013)
(1,974)
(56,430)
(137,337)
(30,387)
(801,441)
(312,364)
(42,027)
(3,947)
(112,861)
(274,674)
(60,774)
(1,602,881)
(624,727)
431,968
Decrease in US$
(199,945)
(238,940)
(477,879)
45,576
(1,508)
Decrease in sugar price
(21,220)
(4,150)
(25,358)
(6,683)
(50,716)
(9,215)
(779,913)
Increase in US$
(523,704)
(625,841)
(1,251,682)
(382,496)
Increase in US$
(230,963)
(276,008)
(552,016)
295,802
Decrease in LIBOR interest rate
(3,946)
(7,895)
(15,801)
(140,312)
(167,790)
(117,834)
(235,667)
COMMITMENTS
a) Selling
The Group has several arrangements in the sugar and ethanol market under which it commits to sell volumes of these
products in future crops. As at June 30, 2016, the volumes of these commitments total 2,063,877 tons of sugar (1,840,905
tons of sugar as at March 31, 2016), 276,750 cubic meters of ethanol (276,750 cubic meters as at March 31, 2016), and
electricity supply commitments, assumed in power auctions and free market, which total 10,142 GWh to be supplied by
2035 (10,214 GWh as at March 31, 2016).
b) Purchases
The Group has several commitments for the purchase of sugarcane from third parties to ensure part of its production in
future crops. The volume of sugarcane to be purchased is estimated based on the expected productivity of the areas
where the sugarcane plantations are located. The amount to be paid by the Group is determined at the end of each
harvest campaign according to the price published by CONSECANA, plus or less other applicable contractual terms.
As at June 30, 2016, estimated purchase commitments by crop are as follows:
Consolidated
Harvest
2016/2017
2017/2018
2018/2019
2019/2020
After 2020
Estim ated area
Estim ated quantity
Estim ated
(hectares)
of cane (Ton)
am ount
111,071
107,361
82,302
54,017
56,562
411,313
8,068,560
8,108,893
6,311,422
4,145,949
4,223,988
30,858,812
609,695
602,017
465,068
306,686
311,144
2,294,610
51
Biosev S.A.
c) Agricultural partnership or lease agreements
As at June 30, 2016, the Group is a party to effective lease or agricultural partnership agreements, which should remain
effective in future crops, as shown in the table below, aimed at ensuring the supply of sugarcane to its plants. The
consideration of lease or agricultural partnership agreements is usually the payment for a certain sugarcane volume to the
farmer, whose price, in turn, is determined at the end of each harvest campaign according to the price published by
CONSECANA, plus or less other applicable contractual terms.
Consolidated
Estim ated quantity
Harvest
2016/2017
2017/2018
2018/2019
2019/2020
After 2020
of cane (Ton)
Estim ated am ount
2,959,593
5,608,001
4,981,040
3,805,217
8,470,537
25,824,388
217,639
412,600
367,082
282,025
651,222
1,930,568
The Company includes the sugarcane volume in leased areas or under agricultural agreements, as indicated above, in the
calculation basis of the biological asset’s fair value, according to the assumptions described in Note 7.
d) Terminal de Exportação de Açúcar do Guarujá Limitada - TEAG
TEAG is a party to an agreement for the lease of a port terminal with Companhia Docas do Estado de São Paulo
("CODESP"), which provides for the payment by TEAG, as lease, of a fixed monthly installment of R$2,4738/m² calculated
on a minimum area of 70,000 m² equivalent to R$173 per month or R$2,078 per year, plus a guaranteed variable minimum
installment equivalent to R$3,370 per year payable to CODESP, corresponding to R$2.470/ton calculated on a minimum
handling of one million and five hundred thousand tons of cargo. The concession granted to TEAG to operate such
terminal will expire on July 6, 2018, renewable for additional 20 years, at CODESP’s discretion.
e) Sociedade Operadora Portuária de São Paulo Ltda. - SOP
As a result of the acquisition of Crystalsev Comércio e Representações Ltda.’s control, on December 28, 2011, the Group
also has the control over its subsidiary SOP, which holds 50% of TEAG shares. 85% of SOP shares are pledged to
financial institutions as collateral of the financing transaction, the total principal of which, as at June 30, 2016, is equivalent
to U$16,812 thousand (U$22,416 thousand as at March 31, 2016). This financing is included in the Group’s debt, as
indicated in Note 14.
The SOP shares held by Biosev Terminais Portuários e Participações Ltda. are pledged to the sellers of the 15% equity
interest, as collateral of the price payment obligation for this interest.
f) Lawsuits against Instituto do Açúcar e do Álcool - IAA
The Company is a plaintiff in lawsuits seeking a compensation from the Federal Government for losses arising from pricing
differences incurred in the period in which sugar and ethanol prices were frozen.
g) Bank guarantees and collateral insurance
As at June 30, 2016, the balances of (i) bank guarantee is R$134,843 in consolidated (R$10,279 in Company and
R$140,521 in consolidated, as at March 31, 2016); and (ii) collateral insurance relating to lawsuits, of R$231.844 in
Company and R$284,389 in Consolidated (R$231,844 and R$284,389 as at March 31, 2016, respectively).
52
Biosev S.A.
27. INSURANCE
The Company and its subsidiaries adopt internal risk management policies, including insurance coverage. In addition, they
are supported by specialists that guide the preparation of the agreements with the insurance companies, in accordance
with the nature of the business and market practices, in order to cover significant losses on their assets and
responsibilities. The insurance coverage effective as at June 30, 2016 includes:
Maxim um coverage (1)
Insurance
Operating risks (**)
General civil liability (**)
Vehicles (*)
Management liability (**)
Equipament and improvement
Guarantee (***)
Assets, responsibilities or interests covered
Com pany
Buildings, fixed and machinery equipment of the group’s 13 plants and offices
Damages against third parties arising from the Company’s operations
Damages against third parties arising from traffic accidents
Law suits filed against the Company’s management
Machinery and equipment
Operations and obligations backed by guarantee
500,000
15,000
500
40,000
76,431
284,389
Consolidated
500,000
15,000
500
40,000
136,865
284,389
(1) Equivalent to the maximum coverage for sundry assets and locations.
(*) The maximum coverage equivalent to the civil liability by covered vehicle.
(**)Company and subsidiaries covered by the same policy.
(***) The maximum coverage equivalent to the total amount approved with the insurance companies. Company and
subsidiaries share the same maximum indemnity limit.
28. EMPLOYEES’ BENEFITS
The consolidated amount invested by the Company in the pension plan is R$511 in the period ended June 30, 2016
(R$491 in the period ended June 30, 2015), recognized in line item “General, administrative and selling expenses”. Due to
the features and design of the pension plan, the Company does not incur any future postemployment or actuarial
obligations.
The Company records a liability related to the deferred variable compensation that will be paid to some employees, totaling
R$18,266 as at June 30, 2016 (R$19,002 as at March 31, 2016).
29. SEGMENT INFORMATION
Information by product margin, and geographic areas, used by the key decision makers is as follows:
Consolidated
06.30.16
Consolidated profit (loss) by product
Net revenue
Sugar
496,978
Ethanol
422,277
Energy
49,168
Other
704,259
Total
1,672,682
(1,607,986)
(461,618)
(407,650)
(15,762)
(722,956)
Gross profit
35,360
14,627
33,406
(18,697)
64,696
Gross margin
Selling expenses
7%
(51,954)
3%
(10,846)
68%
(2,913)
-3%
(5,576)
4%
(71,289)
Operating m argin
(16,594)
3,781
30,493
(24,273)
(6,593)
53
Biosev S.A.
Consolidated
06.30.16
Sales by geographic area
Asia
Sugar
Ethanol
Energy
Other
Total
892,776
North America
191,079
3,165
79,648
21,384
-
622,049
-
South America
2,139
74
-
-
2,213
Africa
101,893
75
-
15,169
117,137
Europe
61,060
-
-
51,022
112,082
-
-
-
5,209
5,209
Foreign m arket
359,336
101,181
-
693,449
1,153,966
Dom estic m arket
137,642
321,096
49,168
10,810
518,716
TOTAL
496,978
422,277
49,168
704,259
1,672,682
Oceania
24,549
Consolidated
06.30.15
Consolidated profit (loss) by product
Net revenue
Sugar
399,181
(393,021)
Ethanol
356,596
(369,907)
Energy
54,429
(16,622)
Gross profit
6,160
(13,311)
37,807
Gross margin
Selling expenses
2%
(29,445)
-4%
(10,279)
69%
(2,166)
Operating m argin
(23,285)
(23,590)
35,641
Other
552,220
(543,479)
8,741
2%
(17)
8,724
Total
1,362,426
(1,323,029)
39,397
3%
(41,907)
(2,510)
Consolidated
06.30.15
Sales by geographic area
Asia
Sugar
Ethanol
Energy
Other
Total
599,397
North America
136,487
217
32,861
-
-
430,049
-
South America
1,723
532
-
-
2,255
64,667
84,521
3,260
-
-
112,530
67,927
197,051
866,847
Africa
Europe
217
Foreign m arket
287,615
36,653
-
542,579
Dom estic m arket
111,566
319,943
54,429
9,641
495,579
TOTAL
399,181
356,596
54,429
552,220
1,362,426
The Company’s chief decision makers use the operating margin as a tool to measure the recurring operating cash
generation capacity and it also allows comparisons with other companies.
Consolidated
06.30.16
06.30.15
Operating m argin
Other operating expenses
(6,593)
(68,297)
(2,510)
(33,225)
Finance income (expenses)
27,020
(305,437)
(91,242)
(206,609)
Loss for the period
(353,307)
(333,586)
Information on key customers
In the period ended June 30, 2016, the Group has one customer, its related party Louis Dreyfus Company Suisse S.A.,
under common control, that accounts for 30% of the Group’s consolidated revenue.
54
Biosev S.A.
30. NON-CASH TRANSACTIONS
The Company carried out the following investing and financing activities not affecting cash, which, therefore, were not
reflected in the statement of cash flows:
Com pany
Consolidated
Three-m onth period Three-m onth period
ended
ended
06.30.16
06.30.15
06.30.16
06.30.15
Transfer of depreciation and amortization to inventories
Purchase of financed fixed assets
14,707
-
-
36,024
10,023
-
31. SUBSEQUENT EVENTS
ACC Umbrella
Until August 10, 2016, the Company obtained, from participating financial institutions in the syndicated ACC (Advances on
Foreign Exchange Contracts) financial facility, originally entered on June 16, 2014, firm commitment letters for extension of
the availability of US$310,000, equivalent to 70% of the originally committed US$440,000 amount, to June, 2019, at an
interest rate of LIBOR + 5.65% p.a..
This syndicate facility extension is coordinated by ING Bank, and other participating financial institutions are Rabobank,
BNP Paribas and Crédit Agricole. Negotiations remain underway between the Company and other international financial
institutions, which may result in additional participants joining the syndicate at a later date and, which will be
communicated as applicable if and when it occurs.
Bellatrix Fundo de Investimento em Direitos Creditórios (FIDC)
On July 7, 2016, the Company and its subsidiary Biosev Bioenergia S.A. subscribed and paid up quotas of the newly
released FIDC, the total contracted amount is R$60,000, for a three-year period, under the administration of Oliveira Trust
Distribuidora de Títulos e Valores Mobiliários and custody of Banco Petra S.A. The purpose of the Fund is to acquire
receivables of sugar and ethanol, as well as derivatives of both products, made in the domestic market. Cession rates of
these credit rights are linked to CDI plus basic spread of 1.75% p.a..
32. APPROVAL OF INTERIM FINANCIAL STATEMENTS
The interim financial statements were approved by the Company’s management and authorized for issue on August 10,
2016.
55
Biosev S.A.
OPINIONS AND STATEMENTS
As Directors of Biosev SA, we declare under Article 25, Paragraph 1, Item VI, CVM Instruction 480 of December 7, 2009,
that we reviewed, discussed and agreed with information interim financial statements and the terms of the external
auditors report on interim financial statements for the three-month period ended June 30, 2016.
São Paulo, August 15, 2016
Rui Chammas
Chief Executive Officer
Paulo Prignolato
Chief Financial and Investor Relations Officer
Eduardo Leme das Neves
Chief Operating Officer
Daniela Aragão
Officer
Enrico Biancheri
Officer
56
Biosev S.A.
OTHER INFORMATIONS CONSIDERED RELEVANT BY THE COMPANY
Non-Statutory Audit Committee Opinion
The non-statutory Audit Committee of Biosev S.A. (“Company”), jointly with the representatives of the Company and of Deloitte
Touche Tohmatsu Auditores Independentes, independent auditors of the Company, examined the interim financial statements of the
Company related to the period ended on June 30th, 2016. Based in the analysis performed and considering the draft of the audit report,
without remarks, prepared by Deloitte Touche Tohmatsu Auditores Independentes, the non-statutory Audit Committee of the Company
recommended, unanimously and without remarks, to the Board of Directors of the Company the approval of the referred financial
statements, pursuant to the terms discussed in the meeting held at this date.
São Paulo, August 09th, 2016.
FEDERICO ADRIAN CERISOLI
WAGNER BERTAZO
MÁRCIO ÁLVARO MOREIRA CASTRO
57
PRODUCTIVITY ADVANCES 9% AND CRUSHING
EXCEEDS 9 MILLION TONS
São Paulo, August 15, 2016 – Biosev, the world’s second largest sugarcane processor, with 11
agroindustrial units in Brazil, presents its earnings for the first quarter of the 2016/17 crop year.
1Q17 HIGHLIGHTS
 Record agricultural yield of 91.3 ton/ha, an increase of 9.2%:
BM&FBOVESPA: BSEV3
Stock price on 8/12/2016: R$10.9
Shares outstanding: 219,628,363
Market cap: R$2.4 billion
Conference call in English
August 16, 2016
12:00 p.m. (Brasília - BRT)
11:00 a.m. (NY- EDT)
4:00 p.m. (London BST)
Dial-in: +1 (786) 924-6977
Toll-free: +1 (888) 700-0802
Code: Biosev
Replay: +55 11 3193-1012
Code: 4264297#
Conference call in Portuguese
August 16, 2016
11:00 a.m. (Brasília - BRT)
10:00 a.m. (NY - EDT)
3:00 p.m. (London- BST)
Dial-in: 55 (11) 3193-1001
55 (11) 2820-4001
Code: Biosev
Replay: (11) 3193-1012
Code: 1783518#
Investor Relations
E-mail: [email protected]
Phone: +55 (11) 3092 5371
www.biosev.com/ri
 At the Ribeirão Preto (RP) Cluster, yield also hit record levels at
99.7 ton/ha, a rise of 19.2%;
 At the Leme (L) and Lagoa da Prata (LP) Clusters, yields grew by
10.1% and TCH reached 85.8 ton/ha.
 Crushing increased by 5.4% to 9 million tons;
 Sugarcane TRS was 119.5 kg/ton, an increase of 2.1%;
 TRS product exceeded 1 million tons, a rise of 7%;
 Sugar revenues were up by 24.5%, boosted by a 12.7% rise in prices;
 Hedge of 645 thousand tons of sugar (40% of the exposure for the
2017/18 crop year), at 18.35 cUS$/lb and FX rate of 3.692R$/US$,
resulting in a price of 67.76 cR$/lb, 26% higher than in the current
crop year;
 Ethanol revenues increased 18.4%, with a 15.4% rise in prices;
 General and Administrative Expenses were reduced by 17.3%, a 24%
cut in real terms;
 Start-up of initiatives aiming at increasing Biosev’s sugar production
capacity as of 2017/18 crop year;
 Roll over anticipation of a syndicated financing facility, in the amount
of US$310 million, with a two-year maturity extension to June 2019.
Biosev is the world’s second largest sugarcane processor, with 11 agroindustrial units in Brazil. Biosev is controlled by the Louis
Dreyfus Group and began operating in the sugar and ethanol industry in 2000, when it acquired its first unit in Brazil. Since then it has
built a track record of growth through both acquisitions and expansion projects that have led its crushing capacity to increase from 0.9
million tons/year in 2000 to 36.4 million tons/year today. Biosev manages 346,000 hectares of land and has surplus biomass power
generation capacity of 1,346 GWh. Biosev adopts the highest standards of corporate governance and its stock is traded on the Novo
Mercado segment of the São Paulo Stock Exchange (BM&FBovespa).
1. OPERATING PERFORMANCE
The following table presents key indicators for operating efficiency and productivity, which are analyzed
in this section:
Efficiency and Productivity
1Q17
1Q16
%
Crushing ('000 tons)
Own
Third Parties
TCH - Agricultural yield (ton/ha)*
Sugarcane TRS (kg/ton)
9,036
5,421
3,616
91.3
119.5
8,576
5,372
3,204
83.7
117.1
5.4%
0.9%
12.8%
9.2%
2.1%
99.0%
97.7%
1.3 p.p.
Harvest Mechanization (%)
* Own cane only
1.1 Operating Efficiency
In the first quarter of the 16/17 crop year, Biosev posted a crushing volume of 9 million tons, up 5.4%
on the same quarter of the previous crop year.
The higher volume of crushing is mainly due to the 12.8% increase in processing third party sugarcane
and higher yield in terms of TCH. These effects were partially offset by a 7.6% drop in the harvested
area, due to more rain in 1Q17. The volume of rain in the Center-South region was 233 mm, 56%
above the historical average.
At the Ribeirão Preto (RP) Cluster, crushing rose to 5.3 million tons, up by 8.4%. This performance was
supported by a 19.2% increase in the yield from the sugarcane fields, which grew to a record figure of
99.7 ton/ha, with the highlight to Vale do Rosário unit, where TCH was 106.9 ton/ha. This performance
was partially offset by a 9.2% decrease in the harvested area, due to the rains, as mentioned above.
Crushing at the Mato Grosso do Sul (MS) Cluster amounted to 2.1 million tons, down 16%. This
performance was due to a 18.1% reduction in the harvested area, as a result of a volume of rain which
was 77% above the historical average for the region.
At the Leme (L) and Lagoa da Prata (LP) Clusters, total crushing was 1.7 million tons, representing an
increase of 41.8% as compared to 1Q16. This result was due to a 10.1% increase in yield, which rose
to 85.8 ton/ha, and to a 24.8% increase in the harvested area.
It should be noted that the Northeast (NE) Cluster is in the off-season period, and so there was no
crushing in 1Q17.
59
The following charts show the evolution in crushing volume on a consolidated basis and at the RP and MS
Clusters:
Crushing Volume ('000 tons)
Consolidated
5.4%
8,576
Ribeirão Preto
Mato Grosso do Sul
9,036
4,858
8.4%
5,268
-16.0%
2,511
1Q16
1Q17
1Q16
1Q17
1Q16
2,110
1Q17
60
1.2 Productivity
1.2.1 Tons of Cane per Hectare (TCH)
The yield of sugarcane fields measured in TCH reached 91.3 ton/ha in 1Q17, an increase of 9.2%. This
growth reflects the positive results of initiatives implemented in the management of the sugarcane
fields.
These initiatives include: (i) improved handling practices, such as the use of liquid and foliar fertilization,
and the modification of processes and equipment to optimize mechanized harvesting and reduce crop
trampling; (ii) continuous improvement in the selection of cane varieties; and (iii) the more intensive use
of agricultural technologies, to be detailed in section 1.2.3
The following charts show the evolution in TCH on a consolidated basis and at the RP and MS clusters.
Of particular note is the consolidated yield of Biosev and the one of the RP Cluster, which reached
record levels:
TCH (ton/ha)
Consolidated
Ribeirão Preto
Mato Grosso do Sul
99.7
19.2%
9.2%
-0.8%
91.3
83.6
83.7
1Q16
1Q17
1Q16
1Q17
86.6
85.9
1Q16
1Q17
1.2.2 Sugarcane Total Recoverable Sugar (TRS)
Cane TRS content was 119.5 kg/ton in 1Q17, an increase of 2.1%. The higher TRS content is mainly
explained by the progress in improving varietal profiles, reducing plant and mineral impurities in the
harvesting process, and the systematic application of ripeners.
The following charts show the change in TRS content between quarters:
Consolidated
Mato Grosso do Sul
Ribeirão Preto
2.3%
2.1%
117.1
119.5
118.1
120.9
1Q16
1Q17
1Q16
1Q17
113.1
1Q16
-0.5%
112.5
1Q17
61
1.2.3 Agricultural Technology
Biosev consistently invests in agricultural technology to boost yields and increase the longevity of its
sugarcane fields.
The Company now has Agricultural Operations Centers at all of its 11 agroindustrial units. This
management tool has enabled the Company to improve its monitoring of agricultural activities in the
field, especially the performance of harvest fronts, and consequently to capture operating efficiency
gains.
Biosev is also using unmanned aerial vehicles (UAVs) for photographing and analyzing its sugarcane
fields, to ensure adequate monitoring and support in decision-making. So far this tool has been used to
identify and correct problems at the RP, MS and NE Clusters.
With 100% use of automatic pilot in mechanized harvesting and planting in its Center-South units, and
with all the sugarcane fields now being georeferenced, conditions are in place for fully mechanizing
both planting and harvesting.
A pilot drip-irrigation project is being implemented in the NE Cluster, at the Estivas Unit, with the
objective of increasing yield in the Northeast region. This technology increases the yield and longevity
of cane fields, reduces production costs per ton of cane and increases the efficiency of water and input
usage.
In regards to the varietal profile, Biosev has started to use pre-sprouted seedlings (PSS). The adoption
of this technology enables sugarcane to be grown from preselected high-quality seedlings that are free
of disease and pests, which ensures a higher multiplication rate compared to traditional planting
systems. Additionally, in partnership with the Interuniversity Network for the Development of the Sugar
and Ethanol Sector (Ridesa), Biosev has started operating its Experimental Nucleus at the NE Cluster.
This initiative is aimed at the research and development of new varieties of sugarcane, to encourage
genetic improvements in the Northeast region.
In addition to these technologies which are now in place, Biosev will use Precision Agriculture to apply
soil correctives in areas to be readied for planting in the 2016/17 crop year. The georeferenced
information makes it possible to prepare maps for applying inputs at variable rates, thus improving
distribution and control, with direct results on the yield and longevity of the sugarcane fields. As an
example of this, tests are being carried out on flow controllers in the planters, to control the application
of planting inputs, at the Vale do Rosário Unit.
62
1.3 Production
The following table shows production volumes and mix:
Production
1Q17
1Q16
%
Sugar Mix (%)*
Anhydrous Mix (%)
Production ('000 tons of TRS Product)**
Sugar ('000 tons)
Ethanol ('000 m³)
Cogeneration (GWh)
51.6%
34.0%
1,058
521
301
237
46.2%
24.8%
989
437
314
266
5.4 p.p.
9.2 p.p.
7.0%
19.4%
-4.0%
-10.7%
* As of 2Q16, sugar mix calculation methodology was aligned with that adopted by the Sugarcane Industry Association (UNICA).
**It considers the conversion factors applied in São Paulo State, published in Consecana Manual
1.3.1 TRS Product
Production in terms of tons of TRS Product came to 1,058 thousand tons in 1Q17, up 7%. The
improvement is explained primarily by a 5.4% increase in crushing volume and a 2.1% rise in
sugarcane TRS.
It should be noted that the share of sugar was 5.4 p.p. higher than in the previous crop year, due to the
increase in the amount of TRS allocated to sugar production, given its higher profitability in relation to
ethanol during 1Q17.
In 1Q17, anhydrous ethanol accounted for 34% of total ethanol production, an increase of 9.2 p.p. over
the previous crop year, due to the product’s higher profitability compared to hydrous ethanol and
energy cogeneration.
63
1.3.2 Cogeneration
Biosev has cogeneration power plants at all of its 11 industrial sites and it is energy self-sufficient
during the harvest period. Of these units, nine produce surplus electricity for sale.
In 1Q17, cogeneration destined for sale decreased 10.7% to 237 GWh, basically as a result of less
energy produced from external biomass, which was partially offset by increased crushing volume.
Considering only energy produced from owned biomass, cogeneration volume increased by 5.8%
between the periods.
The productivity of cogeneration units expressed as a volume of power for sale by ton of sugarcane
crushed1 stood at 27.7 kWh/ton in 1Q17, down by 9.6% compared to the previous crop year. This
reduction is explained by higher rainfall levels in the period, leading cane bagasse to be used only to
keep boilers warm on rainy days, without any surplus power for sale, thus affecting productivity.
<0}
The following charts show a comparison of the volume of power cogeneration for sale and of
productivity for the quarters, on a consolidated basis and for the RP and MS Clusters:
Cogeneration for Sale
Consolidated
30.6
Ribeirão Preto
27.7
23.0
266
43.1
42.7
-10.7%
237
4.0%
41
112
94
97
25
-30.5%
78
224
237
94
97
88
78
1Q16
1Q17
1Q16
1Q17
1Q16
1Q17
Cogen for sale (GWh)
1
22.1
Mato Grosso do Sul
Cogen for sale - Outsourced biomass (GWh)
Cogen for sale/Crushing (kWh/ton)
This productivity indicator excludes crushing volume from mills that do not export energy and the amounts of third-party biomass
64
2. ECONOMIC AND FINANCIAL PERFORMANCE
2.1 Change in accounting standards for biological asset
As of this crop year, biological assets will be accounted in accordance with the new accounting
standards CPC 27 / IAS 16 and CPC 29 / IAS 41.
Accordingly, the following changes were made in the accounting classification and calculation of the fair
value of the biological asset:
i.
Ratoon remains as a non-current asset, under the heading of property, plant and
equipment (PP&E), and no longer in the biological asset line, and its value is now
measured at deemed cost, and no longer at fair value;
ii.
Standing sugarcane is now to be recorded in current assets, under the heading of
biological assets, and not as non-current asset as previously. Measurement continues to
be at fair value less estimated costs to sell, and it will be calculated according to the
discounted cash flow method which, under the new standard, will now include projected
cash flows for a 12-month period (previously this was six years)
In order to adopt the new standards and to maintain the comparability of the Company’s Financial
Statements, the figures reported for 1Q16 have been adjusted to reflect the appropriate changes. In the
table below we show the adjustments in the Balance Sheet concerning the new accounting standards
for biological assets:
Balance Sheet
ASSETS
CURRENT
Biological Assets
NON CURRENT
Biological Assets
PP&E
LIABILITIES
NON CURRENT
SHAREHOLDERS' EQUITY
Accumulated losses
03.31.16
Reported
164,090
2,834,735
3,468,567
260,057
(2,936,585)
Biological
Assets
Effects
886,707
03.31.16
Pro forma
(1)
99,873
263,963
(2,834,735)
1,020,936
886,707
(2)
(215,338)
(611,881)
4,489,503
44,719
(3,548,466)
The introduction of the new accounting standards has altered the fair value of biological assets from
R$2.8 billion to R$1.9 billion in 1Q16 [(1)+(2), as show in the table above].
65
The effects of the new standards on the Statement of Income are shown below:
Income Statement
COGS
Income Tax and Social Contribution
1Q16
Reported
(1,219,954)
(241,655)
Biological
Assets
Effects
(103,075)
35,046
1Q16
Adjusted
(1,323,029)
(206,609)
It should be noted that these adjustments have had purely economic effects, without affecting Biosev’s
cash flow.
66
2.2 Net Revenue
Biosev recorded net revenue of R$1.7 billion in 1Q17, increasing 22.8% against 1Q16. The increase
reflects primarily the sales volume growth and the higher prices of sugar and ethanol, coupled with
growth in revenue from other products, which will be discussed in item 2.2.4. Cogeneration revenue,
however, fell 9.7%, mainly due to lower prices during the quarter.
A breakdown of the net revenue is presented in the following table:
Net Revenue (R$ Thousand)
Sugar
Domestic Market
Export Market
Ethanol
Domestic Market
Export Market
Energy
Other Products*
Total
1Q17
1Q16
%
496,978
137,642
359,336
422,277
321,096
101,181
49,168
704,259
399,181
111,566
287,615
356,596
319,943
36,653
54,429
552,220
24.5%
23.4%
24.9%
18.4%
0.4%
176.1%
-9.7%
27.5%
1,672,682
1,362,426
22.8%
* By-products obtained from the sugar and ethanol production process such as dry yeast, powdered
molasses, raw and hydrolyzed bagasse for animal feed, and commodity products to fulfill export
performance contracts.
The following table shows the position of sugar and ethanol inventories at the end of the periods
indicated:
Inventories
Sugar ('000 tons)
3
Ethanol ('000 m )
1Q17
4Q16
1Q16
156
122
68
65
186
164
67
The breakdown of net revenue by product between the periods is presented below, with the increase in
revenue from other products being of particular note:
Net Revenue by Product (%)
1Q16
40.5%
1Q17
29.3%
25.3%
26.2%
4.0%
Sugar
Ethanol
29.7%
42.1%
2.9%
Energy
Other Products
Below we present a breakdown of net revenue by market. The increase in the share of revenue from
export sales is noteworthy. This performance is due (i) to increased revenue from other products, which
are mainly sold in this market; and (ii) to the increase in volumes and prices for the sugar and ethanol in
the export market:
Net Revenue by Market (%)
1Q16
1Q17
31.0%
36.4%
63.6%
69.0%
68
2.2.1 Sugar
Net revenue from sugar sales came to R$497 million in 1Q17, an increase of 24.5% over 1Q16. This
result basically reflects a 5.9% growth in sales volume combined with a 12.7% increase in the average
sales price in the period.
The higher average sales price in 1Q17 reflects the recovery of sugar prices in the international market,
as well as the higher premiums over VHP for liquid crystal and refined sugar. The higher sales volume
is the result of increased crushing and the larger share of sugar in the production mix.
The following charts show changes in net revenue and a comparison of sugar volumes and average
prices. For the purpose of analyzing sales performance, the average sugar price excludes the non-cash
effects of the hedge accounting of foreign-denominated debt:
Net Revenue (R$ million)
24.5%
Sales Volume (‘000 tons)
Average Sales Price (R$/Ton)
12.7%
497
1,082
960
399
5.9%
359
474
448
288
112
138
1Q16
1Q17
Domestic Market
Export Market
348
378
99
96
1Q16
1Q17
Average Price
69
The following chart shows the breakdown of revenue by type of sugar, with the highlight being an
increase in the share of higher value-added products (crystal, liquid crystal and refined) in sugar
revenue, which rose from 29.9% to 33.8%:
Revenue by Sugar Type (%)
1Q16
1Q17
11.5%
9.3%
6.4%
5.8%
12.0%
18.7%
70.1%
66.2%
2.2.1.1 Initiatives to increase sugar production capacity
Biosev is implementing initiatives to increase its sugar production capacity, in line with its Strategic and
Business Vision.
In this context, Biosev has now taken necessary steps to increase production capacity by 81 thousand
tons, starting in the 2017/18 crop year. This capacity increase will be achieved by means of marginal
investments, budgeted at R$5.9 million, associated mainly with reducing bottlenecks in industrial
processes.
With the implementation of these initiatives, Biosev’s sugar production capacity (currently at 2.5 million
tons a year) will be increased by 3.2%, representing approximately 4.7% of the sugar production in the
2015/16 crop year.
Another significant aspect associated with these initiatives is a greater flexibility in the sugar-ethanol
production mix. In terms of maximizing sugar production (max sugar), the ceiling will rise from the
current level of 57% to 59%. Under the max ethanol scenario, the ceiling will remain unchanged at 53%
of total production.
We should mention that other initiatives for maximizing sugar production are also being analyzed by the
Company.
70
2.2.2 Ethanol
Net revenue from ethanol sales in 1Q17 amounted to R$422 million, increasing 18.4% from 1Q16. This
result reflects the 15.4% increase in average prices, and a rise of 2.1% in the volume sold during the
quarter.
The increase in average prices during 1Q17 was driven mainly by: (i) higher ethanol prices in the
domestic market, (ii) a greater share for higher value-added products (anhydrous, neutral and industrial
ethanol) in the Biosev sales mix; and (iii) higher prices in the export market, particularly due to the
increase in exports of Korean Standard hydrous ethanol.
In the domestic market, the 14.3% drop in sales volume reflects a more sugar oriented production mix,
due to its higher relative profitability, combined with an increase in ethanol exports.
The sales volume in the export market was up by 113.4%, driven mainly by more competitive pricing of
ethanol due to a 14.1% devaluation of the Real against the US Dollar between 1Q16 and 1Q17.
The following charts show changes in net revenue and a comparison of ethanol volumes and average
prices. For the purpose of analyzing sales performance, the average ethanol price excludes the noncash effects of the hedge accounting of foreign-denominated debt:
Sales Volume (‘000 m3)
Average Sales Price (R$/m3)
15.4%
1,609
18.4%
422
1,395
357
2.1%
101
37
320
1Q16
321
1Q17
Domestic Market
Export Market
260
265
33
71
227
194
1Q16
1Q17
Average Price
71
The following chart presents a breakdown of revenue by type of ethanol, with the highlight being the
greater share for higher value-added products (anhydrous, neutral and industrial ethanol) in the sales mix,
which increased from 44.1% to 47.1%:
Revenue by Ethanol Type (%)
1Q17
1Q16
7.1%
6.7%
37.4%
55.8%
40.0%
52.9%
72
2.2.3 Energy
In 1Q17, net revenue from energy sales amounted to R$49 million, down 9.7%, due mainly to lower
average prices, reflecting the lower average settlement price (PLD).
This reduction was partially offset by the growth in sales volume due to higher crushing volume and
higher volume of resale operations.
The following charts show changes in net revenue and a comparison of energy volumes and average
prices.
Sales Volume (GWh)
Average Sales Price (R$/MWh)
-28.5%
190
-9.7%
136
25.7%
54
49
288
1Q16
1Q17
1Q16
Volume
362
1Q17
Prices
2.2.4 Other Products
The Other Products line records revenue from sales of dry yeast, powdered molasses, raw and
hydrolyzed bagasse for animal feed, in addition to revenue from the sale of commodities in the spot
market to fulfill export performance contracts with the aim of settling obligations in foreign currency
Net revenue from other products was R$704 million in 1Q17, with most of this amount related to export
performance contracts linked to maturities of foreign currency debt obligations.
73
2.3 Cost of Goods Sold (COGS)
Total COGS was R$1.6 billion in 1Q17, up by 21.5% from the same quarter of the previous crop year.
This increase is mainly due to: (i) higher unit costs, to be discussed below; (ii) higher TRS sales
volume; (iii) higher volume of resale operations, which includes export performance contracts; (iv) the
increase of third party cane in the supply mix; and (v) early start of the 16/17 crop in comparison to the
previous crop year, which increased the portion of expenditures allocated to COGS and reduced costs
deferred to CAPEX.
Cash COGS ex-resale
(R$/Ton TRS sold)
Excluding non-cash effects and resale costs, COGS amounted to
R$589 million, up by 42.7% from 1Q16. Unit COGS rose from
R$562/ton to R$691/ton between crops due to: (i) higher raw
material costs as a result of a 24.4% increase in CONSECANA
prices; (ii) higher diesel prices and their impact on HLT costs; (iii)
higher labor costs; and (iv) higher costs of industrial inputs due to
the depreciation of the BRL against the USD.
22.9%
691
562
1Q16
1Q17
The tables below show a breakdown of total COGS and cash COGS:
COGS (R$ Thousand)
Total COGS
Non cash items
Depreciation and Amortization
Gains (losses) from changes in the Fair
Value minus estimated costs to sell
Biological Assets
Cash COGS
Personnel
Raw Materials (cane, land lease and HLT)
Inputs
Resale goods
1Q17
1Q16*
%
(1,607,986) (1,323,029)
(205,431)
(207,608)
(263,205)
(236,210)
21.5%
-1.0%
11.4%
57,774
28,602
-
(1,402,555) (1,115,421) 25.7%
(111,302)
(101,765)
9.4%
(420,435)
(276,283) 52.2%
(57,730)
(35,055) 64.7%
(813,088)
(702,318) 15.8%
• Export performance contracts
(699,487)
(533,000)
31.2%
• Sugar, ethanol and energy
(113,601)
(169,318)
-32.9%
Cash COGS ex-resale
(589,467)
(413,103) 42.7%
* 1Q16 figures are presented on a pro forma basis and adjusted in accordance with the new
standards for accounting of biological assets (CPC27/IAS16 and CPC29/IAS41).
Cash COGS ex-resale (R$ Thousand)
Agricultural
HLT (own + 3rd party cane)
Land lease
3rd party cane
1Q17
1Q16*
%
(494,003)
(186,641)
(88,865)
(218,497)
(342,160)
(130,603)
(77,958)
(133,599)
44.4%
42.9%
14.0%
63.5%
Industrial
(84,843)
(63,209) 34.2%
Other
(10,622)
(7,733) 37.4%
(589,467)
(413,103) 42.7%
853
(691)
735 16.1%
(562) 22.9%
Cash COGS ex-resale
TRS Product sold ex-resale ('000 tons)
Cash COGS ex-resale (R$/Ton)
74
2.4 Gross Profit
In order to analyze the profitability of the company’s operations, we monitored the evolution of cash
gross profit, which excludes depreciation, amortization, change in the fair value of biological assets, and
the impact from hedge accounting of foreign currency debt on net revenue, in addition to resale
operations (resale operations comprise exports performance contracts).
Accordingly, the cash gross profit in 1Q17 was R$282 million, up by 6.0% against R$266 million in
1Q16. The gross margin was 32.4%, down by 6.8 p.p. from the same period of the previous crop year.
See below the change in cash gross profit and gross margin between the two crops:
Cash Gross Profit 2 ex-resale/HACC (R$ million) and
Cash Gross Margin ex-resale/HACC (%)
39.2%
32.4%
6.0%
266
282
1Q16
1Q17
Cash Gross Profit ex-resale/HACC
Cash Gross Margin ex-resale/HACC
2
Excludes depreciation, amortization, changes in the fair value of biological assets, effects from the hedge accounting of the foreigndenominated portion of debt on net revenue and resale operations (resale operations comprise exports performance contracts).
75
2.5 Selling, General and Administrative (SG&A) Expenses
SG&A expenses in 1Q17 amounted to R$144 million, increasing by 11.0% against 1Q16.
Selling expenses amounted to R$71 million, up by 70.1% from the same period of the previous crop
year. The principal factors that contributed for this variation were: (i) higher logistic expenses
associated with the increase in the share of exports in the sales mix; and (ii) change in the accounting
classification of logistic expenses associated with sugar fobbing expenses, which used to be
recognized in COGS and are now recorded as shipment expenses.
General and administrative expenses totaled R$72 million, down by 17.3% compared to the amount
recorded in 1Q16. In real terms, these expenses decreased by 24.0% reflecting Biosev’s initiatives to
streamline its business processes.
The table below shows a comparison between the two periods:
SG&A (R$ Thousand)
Selling
Freight
Shipping Charges
Comissions, wharfage and other
G&A
Personnel
Services
Other
SG&A (Cash)
1Q17
1Q16
%
(71,289)
(48,307)
(17,559)
(41,907)
(32,399)
(5,656)
70.1%
49.1%
210.4%
(5,423)
(3,852)
40.8%
(72,285)
(46,534)
(19,073)
(6,678)
(87,407)
(43,420)
(36,774)
(7,213)
-17.3%
7.2%
-48.1%
-7.4%
(143,574)
(129,314)
11.0%
Depreciation expenses allocated in SG&A totaled R$7.3 million in 1Q17.
76
2.6 EBITDA
Adjusted EBITDA was R$140 million (including resale/HACC), down by 23% against 1Q16.
Aiming at a more appropriate analysis of Biosev’s operating profitability, we decided to exclude from the
calculations of adjusted EBITDA(3)(4) the effects from resale operations, including export performance
contracts and the impact from the hedge accounting (HACC) of foreign currency debt on net revenue
(noncash impact).
In this sense, as shown in the chart below, the ex-resale/HACC adjusted EBITDA was R$152 million in
1Q17, a reduction of 24.4% from the same quarter in the previous crop year. This performance was
particularly a result of the increase in COGS and selling expenses, as already discussed, as well as the
lower amount in reversal of provisions, which decreased from R$68 million in 1Q16 to R$11 million in
1Q17, as accounted in the Other Operating Income/Expenses.
The above mentioned effects were partially offset by the increase in the volume and prices of sugar and
ethanol.
The ex-resale/HACC adjusted EBITDA margin was 17.4% in 1Q17, a reduction by 12.2 p.p. from the
previous crop year, mainly due to higher unit costs, as well as the lower amount in reversal of
provisions, as already discussed.
See below the changes in ex-resale/HACC adjusted EBITDA and EBITDA margin in the two periods:
Adjusted EBITDA ex-resale/HACC (R$ million) and EBITDA Margin (%)
29.6%
17.4%
-24.4%
201
1Q16
152
1Q17
Adjusted EBITDA ex-resale/HACC
Adjusted EBITDA margin ex-resale/HACC
3
EBITDA corresponds to earnings before net financial result, depreciation, amortization and income and social
contribution taxes on net income for the period. Among other metrics, we use EBITDA as a measure of our operating
performance and cash flow from operations. Adjusted EBITDA is calculated based on EBITDA (CVM Instruction 527),
excluding changes in the fair value of biological assets less estimated costs to sell and non-recurring items.
4
EBITDA is not a measure of financial performance in accordance with the accounting practices adopted in Brazil (BR
GAAP, IFRS) and should not be considered as an alternative to net income, as an indicator of operating performance, as
an alternative for cash flow from operations or as a measure of liquidity. EBITDA does not consider certain costs, which
could significantly affect our profits, such as financial expenses, taxes, depreciation and amortization, thus limiting its use
as a measure of our profitability.
77
Below is a breakdown of adjusted EBITDA, as well as its reconciliation with net income (loss):
EBITDA Composition
(R$ Thousand)
Net Revenue
Cash COGS
Gross Profit (Cash)
SG&A (Cash)
TEAG Profit/(Loss)
Other Operating Revenue/Expenses
Non-recurring items
Adjusted EBITDA
Adjusted EBITDA Margin
EBITDA Reconciliation
(R$ Thousand)
NET INCOME (LOSS)
Financial result
EBITDA CVM 527
Losses (gains) from changes in the
Fair Value minus estimated costs to
Amortization of Concession - TEAG
1Q17
1Q16
%
1,672,682
1,362,426
22.8%
(1,402,555) (1,115,421)
25.7%
270,127
247,005
9.4%
(143,574)
(129,314)
11.0%
(895)
(390)
129.4%
14,317
64,852
-77.9%
44
(255)
140,019
8.4%
181,898
13.4%
-23.0%
-5 p.p.
1Q17
1Q16*
%
(353,307)
305,437
(27,020)
270,539
195,649
(333,586)
206,609
91,242
244,390
208,655
5.9%
47.8%
10.7%
-6.2%
(57,774)
(28,602)
102.0%
2,100
2,100
Non-recurring items
44
(255)
Adjusted EBITDA
140,019
181,898
Adjusted EBITDA Margin
8.4%
13.4%
* 1Q16 figures are presented on a pro forma basis and adjusted in
accordance with the new standards for accounting of biological assets
.
-
-23.0%
-5 p.p.
78
2.7 Hedge
The table below shows the aggregate position of sugar volumes and prices hedged by derivative
commodities and foreign exchange contracts as of June 30, 2016.
Hedge on 06/30/2016
2016/17
2017/18
1,754
14.51
645
18.35
205
3.693
178
3.692
53.59
67.76
Sugar (#NY11)
Volume ('000 tons)
Average Price (cUS$/lb)
FX (US$)
Amount (US$ million)
Average Price (R$/US$)
Hedged Price (cR$/lb)
The volume of 1,754 thousand tons hedged represents approximately 95% of our exposure for the
2016/17 crop year, while the volume of 645 thousand tons hedged represents approximately 40% of
Biosev's exposure for the 2017/18 crop year.
In addition to the position in foreign exchange derivatives shown above, Biosev recorded additional
currency derivatives in order to mitigate any mismatch between revenue flow disbursements in foreign
currencies associated with the dollar-denominated portion of the company’s costs and indebtedness.
2.8 Financial Result
Net financial result in 1Q17 was R$27 million, representing a reversal of the negative result of R$91
million recorded in the same period of the previous crop year. This reversal results particularly from the
positive impact from foreign exchange variation in 1Q17.
Net exchange variation amounted to R$317 million and derived from a 9.8% appreciation in BRL
against USD on the dollar-denominated portion of assets and liabilities. This amount, accounts for 54%
of the total foreign exchange variation in the crop year. The remaining portion, of R$276 million, was
deferred to other comprehensive income in accordance with Biosev’s hedge accounting policy.
Excluding the effects from foreign exchange variation, the financial result was an expense of R$290
million, up by 138.4% from 1Q16. The increase is basically due to: (i) marking-to-market and realization
of derivative currency instruments, and (ii) higher interest rate expenses.
On June 30, 2016, the US Dollar was quoted at R$3.2098.
See below the evolution of the financial result between the periods:
Financial Result (R$ Thousand)
Financial Result, net
FX Variation
Financial Result before FX
Interest Expenses
Interest Income
Derivative transactions
Other Revenues/(Expenses)
1Q17
1Q16
%
27,020
(91,242)
-129.6%
317,153
30,473
(290,133)
(171,901)
9,375
(137,380)
9,773
(121,715)
(135,435)
10,318
(10,108)
13,510
138.4%
26.9%
-9.1%
-
79
2.9 Earnings Before Taxes (EBT)
Earnings before the provision for income and social contribution taxes were negative by R$48 million in
1Q17, which compares to the loss of R$127 million in the same period of the previous crop year. In
addition to the aspects already discussed in the previous sections, this result had a positive impact from
the changes in the fair value of biological assets, less estimated costs to sell between the periods,
which amounted to R$58 million in 1Q17.
As already mentioned, due to new accounting standards for biological assets, we decided to include the
due changes in 1Q16 financial statements for the purpose of comparing the two quarters, as follows:
Reconciliation of reported EBT and pro forma EBT
Reported EBT 1Q16
Effects from the new accounting standards for Biological Assets
1Q16
(23,902)
(103,075)
Gains (losses) from changes in the fair value minus estimated costs to sell
Biological Assets
(84,492)
(18,583)
Pro forma EBT 1Q16
(126,977)
2.10 Net Income (Loss)
Net loss for the period was R$353 million, compared to a loss of R$334 million in the same period of
the previous crop year. In addition to the aforementioned factors, net loss for the period was affected by
deferred Income and Social Contribution Taxes (IR/CSLL) expenses, in the amount of R$305 million, as
a result of (i) changes in taxable temporary differences in the period, particularly regarding unrealized
foreign exchange variations; and (ii) non-recognition of deferred tax assets associated with tax losses
carryforwards, all of which have economic effects with no impact on cash.
As mentioned above, due to new accounting standards for biological assets, we decided to include the
due changes in 1Q16 financial statements for the purpose of comparing the two quarters, as follows:
Reconciliation of reported Net Income and pro forma Net Income
Reported Net Income 1Q16
Effects from the new accounting standards for Biological Assets
Gains (losses) from changes in the Fair Value minus estimated costs to sell
Biological Assets
Pro forma Net Income 1Q16
1Q16
(265,557)
(68,029)
(84,492)
(18,583)
35,046
(333,586)
80
3. CAPITAL EXPENDITURE
Biosev invested R$251 million in 1Q17, an increase of 11.0% from the amount invested in the same
period of the previous crop year.
CAPEX from current operations totaled R$246 million, up by 10.5% compared to the same period of the
previous crop year. This performance reflects: (i) larger disbursements associated with planting and
treatment which reflect the increase in costs of inputs (fertilizers and herbicides), whose prices were
impacted by the depreciation of BRL against USD, (ii) industrial investments to increase operations
reliability and (iii) the acquisition of harvesters, which did not occur in 1Q16.
These effects were partially offset by lower intercrop maintenance CAPEX due to the early start of the
2016/17 crop in comparison to the previous crop year in the RP and L/LP Clusters, which reduced the
portion of costs deferred to CAPEX.
Expansion CAPEX amounted to R$5 million in line with the Company's strategy to give priority to
investments in planting, treatment and industrial/agricultural maintenance.
The table below shows the breakdown of capital expenditures:
Capex (R$ Thousand)
Expansion
Operations
Industrial
Agriculture
Planting
Treatment
Intercrop maintenance (Agr/Ind)
Other
Total CAPEX
1Q17
1Q16
%
4,627
245,877
18,021
6,084
90,293
79,220
41,029
11,232
250,504
3,204
222,424
5,874
242
80,947
71,224
59,450
4,687
225,628
44.4%
10.5%
206.8%
11.5%
11.2%
-31.0%
139.6%
11.0%
4. INDEBTEDNESS
Biosev’s gross debt was R$6.1 billion at the end of 1Q17, down by 9.8% compared to the end of the
2015/16 crop, basically due to the impact of the 9.8% appreciation of the Real against the US Dollar on
the portion of the debt denominated in dollars, in the amount of R$485 million. Additionally, net
amortizations totaled R$138 million, having also contributed to the reduction in gross debt.
Adjusted net debt was R$5.2 billion, up by 21.7% against the amount recorded at the end of the
2015/16 crop year. This variation is basically due to a reduction in cash position, which totaled R$549
million at the end of 1Q17 and was affected by the increase in working capital needs. Out of total cash
position on June 30, 2016, 55.5% were denominated in US Dollars.
81
The table below shows the breakdown of the debt:
Debt (R$ Million)
06/30/2016
Gross Debt
Short Term
Long Term
Cash and Short-term Investments
Net Debt
Readily Marketable Inventories
Adjusted Net Debt
Net Debt/Adjusted EBITDA
03/31/2016 Var. %
(6,052)
(3,359)
(2,693)
549
(5,503)
334
(5,168)
3.70x
(6,712)
(1,831)
(4,881)
2,239
(4,473)
225
(4,248)
2.95x
-9.8%
83.4%
-44.8%
-75.5%
23.0%
48.6%
21.7%
The following charts present the breakdown of indebtedness by index and by instrument on June 30,
2016, as well as the cash position by currency:
Cash and ST Investments
by Currency (%)
Gross Debt by Instrument and Index (%)
0.1%
4.8%
3.3%
7.6%
0.9%
20.7%
27.2%
32.6%
44.5%
55.5%
11.5%
66.8%
24.4%
BNDES/FCO/FNE
Reestructed Debt
Export Pre Payment
ACC
Other
NCE
USD = 74.6%
LIBOR
Fixed
CDI
TJLP
BRL
Other
USD
As discussed later in this report, in the “Subsequent Events” chapter, Biosev renewed, approximately
one year prior to maturity, the syndicated ACC (Advance on Foreign Exchange Contracts) credit facility,
which had been originally contracted on June 16, 2014. The renewal totaled US$310 million, or 70% of
the amount originally contracted, while the maturity was extended for two years, that is, June 2019. The
schedule of maturities below already reflects this renewal:
Cash and Pro Forma Amortization Schedule (R$ million)
1,819
1,440
1,312
963
963
1,300
414
305
244
927
513
519
414
104
85
Cash
2016/17
2017/18
2018/19
2019/20
R$
518
US$
1,227
645
318
2020/21 to
2027/28
Readily Marketable Inventories*
82
5. CAPITAL MARKETS AND INVESTOR RELATIONS
The chart below shows the performance of the Company’s shares in the past 12 months compared to
the Ibovespa index, as well as the evolution in the liquidity of shares. Biosev shares appreciated
123.4%, exceeding the Ibovespa index, which increased 20.5%:
Performance BSEV3 versus IBOV
R$10.90
(+123.4%)
150%
100%
50%
58,299
(+20.5%)
0%
-50%
-100%
Aug, 2015
Oct, 2015
Dec, 2015
Feb, 2016
Financial Traded Volume (R$ thousand)
Apr, 2016
IBOV
Jun, 2016
Aug, 2016
BSEV3
Source: Bloomberg, August 12,2016
It is worth to highlight that Biosev is one of the winners of the 2016 Transparency Award - 20th
ANEFAC-FIPECAFI-SERASA EXPERIAN Award, in the “Companies with Net Revenue up to R$5
billion” category. The award recognizes the quality of the financial statements and explanatory notes,
as well as the transparency and consistency of the information disclosed, focusing on the full
compliance with the Accounting Standards and absence of qualifications in the Independent Auditors'
Report, among other matters.
83
6. GUIDANCE
Biosev ratifies the guidance already disclosed to the market, in accordance with the table below:
2016/17 Crop year
Crushing (Million tons)
Total TRS (Million tons)*
Guidance
30.5 - 33.5
129.0 - 133.0
3.93 - 4.46
*Total TRS is the product of crushing volume by sugarcane TRS
84
7. SUBSEQUENT EVENTS
Until August 10, 2016, Biosev successfully renewed, approximately one year prior to maturity, a syndicated
ACC credit facility, which had been originally contracted on June 16, 2014.
The renewal totaled US$310 million, or 70% of the amount originally contracted, while the maturity was
extended for two years considering the original maturity, that is, June 2019. The syndicated transaction
was coordinated by the ING bank, with participation of the following financial institutions: ABN AMRO
Bank, BNP Paribas, Rabobank and Credit Agricole. Negotiations remain underway between the Company
and other international financial institutions, which may result in additional participants joining the syndicate
at a later date. The transaction will accrue LIBOR + 5.65 % per annum at the current level of financial
leverage.
This transaction has strategic relevance to Biosev and it was designed to achieve the following objectives:
(i) extend the company´s debt profile and (ii) guarantee access to funding on adequate and competitive
base.
85
8. APPENDICES – SUMMARIZED FINANCIAL STATEMENTS
8.1 INCOME STATEMENT
Income Statement (R$ Thousand)
1Q17
1Q16*
%
1,734,042
(61,360)
1,672,682
1,410,271
(47,845)
1,362,426
23.0%
28.2%
22.8%
(1,607,986)
(1,323,029)
21.5%
64,696
39,397
64.2%
OPERATING INCOME (EXPENSES)
G&A
Selling
Equity (loss) in subsidiaries
Other operating income (expenses)
Financial Result, net
PROFIT (LOSS) BEFORE TAXES ON INCOME
(139,586)
(79,619)
(71,289)
(2,995)
14,317
27,020
(47,870)
(75,132)
(95,587)
(41,907)
(2,490)
64,852
(91,242)
(126,977)
85.8%
-16.7%
70.1%
20.3%
-77.9%
-
NET INCOME (LOSS)
(305,437)
(353,307)
(206,609)
(333,586)
47.8%
5.9%
Gross Revenue
Taxes and Sales Deductions
Net Revenue
COGS
GROSS PROFIT
86
8.2 BALANCE SHEET - ASSETS
ASSETS (R$ Thousand)
CURRENT ASSETS
Accounts receivables
Inventories²
Biological Assets
Recoverable taxes
Other receivables
Total current assets
NON CURRENT ASSETS
Escrow deposits
Recoverable taxes
Other receivables
Investments
PP&E and biological assets
06/30/2016
03/31/2016¹
%
242,382
306,694
132,603
250,751
1,353,018
979,640
117,956
102,902
3,506
3,489,452
1,826,121
408,268
46,077
156,000
807,533
886,707
117,529
53,459
3,506
4,305,200
-86.7%
-24.9%
187.8%
60.7%
67.5%
10.5%
0.4%
92.5%
-18.9%
26,770
252,248
269,261
42,577
19,994
206,660
4,417,414
4,831
21,404
237,877
253,388
263,963
19,545
209,655
4,489,503
0.0%
25.1%
6.0%
6.3%
-83.9%
2.3%
-1.4%
-1.6%
• PP&E
3,375,048
3,468,567
-2.7%
• Biological assets
1,042,366
1,020,936
2.1%
Intangible assets
931,754
6,166,678
934,163
6,434,329
-0.3%
-4.2%
TOTAL ASSETS
9,656,130
10,739,529
-10.1%
1 - 1Q16 figures are presented on a pro forma basis and adjusted in accordance with the new standards
for accounting of biological assets (CPC27/IAS16 and CPC29/IAS41).
2 - Includes commodity products to fulfill export performance contracts: R$679 million on 06/30/2016 and
R$269 million on 03/31/2016.
87
8.3 BALANCE SHEET - LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY
(R$ Thousand)
06/30/2016
03/31/2016*
CURRENT LIABILITIES
Borrowings and financing
Advance from domestic customers
Advance from foreign customers
Accounts payables
Taxes payable
Other payables
3,358,562
13,485
732,230
542,560
134,855
18,416
182,686
141,860
5,124,654
1,830,913
29,389
637,884
572,483
124,720
46,035
201,882
159,651
3,602,957
NON CURRENT LIABILITIES
Advance from foreign customers
Accounts payables
Provision for tax, labor, civil and environmental contigencies
Taxes payable
Other payables
2,693,243
1,769,427
1,802
208,961
48,434
349,928
3
56,138
5,127,936
4,881,016
2,149,690
1,233
44,719
47,668
338,301
3
72,885
7,535,515
2,618,214
1,355,616
(3,901,616)
(685,097)
2,618,214
1,355,616
(3,548,466)
(840,887)
Total equity attributable to shareholders
(612,883)
(415,523)
Non-controlling interest
Total equity
16,423
(596,460)
16,580
(398,943)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
9,656,130
10,739,529
SHAREHOLDERS' EQUITY
Social Capital
Capital reserve
Accumulated losses
Other comprehensive income (loss)
* 1Q16 figures are presented on a pro forma basis and adjusted in accordance with the new standards for
accounting of biological assets (CPC27/IAS16 and CPC29/IAS41).
88
8.4 STATEMENT OF CASH FLOW
Cash FLOW (R$ Thousand)
06/30/2016
06/30/2015*
(353,307)
(333,586)
540,979
270,539
349,371
244,390
(57,774)
(28,602)
(347,621)
236,046
305,372
134,417
(276,315)
222,510
224,976
(37,588)
Decrease/(Increase) in assets
Increase/(Decrease) in liabilities
(787,006)
(521,445)
(528,009)
(248,171)
Dividends received
Interest paid on borrowings and financing
(165,313)
(140,747)
(1,286,092)
(901,142)
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in property, plant and equipment
Additions to biological assets
Increase in intangible assets
Decrease/(Increase) in short-term investments
Other
(135,146)
(104,088)
(954)
95,290
(14,371)
(56,570)
(171,368)
(1,089)
(793,240)
(18,176)
Net cash provided by/(used in) investing activities
(159,269)
(1,040,443)
1,554,878
(1,693,256)
2,367,558
(1,734,646)
CASH FLOW FROM OPERATING ACTIVITIES
NET INCOME (LOSS)
Non-cash transactions
Losses (gains) from changes in the Fair Value minus estimated costs to
sell Biological Assets
Interest, exchange rate changes and inflation adjustments, net
Unrealized losses/(gains) on derivatives
Deferred Income tax and social contribution
Other non-cash transactions
Net cash provided by/(used in) operating activities
CASH FLOW FROM FINANCING ACTIVITIES
Payment of borrowings and financing
Net cash provided by/(used in) financing activities
(138,378)
632,912
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
(1,583,739)
(1,308,673)
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
1,826,121
242,382
1,946,971
638,298
* 1Q16 figures are presented on a pro forma basis and adjusted in accordance with the new standards for accounting of
biological assets (CPC27/IAS16 and CPC29/IAS41).
89
9. Appendix – Market Overview
Sugar
Price
Sugar prices ended 1Q17 at US$17.04 c/lb, or 37.0% higher than the same period of the previous
crop year (US$12.44 c/lb). In BRL, prices were positively impacted by the currency’s depreciation
against the USD, reaching R$59.78 c/lb, up by 56.3% from the 1Q16 (R$38.24 c/lb).
Fundamentals
In the beginning of the 2016/17 crop year, the Center-South region crushed 215 million tons of
sugarcane, 10% more than the previous crop year. Sugar production was even more expressive,
reaching 11 million tons, up by 20% against the same period of the previous crop year, reflecting the
higher share of sugar in the mix and higher TRS content. The increase in the sugar mix was the result
of high sugar prices, reflecting the deficit of the international balance between supply and demand.
The North-Northeast region will soon close its 2015-2016 crop year (August to July), and should
record the lowest crushing level in its history due to the dry weather caused by a strong El Niño. Until
the end of June, the region crushed some 46 million tons, having produced 2.5 million tons of sugar.
Sugar deficit in the world, which is due to lower supply in several important producing regions of the
Northern Hemisphere, has supported prices and stimulated the production of the Brazilian Sugar and
Ethanol Industry. This scenario benefited Brazil’s sugar exports, which surpassed 6.5 million tons by
the end of July.
Average Sugar Prices
VHP, Crystal and Refined (US$/ton)
Source: Bloomberg, June 2016.
90
Ethanol
Price
In the beginning of the 2016/17 crop year, the average ethanol price was R$1,619/m3, up by 15.4%
from R$1,403/m3 in the same period of the previous crop year.
Anhydrous ethanol was traded at an average price of R$1,594/m3, which represents a premium of
11.9% on hydrous ethanol prices, net of the ICMS tax.
Supply and Demand
Brazil’s ethanol production (CS and NNE) between April and June in the 2016/17 crop year totaled 8.9
million m3, or a light increase of 3.5% against the same period of the previous crop year. Out of this
total, 5.5 million m3 was hydrous ethanol, which corresponds to a share of 61.7%, the highest since
the 2011/12 crop year.
With regard to the demand, due to a weaker economic environment in Brazil the performance of the
Otto-Cycle market reduced by 2.6% from 1Q16. Total ethanol consumption was 6.5 million m3,
against 7.1 million m3 in the same period of the previous crop year. Unlike the past crop year,
consumers have favored gasoline consumption due to the higher parity of ethanol/gasoline prices in
Brazilian gas stations (67.43% vs. 63.89%). This trend led to an increase in consumption of
anhydrous ethanol, which represented 42.8% of ethanol consumption, against 38.1% in the same
period of the 2015/16 crop.
BRL’s relative depreciation benefited Brazilian exports, which totaled 480 thousand m3, more than
twice the 241 thousand m3 exported in the same period in the 2015/16 crop year. Imports recorded a
downturn as a result of foreign exchange devaluation, totaling 167 thousand m3 against 230 thousand
m3 in 1Q16.
Hydrous and Anhydrous Ethanol Average Prices (R$/m³)
Source: Bloomberg, June 2016
91

Biosev SA

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