Table of Contents
FORM6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule13a-16 or15d-16
of the Securities Exchange Act of 1934
For the month of May 2017
Commission File Number:1-33659
COSAN LIMITED
(Translation of registrant’s name into English)
Av. Juscelino Kubitschek, 1327 – 4th floor
São Paulo, SP04543-000 Brazil
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form20-F or Form40-F:
Form20-F ☒ Form40-F ☐
Indicate by check mark if the registrant is submitting the Form6-K in paper as permitted by RegulationS-T Rule 101(b)(1):
Yes ☐ No ☒
Indicate by check mark if the registrant is submitting the Form6-K in paper as permitted by RegulationS-T Rule 101(b)(7):
Yes ☐ No ☒
Table of Contents
1Q17 Earnings Release
São Paulo, May 10, 2017–COSAN LIMITED (“CZZ” or “Company”) (NYSE: CZZ andBM&FBovespa: CZLT33)announces today its results for the first quarter (January, February and March) of 2017 (1Q17). The results are presented on a consolidated basis, in accordance with the accounting practices adopted in Brazil and with International Financial Reporting Standards (IFRS). Comparisons in this report take into consideration 1Q17 and 1Q16, except where indicated differently.
Summary of Financial Information
| Executive Summary - Cosan Pro forma¹ | 1Q17 | 1Q16 | Chg.% | 4Q16 | Chg.% | |||||||||||||||
BRL mln | (Jan-Mar) | (Jan-Mar) | 1Q17/1Q16 | (Oct-Dec) | 1Q17/4Q16 | |||||||||||||||
Net Revenue | 12,742.7 | 12,947.5 | -1.6 | % | 13,043.7 | -2.3 | % | |||||||||||||
Gross profit | 1,642.4 | 2,044.3 | -19.7 | % | 1,578.3 | 4.1 | % | |||||||||||||
EBIT | 729.2 | 1,211.7 | -39.8 | % | 703.8 | 3.6 | % | |||||||||||||
EBITDA | 1,458.8 | 1,953.9 | -25.3 | % | 1,696.5 | -14.0 | % | |||||||||||||
Net Income | 21.1 | 130.3 | -83.8 | % | (34.9 | ) | n/a | |||||||||||||
Note 1: Considering 50% of the results of Raízen Combustíveis and Raízen Energia
Message from the CEO
This year began with initial hints of upswing in economy. The challenge of approving the reforms required to ensure that Brazilian economy continues to improve on a sustainable basis, however, withstand. While unemployment remains high, inflation and interest rates continue to decline, and a few segments of the economy, such as automotive production, showed first signs of improvement. The outlook for grain crops is positive, benefitting exports and trade balance.
Our energy portfolio reacted to the economic upturn in the first quarter of 2017. Gasoline equivalent sales grew 1% in the country (ANP base), after a long period of consumption shrinkage, and Raízen Combustíveis outperformed again the industry average. For the second consecutive quarter, industrial natural gas consumption enjoyed a slight recovery and Comgás continue growing in residential and commercial segments, with positive effects on results. We ended the 2016/17 sugarcane crop evidencing our capacity to capture efficiencies in the production and industrial processes, which, coupled with a scenario of more favorable prices and capital allocation discipline, allowed for a significant increase in cash generation at Raízen Energia.
Rumo keeps on increasing capacity and reducing cost, delivering EBITDA growth despite 1Q16 strong basis of comparison. The atypical demand for corn transportation that boosted 1Q16 did not happen in 1Q17. Rumo EBITDA increased on the back of the implementation of the Company’s Capex plan, resulting in higher market share of grain transportation to the Port of Santos (+6 p.p.). The outlook for the upcoming quarters remains positive, especially when it comes to soybean and corn crops. Soybean harvest has been confirming expectations so far, while corn planting happened under favorable conditions for crop productivity.
Finally, our business portfolio, which proved to be highly resilient to the crisis over the last two years, show its ability to capture a potential upturn in the economy, strengthening our confidence in delivering the growth embedded in our 2017 guidance.
Investors Relation |  | |
E-mail: ri@cosan.com.br Telefone: +55 11 3897-9797 Website:ri.cosanlimited.com |
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Table of Contents
| COSAN LIMITED | Earnings Release | |
1st Quarter of the Fiscal Year of 2017
|
Business Units
The Company’s subsidiariesCosan S/A Indústria e Comércio (BM&FBovespa CSAN3) andCosan Logístisca S/A
(BM&FBovespa RLOG3) reported their results on the same date. The full Earnings Releases with main financial and operational information, in addition to the quarterly financial statements, can be found at:
| • | Cosan S/A (CSAN3): http:/ir.cosan.com.br |
| • | Cosan Logística (RLOG3 and RUMO3): http://ir.rumolog.com |
Cosan S/A and Cosan Logística S/A business units that compose Cosan Limited and interest in each reportable segment are shown below:
| • | Cosan S.A. (CSAN3) |
Raízen Combustíveis (50%) | Fuel Distribution | |
Raízen Energia (50%) | Sugar, Ethanol and Cogeneration | |
Comgás (62.6%) | Natural Gas Distribution | |
Moove (100%) | Lubricants, Basic Oils and Specialties | |
Cosan Corporativo (100%) | Corporate Structure and Other Investments | |
• Cosan Logística S.A. (RLOG3) | ||
Rumo Logística (RUMO3) | Logistic Operator | |
Executive Summary 1Q17
Cosan S.A. (CSAN3):
Cosan S/A Pro forma: Adjusted EBITDA was R$1.1 billion in 1Q17(-4%), since favorable results of Raízen Combustíveis and Comgás were partially offset by lower accounting profit of Raízen Energia, which was affected by foreign exchange(non-cash effect). Including the effect of currency hedge on sugar exports, adjusted EBITDA would have been R$1.2 billion (+8%).We ended the 2016/17 sugarcane crop evidencing our capacity to capture production efficiencies, which coupled with the favorable price scenario, enabled a substantial increase of cash generation, with the currency hedge accounted as financial gain. At Raízen Combustíveis, we continued to focus on service stations network expansion and maintenance, privileging long-term relationship with our dealers and optimizing our supply and commercialization strategy. At Comgás, the beginning of 2017 recorded a small recovery in the industrial consumption, while residential and commercial segments continue growing through new connections. At Moove, we outperformed the industry average in Brazil again and increased sales volumes at international operations. With better operating results, the pro forma Cash Flow from Operating Activities (CFO) came to R$2.2 billion (+4%), while Free Cash Flow to Equity (FCFE) totaled R$139 million. Leverage (proforma Net Debt/EBITDA) reached 2.0 times at the end of the period, excluding Comgás’ regulatory current account effects.
Raízen Combustíveis: Adjusted EBITDA grew 16% to R$682 million in 1Q17. The expansion reflects higher volume sold with a better sales mix, coupled with continued gains from the supply and commercialization strategy and cost reductions.The fuel distribution market in Brazil started 2017 with lower drop of consumption when compared to last quarters. Total volume sold fell 1% in 1Q17 (ANP data). Sales of gasoline equivalent showed signs of recovery, growing 1% in the country (ANP base). Raízen’s sales outperformed the industry average, going up 1% in total, while Otto cycle sales increased 3%year-on-year (4% in gasoline equivalent). Diesel sold by Raízen was up 3% in the quarter driven by new agreements with industrial clients.
Raízen Energia: Adjusted EBITDA (excluding biological asset variation, debt hedge accounting andnon-recurring effects) came to R$751 million(-36%) in 1Q17, mainly affected by (i) lower concentration of sales in the period, (ii) higher CONSECANA and (iii) lower foreign exchange rate in the period, despite improved sugar sales average price.The 2016/17 crop year ended with total crushing of 59.4 million tons of sugarcane(-5%), affected by lower productivity compared with previous crop (TCH reduction due to lower rainfall volume, partially offset by slightly improved TRS). Sales volume in sugar equivalent dropped 4%, offset by higher sugar and ethanol sales average prices. The unit average cash cost, excluding the effects from CONSECANA, was 2% lower in the 2016/17 crop, absorbing inflation and evidencing efficiency gains in the productive and industrial processes. Adjusted EBITDA of the crop year was R$3.1 billion(-11%). Including the effect of currency hedge on sugar exports, adjusted EBITDA would have been R$3.7 billion versus R$3.0 billion in previous crop year. 2016/17 CAPEX was up 18% to R$2.1 billion, in line with guidance.
Comgás: EBITDA, normalized by regulatory current account effect, was R$384 million (+19%) in 1Q17, reflecting volume growth (3% ex thermal) and margins correction by inflation (9.8%) in May 2016.Sales volume in the industrial segment was up 3%year-on-year, due to higher consumption of few industries and weak basis of comparison.
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| COSAN LIMITED | Earnings Release | |
1st Quarter of the Fiscal Year of 2017
|
Commercial sales volume was up 5%year-on-year, chiefly due to the addition of new clients in the last 12 months. The residential segment ended the quarter with modest 1% growth, since results from client base expansion were offset by lower unit consumption due to higher average temperature in the period. The regulatory current account recorded a R$60 million reduction during the quarter and ended the period with a balance of R$354 million in favor of clients.
Moove: EBITDA in 1Q17 was up 67% to R$43 million, as a result of higher volume sold (+6%) and better sales mix. Moove outperformed Brazilian lubricant market(-1%) reporting a 1% increase compared to the same period last year (SINDICOM data).
Cosan Logística S.A. (RLOG3):
Rumo’s EBITDA was up 11% to R$493 million in 1T17year-on-year.Even though the atypical demand for corn transportation in
1Q16 was not seen again in 1Q17, Rumo recorded EBITDA growth as a result of implementation of the Company’s Capex plan.
With increased capacity, in 1Q17 the Company recorded total volume close to the volume transported in the same period last year. The higher volume of soybean transported in February and March offset the lower demand of corn in January. In addition, variable costs decreased and fixed costs added to selling, general and administrative expenses increased below inflation, besides tariff contractual adjustments. As a result, EBITDA margin climbed from 38% in 1Q16 to 41% in 1Q17.
Cosan Limited Pro Forma: Adjusted EBITDA reached R$1.7 billion this quarter (+5%), due to better results from Raízen Combustíveis, Comgás and Rumo, partially offset by lower accounting profit from Raízen Energia, strongly affected by foreing exchange(non-cash effect). Cosan Limited closed the quarter with a R$ 109 million net loss.
The following tables present the key operating and financial metrics of our businesses. Historical data for the information presented can be found on our Investor Relations website (ir.cosan.com.br) in the Results Center.
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| COSAN LIMITED | Earnings Release | |
1st Quarter of the Fiscal Year of 2017
|
Main Operational and Financial Metrics
Raízen Combustíveis
| 1Q17 | 1Q16 | Chg.% | 4Q16 | Chg.% | ||||||||||||||||
| (Jan-Mar) | (Jan-Mar) | 1Q17/1Q16 | (Oct-Dec) | 1Q17/4Q16 | ||||||||||||||||
Otto Cycle Volume (Gasoline+ Ethanol) (‘000 cbm) | 2,900 | 2,822 | 3 | % | 3,060 | -5 | % | |||||||||||||
Gasoline Equivalent2Volume (‘000 cbm) | 2,755 | 2,636 | 4 | % | 2,883 | -4 | % | |||||||||||||
Diesel Volume (‘000 cbm) | 2,625 | 2,538 | 3 | % | 2,638 | 0 | % | |||||||||||||
Adjusted EBITDA Margin3(BRL/cbm) | 111 | 97 | 15 | % | 142 | -21 | % | |||||||||||||
Adjusted EBIT3(BRL/cbm) | 87 | 69 | 25 | % | 115 | -25 | % | |||||||||||||
Note 2: Sum of gasoline and ethanol volumers, adjusted by the energy coefficient of 0,7221.
Note 3: Excludesnon-recurring items
Raízen Energia
| 1Q17 | 1Q16 | Chg.% | 2016/17 | 2015/16 | Var.% | |||||||||||||||||||
| (Jan-Mar) | (Jan-Mar) | 1Q17/1Q16 | (Apr-Mar) | (Apr-Mar) | 16/17x15/16 | |||||||||||||||||||
Sugarcane Crushed (mln mt) | — | 2.8 | -100 | % | 59.4 | 62.7 | -5 | % | ||||||||||||||||
Average TRS (kg/tons) | n/a | 109.9 | n/a | 129.4 | 127.6 | 1 | % | |||||||||||||||||
TRS/ha | n/a | 10.3 | n/a | 10.3 | 11.4 | -10 | % | |||||||||||||||||
Sugar/Ethanol Production Mix | n/a | 51% x 49 | % | n/a | 57% x 43 | % | 55% x 45 | % | n/a | |||||||||||||||
Adjusted EBITDA4(BRL mln) | 751 | 1,168 | -36 | % | 3,092 | 3,459 | -11 | % | ||||||||||||||||
Adjusted EBIT4/TRS sold (BRL/ton) | 142 | 179 | -21 | % | 119 | 143 | -17 | % | ||||||||||||||||
Note 4: Excludesnon-recurring effects | ||||||||||||||||||||||||
Comgás
| 1Q17 | 1Q16 | Chg.% | 4Q16 | Chg.% | ||||||||||||||||
| (Jan-Mar) | (Jan-Mar) | 1Q17/1Q16 | (Oct-Dec) | 1Q17/4Q16 | ||||||||||||||||
Total Sales Volume (cbm)Ex-Thermal | 1,008 | 974 | 3 | % | 1,047 | -4 | % | |||||||||||||
Normalized EBITDA5(BRL mln) | 384 | 323 | 19 | % | 359 | 7 | % | |||||||||||||
IFRS EBITDA (BRL mln) | 313 | 520 | -40 | % | 308 | 2 | % | |||||||||||||
Note 5: Includes the effect from the regulatory Current Account.
Moove
| 1Q17 | 1Q16 | Chg.% | 4Q16 | Chg.% | ||||||||||||||||
| (Jan-Mar) | (Jan-Mar) | 1Q17/1Q16 | (Oct-Dec) | 1Q17/4Q16 | ||||||||||||||||
Total Sales Volume (‘000 cbm) | 81 | 77 | 6 | % | 81 | 0 | % | |||||||||||||
EBITDA (BRL mln) | 43 | 26 | 67 | % | 46 | -6 | % | |||||||||||||
Rumo Logística
| Operational and Financial Performance Indicators | 1Q17 | 1Q16 | Chg.% | 4Q16 | Chg.% | |||||||||||||||
| (Jan-Mar) | (Jan-Mar) | 1Q17/1Q16 | (Oct-Dec) | 1Q17/4Q16 | ||||||||||||||||
Consolidated | ||||||||||||||||||||
Operating Ratio | 83.0 | % | 86.0 | % | -3.5 | % | 95.0 | % | -12.6 | % | ||||||||||
Diesel Comsuption (Liters 000’ TKB) | 4.6 | 4.8 | 2 | % | 4.9 | -6 | % | |||||||||||||
North Operation | ||||||||||||||||||||
Grains from Rondonópolis (MT) to Port of Santos (SP) | ||||||||||||||||||||
Average number of freight cars loaded per day (units) | 369 | 395 | -7 | % | 97 | n/a | ||||||||||||||
Transit time (hours) | 107.1 | 100.2 | 7 | % | 96.7 | 11 | % | |||||||||||||
Cycle time of freight cars (days) | 10.2 | 10.8 | -6 | % | 11.0 | -7 | % | |||||||||||||
Operação Sul | ||||||||||||||||||||
Grains from terminals in North of Paraná to Port of Paranaguá (PR) and São Francisco do Sul (SC) |
| |||||||||||||||||||
Average number of freight cars loaded per day (units) | 277 | 355 | -89 | % | 36 | n/a | ||||||||||||||
Transit time (hours) | 57.9 | 49.3 | 5 | % | 47.6 | 22 | % | |||||||||||||
Cycle time of freight cars (days) | 7.6 | 8.4 | -4 | % | 7.8 | -3 | % | |||||||||||||
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COSAN LIMITED Earnings Release | ||
1st Quarter of the Fiscal Year of 2017
| ||
Cosan Corporate Results
The following table provides a breakdown of the 1Q17 results by business unit for all segments detailed previously. All information reflects 100% of their financial performance, regardless of the interest held by Cosan. For the purpose of reconciling EBITDA in the column “Cosan S/A Accounting”, the “Adjustments & Eliminations” column reflects the eliminations from operations among all Cosan subsidiaries for consolidation purposes.
Earnings by | Raízen Combustíveis | Raízen Energia | Comgás | Moove | Cosan Corporate | 50% Raízen | Adjustments and Elimination | Cosan S/A Accounting | Cosan Logistica | Cosan Limited (Parent Company) | Adjustments and Elimination | Consolidated Pro forma | ||||||||||||||||||||||||||||||||||||
Net Revenue | 17,698.2 | 2,913.2 | 1,146.3 | 446.7 | 0.2 | (20,611.4 | ) | — | 1,593.1 | 1,199.2 | 0.0 | (6.6 | ) | 2,785.7 | ||||||||||||||||||||||||||||||||||
Cost of Goods and Services Sold | (16,746.9 | ) | (2,232.1 | ) | (720.1 | ) | (314.0 | ) | (1.1 | ) | 18,979.1 | — | (1,035.2 | ) | (930.9 | ) | — | 6.6 | (1,959.4 | ) | ||||||||||||||||||||||||||||
Gross Profit | 951.2 | 681.1 | 426.1 | 132.7 | (0.9 | ) | (1,632.3 | ) | — | 558.0 | 268.3 | 0.0 | 0.0 | 826.3 | ||||||||||||||||||||||||||||||||||
Gross Margin (%) | 5.4 | % | 23.4 | % | 37.2 | % | 29.7 | % | n/a | 7.9 | % | n/a | 35.0 | % | 22.4 | % | n/a | — | 29.7 | % | ||||||||||||||||||||||||||||
Selling Expenses | (314.1 | ) | (144.3 | ) | (167.8 | ) | (87.4 | ) | (0.1 | ) | 458.4 | — | (255.2 | ) | (2.4 | ) | — | — | (257.6 | ) | ||||||||||||||||||||||||||||
General and Administrative Expenses | (116.2 | ) | (158.8 | ) | (77.1 | ) | (20.2 | ) | (39.6 | ) | 275.0 | — | (136.9 | ) | (63.3 | ) | (7.1 | ) | — | (207.4 | ) | |||||||||||||||||||||||||||
Other Operating Income (Expenses) | (45.8 | ) | (85.3 | ) | (0.6 | ) | 0.1 | (13.4 | ) | 131.1 | — | (13.8 | ) | (2.2 | ) | — | — | (16.0 | ) | |||||||||||||||||||||||||||||
EquityPick-up | — | (37.3 | ) | — | (1.6 | ) | 312.0 | 37.3 | (53.5 | ) | 256.9 | 1.7 | 76.5 | (76.5 | ) | 258.7 | ||||||||||||||||||||||||||||||||
Depreciation and Amortization | 150.2 | 448.7 | 132.7 | 19.7 | 4.2 | (598.9 | ) | — | 156.6 | 290.0 | — | — | 446.6 | |||||||||||||||||||||||||||||||||||
EBITDA | 625.3 | 704.2 | 313.4 | 43.3 | 262.2 | (1,329.5 | ) | (53.5 | ) | 565.5 | 492.2 | 69.3 | (76.5 | ) | 1,050.5 | |||||||||||||||||||||||||||||||||
EBITDA Margin (%) | 3.5 | % | 24.2 | % | 27.3 | % | 9.7 | % | n/a | 6.5 | % | n/a | 35.5 | % | 41.0 | % | n/a | 0.0 | % | 37.7 | % | |||||||||||||||||||||||||||
Financial result | (172.1 | ) | 135.1 | (41.4 | ) | (19.8 | ) | (73.8 | ) | 37.1 | — | (135.0 | ) | (451.2 | ) | (32.1 | ) | — | (618.4 | ) | ||||||||||||||||||||||||||||
Income and Social Contribution Taxes | (89.4 | ) | (77.6 | ) | (55.7 | ) | (2.7 | ) | 21.1 | 167.0 | — | (37.3 | ) | 0.2 | (6.7 | ) | — | (43.8 | ) | |||||||||||||||||||||||||||||
Non-controlling Interest | (13.7 | ) | — | — | — | — | 13.7 | (31.2 | ) | (31.2 | ) | 177.9 | (9.4 | ) | (57.9 | ) | 79.4 | |||||||||||||||||||||||||||||||
Net Income | 199.9 | 312.9 | 83.5 | 1.1 | 205.3 | (512.8 | ) | (84.7 | ) | 205.3 | (71.0 | ) | 21.1 | (134.4 | ) | 21.1 | ||||||||||||||||||||||||||||||||
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COSAN LIMITED Earnings Release | ||
1st Quarter of the Fiscal Year of 2017
| ||
Loans and Financing
At the close of the 1Q17, Cosan Limited’s (parent company) gross debt was R$ 704 million (+4%), without changes throughout the quarter, varying only according to the exchange rate.
Cash and cash equivalents ended the 1Q17 at R$ 228 million, compared to R$ 248 million at the close of previous quarter. The reduction can be explained by provision for interest (Accrual).
Net debt ended the quarter at R$ 475.8 million.
Loans and Financing 1Q17 | Comgás | Moove | Cosan Corporate | Consolidated | Raízen Energia | Raízen Combustíveis | Consolidated Pro forma | Cosan Logística | CZZ Corporate | CZZ Pro forma | ||||||||||||||||||||||||||||||
Opening balance of pro forma net debt | 1,322.1 | 283.7 | 2,698.0 | 4,303.9 | 3,583.8 | 406.4 | 8,294.2 | 7,350.9 | 429.1 | 16,074.1 | ||||||||||||||||||||||||||||||
Cash, cash equivalents and marketable securities | 2,310.8 | 214.8 | 1,836.5 | 4,362.1 | 1,393.8 | 378.6 | 6,134.5 | 1,181.0 | 248.1 | 7,563.5 | ||||||||||||||||||||||||||||||
Gross Debt | 3,632.9 | 498.5 | 4,534.5 | 8,666.0 | 4,977.6 | 785.0 | 14,428.6 | 8,531.8 | 677.2 | 23,637.6 | ||||||||||||||||||||||||||||||
Cash items | (140.6 | ) | (55.5 | ) | (285.1 | ) | (481.2 | ) | (636.7 | ) | (6.4 | ) | (1,124.4 | ) | 2,047.3 | — | 922.9 | |||||||||||||||||||||||
Funding | 9.0 | — | 88.2 | 97.2 | 765.5 | — | 862.7 | 2,388.5 | — | 3,251.2 | ||||||||||||||||||||||||||||||
Payment of principal on loans and borrowings | (118.0 | ) | (42.6 | ) | (76.1 | ) | (236.7 | ) | (1,358.9 | ) | (2.0 | ) | (1,597.5 | ) | (202.5 | ) | — | (1,800.1 | ) | |||||||||||||||||||||
Payment of Interest on loans borrowings | (35.9 | ) | (1.0 | ) | (136.9 | ) | (173.8 | ) | (43.4 | ) | (4.5 | ) | (221.6 | ) | (139.5 | ) | — | (361.1 | ) | |||||||||||||||||||||
Derivatives | 4.3 | (11.9 | ) | (160.4 | ) | (167.9 | ) | — | — | (167.9 | ) | 0.8 | — | (167.1 | ) | |||||||||||||||||||||||||
Noncash items | 104.6 | 6.4 | 49.5 | 160.5 | 283.3 | (77.4 | ) | 366.4 | 312.6 | 26.5 | 705.5 | |||||||||||||||||||||||||||||
Provision for interest (accrual) | 60.3 | 4.3 | 79.8 | 144.4 | 78.5 | 4.5 | 227.3 | 239.4 | 25.8 | 492.5 | ||||||||||||||||||||||||||||||
Monetary variation and MTM adjustment of debt | 27.8 | 9.5 | 178.6 | 215.9 | 11.6 | (2.8 | ) | 224.6 | 16.2 | 0.7 | 241.5 | |||||||||||||||||||||||||||||
Exchange variation, net of derivatives | 16.6 | (7.4 | ) | (208.9 | ) | (199.7 | ) | 193.2 | (79.0 | ) | (85.5 | ) | 57.0 | 0.0 | (28.5 | ) | ||||||||||||||||||||||||
Closing balance of gross debt | 3,597.0 | 449.4 | 4,298.9 | 8,345.3 | 4,624.2 | 701.2 | 13,670.7 | 10,891.7 | 703.7 | 25,266.1 | ||||||||||||||||||||||||||||||
Cash, cash equivalents and marketable securities | 2,012.4 | 82.4 | 2,010.8 | 4,105.6 | 1,718.8 | 258.9 | 6,083.3 | 3,133.5 | 227.8 | 9,444.6 | ||||||||||||||||||||||||||||||
Closing balance of pro forma net debt | 1,584.6 | 367.0 | 2,288.1 | 4,239.7 | 2,905.4 | 442.3 | 7,587.4 | 7,758.2 | 475.8 | 15,821.4 | ||||||||||||||||||||||||||||||
Obligations due to preferred shareholders of subsidiaries | — | — | 1,809.2 | 1,809.2 | — | — | 1,809.2 | — | — | 1,809.2 | ||||||||||||||||||||||||||||||
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Total pro forma net debt and obligations due to preferred shareholders of subsidiaries | 1,584.6 | 367.0 | 4,097.2 | 6,048.9 | 2,905.4 | 442.3 | 9,396.6 | 7,758.2 | 475.8 | 17,630.6 | ||||||||||||||||||||||||||||||
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Table of Contents
COSAN LIMITED Earnings Release | ||
1st Quarter of the Fiscal Year of 2017
| ||
Cash Flow Reconciliation
Cash Flow Statement | Comgás | Moove | Cosan Corporate | 1Q17 Eliminations | Cosan S/A | Raízen Combined | Eliminations | Cosan S/A Pro forma | Cosan Logística | CZZ Corporate | Eliminations | CZZ Pro forma | ||||||||||||||||||||||||||||||||||||
EBITDA | 313.4 | 43.3 | 262.2 | (53.5 | ) | 565.5 | 664.7 | (256.4 | ) | 973.8 | 492.2 | 69.3 | (76.5 | ) | 1,458.8 | |||||||||||||||||||||||||||||||||
Noncash impacts on EBITDA | 11.6 | 6.5 | (296.8 | ) | 53.5 | (225.3 | ) | 124.7 | 256.4 | 155.8 | 64.1 | (75.3 | ) | 76.5 | 221.1 | |||||||||||||||||||||||||||||||||
Changes in assets and liabilities | (54.7 | ) | (115.5 | ) | 190.3 | (21.7 | ) | (1.5 | ) | 773.9 | — | 772.4 | 27.3 | 0.5 | 1.6 | 801.8 | ||||||||||||||||||||||||||||||||
Operating financial result | 62.1 | 0.8 | 38.3 | — | 101.2 | 152.4 | — | 253.5 | (16.0 | ) | 0.8 | — | 238.4 | |||||||||||||||||||||||||||||||||||
Operating Cash Flow | 332.4 | (64.9 | ) | 194.0 | (21.7 | ) | 439.9 | 1,715.7 | — | 2,155.6 | 567.6 | (4.7 | ) | 1.6 | 2,720.1 | |||||||||||||||||||||||||||||||||
CAPEX | (68.7 | ) | (1.7 | ) | (0.3 | ) | — | (70.8 | ) | (574.3 | ) | — | (645.0 | ) | (471.9 | ) | — | — | (1,116.9 | ) | ||||||||||||||||||||||||||||
Other | — | — | (275.8 | ) | — | (275.8 | ) | 19.0 | — | (256.8 | ) | (17.1 | ) | (0.0 | ) | — | (273.9 | ) | ||||||||||||||||||||||||||||||
Cash Flow from Investing Activities | (68.7 | ) | (1.7 | ) | (276.1 | ) | — | (346.5 | ) | (555.3 | ) | — | (901.8 | ) | (489.0 | ) | (0.0 | ) | — | (1,390.9 | ) | |||||||||||||||||||||||||||
Funding | 9.0 | — | 88.2 | — | 97.2 | 765.5 | — | 862.7 | 2,388.5 | — | — | 3,251.2 | ||||||||||||||||||||||||||||||||||||
Loans amortization (Principal) | (118.0 | ) | (42.6 | ) | (76.1 | ) | — | (236.7 | ) | (1.360.8 | ) | — | (1,597.5 | ) | (313.6 | ) | — | — | (1,911.1 | ) | ||||||||||||||||||||||||||||
Loans amortization (Interest) | (35.9 | ) | (1.0 | ) | (136.9 | ) | — | (173.8 | ) | (50.3 | ) | — | (224.1 | ) | (220.0 | ) | — | — | (444.1 | ) | ||||||||||||||||||||||||||||
Derivatives | 4.3 | (11.9 | ) | (160.4 | ) | — | (167.9 | ) | — | — | (167.9 | ) | 0.8 | — | — | (167.1 | ) | |||||||||||||||||||||||||||||||
Other | — | (9.2 | ) | 23.6 | — | 14.4 | (2.8 | ) | — | 11.6 | (31.7 | ) | 0.0 | (1.6 | ) | (21.6 | ) | |||||||||||||||||||||||||||||||
Cash Flow from Financing Activities | (140.6 | ) | (64.6 | ) | (261.5 | ) | — | (466.7 | ) | (648.5 | ) | — | (1,115.2 | ) | 1,824.0 | 0.0 | (1.6 | ) | 707.2 | |||||||||||||||||||||||||||||
Dividends received | — | — | 526.6 | (246.7 | ) | 279.9 | — | (279.9 | ) | — | 2.5 | — | — | 2.5 | ||||||||||||||||||||||||||||||||||
Free Cash Flow to Equity | 123.1 | (131.3 | ) | 183.0 | (268.4 | ) | (93.6 | ) | 511.9 | (279.9 | ) | 138.5 | 1,905.0 | (4.7 | ) | — | 2,038.8 | |||||||||||||||||||||||||||||||
Cosan S.A | — | — | — | — | — | (300.1 | ) | 279.9 | (20.2 | ) | — | (8.3 | ) | — | (28.5 | ) | ||||||||||||||||||||||||||||||||
Comgás | (421.6 | ) | — | — | 268.4 | (153.2 | ) | — | — | (153.2 | ) | — | — | — | (153.2 | ) | ||||||||||||||||||||||||||||||||
Non-controlling Shareholders | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Dividends paid | (421.6 | ) | — | — | 268.4 | (153.2 | ) | (300.1 | ) | 279.9 | (173.4 | ) | — | (8.3 | ) | — | (181.7 | ) | ||||||||||||||||||||||||||||||
Exchange variation impact on cash and cash equivalents | — | (1.1 | ) | (8.6 | ) | — | (9.7 | ) | (6.5 | ) | — | (16.2 | ) | 47.5 | (7.3 | ) | — | 24.0 | ||||||||||||||||||||||||||||||
Cash Generation (Burn) in the Period | (298.4 | ) | (132.4 | ) | 174.4 | — | (256.5 | ) | 205.3 | — | (51.1 | ) | 1,952.5 | (20.3 | ) | — | 1,881.1 | |||||||||||||||||||||||||||||||
7 de 64
Table of Contents
Financial Statements
Cosan Limited - Accounting
Indicators BRL mln | 1Q17 (Jan-Mar) | 1Q16 (Jan-Mar) | Chg.% 1Q17/1Q16 | 4Q16 (Oct-Dec) | Chg.% 1Q17/4Q16 | |||||||||||||||
EBITDA | 1,050.5 | 1,342.9 | -21.8 | % | 1,080.0 | -2.7 | % | |||||||||||||
CAPEX | 549.5 | 422.5 | 30.0 | % | 763.8 | -28.1 | % | |||||||||||||
| Income Statement for the Period | 1Q17 | 1Q16 | Chg.% | 4Q16 | Chg.% | |||||||||||||||
BRL mln | (Jan-Mar) | (Jan-Mar) | 1Q17/1Q16 | (Oct-Dec) | 1Q17/4Q16 | |||||||||||||||
Net Revenue | 2,785.7 | 3,119.1 | -10.7 | % | 2,785.9 | 0.0 | % | |||||||||||||
Cost of Goods and Services Sold | (1,959.4 | ) | (2,066.1 | ) | -5.2 | % | (2,219.7 | ) | -11.7 | % | ||||||||||
Gross profit | 826.3 | 1,053.0 | -21.5 | % | 566.2 | 45.9 | % | |||||||||||||
Selling, general & administrative expenses | (465.0 | ) | (464.8 | ) | 0.0 | % | (548.8 | ) | -15.3 | % | ||||||||||
Other net operating income (expenses) | (16.0 | ) | (37.4 | ) | -57.1 | % | (33.1 | ) | -51.5 | % | ||||||||||
Financial results | (618.4 | ) | (811.1 | ) | -23.8 | % | (718.2 | ) | -13.9 | % | ||||||||||
EquityPick-up | 258.7 | 439.8 | -41.2 | % | 464.3 | -44.3 | % | |||||||||||||
Expenses with income and social contribution taxes | (43.8 | ) | (15.4 | ) | n/a | 87.7 | n/a | |||||||||||||
Non-controlling interest | 79.4 | (48.8 | ) | n/a | 241.2 | -67.1 | % | |||||||||||||
Discontinued operations | — | 15.0 | -100.0 | % | (94.1 | ) | -100.0 | % | ||||||||||||
Net Income (Loss) | 21.1 | 130.3 | -83.8 | % | (34.9 | ) | n/a | |||||||||||||
Balance Sheet BRL mln | 1Q17 03/31/2017 | 4Q16 12/31/2016 | ||||||
Cash and cash equivalents | 6,544 | 4,500 | ||||||
Marketable Securities | 923 | 1,292 | ||||||
Trade accounts receivable | 999 | 1,131 | ||||||
Inventories | 600 | 631 | ||||||
Derivative financial instruments | 836 | 751 | ||||||
Other current assets | 806 | 1,196 | ||||||
Othernon-current assets | 4,447 | 4,341 | ||||||
Investments | 9,021 | 8,793 | ||||||
Property, plant and equipment | 10,927 | 10,726 | ||||||
Intangible assets | 16,997 | 17,109 | ||||||
Total Assets | 52,099 | 50,470 | ||||||
Loans and borrowings | 20,441 | 18,338 | ||||||
Financial instruments and derivatives | 337 | 296 | ||||||
Trade accounts payable | 1,927 | 2,033 | ||||||
Payroll | 162 | 238 | ||||||
Other current liabilities | 1,718 | 1,914 | ||||||
Othernon-current liabilities | 11,763 | 11,641 | ||||||
Shareholders’ Equity | 15,752 | 16,010 | ||||||
Total Liabilities | 52,099 | 50,470 | ||||||
Table of Contents
Financial Statement including Raízen
Cosan Limited Proforma (including 50% of Raízen)
Indicators BRL mln | 1Q17 (Jan-Mar) | 1Q16 (Jan-Mar) | Chg.% 1Q17/1Q16 | 4Q16 (Oct-Dec) | Chg.% 1Q17/4Q16 | |||||||||||||||
EBITDA | 1,458.8 | 1,953.9 | -25.3 | % | 1,696.5 | -14.0 | % | |||||||||||||
CAPEX | 1,075.3 | 848.6 | 26.7 | % | 1,022.5 | 5.2 | % | |||||||||||||
Income Statement for the Period BRL mln | 1Q17 (Jan-Mar) | 1Q16 (Jan-Mar) | Chg.% 1Q17/1Q16 | 4Q16 (Oct-Dec) | Chg.% 1Q17/4Q16 | |||||||||||||||
Net Revenue | 12,742.7 | 12,947.5 | -1.6 | % | 13,043.7 | -2.3 | % | |||||||||||||
Cost of Goods and Services Sold | (11,100.2 | ) | (10,903.2 | ) | 1.8 | % | (11,465.4 | ) | -3.2 | % | ||||||||||
Gross profit | 1,642.4 | 2,044.3 | -19.7 | % | 1,578.3 | 4.1 | % | |||||||||||||
Selling, general & administrative expenses | (831.7 | ) | (869.8 | ) | -4.4 | % | (942.6 | ) | -11.8 | % | ||||||||||
Other net operating income (expenses) | (81.6 | ) | 37.2 | n/a | 68.1 | n/a | ||||||||||||||
Financial results | (636.9 | ) | (772.9 | ) | -17.6 | % | (774.9 | ) | -17.8 | % | ||||||||||
EquityPick-up | (16.5 | ) | (13.6 | ) | 20.7 | % | 13.2 | n/a | ||||||||||||
Expenses with income and social contribution taxes | (127.3 | ) | (256.0 | ) | -50.3 | % | (82.6 | ) | 54.2 | % | ||||||||||
Non-controlling interest | 72.6 | (53.9 | ) | n/a | 199.8 | -63.7 | % | |||||||||||||
Discontinued operations | — | 15.0 | -100.0 | % | (94.1 | ) | -100.0 | % | ||||||||||||
Net Income (Loss) | 21.1 | 130.3 | -83.8 | % | (34.9 | ) | n/a | |||||||||||||
Balance Sheet BRL mln | 1Q17 03/31/2017 | 4Q16 12/31/2016 | ||||||
Cash and cash equivalents | 8,522 | 6,272 | ||||||
Marketable Securities | 923 | 1,292 | ||||||
Trade accounts receivable | 1,951 | 2,548 | ||||||
Inventories | 1,771 | 2,832 | ||||||
Derivative financial instruments | 1,154 | 1,462 | ||||||
Other current assets | 2,287 | 2,864 | ||||||
Othernon-current assets | 6,057 | 5,891 | ||||||
Investments | 356 | 447 | ||||||
Property, plant and equipment | 17,713 | 17,170 | ||||||
Intangible assets | 20,895 | 20,988 | ||||||
Total Assets | 61,629 | 61,765 | ||||||
Loans and borrowings | 26,107 | 24,639 | ||||||
Financial instruments and derivatives | 752 | 1,014 | ||||||
Trade accounts payable | 2,933 | 3,672 | ||||||
Payroll | 396 | 442 | ||||||
Other current liabilities | 2,413 | 2,713 | ||||||
Othernon-current liabilities | 13,173 | 13,171 | ||||||
Shareholders’ Equity | 15,855 | 16,113 | ||||||
Total Liabilities | 61,629 | 61,765 | ||||||
Table of Contents
Cosan Limited
Consolidated interim financial statements as
March 31, 2017
Table of Contents
Cosan Limited
Consolidated interim financial statements
| 12 | ||||
| 13 | ||||
Consolidated statements of profit or loss and other comprehensive income | 15 | |||
| 17 | ||||
| 19 | ||||
| 21 | ||||
11
Table of Contents
Report on Review of Interim Financial Information
To the Board of Directors and Shareholders of
Cosan Limited
Bermuda
Introduction
We have reviewed the accompanying consolidated interim financial information of Cosan Limited (“Company”) contained in the Quarterly Information Form - ITR for the quarter ended March 31, 2017, which comprises the statement of financial position as of March 31, 2017, and the respective statements of profit and loss and other comprehensive income, changes in equity and cash flows for the three-month period then ended, including the footnotes.
The Company’s management is responsible for the preparation and presentation of this interim financial information in accordance with IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board - IASB. Our responsibility is to express a conclusion on this consolidated interim financial information based on our review.
Scope of review
We conducted our review in accordance with the Brazilian and International standards on review engagements of interim financial information (NBC TR 2410 - Revisão de Informações Intermediárias Executada pelo Auditor da Entidade 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 the financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the audit standards 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 consolidated interim financial information
Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial information included in the Quarterly Information Form - ITR referred to above has not been prepared, in all material respects, in accordance with IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board - IASB.
São Paulo, May 10, 2017.
KPMG Auditores Independentes
CRC2SP014428/O-6
Rogério Hernandez Garcia
Accountant CRC1SP213431/O-5
12
Table of Contents
Cosan Limited
Consolidated statements of financial position
(In thousands of Brazilian Reais - R$)
| Note | March 31, 2017 | December 31, 2016 | ||||||||||
Assets | ||||||||||||
Cash and cash equivalents | 7 | 6,544,090 | 4,499,588 | |||||||||
Marketable securities | 8 | 922,843 | 1,291,580 | |||||||||
Trade receivables | 9 | 999,500 | 1,130,624 | |||||||||
Derivative financial instruments | 27 | 200,763 | 20,654 | |||||||||
Inventories | 599,847 | 630,752 | ||||||||||
Receivables from related parties | 11 | 56,183 | 58,517 | |||||||||
Income tax receivable | 267,980 | 364,980 | ||||||||||
Other current tax receivable | 10 | 211,585 | 178,856 | |||||||||
Dividends receivable | 48,440 | 144,160 | ||||||||||
Other current assets | 222,093 | 449,298 | ||||||||||
|
|
|
| |||||||||
Total current assets | 10,073,324 | 8,769,009 | ||||||||||
Trade receivables | 9 | 53,186 | 54,806 | |||||||||
Restricted cash | 225,144 | 200,999 | ||||||||||
Deferred tax assets | 21 | 1,512,568 | 1,490,002 | |||||||||
Receivables from related parties | 11 | 151,496 | 183,740 | |||||||||
Income tax receivable | 199,768 | 121,376 | ||||||||||
Othernon-current tax receivable | 10 | 741,073 | 739,849 | |||||||||
Judicial deposits | 22 | 733,262 | 714,684 | |||||||||
Derivative financial instruments | 27 | 634,901 | 730,426 | |||||||||
Othernon-current assets | 830,368 | 835,730 | ||||||||||
Investments in associates | 12 | 282,455 | 286,947 | |||||||||
Investments in joint ventures | 13 | 8,738,568 | 8,506,395 | |||||||||
Property, plant and equipment | 14 | 10,926,645 | 10,726,448 | |||||||||
Intangible assets and goodwill | 15 | 16,996,700 | 17,109,439 | |||||||||
|
|
|
| |||||||||
Totalnon-current assets | 42,026,134 | 41,700,841 | ||||||||||
|
|
|
| |||||||||
Total assets | 52,099,458 | 50,469,850 | ||||||||||
|
|
|
| |||||||||
The accompanying notes are an integral part of these consolidated interim financial statements
| Note | March 31, 2017 | December 31, 2016 | ||||||||||
Liabilities | ||||||||||||
Loans, borrowings and debentures | 16 | 3,049,146 | 2,404,009 | |||||||||
Leases | 17 | 415,476 | 472,632 | |||||||||
Real estate credit certificates | 108,780 | 105,422 | ||||||||||
Derivative financial instruments | 27 | 21,403 | 40,526 | |||||||||
Trade payables | 19 | 1,926,919 | 2,032,542 | |||||||||
Employee benefits payable | 161,735 | 238,159 | ||||||||||
Income tax payables | 27,779 | 83,113 | ||||||||||
Other taxes payable | 20 | 223,348 | 261,169 | |||||||||
Concessions payables | 18 | 27,822 | 27,662 | |||||||||
Dividends payable | 31,315 | 93,500 | ||||||||||
13
Table of Contents
Cosan Limited
Consolidated statements of financial position
(In thousands of Brazilian Reais - R$)
Payables to related parties | 11 | 256,008 | 237,081 | |||||||||
Deferred revenue | 17,404 | 14,167 | ||||||||||
Other financial liabilities | 223,560 | 203,303 | ||||||||||
Other current liabilities | 386,842 | 415,782 | ||||||||||
|
|
|
| |||||||||
Total current liabilities | 6,877,537 | 6,629,067 | ||||||||||
|
|
|
| |||||||||
Loans, borrowings and debentures | 16 | 17,391,644 | 15,934,488 | |||||||||
Leases | 17 | 839,798 | 924,911 | |||||||||
Real estate credit certificates | 62,467 | 90,323 | ||||||||||
Preferred shareholders payable in subsidiaries | 1,809,176 | 1,769,427 | ||||||||||
Derivative financial instruments | 27 | 315,213 | 255,318 | |||||||||
Trade payables | 19 | 573 | 568 | |||||||||
Other taxes payable | 20 | 156,293 | 153,776 | |||||||||
Provision for legal proceedings | 22 | 1,280,782 | 1,268,564 | |||||||||
Concessions payables | 18 | 2,674,490 | 2,580,144 | |||||||||
Post-employment benefits | 28 | 447,674 | 441,480 | |||||||||
Deferred tax liabilities | 21 | 3,639,084 | 3,550,565 | |||||||||
Deferred revenue | 63,954 | 62,207 | ||||||||||
Othernon-current liabilities | 788,727 | 799,263 | ||||||||||
|
|
|
| |||||||||
Totalnon-current liabilities | 29,469,875 | 27,831,034 | ||||||||||
|
|
|
| |||||||||
Total liabilities | 36,347,412 | 34,460,101 | ||||||||||
|
|
|
| |||||||||
Shareholders’ equity | 23 | |||||||||||
Share capital | 5,328 | 5,328 | ||||||||||
Additionalpaid-in capital | 3,901,232 | 4,051,591 | ||||||||||
Accumulated other comprehensive loss | (354,805 | ) | (480,454 | ) | ||||||||
Retained earnings | 2,717,113 | 2,695,998 | ||||||||||
|
|
|
| |||||||||
Equity attributable to: | ||||||||||||
Owners of the Company | 6,268,868 | 6,272,463 | ||||||||||
Non-controlling interests | 12 | 9,483,178 | 9,737,286 | |||||||||
|
|
|
| |||||||||
Total shareholders’ equity | 15,752,046 | 16,009,749 | ||||||||||
|
|
|
| |||||||||
Total shareholders’ equity and liabilities | 52,099,458 | 50,469,850 | ||||||||||
|
|
|
|
The accompanying notes are an integral part of these consolidated interim financial statements
14
Table of Contents
Cosan Limited
Consolidated statements of profit or loss and other comprehensive income
For the three month period ended March 31, 2017 and 2016
(In thousands of Brazilian Reais – R$, except earnings per share)
| Note | March 31, 2017 | March 31, 2016 (Restated) | ||||||||||
Net sales | 2,785,732 | 3,119,069 | ||||||||||
Cost of sales | (1,959,441 | ) | (2,066,104 | ) | ||||||||
|
|
|
| |||||||||
Gross profit | 826,291 | 1,052,965 | ||||||||||
|
|
|
| |||||||||
Selling expenses | (257,582 | ) | (236,830 | ) | ||||||||
General and administrative expenses | (207,374 | ) | (227,964 | ) | ||||||||
Other (expense) income, net | 25 | (16,040 | ) | (37,354 | ) | |||||||
|
|
|
| |||||||||
Operating expenses | (480,996 | ) | (502,148 | ) | ||||||||
|
|
|
| |||||||||
Income before equity in earnings of investees and financial results | 345,295 | 550,817 | ||||||||||
|
|
|
| |||||||||
Equity in earnings of associates | 12 | 2,954 | (1,558 | ) | ||||||||
Equity in earnings of joint ventures | 13 | 255,697 | 441,344 | |||||||||
|
|
|
| |||||||||
Equity in earnings of investees | 258,651 | 439,786 | ||||||||||
Finance expense | (898,232 | ) | (878,868 | ) | ||||||||
Finance income | 283,009 | 246,552 | ||||||||||
Foreign exchange gain, net | 118,889 | 525,404 | ||||||||||
Derivatives | (122,058 | ) | (704,142 | ) | ||||||||
|
|
|
| |||||||||
Financial results | 26 | (618,392 | ) | (811,054 | ) | |||||||
(Loss) profit before taxes | (14,446 | ) | 179,549 | |||||||||
|
|
|
| |||||||||
Income tax (expenses) benefits | 21 | |||||||||||
Current | 23,567 | (99,072 | ) | |||||||||
Deferred | (67,396 | ) | 83,651 | |||||||||
|
|
|
| |||||||||
| (43,829 | ) | (15,421 | ) | |||||||||
|
|
|
| |||||||||
(Loss) profit from continuing operations | (58,275 | ) | 164,128 | |||||||||
(Loss) profit from discontinued operation, net of tax | — | 14,952 | ||||||||||
|
|
|
| |||||||||
(Loss) profit for the period | (58,275 | ) | 179,080 | |||||||||
|
|
|
| |||||||||
15
Table of Contents
Cosan Limited
Consolidated statements of profit or loss and other comprehensive income
For the three month period ended March 31, 2017 and 2016
(In thousands of Brazilian Reais – R$, except earnings per share)
| Other comprehensive income | ||||||||||||
| Items that will never be reclassified to profit or loss | ||||||||||||
Financial instruments - common transactions | 9,000 | — | ||||||||||
|
|
|
| |||||||||
| 9,000 | — | |||||||||||
Items that are or may be reclassified to profit or loss: | ||||||||||||
Foreign currency translation effect | 14,437 | 33,810 | ||||||||||
Gain (loss) on cash flow hedge in joint ventures and subsidiary | 171,295 | (27,092 | ) | |||||||||
Changes in fair value of available for sale securities | 129 | (2,993 | ) | |||||||||
Taxes | — | 877 | ||||||||||
|
|
|
| |||||||||
| 185,861 | 4,602 | |||||||||||
Total other comprehensive income, net of tax | 194,861 | 4,602 | ||||||||||
|
|
|
| |||||||||
Comprehensive income - Continued operation | 136,586 | 183,682 | ||||||||||
|
|
|
| |||||||||
Comprehensive income - Discontinued operation | — | 414 | ||||||||||
|
|
|
| |||||||||
Total comprehensive income | 136,586 | 184,096 | ||||||||||
|
|
|
| |||||||||
Total net income (loss) attributable to: | ||||||||||||
Owners of the Parent | 21,115 | 130,261 | ||||||||||
Non-controlling interests | (79,390 | ) | 48,819 | |||||||||
|
|
|
| |||||||||
| (58,275 | ) | 179,080 | ||||||||||
Total comprehensive income attributable to: | ||||||||||||
Owners of the Company | 146,764 | 133,583 | ||||||||||
Non-controlling interests | (10,178 | ) | 50,513 | |||||||||
|
|
|
| |||||||||
| 136,586 | 184,096 | |||||||||||
Basic earnings per share from: | 24 | |||||||||||
Continuing operations | R$ | 0.0798 | R$ | 0.4724 | ||||||||
Discontinuing operations | — | R$ | 0.0197 | |||||||||
|
|
|
| |||||||||
| R$ | 0.0798 | R$ | 0.4921 | |||||||||
Diluted earnings per share from: | 24 | |||||||||||
Continuing operations | R$ | 0.0183 | R$ | 0.4123 | ||||||||
Discontinuing operations | — | R$ | 0.0197 | |||||||||
|
|
|
| |||||||||
| R$ | 0.0183 | R$ | 0.4320 |
The accompanying notes are an integral part of these consolidated interim financial statements
16
Table of Contents
Cosan Limited
Consolidated statements of changes in equity
For the three month period ended March 31, 2017 and 2016
(In thousands of Brazilian Reais - R$)
| Share capital | Capital reserve | Accumulated other comprehensive loss | Retained earnings | Equity attributable to owners of the Company | Non-controlling interest | Total equity | ||||||||||||||||||||||
At January 01, 2016 (Restated) | 5,328 | 4,006,562 | (478,207 | ) | 2,380,035 | 5,913,718 | 10,275,532 | 16,189,250 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net profit for the period (Restated) | — | — | — | 130,261 | 130,261 | 48,819 | 179,080 | |||||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||||
Loss on cash flow hedge in joint ventures and subsidiary | — | — | (16,935 | ) | — | (16,935 | ) | (10,157 | ) | (27,092 | ) | |||||||||||||||||
Foreign currency translation effects | — | — | 20,610 | — | 20,610 | 13,200 | 33,810 | |||||||||||||||||||||
Change in fair value of available for sale securities | — | — | (353 | ) | — | (353 | ) | (1,349 | ) | (1,702 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total comprehensive income for the period | — | — | 3,322 | 130,261 | 133,583 | 50,513 | 184,096 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Contributions by and distributions to owners of the Company: | ||||||||||||||||||||||||||||
Exercise of stock options plan | — | — | — | — | — | — | — | |||||||||||||||||||||
Dividends -non-controlling interests | — | (7,091 | ) | — | — | (7,091 | ) | 7,091 | — | |||||||||||||||||||
Dividends | — | — | — | — | — | (579,079 | ) | (579,079 | ) | |||||||||||||||||||
Share-based compensation - Subsidiaries | — | 1,553 | — | — | 1,553 | 1,396 | 2,949 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total contributions by and distributions to owners of the Company | — | (5,538 | ) | — | — | (5,538 | ) | (570,592 | ) | (576,130 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
At March 31, 2016 (Restated) | 5,328 | 4,001,024 | (474,885 | ) | 2,510,296 | 6,041,763 | 9,755,453 | 15,797,216 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
The accompanying notes are an integral part of these consolidated interim financial statements
17
Table of Contents
Cosan Limited
Consolidated statements of changes in equity
For the three month period ended March 31, 2017 and 2016
(In thousands of Brazilian Reais - R$)
| Share capital | Capital reserve | Accumulated other comprehensive loss | Retained earnings | Equity attributable to owners of the Company | Non-controlling interest | Total equity | ||||||||||||||||||||||
At December 31, 2016 | 5,328 | 4,051,591 | (480,454 | ) | 2,695,998 | 6,272,463 | 9,737,286 | 16,009,749 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net profit (loss) for the period | — | — | — | 21,115 | 21,115 | (79,390 | ) | (58,275 | ) | |||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||||
Gain on cash flow hedge in joint ventures and subsidiary | — | — | 106,515 | — | 106,515 | 64,780 | 171,295 | |||||||||||||||||||||
Foreign currency translation effects | — | — | 13,455 | — | 13,455 | 982 | 14,437 | |||||||||||||||||||||
Financial instruments - common transactions | — | — | 5,598 | — | 5,598 | 3,402 | 9,000 | |||||||||||||||||||||
Change in fair value of available for sale securities | — | — | 81 | — | 81 | 48 | 129 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total comprehensive income for the period | — | — | 125,649 | 21,115 | 146,764 | (10,178 | ) | 136,586 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Contributions by and distributions to owners of the Company: | ||||||||||||||||||||||||||||
Dividends -non-controlling interests | — | (7,442 | ) | — | — | (7,442 | ) | 7,442 | — | |||||||||||||||||||
Share options exercised - Subsidiaries | — | 10,201 | — | — | 10,201 | 5,921 | 16,122 | |||||||||||||||||||||
Dividends | — | — | — | — | — | (138,665 | ) | (138,665 | ) | |||||||||||||||||||
Share-based compensation - Subsidiaries | — | 1,250 | — | — | 1,250 | 1,595 | 2,845 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total contributions by and distributions to owners of the Company | — | 4,009 | — | — | 4,009 | (123,707 | ) | (119,698 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Transactions with owners of the Company | ||||||||||||||||||||||||||||
Change of shareholding interest in subsidiary | — | (154,368 | ) | — | — | (154,368 | ) | (120,223 | ) | (274,591 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
At March 31, 2017 | 5,328 | 3,901,232 | (354,805 | ) | 2,717,113 | 6,268,868 | 9,483,178 | 15,752,046 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
The accompanying notes are an integral part of these consolidated interim financial statements
18
Table of Contents
Cosan Limited
Consolidated statements of cash flows
For the three month period ended March 31, 2017 and 2016
(In thousands of Brazilian Reais - R$)
| Note | March 31, 2017 | March 31, 2016 (Restated) | ||||||||||
Cash flows from operating activities | ||||||||||||
(Loss) profit before taxes | (14,446 | ) | 179,549 | |||||||||
Adjustments for: | ||||||||||||
Depreciation and amortization | 446,556 | 352,424 | ||||||||||
Lease and concession | 49,474 | 48,753 | ||||||||||
Equity in earnings of associates | 12 | (2,954 | ) | 1,558 | ||||||||
Equity in earnings of joint ventures | 13 | (255,697 | ) | (441,344 | ) | |||||||
Losses on disposals of assets | (2,441 | ) | 4,841 | |||||||||
Option shares expense | 2,845 | 2,949 | ||||||||||
Provision for legal proceedings | 18,355 | 21,197 | ||||||||||
Indexation charges, interest and exchange, net | 673,233 | 863,717 | ||||||||||
Other | 30,335 | 5,222 | ||||||||||
|
|
|
| |||||||||
| 945,260 | 1,038,866 | |||||||||||
Changes in: | ||||||||||||
Trade receivables | 167,725 | (807 | ) | |||||||||
Inventories | 30,908 | (6,276 | ) | |||||||||
Recoverable taxes | (20,594 | ) | 41,611 | |||||||||
Related parties | 14,110 | 17,186 | ||||||||||
Trade payables | (136,509 | ) | (27,418 | ) | ||||||||
Other financial liabilities | 9,816 | (104,451 | ) | |||||||||
Employee benefits | (105,172 | ) | (72,534 | ) | ||||||||
Provision for legal proceedings | (17,622 | ) | (16,465 | ) | ||||||||
Judicial deposits | (8,205 | ) | (1,566 | ) | ||||||||
Post-employment benefits | (6,827 | ) | (6,284 | ) | ||||||||
Income tax and other tax | (20,447 | ) | (74,287 | ) | ||||||||
Discontinued operation | — | (100 | ) | |||||||||
Concessions payable | (28,096 | ) | (25,996 | ) | ||||||||
Other assets and liabilities, net | 145,694 | (98,010 | ) | |||||||||
|
|
|
| |||||||||
| 24,781 | (375,397 | ) | ||||||||||
|
|
|
| |||||||||
Net cash generated by operating activities | 970,041 | 663,469 | ||||||||||
|
|
|
| |||||||||
Cash flows from investing activities | ||||||||||||
Capital contribution in associates | — | (2,170 | ) | |||||||||
Marketable securities | 399,932 | 213,463 | ||||||||||
Restricted cash | (24,145 | ) | 78,283 | |||||||||
Dividends received from associates | 2,464 | 1,743 | ||||||||||
Dividends received from joint ventures | 279,875 | 249,653 | ||||||||||
Discontinued operation | — | (100 | ) | |||||||||
Put option exercised paid | (275,780 | ) | — | |||||||||
Acquisition of property, plant and equipment, intangible assets and investments | (542,647 | ) | (389,200 | ) | ||||||||
Cash received on sale of fixed assets, and intangible assets | 7,000 | — | ||||||||||
|
|
|
| |||||||||
Net cash (used in) generated by investing activities | (153,301 | ) | 151,672 | |||||||||
|
|
|
| |||||||||
19
Table of Contents
Cosan Limited
Consolidated statements of cash flows
For the three month period ended March 31, 2017 and 2016
(In thousands of Brazilian Reais - R$)
Cash flows from financing activities | ||||||||||
Loans and borrowings and debentures raised | 2,485,716 | 628,261 | ||||||||
Payment of principal on loans, borrowings and debentures | (439,216 | ) | (527,214 | ) | ||||||
Payment of interest on loans, borrowings and debentures | (313,265 | ) | (330,694 | ) | ||||||
Payment of principal on financing leases | (111,071 | ) | (111,206 | ) | ||||||
Payment of interest on financing leases | (80,504 | ) | (91,171 | ) | ||||||
Real estate credit certificates | (31,705 | ) | (31,176 | ) | ||||||
Derivative financial instruments | (167,143 | ) | (8,131 | ) | ||||||
Dividends paid | (161,522 | ) | (583,129 | ) | ||||||
Share options exercised - Subsidiaries | 15,986 | — | ||||||||
|
|
|
| |||||||
Net cash generated by (used in) financing activities | 1,197,276 | (1,054,460 | ) | |||||||
|
|
|
| |||||||
Increase (decrease) in cash and cash equivalents | 2,014,016 | (239,319 | ) | |||||||
|
|
|
| |||||||
Cash and cash equivalents at beginning of the period | 4,499,588 | 3,505,824 | ||||||||
|
|
|
| |||||||
Effect of exchange rate fluctuations on cash held | 30,486 | (56,853 | ) | |||||||
|
|
|
| |||||||
Cash and cash equivalents at end of the period | 6,544,090 | 3,209,652 | ||||||||
|
|
|
| |||||||
Supplemental cash flow information | ||||||||||
Income taxes paid | 862 | 31,085 |
The accompanying notes are an integral part of these consolidated interim financial statements
20
Table of Contents
Cosan Limited
Notes to the consolidated financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
1 Operations
Cosan Limited (“Cosan”) was incorporated in Bermuda on April 30, 2007. Cosan’s class A common shares are traded on the New York Stock Exchange (NYSE) (ticker - CZZ). The BDRs (Brazilian Depositary Receipts) representing Cosan’s class A common shares are listed on the Brazilian Stock Exchange (BM&FBovespa) (ticker - CZLT33). Mr. Rubens Ometto Silveira Mello is the ultimate controlling shareholder of Cosan. Cosan controls its subsidiaries Cosan S.A. Indústria e Comércio (“Cosan S.A.”) and Cosan Logística S.A. (“Cosan Logística”) through a 62.20% and 72.39% interest, respectively. Cosan, Cosan S.A., Cosan Logística and its subsidiaries are collectively referred to as the “Company”.
The Company’s primary activities are in the following business segments: (i) Piped natural gas distribution to part of the State of São Paulo through its subsidiary Companhia de Gás de São Paulo – COMGÁS (“COMGÁS”); (ii) Logistics services including transportation, port loading and storage of sugar, leasing or lending of locomotives, wagons and other railway equipment, through its indirect subsidiaries Rumo S.A. (“Rumo”), logistic segment (“Logistic”); (iii) Production and distribution of lubricants, through its indirect subsidiaries Cosan Lubrificantes e Especialidades S.A. (“Moove”) and Comma Oil & Chemicals Ltd. (“Comma”), under the Mobil licensed trademark in Brazil, Bolivia, Uruguay and Paraguay, in addition to the European and Asian market using the Comma brand and corporate activities (“Lubricants”); and (iv) other investments, in addition to the corporate structures of the Company (“Cosan’s other business”).
The Company also holds interests in two joint ventures (“JVs”): (i) Raízen Combustíveis S.A. (“Raízen Combustíveis”), a fuel distribution business, and (ii) Raízen Energia S.A. (“Raízen Energia”), which operates in the production and marketing of sugar, ethanol and energy cogeneration, produced from sugar cane bagasse.
On March 31, 2017, Cosan Logística had a consolidated working capital of R$607,252 and loss for the period of R$248,826. Nevertheless, it presented a net cash generation from operations of R$546,170 and made investments in the modernization of its fleet and improving the railway network in the amount of R$471,883, in line with its business plan. The capital increase associated with the debt rescheduling implemented in 2016, as well as the issuance of Senior Notes 2024 in 2017 (note 16), equated the Company’s operational continuity risk over a short-term horizon.
On February 23, 2017, TPG VIFundo de Investimento em Participações (“TPG”), a shareholder of Rumo S.A (“Rumo”), exercised its right to exchange 11,479,987 shares issued by Rumo for shares issued by Cosan S.A in pursuant to the shareholders agreement entered into in 2010, subsequently added, between Cosan Logística, TPG VI, GIF, Cosan S.A and the Company. Cosan S.A and GIF agreed to settle financially the stock replacement obligation through of payment of R$ 275,780 and the shares received were valued at fair value in the amount of R$ 97,924 and recorded as capital reserve.
21
Table of Contents
Cosan Limited
Notes to the consolidated financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
2 Basis of preparation
2.1 Statement of compliance
The consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB). They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company’s financial position and performance since the last annual consolidated financial statements as at and for the year ended December 31, 2016.
The significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended December 31, 2016, except for the adoption of new standards and interpretations effective as of January 1, 2017. The Company has not early adopted any other standard, interpretation or amendment that has been issued.
All own relevant information of the interim financial statements, and only they, are being highlighted, and these correspond to those used by management in its management.
These consolidated interim financial statements were authorized for issue by the Board of Directors on May 05, 2017.
22
Table of Contents
Cosan Limited
Notes to the consolidated financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
3 Significant accounting policies
The accounting policies set out below have been applied consistently by the Company to all periods presented in this consolidated interim financial statements.
3.1 Basis of consolidation
The consolidated statements include the accounts of Cosan and its subsidiaries. Cosan’s subsidiaries are listed below:
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
Directly owned subsidiaries | ||||||||
Cosan Logística S.A. | 72.39 | % | 72.42 | % | ||||
Cosan S.A. Indústria e Comércio | 62.20 | % | 62.29 | % | ||||
Interest of Cosan S.A. in its subsidiaries | ||||||||
Comma Oil Chemicals Limited | 100.00 | % | 100.00 | % | ||||
Companhia de Gás de São Paulo – COMGÁS | 62.66 | % | 62.66 | % | ||||
Cosan Biomassa S.A. (i) | 100.00 | % | 100.00 | % | ||||
Cosan Cayman II Limited | 100.00 | % | 100.00 | % | ||||
Cosan Global Limited | 100.00 | % | 100.00 | % | ||||
Cosan Investimentos e Participações S.A. | 100.00 | % | 100.00 | % | ||||
Cosan Lubes Investments Limited | 100.00 | % | 100.00 | % | ||||
Cosan Lubrificantes e Especialidades S.A. | 100.00 | % | 100.00 | % | ||||
Cosan Luxembourg S.A. | 100.00 | % | 100.00 | % | ||||
Cosan Overseas Limited | 100.00 | % | 100.00 | % | ||||
Cosan Paraguay S.A. | 100.00 | % | 100.00 | % | ||||
Cosan US, Inc. | 100.00 | % | 100.00 | % | ||||
Ilha Terminal Distribuição de Produto Químicos Ltda. | 100.00 | % | 100.00 | % | ||||
Pasadena Empreendimentos e Participações S.A. | 100.00 | % | 100.00 | % | ||||
Zip Lube S.A. | 100.00 | % | 100.00 | % | ||||
23
Table of Contents
Cosan Limited
Notes to the consolidated financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
Interest of Logística S.A. in its subsidiaries | ||||||||
Rumo S.A. | 28,37 | % | 28,37 | % | ||||
Logispot Armazéns Gerais S.A. | 14,47 | % | 14,47 | % | ||||
Elevações Portuárias S.A. | 28,37 | % | 28,37 | % | ||||
Rumo Luxembourg Sarl | 28,37 | % | 28,37 | % | ||||
ALL Intermodal S.A. | 28,37 | % | 28,37 | % | ||||
Rumo Malha Oeste S.A. | 28,37 | % | 28,37 | % | ||||
Rumo Malha Paulista S.A. | 28,37 | % | 28,37 | % | ||||
Rumo Malha Sul S.A. | 28,37 | % | 28,37 | % | ||||
Rumo Malha Norte S.A. | 28,23 | % | 28,22 | % | ||||
ALL Armazéns Gerais Ltda. | 28,37 | % | 28,37 | % | ||||
Portofer Ltda. | 28,37 | % | 28,37 | % | ||||
Boswells S.A. | 28,37 | % | 28,37 | % | ||||
Brado Holding S.A. | 28,37 | % | 28,37 | % | ||||
Brado Logística e Participações S.A. | 17,51 | % | 17,65 | % | ||||
Brado Logística S.A. | 17,51 | % | 17,65 | % | ||||
ALL Serviços Ltda. | 28,37 | % | 28,37 | % | ||||
ALL Argentina S.A. | 25,81 | % | 25,81 | % | ||||
ALL Mesopotâmica S.A. | 20,02 | % | 20,02 | % | ||||
ALL Central S.A. | 20,87 | % | 20,87 | % | ||||
Paranaguá S.A. | 28,34 | % | 28,32 | % | ||||
ALL Rail Management Ltda. | 14,19 | % | 14,19 | % | ||||
PGT S.A. | 28,37 | % | 28,37 | % | ||||
| (i) | The Company recorded, in the line with thenon-controlling shareholder’s obligations, the Put Option, according to the shareholder agreement, for the repurchase of shares ofnon-controlling shareholders. |
24
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
4 New standards and interpretations not yet effective
A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2017 and earlier application is permitted; however, the Group has not early adopted the following new or amended standards in preparing these consolidated interim financial statements.
IFRS 15 - Revenue from contracts with customers
The significant impacts related to IFRS 15 may be in the disclosures of the notes to the financial statements and in the policies applied to the control of revenues. Material impacts on revenue recognition are not expected
IFRS 9 - Financial instruments
The application of the new standard may result in a review of the provision for doubtful accounts. The study on possible impacts has not yet been completed.
IFRS 16 Leases
The Company began an initial assessment of the potential impact on its financial statements. So far, the most significant impact identified is that the subsidiary Rumo S.A will recognize new assets and liabilities for its operating leases related to concession. In the jointly-owned subsidiary Raízen, it is expected to have significant impacts on land leases.
The Company has not yet quantified the impact of adopting IFRS 16 on its assets and liabilities. The quantitative effect of the adoption of IFRS 16 will depend specifically on the transition method chosen, the use of practical files and recognition exemptions, and any additional leases that the Company will enter into. The Company expects to disclose its transition approach and quantitative information prior to adoption.
There are no other IFRS standards or IFRIC interpretations that have not come into effect and are expected to have a material impact on the Company.
5 Changes adopted
The changes below were applied for the first time in 2016 did not result in a significant impact on the Company’s annual consolidated financial statements or in the interim financial statements.
The nature and the impact of each new standard or amendment are described below:
(i) Discontinued operation
Due to the partial sale of RADAR segment’s shares and as required by IFRS 5 -Non-current assets available for sale and discontinued operations - the Company is restating the presentation of its income statement for the period ended March 31, 2016.
25
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
(ii) Correction of immaterial errors – Tax installments
During the year of 2016, the Company identified an error in the accounting record of tax installment liabilities, related to others federal taxes than income tax, referring to prior years.
Management concluded that the effect of the correction of error had no material impact on the Company’s interim financial statements for the period ended of March 31, 2016.
The impacts of both restatements for the period ended March 31, 2016 are as follows:
| March 31, 2016 (Restated) | ||||||||||||||||
| As issued | Discontinued operation (i) | Tax installment (ii) | Restated | |||||||||||||
Net sales | 3,141,982 | (22,913 | ) | — | 3,119,069 | |||||||||||
Cost of sales | (2,066,104 | ) | — | — | (2,066,104 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Gross profit | 1,075,878 | (22,913 | ) | — | 1,052,965 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Operating expense | (509,936 | ) | 7,788 | — | (502,148 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Income before equity in earnings of investees and financial results | 565,942 | (15,125 | ) | — | 550,817 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Equity in earnings of associates | (1,558 | ) | — | — | (1,558 | ) | ||||||||||
Equity in earnings of joint ventures | 441,344 | — | — | 441,344 | ||||||||||||
| 439,786 | — | — | 439,786 | |||||||||||||
Financial results | (804,753 | ) | (3,763 | ) | (2,538 | ) | (811,054 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Profit before taxes | 200,975 | (18,888 | ) | (2,538 | ) | 179,549 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Income tax expense | (20,220 | ) | 3,936 | 863 | (15,421 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Profit from continuing operations | 180,755 | (14,952 | ) | (1,675 | ) | 164,128 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Profit from discontinued operations, net of tax | — | 14,952 | — | 14,952 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Profit for the period | 180,755 | — | (1,675 | ) | 179,080 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income attributable to: | ||||||||||||||||
Owners of the Parent | 131,308 | — | (1,047 | ) | 130,261 | |||||||||||
Non-controlling interests | 49,447 | — | (628 | ) | 48,819 | |||||||||||
26
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
6 Operating segments
Segment information
The following segment information is used by Cosan’s senior management (the “Chief Operating Decision Maker”) to assess the performance of the operating segments and to make decisions with regard to the allocation of resources.
The following statement of financial position and profit or loss selected information by segment was prepared on a basis consistent with the accounting practices used in the preparation of consolidated information:
27
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
| March 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||
| Reported segments | Reconciliation | Additional information | ||||||||||||||||||||||||||||||||||||||||||
| Raízen Energia | Raízen Combustíveis | COMGÁS | Moove | Logistics | Cosan Corporate | Deconsolidated effects IFRS 11 | Segment eliminations / adjustments | Total consolidated | Cosan Energia | Cosan Logística | ||||||||||||||||||||||||||||||||||
Statement of income or loss: | ||||||||||||||||||||||||||||||||||||||||||||
Net sales | 2,913,237 | 17,698,154 | 1,146,266 | 446,697 | 1,199,174 | 179 | (20,611,391 | ) | (6,584 | ) | 2,785,732 | 1,593,142 | 1,199,174 | |||||||||||||||||||||||||||||||
Domestic market | 1,616,999 | 17,698,154 | 1,146,266 | 432,171 | 1,115,593 | 179 | (19,315,153 | ) | (6,584 | ) | 2,687,625 | 1,578,616 | 1,115,593 | |||||||||||||||||||||||||||||||
External market | 1,296,238 | — | — | 14,526 | 83,581 | — | (1,296,238 | ) | — | 98,107 | 14,526 | 83,581 | ||||||||||||||||||||||||||||||||
Cost of sales | (2,232,144 | ) | (16,746,925 | ) | (720,119 | ) | (313,987 | ) | (930,852 | ) | (1,067 | ) | 18,979,069 | 6,584 | (1,959,441 | ) | (1,035,174 | ) | (930,852 | ) | ||||||||||||||||||||||||
Gross profit | 681,093 | 951,229 | 426,147 | 132,710 | 268,322 | (888 | ) | (1,632,322 | ) | — | 826,291 | 557,968 | 268,322 | |||||||||||||||||||||||||||||||
Selling expenses | (144,302 | ) | (314,101 | ) | (167,787 | ) | (87,389 | ) | (2,355 | ) | (51 | ) | 458,403 | — | (257,582 | ) | (255,228 | ) | (2,355 | ) | ||||||||||||||||||||||||
General and administrative expenses | (158,760 | ) | (116,242 | ) | (77,113 | ) | (20,219 | ) | (63,308 | ) | (46,734 | ) | 275,002 | — | (207,374 | ) | (136,917 | ) | (63,308 | ) | ||||||||||||||||||||||||
Other income (expense), net | (85,294 | ) | (45,777 | ) | (581 | ) | 148 | (2,194 | ) | (13,413 | ) | 131,071 | — | (16,040 | ) | (13,846 | ) | (2,194 | ) | |||||||||||||||||||||||||
Financial results | 135,062 | (172,116 | ) | (41,424 | ) | (19,799 | ) | (451,212 | ) | (105,957 | ) | 37,054 | — | (618,392 | ) | (135,038 | ) | (451,212 | ) | |||||||||||||||||||||||||
Financial expense | (220,245 | ) | (50,271 | ) | (215,023 | ) | (7,288 | ) | (488,386 | ) | (187,535 | ) | 270,516 | — | (898,232 | ) | (423,559 | ) | (488,386 | ) | ||||||||||||||||||||||||
Financial income | 173,965 | 44,600 | 173,777 | 3,923 | 43,645 | 61,664 | (218,565 | ) | — | 283,009 | 266,726 | 43,645 | ||||||||||||||||||||||||||||||||
Foreign exchange losses, net | (25,387 | ) | 109,220 | 28,714 | 3,921 | 494 | 85,759 | (83,833 | ) | — | 118,888 | 136,888 | 494 | |||||||||||||||||||||||||||||||
Derivatives | 206,729 | (275,665 | ) | (28,892 | ) | (20,355 | ) | (6,965 | ) | (65,845 | ) | 68,936 | — | (122,057 | ) | (115,093 | ) | (6,965 | ) | |||||||||||||||||||||||||
Equity in earnings of associates | (37,277 | ) | — | — | (1,579 | ) | 1,746 | 132,735 | 37,277 | (129,948 | ) | 2,954 | 1,208 | 1,746 | ||||||||||||||||||||||||||||||
Equity in earnings of joint ventures | — | — | — | — | — | 255,697 | — | — | 255,697 | 255,697 | — | |||||||||||||||||||||||||||||||||
Income tax expense benefit | (77,576 | ) | (89,400 | ) | (55,714 | ) | (2,738 | ) | 175 | 14,448 | 166,976 | — | (43,829 | ) | (37,341 | ) | 175 | |||||||||||||||||||||||||||
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Profit (loss) for the period | 312,946 | 213,593 | 83,528 | 1,134 | (248,826 | ) | 235,837 | (526,539 | ) | (129,948 | ) | (58,275 | ) | 236,503 | (248,826 | ) | ||||||||||||||||||||||||||||
Total net income attributable to: | ||||||||||||||||||||||||||||||||||||||||||||
Owners of the Company | 312,946 | 199,895 | 52,343 | 1,134 | (70,922 | ) | 226,427 | (512,841 | ) | (187,867 | ) | 21,115 | 205,315 | (70,922 | ) | |||||||||||||||||||||||||||||
Non-controlling interests | — | 13,698 | 31,185 | — | (177,904 | ) | 9,410 | (13,698 | ) | 57,919 | (79,390 | ) | 31,188 | (177,904 | ) | |||||||||||||||||||||||||||||
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| 312,946 | 213,593 | 83,528 | 1,134 | (248,826 | ) | 235,837 | (526,539 | ) | (129,948 | ) | (58,275 | ) | 236,503 | (248,826 | ) | |||||||||||||||||||||||||||||
Other selected data: | ||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 448,732 | 150,170 | 132,748 | 19,652 | 290,027 | 4,190 | (598,902 | ) | — | 446,617 | 156,590 | 290,027 | ||||||||||||||||||||||||||||||||
EBITDA | 704,192 | 625,279 | 313,414 | 43,323 | 492,238 | 331,536 | (1,329,471 | ) | (129,948 | ) | 1,050,563 | 565,472 | 492,238 | |||||||||||||||||||||||||||||||
Additions to PP&E, intangible and biological assets | 889,745 | 258,825 | 68,720 | 1,736 | 471,883 | 308 | (1,148,570 | ) | — | 542,647 | 70,764 | 471,883 | ||||||||||||||||||||||||||||||||
Reconciliation of EBITDA: | ||||||||||||||||||||||||||||||||||||||||||||
Profit (loss) for the period | 312,946 | 213,593 | 83,528 | 1,134 | (248,826 | ) | 235,837 | (526,539 | ) | (129,948 | ) | (58,275 | ) | 236,503 | (248,826 | ) | ||||||||||||||||||||||||||||
Income tax and social contribution | 77,576 | 89,400 | 55,714 | 2,738 | (175 | ) | (14,448 | ) | (166,976 | ) | — | 43,829 | 37,341 | (175 | ) | |||||||||||||||||||||||||||||
Financial result, net | (135,062 | ) | 172,116 | 41,424 | 19,799 | 451,212 | 105,957 | (37,054 | ) | — | 618,392 | 135,038 | 451,212 | |||||||||||||||||||||||||||||||
Depreciation and amortization | 448,732 | 150,170 | 132,748 | 19,652 | 290,027 | 4,190 | (598,902 | ) | — | 446,617 | 156,590 | 290,027 | ||||||||||||||||||||||||||||||||
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EBITDA | 704,192 | 625,279 | 313,414 | 43,323 | 492,238 | 331,536 | (1,329,471 | ) | (129,948 | ) | 1,050,563 | 565,472 | 492,238 | |||||||||||||||||||||||||||||||
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28
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
| March 31, 2016 (Restated) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Reported segments | Reconciliation | Additional information | ||||||||||||||||||||||||||||||||||||||||||||||
| Raízen Energia | Raízen Combustíveis | COMGÁS | Radar | Moove | Logistics | Cosan Corporate | Deconsolidated effects IFRS 11 | Segment eliminations / adjustments | Total consolidated | Cosan Energia | Cosan Logística | |||||||||||||||||||||||||||||||||||||
Statement of income or loss: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net sales | 3,866,279 | 16,391,752 | 1,460,076 | — | 479,124 | 1,185,891 | 34 | (20,258,031 | ) | (6,056 | ) | 3,119,069 | 1,962,148 | 1,185,891 | ||||||||||||||||||||||||||||||||||
Domestic market | 1,679,105 | 16,391,752 | 1,460,076 | — | 365,932 | 1,145,496 | 34 | (18,070,857 | ) | (6,056 | ) | 2,965,482 | 1,848,956 | 1,145,496 | ||||||||||||||||||||||||||||||||||
External market | 2,187,174 | — | — | — | 113,192 | 40,395 | — | (2,187,174 | ) | — | 153,587 | 113,192 | 40,395 | |||||||||||||||||||||||||||||||||||
Cost of sales | (2,667,086 | ) | (15,600,588 | ) | (828,583 | ) | — | (371,944 | ) | (871,083 | ) | (550 | ) | 18,267,674 | 6,056 | (2,066,104 | ) | (1,201,078 | ) | (871,083 | ) | |||||||||||||||||||||||||||
Gross profit | 1,199,193 | 791,164 | 631,493 | — | 107,180 | 314,808 | (516 | ) | (1,990,357 | ) | — | 1,052,965 | 761,070 | 314,808 | ||||||||||||||||||||||||||||||||||
Selling expenses | (188,404 | ) | (357,096 | ) | (154,584 | ) | — | (83,974 | ) | 1,728 | — | 545,500 | — | (236,830 | ) | (238,557 | ) | — | ||||||||||||||||||||||||||||||
General and administrative expenses | (163,286 | ) | (101,209 | ) | (73,327 | ) | — | (18,793 | ) | (89,774 | ) | (46,070 | ) | 264,495 | — | (227,964 | ) | (141,656 | ) | (88,046 | ) | |||||||||||||||||||||||||||
Other income (expense), net | 68,479 | 80,718 | (2,016 | ) | — | 1,701 | 2,272 | (39,311 | ) | (149,197 | ) | — | (37,354 | ) | (39,836 | ) | 2,272 | |||||||||||||||||||||||||||||||
Financial results | 209,241 | (132,961 | ) | (96,075 | ) | — | (18,913 | ) | (427,296 | ) | (373,550 | ) | (76,280 | ) | 104,780 | (811,054 | ) | (451,898 | ) | (427,296 | ) | |||||||||||||||||||||||||||
Financial expense | (262,775 | ) | (43,355 | ) | (209,988 | ) | — | (8,797 | ) | (469,652 | ) | (295,211 | ) | 306,130 | 104,780 | (878,868 | ) | (496,928 | ) | (469,652 | ) | |||||||||||||||||||||||||||
Financial income | 162,288 | 59,551 | 113,554 | — | 964 | 61,526 | 70,508 | (221,839 | ) | — | 246,552 | 189,136 | 61,526 | |||||||||||||||||||||||||||||||||||
Foreign exchange losses, net | (15,174 | ) | 358,297 | 123,854 | — | 17,421 | 46,520 | 337,609 | (343,123 | ) | — | 525,404 | 507,512 | 46,520 | ||||||||||||||||||||||||||||||||||
Derivatives | 324,902 | (507,454 | ) | (123,495 | ) | — | (28,501 | ) | (65,690 | ) | (486,456 | ) | 182,552 | — | (704,142 | ) | (651,618 | ) | (65,690 | ) | ||||||||||||||||||||||||||||
Equity in earnings of associates | (36,283 | ) | 2,520 | — | — | (866 | ) | 3,558 | 282,490 | 33,763 | (286,740 | ) | (1,558 | ) | (5,116 | ) | 3,558 | |||||||||||||||||||||||||||||||
Equity in earnings of joint ventures | — | — | — | — | — | — | 441,344 | — | — | 441,344 | 441,344 | — | ||||||||||||||||||||||||||||||||||||
Income tax expense benefit | (368,617 | ) | (109,974 | ) | (104,635 | ) | — | 567 | 10,320 | 113,952 | 478,591 | (35,625 | ) | (15,421 | ) | 5,948 | 10,320 | |||||||||||||||||||||||||||||||
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Profit (loss) from continuing operations | 720,323 | 173,162 | 200,856 | — | (13,098 | ) | (184,384 | ) | 378,339 | (893,485 | ) | (217,585 | ) | 164,128 | 331,299 | (184,384 | ) | |||||||||||||||||||||||||||||||
Profit from discontinued operation, net of tax | — | — | — | 14,952 | — | — | — | — | — | 14,952 | — | — | ||||||||||||||||||||||||||||||||||||
Total net income attributable to: | ||||||||||||||||||||||||||||||||||||||||||||||||
Owners of the Company | 720,323 | 163,097 | 200,856 | 14,952 | (13,098 | ) | (48,044 | ) | 378,339 | (883,420 | ) | (402,744 | ) | 130,261 | 247,031 | (48,044 | ) | |||||||||||||||||||||||||||||||
Non-controlling interests | — | 10,065 | — | — | — | (136,340 | ) | — | (10,065 | ) | 185,159 | 48,819 | 84,268 | (136,340 | ) | |||||||||||||||||||||||||||||||||
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| 720,323 | 173,162 | 200,856 | 14,952 | (13,098 | ) | (184,384 | ) | 378,339 | (893,485 | ) | (217,585 | ) | 179,080 | 331,299 | (184,384 | ) | ||||||||||||||||||||||||||||||||
Other selected data: | ||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 643,442 | 163,619 | 119,047 | — | 20,629 | 209,786 | 2,963 | (807,061 | ) | — | 352,425 | 142,794 | 209,786 | |||||||||||||||||||||||||||||||||||
EBITDA | 1,523,141 | 579,716 | 520,613 | — | 25,877 | 442,378 | 640,900 | (2,102,857 | ) | (286,740 | ) | 1,343,028 | 920,043 | 442,378 | ||||||||||||||||||||||||||||||||||
Additions to PP&E, intangible and biological assets | 810,634 | 179,164 | 94,139 | — | 9,348 | 284,874 | 838 | (989,798 | ) | — | 389,199 | 104,425 | 284,874 | |||||||||||||||||||||||||||||||||||
Reconciliation of EBITDA: | ||||||||||||||||||||||||||||||||||||||||||||||||
Profit (loss) for the period | 720,323 | 173,162 | 200,856 | — | (13,098 | ) | (184,384 | ) | 378,339 | (893,485 | ) | (217,585 | ) | 164,128 | 331,299 | (184,384 | ) | |||||||||||||||||||||||||||||||
Income tax and social contribution | 368,617 | 109,974 | 104,635 | — | (567 | ) | (10,320 | ) | (113,952 | ) | (478,591 | ) | 35,625 | 15,421 | (5,948 | ) | (10,320 | ) | ||||||||||||||||||||||||||||||
Financial result, net | (209,241 | ) | 132,961 | 96,075 | — | 18,913 | 427,296 | 373,550 | 76,280 | (104,780 | ) | 811,054 | 451,898 | 427,296 | ||||||||||||||||||||||||||||||||||
Depreciation and amortization | 643,442 | 163,619 | 119,047 | — | 20,629 | 209,786 | 2,963 | (807,061 | ) | — | 352,425 | 142,794 | 209,786 | |||||||||||||||||||||||||||||||||||
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EBITDA | 1,523,141 | 579,716 | 520,613 | — | 25,877 | 442,378 | 640,900 | (2,102,857 | ) | (286,740 | ) | 1,343,028 | 920,043 | 442,378 | ||||||||||||||||||||||||||||||||||
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29
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
| March 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||
| Reported segments | Reconciliation | Additional information | ||||||||||||||||||||||||||||||||||||||||||
Statement of financial position: | Raízen Energia | Raízen Combustíveis | COMGÁS | Moove | Logistics | Cosan Corporate | Deconsolidated effects IFRS 11 | Segment elimination | Total consolidated | Cosan Energia | Cosan Logística | |||||||||||||||||||||||||||||||||
Cash and cash equivalents | 3,437,612 | 517,789 | 1,826,489 | 79,788 | 2,591,724 | 2,046,089 | (3,955,401 | ) | — | 6,544,090 | 3,724,546 | 2,591,724 | ||||||||||||||||||||||||||||||||
Marketable securities | — | — | 185,904 | 2,607 | 541,752 | 192,580 | — | — | 922,843 | 381,091 | 541,752 | |||||||||||||||||||||||||||||||||
Trade receivables | 371,930 | 1,974,343 | 495,264 | 247,691 | 309,721 | 10 | (2,346,273 | ) | — | 1,052,686 | 742,966 | 309,721 | ||||||||||||||||||||||||||||||||
Derivative financial instruments | 582,380 | 55,102 | 391,839 | — | 3,098 | 440,727 | (637,482 | ) | — | 835,664 | 832,566 | 3,098 | ||||||||||||||||||||||||||||||||
Inventories | 647,663 | 1,695,313 | 112,954 | 236,013 | 248,385 | 2,495 | (2,342,976 | ) | — | 599,847 | 351,462 | 248,385 | ||||||||||||||||||||||||||||||||
Other financial assets | 737,089 | — | — | — | — | 88,431 | (737,089 | ) | (88,431 | ) | — | 196,308 | — | |||||||||||||||||||||||||||||||
Other current assets | 1.471.489 | 1,262,040 | 123,145 | 124,205 | 364,767 | 287,466 | (2.733.529 | ) | (93,302 | ) | 806,281 | 466,106 | 364,767 | |||||||||||||||||||||||||||||||
Othernon-current assets | 3,672,657 | 998,368 | 300,252 | (46,017 | ) | 2,670,528 | 1,501,363 | (4,671,026 | ) | (32,447 | ) | 4,393,679 | 1,747,715 | 2,670,528 | ||||||||||||||||||||||||||||||
Investments in associates | 244,429 | — | — | 17,253 | 41,742 | 11,053,775 | (244,429 | ) | (10,830,315 | ) | 282,455 | 240,712 | 41,742 | |||||||||||||||||||||||||||||||
Investments in joint ventures | — | — | — | — | — | 8,738,568 | — | — | 8,738,568 | 8,738,569 | — | |||||||||||||||||||||||||||||||||
Biological assets | 1,276,321 | — | — | — | — | — | (1,276,321 | ) | — | — | — | — | ||||||||||||||||||||||||||||||||
Property, plant and equipment | 11,215,926 | 2,374,314 | — | 234,239 | 10,544,803 | 147,603 | (13,590,240 | ) | — | 10,926,645 | 381,842 | 10,544,803 | ||||||||||||||||||||||||||||||||
Intangible assets and goodwill | 3,234,196 | 4,562,169 | 8,487,651 | 756,308 | 7,746,230 | 6,511 | (7,796,365 | ) | — | 16,996,700 | 9,250,470 | 7,746,230 | ||||||||||||||||||||||||||||||||
Loans, borrowings and debentures | (10,325,687 | ) | (1,007,144 | ) | (3,988,800 | ) | (418,685 | ) | (10,875,536 | ) | (5,157,769 | ) | 11,332,831 | — | (20,440,790 | ) | (8,861,594 | ) | (10,875,536 | ) | ||||||||||||||||||||||||
Derivative financial instruments | (368,228 | ) | (462,442 | ) | — | (30,831 | ) | (19,268 | ) | (286,517 | ) | 830,670 | — | (336,616 | ) | (317,349 | ) | (19,268 | ) | |||||||||||||||||||||||||
Trade payables | (954,161 | ) | (1,057,933 | ) | (1,214,705 | ) | (207,411 | ) | (500,519 | ) | (4,857 | ) | 2,012,094 | — | (1,927,492 | ) | (1,426,973 | ) | (500,519 | ) | ||||||||||||||||||||||||
Real estate credit certificates | — | — | — | — | (171,247 | ) | — | — | — | (171,247 | ) | — | (171,247 | ) | ||||||||||||||||||||||||||||||
Employee benefits payable | (361,806 | ) | (106,432 | ) | (31,334 | ) | (16,009 | ) | (103,879 | ) | (10,513 | ) | 468,238 | — | (161,735 | ) | (57,856 | ) | (103,879 | ) | ||||||||||||||||||||||||
Preferred shareholders payable in subsidiaries | — | — | — | — | — | (1,809,176 | ) | — | — | (1,809,176 | ) | (1,809,176 | ) | — | ||||||||||||||||||||||||||||||
Lease | — | — | — | — | (1,255,274 | ) | — | — | — | (1,255,274 | ) | — | (1,255,274 | ) | ||||||||||||||||||||||||||||||
Other current liabilities | (797,065 | ) | (1,619,483 | ) | (92,589 | ) | (136,238 | ) | (720,336 | ) | (346,105 | ) | 2,416,548 | 101,190 | (1,194,078 | ) | (464,708 | ) | (720,336 | ) | ||||||||||||||||||||||||
Othernon-current liabilities | (1,318,720 | ) | (4,155,496 | ) | (1,649,182 | ) | (130,639 | ) | (5,982,946 | ) | (1,312,798 | ) | 5,474,216 | 24,561 | (9,051,004 | ) | (3,017,040 | ) | (5,982,946 | ) | ||||||||||||||||||||||||
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Total assets (net of liabilities) allocated by segment | 12,766,025 | 5,030,508 | 4,946,888 | 712,274 | 5,433,745 | 15,577,883 | (17,796,533 | ) | (10,918,744 | ) | 15,752,046 | 11,099,655 | 5,433,745 | |||||||||||||||||||||||||||||||
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Total assets | 26,891,692 | 13,439,438 | 11,923,498 | 1,652,087 | 25,062,750 | 24,505,618 | (40,331,130 | ) | (11,044,495 | ) | 52,099,458 | 27,054,351 | 25,062,750 | |||||||||||||||||||||||||||||||
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| — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Equity attributable to owners of the Company | 12,766,988 | 4,823,816 | 4,946,888 | 712,274 | 1,471,584 | 15,633,760 | (17,590,804 | ) | (16,495,638 | ) | 6,268,868 | 9,364,897 | 1,471,584 | |||||||||||||||||||||||||||||||
Non-controlling interests | (963 | ) | 206,692 | — | — | 3,962,161 | (55,877 | ) | (205,729 | ) | 5,576,894 | 9,483,178 | 1,734,758 | 3,962,161 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||
Total shareholders’ equity | 12,766,025 | 5,030,508 | 4,946,888 | 712,274 | 5,433,745 | 15,577,883 | (17,796,533 | ) | (10,918,744 | ) | 15,752,046 | 11,099,655 | 5,433,745 | |||||||||||||||||||||||||||||||
30
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
| December 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||
| Reported segments | Reconciliation | Additional information | ||||||||||||||||||||||||||||||||||||||||||
| Statement of financial position: | Raízen Energia | Raízen Combustíveis | COMGÁS | Moove | Logistics | Cosan Corporate | Deconsolidated effects IFRS 11 | Segment elimination | Total consolidated | Cosan Energia | Cosan Logística | |||||||||||||||||||||||||||||||||
Cash and cash equivalents | 2,787,588 | 757,140 | 2,108,253 | 203,855 | 260,542 | 1,926,938 | (3,544,728 | ) | — | 4,499,588 | 3,990,930 | 260,542 | ||||||||||||||||||||||||||||||||
Marketable securities | — | — | 202,568 | 10,958 | 920,413 | 157,641 | — | — | 1,291,580 | 371,167 | 920,413 | |||||||||||||||||||||||||||||||||
Trade receivables | 682,813 | 2,518,713 | 513,423 | 240,059 | 431,461 | 487 | (3,201,526 | ) | — | 1,185,430 | 753,969 | 431,461 | ||||||||||||||||||||||||||||||||
Derivative financial instruments | 1,243,260 | 178,060 | 437,137 | — | 3,669 | 310,274 | (1,421,320 | ) | — | 751,080 | 747,411 | 3,669 | ||||||||||||||||||||||||||||||||
Inventories | 2,293,492 | 2,108,825 | 114,745 | 228,941 | 284,579 | 2,487 | (4,402,317 | ) | — | 630,752 | 346,173 | 284,579 | ||||||||||||||||||||||||||||||||
Other financial assets | 711,453 | — | — | — | — | 70,487 | (711,453 | ) | (70,487 | ) | — | 70,487 | — | |||||||||||||||||||||||||||||||
Other current assets | 3,030,674 | 1,456,418 | 80,758 | 141,972 | 382,551 | 658,550 | (4,487,092 | ) | (107,927 | ) | 1,155,904 | 793,861 | 382,551 | |||||||||||||||||||||||||||||||
Othernon-current assets | 2,852,423 | 1,089,809 | 307,306 | 26,036 | 2,549,631 | 1,436,632 | (3,942,232 | ) | (33,225 | ) | 4,286,380 | 1,761,857 | 2,549,631 | |||||||||||||||||||||||||||||||
Investments in associates | 393,159 | — | — | 19,400 | 46,847 | 11,153,390 | (393,159 | ) | (10,932,690 | ) | 286,947 | 240,100 | 46,847 | |||||||||||||||||||||||||||||||
Investments in joint ventures | — | — | — | — | — | 8,506,395 | — | — | 8,506,395 | 8,506,395 | — | |||||||||||||||||||||||||||||||||
Biological assets | 1,119,623 | — | — | — | — | — | (1,119,623 | ) | — | — | — | — | ||||||||||||||||||||||||||||||||
Property, plant and equipment | 10,525,166 | 2,379,438 | — | 238,346 | 10,337,119 | 150,983 | (12,904,604 | ) | — | 10,726,448 | 389,329 | 10,337,119 | ||||||||||||||||||||||||||||||||
Intangible assets and goodwill | 3,224,303 | 4,532,282 | 8,550,984 | 770,118 | 7,781,289 | 7,048 | (7,756,585 | ) | — | 17,109,439 | 9,328,150 | 7,781,289 | ||||||||||||||||||||||||||||||||
Loans, borrowings and debentures | (11,556,950 | ) | (1,043,995 | ) | (4,070,076 | ) | (471,661 | ) | (8,523,175 | ) | (5,273,585 | ) | 12,600,945 | — | (18,338,497 | ) | (9,138,129 | ) | (8,523,175 | ) | ||||||||||||||||||||||||
Derivative financial instruments | (789,193 | ) | (648,070 | ) | — | (35,155 | ) | (12,303 | ) | (248,386 | ) | 1,437,263 | — | (295,844 | ) | (283,541 | ) | (12,303 | ) | |||||||||||||||||||||||||
Trade payables | (1,147,089 | ) | (1,148,013 | ) | (1,226,634 | ) | (232,690 | ) | (565,539 | ) | (8,247 | ) | 2,295,102 | — | (2,033,110 | ) | (1,467,570 | ) | (565,539 | ) | ||||||||||||||||||||||||
Real estate credit certificates | — | — | — | — | (195,745 | ) | — | — | — | (195,745 | ) | — | (195,745 | ) | ||||||||||||||||||||||||||||||
Employee benefits payable | (314,989 | ) | (92,573 | ) | (63,904 | ) | (30,187 | ) | (117,149 | ) | (26,919 | ) | 407,562 | — | (238,159 | ) | (121,009 | ) | (117,149 | ) | ||||||||||||||||||||||||
Preferred shareholders payable in subsidiaries | — | — | — | — | — | (1,769,427 | ) | — | — | (1,769,427 | ) | (1,769,427 | ) | — | ||||||||||||||||||||||||||||||
Lease | — | — | — | — | (1,397,543 | ) | — | — | — | (1,397,543 | ) | — | (1,397,543 | ) | ||||||||||||||||||||||||||||||
Other current liabilities | (1,507,193 | ) | (2,245,227 | ) | (211,900 | ) | (168,995 | ) | (663,083 | ) | (407,835 | ) | 3,752,420 | 116,036 | (1,335,777 | ) | (662,235 | ) | (663,083 | ) | ||||||||||||||||||||||||
Othernon-current liabilities | (1,367,686 | ) | (4,714,035 | ) | (1,549,441 | ) | (132,414 | ) | (5,881,195 | ) | (1,408,841 | ) | 6,081,721 | 115,892 | (8,855,999 | ) | (3,065,579 | ) | (5,881,195 | ) | ||||||||||||||||||||||||
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| |||||||||||||||||||||||
Total assets (net of liabilities) allocated by segment | 12,180,854 | 5,128,772 | 5,193,219 | 808,583 | 5,682,276 | 15,238,072 | (17,309,626 | ) | (10,912,401 | ) | 16,009,749 | 10,792,339 | 5,682,276 | |||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||
Total assets | 28,863,954 | 15,020,685 | 12,315,174 | 1,879,685 | 23,038,008 | 24,381,312 | (43,884,639 | ) | (11,144,329 | ) | 50,469,850 | 27,299,829 | 23,038,008 | |||||||||||||||||||||||||||||||
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Equity attributable to owners of the | 12,181,817 | 4,920,333 | 5,193,219 | 808,583 | 1,540,225 | 15,238,072 | (17,102,150 | ) | (16,507,636 | ) | 6,272,463 | 8,965,606 | 1,540,225 | |||||||||||||||||||||||||||||||
Company | ||||||||||||||||||||||||||||||||||||||||||||
Non-controlling interests | (963 | ) | 208,439 | — | — | 4,142,051 | — | (207,476 | ) | 5,595,235 | 9,737,286 | 1,826,733 | 4,142,051 | |||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||
Total shareholders’ equity | 12,180,854 | 5,128,772 | 5,193,219 | 808,583 | 5,682,276 | 15,238,072 | (17,309,626 | ) | (10,912,401 | ) | 16,009,749 | 10,792,339 | 5,682,276 | |||||||||||||||||||||||||||||||
31
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
Net sales by segment:
| March 31, 2017 | March 31, 2016 (Restated) | |||||||
Reported segment | ||||||||
Raízen Energia | ||||||||
Ethanol | 1,530,562 | 1,936,912 | ||||||
Sugar | 1,291,726 | 1,846,288 | ||||||
Cogeneration | 41,098 | 43,881 | ||||||
Other | 49,851 | 39,198 | ||||||
|
|
|
| |||||
| 2,913,237 | 3,866,279 | |||||||
Raízen Combustíveis | ||||||||
Fuels | 17,698,154 | 16,391,752 | ||||||
|
|
|
| |||||
| 17,698,154 | 16,391,752 | |||||||
COMGÁS | ||||||||
Industrial | 760,263 | 1,006,065 | ||||||
Residential | 151,485 | 155,406 | ||||||
Thermal generation | — | 51,721 | ||||||
Cogeneration | 47,723 | 54,523 | ||||||
Automotive | 51,256 | 47,150 | ||||||
Commercial | 67,679 | 53,327 | ||||||
Construction revenue | 56,327 | 66,192 | ||||||
Other | 11,533 | 25,692 | ||||||
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| |||||
| 1,146,266 | 1,460,076 | |||||||
Lubricants | ||||||||
Finished goods | 381,223 | 425,912 | ||||||
Basic oil | 57,521 | 48,942 | ||||||
Other | 7,953 | 4,270 | ||||||
|
|
|
| |||||
| 446,697 | 479,124 | |||||||
Logistics | ||||||||
North operations | 914,200 | 895,886 | ||||||
South operations | 237,100 | 224,871 | ||||||
Container operations | 47,874 | 65,134 | ||||||
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|
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| |||||
| 1,199,174 | 1,185,891 | |||||||
Reconciliation | ||||||||
Cosan Corporate | ||||||||
Other | 179 | 34 | ||||||
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|
|
| |||||
| 179 | 34 | |||||||
IFRS 11 - Deconsolidated of adjustments/eliminations joint ventures and eliminations | (20,617,975 | ) | (20,264,087 | ) | ||||
|
|
|
| |||||
Total | 2,785,732 | 3,119,069 | ||||||
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| |||||
32
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
7 Cash and cash equivalents
| March 31, 2017 | December 31, 2016 | |||||||
Cash and bank deposits | 2,439,687 | 376,029 | ||||||
Savings account | 541,585 | 409,333 | ||||||
Financial investments | 3,562,818 | 3,714,226 | ||||||
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| |||||
| 6,544,090 | 4,499,588 | |||||||
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| |||||
Financial investments are composed as follows: | ||||||||
| March 31, 2017 | December 31, 2016 | |||||||
Investment fund | ||||||||
Repurchase agreements | 2,667,025 | 2,840,760 | ||||||
Bank certificate of deposits - CDB | 355,707 | 363,147 | ||||||
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| |||||
| 3,022,732 | 3,203,907 | |||||||
Bank investments | ||||||||
Repurchase agreements | 29,832 | 26,719 | ||||||
Bank certificate of deposits - CDB | 505,234 | 468,384 | ||||||
Other | 5,020 | 15,216 | ||||||
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| |||||
| 540,086 | 510,319 | |||||||
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| |||||
| 3,562,818 | 3,714,226 | |||||||
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8 Marketable securities
| March 31, 2017 | December 31, 2016 | |||||||
Government security (i) | 922,843 | 1,004,388 | ||||||
Bank certificate of deposits - CDB (ii) | — | 287,192 | ||||||
|
|
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| |||||
| 922,843 | 1,291,580 | |||||||
|
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| |||||
| (i) | Sovereign debt securities classified asheld-for-trading have stated interest connected to SELIC and mature in two to five years. |
| (ii) | Bank certificate of deposits classified asheld-for-trading have stated interest rates connected to CDI and mature in two to five years. |
33
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
9 Trade receivables
| March 31, 2017 | December 31, 2016 | |||||||
Domestic – Brazilian Reais | 1,102,844 | 1,248,270 | ||||||
Export – Foreign currency | 46,371 | 27,446 | ||||||
Allowance for doubtful accounts | (96,529 | ) | (90,286 | ) | ||||
|
|
|
| |||||
| 1,052,686 | 1,185,430 | |||||||
Current | 999,500 | 1,130,624 | ||||||
|
|
|
| |||||
Non-current | 53,186 | 54,806 | ||||||
|
|
|
| |||||
10 Other current tax receivables
| March 31, 2017 | December 31, 2016 | |||||||
ICMS - State VAT | 611,854 | 608,334 | ||||||
Credit installment | 37,434 | 36,708 | ||||||
PIS/COFINS - Revenue tax | 285,019 | 257,920 | ||||||
Other | 18,351 | 15,743 | ||||||
|
|
|
| |||||
| 952,658 | 918,705 | |||||||
Current | 211,585 | 178,856 | ||||||
|
|
|
| |||||
Non-Current | 741,073 | 739,849 | ||||||
|
|
|
| |||||
11 Related parties
a) Receivables from and payables to related parties:
| March 31, 2017 | December 31, 2016 | |||||||
Current Asset | ||||||||
Commercial operation | ||||||||
Raízen Energia S.A. | 37,986 | 37,249 | ||||||
Aguassanta Participações S.A. | 198 | 6,342 | ||||||
Radar Propriedades Agricolas S.A. | 514 | 517 | ||||||
Raízen Combustíveis S.A. | 16,571 | 4,206 | ||||||
Other | 914 | 531 | ||||||
|
|
|
| |||||
| 56,183 | 48,845 | |||||||
Corporate operation / Agreements | ||||||||
Raízen Energia S.A. | — | 9,672 | ||||||
|
|
|
| |||||
| 56,183 | 58,517 | |||||||
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|
| |||||
Non-current assets | ||||||||
Receivables under the framework agreement | ||||||||
Janus Brasil Participações S.A | 28,705 | 28,705 | ||||||
Raízen Energia S.A. | 85,081 | 114,473 | ||||||
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| |||||
| 113,786 | 143,178 | |||||||
Financial and corporation operations | ||||||||
Rezende Barbosa | 35,944 | 38,944 | ||||||
Other | 1,766 | 1,618 | ||||||
|
|
|
| |||||
| 37,710 | 40,562 | |||||||
|
|
|
| |||||
| 151,496 | 183,740 | |||||||
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| |||||
34
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
| March 31, 2017 | December 31, 2016 | |||||||
Current liabilities | ||||||||
Corporate operations | ||||||||
Raízen Energia S.A. | 141,880 | 160,030 | ||||||
Raízen Combustíveis S.A. | 111,078 | 75,624 | ||||||
Other | 3,050 | 1,427 | ||||||
|
|
|
| |||||
| 256,008 | 237,081 | |||||||
b) Related party transactions:
| March 31, 2017 | March 31, 2016 (Restated) | |||||||
Sales of goods and services | ||||||||
Raízen Combustíveis S.A | 35,817 | 27,898 | ||||||
Raízen Energia S.A. | 77,739 | 115,257 | ||||||
|
|
|
| |||||
| 113,556 | 143,155 | |||||||
Purchase of goods / Inputs | ||||||||
Raízen Energia S.A. | (14 | ) | (19 | ) | ||||
Raízen Combustíveis S.A. | (203,851 | ) | (201,220 | ) | ||||
|
|
|
| |||||
| (203,865 | ) | (201,239 | ) | |||||
Discontinued operation | ||||||||
Raízen Energia S.A. | — | 16,171 | ||||||
|
|
|
| |||||
| — | 16,171 | |||||||
Shared income (expense) | ||||||||
Aguassanta Participações S.A. | 160 | 79 | ||||||
Raízen Energia S.A. | (17,295 | ) | (19,008 | ) | ||||
|
|
|
| |||||
| (17,135 | ) | (18,929 | ) | |||||
Financial result | ||||||||
Raízen Energia S.A. | 284 | 361 | ||||||
Other | (204 | ) | (201 | ) | ||||
|
|
|
| |||||
| 80 | 160 | |||||||
c) Officers’ and directors’ compensation
| March 31, 2017 | March 31, 2016 (Restated) | |||||||
Short-term benefits to employees and managers | 25,558 | 19,138 | ||||||
Post-employment benefits | 265 | 169 | ||||||
Other long-term benefits | 130 | 59 | ||||||
Stock option expense | 2,845 | 2,949 | ||||||
|
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| |||||
| 28,798 | 22,315 | |||||||
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| |||||
35
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
12 Investments in associates
a) Information in associates of the Company and the Company´s ownership:
| Tellus Brasil Participações S.A. | Novvi Limited Liability Company | Janus Brasil Participações S.A. | Radar Propriedades Agricolas S.A | Radar II Propriedades Agricolas S.A | Other investments | Total | ||||||||||||||||||||||
Shares issued by the associate | 65,957,282 | 200,002 | 1,907,000 | 1,735,703 | 81,440,221 | — | ||||||||||||||||||||||
Shares held by Cosan | 33,638,214 | 100,001 | 934,430 | 531,125 | 24,920,708 | — | ||||||||||||||||||||||
Cosan ownership interest | 51 | % | 33.33 | % | 51 | % | 51 | % | 51 | % | — | |||||||||||||||||
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|
|
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| |||||||||||||||||
December 31, 2016 | 97,002 | 18,838 | 33,998 | 55,148 | 30,537 | 51,424 | 286,947 | |||||||||||||||||||||
Equity in earnings (losses) of associates | 961 | (1,579 | ) | 1,006 | 414 | 279 | 1,873 | 2,954 | ||||||||||||||||||||
Other comprehensive income | — | (4,493 | ) | 90 | 33 | 7 | — | (4,363 | ) | |||||||||||||||||||
Dividends | — | — | — | — | — | (4,000 | ) | (4,000 | ) | |||||||||||||||||||
Other | — | — | — | — | (25 | ) | 942 | 917 | ||||||||||||||||||||
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|
| |||||||||||||||
March 31, 2017 | 97,963 | 12,766 | 35,094 | 55,595 | 30,798 | 50,239 | 282,455 | |||||||||||||||||||||
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|
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|
|
|
|
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|
|
| |||||||||||||||
Equity in earnings (losses) of associates March 31, 2016 | (1,989 | ) | (866 | ) | 867 | — | — | 430 | (1,558 | ) | ||||||||||||||||||
36
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
b) Information in thenon-controlling interests in subsidiaries of the Company:
| Cosan S.A. Indústria e Comércio | Cosan Logística S.A. | Companhia de Gás de São Paulo - COMGÁS | Rumo S.A. | Logispot Armazéns Agrícolas S.A. | Other | Radar - Discontinued operation | Total | |||||||||||||||||||||||||
Shares issued by the associate | 407,214,353 | 366,490,593 | 127,313,301 | 1,339,015,898 | 2,040,816 | — | — | |||||||||||||||||||||||||
Shares held bynon-controlling shareholders | 153,561,491 | 100,830,418 | 47,535,592 | 959,137,088 | 1,000,000 | — | — | |||||||||||||||||||||||||
Non-controlling interest | 37.71 | % | 27.51 | % | 37.34 | % | 71.63 | % | 49.00 | % | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
| |||||||||||||||||
December 31, 2016 | 3,706,727 | 61,776 | 1,826,733 | 4,105,962 | 36,088 | — | — | 9,737,286 | ||||||||||||||||||||||||
Equity in earnings (losses) of associates | 80,601 | (19,584 | ) | 31,185 | (177,688 | ) | (216 | ) | 6,312 | — | (79,390 | ) | ||||||||||||||||||||
Other comprehensive income (losses) | 68,820 | 39 | — | 417 | — | — | — | 69,276 | ||||||||||||||||||||||||
Dividends | (1,487 | ) | — | (127,094 | ) | (3,247 | ) | — | (3,330 | ) | — | (135,158 | ) | |||||||||||||||||||
Other | (115,996 | ) | 903 | 3,934 | 908 | — | 1,415 | — | (108,836 | ) | ||||||||||||||||||||||
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|
| |||||||||||||||||
March 31, 2017 | 3,738,665 | 43,134 | 1,734,758 | 3,926,352 | 35,872 | 4,397 | — | 9,483,178 | ||||||||||||||||||||||||
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|
| |||||||||||||||||
Equity in (losses) earnings of associates March 31, 2016 (Restated) | 118,536 | (17,645 | ) | 77,665 | (135,649 | ) | (690 | ) | — | 6,602 | 48,819 | |||||||||||||||||||||
37
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
13 Investments in joint ventures
Changes to investments in joint ventures were as follows:
| Raízen Combustíveis S.A. | Raízen Energia S.A. | Total | ||||||||||
Shares issued by the associate | 3,303,168,484 | 5,902,595,634 | ||||||||||
Shares held by Cosan | 1,651,584,242 | 2,951,297,817 | ||||||||||
Cosan ownership interest | 50.00 | % | 50.00 | % | ||||||||
|
|
|
| |||||||||
Equity in earnings of joint ventures March 31, 2016 | 81,185 | 360,159 | 441,344 | |||||||||
December 31, 2016 | 3,190,822 | 5,315,573 | 8,506,395 | |||||||||
Equity in earnings of joint ventures | 99,589 | 156,108 | 255,697 | |||||||||
Other comprehensive losses | (4,002 | ) | 175,220 | 171,218 | ||||||||
Interest on capital | (17,000 | ) | — | (17,000 | ) | |||||||
Dividends | (139,000 | ) | (38,742 | ) | (177,742 | ) | ||||||
|
|
|
|
|
| |||||||
March 31, 2017 | 3,130,409 | 5,608,159 | 8,738,568 | |||||||||
|
|
|
|
|
| |||||||
The statement of financial position and statement of profit or loss of the joint ventures are disclosed in Note 6, Segments.
Pursuant to the terms of the Raízen Joint Venture - Framework Agreement, Cosan is responsible for certain legal proceedings that existed prior to the formation of Raízen, net of judicial deposits as of April 1, 2011, as well as tax installments under the REFIS (tax amnesty and refinancing program), recorded in “Other taxes payable”. Additionally, Cosan granted access to Raízen a credit line(stand-by facility) in the amount of US$500.000, which was unused at March 31, 2017.
38
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
14 Property, plant and equipment
| Land, buildings and improvements | Machinery, equipment and facilities | Railcars and locomotives | Permanent railways | Construction in progress | Other | Total | ||||||||||||||||||||||
Cost | ||||||||||||||||||||||||||||
At December 31, 2016 | 1,043,437 | 716,310 | 5,270,469 | 4,474,856 | 708,580 | 326,361 | 12,540,013 | |||||||||||||||||||||
Additions | — | — | 6,455 | 3,729 | 463,925 | 330 | 474,439 | |||||||||||||||||||||
Disposals | (1,709 | ) | (1,926 | ) | — | — | — | (7,752 | ) | (11,387 | ) | |||||||||||||||||
Transfers | 1,185 | 4,429 | 269,162 | 44,036 | (341,960 | ) | 6,392 | (16,756 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
At March 31, 2017 | 1,042,913 | 718,813 | 5,546,086 | 4,522,621 | 830,545 | 325,331 | 12,986,309 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Depreciation | ||||||||||||||||||||||||||||
At December 31, 2016 | (255,893 | ) | (287,745 | ) | (742,297 | ) | (542,228 | ) | — | 14,598 | (1,813,565 | ) | ||||||||||||||||
Additions | (9,582 | ) | (18,131 | ) | (118,504 | ) | (95,799 | ) | — | (17,413 | ) | (259,429 | ) | |||||||||||||||
Disposals | 166 | 471 | — | — | — | 3,355 | 3,992 | |||||||||||||||||||||
Transfers | (894 | ) | (880 | ) | 9,057 | (12,612 | ) | — | 14,667 | 9,338 | ||||||||||||||||||
|
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|
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|
|
|
|
|
|
|
|
|
| |||||||||||||||
At March 31, 2017 | (266,203 | ) | (306,285 | ) | (851,744 | ) | (650,639 | ) | — | 15,207 | (2,059,664 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
At December 31, 2016 | 787,544 | 428,565 | 4,528,172 | 3,932,628 | 708,580 | 340,959 | 10,726,448 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
At March 31, 2017 | 776,710 | 412,528 | 4,694,342 | 3,871,982 | 830,545 | 340,538 | 10,926,645 | |||||||||||||||||||||
|
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| |||||||||||||||
39
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
15 Intangible assets and goodwill
| Goodwill | Concession rights | Improvements to public concessions and operating licenses | Trademarks | Customer relationships | Other | Total | ||||||||||||||||||||||
Cost: | ||||||||||||||||||||||||||||
At December 31, 2016 | 715,259 | 16,912,506 | 435,624 | 252,474 | 946,824 | 376,669 | 19,639,356 | |||||||||||||||||||||
Additions | — | 58,368 | — | — | 10,862 | 6,809 | 76,039 | |||||||||||||||||||||
Disposals | — | (11,313 | ) | — | — | (2,218 | ) | — | (13,531 | ) | ||||||||||||||||||
Transfers | — | 95 | — | — | (8,008 | ) | 12,234 | 4,321 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
At March 31, 2017 | 715,259 | 16,959,656 | 435,624 | 252,474 | 947,460 | 395,712 | 19,706,185 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Amortization | ||||||||||||||||||||||||||||
At December 31, 2016 | — | (1,319,980 | ) | (200,876 | ) | (182,616 | ) | (668,695 | ) | (157,750 | ) | (2,529,917 | ) | |||||||||||||||
Additions | — | (110,143 | ) | (20,816 | ) | (5,707 | ) | (33,784 | ) | (16,752 | ) | (187,202 | ) | |||||||||||||||
Disposals | — | 6,292 | — | — | 1,936 | — | 8,228 | |||||||||||||||||||||
Transfers | — | — | — | — | 464 | (1,058 | ) | (594 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
At March 31, 2017 | — | (1,423,831 | ) | (221,692 | ) | (188,323 | ) | (700,079 | ) | (175,560 | ) | (2,709,485 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
At December 31, 2016 | 715,259 | 15,592,526 | 234,748 | 69,858 | 278,129 | 218,919 | 17,109,439 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
At March 31, 2017 | 715,259 | 15,535,825 | 213,932 | 64,151 | 247,381 | 220,152 | 16,996,700 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Capitalization of borrowing costs
Capitalized borrowing costs for the period ended March 31, 2017, amounted to R$ 2,136 (R$ 5,182 for the period ended March 31, 2016). The weighted average interest rate used to capitalize borrowing costs on the balance of construction in progress, was 10.41% p.a. for the period ended March 31, 2017 (13.94% p.a. for the period ended March 31, 2016).
40
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
Intangible assets (excluding goodwill) | Annual rate of amortization - % | March 31, 2017 | December 31, 2016 | |||||||||
Gas distribution concession - COMGÁS(i) | Concession term | 8,196,165 | 8,240,521 | |||||||||
Concession rights - Rumo(ii) | Concession term | 7,339,660 | 7,352,005 | |||||||||
|
|
|
| |||||||||
| 15,535,825 | 15,592,526 | |||||||||||
Operating license for port terminal(iii) | 4.00 | 213,931 | 234,748 | |||||||||
Trademarks | ||||||||||||
Mobil | 10.00 | 39,947 | 45,654 | |||||||||
Comma | — | 24,204 | 24,204 | |||||||||
|
|
|
| |||||||||
| 64,151 | 69,858 | |||||||||||
Relationship with customers: | ||||||||||||
Comgás | 3.00 | 213,963 | 233,971 | |||||||||
Lubricants | 6.00 | 33,418 | 44,158 | |||||||||
|
|
|
| |||||||||
| 247,381 | 278,129 | |||||||||||
Other | ||||||||||||
Software license | 20.00 | 140,610 | 146,210 | |||||||||
Other | 79,542 | 72,709 | ||||||||||
| 220,152 | 218,919 | |||||||||||
|
|
|
| |||||||||
Total | 16,281,440 | 16,394,180 | ||||||||||
|
|
|
| |||||||||
| (i) | Refers to the intangible asset for the public gas distribution service concession, which represents the right to charge users for the supply of gas, comprised of: (i) the concession rights recognized in the business combination and (ii) concession assets; |
| (ii) | Refers to the concession right agreement of Rumo Malha Norte, which will be amortized until the end of the concession in 2079; |
| (iii) | Port operating license and customer relationships of Rumo, from the business combinations. |
Impairment testing of cash-generating units (“CGU”) goodwill
The Company tests the recoverable amounts of goodwill arising from business combination transactions annually. Property, plant and equipment and definite life intangible assets that are subject to depreciation and amortization are tested for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.
During the period ended March 31, 2017, no impairment indicators were identified that would trigger the need for an impairment test.
41
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
16 Loans, borrowings and debentures
Interest | ||||||||||||||||||
Description | Index | Annual interest(i) | March 31, 2017 | December 31, 2016 | Maturity | |||||||||||||
Loan and borrowings | ||||||||||||||||||
BNDES | URTJLP | 9.32 | % | 2,522,483 | 2,663,073 | Jun-29 | ||||||||||||
| Fixed | 5.11 | % | 1,257,582 | 1,233,476 | Feb-25 | |||||||||||||
| TJ462 | 10.43 | % | 608,255 | 651,371 | Oct-20 | |||||||||||||
| Selic | 14.20 | % | 308,393 | 313,395 | Jun-23 | |||||||||||||
| TJLP | 9.78 | % | 115,427 | 137,130 | Jun-23 | |||||||||||||
| Selic | 13.65 | % | 4,985 | 5,277 | Sep-20 | |||||||||||||
| Fixed | 3.91 | % | 3,748 | 3,930 | Jan-24 | |||||||||||||
| IPCA | 12.13 | % | 3,557 | 3,453 | Nov-21 | |||||||||||||
| URTJLP | 11.40 | % | — | 17 | Jan-17 | |||||||||||||
EIB | US$ + Libor | 2.51 | % | 568,816 | 612,961 | Sep-21 | ||||||||||||
Foreign loans | GBP + Libor | 3.74 | % | 217,151 | 218,232 | Dec-19 | ||||||||||||
NCE | 112% of CDI | 13.68 | % | 124,230 | 120,069 | Dec-18 | ||||||||||||
| 129.62% CDI | 16.00 | % | 574,571 | 552,576 | Jun-23 | |||||||||||||
| 129.62% CDI | 16.05 | % | 295,102 | 294,516 | Dec-18 | |||||||||||||
| 129.62% CDI | 16.02 | % | 81,453 | 80,486 | Nov-17 | |||||||||||||
Perpetual Notes | US$ | 8.25 | % | 1,604,168 | 1,650,089 | — | ||||||||||||
Resolution 4131 | US$ | 3.80 | % | 129,585 | 133,957 | Oct-20 | ||||||||||||
| US$ + Libor | 2.40 | % | 395,034 | 407,306 | Mar-18 | |||||||||||||
| US$ + Libor | 3.27 | % | 31,889 | 32,798 | Apr-17 | |||||||||||||
Senior Notes Due 2018 | Fixed | 9.50 | % | 164,215 | 168,163 | Mar-18 | ||||||||||||
Senior Notes Due 2023 | US$ | 5.00 | % | 308,964 | 322,062 | Mar-23 | ||||||||||||
Senior Notes Due 2027 | US$ | 7.00 | % | 2,213,084 | 2,304,384 | Jan-27 | ||||||||||||
Senior Notes Due 2024 | US$ | 7.38 | % | 2,375,478 | — | Feb-24 | ||||||||||||
FINEP | Fixed | 5.00 | % | 102,259 | 109,233 | Nov-20 | ||||||||||||
Trade banks | CDI + 4.91% p.a. | 17.64 | % | 147,521 | 163,815 | Jun-19 | ||||||||||||
| Fixed US$ | 6.33 | % | 91,079 | 86,140 | Dec-21 | |||||||||||||
Working capital | CDI + 2.80% p.a. | 15.27 | % | 405,619 | 390,024 | Dec-18 | ||||||||||||
| CDI + 2.95% p.a. | 15.44 | % | 298,040 | 287,168 | Dec-18 | |||||||||||||
| CDI + 0.28% p.m. | 16.37 | % | 18,936 | 9,988 | Jan-18 | |||||||||||||
| CDI + 0.33% p.m. | 16.65 | % | 10,061 | — | Mar-18 | |||||||||||||
| 118% do CDI | — | 22,920 | 22,605 | Sep-17 | ||||||||||||||
Prepayment | US$+Libor Tri | 4.03 | % | 10,334 | 55,641 | Apr-17 | ||||||||||||
FINIMP | US$+Libor Tri | 3.52 | % | 39,139 | 40,798 | Jun-17 | ||||||||||||
|
|
|
| |||||||||||||||
| 15,054,078 | 13,074,133 | |||||||||||||||||
42
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
Interest | ||||||||||||||||||
Description | Index(i) | Annual interest(ii) | March 31, 2017 | December 31, 2016 | Maturity | |||||||||||||
Debentures | ||||||||||||||||||
Non-convertible debentures | CDI + 2,05% p.a. | 14.43 | % | 153,669 | 154,235 | Mar-18 | ||||||||||||
| CDI + 1,30% p.a. | 13.59 | % | 290,000 | 300,183 | Oct-17 | |||||||||||||
| CDI + 3,50% p.a. | 16.05 | % | 2,443,137 | 2,347,271 | Jun-23 | |||||||||||||
| IPCA | 5.26 | % | 538,157 | 528,340 | Dec-25 | |||||||||||||
| 108 % of CDI | 13.16 | % | 338,020 | 350,852 | Jul-18 | |||||||||||||
| IPCA | 6.57 | % | 1,325,765 | 1,291,413 | Sep-20 | |||||||||||||
| Fixed | 13.13 | % | 169,012 | 163,862 | Oct-20 | |||||||||||||
| CDI | 13.14 | % | 128,952 | 128,208 | Jun-23 | |||||||||||||
|
|
|
| |||||||||||||||
| 5,386,712 | 5,264,364 | |||||||||||||||||
Total | 20,440,790 | 18,338,497 | ||||||||||||||||
|
|
|
| |||||||||||||||
Current | 3,049,146 | 2,404,009 | ||||||||||||||||
|
|
|
| |||||||||||||||
Non-current | 17,391,644 | 15,934,488 | ||||||||||||||||
|
|
|
| |||||||||||||||
| (i) | As at March 31, 2017. |
The Company used for calculating the average rates, on an annual basis, the annual average CDI of 9.15% and TJLP of 5%.
Senior Notes 2024
On February 9, 2017, the indirect subsidiary, “Rumo S.A”, issued a foreign debt, Senior Notes Due 2024 (“2024 Notes”) in the total amount of US $ 750,000 maturing on February 2024 with coupon of 7.375% p.a, paid semiannually.
The 2024 Notes were rated,BB- by Standard & Poor’s and Fitch Ratings. Rumo will use the net proceeds of this transaction to prepay certain debt.
The carrying amounts of loans, borrowings and debentures are denominated in the following currencies:
| March 31, 2017 | December 31, 2016 | |||||||
Reais (R$) | 12,456,070 | 12,474,129 | ||||||
Dollar (USD) (i) | 7,767,569 | 5,646,136 | ||||||
Pound (GBP) | 217,151 | 218,232 | ||||||
|
|
|
| |||||
| 20,440,790 | 18,338,497 | |||||||
|
|
|
| |||||
| (i) | On March 31, 2017, all dated debts denominated in US Dollars have currency risk protection through derivatives (Note 27). |
Financial Covenants
The Company and its subsidiaries are subject to certain restrictive clauses in most of the loan and financing agreements, based on certain financial andnon-financial indicators.
As at March 31, 2017, the Company and its subsidiaries were in compliance with all debt financial covenants.
43
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
17 Leases
Finance lease liabilities
Finance lease liabilities are payable as follows:
| �� | March 31, 2017 | December 31, 2016 | ||||||||||||||||||
| Less than one year | Between one and five years | More than five years | Total | Total | ||||||||||||||||
Future minimum lease payments | 531,860 | 803,863 | 318,029 | 1,653,752 | 1,837,441 | |||||||||||||||
Rolling stock | 502,321 | 716,449 | 221,957 | 1,440,727 | 1,616,719 | |||||||||||||||
Terminal | 23,400 | 82,580 | 96,072 | 202,052 | 207,950 | |||||||||||||||
Other | 6,139 | 4,834 | — | 10,973 | 12,772 | |||||||||||||||
Interests | (116,384 | ) | (214,484 | ) | (67,610 | ) | (398,478 | ) | (439,898 | ) | ||||||||||
Rolling stock | (100,748 | ) | (173,688 | ) | (46,586 | ) | (321,022 | ) | (358,158 | ) | ||||||||||
Terminal | (14,702 | ) | (40,087 | ) | (21,024 | ) | (75,813 | ) | (79,611 | ) | ||||||||||
Other | (934 | ) | (709 | ) | — | (1,643 | ) | (2,129 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Present value of minimum lease payments | 415,476 | 589,379 | 250,419 | 1,255,274 | 1,397,543 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Current | 415,476 | 472,632 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
Non-current | 839,798 | 924,911 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
Leases have various expiration dates, the last maturing in June 2043. The amounts are updated annually by Brazilian market price index (Índice Geral de Preços do Mercado-IGPM) plus TJLP (Long-Term Interest Rate) or CDI.
Operating leases
As of March 31, 2017, the future minimum lease payments undernon-cancellable leases are as follows:
| March 31, 2017 | December 31, | |||||||||||||||||||
| Total future minimum payments | 2016 | |||||||||||||||||||
| Less than one year | Between one and five years | More than five years | Total | Total | ||||||||||||||||
Assets | 12,011 | 30,862 | 9,356 | 52,229 | 53,171 | |||||||||||||||
The rentals are recognized as expenses (Note 25) on a straight-line basis over the life of the respective agreement.
44
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
18 Concessions payable
| Concessions payable | Judicial deposits | |||||||||||||||
| March 31, 2017 | December 31, 2016 | March 31, 2017 | December 31, 2016 | |||||||||||||
Payables | ||||||||||||||||
Rumo Malha Sul | 72,250 | 73,707 | — | — | ||||||||||||
Rumo Malha Paulista | 52,186 | 52,979 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 124,436 | 126,686 | — | — �� | |||||||||||||
Court Discussion | ||||||||||||||||
Rumo Malha Paulista | 1,399,318 | 1,345,722 | 118,820 | 118,820 | ||||||||||||
Rumo Malha Oeste | 1,178,558 | 1,135,398 | 19,940 | 19,464 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 2,577,876 | 2,481,120 | 138,760 | 138,284 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 2,702,312 | 2,607,806 | 138,760 | 138,284 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Current | 27,822 | 27,662 | ||||||||||||||
|
|
|
| |||||||||||||
Non-current | 2,674,490 | 2,580,144 | ||||||||||||||
|
|
|
| |||||||||||||
19 Trade payables
| March 31, 2017 | December 31, 2016 | |||||||
Natural gas suppliers | 1,410,272 | 1,377,528 | ||||||
Materials and service suppliers | 685,402 | 789,675 | ||||||
Fuels suppliers | 3,421 | 706 | ||||||
Judicial deposits(i) | (294,976 | ) | (294,976 | ) | ||||
Other | 123,373 | 160,177 | ||||||
|
|
|
| |||||
| 1,927,492 | 2,033,110 | |||||||
|
|
|
| |||||
Current | 1,926,919 | 2,032,542 | ||||||
|
|
|
| |||||
Non-current | 573 | 568 | ||||||
|
|
|
| |||||
| (i) | There is a judicial discussion between the subsidiary COMGÁS and its gas supplier. The gas supplier is charging different prices comparing to the gas supply market. On March 31, 2017, the balance of judicial discussion is R$ 1,056,655 (R$ 1,045,311 on December 31, 2016). The amount is secured by judicial deposit R$ 294,976 (R$ 294,976 on December 31, 2016) and the guaranteed value through surety is of R$ 761,679 (R$ 750,335 on December 31, 2016). |
45
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
20 Other taxes payable
| March 31, 2017 | December 31, 2016 | |||||||
Tax amnesty and refinancing program - Refis | 216,293 | 215,565 | ||||||
ICMS - State VAT | 85,562 | 84,700 | ||||||
COFINS - Revenue tax | 39,222 | 54,208 | ||||||
PIS - Revenue tax | 8,225 | 11,337 | ||||||
INSS - Social security | 5,538 | 7,033 | ||||||
Other | 24,801 | 42,102 | ||||||
|
|
|
| |||||
| 379,641 | 414,945 | |||||||
|
|
|
| |||||
Current | 223,348 | 261,169 | ||||||
|
|
|
| |||||
Non-Current | 156,293 | 153,776 | ||||||
|
|
|
| |||||
21 Income tax and social contribution
a) Reconciliation of income and social contribution tax expenses:
| March 31, 2017 | March 31, 2016 (Restated) | |||||||
(Loss) profit before taxes | (14,446 | ) | 179,549 | |||||
Income tax and social contribution at nominal rate (34%) | 4,912 | (61,047 | ) | |||||
Adjustments to reconcile nominal to effective tax rate | ||||||||
Equity in earnings of investees(non-taxable income) | 87,941 | 149,527 | ||||||
Credit claims for damages | — | 1,398 | ||||||
Differences in tax rates on earnings / losses of overseas companies | (37,169 | ) | (43,108 | ) | ||||
Differences in tax rates on entities under Brazilian presumed profits tax regime | (97 | ) | (88 | ) | ||||
Stock options expenses | (966 | ) | (1,002 | ) | ||||
Interest on capital (net received) | (5,780 | ) | (5,610 | ) | ||||
Non-deductible expenses (donations, gifts, etc.) | (6,092 | ) | (2,037 | ) | ||||
Tax losses not recorded (i) | (88,682 | ) | (69,917 | ) | ||||
Other | 2,104 | 16,463 | ||||||
|
|
|
| |||||
Income tax and social contribution benefit (expense) - current and deferred | (43,829 | ) | (15,421 | ) | ||||
|
|
|
| |||||
Effective rate - % | (303.40 | ) | 8.59 | |||||
|
|
|
| |||||
| (i) | Refers mainly to tax losses not recorded in subsidiaries of Rumo which under current conditions do not attend the requirements of future taxable profits that justify the recognition of the deferred tax assets. In accordance with Brazilian Federal Taxes rules those losses do not expire. |
46
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
b) Deferred income tax assets and liabilities:
| March 31, 2017 | December 31, 2016 | |||||||||||||||||||
| Basis | Income taxes (25%) | Social contribution (9%) | Total income taxes (34%) | Total income taxes (34%) | ||||||||||||||||
Tax loss carry forwards | ||||||||||||||||||||
Income tax loss carry forwards | 7,271,369 | 1,817,842 | — | 1,817,842 | 1,900,366 | |||||||||||||||
Social contribution tax loss carry forwards | 7,284,876 | — | 655,639 | 655,639 | 704,480 | |||||||||||||||
Temporary differences | ||||||||||||||||||||
Foreign currency losses | 1,622,758 | 405,690 | 146,048 | 551,738 | 590,582 | |||||||||||||||
Provision for judicial demands | 1,153,251 | 288,313 | 103,792 | 392,105 | 401,413 | |||||||||||||||
Impairment | 815,190 | 203,798 | 73,367 | 277,165 | 290,470 | |||||||||||||||
Business combination - Property, plant and equipment | (48,998 | ) | (12,249 | ) | (4,410 | ) | (16,659 | ) | 151,060 | |||||||||||
Tax deductible goodwill | (481,504 | ) | (120,376 | ) | (43,335 | ) | (163,711 | ) | (107,520 | ) | ||||||||||
Gains or losses on actuarial liabilities | 412,687 | 103,171 | 37,141 | 140,312 | 138,655 | |||||||||||||||
Allowance for doubtful accounts | 476,170 | 119,043 | 42,855 | 161,898 | 156,717 | |||||||||||||||
Regulatory asset | 204,732 | 51,183 | 18,426 | 69,609 | 71,039 | |||||||||||||||
Profit sharing | 43,770 | 10,942 | 3,940 | 14,882 | 28,923 | |||||||||||||||
Concession contract | (29,802 | ) | (7,450 | ) | (2,683 | ) | (10,133 | ) | (10,616 | ) | ||||||||||
Business combination - Other fair value adjustments | (122,735 | ) | (30,684 | ) | (11,046 | ) | (41,730 | ) | (42,360 | ) | ||||||||||
Property, plant and equipment | (279,790 | ) | (69,947 | ) | (25,182 | ) | (95,129 | ) | (55,861 | ) | ||||||||||
Unrealized gains on derivatives instruments | (103,069 | ) | (25,767 | ) | (9,275 | ) | (35,042 | ) | (992 | ) | ||||||||||
Gain on formation of joint ventures | (3,338,342 | ) | (834,586 | ) | (300,450 | ) | (1,135,036 | ) | (1,135,037 | ) | ||||||||||
(-) Valuation allowance | (4,383,705 | ) | (1,095,926 | ) | (394,534 | ) | (1,490,460 | ) | (1,753,070 | ) | ||||||||||
Business combination - Intangible assets | (10,406,892 | ) | (2,601,723 | ) | (936,620 | ) | (3,538,343 | ) | (3,743,218 | ) | ||||||||||
Other | 936,879 | 234,219 | 84,318 | 318,537 | 354,406 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total net liability | (1,564,507 | ) | (562,009 | ) | (2,126,516 | ) | (2,060,563 | ) | ||||||||||||
Deferred income tax - Assets | 1,512,568 | 1,490,002 | ||||||||||||||||||
Deferred income tax - Liabilities | (3,639,084 | ) | (3,550,565 | ) | ||||||||||||||||
|
|
|
| |||||||||||||||||
Total net deferred taxes | (2,126,516 | ) | (2,060,563 | ) | ||||||||||||||||
|
|
|
| |||||||||||||||||
c) Changes in deferred income taxes, net: | ||||||||||||||||||||
At December 31, 2016 | (2,060,563 | ) | ||||||||||||||||||
|
| |||||||||||||||||||
Recorded through income | (67,396 | ) | ||||||||||||||||||
Other(i) | 1,443 | |||||||||||||||||||
|
| |||||||||||||||||||
At March 31, 2017 | (2,126,516 | ) | ||||||||||||||||||
|
| |||||||||||||||||||
| (i) | Exchange variation effect due to conversion of invested balance abroad. |
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Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
22 Provision for legal proceedings
| Provision for legal proceedings | Judicial deposits | |||||||||||||||
| March 31, 2017 | December 31, 2016 | March 31, 2017 | December 31, 2016 | |||||||||||||
Tax | 486,967 | 479,532 | 382,423 | 376,454 | ||||||||||||
Civil, regulatory and environmental | 344,840 | 344,048 | 175,364 | 173,884 | ||||||||||||
Labor | 448,975 | 444,984 | 175,475 | 164,346 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1,280,782 | 1,268,564 | 733,262 | 714,684 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Changes in provision for legal proceedings:
| Tax | Civil, regulatory and environmental | Labor | Total | |||||||||||||
December 31, 2016 | 479,532 | 344,048 | 444,984 | 1,268,564 | ||||||||||||
Accruals | 772 | 3,484 | 25,556 | 29,812 | ||||||||||||
Disposal / Reversals | (363 | ) | (11,141 | ) | (35,415 | ) | (46,919 | ) | ||||||||
Indexation and interest charges | 7,026 | 8,449 | 13,850 | 29,325 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
March 31, 2017 | 486,967 | 344,840 | 448,975 | 1,280,782 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Tax claims
a) Judicial claims deemed to be probable losses, fully accrued
| March 31, 2017 | December 31, 2016 | |||||||
Compensation with FINSOCIAL | 272,591 | 269,275 | ||||||
State VAT - ICMS credits | 86,729 | 84,778 | ||||||
INSS - Social security | 64,388 | 63,103 | ||||||
PIS and COFINS | 2,185 | 2,449 | ||||||
IPI - Excise tax credit - NT | 1,173 | 1,155 | ||||||
Federal income taxes | 329 | 329 | ||||||
Other | 59,572 | 58,443 | ||||||
|
|
|
| |||||
| 486,967 | 479,532 | |||||||
|
|
|
| |||||
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Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
b) Judicial claims deemed as possible losses, and therefore not accrued
| March 31, 2017 | December 31, 2016 | |||||||
ICMS - State VAT (ii) | 2,340,575 | 2,136,241 | ||||||
Federal income taxes | 2,237,536 | 2,188,011 | ||||||
Foreign financial operation | 1,003,449 | 986,179 | ||||||
PIS and COFINS - Revenue taxes | 866,216 | 850,063 | ||||||
IRRF - Withholding tax | 877,681 | 861,531 | ||||||
INSS - Social security and other | 623,837 | 615,403 | ||||||
IPI - Excise tax credit - NT | 517,684 | 512,209 | ||||||
Goodwill Rumo | 492,374 | 483,723 | ||||||
Penalties related to tax positions | 407,131 | 397,441 | ||||||
Compensation with IPI - IN 67/98 | 129,618 | 128,456 | ||||||
MP 470 - Tax installments (i) | 296,366 | 120,132 | ||||||
Intermodal | 82,604 | 81,247 | ||||||
Stock option | 63,300 | 62,216 | ||||||
Financial transactions tax on loan | 49,927 | 54,896 | ||||||
Social security contributions | 44,440 | 43,764 | ||||||
Compensation credit award | 39,372 | 38,505 | ||||||
Other | 1,012,433 | 992,682 | ||||||
|
|
|
| |||||
| 11,084,543 | 10,552,699 | |||||||
|
|
|
| |||||
| (i) | The Tax Authority partially rejected the Company requests for payment of its federal tax debts, on the grounds that the tax loss offered is not sufficient to settle the respective debts. The likelihood of loss is considered as possible since the results are indicated existed and are available for such use. |
| (ii) | ICMS Rumo Malha Paulista: Tax assessment notice issued by the São Paulo State Treasury Department, in the amount of R$ 155,860, against Rumo Malha Paulista S.A, covering the period from February 2011 to July 2015, with the indication of the follow infractions: |
| a. | Alleged lack of payment of ICMS on railroad services for export; |
| b. | Improper ICMS credit due to error in the book entry of values higher than those found in the Fiscal Books; |
| c. | Undue crediting of ICMS for acquisitions supposedly considered as “use and consumption”. |
The Tax authorities also included fines of 50% of the value of the tax and 100% of the amount of the credit considered undue.
Civil, labor, regulatory and environmental
a) Judicial claims deemed to be probable losses, fully accrued
| • | Civil – refers mainly to compensation for material and moral damages, class actions for abstaining from straw burning sugarcane and execution of environmental nature. |
| • | Labor – represent labor claims filed by former employees and employees of service providers who question, among others, payment of overtime, night and dangerous, job reinstatement, compensation for accidents at work and reimbursement of discounts from payroll, such as confederative and assistance contributions, union dues and other. |
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Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
| • | Regulatory – mainly refers to fines and discussions with National Authority for Terrestrial Transport (ANTT). |
| • | Environmental – these amounts derive from assessments made by the Environmental Sanitation Technology Company(CETESB-SP), Brazilian Institute of Environment and Natural Resources (IBAMA) and Environment Municipal Departments related to soil contamination and water by the overflow of products andnon-compliance with conditions imposed by such operating license. In all cases, measures are being taken to reduce the existing liabilities, as well as repair and prevention measures. |
b) Judicial claims deemed as possible losses, and therefore not accrued
The main civil and labor lawsuits, for which the unfavorable outcome is considered possible, are as follows:
| March 31, 2017 | December 31, 2016 | |||||||
Civil | 2,935,169 | 2,831,407 | ||||||
Labor | 1,077,691 | 1,089,119 | ||||||
Regulatory | 472,559 | 397,414 | ||||||
Environmental | 367,394 | 351,915 | ||||||
|
|
|
| |||||
| 4,852,813 | 4,669,855 | |||||||
|
|
|
| |||||
23 Shareholders’ equity
a) Share capital
As of March 31, 2017, Cosan Limited’s share capital is composed of the following:
Shareholders - Common shares | Class A and / or BDRs | % | Class B1 shares | % | ||||||||||||
Controlling group | 14,514,418 | 8.32 | 96,332,044 | 100.00 | ||||||||||||
Skagen AS | 16,220,419 | 9.30 | — | — | ||||||||||||
M&G Investment Management Limited* | 6,056,705 | 3.47 | — | — | ||||||||||||
Eastspring Investments (Singapore) Limited* | 2,715,398 | 1.56 | — | — | ||||||||||||
Free Float | 128,851,899 | 73.90 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total shares outstanding | 168,358,839 | 96.56 | 96,332,044 | 100.00 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Treasury shares | 5,996,502 | 3.44 | — | — | ||||||||||||
Total | 174,355,341 | 100.00 | 96,332,044 | 100.00 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
b) Treasury shares
The Company holds 5,996,502 Class A treasury shares as of March 31, 2017 and December 31, 2016 with a market value of U.S$ 8.54 per share at March 31, 2017 (U.S. $7.51 per share at December 31, 2016).
50
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Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
c) Other comprehensive (loss) income
| December 31, 2016 | Comprehensive (loss) income | March 31, 2017 | ||||||||||
Foreign currency translation effects | (322,258 | ) | 14,437 | (307,821 | ) | |||||||
Gain on cash flow hedge in joint ventures and subsidiaries | (190,001 | ) | 171,295 | (18,706 | ) | |||||||
Actuarial loss on defined benefit plan | (29,017 | ) | — | (29,017 | ) | |||||||
Financial instrument with subsidiary | 6,000 | 9,000 | 15,000 | |||||||||
Changes in fair value of available for sale securities | (2,618 | ) | 129 | (2,489 | ) | |||||||
|
|
|
|
|
| |||||||
Total | (537,894 | ) | 194,861 | (343,033 | ) | |||||||
|
|
|
|
|
| |||||||
Attributable to: | ||||||||||||
Owners of the Company | (480,454 | ) | 125,649 | (354,805 | ) | |||||||
Non-controlling interests | (57,440 | ) | 69,212 | 11,772 | ||||||||
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Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
24 Earnings per share
The following table sets forth the calculation of earnings per share (in thousands of Brazilian Reais, except per share amounts):
| March 31, 2017 | March 31, 2016 (Restated) | |||||||
Profit attributable from continued operation to ordinary equity holders for basic earnings | 21,115 | 125,042 | ||||||
Profit attributable from discontinued operation to ordinary equity holders for basic earnings | — | 5,219 | ||||||
Effect of dilution: | ||||||||
Dilutive effect of subsidiary’s stock option plan | (665 | ) | (311 | ) | ||||
Dilutive effect of subsidiary’s stock option plan - Discontinued operation | — | (15 | ) | |||||
Dilutive effect of put option | (15,601 | ) | (15,601 | ) | ||||
|
|
|
| |||||
Profit from continued operation attributable to ordinary equity holders adjusted for the effect of dilution | 4,849 | 109,130 | ||||||
|
|
|
| |||||
Profit from discontinued operation attributable to ordinary equity holders adjusted for the effect of dilution | — | 5,204 | ||||||
|
|
|
| |||||
Weighted average number of shares outstanding | 264,690,883 | 264,690,883 | ||||||
Basic earnings per share from: | ||||||||
Continuing operations | R$ | 0.0798 | R$ | 0.4724 | ||||
Discontinuing operations | — | R$ | 0.0197 | |||||
|
|
|
| |||||
| R$ | 0.0798 | R$ | 0.4921 | |||||
Diluted earnings per share from: | ||||||||
Continuing operations | R$ | 0.0183 | R$ | 0.4123 | ||||
Discontinuing operations | — | R$ | 0.0197 | |||||
|
|
|
| |||||
| R$ | 0.0183 | R$ | 0.4320 | |||||
Thenon-controlling interests of the indirect subsidiary Brado have the right to exercise a liquidity option provided for in the shareholders’ agreement signed on August 5, 2013. This option would exchange all Brado shares held by such minority shareholders by shares of ALL. The exchange ratio shall take into account the economic value for both Brado and ALL shares. At the Company’s exclusive discretion, an equivalent cash payment is also possible.
At 31 March 2017, 3,035 options were excluded from the diluted weighted-average number of ordinary shares calculation because their effect would have been anti-dilutive.
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Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
25 Other (expense) income, net
| March 31, 2017 | March 31, 2016 (Restated) | |||||||
Insurance reimbursement income | 1,181 | 7,150 | ||||||
Rental income | 1,495 | 385 | ||||||
Gain(Loss) on disposal ofnon-current assets | 2,485 | (6,493 | ) | |||||
Net effect of legal proceedings, recoverable and tax installments | (17,065 | ) | (37,869 | ) | ||||
Other | (4,136 | ) | (527 | ) | ||||
|
|
|
| |||||
| (16,040 | ) | (37,354 | ) | |||||
|
|
|
| |||||
26 Financial results
| March 31, 2017 | March 31, 2016 (Restated) | |||||||
Cost of gross debt | ||||||||
Interest on debt | (486,116 | ) | (440,424 | ) | ||||
Monetary and exchange rate variation | 65,707 | 509,711 | ||||||
Derivatives | (135,662 | ) | (692,907 | ) | ||||
Amortization of borrowing costs | (243 | ) | — | |||||
Guarantees and warranties on debt | (8,679 | ) | (13,474 | ) | ||||
|
|
|
| |||||
| (565,993 | ) | (637,094 | ) | |||||
Income from financial investment | 196,670 | 115,885 | ||||||
|
|
|
| |||||
| 196,670 | 115,885 | |||||||
|
|
|
| |||||
Cost of debt, net | (368,323 | ) | (521,209 | ) | ||||
Other charges and monetary variations | ||||||||
Interest on other receivables | 48,898 | 67,457 | ||||||
Monetary variation on leases and concessions agreements | (73,127 | ) | (73,408 | ) | ||||
Monetary variation on leases | (34,246 | ) | (50,705 | ) | ||||
Bank charges | (63,736 | ) | (34,908 | ) | ||||
Advances on real state credits | (7,002 | ) | (12,005 | ) | ||||
Interest on contingencies and contracts | (19,791 | ) | (13,638 | ) | ||||
Interest on other liabilities | (103,295 | ) | (186,873 | ) | ||||
Exchange variation | 2,230 | 14,235 | ||||||
|
|
|
| |||||
| (250,069 | ) | (289,845 | ) | |||||
|
|
|
| |||||
(=) Financial results, net | (618,392 | ) | (811,054 | ) | ||||
Finance expense | (898,232 | ) | (878,868 | ) | ||||
Finance income | 283,009 | 246,552 | ||||||
Exchange variation | 118,889 | 525,404 | ||||||
Derivatives | (122,058 | ) | (704,142 | ) | ||||
|
|
|
| |||||
Financial results, net | (618,392 | ) | (811,054 | ) | ||||
|
|
|
| |||||
53
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
27 Financial instruments
| Financial risk management | ||
| Overview | ||
| The Company is exposed to the following risks related to the use of financial instruments: | ||
| • | Credit risk; |
| • | Liquidity risk; and |
| • | Market risk. |
This note presents information about the exposure of the Company and its subsidiaries to the above risks, as well as the objectives of the Company’s risk management policies, these policy and processes for the assessment and management of risks. | ||
| The carrying amount of financial assets and financial liabilities are as follows: | ||
| March 31, 2017 | December 31, 2016 | |||||||
Assets | ||||||||
Fair value through profit or loss | ||||||||
Investment funds | 3,022,732 | 3,203,907 | ||||||
Marketable securities | 922,843 | 1,291,580 | ||||||
Derivate financial instruments | 835,664 | 751,080 | ||||||
|
|
|
| |||||
| 4,781,239 | 5,246,567 | |||||||
Loans and receivables | ||||||||
Cash and cash equivalents | 3,521,358 | 1,295,681 | ||||||
Trade receivables | 1,052,686 | 1,185,430 | ||||||
Restricted cash | 225,144 | 200,999 | ||||||
Receivables from related parties | 207,679 | 242,257 | ||||||
Dividends receivable | 48,440 | 144,160 | ||||||
|
|
|
| |||||
| 5,055,307 | 3,068,527 | |||||||
Total | 9,836,546 | 8,315,094 | ||||||
|
|
|
| |||||
54
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
| March 31, 2017 | December 31, 2016 | |||||||
Liabilities | ||||||||
Liabilities amortized cost | ||||||||
Loans, borrowings and debentures | 16,702,340 | 14.525.030 | ||||||
Leases | 1,255,274 | 1,397,543 | ||||||
Real state credit certificates | 171,247 | 195,745 | ||||||
Trade payables | 1,927,492 | 2,033,110 | ||||||
Other financial liabilities | 223,560 | 203,303 | ||||||
Payables to related parties | 256,008 | 237,081 | ||||||
Dividends payable | 31,315 | 93,500 | ||||||
Tax installments - REFIS | 216,293 | 215,565 | ||||||
Preferred shareholders payable in subsidiaries | 1,809,176 | 1,769,427 | ||||||
|
|
|
| |||||
| 22,592,705 | 20.670.304 | |||||||
Fair value through profit or loss | ||||||||
Loans, borrowings and debentures | 3,738,450 | 3.813.467 | ||||||
Contingent consideration | 113,657 | 166,807 | ||||||
Derivative financial instruments | 336,616 | 295,844 | ||||||
|
|
|
| |||||
| 4,188,723 | 4.276.118 | |||||||
| 26,781,428 | 24,946,422 | |||||||
|
|
|
| |||||
During the period ended at March 31, 2017, there was no reclassification between categories, fair value through profit or loss, loans and receivables and liabilities at the amortized cost presented above.
Risk management structure
As at March 31, 2017 and December 31, 2016, the fair values relating to transactions involving derivative financial instruments to protect the Company’s risk exposure were using observable inputs such as quoted prices in active markets, or discounted cash flows based on market curves, and are presented below:
| Notional | Fair value | |||||||||||||||
| March 31, | December 31, | March 31, | December 31, | |||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
Exchange rate derivatives | ||||||||||||||||
Forward agreements | 10,251 | 438,689 | (94 | ) | (14,983 | ) | ||||||||||
Interest rate and exchange rate risk | ||||||||||||||||
Swap agreements (interest rate) | 1,985,931 | 1,988,540 | 245,525 | 104,491 | ||||||||||||
Swap agreements (exchange and interest rate) | 5,476,865 | 4,315,575 | 253,617 | 365,728 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 7,462,796 | 6,304,115 | 499,142 | 470,219 | |||||||||||||
Total financial instruments | 499,048 | 455,236 | ||||||||||||||
|
|
|
| |||||||||||||
Assets | 835,664 | 751,080 | ||||||||||||||
|
|
|
| |||||||||||||
Liabilities | (336,616 | ) | (295,844 | ) | ||||||||||||
|
|
|
| |||||||||||||
55
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
Credit risk
| March 31, 2017 | December 31, 2016 | |||||||
Cash and cash equivalents(i) | 6,544,090 | 4,499,588 | ||||||
Trade receivables(ii) | 1,052,686 | 1,185,430 | ||||||
Derivative financial instruments(iii) | 835,664 | 751,080 | ||||||
Marketable securities(i) | 922,843 | 1,291,580 | ||||||
Restricted cash(i) | 225,144 | 200,999 | ||||||
Dividends receivable | 48,440 | 144,160 | ||||||
|
|
|
| |||||
| 9,628,867 | 8,072,837 | |||||||
|
|
|
| |||||
| (i) | The cash and cash equivalents are held with bank and financial institution counterparties, which are rated AAA, AA, A and BBB. |
The credit risk on cash and cash equivalents, marketable securities, other financial assets and derivative financial instruments are determined by rating instruments widely accepted by the market and are arranged as follows:
| March 31, 2017 | December 31, 2016 | |||||||
AAA | 599,801 | — | ||||||
AA+ | 541,897 | — | ||||||
AA | 6,654,213 | 5,499,565 | ||||||
A | 603,188 | 983,384 | ||||||
BBB | — | 260,298 | ||||||
|
|
|
| |||||
| 8,399,099 | 6,743,247 | |||||||
|
|
|
| |||||
| (ii) | Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. Credit quality of the customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit insurance. |
The requirement for impairment is analyzed at each reporting date on an individual basis for major clients. Additionally, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actual incurred historical data.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. Management considers that the credit risk is covered by the allowance for doubtful accounts
| (iii) | Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed on an annual basis and may be updated throughout the year. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through potential counterparty’s failure to make payments. |
56
Table of Contents
Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. As mentioned in Note 1, Management has been working on measures to enable the Company to honor its Commitments.
Thenon-derivative financial liabilities of the Company sorted by due dates (based on undiscounted cash flows contracted) are as follows:
| December | ||||||||||||||||||||||||
| March 31, 2017 | 31, 2016 | |||||||||||||||||||||||
| Up to 1 | More than | |||||||||||||||||||||||
| year | 1 - 2 years | 3 - 5 years | 5 years | Total | Total | |||||||||||||||||||
Loans, borrowings and debentures | (4,543,892 | ) | (4,933,735 | ) | (9,973,901 | ) | (12,954,674 | ) | (32,406,202 | ) | (29,957,136 | ) | ||||||||||||
Trade payables | (1,926,919 | ) | (573 | ) | — | — | (1,927,492 | ) | (2,033,110 | ) | ||||||||||||||
Other financial liabilities | (223,560 | ) | — | — | — | (223,560 | ) | (203,303 | ) | |||||||||||||||
REFIS | (12,977 | ) | (12,390 | ) | (16,411 | ) | (191,983 | ) | (233,761 | ) | (235,919 | ) | ||||||||||||
Leases | (649,901 | ) | (364,182 | ) | (560,733 | ) | (355,996 | ) | (1,930,812 | ) | (1,824,890 | ) | ||||||||||||
Real estate credits certificates | (127,530 | ) | (66,721 | ) | — | — | (194,251 | ) | (243,628 | ) | ||||||||||||||
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| (7,484,779 | ) | (5,377,601 | ) | (10,551,045 | ) | (13,502,653 | ) | (36,916,078 | ) | (34,497,986 | ) | |||||||||||||
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Market risk
Market risk is the risk that changes in market prices – such as foreign exchange rates, interest rates and equity prices – will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
The Company uses derivatives to manage market risks. All such transactions are carried out within the guidelines set by the Risk Management Committee. Generally, the Company seeks to apply hedge accounting to manage volatility in profit or loss.
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Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
a) Foreign exchange risk
As at March 31, 2017 and December 31, 2016, the Company and its subsidiaries had the following net exposure to the exchange rate variations on assets and liabilities denominated in Brazilian Reais:
| March 31, 2017 | December 31, 2016 | |||||||||||||||
| R$ | US$ | R$ | US$ | |||||||||||||
Cash and cash equivalents | 2,743,241 | 865,812 | 424,334 | 130,200 | ||||||||||||
Trade receivables | 17,683 | 5,581 | 11,940 | 3,664 | ||||||||||||
Advances to suppliers | — | — | 58,866 | 18,062 | ||||||||||||
Trade payables | — | — | (22,005 | ) | (6,752 | ) | ||||||||||
Loans, borrowings and debentures | (8,471,231 | ) | (2,673,662 | ) | (6,323,330 | ) | (1,940,207 | ) | ||||||||
Contingent consideration | (15,256 | ) | (4,815 | ) | (68,388 | ) | (20,984 | ) | ||||||||
Derivative financial instruments | 4,600,012 | 1,451,841 | 6,413,619 | 1,967,911 | ||||||||||||
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Foreign exchange exposure, net | (1,125,551 | ) | (355,243 | ) | 495,036 | 151,894 | ||||||||||
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Sensitivity analysis on changes in foreign exchange rates:
The probable scenario was defined based on the U.S. Dollar market rates as at March 31, 2017, which determines the fair values of the derivatives at that date. Stressed scenarios (positive and negative effects, before tax effects) were defined based on changes of a 25% and 50% to the U.S. Dollar exchange rates used in the probable scenario.
Based on the financial instruments denominated in U.S. Dollars at March 31, 2017, the Company performed a sensitivity analysis by increasing and decreasing the exchange rate for R$/US$ by 25% and 50%. The probable scenario considers the estimated exchange rates at the due date of the transactions for the companies with functional currency Real (positive and negative, before tax effects), as follows:
| Exchange rate sensitivity analysis (R$/US$) | ||||||||||||||||||||||||
| Scenario | ||||||||||||||||||||||||
| March 31, 2017 | Probable | 25% | 50% | -25% | -50% | |||||||||||||||||||
USD | 3.17 | 3.33 | 4.16 | 5.00 | 2.50 | 1.67 | ||||||||||||||||||
The external source used by the company for market projections was a specialized consultant.
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Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
Considering the above scenario the profit or loss would be impacted as follows:
| Variation scenario | ||||||||||||||||||||||
Instrument | Risk factor | Probable | 25% | 50% | -25% | -50% | ||||||||||||||||
Cash and cash equivalents | USD fluctuation | 137,537 | 829,761 | 1,538,297 | (587,315 | ) | (1,295,851 | ) | ||||||||||||||
Trade receivables | USD fluctuation | 902 | 4,646 | 9,293 | (4,646 | ) | (9,293 | ) | ||||||||||||||
Exchange rate derivatives(i) | USD fluctuation | 559,898 | 178,030 | 327,498 | (120,907 | ) | (270,375 | ) | ||||||||||||||
Exchange rate and interest derivatives(i) | USD and CDI fluctuation | 160,924 | 1,084,739 | 2,160,781 | (1,067,641) | (2,143,966) | ||||||||||||||||
Loans, borrowings and debentures | USD fluctuation | (282,463 | ) | (1,580,944 | ) | (3,036,084 | ) | 1,329,337 | 2,784,477 | |||||||||||||
Contingent consideration | USD fluctuation | (778 | ) | (4,008 | ) | (8,017 | ) | 4,008 | 8,017 | |||||||||||||
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Impacts on profit or loss | 576,020 | 512,224 | 991,768 | (447,164 | ) | (926,991 | ) | |||||||||||||||
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| (i) | For sensitivity analysis, it’s only considered exchange rate swaps for Notional. |
b) Interest rate risk
The Company and its subsidiaries monitor the fluctuations in variable interest rates in connection with its borrowings, especially those that accrue interest using LIBOR, and uses derivative instruments in order to minimize variable interest rate fluctuation risks.
Sensitivity analysis on changes in interest rates:
A sensitivity analysis on the interest rates on loans and borrowings in compensation for the CDI investments withpre-tax increases and decreases of 25% and 50% is presented below:
| March 31, 2017 | ||||||||||||||||||||
Exposure interest rate(i) | Probable | 25% | 50% | -25% | -50% | |||||||||||||||
Cash and cash equivalents | 391,581 | 97,895 | 195,790 | (97,895 | ) | (195,790 | ) | |||||||||||||
Marketable securities | 34,875 | 8,719 | 17,438 | (8,719 | ) | (17,438 | ) | |||||||||||||
Leases | (62,431 | ) | (15,608 | ) | (22,384 | ) | 15,608 | 22,384 | ||||||||||||
Advances on real state credits | (20,183 | ) | (5,046 | ) | (10,091 | ) | 5,046 | 10,091 | ||||||||||||
Interest rate derivatives | 234,030 | 272,098 | 601,841 | (229,784 | ) | (423,669 | ) | |||||||||||||
Loans, borrowings and debentures net off derivatives | (1,759,586 | ) | (628,131 | ) | (1,313,865 | ) | 585,817 | 1,135,694 | ||||||||||||
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Impacts on profit or loss | (1,181,714 | ) | (270,073 | ) | (531,271 | ) | 270,073 | 531,272 | ||||||||||||
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The probable scenario considers the estimated interest rate, as follows:
| Probable | 25% | 50% | -25% | -50% | ||||||||||||||||
SELIC | 8.75 | % | 10.94 | % | 13.13 | % | 6.56 | % | 4.38 | % | ||||||||||
CDI | 9.15 | % | 11.44 | % | 13.73 | % | 6.86 | % | 4.58 | % | ||||||||||
TJ462 | 6.00 | % | 7.50 | % | 9.00 | % | 4.50 | % | 3.00 | % | ||||||||||
TJLP | 5.00 | % | 6.25 | % | 7.50 | % | 3.75 | % | 2.50 | % | ||||||||||
| (i) | The external source used by the company for market projections was a specialized consultant. |
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Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
Financial instruments fair value
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
| • | The cash and cash equivalents, accounts receivable, trade receivables, trade payables and other current liabilities approximate their carrying amount largely due to the short-term maturity of these instruments. |
| • | The fair values of the quoted notes and bonds are based on price quotations at the reporting date. The fair value of unquoted instruments, loans from banks and other financial liabilities, obligations under finance leases, as well as othernon-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. |
| • | The market value of the Senior Notes are listed on the Luxembourg Stock Exchange (Note 16) is based on their quoted market price are as follows: |
| Senior Notes Due | March 31, 2017 | December 31, 2016 | ||
2018 | 100.10% | 95.68% | ||
2023 | 97.51% | 96.05% | ||
2024 | 103.22% | — | ||
2027 | 104,70% | — |
| • | The fair value of Perpetual Notes listed on the Luxembourg Stock Exchange (Note 16) is based on their quoted market price as March 31, 2017 of 100.57% (103.03% at December 31, 2016) of the face value of obligations at March 31, 2017. |
| • | The fair value of other loans and financing, the respective market values substantially approximate the amounts recorded due to the fact that these financial instruments are subject to variable interest rates (Note 16). |
The Company and its subsidiaries enter into derivative financial instruments with various counterparties, principally financial institutions with investment grade credit ratings. Derivatives valued using valuation techniques with observable market data refer mainly to interest rate swaps and foreign exchange forward contracts.
The fair value of derivative financial instruments is determined using valuation techniques and observable market data. The valuation techniques applied more often include pricing models and swaps contracts, with a present value calculation. The models consider various data, including counterparty credit quality, spot exchange rates, forward curves of interest rates and curves of the commodity term rates.
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Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
The carrying amounts and fair value of financial assets and financial liabilities are as follows:
| Carrying amount | Assets and liabilities measured at fair value | |||||||||||||||||||||||
| March 31, | December | March 31, 2017 | December 31, 2016 | |||||||||||||||||||||
| 2017 | 31, 2016 | Level 2 | Level 3 | Level 2 | Level 3 | |||||||||||||||||||
Assets | ||||||||||||||||||||||||
Investment funds | 3,022,732 | 3,203,907 | 3,022,732 | — | 3,203,907 | — | ||||||||||||||||||
Marketable securities | 922,843 | 1,291,580 | 922,843 | — | 1,291,580 | — | ||||||||||||||||||
Derivate financial instruments | 835,664 | 751,080 | 835,664 | — | 751,080 | — | ||||||||||||||||||
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Total | 4,781,239 | 5,246,567 | 4,781,239 | — | 5,246,567 | — | ||||||||||||||||||
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Liabilities | ||||||||||||||||||||||||
Loans, borrowings and debentures | (3,738,450 | ) | (3,813,467 | ) | (3,738,450 | ) | — | (3,813,467 | ) | — | ||||||||||||||
Contingent consideration | (113,657 | ) | (166,807 | ) | — | (113,657 | ) | — | (166,807 | ) | ||||||||||||||
Derivative financial instruments | (336,616 | ) | (295,844 | ) | (336,616 | ) | — | (295,844 | ) | — | ||||||||||||||
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Total | (4,188,723 | ) | (4,276,118 | ) | (4,075,066 | ) | (113,657 | ) | (4,109,311 | ) | (166,807 | ) | ||||||||||||
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Hedge accounting
Currently the Company has adopted the hedge accounting of fair value for some its operations that both the hedging instruments and the hedged items are accounted for at fair value through profit or loss. Operations and accounting effects of this adoption are as follows:
| Debt | Derivative | Total | ||||||||||
At December 31, 2016 | 2,156,011 | (125,272 | ) | 2,030,739 | ||||||||
Interest amortization | (9,596 | ) | (9,067 | ) | (18,663 | ) | ||||||
Fair value | (165,314 | ) | (7,989 | ) | (173,303 | ) | ||||||
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At March 31, 2017 | 1,981,101 | (142,328 | ) | 1,838,773 | ||||||||
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Capital management
The Company’s policy is to maintain a robust capital base to promote the confidence of investors, creditors and the market, and to ensure the future development of the business. Management monitors that the return on capital is adequate for each of its businesses.
28 Post-employment benefits
| March 31, 2017 | December 31, 2016 | |||||||
Futura | 44,726 | 43,401 | ||||||
Futura II | 154 | 163 | ||||||
COMGÁS | 402,794 | 397,916 | ||||||
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| 447,674 | 441,480 | |||||||
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During the period ended March 31, 2017, the expense recognized in relation to the actuarial contributions was R$6,896 (R$6,921 for the three month period ended March 31, 2016).
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Cosan Limited
Notes to the consolidated interim financial statements
(In thousands of Brazilian Reais – R$, except earnings per share)
29 Share-based payment
(i) Share option programmers
The vesting period and share options outstanding at the end of the year are as follows:
| Exercise | ||||||||||||||||||||||||||||||||||||
| Number of instruments on March 31, 2017 | Market | price at | Fair value | |||||||||||||||||||||||||||||||||
| Expected | Interest | Expected | Exercisable | price on | March | at grant | ||||||||||||||||||||||||||||||
Share option programs | life (years) | rate | volatility | Granted | options | Outstanding | grant date | 31, 2017 | date -R$(i) | |||||||||||||||||||||||||||
August 18, 2011 (A) | 1 to 7 | 12.39 | 31.44 | 4,825,000 | (3,193,000 | ) | 1,237,000 | 22.80 | 26.51 | 6.80 | ||||||||||||||||||||||||||
August 18, 2011 (B) | 1 to 12 | 12.39 | 30.32 | 5,000,000 | (2,000,000 | ) | 3,000,000 | 22.80 | 26.51 | 8.15 | ||||||||||||||||||||||||||
December 12, 2012 (C) | 1 to 7 | 8.78 | 31.44 | 700,000 | (48,000 | ) | 652,000 | 38.89 | 47.01 | 10.10 | ||||||||||||||||||||||||||
April 24, 2013 | 5 to 7 | 13.35 | 27.33 | 970,000 | — | 860,000 | 45.22 | 53.99 | 17.95 | |||||||||||||||||||||||||||
April 25, 2014 | 5 to 7 | 12.43 | 29.85 | 960,000 | — | 945,000 | 39.02 | 43.79 | 15.67 | |||||||||||||||||||||||||||
August 31, 2015 | 5 to 7 | 14.18 | 33.09 | 759,000 | — | 674,000 | 19.96 | 19.50 | 7.67 | |||||||||||||||||||||||||||
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| 13,214,000 | (5,241,000 | ) | 7,368,000 | |||||||||||||||||||||||||||||||||
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| (i) | The fair value of the employee share options has been measured using the Black-Scholes formula. |
The number and weighted-average exercise prices of share options under the share option programs were as follows:
| Weighted-average exercise | ||||||||
| Number of options | price - R$ | |||||||
At December 31, 2016 | 12,138,238 | 23.96 | ||||||
Cancellation or settlements | (4,160,238 | ) | — | |||||
Share options exercised | (610,000 | ) | 26.43 | |||||
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At March 31, 2017 | 7,368,000 | 33.11 | ||||||
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(ii) Share-based compensation
On December 21, 2016, a new share-based compensation model was approved at the Assembly of the subsidiary Cosan Logística, which became effective as of the granting, which took place on January 2, 2017.
Cosan Logística issued 1,513,180 shares of the “share-based compensation plan”, which will be transferred in full and free of charge after 5 years, from the approval of the grant, in a quantity adjusted by the number proportional to the dividends paid in the period, conditioned to the exercise of the functions of the beneficiary in the Company, under the terms of each Share granting Program.
The Black and Scholes methodology was used to calculate the fair value of the shares granted under the terms of the “share-based compensation plan”, reflecting the determination of Technical Pronouncement CPC 10 - Share-based Payment. Given the characteristics of the Plan, the fair value is equivalent to the value of the share on the grant date (R$ 6.10).
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Notas explicativas às demonstrações financeiras consolidadas
(Em milhares de Reais – R$, exceto resultado por ação)
(Uma tradução livre do original em inglês)
30 Subsequent events
Distribution of dividends
On May 05, 2017, the Ordinary and Extraordinary General Meeting approved the distribution of dividends in the total amount of R$ 63,528 equivalent to R$ 0.24 per share.
Distribution of dividends - Cosan S.A Indústria e Comércio
On April 27, 2017, the Ordinary and Extraordinary General Meeting approved the distribution of dividends in the total amount of R$ 380,000 equivalent to R$ 0.931658 per common share
Stock option
On April 27, 2017, a new share option programs was approved in the Ordinary and Extraordinary General Meeting, where up to 3% of the shares representing the Company’s stock option may be delivered to the participants.
***
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 11, 2017
COSAN LIMITED
| ||
| By: | /s/ Marcelo Eduardo Martins | |
| Name: | Marcelo Eduardo Martins | |
| Title: | Chief Financial Officer | |