Table of Contents

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant To Rule 13a-16 Or 15d-16

of the Securities Exchange Act of 1934

For the month of September, 2016

Commission File Number: 1-33659

COSAN LIMITED

(Translation of registrant’s name into English)

 

 

Av. Juscelino Kubitschek, 1327, – 4 th floor

São Paulo, SP 04543-000 Brazil

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F             X            

  Form 40-F                           

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Yes                           

   No             X            

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

Yes                           

   No             X            


Table of Contents

COSAN LIMITED

 

Item                
1.   Consolidated interim financial statements as at June 30, 2016 and independent auditors’ review report


Table of Contents

 

Cosan Limited

Consolidated interim financial

statements as at June 30, 2016 and

independent auditors’ review report


Table of Contents

Cosan Limited

Consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

 

Contents

 

Independent auditors’ report on review of interim financial statements

     3   

Consolidated statements of financial position

     4   

Consolidated statements of profit or loss and other comprehensive income

     6   

Consolidated statements of changes in equity

     8   

Consolidated statements of cash flows

     10   

Notes to the consolidated financial statements

     12   

 

2


Table of Contents

Report on review of interim financial information

To the Board of Directors and Shareholders

Cosan Limited

Bermuda

Introduction

We have reviewed the accompanying consolidated interim financial information of Cosan Limited (“The Company”), contained in the Quarterly Information Form—ITR for the quarter ended June 30, 2016, which comprises the statement of financial position as of June 30, 2016 and the respective statements of profit or loss and comprehensive income (loss) for the three and six-month periods then ended and changes in equity and cash flows for the six-month period then ended, including the footnotes.

Management is responsible for the preparation of the consolidated interim financial information in accordance with IAS 34—Interim Financial Reporting, issued by the International Accounting Standards Board—IASB, such as for the presentation of this information in accordance with the regulations of the Brazilian Securities Commission—CVM, applicable to the preparation of Quarterly Information—ITR. Our responsibility is to express a conclusion on this consolidated interim financial information based on our review.

Review scope

We conducted our review in accordance with the Brazilian and International standards on review engagements of interim financial information (NBC TR 2410—Review of Interim Financial Information Performed by the Independent Auditor of the Entity 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 applicable to the preparation of Quarterly Information—ITR, and presented in accordance with the regulations of the Brazilian Securities Commission—CVM.

São Paulo, August 10, 2016

KPMG Auditores Independentes

CRC 2SP014428/O-6

Rogério Hernandez Garcia

Contador CRC 1SP213431/O-5

 

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Table of Contents

Cosan Limited

Consolidated statements of financial position

(In thousands of Brazilian Reais – R$)

 

 

     Note      June 30, 2016      December 31,
2015 (Restated)
 

Assets

        

Cash and cash equivalents

     6         2,544,034         3,505,824   

Restricted cash

        —           57,290   

Marketable securities

     7         1,850,353         605,490   

Trade receivables

     8         1,044,614         904,245   

Derivative financial instruments

     27         3,303         138,105   

Inventories

        644,422         656,901   

Receivables from related parties

     10         96,416         75,229   

Income tax receivable

        225,374         135,050   

Other current tax receivable

     9         184,231         311,892   

Dividends receivable

        14,205         12,064   

Assets held for sale

     13         158,005         149,938   

Other financial assets

        141,064         144,208   

Other current assets

        152,572         138,995   
     

 

 

    

 

 

 

Total current assets

        7,058,593         6,835,231   
     

 

 

    

 

 

 

Trade receivables

     8         68,108         60,733   

Restricted cash

        189,159         200,893   

Deferred tax assets

     21         1,655,441         1,698,611   

Receivables from related parties

     10         197,219         221,345   

Income tax receivable

        200,667         274,597   

Other non-current tax receivable

     9         724,196         633,549   

Judicial deposits

     22         707,101         680,224   

Derivative financial instruments

     27         999,616         2,292,191   

Other non-current assets

        1,148,795         1,185,787   

Investments in associates

     11         180,351         184,376   

Investments in joint ventures

     12         8,347,722         8,237,190   

Investment property

     13         2,593,649         2,595,035   

Property, plant and equipment

     14         10,444,705         9,805,887   

Intangible assets and goodwill

     15         17,242,856         17,309,689   
     

 

 

    

 

 

 

Total non-current assets

        44,699,585         45,380,107   
     

 

 

    

 

 

 

Total assets

        51,758,178         52,215,338   
     

 

 

    

 

 

 

The accompanying notes are an integral part of these consolidated interim financial statements

 

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Table of Contents

Cosan Limited

Consolidated statements of financial position

(In thousands of Brazilian Reais – R$)

 

 

     Note      June 30, 2016     December 31, 2015
(Restated)
 

Liabilities

       

Loans, borrowings and debentures

     16         2,304,564        2,775,510   

Leases

     17         540,166        539,615   

Real estate credits certificates

        96,255        88,089   

Derivative financial instruments

     27         319,193        812   

Trade payables

     19         1,843,392        1,963,981   

Employee benefits payable

        217,238        256,279   

Income tax payable

        81,482        59,620   

Other taxes payable

     20         187,384        153,540   

Concessions payables

     18         27,569        20,205   

Dividends payable

        38,061        39,934   

Payables to related parties

     10         208,773        204,080   

Deferred revenue

        14,167        110,517   

Other financial liabilities

        195,810        236,698   

Other current liabilities

        361,858        473,753   
     

 

 

   

 

 

 

Total current liabilities

        6,435,912        6,922,633   
     

 

 

   

 

 

 

Loans, borrowings and debentures

     16         14,869,148        16,053,693   

Leases

     17         1,110,700        1,202,086   

Real estate credits certificate

        145,910        196,917   

Derivative financial instruments

     27         521,200        741,686   

Trade payables

     19         792        1,031   

Other taxes payable

     20         47,076        51,327   

Provision for legal proceedings

     22         1,253,564        1,193,931   

Concessions payables

     18         2,386,989        2,204,039   

Post-employment benefits

     28         354,595        344,447   

Deferred tax liabilities

     21         4,012,491        4,179,564   

Preferred shareholders payable in subsidiaries

        1,973,074        2,042,878   

Deferred revenue

        67,498        95,730   

Other non-current liabilities

        833,327        723,034   
     

 

 

   

 

 

 

Total non-current liabilities

        27,576,364        29,030,363   
     

 

 

   

 

 

 

Total liabilities

        34,012,276        35,952,996   
     

 

 

   

 

 

 

Shareholders’ equity

     23        

Share capital

        5,328        5,328   

Additional paid-in capital

        4,052,490        4,006,562   

Accumulated other comprehensive loss

        (442,704     (478,207

Retained earnings

        2,496,768        2,425,567   
     

 

 

   

 

 

 

Equity attributable to owners of the parent

        6,111,882        5,959,250   

Non-controlling interests

        11,634,020        10,303,092   
     

 

 

   

 

 

 

Total shareholders’ equity

        17,745,902        16,262,342   
     

 

 

   

 

 

 

Total liabilities and shareholders’ equity

        51,758,178        52,215,338   
     

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated interim financial statements

 

 

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Table of Contents

Cosan Limited

Consolidated statements of profit or loss and other comprehensive income

For the three and six month periods ended June 30, 2016 and 2015

(In thousands of Brazilian Reais – R$, except earnings per share)

 

 

 

     Note      April 1,
2016 to
June 30,
2016
    January 1,
2016 to
June 30,
2016
    April 1,
2015 to
June 30,
2015
(Restated)
    January 1,
2015 to
June 30,
2015
(Restated)
 

Net sales

        3,364,402        6,506,384        3,333,241        5,474,365   

Cost of sales

        (1,995,688     (4,061,792     (2,167,637     (3,758,978
     

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

        1,368,714        2,444,592        1,165,604        1,715,387   
     

 

 

   

 

 

   

 

 

   

 

 

 

Selling expenses

        (257,806     (494,635     (221,034     (440,361

General and administrative expenses

        (277,213     (512,753     (233,506     (413,318

Other (expense) income, net

     26         (20,085     (57,651     37,919        (61,404
     

 

 

   

 

 

   

 

 

   

 

 

 

Operating expense

        (555,104     (1,065,039     (416,621     (915,083
     

 

 

   

 

 

   

 

 

   

 

 

 

Income before equity in earnings of investees and financial results

        813,610        1,379,553        748,983        800,304   
     

 

 

   

 

 

   

 

 

   

 

 

 

Equity in earnings of investees

           

Equity in earnings of associates

     11         (3,600     (5,158     1,656        (2,978

Equity in earnings of joint ventures

     12         252,594        693,938        57,226        227,098   
     

 

 

   

 

 

   

 

 

   

 

 

 
        248,994        688,780        58,882        224,120   

Financial results

     25            

Finance expense

        (843,207     (1,719,946     (649,236     (940,848

Finance income

        329,722        580,495        121,976        191,747   

Foreign exchange losses, net

        534,151        1,059,505        98,058        (493,756

Derivatives

        (769,330     (1,473,471     (179,704     375,528   
     

 

 

   

 

 

   

 

 

   

 

 

 
        (748,664     (1,553,417     (608,906     (867,329

Profit before taxes

        313,940        514,916        198,959        157,095   
     

 

 

   

 

 

   

 

 

   

 

 

 

Income tax (expense) benefit

     21            

Current

        (118,674     (220,169     (115,853     (120,691

Deferred

        48,379        129,654        32,853        117,382   
     

 

 

   

 

 

   

 

 

   

 

 

 
        (70,295     (90,515     (83,000     (3,309

Profit from continuing operations

        243,645        424,401        115,959        153,786   

Loss from discontinued operations, net of tax

        —          —          (3,582     (3,582
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the period

        243,645        424,401        112,377        150,204   
     

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents

Cosan Limited

Consolidated statements of profit or loss and other comprehensive income

For the three and six month periods ended June 30, 2016 and 2015

(In thousands of Brazilian Reais – R$, except earnings per share)

 

 

 

     Note      April 1,
2016 to
June 30,
2016
    January 1,
2016 to
June 30,
2016
    April 1,
2015 to
June 30,
2015
(Restated)
    January 1,
2015 to
June 30,
2015
(Restated)
 

Other comprehensive income (loss)

     23            

Items that may be reclassified to profit or loss:

           

Foreign currency translation effect

        112,145        145,955        13,649        (67,037

(Loss) gain on cash flow hedge in joint ventures and subsidiary

        (113,645     (140,737     35,793        56,528   

Financial instruments—common transactions

        6,000        6,000        —          —     

Changes in fair value of available for sale securities

        1,268        (1,311     3,512        4,998   

Taxes on items that may be reclassified to profit or loss

        1,006        1,883        (1,568     (2,073
     

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income (loss), net of tax

        6,774        11,790        51,386        (7,584
     

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

        250,419        436,191        163,763        142,620   
     

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to:

           

Owners of the Parent

        26,362        157,671        (14,130     2,973   

Non-controlling interests

        217,283        266,730        126,507        147,231   
     

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) attributable to:

           

Owners of the Parent

        58,543        193,174        20,627        (22,269

Non-controlling interests

        191,876        243,017        143,136        164,889   
     

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings (loss) per share from continuing operations

     24         R$0.10        R$0.60        (R$0.05     R$0.01   

Diluted earnings (loss) per share from continuing operations

     24         R$0.04        R$0.53        (R$0.11     (R$0.05
     

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated interim financial statements

 

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Table of Contents

Cosan Limited

Consolidated statements of changes in equity

For the six month periods ended June 30, 2016 and 2015

(In thousands of Brazilian Reais – R$)

 

 

 

            Capital
reserve
    Accumulated
other
comprehensive
loss
          Equity
attributable
to owners
of the parent
             
     Share
capital
     Additional
paid-in
capital
      Retained
earnings
      Non-
controlling

interests
    Total
equity
 

At January 1, 2016

     5,328         4,006,562        (478,207     2,483,283        6,016,966        10,339,706        16,356,672   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Effect of changes to IAS 41—in joint ventures (Note 2.2)

     —           —          —          (57,716     (57,716     (36,614     (94,330

At January 1, 2016 (restated)

     5,328         4,006,562        (478,207     2,425,567        5,959,250        10,303,092        16,262,342   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net profit for the period

     —           —          —          157,671        157,671        266,730        424,401   

Other comprehensive income:

               

Foreign currency translation effects

     —           —          119,024        —          119,024        26,931        145,955   

Loss on cash flow hedge in joint ventures and subsidiary

     —           —          (87,055     —          (87,055     (52,245     (139,300

Financial instruments—common transactions

     —           —          3,751        —          3,751        2,249        6,000   

Changes in fair value of available for sale securities

     —           —          (217     —          (217     (648     (865
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

     —           —          35,503        157,671        193,174        243,017        436,191   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions by and distributions to owners of the Parent:

               

Dividends—non-controlling interests

     —           (7,091     —          —          (7,091     7,091        —     

Share options exercised

     —           578        —          —          578        347        925   

Share-based compensation—Subsidiaries

     —           3,148        —          —          3,148        2,748        5,896   

Dividends

     —           —          —          (86,470     (86,470     (687,799     (774,269
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total contributions by and distributions to owners of the Parent

     —           (3,365     —          (86,470     (89,835     (677,613     (767,448
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with owners of the Company Acquisition of non-controlling interest

     —           49,293        —          —          49,293        1,765,524        1,814,817   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At June 30, 2016

     5,328         4,052,490        (442,704     2,496,768        6,111,882        11,634,020        17,745,902   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated interim financial statements

 

8


Table of Contents

Cosan Limited

Consolidated statements of changes in equity

For the six month periods ended June 30, 2016 and 2015

(In thousands of Brazilian Reais – R$)

 

 

 

     Share
capital
     Capital
reserve
    Accumulated
other
comprehensive
income
    Retained
earnings
    Equity
attributable
to owners
of the parent
    Non-
controlling
interests
    Total
equity
 
        Additional
paid-in
capital
           

At January 1, 2015

     5,328         3,887,109        (165,618     2,125,196        5,852,015        7,649,221        13,501,236   

Effect of changes to IAS 41—in joint ventures

     —           —          —          (7,457     (7,457     (4,472     (11,929

At January 1, 2015 (restated)

     5,328         3,887,109        (165,618     2,117,739        5,844,558        7,644,749        13,489,307   

Net profit for the period

     —           —          —          2,973        2,973        147,231        150,204   

Other comprehensive income:

               

Foreign currency translation effects

     —           —          (60,767     —          (60,767     (6,270     (67,037

Gain on cash flow hedge in joint ventures and subsidiary

     —           —          35,102        —          35,102        21,052        56,154   

Changes in fair value of available for sale securities

     —           —          423        —          423        2,876        3,299   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

     —           —          (25,242     2,973        (22,269     164,889        142,620   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions by and distributions to owners of the Parent:

               

Dividends—non-controlling interests

     —           (1,965     —          —          (1,965     (1,179     (3,144

Share based compensation—Subsidiaries

     —           3,664        —          —          3,664        2,195        5,859   

Dividends

     —           —          —          (94,246     (94,246     (237,586     (331,832
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total contributions by and distributions to owners of the Parent

     —           1,699        —          (94,246     (92,547     (236,570     (329,117
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with owners of the parent

               

Acquisition of non-controlling interest

     —           409        —          —          409        (12,594     (12,185

Business combination ALL

     —           118,937        —          —          118,937        2,831,469        2,950,406   

Share buy-back cost—Rumo

     —           (3,901     —          —          (3,901     (21,201     (25,102
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     —           115,445        —          —          115,445        2,797,674        2,913,119   

At June 30, 2015 (Restated)

     5,328         4,004,253        (190,860     2,026,466        5,845,187        10,370,742        16,215,929   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated interim financial statements

 

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Cosan Limited

Consolidated statements of cash flows

For the six month periods ended June 30, 2016 and 2015

(In thousands of Brazilian Reais – R$)

 

 

 

     Note      June 30, 2016     June 30, 2015
(Restated)
 

Cash flows from operating activities

       

Profit before taxes

        514,916        157,095   

Adjustments for:

       

Depreciation and amortization

        816,884        482,062   

Equity in earnings of associates

     11         5,158        2,978   

Equity in earnings of joint ventures

     12         (693,938     (227,098

Loss on disposal of assets

        8,517        3,096   

Stock option expense

     10         5,896        5,859   

Change in fair value of investment property

     13 / 26         (8,532     (23,162

Provisions for legal proceedings

        60,081        23,537   

Indexation charges, interest and exchange gains/losses, net

        1,674,733        988,093   

Other

        (62,779     69,877   
     

 

 

   

 

 

 
        2,320,936        1,482,337   

Changes in:

       

Trade receivables

        (70,195     (61,150

Inventories

        3,785        4,005   

Recoverable taxes

        117,200        45,880   

Related parties

        (44,118     (60,268

Trade payables

        (94,691     335,339   

Other financial liabilities

        (102,005     —     

Employee benefits

        (85,038     (51,425

Adivances to suppliers

        (3,227     (25,474

Provisions for legal proceedings

        (39,593     (7,360

Judicial deposits

        (10,737     (16,802

Post-employment benefits

        (12,685     (11,201

Income and other taxes

        (117,433     (113,194

Concessions payables

        (53,963     —     

Other assets and liabilities, net

        (182,042     (119,281
     

 

 

   

 

 

 
        (694,742     (80,931

Net cash generated by operating activities

        1,626,194        1,401,406   
     

 

 

   

 

 

 

Cash flows from investing activities

       

Capital contribution in associates

        (2,715     (48,721

Marketable securities

        (1,202,950     183,192   

Restricted cash

        71,002        74,742   

Dividends received from associates

        6,076        1,151   

Dividends received from joint ventures

        443,303        206,425   

Net cash acquired in business combination

        —          169,703   

Put option exercised paid

        (186,052     —     

Acquisition of property, plant and equipment, intangible assets and investments

        (1,049,003     (797,960

Related parties

        11,338        —     

Proceeds from sale of property, plant and equipment, intangible assets and investments, net

        —          1,316   
     

 

 

   

 

 

 

Net cash used in investing activities

        (1,909,001     (210,152
     

 

 

   

 

 

 

 

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Cosan Limited

Consolidated statements of cash flows

For the six month periods ended June 30, 2016 and 2015

(In thousands of Brazilian Reais – R$)

 

 

 

     Note      June 30, 2016     June 30, 2015
(Restated)
 

Cash flows from financing activities

       

Loans, borrowings and debentures raised

        5,305,061        2,382,655   

Payment of loans, borrowings and debentures

       

Principal

        (5,572,362     (1,865,705

Interest paid

        (863,386     (488,549

Payment of leases

       

Principal

        (230,889     (83,372

Interest paid

        (176,850     (63,005

Real estate credits certificate

        (64,218     (33,061

Non-controlling interest capital increase

        1,978,953        —     

Non-controlling interest subscription

        28,764        —     

Derivative financial instruments

        (21,336     203,950   

Treasury shares

        925        (12,185

Related parties

        —          (3,806

Dividends paid

        (968,001     (356,430
  

 

 

    

 

 

   

 

 

 

Net cash used in financing activities

        (583,339     (319,508
  

 

 

    

 

 

   

 

 

 

(Decrease) increase in cash and cash equivalents

        (866,146     871,746   
  

 

 

    

 

 

   

 

 

 

Cash and cash equivalents at beginning of the period

        3,505,824        1,649,340   

Effects of exchange rate changes on cash held

        (95,644     10,861   
  

 

 

    

 

 

   

 

 

 

Cash and cash equivalents at end of the period

        2,544,034        2,531,947   
  

 

 

    

 

 

   

 

 

 

Supplemental cash flow information:

       

Income taxes paid

        53,806        52,725   

Business combination—non-cash effect

        —          2,537,831   

The accompanying notes are an integral part of these consolidated interim financial statements

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

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 62.51% and 72.47% 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 Logística Operadora Multimodal S.A. (“Rumo”) and América Latina Logística S.A. (“ALL”), logistic segment (“Logistic”); (iii) Purchase, sale and leasing of agricultural land through its subsidiaries, Radar Propriedades Agrícolas S.A. and Radar II Propriedades Agrícolas S.A. (“Radar”); (iv) Production and distribution of lubricants, through its indirect subsidiaries Cosan Lubrificantes e Especialidades S.A. (“CLE”) 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 (v) 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 June 30, 2016, Cosan Logística had a negative consolidated working capital of R$262,442 and loss for the period of R$218,013. Nevertheless, it presented a net cash generation from operations of R$743,614 and made investments in the modernization of its fleet and improving the railway network in the amount of R$824,094, in line with its business plan.

On April 22, 2016, GIF, controlled by Gávea Investimentos and shareholder of subsidiary Rumo, exercised its right to exchange 12,831,102 shares of Rumo for shares of subsidiary Cosan S.A in accordance with the shareholders’ agreement signed in 2010, subsequently inserted, between Cosan Logistics, TPG VI Investment Fund Participations, GIF, Cosan SA and the Company. Cosan S.A. and GIF agreed to settle financially the share exchange obligation through payment of R$ 186,052. The shares received were valued at fair value in the amount of R$ 51,660 presented under “other financial assets”. Once buying shares of Rumo, Cosan S.A. composed the RUMO’s non-controlling framework. Considering that the Company is the parent of both companies, the balance of R$51,660 was reclassified from Other financial assets to non-controlling interests.

On April 07, 2016 Rumo completed a capital increase, pursuant to CVM Rule 476 and Regulation “S” for foreign investors, of R$2,600,000 through the issuance of 1,040,000,000 Rumo’s common shares. These funds have been used for cash strengthening and financing of Rumo’s business plan.

Due to this transaction, Company increased its share in subsidiary Cosan Logistica with dilution of non-controlling.

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

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), and in accordance with the regulations issued by the Brazilian Securities Commission—CVM applicable to the preparation of the Quarterly Information—ITR. 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, 2015.

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, 2015, except for the adoption of new standards and interpretations effective as of January 1, 2016. The Company has not early adopted any other standard, interpretation or amendment that has been issued.

These consolidated financial statements were authorized for issue by the Board of Directors on August 10, 2016.

 

2.2 New standards, interpretations and amendments adopted by the Company—Restated

The accounting effects of the ALL acquisition are presented in the note 4 and the financial position and consolidated results of operations for the current period are not necessarily comparable with the information presented in previous period.

Although these new standards and amendments apply for the first time in 2016, they do not have a material impact on the annual consolidated financial statements or the interim consolidated financial statements of the Company. The nature and the impact of each new standard or amendment is described below:

Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants

The amendments change the accounting requirements for biological assets that meet the definition of bearer plants. Under the amendments, biological assets that meet the definition of bearer plants will no longer be within the scope of IAS 41 Agriculture . Instead, IAS 16 will apply. After initial recognition, bearer plants will be measured under IAS 16 at accumulated cost (before maturity) and using either the cost model. The amendments also require that produce that grows on bearer plants will remain in the scope of IAS 41 measured at fair value less costs to sell. For government grants related to bearer plants, IAS 20 Accounting for Government Grants and Disclosure of Government Assistance will apply. These amendments substantially impact the jointly controlled company Raízen Energia and do not have any effect to the Company since it does not have any bearer plants. The impact related to the initial adoption of the accounting standard for the year ended December 31, 2015, as follow:

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

Consolidated statements of financial position

 

     December 31, 2015  
     As issued     IAS 41 effect     Restated  

Assets

      

Current assets

     6,835,231        —          6,835,231   

Investments in joint ventures

     8,329,520        (92,330     8,237,190   

Other non-current assets

     37,142,917        —          37,142,917   
  

 

 

   

 

 

   

 

 

 
     —          —          —     

Total assets

     52,307,668        (92,330     52,215,338   
  

 

 

   

 

 

   

 

 

 

Liabilities

      

Current liabilities

     6,922,633        —          6,922,633   

Non-current liabilities

     29,030,363        —          29,030,363   
  

 

 

   

 

 

   

 

 

 

Total liabilities

     35,952,996        —          35,952,996   
  

 

 

   

 

 

   

 

 

 

Shareholders’ equity

      

Share capital

     5,328        —          5,328   

Additional paid-in capital

     4,006,562        —          4,006,562   

Accumulated other comprehensive loss

     (478,207     —          (478,207

Retained earnings

     2,483,283        (57,716     2,425,567   
  

 

 

   

 

 

   

 

 

 

Equity attributable to owners of the parent

     6,016,966        (57,716     5,959,250   

Non-controlling interests

     10,337,706        (34,614     10,303,092   
  

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     16,354,672        (92,330     16,262,342   
  

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

     52,307,668        (92,330     52,215,338   
  

 

 

   

 

 

   

 

 

 

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

Consolidated statements of profit or loss

 

     April 1, 2015
to June 30,
2015

(as issued)
    IAS 41
effect
    April 1,
2015 to
June 30,
2015

(restated)
    January 1,
2015 to
June 30,
2015

(as issued)
    IAS 41
effect
    January 1,
2015 to
June 30,
2015

(restated)
 

Gross profit

     1,165,604        —          1,165,604        1,715,387        —          1,715,387   

Operating expense

     (416,621     —          (416,621     (915,083     —          (915,083
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before equity in earnings of investees and financial results

     748,983        —          748,983        800,304        —          800,304   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity in earnings of associates

     1,656          1,656        (2,978       (2,978

Equity in earnings of joint ventures

     90,274        (33,048     57,226        248,045        (20,947     227,098   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     91,930        (33,048     58,882        245,067        (20,947     224,120   

Financial results

     (608,906     —          (608,906     (867,329     —          (867,329
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit before taxes

     232,007        (33,048     198,959        178,042        (20,947     157,095   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income tax (expense) benefit

     (83,000     —          (83,000     (3,309     —          (3,309
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit from continuing operations

     149,007        (33,048     115,959        174,733        (20,947     153,786   

Loss from discontinued operations, net of tax

     (3,582     —          (3,582     (3,582     —          (3,582

Profit for the period

     145,425        (33,048     112,377        171,151        (20,947     150,204   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to:

            

Owners of the Parent

     6,528        (20,658     (14,130     16,067        (13,094     2,973   

Non-controlling interests

     138,897        (12,390     126,507        155,084        (7,853     147,231   

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

3 Significant accounting policies

The accounting policies set out below have been applied consistently by the Company to all periods presented.

 

3.1 Basis of consolidation

The consolidated interim financial statements include the accounts of Cosan and its subsidiaries. Cosan’s subsidiaries are listed below:

 

     June 30,
2016
     December 31,
2015
 

Directly owned subsidiaries

     

Cosan Logística S.A.

     72.47%         63.27%   

Cosan S.A. Indústria e Comércio

     62.50%         62.51%   

Interest of Cosan S.A. in its subsidiaries

     

Águas da Ponte Alta S.A.

     65.00%         65.00%   

Bioinvestments Negócios e Participações S.A.

     65.00%         65.00%   

Comma Oil Chemicals Limited

     100.00%         100.00%   

Companhia de Gás de São Paulo—COMGÁS (i)

     61.73%         61.33%   

Cosan Biomassa S.A.

     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%   

Nova Agrícola Ponte Alta S.A. (ii)

     29.50%         29.50%   

Nova Amaralina S.A. Propriedades Agrícolas. (ii)

     29.50%         29.50%   

Nova Santa Barbara Agrícola S.A. (ii)

     29.50%         29.50%   

Pasadena Empreendimentos e Participações S.A.

     100.00%         100.00%   

Proud Participações S.A.

     65.00%         65.00%   

Radar II Propriedades Agrícolas S.A.

     65.00%         65.00%   

Radar Propriedades Agrícolas S.A. (ii)

     29.50%         29.50%   

Terras da Ponte Alta S.A. (ii)

     29.50%         29.50%   

Vale da Ponte Alta S.A.

     65.00%         65.00%   

Zip Lube S.A.

     100.00%         100.00%   

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

     June 30,
2016
     December 31,
2015
 

Interest of Cosan

     

Logística S.A. in its subsidiaries

     

ALL – América Latina Logística Argentina S.A.

     25.71%         23.89%   

ALL – América Latina Logística Armazéns Gerais Ltda.

     28.27%         26.26%   

ALL – América Latina Logística Central S.A.

     20.79%         19.31%   

ALL – América Latina Logística Equipamentos Ltda. (iii)

     —           26.26%   

ALL – América Latina Logística Intermodal S.A.

     28.27%         26.26%   

ALL – América Latina Logística Malha Norte S.A.

     28.06%         26.06%   

ALL – América Latina Logística Malha Oeste S.A.

     28.27%         26.26%   

ALL – América Latina Logística Malha Paulista S.A.

     28.27%         26.26%   

ALL – América Latina Logística Malha Sul S.A.

     28.27%         26.26%   

ALL – América Latina Logística Mesopotâmica S.A.

     19.95%         18.53%   

ALL – América Latina Logística Participações S.A. (iii)

     —           26.26%   

ALL – América Latina Logística Rail Management Ltda.

     14.14%         13.13%   

ALL – América Latina Logística S.A.

     28.27%         26.26%   

ALL – América Latina Logística Serviços Ltda.

     28.27%         26.26%   

Boswells S.A.

     28.27%         26.26%   

Brado Holding S.A.

     28.27%         26.26%   

Brado Logística e Participações S.A.

     17.59%         16.34%   

Brado Logística S.A.

     17.59%         16.34%   

Logispot Armazéns Gerais S.A.

     14.42%         13.39%   

Paranaguá S.A.

     28.22%         26.22%   

PGT—Grains Terminal S.A.

     28.27%         26.26%   

Portofer Transporte Ferroviário Ltda.

     28.27%         26.26%   

Rumo Logística Operadora Multimodal S.A.

     28.27%         26.26%   

 

(i) From June 30, 2016, the subsidiary “Cosan S.A” encrease its share to 61.73% in Comgás due to the capital increase arising from partial use of tax benefit of goodwill as the Annual General Meeting / Extraordinary April 26, 2016 the subsidiary Comgás.
(ii) The Company has an indirect control over the Radar and its subsidiaries, even without controlling interest, as the Shareholders’ Agreement the subsidiary “Cosan S.A” has the power to direct all relevant activities of Radar and exercise most power in all relevant decisions on financial matters and operational radar.
(iii) Incorporated in March 1, 2016 by ALL Intermodal S.A.

 

3.2 New standards and interpretations not yet adopted

 

  IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement.

IFRS 9 includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. The Company has yet to assess IFRS 9’s full impact.

IFRS 9 is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted.

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

  IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11—Construction Contracts and IFRIC 13—Customer Loyalty Programmes. IFRS 15 is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted.

The Company is currently assessing the potential impacts of adopting IFRS 15.

 

  IFRS 16—Leases was issued on January 13, 2016. IFRS 16 eliminates the current dual accounting model for lessees, which distinguishes between on-balance sheet finance leases and off-balance sheet operating leases. Instead, there is a single, on-balance sheet accounting model that is similar to current finance lease accounting. For lessees, the lease becomes an on-balance sheet liability that attracts interest, together with a new asset on the other side of the balance sheet. In other words, lessees will appear to become more asset-rich but also more heavily indebted. The new standard takes effect in January 2019. Management is assessing the impact of its adoption.

There are no other IFRS or IFRIC interpretations that are not yet effective and that are expected to have a significant impact on the Company.

 

4 Business combinations

On 1 April 2015, after the necessary approvals from the competent bodies, the subsidiary “RUMO” incorporated 100% of the common shares of ALL and, through a shareholders’ agreement, now holds its full control and consolidate its results.

The merger took place by exchange of shares, with the issue by Rumo, of 1,963,670,770 registered common shares with no par value, representing 65.67% of its equity in exchange for 100% of the share capital of ALL , represented by 681,995,165 common shares.

As a result of the acquisition, the Company consolidates its participation strategy in the logistics segment and infrastructure in Brazil, incorporating approximately 12,000 km of rail present in ALL Awards.

 

a) Consideration transferred

The fair value of the ordinary shares issued was based on the listed share price of the ALL (ticker – ALL3.SA) as at March 31, 2015 of R$ 3.97 per share. Additionally, the value was adjusted by the settlement of pre-existing relationship, as follows:

 

     In thousands
of R$
 

Equity instruments (681,995,165 common shares)

     2,707,534   

Settlement of pre-existing relationship

     29,838   
  

 

 

 

Total consideration transferred

     2,737,372   
  

 

 

 

 

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Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

(i) Settlement of pre-existing relationship

In March 2009, Rumo and ALL entered into an operating agreement (pre-existing relationship) for the supply of sugar transport logistics and other grains from the western of the state of São Paulo to the Port of Santos, in which Rumo has port concessions for lifting services.

According to the terms of the existing agreement, Rumo invested in the construction and improvement of permanent roads under concession of ALL and acquisition of rolling stock for use in the transport of products in the rail network, in order to increase rail freight transport capacity in ALL. In exchange for the Company’s investments, the agreement stipulated that ALL should provide a certain capacity of rail transport services, as well as compensate Rumo through the payment of a fee, fixed contractually, per ton of product transported by ALL on the rail network and / or by the use of undercarriage given by Rumo to ALL.

This pre-existing relationship was settled when Rumo acquired ALL. As a result of this settlement, Rumo recorded a gain of R$ 29,838 in the profit or loss as “other operating income”.

The fair value of the settlement of pre-existing relationship has been the difference between the value of the investment made by Rumo and the discounted cash flow of the remuneration of such investment, considering the volume and contractually agreed rate.

 

b) Identifiable assets acquired and liabilities assumed

The following table summarizes the recognized amounts of assets acquired and liabilities assumed at the date of acquisition:

 

Description

  

Cash and cash equivalents

     169,703   

Investment securities

     940,689   

Trade receivables

     382,576   

Inventories

     79,115   

Other credits

     1,517,924   

Property, plant and equipment

     7,206,290   

Intangible assets

     7,652,231   

Loans, borrowings and debentures

     (6,639,223

Leases

     (1,857,947

Real estate credits certificate

     (340,255

Trade payables

     (915,213

Leases and concessions

     (1,974,280

Provision for legal proceedings

     (458,575

Deferred tax liabilities

     (1,168,034

Other liabilities

     (1,625,948
  

 

 

 

Consolidated net assets

     2,969,053   
  

 

 

 

Non-controlling interests

     (231,681
  

 

 

 

Total identifiable net assets acquired

     2,737,372   
  

 

 

 

 

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Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

During the measurement period were identified new information about facts and circumstances existing at the acquisition date related to temporary assets and liabilities were adjusted on completion of the acquisition.

 

5 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 regards to the allocation of resources.

The following statement of financial position and profit or loss selected information by segment was prepared on the same basis as the accounting practices used in the preparation of consolidated information:

 

20


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

 

     April 1, 2016 to June 30, 2016     Additional information  
     Raízen
Energia
    Raízen
Combustíveis
    COMGÁS     Radar     Lubricants     Logistics     Cosan
Corporate
    Deconsolidated
effects IFRS 11
    Segment
elimination /
adjustments
    Total
consolidated
    Cosan
Energia
    Cosan
Logística
 

Statement of profit or loss:

                        

Net sales

     2,642,897        16,479,574        1,493,958        24,014        488,992        1,376,248        341        (19,122,471     (19,151     3,364,402        2,007,304        1,376,248   

Domestic market

     1,001,494        16,479,574        1,493,958        24,014        374,949        1,312,995        341        (17,481,068     (19,151     3,187,106        1,893,261        1,312,995   

External market

     1,641,403        —          —          —          114,043        63,253        —          (1,641,403     —          177,296        114,043        63,253   

Cost of sales

     (2,216,693     (15,665,191     (729,430     —          (369,337     (907,528     (8,544     17,881,884        19,151        (1,995,688     (1,107,310     (907,528

Gross profit

     426,204        814,383        764,528        24,014        119,655        468,720        (8,203     (1,240,587     —          1,368,714        899,994        468,720   

Selling expenses

     (180,311     (299,521     (159,886     —          (95,368     (2,451     (100     479,832        —          (257,805     (255,354     (2,451

General and administrative expenses

     (115,335     (119,596     (84,627     (7,114     (16,947     (82,957     (85,567     234,931        —          (277,212     (149,684     (82,957

Other income (expense), net

     (31,531     117,352        (640     8,878        152        (10,067     (18,408     (85,821     —          (20,085     (10,018     (10,068

Financial results

     206,657        (146,745     (45,932     4,364        (25,351     (406,421     (284,025     (59,912     8,700        (748,665     (249,649     (406,421

Financial expense

     (211,252     (12,042     (164,259     (342     (13,883     (477,461     (195,964     223,294        8,700        (843,209     (343,682     (477,461

Financial income

     165,611        54,659        118,072        4,706        845        74,125        131,974        (220,270     —          329,722        255,399        74,125   

Foreign exchange losses, net

     (45,045     423,806        118,707        —          27,928        35,538        351,978        (378,761     —          534,151        563,265        35,538   

Derivatives

     297,343        (613,168     (118,452     —          (40,241     (38,623     (572,013     315,825        —          (769,329     (724,631     (38,623

Equity in earnings of associates

     (12,492     —          —          —          (2,157     2,565        352,381        12,492        (356,389     (3,600     (6,676     2,565   

Equity in earnings of joint ventures

     —          —          —          —          —          —          252,594        —          —          252,594        252,594        —     

Income tax (expense) benefit

     (79,297     (74,250     (163,127     (4,547     4,078        (3,018     99,276        153,547        (2,958     (70,296     (64,319     (3,017
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss) for the period

     213,895        291,623        310,316        25,595        (15,938     (33,629     307,948        (505,518     (350,647     243,645        416,888        (33,629
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to:

                        

Owners of the Parent

     213,895        279,440        310,316        25,595        (15,938     (11,006     307,948        (493,335     (590,553     26,362        281,585        (11,006

Non-controlling interests

     —          12,183        —          —          —          (22,623     —          (12,183     239,906        217,283        135,303        (22,623
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     213,895        291,623        310,316        25,595        (15,938     (33,629     307,948        (505,518     (350,647     243,645        416,888        (33,629

Other selected data:

                        

Depreciation and amortization

     541,002        148,653        122,037        159        21,959        215,647        4,528        (689,655     —          364,330        148,683        215,647   

EBITDA

     627,537        661,271        641,412        25,937        27,294        591,457        497,225        (1,288,808     (356,389     1,426,936        879,539        591,456   

Additions to PP&E, intangible and biological assets

     357,730        225,846        109,321        22        9,339        539,219        1,803        (583,576     —          659,704        120,485        539,219   

Reconciliation of EBITDA:

                        

Profit (loss) for the period

     213,895        291,623        310,316        25,595        (15,938     (33,629     307,948        (505,518     (350,647     243,645        416,888        (33,629

Income tax and social contribution

     79,297        74,250        163,127        4,547        (4,078     3,018        (99,276     (153,547     2,958        70,296        64,319        3,017   

Financial result, net

     (206,657     146,745        45,932        (4,364     25,351        406,421        284,025        59,912        (8,700     748,665        249,649        406,421   

Depreciation and amortization

     541,002        148,653        122,037        159        21,959        215,647        4,528        (689,655     —          364,330        148,683        215,647   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     627,537        661,271        641,412        25,937        27,294        591,457        497,225        (1,288,808     (356,389     1,426,936        879,539        591,456   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

21


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

 

     January 1, 2016 to June 30, 2016     Additional information  
     Raízen
Energia
    Raízen
Combustíveis
    COMGÁS     Radar     Lubricants     Logistics     Cosan
Corporate
    Deconsolidated
effects IFRS 11
    Segment
elimination /
adjustments
    Total
consolidated
    Cosan
Energia
    Cosan
Logística
 

Statement of profit or loss:

                        

Net sales

     6,509,176        32,871,326        2,954,034        46,928        968,117        2,562,139        374        (39,380,502     (25,208     6,506,384        3,969,453        2,562,139   

Domestic market

     2,680,599        32,871,326        2,954,034        46,928        740,882        2,458,491        374        (35,551,925     (25,208     6,175,501        3,742,218        2,458,491   

External market

     3,828,577        —          —          —          227,235        103,648        —          (3,828,577     —          330,883        227,235        103,648   

Cost of sales

     (4,883,779     (31,265,779     (1,558,014     —          (741,281     (1,778,611     (9,094     36,149,558        25,208        (4,061,792     (2,308,389     (1,778,611

Gross profit

     1,625,397        1,605,547        1,396,020        46,928        226,836        783,528        (8,720     (3,230,944     —          2,444,592        1,661,064        783,528   

Selling expenses

     (368,715     (656,617     (314,469     —          (179,342     (724     (100     1,025,332        —          (494,635     (493,912     (724

General and administrative expenses

     (278,621     (220,805     (157,953     (14,690     (35,740     (172,729     (131,641     499,426        —          (512,753     (291,340     (172,729

Other income (expense), net

     36,948        198,070        (2,656     8,665        1,854        (7,794     (57,720     (235,018     —          (57,651     (49,854     (7,794

Financial results

     415,898        (279,706     (142,008     8,128        (44,266     (833,718     (655,033     (136,192     113,480        (1,553,417     (699,008     (833,718

Financial expense

     (474,027     (55,397     (374,248     (751     (22,680     (947,113     (488,634     529,424        113,480        (1,719,946     (838,071     (947,113

Financial income

     327,899        114,210        231,626        8,928        1,809        135,651        202,481        (442,109     —          580,495        444,535        135,651   

Foreign exchange losses, net

     (60,219     782,103        242,561        (49     45,348        82,058        689,587        (721,884     —          1,059,505        1,070,777        82,058   

Derivatives

     622,245        (1,120,622     (241,947     —          (68,743     (104,314     (1,058,467     498,377        —          (1,473,471     (1,376,249     (104,314

Equity in earnings of associates

     (48,775     2,520        —          —          (3,022     6,122        634,872        46,255        (643,130     (5,158     (11,792     6,122   

Equity in earnings of joint ventures

     —          —          —          —          —          —          693,938        —          —          693,938        693,938        —     

Income tax (expense) benefit

     (447,913     (184,223     (267,762     (8,483     4,645        7,302        212,366        632,136        (38,583     (90,515     (59,234     7,302   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss) for the period

     934,219        464,786        511,172        40,548        (29,035     (218,013     687,962        (1,399,005     (568,233     424,401        749,862        (218,013
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to:

                        

Owners of the Parent

     934,219        442,538        511,172        40,548        (29,035     (59,050     687,962        (1,376,757     (993,926     157,671        530,291        (59,050

Non-controlling interests

     —          22,248        —          —          —          (158,963     —          (22,248     425,693        266,730        219,571        (158,963
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     934,219        464,786        511,172        40,548        (29,035     (218,013     687,962        (1,399,005     (568,233     424,401        749,862        (218,013

Other selected data:

                        

Depreciation and amortization

     1,184,444        312,272        241,085        314        42,588        425,432        7,489        (1,496,716     —          716,908        291,476        425,432   

EBITDA

     2,150,678        1,240,987        1,162,027        41,217        53,174        1,033,835        1,138,118        (3,391,665     (643,130     2,785,241        1,799,580        1,033,835   

Additions to PP&E, intangible and biological assets

     1,168,364        405,011        203,460        122        18,687        824,094        2,640        (1,573,375     —          1,049,003        224,909        824,094   

Reconciliation of EBITDA:

                        

Profit (loss) for the period

     934,219        464,786        511,172        40,548        (29,035     (218,013     687,962        (1,399,005     (568,233     424,401        749,862        (218,013

Income tax and social contribution

     447,913        184,223        267,762        8,483        (4,645     (7,302     (212,366     (632,136     38,583        90,515        59,234        (7,302

Financial result, net

     (415,898     279,706        142,008        (8,128     44,266        833,718        655,033        136,192        (113,480     1,553,417        699,008        833,718   

Depreciation and amortization

     1,184,444        312,272        241,085        314        42,588        425,432        7,489        (1,496,716     —          716,908        291,476        425,432   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     2,150,678        1,240,987        1,162,027        41,217        53,174        1,033,835        1,138,118        (3,391,665     (643,130     2,785,241        1,799,580        1,033,835   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

22


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

     April 1, 2015 to June 30, 2015 (Restated)     Additional information  
     Raízen
Energia
    Raízen
Combustíveis
    COMGÁS     Radar     Lubricants     Logistics     Cosan
Corporate
    Deconsolidated
effects IFRS 11
    Segment
elimination /
adjustments
    Total
consolidated
    Cosan
Energia
    Cosan
Logística
 

Statement of profit or loss:

                        

Net sales

     1,646,883        14,793,885        1,671,012        26,927        424,088        1,220,285        —          (16,440,768     (9,071     3,333,241        2,122,027        1,220,285   

Domestic market

     790,038        14,793,885        1,671,012        26,927        338,505        1,175,685        —          (15,583,923     (9,071     3,203,058        2,036,444        1,175,685   

External market

     856,845        —          —          —          85,583        44,600        —          (856,845     —          130,183        85,583        44,600   

Cost of sales

     (1,577,927     (14,134,501     (1,090,919     (5,530     (314,261     (765,998     —          15,712,428        9,071        (2,167,637     (1,410,710     (765,998

Gross profit

     68,956        659,384        580,093        21,397        109,827        454,287        —          (728,340     —          1,165,604        711,317        454,287   

Selling expenses

     (88,087     (281,090     (150,654     —          (70,380     —          —          369,177        —          (221,034     (221,034     —     

General and administrative expenses

     (121,175     (97,231     (73,860     (6,988     (17,385     (84,782     (50,491     218,406        —          (233,506     (142,597     (84,782

Other income (expense), net

     (24,342     82,634        (1,787     6,460        214        39,831        (6,799     (58,292     —          37,919        (1,911     39,831   

Financial results

     10,958        (34,279     (58,294     1,979        (12,766     (323,003     (216,822     23,321        —          (608,906     (260,761     (323,003

Financial expense

     (195,132     (47,074     (92,788     (351     (13,043     (354,971     (192,261     242,206        4,178        (649,236     (285,655     (354,971

Financial income

     152,405        41,452        41,910        2,330        1,027        47,899        32,968        (193,857     (4,178     121,956        74,036        47,899   

Foreign exchange losses, net

     145,247        28,116        46,063        —          2,960        (59     49,114        (173,363     —          98,078        107,547        (59

Derivatives

     (91,562     (56,773     (53,479     —          (3,710     (15,872     (106,643     148,335        —          (179,704     (156,689     (15,872

Equity in earnings of associates

     (11,422     3,064        —          —          (2,131     181        169,310        8,358        (165,704     1,656        1,475        181   

Equity in earnings of joint ventures

     —          —          —          —          —          —          57,226        —          —          57,226        57,226        —     

Income tax (expense) benefit

     72,765        (117,122     (100,134     (3,477     (3,318     (46,573     70,502        44,357        —          (83,000     (36,427     (46,573
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss) for the period

     (92,347     215,360        195,364        19,371        4,061        39,941        22,926        (123,013     (165,704     115,959        107,288        39,941   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to:

                        

Owners of the Parent

     (92,347     208,338        195,364        19,371        4,061        14,503        22,926        (115,991     (266,773     (10,548     16,402        14,503   

Non-controlling interests

     —          7,022        —          —          —          25,438        —          (7,022     101,069        126,507        90,886        25,438   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (92,347     215,360        195,364        19,371        4,061        39,941        22,926        (123,013     (165,704     115,959        107,288        39,941   

Other selected data:

                        

Depreciation and amortization

     336,430        147,697        119,701        246        18,919        176,885        1,059        (484,127     —          316,810        139,925        176,885   

EBITDA

     160,360        514,458        473,493        21,115        39,064        586,402        170,305        (674,818     (165,704     1,124,675        544,401        586,402   

Additions to PP&E, intangible and biological assets

     357,555        116,873        122,454        272        6,959        471,631        14,955        (474,428     —          616,271        144,639        471,631   

Reconciliation of EBITDA:

                        

Profit (loss) for the period

     (92,347     215,360        195,364        19,371        4,061        39,941        22,926        (123,013     (165,704     115,959        107,288        39,941   

Income tax and social contribution

     (72,765     117,122        100,134        3,477        3,318        46,573        (70,502     (44,357     —          83,000        36,427        46,573   

Financial result, net

     (10,958     34,279        58,294        (1,979     12,766        323,003        216,822        (23,321     —          608,906        260,761        323,003   

Depreciation and amortization

     336,430        147,697        119,701        246        18,919        176,885        1,059        (484,127     —          316,810        139,925        176,885   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     160,360        514,458        473,493        21,115        39,064        586,402        170,305        (674,818     (165,704     1,124,675        544,401        586,402   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

23


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

 

     January 1, 2015 to June 30, 2015 (Restated)     Additional information  
     Raízen
Energia
    Raízen
Combustíveis
    COMGÁS     Radar     Lubricants     Logistics     Cosan
Corporate
    Deconsolidated
effects IFRS 11
    Segment
elimination /
adjustments
    Total
consolidated
    Cosan
Energia
    Cosan
Logística
 

Statement of profit or loss:

                        

Net sales

     4,726,922        28,855,395        3,205,075        48,533        803,931        1,425,897        —          (33,582,317     (9,071     5,474,365        4,057,539        1,425,897   

Domestic market

     1,956,396        28,855,395        3,205,075        48,533        644,171        1,352,533        —          (30,811,791     (9,071     5,241,241        3,897,779        1,352,533   

External market

     2,770,526        —          —          —          159,760        73,364        —          (2,770,526     —          233,124        159,760        73,364   

Cost of sales

     (4,162,081     (27,394,590     (2,245,596     (7,268     (602,837     (912,348     —          31,556,671        9,071        (3,758,978     (2,855,701     (912,347

Gross profit

     564,841        1,460,805        959,479        41,265        201,094        513,549        —          (2,025,646     —          1,715,387        1,201,838        513,550   

Selling expenses

     (237,160     (597,023     (305,176     —          (135,185     —          —          834,183        —          (440,361     (440,360     —     

General and administrative expenses

     (261,826     (197,502     (160,456     (14,195     (33,532     (109,152     (95,983     459,328        —          (413,318     (283,475     (109,154

Other income (expense), net

     14,757        143,560        (3,867     20,783        373        39,371        (118,064     (158,317     —          (61,404     (100,775     39,371   

Financial results

     (227,345     (21,326     (132,251     3,671        (8,996     (343,402     (386,351     248,671        —          (867,329     (545,475     (343,402

Financial expense

     (399,974     (86,029     (196,678     (705     (21,488     (365,294     (364,683     486,003        8,000        (940,848     (559,468     (365,294

Financial income

     300,198        79,229        79,224        4,400        1,355        53,551        61,217        (379,427     (8,000     191,747        138,144        53,551   

Foreign exchange losses, net

     (460,179     (144,690     (196,450     (24     5,575        (56,276     (246,581     604,869        —          (493,756     (460,998     (56,276

Derivatives

     332,610        130,164        181,653        —          5,562        24,617        163,696        (462,774     —          375,528        336,847        24,617   

Equity in earnings of associates

     (17,412     7,112        —          —          (7,090     181        178,271        10,300        (174,340     (2,978     (3,159     180   

Equity in earnings of joint ventures

     —          —          —          —          —          —          227,098        —          —          227,098        227,098        —     

Income tax (expense) benefit

     103,048        (262,098     (131,975     (6,821     (9,023     (51,406     195,916        159,050        —          (3,309     48,097        (51,406
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss) for the period

     (61,097     533,528        225,754        44,703        7,641        49,141        887        (472,431     (174,340     153,786        103,789        49,139   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to:

                        

Owners of the Parent

     (61,097     514,484        225,754        44,703        7,641        22,056        887        (453,387     (294,486     6,555        (15,182     22,054   

Non-controlling interests

     —          19,044        —          —          —          27,085        —          (19,044     120,146        147,231        118,971        27,085   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (61,097     533,528        225,754        44,703        7,641        49,141        887        (472,431     (174,340     153,786        103,789        49,139   

Other selected data:

                        

Depreciation and amortization

     964.044        287.030        239.152        491        36.847        203.538        2.034        (1.251.074     —          482.062        278.522        203.538   

EBITDA

     1,027,244        1,103,982        729,132        48,344        62,507        647,487        193,356        (2,131,226     (174,340     1,506,486        879,689        647,485   

Additions to PP&E, intangible and biological assets

     1,198,002        358,627        246,020        940        15,264        502,621        33,115        (1,556,629     —          797,960        296,760        502,621   

Reconciliation of EBITDA:

                        

Profit (loss) for the period

     (61,097     533,528        225,754        44,703        7,641        49,141        887        (472,431     (174,340     153,786        103,789        49,139   

Income tax and social contribution

     (103,048     262,098        131,975        6,821        9,023        51,406        (195,916     (159,050     —          3,309        (48,097     51,406   

Financial result, net

     227,345        21,326        132,251        (3,671     8,996        343,402        386,351        (248,671     —          867,329        545,475        343,402   

Depreciation and amortization

     964,044        287,030        239,152        491        36,847        203,538        2,034        (1,251,074     —          482,062        278,522        203,538   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     1,027,244        1,103,982        729,132        48,344        62,507        647,487        193,356        (2,131,226     (174,340     1,506,486        879,689        647,485   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

24


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

 

     June 30, 2016     Additional information  
     Raízen
Energia
    Raízen
Combustíveis
    COMGÁS     Radar     Lubricants     Logistics     Cosan
Corporate
    Deconsolidated
effects IFRS 11
    Segment
elimination
    Total
consolidated
    Cosan
Energia
    Cosan
Logística
 

Statement of financial position:

                        

Cash and cash equivalents

     3,170,659        974,962        1,390,730        7,798        63,907        71,863        1,009,736        (4,145,621     —          2,544,034        2,259,354        71,863   

Marketable securities

     —          —          —          138,559        —          1,711,794        —          —          —          1,850,353        138,559        1,711,794   

Trade receivables

     626,584        1,745,822        573,785        21,666        247,719        269,506        45        (2,372,406     —          1,112,721        843,216        269,506   

Derivative financial instruments

     1,300,319        181,751        411,158        —          —          4,080        587,681        (1,482,070     —          1,002,919        998,839        4,080   

Inventories

     1,205,843        1,489,635        139,039        —          289,328        212,832        3,223        (2,695,478     —          644,422        431,590        212,832   

Other financial assets

     —          —          —          141,064        —          —          51,660        —          (51,660     141,064        192,724        —     

Other current assets

     2,049,352        1,352,703        90,397        137,080        46,826        404,985        209,088        (3,402,055     (57,573     830,803        470,768        404,985   

Other non-current assets

     3,168,935        890,395        262,340        58        43,202        2,802,856        1,722,111        (4,059,330     (7,989     4,822,578        2,019,716        2,802,856   

Investment in associates

     218,508        —          —          —          6,265        46,745        12,110,409        (218,508     (11,983,066     180,353        133,608        46,745   

Investment in joint ventures

     —          —          —          —          —          —          8,347,720        —          —          8,347,720        8,347,720        —     

Biological assets

     809,841        —          —          —          —          —          —          (809,841     —          —          —          —     

Investment property

     —          —          —          2,593,649        —          —          —          —          —          2,593,649        2,593,649        —     

Property, plant and equipment

     11,051,790        2,359,833        —          1,618        240,455        10,051,873        150,759        (13,411,623     —          10,444,705        392,832        10,051,873   

Intangible assets and goodwill

     3,246,428        4,500,044        8,574,445        1,889        796,154        7,862,142        8,227        (7,746,472     —          17,242,857        9,380,715        7,862,142   

Loans, borrowings and debenture

     (9,956,894     (2,648,257     (3,550,781     —          (472,879     (8,169,580     (4,980,472     12,605,151        —          (17,173,712     (8,244,200     (8,169,580

Derivative financial instruments

     (1,237,068     (917,504     —          —          (53,218     (24,243     (762,932     2,154,572        —          (840,393     (816,150     (24,243

Trade payables

     (977,463     (670,482     (1,165,076     (2,209     (197,883     (473,375     (4,849     1,647,945        —          (1,843,392     (1,370,017     (473,375

Employee benefits payable

     (434,535     (123,542     (45,511     (5,201     (17,880     (135,322     (13,324     558,077        —          (217,238     (81,916     (135,322

Other current liabilities

     (1,040,859     (1,320,508     (162,550     (37,485     (133,006     (1,267,115     (206,998     2,361,367        55,629        (1,751,525     (504,983     (1,267,115

Other non-current liabilities

     (1,309,603     (2,769,990     (1,342,467     (106,310     (157,960     (7,199,804     (3,472,773     4,079,593        93,298        (12,186,016     (5,069,581     (7,199,804
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets (net of liabilities) allocated by segment

     11,891,837        5,044,862        5,175,509        2,892,176        701,030        6,169,237        14,759,311        (16,936,699     (11,951,361     17,745,902        12,116,443        6,169,237   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

     26,848,259        13,495,145        11,441,894        3,043,381        1,733,856        23,438,676        24,200,659        (40,343,404     (12,100,288     51,758,178        28,203,290        23,438,676   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity attributable to owners of the parent

     11,892,800        4,870,307        5,175,509        2,892,176        701,030        1,670,838        14,759,311        (16,763,107     (19,086,982     6,111,882        8,647,429        1,670,838   

Non-controlling interests

     (963     174,555        —          —          —          4,498,399        —          (173,592     7,135,621        11,634,020        3,469,014        4,498,399   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     11,891,837        5,044,862        5,175,509        2,892,176        701,030        6,169,237        14,759,311        (16,936,699     (11,951,361     17,745,902        12,116,443        6,169,237   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

25


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

 

     December 31, 2015 (Restated)     Additional information  
     Raízen
Energia
    Raízen
Combustíveis
    COMGÁS     Radar     Lubricants     Logistics     Cosan
Corporate
    Deconsolidated
effects IFRS 11
    Segment
elimination
    Total
consolidated
    Cosan
Energia
    Cosan
Logística
 

Statement of financial position:

                        

Cash and cash equivalents

     2,995,495        885,880        1,967,643        1,016        96,907        246,849        1,193,409        (3,881,375     —          3,505,824        3,129,530        246,849   

Marketable securities

     —          —          —          241,430        —          508,268        —          —          —          749,698        241,430        508,268   

Trade receivables

     719,092        2,058,601        540,132        38,510        220,417        165,671        248        (2,777,693     —          964,978        799,308        165,671   

Derivative financial instruments

     1,465,816        255,665        665,032        —          12,363        99,863        1,653,038        (1,721,481     —          2,430,296        2,292,859        99,863   

Inventories

     2,371,987        1,287,946        134,347        —          293,916        225,784        2,854        (3,659,933     —          656,901        431,117        225,784   

Other current assets

     1,579,568        1,029,510        132,960        120,615        51,926        364,168        277,393        (2,609,078     (66,604     880,458        503,502        364,168   

Other non-current assets

     3,425,968        921,891        279,091        51        (135,853     2,824,311        1,937,123        (4,347,859     (9,717     4,895,006        2,070,687        2,824,311   

Investment in associates

     225,670        248,456        —          —          8,453        44,241        11,971,024        (474,126     (11,839,342     184,376        140,134        44,241   

Investment in joint ventures

     —          —          —          —          —          —          8,237,190        —          —          8,237,190        8,237,190        —     

Biological assets

     678,564        —          —          —          —          —          —          (678,564     —          —          —          —     

Investment property

     —          —          —          2,595,035        —          —          —          —          —          2,595,035        2,595,035        —     

Property, plant and equipment

     11,027,461        2,409,555        —          2,029        243,080        9,404,087        156,691        (13,437,016     —          9,805,887        401,800        9,404,087   

Intangible assets and goodwill

     3,261,623        4,414,352        8,620,436        1,669        818,362        7,862,420        6,802        (7,675,975     —          17,309,689        9,447,269        7,862,420   

Loans, borrowings and debenture

     (11,549,211     (3,226,449     (3,823,067     —          (512,758     (8,585,175     (5,908,203     14,775,660        —          (18,829,203     (9,755,703     (8,585,175

Trade payables

     (676,321     (67,902     —          —          (291     (1,780     (740,427     744,223        —          (742,498     (740,718     (1,780

Derivative financial instruments

     (1,126,540     (937,177     (1,302,397     (2,511     (235,663     (420,189     (4,252     2,063,717        —          (1,965,012     (1,544,822     (420,189

Employee benefits payable

     (315,704     (83,214     (65,522     (5,684     (15,061     (149,871     (20,141     398,918        —          (256,279     (106,407     (149,871

Other current liabilities

     (920,298     (968,904     (103,331     (35,464     (135,945     (1,477,920     (237,919     1,889,202        64,528        (1,926,051     (463,015     (1,477,920

Other non-current liabilities

     (1,364,086     (3,129,560     (1,180,987     (104,403     (209,245     (7,094,274     (3,754,009     4,493,646        108,965        (12,233,953     (5,236,850     (7,094,274
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets (net of liabilities) allocated by segment

     11,799,084        5,098,650        5,864,337        2,852,293        500,608        4,016,453        14,770,821        (16,897,734     (11,742,170     16,262,342        12,442,346        4,016,453   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

     27,751,244        13,511,856        12,339,641        3,000,355        1,609,571        21,745,662        25,435,772        (41,263,100     (11,915,663     52,215,338        30,289,861        21,745,662   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity attributable to owners of the parent

     11,800,047        4,926,655        5,864,337        2,852,293        500,608        1,113,277        14,770,821        (16,726,702     (19,142,086     5,959,250        8,753,858        1,113,277   

Non-controlling interests

     (963     171,995        —          —          —          2,903,176        —          (171,032     7,399,916        10,303,092        3,688,488        2,903,176   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     11,799,084        5,098,650        5,864,337        2,852,293        500,608        4,016,453        14,770,821        (16,897,734     (11,742,170     16,262,342        12,442,346        4,016,453   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

26


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

Net sales by segment:

 

     April 1, 2016 to
June 30, 2016
    January 1, 2016
to June 30, 2016
    April 1, 2015 to
June 30, 2015
    January 1, 2015
to June 30, 2015
 

Raízen Energia

        

Ethanol

     1,262,340        3,199,252        940,503        2,566,987   

Sugar

     1,115,321        2,961,609        464,968        1,873,297   

Cogeneration

     151,438        195,319        172,052        184,738   

Other

     113,798        152,996        69,360        101,900   
  

 

 

   

 

 

   

 

 

   

 

 

 
     2,642,897        6,509,176        1,646,883        4,726,922   

Raízen Combustíveis

        

Fuels

     16,479,574        32,871,326        14,793,885        28,855,395   
  

 

 

   

 

 

   

 

 

   

 

 

 
     16,479,574        32,871,326        14,793,885        28,855,395   

COMGÁS

        

Industrial

     996,765        2,002,830        1,049,105        2,076,956   

Residential

     197,848        353,254        181,347        302,204   

Thermo generation

     9,873        61,594        135,036        250,145   

Construction revenue

     57,386        111,909        72,128        138,100   

Commercial

     50,827        97,977        50,014        95,051   

Cogeneration

     75,903        146,301        71,792        133,401   

Automotive

     88,095        154,287        103,343        193,724   

Other

     17,261        25,882        8,247        15,494   
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,493,958        2,954,034        1,671,012        3,205,075   

Radar

        

Land lease

     20,164        39,353        16,519        33,505   

Property sales

     —          —          6,436        8,315   

Other

     3,850        7,575        3,972        6,713   
  

 

 

   

 

 

   

 

 

   

 

 

 
     24,014        46,928        26,927        48,533   

Lubricants

        

Lubricants

     425,273        851,185        327,814        637,523   

Basic oil

     59,891        108,833        56,704        94,158   

Other

     3,828        8,099        39,570        72,250   
  

 

 

   

 

 

   

 

 

   

 

 

 
     488,992        968,117        424,088        803,931   

Cosan Corporate

     341        374        —          —     

IFRS 11—Deconsolidated of adjustments/eliminations joint ventures and eliminations

     (19,141,622     (39,405,710     (16,449,839     (33,591,388
  

 

 

   

 

 

   

 

 

   

 

 

 

Cosan Energia

     1,988,154        3,944,245        2,112,956        4,048,468   
  

 

 

   

 

 

   

 

 

   

 

 

 

Logistics

        

North operations (i)

     998,048        1,893,980        817,350        1,022,962   

South operations (i)

     302,500        527,328        320,151        320,151   

Container operations (i)

     75,700        140,831        82,784        82,784   
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,376,248        2,562,139        1,220,285        1,425,897   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     3,364,402        6,506,384        3,333,241        5,474,365   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(i) Segment created following the ALL Acquisition, which was completed on April 1, 2015.

 

27


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

6 Cash and cash equivalents

 

     June 30,
2016
     December 31,
2015
 

Cash and bank deposits

     463,557         305,510   

Short-term investments

     2,080,477         3,200,314   
  

 

 

    

 

 

 
     2,544,034         3,505,824   
  

 

 

    

 

 

 

Short-term investments are composed as follows:

 

     June 30,
2016
     December 31,
2015
 

Investment funds

     

Repurchase agreements

     1,603,667         1,252,229   

Bank certificate of deposits—CDB

     212,840         792,279   

Other

     20,738         199,919   
  

 

 

    

 

 

 
     1,837,245         2,244,427   

Bank investments

     

Repurchase agreements

     63,865         407,971   

Bank certificate of deposits—CDB

     171,043         542,658   

Other

     8,324         5,258   
  

 

 

    

 

 

 
     243,232         955,887   
     2,080,477         3,200,314   
  

 

 

    

 

 

 

 

7 Marketable securities

 

     June 30,
2016
     December 31,
2015
 

Government security

     1,614,153         334,167   

Bank certificate of deposits—CDB

     236,200         271,323   
  

 

 

    

 

 

 
     1,850,353         605,490   
  

 

 

    

 

 

 

 

28


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

8 Trade receivables

 

     June 30,
2016
    December 31,
2015
 

Domestic—Brazilian Reais

     1,156,352        999,007   

Export—Foreign currency

     26,673        29,402   

Allowance for doubtful accounts

     (70,303     (63,431
  

 

 

   

 

 

 
     1,112,722        964,978   
  

 

 

   

 

 

 

Current

     1,044,614        904,245   
  

 

 

   

 

 

 

Non-current

     68,108        60,733   
  

 

 

   

 

 

 

 

9 Other current tax receivable

 

     June 30,
2016
     December 31,
2015
 

ICMS—State VAT

     615,769         597,023   

COFINS—Revenue tax

     213,293         228,393   

PIS—Revenue tax

     63,416         69,098   

PAES—Special Program for Installment Payments

     1,991         33,245   

Other

     13,958         17,682   
  

 

 

    

 

 

 
     908,427         945,441   
  

 

 

    

 

 

 

Current

     184,231         311,892   
  

 

 

    

 

 

 

Non-current

     724,196         633,549   
  

 

 

    

 

 

 

 

29


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

10 Related parties

 

a) Receivables from and payables to related parties:

 

     June 30,
2016
     December 31,
2015
 

Current assets

     

Commercial operations

     

Raízen Energia S.A.

     61,727         47,591   

Raízen Combustíveis S.A.

     8,587         3,052   

Aguassanta Participações S.A.

     6,327         6,371   

Other

     9,042         4,085   
  

 

 

    

 

 

 
     85,683         61,099   

Corporate operation / Agreements

     

Raízen Energia S.A.

     10,733         13,028   
  

 

 

    

 

 

 
     10,733         13,028   

Financial operations

     

Raízen Combustíveis S.A.

     —           1,102   
  

 

 

    

 

 

 
     —           1,102   
     96,416         75,229   
  

 

 

    

 

 

 

Non-current assets

     

Receivables under the framework agreement

     

Raízen Energia S.A.

     114,687         89,763   

Janus Brasil Participações S.A.

     20,875         20,875   
  

 

 

    

 

 

 
     135,562         110,638   

Financial operations

     

Rezende Barbosa Group

     46,052         70,365   

Novvi Limited Liability Company

     15,414         17,121   

Other

     191         8   
  

 

 

    

 

 

 
     61,657         87,494   

Corporate operation

     

Raízen Energia S.A.

     —           23,029   

Other

     —           184   
  

 

 

    

 

 

 
     —           23,213   
     197,219         221,345   
  

 

 

    

 

 

 

Total

     293,635         296,574   
  

 

 

    

 

 

 

Current liabilities

     

Commercial operations

     

Raízen Energia S.A.

     25,215         46,582   

Raízen Combustíveis S.A.

     72,983         71,489   

Other

     170         (454
  

 

 

    

 

 

 
     98,368         117,617   

Corporate operations / Agreements

     

Raízen Energia S.A.

     103,539         78,653   

Raízen Combustíveis S.A.

     6,866         7,810   
  

 

 

    

 

 

 
     110,405         86,463   

Total

     208,773         204,080   
  

 

 

    

 

 

 

 

30


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

b) Related party transactions:

 

     April 1,
2016 to
June 30,
2016
    January 1,
2016 to
June 30,
2016
    April 1,
2015 to
June 30,
2015
    January 1,
2015 to
June 30,
2015
 

Sales of goods and services

        

Raízen Energia S.A.

     100,063        214,898        42,596        138,337   

Raízen Combustíveis S.A.

     34,314        62,211        31,182        34,857   

Other

     —          422        127        127   
  

 

 

   

 

 

   

 

 

   

 

 

 
     134,377        277,531        73,905        173,321   

Purchase of goods / Inputs

        

Raízen Energia S.A.

     (47     (66     (67     (70

Raízen Combustíveis S.A.

     (225,956     (427,050     (1,751     (1,764

Other

     (144     (269     —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 
     (226,147     (427,385     (1,818     (1,834

Land lease

        

Raízen Energia S.A.

     15,314        31,485        14,777        29,279   
  

 

 

   

 

 

   

 

 

   

 

 

 
     15,314        31,485        14,777        29,279   

Shared income (expense)

        

Aguassanta Participações S.A.

     92        171        111        216   

Raízen Energia S.A.

     (18,732     (33,845     (10,674     (21,342
  

 

 

   

 

 

   

 

 

   

 

 

 
     (18,640     (33,674     (10,563     (21,126

Financial result

        

Raízen Energia S.A.

     470        994        420        1,230   

Other

     128        (73     (76     (195
  

 

 

   

 

 

   

 

 

   

 

 

 
     598        921        344        1,035   

Total

     (94,498     (151,122     76,645        180,675   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

c) Officers’ and directors’ compensation

 

     April 1,
2016 to
June 30,
2016
     January 1,
2016 to
June 30,
2016
     April 1,
2015 to
June 30,
2015
     January 1,
2015 to
June 30,
2015
 

Regular compensation

     47,213         58,288         6,655         20,870   

Stock option expense

     3,416         5,896         2,930         5,859   

Bonuses and other variable compensation

     23,227         33,512         24,908         33,060   
  

 

 

    

 

 

    

 

 

    

 

 

 
     73,856         97,696         34,493         59,789   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

31


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

11 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.
    Other
investments
    Total  

Shares issued by the associate

     65,957,282        200,002        16,166,927        —       

Shares held by Cosan

     33,638,214        100,001        31,699,465        —       

Cosan ownership interest

     51.00%        50.00%        51.00%        —       
  

 

 

   

 

 

   

 

 

   

 

 

   

Equity in earnings (losses) of associates at June 30, 2015

     5,986        (7,081     146        (2,029     (2,978

At December 31, 2015

     99,638        6,783        23,713        54,242        184,376   

Equity in earnings (losses) of associates

     (1,461     (3,022     3,976        (4,651     (5,158

Capital increase

     —          2,170        —          —          2,170   

Dividends

     (1,508     —          (689     (3,754     (5,951

Other

     (492     —          —          5,406        4,914   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At June 30, 2016

     96,177        5,931        27,000        51,243        180,351   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

32


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

b) Information in the non-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 Logística
Operadora
Multimodal S.A.
    Logispot
Armazéns
Agrícolas S.A.
    Radar
Propriedades
Agrícolas S.A.
    Radar II
Propriedades
Agrícolas S.A.
    Elimination of
participation
Radar II in
Radar
    Total  

Shares issued by the associate

     407,214,353        365,100,567        127,313,301        1,339,015,898        2,040,816        21,148,989        830,690,258        —       

Shares held by non-controlling shareholders

     153,511,030        101,368,577        48,720,752        960,507,722        1,000,000        17,147,822        290,710,861        —       

Non-controlling interest

     37.49%        27.52%        38.27%        71.73%        49.00%        81.08%        35.00%        —       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Equity in earnings

                  

(losses) of associates at June 30, 2015 (Restated)

     (5,692     6,867        88,747        28,186        (1,101     26,609        3,615        —          147,231   

At December 31, 2015

     3,700,096        46,043        2,109,567        2,866,244        36,835        1,728,749        349,022        (498,850     10,337,706   

Effect of changes to IAS 41—in joint ventures (Note 2.2)

     (34,614     —          —          —          —          —          —          —          (34,614

At December 31, 2015 (Restated)

     3,665,482        46,043        2,109,567        2,866,244        36,835        1,728,749        349,022        (498,850     10,303,092   

Equity in earnings (losses) of associates

     226,893        (20,770     197,239        (158,175     (788     18,623        7,442        (3,734     266,730   

Other comprehensive income (losses)

     (25,183     91        —          1,879        —          (590     (38     110        (23,731

Dividends

     (212,448     —          (475,351     —          —          —          —          —          (687,799

Capital increase

     —          139,556        —          1,751,480        —          —          —          —          1,891,036   

Other

     (85,393     (67,663     36,825        923        —          —          —          —          (115,308
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At June 30, 2016

     3,569,351        97,257        1,868,280        4,462,351        36,047        1,746,782        356,426        (502,474     11,634,020   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

12 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 at June 30, 2015 (Restated)

     256,649        (29,551     227,098   

At December 31, 2015

     3,204,834        5,124,686        8,329,520   

Effect of changes to IAS 41—in joint ventures (Note 2.2)

     —          (92,330     (92,330

At December 31, 2015 (Restated)

     3,204,834        5,032,356        8,237,190   

Equity in earnings of joint ventures

     220,905        473,033        693,938   

Other comprehensive losses

     13,975        (136,539     (122,564

Interest on capital

     (39,000     —          (39,000

Dividends

     (224,060     (197,782     (421,842
  

 

 

   

 

 

   

 

 

 

At June 30, 2016

     3,176,654        5,171,068        8,347,722   
  

 

 

   

 

 

   

 

 

 

The statement of financial position and statement of profit or loss of the joint ventures are disclosed in Note 5, 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 million, which was unused at June 30, 2016.

 

13 Assets held for sale and investment property

 

     Investment
property
    Assets
held for
sale
    Total  

At December 31, 2015

     2,595,035        149,938        2,744,973   

Change in fair value

     8,532        (5,233     3,299   

Additions

     —          3,382        3,382   

Transfers

     (9,918     9,918        —     
  

 

 

   

 

 

   

 

 

 

At June 30, 2016

     2,593,649        158,005        2,751,654   
  

 

 

   

 

 

   

 

 

 

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

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, 2015

     859,957        663,223        4,235,037        3,568,597        824,034        467,090        10,617,938   

Additions

     —          6,690        17,816        —          992,148        18,778        1,035,432   

Disposals

     —          (101     (823     (7,409     —          (9,445     (17,778

Transfers

     78,505        52,457        607,939        14,589        (780,622     11,805        (15,327
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At June 30, 2016

     938,462        722,269        4,859,969        3,575,777        1,035,560        488,228        11,620,265   

Depreciation

              

At December 31, 2015

     (118,056     (218,925     (248,686     (209,308     —          (17,076     (812,051

Additions

     (21,893     (37,644     (127,133     (146,905     —          (36,150     (369,725

Disposals

     —          100        440        3,048        —          2,555        6,143   

Transfers

     4,678        1,159        3,071        (7,342     —          (1,493     73   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At June 30, 2015

     (135,271     (255,310     (372,308     (360,507     —          (52,164     (1,175,560

At December 31, 2015

     741,901        444,298        3,986,351        3,359,289        824,034        450,014        9,805,887   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At June 30, 2016

     803,191        466,959        4,487,661        3,215,270        1,035,560        436,064        10,444,705   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Capitalization of borrowing costs

Capitalized borrowing costs for the period ended June 30, 2016 amounted to R$2.103 (R$5.550 for the period ended June 30, 2015).

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

15 Intangible assets and goodwill

 

     Goodwill     Concession
rights
    Improvements
to public
concessions
and operating
licenses
    Trademarks     Customer
relationships
    Other     Total  

Cost

              

At December 31, 2015

     713,291        16,664,047        432,529        252,474        940,470        404,013        19,406,824   

Additions

     —          161,084        —          —          42,155        7,430        210,669   

Disposals

     —          (11,924     —          —          (9,152     —          (21,076

Transfers

     —          (165     —          —          (1,190     15,096        13,741   

Business combination

     —          67,583        —          —          —          —          67,583   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At June 30, 2016

     713,291        16,880,625        432,529        252,474        972,283        426,539        19,677,741   

Amortization

              

At December 31, 2015

     —          (1,011,806     (193,818     (159,789     (575,411     (156,311     (2,097,135

Additions

     (2,846     (224,672     (5,870     (11,414     (74,737     (30,926     (350,465

Disposals

     —          7,948        —          —          4,761        —          12,709   

Transfers

     —          123        —          —          —          (117     6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At June 30, 2016

     (2,846     (1,228,407     (199,688     (171,203     (645,387     (187,354     (2,434,885

At December 31, 2015

     713,291        15,652,241        238,711        92,685        365,059        247,702        17,309,689   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At June 30, 2016

     710,445        15,652,218        232,841        81,271        326,896        239,185        17,242,856   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

Capitalization of borrowing costs

Capitalized borrowing costs for the period ended June 30, 2016, amounted to R$9,659 (R$9,383 for the period ended June 30, 2015). The weighted average interest rate used to capitalize borrowing costs on the balance of construction in progress, was 12,98% p.a. for the period ended June 30, 2016 (10.40% p.a. for the period ended June 30, 2015).

 

Intangible assets (excluding goodwill)

   Annual rate of
amortization - %
     June 30,
2016
     December 31,
2015
 

Gas distribution concession—COMGÁS (i)

     Concession term         8,230,218         8,237,379   

Concession rights—Rumo (ii)

     Concession term         7,422,000         7,414,862   
     

 

 

    

 

 

 
        15,652,218         15,652,241   

Operating license for port terminal (iii)

     4.00%         232,841         238,711   
     

 

 

    

 

 

 
        232,841         238,711   

Trademarks

        

Mobil

     10.00%         57,068         68,481   

Comma

     —           24,203         24,204   
     

 

 

    

 

 

 
        81,271         92,685   

Relationships with customers

        

COMGÁS

     20.00%         280,013         313,694   

Lubricants

     6.00%         46,883         51,365   
     

 

 

    

 

 

 
        326,896         365,059   

Other

        

Software licenses

     20.00%         130,468         126,469   

Other

     15.00%         108,717         121,233   
     

 

 

    

 

 

 
        239,185         247,702   
        16,532,411         16,596,398   
     

 

 

    

 

 

 

 

(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 ALL 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 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 June 30, 2016, no impairment indicators were identified that would trigger the need for an impairment test.

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

6 Loans, borrowings and debentures

 

     Interest                       

Description

   Index (i)      Annual
interest (ii)
     June 30,
2016
     December 31,
2015
     Maturity  

Loan and borrowings

              

BNDES

     URTJLP         9.34%         2,664,156         2,851,793         Jun-2029   
     Fixed         4.93%         1,110,292         1,016,225         Sep-2018   
     TJ462         10.43%         730,903         809,660         Oct-2020   
     Selic         16.22%         310,502         298,258         Jun-2023   
     TJLP         10.15%         161,432         176,900         Jun-2023   
     Selic         14.15%         5,897         5,595         Sep-2020   
     Fixed         3.95%         4,293         4,684         Jan-2024   
     IPCA         15.59%         4,519         4,152         Nov-2021   
     URTJLP         10.13%         25,580         217         Sep-2022   

EIB

     US$ + LIBOR         2.35%         655,634         869,014         Sep-2021   

Foreign loans

     LIBOR Sterling         3.93%         229,810         312,940         Dec-2019   

FRN

     US$         2.63%         —           216,134         Jan-2017   

ECN

     112% of CDI         15.95%         150,096         406,805         Dec-2018   
     109% of CDI         15.50%         —           304,644         Oct-2018   
     129,62% of CDI         18.69%         547,032         —           Jun-2023   
     US$         3.79%         —           126,669         Jul-2016   

Perpetual Notes

     US$         8.25%         1,624,793         1,976,673         —     

Resolution 4131

     US$         3.08%         129,929         477,705         Oct-2020   
     US$ + LIBOR         2.40%         398,076         471,045         Mar-2018   
     US$ + LIBOR         2.00%         353,352         406,348         Nov-2016   

Senior Notes Due 2018

     Fixed         9.50%         170,280         875,376         Mar-2018   

Senior Notes Due 2023

     US$         5.00%         305,764         2,009,296         Mar-2023   

Senior Notes Due 2027

     US$         7.00%         1,655,650         —           Jan-2027   

FINEP

     Fixed         5.00%         123,166         137,133         Nov-2020   

Trade banks

     CDI + 3.50% p.a.         18.13%         —           205,781         Sep-2016   
     CDI + 4.91% p.a.         19.73%         196,448         195,632         Jun-2019   
     Fixed         20.98%         1,914         3,898         Jun-2016   

Working capital

     CDI + 2.50% p.a.         17.33%         388,619         388,203         Dec-2018   
     CDI + 2.80% p.a.         17.50%         287,203         —           Dec-2018   
     US$ + LIBOR         4.45%         84,108         100,121         Sep-2021   
     CDI + 0.28% p.m.         18.02%         15,035         25,004         Dec-2016   
     121.10% of CDI         17.37%         5,013         10,144         Nov-2016   
     118% of CDI         —           25,331         17,764         Oct-2016   

Prepayment

     US$ + LIBOR         3.65%         55,164         —           Apr-2017   
        

 

 

    

 

 

    
           12,419,991         14,703,813      

Debentures

              

Convertible debentures

     URTJLP         9.01%         —           2,592         Jun-2016   

Non-convertible debentures

     CDI + 2.05% p.a         16.47%         148,040         1,431,607         Mar-2018   
     CDI + 1.30% p.a.         15.61%         298,972         775,228         Oct-2017   
     CDI + 3.50% p.a.         18.12%         2,321,303         —           Jun-2023   
     IPCA         18.79%         529,539         594,157         Dec-2025   
     108% of CDI         15.34%         526,379         526,285         Jul-2018   
     IPCA         16.53%         634,732         484,246         Sep-2020   
     Fixed         13.13%         163,834         161,175         Oct-2020   
     CDI         15.17%         129,963         119,785         Sep-2019   
     % of net revenue         —           959         30,315         —     
        

 

 

    

 

 

    
           4,753,721         4,125,390      

Total

           17,173,712         18,829,203      
        

 

 

    

 

 

    

Current

           2,304,564         2,775,510      
        

 

 

    

 

 

    

Non-current

           14,869,148         16,053,693      
        

 

 

    

 

 

    

 

(i) TJLP and URTJLP are long-term interest rates on BNDES (Brazilian National Economic and Social Development Bank) loans. Selic is the benchmark interest rate set by the Brazilian Central Bank. CDI is a benchmark interbank lending rate in Brazil. IPCA is a benchmark consumer price index.
(ii) As at June 30, 2016.

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

On June 9, 2016, it was issued Senior Notes in the international market in accordance with the “Regulation S” and “144A” in the amount of US$ 500 million, which are subject to interest at 7% pa The funds were used for partial repayment of Senior Note 2018 and Senior Note 2023. During the term of the permit, the Company must maintain the net debt divided by EBITDA, and other financial covenants.

On July 11, 2016 the Cosan Luxembourg S.A. (“Cosan Lux”) issued an additional U.S.$150,000,000 principal amount of its 7% Senior Notes due 2027. The Bonds are additional securities issued pursuant to the provisions of the indenture, dated as of June 20, 2016, among the Issuer, Cosan S.A. and Deutsche Bank Trust Company Americas, as Trustee (the “Trustee”), and an officers’ certificate to be dated July 18, 2016.

On June 28, 2016 the subsidiary “Rumo” completed the structure of part of the debt reprofiling of Rumo and its subsidiaries maturing in 2016, 2017 and 2018 in the amount of R$ 2,925,647, with changes to certain terms and conditions, or hiring new working capital instruments. As a result of the operation were issued Debentures not convertible into shares maturing in 2023 and carried out contractual amendment of certain debts which extended the maturity to start from 2019.

The carrying amounts of loans, borrowings and debentures are denominated in the following currencies:

 

     June 30,
2016
     December 31,
2015
 

Brazilian Real

     11,681,432         11,863,258   

US Dollar

     5,262,470         6,653,005   

Pound Sterling

     229,810         312,940   
  

 

 

    

 

 

 
     17,173,712         18,829,203   
  

 

 

    

 

 

 

Financial Covenants

The Company and its subsidiaries are subject to certain restrictive financial covenants set forth in existing loans, financing and debentures agreements in relation to certain financial and non-financial indicators. Financial ratios are: (i) consolidated net comprehensive debt (Bank loans, bonds, leases, certificates of real estate receivables net of cash and cash equivalents, marketable securities and derivative instruments)/ EBITDA; (ii) EBITDA / consolidated financial results (considers only interest on debentures, loans / financing and derivative activities); (iii) equity / net assets, being item (iv) applicable only to BNDES. Except for BNDES, whose measurement is required annually, a quarterly measurement is required on the reporting date, using the consolidated financial statements.

Except for BNDES, whose new net comprehensive debt indicators / EBITDA and ICD are yet to be set, all other creditors have agreed to a ratio of up to 5.5x net comprehensive debt / EBITDA. If the negotiations with BNDES require a lower leverage ratio, such ratio will be extended to all other creditors with equivalent covenants conditions. On June 30, 2016, quarterly financial covenants were met within the new established standards.

 

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

As at June 30, 2016, the Company and its subsidiaries were in compliance with all debt financial covenants.

 

17 Leases

Finance lease liabilities

Finance lease liabilities are payable as follows:

 

     June 30, 2016     December 31, 2015  
     Less than
one year
    Between
one and
five years
    More
than five
years
    Total     Total  

Future minimum lease payments

     715,848        1,088,420        389,893        2,194,161        2,196,200   

Rolling stock

     685,058        995,009        280,097        1,960,164        1,953,414   

Terminal

     23,861        86,408        109,796        220,065        232,148   

Other

     6,929        7,003        —          13,932        10,638   

Interests

     (175,682     (276,032     (91,581     (543,295     (454,499

Rolling stock

     (158,556     (229,812     (64,796     (453,164     (357,416

Terminal

     (15,726     (45,165     (26,785     (87,676     (96,069

Other

     (1,400     (1,055     —          (2,455     (1,014
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Present value of minimum lease payments

     540,166        812,388        298,312        1,650,866        1,741,701   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Current

           540,166        539,615   
        

 

 

   

 

 

 

Non-current

           1,110,700        1,202,086   
        

 

 

   

 

 

 

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 June 30, 2016, the future minimum lease payments under non-cancellable leases are as follows:

 

     June 30,
2016
     December 31,
2015
 

Future minimum lease payments

     

Less than one year

     11,484         22,788   

Between one and five years

     21,181         24,364   

More than five years

     11,330         13,528   
  

 

 

    

 

 

 
     43,995         60,680   
  

 

 

    

 

 

 

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

The rentals are recognized as expenses (Note 26) on a straight-line basis over the life of the respective agreement.

 

18 Concessions payable

 

     Concessions payable      Judicial deposits  
     June 30,
2015
     December 31,
2015
     June 30,
2015
     December 31,
2015
 

Payables

           

Malha Sul

     66,394         65,906         —           —     

Malha Paulista

     25,968         24,944         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 
     92,362         90,850         —           —     

Court Discussion

           

Malha Paulista

     1,278,871         1,175,697         117,533         116,510   

Malha Oeste

     1,043,325         957,697         18,694         18,060   
  

 

 

    

 

 

    

 

 

    

 

 

 
     2,322,196         2,133,394         136,227         134,570   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     2,414,558         2,224,244         136,227         134,570   
  

 

 

    

 

 

    

 

 

    

 

 

 

Current

     27,569         20,205         
  

 

 

    

 

 

       

Non-current

     2,386,989         2,204,039         
  

 

 

    

 

 

       

 

19 Trade payables

 

     June 30,
2016
    December 31,
2015
 

Natural gas suppliers

     1,363,620        1,489,552   

Materials and service suppliers

     681,507        627,067   

Fuels suppliers

     1,122        3,535   

Judicial deposits (i)

     (294,976     (294,976

Other

     92,911        139,834   
  

 

 

   

 

 

 
     1,844,184        1,965,012   

Current

     1,843,392        1,963,981   
  

 

 

   

 

 

 

Non-current

     792        1,031   
  

 

 

   

 

 

 

 

(i) On June 30, 2016, the balance of judicial discussion due to the fact of Petrobras is practicing different prices comparing to the market in gas supply is R$1,000,477, being the amount secured by judicial deposit R$294,976 and the amount guaranteed by bond R$705,501.

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

20 Other taxes payable

 

     June 30,
2016
     December 31,
2015
 

ICMS—State VAT

     89,946         73,692   

Tax Amnesty and Refinancing Program—REFIS

     51,262         56,041   

COFINS—Revenue tax

     35,407         23,080   

INSS—Social security

     7,974         7,483   

PIS—Revenue tax

     7,628         4,670   

Other

     42,243         39,901   
  

 

 

    

 

 

 
     234,460         204,867   

Current

     187,384         153,540   
  

 

 

    

 

 

 

Non-current

     47,076         51,327   
  

 

 

    

 

 

 

 

21 Income tax and social contribution

 

a) Reconciliation of income and social contribution tax expenses:

 

     April 1,
2016 to
June 30,
2016
    January 1,
2016 to
June 30,
2016
    April 1,
2015 to
June 30,
2015
(Restated)
    January 1,
2015 to
June 30,
2015
(Restated)
 

Profit before taxes

     313,940        514,916        198,959        157,095   

Income tax and social contribution at nominal rate (34%)

     (106,740     (175,071     (67,646     (53,412

Adjustments to reconcile nominal to effective tax rate

        

Equity in earnings of investees (non-taxable income)

     84,658        234,185        20,020        76,201   

Differences in tax rates on earnings / losses of overseas companies

     (58,885     (102,969     (19,727     3,647   

Differences in tax rates on entities under Brazilian presumed profits tax regime

     5,610        7,953        4,784        11,144   

Tax profit of the activity (operating income)

     6,562        17,252        9,096        9,096   

Stock options expenses

     (1,002     (2,005     (996     (1,992

Interest on capital (net received)

     (7,650     (13,260     —          (6,120

Non-deductible expenses (donations, gifts, etc.)

     (3,619     (5,647     1,044        (11,219

Costs of issuing equity instruments

     21,307        21,307        —          —     

Tax losses not recorded

     (6,377     (70,150     (27,348     (27,422

Other

     (4,159     (2,110     (2,227     (3,232
  

 

 

   

 

 

   

 

 

   

 

 

 

Income tax and social contribution benefit (expense)—current and deferred

     (70,295     (90,515     (83,000     (3,309
  

 

 

   

 

 

   

 

 

   

 

 

 

Effective rate—%

     22.39        17.58        41.72        2.11   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

42


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

b) Deferred income tax assets and liabilities:

 

     June 30, 2016     December 31,
2015
 
     Basis     Income
taxes (25%)
    Social
contribution
(9%)
    Total
income
taxes (34%)
    Total income
taxes (34%)
 

Tax loss carry forwards

          

Income tax loss carry forwards

     7,593,381        1,898,345        —          1,898,345        1,597,697   

Social contribution tax loss carry forwards

     7,649,187        —          688,427        688,427        580,269   

Temporary differences

          

Foreign currency losses

     1,647,598        411,900        148,284        560,184        937,281   

Provision for judicial demands

     1,109,848        277,462        99,886        377,348        354,730   

Impairment

     960,278        240,070        86,425        326,495        350,325   

Business combination—Property, plant and equipment

     596,416        149,104        53,677        202,781        246,757   

Tax deductible goodwill

     50,184        12,546        4,517        17,063        129,207   

Gains or losses on actuarial liabilities

     315,577        78,894        28,402        107,296        103,820   

Allowance for doubtful accounts

     462,451        115,613        41,621        157,234        95,015   

Regulatory asset

     217,352        54,338        19,562        73,900        76,764   

Profit sharing

     44,369        11,092        3,993        15,085        32,327   

Concession contract

     (34,072     (8,518     (3,066     (11,584     (12,552

Assets held for sale

     (121,556     (2,431     (1,313     (3,744     (1,255

Business combination—Other fair value adjustments

     (731,577     (40,875     (16,937     (57,812     (66,404

Property, plant and equipment

     (507,806     (126,952     (45,703     (172,655     (147,749

Unrealized gains on derivatives instruments

     (22,178     (5,544     (1,996     (7,540     (469,899

Unrealized gains on investment properties

     (1,976,172     (39,523     (21,343     (60,866     (62,069

Gain on formation of joint ventures

     (3,338,342     (834,586     (300,451     (1,135,037     (1,135,037

(-) Valuation allowance

     (5,016,942     (1,254,235     (451,525     (1,705,760     (1,526,639

Business combination—Intangible assets

     (11,224,197     (2,806,049     (1,010,178     (3,816,227     (3,839,323

Other

     542,750        139,738        50,279        190,017        275,782   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net liability

       (1,729,611     (627,439     (2,357,050     (2,480,953

Deferred income tax—Assets

           1,655,441        1,698,611   

Deferred income tax—Liabilities

           (4,012,491     (4,179,564
        

 

 

   

 

 

 

Total net deferred taxes

           (2,357,050     (2,480,953
        

 

 

   

 

 

 

 

c) Changes in deferred income taxes, net:

 

At December 31, 2015—Net deferred tax liability

     (2,480,953

Recorded through income

     129,654   

Recorded through other comprehensive income

     1,883   

Business combinations

     (27,505

Other (i)

     19,871   
  

 

 

 

At June 30, 2016—Net deferred tax liability

     (2,357,050
  

 

 

 

 

(i) Exchange variation effect due to conversion of invested balance abroad.

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

22 Provision for legal proceedings

 

     Provision for legal proceedings      Judicial deposits  
     June 30,
2016
     December 31,
2015
     June 30,
2016
     December 31,
2015
 

Tax

     456,232         441,674         388,422         377,435   

Civil, regulatory and environmental

     337,332         284,344         185,740         181,180   

Labor

     460,000         467,913         132,939         121,609   
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,253,564         1,193,931         707,101         680,224   
  

 

 

    

 

 

    

 

 

    

 

 

 

Changes in provision for legal proceedings:

 

     Tax     Civil,
regulatory
and
environmental
    Labor     Total  

At December 31, 2015

     441,674        284,344        467,913        1,193,931   

Accruals

     4,197        26,629        57,122        87,948   

Write-off / Reversals

     (4,457     (12,450     (87,215     (104,122

Indexation and interest charges

     14,818        38,809        22,180        75,807   
  

 

 

   

 

 

   

 

 

   

 

 

 

At June 30, 2016

     456,232        337,332        460,000        1,253,564   
  

 

 

   

 

 

   

 

 

   

 

 

 

Tax claims

 

a) Judicial claims deemed to be probable losses, fully accrued

 

     June 30,
2016
     December 31,
2015
 

Compensation with FINSOCIAL

     262,073         255,022   

State VAT—ICMS credits

     82,352         79,417   

INSS—Social security

     60,481         57,916   

PIS and COFINS

     2,373         2,781   

IPI—Excise tax credit—NT

     1,115         1,105   

Federal income taxes

     329         329   

Other

     47,509         45,104   
  

 

 

    

 

 

 
     456,232         441,674   
  

 

 

    

 

 

 

 

44


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

b) Judicial claims deemed as possible losses, and therefore not accrued

 

     June 30,
2016
     December 31,
2015
 

ICMS—State VAT

     1,974,161         1,904,253   

Federal income taxes (i)

     1,714,971         886,178   

Foreign financial operation

     948,668         911,942   

PIS and COFINS—Revenue taxes

     849,593         879,669   

IRRF—Withholding tax

     826,450         792,104   

INSS—Social security and other

     609,324         577,686   

IPI—Excise tax credit—NT

     494,722         484,606   

Goodwill ALL

     464,933         446,535   

Penalties related to tax positions

     376,393         258,391   

Compensation with IPI—IN 67/98

     125,933         123,522   

MP 470—Tax installments

     116,940         113,814   

Intermodal

     78,301         76,914   

Stock option

     59,861         57,554   

Financial transactions tax on loan

     52,343         49,844   

Social security contributions

     42,294         40,855   

Compensation credit award

     36,622         —     

Other

     974,494         952,651   
  

 

 

    

 

 

 
     9,746,003         8,556,518   
  

 

 

    

 

 

 

 

(i) The tax contingencies relate to the tax assessments mainly in the Federal sphere assessed as possible losses by the legal counsel and management and, therefore, no reserve was required. Until the date of approval of the interim financial statements, the Company had knowledge of an assessment notice on goodwill amortization expense amounting possible is R$601,288. The tax assessment is questioned at the administrative level.

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.

 

  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 and non-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.

 

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

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:

 

     June 30,
2016
     December 31,
2015
 

Civil

     2,334,001         2,385,643   

Labor

     1,012,475         960,446   

Regulatory

     355,932         339,267   

Environmental

     325,637         295,984   
  

 

 

    

 

 

 
     4,028,045         3,981,340   
  

 

 

    

 

 

 

 

23 Shareholders’ equity

 

a) Share capital

As of June 30, 2016, Cosan Limited’s share capital is composed of the following:

 

Shareholders—Common shares

   Class A and /
or BDRs
     %      Class B1
shares
     %  

Queluz Holdings Limited

     9,933,168         5.70         66,321,766         68.85   

Usina Costa Pinto S.A. Açúcar e Álcool

     —           —           30,010,278         31.15   

Gávea Investimentos Ltda.

     17,126,127         9.82         —           —     

Skagen AS

     16,220,419         9.30         —           —     

MSOR Participações S.A.

     1,811,250         1.04         —           —     

Other

     123,267,875         70.70         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

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 June 30, 2016 and December 31, 2015 with a market value of U.S.$6.76 per share at December 31, 2015 (U.S.$3.69 per share at December 31, 2015).

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

c) Other comprehensive (loss) income

 

     December 31,
2015
    Comprehensive
(loss) income
    June 30,
2016
 

Foreign currency translation effects

     (468,350     145,955        (322,395

Loss on cash flow hedge in joint ventures and subsidiaries

     (235,779     (139,300     (375,079

Revaluation of investment properties reclassified from property, plant and equipment

     190,735        —          190,735   

Actuarial gain on defined benefit plan

     28,032        —          28,032   

Financial instrument with subsidiary

     —          6,000        6,000   

Changes in fair value of available for sale securities

     6,748        (865     5,883   
  

 

 

   

 

 

   

 

 

 

Total

     (478,614     11,790        (466,824
  

 

 

   

 

 

   

 

 

 

Attributable to:

      

Owners of the Parent

     (478,207     35,503        (442,704

Non-controlling interests

     (407     (23,713     (24,120
      
     December 31,
2014
    Comprehensive
(loss) income
    June 30,
2015
 

Foreign currency translation effects

     (298,446     (67,037     (365,483

Gain (loss) on cash flow hedge in joint ventures and subsidiaries

     (10,574     56,154        45,580   

Revaluation of investment properties reclassified from property, plant and equipment

     190,735        —          190,735   

Actuarial (losses) gain on defined benefit plan

     47,104        —          47,104   

Changes in fair value of available for sale securities

     (1,467     3,299        1,832   
  

 

 

   

 

 

   

 

 

 

Total

     (72,648     (7,584     (80,232
  

 

 

   

 

 

   

 

 

 

Attributable to:

      

Owners of the Parent

     (165,618     (25,242     (190,860

Non-controlling interests

     92,970        17,658        110,628   

 

47


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

24 Earnings per share

The following table sets forth the calculation of earnings per share for the period ended June 30, 2016 and 2015 (in thousands of Brazilian Reais, except per share amounts):

 

     April 1, 2016
to June 30,
2016
    January 1,
2016 to
June 30, 2016
    April 1, 2015
to June 30,
2015
(Restated)
    January 1,
2015 to
June 30, 2015
(Restated)
 

Profit (loss) attributable to ordinary equity holders for basic earnings

     26,362        157,671        (14,130     2,973   

Effect of dilution:

        

Dilutive effect of subsidiary’s stock option plan

     (1,012     (1,446     (71     (7

Dilutive effect of put option

     (15,601     (15,601     (15,601     (15,601
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit attributable to ordinary equity holders adjusted for the effect of dilution

     9,749        140,624        (29,802     (12,635
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of shares outstanding

     264,690,883        264,690,883        264,690,883        264,690,883   

Basic earnings (loss) per share from continuing operations

     R$0.10        R$0.60        (R$0.05     R$0.01   

Diluted earnings (loss) per share from continuing operations

     R$0.04        R$0.53        (R$0.11     (R$0.05
  

 

 

   

 

 

   

 

 

   

 

 

 

The non-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.

The stock option plan is out of money, so, the exercise price of the options granted is much higher than the average stock price during the period. These financial instruments have antidilutive effects in the periods presented.

 

48


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

25 Financial results

 

     April 1,
2016 to
June 30,
2016
    January 1,
2016 to
June 30,
2016
    April 1,
2015 to
June 30,
2015
    January 1,
2015 to
June 30,
2015
 

Cost of gross debt

        

Interest on debt

     (376,459     (809,666     (349,872     (527,356

Exchange and monetary variations

     490,033        999,744        99,125        (593,641

Derivatives

     (758,722     (1,458,848     (219,852     400,904   

Amortization of borrowing costs

     (62,509     (62,509     —          —     

Discounts obtained from financial operations

     85,274        85,274        —          —     

Guarantees and warranties on debt

     (9,504     (22,978     (5,590     (11,337
  

 

 

   

 

 

   

 

 

   

 

 

 
     (631,887     (1,268,983     (476,189     (731,430

Income from financial investment

     152,128        271,303        92,968        141,845   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of debt, net

     (479,759     (997,680     (383,221     (589,585
  

 

 

   

 

 

   

 

 

   

 

 

 

Other charges and monetary variations

        

Monetary variation on leases and concessions agreements

     (72,174     (145,582     (53,691     (53,691

Monetary restatement and interest on leases

     (51,389     (102,094     (22,217     (22,217

Interest on other receivables

     63,271        133,511        17,762        31,214   

Interest on other liabilities

     (170,939     (357,297     (114,646     (197,884

Bank charges

     (63,814     (110,741     (41,200     (57,017

Other

     26,140        26,466        (11,693     21,851   
  

 

 

   

 

 

   

 

 

   

 

 

 
     (268,905     (555,737     (225,685     (277,744
  

 

 

   

 

 

   

 

 

   

 

 

 

Financial results, net

     (748,664     (1,553,417     (608,906     (867,329
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation

        

Finance expense

     (843,207     (1,719,946     (649,236     (940,848

Finance income

     329,722        580,495        121,976        191,747   

Foreign exchange losses, net

     534,151        1,059,505        98,058        (493,756

Derivatives

     (769,330     (1,473,471     (179,704     375,528   
  

 

 

   

 

 

   

 

 

   

 

 

 

Financial results, net

     (748,664     (1,553,417     (608,906     (867,329
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

26 Other (expense) income, net

 

     April 1,
2016 to
June 30,
2016
    January 1,
2016 to
June 30,
2016
    April 1,
2015 to
June 30,
2015
    January 1,
2015 to
June 30,
2015
 

Settlement of pre-existing relationship with business combinations

     —          —          29,838        29,838   

Insurance reimbursement income

     418        7,568        5,739        8,244   

Rental income

     831        1,216        1,952        2,121   

Cost related to internal organization and prospective acquisitions

     —          —          (105     (101,364

Changes in the fair value of investment properties

     8,822        8,532        8,842        23,162   

Loss on disposal of non-current assets

     (2,732     (9,226     (1,377     (2,659

Provisions for legal proceedings

     (38,322     (76,191     (10,025     (24,143

Other

     10,898        10,450        3,055        3,397   
  

 

 

   

 

 

   

 

 

   

 

 

 
     (20,085     (57,651     37,919        (61,404
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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.

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

The carrying amount of financial assets and financial liabilities are as follows:

 

     June 30,
2016
     December 31,
2015
 

Assets

     

Fair value through profit or loss

     

Investment funds

     1,837,245         2,244,427   

Marketable securities

     1,850,353         605,490   

Other financial assets

     141,064         144,208   

Derivate financial instruments

     1,002,919         2,430,296   
  

 

 

    

 

 

 
     4,831,581         5,424,421   

Loans and receivables

     

Cash and cash equivalents

     706,789         1,261,397   

Trade receivables

     1,112,722         964,978   

Retricted cash

     189,159         258,183   

Receivables from related parties

     293,635         296,574   

Dividends receivable

     14,205         12,064   
  

 

 

    

 

 

 
     2,316,510         2,793,196   

Total

     7,148,091         8,217,617   
  

 

 

    

 

 

 

Liabilities

     

Liabilities amortized cost

     

Loans, borrowings and debentures

     13,489,097         13,895,414   

Leases

     1,650,866         1,741,701   

Advances on real state credits

     242,165         285,006   

Trade payables

     1,844,184         1,965,012   

Other financial liabilities

     195,810         236,698   

Payables to related parties

     208,773         204,080   

Contingent consideration

     141,352         217,377   

Dividends payable

     38,061         39,934   

Tax installments—REFIS

     51,262         56,041   

Preferred shareholders payable in subsidiaries

     1,973,074         2,042,878   
  

 

 

    

 

 

 
     19,834,644         20,684,141   

Fair value through profit or loss

     

Loans, borrowings and debentures

     3,684,615         4,933,789   

Post-employment benefits

     354,595         344,447   

Derivative financial instruments

     840,393         742,498   
  

 

 

    

 

 

 
     4,879,603         6,020,734   
     24,714,247         26,704,875   
  

 

 

    

 

 

 

During the period there was no reclassification between categories, fair value through profit or loss, loans and receivables and liabilities at the amortized cost presented above.

 

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

Risk management structure

As at June 30, 2016 and December 31, 2015, 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  
     June 30,
2016
     December 31,
2015
     June 30,
2016
    December 31,
2015
 

Exchange rate derivatives

          

Forward agreements

     1,947,859         2,058,190         (207,240     46,247   

Interest rate and exchange rate risk

          

Swap agreements (interest rate)

     1,831,966         1,083,526         10,295        (107,230

Cross currency interest rate swaps

     2,876,487         4,629,948         359,471        1,748,781   
  

 

 

    

 

 

    

 

 

   

 

 

 
     4,708,453         5,713,474         369,766        1,641,551   

Total financial instruments

  

     162,526        1,687,798   
        

 

 

   

 

 

 

Assets

           1,002,919        2,430,296   
        

 

 

   

 

 

 

Liabilities

           (840,393     (742,498
        

 

 

   

 

 

 

Credit risk

 

     June 30,
2016
     December 31,
2015
 

Cash and cash equivalents (i)

     2,544,034         3,505,824   

Trade receivables (ii)

     1,112,722         964,978   

Other financial assets (ii)

     141,064         144,208   

Derivative financial instruments (i)

     1,002,919         2,430,296   

Marketable securities (i)

     1,850,353         605,490   

Restricted cash (i)

     189,159         258,183   

Dividends receivable

     14,205         12,064   
  

 

 

    

 

 

 
     6,854,456         7,921,043   
  

 

 

    

 

 

 

 

(i) The cash and cash equivalents are held with bank and financial institution counterparties, which are rated BB to AAA.

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:

 

     June 30,
2016
     December 31,
2015
 

AAA

     529,336         1,473,089   

AA+

     1,645,741         —     

AA

     2,289,827         4,068,000   

A

     1,205,756         357,399   

BB

     —           207,097   

BBB

     56,869         580,233   
  

 

 

    

 

 

 
     5,727,529         6,685,818   
  

 

 

    

 

 

 

 

(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.

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. The Company’s maximum exposure to credit risk for the components of the statement of financial position is the carrying amounts as illustrated in Note 16. The Company’s maximum exposure for financial guarantees and financial derivative instruments are as below.

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

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.

The non-derivative financial liabilities of the Company sorted by due dates (based on undiscounted cash flows contracted) are as follows:

 

     June 30, 2016     December 31,
2015
 
     Up to 1 year     1 - 2 years     3 - 5 years     More than
5 years
    Total     Total  

Loans, borrowings and debentures

     (3,609,337     (5,152,307     (10,474,269     (8,645,085     (27,880,998     (29,450,102

Trade payables

     (1,843,392     (792     —          —          (1,844,184     (1,965,012

Other financial liabilities

     (195,810     —          —          —          (195,810     (236,698

REFIS

     (13,392     (11,786     (16,510     (14,511     (56,199     (64,529

Leases

     (690,784     (447,059     (665,174     (365,882     (2,168,899     (2,132,455

Real estate credits certificates

     (138,824     (128,862     (45,376     —          (313,062     (382,559
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (6,491,539     (5,740,806     (11,201,329     (9,025,478     (32,459,152     (34,231,355
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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 financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

a) Foreign exchange risk

As at June 30, 2016 and December 31, 2015, the Company and its subsidiaries had the following net exposure to the exchange rate variations on assets and liabilities denominated in Brazilian Reais:

 

     June 30, 2016     December 31, 2015  
     R$     US$     R$     US$  

Cash and cash equivalents

     183,651        57,216        256,003        65,561   

Trade receivables

     19,651        6,122        18,227        4,668   

Advances to suppliers

     67,576        21,053        85,155        21,808   

Trade payables

     (68,924     (21,473     (15,894     (4,070

Loans, borrowings and debentures

     (5,854,184     (1,823,846     (6,653,006     (1,703,802

Advances from clients

     —          —          (1,701     (436

Contingent consideration

     (35,638     (11,103     (65,064     (16,663

Derivative financial instruments

     4,824,346        1,503,150        6,688,138        1,712,799   
  

 

 

   

 

 

   

 

 

   

 

 

 

Foreign exchange exposure, net

     (863,522     (268,881     311,858        79,865   
  

 

 

   

 

 

   

 

 

   

 

 

 

Sensitivity analysis on changes in foreign exchange rates:

The probable scenario was defined based on the U.S. Dollar market rates as at June 30, 2016, 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 June 30, 2016, 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$/US$)  
     June 30,
2016
     Scenario  
        Probable      25%      50%      -25%      -50%  

USD

     3.2098         3.5376         4.4220         5.3064         2.6532         1.7688   

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

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         18,702        69,160        119,617        (31,756     (82,213

Trade receivables

     USD fluctuation         2,007        7,421        12,836        (3,408     (8,822

Advances to suppliers

     USD fluctuation         7,063        25,723        44,382        (11,597     (30,257

Trade payables

     USD fluctuation         (7,039     (26,030     (45,020     11,952        30,943   

Exchange rate derivatives (i)

     USD fluctuation         198,924        735,620        1,272,316        (337,771     (874,467

Exchange rate and interest
derivatives (i)

     USD and CDI fluctuation         487,685        1,803,454        3,119,223        (828,083     (2,143,852

Loans, borrowings and debentures

     USD fluctuation         (597,857     (2,210,866     (3,823,875     1,015,153        2,628,162   

Contingent consideration

     USD fluctuation         (3,640     (13,459     (23,278     6,180        15,999   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Impacts on profit or loss

        105,845        391,023        676,201        (179,330     (464,507
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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 with pre-tax increases and decreases of 25% and 50% is presented below:

 

     June 30, 2016  

Exposure interest rate (i)

   Probable     25%     50%     -25%     -50%  

Cash and cash equivalents

     267,963        66,991        133,981        (66,991     (133,981

Marketable securities

     230,975        57,744        115,488        (57,744     (115,488

Other financial assets

     18,564        4,641        9,282        (4,641     (9,282

Leases

     (121,446     (30,361     (50,976     30,361        50,976   

Advances on real state credits

     (31,869     (7,967     (15,935     7,967        15,935   

Interest rate derivatives

     10,295        (264,866     (485,662     322,079        723,670   

Loans, borrowings and debentures

     (1,474,927     (368,732     (737,464     368,732        737,464   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Impacts on profit or loss

     (1,100,445     (542,550     (1,031,286     599,763        1,269,294   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

The probable scenario considers the estimated interest rate, as follows:

 

     Probable      25%      50%      -25%      -50%  

SELIC

     13.18%         16.48%         19.77%         9.89%         6.59%   

CDI

     13.16%         16.45%         19.74%         9.87%         6.58%   

TJ462

     8.50%         10.63%         12.75%         6.38%         4.25%   

TJLP

     7.50%         9.38%         11.25%         5.63%         3.75%   

IPCA

     5.98%         7.48%         8.97%         4.49%         2.99%   

LIBOR

     1.20%         1.50%         1.80%         0.90%         0.60%   

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 other non-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 Due 2018, 2023 and 2027 are listed on the Luxembourg Stock Exchange (Note 16) is based on their quoted market price as of June 30, 2016, of 94.99% (78.71% on December 31, 2015) and 94.54% (83.83% at December 31, 2015), respectively, of the face nominal value at June 30, 2016.

 

  The fair value of Perpetual Notes listed on the Luxembourg Stock Exchange (Note 16) is based on their quoted market price as June 30, 2016 of 95.69% (79.64% at December 31, 2015) of the face value of obligations at June 30, 2016.

 

  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 fair values of the remaining of assets held for sale are derived from quoted market prices in active markets.

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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Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

The carrying amounts and fair value of financial assets and financial liabilities are as follows:

 

     Carrying amount     Assets and liabilities measured at fair value  
     June 30,
2016
    December 31,
2015
    June 30, 2016     December 31, 2015  
         Level 1      Level 2     Level 1      Level 2  

Assets

              

Investment funds

     1,837,245        2,244,427        —           1,837,245        —           2,244,427   

Marketable securities

     1,850,353        605,490        —           1,850,353        —           605,490   

Other financial assets

     141,064        144,208        —           141,064        —           144,208   

Derivate financial instruments

     1,002,919        2,430,296        —           1,002,919        —           2,430,296   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total

     4,831,581        5,424,421        —           4,831,581        —           5,424,421   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Liabilities

              

Loans, borrowings and debentures

     (3,684,615     (4,933,789     —           (3,684,615     —           (4,933,789

Post-employment benefits

     (354,595     (344,447     —           (354,595     —           (344,447

Derivative financial instruments

     (840,393     (742,498     —           (840,393     —           (742,498
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total

     (4,879,603     (6,020,734     —           (4,879,603     —           (6,020,734
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Hedge accounting – Fair value

Currently the Company has adopted the fair value hedge for some of 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, 2015

     2,522,772        (822,586     1,700,186   

Interest amortization

     (62,455     251,685        189,230   

Fair value

     (339,068     467,073        128,005   
  

 

 

   

 

 

   

 

 

 

At June 30, 2016

     2,121,249        (103,828     2,017,421   
  

 

 

   

 

 

   

 

 

 

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.

 

57


Table of Contents

Cosan Limited

Notes to the consolidated financial statements

For the three and six month periods ended June 30, 2016 and 2015

(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)

 

 

28 Post-employment benefits

 

     June 30,
2016
     December 31,
2015
 

Futura

     48,410         48,414   

Futura II

     263         335   

COMGÁS

     305,922         295,698   
  

 

 

    

 

 

 
     354,595         344,447   
  

 

 

    

 

 

 

During the period ended June 30, 2016, the expense recognized in relation to the actuarial contributions was R$13,946 (R$13,331 for the six month period ended June 30, 2015).

 

29 Share-based payment

The vesting period and share options outstanding at the end of the period are as follows:

 

Share option programs

   Expected
life
(years)
     Interest
rate
     Expected
volatility
     Number of instruments on June 30, 2016      Market
price
on
grant
date
     Exercise
price at
June 30,
2016
     Fair
value at
grant
date -
R$ (i)
 
            Granted      Exercisable
options
     Outstanding           

August 18, 2011 (A)

     1 to 5         12.39%         31.44%         4,825,000         840,000         2,206,250         22.98         26.50         6,80  

August 18, 2011 (B)

     1 to 10         12.39%         30.32%         5,000,000         1,080,000         4,080,000         22.98         26.50         8,15  

December 12, 2012 (C)

     1 to 5         8.78%         31.44%         700,000         372,000         652,000         39.80         46.42         10.10   

April 24, 2013

     5         13.35%         27.33%         970,000         —           930,000         46.51         53.21         17,95  

April 25, 2014

     5         12.43%         29.85%         960,000         —           930,000         37.10         43.29         15,67  

August 31, 2015

     5         14.18%         33.09%         759,000         —           759,000         18.15         19.68         7.67   

October 2, 2015

     5         15.66%         62.94%         4,485,238         —           4,205,238         6.30         7.86         2.83   
           

 

 

    

 

 

    

 

 

          
              17,699,238         2,292,000         13,762,488            
           

 

 

    

 

 

    

 

 

          

 

(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:

 

     Number of
options
    Weighted-average
exercise price -R$
 

At December 31, 2015

     13,876,238        24.22   

Cancellation or settlements

     (70,000     —     

Share options exercised

     (43,750     26.50   
  

 

 

   

 

 

 

At June 30, 2016

     13,762,488        24.31   
  

 

 

   

 

 

 

***

 

58


Table of Contents

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: September 15, 2016

 

COSAN LIMITED
By:   /s/ Marcelo Eduardo Martins
 

Name: Marcelo Eduardo Martins

Title: Chief Financial Officer

 

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