LND Brasilagro Cia Brasileira De Propriedades Agricolas

Contents

See accompanying notes.

See accompanying notes.

BrasilAgro – Companhia Brasileira de Propriedades Agrícolas

Interim condensed consolidated statements of income

For the three-month period ended September 30

(In thousands of reais, unless stated otherwise)

See accompanying notes.

BrasilAgro – Companhia Brasileira de Propriedades Agrícolas

Interim condensed consolidated statements of comprehensive income

For the three-month period ended September 30

(In thousands of reais, unless otherwise stated)

See accompanying notes.

BrasilAgro – Companhia Brasileira de Propriedades Agrícolas

Interim condensed consolidated statements of changes in equity

For the three-month period ended September 30, 2020 and 2019

(In thousands of reais)

See accompanying notes.

BrasilAgro – Companhia Brasileira de Propriedades Agrícolas

Interim condensed consolidated statements of cash flows

For the three-month period ended September 30

(In thousands of reais)

See accompanying notes.

BrasilAgro - Companhia Brasileira de Propriedades Agrícolas (“BrasilAgro” or "Company") was incorporated on September 23, 2005 and is headquartered at Avenida Brigadeiro Faria Lima, 1309, in São Paulo with branches in the states of Bahia, Goiás, Mato Grosso, Minas Gerais, Maranhão and Piauí, and in Paraguay, in the state of Boquerón. The ultimate parent company of BrasilAgro is Argentine-based Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria (“Cresud S.A.C.I.F.Y.A.”).

BrasilAgro corporate purpose includes:

The Company has sixteen (16) farms in six (6) Brazilian states and one (1) farm in Paraguay, for a total area of 215,330 hectares of own lands and 50,747 hectares of leased lands.

On July 11, 2019, the Company signed a purchase and sale agreement for a total area of 1,134 hectares (893 agricultural hectares) of the Jatobá Farm, a rural property located in the city of Jaborandi, state of Bahia, for an amount corresponding to 302 bags of soybean per agricultural hectare, totaling R$23,183 as of September 2, 2019.

On September 2, 2019, the buyer met the contractual conditions to take possession of the Jatobá IV farm upon the down payment of R$2,698. As a result, revenue was recognized in the statement of income (see Note 21.b) and the remaining balance corresponding to 232,000 soybean bags is recorded in accounts receivable from sales of farms, to be received in six annual installments ending in 2025 (Note 7.1.e – Jatobá IV).

On July 31, 2020, the Company concluded the sale of a 2,160-hectare area of the Bananal Farm (“Bananal X”), a property located in the municipality of Luís Eduardo Magalhães (Bahia), with 1,714 hectares of agricultural area and 446 hectares of legal reserve and permanent preservation area. The area sold was owned by the subsidiary Agrifirma, a company acquired on January 27, 2020, and was not part of the Company’s farm portfolio due to the sale commitment signed by the former management.

The agreement was executed on March 22, 2019 for a fixed price of R$28,000 to be paid in seven installments. In the last fiscal year ended June 30, 2020, the farm was maintained as noncurrent asset held for sale due to a disagreement involving the lessor of the area at the time of the sale that impeded the transfer of possession to the buyer. On July 31, 2020, the conditions provided for in the agreement were met and the Company recognized the sale without effect on profit or loss for the period, since the asset was registered at its fair value less selling expenses, as set forth in IFRS 5 – Noncurrent Assets Held for Sale and Discontinued Operations.

Up to the date of transfer of ownership, the Company received R$7,500 (Note 7.1.e – Bananal X). The amount of R$2,000 refers to installments 1 and 2, which were transferred on February 20, 2019 and March 15, 2019 as advances, while the amount of R$5,500 corresponds to installments 3 and 4 received on July 31, 2020. The remaining balance of R$20,500 will be received in three annual installments ending in 2023.

COVID-19 cases were first reported on December 31, 2019, and since then the disease has spread to various countries, including Brazil and Paraguay, where the Company operates, with reports of numerous deaths caused by the new coronavirus. On March 11, 2020, the World Health Organization declared a global pandemic.

In March 2020, the Company developed and implemented a plan with various measures to protect the health of the employees, contribute to containing COVID-19 and mitigate its effects on operations. These measures included:

The operations in Brazil and Paraguay continued normally and to date the Company has not had any material impact caused by the spread of COVID-19.

COVID-19 could affect the Company’s operations if a significant portion of its workforce cannot work effectively due to the spread of the virus, quarantines, government actions, the shutdown of facilities or other restrictions. Part of the Company’s revenue is generated by the sale of commodities to local clients, but the global market for said commodities relies on an extensive logistics and supply chain, including ports, distribution centers and suppliers. In addition, the high volatility in the U.S. dollar exchange rate and the prices of commodities could result in losses for the Company.

With regards to its business, a fact that merits attention is the strong demand for exports benefited by the appreciation of the U.S. dollar. With regards to the logistics chain, no significant disruptions were noted in the logistics and export operations, as well as in inbound shipments of raw materials and goods, most of which had been acquired prior to the quarantine period in Brazil. With regard to sales commitments for the 2019/20 crop year, the Company has not identified any material changes, since their origination is based on a strong correlation between the way the negotiations are conducted, and the players selected as commercial partners. Therefore, to date, the Company has not observed any matters related to these commitments. Moreover, the Company is well positioned to surmount the effects caused by covid-19, with its main concerns including its cash preservation, leverage ratio and cost and borrowing efficiency, which are aligned with the risk policies adopted by the Company.

Short and long-term liquidity is preserved, and even any changes in inbound and outbound shipments are scaled to not affect significantly the Company’s financial position. BrasilAgro did not identify significant risks with regards to its capacity to continue operating. Lastly, no material subsequent events related to facts known after June 30, 2020 that should be disclosed were identified. During the quarter ended September 30, 2020, no material impacts were identified, being important to note that:

The significant accounting policies applied when preparing these Interim condensed consolidated financial statements are consistent with the policies applied as of June 30, 2020.

On December 28, 2020, the Company’s executive board approved these Interim condensed consolidated financial statements and authorized them for issuance.

The interim condensed consolidated financial statements are presented in thousands of reais (“R$”), which represents the Company’s presentation and functional currency.

The interim condensed consolidated financial statements for the three-month period ended September 30, 2020 have been prepared in accordance with IAS 34, Interim Financial Reporting.

Non-financial data included in this Interim condensed consolidated financial statements, such as number of hectares owned by the Company, among others, has not been subject to audit procedures, or any review from our independent auditors.

Basis of consolidation

The interim condensed consolidated financial statements comprise the financial statements of BrasilAgro and its subsidiaries as of September 30, 2020 and June 30, 2020, as described below.

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended June 30, 2020, except for the adoption of new standards effective as of July 1, 2020. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

Several amendments and interpretations apply for the first time in 2020, but do not have an impact on the interim condensed consolidated financial statements of the Company. There are no new standards and interpretations issued that caused, according to Management’s analysis, any significant impact on these interim consolidated financial statements.

In October 2018, the IASB issued amendments to IFRS 3 regarding the definition of a business to help entities to determine if a set of activities and assets acquired is a business or not. They clarify the minimum requirements for a company, eliminate the assessment of if market participants are capable of replacing missing elements, include guidelines to help entities to evaluate if an acquired process is substantive, determine better the definitions of business and outputs and introduce a test of concentration of optional fair value. New illustrative cases were provided with the amendments.

Since the amendments apply prospectively to transactions or other events occurring on the date or after the first-time adoption, the Company will not be affected by these amendments on the transition date.

In October 2018, IASB issued amendments to IAS 1 and IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors to align the definition of omission in all standards, with the information material if omitting, misstating or obscuring if it could reasonably influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity

Such amendments are not expected to have a significant impact on Company’s individual and consolidated financial statements.

There are no other standards and interpretations issued and not yet adopted that may, in the opinion of the Management, significantly impact profit or loss or shareholders’ equity disclosed by the Company.

Accounting estimates and judgments are continuously assessed and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the current circumstances.

Based on the assumptions, the Company concerning its future. The resulting accounting estimates will, by definition, seldom equal the related actual amounts. The estimates and assumptions that have a significant risk of causing a material misstatement to the carrying amounts of assets and liabilities within the next year are as follows:

The Company is party to different legal and administrative proceedings, as described in Note 27. Provisions are set up for all the contingencies related to legal claims that are estimated to represent probable losses (present obligations resulting from past events in which an outflow of resources is probable, and amounts can be reliably estimated). The evaluation of the likelihood of loss is responsibility of the Company and includes the opinion of outside legal advisors.

The fair value of biological assets recorded in the balance sheet (Note 9) was determined using valuation techniques, including the discounted cash flow method. The inputs for these estimates are based on those observable in the market, whenever possible, and when such inputs are not available, a certain level of judgment is required to estimate the fair value. Judgment includes considerations on data e.g. price, productivity, crop cost and production cost.

Changes in the assumptions on these factors might affect the fair value recognized for biological assets.

An increase or decrease by 1% in the expected productivity of sugarcane and grains/cotton would result in an increase or decrease in biological asset by R$1,002 and an increase or decrease by 1% in the price of sugarcane and grains/cotton would result in an increase or decrease in biological asset by R$1,583.

With regard to cattle, the Company values its stock at fair value based on market price publicly available for the region.

The fair value of investment properties was determined through an appraisal prepared by the Company.

The appraisal was performed by means of standards adopted in the market considering the characteristics, location, type of soil, climate of the region, calculation of improvements, presentation of the elements and calculation of the land value, which may differ based on these variables.

The Company recognizes deferred income tax assets and liabilities, as described in Note 17, on tax loss carryforwards and temporary differences between the carrying amount and the tax basis of assets and liabilities using statutory rates. The Company regularly assesses if the deferred income tax assets recognized are recoverable, considering the taxable profit generated in the past as well as the expected future taxable profit, in accordance with a technical feasibility study performed by the Company.

The Company analyzes its agreements in accordance with the requirements of IFRS 16 and recognizes right-of-use assets and lease liabilities for the lease operations under agreements that meet the requirements of the accounting standard. Management considers as the lease component only the minimum fixed lease payments for the purpose of measuring the lease liabilities. The measurement of lease liabilities corresponds to the total future payments of leases and rentals, adjusted to present value, considering the incremental borrowing rate.

The Company analyzes its agreements in accordance with the requirements of IFRS 16 and recognizes right-of-use assets and lease liabilities for the lease operations under agreements that meet the requirements of the accounting standard. The Management of the Company considers as the lease component only the minimum fixed value for the purpose of measuring the lease liabilities. The measurement of lease liabilities corresponds to the total future payments of leases and rentals, adjusted to present value, considering the nominal discount rate which ranges between 4.87% and 8.93%.

For the cases where payments are indexed to the soybean bag, future minimum payments are estimated in number of soybean bags and translated into local currency using the soybean price of each region, on the base date of first-time adoption of IFRS 16, and adjusted to the current price at time of payment. Meanwhile, payments indexed to Consecana are stipulated in tons of sugarcane and translated into local currency based on the Consecana price in effect at the time.

The financial risk management adopted in the preparation of the consolidated interim financial statements is consistent with that adopted in Note 4 to the annual financial statements for June 30, 2020. Notes 4.1, 4.2, 4.3 to 4.10 disclosed in the annual financial statements for June 30, 2020 did not have significant changes.

This risk arises from the possibility that the Company may incur losses due to fluctuations in exchange rates, which reduces the nominal amount of assets or increase the amount of liabilities. This risk also arises with respect to commitments to sell products existing in inventories or agricultural products not yet harvested when sales are made at prices to be fixed at a future date, prices which vary depending on the exchange rate.

This risk arises from the possibility that the Company may incur losses due to fluctuations in the interest rates or indices which increase financial expenses related to certain contracts for the acquisition of farms, indexed by inflation, such as the IGP-M rate ("FGV").

This risk arises from the possibility that the Company may incur losses due to fluctuations in the market prices of agricultural products.

Management identified for each type of derivative financial instrument the conditions for variation in foreign exchange rates, interest rates or commodities prices which may generate loss on assets and/or liabilities which is being hedged or, in the case of derivative financial instruments related to transactions not recorded in the balance sheet, in the fair value of the contracted derivatives.

The sensitivity analysis shows the impact from the changes in the market variables on the aforementioned financial instruments of the Company, considering all other market indicators comprised. Upon their settlement, such amounts may differ from those stated below, due to the estimates used in their preparation.

This analysis contemplates five distinct scenarios that differ due to the intensity of variation in relation to the current market. At September 30, 2020, as reference for probable scenarios I, II, III and IV, a variation in relation to the current market of 0%, -25%, -50%, +25%, +50%, respectively, was considered.

The preparation of the probable scenario took into consideration the market prices of each one of the reference assets of derivative financial instruments held by the Company at year end. Since all these assets are traded in competitive and open markets, the current market price is a meaningful reference for the expected price of these assets. Accordingly, since the current market price was the reference for the calculation of both book value and the Probable Scenario, it resulted in no mathematical difference.

The assumptions and scenarios are as follows:

This sensitivity analysis aims to measure the impact of variable market changes on the aforementioned financial instruments of the Company, considering all other market indicators remain unchanged. Estimated amounts below can significantly differ from amount eventually settled.

In addition, the Company presents a summary of possible scenarios for the following 12 months of the Company’s financial instruments. Reliable sources of index disclosure were used for the rates used in the “probable scenario”.