(Convenience Translation into English from the
Original Previously Issued in Portuguese)
Biosev S.A.
Individual and Consolidated
Financial Statements
For the Year Ended
March 31, 2014
Financial Statements
March 31, 2014
CONTENTS
INDEPENDENT AUDITOR’S REPORT………………………………………………………………………….......... 03
BALANCE SHEET………..................................................................................................................................... 05
STATEMENT OF OPERATIONS......................................................................................................................... 06
STATEMENT OF COMPREHENSIVE LOSS…………........................................................................................ 07
STATEMENT OF CHANGES IN EQUITY............................................................................................................ 08
STATEMENT OF CASH FLOWS……………....................................................................................................... 09
STATEMENT OF VALUE ADDED……………....................................................................................................... 10
OPINIONS AND STATEMENTS ………………………………………………………………………………………… 88
NOTES TO THE FINANCIAL STATEMENTS
1.
GENERAL INFORMATION .......................................................................................................................11
2.
SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES ....................................................................12
3.
CRITICAL ACCOUNTING JUDGMENTS AND KEY ESTIMATES AND ASSUMPTIONS ........................25
4.
CASH AND CASH EQUIVALENTS ...........................................................................................................27
5.
SHORT-TERM INVESTMENTS ................................................................................................................27
6.
TRADE RECEIVABLES ............................................................................................................................28
7.
INVENTORIES ..........................................................................................................................................30
8.
RECOVERABLE TAXES ...........................................................................................................................31
9.
ASSETS HELD FOR SALE .......................................................................................................................31
10.
ESCROW DEPOSITS ...............................................................................................................................33
11.
CURRENT AND DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION ..........................................33
12.
INVESTMENTS .........................................................................................................................................37
13.
PROPERTY, PLANT AND EQUIPMENT ..................................................................................................42
14.
BIOLOGICAL ASSETS ..............................................................................................................................44
15.
INTANGIBLE ASSETS ..............................................................................................................................46
16.
BORROWINGS AND FINANCING ............................................................................................................48
17.
TRADE PAYABLES...................................................................................................................................49
18.
TAXES AND CONTRIBUTIONS PAYABLE ..............................................................................................50
19.
PROVISION FOR TAX, LABOR, CIVIL AND ENVIRONMENTAL CONTINGENCIES ..............................51
20.
RELATED PARTIES..................................................................................................................................55
21.
EQUITY .....................................................................................................................................................66
22.
NET REVENUES AND COST OF SALES.................................................................................................68
23.
EXPENSES BY NATURE ..........................................................................................................................69
24.
FINANCE INCOME (EXPENSES) .............................................................................................................70
25.
OTHER OPERATING INCOME (EXPENSES) ..........................................................................................71
26.
LOSS PER SHARE ...................................................................................................................................71
27.
RISK MANAGEMENT AND FINANCIAL INSTRUMENTS ........................................................................72
28.
COMMITMENTS .......................................................................................................................................82
29.
INSURANCE .............................................................................................................................................84
30.
EMPLOYEES’ BENEFITS .........................................................................................................................85
31.
SEGMENT INFORMATION .......................................................................................................................85
32.
NON-CASH TRANSACTIONS ..................................................................................................................87
33.
APPROVAL OF FINANCIAL STATEMENTS ............................................................................................87
(Convenience Translation into English from the Original Previously Issued in Portuguese)
INDEPENDENT AUDITORS’ REPORT
To the Management and Shareholders of
Biosev S.A.
São Paulo - SP
We have audited the accompanying individual and consolidated financial statements of
Biosev S.A. (“Company”), identified as Company and Consolidated, respectively, which
comprise the balance sheet as of March 31, 2014, and the related statements of operations,
comprehensive income (loss), changes in equity and cash flows for the year then ended,
and a summary of significant accounting practices and other explanatory information.
Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of the individual
financial statements in accordance with accounting practices adopted in Brazil and the
consolidated financial statements in accordance with International Financial Reporting
Standards - IFRSs, issued by the International Accounting Standards Board - IASB, and in
accordance with accounting practices adopted in Brazil, and for such internal control as
Management determines is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Brazilian and international standards on
auditing. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company’s preparation and fair presentation of
the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control. An audit also includes evaluating the appropriateness of
accounting practices used and the reasonableness of accounting estimates made by
Management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a reasonable basis for our audit opinion.
Deloitte Touche Tohmatsu
Opinion on the individual financial statements
In our opinion, the individual financial statements present fairly, in all material respects, the
financial position of Biosev S.A. as of March 31, 2014, and its financial performance and its
cash flows for the year then ended in accordance with accounting practices adopted in Brazil.
Opinion on the consolidated financial statements
In our opinion, the consolidated financial statements present fairly, in all material respects, the
consolidated financial position of Biosev S.A. as of March 31, 2014, and its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance with
IFRSs issued by IASB and accounting practices adopted in Brazil.
Emphasis of matter
Individual financial statements
We draw attention to note 2.1, which states that the individual financial statements have been
prepared in accordance with accounting practices adopted in Brazil. In the case of the Company,
these accounting practices differ from IFRSs, applicable to the separate financial statements,
only with respect to the measurement of investments in subsidiaries by the equity method of
accounting, which, for purposes of IFRSs, would be measured at cost or fair value. Our opinion
is not qualified in respect of this matter.
Other matters
Statements of value added
We have also audited the individual and consolidated statements of value added (“DVA”), for
the year ended March 31, 2014, prepared under the responsibility of the Company’s
Management, the presentation of which is required by the Brazilian Corporate Law for publiclytraded companies, and as supplemental information by IFRSs that do not require a presentation
of DVA. These statements were subject to the same audit procedures described above and, in our
opinion, are fairly presented, in all material respects, in relation to the financial statements taken
as a whole.
The accompanying financial statements have been translated into English for the convenience of
readers outside Brazil.
São Paulo, June 5, 2014
DELOITTE TOUCHE TOHMATSU
Auditores Independentes
Vagner Ricardo Alves
Engagement Partner
Biosev S.A.
(Convenience Translation into English from the Original Previously Issued in Portuguese)
BALANCE SHEET
AS AT MARCH 31, 2014
(In thousands of Brazilian reais - R$)
ASSETS
Note
CURRENT ASSETS
Cash and cash equivalents
Short-term investments
Derivative financial instruments
Trade receivables
Inventories
Recoverable taxes
Other receivables
4
5
27
6
7
8
Assets held for sale
9
Total current assets
NON-CURRENT ASSETS
Long-term receivables:
Advances to suppliers
Escrow deposits
Recoverable taxes
Deferred income tax and social contribution
Com pany
Consolidated
Com pany
Consolidated
(BR GAAP)
(BR GAAP and IFRS)
(BR GAAP)
(BR GAAP and IFRS)
03.31.14
03.31.13
03.31.14
03.31.13
210,208
91,289
31,867
191,174
258,224
76,217
24,951
632,312
141,932
62,711
194,828
296,001
53,189
15,430
1,729,602
118,535
31,867
278,206
505,021
103,445
89,257
791,728
572,211
62,711
257,586
593,421
132,214
67,836
883,930
1,396,403
2,855,933
2,477,707
3,084
3,084
38,140
63,233
887,014
1,399,487
2,894,073
2,540,940
NON-CURRENT LIABILITIES
Borrow ings and financing
Advances from foreign customers
Deferred income tax and social contribution
Derivative financial instruments
Provision for tax, labor, civil and enviromental contingencies
Taxes payable
73,124
112,604
33,924
47,618
Biological assets
14
650,583
712,682
1,279,891
1,241,580
Total non-current liabilities
Investments
Property, plant and equipment
Intangible assets
12
13
15
776,810
1,859,450
25,134
1,139,675
2,033,953
21,757
233,530
3,761,140
946,002
235,209
4,117,416
1,036,721
EQUITY
Capital
3,564,206
4,392,341
6,635,135
7,196,463
Capital reserve
Other comprehensive loss
Total equity attributable to the Com pany's ow ners
Non-controlling interests
5,791,828
9,529,208
9,737,403
03.31.13
03.31.14
03.31.13
16
1,140,565
43,673
60,734
150,693
59,753
12,844
110,588
1,324,115
10,089
189,754
107,827
71,844
31,165
39,812
1,907,036
61,493
208,672
333,913
103,589
36,247
132,386
1,254,433
16,805
403,913
254,044
112,239
90,405
58,955
17
18
27
16
20
11.1
27
19
18
Other payables
Accumulated losses
4,451,220
03.31.14
Total current liabilities
7,187
64,564
60,103
239,816
TOTAL ASSETS
Note
Other payables
8,529
71,490
69,496
29,590
Total non-current assets
34,828
171,407
68,291
243,393
CURRENT LIABILITIES
Borrow ings and financing
Advances from customers
Advances from foreign customers
Trade payables
Accrued payroll and related taxes
Taxes payable
Derivative financial instruments
10
8
11.1
Other receivables
27,268
170,273
148,970
34,137
LIABILITIES AND EQUITY
72,951
78,504
161,093
150,313
1,651,801
1,853,110
2,944,429
2,341,107
929,407
190,233
133,279
6,181
1,332,951
1,037
134,431
4,589
3,414,704
570,700
283,814
26,860
606,914
45,873
3,967,379
166,738
58,744
615,607
11,790
10,515
8,493
98,457
111,933
1,269,615
1,481,501
5,047,322
4,932,191
21
2,490,036
1,790,036
2,490,036
1,790,036
21
1,356,481
1,405,194
1,356,481
1,405,194
(2,156,284)
(688,720)
(2,156,284)
(160,429)
(49,293)
(160,429)
1,529,804
2,457,217
1,529,804
(688,720)
(49,293)
2,457,217
-
-
7,653
6,888
Total equity
1,529,804
2,457,217
1,537,457
2,464,105
TOTAL LIABILITIES AND EQUITY
4,451,220
5,791,828
9,529,208
9,737,403
The accompanying notes are an integral part of these financial statements.
5
Biosev S.A.
(Convenience Translation into English from the Original Previously Issued in Portuguese)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 2014
(In thousands of Brazilian reais - R$)
Note
NET REVENUE
Cost of sales and services
22
14, 22, 23
GROSS PROFIT
OPERATING INCOME (EXPENSES)
General, administrative and selling
Losses on changes in fair value less estimated costs to sell biological unrealized
Equity in subsidiaries
Other operating income
Other operating expenses
OPERATING LOSS BEFORE FINANCE INCOME (EXPENSES)
Finance income
Finance expenses
Exchange rate changes
LOSS BEFORE TAXES ON INCOME
INCOME TAX AND SOCIAL CONTRIBUTION
LOSS PER SHARE - R$
Basic
Diluted
Consolidated
(BR GAAP and IFRS)
03.31.14
03.31.13
03.31.14
03.31.13
1,677,926
(1,471,559)
1,939,618
(1,661,507)
4,267,523
(3,707,116)
4,152,209
(3,761,668)
206,367
278,111
560,407
390,541
23
(1,140,806)
(280,808)
(713,144)
(306,888)
(1,085,952)
(559,876)
(685,150)
(550,252)
12
25
25
(252,494)
(508,924)
80,591
(179,171)
(180,005)
(272,827)
221,004
(174,428)
(125,399)
(1,612)
246,891
(645,956)
(140,776)
(2,778)
330,133
(321,477)
24
24
24
(934,439)
131,184
(314,320)
(133,116)
(435,033)
136,552
(423,231)
(81,273)
(525,545)
201,580
(594,319)
(184,040)
(294,609)
212,032
(733,073)
(119,985)
(1,250,691)
(216,873)
(802,985)
182,957
(1,102,324)
(364,475)
(935,635)
316,077
(1,467,564)
(620,028)
(1,466,799)
(619,558)
(1,467,564)
765
(620,028)
470
11.2
LOSS FOR THE YEAR
Attributable to:
Company's ow ners
Non-controlling interests
Com pany
(BR GAAP)
26
26
26
-
-
(7.18052)
(5.04741)
(7.18052)
(5.04741)
(7.18052)
(5.04741)
(7.18052)
(5.04741)
The accompanying notes are an integral part of these financial statements.
6
Biosev S.A.
(Convenience Translation into English from the Original Previously Issued in Portuguese)
STATEMENT OF COMPREHENSIVE INCOME (LOSS)
FOR THE YEAR ENDED MARCH 31, 2014
(In thousands of Brazilian reais - R$)
Note
LOSS FOR THE YEAR
Com pany
Consolidated
(BR GAAP)
(BR GAAP and IFRS)
03.31.14
03.31.13
(1,467,564)
03.31.14
(620,028)
(1,466,799)
03.31.13
(619,558)
OTHER COMPREHENSIVE INCOME (LOSS)
Items to be subsequently reclassified in the statement of operations:
Financial instruments - hedge accounting of futures
Financial instruments - hedge accounting of Libor sw ap
Financial instruments - hedge accounting of Non-Deliverable Forw ard (NDF)
Financial instruments - hedge accounting of exchange differences
Deferred income tax and social contribution related to components of other comprehensive income (loss)
COMPREHENSIVE LOSS FOR THE YEAR
Attributable to:
Company's ow ners
Non-controlling interests
27
(43,231)
23,286
(43,231)
23,286
27
27
27
30,358
(20,070)
(135,446)
(13,589)
70,813
(43,110)
30,358
(20,070)
(135,446)
(13,589)
70,813
(43,110)
57,253
(12,716)
57,253
(12,716)
(111,136)
24,684
(111,136)
11.3
(1,578,700)
-
(595,344)
-
24,684
(1,577,935)
(594,874)
(1,578,700)
765
(595,344)
470
The accompanying notes are an integral part of these financial statements.
7
Biosev S.A.
(Convenience Translation into English from the Original Previously Issued in Portuguese)
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED MARCH 31, 2014
(In thousands of Brazilian reais - R$)
Other
com prehensive
Note
BALANCES AS AT MARCH 31, 2012
Profit (loss) for the year
Other comprehensive income (loss):
Adjusted derivatives (hedge accounting), net of taxes
Com prehensive incom e (loss) for the year
Shareholders' contributions
Paid-in capital
Repurchase of shares from non-controlling interests
Non-controlling interests
21
21
21
BALANCES AS AT MARCH 31, 2013
Profit (loss) for the year
Other comprehensive income (loss):
Adjusted derivatives (hedge accounting), net of taxes
Com prehensive incom e (loss) for the year
Public offering of common shares on April 19, 2013 (46,666,667 shares)
Costs on the issuance of the shares in the context of the public offering
BALANCE AS AT MARCH 31, 2014
21
21
Capital
Capital reserve
incom e (loss)
Accum ulated losses
1,175,996
1,431,935
-
-
-
-
-
24,684
14,040
600,000
-
(14,040)
(12,701)
-
1,790,036
1,405,194
-
-
-
-
700,000
2,490,036
(48,713)
1,356,481
(73,977)
(68,692)
(620,028)
-
24,684
-
(620,028)
-
(49,293)
(688,720)
-
Com pany's equity
2,465,262
(620,028)
24,684
(595,344)
600,000
(12,701)
2,457,217
Non-controlling
Total consolidated
interests
equity
5,830
470
470
588
6,888
765
2,471,092
(619,558)
24,684
(594,874)
600,000
(12,701)
588
2,464,105
(1,467,564)
(111,136)
(1,467,564)
-
(111,136)
-
(111,136)
(111,136)
-
(1,467,564)
-
(1,578,700)
700,000
(48,713)
765
-
(1,577,935)
700,000
(48,713)
(160,429)
(2,156,284)
1,529,804
7,653
(1,466,799)
1,537,457
The accompanying notes are an integral part of these financial statements.
8
Biosev S.A.
(Convenience Translation into English from the Original Previously Issued in Portuguese)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED MARCH 31, 2014
(In thousands of Brazilian reais - R$)
Note
Com pany
Consolidated
(BR GAAP)
(BR GAAP and IFRS)
03.31.14
03.31.13
03.31.14
03.31.13
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the year
Non-cash transactions:
Depreciation, amortization and sugarcane harvest
Loss from sale of property, plant and equipment
Gain from sale of assets held for sale (land)
Equity in subsidiaries
Interest, exchange rate changes and inflation adjustments, net
Exchange, interest rate and commodities risk management
Recognition of provision for tax, labor, civil and enviromental contingencies
Recognition (reversal) of allow ance for doubtful accounts
Impairment losses
Recognition (reversal) of allow ance for negative margin and
realization of storeroom inventories and advances to suppliers
Losses on changes in fair value less
estimated costs to sell biological assets
Deferred income tax and social contribution
Unrealized losses (gains) on derivatives
Gain from sale of Usina São Carlos' assets (“USC”)
Non-controlling interests
Decrease (increase) in assets:
Trade receivables
Inventories
Biological assets
Held-for-sale assets
Derivative financial instruments
Recoverable taxes
Advances to suppliers
Other receivables
Increase (decrease) in liabilities:
Trade payables
Advances from foreign customers
Accrued payroll and related taxes
Taxes payable
Advances from domestic customers
Payments of tax, labor, civil and environmental contingencies
Derivative financial instruments
Other payables
(1,467,564)
23
25
25
12
6
9, 13 and 15
7
14
11
6
7
14
9
27.6
8
17
18
19
27.6
265,759
5,320
508,924
355,260
(58,793)
11,972
(247)
66,293
9,124
(620,028)
470,287
5,723
272,827
288,882
92,668
20,052
416
(9,297)
(1,466,799)
(619,558)
649,661
8,220
(23,195)
1,612
740,744
(47,166)
46,093
(1,568)
300,853
972,162
8,042
(881)
2,778
709,848
94,217
57,094
(254)
-
22,443
(21,351)
547,237
517,256
591,153
663,094
239,423
(140,333)
-
(205,507)
89,941
(93,460)
-
383,585
(168,389)
(765)
(342,158)
37,400
(93,460)
(470)
342,375
829,760
3,901
41,731
(17,260)
30,844
(8,093)
(1,342)
35,110
(24,014)
41,825
(39,177)
3,010
(56,538)
(24,611)
6,512
(38,028)
(19,052)
69,586
(14,823)
46,457
30,844
(27,582)
7,560
(1,811)
23,986
157,925
(46,999)
56,856
(56,538)
(69,841)
27,523
(51,855)
84,891
(131,021)
91,179
41,057
42,866
61,213
(12,091)
(16,729)
33,584
(18,275)
128,532
(3,531)
20,803
182,837
6,203
10,051
2,039
(1,282)
(139,445)
(436)
79,869
375,459
(8,650)
(20,075)
44,688
(59,937)
88,713
(2,696)
5,394
390,968
14,055
(18,208)
6,278
(30,973)
(126,308)
813
1,036,482
1,466,503
215,569
80,770
497,371
242,019
642,835
(136,011)
779,509
(148,997)
1,625,032
(281,590)
1,749,579
(308,886)
506,824
630,512
1,343,442
1,440,693
10
5
(6,926)
45,420
54,460
(129,477)
(8,874)
(123,713)
293
(399,700)
1,134
440,679
67
(328,168)
(42,073)
(164,447)
94
(560,243)
Additions to biological assets
14
(522,884)
(529,187)
(796,705)
(793,981)
Additions to intangible assets
Proceeds from sale of property, plant and equipment
Proceeds from sale of Usina São Carlos' assets ("USC")
Investment in subsidiary
15
(1,202)
(200,519)
1,322
176,850
-
(1,209)
-
(706)
4,319
176,850
-
(761,128)
(883,009)
(684,202)
(1,380,187)
700,000
(48,713)
508,551
(1,327,638)
600,000
2,252,752
(2,130,256)
700,000
(48,713)
2,009,949
(2,382,602)
600,000
(12,701)
3,251,166
(3,901,640)
Cash provided by operating activities
Interest paid on borrow ings and financing
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in scrow deposits
Decrease (increase) in short-term investments
Decrease in investments
Increase in property, plant and equipment
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Shareholders' contributions
Buyback of shares held by non-controlling interest
Costs on the issuance of the shares in the context of the public offering
Borrow ings and financing
Payment of borrow ings and financing
21
16
16
Net cash used in financing activities
(167,800)
722,496
278,634
(63,175)
DECREASE (INCREASE) IN CASH AND CASH EQUIVALENTS
(422,104)
469,999
937,874
(2,669)
Cash and cash equivalents at the beginning of year
4
632,312
162,313
791,728
794,397
Cash and cash equivalents at the end of year
4
210,208
632,312
1,729,602
791,728
9
Biosev S.A.
(Convenience translation into English from the Original Previously Issued in Portuguese)
STATEMENT OF VALUE ADDED
FOR THE YEAR ENDED MARCH 31, 2014
(In thousands of Brazilian reais - R$)
Note
Com pany
Consolidated
(BR GAAP)
(BR GAAP and IFRS)
03.31.14
03.31.13
03.31.14
03.31.13
1,842,849
2,308,487
4,712,543
4,785,813
1.1) Sales
22
1,762,258
2,088,315
4,465,652
4,455,680
1.2) Allow ance for doubtful accounts - reversal (recognition)
25
247
25
80,344
-
1 - REVENUE
1.3) Other operating revenues
2 - EXPENSES FROM FINANCIAL INTERMEDIATION
3 - INPUTS PURCHASED FROM THIRD PARTIES
3.1) Cost of products sold
Cost of products sold, net of taxes
23
Recoverable taxes
3.2) Materials, electric pow er, external services and other
3.3) Net gain resulting from change in fair value of biological assets and others
4 - GROSS VALUE ADDEED (1-2-3)
5 - DEPRECIATION, AMORTIZATION AND DEPLETION
23
(416)
1,568
254
220,588
245,323
329,879
-
-
-
(1,400,385)
(1,305,009)
(3,419,424)
(2,797,594)
(1,297,826)
(1,488,817)
(3,466,285)
(3,602,557)
(1,176,816)
(1,324,256)
(3,241,362)
(3,239,350)
(121,010)
(164,561)
(224,923)
(363,207)
(621,565)
(557,010)
(949,010)
519,006
740,818
995,871
1,662,888
442,464
1,003,478
1,293,119
1,988,219
(857,925)
(265,759)
(470,287)
(649,661)
176,705
533,191
643,458
1,016,057
(377,740)
(136,275)
199,968
209,254
(508,924)
131,184
(272,827)
136,552
(1,612)
201,580
(2,778)
212,032
8 - VALUE ADDED FOR DISTRIBUTION (6+7)
(201,035)
396,916
843,426
1,225,311
9 - DISTRIBUTION OF VALUE ADDED
(201,035)
396,916
843,426
1,225,311
308,376
293,241
586,994
553,638
203,509
190,739
394,355
369,496
Benefits
72,948
74,247
138,530
135,235
Severance pay fund (FGTS)
31,919
28,255
54,109
48,907
9.2) Taxes, rates and contributions
311,644
(6,672)
579,395
29,753
Federal
243,714
(63,056)
449,473
(99,972)
67,861
56,198
129,677
129,259
69
186
245
466
9.3) Third-party capital use
646,509
730,375
1,143,836
1,261,478
Rentals
199,073
225,871
365,477
408,420
447,436
504,504
778,359
853,058
6 - VALUE ADDED CREATED BY THE ENTITY (4-5)
7 - VALUE ADDED RECEIVED IN TRANSFER
7.1) Equity in subsidiaries
7.2) Finance income
9.1) Personnel and payroll taxes
24
23
Direct compensation
State
Municipal
Interest and exchange rate changes
24
(972,162)
9.4) Equity capital
(1,467,564)
(620,028)
(1,466,799)
(619,558)
Loss for the year
(1,467,564)
(620,028)
(1,466,799)
(619,558)
The accompanying notes are an integral part of these financial statements.
10
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
1.
GENERAL INFORMATION
Biosev S.A. (“Company”), headquartered at Avenida Brigadeiro Faria Lima, 1355, 11º andar, Pinheiros, São Paulo, SP,
and its subsidiaries (collectively “Group”) are mainly engaged in the production, processing and sale of agricultural
products, primarily sugarcane and its by-products; the agricultural operations in Company-owned or third-party land; the
export, import and sale of petroleum by-products, lubricants, fuel, grease and hydrated ethyl alcohol; the purchase, sale,
import and export of agricultural products and its by-products; and the generation and sale of electricity and its byproducts.
The Group comprises the activities of Biosev S.A. and Biosev Bioenergia S.A. (“Biosev Bioenergia”), based in Brazil, and
Biosev Bioenergia International S.A. (“Biosev Bioenergia International”), based in Switzerland. Additionally, the Group
consists of the subsidiaries of such companies, including (i) Biosev Bioenergia Limited, based in the Cayman Island, which
was established for the purpose of conducting certain international business transactions of the Group, notably the sale of
sugar, but which never went into operation and which is currently in liquidation stage; (ii) Biosev Finance International B.V,
based in the Netherlands, is mainly engaged in the performance of short-term investments with own resources and
investment in other companies, either as partner or shareholder, in Brazil or abroad; and (iii) Biosev Passatempo Bionergia
S.A., a special-purpose entity established to hold and operate the electric power cogeneration assets of the Passa Tempo
unit, located in the State of Mato Grosso do Sul, a company that has not yet commenced operations.
The Group is organized in industrial clusters, composed as follows, with their corresponding branches:




Ribeirão Preto Agri-Industrial Cluster: Santa Elisa, Vale do Rosário, MB (Morro Agudo), Jardest and Continental plants
(located in the State of São Paulo).
Mato Grosso do Sul Agri-Industrial Cluster: Maracaju, Passa Tempo and Rio Brilhante plants (located in the State of
Mato Grosso do Sul).
Northeast Agri-Industrial Cluster: Estivas (located in the State of Rio Grande do Norte) and Giasa (located in the State
of Paraíba) plants;
Leme/Lagoa da Prata Agri-Industrial Cluster: Cresciumal (located in the State of São Paulo) and Lagoa da Prata
(located in the State of Minas Gerais) plants.
The Company is a subsidiary of the Louis Dreyfus Commodities Group, directly controlled by Sugar Holdings BV, which
holds 49.87% of its shares.
1.1 Business Plan
On March 20, 2014, the Company announced on the Relevant Fact the Business Plan, which resulted, among others, in
the hibernation of Jardest unit, reduction of approximately 20% of executive positions and recognition of provisions for
impairment of deferred taxes.
The implementation of this Business Plan resulted in the following impact on the financial statements:
Com pany
(BR GAAP)
Consolidated
(BR GAAP and IFRS)
03.31.14
03.31.14
Impairment - Property, plant and equipment (note 13)
Impairment - Intangible assets (note 15)
Provision for personnel reduction (note 19)
Others
Provision for losses of deferred income tax and social contribution (note 11)
66,258
35
7,832
20,539
218,077
210,339
88,683
27,489
43,541
467,063
Effect of deferred income tax and social contribution (nota 11)
312,741
(32,186)
837,115
(95,715)
280,555
741,400
11
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
2.1 Statement of compliance and basis of preparation
The Company’s financial statements comprise:

The consolidated financial statements prepared in accordance with the International Financial Reporting Standards
(IFRSs), issued by the International Accounting Standards Board (IASB), and the accounting practices adopted in Brazil,
identified as Consolidated - BR GAAP and IFRS.

The individual financial statements of the Company prepared in accordance accounting practices adopted in Brazil,
identified as Company - BR GAAP.
The accounting practices adopted in Brazil include those established in the Brazilian Corporate Law, as well as the
Pronouncements, Instructions and Interpretations issued by the Accounting Pronouncements Committee (CPC) and
approved by the Brazilian Securities and Exchange Commission (CVM).
The Company’s individual financial statements present the valuation of investments in subsidiaries and joint ventures by
the equity method of accounting, pursuant to prevailing Brazilian statutes. Accordingly, these individual financial
statements are not considered as in accordance with IFRSs, which require the measurement of such investments in
separate financial statements of the Company, at their fair values or at cost.
As there is no difference between the consolidated equity and the consolidated profit attributable to the Company’s
owners, disclosed in the consolidated financial statements prepared in accordance with IFRSs and the accounting
practices adopted in Brazil, and the Company’s equity and profit or loss disclosed in the individual financial statements
prepared in accordance with accounting practices adopted in Brazil, the Company opted for presenting these individual
and consolidated financial statements in a single set, using a side-by-side format.
The financial statements have been prepared based on the historical cost, except for certain financial instruments, heldfor-sale assets, and biological assets measured at their fair values, as described in the accounting practices below. The
historical cost is generally based on the fair value of the consideration paid in exchange for assets on the transaction date.
The main accounting practices applied to the preparation of these consolidated financial statements are outlined below.
These practices have been consistently applied in the previous reporting periods presented, except as otherwise indicated.
2.1.1 New and revised standards and interpretations
a) Standards, interpretations and revised standards in effect as at March 31, 2014 which did not have a material impact on
the Company’s financial statements.
Interpretations of and amendments to the standards below have been issued and were effective as at March 31, 2014.
However, they have not significantly impacted the Company’s financial statements:
Standard
Amendments to IFRS 7/CPC
40 (R1) (*)
IAS 28 (revised in 2011)
Investments in Associates
and Joint Ventures/CPC 18
(R2) (*)
IAS 27 (revised in 2011)
Separate
Financial
Statements/CPC 35 (R2)(*)
Main requirements
Disclosures - requires information on
offset assets and liabilities recognized
in conformity with paragraphs 42 and
43 of IAS 32 - Financial Instruments.
Review of IAS 28 to include the
amendments introduced by IFRSs 10,
11 and 12.
Effective date
Effective for periods beginning on or after
January 1, 2013.
IAS 27 requirements related to
consolidated financial statements are
replaced
by
IFRS
10.
The
requirements for separate financial
statements are maintained.
Effective for periods beginning on or after
January 1, 2013.
Effective for periods beginning on or after
January 1, 2013.
12
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
IFRS 10
Consolidated
Financial Statements/CPC
36(R3) (*)
Replaces IAS 27 concerning the Effective for periods beginning on or
requirements applicable to the January 1, 2013.
consolidated financial statements and
SIC 12. IFRS 10 established a single
control-based consolidation model,
regardless of the investment nature.
IFRS
11
–
Joint Eliminated
the
proportionate Effective for periods beginning on or
Arrangements/CPC 19(R2) consolidation model for jointly- January 1, 2013.
(*)
controlled entities and maintained the
equity method model only. It also
eliminated the concept of “jointlycontrolled assets” and maintained
“jointly-controlled operations” and
“jointly-controlled entities” only.
IFRS 12 - Disclosure of Expands
the
requirements
for Effective for periods beginning on or
Interests
in
Other disclosure of investments in entities January 1, 2013.
Entities/CPC 45 (*)
that the Company has a significant
influence over.
IFRS 13 - Fair Value Supersedes and consolidates in a Effective for periods beginning on or
Measurement/CPC 46 (*)
single standard all the guidance and January 1, 2013.
requirements in respect of fair value
measurement contained in other
IFRSs. IFRS 13 defines the fair value
and how to determine the fair value
and the disclosure requirements
related to the measurement of fair
value. However, it does not introduce
any new requirement or amendment
with respect to items that should be
measured at fair value, which remain
as originally issued.
Amendments to IAS 1 – Introduces the requirement that all Effective for periods beginning on or
Presentation of Financial items
recognized
in
other July 1, 2012.
Statements/CPC 26 (R1) (*)
comprehensive income (loss) be
separated into and totaled as items
that are and items that are not
subsequently reclassified to profit or
loss.
(*) CPCs related to the IFRSs issued and approved by the Federal Accounting Council (CFC) and CVM.
after
after
after
after
after
b) Standards, interpretations and revised standards not yet effective and which were not early adopted by the Company.
The standards and amendments to the standards below were published and are mandatory for periods beginning after
March 31, 2014. However, the Company did not early adopt them.
Standard
IFRIC 21
Main requirements
Clarified when an entity must
recognize the tax obligations in
accordance with applicable legislation.
The obligation must be recognized
when the event that generated the
obligation takes place.
Effective date
Effective for periods beginning on or
after January 1, 2014.
13
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
IFRS 9
(as amended
in 2010)
"Financial Instruments". IFRS 9
maintains but simplifies the combined
measurement model and establishes
two main categories to measure
financial assets: amortized cost and
fair value. The basis for classification
depends on the entity’s business
model and the contractual cash flow
characteristics of the financial asset.
The IAS 39 guidance on the
impairment of financial assets, and on
hedge accounting continues to apply.
Effective for periods beginning on or
after January 1, 2015.
These standards, revised standards and interpretations are effective for annual reporting periods beginning on or after
2014 and were not used in preparing these financial statements. The Company does not expect any of these new
standards to have a material effect on the Group’s financial statements, except for IFRS 9 Financial Instruments, which
can change the classification and measurement of the Group’s financial assets. The Company does not expect to early
adopt these standards and their impact has not yet been measured.
The CPC has not yet issued some pronouncements and amendments related to the new and revised IFRSs above.
Considering the commitment of CPC, CFC and CVM to keep the set of standards up-to-date as amendments are made by
the IASB, these standards and amendments are expected to be issued by CPC and approved by CFC and CVM by the
date they become effective.
2.2 Basis of consolidation and investments in subsidiaries
Subsidiaries are all the entities with financial and operating policies of which the Company has the power to govern in
order to benefit from their activities and in which it owns interest above 50%. In the applicable cases, the existence and the
effect of potential voting rights, currently exercisable or convertible, are taken into consideration to determine whether the
Company controls or not another entity. Subsidiaries are fully consolidated from the date in which share control is
transferred to the Company and cease to be consolidated, when applicable, when control no longer exists. The
subsidiaries’ financial statements are prepared for the same reporting period of their parent, using accounting practices
consistent with those adopted by the Company.
In those cases where control is jointly held, consolidation is made by the equity method of accounting and those entities
are initially recognized at their cost amount.
The subsidiaries included in the consolidated financial statements are described in Note 1. The main consolidation criteria
adopted by the Company are: (a) sum of the balances of assets, liabilities, revenue and expenses, according to their
accounting nature; (b) elimination of intragroup balances and transactions; and (c) elimination of the balances of
investment in subsidiaries.
In the consolidated financial statements, the changes in the Company’s equity interests in subsidiaries that do not result in
loss of control by the Company are recognized as capital transactions. The carrying amounts of the Company’s interests
and non-controlling interests are adjusted to reflect the changes in their interests in the subsidiaries. The difference
between the amount based on which non-controlling interests are adjusted and the fair values of considerations paid or
received are recognized directly in equity and attributed to the Company’s owners.
When the Company losses the control over a subsidiary, the gain or loss from the disposal of control is calculated based
on the difference between: (a) the sum of the fair value of considerations received and the fair value of the residual
interest; and (b) the prior-year balance of the subsidiary’s assets (including goodwill) and liabilities and non-controlling
interests, if any. When the subsidiary’s assets are recognized at fair values and the corresponding accumulated gain or
loss was recognized in line item “Other comprehensive loss” and accumulated in equity, the amounts previously
recognized in “Other comprehensive loss” and accumulated in equity are accounted for as if the Company had directly
disposed of the corresponding assets (i.e., reclassified to profit or loss or directly transferred to line item “Retained
earnings (accumulated losses)”). The fair value of any investment held in the former subsidiary on the date when control is
lost is regarded as the fair value on initial recognition for subsequent accounting in accordance with CPC 38 - Instrumentos
Financeiros: Reconhecimento e Mensuração / IAS 39 - Financial Instruments: Recognition and Measurement, or, when
applicable, the cost at the initial recognition of an investment in an associate or jointly-controlled entity.
14
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
2.3 Business combination
Beginning January 1, 2009, business combinations are accounted by the acquisition method. The cost of an acquisition is
measured as the sum of the consideration transferred, measured based on fair value on the acquisition date, and the
amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures any noncontrolling interests in the acquiree either at fair value or at the non-controlling interest’s share of the acquiree’s identifiable
net assets. The costs attributable to the acquisition are expensed when incurred.
When acquiring a business, the Company measures the assets acquired and liabilities assumed for the purpose of
classifying and allocating them according to the contractual terms, the economic circumstances and the conditions
prevailing on the acquisition date, which includes the acquiree’s separating the embedded derivatives existing in the
acquiree’s host contracts.
In a business combination achieved in stages, the Company remeasures its previously held equity interest in the acquiree
at its acquisition-date fair value and recognizes the resulting gain or loss, if any, in the statement of operations.
Any contingent consideration transferable by the buyer will be recognized at fair value on the acquisition date. Subsequent
changes in the fair value of contingent consideration considered an asset or a liability are recognized according to CPC 38
/ IAS 39 in the statement of operations or in “Other comprehensive loss”. Contingent consideration classified as equity is
not remeasured until it is settled.
The goodwill is initially measured as the excess of the consideration transferred in relation to the net assets acquired
(identifiable assets acquired less the liabilities assumed). If the consideration is lower than the net assets acquired, the
difference is recognized directly as a gain in profit or loss for the current year.
After the initial recognition, goodwill is measured at cost less any accumulated impairment losses. For impairment test
purposes, goodwill acquired in a business combination is, as from the acquisition date, allocated to the Company’s cashgenerating unit that is expected to benefit from the combination’s synergy, regardless of any other acquiree’s assets or
liabilities to be allocated to this unit.
The cash-generating unit to which goodwill has been allocated is annually tested for impairment or more frequently when
there is indication that the cash-generating unit may be impaired. If the recoverable amount of a cash-generating unit is
lower than its carrying amount, the impairment loss is first allocated to reduce the carrying amount of any goodwill
allocated to the unit, and subsequently to the other assets of the cash-generating unit, proportionally to the carrying
amount of each of its assets. Impairment losses on goodwill are directly recorded in statement of operations for the year.
Impairment losses are not reversed in subsequent periods.
The Company has identified impairment loss on the goodwill for the year ended March 31, 2014. The impairment effects
are described in Note 15.1.
When goodwill is part of a cash-generating unit and a portion of such unit is sold, the goodwill associated with the portion
sold should be included in transaction costs when the gain or loss on sale is determined. The goodwill sold under these
circumstances is determined based on the proportional amounts of the portion sold in relation to the cash-generating unit
maintained.
2.4 Interests in joint ventures
A joint venture is the contractual arrangement whereby the Group and other parties agreed sharing of control over an
economic activity, and exists only when the strategic financial and operating policies relating to the activity require the
unanimous consent of the parties sharing control.
When a Group’s entity undertakes its activities directly through a joint venture, the Group’s interest in jointly-controlled
assets and any liabilities incurred jointly with the other controlling shareholders are recognized in the financial statements
of such entity and classified according to their nature. Incurred liabilities and expenses directly related to the interests in
the jointly-controlled assets are accounted for on an accrual basis. Any gain arising from the sale or use of the Group’s
interests in the jointly-controlled assets and its share of any expenses incurred in common are recognized when it is
probable that the economic benefits related to the transactions will be transferred to the Group and its amount can be
reliably measured.
15
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Joint venture arrangements that involve the establishment of a separate entity in which each venturer holds an interest are
called jointly-controlled entities.
The Group discloses its interests in jointly-controlled entities, in its consolidated financial statements, by the equity method
of accounting, and are initially recognized at their cost amount. The Group’s investments in associates include goodwill
identified on the acquisition, net of any accumulated impairment loss. In the individual financial statements of the
Company, interests in jointly-controlled entities are recognized by the equity method of accounting.
Any goodwill arising on the acquisition of Group’s interests in a jointly-controlled entity is accounted for according to the
Group’s accounting practices applicable to goodwill arising on a business combination.
Whenever a Group entity conducts transactions with a jointly-controlled entity, the resulting profits or losses are recognized
in the consolidated financial statements proportionately to the Group’s interest held in the jointly-controlled entity.
2.5 Segment information
Segment information is consistent with the internal report provided to the chief operating decision maker. The chief
operating decision maker, responsible for allocating resources to the operating segments and assessing their
performance, is represented by the board of directors and the executive committee.
2.6 Functional and reporting currency
Items included in the financial statements of each Group company are measured using the currency of the main economic
environment in which the Company operates (“functional currency”). The Company’s consolidated financial statements are
presented in Brazilian reais (R$), which is the Company’s functional and also presentation currency.
2.7 Foreign currency-denominated transactions and balances
Foreign currency-denominated transactions are recorded at the foreign exchange rate prevailing on the transaction date.
Foreign currency-denominated assets and liabilities are translated using the foreign exchange rate prevailing at the end of
the reporting periods and the related changes are recorded in the statement of operations when incurred. Any transaction
in a currency different from the Group’s functional currency (Brazilian real) is considered a foreign currency transaction.
Exchange rate differences on monetary items are recognized in profit or loss in the period they incur, except for:

exchange differences arising on translating foreign currency-denominated borrowings and financing related to assets
under construction for future use in production, which are part of the these assets’ cost when considered as adjustments to
interest costs on said borrowings;

exchange differences arising on foreign currency-denominated transactions designated as hedges against risks of
exchange rate fluctuations; and

exchange differences arising on monetary items receivable or payable regarding a foreign operation, whose
settlement is not estimated or probable (and is, therefore, part of the net investment in the foreign operation), initially
recognized in “Other comprehensive loss” and reclassified from equity to the profit or loss on amortization of monetary
items.
All other foreign exchange gains and losses, including foreign exchange gains and losses related to loans and cash and
cash equivalents, are presented in the statement of operations as finance income or expenses.
In the consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into
Brazilian reais at exchange rates prevailing at the end of the reporting period. Income and expenses are translated using
the average exchange rates for the period, unless exchange rates fluctuate significantly; in this case the exchange rate
prevailing on transaction date is used. Exchange differences arising on these translations, if any, are classified in “Other
comprehensive income (loss)” and accumulated in equity, and are attributed to non-controlling interests as appropriate.
2.8 Cash and cash equivalents
Include cash, banks, and short-term investments - redeemable within up to 90 days before the investment date - classified
as highly liquid or convertible into a known cash amount and subject to an immaterial risk of change in value, which are
16
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
recognized at cost plus income earned through the end of the reporting period, which do not exceed their fair or realization
value.
2.9 Short-term investments
Consist of temporary investments held to maturity, redeemable within up to 90 days after the investment date, and are
stated at cost plus income earned through the end of the reporting period, not exceeding the trade values.
2.10 Trade receivables and allowance for doubtful accounts
Trade receivables are stated at their original amounts, less the allowance for doubtful accounts. Trade receivables
from foreign customers are adjusted based on exchange rates prevailing at end of the reporting period. The allowance for
doubtful accounts was estimated based on credit risk analysis, which includes loss history, individual situation of
customers, situation of the corporate group to which they belong, real guarantees for debts and the assessment of the
legal counsel, and is considered sufficient by the Company’s management to cover possible losses on amounts
receivable.
2.11 Inventories
Inventory balances are substantially composed of raw materials, finished products and auxiliary products, and are stated at
average purchase or production cost, which does not exceed the net realizable value.
The allowances for slow-moving or obsolete inventories are recorded when considered necessary by Management.
2.12 Property, plant and equipment
Stated at cost of purchase, production or construction, less accumulated depreciation, except for land, which is not
depreciated. Depreciation is calculated on a straight-line basis, based on the estimated useful lives of the assets, as
described in Note 13. Interest on borrowings and financing is capitalized to construction in progress.
An item of property, plant and equipment is written off upon disposal or when there is no future economic benefits resulting
from its continuous use. Any gain or loss from the sale or write-off of an item of property, plant and equipment is
determined by the difference between the sales amount received and the carrying value of the asset sold, recognized in
profit or loss.
The Company opted not to review the historical cost of property, plant and equipment items and use the deemed cost
criterion, pursuant to the option prescribed by ICPC 10 – Interpretação sobre a Aplicação Inicial ao Ativo Imobilizado e à
Propriedade para Investimento dos Pronunciamentos Técnicos CPCs 27, 28, 37 and 43 to Property, Plant and Equipment
and Investment Property, paragraphs 20-29, to recognize the opening balance of property, plant and equipment on the
first-time adoption of CPC 27- Ativo Imobilizado / IAS 16, Property, Plant and Equipment, and ICPC 10.
The Group conducts the main scheduled maintenances of its plants on an annual basis. Scheduled maintenances are
conducted in December and March in the states of São Paulo (SP), Minas Gerais (MG) and Mato Grosso do Sul (MS), and
from February to July in the Northeast, for the purpose of inspecting and replacing components. Maintenance costs which
do not impact the useful lives of assets are recognized as expenses when incurred. Items subject to wear and tear during
the crop are recorded as (deferred industrial) assets when replaced and are depreciated over the following crop period.
2.13 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which necessarily
take a substantial amount of time to be ready for the intended use or sale, are added to the cost of such assets until they
are ready for the intended use or sale.
Income on investments earned on the short-term investment of funds of specific borrowings not yet spent on the qualifying
assets is deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are recognized in profit or loss for the year they are incurred.
17
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
2.14 Biological assets
CPC 29 – Ativo Biológico e Produto Agrícola / IAS 41 - Agriculture, prescribes the accounting treatment of activities that
involve biological assets (such as sugarcane plantations) or agricultural produce (at the point of harvest). Biological assets
and the related agricultural produce shall be recognized at fair value less estimated point-of-sale costs. To meet this
requirement, the Company adopted the economic and financial valuation of sugarcane biological assets using the
discounted cash flow method for the next six years, which represents the average extraction period of high levels of Total
Recoverable Sugar/Total Recovered Sugar (ATR/TR).
The two components of the biological asset (sugarcane ratoon and sugarcane) are presented as a single asset in the
balance sheet since agricultural production cannot be recognized separately from the biological asset to which it refers
until the point of harvest. As the sugarcane ratoon do not meet the definition of current asset as set out in CPC 26 (R1) Apresentação das Demonstrações Contábeis / IAS 1 - Presentation of Financial Statements, the biological asset is
classified as a non-current asset.
The change in the fair value of biological assets is recognized in the income statement, in line item “Gains (losses) on
changes in fair value of biological assets less estimated costs to sell”. The realized portion, calculated based on the
utilization of inventories of finished products during the year, is recognized before “Gross profit”, in the statement of
operations.
2.15 Investments in subsidiaries and jointly-controlled entities
Investments in subsidiaries and jointly-controlled entities are accounted for and measured in the individual financial
statements by the equity method of accounting and are initially recognized at cost. The gains or losses are recognized in
profit or loss as operating revenue (or expenses) in the individual financial statements. Other investments are recognized
and maintained at cost or fair value.
When necessary, the subsidiaries’ and jointly-controlled entities’ accounting practices are changed to ensure the
consistency and uniformity of criteria with the accounting practices adopted by the Company.
2.16 Intangible assets
Separately acquired intangible asset
Separately acquired intangible assets with finite useful lives are carried at cost less accumulated amortization and
accumulated impairment losses.
Amortization is recognized on a straight-line basis, based on the estimated useful lives of the assets. The estimated useful
life and amortization method are reviewed at the end of each annual reporting period, and the effect of any changes in
estimates is accounted for on a prospective basis.
Separately acquired intangible assets with indefinite useful lives are carried at cost less accumulated impairment losses.
Internally generated intangible assets - expenditure on research and development
Expenditure on research is recognized as an expense for the year it incurred.
An internally generated intangible asset arising from development (or from the development phase of an internal project) is
recognized if, and only if, all of the following can be demonstrated:

The technical feasibility of completing the intangible asset so that it will be available for use or sale.

The intention to complete the intangible asset and use or sell it.

The ability to use or sell the intangible asset.

How the intangible asset will generate probable future economic benefits.

The availability of adequate technical, financial and other resources to complete the development of the intangible
18
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
asset for use or sale.

The ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognized of internally generated intangible assets corresponds to the sum of the costs incurred since
the time an intangible asset met the recognition criteria above. When no internally generated intangible asset can be
recognized, development expenditure is recognized in profit or loss for the period, when incurred.
Subsequently to the initial recognition, internally generated intangible assets are recognized at cost, less accumulated
amortization and impairment losses thereon, as separately acquired intangible assets.
Derecognition of intangible assets
As intangible asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal.
The gain or loss arising from the derecognition of an intangible asset, measured as the difference between the net disposal
proceeds and the carrying amount of the asset, is recognized in income when the asset is derecognized.
Software
Software licenses purchased are capitalized based on the costs incurred to purchase the software and make it ready for
use. These costs are amortized on a straight-line basis over their estimated useful lives of 4 years.
2.17 Impairment of tangible and intangible assets excluding goodwill
At the end of each year, the Group reviews the carrying amounts of its tangible and intangible assets to determine if there
is any indication that such assets might be impaired. If there is such an indication, the recoverable amount of the asset is
estimated to measure the amount of impairment loss. Where it is not possible to estimate the recoverable amount of an
individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
When a reasonable and consistent allocation basis can be identified, corporate assets are also allocated to the cashgenerating units or the smallest group of cash-generating units for which a reasonable and consistent allocation basis can
be identified.
Recoverable amount is the higher of fair value less costs to sell and value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.
If the recoverable value of an asset (or cash-generating unit) is lower than its carrying amount, then the carrying amount of
the asset (or cash-generating unit) is written down to its recoverable amount. The impairment losses are immediately
recognized in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years.
The reversal of the impairment loss is promptly recognized in profit or loss.
In the year ended March 31, 2014, the Company identified impaired assets and recognized impairment losses as
described in Notes 9, 13.4 and 15.1.
2.18 Other current and non-current assets
Carried at cost, adjusted for inflation and net of allowance for non-realization, if applicable.
2.19 Current and non-current liabilities
Carried at known amounts or amounts estimated by Management, plus borrowing costs, inflation adjustments and
exchange differences incurred through the end of the reporting period, when applicable.
19
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
2.20 Borrowings and financing
Liabilities originated from borrowings and financing are recognized at fair value, less incremental transactions costs directly
attributable to the financial liability. These liabilities are subsequently measured using the effective interest rate method,
which takes into consideration the transaction costs and the contractual interest allocated until maturity. For floating rate
borrowings, the effective interest rate is periodically re-calculated when the effect of the remeasured contractual effective
interest rate is material.
2.21 Leases
Leases are classified as finance leases when they substantially transfer all the risks and rewards incidental to ownership to
the lessee. All other leases that do not have these features are classified as operating leases.
Finance lease
Finance lease agreements are initially recognized as Company’s and its subsidiaries’ assets at their fair values at the
inception of the lease or, if lower, at the present value of the minimum lease payments. The related payable to the lessor is
included in balance sheet as a financing (borrowings and financing).
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the liability. Financial charges are recorded directly in the statement of
operations.
Operating lease
Operating lease payments are recognized as expenses on a straight-line basis over the lease term, except when another
approach is more appropriate to reflect the timing the economic benefits of the leased asset are consumed. Contingent
payments arising on operating leases are recognized as expenses for the period they are incurred.
2.22 Income tax and social contribution
Current and deferred income tax and social contribution are calculated based on the tax law enacted or substantially
enacted at the end of the reporting period, including in the countries where the Group entities operate and generate profits.
Management periodically assesses the positions assumed in the tax calculations with respect to situations where
applicable tax regulations are open to interpretations. The Company recognizes provisions, when appropriate, based on
the estimated payments to tax authorities.
The income tax and social contribution expenses comprise deferred and current taxes. The current and deferred taxes are
recognized in profit or loss unless they are related to business combinations or items directly recognized in equity.
Current tax is the expected tax payable or receivable on taxable profit or loss for the year at tax rates that have been
enacted or substantially enacted at the end of the reporting period and any adjustment to taxes payable in relation to prior
years.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used for tax calculation purposes. Deferred taxation is not accounted for on
the following temporary differences: (i) initial recognition of assets and liabilities in a transaction that is not a business
combination and does not affect either the accounting or taxable profit or loss; and (ii) differences associated with
investments in subsidiaries and controlled entities when it is probable that they will not reverse in the foreseeable future.
Moreover, a deferred tax liability is not recognized for taxable temporary differences resulting in the initial recognition of
goodwill. The deferred tax is measured at the rates that are expected to be applied on temporary differences when they
reverse, based on the laws that have been enacted or substantially enacted at the end of the reporting period.
Current income tax and social contribution are carried at their net amounts by the taxpayer, in liabilities when there are
amounts payable or in assets when prepaid amounts exceed the total payable at the end of the financial statement.
Deferred tax assets and liabilities may be netted if there is a legal right to offset the current tax asset and liability amounts
and they relate to the same taxing authority.
20
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
A deferred income tax and social contribution asset is recognized for all unutilized tax losses, tax credits, and deductible
temporary differences to the extent that it is probable that taxable profits will be available against which those tax losses,
tax credits, and deductible temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that
their realization is no longer probable.
2.23 Provision for tax, labor, civil, and environmental contingencies
The Company recognizes a provision only when it has a current legal or constructive obligation as a result of a past event,
when it is probable that a disbursement of resources will be required to settle the obligation and when such disbursement
can be reliably and accurately made. When any of these criteria is not met, the Company does not recognize any
provision.
The Company recognizes provisions to cover future disbursements resulting from ongoing civil, environmental, tax and
labor lawsuits. The provision is recognized based on a case-by-case analysis made by the Company’s legal counsel (as
explained in Note 19) of the ongoing lawsuits and the estimated unfavorable outcomes that would entail a future
disbursement. Potential contingent assets are not recognized until there is a final and unappealable decision favorable to
the Company and when it is certain that the asset will be realized. Taxes whose collection is being challenged in courts are
recorded taking into consideration the legal obligation concept. The escrow deposits made for the ongoing lawsuits are
recorded in line item “Escrow deposits”, in non-current assets.
As at March 31, 2014, the Group was a party to several lawsuits or administrative proceedings arising in the normal course
of its business, which includes labor, civil, environmental and tax proceedings. The Group records in its balance sheet a
provision for losses on litigations when the estimated likelihood of an unfavorable outcome is probable according to its
legal counsel and the loss history in similar cases. The Group maintains provisions for contingencies assessed as
probable losses, as required by prevailing accounting standards. In general, the provisions are adjusted and added of the
related interest on a monthly basis.
Onerous contracts
Present obligations resulting from onerous contracts are recognized and measured as provisions. An onerous contract
exists when the unavoidable costs to discharge the contractual obligations exceed the economic benefits expected to be
received over the contract period.
2.24 Financial instruments
(a)
Classification
Financial assets and financial liabilities held by the Company are classified into the following categories: (i) financial assets
measured at fair value through profit or loss; (ii) held-to-maturity financial assets; (iii) available-for-sale financial assets;
(iv) loans and receivables; (v) financial liabilities measured at fair value through profit or loss; and (vi) other financial
liabilities. The classification depends on the purpose for which the financial assets and financial liabilities were acquired or
contracted.
(i)
Financial assets calculated at fair value through profit or loss
Held-for-trading financial assets, when acquired for such purpose, mainly in the short term. Derivative instruments are also
classified in this category. Assets in this category are classified in current and non-current assets, as applicable.
As at March 31, 2014, this category includes only derivatives. The balances related to gains or losses on unsettled
transactions are classified in current assets or current liabilities, and gains or losses arising from changes in fair value are
recorded under “Finance income” or “Finance expenses”, respectively, except if the financial instruments are designated
as effective hedge, in which case they are treated as described in item (a). (vi). (c) below.
21
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
(ii)
Financial assets held to maturity
Comprise investments in certain financial assets classified when contracted to be held to maturity, which are measured at
cost of purchase, plus income earned according to contractual terms and conditions.
As at March 31, 2014, this category includes the Company’s short-term investments.
(iii)
Available-for-sale financial assets
When applicable, non-derivative financial assets are included in this category, such as securities and/or shares quoted in
an active market or which are not quoted in an active market but whose fair values can be reasonably estimated.
(iv)
Loans and receivables
Include non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These
are recorded in current assets, except for maturities greater than 12 months after the end of the reporting periods, when
applicable, which are classified as non-current assets. As at March 31, 2014, comprise cash and cash equivalents, trade
receivables, recoverable taxes, other receivables and advance to suppliers.
(v)
Financial liabilities measured at fair value through profit or loss
These include financial liabilities held for trading or designated at fair value through profit or loss.
A financial liability is classified as held for trading if it:

has been acquired mainly for repurchase in the short term.

upon its initial recognition, is part of a portfolio of identified financial instruments that the Group manages together
and has a recent actual pattern of short-term profit-taking.

is a derivative that is not designated as an effective hedging instrument.
A financial liability other than a financial liability held for trading may be designated at fair value through profit or loss upon
initial recognition if:

such designation eliminates or significantly reduces a measurement or recognition inconsistency that would
otherwise arise.

the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its
performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or
investment strategy, and information about the Group is provided internally on that basis.
As at March 31, 2014, this category includes only derivatives.
Financial liabilities at fair value through profit or loss are stated at fair value, with any gains or losses arising on
remeasurement recognized in profit or loss, except if the financial instruments are designated as effective hedge, in which
case they are treated as described in item (a).(vi).(c) below. In the other cases, the net gains or losses recognized in profit
or loss incorporates any interest paid on the financial liability and is included in line item “Other gains or losses” in the
statement of operations. The fair value is determined as described in Note 27.
(vi)
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
They are subsequently measured at amortized cost under the effective interest method and the financial expense is
recognized based on effective compensation.
22
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating its
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts the estimated future
cash payments through the expected life of the financial liability or, when appropriate, a shorter period, to the net carrying
amount on initial recognition.
The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged and cancelled.
The difference between the carrying amount of a derecognized financial liability and the consideration paid and payable is
recognized in profit or loss.
(b)
Measurement
Regular purchases and sales of financial assets are recognized on the transaction date, i.e., on the date Company agrees
to buy or sell the asset. Financial assets at fair value through profit or loss are initially recognized at fair value and
transaction costs are recognized in the statement of operations. Loans and receivables are accounted for at the amortized
cost.
Gains or losses resulting from changes in the fair value of financial assets measured at fair value through profit or loss are
recognized in the statement of operations in “Finance income” or “Finance expenses”, respectively, when earned or
incurred. Changes in financial assets classified as “Available for sale”, when applicable, are recorded in “Other
comprehensive loss” until the financial assets are settled, when they are ultimately reclassified to profit or loss.
(c)
Derivatives and hedging activities
The Company has derivatives whose management is performed by establishing strategies and control systems, setting
limits for positions and exposure, and monitoring the risks involved.
The Company has such derivatives to hedge its revenue, costs and certain assets and liabilities against the exposures to
commodity market volatility and foreign exchange fluctuations. In addition, it uses derivatives to hedge the realization of its
investments in currencies other than the Brazilian real. The Company actively manages derivative instruments, and these
transactions are monitored on a continuous basis so that adjustments to goals and strategies may be made in response to
market conditions, particularly because a significant portion of the Company’s revenues and, consequently, the generation
of cash, derives from prices denominated in US dollars.
The Company also monitors the fluctuations of the various interest rates linked to its monetary assets and liabilities, and, in
conformity with its hedge policy, operates with derivatives to minimize such risks. These transactions are designated as
cash flow hedges. The Company documents its risk management strategy and policies on the commencement date of the
hedging relationship. The Company also documents hedging effectiveness tests on designation and subsequent dates.
The effective portion of changes in the fair value of derivatives is recognized in equity, in line item “Other comprehensive
loss”. The ineffective portion is immediately recognized in profit or loss, in line item “Finance income” or “Finance
expenses”. Gains or losses recognized in equity are recycled to profit or loss when the hedged item affects profit or loss for
the year. When the hedging instrument reaches its maturity, it is sold or, when the transaction does not qualify for hedge
accounting any longer, the cumulative amount of the effective portion recognized in equity in line item “Other
comprehensive loss” is kept in this reserve until the hedged transaction is completed and affects the Company’s profit or
loss.
(d)
Embedded derivative
The Company determines the existence of derivatives embedded in the transactions involving financial instruments, such
as loans, debt note issuances, leases and purchase and sale agreements. When identified, the embedded derivative is
evaluated for purposes of segregation of the principal instrument and its separate accounting.
The Company did not identify embedded derivatives in the transactions recognized in these financial statements.
2.25 Assets held for sale
Assets held for sale (or disposal group) whose sale is highly probable within 12 months are classified in line item “Assets
held for sale”, in current assets, in the balance sheet.
23
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
For the sale to be highly probable, the Group’s management must be committed to a plan to sell the non-current asset or
disposal group, and a formal sale plan must have been initiated.
The non-current assets (or disposal groups) classified as held for sale are measured at the lower of its carrying amount
and fair value less costs to sell. Property, plant and equipment and intangible assets classified as held for sale are not
depreciated or amortized.
2.26 Capital
Total shares are classified in equity. Incremental costs directly attributable to the issue of new shares or options are shown
in equity as a deduction of the amount added to capital, net of taxes.
2.27 Revenue recognition
Revenue from sales of goods in the normal course of operations is measured at the fair value of the consideration received
or receivable, less any expected returns, trading discounts and/or bonuses granted to the buyer, and other similar
deductions.
Sales revenue is recognized when there is convincing evidence that the most significant risks and rewards of ownership of
goods have been transferred to the buyer, it is probable that future economic benefits will flow to the entity, the associated
costs and possible return of goods can be reliably estimated, there is no continued involvement with the goods sold, and
the amount of the operating revenue can be reliably measured. Revenue from services provided is recognized as it is
realized.
The appropriate timing for transfer of risks and rewards varies depending on the individual terms and conditions of the
sales contract. For international sales, this timing depends on the international commercial terms (incoterms) applicable to
the contract.
2.28 Finance income (expenses)
Finance income includes interest income from funds invested (excluding available-for-sale financial assets), gains on the
disposal of available-for-sale financial assets, changes in the fair value of financial assets measured at fair value through
profit or loss, and gains on hedging instruments that are recognized in profit or loss. Interest income is recognized in profit
or loss under the effective interest method. Distributions received from investees accounted for by the equity method
reduce the investment value.
Finance expenses comprise interest expenses on borrowings, net of the discount to present value of the provisions, losses
in the fair value of financial instruments measured at fair value through profit or loss, impairment losses recognized in
financial assets, and losses on hedging instruments that are recognized in profit or loss. Borrowing costs that are not
directly attributable to the acquisition, construction or production of a qualifying asset are measured through profit or loss
under the effective interest method.
2.29 Earnings (loss) per share
Basic earnings (loss) per share are calculated by means of the net profit (loss) for the year attributable to the Company’s
owners and the weighted average number of common shares outstanding in the related year. For basic earnings (loss) per
share calculation purposes, preferred shares were given the same treatment as the common shares, as they have the
same characteristic and differ only as to the right to vote on some matters and the priority in receiving their equity value in
case of Company liquidation, without premium.
2.30 Employees’ benefits
i.
Employees’ benefits
The Company offers its employees a pension plan to allow people to accumulate funds to receive a monthly pension in the
future. The Company’s pension plan is optional for all employees and officers. An employee can elect to join the pension
plan and choose one of the two types of plans: 1- a defined contribution plan (PGBL) or 2 - a life insurance benefit plan
(VGBL).
24
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
ii.
Profit sharing and bonuses
Employees’ profit sharing and executives’ variable compensation are linked to the achievement of operating and financial
targets. The Company recognizes a liability and an expense allocated to production costs and general and administrative
expenses when such goals are met.
2.31 Statement of value added (DVA)
The purpose of this statement is to disclose the wealth created by the Company and its distribution during a certain
reporting period, and is presented by the Company, as required by the Brazilian Corporate Law, as an integral part of its
individual financial statements, and as additional disclosures to the consolidated financial statements, since this statement
is not required by IFRSs.
The statement of value added was prepared using information obtained in the same accounting records used to prepare
the financial statements and pursuant to the provisions of CPC 09 – Demonstração do Valor Adicionado. The first part of
the DVA presents the wealth created by the Company, represented by revenues (gross sales revenue, including taxes
levied thereon, other income and the effects of the allowance for doubtful accounts), inputs purchased from third parties
(cost of sales and purchases of materials, energy and services from third parties, including the taxes included upon
purchase, the effects of impairment and recovery of assets, and depreciation and amortization) and the value added
received from third parties (share of profits (losses) of subsidiaries, finance income and other income). The second part of
the DVA presents the distribution of wealth among employees, taxes and contributions, compensation to third parties and
shareholders.
3.
CRITICAL ACCOUNTING JUDGMENTS AND KEY ESTIMATES AND ASSUMPTIONS
In the preparation of the financial statements, Management is required to use, at the end of each fiscal year, certain
accounting practices that incorporate judgments and estimates about the carrying amounts of revenues, expenses, assets
and liabilities, and the disclosure of contingent liabilities that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience of the Management and other factors that are considered
to be relevant. Actual results could differ from those estimates.
The following are the critical accounting judgments, except those that involve estimates, made by Management while
preparing these financial statements:
•
Assets held for sale
For the sale to be highly probable, the Group’s management must be committed to a plan to sell the non-current asset or
disposal group, and a formal sale plan must have been initiated.
The non-current assets (or disposal groups) classified as held for sale are measured at the lower of its carrying amount
and fair value less costs to sell. Property, plant and equipment and intangible assets classified as held for sale are not
depreciated or amortized.
The following are the key estimates and assumptions used in preparing the financial statements. As these estimates and
assumptions have not been checked, they may result in significant adjustments to the carrying amounts of assets and
liabilities in the next fiscal year.
•
Allowance for doubtful accounts
The allowance for doubtful accounts is accounted for to anticipate probable losses on the realization of the related
receivables. The allowance was set up based on the average losses incurred in certain periods coupled with the analysis
on probable losses of current and past-due receivables.
•
Allowance for inventory losses
The allowance for inventory losses was set up based on the history of losses incurred on the goods handling to estimate
possible losses on existing inventories in the plants. Additionally, the Company recognized allowances for losses on
25
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
inventory items whose estimated sales price is lower than the purchase price and/or the production cost, and also for slowmoving and possibly obsolete items.
•
Adjustment to present value of assets and liabilities
Fixed-price credit purchase and sale transactions or other assets and liabilities, when applicable, are discounted to their
present value taking into consideration their related realization terms. In order to calculate the present value, the Company
estimated future cash flows generated by the related cash-generating units, using an appropriate discount rate, according
to its Management.
As at March 31, 2014, the Company determined the present value of assets and liabilities based on the assumptions
above, and identified assets and liabilities from long-term transactions subject to adjustment at present value. With respect
to the assets and liabilities from short-term transactions, the effects are not relevant and, therefore, no adjustments were
recorded.
•
Useful lives of property, plant and equipment
The Company reviews the useful lives of property, plant and equipment items on an annual basis at the end of each
reporting period. The estimated useful lives of the main property, plant and equipment items may or may not change as a
result of this review. The impacts of the review of the estimated useful lives of assets are recognized prospectively in the
Company’s financial statements.
•
Impairment of non-financial assets
At the end of each annual period, the Company tests fixed and intangible assets for impairment to determine if there are
any indications that the assets may be impaired. When such indication exists, the recoverable amount of the asset is
estimated to measure the impairment loss. If the estimated recoverable amount is lower than an asset’s value, the
impairment loss is immediately recognized in profit or loss.
When it is not possible to estimate the recoverable amount of an individual asset, the Company calculates the recoverable
amount of the cash-generating unit to which the asset belongs. The assets may be allocated to the cash-generating units,
individually or grouped in the smallest group of cash-generating units for which a reasonable and consistent allocation
basis can be identified.
When the impairment loss is reversed, the carrying amount of the asset (or cash-generating unit) increases to the revised
estimate of its recoverable value provided that it does not exceed the carrying amount that would have been obtained had
no impairment losses been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment
loss is recognized immediately in profit or loss, when applicable.
•
Measurement of derivative financial instruments
The Company uses valuation techniques that include the use of inputs that are not based on observable market data to
estimate the fair values of certain types of financial instruments.
In applying the accounting practices to transactions with derivatives classified as future cash flow hedges, the Company
uses revenue and cost estimates for their projected realization periods. Gains or losses on the mark-to-market or
realization of financial instruments or derivatives designated as future cash flow hedges are recorded in line item “Other
comprehensive loss” and recognized in profit or loss for the year when the hedged item is realized.
The Company believes that appropriate valuation techniques and assumptions are used to determine the fair values of
financial instruments and derivatives, and that it has the appropriate projection and monitoring tool.
•
Biological assets
The Company applies the accounting treatment of biological assets for its sugarcane plantation as set out in CPC 29 Ativo Biológico e Produto Agrícola / IAS 41 – Agriculture.
26
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
The production cost of the Company’s finished product inventories and, consequently, the cost of sales, takes into account
the effect at fair value of the Company’s biological assets on harvest date, less estimated point-of-sale costs. The main
assumptions used to determine the fair values of biological assets are: production estimates and productivity by area,
sugar quantity (sucrose) per ton of sugarcane, sugar price, ethanol price, plantation costs, and sugarcane maintenance
costs, foreign exchange rate, freight, harvest and transportation costs, and interest rate.
•
Provision for tax, labor, civil, and environmental contingencies
The Company is a party to several lawsuits and administrative proceedings, as described in Note 19. The Company
recognizes a provision for all contingent liabilities arising from lawsuits that represent an estimated probable unfavorable
outcome according to the legal counsel and the loss history in similar cases. The Company recognizes provisions for
contingencies assessed as probable losses or when required by prevailing accounting standards. The provisions are
adjusted and added of the related interest on a monthly basis.
•
Income tax, social contribution, and other taxes
The Company recognizes deferred assets and liabilities based on differences between the carrying amount stated in the
financial statements and the taxable base of the assets and liabilities using prevailing tax rates. The Company regularly
reviews the recoverability of deferred tax assets based on projected future taxable income, based on a technical feasibility
study. The recoverable value of these taxes is immediately reduced as it becomes apparent that their realization is less
than probable.
4.
CASH AND CASH EQUIVALENTS
Com pany
(BR GAAP)
03.31.14
Cash and banks
Short-term investments
Debentures
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
9,720
44,292
156,196
15,216
105,358
511,738
1,100,258
45,944
583,400
210,208
632,312
1,729,602
03.31.13
174,353
105,637
511,738
791,728
All investments classified as “Cash and cash equivalents” are highly liquid and/or can be redeemed within less than 90
days and are adjusted by the income earned through the end of the reporting period, not exceeding the negotiated
amount.
Short-term investments refer to floating rate Certificates of Bank Deposit (CDBs) and/or CDBs indexed at rates ranging
from 99% to 107% (98% to 100.3% as at March 31, 2013).
Debentures not subject to Tax on Financial Transactions (IOF) are from local prime financial institutions indexed to rates
ranging from 20% to 101.5% of Interbank Deposit Rate (CDI) (95% to 101.8% as at March 31, 2013).
5.
SHORT-TERM INVESTMENTS
Com pany
(BR GAAP)
Short-term investments
Fixed-income investment fund
Consolidated
(BR GAAP and
03.31.14 03.31.13 03.31.14 03.31.13
91,289
141,932
117,475 571,224
1,060
987
91,289
141,932
118,535
572,211
27
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Short-term investments refer to floating rate Certificates of Bank Deposit (CDBs) and/or CDBs indexed at rates ranging
from 99% to 102% of the CDI as at March 31, 2014 (99% to 106.5% as at March 31, 2013).
The fixed-income investment funds are subject to the rate from 8% to 9% as at March 31, 2014 (6.9% as at March 31,
2013).
6.
TRADE RECEIVABLES
Com pany
(BR GAAP)
03.31.14
03.31.13
Consolidated
(BR GAAP and IFRS)
03.31.14
03.31.13
Related parties (Note 20):
In Brazil
Abroad
34,809
98,896
1,721
150,218
223
121,916
165
67,814
133,705
151,939
122,139
67,979
Third parties:
In Brazil
Abroad
51,078
6,792
39,160
4,377
141,718
27,908
127,126
77,608
(-) Allow ance for doubtful accounts
57,870
(401)
43,537
(648)
169,626
(13,559)
204,734
(15,127)
191,174
194,828
278,206
257,586
Before recording transactions with new customers, the Group performs comprehensive risk analyses and assesses the
qualification of such counterparties. This analysis is carried out using balanced scorecard techniques, through the analysis
of financial statements, financial position and business references, taking into consideration quantitative and qualitative
aspects.
As at March 31, 2014, the balance of overdue items in the “Trade receivables” (see the aging list below) amounts to
R$474, in Company, and R$25,362 in Consolidated (R$48,270, in Company, and R$56,801 in Consolidated as at March
31, 2013). Out of this total, R$433, in Company, and R$22,251 in Consolidated as at March 31, 2014 (R$2,613, in
Company, and R$22,903 in Consolidated as at March 31, 2013) are overdue over 60 days, and R$401, in Company, and
R$13,559 in Consolidated as at March 31, 2014 (R$648, in Company, and R$15,127 in Consolidated as at March 31,
2013) are recorded in allowance for doubtful accounts in the aging list below.
The remaining balance of R$32, in Company, and R$8,692, in Consolidated as at March 31, 2014 (R$1,965, in Company,
and R$7,776, in Consolidated as at March 31, 2013) does not comprise the allowance for doubtful accounts, as there was
no significant change in the credit quality and the amounts are still considered recoverable.
28
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
The aging list of trade receivables is as follows:
Com pany
(BR GAAP)
Current
Overdue:
Up to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
Over 180 days
Consolidated
(BR GAAP and IFRS)
03.31.14
03.31.13
03.31.14
03.31.13
191,101
147,206
266,403
215,912
40
1
138
295
19,858
25,799
530
1,242
841
2,182
929
72
7,926
14,253
28,210
5,688
548
4,246
18,109
191,575
195,476
291,765
272,713
The change in the allowance for doubtful accounts is as follows:
Com pany
(BR GAAP)
Balance at the beginning of year
Impairment losses recognized on receivables
Amounts recovered in the year
Consolidated
(BR GAAP and IFRS)
03.31.14
(648)
03.31.13
(232)
03.31.14
(15,127)
03.31.13
(15,381)
(417)
(694)
(489)
(868)
664
278
2,057
1,122
(401)
(648)
(13,559)
(15,127)
The breakdown of the allowance for doubtful accounts per due date is as follows:
Com pany
(BR GAAP)
03.31.14
61 to 90 days
91 to 180 days
Over 180 days
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
(117)
(284)
(30)
(109)
(509)
(122)
(13,437)
(43)
(124)
(14,960)
(401)
(648)
(13,559)
(15,127)
The overdue items not included in the allowance for doubtful accounts are broken down as follows:
Com pany
(BR GAAP)
03.31.14
61 to 90 days
91 to 180 days
Over 180 days
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
21
11
500
1,133
332
72
7,804
816
505
4,122
3,149
32
1,965
8,692
7,776
The expenses and the reversions on the recognition of the allowance for doubtful accounts was recorded in line item
“Other operating income (expenses)” in the statement of operations. When recovery of additional cash is not expected, the
amounts credited to line item “Allowance for doubtful accounts” are in general reversed against the definite write-off of the
receivable and are recorded in profit or loss.
Maximum exposure to credit risk at the reporting dates is the carrying amount of each aging range, as shown in the aging
list above.
29
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
7.
INVENTORIES
Com pany
(BR GAAP)
03.31.14
Finished products:
Sugar
Ethanol
Sugar syrup
Other
Allow ance for negative inventory margin
Raw materials and packaging materials
Storeroom supplies
Allow ance for realization of storeroom inventories
Advances to suppliers (*)
Allow ance for losses on advances to suppliers
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
48,630
87,841
1,437
733
(9,317)
47,328
104,442
4,708
7,670
(13,647)
60,292
131,999
2,003
1,870
(20,598)
65,293
154,399
7,316
8,266
(21,509)
129,324
150,501
175,566
213,765
1,703
96,676
(14,743)
71,247
(25,983)
1,630
83,631
(2,272)
87,511
(25,000)
3,486
152,302
(28,955)
230,051
(27,429)
3,736
134,756
(4,377)
274,194
(28,653)
128,900
145,500
329,455
379,656
258,224
296,001
505,021
593,421
(*) Advances to sugarcane suppliers are adjusted on a monthly basis according to the specific conditions and indices set
forth in the agreements.
The changes in the allowance for negative inventory margin, realization of storeroom inventories, and losses on advances
to suppliers are broken down as follows:
Com pany
(BR GAAP)
03.31.14
Negative inventory m argin
Opening balance
Additions
Reversals
03.31.13
Consolidated
(BR GAAP and IFRS)
03.31.14
03.31.13
(13,647)
(13,810)
(21,509)
(22,188)
(9,317)
13,647
(13,647)
13,810
(20,598)
21,509
(21,509)
22,188
(9,317)
(13,647)
(20,598)
(21,509)
(2,272)
(16,360)
3,889
(2,812)
(3,493)
4,033
(4,377)
(30,849)
6,271
(5,352)
(7,755)
8,730
(14,743)
(2,272)
(28,955)
(4,377)
(25,000)
(33,594)
(28,653)
(48,350)
(1,709)
726
(28,144)
36,738
(1,916)
3,140
(35,904)
55,601
(25,983)
(25,000)
(27,429)
(28,653)
Realization of storeroom inventories
Opening balance
Additions
Reversals
Losses on advances to suppliers
Opening balance
Additions
Reversals
30
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
The allowance for write down to replacement and/or inventory realizable value is calculated by analyzing the average
production cost of finished products as compared to their realizable value in the market, less costs to sell.
The allowance for losses on obsolete and slow-moving storeroom inventories is recognized on a quarterly basis based on
technical reports approved by the Company.
We estimate that storeroom inventories realizable after 12 months total R$23,413 as at March 31, 2014 (R$8,208 as at
March 31, 2013).
The amount of the Company’s inventories recognized as cost of sales for the year ended March 31, 2014 is R$1,471,559
(R$1,661,507 in the year ended March 31, 2013). The consolidated amount of inventories recognized as cost of sales for
the year ended March 31, 2014 is R$3,707,116 (R$3,761,668 in the year ended March 31, 2013).
8.
RECOVERABLE TAXES
Com pany
(BR GAAP)
03.31.14
State VAT (ICMS)
Taxes on revenue (PIS and COFINS) (a)
Witholding income tax (IRRF) on short-term investments and
prepayments
Social security contribution (INSS) and other taxes
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
80,296
39,614
83,248
16,370
91,746
121,228
114,719
64,879
17,823
9,395
26,836
18,362
7,980
4,279
12,605
2,545
145,713
113,292
252,415
200,505
Current assets
76,217
53,189
103,445
132,214
Non-current assets
69,496
60,103
148,970
68,291
Total
(a) Refers to PIS and COFINS credits related to: (i) Law 10.637/02 which addresses the non-cumulativeness of
PIS/PASEP; (ii) Law 10.833/03 which addresses the non-cumulativeness of COFINS, PIS and PASEP; and (iii) Law
11.774/2008, which provide for the taking of PIS / COFINS on property, plant and equipment.
9.
ASSETS HELD FOR SALE
Com pany
(BR GAAP)
Assets held for sale - land and plots of land
Construction in progress - alcohol tanks
Investments held for sale - Usina São Carlos ("USC")
Consolidated
(BR GAAP and IFRS)
03.31.14
03.31.13
-
-
35,056
-
56,649
3,500
3,084
3,084
3,084
3,084
3,084
38,140
63,233
3,084
03.31.14
03.31.13
Consolidated
(BR GAAP and IFRS)
Hectares available for sale - land and plots of land (*)
03.31.14 03.31.13
2,174
3,768
(*) Unaudited
31
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Changes in assets held for sale are as follows:
Com pany
(BR GAAP)
Opening balance
Additions
Impairment
Transfer to property, plant and equipment
Sales
03.31.14 03.31.13
3,084
37,545
(34,461)
3,084
3,084
Consolidated
(BR GAAP and IFRS)
03.31.14
63,233
(1,831)
(23,262)
03.31.13
115,193
37,545
(17,075)
(2,078)
(70,352)
38,140
63,233
Certain assets were classified as assets held for sale following the CPC 31 - Ativo não circulante mantido para venda e
operação descontinuada / IFRS 5 - Non-current Asset Held for Sale and Discontinued Operation.
Conclusion of the sale of these assets requires approval of the non-controlling shareholders that extended the time needed
to complete the sale beyond one year. The actions required to obtain these approvals may not be initiated until a buyer is
known and is obtained a firm purchase commitment. Therefore, the Company's management maintains a firm commitment
to the sale of these assets is highly probable and meets established by the CPC 31/IFRS 5 so that they are classified as
assets held for sale.
These assets are trading at prices considered reasonable by management.
Properties held for sale – lands and plots of lands
Sale of properties
During the year ended March 31, 2014, the Company sold properties for the total amount of R$46,457, resulting in a gain
of R$23,195.
As at March 31, 2014, out of the amount not received from properties sold of R$29,532 (R$23,429 as at March 31, 2013),
R$18,162 (R$17,340 as at March 31, 2013) is recorded in line item “Trade receivables”, in current assets, and R$11,370
(R$6,089 as at March 31, 2013) is recorded in line item “Other receivables”, in non-current assets.
Impairment
The Company revised the recoverable amount of the land assets held for sale and recorded a reversal of R$1,669, and a
reduction of R$3,500. The net amount of R$1,831, is recorded in "Other operating expenses" in the statement of
operations.
Investments held for sale - Usina São Carlos (“USC”)
On March 15, 2013, the Company concluded the operation through the sale of the shares, to São Martinho S.A. (“SMSA”),
of Mirtilo Investimentos e Participações S.A., a special purpose company, which holds the USC’s agricultural assets,
including USC’s own sugarcane plantation, agricultural agreements (rural lease and agricultural partnerships) and
sugarcane supply agreements. The transaction does not involve the unit industrial assets, which will be owned by the
Company.
The warehouse machinery and equipment, transferred to assets held for sale, in the amount of R$3,084, were not sold as
they were pledged on behalf of the National Bank for Economic and Social Development (Banco Nacional do
Desenvolvimento - BNDES). These procedures were executed on March 21, 2014.
32
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
10. ESCROW DEPOSITS
Com pany
(BR GAAP)
03.31.14
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
Civil
841
7,654
3,531
Environmental
682
-
4,892
145
1,523
7,654
8,423
13,068
5,578
28,948
100
7,235
-
3,165
5,363
2,072
5,715
440
8,567
35,838
4,953
12,355
263
6,244
11,088
8,935
12,098
440
41,861
16,755
61,976
38,805
28,106
-
41,301
(1,146)
99,874
-
120,680
(1,146)
Tax law suits:
Federal VAT (IPI) payable
Income tax (IRPJ)/Social Contribution (CSLL)
ICMS, PIS and COFINS
Social charges and securities
Others
Labor
Labor appeals
Allow ance for losses
28,106
40,155
71,490
99,874
64,564
170,273
12,923
119,534
171,407
The changes in the Company’s escrow deposits are as follows:
Com pany
(BR GAAP)
Opening balance
Additions
Offsets/redemptions
Consolidated
(BR GAAP and IFRS)
03.31.14
03.31.13
64,564
55,690
43,433
11,395
(36,507)
(2,521)
71,490
03.31.14
03.31.13
171,407 129,334
101,029
47,045
(102,163)
(4,972)
64,564
170,273
171,407
11. CURRENT AND DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION
11.1 Deferred income tax and social contribution assets and liabilities disclosed in balance sheet
Com pany
(BR GAAP)
03.31.14
Deferred income tax and social contribution assets
Deferred income tax and social contribution liabilities
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
29,590
-
239,816
-
34,137
(283,814)
243,393
(166,738)
29,590
239,816
(249,677)
76,655
33
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
11.2 Income tax and social contribution recognized in profit or loss
Com pany
(BR GAAP)
03.31.14
Results from current income tax and social contribution
Results from deferred income tax and social contribution related to the origin
and reversal of temporary differences and tax loss carryforw ards
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
22,550
(22,550)
19,110
(26,081)
(239,423)
205,507
(383,585)
342,158
(216,873)
182,957
(364,475)
316,077
11.3 Income tax and social contribution recognized in other comprehensive income (loss)
Com pany
Consolidated
(BR GAAP)
(BR GAAP and IFRS)
03.31.14
03.31.13
03.31.14
03.31.13
Results from deferred income tax and social contribution recognized in other
comprehensive income (loss):
Financial instruments - hedge accounting of futures
14,699
(6,427)
14,699
Financial instruments - hedge accounting of Libor sw ap
(1,058)
(2,063)
(10,321)
4,620
6,824
8,732
(12,031)
(8,978)
6,824
46,051
(24,076)
14,657
29,197
(29,499)
57,253
(12,716)
28,056
16,783
-
-
57,253
(12,716)
57,253
(12,716)
Financial instruments - hedge accounting of Non-Deliverable Forw ard (NDF)
Financial instruments - hedge accounting of exchange rate changes
Effects on subsidiaries
(7,917)
11.4 Reconciliation of income tax and social contribution expenses at statutory and effective rates
Com pany
(BR GAAP)
03.31.14
Results before taxes
Statutory rate
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
(1,250,691)
34%
(802,985)
34%
(1,102,324)
34%
(935,635)
34%
Income tax and social contribution at statutory rate
Equity in subsidiaries
Goodw ill amortization
Unrecognized deferred income tax and social contribution credits
Tax revenue (grants)
Foreign subsidiary rate differential
Write-off of fair value of biological assets
Impairment losses - intangible assets
Provision for losses of deferred income tax and social contribution
Other
425,235
(173,034)
(208,376)
6,203
(30,072)
(218,077)
(18,752)
273,014
(92,761)
5,191
(2,487)
374,790
(548)
79,000
(264,736)
6,203
728
(30,072)
(30,103)
(467,063)
(32,674)
318,116
(944)
(8,778)
5,191
3,922
(1,430)
Income (loss) from income tax and social contribution at effective rate
(216,873)
182,957
(364,475)
316,077
-17.34%
22.78%
-33.06%
33.78%
Effective rate
34
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
11.5 Balances of deferred income tax and social contribution assets and liabilities
Recognized in
Com pany (BR GAAP)
Temporary differences:
Provision for tax, labor, civil and environmental contingencies (**)
Provision for losses on advances to suppliers
Sundry provisions (**)
Adjustment at fair value of biological assets
Net present value - Law 11.638
Hedge accounting of Libor sw ap, NDF and exchange rate changes
Effect of translation of functional currency
Unrealized exchange rate changes
Amortization of tax goodw ill
Encouraged accelerated depreciation (*)
Impairment (**)
Mark-to-market of derivatives
Unutilized tax losses and credits:
Tax loss carryforw ards
Social contribution tax loss carryforw ards
Opening
Recognized in
balance as at
profit or loss
03.31.13
for the year
other
Closing
com prehensive balance as at
incom e (loss)
03.31.14
37,596
8,501
59,926
47,689
1,929
7,719
334
(16,559)
32,722
(1,929)
-
45,315
8,835
43,367
80,411
-
(17,755)
(123,076)
(10,363)
(148,473)
(13,707)
2,656
28,287
57,013
(54,452)
(71,379)
29,208
(34,966)
29,197
-
-
14,098
(94,789)
46,650
(202,925)
(71,379)
29,208
(48,673)
(157,733)
(21,346)
29,197
(149,882)
291,966
105,583
(160,351)
(57,726)
-
131,615
47,857
239,816
(239,423)
29,197
29,590
-
(*) During the year ended March 31, 2014, the Company, based on Law 4.506/64, which provides for the adoption of
accelerated depreciation coefficient, recorded the amount of R$71,379.
(**) As mentioned on note 1.1, the Company recognized in these lines items, the tax effects on temporary, resulting from
provisions of the Business Plan in the amount of R$32,186.
Recognized in
Com pany (BR GAAP)
Temporary differences:
Provision for tax, labor, civil and environmental contingencies
Provision for losses on advances to suppliers
Sundry provisions
Biological assets
Net present value - Law 11.638
Hedge accounting of Libor sw ap, NDF and exchange rate changes
Effect of translation of functional currency
Unrealized exchange rate changes
Amortization of tax goodw ill
Mark-to-market of derivatives
Unutilized tax losses and credits:
Tax loss carryforw ards
Social contribution tax loss carryforw ards
Opening
Recognized in
balance as at
profit or loss
03.31.12
for the year
other
Closing
com prehensive balance as at
incom e (loss)
03.31.13
26,933
11,423
28,841
(19,168)
17,019
(142,058)
9,921
(155,673)
(19,975)
10,663
(2,922)
31,085
66,857
1,929
(5,276)
18,982
(20,284)
7,200
6,268
(29,498)
-
37,596
8,501
59,926
47,689
1,929
(17,755)
(123,076)
(10,363)
(148,473)
(13,707)
(242,737)
114,502
(29,498)
(157,733)
225,051
81,493
66,915
24,090
-
291,966
105,583
63,807
205,507
(29,498)
239,816
35
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Recognized in
Consolidated (BR GAAP and IFRS)
Opening
Recognized in
balance as at
profit or loss
03.31.13
for the year
Temporary differences:
Provision for tax, labor, civil and environmental contingencies (**)
Provision for losses on advances to suppliers
Sundry provisions (**)
Biological assets
Closing
incom e (loss)
03.31.14
172,028
9,742
111,526
20,828
9,229
(416)
(16,797)
13,861
-
181,257
9,326
94,729
34,689
1,800
(1,282)
-
518
42,816
(123,076)
(53,184)
(39,180)
(148,473)
(5,893)
(2,588)
(12,075)
(1,714)
(590,660)
28,297
9,959
69,697
(54,452)
4,068
(22,196)
(3,500)
(71,379)
1,714
73,853
57,253
-
100,069
(94,779)
(43,225)
30,517
(202,925)
(1,825)
(24,784)
(15,575)
(71,379)
(516,807)
(869)
41,869
318
-
41,869
(551)
(618,972)
82,843
57,253
(478,876)
510,529
185,098
(342,962)
(123,466)
-
167,567
61,632
76,655
(383,585)
57,253
(249,677)
Net present value - Law 11.638
Hedge accounting of Libor sw ap, NDF and exchange rate changes
Effect of translation of functional currency
Fair value of financial debts
Unrealized exchange rate changes
Amortization of tax goodw ill
Assets held for sale
Mark-to-market of derivatives
Effect of Rural Securitization Program (PESA)
Encouraged accelerated depreciation (*)
Revaluation reserve
Appreciation of acquired assets (**)
other
com prehensive balance as at
Impairment (**)
Customers contracts
Unutilized tax losses and credits:
Tax loss carryforw ards
Social contribution tax loss carryforw ards
(*) During the year ended March 31, 2014, the Company, based on Law 4.506/64, which provides for the adoption of
accelerated depreciation coefficient, recorded the amount of R$71,379.
(**) As mentioned on note 1.1, the Company recognized in these lines items, the tax effects on temporary, resulting from
provisions of the Business Plan in the amount of R$95,715.
Recognized in
Consolidated (BR GAAP and IFRS)
Temporary differences:
Provision for tax, labor, civil and environmental contingencies
Provision for losses on advances to suppliers
Sundry provisions
Biological assets
Net present value - Law 11.638
Hedge accounting of Libor sw ap, NDF and exchange rate changes
Effects of translation of functional currency
Fair value of financial debts
Unrealized exchange rate changes
Amortization of tax goodw ill
Held-for-sale assets
Mark-to-market of derivatives
Effect of Rural Securitization Program (PESA)
Revaluation reserve
Appreciation of assets acquired
Customers contracts
Unutilized tax losses and credits:
Tax loss carryforw ards
Social contribution tax loss carryforw ards
Opening
Recognized in
other
Closing
balance as at
profit or loss
com prehensive
balance as at
03.31.12
for the year
incom e (loss)
Other
03.31.13
158,335
16,439
53,074
(61,836)
55,532
(142,058)
(63,143)
(25,917)
(155,673)
(15,345)
(8,658)
(10,369)
(2,184)
(634,650)
(4,727)
13,693
(6,697)
58,452
82,664
1,800
18,982
9,959
(13,263)
7,200
9,452
6,070
(1,706)
470
44,765
3,858
(12,716)
-
-
(775)
-
172,028
9,742
111,526
20,828
1,800
42,816
(123,076)
(53,184)
(39,180)
(148,473)
(5,893)
(2,588)
(12,075)
(1,714)
(590,660)
(869)
(841,180)
235,699
(12,716)
(775)
(618,972)
432,964
156,341
77,666
28,793
-
(101)
(36)
510,529
185,098
(251,875)
342,158
(12,716)
(912)
76,655
36
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
As at March 31, 2014, the Company recorded tax loss carryforwards totaling R$1,254,273, in Company, and R$2,552,152,
in Consolidated (R$399,803 in Cosolidated as at March 31, 2013) for which no deferred income tax and social contribution
assets have been recognized.
As described in the note 1.1, the Company recorded a provision for loss on deferred tax assets for consolidated tax loss
carryforwards of social contribution balance (Contribuição Social sobre o Lucro Líquido – CSLL) in the amount of
R$218,077, in Company, and R$467,063, in Consolidated.
11.6 Management projections for the realization of deferred income tax and social contribution balances
According to the Company’s management projections, deferred income tax and social contribution arising from tax loss
carryforwards will be realized as shown below, based on taxable income projection.
Com pany
(BR GAAP)
03.31.14
2013
2014
2015
2016
2017 to 2022
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
12,269
38,158
129,045
12,793
33,871
44,367
306,518
15,632
47,686
165,881
13,371
27,237
59,701
82,480
512,838
179,472
397,549
229,199
695,627
The Company’s deferred income tax and social contribution balances consist of tax loss carryforwards and temporary
differences. The study on the realization of these balances focuses exclusively on the expected realization (utilization) of
tax loss carryforwards.
The projections of future taxable income include several estimates related to the performance of the Brazilian and
international economies, exchange rate fluctuation, sales volume, sales price, tax rates, and others, which may change in
relation to actual data and amounts.
The Company’s projected earnings are based on the increase of own sugarcane availability, production capacity increase,
increase in sugarcane suppliers, specific projects for cost reduction and market price increase.
As income tax and social contribution depend not only on taxable income but also on the existence of non-taxable income,
non-deductible expenses and several other variables, there is no relevant correlation between the Group’s net profit and
income tax and social contribution on net profit.
11.7 Provisory act 627/2013 (Medida Provisária - MP 627/2013)
In November of 2013, was issued the Provisory act 627 (Medida Provisária - MP 627), changing the tax rules and
eliminating the Transitional Tax Regime (Regime de Tributação Transitória – RTT). The Company, supported by its legal
advisors, analyzed the implications of early adoption, and the impacts that could have on the individual and consolidated
financial statements, as at on March 31, 2014, and does not expect an impact on the financial statements.
12. INVESTMENTS
Com pany
(BR GAAP)
03.31.14
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
Investm ents
Investments in subsidiaries and jointly-controlled subsidiaries
Other investments
774,307
2,503
1,137,172
2,503
231,027
2,503
232,639
2,570
776,810
1,139,675
233,530
235,209
37
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
a)
Interest in subsidiaries and jointly-controlled entities
Com pany
(BR GAAP)
Consolidated
(BR GAAP and IFRS)
Biosev
Biosev
Bioenergia
Bioenergia S.A International S.A.
TEAG
Capital
Profit (loss) for the year
Equity
Elimination of loss on the sale of property, plant and equipment w ith related parties
Ow nership interest
843,603
175
64,702
(510,591)
(144,833)
(1,446)
100%
770
14,244
100%
13,574
84,096
50%
Value of investm ents in subsidiaries under equity m ethod
(146,279)
14,244
42,048
494,079
-
897
-
-
348,697
14,244
231,027
(509,694)
770
6,787
Goodw ill/realization of concession value, net
Elimination of gains on the sale of property, plant and equipment w ith related parties
Investm ents
Equity pick up in subsidiaries
b)
188,979
Changes in investments in subsidiaries, jointly-controlled entities and non-controlled entities
Com pany
(BR GAAP)
Goodw ill
Opening balance
Capital increase
Biosev
Biosev
Bioenergia
Bioenergia S.A International S.A.
218,253
13,474
Tavares de
Melo (*)
407,675
Am pla (*)
3,691
Other
2,503
Total
03.31.14
645,596
Total
03.31.13
954,475
200,519
(509,694)
(54,460)
-
770
-
-
-
-
200,519
(508,924)
(54,460)
-
(272,827)
(35,758)
(294)
(145,382)
14,244
407,675
3,691
2,503
282,731
645,596
Goodw ill
494,079
-
-
-
-
494,079
494,079
Value of investm ents
348,697
14,244
407,675
3,691
2,503
776,810
1,139,675
Equity pick up in subsidiaries
Other comprehensive loss
Other
(*) Companies merged in prior years.
Consolidated
(BR GAAP and IFRS)
TEAG
Opening balance
Equity pick up in subsidiaries
Profit
Realization of concession value, net
Other
Value of investm ents
Other
Total
Total
03.31.14
03.31.13
232,639
(1,612)
2,570
-
235,209
(1,612)
238,081
(2,778)
6,787
-
6,787
6,321
(8,399)
-
(8,399)
(9,099)
-
(67)
(67)
(94)
231,027
2,503
233,530
235,209
231,027
2,503
233,530
235,209
38
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
c)
Additional information on the main investments in operating subsidiaries (direct and indirect)

Biosev Bioenergia S.A – direct subsidiary
Headquartered in Sertãozinho, State of São Paulo, it is mainly engaged in the production, processing and sale of
agricultural products, primarily sugarcane; the agricultural operations in Company-owned or third-party land; the purchase,
sale, import and export of agricultural products and its by-products, as well as petroleum by-products, lubricants, fuel,
grease and hydrated ethyl alcohol; and the generation and sale of electricity.
Up to November 30, 2011, Biosev Bioenergia S.A. consisted of the operations of Biosev Bioenergia and Usina Continental
S.A. (“Usina Continental”), whose operations were conducted at the branches (plants) Santa Elisa, Jardest, Vale do
Rosário, Morro Agudo and Continental (located in the State of São Paulo).
On December 1, 2011, Biosev Bioenergia S.A. merged Usina Continental.
On June 11, 2012, Biosev Bionergia S.A.’s shareholders approved, at the Extraordinary General Meeting, the change in
the Company’s name from LDC-SEV Bioenergia S.A. to Biosev Bioenergia S.A.
On July 31, 2013, the Company’s Extraordinary General Meeting approved the capital increase in investee Biosev
Bioenergia S.A., in the amount of R$200,519, from R$643,084 to R$843,603, upon the issuance of 20,051,922,736
registered common shares, with no par value.

Biosev Bioenergia International S.A. – direct subsidiary
Established on November 12, 2010, Biosev Bioenergia International S.A. is a wholly-owned subsidiary of the Company
based in Switzerland, and its purpose is to centralize the Group’s exports previously conducted by the Company.

Biosev Bioenergia Limited – direct subsidiary
Headquartered in the Cayman Island, was established for the purpose of conducting certain international business
transactions of the Group, notably the sale of sugar, but which never went into operation and which is currently in
liquidation stage.

Biosev Finance International B.V. – direct subsidiary
Established on September 13, 2013, Biosev Finance International B.V, based in the Netherlands, is the Company’s whollyowned subsidiary mainly engaged in, among others, raise funds,
the performance of short-term investments and
investment in other companies, either as partner or shareholder, in Brazil or abroad.

Biosev Passatempo Bionergia S.A. – direct subsidiary
Established to hold and operate the electric power cogeneration assets of the Passa Tempo unit, located in the State of
Mato Grosso do Sul, a company that has not yet commenced operations.

Biosev Terminais Portuários e Participações Ltda. – indirect subsidiary
Headquartered at Avenida Brigadeiro Faria Lima, 1355, 14º andar, Conjunto 1.401-A - Sala 1, Pinheiros, in the city of São
Paulo, SP, it is mainly engaged in the operation of ports and port activities, make financial investments using own funds,
and holding interests in other companies, either as partner or shareholder, in Brazil or abroad.
On June 11, 2012, Biosev Terminais Portuários e Participações Ltda.’s Articles of Association was amended to change the
Company’s corporate name from LDC-SEV Terminais Portuários e Participações Ltda. to Biosev Terminais Portuários e
Participações Ltda.
39
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)

Crystalsev Comércio e Representação Ltda. (Crystalsev) and Sociedade Operadora Portuária (SOP) –
indirect subsidiaries
On December 28, 2011, Biosev Bioenergia S.A. started to hold control of Crystalsev Comércio e Representação Ltda.,
after a capital increase totaling R$150,410, paid in through a contribution of receivables held by Biosev Bioenergia S.A.
from Crystalsev, in addition to the appointment of Crystalsev’s director. Such company holds, among other assets, 85% of
the shares of Sociedade Operadora Portuária (“SOP”), which in turn holds 50% of the capital of Terminal de Exportação
de Açúcar do Guarujá Ltda. (“TEAG”). After the capital increase, Biosev Bioenergia S.A.’s interest in Crystalsev increased
from 72.49% to 90.45%.
Headquartered in Ribeirão Preto, SP, Crystalsev is mainly engaged in the purchase and sale of sugar, ethanol and ethanol
byproducts; fuel distribution; the provision of technical, commercial and administrative services; general cargo
transportation; and sugar, ethanol, ethanol byproducts, and grain storage.
d)

Investments in jointly-controlled entities
Terminal de Exportação de Açúcar do Guarujá Ltda. (TEAG)
Due to the Company’s control over Crystalsev Comércio e Representação Ltda. (Crystalsev) on December 28, 2011 and
as described in item “c” above, the Company recognized, through its indirect subsidiary Sociedade Operadora Portuária
(SOP), for accounting purposes, 50% of TEAG’s capital. This investment results from a joint venture between SOP and
Cargill Agrícola S.A., a company headquartered in Guarujá, SP, engaged in the undertaking operations typical of a port
operator and shipping agency; road transportation of goods for own account or for third parties; the provision of services
for own account or for third parties, and the provision of specialized, commercial and industrial assistance to other local or
foreign entities; and holding interests in other entities as shareholder.
The respective balance sheet and income statement are broken down as follows:
TEAG
(BR GAAP)
Interest (%)
50.00%
03.31.14
Balance Sheet
Assets
Total current assets
Long-term receivables
Property, plant and equipment and intangible assets
Total non-current assets
Total assets
Liabilities
Total current liabilities
Total non-current liabilities
Equity
Total equity
Total liabilities and equity
03.31.13
58,099
16,072
22,450
38,522
35,134
18,312
27,738
46,050
96,621
81,184
9,690
2,835
7,919
2,743
84,096
70,522
96,621
81,184
40
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Interest (%)
Statem ent of Operations
Net revenue
Operating incom e (expenses)
General, administrative and selling
Other operating income (loss)
TEAG
(BR GAAP)
50.00%
03.31.14
03.31.13
75,981
74,261
(64,434)
2,676
(58,270)
(630)
Operating incom e before finance incom e, net
Finance income, net
14,223
6,317
15,361
4,334
Incom e before incom e taxes
Income tax and social contribution
20,540
(6,966)
19,695
(6,673)
Profit for the year
13,574
13,022
e)
Other investments

Centro de Tecnologia Canavieira S.A. (CTC)
Located at Avenida Brigadeiro Faria Lima, 2.179, 10 andar, it is engaged in the research and development of new
technologies, varieties and cultivars, especially the genetic improvement of sugarcane, disease and pest control; and the
transference of agricultural, manufacturing and laboratory technologies. On March 28, 2012, the management of CTC
approved the CTC capital increase, in which the Company subscribed for 9,304 shares, in the amount of R$2,503 paid by
conversion under an advance for future capital increase agreement. The Company’s participation in CTC is 1.62%.

INDUMEL – Indústria e Comércio de Melaço Ltda.
Based in Fazenda São Geraldo, Sertãozinho – SP, the Company is mainly engaged in the production and sale of
molasses powder, dehydrated products in general and byproducts, in own or third-party facilities, in Brazil or abroad.

Agrícola e Comercial MB Ltda.
Based in Fazenda Mateiro, Morro Agudo – SP, the Company is mainly engaged in the sale of sugarcane, production and
sale of selected and/or certified seedlings, research and monitoring of the implementation and development of new types
of seedlings, provision of services, transportation services in general, technical support and advisory to the sugarcane
crop, preparation of agricultural projects in general and development of the farming activities in general.
41
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
13. PROPERTY, PLANT AND EQUIPMENT
Com pany (BR GAAP)
03.31.14
03.31.13
Accum ulated
Cost
Land
Buildings
Improvements
Facilities
depreciation
25,146
322,434
(97,299)
Accum ulated
Net
Cost
25,146
22,360
225,135
314,418
depreciation
(83,432)
Net
22,360
230,986
53,936
(24,364)
29,572
53,780
(20,994)
32,786
387,198
(130,974)
256,224
366,733
(106,510)
260,223
Furniture and fixtures
17,131
(7,444)
9,687
15,829
(6,057)
9,772
IT equipment
30,692
(25,369)
5,323
31,505
(19,483)
12,022
2,057,594
(917,201)
1,140,393
1,951,725
(723,648)
1,228,077
8,040
(3,112)
4,928
5,673
(1,852)
3,821
214,502
(98,994)
115,508
297,101
(113,147)
183,954
3,116,673
(1,304,757)
1,811,916
3,059,124
(1,075,123)
1,984,001
47,534
49,952
1,859,450
3,109,076
Machinery and equipment (*)
Vehicles
Agricultural machinery and implements
Construction in progress (Note 13.1)
47,534
3,164,207
(1,304,757)
(1,075,123)
49,952
2,033,953
Consolidated (BR GAAP and IFRS)
03.31.14
03.31.13
Accum ulated
Cost
Land
29,898
depreciation
Cost
29,898
27,715
(182,931)
386,503
561,371
156,517
(50,839)
105,678
459,418
(148,333)
311,085
Furniture and fixtures
28,382
(15,300)
IT equipment
48,247
4,749,778
Buildings
569,434
Improvements
Facilities
Machinery and equipment (*)
Vehicles
Agricultural machinery and implements
Construction in progress (Note 13.1)
-
Accum ulated
Net
depreciation
-
Net
27,715
(126,767)
434,604
154,973
(37,451)
117,522
426,005
(118,306)
307,699
13,082
26,804
(13,140)
13,664
(39,125)
9,122
47,973
(30,956)
17,017
(2,132,701)
2,617,077
4,540,487
(1,630,142)
2,910,345
53,711
(45,822)
7,889
50,187
(42,762)
7,425
334,081
(140,301)
193,780
363,998
(161,495)
202,503
6,429,466
(2,755,352)
3,674,114
6,199,513
(2,161,019)
4,038,494
87,026
78,922
3,761,140
6,278,435
87,026
6,516,492
(2,755,352)
(2,161,019)
78,922
4,117,416
(*) Includes deferred manufacturing costs.
42
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Changes in the net value of property, plant and equipment are as follows:
Com pany
(BR GAAP)
03.31.14
Opening balance
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
4,129,684
2,033,953
1,916,788
4,117,416
Acquisitions and additions
213,911
405,324
367,011
565,867
Residual value of w rite-offs
Transfer to available-for-sale asset - Usina São
Carlos (USC) (*)
Impairment (**)
(71,787)
(7,045)
(20,639)
(12,361)
-
(3,084)
-
(3,084)
(66,258)
(16,762)
(210,339)
(16,762)
Transfer to recoverable taxes (***)
Transfer from held-for-sale assets
Transfer to intangible assets
(24,328)
-
-
(24,328)
-
2,078
Depreciation for the year
(11,626)
(10,642)
(12,418)
(13,337)
(214,415)
(250,626)
(455,563)
(534,669)
1,859,450
2,033,953
3,761,140
4,117,416
(*) See Note 9.
(**) See Note 13.4.
(***) Starting December 31, 2013 the Company recognized PIS / COFINS on fixed assets based on the date of acquisition,
as by Law 11.774/2008. Before that date, these credits were taken based on the depreciation, of the fixed assets.
13.1 Construction in progress
Construction in progress is broken down by plant as follows:
Com pany
(BR GAAP)
Plant
Jaboticabal
03.31.14
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
-
169
-
169
4,340
2,562
4,340
2,562
13,443
11,136
13,443
11,136
945
2,400
945
2,400
Lagoa da Prata
9,761
8,094
9,761
8,094
Rio Brilhante
9,528
9,968
9,528
9,968
Maracaju
8,254
4,956
8,254
4,956
852
8,347
851
8,347
Santa Elisa
-
-
12,250
9,231
Vale do Rosário
-
-
12,571
7,573
MB
-
-
7,353
4,505
Continental
-
-
6,066
3,633
Corporativo
411
2,320
1,664
6,348
47,534
49,952
87,026
78,922
Leme
Passatempo
Giasa
Estivas
Total
The balance of construction in progress refers basically to the adaptation of industrial facilities, increase in sugar
production and refurbishment of administrative facilities.
43
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
13.2 Depreciation
As at March 31, 2014, assets were depreciated based on the remaining as follows:
Average
useful life
in years
Buildings
Leasehold improvements
Facilities
Furniture and fixtures
Hardware
Machinery and equipment
Vehicles
Agricultural machinery and equipment
53
28
21
13
10
22
9
9
13.3 Guarantees and commitments for acquisition of fixed assets
As at March 31, 2014, the Company had agreements with suppliers for acquisition of fixed assets, amounting to R$48,811
(R$92,074 as at March 31, 2013), and total fixed assets pledged as collateral in the amount of R$1,092,783 (R$1,085,660
as at December 31, 2013).
13.4 Impairment
As note in 1.1 on March 20, 2014, the Company announced the Relevant Fact, which resulted in impairment in the amount
of R$66,258 in Company and R$210,339 in consolidated (R$16,762 in Company in the March 31, 2013).
The main impaired assets which suffered impairment comprise land, buildings, furniture and fixtures, computers,
machinery and equipment, vehicles, and agricultural machinery and inputs, recorded in line items “Other operating
expenses”, in the statement of operations.
14. BIOLOGICAL ASSETS
Com pany
(BR GAAP)
03.31.14
Opening balance
712,682
Increases arising from expenses on sugarcane crops and crop
treatments
Losses on changes in fair value less estimated costs to sell
Realized
Unrealized
Consolidated
(BR GAAP and IFRS)
03.31.13
945,878
03.31.14
1,241,580
03.31.13
1,507,989
522,884
529,187
796,705
793,981
1,235,566
1,475,065
2,038,285
2,301,970
(294,743)
(230,176)
(337,251)
(184,758)
(465,754)
(104,573)
(522,318)
(149,076)
(524,919)
(522,009)
(570,327)
(671,394)
(278)
(59,786)
(37,471)
(202,903)
(278)
(187,789)
(37,471)
(351,525)
650,583
712,682
1,279,891
1,241,580
Write-off (*)
Sugarcane harvest in the year
(*) As at March 31, 2013, refers to the sale of USC’s assets.
44
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
When determining the fair value, the Company takes the following into consideration:
Valuation methodology
The discounted cash flow for the next six years was the method used for the economic and financial evaluation of
sugarcane biological assets, which represents the average extraction period of sugarcane plantation.
Discount rate
The discount rate used to calculate the discounted cash flow was 5.50%, which represents the weighted average cost of
capital (WACC), net of taxes. This rate is used as proper parameter to calculate the discount rate applicable to future cash
flows of the biological assets.
Market overview
Own or third-party sugarcane is processed by the plant or ethanol distillery. Its own sugarcane has two different origins:
(a) sugarcane grown in own land; and (b) sugarcane grown in leased land, where the plant leases the land from third parties
and is responsible for all farming activities. These lease agreements are basically entered into for a six-year period (one
cycle). The sugarcane from third parties (suppliers) is acquired by the plant under supply contracts. Either the supplier or the
plant itself can be responsible for the transportation of sugarcane to the plant.
CONSECANA’s formula calculates the consideration per ton of sugarcane based on:
a)
The volume of ATR/TR delivered by the sugarcane supplier.
b) The share of the sugarcane production cost as a percentage of the sugar, ethanol residue, anhydrous ethanol and
hydrated ethanol.
c)
The net prices of sugar in the domestic and foreign markets, and the prices of anhydrous ethanol and ethyl ethanol
fuel, hydrated ethanol, and ethanol for other purposes.
d)
The plant’s production mix for said crop.
CONSECANA’s reference price is published on monthly basis.
The following assumptions were used to determine the fair value:
Com pany
(BR GAAP)
03.31.14
Estimated harvest area (in hectares)
Expected yields (in ton of sugarcane per hectare)
Total volume of recoverable sugar (in kilogram per ton of
sugarcane)
Value of a kilogram of total recoverable sugar (in R$) CONSECANA
Discount rate
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
186,950
67.0
187,283
72.8
291,605
72.2
289,107
74.2
132.4
134.1
133.8
136.3
0.5190
0.4753
0.5190
0.4753
5.50%
5.22%
5.50%
5.22%
As at March 31, 2014, inventory gains amounted to R$22,318 (gains of R$4,753 as at March 31, 2013), in Company, and
R$20,826 (gains of R$8,300 as at March 31, 2013), in Consolidated, relating to the unrealized adjustment to fair value of
biological assets.
As at March 31, 2014, the Company provided as guarantee for the export prepayment 73,134 hectares (73,134 hectares
as at March 31, 2013), equivalent to approximately 4,890,548 tons of sugarcane (5,690,754 as at March 31, 2013), in the
amount of R$79,486, at fair value, as at March 31, 2014 (R$80,408 as at March 31, 2013). Such prepayment was
disbursed on July 16, 2012 and falls due on January 31, 2015.
45
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
15. INTANGIBLE ASSETS
Com pany
(BR GAAP)
03.31.14
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
Goodw ill
Biosev Bioenergia
-
-
494,079
494,079
Usinas Tavares de Melo
-
-
407,675
407,675
Crystalsev
-
-
-
88,538
Ampla
-
-
3,691
3,691
-
-
905,445
993,983
25,134
21,757
28,998
27,543
25,134
21,757
28,998
27,543
Customers
-
-
-
2,552
Other
-
-
11,559
12,643
-
-
11,559
15,195
25,134
21,757
946,002
1,036,721
Softw are
Licenses
Other
Changes in intangible assets are as follows:
Com pany
(BR GAAP)
T ra ns f e r f ro m
pro pe rt y, pla nt a nd
03.31.13
Softw are
Licenses
e quipm e nt / A ddit io ns
Am ortization
Im pairm ent
03.31.14
21,757
12,828
(9,416)
(35)
25,134
21,757
12,828
(9,416)
(35)
25,134
Com pany
(BR GAAP)
T ra ns f e r f ro m
pro pe rt y, pla nt a nd
03.31.12
Softw are
Licenses
e quipm e nt / A ddit io ns
Am ortization
Im pairm ent
03.31.13
18,493
10,642
(7,272)
(106)
21,757
18,493
10,642
(7,272)
(106)
21,757
46
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Consolidated
(BR GAAP and IFRS)
T ra ns f e r f ro m
pro pe rt y, pla nt a nd
03.31.13
e quipm e nt / A ddit io ns
Am ortization
Im pairm ent
03.31.14
Goodw ill
Biosev Bioenergia
494,079
-
-
-
494,079
Usinas Tavares de Melo
Crystalsev
407,675
-
(88,538)
407,675
88,538
-
3,691
-
-
-
27,543
13,620
(12,020)
2,552
-
(2,552)
-
-
12,643
-
(1,084)
-
11,559
13,620
(15,656)
(88,683)
946,002
Ampla
3,691
Softw are
Licenses
Other
Customers
Other
1,036,721
(145)
28,998
Consolidated
(BR GAAP and IFRS)
T ra ns f e r f ro m
pro pe rt y, pla nt a nd
03.31.12
e quipm e nt / A ddit io ns
Am ortization
Im pairm ent
03.31.13
Goodw ill
Biosev Bioenergia
494,079
-
-
-
494,079
Usinas Tavares de Melo
Crystalsev
407,675
-
-
407,675
88,538
-
3,691
-
-
-
3,691
24,194
13,337
(9,882)
13,899
-
(11,347)
Ampla
Softw are
Licenses
(106)
Other
Customers
Other
88,538
27,543
-
13,024
788
(1,169)
1,045,100
14,125
(22,398)
(106)
2,552
12,643
1,036,721
15.1 Goodwill impairment test
The goodwill impairment test is conducted annually, considering the Company as a sole cash-generating unit, since this is
the lowest goodwill level monitored by Management.
The recoverable amount is determined based on the calculation of the value in use used for the cash flow projections
based on the ten-year financial budget and discount rate of 11% per year, net of taxes. Cash flows after a five-year period
were extrapolated at a constant annual growth rate of 4%.
As described in the note 1.1, the Company reduced the carrying value of the goodwill arising on acquisition of subsidiary
Crystalsev Trade and Representation Ltda., in the absence of evidence of future profitability. The impact of the goodwill
impairment was R$88,538.
15.2 Amortization
As at March 31, 2014, the amortization of intangible assets based on the remaining estimated useful life is as follows:
Average useful life
in years
Licenses
Trademarks and patents
4
10
47
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
16. BORROWINGS AND FINANCING
Com pany
(BR GAAP)
Description
Advance on Foreign Exchange Contract
(ACC)
Currency
US$
Weighted average financial charges
Exchange rate change plus average interest rate of
3.60% p.a.
TJLP plus average interest rate of 3.41% p.a. or
currency basket plus average interest rate of 2.91%
p.a.
Exchange rate change plus Libor plus average
interest rate of 3.69% p.a. or exchange rate change
plus interest of 5.40% p.a.
Maturity
Collaterals
03.31.14
03.31.13
From 04.10.14 to 03.06.15
Guarantee and promissory note
284,000
811,316
From 12.15.14 to 04.16.18
Mortgage, lien, guarantee and promissory
note
274,007
403,100
From 10.22.14 to 04.18.16
Guarantee, promissory note and receivables
791,020
784,604
Financing - BNDES
R$
Export Prepayment (PPE) (*)/(c)
US$
Constitutional Fund to Finance the the
Midw est - FCO
R$
Interest of 8.5% p.a.
On 12.01.23
Collateral and financed assets
124,275
54,244
Finame
R$
Average interest rate of 6.60% p.a. or TJLP plus
average interest rate of 2.96% p.a.
From 04.15.15 to 10.16.17
Mortgage, lien, guarantee and promissory
note
72,696
77,729
Constitutional Fund to Finance the
Northeast (FNE)
R$
Interest of 8.5% p.a.
On 04.17.17
Pledge and guarantee
14,093
21,581
Average interest rate of 117.76% of CDI or the
exchange rate plus interest of 5.50% p.a. or CDI plus
average interest rate of 3.20% p.a.
From 06.18.14 to 04.24.16
Guarantee and promissory note
509,881
504,492
TOTAL
2,069,972
2,657,066
(-) Portion of current liabilities
Non-current liabilities
1,140,565
929,407
1,324,115
1,332,951
Export Credit Note and Bill - NCE (b)/(e)
R$/US$
Consolidated
(BR GAAP and IFRS)
Description
Currency
Restructured debt (ex-Debentures) - R$
(d)
R$
Restructured debt - US$ (d)
US$
Restructured debt (Debentures) - R$ (a)/(d)
R$
Advance on Foreign Exchange Contract
(ACC)
US$
Financing - BNDES
R$
Export Prepayment (PPE) (*)/(c)
US$
Constitutional Fund to Finance the the
Midw est - FCO
R$
Finame
R$
Constitutional Fund to Finance the
Northeast (FNE)
Rural Securitization Program (PESA)
Export Credit Note and Bill (b)/(e)
Foreign financing
Weighted average financial charges
CDI plus average interest rate of 1.67% p.a. or IPCA
plus interest of 7% p.a.
Exchange rate change plus Libor + average interest
rate of 2.46% p.a.
CDI plus 1.72% p.a.
Exchange rate change plus average interest rate of
3.32% p.a.
TJLP plus average interest rate of 3.41% p.a. or
currency basket plus average interest rate of 2.91%
p.a.
Exchange rate change plus Libor plus average
interest rate of 3.66% p.a. or exchange rate change
plus intrest of 5.40% p.a.
Maturity
From 04.01.14 to 07.10.24
From 07.10.14 to 07.10.24
On 07.10.24
Collaterals
Guarantee, receivables, mortgage and
shares
Guarantee, receivables, mortgage and
shares
Guarantee, receivables, mortgage and
shares
03.31.14
03.31.13
357,977
442,395
914,756
912,571
369,238
429,442
From 04.10.14 to 03.06.15
Guarantee and promissory note
575,081
829,786
From 12.15.14 to 04.16.18
Mortgage, financed assets, guarantee and
promissory note
274,007
412,670
From 04.28.14 to 10.26.17
Guarantee, promissory note and receivables
1,864,359
1,004,067
Interest of 8.5% p.a.
On 12.01.23
Guarantee and financed assets
124,275
54,244
Average interest change of 5.99% p.a. or TJLP plus
average interest rate of 2.96% p.a.
From 04.15.15 to 10.16.17
Mortgage, financed assets, guarantee and
promissory note
82,183
78,151
R$
Interest of 8.5% p.a.
On 04.17.17
Mortgage and guarantee
14,093
21,581
R$
IGP-M plus 4% p.a.
From 05.01.18 to 08.02.19
Guarantee, promissory note and National
Treasury Certificate (CTN)
13,781
14,486
From 06.18.14 to 10.26.17
Guarantee and promissory note
731,990
619,594
-
Guarantee and collateral
R$/US$
US$
Average interest rate of 117.76% of CDI or the
exchange rate plus interest of 5.51% p.a. or CDI plus
average interest rate of 3.58% p.a.
1.44% p.a.
TOTAL
(-) Portion of current liabilities
Non-current liabilities
-
402,825
5,321,740
1,907,036
3,414,704
5,221,812
1,254,433
3,967,379
(*) Transactions with related-party are described in Note 20.
(a) Net of commission costs for the issuance of debentures, in the amount of R$3,860, as at March 31, 2014 (R$4,236 as
at March 31, 2013), monthly recorded in profit or loss through the maturity of such transaction.
(b) Net of commission costs for the issuance of NCE, in the amount of R$1,210, as at March 31, 2014, monthly recorded in
profit or loss through the maturity of such transaction.
(c) Net of commission costs for the issuance of PPE, in the amount of R$1,116, as at March 31, 2014 (R$2,110 as at
March 31, 2013), monthly recorded in profit or loss through the maturity of such transaction.
(d) Net of deferred expenses, in the amount of R$2,353, as at March 31, 2014 (R$1,962 as at March 31, 2013), monthly
recorded in profit or loss through the maturity of such transaction.
(e) As at March 31, 2014, the US debt amounts to R$225,748 in Company (R$200,874 as at March 31, 2013) and
R$351,717 in Consolidated (R$315,976 as at March 31, 2013).
48
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Non-current liabilities mature as follows (crop year):
Com pany
Consolidated
(BR GAAP)
(BR GAAP and IFRS)
03.31.14
03.31.14
April 2015 to March 2016
455,000
1,552,894
April 2016 to March 2017
365,210
640,563
April 2017 to March 2018
31,948
200,079
Abril 2018 to March 2019
14,544
175,378
April 2019 to July 2024
62,705
845,790
929,407
3,414,704
With respect to the financing through FCO, the Company used, through March 31, 2014, R$123,545 (R$54,244 through
March 31, 2013), equivalent to the total contracted amount, whose balance was used in the co-generation expansion
project to Passatempo Industrial Unit.
Some of the financing agreements entered into by the Company contain restrictive covenants, including the debt
restructuring agreement of Biosev Bioenergia S.A., as set out in the Obligation Acknowledgment Master Agreement and
Other Covenants entered into on October 26, 2009, and the related agreements, as part of the acquisition process of
Biosev Bioenergia S.A.
These restrictive covenants, applicable beginning 2010 (inclusive), require compliance with a minimum current liquidity
ratio, net debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization) ratio, and EBITDA-to-net
financial expenses ratio.
The compliance with covenants shall be reported to the financial institutions on an annual basis. As at March 31, 2014, the
Company is compliant with the contractual provisions of its significant borrowings and financing.
17. TRADE PAYABLES
Com pany
(BR GAAP)
03.31.14
Related parties (Note 20)
In Brazil
Abroad
Third parties
In Brazil
Abroad
03.31.13
Consolidated
(BR GAAP and IFRS)
03.31.14
03.31.13
24,784
24,569
11,925
2,825
31,845
25,034
13,036
14,337
49,353
14,750
56,879
27,373
101,107
233
93,077
-
255,726
21,308
226,671
-
101,340
93,077
277,034
226,671
150,693
107,827
333,913
254,044
49
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
18. TAXES AND CONTRIBUTIONS PAYABLE
Com pany
(BR GAAP)
03.31.14
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
REFIS and other installment plans
IPI
State VAT (ICMS)
Tax on revenue (PIS and COFINS)
Social Securities Tax (INSS) and Severance Pay Fund (FGTS)
Income tax (IRPJ) and social contribution (CSLL)
Other
Total
8,892
212
3,225
362
4,019
373
1,942
6,433
1,583
3,085
23,015
1,638
57,886
467
10,076
801
8,438
1,754
2,698
67,494
1,583
4
5,764
25,122
2,228
19,025
35,754
82,120
102,195
Current liabilities
12,844
31,165
36,247
90,405
6,181
4,589
45,873
11,790
Non-current liabilities
Payment into installments
The debts in connection with the Tax Debt Refinancing Program (REFIS IV) and other installments, recorded under current
liabilities and non-current liabilities, as at March 31, 2014, are as follows:
Com pany
(BR GAAP)
Tax
REFIS
IPI
IRPJ/CSLL
PIS/COFINS
INSS
IRRF
Contribution - sugar and ethanol
Other installm ents
ICMS
Principal
Fine
Interest
273
451
140
2,550
396
318
39
280
-
99
202
21
1,186
143
113
2,379
1,670
6,507
1,989
Paym ents
03.31.14
Principal
(134)
(97)
(88)
(1,763)
(195)
(147)
238
556
112
2,253
344
284
305
464
200
2,724
441
352
1,590
(534)
5,105
250
3,354
(2,958)
8,892
4,736
Fine
43
333
376
Interest
Paym ents
03.31.13
93
193
18
1,207
137
105
(27)
(4)
(61)
(248)
(39)
(26)
371
653
200
4,016
539
431
130
(157)
223
1,883
(562)
6,433
Consolidated
(BR GAAP and IFRS)
Tax
REFIS
IPI
IRPJ/CSLL
PIS/COFINS
INSS
IRRF
Contribution - sugar and ethanol
Other installm ents
ICMS
INSS
Principal
Fine
Interest
Paym ents
03.31.14
Principal
Fine
Interest
Paym ents
03.31.13
7,454
1,338
3,431
5,013
396
318
4,325
184
700
1,379
-
13,259
1,717
3,481
4,287
143
113
(135)
(97)
(88)
(1,763)
(195)
(147)
24,903
3,142
7,524
8,916
344
284
7,521
1,356
3,507
5,199
441
352
4,346
185
707
1,438
-
13,319
1,715
3,490
4,325
137
105
(28)
(5)
(56)
(252)
(39)
(26)
25,158
3,251
7,648
10,710
539
431
2,379
13,777
1,670
-
1,590
4,226
(534)
(10,335)
5,105
7,668
2,216
15,843
141
-
1,751
4,600
(2,354)
(2,440)
1,754
18,003
34,106
8,258
28,816
(13,294)
57,886
36,435
6,817
29,442
(5,200)
67,494
On November 30, 2009, the Company and its subsidiary Biosev Bionergia S.A. adhered to the Tax Debt Financing
Program (REFIS IV), under Law 11.941/09, in order to comply with their tax obligations before the Brazilian Federal
Revenue Service (RFB) and National Treasury Attorney General (PGFN).
Management’s decision to adhere to the REFIS IV was based on the decision of higher courts, as well as on the opinion of
its legal counsel about favorable outcomes from lawsuits in progress. The payment into installments allowed the Company
to reduce the amount payable in terms of fines, interest and legal charges.
50
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
On November 30, 2009, the Company offset the amounts related to fines and interest against tax loss carryforwards, in the
amount of R$11,728, in Company, and R$30,281, in Consolidated, in accordance with the REFIS IV program and the
limits under applicable legislation.
In 2010, the debits enrolled for payment into installments, under Law 11.941/09, whose provisions were already accrued,
were reviewed based on the debit reductions provided for in the special programs in accordance with the cancellation of
the administrative proceedings or lawsuits. In 2010, IRPJ and CSLL gains amounted to R$28,532, in Company, and
R$35,106, in Consolidated, recorded in operating income (expenses) and finance income (expenses).
In accordance with Law 11.941/09, on June 30, 2011, the payment of the tax debits was divided into 60 installments to the
Company and 30 installments to the subsidiary. These tax debits were adjusted at the SELIC rate as from the date of such
adhesion, on November 30, 2009. Due to the consolidation, the provision has an addition at R$1,100 in the second quarter
of 2011, in Company, in line item “Other operating expenses, before IRPJ and CSLL”. In the subsidiary, no effects were
recorded through profit or loss.
With respect to the escrow deposits related to the REFIS IV lawsuits, the Company received a favorable outcome from
PGFN about the use of the exceeding amount generated after the reductions in cash.
In relation to the Subsidiary’s non-consolidated portion, the Company replied to the RFB tax assessment in relation to the
maturity date of the remaining balance of non-social security debts. The Company confirmed its intention to perform the
payments according to the original option for paying the taxes in installments, immediately after the consolidation of these
debts, which, as at March 31, 2014, had not been consolidated and, due to the lack of estimated payment date, the
Company reclassified the amount of R$39,692 to non-current liabilities.
19. PROVISION FOR TAX, LABOR, CIVIL AND ENVIRONMENTAL CONTINGENCIES
The Company is a party to various ongoing lawsuits involving tax, labor, civil and environmental matters arising in the
normal course of business.
Com pany (BR GAAP)
Inflation
03.31.13
adjustm ent
Additions
Reversals
Paym ents
03.31.14
Tax
PIS and COFINS (taxes on revenue)
ICMS
IRPJ/CSLL
Social security contributions
Labor
Environmental
Civil
1,903
88
12,500
(40)
52
-
-
3,372
111
47
24,100
1,222
1,416
(7,255)
(94)
19,389
41,875
1,381
1,515
(16,446)
(1,686)
26,639
69,942
3,801
41,410
(31,894)
(15,518)
67,741
9,440
535
762
(539)
(1,071)
13,174
2,047
15,029
(478)
92,556
6,383
57,201
(32,911)
(16,589)
106,640
134,431
7,764
58,716
(49,357)
(18,275)
133,279
(9,191)
-
(1,592)
-
-
1,991
1,729
3,530
9,127
29,772
51
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Com pany (BR GAAP)
Inflation
03.31.12
Tax
PIS and COFINS (taxes on revenue)
ICMS
IRPJ/CSLL
Social security contributions
Other
Labor
Environmental
Civil
adjustm ent
Additions
Reversals
Paym ents
03.31.13
1,951
88
146
(282)
-
1,903
14,787
190
5,836
(8,313)
-
12,500
1,608
61
2,183
(480)
-
3,372
16,235
826
8,822
(1,783)
-
24,100
-
2
-
-
34,579
1,165
16,989
(10,858)
-
41,875
43,263
3,676
33,116
(8,831)
4,256
402
5,375
(593)
-
9,440
2,017
171
11,469
(483)
-
13,174
49,536
4,249
49,960
(9,907)
(1,282)
92,556
84,115
5,414
66,949
(20,765)
(1,282)
134,431
(2)
-
(1,282)
69,942
Consolidated (BR GAAP and IFRS)
Inflation
03.31.13
adjustm ent
Additions
Reversals
Paym ents
03.31.14
Tax
IPI levied on sugar sales
IPI
91,196
(3,779)
65
204
(59)
-
PIS and COFINS (taxes on revenue)
50,980
1,728
ICMS
46,533
IRPJ/CSLL
29,697
Social security contributions
Other
Labor
Environmental
Civil
(88)
-
-
87,394
-
145
-
51,906
676
(1,478)
1,742
52
(16,739)
(4,054)
27,534
89
1,882
(12,371)
(1,360)
17,937
59,925
3,256
5,077
(7,580)
(94)
60,584
1,652
4
590
(1,585)
280,187
2,981
8,342
(39,841)
(5,508)
246,161
231,862
11,651
122,027
(93,948)
(49,514)
222,078
24,811
2,427
4,974
(1,717)
(1,071)
29,424
78,747
335,420
(7,366)
6,712
46,379
173,380
(4,665)
(100,330)
(3,844)
(54,429)
109,251
360,753
615,607
9,693
181,722
(140,171)
(59,937)
606,914
-
661
52
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Consolidated (BR GAAP and IFRS)
Inflation
03.31.12
adjustm ent
Additions
Reversals
Offsets
Paym ents
03.31.13
Tax
IPI levied on sugar sales
91,501
1,748
930
(2,983)
-
-
1,136
-
-
(932)
-
-
204
PIS and COFINS (taxes on revenue)
52,195
3,432
146
(4,793)
-
-
50,980
ICMS
54,283
1,909
6,154
(15,813)
-
-
46,533
IRPJ/CSLL
40,037
1,554
3,632
(15,492)
-
29,697
Social security contributions
52,206
2,532
11,612
(6,425)
-
-
59,925
6,429
511
(5,159)
-
-
1,652
297,787
11,686
22,345
(51,597)
-
280,187
IPI
Other
Labor
(129)
(34)
(34)
180,584
15,848
102,776
(36,373)
-
Environmental
16,425
1,448
9,941
(3,003)
-
-
Civil
63,144
6,100
13,184
(3,681)
-
-
260,153
23,396
125,901
(43,057)
-
557,940
35,082
148,246
(94,654)
(34)
(30,973)
91,196
231,862
24,811
78,747
(30,973)
335,420
(30,973)
615,607
IPI on high polarization sugar sales
As at March 31, 2014, the Group was a party to lawsuits challenging the levy of the federal VAT (IPI) on high polarization
sugar sales. The Company set up a provision of R$71,717 (R$75,762 as at March 31, 2013) specifically for the case
where the likelihood of an unfavorable outcome was assessed by the legal counsel as possible at the time of the business
combination. The Company also set up a provision of R$15,677 (R$15,346 as at March 31, 2013) for the cases assessed
as probable losses. No provision was set up when the likelihood of loss is considered remote.
PIS and COFINS and IRPJ/CSLL
Refers to lawsuits discussing PIS/COFINS or IRPJ tax credits that have been assessed as probable loss based on the
Group´s interpretation of the law, which, in turn, differs from the interpretation of the tax authorities in light of hierarchically
lower regulatory instructions.
As a result, the offset of debits relating to IRPJ, CSLL, PIS, COFINS, among others, made by the Company were
disallowed by tax authorities. Therefore, a provision was recognized.
Social security contributions
In this group, the Company challenges the levy of social security contributions on revenues from export rural production
through other companies.
The accrued amount of R$18,134 (R$17,209 as at March 31, 2013) is subject to tax assessment. In addition, the lawsuit
initiated by União da Indústria de Cana-de-Açúcar – UNICA challenges the constitutionality of this contribution.
Labor, environmental, and civil contingencies
As at March 31, 2014, there were labor, environmental, and civil lawsuits for which the Group recognized provisions for
contingencies arising from the lawsuits whose likelihood of loss is considered probable or according to applicable
accounting standards, based on the opinion of Group’s legal counsel and past experience.
Labor claims are substantially related to (i) working hours; (ii) additional premiums; (iii) jointly-liability with service
providers; (iv) occupational accidents and/or hazards/diseases; (v) organizational climate; (vi) compensation costs in
relation to the items mentioned above.
53
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Environmental lawsuits are primarily comprised of: (i) burn of sugarcane straw; and (ii) alleged non-authorized intervention
in an area considered by environmental authorities as a permanent preservation area.
The civil lawsuits to which the Company is a party basically refer to discussions involving contractual issues, occupational
and/or traffic accidents and service providers.
Contingencies - court or out-of-court claims classified as possible losses and not provided for
Tax
The tax claims (court and out-of-court) existing at March 31, 2014, with an acknowledged possible likelihood of loss and
not provided for are shown in the table below:
Com pany
Consolidated
(BR GAAP)
03.31.14
Tax
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
378,673
347,686
753,537
600,357
378,673
347,686
753,537
600,357
Among the contingencies for which a provision has not been recognized and that have been assessed as possible loss is
the collection of ICMS due to an alleged difference identified in inventories. Additionally, there is a discussion also
involving ICMS on the reasonableness in levying ICMS on sales of sugarcane alcohol items and export of semi-finished
products.
Civil and labor
The civil and labor claims (court and out-of-court) as at March 31, 2013, with an acknowledged possible likelihood of loss
and not provided for are shown in the table below:
Com pany
Consolidated
(BR GAAP)
(BR GAAP and IFRS)
03.31.14
Civil
Labor
03.31.13
03.31.14
03.31.13
4,509
2,203
11,908
5,846
5,216
5,594
12,258
9,833
9,725
7,797
24,166
15,679
As at March 31, 2014, the Group was a party to labor and civil lawsuits whose likelihood of loss is considered possible
based on the opinion of Group’s legal counsel.
Labor claims are substantially related to (i) working hours; (ii) time in transit; (iii) additional premiums; (iv) refund of
deductions, such as trade union fees; (v) contractual exclusivity; (vi) jointly-liability with service providers; (vii) occupational
accidents and/or hazards/diseases; (viii) organizational climate; (ix) validity of the collective bargaining agreement, and (x)
compensation costs in relation to the items mentioned above.
The civil lawsuits basically refer to discussions involving contractual issues and occupational and/or traffic accidents.
54
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
20. RELATED PARTIES
a) Transactions with the Company
Sugar Holdings B.V. is the direct parent of the Company, which as at March 31, 2014 holds 49.87% of the Company’s total
capital and 49.87% of its voting capital.
Sugar Holdings B.V. is a subsidiary of Louis Dreyfus Commodities NH B.V., which in turn has as its ultimate parent Akira
Holding Foundation.
There were no transactions between the Company and its parent company in the year ended March 31, 2014.
As at March 31, 2014, the loan entered into between Biosev Bioenergia International S.A. and the Company’s parent is
broken down as follows:
Consolidated (BR GAAP and IFRS)
Liabilities
Borrow ings and
Parent
financing
Total
Sugar Holdings B.V.
(806,207)
(806,207)
03.31.2014
(806,207)
(806,207)
The loan agreement entered into with Sugar Holdings B.V. is subject to Libor rate + 5.15% on principal.
b) Transactions with subsidiaries and jointly-controlled entities

Sales customers
In the year ended March 31, 2014, the Company carried out sales transactions with the following subsidiaries:
Name
Biosev Bioenergia International S.A.
Biosev Bioenergia S.A.
Relationship w ith the Company or its Subsidiary
Subsidiary.
Subsidiary.
The agreements entered into with Biosev Bionergia International S.A. provide for the purchase of products by Biosev
Bionergia International S.A. at the price agreed by the parties, based on market quotation.
The Company carries out eventual transactions with its subsidiaries, for purchase and sale of products and other, in
accordance with the transaction.

Loan
In the year ended March 31, 2014, the Company carried out loan transactions with the following subsidiary:
Name
Biosev Bioenergia S.A.
Relationship w ith the Company or its Subsidiary
Subsidiary.
The agreement with Biosev Bionergia S.A., on December 30, 2009, was entered into for undetermined period. The
amounts under this agreement are subject to CDI rate.
55
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)

Borrowing
In the year ended March 31, 2014, the Company carried out loan transactions with the following subsidiary:
Name
Biosev Bioenergia International S.A.
Relationship w ith the Company or its Subsidiary
Subsidiary.
The terms and conditions of the borrowings entered into with Biosev Bioenergia International S.A. are described in Note
16.
The table below shows the balances and transactions as at March 31, 2014 between the Company and its subsidiaries,
which are consolidated in its balance sheet:
Com pany (BR GAAP)
Assets
Subsidiaries
Biosev Bioenergia International S.A
Trade receivables
Loan (*)
Total
Biosev Bioenergia S.A. (**)
11,110
35,057
63,834
11,110
98,891
03.31.2014
46,167
63,834
110,001
Biosev Bioenergia S.A.
104,441
1,566
75,232
104,441
76,798
03.31.2013
106,007
75,232
181,239
Biosev Bioenergia International S.A.
(*) Amount recognized in other receivables (non-current assets).
(**) Out of total receivables, R$262 refers to interest receivable, recorded in other receivables (current assets).
Com pany ( BR GAAP)
Liabilities
Subsidiaries
Biosev Bioenergia International S.A
Trade payables
Advances from
Borrow ings and
custom ers (*)
financing
Total
Biosev Bioenergia S.A.
446
9,006
60,732
-
170,174
-
231,352
9,006
03.31.2014
9,452
60,732
170,174
240,358
Biosev Bioenergia International S.A.
Biosev Bioenergia S.A.
612
4,548
188,634
-
264,491
-
453,737
4,548
03.31.2013
5,160
188,634
264,491
458,285
(*) Amounts recognized in advances from foreign customers (current liabilities).
56
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Com pany ( BR GAAP)
Profit (loss)
Incom e
Subsidiaries
Biosev Bioenergia International S.A.
Biosev Bioenergia S.A.
03.31.2014
Biosev Bioenergia International S.A.
Biosev Bioenergia S.A.
03.31.2013
Sales
Interest
Expenses
Total
Purchases
Interest
Total
494,776
104,860
19,733
494,776
124,593
(598)
(20,099)
(69,181)
-
(69,779)
(20,099)
599,636
19,733
619,369
(20,697)
(69,181)
(89,878)
755,246
16,328
34,975
1,977
790,221
18,305
(502)
(10,956)
(56,664)
(1,674)
(57,166)
(12,630)
771,574
36,952
808,526
(11,458)
(58,338)
(69,796)
c) Other related parties
The Company adopts internal rules and policies that govern the related-party transactions in order to ensure that these
transactions are carried out at market price, conditions and costs or based on the conditions of any business previously
carried out on an arm’s length or, in the absence of market terms and previous business, contracted on an arm’s length,
according to the Company’s best interests, and clearly recorded in the financial statements.
For purposes of the Company’s related-party transactions, market conditions are those conditions which considered the
applicable principles during the negotiation, such as the principles of competition (service prices and conditions compatible
with the market, if applicable or possible); adequacy (services provided in compliance with the contractual terms and
Company’s responsibilities, as well as proper security control over information); and transparency (proper disclosure of the
agreed conditions and proper application thereof, as well as the related effects in the Company’s financial statements).

Sales customers
In the year ended March 31, 2014, the Company and its subsidiaries carried out sales transactions with the following
related parties:
Nam e
Beabisa Agricultura Ltda
Louis Dreyfus Commodities Colombia Ltda
LD Commodities Sugar Merchandising LLC
Louis Dreyfus Commodities Suisse S.A.
LDC Ethanol Interior Merchandising
Elbel Comércio e Participações Ltda
Sorocaba Refrescos S.A.
Uberlândia Refrescos Ltda.
Renk Zanini Equipamentos Industriais S.A.
Kow alski Alimentos S.A.
TEAG- Terminal de Exportação de Açúcar do Guarujá Ltda.
Relationship w ith the Com pany or its Subsidiary
Company controlled by a relative of a Company's key management member.
Company under common control.
Company under common control.
Company under common control.
Company under common control.
Company controlled by a relative of a Company's key management member.
Company controlled by a relative of a Company's key management member.
Company controlled by a relative of a Company's key management member.
Company controlled by a relative of a Company's key management member.
Company under common control.
Jointly-controlled entity
The agreements provide for the sale of sugarcane molasses, liquid sugar, VHP sugar, energy and ethanol at the price
agreed by the parties based on market quotations.
The agreements entered into with Louis Dreyfus Commodities Suisse S.A. provide for the exports that generate accounts
receivable in dollars, cash against documents.
57
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)

Cost and service sharing
In the year ended March 31, 2014, the Company and its subsidiaries held cost and service sharing transactions with the
following related parties:
Name
LDC Trading and Services Co.
Louis Dreyfus Commodities Brasil S.A.
Louis Dreyfus Commodities Suisse S.A.
Louis Dreyfus Commodities Agroindustrial S.A.
Term Commodities Inc.
Relationship w ith the Company or its Subsidiary
Company under common control.
Company under common control.
Company under common control.
Company under common control.
Company under common control.
The agreements entered into with companies under common control provide for the mutual sharing of the structures in the
accounting, budget, legal, commercial, administrative, supply, treasury, human resources, communication and information
technology areas, at the prices equivalent to costs incurred. The amounts payable by the parties arising from shared costs
are settled in cash.
The agreement entered into with Louis Dreyfus Commodities Suisse S.A. provides for the provision of market advisory
services, including the Brazilian and international sugar and ethanol markets, at the price determined based on the
aggregate ton of sugarcane effectively processed by the Company, is subsidiaries and jointly-controlled entities, falling due
in July 31 of the year subsequent to such calculation.
The agreement entered into with Term Commodities Inc. provides for the provision of brokerage services to futures
contracts in commodities exchange, at the price determined based on the number of agreements executed. The balance of
accounts receivable represents the margin deposit, which liquidity is restricted in order to guarantee futures market
operations.

Equipment suppliers
In the year ended March 31, 2014, the Company and its subsidiaries held equipment purchase and industrial service
transactions with the following related party:
Name
Renk Zanini Equipamentos Industriais S.A.
Sermatec Industria e Montagens Ltda.
Relationship w ith the Company or its Subsidiary
Company controlled by a relative of a Company's key management member.
Company controlled by a relative of a Company's key management member.
The agreements provided for the sale of industrial equipment and provision of technical services. As a guarantee,
Sermatec Indústrias e Montagens Ltda. issued promissory notes on behalf of the Company, in the total amount of
R$52,544, collateralized by Zanini Equipamentos Pesados Ltda.

Export of commodities
As at March 31, 2014, the Company and its subsidiaries carried out export transactions of commodities with the following
related party:
Name
Louis Dreyfus Commodities Brasil S.A.
Relationship w ith the Company or its Subsidiary
Company under common control.
The agreement for export of commodities entered into with Louis Dreyfus Commodities Brasil S.A. provides for the
purchase and sale of goods for future delivery specifically for export purposes in order to comply with obligations
previously assumed. This agreement is subject to the premium of 1.05% on total shipments.
58
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)

Input suppliers
In the year ended March 31, 2014, the Company and its subsidiaries carried out input purchase transactions with the
following related parties:
Name
Macrofertil Industria e Comércio de Fertilizantes S.A.
LDC Ethanol Interior Merchandising
Louis Dreyfus Commodities Brasil S.A.
Relationship w ith the Company or its Subsidiary
Company under common control.
Company under common control.
Company under common control.
The agreements provide for the supply of fertilizers and are effective through the full compliance with the obligations.

Sugarcane suppliers, rural lease, and agricultural partnership
In the year ended March 31, 2014, the Company and its subsidiaries held sugarcane purchase, rural lease, and/or
agricultural partnership transactions with the following related parties:
Nam e
Relationship w ith the Com pany or its Subsidiary
Louis Dreyfus Commodities Agroindustrial S.A.
Company under common control.
Alebisa Empreendimentos e Participações Ltda.
Anbisa Agricultura Ltda
Renk Zanini Equipamentos Industriais S.A.
B5 Participações Ltda.
Beabisa Agricultura Ltda
Beabisa Agro Comercial e Empreendimentos Ltda
Beatriz Biagi Becker
Carbisa Agricultura Ltda
Edilah de Faria Lacerda Biagi
Edimasa Agricultura Ltda
Elbel Comércio e Participações Ltda
Maubisa Agricultura Ltda.
Maurilio Biagi Filho
Panorama Agricultura Ltda.
Santa Elisa Participações S.A.
Usina Santa Elisa S.A.
Company controlled by a relative of a Company's key
Company controlled by a relative of a Company's key
Company controlled by a relative of a Company's key
Company controlled by a relative of a Company's key
Company controlled by a relative of a Company's key
Company controlled by a relative of a Company's key
Relative of a Company's key management member.
Company controlled by a relative of a Company's key
Relative of a Company's key management member.
Company controlled by a relative of a Company's key
Company controlled by a relative of a Company's key
Company controlled by a relative of a Company's key
Relative of a Company's key management member.
Company controlled by a relative of a Company's key
Company controlled by a relative of a Company's key
Company controlled by a relative of a Company's key
management member.
management member.
management member.
management member.
management member.
management member.
management member.
management member.
management member.
management member.
management member.
management member.
management member.
The agricultural agreements provides for the sugarcane cultivation by the Company in properties owned by such related
parties. The compensation of each agreement is determined in tons of sugarcane, whose price is determined based on the
criteria set forth by CONSECANA/SP. The compensation of each sugarcane supply agreement is determined in ATR
kilograms per ton of sugarcane.

Service providers
In the year ended March 31, 2014, the Company and its subsidiaries held sugar elevation and storage transactions with
the following related party:
Name
Relationship w ith the Company or its Subsidiary
TEAG- Terminal de Exportação de Açúcar do Guarujá Ltda.
Jointly-controlled entity
The agreements entered into with TEAG - Terminal de Exportação de Açúcar do Guarujá Ltda. set forth the provision of
sugar elevation services through TEAG - Terminal de Exportação de Açúcar do Guarujá Ltda. The price is determined by
ton of sugar.
59
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
The tables below shows the balances and transactions as at March 31, 2014 between the Company and related parties
not indicated in the items a and b above:
Com pany (BR GAAP)
Assets
Derivatives
Trade
Advances to
receivables
suppliers (*)
Total
Com panies under com m on control
Louis Dreyfus Commodities Brasil S.A.
-
14
1,705
Louis Dreyfus Commodities Suisse S.A.
-
365
-
365
4,930
87,421
-
92,351
4,930
87,800
1,705
94,435
-
-
6,783
6,783
-
-
6,783
6,783
4,930
87,800
8,488
101,218
Term Commodities Inc.
Com pany controlled by a relative
Com pany's key m anagem ent m em ber
of
1,719
a
Sermatec Industria e Montagens Ltda.
03.31.2014
Com panies under com m on control
Louis Dreyfus Commodities Brasil S.A.
Louis Dreyfus Commodities Suisse S.A.
Term Commodities Inc.
Com pany controlled by a relative
Com pany's key m anagem ent m em ber
Sermatec Industria e Montagens Ltda.
03.31.2013
of
-
155
-
155
16,799
203
45,574
-
203
62,373
16,799
45,932
-
62,731
-
-
8,761
8,761
-
-
8,761
8,761
16,799
45,932
8,761
71,492
a
(*) As at March 31, 2014, advances to suppliers, under inventories, amounted to R$407 (R$1,975 as at March 31, 2013),
advances from suppliers (non-current assets) amounted to R$1,298 and property, plant and equipment – work in progress
amounted to R$6,783 (R$6,786 as at March 31, 2013).
60
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Consolidated ( BR GAAP and IFRS)
Assets
Com panies
Derivatives
Trade
Advances to
receivables
suppliers (*)
Total
Com panies under com m on control
-
69
2,231
-
8
-
8
-
11,271
-
11,271
4,930
23,148
87,497
-
23,148
92,427
4,930
121,993
2,231
129,154
-
145
1
146
-
145
1
146
Alebisa Empreendimento e Participações Ltda.
-
-
615
615
Anbisa Agricultura Ltda
-
-
746
746
B5 Participações Ltda
-
-
539
539
Beabisa Agricultura Ltda.
-
-
450
450
Beabisa Agro Comercial e Empreendimentos Ltda.
-
-
6
6
Carbisa Agricultura Ltda
-
-
2,051
2,051
Edimasa Agricultura Ltda.
-
-
267
267
Elbel Comércio e Participações Ltda.
-
1
1,733
1,734
Maubisa Agricultura Ltda
-
-
52
52
Panorama Agricultura Ltda.
-
-
407
407
Usina Santa Elisa S.A.
-
-
472
6,783
472
6,783
-
1
14,121
14,122
Beatriz Biagi Becker
-
-
424
424
Edilah Faria Lacerda Biagi
Maurilio Biagi Filho
-
-
1,564
340
2,328
1,564
340
2,328
4,930
122,139
18,681
145,750
Jointly-controlled entities
Louis Dreyfus Commodities Brasil S.A.
-
155
-
155
Louis Dreyfus Commodities Agroindustrial S.A.
-
10
-
10
16,799
22,429
46,376
-
22,429
63,175
16,799
68,970
-
85,769
Louis Dreyfus Commodities Brasil S.A.
Louis Dreyfus Commodities Agroindustrial S.A.
Louis Dreyfus Commodities Suisse S.A.
LDC Ethanol Interior Merchandising
Term Commodities Inc.
Jointly-controlled entity
Teag-Terminal Exp. Açúcar Guarujá Ltda.
Com panies controlled by a relative
Com pany's key m anagem ent m em ber
of
a
Sermatec Industria e Montagens Ltda.
Relative of a Com pany's
m em ber
2,300
key m anagem ent
03.31.2014
Louis Dreyfus Commodities Suisse S.A. (**)
Term Commodities Inc.
Com panies controlled by a relative
Com pany's key m anagem ent m em ber
Alebisa Empreendimento e Participações Ltda.
of
a
-
-
385
385
Anbisa Agricultura Ltda.
-
-
1,046
1,046
B5 Participações Ltda.
-
-
784
784
Beabisa Agricultura Ltda.
-
-
1,193
1,193
Carbisa Agricultura Ltda.
-
-
2,273
2,273
Edimasa Agricultura Ltda.
-
-
502
502
Elbel Comércio e Participações Ltda.
-
-
4,342
4,342
Sermatec Industria e Montagens Ltda.
-
-
8,761
579
8,761
579
-
-
19,865
19,865
-
-
220
220
-
-
847
245
847
245
Usina Santa Elisa S.A.
Relative of a Com pany's
m em ber
Beatriz Biagi Becker
Edilah Faria Lacerda Biagi
Maurilio Biagi Filho
03.31.2013
key m anagem ent
-
-
1,312
1,312
16,799
68,970
21,177
106,946
(*) As at March 31, 2014, advances to suppliers, under inventories, amounted to R$10,600 (R$14,391 as at March 31,
2013), advances from suppliers (non-current assets) amounted to R$1,298 and property, plant and equipment – work in
progress amounted to R$6,783 (R$6,786 as at March 31, 2013).
(**) As at March 31, 2013, of the total amount, R$991 refers to trade receivables of Terminal de Exportação de Açúcar do
Guarujá Ltda. (TEAG), investments in jointly-controlled entities (joint venture).
61
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Com pany ( BR GAAP)
Liabilities
Advances from
Derivatives
Trade payables
custom ers (*)
Total
Com panies under com m on control
Louis Dreyfus Commodities Agroindustrial S.A.
-
1
-
1
Louis Dreyfus Commodities Brasil S.A.
-
1,407
-
1,407
Louis Dreyfus Commodities Suisse S.A.
-
2,440
191,531
193,971
Macrofértil Indústria e Comércio de Fertilizantes Ltda.
-
12,056
-
12,056
38,905
38,905
21,663
20
37,587
191,531
60,568
20
268,023
2,314
Term Commodities Inc.
LDC Ethanol Interior Merchandising
Com pany controlled by a relative
Com pany's key m anagem ent m em ber
of
a
Sermatec Industria e Montagens Ltda.
03.31.2014
Com panies under com m on control
Louis Dreyfus Commodities Agroindustrial S.A.
Louis Dreyfus Commodities Brasil S.A.
Louis Dreyfus Commodities Suisse S.A.
Nethgrain B.V.
Term Commodities Inc.
Com pany controlled by a relative
Com pany's key m anagem ent m em ber
Sermatec Industria e Montagens Ltda.
03.31.2013
of
-
2,314
-
-
2,314
-
2,314
38,905
39,901
191,531
270,337
1,223
3
2,436
2,213
-
1,120
-
3
2,436
2,213
1,120
1,223
1,223
4,652
1,120
6,995
-
4,938
-
4,938
-
4,938
-
4,938
1,223
9,590
1,120
11,933
a
(*) Amounts recognized in advances from foreign customers, out of which R$1,298 in current liabilities and R$190,233 in
non-current liabilities.
62
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Consolidated (BR GAAP and IFRS)
Liabilities
Com panies under com m on control
Louis Dreyfus Commodities Agroindustrial S.A.
Louis Dreyfus Commodities Brasil S.A.
Louis Dreyfus Commodities Suisse S.A.
LDC Ethanol Interior Merchandising
LDC Trading and Services Co.
Macrofértil Indústria e Comércio de Fertilizantes Ltda.
Term Commodities Inc.
Jointly-controlled entity
Teag-Terminal Exp. Açúcar Guarujá Ltda.
Advances from
Borrow ings
custom ers (*)
and financing
Derivatives
Trade payables
Total
38,905
1
1,378
38,257
20
52
21,444
21,663
695,765
-
25,851
-
1
1,378
759,873
20
52
21,444
60,568
38,905
82,815
695,765
25,851
843,336
-
745
-
-
745
-
745
-
-
745
-
658
400
281
481
202
417
2,555
149
401
8
2,574
144
-
-
658
400
281
481
202
417
2,555
149
401
8
2,574
144
-
8,270
-
-
8,270
-
7
-
-
7
-
7
-
-
7
38,905
91,837
695,765
25,851
852,358
Com panies under com m on control
Louis Dreyfus Commodities Agroindustrial S.A.
-
101
-
-
101
LDC Trading and Services Co.
-
7
-
-
7
Louis Dreyfus Commodities Brasil S.A.
Louis Dreyfus Commodities Suisse S.A.
-
3,303
-
-
3,303
-
51,995
402,760
-
454,755
1,223
-
1,120
-
-
1,120
1,223
1,223
55,406
403,880
-
460,509
Alebisa Empreendimento e Participações Ltda.
-
543
-
-
543
Anbisa Agricultura Ltda.
-
416
-
-
416
B5 Participações Ltda.
-
243
-
-
243
Beabisa Agricultura Ltda.
-
391
-
-
391
Carbisa Agricultura Ltda.
Edimasa Agricultura Ltda.
Elbel Comércio e Participações Ltda.
Maubisa Agricultura Ltda.
Uberlândia Refrescos Ltda.
Sermatec Industria e Montagens Ltda.
Usina Santa Elisa S.A.
-
97
456
2,333
144
29
4,938
116
9,706
-
-
97
456
2,333
144
29
4,938
116
9,706
1,223
20
20
65,132
403,880
-
20
20
470,235
Com panies controlled by a relative of a
Com pany's key m anagem ent m em ber
Alebisa Empreendimento e Participações Ltda
Anbisa Agricultura Ltda.
B5 Participações Ltda.
Beabisa Agricultura Ltda.
Carbisa Agricultura Ltda.
Edimasa Agricultura Ltda.
Elbel Comércio e Participações Ltda.
Maubisa Agricultura Ltda.
Panorama Agricultura Ltda.
Santa Elisa Participações S.A.
Sermatec Industria e Montagens Ltda.
Usina Santa Elisa S.A.
Relative of a Com pany's key m anagem ent
m em ber
Maurilio Biagi Filho
03.31.2014
Nethgrain B.V.
Term Commodities Inc.
Com panies controlled by a relative
Com pany's key m anagem ent m em ber
of a
Relative of a Com pany's key m anagem ent
m em ber
Maurilio Biagi Filho
03.31.2013
(*) Amounts recognized in advances from foreign customers, out of which R$125,065 in current liabilities and R$570,700
in non-current liabilities, for the delivery of products of the crop 2015/2016.
(**) Of the total amount, R$34,958 as at March 31, 2014 (R$37,759 as at March 31, 2013) was recognized in other
obligations (current liabilities).
63
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Com pany ( BR GAAP)
Profit (loss)
Incom e
Expenses
Total
Sales
Total
incom e
Purchases
Interest
expenses
Com panies under com m on control
Louis Dreyfus Commodities Agroindustrial S.A.
Louis Dreyfus Commodities Brasil S.A.
Louis Dreyfus Commodities Suisse S.A.
LD Commodities Sugar Merchandising LLC
LDC Ethanol Interior Merchandising
Macrofértil Indústria e Comércio de Fertilizantes Ltda.
Term Commodities Inc.
Jointly-controlled entity
Teag-Terminal Exp. Açúcar Guarujá Ltda.
Com pany controlled by a relative of a Com pany's key
m anagem ent m em ber
Renk Zanini S.A. Equipamentos Industriais
Sermatec Industria e Montagens Ltda.
03.31.2014
78
108
2,108
3,201
78
108
2,108
3,201
(10)
(111,259)
(37,357)
(1,761)
(5,959)
(370)
(1)
(721)
(10)
(117,218)
(370)
(1)
(37,357)
(2,482)
5,495
5,495
(150,387)
(7,051)
(157,438)
257
257
257
257
(43)
(43)
-
386
-
386
-
(873)
(132)
-
-
(43)
(43)
(873)
(132)
386
386
(1,005)
6,138
6,138
(151,435)
(7,051)
-
(158,486)
(1,005)
83
3
2,093
32
401
-
83
3
2,093
32
401
-
(3)
(12,998)
(323)
(28,484)
(539)
(9,667)
(107)
(836)
(3)
(22,665)
(323)
(107)
(28,484)
(1,375)
2,612
2,612
(42,347)
(10,610)
(52,957)
-
(4)
(1,385)
-
(4)
(1,385)
Jointly-controlled entities
Hedera Investimentos e Participações
Louis Dreyfus Commodities Agroindustrial S.A.
Louis Dreyfus Commodities Brasil S.A.
Louis Dreyfus Commodities Suisse S.A.
Louis Dreyfus Commodities Asia Pte. Ltd.
LD Commodities Sugar Merchandising LLC
Nethgrain B. V.
Macrofértil Indústria e Comércio de Fertilizantes Ltda.
Term Commodities Inc.
Com panies controlled by a relative of a Com pany's
key m anagem ent m em ber
Renk Zanini S.A. Equipamentos Industriais
Sermatec Industria e Montagens Ltda.
03.31.2013
-
-
(1,389)
2,612
2,612
(43,736)
(10,610)
(1,389)
(54,346)
64
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Consolidated ( BR GAAP and IFRS)
Profit (loss)
Incom e
Expenses
Total
Com panies
Com panies under com m on control
LDC Ethanol Interior Merchandising
LDC Trading and Services Co.
Louis Dreyfus Commodities Agroindustrial S.A.
Louis Dreyfus Commodities Brasil S.A.
Louis Dreyfus Commodities Suisse S.A.
Louis Dreyfus Commodities Colombia. Ltda
Kow alski Alimentos S.A.
Macrofértil Indústria e Comércio de Fertilizantes Ltda.
LD Commodities Sugar Merchandising LLC
Sugar Holdings B.V.
Term Commodities Inc.
Jointly-controlled entity
TEAG-Terminal Exp. Açúcar Guarujá Ltda.
Com panies controlled by a relative of a Com pany's
key m anagem ent m em ber
Alebisa Empreendimento e Participações Ltda
Anbisa Agricultura Ltda
B5 Participações Ltda
Beabisa Agricultura Ltda.
Carbisa Agricultura Ltda
Companhia de Bebidas Ipiranga
Edimasa Agricultura Ltda.
Elbel Comércio e Participações Ltda.
Maubisa Agricultura Ltda.
Panorama Agricultura Ltda.
Uberlândia Refrescos Ltda.
Usina Santa Elisa S.A.
Renk Zanini S.A. Equipamentos Industriais
Santa Elisa Participações S.A.
Sorocaba Refrescos S/A
Sermatec Industria e Montagens Ltda.
Relative of a Com pany's key m anagem ent m em ber
Maurilio Biagi Filho
03.31.2014
Com panies under com m on control
Hedera Investimentos e Participações
LDC Ethanol Interior Merchandising
LDC Trading and Services Co.
Louis Dreyfus Commodities Agroindustrial S.A.
Louis Dreyfus Commodities Asia Pte. Ltd.
Louis Dreyfus Commodities Brasil S.A.
Louis Dreyfus Commodities Suisse S.A.
LD Commodities Sugar Merchandising LLC
Nethgrain B.V.
Macrofértil Indústria e Comércio de Fertilizantes Ltda.
Term Commodities Inc.
Jointly-controlled entity
TEAG-Terminal Exp. Açúcar Guarujá Ltda.
Com panies controlled by a relative of a Com pany's
key m anagem ent m em ber
Alebisa Empreendimento e Participações Ltda.
Anbisa Agricultura Ltda.
B5 Participações Ltda.
Beabisa Agricultura Ltda.
Carbisa Agricultura Ltda.
Companhia de Bebidas Ipiranga
Edimasa Agricultura Ltda.
Elbel Comércio e Participações Ltda.
Maubisa Agricultura Ltda.
Uberlândia Refrescos Ltda.
Usina Santa Elisa S.A.
Sorocaba Refrescos S.A.
Renk Zanini S.A. Equipamentos Industriais
Sermatec Industrias e Montagens Ltda.
Relative of a Com pany's key m anagem ent m em ber
Maurilio Biagi Filho
Beatriz Biagi Becker
03.31.2013
Sales
Interest
Total incom e
Interest
expenses
38,995
78
1,258,487
4,361
11
2,108
3,201
1
360
152
38,995
1
78
1,258,847
4,361
11
2,108
3,353
(7,665)
(691)
(121)
(112,367)
(31,686)
(61,804)
(1,761)
(1)
(5,959)
(69,770)
(579)
(956)
(7,666)
(691)
(121)
(118,326)
(101,456)
(61,804)
(579)
(2,717)
1,307,241
513
1,307,754
(216,095)
(77,265)
(293,360)
2,922
89
3,011
(16,987)
(162)
(17,149)
2,922
89
3,011
(16,987)
(162)
(17,149)
-
-
(1,697)
(2,071)
(1,419)
(2,494)
(1,682)
(1)
(1,692)
(12,050)
(749)
(2,021)
(1,227)
(887)
(785)
(253)
(29,028)
-
-
Purchases
1
466
829
253
-
-
1
466
829
253
-
(1,697)
(2,071)
(1,419)
(2,494)
(1,682)
(1)
(1,692)
(12,050)
(749)
(2,021)
(1,227)
(887)
(785)
(253)
1,590
-
1,590
(29,028)
-
-
-
(113)
-
41
-
41
-
-
(113)
-
-
-
(113)
1,311,753
602
1,312,355
(262,223)
(77,427)
(339,650)
83
14,293
18
32
623
985,674
401
-
138
-
83
14,293
18
32
623
985,812
401
-
(73)
(608)
(3)
(12,998)
(38,143)
(47,572)
(502)
(9,667)
(27,450)
(107)
(836)
(73)
(608)
(3)
(22,665)
(65,593)
(107)
(47,572)
(1,338)
1,001,124
138
1,001,262
(99,899)
(38,060)
(137,959)
2,161
-
2,161
(25,559)
-
(25,559)
2,161
-
2,161
(25,559)
-
(25,559)
3,941
2,298
128
-
-
3,941
2,298
128
-
(1,886)
(1,853)
(1,245)
(1,820)
(1,287)
(2)
(1,332)
(10,196)
(683)
(896)
(362)
(1,385)
-
(1,886)
(1,853)
(1,245)
(1,820)
(1,287)
(2)
(1,332)
(10,196)
(683)
(896)
(362)
(1,385)
6,367
-
6,367
(22,947)
-
(22,947)
-
-
-
(56)
(113)
-
(56)
(113)
-
-
-
(169)
1,009,652
138
1,009,790
(148,574)
-
(38,060)
(113)
(169)
(186,634)
65
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
d) Compensation of key management personnel
The compensation of officers and other key management personnel for the year is as follows:
Com pany (BR GAAP)
Consolidated (BR GAAP and IFRS)
03.31.14
Short-term benefits
Other long-term benefits
03.31.13
16,633
4,753
1,403
1,233
18,036
5,986
Short-term benefits of the key management personnel consist of salaries, social security and pension plan contributions,
payroll taxes, profit sharing, and short-term performance bonuses. Other long-term benefits include performance bonus
and deferred benefits that expired in each reporting period.
21. EQUITY
Capital
Changes in capital are as follows:
Shares
Com m on
03.31.12
Issuance of shares
Preferred A
03.31.2013
Conversion of shares
Grouping of shares
Public offering
Costs on issuance of shares
03.31.2014
Capital
Total
Capital reserve
10,800,757,666
411,206,462
437,707,342
11,649,671,470
1,175,996
378,212,919
-
-
378,212,919
14,040
Repurchase of Class A preferred shares
Issuance of shares
Am ounts in thousand of Brazilian reais - R$
Preferred B
(31,139,500)
(31,139,500)
1,431,935
(14,040)
(12,701)
4,017,649,778
-
-
4,017,649,778
600,000
-
15,196,620,363
380,066,962
437,707,342
16,014,394,667
1,790,036
1,405,194
(380,066,962)
(437,707,342)
-
-
-
-
-
817,774,304
(15,854,250,721)
-
-
(15,854,250,721)
46,666,667
-
-
46,666,667
700,000
-
-
-
-
-
206,810,613
-
-
206,810,613
2,490,036
(48,713)
1,356,481
On April 15, 2013, the Board of Directors’ meeting approved the following matters, amongst others: (i) the Company's
capital increase upon the issuance of registered common shares, with no par value, at the price of R$15.00 per share, as
approved by the Board of Directors’ meeting, held on March 25, 2013, for the public subscription in the context of the initial
public offering of the Company’s shares (“Offering”), excluding the preemptive rights of the Company’s shareholders in the
subscription, as prescribed by article 172, item I, of Law 6.404, of December 15, 1976, as amended (“Brazilian Corporate
Law”), which were issued within the Company’s authorized capital limit, as set forth in its Bylaws; and (ii) the following
documents relating to the Offering: (a) draft of the announcement of commencement; (b) draft of the announcement of
completion; (c) Subscription Bulletin; (d) Final Prospectus; (e) Reference Form; and (f) Final Offering Memorandum.
By virtue of the approval described above, the Company’s capital increased from R$1,790,036 to R$2,490,036, an
increase of R$700,000, upon the issuance of 46,666,667 new registered common shares, with no par value (“Shares”),
subject to the public distribution in the context of the Offering in Brazil, as prescribed by CVM Instruction 400/2003, in the
non-organized over-the-counter market, including the placement efforts of the shares abroad.
The announcement of commencement was published on April 16, 2013 and, therefore, the implementation of the following
was verified: (i) conversion of the Class A and Class B preferred shares into registered common shares, with no par value,
at the ratio of one common share for each Class A or Class B preferred share, under the Global Agreement; and (ii)
grouping of the Company’s common shares at the ratio of one registered common share, with no par value, for each 100
existing common shares.
66
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Consolidated
(BR GAAP and IFRS)
03.31.14
03.31.13
Issued capital includes:
Common shares
2,490,036
1,704,341
Class A preferred shares
-
41,510
Class B preferred shares
-
44,185
2,490,036
1,790,036
On April 16, 2013, the Company’s Board of Directors’ meeting approved, among other matters, the capital increased
authorized on April 15, 2013, upon issuance of total shares. Therefore, the Company’s capital amounted to R$2,490,036,
divided in 206,810,613 registered common shares, without par value.
As at March 31, 2014, capital is represented by 206,810,613 common shares (15,196,620,363 as at March 31, 2013), all
registered and without par value. In accordance with the Social Statute, the Company is authorized to increase its capital
by up to 167,000,000 registered common shares, with no par value, regardless of any amendment to the bylaws, based on
a Board of Directors’ resolution.
Capital reserve
In the year ended March 31, 2014, the expenses incurred with the issuance of new shares amount to R$48,713 were
recorded in the capital reserve, under the Company’s equity, as set forth in CVM Resolution 649/2010 and CPC 08 (R1) –
Equity Transaction Costs and Premiums.
Dividend policy
The Company’s bylaws establish the distribution of a mandatory dividend of 25% of the profit for the year, adjusted as
established by Article 202 of Law 6.404/76, which is paid in the same year when the distribution is approved.
67
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
22. NET REVENUES AND COST OF SALES
Com pany
(BR GAAP)
03.31.14
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
Gross revenue
Dom estic m arket
Sugar
286,269
370,429
501,523
651,858
Ethanol
757,206
656,431
1,258,170
1,172,951
Energy
191,442
167,480
279,439
235,844
11,367
21,872
50,125
70,684
1,246,284
1,216,212
2,089,257
2,131,337
414,529
825,034
1,777,359
1,888,019
12,778
63,068
517,869
469,296
100,081
16
95,731
1
527,388
888,118
2,390,959
2,357,316
1,773,672
2,104,330
4,480,216
4,488,653
Taxes (b)/(c)
(84,332)
(148,697)
(198,129)
(303,471)
Sales rebates
(11,414)
(16,015)
(14,564)
(32,973)
1,677,926
1,939,618
4,267,523
4,152,209
Sugar
(177,184)
(239,784)
(355,261)
(460,249)
Ethanol
(497,897)
(466,551)
(877,151)
(963,448)
Energy
(121,580)
(96,278)
(155,818)
(123,378)
(12,419)
(12,724)
(35,053)
(39,543)
(809,080)
(815,337)
(1,423,283)
(1,586,618)
Other
Foreign m arket
Sugar
Ethanol
Other (a)
Net revenue
Cost of sales (d)
Dom estic m arket
Other
Foreign m arket
Sugar
(256,168)
(458,740)
(1,310,634)
(1,292,047)
Ethanol
(13,625)
(50,163)
(409,336)
(360,684)
Other (a)
(97,943)
(16)
(98,109)
(1)
(367,736)
(508,919)
(1,818,079)
(1,652,732)
(117,826)
(193,854)
(198,409)
(297,506)
(176,917)
(143,397)
(267,345)
(224,812)
(294,743)
(337,251)
(465,754)
(522,318)
(1,471,559)
(1,661,507)
(3,707,116)
(3,761,668)
Losses on changes in fair value less estim ated costs to sell
biological assets - realized
Sugar
Ethanol
(a) Amounts relating to the export of commodities, as described in Note 20.
(b) Includes government grants, which reduced the taxable base on sales by R$62,703 for the year ended March 31, 2014
(R$21,356 for the year ended March 31, 2013).
(c) In the period ended March 31, 2014, revenues and expenses include PIS and COFINS credits in the amount of
R$56,653, Company, and R$89,016, Consolidated, as deemed credit, as set forth in article 1, of Law 12.859, of
September 10, 2013, published in the Official Gazette on September 11, 2013.
(d) Including the use of PIS, COFINS, ICMS and IPI credits.
68
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
23. EXPENSES BY NATURE
The information on the nature of cost of sales and services and general, administrative and selling expenses is as follows:
Com pany
(BR GAAP)
03.31.14
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
Cost of sales and services
Amortization of plantation
Personnel (*)
(55,007)
(216,754)
(230,381)
(201,814)
(182,064)
(458,486)
(390,389)
(428,776)
Depreciation and amortization
Raw materials and inputs, net of taxes
Raw materials
Inputs
Products for resale
Losses on changes in fair value less estimated costs to sell
biological assets - realized
(192,713)
(221,845)
(432,886)
(545,170)
(405,684)
(74,699)
(231,959)
(496,127) (1,256,032) (1,213,636)
(83,204)
(143,667)
(167,704)
(90,885)
(768,227)
(493,675)
(294,743)
(1,471,559)
General, administrative and selling expenses
Personnel (*)
Depreciation
Freight
Services
Shipping expenses
Other
(337,251)
(465,754)
(522,318)
(1,661,507) (3,707,116) (3,761,668)
(104,100)
(18,039)
(55,364)
(73,054)
(3,945)
(26,306)
(103,493)
(18,061)
(85,232)
(69,913)
(7,521)
(22,668)
(149,653)
(34,711)
(166,948)
(136,493)
(29,578)
(42,493)
(144,964)
(36,603)
(168,487)
(124,564)
(39,430)
(36,204)
(280,808)
(306,888)
(559,876)
(550,252)
(*) As at March 31, 2014, the personnel expenses, in Company and Consolidated, in the amount of R$320,854 and
R$608,139 (R$305,307 and R$573,740, respectively, as at March 31, 2013), comprise R$308,425 and R$587,044
(R$293,241 and R$553,638, respectively, as at March 31, 2013) relating to personnel expenses, and R$12,429 and
R$21,095 (R$12,066 and R$20,102, respectively, as at March 31, 2013) relating to INSS contribution, respectively.
69
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
24. FINANCE INCOME (EXPENSES)
Com pany
(BR GAAP)
03.31.14
03.31.13
Consolidated
(BR GAAP and IFRS)
03.31.14
03.31.13
Finance incom e
Derivative transactions - Commodities
Derivative transactions - Currency
Derivative transactions - Libor sw ap
Discounts obtained
Income from fixed-income investments
Interest
Other
14,618
49,318
5,023
249
24,752
31,521
5,703
23,318
80,875
8,223
639
6,771
16,722
4
14,618
79,093
33,215
330
38,929
29,692
5,703
23,318
104,559
38,706
787
12,180
32,478
4
131,184
136,552
201,580
212,032
(3,881)
(7,929)
(3,881)
(121,943) (197,986) (122,079)
(9,250) (15,341) (60,399)
(169,167) (180,187) (382,623)
(1,436)
(1,234)
(2,837)
(1,452)
(3,653)
(9,826)
(7,191) (16,901) (12,674)
(7,929)
(198,167)
(64,026)
(431,620)
(1,447)
(5,559)
(24,325)
(314,320) (423,231) (594,319)
(733,073)
Exchange rate changes
(133,116)
(81,273) (184,040)
(119,985)
Finance expenses
(316,252) (367,952) (576,779)
(641,026)
Finance expenses
Derivative transactions - Commodities
Derivative transactions - Currency
Derivative transactions - Libor sw ap
Interest
Discounts granted
Tax on financial transactions (IOF)
Other
70
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
25. OTHER OPERATING INCOME (EXPENSES)
Com pany
(BR GAAP)
03.31.14
Other incom e
Revenue from sale of Usina São Carlos' assets (“USC”)
Income on sale of held-for-sale assets (land)
Contractual indemnities
Reversal of provision for tax, labor, civil and environmental contingencies
Tax credits
Reversal of allow ance for doubtful accounts
Other
Other expenses
Expenses from sale of Usina São Carlos' assets (“USC”)
Loss on sale of property, plant and equipment
Impairment - held-for-sale assets
Impairment - property, plant and equipment
Impairment - intangible assets
Fines and indemnities
Provision for tax, labor, civil and environmental contingencies
Tax expenses
Borrow ings expenses (*)
Allow ance for doubtful accounts
Other
03.31.13
03.31.14
03.31.13
6,802
67,632
247
5,910
196,500
21,049
3,455
23,195
6,802
200,108
2,855
1,568
12,363
196,500
881
123,699
254
8,799
80,591
221,004
246,891
330,133
- (103,040)
(5,320)
(5,723)
-
(8,220)
(1,831)
(103,040)
(8,042)
(17,075)
(4,597)
(36,401)
(7,807)
(12,661)
(416)
(3,783)
(210,339)
(88,683)
(43,198)
(186,873)
(6,306)
(5,251)
(95,255)
(51,260)
(116,768)
(7,793)
(12,661)
(4,838)
(179,171) (174,428)
(645,956)
(321,477)
46,576 (399,065)
8,656
(66,258)
(35)
(63,867)
(4,278)
(5,251)
(34,162)
(98,580)
Other operating incom e (expenses)
Consolidated
(BR GAAP and IFRS)
(*) In 2014, expenses on funds raised are mainly comprised of advisory expenses and attorneys’ fees, in the amount of
R$3,385 and operating expenses, in the amount of R$1,842 as at March 31, 2014 (R$8,897 and R$1,942, respectively, as
at March 31, 2013).
26. LOSS PER SHARE
The basic and diluted loss per share was calculated based on the profit attributable to the Biosev’s owners divided by the
weighted average number of outstanding common shares, excluding the common shares purchased and held in treasury.
Com pany
(BR GAAP)
03.31.14
Loss for the year attributable to the Company's ow ners
Weighted average number of shares used to calculate basic and
diluted loss per share
Total basic and diluted loss per share
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
(1,467,564)
(620,028)
(1,467,564)
(620,028)
204,381,389
(7.18052)
122,840,833
(5.04741)
204,381,389
(7.18052)
122,840,833
(5.04741)
71
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
27. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
I - Risk management
The Company is exposed to risks arising from its operations and considers market, credit, liquidity, and capital risks as the
most significant risks to which it is exposed.
The objective of the Company’s risk management program is to hedge its results against fluctuations in sugar prices,
foreign exchange and interest rates. These risks are managed using hedging financial instruments available in the financial
markets, such as: swaps, interest rate futures; currency forwards and futures; commodity forwards, futures and options.
Transactions carried out in the over-the-counter market are contracted through low-risk domestic and foreign banks, and
transactions contracted on the stock exchange market are mainly traded in futures and options markets at the New York
Commodities Exchanges (NYSE: ICE) and the São Paulo Stock and Mercantile Exchange (BM&FBOVESPA).
The use of these instruments is guided by the Financial and Risk Management Policy approved by the Board of Directors
on September 13, 2013. Additionally, the Company does not carry out transactions with any type of leverage, as well as
does not have transactions with exotic derivatives.
The risk management policies, practices and instruments are determined by the Executive Committee and the Strategic
Committee (the body that supports the Company’s Board of Directors).
The Executive Committee has the following responsibilities before the Board of Directors: (i) monitor the compliance with
the policy and report eventual non-compliances; (ii) inform about the indebtness, as well as the related debt instruments;
(iii) inform about the burdens on the assets; and (iv) monitor the risk management instruments.
The Market Consultancy Service Agreement, between Biosev Bioenergia International S.A, Louis Dreyfus Commodities
Suisse S.A and Biosev S.A, entered into on November 29, 2010 with due date on March, 31, 2024, and according the
addition on July 30, 2013, assists the Executive Committee’s responsibilities in the Risk Management, based on the
information on the sugar and ethanol markets provided by Louis Dreyfus Commodities Suisse S.A., including historical
information, studies, analyses, credit risk advisory, as well as researches, opinions and estimates about several issues in
the main agricultural commodities markets, including the domestic and international sugar and ethanol markets.
The Risk Management Department is subject to the Chief Financial Officer and is responsible for the calculation,
measurement, analysis and monitoring of the exposure, by issuing daily reports based on which the necessary corrective
measures are taken. It is also responsible for monitoring the compliance with the risk management policies.
27.1 Market risk
The Company is mainly exposed to risks related to foreign exchange, interest rate and agricultural commodity price
fluctuations. In order to hedge against these market risks, the Company uses various derivative financial instruments,
including:

Forward and futures foreign exchange contracts to hedge fair value and cash flow items against exchange rate
changes.

Interest rate futures to supplement the hedging of said items.

Interest rate swap contracts to mitigate LIBOR fluctuation risk.

Derivative commodity contracts to hedge inventory and future agricultural commodity delivery transactions.
The parameters used to manage these risks are based on hedging strategy monitoring tools, such as sensitivity analysis,
stress tests, and a hedging scale, aimed at securing the future amount of sugar and ethanol sales, including the effects
from foreign exchange rate, as well as interest rate exposure.
72
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
As at March 31, 2014, the assets and liabilities relating to the derivative transactions are broken down as follows:
Com pany
(BR GAAP)
03.31.14
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
Exchange risk management (Note 27.1.1)
Interest rate risk management (Note 27.1.2)
Agricultural commodities risk management (Note 27.1.3)
(43,737)
(1,085)
(33,899)
11,802
(5,535)
15,595
(43,737)
(49,743)
(33,899)
11,802
(82,385)
15,595
Total
(78,721)
21,862
(127,379)
(54,988)
Current assets
Current liabilities
Non-current liabilities
31,867
62,711
31,867
62,711
(110,588)
(39,812)
(132,386)
(58,955)
(1,037)
(26,860)
(58,744)
-
27.1.1 Foreign exchange risk management
Because the Company’s functional currency is the Brazilian real (R$), the foreign currency-denominated operations are
exposed to the foreign exchange risk. Foreign exchange positions are managed based on the Financial and Risk
Management Policy, approved by the Company’s Board of Directors on September 13, 2013. The Company carries out
transactions with currency derivatives in order to reduce variability in its profit or loss due to the existence of US dollardenominated net cash flows from exports. In addition, once understood to be naturally protected, the Company does not
have financial instruments to cover its equity exchange exposure, as it has a natural hedge, and allocates a portion of its
debt for hedge accounting (see Note 27.8).
The Company carries out transactions with interest rate derivatives traded on the BM&FBOVESPA (one-day DI futures) in
order to supplement foreign exchange rate hedges contracted under foreign exchange contracts traded on said exchange
— future dollar financial instruments (DOL) and exchange coupon futures (DDI). The consolidated use of such futures
contracts aims at having effects similar to those of one single DOL futures contract. This strategy is adopted by the
Company without leverage. This is necessary because an individually traded DOL futures contract does not have
significant liquidity for terms above three months and, therefore, could not meet the Company’s foreign exchange hedging
requirements. This practice is regulated by the BM&FBOVESPA and has been widely disseminated among futures market
participants in Brazil for over a decade.
73
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
The table below shows the Company’s NDF, DOL, DI and DDI forward currency sale instruments, used for purposes of
hedging foreign exchange risk:
Com pany (BRGAAP) and Consolidated (BRGAAP and IFRS)
Notional value
Average exchange rate
03.31.14
03.31.13
Foreign currency
03.31.14
Local currency (*)
03.31.13
03.31.14
(Sale) purchase
Outstanding forw ard contracts – NDF US dollar
Hedge Accounting
Maturity:
Less than 3 months
3 to 6 months
Over 6 months
Non-Hedge Accounting
Maturity:
Less than 3 months
3 to 6 months
Over 6 months
Outstanding futures contracts
DOL - dollar futures Maturity:
Less than 3 months
DDI - futures exchange coupon
Maturity:
Less than 3 months
3 to 6 months
Over 6 months
DI - 1 day:
Less than 3 months
3 to 6 months
Over 6 months
2.358
2.358
2.456
2.344
2.332
2.483
2.089
2.116
2.200
1.944
2.077
2.201
Fair value
03.31.13
03.31.14
03.31.13
(Sale) purchase
(110,490)
(97,685)
(165,367)
(107,000)
(145,700)
(249,521)
(260,542)
(230,346)
(406,218)
(213,876)
(308,774)
(546,947)
13,742
3,818
5,599
6,752
10,502
21,578
(373,542)
(502,221)
(897,106)
(1,069,597)
23,159
38,832
139,490
(19,915)
(87,255)
(28,000)
100,200
(31,579)
326,990
(46,451)
(216,662)
(48,560)
214,258
(71,725)
(34,366)
(11,688)
(22,645)
(16,611)
(9,147)
(191)
32,320
40,621
63,877
93,973
(68,699)
(25,949)
329,250
(57,910)
745,093
(116,620)
3,104
(323)
329,250
(57,910)
745,093
(116,620)
3,104
(323)
(192,932)
100,613
52,219
82,463
(77,725)
(41,495)
(436,604)
227,688
118,171
166,064
(156,523)
(83,563)
50
168
(244)
313
(660)
(386)
(40,100)
(36,757)
(90,745)
(74,022)
(26)
(733)
49,138
(133,998)
(11,926)
(32,592)
78,802
57,188
111,200
(303,238)
(26,989)
(65,634)
158,692
115,165
1
15
1
(6)
(19)
(96,786)
103,398
(219,027)
208,223
16
(24)
-
(1,291)
US outstanding option contracts
Maturity:
3 to 6 months
79,304
79,304
Outstanding forw ard contracts – NDF Euro
Maturity:
3 to 6 months
-
179,465
179,465
-
(1,291)
-
-
146
-
385
-
-
146
-
385
-
(1)
(1)
(43,737)
11,802
(*) Convenience conversion.
74
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
27.1.2 Interest rate risk management
The Company uses Libor derivatives to hedge against interest rate fluctuations. These derivatives are traded on the
Brazilian over-the-counter market with low-risk banks as counterparties, and are registered with CETIP S.A. - Balcão
Organizado de Ativos e Derivativos (Brazilian organized OTC market), as required by prevailing legislation.
The table below shows the Company’s Libor swap instruments with receipt of Libor interest and payment of fixed rates.
The table below presents the derivatives used for purposes of hedging Libor interest risk and respective results:
Com pany (BR GAAP)
Average fixed rate contracted - %
Notional value
03.31.14
Fair value
03.31.14
03.31.13
03.31.13
Less than 1 year
5.29%
5.29%
23,000
91,000
1 to 2 years
5.29%
5.29%
-
20,000
03.31.14
03.31.13
Hedge Accounting
Outstanding position:
(1,085)
-
(4,222)
(1,037)
(1,085)
(5,259)
-
(1,152)
-
(1,152)
-
876
Non-Hedge Accounting
Long position - fixed income
Outstanding position:
Less than 1 year
5.29%
5.29%
-
32,000
Short position - fixed income
Outstanding position:
Less than 1 year
4.16%
4.16%
-
32,000
-
876
(1,085)
(5,535)
Consolidated (BR GAAP and IFRS)
Average fixed rate contracted - %
Notional value
03.31.14
Fair value
03.31.14
03.31.13
03.31.13
03.31.14
03.31.13
Less than 1 year
3.20%
3.38%
873,000
848,000
(22,884)
(23,365)
1 to 2 years
3.20%
3.38%
760,000
777,000
(18,410)
(21,510)
2 to 5 years
3.20%
3.38%
669,000
676,000
Over 5 years
3.20%
3.38%
398,000
435,000
(12,717)
4,268
(33,354)
(3,880)
(49,743)
(82,109)
-
(1,152)
-
(1,152)
-
876
-
876
(49,743)
(82,385)
Hedge Accounting
Outstanding position:
Non-Hedge Accounting
Long position - fixed income
Outstanding position:
Less than 1 year
5.29%
5.29%
-
32,000
Short position - fixed income
Outstanding position:
Less than 1 year
4.16%
4.16%
-
32,000
The amounts stated as cash flow hedges represent all the swap contracts for which the Company adopted hedge
accounting, in conformity with technical pronouncement CPC 38 – Instrumentos Financeiros: Reconhecimento e
Mensuração/IAS 39 - Financial Instruments: Recognition and Measurement, which are used to hedge against the impacts
of LIBOR fluctuations on interest payments arising from long-term prepayment contracts; for contracts not designated for
hedge accounting, the Company accounts for the effects of changes in LIBOR swap position against profit or loss.
75
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
27.1.3 Agricultural commodities risk management
The Company carries out transactions with commodity derivatives (sugar and ethanol) in order to reduce the impact of the
changes in the market prices considering that these changes may significantly affect the Company’s future sales value.
These risks are managed according to the Company’s Risk Management Policy and the hedge strategy monitoring tool
which determines the hedge volume and timeframe.
The Company’s futures and option contracts in the years used for commodity risk hedging and the related results are as
follows:
Com pany (BRGAAP) and Consolidated (BRGAAP and IFRS)
Notional value
Foreign currency
03.31.14
Local currency
03.31.13
03.31.14
Fair value
03.31.13
03.31.14
03.31.13
Outstanding sugar futures contracts
ICE RAW sugar
Hedge Accounting
Less than 3 months
3 to 6 months
Over 6 months
(2,507)
-
(5,674)
-
(271)
-
(135,819)
(91,679)
(55,560)
(24,153)
(307,358)
(207,469)
(111,887)
(48,640)
(22,189)
(8,270)
11,922
4,642
(230,005)
(79,713)
(520,501)
(160,527)
(30,730)
16,564
(143,736)
46,170
(26,338)
(19,641)
(61,283)
(4,755)
(325,273)
104,482
(59,602)
(39,553)
(123,411)
(9,576)
(8,452)
11,474
(11,198)
399
(7,083)
6,919
(123,904)
(85,679)
(280,393)
(172,540)
(8,176)
Non-Hedge Accounting
Maturity:
Less than 3 months
3 to 6 months
Over 6 months
235
Outstanding sugar options contracts
Options - ICE RAW sugar
Maturity:
Less than 3 months
3 to 6 months
Over 6 months
31,181
7,375
70,562
14,851
1,762
(1,222)
(12,471)
(8,047)
-
(28,221)
(18,210)
-
1,242
1,926
-
10,663
7,375
24,131
14,851
4,930
(1,222)
7,133
(4,994)
16,142
(10,058)
(25)
(6,801)
-
(1,729)
746
(13,696)
-
92
10
(11,795)
15,159
(23,754)
Outstanding ethanol futures contracts
Futures Ethanol - BMF&Bovespa
Maturity:
Less than 3 months
3 to 6 months
Over 6 months
(764)
330
6,699
77
(33,899)
18
18
15,595
27.2 Credit risk
The credit risk is managed through the careful analysis of the customer portfolio, the definition of credit limits, and the
ongoing control of outstanding positions. In conformity with the Company’s credit policy, using a risk assessment
methodology, the Company adopted balance scorecard techniques. The Company adopts hedging instruments, such as
collaterals, pledges and guarantees, to mitigate potential credit exposures. Historically, the Company does not record
significant losses in trade receivables.
27.3 Liquidity risk
The Company operates with a liquidity level considered sufficient for its operations and uses a number of sources of funds
to finance its activities. In order to cover possible liquidity deficiencies or mismatches between cash and cash equivalents
with short-term maturities, the Company has good relationship with first-class banks, in Brazil or abroad, as well as a credit
line with its parent. Moreover, the products financed by the Company are highly liquid and can be easily sold to generate
cash or also be provided as a guarantee for financial transactions. In addition, part of the investments, especially those
related to sugarcane plantation treatments, is supported by short-term financing and will be realized in the following
harvest campaign. Accordingly, the Company and its creditors agreed that for liquidity analysis purposes, 30% of the
biologic asset value is recorded in current assets.
76
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
27.3.1
Liquidity and interest rate tables
The tables below show in detail the expected maturity of the Group’s financial liabilities:
Com pany (BR GAAP)
3 m onths
Less
than 1 m onth
As at March 31, 2014
Borrow ings and financing
Derivative financial instruments
Trade payables
Accrued payroll and related taxes
Taxes payable
Other payables
As at March 31, 2013
Borrow ings and financing
Derivative financial instruments
Trade payables
Accrued payroll and related taxes
Taxes payable
Other payables
37,970
72,675
107,550
7,076
9,515
1,020,177
33,487
11,616
29,744
1,834
1 to 5 years
751,425
6,181
Over 5 years
177,982
-
Total
2,069,972
110,588
150,693
59,753
19,025
69,716
695
2,540
10,515
-
83,466
143,494
1,099,398
768,121
177,982
2,493,497
221,173
1,061
101,105
6,473
29,205
386,285
31,040
1,524
38,251
644
716,657
7,711
5,198
27,120
1,316
1,278,707
1,037
4,589
54,244
-
2,657,066
40,849
107,827
71,844
35,754
23,569
40,304
14,631
8,493
-
86,997
382,586
498,048
772,633
1,292,826
54,244
3,000,337
than 1 m onth
As at March 31, 2013
Borrow ings and financing
Derivative financial instruments
Trade payables
Accrued payroll and related taxes
Taxes payable
Other payables
82,418
4,426
31,527
22,933
1,495
to 1 year
304,502
Less
As at March 31, 2014
Borrow ings and financing
Derivative financial instruments
Trade payables
Accrued payroll and related taxes
Taxes payable
Other payables
1 to 3 m onths
58,748
72,674
261,023
11,272
25,381
Consolidated (BR GAAP and IFRS)
3 m onths
1 to 3 m onths
305,536
4,426
39,314
36,274
4,239
to 1 year
1,542,752
55,286
33,576
56,043
6,627
1 to 5 years
1,585,876
8,682
45,873
Over 5 years
1,828,828
18,178
-
Total
5,321,740
159,246
333,913
103,589
82,120
109,464
22,925
28,704
98,457
-
259,550
538,562
412,714
1,722,988
1,738,888
1,847,006
6,260,158
221,938
1,061
218,484
10,044
37,371
40,045
404,756
31,040
2,195
58,480
3,395
76,901
627,739
26,854
33,365
43,715
49,639
33,367
2,156,089
58,744
11,790
111,933
1,811,290
-
5,221,812
117,699
254,044
112,239
102,195
262,246
528,943
576,767
814,679
2,338,556
1,811,290
6,070,235
27.4 Capital risk
The Company manages its capital structure in order to safeguard a continuous return to the Company’s shareholders. The
Company monitors capital through financial leverage index analysis; these indexes include adjusted net debt to adjusted
EBITDA ratio. In turn, the net debt corresponds to total borrowings and financing (including short- and long-term
borrowings and financing), less cash, cash equivalents, short-term investments and highly liquid inventory (ethanol, sugar
and allowance for negative inventory margin).
The Company includes swap contracts designated for hedge accounting (see note 27.1.2) for the purposes of analyzing
the risk of capital net debt.
The Company may change its capital structure, in conformity with economic and financial conditions, aiming at optimizing
its financial leverage and/or debt management.
27.5 Margin calls
Derivative transactions in commodity exchanges (ICE and BM&FBOVESPA) require an initial margin call in guarantee.
To trade on the ICE, as at March 31, 2014, the Company has R$42,136 (R$24.602 as at March 31, 2013), fully deposited
by the Company’s in cash, through the fiduciary agent Term Commodities Inc, a company under common control.
77
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
To trade on the BM&FBOVESPA, as at March 31, 2014, the Company has R$114,467 (R$38,500 as at March 31, 2013)
under a settlement guarantee provided by a prime bank, in the amount of R$20,000, Bank Certificates of Deposit (CDBs),
in the amount of R$85,700, and cash deposit in the amount of R$8,767.
As at March 31, 2014, the Company’s derivative transactions on the over-the-counter market do not require margin calls.
27.6 Categories of financial instruments
The financial instruments recorded in the balance sheet, such as cash and cash equivalents and borrowings and financing,
are stated at contractual values, which approximates their fair values due to their short terms and characteristics.
Derivatives are specifically recorded at market value based on proper market information and/or evaluation methodologies
for each financial instrument. The methods used are a common fair value measurement practice of the financial market.
The use of different market inputs and/or valuation techniques might result in amounts different from the recognized
realizable value of financial instruments.
The fair value of financial instruments not traded in active markets (for example, over-the-counter derivatives) is
determined using valuation techniques. The Company uses several methods and makes assumptions that are based on
existing market conditions at the end of the reporting period. The fair value of foreign exchange forwards is determined
based on forward exchange rates quoted at the end of the reporting period.
Com pany
(BR GAAP)
03.31.14
Financial assets:
Cash and cash equivalents (Note 4)
Fair value through profit or loss:
Held for trading
Held-to-maturity investments (Note 5)
Borrow ings and receivables
Derivatives designated as hedge accounting (Note 27.1)
Financial liabilities:
Fair value through profit or loss:
Held for trading
Derivatives designated as hedge accounting (Note 27.1)
Other financial liabilities (*)
Consolidated
(BR GAAP and IFRS)
03.31.13
03.31.14
03.31.13
210,208
632,312
1,729,602
791,728
8,708
91,289
360,739
23,159
7,315
141,932
387,426
55,396
8,708
118,535
571,660
23,159
7,315
572,211
544,447
55,396
78,773
31,815
2,382,909
35,590
5,259
2,959,488
78,773
80,474
6,100,912
52,154
65,545
5,952,536
(*) As at March 31, 2014, the balance of other financial liabilities consists basically of borrowings and financing, totaling
R$2,069,972, Company (R$2,657,066 as at March 31, 2013) and R$5,321,740, Consolidated (R$5,221,812 as at March
31, 2013).
27.7 Measurements at fair value recognized in balance sheet
Technical pronouncement CPC 40 (R1) - Instrumentos Financeiros: Evidenciação/IFRS 7 - Financial Instruments:
Disclosure defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit
price) in the primary or most advantageous market for the asset or liability in an orderly transaction between market
participants on the measurement date. Technical pronouncement CPC 40 (R1)/IFRS 7 also establishes a three-level fair
value hierarchy which prioritizes inputs for fair value measurement by an entity in order to maximize the use of observable
data and minimize the use of unobservable data. Technical pronouncement CPC 40 (R1)/IFRS 7 describes the three
levels of inputs that should be used to measure fair value, which are the following:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities.

Level 2 - Inputs other than the data included in Level 1, where prices are quoted (unadjusted).
Fair value measurements of Level 2 are obtained based on other variables besides quoted prices included in Level 1,
which are directly observable for an asset or liability, such as prices, or indirectly observable, i.e. based on prices.
78
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)

Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs) because
market activity is insignificant or does not exist.
The Company’s financial assets and liabilities measured at fair value on a recurring basis and subject to disclosure as
required by CPC 40 (R1)/IFRS 7, as at March 31, 2014, are as follows:
Level 1
Financial assets at fair value through profit or loss
Derivative financial assets
Total
Com pany (BR GAAP)
03.31.14
Level 2
10,047
21,820
Total
31,867
10,047
21,820
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
(42,143)
(68,445)
(110,588)
Total
(42,143)
(68,445)
(110,588)
Level 1
03.31.13
Level 2
31,867
Total
Financial assets at fair value through profit or loss
Derivative financial assets
16,799
45,912
62,711
Total
16,799
45,912
62,711
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
(2,284)
(38,565)
(40,849)
Total
(2,284)
(38,565)
(40,849)
79
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Consolidated (BR GAAP and IFRS)
03.31.14
Level 1
Level 2
Total
Financial assets at fair value through profit or loss
Derivative financial assets
10,047
21,820
31,867
Total
10,047
21,820
31,867
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
(42,143)
(117,103)
(159,246)
Total
(42,143)
(117,103)
(159,246)
Level 1
03.31.13
Level 2
Total
Financial assets at fair value through profit or loss
Derivative financial assets
16,799
45,912
62,711
Total
16,799
45,912
62,711
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
(2,284)
(115,415)
(117,699)
Total
(2,284)
(115,415)
(117,699)
27.8 Derivative and non-derivative financial instruments with the application of hedge accounting
In accordance with accounting practices adopted in Brazil, derivative financial instruments are accounted for at fair value
through profit or loss, unless a derivative is designated for hedge accounting. A derivative only qualifies for hedge
accounting when all the conditions set out by CPC 38/IAS 39 are met. The adoption of hedge accounting is optional and
aims at recognizing gains or losses on derivatives only when the hedged item is realized on an accrual basis and,
therefore, reducing the volatility of gains or losses from the mark-to-market of derivatives.
The Company applies hedge accounting to account for part of its derivative and non-derivative financial instruments.
The Company’s derivatives designated for hedge accounting are: Libor swaps, contracted to mitigate the effect of interest
rate fluctuations on the long-term debt; sugar futures and currency forwards (NDFs), which hedge future sales and have
been classified as cash flow hedges of highly probable transactions (CPC 38/IAS 39, Item 78 b).
As prescribed by paragraph 72 of CPC 38/IAS 39, the Company also opted for using non-derivative financial instruments
for hedge accounting, by designating export debts as foreign exchange risk hedges (natural hedge), which hedge future
exports and are classified as cash flow hedges.
The effective portion of derivative and non-derivative financial instruments designated for hedge accounting to hedge
future sales is recorded in the balance sheet in line item “Other comprehensive income (loss)”, in equity, and recognized in
profit or loss, in line item “Net operating revenue” upon the recognition of the hedged sale. The ineffective portion is
recorded as a finance income (expenses) for the period when it is incurred.
27.9 Sensitivity analysis
The table below shows the Company’s sensitivity to the presented risk factor, based on changes in the risk factor
considered reasonably possible by Management (probable scenario).
The probable scenario is obtained based on future dollar, sugar and ethanol market curves (as at March 31, 2014) and the
Group’s expectations for each one of the variables indicated, over a twelve-month period.
80
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
As required by CVM Instruction 475/2008, the sensitivity analysis is also presented to changes in the fair value of financial
instruments for another two scenarios, in which market conditions are stressed by 25% and 50% (ethanol and sugar
options are included as delta equivalent in futures contracts).
The derivative financial instruments are provided to hedge against risks from future cash flows. The non-derivative
financial instruments must not be considered as the Company’s net exchange exposure because the table below does not
consider the biological asset, as it is not a financial instrument, but it is used in the production of sugar and ethanol for
future exports. See Notes 14 and 27.8.
Com pany (BR GAAP)
Effects on fair value
Notional am ount foreign currency
Effects on profit or loss
Exchange risk
Non-derivatives
Cash and cash equivalents
Trade receivables
Trade payables
Advances from foreign customers
Borrow ings and financing
Derivatives
Futures and forw ards contracts in foreign currency (DOL+DDI+NDF):
Sale
Price risk
Sugar futures contracts (sale)
Ethanol futures contracts (purchase)
Effects on equity
Exchange risk
Non-derivatives
Exchange rate change hedge accounting
Derivatives
NDF hedge accounting
Interest rate risk
Derivatives
Sw ap libor hedge accounting
Probable
Risk factor
scenario
25% stress
50% stress
665 Decrease in US$
46,703 Decrease in US$
(10,960) Increase in US$
(107,038) Increase in US$
(350,490) Increase in US$
(185)
(12,962)
(3,042)
(29,707)
(97,273)
(376)
(26,422)
(6,200)
(60,557)
(198,290)
(752)
(52,844)
(12,401)
(121,114)
(396,579)
321,470 Decrease in US$
(87,549)
(178,467)
(356,934)
(39,364)
(62,416)
(124,832)
(1,451)
(3,790)
(7,580)
Increase in sugar
price
Decrease in
6,699
ethanol price
(123,904)
(228,600)
Increase in US$
(63,444)
(129,330)
(258,661)
(373,542)
Increase in US$
(107,650)
(219,442)
(438,885)
10,000
Decrease in libor
interest rate
(11)
(22)
(43)
(230,005)
Increase in sugar
price
(86,913)
(137,808)
(275,616)
Price risk
Derivatives
Futures hedge accounting
81
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Consolidated (BR GAAP and IFRS)
Effects on fair value
Notional am ount foreign currency
Effects on profit or loss
Exchange risk
Non-derivatives
Cash and cash equivalents
Trade receivables
Trade payables
Advances from foreign customers
Borrow ings and financing
Derivatives
Futures and forw ards contracts in foreign currency (DOL+DDI+NDF):
Purchase
Price risk
Sugar futures contracts (sale)
Ethanol futures contracts (purchase)
Effects on equity
Exchange risk
Non-derivatives
Exchange rate change hedge accounting
Derivatives
NDF hedge accounting
Interest rate risk
Derivatives
Sw ap libor hedge accounting
Probable
Risk factor
46,684 Decrease in US$
66,669 Decrease in US$
(12,735) Increase in US$
(317,727) Increase in US$
scenario
25% stress
50% stress
(12,956)
(18,503)
(3,534)
(88,180)
(26,411)
(37,718)
(7,205)
(179,754)
(52,823)
(75,435)
(14,409)
(359,508)
Increase in US$
(151,703)
(309,246)
(618,491)
321,470 Decrease in US$
(87,549)
(178,467)
(356,934)
(39,364)
(62,416)
(124,832)
(1,451)
(3,790)
(7,580)
(546,612)
Increase in sugar
price
Decrease in
6,699
ethanol price
(123,904)
(713,403)
Increase in US$
(197,994)
(403,608)
(807,215)
(373,542)
Increase in US$
(107,650)
(219,442)
(438,885)
385,735
Decrease in libor
interest rate
(8,990)
(18,179)
(37,177)
(230,005)
Increase in sugar
price
(86,913)
(137,808)
(275,616)
Price risk
Derivatives
Futures hedge accounting
28.
COMMITMENTS
a) Selling
The Group has several arrangements in the sugar and ethanol market under which it commits to sell volumes of these
products in future crops. As at March 31, 2014, the volumes of these commitments total 3,057,617 tons of sugar
(4,293,985 tons of sugar as at March 31, 2013), 124,020 cubic meters of ethanol (218,061 cubic meters as at March 31,
2013), and electricity supply commitments, assumed in power auctions and free market, which total 11,350 GWh to be
supplied by 2035 (11,765 GWh as at March 31, 2013).
b) Purchases
The Group has several commitments for the purchase of sugarcane from third parties to ensure part of its production in
future crops. The volume of sugarcane to be purchased is estimated based on the expected productivity of the areas
where the sugarcane plantations are located. The amount to be paid by the Group is determined at the end of each
harvest campaign according to the price published by CONSECANA, plus or less other applicable contractual terms.
82
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
As at March 31, 2014, estimated purchase commitments by crop are as follows:
Consolidated
(BR GAAP and IFRS)
Harvest
Estim ated area
Estim ated quantity
(hectares)
of cane (Ton)
Estim ated am ount
2014/2015
120,494
9,003,082
509,559
2015/2016
109,068
8,148,820
460,511
2016/2017
73,007
5,585,289
313,808
2017/2018
After 2018
58,076
4,352,667
243,879
71,200
5,538,351
309,037
431,845
32,628,209
1,836,794
The Company has commitments to purchase third-party ethanol, by volume of 55,000 cubic meters, in order to fulfill the
ANP # 67 regulations requiring the maintenance of stocks of 25% of the volume sold in the preceding calendar to ensure
the supply of the Northeast market, where there may not be enough production to ensure supply throughout the whole
year.
c) Agricultural partnership or lease agreements
As at March 31, 2014, the Group is a party to effective lease or agricultural partnership agreements, which should remain
effective in future crops, as shown in the table below, aimed at ensuring the supply of sugarcane to its plants. The
consideration of lease or agricultural partnership agreements is usually the payment for a certain sugarcane volume to the
farmer, whose price, in turn, is determined at the end of each harvest campaign according to the price published by
CONSECANA, plus or less other applicable contractual terms.
Consolidated
(BR GAAP and IFRS)
Estim ated quantity of
Harvest
cane (Ton)
Estim ated am ount
2014/2015
4,239,024
238,703
2015/2016
5,033,793
283,762
2016/2017
4,720,186
266,156
2017/2018
After 2018
4,282,059
241,518
12,283,167
705,153
30,558,229
1,735,292
The Company includes the sugarcane volume in leased areas or under agricultural agreements, as indicated above, in the
calculation basis of the biological asset’s fair value, according to the assumptions described in Note 14.
d) Terminal de Exportação de Açúcar do Guarujá Limitada - TEAG
TEAG is a party to an agreement for the lease of a port terminal with Companhia Docas do Estado de São Paulo
("CODESP"), which provides for the payment by TEAG, as lease, of a fixed monthly installment of R$2,1701/m² calculated
on a minimum area of 70,000 m² equivalent to R$152 per month or R$1,823 per year, plus a guaranteed variable minimum
installment equivalent to R$2,993 per year payable to CODESP, corresponding to R$1,995/ton calculated on a minimum
handling of one million and five hundred thousand tons of cargo. The concession granted to TEAG to operate such
terminal will expire on July 6, 2018, renewable for additional 20 years, at CODESP’s discretion.
83
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
e) Sociedade Operadora Portuária de São Paulo Ltda. - SOP
As a result of the acquisition of Crystalsev Comércio e Representações Ltda.’s control, on December 28, 2011, the Group
also has the control over its subsidiary SOP, which holds 50% of TEAG shares. 85% of SOP shares are pledged to
financial institutions as collateral of the financing transaction, the total principal of which, as at March 31, 2014, is
equivalent to US$47,934 (U$51,871 as at March 31, 2013). This financing is included in the Group’s debt, as indicated in
Note 16.
The SOP shares held by Biosev Terminais Portuários e Participações Ltda. are pledged to the sellers of the 15% equity
interest, as collateral of the price payment obligation for this interest.
f) Unacquired surplus assets
Due to business successions, the Company is a plaintiff in lawsuits 2616-17.1990.4.01.3400; 0000462.11.1999.4.01.3400;
40872-09.2002.4.01.3400; 0007061-63.1999.4.01.3400 and 0016264-15.2000.4.01.3400, in which its seeks a
compensation from the Federal Government for losses arising from pricing differences incurred in the period in which
sugar and ethanol prices were frozen. However, even if the Company obtains a favorable decision, due to preceding
contractual obligations, any compensation amounts that the Company may receive will be transferred to third parties under
the terms of the respective agreements.
g) Bank guarantees and collateral insurance
The balances of (i) bank guarantee; and (ii) collateral insurance relating to lawsuits, debts, co-generation auctions and
collaterals under derivative transactions conducted on BM&FBOVESPA totaled, as at March 31, 2014, R$179,282 and
R$109,220, respectively (R$177,000 and R$109,000, respectively, as at March 31, 2013).
29. INSURANCE
The Company and its subsidiaries adopt internal risk management policies, including insurance coverage. In addition, they
are supported by specialists that guide the preparation of the agreements with the insurance companies, in accordance
with the nature of the business and market practices, in order to cover significant losses on their assets and
responsibilities. The insurance coverage effective as at March 31, 2014 includes:
Maxim um coverage (1)
Insurance
Assets, responsibilities or interests covered
Operating risks
Buildings, fixed and machinery equipment of the group’s 13 plants and
offices
General civil liability
Damages against third parties arising from the Company’s operations
Vehicles (*)
Damages against third parties arising from traffic accidents
Management liability (**)
Law suits filed against the Company’s management
Equipament and improvement
Machinery and equipment
Guarantee(***)
Operations and obligations backed by guarantee
Com pany
Consolidated
500,000
1,000,000
10,000
20,000
500
500
40,000
40,000
1,100
2,200
275,000
275,000
(1) Equivalent to the maximum coverage for sundry assets and locations.
(*) The maximum coverage equivalent to the civil liability by covered vehicle.
(**) Company and subsidiaries covered by the same policy.
(***) The maximum coverage equivalent to the total amount approved with the insurance companies. Company and
subsidiaries share the same maximum indemnity limit.
84
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
30.
EMPLOYEES’ BENEFITS
The Company offers its employees a pension plan to allow people to accumulate funds to receive a monthly pension in the
future, so that an employee can maintain a dignified standard of living after his or her retirement. The Company’s pension
plan is optional for all employees and officers.
An employee can elect to join the pension plan and choose one of the two types of plans: 1 - a defined contribution plan
(PGBL) or 2 - a life insurance benefit plan (VGBL). Under the plan’s approved rules, an employee can make basic or
supplemental contributions, and the Company matches the basic contributions made by each employee, limited to 6.5% of
the contribution salary. Additionally, an employee can make extraordinary contributions, which are not matched by the
Company.
The consolidated amount invested by the Company in the pension plan was R$2,159 as at March 31, 2014 (R$1,813 as at
March 31, 2013), recognized in line item “General, administrative and selling expenses”. Due to the features and design of
the pension plan, the Company does not incur any future postemployment or actuarial obligations.
The Company records a liability related to the deferred variable compensation that will be paid to some employees, totaling
R$9,457 as at March 31, 2014 (R$21,964 as at March 31, 2013).
31. SEGMENT INFORMATION
The information reported to the key decision maker to base the allocation of funds and assess the performance of the
segment focuses on the types of products delivered. However, as the products have similar economic features and
production processes, the Company’s management aggregated the products in a single operating segment. Therefore, the
Company’s reportable segment pursuant to CPC 22 - Informações por Segmento/IFRS 8 – Operating Segments is “Sugar,
Ethanol and Energy”.
The segment information are based on the information used by Management, where the Company and its subsidiaries
were defined as a single business segment, even though margin performance monitoring is carried out separately on the
main Company products.
The chief operating decision maker assesses the performance of operating segments based on the products’ margin and
geographical information.
According to the Company and its subsidiaries’ structure, the analyses are conducted on the following products of the
reportable segment:




Sugar;
Ethanol;
Energy;
Other products.
85
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Information by product margin, and geographic areas, used by the key decision makers is as follows:
Consolidated
(BR GAAP and IFRS)
03.31.14
Consolidated profit (loss) by product
Net revenue
Sugar
2,217,092
Ethanol
1,669,066
Cost of products sold
(1,864,306)
(1,553,833)
Energy
243,351
(155,818)
Gross profit
352,786
115,233
87,533
Gross margin
16%
(138,954)
7%
(65,203)
36%
(6,543)
213,832
50,030
80,990
Selling expenses
Operating m argin
Other
138,014
Total
4,267,523
(133,159)
(3,707,116)
4,855
4%
(43)
4,812
560,407
13%
(210,743)
349,664
Consolidated
(BR GAAP and IFRS)
03.31.14
Sales by geographic area
Sugar
Asia
1,086,897
49,926
224,523
199,329
-
95,640
-
1,407,060
North America
South America
360,246
17,218
-
91
377,555
Africa
259,642
20,648
67,642
9,157
-
-
327,284
29,805
Dom estic m arket
1,777,359
439,733
517,869
1,151,197
243,351
95,731
42,283
2,390,959
1,876,564
TOTAL
2,217,092
1,669,066
243,351
138,014
4,267,523
Net revenue
Sugar
2,402,812
Ethanol
1,502,156
Energy
190,098
Other
57,143
Total
4,152,209
Cost of products sold
(2,049,801)
(1,548,945)
Europe
Foreign m arket
Ethanol
Energy
Other
Total
249,255
Consolidated
(BR GAAP and IFRS)
03.31.13
Consolidated profit (loss) by product
Gross profit
353,011
(46,789)
Gross margin
15%
(155,600)
-3%
(60,199)
197,411
(106,988)
Selling expenses
Operating m argin
(123,378)
(39,544)
66,720
17,599
35%
66,720
31%
(69)
17,530
(3,761,668)
390,541
9%
(215,868)
174,673
86
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Consolidated
(BR GAAP and IFRS)
03.31.13
Sales by geographic area
Sugar
Asia
1,146,849
49,898
67,809
304,005
-
1
-
1,214,659
366,950
324,322
24,259
73,223
-
-
391,209
397,545
Dom estic m arket
1,888,019
514,793
469,296
1,032,860
190,098
1
57,142
2,357,316
1,794,893
TOTAL
2,402,812
1,502,156
190,098
57,143
4,152,209
North America
Europe
Other
Foreign m arket
Ethanol
Energy
Other
Total
353,903
The Company’s chief decision makers use the operating margin as a tool to measure the recurring operating cash
generation capacity and it also allows comparisons with other companies.
Operating m argin
Other operating expenses
Finance expenses
Income tax and social contribution
Loss for the year
Consolidated
(BR GAAP and IFRS)
03.31.14
03.31.13
349,664
174,673
(875,209)
(469,282)
(576,779)
(641,026)
(364,475)
316,077
(1,466,799)
(619,558)
Information on key customers
As at March 31, 2014, the Group has one customer, its 3related party Louis Dreyfus Commodities Suisse S.A., under
common control, that accounts for 29% of the Group’s consolidated revenue.
32. NON-CASH TRANSACTIONS
The Company carried out the following investing and financing activities not affecting cash, which, therefore, were not
reflected in the statement of cash flows:
Com pany
Consolidated
(BR GAAP)
(BR GAAP and IFRS)
03.31.14
Transfer of depreciation to inventories and biological assets
Write-off of other comprehensive income to investments
Repurchase of shares from non-controlling interests
Reversal of provision for equity deficit to short-term investments
Transfer from property, plant and equipment to intangible assets
Transfer to available-for-sale assets - Usina São Carlos ("USC")
Purchase of financed fixed assets
Transfer from property, plant and equipment to recoverable taxes
Other
13,078
11,626
20,178
24,328
5,151
03.31.13 03.31.14
17,993
35,758
12,701
(2,285)
10,642
(40,556)
5,777
(998)
3,629
12,418
29,659
24,328
5,151
03.31.13
(24,806)
13,337
(40,556)
5,777
(2,078)
(998)
33. APPROVAL OF FINANCIAL STATEMENTS
The financial statements were approved by the Company’s management and authorized for issue on June 5, 2014.
87
Biosev S.A.
Notes to the Financial Statements
For the Year Ended March 31, 2014
(Amounts in thousands of Brazilian reais, unless otherwise stated)
OPINIONS AND STATEMENTS
As Directors of Biosev SA, we declare under Article 25, Paragraph 1, Item VI, CVM Instruction 480 of December 7, 2009,
that we reviewed, discussed and agreed with financial statements and the terms of the external auditors’ report on financial
statements at March 31, 2014.
São Paulo, June 5, 2014
Rui Chammas
Chief Executive Officer
Evandro S. Pause
Chief Operating Officer
Paulo Prignolato
Chief Financial and Investor Relations Officer
88
NET REVENUE REACHES R$4.3 BILLION AND ADJUSTED EBITDA AMOUNTS TO
R$1.1 BILLION IN THE 2013/14 CROP YEAR
São Paulo, June 10, 2014 - Biosev, the world’s second largest sugarcane processor, with 11 industrial
units strategically located in 4 Agroindustrial Clusters in Brazil, announces its results for the 2013/14 crop
year.
Bovespa: BSEV3
Stock price on 6/9/14: R$7.00
Shares outstanding: 206.810.613
Market cap: R$1.4 billion
Conference Call Portuguese
June 11, 2014
11 am (Brasilia Time)
10 am (NY-EST)
3 pm (London-GMT)
Dial-in: (11) 3193-1001
Code: Biosev
Replay: (11) 3193-1012
Code: 4810680#
Conference Call English
June 11, 2014
12 pm (Brasilia Time)
11 am (NY- EST)
4 pm (London-GMT)
Dial-in: 1-412-317-6776
Code: Biosev
Replay: +1 412-317-0088
Code: 10044389
Investor Relations
E-mail: ri@biosev.com
Phone: +55 (11) 3092 5371
www.biosev.com/ir
HIGHLIGHTS
 Sugarcane crushing of 30 million metric tons, the highest
volume of the last three years;
 Gross Revenue of R$4.5 billion and Net Revenue of R$4.3
billion, representing growth of 2.8%;
 Cogeneration net revenue grows 28% to reach R$243 million;
 Increase in cogeneration efficiency of 13.2% to 23.7 kWh/ton
crushed;
 The Ribeirão Preto Cluster registered a capacity utilization
rate of 87.4% and TCH of 83.3 tons/hectare, with total
crushing volume of 17 million tons;
 Adjusted Net Debt reduction of R$358 million, equivalent to 9.8%.
Biosev is the world’s second largest sugarcane processor, with 11 industrial units strategically located in four
Agroindustrial Clusters in Brazil. The Company is controlled by the Louis Dreyfus Commodities group and began
operating in the sugar and ethanol industry in 2000, when it acquired its first unit in Brazil. Since then it has built a
successful track record of growth through both acquisitions and expansion projects that have led its crushing
capacity to increase from 0.9 million metric tons/year in 2000 to 36.4 million metric tons/year today. Biosev manages
340,000 hectares of land and has surplus biomass power generation capacity of 1,346 GWh. The Company adopts
the highest standards of corporate governance and its stock is traded on the Novo Mercado segment of the Brazilian
stock exchange (BM&FBovespa).
1. MESSAGE FROM MANAGEMENT
The 2013-14 crop year proved very challenging and intense for Biosev’s businesses. To confront this
reality, the Company implemented comprehensive structural adjustments to surmount the macroeconomic
and sectorial challenges that continue to affect Brazil's sugar and ethanol industry.
In this context, on March 20, Biosev approved, through its Board of Directors, the Business Plan for the
2014-18 period. The Plan’s main objective is to attain positive and sustainable free cash flow generation
starting already in the 2014/15 crop year. To achieve this goal, the Company reorganized its Agroindustrial
Clusters and decided to create the Ribeirão Preto Cluster (RP), which together with the Mato Grosso do
Sul (MS), Northeast (NE) and Leme-Lagoa da Prata Clusters, consolidates annual sugarcane crushing
capacity of 36.4 million metric tons. Biosev also conducted a thorough analysis of the economic feasibility
of its 12 mills and opted for the continued operation of 11 of them. The Jardest Mill in São Paulo was put
into hibernation, with its biological assets to be used by the other mills located in the Ribeirão Preto region,
which will improve their operating efficiency. This process also led to the decision to reduce the
organization's hierarchical levels, with the number of managers and directors decreasing by 20%.
The Company has a well consolidated and competitive platform of assets installed in Brazil and will now
prioritize the capture of productivity gains and operating efficiencies within this structure.
The initial results have already begun to emerge. This crop year ended in March, with crushing volume
reaching 30 million metric tons, which is the best result of the last three years and was achieved despite
the adverse weather conditions during the year, in particular the frosts that affected sugarcane fields at the
Mato Grosso do Sul Agroindustrial Cluster. Another highlight was the improvement in capacity utilization,
which reached 79%, though still with further room for improvement.
Biosev has decided to maintain its level of investment in planting, crop treatments and industrial
maintenance in line with the levels of previous crop years, which will favor the sustainability of the planned
results. On the other hand, its investments in expansion projects will be reduced in the 2014/15 crop year.
It is worth mentioning that Biosev, which is the world’s second largest cane processor, has concluded an
important cycle of investments that culminated in the startup of Cogeneration Units at the Lagoa da Prata
and Passatempo mills, the latter in May 2013. With the startup of these units, our surplus cogeneration
capacity increased from 973 GWh in 2010 to 1,346 GWh currently, significantly above the current level of
power sales, which demonstrates the important potential for improvement in results as the volume of
power sales nears our cogeneration capacity.
On the financial front, the priority is to lengthen the debt maturity profile and reduce leverage, which will be
supported by positive free cash flow and the implementation of structured financing operations, some of
which in an advanced stage of execution. Measures to reduce working capital needs are also already
being implemented.
The sugar and ethanol industry is cyclical by nature, with periods of high and low profitability alternating
over the years, and is currently facing a down cycle caused by the investments made in the first half of the
last decade. Sugar prices in particular are determined in global markets based on the product’s supply90
demand balance. As such, we expect demand growth to outpace supply growth in this coming crop year,
which points to an upward trend in sugar prices.
With regard to ethanol, the loss of parity between domestic and international gasoline prices has adversely
affected Biosev's results. The effects of this pricing policy have damaged not only the sugar and ethanol
industry, but also Brazil’s balance of trade. The maintenance of this policy in the medium and long term is
undoubtedly questionable.
We believe we have taken the measures needed to confront this challenging macroeconomic and industry
environment. We are focused on executing our business plan and monitoring results in a disciplined
manner and remain firm in our commitment to create value for all our shareholders.
In closing, I would like to take the opportunity to thank all of our Clients, Suppliers, Employees, Partners,
Shareholders and Business Institutions that have cooperated with Biosev over this last year and are
engaged in our entrepreneurial project.
Rui Chammas
Chief Executive Officer
91
2. OPERATING PERFORMANCE
The following table presents key indicators for operating efficiency and productivity, which are analyzed
in this section:
Efficiency and Productivity
4Q14
4Q13
%
13/14
12/13
%
Crushing ('000 tons)
Own
Third Parties
TCH - Agricultural yield (ton/ha)¹
Sugarcane TRS (kg/ton)
Mechanization (%)*
RTC (%)**
948
556
392
47.1
124.7
73.6%
89.3%
694
533
162
38.1
127.4
78.4%
89.2%
36.6%
4.4%
142.7%
23.7%
-2.1%
-4.8 p.p.
0.1 p.p.
30,009
17,623
12,386
71.0
124.9
94.7%
92.1%
29,533
18,515
11,018
71.1
133.0
93.0%
91.4%
1.6%
-4.8%
12.4%
-0.1%
-6.1%
1.7 p.p.
0.7 p.p.
*Only considers own cane harvested
** Total Recovered Sugar Adjusted: An indicator that measures the efficiency of the industrial process, expressed as the percentage
of sugar recovered from the mill's sugarcane input.
2.1 Operating Efficiency
Biosev recorded crushing volume of 30 million metric tons in the 2013/14 crop year, which was the
largest crop of the last three years. A highlight was the Ribeirão Preto Agroindustrial Cluster, which
recorded a 3.3% increase in crushing volume from the previous crop year.
In the 2013/14 crop, own cane accounted for 58.7%, compared to 62.7% in the previous season. The
decrease is mainly explained by the sale of the biological assets of the São Carlos Mill last year, which
led to the conversion of 900,000 metric tons of own cane to third-party cane and to a reduction in the
percentage of own cane. In addition to that, the frost in MS, that affected mostly our own cane, also
contributed for this mix.
Biosev continued to improve its operating efficiency this season and increased its capacity utilization
rate from 73.8% to 79.2%. This performance was led by the Ribeirão Preto Cluster, which registered
capacity utilization of 87.4%, increasing 11 p.p. from the prior crop year. The result reflects the
improvement in yields on own cane fields combined with the higher volume of cane sourced from third
parties. The shutdown of the São Carlos mill in Jaboticabal also contributed to the increase in capacity
utilization rate in the Ribeirão Preto Cluster.
The following charts show the evolution in installed capacity utilization rates and total crushing volume
at the Ribeirão Preto Cluster.
92
Crushing Volume (‘000 tons) vs. Capacity Utilization (%)
Ribeirão Preto
Cluster
76%
Total
79%
74%
69%
+ 1.6%
Ribeirão Preto Cluster
87%
64%
Título do Gráfico
+7.3%
+ 3.3%
+19.3%
+3.3%
+19.3%
27,514
29,533
30,009
11/12
12/13
13/14
11/12
12/13
Crushing ('000 tons)
13,816
16,482
17,034
11/12
12/13
13/14
13/14
Capacity Utilization (%)
2.2 Productivity
2.2.1 Tons of Cane per Hectare (TCH)
The yields of the sugarcane fields measured in TCH remained stable compared to the 2012/13 crop
year, at 71.0 ton/ha. This performance was heavily impacted by the frosts that affected the Mato
Grosso do Sul Agroindustrial Cluster in 2Q14.
The higher yields of cane fields in the Ribeirão Preto region helped keep TCH relatively stable on a
consolidated basis in relation to the prior season, despite the frosts. The increase in yield is explained
primarily by the use of the double alternate row planting technique and by the improvement in crop
management, with optimization of crop age and varieties and better planning of harvest operations.
As a result, TCH increased from 78.1 ton/ha to 83.3 ton/ha this season at the Ribeirão Preto
Agroindustrial Cluster, which represents a 6.6% increase in yield.
The following charts show the evolution in total TCH and specifically at the Ribeirão Preto Cluster.
93
Evolution in TCH (ton/ha)
Ribeirão Preto
Cluster
Consolidated
+6.6%
-0.1%
+3.0%
+11.6%
69.0
71.1
71.0
69.9
78.1
83.3
11/12
12/13
13/14
11/12
12/13
13/14
2.2.2 Sugarcane Total Recoverable Sugar (TRS)
Cane TRS content decreased 6.1% from the 2012/13 crop year to close the season at 124.9 kg/ton.
The decrease was mainly due to the adverse weather conditions during this crop year, especially the
frosts at the Mato Grosso do Sul Cluster.
At the Ribeirão Preto Cluster, TRS content declined by 3.1% in the 2013/14 crop year, mainly due to
the above-average rainfall between March and June 2013.
In 4Q14, cane TRS content was 124.7 kg/ton, or 2.1% lower than in 4Q13. The following charts show
the change in TRS between periods:
Evolution in Sugarcane TRS (kg/metric ton)
Ribeirão Preto
Cluster
Consolidated
-1.3%
+0.2%
-3.1%
-6.1%
132.7
133.0
124.9
135.7
134.0
129.9
11/12
12/13
13/14
11/12
12/13
13/14
94
2.2.3 Mechanization
The harvest mechanization rate on own fields reached 94.7% at the close of the 2013/14 crop year,
increasing 1.9 p.p. from the 2012/13 crop year. This performance is explained by investments made
over the past few years to improve harvest technology.
2.3 Production
Production in terms of TRS amounted to 3.7 million metric tons, a decrease of 2.4% from the 2012/13
crop year, mainly reflecting the 6.1% reduction in cane TRS content in the period. The decrease was
partially offset by the 1.6% increase in crushing volume and the 0.7 p.p. increase in industrial efficiency
measured by RTC.
The production mix was balanced this season, with 51% of production directed to sugar, compared to
61% in the previous crop. The result reflects Biosev’s operating flexibility, which represents an
important competitive advantage of the company.
The following table shows volumes and production mix:
P ro duc tio n
4Q14
4Q13
Sugar Mix (%)
Production ('000 tons)*
Sugar ('000 tons)
Ethanol ('000 m³)
Cogeneration (GWh)³
37,5%
124
41
48
43
36,5%
82
26
32
17
%
-
51,5%
56,0%
48,6%
151,3%
13/14
12/13
51,1%
3.767
1.723
1.150
712
61,0%
3.860
2.136
952
619
%
-
-2,4%
-19,3%
20,7%
15,0%
*Amounts in tons of TRS. It considers the conversion factors applied in São Paulo State, pub lished in Consecana Manual.
In 4Q14, production measured in metric tons of TRS increased 51.5%, which is mainly explained by the
shifting of the crop in the country's Northeast. This performance was influenced by the all-time high
crushing volume at the Giasa mill, which corresponded to 1.1 million tons annually.
2.4 Cogeneration
Cogeneration destined for sale increased 15.0% in the 2013/14 crop year to 712 GWh. The increase
was due to the higher surplus power available for sale, which is explained by the investment to expand
surplus power capacity at the Lagoa da Prata (LPT) mill, which was concluded in July 2012, and at the
Passatempo (PTP) mill, which was concluded in May 2013, as well by an increase in productivity at
Biosev’s cogeneration units.
Productivity, measured in kWh of power sold per metric ton of cane crushed, increased by 13.2%, from
21.0 kWh/ton to 23.7 kWh/ton, due to the startup of the new thermal power plants equipped with new
technology steam boilers. At the Mato Grosso do Sul Cluster, for instance, cogeneration efficiency
increased by 15.4% to 27.9 kWh/ton in the 2013/14 crop year.
In 4Q14, surplus cogeneration increased 151.3% to 43 GWh, reflecting the shifting of the crop in the
Northeast Cluster, which resulted in higher crushing volume in the quarter, and, to a lesser extent, due
to energy produced from outsourced biomass.
95
The following charts show the evolution in cogeneration:
Evolution in Cogeneration
Total
20.7
+8.4%
Mato Grosso do Sul
Cluster
23.7
Total
21.0
+15.0%
21
21
Polo MS
24.2
22.7
24
Ribeirão Preto
Cluster
27.9
20.7
27.9235
24.1950
23
17.6
17.4
+21.7%
+20.4%
+7.6%
+4.5%
571
619
11/12
12/13
571
11/12
712
619
13/14
12/13
712
171
13/14 11/12
Cogeneration (GWh)
179
171
192
179
192
12/13 11/12 13/14 12/13
240
13/14 11/12
289
352
12/13
13/14
Cogen/Crushing (kWh/tons)
3. ECONOMIC AND FINANCIAL PERFORMANCE
3.1 Net Revenue
Biosev recorded net revenue of R$4.3 billion in the 2013/14 crop year, increasing 2.8% from the
2012/13 crop year. The increase reflects the higher ethanol sales volume in both the domestic and
export markets and the 28.0% increase in cogeneration revenue.
In 4Q14, net revenue amounted to R$852 million, decreasing 11.5% from 4Q13, reflecting the lower
sugar sales volume in the 2013/14 intercrop period compared to the same period last year. The
following table presents a breakdown of revenue by product and market:
Net Revenue (R$ Thousand)
4Q14
4Q13
Sugar
Domestic Market
Export Market
Ethanol
Domestic Market
Export Market
Energy*
Other Products
332,569
110,331
222,238
464,259
405,509
58,750
52,325
3,325
Total
852,478
%
13/14
12/13
%
585,454
128,801
456,653
376,956
320,906
56,050
(4,512)
5,600
-43.2% 2,217,092 2,402,812
-14.3%
439,733
514,793
-51.3% 1,777,359 1,888,019
23.2% 1,669,066 1,502,156
26.4% 1,151,197 1,032,860
4.8%
517,869
469,296
243,351
190,098
-40.6%
138,014
57,143
-7.7%
-14.6%
-5.9%
11.1%
11.5%
10.4%
28.0%
141.5%
963,498
-11.5% 4,267,523
4,152,209
2.8%
*In March 2013, returns related to previous quarters totaled R$27.6 million, affecting the energy revenue, which explains the
negative net revenue in the 4Q13. There was also a reclassification of approximately R$7.4 million b etween energy and other
products revenue.
96
The following charts show the evolution in net revenue by product:
Net Revenue by Product (%)
12/13
4.6%
13/14
1.4%
5.7%
3.2%
36.2%
39.1%
52.0%
57.9%
The following charts present a breakdown of net revenue by market, with the increase of sugar exports
to countries in Africa, Latin America and the Middle East, as a highlight:
Net Revenue by Market (%)
12/13
13/14
43.2%
56.8%
44.0%
56.0%
3.1.1 Sugar
Net revenue from sugar sales amounted to R$2.2 billion in the 2013/14 crop year, which represents a
decrease of 7.7% from the previous crop year. The decrease was directly related to the shift in the
production mix in the crop year, with a higher share of ethanol.
Note that Biosev's average sugar price for the 2013/14 crop was 1.2% higher than for the 2012/13
crop, despite the drop of approximately 20% in average sugar prices in international markets (#NY11).
The appreciation in the U.S. dollar against the Brazilian real (average in period) of some 8% in the
period also helped offset the drop in sugar prices.
In 4Q14, revenue from sugar sales decreased 43.2% and was directly impacted by the 44.0% reduction
in sales volume in the intercrop period.
97
The following charts present comparisons of sugar prices and volumes for the last two crops and a
breakdown of revenue by type of sugar for the 2013/14 crop:
Sales Volume (‘000 metric tons) and Average Sales Price (R$/metric ton)
1,049
1,037
882
1,038
1,041
926
879
798
2.399
2.187
-8,9%
1,814
1,712
602
-44,0%
440
337
162
212
125
585
475
4T13
4T14
12/13
13/14
Revenue by type of sugar, %
12/13
13/14
4.5%
5.1%
20.3%
24.0%
70.9%
75.2%
3.1.2 Ethanol
Net revenue from ethanol sales was R$1.7 billion in the 2013/14 crop year, increasing 11.1% from the
previous season. The increase reflects the shift in the production mix to prioritize ethanol due to the
higher profitability observed in the domestic market.
Average prices increased 6.7% compared to the prior year, led by a 9.9% increase in domestic prices.
Revenue growth was also driven by the 10% increase in demand for anhydrous ethanol in the domestic
market.
In 4Q14, ethanol revenue increased 23.2%, from R$377 million in the 2012/13 crop year to R$464
million in the 2013/14 crop year, mainly due to the higher prices in both the domestic and export
markets.
98
The following charts show ethanol volumes and prices in both crop years and a breakdown by type of
ethanol for the 2013/14 crop year:
Sales Volume ('000 m³) and Average Sales Price (R$/m³)
1,454
1,430
1,388
1,394
1,361
1,401
1,238
1.171
1,273
292
40
+10,9%
+4,1%
1.219
337
373
834
846
12/13
13/14
324
40
252
284
4T13
4T14
Revenue by type of ethanol, %
12/13
13/14
6.4%
42.2%
5.8%
51.4%
43.0%
51.2%
99
3.1.3 Energy
Biosev has energy cogeneration units at all 11 of its industrial sites and is energy self-sufficient during
the harvest period. Of these mills, 9 produce surplus power for sale.
Net revenue from power sales in the 2013/14 crop year was R$243 million, increasing 28.0% from the
2012/13 crop year. Net revenue growth in the period was driven by: (i) the higher volume of
cogeneration power due to the startup of the Passatempo mill; (ii) the additional cogeneration biomass
power acquired in the market; (iii) the higher spot prices for energy, which reached the ceiling of
R$823/MWh.
The following charts show the variation in cogeneration power volumes and prices between the
periods:
Sales Volume (GWh) and Average Sales Price (R$/MWh)
297
187
178
234
+6,0%
1,225
+79,0%
1,298
176
99
4T13
4T14
12/13
13/14
*Excludes the effects from the power returned to CCEE (Electricity Trading
Chamber) in the 2012/13 season for price-calculation purposes.
3.1.4 Other Products
Revenue from Other Products amounted to R$138 million, increasing 141.5% from the previous
season. Revenues from dry yeast, powdered molasses, raw and hydrolyzed bagasse for animal feed
among others are recorded in this line.
100
3.1.5 Inventories
The level of sugar and ethanol inventories remained in line with company’s expectations for the end of
the intercrop period. The table below shows the ending position in each crop year:
Inventories*
Vol u m es S u gar ( '000 t on s ) & E t han ol ( '000 m ³ )
R$ T hou s an ds
13/14
12/13
%
13/14
12/13
%
70
95
71
107
-2.0%
-10.6%
42,374
129,319
49,652
148,531
-14.7%
-12.9%
Sugar ('000 tons)
Ethanol ('000 m³)
* Inventories at cost price (it considers provision for negative margin)
3.2 Cost of Goods Sold (COGS)
In the 2013/14 crop year COGS amounted to R$3.7 billion, down 1.5% from the previous crop year.
Cash COGS ex-resale (excluding non-cash effects and resale costs) increased 2.7% from the prior
season to end the crop year at R$1.9 billion. The main factors impacting COGS were:
i)
The 3.5% increase in raw material costs due to the higher proportion of third-party cane in the
mix. The increase was partially offset by the 3.3% decrease in the ending TRS price per
kilogram in São Paulo (CONSECANA), which ended the 2013/14 crop year at R$0.4572 kg/ton,
compared to R$0.4728 kg/ton for the 2012/13 crop year.
ii)
The 14.3% decrease in expenses with industrial inputs basically reflects the lower production of
refined and crystal sugar (down some 20%), which resulted in lower packaging costs.
In 4Q14, cash COGS ex-resale decreased by 26.7% due to lower raw material and input costs.
The following table presents a breakdown of COGS as well as unit cash COGS in R$/ton of TRS
Product:
COGS (R$ Thousand)
4Q14
4Q13
(720,208)
(219,979)
(939,266)
(364,216)
(111,264)
(175,421)
-36.6%
(79,622)
(123,244)
-35.4%
(29,093)
(65,551)
-55.6%
Cash COGS
Personnel
Raw materials
Industrial inputs and services
Resale
(500,229)
(95,701)
(226,313)
(26,401)
(151,814)
Cash COGS w/o resale
Total COGS
Non cash items
Planting Amortization
Depreciation and Amortization
Losses from changes in the Fair Value minus estimated
costs of selling Biological Assets (realized)
Total in TRS Product (`000 tons)*
Unit Cash COGS¹ w/o resale (R$/Ton)
13/14
12/13
%
-23.3% (3,707,116)
-39.6% (1,080,704)
%
(3,761,668)
(1,457,877)
-1.5%
-25.9%
(182,064)
(390,389)
-53.4%
(432,886)
(545,170)
-20.6%
(465,754)
(522,318)
-10.8%
(575,050)
(99,967)
(329,163)
(45,943)
(99,977)
-13.0% (2,626,412) (2,303,791)
-4.3%
(458,486)
(428,776)
-31.2% (1,256,032) (1,213,636)
-42.5%
(143,667)
(167,704)
51.8%
(768,227)
(493,675)
14.0%
6.9%
3.5%
-14.3%
55.6%
(348,415)
(475,073)
-26.7%
(1,858,185)
(1,810,116)
2.7%
687
(507)
1,030
(461)
-33.3%
10.0%
3,664
(507)
4,069
(445)
-9.9%
14.0%
*Amounts in tons of TRS. It considers the conversion factors applied in São Paulo State, pub lished in Consecana Manual.
101
3.2.1 Unit COGS
Unit cash COGS excluding the effects from resale increased 14.0% in the 2013/14 crop year to R$507
per metric ton of TRS. The increase was mainly due to the 6.1% decrease in cane TRS content,
resulting primarily from the weather events already disclosed, in particular the frost in the MS Cluster,
which led to a reduction in the production of TRS product in the period.
In 4Q14, unit cash COGS excluding resale costs increased 10.0%, mainly due to the higher proportion
of third-party cane in the mix.
3.3 Gross Profit
Gross Profit amounted to R$560 million in the 2013/14 crop year, increasing 43.5% from the prior year.
The increase reflects the changes in the following non-cash COGS items:
(i)
the R$208 million reduction in planting amortizations, mainly due to the reduction in own cane
crushing in the current crop year;
(ii)
the R$112 million reduction in depreciation and amortization, which is essentially explained by
the shorter intercrop period in 2013/14 compared to 2012/13.
Cash Gross Profit amounted to R$1.6 billion, decreasing 11.2% in the year. The decline was due to the
14% increase in cash COGS, as described in item 3.2.
The following charts show the changes in cash Gross Profit and cash Gross Margin between the
periods:
Gross Profit (R$ ’000) and Gross Margin (%) – Cash Basis
45%
41%
40%
41%
40%
1,848
388
-9,3%
352 388
38%
-11,2%
1,641
352
-9,3%
4Q13
4Q14
12/13
4Q13
4Q14
Gross Profit
Gross Margin (Cash)
13/14
102
3.4 Selling, General and Administrative (SG&A) Expenses
SG&A expenses amounted to R$525 million at the end of the 2013/14 crop year, increasing 2.2% from
the 2012/13 crop year. The item that most contributed to the increase was Services, whose expenses
were associated with consulting projects. The increase was partially offset by the 25.0% decrease in
shipping expenses due to the lower volume of sugar exports in the year.
In 4Q14, SG&A expenses decreased by 20.8% compared to 4Q13, due to the reduction in freight and
shipping expenses resulting primarily from the lower sugar sales volume.
The following table presents a comparison of SG&A expenses between the periods:
S G &A (R $ T ho us and)
4T 14
4T 13
Personnel
Freight
Services
Shipping Charges
Others
(35,237)
(20,129)
(26,684)
(3,068)
(9,201)
(33,759)
(40,494)
(27,225)
(6,759)
(10,886)
Total Expenses (Cash)
(94,319)
(119,123)
%
13/14
12/13
%
4.4%
-50.3%
-2.0%
-54.6%
-15.5%
(149,653)
(166,948)
(136,493)
(29,578)
(42,493)
(144,964)
(168,487)
(124,564)
(39,430)
(36,204)
3.2%
-0.9%
9.6%
-25.0%
17.4%
-20.8%
(525,165)
(513,649)
2.2%
As a percentage of net revenue, SG&A expenses in the 2013/14 crop year were 12.5%. This figure
includes the expenses with personnel and administrative items at the agroindustrial units (PAE), which
amounted to R$143 million. Excluding these expenses, SG&A expenses corresponded to 9.0% of net
revenue for the 2013/14 crop year, in line with the previous period.
3.5 EBITDA
Adjusted EBITDA(1)(2) in the 2013/14 crop year amounted to R$1.1 billion, decreasing 10.7% from the
previous crop year. Adjusted EBITDA margin was 26.9%, contracting by 4.1 p.p. from the 2012/13 crop
year. The main factors that contributed to this result were:
i)
the 14.0% increase in cash COGS, as already discussed in item 3.2;
ii)
the positive impact from the reversal of non-recurring items(3) accounted as Other Operating
Expenses in the amount of R$424 million, which was due to the provision for the write-off of
1
EBITDA corresponds to earnings before net financial income (expenses); depreciation, amortization and depletion; and
income and social contribution taxes on net income for the period. Among other metrics, we use EBITDA as a measure
of our operating performance and operating cash flow generation. Adjusted EBITDA is calculated based on EBITDA
(CVM 527 Instruction), excluding non-cash effects and non-recurring items.
2
EBITDA is not a measure for financial performance in accordance with accounting practices adopted in Brazil (BR
GAAP, IFRS) and should not be considered as an alternative to net income, as an indicator of operating performance, as
an alternative for operational cash flow or as a measure of liquidity. EBITDA does not consider certain costs, which could
significantly affect our profits, such as financial expenses, taxes, depreciation and amortization, thus limiting its use as a
measure of our profitability.
3
Non-recurring items resulting from one-off events that do not tend to repeat in other periods and therefore do not reflect
the typical results of the Company’s operation.
103
assets and expenses with the organizational restructuring, as already announced in a Material
Fact to the market.
Excluding the effects from resale, adjusted EBITDA margin stood at 31.7% in the 2013/14 crop year,
compared to 35.3% in the previous crop.
As already mentioned, adverse weather conditions negatively impacted Biosev results. The amount of
this impact in the adjusted EBITDA was estimated at R$ 328 million for the 2013/2014 crop year.
In 4Q14, adjusted EBITDA amounted to R$269 million, increasing 6.3% compared to 4Q13. This
positive variation mainly reflects the 13.0% reduction in cost of goods sold.
The composition of Adjusted EBITDA and the reconciliation of EBITDA to Adjusted EBITDA, as well as
a chart with the quarterly evolution in Adjusted EBITDA are presented below:
EBITDA Composition (R$ Thousand)
Net Revenue
Unit Net Revenue (R$/Ton)
Cash COGS
Unit Cash COGS (R$/ton)
Gross Profit
Unit Gross Profit (R$/Ton)
Cash SG&A
Equity in subsidiaries (TEAG)
Others Operating Revenue/Expenses
Unit hibernation and asset impairment
Non-recurring items
4Q14
4Q13
%
13/14
12/13
%
852,478
963,498
-11.5%
4,267,523
4,152,209
2.8%
941
854
10.2%
975
920
6.1%
(500,229)
(575,050)
-13.0%
(2,626,412)
(2,303,791)
14.0%
(552)
(510)
8.3%
(600)
(510)
17.7%
352,249
388,448
-9.3%
1,641,111
1,848,418
-11.2%
389
344
12.9%
375
409
-8.4%
(94,319)
12
(399,484)
370,052
40,770
(119,123)
1,806
66,504
(84,388)
-20.8%
-99.3%
-
(525,165)
6,787
(399,065)
370,052
54,097
(513,649)
6,321
8,656
(63,724)
2.2%
7.4%
-
269,281
31.6%
253,247
26.3%
6.3%
5.3 p.p.
1,147,817
26.9%
1,286,022
31.0%
-10.7%
-4.1 p.p.
4Q 14
4Q 13
13/14
12/13
NET INCOME (LOSS)
(1,017,684)
Financial income
56,578
Depreciation and Amortization
199,792
Fair value amortization of TEAG concession through
Equity in subsidiary
Income Tax and Social Contribution
291,604
EBITDA
(469,710)
Margem EBITDA
-55.1%
(185,440)
74,007
307,316
(1,466,799)
576,779
649,661
(619,558)
641,026
972,162
Adjusted EBITDA
Adjusted EBITDA Margin
EBITDA Reconciliation (R$ Thousand)
Earnings (Losses) decurring of fair value changes
minus estimated costs for selling bio assets
(Realized)
Fair value amortization of TEAG concession through
Equity in subsidiary
Unit hibernation and asset impairment
Non-recurring items
Adjusted EBITDA
Adjusted EBITDA Margin
(104,571)
91,313
9.5%
326,069
244,223
2,100
2,100
370,052
40,770
269,281
31.6%
(84,388)
253,247
26.3%
%
448.8%
-23.6%
-35.0%
-
-
-
%
136.7%
-10.0%
-33.2%
-
-64.6 p.p.
364,475
124,116
2.9%
(316,077)
677,553
16.3%
33.5%
591,153
663,094
-10.8%
8,399
9,099
-7.7%
6.3%
5.3 p.p.
370,052
54,097
1,147,817
26.9%
(63,724)
1,286,022
31.0%
-81.7%
-13.4 p.p.
-10.7%
-4.1 p.p.
104
Evolution in Adjusted EBITDA (R$ million)
30.0%
26.3%
31.6%
25.5%
20.7%
253
220
400
259
269
4Q13
1Q14
2Q14
3Q14
4Q14
Adj EBITDA
Adj EBITDA Margin
3.6 Hedge
The Hedge Policy of Biosev has as its main goal the protection of its future cash flows.
The following table shows the aggregate position of our hedged sugar volumes and prices via material
contracts and derivative instruments on March 31, 2014:
Pricing on 03/31/14
Sugar
NY11
Volume ('000 tons)
Average Price (cUS$/lb)
Exchange Rate
US$
Volume (US$ million)
Average Price (R$/US$)
Crop
14/15
15/16
1,248
18.27
68
18.54
355
2.39
19
2.66
105
3.7 Financial Result
The net financial result in the 2013/14 crop year was an expense of R$577 million, decreasing 10.0%
compared to the prior crop year.
Net exchange variation was a loss of R$184 million, increasing by 53.4% from the exchange variation
loss of R$120 million in the previous crop year. This change was due to the depreciation in the
Brazilian real against the U.S. dollar of 12.4% in the period, compared to 10.5% in the previous crop
year. This above amount represents approximately 50% of the total exchange variation incurred in the
crop year, since the remaining portion was deferred to shareholders’ equity4, in accordance with our
Hedge Accounting policy.
Excluding the effects from exchange variation, the net financial result was an expense of R$393 million,
decreasing 24.5% from the previous crop year. This change was impacted by the following:
i)
the 11.6% decrease in interest expenses due to the reduction in the average debt balance
between the periods.
ii)
the increase in interest income due to the higher balance of cash and marketable securities in
the year: R$1.8 billion at the end of the 2013/14 crop year compared to R$1.4 billion at the end
of the 2012/13 crop year;
iii)
the 42.6% decrease in net derivative expenses, mainly due to the R$51 million gain from
currency derivatives. This gain reflects the higher deferral of exchange variation to the other
Comprehensive Income Account (OCI) in the period, in accordance with our Hedge Accounting
policy.
In 4Q14, the net financial result was an expense of R$57 million, decreasing 23.6% from 4Q13 due to
the reduction in interest expenses between the periods.
The following table shows the change in the financial result between the periods:
Financial Result (R$ Thousand)
Financial Result, Net
FX Variation
Financial Result before FX
Interest - Expenses
Interest - Revenues
Derivative transactions
Others Revenues/Expenses
4Q14
4Q13
%
13/14
12/13
%
(56,578)
(74,007)
-23.6%
(576,779)
(641,026)
-10.0%
27,580
27,106
1.7%
(184,040)
(119,985)
53.4%
-16.1%
-30.4%
-26.6%
94.7%
-5.8%
(393,403)
(352,931)
38,929
(59,433)
(19,304)
(521,041)
(399,142)
12,180
(103,539)
(30,540)
-24.5%
-11.6%
219.6%
-42.6%
-36.8%
(84,822)
(61,599)
3,397
(18,917)
(7,039)
(101,113)
(88,557)
4,630
(9,715)
(7,471)
On March 31, 2014, the U.S. dollar exchange rate was R$2.26/US$.
4
Accounted as Other Comprehensive Income
106
3.8 Net Income (Loss)
The Company recorded a net loss of R$1.5 billion in the 2013/14 crop year. In addition to the
aforementioned factors, the result was adversely affected by the noncash accrual of R$467 million
related to the write-off of deferred income tax assets, as already announced in a Material Fact to the
market.
Excluding the non-recurring effects derived from the 2014 Business Plan, the net loss for the period
was R$725 million, which is compared to net loss of R$620 million in the previous crop year.
As already mentioned, adverse weather conditions also negatively impacted Biosev results. The
amount of this impact was estimated at R$328 million before taxes for the 2013/2014 crop year.
4. CAPITAL EXPENDITURE
Over the last few years, Biosev has built a competitive platform of assets as a result of an expansion
cycle in investments made with capital discipline. Biosev plans to use this platform to support its growth
based on improvements in yield and efficiency. In this scenario, the Company will continue to invest in
planting, treatments and industrial maintenance in amounts similar to previous crop years, while
substantially reducing its investments in expansion.
Investments in the 2013/14 crop year amounted to R$1.2 billion, decreasing 10.3% from the previous
season. The main driver of this reduction between the periods was the lower expenditures with
expansion projects, given the conclusion of the Passatempo cogeneration project in Mato Grosso do
Sul that started operation in May 2013.
This variation is also explained by the following factors: (i) the increase in industrial maintenance, as a
result of a longer crop season; (ii) the increased efficiency of harvesters, which reduced the need for
fleet renewal and consequently for investments in agricultural maintenance; and (iii) the conclusion of
projects to adapt the mills to environmental standards, which led to a reduction in the line “Other.”
The following table presents a breakdown of capital expenditures:
Capex (R$ Thousand)
Investment
Industrial
Agriculture
IT
Planting
Maintenance
Industrial
Agriculture
Planting
Treatment
Intercrop maintenance costs
Others
Total
4Q14
4Q13
%
13/14
12/13
%
18,213
13,107
1,667
704
2,734
31,988
23,161
309
965
7,554
-43.1%
-43.4%
440.4%
-27.0%
-63.8%
53,923
39,510
1,661
3,085
9,667
188,940
142,361
25,830
4,537
16,213
-71.5%
-72.2%
-93.6%
-32.0%
-40.4%
466,693
49,119
11,562
100,092
49,677
250,931
5,311
484,905
472,182
32,703
19,628
76,137
52,361
284,469
6,884
504,171
-1.2% 1,151,890 1,155,588
50.2%
84,187
64,695
-41.1%
34,158
57,297
31.5%
322,128
295,995
-5.1%
290,813
288,158
-11.8%
382,597
375,981
-22.8%
38,007
73,461
-3.8% 1,205,813 1,344,528
-0.3%
30.1%
-40.4%
8.8%
0.9%
1.8%
-48.3%
-10.3%
107
5. INDEBTEDNESS
At the end of the 2013/14 crop year, adjusted net debt stood at R$3.3 billion, decreasing 9.4% from the
previous crop year. The main factors in the reduction in adjusted net debt were: (i) the proceeds from
the R$700 million IPO; (ii) the amortization of advances on export contracts (ACC) and other trade
finance facilities, which was partially offset by new funding operations; (iii) the R$171 million decrease
in working capital needs.
03/31/2014 03/31/2013
Var. %
Total
Total
Debt - R$ Million
Gross Debt
Short Term
Long Term
Cash and Investments
Net Debt
Readily Marketable Inventories (RMI)
Adjusted Net Debt
(5,322)
(1,907)
(3,415)
1,848
(3,474)
172
(3,302)
(5,222)
(1,254)
(3,967)
1,364
(3,858)
198
(3,660)
1.9%
52.0%
-13.9%
35.5%
-10.0%
-13.4%
-9.8%
Of the total debt at the end of the 2013/14 crop year, approximately 70% corresponded to borrowings
and financing denominated in U.S. dollar. Of these amounts, 48.1% was naturally hedged by our future
exports.
Since the beginning of the crop year, our dollar-denominated debt increased by R$354 million due to
exchange variation effects in the period, and a portion in the amount of R$170 million was deferred to
shareholders’ equity, in accordance with our Hedge Accounting policy.
The following charts present a breakdown of debt by index and instrument:
Gross Debt by Instrument and Index (%)
1.1%
0.3%
5.4%
5.8% 9.3%
BNDES/FCO/FNE
17.4%
Restructed Debt
ACC
NCE
CDI
TJLP
Other
34.0%
Pre
50.1%
Export Pre Payment
33.2%
LIBOR
20.5%
Other
22.9%
At the close of the 2013/14 crop year, our adjusted net debt corresponded to 2.9 times our Adjusted
EBITDA. The following chart shows the evolution in adjusted net debt and financial leverage:
108
Evolution in Adjusted Net Debt (R$ million)
3.1
2.9
2.8
2.6
2.6
3,660
3,430
3,267
3,498
3,302
4Q13
1Q14
2Q14
3Q14
4Q14
Adj Net Debt
Adj net Debt/Adj EBITDA
6. CAPITAL MARKETS AND INVESTOR RELATIONS
Biosev became a publicly traded company just over one year ago, on April 16, 2013, when its stock
was listed on the Brazilian Stock Exchange (BM&FBOVESPA). The Company's stock is traded on the
Novo Mercado listing segment and is a component of the Special Corporate Governance Stock Index
(IGC), Corporate Governance Index - Novo Mercado (IGNM) and Special Tag-Along Stock Index
(ITAG).
In its IPO, Biosev realized the primary distribution of 46,666,667 common shares and 37,406,609 put
options. The options mature on July 21, 2014 at a fixed price of R$16.57, with the counterparty the
controlling shareholder Louis Dreyfus Commodities.
Since its listing, the average daily trading volume of BSEV3 was of R$472 thousand. The following
chart shows the company’s stock performance since its IPO through the close of the crop year:
109
20%
Evolution BSEV3 x IBOVESPA
10%
0%
50,414
-07%
-10%
-20%
8.50
-30%
-34%
-40%
-50%
IBOV
BSEV3
7. GUIDANCE
As already disclosed to the market, Biosev recorded crushing volume of 30 million metric tons, which is
the highest level of the last three years, and production (measured in TRS Product) within the guidance
range, as shown in the following table:
Guidance
0
Crushing (Million tons)
TRS Cane (kg/ton)
TRS Product (Million tons)
Crop 2013/14
Actual
28.7 - 30.1
125.0 - 131.0
3.6 - 3.9
30
124.9
3.7
0
We take this opportunity to announce our guidance for the 2014/15 crop year. The numbers below
already take into consideration our estimates concerning the impact of this year’s drought at this
present moment.
Guidance
Crushing (Million tons)
Sugarcane TRS (kg/ton)
TRS Product (Million tons)
14/15
29.0 - 31.5
128.0 - 134.0
3.7 - 4.2
110
8. APPENDIX – SUMMARIZED FINANCIAL STATEMENTS
8.1 INCOME STATEMENT
Income Statement (R$ Thousand)
Gross Revenue
Taxes and Sales Deductions
NET REVENUE
COGS
GROSS PROFIT
4T14
4T13
%
13/14
12/13
%
924,454
(71,976)
852,478
(720,207)
1,041,986
(78,488)
963,498
(939,266)
-11.3%
-8.3%
-11.5%
-23.3%
4,480,216
(212,693)
4,267,523
(3,707,116)
4,488,653
(336,444)
4,152,209
(3,761,668)
-0.2%
-36.8%
2.8%
-1.5%
132,271
24,232
445.9%
560,407
390,541
43.5%
(103,225)
(46,546)
(37,612)
27,580
(127,774)
(50,864)
(50,249)
27,106
-19.2%
-8.5%
-25.1%
1.7%
(559,876)
201,580
(594,319)
(184,040)
(550,252)
212,032
(733,073)
(119,985)
1.7%
-4.9%
-18.9%
53.4%
OPERATING INCOME (EXPENSES)
General, administrative and selling expenses
Financial income
Financial expenses
FX variation
Losses on changes in fair value less estimated costs
of selling bio assets (Unrealized)
Equity (loss) in subsidiaries
Other operating income
Other operating expenses
Operating income (expenses), net
(296,976)
(178,672)
66.2%
(125,399)
(140,776)
-10.9%
(2,088)
18,407
(417,891)
(858,351)
(294)
223,303
(156,799)
(314,243)
610.2%
-91.8%
166.5%
173.1%
(1,612)
246,891
(645,956)
(1,662,731)
(2,778)
330,133
(321,477)
(1,326,176)
-42.0%
-25.2%
100.9%
25.4%
PROFIT (LOSS) BEFORE TAXES ON INCOME
(726,080)
(290,011)
150.4%
(1,102,324)
(935,635)
17.8%
(291,604)
(1,017,684)
104,571
(185,440)
448.8%
(364,475)
(1,466,799)
316,077
(619,558)
136.7%
Income Tax and Social Contribution
NET INCOME (LOSS)
8.2 BALANCE SHEET – ASSETS
ASSETS (R$ Thousand)
CURRENT ASSETS
Cash and cash equivalents
Short-term investments
Derivative financial instruments
Trade receivables
Inventories
Recoverable taxes
Other receivables
03/31/2014 03/31/2013
%
1,729,602
118,535
31,867
278,206
505,021
103,445
89,257
2,855,933
791,728
572,211
62,711
257,586
593,421
132,214
67,836
2,477,707
118.5%
-79.3%
-49.2%
8.0%
-14.9%
-21.8%
31.6%
15.3%
Assets held for sale
Total current assets
38,140
2,894,073
63,233
2,540,940
-39.7%
13.9%
NON CURRENT ASSETS
Long-term receivables:
Advances to suppliers
Escrow deposits
Recoverable taxes
Deferred income tax and social contribution
Other receivables
Biological Assets
Investments
Property, plant and equipment
Intangible assets
Total non-current assets
27,268
170,273
148,970
34,137
33,924
1,279,891
233,530
3,761,140
946,002
6,635,135
34,828
171,407
68,291
243,393
47,618
1,241,580
235,209
4,117,416
1,036,721
7,196,463
-21.7%
-0.7%
118.1%
-86.0%
-28.8%
3.1%
-0.7%
-8.7%
-8.8%
-7.8%
TOTAL ASSETS
9,529,208
9,737,403
-2.1%
112
8.3 BALANCE SHEET – LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES AND EQUITY (R$ Thousand)
03/31/2014 03/31/2013
%
CURRENT LIABILITIES
Borrowings and financing
Advance from domestic customers
Advance from foreign customers
Trade payables
Accrued payroll and related taxes
Taxes payable
Derivative financial instruments
Other payables
Total current liabilities
1,907,036
61,493
208,672
333,913
103,589
36,247
132,386
161,093
2,944,429
1,254,433
16,805
403,913
254,044
112,239
90,405
58,955
150,313
2,341,107
52.0%
265.9%
-48.3%
31.4%
-7.7%
-59.9%
124.6%
7.2%
25.8%
NON-CURRENT LIABILITIES
Borrowings and financing
Advance from foreign customers
Deferred Income tax and social contribution
Derivative financial instruments
Provision for labor, civil and tax contigencies
Taxes payable
Other payables
Total non-current liabilities
3,414,704
570,700
283,814
26,860
606,914
45,873
98,457
5,047,322
3,967,379
166,738
58,744
615,607
11,790
111,933
4,932,191
-13.9%
70.2%
-54.3%
-1.4%
289.1%
-12.0%
2.3%
SHAREHOLDERS' EQUITY
Capital
Capital reserve
Accumulated losses
Other comprehensive income (loss)
Total equity attributable to shareholders
2,490,036
1,356,481
-2,156,284
-160,429
1,529,804
1,790,036
1,405,194
-688,720
-49,293
2,457,217
39.1%
-3.5%
213.1%
225.5%
-37.7%
Non-controlling interest
Total equity
7,653
1,537,457
6,888
2,464,105
11.1%
-37.6%
TOTAL LIABILITIES AND EQUITY
9,529,208
9,737,403
-2.1%
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8.4 CASH FLOW STATEMENTS
Cash FLOW (R$ Thousand)
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the year
Non-cash transactions:
Depreciation, amortization and crop treatment
Interest, exchange rate changes and inflation adjustments, net
Losses decurring of fair value changes less estimated costs for
selling bio assets (Realized and Unrealized)
Income tax and social contribution deferred
Others items not affecting cash
Decrease in assets:
Increase in liabilities:
13/14
12/13
(1,466,799)
(619,558)
649,661
740,744
972,162
709,848
591,153
663,094
383,585
138,138
1,036,482
(342,158)
83,115
1,466,503
91,179
497,371
41,057
242,019
Cash provided by operating activities
Interests paid on borrowings and financing
1,625,032
(281,590)
1,749,579
(308,886)
Net cash provided by operating activities
1,343,442
1,440,693
CASH FLOW FROM INVESTING ACTIVITIES
Additions to property, plant and equipment
Additions to biological assets
Reductions (additions) to intangible assets
Decrease (increase) in short-term investments
Other
Net cash used in investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Shareholders' contribution
Repurchase shares of noncontrolling
Costs on the issuance of the shares in the context of the public
offering
Increase in borrowings and financing
Payment of borrowings and financing
Net cash provided by (used in) financing activities
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of year
Cash and cash equivalents at the end of year
(328,168)
(796,705)
(1,209)
440,679
1,201
(684,202)
700,000
(48,713)
2,009,949
(2,382,602)
278,634
937,874
791,728
1,729,602
(560,243)
(793,981)
(706)
(164,447)
139,190
(1,380,187)
600,000
(12,701)
3,251,166
(3,901,640)
(63,175)
(2,669)
794,397
791,728
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9. APPENDIX – MARKET OVERVIEW
Sugar
Prices - In 4Q14, the price of the sugar NY#11 futures nearby contract increased US$1.36 c/lb from
US$16.41 c/lb to US$17.77 c/lb. In the period, the BRL appreciated 3.8% against the USD, from
2.362 R$/US$ to 2.271 R$/US$, resulting in an increase of 5.8% in the price of sugar in BRL from
R$38.75 c/lb to R$40.36 c/lb.
This increase in prices is explained by the significantly lower than normal rainfall in CS Brazil and
consecutives delays by the Indian government to finalize its export subsidy, which limited the impact of
the measure since mills ran out of time to produce raw sugar.
Production - N/NE Brazil crushed 18.3 MM tons in the quarter, 3.0MM tons more than the same quarter
last season (+20%). Despite the higher crush, TRS content was well below last year’s level (132 kg/tc,
vs. 141 kg/tc), mainly because rainfall was above average during most of the season, which is the
opposite of what occurred last crop, when rains were consistently below normal levels.
In the Northern Hemisphere, the Indian harvest is approaching its end, with sugar production close to
23.5MM tons, vs. 24.9MM tons last year. Thailand production was positively impacted by dry weather
and good sucrose content, and final production should end at around 11.4MM tons of sugar, compared
to 10.8MM a year earlier. In Mexico, production has evolved at a good pace, but is not expected to catch
up with last year and should end at around 6.5MM metric tons of sugar, 1.0MM metric ton lower than last
season.
Demand - Sugar purchases were slightly above the volumes traded during the previous quarter. The
estimates are that China and Malaysia purchased around 650k lower volume, with a positive offset of
900k metric tons from India, Bangladesh and Egypt.
The market consensus on the 13/14 global S&D surplus now seems to be between 2.0MM to 5.0 MM
metric tons for 13/14 and -2.0 to +2.0 MM metric tons for 14/15, depending on the magnitude of the
El Niño impact on crops around the world, which is a considerable reduction compared to the previous
four years.
115
Average Sugar Prices
VHP (cUS$lb) vs. Crystal (US$/Ton) vs. Refined (US$/Ton)
35.00
33.00
650.00
31.00
29.00
27.00
500.00
25.00
23.00
21.00
350.00
19.00
17.00
15.00
200.00
VHP (#NY11) cUS$lb
Crystal (ESALQ) US$/Ton
Refined (London) US$/Ton
Source: Bloomberg, April 2014.
Average VHP Prices
(cUS$/lb vs. cR$/lb) and Exchange Variation
50.00
2.50
45.00
2.40
40.00
2.30
35.00
2.20
30.00
2.10
25.00
2.00
20.00
1.90
15.00
1.80
10.00
1.70
VHP (#NY11) cUS$/lb
VHP (#NY11) cR$/lb
FX (US$/R$)
Source: Bloomberg, April 2014.
116
Ethanol
During the quarter, hydrous ethanol ESALQ prices increased by R$144/m³, settling at R$1,420/m³ net of
taxes. This strong increase in hydrous prices was a result of the dry inter-crop period in Brazil CS, along
with strong ethanol demand during the quarter. During the same period, anhydrous ethanol prices rose
R$149/m³, settling at R$1,588/m³, with the premium over hydrous more or less unchanged during the
quarter, at 12%.
Domestic demand for ethanol at the mill level ended the quarter near 4.8 million m³, approximately
20.5% above the same period a year before. Hydrous demand was particularly strong (+12%)
considering that the ethanol pump price parity in relation to gasoline during the quarter was about the
same compared to last year, at 69%. Also, anhydrous demand rose 33% against 4Q13, primarily as a
function of the increase in the percentage of anhydrous ethanol added to the gasoline blend from 20% to
25%, but also because of stronger total fuel demand.
By the end of the quarter, the Brazilian states of Goiás, Mato Grosso, Paraná and São Paulo, which are
responsible for approximately 50% of domestic demand, had hydrous ethanol prices less competitive
than gasoline (above 70% of the price of gasoline). However, we should observe some states moving
back into an ethanol-consumption incentive in the next month with the evolution of the new crop in
CS Brazil.
With regard to exports during the quarter, according to SECEX (Secretaria do Comércio Exterior), 335
thousand m³ of Brazilian ethanol was exported, down 47.0% from 4Q13. While exports to the United
States were only 160 thousand m³ (down 191 thousand m³ from the same quarter of last year), exports
to Asia were up 76 thousand m³ at 126 thousand m³.
This quarter Brazil imported 210 thousand m³ of ethanol, from which 85 thousand m³ arrived in Center
South Brazil and 125 thousand m³ arrived in the country's Northeast. In the same quarter last year, Brazil
imported 80 thousand m³, all of which went to the Northeast.
Ethanol Prices (R$m3)
1,700
1,600
1,500
1,400
1,300
1,200
1,100
1,000
900
800
Hydrous (ESALQ)
Anhydrous (ESALQ)
Source: Bloomberg, April 2014.
117