Financial statements BrasilAgro Companhia Brasileira de Propriedades Agrícolas

Transcription

1 Financial statements BrasilAgro Companhia Brasileira de Propriedades Agrícolas With Independent Auditor s Report

2 Financial statements Contents Independent auditor's report on the financial statements... 1 Message from Management. 7 Fiscal Council Opinion.. 9 Management s Representation on the Financial Statements. 10 Management s Representation on the Independent Auditor s Report. 11 Audited financial statements Balance sheets Statements of operations Statements of comprehensive income Statements of changes in equity Statements of cash flows Statements of value added Notes to the financial statements... 19

3 Independent auditor s report on individual and consolidated financial statements The Shareholders, Board of Directors and Officers BrasilAgro - Companhia Brasileira de Propriedades Agrícolas São Paulo SP Opinion We have audited the accompanying individual and consolidated financial statements of BrasilAgro - Companhia Brasileira de Propriedades Agrícolas ( ), identified as and, respectively, which comprise the statement of financial position as of and the statements of profit or loss, of comprehensive income, of changes in equity and of cash flows for the year then ended, and the notes to the financial statements, including a summary of significant accounting practices. In our opinion, the financial statements referred to above present fairly, in all material respects, the individual and consolidated financial position of BrasilAgro - Companhia Brasileira de Propriedades Agrícolas as of, the individual and consolidated financial performance and the respective individual and consolidated cash flows for the year then ended, in accordance with the accounting practices adopted in Brazil and the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). Basis for opinion We conducted our audit in accordance with Brazilian and international standards on auditing. Our responsibilities under those standards are further described in the Auditor s responsibilities for audit of the individual and consolidated financial statements" section of our report. We are independent of the and its subsidiaries in accordance with the ethical requirements provided for in the Code of Ethics for Professional Accountants and in the professional standards issued by Brazil's National Association of State Boards of Accountancy, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to support our opinion. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the individual and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Analysis of recoverability of investment properties As of, the balance of investment properties, represented by land and the respective farm infrastructure, measured at cost, net of depreciation, totaled R$ 80,219 thousand, representing 7.74% of the total assets of the, and R$ 557,152 thousand, representing 47.23% of total assets in. The methodologies and modeling used to determine the fair value of these properties, used as the basis for the impairment analysis, were based on comparative market data and cost formation, as well as on 1

4 subjective assumptions adopted by the management and its external appraisers, and involve a reasonable degree of judgment and market information and conditions. The monitoring of this matter was considered significant for our audit due to the significance of the amounts involved in relation to total assets and the potential risks to the profit or loss for the year in the case of identification of adjustments due to impairment of the asset, as well as to uncertainties inherent in the determination of the expected recoverable amounts, given the use of market information and the high degree of judgment exercised by management and its appraisers in determining the assumptions for their calculation. A change in any of these assumptions may have a significant impact on the financial statements. How our audit conducted this matter: Our audit procedures included, among others, the involvement of valuation experts to assist us in reviewing the methodology and models used to measure the fair value of the investment properties, including the reasonableness of the assumptions and comparative market data used, as well as the analysis of the accuracy of such properties' data provided by the management and the external appraisers. We analyzed information that could contradict the most significant assumptions, market values and methodologies selected, and evaluated the objectivity and skills of the external appraiser engaged by the. We performed tests on the additional costs and depreciation incurred over the year. We also analyzed the adequacy of the disclosures in the 's financial statements in connection with this matter. Analysis of realization of deferred tax assets As described in Note 16, the recorded under noncurrent assets R$ 18,281 thousand,, and R$ 32,742 thousand,, referring to deferred tax credits arising from income and social contribution tax losses, and deductible temporary differences whose recognition and recoverability are based on a study prepared by management on generation of future taxable profit. The estimate of future taxable profit generation requires judgment and interpretation of tax laws, as well as the projection of future profit. The monitoring of this matter was considered significant to our audit due to the significance of the amounts in relation to total assets, as well as in relation to the effects on profit or loss for the year, and the degree of judgment used in the projections of future taxable profit, its estimates and assumptions, and the impact that any changes in those assumptions and estimates could have on the financial statements. How our audit conducted this matter: Our audit procedures included, among others, the use of tax specialists to analyze the bases for tax credits under the current tax legislation, and valuation specialists to assist us in assessing the assumptions and methodology used by the for the projections of future taxable profit, such as changes in sales and costs, taxable profit, tax rates, arithmetic calculations, and we further compared certain data, where available, with other external sources and aligned these assumptions with business plans approved by the s board. Additionally, we analyzed the adequacy of the disclosures made in the financial statements by the. 2

5 Assessment of biological assets As mentioned in Note 9, the and its subsidiaries measured their biological assets, which correspond to agricultural produce and cattle in development, based on their fair value, calculated based on the value of agricultural produce in the active market (cattle) or based on the discounted cash flow of the growing crop (grains and sugarcane), when there is no active market. This measurement is a significant estimate and is based on several assumptions and methodologies adopted by the management, for which internal and external information was used, mainly relating to the active market price, productivity, prices and interest rate for discounting of cash flows, and also involves plantation areas. At, the recorded a balance of R$ 39,607 thousand,, and R$ 96,046 thousand,, under "Biological assets", in current and noncurrent assets, according to the period of harvest/crop. The monitoring of this matter was considered significant for our audit due to the significance of the biological asset amounts over total assets and profit or loss for the year, due to uncertainties inherent in this type of estimate, as well as to the judgment required from management in determining the assumptions for calculating its fair value. How our audit conducted this matter: Our auditing procedures included, among others, the use of valuation experts to assist us in assessing the assumptions and methodology used by the, particularly those relating to market prices (cattle) and productivity estimates, future commodity prices and interest rates for discount of cash flows. In addition, we involved specialized professionals to perform the physical inspection of planted areas, evaluate the existence of agricultural produce and its physical conditions. We performed tests on the costs that were added over the year. We also focused on the adequacy of the disclosures made by the in connection with this matter. Recognition of sales of farms In the year ended, the and its subsidiaries recognized R$ 39,817 thousand under profit or loss for the year relating to gains on the sale of three agricultural properties that were part of two farms, as mentioned in Notes 1.2. and 1.9b The sale of the farm is recognized to the extent that the risks and rewards of ownership are significantly transferred to the buyers. The process of recognizing the sale of land involves a careful analysis of the contractual data, assessment of the buyer's ability to pay, involves risk over the correct period for recognition, restatement of the accounts receivable and related internal controls, in order to ensure that the properties had their risks and rewards transferred in the correct period under the accrual basis of accounting, in light of the accounting standards in force. This also involves significant judgment by the management. The monitoring of this matter was considered significant for our audit for the reasons set forth above and also because of the risk of early recognition of the sale and restatement of the accounts receivable based on the contractual indices, their significance in relation to profit or loss for the year, and the risk of recognition of sale in a different amount, as well as the judgment required from management in recognizing revenue relating to such sales. 3

6 How our audit conducted this matter: Our audit procedures included, among others: (i) analysis of the sales contracts together with the evidence and analysis of the significant transfer of risks and rewards, including the credit analysis referring to buyer; (ii) fair value test on the transaction date, considering the maturity dates and discount rates; (iii) analysis of impairment of the accounts receivable balance and test on the restatement of the balance based on the agreed-upon indices; (iv) sending confirmation letters referring to the accounts receivable balance in order to confirm the existence of the respective transaction. We also focused on the adequacy of the disclosures made by the in connection with this matter. Other matters Statements of value added The individual and consolidated statements of value added (SVA) for the year ended, prepared under the responsibility of the management, and presented as supplementary information for IFRS purposes, were submitted to audit procedures performed in conjunction with the audit of the 's financial statements. For the purpose of forming our opinion, we evaluate whether these statements are reconciled with the financial statements and accounting records, as applicable, and whether their form and content are in accordance with the criteria set forth in Accounting Pronouncement CPC 09 - Statement of Value Added. In our opinion, these statements of value added have been properly prepared, in all material respects, in accordance with the criteria set forth in this Accounting Pronouncement and are consistent with the overall individual and consolidated financial statements. Audit of the previous year s amounts The amounts related to the year ended June 30, 2017, presented for comparison purposes, were previously audited by other independent auditors, who reports thereon, dated August 29, 2017, had no modification. Other information accompanying the individual and consolidated financial statements and the auditor's report The management is responsible for such other information, including the Management Report. Our opinion on the individual and consolidated financial statements does not cover the Management Report and we do not express any form of audit conclusion on this report. In connection with the audit of the individual and consolidated financial statements, our responsibility is to read the Management Report and, in doing so, consider whether the report is significantly inconsistent with the financial statements or with our knowledge obtained in the audit, or otherwise seems to contain material misstatements. If, based on our work, we conclude that there are material misstatements in the Management Report, we are required to communicate this matter. We have nothing to report in this regard. 4

7 Responsibilities of management and those charged with governance for the individual and consolidated financial statements Management is responsible for the preparation and fair presentation of these individual and consolidated financial statements in accordance with accounting practices adopted in Brazil and in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and for such internal controls as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the individual and consolidated financial statements, management is responsible for assessing the s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless management either intends to liquidate the and its subsidiaries or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the s and its subsidiaries financial reporting process. Auditor s responsibilities for audit of the individual and consolidated financial statements Our objectives are to obtain reasonable assurance about whether the overall individual and consolidated financial statements are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Brazilian and international standards on auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of the audit conducted in accordance with Brazilian and International standards on auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the individual and consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than one resulting from error, as fraud may involve override of internal controls, collusion, forgery, intentional omissions or misrepresentations. Obtain an understanding of internal control relevant to the audit 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 internal control of and its subsidiaries. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of the management s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the s and its subsidiaries ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the individual and consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit 5

8 evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the and its subsidiaries to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the individual and consolidated financial statements represent the corresponding transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal controls that we identify during our audit. We also provided those charged with governance with a statement that we have complied with relevant ethical requirements, including those regarding independence, and communicated with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we are required to determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. São Paulo, August 24, Baker Tilly 4Partners Auditores Independentes S.S. CRC 2SP /O-1 Fábio Rodrigo Muralo Contador CRC 1SP /O-0 6

9 Message from Management At the beginning of the 16/17 harvest, we implemented a strategic plan to reduce the volatility of agricultural operations results and maximize the combination of the s operating and real estate return. In this period, we delivered important results that reflect the actions and projects developed, showing that we are going in the right direction and confirming our commitment to deliver positive results in a recurring and sustainable manner. We ended the 17/18 harvest year with Adjusted EBITDA of R$134.7 million and Net Income of R$126.3 million, an increase of 217% and 363% compared to the previous year, respectively. This result reflects Net Revenue of R$296.7 million, consisting of R$52.4 million for sale of properties and R$244.3 million for sale of agricultural products. In 2018, we sold two areas of the Araucária and Jatobá farms for R$66.2 million and R$177.9 million, respectively. The gain on the sale of the Araucária Farm was recognized in the 17/18 fiscal year and the gain on the sale of the Jatobá Farm will be recorded in the 18/19 fiscal year. These sales reinforce the success and consistency of our business model, with the capture of capital gains through the sale of properties. The average value of property sales in the last 7 years is R$102.6 million, with IRR (Internal Rate of Return) ranging between 14% and 27%. Still regarding value generation in the real estate segment, we added another 2,000 hectares in the operation in Paraguay. The development of the land creates value by itself. Since the beginning of operations in 2006, we have developed more than 123,400 hectares, representing an average growth of 32% in the portfolio transformation. Regarding agricultural operations, we delivered a strong performance Operations EBITDA (excluding farm sales) of R$91.8 millions in the 17/18 harvest year reflecting the results of the grains and sugarcane harvests and the actions implemented during the last two years: (i) cattle raising activities we closed the year with 20,000 head of cattle, (ii) incorporation of mature areas in the operation (via acquisition and leasing), (iii) lease to third party areas with greater volatility and (iv) investments in the development and maturation of the portfolio. We also issued Agribusiness Receivables Certificates (ARC) in the amount of R$142.2 million this fiscal year, with the aim of leveraging and extending the 's lending and financing structure, allowing greater flexibility in the allocation of capital in the short term. Another important achievement was the Great Place to Work certification, recognizing BrasilAgro s excellent working environment. The granting of this certificate reflects all the measures to improve processes, train and develop people, who are the s foundation. We believe that we made the right decisions, and their positive impacts are already reflected in the financial results of this fiscal year and will be even more clearly observed in the coming years. We remain focused on generating value for our shareholders. Adherence to the Market Arbitration Chamber The is subject to arbitration on the Market Arbitration Chamber, as stated on the Arbitration Clause in its Bylaws. 7

10 Relationship with External Auditors The independent auditors, Baker Tilly 4Partners Auditores Independentes S.S., who reviewed the individual and consolidated financial statements for the year ended in, only provided audit services and quarterly revisions to BrasilAgro Companhia Brasileira de Propriedades Agrícolas on the quarters ended in September 30, 2017, December 31, 2017 and March 31, Final Considerations BrasilAgro s management thanks its shareholders, customers, suppliers and financial institutions for their collaboration and trust and, in particular, to its employees for their dedication and effort. We remain at your disposal for any further information. André Guillaumon CEO and Operations Officer Gustavo Javier Lopez Administrative and Investor Relations Officer 8

11 Fiscal Council Opinion The members of the Fiscal Council of Brasilagro Companhia Brasileira de Propriedades Agrícolas, in compliance with the legal and statutory provisions, examined the s Management Report and Financial Statements prepared in accordance with the accounting practices adopted in Brazil and the Financial statements prepared in accordance with the international financial reporting standards ( IFRS ), issued by the International Accounting Standards Board ( IASB ) and the accounting practices adopted in Brazil, all related to the year ended. Based on the examinations made, considering further, the opinion of Baker Tilly Brasil Auditoria e Consultoria, as well as the information and clarifications provided by Management, the members of the Fiscal Council concluded that said documents, have been properly prepared in all their material respects, appropriate, and should therefore be referred for approval by the s Annual Shareholders Meeting. São Paulo, August 24, Fabiano Nunes Ferrari Ivan Luvisotto Alexandre Débora de Souza Morsch 9

12 Management s representation on the Financial Statements In accordance with section VI of article 25 of CVM Instruction 480, of December 7, 2009, the Management declares that reviewed, discussed and agreed with the 's Financial Statements for the year ended. São Paulo, August 24, André Guillaumon CEO and Operations Officer Gustavo Javier Lopez Administrative and Investor Relations Officer 10

13 Management s representation on the Independent Auditor's Report In accordance with section V of article 25 of CVM Instruction 480, as of December 7, 2009, we hereby represent that we have reviewed, discussed and agreed with the independent auditor s report on the 's Financial Statements for the year ended, issued on this date. São Paulo, August 24, André Guillaumon CEO and Operations Officer Gustavo Javier Lopez Administrative and Investor Relations Officer 11

14 Balance Sheets Years ended and 2017 (In thousands of reais) Assets Notes 6/30/2018 6/30/2017 6/30/2018 6/30/2017 Current assets Cash and cash equivalents ,140 29, ,314 43,798 Securities ,216 1,408 11,215 6,972 Derivative Financial Instruments 6 28,299 3,199 28,299 4,090 Accounts receivable and other credits 7 35,635 20,051 95,176 54,026 Inventories 8 38,244 13,030 69,622 22,658 Biological assets 9 27,529 17,649 61,993 38,260 Transactions with related parties 27 34,580 3,714 1,660 1, ,643 88, , ,102 Noncurrent assets Biological assets 9 12,078 8,820 34,053 13,435 Restricted securities 5.2 9,588 8,982 18,226 17,088 Derivative Financial Instruments 6 4, ,053 1 Deferred taxes ,281 30,609 32,742 53,780 Accounts receivable and other credits 7 14,226 16,094 74,775 44,605 Investment properties 10 80,219 78, , ,799 Transactions with related parties 27-35,640-35,640 Investments 11.a 607, , ,426 Property, plant and equipment 12 36,511 31,885 84,830 54,745 Intangible assets 1,331 1,634 1,403 1, , , , ,191 Total assets 1,037, ,566 1,179, ,293 The accompanying notes are an integral part of these individual and consolidated financial statements. 12

15 Balance sheets and 2017 (In thousands of reais) Liabilities and equity Notes 6/30/2018 6/30/2017 6/30/2018 6/30/2017 Current liabilities Trade accounts payable and other liabilities 14 60,920 27, ,445 55,615 Loans, financing, financial leases and debentures 15 16,282 43,141 70,088 56,620 Labor obligations 11,573 9,813 14,300 11,513 Derivative Financial Instruments 6 10,432 3,978 10,489 3,978 Payables for purchase of farms 13-22,085-24,646 Transactions with related parties 27 5,343 5,781 1,831 4, , , , ,156 Noncurrent liabilities Trade accounts payable and other liabilities ,298 1,520 Loans, financing, financial leases and debentures ,524 9, ,932 55,555 Derivative Financial Instruments 6 2,145-2,145 - Provision for legal claims ,380 1,207 1, ,635 11, ,582 58,669 Total liabilities 281, , , ,825 Equity Share capital 17.a 584, , , ,224 Capital reserve 1,997 1,525 1,997 1,525 Treasury shares 17.c (35,208) (36,797) (35,208) (36,797) Income reserves 164,968 68, ,968 68,615 Additional dividends proposed 17.d - 6,486-6,486 Comprehensive income 17.e 39,883 43,415 39,883 43,415 Total equity 755, , , ,468 Total liabilities and equity 1,037, ,566 1,179, ,293 The accompanying notes are an integral part of these individual and consolidated financial statements. 13

16 Statements of operations Years ended and 2017 (In thousands of reais, unless stated otherwise) Notes 7/1/2017 to 6/30/2018 7/1/2016 to 6/30/2017 7/1/2017 to 6/30/2018 7/1/2016 to 6/30/2017 Net revenue 19.a 137, , , ,911 Gain from sale of farm 19.b ,817 26,716 Changes in fair value of biological assets and agricultural products 9 40,544 3,409 99,083 12,266 Reversal of (provision for) impairment of agricultural products, net (927) 883 (1,655) Cost of sales 20 (120,949) (96,212) (228,319) (136,362) Gross profit 57,247 9, ,742 47,876 Selling expenses 20 (5,536) (4,777) (10,087) (6,676) General and administrative expenses 20 (29,651) (27,274) (34,945) (30,941) Other operating income (expenses), net 22 35,616 (6,123) 35,432 (6,019) Equity in earnings of affiliates 11.a 97,244 35,479 14,671 (4,425) Operating profit (loss) before financial results and taxes 154,920 6, ,813 (185) Net financial income (expenses) Financial income 23 81,597 82, , ,090 Financial expenses 23 (97,811) (60,464) (137,879) (76,646) Profit before income and social contribution taxes 138,706 28, ,257 33,259 Income and social contribution taxes 16.2 (12,368) (1,040) (25,919) (5,949) Net income for the year 126,338 27, ,338 27,310 Basic earnings per share reais Diluted earnings per share reais The accompanying notes are an integral part of these individual and consolidated financial statements. 14

17 Statements of comprehensive income Years ended and 2017 (In thousands of reais) Notes and 7/1/2017 to 7/1/2016 to 6/30/2018 6/30/2017 Net income for the year 126,338 27,310 Comprehensive income to be reclassified to income from the period in subsequent periods: Effect on the conversion of investments abroad 17.e 27,084 3,410 Write-off of effect on conversion of joint venture due to spin-off 17.e / 1.1 (30,616) - Total comprehensive income 122,806 30,720 The accompanying notes are an integral part of these individual and consolidated financial statements. 15

18 Statements of changes in equity Years ended and 2017 (In thousands of reais) Notes Capital Capital reserve Treasury shares Legal reserve Income reserves Reserve for investment and expansion Additional dividends proposed Comprehensive income Retained earnings At June 30, 2016 Restated 584,224 1,771 (37,203) 9,020 82,138 7,533 40, ,488 Total equity Additional dividends proposed 17d (22,000) 22, Additional dividends paid 17d (29,533) - - (29,533) Exercise of stock options granted 17.c - (246) 1, Cancellation of treasury stock 17.c ,881 - (14,881) Treasury stock acquired 17.c - - (15,551) (15,551) Net income for the year ,310 27,310 Constitution of legal reserve 17d , (1,366) - Minimum mandatory dividends 17d (6,486) (6,486) Additional dividends proposed 17d ,486 - (6,486) - Constitution of reserve for investment and expansion 17d , (12,972) - Effect on the conversion of investments abroad 17.e ,410-3,410 At June 30, ,224 1,525 (36,797) 10,386 58,229 6,486 43, ,468 Payment of additional dividends 17d (6,486) - - (6,486) Time-barred and unclaimed dividends 17d Share based compensation 21.b Exercise of stock options granted 17.c - (372) 2, ,827 Cancellation of treasury stock 17.f Treasury stock acquired 17.c - - (610) (610) Net income for the year , ,338 Constitution of legal reserve 17.d , (6,317) - Minimum mandatory dividends 17.d (30,005) (30,005) Additional dividends proposed 17.d ,995 - (10,995) - Constitution of reserve for investment and expansion 17.d , (79,041) - Effect on the conversion of investments abroad 17.e ,084-27,084 Write-off of effect on conversion of joint venture due to spin-off 17.e / (30,616) - (30,616) At 584,224 1,997 (35,208) 16, ,270 10,995 39, ,864 The accompanying notes are an integral part of these individual and consolidated financial statements. 16

19 Statements of cash flows Years ended and 2017 (In thousands of reais) Note 7/1/2017 to 6/30/2018 7/1/2016 to 6/30/2017 7/1/2017 to 6/30/2018 7/1/2016 to 6/30/2017 CASH FLOWS FROM OPERATING ACTIVITIES Net income for the year 126,338 27, ,338 27,310 Adjustment to reconcile net income in the year Depreciation and amortization 20 13,022 9,681 23,222 15,027 Gain from surplus obtained through spin-off 1.1 (5,098) - (5,098) - Gain from sale of farm 19.b - - (39,817) (26,716) Write-off of effect on conversion of joint venture due to spin-off 17.e / 22 (30,616) - (30,616) - Net book value of property, plant and equipment and intangible assets disposed of 405 1, ,896 Write-offs of investment properties ,793 8,246 Equity in earnings of affiliates 11.a (97,244) (35,479) (14,671) 4,425 Unrealized gain on derivatives, net 23 (1,808) (1,513) (1,772) (1,513) Short-term investments, foreign exchange and monetary variation and other financial charges, net 8,693 (9,813) 12,191 (8,546) Adjustment to present value of receivables from sale of farms, machinery and financial lease, net (12,721) (8,029) Share-based incentive plan - ILPA Deferred income and social contribution taxes ,328 1,040 21,044 1,814 Fair value of unrealized biological assets and agricultural products 9 (40,544) (3,409) (99,083) (12,266) Set-up (reversal) of provision for impairment of agricultural products, net 8.1 (529) 927 (883) 1,655 Allowance for doubtful accounts (518) (133) (516) Provision for legal claims 22 (414) 113 (387) 139 (14,372) (9,629) (10,316) 2,926 Changes in working capital Trade accounts receivable (15,798) 2,743 (6,746) (7,297) Inventories (26,370) (3,724) (58,442) (6,329) Biological assets 28,326 9,698 60,312 5,576 Taxes recoverable 3,963 4,590 1,943 2,754 Operations with derivatives (17,892) 1,174 (16,982) 18,996 Other receivables (75) 5,520 (2,356) 3,779 Trade accounts payable 6,897 4,855 11,178 24,996 Related parties (181) 13,285 (2,338) 16,714 Taxes payable 395 (2,318) 1,718 (2,769) Income and social contribution taxes - - 1,323 (970) Labor charges 1,760 1,171 2,787 2,657 Advances from customers 2,063 3,570 15,540 5,353 Other liabilities 113 (37) 115 (1,335) Net cash provided by (used in) operating activities (31,171) 30,898 (2,264) 65,051 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of property, plant and equipment and intangible assets (11,574) (13,111) (43,105) (25,478) Acquisitions of investment properties (9,128) (6,656) (23,861) (119,150) Redemption of (investment in) marketable securities, net (8,845) 85,824 (4,001) 125,090 Dividends received 29,376 32, Reduction of (increase in) investments and interest held (23,820) (71,647) - - Future capital contribution (3,318) (12,623) - - Cash received from sale of farms - - 5,267 6,011 Net cash provided by (used in) investing activities (27,309) 14,747 (65,700) (13,527) CASH FLOWS FROM FINANCING ACTIVITIES Payments for purchase of Farms (12,853) - (15,559) - Loans and financing raised ,831 37, ,310 39,469 Interest paid on loans and financing 15 (5,514) (1,879) (10,347) (6,327) Repayment of loans and financing 15 (65,883) (21,148) (105,408) (48,308) Treasury stock acquired, net of amounts received for stock options exercised (610) (14,721) (610) (14,721) Dividends paid (12,972) (32,043) (12,972) (32,043) Net cash generated from (used in) investment activities 105,999 (32,767) 125,414 (61,930) Increase (decrease) in cash and cash equivalents 47,519 12,878 57,450 (10,406) Effect of exchange rate variation on cash and cash equivalents 1,620-3,066 - Cash and cash equivalents at beginning of year ,001 16,123 43,798 54,204 Cash and cash equivalents at end of year ,140 29, ,314 43,798 49,139 12,878 60,516 (10,406) The accompanying notes are an integral part of these individual and consolidated financial statements. 17

20 Statements of value added Years ended and 2017 (In thousands of reais) Notes 7/1/2017 to 6/30/2018 7/1/2016 to 6/30/2017 7/1/2017 to 6/30/2018 7/1/2016 to 6/30/2017 Revenues Gross operating revenue , , , ,305 Gain on sale of farm ,817 26,716 Change in fair value of biological assets and agricultural products 9 40,544 3,409 99,083 12,266 Provision for impairment of agricultural products, net (927) 883 (1,655) Other revenues and expenses 35,616 (480) 35,432 (445) Allowance for doubtful accounts (518) (134) (516) Inputs acquired from third parties 218, , , ,671 Cost of sales (108,530) (87,232) (205,913) (122,036) Materials, energy, outsourced services and other (12,582) (15,531) (17,875) (18,017) (121,112) (102,763) (223,788) (140,053) Gross value added 97,254 5, ,044 48,618 Depreciation and amortization 20 (13,022) (9,681) (23,222) (15,027) Net value added produced (used) by the 84,232 (4,377) 180,822 33,591 Value added received through transfer Equity in earnings of affiliates 11.a 97,244 35,479 14,671 (4,425) Financial income 23 81,597 82, , , , , , ,665 Total value added to be distributed 263, , , ,256 Personnel and charges Direct compensation 17,645 15,851 19,763 17,494 Benefits 2,524 2,794 2,893 3,018 Severance fund (F.G.T.S) Taxes, charges and contributions Federal 16,097 7,300 34,351 15,015 State , Local Financing Financial expenses 98,359 58, ,371 74,220 Rentals Interest on own capital Minimum mandatory dividends 17.d 30,005 6,486 30,005 6,486 Additional dividends proposed 17.d 10,995 6,486 10,995 6,486 Retained earnings of the year 85,338 14,338 85,338 14,338 Value added distributed 263, , , ,256 The accompanying notes are an integral part of these individual and consolidated financial statements. 18

21 Notes to the financial statements 1. General information BrasilAgro Companhia Brasileira de Propriedades Agrícolas ( BrasilAgro ) or ("") was incorporated on September 23, 2005 and is headquartered at Avenida Brigadeiro Faria Lima, 1309, in São Paulo with branches in the States of Bahia, Goiás, Mato Grosso, Minas Gerais, Maranhão and Piauí, and in Paraguay, in the State of Boquerón. The holds interest in other companies ( subsidiaries), as mentioned in Note 2.1, and its corporate purpose includes: agriculture, cattle raising and forestry activities of any type and nature and rendering directly or indirectly related services; the import and export of agricultural products and inputs and those related to cattle raising activity; the purchase, sale and/or rental of properties, land, buildings and real estate in rural and/or urban areas; real estate brokerage involving any type of operations; holding interest, as a member, in other companies and commercial ventures of any nature, in Brazil and/or abroad, directly or indirectly related to the purposes described herein; and management of its own and third-party assets. The and its subsidiaries have ten (10) farms in six (6) Brazilian states and one (1) farm in Paraguay, with total area of 198,158 hectares of own lands and 26,763 hectares of leased lands. 1.1 Spin-off of Joint Venture Cresca S.A. On October 5, 2016, the entered into an agreement with Carlos Casado S.A., the sole partner of the in the Joint Venture Cresca S.A., each with 50% interest in the share capital, by which the partners undertook to sell to third parties all the assets and liabilities that meet the definition of business or divide them into equivalent parts, including rural properties, within an agreed-upon period. Since the assets and liabilities of Cresca were not sold to third parties within the established term, the parties decided to divide them in proportion to the interest held by each in the capital, under the agreement signed on December 31, As a result of this transaction, the now has the following two subsidiaries to receive Cresca s assets and liabilities: - Palmeiras S.A. ( Palmeiras ) Subsidiary that fully received cattle, inventory and contracts (including labor); such transfer to the subsidiary was concluded on June 30, 2017, as described in Note 1.6 to the financial statements of June 30, Agropecuária Moroti S.A. ( Moroti ) Subsidiary that received on February 9, 2018, upon conclusion of the formal spin-off process, all other assets and liabilities of Cresca attributed to BrasilAgro, including land and debts. On February 9, 2018, the spin-off of Cresca was concluded; the portion of assets and liabilities attributed to the was transferred to the wholly-owned subsidiary Agropecuária Moroti S.A. 19

22 As part of the spin-off, the and Carlos Casado, partners in the joint venture, decided to waive the interest for late payment on the loans taken by Cresca S.A. for the partners, in the total amount of R$32,963, and BrasilAgro s share was R$16,563 (Note 23). After the spin-off, considering that the came to have control of assets and liabilities that were earlier jointly controlled, as required by IFRS 3 Business Combinations, the assets acquired and liabilities assumed were measured once again at the fair value on the date of acquisition, and the gain/loss was booked in the result. The estimated fair value of the assets and liabilities spun off and transferred to Moroti on February 9, 2018 is shown below: Book value Effect of surplus value Fair value Assets 134,446 11, ,948 Accounts receivable, inventories and other receivables 4, ,652 Recoverable taxes 13 (13) - Investment properties 129,750 11, ,952 Other property and equipment other than land Liabilities 18,968 6,404 25,372 Trade payables, taxes and other liabilities 254 6,322 6,576 Loans 18, ,796 Fair value of net spun-off assets 115,478 5, ,576 As shown above, since the investment was recorded in the as R$115,478 and the fair value assessed was R$120,576, the recorded a gain of R$5,098 (Note 22).The fair value of assets and liabilities was estimated on a preliminary basis and concluded on, within the 12- month period allowed by IFRS 3 Business Combinations. Moreover, the had recorded the effects of conversion of investments abroad under other comprehensive income. After the spin-off, as required by the accounting principles, the accumulated effect of conversion of investments abroad (R$30,616) was written off from other comprehensive income and booked in the result of the year, under Other Operating Revenue (Expenses) (Note 22) Sale of Farm On May 3, 2018, the sold an area measuring 956 hectares (660 agricultural hectares) of the Araucária Farm. The area was sold for 1,208 soybean bags per usable hectare or R$66,224 par value. The transaction determined a down payment of 79,200 soybean bags in the amount of R$5,267, a second installment corresponding to the same number of soybean bags to be received on September 1, 2018 and the balance to be settled in six annual installments (Note 7.1.e Araucária V). The accounting impact on profit or loss is described in Note 19.b. 2. Basis of preparation and presentation The significant accounting policies applied when preparing these financial statements are described below. These policies are being consistently applied in all years presented, unless otherwise stated Basis of preparation 20

23 The individual and consolidated financial statements were prepared based on the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) and the accounting practices adopted in Brazil (BR GAAP), which comprise the Brazilian corporate law, as well as the Accounting Pronouncements, Guidelines and Interpretations issued by the Accounting Pronouncements Committee (CPC) and approved by the Securities and Exchange Commission of Brazil (CVM). The s Management affirms that all material information about the in the financial statements, and only such information, is being highlighted and corresponds to the information used by it in its management. The s Board of Directors is entitled to change the s annual individual and consolidated financial statements after their issuance. On August 24, 2018 the s Executive Board, Board of Directors and Fiscal Council approved the s individual and consolidated financial statements and authorized their issuance. The individual and consolidated financial statements have been prepared based on the historical cost, unless otherwise stated, as described in the summary of significant accounting policies. The financial statements have been prepared in the ordinary course of business. Management has not identified any significant uncertainty as to the s ability to continue as a going concern in the next 12 months. The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires Management s judgmental analysis when applying the s accounting practices. Those areas requiring a higher level of judgment and with more complexity, as well as the areas in which assumptions and estimates are significant for the consolidated financial statements, are disclosed in Note 3. The non-financial data included in these financial statements, such as sales volume, planted and leased area, quantity of farms and environment, has not been examined by the independent auditors. Basis of consolidation The consolidated financial statements comprise the financial statements of the and its subsidiaries as of and 2017, as shown in the table below and in the investment note - Note 11. Subsidiaries and joint venture (%) 6/30/2018 6/30/2017 Jaborandi Agrícola Jaborandi Cremaq Engenho Araucária Mogno Cajueiro Ceibo Flamboyant Palmeiras Moroti (a) Cresca (b) FIM Guardian exclusive fund (c)

24 (a) Subsidiary created during the Cresca spin-off process, as per Note 1.1. (b) Joint Venture its results are not consolidated and it is recorded as investment subject to equity in earnings of affiliates. (c) During the year, the closed its exclusive investment fund (FIM Guardian). The subsidiaries are fully consolidated from the date control was obtained, being consolidated up to the date on which the control no longer exists. The investor controls the investee when it is exposed to, or has rights on, variable returns arising from its involvement with the investee and has capacity to affect such returns through its power in the investee. The financial statements of the subsidiaries and the joint venture are prepared for the same disclosure period of the, using consistent accounting policies. All intragroup balances, revenues and expenses are fully eliminated in the consolidated financial statements Foreign currency translation a) Functional and presentation currency Items included in the financial statements of each of the subsidiaries headquartered in Brazil and the are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"), for which the functional and presentation currency is the Brazilian Real ( R$ ). For the subsidiaries Palmeiras S.A. ( Palmeiras ) and Agropecuária Moroti S.A. ( Moroti ) and the joint venture Cresca S.A. ( Cresca ), companies headquartered in Paraguay, the functional currency is the U.S. dollar. b) Transactions and balances in foreign currencies Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the transactions or valuations, when items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statements of operations. c) Foreign group companies In the preparation of the financial statements, the financial statements of the companies Palmeiras, Moroti and Cresca, whose functional currency is the U.S. dollar, are translated into reais as follows: a) Balance Sheet at the foreign exchange rate ruling at the end of each year and b) Statement of Operations, at the average foreign exchange rate of the year. The adjustments at fair value recognized in the constitution of the subsidiary Moroti are expressed in Moroti s functional currency and translated at foreign exchange rate ruling at the end of each year. The effects of variations in the foreign exchange rate resulting from these translations are presented under Equity adjustment in the statement of changes in equity and in the statement of comprehensive income. 22

25 2.3. Investments in subsidiaries and in joint venture The investments in subsidiaries and in joint venture are recorded on the equity method in the individual and consolidated financial statements. Joint venture is an agreement whereby the parties sharing joint control are entitled to the net assets of the joint ventures. Joint control is the contractual sharing of a control, existing only when decisions on the related activities require the unanimous consent of the parties Cash and cash equivalents and marketable securities Cash and cash equivalents includes cash, bank deposits maturing within 90 days from the date of contract and short-term highly liquid repurchase agreements for which there are no fines or other restrictions for their immediate redemption from the issuer of the instrument. Cash equivalents are recorded at cost plus earnings accrued up to the balance sheet dates, exceeding market or realization value. not Securities include the financial investments provided as guarantee for loans and financing recorded in current and noncurrent assets based on the maturities of referred to loans and financing. Considering the nature of investments held by the, there are no significant differences between their book value and the market value. Book balances are recorded at the original value plus earnings accrued up to the balance sheet date on a pro-rata temporis basis. Investments in bank deposit certificates and repurchase agreements may mature within more than 90 days from the date of contract, and may have repurchase guarantee contractually provided by the financial institution issuing the security, allowing the redemption of securities at the amount originally invested plus interest with no penalty. They are classified as cash and cash equivalents. Investments in deposit certificates that are not eligible for redemption without penalties are held in securities. Certain debt agreements require the to keep securities as guarantee for the outstanding balances. Such investments are linked while held in guarantee. The records the purchases and sales of such investments as investment activities in the statement of cash flows. The fixed income investments are intended to maintain the amounts held by the and not yet allocated to rural activities, and are governed by a policy approved by the Board of Directors. In the statement of cash flows, financing and investing activities include only transaction which actually impact cash and cash equivalents Financial instruments Classification and measurement In the years presented, the classifies its financial assets and liabilities within the following categories: measured at fair value through profit or loss, loans and receivables, and available for sale. Classification of financial assets and liabilities is determined at initial recognition. 23