Biosev S.A. Individual and Consolidated Financial Statements For the Year Ended March 31, 2017

Transcription

1 (Convenience Translation into English from the Original Previously Issued in Portuguese) Individual and Financial Statements For the Year Ended March 31, 2017

2 Deloitte Touche Tohmatsu Financial Statements March 31, 2017 CONTENTS INDEPENDENT AUDITOR S REPORT BALANCE SHEET STATEMENT OF OPERATIONS STATEMENT OF COMPREHENSIVE LOSS STATEMENT OF CHANGES IN EQUITY STATEMENT OF CASH FLOWS STATEMENT OF VALUE ADDED NOTES TO THE FINANCIAL STATEMENTS 1. GENERAL INFORMATION SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES CASH AND CASH EQUIVALENTS SHORT AND LONG-TERM INVESTMENTS TRADE RECEIVABLES INVENTORIES BIOLOGICAL ASSETS RECOVERABLE TAXES ESCROW DEPOSITS CURRENT AND DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION INVESTMENTS (PROVISION FOR INVESTMENT LOSS) PROPERTY, PLANT AND EQUIPMENT INTANGIBLE ASSETS BORROWINGS AND FINANCING TRADE PAYABLES TAXES AND CONTRIBUTIONS PAYABLE PROVISION FOR TAX, LABOR, CIVIL AND ENVIRONMENTAL CONTINGENCIES RELATED PARTIES EQUITY NET REVENUES AND COST OF SALES AND SERVICES EXPENSES BY NATURE FINANCE INCOME (EXPENSES) OTHER OPERATING INCOME (EXPENSES) LOSS PER SHARE RISK MANAGEMENT AND FINANCIAL INSTRUMENTS COMMITMENTS INSURANCE EMPLOYEES BENEFITS SEGMENT INFORMATION...78

3 30. NON-CASH TRANSACTIONS SUBSEQUENT EVENTS APPROVAL OF FINANCIAL STATEMENTS...80

4 Deloitte Touche Tohmatsu Dr. Chucri Zaidan Avenue, nº th to 12 th floors Golden Tower São Paulo SP Brazil Tel.: + 55 (11) Fax: + 55 (11) (Convenience Translation into English from the Original Previously Issued in Portuguese) INDEPENDENT AUDITOR S REPORT ON THE INDIVIDUAL AND CONSOLIDATED FINANCIAL STATEMENTS To the Shareholders and Management of Opinion We have audited the accompanying individual and consolidated financial statements of ( ), identified as parent and consolidated, respectively, which comprise the balance sheet as of March 31, 2017, and the statements of operations, comprehensive loss, changes in equity and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the individual and consolidated financial statements referred to above present fairly, in all material respects, the individual and consolidated financial position of as of March 31, 2017, and its individual and consolidated financial performance and its individual and consolidated cash flows for the year then ended in accordance with accounting practices adopted in Brazil and 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 the audit of the individual and consolidated financial statements section of our report. We are independent of the and its subsidiaries in accordance with the relevant ethical requirements of the Code of Ethics for Professional Accountants and the professional standards issued by the Brazilian Federal Accounting Council ( CFC ), 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 provide a basis for our audit opinion. Emphasis of matter Restatement of the prior year As mentioned in note 2.1. to the financial statements, due to the change in accounting policy introduced by the technical pronouncements CPC 29 - Biological Assets and Agricultural Produce and CPC 27 - Property, Plant and Equipment, equivalent to international standards IAS 41 - Agriculture and IAS 16 - Property, Plant and Equipment, respectively, the individual and consolidated financial statements for the years ended March 31, 2016 and 2015, presented for comparison purposes, were adjusted and are being restated as required by technical pronouncements CPC 23 - Accounting Policies, Changes in Accounting Estimates and Errors and CPC 26 (R1) - Presentation of Financial Statements. Our conclusion does not contain modifications related to this matter. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as "Deloitte Global") does not provide services to clients. Please see for a more detailed description of DTTL and its member firms. Deloitte provides audit, consulting, financial advisory, risk management, tax and relates services to public and private clients spanning multiple industries. Deloitte serves four out of five Fortune Global 500 companies through a globally connected network of member firms in more than 150 countries bringing world-class capabilities, insights, and high-quality service to address clients` most complex business challenges. To learn more about how Deloitte`s approximately 225,000 professionals make an impact that matters, please connect with us on Facebook, LinkedIn or Twitter Deloitte Touche Tohmatsu. All rights reserved.

5 Opinião Transactions with related parties The and its subsidiaries have carried out significant transactions with related parties of the Louis Dreyfus Group. The effects on results of these transactions and the corresponding assets and liabilities are disclosed in note 18. Our opinion is not modified with respect to this matter. 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. Liquidity management and going concern Given the s financial position as at March 31, 2017 and the indebtedness, recurring losses and negative shareholders equity, as mentioned in note 1, the conclusion that there is no relevant uncertainty regarding the going concern reflected a complex process and involved a high degree of judgment. This issue involved several important aspects, such as credit capacity and debt renegotiation, compliance with covenants, cash generation capacity and extent of financial support by the parent company. Our audit procedures included, among other things, analysis of the s business plan, assessment of the main assumptions adopted, and the Management s plans for liquidity management for the next 12 months. We reviewed the cash flow projected for the next 12 months in order to identify liquidity risk situations, and evaluated the main assumptions used by Management in preparing the subject projections, such as renewals of outstanding borrowings in that period, revenues, costs of products and projected administrative expenses. In addition, we focused on evaluating the adequacy of the disclosures made in the financial statements with respect to Management s conclusion regarding the s ability to continue operating as a going concern. Revenue recognition The revenue recognition by the involves different revenue streams due to the diverse contractual characteristics. There are sales of ethanol mainly for the domestic market, with different types of arrangements for delivery to the buyer, such as Cost, Insurance and Freight - CIF, Free On Board - FOB and bill and hold agreements. There are also sales of sugar to both domestic and foreign markets, under incoterms CIF, FOB, FOB- Port and bill and hold. On the perspective of revenue recognition, in addition to aspects such as the actual occurrence of transactions, such arrangements involve difficulties in determining the timing of sale, the so-called sales cutoff, when the seller effectively transfers all the benefits and property risks to the buyer. Our audit approach consisted of obtaining an understanding of the business flows and aspects of the arrangements, including controls, application of sample tests to confirm both occurrence and appropriate cutoff of the transactions and obtaining confirmations from sampled customers, regarding terms of sale and responsibility for ownership of products sold under different delivery arrangements Deloitte Touche Tohmatsu. All rights reserved.

6 Biological asset The is required to measure its biological assets at fair value, less costs to sell. The measurement of biological assets is significant for our audit, since the balance as at March 31, 2017 is material to the individual and consolidated financial statements, as described in note 7. In addition, the measurement process is complex, involving a high degree of judgment and some relevant unobservable assumptions. In this regard, fair value determination is based on specific valuation methodologies and use of assumptions, such as sugar and ethanol prices, expected sugarcane productivity, expected value and quantity of total recoverable sugar, which may be affected by factors which are not under the full control of the. Our audit approach, in this case, consisted of obtaining an understanding of the processes of pricing biological assets and the inputs (sources) of the assumptions used, a detailed review of the underlying data and the valuation methodology, using both the knowledge of valuation specialists and retrospective analysis. Risk management, derivatives and hedge accounting According to note 25 to the financial statements, the uses some strategies to hedge its future cash flows from the impact of relevant variables, such as the U.S. dollar exchange rate and the market price of the most traded type of sugar. These strategies consist of contracting derivative instruments specific to each type of risk (futures, swaps, forwards, etc.) that have their own valuation effects from the underlying financial instruments. In addition, some of these instruments are designated as a hedged object in relation to a specific and documented risk in order to harmonize the recognition on income of the instrument s impacts (derivative and non-derivative) and the object, which is known as hedge accounting. Our audit of these matters involved obtaining an understanding of the financial instruments entered into by the, including contractual aspects, and on the planning and design of instruments for hedge accounting purposes. Our work also involved obtaining confirmations from brokers and banks, reviewing and recalculating the valuation of derivatives and reviewing hedge accounting controls, in addition to the involvement of our valuation specialists in some cases. We also assessed the adequacy of the disclosures made by Management in the s financial statements. Tax, labor, civil and environmental risks Considering the high volume of litigation and the monetary value involved, as explained in note 17, combined with the complexity of tax legislation and frequent changes in laws and jurisprudence, constant monitoring is required by Management to identify, capture, record and disclose relevant changes that alter the amount and/or the likelihood of losses in relation to those risks. Our audit approach on the provision for risks consisted of developing an understanding of the work of the legal department and the processes of identification and capturing information, analysis of types of litigation and disputes and obtaining representation from the external legal advisors regarding awareness of the existence of litigation and disputes, amounts at risk and probabilities of loss for all major cases (mainly labor and civil). On labor cases, given the quantity of cases, our work depends on sampling and seeking the assessment on the subject chances of loss. Additionally, we assessed the adequacy of the disclosures made in the financial statements Deloitte Touche Tohmatsu. All rights reserved.

7 Other matters Statements of value added The individual and consolidated statements of value added for the year ended March 31, 2017, prepared under the responsibility of the s Management and disclosed as supplemental information for purposes of the IFRS, were subject to audit procedures performed together with the audit of the s financial statements. In forming our opinion, we assess whether these individual and consolidated statements of value added are reconciled with the financial statements and accounting records, as applicable, and whether their form and content are in accordance with the criteria set out in technical pronouncement CPC 09 - Statement of Value Added. In our opinion, these statements of value added were appropriately prepared, in all material respects, in accordance with the criteria set out in such technical pronouncement and are consistent in relation to the individual and consolidated financial statements taken as a whole. Other information accompanying the individual and consolidated financial statements and the independent auditor s report Management is responsible for the other information. The other information comprises 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 thereon. In connection with our audit of the individual and consolidated financial statements, our responsibility is to read the Management Report and, in doing so, consider whether this report is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement in the Management Report, we are required to report that fact. We have nothing to report in this regard. 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 the individual and consolidated financial statements in accordance with accounting practices adopted in Brazil and the IFRS, issued by the IASB, 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. 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 Deloitte Touche Tohmatsu. All rights reserved.

8 Auditor s responsibilities for the audit of the individual and consolidated financial statements Our objectives are to obtain reasonable assurance about whether the individual and consolidated financial statements as a whole 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 an audit 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 for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 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 the 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 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 ability of the and its subsidiaries 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 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 individual and consolidated financial statements, including the disclosures, and whether the individual and consolidated financial statements represent the underlying 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 s 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 control that we identify during our audit Deloitte Touche Tohmatsu. All rights reserved.

9 We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and, when applicable, related safeguards. From the matters communicated with those charged with governance, we 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. The accompanying individual and consolidated financial statements have been translated into English for the convenience of readers outside Brazil. São Paulo, June 1, 2017 DELOITTE TOUCHE TOHMATSU João Eugenio Leitão Fº Auditores Independentes Engagement Partner referidas apresentam adequadamente, em todos os aspectos relevantes, a posição patrimonial e financeira, individual e consolidada, da em 31 de março de 2016, o desempenho individual e consolidado de suas operações e os seus respectivos fluxos de caixa para o exercício findo naquela data, de acordo com as práticas contábeis adotadas no Brasil e com as normas internacionais de relatório financeiro (IFRSs), emitidas pelo IASB. Outros assuntos Demonstrações do valor adicionado Examinamos, também, as demonstrações individual e consolidada do valor adicionado (DVAs) referentes ao exercício findo em 31 de março de 2016, preparadas sob a responsabilidade da Administração da Companhia, cuja apresentação é requerida pela legislação societária brasileira para companhias abertas, e como informação suplementar pelas IFRSs, que não requerem a apresentação das DVAs. Essas demonstrações foram submetidas aos mesmos procedimentos de auditoria descritos anteriormente e, em nossa opinião, estão adequadamente apresentadas, em todos os seus aspectos relevantes, em relação às demonstrações financeiras tomadas em conjunto. São Paulo, 1º de junho de 2016 DELOITTE TOUCHE TOHMATSU Auditores Independentes CRC nº 2 SP /O-8 João Eugenio Leitão Filho Contador CRC nº 1 SP /O Deloitte Touche Tohmatsu. All rights reserved.

10 (Convenience Translation into English from the Original Previously Issued in Portuguese) BALANCE SHEET AS AT MARCH 31, 2017 (In thousands of Brazilian reais - R$) ASSETS Note (Restated) (Restated) (Restated) (Restated) LIABILITIES AND EQUITY Note (Restated) (Restated) (Restated) (Restated) CURRENT ASSETS CURRENT LIABILITIES Cash and cash equivalents 3 290, , ,625 1,463,438 1,826,121 1,946,971 Borrowings and financing , , ,339 1,944,007 1,830,913 1,615,579 Short-term investments 4 24, , , ,268 74,539 Advances from domestic customers 21,154 16,144 10,388 30,998 29,389 20,042 Derivative financial instruments ,482 46,077 21, ,708 46,077 21,998 Advances from foreign customers 465, , , , , ,075 Trade receivables 5 118,174 83, , , , ,679 Trade payables , , , , , ,073 Inventories 6 431, , , , , ,147 Accrued payroll and related taxes 61,050 71,200 66, , , ,849 Biological assets 7 530, , , , , ,720 Taxes payable 16 20,396 14,703 39,759 49,644 46,035 78,707 Recoverable taxes 8 141,261 72, , , , ,324 Derivative financial instruments 25 15, , ,586 28, , ,933 Other receivables 23,227 17,025 12, ,549 53, ,162 Other payables 81,881 82, , , , ,606 1,692,419 2,293,110 1,568,227 4,105,909 4,301,694 3,696,540 Total current liabilities 1,746,482 2,090,505 2,004,549 3,631,927 3,602,957 3,345,864 Assets held for sale ,506 3,506 2,779 1,692,419 2,293,110 1,568,227 4,109,415 4,305,200 3,699,319 NON-CURRENT LIABILITIES Borrowings and financing 14 1,614,768 1,652,310 1,628,513 4,344,647 4,881,016 4,711,664 NON-CURRENT ASSETS Advances from foreign customers 879, , ,800 2,427,670 2,149, ,400 Long-term receivables Trade payables 15 1, ,941 1,233 - Short-term investments 4 13,218 4,823 11,496 19,891 4,831 11,496 Deferred income tax and social contribution , ,636 44,719 66,679 Advances to suppliers 9,946 8,887 8,409 14,936 21,404 23,515 Derivative financial instruments ,236 47,668 48,730 Escrow deposits 9 168, ,252 66, , , ,491 Provision for tax, labor, civil and enviromental contingencies , , , , , ,590 Recoverable taxes 8 101, ,577 67, , , ,176 Taxes payable , ,975 Deferred income tax and social contribution , ,782 3, , ,445 Other payables 445, ,337 29,658 56,776 72,885 86,916 Other receivables 9,275 11, ,618 17,371 19,545 41,840 Provision for investment loss , , , Investments , , , , , ,029 Total non-current liabilities 3,808,426 3,693,398 2,364,356 7,318,188 7,535,515 6,347,954 Property, plant and equipment 12 2,372,269 2,336,375 2,468,484 4,489,025 4,489,503 4,761,927 Intangible assets 13 16,606 16,826 19, , , ,357 Total non-current assets 3,184,688 3,075,270 3,358,635 6,179,182 6,434,329 6,563,276 EQUITY Capital 19 2,618,214 2,618,214 2,618,214 2,618,214 2,618,214 2,618,214 Capital reserve 19 1,355,616 1,355,616 1,355,616 1,355,616 1,355,616 1,355,616 Accumulated losses (4,148,598) (3,548,466) (2,658,168) (4,148,598) (3,548,466) (2,658,168) Other comprehensive loss (503,033) (840,887) (757,705) (503,033) (840,887) (757,705) Total equity attributable to the 's owners (677,801) (415,523) 557,957 (677,801) (415,523) 557,957 Non-controlling interests ,283 16,580 10,820 Total equity (677,801) (415,523) 557,957 (661,518) (398,943) 568,777 TOTAL ASSETS 4,877,107 5,368,380 4,926,862 10,288,597 10,739,529 10,262,595 TOTAL LIABILITIES AND EQUITY 4,877,107 5,368,380 4,926,862 10,288,597 10,739,529 10,262,595 The accompanying notes are an integral part of these financial statements. 9

11 (Convenience Translation into English from the Original Previously Issued in Portuguese) STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2017 (In thousands of Brazilian reais - R$) Note (Restated) (Restated) NET REVENUE 20 3,062,234 3,012,861 7,025,054 6,162,648 Cost of sales and services 20 and 21 (2,864,461) (2,426,764) (6,394,521) (5,327,364) GROSS PROFIT 197, , , ,284 OPERATING INCOME (EXPENSES) (492,199) (580,004) (569,410) (483,492) General, administrative and selling 21 (258,610) (250,428) (598,344) (580,295) Equity in subsidiaries 11 (248,977) (336,533) (7,889) 6,095 Other operating income 23 74,155 67, , ,961 Other operating expenses 23 (58,767) (60,670) (83,790) (144,253) OPERATING INCOME (EXPENSES) BEFORE FINANCE INCOME (EXPENSES) (294,426) 6,093 61, ,792 Finance income 22 27,999 33,648 79, ,998 Finance expenses 22 (392,364) (289,742) (731,500) (683,009) Derivatives 22 (45,549) (248,108) (125,350) (206,476) Exchange rate changes ,533 (227,264) 327,398 (457,605) LOSS BEFORE TAXES (542,807) (725,373) (389,003) (881,300) INCOME TAX AND SOCIAL CONTRIBUTION 10.2 (57,325) (164,925) (211,426) (3,238) LOSS FOR THE YEAR (600,132) (890,298) (600,429) (884,538) Attributable to: 's ow ners 24 (600,132) (890,298) (600,132) (890,298) Non-controlling interests - - (297) 5,760 LOSS PER SHARE - R$ Basic 24 ( ) ( ) ( ) ( ) Diluted 24 ( ) ( ) ( ) ( ) The accompanying notes are an integral part of these financial statements. 10

12 (Convenience Translation into English from the Original Previously Issued in Portuguese) STATEMENT OF COMPREHENSIVE LOSS FOR THE YEAR ENDED MARCH 31, 2017 (In thousands of Brazilian reais - R$) Note (Restated) (Restated) LOSS FOR THE YEAR (600,132) (890,298) (600,429) (884,538) OTHER COMPREHENSIVE INCOME (LOSS) Items subsequently reclassified to profit or loss: Financial instruments - hedge accounting of futures 25 48,401 (168,731) 48,401 (168,731) Financial instruments - hedge accounting of Libor sw ap 25 32, , Financial instruments - hedge accounting of Non-Deliverable Forw ard (NDF) 25 29, ,935 29, ,935 Financial instruments - hedge accounting of exchange differences ,774 (125,100) 401,774 (125,100) Deferred income tax and social contribution related to components of other comprehensive income (loss) 10.3 (174,046) 42,852 (174,046) 42, ,854 (83,182) 337,854 (83,182) COMPREHENSIVE LOSS FOR THE YEAR (262,278) (973,480) (262,575) (967,720) Attributable to: 's ow ners (262,278) (973,480) (262,278) (973,480) Non-controlling interests - - (297) 5,760 The accompanying notes are an integral part of these financial statements. 11

13 (Convenience Translation into English from the Original Previously Issued in Portuguese) STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2017 (In thousands of Brazilian reais - R$) Other Capital Capital reserve comprehensive income (loss) Accumulated losses 's equity Non-controlling interests Total consolidated equity BALANCES AS AT MARCH 31, ,618,214 1,355,616 (757,705) (2,658,168) 557,957 10, ,777 Profit (loss) for the year (890,298) (890,298) 5,760 (884,538) Other comprehensive income (loss): Adjusted derivatives (hedge accounting), net of taxes - - (83,182) - (83,182) - (83,182) Comprehensive income (loss) for the year - - (83,182) (890,298) (973,480) 5,760 (967,720) BALANCES AS AT MARCH 31, ,618,214 1,355,616 (840,887) (3,548,466) (415,523) 16,580 (398,943) Loss for the year (600,132) (600,132) (297) (600,429) Other comprehensive income (loss): Adjusted derivatives (hedge accounting), net of taxes , , ,854 Comprehensive income (loss) for the year ,854 (600,132) (262,278) (297) (262,575) BALANCES AS AT MARCH 31, ,618,214 1,355,616 (503,033) (4,148,598) (677,801) 16,283 (661,518) The accompanying notes are an integral part of these financial statements. 12

14 (Convenience Translation into English from the Original Previously Issued in Portuguese) STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, 2017 (In thousands of Brazilian reais - R$) CASH FLOW FROM OPERATING ACTIVITIES Note (Restated) (Restated) Loss for the year (600,132) (890,298) (600,429) (884,538) Non-cash transactions: Depreciation and amortization , ,683 1,538,311 1,197,508 Loss (income) from sale of property, plant and equipment 23 (1,211) 6, ,876 Equity in subsidiaries , ,533 7,889 (6,095) Interest, exchange rate changes and inflation adjustments, net 39, ,572 (69,202) 971,763 Exchange, interest rate and commodities risk management 95, , , ,983 Recognition (reversal) of provision for tax, labor, civil and enviromental contingencies 14,398 4,387 7,639 (105,955) Recognition (reversal) of allow ance for doubtful accounts 5 (671) Reversal of impairment 12 (1,001) (8,176) (2,087) (8,764) Provision (reversal) of allow ance for negative margin and realization of storeroom inventories and advances to suppliers Gains on changes in fair value less estimated costs to sell biological assets Deferred income tax and social contribution , , ,282 20,374 Hedge operations 363,637 (111,729) 511,900 (126,034) Non-controlling interests (5,760) 1,036, ,606 1,494,794 1,021,605 Decrease (increase) in assets: Trade receivables 5 (30,007) 151,134 (108,206) 123,546 Inventories 6 31,757 (250,632) (43,728) (369,572) Assets held for sale (727) Derivative financial instruments 25 (86,405) (24,079) (139,631) (24,079) Recoverable taxes 8 (30,290) (43,699) (70,741) (67,417) Advances to suppliers (1,059) (478) 6,468 2,111 Other receivables (3,525) 123,879 (47,213) 203,758 (119,529) (43,875) (403,051) (132,380) Increase (decrease) in liabilities: Trade payables 15 95,072 99, , ,643 Advances from foreign customers (18,629) 627, ,018 1,346,099 Accrued payroll and related taxes (10,150) 4,371 (16,111) 15,871 Taxes payable 16 5,690 (28,028) 3,606 (35,644) Advances from domestic customers 5,010 5,756 1,609 9,347 Payments of labor, civil, tax and environmental contingencies 17 (7,639) (3,452) (38,658) (24,334) Derivative financial instruments 25.1 (259,420) (196,664) (340,450) (208,096) Other payables (106,405) 457,505 (14,463) (171,986) (296,471) 966,700 (27,176) 1,068,900 Cash provided by operating activities, net interest 620,007 1,538,431 1,064,567 1,958,125 Dividends - - 3,379 10,981 Interest paid on borrow ings and financing (215,278) (184,232) (463,339) (430,963) Cash provided by operating activities 404,729 1,354, ,607 1,538, e 21 8,421 (36,297) 4,608 (35,776) (126,167) (74,887) (245,460) (125,958) CASH FLOW FROM INVESTING ACTIVITIES Increase in escrow deposits 9 (42,267) (60,104) (65,089) (76,386) Decrease (increase) in short-term investments 4 120,639 (136,437) 286,092 (156,570) Decrease (increase) in investments (provision for investment loss) 11 (287,804) 27, Increase in property, plant and equipment 12 (476,854) (195,631) (803,295) (388,421) Additions to biological assets 7 (301,201) (424,693) (484,854) (702,952) Additions to intangible assets 13 (8,559) (8,552) (8,778) (11,174) Investment in subsidiary 13 - (2,500) 10,000 - Cash used in investing activities (996,046) (800,147) (1,065,924) (1,335,016) CASH FLOW FROM FINANCING ACTIVITIES Borrow ings and financing 14 1,395,398 1,546,202 3,322,274 3,614,120 Payment of borrow ings and financing 14 (1,373,266) (1,817,792) (3,223,640) (3,938,097) Cash provided by (used in) financing activities 22,132 (271,590) 98,634 (323,977) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (569,185) 282,462 (362,683) (120,850) Cash and cash equivalents at the beginning of year 3 860, ,625 1,826,121 1,946,971 Cash and cash equivalents at the end of year 3 290, ,087 1,463,438 1,826,121 The accompanying notes are an integral part of these financial statements. 13

15 (Convenience Translation into English from the Original Previously Issued in Portuguese) STATEMENT OF VALUE ADDED FOR THE YEAR ENDED MARCH 31, 2017 (In thousands of Brazilian reais - R$) Note (Restated) (Restated) 1 - REVENUE 3,278,537 3,184,564 7,501,805 6,651, ) Sales 20 3,203,711 3,117,742 7,381,313 6,417, ) Allowance for doubtful accounts - provision (reversal) (805) (121) (981) 1.3) Other operating revenues 23 74,155 67, , , INPUTS PURCHASED FROM THIRD PARTIES (1,648,459) (1,515,130) (4,379,637) (3,803,414) 2.1) Cost of products sold (2,062,786) (1,889,371) (5,152,210) (4,311,997) Cost of products sold, net of taxes 21 (1,807,382) (1,603,986) (4,641,262) (3,830,655) Recoverable taxes (255,404) (285,385) (510,948) (481,342) 2.2) Materials, electric pow er, external services and other (413,857) (232,289) (196,436) (424,453) 2.3) Gains on changes in fair value of biological assets and other 828, , , , GROSS VALUE ADDEED (1-2) 1,630,078 1,669,434 3,122,168 2,847, DEPRECIATION AND AMORTIZATION 21 (937,673) (682,683) (1,538,311) (1,197,508) 5 - VALUE ADDED CREATED BY THE ENTITY (3-4) 692, ,751 1,583,857 1,650, VALUE ADDED RECEIVED IN TRANSFER 6,250,185 (36,987) 6,636, , ) Equity in subsidiaries 11 (248,977) (336,533) (7,889) 6, ) Finance income 6,499, ,546 6,644, , VALUE ADDED FOR DISTRIBUTION (5+6) 6,942, ,764 8,220,198 2,136, DISTRIBUTION OF VALUE ADDED 6,942, ,764 8,220,198 2,136, ) Personnel and payroll taxes , , , ,440 Direct compensation 214, , , ,772 Benefits 70,936 76, , ,128 Severance pay fund (FGTS) 34,702 31,481 62,434 58, ) Taxes, rates and contributions 212, , , ,590 Federal 53, , ,425 74,312 State 159, , , ,951 Municipal ) Third-party capital use 7,009,810 1,238,201 7,622,173 2,121,936 Rentals 262, , , ,805 Interest and exchange rate changes 6,747,543 1,031,012 7,094,356 1,713, ) Equity capital (600,132) (890,298) (600,429) (884,538) Loss for the year (600,132) (890,298) (600,429) (884,538) The accompanying notes are an integral part of these financial statements. 14

16 1. GENERAL INFORMATION ( ), headquartered at Avenida Brigadeiro Faria Lima, 1355, 11º andar, Pinheiros, São Paulo, SP, and its subsidiaries (collectively Group ) are engaged in the production, processing and sale of agricultural products, primarily sugarcane and its byproducts; agricultural operations in -owned or third-party land; exports, imports and sale of petroleum byproducts, lubricants, fuel, grease and hydrated ethyl alcohol; purchase, sale, imports and exports of agricultural products and their byproducts; and the generation and sale of electricity. The Group comprises the activities of 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 Finance International B.V, based in the Netherlands, which is 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 (ii) Biosev Comercializadora de Energia 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. 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: Leme (located in the State of São Paulo) and Lagoa da Prata (located in the State of Minas Gerais) plants. The is directly controlled by Sugar Holdings BV, which holds 59.58% of its shares. Sugar Holdings BV is a subsidiary of the Louis Dreyfus Group. As described in the financial statements, the has a relatively high leverage ratio. The consolidated balance of debt falling due during the next 12 (twelve) months amounts to R$1,944,007 against balances of cash and short-term investments amounting to R$1,570,236 as of March 31, Several measures have been adopted by the s management in order to adjust its indebtedness profile. In particular, the seeks to maximize the use of its assets without impacting its strict financial discipline, in order to increase its operating efficiency and production to meet and maintain a positive free cash flow. The has recorded losses over the last years, mainly due to the negative exchange rate impacts on foreign currency-denominated debt and adverse climate events. The recorded net losses of R$600,429 and R$884,538 for the years ended March 31, 2017 and 2016, respectively. The s ability to continue as a going concern depends on additional capital, renewal of outstanding credit facilities and, ultimately, generation of profitable operations. Specifically, the s and its subsidiaries debt levels may have significant effects on the business, including the capacity to finance working capital and perform recurring capital disbursements, considering the funds necessary to pay debt service. Although there are no guarantees that the will be able to generate sufficient cash flows to finance the operations and meet debt repayments, the s management expects that the current cash balances and credit facilities, as well as the respective operations, will be sufficient to meet the working capital needs, capital expenses, debt service and other needs for the next year. In the event sufficient cash is not generated to support the operations in progress, the will have to obtain additional funds from other sources. The may need to refinance, totally or partially, its debts, which may require more onerous terms and all the effects thereof. Notwithstanding the above, the has been successful in renewing its credit facilities and has obtained continuous financial support from its controlling shareholder through advances for future sales. In this regard, during the year, the renewed a significant portion of its trade financing facilities for at least two years, in the amount of approximately R$1,910,000 (ACC Umbrella of US$430,000 and prepaid exports of US$167,000), and received advances from the related 15

17 party amounting to approximately R$735,000. The s management has also been considering raising new funds from trade finance lines and executing a public offering of shares in Brazil and abroad (as previously disclosed). 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES 2.1 Statement of compliance and basis of preparation The individual and consolidated financial statements were 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. 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). As there is no difference between the consolidated equity and the consolidated profit attributable to the s owners, disclosed in the consolidated financial statements prepared in accordance with IFRSs and the accounting practices adopted in Brazil, and the s equity and profit or loss disclosed in the individual financial statements prepared in accordance with accounting practices adopted in Brazil, the 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. 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 s management and other factors that are considered to be relevant. Actual results may differ from these estimates. Management undertakes that all relevant information related to the financial statements, and only such information, is being highlighted and corresponds to the information used by management in this management. 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 financial statements presented, except as otherwise indicated New and revised standards and interpretations a) Standards, interpretations and revised standards not yet effective and which were not early adopted by the. The standards and amendments to the standards below were published and are mandatory for periods beginning after March 31, However, the did not early adopt or amend them. Standard Main requirements Effective date IFRS 15/CPC 47 Revenue Recognition IFRS 15 sets forth that the revenue is recognized in order to reflect the transfer of goods or services to the customers at an amount representing the company s expectations to receive back the rights relating to such products or services. Effective for periods beginning on or after January 1, IFRS 9/CPC 48 "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 new standard introduced a new expected-loss impairment model and restructured the Effective for periods beginning on or after January 1,

18 hedge accounting model. IFRS 16 Leases. IFRS 16 replaces IAS 17 and related interpretations and sets forth the principles for lease recognition, measurement, presentation and disclosure. Effective for periods beginning on or after January 1, These standards, revised standards and interpretations are effective for annual financial statements beginning on or after 2017 and were not used in preparing these financial statements. The does not expect that these new standards will have a material effect on the Group s financial statements, except for IFRS 9 Financial Instruments, which may change the classification and measurement of the financial assets held by the Group and IFRS 16 Leases, which may change the recognition, measurement, presentation and disclosure of leases. The does not intend to adopt these standards in advance and the related effects have not been measured. The CPC has not yet issued the pronouncement related to the IFRS 16 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, this standard is expected to be issued by CPC and approved by CFC and CVM by the date they become effective. b) Standards, interpretations and revised standards in effect as at March 31, 2016, which had a material impact on the s financial statements. The amendments to CPC 27/IAS 16 and CPC 29/IAS 41 are mandatory for the year beginning January 1, 2016 and were adopted in the preparation of these financial statements. Standard Main requirements Effective date These pronouncements set forth that the plants used in the production of agricultural products, wich more than one period, which can be remotely sold as agricultural products, are to be measured at historical cost instead of fair value. CPC 27/IAS 16 and CPC 29/IAS 41 Effective for periods beginning on or after January 1, Under CPC 29 and CPC 27, sugarcane ratoons are classified as the bearer plant for standing sugarcane, which is the consumable biological asset. As a result, the sugarcane plantation (ratoons) will be reclassified to property, plant and equipment, measured by the amortized cost and depreciated over its useful live, in a descending order, based on the expected productivity under CPC 27. The consumable biological assets continues to be measured at fair value less sales cost, and become to be disclosed in current assets considering the maturity of sugarcane is twelve months, nonetheless can be harvested up to eighteen months. The adopted the transition rule that allows companies to apply the fair value of the bearer plant as deemed cost at the beginning of the earliest period disclosed in the financial statements. 17

19 The adoption of the standard adjusted the equity balances and profit or loss disclosed in the financial statements for the years ended March 31, 2015 and 2016, as follows: Balance Sheet Disclosed Adjustments Restated Disclosed Adjustments Restated ASSETS CURRENT ASSETS Biological assets - 381, , , ,819 NONCURRENT ASSETS Deferred income tax and social contribution ,141 1,141 Biological assets 1,083,387 (1,083,387) - 1,836,758 (1,836,758) - Property, plant and equipment 1,766, ,057 2,468,484 1,693, ,235 2,336,375 CURRENT LIABILITIES NONCURRENT LIABILITIES Deferred income tax and social contribution ,338 (215,338) - Allow ance for losses on investments , , ,517 EQUITY Accumulated losses (2,936,585) (611,881) (3,548,466) Balance Sheet Disclosed Adjustments Restated Disclosed Adjustments Restated ASSETS CURRENT ASSETS Biological assets - 541, , , ,707 NONCURRENT ASSETS Deferred income tax and social contribution ,090 99, ,963 Biological assets 1,685,048 (1,685,048) - 2,834,735 (2,834,735) - Property, plant and equipment 3,618,599 1,143,328 4,761,927 3,468,567 1,020,936 4,489,503 CURRENT LIABILITIES NONCURRENT LIABILITIES Deferred income tax and social contribution ,057 (215,338) 44,719 EQUITY Accumulated losses (2,936,585) (611,881) (3,548,466) Statement of Operations Disclosed Adjustments Restated Disclosed Adjustments Restated Cost of sales and revenues (1,790,060) (636,704) (2,426,764) (4,400,272) (927,092) (5,327,364) Equity in subsidiaries (144,877) (191,656) (336,533) 6,095-6,095 Income tax and social contribution (381,404) 216,479 (164,925) (318,449) 315,211 (3,238) Statement of Cash Flows Disclosed Adjustments Restated Disclosed Adjustments Restated Loss for the year (278,417) (611,881) (890,298) (272,657) (611,881) (884,538) Non-cash transactions: Depreciation and amortization 653,077 29, ,683 1,137,499 60,009 1,197,508 Equity in subsidiaries 144, , ,533 (6,095) - (6,095) Gains (losses) on changes in fair value less of biological assets, less estimated sales costs (681,985) 607,098 (74,887) (993,041) 867,083 (125,958) Deferred inome tax and social contribution 399,667 (216,479) 183, ,585 (315,211) 20,374 18

20 2.2 Basis of consolidation and investments in subsidiaries Subsidiaries are all the entities with financial and operating policies of which the 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 controls or not another entity. Subsidiaries are fully consolidated from the date in which share control is transferred to the 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. 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 are: (a) sum of the balances of assets, liabilities, revenues 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 s equity interests in subsidiaries that do not result in loss of control by the are recognized as capital transactions. The carrying amounts of the 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 s owners. When the loses 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 income (loss) and accumulated in equity, the amounts previously recognized in Other comprehensive income (loss) and accumulated in equity are accounted for as if the 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. 2.3 Business combination 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 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. 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. No impairment loss has been identified on the s goodwill for the year ended March 31,

21 2.4 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 s management aggregated the products in a single operating segment. Therefore, the s reportable segment pursuant to CPC 22 Informações por Segmento/IFRS 8 Operating Segments is Sugar, Ethanol and Energy The segment information is based on the information used by Management, where the and its subsidiaries were defined as a single business segment, even though margin performance monitoring is carried out separately on the main products. The chief operating decision maker assesses the performance of operating segments based on the products margin and geographical information. According to the and its subsidiaries structure, the analyses are conducted on the following products of the reportable segment: Sugar; Ethanol; Energy; Other products. 2.5 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 operates ( functional currency ). The s consolidated financial statements are presented in Brazilian reais (R$), which is the s functional and reporting currency. 2.6 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 income (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. 20

22 2.7 Cash and cash equivalents Cash and cash equivalents include cash, demand deposits and short-term investments, and 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 financial statements, not exceeding the negotiated amount. 2.8 Short-term investments Consist of temporary investments held to maturity, which exceed 90 days, and are stated at cost plus income earned through the end of the financial statements, not exceeding fair or realizable values. 2.9 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 financial statements. Allowance for doubtful accounts 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 s management to cover possible losses on amounts receivable 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. 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 Agri-Industrial cluster. Additionally, the recognized allowances for losses on inventory items whose estimated sales price is lower than the purchase price and/or the production cost, and also for slow-moving and possibly obsolete items 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 12. 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 Group conducts the main scheduled maintenances of its plants on an annual basis. Scheduled maintenances are conducted between 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 manufacturing costs) assets when replaced and are depreciated over the following crop period. The sugarcane plantation (ratoons) is classified as property, plant and equipment, measured by the amortized cost and will be depreciated over its useful live, in a descending order, based on the expected productivity under CPC 27. Useful lives of property, plant and equipment The reviews the useful lives of property, plant and equipment items on an annual basis at the end of each financial statements. 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 these items are recognized prospectively in the s financial statements. 21

23 2.12 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. The did not identify borrowing costs attributable directly to the acquisition, construction or production of qualifying assets in these financial statements Biological assets CPC 29 Ativo Biológico e Produto Agrícola / IAS 41 Agriculture prescribes the accounting treatment of activities that involve biological assets, except bearer plants, or agricultural produce (at the point of harvest). Biological assets and the related agricultural produce are recognized at fair value less estimated point-of-sale costs and is disclosed in current assets considering that the sugarcane matures within twelve months and can be harvested up to eighteen months. To meet this requirement, the adopted the economic and financial valuation of sugarcane biological assets using the discounted cash flow method; 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. The change in the fair value of biological assets is recognized in the statement of operations, in line item Cost of sales and services. The realized portion results from the consumption of the portion at fair value allocated to inventories 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 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 financial statements, 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. 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 profit or loss when the asset is derecognized. 22

24 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 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 (or a cashgenerating unit) in prior years. The reversal of the impairment loss is promptly recognized in profit or loss. As at March 31, 2017, the has not identified evidence that the value of its assets is less than the realizable value Other current and non-current assets and liabilities Carried at cost, adjusted for inflation and net of allowance for non-realization, if applicable. 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 their present value, the estimates future cash flows generated by the related cash-generating units, using an appropriate discount rate, according to the s management. The analyzed the present value of long-term assets and liabilities based on the abovementioned assumptions as at March 31, 2017 and adjusted some assets and liabilities to present value. In relation to the assets and liabilities resulting from short-term operations, the effects are not significant and, therefore, no adjustments were recorded Related parties The has internal rules and policies to regulate and perform the related-party transactions at usual market prices, conditions and costs, or according to the business conditions previously performed on a commutative basis or, in the absence of usual market conditions and previous business, contracted on a commutative basis, according to the s best interests and clearly disclosed in the financial statements. 23

25 For purposes of related-party transaction policy, market conditions are those carried out according to the market principles, such as competition (service prices and conditions compatible to the market, if applicable or possible); adequacy (adhesion of the services to the s contractual terms and responsibilities, as well as proper information security control); and transparency (proper disclosure of the agreed conditions and correct application, as well as respective effects in the s financial statements) 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. According to CPC 08 (R1) Custo de Transação, the costs of transaction incurred in raising funds through the contracting of loans and/or financing are recognized as a reduction of the amount received and allocated to the profit and loss over the agreement at amortized cost applying the effective interes method 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. As at March 31, 2017, the s leases are classified as operating leases. 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 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 financial statements, including 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 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 financial statements 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 financial statements. 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 statements. 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. 24

26 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 financial statement and reduced to the extent that their realization is no longer probable Provision for tax, labor, civil, and environmental contingencies The 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 does not recognize any provision. The 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 s legal counsel 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 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. Provisions maintained on the balance sheet refer to losses arising from disputes based on the estimated probability based on the assessment of its legal counsel, probable loss or when required by the accounting standards, and the loss in similar cases in history. Updating of provisions occurs monthly, plus applicable interest. Provisions is reviewed at the end of financial statements and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed, as described in Note 17. As at March 31, 2017, 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 Financial instruments (a) Classification Financial assets and financial liabilities held by the 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, 2017, 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 in the statements of operations, except if the financial instruments are designated as effective hedge, in which case they are treated as described in item (c) below. (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, 2017, this category includes the s short-term investments. 25

27 (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 financial statements, when applicable, which are classified as non-current assets. As at March 31, 2017, comprise cash and cash equivalents, trade receivables and other receivables. (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, 2017, 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 (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 profit or loss. The fair value is determined as described in Note 25. (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. 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. 26

28 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 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 when earned or incurred. Changes in financial assets classified as Available for sale, when applicable, are recorded in Other comprehensive income (loss) until the financial assets are settled, when they are ultimately reclassified to profit or loss. (c) Derivatives and hedging activities The has derivatives whose management is performed by establishing strategies and control systems, setting limits for positions and exposure, and monitoring the risks involved. The 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 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 s revenues and, consequently, the generation of cash, derives from prices denominated in US dollars. The 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 documents its risk management strategy and policies on the commencement date of the hedging relationship. The also documents hedging effectiveness tests on designation and subsequent dates. (d) Embedded derivative The 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 did not identify embedded derivatives in the transactions recognized in these financial statements. (e) Measurement of derivative financial instruments The 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 s accounting practices to transactions with derivatives classified as future cash flow hedges, the 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 income (loss) and recognized in profit or loss when the hedged item is realized. The uses appropriate valuation techniques and assumptions to determine the fair values of financial instruments and derivatives, and appropriate projection and monitoring tools. 27

29 2.24 Assets held for sale The assets held for sale were classified according to technical pronouncement CPC 31/IFRS 5 - Ativo Não Circulante Mantido para Venda e Operação Descontinuada/IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Conclusion of the sale of these assets requires the approval of the non-controlling shareholders that extended the period necessary to complete the sale beyond one year. The actions required to obtain these approvals may not be initiated until a buyer is known and a firm purchase commitment is obtained. Therefore, the s management maintains a firm commitment that the sales of these assets is highly probable and with the technical pronouncement CPC 31/IFRS 5 to be classified as assets held for sale. 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 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 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. Contracts of bill and hold sales delivery of the merchandise is delayed at the buyer s request, revenue is recognized when (i) the buyer becomes the owner, (ii) the buyer provides specific instructions related to the delivery, (iii) the conditions of payment are those usually practiced by the and (iv) the product is in the 's inventory identified and ready for delivery to the buyer. 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 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. 28

30 2.28 Earnings (loss) per share Basic and diluted earnings (loss) per share are calculated by means of the net profit (loss) for the year attributable to the 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 liquidation, without premium Employees benefits (i) Employees benefits The offers its employees a pension plan defined contribution 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 retirement. The 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 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. (ii) Profit sharing and bonuses Employees profit sharing and executives variable compensation are linked to the achievement of operating and financial targets. The recognizes a liability and an expense allocated to production costs and general and administrative expenses when such goals are met Statement of value added (DVA) The purpose of this statement is to disclose the wealth created by the and its distribution during a certain financial statements, and is presented by the, 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, 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. CASH AND CASH EQUIVALENTS Cash and banks 210, ,271 1,217,382 1,520,727 Short-term investments 52, , , ,888 Debentures 28,409 68, , , , ,087 1,463,438 1,826,121 29

31 Short-term investments refer to floating rate Certificates of Bank Deposit (CDBs) and/or CDBs indexed at rates ranging from 5% to 102% of the Interbank Deposit Rate (CDI) as at March 31, 2017 (96% to 102% as at March 31, 2016). The CDBs investments are subjected to repurchase commitments by the financial institutions issuers and/or custodians. Debentures not subject to Tax on Financial Transactions (IOF) are issued from local prime financial institutions indexed to rates ranging from 50% to 99.5% of CDI as at March 31, 2017 (80% to 101% as at March 31, 2016). 4. SHORT AND LONG-TERM INVESTMENTS Short and long-term investments 34, , , ,802 Fixed-income investment fund 3,253-9,787 1,297 38, , , ,099 Current assets 24, , , ,268 Non-current assets 13,218 4,823 19,891 4,831 Short and long-term investments refer to restricted deposits and are operations represented by (i) floating rate Certificates of Bank Deposit (CDBs) and/or CDBs indexed at rates ranging from 90% to 100% of the Interbank Deposit Rate (CDI) as at March 31, 2017 (90% to 102% as at March 31, 2016); and (ii) margin deposits in derivative operations. Out of the total fixed-income investment fund as at March 31, 2017, R$3,253, in, and R$9,759, in, refers to the quotas of Bellatrix Fundo de Investimento em Direitos Creditórios (FIDC), and to the value of R$1,006 (in reais). 5. TRADE RECEIVABLES Related parties (Note 18) In Brazil 2,396 5, Abroad 31,659 38,497 10,247 30,296 34,055 43,995 10,280 30,450 Third parties In Brazil 84,492 40, ,730 90,202 Abroad ,403 49,014 84,518 40, , , ,573 84, , ,666 (-) Allow ance for doubtful accounts (399) (1,070) (13,787) (13,666) 118,174 83, , ,000 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, 2017, the balance of overdue items in the line Trade receivables (see the aging list below) amounts to R$3,166, in, and R$18,774 in (R$11,633 and R$22,497, as at March 31, 2016, respectively). Out of this total, R$399, in, and R$13,787, in, as at March 31, 2017 (R$1,070 and R$13,666, as at March 31, 2016, respectively) are recorded in allowance for doubtful accounts in the aging list below. The remaining balance of R$2,767, in, and R$4,987, in, as at March 31, 2017 (R$10,563 and R$8,831, as at March 31, 2016, respectively) 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. 30

32 The aging list of trade receivables is as follows: Current 115,407 73, , ,169 Overdue Up to 30 days 2,471 4,300 3,959 4, to 60 days 154 5, , to 90 days to 180 days 158 1, ,073 Over 180 days ,178 13, ,573 84, , ,666 The change in the allowance for doubtful accounts is as follows: Balance at the beginning of the year (1,070) (265) (13,666) (12,685) Impairment losses recognized on receivables (2,098) (4,094) (5,596) (4,654) Uncollectable amounts derecognized in the year Amounts recovered in the year 2,194 3,242 4,797 3,598 (399) (1,070) (13,787) (13,666) The breakdown of the allowance for doubtful accounts per due date is as follows: to 90 days (35) (3) (366) (45) 91 to 180 days (44) (875) (243) (954) Over 180 days (320) (192) (13,178) (12,667) (399) (1,070) (13,787) (13,666) The overdue items not included in the allowance for doubtful accounts are broken down as follows: Up to 30 days 2,471 4,300 3,959 4, to 60 days 154 5, , to 90 days to 180 days ,119 Over 180 days ,767 10,563 4,987 8,831 The income (expense) 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. 31

33 6. INVENTORIES Finished products Sugar 51,147 77,807 64,711 89,525 Ethanol 85,762 98, , ,992 Sugar syrup 6,604 2,654 9,550 4,943 Other (*) 37,828 30,983 70,496 39,882 Allow ance for negative inventory margin (11,026) (2,668) (20,873) (16,448) 170, , , ,894 Raw materials and packaging materials 2,048 1,886 3,076 2,724 Storeroom supplies 61,562 58, ,441 92,795 Allow ance for realization of storeroom inventories (3,996) (3,933) (5,701) (5,518) Advances to suppliers (**) 201, , , , , , , , , , , ,533 (*) Out of total consolidated amount as at March 31, 2017, R$30,697, in, and R$56,703 in (R$29,665 as at March 31, 2016) refers to export of commodities, as described in Note 18. (**) Out of total amount as at March 31, 2017, R$89,056, in, and R$258,585 in (R$57,769 and R$208,243 as at March 31, 2016, respectively) refer to advances to sugarcane suppliers that are adjusted on a monthly basis according to the specific conditions and indices set forth in the agreements, and R$112,058, in, and R$200,566, in (R$185,232 and R$239,395 as at March 31, 2016, respectively), refers to export prepayment of commodities, as described in Note 18. The changes in the allowance for negative inventory margin and realization of storeroom inventories are broken down as follows: Negative inventory margin Opening balance (2,668) (6,321) (16,448) (13,028) Additions (11,026) (2,668) (20,873) (16,448) Reversals 2,668 6,321 16,448 13,028 (11,026) (2,668) (20,873) (16,448) Realization of storeroom inventories Opening balance (3,933) (12,919) (5,518) (19,598) Additions (2,860) (7,022) (3,845) (10,344) Reversals 2,797 16,008 3,662 24,424 (3,996) (3,933) (5,701) (5,518) The allowance for negative inventory margin 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 realization of storeroom inventories, considering obsolete and slow-moving items is recognized on a quarterly basis based on inventory management procedure of storeroom inventories duly approved by the. The estimated storeroom inventories realizable after 12 months is R$18,184 as at March 31, 2017 (R$3,417 as at March 31, 2016). The amount of the s inventories recognized as cost of sales and services as at March 31, 2017 is R$2,864,461, in, and R$6,394,521 in (R$2,426,764 and R$5,327,364 in the year ended March 31, 2016, respectively). 32

34 7. BIOLOGICAL ASSETS (Restated) (Restated) Opening balance 556, , , ,720 Increases arising from expenses on sugarcane crops and crop treatments 509, ,531 1,020, ,759 1,065, ,861 1,907,405 1,416,479 Gains on changes in fair value less estimated costs to sell 126,167 74, , ,958 Sugarcane harvest at fair value in the year (661,244) (327,599) (1,209,108) (655,400) Write-off (269) (330) (269) (330) 530, , , ,707 When determining the fair value, the takes the following into consideration: Valuation methodology The discounted cash flow is the method used for the economic and financial evaluation of sugarcane biological assets. Discount rate The discount rate used to calculate the discounted cash flow was 11.02%, 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 for a six-year period (one cycle). The sugarcane from third parties 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. The formula of Conselho dos Produtores de Cana-de-Açúcar e Álcool (CONSECANA) calculates the consideration per ton of sugarcane based on: a) The volume of ATR/KG 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: (Restated) (Restated) Estimated harvest area (in hectares) 184, , , ,427 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 11.02% 11.02% 11.02% 11.02% 33

35 As at March 31, 2017, the provided as guarantee for the export prepayment 226,034 hectares (226,034 hectares as at March 31, 2016), equivalent to approximately 20,030,303 tons of sugarcane (18,806,632 as at March 31, 2016), at fair value approximated of R$691,499 (R$687,740 as at March 31, 2016). Such prepayment falls due between April 2018 and September The is exposed to certain risks related to its plantations, such as (i) supply and demand, which continually monitors the market for its products and performs trend analyzes that feed the trading strategy regularly and where volumes are defined and / or adjusted (ii) regulatory and environmental, subject to specific laws and regulations, which monitors establishing policies and procedures aimed at compliance with these laws and (iii) climate, exposed to risks of damages caused by changes monitoring the evolution in its routine and acting in a strategic way in the management of sugar cane fields, in order to minimize risks and exposures of biological assets. The acts in the optimization of the harvest sequence avoiding critical periods of droughts and frosts, use of irrigation for units in regions of low water regime, management of varieties according to the edaphoclimatic environments, in addition to good agricultural practices applied in the field, Aiming at maintaining the productivity of sugarcane plantations. 8. RECOVERABLE TAXES State VAT (ICMS) 55,816 54,296 68,278 66,188 Taxes on revenue (PIS and COFINS) (a) 119, , , ,595 Witholding income tax (IRRF) on short-term investments and prepayments 59,766 52, ,328 83,878 Excise Tax (IPI) and other taxes 7,758 5,905 31,277 10, , , , ,917 Current assets 141,261 72, , ,529 Non-current assets 101, , , ,388 (a) Refers to PIS and COFINS credits related to: (i) Law 10637/02 which addresses the non-cumulativeness of PIS/PASEP; (ii) Law 10833/03 which addresses the non-cumulativeness of COFINS, PIS and PASEP; (iii) Law 11774/2008, which addresses the PIS/COFINS credits on property, plant and equipment; (iv) Law 13043/14 relating to the Special Tax Reintegration Regime for Exporting Companies (REINTEGRA) and (v) Law / 13, PIS and COFINS as deemed credits on ethanol finished on December 31, ESCROW DEPOSITS Civil 1,222 1,176 6,433 6,196 Environmental 1,450 1,074 6,851 6,274 2,672 2,250 13,284 12,470 Tax law suits Federal VAT (IPI) 4,887 4,361 16,191 16,306 Income tax (IRPJ)/Social Contribution (CSLL) 34,131 31,982 42,968 40,128 ICMS, PIS and COFINS 17,611 17,770 24,059 23,201 Social security contributions 23,337 17,397 30,272 23,876 Other , ,975 71, , ,440 Labor Labor appeals 85,872 52, , ,967 85,872 52, , , , , , ,877 34

36 The changes in the s escrow deposits are as follows: Opening balance 126,252 66, , ,491 Additions 52,120 68,755 89,060 99,287 Offsets/redemptions (9,853) (8,651) (23,971) (22,901) 168, , , , CURRENT AND DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION 10.1 Deferred income tax and social contribution assets and liabilities disclosed in balance sheet (Restated) (Restated) Deferred income tax and social contribution assets - 1,141 3, ,963 Deferred income tax and social contribution liabilities (81,967) - (163,636) (44,719) (81,967) 1,141 (160,084) 219, Income tax and social contribution recognized in profit or loss (Restated) (Restated) Results from current income tax and social contribution - 18,263 (6,144) 17,136 Results from deferred income tax and social contribution related to the origin and reversal of temporary differences and tax loss carryforw ards (57,325) (183,188) (205,282) (20,374) (57,325) (164,925) (211,426) (3,238) 10.3 Income tax and social contribution recognized in other comprehensive income (loss) Results from deferred income tax and social contribution recognized in other comprehensive income (loss): Financial instruments - hedge accounting of futures (16,456) 65,119 (16,456) 57,369 Financial instruments - hedge accounting of Sw ap Libor - - (10,999) (293) Financial instruments - hedge accounting of Non-Deliverable Forw ard (NDF) 9,261 (63,137) (9,988) (56,758) Financial instruments - hedge accounting of exchange rate changes (18,588) 26,565 (136,603) 42,534 (25,783) 28,547 (174,046) 42,852 Effects on subsidiaries (148,263) 14, (174,046) 42,852 (174,046) 42,852 35

37 10.4 Reconciliation of income tax and social contribution expenses at statutory and effective rates (Restated) (Restated) Results before taxes (542,807) (725,373) (389,003) (881,300) Statutory rate 34% 34% 34% 34% Income from income tax and social contribution at statutory rate 184, , , ,642 Equity in subsidiaries (84,652) (114,421) (2,682) 2,072 Goodw ill amortization ,111 35,111 Unrecognized deferred income tax and social contribution credits (134,316) (266,663) (316,964) (390,349) Tax revenue (grants) 9,846 8,433 9,846 8,433 Foreign subsidiary rate differential ,643 1,157 Thin Capitalization (28,600) (24,398) (69,529) (67,711) Other (4,157) (14,503) (15,112) 108,407 Results from income tax and social contribution at effective rate (57,325) (164,925) (211,426) (3,238) 10.5 Balances of deferred income tax and social contribution assets and liabilities Openning balance as at (Restated) Recognized in profit or loss for the year Recognized in other comprehensive income (loss) Closing balance as at Temporary differences: Provision for tax, labor, civil and environmental contingencies 36,389 2,298-38,687 Adjustment at fair value of biological assets (109,068) 28,571 - (80,497) Adjustment to present value (AVP) - Law (93) - - Hedge accounting of Libor sw ap, NDF and exchange rate changes 80,371 (19,249) (25,783) 35,339 Effect of translation of functional currency (68,867) 68, Unrealized exchange rate changes 162,495 (117,631) - 44,864 Amortization of tax goodw ill (245,277) - - (245,277) Encouraged accelerated depreciation (42,235) 42, Impairment 26,570 16,004-42,574 Mark-to-market of derivatives (57,474) (59,950) - (117,424) Other 38,671 (18,377) - 20,294 (178,332) (57,325) (25,783) (261,440) Unutilized tax losses and credits Tax loss carryforw ards 131, ,615 Social contribution tax loss carryforw ards 47, ,858 1,141 (57,325) (25,783) (81,967) 36

38 Closing balance as at Recognized in profit or loss for the year Recognized in other comprehensive income (loss) Closing balance as at (Restated) Temporary differences: Provision for tax, labor, civil and environmental contingencies 36, ,389 Provision for losses on advances to suppliers 8,045 (8,045) - - Adjustment at fair value of biological assets (68,487) (40,581) - (109,068) Adjustment to present value (AVP) - Law (376) - 93 Hedge accounting of Libor sw ap, NDF and exchange rate changes 80,422 (28,598) 28,547 80,371 Effect of translation of functional currency (83,125) 14,258 (68,867) Unrealized exchange rate changes 200,998 (38,503) - 162,495 Amortization of tax goodw ill (227,126) (18,151) - (245,277) Encouraged accelerated depreciation (56,281) 14,046 - (42,235) Impairment 28,565 (1,995) - 26,570 Derivatives (22,278) (35,196) (57,474) Other 79,036 (40,365) - 38,671 (23,691) (183,188) 28,547 (178,332) Unutilized tax losses and credits Tax loss carryforw ards 131, ,615 Social contribution tax loss carryforw ards 47, , ,782 (183,188) 28,547 1,141 Openning balance as at (Restated) Recognized in profit or loss for the year Recognized in other comprehensive income (loss) Closing balance as at Temporary differences: Provision for tax, labor, civil and environmental contingencies 115,181 (10,425) - 104,756 Adjustment at fair value of biological assets (172,288) 5,210 - (167,078) Adjustment to present value (AVP) - Law (26) - - Hedge accounting of Libor sw ap, NDF and exchange rate changes 450,609 - (174,046) 276,563 Effect of translation of functional currency (68,856) 68, Unrealized exchange rate changes 467,850 (362,832) - 105,018 Amortization of tax goodw ill (245,277) - - (245,277) Mark-to-market of derivatives (310,814) 55,289 - (255,525) Encouraged accelerated depreciation (42,235) 42, Impairment 36,851 16,758-53,609 Appreciation of acquired assets (317,135) 20,009 - (297,126) Assets held for sale Fair value of financial debts (16,315) 8,133 - (8,182) Other 91,170 (47,005) - 44,165 (10,340) (203,798) (174,046) (388,184) Unutilized tax losses and credits. Tax loss carryforw ards 167,850 (1,091) - 166,759 Social contribution tax loss carryforw ards 61,734 (393) - 61, ,244 (205,282) (174,046) (160,084) 37

39 Openning balance as at Recognized in profit or loss for the year Recognized in other comprehensive income (loss) Closing balance as at (Restated) Temporary differences: Provision for tax, labor, civil and environmental contingencies 147,510 (32,329) - 115,181 Adjustment at fair value of biological assets 8,539 (8,539) - - Adjustment to present value (AVP) - Law (102,891) (69,397) - (172,288) Hedge accounting of Libor sw ap, NDF and exchange rate changes 1,038 (1,012) - 26 Effect of translation of functional currency 407,757-42, ,609 Unrealized exchange rate changes (83,114) 14,258 - (68,856) Amortization of tax goodw ill 466,718 1, ,850 Mark-to-market of derivatives (227,126) (18,151) - (245,277) Encouraged accelerated depreciation (230,772) (80,042) - (310,814) Impairment (56,281) 14,046 - (42,235) Appreciation of acquired assets 38,658 (1,807) - 36,851 Assets held for sale (488,673) 171,538 - (317,135) Fair value of financial debts 1,276 (383) Other (33,266) 16,951 (16,315) 116,381 (25,211) - 91,170 (34,246) (18,946) 42,852 (10,340) Unutilized tax losses and credits Tax loss carryforw ards 168,900 (1,050) - 167,850 Social contribution tax loss carryforw ards 62,112 (378) - 61, ,766 (20,374) 42, ,244 As at March 31, 2017, the contains tax loss carryforwards in the amounts of R$2,763,748, in, and R$5,059,650 in (R$2,368,701 and R$4,127,401 as at March 31, 2016, respectively) for which no deferred income tax and social contribution assets have been recognized Management projections for the realization of deferred income tax and social contribution balances According to the 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 /2018 crop 77,641 90,850 93,985 90, /2019 crop 96,389 88, ,672 88, /2020 crop 5,443-5,443 50, , , , ,584 The 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 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. 38

40 11. INVESTMENTS (PROVISION FOR INVESTMENT LOSS) (Restated) Investments in subsidiaries and jointly-controlled subsidiaries 490, , , ,153 Other investments 2,502 2,502 2,502 2,502 Investments 493, , , ,655 Provision for investment loss (672,325) (646,517) - - a) Interest in subsidiaries and jointly-controlled entities Biosev Bioenergia S.A. Biosev Bioenergia International S.A. Biosev Comercializadora de Energia S.A. Capital 843, ,501 44,701 Profit (loss) for the year (313,601) 64, ,020 Equity (1,165,380) 75,868 3,336 44,205 Elimination of gains on the sale of property, plant and equipment w ith related parties (1,013) Ow nership interest 100% 100% 100% 50% Value of investments in subsidiaries under equity method TEAG (1,166,393) 75,868 3,336 22,103 Goodw ill/realization of concession value, net 494, ,782 Elimination of gains on the sale of property, plant and equipment w ith related parties (11) Investments - 75,868 3, ,885 Provision for investment loss (672,325) Equity pick up in subsidiaries (313,612) 64, b) Changes in investments in subsidiaries, jointly-controlled entities and non-controlled entities Goodwill Biosev Biosev Bioenergia Biosev Comercializadora Tavares de Bioenergia S.A. International S.A. de Energia S.A. Melo (*) Ampla (*) Other (Restated) Opening balance (1,140,596) 11,462 3, ,675 3,691 2,502 (712,159) (350,356) Capital increase ,500 Equity pick up in subsidiaries (313,612) 64, (248,977) (144,877) Other comprehensive income (loss) 287, ,804 (27,770) Efects from changes in accounting standard - IAS (191,656) Value of investments in subsidiaries under equity method (1,166,404) 75,868 3, ,675 3,691 2,502 (673,332) (712,159) Goodw ill 494, , ,079 Value of investments - 75,868 3, ,675 3,691 2, , ,437 Provision for investment loss (672,325) (672,325) (646,517) (*) Companies merged in prior years. TEAG Other Opening balance 207,153 2, , ,029 Dividends (3,379) - (3,379) - Capital decrease (10,000) - (10,000) (10,981) Equity pick up in subsidiaries (7,889) - (7,889) 6,095 Profit ,494 Realization of concession value, net (8,399) - (8,399) (8,399) Other (488) Value of investments 185,885 2, , ,655 39

41 c) Additional information on the main investments in operating subsidiaries (direct and indirect) Biosev Bioenergia Limited On January 3, 2017, subsidiary Biosev Bioenergia Limited, based in Cayman Islands, was dissolved. This subsidiary was established to carry out the Group s certain international commercial operations, mainly sugar sales; however it has never started its operations. Biosev Terminais Portuários e Participações Ltda. indirect subsidiary On July 31, 2016, Biosev Terminais Portuários e Participações Ltda. s shareholders approved the s capital increase in the amount of R$5,038, from R$25,144 to R$30,182, upon the issuance of 5,037,597 new registered shares, with a par value of R$1 each, which shares were paid upon the conversion in capital of the funds in connection with the Future Capital Increase Payments, entered into on March 11, On March 31, 2017, Biosev Terminais Portuários e Participações Ltda. s shareholders approved the s capital increase in the amount of R$9,080, from R$30,182 to R$39,261, upon the issuance of 9,079,040 new registered shares, with a par value of R$1 each, which shares were paid upon the conversion in capital of the funds in connection with the Future Capital Increase Payments, entered into on September 11, 2016 and March 11, d) Investments in jointly-controlled entities Terminal de Exportação de Açúcar do Guarujá Ltda. (TEAG) Due to the s control over Crystalsev Comércio e Representação Ltda. (Crystalsev) on December 28, 2011, the 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. On March 22, 2017, the shareholders of Terminal de Exportação de Açúcar do Guarujá Ltda. (TEAG) approved the s capital decrease in the amount of R$20,000. The total subscribed capital amounted to R$44,702 divided into 44,701,834 shares, with a par value of R$1 each, equally distributed among the shareholders. The respective balance sheet and statement of operations are broken down as follows: TEAG Balance Sheet Assets Total current assets 34,917 49,089 Long-term receivables 1,209 10,772 Property, plant and equipment and intangible assets 22,966 32,211 Total non-current assets 24,175 42,983 Total assets 59,092 92,072 Liabilities Total current liabilities 9,634 13,746 Total non-current liabilities 5,253 8,382 Equity Total equity 44,205 69,944 Total liabilities and equity 59,092 92,072 40

42 TEAG Statement of operations Net revenue 81,463 70,229 Operating expenses General, administrative and selling (83,296) (74,902) Other operating income (loss) (987) 45,050 Operating loss before finance income (expenses), net (2,820) 40,377 Finance income, net 4,265 4,244 Income (loss) before income taxes 1,445 44,621 Income tax and social contribution (425) (15,634) Profit for the year 1,020 28, PROPERTY, PLANT AND EQUIPMENT (Restated) Cost Accumulated depreciation Net Cost Accumulated depreciation Net Land 16,752-16,752 26,953-26,953 Buildings 322,889 (113,643) 209, ,296 (108,471) 214,825 Improvements 53,905 (30,620) 23,285 51,897 (28,176) 23,721 Facilities 420,069 (206,485) 213, ,839 (181,705) 219,134 Furniture and fixtures 16,029 (8,986) 7,043 15,270 (8,184) 7,086 IT equipment 35,724 (30,037) 5,687 35,388 (28,638) 6,750 Machinery and equipment (*) 2,422,801 (1,363,485) 1,059,316 2,259,931 (1,230,005) 1,029,926 Vehicles 21,277 (15,949) 5,328 15,064 (10,720) 4,344 Agricultural machinery and implements (**) 812,843 (652,792) 160, ,125 (578,979) 131,146 Bearer plant 1,805,325 (1,148,741) 656,584 1,605,375 (962,140) 643,235 5,927,614 (3,570,738) 2,356,876 5,444,138 (3,137,018) 2,307,120 Construction in progress (Note 12.1) 15,393-15,393 29,255-29,255 5,943,007 (3,570,738) 2,372,269 5,473,393 (3,137,018) 2,336, (Restated) Cost Accumulated depreciation Net Cost Accumulated depreciation Net Land 19,307-19,307 40,036-40,036 Buildings 530,863 (188,025) 342, ,612 (177,570) 352,042 Improvements 156,605 (67,437) 89, ,289 (61,627) 92,662 Facilities 595,845 (283,070) 312, ,656 (246,431) 317,225 Furniture and fixtures 24,294 (14,288) 10,006 22,780 (13,074) 9,706 IT equipment 60,862 (47,943) 12,919 58,642 (44,382) 14,260 Machinery and equipment (*) 5,387,677 (3,068,987) 2,318,690 5,078,231 (2,766,823) 2,311,408 Vehicles 57,120 (49,778) 7,342 48,487 (44,356) 4,131 Agricultural machinery and implements (**) 1,324,142 (1,036,049) 288,093 1,159,331 (902,148) 257,183 Bearer plant 2,950,380 (1,891,005) 1,059,375 2,608,975 (1,588,039) 1,020,936 11,107,095 (6,646,582) 4,460,513 10,264,039 (5,844,450) 4,419,589 Construction in progress (Note 12.1) 28,512-28,512 69,914-69,914 11,135,607 (6,646,582) 4,489,025 10,333,953 (5,844,450) 4,489,503 (*) Includes deferred manufacturing costs. (**) Includes deferred agricultural costs. 41

43 Changes in the net value of property, plant and equipment are as follows: (*) See Note Construction in progress Construction in progress is broken down by plant as follows: (Restated) (Restated) Opening balance 2,336,375 2,468,484 4,489,503 4,761,926 Acquisitions and additions 485, , , ,959 Residual value of w rite-offs (10,683) (25,468) (12,370) (28,543) Reversal of Impairment (*) 1,001 8,176 2,087 8,764 Depreciation for the year (439,892) (503,548) (807,881) (939,603) 2,372,269 2,336,375 4,489,025 4,489,503 Plant Leme 1,212 1,597 1,212 1,597 Passatempo 1,929 2,263 1,929 2,263 Giasa 6,679 2,569 6,679 2,569 Lagoa da Prata 888 8, ,406 Rio Brilhante 968 2, ,947 Maracaju 3,028 4,164 3,028 4,164 Estivas 657 5, ,142 Santa Elisa - - 7,865 16,303 Vale do Rosário - - 1,095 17,450 MB - - 2,950 2,774 Continental - - 1,209 4,132 Corporativo 32 2, ,167 15,393 29,255 28,512 69,914 The balance of construction in progress refers basically to the adaptation of industrial facilities, increase in sugar production and refurbishment of administrative facilities Depreciation As at March 31, 2017, assets were depreciated based on the remaining estimated useful lives, as follows: Average useful life in years Buildings 52 Leasehold improvements 26 Facilities 19 Furniture and fixtures 12 IT equipment 7 Machinery and equipment 20 Vehicles 6 Agricultural machinery and implements 8 Bearer plant 6 42

44 12.3 Fixed assets given in guarantees and commitments for acquisition of fixed assets As at March 31, 2017, the had agreements with suppliers for acquisition of fixed assets, amounting to R$30,072 (R$29,807 as at March 31, 2016), and total fixed assets given in guarantees in the amount of R$1,160,611 (R$912,942 as at March 31, 2016) Impairment As at March 31, 2017, the impairment was reversed in the amounts of R$1,001, in, and R$2,087, in, resulting from the sales and/or transfers of fixed assets between the Group s industrial clusters. As at March 30, 2017, the accumulated balance of impairment are R$70,827 in, and R$195,310 in (R$71,828 and R$197,397 as at March 31, 2016, respectively). The main impaired assets comprise land, buildings, furniture and fixtures, computers, machinery and equipment, vehicles, and agricultural machinery and implements. 13. INTANGIBLE ASSETS Goodwill Biosev Bioenergia , ,079 Usinas Tavares de Melo , ,675 Ampla - - 3,691 3,691 Software , ,445 Licenses 16,606 16,826 18,549 20,724 16,606 16,826 18,549 20,724 Other - - 7,313 7, ,313 7,994 16,606 16, , ,163 Changes in intangible assets are as follows: Additions Amortization Software Licenses 16,826 8,559 (8,779) 16,606 16,826 8,559 (8,779) 16, Additions Amortization Software Licenses 19,308 8,552 (11,034) 16,826 19,308 8,552 (11,034) 16,826 43

45 Goodwill Additions Amortization Biosev Bioenergia 494, ,079 Usinas Tavares de Melo 407, ,675 Ampla 3, ,691 Software Licenses 20,724 8,029 (10,204) 18,549 Other Other 7, (1,430) 7, ,163 8,778 (11,634) 931,307 Goodw ill Additions Amortization Biosev Bioenergia 494, ,079 Usinas Tavares de Melo 407, ,675 Ampla 3, ,691 Softw are Licenses 21,973 11,174 (12,423) 20,724 Other Other 9,939 - (1,945) 7, ,357 11,174 (14,368) 934, Goodwill impairment test The goodwill impairment test is conducted annually, considering the 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 five-year financial budget, subject to annual growth rates beginning in the sixth year, combined with the discount rate discounts between 11% and 12% per year, net of taxes, and annual growth rates between 4% and 5%. The carrying amount would not exceed the recoverable value in the event of any reasonably possible change in key assumptions, on which the recoverable value is based Amortization As at March 31, 2017, estimated useful life for intangible amortization purposes is as follows: Average useful life in years Licenses 4 Others 10 44

46 14. BORROWINGS AND FINANCING Description Currency Weighted average financial charges Maturity (*) Collaterals Advance on Foreign Exchange Contract (ACC) (c) US$ Exchange rate change plus average interest rate of From to 6.57% p.a Guarantee and promissory note 975, ,250 Financing - BNDES R$ TJLP plus average interest rate of 4.59% p.a. or From to Mortgage, lien, guarantee and promissory currency basket plus average interest rate of 4.80% note p.a. 14,196 82,747 Export Prepayment - PPE (c) US$ Exchange rate change plus Libor plus average Guarantee, promissory note and As at interest rate of 5.79% p.a. receivables 535, ,940 Constitutional Fund to Finance the the Midw est - FCO R$ Interest of 8.5% p.a. As at Collateral and financed assets 93, ,222 Finame R$ Average interest rate of 5.82% p.a. or TJLP plus From to Mortgage, lien, guarantee and promissory average interest rate of 2.93% p.a note 5,479 24,471 Fundo de Investimento em Direitos Creditórios - FIDC (b)/(g) R$ Average interest rate of 15.87% p.a. As at ,302 - Constitutional Fund to Finance the Northeast (FNE) R$ ,187 Export Credit Note and Bill - NCE R$ Average interest rate of 137% of CDI or exchange From to rate change plus interest of 4.50% p.a Guarantee and promissory note 331, ,378 Offshore Loan (e) US$ Exchange rate change plus Libor plus average Mortgage, credit rights and machinery and As at interest rate of 5.72% p.a. equipment 192, ,945 Bank Credit Note - CCB R$ Average interest rate of 16.65% p.a. or average From to Collection and assignment of receivables interest rate of % of CDI rate , ,983 2,375,403 2,525,123 Current liabilities 760, ,813 Non-current liabilities 1,614,768 1,652,310 Description Currency Weighted average financial charges Maturity (*) Collaterals Restructured debt (ex-debentures) - R$ R$ CDI plus 1.72% p.a. As at Guarantee, receivables, mortgage and shares 196, ,437 Restructured debt - US$ US$ Exchange rate change plus Libor + average interest Guarantee, receivables, mortgage and As at rate of 2.47% p.a. shares 887,375 1,162,546 Restructured debt (Debenture) - R$ (a) R$ CDI plus 1.72% p.a. As at Guarantee, receivables, mortgage and shares 269, ,478 Advance on Foreign Exchange Contract - ACC (c) US$ Exchange rate change plus average interest rate of From to 6.44% p.a Guarantee and promissory note 2,393,542 2,215,713 Financiamentos BNDES R$ TJLP plus average interest rate of 4.59% p.a. or From to Mortgage, financed assets, guarantee and currency basket plus average interest rate of 4.80% promissory note p.a. 14,196 82,747 Export Prepayment PPE (c)/(f) US$ Exchange rate change plus Libor + average interest From to Guarantee, promissory note and rate of 5.04% p.a receivables 1,008,973 1,557,375 Constitutional Fund to Finance the the Midw est - FCO R$ Interest of 8.5% p.a. As at Guarantee and financed assets 93, ,222 Finame R$ Average interest rate of 7.44% p.a. or TJLP plus From to Mortgage, financed assets, guarantee and average interest rate of 2.93% p.a promissory note 18,624 34,606 Fundo de Investimento em Direitos Creditórios - FIDC (b)/(g) R$ Average interest rate of 15.87% p.a. As at ,393 - Constitutional Fund to Finance the Northeast (FNE) R$ ,187 Rural Securitization Program (PESA) R$ IGP-M plus 4% p.a. From to Guarantee, promissory note and National Treasury Certificate (CTN) 7,845 10,857 Export Credit Note and Bill - NCE (d) Offshore Loan (e) R$/US$ Bank Credit Note - CCB R$ (*) Refers to the last contract maturity date. US$ Average interest rate of 137% of CDI or exchange rate change plus interest of 8.21% p.a. or CDI plus average rate of 4.36% p.a. Exchange rate change plus Libor plus average interest rate of 4.15% p.a. Average interest rate of 16.65% p.a. or average interest rate of % of CDI rate. From to From to From to Guarantee and promissory note 504, ,832 Mortgage, credit rights and machinery and equipment (a) Net of commission costs for the issuance of debentures, in the amount of R$2,734, as at March 31, 2017 (R$3,109 as at March 31, 2016), monthly recorded in profit or loss through the maturity of such transaction. (b) Net of commission costs for the issuance of FIDC, in the amount of R$1,862, as at March 31, 2017, monthly recorded in profit or loss through the maturity of such transaction. (c) Net of deferred expenses, in the amount of R$33,479, as at March 31, 2017 (R$30,996 as at March 31, 2016), monthly recorded in profit or loss through the maturity of such transaction. (d) As at March 31, 2017, the US debt amounts to R$45,065 in (R$25,756 as at March 31, 2016). 656, ,945 Collection and assignment of receivables 219, ,984 6,288,654 6,711,929 Current liabilities 1,944,007 1,830,913 Non-current liabilities 4,344,647 4,881,016 (e) Net of commission costs for the issuance of Offshore Loan, in the amount of R$15,304, as at March 31, 2017 (R$1,347 as at March 31, 2016), monthly recorded in profit or loss through the maturity of such transaction. (f) Include export prepayments, contracted on January 9, 2015, by subsidiary Biosev Bioenergia International S.A. with the trade union of foreign financial institutions, in the amount of R$441,849, as at March 31, 2017 (R$866,799 as at March 31, 2016). These operations are collateralized by a set of assets for settlement. As at March 31, 2017, the 45

47 foreign currency-denominated deposits comprise, together with the agricultural production (sugarcane) of specific units and sugar and ethanol inventories, the ratio of % of the obligations. (g) In July 2016, the Receivables Investment Fund (FIDC) was established for the disposal of a part of the receivables from sales in installments in the domestic market, in the amount of R$60,000, out of which R$9,000 related to subordinated units. As at March 31, 2017, the outstanding invoices negotiated with the fund amounted to R$18,393. Non-current liabilities mature as follows (crop year): April 2018 to March ,778 1,613,888 April 2019 to March ,991 1,749,901 April 2020 to March , ,027 April 2021 to March , ,025 April 2022 to October , ,806 1,614,768 4,344,647 Some of the financing agreements entered into by the 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 as defined in the terms of contracts, and EBITDA-to-net financial expenses ratio. The verification of compliance with the restrictive covenants occurs annual, at the close of s year. As at March 31, 2017, the was compliant with the contractual provisions of its borrowings and financing. 15. TRADE PAYABLES Related parties (Note 18) In Brazil 9,140 5,121 25,105 13,229 Abroad 15,338 45,120 53,602 78,319 24,478 50,241 78,707 91,548 Third parties In Brazil 286, , , ,636 Abroad 10, ,759 15, , , , , , , , ,716 Current liabilities 320, , , ,483 Non-current liabilities 1, ,941 1,233 46

48 16. TAXES AND CONTRIBUTIONS PAYABLE Installments plan (*) - 1,201 1,877 9,937 IPI , State VAT (ICMS) 7, ,651 14,737 Tax on revenue (PIS and COFINS) , Social Securities Tax (INSS) 7,643 7,280 16,563 12,642 Income tax (IRPJ) and social contribution (CSLL) ,447 2,402 Other 4,032 4,443 5,000 5,199 20,396 14,706 49,644 46,038 Current liabilities 20,396 14,703 49,644 46,035 Non-current liabilities (*) Refer to the adhesion of installments plans in the State of Mato Grosso do Sul, according to Attachment IX, of Decree 9203/1998 RICMS/MS, including the outstanding ICMS credits subject to reduction of interest and fines,and extension of payment term. 17. PROVISION FOR TAX, LABOR, CIVIL AND ENVIRONMENTAL CONTINGENCIES The is a party to various ongoing lawsuits involving tax, labor, civil and environmental matters arising in the normal course of business Inflation adjustment Additions Reversals Payments Tax ICMS 219 (113) - (106) - - IRPJ/CSLL 801 (180) - (550) - 71 Social security contributions 12,163 (2,384) - (9,779) ,183 (2,677) - (10,435) - 71 Labor 79,811 3,723 35,809 (13,916) (7,627) 97,800 Environmental 7, (295) (12) 9,112 Civil 5, (196) - 5,977 93,018 5,039 36,878 (14,407) (7,639) 112, ,201 2,362 36,878 (24,842) (7,639) 112, Inflation adjustment Additions Reversals Payments Tax ICMS 247 (17) - (11) IRPJ/CSLL (130) Social security contributions 13,043 (916) 3,501 (3,465) - 12,163 14,198 (910) 3,501 (3,606) - 13,183 Labor 81,563 4,605 13,731 (16,637) (3,451) 79,811 Environmental 6,150 1, (159) (1) 7,988 Civil 3, , ,219 91,068 6,713 15,485 (16,796) (3,452) 93, ,266 5,803 18,986 (20,402) (3,452) 106,201 47

49 Tax Inflation adjustment Additions Reversals Payments IPI levied on sugar sales 16, ,035 IPI 146 (11) - (135) - - PIS and COFINS 6,380 (2,004) - (970) - 3,406 ICMS 218 (112) - (106) - - IRPJ/CSLL 9,448 (3,101) - (3,502) - 2,845 Social security contributions 38,032 (7,748) - (30,284) - - Other 724 (386) - (322) ,499 (12,878) - (35,319) - 23,302 Labor 200,054 1,272 65,622 (18,753) (38,526) 209,669 Environmental 38,674 2,345 8,007 (3,713) (132) 45,181 Civil 28,074 2,638 2,112 (3,694) - 29, ,802 6,255 75,741 (26,160) (38,658) 283, ,301 (6,623) 75,741 (61,479) (38,658) 307, Inflation adjustment Additions Reversals Payments Tax IPI levied on sugar sales 87, (71,718) - 16,551 IPI PIS and COFINS 32, (26,643) - 6,380 ICMS 1,402 (942) - (242) IRPJ/CSLL 10, (1,768) - 9,448 Social security contributions 52,965 (3,951) 9,023 (20,005) - 38,032 Other ,812 (3,960) 9,023 (120,376) - 71,499 Labor 222,591 4,895 29,557 (32,870) (24,119) 200,054 Environmental 31,604 6,236 1,188 (177) (177) 38,674 Civil 27,583 1,602 1,025 (2,098) (38) 28, ,778 12,733 31,770 (35,145) (24,334) 266, ,590 8,773 40,793 (155,521) (24,334) 338,301 IPI on high polarization sugar sales The Group is a party to lawsuits challenging the levy of the federal VAT (IPI) on high polarization sugar sales. On June 26, 2015, the Federal Regional Court accepted the Ordinary Action filed by the, and annulled the decision for consideration of the request for proof. As at March 31, 2017, the accrued amounts is R$17,035 (R$16,551 as at March 31, 2016). Labor, environmental, and civil contingencies As at March 31, 2017, 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. The civil lawsuits to which the is a party basically refer to discussions involving contractual issues, occupational and/or traffic accidents and service providers. 48

50 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 as at March 31, 2017, with an acknowledged possible likelihood of loss and not provided for are shown in the table below: Tax 693, ,825 1,720,360 1,224, , ,825 1,720,360 1,224,529 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 export of semi-finished products. Civil and labor The civil and labor claims (court and out-of-court) as at March 31, 2017, with an acknowledged possible likelihood of loss and not provided for are shown in the table below: Civil 27,632 19,565 43,794 33,238 Labor 26,992 24, ,254 50,164 54,624 44, ,048 83,402 As at March 31, 2017, 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. 18. RELATED PARTIES a) Transactions with the Parent Sugar Holdings B.V. is the direct parent of the, which as at March 31, 2017 holds 59.58% of the s total and voting capital. Sugar Holdings B.V. is a subsidiary of Louis Dreyfus NH B.V., which in turn has as its ultimate parent Akira Holding Foundation. There were no transactions between the Parent and the Group as year ended at March 31,

51 b) Transactions with subsidiaries and jointly-controlled entities Sales customers As at March 31, 2017, the carried out sales transactions with the following subsidiaries: Name Biosev Bioenergia S.A. Biosev Bioenergia International S.A. Relationship with the or its Subsidiary Subsidiary. Subsidiary. The agreements entered into with Biosev Bioenergia International S.A. provide for the purchase of products by Biosev Bioenergia International S.A. at the price agreed by the parties, based on market quotation. The carries out eventual transactions with its subsidiaries, for purchase and sale of products and other, in accordance with the transaction. Advance from customers As at March 31, 2017, the carried out advance from customer transactions with the following subsidiary: Name Biosev Bioenergia International S.A. Relationship with the or its Subsidiary Subsidiary. Loan As at March 31, 2017, the carried out loan transactions with the following subsidiary: Name Biosev Bioenergia S.A. Sociedade Operadora Portuária de São Paulo Ltda. Relationship with the or its Subsidiary Subsidiary. Subsidiary. The agreement with Biosev Bioenergia S.A., on December 30, 2009, was entered into for undetermined period, subject to the CDI variation. The table below shows the balances and transactions as at March 31, 2017 between the and its subsidiaries, which are consolidated in its balance sheet: Subsidiaries Trade receivables Assets Total Biosev Bioenergia International S.A. 31,659 31,659 Biosev Bioenergia S.A. 2,363 2, ,022 34,022 Biosev Bioenergia International S.A. 37,960 37,960 Biosev Bioenergia S.A. 5,368 5, ,328 43,328 50

52 Subsidiaries Trade payables Liability Advances from customers (*) Loan (**) Total Biosev Bioenergia International S.A. 15, , ,111 Biosev Bioenergia S.A. 4, , ,484 Sociedade Operadora Portuária de São Paulo Ltda ,256 11, , , , ,851 Biosev Bioenergia International S.A. 25, , ,265 Biosev Bioenergia S.A. 1, , ,205 Sociedade Operadora Portuária de São Paulo Ltda ,064 9, , , , ,534 (*) As at March 31, 2017, the amounts of R$192,025 (R$167,927 as at March 31, 2016) and R$55,787 (R$95,070) were recorded in current liabilities and non-current liabilities, respectively. (**) As at March 31, 2017, the amount of R$437,063 (R$529,338 as at March 31, 2016) was recorded in non-current liabilities, in line item "Other payables". Subsidiaries Sales Revenues Interest and exchange rate Profit or loss changes Total Purchases Expenses Interest and exchange rate changes Biosev Bioenergia International S.A. 724,766 44, ,101 (16,325) (13,440) (29,765) Biosev Bioenergia S.A. 10,630-10,630 (36,922) (69,176) (106,098) Sociedade Operadora Portuária de São Paulo Ltda (1,127) (1,127) ,396 44, ,731 (53,247) (83,743) (136,990) Total Biosev Bioenergia International S.A. 487,504 3, ,883 (147) (10,866) (11,013) Biosev Bioenergia S.A. 31,654 3,229 34,883 (2,595) (14,633) (17,228) Biosev Comercializadora de Energia S.A (129) - (129) Sociedade Operadora Portuária de São Paulo Ltda (1,132) (1,132) ,158 6, ,766 (2,871) (26,631) (29,502) c) Other related parties Sales customers As at March 31, 2017, the and its subsidiaries carried out sales transactions with the following related parties: Name Louis Dreyfus Brasil S.A. Louis Dreyfus Suisse S.A. Louis Dreyfus Ethanol Merchandising LLC Relationship with the or its Subsidiary under common control. under common control. under common control. The agreements provide for the sale of sugarcane molasses, liquid sugar, VHP sugar, power and ethanol at the price agreed by the parties based on market quotations. The agreements entered into with Louis Dreyfus Suisse S.A. provide for the exports that generate accounts receivable in dollars, cash against documents. On January, 2017 this agreement was amended and there is derivative. The measurement and accounting of this instrument was occurred in the subsidiary Biosev Bioenergia International S.A., according to technical pronouncement CPC 38 / IAS

53 Advance from customers As at March 31, 2017, the carried out advance from customer transactions with the following related parties: Name Berghmelk BV Louis Dreyfus Suisse S.A. Sugar Netherlands Finance BV Louis Dreyfus North Latam Holdings BV Relationship with the or its Subsidiary under common control. under common control. under common control. under common control. On October 3, 2016, the agreement for advances from foreign customers was amended, which agreement was entered into on March 18, 2016, in the amount of US$400,000, between, Biosev Bioenergia S.A. and Louis Dreyfus Suisse S.A. whereby Louis Dreyfus Suisse S.A. assigned the agreement to Berghmelk BV, and the Libor interest rate was changed from semiannual to monthly, additionally on March 29, 2017 was signed a new amended whereby Berghmelk BV. assigned the agreement to Louis Dreyfus North Latam Holdings BV. Cost and service sharing As at March 31, 2017, the and its subsidiaries held cost and service sharing transactions with the following related parties: Name LDC Trading and Services Co. S.A. Louis Dreyfus Brasil S.A. Louis Dreyfus Suisse S.A. Term Inc. Relationship with the or its Subsidiary under common control. under common control. under common control. 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 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, 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 short-term investments represents the margin deposit which guarantee futures market operations. Equipment suppliers As at March 31, 2017, the and its subsidiaries held equipment purchase and industrial service transactions with the following related parties: Name Renk Zanini S.A. Equipamentos Industriais Sermatec Industrias e MontagensLtda. Relationship with the or its Subsidiary controlled by a relative of a 's key management member controlled by a relative of a '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, in the total amount of R$52,544, collateralized by Zanini Equipamentos Pesados Ltda. 52

54 Export of commodities As at March 31, 2017, the and its subsidiaries carried out export transactions of commodities with the following related party: Name Louis Dreyfus Suisse S.A. Relationship with the or its Subsidiary under common control. The agreement for export of commodities entered into with Louis Dreyfus 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 between 1.05% and 4.10% on total shipments. Input and finished products suppliers As at March 31, 2017, the and its subsidiaries carried out input purchase transactions with the following related parties: Name Macrofertil Industria e Comércio de Fertilizantes S.A. Louis Dreyfus Ethanol Merchandising LLC Louis Dreyfus Brasil S.A. Relationship with the or its Subsidiary under common control. under common control. 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 As at March 31, 2017, the and its subsidiaries held sugarcane purchase, rural lease, and/or agricultural partnership transactions with the following related parties: Name 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. Relationship with the or its Subsidiary controlled by a relative of a 's key management member. controlled by a relative of a 's key management member. controlled by a relative of a 's key management member. controlled by a relative of a 's key management member. controlled by a relative of a 's key management member. controlled by a relative of a 's key management member. Relative of a 's key management member. controlled by a relative of a 's key management member. Relative of a 's key management member. controlled by a relative of a 's key management member. controlled by a relative of a 's key management member. controlled by a relative of a 's key management member. Relative of a 's key management member. controlled by a relative of a 's key management member. controlled by a relative of a 's key management member. controlled by a relative of a 's key management member. The agricultural agreements provides for the sugarcane cultivation and supply by the 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. 53

55 Service providers As at March 31, 2017, the and its subsidiaries held sugar elevation and storage transactions with the following related party: Name TEAG- Terminal de Exportação de Açúcar do Guarujá Ltda. Relationship with the or its Subsidiary Jointly-controlled entity The agreements entered into with TEAG set forth the provision of sugar elevation services through TEAG. The price is determined by ton of sugar. The table below shows the balances and transactions as at March 31, 2017 between the and related parties not indicated in the items a) and b) above: Derivatives (*) Trade receivables (**) Advances to suppliers Companies under common control Louis Dreyfus Brasil S.A , ,091 Term Commodities Inc. 11, ,048 Total 11, , ,139 controlled by a relative of a 's key management member Sermatec Industria e Montagens Ltda. - 4,143-4,143-4,143-4, ,048 4, , ,282 Assets Companies under common control Louis Dreyfus Brasil S.A , ,362 Louis Dreyfus Suisse S.A Term Commodities Inc. 109, , , , ,822 controlled by a relative of a 's key management member Sermatec Industria e Montagens Ltda. - 5,081-5,081-5,081-5, ,923 5, , ,903 (*) As at March 31, 2017, the amount of R$11,048 (R$77,450 as at March 31, 2016) was recorded in line item Short-term investments relating to margin deposits in derivative transactions. (**) As at March 31, 2017, out of trade receivables, the amount of R$4,143 (R$5,081 as at March 31, 2016) was recorded in line item Other receivables in non-current assets. 54

56 Assets Derivatives (*) Trade receivables (**) Advances to suppliers (***) Companies under common control Louis Dreyfus Ethanol Merchandising LLC Louis Dreyfus Brasil S.A , ,589 LDC Trading and Services Co. S.A Louis Dreyfus Suisse S.A. 53,226 10,009-63,235 Term Commodities Inc. 11, ,048 controlled by a relative of a 's key management member Total 64,274 10, , ,110 Alebisa Empreendimento e Participações Ltda Anbisa Agricultura Ltda B5 Participações Ltda Beabisa Agricultura Ltda Beabisa Agro Comercial e Empreendimentos Ltda Carbisa Agricultura Ltda Edimasa Agricultura Ltda Elbel Comércio e Participações Ltda ,829 1,829 Panorama Agricultura Ltda Usina Santa Elisa S.A Sermatec Industria e Montagens Ltda. - 4,143-4,143-4,143 5,196 9,339 Relative of a 's key management member Beatriz Biagi Becker Edilah Faria Lacerda Biagi Maurilio Biagi Filho ,274 14, , ,240 Companies under common control Louis Dreyfus Ethanol Merchandising LLC Louis Dreyfus Brasil S.A , ,543 Louis Dreyfus Sucos S.A Louis Dreyfus Suisse S.A. - 30,244-30,244 Term Commodities Inc. 109, ,923 controlled by a relative of a 's key management member 109,923 30, , ,768 Alebisa Empreendimento e Participações Ltda Anbisa Agricultura Ltda B5 Participações Ltda Beabisa Agricultura Ltda Beabisa Agro Comercial e Empreendimentos Ltda Carbisa Agricultura Ltda Edimasa Agricultura Ltda Elbel Comércio e Participações Ltda ,658 2,658 Panorama Agricultura Ltda Usina Santa Elisa S.A Sermatec Industria e Montagens Ltda. - 5,081-5,081-5,081 6,162 11,243 Relative of a 's key management member Beatriz Biagi Becker Edilah Faria Lacerda Biagi - - 2,698 2,698 Maurilio Biagi Filho ,817 3, ,923 35, , ,828 (*) As at March 31, 2017, the amount of R$53,226 (R$32,473 as at March 31, 2016) was recorded in line item Derivatives in current assets, and the amount of R$11,048 (R$77,450 as at March 31, 2016) was recorded in line item "Short-term investments", relating to margin deposits in derivative transactions. (**) As at March 31, 2017, out of trade receivables, the amount of R$4,143 (R$5,081 as at March 31, 2016) was recorded in line item Other receivables in non-current assets. (***) As at March 31, 2017, out of advances to suppliers, R$200,556 (R$239,395 as at March 31, 2016) refers to export of commodities was recorded in line item Inventories 55

57 Derivatives Trade payables Liabilities Advances from customers (*) Loan Total Companies under common control Louis Dreyfus Ethanol Merchandising LLC Louis Dreyfus North Latam Holdings BV , ,598 Louis Dreyfus Brasil S.A. - 2, ,038 Louis Dreyfus Suisse S.A , ,202 Sugar Netherlands Finance BV , ,076 Macrofértil Indústria e Comércio de Fertilizantes Ltda. - 2, ,425 Term Commodities Inc ,502 1,096,876-1,101,940 Companies under common control Louis Dreyfus Ethanol Merchandising LLC - 15, ,982 Louis Dreyfus Brasil S.A. - 3, ,484 Louis Dreyfus Suisse S.A. - 3, , ,962 Sugar Netherlands Finance BV ,567-71,567 Macrofértil Indústria e Comércio de Fertilizantes Ltda Term Commodities Inc. 13, , ,662 23,597 1,064, ,101,930 (*) Amounts recorded in advances from foreign customers, R$273,092 (R$423,340 as at March 31, 2016) in current liabilities and R$823,784 (R$641,319 as at March 31, 2016) in non-current liabilities, relating to 2017/2018, 2018/2019 and 2019/2020 crops, which may be extended for one or more crops, as agreed by the parties. 56

58 Derivatives Trade payables Advances from customers (*) Loan Total Companies under common control Louis Dreyfus Brasil S.A. - 10, ,597 Louis Dreyfus Suisse S.A. - 52, , ,547 Louis Dreyfus North Latam Holdings BV 1,361,097 1,361,097 Sugar Netherlands Finance BV , ,448 Louis Dreyfus Ethanol Merchandising LLC Macrofértil Indústria e Comércio de Fertilizantes Ltda. - 3, ,134 Term Commodities Inc , ,333 2,568,641-2,636,536 Companies controlled by a relative of a 's key management member 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. - 5, ,165 Panorama Agricultura Ltda Usina Santa Elisa S.A Jointly-controlled entity - 9, ,984 TEAG - Terminal Exp. Açúcar Guarujá Ltda. - 1, ,048 Relative of a 's key management member Liabilities - 1, ,048 Beatriz Biagi Becker Edilah Faria Lacerda Biagi ,707 2,568,641-2,647,910 Companies under common control Louis Dreyfus Brasil S.A. - 3, ,494 Louis Dreyfus Suisse S.A. - 61,854 1,990,658-2,052,512 Sugar Netherlands Finance BV , ,309 Louis Dreyfus Ethanol Merchandising LLC - 16, ,036 Macrofértil Indústria e Comércio de Fertilizantes Ltda LDC Trading and Services Co. S.A Term Commodities Inc. 13, ,008 13,662 82,607 2,718, ,815,248 Companies controlled by a relative of a 's key management member Alebisa Empreendimento e Participações Ltda Anbisa Agricultura Ltda B5 Participações Ltda Beabisa Agricultura Ltda Beabisa Agro Comercial e Empreendimentos Ltda Carbisa Agricultura Ltda Edimasa Agricultura Ltda Maubisa Agricultura Ltda Elbel Comércio e Participações Ltda. - 4, ,077 Panorama Agricultura Ltda Renk Zanini S.A. Equipamentos Industriais Usina Santa Elisa S.A , ,538 Relative of a 's key management member Beatriz Biagi Becker Edilah Faria Lacerda Biagi ,662 91,548 2,718, ,824,189 (*) Amounts recorded in advances from foreign customers, R$442,903 (R$569,277 as at March 31, 2016) in current liabilities and R$2,125,738 (R$2,149,690 as at March 31, 2016) in non-current liabilities, relating to 2017/2018, 2018/2019 and 2019/2020 crops, which may be extended for one or more crops, as agreed by the parties. 57

59 Companies under common control Sales Income Interest and exchange rate changes Total income Profit (loss) Purchases Expenses Interest and exchange rate changes Total expenses Louis Dreyfus Brasil S.A (1,001,674) (4,193) (1,005,867) Louis Dreyfus Suisse S.A. 430,542 17, ,141 - (18,245) (18,245) Louis Dreyfus Asia Pte. Ltd. 539, , Macrofértil Indústria e Comércio de Fertilizantes Ltda (2,465) - (2,465) Louis Dreyfus Ethanol Merchandising LLC (10,849) - (10,849) Louis Dreyfus North Latam Holdings BV (304) (304) Berghmelk BV - 58,000 58,000 - (19,071) (19,071) Sugar Netherlands Finance BV - 12,280 12,280 - (4,394) (4,394) Term Commodities Inc (64,347) (4,921) (69,268) 970,327 88,670 1,058,997 (1,079,335) (51,128) (1,130,463) controlled by a relative of a 's key management member Renk Zanini S.A. Equipamentos Industriais ,605 88,670 1,059,275 (1,079,335) (51,128) (1,130,463) Companies under common control Louis Dreyfus Sucos S.A (2) - (2) Louis Dreyfus Brasil S.A (903,901) (1,980) (905,881) Louis Dreyfus Suisse S.A. 441,277 8, ,979 - (716) (716) Macrofértil Indústria e Comércio de Fertilizantes Ltda (2,824) - (2,824) Louis Dreyfus Asia Pte. Ltd. 418, , LDC Ethanol Interior Merchandising (19,367) - (19,367) Sugar Netherlands Finance BV - 13,541 13,541 - (18,626) (18,626) Term Commodities Inc (5,038) (990) (6,028) ,059 22, ,302 (931,132) (22,312) (953,444) 58

60 Sales Income Interest and exchange rate changes Total income Profit (loss) Purchases Expenses Interest and exchange rate changes Total expenses Companies under common control Louis Dreyfus Ethanol Merchandising LLC (42,606) - (42,606) LDC Trading and Services Co.S.A (890) (16) (906) Berghmelk BV - 145, ,000 - (47,274) (47,274) Louis Dreyfus North Latam Holdings BV (775) (775) Louis Dreyfus Brasil S.A (2,054,443) (14,968) (2,069,411) Louis Dreyfus Suisse S.A. 1,579, ,615 1,686,934 (81,534) (53,943) (135,477) Louis Dreyfus Asia Pte. Ltd. 1,148,341-1,148, Macrofértil Indústria e Comércio de Fertilizantes Ltda (2,783) - (2,783) Sugar Netherlands Finance BV - 73,934 73,934 - (27,439) (27,439) Term Commodities Inc (64,347) (5,239) (69,586) 2,727, ,340 3,055,016 (2,246,603) (149,654) (2,396,257) Jointly-controlled entity Teag-Terminal Exp. Açúcar Guarujá Ltda (26,279) (96) (26,375) (26,279) (96) (26,375) Companies controlled by a relative of a 's key management member Alebisa Empreendimento e Participações Ltda (3,461) - (3,461) Anbisa Agricultura Ltda (3,493) - (3,493) B5 Participações Ltda (2,268) - (2,268) Beabisa Agricultura Ltda (2,043) - (2,043) Carbisa Agricultura Ltda (2,219) - (2,219) Edimasa Agricultura Ltda (2,052) - (2,052) Elbel Comércio e Participações Ltda (17,163) - (17,163) Panorama Agricultura Ltda (827) - (827) Renk Zanini S.A. Equipamentos Industriais Santa Elisa Participações S.A (690) - (690) Usina Santa Elisa S.A (1,969) - (1,969) (36,185) - (36,185) Relative of a 's key management member Beatriz Biagi Becker (1,044) - (1,044) Edilah Faria Lacerda Biagi (3,583) - (3,583) (4,627) - (4,627) ,728, ,340 3,055,421 (2,313,694) (149,750) (2,463,444) Companies under common control Louis Dreyfus Ethanol Merchandising LLC (88,962) - (88,962) LDC Trading and Services Co (821) (7) (828) Louis Dreyfus Sucos S.A (156) - (156) Louis Dreyfus Brasil S.A (1,504,140) (2,717) (1,506,857) Louis Dreyfus Suisse S.A. 1,701,586 20,458 1,722,044 (61,234) (640) (61,874) Louis Dreyfus Asia Pte. Ltd. 724, , Macrofértil Indústria e Comércio de Fertilizantes Ltda (5,562) - (5,562) Sugar Netherlands Finance BV - 98,544 98,544 - (63,953) (63,953) Term Commodities Inc (6,500) (1,308) (7,808) 2,426, ,002 2,545,491 (1,667,375) (68,625) (1,736,000) Jointly-controlled entity Teag-Terminal Exp. Açúcar Guarujá Ltda (10,959) (26) (10,985) (10,959) (26) (10,985) Companies controlled by a relative of a 's key management member Alebisa Empreendimento e Participações Ltda (2,508) - (2,508) Anbisa Agricultura Ltda (2,191) - (2,191) B5 Participações Ltda (1,443) - (1,443) Beabisa Agricultura Ltda (2,138) - (2,138) Beabisa Agro Comercial e Empreendimentos Ltda (31) - (31) Carbisa Agricultura Ltda (2,504) - (2,504) Edimasa Agricultura Ltda (2,208) - (2,208) Elbel Comércio e Participações Ltda (13,082) - (13,082) Panorama Agricultura Ltda (1,559) - (1,559) Renk Zanini S.A. Equipamentos Industriais (3) - (3) Santa Elisa Participações S.A. 9-9 (1,612) - (1,612) Uberlândia Refrescos Ltda Usina Santa Elisa S.A (1,025) - (1,025) (30,304) - (30,304) Relative of a 's key management member Beatriz Biagi Becker (175) - (175) Edilah Faria Lacerda Biagi (568) - (568) (743) - (743) ,426, ,002 2,545,848 (1,709,381) (68,651) (1,778,032) 59

61 d) Compensation of key management personnel The compensation of officers and other key management personnel for the year is as follows: and Short-term benefits 11,675 12,363 Long-term benefits 4,988 2,436 16,663 14,799 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. Long-term benefits include performance bonus and deferred benefits that expired in each financial statements. 19. EQUITY Capital Changes in capital are as follows: As at March 31, 2017, capital is represented by 219,628,363 common shares (219,628,363 common shares as at March 31, 2016), all registered and without par value. In accordance with the s Bylaws, the 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, as well as define the price and other issuance terms and conditions. Capital reserve Capital reserve is composed of the balances of goodwill reserves in the issuance of shares, buyback of shares and costs directly related to the offer of shares. Dividend policy Shares In reais ( thousand) - R$ Common Capital Capital reserve ,628,363 2,618,214 1,355, ,628,363 2,618,214 1,355,616 The 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 6404/76, which is paid in the same year when the distribution is approved. 60

62 20. NET REVENUES AND COST OF SALES AND SERVICES Gross revenue (g) Domestic market (Restated) (Restated) Sugar 414, , , ,281 Ethanol 1,112,147 1,148,827 2,188,742 1,797,218 Energy 159, , , ,619 Other 18,682 16,795 96,738 67,184 1,704,554 1,711,658 3,260,185 2,827,302 Foreign market Sugar 528, ,815 2,165,048 1,696,484 Ethanol 10,186 23, , ,493 Other (a) 970, ,908 1,807,421 1,501,084 1,509,417 1,418,176 4,142,078 3,607,061 3,213,971 3,129,834 7,402,263 6,434,363 Taxes (b)/(c) (141,477) (104,881) (356,259) (254,588) Sales rebates (10,260) (12,092) (20,950) (17,127) Net revenue 3,062,234 3,012,861 7,025,054 6,162,648 Cost of sales (d)/(f) Domestic market Sugar (321,985) (307,675) (500,235) (511,026) Ethanol (963,359) (892,129) (1,890,132) (1,443,725) Energy (47,678) (44,430) (85,870) (90,486) Other (22,533) (13,013) (80,688) (51,436) (1,355,555) (1,257,247) (2,556,925) (2,096,673) Foreign market Sugar (e) (628,399) (346,573) (2,044,241) (1,443,911) Ethanol (e) (13,392) (25,382) (185,601) (441,283) Other (a) (993,282) (872,449) (1,853,214) (1,471,455) (1,635,073) (1,244,404) (4,083,056) (3,356,649) Gains (losses) on changes in fair value less estimated costs to sell biological assets Sugar 106,152 49, , ,820 Ethanol 20,015 25,248 71,486 (26,862) 126,167 74, , ,958 (2,864,461) (2,426,764) (6,394,521) (5,327,364) (a) Amounts relating to the export of commodities, as described in Note 18. (b) Includes government grants, which reduced the taxable base on sales by R$109,890 for the year ended March 31, 2017 (R$104,438 for the year ended March 31, 2016). (c) As at March 31, 2016, revenues and expenses include PIS and COFINS credits in the amount of R$40,973, in, and R$79,778, in (R$77,980 and R$120,218 as at March 31, 2016, respectively), as deemed credit, as set forth in article 1, of Law 12859, of September 10, 2013, published in the Official Gazette on September 11, (d) Include PIS and COFINS credits in the amount of R$26,062, in, and R$42,097, in, as at March 31, 2016 (R$18,025 and R$28,430, as at March 31, 2016, respectively), as prescribed by article 3, of Law 10637/02, which addresses the non-cumulativeness of PIS/PASEP; and article 3, of Law 10833/03, which addresses the noncumulativeness of COFINS. 61

63 (e) Include REINTEGRA credits, in the amount of R$3,415, in, and R$5,153, in, as at March 31, 2017 (R$3,516 and R$13,745, as at March 31, 2016, respectively), as set forth in article 21, of Law 13043, of November 13, 2014, which addresses the REINTEGRA reintroducing. (f) Include ICMS-ST credits on the acquisition of diesel fuel, in the amount of R$350, in, and R$2,657, in (R$266 and R$4,005, as at March 31, 2016, respectively), as set forth in article 155, paragraph 2, of CF88 and ICMS credits on materials, in the amount of R$1,805, in, and R$12,507, in, as at March 31, 2017 (R$788 and R$4,363 as at March 31, 2016, respectively). (g) Includes amounts relating to bill and hold sales in the amount of R$ according to CPC 30 (R1) Receitas/IAS 18 - Revenue. 21. EXPENSES BY NATURE The information on the nature of cost of sales and services and general, administrative and selling expenses is as follows: Cost of sales and services (Restated) (Restated) Personnel (*) (259,502) (231,701) (488,063) (455,401) Depreciation and amortization (**) (923,744) (665,964) (1,510,656) (1,167,266) Raw materials and inputs, net of taxes: Raw materials (644,404) (591,072) (1,871,973) (1,601,282) Inputs (117,063) (105,495) (209,124) (182,611) Products for resale (1,045,915) (907,419) (2,560,165) (2,046,762) (1,807,382) (1,603,986) (4,641,262) (3,830,655) Gains on changes in fair value less estimated costs to sell biological assets 126,167 74, , ,958 (2,864,461) (2,426,764) (6,394,521) (5,327,364) General, administrative and selling expenses Personnel (*) (74,593) (83,086) (142,394) (161,513) Depreciation (13,929) (16,719) (27,655) (30,242) Freight (84,049) (59,078) (183,067) (166,569) Services (35,899) (56,410) (121,387) (145,082) Shipping expenses (2,829) (1,892) (75,006) (27,346) Other (47,311) (33,243) (48,835) (49,543) (258,610) (250,428) (598,344) (580,295) (*) As at March 31, 2017, the personnel expenses, in and, in the amount of R$334,095 and R$630,457, respectively (R$314,787 and R$616,914 as at March 31, 2016), comprise R$320,271 and R$605,522, respectively (R$302,759 and R$594,440 as at March 31, 2016) relating to personnel expenses, and R$13,824 and R$24,935 (R$12,028 and R$22,474 as at March 31, 2016) relating to INSS contribution, respectively. (**) Includes biological asset and agricultural produce. 62

64 22. FINANCE INCOME (EXPENSES) Finance income Discounts obtained , Income from financial investments 7,391 14,538 32,739 41,319 Interest 12,507 13,887 32,691 55,886 Other 7,533 4,721 12,863 16,127 27,999 33,648 79, ,998 Finance expenses Interest (368,427) (274,255) (691,329) (658,550) Discounts granted (1,901) (947) (2,276) (3,567) Tax on Financial Operations - IOF (782) (6,240) (2,478) (6,613) Tax on Financial Operations - IOF - Intercompany Transactions (15,870) (4,915) (14,889) (6,850) Other (4,960) (2,449) (16,762) (3,438) PIS and COFINS on finance income (424) (936) (3,766) (3,991) (392,364) (289,742) (731,500) (683,009) Derivatives Derivatives of Commodities (10,770) (24,374) (12,415) (24,695) Derivatives of exchange - Comercial transactions 146,562 62,569 80, ,153 Derivatives of exchange - Financial transactions (181,341) (286,303) (181,341) (286,302) Derivatives of interest rate - Libor Sw ap - - (12,415) (26,632) (45,549) (248,108) (125,350) (206,476) Exchange rate changes 161,533 (227,264) 327,398 (457,605) Finance expenses (248,381) (731,466) (450,126) (1,233,092) 23. OTHER OPERATING INCOME (EXPENSES) Reversal (recognition) of provision for tax, labor, civil and environmental contingencies (4,397) 4,868 24, ,062 Contratual Fines and indemnities (1,543) (23,476) (28,450) (68,898) Tax income (expenses) (2,374) (2,568) 13,066 (9,274) Impairment reversal - property, plant and equipment 1,001 8,176 2,087 8,764 Gain (loss) on sale of property, plant and equipment 1,211 (6,558) (387) (10,876) Reversal (recognition) of allow ance for doubtful accounts 671 (805) (121) (981) Other operating income, net 20,819 27,320 26,232 32,911 Total other operating income, net 15,388 6,957 36,823 90,708 Total other operating income 74,155 67, , ,961 Total other operating expenses (58,767) (60,670) (83,790) (144,253) 63

65 24. LOSS PER SHARE The basic and diluted loss per share was calculated based on the loss attributable to the Biosev s owners divided by the weighted average number of outstanding common shares (Restated) (Restated) Loss for the year attributable to the 's ow ners (600,132) (890,298) (600,132) (890,298) Weighted average number of shares used to calculate basic and diluted earnings per share 213,134, ,971, ,134, ,971,997 Total basic and diluted loss per share ( ) ( ) ( ) ( ) 25. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS I Risk management The 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 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 market, 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 or negotiated with Louis Dreyfus Suisse S.A. Transactions contracted on the stock exchange market are mainly traded in futures and options markets at the New York Commodities Exchanges (NYSE: ICE) and Chicago (NYSE: CME), and São Paulo Stock and Mercantile Exchange (BM&FBOVESPA). The use of these instruments is guided by the Financial and Risk Management Policy approved and revised by the Board of Directors on September 13, 2013 and June 1, 2016, respectively. Additionally, the 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 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 of the and its subsidiaries, as well as the related debt instruments; (iii) inform about the burdens on the assets of the and its subsidiaries; and (iv) monitor the risk management instruments of the and its subsidiaries. The Market Consultancy Service Agreement, between Biosev Bioenergia International S.A, Louis Dreyfus Suisse S.A and Biosev S.A, entered into on November 29, 2010 with due date on March, 31, 2024, and according to 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 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. 64

66 25.1 Market risk The 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 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 mentioned 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. As at March 31, 2017, the assets and liabilities relating to the derivative transactions are broken down as follows: Exchange risk management (Note ) 117,240 (152,465) 170,466 (152,465) Interest rate risk management (Note ) - - (28,846) (69,361) Agricultural commodities risk management (Note ) (550) 18,353 (550) 18, ,690 (134,112) 141,070 (203,473) Current assets 132,482 46, ,708 46,077 Current liabilities (15,792) (180,189) (28,402) (201,882) Non-current liabilities - - (16,236) (47,668) Foreign exchange risk management Because the 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 s Board of Directors on September 13, The 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, costs and debts. The 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 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 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. 65

67 The table below shows the s NDF, DOL, DI and DDI forward currency sale instruments, used for purposes of hedging foreign exchange risk and respective results: Outstanding forw ard contracts NDF US dollar Hedge Accounting - short position Maturity: (*) Convenience conversion Less than 3 months (79,994) - (291,717) - 38,364-3 to 6 months (152,980) (24,531) (559,738) (95,086) 67,328 4,685 Hedge accounting - long position Maturity: (232,974) (24,531) (851,455) (95,086) 105,692 4,685 3 to 6 months , ,289 - (9,212) - Non-hedge accounting - short position Maturity: 170, ,289 - (9,212) - Less than 3 months (135,006) - (429,328) - 1,574-3 to 6 months (85,020) (469) (272,118) (1,819) Over 6 months (26,000) - (95,758) - 10,608 - Non-hedge accounting - long position Maturity: (246,026) (469) (797,204) (1,819) 12, Less than 3 months , , , ,484 9,565 (87,495) Over 6 months , ,910 - (40,817) Outstanding futures contracts DOL - dollar futures Maturity: 225, , ,321 1,706,394 9,565 (128,312) Less than 3 months 45,500 8, ,162 31, ,595 3 to 6 months (85,000) - (269,314) DDI - futures exchange coupon Maturity: (39,500) 8,750 (125,152) 31, ,595 Less than 3 months 165, , , ,515 (2,689) (6,470) 3 to 6 months (22,050) 68,751 (69,864) 244, (1,947) Over 6 months (101,954) (117,333) (323,031) (417,578) 484 2,963 DI - 1 day: 41,343 85, , ,616 (2,057) (5,454) Less than 3 months (143,204) (188,076) (453,726) (669,344) (4) 1 3 to 6 months 41,777 (73,659) 132,367 (262,146) Over 6 months 115,120 81, , ,052 (33) 59 US outstanding option contracts Maturity: Average exchange rate Notional value contracted Foreign currency Local currency (*) Fair value (Sale) purchase (Sale) purchase 13,693 (180,235) 43,388 (641,438) (22) 84 3 to 6 months - 100, ,890 - (34,093) - 100, ,890 - (34,093) 117,240 (152,465) 66

68 Outstanding forw ard contracts NDF US dollar Hedge accounting - short position Maturity: (*) Convenience conversion Less than 3 months (79,994) - (291,717) - 38,364-3 to 6 months (152,980) (24,531) (559,738) (95,086) 67,328 4,685 Hedge accounting - long position Maturity: (232,974) (24,531) (851,455) (95,086) 105,692 4,685 3 to 6 months , ,289 - (9,212) - Non-hedge accounting - short position Maturity: 170, ,289 - (9,212) - Less than 3 months (135,006) - (429,328) - 1,574-3 to 6 months (85,020) (469) (272,118) (1,819) Over 6 months (26,000) - (95,758) - 10,608 - Non-hedge accounting - long position Maturity: (246,026) (469) (797,204) (1,819) 12, Less than 3 months , , , ,484 9,565 (87,495) Over 6 months , ,910 - (40,817) Outstanding futures contracts DOL - dollar futures Maturity: 225, , ,321 1,706,394 9,565 (128,312) Less than 3 months 45,500 8, ,162 31, ,595 3 to 6 months (85,000) - (269,314) DDI - futures exchange coupon Maturity: (39,500) 8,750 (125,152) 31, ,595 Less than 3 months 165, , , ,515 (2,689) (6,470) 3 to 6 months (22,050) 68,751 (69,864) 244, (1,947) Over 6 months (101,954) (117,333) (323,031) (417,578) 484 2,963 DI - 1 day: 41,343 85, , ,616 (2,057) (5,454) Less than 3 months (143,204) (188,076) (453,726) (669,344) (4) 1 3 to 6 months 41,777 (73,659) 132,367 (262,146) Over 6 months 115,120 81, , ,052 (33) 59 US outstanding option contracts Maturity: Average exchange rate Notional value contracted Foreign currency Local currency (*) Fair value (Sale) purchase (Sale) purchase 13,693 (180,235) 43,388 (641,438) (22) 84 Less than 3 months (28,859) - (91,437) - 4,695-3 to 6 months (89,006) 100,000 (282,008) 355,890 16,289 (34,093) Over 6 months (159,284) - (504,675) - 32,242 - (277,149) 100,000 (878,120) 355,890 53,226 (34,093) 170,466 (152,465) Interest rate risk management The 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. 67

69 The table below shows the s Libor swap instruments with receipt of Libor interest and payment of fixed rates and presents the derivatives used for purposes of hedging Libor interest risk and respective results: Average fixed rate Notional value contracted - % Foreign currency Local currency (*) Fair value Hedge Accounting Outstanding position: Less than 1 year 3.15% 3.15% 39,967 39, , ,237 (12,610) (21,693) 1 to 2 years 3.15% 3.15% 39,967 39, , ,237 (7,506) (16,970) 2 to 5 years 3.15% 3.15% 119, , , ,712 (7,745) (26,690) Over 5 years 3.15% 3.15% 56,002 95, , ,542 (985) (4,008) 255, , ,587 1,052,728 (28,846) (69,361) (*) Convenience conversion Agricultural commodities risk management The 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 s future sales value. These risks are managed according to the s Risk Management Policy and the hedge strategy monitoring tool which determines the hedge volume and timeframes. 68

70 The s futures and option contracts in the year used for commodity risk hedging and the related results are as follows: Outstanding sugar futures contracts ICE RAW Açúcar Hedge Accounting Maturity: Less than 3 months (5,859) - (18,562) to 6 months (597) (58,813) (1,893) (209,309) 6 7,879 Over 6 months (29,119) (73,167) (92,260) (260,395) 379 8,521 Non-Hedge Accounting (35,575) (131,980) (112,715) (469,704) ,400 Maturity: Less than 3 months (15,338) (62,406) (48,598) (222,097) 21 8,380 3 to 6 months 8,977 (40,796) 28,443 (145,188) (94) 4,638 Over 6 months 66,836 38, , ,746 (946) 3,216 Outstanding sugar options contracts Opções - ICE RAW Açúcar 60,475 (64,778) 191,607 (230,539) (1,019) 16,234 Maturity: Less than 3 months (20) 3 to 6 months - (11,831) - (42,107) - (13,642) Outstanding forw ard contracts NDF sugar NDF - açúcar Maturity: - (11,711) - (41,680) - (13,662) Over 6 months - (1,508) - (5,992) - (545) Outstanding ethanol futures contracts Futuro Etanol - BMF&Bovespa Maturity: - (1,508) - (5,992) - (545) Less than 3 months (146) (565) (463) (2,010) to 6 months ,817 2, Futures ethanol - CBOT Maturity: Notional value e Foreign currency Local currency (*) Fair value , Less than 3 months 327 (2,804) 1,035 (9,978) to 6 months - 5,193-18,481 - (337) 327 2,389 1,035 8, (161) (550) 18,353 (*) Convenience conversion 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 s credit policy, using a risk assessment methodology, the adopted balanced scorecard techniques. The adopts hedging instruments, such as collaterals, pledges and guarantees, to mitigate potential credit exposures. Historically, the does not record significant losses in trade receivables. 69

71 25.3 Liquidity risk The 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 has good relationship with first-class banks, in Brazil or abroad, as well as a credit line with its parent. Moreover, the products manufactured by the 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 Liquidity and interest rate tables The tables below show in detail the expected maturity of the Group s financial liabilities: Less than 1 month 1 to 3 months 3 months to 1 year 1 to 5 years Over 5 years Total As at March 31, 2017 Borrow ings and financing 14, , ,893 1,465, ,941 2,375,403 Derivative financial instruments 6,580-9, ,792 Trade payables 195,592 68,196 56,669 1, ,496 Accrued payroll and related taxes 12,223 14,744 34, ,050 Taxes payable 20, ,396 Other payables 34,404 42,234 5,243 23, , ,677 As at March 31, , , ,100 1,490, ,182 3,321,814 Borrow ings and financing 241,232 84, ,445 1,474, ,160 2,525,123 Derivative financial instruments 61, ,784 10, ,189 Trade payables 155,738 38,810 31, ,424 Accrued payroll and related taxes 10,175 27,441 33, ,200 Taxes payable 12, , ,706 Other payables 76,469 5, , , , , ,175 2,026, ,160 3,651,724 Less than 1 month 1 to 3 months 3 months to 1 year 1 to 5 years Over 5 years Total As at March 31, 2017 Borrow ings and financing 75, ,828 1,136,081 3,842, ,806 6,288,654 Derivative financial instruments 6,580-21,822 15, ,638 Trade payables 641, ,318 34,413 1, ,989 Accrued payroll and related taxes 20,860 22,526 65, ,609 Taxes payable 39, , ,644 Other payables 106,533 50,493 4,271 32,828 23, , , ,552 1,271,318 3,893, ,300 7,504,607 As at March 31, 2016 Borrow ings and financing 340, ,457 1,087,773 4,031, ,774 6,711,929 Derivative financial instruments 61, ,784 32,349 42,477 5, ,550 Trade payables 465,934 70,761 35,788 1, ,716 Accrued payroll and related taxes 18,963 44,326 61, ,720 Taxes payable 40, , ,038 Other payables 137,970 6,451 15,230 72, ,536 1,065, ,099 1,237,767 4,147, ,965 7,938,489 70

72 25.4 Capital risk The manages its capital structure in order to safeguard a continuous return to the s shareholders. The 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 allocates the swap contracts designated as hedge accounting (see Note ) to the adjusted net debt for capital risk analysis purposes. The may change its capital structure, in conformity with economic and financial conditions, aiming at optimizing its financial leverage and/or debt management 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, 2017, the has R$10,471 (R$80,794 as at March 31, 2016), fully deposited by the s in cash, through fiduciary agent Term Commodities Inc, a company under common control. To trade on the BM&FBOVESPA, the margin call required, as at March 31, 2017, is R$11,798 (R$68,429 as at March 31, 2016), deposited as Bank Deposit Certificate (CDB), in the amount of R$8,400 (R$68,400 as at March 31, 2016) and in cash in the amount of R$5,506. As at March 31, 2017, the s derivative transactions on the over-the-counter market do not require margin calls 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/or 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 uses several methods and makes assumptions that are based on existing market conditions at the end of the financial statements. The fair value of foreign exchange forwards is determined based on forward exchange rates quoted at the end of the financial statements. 71

73 Financial assets: Fair value through profit or loss: Derivatives designated as hedge accounting (Note 25.1) 116,572 21, ,572 21,086 Held for trading 15,910 26,997 69,136 26,997 Held to maturity: Short-term investments (Note 4) 38, , , ,099 Loans and receivables: Cash and cash equivalents (Note 3) 290, ,087 1,463,438 1,826,121 Trade receivables (Note 5) 118,174 83, , ,000 Other financial assets 201, , , ,881 Financial liabilities: Fair value through profit or loss: Derivatives designated as hedge accounting (Note 25.1) ,309 69,361 Held for trading 15, ,195 15, ,195 Other financial liabilities: Borrow s and financing (Note 14) 2,375,403 2,525,123 6,288,654 6,711,929 Trade payables (Note 15) 321, , , ,716 Other financial liabilities 609, , , , 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 or indirectly observable for an asset or liability. 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 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, 2017, are as follows: 72

74 Level 1 Level 2 Total Financial assets at fair value through profit or loss Derivative financial assets , , , ,482 Financial liabilities at fair value through profit or loss Derivative financial liabilities (2,046) (13,746) (15,792) (2,046) (13,746) (15,792) Nível 1 Nível 2 Total Financial assets at fair value through profit or loss Derivative financial assets 41,362 4,715 46,077 41,362 4,715 46,077 Financial liabilities at fair value through profit or loss Derivative financial liabilities (51,332) (128,857) (180,189) (51,332) (128,857) (180,189) Level 1 Level 2 Total Financial assets at fair value through profit or loss Derivative financial assets , , , ,708 Financial liabilities at fair value through profit or loss Derivative financial liabilities (2,046) (42,592) (44,638) (2,046) (42,592) (44,638) Nível 1 Nível 2 Total Financial assets at fair value through profit or loss Derivative financial assets 41,362 4,715 46,077 41,362 4,715 46,077 Financial liabilities at fair value through profit or loss Derivative financial liabilities (51,332) (198,218) (249,550) (51,332) (198,218) (249,550) 25.8 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 applies hedge accounting to account for part of its derivative and non-derivative financial instruments. The 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 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 changes in fair value of derivatives is recognized in equity, in line item Other comprehensive income (loss). The non-effective portion is recognized immediately in profit or loss for the year. The gain or losses 73

75 recognized in equity are transferred to profit or loss when the hedged item impacts the profit or loss for the year. When the hedge instrument matures, is sold or the transaction is no longer designated for hedge accounting, the accumulated effective portion recorded in equity, in line item Other comprehensive income (loss), is held in this reserve until performance of the hedge transaction that impacts the s profit or loss Sensitivity analysis The table below shows the 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, 2017) and the Group s expectations for each one of the variables indicated, over a twelve-month period. 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 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 7 and Notional amount - foreign currency Risk factor Probable Effects on fair value scenario 25% stress 50% stress Effects on profit or loss Exchange risk Non-derivatives Cash and cash equivalents 63,981 Decrease in US$ (29,041) (50,679) (101,358) Short-term investments 3,487 Decrease in US$ (1,583) (2,762) (5,524) Trade receivables 10,001 Decrease in US$ (4,539) (7,922) (15,844) Advances to suppliers 35,368 Decrease in US$ (16,053) (28,015) (56,029) Trade payables (5,634) Increase in US$ (2,557) (4,462) (8,925) Advances from foreign customers (424,406) Increase in US$ (192,640) (336,172) (672,344) Short- and long-term borrow ings and financing (397,888) Increase in US$ (180,603) (315,167) (630,334) Derivatives Futures and forw ards contracts in foreign currency (19,183) Increase in US$ (50,303) (87,782) (175,564) Price risk Sugar futures and options contracts (purchase) 60,475 Decrease in sugar price (58,187) (47,867) (95,733) BMF ethanol futures contracts (sales) 743 Decrease in ethanol price (341) (348) (696) CBOT ethanol futures contracts (sales) 327 Decrease in ethanol price (205) (162) (325) Effects on equity Exchange risk Non-derivatives Exchange rate change hedge accounting (140,000) Increase in US$ (63,547) (110,894) (221,788) Derivatives NDF hedge accounting (62,974) Increase in US$ (28,685) (50,057) (100,114) Price risk Derivatives Futures hedge accounting (35,575) Increase in sugar price (33,131) (27,255) (54,510) 74

76 Notional amount - foreign currency Risk factor Probable Effects on fair value scenario 25% stress 50% stress Effects on profit or loss Exchange risk Non-derivatives Cash and cash equivalents 380,726 Decrease in US$ (172,814) (301,573) (603,147) Short-term investments 3,572 Decrease in US$ (1,621) (2,829) (5,658) Trade receivables 167,013 Decrease in US$ (75,808) (132,291) (264,582) Advances to suppliers 249,490 Decrease in US$ (113,245) (197,621) (395,243) Trade payables (190,971) Increase in US$ (86,683) (151,269) (302,537) Advances from foreign customers (1,137,782) Increase in US$ (516,445) (901,237) (1,802,473) Short- and long-term borrow ings and financing (860,795) Increase in US$ (390,719) (681,836) (1,363,672) Derivatives Options contracts (277,149) Increase in US$ (86,884) (143,648) (266,616) Futures and forw ards contracts in foreign currency (19,183) Increase in US$ (50,303) (87,782) (175,564) Price risk Sugar futures and options contracts (purchase) 60,475 Decrease in sugar price (58,187) (47,867) (95,733) BMF ethanol futures contracts (sales) 743 Decrease in ethanol price (341) (348) (696) CBOT ethanol futures contracts (sales) 327 Decrease in ethanol price (205) (162) (325) Effects on equity Exchange risk Non-derivatives Exchange rate change hedge accounting (721,468) Increase in US$ (327,478) (571,475) (1,142,949) Derivatives NDF hedge accounting (232,974) Increase in US$ (28,685) (50,057) (100,114) Interest rate risk Derivatives Sw ap LIBOR Hedge Accounting (62,974) Decrease in libor rate (5,347) (10,701) (21,429) Price risk Derivatives Futures Hedge Accounting (35,575) Increase in sugar price (33,131) (27,255) (54,510) On March 31, 2017, the probable scenario considers a CDI rate projected for the 12-month period, adjusted based on the percentage of the respective exposures and extracted on BM&F Bovespa's benchmark exchange rates, a 12 month LIBOR market rate and a current TJLP. These rates were applied to the exposure volume for each of the indexes in the table below of loans and financing, advances from customers, cash and cash equivalents and financial investments to calculate the probable impact of each index on the financial result. For the three indexers simulations were performed considering the worst scenarios, a 25% and 50% increase in the rates of the probable scenarios. Notional amount Local currency Probable scenario 25% stress 50% stress Operations indexed to CDI (368,476) (46,148) (57,685) (69,222) Operations indexed to Labor (1,345,340) (12,195) (15,244) (18,292) Operations indexed to TJLP (13,117) (984) (1,230) (1,476) Total (1,726,933) (59,327) (74,159) (88,990) Notional amount Local currency Probable scenario 25% stress 50% stress Operations indexed to CDI (247,338) (27,255) (34,069) (40,882) Operations indexed to Labor (4,805,572) (39,550) (49,437) (59,325) Operations indexed to TJLP (13,117) (984) (1,230) (1,476) Total (5,066,027) (67,789) (84,736) (101,683) 75

77 26. 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, 2017, the volumes of these commitments total 1,601,137 tons of sugar (1,840,905 tons of sugar as at March 31, 2016), 126,846 cubic meters of ethanol (180,651 cubic meters as at March 31, 2016), and electricity supply commitments, assumed in power auctions and free market, which total 9,622 GWh to be supplied by 2035 (10,214 GWh as at March 31, 2016). 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. As at March 31, 2017, estimated purchase commitments by crop are as follows: Harvest Estimated area (hectares) Estimated quantity of cane (Ton) Estimated amount 2017/ ,678 8,876, , / ,615 6,576, , / ,946 4,395, , / ,528 3,129, ,809 After ,347 1,598, , ,114 24,575,737 2,069,873 As at March 31, 2017, the has commitments for the purchase of ethanol from third parties, in the volume of 23,560 cubic meters (10,000 cubic meters as at March 31, 2016), under ANP #67, which requires a minimum inventory of the volume sold in the previous year in order to ensure the supply in the Northeast, which region may not have sufficient production to ensure its own supply over the year. c) Agricultural partnership or lease agreements As at March 31, 2017, 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. Harvest Estimated quantity of cane (Ton) Estimated amount 2017/2018 5,968, , /2019 5,158, , /2020 3,992, , /2021 3,070, ,923 After ,880, ,378 25,069,777 2,114,112 The 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 7. 76

78 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$2.4738/m² calculated on a minimum area of 70,000 m² equivalent to R$191 per month or R$2,297 per year, plus a guaranteed variable minimum installment equivalent to R$3,762 per year payable to CODESP, corresponding to R$2.5080/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. 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, 2017, is equivalent to U$11,208 thousand (U$22,416 thousand as at March 31, 2016). This financing is included in the Group s debt, as indicated in Note 14. 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) Lawsuits against Instituto do Açúcar e do Álcool - IAA The is a plaintiff in lawsuits in which it 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. g) Bank guarantees and collateral insurance As at March 31, 2017, the (i) bank guarantees amount to R$117,019 in (R$140,521, in, as at March 31, 2016); and (ii) collateral issurance relating to lawsuits amounts to R$241,422, in, and R$320,730 in (R$231,844 and R$284,389 as at March 31, 2016, respectively). 27. INSURANCE The 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, 2017 includes: (1) Equivalent to the maximum coverage for sundry assets and locations. (*) The maximum coverage equivalent to the civil liability by covered vehicle. (**) and subsidiaries covered by the same policy. Maximum coverage (1) Insurance Assets, responsibilities or interests covered Operating risks (**) Buildings, fixed and machinery equipment of the group s 13 plants and offices 500, ,000 General civil liability (**) Damages against third parties arising from the s operations 15,000 15,000 Vehicles (*) Damages against third parties arising from traffic accidents Management liability (**) Law suits filed against the s management 40,000 40,000 Equipament and improvement Machinery and equipment 28,813 67,298 Guarantee (***) Operations and obligations backed by guarantee 214, ,264 (***) The maximum coverage equivalent to the total amount approved with the insurance companies. and subsidiaries share the same maximum indemnity limit. 77

79 28. EMPLOYEES BENEFITS The consolidated amount invested by the in the pension plan was R$2,078 as at March 31, 2017 (R$2,041 as at March 31, 2016), recognized in line item General, administrative and selling expenses. Due to the features and design of the pension plan, the does not incur any future postemployment or actuarial obligations. The recorded a liability related to the deferred variable compensation that will be paid to some employees, totaling R$12,000 as at March 31, 2017 (R$19,002 as at March 31, 2016). In addition, the recorded a liability related to the Profit Sharing Program, as set forth in the Collective Agreement, in the amount of R$13,080 as at March 31, 2017 (R$36,251 as at March 31, 2016). 29. SEGMENT INFORMATION Information by product margin, and geographic areas, used by the key decision makers is as follows: profit (loss) by product Sugar Ethanol Energy Other Total Net revenue 2,791,017 2,123, ,761 1,891,813 7,025,054 Cost of products sold (2,370,502) (2,004,247) (85,870) (1,933,902) (6,394,521) Gross profit 420, , ,891 (42,089) 630,533 Gross margin 15% 6% 61% -2% 9% Selling expenses (226,521) (34,087) (9,158) (5,629) (275,395) Operating margin 193,994 85, ,733 (47,718) 355, Sales by geographic area Sugar Ethanol Energy Other Total Asia 1,252, ,637-1,687,847 3,043,842 North America 3,309 37,322-14,174 54,805 South America 22,146 5, ,348 Africa 698, , ,070 Europe 188,569 23,448-78, ,804 Oceania ,209 5,209 Foreign market 2,165, ,609-1,807,421 4,142,078 Domestic market 625,969 1,953, ,761 84,392 2,882,976 TOTAL 2,791,017 2,123, ,761 1,891,813 7,025, (Restated) profit (loss) by product Sugar Ethanol Energy Other Total Net revenue 2,298,707 2,071, ,193 1,559,718 6,162,648 Cost of products sold (1,802,117) (1,911,870) (90,486) (1,522,891) (5,327,364) Gross profit 496, , ,707 36, ,284 Gross margin 22% 8% 61% 2% 14% Selling expenses (150,951) (58,043) (9,323) (296) (218,613) Operating margin 345, , ,384 36, ,671 78

80 (Restated) Sales by geographic area Sugar Ethanol Energy Other Total Asia 756, ,378-1,205,344 2,206,070 North America 52,745 99, ,295 South America 41,606 4, ,399 Africa 316,624 3,767-18, ,140 Europe 521,779 57, , ,775 Oceania 7, ,382 Foreign market 1,696, ,493-1,501,084 3,607,061 Domestic market 602,223 1,661, ,193 58,634 2,555,587 TOTAL 2,298,707 2,071, ,193 1,559,718 6,162,648 The 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 (Restated) Operating margin 355, ,671 Other operating expenses (294,015) (264,879) Finance expenses (450,126) (1,233,092) Income tax and social contribution (211,426) (3,238) Loss for the year (600,429) (884,538) Information on key customers As at March 31, 2017, the Group has two customers, its related parties Louis Dreyfus Suisse S.A. and Louis Dreyfus Asia Pte. Ltd, under common control, that accounts for 39% of the Group s consolidated revenue. 30. NON-CASH TRANSACTIONS The carried out the following investing and financing activities not affecting cash, which, therefore, were not reflected in the statement of cash flows: (Restated) (Restated) Transfer from depreciation and amortization to inventories (14,595) (36,814) (11,401) (68,397) Purchase of financed property, plant and equipment items - - 9, SUBSEQUENT EVENTS On March 9, 2017, through a meeting of quotaholders, it was approved a reduction of the capital stock of the subsidiary Crystalsev Comércio e Representação Ltda. ("Crystalsev"), in the total amount of R$49,270, which will be implemented upon the delivery by Crystalsev of the totality of its stake in Sociedade Operadora Portuária de São Paulo Ltda. ("SOP"), a directly controlled by Crystalsev. Pursuant to article 1.084, paragraphs 1 and 2, of the Civil Code, such approval shall become effective 90 days after the date of publication of the minutes of said meeting of the members without any challenge by creditors. 79

81 32. APPROVAL OF FINANCIAL STATEMENTS The financial statements were approved by the s management and authorized for issue on June 1,

82 Comments on the s Projections In the year ended March 31, 2017, the achieved a crushing volume of 31.5 million tons, a Cane TRS of kg/ton and total production measured by Total TRS came to 4,068 thousand tons. These figures are within the range of the guidance for the year. The following table presents a comparison of the guidance given to the market and the actual results: 2016/17 Crop Year 2016/17 Actual 2016/17 Guidance Crushing (Million Tons) Cane TRS (kg/ton) Total TRS (1) (Million Tons) (1) - Total TRS is the product of crushing volume by cane TRS 81

83 NON-STATUTORY AUDIT COMMITTEE OPINION The non-statutory Audit Committee of ( ), jointly with the representatives of the and of Deloitte Touche Tohmatsu Auditores Independentes, independent auditors of the, examined the financial statements of the related to the fiscal year ended on March 31st, Based in the analysis performed and considering the draft of the audit report, without remarks, prepared by Deloitte Touche Tohmatsu Auditores Independentes, the non-statutory Audit Committee of the recommended, unanimously and without remarks, to the Board of Directors of the the approval of the referred financial statements. São Paulo, May 31st, FEDERICO ADRIAN CERISOLI WAGNER BERTAZO MÁRCIO ÁLVARO MOREIRA CASTRO 82

84 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, São Paulo, June 1, 2017 Rui Chammas Chief Executive Officer Paulo Prignolato Chief Financial and Investor Relations Officer Eduardo Leme das Neves Chief Operating Officer Daniela Aragão Officer 83

85 CRUSHING VOLUME REACHES 31.5 MILLION TONS WITH A CAPACITY UTILIZATION RATE OF 86.6%, A NEW RECORD São Paulo, June 1, 2017 Biosev, the world s second-largest sugarcane processor, announces its results for the 2016/17 crop year. HIGHLIGHTS OF THE 2016/17 CROP YEAR BM&FBOVESPA: BSEV3 Stock price on 5/31/2017: R$5.89 No. of shares: 219,628,363 Market cap: R$1.3 billion Conference Call Portuguese June 2, :00 a.m. (Brasília - BRT) 10:00 a.m. (NY EDT) 3:00 p.m. (London - BST) Dial-in: +55 (11) (11) Code: Biosev Replay: +55 (11) Code: # Conference Call English June 2, :00 a.m. (Brasília - BRT) 11:00 a.m. (NY EDT) 4:00 p.m. (London - BST) Dial-in: +1 (786) Toll-free: +1 (888) Code: Biosev Replay: Code: # Investor Relations ri@biosev.com Dial-in: (11) Capacity utilization rate of 86.6%, a new record; agricultural yield (TCH) increases 2% to 77.9 ton/ha, highlighting: At Biosev s clusters in Brazil s Center-South region (CS), yield increased 3% to 83.0 ton/ha; At the Ribeirão Preto Cluster (RP), yield increased 9% to 83.8 ton/ha; At the Lagoa da Prata Cluster (LP), yield increased 10% to 83.1 ton/ha. Cane TRS increased 1% to kg/ton, highlighting the 6% increase at the Lagoa da Prata Cluster to kg/ton; General and Administrative Expenses decreased 11%, equivalent to 15% in real terms; EBITDA ex-resale/hacc reached R$1.5 billion with margin of 32.2%. Biosev is the world s second largest sugarcane processor, with 11 agroindustrial units in Brazil. Biosev is controlled by the Louis Dreyfus 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 track record of growth through both acquisitions and expansion projects that have led its crushing capacity to increase from 0.9 million tons/year in 2000 to 36.4 million tons/year today. Biosev manages 346,000 hectares of land and has surplus biomass power generation capacity of 1,346 GWh. Biosev adopts the highest standards of corporate governance and its stock is traded on the Novo Mercado segment of the São Paulo Stock Exchange (BM&FBovespa).

86 85 1. MESSAGE FROM MANAGEMENT Biosev continued to make progress on its entrepreneurial project and confirmed productivity and operating efficiency gains as its key priorities, at the same time it strengthened the commitment to the renewal of its sugarcane fields. This direction comes as result of the belief that value creation will be driven by the combination of high-quality biological assets and industrial units with highly reliable operations and efficient processes, aiming at achieving the lowest production cost. These factors are further leveraged by superior market intelligence based on a commercial information system that combines a global vision with local market knowledge. From the industry standpoint, it is important to highlight the continuous improvement observed over the course of the crop year in the business environment for the sugar and ethanol industry. Sugar prices, which are cyclical by nature and determined globally based on the balance of supply and demand, posted an important recovery, supported by another year of demand outstripping supply, as demonstrated by the reduction in the stock-to-use ratio. At this moment in the cycle, with inventories shifting to new levels, price volatility tends to increase, as shown by recent fluctuations arising from changes in the positions of speculative funds, which have affected sugar prices in recent months. We believe this is a short-term dynamic and that business fundamentals will prevail over time. In our opinion, the outlook for sugar prices in the coming crop year remains positive, which could lead us to increase the share of sugar in the production mix in relation to the previous crop year. Note that Biosev s decision regarding its sugar and ethanol production mix is always driven by profitability maximization and take into consideration the regulatory environment and its potential impacts on ethanol prices. Ethanol prices were more attractive and higher than in the previous crop year. With the new fuelpricing policy adopted by Petrobras last year, we began working with a scenario of ethanol prices more correlated to market dynamics and pegged to oil-price fluctuations in the international market. On the operational front, we consolidated the continuous improvement process in the agricultural area and maintained the level of investment in renewing sugarcane fields and improving crop treatments, which resulted in another year of yield gains (TCH) on our cane fields. This, combined with the improvement in cane quality (TRS), supported an increase in total sugar per hectare (TSH) that places Biosev as a reference in the sugar and ethanol industry. Given the higher yields, we began to encounter bottlenecks at our mills, which affected costs and operational margins. We used the intercrop period to carry out the maintenance and investments required to maximize the operating reliability of our mills and consequently maximize production and dilute fixed costs for the 2017/18 crop year. We also continued to make progress on optimizing internal processes to capture efficiency gains, which included rigorously controlling general and administrative expenses, which fell by approximately 11% in nominal terms in relation to the prior crop year. On the financial front, it is worth to highlight Biosev s relationship with the banking community and the access to financing facilities, as demonstrated by its capacity to roll over short-term debt. We ended the crop year with a cash position of R$1.5 billion, which is sufficient to meet more than 80% of short-term liabilities, which we believe is adequate. From the strategic standpoint, our priorities remain lengthening the debt maturity profile and deleveraging, as well as working intensely on strengthening our capital structure. In the capital markets, it is worth to highlight the increase in stock liquidity and the expansion of our shareholder base, supported by targeted communication efforts.

87 86 As mentioned earlier, Biosev opted to maintain its level of investments in planting and treatments, while also investing in the maintenance of industrial and agricultural equipment during the intercrop period in order to improve even further the reliability of its operations. We expect a return on these investments in the form of operating efficiency gains (agricultural and industrial) and lower production costs. As part of its commitment to society and to fostering development in local communities, Biosev concluded the Participatory Social Diagnosis, whose results were translated into a more comprehensive study of the social, environmental and economic impacts of our operations. In the process, new ideas and suggestions were formulated to strengthen Biosev s Social Responsibility platform (through the programs Environmental Education, Education for Health, Community Integration and Citizen Participation) in order to create shared value in our relations with communities and other stakeholders. In closing, we believe we have intensely and adequately prepared for the crop year that has just begun. We are determined to improve our performance and results, leveraged by cost reduction via the optimization of internal processes and our capacity to secure higher prices, which is evidenced by a sugar hedge position with prices 30% higher than in the previous crop year for approximately 60% of our exposure. We will move forward, with discipline, towards our goal of consolidating Biosev as a company that sustainably generates positive free cash flow. I want to take this opportunity to thank all of our Clients, Suppliers, Employees, Partners, Shareholders and Business Institutions that have cooperated with Biosev over this last year and invite them this year to further strengthen our Partnership. Rui Chammas Chief Executive Officer

88 87 2. OPERATING PERFORMANCE The following table presents key indicators for operating efficiency and productivity, which are analyzed in this section: Efficiency and Productivity 2016/ /16 % Crushing ('000 tons) 31,535 30, % Own 20,184 19, % Third Parties 11,352 11, % TCH - Agricultural yield (ton/ha)* % Sugarcane TRS (kg/ton) % Capacity Utilization (%) 86.6% 85.1% 1.5 p.p. * Own cane only 2.1 Operating Efficiency In the 2016/17 crop year, Biosev registered crushing volume of 31.5 million tons, which is the highest volume of the last six crop years and 1.9% higher than in the last crop year. The capacity utilization rate reached 86.6%, 1.5 p.p. higher than last crop year. The higher crushing volume in the 2016/17 crop year was supported primarily by the 2.3% increase in yield, measured by tons of cane per hectare (TCH), which reached 77.9 ton/ha. Biosev s units located in Brazil's Center-South region registered a yield of 83.0 ton/ha, increasing 2.6% on the prior crop year. Crushing at the RP Cluster amounted to 16.7 million tons, or 4.2% higher than in the 2015/16 crop year. This performance was supported mainly by the 8.6% increase in yield, to 83.8 ton/ha. It is worth to highlight that MB and Continental units both set new records for crushing volume. At the Mato Grosso do Sul (MS) Cluster, crushing volume was 7.8 million tons, down 4.5% on the previous crop year. This performance reflects the 5.3% decrease in yield, which was partially offset by the increase in the harvested area. Still in the MS Cluster, the Passatempo unit also set a new record for crushing volume. At the Leme (L) and Lagoa da Prata (LP) clusters, combined crushing volume came to 4.9 million tons, representing growth of 16.6% on the previous crop year and also setting a new record. The result is due to the 7.4% higher yield and higher harvested area.

89 88 The following charts show the evolution in crushing volume on a consolidated basis and at the RP and MS clusters: Crushing Volume ('000 tons) Ribeirão Preto Mato Grosso do Sul 1.9% 30,959 31,535 15, % 16, % 8,194 7, / / / / / /17

90 Productivity Tons of Cane per Hectare (TCH) The yield (TCH) of Biosev s sugarcane fields in the 2016/17 crop year reached 77.9 ton/ha, increasing 2.3%, mainly due to: (i) the more intensive use of planting and crop treatments inputs; (ii) the adoption of enhanced agricultural practices, including the use of liquid and foliar fertilization, fertiirrigation and the modification of processes and equipment to optimize mechanized harvesting and reduce trampling; and (iii) the use of agricultural technologies, to be detailed in section The highlights in this area were the 8.6% yield increase at the RP Cluster to 83.3 ton/ha and the 7.4% yield increase at the Leme and Lagoa da Prata Clusters to 85.3 ton/ha. TCH at the MS Cluster was 81.0 ton/ha in the 2016/17 crop year, down 5.3% from 2015/16, mainly due to the effects of the adverse weather conditions. The following charts show the evolution in consolidated TCH at Biosev s units located in the Center- South region and in the RP and MS Clusters, with the highlights the consolidated yield in the Center- South and at the RP Cluster: TCH (ton/ha) Center South* Ribeirão Preto Mato Grosso do Sul % % % % / / / / / / / /17 * Excludes TCH for mills in the NE Cluster Cane Total Recoverable Sugar (TRS) In the 2016/17 crop year, cane TRS content was kg/ton, increasing 1.2%. The higher Cane TRS content is explained by (i) the progress made in the selection of cane varieties; (ii) the reduction in plant and mineral impurities in the harvest process; (iii) the systematic use of ripeners; and (iv) weather conditions during the 2016/17 crop year that favored the accumulation of TRS. The MS, L, LP and NE clusters all registered increases in cane TRS content. The highlight was the LP Cluster, which recorded a record-high TRS content of kg/ton, or 5.9% higher than in the previous crop year. At the NE Cluster, the severe drought that affected the region favored the accumulation of sugar in the cane and consequently had a positive impact in the TRS content. At the RP Cluster, the lower cane TRS content is associated with the resumption of crushing activities in March, when TRS content is typically lower. The following charts show the change in TRS content between crop years:

91 90 Sugarcane TRS (kg/ton) Center South* Ribeirão Preto Mato Grosso do Sul % % % % / / / / / / / /17 * excludes Sugarcane TRS for mills in the NE Cluster

92 Agricultural Technology Biosev consistently invests in agricultural technology to capture productivity gains and increase the longevity of its sugarcane fields. To support these efforts, it maintains Agricultural Operations Centers at its 11 agroindustrial units. This online management tool has been instrumental to improve the monitoring of field operations, especially the performance of harvesting and planting operations, and consequently to increase operating efficiency. The already uses an autopilot system for 100% of its mechanized harvesting and planting operations at its units in the Center-South region, and also has georeferenced 100% of its cane fields. To obtain optimal results from its autopilot system, Biosev uses simulators to train harvesters operators. In addition to that, Biosev also uses unmanned aerial vehicles (UAVs) to create images and conduct analyses of its cane fields, which is an essential tool for making decisions regarding field interventions. The tool is used to identify and correct fails in the cane fields at RP, MS and NE Clusters in order to maintain maximum plant populations per hectare and to create conditions for leveraging field productivity and longevity. With regard to the varietal profile, Biosev uses pre-sprouted seedlings (PSS) to accelerate the adoption of more productive and sugar-rich varieties. This technology enables the production of sugarcane from preselected high-quality seedlings that are free of disease and pests, which ensures a higher multiplication rate compared to traditional planting systems. During the 2016/17 crop year, more than six million PPSs (450 ha) were planted. Another important initiative in varietal evolution is the partnership with the Inter-University Network to Develop the Sugar and Ethanol Industry (Ridesa), which supports the development of the NE Cluster Experimental Center in the research and development of new sugarcane varieties to drive genetic enhancement in the Northeast. Cane fields planted with pre-sprouted seedlings also serve as sources of conventional seedlings (culms) of excellent quality and health for conventional planting. In this sense, Biosev began using automated planters that automatically dose and distribute seedlings and require no intervention by the operator. Some of the results obtained in the process are higher planting efficiency and lower seedling consumption, which saves on space for nurseries and makes more cane available for industrial processing. The next step is to install output controllers on planters to control the application of inputs. Also, concerning the enhanced control and monitoring of the use of inputs, Biosev uses precision agriculture techniques for applying soil amendments on areas prepared for new plantations. Georeferenced data supports the creation of maps for applying inputs at variable rates, which enhances distribution and improves control of amendment consumption. Over the coming crop years, this system will also be used to apply fertilizers at variable rates. With the adoption of these best practices, the agricultural technology employed on Biosev s sugarcane fields has evolved consistently and paved the way for new initiatives. One such example is foliar fertilization (aerial spraying), which seeks to ensure maximum cane fields yields and promote the accumulation of phytomass during the period of optimal plant development. Another example is the adoption of mathematical modeling for pest control at the RP Cluster, which allocates resources

93 to areas with the highest probability of pests and consequently improves the efficiency of controls and yields. 92

94 Production The following table shows volumes and the production mix: Production 2016/ /16 % Sugar Mix (%)* 50.7% 45.9% 4.8 p.p. Anhydrous Mix (%) 34.7% 30.8% 3.9 p.p. Production ('000 tons of TRS Product)** 3,924 3, % Sugar ('000 tons) 1,900 1, % Ethanol ('000 m³) 1,138 1, % Cogeneration (GWh) % * As of 2Q16, sugar mix calculation methodology was aligned with that adopted by the Sugarcane Industry Association (UNICA). **It considers the conversion factors applied in São Paulo State, published in Consecana Manual TRS Product Production in terms of tons of TRS Product came to 3,924 thousand tons in the 2016/17 crop year, up 0.9% from the previous crop year. The improvement is explained primarily by the 1.9% higher crushing volume and 1.2% higher Cane TRS content, which were partially offset by the reduction in industrial efficiency. The reduction in industrial efficiency is associated with the lower operating reliability combined with the lower efficiency of the industrial process in the 2016/17 crop year. Note that efforts to improve the efficiency of industrial equipment received special attention during the maintenance services conducted during the last intercrop period with the aim of eliminating bottlenecks and maximizing TRS product. As part of this strategy, Biosev has been intensifying its process engineering activities in order to increase industrial efficiency at its units. In the 2016/17 crop year, the share of sugar in the production mix increased 4.8 p.p. compared to the previous crop year, due to the higher volume of TRS allocated to sugar production because of its higher profitability compared to ethanol. In the crop year, anhydrous ethanol accounted for 34.7% of total ethanol production, increasing 3.9 p.p. from the previous crop year, due to the product's higher profitability compared to hydrous ethanol and energy cogeneration.

95 Cogeneration Biosev has cogeneration power plants at all 11 of its industrial sites and is energy self-sufficient during the harvest period. Of these units, nine produce surplus electricity for sale. Cogeneration destined for sale in the 2016/17 crop year decreased 9.2% to 843 GWh. The reduction was mainly due to the cease of power generation from external biomass, which was partially offset by the higher crushing volume and productivity of cogeneration units. Considering only the power generated from own biomass, cogeneration volume increased 5.1% compared to the previous crop year. The productivity of cogeneration units measured in kwh of power sold per ton of cane crushed 1 stood at 30.7 kwh/ton in the 2016/17 crop year, up 2.7% from the previous crop year. This increase reflects the optimizations in the cogeneration process, as well as the more favorable weather conditions (lower precipitation during the current crop year). At the RP Cluster, productivity was adversely affected by the lower operating efficiency of mills in the region. The following charts show a comparison of cogeneration for sale and productivity between the periods on consolidated basis and for the RP and MS Clusters: Cogeneration for Sale % Ribeirão Preto % 301 Mato Grosso do Sul % /16 16/ /16 16/ /16 16/17 1 This productivity indicator excludes crushing volume from mills that do not export energy and the amounts of outside biomass.

96 95 3. ECONOMIC AND FINANCIAL PERFORMANCE 3.1 Change in accounting standards for biological assets As of the 2016/17 crop year, Biosev reports biological assets in accordance with the new accounting standards CPC 27 / IAS 16 and CPC 29 / IAS 41. Accordingly, the following changes were made in the accounting classification and calculation of the fair value of biological assets: i. The value of ratoons continues to be recognized in non-current assets, under property, plant and equipment (PP&E), and no longer in biological assets, with its value recognized at deemed cost, and no longer at fair value; ii. Standing sugarcane is recorded as current assets, under the heading of biological assets, and no longer as non-current assets. It continues to be measured at fair value less estimated costs to sell, and calculated using the discounted cash flow method, which, under the new standard, includes cash flows projected for 12 months (compared to six years previously). To comply with the new standards and maintain the comparability of the s results between periods, previously reported figures were restated to reflect the new standards, as applicable. The following tables present details on the effects from adopting the new accounting standards for recognizing biological assets on the s income statement in the 2015/16 crop year and for 4Q16: Income Statement (R$ Thousand) 2015/16 Reported Biological Assets Effects 2015/16 Restated COGS (4,400,272) (927,092) (5,327,364) Income Tax and Social Contribution (318,449) 315,211 (3,238) Income Statement (R$ Thousand) 4Q16 Reported Biological Assets Effects 4Q16 Restated COGS (1,111,991) (41,375) (1,153,366) Income Tax and Social Contribution 37,829 14,067 51,896 Note that these adjustments produce only accounting impacts, and therefore do not affect Biosev s cash flow.

97 3.2 Net Revenue Net revenue excluding the non-cash effects from the hedge accounting (HACC) of foreigndenominated debt reached R$7.1 billion in the 2016/17 crop year, increasing 12.6%. This performance reflects the higher sales volume of sugar and the higher prices of sugar and ethanol, coupled with the growth in revenue from other products, which will be discussed in item Cogeneration revenue, however, fell 6.2%, mainly due to lower prices. In 4Q17, net revenue excluding the non-cash effects from the hedge accounting (HACC) of foreigndenominated debt reached R$1.6 billion, increasing 15.0%. This performance mainly reflects the lower sugar sales volumes and lower sugar and ethanol prices compared to the same quarter of last crop year, with these factors more than offset by the higher revenue from other products. Note that, in addition to revenue from sales of sugar, ethanol, energy cogeneration and the corresponding byproducts of the sugar and ethanol production process (molasses, dry yeast and sugar cane bagasse), Biosev s Net Revenue also includes revenue from the resale of finished products, such as: (i) sugar, ethanol and energy; and (ii) other commodities, which are required to comply with export performance contracts associated with obligations denominated in foreign currency. The following table presents a breakdown of net revenue ex-hacc by product and market: Net Revenue ex-hacc (R$ Thousand) 4Q17 4Q16 % 2016/ /16 % Sugar 411, , % 2,863,314 2,407, % Domestic Market 141, , % 625, , % Export Market 270, , % 2,237,345 1,805, % Ethanol 795, , % 2,137,912 2,113, % Domestic Market 772, , % 1,953,854 1,661, % Export Market 22,483 39, % 184, , % Energy 34,957 37, % 218, , % Other Products 330,164 96, % 1,891,813 1,559, % Dry yeast, molasses and bagasse 9,850 8, % 84,392 58, % Export performance contracts 320,314 88, % 1,807,421 1,501, % Total 1,572,298 1,366, % 7,111,800 6,314, % Additionally, the following table shows the revenue derived from resale transactions: Resale operations (R$ Thousand) 4Q17 4Q16 % 2016/ /16 % Sugar, ethanol and energy* 218, , % 722, , % Export performance contracts 320,314 88, % 1,807,421 1,501, % Total 538, , % 2,530,257 2,139, % * Revenue from sugar, ethanol and energy resale transactions are accounted in each of the corresponding product lines 96

98 97 The following charts present a breakdown of net revenue ex-hacc by product in both crop years, excluding: (i) the non-cash effects from the hedge accounting of foreign-denominated debt; and (ii) the revenue from export performance contracts. The highlight was the growth in the share of sugar in Biosev s revenue due to the higher sales volume and higher prices: Net Revenue ex-hacc by Product (%) The following charts present a breakdown of net revenue by market, excluding the effects from hedge accounting and the revenue from export performance contracts: Net Revenue ex-hacc by Market (%)

99 The following table presents the sugar and ethanol inventory position at the end of the respective periods: Inventories 2016/ /16 Sugar ('000 tons) Ethanol ('000 m 3 )

100 Sugar Net revenue from sugar sales excluding the non-cash effects from the hedge accounting of foreigndenominated debt (HACC) came to R$2.9 billion in the 2016/17 crop year, increasing 18.9%. This result basically reflects the 10.2% growth in sales volume combined with the 7.9% increase in the average sales price. The higher average sales price in the 2016/17 crop year reflects the recovery of sugar prices in the international market as well as the higher premiums for crystal and refined sugar compared to VHP. Meanwhile, sales volume growth is explained mainly by the higher share of sugar in the production mix. In 4Q17, net revenue from sugar sales excluding the non-cash effects from the hedge accounting of foreign-denominated debt (HACC) amounted to R$412 million, down 31.3% compared to 4Q16. The result reflects the 23.1% contraction in sales volume and the 10.6% decline in the average price compared to the prior-year period. The following charts present the evolution in net revenue and a comparison of sugar volumes and average prices, excluding the non-cash effects from the hedge accounting of foreign-denominated debt (HACC): Net Revenue ex-hacc (R$ million) Volume ( 000 tons) and Average Price (R$/ton) 2, % 2,863 1,156 2, % 10.2% 2,296 1,247 1,805 2,237 1,563 1, / / / /17

101 100 Net Revenue ex-hacc (R$ million) Volume ( 000 tons) and Average Price (R$/ton) 1, % 1, % Q16 4Q % Q16 4Q17 The following charts present a breakdown by type of sugar, excluding the non-cash effects from the hedge accounting of foreign-denominated debt: Net Revenue ex-hacc by type of sugar (%)

102 Ethanol Net revenue from ethanol sales, excluding the non-cash impacts from the hedge accounting of foreign-denominated debt (HACC), came to R$2.1 billion in the 2016/17 crop year, increasing 1.1% from 2015/16. This result reflects the 8.7% increase in the average price, which was partially offset by the 7.0% decrease in sales volume. The higher average price in the 2016/17 crop year is explained by: (i) the higher ethanol prices practiced in the domestic market, which were supported by the product s lower supply due to the higher allocation of TRS to sugar production; (ii) the positive impact from Petrobras new pricing policy; and (iii) the higher share of anhydrous ethanol, a higher value-added product, in the sales mix. In the 2016/17 crop year, the 7.0% decrease in sales volume reflects the higher share of sugar in the production mix. In 4Q17, net revenue from ethanol sales, excluding the non-cash effects from the hedge accounting of foreign-denominated debt (HACC), came to R$795 million, increasing 25.3% from 4Q16. This performance reflects the 40.4% growth in sales volume, which was partially offset by the 10.7% decrease in the average sales price. The following charts present the evolution in net revenue and a comparison of ethanol volumes and average prices, excluding the non-cash effects from the hedge accounting of foreign-denominated debt: Net Revenue ex-hacc (R$ million) Sales Volume ('000 m³) and Average Sales Price (R$/m³) 2, % 2,138 1, % 1, , % 1, ,662 1,954 1,002 1, / / / /17

103 102 Net Revenue ex-hacc (R$ million) Sales Volume ('000 m³) and Average Sales Price (R$/m³) % , % 1, % Q16 4Q17 4Q16 4Q17 The following charts present a breakdown of revenue by type of ethanol, excluding the non-cash effects from the hedge accounting of foreign-denominated debt, with the highlight the higher share of anhydrous ethanol in the sales mix: Net Revenue ex-hacc by type of ethanol (%) 2015/16 6.0% 2016/17 5,9% 36,0% 58,0% 41.3% 52,6%

104 Energy Net revenue from energy cogeneration was R$219 million in the 2016/17 crop year, down 6.2% from the previous crop year, mainly due the lower settlement price (PLD), which adversely affected Biosev s average price. The reduction was partially offset by the 5.7% higher sales volume, which was supported by higher crushing volume and a higher number of energy resale operations. Net revenue from energy sales was R$35 million in 4Q17, down 5.7%, due to the lower sales volume, which was partially offset by the higher average sales price in the period. The following charts present the evolution in net revenue and a comparison of energy volumes and average prices: Net Revenue (R$ million) Sales Volume (GWh) and Average Sales Price (R$/MWh) -11.3% % 5.7% ,396 1, / / / /17 Net Revenue (R$ million) Sales Volume (GWh) and Average Sales Price (R$/MWh) % % -31.3% Q16 4Q17 4Q16 4Q17

105 Other Products The line Other Products records revenue from sales of dry yeast, powdered molasses, raw and hydrolyzed bagasse for animal feed, in addition to revenue from the sale of commodities in the spot market to fulfill export performance contracts with the aim of settling obligations in foreign currency. In the 2016/17 crop year, revenue from the sale of other products amounted to R$1.9 billion, most of which was related to the performance of export contracts associated with the settlement of foreigndenominated debt.

106 Cost of Goods Sold (COGS) COGS amounted to R$6.4 billion in the 2016/17 crop year, increasing 20.0% from the previous crop year. This increase is mainly explained by: (i) higher unit costs, to be discussed below; (ii) the 2.3% growth in TRS sales volume; and (iii) the higher volume of resale operations, which includes the performance of export contracts. Excluding the non-cash effects and resale costs, COGS amounted to R$2.6 billion, up 14.7% from the 2015/16 crop year. Unit COGS increased from R$574/ton to R$644/ton between crop years, due to: (i) the higher costs associated with the acquisition of third-party cane, due to the 23.2% increase in the CONSECANA price; (ii) the higher costs with harvesting, loading and transportation (HLT) related mainly to labor, maintenance and diesel; (iii) the higher leasing costs (also affected by the CONSECANA price); and (iv) higher industrial costs, mainly related to labor and industrial maintenance. In 4Q17, Cash COGS ex-resale amounted to R$542 million, down 14.0% from 4Q16, mainly due to the higher portion of costs deferred to CAPEX, reflecting the higher number of intercrop days compared to the previous crop year. The following table presents a breakdown of total COGS and cash COGS: COGS and Cash COGS (R$ Thousand) 4Q17 4Q16* % 2016/ /16* % Total COGS (1,686,463) (1,153,366) 46.2% (6,394,521) (5,327,364) 20.0% Non cash items (575,312) (317,619) 81.1% (1,265,196) (1,041,308) 21.5% Depreciation and Amortization (521,207) (369,831) 40.9% (1,510,656) (1,167,266) 29.4% Gains (losses) from changes in the Fair Value minus estimated costs to sell (54,105) 52, % 245, , % Biological Assets Cash COGS (1,111,151) (835,747) 33.0% (5,129,325) (4,286,056) 19.7% Personnel (132,860) (128,216) 3.6% (488,063) (455,401) 7.2% Raw Materials (cane, land lease and HLT) (379,723) (448,792) -15.4% (1,871,973) (1,601,282) 16.9% Inputs (28,988) (52,395) -44.7% (209,124) (182,611) 14.5% Resale goods (569,580) (206,344) 176.0% (2,560,165) (2,046,762) 25.1% Sugar, ethanol and energy (237,243) (116,289) 104.0% (730,371) (575,107) 27.0% Export performance contracts (332,337) (90,055) 269.0% (1,829,794) (1,471,655) 24.3% Cash COGS ex-resale (541,571) (629,403) -14.0% (2,569,160) (2,239,294) 14.7% * Figures restated in accordance with the new standard for accounting of biological assets (CPC27/IAS16 and CPC29/IAS41). Cash COGS ex-resale (R$ Thousand) 4Q17 4Q16 % 2016/ /16* % Agricultural (465,764) (535,403) -13.0% (2,193,058) (1,898,296) 15.5% HLT (own + 3rd party cane) (183,571) (222,396) -17.5% (739,654) (706,240) 4.7% Land lease (135,446) (100,194) 35.2% (476,760) (371,791) 28.2% 3rd party cane (146,747) (212,813) -31.0% (976,642) (820,265) 19.1% Industrial (74,134) (74,865) -1.0% (355,004) (309,957) 14.5% Other (1,673) (19,135) -91.3% (21,098) (31,041) -32.0% Cash COGS ex-resale (541,571) (629,403) -14.0% (2,569,160) (2,239,294) 14.7% TRS Product sold ex-resale ('000 tons) % 3,987 3, % Cash COGS ex-resale (R$/Ton) (562) (686) -18.1% (644) (574) 12.2%

107 Gross Profit In order to analyze the profitability of the s operations, Biosev monitors cash gross profit, which excludes depreciation, amortization, changes in the fair value of biological assets and the effects from hedge accounting of foreign-denominated debt on net revenue, as well as the effects from resale operations (resale operations encompass the performance of export contracts). Accordingly, cash gross profit in the 2016/17 crop year amounted to R$2.0 billion, up 4.0% from R$1.9 billion in the 2015/16 crop year, while gross margin stood at 43.9%, down 2.5 p.p. from the previous crop year. The following chart shows the changes in cash gross profit and cash gross margin between crop years: Cash Gross Profit 2 ex-resale/hacc (R$ million) and Cash Gross Margin ex-resale/hacc (%) 2 Excludes depreciation, amortization, variation in the fair value of biological assets, hedge accounting effects of foreign-denominated debt on net revenue, and resale operations (resale operations consist of the performance of export contracts).

108 Selling, General and Administrative (SG&A) Expenses SG&A expenses amounted to R$571 million in the 16/17 crop year, increasing 3.8% from the previous crop year. Selling expenses came to R$275 million, an increase of 26.0% compared to 2015/16 crop year. The main factor in this variation was the increase in logistics expenses associated with the higher volume of sugar exports in the 2016/17 crop year. General and administrative expenses came to R$295 million, down 10.9% compared to the previous crop year. In real terms, these expenses fell 14.8%, reflecting the s continued initiatives to streamline its business processes. Selling expenses in the quarter amounted to R$43 million, down 6.0% from 4Q16, mainly due to the lower export volume. General and administrative expenses came to R$51 million in the quarter, decreasing 27.6% from 4Q16, due to the aforementioned initiatives. The following table presents a comparison of SG&A expenses between periods: SG&A (R$ Thousand) 4Q17 4Q16 % 2016/ /16 % Selling (42,682) (45,402) -6.0% (275,395) (218,613) 26.0% Freight (26,828) (33,442) -19.8% (183,067) (166,569) 9.9% Shipping Charges (12,201) (7,367) 65.6% (75,006) (27,346) 174.3% Commissions, wharfage and other (3,653) (4,593) -20.5% (17,322) (24,698) -29.9% G&A (51,409) (71,046) -27.6% (295,294) (331,440) -10.9% Personnel (20,735) (38,705) -46.4% (142,394) (161,513) -11.8% Services (22,506) (28,428) -20.8% (121,387) (145,082) -16.3% Other (8,168) (3,913) 108.7% (31,513) (24,845) 26.8% SG&A (Cash) (94,091) (116,448) -19.2% (570,689) (550,053) 3.8% Furthermore, depreciation expenses allocated as SG&A expenses amounted to R$27.7 million in the 2016/17 crop year and to R$6.3 million in 4Q17.

109 EBITDA Adjusted EBITDA (including resale/hacc) came to R$1.4 billion, decreasing 5.6% from the 2015/16 crop year. In 4Q17, adjusted EBITDA (including resale/hacc) came to R$368 million, down 22.9% compared to 4Q16. To ensure a more accurate analysis of Biosev s operating profitability, we opted to exclude from the calculation of adjusted EBITDA (3)(4) the effects from (i) resale operations, including the performance of export contracts, and (ii) the non-cash effects from the hedge accounting (HACC) of foreigndenominated debt on net revenue. Accordingly, and as shown in the following chart, adjusted EBITDA ex-resale/hacc was R$1.5 billion in the 2016/17 crop year, down 1.5% compared to the previous crop year. This performance is mainly explained by the increases in COGS and selling expenses, which were partially offset by higher sugar and ethanol prices and sugar sales volume growth, as already discussed. Adjusted EBITDA margin ex-resale/hacc stood at 32.2% in the crop year, down 3.7 p.p. from the previous crop year, basically due to higher unit costs. In 4Q17, Adjusted EBITDA ex-resale/hacc amounted to R$398 million, decreasing 9.6% from the same quarter of the previous crop year. This performance is mainly explained by lower sugar and ethanol sales prices and lower sugar sales volumes, which were partially offset by the reduction in unit COGS. EBITDA margin ex-resale/hacc stood at 38.5%, down 0.7 p.p. from the previous crop year. 3 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 Instruction 527), excluding non-recurring items. 4 EBITDA is not a measure of financial performance in accordance with the 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 operating 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.

110 109 The following chart shows the change in adjusted EBITDA ex-resale/hacc and EBITDA margin between periods: Adjusted EBITDA ex-resale/hacc (R$ million) and EBITDA Margin (%) The following table presents breakdowns of Adjusted EBITDA and Adjusted EBITDA exresale/hacc: EBITDA Composition (R$ Thousand) 4Q17 4Q16 % 2016/ /16 % Net Revenue 1,572,298 1,366, % 7,025,054 6,162, % Cash COGS (1,111,151) (835,747) 33.0% (5,129,325) (4,286,055) 19.7% Gross Profit (Cash) 461, , % 1,895,729 1,876, % SG&A (Cash) (94,091) (116,448) -19.2% (570,689) (550,053) 3.8% TEAG Profit/(Loss)¹ (778) 2, , % Other Operating Revenue/Expenses 1,699 55, % 36,823 90, % Non-recurring items (389) 4,657 - (1,837) 8,873 - Adjusted EBITDA 367, , % 1,360,537 1,440, % Adjusted EBITDA Margin 23.4% 34.9% p.p. 19.4% 23.4% -4 p.p. Resale effect² 30,643 (36,589) - 29,908 (92,567) - HACC effect³ , , % EBITDA ex-resale/hacc 398, , % 1,477,190 1,499, % EBITDA Margin ex-resale/hacc 38.5% 39.2% -0.7 p.p. 32.2% 35.9% -3.7 p.p. 1 - Equivalent to 50% of TEAG's shareholding position 2 - Excludes the effects from resale operations of sugar, ethanol, energy and exports performance contracts 3 - Excludes the impact from hedge accounting (HACC) of foreign currency debt on net revenue (non-cash impact)