Cosan Logística S.A. Interim financial statements June 30, 2018 (A free translation of the original in Portuguese)

Transcription

1 Interim financial statements June 30, 2018 (A free translation of the original in Portuguese)

2 Interim financial statements June 30, 2018 Contents Independent auditor s report on review of interim financial statements 3 Balance sheets 5 Statements of income 7 Statements of comprehensive income 9 Statements of changes in equity 10 Statements of cash flows indirect method 12 Statements of value added

3 Independent auditor's report on review of interim financial statements To the Management, Board of Directors and Shareholders of São Paulo - SP Introduction We have reviewed the accompanying individual and consolidated interim financial information of Cosan Logística S.A. ( Company ), included in the Quarterly Information Form - ITR for the quarter ended June 30, 2018, which comprise the balance sheet as of June 30, 2018 and the related statements of profit and loss and comprehensive income for the three and six-month periods then ended and changes in shareholders' equity and cash flows for the six-month period then ended, including the notes. Company s management is responsible for the preparation of these interim financial information in accordance with the Technical Pronouncement CPC 21 (R1) - Demonstração Intermediária and IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board - IASB, as well as for the presentation of the information in accordance with the standards issued by Comissão de Valores Mobiliários, applicable to the preparation of Quarterly Information - ITR. Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of review We conducted our review in accordance with Brazilian and International standards on review of interim financial information (NBC TR Revisão de Informações Intermediárias Executada pelo Auditor da Entidade and ISRE Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion on the interim financial information Based on our review, nothing has come to our attention that causes us to believe that the individual and consolidated interim financial information included in the quarterly information referred to above is not prepared, in all material respects, in accordance with CPC 21 (R1) and IAS 34 issued by IASB, applicable to the preparation of the Quarterly Information - ITR and presented in accordance with the standards issued by Comissão de Valores Mobiliários. 3

4 Other matters - Statements of added value The individual and consolidated interim financial information related to the Statements of added value (DVA) for the six-month period ended June 30, 2018, prepared under the responsibility of the Company s management, presented herein as supplementary information for IAS 34 purposes, have been subject to review procedures jointly performed with the review of the Company s interim financial information ITR. In order to form our conclusion, we assessed whether those statements are reconciled with the interim financial information and accounting records, as applicable, and whether their format and contents are in accordance with criteria determined in the Technical Pronouncement CPC 09 Demonstração do Valor Adicionado. Based on our review, nothing has come to our attention that causes us to believe that the statements of added value referred to above were not prepared, in all material respects, consistently with the overall individual and consolidated interim financial information. São Paulo, 07 August 2018 KPMG Auditores Independentes CRC 2SP014428/O-6 Original in Portuguese signed by Rogério Hernandez Garcia Contador CRC 1SP213431/O-5 4

5 Balance sheets Note Parent Company June 30, 2018 December 31, 2017 June 30, 2018 Consolidated December 31, 2017 Assets Cash and cash equivalents 5 2,308 1,905 83, ,909 Marketable securities ,488,020 3,153,160 Accounts receivable , ,342 Derivative financial instruments Inventories , ,291 Related parties ,598 13,369 Current income taxes 4,359 4,289 80,695 55,144 Other recoverable taxes , ,125 Dividends receivable Other assets , ,380 Current 7,367 7,112 3,801,569 4,413,732 Accounts receivable ,312 12,376 Restricted cash , ,634 Deferred income tax ,086,630 1,156,560 Related parties ,679 18,086 Current income taxes , ,996 Other recoverable taxes , ,057 Judicial deposits , ,695 Derivative financial instruments , ,447 Other non-current assets ,100 92,590 Equity method investments 11 2,182,787 2,206,797 39,357 41,930 Property and equipment ,667,811 11,266,278 Intangible assets ,557,415 7,622,969 Non-current 2,183,519 2,207,520 22,454,941 21,823,618 Total Assets 2,190,886 2,214,632 26,256,510 26,237,350 The accompanying notes are an integral part of these interim financial statements. 5

6 Balance sheets Note Parent Company June 30, 2018 December 31, 2017 June 30, 2018 Consolidated December 31, 2017 Liabilities Current portion of long-term debt ,348,916 1,594,008 Finance leases , ,344 Real estate credit certificates ,873 86,745 Accounts payable - suppliers , ,597 Salaries payable , ,864 Current income tax 9 2 5,049 2,006 Other taxes payable 15 1, ,352 43,751 Dividends payable ,877 8,747 Leases and concessions ,819 27,413 Related parties , , ,468 Deferred income ,809 11,529 Other financial liabilities 26.b , ,977 Other current liabilities 57 1, , ,157 Current 1,798 3,625 2,935,578 3,515,606 Long-term debt ,798,797 8,076,938 Finance leases , ,794 Other taxes payable ,438 11,010 Provision for judicial demands , ,034 Leases and concessions ,042,483 2,905,921 Deferred income tax ,348,281 2,342,076 Deferred income ,356 56,495 Other current liabilities , ,886 Non-current ,379,539 14,698,154 Total liabilities 1,798 3,625 18,315,117 18,213,760 Equity 21 Common stock 2,284,893 2,284,893 2,284,893 2,284,893 Capital reserve 213, , , ,671 Other equity 7,362 5,074 7,362 5,074 Accumulated losses (316,812) (289,631) (316,812) (289,631) Equity attributable to: Owners of the Company Non-controlling interests 11.c 2,189,088-2,211,007 2,189,088-5,752,305 2,211,007 5,812,583 Total equity 2,189,088 2,211,007 7,941,393 8,023,590 Total liabilities and equity 2,190,886 2,214,632 26,256,510 26,237,350 The accompanying notes are an integral part of these interim financial statements. 6

7 Statements of income (In thousands of Brazilian Reais R$, except earnings per share) Note April 1, 2018 to June 30, 2018 Parent Company January 1, 2018 to June 30, 2018 April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 General and administrative (592) (114) (1,117) (1,611) Operating expenses (592) (114) (1,117) (1,611) Result before financial results and equity income on investments (592) (114) (1,117) (1,611) Equity income on investments 11 (10,176) (26,960) (8,887) (79,579) Equity income on investments (10,176) (26,960) (8,887) (79,579) Result before financial results and income taxes (10,768) (27,074) (10,004) (81,190) Financial expenses (6) (12) (66) (88) Financial income Financial result, net Result before income taxes (10,676) (26,900) (9,848) (80,842) Income tax and social contribution benefit 16 Deferred Result for the period (10,676) (26,900) (9,550) (80,471) The accompanying notes are an integral part of these interim financial statements. 7

8 Statements of income (In thousands of Brazilian Reais R$, except earnings per share) Note April 1, 2018 to June 30, 2018 January 1, 2018 to June 30, 2018 Consolidated April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 Net revenue from services 1,664,545 3,061,228 1,506,143 2,705,317 Cost of services (1,116,424) (2,117,138) (989,334) (1,920,186) Gross profit 548, , , ,131 Selling (2,407) (6,234) (17,285) (19,640) General and administrative (68,180) (137,795) (65,877) (129,185) Other, net 25 (4,145) (8,540) (2,212) (4,403) Operating expenses (74,732) (152,569) (85,374) (153,228) Result before financial results and equity income on investments 473, , , ,903 Equity income on investments 11 3,785 5,165 1,412 3,158 Equity income on investments 3,785 5,165 1,412 3,158 Income before financial results and income taxes 477, , , ,061 Financial expenses (297,915) (640,820) (459,653) (948,040) Financial income 51, ,885 78, ,641 Foreign exchange, net (620,168) (633,141) (128,958) (128,464) Derivatives 407, ,684 76,751 69,786 Financial result, net 24 (459,566) (808,392) (432,864) (884,077) Result before income taxes 17,608 (11,706) (17) (249,016) Expense tax and social contribution benefit 16 Current (4,819) (8,676) (5,356) (16,339) Deferred (47,823) (72,351) (25,451) (14,294) (52,642) (81,027) (30,807) (30,633) Result for the period (35,034) (92,733) (30,824) (279,649) Result attributable to: Owners of the Company (10,676) (26,900) (9,550) (80,471) Non-controlling interest (24,358) (65,833) (21,274) (199,178) Earnings per share: 22 Basic and diluted (R$ ) (R$ ) (R$ ) (R$ ) The accompanying notes are an integral part of these interim financial statements. 8

9 Statements of comprehensive income April 1, 2018 to June 30, 2018 Parent Company January 1, 2018 to June 30, 2018 April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 Result for the period (10,676) (26,900) (9,550) (80,471) Items that won't be reclassified to the result Actuarial losses with pension plan (281) (297) - - Items that can be reclassified to the result Currency translation adjustment 2,013 2, Other comprehensive income, net of income tax and social contribution 1,732 2, Total comprehensive result (8,944) (24,612) (9,485) (80,266) April 1, 2018 to June 30, 2018 January 1, 2018 to June 30, 2018 Consolidated April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 Result for the period (35,034) (92,733) (30,824) (279,649) Items that won't be reclassified to the result Actuarial losses with pension plan (987) (1,042) - - Items that can be reclassified to the result Currency translation adjustment 7,069 9, Other comprehensive result net of income tax and social contribution 6,082 8, Total comprehensive result (28,952) (84,697) (30,596) (278,928) Comprehensive result attributable to: Owners of the Company (8,944) (24,612) (9,485) (80,266) Non-controlling interest (20,008) (60,085) (21,111) (198,662) The accompanying notes are an integral part of these interim financial statements. 9

10 Statements of changes in equity (In thousands of Brazilian Reais - R$) Common capital Attributable to shareholders of the Company Treasury shares Capital reserve Other equity Accumulated losses Total Noncontrolling interest Total Equity At December 31, ,284,893 (4,169) 214,840 5,074 (289,631) 2,211,007 5,812,583 8,023,590 Initial adoption of standard CPC 48 / IFRS (281) (281) (707) (988) At January 1, ,284,893 (4,169) 214,840 5,074 (289,912) 2,210,726 5,811,876 8,022,602 Result for the period (26,900) (26,900) (65,833) (92,733) Other comprehensive income: Currency translation adjustment ,585-2,585 6,493 9,078 Actuarial losses with pension plan (297) - (297) (745) (1,042) Total comprehensive income, net of taxes ,288 (26,900) (24,612) (60,085) (84,697) Contributions and distributions to shareholders Effect of dividend distribution on non-controlling shareholders - - (36) - - (36) 36 - Stock option plan - - 1, ,063 2,460 3,523 Repurchase of treasury shares - 1, ,947-1,947 Dividends (1,982) (1,982) Total transactions with and to owners of the Company - 1,947 1, , ,488 At June 30, ,284,893 (2,222) 215,867 7,362 (316,812) 2,189,088 5,752,305 7,941,393 The accompanying notes are an integral part of these interim financial statements. 10

11 Statements of changes in equity (In thousands of Brazilian Reais - R$) Attributable to shareholders of the Company Common capital Treasury shares Capital reserve Other equity Accumulated losses Total Non-controlling interest Total Equity At January 1, ,524,701 (8,218) 229,178 4,680 (210,116) 1,540,225 4,142,051 5,682,276 Result for the period (80,471) (80,471) (199,178) (279,649) Other comprehensive income: Currency translation adjustment Total comprehensive income, net of taxes (80,471) (80,266) (198,662) (278,928) Contributions and distributions to shareholders Capital increase 10, ,191-10,191 Change in interest in subsidiary - - (5,045) - - (5,045) (5,146) (10,191) Stock option plan ,816 2,704 Dividends (3,246) (3,246) Repurchase of treasury shares - 1, ,696-1,696 Total transactions with and to owners of the Company 10,191 1,696 (4,157) - - 7,730 (6,576) 1,154 At June 30, ,534,892 (6,522) 225,021 4,885 (290,587) 1,467,689 3,936,813 5,404,502 The accompanying notes are an integral part of these interim financial statements. 11

12 Statements of cash flows (In thousands of Brazilian Reais - R$) Parent Company January 1, 2018 to June 30, 2018 January 1, 2017 to June 30, 2017 January 1, 2018 to June 30, 2018 Consolidated January 1, 2017 to June 30, 2017 Cash flows from operating activities Result before income taxes and social contribution (26,900) (80,842) (11,706) (249,016) Adjustments to: Depreciation and amortization , ,704 Equity pick-up from controlled and associated 26,960 79,579 (5,165) (3,158) Provision for profit sharing ,198 32,761 Result on disposal of fixed and intangible assets - - (4,951) (3,644) Provision for judicial demands ,114 32,310 Expected losses on doubtful accounts - - (945) 11,205 Stock option plan ,523 2,704 Lease and concessions ,631 95,223 Deferred revenue - - (4,860) (8,224) Take or pay - - (7,007) (3,600) Interest, indexation charges and exchange variations, net (108) (183) 774, ,703 Other - - (63) (11,997) 36 (1,278) 1,629,873 1,294,971 Changes in: Accounts receivable - - (26,098) 92,313 Judicial deposits (9) (20) (14,299) (17,889) Net, related parties (877) 678 (2,853) 34,021 Other taxes, net 50 (32) (42,389) (78,527) Inventories - - (62,416) 42,117 Salaries payable - - (67,165) (28,259) Accounts payable (2) 27 (175,474) (150,152) Lease and concessions payable - - (53,310) (55,579) Provision for judicial demands - - (36,500) (36,196) Other financial liabilities - - (5,352) 38,987 Other asset and liabilities, net (972) (68) (119,936) (124,347) (1,810) 585 (605,792) (283,511) Net cash generated from (used in) operating activities (1,774) (693) 1,024,081 1,011,460 Cash flow from investing activities Marketable securities 230 3, ,005 (1,287,992) Restricted cash ,152 (18,720) Dividends received from controlled and associated - - 6,458 3,764 Purchase of property, plant and equipment and intangible - - (1,039,864) (950,064) Cash received on disposal of other fixed assets ,000 Net cash generated from (used in) investing activities 230 3,437 (228,249) (2,246,012) Cash flow from financing activities Proceeds from debts - - 2,136,816 2,456,138 Repayments of principal from debts - - (2,323,243) (445,855) Payments of interest from debts - - (370,301) (470,837) Repayments of principal from leases - - (299,126) (210,265) Payments of interest from leases - - (76,790) (159,160) Repayments of principal from real estate certificates - - (53,483) (63,382) Payments of interest from real estate certificates - - (97) (1,554) Capital increase - 10,191-10,191 Derivative financial instruments - - (31,687) 28,258 Repurchase of treasury shares 1,947-1,947 - Acquisition of non-controller interest - (10,191) - (10,191) Dividends paid - - (2,636) (619) Net cash generated from (used in) financing activities 1,947 - (1,018,600) 1,132,724 Impact of exchange variation on cash and cash equivalents ,766 27,588 Increase (decrease) in cash and cash equivalents 403 2,744 (96,002) (74,240) Cash and cash equivalents at beginning of the period 1, , ,542 Cash and cash equivalents at end of the period 2,308 2,759 83, ,302 Supplemental disclosure of cash flow information: Income taxes paid ,035 The accompanying notes are an integral part of these interim financial statements. 12

13 Statements of value added (In thousands of Brazilian Reais - R$) January 1, 2018 to June 30, 2018 Parent Company January 1, 2017 to June 30, 2017 January 1, 2018 to June 30, 2018 Consolidated January 1, 2017 to June 30, 2017 Revenue Sale of services - - 3,246,798 2,890,425 Other operating revenue ,713 27,034 Expected gain (losses) on doubtful accounts (11,205) - - 3,283,456 2,906,254 Raw materials acquired from third parties Cost of services rendered - - (678,091) (486,372) Materials, energy, third party services, other 417 (821) (431,840) (480,934) 417 (821) (1,109,931) (967,306) Gross value added 417 (821) 2,173,525 1,938,948 Retention Depreciation and amortization - - (697,057) (588,704) - - (697,057) (588,704) Net value added 417 (821) 1,476,468 1,350,244 Value added transferred in Equity pick-up in investees (26,960) (79,579) 5,165 3,158 Financial income , ,641 (26,774) (79,143) 132, ,799 Value added to be distributed (26,357) (79,964) 1,608,518 1,476,043 Distribution of value added Personnel , ,370 Direct remuneration , ,711 Benefits ,826 55,212 FGTS ,442 15,447 Taxes and contributions 142 (224) 208, ,129 Federal 4 (369) 161, ,599 State ,128 25,967 City ,062 8,563 Third party capital remuneration ,124,382 1,186,193 Interest ,277 1,006,718 Leasing , ,475 Equity capital remuneration (26,900) (80,471) (92,733) (279,649) Non-controlling interests - - (65,833) (199,178) Result for the period (26,900) (80,471) (26,900) (80,471) (26,357) (79,964) 1,608,518 1,476,043 The accompanying notes are an integral part of these interim financial statements. 13

14 1 Operations ("The Company" or "Cosan Logística"), is a publicly traded company with its shares traded on B3 S.A. Brasil, Bolsa, Balcão ( B3 ) under the code RLOG3, and has its headquarters in the city of São Paulo, State of São Paulo, Brazil. The Company is a direct subsidiary of Cosan Ltd. ("CZZ") which owns 72.51% of its capital. The Company is engaged in the management, directly or indirectly, ownership interests in infrastructure sector companies, such as, but not limited to these, logistics, cargo transportation, port operation of distribution terminals and other related activities. The Company, through its direct subsidiary Rumo S.A. ( Rumo ), is a service provider in the logistics sector (transport and elevation), principally for export commodities, providing an integrated transport solution, handling, storage and shipment from the production centers to the main southern and southeast ports, and also holds interests in other companies and ventures related to logistic. The Company operates in the rail transportation segment in Southern Brazil through its subsidiary Rumo Malha Sul S.A. ("Rumo Malha Sul"), and the Midwest region and State of São Paulo through subsidiaries Rumo, Rumo Malha Paulista S.A. ("Rumo Malha Paulista"), Rumo Malha Norte S.A. ("Rumo Malha Norte") and Rumo Malha Oeste S.A. ("Rumo Malha Oeste"). In addition, the subsidiary Brado Logística e Participações S.A. ("Brado") operates in the container segment while Elevações Portuárias S.A. ( Elevações Portuárias ) has terminals for transshipment and terminals for export of sugar and grains in the Port of Santos. On January 10, 2018, the pricing and placement of debt securities in the international market was approved, Senior Notes due 2025 ("Notes 2025"), issued by the subsidiary Rumo Luxembourg S.à.rl ("Rumo Lux"), amounting US$500,000 (R$1,581,200), maturing on January 2025, a coupon of 5.875%, payable semiannually, and a yield of 6.00% per annum. Notes 2025 were rated BB- by the agency Fitch Ratings and B+ by the rating agency Standard & Poor's. The Company will use the net proceeds from this funding in debt restructuring and for general use. This issue is part of the Company's capital structure management process and has as one of its objectives the diversification of the sources of financing of the Company's investment plan. On April 20, 2018, the incorporation of Brado Holding S.A., Rumo Malha Norte Holding Ltda. and Tezza Consultoria de Negócios Ltda. by Rumo was approved, so that the merged companies will be extinguished and Rumo will succeed those incorporated. This transaction serves the interests of the parties and their shareholders, generating benefits to the parties and their shareholders, by providing administrative efficiency, including the reduction of operating costs. In addition, the incorporation of PGT S.A. by ALL Armazéns Gerais Ltda. was approved. On May 7, 2018, the operations required for the placement of Senior Notes 2025 issued in January 2018 by subsidiary Rumo Lux were approved and ratified, as well as (i) the issuance of NCE through the transfer of foreign funds by the subsidiary Rumo Malha Norte, in favor of Itaú Unibanco S.A. ( Itaú ), amounting US$500,000, maturing in 07 years, observing the usual early maturity events in capital market operations, as described in NCE, and interest rates equivalent to a certain percentage, which should not exceed the maximum percentage of 5.875% per year, which consists of transfer of funds from a linked note in accordance with Resolution 2,921 of the National Monetary Council of January 17, 2002 obtained by Itaú from Rumo Lux - the principal amount of the NCE will be amortized in full on the respective maturity date, and interest will be paid semiannually, as from the date of payment of the NCE, as well as (ii) hedge contracting related to this operation, including Non-deliverable Forward operation. 14

15 a) The concession of railway operation and port terminal The Company holds, through subsidiaries or affiliates, concession of railway services and port terminals, whose scope and concession terms are as follows: Companies Concession end Coverage areas Controlled Elevações Portuárias March 2036 Port of Santos-SP Rumo Malha Paulista December 2028 São Paulo State Rumo Malha Sul February 2027 South and São Paulo State Rumo Malha Oeste June 2026 Midwest and São Paulo State Rumo Malha Norte May 2079 Midwest and São Paulo State Portofer June 2025 Port of Santos-SP Associates Terminal XXXIX October 2025 Port of Santos-SP TGG - Terminal de Granéis do Guarujá August 2027 Port of Santos-SP Termag - Terminal Marítimo de Guarujá August 2027 Port of Santos-SP The subsidiaries and associates above are subject to compliance with certain conditions set out in the privatization bids and the concession contracts of railway networks and port terminals. To the extent that there is no substantive control to which the service should be provided and as there is no substantive pricing control, IFRIC 12 / ICPC 01 is not applicable to the Company and therefore the assets acquired by it are treated under IAS 17 / CPC 27 Property and Equipment. 15

16 2 Basis of preparation 2.1 Statement of compliance The individual and consolidated interim financial statements have been prepared in accordance with CPC 21 (R1) - Interim Financial Reporting and the International Accounting Standard IAS 34 - Interim Financial Reporting issued by the International Accounting Standards Board (IASB), and are presented in accordance with the rules of the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of the Quarterly information (ITR). Interim accounting information was prepared based on the preparation basis and accounting policies consistent with those adopted in the preparation of the financial statements as of December 31, 2017 and should be read together. The information notes that no significant changes were not repeated in full in these financial statements. All relevant information from financial statements is being evidenced, and these correspond to those used by the Board in its management. Certain amounts of the comparative balances in note 24 to the financial result were reclassified to improve the level of detail of the disclosures in these consolidated interim financial statements. These reclassifications had insignificant impacts on the Company's consolidated interim financial statements. On August 07, 2018, the Board of Directors authorized the issuance of the financial statements. 16

17 3 Significant accounting policies This interim financial information were prepared based on the preparation basis and accounting policies consistent with those adopted in the preparation of the financial statements as of December 31, 2017, except for the adoption of the new standards effective as of January 1, The Company did not adopt in advance any other standard or interpretation issued that is not yet in force. The Company applied for the first time the IFRS 15 (CPC 47) Revenue from Contract with Customer and IFRS 9 (CPC 48) Financial Instruments, whose effects and changes are disclosed below (Note 3.2). 3.1 Basis of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries listed below: Directly and indirectly controlled Controlled June 30, 2018 December 31, 2017 Rumo S.A % 28.47% Logispot Armazéns Gerais S.A % 14.52% Elevações Portuárias S.A % 28.47% Rumo Luxembourg Sarl 28.47% 28.47% Rumo Intermodal S.A % 28.47% Rumo Malha Oeste S.A % 28.47% Rumo Malha Paulista S.A % 28.47% Rumo Malha Sul S.A % 28.47% Rumo Malha Norte S.A % 28.33% Boswells S.A % 28.47% Brado Holding S.A. (i) % ALL Serviços Ltda. (i) % ALL Argentina S.A % 28.47% Paranaguá S.A % 28.47% ALL Armazéns Gerais Ltda % 28.47% Portofer Ltda % 28.47% Brado Logística e Participações S.A % 17.71% Brado Logística S.A % 17.71% ALL Mesopotâmica S.A % 20.09% ALL Central S.A % 20.94% Servicios de Inversión Logística Integrales S.A 28.47% 28.47% PGT S.A. (ii) % (i) As mentioned in Note 1, incurred the merger of Brado Holding S.A., Rumo Malha Norte Holding Ltda. and Tezza Consultoria de Negócios Ltda. ("ALL Serviços Ltda.") by the Company. (ii) In addition, incurred the incorporation of PGT S.A. by ALL Armazéns Gerais Ltda. Despite having participation of 28.47% in the ownership structure, the Company is the largest individual shareholder and continues to control Rumo and its subsidiaries. The Board of Directors consist of 6 members, all of whom are appointed by the controlling shareholder, who are therefore exposed to, or has rights over, the variable returns from its involvement with Rumo and its subsidiaries and has the ability to affect the returns by exercising its power over Rumo and its subsidiaries. 17

18 Investment in associates (equity of investees) The following associates are accounted for under the equity method: Directly and indirectly controlled Associates (Equity) June 30, 2018 December 31, 2017 Rhall Terminais Ltda % 30.00% Termag S.A. (i) 19.85% 19.85% TGG S.A. (i) 9.92% 9.92% Terminal XXXIX S.A % 49.62% i. For these associates a conclusion about the existence of significant influence arises from the Company's representative to participate in the affiliate's board. 3.2 New regulations and interpretations adopted by the Company CPC 47 / IFRS 15 - Customer Contract Revenue CPC 47 / IFRS 15 has as a fundamental principle the recognition of revenue when services are transferred to the customer at the transaction price. Revenue is recognized according to this principle by applying a 5-step model: Step 1: Identify the contract(s) with the client; Step 2: Identify the performance obligations defined in the contract; Step 3: Determine the price of the transaction; Step 4: Allocate the price of the transaction to the performance obligations provided in the agreement; and Step 5: Recognize revenue when (or as) the entity meets each performance obligation. When evaluating contracts with customers, the Company uses judgment to identify whether contracts can be combined, whether there are contract modifications, determines different services, and whether performance obligations are met over time or at a given time, if there are discounts implicit in the contact and determine significant funding components. In addition, the Company uses estimates when determining the variable consideration and its individual services prices when using the allocation methodology. In the evaluation of the Company, no significant effects of the adoption of CPC 47 / IFRS 15 affecting these interim financial statements were identified. We record all sales of services only when a contract or agreement is in effect as services are rendered and the charge for the fixed or determinable service price is reasonably assured. We recognize any loss that we expect to incur in these agreements when such loss is probable. The Company does not expect to have any agreement in which the period between the transfer of the services promised to the client and the payment by the client exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the amount of money in time. 18

19 CPC 48 / IFRS 9 - Financial instruments CPC 48 / IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments: Recognition and Measurement for annual periods beginning on or after January 1, 2018, bringing together all three aspects of accounting for financial instruments: (i) classification and measurement; (ii) impairment; and (iii) hedge accounting. Except for the classification and measurement of financial assets, the Company applied CPC 48 / IFRS 9 prospectively with the initial application date of January 1, The effect of adopting CPC 48 / IFRS 9 is as follows: Impact on the consolidated balance sheets (increase/(decrease)) on January 1, 2018: Assets Accounts receivable (1,295) Deferred income tax and social contribution 307 Equity Accumulated losses 988 a) Classification and measurement Except for certain commercial receivables, in accordance with CPC 48 / IFRS 9, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not measured at the fair value through profit or loss, of transaction costs. In accordance with CPC 48 / IFRS 9, debt financial instruments are subsequently measured at fair value through profit or loss, amortized cost or fair value through other comprehensive income. The classification is based on two criteria: (i) the Company's business model to manage the assets; and (ii) whether the contractual cash flows of the instruments represent "principal and interest payments only" on the amount of outstanding capital. The Company recognizes its financial assets at amortized cost for financial assets that are kept within a business model with the objective of obtaining contractual cash flows that meet the "Principal and Interest" criteria. This category includes trade accounts receivable, cash and cash equivalents, restricted cash, receivables from related parties, other financial assets and dividends and interest on shareholders' equity receivable. No remeasurement of financial assets was carried out. The evaluation of the Company's business models was carried out from the date of initial application on January 1, 2018 and retrospectively applied to financial assets that were not derecognized before January 1, The assessment of whether cash flows contractual debt instruments are solely composed of principal and interest was made based on the facts and circumstances as in the initial recognition of the assets. The accounting of the Company's financial liabilities remains basically the same as in IAS 39. Similar to the requirements of IAS 39, CPC 48 / IFRS 9 requires that contingent consideration be treated as financial instruments measured at fair value, with changes in fair value recognized in profit or loss. 19

20 The embedded derivatives are not separated from the related financial asset. Instead, financial assets are classified based on their contractual terms and the Company's business model. The accounting for derivatives embedded in financial liabilities and in non-financial related contracts did not change from that required by IAS 39. b) Impairment The adoption of CPC 48 / IFRS 9 fundamentally changed the Company's accounting for impairment losses on financial assets, replacing the IAS 39 impairment approach with an expected credit loss approach. The Company recognizes a provision for expected credit loss for its accounts receivable. The simplified standard approach is applied and the expected credit losses for the entire life of the asset are calculated. The Company has established a provisioning matrix that is based on the historical experience of credit loss, adjusted for specific prospective factors for the debtors and for the economic environment. The adoption of the expected credit loss requirements of CPC 48 / IFRS 9 resulted in a raise in the Company's provisions for losses in the amount of R$1,295. The raise in the provision resulted in an adjustment to the accumulated losses in the amount of R$988 and asset deferred income tax and social contribution in the amount of R$307. The reduction in recoverable value falls within the exemptions from the general principle of application of this standard for comparative periods. The Company used the transition model without restatement of the comparative balance, recognizing the impacts of the adoption of the standard on profit reserves. c) Hedge accounting The Company applied hedge accounting prospectively. At the date of initial application, all of the Company's existing hedging relationships were eligible to be treated as continuing hedging relationships. Consistent with previous periods, the Company continued to designate the change in the fair value of the entire forward contract in the Company's cash flow hedge relationships and, as such, the adoption of the hedge accounting requirements of CPC 48 / IFRS 9 had no impact the Company's interim financial statements. In accordance with IAS 39, all gains and losses arising from the Company's cash flow hedge relationships were eligible to be subsequently reclassified to income. However, in accordance with CPC 48 / IFRS 9, the gains and losses resulting from cash flow hedging of the expected purchases of non-financial assets need to be incorporated into the initial book values of the non-financial assets. Therefore, after the adoption of CPC 48 / IFRS 9, the net cash flow hedge gain or loss was presented under "Other comprehensive income not being reclassified to income". This amendment applies only prospectively from the date of initial application of CPC 48 / IFRS 9 and has no impact on the presentation of comparative values. 20

21 3.3 Cash Flow Non cash transactions The Company presents its statement of cash flows using the indirect method. During the period ended June 30, 2018, the Company made the following transaction not involving cash and therefore is not reflected in the consolidated statement of cash flows: i) Purchase of fixed assets at term amounting R$2,431 (R$4,167 on June 30, 2017). Classification of interest and dividends i) The Company classifies the dividends and interest on shareholders' equity received as cash flow from investing activities, with the purpose of avoiding distortions in its cash flows as a function of cash flow from these operations through the increase in dividends received from subsidiaries. ii) Interest received or paid is classified as cash flow from financing activities, as it is considered to refer to the costs of obtaining financial resources. 4 New standards and interpretations not yet effective CPC 06 / IFRS 16 Leases The Company began an initial assessment of the potential impact on its financial statements. The most significant impact identified will result from the recording of new assets and liabilities for their operating leases of assets linked to the concessions. The Company has not yet quantified the impact of the adoption of CPC 06 / IFRS 16 on its assets and liabilities. The quantitative effect of the adoption of CPC 06 / IFRS 16 will depend specifically on the transition method chosen, the use of practical records and exemptions from collection, and any additional leases that the Company will enter into. The Company expects to disclose its transition approach and quantitative information prior to adoption. 21

22 5 Cash and cash equivalent Parent Company Consolidated December 31, December 31, June 30, June 30, Cash and bank accounts ,932 9,558 Financial investments 2,291 1,902 43, ,351 2,308 1,905 83, ,909 The financial investments were as below: Parent Company Consolidated December 31, December 31, June 30, June 30, Exclusive funds Repurchase transactions 1,502 1,514 1,502 1,514 Bank deposit certificates - CDB ,291 1,902 2,291 1,902 Bank investments Bank deposit certificates - CDB , ,922 Repurchase transactions - - 8,050 6,663 Other investments - - 4,422 4, , ,449 2,291 1,902 43, ,351 6 Marketable securities and restricted cash Marketable securities Parent Company Consolidated December 31, December 31, June 30, June 30, Government bonds ,428,242 2,940,543 CDB investments linked to BNDES loans , , ,488,020 3,153,160 Consolidated Restricted cash December 31, June 30, Investments linked to loans 70,526 93,251 Securities pledged as collateral 95, , , ,634 22

23 7 Accounts receivable Consolidated December 31, June 30, Domestic Brazilian Reais 391, ,762 Export Foreign currency 42,008 39,740 Expected losses on doubtful accounts (31,429) (30,784) 402, ,718 Current 384, ,342 Non-current 17,312 12, , ,718 8 Inventories Consolidated December 31, June 30, Parts and accessories 308, ,256 Fuels and lubricants 7,303 4,207 Warehouse and other 38,790 33, , ,291 9 Other recoverable taxes Parent Company June 30, 2018 December 31, 2017 June 30, 2018 Consolidated December 31, 2017 Contribution to social security financing ("COFINS") , ,058 Social Integration program ("PIS") ,880 67,327 Tax on circulation of goods, transport services and communication ("ICMS") (i) , ,204 ICMS - CIAP (ii) , ,576 Other 4 4 8,776 10, , ,182 Current , ,125 Non-current , , , ,182 (i) ICMS credit on the acquisition of inputs and diesel used in transport. (ii) ICMS credit arising from acquisition of fixed assets. 23

24 10 Related parties a) Summary of the main balance and transactions with related parties: Parent Company Consolidated December 31, December 31, June 30, 2018 June 30, Current asset Commercial operations Cosan S.A Raízen Energia S.A ,925 6,556 Raízen Combustíveis S.A ,956 5,031 Other ,598 13,369 Non-current assets Commercial operations Raízen Combustíveis S.A ,534 18,086 Other ,679 18,086 Total ,277 31,455 Parent Company Consolidated December 31, December 31, June 30, 2018 June 30, Current liabilities Commercial operations Raízen Energia S.A ,418 21,122 Cosan S.A ,342 2,569 4,207 Cosan Lubrificantes e Especialidades S.A ,056 3,225 Raízen Combustíveis S.A , ,375 Other - - 1,322 1, , , ,468 Total 491 1, , ,468 b) Summary of transactions with related parties: Parent Company April 1, 2018 to June 30, 2018 January 1, 2018 to June 30, 2018 April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 Shared expenses Cosan S.A. (59) (189) (182) (269) Raízen Energia S.A. (44) (62) (36) (47) (103) (251) (218) (316) 24

25 April 1, 2018 to June 30, 2018 January 1, 2018 to June 30, 2018 Consolidated April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 Operating income Raízen Combustíveis S.A. 36,796 71,897 29,581 62,443 Raízen Energia S.A. and subsidiaries 79, ,869 93, ,590 Other - 7, , , , ,033 Purchases of products / inputs Raízen Combustíveis S.A. (302,959) (555,402) (238,569) (442,285) Cosan Lubrificantes e Especialidades S.A. (9,355) (18,451) (8,917) (15,501) Other (127) (127) - - (312,441) (573,980) (247,486) (457,786) Shared expenses Cosan S.A. (2,339) (5,873) (2,917) (5,333) Raízen Energia S.A. (6,779) (14,027) (6,767) (13,636) (9,118) (19,900) (9,684) (18,969) Financial result Other c) Officers and directors remuneration Fixed and variable remuneration of key personnel, including directors and board members, are recognized in the consolidated results for the period, as follows: April 1, 2018 to June 30, 2018 January 1, 2018 to June 30, 2018 April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 Short-term benefits to employees and managers 4,361 11,558 6,616 11,080 Stock option recognized (Note 23) 753 1,509 1,352 2,704 5,114 13,067 7,968 13,784 25

26 11 Equity method investments a) Parent Company Total shares of the investee Shares held by the Company Percentage of interest (%) Balance at January 1, 2018 Equity pickup Comprehensive income Stock option plan Other Balance at June 30, 2018 Equity pick-up on June 30, 2017 Controlled Rumo S.A. 1,559,015, ,851, % 2,206,797 (26,960) 2, (320) 2,182,787 (79,579) Total 2,206,797 (26,960) 2, (320) 2,182,787 (79,579) b) Consolidated Total shares of investee Shares held by the Company Percentage of interest (%) Balance at January 1, 2018 Equity pickup Dividends Balance at June 30, 2018 Equity pick-up on June 30, 2017 Affiliates Rhall Terminais Ltda. 28,580 8, % 4, (1,201) 3, Termag S.A. 500,000 99, % 4,463 (983) - 3, TGG S.A. 79,747,000 7,914, % 17,549 2,830 (2,928) 17,451 1,792 Terminal XXXIX S.A. 200,000 99, % 15,639 2,959 (3,609) 14,989 1,104 Total 41,930 5,165 (7,738) 39,357 3,158 26

27 c) Non-controlling interests Total shares of investee Shares held by the Company Percentage of interest (%) Balance at January 1, 2018 Equity pick-up Comprehensive income Stock option plan Dividends Other Balance at June 30, 2018 Equity pick-up on June 30, 2017 Logispot 2,040,816 1,000, % 34,589 (290) ,299 (575) Rumo 1,559,015,898 1,115,164, % 5,544,663 (67,739) 5,748 2,460 - (797) 5,484,335 (200,972) Brado Participações 12,962,963 4,963, % 218,383 1, (510) - 219,178 1,658 Rumo Malha Norte 1,189,412,363 5,709, % 14, (1,472) ,493 1,001 Rail Management 20, % (290) Total 5,812,583 (65,833) 5,748 2,460 (1,982) (671) 5,752,305 (199,178) 27

28 12 Property and equipment Consolidated Land, buildings and improvements Machinery, equipment and facilities Freight cars and (i) / (ii) locomotives Track structure (i) Construction in progress Other Total Cost: At January 1, , ,786 6,095,596 5,136, , ,162 13,933,253 Additions ,040, ,041,315 Disposals (2,317) (2,412) (45,036) - (164) (28,119) (78,048) Transfers 120, , , ,723 (942,806) 28,591 9,560 At June 30, , ,953 6,241,302 5,634,839 1,025, ,301 14,906,080 Depreciation: At January 1, 2018 (246,745) (270,442) (1,245,651) (949,777) - 45,640 (2,666,975) Additions (18,715) (50,225) (314,862) (228,028) - (10,845) (622,675) Disposals 2,317 2,412 44, ,333 72,741 Transfers (21,564) (21,360) At June 30, 2018 (262,939) (318,255) (1,515,834) (1,177,805) - 36,564 (3,238,269) At January 1, , ,344 4,849,945 4,186, , ,802 11,266,278 At June 30, , ,698 4,725,468 4,457,034 1,025, ,865 11,667,811 (i) Leasehold improvements and finance leases included; (ii) On June 30, 2018, freight cars and locomotives in the amount of R$745,203 (R$743,203 on December 31, 2017) were given on bail to guarantee bank loans (Note 14). 28

29 13 Intangible assets Consolidated Goodwill (i) Concession Operating Rights (ii) license Other Total Cost: At January 1, ,451 7,900, , ,511 8,543,009 Additions Disposals (9) (9) Transfers ,846 7,846 At June 30, ,451 7,900, , ,328 8,551,826 Amortization At January 1, (669,326) (212,616) (38,098) (920,040) Additions - (60,451) (8,061) (5,870) (74,382) Disposals Transfers At June 30, (729,777) (220,677) (43,957) (994,411) At January 1, ,451 7,231, ,008 68,413 7,622,969 At June 30, ,451 7,170, ,947 71,371 7,557,415 (i) Goodwill arising from business combination, of which R$62,922 on Terminal T-16 in Santos and R$37,529 of direct subsidiary Logispot presented only in consolidated balances. (ii) The amortization is recognized in the income statement in cost of services, as depreciation and amortization. Annual rate of amortization - % June 30, 2018 December 31, 2017 Intangible (other than goodwill) Software 20% 32,437 31,669 Operating license 3.70% 217, ,008 Concession rights 1.59% 7,170,646 7,231,097 Other 36,743 36,744 Total 7,456,964 7,522,518 The Company annually tests the recoverable value of goodwill for the expectation of future results arising from a business combination. Assets subject to depreciation and amortization are only tested if there are indications that the carrying amount is not recoverable. In the six-months period ended June 30, 2018, no indicators for asset impairment testing were identified. 29

30 14 Loans, borrowings and debentures Financial charges Consolidated Description Index Average interest rate June 30, 2018 December 31, 2017 Maturity date Loans and borrowings Finame (BNDES) Pre-fixed 5.28% 1,169,281 1,281,371 February/2025 Finem (BNDES) Pre-fixed 3.76% 2,278 2,695 January/2024 URTJLP 8.42% 2,075,275 2,270,055 June/2029 IPCA 12.13% 2,999 2,840 November/2021 Selic 13.65% 3,543 4,075 September/2020 NCE 112% of CDI 7.18% 29,919 59,858 December/ % of CDI 8.05% 645, ,766 December/ % of CDI 8.12% 514,388 - December/2023 CDI % p.a % 295, ,968 December/2018 Senior Notes 2024 Pre-fixed (US$) 7.38% 2,891,496 2,570,622 February/2024 Senior Notes 2025 Pre-fixed (US$) 5.88% 1,861,518 - January/2025 Commercial banks CDI % p.a % 32 98,117 June/2019 Pre-fixed (US$) 5.33% 97,662 95,040 December/2021 9,589,549 7,324,407 Debentures Non-convertible debentures CDI % p.a. 8.57% - 152,573 April/2018 CDI % p.a % - 1,359,125 May/ % of CDI 6.92% 57, ,515 July/ % of CDI 8.25% 501, ,576 December/2025 Pre-fixed 13.13% - 163,750 March/ ,164 2,346,539 Total 10,147,713 9,670,946 Current 1,348,916 1,594,008 Non-current 8,798,797 8,076,938 The carrying amounts of loans and financing of the Company are denominated in these currencies: June 30, 2018 Consolidated December 31, 2017 Brazilian Real 5,297,037 7,005,284 US Dollar 4,850,676 2,665,662 - Total 10,147,713 9,670,946 NCE Dec/2023 On January 26, 2018, through its subsidiary Rumo Malha Norte, there was fundraising from Banco Bradesco S.A., through an Export Credit Note, amounting R$500,000, with maturity in December 2023 and on the debit balance shall bear interest of 126% of the daily rate of CDI-Interbank Deposit Certificate, payable semiannually. 30

31 Senior Notes 2025 On January 18, 2018, through its subsidiary Rumo Luxembourg, the Company issued debt securities in the international market, Senior Notes due 2025 amounting US$500,000 thousands, with maturity in January 2025 and interest of 5.875% per annum, paid semi-annually. This debt is protected by exchange and interest rate swaps. Unused credit lines At June 30, 2018, the Company and its subsidiaries had lines of credit for financing from BNDES, which were not used, totaling of R$21,325 (R$94,220 on December 31, 2017). Covenants The Company and its subsidiaries are subject to certain restrictive clauses in most of the loan and financing agreements, based on certain financial and non-financial indicators. The Company evaluates the conditions of the restrictive clauses annually. On June 30, 2018, the Company and its subsidiaries did not have loans with the BNDES, subject to covenants. These requirements have been replaced by bank guarantees. Changes occurred for the period ended June 30, 2018 is as follow: Consolidated At December 31, ,670,946 Proceeds from debts 2,136,816 Monetary and exchange correction 1,033,495 Repayments of principal from debts (2,323,243) Payments of interest from debts (370,301) At June 30, ,147, Other taxes payable Parent Company June 30, 2018 December 31, 2017 June 30, 2018 Consolidated December 31, 2017 Tax on circulation of goods, transport services and communication ("ICMS") - - 7,230 3,040 National social security institute ("INSS") 8 6 4,950 6,563 Social integration program ("PIS") ,217 1,725 Contribution to social security financing ("COFINS") ,388 8,365 Tax amnesty and refinancing program ,691 21,955 Tax on services - - 4,031 4,494 Financial transaction tax - - 1,577 2,224 Other 1 3 5,706 6,395 1, ,790 54,761 Current 1, ,352 43,751 Non-current - - 7,438 11,010 31

32 16 Income tax and social contribution a) Reconciliation of income tax and social contribution expenses: April 1, 2018 to June 30, 2018 Parent Company January 1, 2018 to June 30, 2018 April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 Result before income taxes (10,676) (26,900) (9,848) (80,842) Income tax and social contribution expense at nominal rate (34%) 3,630 9,146 3,348 27,486 Adjustments to determine the effective rate Equity pick-up (3,460) (9,166) (3,022) (27,057) Share-based payment transactions - (29) (29) (57) Unrecognized NOLs and temporary differences (i) (170) Other (1) Tax and social contribution (current and deferred) Effective rate - % 0,00% 0,00% 3.03% 0.46% April 1, 2018 to June 30, 2018 January 1, 2018 to June 30, 2018 Consolidated April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 Result before income taxes 17,608 (11,706) (17) (249,016) Income tax and social contribution expense at nominal rate (34%) (5,987) 3, ,665 Adjustments to determine the effective rate Equity pick-up 1,287 1, ,074 Share-based payment transactions (584) (1,198) (460) (919) Permanent differences 47 (36) (214) (329) Effect of amortization of goodwill (3,672) 927 Unrecognized NOLs and temporary differences (i) (25,180) (61,346) (34,755) (119,256) Exploration profit - tax incentive (16,117) (11,287) 10,930 14,896 Result of companies abroad (5,783) (12,114) (3,153) (12,139) Other (788) (1,709) Tax and social contribution (current and deferred) (52,642) (81,027) (30,807) (30,633) Effective rate - % % % -181,217.65% % (i) Refers mainly to tax losses and temporary differences of the Company, and its subsidiaries Rumo, Rumo Malha Sul and Rumo Malha Oeste which do not meet the requirements for accounting of deferred income tax and social contribution assets due to the lack of predictability of future generation of taxable income. 32

33 b) Deferred corporate income tax (IRPJ) and social contribution (CSLL) assets and liabilities June 30, 2018 Parent Company December 31, 2017 Consolidated December 31, June 30, Assets credits from: Tax losses carry forwards - income tax 1,535 1,345 1,861,809 1,707,698 Tax losses of social contribution , ,824 Temporary differences: Provision for judicial demands , ,611 Impairment provision , ,236 Allowance for doubtful accounts ,160 22,483 Provision for non-performing tax ,733 30,515 Provision for profit sharing ,152 28,987 Review of useful life - Fixed assets , ,602 Temporary differences from other provisions , ,561 Business combination - Fixed assets , ,174 Fair value adjustments on debts ,855 Other 1-55,044 56,047 Deferred taxes - Assets 2,588 2,636 3,869,633 3,678,593 (-) Unrecognized deferred assets credits (2,588) (2,636) (2,004,407) (1,943,286) Liabilities credits from: Temporary differences: Tax goodwill amortized - - (23,130) (21,991) Lease - - (292,820) (277,077) Unrealized result from derivatives - - (165,552) (13,093) Fair value adjustments on debts - - (35,803) - Business combination - Intangible assets - - (2,579,401) (2,579,894) Other - - (30,171) (28,768) Deferred taxes - Liabilities - - (3,126,877) (2,920,823) Total deferred taxes - - (1,261,651) (1,185,516) Deferred assets - - 1,086,630 1,156,560 Deferred liabilities - - (2,348,281) (2,342,076) c) Changes in deferred taxes (net) Consolidated At January 1, 2018 (1,185,516) Income statement (72,351) Compensation of tax loss carryforwards - PERT (4,091) Initial adoption IFRS At June 30, 2018 (1,261,651) 33

34 17 Accounts payable - suppliers Consolidated June 30, 2018 December 31, 2017 Material and services suppliers 478, ,778 Fuels and lubricants suppliers 807 1,814 Other 5,716 6,005 Total 484, , Provision for judicial demands and judicial deposits Provision for judicial demands Consolidated June 30, 2018 December 31, 2017 Taxes 69,921 68,897 Civil, regulatory and environmental 170, ,736 Labor 294, , , ,034 Judicial deposits Parent Company Consolidated June 30, 2018 December 31, December 31, June 30, Tax ,345 19,091 Civil, regulatory and environmental , ,260 Labor , , , ,695 Changes in the provision were: Taxes Civil, regulatory and environmental Consolidated Labor At January 1, , , , ,034 Additions 1,810 13,855 28,613 44,278 Settlement or write-offs (1,504) (10,766) (33,747) (46,017) Monetary restatement (i) ,712 15,129 34,559 At June 30, , , , ,854 (i) Write-off interest expense included. Total 34

35 a) Tax Judicial claims deemed as probable losses: Consolidated December 31, June 30, ICMS credits 56,117 55,575 PIS and COFINS 1,940 1,911 Other 11,864 11,411 69,921 68,897 Judicial claims deemed as possible losses: Consolidated December 31, June 30, Capital gain Rumo 520, ,120 Isolated fine federal tax 439, ,249 IRPJ and CSLL 383, ,319 ICMS Rumo Malha Paulista 316, ,334 Foreign financial operations 285, ,414 ICMS - Export 286, ,278 MP 470 installment debts 111, ,098 Withholding income tax ("IRRF") Swap 73,742 72,466 ICMS TAD 70,503 62,850 Stock option plan 66,889 65,776 IOF on loan 51,961 51,330 Social security contributions 4,051 45,985 Compensation with credit award 42,240 41,350 PIS/COFINS mutual traffic 33,388 32,967 ICMS - Passenger transport 6,802 10,100 PIS/COFINS 7,472 7,310 ICMS Armazéns Gerais 6,375 6,249 ICMS Material of use and consumption 9,403 - Other 119, ,270 2,836,440 2,765,465 35

36 b) Civil, regulatory and environmental Judicial claims deemed as possible losses: Consolidated December 31, June 30, Civil 1,658,337 1,522,750 Regulatory 600, ,028 Environmental 412, ,462 2,671,026 2,444,240 On July 25, 2018, the Company became aware of the filing of an administrative inquiry with CADE to analyze a representation filed by Agrovia. The Company refutes the arguments presented and emphasizes that most of the facts have already been analyzed and rejected by the CADE in another administrative proceeding. The Company assesses as possible the risk that an administrative proceeding will be initiated and losses will be incurred in this process. Due to the initial stage of the topic, it is not possible to estimate the value at risk. c) Labor Judicial claims deemed as possible losses: Consolidated December 31, June 30, Labor 835, , , ,131 36

37 19 Leases Finance leases The Company and its subsidiaries have lease agreements, mainly for railcars and locomotives classified as finance leases. December 31, June 30, Less than a Between one More than year and five years five years Total Total Future minimum lease payments 238, , , ,029 1,250,860 Rolling stock 212, , , ,398 1,060,759 Terminal 23,400 76,208 73, , ,484 Other 2,975 1,851-4,826 5,617 Interest on installment (64,596) (145,017) (36,146) (245,759) (306,722) Rolling stock (51,911) (112,404) (23,416) (187,731) (241,509) Terminal (12,370) (32,507) (12,730) (57,607) (64,528) Other (315) (106) - (421) (685) Present value of minimum payments 173, , , , ,138 Current 173, ,344 Non-current 497, ,794 Lease agreements have varying expirations, the last due to expire in June The amounts are adjusted annually for inflation rates (as IGPM and IPCA) or may incur interest based on the TJLP or CDI and some contracts have renewal or purchase options that were considered in determining the classification as financial lease. Changes occurred for the period ended June 30, 2018 is as follow: Consolidated At January 1, ,138 Interest, monetary and exchange correction 103,048 Repayments of principal from debts (299,126) Payments of interest from debts (76,790) At June 30, ,270 Operating leases June 30, 2018 Total future minimum lease payments December 31, 2017 Assets Up to 1 From 1 to 5 Over 5 years Total year years Total Locomotives ,387 1,695 Rail cars 7,330 24,747 3,254 35,331 38,449 Total 7,895 25,569 3,254 36,718 40,144 Operating lease payments (rentals) are recognized as expenses on a straight line basis over the term of the contracts. 37

38 20 Lease and concessions June 30, 2018 December 31, 2017 Leases Concessions Total Total Amounts payables: Rumo Malha Sul 34,787 30,103 64,890 65,550 Rumo Malha Paulista - 20,011 20,011 48,139 34,787 50,114 84, ,689 Amounts under judicial discussions: Rumo Malha Paulista 1,642,004-1,642,004 1,535,470 Rumo Malha Oeste 1,265,844 78,553 1,344,397 1,284,175 2,907,848 78,553 2,986,401 2,819,645 Total 2,942, ,667 3,071,302 2,933,334 Current 28,819 27,413 Non-current 3,042,483 2,905,921 3,071,302 2,933,334 Judicial deposits on June 30, 2018 concerning the above claims totaled: June 30, 2018 December 31, 2017 Rumo Malha Paulista 119, ,806 Rumo Malha Oeste 20,690 20, , ,496 Judicial deposits are recorded in the line "regulatory" under Note

39 21 Equity a. Treasury shares In the period ended June 30, 2018, the Company exercised a stock option plan for the Company's shares under the symbol "RLOG3", amounting R$1,947 from treasury shares. b. Capital reserve Changes of the period are comprised of the transactions with shareholders highlighted below: Increase of R$1,063 related to stock option transactions; Decrease of R$36 related to the effect of the distribution of dividends in the subsidiary Rumo Malha Norte. c. Other comprehensive income Comprehensive income December 31, 2017 Base Net June 30, 2018 Foreign currency translation differences - equity - accounted investee 5,401 2,585 2,585 7,986 Defined benefit plan actuarial loss (327) (297) (297) (624) Total 5,074 2,288 2,288 7,362 d. Tax incentives SUDAM Rumo Malha Norte obtained through the Superintendence of the Development of the Amazon - SUDAM the right to the reduction of income tax on corporate entities - IRPJ and additional non-refundable income, as it is located in the area covered by the Legal Amazon and since it is the transport sector considered a priority project for regional development. The tax benefit includes a reduction of 75% on IRPJ and additional non-refundable income on operating profit up to The effect of the reduction of 75% on IRPJ and additional non-refundable calculated up to June 30, 2018 on the operating profit was R$(11,287) (R$14,896 on June 30, 2017), recorded as a reduction of the Income Tax and Social Contribution expense of the subsidiary Rumo Malha Norte. 39

40 22 Earnings per share Basic earnings per share are calculated by dividing the loss by the weighted average number of common shares outstanding during the year. Diluted earnings per share are calculated by adjusting the income and number of shares for the impacts of potentially dilutive instruments. The table below shows the calculation of earnings per share (in thousands, except per share amounts) for the period ended June 30, 2018 and 2017: Basic and diluted April 1, 2018 to June 30, 2018 January 1, 2018 to June 30, 2018 April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 Result for the period (10,676) (26,900) (9,550) (80,471) Denominator: Weighted average number of outstanding common shares 462, , , ,056 Basic and diluted earnings per common share (R$ ) (R$ ) (R$ ) (R$ ) Dilutive instruments The non-controlling interest of the indirect subsidiary Brado have the right to exercise a Liquidity option provided for in the shareholders' agreement signed on August 05, This option would exchange all Brado shares held by such minority shareholders by shares of the Company. The exchange ratio shall take into account the economic value for both Brado and the Company shares. At the Company's exclusive discretion, an equivalent cash payment is also possible. On June 30, 2018, 19,654 shares (31,102 on June 30, 2017) have an antidilutive effect and therefore were not considered in the diluted earnings per share analysis. The Company has stock-based compensation plans, as detailed in note 23, whose instruments (options or restricted shares) would reduce the loss per share in the years presented. On June 30, 2018, 3,390 shares (3,035 on June 30, 2017) have an antidilutive effect and therefore were not considered in the diluted earnings per share analysis. 40

41 23 Stock option plan 1) Program Features: Lack period (years) Grant date Interest rate Volatility Granted shares Exercised / canceled Effective on June 30, 2018 Market price on grant date - R$ Fair value on grant date - R$ Stock grants October 1, % 42.75% 1,485,900 (161,600) 1,324, January 2, % 42.75% 1,476,000 (106,600) 1,369, September 1, % 29.76% 870,900 (17,950) 852, ,832,800 (286,150) 3,546,650 Exercise price at June 30, 2018 Stock options 2011 (A) 7 August 18, % 31.44% 1,206,250 (1,147,500) 58, (B) 12 August 18, % 30.32% 1,250,000 (625,000) 625, (C) 7 December 12, % 31.44% 175,000 (105,000) 70, April 24, % 27.33% 242,500 (30,000) 212, April 25, % 29.85% 240,000 (20,000) 220, ,113,750 (1,927,500) 1,186,250 2) Changes: Number of options Stock option Stock grant Stock option CLOG Average exercise price Number of options Number of options Average exercise price December 31, , ,587,750 1,359, Lost (19,764) (8,200) - - Exercised - - (32,900) (173,250) June 30, , ,546,650 1,186, In the period ended June 30, 2018, R$3,523 was recognized as expenses related to the appropriation of the Stock Grant Plans (R$2,704 on June 30, 2017). 41

42 24 Financial result April 1, 2018 to June 30, 2018 January 1, 2018 to June 30, 2018 Parent Company Consolidated April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 April 1, 2018 to June 30, 2018 January 1, 2018 to June 30, 2018 April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 Cost of gross debt Interest and monetary variations on debts (130,214) (272,928) (259,218) (540,765) Net exchange rate changes on debts (611,929) (623,682) (131,610) (133,975) Result from derivatives and fair value , ,684 74,248 67,283 Amortization of funding expenses (25,264) (32,520) (7,437) (7,509) Guarantees and warranties about on loans (26,014) (54,243) (35,600) (73,298) (386,191) (644,689) (359,617) (688,264) Income from financial investments , ,227 69, , , ,227 69, ,589 Cost of debt, net (339,070) (541,462) (289,745) (585,675) Other charges and monetary variations Interest on other receivables ,165 23,659 9,124 20,053 Lease and concessions (47,337) (92,567) (61,864) (134,992) Finance leases (20,176) (72,495) (32,294) (66,539) Banking expenses and other - (1) (53) (65) (10,618) (19,700) (19,781) (33,248) Real credit certificate (1,500) (3,702) (5,625) (12,627) Interest on contingencies and commercial contracts (1) (2) (2) (3) (24,566) (48,737) (16,130) (35,921) Exchange variation (8,239) (9,459) 2,652 5,511 Interest on other liabilities (5) (9) (11) (20) (12,225) (43,929) (19,201) (40,639) (120,496) (266,930) (143,119) (298,402) Finance result, net (459,566) (808,392) (432,864) (884,077) Financial expenses (6) (12) (66) (88) (297,915) (640,820) (459,653) (948,040) Financial income , ,885 78, ,641 Foreign exchange, net (620,168) (633,141) (128,958) (128,464) Derivatives , ,684 76,751 69,786 Finance result, net (459,566) (808,392) (432,864) (884,077) 42

43 25 Other income (expenses), net Consolidated April 1, 2018 to June 30, 2018 January 1, 2018 to June 30, 2018 April 1, 2017 to June 30, 2017 January 1, 2017 to June 30, 2017 Net effect of judicial demands and tax installment (21,654) (42,114) (18,389) (32,310) Income of port operations 1,544 2,260 1,735 1,735 Rental and leases revenue - - (833) 661 Result on sale of scrap / eventual 12,378 25,325 13,881 20,169 Result on disposals of fixed assets and intangible assets 4,383 4,951 1,850 3,644 Insurance claims recovery 1,757 5,345-1,181 Other (2,553) (4,307) (456) 517 (4,145) (8,540) (2,212) (4,403) 43

44 26 Financial instruments Financial risk management Overview The Company is exposed to the following risks from its use of financial instruments: Credit risk; Liquidity risk; and Market risk This note presents information about the Company's and its subsidiaries exposure, to each of the above risks, the Company's objectives, policies and processes for measuring and managing risk. The carrying amounts and the separation by category of financial assets and liabilities are as follows: June 30, 2018 December 31, 2017 Assets Fair value through profit or loss Cash and cash equivalents 2,291 1,902 Marketable securities 2,488,020 3,153,160 Derivate financial instruments 480, ,107 2,970,795 3,265,169 Amortized cost Cash and cash equivalents 81, ,007 Accounts receivable 402, ,718 Related parties 62,277 31,455 Restricted cash 166, , , ,814 Total 3,683,198 4,071,983 Liabilities Amortized cost Long-term debts 5,956,142 7,005,284 Finance leases 671, ,138 Real estate credit certificates 36,873 86,745 Accounts payable - suppliers 484, ,597 Other financial liabilities 301, ,977 Related parties 164, ,468 Dividends payable 6,877 8,747 Debt payment in installments 13,691 21,955 7,634,974 9,135,911 Fair value through profit or loss Long-term debts 4,191,571 2,665,662 4,191,571 2,665,662 Total 11,826,545 11,801,573 During the period, there was no reclassification between categories, the fair value through the result and amortized cost presented above. 44

45 Structure of risk management Management is responsible for establishing and overseeing the Company's risk management framework. The Board of Directors follows the Risk Management through the Company's senior management reporting, which is responsible for developing and monitoring risk management policies. Risk management policies are established to identify and analyze the risks to which the Company is exposed to define limits of appropriate risks and controls, and to monitor risks and adherence to defined limits. Risk management policies are reviewed regularly to reflect changes in market conditions and the Company's activities. Management through its standards and training procedures and management seek to maintain a discipline and control environment in which all employees are aware of their duties and obligations. The Audit Committee oversees how management monitors compliance with policies and risk management procedures and reviews the adequacy of the risk management framework in relation to the risks to which the Company is exposed. The Audit Committee is supported by the internal audit team in carrying out its functions. The internal audit performs regular and sporadic revisions in policies and risk management procedures and the result of the following is reported to the Audit Committee. All derivative activities for risk management purposes are carried out by specialized teams with the skills, experience and appropriate supervision. It is the Company's policy not to engage in any derivative transactions for speculative purposes. The use of financial instruments for the purpose of protection is done through an analysis of the risk exposure that management intends to cover. On June 30, 2018 and December 31, 2017, the fair values related to transactions involving derivative financial instruments to hedge risk exposure of the Company are presented next: Interest rate risk June 30, 2018 Notional December 31, 2017 June 30, 2018 Fair value December 31, 2017 Swap contracts (interest) (i) - 161,561-2,009 Swap contracts (interest and exchange) 4,102,638 2,481, , ,098 4,102,638 2,642, , ,107 Total financial instruments 4,102,638 2,642, , ,107 Assets 480, ,107 (i) For the period ended June 30, 2018, the Company contracted Swap operations, where it will be Active in USD % and Passive in % of the CDI as of May 2,

46 (a) Credit risk June 30, 2018 December 31, 2017 Cash and cash equivalents (i) 83, ,909 Marketable securities (i) 2,488,020 3,153,160 Restricted cash (i) 166, ,634 Account receivables (ii) 402, ,718 Related parties (ii) 62,277 31,455 Derivative financial instruments (i) 480, ,107 3,683,198 4,071,983 (i) The risk of credit balances with banks and financial institutions is managed by the Company's treasury in accordance with the policy established by. Excess funds are invested only with approved counterparties and within the limits assigned to each. The counterparty credit limit is reviewed annually and may be updated throughout the year. These limits are designed to minimize the concentration of risks and therefore mitigate financial loss in the event of a potential failure of counterparty. The maximum the Company's exposure to credit risk in relation to the balance sheet components on June 30, 2018 and December 31, 2017 is the value recorded, as shown in note 14 except for financial guarantees and derivative financial instruments. The maximum exposure with respect to financial guarantees and derivative financial instruments is presented in the liquidity table below. (ii) The risk of customer credit is managed centrally by each business segment, subject to the procedures, controls and policy established by the Company in relation to this risk. Credit limits are established for all customers based on internal rating criteria. Customer credit quality is evaluated based on an internal procedure of extensive credit rating. The outstanding customer receivables are monitored frequently. The need for a valuation allowance for impairment is analyzed at each reporting date on an individual basis for major clients. In addition, a large number of receivables with smaller balances are grouped into homogenous groups and in such cases; the recoverable loss is assessed collectively. The calculations are based on actual historical data. The credit risk on cash and cash equivalents, marketable securities are determined by rating instruments widely accrued by the market and are arranged as follows: June 30, 2018 AA 295,528 AAA 2,904,791 A+ 6,866 B 11,614 Total 3,218,799 (b) Liquidity risk Liquidity risk is the risk that the Company and its subsidiaries encounter difficulties in meeting the obligations associated with its financial liabilities that are settled with cash payments or other financial assets. The Company's approach and its subsidiaries to managing liquidity is to ensure, as much as possible, there is always a sufficient liquidity to meet the obligations falling due under normal and stress conditions, without causing unacceptable losses or risk damaging the reputation of the Company and its subsidiaries. 46

47 Financial liabilities of the Company sorted by due dates (based on undiscounted cash flows contracted) are as follows: June 30, 2018 December 31, 2017 Up to 1 year 1 to 2 years 3 to 5 years Over 5 years Total Total Long-term debt (1,890,931) (1,464,626) (3,847,538) (6,461,972) (13,665,067) (12,960,121) Accounts payable - suppliers (484,686) (484,686) (628,597) Other financial liabilities (i) (301,330) (301,330) (291,977) Debt payment in installments (7,409) (4,776) (693) (1,778) (14,656) (22,621) Finance leases (276,765) (172,921) (332,874) (239,529) (1,022,089) (1,443,470) Real estate credit certificates (39,356) (39,356) (92,844) Related parties payable (164,104) (164,104) (148,468) Dividends payable (6,877) (6,877) (8,747) Derivate financial instruments (34,092) (158,221) (617,594) 1,262, ,819 (576,319) (3,205,550) (1,800,544) (4,798,699) (5,440,553) (15,245,346) (16,173,164) (i) On June 30, 2018, the consolidated balance anticipated by our suppliers with financial institutions was R$301,330 (R$291,977 on December 31, 2017). All these operations were with Banco Itaú at an average interest rate of 7.75% p.a. The average term of these operations, which are recorded at their present values at the interest rate previously mentioned, is three months. (c) Market risk Market risk is the risk that changes in market prices - such as exchange rates and interest rates - will affect the Company's earnings or the value of its holdings of financial instruments. The objective of market risk management is to manage and control exposures to market risks within acceptable parameters, while improving the return. The Company uses derivatives to manage market risks. All these operations are conducted within the guidelines established by the risk management policy. Generally, the Company seeks to apply hedge accounting to manage the volatility in the result. Foreign exchange risk On June 30, 2018 and December 31, 2017, the Company and its subsidiaries had the following net exposure to exchange rates on assets and liabilities denominated in US Dollars: June 30, 2018 December 31, 2017 Cash and cash equivalents 14,680 5,649 Account receivables 17,092 10,903 Accounts payable - suppliers (27,117) (13,230) Long-term debts (4,850,676) (2,665,662) Exchange rate derivatives (notional) (i) 4,857,872 2,676,559 Foreign exchange exposure, net 11,851 14,219 47

48 (i) These balances are equivalent to the value of the notional currency in US Dollars converted to R$ at the Dollar rate of June 30, Sensitivity analysis of changes in exchange rates: The probable scenario was defined based on the market rates in US dollars as of June 30, 2018, which determines the fair value of the derivatives at that date. Stressed scenarios (positive and negative effects, before taxes) were defined based on adverse impacts of 25% and 50% on the US dollar exchange rates used in the probable scenario. Based on the financial instruments denominated in U.S. Dollars at June 30, 2018, the Company performed a sensitivity analysis by increasing and decreasing the exchange rate for R$/US$ by 25% and 50%. The probable scenario considers the estimated exchange rates projected for the coming year for the companies with functional currency Real (positive and negative, before tax effects), as follows: June 30, 2018 Exchange rate sensitivity analysis (R$/US$) Scenarios Probable 25% 50% -25% -50% US Dollars In the probable scenario, the Company uses the U.S. Dollar projected by specialized consulting for June 30, Given the above scenario, the gains and losses would be affected as follows: Scenarios Instrument Risk factor Probable 25% 50% -25% -50% USD Cash and cash equivalents fluctuation (1,697) 3,246 6,491 (3,246) (6,491) USD Accounts receivable fluctuation (1,976) 3,779 7,558 (3,779) (7,558) USD Accounts payable fluctuation 2,540 (6,144) (12,289) 6,144 12,289 USD Exchange rate derivatives (notional) fluctuation (631,253) 1,223,661 2,447,322 (1,223,661) (2,447,322) USD Long-term debt fluctuation 634,697 (1,237,069) (2,474,137) 1,237,069 2,474,137 Impacts on result of the period 2,311 (12,527) (25,055) 12,527 25,055 Interest rate risk The Company and its subsidiaries monitor fluctuations in variable interest rates tied to some debts, mainly those linked to the risk of CDI/TJLP, and makes use of derivative instruments in order to minimize these risks. 48

49 Sensitivity analysis of changes in interest rates: The probable scenario considers the Company's projections for interest rates, as follows: June 30, 2018 Probable 25% 50% -25% -50% SELIC 6.50% 8.10% 9.80% 4.90% 3.30% CDI 5.77% 7.20% 8.70% 4.30% 2.90% TJLP 7.30% 9.10% 11.0% 5.50% 3.70% IPCA 2.05% 2.60% 3.10% 1.50% 1.0% The Company uses specialized advice for market projections. The sensitivity analysis on interest rates on loans and financing and compensation for CDI of financial investments increase and decrease of 25% and 50% is as follows: June 30, 2018 Exposure interest rate (i) Probable 25% 50% -25% -50% Cash and cash equivalents 1, (479) (958) Restricted cash 327,963 81, ,982 (81,991) (163,982) Long-term debt (269,936) (67,447) (134,946) 67, ,946 Interest rate derivative 183,281 (735,312) (1,365,512) 861,996 1,877,456 Real estate credit certificates (2,128) (532) (1,064) 532 1,064 Finance leases (24,858) (6,215) (12,429) 6,215 12,429 Impacts on result of the period 216,238 (727,036) (1,349,011) 853,720 1,860,955 (i) The rates of CDI and TJLP considered: 5.77% p.a. and 7.30% p.a., respectively, were obtained from information provided by the market. Fair value of financial instruments The fair value of financial assets and liabilities represents the amount at which the instrument could be exchanged in a current transaction between willing parties, and not in a forced sale or liquidation. The following methods and assumptions were used to estimate the fair value: The Cash and cash equivalents, accounts receivable, accounts payable and other short-term liabilities approximate their carrying amount largely due to the short-term maturity of these instruments. The fair value of bonds and marketable bonds is based on price quotations at the balance sheet date. The fair value of non-negotiable instruments, bank loans and other financial debts, obligations under finance leases as well as other non-current financial liabilities is estimated by means of future cash flows discounted using rates currently available for debt or deadlines and the like remaining. 49

50 The fair values of the Senior Notes are quoted on the Luxembourg Stock Exchange (Note 14) and are based on the quoted market price as follows: Loans Company June 30, December , 2017 Senior Notes Due 2024 Rumo Luxembourg % % Senior Notes Due 2025 Rumo Luxembourg 91.91% - The fair value of other loans and financing, their market values substantially approximate the amounts recorded due to the fact that these financial instruments are subject to variable interest rates, see details in note 14. The Company and its subsidiaries enter into derivative financial instruments with various counterparties, principally financial institutions with investment grade credit ratings. The fair value of derivative financial instruments is determined using valuation techniques and observable market data such as quoted prices in active markets or discounted flows based on market curves. The most commonly used valuation techniques include fixed rate pricing models and swaps, with present value calculations. The models consider various data, including counterparty credit quality, spot and forward exchange rates, interest rate curves. In order to measure the credit risk of the parties involved in the derivative instruments, the Company uses the forward rate structure disclosed by B3 and adds discount rates that reflect the counterparty credit risk that are applied in each of the maturities in the calculation of the fair value of all financial instruments. The Company adopts counterparty ratings for positive flows and its own rating for negative flows, available on the market and disclosed by renowned rating agencies, as a necessary premise to extract the probability of default. The carrying amounts and fair values of financial assets and liabilities are as follows: Assets and liabilities measured by fair value Book value June 30, 2018 December 31, 2017 June 30, December Level 1 Level 2 Level 3 Level 1 Level 2 Level , 2017 Assets Investments funds 2,291 1,902-2, ,902 - Marketable securities 2,488,020 3,153,160-2,488, ,153,160 - Derivative financial instruments 480, , , ,107 - Total 2,970,795 3,265,169-2,970, ,265,169 - Liabilities Long-term debts (4,191,571) (2,665,662) - (4,191,571) - - (2,665,662) - Total (4,191,571) (2,665,662) - (4,191,571) - - (2,665,662) - 50

51 Hedge accounting Fair value Currently, the Company adopts a fair value hedge for some of its operations in that both (hedge instruments and hedged items) are accounted for at fair value through profit or loss. Operations and accounting effects of this adoption are as follows: Debt Derivatives Total Balance on January 1, 2018 (2,570,622) 106,091 (2,464,531) Initial measurement (1,605,950) - (1,605,950) Interest amortization 89,742 43, ,953 Fair value (666,184) 319,568 (346,616) Balance on June 30, 2018 (4,753,014) 468,870 (4,284,144) 27 Operating segment information Management evaluates the performance of its operating segments based on EBITDA (earnings before income tax and social contribution, interest, depreciation and amortization). Operational segments (i) North Operations: comprised of the railway operations, road operations, transshipment and port elevation in the areas of the Rumo s concession, Elevações Portuárias, Rumo Malha Norte and Rumo Malha Paulista. (ii) South Operations: comprised of the railway and transshipment in the concession area of Rumo Malha Sul and Rumo Malha Oeste. (iii) Container Operations: comprised by the group company that focuses on container logistics either by rail or road transport and other container operations results. The segment information has been prepared in accordance with the same accounting policies used in preparing the consolidated information. 51

52 Period: April 1, 2018 to June 30, 2018 Period: January 1, 2018 to June 30, 2018 Results by segment North Operations South Operations Container Operations Corporate Consolidated Results by segment North Operations South Operations Container Operations Corporate Consolidated Net revenue 1,210, ,195 64,670-1,664,545 Net revenue 2,264, , ,858-3,061,228 Cost of services (685,350) (355,785) (75,289) - (1,116,424 Cost of services (1,287,429) (683,167) (146,542) - (2,117,138) Gross profit 525,330 33,410 (10,619) - 548,121 Gross profit 976,596 (5,822) (26,684) - 944,090 Gross margin (%) 43.4% 8.6% -16.4% 0.0% 32.9% Gross margin (%) 43.1% -0.9% -22.3% 0.0% 30.8% Selling, general and Selling, general and administrative (48,180) (15,711) (6,105) (591) (70,587) administrative (100,845) (30,240) (12,830) (114) (144,029) Other income and equity 2,419 (7,360) 4,583 (2) (360) Other income and equity 3,713 (13,585) 6,495 2 (3,375) Depreciation and amortization 246, ,193 13, ,937 Depreciation and amortization 469, ,260 27, ,057 EBITDA 726, ,532 1,853 (593) 843,111 EBITDA 1,348, ,613 (5,543) (112) 1,493,743 Margin EBITDA (%) 60.0% 29.7% 2.9% 0.0% 50.7% Margin EBITDA (%) 59.6% 22.2% -4.6% 0.0% 48.8% Period: April 1, 2017 to June 30, 2017 Period: January 1, 2017 to June 30, 2017 Results by segment North Operations South Operations Container Operations Corporate Consolidated Results by segment North Operations South Operations Container Operations Corporate Consolidated Net revenue 1,116, ,963 56,833-1,506,143 Net revenue 2,030, , ,750-2,705,317 Cost of services (604,042) (310,489) (74,803) - (989,334) Cost of services (1,156,474) (617,362) (146,350) - (1,920,186) Gross profit 512,305 22,474 (17,970) - 516,809 Gross profit 874,041 (47,310) (41,600) - 785,131 Gross margin (%) 45.9% 6.7% -31.6% 0.0% 34.3% Gross margin (%) 43.0% -8.3% -39.7% 0.0% 29.0% Selling, general and Selling, general and administrative (59,269) (16,843) (5,933) (1,117) (83,162) administrative (102,734) (33,160) (11,320) (1,611) (148,825) Other income and equity (231) (2,013) 1,444 - (800) Other income and equity (1,180) (3,783) 3,718 - (1,245) Depreciation and amortization 191,396 91,155 16, ,801 Depreciation and amortization 374, ,806 32, ,704 EBITDA 644,201 94,773 (6,209) (1,117) 731,648 EBITDA 1,144,648 97,553 (16,825) (1,611) 1,223,765 Margin EBITDA (%) 57.7% 28.5% -10.9% 0.0% 48.6% Margin EBITDA (%) 56.4% 17.1% -16.1% 0.0% 45.2% 52

53 EARNINGS RELEASE 2Q18 Curitiba, August 7, 2018 RUMO S.A. (B3: RAIL3) ( Rumo ) and COSAN LOGÍSTICA S.A. (B3: RLOG3) ( Cosan Logística ) today announced their results for the second quarter of 2018 (2Q18) composed of April, May, and June. The results are consolidated in accordance with the accounting criteria adopted in Brazil and International Financial Reporting Standards (IFRS). The comparisons included in this report consider 2Q18 and 2Q17 unless otherwise indicated. Rumo 2Q18 and 6M18 Highlights In 2Q18, EBITDA totaled R$844 million, 15% higher than 2Q17. EBITDA margin grew by 2 p.p. to 51%. In 6M18, EBITDA advanced 22% to R$1,494 million, with a margin of 49%, 4 p.p. higher than in 6M17. Total transported volume reached 13.5 billion RTK, 9% higher than in 2Q17. In 6M18, total transported volume grew 13% to 25.3 billion RTK. May volumes were negatively impacted by the truck drivers strike. In April and June, transported volumes rose more than 15%, when compared to last year. Loading volumes in Rumo s terminals at the Port of Santos (SP) dropped 21% in 2Q18 year-overyear and 12% in 6M18, totaling 5.1 million tons. This result mainly reflected the negative macro environment for sugar trade. Capex totaled R$559 million in 2Q18, while in 6M18, capex came to R$1,042 million, in line with the Company s investment plan, with a highlight to the investments in truck dumpers that increase significantly the capacity of the Rondonópolis (MT) terminal. 2Q18 2Q17 Chg.% Summary of Financial (Amounts in R$ MM) 6M18 6M17 Chg.% 13,464 12, % Total Transported Volume (million RTK) 25,291 22, % 2,616 3, % Total Volume Loaded (TU 000) 5, , % 1, , % Net Revenue 3, , % % Gross Profit % 32.9% 34.3% -1.4 p.p. Gross Margin (%) 30.8% 29.0% 1.8 p.p. (70.0) (82.0) -14.7% Selling. General and Administrative Expenses (143.9) (147.2) -2.2% (0.4) (0.8) -55.1% Other Op. Revenues (Expenses) and Equity Pickup (3.4) (1.2) >100% % Operational Profit % % Depreciation and Amortization % % EBITDA 1, , % 50.7% 48.6% 2 p.p. EBITDA Margin (%) 48.8% 45.3% 3.5 p.p. (34.5) (30.2) 14.5% Net Profit (Loss) (92.8) (278.8) -66.7% -2.1% -2.0% -0.1 p.p. Net Margin (%) -3.0% -10.3% 7.3 p.p % Capex 1, % Conference Call English 2:00 p.m. (Brasília time) August 8, 2018 (Wednesday) Phones (BR): Phone (USA): Code: RUMO Investor Relations ir@rumolog.com Phones: Website: ri.rumolog.com Portuguese 3:00 p.m.(brasília time) August 8, 2018 (Wednesday) Phones: Code: RUMO 1 of20

54 Earnings Release 2Q18 and 6M Q18 Executive Summary Rumo s EBITDA reached R$843.7 million in 2Q18, up 15% year-over-year. In 6M18, EBITDA advanced 22% to R$1.5 billion. The results were bolstered by higher transported volumes and greater cost efficiency. In 2Q18, fuel consumption decreased (Liters/GTK: -7%) and fixed costs were diluted, contributing to 2 p.p. margin expansion, to 51% in the period. Volume transported by Rumo reached 13.5 billion RTK in 2Q18, up 9% year-over-year. In 6M18, volume transported totaled 25.3 billion RTK, up 13% versus 6M17. The quarter started with strong demand for soybean transportation and capacity, which drove 15% growth in April volumes. In May, the first 20 days of the month mirrored April s performance, however, over the last 10 days of the month, with the truck drivers strike, the Company was impacted especially in its grain operation in the state of Mato Grosso. In June, with the end of the stike, demand and operation got back to normal, recording growth of 16% in transported volumes in front of last year. In addition, it is worth mentioning that fertilizer operation in Rondonópolis (MT) initiated activities this quarter, which is strictly within the volumes planned for the year. Total Transported Volume (Billion RTK) Grains Volume: North Operation (Billion RTK) Source: Rumo System In 2Q18, Rumo reached a market share of 43% in the transportation of grains to the Port of Santos (SP), 2 p.p. lower than in 2Q17. Both exports volume and transported volumes by Rumo were impacted by the truck drivers strike in May. However, excluding the strike period, Rumo s volume was constrained by capacity, which was lower than market expansion during some periods of the quarter, resulting market share loss. The South Operation increased 6 p.p. market share of grains at the ports of Paranaguá (PR), and São Francisco do Sul (SC), due to more available capacity for grains, as long as sugar market was not favorable. Aditionally, our commercial effort to bring more grains demand, improvements in operational safety, access to better port terminals, together with investments delivered 37% growth in transported volumes. Rumo s Volume and Market Share Evolution in Grain Transportation: Port of Santos (SP) Ports of Paranaguá (PR) and São Francisco do Sul (SC) (Millions of tons and %) (Millions of tons and %) Source: Marine Agency 2 of 20

55 Earnings Release 2Q18 and 6M18 In 2Q18, Rumo maintained its indebtedness ratio at 2.6x.broad net debt/ebitda, making prepayments on certain instruments, reducing its gross debt balance from R$12.1 billion to R$10.9 billion. This quarter, the financial result recorded relevant non-recurring effects: (i) marked-to-market of Senior Notes hedging instruments (swap for CDI interest rate) as a result of interest forward curve fluctuation, which impacted results by R$80 million, but a non-cash effect; (ii) recognition of approximately R$22 million non-cash expenses referring to the Debenture issued in 2016, which previously would be deferred over the debt useful life, and due to prepayment, were recognized in advance; and (iii) prepayment fees of this Debenture totaling R$16 million (cash effect). The outlook for 2018 grains crops remains positive for Rumo. Agroconsult revised estimates for the 2017/2018 soybean crop relative to the previous crop, increasing production projections in Brazil and the state of Mato Grosso to 4% growth, which would make this a record crop. For the 2017/2018 corn crop, estimates indicate a 17% decline in Brazilian production and a 10% drop in Mato Grosso production. Positive conditions for soybean trade extended its exports period, which coupled with corn carryover inventories contributed to offset the lower grain production, already expected for the second half. Soybean Production Forecast (million tons) Corn Production Forecast (million tons) Source: Agroconsult In addition, there is a trend of increase in average road freight prices when compared to 2017, which is evidenced by IMEA figures, enhancing Rumo s competitiveness. Avarege Road Freight Prices from Rondonópolis (MT) to the Port of Santos (SP) (R$/ton) Source: IMEA (Mato Grosso Institute of Agribusiness Economy) All of the comments in this report refer to Rumo s consolidated results. However, the 2Q18 financial information related to Cosan Logística is available in the appendices. 3 of 20

56 Earnings Release 2Q18 and 6M18 2. Consolidated Operating and Financial Indicators 2Q18 2Q17 Chg.% Summary of Financial Information (Amounts in R$ MM) 6M18 6M17 Chg.% 13,464 12, % Total Transported Volume (million RTK) 25,291 22, % 11,160 10, % Agricultural Products 20,759 18, % 2,304 1, % Industrial Products 4,532 3, % % Average Transportation Yield (R$/000 RTK) % 2,616 3, % Total Volume Loaded (TU 000) 5,090 5, % % Average Loading Yield (R$/TU) % 1, , % Net Operating Revenue 3, , % 1, , % Transportation 2, , % % Port Loading % % Other² % (1,116.4) (989.3) 12.8% Costs of Services (2,117.1) (1,920.2) 10.3% (386.5) (337.1) 14.7% Variable Costs (705.9) (615.4) 14.7% (366.1) (353.5) 3.6% Fixed Costs (718.4) (718.6) 0.0% (363.8) (298.8) 14.7% Depreciation and Amortization (692.9) (586.2) 18.2% % EBITDA 1, , % 50.7% 48.6% 2.0 p.p. EBITDA Margin (%) 48.8% 45.3% 3.5 p.p. Note²: Includes revenue from right of way of other railways, revenue from sugar transportation using other railways or road transportation and revenue from volumes contracted but not executed according to commercial agreements (take or pay). Rumo Consolidated Transported Volume Transported Volume (Million RTK) and Average Railroad Transportation Yield (R$/000 RTK) 2Q18 2Q17 Chg.% Operational Figures (Amounts in R$ MM) 6M18 6M17 Chg. % 13,464 12, % Total Transported Volume (million RTK) 25,291 22, % 11,160 10, % Agricultural Products 20,759 18, % 7,770 6, % Soybean 14,340 12, % 1,717 1, % Soybean meal 3,256 2, % 362 1, % Corn 1,045 1, % 1,014 1, % Sugar 1,643 1, % % Fertilizers % % Other % 2,304 1, % Industrial Products 4,532 3, % 1,060 1, % Fuels 2,127 2, % % Wood, Pulp and Paper >100% % Containers 1, % % Other % 4 of 20