Cosan Logística S.A. Interim financial statements September 30, 2017 (A free translation of the original in Portuguese)

Transcription

1 Interim financial statements (A free translation of the original in Portuguese)

2 Interim financial statements Contents Independent auditor s report on review of interim financial information 3 Balance sheets 5 Statements of income 7 Statements of comprehensive income 9 Statements of changes in equity 11 Statements of cash flows indirect method 12 Statements of value added

3 Report on Review of Interim Financial Information - ITR To the Management, Board of Directors and Shareholders of Cosan Logística S.A. 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, which comprise the balance sheet as of and the related statements of profit and loss and comprehensive income for the three and nine-month periods then ended and changes in shareholders' equity and cash flows for the nine-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. Other matters - Statements of added value The individual and consolidated interim financial information related to the Statements of added value (DVA) for the nine-month period ended, 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 3

4 above were not prepared, in all material respects, consistently with the overall individual and consolidated interim financial information. São Paulo, 08 November 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 30, December 31, 30, December 31, Assets Cash and cash equivalents 3 2, , ,542 Marketable securities ,820 1,516, ,413 Accounts receivable , ,156 Derivative financial instruments ,573 2,883 Inventories , ,579 Related parties 8 3,362-48,654 28,814 Current income taxes 3,759 3,443 24, ,399 Other recoverable taxes ,666 84,009 Dividends receivable ,304 Other assets , ,932 Current 9,867 7,278 2,697,738 2,308,031 Accounts receivable ,661 14,305 Restricted cash , ,999 Deferred income tax 14-1,297 1,130,714 1,159,790 Current income taxes , ,376 Other recoverable taxes , ,805 Judicial deposits , ,470 Derivative financial instruments , Other non-current assets , ,191 Equity method investments 9 1,482,199 1,533,232 42,481 46,847 Property and equipment ,945,776 10,337,119 Intangible assets ,659,406 7,781,289 Non-current 1,482,820 1,535,123 21,448,164 20,729,977 Total Assets 1,492,687 1,542,401 24,145,902 23,038,008 The accompanying notes are an integral part of these interim financial statements. 5

6 Balance sheets Note Parent Company 30, December 31, 30, December 31, Liabilities Current portion of long-term debt ,412,784 1,467,725 Finance leases , ,632 Real estate credit certificates , ,422 Derivative financial instruments ,535 Accounts payable - suppliers , ,972 Salaries payable , ,150 Current income tax 1-3,768 35,990 Other taxes payable ,549 33,613 Dividends payable ,190 6,970 Leases and concessions ,955 27,662 Related parties , ,710 Deferred income ,775 14,167 Other financial liabilities 26.b , ,569 Other current liabilities 1,030 1, , ,400 Current 2,996 2,176 3,219,806 3,395,517 Long-term debt ,714,423 7,055,450 Finance leases , ,911 Real estate credit certificates ,472 90,323 Derivative financial instruments ,748 7,768 Current income tax ,749 - Other taxes payable ,991 17,056 Provision for judicial demands , ,022 Leases and concessions ,835,348 2,580,144 Deferred income tax ,396,047 2,395,053 Deferred income ,546 62,207 Other current liabilities , ,281 Non-current ,442,893 13,960,215 Total liabilities 2,996 2,176 18,662,699 17,355,732 Equity 20 Common stock 1,534,892 1,524,701 1,534,892 1,524,701 Treasury shares (4,856) (8,218) (4,856) (8,218) Capital reserve 225, , , ,178 Other equity 5,276 4,680 5,276 4,680 Accumulated losses (271,115) (210,116) (271,115) (210,116) Equity attributable to: Owners of the Company 1,489,691 1,540,225 1,489,691 1,540,225 Non-controlling interests - - 3,993,512 4,142,051 Total equity 1,489,691 1,540,225 5,483,203 5,682,276 Total liabilities and equity 1,492,687 1,542,401 24,145,902 23,038,008 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 July 1, to Parent Company January 1, to 30, July 1, to January 1, to General and administrative (698) (2,307) (1,463) (4,685) Other, net 25 - (1) Operating expenses (698) (2,308) (557) (4,360) Result before financial results and equity income on investments (698) (2,308) (557) (4,360) Equity income on investments 9 21,696 (57,883) (17,460) (76,209) Equity income on investments 21,696 (57,883) (17,460) (76,209) Financial expenses (7) (96) (27) (3,583) Financial income ,117 Foreign exchange, net Financial result, net ,567 Result before income taxes 21,140 (59,702) (17,993) (77,002) Income (expense) tax and social contribution benefit 14 Deferred (1,668) (1,297) (1,668) (1,297) Result for the period 19,472 (60,999) (17,765) (76,814) The accompanying notes are an integral part of these interim financial statements. 7

8 Statements of income (In thousands of Brazilian Reais R$, except earnings per share) Note July 1, to January 1, to 30, July 1, to January 1, to Net revenue from services 23 1,648,910 4,354,227 1,437,783 3,999,922 Cost of services (1,090,373) (3,010,559) (939,010) (2,717,621) Gross profit 558,537 1,343, ,773 1,282,301 Selling, general and administrative (64,603) (213,426) (90,167) (263,620) Other, net 25 (2,040) (6,445) 4,763 (3,033) Operating expenses (66,643) (219,871) (85,404) (266,653) Result before financial results and equity income on investments 491,894 1,123, ,369 1,015,648 Equity income on investments 9 4,043 7,200 2,628 8,751 Equity income on investments 4,043 7,200 2,628 8,751 Financial expenses (492,646) (1,440,686) (501,198) (1,448,311) Financial income 63, ,183 76, ,632 Foreign exchange, net 110,390 (18,074) (2,914) 79,144 Derivatives (69,350) 436 3,172 (101,142) Financial result, net 24 (388,064) (1,272,141) (423,959) (1,257,677) Result before income taxes 107,873 (141,144) (7,962) (233,278) Expense tax and social contribution benefit 14 Current (16,590) (32,926) (8,348) (34,867) Deferred (15,833) (30,130) (42,826) (9,004) (32,423) (63,056) (51,174) (43,871) Result for the period 75,450 (204,200) (59,136) (277,149) Result attributable to: Owners of the Company 19,472 (60,999) (17,765) (76,814) Non-controlling interest 55,978 (143,201) (41,371) (200,335) Earnings per share: 21 Basic R$ (R$ ) (R$ ) (R$ ) Diluted R$ (R$ ) (R$ ) (R$ ) The accompanying notes are an integral part of these interim financial statements. 8

9 Statements of comprehensive income July 1, to Parent Company January 1, to July 1, to January 1, to Result for the period 19,472 (60,999) (17,765) (76,814) Items that can be subsequently reclassified to the result Currency translation adjustment ,437 Cash flow hedge accounting result (295) Other comprehensive result net of income tax and social contribution ,102 1,142 Total comprehensive result 19,862 (60,403) (16,663) (75,672) July 1, to January 1, to July 1, to January 1, to Result for the period 75,450 (204,200) (59,136) (277,149) Items that can be subsequently reclassified to the result Currency translation adjustment 1,371 2,092 2,860 6,667 Cash flow hedge accounting result - - 1,261 (1,598) Deferred tax - - (429) 543 Other comprehensive result net of income tax and social contribution 1,371 2,092 3,692 5,612 Total comprehensive result 76,821 (202,108) (55,444) (271,537) Comprehensive result attributable to: Owners of the Company 19,862 (60,403) (16,663) (75,672) Non-controlling interest 56,959 (141,705) (38,781) (195,865) 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$) Attributable to shareholders of the Company Common stock Treasury shares Capital reserve Other equity Accumulated losses Total Noncontrolling interest At January 1, 1,524,701 (8,218) 229,178 4,680 (210,116) 1,540,225 4,142,051 5,682,276 Result for the period (60,999) (60,999) (143,201) (204,200) Currency translation adjustment ,496 2,092 Total comprehensive income, net of taxes (60,999) (60,403) (141,705) (202,108) Capital increase 10, ,191-10,191 Change in interest in subsidiary - - (5,045) - - (5,045) (5,146) (10,191) Stock option plan - - 1, ,361 2,795 4,156 Repurchase of treasury shares - 3, ,362-3,362 Dividends (4,483) (4,483) Total transactions with and to owners of the Company 10,191 3,362 (3,684) - - 9,869 (6,834) 3,035 At 1,534,892 (4,856) 225,494 5,276 (271,115) 1,489,691 3,993,512 5,483,203 The accompanying notes are an integral part of these interim financial statements. Total Equity 10

11 Statements of changes in equity (In thousands of Brazilian Reais - R$) Attributable to shareholders of the Company Common stock Treasury shares Capital reserve Profit for the period Accumulated losses Total Non-controlling interest Total Equity At January 1, 940,753 (12,185) 184,727 3,404 (3,423) 1,113,276 2,903,080 4,016,356 Result for the period (76,814) (76,814) (200,335) (277,149) Income from hedge instruments net of tax (295) - (295) (760) (1,055) Currency translation adjustment ,437-1,437 5,230 6,667 Total comprehensive income, net of taxes ,142 (76,814) (75,672) (195,865) (271,537) Capital increase 583, , ,948 Capital increase in subsidiary ,846,052 1,846,052 Transaction cost related to the capital increase - - (18,930) - - (18,930) (46,744) (65,674) Stock option plan - - 1, ,088 1,378 2,466 Change in interest in subsidiary , ,830 (55,830) - Repurchase of treasury shares - 1, ,809-1,809 Total transactions with owners of the Company 583,948 1,809 37, ,745 1,744,856 2,368,601 At 1,524,701 (10,376) 222,715 4,546 (80,237) 1,661,349 4,452,071 6,113,420 The accompanying notes are an integral part of these interim financial statements. 11

12 Statements of cash flows (In thousands of Brazilian Reais - R$) 12 Parent Company January 1, to 30, January 1, to 30, January 1, to 30, January 1, to 30, Cash flows from operating activities Result before income taxes and social contribution (59,702) (77,002) (141,144) (233,278) Adjustments to: Depreciation and amortization , ,816 Equity pick-up from controlled and associated 57,883 76,209 (7,200) (8,751) Provision for profit sharing ,888 31,295 Result on disposal of fixed and intangible assets - - (1,125) 6,491 Provision for judicial demands ,372 18,181 Provision for losses on doubtful accounts , Stock option plan ,156 2,467 Lease and concessions , ,449 Deferred revenue - - (12,735) (13,574) Take or pay - - (4,567) (107,488) Interest, indexation charges and exchange variations, net (259) 301 1,164,374 1,271,716 Other - - (18,062) (10,161) (1,826) 70 2,133,269 1,757,615 Changes in: Accounts receivable ,236 (11,266) Judicial deposits (27) (755) (33,924) (13,696) Net, related parties 848 (131) 35,645 14,700 Other recoverable taxes (41) 3,904 (79,794) 79,095 Other payable taxes (5) (5,455) (68,496) (80,461) Inventories ,082 (67,362) Salaries payable - - (20,589) (40,596) Accounts payable (33) 18 (86,075) 92,942 Lease and concessions payable - - (84,039) (80,714) Provision for judicial demands - - (54,374) (57,410) Other financial liabilities ,372 (41,562) Other asset and liabilities, net (44) (1,296) (115,241) (116,801) 698 (3,715) (404,197) (323,131) Net cash generated from (used in) operating activities (1,128) (3,645) 1,729,072 1,434,484 Cash flow from investing activities Capital increase in subsidiary - (753,948) - (4,138) Marketable securities 3,433 (165) (467,802) (876,444) Restricted cash - - (24,696) 5,432 Dividends received from controlled and associated - - 5,064 8,193 Purchase of property, plant and equipment, intangible - - (1,423,835) (1,264,952) Cash received on disposal of other fixed assets - - 7,000 - Net cash generated from (used in) investing activities 3,433 (754,113) (1,904,269) (2,131,909) Cash flow from financing activities Proceeds from debts - - 2,490,166 2,926,981 Repayments of principal from debts - - (1,482,608) (3,904,773) Payments of interest from debts - - (910,166) (902,589) Capital increase 10, ,948 10,191 2,368,273 Derivative financial instruments - - (18,086) 5,265 Acquisition of non-controller interest (10,191) - (10,191) - Dividends paid - - (2,069) (777) Net cash generated from financing activities - 583,948 77, ,380 Impact of exchange variation on cash and cash equivalents ,417 - Increase (decrease) in cash and cash equivalents 2,305 (173,810) (70,543) (205,045) Cash and cash equivalents at beginning of period , , ,849 Cash and cash equivalents at end of period 2, ,999 41,804 Supplemental disclosure of cash flow information: Income taxes paid ,446 4,505 The accompanying notes are an integral part of these interim financial statements.

13 Statements of value added (In thousands of Brazilian Reais - R$) January 1, to 30, Parent Company January 1, to January 1, to January 1, to Revenue Sale of services - - 4,640,179 4,346,568 Other operating revenue ,830 59,489 Allowance for doubtful accounts - - (11,095) (452) - - 4,730,914 4,405,605 Raw materials acquired from third parties Cost of services rendered - - (1,011,528) (1,069,694) Materials, energy, third party services, other (1,825) (3,549) (660,791) (580,105) (1,825) (3,549) (1,672,319) (1,649,799) Gross value added (1,825) (3,549) 3,058,595 2,755,806 Retention Depreciation and amortization - - (892,940) (651,816) - - (892,940) (651,816) Net value added (1,825) (3,549) 2,165,655 2,103,990 Value added transferred in Equity pick-up in investees (57,883) (76,209) 7,200 8,751 Financial income 585 7, , ,632 (57,298) (69,092) 193, ,383 Value added to be distributed (59,123) (72,641) 2,359,038 2,325,373 Distribution of value added Personnel , ,605 Direct remuneration , ,705 Benefits ,617 80,021 FGTS ,199 22,879 Taxes and contributions 1, , ,587 Federal 1,299 (188) 255, ,137 State ,542 43,781 City ,202 21,669 Third party capital remuneration 96 3,550 1,729,907 1,742,330 Interest 96 3,550 1,458,324 1,470,309 Leasing , ,021 Equity capital remuneration (60,999) (76,814) (204,200) (277,149) Non-controlling interests - - (143,201) (200,335) Losses (60,999) (76,814) (60,999) (76,814) (59,123) (72,641) 2,359,038 2,325,373 The accompanying notes are an integral part of these interim financial statements. 13

14 1 Operations Cosan Logística S.A. ("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 72.40% 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 infrastructure. Rumo 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 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 December 19,, Rumo Logística Operadora Multimodal S.A. ( Rumo Logística ) and Rumo approved the operation of Incorporation of Rumo Logística by Rumo ("Incorporation"), pursuant to the "Protocol and Justification of Incorporation". The accounting operation incurred on December 31, and consisted of the corporate reorganization through the reverse incorporation of Rumo Logística by Rumo and consequent extinction of the first, with succession of all its assets, rights and obligations by Rumo, under the terms of Articles 224 to 227 of 6,404/76 ("Brazilian Corporation Law"). In addition, following the event described in the previous paragraph, Rumo contributed the assets and liabilities related to the port operations that previously occurred in the direct subsidiary Rumo Logística into the new indirect subsidiary of the segment, Elevações Portuárias through capital increase amounting R$672,396. Additionally, Rumo contributed assets (rail cars and locomotives) amounting R$895,727 in the indirect subsidiary Rumo Malha Norte. On February 23,, TPG VI Fundo de Investimento em Participações ("TPG"), shareholder of Rumo, exercised its right to substitute 12,831,102 shares issued by Rumo - all of its shares related to Rumo's shareholders' agreement, celebrated by Cosan S.A. Indústria e Comércio ( Cosan ), the Company, GIF Rumo Fundo de Investimento em Participações ( GIF ), TPG and CZZ on 2010, as amended ("Shareholders' Agreement"), for shares issued by Cosan and shares issued by the Company, with settlement as agreed between the shareholders. After settlement of the substitution obligations, the Shareholders' Agreement will automatically terminate. On March 7,, the Company approved the increase in the common capital, within the limit of the authorized capital provided in Article 6 of the Company's Bylaws, as a result of the exercise by TPG, of the right to substitute all shares held by TPG at Rumo (BM&FBovespa: RAIL3), for shares 14

15 issued by Cosan (BM&FBovespa: CSAN3) and the Company ("Right of Substitution"), pursuant to Rumo Shareholders' Agreement signed on June 30, 2011 and added on 05, 2014, between the Company, TPG, GIF, Cosan and CZZ ("Rumo Shareholders Agreement"). On the Extraordinary General Meeting held 21,, an amendment to the Rumo's authorized capital limit was approved, so that the common capital can be increased by up to R$3,000,000 through resolution of the Board of Directors, regardless of statutory amendment. In addition, on 21,, a public offering for the primary distribution of 220,000,000 (two hundred and twenty million) common shares, registered, with no par value, free and clear of any liens or to be issued by Rumo, with restricted placement efforts, under the terms of CVM Instruction 476 was approved. The transaction was settled on October 10, (see note 28), improving the Company's capital structure, particularly net working capital. 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 Subsidiaries 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. The concession agreements of these subsidiaries and associates shall be terminated by: expiration of the contractual term; expropriation; forfeiture; termination; annulment and bankruptcy; or termination of the concessionaire. In the event of termination of any of the concessions, the main effects would be as follows: Return to the government all the rights and privileges transferred to the subsidiaries, together with leased assets and those resulting from investments that are considered 15

16 reversible by the Federal Government as being necessary to the continuous provision of the granted service. The reversible assets would be indemnified by the Federal Government based on the residual cost, calculated based on the accounting records of the subsidiaries, considering depreciation; such costs would be subject to technical and financial analysis by the Federal Government. Any and all improvements made to the permanent track superstructure would not be considered as investments for indemnification purposes. 2 Basis of preparation and significant accounting policies 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) and do not include all the information required in the annual financial statements. These interim financial statements have been prepared following the basis of preparation and accounting policies consistent with those adopted in the preparation of the financial statements of December 31, 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. On November 08,, the Board of Directors authorized the issuance of the financial statements. 2.2 Presentation of Information by segment The Management are structured on two vice presidents, the first focused on South operations (comprised of railway and transshipment in the concession area of Rumo Malha Sul and Rumo Malha Oeste) and the second focused on the North operations (composed by railway operations, road operations, transshipment and port elevation in the concession of Rumo, Elevações Portuárias, Rumo Malha Norte and Rumo Malha Paulista). A third segment includes Brado, the Company's indirect subsidiary, focused on container operations and the container operations of other group companies. Therefore, the Company now discloses four segments: (i) Northern Operations, (ii) South Operations, (iii) Container Operations, and (iv) Corporate. 2.3 Basis of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries listed below: 16

17 Directly and indirectly controlled 30, December 31, Subsidiaries Rumo S.A % 28.37% Logispot Armazéns Gerais S.A % 14.47% Elevações Portuárias S.A % 28.37% Rumo Luxembourg Sarl 28.47% 28.37% Rumo Intermodal S.A % 28.37% Rumo Malha Oeste S.A % 28.37% Rumo Malha Paulista S.A % 28.37% Rumo Malha Sul S.A % 28.37% Rumo Malha Norte S.A % 28.22% Boswells S.A % 28.37% Brado Holding S.A % 28.37% ALL Serviços Ltda % 28.37% ALL Argentina S.A % 25.81% Paranaguá S.A % 28.32% ALL Rail Management Ltda % 14.19% ALL Armazéns Gerais Ltda % 28.37% Portofer Ltda % 28.37% Brado Logística e Participações S.A % 17.65% Brado Logística S.A % 17.65% ALL Mesopotâmica S.A % 20.02% ALL Central S.A % 20.87% PGT S.A % 28.37% 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. Investment in associates (equity of investees) The following associates are accounted for under the equity method: Directly and indirectly controlled 30, December 31, Associates (Equity) 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. 17

18 2.4 Statement of value added The Company prepared statements of value added (DVA) in accordance with CPC 09 - Statement of Added Value, which are presented as an integral part of these interim financial statements in accordance with accounting practices adopted in Brazil applicable to public companies, while for IFRS they represent supplementary financial information. 2.5 Cash Flow non cash transactions The Company presents its statement of cash flows using the indirect method. During the period ended, the Company made the following transaction not involving cash and therefore is not reflected in the consolidated statement of cash flows: Lease of locomotives, rail cars and other assets through operation accounted characterized as capital leases in the amount of R$4, New standards and interpretations not yet effective IFRS 9 Financial Instruments We have identified a change in the policy for the provision for doubtful accounts and we have started a study on the possible impacts, without conclusion to date. IFRS 15 Revenue from Contracts with Customers This rule combines, enhances, and replaces specific revenue recognition guidelines into a single standard. It defines a new five-step model for recognizing revenue from customer contracts. We do not expect material adjustments in revenue recognition, but we continue to evaluate possible impacts of IFRS 15 in the disclosures in explanatory notes and in the policies applied in the control of revenue. The standard is applicable for years beginning on or after January 1, IFRS 16 Leasing (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 adopting IFRS 16 on its assets and liabilities. The quantitative effect of the adoption of IFRS 16 will depend specifically on the transition method chosen, the use of practical files and recognition exemptions, and any additional leases that the Company will enter into. The Company expects to disclose its transition approach and quantitative information prior to adoption. 18

19 Amendments to IAS 7 Statement of Cash Flows The amendments require entities to provide disclosures about changes in their liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses). On initial application of the amendment, Company is not required to provide comparative information for preceding periods. The Company is not required to provide additional disclosures in its interim consolidated financial statements, but will disclose additional information in its annual consolidated financial statements for the year ended December 31,. Amendments to IAS 12 Income Taxes: Recognition of Deferred Tax Assets for Unrecognized Losses The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how the Company should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount. Company is required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognized in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. The Company is not required to provide additional disclosures in its interim consolidated financial statements, but will disclose additional information in its annual consolidated financial statements for the year ended December 31,. There are no other IFRS standards or IFRIC interpretations that have not come into effect and are expected to have a material impact on the Company. 19

20 3 Cash and cash equivalent Parent Company December 31, December 31, Cash and bank accounts ,128 85,122 Financial investments 2, , ,420 2, , ,542 The financial investments were as below: Parent Company December 31, December 31, Exclusive funds Repurchase transactions 1,983-1,983 - Bank deposit certificates - CDB Other investments ,263-2,317 - Bank investments Bank deposit certificates - CDB , ,348 Repurchase transactions - - 8,138 26,719 Other investments , , ,420 2, , ,420 4 Marketable securities and restricted cash Marketable securities Parent Company 30, December 31, 30, December 31, Government bonds (i) - - 1,294, ,221 CDB investments linked to BNDES loans (ii) 398 3, , , ,820 1,516, ,413 (i) Government bonds classified as held for trading have interest rates pegged to SELIC and maturing between two and five years. (ii) CDB investments linked to BNDES loans classified as held for trading have an interest rate pegged to CDI and maturing between two and five years. Restricted cash 30, December 31, Government bonds 2,154 - Investments linked to loans 91,811 63,474 Securities pledged as collateral 131, , , ,999 20

21 5 Accounts receivable December 31, Domestic Brazilian Reais 307, ,543 Export Foreign currency 47,926 15,504 Allowance for doubtful accounts (29,164) (18,586) 326, ,461 Current 313, ,156 Non-current 12,661 14, , ,461 6 Inventories December 31, Parts and accessories 228, ,453 Fuels and lubricants 6,881 7,397 Warehouse and other 23,221 32, , ,579 7 Other recoverable taxes December 31, Contribution to social security financing ("COFINS") 261, ,824 Social Integration program ("PIS") 66,293 45,425 Tax on circulation of goods, transport services and communication ("ICMS") (i) 366, ,960 ICMS - CIAP (ii) 194, ,221 Other 9,575 4, , ,814 Current 177,666 84,009 Non-current 720, , , ,814 (i) ICMS credit on the acquisition of inputs and diesel used in transport. (ii) ICMS credit arising from acquisition of fixed assets. 21

22 8 Related parties a) Summary of the main balance and transactions with related parties: Parent Company December 31, December 31, Current asset Commercial operations Cosan S.A. Indústria e Comércio 3,362-3, Raízen Energia S.A ,833 14,261 Raízen Combustíveis S.A ,667 12,412 Other - - 2,403 1,701 3,362-48,654 28,814 Parent Company December 31, December 31, Current liabilities Commercial operations Raízen Energia S.A ,270 18,431 Cosan S.A. Indústria e Comércio 825-2,847 17,407 Cosan Lubrificantes e Especialidades S.A ,846 1,854 Raízen Combustíveis S.A ,483 68,151 Other - - 1, Total , ,710 b) Summary of transactions with related parties: July 1, to January 1, to 30, Parent Company July 1, to January 1, to Shared expenses Cosan S.A. Indústria e Comércio (739) (1,008) - - Raízen Energia S.A. (29) (76) - - (768) (1,084)

23 July 1, to January 1, to July 1, to January 1, to Operating income Raízen Combustíveis S.A. 121, ,956 34,708 90,441 Raízen Energia S.A. and subsidiaries 37,477 99, , ,836 Other 1, , , , ,277 Purchases of products / inputs Raízen Combustíveis S.A. (276,155) (718,440) (235,842) (662,891) Cosan Lubrificantes e Especialidades S.A. (9,246) (24,748) (7,775) (32,983) (285,401) (743,188) (243,617) (695,874) Shared expenses Cosan S.A. Indústria e Comércio (3,188) (8,608) (2,467) (7,402) Raízen Energia S.A. (6,141) (19,788) (8,721) (21,347) (9,329) (28,396) (11,188) (28,749) 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: July 1, to January 1, to July 1, to January 1, to Short-term benefits to employees and managers 4,285 15,365 9,187 25,099 Stock option recognize (Note 22) 1,452 4, ,467 5,737 19,521 10,011 27,566 23

24 9 Equity method investments a) Parent Company Subsidiaries Total shares of the investee Shares held by the Company Percentage of interest (%) Balance at January 1, Equity pick-up Comprehensive income Changes in interest in subsidiary Capital increase Stock option plan Balance at 30, Equity pickup on 30, Rumo 1,339,015, ,217, % 1,533,232 (57,883) 596 (5,045) 10,191 1,108 1,482,199 (76,209) Total 1,533,232 (57,883) 596 (5,045) 10,191 1,108 1,482,199 (76,209) b) Total shares of investee Shares held by the Company Percentage of interest (%) Balance at January 1, Equity pick-up Dividends Other Balance at 30, Equity pick-up on 30, Affiliates Rhall Terminais 28,580 8, % 3, ,011 (199) Termag S.A. 500,000 99, % 8,956 1,747 (4,713) (1,287) 4,703 1,914 TGG S.A. 79,747,000 7,914, % 18,536 3,251 (4,000) (1) 17,786 3,626 Terminal XXXIX 200,000 99, % 15,711 1,836 (2,853) 1,287 15,981 3,410 Total 46,847 7,200 (11,566) - 42,481 8,751 24

25 c) Non-controlling interests Total shares of investee Shares held by the Company Percentage of interest (%) Balance at January 1, Equity pick-up Comprehensive income Dividends Changes in interest in subsidiary Stock option plan Other Balance at 30, Equity pick-up on 30, Logispot 2,040,816 1,000, % 36,089 (684) ,405 (877) Rumo S.A. (Rumo Logística in ) 1,339,015, ,798, % 3,871,395 (146,526) 1,496 - (5,146) 2, ,724,078 (206,364) Brado Participações 12,962,963 4,963, % 218,637 2,553 - (2,402) ,788 6,017 Rumo Malha Norte 1,189,412,363 5,709, % 15,770 1,796 - (2,081) ,485 1,059 Rail Management 20,000 9, % 160 (340) (64) (244) (170) Total 4,142,051 (143,201) 1,496 (4,483) (5,146) 2,795-3,993,512 (200,335) 25

26 10 Property and equipment Land, buildings and improvements Machinery, equipment and facilities Freight cars and locomotives (i) Track structure (i) Construction in progress Cost: At January 1, 800, ,606 5,270,470 4,474, , ,047 12,013,923 Additions ,965 3,729 1,392,489 6,459 1,417,642 Disposals (2,239) (1,926) - (3,695) - (35,714) (43,574) Transfers 8, , , ,469 (1,331,187) (123,113) (13,978) At 807, ,278 5,996,730 4,862, , ,679 13,374,013 Depreciation: At January 1, (214,900) (229,780) (742,297) (542,228) - 52,401 (1,676,804) Additions (22,517) (40,466) (372,138) (302,109) - (49,690) (786,920) Disposals ,913 23,367 Transfers (599) (1) 40,575 (12,621) - (15,234) 12,120 At (237,782) (269,776) (1,073,860) (856,209) - 9,390 (2,428,237) At January 1, 585, ,826 4,528,173 3,932, , ,448 10,337,119 At 569, ,502 4,922,870 4,006, , ,069 10,945,776 i) Leasehold improvements and finance leases included. Other Total 26

27 11 Intangible assets Goodwill (i) Right of way Concession and operating Rights (ii) license Other Total Cost: At January 1, 100,451 7,562, , ,778 8,223,540 Additions ,380 1,380 Disposals (4,220) (4,220) Transfers - 337,736 - (16,206) 321,530 At 100,451 7,900, , ,732 8,542,230 Amortization At January 1, - (210,681) (200,876) (30,694) (442,251) Additions - (37,035) (62,442) (6,543) (106,020) Disposals ,218 4,218 Transfers - (337,735) - (1,036) (338,771) At - (585,451) (263,318) (34,055) (882,824) At January 1, 100,451 7,352, ,748 94,084 7,781,289 At 100,451 7,314, ,306 71,677 7,659,406 (i) Goodwill arising from business combination, of which R$62,922 of previously direct subsidiary Teaçú Armazéns Gerais S.A., merged by the Company, 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 - % December 31, Intangible (other than goodwill) Software 20% 34,946 27,158 Operating license and customer base 3.70% 172, ,748 Concession rights 1.59% 7,314,972 7,352,006 Other 36,731 66,926 Total 7,558,955 7,680,838 The Company annually tests the recoverable amounts of goodwill arising from business combinations operations. Property and equipment and intangible assets with definite lives are subject to depreciation and amortization is tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In the period ended, no indicators for impairment were identified. 27

28 12 Loans, borrowings and debentures Financial charges Description Index Average December interest rate 30, 31, Maturity date Loans and borrowings Finame (BNDES) Pre-fixed 5.24% 1,322,521 1,232,984 February/2025 URTJLP 8.79% - 17 January/ Finem (BNDES) Pre-fixed 3.93% 2,212 3,930 January/2024 URTJLP 8.80% 2,253,640 2,663,459 June/2029 IPCA 10.91% 3,721 3,453 November/2021 Selic 13.65% 4,314 5,277 /2020 NCE 112% of CDI 9.16% 92, ,069 December/ % of CDI 10.68% 567, ,576 June/2023 CDI % p.a % 81,272 80,486 November/ CDI % p.a % 294, ,516 December/2018 Senior Notes Pre-fixed (US$) 7.38% 2,381,777 - February/2024 Commercial banks CDI % p.a % 114, ,815 June/2019 Pre-fixed (US$) 5.49% 95,072 86,140 December/2021 7,213,878 5,206,722 Debentures Non-convertible debentures CDI % p.a 10.36% 153, ,285 April/2018 CDI % p.a % - 300,183 / CDI % p.a % 2,423,240 2,347,271 June/ % of CDI 8.82% 167, ,852 July/2018 Pre-fixed 13.13% 169, ,862 October/2020 2,913,329 3,316,453 Total 10,127,207 8,523,175 Current Non-current 1,412,784 8,714,423 1,467,725 7,055,450 Senior Notes 2024 On February 9,, through its subsidiary, Rumo Luxembourg Sarl ("Rumo Luxembourg"), the Company issued debt securities in the international market, Senior Notes due 2024 ("Notes 2024") in the total amount of US$750,000, with maturity in February 2024 and interest of 7.375% per annum, paid semi-annually. This debt is protected by foreign exchange and interest rate swaps. Unused credit lines At, the Company and its subsidiaries had lines of credit for financing from BNDES, which were not used, totaling of R$287,170 (R$541,639 on December 31, ). 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. 28

29 Below are the changes occurred for the nine-month period ended : Balance at January 1, 8,523,175 Additions 2,490,166 Payments (1,725,417) Monetary variation, exchange variations and fair value 839,284 Balance at 10,127, Other taxes payable Parent Company December 31, December 31, Tax on circulation of goods, transport services and communication ("ICMS") - - 3,258 2,407 National social security institute ("INSS") - - 5,280 5,930 Social integration program ("PIS") ,638 1,107 Contribution to social security financing ("COFINS") ,948 6,027 Tax amnesty and refinancing program ,655 23,709 Tax on services - - 6,294 3,364 Financial transaction tax - - 2,085 2,992 Other 3 3 3,383 5, ,540 50,669 Current ,549 33,613 Non-current ,991 17,056 29

30 14 Income tax and social contribution a) Reconciliation of income tax and social contribution expenses July 1, to 30, Parent Company January 1, to July 1, to 30, January 1, to 30, Result before income taxes 21,140 (59,702) (17,993) (77,002) Income (expense) tax and social contribution at nominal rate (34%) (7,188) 20,299 6,118 26,181 Adjustments to determine the effective rate Equity pick-up 7,377 (19,680) (5,936) (25,911) Unrecognized NOLs and temporary differences (i) (1,837) (1,837) - - Other (20) (79) 46 (82) Tax and social contribution (current and deferred) (1,668) (1,297) Effective rate - % 7.89% -2.17% 1.27% 0.24% July 1, to 30, January 1, to 30, July 1, to 30, January 1, to 30, Result before income taxes 107,873 (141,144) (7,962) (233,278) Income tax (expense) and social contribution at nominal rate (34%) (36,677) 47,989 2,707 79,315 Adjustments to determine the effective rate Equity pick-up 1,375 2, ,975 Spending on share issues - - 1,022 22,329 Unrecognized NOLs and temporary differences (i) (31,280) (150,686) (64,587) (176,128) Exploration profit - tax incentive 31,347 46,312 10,221 27,473 Result of companies abroad (909) (12,892) - - Other 3,721 3,773 (1,431) 165 Tax and social contribution (current and deferred) (32,423) (63,056) (51,174) (43,871) Effective rate - % 30.06% % % % (i) Refers mainly to tax losses and temporary differences of the subsidiaries 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 generation of taxable income. 30

31 b) Deferred corporate income tax (IRPJ) and social contribution (CSLL) assets and liabilities Tax losses: Parent Company December 31, Basis IRPJ CSLL Total Tax losses carry forwards - income tax 2, Tax losses of social contribution 2, Temporary differences: Provision for non-performing tax Provision for profit sharing (-) Unrecognized credits (7,789) (1,225) (443) (1,668) - Other 1, Total deferred assets taxes ,297 Tax losses: December 31, Basis IRPJ CSLL Total Tax losses carry forwards - income tax 6,707,620 1,676,905-1,676,905 1,504,185 Tax losses of social contribution 6,820, , , ,177 Temporary differences: Tax goodwill amortized (63,006) (15,752) (5,671) (21,423) (19,715) Lease (747,880) (186,970) (67,309) (254,279) (138,511) Review of useful life 1,144, , , , ,430 Business combination - Fixed assets 409, ,411 36, , ,769 Business combination - Intangible assets (7,588,656) (1,897,164) (682,979) (2,580,143) (2,579,247) Impairment provision 826, ,722 74, , ,070 Provision for judicial demands 614, ,692 55, , ,068 Provision for non-performing tax 85,771 21,443 7,719 29,162 22,564 Provision for profit sharing 59,200 14,800 5,328 20,128 17,409 Capitalization of interest on loans (5,190) (1,298) (467) (1,765) - Allowance for doubtful accounts 64,359 16,090 5,792 21,882 17,798 (-) Unrecognized credits (8,284,774) (1,420,834) (511,522) (1,932,356) (1,781,670) Other 423, ,988 38, , ,410 Total net liability 467,064 (937,848) (327,485) (1,265,333) (1,235,263) Deferred income tax Assets 1,130,714 1,159,790 Deferred income tax Liabilities (2,396,047) (2,395,053) Total net deferred taxes (1,265,333) (1,235,263) 31

32 c) Changes in deferred taxes (net) Parent Company At December 31, 1,297 (1,235,263) Income statement (1,297) (30,130) Other - 60 At - (1,265,333) 15 Accounts payable - suppliers Parent Company December 31, December 31, Material and services suppliers , ,657 Fuels and lubricants suppliers Other , ,177 Total , ,540 Current , ,972 Non-current (i) (i) Presented in the balance sheet under "other liabilities" in non-current liabilities. 32

33 16 Provision for judicial demands and judicial deposits Provision for judicial demands Parent Company December 31, December 31, Taxes ,116 74,472 Civil, regulatory and environmental , ,187 Labor , , , ,022 Judicial deposits Parent Company December 31, December 31, Tax ,509 25,709 Civil, regulatory and environmental , ,035 Labor , , , ,470 Changes in the provision were: Taxes Civil, regulatory and environmental Labor Total At January 1, 74, , , ,022 Additions 1,528 8,090 52,476 62,094 Settlement / Write-offs (3,459) (8,848) (65,522) (77,829) Monetary restatement / reversal (i) (2,425) 7,345 15,533 20,453 At 70, , , ,740 (i) Write-off interest expense included. 33

34 a) Tax Judicial claims deemed as probable losses: 30, December 31, ICMS credits 55,429 53,261 PIS and COFINS 2,135 2,115 Other 12,552 19,096 70,116 74,472 Judicial claims deemed as possible losses: 30, December 31, Foreign financial operations 1,032, ,179 Capital gain Rumo S.A. 506, ,723 Isolated fine federal tax 423, ,441 ICMS Rumo Malha Paulista (i) 304,730 - IRPJ and CSLL 298, ,678 ICMS - Export 219, ,313 MP 470 installment debts (ii) 109, ,132 Rumo Intermodal (ii) - 81,247 Withholding income tax ("IRRF") Swap 71,718 68,382 Stock option plan 65,124 62,216 ICMS Armazéns Gerais (ii) 6,131 60,029 ICMS TAD 63,089 58,236 IOF on loan 50,961 54,896 Social Security Contributions 45,578 43,764 PIS/COFINS Mutual Traffic 41,526 41,565 Compensation with credit award 40,830 38,505 PIS and COFINS 7,016 - Other 211, ,292 3,497,731 3,171,598 (i) Tax assessment notice issued by the São Paulo State Treasury Department, against Rumo Malha Paulista S.A., covering the period from February 2011 to July 2015, with the indication of infractions for alleged lack of Payment of ICMS on railroad services for export; Undue credit of ICMS for alleged bookkeeping in the Book of Entries of amounts higher than those found in the Tax Books; Undue crediting of ICMS for acquisitions supposedly framed as use and consumption. Also included were fines of 50% of the value of the tax and 100% of the amount of the credit considered undue. (ii) Reduction derives from favorable administrative decisions (Administrative Council of Tax Appeals CARF and Court of Taxes and Fees TIT ). 34