USINA BOA VISTA S

Transcription

USINA BOA VISTA S

Vale do Tijuco
Açúcar e Álcool S.A.
Financial statements March
31, 2016 and 2015
KPDS 155599
Vale do Tijuco Açúcar e Álcool S.A.
31, 2016 and 2015
Contents
Independent auditors' report on the financial statements
3
Balance sheets
5
Statements of income
6
Statements of comprehensive income
7
Statements of changes in shareholders' equity
8
Statements of cash flows - Indirect method
9
Notes to the financial statements
10
2
KPMG Auditores Independentes
Passeio das Castanheiras, 431 - Salas 407 a 411
Condomínio Tríade - Torre Nova York - Parque Faber Castell
13561-384 - São Carlos/SP - Brazil
Caixa Postal 708 - CEP 13560-970 - São Carlos/SP - Brazil
Telephone 55 (16) 2106-6700, Fax 55 (16) 2106-6767
www.kpmg.com.br
Independent auditors' report on the financial
statements
To
Directors and Shareholders of
Uberaba - MG
We have reviewed financial statements of Vale do Tijuco Açúcar e Álcool S.A.
(“Company”), comprising the balance sheet as of March 31, 2016 and the related
statements of income, comprehensive income, changes in shareholders' equity and cash
flows for the year then ended, as well as the summary of the significant accounting
practices and other explanatory notes.
Management’s responsibility for the financial statements
Company's management is responsible for the preparation and adequate presentation of
the financial statements in accordance with the accounting practices adopted in Brazil,
and the internal controls it deemed necessary to enable the preparation of these financial
statements free of material misstatements, regardless of whether caused by fraud or
error.
Responsibility of the independent auditors
Our responsibility is to express an opinion on these financial statements based on our
audit, undertaken in accordance with Brazilian and international auditing standards. These
standards require compliance with ethical requirements by the auditors and that the audit
be planned and executed with the objective of obtaining reasonable assurance that the
financial statements are free from significant distortions.
KPMG Auditores Independentes, uma sociedade simples brasileira e
firma-membro da rede KPMG de firmas-membro independentes e
afiliadas à KPMG International Cooperative (“KPMG International”),
uma entidade suíça.
KPMG Auditores Independentes, a Brazilian entity and a member
firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity.
3
An audit involves the carrying out of procedures selected to obtain evidence related to the
amounts and disclosures presented in the financial statements. The procedures selected
depend on the auditor's judgment, including an assessment of the risks of significant
distortion in the financial statements, regardless of whether the latter are caused by fraud
or error. In this risk assessment, according to auditing standards, the auditor considers
relevant internal controls for the preparation and adequate presentation of the financial
statements of the Company, to plan the audit procedures that are appropriate in the
circumstances, but not for purposes of expressing an opinion on the efficacy of these
internal controls of the Company. An audit also includes the evaluation of the adequacy of
adopted accounting practices and reasonability of accounting estimates made by
Management, as well as an assessment of the presentation of financial statements taken
as a whole.
We believe that the audit evidence obtained is sufficient and appropriate to support our
opinion.
Opinion
In our opinion, the aforementioned financial statements present adequately, in all relevant
aspects, the financial position of Vale do Tijuco Açúcar e Álcool S.A. as of March 31, 2016,
the performance of its operations and its cash flows for the year then ended, in
accordance with the accounting practices adopted in Brazil.
Emphasis
Without modifying our opinion, we draw attention to note 1 to the financial statements,
which demonstrates that the Company's total current liabilities exceeded total current
assets by R$ 323,992 thousand as of March 31, 2016. This condition, together with other
matters, as described in note 1, indicate that a significant uncertainty exists and may raise
significant doubts on the Company's operating capacity as a going concern. Our opinion is
not qualified in relation to this matter.
São Carlos, June 27, 2016
KPMG Auditores Independentes
CRC 2SP014428/O-6
Original report in Portuguese signed by
André Luiz Monaretti
Accountant CRC 1SP160909/O-3
KPMG Auditores Independentes, uma sociedade simples brasileira e
firma-membro da rede KPMG de firmas-membro independentes e
afiliadas à KPMG International Cooperative (“KPMG International”),
uma entidade suíça.
KPMG Auditores Independentes, a Brazilian entity and a member
firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity.
4
Balance sheets at March 31, 2016 and 2015
(In thousands of reais)
Assets
Current assets
Cash and cash equivalents
Pledged interest earning bank deposits
Trade accounts receivable and other receivables
Inventories
Recoverable taxes and contributions
Derivative financial instruments
Advances to suppliers and other assets
Note
8
9
10
11
12
23
13
Total current assets
2016
2015
63,697
36,008
14,311
26,763
19,368
11,679
58,891
141,271
7,369
19,841
16,024
34,316
230,717
218,821
Liabilities
Current liabilities
Loans and financing
Debentures
Suppliers and other accounts payable
Provision and labor charges
Tax liabilities
Advance from clients
Other current liabilities
Note
16
17
18
23
10
13
23
12
24
Total non-current assets
4,443
6,923
1,539
5,479
42,511
7,118
3,213
7,908
880
29,817
28,142
68,013
69,960
448,172
93,042
59,479
31,999
19,296
2,472
46,761
7,854
554,709
709,075
217,397
51,439
751
10,496
1,913
787
164,750
818
282,783
165,568
273,718
(23,129)
(127,364)
173,718
(59,000)
(42,198)
Total shareholders' equity
123,225
72,520
Total liabilities
837,492
874,643
Total liabilities and shareholders' equity
960,717
947,163
19
2
207,553
450,025
4,407
2
190,328
463,827
4,225
730,000
728,342
Non-current liabilities
Loans and financing
Debentures
Liability interest
Provisions for contingencies
16
17
18
23
20
Total non-current liabilities
Investments
Biological assets
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
14
15
960,717
Shareholders' equity
Capital
Equity valuation adjustment
Accumulated losses
947,163
See the accompanying notes to the financial statements
5
2015
335,616
40,486
61,055
40,046
12,584
2,555
58,532
3,835
Total current liabilities
Long-term assets
Judicial deposits
Deferred income and social contribution taxes
2016
21
Statements of income
Years ended March 31, 2016 and 2015
Note
Operating income
Variation of the biological asset's fair value
Cost of sales and services
25
14
26
Gross income
Sales expenses
Administrative expenses
Other operating income
26
26
Income (loss) before net financial income (expenses) and taxes
2016
2015
422,180
21,310
(379,068)
476,430
1,223
(351,325)
64,422
126,328
(34,065)
(9,605)
(1,993)
(35,909)
(13,841)
1,450
(45,663)
(48,300)
18,759
78,028
Financial expenses
Financial income
27
27
(211,242)
109,804
(83,770)
13,107
Net financial expenses
27
(101,438)
(70,663)
(82,679)
7,365
(2,487)
373
(2,487)
373
(85,166)
7,738
(Loss) income before taxes
24
Net (Loss) income for the year
See the accompanying notes to the financial statements.
6
Statements of comprehensive income
2016
(Loss) income for the year
Net gains (losses) from cash flow hedge
Total comprehensive income
7
2015
(85,166)
7,738
35,871
(53,209)
(49,295)
(45,471)
Statements of changes in shareholders' equity
Note
Balance at April 1, 2014
21
Other comprehensive income:
Net losses from cash flow hedge
Net income for the year
Balance at March 31, 2015
21
Capital increase through paid-up capital pursuant to minutes of meeting held on November 27, 2015
Other comprehensive income
Net gains from cash flow hedge
Loss for the year
21
8
Equity
valuation
adjustment
Accumulated
losses
173,718
(5,791)
(49,936)
117,991
-
(53,209)
-
7,738
(53,209)
7,738
173,718
(59,000)
(42,198)
72,520
Capital
100,000
-
-
35,871
-
(85,166)
35,871
(85,166)
(23,129)
(127,364)
123,225
273,718
-
Total
shareholders'
equity
100,000
Statements of cash flows - Indirect method
Note
Cash flow from operating activities
Income (loss) for the year
Adjustments to reconcile income (loss):
Change in fair value of biological assets
Depreciation and amortization
Decrease in biological assets for the crop of sugarcane
Off-season amortization
Amortization of cultural treatments of ratoon cane
Residual value of written-off fixed assets
Interest on loans and financing
Unrealized exchange variation on loans and investments
Unrealized losses on derivative financial instruments
Reversal of allowance for doubtful accounts
Formation/reversal of provision for contingencies and other liabilities
2016
2015
(85,166)
7,738
(21,310)
38,741
39,246
36,503
34,868
7,363
72,660
16,487
43,861
(1,223)
37,771
37,040
36,792
22,051
9,649
64,921
(5,092)
19,608
3
(390)
(373)
-
(31)
2,487
185,709
228,495
(Increase) decrease in trade accounts receivable and other receivables
(Increase) decrease in inventories
(Increase) in taxes and contributions recoverable
(Increase) in advance to suppliers and other assets
Increase (decrease) in suppliers and other accounts payable
(Decrease) increase in provisions and labor charges
Increase in tax liabilities
Increase in advances from clients
(Decrease) increase in other liabilities
(8,831)
(6,922)
(16,038)
(23,590)
2,327
(6,712)
83
11,771
(2,106)
18,661
1,051
(330)
(14,604)
(31,032)
3,216
199
46,501
5,516
Cash from operating activities
135,691
257,673
Payment of interest on loans and financing
(71,365)
(63,788)
64,326
193,885
(36,008)
(70,029)
(58,400)
(1,055)
(69,786)
(44,674)
(1,694)
9,764
(106,390)
Cash flow from operating activities
Cash flow from investment activities
Increase in pledged interest earning bank deposits
Formation of biological assets
Acquisition of fixed assets
Acquisition of intangible assets
Receipts deriving from the disposal of fixed assets
Cash flow (used in) investment activities
31 b
-
(165,492)
Cash flow from financing activities
Loans and financing
Payment of principal of loans and financing
Capital increase
317,580
(394,252)
100,000
Cash flow from (used in) financing activities
242,354
(248,987)
-
23,328
(6,633)
Net (decrease) increase in cash and cash equivalents
(77,838)
80,862
Cash and cash equivalents at April 1
Effect of exchange variation on the cash and cash equivalents
141,271
264
60,409
63,697
141,271
Cash and cash equivalents on March 31, 2016
31 a
9
-
31, 2016 and 2015
Notes to the financial statements
1
Operations
The Company, located at Rodovia BR 050 (KM 21) - Bairro Industrial de Uberaba, is engaged
in the production, sale and export of sugar, ethanol and other products derived from the
processing of sugarcane; the provision of services to third parties and the industrialization by
order of the latter; the co-generation and sale of electric power, and it may exploit the planting
of sugarcane in their own or third-party land; the sale of their own or third-party sugarcane; the
intermediation of sale of sugarcane, and holding interest in other companies, as partner or
shareholder.
The operations of Vale do Tijuco Açúcar e Álcool S.A. began on April 12, 2010. Its industrial
plant has grinding capacity of around 4 million tons of sugarcane per harvest, producing sugar,
anhydrous ethanol, hydrated ethanol and power, as well as the by-products fusel oil and
sugarcane bagasse.
The planting of sugarcane requires a period of up to 18 months for maturation and beginning of
harvest, which usually occurs between April and November. The sale of the production occurs
throughout the year and it does not suffer variations due to seasonality, but only variation of the
usual market offer and demand (commodity price and foreign exchange).
As a means to extend the maturity profile of the Company's debt, which, at March 31, 2016,
presented an excess of current liabilities over current assets of R$ 323,992, Management is
already renegotiating the balances of borrowings and adequate funding with the main creditor
banks whose loans are classified as current liabilities, with a view to adjusting the cash flows
from operations. Among the main actions taken, the following stand out:
•
On November 27, 2015, an amount of R$ 100,000 was transferred by the shareholders, as a
planned capital increase.
•
Search for a long-term credit line totaling R$ 200,000 from prime banks, to adjust working
capital and reduce financial expenses as mentioned in Note 33, the Company has succeeded in
part of its negotiations and raised new financing long-term in the amount of R $ 95,385.
•
Projected cash flow with reduction of debt for next crops, being R$18,000 for 16/17 crop.
•
Negotiation of waiver referring to financial indices that were not achieved and, consequently,
the amount of R$ 106,911 was reclassified from non-current liabilities to current liabilities in
March 31, 2016.
The purpose of the strategic planning the Company has been implementing is to generate
positive results in the coming years.
These strategies were approved by the Company’s shareholders.
10
31, 2016 and 2015
2
Preparation basis
Statement of conformity regarding the Accountant Statements Committee (CPC)
standards
The financial statements were prepared according to the accounting practices adopted in Brazil
(BR GAAP) in conformity with the pronouncements issued by the Accounting Pronouncements
Committee (CPC).
The issue of financial statements was authorized by the Management on June 27, 2016.
Details on the Company’s significant accounting policies are shown in Note 6.
3
Functional and presentation currency
These financial statements are being presented in Brazilian reais, functional currency of the
Company. All balances have been rounded to the nearest value, except otherwise indicated.
4
Use of estimates and judgments
The preparation of the financial statements, Management used judgments, estimates and
assumptions that affect the Company’s application of accounting principles and the reported
amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates.
Estimates and assumptions are reviewed in a continuous manner. Reviews of estimates are
recognized on a prospective basis.
a. Uncertainties on assumptions and estimates
Information on uncertainties as to assumptions and estimates that pose a high risk of resulting in
a material adjustment in the year ending March 31, 2017 are included in the following notes:
•
Note 10 - realization of accounts receivable and other receivables;
•
Note 20 - Recognition and measurement of provision for contingencies: main assumptions on
the probability and volume of outflows; and
•
Note 24 - Recognition of deferred tax assets: availability of future taxable income against which
tax losses may be used.
Measurement of fair value
A series of Company accounting policies and disclosures requires the measurement of fair
value, for financial and non-financial assets and liabilities.
The Company established a control structure related to measurement of fair value. This includes
a valuation team which has overall responsibility for overseeing all significant fair value
measurements.
11
31, 2016 and 2015
The Company periodically reviews unobservable data considered significant and valuation
adjustments. If third-party information, such as broker quotes or pricing services, is used to
measure fair values, the management assesses the evidence obtained from the third parties to
support the conclusion that such valuations meet the CPC requirements, including the level in
the fair value hierarchy in which such valuations should be classified.
When measuring fair value of an asset or liability, the Company uses observable data as much
as possible. Fair values are classified at different levels according to hierarchy based on
information (inputs) used in valuation techniques, as follows:
•
Level 1: Prices quoted (not adjusted) in active markets for identical assets and liabilities.
•
Level 2: Inputs, except for quoted prices, included in Level 1 which are observable for assets or
liabilities, directly (prices) or indirectly (derived from prices).
•
Level 3: Inputs, for assets or liabilities, which are not based on observable market data (nonobservable inputs).
The Company recognizes transfers between fair value hierarchic levels at the end of the
financial statements period in which changes occurred.
Additional information on the assumptions adopted in the measurement of fair values is
included in the following notes:
•
Note 14 - Biological assets; and
•
Note 23 - Financial instruments.
5
Measuring basis
The financial statements were prepared based on the historical cost, except for the following
material items recognized in the balance sheets:
•
Derivative financial instruments measured at fair value;
•
Non-derivative financial instruments designated at fair value through profit or loss are measured
at fair value; and
•
Biological assets measured at fair value less selling costs.
6
Significant accounting policies
The Company applied the accounting policies described below consistently to all the years
presented in these financial statements.
12
31, 2016 and 2015
a.
Operating income
(i)
Sale of products
Operating income is recognized when (i) the most significant risks and rewards inherent to the
ownership of the assets have been transferred to the purchaser, (ii) it is probable that the
financial economic benefits will flow to the company, (iii) the costs related and potential return
of goods can be reliably estimated, (iv) there is no continued involvement with the goods sold,
and (v) the amount of income can be reliably measured. Income is measured net of returns, trade
discounts and bonus.
The moment for the transfer of risks and benefits varies depending on the individual conditions
of each sales agreement. For sugar and ethanol sales in the domestic market, transfer is normally
carried out when the product is delivered in the client's premises of when it is picked up by the
client in the Company's premises. For sales in the foreign market, the transfer occurs upon
loading of goods in the transportation company of the seller harbor.
(ii)
Sale of electricity
Income from the sale of power generation is recorded based on the guaranteed energy and tariffs
specified in the terms of supply agreements or the prevailing market price, as applicable.
As mentioned in Note 25, the Company has futures contract for trading of electric power in the
total volume of 61,320 Mwh per year/crop.
b.
Financial income and expenses
The financial income and expenses of the Company comprise the following:
•
income/losses from derivative financial instruments;
•
net gains/losses in exchange variation of financial assets and liabilities;
•
interest expenses on loans and financing; and
•
other financial income and expenses.
Financial income and expenses are recognized in income (loss) using the effective interest rate
method.
c.
Foreign currency
Foreign currency transactions
Transactions in foreign currency are translated into the functional currency of the Company at
the exchange rates on the dates of the transactions.
13
31, 2016 and 2015
Monetary assets and liabilities denominated and calculated in foreign currencies on the balance
sheet date are reconverted into the functional currency at the foreign exchange rate on that date.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair
value are translated into the functional currency at the foreign exchange rate on the date the fair
value was determined. Non-monetary items that are measured based on the historical cost in
foreign currency are translated using the rate of the transaction date. Exchange differences
arising from the translated are recognized in income (loss).
However, foreign exchange differences resulting from reconversion of effective cash flow
hedge are recognized in other comprehensive income.
d.
Employee benefits
(i)
Short-term employee benefits
Obligations for short-term employee benefits are recognized as personnel expenses as the
related service is rendered. The liability is recognized at the amount expected to be paid, if the
Company has a legal or constructive obligation to pay this amount as a result of prior service
rendered by the employee, and the obligation can be reliably estimated.
(ii)
Defined contribution plan
Obligations for contributions to defined contribution pension plans are recognized as employee
benefit expenses in profit or loss when the related services are rendered by the employees.
Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in
the future payments is possible. The Company has no other post-employment benefits.
(iii)
Defined benefit plan
The Company's net obligation in respect of defined benefit plans is calculated individually for
each plan by estimating the amount of the future benefit that employees will earn in return for
their service in the current and prior periods. This amount is discounted at present value and is
presented net of any of the plan’s assets fair values.
The calculation of defined benefit plan obligation is made each year by a qualified actuary
adopting the projected unit credit method. When the calculation results in a potential for the
Company, the asset to be recognized is limited to present value of the economic benefits
available as future plan refunds or reduction in the future payments. To calculate economic
benefits’ present value, any minimum applicable cost requirements are taken into consideration.
e.
Income and social contribution taxes
The income and social contribution taxes, both current and deferred, are calculated based on the
rates of 15% plus a surcharge of 10% on taxable income in excess of R$ 240 (annual basis) for
income tax and 9% on taxable income for social contribution on net income, and consider the
offset of income tax loss carryforward and negative basis of social contribution, limited to 30%
of the taxable income in the year.
Income and social contribution tax expense comprises both current and deferred income and
social contribution taxes. Current taxes and deferred taxes are recognized in income unless they
are related to items directly recognized in Shareholders' equity or in other comprehensive
income.
14
31, 2016 and 2015
(i)
Current income tax and social contribution expense
Current tax expense is the tax payable or receivable on the taxable income or loss for the year
and any adjustments to taxes payable in relation to prior years. It is measured based on rates
enacted at the balance sheet date.
Current tax assets and liabilities are offset only if certain criteria are met.
(ii)
Deferred income and social contribution tax expenses
Deferred tax and liabilities are recognized in relation to the temporary differences between the
book values of assets and liabilities for financial statement purpose and used for taxation
purposes.
A deferred tax asset is recognized for unused tax losses and deductible temporary differences, to
the extent that it is probable that future taxable income will be available against those that will
be utilized. Deferred tax assets are reviewed at each balance sheet date and reduced when their
realization is no longer probable.
Deferred tax assets and liabilities are measured at tax rates expected to be applied to temporary
differences when they are reversed, based on rates enacted or decreed up to the date of balance
sheet date.
The measurement of deferred tax assets and liabilities reflects the tax consequences in a manner
in which the Company expects to recover or settle its assets and liabilities.
The deferred tax assets and liabilities are offset only if certain criteria are met.
f.
Biological assets
Biological assets are measured at fair value, less sales expenses, and any changes are recognized
in income (loss). Sale costs include all costs that are necessary to sell the assets, including
transport expenses. Sugarcane is transferred to the cost of production at their fair value, minus
estimated selling expenses determined on the cutoff date.
g.
Inventories
Inventories are measured at the lower of cost and net realizable value. Inventory costs are
valued at the average cost of purchase or production and include expenses incurred in the
acquisition of inventories, production and conversion costs and other costs incurred in bringing
them to their current locations and conditions.
The net realizable value is the estimated price at which inventories can be realized in the normal
course of business, less the estimated completion costs and selling expenses.
The sugarcane consumed in the production process is measured at its fair value, net of sales
expenses determined on the cutoff date.
h.
(i)
Recognition and measurement
Property, plant and equipment items are stated at historical acquisition or construction cost, net
of accumulated depreciation and impairment losses.
15
31, 2016 and 2015
When significant parts of a property, plant and equipment item have different useful lives, are
accounted for as separate items (major components) of property, plant and equipment.
Any gains and losses on disposal a property, plant and equipment item are recognized in income
(loss).
(ii)
Subsequent costs
Subsequent costs are capitalized in accordance with the probability that associated future
economic benefits may be earned by the Company. Maintenance expenses and recurring repairs
are recognized in the income when incurred.
(iii)
Maintenance costs
The maintenance cost of a component of property, plant and equipment is recognized in the
book value of the item when it is probable that the future economic benefits embodied in the
component will flow and its cost can be reliably measured. The book value of the component
that has been replaced by another is written off. Costs of normal maintenance on property, plant
and equipment are charged to the income statement as incurred.
The Company performs annual maintenance at its manufacturing unit, approximately in the
period from December to March. The main maintenance costs include costs of labor, materials,
outsourced services and overhead allocated during the off-season period. Said costs are
accounted for as a component of the cost of the equipment and depreciated during the following
harvest. Any other type of expenditure, which does not increase the useful life or maintain the
grinding capacity, is recognized as an expense.
(iv)
Depreciation
Depreciation is calculated to amortize the cost of items of fixed asset items, net of their
estimated residual values, using the straight-line method based on estimated useful lives of such
items. The depreciation is recognized in income (loss) and in production cost. Land is not
depreciated.
The estimated useful lives such as weighted average rates, for the current and comparative years
are as follows:
Industrial equipment
Constructions and buildings
Agricultural machinery and tractors
Paving
Vehicles
Agricultural equipment
Machinery, equipment and tools
Furniture and fixtures
Computers and peripherals
Others
Years
Rates
19
36
5
10
5
6
6
7
5
6
5.40%
2.75%
18.75%
10%
20%
17.06%
18.06%
15.12%
19.85%
16.10%
Depreciation methods, useful lives and residual values are reviewed at each balance sheet date
and adjusted if appropriate.
16
31, 2016 and 2015
i.
(i)
Intangible assets
Other intangible assets
Other intangible assets acquired by the Company with finite useful lives are carried at cost, net
of accumulated amortization and any accumulated impairment losses.
(ii)
Subsequent expenses
Subsequent expenses are capitalized only when they increase the future economic benefits
embodied in the specific asset to which they relate. All other expenditures are recognized in
profit or loss as incurred.
(iii)
Amortization
Amortization is calculated under the straight-line method based on the estimated useful life of
items to amortize the cost of intangible asset items, net of their estimated residual values.
Amortization is recognized in profit or loss.
The average estimated useful lives for the current and comparative is 5 years.
Amortization methods, useful lives and residual values are reviewed at each balance sheet date
and adjusted if appropriate.
j.
Financial instruments
The Company classifies non-derivative financial assets in the following categories: financial
instruments measured at fair value through profit or loss and loans and receivables.
The Company classifies non-derivative financial liabilities in the category of other financial
liabilities.
(i)
Non-derivative financial assets and liabilities - recognition and derecognition
The Company initially recognizes the loans, receivables and debt instruments on the date that
they are originated. All other financial assets and liabilities are initially recognized on the date
of the negotiation when the Company becomes a party to the instrument's contractual
provisions.
The Company derecognizes a financial asset when the contractual rights to the cash flow of the
asset expire, or when the Company transfers the rights to the reception of contractual cash flows
over a financial asset in a transaction in which essentially all the risks and benefits of ownership
of the financial asset are transferred. Any interest in such transferred financial assets that is
created or retained by the Company is recognized as a separate asset or liability.
The Company derecognizes a financial liability when its contractual obligations are discharged
or canceled or expire.
Financial assets and liabilities are offset and the net amount reported in the balance sheet only
when there is a legally enforceable right of the Company to offset and there is intention to settle
on a net basis, or to realize the asset and settle the liability simultaneously.
17
31, 2016 and 2015
(ii)
Non-derivative financial assets - Measurement
Financial assets measured at fair value through profit or loss
A financial asset is classified as measured at fair value through profit or loss if it is held for
trading or is designated as such upon initial recognition. The transaction costs are recognized in
income (loss) as incurred. They are measured at fair value and changes in the fair value,
including gains with interest and dividends, are recognized in the income for the year.
Loans and receivables
Such assets are initially recognized at fair value plus any transaction costs directly assignable.
After their initial recognition, loans and receivables are measured at amortized cost using the
effective interest rate method.
In statements of cash flow, cash and cash equivalents are immediately receivable and an integral
part of the Company’s cash management.
(iii)
Non-derivative financial liabilities - Measurement
A financial liability is classified as measured at fair value through profit or loss if it is held for
trading or is designated as such upon initial recognition. The transaction costs are recognized in
income (loss) as incurred. Financial liabilities recorded at fair value through profit or loss are
measured at fair value and changes in the fair value of such liabilities, including gains with
interest and dividends, are recognized in the income for the year.
Other non-derivative financial liabilities are initially measured at fair value less any transaction
costs directly assignable. After their initial recognition, these financial liabilities are measured at
amortized cost using the effective interest rate method.
(iv)
Capital
Common shares
Additional costs directly attributable to the issue of shares are recognized as reduction in the
shareholders’ equity. Effects from taxes related to these transactions’ costs are accounted for in
accordance with CPC 32 - Taxes on income.
Dividends
The Company’s bylaws determines a percentage higher than 25% to payment of compulsory
minimum dividends.
(v)
Derivative financial instruments, including hedge accounting
The Company holds derivative financial instruments to hedge its exposure to foreign currency
and interest rate changes.
18
31, 2016 and 2015
Upon initial designation of the derivative as a hedging instrument, the Company formally
documents the relationship between the hedge instruments and the hedgeable items, including
the risk management goals and the strategy in the execution of the hedge transaction and the
hedgeable risk, together with the methods that will be used to assess the effectiveness of the
hedge relationship. The Company evaluates the hedge relationship, initially and then
continuously, to conclude if hedge instruments are expected to be "highly effective" in the offset
of variations in fair value or cash flows of items subject to hedge during the period for which
hedge is assigned whether the actual results of each hedge are within the range of 80%-125%.
For a cash flows hedge of a planned transaction, the transaction should have its occurrence as
highly probable and should present exposure to variations in the cash flows that at the end could
affect the reported income (loss).
Derivatives are initially measured at their fair value; any attributable transaction costs are
recognized in profit or loss when incurred. After the initial recognition, derivatives are
measured at fair value and changes are recorded in profit or loss.
Cash flow hedge
When a derivative is designated as a hedge instrument to hedge cash flow variability, the
effective portion of variation in the derivative's fair value is recognized in other comprehensive
income and disclosed in “equity valuation adjustments” caption in shareholders' equity. Any
non-effective portion of the variations in the fair value of the derivative is recognized
immediately in net income.
Accumulated value held under equity valuation adjustments is reclassified to income for the
same period in which hedged item affects income.
In case (i) occurrence of foreseen transaction is no longer expected, (ii) hedge instrument no
longer satisfies the hedge accounting criteria, (iii) the hedge instruments expires or is sold,
wound up, exercised or has its designation revoked, then the hedge accounting is discontinued
prospectively. If there are no more expectations regarding the occurrence of the planned
transaction, the balance in other comprehensive income is reclassified to income (loss).
k.
Impairment
(i)
Non-derivative financial assets
Financial assets not classified as financial assets at fair value through profit or loss, including
investments accounted for under the equity method, are evaluated at each balance sheet date to
determine if there are objective impairment evidence.
Objective evidences of financial assets’ impairment include:
•
debtor’s default or delays;
•
restructuring of an amount owed to the Company at conditions that would not be accepted under
normal conditions;
•
indications that the debtor or issuer will face bankruptcy/court-ordered reorganization;
•
negative changes in payment situation of debtors or issuers;
19
31, 2016 and 2015
•
the disappearance of an active market for an instrument due to financial distress; or
•
observable data indicating that expected cash flow measurement of a group of financial assets
decreased.
Financial assets measured at amortized cost
The Company considers as evidence of impairment of assets measured by amortized cost both
individually and on an aggregate basis. All individually significant assets are assessed for
impairment. Those non-impaired on an individual basis are collectively assessed for any
impairment loss not yet identified. Assets that are not individually significant are assessed on an
aggregate basis in relation to impairment by grouping the assets with similar risk characteristics.
When assessing impairment on an aggregate basis the Company makes use of historical trends
of the recovery term and the amounts of losses incurred, adjusted to reflect the management's
judgment if the current economic and credit conditions are such that the actual losses will
probably be higher or lower than those suggested by historical trends.
An impairment is calculated as the difference between the asset's book value and the present
value of estimated future cash flows discounted at the financial asset's original effective interest
rate of the asset. The losses are recognized in income and reflected in an account for allowance
for losses. When the Company considers that it is not possible to reasonably expect recovery,
amounts are written-off. When a subsequent event indicates loss reduction, provision is reversed
through profit or loss.
Investees recorded under the equity method of accounting
An impairment loss referring to an investee value at the equity method is measured by
comparing the investment’s recoverable value to its book value. An impairment loss is
recognized in the statement of income and is reversed if there has been a favorable change in the
estimates used to determine the recoverable value.
(ii)
Non-financial assets
The book values of the Company's non-financial assets, except for biological assets, inventories,
biological assets and deferred tax assets are reviewed at each balance sheet date for indication of
impairment. If such indication exists, the asset's recoverable amount is estimated. In case of
goodwill, recoverable value is tested on an annual basis.
For impairment tests, assets are grouped at the lowest possible group of assets that generates
cash inflows for their continued use, these entries that are largely independent of the cash
inflows from other assets or CGU (cash generating units).
Recoverable value or CGU of an asset is the higher of value in use and fair value less selling
costs. Value in use is based on estimated future cash flows discounted to present value using a
discount rate before taxes that reflects current market evaluations of times value of money and
the specific risks of the assets or CGU.
An impairment loss is recognized when the book value of an asset or its CGU exceeds its
recoverable value.
20
31, 2016 and 2015
The Company’s Management did not identify any evidence that would justify the need of
provision for recoverability on March 31, 2016.
l.
Provisions
Provisions are determined by discounting the estimated future cash flows at a pre-tax rate which
reflects the current market evaluations as to the value of the cash over time and the specific risks
of the related liability. Effects from de-recognition of elapsing of time discount are recognized
in income as financial expenses.
7
New standards and interpretations not yet effective
Several new standards, amendments to standards and interpretations will be effective for the
years started after January 1, 2016, and have not been adopted to the preparation of these
financial statements. Those that may be relevant to the Company are listed below. The
Company does not plan to adopt this standard in advance.
IFRS 9 Financial Instruments
IFRS 9, published in July 2014, replaces guidelines of IAS 39 Financial Instruments:
Recognition and Measurement. IFRS 9 includes revised guidance on the classification and
measurement of financial instruments, including a new expected credit loss model for
calculating impairment on financial assets, and the hedge accounting requirements. The
regulation maintains the IAS 39 guidelines about acknowledging and disacknowledging
financial instruments.
IFRS 9 is effective for periods beginning on or after January 1, 2018, with early adoption
allowed.
IFRS 15 Income from Contracts with Clients
The IFRS 15 requires an entity to recognize the amount of income reflecting the consideration
that it expects to receive in exchange for control of these goods or services. The new standard
will replace most of the detailed guidance on income recognition that currently exists in IFRS
and when the new standard is adopted. The new standard is applicable beginning on or after
January 1, 2018, with early adoption permitted by the IFRS. The standard may be adopted
retrospectively, adopting a cumulative effects approach. The Company is evaluating the effects
IFRS 15 will have on its financial statements and disclosures. The Company has not yet chosen
the transition method to the new standard or determined the effects of the new standard in
today's financial reports.
Agriculture: Production Plants (amendments to CPC 27 / IAS 16 and CPC 29 /
IAS 41)
These changes require that production plants defined as live plants must be accounted for as
property, plant and equipment and included in the ambit of CPC 27 / IAS 16 Property, plant and
equipment and no longer in the scope of CPC 29/ IAS 41 Agriculture.
These changes are to be enforced in years starting on or after January 1, 2016, and early
adoption is permitted.
In addition, the following new rules or changes are not expected to have a significant impact on
the financial statements of the Company.
21
31, 2016 and 2015
IFRS 16 Leases
IFRS 16, published in January 2016, includes guidelines on single model, without lease
classification test and all leases recognized in the balance sheet.
•
Lessee recognizes a right of use asset (right-of-use, ROU) and a lease liability and treatment
equal to financed purchase of an asset.
IFRS 16 is effective for periods beginning on or after January 1, 2019, with early adoption
allowed, only if IFRS 15 is also adopted. The Company is evaluating the effects IFRS 16 will
have on Company’s financial statements.
In addition, the following new rules or changes are not expected to have a significant impact on
the financial statements of the Company.
•
IFRS 14 - Regulatory Deferral Accounts;
•
Acceptable Methods of Depreciation and Amortization (changes in CPC 27 / IAS 16 and CPC
04 (R1)/ IAS 38);
•
Annual improvements of 2012-2014 IFRS’s - several standards; and
•
Disclosure Initiative (Amendment of CPC 26 (R1)/ IAS 1).
The Accounting Pronouncements Committee has not yet issued any accounting pronouncement
or amendments in current pronouncements corresponding to all new IFRSs. Therefore, early
adoption of IFRS is not allowed for entities that disclose their financial statements in accordance
with accounting practices adopted in Brazil.
8
2016
2015
Cash and banks
Interest earning bank deposits
9,062
54,635
21,021
120,250
Total
63,697
141,271
The cash balance arises from receipts of business transactions and are resources available to
meet the immediate cash needs of the Company. All funds are deposited in prime bank
institutions.
Interest earning bank deposits are cash equivalents since they are promptly convertible into a
known sum of cash and subject to an insignificant risk of change of value. These interest
earning bank deposits refer to Bank Deposit Certificates (CDB) in several financial statements,
remunerated at rates that vary from 95% to 100% of the CDI - Interbank Deposit Certificate.
Interest earning bank deposits have no monthly maturity and may be redeemed at any time.
Information on the Company's exposure to market, credit and fair value measurements risks
related to cash and cash equivalents are included in Note 23.
22
31, 2016 and 2015
9
Interest earning bank deposits linked
Refers to financial investments linked to delivery of 40,000 thousand metric tons of VHP sugar
up to July 2016 with remuneration fees of 100.20% of Interbank Deposit Certificate (CDI).
Information on the Company's exposure to market, credit and fair value measurements risks
related to cash and cash equivalents are included in Note 23.
10
2016
2015
From the sale of ethanol
From the sale of energy
From the sale of sugar
From the sale of sugarcane
Others
276
10,900
54
39
3,042
728
4,322
1,257
1,062
Trade accounts receivable
14,311
7,369
4,443
3,213
Total
18,754
10,582
Current assets
Non-current assets
14,311
4,443
7,369
3,213
Related party credits (Note 29)
Other receivables
As of March 31, 2016, the Company did not have any operations that might generate a material
effect from adjustments to present value.
Information on the Company’s exposure to credit, market risk, fair value measurement and
impairment losses in the accounts receivable and other receivables are disclosed in Note 23.
11
Inventories
Finished product
Anhydrous ethanol
VHP Sugar
Hydrous ethanol
Storeroom
Warehouse, sundry (a)
Our inventory held by third parties
Advance to sundry suppliers
Others
Total
(a)
2016
2015
11,653
3,041
673
5,624
96
179
9,876
1,520
-
7,794
2,882
2,222
1,044
26,763
19,841
The most representative amounts of supplies refer to inputs and agricultural pesticides to be used in the planting areas
in plantation - own or third parties.
23
31, 2016 and 2015
12
2016
2015
COFINS recoverable
ICMS recoverable - purchase of inputs
ICMS recoverable - Acquisition of fixed assets
PIS recoverable
Income tax on interest earning bank deposits
Other taxes recoverable
32,716
10,150
8,315
5,031
4,918
749
21,722
4,779
9,103
7,849
1,388
1,000
Total
61,879
45,841
Current assets
Non-current assets
19,368
42,511
16,024
29,817
PIS and COFINS
The balance comprises credits arising from the non-cumulative collection of PIS and COFINS
(taxes on income) on purchases of parts used to perform maintenance on the manufacturing
facilities and agricultural fleet, maintenance services provided at the manufacturing and
agricultural facilities, freight and storage related to sales transactions and electric power, as well
as other credits arising from purchases of machinery and equipment, buildings and constructions
to be used in production. These credits may be compensated with other federal taxes and no
limitation periods.
ICMS
The balance is mainly comprised of credits calculated on acquisition of fixed asset items,
realized at the rate of 1/48, and may be offset against taxes of the same nature.
IRRF
Refers to withholding income tax on financial investments and income tax and social
contribution prepayments through an offset against federal taxes and contributions due.
13
2016
2015
Advance to suppliers of sugar-cane - third parties
Advance to sugarcane suppliers - related parties (note 29)
Others
59,665
2,279
3,870
35,446
1,896
4,882
Total
65,814
42,224
Current assets
Non-current assets
58,891
6,923
34,316
7,908
The balance of advance to suppliers refers to the agreement for supply of sugarcane, signed by
the Company and its suppliers. Balance classified in non-current assets refers to advance supply
sugarcane contracts that will be realized upon receipt of sugarcane beginning as of 2016/17
crop, priced based on Total Recoverable Sugar (TRS) index disclosed by Consecana (Council of
Sugarcane, Sugar and Ethanol Producers in the São Paulo State) at the end of the crop.
24
31, 2016 and 2015
14
Biological assets
The Company’s biological assets comprise cultivation and planting of own sugarcane and
cultivation and planting through contracts with sugarcane partners, whose yield is to be used as
raw material in its ethanol and sugar industrial processes. The sugarcane plantation is initiated
with the plantation of seedlings on land owned by third-party landowners, and the first cutting
occurs after a period of 12 to 18 months after planting, when the sugarcane is cut and the root
(“ratoon”) continues in the soil. After each cut or year/crop, treated ratoon grows again and
yields an average of five or six crops, depending on culture and genetic material.
Biological assets’ movement is as follows:
178,410
Increase due to additions of planting
Decrease due to harvesting
Fair value less estimated selling expenses
69,786
(59,091)
1,223
190,328
Increase due to additions of planting
Decrease due to harvesting
Fair value less estimated selling expenses
70,029
(74,114)
21,310
207,553
Biological assets will be realized in the following crops:
2016
2016/2017
2017/2018
2018/2019
2019/2020
2020 onwards
89,699
56,454
37,354
20,363
3,683
207,553
Sugarcane plantations
Planted areas refer only to sugarcane plantations, and do not consider planted land. The
following assumptions were used in the determination of the fair value:
Estimated harvest area (hectares)
Estimated productivity (sugarcane tons/hectares)
Total recoverable sugar (ATR) (kg)
TRS value/kg (R$)
2016
2015
21,637
78.48
133
0.6515
21,911
81.22
140
0.4763
The discount rate used in the cash flow of each year, called as “Weighted-Average Cost of
Capital”, corresponded to 5.25% per year (6.11% on March 31, 2015), which was revised and
approved by the Company’s Management.
The Company is exposed to several risks related to its harvests:
25
31, 2016 and 2015
Regulatory and environmental risks
The Company is subject to laws and regulations and established environmental policies and
procedures directed to compliance with environmental laws and other. The management carries
out regular analyses to identify environmental risks and assure that systems under operation are
appropriate to manage those risks.
Supply and demand risks
The Company is exposed to risks resulting from the prices fluctuation and sales volume of its
plantations. Whenever possible, the Company manages this risk by aligning its extraction
volume to the market's offer and demand. The management analyzes on a regular basis the trend
of the industry to ensure that a price structure of the Company is in accordance with market and
to ensure that estimated volumes of extraction are consistent with expected demand.
Climatic risks and others
The Company's plantations are exposed to the risk of damage due to climate changes, pests and
diseases, forest fires and other forces of nature. The Company had extended processes in
progress to monitor and reduce those risks, including health regulation inspections of the sugar
cane areas and analysis of diseases and plagues of the industry. The Company also protects
itself against natural disasters.
26
31, 2016 and 2015
15
(a)
Industrial
equipment
Constructions
and buildings
Agricultural
machinery
and tractors
Land
Machinery,
equipment
and tools
Furniture
and
fixtures
Computers
and
peripherals
Paving
Cost
Additions
Write-offs
Transfers
352,500
4,614
(267)
23,298
69,101
77
(290)
3,851
33,602
7,019
(562)
(162)
17,253
1,291
(1,979)
163
1,080
-
3,459
260
(1)
171
1,224
118
(50)
37
1,228
431
(61)
31,839
23,250
(15,354)
(28,497)
Additions
Write-offs
Transfers
380,145
899
7,038
72,739
1,574
(1,045)
4,569
9,740
1,430
(445)
97
16,728
392
(1,052)
823
1,080
-
3,889
770
(229)
1,329
25
15
1,598
127
-
388,082
7,862
10,822
16,891
1,080
4,430
1,369
Depreciation
Depreciation for the year
Write-offs
Transfers
(14,925)
(7,443)
345
68
(2,696)
(740)
-
(2,780)
(1,986)
309
(1)
(3,997)
(2,809)
(68)
-
(1,907)
(612)
1
38
(7,911)
(2,281)
-
(21,955)
(6,642)
1,451
(3,436)
(788)
-
(4,458)
(1,883)
219
(6,874)
(2,963)
421
-
(97,552)
(10,192)
(27,146)
(4,224)
(6,122)
(9,416)
304,415
290,530
64,828
67,645
17,942
14,812
4,426
3,638
5,282
4,700
9,854
7,475
Vehicles
Agricultural
equipment
6,739
1,123
9,231
1,185
(686)
10
39,897
3,287
(1,538)
312
7,862
-
77,837
41,958
(55,245)
(20,447)
(38)
(5,952)
(2,032)
73
-
Depreciation for the year
Write-offs
(75,730)
(21,822)
-
Net book value
Basically refers to works for the expansion of industrial plant and acquisition of equipment.
27
Construction
Off-season
in process maintenance
(a) expenditures
Others
Total
31,465
44,217
(36,792)
-
5,046
1,324
(978)
67
563,767
83,786
(56,959)
-
11,238
14,928
(304)
(12,280)
38,890
38,561
(36,503)
-
5,459
5,939
(5,080)
(345)
590,594
67,932
(45,967)
-
1,725
13,582
40,948
5,973
612,559
(658)
(182)
22
(3)
(813)
(171)
1
-
-
(1,402)
(724)
4
3
(90,375)
(37,146)
754
-
(2,480)
(510)
-
(821)
(124)
-
(983)
(213)
-
-
-
(2,119)
(642)
10
(126,767)
(37,868)
2,101
-
(2,990)
(945)
(1,196)
-
-
(2,751)
(162,534)
1,080
1,080
1,409
1,440
508
424
615
529
11,238
13,582
38,890
40,948
3,340
3,222
463,827
450,025
31, 2016 and 2015
Guarantee
Fixed asset items were given in guarantee of loans and financing, as described in note 16.
Analysis of recovery value
In accordance with CPC 01 (R1) Asset Impairment, the Company assessed indicators of
impairment as of March 31, 2016 and found no need to determine the recoverable value.
16
Loans and financing
This note discloses contract information on the Company's loans and financing. Note 23
discloses additional information on the Company's exposure to interest rate and currency risks.
The Company obtained loans, contracted in local currency, in order to finance the acquisition of
its industrial plant and operations. On March 31, 2016 and 2015, the balance of loans and
financing is as follows:
Average interests and
charges p.a.
Year of
maturity
2016
2015
14.97%
5.81%
18.75%
2021
2026
2023
19,897
138,516
1,225
29,417
165,006
-
R$
USD
R$
R$
TJLP
Prefixed
SELIC
CDI (Interbank deposit
certificate)
Prefixed
Prefixed
SELIC
17.11%
9.50%
10.07%
17.25%
2017
2016
2020
2016
11,721
384
-
24,552
29,035
6,861
-
(c)
R$
TJLP
12.43%
2022
33,995
42,825
(c)
R$
5.23%
2022
34,099
44,133
ACC
ACC
PPE
(d)
(d)
(d)
USD
USD
USD
15.62%
5.50%
7.06%
2016
2016
2016
5,374
36,163
-
99,636
61,870
PPE
(d)
USD
13.64%
2016
40,226
17,490
PPE
CRA
NCE
NCE
(d)
(e)
(d)
(d)
USD
R$
USD
R$
6.86%
17.13%
3.75%
5.00%
2017
2019
2016
2016
47,548
77,747
5,000
99,874
-
NCE
PASS
PASS
CCE
(d)
(f)
(f)
(d)
R$
R$
R$
USD
19.64%
13.80%
20.63%
7.40%
2017
2016
2016
2020
10,071
1,677
5,212
53,394
-
CCE
(d)
R$
Prefixed
certificate)
Prefixed
Prefixed
certificate)
certificate)
Prefixed
Prefixed
Prefixed
certificate)
TJLP
SELIC
Prefixed
certificate)
18.63%
2020
Transaction costs
40,036
562,285
(9,272)
620,699
(7,777)
Total
Current liabilities
553,013
335,616
217,397
612,922
448,172
164,750
Credit facility
Ref.
Currency
Index
Finame
Finame
Finame
(a)
(a)
(a)
R$
R$
R$
Working capital
Working capital
Working capital
Working capital
Indirect BNDES
onlending
Indirect BNDES
onlending
(b)
(b)
(b)
(b)
(a)
Refers to loans contracted to fund the acquisition of industrial and agricultural equipment. The loans have a grace period for payment of the first
installment of principal, interest and charges of 6-18 months from the date of contract signing. The contracts are secured by chattel mortgage on
disposal of assets as a financing object and pledge of credit rights of electricity receivable.
(b)
Refers to working capital loans obtained, the interest is paid monthly after the signing of the contract. The loans are guaranteed by the Companhia
Mineira de Açúcar e Álcool Participações surety that mostly relate to 100% of the contracted facility.
28
31, 2016 and 2015
(c)
It refers to a credit operation signed between Vale do Tijuco Açúcar e Álcool S.A. and Banco do Brasil S.A., Banco de Desenvolvimento de Minas
Gerais - BDMG and Bradesco S.A., which are the financial agents of the contract, in which Banco do Brasil S.A. is the Leader of the financial agents.
The amount was released by the National Bank for Economic and Social Development - BNDES with the prerogative to finance project of implantation
of a plant with grinding capacity of 1.8 million tons of sugarcane. The funds obtained were used for acquisition of industrial assets, for expansion of the
production capacity of the unit. The contracts are guaranteed by statutory lien on disposal of assets as a financing object and pledge of credit rights of
electricity receivable and are collateralized by the Companhia Mineira de Açúcar e Álcool Participações.
The contract of indirect repass of BNDES funds contains a restrictive clause that requires Vale do Tijuco Açúcar e Álcool S.A. to maintain the Index of
Debt Service Coverage (ICSD), of at least 1.30 during the validity of the contract, which is calculated upon closing of the fiscal year, as follows:
EBITDA (-) Income tax and social contribution (-) changes in working capital / amortization of principal + interest payment.
(d)
The advances on exchange contracts and credit notes were signed with many financial institutions and will be settled through exports made in years
2016 and 2017.
(e)
These refer to Agribusiness Receivable Certificates ("CDCAs"), under a trust agreement, registered with BM&F Bovespa and CETIP. The approval
was on October 7, 2014. CDCA installments will bear interest levied on an annual basis, as of the date of payment of the CRA until the respective
payment date of each installment of CDCA interest, calculated on the nominal value and equivalent to 100% of accumulated average daily rates of DI
over extra group - Interbank Deposits, calculated by CETIP. The following financial institutions and agents were contracted: Leading coordinating
bank: BB-Banco de Investimentos S/A; issuing creditor: Gaia Agro Securitizadora S.A., fiduciary agent: Planner Trustee Distribuidora de Títulos e
Valores Mobiliários Ltda; registrar agent: BNY Mellon Serviços Financeiros Distribuidora de Títulos e Valores Mobiliários S.A.; custodian agent:
SLW Corretora de Valores de Câmbio Ltda. The contracts are guaranteed by statutory lien on disposal of assets as a financing object and pledge of
credit rights of VHP sugar, agricultural pledge and are collateralized by the Companhia Mineira de Açúcar e Álcool Participações.
The agreement of R$ 97,850 has a restrictive covenant that requires the Company maintain the following financial ratios: Net Bank Debt/EBITDA
ratio below 5.00; and the Net Bank Debt volume: the issuer's net bank debt cannot exceed a total of R$ 600,000 (six hundred million reais) during the
effective period of the agreement, which is calculated at the end of the fiscal year.
(f)
Refers to the transfer of the Program for Support of the Sugar-Ethanol Industry (“PASS”) from “BDMG” (Banco de Desenvolvimento de Minas Gerais
S/A), released by BNDES on November 24, 2015. The agreements have a grace period for payment of the first installment of principal, interest and
charges from the date of contract signing up to January 15, 2016. The contracts are guaranteed by the assignment of fiduciary ownership in disposal
and entailment in the volume stored, established in anhydrous ethanol contract.
The loans and financing have the following maturity:
In years
March 31, 2016
Loans and financing
March 31, 2015
Loans and financing
Book value
Up to 1
1-2
2-3
3-4
4-5
>5
553,013
335,616
51,330
50,848
46,821
29,219
39,179
Book
value
Up to 1
1-2
2-3
3-4
4-5
5>
612,922
448,172
36,870
37,379
30,559
27,192
32,750
Amortization schedule of the transaction cost
The transaction costs recorded under loans and financing, to be allocated to the result in each
subsequent year, is as follows:
In years
March 31, 2016
Transaction costs
Book value
1
1-2
2-3
3-4
4-5
>5
9,272
2,830
2,608
2,538
1,247
16
33
Em anos
March 31, 2015
Transaction costs
Book value
1
1-2
2-3
3-4
4-5
>5
7,777
1,579
2,335
1,538
1,527
769
29
29
31, 2016 and 2015
Covenants
The Company has contractual obligations arising from loans and financing and have not met the
debt service coverage ratio, which must be equal to or greater than 1.30, contained in the
Financing Agreement entered into Banco Bradesco S.A., Banco do Brasil S.A. and Banco de
Desenvolvimento de Minas Gerais (“BDMG”) by means of indirect transfer of funds from the
Brazilian Economic and Social Development Bank ("BNDES”) by and between Banco
Bradesco S.A., Banco do Brasil S.A. and Banco de Desenvolvimento de Minas Gerais
(“BDMG”) and obtained a waiver for the year ended March 31, 2016. As of March 31, 2015,
the amount of R$ 126,734 was reclassified from non-current liabilities to current liabilities due
to the lack of waiver.
The Company also has CCE-Export Credits loan contracts with financial institutions: Banco
Panamericano S.A., Banco Itaú S.A. and Banco Rabobank S.A., with restrictive clauses
referring to financial indices that were not achieved and for which there is no waiver.
Consequently, the amount of R$ 106,911 was reclassified from non-current liabilities to current
liabilities.
17
Debentures
Currency
Index
Average interests
and charges p.a.
Maturity
2016
2015
R$
CDI (Interbank
deposit certificate)
3.00%
2017
94,296
(2,371)
94,181
(1,139)
Total
91,925
93,042
Current liabilities
40,486
51,439
93,042
-
Credit facility
Debentures
Transaction costs
On November 11, 2013, the Company issued 12,000,000 debentures units pursuant to the
indenture of sole series debentures, non-convertible into shares, in a single series, as collateral
and personal guarantee in the nominal value of R$ 120,000. Among the contracting parties,
Companhia Mineira de Açúcar e Álcool Participações was the guarantor and Pentágono S/A Distribuidora de Valores Mobiliários the representative of the group of borrowers. The
following financial institutions were contracted: Settlement Bank: Itaú Unibanco S/A; Banco
Coordenador Líder: Banco Itaú BBA S.A.; Coordinating banks: Banco Rabobank International
Brasil S.A., together with Banco Votorantim S.A. and Banco Itaú BBA S.A. The financial
release of funds between financial institutions and the issuer occurred on January 20, 2014 and
the first installment maturing in November 2016. Maturities range from June to November of
each year.
30
31, 2016 and 2015
The Company renegotiated the clauses of the debenture deed with the debenture holders in June
2015, through a General Debenture Holders' Meeting held on June 10, 2015. It was decided to
exclude Issuance Deed clause that addresses financial index “Shareholders' Equity and Total
Assets” from financial covenants. As of March 31, 2015, the Company have not met such ratio,
effective at the time, consequently, the amount of R$ 40,079 was reclassified from non-current
liabilities to current liabilities. In current year of March 31, 2016, as a result of contract change,
the Company is complying with all indices.
Debentures mature as follows:
March 31, 2016
Debentures
March 31, 2015
Debentures
Book value
Up to 12
months
1-2
years
91,925
40,486
51,439
Book value
Up to 12
months
93,042
93,042
Amortization schedule of the transaction cost
The transaction costs recorded under loans and financing, to be allocated to the result in each
subsequent period, is as follows:
March 31, 2016
Book value
12
months
1-2
years
2,371
1,658
713
Transaction costs
March 31, 2015
Transaction costs
Book value
12
months
1,139
1,139
The exposure information of the Company to liquidity and fair value measurement risks related
to debentures is disclosed in note 23.
18
2016
2015
Domestic suppliers of materials and services
Sugarcane suppliers
Sugarcane suppliers - Related parties (Note 29)
51,984
9,071
751
46,213
13,266
-
Total
61,806
59,479
Current liabilities
61,055
751
59,479
-
The sugarcane harvest period, between April and December of each year, on average, has direct
impact on the balance of suppliers of sugarcane and respective cutting, loading and
transportation services.
31
31, 2016 and 2015
Amounts payable to sugarcane suppliers and agricultural partners take into consideration
sugarcane delivered and not yet paid, and possible supplementation of sugarcane price
calculated based on the final crop price, using the Total Recoverable Sugar (TRS) index
disclosed by Consecana (Council of Sugarcane, Sugar and Ethanol Producers in the São Paulo
State).
The Company evaluated adjustments to present value of its suppliers’ balances on March 31,
2016 and 2015 and concluded that these amounts did not generate material adjustments to
present value in financial information.
The exposure information of the Company to currency and fair value measurement related to
suppliers and other accounts payable is disclosed in note 23.
19
20
Advance from clients
2016
2015
Advance from clients - sugar
Advance from clients - ethanol
Advance from clients - others
52,043
6,467
22
40,502
1,536
4,723
Total
58,532
46,761
Provision for contingencies
The Company is party to lawsuits involving labor, civil and tax lawsuits. To face future losses
linked to those processes, a provision was recorded at an amount considered by the Company's
management as sufficient to cover probable losses. The likelihood of lawsuit losses and the
determination of involved amounts was performed considering claimers' requests, previous
court decisions on the matter, and the opinion of legal counsel of the Company. The main
information of lawsuits is presented as follows:
Opening balance
Additions
Write-offs
Closing balance
2016
2015
818
2,606
(2,637)
1,208
1,135
(1,525)
787
818
Based on information from its legal advisors, analysis of the pending legal proceedings, based
on previous experience with regards to amounts claimed, management recorded provisions for
amounts considered sufficient to cover possible losses from the current actions.
Unrecognized contingent liabilities
Contingent liabilities not recognized in the financial statements refer to lawsuits for which an
unfavorable outcome has been regarded as possible by the legal advisors, amounting to R$
3,916 as of March 31, 2016, R$ 4,603 as of March 31, 2015), for which no reserve has been
recorded, taking into consideration that neither the accounting practices adopted in Brazil nor
the International Financial Reporting Standards (IFRS) require it to be accounted for.
32
31, 2016 and 2015
21
a.
Capital
As of March 31, 2016, capital is represented by 515,925,556 (173,717,627 as of March 31,
2015) registered common shares, with no par value, distributed as follows:
2016
Companhia Mineira de Açúcar e Álcool Participações
2015
Shares
R$
Shares
R$
515,925,556
273,718
173,717,627
173,718
On November 27, 2015, the shareholder, at the Special Shareholders' Meeting, approved the
capital increase in the amount of R$ 100,000 through the issuance of 342,207,929 new shares.
b.
Legal reserve
The legal reserve is set up at the rate of 5% of the net income determined in each financial year,
pursuant to article 193 of Law 6404/76 up to the limit of 20% of the share capital.
c.
Statutory reserve
The Company shall maintain a statutory reserve for business development or expansion, aimed
at: (i) ensuring funds for investments in research & technology; (ii) increasing working capital
to ensure proper operating conditions to meet the corporate objectives of the Company; and (iii)
to finance the business growth of the Company. After the adjustments and legal deductions, up
to 100% of the remaining net income can be allocated to the statutory reserve, up to the limit of
the capital stock, in case it is approved at the Annual Shareholders’ Meeting.
d.
Equity valuation adjustment
It includes the effective portion of the cumulative net exchange variation of liabilities in dollar
and derivatives designated as cash flow hedge of future exports (hedged item), according to
Note 23.
e.
Dividends
The Company’s bylaws determines a percentage higher than 25% to payment of compulsory
minimum dividends. In view of the accumulated losses, no dividend was declared or paid.
22
Capital management
The Company's capital management is conducted so as to balance own and third parties' fund
sources, balancing the return to shareholders and the risk to shareholders and creditors.
The Company's debt for adjusted ratio of capital at the end of the year is presented below:
2016
2015
Total liabilities
(-) Cash and cash equivalents and pledged interest earning bank deposits
837,492
(99,705)
874,643
(141,271)
(=) Net debt (A)
Shareholders’ equity (B)
Net debt ratio (A) / (B)
737,787
123,225
5.99
733,372
72,520
10.11
33
31, 2016 and 2015
23
a.
Accounting classification and fair values
The following table shows the carrying and fair values of financial assets and liabilities,
including their fair value classifications. It does not include information on the fair value of
assets and liabilities not measured at fair value if the book value is a reasonable approximation
of fair value.
March 31 2016
Fair value
Book value
Designated
at fair
value
Loans and
receivables
Other
financial
liabilities
Total
Level 1
Level 2
Level 3
Total
54,635
36,008
17,158
-
-
54,635
36,008
17,158
-
54,635
36,008
17,158
-
53,635
36,008
17,158
107,801
-
-
107,801
-
107,801
Financial assets not measured at fair value
Accounts receivable and other receivables
-
9,062
18,754
-
9,062
18,754
Total
-
27,816
-
27,816
Financial assets measured at fair value
Total
March 31 2016
Financial instruments measured at fair
value
Loans and financing
Debentures
Total
Financial instruments not measured at
fair value
Suppliers
Total
- 107,801
Fair value
Book value
Designat
ed at fair
value
Loans and
receivables
Other
financial
liabilities
Total
Level 1
Level 2
Level 3
Total
50,542
-
-
553,013
91,925
553,013
50,542
91,925
-
553,013
50,542
91,925
-
553,013
50,542
91,925
50,542
-
644,938
695,480
-
695,480
-
-
61,806
61,806
-
-
61,806
61,806
Book value
March 31 2015
695,480
Fair value
Designate
d at fair
value
Loans and
receivables
Other
financial
liabilities
Total
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value
120,250
-
-
120,250
-
120,250
-
120,250
Total
120,250
-
-
120,250
-
120,250
-
120,250
Financial assets not measured at fair
value
Accounts receivable and other receivables
-
21,021
10,582
-
21,021
10,582
Total
-
31,603
-
31,603
34
31, 2016 and 2015
Book value
March 31 2015
Designated
at fair
value
Loans and
receivables
Other
financial
liabilities
Total
-
-
612,922
31,999
93,042
612,922
31,999
93,042
- 612,922
31,999
93,042
- 612,922
31,999
93,042
Total
Financial instruments not measured at fair value
Suppliers
-
-
737,963
737,963
- 737,963
737,963
-
-
59,479
59,479
Total
-
-
59,479
59,479
Financial instruments measured at fair value
Loans and financing
Debentures
b.
Fair value
Level 1
Level 2 Level 3
Total
Measurement of fair value
The book values referring to the financial instruments contained in the balance sheet, when
compared with the amounts that could be obtained in their trading in an asset market or, in the
absence hereof, with the net present value adjusted with a basis on the current interest rate in the
market, are substantially close to their corresponding market values.
There were no material transfers between levels at March 31, 2016.
c.
Management of financial risks
The Company has transactions involving financial instruments aimed at meeting their own
needs. As of March 31, 2016, the Company does not have financial instruments not recorded
nor does make transactions involving financial instruments for speculation. The main risks
related to the operations of the Company are as follows:
•
Credit risk;
•
Liquidity risk; and
•
Market risk.
This note presents information on the Company's exposure to each one of the abovementioned
risks, the Company's goals, policies and processes for the measurement and management of risk,
and the Company's capital management.
Risk management structure
The Board of Directors is responsible for following the risk management policies of the
Company, and the managers of each area report on their activities to the Board of Directors.
The risk management policies of the Company were established to identify and analyze risks
which the Company is exposed, to define proper risk limits and controls, and to monitor risks
and compliance with limits. The risk management policies and systems are reviewed frequently
to reflect changes in the market conditions and in the Company's activities. The Company,
through its training and management rules and procedures, aims to develop a disciplined and
constructive control environment, in which all the employees understand their roles and
obligations.
35
31, 2016 and 2015
Credit risk
Credit risk is the risk the Company has of incurring losses from a client or a party to a financial
instrument, arising from their fail to comply with their contractual obligations. Risk is mainly
due to trade accounts receivable, and of financial instruments, as follows.
Exposure to credit risk
The book values of financial assets classified as loans and receivables represent the maximum
credit exposure. The maximum credit risk exposure on balance sheet date was:
2016
2015
63,697
36,008
18,754
17,158
141,271
10,582
-
Total
135,617
151,853
Current assets
Non-current assets
125,695
9,922
148,640
3,213
The Company's objective is to work with a reduced number of financial institutions and to seek
business with those that present a greater robustness. In addition, another policy adopted to
mitigate credit risk is to maintain investment balances proportional to the balance of the
borrowings with each of these institutions.
In the history of the Company, there are no records of losses on cash and cash equivalents.
Loans and receivables
The Company's exposure to credit risk is mainly influenced by the individual characteristics of
each client. In addition, sales are evenly distributed throughout the corporate year (mainly in the
crop period from March to December of each calendar year) which allows that the Company to
interrupt deliveries to clients which are considered as a possible credit risk.
Impairment losses
The composition by maturity of trade accounts receivable recorded in current assets as of the
financial statements for which no impairment loss was recognized was as follows.
2016
2015
Falling due
Overdue - in days
up to 30
31-90
91-180
>181
13,183
5,019
239
420
476
7
1,349
13
988
7
Total
14,318
7,376
36
31, 2016 and 2015
The Company reviewed the adjustment to present value of its trade accounts receivable balances
as of March 31, 2016 and 2015 and concluded that their amounts approximate the book value,
since their accounts receivables have a short-term turnover.
The allowance for doubtful accounts is formed based on the past-due bills for over 180 days, at
an amount considered adequate by the Management to cover eventual losses from the
realization of trade accounts receivable. As of March 31, 2016 and 2015, the amount provided is
R$ 7.
From clients that present a history of non-performance of its financial obligations, the Company
and its subsidiaries seek to operate with advanced payments.
Guarantees
The Company is guarantor before the financial entities and credit cooperatives, of input
purchase transactions and financing to be used in the planting and harvesting of sugarcane of its
suppliers. As of March 31, 2016, the total collateralized value amounts to R$ 7,387. The
Company will assume the debit of its suppliers up to the limit of the pledged collateral, in case
of default on obligations. The occasional values disbursed by the Company to pay the
obligations of suppliers, in case of default, are adjusted by the TJLP (Long-term interest rate),
plus 5.5% p.a. on a pro rata basis, and will be deducted when the sugarcane is supplied by the
supplier. As of March 31, 2016, the Company did not record the collateral at fair value, because
there was no supplier in default in the Company, nor did any likelihood of the use of these
collaterals by suppliers.
Liquidity risk
Liquidity risk is the risk of the Company encountering difficulties in performing the obligations
associated with its financial liabilities that are settled with cash payments or with another
financial asset. The responsibility for the management of liquidity risk lies with the Company’s
management, which manages the liquidity risk in short, medium and long terms, maintaining
credit lines of funding according to its cash needs, combining the profiles of its financial asset
and liability maturities.
The Company uses IT systems and management tools which enable the monitoring of cash flow
requirements and the optimization of their cash return on investments. The Company’s policy is
to operate with high liquidity to guarantee compliance with operating and financial obligations
at least for one operating cycle; this includes possible impact of extreme circumstances that may
not be reasonably foreseen, such as natural disasters and cyclic movements of the commodities
market.
No cash flow expected, included in the analysis of the maturation of the Company, may occur
significantly sooner or in amounts significantly different.
37
31, 2016 and 2015
Exposure to liquidity risk
The book value of financial liabilities with liquidity risk is as follows:
2016
2015
Loans and financing
Debentures
553,013
91,925
61,806
50,542
612,922
93,042
59,479
31,999
Total
757,286
797,238
Current liabilities
477,203
280,083
632,692
164,750
The recorded maturity of financial liabilities are as follows:
In years
March 31, 2016
Loans and financing
Debentures
Book value
Contractual
flow
Up to 1
1-2
2-3
3-4
4-5
>5
553,013
91,925
61,806
50,542
661,130
105,240
61,806
50,542
402,269
46,350
61,055
40,046
59,814
58,890
751
10,496
60,946
-
56,120
-
35,022
-
46,959
-
Book value
Contractual
flow
Up to 1
1-2
2-3
3-4
4-5
>5
612,922
93,042
59,479
31,999
704,361
106,475
59,479
31,999
516,046
106,475
59,479
31,999
40,905
-
43,040
-
35,187
-
31,310
-
37,873
-
In years
March 31, 2015
Loans and financing
Debentures
No cash flow expected, included in the analysis of the maturation of the Company, may occur
significantly sooner or in amounts significantly different.
On March 31, 2016, Company presented current liabilities balance higher than current assets’
balance by R$ 323,992 and plans are addressed in note 1.
Market risk
Market risk is the risk that alterations in market prices, such as exchange rates and interest rates,
have in the Company's earnings, or in the value of its holdings of financial instruments. Because
of its activities, the Company is also exposed to financial risks arising from the following:
change in the value of total recoverable sugar, used for calculating the fair value of the
biological asset and the VHP sugar value (Very High Polarized).
Interest rate risk
The Company is exposed to risks related to interest rates, by virtue of loans and financing
contracted and interest earning bank deposits, primarily exposed to variations in the CDI
(Interbank deposit certificate), Selic and TJLP (Long-term interest rate). The Company's
management monitors the fluctuations in the floating interest rates linked to certain debts, by
using derivatives to minimize the impacts arising from these risks.
38
31, 2016 and 2015
Profile
On the financial statement date, the profile of financial instruments remunerated through
Company's interest was:
Financial assets
Financial liabilities
Loans and financing
Debentures
2016
2015
54,635
36,008
120,250
-
553,013
91,925
612,922
93,042
Cash flow sensitivity analysis for variable rate instruments
The sensitivity analysis is made based on the interest rates of non-derivative financial
instruments in the year ended March 31, 2016. As established by CVM Instruction 475/08,
which requires the presentation of two scenarios with deterioration of 25% and 50% in the
variable of risk considered, we show below the possible impacts of how they would have
increased (decreased) the equity and the profit or loss for the year according to the following
amounts. These scenarios can produce impacts on profit or loss and future cash flows of the
Company as described below:
•
Scenario I: It corresponds to the scenario considered as the most probable for interest rates on
the date of financial statements;
•
Scenario II: Deterioration of 25% in the main risk factor of the financial instrument in relation
to the level verified in the probable scenario; and
•
Scenario III: Deterioration of 50% in the main risk factor of the financial instrument in relation
to the level verified in the probable scenario.
39
31, 2016 and 2015
Interest rate risk on financial assets and liabilities - Appreciation of rates
Scenarios
Probable
Instruments
Financial assets
Finame
Finame
Indirect BNDES onlending
Working capital
PASS
PASS
ACC, CCE, PPE and NCE
Debentures
Exposure in 2016
Risk
Index variation by 25%
%
Amount
%
Amount
%
Amount
54,635
36,008
CDI (Interbank deposit certificate)
10.09%
10.09%
5,513
3,633
12.61%
12.61%
1,376
908
15.14%
15.14%
2,759
1,819
(19.897)
(1,225)
(33,995)
(11,721)
(1,677)
(5,212)
(143,255)
(94,295)
TJLP
SELIC
TJLP
TJLP
SELIC
5.13%
14.02%
5.13%
10.09%
5.13%
14.02%
10.09%
10.09%
(947)
(172)
(1,742)
(1,183)
(86)
(731)
(14,454)
(9,514)
6.41%
17.53%
6.41%
12.61%
6.41%
17.53%
12.61%
12.61%
(254)
(43)
(435)
(295)
(21)
(183)
(3,610)
(2,377)
7.69%
21.03%
7.69%
15.14%
7.69%
21.03%
15.14%
15.14%
(509)
(86)
(874)
(592)
(43)
(365)
(7,235)
(4,762)
Impact on income (loss) and shareholders’ equity
(4,934)
40
(9,884)
31, 2016 and 2015
Interest rate risk on financial assets and liabilities - Depreciation of rates
Scenarios
Probable
Instruments
Financial assets
Finame
Finame
Indirect BNDES onlending
Working capital
PASS
PASS
PPE and NCE
Debentures
Exposure in 2016
Risk
%
Amount
%
Amount
%
Amount
54,635
36,008
10.09%
10.09%
(5,513)
(3,633)
7.57%
7.57%
(1,376)
(908)
5.05%
5.05%
(2,759)
(1,819)
(19.897)
(1,225)
(33,995)
(11,721)
(1,677)
(5,212)
(143,255)
(94,296)
TJLP
SELIC
TJLP
TJLP
SELIC
5.13%
14.02%
5.13%
10.09%
5.13%
14.02%
10.09%
10.09%
947
172
1,742
1,183
86
731
14,454
9,514
3.84%
10.52%
3.84%
7.57%
3.84%
10.52%
7.57%
7.57%
254
43
435
295
21
183
3,610
2,377
2.56%
7.01%
2.56%
5.05%
2.56%
7.01%
5.05%
5.05%
509
86
874
592
43
365
7,235
4,762
4,934
Source: CDI information was extracted from CETIP basis, TJLP (long-term interest rate) was extracted from Federal Revenue Service and SELIC rate from the Central Bank of Brazil.
41
9,884
31, 2016 and 2015
Currency risk
The Company is subject to currency risk (US dollar) in part of their borrowings taken in a
currency other than the functional currency.
With respect to other assets and liabilities denominated in foreign currency, the Company
ensures that its net exposure is kept to an acceptable level by buying or selling foreign
currencies at spot rates where necessary to address short-term instability.
The short-term portions of the monetary liabilities denominated in foreign currency are secured
by assets also denominated in foreign currency (sugar export at a price fixed in foreign
currency).
The long-term portion of these liabilities is secured by the Company’s sugar exports, which
account for 100% of the total exports, and whose prices are fixed in foreign currency and show
little sensitivity to exchange rate fluctuations.
Exposures to foreign exchange risks
Foreign currency net exposure related to principal amounts is presented in the chart below (in
US$ thousand):
2016
2015
Swap and options
Loans and financing
NDF - Non-Deliverable Forward
2,295
(15,395)
(49,958)
(19,500)
3,416
(61,971)
(34,700)
Net exposure
(82,558)
(93,255)
Sensitivity analysis - Currency risk
The sensitivity analysis is made based on the exposure of loans and financing to the monetary
restatement of the US dollar in the period ended March 31, 2016. As established by CVM
Instruction 475/08, which requires the presentation of two scenarios with deterioration of 25%
and 50% in the variable of risk considered, we show below the possible impacts of how they
would have increased (decreased) the equity and the profit or loss for the period according to the
following amounts. These scenarios can produce impacts on profit and/or loss and future cash
flows of the Company as described below:
•
Scenario I: For the probable scenario in US dollar the exchange rate on March 31, 2016 was
considered;
•
Scenario II: Deterioration of 25% in the main risk factor of the financial instrument in relation
to the level verified in the probable scenario; and
•
Scenario III: Deterioration of 50% in the main risk factor of the financial instrument in relation
to the level verified in the probable scenario.
42
31, 2016 and 2015
Scenarios
Assets
Purchase and sale option
Swap
Liabilities
Loans and financing
Swap
Notional
USD thousand
Fair value
R$
Increase (R$)
25%
50%
Decrease (R$)
25%
50%
2,295
17,914
4,479
8,957
(4,479)
(8,957)
19,500
12,000
17,051
107
4,263
27
8,526
54
(4,263)
(27)
(8,526)
(54)
(49,958)
(142,480)
(35,620)
(71,240)
35,620
71,240
(19,500)
(19,500)
(27,395)
(25.714)
(17.124)
(7,704)
(6,427)
(4,281)
(1,926)
(39,485)
(12,857)
(8,562)
(3,852)
(78,974)
6,427
4,281
1,926
39,485
12,857
8,562
3,852
78,974
Information used to calculate sensitivity analyses presented above were obtained from external
market sources, such as Bloomberg and BM&F Bovespa.
Hedge accounting
Cash flow hedge involving the Company’s exports
The Company adopts a cash flow hedge accounting structure that consists of covering a highly
probable expected transaction of export in foreign currency (USD), against the exchange risk of
fluctuation in the foreign exchange rate of USD in relation to BRL, using as coverage
instrument the non-derivative financial instruments, such as Advance on Export Contracts
(ACC, in Portuguese) and the Export Credit Note (NCE, in Portuguese) and derivatives such as
Non-Deliverable Forward (NDF, in Portuguese), at amounts and maturities equivalent to
exports. The relation of hedge designated to hedge accounting is as follows:
2016
Realized
Income (loss)
(note 25)
2015
Not realized
Shareholders'
equity
Realized
Income
(loss)
(note 25)
Not realized
Shareholders'
equity
ACC and NCE
NDF
(46,221)
(23,712)
(9,331)
(25,713)
(12,377)
-
(31,610)
(57,784)
Net exposure
(69,333)
(35,044)
(12,377)
(89,394)
-
11,915
-
30,394
(69,333)
(23,129)
(12,377)
(59,000)
(-) Deferred income and social
contribution taxes
Net exposure
The effective portion of the change in the fair value of designated derivatives and qualified as
cash flow hedge, and not settled, as well as the exchange variation in non-derivative hedge
instruments is recognized in shareholders’ equity as “Equity valuation adjustments”. This
portion is realized at the time of the elimination of the risk to which the hedge instruments were
designated. At the time of the settlement of financial instruments, gains and losses that were
previously deferred in other comprehensive income are transferred into profit or loss.
43
31, 2016 and 2015
The Company is exposed to the exchange risk of future cash flows in foreign currency, in view
of the income from the export of sugar. In order to mitigate this risk, the Company adopts
coverage procedures based on the exchange exposure calculated by the commercial credit
amount for the next 12 months, which is monthly reviewed. The coverage of the future cash
flows is analyzed and discussed by the Company’s Board of Directors, which approves and
authorizes the purchase and designation of derivative financial instruments for hedge
accounting.
The chart below presents all the derivative financial instruments contracted, as well as the
respective fair values calculated by the management of the Company:
2016
Derivative
Maturity
Notional (U$$)
Notional
(R$)
Fair value
(R$)
Principal Swap
May 2016
12,000
40,103
107
Derivative
Maturity
Notional (U$$)
Notional
(R$)
Fair value
(R$)
Principal Swap
Interest rate swap
Principal Swap
Principal Swap
Principal Swap
Principal Swap
Principal Swap
Principal Swap
Principal Swap
Principal Swap
May 2016
May 2016
Jun 2016
Jul 2016
Aug 2016
Sep 2016
Oct 2016
Nov 2016
Mar 2017
Nov 2017
625
1,593
4,325
1,450
1,450
1,450
2,950
2,950
3,000
7,602
2,410
5,000
16,136
5,595
5,595
5,597
11,375
11,528
10,755
28,599
(222)
(757)
(1,270)
(517)
(523)
(512)
(1,028)
(1,219)
(199)
(1,457)
27,395
102,590
(7,704)
Total liabilities
2016
Derivatives
Term
Term
Term
Term
Term
Term
Term
Term
Purchase/Sale
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Market
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
Contract
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
Total
44
Maturity
06/30/2016
07/29/2016
08/31/2016
09/30/2016
04/28/2017
05/30/2017
06/30/2017
05/30/2017
Notional (U$$
thousand)
150
3,800
3,800
2,000
2,300
1,500
3,650
2,300
Fair value
(R$)
178
4,531
4,567
2,377
3,564
2,298
5,012
3,187
19,500
25,714
31, 2016 and 2015
2015
Derivatives
Purchase/Sale
Market
Contract
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Term
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
CETIP
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
NDF
Maturity
Notional
(U$$ thousand)
Fair value
(R$)
05/29/2015
06/30/2015
09/30/2015
07/31/2015
08/31/2015
10/30/2015
12/30/2015
11/30/2015
12/29/2015
09/30/2015
10/30/2015
11/30/2015
04/30/2015
05/29/2015
06/30/2015
07/30/2015
08/31/2015
09/30/2015
10/30/2015
11/30/2015
12/29/2015
04/30/2015
05/29/2015
06/30/2015
07/30/2015
08/31/2015
09/30/2015
10/30/2015
11/30/2015
12/29/2015
04/30/2015
05/29/2015
06/30/2015
07/30/2015
08/31/2015
09/30/2015
10/30/2015
11/30/2015
12/29/2015
500
500
500
500
500
500
500
500
1,250
250
250
250
500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
300
300
300
300
300
300
300
300
300
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
(426)
(430)
(436)
(433)
(436)
(435)
(438)
(437)
(1,137)
(224)
(225)
(227)
(444)
(1,308)
(1,324)
(1,339)
(1,353)
(1,364)
(1,371)
(1,379)
(1,384)
(256)
(259)
(262)
(265)
(268)
(270)
(271)
(273)
(274)
(1,357)
(1,370)
(1,384)
(1,399)
(1,412)
(1,422)
(1,431)
(1,440)
(1,836)
34,700
(31,999)
The call and put options have the following maturities:
2016
Contracted
Call option
Call option
Call option
Call option
Call option
Call option
Total
45
Maturity
Notional
(U$$ thousand)
Fair value (R$)
04/29/2016
05/31/2016
06/30/2016
07/29/2016
08/31/2016
08/31/2016
2,300
3,800
3,800
3,800
3,800
2,000
1,424
7,224
2,296
2,400
2,390
1,317
19,500
17,051
31, 2016 and 2015
Contracted
Put Option
Put Option
Put Option
Put Option
Put Option
Put Option
Put Option
Maturity
Notional
(U$$ thousand)
Fair value (R$)
06/30/2016
07/29/2016
08/31/2016
09/30/2016
04/28/2017
05/30/2017
06/30/2017
(150)
(3,800)
(3,800)
(2,000)
(2,300)
(3,800)
(3,650)
(6,463)
(2,527)
(2,663)
(1,458)
(712)
(1,525)
(1,776)
(19,500)
(17,124)
Total
The chart below presents all the derivative financial instruments contracted, as well as the
respective fair values calculated by the management of the Company:
2016
Assets
Swap
Total
Notional
(U$$
thousand)
19,500
12,000
2015
Fair value
(R$)
17,051
107
31,500
17,158
Current assets
Non-current assets
Liabilities
Notional
(U$$
thousand)
-
11,679
5,479
2016
Notional
(U$$
thousand)
Fair value
(R$)
Fair value
(R$)
-
2015
Notional
(U$$
Fair value
thousand)
(R$)
Swap
19,500
19,500
27,395
25,714
17,124
7,704
34,700
-
31,999
-
Total
66,395
50,542
34,700
31,999
Current liabilities
40,046
10,496
31,999
-
Sensitivity analysis of derivative financial instruments
The sensitivity analysis of the change in the fair value of the derivative financial instruments of
the Company in the probable, possible and remote scenarios.
46
31, 2016 and 2015
Interest rate risk on financial assets and liabilities - Appreciation of rates
Scenario 1
Instrument
Derivative financial instruments - Assets
Swap
Derivative financial instruments - Liabilities
Swap
Amount
Risk
Scenario 2
Scenario 3
%
Amount
%
Amount
%
Amount
17,051
107
14.13%
14.13%
17,051
107
17.66%
17.66%
14,040
88
21.20%
21.20%
13,436
84
(25,714)
(17,124)
(7,704)
Foreign exchange
Foreign exchange
3.56
3.56
14.13%
(25,714)
(17,124)
(7,704)
4.45
4.45
17.66%
(6,429)
(4,281)
(1,924)
5.34
5.34
21.20%
(12,857)
(8,562)
(3,855)
(33,384)
Impact on income (loss) and shareholders’ equity (variation)
1,494
(11,754)
Interest rate risk on financial assets and liabilities - Depreciation of rates
Scenario 1
Instrument
Derivative financial instruments - Assets
Swap
Derivative financial instruments - Liabilities
Swap
Amount
Risk
Scenario 2
Scenario 3
%
Amount
%
Amount
%
Amount
17,051
107
14.13%
14.13%
17,051
107
10.60%
10.60%
(15,244)
(96)
7.07%
7.07%
(15,845)
(99)
(25,714)
(17,124)
(7,704)
Foreign exchange
Foreign exchange
3.56
3.56
14.13%
(25,714)
(17,124)
(7,704)
2.67
2.67
10.60%
6,429
4,281
553
1.78
1.78
7.07%
12,857
8,562
1,115
(33,384)
Impact on income (loss) and shareholders’ equity (variation)
47
(4,077)
6,590
31, 2016 and 2015
Income from derivative financial instruments
The Company recorded the gains and losses on these transactions in profit or loss for the year.
As of March 31, 2016, the impacts recorded in profit or loss are shown below:
Derivative
Market
Risk
2016
2015
Swap
(-) Deferred income and social
contribution taxes
CETIP
USD
6,017
(389)
(2,046)
132
3,971
(257)
Net Effect on Company’s income (loss)
24
Assets/ Liabilities
Provision for contingencies
Allowance for doubtful accounts
Actuarial provision
Effects of swap contracts
Tax losses and negative basis (a)
Fair value of biological assets
Effects of exchange forward contracts (NDF)
Net assets
(a)
Income (loss)
2016
2015
2016
2015
2016
2015
918
2
(993)
3,086
(10,285)
278
2
132
1,167
(3,889)
640
(1,125)
1,919
(6,396)
(132)
(8)
(5)
(222)
740
-
-
14,390
30,452
2,475
-
(18,537)
27,422
7,118
28,142
(2,487)
373
(18,537)
27,422
The Company’s management recognized deferred tax assets of income tax and social contribution arising from tax and social contribution loss
carryforwards up to the limit of 30% of deferred tax liabilities of income tax and social contribution - annual offsetting limit of tax loss, according to
the tax legislation, arising from the gain determined in the calculation of the fair value of biological asset. The remaining balance of unrecorded
deferred income and social contribution tax losses and negative basis of social contribution is approximately R$ 79,368.
Reconciliation of deferred income and social contribution taxes
Effective rate reconciliation
2016
2015
(82,679)
34%
7,365
34%
28,111
(2,504)
(12,061)
(18,537)
(24,545)
27,422
Deferred tax
(2,487)
373
Effective rate
3.05%
4.36%
Income (loss) for the year before taxes
Nominal rate
Tax expense at nominal rate
Adjustment of income and social contribution taxes
Non-deductible expenses
Effects of financial instruments directly recognized in shareholders’ equity
The tax nominal rate is 34% on adjusted income, according to current legislation in Brazil for
taxable income annual. The effective rate shown above is the best management estimate of the
expected annual rate. The noted distortions arise from the effects of the non-accounting of the
tax credits mentioned in item (a) of this note.
Deductible timing differences and accumulated taxes losses do not lapse pursuant to the tax
legislation in force.
48
31, 2016 and 2015
25
Net operating income
The operating income of the Company are comprised of sugar and ethanol sales for the
domestic and foreign market and electricity.
We reproduce below the reconciliation between gross income for tax purposes and the income
presented in the statement of income for the year:
(a)
2016
2015
Gross income from sales and services:
Ethanol - Domestic market
Sugar - Foreign market
Electric power (a)
Sugar - Domestic market
Other income
CPC 38 - Hedge Accounting (Note 23)
237,540
226,762
43,640
1,507
(69,933)
204,227
208,577
98,450
128
1,904
(12,377)
Gross tax income
439,516
500,909
Sales tax
Rebates and returns
(17,331)
(5)
(24,479)
-
Net operating income
422,180
476,430
It refers to the supply of electric energy to the Electric Energy Trading Chamber (CCEE, in Portuguese), as
established in the contract entered into through the bid promoted by the Brazilian Electricity Regulatory Agency
(ANEEL, in Portuguese). The energy supply contract establishes the supply of 876,000 Mwh, during the period
between April 2010 and March 2025, as follows:
Year of
supply
2010 / 2011
2011 / 2012
2012 / 2013
2013 / 2014
2014 / 2015
2015 / 2016
2016 / 2017
2017 / 2018
2018 / 2019
2019 / 2020
2020 / 2021
2021 / 2022
2022 / 2023
2023 / 2024
2024 / 2025
Total
The energy income is divided into fixed and variable.
49
Contracted
(Mwh)
Exported
(Mwh)
17,520
61,320
61,320
61,320
61,320
61,320
61,320
61,320
61,320
61,320
61,320
61,320
61,320
61,320
61,320
17,520
61,320
61,320
61,320
61,320
61,320
-
876,000
324,120
31, 2016 and 2015
Fixed income
The Company is entitled to the annual fixed income of R$ 9,412, adjusted by the Extended
National Consumer Price Index (IPCA, in Portuguese). The payment of the fixed income is
monthly made in the proportion of one twelfth.
In case the energy is supplied at amounts below the committed one, the Company will be
required to pay an annual refund to be calculated by CCEE at the end of each supply period.
The Company already delivered 100% of the amount contracted by CCEE for the year regarding
the amount of 61,320 Mwh.
26
Expenses by nature
The Company presented its statements of income using expenses classification based on
function. Information on the nature of these expenses recognized in the statements of income is
as follows:
2016
2015
Cost of goods sold
CGS - Sugar
CGS - Anhydrous ethanol
CGS - Hydrous ethanol
CGS - Electricity
Cost of services rendered
CGS - Sugarcane
Other expenses
Recovery of PIS and COFINS
(188,271)
(115,511)
(74,721)
(15,125)
(655)
(231)
15,446
(175,318)
(107,141)
(62,979)
(22,864)
(1,500)
(238)
(471)
19,186
Total
(379,068)
(351,325)
Sales expenses
Freight, port expenses and commissions
Personnel expenses
Depreciation and amortization
Other commercial expenses
(30,274)
(1,737)
(972)
(1,082)
(32,507)
(1,654)
(957)
(791)
Total
(34,065)
(35,909)
Administrative expenses
Personnel expenses
Outsourced services
Depreciation, amortization and depletion
Other administrative expenses
(4,295)
(3,996)
(1,212)
(102)
(8,788)
(3,622)
(1,033)
(398)
Total
(9,605)
(13,841)
50
31, 2016 and 2015
27
Net financial income (expenses)
Financial expenses:
Interest on loans and financing
IOF
Unrealized losses on derivative financial instruments:
- Loss on fair value adjustment
- Effective loss - settlement of transactions
Net exchange variation
Other financial expenses
Financial income:
Gains with derivative financial instruments:
- Gains on fair value adjustment
- Effective gains - settlement of transactions
- Asset foreign exchange fluctuation
Other financial income
Net financial income (loss)
28
2016
2015
(72,239)
(743)
(69,488)
(430)
(71,597)
(2,233)
(55,079)
(9,351)
(1,891)
(2,049)
(6,700)
(3,212)
(211,242)
(83,770)
66,734
8,250
31,132
3,688
1,904
4
7,112
4,087
109,804
13,107
(101,438)
(70,663)
Commitments with contracts
Sales commitment
The Company operates mainly in the commodities’ market. The sales are substantially made at
the price on the transaction date. However, the Company has several agreements in the market
of sugar committing itself to selling certain volumes in future crops. As of March 31, 2016, the
sale commitments of sugar amount to 220,000 tons, entered into for the 2016/2017 crop.
In addition, the Company has contracts for the sale of anhydrous ethanol at the volume of
87,384 m3 for 2016/2017 crop.
Agricultural Partnership Agreements
The Company has agricultural partnership contracts for sugarcane plantation, with average
duration of five years. These contracts have the purpose of ensuring a portion of the future
production, which is estimated as follows:
•
2016/2017 crop season onward - 49,658 metric tons per crop season.
The payments related to these obligations are calculated on a straight-line basis, according to the
contracts, taking into account the commitment to the share of the partner, which will be valued
by the prices to be set at each crop by the CONSECANA (Council of Sugarcane, Sugar and
Ethanol Producers in the São Paulo State) - SP system.
Operational lease
The Company has operating lease contracts for lands, sugarcane crops for the average duration
of five years. The payments related to these obligations are calculated on straight-line basis,
according to the contracts. Payments are monthly made or as provided in each contract. The
expenditures related to these agreements amount to R$ 208 per month up to December 31, 2022.
51
31, 2016 and 2015
29
Related parties
Parent company of that Company where these financial statements are consolidated is
Companhia Mineira de Açúcar e Álcool Participações.
a.
Remuneration of management key personnel
Company’s key management personnel is comprised of the Executive Board elected in the
Annual Shareholders' Meeting. The amounts related to the compensation of key management
personnel in the year ended March 31, 2016, as short-term benefits were R$ 2,658 (R$ 3,653 on
March 31, 2015), recorded in the group of general and administrative expenses and include
salaries, bonuses, variable compensations and direct and indirect benefits.
The Company does not pay other types of remuneration such as post-employment benefits,
other long-term benefits or termination benefits.
b.
Principal balances of transactions
Transactions with related parties, except for the purchase of raw material, which is made
according to the market price, are made based on conditions negotiated between the Company
and the related companies, which could be different if they were made with non-related parties.
The balances with related parties are presented as follows:
Non-current assets
Related party transactions (Note 10)
Triângulo Mineiro Açúcar e Álcool S/A.
Companhia Mineira de Açúcar e Álcool Participações S/A.
Advances - Sugarcane suppliers (Note 13)
Marco Otavio Galvão
(b)
(c)
Income (loss)
Purchase of raw material (sugarcane)
Marco Otavio Galvão
JF Citrus Agropecuária
2015
1,692
2,751
617
2,596
2,279
1,896
6,722
5,109
751
-
2016
2015
2,279
-
4,005
22
2,279
4,027
(a)
Total
JF Citrus Agropecuária (Note 18)
2016
(c)
Total
(a)
Amount granted to the respective subsidiaries, not subject to interest, and which will be settled by the Company
according to its available cash.
(b)
Amount granted to Marco Otávio Galvão, not subject to interest, and which will be settled upon delivery of
sugarcane, in the 2016/2017 crop.
(c)
Mr. Marco Otávio Galvão and JF Citrus Agropecuária Ltda. have sugarcane properties near Vale do Tijuco Açúcar e
Álcool S/A. and, therefore, operate as regular suppliers of sugarcane. They are classified as related parties because
they are shareholders of Companhia Mineira de Açúcar e Álcool Participações.
The Company pledges collaterals for transactions with suppliers, as described in Note 23.
52
31, 2016 and 2015
30
Insurance coverage
The Company adopts the policy of contracting insurance coverage for assets subject to risks for
amounts considered to be sufficient to cover eventual claims, considering the nature of its
activity.
As of March 31, 2016, the Company has insurance at amounts considered sufficient by the
Management to cover possible losses, as follows:
31
Insured property
Insured amount
Civil liability
Rural Pledge
Vehicles
Machinery and equipment, sundry
Patrimonial
15,000
5,856
100% FIPE table
35,524
200,000
Statements of cash flows
Statements of cash flows were prepared according to technical pronouncement CPC 03 R2.
a.
Cash and cash equivalents consist of cash available in the Company and balances deposited in
banks.
b.
Fixed assets
During the year ended March 31, 2016, the Company purchased fixed assets at the total cost of
R$ 67,932 (R$ 83,820 as of March 31, 2015), of which R$ 9,532
(R$ 23,750 as of March 31, 2015) by raising loans and financing did not affect cash.
32
Environmental risks
The facilities of the Company and their industrial and agricultural activities are subject to
environmental regulations. The Company reduces the risks associated with environmental
matters, by operational procedures and investment controls in pollution control equipment and
systems which are technical/operating procedures and were not object of the analysis of
independent auditors since they are not non-financial items, besides believing that no provision
for losses related to environmental issues is currently required, based on the effective laws and
regulations.
33
Subsequent events
From 25 April to 17 May 2016, the Company entered into a long-term loan agreements
amounting to R$ 95,385.
*
*
53
*
31, 2016 and 2015
Board of Directors
Board Members
José Francisco de Fátima Santos
President
Luiz Gustavo Turchetto Santos
Hansjorg Suelzle
Moleonoto Tjang
Surjadi Tirtarahardia
Mark Julian Wakeford
Executive Board
Carlos Eduardo Turchetto Santos
Celso Oliveira
Sylvio Ortega Filho
Eduardo Scandiuzzi Lopes
Accountant
Anderson César Augusto Alves
CRC/SP nº 1SP206284/O-8
54

USINA BOA VISTA S

Transcription

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