FORM
6-K
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Report
of Foreign Issuer
Pursuant
to Rule 13a-16 or 15d-16
of
the Securities Exchange Act of 1934
For
the
month of September, 2007
Commission
File Number: 333-144010
COSAN
LIMITED
(Translation
of registrant’s name into English)
Av.
Juscelino Kubitschek, 1726 – 6th
floor
São
Paulo, SP 04543-000 Brazil
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F:
|
Form
20-F
|
X
|
Form
40-F
|
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1):
|
Yes
|
No
|
X
|
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(7):
|
Yes
|
No
|
X
|
Indicate
by check mark whether by furnishing the information contained in this Form,
the
Registrant is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
|
Yes
|
No
|
X
|
If
“Yes”
is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): N/A
COSAN
LIMITED
TABLE
OF
CONTENTS
|
Item
|
||
|
1.
|
First
Quarter Earnings
Release.
|
|
|
2.
|
Cosan
Limited unaudited interim financial statements for quarter ended
July 31,
2007 (US GAAP).
|
|
|
3.
|
Cosan
S.A. Indústria e Comércio S.A. unaudited interim financial statements for
quarter ended July 31, 2007 (US GAAP).
|
|
|
4.
|
Cosan
S.A. Indústria e Comércio S.A. unaudited interim financial statements for
quarter ended July 31, 2007 (Brazilian
GAAP).
|
 |
Quarterly
Financial Letter
|
|
|
1st
Quarter of Fiscal Year 2008 – May, June and
July
|
Paulo
Diniz,
CFO
& RI
Guilherme
A. Prado,
Investors’
Relations
Alexandre
Sirihal,
Financial
Planning
Anderson
Varanda,
Treasury
Mauricio
Sartorelli,
Controllership
ri@cosan.com.br
www.cosan.com.br
|
Stock
Performance
|
||||||||||||
|
IPO
|
31/Jul/07
|
12/Sep/07
|
||||||||||
|
CSAN3
|
||||||||||||
|
Price
(R$/Share)
|
16,00
|
33,29
|
21,56
|
|||||||||
|
Δ since
IPO (%)
|
108,1 | % | 34,8 | % | ||||||||
|
Daily
Vol.
R$MM
|
36,43
|
36,38
|
||||||||||
|
CZZ
|
||||||||||||
|
Price
(US$/Share)
|
10,50
|
-
|
10,68
|
|||||||||
|
Δ
since
IPO
(%)
|
-
|
1,7 | % | |||||||||
|
Daily
Vol.
R$MM
|
-
|
8,59
|
||||||||||
|
CZLT11
|
||||||||||||
|
Price
(R$/BDR)
|
21,05
|
-
|
20,60
|
|||||||||
|
Δ
since
IPO
(%)
|
-
|
-2,1 | % | |||||||||
|
Daily
Vol.
R$MM
|
-
|
5,57
|
||||||||||
|
Definitions:
FY’08
- fiscal
year beginning on May 5, 2007 and to end on April 30, 2008
FY’07
- fiscal
year beginning on May 1, 2006 and ended on April 30, 2007
1Q’08
-
quarter to end on July 31, 2007
1Q’07
-
quarter ended on July 31, 2006
YTD08
- period
beginning on the same date as FY’08 and ending at end of
1Q’08
YTD07
- period
beginning on the same date as FY’07 and ending at the end of
1Q’07
|
| Cosan: performance affected by depressed prices and strategy strengthened with listing on the NYSE | ||
|
§
|
The
dramatic
decline in sugar and ethanol commodity prices, the significant
appreciation of the Brazilian real versus the U.S. dollar and the
adverse climatic conditions during the quarter strongly affected
the
entire Brazilian sugar and ethanol industry at the beginning of this
2007/2008 harvest. As a result of this overall environment, the situation
for Cosan was no different: average sugar and ethanol prices in this
1Q’08
declined 46% and 29%, respectively, as compared to the same quarter
last
year. Accordingly, the company prioritized its trading of sugar,
with
842.1 thousand tons, taking advantage of its existing favorable hedging
position. With respect to the 245.0 million liters of ethanol sold,
given
that it follows an essentially spot prices market, Cosan opted for
increase its ethanol inventory, in order to mitigate the negative
effects
of massive sales by most ethanol producers. Therefore, at the end
of 1Q’08
Cosan recorded net operating revenues of R$591.7 million, 37.3% lower
than
amount recorded for 1Q’07.
|
|
|
1Q'07
|
1Q'08
|
Financial
Highlights (R$MM)
|
YTD'07
|
YTD'08
|
|
|
944.1
|
591.7
|
Net
Operating Revenue
|
944.1
|
591.7
|
|
|
368.2
|
43.7
|
Gross
Profit
|
368.2
|
43.7
|
|
|
39.0%
|
7.4%
|
Gross
Margin
|
39.0%
|
7.4%
|
|
|
329.1
|
49.5
|
EBITDA
|
329.1
|
49.5
|
|
|
34.9%
|
8.4%
|
EBITDA
Margin
|
34.9%
|
8.4%
|
|
|
203.2
|
133.3
|
EBITDAH
(Adjusted by Hedge)
|
203.2
|
133.3
|
|
|
24.8%
|
19.7%
|
EBITDAH
Margin
|
24.8%
|
19.7%
|
|
|
5.4
|
13.7
|
Net
Profit (Loss)
|
5.4
|
13.7
|
|
|
0.6%
|
2.3%
|
Net
Margin
|
0.6%
|
2.3%
|
|
§
|
Cost
of goods
sold was strongly affected by intermittent rainfall that is atypical
at
this early stage of the harvest, resulting in 15.1 million tons of
sugarcane crushed, compared to the 17.3 million tons that were initially
projected. As a result, the company’s agricultural and industrial
activities were significantly idle, resulting mostly in a high cost
for
our own sugarcane. Thus, combined with the depressed prices, our
EBITDA
margin declined to 8.4% in 1Q’08, compared to the 34.9% for the same
quarter last year. However, the company’s favorable hedging position
caused the EBITDAH of R$133.3 million to represent a margin of 19.7%
compared to 24.8% in 1Q’07, which margin is an extremely attractive margin
in particular for a period of extremely low
prices.
|
|
|
§
|
If
the 14%
appreciation of the real adversely impacted export revenues in the
quarter
(although partially mitigated by the exchange rate hedging), which
appreciation in turn resulted in a relevant exchange gain on U.S.
dollar
indebtedness, generating net financial revenue of R$150.8 million
in this
1Q’08. Thus, even after deducting non-cash amortizations of R$56.0 million
of premiums related to past acquisitions, the R$13.7 million in net
income
was significantly improved from R$5.4 million reported for the same
quarter last year.
|
|
|
§
|
As
a
subsequent event, the crisis that hit global financial markets provided
a
unique contribution to the company. On August 16 2007, Cosan Limited,
the
parent company of the Cosan Group, conducted its US$1.2 billion NYSE
IPO,
thereby becoming the first Brazilian-controlled company to have shares
listed on the New York Stock Exchange. Notwithstanding the considerably
depressed prices in the international stock markets, the NYSE listing
will
be fundamentally important from the strategic point of view, for
the Cosan
Group
|
|
A-1
| to implement its vision of effectively becoming the No. 1 renewable energy global player. |
|
A.
Market Outlook
|
||
|
§
|
From
a macro
standpoint, the market starts to pay a high price for its intrinsic
distortions. As only one third of the world sugar market is free
from
trade barriers, while the other two thirds are protected, the prohibition
of subsidized exports from Europe to the free market in the recent
past
generated a true battle with sugar prices, which actually surpassed
US¢19/lb. At the same time, the world discovered ethanol, leading
the U.S.
to combine resources to create the largest ethanol market in the
world
within a relatively short period of time. In addition, the rapid
success
of flex-fuel automobiles in Brazil created immediate
opportunities, which were initially projected to last only for
a limited
period of time. The combination of these two factors ultimately
triggered
a race among countries and producers for expansion of world production.
In
Brazil and India, the publicity concerning the sugar and ethanol
industry
caused the race to be even more competitive by the arrival of the
“parachutists” (newcomers to the industry with no previous knowledge), who
believed that they could generate extremely high returns within
a short
period of time.
|
|
|
§
|
As
a result,
the world is currently experiencing over-supply, with resulting
depressed
prices. If this imbalance significantly impacts this harvest, then
it
should contribute to a better natural selection of the producers,
which
may teach the “parachutists” a difficult lesson. Hence, a second wave of
consolidation in the industry may ensue, with some remaining players
becoming stronger, but the great majority considerably
weaker.
|
|
|
§
|
From
a
punctual standpoint, the 2007/08 harvest in the central-southern
region of
Brazil has been providing some surprises, which have resulted in
the more
optimistic production expectations, particularly for sugar, announced
in
the beginning of the harvest to start to lose strength and a number
of
industry sources, such as Unica and Datagro, have been modifying
their
projections to more conservative levels. The reasons are: (i) a
more
ethanol-oriented harvest than initially expected, with the mix
in favor of
ethanol exceeding 55%; (ii) delay in machinery and equipment maintenance,
which delayed the beginning of the harvest for some farmers; (iii)
delays
caused by rainfall, principally in the second half of July, when
the mills
were down several days; (iv) less agricultural productivity and
industrial
yield, resulting from a greater incidence of sugarcane bore (a
type of
plague), as well as an increase in the sugarcane fiber
content.
|
|
|
Harvest
consolidates as being more ethanol-oriented, and hydrous ethanol
is the
featuring product.
|
§
|
At
the end of
1Q’08 the 2007/08 harvest in the central-southern region of Brazil
showed
crushing of approximately 190 million tons of sugarcane, a volume
3%
higher than for the same period of the previous harvest. Production
of
sugar totaled 10.9 million tons, i.e., a drop of 12% in relation
to the
same period last year. On the other hand, production of ethanol
totaled
8.3 billion liters, which represents an increase of 11%. Of the
total
volume of ethanol, production of hydrous ethanol exceed 5 billion
liter,
24% higher, while anhydrous ethanol showed 3.2 billion liters,
6% lower in
comparison with the same period of the previous year. These figures
corroborate the growing demand for hydrous ethanol generated by
flex-fuel
automobiles.
|
|
§
|
The
impact of
the arrival of the new Brazilian harvest in the international sugar
market
has effectively been assimilated already by the market and thus
the
|
|
2
|
trend
of more
intense declines, perceived since the middle of last year, has
lost
strength, opening space for brief recoveries. During 1Q’08, sugar quotes
dropped to US¢8.45/lb, the lowest quote since May 2005. At the end of
1Q’08 the NY11 was quoted at US¢10.33/lb. The average NY11 for 1Q’08, of
US¢9.29/lb, was 41% lower than the average price for the same period
last
year. As regards 4Q’07, we had a decrease of almost 9%.
|
||
 |
||
|
Hedge
funds continue to play an important role in NY sugar
quotes.
|
§
|
During
1Q’08
the major hedge funds went from a net sold position of approximately
35
thousand lots at the beginning of the quarter to a net long position
at
the end of the quarter of 24 thousand lots, i.e., a variation of
59
thousand lots. Smaller funds and speculators increased their long
positions by close to 24 thousand lots, reaching at the end of
the quarter
a net purchased position of 28 thousand lots. Thus, at the end
of 1Q’08,
the major hedge funds, coupled with smaller funds and speculators,
held a
net long position of approximately 52 thousand lots, representing
8% of
total outstanding contracts. At the end of 4Q’07 these funds held a net
sold position of 34 thousand lots, or 5% of outstanding
contracts.
|
 |
||
|
§
|
Variances
of
refined sugar quotes, although more moderate than that for raw
sugar, were
also significant. In the international market the refined sugar
|
3
|
average
price
during 1Q’08, of US$322.18/ton, was 30% lower than the U$460.98/ton for
1Q’07. In comparison to the previous quarter, there was a decrease
of
3.7%. |
||
|
§ |
As
we had
commented in previous quarters, the scarcity of refining capacity
around
the world, deriving from the end of the subsidies granted for European
exports, maintained the white sugar premium at historically high
levels.
However, with the start-up of operations of new refineries, located
mainly
in Middle East and African countries, the white sugar premium has
been
gradually decreasing and at the end of 1Q’08 was quoted at US$88 per ton.
At the end of 4Q’07 the white sugar premium was quoted at US$110 per
ton. |
|
 |
||
|
Domestic
refined sugar market showing significant drops in the
quarter, on account of the beginning of the harvest in Brazil and
of the
international prices for refined
sugar. |
§ |
Reflecting
the
behavior of the international market, the domestic market also
gave in to
pressure brought by the progress of the 2007/08 harvest. The average
price
in 1Q’08 for crystal sugar was R$25.96 per 50Kg bag (or R$519.28/ton),
47%
lower than the R$49.41 per 50Kg bag (or R$988.20/ton) at the end
1Q’07.
Crystal sugar devaluated 25% in comparison to 4Q’07.. |
 |
||
|
§ |
The
strong
ethanol-oriented profile of the 2007/08 harvest raised supply
considerably, pressuring its quote down. The average price in 1Q’08 for
|
4
|
hydrous
ethanol, ESALQ (University of São Paulo School of Agronomics) base, was
R$0.6295/liter, or 28% lower than the R$0.8677/liter observed in
the same
period of the previous fiscal year. For anhydrous ethanol the average
price of R$0.7511/liter was 25% lower than the R$0.9956/liter for
the same
period of the previous year. As regards 4Q’07, we had devaluation of 28
and 20% for hydrous and anhydrous ethanol, respectively.
|
||
|
Ethanol
exports on the upswing, still with major concentration in the U.S.,
but
with some new destinations.
|
§
|
Ethanol
exports after the excitement observed with large volumes being
shipped to
the U.S. during the last harvest, face now the doubts to the current
North
Americans appetite. According to Secex (Foreign Trade Office) data,
during
the months from April to July 2007, 1.19 billion liters were shipped,
a
volume 22% higher than the 970 million liters for the same period
last
year. Out of this volume, 413 million were shipped to the U.S.,
a 32%
lower in comparison to the same period last year. However, one
must be
careful when analyzing this data and must keep in mind that the
last
harvest had a sugar-oriented profile, particularly in its beginning,
and
that the concern in the first months of the harvest was supply
for the
domestic market, as evidenced by the low carrying-over stocks in
that
year. Thus, exports only began to gain strength during the course
of the
harvest.
|
|
§
|
In
addition,
it is important to highlight the export of ethanol to the U.S.
via the
Caribbean, on account of tariff benefits. During the period April
to July
2006 direct exports to the U.S. (605 million liters) represented
62% of
the exported volume, while indirect exports (106 million liters),
via the
Caribbean, represented 11%. In the period from April to July 2007,
direct
exports to the U.S. (413 million liters) represented 35% of exported
volume, while indirect exports (371 million liters), via the Caribbean,
represented 31%.
|
|
|
§
|
In
any event,
the fact that ethanol exports increased is in itself significant,
mostly
because countries like the Netherlands, Japan and the UK increased
their
volumes of ethanol imports.
|
|
 |
||
|
§
|
The
drop
ethanol quotes finally reached the gas stations, thus picking consumers’
interest in using this fuel. At the closing of 1Q’08, the
average price of gasoline at Brazilian gas stations was R$2.47/liter,
while the price of hydrous ethanol was R$1.41/liter, or a 57% parity.
Data
disclosed by the ANP (National Petroleum Agency), based on an assessment
conducted on July 31, 2007, show that in only 4 Brazilian states
(Amapá,
Roraima, Pará and
|
5
|
Sergipe)
the
price of ethanol was higher than a parity of 75% with the price
of
gasoline. The states in which ethanol showed most price advantage
in
relation to gasoline were Mato Grosso, Goiás and São Paulo, with parities
of 42%, 48% and 49%, respectively.
|
||
|
§
|
The
large
disparity between ethanol prices in the various Brazilian states
is mainly
explained by tax reasons and also due to logistics problems. ICMS,
State
Value Added Tax on Goods and Services, is the major cause for this
discrepancy. While in São Paulo the ICMS rate for ethanol is 12%, in the
majority of Brazilian states the rate is 25%.
|
|
 |
||
|
§
|
During
1Q’08
sales of flex-fuel vehicles exceeded 500 thousand units, or 86%
of the
sales of new automobiles, causing the current fleet of these types
of
vehicles to come close to 3.8 million automobiles. According to
estimates
by the Anfavea (National Association of Automotive Vehicle Manufacturers),
the share of flex-fuel vehicles of the current Brazilian fleet
of service
and passenger vehicles is close to 18%, and projections for the
coming
years are quite optimistic.
|
|
 |
||
|
§
|
1Q’08
was
marked by a strong devaluation of the U.S. dollar versus the Real,
with
the dollar reaching a quote of R$1.8448/US$ in July, the lowest
in the
last
|
6
|
6
years. At
the end of 1Q’08 the dollar was quoted at R$1.8776/US$, a devaluation of
7.7% in comparison to the end of 4Q’07. However, in the last few weeks,
due to the uncertainties in the world market triggered by the U.S.
subprime market crisis, quotes have soared and the dollar surpassed
R$2.10/US$. Currently the dollar is at a level of
R$1.95/US$1.00.
|
|
B.
Operating Perforncema
|
||
|
§
|
Cosan
ended
1Q’08 with net operating revenues of R$591.7 million, an amount 37.3%
lower than the revenues recorded in 1Q’07. Contributing strongly to this
drop was the decision to reduce ethanol sales, which showed a sales
volume
in 1Q’08, 16.0% lower than 1Q’07 sale volume, due to the low market
prices. However, the driver for the significant decrease in sales
were the
45.8% and 28.6% drops in average prices in Brazilian Reais for
sugar and ethanol sold, respectively, which followed the trend
of reduced
prices that had been established practically since the beginning
of
FY’07.
|
|
|
§
|
Despite
the
strong impact the general drop in prices had on the reduction in
prices of
the ATR (Total Recoverable Sugar) acquired from third parties with
the
purpose of reducing production costs, adverse climatic conditions,
with
intermittent rainfall throughout 1Q’08, ended up determining a major rise
in the cost of sugarcane cultivated by Cosan itself. As a result
the
expected reductions of unit costs for production of sugar and ethanol
were
hindered. Hence, what ultimately materialized was a significant
reduction
of gross profit to R$43.7 million, a drop of 88.1%. In the same
way,
EBITDA of R$49.5 million, a margin of 8.4%, was 85% lower than
recorded
for 1Q’07, the largest in Cosan’s history.
|
|
|
§
|
It
should be
noted that, the derivatives transactions contracted to mitigate
fluctuations of sugar prices and exchange rates, which in 1Q’07 ended up
partially annulling the record EBITDA, have decisively contributed
in this
1Q’08 as a supplement to the results of the operating activities,
adjusting EBITDAH to R$133.3 million, with a margin of 19.7%. This
supplement of results from derivatives, added to the positive result
of
the exchange rate variation for U.S. dollars-denominated debt,
ultimately
resulted in net income of R$13.7 million in 1Q’08, a net margin of 2.3%,
two-and-a-half times higher than the net income reported for
1Q’07.
|
|
|
1Q'07
|
1Q'08
|
Income
Statement (R$MM)
|
YTD'07
|
YTD'08
|
|
|
944.1
|
591.7
|
Net
Operating Revenue
|
944.1
|
591.7
|
|
|
(576.0)
|
(548.0)
|
Cost
of Goods
Sold
|
(576.0)
|
(548.0)
|
|
|
(70.3)
|
(125.4)
|
with
Depreciation & Amortization
|
(70.3)
|
(125.4)
|
|
|
368.2
|
43.7
|
Gross
Profit
|
368.2
|
43.7
|
|
|
39.0%
|
7.4%
|
Gross
Margin
|
39.0%
|
7.4%
|
|
|
(60.1)
|
(61.1)
|
Selling
Expenses
|
(60.1)
|
(61.1)
|
|
|
(46.3)
|
(57.0)
|
General
&
Adm. Expenses
|
(46.3)
|
(57.0)
|
|
|
(3.0)
|
(1.5)
|
Other
Operating Expenses
|
(3.0)
|
(1.5)
|
|
|
329.1
|
49.5
|
EBITDA
|
329.1
|
49.5
|
|
|
34.9%
|
8.4%
|
EBITDA
Margin
|
34.9%
|
8.4%
|
|
|
(185.7)
|
150.8
|
Net
Finacial
Expenses
|
(185.7)
|
150.8
|
|
|
0.3
|
0.1
|
Equity
Income
|
0.3
|
0.1
|
|
|
(56.4)
|
(56.0)
|
Goodwill
Amortization
|
(56.4)
|
(56.0)
|
|
|
1.2
|
3.0
|
Other
Non-Operat.Result/Extraordinary
|
1.2
|
3.0
|
|
|
18.2
|
22.1
|
Profit
Before Income Tax
|
18.2
|
22.1
|
|
|
(11.2)
|
(9.0)
|
Income
Tax
|
(11.2)
|
(9.0)
|
|
|
(1.6)
|
0.6
|
Minority
Interests
|
(1.6)
|
0.6
|
|
|
5.4
|
13.7
|
Net
Profit (Loss)
|
5.4
|
13.7
|
|
|
0.6%
|
2.3%
|
Net
Margin
|
0.6%
|
2.3%
|
7
|
§
|
In
terms of
composition of net operating revenues, there were no major profile
changes
in this 1Q’08 when compared to 1Q’07: the share of sales to the domestic
market rose slightly from 35.5% to 37.9%, less as a result of
accommodation in the sales of sugar and ethanol and more from the
increased importance of other products and services, which rose
from 5.5% to 8.6% of the share of net revenues, due to the
strong drop in prices of the commodities and the reduction of volume
of
ethanol sold.
|
|
1Q'07
|
1Q'08
|
Sales
Composition (R$MM)
|
YTD'07
|
YTD'08
|
|
|
944.1
|
591.7
|
Net
Operating Revenue
|
944.1
|
591.7
|
|
|
610.6
|
371.8
|
Sugar
Revenue
|
610.6
|
371.8
|
|
|
94.6
|
57.3
|
Local
|
94.6
|
57.3
|
|
|
516.0
|
314.5
|
Export
|
516.0
|
314.5
|
|
|
281.8
|
168.9
|
Ethanol
Revenue
|
281.8
|
168.9
|
|
|
191.5
|
120.1
|
Local
|
191.5
|
120.1
|
|
|
90.2
|
48.8
|
Export
|
90.2
|
48.8
|
|
|
51.8
|
51.0
|
Other
Revenue
|
51.8
|
51.0
|
|
|
49.3
|
46.6
|
Local
|
49.3
|
46.6
|
|
|
2.4
|
4.3
|
Export
|
2.4
|
4.3
|
|
§
|
The
strong
drop in sugar prices did not inhibit trading, mainly on account
of the
good position of price fixation in derivative markets that Cosan
captured
throughout the quarter. Thus the volume of sugar sales ended up
growing
12.4% in comparison with 1Q’07, significantly propelled by exports,
particularly refined sugar. The total volume sold of 842.1 thousand
tons
coupled with production significantly less than those for 1Q’07, on
account of the rainfall that hindered crushing during a good part
of July,
on the other hand determined a level of sugar inventories of 306.7
thousand tons at the end of 1Q’08, 59.6% lower than the 758.3 thousand
tons held in stock on July 31, 2006.
|
|
|
§
|
Reflecting
the
deteriorated market conditions, the average prices practiced fell
by 45.8%
from 1Q’07 to this 1Q’08, with a more significant drop (46.6%) in export
prices than in domestic prices, likewise considerably depressed
(40.6%).
However, as emphasized, these average prices practiced do not reflect
Cosan’s hedging policy. If we were to adjust the average prices by the
hedging results obtained in the periods, the average price of R$426
per
ton of sugar exported in 1Q’07 would be restated to R$541 per ton.
Likewise, the average price of exported sugar in 1Q’06, R$798 per ton,
would be restated to R$603 per ton. Thus, the drop in prices would
be of
only 10.2%, compared to the 46.6% of apparent
reduction.
|
|
1Q'07
|
1Q'08
|
Sugar
Business
|
YTD'07
|
YTD'08
|
|
|
Volume
Sold (thousand tons)
|
|||||
|
749.3
|
842.1
|
Total
Local
& Export
|
749.3
|
842.1
|
|
|
102.3
|
104.3
|
Local
|
102.3
|
104.3
|
|
|
647.0
|
737.8
|
Export
|
647.0
|
737.8
|
|
|
Average
Unit Price (R$/ton)
|
|||||
|
815
|
442
|
Total
Local
& Export
|
815
|
442
|
|
|
925
|
550
|
Local
|
925
|
550
|
|
|
798
|
426
|
Export
|
798
|
426
|
|
§
|
As
for ethanol
business, Cosan considered as excessive the price response to the
decrease
in international sugar quote and, therefore, decided to reduce
the sales
volume and build-up inventories, which ultimately determined a
reduction
of 16% of the volume sold of 245.0 million liters in comparison
with
1Q’07, when 291.6 million liters were sold. Thus, even with restriction
of
production of ethanol due to rainfall, such as with production
of sugar,
the
|
8
|
ending
ethanol
inventories, of 325.5 million liters, were 0.8% above the 322.9
million
liters held in stock on July 31, 2006.
|
||
|
§
|
Similarly
to
what occurred with the average unit price for sugar, the average
unit
price for ethanol also showed a significant drop of 28.6% in the
domestic
and foreign markets, going from R$966/thousand liters in 1Q’07 to
R$690/thousand liters in 1Q’08. When looking at the average unit price in
the domestic market, the reduction was of 23.6%, less extreme than
the
39.4% reduction in the average unit price for
exports.
|
|
1Q'07
|
1Q'08
|
Ethanol
Business
|
YTD'07
|
YTD'08
|
|
|
Volume
Sold (million liters)
|
|||||
|
291.6
|
245.0
|
Total
Local
& Export
|
291.6
|
245.0
|
|
|
212.5
|
174.5
|
Local
|
212.5
|
174.5
|
|
|
79.1
|
70.5
|
Export
|
79.1
|
70.5
|
|
|
Average
Unit Price (R$/thousand liters)
|
|||||
|
966
|
690
|
Total
Local
& Export
|
966
|
690
|
|
|
901
|
689
|
Local
|
901
|
689
|
|
|
1,141
|
692
|
Export
|
1,141
|
692
|
|
Unit
costs grow principally on account of a lower crushing rate due
to heavy
rainfall
|
§
|
Cost
of goods
sold and of services rendered showed a reduction of 4.9%, from
R$576.0
million in 1Q’07 to R$548.0 million in 1Q’08. Four main factors had
decisive impacts on the cost of good sold in 1Q’08: i) increase of 12.4%
of the volume of sugar traded; ii) reduction of 16% of the volume
of
ethanol sold; iii) a significant drop in the value of ATR, following
the
trend of sugar and ethanol prices; and; iv) increase of the unit
cost of
our own sugarcane and of the cost of industrial processing of sugar
and
ethanol, as a result of non-dilution of overheads, on account of
reduction
of the crushing rate due to unexpected rains in the month of July
2007
|
|
§
|
Rainfalls,
particularly in the month of July, caused the crushing for 1Q’08 of 15.1
million tons of sugarcane to be 10% below the volume of cane processed
in
1Q’07, which was 16.8 million tons, and thus below the planned volume
of
17.3 millions tons for the quarter. With a production mix oriented
to
ethanol, 1Q’08 sugar production remained 20.4% lower 1Q’07 production,
while ethanol production remained generally aligned. Considering
that a
major portion of the costs of our own sugarcane production and
of
industrial processing are based on labor, Cosan ended up showing
considerable idleness resulting in an increase in the unit costs
for
production of sugar and ethanol.
|
|
|
§
|
With
respect
to the cost of sugarcane acquired from third parties and leasing
of land,
costs decreased since the price of ATR, provided by CONSECANA method
(see
section Did You Know?) resulted in an expressive reduction of 33.8%,
closing 1Q’08 at R$0.2569/kg versus R$0.3881/kg on July 31,
2006.
|
|
|
§
|
The
combined
effects of idleness of the industrial plant and in the agricultural
area,
as well as the reduction of the ATR price, led to a net reduction
of 5% of
the unit cost of sugar, which decreased from R$441 to R$419 per
ton and a
reduction of 0.3% in the unit cost of ethanol, from R$671 to R$669
per
thousand liters.
|
|
|
§
|
Cost
of other
products and services showed a strong reduction of 37.7%, from
R$49.7
million in 1Q’07 to R$31.2 million in 1Q’08. The principal item that
influenced this reduction was the reclassification of R$6.9 million
in
this 1Q’08, of the cost of rendering harbor services for shipment of
Cosan’s own sugar, which previously was classified in this line item
of
COGS, which starting this fiscal year, is shown in the consolidated
statements as selling expenses, included in the logistics expenses
for our
own VHP sugar. As a result, this
|
9
|
same
apparent of cost reduction “benefit” had a negative effect on
selling expenses for the quarter.
|
|
1Q'07
|
1Q'08
|
COGS
per Product
|
YTD'07
|
YTD'08
|
|
|
(576.0)
|
(548.0)
|
Cost
of Good Sold (R$MM)
|
(576.0)
|
(548.0)
|
|
|
(330.5)
|
(352.9)
|
Sugar
|
(330.5)
|
(352.9)
|
|
|
(195.8)
|
(164.0)
|
Ethanol
|
(195.8)
|
(164.0)
|
|
|
(49.7)
|
(31.2)
|
Other
Products/Services
|
(49.7)
|
(31.2)
|
|
|
Average
Unit Cost (R$)
|
|||||
|
441
|
419
|
Unit
COGS of
Sugar (R$/ton)
|
441
|
419
|
|
|
671
|
669
|
Unit
COGS of
Ethanol (R$/thousand liters)
|
671
|
669
|
|
|
n.a.
|
n.a.
|
Unit
COGS of
Other Produtcs/Services
|
n.a.
|
n.a.
|
|
Selling
expenses on a unit basis fell 1%
|
§
|
Selling
expenses totaled R$61.1 million in 1Q’08, 1.7% above the total of R$60.1
million recorded for 1Q’07, although now including R$6.9 million of harbor
logistics for our own sugar mentioned in the previous paragraph.
In this
way the average unit expense for trading sugar-equivalent (sugar
+ ethanol
transformed into sugar) showed a slight increase of 1.9%, from
R$48 to
R$49 per ton of sugar-equivalent. Netting selling expenses with
net
operating revenues, the unit expense for sugar was reduced by 12.1%,
while
the unit expense for ethanol rose by
15.8%.
|
|
1Q'07
|
1Q'08
|
Selling
Expenses
|
YTD'07
|
YTD'08
|
|
|
(60.1)
|
(61.1)
|
Selling
Expenses (R$MM)
|
(60.1)
|
(61.1)
|
|
|
(38.8)
|
(38.4)
|
Sugar
|
(38.8)
|
(38.4)
|
|
|
(17.9)
|
(17.4)
|
Ethanol
|
(17.9)
|
(17.4)
|
|
|
(3.3)
|
(5.3)
|
Other
Products/Services
|
(3.3)
|
(5.3)
|
|
|
Avg.
Unit Selling Cost (R$)
|
|||||
|
52
|
46
|
Unit
Sale Cost
of Sugar (R$/ton)
|
52
|
46
|
|
|
61
|
71
|
Unit
Sale Cost
of Ethanol (R$/thousand liters)
|
61
|
71
|
|
|
n.a.
|
n.a.
|
Unit
Sale Cost
of Other Products/Revenues
|
n.a.
|
n.a.
|
|
Administrative
expenses still reflect special projects
|
§
|
General
and
administrative expenses closed the first quarter of FY’08 at R$57.0
million, substantially above R$46.3 million 1Q´07 expenses. The principal
items that contributed to the increases were expenses related to
the
professional fees of auditors and consultants involved in implementing
financial statements in US GAAP, in compliance with the requirements
of
the Novo Mercado, as well as expenses related to implementation
of the Competencies Center for service and support to the SAP recently
implemented in Cosan.
|
|
§
|
Taken
in a
unitary form, and considering the reduction of volumes of ethanol
traded
and, as a consequence, of sugar-equivalent, general and administrative
expenses rose 23.3%, from R$37 to R$46 per ton of
sugar-equivalent.
|
|
1Q'07
|
1Q'08
|
General
& Administrative Expenses
|
YTD'07
|
YTD'08
|
|
|
(46.3)
|
(57.0)
|
G&A
Expenses (R$MM)
|
(46.3)
|
(57.0)
|
|
|
(29.9)
|
(35.8)
|
Sugar
|
(29.9)
|
(35.8)
|
|
|
(13.8)
|
(16.3)
|
Ethanol
|
(13.8)
|
(16.3)
|
|
|
(2.5)
|
(4.9)
|
Other
Products/Services
|
(2.5)
|
(4.9)
|
|
|
Avg.
Unit. G&A Cost (R$)
|
|||||
|
40
|
43
|
Unit
G&A
Cost of Sugar (R$/ton)
|
40
|
43
|
|
|
47
|
66
|
Unit
G&A
Cost of Ethanol (R$/thousand liters)
|
47
|
66
|
|
|
n.a.
|
n.a.
|
Unit
G&A
Cost of Other Products/Services
|
n.a.
|
n.a.
|
|
§
|
Once
again,
the net financial results showed a significant variation, impacted
by the
strong effects of foreign exchange variation and by the results
with
derivatives transactions, which inverted a position of net expense
of
R$185.7 million to a position of net revenue of R$150.8
million.
|
10
|
Pricing
Derivatives - NY11
|
||
|
Screen
|
'000
t
|
¢/lb
|
|
May'07
|
40.0
|
9.56
|
|
Jul'07
|
352.7
|
9.13
|
|
Oct'07
|
680.8
|
11.01
|
|
Mar'08
|
31.8
|
11.04
|
|
Jul'08
|
141.6
|
10.34
|
|
Oct'08
|
38.1
|
10.55
|
|
Total
|
1,284.9
|
10.36
|
|
Pricing
Derivatives - London #5
|
||
|
Screen
|
'000
t
|
US$/ton
|
|
May'07
|
2.9
|
352.20
|
|
Aug'07
|
92.0
|
326.06
|
|
Oct'07
|
54.4
|
317.63
|
|
Dec'07
|
22.5
|
305.06
|
|
Total
|
171.8
|
321.09
|
|
Pricing
Derivatives - RBOB Gasoline
|
||
|
Screen
|
'000
m³
|
US$/gal
|
|
Aug'07
|
2.5
|
2.27
|
|
Sep'07
|
2.5
|
2.07
|
|
Oct'07
|
2.5
|
2.02
|
|
Total
|
7.6
|
2.12
|
|
FX
Derivatives
|
||
|
Quarter
|
'US$MM
|
R$/US$
|
|
2Q'08
|
143.0
|
2.09
|
|
3Q'08
|
181.0
|
2.08
|
|
4Q'08
|
96.0
|
2.03
|
|
Total
|
420.0
|
2.07
|
|
1Q'07
|
1Q'08
|
Financial
Expenses, Net (R$MM)
|
YTD'07
|
YTD'08
|
|
|
(66.7)
|
(62.2)
|
Interest
on
Financial Debt
|
(66.7)
|
(62.2)
|
|
|
25.6
|
23.3
|
Financial
Investments Income
|
25.6
|
23.3
|
|
|
(41.1)
|
(39.0)
|
Sub-total:
Interest on Net Financial Debt
|
(41.1)
|
(39.0)
|
|
|
(11.5)
|
(17.0)
|
Other
interest
and monetary variation
|
(11.5)
|
(17.0)
|
|
|
(68.0)
|
128.5
|
Exchange
Variation
|
(68.0)
|
128.5
|
|
|
(125.9)
|
83.8
|
Gains
(losses)
with Derivatives
|
(125.9)
|
83.8
|
|
|
(7.5)
|
(5.5)
|
CPMF
Taxes,
Banking Fees and Other
|
(7.5)
|
(5.5)
|
|
|
25.6
|
-
|
Discounts
in
Promissory Notes
|
25.6
|
-
|
|
|
42.8
|
-
|
Recalc.
Provision Interest IAA
|
42.8
|
-
|
|
|
(185.7)
|
150.8
|
Net
Financial Expenses
|
(185.7)
|
150.8
|
|
Significant
reduction in the average cost of third party
capital
|
§
|
Concerning
financial costs associated with capital structure, i.e., of interest
on
financial indebtedness, net of earnings from short-term financial
investment, there was a reduction of 5.5%, where expenses totaled
R$39.0
million. Comparing these capital structure expenses with gross
indebtedness net of average cash and cash equivalents, short-term
financial investments and CTNs (National Treasury Certificates)
for the
quarter, the average cost of the debt fell from 11.9% p.a. in 1Q’07 to
9.1% p.a. in 1Q’08, reflecting the concentrated effort of reducing the
cost of capital.
|
|
§
|
From
the
standpoint of foreign exchange results, the contrasting tracks
of the foreign exchange rate in 1Q’07 and 1Q’08 had different results.
While in 1Q’07 the exchange rate went from R$2.0892/US$ to R$2.1762/US$,
resulting in exchange expenses of R$68.0 million on net liabilities
denominated in U.S. dollars, in 1Q’08 the exchange rate went from
R$2.0339/US$ to R$1.8776/US$, generating exchange revenues of R$128.5
million.
|
|
|
§
|
Contrasting
results were also recorded for derivatives: while in 1Q’07 raw sugar was
being sold at record prices, Cosan showed net losses from derivative
transactions of R$125.9 million, for having hedged at price levels
below
those at which the product was being traded. In contrast, in this
1Q’08,
while trading prices for sugar were below the levels for the last
24
months, Cosan recorded net gains with derivative transactions of
R$83.8
million, of which R$44.0 million for having hedged sugar at prices
that
were higher than those practiced in the market, and R$39.8 million
for
having hedged exchange rates of Reais per U.S. dollar at prices
likewise
higher than the market in the quarter. Effectively, this comparison
between quarters shows the efficiency of the hedging strategy that
Cosan
has adopted, which on the one hand limits earnings in moments of
price
explosions and on the other minimizes the restriction of margins
in
moments of decreases in commodities’ prices.
|
|
|
§
|
At
the end of
1Q’08 Cosan had 1,284.3 thousand tons of VHP sugar hedged at an average
price of US¢10.36 per lb, with an estimated negative market value of R$0.9
million. It also had 171.8 thousand tons of refined sugar hedged
at an
average price of US$321.09 per ton with an estimated market value
of R$3.8
million. Also, for the first time operating with gasoline derivatives
in
pricing its ethanol, Cosan had 7.6 million liters of gasoline hedged
at an
average price of US$2.12 per gallon, with an estimated market value
of
R$0.2 million. Lastly, Cosan presented US$420.0 million dollars
with an
exchange rate hedged at R$2.07/US$, at a market value of R$35.0
million.
|
|
|
§
|
Expenses
with
income tax and social contribution, amounting to R$9.0 million,
reflected
taxable income assessed for the quarter, adjusted by expenses that
are
non-deductible for purposes of tax calculation. In view of the
imminence
of the bottom-line for both quarters at a break-even point, i.e.,
nihil
net income, the effective income tax and social contribution rates
presented relevant
|
11
|
variances
in
relation to the legal rate of 34%, showing 41% in 1Q’08 and 61.8% in
1Q’07.
|
||
|
§
|
All
in all,
even in a quarter with depressed prices, at the end of the first
three
months of FY’08 Cosan showed net income of R$13.7 million, which
represented growth of 154.1% in relation to net income of R$5.4
million
recorded for 1T´07, a quarter in which sugar and ethanol prices were much
more favorable for producers.
|
|
|
C.
Financial Situation
|
||
|
§
|
Cosan’s
gross
indebtedness closed the first quarter of FY’08 at R$2,820.7 million, 18.4%
higher than the gross debt of R$2,381.4 million in 1Q’07, which growth is
entirely attributable to funding of US$400 million in 10-year Senior
Notes
conducted in the 3Q’07.
|
|
|
§
|
In
turn, the
net debt increased 22% in relation to 1Q’07, reaching R$1,512.8 million,
mainly on account of capital expenditure investments made in the
course of
FY’07 in this 1Q’08.
|
|
|
Debt
per Type (R$MM)
|
1Q'07
|
%
|
1Q'08
|
%
|
Var.
|
|
|
Senior
Notes
2009
|
453.4
|
19.0
|
389.9
|
13.8
|
(63.5)
|
|
|
Senior
Notes
2017
|
-
|
-
|
777.9
|
27.6
|
777.9
|
|
|
Perpetual
Notes
|
998.5
|
41.9
|
861.9
|
30.6
|
(136.6)
|
|
|
PESA
Securitization
|
488.6
|
20.5
|
509.2
|
18.1
|
20.6
|
|
|
Finame
(BNDES)
|
13.8
|
0.6
|
13.4
|
0.5
|
(0.4)
|
|
|
Working
Capital
|
35.8
|
1.5
|
36.7
|
1.3
|
0.9
|
|
|
IFC
|
145.1
|
6.1
|
118.7
|
4.2
|
(26.5)
|
|
|
Debentures
|
55.5
|
2.3
|
55.1
|
2.0
|
(0.4)
|
|
|
Advances
from
Customers
|
144.7
|
6.1
|
56.7
|
2.0
|
(88.0)
|
|
|
Promissory
Notes
|
44.6
|
1.9
|
1.3
|
0.0
|
(43.3)
|
|
|
Related
Parties
|
1.5
|
0.1
|
-
|
-
|
(1.5)
|
|
|
Gross
Debt
|
2,381.4
|
100.0
|
2,820.7
|
100.0
|
439.3
|
|
|
Cash
&
Marketable Securities
|
809.8
|
34.0
|
816.4
|
28.9
|
6.6
|
|
|
Advances
to
Suppliers
|
167.3
|
7.0
|
308.6
|
10.9
|
141.4
|
|
|
CTN's
-
Brazilian Treasury Bills
|
109.6
|
4.6
|
127.8
|
4.5
|
18.2
|
|
|
Land
related
to the Debentures
|
55.1
|
2.3
|
55.1
|
2.0
|
-
|
|
|
Net
Debt
|
1,239.7
|
52.1
|
1,512.8
|
53.6
|
273.1
|
|
|
Total
Debt
without PESA/Debentures
|
1,837.3
|
77.2
|
2,256.4
|
80.0
|
419.1
|
|
|
Net
Debt
without PESA/Debentures
|
860.3
|
36.1
|
1,131.4
|
40.1
|
271.1
|
|
§
|
With
respect
to the profile of the company’s indebtedness at the end of 1Q’08, 5.6% of
the debt was allocated to short-term, while 94.4% remained in long-term.
When comparing with the same period of last year, in 1Q’07, 7.2% of the
debt was in short-term in 92.8% in long-term. In terms of currency
it must
be pointed out that the share of debts denominated in U.S. dollars
increased from 73.5% at the end of 1Q’07 to 77.6% of the company’s gross
indebtedness, antecipating the future grow in exports of the
company.
|
|
Debt
Profile (R$MM)
|
1Q'07
|
%
|
1Q'08
|
%
|
Var.
|
|
|
Total
Debt
|
2,381.4
|
100.0
|
2,820.7
|
100.0
|
439.3
|
|
|
Short-Term
|
171.5
|
7.2
|
158.8
|
5.6
|
(12.7)
|
|
|
Long-Term
|
2,209.9
|
92.8
|
2,661.8
|
94.4
|
452.0
|
|
|
Real
-
R$
|
631.6
|
26.5
|
632.3
|
22.4
|
0.7
|
|
|
Dollar
-
US$
|
1,749.8
|
73.5
|
2,188.4
|
77.6
|
438.6
|
12
| D. Investments | ||||||
|
Growth
of operating capital expenditures follows projects for cogeneration,
information systems and modernization of our industrial
|
§
|
Operating
capital expenditures totaled R$167.0 million for the 1Q’08, 97.8% up on
the R$ 84.4 million recorded in the 1Q’07. The funds were mainly allocated
to sugarcane planting, the continuity of the expansion plans
and the
cogeneration projects based on sugarcane bagasse.
|
||||
|
1Q'07
|
1Q'08
|
Capex
(R$MM)
|
YTD'07
|
YTD'08
|
||
|
3.7
|
3.9
|
New
Investments, including Goodwill
|
3.7
|
3.9
|
||
|
0.2
|
0.7
|
Deferred
Charges & Other
|
0.2
|
0.7
|
||
|
-
|
3.3
|
Incorporated
PP&E and Land Acquisition
|
-
|
3.3
|
||
|
37.9
|
56.1
|
Sugar
Cane
Planting Costs
|
37.9
|
56.1
|
||
|
0.2
|
27.5
|
Co-generation
Projects
|
0.2
|
27.5
|
||
|
-
|
3.6
|
Inter-harvest
Maintenance Costs
|
-
|
3.6
|
||
|
46.3
|
79.8
|
Investments
in
P,P&E
|
46.3
|
79.8
|
||
|
|
88.4
|
174.9
|
Capex
|
88.4
|
174.9
|
|
|
|
84.4
|
167.0
|
Operating
Capex
|
84.4
|
167.0
|
|
|
§
|
In
1Q’08,
R$56.1 million were invested in the planting of 14.0 thousand hectares,
representing a unit figure of R$4,022/ha, 54.5% more expensive
than the
14.5 thousand hectares planted at R$2,603/ha during 1Q’07. This
significant price increase was due to the fact that a significant
portion
of the planting already carried out this year related to expansion
areas,
principally in the Gasa unit, where the task of preparing the soil,
is
particularly more expensive, since it is the first time that the
soil has
been used for sugarcane. In the expansion, approximately R$32.0
million
were invested in 1Q’08 in the industrial side alone.
|
|
|
§
|
In
1Q’08, more
than 27.5 million were invested in the cogeneration projects of
the Costa
Pinto and Rafard units. As of July 31, 2007, more than R$113.6
million
have cumulatively been invested in these two projects.
|
|
|
§
|
In
1Q’08,
R$3.7 were used for the greenfield in the State of Goiás. Of this, R$1.7
million was allocated to acquisition of land for installation of
the
industrial units.
|
|
|
§
|
Other
material
investments were: R$3.2 million for development of SAP, R$4.7 million
in a
new feed hopper at the port terminal for the expansion of raising/loading
capacity, R$5.7 million in agricultural mechanization and R$4.8
million in
the full-potential/industrial processes optimization project.
|
|
|
E.
Relevant Facts
|
||
|
§
|
On
August 16,
2007, Cosan Limited, a company headquartered in the Bermuda Islands,
controlling shareholder of Cosan S/A Indústria e Comércio, conducted its
IPO in the New York Stock Exchange (NYSE) and in the BOVESPA. The
offer,
which was entirely primary, consisted of an issuance of 111,678,000
new
class “A” shares, including 13,064,914 in the form of level III Brazilian
Deposit Receipts (BDRs), on the BOVESPA, at a price of US$10.50
per share.
In this way the total amount raised was US$1,172,619,000.00, net
of
IPO-related underwriting commissions and expenses, will be used
to finance
the Cosan Group’s growth as described in the prospectus..
|
|
|
§
|
On
August 30,
2007, an Annual Shareholders’ Meeting of Cosan S/A Indústria e Comércio
was held, in which the following matters were discussed and approved
unanimously approved: i) the financial statements for the fiscal
year
ended April 30, 2007; ii) distribution of dividends resolved by
the
Company’s Board of Directors, relative to the fiscal year ended April 30,
2007, payment for which began on August 6, 2007; iii) election
of the
members of the Fiscal
|
|
13
|
Council
and of
their relevant deputies; iv) resolution of the overall remuneration
of the
administrative officers and members of the Fiscal
Council.
|
||
|
§
|
The
Fiscal
Council is composed of: i) Mr. João Ricardo Ducati, with Mr. Henrique de
Bastos Malta acting as his deputy; ii) Mr. Luiz Recchia, with Mr.
João
Carlos Conti acting as his deputy; and iii) Mr. Ademir José Scarpin, with
Ms. Daniela Nascimento Pinelli acting as his deputy. It was resolved
that
the annual remuneration of the members of the Fiscal Council would
be
R$175,000.00 and that the total annual budget to be distributed
on account
of professional fees for the administrative officers of the Company
would
be R$6,950,000.00.
|
|
|
§
|
On
September
11, 2007 a Meeting of the Board of Directors of Cosan S/A Indústria e
Comércio, was held, in which the following topics were discussed and
approved: i) approval of the election of the statutory executive
officers
of the Company for a term of office of two (2) years, on the terms
of
Article 25 of its By-Laws; ii) allocation of the global budget
for
remuneration of the members of the Board of Directors and of the
statutory
Executive Board of the Company, approved in the Annual Shareholders’
Meeting held on August 30, 2007, on the terms of Article 15 of
the
Company’s By-Laws; iii) disclosure of the results and financial statements
of the Company for the first quarter of fiscal year 2008, ended
on July
31, 2007; iv) approval of the granting of the standard plan for
Stock
Options to the Company’s Chief Commercial Officer, on the terms resolved
by the Special Shareholders’ Meeting held on August 30, 2005.
|
|
|
§
|
The
statutory
executive officers were reelected for terms of office of 2 years.
Thus,
the Executive Board of Cosan S/A Indústria e Comércio is composed
by:
|
|
§
|
Mr.
Rubens
Ometto Silveira Mello, Chief Executive Officer;
|
||
|
§
|
Mr.
Pedro
Isamu Mizutani, Executive Vice President and Chief Operating
Officer;
|
||
|
§
|
Mr.
Paulo
Sérgio de Oliveira Diniz, Chief Financial and Investor Relations
Officer;
|
||
|
§
|
Mr.
Marcos
Marinho Lutz, Chief Commercial Officer;
|
||
|
§
|
Mr.
Armando
Vieira Viotti, Chief Manufacturing Officer;
|
||
|
§
|
Mr.
Rodolfo
Norivaldo Geraldi, Chief Agriculture Officer; and
|
||
|
§
|
Mr.
José
Vitório Tararam, Chief Administrative
Officer
|
|
F.
Did You Know? CONSECANA mechanism
|
||
|
§
|
As
regards the
costing of sugarcane acquired from sugarcane farmers, the mechanism
used
by Cosan is substantially the mechanism determined in the
Instructions Manual of the CONSECANA-SP (Council of Producers
of
Sugarcane, Sugar and Ethanol of the State of São Paulo), which is
available for the public on http://www.portalunica.com.br. Generally
speaking, what the mechanism determines is that: i) the price
paid be
based on the quantity of recoverable sugar effectively delivered
and not
on the quantity of sugar cane; ii) the price paid will reflect
the average
prices of the derivates of sugarcane traded in the State of São Paulo,
implying the sharing of market risk between mills and sugarcane
farmers;
and iii) the price paid observes a linearity of delivery of sugarcane
during the harvest, hindering the farmers from
benefiting
|
|
14
|
by
delivering at specific times during the harvest. For purposes
of the
CONSECANA system, the harvest begins on April 1 of each year
and ends on
March 31 of the following year.
|
||
|
§
|
The
ATR price
is obtained from an assessment of the average prices of the derivates
of
sugarcane practiced in the State of São Paulo, through a primary survey
developed by the CEPEA (Center for Advanced Studies on Applied
Economics)
of the ESALQ/USP (College of Agriculture “Luiz de Queiroz” of the
University of São Paulo). In this survey, the prices are assessed in the
PVU form (unit selling price, without taxes and freight) for
9 products
(1. white sugar for the domestic market (ABMI), 2. white sugar
for the
export market (ABME), 3. VHP sugar (AVHP), 4. anhydrous fuel
ethanol
(AAC), 5. hydrous fuel ethanol (AHC), 6. anhydrous industrial
ethanol
(AAI), 7. hydrous industrial ethanol (AHI), 8. anhydrous export
ethanol
(AAE), and 9. hydrous export ethanol (AHE)). For each one of
these average
prices the share factor of raw material in the composition of
the product
is applied (stipulated by the CONSECANA as being 59.5% in sugar
and 62.1%
in ethanol) and subsequently the factor for conversion of the
finished
product in the ATR (1.0495 kg of ATR for each kg of white sugar,
1.0453 kg
of ATR for each kg of VHP sugar, 1.7651 kg of ATR for each liter
of
anhydrous ethanol and 1.6913 kg of ATR for each liter of hydrous
ethanol).
After conversion of all of the prices of products into ATR prices,
a
weighted average of all of the products is calculated, according
to the
trading curve and the production mix for these products in the
last three
harvest years (at the end of each harvest, these curves are adjusted
for
the effective harvest mix) and this weighted average is the price
to be
paid for the ATR. Month by month, throughout the harvest, the
accumulated
average price is altered, and the effective price for the month
is
recalculated.
|
|
|
§
|
A
practical
construal of the CONSECANA rules is presented in the following
example: a
supplier delivers sugarcane to a mill throughout the month of
April. Upon
receiving the sugarcane, lab tests determine the quantity of
ATR (totally
recoverable sugar) contained in the sugarcane. This quantity
of ATR is the
product effectively “purchased” by the mill. As an illustration, assuming
that the supplier has delivered 1,000 tons of sugarcane with
an ATR of
140kg per ton and that, according to the CONSECANA, the price
of the ATR
is R$0.25 per kilogram, for this delivery the mill would record
a cost of
acquired sugarcane of 140kg x R$0.25/kg = R$35. The accounting
entry would
be a debit to inventory for the cost of sugarcane of R$35, and
a credit to
accounts payable to sugarcane suppliers. The mill would pay monthly
in
spot cash 80% of the amount purchased in the month, i.e., R$28
as a credit
to the cash account and would withhold the remaining 20% (R$7),
leaving
the suppliers account outstanding in this amount for settlement
at the end
of the harvest, according to the variance of the ATR price.
|
|
|
§
|
Assuming
that
in the month of May the ATR price had risen to R$0.28 per kg
and the
average accumulated price had been adjusted to R$0.27, and that
the mill
purchases another 1,000 tons of sugarcane from the same supplier
with an
ATR of 140kg, the following accounting and financial events would
occur:
i) a debit entry to inventory, cost of sugarcane, of R$39.2 (140kg
x
R$0.28/kg), with a credit to the supplier, on account of the
purchase in
May; ii) a debit of R$1.40 to inventory, cost of sugarcane, with
a credit
to suppliers, to adjust the price of all of the sugarcane purchased
to-date (280 kg x R$0.27/kg = R$75.6 – R$35 – R$39.2 = R$1.4); iii)
payment of 80% of the amount purchased in the month, of R$31.36,
with a
debit to the supplier, maintaining the remaining 20% outstanding
in
accounts payable.
|
15
|
§
|
The
same
procedure described above would be carried out month per month,
i.e., each
month paying for 80% of the sugarcane delivered in the month,
at the price
for the month, and correcting the cost of 100% of the sugarcane
delivered
to-date at the price accumulated up to the month. This procedure
continues
up to the month of October. In November, without any alteration
from the
costing standpoint, there is an alteration from the cash standpoint:
of
the entire amount withheld (20% per month), one fifth is paid
in this
month and so forth, month per month, in the same way, until final
settlement is made in the month of March after disclosure by
the CONSECANA
of the final ATR prices. In such month, according to the trend
of the
prices of sugar and of ethanol and the final curves (mix and
velocity) for
trading of the harvest, either overpayments or underpayments
to the
supplier may occur. This difference will be adjusted in the cost
for the
same fiscal year and the amount payable, if greater, will be
settled
financially, and if lower will result in an advance to the supplier,
with
adjustment of the amounts payable in the following fiscal
year.
|
|
|
§
|
In
order to
see how the pricing is conducted monthly for sugarcane acquired
in the
month, as well as the accounting adjustments in costs for the
entire
harvest, it is worth reproducing the content of CONSECANA Circular
No.
6/07, with the ATR prices for July 2007:
|
|
|
Circular
No. 6/07 – July 31, 2007
|
||
|
We
set forth
below the average price per kg of ATR for purposes of issuance
of the
Receiving Tax Bill for sugarcane delivered during the month of
July 2007.
The average price per kg of ATR for the month of JULY is R$
0.2569.
|
||
|
The
billing
price for sugar in the domestic and export markets, and the prices
of
anhydrous and hydrous ethanol shipped to the domestic and export
markets,
as assessed by the ESALQ/CEPEA, in the months from APRIL to JULY,
and JULY
to-date, are shown below.
|
|
Month
|
ABMI
|
ABME
|
AVHP
|
AAC
|
AHC
|
AAI
|
AHI
|
AAE
|
AHE
|
|
April
|
33.87
|
27.85
|
22.04
|
1,072.57
|
940.51
|
1,215.29
|
1,075.38
|
960.16
|
940.13
|
|
May
|
28.56
|
25.20
|
19.73
|
883.78
|
690.84
|
1,055.34
|
836.54
|
746.49
|
693.14
|
|
June
|
24.94
|
22.61
|
18.14
|
675.07
|
587.86
|
791.23
|
671.90
|
691.01
|
731.93
|
|
July
|
24.34
|
22.06
|
17.75
|
668.53
|
583.99
|
777.75
|
674.64
|
656.33
|
665.09
|
|
July
to-date
|
27.94
|
23.36
|
19.09
|
828.23
|
708.86
|
961.50
|
822.70
|
702.86
|
727.52
|
|
The
prices of
Domestic Market Sugar (ABMI) and of anhydrous and hydrous ethanol
intended
for industry (AAI and AHI), include taxes, while the prices for
sugar for
the export market (ABME and AVHP) and of anhydrous and hydrous
fuel
ethanol intended for the export market, are net (PVU/PVD).
|
||
|
The
average
net prices per kg of the ATR, in R$/kg, by product, obtained
for the
months from APRIL to JULY, and JULY to-date, calculated based
information
contained in Circular No. 01/07, are the
following:
|
|
Month
|
ABMI
|
ABME
|
AVHP
|
AAC
|
AHC
|
AAI
|
AHI
|
AAE
|
AHE
|
|
April
|
0.3153
|
0.3220
|
0.2558
|
0.3774
|
0.3453
|
0.3880
|
0.3617
|
0.3378
|
0.3452
|
|
May
|
0.2659
|
0.2913
|
0.2290
|
0.3109
|
0.2537
|
0.3369
|
0.2787
|
0.2626
|
0.2545
|
|
June
|
0.2322
|
0.2614
|
0.2106
|
0.2375
|
0.2158
|
0.2526
|
0.2239
|
0.2431
|
0.2687
|
|
July
|
0.2266
|
0.2550
|
0.2060
|
0.2352
|
0.2144
|
0.2483
|
0.2248
|
0.2309
|
0.2442
|
|
July
to-date
|
0.2601
|
0.2701
|
0.2215
|
0.2914
|
0.2603
|
0.3070
|
0.2741
|
0.2473
|
0.2671
|
|
Month
|
Average
Price per kg of ATR
|
|
|
Month
|
Accumulated
|
|
|
April
|
0.3217
|
0.3217
|
|
May
|
0.2632
|
0.2899
|
|
June
|
0.2299
|
0.2687
|
|
July
|
0.2243
|
0.2569
|
16
| Source: Consecana. | ||
|
§
|
Let
us take as
a base the track of VHP sugar: its average price at the mill
(without
freight) accumulated in the harvest (April to July), according
to the
survey, was R$19.09 per 50 kg bag, or, considering an average
dollar rate
in the period (average of the daily closings of the PTAX 800
quote) of
R$1.9337, of US¢8.96 per lb. Thus, by dividing the amount of R$19.09 per
50 kg bag, one arrives at R$0.3817 per kg. Multiplying by the
tax factor
of 1.01964 (Consecana Circular No. 03/06), then dividing by the
factor for
conversion of VHP sugar into ATR, of 1.0453, and multiplying
by the
percentage of share of the raw material, of 59.5%, one arrives
at the
price per kg of ATR (VHP base) of R$0.2215. Thus, if the State
of São
Paulo were to produce and trade only VHP sugar as a sugarcane
derivate,
the price of the ATR would be R$0.2215 per kg. However, following
the
estimated mix for the 2007/08 harvest (Consecana Circular No.
01/07), VHP
sugar would contribute with only 25.22% of the weight in the
calculation
of the price of the ATR, and so the ATR amount accumulated up
to July/08
is R$0.2569 per kg. This is the amount that is recognized in
the
calculation of the cost of sugarcane from suppliers acquired
in the
period, whether in the form of sugar and ethanol inventory on
July 31,
2007, or already realized in the form of cost of goods sold in
the results
for 1Q’08.
|
|
|
G.
Guidance for FY’07
|
||
|
This
section
contains guidance by variance range of certain key parameters
for the
company, containing right from not-so-relevant variances of less
than 5%
in the company’s present stage, going to average variances of up to 15%,
relevant variances up to 30% and major variances of over 30%.
In addition,
the other sections of this financial letter may also contain
projections
on the terms of Section 27A of the U.S. Securities Act of 1933
and Section
21E of the Securities Exchange Act of 1934, as amended. These
projections
and guidance are only estimates, and are no assurance of any
future
results. Investors are alerted that any projections and guidance
are
subject to a number of risks, uncertainties and market-related
factors we
well as to the operating context of Cosan and of its subsidiaries,
and
could cause material differences in the explicit or implicit
future
results for these projections. Although Cosan believes that,
based on
information presently available for its administrative officers,
the
expectations and assumptions used in the projections and guidance
below
are reasonable, Cosan cannot guarantee any future event or result.
Cosan
does not assume any obligation of updating any of the mentioned
projections.
|
||
|
Changes
|
|||||
|
from
|
|||||
|
previous
|
|||||
|
Guidance
|
2006
FY
|
2007FY
|
2008FY
|
guidance
|
|
|
FX
Rate - EoP
(R$:US$)
|
2.0892
|
2.0339
|
=
|
-
|
|
|
Crushed
Cane
Volume (thousand tons)
|
27,891
|
36,154
|
▲
|
-
|
|
|
Sugar
Volume
Sold (thousand tons)
|
2,469
|
3,241
|
=
|
-
|
|
|
Ethanol
Volume
Sold (million liters)
|
1,016
|
1,322
|
▲
|
-
|
|
|
Avg.
Sugar
Price (R$/ton)
|
603
|
683
|
▼▼
|
-
|
|
|
Avg
Ethanol
Price (R$/thousand liter)
|
844
|
897
|
▼▼
|
-
|
|
|
Revenues
(R$MM)
|
2,478
|
3,605
|
▼▼
|
-
|
|
|
COGS
(R$MM)
|
1,721
|
2,481
|
▼
|
-
|
|
|
EBITDA
(R$MM)
|
518
|
928
|
▼▼▼
|
-
|
|
|
Net
Profit/Loss (R$MM)
|
(65)
|
357
|
▼▼▼
|
-
|
|
|
Operating
Capex (R$MM)
|
209
|
167
|
▲▲▲
|
-
|
17
|
Consolidated
Companies
|
|
|
Cosan
Operadora Portuária S.A.
|
90.0%
|
|
Administ.
de
Participações Aguassanta Ltda.
|
91.5%
|
|
Usina
da Barra
S.A. Açúcar e Álcool
|
98.4%
|
|
Agrícola
Ponte
Alta S.A.
|
98.4%
|
|
Cosan
International Universal Corporation
|
100.0%
|
|
Cosan
Finance
Limited
|
100.0%
|
|
Cosan
Distribuidora de Combustíveis Ltda.
|
99.9%
|
|
Cosan
S.A.
Bioenergia
|
100.0%
|
|
Corona
Bioenergia S.A.
|
98.4%
|
|
Barra
Bioenergia S.A.
|
98.4%
|
|
FBA
Bioenergia
S.A.
|
98.4%
|
|
DaBarra
Alimentos Ltda.
|
98.4%
|
|
Bomfim
Nova
Tamoio - BNT Agrícola Ltda.
|
98.4%
|
|
Grançucar
S.A.
Refinadora de Açúcar
|
100.0%
|
|
Etanol
Participações S.A.
|
33.3%
|
|
Cosan
Centroeste S.A. Açúcar e Álcool
|
100.0%
|
|
H.
Financial Statements
|
||
|
§
|
The
consolidated financial statements have been prepared based on
basic
principles of consolidation, observing the provisions contained
in the
Brazil Corporations Law and in accordance with CVM Instruction
No.
247/96.
|
|
|
§
|
The
consolidation process includes the following principal procedures:
i)
elimination of the asset and liability accounts maintained between
the
consolidated companies, ii) elimination of the investments in
proportion
to the controlling company’s participation in the net equities of the
controlled subsidiaries, iii) elimination of the balances of
revenues and
expenses deriving from transactions between the consolidated
companies,
and iv) elimination of unrealized profits deriving from transactions
between the consolidated companies. The companies that constitute
the
Cosan group and that had their financial statements consolidated
are show
in the table to the left.
|
|
18
|
Income
Statement
|
Apr'05
|
Apr'06
|
Apr'07
|
Oct'05
|
Jan'06
|
Apr'06
|
Jul'06
|
Oct'06
|
Jan'07
|
Apr'07
|
Jul'07
|
|
(In
million of reais)
|
FY'05
|
FY'06
|
FY'07
|
2Q'06
|
3Q'06
|
4Q'06
|
1Q'07
|
2Q'07
|
3Q'07
|
4Q'07
|
1Q'08
|
|
Gross
Operating Revenue
|
2,048.3
|
2,702.4
|
3,902.9
|
549.4
|
721.7
|
818.0
|
1,014.7
|
1,084.3
|
1,048.5
|
755.4
|
636.4
|
|
(-)
Sales
Taxes and Deductions
|
(147.9)
|
(224.5)
|
(297.8)
|
(46.5)
|
(65.2)
|
(70.6)
|
(70.6)
|
(76.2)
|
(77.7)
|
(73.3)
|
(44.7)
|
|
(=)
Net Operating Revenue
|
1,900.4
|
2,477.9
|
3,605.1
|
502.9
|
656.5
|
747.5
|
944.1
|
1,008.1
|
970.8
|
682.1
|
591.7
|
|
(-)
Cost of
Goods Sold and Services Rendered
|
(1,338.5)
|
(1,721.3)
|
(2,481.1)
|
(347.2)
|
(447.7)
|
(507.3)
|
(576.0)
|
(713.1)
|
(680.2)
|
(511.8)
|
(548.0)
|
|
(=)
Gross Profit
|
561.8
|
756.6
|
1,123.9
|
155.7
|
208.8
|
240.2
|
368.2
|
294.9
|
290.6
|
170.3
|
43.7
|
|
Margin
|
29.6%
|
30.5%
|
31.2%
|
31.0%
|
31.8%
|
32.1%
|
39.0%
|
29.3%
|
29.9%
|
25.0%
|
7.4%
|
|
(-)
Operating Income (Expenses):
|
(528.5)
|
(819.1)
|
(558.6)
|
(167.4)
|
(265.0)
|
(234.7)
|
(351.2)
|
(109.7)
|
(196.7)
|
98.9
|
(24.6)
|
|
(-)
Selling
|
(171.7)
|
(217.1)
|
(282.0)
|
(53.2)
|
(53.7)
|
(46.4)
|
(60.1)
|
(75.6)
|
(71.2)
|
(75.2)
|
(61.1)
|
|
(-)
General
and Administrative
|
(121.9)
|
(150.0)
|
(246.2)
|
(35.0)
|
(35.4)
|
(44.9)
|
(46.3)
|
(49.4)
|
(52.8)
|
(97.7)
|
(57.0)
|
|
(-)
Financial
Income (Expenses), Net
|
(102.0)
|
(245.2)
|
158.0
|
(49.1)
|
(87.6)
|
(85.4)
|
(185.7)
|
27.7
|
(17.6)
|
333.6
|
150.8
|
|
(±)
Earnings
(Losses) on Equity Investments
|
-
|
0.6
|
(0.1)
|
0.3
|
0.2
|
0.1
|
0.3
|
0.1
|
0.1
|
(0.5)
|
0.1
|
|
(-)
Goodwill
Amortization
|
(93.2)
|
(142.8)
|
(223.7)
|
(29.2)
|
(29.3)
|
(50.0)
|
(56.4)
|
(55.6)
|
(55.9)
|
(55.9)
|
(56.0)
|
|
(±)
Other
Operating Income (Expenses), Net
|
(39.7)
|
(11.8)
|
35.3
|
(1.3)
|
(9.0)
|
(5.5)
|
(3.0)
|
43.1
|
0.7
|
(5.4)
|
(1.5)
|
|
(-)
Expenses
with Placement of Shares
|
-
|
(52.8)
|
-
|
-
|
(50.2)
|
(2.6)
|
-
|
-
|
-
|
-
|
-
|
|
(=)
Operating Income (Loss)
|
33.3
|
(62.5)
|
565.3
|
(11.7)
|
(56.1)
|
5.5
|
17.0
|
185.3
|
93.9
|
269.1
|
19.1
|
|
Margin
|
1.8%
|
-2.5%
|
15.7%
|
-2.3%
|
-8.6%
|
0.7%
|
1.8%
|
18.4%
|
9.7%
|
39.5%
|
3.2%
|
|
(±)
Non-operating Result, Net
|
2.7
|
(1.0)
|
2.0
|
0.4
|
(0.9)
|
2.1
|
1.2
|
0.3
|
0.1
|
0.4
|
3.0
|
|
(=)
Income (Loss) before Taxes
|
36.0
|
(63.5)
|
567.3
|
(11.3)
|
(57.0)
|
7.6
|
18.2
|
185.6
|
94.0
|
269.5
|
22.1
|
|
(±)
Income and
Social Contribution Taxes
|
(22.2)
|
5.8
|
(203.9)
|
(4.8)
|
16.3
|
(2.6)
|
(11.2)
|
(60.1)
|
(30.0)
|
(102.5)
|
(9.0)
|
|
(±)
Minority
Interest
|
3.3
|
(6.9)
|
(6.2)
|
(0.2)
|
(0.5)
|
(5.8)
|
(1.6)
|
(1.8)
|
(0.6)
|
(2.3)
|
0.6
|
|
(=)
Net Income (Loss) for the Year
|
17.1
|
(64.6)
|
357.3
|
(16.3)
|
(41.2)
|
(0.9)
|
5.4
|
123.8
|
63.4
|
164.7
|
13.7
|
|
Margin
|
0.9%
|
-2.6%
|
9.9%
|
-3.3%
|
-6.3%
|
-0.1%
|
0.6%
|
12.3%
|
6.5%
|
24.2%
|
2.3%
|
|
●
EBITDA
|
340.9
|
517.7
|
928.0
|
107.1
|
132.8
|
168.5
|
329.1
|
272.6
|
197.9
|
128.4
|
49.5
|
|
Margin
|
17.9%
|
20.9%
|
25.7%
|
21.3%
|
20.2%
|
22.5%
|
34.9%
|
27.0%
|
20.4%
|
18.8%
|
8.4%
|
|
●
EBITDAH (Ebitda adjusted by Hedge)
|
275.6
|
308.6
|
853.7
|
75.7
|
88.1
|
56.4
|
203.2
|
280.9
|
233.2
|
136.4
|
133.3
|
|
Margin
|
15.0%
|
13.6%
|
24.2%
|
16.0%
|
14.4%
|
8.9%
|
24.8%
|
27.6%
|
23.2%
|
19.8%
|
19.7%
|
|
●
EBIT
|
228.6
|
377.8
|
631.1
|
66.3
|
110.8
|
143.5
|
258.8
|
213.1
|
167.3
|
(8.1)
|
(75.9)
|
|
Margin
|
12.0%
|
15.2%
|
17.5%
|
13.2%
|
16.9%
|
19.2%
|
27.4%
|
21.1%
|
17.2%
|
-1.2%
|
-12.8%
|
|
●Depreciation
& Amortization
|
112.3
|
139.9
|
297.0
|
40.9
|
22.1
|
25.0
|
70.3
|
59.5
|
30.6
|
136.5
|
125.4
|
|
Balance
Sheet
|
Apr'05
|
Apr'06
|
Apr'07
|
Oct'05
|
Jan'06
|
Apr'06
|
Jul'06
|
Oct'06
|
Jan'07
|
Apr'07
|
Jul'07
|
|
(In
million of reais)
|
FY'05
|
FY'06
|
FY'07
|
2Q'06
|
3Q'06
|
4Q'06
|
1Q'07
|
2Q'07
|
3Q'07
|
4Q'07
|
1Q'08
|
|
Cash
and Cash
Equivalents
|
35.2
|
61.0
|
643.8
|
82.0
|
62.2
|
61.0
|
176.2
|
56.7
|
976.8
|
643.8
|
579.0
|
|
Marketable
Securities
|
3.9
|
770.5
|
573.3
|
3.5
|
420.4
|
770.5
|
633.6
|
345.7
|
303.7
|
573.3
|
237.4
|
|
Trade
Accounts
Receivable
|
119.1
|
212.6
|
112.3
|
124.4
|
156.1
|
212.6
|
232.2
|
277.4
|
212.1
|
112.3
|
140.4
|
|
Derivative
Financial Instruments
|
0.9
|
288.6
|
37.6
|
29.3
|
-
|
288.6
|
72.8
|
15.2
|
8.5
|
37.6
|
94.0
|
|
Inventories
|
339.8
|
390.8
|
503.4
|
806.1
|
587.3
|
390.8
|
876.2
|
1,221.2
|
857.9
|
503.4
|
790.2
|
|
Advances
to
Suppliers
|
94.6
|
132.7
|
211.4
|
95.5
|
102.6
|
132.7
|
167.3
|
174.2
|
184.0
|
211.4
|
308.6
|
|
Related
Parties
|
44.8
|
0.0
|
-
|
-
|
-
|
0.0
|
0.1
|
-
|
0.1
|
-
|
-
|
|
Deferred
Income and Social Contribution Taxes
|
14.2
|
41.4
|
38.1
|
16.7
|
14.1
|
41.4
|
58.3
|
56.9
|
144.9
|
38.1
|
26.9
|
|
Other
Assets
|
61.4
|
115.7
|
104.9
|
92.0
|
72.1
|
115.7
|
133.3
|
124.7
|
121.7
|
104.9
|
94.2
|
|
Current
Assets
|
713.9
|
2,013.4
|
2,224.7
|
1,249.6
|
1,414.8
|
2,013.4
|
2,350.1
|
2,272.0
|
2,809.6
|
2,224.7
|
2,270.8
|
|
Accounts
Receivable from Federal Government
|
-
|
-
|
318.4
|
-
|
-
|
-
|
-
|
-
|
-
|
318.4
|
318.4
|
|
Marketable
Securities
|
1.2
|
0.1
|
-
|
1.1
|
1.2
|
0.1
|
-
|
-
|
-
|
-
|
-
|
|
Related
Parties
|
0.6
|
-
|
0.0
|
-
|
-
|
-
|
-
|
0.0
|
0.1
|
0.0
|
0.0
|
|
CTN's-Restricted
Brazilian Treasury Bills
|
47.0
|
104.9
|
123.3
|
52.7
|
56.8
|
104.9
|
109.6
|
114.0
|
119.2
|
123.3
|
127.8
|
|
Deferred
Income and Social Contribution Taxes
|
51.5
|
361.8
|
242.5
|
56.8
|
87.9
|
361.8
|
342.9
|
299.3
|
214.0
|
242.5
|
261.6
|
|
Other
Assets
|
15.8
|
99.4
|
112.3
|
16.5
|
14.0
|
99.4
|
96.5
|
93.7
|
112.9
|
112.3
|
108.1
|
|
Investments
|
13.1
|
13.4
|
93.2
|
13.4
|
13.5
|
13.4
|
13.6
|
13.6
|
13.7
|
93.2
|
13.8
|
|
Property,
Plant and Equipment
|
1,481.6
|
1,656.4
|
2,013.1
|
1,193.7
|
1,256.0
|
1,656.4
|
1,603.7
|
1,600.3
|
1,732.1
|
2,013.1
|
2,076.7
|
|
Goodwill
|
357.6
|
1,353.0
|
1,133.2
|
352.8
|
467.3
|
1,353.0
|
1,300.5
|
1,245.0
|
1,189.1
|
1,133.2
|
-
|
|
Deferred
Charges
|
2.4
|
2.3
|
2.6
|
2.4
|
2.3
|
2.3
|
2.4
|
2.3
|
2.2
|
2.6
|
1,149.8
|
|
Noncurrent
Assets
|
1,970.9
|
3,591.3
|
4,038.6
|
1,689.3
|
1,899.1
|
3,591.3
|
3,469.1
|
3,368.2
|
3,383.2
|
4,038.6
|
4,056.2
|
|
(=)
Total Assets
|
2,684.8
|
5,604.8
|
6,263.4
|
2,938.9
|
3,313.9
|
5,604.8
|
5,819.2
|
5,640.2
|
6,192.8
|
6,263.4
|
6,327.0
|
|
Loans
and
Financings
|
38.1
|
68.8
|
89.0
|
441.0
|
54.9
|
68.8
|
75.0
|
73.4
|
75.9
|
89.0
|
116.5
|
|
Derivatives
Financial Instruments
|
3.2
|
65.4
|
35.5
|
-
|
-
|
65.4
|
32.5
|
20.5
|
2.5
|
35.5
|
48.0
|
|
Trade
Accounts
Payable
|
94.9
|
201.7
|
113.8
|
218.2
|
146.7
|
201.7
|
379.6
|
348.0
|
197.2
|
113.8
|
315.2
|
|
Salaries
Payable
|
30.1
|
49.7
|
63.3
|
52.8
|
22.7
|
49.7
|
77.2
|
92.0
|
37.5
|
63.3
|
91.7
|
|
Taxes
and
Social Contributions Payable
|
88.1
|
111.1
|
126.2
|
72.8
|
129.0
|
111.1
|
134.8
|
107.3
|
114.8
|
126.2
|
131.5
|
|
Advances
from
Customers
|
188.1
|
79.2
|
49.4
|
51.7
|
49.7
|
79.2
|
55.1
|
98.4
|
83.2
|
49.4
|
41.0
|
|
Promissory
Notes
|
14.6
|
55.8
|
1.3
|
39.7
|
43.8
|
55.8
|
41.0
|
37.8
|
3.7
|
1.3
|
1.3
|
|
Related
Parties
|
1.4
|
0.1
|
0.7
|
0.0
|
0.0
|
0.1
|
0.1
|
0.7
|
-
|
0.7
|
-
|
|
Deferred
Income and Social Contribution Taxes
|
4.9
|
5.5
|
5.5
|
5.5
|
5.5
|
5.5
|
5.5
|
5.5
|
5.5
|
5.5
|
5.5
|
|
Dividends
Proposed
|
-
|
-
|
75.8
|
-
|
-
|
-
|
-
|
-
|
-
|
75.8
|
75.8
|
|
Other
Liabilities
|
30.8
|
32.8
|
31.4
|
58.2
|
21.7
|
32.8
|
64.7
|
64.9
|
27.2
|
31.4
|
11.5
|
|
Current
Liabilities
|
494.1
|
670.0
|
591.7
|
939.9
|
473.9
|
670.0
|
865.3
|
848.4
|
547.5
|
591.7
|
838.1
|
|
Loans
and
Financing
|
798.4
|
2,002.7
|
2,770.4
|
792.5
|
787.5
|
2,002.7
|
2,060.2
|
2,040.6
|
2,868.7
|
2,770.4
|
2,591.1
|
|
Taxes
and
Social Contributions Payable
|
217.4
|
446.9
|
338.5
|
223.6
|
216.5
|
446.9
|
435.2
|
355.8
|
346.2
|
338.5
|
336.5
|
|
Related
Parties
|
0.6
|
1.4
|
-
|
1.3
|
1.2
|
1.4
|
1.4
|
1.7
|
-
|
-
|
-
|
|
Promissory
Notes
|
48.1
|
12.7
|
-
|
38.3
|
12.4
|
12.7
|
3.6
|
-
|
-
|
-
|
-
|
|
Provision
for
Contingencies
|
245.9
|
907.4
|
728.0
|
325.9
|
372.3
|
907.4
|
886.5
|
705.4
|
717.4
|
728.0
|
741.0
|
|
Advances
from
Customers
|
80.8
|
86.9
|
49.5
|
72.1
|
61.7
|
86.9
|
89.6
|
87.1
|
42.5
|
49.5
|
15.6
|
|
Deferred
Taxes
on Revaluation Reserves
|
25.2
|
40.8
|
33.4
|
25.2
|
24.0
|
40.8
|
39.0
|
37.2
|
35.4
|
33.4
|
30.9
|
|
Other
Liabilities
|
7.8
|
66.5
|
100.6
|
4.4
|
3.5
|
66.5
|
62.0
|
62.0
|
62.4
|
100.6
|
109.6
|
|
Noncurrent
Liabilities
|
1,424.3
|
3,565.4
|
4,020.4
|
1,483.4
|
1,479.3
|
3,565.4
|
3,577.6
|
3,289.9
|
4,072.5
|
4,020.4
|
3,824.7
|
|
Minority
Shareholders' Interest
|
3.5
|
14.0
|
20.2
|
3.9
|
4.4
|
14.0
|
15.6
|
17.4
|
17.9
|
20.2
|
19.6
|
|
Capital
|
301.0
|
1,185.8
|
1,192.7
|
300.0
|
1,185.8
|
1,185.8
|
1,185.8
|
1,185.8
|
1,192.7
|
1,192.7
|
1,192.7
|
|
Revaluation
Reserves
|
326.6
|
195.9
|
195.0
|
196.6
|
196.2
|
195.9
|
195.6
|
195.4
|
195.2
|
195.0
|
194.7
|
|
Legal
Reserve
|
7.1
|
-
|
16.0
|
4.7
|
4.7
|
-
|
-
|
-
|
-
|
16.0
|
16.0
|
|
Reserve
for
New Investments and Upgrading
|
-
|
-
|
227.3
|
-
|
-
|
-
|
-
|
-
|
-
|
227.3
|
227.3
|
|
Accumulated
losses
|
128.2
|
(26.2)
|
-
|
10.5
|
(30.3)
|
(26.2)
|
(20.6)
|
103.4
|
167.0
|
-
|
13.9
|
|
Shareholders'
Equity
|
762.9
|
1,355.4
|
1,631.0
|
511.7
|
1,356.3
|
1,355.4
|
1,360.8
|
1,484.6
|
1,554.9
|
1,631.0
|
1,644.7
|
|
(=)
Total Liabilities & Shareholders' Equity
|
2,684.8
|
5,604.8
|
6,263.4
|
2,938.9
|
3,313.9
|
5,604.8
|
5,819.2
|
5,640.2
|
6,192.8
|
6,263.4
|
6,327.0
|
*The
inter-harvest
maintenance costs has been reclassified from inventory to PP&E in agreement
with the Technical Instruction n. 01/2006 from IBRACON.
**
The judicial deposits balance has been reclassified as deduction to provision
for contingencies, inaccordance with Deliberation n. 488/05 from
CVM.
19
|
Cash
Flow Statement
|
Apr'05
|
Apr'06
|
Apr'07
|
Oct'05
|
Jan'06
|
Apr'06
|
Jul'06
|
Oct'06
|
Jan'07
|
Apr'07
|
Jul'07
|
|
|
(In
millions of reais)
|
FY'05
|
FY'06
|
FY'07
|
2Q'06
|
3Q'06
|
4Q'06
|
1Q'07
|
2Q'07
|
3Q'07
|
4Q'07
|
1Q'08
|
|
|
Net
Income (Loss) for the Year
|
17,1
|
(64,6)
|
357,3
|
(16,3)
|
(41,2)
|
(0,9)
|
5,4
|
123,8
|
63,4
|
164,7
|
13,7
|
|
|
Non-cash
Adjustments:
|
||||||||||||
|
Depreciation
& Amortization
|
112,3
|
139,9
|
297,0
|
40,9
|
22,1
|
25,0
|
70,3
|
59,5
|
30,6
|
136,5
|
125,4
|
|
|
Goodwill
Amortization
|
93,2
|
142,8
|
223,7
|
29,2
|
29,3
|
50,0
|
56,4
|
55,6
|
55,9
|
55,9
|
56,0
|
|
|
Accrued
Financial Expenses
|
22,3
|
48,7
|
(190,6)
|
21,3
|
44,0
|
(14,2)
|
91,2
|
(1,8)
|
65,0
|
(344,9)
|
(103,0)
|
|
|
Other
Non-cash
Items
|
17,0
|
(19,5)
|
128,2
|
0,6
|
(18,6)
|
(6,3)
|
8,7
|
4,6
|
(6,5)
|
121,4
|
(7,4)
|
|
|
(=)
Adjusted Net Profit (Loss)
|
262,0
|
247,4
|
815,5
|
75,6
|
35,6
|
53,6
|
231,9
|
241,7
|
208,4
|
133,5
|
84,5
|
|
|
(±)
Decrease
(Increase) in Assets
|
(88,8)
|
(366,5)
|
165,0
|
(263,9)
|
202,9
|
(177,0)
|
(269,9)
|
(263,8)
|
356,6
|
342,1
|
(441,8)
|
|
|
(±)
Increase
(Decrease) in Liabilities
|
15,1
|
51,7
|
(237,2)
|
43,8
|
(142,7)
|
73,8
|
204,6
|
(232,7)
|
(264,3)
|
55,3
|
217,1
|
|
|
(=)
Cash Flow from Operating Activities
|
188,3
|
(67,4)
|
743,3
|
(144,5)
|
95,8
|
(49,6)
|
166,6
|
(254,8)
|
300,7
|
530,8
|
(140,2)
|
|
|
Marketable
Securities
|
40,8
|
(766,6)
|
197,2
|
1,5
|
(417,0)
|
(350,1)
|
136,9
|
287,9
|
42,0
|
(269,6)
|
338,7
|
|
|
Goodwill
Paid
in Equity Investment Acquisitions
|
(101,2)
|
(536,1)
|
(3,7)
|
-
|
-
|
(536,1)
|
(3,7)
|
-
|
-
|
-
|
(1,8)
|
|
|
Acquisition
of
Investments
|
(8,3)
|
-
|
(80,0)
|
(0,0)
|
(61,0)
|
61,0
|
-
|
-
|
(0,0)
|
(80,0)
|
(2,1)
|
|
|
Acquisition
of
Property, Plant and Equipment
|
(200,2)
|
(208,9)
|
(683,5)
|
(23,4)
|
(26,6)
|
(109,0)
|
(84,4)
|
(122,7)
|
(111,2)
|
(365,1)
|
(170,3)
|
|
|
Additions
to
Deferred Charges and Others
|
-
|
0,2
|
(0,6)
|
-
|
(0,1)
|
(0,1)
|
(0,2)
|
(0,0)
|
(0,0)
|
(0,4)
|
(0,1)
|
|
|
(=)
Cash Flow from Investment Activities
|
(268,8)
|
(1.511,4)
|
(570,7)
|
(21,9)
|
(504,6)
|
(934,3)
|
48,5
|
165,2
|
(69,3)
|
(715,1)
|
164,3
|
|
|
Gross
Indebtedness
|
1.304,3
|
1.878,8
|
854,7
|
371,7
|
85,9
|
1.162,7
|
3,2
|
46,3
|
852,1
|
(47,0)
|
6,3
|
|
|
Payments
of
Principal and Interest on Debt
|
(1.319,4)
|
(1.159,9)
|
(375,6)
|
(193,5)
|
(582,7)
|
(180,0)
|
(103,2)
|
(76,2)
|
(170,3)
|
(25,9)
|
(95,2)
|
|
|
Capital
Increase
|
64,4
|
885,8
|
6,9
|
-
|
885,8
|
-
|
-
|
-
|
6,9
|
-
|
-
|
|
|
Proposed
Dividends
|
(1,6)
|
-
|
(75,8)
|
-
|
-
|
-
|
-
|
-
|
-
|
(75,8)
|
-
|
|
|
(=)
Cash Flows from Financing Activities
|
47,7
|
1.604,6
|
410,2
|
178,2
|
389,0
|
982,8
|
(100,0)
|
(29,9)
|
688,7
|
(148,7)
|
(88,9)
|
|
|
(=)
Total Cash Flow
|
(32,8)
|
25,8
|
582,8
|
11,9
|
(19,8)
|
(1,2)
|
115,2
|
(119,5)
|
920,1
|
(333,0)
|
(64,8)
|
|
|
(+)
Cash &
Equivalents, Beginning
|
68,0
|
35,2
|
61,0
|
70,2
|
82,0
|
62,2
|
61,0
|
176,2
|
56,7
|
976,8
|
643,8
|
|
|
(=)
Cash & Equivalents, Closing
|
35,2
|
61,0
|
643,8
|
82,0
|
62,2
|
61,0
|
176,2
|
56,7
|
976,8
|
643,8
|
579,0
|
|
|
Credit
Statistics (LTM)
|
Apr'05
|
Apr'06
|
Apr'07
|
Oct'05
|
Jan'06
|
Apr'06
|
Jul'06
|
Oct'06
|
Jan'07
|
Apr'07
|
Jul'07
|
|
|
(In
million of reais)
|
FY'05
|
FY'06
|
FY'07
|
2Q'06
|
3Q'06
|
4Q'06
|
1Q'07
|
2Q'07
|
3Q'07
|
4Q'07
|
1Q'08
|
|
|
Net
Operating Revenues
|
1.900,4
|
2.477,9
|
3.605,1
|
1.925,8
|
2.193,7
|
2.477,9
|
2.851,0
|
3.356,2
|
3.670,4
|
3.605,1
|
3.252,7
|
|
|
●
|
Gross
Profit
|
561,8
|
756,6
|
1.123,9
|
565,9
|
671,9
|
756,6
|
972,9
|
1.112,1
|
1.193,9
|
1.123,9
|
799,5
|
|
●
|
EBITDA
|
340,9
|
517,7
|
928,0
|
357,0
|
424,1
|
517,7
|
737,5
|
903,0
|
968,1
|
928,0
|
648,5
|
|
●
|
EBIT
|
228,6
|
377,8
|
631,1
|
222,8
|
290,1
|
377,8
|
579,3
|
726,0
|
782,6
|
631,1
|
296,4
|
|
●
|
Net
Financial
Expenses
|
102,0
|
245,2
|
(158,0)
|
66,9
|
187,5
|
245,2
|
407,8
|
331,0
|
261,0
|
(158,0)
|
(494,5)
|
|
●
|
Net
Profit
|
17,1
|
(64,6)
|
357,3
|
2,3
|
(62,4)
|
(64,6)
|
(53,0)
|
87,1
|
191,7
|
357,3
|
365,6
|
|
Liquid
Funds
|
180,7
|
1.124,2
|
1.607,0
|
233,7
|
642,1
|
1.124,2
|
1.141,7
|
745,7
|
1.638,7
|
1.607,0
|
1.307,9
|
|
|
●
|
Cash
&
Marketable Securities
|
39,1
|
831,5
|
1.217,1
|
85,5
|
482,6
|
831,5
|
809,8
|
402,4
|
1.280,5
|
1.217,1
|
816,4
|
|
●
|
Advances
to
Suppliers
|
94,6
|
132,7
|
211,4
|
95,5
|
102,6
|
132,7
|
167,3
|
174,2
|
184,0
|
211,4
|
308,6
|
|
●
|
CTN's-Brazilian
Treasury Bills
|
47,0
|
104,9
|
123,3
|
52,7
|
56,8
|
104,9
|
109,6
|
114,0
|
119,2
|
123,3
|
127,8
|
|
●
|
Land
related
to the Debentures
|
-
|
55,1
|
55,1
|
-
|
-
|
55,1
|
55,1
|
55,1
|
55,1
|
55,1
|
55,1
|
|
Short-Term
Debt
|
242,2
|
204,3
|
140,3
|
532,4
|
148,4
|
204,3
|
171,5
|
210,7
|
163,1
|
140,3
|
158,8
|
|
|
●
|
Loans
and
Financings
|
38,1
|
68,8
|
89,0
|
441,0
|
54,9
|
68,8
|
75,0
|
73,4
|
75,9
|
89,0
|
116,5
|
|
●
|
Debentures
|
-
|
0,5
|
-
|
-
|
-
|
0,5
|
0,4
|
0,4
|
0,4
|
-
|
-
|
|
●
|
Advances
from
Customers
|
188,1
|
79,2
|
49,4
|
51,7
|
49,7
|
79,2
|
55,1
|
98,4
|
83,2
|
49,4
|
41,0
|
|
●
|
Promissory
Notes
|
14,6
|
55,8
|
1,3
|
39,7
|
43,8
|
55,8
|
41,0
|
37,8
|
3,7
|
1,3
|
1,3
|
|
●
|
Related
Parties
|
1,4
|
0,1
|
0,7
|
0,0
|
0,0
|
0,1
|
0,1
|
0,7
|
-
|
0,7
|
-
|
|
Long-Term
Debt
|
927,9
|
2.158,8
|
2.875,0
|
904,3
|
862,8
|
2.158,8
|
2.209,9
|
2.184,5
|
2.966,2
|
2.875,0
|
2.661,8
|
|
|
●
|
Loans
and
Financings
|
798,4
|
2.002,7
|
2.770,4
|
792,5
|
787,5
|
2.002,7
|
2.060,2
|
2.040,6
|
2.868,7
|
2.770,4
|
2.591,1
|
|
●
|
Debentures
|
-
|
55,1
|
55,1
|
-
|
-
|
55,1
|
55,1
|
55,1
|
55,1
|
55,1
|
55,1
|
|
●
|
Advances
from
Trading Co's
|
80,8
|
86,9
|
49,5
|
72,1
|
61,7
|
86,9
|
89,6
|
87,1
|
42,5
|
49,5
|
15,6
|
|
●
|
Promissory
Notes
|
48,1
|
12,7
|
-
|
38,3
|
12,4
|
12,7
|
3,6
|
-
|
-
|
-
|
-
|
|
●
|
Related
Parties
|
0,6
|
1,4
|
-
|
1,3
|
1,2
|
1,4
|
1,4
|
1,7
|
-
|
-
|
-
|
|
Total
Debt
|
1.170,1
|
2.363,1
|
3.015,3
|
1.436,7
|
1.011,2
|
2.363,1
|
2.381,4
|
2.395,2
|
3.129,4
|
3.015,3
|
2.820,7
|
|
|
Net
Debt
|
989,4
|
1.238,8
|
1.408,3
|
1.203,0
|
369,1
|
1.238,8
|
1.239,7
|
1.649,5
|
1.490,7
|
1.408,3
|
1.512,8
|
|
|
●
|
Net
Debt excl.
PESA/Debentures
|
799,9
|
863,5
|
1.028,3
|
1.005,3
|
160,8
|
863,5
|
860,3
|
1.267,4
|
1.112,1
|
1.028,3
|
1.131,4
|
|
Current
Assets
|
713,9
|
2.013,4
|
2.224,7
|
1.249,6
|
1.414,8
|
2.013,4
|
2.350,1
|
2.272,0
|
2.809,6
|
2.224,7
|
2.270,8
|
|
|
Current
Liabilities
|
494,1
|
670,0
|
591,7
|
939,9
|
473,9
|
670,0
|
865,3
|
848,4
|
547,5
|
591,7
|
838,1
|
|
|
Shareholders'
Equity
|
762,9
|
1.355,4
|
1.631,0
|
511,7
|
1.356,3
|
1.355,4
|
1.360,8
|
1.484,6
|
1.554,9
|
1.631,0
|
1.644,7
|
|
|
Capex
- Property, Plant and Equipment
|
268,8
|
1.511,4
|
570,7
|
(143,3)
|
561,4
|
1.511,4
|
1.412,3
|
1.225,2
|
789,9
|
570,7
|
455,0
|
|
|
●
|
Capex
-
Operational
|
122,0
|
208,9
|
475,1
|
151,3
|
137,2
|
208,9
|
243,2
|
302,6
|
354,4
|
475,1
|
526,9
|
|
EBITDA
Margin
|
17,9%
|
20,9%
|
25,7%
|
18,5%
|
19,3%
|
20,9%
|
25,9%
|
26,9%
|
26,4%
|
25,7%
|
19,9%
|
|
|
●
|
Gross
Profit
Margin
|
29,6%
|
30,5%
|
31,2%
|
29,4%
|
30,6%
|
30,5%
|
34,1%
|
33,1%
|
32,5%
|
31,2%
|
24,6%
|
|
●
|
EBIT
Margin
|
12,0%
|
15,2%
|
17,5%
|
11,6%
|
13,2%
|
15,2%
|
20,3%
|
21,6%
|
21,3%
|
17,5%
|
9,1%
|
|
●
|
Net
Profit
Margin
|
0,9%
|
-2,6%
|
9,9%
|
0,1%
|
-2,8%
|
-2,6%
|
-1,9%
|
2,6%
|
5,2%
|
9,9%
|
11,2%
|
|
Net
Debt ÷ Shareholders' Equity
|
||||||||||||
|
●
|
Net
Debt
%
|
56,5%
|
47,8%
|
46,3%
|
70,2%
|
21,4%
|
47,8%
|
47,7%
|
52,6%
|
48,9%
|
46,3%
|
47,9%
|
|
●
|
Shareholders'
Equity %
|
43,5%
|
52,2%
|
53,7%
|
29,8%
|
78,6%
|
52,2%
|
52,3%
|
47,4%
|
51,1%
|
53,7%
|
52,1%
|
|
Net
Debt excl. PESA ÷ Equity
|
||||||||||||
|
●
|
Net
Debt excl.
PESA %
|
51,2%
|
38,9%
|
38,7%
|
66,3%
|
10,6%
|
38,9%
|
38,7%
|
46,1%
|
41,7%
|
38,7%
|
40,8%
|
|
●
|
Shareholders'
Equity %
|
48,8%
|
61,1%
|
61,3%
|
33,7%
|
89,4%
|
61,1%
|
61,3%
|
53,9%
|
58,3%
|
61,3%
|
59,2%
|
|
Long-Term
Payable Debt to Equity Ratio
|
0,9x
|
0,5x
|
0,9x
|
1,3x
|
0,4x
|
0,5x
|
0,5x
|
0,5x
|
1,0x
|
0,9x
|
0,8x
|
|
|
Liquidity
Ratio (Current Assets ÷ Current Liabilities)
|
1,4x
|
3,0x
|
3,8x
|
1,3x
|
3,0x
|
3,0x
|
2,7x
|
2,7x
|
5,1x
|
3,8x
|
2,7x
|
|
|
Net
Debt ÷ EBITDA
|
2,9x
|
2,4x
|
1,5x
|
3,4x
|
0,9x
|
2,4x
|
1,7x
|
1,8x
|
1,5x
|
1,5x
|
2,3x
|
|
|
●
|
Net
Debt excl.
PESA ÷ EBITDA
|
2,3x
|
1,7x
|
1,1x
|
2,8x
|
0,4x
|
1,7x
|
1,2x
|
1,4x
|
1,1x
|
1,1x
|
1,7x
|
|
●
|
Short-Term
Net
Debt ÷ EBITDA
|
0,7x
|
0,4x
|
0,2x
|
1,5x
|
0,3x
|
0,4x
|
0,2x
|
0,2x
|
0,2x
|
0,2x
|
0,2x
|
|
Net
Debt ÷ (EBITDA - Capex)
|
13,7x
|
-1,2x
|
3,9x
|
2,4x
|
-2,7x
|
-1,2x
|
-1,8x
|
-5,1x
|
8,4x
|
3,9x
|
7,8x
|
|
|
●
|
Net
Debt ÷
(EBITDA - Operational Capex)
|
4,5x
|
4,0x
|
3,1x
|
5,9x
|
1,3x
|
4,0x
|
2,5x
|
2,7x
|
2,4x
|
3,1x
|
12,4x
|
|
Interest
Cover (EBITDA ÷ Net Financial Exp.)
|
3,3x
|
2,1x
|
-5,9x
|
5,3x
|
2,3x
|
2,1x
|
1,8x
|
2,7x
|
3,7x
|
-5,9x
|
-1,3x
|
|
|
●
|
Interest
Cover
(EBITDA - Op.Capes)÷Net Fin.)
|
2,1x
|
1,3x
|
-2,9x
|
3,1x
|
1,5x
|
1,3x
|
1,2x
|
1,8x
|
2,4x
|
-2,9x
|
-0,2x
|
|
Avg.
Debt Cost (Net.Fin.Exp. ÷ Net Debt)
|
10,3%
|
19,8%
|
-11,2%
|
5,6%
|
50,8%
|
19,8%
|
32,9%
|
20,1%
|
17,5%
|
-11,2%
|
-32,7%
|
|
20
|
I.
Cosan Limited
|
||
|
§
|
As
of July 31,
2007, Cosan Limited had no operational assets or liabilities. The
corporate restructuring through which Cosan Limited became Cosan
S.A.’s
controlling shareholder (with 51% of its capital stock) was completed
on
August 1, 2007. In addition, Cosan Limited’s IPO was priced on August 16,
2007. Therefore, Cosan Limited has no operations or financial results
for
1Q’08.
|
|
|
§
|
Assuming
that
Cosan Limited had 51% of Cosan S.A.’s shares at the beginning of 1Q’08,
its operations and financial results would have been the same as
those of
Cosan S.A., except for adjustments related to minority interest.
Therefore, we have presented financial statements of Cosan S.A.
prepared
in accordance with US GAAP and in US dollars.
|
|
|
§
|
The
US GAAP
financial statements presented below have been prepared in accordance
with
the applicable rules of the U.S. Securities and Exchange Commission.
The
companies that constitute the Cosan Group and that had their financial
statements consolidated are show in the table to the
left.
|
|
|
Income
Statement
|
Apr'05
|
Apr'06
|
Apr'07
|
Oct'05
|
Jan'06
|
Apr'06
|
Jul'06
|
Oct'06
|
Jan'07
|
Apr'07
|
Jul'07
|
|
|
(In
millions of U.S. dollars)
|
FY'05
|
FY'06
|
FY'07
|
2Q'06
|
3Q'06
|
4Q'06
|
1Q'07
|
2Q'07
|
3Q'07
|
4Q'07
|
1Q'08
|
|
|
Net
sales
|
644.4
|
1,096.6
|
1,679.1
|
|
|
425.0
|
|
|
|
301.3
|
||
|
(-)
Cost of
goods sold
|
(456.6)
|
(796.3)
|
(1,191.3) |
|
|
(263.3)
|
|
|
|
(288.2)
|
||
|
(=)
Gross profit
|
187.8
|
300.3
|
487.8
|
|
|
161.8
|
|
|
|
13.1
|
||
|
(-)
Selling
expenses
|
(57.8)
|
(97.8)
|
(133.8)
|
|
|
(27.9)
|
|
|
|
(32.0)
|
||
|
(-)
General
and administrative expenses
|
(40.0)
|
(72.0)
|
(121.1)
|
|
|
(21.9)
|
|
|
|
(30.1)
|
||
|
(=)
Operating income (loss)
|
90.0
|
130.5
|
232.9
|
|
|
112.0
|
|
|
|
(49.0)
|
||
|
Operating
margin
|
14.0%
|
11.9%
|
13.9%
|
|
|
26.3%
|
|
|
|
-16.3%
|
||
|
(-)
|
Other
income
(expense):
|
|||||||||||
|
Financial
|
(39.2)
|
(226.6)
|
289.4
|
|
|
22.8
|
|
|
53.7
|
|||
|
Other
|
(16.4)
|
(5.5)
|
16.3
|
|
|
(1.4)
|
|
|
(0.5)
|
|||
|
(=)
|
Income
(loss) before income taxes, equity in income
|
|||||||||||
|
of
affiliates and minority interest
|
34.5
|
(101.6)
|
538.5
|
|
|
133.4
|
|
|
4.2
|
|||
|
(-)
Income
taxes expense (benefit)
|
(14.9)
|
29.7
|
(188.8)
|
|
|
(47.4)
|
|
|
(1.7)
|
|||
|
(=)
|
Income
(loss) before equity in income of affiliates and
|
|||||||||||
|
minority
interest
|
19.6
|
(71.8)
|
349.7
|
|
|
86.0
|
|
|
|
2.5
|
||
|
(±)
Equity in
income of affiliates
|
3.4
|
1.6
|
(0.0)
|
|
|
0.1
|
|
|
(0.2)
|
|||
|
(±)
Minority
interest in net (income) loss of subsidiaries
|
(0.4)
|
(2.6)
|
(3.2)
|
|
|
(0.8)
|
|
|
0.2
|
|||
|
(=)
Net income (loss)
|
22.7
|
(72.8)
|
346.5
|
|
|
85.3
|
|
|
2.4
|
|||
|
Margin
|
3.5%
|
-6.6%
|
20.6%
|
|
|
|
20.1%
|
|
|
0.8%
|
||
|
●
|
EBITDA
|
118.4
|
222.7
|
433.3
|
|
|
146.9
|
|
|
25.7
|
||
|
Margin
|
18.4%
|
20.3%
|
25.8%
|
|
|
34.6%
|
|
|
8.5%
|
|||
|
●
|
EBIT
|
76.7
|
124.0
|
245.9
|
|
|
109.9
|
|
|
(49.6)
|
||
|
Margin
|
11.9%
|
11.3%
|
14.6%
|
|
|
25.9%
|
|
|
-16.4%
|
|||
|
●
|
Depreciation
and amortization
|
41.7
|
98.6
|
187.4
|
|
|
37.0
|
|
|
|
75.2
|
|
21
|
Balance
Sheet
|
Apr'05
|
Apr'06
|
Apr'07
|
Oct'05
|
Jan'06
|
Apr'06
|
Jul'06
|
Oct'06
|
Jan'07
|
Apr'07
|
Jul'07
|
|
(In
millions of U.S. dollars)
|
FY'05
|
FY'06
|
FY'07
|
2Q'06
|
3Q'06
|
4Q'06
|
1Q'07
|
2Q'07
|
3Q'07
|
4Q'07
|
1Q'08
|
|
Assets
|
|||||||||||
|
Current
assets:
|
|||||||||||
|
Cash
and cash
equivalents
|
13.2
|
29.2
|
316.5
|
|
|
|
81.0
|
|
|
307.7
|
|
|
Restricted
cash
|
0.4
|
63.0
|
17.7
|
|
|
1.2
|
|
|
49.2
|
||
|
Marketable
securities
|
2.0
|
368.8
|
281.9
|
|
|
291.1
|
|
|
124.5
|
||
|
Trade
accounts
receivable, net
|
45.2
|
101.8
|
55.2
|
|
|
106.7
|
|
|
74.6
|
||
|
Inventories
|
122.2
|
187.2
|
247.5
|
|
|
|
402.6
|
|
|
415.9
|
|
|
Advances
to
suppliers
|
34.7
|
63.5
|
104.0
|
|
|
76.9
|
|
|
163.5
|
||
|
Deferred
income taxes
|
12.8
|
74.8
|
-
|
|
|
37.6
|
|
|
|
-
|
|
|
Other
current
assets
|
62.2
|
72.0
|
116.8
|
|
|
84.6
|
|
|
93.5
|
||
|
292.6
|
960.3
|
1,139.5
|
|
|
|
1,081.8
|
|
|
1,228.9
|
||
|
Noncurrent
assets:
|
|||||||||||
|
Property,
plant and equipment, net
|
401.8
|
1,008.1
|
1,194.1
|
|
|
941.2
|
|
|
1,311.0
|
||
|
Goodwill
|
166.6
|
497.9
|
491.9
|
|
|
473.5
|
|
|
527.7
|
||
|
Intangible
assets, net
|
30.3
|
98.9
|
94.0
|
|
|
93.2
|
|
|
99.7
|
||
|
Accounts
Receivable from Federal Government
|
-
|
-
|
156.5
|
|
|
|
-
|
|
|
169.6
|
|
|
Other
non-current assets
|
68.9
|
126.6
|
177.5
|
|
|
123.0
|
|
|
192.3
|
||
|
667.7
|
1,731.4
|
2,113.9
|
|
|
1,630.9
|
|
|
2,300.3
|
|||
|
(=)
Total assets
|
960.2
|
2,691.8
|
3,253.4
|
|
|
|
2,712.7
|
|
|
3,529.1
|
|
|
Liabilities
and shareholders' equity
|
|||||||||||
|
Current
liabilities:
|
|||||||||||
|
Trade
accounts
payable
|
33.6
|
96.6
|
55.9
|
|
|
174.4
|
|
|
166.6
|
||
|
Advances
from
customers
|
74.2
|
37.9
|
24.3
|
|
|
|
25.3
|
|
|
21.9
|
|
|
Taxes
payable
|
31.3
|
40.0
|
57.5
|
|
|
49.7
|
|
|
64.8
|
||
|
Salaries
payable
|
10.8
|
23.8
|
31.1
|
|
|
|
35.5
|
|
|
47.9
|
|
|
Current
portion of long-term debt
|
7.6
|
46.6
|
36.1
|
|
|
|
46.3
|
|
|
51.8
|
|
|
Derivative
financial instruments
|
34.4
|
133.4
|
9.8
|
|
|
|
44.0
|
|
|
15.0
|
|
|
Dividends
payable
|
-
|
-
|
37.3
|
|
|
|
-
|
|
|
40.4
|
|
|
Other
liabilities
|
15.9
|
18.9
|
22.2
|
|
|
|
32.6
|
|
|
10.2
|
|
|
207.8
|
397.1
|
274.2
|
|
|
407.8
|
|
|
418.5
|
|||
|
Long-term
liabilities:
|
|||||||||||
|
Long-term
debt
|
314.7
|
941.7
|
1,342.5
|
|
|
933.0
|
|
|
1,357.2
|
||
|
Estimated
liability for legal proceedings and labor claims
|
|||||||||||
|
101.7
|
462.2
|
379.2
|
|
|
433.4
|
|
|
417.8
|
|||
|
Taxes
payable
|
71.5
|
152.4
|
106.9
|
|
|
141.9
|
|
|
115.7
|
||
|
Advances
from
customers
|
31.9
|
41.6
|
24.3
|
|
|
|
41.2
|
|
|
8.3
|
|
|
Deferred
income taxes
|
17.9
|
81.6
|
141.6
|
|
|
83.2
|
|
|
142.2
|
||
|
Other
long-term liabilities
|
23.8
|
33.1
|
47.5
|
|
|
23.9
|
|
|
50.3
|
||
|
561.6
|
1,712.7
|
2,042.0
|
|
|
1,656.6
|
|
|
2,091.5
|
|||
|
Minority
interest in consolidated subsidiaries
|
0.5
|
4.9
|
8.5
|
|
|
5.6
|
|
|
9.0
|
||
|
Shareholders'
equity:
|
|||||||||||
|
Common
stock
|
181.4
|
525.2
|
535.1
|
|
|
525.2
|
|
|
535.1
|
||
|
Additional
paid-in capital
|
103.5
|
161.4
|
160.9
|
|
|
163.0
|
|
|
162.6
|
||
|
Accumulated
other comprehensive income
|
(66.7)
|
38.9
|
72.0
|
|
|
17.8
|
|
|
149.3
|
||
|
Retained
earnings (losses)
|
(27.9)
|
(148.6)
|
160.6
|
|
|
(63.3)
|
|
|
163.1
|
||
|
Total
shareholders' equity
|
190.3
|
577.0
|
928.7
|
|
|
642.7
|
|
|
1,010.1
|
||
|
(=)
Total liabilities and shareholders' equity
|
960.2
|
2,691.8
|
3,253.4
|
|
|
2,712.7
|
|
|
|
3,529.1
|
22
|
Cash
Flow Statement
|
Apr'05
|
Apr'06
|
Apr'07
|
Oct'05
|
Jan'06
|
Apr'06
|
Jul'06
|
Oct'06
|
Jan'07
|
Apr'07
|
Jul'07
|
|
|
(In
millions of U.S. dollars)
|
FY'05
|
FY'06
|
FY'07
|
2Q'06
|
3Q'06
|
4Q'06
|
1Q'07
|
2Q'07
|
3Q'07
|
4Q'07
|
1Q'08
|
|
|
Cash
flow from operating activities:
|
|
|
|
|||||||||
|
Net
income
(loss) for the year/quarter
|
22.7
|
(72.8)
|
346.5
|
|
|
|
85.3
|
|
|
2.4
|
||
|
Adjustments
to
reconcile net income (loss) to cash provided by operating
activities:
|
|
|
|
|||||||||
|
Depreciation
and amortization
|
41.7
|
98.6
|
187.4
|
|
|
|
37.0
|
|
|
75.2
|
||
|
Deferred
income and social contribution taxes
|
(2.3)
|
(53.0)
|
150.2
|
|
|
42.4
|
|
|
(8.6)
|
|||
|
Interest,
monetary and exchange variation
|
8.1
|
24.3
|
116.3
|
|
|
56.0
|
|
|
(53.1)
|
|||
|
Minority
interest in net income of subsidiaries
|
0.4
|
2.6
|
3.2
|
|
|
0.8
|
|
|
(0.2)
|
|||
|
Others
|
9.8
|
15.9
|
(176.8)
|
|
|
3.6
|
|
|
5.8
|
|||
|
80.4
|
15.6
|
626.8
|
|
|
225.2
|
|
|
21.5
|
||||
|
Decrease/increase
in operating assets and liabilities:
|
|
|
|
|||||||||
|
Trade
accounts
receivable, net
|
(18.5)
|
(35.4)
|
48.2
|
|
|
(8.1)
|
|
|
(16.7)
|
|||
|
Inventories
|
(20.7)
|
30.9
|
(54.1)
|
|
|
(222.9)
|
|
|
(147.8)
|
|||
|
Advances
to
suppliers
|
(1.9)
|
(10.7)
|
(38.7)
|
|
|
(15.9)
|
|
|
(50.9)
|
|||
|
Trade
accounts
payable
|
14.8
|
28.7
|
(43.2)
|
|
|
81.7
|
|
|
106.0
|
|||
|
Derivative
financial instruments
|
(16.0)
|
83.5
|
(155.0)
|
|
|
(86.0)
|
|
|
33.5
|
|||
|
Taxes
payable
|
(9.1)
|
(37.6)
|
(36.6)
|
|
|
2.3
|
|
|
(0.8)
|
|||
|
Other
assets
and liabilities, net
|
(21.2)
|
11.0
|
(63.4)
|
|
|
17.4
|
|
|
11.1
|
|||
|
(72.8)
|
70.4
|
(342.8)
|
|
|
(231.6)
|
|
|
(65.6)
|
||||
|
(=)
Net cash provided by operating actitivities
|
7.6
|
86.0
|
284.0
|
|
|
(6.4)
|
|
|
(44.0)
|
|||
|
●
|
Cash
flow from investing activities:
|
|
|
|
||||||||
|
Restricted
cash
|
5.1
|
(62.6)
|
47.0
|
|
|
59.2
|
|
|
(30.0)
|
|||
|
Marketable
securities
|
9.5
|
(366.9)
|
97.0
|
|
|
62.9
|
-
|
-
|
34.0
|
180.8
|
||
|
Acquisition
of
property, plant and equipment
|
(68.8)
|
(135.2)
|
(356.2)
|
|
|
(10.4)
|
-
|
-
|
(345.8)
|
(94.4)
|
||
|
Acquisitions,
net of cash acquired
|
(8.5)
|
(260.9)
|
(39.4)
|
|
|
-
|
-
|
-
|
(39.4)
|
(1.1)
|
||
|
(=)
Net cash used in investing actitivities
|
(62.7)
|
(825.5)
|
(251.6)
|
|
|
111.8
|
-
|
-
|
(363.4)
|
55.3
|
||
|
●
|
Cash
flow from financing activities:
|
|
|
|
|
|||||||
|
Proceeds
from
issuance of common stock
|
23.3
|
383.1
|
3.2
|
|
|
-
|
-
|
-
|
3.2
|
-
|
||
|
Dividends
Paid
|
(0.6)
|
-
|
-
|
|
|
-
|
-
|
-
|
-
|
-
|
||
|
Additions
of
long-term debts
|
539.0
|
899.3
|
424.6
|
|
|
1.5
|
-
|
-
|
423.1
|
-
|
||
|
Payments
of
long-term debts
|
(528.1)
|
(556.5)
|
(205.0)
|
|
|
(59.2)
|
-
|
-
|
(145.8)
|
(47.1)
|
||
|
(=)
Net cash provided by financing actitivities
|
33.6
|
725.9
|
222.8
|
|
|
(57.7)
|
-
|
-
|
280.5
|
(47.1)
|
||
|
Effect
of
exchange rate changes on cash and cash
|
|
|
|
|
||||||||
|
equivalents
|
12.8
|
29.6
|
32.1
|
|
|
4.0
|
-
|
-
|
28.1
|
27.0
|
||
|
(=)
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
|
|
|||||||
|
(8.8)
|
16.1
|
287.3
|
|
|
51.8
|
-
|
-
|
235.6
|
(8.8)
|
|||
|
(+)
Cash and
cash equivalents at beginning of year
|
21.9
|
13.2
|
29.2
|
|
|
29.2
|
-
|
-
|
81.0
|
316.5
|
||
|
(=)
Cash and cash equivalents at end of year
|
13.2
|
29.2
|
316.5
|
|
|
81.0
|
-
|
-
|
316.5
|
307.7
|
||
|
Cash
Flow Statement
|
Apr'05
|
Apr'06
|
Apr'07
|
Oct'05
|
Jan'06
|
Apr'06
|
Jul'06
|
Oct'06
|
Jan'07
|
Apr'07
|
Jul'07
|
|
|
(In
millions of U.S. dollars)
|
FY'05
|
FY'06
|
FY'07
|
2Q'06
|
3Q'06
|
4Q'06
|
1Q'07
|
2Q'07
|
3Q'07
|
4Q'07
|
1Q'08
|
|
|
●
|
Cash
flow from operating activities:
|
|
|
|
|
|||||||
|
Net
income
(loss) for the year/quarter
|
22.7
|
(72.8)
|
346.5
|
|
|
85.3
|
|
|
2.4
|
|||
|
Adjustments
to
reconcile net income (loss) to cash provided by operating
activities:
|
|
|
|
|
||||||||
|
Depreciation
and amortization
|
41.7
|
98.6
|
187.4
|
|
|
37.0
|
|
|
75.2
|
|||
|
Deferred
income and social contribution taxes
|
(2.3)
|
(53.0)
|
150.2
|
|
|
42.4
|
|
|
(8.6)
|
|||
|
Interest,
monetary and exchange variation
|
8.1
|
24.3
|
116.3
|
|
|
56.0
|
|
|
(53.1)
|
|||
|
Minority
interest in net income of subsidiaries
|
0.4
|
2.6
|
3.2
|
|
|
0.8
|
|
|
(0.2)
|
|||
|
Others
|
9.8
|
15.9
|
(176.8)
|
|
|
3.6
|
|
|
5.8
|
|||
|
80.4
|
15.6
|
626.8
|
|
|
225.2
|
|
|
21.5
|
||||
|
Decrease/increase
in operating assets and liabilities:
|
|
|
|
|
||||||||
|
Trade
accounts
receivable, net
|
(18.5)
|
(35.4)
|
48.2
|
|
|
(8.1)
|
|
|
(16.7)
|
|||
|
Inventories
|
(20.7)
|
30.9
|
(54.1)
|
|
|
(222.9)
|
|
|
(147.8)
|
|||
|
Advances
to
suppliers
|
(1.9)
|
(10.7)
|
(38.7)
|
|
|
(15.9)
|
|
|
(50.9)
|
|||
|
Trade
accounts
payable
|
14.8
|
28.7
|
(43.2)
|
|
|
81.7
|
|
|
106.0
|
|||
|
Derivative
financial instruments
|
(16.0)
|
83.5
|
(155.0)
|
|
|
(86.0)
|
|
|
33.5
|
|||
|
Taxes
payable
|
(9.1)
|
(37.6)
|
(36.6)
|
|
|
2.3
|
|
|
(0.8)
|
|||
|
Other
assets
and liabilities, net
|
(21.2)
|
11.0
|
(63.4)
|
|
|
17.4
|
|
|
11.1
|
|||
|
(72.8)
|
70.4
|
(342.8)
|
|
|
(231.6)
|
|
|
(65.6)
|
||||
|
(=)
Net cash provided by operating actitivities
|
7.6
|
86.0
|
284.0
|
|
|
(6.4)
|
|
|
(44.0)
|
|||
|
●
|
Cash
flow from investing activities:
|
|
|
|
|
|||||||
|
Restricted
cash
|
5.1
|
(62.6)
|
47.0
|
|
|
59.2
|
|
|
(30.0)
|
|||
|
Marketable
securities
|
9.5
|
(366.9)
|
97.0
|
|
|
62.9
|
|
|
180.8
|
|||
|
Acquisition
of
property, plant and equipment
|
(68.8)
|
(135.2)
|
(356.2)
|
|
|
(10.4)
|
|
|
(94.4)
|
|||
|
Acquisitions,
net of cash acquired
|
(8.5)
|
(260.9)
|
(39.4)
|
|
|
-
|
|
|
(1.1)
|
|||
|
(=)
Net cash used in investing actitivities
|
(62.7)
|
(825.5)
|
(251.6)
|
|
|
111.8
|
|
|
55.3
|
|||
|
●
|
Cash
flow from financing activities:
|
|
|
|
|
|||||||
|
Proceeds
from
issuance of common stock
|
23.3
|
383.1
|
3.2
|
|
|
-
|
|
|
-
|
|||
|
Dividends
Paid
|
(0.6)
|
-
|
-
|
|
|
-
|
|
|
-
|
|||
|
Additions
of
long-term debts
|
539.0
|
899.3
|
424.6
|
|
|
1.5
|
|
|
-
|
|||
|
Payments
of
long-term debts
|
(528.1)
|
(556.5)
|
(205.0)
|
|
|
|
(59.2)
|
|
|
(47.1)
|
||
|
(=)
Net cash provided by financing actitivities
|
33.6
|
725.9
|
222.8
|
|
|
(57.7)
|
|
|
(47.1)
|
|||
|
Effect
of
exchange rate changes on cash and cash
|
|
|
|
|
||||||||
|
equivalents
|
12.8
|
29.6
|
32.1
|
|
|
4.0
|
|
|
|
27.0
|
||
|
(=)
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
|
|
|||||||
|
(8.8)
|
16.1
|
287.3
|
|
|
51.8
|
|
|
(8.8)
|
||||
|
(+)
Cash and
cash equivalents at beginning of year
|
21.9
|
13.2
|
29.2
|
|
|
29.2
|
|
|
316.5
|
|||
|
(=)
Cash and cash equivalents at end of year
|
13.2
|
29.2
|
316.5
|
|
|
81.0
|
|
|
307.7
|
|||
23
|
Cosan
Limited
|
|
Unaudited
Balance Sheet
|
|
as
of July 31, 2007 and
April
30, 2007
|
B
COSAN
LIMITED
UNAUDITED
BALANCE SHEETS
July,
31
2007 and April 30, 2007
Contents
|
Report
of Independent Registered Public Accounting Firm
|
1
|
|
Balance
Sheets at July 31, 2007 (Unaudited) and April 30, 2007
|
2
|
|
Notes
to the Balance Sheets (Unaudited)
|
3
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Board of Directors and Shareholders of
Cosan
Limited
We
have reviewed the balance sheet of
Cosan Limited as of July
31, 2007. This balance
sheet is the responsibility of the Company’s management.
We
conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, the objective of
which is the expression of an opinion regarding the financial statements taken
as whole. Accordingly, we do not express such an opinion.
Based
on our review, we are not aware of
any material modifications that should be made to the balance sheet referred
to
above for them to be in conformity with U.S.
generally accepted accounting
principles.
We
have previously audited, in
accordance with of the Public Company Accounting
Oversight
Board (United
States),
the
balance sheet of Cosan Limited as of
April 30, 2007
and in our report dated May 31, 2007,
we expressed an unqualified opinion on
that balance sheet . In our opinion, the information set forth in the
accompanying balance sheet as of April 30, 2007,
is fairly stated, in all material
respects, in relation to the balance sheet from which it has been
derived.
|
Campinas,
Brazil
|
ERNST
& YOUNG
|
|
September
10, 2007
|
Auditores
Independentes S.S.
|
|
CRC2SP015199/O-8
|
|
|
/s/
Luiz Carlos Nannini
|
|
|
Luiz
Carlos Nannini
|
|
|
Accountant
CRC 1SP171638/O-7
|
1
COSAN
LIMITED
BALANCE
SHEETS
July
31,
2007 and April 30, 2007
(In
U.S.
dollars, except otherwise mentioned)
|
(Unaudited)
July
31,
2007
|
April
30,
2007
|
||
|
Assets
|
|||
|
Cash
and cash equivalents
|
10.00
|
10.00
|
|
|
Total
Assets
|
10.00
|
10.00
|
|
|
Stockholder’s
Equity
|
|||
|
Common
stock, $0.01 par value; 1,000 shares authorized, issued and
outstanding
|
10.00
|
10.00
|
|
|
Total
Stockholder's Equity
|
10.00
|
10.00
|
2
NOTES
TO
THE UNAUDITED BALANCE SHEETS
(In
U.S.
dollars, except otherwise mentioned)
|
1.
|
Organization
and Purpose
|
Cosan
Limited was incorporated in Bermuda as an exempted company on April 30, 2007.
In
connection with its formation, Cosan Limited issued 1,000 shares of common
stock
for US$10.00 to Mr. Rubens Ometto Silveira Mello, who indirectly controls Cosan
S.A. Indústria e Comércio and its subsidiaries (“Cosan”).
Cosan
Limited was formed to acquire all of the common shares of Cosan held by
Aguassanta Participações S.A. and Usina Costa Pinto S.A. Açúcar e Álcool, each
company indirectly controlled by Mr. Rubens Ometto Silveira Mello.
|
2.
|
Presentation
of the Consolidated Financial
Statements
|
These
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States.
|
3.
|
Subsequent
Event
|
On
August
1, 2007, Cosan Limited became the controlling shareholder of Cosan S.A.
Indústria e Comércio (“Cosan”) in which it holds 51% interest.
This
operation was carried out by means of a corporate restructuring involving the
Cosan’s former direct controlling shareholders, to wit, Usina Costa Pinto S.A.
Açúcar e Álcool (“Usina Costa Pinto”) and Aguassanta Participações S.A.
(“Aguassanta Participações”). Referred to shareholders contributed capital to
Cosan Limited in the form of Cosan’s common shares, as stated below, thus
becoming part of the Cosan’s indirect ownership structure:
|
Shareholder
|
Number
of shares of Cosan’s issue contributed as capital to Cosan
Limited
|
Interest
held in Cosan
|
|||
|
Usina
Costa Pinto
|
30,010,278
|
15.89%
|
|||
|
Aguassanta
Participações
|
66,321,766
|
35.11%
|
|||
|
96,332,044
|
51.00%
|
3
COSAN
LIMITED
NOTES
TO
THE UNAUDITED BALANCE SHEETS
(In
U.S. dollars, except otherwise mentioned)
|
3.
|
Subsequent
Event - Continued
|
Subsequently,
Aguassanta Participações proceeded with the corporate restructuring involving
its interest held in Cosan Limited. As a result of this restructuring, the
equity interest formerly held by Aguassanta Participações directly in Cosan
Limited turned into indirect interest, by means of holding companies in Brazil
and abroad. Upon completion of said corporate restructuring operation, Cosan
Limited ownership structure – where Cosan Limited equity interest in
Cosan S.A. Indústria e Comércio remained unaltered, corresponding to 51.6%, was
as follows:
|
Shareholder
|
Class
of shares
|
Number
of shares
|
Interest
|
||||
|
Usina
Costa Pinto
|
B1
|
30,010,278
|
15.29%
|
||||
|
Queluz
Holdings Limited
|
B1
|
66,321,766
|
33.78%
|
||||
|
Aguassanta
Participações
|
A
|
5,000,000
|
2.55%
|
||||
|
Other
shareholders
|
A
|
95,000,000
|
48.39%
|
||||
|
196,332,044
|
100.00%
|
Cosan
Limited shares owned by Usina Costa Pinto and Queluz Holdings Limited are Class
B1 shares, which entitle their holders to 10 votes per share. Other shares
are
Class A shares, which entitle holders to 1 vote per share.
On
August
16, 2007, Cosan Limited took part in a Global Initial Public Offering (IPO)
at
the New York Stock Exchange by offering 100,000,000 Class A shares. As of that
date, Cosan Limited priced its IPO at US$10.50 per Class A share, equivalent
to
the amount of R$21.05.
In
consonance with the IPO, Cosan Limited is conducting a public distribution
of
Brazilian Depositary Receipts (“BDRs”), which represent Class A shares and have
been traded at the São Paulo Stock Exchange since August 17, 2007.
The
referred to operation gave rise to questioning by the Brazilian Securities
and
Exchange Commission (“CVM”) which, in an Official Letter dated
August 10, 2007 requested information of the Company’s Chairman and
CEO about noncompliance with his loyalty duties and the possible usurpation
of
corporate opportunity under the terms of Brazilian legislation, especially
as
regards the conduct of activities abroad by Cosan Limited which could have
been
performed by Cosan itself.
4
On
August
14, 2007, the Company’s Chairman and CEO informed CVM that his role in the
corporate reorganization operation was and continues to be conducted pursuant
to
Brazilian laws.
5
COSAN
LIMITED
NOTES
TO
THE UNAUDITED BALANCE SHEETS
(In
U.S. dollars, except otherwise mentioned)
|
3.
|
Subsequent
Event - Continued
|
Complementarily,
at a meeting held on August 15, 2007, the Company learned from CVM
Decision-Making Board that, in the opinion of its members, the conduct of
activities abroad by means of Cosan Limited which could be developed by Cosan
S.A. through the currently proposed ownership structure may represent a
violation of the Brazilian corporate laws as respects loyalty duty and conflict
of interest. Accordingly, if the structure is maintained and Cosan Limited
performs investment operations abroad to the detriment of Cosan S.A., CVM may
initiate an administrative proceeding, which may ultimately lead to penalties.
The Company’s Chairman and CEO believes not to have violated any applicable law,
otherwise he undertakes to propose alternative structures and, in the search
of
solutions in this connection, he further undertakes not to change the conditions
and steps already publicized under significant events, particularly as regards
the swap offering to be directed to Cosan S.A. shareholders.
6
Cosan
S. A. Indústria e Comércio
Unaudited
Condensed
Consolidated Financial Statements
Consolidated Financial Statements
for
the three months ended July 31, 2007 and 2006
C
COSAN
S.A. INDÚSTRIA E COMÉRCIO
UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TABLE
OF CONTENTS
Page
|
Report
of Independent Registered Public Accounting Firm
|
1
|
|
Condensed
Consolidated Balance Sheets at July 31, 2007 (Unaudited)
|
|
|
and
April 30, 2007
|
2
|
|
Condensed
Consolidated Statements of Income for the Three Months
|
|
|
ended
July 31, 2007 and 2006 (Unaudited)
|
4
|
|
Condensed
Consolidated Statements of Shareholders’ Equity for the
|
|
|
Three
Months ended July 31, 2007 (Unaudited)
|
5
|
|
Condensed
Consolidated Statements of Cash Flows for the
Three
|
|
|
Months
Ended July 31, 2007 and 2006 (Unaudited)
|
6
|
|
Notes
to the Condensed Consolidated Financial Statements
(Unaudited)
|
|
|
July
31, 2007
|
7
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Board of Directors and Shareholders of
Cosan
S.A.
Indústria e Comércio
We
have reviewed the condensed
consolidated balance sheet of Cosan S.A. Indústria e Comércio and subsidiaries
as of July 31,
2007, the related condensed
consolidated statements of income and cash flows for the three-month periods
ended July 31,
2007 and 2006, and the
condensed consolidated statement of shareholders’ equity for the three-month
period ended July 31,
2007. These financial
statements are the responsibility of the Company's
management.
We
conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, the objective of
which is the expression of an opinion regarding the financial statements taken
as whole. Accordingly, we do not express such an opinion.
Based
on our review, we are not aware of
any material modifications that should be made to the condensed consolidated
financial statements referred to above for them to be in conformity with
U.S.
generally accepted accounting
principles.
We
have previously audited, in
accordance with of the Public Company Accounting
Oversight
Board (United States),
the
consolidated balance sheet of Cosan
S.A. Indústria e Comércio and subsidiaries as of April 30, 2007,
and the related consolidated
statements of operations, shareholders’ equity and cash flows for the year then
ended not presented herein and in our report dated May 31, 2007,
we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of April 30,
2007, is fairly stated, in
all material respects, in relation to the consolidated balance sheet from which
it has been derived.
|
Campinas,
Brazil
|
ERNST
& YOUNG
|
|
September
10, 2007
|
Auditores
Independentes S.S.
|
|
CRC2SP015199/O-8
|
|
|
/s/
Luiz Carlos Nannini
|
|
|
Luiz
Carlos Nannini
|
|
|
Accountant
CRC 1SP171638/O-7
|
1
CONDENSED
CONSOLIDATED BALANCE SHEETS
July
31,
2007 and April 30, 2007
(In
thousands of U.S. dollars, except share data)
|
(Unaudited)
July
31,
2007
|
April
30,
2007
|
||
|
Assets
|
|||
|
Current
assets:
|
|||
|
Cash
and cash equivalents
|
307,716
|
316,542
|
|
|
Restricted
cash
|
49,165
|
17,672
|
|
|
Marketable
securities
|
124,497
|
281,879
|
|
|
Trade
accounts receivable, less allowances: July, 31, 2007 – 5,507; April 30,
2007 – 4,013
|
74,611
|
55,206
|
|
|
Inventories
|
415,904
|
247,480
|
|
|
Advances
to suppliers
|
163,504
|
103,961
|
|
|
Other
current assets
|
93,454
|
116,763
|
|
|
1,228,851
|
1,139,503
|
||
|
Property,
plant and equipment, net
|
1,311,026
|
1,194,050
|
|
|
Goodwill
|
527,698
|
491,857
|
|
|
Intangible
assets, net
|
99,745
|
93,973
|
|
|
Accounts
receivable from Federal Government
|
169,556
|
156,526
|
|
|
Other
non-current assets
|
192,250
|
177,460
|
|
|
2,300,275
|
2,113,866
|
||
|
Total
assets
|
3,529,126
|
3,253,369
|
2
|
(Unaudited)
July
31,
2007
|
April
30,
2007
|
|||
|
Liabilities
and shareholders’ equity
|
||||
|
Current
liabilities:
|
||||
|
Trade
accounts payable
|
166,607
|
55,938
|
||
|
Advances
from customers
|
21,857
|
24,275
|
||
|
Taxes
payable
|
64,809
|
57,543
|
||
|
Salaries
payable
|
47,863
|
31,109
|
||
|
Current
portion of long-term debt
|
51,830
|
36,076
|
||
|
Derivative
financial instruments
|
14,983
|
9,779
|
||
|
Dividends
payable
|
40,379
|
37,261
|
||
|
Other
liabilities
|
10,164
|
22,238
|
||
|
418,492
|
274,219
|
|||
|
Long-term
liabilities:
|
||||
|
Long-term
debt
|
1,357,221
|
1,342,496
|
||
|
Estimated
liability for legal proceedings and labor claims
|
417,818
|
379,191
|
||
|
Taxes
payable
|
115,668
|
106,897
|
||
|
Advances
from customers
|
8,333
|
24,333
|
||
|
Deferred
income taxes
|
142,196
|
141,587
|
||
|
Other
long-term liabilities
|
50,261
|
47,484
|
||
|
2,091,497
|
2,041,988
|
|||
|
Minority
interest in consolidated subsidiaries
|
8,999
|
8,512
|
||
|
Shareholders’
equity
|
||||
|
Common
stock, no par value. Authorized 188,886,360 shares; issued and outstanding
188,886,360 shares at July 31, 2007 and April 30, 2007
|
535,105
|
535,105
|
||
|
Additional
paid-in capital
|
162,612
|
160,944
|
||
|
Accumulated
other comprehensive income
|
149,331
|
71,953
|
||
|
Retained
earnings
|
163,090
|
160,648
|
||
|
Total
shareholders’ equity
|
1,010,138
|
928,650
|
||
|
Total
liabilities and shareholders' equity
|
3,529,126
|
3,253,369
|
See
accompanying notes to condensed consolidated financial statements.
3
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
Three
months ended July 31, 2007 and 2006
(In
thousands of U.S. dollars, except share data)
(Unaudited)
|
2007
|
2006
|
||
|
Net
sales
|
301,300
|
425,023
|
|
|
Cost
of goods sold
|
(288,189)
|
(263,263)
|
|
|
Gross
profit
|
13,111
|
161,760
|
|
|
Selling
expenses
|
(31,975)
|
(27,910)
|
|
|
General
and administrative expenses
|
(30,140)
|
(21,890)
|
|
|
Operating
(loss) income
|
(49,004)
|
111,960
|
|
|
Other
income (expense):
|
|||
|
Financial
income
|
135,994
|
152,489
|
|
|
Financial
expenses
|
(82,287)
|
(129,684)
|
|
|
Other
expenses
|
(541)
|
(1,368)
|
|
|
Income
before income taxes, equity in income of affiliates and minority
interest
|
4,162
|
133,397
|
|
|
Income
taxes
|
(1,702)
|
(47,389)
|
|
|
Income
before equity in income of affiliates and minority
interest
|
2,460
|
86,008
|
|
|
Equity
in income (loss)of affiliates
|
(233)
|
117
|
|
|
Minority
interest in loss (net income) of subsidiaries
|
215
|
(840)
|
|
|
Net
income
|
2,442
|
85,285
|
|
|
Earnings
per share:
|
|||
|
Basic
|
0.01
|
0.45
|
|
|
Diluted
|
0.01
|
0.45
|
|
|
Weighted
average number of shares outstanding:
|
|||
|
Basic
|
188,886,360
|
187,753,653
|
|
|
Diluted
|
192,127,535
|
190,584,190
|
See
accompanying notes to condensed consolidated financial statements.
4
CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Three
months ended July 31, 2007
(In
thousands of U.S. dollars, except share data)
(Unaudited)
|
Common
number
|
Common
amount
|
Additional
paid-in
capital
|
Accumulated
other
comprehensive income
|
Retained
earnings
|
Total
shareholders’
equity
|
||||||
|
Balances
at April 30, 2007
|
188,886,360
|
535,105
|
160,944
|
71,953
|
160,648
|
928,650
|
|||||
|
Share
based compensation
|
-
|
-
|
1,668
|
-
|
-
|
1,668
|
|||||
|
Net
income
|
-
|
-
|
-
|
-
|
2,442
|
2,442
|
|||||
|
Currency
translation adjustment
|
-
|
-
|
-
|
77,378
|
-
|
77,378
|
|||||
|
Balances
at July 31, 2007
|
188,886,360
|
535,105
|
162,612
|
149,331
|
163,090
|
1,010,138
|
See
accompanying notes to condensed consolidated financial statements.
5
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three
months ended July 31, 2007 and 2006
(In
thousands of U.S. dollars)
(Unaudited)
|
2007
|
2006
|
||
|
Cash
flow from operating activities
|
|||
|
Net
income
|
2,442
|
85,285
|
|
|
Adjustments
to reconcile net income to cash provided by operating
activities
|
|||
|
Depreciation
and amortization
|
75,243
|
37,044
|
|
|
Deferred
income and social contribution taxes
|
(8,611)
|
42,401
|
|
|
Interest,
monetary and exchange variation
|
(53,100)
|
56,030
|
|
|
Minority
interest in (net income) loss of subsidiaries
|
(215)
|
840
|
|
|
Others
|
5,778
|
3,589
|
|
|
Decrease
(increase) in operating assets and liabilities
|
|||
|
Trade
accounts receivable, net
|
(16,671)
|
(8,112)
|
|
|
Inventories
|
(147,823)
|
(222,949)
|
|
|
Advances
to suppliers
|
(50,889)
|
(15,868)
|
|
|
Trade
accounts payable
|
106,012
|
81,745
|
|
|
Derivative
financial instruments
|
33,510
|
(86,034)
|
|
|
Taxes
payable
|
(841)
|
2,304
|
|
|
Other
assets and liabilities, net
|
11,138
|
17,358
|
|
|
Net
cash used in by operating activities
|
(44,027)
|
(6,367)
|
|
|
Cash
flows from investing activities
|
|||
|
Restricted
cash
|
(30,022)
|
59,244
|
|
|
Marketable
securities
|
180,847
|
62,949
|
|
|
Acquisition
of property, plant and equipment
|
(94,391)
|
(10,386)
|
|
|
Acquisition
of investment
|
(1,121)
|
-
|
|
|
Net
cash provided by investing activities
|
55,313
|
111,807
|
|
|
Cash
flows from financing activities
|
|||
|
Additions
of long-term debt
|
-
|
1,476
|
|
|
Payments
of long-term debt
|
(47,128)
|
(59,172)
|
|
|
Net
cash used in financing activities
|
(47,128)
|
(57,696)
|
|
|
Effect
of exchange rate changes on cash and
|
|||
|
cash
equivalents
|
27,016
|
4,021
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
(8,826)
|
51,765
|
|
|
Cash
and cash equivalents at beginning of period
|
316,542
|
29,215
|
|
|
Cash
and cash equivalents at end of period
|
307,716
|
80,980
|
See
accompanying notes to condensed consolidated financial statements.
6
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS
(In
thousands of U.S. dollars, unless otherwise stated)
|
1.
|
Operations
|
Cosan
S.A.
Indústria e Comércio and subsidiaries (“Cosan”) is incorporated under the laws
of the Federative Republic of Brazil. Cosan shares are traded on the São Paulo
Stock Exchange (Bovespa). See Note 13.
|
2.
|
Presentation
of the Consolidated Financial
Statements
|
a.
Basis
of Reporting for Interim Financial Statements
The
condensed consolidated financial statements have been prepared in accordance
with generally accepted accounting principles in the United States (“U.S.
GAAP”), which differs in certain respects from accounting principles generally
accepted in Brazil (“Brazilian GAAP”), which Cosan uses to prepare its statutory
consolidated financial statements as filed with the Brazilian Securities
Commission - CVM (“Comissão de Valores Mobiliários”).
In
the
opinion of management, the unaudited condensed consolidated financial statements
reflect all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation of the Company’s results for the periods
presented. Interim results for the three months ended July 31, 2007, are not
necessarily indicative of the results that may be expected for the year ending
April 30, 2008.
These
Financial Statements should be read in conjunction with Cosan’s annual financial
statements for the fiscal year ended April 30, 2007.
The
unaudited condensed consolidated financial statements include the accounts
of
Cosan S.A. Indústria e Comércio and its subsidiaries. All significant
intercompany transactions have been eliminated.
The
accounts of Cosan are maintained in Brazilian reais, which have been translated
into U.S. dollars in accordance with Statement of Financial Accounting Standards
(“SFAS”) No. 52 “Foreign Currency Translation” using the real as the functional
currency.
The
exchange rate of the Brazilian real (R$) to the US$ was
R$2.0339=US$1.00 at April 30, 2007 and R$1.8776=US$ 1.00 at July 31,
2007.
7
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
|
2.
|
Presentation
of the Consolidated Financial
Statements--Continued
|
b. Use
of estimates
The
preparation of condensed consolidated financial statements in conformity with
U.S. GAAP requires management to make estimates and assumptions that affect
the
amounts reported in the consolidated financial statements and accompanying
notes. Actual results could differ from these estimates. These estimates and
assumptions are reviewed and updated regularly to reflect recent
experience.
c. Recently
issued accounting standards
In
February 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities—including an amendment of FASB
Statement No. 115” (“SFAS 159”), which expands the use of fair value
measurement by permitting entities to choose to measure many financial
instruments and certain other items at fair value at specified election dates.
This statement is required to be adopted by Cosan as of May 1, 2008. Cosan
does not believe the adoption of SFAS 159 will have a material effect on its
consolidated financial position, results of operations or cash
flows.
In
September 2006, the FASB also issued Statement of Financial Accounting
Standards No. 157, “Fair Value Measurements” (“SFAS 157”), which defines
fair value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements. SFAS 157 does not require any new
fair value measurements but instead is intended to eliminate inconsistencies
with respect to this topic found in various other accounting pronouncements.
This Statement is effective for Cosan as of May 1, 2008. Cosan does not
believe the adoption of SFAS 157 will have a material effect on its consolidated
financial position, results of operations or cash flows.
8
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
|
3.
|
Cash
and Cash Equivalents
|
|
July
31, 007
|
April
30, 2007
|
||
|
Local
currency
|
|||
|
Cash
and bank accounts
|
101,427
|
16,208
|
|
|
Foreign
currency
|
|||
|
Cash
and bank accounts
|
206,289
|
300,334
|
|
|
307,716
|
316,542
|
|
4.
|
Derivative Financial
Instruments
|
Cosan
has
entered into derivative financial instruments with various counterparties and
uses derivatives to manage the overall exposures related to sugar price
variation in the international market and exchange rate variation. The
instruments are commodity futures contracts, forward currency agreements,
interest rate and foreign exchange swap contracts, and option contracts. Cosan
recognizes all derivatives on the balance sheet at fair value.
There
are
no derivative instruments designated as hedges.
The
following table summarizes the notional value of derivative financial
instruments as well as the related amounts recorded in balance sheet
accounts:
|
Notional
amounts
|
Carrying
value asset
(liability)
|
||||||
|
July
31, 2007
|
April
30, 2007
|
July
31, 2007
|
April
30, 2007
|
||||
|
Commodities
derivatives
|
|||||||
|
Future
contracts:
|
|||||||
|
Sell
commitments
|
188,857
|
247,882
|
7,843
|
47,427
|
|||
|
Options:
|
|||||||
|
Purchased
|
40,642
|
58,587
|
3,183
|
4,502
|
|||
|
Written
|
84,568
|
-
|
(1,097)
|
-
|
|||
|
Foreign
exchange derivatives
|
|||||||
|
Forward
contracts:
|
|||||||
|
Sale
commitments
|
439,912
|
153,824
|
33,037
|
13,274
|
|||
|
Swap
agreements
|
314,313
|
328,419
|
(13,886)
|
(9,779)
|
|||
|
Total
assets
|
44,063
|
65,203
|
|||||
|
Total
liabilities
|
(14,983)
|
(9,779)
|
|||||
9
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
|
4.
|
Derivative Financial
Instruments--Continued
|
Where
quoted market prices were not available, fair values were based on estimates
using discounted cash flows or other valuation techniques. Asset figures are
classified as other current assets.
|
5.
|
Inventories
|
|
July
31,
2007
|
April
30,
2007
|
||
|
Finished
goods:
|
|||
|
Sugar
|
75,264
|
5,730
|
|
|
Ethanol
|
113,207
|
8,731
|
|
|
Others
|
10,024
|
1,681
|
|
|
198,495
|
16,142
|
||
|
Annual
maintenance cost of growing crops
|
156,168
|
183,157
|
|
|
Others
|
61,241
|
48,181
|
|
|
415,904
|
247,480
|
The
increase in finished goods and decrease in annual maintenance cost of growing
crops relate to the beginning of the 2007/2008 harvest period which occurred
in
middle March 2007.
6. Long-term
Debt
Long-term debt is summarized as follows:
|
Financial
charges
|
|||||||
|
Index
|
Average
Annual interest rate
|
July
31, 2007
|
April
30, 2007
|
||||
|
Resolution
2471 (PESA)
|
IGP-M
|
3.95%
|
215,923
|
196,545
|
|||
|
Corn
price variation
|
12.50%
|
748
|
685
|
||||
|
Senior
notes due 2009
|
US
Dollar
|
9.0%
|
205,143
|
200,000
|
|||
|
Senior
notes due 2017
|
US
Dollar
|
7.0%
|
414,311
|
407,311
|
|||
|
IFC
|
US
Dollar
|
7.44%
|
63,195
|
67,677
|
|||
|
Perpetual
notes
|
US
Dollar
|
8.25%
|
459,034
|
459,035
|
|||
|
Others
|
Various
|
Various
|
50,697
|
47,319
|
|||
|
1,409,051
|
1,378,572
|
||||||
|
Currently
liability
|
(51,830)
|
(36,076)
|
10
|
Financial
charges
|
|||||||
|
Index
|
Average
Annual interest rate
|
July
31, 2007
|
April
30, 2007
|
||||
|
Long-term
debt
|
1,357,221
|
1,342,496
|
11
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
6. Long-term
Debt--Continued
Long-term debt has the following scheduled maturities:
|
July
31,
|
|
|
13
to 24 months
|
8,319
|
|
25
to 36 months
|
207,434
|
|
37
to 48 months
|
7,311
|
|
49
to 60 months
|
36,415
|
|
61
to 72 months
|
12,683
|
|
73
to 84 months
|
1,171
|
|
After
84 months
|
1,083,888
|
|
Total
|
1,357,221
|
Senior
notes due 2009
The
senior
notes are listed on the Luxembourg Stock Exchange, mature in November 2009
and
bear interest at a rate of 9% per annum, payable semi-annually in May and
November as from May 1, 2005. Guarantees have been provided by Cosan’s
subsidiary, Usina da Barra.
Senior
notes due 2017
On
January
26, 2007, the wholly-owned subsidiary Cosan Finance Limited issued US$400
million of senior notes in the international capital markets. These senior
notes, listed on the Luxembourg Stock Exchange, mature in February 2017 and
bear
interest at a rate of 7% per annum, payable semi-annually. Guarantees have
been
provided by the subsidiary, Usina da Barra.
Perpetual
notes
On
January
24 and February 10, 2006, Cosan issued perpetual notes. The perpetual notes
are
listed in the Luxembourg Stock Exchange - EURO MTF and are subject to interest
of 8.25% per year, payable quarterly on the 15th of May, August, November and
February of each year, beginning May 15, 2006.
These
notes may, at the discretion of Cosan, be redeemed as from February 15, 2011
on
any interest payment date. Perpetual notes are guaranteed by Cosan and by Usina
da Barra.
12
Special
Agricultural Financing Program (Programa Especial de Saneamento de Ativos),
or
PESA
13
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
6. Long-term
Debt--Continued
Perpetual
notes--Continued
To
extend
the repayment period of debts incurred by Brazilian agricultural producers,
the
Brazilian government passed Law 9.138 followed by Central Bank Resolution 2,471,
which, together, formed the PESA program. PESA offered certain
agricultural producers with certain types of debt the opportunity to acquire
Brazilian treasury bills (CTNs) in an effort to restructure their agricultural
debt. The face value of the Brazilian treasury bills was the
equivalent of the value of the restructured debt and was for a term of 20
years.
The
acquisition price was calculated by the present value, discounted at a rate
of
12% per year or at the equivalent of 10.4% of its face value. The CTNs were
deposited as a guarantee with a financial institution and cannot be renegotiated
until the outstanding balance is paid in full. The outstanding balance
associated with the principal is adjusted in accordance with the IGP-M until
the
expiration of the restructuring term, which is also 20 years, at which point
the
debt will be discharged in exchange for the CTNs. Because the CTNs
will have the same face value as the outstanding balance at the end of the
term,
it will not be necessary to incur additional debt to repay our PESA
debt.
On
July
31, 2003, the Central Bank issued Resolution 3,114, authorizing the reduction
of
up to five percentage points of PESA related interest rates, effectively
lowering the above-mentioned rates to 3%, 4% and 5%, respectively. The CTNs
held
by Cosan as of July 31, 2007 and April 30, 2007 amounted to US$90,883 and
US$82,205 respectively, and are classified as non-current
assets-other.
Cosan
and
its subsidiaries are subject to certain restrictive covenants related to
indebtedness limit (net debt/EBTIDA ratio must be less than 3.5 to 1);
limitation on transactions with shareholders and affiliated companies; and
limitation on payment of dividends and other payments affecting
subsidiaries.
14
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
|
7.
|
Contingencies
|
|
July
31,
2007
|
April
30,
2007
|
||
|
Tax
contingencies
|
363,328
|
329,493
|
|
|
Civil
and labor contingencies
|
54,490
|
49,698
|
|
|
417,818
|
379,191
|
Cosan
and
its subsidiaries are parties in various ongoing labor claims, civil and tax
proceedings arising in the normal course of its business. Respective provisions
for contingencies were recorded considering those cases in which the likelihood
of loss has been rated as probable. Management believes resolution of these
disputes will have no effect significantly different than the estimated amounts
accrued.
Judicial
deposits recorded by Cosan under the caption other non-current assets have
been
made for some of these suits amounting to US$23,336 (US$21,274 on April 30,
2007). Judicial deposits are restricted assets of Cosan placed on deposit with
the court and held in judicial escrow pending of legal resolution certain legal
proceedings.
Tax
contingencies refer, substantially, to suits filed by Cosan and its
subsidiaries, relating to several aspects of the legislation ruling PIS, Cofins,
contributions to the extinct IAA - Sugar and Ethanol Institute, and the Federal
VAT (IPI), as well as tax delinquency notices related to ICMS and contributions
to the INSS.
The
major
tax contingencies as of July 31, 2007 are related to Excise tax - IPI credit
premium in the amount of US$136,277, Value added tax - ICMS in the amount of
US$20,797, IAA tax contribution in the amount of US$41,214, and Social
Contributions in the amount of US$64,743.
In
addition to the aforementioned claims, Cosan and its subsidiaries are involved
in other contingent liabilities relating to tax claims and environmental
matters, which have not been recorded, considering their current stage and
the
likelihood of favorable outcomes. These claims are broken down as
follows:
|
July
31,
2007
|
April
30,
2007
|
||
|
ICMS
- State value added tax
|
33,759
|
28,964
|
|
|
IAA
- Sugar and Ethanol Institute
|
25,787
|
23,706
|
|
|
IPI
- Federal value-added tax
|
38,555
|
31,921
|
15
|
July
31,
2007
|
April
30,
2007
|
|
Others
|
23,040
|
18,574
|
|
|
121,141
|
103,165
|
16
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
|
7.
|
Contingencies--Continued
|
The
subsidiary Usina da Barra has several indemnification suits filed against the
Federal Government. The suits relate to product prices that did not conform
to
the reality of the market, which were mandatorily established at the time the
sector was under the Government’s control.
In
connection with one of these suits, a final and unappealable decision in the
amount of US$149,121, million was rendered in September 2006 in favor of Usina
de Barra. This has been recorded as a gain in the statement of operations.
Since
the recorded amount is substantially composed of interest and monetary
restatement, it was recorded in Financial income and in a non-current receivable
on the balance sheet. In connection with the settlement process, the form of
payment is being determined.
The
Company is expecting a final decision relative to the payment terms within
three
years, which is expected to be in the form of public debt, to be received over
a
ten year period. The amount is subject to interest and inflation adjustment
by
an official index. Lawyers’ fees in the amount of US$18,783 relating to this
suit was recorded in general and administrative expenses.
|
8.
|
Income
taxes
|
The
Company and its subsidiaries file income tax returns in the Brazilian federal
jurisdiction. The Company is no longer subject to Brazilian federal income
tax
examinations by tax authorities for years before December 31, 2001.
Additionally, the Company has not been under a Brazilian Internal Revenue
Service (IRS) income tax examination for 2002 through 2007.
Effective
May 1, 2007, the Company
adopted FASB Interpretation No. 48, Accounting for Uncertainty
in Income
Taxes, an
interpretation of FASB Statement 109
(FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in financial statements and prescribes a threshold of
more-likely-than-not for recognition of tax benefits of uncertain tax positions
taken or expected to be taken in a tax return. FIN 48 also provides related
guidance on measurement, derecognition, classification, interest and penalties,
and disclosure. Also, FIN 48excludes income taxes from the scope of Statement
of
Financial Accounting Standards No. 5, Accounting for
Contingencies.
17
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
|
8.
|
Income
taxes--Continued
|
Prior
to the adoption of FIN 48, the
Company recognized tax benefits of uncertain tax positions only if it was
probable that the positions would be sustained. There was no retained earnings
impact upon adoption of FIN 48 as no additional tax position met the recognition
threshold under FIN 48.
A
reconciliation of the beginning and ending amount of unrecognized tax benefits
is as follows:
|
Balance
at May 1, 2007
|
20,460
|
|
|
Accrued
interest on unrecognized tax benefit
|
292
|
|
|
Settlements
|
(20)
|
|
|
Balance
at July 31, 2007
|
20,732
|
It
is
possible that the amount of unrecognized tax benefits will change in the next
twelve months, however, an estimate of the range of the possible change cannot
be made at this time due to the long time to reach an settlement agreement
or
decision with the taxing authorities.
The
Company recognizes interest accrued related to unrecognized tax benefits in
interest expense and penalties in operating expenses.
|
9.
|
Share-based
compensation
|
In
the
ordinary and extraordinary general meeting held on August 30, 2005, the
guidelines for the outlining and structuring of a stock option plan for Cosan’s
officers and employees were approved, thus authorizing the issue of up to 5%
of
shares comprising Cosan’s share capital. This stock option plan was outlined to
attract and retain services rendered by officers and key employees, offering
them the opportunity to become shareholders of Cosan. On September 22, 2005,
the
board of directors approved the distribution of stock options corresponding
to
4,302,780 common shares to be issued or purchased by Cosan related to 3.25%
of
the share capital at the time, authorized by the annual/extraordinary meeting.
The remaining 1.75% may still be distributed. On September 22, 2005, the
officers and key employees were informed regarding the key terms and conditions
of the share-based compensation arrangement.
18
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
|
9.
|
Share-based
compensation--Continued
|
According
to the market value on the date of issuance, the exercise price is US$3.25
per
share which does not include any discount. The exercise price was calculated
before the valuation mentioned above based on an expected private equity deal
which did not occur. Options may be exercised after a one-year vesting period
starting November 18, 2005, at the maximum percentage of 25% per year of the
total stock options offered by Cosan. The options for each 25% have a five-year
period to be exercised.
The
exercised options will be settled only through issuance of new common shares
or
treasury stock that Cosan may have in each date.
The
employees that leave Cosan before the vesting period will forfeit 100% of their
rights. However, if the employment is terminated by Cosan with no cause, the
employees will have right to exercise 100% of their options of that particular
year plus the right to exercise 50% of the options of the following
year.
The
fair
value of stock-based awards was estimated using a binominal model with the
following assumptions for the three-months period ended July 31,
2007:
|
September
22, 2005
|
|
|
Grant
price – US$
|
3.25
|
|
Expected
life (in years)
|
7.5
|
|
Interest
rate
|
14.52%
|
|
Volatility
|
34%
|
|
Dividend
yield
|
1.25%
|
|
Weighted-average
fair value at grant date – US$
|
6.41
|
As
of July
31, 2007 the amount of US$ 13,815 related to the unrecognized stock option
compensation cost is expected to be recognized in 2.5 years. Cosan currently
has
no shares in treasury.
Additionally
as of July 31, 2007 there was 2,885,013 options outstanding with a
weighted-average exercise price of US$3.25.
19
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
10.
Earnings
per Share
The
table
below reconciles weighted average shares outstanding to weighted average shares
and dilutive potential shares outstanding for the three months ended July
31:
|
2007
|
2006
|
||
|
Weighted
average shares outstanding
|
188,886,360
|
187,753,653
|
|
|
Effect
of dilutive stock options
|
3,241,175
|
2,830,537
|
|
|
Weighted
average shares and dilutive potential shares outstanding
|
192,127,535
|
190,584,190
|
11.
Other Comprehensive Income
The
table
below presents accumulated other comprehensive income (expense) for the three
months ended July 31:
|
2007
|
2006
|
||
|
Net
income
|
2,442
|
85,285
|
|
|
Currency
translation adjustment
|
77,378
|
17,754
|
|
|
Total
comprehensive income
|
79,820
|
103,039
|
12. Segment
Information
The
following information about segments is based upon information used by Cosan’s
senior management to assess the performance of operating segments and decide
on
the allocation of resources. Cosan’s reportable segments are business units that
target different industry segments. Each reportable segment is managed
separately because of the need to specifically address customer needs in these
different industries. Cosan has three segments: Sugar, Ethanol and others group.
The operations of these segments are based solely in Brazil.
20
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
12.
Segment
Information--Continued
The
sugar
segment mainly operates and produces a broad variety of sugar products,
including raw (also known as very high polarization - VHP sugar), organic,
crystal and refined sugars, and sell these products to a wide range of customers
in Brazil and abroad. Cosan exports the majority of the sugar produced through
international commodity trading companies. Cosan’s domestic customers include
wholesale distributors, food manufacturers and retail supermarkets, through
which it sells its “Da Barra” branded products.
The
ethanol segment substantially produces and sells fuel ethanol, both hydrous
and
anhydrous (which has lower water content than hydrous ethanol) and industrial
ethanol. Cosan’s principal ethanol product is fuel ethanol, which is used both
as an automotive fuel and as an additive in gasoline, and is mainly sold in
the
domestic market by fuel distribution companies. Consumption of hydrous ethanol
in Brazil is increasing as a result of the introduction of flex fuel vehicles
that can run on either gasoline or ethanol (or a combination of both) to the
Brazilian market in 2003. In addition, Cosan sells liquid and gel ethanol
products used mainly in the production of paint and cosmetics and alcoholic
beverages for industrial clients in various sectors.
The
accounting policies underlying the financial information provided for the
segments are based on Brazilian GAAP. We evaluate segment performance
information generated from the statutory accounting records.
Others
segment is comprised by selling cogeneration of electricity, diesel and
corporate activities.
No
asset
information is provided by reportable segment due to the fact that the majority
of the assets used in production of sugar an ethanol are the same.
21
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
12.
Segment Information--Continued
Measurement
of segment profit or loss and segment assets
Cosan
evaluates performance and allocates resources based on return on capital and
profitable growth. The primary measurement used by management to measure the
financial performance of Cosan is adjusted EBIT (earnings before interests
and
taxes excluding especial items such as impairment and restructuring, integration
costs, one-time gains or losses on sales of assets, acquisition, and other
items
similar in nature). The accounting policies of the reportable segments are
the
same as those described in the summary of significant accounting
policies.
|
July
31,
|
|||
|
2007
|
2006
|
||
|
Net
sales — Brazilian GAAP:
|
|||
|
Sugar
|
190,074
|
274,266
|
|
|
Ethanol
|
84,722
|
126,574
|
|
|
Others
|
25,715
|
23,251
|
|
|
Total
|
300,511
|
424,091
|
|
|
Reconciling
item to U.S. GAAP
|
|||
|
Sugar
|
789
|
932
|
|
|
Ethanol
|
-
|
-
|
|
|
Others
|
-
|
-
|
|
|
Total
|
789
|
932
|
|
|
Total
net sales
|
301,300
|
425,023
|
|
22
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
12.
Segment Information--Continued
Measurement
of segment profit or loss and segment
assets--Continued
|
July
31,
|
|||
|
2007
|
2006
|
||
|
Segment
operating income - Brazilian GAAP
|
|||
|
Sugar
|
(41,325)
|
60,033
|
|
|
Ethanol
|
(18,420)
|
27,705
|
|
|
Others
|
(5,591)
|
5,090
|
|
|
Operating
income (loss) under Brazilian GAAP
|
(65,336)
|
92,828
|
|
|
Reconciling
items to U.S. GAAP
|
|||
|
Depreciation
and amortization expenses
|
|||
|
Sugar
|
10,836
|
12,864
|
|
|
Ethanol
|
4,830
|
5,937
|
|
|
Others
|
1,466
|
1,091
|
|
|
17,132
|
19,892
|
||
|
Other
adjustments
|
|||
|
Sugar
|
(216)
|
(162)
|
|
|
Ethanol
|
(448)
|
(505)
|
|
|
Others
|
(136)
|
(93)
|
|
|
(800)
|
(760)
|
||
|
Total
sugar
|
(30,705)
|
72,735
|
|
|
Total
ethanol
|
(14,038)
|
33,137
|
|
|
Total
others
|
(4,261)
|
6,088
|
|
|
Operating
income (loss) under U.S. GAAP
|
(49,004)
|
111,960
|
|
23
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
|
|
12. Segment
Information--Continued
|
Sales
by principal customers
Sugar
The
following table sets forth the amount of sugar that we sold to our principal
customers during the three months ended July 31, as a percentage of our total
sales of sugar:
|
Market
|
Customer
|
2007
|
2006
|
|||
|
International
|
Sucres
et Denrées
|
25%
|
47%
|
|||
|
Tate
& Lyle International
|
16%
|
5%
|
||||
|
S.A.
Fluxo
|
14%
|
11%
|
||||
|
Coimex
Trading Ltd
|
13%
|
14%
|
||||
|
Cane
International Corporation
|
12%
|
-
|
Ethanol
The
following table sets forth the amount of ethanol that we sold to our principal
customers during the three months ended July 31, as a percentage of our total
sales of ethanol:
|
Market
|
Customer
|
2007
|
2006
|
|||
|
International
|
Vertical
UK LLP
|
35%
|
29%
|
|||
|
Vitol
Inc.
|
26%
|
-
|
||||
|
Alcotra
S.A.
|
-
|
27%
|
||||
|
Domestic
|
Shell
Brasil Ltda.
|
34%
|
32%
|
|||
|
Euro
Petróleo do Brasil Ltda.
|
26%
|
-
|
||||
|
Petrobrás
Distribuidora S.A.
|
13%
|
9%
|
||||
|
Manancial
Distribuidora de Petróleo Ltda.
|
-
|
12%
|
24
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
|
13.
|
Subsequent
Event
|
Change
of controlling shareholder
On
August
1, 2007, Cosan Limited, a company incorporated in Bermuda, became the
controlling shareholder of Cosan S.A. Indústria e Comércio (the “Company”), in
which it obtained a 51% interest.
This
operation was carried out by means of a corporate restructuring involving the
Company’s former direct controlling shareholders, to wit, Usina Costa Pinto S.A.
Açúcar e Álcool (“Usina Costa Pinto”) and Aguassanta Participações S.A.
(“Aguassanta Participações”). Referred to shareholders contributed capital to
Cosan Limited in the form of Company’s common shares, as stated below, thus
becoming part of the Company’s indirect ownership structure:
|
Shareholder
|
Number
of shares of the Company’s issue contributed as capital to Cosan
Limited
|
Interest
held in the Company
|
||
|
Usina
Costa Pinto
|
30,010,278
|
15.89%
|
||
|
Aguassanta
Participações
|
66,321,766
|
35.11%
|
||
|
96,332,044
|
51.00%
|
Subsequently,
Aguassanta Participações proceeded with the corporate restructuring involving
its interest held in Cosan Limited. As a result of this restructuring, the
equity interest formerly held by Aguassanta Participações directly in Cosan
Limited turned into indirect interest, by means of holding companies in Brazil
and abroad. Upon completion of said corporate restructuring operation, the
Cosan
Limited ownership structure – where Cosan Limited‘s equity interest in
Cosan S.A. Indústria e Comércio remained unaltered, corresponding to
51.6% , was as follows:
|
Shareholder
|
Class
of shares
|
Number
of shares
|
Interest
|
|||
|
Usina
Costa Pinto
|
B1
|
30,010,278
|
15.29%
|
|||
|
Queluz
Holdings Limited
|
B1
|
66,321,766
|
33.78%
|
|||
|
Aguassanta
Participações
|
A
|
5,000,000
|
2.55%
|
|||
|
Other
shareholders
|
A
|
95,000,000
|
48.39%
|
|||
|
196,332,044
|
100.00%
|
25
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
|
13.
|
Subsequent
Event--Continued
|
Cosan
Limited shares owned by Usina Costa Pinto and Queluz Holdings Limited are Class
B1 shares, which entitle their holders to 10 votes per share. Other shares
are
Class A shares, which entitle holders to 1 vote per share.
On
August
16, 2007, Cosan Limited took part in a Global Initial Public Offering (IPO)
at
the New York Stock Exchange by offering 100,000,000 Class A shares. As of that
date, Cosan Limited priced its IPO at US$10.50 per Class A share, equivalent
to
the amount of R$21.05.
In
consonance with the IPO, Cosan Limited is conducting a public distribution
of
Brazilian Depositary Receipts (“BDRs”), which represent Class A shares and have
been traded at the São Paulo Stock Exchange since August 17, 2007.
The
referred to operation gave rise to questioning by the Brazilian Securities
and
Exchange Commission (“CVM”) which, in an Official Letter dated
August 10, 2007 requested information of the Company’s Chairman and
CEO about noncompliance with his loyalty duties and the possible usurpation
of
corporate opportunity under the terms of Brazilian legislation, especially
as
regards the conduct of activities abroad by Cosan Limited which could have
been
performed by the Company itself.
On
August
14, 2007, the Company’s Chairman and CEO informed CVM that his role in the
corporate reorganization operation was and continues to be conducted pursuant
to
Brazilian laws.
Complementarily,
at a meeting held on August 15, 2007, the Company learned from CVM
Decision-Making Board that, in the opinion of its members, the conduct of
activities abroad by means of Cosan Limited which could be developed by Cosan
S.A. through the currently proposed ownership structure may represent a
violation of the Brazilian corporate laws as respects loyalty duty and conflict
of interest. Accordingly, if the structure is maintained and Cosan Limited
performs investment operations abroad to the detriment of Cosan S.A., CVM may
initiate an administrative proceeding, which may ultimately lead to penalties.
The Company’s Chairman and CEO believes not to have violated any applicable law,
otherwise he undertakes to propose alternative structures and, in the search
of
solutions in this connection, he further undertakes not to change the conditions
and steps already
26
publicized
under significant events, particularly as regards the swap offering to be
directed to Cosan S.A. shareholders.
27
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS--Continued
(In
thousands of U.S. dollars, unless otherwise stated)
|
13.
|
Subsequent
Event--Continued
|
Annual
General Meeting
On
August
30, 2007, the Company held its Annual General Meeting whereat the following
resolutions were made by unanimous vote:
|
|
•
|
Approval
of the Company’s financial statements and management report for the year
ended April 30, 2007, as well as of the allocation of net profit
for the
year;
|
|
|
•
|
Ratification
of the dividend distribution resolved by the Board of Directors and
effectively carried out on August 6,
2007;
|
|
|
•
|
Election
of the Company’s Audit Committee new
members;
|
|
|
•
|
Setting
the Audit Committee members compensation and the overall annual amount
payable as Company management fees.
|
28
|
Unconsolidated
and Consolidated Quarterly Financial
Information
|
|
Cosan
S.A. Indústria e Comércio
|
|
July
31, 2007
|
C
COSAN
S.A. INDÚSTRIA E COMÉRCIO
UNCONSOLIDATED
AND CONSOLIDATED QUARTERLY FINANCIAL INFORMATION
July
31,
2007
Contents
|
Special
Review Report of Independent Auditors
|
1
|
|
Quarterly
Financial Information
|
|
|
Balance
Sheets
|
3
|
|
Statements
of Operations
|
5
|
|
Notes
to the Quarterly Financial Information
|
6
|
|
Report
on Company’s Performance
|
47
|
|
Other
Company’s Relevant Information
|
75
|
A
free translation from Portuguese into English of Special Review Report of
Independent Auditors on quarterly financial information prepared in Brazilian
currency in accordance with the accounting practices adopted in
Brazil
SPECIAL
REVIEW REPORT OF INDEPENDENT AUDITORS
The
Board
of Directors and Shareholders of
Cosan
S.A. Indústria e Comércio
|
1.
|
We
have performed a special review of the accompanying Quarterly Financial
Information of Cosan S.A. Indústria e Comércio and Cosan S.A. Indústria e
Comércio and subsidiaries for the three-month period ended July 31, 2007,
including the balance sheets, statements of income, report on the
Company’s performance and other Company and subsidiaries’ relevant
information, in accordance with accounting practices adopted in
Brazil.
|
|
2.
|
Our
review was conducted in accordance with the specific procedures determined
by the Institute of Independent Auditors of Brazil (IBRACON) and
the
Federal Board of Accountancy (CFC), and included principally: (a)
inquiries of and discussions with the management responsible for
the
Company’s accounting, financial and operational areas about the criteria
adopted for the preparation of the quarterly information and (b)
review of
information and subsequent events which have or could have significant
effects on the Company’s operations and financial
position.
|
|
3.
|
Based
on our special review we are not aware of any material modification
that
should be made to the Quarterly Financial Information referred to
above
for it to comply with accounting practices adopted in Brazil applicable
to
the preparation of Quarterly Financial Information, together with
specific
regulations established by the Brazilian Securities and Exchange
Commission (CVM).
|
|
4.
|
Our
special review was carried out to enable us to issue a report on
the
special review of the Quarterly Financial Information referred to
in the
first paragraph, taken as a whole. The statements of cash flows of
Cosan
S.A. Indústria e Comércio and Cosan S.A. Indústria e Comércio and
subsidiaries for the three-month period ended July 31, 2007, prepared
in
accordance with the accounting practices adopted in Brazil, which
are
presented to provide supplementary information about the Company
and its
subsidiaries, are not required as an integral part of the Quarterly
Financial Information. These statements were submitted to the review
procedures described in the second paragraph and, based on our review,
we
are not aware of any material modification that should be made to
these
supplementary statements for them to be fairly disclosed, in all
material
respects, with regard to the Quarterly Financial Information for
the
three-month period ended July 31, 2007, taken as a
whole.
|
1
|
5.
|
We
have audited the balance sheets as of April 30, 2007 and the related
notes, presented herewith for comparison purposes, and in our report
dated
May 31, 2007, we expressed an unqualified opinion on those balance
sheets.
We have also reviewed the statements of income for the quarter
ended as of
July 31, 2006, presented herewith for comparison purposes, and
in our
report dated September 13, 2006, we expressed an unqualified special
review report on those statements of
income.
|
Campinas,
September 10, 2007
ERNST
& YOUNG
Auditores
Independentes S.S.
CRC2SP015199/O-6
/s/
Luiz
Carlos Nannini
Luiz
Carlos Nannini
Accountant
CRC1SP171638/O-7
2
A
free translation from Portuguese into English of quarterly financial information
prepared in Brazilian currency in accordance with the accounting practices
adopted in Brazil
COSAN
S.A. INDÚSTRIA E COMÉRCIO
BALANCE
SHEETS
July
31,
2007 and April 30, 2007
(In
thousands of reais)
|
Parent
Company
|
Consolidated
|
|||||||
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
|||||
|
ASSETS
|
||||||||
|
Current
assets
|
||||||||
|
Cash
and cash equivalents
|
Note 4
|
145,442
|
31,571
|
578,973
|
643,815
|
|||
|
Marketable
securities
|
Note 5
|
229,410
|
513,698
|
237,428
|
573,314
|
|||
|
Trade
accounts receivable:
|
||||||||
|
Domestic
|
27,407
|
20,775
|
92,175
|
87,151
|
||||
|
Foreign
|
10,676
|
23,259
|
58,546
|
33,234
|
||||
|
(-)
Allowance for doubtful accounts
|
(954)
|
(940)
|
(10,340)
|
(8,102)
|
||||
|
Derivative
financial instruments
|
Note 6
|
94,029
|
37,578
|
94,029
|
37,578
|
|||
|
Inventories
|
Note 7
|
346,290
|
220,831
|
790,209
|
503,350
|
|||
|
Advances
to suppliers
|
Note 8
|
112,829
|
86,642
|
308,647
|
211,446
|
|||
|
Related
parties
|
Note 9
|
447,195
|
277,149
|
-
|
-
|
|||
|
Deferred
income and social contribution taxes
|
Note
14
|
25,127
|
34,008
|
26,923
|
38,093
|
|||
|
Other
assets
|
59,760
|
80,374
|
94,238
|
104,866
|
||||
|
1,497,211
|
1,324,945
|
2,270,828
|
2,224,745
|
|||||
|
Noncurrent
assets
|
||||||||
|
Long-term
receivables
|
||||||||
|
Accounts
receivable from federal government
|
Note
16
|
-
|
-
|
318,358
|
318,358
|
|||
|
Related
parties
|
Note 9
|
251
|
251
|
43
|
45
|
|||
|
CTNs-Restricted
Brazilian Treasury Bills
|
Note
15
|
19,655
|
18,992
|
127,771
|
123,310
|
|||
|
Deferred
income and social contribution taxes
|
Note
14
|
60,208
|
62,748
|
261,552
|
242,530
|
|||
|
Other
assets
|
30,902
|
33,876
|
108,106
|
112,323
|
||||
|
Permanent
assets
|
||||||||
|
Investments
|
Note
10
|
1,187,464
|
1,234,465
|
13,849
|
93,169
|
|||
|
Property,
plant and equipment
|
Note
11
|
754,046
|
758,963
|
2,076,733
|
2,013,137
|
|||
|
Goodwill
|
Note
12
|
519,870
|
555,989
|
1,146,574
|
1,133,178
|
|||
|
Deferred
charges
|
-
|
-
|
3,178
|
2,559
|
||||
|
2,572,396
|
2,665,284
|
4,056,164
|
4,038,609
|
|||||
|
Total
assets
|
4,069,607
|
3,990,229
|
6,326,992
|
6,263,354
|
||||
3
|
Parent
Company
|
Consolidated
|
|||||||
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
|||||
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||||||
|
Current
liabilities
|
||||||||
|
Loans
and financing
|
Note
15
|
63,869
|
60,759
|
116,521
|
88,991
|
|||
|
Derivative
financial instruments
|
Note 6
|
47,961
|
35,536
|
47,961
|
35,536
|
|||
|
Trade
accounts payable
|
126,680
|
54,630
|
315,207
|
113,773
|
||||
|
Salaries
payable
|
37,768
|
25,572
|
91,700
|
63,273
|
||||
|
Taxes
and social contributions payable
|
Note
13
|
51,829
|
48,202
|
131,539
|
126,202
|
|||
|
Advances
from customers
|
14,679
|
27,733
|
41,039
|
49,373
|
||||
|
Promissory
notes
|
1,268
|
1,261
|
1,268
|
1,261
|
||||
|
Related
parties
|
Note 9
|
9,459
|
668
|
-
|
667
|
|||
|
Deferred
income and social contribution taxes on revaluation
reserve
|
-
|
-
|
5,486
|
5,486
|
||||
|
Other
liabilities
|
8,114
|
23,130
|
11,515
|
31,356
|
||||
|
Dividends
proposed
|
Note
17
|
75,783
|
75,783
|
75,815
|
75,815
|
|||
|
437,410
|
353,274
|
838,051
|
591,733
|
|||||
|
Noncurrent
liabilities
|
||||||||
|
Loans
and financing
|
Note
15
|
1,396,753
|
1,519,135
|
2,591,126
|
2,770,435
|
|||
|
Taxes
and social contributions payable
|
Note
13
|
48,253
|
49,562
|
336,526
|
338,507
|
|||
|
Related
parties
|
Note 9
|
347,356
|
216,841
|
-
|
-
|
|||
|
Provision
for contingencies
|
Note
16
|
177,172
|
172,776
|
740,970
|
727,966
|
|||
|
Advances
from customers
|
-
|
32,542
|
15,646
|
49,491
|
||||
|
Deferred
income and social contribution taxes on revaluation
reserve
|
-
|
-
|
30,859
|
33,435
|
||||
|
Other
liabilities
|
17,997
|
15,100
|
109,587
|
100,597
|
||||
|
1,987,531
|
2,005,956
|
3,824,714
|
4,020,431
|
|||||
|
Minority
shareholders’ interest
|
-
|
-
|
19,561
|
20,191
|
||||
|
Shareholders’
equity
|
Note
17
|
|||||||
|
Capital
|
1,192,692
|
1,192,692
|
1,192,692
|
1,192,692
|
||||
|
Legal
reserve
|
15,954
|
15,954
|
15,954
|
15,954
|
||||
|
Revaluation
reserves
|
194,736
|
195,004
|
194,736
|
195,004
|
||||
|
Reserve
for new investments and modernization
|
227,349
|
227,349
|
227,349
|
227,349
|
||||
|
Accumulated
gain
|
13,935
|
-
|
13,935
|
-
|
||||
|
1,644,666
|
1,630,999
|
1,644,666
|
1,630,999
|
|||||
|
Total
liabilities and shareholders’ equity
|
4,069,607
|
3,990,229
|
6,326,992
|
6,263,354
|
||||
See
accompanying notes.
4
COSAN
S.A. INDÚSTRIA E COMÉRCIO
STATEMENTS
OF INCOME
Three-month
periods ended July 31, 2007 and 2006
(In
thousands of reais, except for the income per share)
|
Thee-month
period
|
||||||||
|
Parent
Company
|
Consolidated
|
|||||||
|
2007
|
2006
|
2007
|
2006
|
|||||
|
Gross
operating revenue
|
||||||||
|
Sales
of goods and services
|
376,264
|
509,406
|
636,444
|
1,014,685
|
||||
|
Taxes
and sales deductions
|
(16,250)
|
(23,380)
|
(44,731)
|
(70,572)
|
||||
|
Net
operating revenue
|
360,014
|
486,026
|
591,713
|
944,113
|
||||
|
Cost
of goods sold and services rendered
|
(331,716)
|
(321,657)
|
(548,010)
|
(575,950)
|
||||
|
Gross
profit
|
28,298
|
164,369
|
43,703
|
368,163
|
||||
|
Operating
income (expenses)
|
||||||||
|
Selling
expenses
|
(27,304)
|
(21,267)
|
(61,083)
|
(60,060)
|
||||
|
General
and administrative expenses
|
(33,971)
|
(23,243)
|
(54,826)
|
(44,875)
|
||||
|
Management
fees
|
Note
18
|
(1,718)
|
(1,083)
|
(2,175)
|
(1,422)
|
|||
|
Financial
income (expenses), net
|
Note
19
|
171,100
|
(203,721)
|
150,842
|
(185,681)
|
|||
|
Earnings
(losses) on equity investments
|
Note
10
|
(49,105)
|
80,519
|
118
|
261
|
|||
|
Goodwill
amortization
|
(36,119)
|
(30,122)
|
(55,968)
|
(56,364)
|
||||
|
Other
operating income (expenses), net
|
(3,803)
|
2,188
|
(1,481)
|
(3,044)
|
||||
|
19,080
|
(196,729)
|
(24,573)
|
(351,185)
|
|||||
|
Operating
income (loss)
|
47,378
|
(32,360)
|
19,130
|
16,978
|
||||
|
Nonoperating
income, net
|
868
|
216
|
2,954
|
1,213
|
||||
|
Income
(loss) before income and social contribution taxes
|
48,246
|
(32,144)
|
22,084
|
18,191
|
||||
|
Income
and social contribution taxes
|
Note
14
|
(34,579)
|
37,522
|
(9,047)
|
(11,235)
|
|||
|
Minority
shareholders’ interest
|
-
|
-
|
630
|
(1,578)
|
||||
|
Net
income for the period
|
13,667
|
5,378
|
13,667
|
5,378
|
||||
|
Income
per share – in Reais
|
0.07
|
0.09
|
||||||
See
accompanying notes.
5
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION
(In
thousands of reais)
1.
Operations
The
primary activity of Cosan S.A.
Indústria e Comércio (“Company”, “Cosan”), with principal place of business in
the city of Piracicaba,
São
Paulo, and its subsidiaries
is the
manufacturing and trading of sugar and alcohol and co-generation of electric
power from sugar cane both of their own plantations and third parties. The
Company has 17 producing units, all located in the São Paulo State, with a
nominal capacity of milling 40 million tons of sugar cane per year, producing
varied qualities of raw and refined sugar, anhydrous and hydrated alcohol.
The
Company activities are still linked with those of its subsidiary Cosan Operadora
Portuária S.A. and affiliate TEAS - Terminal Exportador de Álcool de Santos
S.A., which consist mainly in the logistic support to export of sugar and
ethanol by the Company.
During
the
quarter ended July 31, 2007, the main operations were as follows:
|
·
|
On
June 25, 2007, the Company contributed capital in the amount of R$2,105
to
subsidiary Etanol Participações S.A., parent company of Usina Santa Luiza
S.A. and Agropecuária Aquidaban S.A., which management is jointly
conducted with the other shareholders, keeping its 33.33% interest
in
Etanol Participações S.A. capital;
|
|
·
|
On
June 25, 2007, the Company subscribed capital in former subsidiary
Cosan
Centroeste S.A. Açúcar e Álcool, in the amount of R$30,000, of which
R$2,550 were paid up; and,
|
|
·
|
On
July 23, 2007, the Company sold its interest in Cosan Centroeste
S.A.
Açúcar e Álcool at cost, for the amount of
R$2,551.
|
6
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
2.
Basis
of Preparation and Presentation of the Quarterly
Information
The
quarterly information is the responsibility of the Company’s management and was
prepared according to the accounting practices adopted in Brazil, to the
standards of the Brazilian Securities Commission (CVM) and to the rules of
the
Sao Paulo Stock Exchange (BOVESPA) applicable to companies operating in the
so-called “New Market”, not including all disclosures usually necessary in
annual financial statements or those required by the accounting practices
adopted in Brazil for complete financial statements.
The
preparation of quarterly information involves the use of accounting estimates.
Such estimates were based on objective and subjective aspects considering
management’s judgment to determine the adequate amount to be recorded in the
quarterly information. Significant items subject to these estimates and
assumptions include the selection of useful lives of fixed assets and their
recovery in operations, risk credit analysis to determine the allowance for
doubtful accounts, and the analyses of other risks to determine other
provisions, including the provision for contingencies, and the valuation of
financial instruments and other assets and liabilities at the balance sheet
date.
Actual
results may significantly differ from these estimates once the underlying
transactions are settled due to the underlying inaccuracy of the determination
process. The Company reviews its estimates and assumptions at least on a
quarterly basis.
Assets
and
liabilities are classified as current when these items are likely to be settled
or realized within 12 months, or otherwise classified as noncurrent. Monetary
assets and liabilities denominated in foreign currencies were translated into
reais at the foreign exchange rate in effect at the balance sheet date. Foreign
currency translation gains and losses are recognized in the statements of
income. Assets and liabilities of foreign subsidiaries were translated into
reais at the foreign exchange rate in force at the balance sheet date and the
results of operations were translated at the average exchange rate for the
period.
7
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
2.
Basis
of Preparation and Presentation of the Quarterly
Information--Continued
The
quarterly information for the three-month period ended July 31, 2007 include
the
changes established by Technical Instruction No. 01/2006, issued by the
Brazilian Institute of Independent Auditors (IBRACON), adopted since April
30,
2007. With the adoption of the referred to instruction, the Company changed
the
manner of recording inter-harvest costs, which used to be deferred to be charged
to inventory of the following harvest. With the change, fixed costs which used
to be components of inter-harvest costs, of which the most significant was
depreciation for the period of shut-down for maintenance, started to be charged
to the statement of operations for the period. The parts and pieces that are
usually replaced during the planned shut-down for maintenance, included in
inter-harvest costs, started to be included planned in cost of property, plant
and equipment, in a specific account, and depreciated during the following
harvest period.
For
purposes of additional information, the statements of cash flow, prepared in
accordance with Accounting Standard and Procedure (NPC) No. 20, issued by
IBRACON – the Brazilian Institute of Independent Auditors are being
presented.
Net
income
for the three-month period ended July 31, 2007 does not necessarily indicate
the
result that may be expected for the year ending April 30, 2008.
The
quarterly information and related notes are presented in thousands of reais,
except where otherwise indicated.
Consolidation
of financial statements
The
consolidated financial statements were prepared in accordance with the basic
consolidation principles. The consolidated process included the following main
procedures:
|
a)
|
Elimination
of asset and liability accounts held among consolidated
companies;
|
|
b)
|
Elimination
of investments considering the interest held by the parent company
in the
subsidiaries’ equity;
|
|
c)
|
Elimination
of elimination of revenue and expenses in consolidated intercompany
operations; and,
|
|
d)
|
Elimination
of unrealized income arising from relevant transactions carried out
between consolidated companies.
|
8
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
2.
Basis
of Preparation and Presentation of the Quarterly
Information--Continued
Etanol
Participações S.A. and subsidiaries, whose controlling interest is shared with
another economic group, are consolidated according to the Company’s ownership
interest in the capital of Etanol.
The
financial year of the companies included in the consolidation coincides with
that of the Parent Company, except for Etanol Participações S.A., which year-end
is December 31.
Consolidated
companies are listed below:
|
Interest
as of
|
||||||||
|
July
31, 2007
|
April
30, 2007
|
|||||||
|
Direct
|
Indirect
|
Direct
|
Indirect
|
|||||
|
Cosan
Operadora Portuária S.A.
|
90.0%
|
-
|
90.0%
|
-
|
||||
|
Administração
de Participações Aguassanta Ltda.
|
91.5%
|
-
|
91.5%
|
-
|
||||
|
Agrícola
Ponte Alta S.A.
|
-
|
98.4%
|
-
|
98.4%
|
||||
|
Cosan
Distribuidora de Combustíveis Ltda.
|
99.9%
|
-
|
99.9%
|
-
|
||||
|
Cosan
S.A. Bioenergia
|
100.0%
|
-
|
100.0%
|
-
|
||||
|
Corona
Bioenergia S.A.
|
-
|
98.4%
|
-
|
98.4%
|
||||
|
FBA
Bioenergia S.A.
|
-
|
98.4%
|
-
|
98.4%
|
||||
|
Barra
Bioenergia S.A.
|
-
|
98.4%
|
-
|
98.4%
|
||||
|
Cosan
International Universal Corporation
|
100.0%
|
-
|
100.0%
|
-
|
||||
|
Cosan
Finance Limited
|
100.0%
|
-
|
100.0%
|
-
|
||||
|
DaBarra
Alimentos Ltda.
|
-
|
98.4%
|
-
|
98.4%
|
||||
|
Bonfim
Nova Tamoio – BNT Agrícola Ltda.
|
-
|
98.4%
|
-
|
98.4%
|
||||
|
Usina
da Barra S.A. Açúcar e Álcool
|
82.4%
|
16.0%
|
82.4%
|
16.0%
|
||||
|
Grançucar
S.A. Refinadora de Açúcar
|
99.9%
|
0.1%
|
99.9%
|
0.1%
|
||||
|
Etanol
Participações S.A. (1)
|
33.3%
|
-
|
33.3%
|
-
|
||||
|
Cosan
Centroeste S.A. Açúcar e Álcool
|
-
|
98.4%
|
99.9%
|
0.1%
|
||||
(1) As mentioned in Note 1, on July 23, 2007 the Company sold its interest
to
indirect subsidiary Agrícola Ponte Alta S.A..
3.
Summary
of Principal Accounting Practices
The
accounting practices adopted in the preparation of the quarterly information
are
consistent with those disclosed in the financial statements as of April 30,
2007.
4.
Cash
and Cash Equivalents
|
Parent
Company
|
Consolidated
|
|||||||
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
|||||
|
Cash
|
49
|
311
|
350
|
398
|
||||
|
Overnight investments
(i)
|
-
|
-
|
370,177
|
584,967
|
||||
|
Checking
accounts
|
131,184
|
7,040
|
191,295
|
32,569
|
||||
|
Amounts
pending foreign exchange closing (ii)
|
14,209
|
24,220
|
17,151
|
25,881
|
||||
|
145,442
|
31,571
|
578,973
|
643,815
|
|||||
9
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
4.
Cash
and Cash Equivalents--Continued
|
(i)
|
The
overnight balance corresponds to short-term investment in US dollars
with
highly rated banks, which is remunerated according to Federal Funds
rate,
and may be promptly redeemed.
|
|
(ii)
|
Amounts
pending foreign exchange closing refer to receipts of funds in foreign
currency from customers located abroad, whose foreign exchange closing
with the applicable financial institutions had not occurred as of
the
balance sheet date.
|
5.
Marketable
Securities
|
Parent
Company
|
Consolidated
|
||||||
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
||||
|
Bank
Deposit Certificates – CDB
|
229,399
|
513,687
|
237,417
|
573,303
|
|||
|
Other
fixed income securities
|
11
|
11
|
11
|
11
|
|||
|
229,410
|
513,698
|
237,428
|
573,314
|
||||
Investments
in Bank Deposit Certificates – CDB, allowing immediate redemption, are made with
highly-rated banks and accrue in average 101.5% of Interbank Deposit Certificate
– CDI.
6.
Derivative
Financial Instruments
|
Parent
Company
|
Consolidated
|
|||||||
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
|||||
|
In
assets:
|
||||||||
|
Margin
deposits
|
92,313
|
35,944
|
92,313
|
35,944
|
||||
|
Option
premium-long position
|
388
|
1,036
|
388
|
1,036
|
||||
|
Unrealized
results
|
1,328
|
598
|
1,328
|
598
|
||||
|
94,029
|
37,578
|
94,029
|
37,578
|
|||||
|
In
liabilities:
|
||||||||
|
Option
premium-short position
|
7,158
|
-
|
7,158
|
-
|
||||
|
Unrealized
results
|
40,803
|
35,536
|
40,803
|
35,536
|
||||
|
47,961
|
35,536
|
47,961
|
35,536
|
|||||
10
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
6.
Derivative
Financial Instruments -- Continued
Margin
deposits refer to net remittances of financial receipts related to daily
adjustment of price variation margins in future contracts and
options.
Unrealized
results, in assets, refer to loss from derivative operations already settled
with Commodities Exchanges, however without the corresponding physical shipment
of hedged sugar volume.
Unrealized
results, in liabilities, refer to gain from derivative operations already
settled with Commodities Exchanges, however without the corresponding physical
shipment of hedged sugar volume.
7.
Inventories
|
Parent
Company
|
Consolidated
|
|||||||
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
|||||
|
Finished
goods:
|
||||||||
|
Sugar
|
57,067
|
4,777
|
143,023
|
11,654
|
||||
|
Ethanol
|
105,179
|
4,344
|
215,302
|
17,757
|
||||
|
Other
|
7,913
|
2,803
|
15,493
|
3,420
|
||||
|
Harvest
costs
|
124,005
|
165,360
|
296,820
|
372,524
|
||||
|
Supplies
and others
|
52,126
|
43,547
|
119,571
|
97,995
|
||||
|
346,290
|
220,831
|
790,209
|
503,350
|
|||||
8.
Advances
to Suppliers
|
Parent
Company
|
Consolidated
|
||||||
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
||||
|
Sugarcane
suppliers
|
106,880
|
78,869
|
269,622
|
184,608
|
|||
|
Equipment,
material and service suppliers
|
5,949
|
|
7,773
|
39,025
|
26,838
|
||
|
112,829
|
86,642
|
308,647
|
211,446
|
||||
11
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
9.
Balances
with Related Parties
|
Assets
|
|||||||
|
Parent
Company
|
Consolidated
|
||||||
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
||||
|
Usina
da Barra S.A. Açúcar e Álcool
|
365,980
|
261,127
|
-
|
-
|
|||
|
Cosan
Operadora Portuária S.A.
|
7,084
|
5,262
|
-
|
-
|
|||
|
Cosan
International Universal Corporation
|
43,926
|
10,116
|
-
|
-
|
|||
|
Cosan
S.A. Bioenergia
|
24,492
|
39
|
-
|
-
|
|||
|
Agrícola
Ponte Alta S.A.
|
2,551
|
-
|
-
|
-
|
|||
|
Cosan
Cetroeste S.A. Açúcar e Álcool
|
1,793
|
153
|
-
|
-
|
|||
|
Others
|
1,620
|
703
|
43
|
45
|
|||
|
447,446
|
277,400
|
43
|
45
|
||||
|
Current
|
(447,195)
|
(277,149)
|
-
|
-
|
|||
|
Noncurrent
|
251
|
251
|
43
|
45
|
|||
|
Liabilities
|
|||||||
|
Parent
Company
|
Consolidated
|
||||||
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
||||
|
Cosan
Finance Limited
|
356,148
|
216,841
|
-
|
-
|
|||
|
Etanol
Participações S.A.
|
667
|
667
|
-
|
667
|
|||
|
Other
|
-
|
1
|
-
|
-
|
|||
|
356,815
|
217,509
|
-
|
667
|
||||
|
Current
|
(9,459)
|
(668)
|
-
|
(667)
|
|||
|
Noncurrent
|
347,356
|
216,841
|
-
|
-
|
|||
|
Parent
Company
|
Consolidated
|
||||||
|
05/01/07
to
07/31/07
|
05/01/07
to
07/31/07
|
05/01/07
to
07/31/07
|
05/01/07
to
07/31/07
|
||||
|
Transactions
involving assets
|
|||||||
|
Remittance
of financial resources, net of receipts and credit
assignments
|
70,263
|
79,524
|
-
|
130
|
|||
|
Sale
of finished goods and services
|
190,241
|
13,324
|
-
|
-
|
|||
|
Purchase
of finished goods and services
|
(91,907)
|
(81,825)
|
-
|
-
|
|||
|
Financial
income
|
1,449
|
260
|
-
|
-
|
|||
|
Transactions
involving liabilities
|
|||||||
|
Receipt
of financial resources, net of payments
|
150,445
|
(74)
|
(667)
|
48
|
|||
|
Financial
incomes
|
(11,139)
|
-
|
-
|
-
|
The
purchase and sale of products and services are carried out at arm’s
length.
12
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
9.
Balances
with Related Parties--Continued
Amounts
receivable from Usina da Barra referred basically to advances for future
deliveries of sugar and advances for future capital increase. Such amounts
accrued 100% of CDI interest.
The
balances receivable from Cosan Operadora Portuária S.A. refer to advance
payments for the rendering of port services, which do not accrue
interest.
The
balance receivable from Cosan International Universal Corporation corresponds
to
sales of finished products, which will be sold by the subsidiary company abroad.
Average days sales outstanding averages 30 days, bearing no
interest.
The
balance receivable from Cosan S.A. Bioenergia corresponds to advance for future
capital increase, which does not accrue interest.
The
balance payable to Cosan Finance Limited refers to two loan agreements to be
settled in 2014, 2015, and 2016, which are subject to exchange variation to
the
US dollar and annual interest based on Libor rate, plus interest from 4.75%
to
4.85% per year.
At
July
31, 2007, the Company and its subsidiary Usina da Barra were lessees of 5,758
hectares of land (same April 30, 2007) (not reviewed) of Santa Bárbara Agrícola
S.A., 12,751 hectares of land (same in April 30, 2007) (not reviewed) of
Indústria Açucareira São Francisco S.A. and 17,192 hectares of land (same in
April 30, 2007) (not reviewed) of Amaralina Agrícola Ltda., related companies
which are controlled by Cosan. The amount paid by the Company and its subsidiary
to the lessors in the quarter ended July 31, 2007 totaled R$4,676 (R$6,181
as of
July 31, 2006). These operations are carried out under conditions and prices
similar to those prevailing in the market, calculated based on sugar cane tons
per hectare, valued based on the price stipulated by CONSECANA.
13
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
10.
Investments
|
Parent
company
|
||||||||||
|
Investees
|
Investor
|
|||||||||
|
Equity
|
Operating
result for the period
|
Interest
%
|
Investments
|
Earnings
(losses) on equity investments
|
||||||
|
07/31/07
|
05/01/07
to 07/31/07
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
05/01/07
to 07/31/07
|
05/01/06
to 07/31/06
|
|||
|
Administração
de Participações Aguassanta Ltda.
|
172,768
|
(8,935)
|
91.5
|
91.5
|
158,080
|
166,256
|
(8,176)
|
13,510
|
||
|
Usina
da Barra S.A. Açúcar e Álcool
|
985,766
|
(50,932)
|
82.4
|
82.4
|
812,154
|
854,116
|
(41,962)
|
67,814
|
||
|
Cosan
Operadora Portuária S.A.
|
40,654
|
1,702
|
90.0
|
90.0
|
36,586
|
35,054
|
1,532
|
2,301
|
||
|
TEAS
- Terminal Exportador de Álcool de Santos S.A.
|
43,167
|
369
|
32.0
|
32.0
|
13,814
|
13,696
|
118
|
261
|
||
|
Cosan
Distribuidora de Combutíveis Ltda.
|
220
|
(49)
|
99.9
|
99.9
|
220
|
268
|
(48)
|
(47)
|
||
|
Cosan
S.A. Bioenergia
|
85,575
|
-
|
100.0
|
100.0
|
85,575
|
85,575
|
-
|
-
|
||
|
Grançucar
S.A. Refinadora de Açúcar (1)
|
3,243
|
-
|
99.9
|
99.9
|
26
|
26
|
-
|
-
|
||
|
Cosan
Centroeste S.A. Açúcar e Álcool (2)
|
-
|
-
|
-
|
99.9
|
-
|
1
|
-
|
-
|
||
|
Etanol
Participações S.A.
|
242,981
|
(4,127)
|
33.3
|
33.3
|
80,986
|
79,450
|
(569)
|
-
|
||
|
Other
investments (3)
|
-
|
-
|
-
|
-
|
23
|
23
|
-
|
(3,320)
|
||
|
1,187,464
|
1,234,465
|
(49,105)
|
80,519
|
|||||||
|
(1)
|
The
investment balance is reduced by a provision for losses, in the amount
of
R$3,217;
|
|
(2)
|
Equity
interest sold on June 23, 2007 (see Note
1);
|
|
(3)
|
The
‘Earnings (losses) on equity investments’ column includes the results
computed by companies merged into Cosan in the year ended April 30,
2007.
|
|
July
31, 2007
|
|||
|
Parent
company
|
Consolidated
|
||
|
Balances
as April 30, 2007
|
1,234,465
|
93,169
|
|
|
Earnings
(losses) on equity investments
|
(49,105)
|
118
|
|
|
Capital
increase in subsidiaries
|
4,655
|
2,105
|
|
|
Increase
of investment and goodwill due to merger
|
-
|
12
|
|
|
Reduction
by proportional consolidation
|
-
|
(81,555)
|
|
|
Investment
sale
|
(2,551)
|
-
|
|
|
Balances
as of July 31, 2007
|
1,187,464
|
13,849
|
|
During
the
three-month period ended July 31, 2007, subsidiaries Cosan International
Universal Corporation and Cosan Finance Limited posted operating losses in
the
amount of R$1,952 and R$816, respectively. Such losses were recognized by the
parent company in the statement of operations for the period under Other
operating income (expenses), as a matching entry to the Provision for
devaluation of equity investments, classified in Other non-current liabilities,
as these subsidiaries had capital deficiency in the amounts of R$7,812 and
R$4,276, respectively.
14
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTELY FINANCIAL INFORMATION—Continued
(In
thousands of reais)
10.
Investments--Continued
On
June
25, 2007, the Company contributed capital to Etanol Participações S.A.,
remitting funds in the amount of R$2,105, which corresponds to 2,114,784 common
registered shares with no par value. The Company’s interest in Etanol’s capital
was kept at 33.3%.
On
June
25, 2007, the Company subscribed for a capital increase amounting to R$30,000
in
former subsidiary Cosan Centroeste S.A. Açúcar e Álcool, through the issue of
30,000,000 new common registered shares with no par value. Out of the total
capital increase, Cosan paid up R$2,550 via current account credits; the
remainder, in the amount of R$27,450, will be paid up with assets and cash
no
later than December 31, 2007.
On
July
23, 2007, the Company sold its interest in Cosan Centroeste S.A. Açúcar e Álcool
to indirect subsidiary Agrícola Ponte Alta S.A. at cost, for the amount of
R$2,551.
11.
Property,
Plant and Equipment
|
Parent
Company
|
|||||||||||
|
07/31/07
|
04/30/07
|
||||||||||
|
Average
annual depreciation rates (%)
|
Cost
|
Revaluation
|
Accumulated
depreciation/
amortization
|
Net
|
Net
|
||||||
|
Land
and rural properties
|
-
|
72,589
|
108,150
|
-
|
180,739
|
179,116
|
|||||
|
Machinery,
equipment and installations
|
11.76
|
316,067
|
-
|
(181,659)
|
134,408
|
126,465
|
|||||
|
Vehicles
|
23.80
|
35,747
|
-
|
(25,872)
|
9,875
|
9,311
|
|||||
|
Furniture,
fixtures and computer equipment
|
15.98
|
21,150
|
-
|
(10,860)
|
10,290
|
10,850
|
|||||
|
Buildings
and improvements
|
4.00
|
100,577
|
-
|
(18,664)
|
81,913
|
97,955
|
|||||
|
Construction
in progress
|
-
|
117,011
|
-
|
-
|
117,011
|
99,385
|
|||||
|
Sugar
cane planting costs
|
20.00
|
260,892
|
-
|
(79,939)
|
180,953
|
177,838
|
|||||
15
|
Parts
and components to be periodically replaced
|
100.00
|
59,824
|
-
|
(21,831)
|
37,993
|
57,560
|
|||||
|
Other
|
-
|
864
|
-
|
-
|
864
|
483
|
|||||
|
984,721
|
108,150
|
(338,825)
|
754,046
|
758,963
|
16
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
11.
Property,
Plant and Equipment
|
Consolidated
|
|||||||||||
|
07/31/07
|
04/30/07
|
||||||||||
|
Average
annual depreciation rates (%)
|
Cost
|
Revaluation
|
Accumulated
depreciation/
amortization
|
Net
|
Net
|
||||||
|
Land
and rural properties
|
-
|
212,193
|
362,638
|
-
|
574,831
|
571,904
|
|||||
|
Machinery,
equipment and installations
|
11.42
|
929,081
|
141,454
|
(751,498)
|
319,037
|
310,941
|
|||||
|
Vehicles
|
20.47
|
99,130
|
8,993
|
(87,655)
|
20,468
|
18,796
|
|||||
|
Furniture,
fixtures and computer equipment
|
15.45
|
43,946
|
107
|
(25,924)
|
18,129
|
18,538
|
|||||
|
Buildings
and improvements
|
5.57
|
283,320
|
54,264
|
(106,190)
|
231,394
|
253,656
|
|||||
|
Construction
in progress
|
-
|
254,107
|
-
|
-
|
254,107
|
188,198
|
|||||
|
Sugar
cane planting costs
|
20.00
|
737,732
|
-
|
(263,529)
|
474,203
|
456,615
|
|||||
|
Parts
and components to be periodically replaced
|
100.00
|
124,488
|
-
|
(44,380)
|
80,108
|
120,897
|
|||||
|
Advances
for fixed asset purchases
|
-
|
105,789
|
-
|
-
|
105,789
|
76,317
|
|||||
|
Other
|
-
|
1,884
|
-
|
-
|
1,884
|
492
|
|||||
|
Provision
for property, plant and equipment devaluation
|
(3,217)
|
-
|
-
|
(3,217)
|
(3,217)
|
||||||
|
2,788,453
|
567,456
|
(1,279,176)
|
2,076,733
|
2,013,137
|
|||||||
The
balance of R$254,107 at July 31, 2007 (R$188,198 in April 30, 2007) under
construction in progress consists of investments in manufacturing plants’
modernization and for increased product storage capacity.
The
balance of R$105,789 in July 31, 2007 (R$76,317 in April 30, 2007) under
advances for fixed assets acquisition consists of advances for purchase of
machinery and equipment by electric power co-generation companies.
17
At
July
31, 2007, consolidated property, plant and equipment included the amount of
R$429,958 (R$435,047 on April 30, 2007) related to net balance of
revaluations.
Profit
and
loss for the quarter includes the amount of R$4,962 in July 31, 2007 (R$2,591
in
2006) referring to depreciation of revalued assets.
18
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
12.
Goodwill
|
Average
annual amortization rates (%)
|
Parent
Company
|
|||||||||
|
07/31/07
|
04/30/07
|
|||||||||
|
Cost
|
Accumulated
amortization
|
Net
|
Net
|
|||||||
|
Goodwill
on the acquisition of Administração de Participações Aguassanta
Ltda.
|
20
|
392,616
|
(360,109)
|
32,507
|
52,138
|
|||||
|
Goodwill
on the acquisition of JVM Participações S.A.
|
20
|
63,720
|
(31,860)
|
31,860
|
35,046
|
|||||
|
Goodwill
on the acquisition of Grupo Mundial
|
10
|
127,953
|
(19,193)
|
108,760
|
111,959
|
|||||
|
Goodwill
on the payment of capital of Mundial
|
10
|
21,142
|
(2,819)
|
18,323
|
18,852
|
|||||
|
Goodwill
on the acquisition Corona (ABC 125 and ABC 126)
|
10
|
267,824
|
(40,173)
|
227,651
|
234,346
|
|||||
|
Goodwill
on the acquisition Usina Açucareira Bom Retiro S.A.
|
10
|
115,165
|
(14,396)
|
100,769
|
103,648
|
|||||
|
988,420
|
(468,550)
|
519,870
|
555,989
|
|||||||
|
Average
annual amortization rates (%)
|
Consolidated
|
|||||||||
|
07/31/07
|
04/30/07
|
|||||||||
|
Cost
|
Accumulated
amortization
|
Net
|
Net
|
|||||||
|
Goodwill
on the acquisition of Administração de Participações Aguassanta
Ltda.
|
20
|
392,616
|
(360,109)
|
32,507
|
52,138
|
|||||
|
Goodwill
on the acquisition of JVM Participações S.A.
|
20
|
63,720
|
(31,860)
|
31,860
|
35,046
|
|||||
|
Goodwill
on the acquisition of Usina da Barra
|
20
|
35,242
|
(22,937)
|
12,305
|
14,067
|
|||||
|
Goodwill
on the constitution of FBA
|
10
|
22,992
|
(14,753)
|
8,239
|
8,813
|
|||||
|
Goodwill
on the acquisition of Univalem S.A. Açúcar e Álcool
|
10
|
24,118
|
(15,081)
|
9,037
|
9,640
|
|||||
|
Goodwill
on the acquisition of Guanabara Agro Industrial S.A.
|
20
|
27,747
|
(25,974)
|
1,773
|
3,160
|
|||||
|
Goodwill
on the acquisition of Grupo Destivale
|
10
|
69,918
|
(15,771)
|
54,147
|
55,895
|
|||||
|
Goodwill
on the acquisition of Grupo Mundial
|
10
|
127,953
|
(19,193)
|
108,760
|
111,959
|
|||||
|
Goodwill
on the payment of capital of Mundial
|
10
|
21,142
|
(2,819)
|
18,323
|
18,852
|
|||||
|
Goodwill
on the acquisition of Corona
|
10
|
818,831
|
(119,343)
|
699,488
|
719,960
|
|||||
|
Goodwill
on the acquisition of Usina Açucareira Bom Retiro S.A.
|
10
|
115,165
|
(14,396)
|
100,769
|
103,648
|
|||||
|
Goodwill
on the acquisition of Etanol Participações S.A.
|
10
|
69,366
|
-
|
69,366
|
-
|
|||||
|
1,788,810
|
(642,236)
|
1,146,574
|
1,133,178
|
|||||||
13.
Taxes and Social Contributions Payable
|
Parent
Company
|
Consolidated
|
||||||
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
||||
|
ICMS
– State VAT
|
9,094
|
3,103
|
20,957
|
10,374
|
|||
|
INSS
– Social Security
|
7,212
|
6,158
|
14,426
|
12,012
|
|||
|
PIS
– Social Integration Program
|
318
|
829
|
1,186
|
1,806
|
|||
|
COFINS
– Social Security Funding
|
1,467
|
3,823
|
5,457
|
8,326
|
|||
|
Tax
Recovery Program – REFIS
|
-
|
-
|
291,013
|
291,913
|
|||
|
Special
Tax Payment Program – PAES
|
63,431
|
65,084
|
89,581
|
92,092
|
|||
|
Income
and social contribution taxes payable
|
10,120
|
4,158
|
31,202
|
29,251
|
|||
|
Other
|
8,440
|
14,609
|
14,243
|
18,935
|
|||
|
|
100,082
|
97,764
|
468,065
|
464,709
|
|||
|
Current
liabilities
|
(51,829)
|
(48,202)
|
(131,539)
|
(126,202)
|
|||
|
Noncurrent
liabilities
|
48,253
|
49,562
|
336,526
|
338,507
|
|||
19
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
13. Taxes
and Social Contributions Payable--Continued
Noncurrent
amounts become due as follows:
|
Parent
Company
|
Consolidated
|
||||||
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
||||
|
13
to 24 months
|
9,865
|
9,740
|
38,725
|
41,433
|
|||
|
25
to 36 months
|
9,865
|
9,740
|
37,953
|
40,482
|
|||
|
37
to 48 months
|
9,598
|
9,635
|
36,743
|
39,216
|
|||
|
49
to 60 months
|
9,224
|
9,115
|
36,185
|
38,663
|
|||
|
61
to 72 months
|
9,701
|
9,099
|
35,739
|
38,648
|
|||
|
73
to 84 months
|
-
|
2,233
|
22,890
|
28,388
|
|||
|
85
to 96 months
|
-
|
-
|
22,890
|
25,526
|
|||
|
Above
97 months
|
-
|
-
|
105,401
|
86,151
|
|||
|
48,253
|
49,562
|
336,526
|
338,507
|
||||
Tax
Recovery Program - REFIS
In
2000,
several of the former subsidiaries that now are part of Usina da Barra and
the
former Corona signed an Option Instrument applying to pay their debts in
installments based on the Tax Recovery Program - REFIS, approved by Law No.
9964, of April 10, 2000. Therefore, the companies voluntarily informed the
Brazilian Internal Revenue Service - SRF and the National Institute of Social
Security - INSS of their tax and social contribution obligations. Property,
plant and equipment of the companies were offered as security in the debt
consolidation process.
Under
the
REFIS, tax payments are made based on 1.2% of the taxpayer’s monthly gross
revenue. The remaining balance is monetarily adjusted based on the TJLP
variation.
The
balances at July 31 and April 30, 2007 are as follows:
|
Consolidated
|
|||
|
07/31/07
|
04/30/07
|
||
|
Original
amount:
|
|||
|
Principal
|
166,921
|
166,921
|
|
|
Penalty
|
50,714
|
50,714
|
|
|
Interest
|
81,358
|
81,358
|
|
|
Legal
fees and charges
|
17,212
|
17,212
|
|
|
Offset
of income and social contribution tax loss carryforward against the
debt
|
(23,977)
|
(23,977)
|
|
|
292,228
|
292,228
|
||
|
Charges
calculated upon TJLP variation
|
107,081
|
104,054
|
|
|
Payments
made
|
(108,296)
|
(104,369)
|
|
|
291,013
|
291,913
|
||
|
Current
liabilities
|
(23,033)
|
(25,686)
|
|
|
Noncurrent
liabilities
|
267,980
|
266,227
|
|
20
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
13. Taxes
and Social Contributions Payable--Continued
Special
Tax Payment Program - PAES
By
using the benefit granted by the
Special Tax Payment Program – PAES, under the terms of Law No. 10684 published
on May 31, 2003,
the Company and its subsidiaries
discontinued litigation in certain judicial proceedings and pleaded the payment
in installments of debts maturing up to February 28, 2003
to the SRF, of the National Fund For
Economic Development (FNDE), and the INSS. Installments are adjusted monthly
based on the TJLP variation.
To
date,
the tax authorities have not yet officially confirmed the amount of total
consolidated debts, which, according to the Company and its subsidiaries
controls, are as follows:
|
Parent
Company
|
Consolidated
|
||||||
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
||||
|
Tax
debts including restatement up to the date of adherence to the
program:
|
|||||||
|
SRF/FNDE
taxes
|
62,093
|
62,093
|
83,914
|
83,914
|
|||
|
INSS
contributions
|
13,216
|
13,216
|
24,709
|
24,709
|
|||
|
Amortization
|
(34,439)
|
(32,047)
|
(51,405)
|
(47,809)
|
|||
|
Monetary
restatement
|
22,561
|
21,822
|
32,363
|
31,278
|
|||
|
63,431
|
65,084
|
89,581
|
92,092
|
||||
|
Current
installments
|
(19,459)
|
(19,460)
|
(24,174)
|
(24,259)
|
|||
|
Noncurrent
installments
|
43,972
|
45,624
|
65,407
|
67,833
|
|||
Installments
have been paid based on 1,5% of the Company’s revenues, considering a minimum of
120 and a maximum of 180 installments.
21
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
13. Taxes
and Social Contributions Payable--Continued
General
considerations
The
Company and its subsidiaries must comply with several conditions to continue
benefiting from the installment payment programs mentioned above, particularly
the regular payment of the installments as required by law and of the taxes
becoming due.
Under
the
self-assessment tax system adopted in Brazil, income tax returns filed may
be
audited by tax authorities for a period of five years from their
filing.
14.
Income
and Social Contribution Taxes
|
a)
|
Reconciliation
of income and social contribution tax
expenses:
|
|
Parent
company
|
Consolidated
|
||||
|
05/01/2007
to 07/31/2007
|
05/01/2006
to 07/31/2006
|
05/01/2007
to 07/31/2007
|
05/01/2006
to 07/31/2006
|
||
|
Income
(loss) before income and social contribution taxes
|
48,246
|
(32,144)
|
22,084
|
18,191
|
|
|
Income
and social contribution taxes at nominal rate (34%)
|
(16,404)
|
10,929
|
(7,509)
|
(6,185)
|
|
|
Adjustments
to calculate effective rate:
|
|||||
|
Earnings
(losses) on equity investments
|
(16,696)
|
27,376
|
40
|
89
|
|
|
Non-deductible
goodwill amortization
|
(838)
|
(271)
|
(838)
|
(2,472)
|
|
|
Non-deductible
donations and contributions
|
(421)
|
(428)
|
(864)
|
(904)
|
|
|
Others
|
(220)
|
(84)
|
124
|
(1,763)
|
|
|
Total
current and deferred taxes
|
(34,579)
|
37,522
|
(9,047)
|
(11,235)
|
|
|
Effective
rate
|
71.67%
|
-
|
40.97%
|
61.76%
|
|
22
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
14.
Income
and Social Contribution Taxes--Continued
b)
Deferred income and social contribution tax assets:
|
Parent
company
|
||||||||||
|
07/31/07
|
04/30/07
|
|||||||||
|
Basis
|
IRPJ
25%
|
CSSL
9%
|
Total
|
Total
|
||||||
|
Provision
for contingencies and other temporary differences
|
113,796
|
28,449
|
10,241
|
38,690
|
40,183
|
|||||
|
Income
tax losses
|
137,164
|
34,291
|
-
|
34,291
|
41,591
|
|||||
|
Social
contribution tax losses
|
137,266
|
-
|
12,354
|
12,354
|
14,982
|
|||||
|
Deferred
taxes
|
62,740
|
22,595
|
85,335
|
96,756
|
||||||
|
Current
assets
|
(25,127)
|
(34,008)
|
||||||||
|
Noncurrent
assets
|
60,208
|
62,748
|
||||||||
|
07/31/07
|
04/30/07
|
||||||||
|
Basis
|
IRPJ
25%
|
CSSL
9%
|
Total
|
Total
|
|||||
|
Provision
for contingencies and other temporary differences
|
656,695
|
164,173
|
59,103
|
223,276
|
223,642
|
||||
|
Income
tax losses
|
191,736
|
47,934
|
-
|
47,934
|
41,891
|
||||
|
Social
contribution tax losses
|
191,837
|
-
|
17,265
|
17,265
|
15,090
|
||||
|
Deferred
taxes
|
212,107
|
76,368
|
288,475
|
280,623
|
|||||
|
Current
assets
|
(26,923)
|
(38,093)
|
|||||||
|
Noncurrent
assets
|
261,552
|
242,530
|
|||||||
Deferred
taxes on income and social contribution tax loss carryforwards must be realized
in up to 2 years (parent company) and 10 years (consolidated), according to
expectation of future profitability of the Company and its subsidiaries, as
demonstrated in financial projections prepared by management and to be approved
by the Board of Directors.
23
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
14.
Income
and Social Contribution Taxes--Continued
b)
Deferred income and social contribution tax
assets:--Continued
The
recovery of such tax credits is estimated to occur in the following
years:
|
Parent
Company
|
Consolidated
|
||||||
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
||||
|
2008
|
25,127
|
34,008
|
26,923
|
38,093
|
|||
|
2009
|
23,559
|
28,839
|
41,249
|
47,745
|
|||
|
2010
|
3,869
|
7,119
|
41,524
|
45,689
|
|||
|
2011
|
3,869
|
4,465
|
41,818
|
24,849
|
|||
|
2012
|
3,869
|
3,721
|
29,857
|
20,708
|
|||
|
2013
a 2017
|
25,042
|
18,604
|
107,104
|
103,539
|
|||
|
85,335
|
96,756
|
288,475
|
280,623
|
||||
Estimates
for recovery of the tax credits were based on projections of taxable income,
taking into consideration several financial and business assumptions on the
balance sheet preparation date.
24
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
15.
Loans
and Financings
|
Purpose
|
Financial
charges(1)
|
Parent
Company
|
Consolidated
|
Final maturity | Guarantees(2) | ||||
|
Index
|
Average
annual
interest rate |
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07 | ||
|
Senior
Notes Due 2009
|
Dollar
(US)
|
9.0%
with 81% of CDI swap
|
389,941
|
416,337
|
389,941
|
416,337
|
November/2009
|
-
|
-
|
|
Senior
Notes Due 2017
|
Dollar
(US)
|
7.0%
|
-
|
-
|
777,911
|
828,430
|
February/2017
|
-
|
-
|
|
Perpetual
notes
IFC
|
Dollar
(US)
Dollar
(US)
|
8.25%
7.44%
|
861,883
118,655
|
933,630
137,649
|
861,883
118,655
|
933,630
137,649
|
-
January/2013
|
-
-
|
-
-
|
|
Resolution
2471
|
IGP-M
Corn
price variation
|
3.95%
12.5%
|
83,856
144
|
84,515
144
|
507,793
1,404
|
501,902
1,394
|
October/2020
October/2025
|
National
Treasury Securities and land mortgage
|
National
Treasury Securities and land mortgage
|
|
Finame
(3)
|
Prefixed
URTJLP
|
12.86%
5.0%
|
1,148
4,995
|
1,122
6,497
|
1,148
12,252
|
1,122
7,239
|
April/2010
March/2012
|
Mortgage
and chattel mortgage on financed assets
|
Mortgage
and chattel mortgage on financed assets
|
|
Working
capital (4)
|
IGP-M
TR
CDI
Prefixed
|
11.3%
12.0%
92%
of CDI
9.23%
|
-
-
-
-
|
-
-
-
-
|
8,911
17,012
1,436
9,301
|
9,605
16,988
-
5,130
|
December/2012
March/2015
April/2008
July/2007
|
Inventories,
lien and land mortgage
|
Inventories,
lien and land mortgage
|
|
1,460,622
|
1,579,894
|
2,707,647
|
2,859,426
|
||||||
|
Current
|
(63,869)
|
(60,759)
|
(116,521)
|
(88,991)
|
|||||
|
Noncurrent
|
1,396,753
|
1,519,135
|
2,591,126
|
2,770,435
|
|||||
|
(1)
|
Financial
charges at July 31, 2007, except when otherwise
indicated;
|
|
(2)
|
All
loans and financings are guaranteed by promissory notes and guarantees
by
the Company and its shareholders, in addition to the security described
above;
|
|
(3)
|
Out
of total financings indexed by URTJLP: 54.97% - principal and charges
to
be paid twice-yearly, and 45.03% - principal and charges to be paid
monthly;
|
25
|
(4)
|
Out
of total loans indexed by IGP-M, 49.38% - principal to be paid monthly
and
charges annually, and 50.62% - principal and charges paid monthly.
The
remaining portion is indexed to TR, principal and charges are paid
monthly.
|
26
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
15.
Loans
and Financing --Continued
Noncurrent
loans have the following scheduled maturities:
|
Parent
Company
|
Consolidated
|
||||||
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
||||
|
13
to 24 months
|
17,017
|
20,156
|
23,183
|
26,729
|
|||
|
25
to 36 months
|
391,516
|
424,293
|
397,039
|
428,460
|
|||
|
37
to 48 months
|
15,485
|
16,988
|
21,282
|
21,500
|
|||
|
49
to 60 months
|
15,473
|
16,957
|
20,861
|
21,123
|
|||
|
61
to 72 months
|
28,859
|
42,380
|
31,467
|
45,256
|
|||
|
73
to 84 months
|
-
|
8
|
2,199
|
2,132
|
|||
|
85
to 96 months
|
-
|
8
|
1,652
|
1,955
|
|||
|
Thereafter
|
928,403
|
998,345
|
2,093,443
|
2,223,280
|
|||
|
1,396,753
|
1,519,135
|
2,591,126
|
2,770,435
|
||||
Resolution
No. 2471
From
1998
to 2000, the Company and its subsidiaries renegotiated their debt related to
agricultural funding with several financial institutions, thereby reducing
their
financial cost to annual interest rates below 10% and guaranteeing the
amortization of the updated principal amount with the assignment and transfer
of
CTNs - Restricted Brazilian Treasury Bills redeemable on the debt maturity
dates, using the tax incentive introduced by Resolution No. 2471, issued by
the
Central Bank of Brazil on February 26, 1998. At July 31, 2007, these
certificates, classified as noncurrent assets, amounted to R$19,655 (R$18,992
at April
30, 2007), Company, and R$127,771
(R$123,310 at April 30,
2007), consolidated. Payments pursuant to such certificates are
calculated based on the IGP-M variation plus annual interest of 12%. Upon
payment of the debt, the redemption value should be similar to the amount of
the
renegotiated debt. Interest referring to these financings is paid annually
and
principal is to be paid in 2020, Company, and 2025, consolidated.
Senior
Notes
a)
Due
2009
On
October
18, 2004, the Company issued Senior Notes in the international capital markets
under Rule 144A and Regulation S of the U.S. Securities Act of 1933, in the
amount of US$200 million. These Senior Notes bear interest at a rate of 9%
per
annum, payable semi-annually in May and November of each year.
27
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
15.
Loans
and Financing --Continued
Senior
Notes--Continued
b)
Due
2017
On
January
26, 2007, the wholly-owned subsidiary Cosan Finance Limited issued Senior Notes
in the international capital markets under Rule 144A and Regulation S of the
U.S. Securities Act of 1933, in the amount of US$400 million. These Senior
Notes
bear interest at a rate of 7% per annum, payable semi-annually in February
and
August of each year.
IFC
– International Finance Corporation
On
June
28, 2005, the Company entered into a credit facility agreement in the total
amount of US$70 million with the IFC, comprising an “A loan” of US$50 million
and a “C loan” of US$20 million. The “C loan” was withdrawn on October 14, 2005
while the funds from the “A loan” were released at February 23, 2006. Under the
agreement, the Company has granted to IFC an option for the total or partial
conversion of the “C loan” into common shares of the Company in connection with
its Initial Public Offering. On November 7, 2005, IFC informed the Company
of
its intention to exercise the conversion option in relation to the amount of
US$5 million, which translated on November 16, 2005 totaled outlay of R$10,980
referring to “C loan”, which was converted into 228,750 common registered shares
in connection with the public offer realized on November 2005.
28
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
15.
Loans
and Financing --Continued
IFC
– International Finance Corporation--Continued
Interest
payments accrued on these loans are due on a semi-annual basis and are payable
on January 15 and July 15 of each year, based on the LIBOR plus a spread of
3.75% per annum for “C Loan”, and on LIBOR plus a spread of 2.5% per annum for
“A Loan”. The “C loan” accrues additional interest based on a formula that takes
the Company’s EBITDA into consideration. The “C loan” outstanding principal will
be settled in a lumpsum on January 15, 2013, and may be prepaid. The “A loan”
principal will be repaid in 12 equal installments payable every six months
beginning July 15, 2007. The operations are guaranteed by the industrial
facilities under “Usina Rafard”, and by a guarantee provided by the controlling
shareholder and Usina da Barra, Cosan Operadora Portuária and Agrícola Ponte
Alta S.A.
The
Company, together with its controlling shareholder and its subsidiaries, entered
into an Equity Rights Agreement with IFC, whereby tag along right and a put
option have been granted to IFC, which requires the Company’s controlling
shareholders to hold a minimum interest of 51% in the Company’s share
capital.
Perpetual
Notes
On
January 24 and February 10, 2006,
the Company issued Perpetual Notes in
the international market in
accordance with Regulations S and Rule 144A, in the amount of US$450 million for qualified
institutional investors. Perpetual notes are listed in the Luxemburg
Stock Exchange - EURO MTF and are subject to interest of 8.25% per year, payable
quarterly on the 15th of May, August, November and February of each year,
beginning May 15, 2006. These notes may, at the discretion of the Company,
be
redeemed as from February 15, 2011 on any interest payment date. Perpetual notes are secured
by the Company and by Usina da Barra.
29
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
15.
Loans
and Financing --Continued
Restrictive
Covenants in the Loan and Financing Agreements
The
Company and its subsidiaries are subject to certain restrictive covenants,
the
main ones being as follows:
|
·
|
indebtedness
limit: net debt/EBTIDA ratio must be less than 3.5 to 1, being 2.3
to 1 at July 31, 2007 (1.7 to 1 at July 31,
2006);
|
|
·
|
restriction
on transactions with shareholders and affiliated
companies;
|
|
·
|
restriction
on payment of dividends and other payment restrictions affecting
subsidiaries;
|
|
·
|
indebtedness
limit: current asset/current liability ratio equal or higher than
1.3
being 2.7 at July 31, 2007 (2.8 at July 31, 2006);
and
|
|
·
|
restriction
on guarantees granted on assets
|
All
restrictive covenants have been fully met by the Company and its
subsidiaries.
Expenses
with issue of Notes
Expenses
incurred with issue of Senior
and Perpetual Notes are recorded as other assets and as prepaid expenses, in
current and noncurrent assets respectively, and amortized up to the respective
maturity date of the notes. Specifically for Perpetual Notes, amortization
is
calculated through their redemption date, namely February 15, 2011,
at the Company’s
option.
30
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
16.
Provision
for Contingencies
|
Parent
Company
|
Consolidated
|
|||||||
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
|||||
|
Tax
|
179,731
|
175,350
|
682,186
|
670,154
|
||||
|
Civil
and labor
|
7,737
|
7,572
|
102,600
|
101,082
|
||||
|
187,468
|
182,922
|
784,786
|
771,236
|
|||||
|
Judicial
deposits
|
(10,296)
|
(10,146)
|
(43,816)
|
(43,270)
|
||||
|
177,172
|
172,776
|
740,970
|
727,966
|
|||||
The
Company and its subsidiaries are a party to various ongoing labor claims, civil
and tax proceedings arising from the normal course of their business. Respective
provisions for contingencies were recorded considering those cases in which
the
likelihood of loss has been rated as probable based on the opinion of their
legal advisors. Management believes resolution of these disputes will have
no
effect significantly different from the estimated amounts accrued.
Tax
contingencies refer, substantially,
to suits filed by the Company and its subsidiaries, discussing several aspects
of the legislation ruling PIS, Cofins, contributions to the extinct IAA –
Sugar and Ethanol Institute, and
the Federal VAT (IPI), as well as tax delinquency notices related to ICMS and
contributions to the INSS.
The
main tax contingencies are as
follows:
|
Parent
Company
|
Consolidated
|
|||||||
|
07/31/07
|
04/30/07
|
07/31/07
|
04/30/07
|
|||||
|
Credit
premium - IPI
|
131,266
|
128,836
|
255,873
|
251,534
|
||||
|
ICMS
credits
|
11,200
|
10,585
|
39,048
|
37,315
|
||||
|
Contribution
to IAA
|
-
|
|
-
|
77,383
|
76,643
|
|||
|
PIS
and Cofins
|
17,215
|
|
16,341
|
121,562
|
119,268
|
|||
|
Other
|
20,050
|
19,588
|
188,320
|
185,394
|
||||
|
179,731
|
175,350
|
682,186
|
670,154
|
|||||
The
status
of proceedings and respective amounts involved did not change significantly
in
the three-month period ended July 31, 2007 vis-à-vis the prior quarter ended
April 30, 2007.
31
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
16.
Provision
for Contingencies--Continued
Likelihood
of loss rated as possible
i) IPI
Premium Credit resulting from Revenue Procedure No. 67/98
Brazilian
IRS Revenue Procedure No. 67/98 enabled the possibility of recovering IPI
amounts paid in the period from January 14, 1992 to November 16, 1997 on refined
amorphous sugar.
In
light
of this, former Usina da Barra, for periods in which payments had been made,
claimed the right to offset these amounts against other taxes due. Nevertheless,
the Brazilian IRS denied claims for both refunding and offsetting the referred
to amounts. Thus, Usina da Barra filed an administrative appeal against such
rejection.
After
the
notice for payment of the offset amounts, in light of the changes introduced
by
Brazilian Internal Revenue Service (SRF) Revenue Procedure No. 210/02, the
subsidiary Usina da Barra obtained a preliminary injunction on a petition filed
for a writ of mandamus to suspend collection of the taxes offset aimed to
prevent the government from filing actions for collection of such debts. The
preliminary injunction was granted by the relevant judge. The legal advisor
representing the Company in this case rated the likelihood of an unfavorable
outcome as possible. The amount offset and restated through July 31, 2007 totals
R$145,884 (R$144,123 at April 30, 2007). Supported by the evaluation of its
legal advisors, management believes that it is not necessary to recognize a
provision for this contingency.
ii) Tax
assesment – Withholding Income tax
In
September 2006, the Brazilian IRS drew up a tax deficiency notice against the
Company in view of the lack of payment of withholding income tax on capital
gain
from operation involving acquisition of subsidiary, giving rise to an
administrative process for which the likelihood of loss is rated as possible,
according to the legal advisors’ opinion. No provision was recorded in the
financial statements. At July 31, 2007, this proceeding amounted to R$150,239
(R$148,550 at April 30, 2007).
32
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
16.
Provision
for Contingencies--Continued
Likelihood
of loss rated as possible--Continued
iii)
Other
contingencies
In
addition to the aforementioned claims, the Company and its subsidiaries are
involved in other contingent liabilities relating to tax claims, which have
not
been accounted for, considering their current stage and the likelihood of
favorable outcomes based on the opinion of their legal advisors. These claims
are broken down as follows:
|
Parent
Company
|
Consolidated
|
|||||||
|
07/31/07
|
04/30/06
|
07/31/07
|
04/30/06
|
|||||
|
ICMS
– State Value added Tax
|
6,608
|
6,482
|
63,386
|
58,909
|
||||
|
IAA
- Sugar and Ethanol Institute
|
-
|
-
|
48,418
|
48,216
|
||||
|
IPI
- Federal Value-added tax
|
15,436
|
15,219
|
72,391
|
64,924
|
||||
|
Other
|
11,799
|
7,134
|
43,259
|
37,777
|
||||
|
33,843
|
28,835
|
227,454
|
209,826
|
|||||
Contingent
credits
i)
IPI
Premium Credit - BEFIEX
The
subsidiary Usina da Barra has been challenging in court previously unused tax
credits of approximately R$279,273 in July 31, 2007 (R$275,915 at April 30,
2007), related to IPI premium credit (Decree Law No. 491, dated March 5, 1969),
levied on exports made under the Special Export Program – BEFIEX, calculated for
the period May 1992 to December 2006. The subsidiary’s legal advisors believe
that there are good chances of a favorable outcome in this case. These credits
were neither recorded by the Company nor used to offset against other tax
liabilities.
ii)
Accounts
receivable from federal government
The
subsidiary Usina da Barra has several indemnification suits filed against the
Federal Government, since, at the time the sector was under the Government’s
control, the product prices were mandatorily established at levels that did
not
conform to the reality of the sector, created by the Government
itself.
33
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
16.
Provision
for Contingencies--Continued
Contingent
credits--Continued
ii)
Accounts
receivable from federal government--Continued
The
indemnification suits are still being challenged in court and, as such, were
not
recorded in the subsidiary’s financial statements as of July 31, 2007. However,
on February 28, 2007, the subsidiary recognized a gain in the P&L for the
period, in the amount of R$318,358, corresponding to one of the above-mentioned
proceedings, for which a final and unappealable decision was rendered in favor
of subsidiary, as per decision handed down at the end of July 31, 2007. Since
the recorded amount is substantially composed of interest and monetary
restatement, it was recognized under Financial income (expenses), net, against
the account Credit from indemnification suit, under noncurrent assets. The
Company is expecting a final decision regarding the form of payment, which
should take place by means of securities issued in connection with public debts,
to be received in 10 years, after the final decision is handed down for the
enforcement proceeding. The Company, based on the opinion of its legal advisors,
estimates that the discussion on the enforcement proceeding will be concluded
in
three years. The lawyers’ fees referring to this suit was recognized in General
and administrative expenses, in the amount of R$38,203, against the account
Other liabilities, under noncurrent liabilities.
17.
Shareholders’
Equity
a)
Capital
As
of July
31, 2007, the Company’s capital is represented by 188,886,360 registered common
shares (same as at April 30, 2007), with no nominal value.
34
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
17.
Shareholders’
Equity--Continued
b)
Legal
reserve
At
April
30, 2007, the Company distributed 5% of the net income determined in the year
legal reserve, as per the articles of incorporation and in compliances with
the
Brazilian Corporate Law, in amount of R$15,954.
c)
Dividends
According
to the Company’s article of incorporation, shareholders are entitled to minimum
compulsory dividends of 25% of the year’s net income, adjusted in accordance
with article 202 of Law 6404/76. The dividend amounts determined at April 30,
2007 corresponded to R$75,783, which was fully paid since August 6,
2007.
d) Reserve
for new investments and modernization
The
Company management has approved at the shareholders’ meeting that a portion of
earnings be retained as of April 30, 2007, in the amount of R$227,349, in order
to continue investments and the modernization process.
18.
Management
Fees
Management
compensation is made solely through the payment of management fees, which are
separately disclosed in the statements of operations.
35
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
19.
Financial
Income (Expenses), Net
|
Parent
Company
|
Consolidated
|
||||||
|
05/01/07
to
07/31/07
|
05/01/06
to 07/31/06
|
05/01/07
to
07/31/07
|
05/01/06
to 07/31/06
|
||||
|
Financial
expenses
|
|||||||
|
Interest
(1)
|
(54,978)
|
(55,398)
|
(89,673)
|
(41,254)
|
|||
|
Monetary
variation losses
|
(485)
|
(1,243)
|
(2,974)
|
(11,695)
|
|||
|
Exchange
variation losses (2)
|
131,927
|
(68,949)
|
134,537
|
(70,947)
|
|||
|
Results
from derivatives (3)
|
(7,241)
|
(152,076)
|
(7,241)
|
(152,076)
|
|||
|
CPMF
expenses
|
(2,945)
|
(3,267)
|
(5,120)
|
(5,787)
|
|||
|
Bank
charges
|
(141)
|
(1,174)
|
(410)
|
(1,747)
|
|||
|
66,137
|
(282,107)
|
29,119
|
(283,506)
|
||||
|
Financial
income
|
|||||||
|
Interest
(1)
|
4,483
|
4,705
|
13,604
|
11,612
|
|||
|
Monetary
variation gains
|
112
|
-
|
726
|
4,595
|
|||
|
Exchange
variation gains (2)
|
(6,007)
|
3,788
|
(6,023)
|
2,970
|
|||
|
Results
from derivatives (3)
|
91,066
|
20,586
|
91,066
|
26,151
|
|||
|
Earnings
from marketable securities
|
15,235
|
23,552
|
23,267
|
25,632
|
|||
|
Discounts
obtained (4)
|
74
|
25,755
|
(917)
|
26,865
|
|||
|
104,963
|
78,386
|
121,723
|
97,825
|
||||
|
171,100
|
(203,721)
|
150,842
|
(185,681)
|
||||
(1)
Includes results from currency and interest rate swap contracts for the changes
related to the senior notes;
(2)
Includes foreign exchange gains on liabilities denominated in foreign
currency;
(3)
Includes results from transactions in futures, options, swaps and NDF;
and,
(4)
In
2006, includes discounts obtained on promissory notes and VAT
payment.
36
20.
Statement
of EBITDA (Not reviewed)
|
Consolidated
|
||||||||
|
05/01/07
to
07/31/07
|
05/01/06
to
07/31/06
|
08/01/06
to
07/31/07
|
08/01/05
to
07/31/06
|
|||||
|
Net
operating revenue
|
591,713
|
944,113
|
3,252,656
|
2,851,016
|
||||
|
Less:
|
||||||||
|
Cost
of goods sold and services rendered
|
(548,010)
|
(575,950)
|
(2,453,175)
|
(1,878,104)
|
||||
|
Selling
expenses
|
(61,083)
|
(60,060)
|
(283,045)
|
(213,362)
|
||||
|
General
and administrative expenses and management fees
|
(57,001)
|
(46,297)
|
(256,863)
|
(161,525)
|
||||
|
Other
operating income (expenses), net
|
(1,481)
|
(3,044)
|
36,872
|
(18,764)
|
||||
|
Plus:
|
||||||||
|
Depreciation
and amortization
|
125,379
|
70,329
|
352,010
|
158,267
|
||||
|
EBITDA
|
49,517
|
329,091
|
648,455
|
737,528
|
||||
EBITDA
of
the Company and subsidiaries may be reconciled with operating results as
follows:
37
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
20.
Statement
of EBITDA (Not
reviewed)--Continued
|
Consolidated
|
|||||||||
|
05/01/07
to
07/31/07
|
05/01/06
to
07/31/06
|
08/01/06
to
07/31/07
|
08/01/05
to
07/31/06
|
||||||
|
Operating
income (loss)
|
19,130
|
16,978
|
567,445
|
(45,389)
|
|||||
|
Plus:
|
|||||||||
|
Goodwill
amortization
|
55,968
|
56,364
|
223,290
|
164,904
|
|||||
|
Financial
income (expenses), net
|
(150,842)
|
185,681
|
(494,490)
|
407,773
|
|||||
|
Losses
(gains) on equity investments
|
(118)
|
(261)
|
200
|
(832)
|
|||||
|
Expenses
with placement of shares
|
-
|
-
|
-
|
52,805
|
|||||
|
Depreciation
and amortization
|
125,379
|
70,329
|
352,010
|
158,267
|
|||||
|
EBITDA
|
49,517
|
329,091
|
648,455
|
737,528
|
|||||
21.
Financial
Instruments
a)
Risk
management
The
volatility in the price of commodities and foreign exchange rates are the main
market risks to which the Company and its subsidiaries are exposed. The Company
carries out operations involving financial instruments with a view to managing
such risks.
These
risks and related instruments are managed through the definition of strategies,
establishment of control systems and determination of foreign exchange, interest
rate and price change limits.
The
financial instruments are contracted for hedging purposes only.
b)
Price
risk
The
Company carries out transactions involving derivatives, with a view to reducing
its exposure to sugar price variations in the foreign market. Such transactions
assure an average minimum income for future production. The Company actively
manages the positions contracted and relevant results of such activity are
continually monitored, so as to allow that adjustments be made to goals and
strategies considering changes in market conditions. The Company operates mainly
in futures and options markets on the NYBOT (New York Board of Trade) and the
LIFFE (London International Financial Futures and Options
Exchange).
38
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
21.
Financial
Instruments--Continued
b)
Price
risk--Continued
At
July
31, 2007 the Company had 1,456,665 tons of sugar (1,317,287 tons at April 30,
2007), hedged by negotiations with financial instruments, as shown
below:
|
Derivatives
included in contract
NY11 (NYBOT)
|
||||||||
|
Month
|
Quote
on
07/31/07
(¢/lb)
|
Protected
volume (T)
|
Average
price
(¢/lb)
|
Market
Value on
07/31/07
(R$ thousand)
|
||||
|
May/07
|
10.33
|
39,980
|
9.56
|
(1,274)
|
||||
|
Jul/07
|
10.33
|
352,677
|
9.13
|
(17,525)
|
||||
|
Oct/07
|
10.33
|
680,771
|
11.01
|
18,456
|
||||
|
Mar/08
|
10.42
|
31,750
|
11.04
|
812
|
||||
|
Jul/08
|
10.51
|
141,630
|
10.34
|
(977)
|
||||
|
Oct/08
|
10.77
|
38,100
|
10.55
|
(354)
|
||||
|
Total
|
1,284,907
|
10.36
|
(862)
|
|||||
|
Derivatives
included in Contract London # 5 (LIFFE)
|
||||||||
|
Month
|
Quote
on
07/31/07
(US$/lb)
|
Protected
volume (T)
|
Average
price
(US$/lb)
|
Market
Value on
07/31/07
(R$ thousand)
|
||||
|
May/07
|
309.40
|
2,922
|
352.20
|
234
|
||||
|
Aug/07
|
309.40
|
91,986
|
326.06
|
2,876
|
||||
|
Oct/07
|
309.40
|
54,350
|
317.63
|
840
|
||||
|
Aug/08
|
309.20
|
22,500
|
305.06
|
(175)
|
||||
|
Total
|
171,758
|
321.09
|
3,775
|
|||||
|
Derivatives
included in Contract RBOB Gasoline (NYMEX)
|
||||||||
|
Month
|
Quote
on
07/31/07
(US$/g)
|
Protected
volume (M3)
|
Average
price
(US$/g)
|
Market
Value on
07/31/07
(R$ thousand)
|
||||
|
Aug/07
|
2.11
|
2,544
|
2.27
|
202
|
||||
|
Sep/07
|
2.11
|
2,544
|
2.07
|
(50)
|
||||
|
Oct/07
|
2.01
|
2,544
|
2.02
|
10
|
||||
|
Total
|
7,632
|
2.12
|
162
|
|||||
39
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
21.
Financial
Instruments--Continued
b)
Price
risk--Continued
|
Derivatives
included in contract NY11 (NYBOT)
|
||||||||
|
Month
|
Quote
on
04/30/07
(¢/lb)
|
Protected
volume (T)
|
Average
price
(¢/lb)
|
Market
Value on
04/30/07
(R$ thousand)
|
||||
|
Mar/07
|
9.10
|
474
|
12.02
|
62
|
||||
|
May/07
|
9.10
|
289,480
|
9.63
|
6,815
|
||||
|
Jul/07
|
9.10
|
403,301
|
12.21
|
56,794
|
||||
|
Oct/07
|
9.45
|
471,881
|
11.51
|
44,219
|
||||
|
Mar/08
|
10.09
|
31,750
|
11.04
|
1,349
|
||||
|
Total
|
1,196,887
|
11.28
|
109,239
|
|||||
|
Derivatives
included in Contract London # 5 (LIFFE)
|
||||||||
|
Month
|
Quote
on
04/30/07
(US$/lb)
|
Protected
volume (T)
|
Average
price
(US$/lb)
|
Market
Value on
04/30/07
(R$ thousand)
|
||||
|
Mar/07
|
308.00
|
14,000
|
336.00
|
797
|
||||
|
May/07
|
308.00
|
25,000
|
339.82
|
1,618
|
||||
|
Aug/07
|
308.00
|
49,300
|
324.84
|
1,689
|
||||
|
Oct/07
|
297.00
|
32,100
|
321.02
|
1,568
|
||||
|
Total
|
120,400
|
328.23
|
5,672
|
|||||
c)
Foreign
exchange risk
The
Company carries out transactions involving derivatives, with a view to reducing
its exposure to foreign exchange rate variations on exports. Transactions with
derivatives combined with commodity price derivatives assure an average minimum
income for future production. The Company actively manages the positions
contracted and relevant results of such activity are continually monitored,
so
as to allow that adjustments be made to goals and strategies considering changes
in market conditions. The Company operates mainly in the OTC segment with
leading institutions.
40
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
21.
Financial
Instruments--Continued
c)
Foreign
exchange risk--Continued
At
July
31, 2007, the Company had US$420,000 thousand (US$191,000 thousand at April
30,
2007) protected by negotiations with financial instruments, as shown
below:
|
Derivatives
included in the contract denominated in Commercial Dollar Rate (Futures
and Commodities Exchange - BM&F)
|
||||||||
|
Protected
|
Average
|
Market
value
on
|
||||||
|
Month
|
Quote
on
07/31/07
(R$/US$)
|
volume
(US$
thousand)
|
price
(R$/US$)
|
07/31/07
(R$ thousand)
|
||||
|
Aug/07
|
1.8776
|
59,000
|
2.1317
|
7,636
|
||||
|
Sep/07
|
1.8910
|
41,000
|
2.1022
|
4,406
|
||||
|
Oct/07
|
1.8971
|
43,000
|
2.0335
|
2,899
|
||||
|
Nov/07
|
1.9038
|
74,000
|
2.0774
|
6,390
|
||||
|
Dec/07
|
1.9098
|
71,000
|
2.1026
|
6,787
|
||||
|
Jan/08
|
1.9158
|
36,000
|
2.0445
|
2,223
|
||||
|
Feb/08
|
1.9227
|
16,000
|
2.1232
|
1,565
|
||||
|
Mar/08
|
1.9286
|
52,000
|
2.0170
|
2,133
|
||||
|
Apr/08
|
1.9348
|
28,000
|
2.0114
|
970
|
||||
|
Total
|
420,000
|
2.0743
|
35,009
|
|||||
|
Derivatives
included in the contract denominated in Commercial Dollar Rate (Futures
and Commodities Exchange - BM&F)
|
||||||||
|
Protected
|
Average
|
Market
value
on
|
||||||
|
Month
|
Quote
on
04/30/07
(R$/US$)
|
volume
(US$
thousand)
|
price
(R$/US$)
|
04/30/07
(R$ thousand)
|
||||
|
May/07
|
2.0339
|
27,000
|
2.3416
|
8,303
|
||||
|
Jun/07
|
2.0443
|
36,000
|
2.3823
|
12,039
|
||||
|
Jul/07
|
2.0528
|
33,000
|
2.3852
|
10,757
|
||||
|
Aug/07
|
2.0638
|
14,000
|
2.3568
|
3,982
|
||||
|
Sep/07
|
2.0740
|
7,000
|
2.2767
|
1,300
|
||||
|
Dec/07
|
2.0995
|
59,000
|
2.1231
|
890
|
||||
|
Jan/08
|
2.1077
|
6,000
|
2.3161
|
1,108
|
||||
|
Feb/08
|
2.1163
|
9,000
|
2.2299
|
879
|
||||
|
Total
|
191,000
|
2.2820
|
39,258
|
|||||
41
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
(Unaudited)
21.
Financial
Instruments--Continued
c) Foreign
exchange risk--Continued
Additionally,
the Company was engaged in currency and interest rate swap operations for
charges associated to Senior Notes, from the U.S. dollar exchange rate variation
plus interest of 9% p.a. to 81% do CDI. The total nominal contracted amount
of
US$90,300 thousand, R$257,671 on the date the contract was entered into,
corresponding to total interest payable by the maturity date of the Senior
Notes, of which the amount of US$36,300 thousand was incurred and paid by July
31, 2007 (idem at April 2007). The financial result obtained in this type of
transaction is recognized on a pro-rata temporis basis as a contra entry to
the
Senior Notes interest expense. In the quarter ended July 31, 2007, the Company
determined a negative result on these swap operations in the amount of R$4,903
(R$23,393 at April 30, 2007).
At
July
31, 2007 and April 30, 2007, the Company’s and its subsidiaries’ net exposure to
changes in U.S. dollar exchange rate variation was as follows:
|
Consolidated
|
|||||||
|
07/31/07
|
04/30/07
|
||||||
|
R$
|
US$
(in thousands)
|
R$
|
US$
(in thousands)
|
||||
|
Amounts
pending foreign exchange closing
|
17,151
|
9,135
|
25,881
|
12,725
|
|||
|
Cash
and cash equivalents
|
370,177
|
197,154
|
584,967
|
287,609
|
|||
|
Derivative
financial instruments – assets (1)
|
92,701
|
49,372
|
36,980
|
18,182
|
|||
|
Notes
receivable from abroad
|
58,546
|
31,181
|
33,234
|
16,340
|
|||
|
Loans
in foreign currency
|
(118,655)
|
(63,195)
|
(137,649)
|
(67,677)
|
|||
|
Advances
from customers (2)
|
(40,002)
|
(21,305)
|
(86,166)
|
(42,365)
|
|||
|
Senior
Notes due in 2009
|
(375,520)
|
(200,000)
|
(406,780)
|
(200,000)
|
|||
|
Senior
Notes due in 2017
|
(777,911)
|
(414,311)
|
(828,430)
|
(407,311)
|
|||
|
Perpetual
notes
|
(861,883)
|
(459,034)
|
(933,630)
|
(459,034)
|
|||
|
Derivative
financial instruments – liabilities (3)
|
(7,158)
|
(3,812)
|
-
|
-
|
|||
|
Net
foreign exchange exposure
|
(1,642,554)
|
(874,815)
|
(1,711,593)
|
(841,531)
|
|||
|
|
(1)
|
Includes
balances of margin deposit and call option premium (see Note
6);
|
|
|
(2)
|
Includes
export prepayment balances; and
|
|
|
(3)
|
Includes
balances of credit facility used and put option premium (see Note
6).
|
42
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
21.
Financial
Instruments--Continued
d)
Interest
rate risk
The
Company monitors fluctuations of the several interest rates linked to its
monetary assets and liabilities and, in the event of increased volatility of
such rates, it may engage in transactions with derivatives so as to minimize
such risks. At July 31, 2007, the Company did not record any interest rate
derivative contracts, except for the swap arrangement referred to in item c)
Foreign exchange risk.
e)
Credit
risk
A
significant portion of sales made by the Company and its subsidiaries is
intended for a selected group of best-in-class counterparts, i.e. trading
companies, fuel distribution companies and large supermarket chains. Credit
risk
is managed through specific rules of client acceptance, credit rating and
setting of limits for customer exposure, including the requirement of a letter
of credit from major banks. The Company and its subsidiaries historically do
not
record material losses on trade accounts receivable.
f)
Debt
acceleration risk
As
of July
31, 2007, the Company was a party to loan and financing agreements with
covenants generally applicable to these operations, regarding cash generation,
debt to equity ratio and others. These covenants are being fully
complied with by the Company and do not place any restrictions on its operations
as a going-concern.
43
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
21.
Financial
Instruments--Continued
g)
Market
values
As
of July
31, 2007 and April 30, 2007, the fair values of cash and cash equivalents,
marketable securities and trade accounts receivable and payable approximate
the
respective amounts recorded in the consolidated financial statements, due to
their short-term nature.
The
fair
value of the loan related to Resolution 2471, represented by its present value,
at July 31, 2007 and April 30, 2007, approximates the amounts recorded in
noncurrent assets under Restricted Brazilian Treasury Bills (CTN).
The
fair
value of the Senior Notes maturing in 2009 and 2017, as described in Note 15,
according to their market value, was 104.75% and 91.75%, respectively, of their
face value at July 31, 2007.
The
fair
value of Perpetual Notes as described in Note 15, according to its market value,
was 99.25% of its face value at July 31, 2007.
As
for the
other loan and financing arrangements, their respective fair values
substantially approximate the amounts recorded in the financial statements
considering that such instruments are subject to variable interest
rates.
22.
Insurance
(Not Reviewed)
At
July
31, 2007, the Company and its subsidiaries maintains insurance cover against
fire, lightning and explosions of any nature for the whole sugar and ethanol
stock in the aggregate amount of R$1,059,700 and for buildings and equipment
located at plants and installations amount in the aggregate to R$137,443. Sugar
and ethanol inventories located at different plants and warehouses are covered
by separate insurance policies with expiration dates varying between July 2007
and July 2008, each of them being renewable annually, usually by agreement
between the parties. In particular, equipment and products that are offered
as
guarantee for the financial transactions we are engaged in are
insured.
44
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
22.
Insurance
(Not reviewed)--Continued
Also
the
Company has taken out insurance policies for its aircrafts in the total amount
of roughly R$16,000 million which are valid until September 2007 to June 2008
as
well as civil liability insurance of approximately R$388,000
million.
At
July
31, 2007, Cosan Portuária has insurance for its cargo loading terminal in Santos
Port in the total amount of R$112,475, which encompasses equipment as well
as
inventories stored in the terminal.
The
Company does not foresee any difficulties to renew its insurance policies and
believes that the coverage established is reasonable in terms of amounts and
consistent with Brazilian industry standards.
23.
Stock
Option Plan
At
the
Annual and Extraordinary Shareholders’ Meeting held on August 30, 2005, the
Guidelines for the Outlining and Structuring of a Stock Option Plan for
Company’s officers and employees were approved, thus authorizing the issue of up
to 5% of shares comprising the Company’s share capital. This stock option plan
was outlined to attract and retain services rendered by officers and high level
employees, offering them the opportunity to become shareholders of the Company.
On September 22, 2005, the Board of Directors approved the distribution of
stock
options corresponding to 4,302,780 common shares to be issued or purchased
by
the Company related to 3.25% of the share capital at the time, authorized by
the
Annual/Extraordinary Meeting. The remaining 1.75% may still be distributed.
According to the Stock Option Plan, the option price is R$6.11 (six reais and
eleven cents) per share. Options may be exercised after a one-year grace period
starting November 18, 2005, at the maximum percentage of 25% per year. On
November 20, 2006, 1,132,707 options were exercised and 285,060 options expired
due to the exit of one eligible executive. Consequently, the remaining balance
of the options to be exercised at July 31, 2007 is of 2,885,013 common
shares.
45
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
23.
Stock
Option Plan--Continued
In
the
quarter ended July 31, 2007, were the Company to record the Stock Option Plan,
its net income would have increased by R$2,026 (decreased R$5,204 in the quarter
ended at July 31, 2006). In this hypothesis, at July 31, 2007, the Company
would
present increase in noncurrent assets by R$10,658 (R$11,702 at
April 30, 2007), increase in noncurrent liabilities by R$31,347
(R$34,417 at April 30, 2007) and decrease in shareholders’ equity by
R$20,689 (R$22,715 at April 30, 2007). If the stock option included
the issue of new shares, current shareholders would have their shareholding
reduced by 1.5044%, after the exercise of all options without any effect on
the
Company results.
24.
Subsequent
Event
Change
of controlling shareholder
On
August
1, 2007, Cosan Limited, a company incorporated in Bermuda, became the
controlling shareholder of Cosan S.A. Indústria e Comércio (the “Company”), in
which it holds 51% interest.
This
operation was carried out by means of a corporate restructuring involving the
Company’s former direct controlling shareholders, to wit, Usina Costa Pinto S.A.
Açúcar e Álcool (“Usina Costa Pinto”) and Aguassanta Participações S.A.
(“Aguassanta Participações”). Referred to shareholders contributed capital to
Cosan Limited in the form of Company’s common shares, as stated below, thus
becoming part of the Company’s indirect ownership structure:
|
Shareholder
|
Number
of shares of the Company’s issue contributed as capital to Cosan
Limited
|
Interest
held in the Company
|
|
Usina
Costa Pinto
|
30,010,278
|
15.89%
|
|
Aguassanta
Participações
|
66,321,766
|
35.11%
|
|
96,332,044
|
51.00%
|
46
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
24.
Subsequent
Event--Continued
Change
of controlling shareholder--Continued
Subsequently,
Aguassanta Participações proceeded with the corporate restructuring involving
its interest held in Cosan Limited. As a result of this restructuring, the
equity interest formerly held by Aguassanta Participações directly in Cosan
Limited turned into indirect interest, by means of holding companies in Brazil
and abroad. Upon completion of said corporate restructuring operation, Cosan
Limited ownership structure – where Cosan Limited equity interest in
Cosan S.A. Indústria e Comércio remained unaltered, corresponding to
51,6% -, was as follows:
|
Shareholder
|
Class
of shares
|
Number
of shares
|
Interest
|
|
Usina
Costa Pinto
|
B1
|
30,010,278
|
15.29%
|
|
Queluz
Holdings Limited
|
B1
|
66,321,766
|
33.78%
|
|
Aguasanta
Participações S.A.
|
A
|
5,000,000
|
2.55%
|
|
Other
shareholders
|
A
|
95,000,000
|
48.39%
|
|
196,332,044
|
100.00%
|
Cosan
Limited shares owned by Usina Costa Pinto and Queluz Holdings Limited are Class
B1 shares, which entitle their holders to 10 votes per share. Other shares
are
Class A shares, which entitle holders to 1 vote per share.
On
August
16, 2007, Cosan Limited took part in a Global Initial Public Offering (IPO)
at
the New York Stock Exchange by offering 100,000,000 Class A shares. As of that
date, Cosan Limited priced its IPO at US$10.50 per Class A share, equivalent
to
the amount of R$21.05.
In
consonance with the IPO, Cosan Limited is conducting a public distribution
of
Brazilian Depositary Receipts (“BDRs”), which represent Class A shares and have
been traded at the São Paulo Stock Exchange since August 17, 2007.
The
referred to operation gave rise to questioning by the Brazilian Securities
and
Exchange Commission (“CVM”) which, in an Official Letter dated
August 10, 2007 requested information of the Company’s Chairman and
CEO about noncompliance with his loyalty duties and the possible usurpation
of
corporate opportunity under the terms of Brazilian legislation, especially
as
regards the conduct of activities abroad by Cosan Limited which could have
been
performed by the Company itself.
47
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
24.
Subsequent
Event--Continued
Change
of controlling shareholder--Continued
On
August
14, 2007, the Company’s Chairman and CEO informed CVM that his role in the
corporate reorganization operation was and continues to be conducted pursuant
to
Brazilian laws.
Complementarily,
at a meeting held on August 15, 2007, the Company learned from CVM
Decision-Making Board that, in the opinion of its members, the conduct of
activities abroad by means of Cosan Limited which could be developed by Cosan
S.A. through the currently proposed ownership structure may represent a
violation of the Brazilian corporate laws as respects loyalty duty and conflict
of interest. Accordingly, if the structure is maintained and Cosan Limited
performs investment operations abroad to the detriment of Cosan S.A., CVM may
initiate an administrative proceeding, which may ultimately lead to penalties.
The Company’s Chairman and CEO believes not to have violated any applicable law,
otherwise he undertakes to propose alternative structures and, in the search
of
solutions in this connection, he further undertakes not to change the conditions
and steps already publicized under significant events, particularly as regards
the swap offering to be directed to Cosan S.A. shareholders.
Annual
General Meeting
On
August
30, 2007, the Company held its Annual General Meeting whereat the following
resolutions were made by unanimous vote:
|
|
•
|
Approval
of the Company’s financial statements and management report for the year
ended April 30, 2007, as well as of the allocation of net profit
for the
year;
|
|
|
•
|
Ratification
of the dividend distribution resolved by the Board of Directors and
effectively carried out on August 6,
2007;
|
|
|
•
|
Election
of the Company’s Audit Committee new
members;
|
|
|
•
|
Setting
the Audit Committee members compensation and the overall annual amount
payable as Company management fees.
|
48
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
29.
Additional
Information
|
Parent
Company
|
Consolidated
|
|||||||
|
05/01/07
to 07/31/07
|
05/01/06
to 07/31/06
|
05/01/07
to 07/31/07
|
05/01/06
to 07/31/06
|
|||||
|
Cash
flows from operating activities
|
||||||||
|
Net
income for the period
|
13,667
|
5,378
|
13,667
|
5,378
|
||||
|
Adjustments
to reconcile net income to cash provided by (used in) operating
activities
|
||||||||
|
Losses
(earnings) on equity investments
|
49,105
|
(80,519)
|
(118)
|
(261)
|
||||
|
Depreciation
and amortization
|
51,081
|
21,107
|
125,379
|
70,329
|
||||
|
Provision
for devaluation of permanent equity investments
|
2,768
|
-
|
24
|
34
|
||||
|
Residual
value of permanent asset disposals
|
3,166
|
401
|
2,553
|
2,040
|
||||
|
Goodwill
amortization
|
36,119
|
30,122
|
55,968
|
56,364
|
||||
|
Set-up
(reversal) of provision for contingencies
|
795
|
(1,635)
|
1,670
|
4,942
|
||||
|
Minority
interest
|
-
|
-
|
(630)
|
1,578
|
||||
|
Deferred
income and social contribution taxes
|
11,421
|
(37,522)
|
(10,943)
|
130
|
||||
|
Discounts
on promissory notes
|
-
|
(25,600)
|
-
|
(25,600)
|
||||
|
Interest
and monetary and foreign exchange variation, net
|
(66,493)
|
128,215
|
(103,036)
|
116,777
|
||||
|
Others
|
-
|
-
|
-
|
199
|
||||
|
Decrease
(increase) in assets
|
||||||||
|
Trade
accounts receivable
|
2,874
|
(19,584)
|
(29,073)
|
(17,654)
|
||||
|
Inventories
|
(125,459)
|
(184,597)
|
(279,628)
|
(420,490)
|
||||
|
Derivative
financial instruments
|
(56,451)
|
215,839
|
(56,451)
|
215,839
|
||||
|
Other
assets
|
(3,457)
|
(4,745)
|
(76,691)
|
(49,465)
|
||||
|
Increase
(decrease) in liabilities
|
||||||||
|
Trade
accounts payable
|
72,050
|
70,053
|
199,863
|
177,894
|
||||
|
Salaries
payable
|
12,196
|
9,637
|
27,106
|
27,433
|
||||
|
Taxes
and social contributions payable
|
1,452
|
3,237
|
(1,399)
|
5,015
|
||||
|
Provision
for contingencies
|
244
|
31
|
(1,084)
|
1,619
|
||||
|
Derivative
financial instruments
|
12,425
|
(32,907)
|
12,425
|
(32,907)
|
||||
|
Other
liabilities
|
(14,887)
|
9,048
|
(19,767)
|
27,424
|
||||
|
Net
cash provided by (used in) operating activities
|
2,616
|
105,959
|
(140,165)
|
166,618
|
||||
|
Cash
flow from investing activities
|
||||||||
|
Acquisition
of investment
|
(4,655)
|
-
|
(2,105)
|
-
|
||||
|
Goodwill
on acquisition of investment
|
-
|
-
|
(1,829)
|
(3,706)
|
||||
|
Acquisition
of property, plant and equipment
|
(45,910)
|
(40,402)
|
(170,349)
|
(84,432)
|
||||
|
Marketable
securities
|
284,288
|
87,139
|
338,679
|
136,900
|
||||
|
Others
|
-
|
-
|
(132)
|
(232)
|
||||
|
Net
cash provided by investing activities
|
233,723
|
46,737
|
164,264
|
48,530
|
||||
49
COSAN
S.A. INDÚSTRIA E COMÉRCIO
NOTES
TO
THE QUARTERLY FINANCIAL INFORMATION--Continued
(In
thousands of reais)
29.
Additional
Information--Continued
|
Parent
Company
|
Consolidated
|
|||||||
|
05/01/07
to 07/31/07
|
05/01/06
to 07/31/06
|
05/01/07
to 07/31/07
|
05/01/06
to 07/31/06
|
|||||
|
Cash
flows from financing activities
|
||||||||
|
Loans
and financing
|
-
|
-
|
1,936
|
-
|
||||
|
Advances
from customers
|
-
|
2,936
|
4,363
|
3,212
|
||||
|
Payments
of principal and interest on loans and financings, advances from
customers
and promissory notes
|
(91,728)
|
(59,358)
|
(97,664)
|
(103,168)
|
||||
|
Prepayment
with related parties
|
(30,740)
|
-
|
-
|
-
|
||||
|
Others
|
-
|
-
|
2,424
|
-
|
||||
|
Net
cash used in financing activities
|
(122,468)
|
(56,422)
|
(88,941)
|
(99,956)
|
||||
|
Net
increase (decrease) in cash and cash equivalents
|
113,871
|
96,274
|
(64,842)
|
115,192
|
||||
|
Cash
and cash equivalents at beginning of period
|
31,571
|
19,247
|
643,815
|
61,036
|
||||
|
Cash
and cash equivalents at end of period
|
145,442
|
115,521
|
578,973
|
176,228
|
||||
|
Additional
cash flow information
|
||||||||
|
Interest
paid on loans, financings, advances from customers and promissory
notes
|
39,794
|
46,800
|
40,465
|
49,668
|
||||
|
Income
and social contribution taxes paid
|
1,176
|
-
|
5,333
|
564
|
||||
50
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)
|
Quarterly
Financial Letter
|
|
|
1st
Quarter of Fiscal Year 2008 – May, June and
July
|
| Paulo
Diniz,
CFO
& RI
|
Cosan: performance affected by depressed prices while strategy strengthened by listing on the NYSE | ||
|
Guilherme
A. Prado,
Investors’
Relations
Alexandre
Sirihal,
Financial
Planning
Anderson
Varanda,
Treasury
Mauricio
Sartorelli,
Controllership
ri@cosan.com.br
www.cosan.com.br
|
§ |
The dramatic drop in sugar and ethanol commodity prices, the relevant appreciation of the Brazilian Real versus the U.S. dollar and the adverse climatic conditions in the quarter caused the entire Brazilian sugar & ethanol industry to be strongly affected as this 2007 harvest begins. Reflecting this environment, the situation for Cosan was no different: average sugar and ethanol prices in this 1Q’08 fell 46% and 29% in relation to the same quarter last year. Accordingly, the company prioritized the trading of sugar, with 842.1 thousand tons, taking advantage of the existing favorable hedging position. As regards the 245.0 million liters of ethanol sold, considering that it essentially concerns a spot prices market, Cosan opted for added storage, so as to mitigate the harmful effects caused by massive sales by most ethanol producers. Hence, at the end of 1Q’08 Cosan recorded net sales of R$591.7 million, 37.3% less than those recorded for 1Q’07. |
|
|
1Q'07
|
1Q'08
|
Financial
Highlights
(R$MM)
|
YTD'07
|
YTD'08
|
|
944.1
|
591.7
|
Net
Operating Revenue
|
944.1
|
591.7
|
|
368.2
|
43.7
|
Gross
Profit
|
368.2
|
43.7
|
|
39.0%
|
7.4%
|
Gross
Margin
|
39.0%
|
7.4%
|
|
329.1
|
49.5
|
EBITDA
|
329.1
|
49.5
|
|
34.9%
|
8.4%
|
EBITDA
Margin
|
34.9%
|
8.4%
|
|
203.2
|
133.3
|
EBITDAH
(Adjusted by Hedge)
|
203.2
|
133.3
|
|
24.8%
|
19.7%
|
EBITDAH
Margin
|
24.8%
|
19.7%
|
|
5.4
|
13.7
|
Net
Profit (Loss)
|
5.4
|
13.7
|
|
0.6%
|
2.3%
|
Net
Margin
|
0.6%
|
2.3%
|
|
Definitions:
FY’08
–
fiscal
year beginning on
May 5, 2007 and to end on April 30, 2008 FY’07
- fiscal
year beginning on
May 1, 2006 and ended on April 30, 2007 1Q’08
-
quarter to end on July 31, 2007
1Q’07
-
quarter ended on July 31, 2006
YTD08
- period beginning on the same date as FY’08 and ending at end
of 1Q’08
YTD07
- period beginning on
the same date as FY’07 and ending at the end of 1Q’07 |
§
|
Cost
of goods
sold ended up strongly affected by intermittent rainfall that
is atypical
at this beginning stage of the harvest, resulting in that only
15.1
million tons of cane where crushed, as compared to the 17.3 million
tons
initially planned. As a consequence, considerable idleness was
generated
for the company’s agricultural and industrial activities, resulting mostly
in a high cost for our own cane. Thus, combined with the depressed
prices,
the EBITDA margin dropped to 8.4% in this 1Q’08, as compared to the 34.9%
for the same quarter last year. However, the company’s favorable hedging
position caused the EBITDAH of R$133.3 million to represent a
margin of
19.7% versus 24.8% for the 1Q’07, which margin is extremely
attractive for a period of almost pitiful
prices.
|
51
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
|
§
|
If
on the one
hand the 14% appreciation of the Real significantly penalized export
revenues in the quarter (although partially mitigated by the exchange
rate
hedge), this appreciation ended up providing a relevant exchange
gain on
dollar indebtedness, generating net financial revenue of R$150.8
million
in this 1Q’08. Thus, if even after deducting non-cash amortizations of
R$56.0 million of premiums related to past acquisitions, the R$13.7
million bottom line was ultimately much better than the R$5.4 million
reported for the same quarter last
year.
|
|
§
|
As
a
subsequent event, the hurricane that struck the world financial market
provided a unique contribution to the company. Thus, on August 17
2007,
Cosan Ltd., the parent company of the Cosan group, conducted its
IPO in
the NYSE securing funding of US$1.2 billion, thereby becoming the
first
company with Brazilian control to have shares listed on the New York
exchange. Despite the considerably depressed prices in the international
stock markets, listing on the NYSE will be fundamentally important
from
the strategic point of view, for the Cosan group to realize its vision
of
effectively becoming the No. 1 global player in terms of renewable
energy.
|
A.
Market Outlook
|
§
|
From
the macro
standpoint the market starts to pay the high price for its intrinsic
distortions. As only one third of the world sugar market is free,
while
the other two thirds are protected, the prohibition of subsidized
exports
from Europe to the free market in the recent past generated a true
scuffle
with sugar prices, which actually surpassed US¢19/lb. At the same time the
world discovered ethanol, leading the U.S. to gather resources to
create
the largest ethanol market on the planet within a relatively short
period.
In addition, the actual rapidity of success of the flex-fuel
automobiles in Brazil created immediate opportunities, which until
then
had only been for an extended horizon. The combination of these two
elements ultimately created a race among countries and producers
for
expansion of world production. In Brazil and India, the publicity
concerning the sugar and ethanol industry caused the race to be even
more
magnified by the arrival of the “parachutists” (newcomers to the industry
with no previous knowledge), who believed that they could generate
extremely high returns within a short period of
time.
|
|
§
|
As
a result,
presently the world is experiencing a situation of surplus supply,
with
resulting depressed prices. If on the one hand this imbalance should
give
rise to serious consequences for this harvest, on the other hand
it should
contribute to better selectivity among the producers themselves,
making
them can learn a hard lesson. In this way, a second wave of consolidation
in the industry could be visualized, with some remaining players
becoming
more strengthened, but the great majority considerably
weakened.
|
52
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
| § |
The
2007/08
harvest in the central-southern region of Brazil has been providing
some
surprises, which have caused the more optimistic production expectations,
particularly in the case of sugar, announced in the beginning of
the
harvest, to start to loose strength and a number of sources of
information
of the industry, such as Única and Datagro, have been revising their
projections to more conservative levels. The reasons for this are:
i) a
more ethanol-oriented harvested than for the initial expectation,
with the
mix in favor of ethanol exceeding 55%; ii) delay of maintenance
of
machinery and equipment, which delayed the beginning of the harvest
for
some farmers; iii) delays caused by rainfall, principally in the
second
half of July, when the mills were down for about 5 days; iv) less
agricultural productivity and industrial yield, resulting from
a greater
incidence of cane bore (a type of plague), as well as an increase
in the
content of fiber in the cane.
|
||
|
Harvest
consolidates as being more ethanol-oriented, and hydrous ethanol
is the
featuring product.
|
§
|
At
the end of
1Q’08 the 2007/08 harvest in the central-southern region of Brazil
showed
crushing of approximately 190 million tons of cane, a volume 3%
higher
than for the same period of the previous harvest. Production of
sugar
totaled 10.9 million tons, i.e., a drop of 12% in relation to the
same
period last year. On the other hand, production of ethanol totaled
8.3
billion liters, which represents an increase of 11%. Of the total
volume
of ethanol, production of hydrous ethanol exceed 5 billion liter,
24% more
volume, while anhydrous ethanol showed 3.2 billion liters, 6% less
than in
the same period of the previous year. These figures corroborate
the
growing demand for hydrous ethanol generated by
flex-fuel automobiles.
|
|
| § |
The
impact of
the arrival of the new Brazilian harvest in the international sugar
market
in a way has already been assimilated by the market and thus the
trend of
more intense losses, perceived since the middle of last year, has
lost
strength, opening space for brief recoveries. During 1Q’08 sugar quotes
dropped to US¢8.45/lb, the lowest quote since May 2005. At the end of
1Q’08 the NY11 was quoted at US¢10.33/lb. The average NY11 for 1Q’08, of
US¢9.29/lb, was 41% less than the average price for the same period
last
year. As regards 4Q’07, we had a decrease of almost
9%. |
53
 |
|
54
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
|
Hedge
funds continue to play an important role in NY sugar
quotes.
|
§
|
During
1Q’08
the major hedge funds went from a net sold position of approximately
35
thousand lots at the beginning of the quarter to a net purchased
position
at the end of the quarter of 24 thousand lots, i.e., a variance
of 59
thousand lots. Minor funds and speculators increased their
purchased
positions by close to 24 thousand lots, reaching at the end
of the quarter
a net purchases position of 28 thousand lots. Thus, at the
end of 1Q’08,
the major hedge funds, coupled with minor funds and speculators,
held a
net purchase position of approximately 52 thousand lots,
representing 8%
of total outstanding contracts. At the end of 4Q’07 these fund held a net
sold position of 34 thousand lots, or 5% of outstanding
contracts.
|
|
 |
|
§
|
Variances
of
refined sugar quotes, although more moderate than for coarse sugar,
were
also significant. In the international market the average price
observed
for refined sugar during 1Q’08, of US$322.18/ton, was 30% less than the
U$460.98/ton for 1Q’07. In comparison with the previous quarter, there was
a decrease of 3.7%.
|
|
§
|
As
we had
commented in previous quarters, the scarcity of refining capacity
around
the world, deriving from the end of the subsidies granted for European
exports, maintained the white sugar premium at historically high
levels.
However, with the start-up of operations of new refineries, located
mainly
in Middle East and African countries, the white sugar premium has
been
lowering gradually and at the end of 1Q’08 was quoted at US$88 per ton. At
the end of 4Q’07 the white sugar premium was quoted at US$110 per
ton.
|
55
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
|
Domestic
refined sugar market showing significant drops in the quarter,
on account
of the harvest in Brazil and of the international prices for
refined
sugar.
|
§
|
 Reflecting
the
behavior of the international market, the domestic market
also gave in to
pressure brought by the advancement of the 2007/08 harvest.
The average
price in 1Q’08 for crystal sugar was R$25.96 per 50Kg bag (or
R$519.28/ton), 47% less than the R$49.41 per 50Kg bag (or
R$988.20/ton) at
the end 1Q’07. As regards 4Q’07 crystal sugar showed 25%
devaluation.
|
|
 |
56
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
| The strong ethanol-oriented profile of the 2007/08 harvest raised considerably the supply of this fuel, pressuring down its quote. The average price in 1Q’08 for hydrous ethanol, ESALQ (University of São Paulo School of Agronomics) base, was R$0.6295/liter, or 28% less than the R$0.8677/liter observed in the same period of the previous fiscal year. For anhydrous ethanol the average price of R$0.7511/liter was 25% less than the R$0.9956/liter for the same period of the previous year. As regards 4Q’07, we had devaluation of 28 and 20% for hydrous and anhydrous ethanol, respectively. | |||
|
Ethanol
exports on the upswing, still with major concentration
in the U.S., but
with some new destinations.
|
§
|
Perhaps
the
main question at this time concerns the performance
of Brazilian ethanol
exports. After the excitement observed with large
volumes being shipped to
the U.S. during the last harvest, some doubt remains
as to the current
appetite of North Americans. According to Secex (Foreign
Trade Office)
data, in the months of April to July 2007 1.19 billion
liters were
shipped, a volume 22% higher than the 970 million
liters for the same
period last year. Of this volume, 413 million were
shipped to the U.S., a
volume 32% less than for the same period last year.
However, one must be
careful when analyzing this data and must keep in
mind that the last
harvest had a sugar-oriented profile, particularly
in its beginning, and
that the concern in the first months of the harvest
was supply for the
domestic market, as evidenced by the low carrying-over
stocks in that
year. Thus, exports only began to gain strength in
the course of the
harvest.
|
|
|
§
|
Another
point
that deserves being stressed is the export of ethanol to
the U.S. via the
Caribbean, on account of tariff benefits. During the period
April to July
2006 direct exports to the U.S. (605 million liters) represented
62% of
the exported volume, while indirect exports (106 million
liters), via the
Caribbean, represented 11%. In the period from April to July
2007, direct
exports to the U.S. (413 million liters) represented 35%
of exported
volume, while indirect exports (371 million liters), via
the Caribbean,
represented 31%.
|
||
|
§
|
In
any event,
the fact that ethanol exports rose is in itself significant,
but
principally due to the fact that countries like the Netherlands,
Japan and
the UK increased their volumes of ethanol
imports.
|
57
|
|
 |
58
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE
(CONSOLIDATED)--Continued
|
§
|
The
drop in
the quotes for ethanol finally reached the gas stations, thus
increasing
the interest of consumers in using this fuel. At the closing
of 1Q’08, the
average price of gasoline at Brazilian service stations was R$2.47/liter,
while the price of hydrous ethanol was R$1.41/liter, or a 57%
parity. Data
disclosed by the ANP (National Petroleum Agency), based on an
assessment
conducted on July 31, 2007, show that in only 4 Brazilian states
(Amapá,
Roraima, Pará and Sergipe) the price of ethanol was higher than a parity
of 75% with the price of gasoline. The states in which ethanol
showed most
advantage in relation to gasoline were Mato Grosso, Goiás and São Paulo,
with parities of 42%, 48% and 49%,
respectively.
|
|
§
|
The
large
disparity between the prices of ethanol in the various Brazilian
states is
mostly explained by tax reasons and also due to logistics problems.
ICMS,
State Value Added Tax on Goods and Services, is the major cause
for this
difference. While in São Paulo the ICMS rate for ethanol is 12%, in the
majority of Brazilian states the rate is
25%.
|
 |
|
§
|
During
1Q’08
sales of flex-fuel vehicles exceeded 500 thousand units, or 86%
of the
sales of new automobiles, causing the current fleet of these types
of
vehicles to come close to 3.8 million automobiles. According to
estimates
by the Anfavea (National Association of Automotive Vehicle Manufacturers),
the share of flex-fuel vehicles of the present Brazilian fleet
of
utilitarians and passenger vehicles is close to 18%, and projections
for
the coming years are quite
optimistic.
|
59
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE
(CONSOLIDATED)--Continued
 |
|
§
|
1Q’08
was
marked by strong devaluation of the U.S. dollar versus the Real,
where the
dollar in the month of July reached a quote of R$1.8448/US$, the
lowest in
the last 6 years. At the end of 1Q’08 the dollar was quoted at
R$1.8776/US$, a devaluation of 7.7% in relation to the end of 4Q’07.
However, in the last few weeks, due to the uncertainties in the
world
market triggered by the U.S. subprime market crisis, quotes have
soared
and the dollar surpassed R$2.10/US$. Presently the dollar is at
a level of
R$1.95/US$.
|
B.
Operating Performance
|
§
|
Cosan
ended
1Q’08 with net operating revenues of R$591.7 million, an amount 37.3%
less
than the revenues recorded in 1Q’07. Contributing strongly to this drop
was the decision to reduce trading of ethanol, which showed a sales
volume
in 1Q’08, 16.0% less than the volume for 1Q’07, due to the low prices that
were practiced in the market. However, the determinant factors
for the
significant reduction of sales were effectively the 45.8% and 28.6%
drops
in average prices in Brazilian Reais for sugar and ethanol sold,
respectively, which followed the trend of reduced prices that had
been
established practically since the beginning of
FY’07.
|
|
§
|
Despite
the
general drop in prices having strongly impacted the reduction of
the price
of the ATR (Total Recoverable Sugar) acquired from third parties
with the
purpose of reducing production costs, adverse climatic conditions,
with
intense rainfall throughout 1Q’08, ended up determining a major rise in
the cost of sugarcane cultivated by Cosan itself and, as a result
hindering the expected reductions of unit costs for production
of sugar
and ethanol. Hence, what ultimately materialized was a significant
reduction of gross profit to R$43.7 million, a drop of 88.1%. In
the same
way, EBITDA of R$49.5 million, a margin of 8.4%, was 85% less than
recorded for 1Q’07, the largest in Cosan’s
history.
|
60
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
|
§
|
Obviously,
the
transactions with derivatives contracted to mitigate fluctuations
of sugar
prices and exchange rates, which in 1Q’07 ended up partially annulling the
record EBITDA, in this 1Q’08 they decisively contributed as a supplement
to the results of the operating activities, adjusting EBITDAH to
R$133.3
million, a margin of 19.7%. This supplement of results from derivatives,
added to the positive result of the exchange variance on debts
denominated
in U.S. dollars, ultimately gave rise to net income of R$13.7 million
in
1Q’08, a net margin of 2.3%, two-and-a-half times more than the net
income
reported for 1Q’07.
|
|
1Q'07
|
1Q'08
|
Income
Statement
(R$MM)
|
YTD'07
|
YTD'08
|
|
944.1
|
591.7
|
Net
Operating Revenue
|
944.1
|
591.7
|
|
(576.0)
|
(548.0)
|
Cost
of Goods
Sold
|
(576.0)
|
(548.0)
|
|
(70.3)
|
(125.4)
|
with
Depreciation & Amortization
|
(70.3)
|
(125.4)
|
|
368.2
|
43.7
|
Gross
Profit
|
368.2
|
43.7
|
|
39.0%
|
7.4%
|
Gross
Margin
|
39.0%
|
7.4%
|
|
(60.1)
|
(61.1)
|
Selling
Expenses
|
(60.1)
|
(61.1)
|
|
(46.3)
|
(57.0)
|
General
&
Adm. Expenses
|
(46.3)
|
(57.0)
|
|
(3.0)
|
(1.5)
|
Other
Operating Expenses
|
(3.0)
|
(1.5)
|
|
329.1
|
49.5
|
EBITDA
|
329.1
|
49.5
|
|
34.9%
|
8.4%
|
EBITDA
Margin
|
34.9%
|
8.4%
|
|
(185.7)
|
150.8
|
Net
Finacial
Expenses
|
(185.7)
|
150.8
|
|
0.3
|
0.1
|
Equity
Income
|
0.3
|
0.1
|
|
(56.4)
|
(56.0)
|
Goodwill
Amortization
|
(56.4)
|
(56.0)
|
|
1.2
|
3.0
|
Other
Non-Operat.Result/Extraordinary
|
1.2
|
3.0
|
|
18.2
|
22.1
|
Profit
Before Income Tax
|
18.2
|
22.1
|
|
(11.2)
|
(9.0)
|
Income
Tax
|
(11.2)
|
(9.0)
|
|
(1.6)
|
0.6
|
Minority
Interests
|
(1.6)
|
0.6
|
|
5.4
|
13.7
|
Net
Profit (Loss)
|
5.4
|
13.7
|
|
0.6%
|
2.3%
|
Net
Margin
|
0.6%
|
2.3%
|
|
§
|
In
terms of
composition of net operating revenues, there were no major changes
of
profile in this 1Q’08 when compared to 1Q’07: the share of sales to the
domestic market rose slightly from 35.5% to 37.9%, less as a result
of
accommodation in the sales of sugar and ethanol and more from the
increased importance of other products and services, which rose
from 5.5% to 8.6% of the share of net revenues, due to the
strong drop in prices of the commodities and the reduction of volume
of
ethanol sold.
|
|
1Q'07
|
1Q'08
|
Sales
Composition
(R$MM)
|
YTD'07
|
YTD'08
|
|
944.1
|
591.7
|
Net
Operating Revenue
|
944.1
|
591.7
|
|
610.6
|
371.8
|
Sugar
Revenue
|
610.6
|
371.8
|
|
94.6
|
57.3
|
Local
|
94.6
|
57.3
|
|
516.0
|
314.5
|
Export
|
516.0
|
314.5
|
|
281.8
|
168.9
|
Ethanol
Revenue
|
281.8
|
168.9
|
|
191.5
|
120.1
|
Local
|
191.5
|
120.1
|
|
90.2
|
48.8
|
Export
|
90.2
|
48.8
|
|
51.8
|
51.0
|
Other
Revenue
|
51.8
|
51.0
|
|
49.3
|
46.6
|
Local
|
49.3
|
46.6
|
|
2.4
|
4.3
|
Export
|
2.4
|
4.3
|
61
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
|
§
|
The
strong
drop in sugar prices did not inhibit trading, mainly on account
of the
good position of fixation of prices in derivative markets that
Cosan
detained throughout the quarter. Thus the volume of sugar traded
ended up
growing 12.4% in comparison with 1Q’07, with a relevant thrust from
exports, particularly refined sugar. The total volume sold of 842.1
thousand tons coupled with production significantly less than for
1Q’07,
on account of the heavy rainfall that hindered crushing during
a good part
of July, on the other hand determined a level of sugar inventories
of
306.7 thousand tons at the end of 1Q’08, 59.6% less than the 758.3
thousand tons held in stock on July 31,
2006.
|
|
§
|
Reflecting
the
deteriorated market conditions, the average prices practiced fell
by 45.8%
from 1Q’07 to this 1Q’08, with a more significant drop (46.6%) in export
prices than for domestic prices, likewise considerably depressed
(40.6%).
However, as emphasized, these average prices practiced do not reflect
Cosan’s hedging policy. If we were to adjust the average prices by the
hedging results obtained in the periods, the average price of R$426
per
ton of sugar exported in 1Q’07 would be restated to R$541 per ton.
Likewise, the average price of exported sugar in 1Q’06, R$798 per ton,
would be restated to R$603 per ton. Thus, the drop in prices would
be of
only 10.2%, compared to the 46.6% of apparent
reduction.
|
|
1Q'07
|
1Q'08
|
Sugar
Business
|
YTD'07
|
YTD'08
|
|
Volume
Sold (thousand tons)
|
||||
|
749.3
|
842.1
|
Total
Local
& Export
|
749.3
|
842.1
|
|
102.3
|
104.3
|
Local
|
102.3
|
104.3
|
|
647.0
|
737.8
|
Export
|
647.0
|
737.8
|
|
Average
Unit Price (R$/ton)
|
||||
|
815
|
442
|
Total
Local
& Export
|
815
|
442
|
|
925
|
550
|
Local
|
925
|
550
|
|
798
|
426
|
Export
|
798
|
426
|
|
§
|
As
for ethanol
business, Cosan considered the price response to the lowering of
the
international quote for sugar to be excessive and so decided to
reduce the
volume of sales and to accumulate inventories, which ultimately
determined
a reduction of 16% of the volume sold of 245.0 million liters in
comparison with 1Q’07, when 291.6 million liters were sold. Thus, even
with restriction of production of ethanol due to rainfall, such
as with
production of sugar, the ending ethanol inventories, of 325.5 million
liters, were 0.8% above the 322.9 million liters held in stock
on July 31,
2006.
|
|
§
|
Similarly
to
what occurred with the average unit price for sugar, the average
unit
price for traded ethanol also showed a significant drop of 28.6%
in the
domestic and foreign markets, going from R$966/thousand liters
in 1Q’07 to
R$690/thousand liters in 1Q’08. When looking at the average unit price in
the domestic market, the reduction was of 23.6%, less extreme than
the
reduction of 39.4% that occurred with the average unit price for
exports.
|
62
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
|
1Q'07
|
1Q'08
|
Ethanol
Business
|
YTD'07
|
YTD'08
|
|
Volume
Sold (million liters)
|
||||
|
291.6
|
245.0
|
Total
Local
& Export
|
291.6
|
245.0
|
|
212.5
|
174.5
|
Local
|
212.5
|
174.5
|
|
79.1
|
70.5
|
Export
|
79.1
|
70.5
|
|
Average
Unit Price (R$/thousand liters)
|
||||
|
966
|
690
|
Total
Local
& Export
|
966
|
690
|
|
901
|
689
|
Local
|
901
|
689
|
|
1,141
|
692
|
Export
|
1,141
|
692
|
|
Unit
costs grow principally on account of the reduction
of the rate of crushing
due to heavy rainfall
|
§
|
Cost
of goods
sold and of services rendered showed a reduction
of 4.9%, from R$576.0
million in 1Q’07 to R$548.0 million in 1Q’08. Four main factors had
decisive impacts on the cost of good sold in
1Q’08: i) increase of 12.4%
of the volume of sugar traded; ii) reduction
of 16% of the volume of
ethanol sold; iii) a significant drop in the
value of ATR, following the
pattern of sugar and ethanol prices; and; iv)
increase of the unit cost of
our own cane and of the cost of industrial processing
of sugar and
ethanol, as a result of non-dilution of overheads,
on account of reduction
of the rate of crushing due to unexpected rains
in the month of July
2007.
|
|
|
§
|
Heavy
rainfall, particularly in the month of July,
caused the crushing for 1Q’08
of 15.1 million tons of sugarcane to keep 10%
below the volume of cane
processed in 1Q’07, which was 16.8 million tons. With a production
mix
oriented to ethanol, production of sugar in 1Q’08 remained 20.4% below
production in 1Q’07, while ethanol production remained basically
aligned.
Considering that a major portion of the costs
of our own cane production
and of industrial processing are based on labor,
Cosan ended up showing
considerable idleness and, as a result, an increase
in the unit costs for
production of sugar and ethanol.
|
||
|
§
|
As
regards the
cost of cane acquired from third parties and
leasing of land, on the other
hand there was an effect of cost reduction, inasmuch
as the price of ATR,
provided by CONSECANA method (see section Did
You Know?), resulted in an
expressive reduction of 33.8%, closing 1Q’08 at R$0.2569/kg versus
R$0.3881/kg on July 31, 2006.
|
||
|
§
|
The
combined
effects of idleness of the industrial plant and
in the agricultural area,
as well as the reduction of the ATR price, led
to a net reduction of 5% of
the unit price of sugar, which fell from R$441
to R$419 per ton and a
reduction of 0.3% in the unit price of ethanol,
from R$671 to R$669 per
thousand liters.
|
||
|
§
|
Cost
of other
products and services showed a strong reduction
of 37.7%, from R$49.7
million in 1Q’07 to R$31.2 million in 1Q’08. The principal item that
influenced this reduction was the reclassification
of R$6.9 million in
this 1Q’08, of the cost of rendering harbor services
for shipment of
Cosan’s own sugar, which previously was classified
in this line item of
COGS, and that as from this fiscal year begins
to be shown in the
consolidated statements as selling expenses,
included in the logistics
expenses for our own VHP sugar. As a result,
this same apparent of cost
reduction “benefit” had a negative effect on selling expenses for
the
quarter.
|
63
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
|
1Q'07
|
1Q'08
|
COGS
per
Product
|
YTD'07
|
YTD'08
|
|
(576.0)
|
(548.0)
|
Cost
of Good Sold (R$MM)
|
(576.0)
|
(548.0)
|
|
(330.5)
|
(352.9)
|
Sugar
|
(330.5)
|
(352.9)
|
|
(195.8)
|
(164.0)
|
Ethanol
|
(195.8)
|
(164.0)
|
|
(49.7)
|
(31.2)
|
Other
Products/Services
|
(49.7)
|
(31.2)
|
|
Average
Unit Cost (R$)
|
||||
|
441
|
419
|
Unit
COGS of
Sugar (R$/ton)
|
441
|
419
|
|
671
|
669
|
Unit
COGS of
Ethanol (R$/thousand liters)
|
671
|
669
|
|
n.a.
|
n.a.
|
Unit
COGS of
Other Produtcs/Services
|
n.a.
|
n.a.
|
|
Selling
expenses on a unit basis fell 1%
|
§
|
Selling
expenses totaled R$61.1 million in 1Q’08, 1.7% above the total of R$60.1
million recorded for 1Q’07, however now including the R$6.9 million for
harbor logistics for our own sugar mentioned
in the previous paragraph. In
this way the unit expense for trading sugar-equivalent
(sugar + ethanol
transformed into sugar) showed a slight increase
of 1.9%, from R$48 to
R$49 per ton of sugar-equivalent. Proportioning
selling expenses with net
operating revenues, the unit expense for sugar
was reduced by 12.1%, while
the unit expense for ethanol rose by
15.8%.
|
|
1Q'07
|
1Q'08
|
Selling
Expenses
|
YTD'07
|
YTD'08
|
|
(60.1)
|
(61.1)
|
Selling
Expenses (R$MM)
|
(60.1)
|
(61.1)
|
|
(38.8)
|
(38.4)
|
Sugar
|
(38.8)
|
(38.4)
|
|
(17.9)
|
(17.4)
|
Ethanol
|
(17.9)
|
(17.4)
|
|
(3.3)
|
(5.3)
|
Other
Products/Services
|
(3.3)
|
(5.3)
|
|
Avg.
Unit Selling Cost (R$)
|
||||
|
52
|
46
|
Unit
Sale Cost
of Sugar (R$/ton)
|
52
|
46
|
|
61
|
71
|
Unit
Sale Cost
of Ethanol (R$/thousand liters)
|
61
|
71
|
|
n.a.
|
n.a.
|
Unit
Sale Cost
of Other Products/Revenues
|
n.a.
|
n.a.
|
|
Administrative
expenses still reflect special projects
|
§
|
General
and
administrative expenses closed the first quarter
of FY’08 at R$57.0
million, substantially above the amount for 1Q´07, when expenses amounting
to R$46.3 million were recorded. The principal
items that contributed to
the increases were expenses related to the professional
fees of auditors
and consultants involved in implementation of
the financial statements in
US GAAP, in compliance with the requirements
of the Novo Mercado
(New Market), enabling consolidation by Cosan
Limited, as well as expenses
related to implementation of the Competencies
Center for service and
support to the SAP recently implemented in
Cosan.
|
|
1Q'07
|
1Q'08
|
General
&
Administrative
Expenses
|
YTD'07
|
YTD'08
|
|
(46.3)
|
(57.0)
|
G&A
Expenses (R$MM)
|
(46.3)
|
(57.0)
|
|
(29.9)
|
(35.8)
|
Sugar
|
(29.9)
|
(35.8)
|
|
(13.8)
|
(16.3)
|
Ethanol
|
(13.8)
|
(16.3)
|
|
(2.5)
|
(4.9)
|
Other
Products/Services
|
(2.5)
|
(4.9)
|
|
Avg.
Unit. G&A Cost (R$)
|
||||
|
40
|
43
|
Unit
G&A
Cost of Sugar (R$/ton)
|
40
|
43
|
|
47
|
66
|
Unit
G&A
Cost of Ethanol (R$/thousand liters)
|
47
|
66
|
|
n.a.
|
n.a.
|
Unit
G&A
Cost of Other Products/Services
|
n.a.
|
n.a.
|
64
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
|
§
|
Once
again,
the net financial results showed a major variance, impacted
by the strong
effects of foreign exchange variance and by the results with
derivatives
transactions, which inverted a position of net expense of
R$185.7 million
to a position of net revenue of R$150.8
million.
|
|
1Q'07
|
1Q'08
|
Financial
Expenses, Net
(R$MM)
|
YTD'07
|
YTD'08
|
|
(66.7)
|
(62.2)
|
Interest
on
Financial Debt
|
(66.7)
|
(62.2)
|
|
25.6
|
23.3
|
Financial
Investments Income
|
25.6
|
23.3
|
|
(41.1)
|
(39.0)
|
Sub-total:
Interest on Net Financial Debt
|
(41.1)
|
(39.0)
|
|
(11.5)
|
(17.0)
|
Other
interest
and monetary variation
|
(11.5)
|
(17.0)
|
|
(68.0)
|
128.5
|
Exchange
Variation
|
(68.0)
|
128.5
|
|
(125.9)
|
83.8
|
Gains
(losses)
with Derivatives
|
(125.9)
|
83.8
|
|
(7.5)
|
(5.5)
|
CPMF
Taxes,
Banking Fees and Other
|
(7.5)
|
(5.5)
|
|
25.6
|
-
|
Discounts
in
Promissory Notes
|
25.6
|
-
|
|
42.8
|
-
|
Recalc.
Provision Interest IAA
|
42.8
|
-
|
|
(185.7)
|
150.8
|
Net
Financial Expenses
|
(185.7)
|
150.8
|
|
Important
reduction of the average cost of third party
capital
|
§
|
Concerning
financial costs associated with capital structure, i.e.,
of interest on
financial indebtedness, net of earnings from short-term
financial
investment, there was a reduction of 5.5%, where expenses
totaled R$39.0
million. Comparing these capital structure expenses with
gross
indebtedness net of average cash and cash equivalents,
short-term
financial investments and CTNs (National Treasury Certificates)
for the
quarter, the average cost of the debt fell from 11.9% p.a.
in 1Q’07 to
9.1% p.a. in 1Q’08, reflecting the concentrated effort of reducing the
cost of capital.
|
|
|
§
|
From
the
standpoint of foreign exchange results, the contrasting tracks
of the foreign exchange rate for 1Q’07 and 1Q’08 gave rise to differing
results. While in 1Q’07 the exchange rate went from R$2.0892/US$ to
R$2.1762/US$, giving rise to exchange expenses of R$68.0
million on net
liabilities denominated in U.S. dollars, in 1Q’08 the exchange rate went
from R$2.0339/US$ to R$1.8776/US$, generating exchange revenues
of R$128.5
million.
|
||
|
§
|
Contrasting
results were also recorded for derivatives: while in 1Q’07 coarse sugar
was being sold at record prices, Cosan showed net losses
from derivative
transactions of R$125.9 million, for having hedged at price
levels below
those at which the product was being traded. In contrast,
in this 1Q’08,
while trading prices for sugar were below the levels for
the last 24
months, Cosan recorded net gains with derivative transactions
of R$83.8
million, of which R$44.0 million for having hedged sugar
at prices that
were higher than those practiced in the market, and R$39.8
million for
having hedged exchange rates of Reais per U.S. dollar at
prices likewise
higher than the market in the quarter. Effectively, this
comparison
between quarters shows the efficacy of the hedging strategy
that Cosan has
adopted, which on the one hand side limits earnings in moments
of price
explosions and on the other minimizes the restriction of
margins in
moments of lowering of the prices of the
commodities.
|
65
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
 |
§
§
§
|
At
the end of
1Q’08 Cosan had 1,284.3 thousand tons of VHP sugar protected
at an average
price of US¢10.36 per lb, with an estimated negative market value of
R$0.9
million. It also had 171.8 thousand tons of refined sugar
protected at an
average price of US$321.09 per ton with an estimated market
value of R$3.8
million. Also, when for the first time operating with gasoline
derivatives
in order to price its ethanol, Cosan had 7.6 million liters
of gasoline
protected at an average price of US$2.12 per gallon, with
an estimated
market value of R$0.2 million. Lastly, Cosan presented US$420.0
million
dollars with an exchange rate protected at R$2.07/US$, at
a market value
of R$35.0 million.
Expenses
with
income tax and social contribution, amounting to R$9.0
million, reflected
taxable income assessed for the quarter, adjusted by expenses
that are
non-deductible for purposes of tax calculation. In view
of the imminence
of the bottom-line for both quarters at a break-even point,
i.e., nihil
net income, the effective income tax and social contribution
rates
presented relevant variances in relation to the legal rate
of 34%, showing
41% in 1Q’08 and 61.8% in 1Q’07.
With
all of
this, even in a quarter with depressed prices, at the
end of the first
three months of FY’08 Cosan showed net income of R$13.7 million, which
represented growth of 154.1% in relation to net income
of R$5.4 million
recorded for 1T´07, a quarter in which sugar and ethanol prices were
much
more favorable for producers.
|
|
| C. Financial Condition | |||
|
§
|
Cosan’s
gross
indebtedness closed the first quarter of FY’08 at R$2,820.7 million, 18.4%
more than the gross debt of R$2,381.4 million in 1Q’07, which growth is
entirely attributable to funding of US$400 million in 10-year
Senior Notes
conducted in the 3Q’07.
|
||
|
§
|
In
turn, the
net debt grew 22% in relation to 1Q’07, reaching R$1,512.8 million, mainly
on account of capital expenditure investments made in the
course of FY’07
in this 1Q’08.
|
66
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
|
Debt
per Type
(R$MM)
|
1Q'07
|
%
|
1Q'08
|
%
|
Var.
|
|
Senior
Notes
2009
|
453.4
|
19.0
|
389.9
|
13.8
|
(63.5)
|
|
Senior
Notes
2017
|
-
|
-
|
777.9
|
27.6
|
777.9
|
|
Perpetual
Notes
|
998.5
|
41.9
|
861.9
|
30.6
|
(136.6)
|
|
PESA
Securitization
|
488.6
|
20.5
|
509.2
|
18.1
|
20.6
|
|
Finame
(BNDES)
|
13.8
|
0.6
|
13.4
|
0.5
|
(0.4)
|
|
Working
Capital
|
35.8
|
1.5
|
36.7
|
1.3
|
0.9
|
|
IFC
|
145.1
|
6.1
|
118.7
|
4.2
|
(26.5)
|
|
Debentures
|
55.5
|
2.3
|
55.1
|
2.0
|
(0.4)
|
|
Advances
from
Customers
|
144.7
|
6.1
|
56.7
|
2.0
|
(88.0)
|
|
Promissory
Notes
|
44.6
|
1.9
|
1.3
|
0.0
|
(43.3)
|
|
Related
Parties
|
1.5
|
0.1
|
-
|
-
|
(1.5)
|
|
Gross
Debt
|
2,381.4
|
100.0
|
2,820.7
|
100.0
|
439.3
|
|
Cash
&
Marketable Securities
|
809.8
|
34.0
|
816.4
|
28.9
|
6.6
|
|
Advances
to
Suppliers
|
167.3
|
7.0
|
308.6
|
10.9
|
141.4
|
|
CTN's
-
Brazilian Treasury Bills
|
109.6
|
4.6
|
127.8
|
4.5
|
18.2
|
|
Land
related
to the Debentures
|
55.1
|
2.3
|
55.1
|
2.0
|
-
|
|
Net
Debt
|
1,239.7
|
52.1
|
1,512.8
|
53.6
|
273.1
|
|
Total
Debt
without PESA/Debentures
|
1,837.3
|
77.2
|
2,256.4
|
80.0
|
419.1
|
|
Net
Debt
without PESA/Debentures
|
860.3
|
36.1
|
1,131.4
|
40.1
|
271.1
|
|
Gross
Debt
|
2,381.4
|
100.0
|
2,820.7
|
100.0
|
439.3
|
|
§
|
As
regards the
profile of the company’s indebtedness at the end of 1Q’08, 5.6% of the
debt was allocated to short-term, while 94.4%
remained in long-term. When
comparing with the same period of last year,
in 1Q’07, 7.2% of the debt
was in short-term in 92.8% in long-term. In terms
of currency it must be
pointed out that the share of debts denominated
in U.S. dollars grew from
73.5% at the end of 1Q’07 to 77.6% of the company’s gross indebtedness,
which has been giving rise to an increase of
the natural hedge for Cosan’s
exports.
|
|
Debt
Profile
(R$MM)
|
1Q'07
|
%
|
1Q'08
|
%
|
Var.
|
|
Total
Debt
|
2,381.4
|
100.0
|
2,820.7
|
100.0
|
439.3
|
|
Short-Term
|
171.5
|
7.2
|
158.8
|
5.6
|
(12.7)
|
|
Long-Term
|
2,209.9
|
92.8
|
2,661.8
|
94.4
|
452.0
|
|
Real
-
R$
|
631.6
|
26.5
|
632.3
|
22.4
|
0.7
|
|
Dollar
-
US$
|
1,749.8
|
73.5
|
2,188.4
|
77.6
|
438.6
|
67
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
D.
Investments
|
Growth
of operating capital expenditures
follows projects for cogeneration,
information systems and modernization
of our industrial
plants
|
§
|
Operating
capital expenditures for 1Q’08 totaled R$167.0 million
and were mainly
directed to planting of sugar
cane, continuity of the expansion
plans and
of the projects for cogeneration
of electric power using sugarcane
bagasse.
|
|
1Q'07
|
1Q'08
|
Capex
(R$MM)
|
YTD'07
|
YTD'08
|
|
3.7
|
3.9
|
New
Investments, including Goodwill
|
3.7
|
3.9
|
|
0.2
|
0.7
|
Deferred
Charges & Other
|
0.2
|
0.7
|
|
-
|
3.3
|
Incorporated
PP&E and Land Acquisition
|
-
|
3.3
|
|
37.9
|
56.1
|
Sugar
Cane
Planting Costs
|
37.9
|
56.1
|
|
0.2
|
27.5
|
Co-generation
Projects
|
0.2
|
27.5
|
|
-
|
3.6
|
Inter-harvest
Maintenance Costs
|
-
|
3.6
|
|
46.3
|
79.8
|
Investments
in
P,P&E
|
46.3
|
79.8
|
|
88.4
|
174.9
|
Capex
|
88.4
|
174.9
|
|
84.4
|
167.0
|
Operating
Capex
|
84.4
|
167.0
|
|
§
|
In
the first
three months of FY’08, R$56.1 million were invested in the planting
of
14.0 thousand hectares, representing a unit figure
of R$4,022/ha, 54.5%
more costly than the 14.5 thousand hectares planted
at R$2,603/ha in the
course of 1Q’07. This significant price increase was due to the
fact that
this year a good portion of the planting already
carried out corresponded
to areas of expansion, principally in the Gasa unit,
where the task of
preparation of the soil, is particularly more costly,
since it is the
first time that the soil receives cane fields. As
regards this expansion,
approximately R$32.0 million have already been invested
in this 1Q’08, in
the industrial side alone.
|
|
§
|
The
investments in the cogeneration projects of the Costa
Pinto and Rafard
units in 1Q’08, were more than 27.5 million. On July 31, 2007
these two
projects have already accumulated more than R$113.6
million in
investments.
|
|
§
|
It
is worth
mentioning that in 1Q’08 funds in the order of R$3.7 were also disbursed
for the greenfield in the State of Goiás. Of this, R$1.7 million was
allocated to acquisition of land for installation
of the industrial
units.
|
|
§
|
Other
relevant
investments are: approximately R$3.2 million for
development of the SAP,
R$4.7 million in a new feed hopper at the port terminal
for increase of
raising/loading capacity, R$5.7 million in agricultural
mechanization and
approximately R$4.8 million in the full-potential/industrial
processes
optimization project.
|
68
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
E.
Relevant Facts
|
§
|
On
August 16,
2007, Cosan Limited, a company headquartered in the
Bermuda Islands,
controlling shareholder of Cosan S/A Indústria e Comércio, conducted its
IPO in the New York Stock Exchange (NYSE) and in
the BOVESPA. The offer,
which was fully primary, comprised the issue of 100
million new class “A”
shares, at a price of US$10.50 per share. In this
way the total amount
funded was US$1,015,875,000.00. Approximately 87%
of this total had been
placed in the NYSE and 13% in the form of level III
Brazilian Deposit
Receipts (BDRs) in the BOVESPA. In addition to this
amount, the Green Shoe
had also been exercised in almost its totality. Thus,
on September 7, 2007
another 11,678,000 new class “A” shares were issued, likewise at the price
of US$10.50 per share, amounting to a total of one
hundred and twenty-two
million, six hundred and nineteen thousand U.S. dollars
(US$122.619.000,00). The total gross amount secured,
of one billion, one
hundred and thirty-eight million, four hundred and
ninety-four thousand
U.S. dollars (US$1,138,494,000.00), after deducting
the expenses with the
IPO, will be used to finance the Cosan Group’s growth, as described in the
offering memorandum.
|
|
§
|
On
August 30,
2007, an Annual Shareholders’ Meeting of Cosan S/A Indústria e Comércio
was held, in which the following matters were discussed
and approved
unanimously:
|
|
|
i)
|
approval
of
the Financial Statements for the fiscal year ended
April 30,
2007;
|
|
|
ii)
|
distribution
of dividends resolved by the Company’s Board of Directors, relative to the
fiscal year ended April 30, 2007, payment for which
began on August 6,
2007;
|
|
|
iii)
|
election
of
the members of the Fiscal Council and of their relevant
deputies;
|
|
|
iv)
|
establishment
of the overall remuneration of the administrative
officers and members of
the Fiscal Council.
|
|
§
|
The
Fiscal
Council is made up of: i) Mr. João Ricardo Ducati, with Mr. Henrique de
Bastos Malta acting as his deputy; ii) Mr. Luiz Recchia,
with Mr. João
Carlos Conti acting as his deputy; and iii) Mr. Ademir
José Scarpin, with
Ms. Daniela Nascimento Pinelli acting as his deputy.
It was established
that the annual remuneration of the members of the
Fiscal Council would be
one hundred and seventy-five thousand Reais (R$175,000.00) and
that the total annual budget to be distributed on
account of professional
fees for the administrative officers of the Company
would be of six
million, nine hundred and fifty thousand Reais
(R$6,950,000.00).
|
|
§
|
On
September
11, 2007 a Meeting of the Board of Directors of Cosan
S/A Indústria e
Comércio, was held, in which the following topics were
discussed and
approved:
|
69
|
|
i)
|
approval
of
the election of the statutory executive officers
of the Company for a term
of office of two (2) years, on the terms of Article
25 of its
By-Laws;
|
70
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
|
|
ii)
|
allocation
of
the global budget for remuneration of the members
of the Board of
Directors and of the statutory Executive Board
of the Company, approved in
the Annual Shareholders’ Meeting held on August 30, 2007, on the terms
of
Article 15 of the Company’s
By-Laws;
|
|
|
iii)
|
disclosure
of
the results and financial statements of the Company
for the first quarter
of fiscal year 2008, ended on July 31,
2007.
|
|
|
iv)
|
approve
the
granting of the standard plan for Stock Options
to the Company’s Executive
Vice-President for Trading, on the terms resolved
by the Special
Shareholders’ Meeting held on August 30,
2005.
|
|
§
|
The
statutory
executive officers were reelected for terms of
office of 2 years. Thus,
the Executive Board of Cosan S/A Indústria e Comércio is made up
of:
|
|
§
|
Mr.
Rubens
Ometto Silveira Mello, Chief Executive
Officer;
|
|
§
|
Mr.
Pedro
Isamu Mizutani, Chief Operating
Officer;
|
|
§
|
Mr.
Paulo
Sérgio de Oliveira Diniz, Chief Financial and Investor
Relations
Officer;
|
|
§
|
Mr.
Marcos
Marinho Lutz, Chief Commercial
Officer;
|
|
§
|
Mr.
Armando
Vieira Viotti, Chief Manufacturing
Officer;
|
|
§
|
Mr.
Rodolfo
Norivaldo Geraldi, Chief Agriculture Officer;
and
|
|
§
|
Mr.
José
Vitório Tararam, Chief Administrative
Officer
|
F.
Did You Know? Cost of sugar cane
|
§
|
Cosan
is the
largest processor of sugarcane in the world,
having processed in FY’07
36.2 million tons of cane, and in this 1Q’08 15.1 million tons. Of this
total volume of processed cane, Cosan, also the
world’s largest producer
of sugarcane, contributed with 21.6 million tons
in FY’07 (60%) and with
9.3 million tons in 1Q’08 (62%).
|
|
§
|
Sugarcane
is
the principal raw material for sugar and ethanol,
and accounts for
approximately 70% to 75% of the cost of these
products. In this way, it is
important to understand the process of cost formation
for sugarcane.
Obviously this process is quite different from
that related to sugarcane
processed by Cosan from sugarcane acquired from
farmers.
|
|
§
|
As
regards own
sugar, i.e., cane sugar cultivated by Cosan itself,
the costing process is
very similar to the costing of any industrial
processing, i.e., the
costing system is by absorption. In this process,
the various production
elements used in order to have the sugarcane
in the mill (end of the
agricultural process and beginning of the industrial
process) are absorbed
in the cost of the sugarcane as each one of them
is
incurred.
|
71
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
|
§
|
For
better
understanding of the pattern of costs, there
are three principal
agricultural processes. The first process is
the planting, which involves
right from preparation of the soil and sub-soil,
production of seedlings,
fertilization, planting of seedlings and the
first treatments, such as
control of plagues, irrigation, etc. The production
elements used at this
point are substantially labor (wages, charges,
benefits), agricultural
supplies (fertilizers, pesticides, herbicides),
machinery and implements
(tractors, trailers, trucks) and diesel oil,
in addition to services of
third parties such as contractors. All of the
expenditures with these
production elements during the planting activities
make up the sugarcane
crops that represent Cosan’s fixed assets. This fixed asset is amortized
in 5 years, which is compatible with the useful
life of a cane field, at
the rate that the cane field is harvested.
Total annual amortization makes
up the cost of sugarcane produced in each fiscal
year. Thus, it is
important to emphasize that the amount of costs
that are part of cost of
goods sold for each year comprises the average
of the expenditures with
planting over the last five years and, as a
consequence, at times even
actual efficiency gains and costs are hidden
by past inflation,
accumulated in Cosan’s fixed assets, but not yet booked as cost
of goods
sold.
|
|
§
|
The
second
agricultural process is what is internally
called culture treatment. This
annual process is equivalent to maintenance
of the crops and involves, not
unlike as for plantation, the use of labor,
supplies, machinery and diesel
oil. Just as in any industrial plant, the intensity
of expenditures with
culture treatment will have a direct impact
on the productivity of the
crops. Thus, according to the specific conditions
of each soil, climate,
topography and whether or not plagues are present,
spending with culture
treatments can vary considerably. Expenditures
with culture treatments, as
they are incurred, are absorbed by the inventories
item called harvest
costs and are transferred to the cost of sugarcane
produced in the
following fiscal year. For practical purposes,
one can estimate the cost
of culture treatments of one fiscal year considering
the amount recognized
in inventories, in the item harvest costs,
at the end of the previous
fiscal year.
|
|
§
|
The
third and
last major agricultural process actually comprises
three operations and is
called CCT - local acronym for Cutting, Loading
and Transportation. This
process, which is also annual and carried out
during the harvest, is the
process that involves cutting the sugar cane,
loading it onto trucks and
carrying it to the mills. Regardless of whether
mechanized harvesting or
manual cutting (with burning) is used for this
process, the principal
production elements are labor, machinery (harvesters
and trucks) and
diesel oil, in addition to contractors. The
expenditures with these
production elements are transferred to the
cost of sugarcane produced at
the time when they are
incurred.
|
72
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
|
§
|
An
important
element for agriculture production not mentioned
in any of the previous
processes is land. Cosan operates both with
its own land areas, which are
included in its fixed assets (approximately
57 thousand hectares) and with
land areas leased from third parties (approximately
285 thousand
hectares). Own land, although it has an associated
capital cost, in terms
of accounting does not generate costs, as bookkeeping
practices hinder
recording of depreciation on land property.
Thus, accounting-wise,
sugarcane planted on own land shows a lower
cost of production and, when
sold, shows better EBITDA. However, in terms
of return on invested
capital, this sugarcane will not necessarily
show better economic return,
since the cost of capital associated with land
is significantly high.
Leased land, in turn, presents as cost the
amount disbursed for payment of
the lease agreements. These agreements, which
have their logic based on
the Consecana mechanism (see our Quarterly
Letter for 1Q’07, disclosed in
July 2006), are ultimately priced in the same
way as for sugarcane
acquired from suppliers, as will be discussed
below.
|
|
§
|
As
regards the
costing of sugarcane acquired from cane farmers,
the mechanism used by
Cosan is substantially the mechanism determined in the
Instructions Manual of the CONSECANA-SP (Council
of Producers of Sugar
Cane, Sugar and Ethanol of the State of São Paulo), which is available for
the public on http://www.portalunica.com.br.
Generally speaking, what the mechanism determines
is that: i) the price
paid is based on the quantity of recoverable
sugar effectively delivered
and not on the quantity of sugar cane; ii)
the price paid will reflect the
average prices of the derivates of sugarcane
traded in the State of São
Paulo, implying the sharing of market risk
between mills and sugarcane
farmers; and iii) the price paid observes a
linearity of delivery of
sugarcane during the harvest, hindering the
farmers from benefiting by
delivering at specific times during the harvest.
For purposes of the
CONSECANA system, the harvest begins on April
1 of each year and ends on
March 31 of the following year.
|
|
§
|
The
ATR price
is obtained from an assessment of the
average prices of the derivates of
sugarcane practiced in the State of São Paulo, through a primary survey
developed by the CEPEA (Center for Advanced
Studies on Applied Economics)
of the ESALQ/USP (College of Agriculture
“Luiz de Queiroz” of the
University of São Paulo. In this survey, the prices are
assessed in the
PVU form (unit selling price, without
taxes and freight) for 9 products
(1. white sugar for the domestic market
(ABMI), 2. white sugar for the
export market (ABME), 3. VHP sugar (AVHP),
4. anhydrous fuel ethanol
(AAC), 5. hydrous fuel ethanol (AHC),
6. anhydrous industrial ethanol
(AAI), 7. hydrous industrial ethanol
(AHI), 8. anhydrous export ethanol
(AAE), and 9. hydrous export ethanol
(AHE)). For each one of these average
prices the share factor of raw material
in the composition of the product
is applied (stipulated by the CONSECANA
as being 59.5% in sugar and 62.1%
in ethanol) and subsequently the factor
for conversion of the finished
product in the ATR (1.0495 kg of ATR
for each kg of white sugar, 1.0453 kg
of ATR for each kg of VHP sugar, 1.7651
kg of ATR for each liter of
anhydrous ethanol and 1.6913 kg of ATR
for each liter of hydrous ethanol).
After conversion of all of the prices
of products into ATR prices, a
weighted average of all of the products
is
|
73
|
|
calculated,
according to the trading curve and
the production mix for these products
in the last three harvest years (at
the end of each harvest, these curves
are adjusted for the effective harvest
mix) and this weighted average
is
|
74
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
the
price to be paid
for the ATR. Month by month, throughout the harvest,
the accumulated average
price is altered, and the effective price for the month
is
recalculated.
|
§
|
A
practical
construal of the CONSECANA rules is presented
in the following example: a
supplier delivers cane to a mill throughout
the month of April. Upon
receiving the sugar cane, lab tests determine
the quantity of ATR (totally
recoverable sugar) contained in the cane.
This quantity of ATR is the
product effectively “purchased” by the mill. As an illustration, assuming
that the supplier has delivered 1,000 tons
of cane with an ATR of 140kg
per ton and that, according to the CONSECANA,
the price of the ATR is
R$0.25 per kilogram, for this delivery the
mill would record a cost of
acquired sugarcane of 140kg x R$0.25/kg =
R$35. The accounting entry would
be a charged to inventory for the cost of
sugarcane of R$35, and a credit
to accounts payable to sugarcane suppliers.
The mill would pay monthly in
spot cash 80% of the amount purchased in
the month, i.e., R$28 as a credit
to the cash account and would withhold the
remaining 20% (R$7), leaving
the suppliers account outstanding in this
amount for settlement at the end
of the harvest, according to the variance
of the ATR
price.
|
|
§
|
Assuming
that
in the month of May the ATR price had risen
to R$0.28 per kg and the
average accumulated price had been adjusted
to R$0.27, and that the mill
purchases another 1,000 tons of cane from
the same supplier with an ATR of
140kg, the following accounting and financial
events would occur: i) a
debit entry to stock, cost of sugarcane,
of R$39.2 (140kg x R$0.28/kg),
with a credit to the supplier, on account
of the purchase in May; ii) a
debit of R$1.40 to stock, cost of sugarcane,
with a credit to suppliers,
to adjust the price of all of the sugarcane
purchased to-date (280 kg x
R$0.27/kg = R$75.6 – R$35 – R$39.2 = R$1.4); iii) payment of 80% of the
amount purchased in the month, of R$31.36,
with a debit to the supplier,
maintaining the remaining 20% outstanding
in accounts
payable.
|
|
§
|
The
same
procedure described above would be carried
out month per month, i.e., each
month paying for 80% of the cane delivered
in the month, at the price for
the month, and correcting the cost of 100%
of the cane delivered to-date
at the price accumulated up to the month.
This procedure continues up to
the month of October. In November, without
any alteration from the costing
standpoint, there is an alteration from the
cash standpoint: of the entire
amount withheld (20% per month), one fifth
is paid in this month and so
forth, month per month, in the same way,
until final settlement is made in
the month of March after disclosure by the
CONSECANA of the final ATR
prices. In such month, according to the trend
of the prices of sugar and
of ethanol and the final curves (mix and
velocity) for trading of the
harvest, either overpayments or underpayments
to the supplier may occur.
This difference will be adjusted in the cost
for the same fiscal year and
the amount payable, if greater, will be settled
financially, and if lower
will result in an advance to the supplier,
with adjustment of the amounts
payable in the following fiscal
year.
|
75
|
§
|
In
order to
see how the pricing is conducted monthly for
sugarcane acquired in the
month, as well as the accounting adjustments
in costs for the entire
harvest, it is worth reproducing the content
of CONSECANA Circular No.
6/07, with the ATR prices for July
2007:
|
76
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
Circular
No.
6/07
–
July
31,
2007
We
set forth below the average price per
kg
of
ATR
for purposes
of issuance of the Receiving Tax Bill
for cane delivered during the month of July
2007.
The
average price per
kg of
ATR
for the month of
JULY is
R$ 0.2569.
The
billing price for sugar in the
domestic and export markets,
and the prices of anhydrous and
hydrous ethanol shipped to the domestic and export markets,
as assessed by the ESALQ/CEPEA,
in
the months from APRIL
to JULY, and JULY to-date,
are shown
below.
|
Mês
|
ABMI
|
ABME
|
AVHP
|
AAC
|
AHC
|
AAI
|
AHI
|
AAE
|
AHE
|
|
April
|
33.87
|
27.85
|
22.04
|
1,072.57
|
940.51
|
1,215.29
|
1,075.38
|
960.16
|
940.13
|
|
May
|
28.56
|
25.20
|
19.73
|
883.78
|
690.84
|
1,055.34
|
836.54
|
746.49
|
693.14
|
|
June
|
24.94
|
22.61
|
18.14
|
675.07
|
587.86
|
791.23
|
671.90
|
691.01
|
731.93
|
|
July
|
24.34
|
22.06
|
17.75
|
668.53
|
583.99
|
777.75
|
674.64
|
656.33
|
665.09
|
|
July
to-date
|
27.94
|
23.36
|
19.09
|
828.23
|
708.86
|
961.50
|
822.70
|
702.86
|
727.52
|
The
prices of Domestic Market
Sugar (ABMI)
and
of anhydrous and hydrous ethanol
intended for industry
(AAI
and
AHI), include
taxes, while the prices for
sugar for the export market
(ABME and
AVHP) and
of anhydrous and hydrous fuel
ethanol intended for the export market,
are net
(PVU/PVD).
The
average net prices per kg
of the
ATR,
in
R$/kg,
by product,
obtained for the months from
APRIL
to JULY, and JULY to-date, calculated
based information
contained in
Circular
No.
01/07, are
the following:
|
Month
|
ABMI
|
ABME
|
AVHP
|
AAC
|
AHC
|
AAI
|
AHI
|
AAE
|
AHE
|
|
April
|
0.3153
|
0.3220
|
0.2558
|
0.3774
|
0.3453
|
0.3880
|
0.3617
|
0.3378
|
0.3452
|
|
May
|
0.2659
|
0.2913
|
0.2290
|
0.3109
|
0.2537
|
0.3369
|
0.2787
|
0.2626
|
0.2545
|
|
June
|
0.2322
|
0.2614
|
0.2106
|
0.2375
|
0.2158
|
0.2526
|
0.2239
|
0.2431
|
0.2687
|
|
July
|
0.2266
|
0.2550
|
0.2060
|
0.2352
|
0.2144
|
0.2483
|
0.2248
|
0.2309
|
0.2442
|
|
July
to-date
|
0.2601
|
0.2701
|
0.2215
|
0.2914
|
0.2603
|
0.3070
|
0.2741
|
0.2473
|
0.2671
|
|
Month
|
Average
Price per kg of
ATR
|
|
|
Month
|
Accumulated
|
|
|
April
|
0.3217
|
0.3217
|
|
May
|
0.2632
|
0.2899
|
|
June
|
0.2299
|
0.2687
|
|
July
|
0.2243
|
0.2569
|
Source:
Consecana.
|
§
|
Let
us take as
a base the track of VHP sugar: its average price
at the mill (without
freight) accumulated in the harvest (April to
July), according to the
survey, was R$19.09 per 50 kg bag, or, considering
an average dollar rate
in the period (average of the daily closings
of the PTAX 800 quote) of
R$1.9337, of US¢8.96 per lb. Thus, by dividing the amount of
R$19.09 per
50 kg bag, one arrives at R$0.3817 per kg. Multiplying
by the tax factor
of 1.01964 (Consecana Circular No. 03/06), then
dividing by the factor for
conversion of VHP sugar into ATR, of 1.0453,
and multiplying by the
percentage of share of the raw material, of 59.5%,
one arrives at the
price per kg of ATR (VHP base) of R$0.2215. Thus,
if the State of São
Paulo were to produce and trade only VHP sugar
as a sugarcane derivate,
the price of the ATR would be
R$0.2215
|
77
|
|
per
kg.
However, following the estimated mix for the
2007/08 harvest (Consecana
Circular No. 01/07), VHP sugar would contribute
with only 25.22% of the
weight in the calculation of the price of the
ATR, and so the ATR
amount
|
78
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
accumulated
up to
July/08 is R$0.2569 per kg. This is the amount that is
recognized in the
calculation of the cost of sugarcane from suppliers acquired
in the period,
whether in the form of sugar and ethanol inventory on July
31, 2007, or already
realized in the form of cost of goods sold in the results
for
1Q’08.
G.
Guidance for FY’07
|
§
|
This
section
contains guidance by variance range of certain
key parameters for the
company, containing right from not-so-relevant
variances of less than 5%
in the company’s present stage, going to average variances of
up to 15%,
relevant variances up to 30% and major variances
of over 30%. In addition,
the other sections of this financial letter may
also contain projections
on the terms of Section 27A of the U.S. Securities
Act of 1933 and Section
21E of the Securities Exchange Act of 1934, as
subsequently amended. These
projections and guidance are only estimates,
and are no assurance of any
future results. Investors are alerted that any
projections and guidance
are subject to a number of risks, uncertainties
and factors related to the
market and to the operating context of Cosan
and of its subsidiaries, and
could cause material differences in the explicit
or implicit future
results for these projections. Although Cosan
believes that the
expectations and assumptions used in the mentioned
projections and
guidance below are reasonable, based on information
presently available
for its administrative officers, Cosan cannot
guarantee any future event
or result. Cosan does not assume any obligation
of updating of any of the
mentioned projections.
|
|
Changes
|
|||||
|
from
|
|||||
|
previous
|
|||||
|
Guidance
|
2006
FY
|
2007FY
|
2008FY
|
guidance
|
|
|
FX
Rate - EoP
(R$:US$)
|
2.0892
|
2.0339
|
=
|
-
|
|
|
Crushed
Cane
Volume (thousand tons)
|
27,891
|
36,154
|
▲
|
-
|
|
|
Sugar
Volume
Sold (thousand tons)
|
2,469
|
3,241
|
=
|
-
|
|
|
Ethanol
Volume
Sold (million liters)
|
1,016
|
1,322
|
▲
|
-
|
|
|
Avg.
Sugar
Price (R$/ton)
|
603
|
683
|
▼▼
|
-
|
|
|
Avg
Ethanol
Price (R$/thousand liter)
|
844
|
897
|
▼▼
|
-
|
|
|
Revenues
(R$MM)
|
2,478
|
3,605
|
▼▼
|
-
|
|
|
COGS
(R$MM)
|
1,721
|
2,481
|
▼
|
-
|
|
|
EBITDA
(R$MM)
|
518
|
928
|
▼▼▼
|
-
|
|
|
Net
Profit/Loss (R$MM)
|
(65)
|
357
|
▼▼▼
|
-
|
|
|
Operating
Capex (R$MM)
|
209
|
167
|
▲▲▲
|
-
|
79
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
H.
Financial Statements
|
§
|
The
consolidated financial statements have been prepared
based on basic
principles of consolidation, observing the provisions
contained in the
Brazil Corporations Law and in accordance with CVM
Instruction No.
247/96.
|
|
§
|
The
consolidation process includes the following principal
procedures: i)
elimination of the asset and liability accounts maintained
between the
consolidated companies, ii) elimination of the investments
in proportion
to the controlling company’s participation in the net equities of the
controlled subsidiaries, iii) elimination of the
balances of revenues and
expenses deriving from transactions between the consolidated
companies,
and iv) elimination of unrealized profits deriving
from transactions
between the consolidated companies.
|
|
§
|
The
companies
that make up the Cosan group and that had their financial
statements
consolidated are show in the table to the
left.
|
From
the macro
standpoint the market starts to pay the high price for its
intrinsic
distortions. As only one third of the world sugar market is
free, while the
other two thirds are protected, the prohibition of subsidized
exports from
Europe to the free market in the recent past generated a true
scuffle with sugar
prices, which actually surpassed US¢19/lb. At the same time the world discovered
ethanol, leading the U.S. to gather resources to create the
largest ethanol
market on the planet within a relatively short period. In addition,
the actual
rapidity of success of the flex-fuel automobiles in Brazil created
immediate opportunities, which until then had only been for
an extended horizon.
The combination of these two elements ultimately created a
race among countries
and producers for expansion of world production. In Brazil
and India, the
publicity concerning the sugar and ethanol industry caused
the race to be even
more magnified by the arrival of the “parachutists” (newcomers to the industry
with no previous knowledge), who believed that they could generate
extremely
high returns within a short period of time.
As
a result,
presently the world is experiencing a situation of surplus
supply, with
resulting depressed prices. If on the one hand this imbalance
should give rise
to serious consequences for this harvest, on the other hand
it should contribute
to better selectivity among the producers themselves, making
them can learn a
hard lesson. In this way, a second wave of consolidation in
the industry could
be visualized, with some remaining players becoming more strengthened,
but the
great majority considerably weakened.
80
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE (CONSOLIDATED)--Continued
|
Income
Statement
|
Apr'05
|
Apr'06
|
Apr'07
|
Oct'05
|
Jan'06
|
Apr'06
|
Jul'06
|
Oct'06
|
Jan'07
|
Apr'07
|
Jul'07
|
|
(In
million of
reais)
|
FY'05
|
FY'06
|
FY'07
|
2Q'06
|
3Q'06
|
4Q'06
|
1Q'07
|
2Q'07
|
3Q'07
|
4Q'07
|
1Q'08
|
|
Gross
Operating Revenue
|
2,048.3
|
2,702.4
|
3,902.9
|
549.4
|
721.7
|
818.0
|
1,014.7
|
1,084.3
|
1,048.5
|
755.4
|
636.4
|
|
(-)
Sales
Taxes and Deductions
|
(147.9)
|
(224.5)
|
(297.8)
|
(46.5)
|
(65.2)
|
(70.6)
|
(70.6)
|
(76.2)
|
(77.7)
|
(73.3)
|
(44.7)
|
|
(=)
Net Operating Revenue
|
1,900.4
|
2,477.9
|
3,605.1
|
502.9
|
656.5
|
747.5
|
944.1
|
1,008.1
|
970.8
|
682.1
|
591.7
|
|
(-)
Cost of
Goods Sold and Services Rendered
|
(1,338.5)
|
(1,721.3)
|
(2,481.1)
|
(347.2)
|
(447.7)
|
(507.3)
|
(576.0)
|
(713.1)
|
(680.2)
|
(511.8)
|
(548.0)
|
|
(=)
Gross Profit
|
561.8
|
756.6
|
1,123.9
|
155.7
|
208.8
|
240.2
|
368.2
|
294.9
|
290.6
|
170.3
|
43.7
|
|
Margin
|
29.6%
|
30.5%
|
31.2%
|
31.0%
|
31.8%
|
32.1%
|
39.0%
|
29.3%
|
29.9%
|
25.0%
|
7.4%
|
|
(-)
Operating Income (Expenses):
|
(528.5)
|
(819.1)
|
(558.6)
|
(167.4)
|
(265.0)
|
(234.7)
|
(351.2)
|
(109.7)
|
(196.7)
|
98.9
|
(24.6)
|
|
(-)
Selling
|
(171.7)
|
(217.1)
|
(282.0)
|
(53.2)
|
(53.7)
|
(46.4)
|
(60.1)
|
(75.6)
|
(71.2)
|
(75.2)
|
(61.1)
|
|
(-)
General
and Administrative
|
(121.9)
|
(150.0)
|
(246.2)
|
(35.0)
|
(35.4)
|
(44.9)
|
(46.3)
|
(49.4)
|
(52.8)
|
(97.7)
|
(57.0)
|
|
(-)
Financial
Income (Expenses), Net
|
(102.0)
|
(245.2)
|
158.0
|
(49.1)
|
(87.6)
|
(85.4)
|
(185.7)
|
27.7
|
(17.6)
|
333.6
|
150.8
|
|
(±)
Earnings
(Losses) on Equity Investments
|
-
|
0.6
|
(0.1)
|
0.3
|
0.2
|
0.1
|
0.3
|
0.1
|
0.1
|
(0.5)
|
0.1
|
|
(-)
Goodwill
Amortization
|
(93.2)
|
(142.8)
|
(223.7)
|
(29.2)
|
(29.3)
|
(50.0)
|
(56.4)
|
(55.6)
|
(55.9)
|
(55.9)
|
(56.0)
|
|
(-)
Expenses
with Placement of Shares
|
-
|
(52.8)
|
-
|
-
|
(50.2)
|
(2.6)
|
-
|
-
|
-
|
-
|
-
|
|
(±)
Other
Operating Income (Expenses), Net
|
(39.7)
|
(11.8)
|
35.3
|
(1.3)
|
(9.0)
|
(5.5)
|
(3.0)
|
43.1
|
0.7
|
(5.4)
|
(1.5)
|
|
(=)
Operating Income (Loss)
|
33.3
|
(62.5)
|
565.3
|
(11.7)
|
(56.1)
|
5.5
|
17.0
|
185.3
|
93.9
|
269.1
|
19.1
|
|
Margin
|
1.8%
|
-2.5%
|
15.7%
|
-2.3%
|
-8.6%
|
0.7%
|
1.8%
|
18.4%
|
9.7%
|
39.5%
|
3.2%
|
|
(±)
Non-operating Result, Net
|
2.7
|
(1.0)
|
2.0
|
0.4
|
(0.9)
|
2.1
|
1.2
|
0.3
|
0.1
|
0.4
|
3.0
|
|
(=)
Income (Loss) before Taxes
|
36.0
|
(63.5)
|
567.3
|
(11.3)
|
(57.0)
|
7.6
|
18.2
|
185.6
|
94.0
|
269.5
|
22.1
|
|
(±)
Income and
Social Contribution Taxes
|
(22.2)
|
5.8
|
(203.9)
|
(4.8)
|
16.3
|
(2.6)
|
(11.2)
|
(60.1)
|
(30.0)
|
(102.5)
|
(9.0)
|
|
(±)
Minority
Interest
|
3.3
|
(6.9)
|
(6.2)
|
(0.2)
|
(0.5)
|
(5.8)
|
(1.6)
|
(1.8)
|
(0.6)
|
(2.3)
|
0.6
|
|
(=)
Net Income (Loss) for the Year
|
17.1
|
(64.6)
|
357.3
|
(16.3)
|
(41.2)
|
(0.9)
|
5.4
|
123.8
|
63.4
|
164.7
|
13.7
|
|
Margin
|
0.9%
|
-2.6%
|
9.9%
|
-3.3%
|
-6.3%
|
-0.1%
|
0.6%
|
12.3%
|
6.5%
|
24.2%
|
2.3%
|
|
EBITDA
|
340.9
|
517.7
|
928.0
|
107.1
|
132.8
|
168.5
|
329.1
|
272.6
|
197.9
|
128.4
|
49.5
|
|
Margin
|
17.9%
|
20.9%
|
25.7%
|
21.3%
|
20.2%
|
22.5%
|
34.9%
|
27.0%
|
20.4%
|
18.8%
|
8.4%
|
|
EBITDAH
(Ebitda adjusted by Hedge)
|
275.6
|
308.6
|
853.7
|
75.7
|
88.1
|
56.4
|
203.2
|
280.9
|
233.2
|
136.4
|
133.3
|
|
Margin
|
15.0%
|
13.6%
|
24.2%
|
16.0%
|
14.4%
|
8.9%
|
24.8%
|
27.6%
|
23.2%
|
19.8%
|
19.7%
|
|
EBIT
|
228.6
|
377.8
|
631.1
|
66.3
|
110.8
|
143.5
|
258.8
|
213.1
|
167.3
|
(8.1)
|
(75.9)
|
|
Margin
|
12.0%
|
15.2%
|
17.5%
|
13.2%
|
16.9%
|
19.2%
|
27.4%
|
21.1%
|
17.2%
|
-1.2%
|
-12.8%
|
|
Depreciation
& Amortization
|
112.3
|
139.9
|
297.0
|
40.9
|
22.1
|
25.0
|
70.3
|
59.5
|
30.6
|
136.5
|
125.4
|
81
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE
(CONSOLIDATED)--Continued
|
Balance
Sheet
|
Apr'05
|
Apr'06
|
Apr'07
|
Oct'05
|
Jan'06
|
Apr'06
|
Jul'06
|
Oct'06
|
Jan'07
|
Apr'07
|
Jul'07
|
|
(In
million of
reais)
|
FY'05
|
FY'06
|
FY'07
|
2Q'06
|
3Q'06
|
4Q'06
|
1Q'07
|
2Q'07
|
3Q'07
|
4Q'07
|
1Q'08
|
|
Cash
and Cash
Equivalents
|
35.2
|
61.0
|
643.8
|
82.0
|
62.2
|
61.0
|
176.2
|
56.7
|
976.8
|
643.8
|
579.0
|
|
Marketable
Securities
|
3.9
|
770.5
|
573.3
|
3.5
|
420.4
|
770.5
|
633.6
|
345.7
|
303.7
|
573.3
|
237.4
|
|
Derivative
Financial Instruments
|
0.9
|
288.6
|
37.6
|
29.3
|
-
|
288.6
|
72.8
|
15.2
|
8.5
|
37.6
|
94.0
|
|
Trade
Accounts
Receivable
|
119.1
|
212.6
|
112.3
|
124.4
|
156.1
|
212.6
|
232.2
|
277.4
|
212.1
|
112.3
|
140.4
|
|
Inventories
|
339.8
|
390.8
|
503.4
|
806.1
|
587.3
|
390.8
|
876.2
|
1,221.2
|
857.9
|
503.4
|
790.2
|
|
Advances
to
Suppliers
|
94.6
|
132.7
|
211.4
|
95.5
|
102.6
|
132.7
|
167.3
|
174.2
|
184.0
|
211.4
|
308.6
|
|
Related
Parties
|
44.8
|
0.0
|
-
|
-
|
-
|
0.0
|
0.1
|
-
|
0.1
|
-
|
-
|
|
Taxes
Recoverable
|
41.7
|
63.4
|
54.0
|
52.6
|
55.0
|
63.4
|
71.9
|
72.5
|
62.4
|
54.0
|
57.9
|
|
Deferred
Income and Social Contribution Taxes
|
14.2
|
41.4
|
38.1
|
16.7
|
14.1
|
41.4
|
58.3
|
56.9
|
144.9
|
38.1
|
26.9
|
|
Other
Assets
|
19.8
|
52.4
|
50.9
|
39.4
|
17.1
|
52.4
|
61.5
|
52.2
|
59.3
|
50.9
|
36.4
|
|
Current
Assets
|
713.9
|
2,013.4
|
2,224.7
|
1,249.6
|
1,414.8
|
2,013.4
|
2,350.1
|
2,272.0
|
2,809.6
|
2,224.7
|
2,270.8
|
|
Marketable
Securities
|
1.2
|
0.1
|
-
|
1.1
|
1.2
|
0.1
|
-
|
-
|
-
|
-
|
-
|
|
Related
Parties
|
0.6
|
-
|
0.0
|
-
|
-
|
-
|
-
|
0.0
|
0.1
|
0.0
|
0.0
|
|
CTN's-Restricted
Brazilian Treasury Bills
|
47.0
|
104.9
|
123.3
|
52.7
|
56.8
|
104.9
|
109.6
|
114.0
|
119.2
|
123.3
|
127.8
|
|
Deferred
Income and Social Contribution Taxes
|
51.5
|
361.8
|
242.5
|
56.8
|
87.9
|
361.8
|
342.9
|
299.3
|
214.0
|
242.5
|
261.6
|
|
Prepaid
Expenses
|
11.3
|
40.0
|
49.1
|
11.4
|
10.5
|
40.0
|
37.1
|
34.2
|
52.8
|
49.1
|
43.5
|
|
Land
Linked to
Debentures
|
-
|
55.1
|
55.1
|
-
|
-
|
55.1
|
55.1
|
55.1
|
55.1
|
55.1
|
55.1
|
|
Accounts
Receivable from Federal Government
|
-
|
-
|
318.4
|
-
|
-
|
-
|
-
|
-
|
-
|
318.4
|
318.4
|
|
Other
Assets
|
4.5
|
4.3
|
8.2
|
5.1
|
3.5
|
4.3
|
4.3
|
4.4
|
5.1
|
8.2
|
9.5
|
|
Noncurrent
Assets
|
116.2
|
566.2
|
796.6
|
127.0
|
159.9
|
566.2
|
549.0
|
507.0
|
446.1
|
796.6
|
815.8
|
|
Investments
|
13.1
|
13.4
|
93.2
|
13.4
|
13.5
|
13.4
|
13.6
|
13.6
|
13.7
|
93.2
|
13.8
|
|
Property,
Plant and Equipment
|
1,481.6
|
1,656.4
|
2,013.1
|
1,193.7
|
1,256.0
|
1,656.4
|
1,603.7
|
1,600.3
|
1,732.1
|
2,013.1
|
2,076.7
|
|
Deferred
Charges
|
360.0
|
1,355.4
|
1,135.7
|
355.2
|
469.7
|
1,355.4
|
1,302.9
|
1,247.3
|
1,191.3
|
1,135.7
|
1,149.8
|
|
Permanent
Assets
|
1,854.7
|
3,025.2
|
3,242.0
|
1,562.3
|
1,739.2
|
3,025.2
|
2,920.2
|
2,861.2
|
2,937.1
|
3,242.0
|
3,240.3
|
|
(=)
Total Assets
|
2,684.8
|
5,604.8
|
6,263.4
|
2,938.9
|
3,313.9
|
5,604.8
|
5,819.2
|
5,640.2
|
6,192.8
|
6,263.4
|
6,327.0
|
|
Loans
and
Financings
|
38.1
|
68.8
|
89.0
|
441.0
|
54.9
|
68.8
|
75.0
|
73.4
|
75.9
|
89.0
|
116.5
|
|
Debentures
|
-
|
0.5
|
-
|
-
|
-
|
0.5
|
0.4
|
0.4
|
0.4
|
-
|
-
|
|
Derivatives
Financial Instruments
|
3.2
|
65.4
|
35.5
|
-
|
-
|
65.4
|
32.5
|
20.5
|
2.5
|
35.5
|
48.0
|
|
Trade
Accounts
Payable
|
94.9
|
201.7
|
113.8
|
218.2
|
146.7
|
201.7
|
379.6
|
348.0
|
197.2
|
113.8
|
315.2
|
|
Salaries
Payable
|
30.1
|
49.7
|
63.3
|
52.8
|
22.7
|
49.7
|
77.2
|
92.0
|
37.5
|
63.3
|
91.7
|
|
Taxes
and
Social Contributions Payable
|
88.1
|
111.1
|
126.2
|
72.8
|
129.0
|
111.1
|
134.8
|
107.3
|
114.8
|
126.2
|
131.5
|
|
Advances
from
Customers
|
188.1
|
79.2
|
49.4
|
51.7
|
49.7
|
79.2
|
55.1
|
98.4
|
83.2
|
49.4
|
41.0
|
|
Promissory
Notes
|
14.6
|
55.8
|
1.3
|
39.7
|
43.8
|
55.8
|
41.0
|
37.8
|
3.7
|
1.3
|
1.3
|
|
Related
Parties
|
1.4
|
0.1
|
0.7
|
0.0
|
0.0
|
0.1
|
0.1
|
0.7
|
-
|
0.7
|
-
|
|
Deferred
Income and Social Contribution Taxes
|
4.9
|
5.5
|
5.5
|
5.5
|
5.5
|
5.5
|
5.5
|
5.5
|
5.5
|
5.5
|
5.5
|
|
Dividends
Proposed
|
-
|
-
|
75.8
|
-
|
-
|
-
|
-
|
-
|
-
|
75.8
|
75.8
|
|
Other
Liabilities
|
30.8
|
32.2
|
31.4
|
58.2
|
21.7
|
32.2
|
64.2
|
64.5
|
26.8
|
31.4
|
11.5
|
|
Current
Liabilities
|
494.1
|
670.0
|
591.7
|
939.9
|
473.9
|
670.0
|
865.3
|
848.4
|
547.5
|
591.7
|
838.1
|
|
Loans
and
Financing
|
798.4
|
2,002.7
|
2,770.4
|
792.5
|
787.5
|
2,002.7
|
2,060.2
|
2,040.6
|
2,868.7
|
2,770.4
|
2,591.1
|
|
Debentures
|
-
|
55.1
|
55.1
|
-
|
-
|
55.1
|
55.1
|
55.1
|
55.1
|
55.1
|
55.1
|
|
Taxes
and
Social Contributions Payable
|
217.4
|
446.9
|
338.5
|
223.6
|
216.5
|
446.9
|
435.2
|
355.8
|
346.2
|
338.5
|
336.5
|
|
Related
Parties
|
0.6
|
1.4
|
-
|
1.3
|
1.2
|
1.4
|
1.4
|
1.7
|
-
|
-
|
-
|
|
Promissory
Notes
|
48.1
|
12.7
|
-
|
38.3
|
12.4
|
12.7
|
3.6
|
-
|
-
|
-
|
-
|
|
Provision
for
Contingencies
|
245.9
|
907.4
|
728.0
|
325.9
|
372.3
|
907.4
|
886.5
|
705.4
|
717.4
|
728.0
|
741.0
|
|
Advances
from
Customers
|
80.8
|
86.9
|
49.5
|
72.1
|
61.7
|
86.9
|
89.6
|
87.1
|
42.5
|
49.5
|
15.6
|
|
Deferred
Taxes
on Revaluation Reserves
|
25.2
|
40.8
|
33.4
|
25.2
|
24.0
|
40.8
|
39.0
|
37.2
|
35.4
|
33.4
|
30.9
|
|
Other
Liabilities
|
7.8
|
11.5
|
45.5
|
4.4
|
3.5
|
11.5
|
7.0
|
7.0
|
7.3
|
45.5
|
54.5
|
|
Noncurrent
Liabilities
|
1,424.3
|
3,565.4
|
4,020.4
|
1,483.4
|
1,479.3
|
3,565.4
|
3,577.6
|
3,289.9
|
4,072.5
|
4,020.4
|
3,824.7
|
|
Minority
Shareholders' Interest
|
3.5
|
14.0
|
20.2
|
3.9
|
4.4
|
14.0
|
15.6
|
17.4
|
17.9
|
20.2
|
19.6
|
|
Capital
|
301.0
|
1,185.8
|
1,192.7
|
300.0
|
1,185.8
|
1,185.8
|
1,185.8
|
1,185.8
|
1,192.7
|
1,192.7
|
1,192.7
|
|
Profits
Reserve
|
-
|
-
|
227.3
|
-
|
-
|
-
|
-
|
-
|
-
|
227.3
|
227.3
|
|
Legal
Reserve
|
7.1
|
-
|
16.0
|
4.7
|
4.7
|
-
|
-
|
-
|
-
|
16.0
|
16.0
|
|
Revaluation
Reserves
|
326.6
|
195.9
|
195.0
|
196.6
|
196.2
|
195.9
|
195.6
|
195.4
|
195.2
|
195.0
|
194.7
|
|
Accumulated
losses
|
128.2
|
(26.2)
|
-
|
10.5
|
(30.3)
|
(26.2)
|
(20.6)
|
103.4
|
167.0
|
-
|
13.9
|
|
Shareholders'
Equity
|
762.9
|
1,355.4
|
1,631.0
|
511.7
|
1,356.3
|
1,355.4
|
1,360.8
|
1,484.6
|
1,554.9
|
1,631.0
|
1,644.7
|
|
(=)
Total Liabilities & Shareholders' Equity
|
2,684.8
|
5,604.8
|
6,263.4
|
2,938.9
|
3,313.9
|
5,604.8
|
5,819.2
|
5,640.2
|
6,192.8
|
6,263.4
|
6,327.0
|
*The
inter-harvest
maintenance costs has been reclassified from inventory to PP&E in agreement
with the Technical Instruction n. 01/2006 from IBRACON.
**The judicial deposits balance has been reclassified as deduction to provision for contingencies, in accordance with Deliberation n. 488/05 from CVM.
**The judicial deposits balance has been reclassified as deduction to provision for contingencies, in accordance with Deliberation n. 488/05 from CVM.
82
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE
(CONSOLIDATED)--Continued
|
Cash
Flow
Statement
|
Apr'05
|
Apr'06
|
Apr'07
|
Oct'05
|
Jan'06
|
Apr'06
|
Jul'06
|
Oct'06
|
Jan'07
|
Apr'07
|
Jul'07
|
|
(In
millions of
reais)
|
FY'05
|
FY'06
|
FY'07
|
2Q'06
|
3Q'06
|
4Q'06
|
1Q'07
|
2Q'07
|
3Q'07
|
4Q'07
|
1Q'08
|
|
Net
Income (Loss) for the Year
|
17.1
|
(64.6)
|
357.3
|
(16.3)
|
(41.2)
|
(0.9)
|
5.4
|
123.8
|
63.4
|
164.7
|
13.7
|
|
Non-cash
Adjustments:
|
|||||||||||
|
Earnings
(Losses) from Equity Investments
|
-
|
(0.6)
|
0.1
|
(0.3)
|
(0.2)
|
(0.1)
|
(0.3)
|
(0.1)
|
(0.1)
|
0.5
|
(0.1)
|
|
Depreciation
& Amortization
|
112.3
|
139.9
|
297.0
|
40.9
|
22.1
|
25.0
|
70.3
|
59.5
|
30.6
|
136.5
|
125.4
|
|
Residual
Value
of Permanent Assets Disposals
|
10.6
|
6.7
|
8.4
|
0.3
|
0.4
|
3.1
|
2.0
|
1.6
|
1.0
|
3.8
|
2.6
|
|
Goodwill
Amortization
|
93.2
|
142.8
|
223.7
|
29.2
|
29.3
|
50.0
|
56.4
|
55.6
|
55.9
|
55.9
|
56.0
|
|
Accrued
Financial Expenses
|
22.3
|
48.7
|
(190.6)
|
21.3
|
44.0
|
(14.2)
|
91.2
|
(1.8)
|
65.0
|
(344.9)
|
(103.0)
|
|
Other
Non-cash
Items
|
6.4
|
(25.6)
|
119.7
|
0.6
|
(18.8)
|
(9.4)
|
6.9
|
3.1
|
(7.3)
|
117.0
|
(9.9)
|
|
(=)
Adjusted Net Profit (Loss)
|
262.0
|
247.4
|
815.5
|
75.6
|
35.6
|
53.6
|
231.9
|
241.7
|
208.4
|
133.5
|
84.5
|
|
(±)
Decrease
(Increase) in Assets
|
(88.8)
|
(366.5)
|
165.0
|
(263.9)
|
202.9
|
(177.0)
|
(269.9)
|
(263.8)
|
356.6
|
342.1
|
(441.8)
|
|
(±)
Increase
(Decrease) in Liabilities
|
15.1
|
51.7
|
(237.2)
|
43.8
|
(142.7)
|
73.8
|
204.6
|
(232.7)
|
(264.3)
|
55.3
|
217.1
|
|
(=)
Cash Flow from Operating Activities
|
188.3
|
(67.4)
|
743.3
|
(144.5)
|
95.8
|
(49.6)
|
166.6
|
(254.8)
|
300.7
|
530.8
|
(140.2)
|
|
Marketable
Securities
|
40.8
|
(766.6)
|
197.2
|
1.5
|
(417.0)
|
(350.1)
|
136.9
|
287.9
|
42.0
|
(269.6)
|
338.7
|
|
Goodwill
Paid
in Equity Investment Acquisitions
|
(101.2)
|
(536.1)
|
(3.7)
|
-
|
-
|
(536.1)
|
(3.7)
|
-
|
-
|
-
|
(1.8)
|
|
Acquisition
of
Investments
|
(8.3)
|
-
|
(80.0)
|
(0.0)
|
(61.0)
|
61.0
|
-
|
-
|
(0.0)
|
(80.0)
|
(2.1)
|
|
Other
|
-
|
0.4
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
0.5
|
|
Acquisition
of
Property, Plant and Equipment
|
(200.2)
|
(208.9)
|
(683.5)
|
(23.4)
|
(26.6)
|
(109.0)
|
(84.4)
|
(122.7)
|
(111.2)
|
(365.1)
|
(170.3)
|
|
Additions
to
Deferred Charges
|
-
|
(0.2)
|
(0.6)
|
-
|
(0.1)
|
(0.1)
|
(0.2)
|
(0.0)
|
(0.0)
|
(0.4)
|
(0.7)
|
|
(=)
Cash Flow from Investment Activities
|
(268.8)
(1,511.4)
|
(570.7)
|
(21.9)
|
(504.6)
|
(934.3)
|
48.5
|
165.2
|
(69.3)
|
(715.1)
|
164.3
|
|
|
Loans
and
Financings
|
852.1
|
1,817.4
|
849.9
|
371.7
|
54.6
|
1,213.6
|
-
|
-
|
849.9
|
-
|
1.9
|
|
Advances
from
Customers
|
415.6
|
0.4
|
4.8
|
-
|
31.3
|
(111.9)
|
3.2
|
46.3
|
2.2
|
(47.0)
|
4.4
|
|
Promissory
Notes
|
36.6
|
61.0
|
-
|
-
|
-
|
61.0
|
-
|
-
|
-
|
-
|
-
|
|
Payments
of
Principal and Interest on Debt
|
(1,319.4)
(1,159.9)
|
(375.6)
|
(193.5)
|
(582.7)
|
(177.8)
|
(103.2)
|
(76.2)
|
(170.3)
|
(25.9)
|
(97.7)
|
|
|
Capital
Increase
|
64.4
|
885.8
|
6.9
|
-
|
885.8
|
-
|
-
|
-
|
6.9
|
-
|
-
|
|
Proposed
Dividends
|
(1.6)
|
-
|
(75.8)
|
-
|
-
|
-
|
-
|
-
|
-
|
(75.8)
|
-
|
|
Other
|
-
|
-
|
-
|
-
|
(0.0)
|
(2.1)
|
-
|
-
|
-
|
-
|
2.4
|
|
(=)
Cash Flows from Financing Activities
|
47.7
|
1,604.6
|
410.2
|
178.2
|
389.0
|
982.8
|
(100.0)
|
(29.9)
|
688.7
|
(148.7)
|
(88.9)
|
|
(=)
Total Cash Flow
|
(32.8)
|
25.8
|
582.8
|
11.9
|
(19.8)
|
(1.2)
|
115.2
|
(119.5)
|
920.1
|
(333.0)
|
(64.8)
|
|
(+)
Cash &
Equivalents, Beginning
|
68.0
|
35.2
|
61.0
|
70.2
|
82.0
|
62.2
|
61.0
|
176.2
|
56.7
|
976.8
|
643.8
|
|
(=)
Cash & Equivalents, Closing
|
35.2
|
61.0
|
643.8
|
82.0
|
62.2
|
61.0
|
176.2
|
56.7
|
976.8
|
643.8
|
579.0
|
83
COSAN
S.A. INDÚSTRIA E COMÉRCIO
REPORT
ON
COMPANY’S PERFORMANCE
(CONSOLIDATED)--Continued
|
Credit
Statistics
(LTM)
|
Apr'05
|
Apr'06
|
Apr'07
|
Oct'05
|
Jan'06
|
Apr'06
|
Jul'06
|
Oct'06
|
Jan'07
|
Apr'07
|
Jul'07
|
|
(In
million of
reais)
|
FY'05
|
FY'06
|
FY'07
|
2Q'06
|
3Q'06
|
4Q'06
|
1Q'07
|
2Q'07
|
3Q'07
|
4Q'07
|
1Q'08
|
|
Net
Operating Revenues
|
1,900.4
|
2,477.9
|
3,605.1
|
1,925.8
|
2,193.7
|
2,477.9
|
2,851.0
|
3,356.2
|
3,670.4
|
3,605.1
|
3,252.7
|
|
•
Gross
Profit
|
561.8
|
756.6
|
1,123.9
|
565.9
|
671.9
|
756.6
|
972.9
|
1,112.1
|
1,193.9
|
1,123.9
|
799.5
|
|
•
EBITDA
|
340.9
|
517.7
|
928.0
|
357.0
|
424.1
|
517.7
|
737.5
|
903.0
|
968.1
|
928.0
|
648.5
|
|
• EBIT
|
228.6
|
377.8
|
631.1
|
222.8
|
290.1
|
377.8
|
579.3
|
726.0
|
782.6
|
631.1
|
296.4
|
|
• Net
Financial Expenses
|
102.0
|
245.2
|
(158.0)
|
66.9
|
187.5
|
245.2
|
407.8
|
331.0
|
261.0
|
(158.0)
|
(494.5)
|
|
• Net
Profit
|
17.1
|
(64.6)
|
357.3
|
2.3
|
(62.4)
|
(64.6)
|
(53.0)
|
87.1
|
191.7
|
357.3
|
365.6
|
|
Liquid
Funds
|
180.7
|
1,124.2
|
1,607.0
|
233.7
|
642.1
|
1,124.2
|
1,141.7
|
745.7
|
1,638.7
|
1,607.0
|
1,307.9
|
|
• Cash
&
Marketable
Securities
|
39.1
|
831.5
|
1,217.1
|
85.5
|
482.6
|
831.5
|
809.8
|
402.4
|
1,280.5
|
1,217.1
|
816.4
|
|
• Advances
to Suppliers
|
94.6
|
132.7
|
211.4
|
95.5
|
102.6
|
132.7
|
167.3
|
174.2
|
184.0
|
211.4
|
308.6
|
|
• CTN's-Brazilian
Treasury Bills
|
47.0
|
104.9
|
123.3
|
52.7
|
56.8
|
104.9
|
109.6
|
114.0
|
119.2
|
123.3
|
127.8
|
|
•
Land
related to the Debentures
|
-
|
55.1
|
55.1
|
-
|
-
|
55.1
|
55.1
|
55.1
|
55.1
|
55.1
|
55.1
|
|
Short-Term
Debt
|
242.2
|
204.3
|
140.3
|
532.4
|
148.4
|
204.3
|
171.5
|
210.7
|
163.1
|
140.3
|
158.8
|
|
• Loans
and Financings
|
38.1
|
68.8
|
89.0
|
441.0
|
54.9
|
68.8
|
75.0
|
73.4
|
75.9
|
89.0
|
116.5
|
|
• Debentures
|
-
|
0.5
|
-
|
-
|
-
|
0.5
|
0.4
|
0.4
|
0.4
|
-
|
-
|
|
• Advances
from Customers
|
188.1
|
79.2
|
49.4
|
51.7
|
49.7
|
79.2
|
55.1
|
98.4
|
83.2
|
49.4
|
41.0
|
|
• Promissory
Notes
|
14.6
|
55.8
|
1.3
|
39.7
|
43.8
|
55.8
|
41.0
|
37.8
|
3.7
|
1.3
|
1.3
|
|
• Related
Parties
|
1.4
|
0.1
|
0.7
|
0.0
|
0.0
|
0.1
|
0.1
|
0.7
|
-
|
0.7
|
-
|
|
Long-Term
Debt
|
927.9
|
2,158.8
|
2,875.0
|
904.3
|
862.8
|
2,158.8
|
2,209.9
|
2,184.5
|
2,966.2
|
2,875.0
|
2,661.8
|
|
• Loans
and Financings
|
798.4
|
2,002.7
|
2,770.4
|
792.5
|
787.5
|
2,002.7
|
2,060.2
|
2,040.6
|
2,868.7
|
2,770.4
|
2,591.1
|
|
• Debentures
|
-
|
55.1
|
55.1
|
-
|
-
|
55.1
|
55.1
|
55.1
|
55.1
|
55.1
|
55.1
|
|
• Advances
from Trading Co's
|
80.8
|
86.9
|
49.5
|
72.1
|
61.7
|
86.9
|
89.6
|
87.1
|
42.5
|
49.5
|
15.6
|
|
• Promissory
Notes
|
48.1
|
12.7
|
-
|
38.3
|
12.4
|
12.7
|
3.6
|
-
|
-
|
-
|
-
|
|
• Related
Parties
|
0.6
|
1.4
|
-
|
1.3
|
1.2
|
1.4
|
1.4
|
1.7
|
-
|
-
|
-
|
|
Total
Debt
|
1,170.1
|
2,363.1
|
3,015.3
|
1,436.7
|
1,011.2
|
2,363.1
|
2,381.4
|
2,395.2
|
3,129.4
|
3,015.3
|
2,820.7
|
|
Net
Debt
|
989.4
|
1,238.8
|
1,408.3
|
1,203.0
|
369.1
|
1,238.8
|
1,239.7
|
1,649.5
|
1,490.7
|
1,408.3
|
1,512.8
|
|
• Net
Debt excl. PESA/Debentures
|
799.9
|
863.5
|
1,028.3
|
1,005.3
|
160.8
|
863.5
|
860.3
|
1,267.4
|
1,112.1
|
1,028.3
|
1,131.4
|
|
Current
Assets
|
713.9
|
2,013.4
|
2,224.7
|
1,249.6
|
1,414.8
|
2,013.4
|
2,350.1
|
2,272.0
|
2,809.6
|
2,224.7
|
2,270.8
|
|
Current
Liabilities
|
494.1
|
670.0
|
591.7
|
939.9
|
473.9
|
670.0
|
865.3
|
848.4
|
547.5
|
591.7
|
838.1
|
|
Shareholders'
Equity
|
762.9
|
1,355.4
|
1,631.0
|
511.7
|
1,356.3
|
1,355.4
|
1,360.8
|
1,484.6
|
1,554.9
|
1,631.0
|
1,644.7
|
|
Capex
- Property, Plant and Equipment
|
268.8
|
1,511.4
|
570.7
|
(143.3)
|
561.4
|
1,511.4
|
1,412.3
|
1,225.2
|
789.9
|
570.7
|
455.0
|
|
• Capex
- Operational
|
122.0
|
208.9
|
475.1
|
151.3
|
137.2
|
208.9
|
243.2
|
302.6
|
354.4
|
475.1
|
526.9
|
|
EBITDA
Margin
|
17.9%
|
20.9%
|
25.7%
|
18.5%
|
19.3%
|
20.9%
|
25.9%
|
26.9%
|
26.4%
|
25.7%
|
19.9%
|
|
• Gross
Profit Margin
|
29.6%
|
30.5%
|
31.2%
|
29.4%
|
30.6%
|
30.5%
|
34.1%
|
33.1%
|
32.5%
|
31.2%
|
24.6%
|
|
• EBIT
Margin
|
12.0%
|
15.2%
|
17.5%
|
11.6%
|
13.2%
|
15.2%
|
20.3%
|
21.6%
|
21.3%
|
17.5%
|
9.1%
|
|
• Net
Profit Margin
|
0.9%
|
-2.6%
|
9.9%
|
0.1%
|
-2.8%
|
-2.6%
|
-1.9%
|
2.6%
|
5.2%
|
9.9%
|
11.2%
|
|
Net
Debt ÷ Shareholders' Equity
|
|||||||||||
|
• Net
Debt %
|
56.5%
|
47.8%
|
46.3%
|
70.2%
|
21.4%
|
47.8%
|
47.7%
|
52.6%
|
48.9%
|
46.3%
|
47.9%
|
|
• Shareholders'
Equity %
|
43.5%
|
52.2%
|
53.7%
|
29.8%
|
78.6%
|
52.2%
|
52.3%
|
47.4%
|
51.1%
|
53.7%
|
52.1%
|
|
Net
Debt excl. PESA ÷ Equity
|
|||||||||||
|
•
Net Debt excl. PESA %
|
51.2%
|
38.9%
|
38.7%
|
66.3%
|
10.6%
|
38.9%
|
38.7%
|
46.1%
|
41.7%
|
38.7%
|
40.8%
|
|
• Shareholders'
Equity %
|
48.8%
|
61.1%
|
61.3%
|
33.7%
|
89.4%
|
61.1%
|
61.3%
|
53.9%
|
58.3%
|
61.3%
|
59.2%
|
|
Long-Term
Payable Debt to Equity Ratio
|
0.9x
|
0.5x
|
0.9x
|
1.3x
|
0.4x
|
0.5x
|
0.5x
|
0.5x
|
1.0x
|
0.9x
|
0.8x
|
|
Liquidity
Ratio (Current Assets ÷ Current Liabilities)
|
1.4x
|
3.0x
|
3.8x
|
1.3x
|
3.0x
|
3.0x
|
2.7x
|
2.7x
|
5.1x
|
3.8x
|
2.7x
|
|
Net
Debt ÷ EBITDA
|
2.9x
|
2.4x
|
1.5x
|
3.4x
|
0.9x
|
2.4x
|
1.7x
|
1.8x
|
1.5x
|
1.5x
|
2.3x
|
|
•
Net
Debt excl. PESA ÷ EBITDA
|
2.3x
|
1.7x
|
1.1x
|
2.8x
|
0.4x
|
1.7x
|
1.2x
|
1.4x
|
1.1x
|
1.1x
|
1.7x
|
|
• Short-Term
Net Debt ÷ EBITDA
|
0.7x
|
0.4x
|
0.2x
|
1.5x
|
0.3x
|
0.4x
|
0.2x
|
0.2x
|
0.2x
|
0.2x
|
0.2x
|
|
Net
Debt ÷ (EBITDA - Capex)
|
13.7x
|
-1.2x
|
3.9x
|
2.4x
|
-2.7x
|
-1.2x
|
-1.8x
|
-5.1x
|
8.4x
|
3.9x
|
7.8x
|
|
• Net
Debt ÷ (EBITDA
- Operational Capex)
|
4.5x
|
4.0x
|
3.1x
|
5.9x
|
1.3x
|
4.0x
|
2.5x
|
2.7x
|
2.4x
|
3.1x
|
12.4x
|
|
Interest
Cover (EBITDA ÷ Net Financial Exp.)
|
3.3x
|
2.1x
|
-5.9x
|
5.3x
|
2.3x
|
2.1x
|
1.8x
|
2.7x
|
3.7x
|
-5.9x
|
-1.3x
|
|
• Interest
Cover (EBITDA - Op.Capes)÷Net
Fin.)
|
2.1x
|
1.3x
|
-2.9x
|
3.1x
|
1.5x
|
1.3x
|
1.2x
|
1.8x
|
2.4x
|
-2.9x
|
-0.2x
|
|
Avg.
Debt Cost (Net.Fin.Exp. ÷ Net Debt)
|
10.3%
|
19.8%
|
-11.2%
|
5.6%
|
50.8%
|
19.8%
|
32.9%
|
20.1%
|
17.5%
|
-11.2%
|
-32.7%
|
Non-financial
information were not reviewed by our independent
auditors.
84
COSAN
S.A. INDÚSTRIA E COMÉRCIO
OTHER
COMPANY’S RELEVANT INFORMATION
Ownership
interest in subsidiaries
|
Name
of subsidiary
|
CNPJ
|
Classification
|
Ownership
interest in investee
%
|
Net
worth of investor
%
|
Type
of company
|
Number
of shares held in current quarter (thousand)
|
Number
of shares held in prior quarter (thousand)
|
|||||||
|
Usina
da Barra S.A. Açúcar e Álcool
|
48.661.888/0001-30
|
Unlisted
subsidiary
|
82.39
|
49.38
|
Commercial,
industrial and others
|
717,538
|
717,538
|
|||||||
|
Cosan
Operadora Portuária S.A.
|
71.550.388/0001-42
|
Unlisted
subsidiary
|
90.00
|
2.22
|
Commercial, industrial
and others
|
90
|
90
|
|||||||
|
Administração
de Participações Aguassanta Ltda.
|
46.855.292/0001-45
|
Unlisted
subsidiary
|
91.50
|
9.61
|
Commercial, industrial
and others
|
1
|
1
|
|||||||
|
Cosan
International Universal Corporation
|
-
|
Unlisted
subsidiary
|
100.00
|
(0.47)
|
Commercial, industrial
and others
|
2
|
2
|
|||||||
|
Cosan
Finance Limited
|
-
|
Unlisted
subsidiary
|
100.00
|
(0.26)
|
Commercial, industrial
and others
|
1
|
1
|
85
COSAN
S.A. INDÚSTRIA E COMÉRCIO
OTHER
COMPANY’S RELEVANT INFORMATION—Continued
|
1.
|
Shareholding
Structure at July 31, 2007
|
In
accordance with the Special Corporate Governance Practices Guidelines (“Novo
Mercado”) please find below a statement showing the shareholding structure
showing investors or shareholders/members holding directly or indirectly
more
than 5% of the voting capital, including individuals and companies domiciled
abroad at July 31, 2007.
|
Cosan
S.A. Indústria e Comércio
|
||||||||||||||||||||||||
|
Shareholder/Member
|
Common
Shares / Units of Interest |
%
|
Preferred
Shares |
%
|
Total
|
%
|
||||||||||||||||||
|
Aguassanta
Participações S.A.
|
66,791,951
|
35.36
|
-
|
-
|
66,791,951
|
35.36
|
||||||||||||||||||
|
Usina
Costa Pinto S.A. Açúcar e Álcool
|
30,010,278
|
15.89
|
-
|
-
|
30,010,278
|
15.89
|
||||||||||||||||||
|
Lewington
Pte. Ltd. (Singapore)
|
11,279,050
|
5.97
|
-
|
-
|
11,279,050
|
5.97
|
||||||||||||||||||
|
Wellington
Management Company LLP*
|
9,549,670
|
5.06
|
-
|
-
|
9,549,670
|
5.06
|
||||||||||||||||||
|
Others
|
71,255,411
|
37.72
|
-
|
-
|
71,255,411
|
37.72
|
||||||||||||||||||
|
188,886,360
|
100.00
|
-
|
-
|
188,886,360
|
100.00
|
|||||||||||||||||||
|
Aguassanta
Participações S.A.
|
||||||||||||||||||||||||
|
Shareholder/Member
|
Common
Shares / Units of Interest |
%
|
Preferred
Shares |
%
|
Total
|
%
|
||||||||||||||||||
|
Usina
Bom Jesus S.A. Açúcar e Álcool
|
1,261,352
|
75.29
|
-
|
-
|
1,261,352
|
75.29
|
||||||||||||||||||
|
Ometto
Gonçalves S.A.
|
88,095
|
5.26
|
-
|
-
|
88,095
|
5.26
|
||||||||||||||||||
|
Flama
Empreendimentos e Participações S.A.
|
88,094
|
5.26
|
-
|
-
|
88,094
|
5.26
|
||||||||||||||||||
|
Nova
Celisa S.A.
|
88,081
|
5.26
|
-
|
-
|
88,081
|
5.26
|
||||||||||||||||||
|
Others
|
149,866
|
8.93
|
-
|
-
|
149,866
|
8.93
|
||||||||||||||||||
|
1,675,488
|
100.00
|
-
|
-
|
1,675,488
|
100.00
|
|||||||||||||||||||
|
Usina
Bom Jesus S.A. Açúcar e Álcool
|
||||||||||||||||||||||||
|
Shareholder/Member
|
Common
Shares / Units of Interest |
%
|
Preferred
Shares |
%
|
Total
|
%
|
||||||||||||||||||
|
Belga
Empreendimentos e Participações S.A.
|
1,941,450,929
|
38.46
|
-
|
-
|
1,941,450,929
|
38.46
|
||||||||||||||||||
|
Nova
Celisa S.A.
|
1,721,682,254
|
34.11
|
-
|
-
|
1,721,682,254
|
34.11
|
||||||||||||||||||
|
R.A.
Coury Agrícola e Participações Ltda.
|
291,259,369
|
5.77
|
-
|
-
|
291,259,369
|
5.77
|
||||||||||||||||||
|
Others
|
1,093,327,748
|
21.66
|
-
|
-
|
1,093,327,748
|
21.66
|
||||||||||||||||||
|
5,047,720,300
|
100.00
|
-
|
-
|
5,047,720,300
|
100.00
|
|||||||||||||||||||
|
Belga
Empreendimentos e Participações Ltda.
|
||||||||||||||||||||||||
|
Shareholder/Member
|
Common
Shares / Units of Interest |
%
|
Preferred
Shares |
%
|
Total
|
%
|
||||||||||||||||||
|
Rubens
Ometto Silveira Mello
|
4,139
|
99.98
|
-
|
-
|
4,139
|
99.98
|
||||||||||||||||||
|
Mônica
Maria Mellão Silveira Mello
|
1
|
0.02
|
-
|
-
|
1
|
0.02
|
||||||||||||||||||
|
4,140
|
100.00
|
-
|
-
|
4,140
|
100.00
|
|||||||||||||||||||
86
COSAN
S.A. INDÚSTRIA E COMÉRCIO
OTHER
COMPANY’S RELEVANT INFORMATION—Continued
|
1.
|
Shareholding
Structure at July 31,
2007--Continued
|
|
Nova
Celisa S.A.
|
||||||||||||||||||||||||
|
Shareholder/Member
|
Common
Shares / Units of Interest |
%
|
Preferred
Shares |
%
|
Total
|
%
|
||||||||||||||||||
|
Rio
das Pedras Participações S.A.
|
918,000
|
51.00
|
882,000
|
50.00
|
1,800,000
|
50.51
|
||||||||||||||||||
|
Isa
Participações Ltda.
|
882,000
|
49.00
|
882,000
|
50.00
|
1,764,000
|
49.49
|
||||||||||||||||||
|
1,800,000
|
100.00
|
1,764,000
|
100.00
|
3,564,000
|
100.00
|
|||||||||||||||||||
|
Rio
das Pedras Participações S.A.
|
||||||||||||||||||||||||
|
Shareholder/Member
|
Common
Shares / Units of Interest |
%
|
Preferred
Shares |
%
|
Total
|
%
|
||||||||||||||||||
|
Rubens
Ometto Silveira Mello
|
1,349,877,943
|
99.91
|
-
|
-
|
1,349,877,943
|
99.91
|
||||||||||||||||||
|
Mônica
Maria Mellão Silveira Mello
|
1,196,078
|
0.09
|
-
|
-
|
1,196,078
|
0.09
|
||||||||||||||||||
|
1,351,074,021
|
100.00
|
-
|
-
|
1,351,074,021
|
100.00
|
|||||||||||||||||||
|
Isa
Participações Ltda.
|
||||||||||||||||||||||||
|
Shareholder/Member
|
Common
Shares / Units of Interest |
%
|
Preferred
Shares |
%
|
Total
|
%
|
||||||||||||||||||
|
Isaltina
Ometto Silveira Mello
|
999
|
99.90
|
-
|
-
|
999
|
99.90
|
||||||||||||||||||
|
Other
|
1
|
0.10
|
-
|
-
|
1
|
0.10
|
||||||||||||||||||
|
1,000
|
100.00
|
-
|
-
|
1,000
|
100.00
|
|||||||||||||||||||
|
R.A.
Coury Agrícola e Participações Ltda.
|
||||||||||||||||||||||||
|
Shareholder/Member
|
Common
Shares / Units of Interest |
%
|
Preferred
Shares |
%
|
Total
|
%
|
||||||||||||||||||
|
Raul
Coury Filho
|
9,044,070
|
20.83
|
-
|
-
|
9,044,070
|
20.83
|
||||||||||||||||||
|
Luiz
Gustavo Coury
|
5,999,766
|
13.81
|
-
|
-
|
5,999,766
|
13.81
|
||||||||||||||||||
|
Jorge
Coury Sobrinho
|
5,999,766
|
13.81
|
-
|
-
|
5,999,766
|
13.81
|
||||||||||||||||||
|
Maria
Beatriz Coury
|
5,999,766
|
13.81
|
-
|
-
|
5,999,766
|
13.81
|
||||||||||||||||||
|
Rosana
E. Coury Mac Donell
|
5,999,766
|
13.81
|
-
|
-
|
5,999,766
|
13.81
|
||||||||||||||||||
|
Myrian
C. Coury Meneguel
|
5,999,766
|
13.81
|
-
|
-
|
5,999,766
|
13.81
|
||||||||||||||||||
|
Raul
Coury
|
2,196,050
|
5.06
|
-
|
-
|
2,196,050
|
5.06
|
||||||||||||||||||
|
Anita
Cobra Coury
|
2,196,050
|
5.06
|
-
|
-
|
2,196,050
|
5.06
|
||||||||||||||||||
|
43,435,000
|
100.00
|
-
|
-
|
43,435,000
|
100.00
|
|||||||||||||||||||
|
Ometto
Gonçalves S.A.
|
||||||||||||||||||||||||
|
Shareholder/Member
|
Common
Shares / Units of Interest |
%
|
Preferred
Shares |
%
|
Total
|
%
|
||||||||||||||||||
|
Marcos
Ometto Gonçalves
|
16,999
|
25.00
|
32,501
|
24.62
|
49,500
|
24.75
|
||||||||||||||||||
|
Renato
Ometto Gonçalves
|
16,999
|
25.00
|
32,501
|
24.62
|
49,500
|
24.75
|
||||||||||||||||||
|
Liliana
Ometto Gonçalves Bittar
|
16,999
|
25.00
|
32,501
|
24.62
|
49,500
|
24.75
|
||||||||||||||||||
|
Paulo
Gonçalves Júnior
|
16,999
|
25.00
|
32,501
|
24.62
|
49,500
|
24.75
|
||||||||||||||||||
|
Other
|
4
|
0.00
|
1,996
|
1.52
|
2,000
|
1.00
|
||||||||||||||||||
|
68,000
|
100.00
|
132,000
|
100.00
|
200,000
|
100.00
|
|||||||||||||||||||
87
COSAN
S.A. INDÚSTRIA E COMÉRCIO
OTHER
COMPANY’S RELEVANT INFORMATION—Continued
|
1.
|
Shareholding
Structure at July 31,
2007--Continued
|
|
Flama
Empreendimentos e Participações S.A.
|
||||||||||||||||||||||||
|
Shareholder/Member
|
Common
Shares / Units of Interest |
%
|
Preferred
Shares |
%
|
Total
|
%
|
||||||||||||||||||
|
Fernando
Luiz Altério
|
20,842
|
50.01
|
41,675
|
50.00
|
62,517
|
50.00
|
||||||||||||||||||
|
Ana
Maria Ometto Altério
|
20,833
|
49.99
|
41,675
|
50.00
|
62,508
|
50.00
|
||||||||||||||||||
|
41,675
|
100.00
|
83,350
|
100.00
|
125,025
|
100.00
|
|||||||||||||||||||
|
Usina
Costa Pinto S.A. Açúcar e Álcool
|
||||||||||||||||||||||||
|
Shareholder/Member
|
Common
Shares / Units of Interest |
%
|
Preferred
Shares |
%
|
Total
|
%
|
||||||||||||||||||
|
Pedro
Ometto S.A. Administração e Participações
|
64,998,204
|
100.00
|
49,995,534
|
38.46
|
114,993,738
|
58.97
|
||||||||||||||||||
|
Hyposwiss
Banco Privado S.A. (Switzerland)*
|
-
|
-
|
38,371,510
|
29.52
|
38,371,510
|
19.68
|
||||||||||||||||||
|
Isaac
Michaan
|
-
|
-
|
12,662,650
|
9.74
|
12,662,650
|
6.49
|
||||||||||||||||||
|
Aguassanta
Participações S.A.
|
835
|
-
|
11,150,069
|
8.58
|
11,150,904
|
5.72
|
||||||||||||||||||
|
Others
|
961
|
-
|
17,820,237
|
13.70
|
17,821,198
|
9.14
|
||||||||||||||||||
|
65,000,000
|
100.00
|
130,000,000
|
100.00
|
195,000,000
|
100.00
|
|||||||||||||||||||
|
Pedro
Ometto S.A. Administração e Participações
|
||||||||||||||||||||||||
|
Shareholder/Member
|
Common
Shares / Units of Interest |
%
|
Preferred
Shares |
%
|
Total
|
%
|
||||||||||||||||||
|
Nova
Aguassanta Administração de Participações Ltda.
|
222,752,725
|
99.99
|
-
|
-
|
222,752,725
|
99.99
|
||||||||||||||||||
|
Others
|
65
|
0.01
|
-
|
-
|
65
|
0.01
|
||||||||||||||||||
|
222,752,790
|
100.00
|
-
|
-
|
222,752,790
|
100.00
|
|||||||||||||||||||
|
Nova
Aguassanta Administração e Participações
Ltda.
|
||||||||||||||||||||||||
|
Shareholder/Member
|
Common
Shares / Units of Interest |
%
|
Preferred
Shares |
%
|
Total
|
%
|
||||||||||||||||||
|
Aguassanta
Participações S.A.
|
1
|
91.50
|
-
|
-
|
1
|
91.50
|
||||||||||||||||||
|
Ometto
Moreno Comércio e Empreendimentos Ltda.
|
4
|
6.25
|
-
|
-
|
4
|
6.25
|
||||||||||||||||||
|
Other
|
4
|
2.25
|
-
|
-
|
4
|
2.25
|
||||||||||||||||||
|
9
|
100.00
|
-
|
-
|
9
|
100.00
|
|||||||||||||||||||
|
Ometto
Moreno Comércio e Empreendimentos Ltda.
|
||||||||||||||||||||||||
|
Shareholder/Member
|
Common
Shares / Units of Interest |
%
|
Preferred
Shares |
%
|
Total
|
%
|
||||||||||||||||||
|
Fernando
Manoel Ometto Moreno
|
2,354,956
|
100.00
|
-
|
-
|
2,354,956
|
100.00
|
||||||||||||||||||
|
Other
|
1
|
0.00
|
-
|
-
|
1
|
0.00
|
||||||||||||||||||
|
2,354,957
|
100.00
|
-
|
-
|
2,354,957
|
100.00
|
|||||||||||||||||||
88
COSAN
S.A. INDÚSTRIA E COMÉRCIO
OTHER
COMPANY’S RELEVANT INFORMATION—Continued
1.
Shareholding
Structure at July 31, 2007--Continued
|
Lewington
Pte. Ltd.
|
||||||||||||||||||||||||
|
Shareholder/Member
|
Common
Shares / Units of Interest |
%
|
Preferred
Shares |
%
|
Total
|
%
|
||||||||||||||||||
|
Kuok
(Singapore) Limited*
|
255,000
|
50.00
|
-
|
-
|
255,000
|
50.00
|
||||||||||||||||||
|
Kerry
Holdings Limited*
|
127,500
|
25.00
|
-
|
-
|
127,500
|
25.00
|
||||||||||||||||||
|
Trendfield
Inc.*
|
127,500
|
25.00
|
-
|
-
|
127,500
|
25.00
|
||||||||||||||||||
|
510,000
|
100.00
|
-
|
-
|
510,000
|
100,00
|
|||||||||||||||||||
*
These
companies are located abroad and they are not include into Cosan’s Group. We do
not have information regarding their shareholders that have been disclosed
at
the market.
2.
Company’s
Marketable Securities in the Hands of Controlling Shareholders and Management
at
July 31, 2007
In
accordance with the Special Corporate Governance Practices Guidelines (“Novo
Mercado”) please find below a statement showing the number and characteristics
of marketable securities issued by the Company that are directly or indirectly
owned by the Controlling Shareholder/Member, officers or members of the
Board of
Directors or Management at July 31, 2007 and April 30, 2007, as
follows:
|
07/31/07
|
04/30/07
|
||||
|
Marketable
Security Owner
|
Type
of
Security |
Number
|
%
|
Number
|
%
|
|
Controlling
Group
|
Common
Shares
|
96,803,372
|
51,25%
|
96,803,372
|
51,25%
|
|
Administration
council
|
Common
Shares
|
19,113
|
0,01
|
19,113
|
0,01%
|
|
Board
of Directors
|
Common
Shares
|
33,721
|
0,02%
|
33,721
|
0,02%
|
|
96,856,206
|
51,28%
|
96,856,206
|
51,28%
|
89
COSAN
S.A. INDÚSTRIA E COMÉRCIO
OTHER
COMPANY’S RELEVANT INFORMATION—Continued
|
3.
|
Number
of Shares Outstanding at July 31, 2007 – 92,030,154
(48.72%)
|
In
accordance with the Special Corporate Governance Practices Guidelines (“Novo
Mercado”) please find below a statement showing the number of outstanding shares
and their percentage in relation to total shares issued at July 31,
2007.
|
Cosan
S.A. Indústria e Comércio
|
|||||||||||
|
Shareholder/Member
|
Common
Shares / Units of Interest
|
%
|
Preferred
Shares
|
%
|
Total
Shares
|
%
|
|||||
|
Aguassanta
Participações S.A.
|
66,791,951
|
35.36
|
-
|
-
|
66,791,951
|
35.36
|
|||||
|
Usina
Costa Pinto S.A. Açúcar e Álcool
|
30,010,278
|
15.89
|
-
|
-
|
30,010,278
|
15.89
|
|||||
|
Rubens
Ometto Silveira Mello
|
675
|
0.00
|
675
|
0.00
|
|||||||
|
Nova
Celisa S.A.
|
468
|
0.00
|
-
|
-
|
468
|
0.00
|
|||||
|
Board
of directors
|
19,113
|
0.01
|
19,113
|
0.01
|
|||||||
|
Executives
|
33,721
|
0.02
|
33,721
|
0.02
|
|||||||
|
Minority
interest
|
92,030,154
|
48.72
|
-
|
-
|
92,030,154
|
48.72
|
|||||
|
188,886,360
|
100.00
|
-
|
-
|
188,886,360
|
100.00
|
||||||
4.
Orders
Placed/Agreements Entered Into
Considering
that the Company operates in the commodities market, its sales are substantially
made at prices applicable at sales dates. However, Cosan has several sugar
and
ethanol markets contracts to be archieve by the Company through sales of
these
products in the future crops. The volumes related to outstanding
orders/agreements are as follows:
|
Product
|
Jul/2007
|
Jul/2006
|
|
Sugar
(in tons)
|
4,724,000
|
5,431,000
|
|
Ethanol
(in cubic meters)
|
105,000
|
85,000
|
Commitments
by crop are as follow:
|
Sugar
|
Ethanol
|
|||
|
Crop
|
Jul/2007
|
Jul/2006
|
Jul/2007
|
Jul/2006
|
|
2006
/ 2007
|
-
|
1,850,000
|
-
|
85,000
|
|
2007
/ 2008
|
1,772,000
|
1,617,000
|
105,000
|
-
|
|
2008
/ 2009
|
2,068,000
|
1,607,000
|
-
|
-
|
|
2009
/ 2010
|
884,000
|
357,000
|
-
|
-
|
|
4,724,000
|
5,431,000
|
105,000
|
85,000
|
|
5.
Arbitration
Clause
The
Company is subject to the
arbitration chamber for its industry, according to the arbitration clause
set
forth in its articles of incorporation.
90
COSAN
S.A. INDÚSTRIA E COMÉRCIO
OTHER
COMPANY’S RELEVANT INFORMATION—Continued
6.
Services
Rendered by the Independent Auditors
Abiding
by
CVM Instruction No. 381/03, we set out below information on other services
rendered by our independent auditors - Ernst & Young Auditores Independentes
S.S. and their related parties, in the current year, to Cosan S.A. Indústria e
Comércio and subsidiaries and other companies belonging to the same Group as
that of the Company:
|
Nature
|
Duration
|
|
Advisory
services related to documentation for compliance with Sarbanes
Oxley Act
(SOX) in the amount of R$716 thousand.
|
May
to July 2007
|
The
policies of the Company and its subsidiaries do not allow hiring of their
independent auditors for services resulting in conflicts of interest or
impairing objectivity or independence.
Company
management, after discussing with their independent auditors, concluded
that
those services does not impair independence of the auditors once they do
not
characterize actual or supposed loss of objectivity and integrity.
Non-financial
information were not reviewed by our independent auditors.
91
COSAN
S.A. INDÚSTRIA E COMÉRCIO
OTHER
COMPANY’S RELEVANT INFORMATION--Continued
Statement
of Income (operations) of Subsidiaries
Usina
da Barra S.A. Açúcar e Álcool
|
05/01/07
to
07/31/07
|
|
|
Gross
operating revenue
|
|
|
Sales
of goods and services
|
317,579
|
|
Taxes
and sales deductions
|
(26,434)
|
|
Net
operating revenue
|
291,145
|
|
Cost
of goods sold and services rendered
|
(281,931)
|
|
Gross
profit
|
9,214
|
|
Operating
income (expenses)
|
|
|
Selling
expenses
|
(32,061)
|
|
General
and administrative expenses
|
(16,743)
|
|
Financial
income, net
|
(18,764)
|
|
Losses
on equity investments
|
(6)
|
|
Goodwill
amortization
|
(19,850)
|
|
Other
operating expenses, net
|
(721)
|
|
(88,145)
|
|
|
Operating
income
|
(78,931)
|
|
Nonoperating
income, net
|
2,144
|
|
Income
before income and social contribution taxes
|
(76,787)
|
|
Income
and social contribution taxes
|
|
|
Current
|
4,402
|
|
Deferred
|
21,453
|
|
25,855
|
|
|
Income
for the period
|
(50,932)
|
|
Number
of shares (thousand)
|
870,923
|
|
Income
per share – in Reais
|
0,06
|
92
COSAN
S.A. INDÚSTRIA E COMÉRCIO
OTHER
COMPANY’S RELEVANT INFORMATION--Continued
Statement
of Income (operations) of Subsidiaries--Continued
Cosan
Operadora Portuária S.A.
|
05/01/07
to
07/31/07
|
05/01/06
to
07/31/06
|
||
|
Gross
operating revenue
|
|||
|
Sales
of services
|
19,615
|
20,446
|
|
|
Taxes
and sales deductions
|
(1,947)
|
(2,289)
|
|
|
Net
operating revenue
|
17,668
|
18,157
|
|
|
Cost
of services rendered
|
(10,432)
|
(10,986)
|
|
|
Gross
profit
|
7,236
|
7,171
|
|
|
Operating
income (expenses)
|
|||
|
Selling
expenses
|
(767)
|
194
|
|
|
General
and administrative expenses
|
(3,238)
|
(2,526)
|
|
|
Management
fees
|
(114)
|
(56)
|
|
|
Financial
expenses, net
|
(597)
|
(395)
|
|
|
Other
operating expenses, net
|
49
|
(524)
|
|
|
(4,667)
|
(3,307)
|
||
|
Operating
income
|
2,569
|
3,864
|
|
|
Nonoperating
income, net
|
27
|
6
|
|
|
Income
before income and social contribution taxes
|
2,596
|
3,870
|
|
|
Income
and social contribution taxes
|
|||
|
Current
|
(878)
|
(355)
|
|
|
Deferred
|
(16)
|
(958)
|
|
|
(894)
|
(1,313)
|
||
|
Income
for the period
|
1,702
|
2,557
|
|
|
Number
of shares (thousand)
|
100
|
100
|
|
|
Income
per share – in Reais
|
17.02
|
25.57
|
93
COSAN
S.A. INDÚSTRIA E COMÉRCIO
OTHER
COMPANY’S RELEVANT INFORMATION--Continued
Statement
of Income (operations) of Subsidiaries--Continued
Administração
de Participações Aguassanta Ltda.
|
05/01/07
to
07/31/07
|
05/01/06
to
07/31/06
|
||
|
Gross
operating revenue
|
|||
|
Sales
of goods and services
|
-
|
-
|
|
|
Taxes
and sales deductions
|
-
|
-
|
|
|
Net
operating revenue
|
-
|
-
|
|
|
Cost
of goods sold and services rendered
|
-
|
-
|
|
|
Gross
profit
|
-
|
-
|
|
|
Operating
income (expenses)
|
|||
|
Selling
expenses
|
-
|
-
|
|
|
General
and administrative expenses
|
-
|
(1)
|
|
|
Management
fees
|
(4)
|
(4)
|
|
|
Financial
expenses, net
|
(1)
|
-
|
|
|
Gain
on equity investments
|
(8,930)
|
14,770
|
|
|
Other
operating expenses
|
-
|
-
|
|
|
(8,935)
|
14,765
|
||
|
Operating
income
|
(8,935)
|
14,765
|
|
|
Nonoperating
income (expenses), net
|
-
|
-
|
|
|
Income
before income and social contribution taxes
|
(8,935)
|
14,765
|
|
|
Income
and social contribution taxes
|
|||
|
Current
|
-
|
-
|
|
|
Deferred
|
-
|
-
|
|
|
-
|
-
|
||
|
Income
for the period
|
(8,935)
|
14,765
|
|
|
Number
of shares
|
9
|
9
|
|
|
Earnings
per share - in Reais
|
(992,78)
|
1,640,56
|
94
COSAN
S.A. INDÚSTRIA E COMÉRCIO
OTHER
COMPANY’S RELEVANT INFORMATION--Continued
Statement
of Income (operations) of Subsidiaries--Continued
Cosan
International Universal Corporation
|
05/01/07
to
07/31/07
|
|
|
Gross
operating revenue
|
|
|
Sales
of goods and services
|
205,250
|
|
Taxes
and sales deductions
|
-
|
|
Net
operating revenue
|
205,250
|
|
Cost
of goods sold and services rendered
|
(207,470)
|
|
Gross
profit
|
(2,220)
|
|
Operating
income (expenses)
|
|
|
Selling
expenses
|
(109)
|
|
General
and administrative expenses
|
-
|
|
Financial
expenses, net
|
(206)
|
|
Gain
on equity investments
|
-
|
|
Other
operating expenses
|
-
|
|
(315)
|
|
|
Operating
loss
|
(2,535)
|
|
|
|
|
Nonoperating
income (expenses), net
|
-
|
|
Loss
before income and social contribution taxes
|
(2,535)
|
|
Income
and social contribution taxes
|
|
|
Current
|
-
|
|
Deferred
|
-
|
|
-
|
|
|
Loss
for the period
|
(2,535)
|
|
Number
of shares
|
2
|
|
Loss
per share - in Reais
|
(1,267,50)
|
95
COSAN
S.A. INDÚSTRIA E COMÉRCIO
OTHER
COMPANY’S RELEVANT INFORMATION--Continued
Statement
of Income (operations) of Subsidiaries--Continued
Cosan
Finance Limited
|
05/01/07
to
07/31/07
|
|
|
Gross
operating revenue
|
|
|
Sales
of goods and services
|
-
|
|
Taxes
and sales deductions
|
-
|
|
Net
operating revenue
|
-
|
|
Cost
of goods sold and services rendered
|
-
|
|
Gross
profit
|
-
|
|
Operating
income (expenses)
|
|
|
Selling
expenses
|
-
|
|
General
and administrative expenses
|
(331)
|
|
Financial
expenses, net
|
(796)
|
|
Gain
on equity investments
|
-
|
|
Other
operating expenses
|
-
|
|
(1,127)
|
|
|
Operating
loss
|
(1,127)
|
|
Nonoperating
income (expenses), net
|
-
|
|
Loss
before income and social contribution taxes
|
(1,127)
|
|
Income
and social contribution taxes
|
|
|
Current
|
-
|
|
Deferred
|
-
|
|
-
|
|
|
Loss
for the period
|
(1,127)
|
|
Number
of shares
|
1
|
|
Loss
per share - in Reais
|
(1,127,00)
|
96
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned,
thereunto
duly authorized.
|
COSAN
LIMITED
|
|||||
|
Date:
|
September
14, 2007
|
By:
|
/S/
Paulo Sérgio de Oliveira Diniz
|
||
|
Name:
|
Paulo
Sérgio de Oliveira Diniz
|
||||
|
Title:
|
Chief
Financial Officer and Investors Relations
Officer
|
||||