UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
OR
For the fiscal year ended
OR
OR
Commission file number:
(Exact name of Registrant as specified in its charter)
COSAN INC.
(Translation of Registrant’s name into English)
Federal Republic of
(Jurisdiction of incorporation or organization)
+55 11 3897-9797
(Address of principal executive offices)
ri@cosan.com
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol |
Name of each exchange on which registered |
American depositary shares, each representing four common shares, no par value |
|
New York Stock Exchange |
|
|
|
* Not for trading purposes, but only in connection with the listing of American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
The number of outstanding shares as of December 31, 2022 was:
Title of Class |
Number of Shares Outstanding |
Common shares, no par value |
|
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Auditor Name:
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements: ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b): ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
☐ U.S. GAAP
☒
☐ Other
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
EXPLANATORY NOTE
Other than set forth above, this Form 20-F/A does not, and does not purport to, amend, update or restate the information in any other item of the Original Annual Report as originally filed with the SEC. As a result, this Form 20-F/A does not reflect any events that may have occurred after the Original Annual Report was filed on April 24, 2023.
PART III
Item 17. Financial Statements
We have responded to Item 18 in lieu of responding to this Item.
Item 18. Financial Statements
See our audited consolidated financial statements beginning on page F-1 of this Amendment No. 1 to the Original Annual Report.
Item 19. Exhibits
We are filing the following documents as part of this annual report on Form 20-F:
Exhibit Number |
Exhibit |
---|---|
1.1 |
|
2.1 |
|
2.2 |
|
2.3 |
|
2.4 |
|
2.5 |
|
2.6 |
|
2.7 |
|
2.8 |
|
2.9 |
4.1 |
|
4.2 |
|
4.3 |
|
4.4 |
|
4.5 |
|
4.6 |
|
4.7 |
|
4.8 |
|
4.9 |
|
4.10 |
|
4.11 |
|
4.12 |
|
4.13 |
|
4.14 |
|
4.15 |
|
4.16 |
|
4.17 |
|
4.18 |
4.19 |
|
4.20 |
|
4.21 |
|
4.22 |
|
4.23 |
|
4.24 |
|
8.1 |
|
11.1 |
|
12.1** |
|
12.2** |
|
13.1** |
|
13.2** |
|
13.3** |
Financial Statements for the fiscal years ended March 31, 2023, 2022 and 2021 of Raízen S.A. |
101.INS |
XBRL Instance Document (filed as Exhibit 101.INS to Cosan S.A.’s annual report on Form 20-F for the year ended December 31, 2022, and incorporated herein by reference). |
101.SCH |
XBRL Taxonomy Extension Schema Document (filed as Exhibit 101.SCH to Cosan S.A.’s annual report on Form 20-F for the year ended December 31, 2022, and incorporated herein by reference). |
101.CAL |
XBRL Taxonomy Extension Calculation Linkbase Document (filed as Exhibit 101.CAL to Cosan S.A.’s annual report on Form 20-F for the year ended December 31, 2022, and incorporated herein by reference). |
101.DEF |
XBRL Taxonomy Extension Definition Linkbase Document (filed as Exhibit 101.DEF to Cosan S.A.’s annual report on Form 20-F for the year ended December 31, 2022, and incorporated herein by reference). |
101.LAB |
XBRL Taxonomy Extension Label Linkbase Document (filed as Exhibit 101.LAB to Cosan S.A.’s annual report on Form 20-F for the year ended December 31, 2022, and incorporated herein by reference). |
101.PRE |
XBRL Taxonomy Extension Presentation Linkbase Document (filed as Exhibit 101.PRE to Cosan S.A.’s annual report on Form 20-F for the year ended December 31, 2022, and incorporated herein by reference). |
* Portions of this item have been omitted pursuant to a request for confidential treatment.
** Filed herewith.
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Amendment No. 1 to the annual report on Form 20-F on its behalf.
COSAN S.A. |
|||
By: | /s/ Ricardo Lewin |
||
Name: | Ricardo Lewin | ||
Title: | Chief Financial Officer | ||
Date: June 29, 2023
EXHIBIT 12.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Luis Henrique Cals de Beauclair Guimarães, certify that:
1. | I have reviewed this annual report on Form 20-F of Cosan S.A.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. | [Omitted] |
5. | [Omitted] |
Date: June 29, 2023
By: |
/s/Luis Henrique Cals de Beauclair Guimarães |
|
|
Name: |
Luis Henrique Cals de Beauclair Guimarães |
|
Title: |
Chief Executive Officer |
EXHIBIT 12.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ricardo Lewin, certify that:
1. | I have reviewed this annual report on Form 20-F of Cosan S.A.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. | [Omitted] |
5. | [Omitted] |
Date: June 29, 2023
By: |
/s/Ricardo Lewin | |
|
Name: |
Ricardo Lewin |
|
Title: |
Chief Financial Officer |
EXHIBIT 13.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The certification set forth below is being submitted in connection with the Annual Report on Form 20-F for the fiscal year ended December 31, 2022 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to section 906 of the U.S. Sarbanes Oxley Act of 2002.
I, Luis Henrique Cals de Beauclair Guimarães, the Chief Executive Officer of Cosan S.A., certify that, to the best of my knowledge:
1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Cosan S.A.
Date: June 29, 2023
By: |
/s/ Luis Henrique Cals de Beauclair Guimarães |
|
|
Name: |
Luis Henrique Cals de Beauclair Guimarães |
|
Title: |
Chief Executive Officer |
EXHIBIT 13.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The certification set forth below is being submitted in connection with the Annual Report on Form 20-F for the fiscal year ended December 31, 2022 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to section 906 of the U.S. Sarbanes Oxley Act of 2002.
I, Ricardo Lewin, the Chief Financial Officer of Cosan S.A., certify that, to the best of my knowledge:
1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Cosan S.A.
Date: June 29, 2023
By: |
/s/ Ricardo Lewin |
|
|
Name: |
Ricardo Lewin |
|
Title: |
Chief Financial Officer |
EXHIBIT 13.3
.
Combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023,
and Independent auditor’s report
1 |
Contents
2 |
To
The Board of Directors and Shareholders of
Raízen S.A.
Opinion
We have audited the combined consolidated financial statements of Raízen S.A. (the Company), which comprise the consolidated statements of financial position as of March 31, 2023 and 2022, and the related combined consolidated statements of income, comprehensive income, changes in equity and cash flows for the three years in the period ended March 31, 2023, and the related notes (collectively referred to as the “combined consolidated financial statements”).
In our opinion, the accompanying combined consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three-year period ended March 31, 2023 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Combined Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Combined Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the combined consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the combined consolidated financial statements that are free of material misstatement, whether due to fraud or error.
In preparing the combined consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the financial statements are available to be issued.
Auditor’s Responsibilities for the Audit of the Combined Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the combined consolidated financial statements as a whole are free of material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
/s/Ernst & Young Auditores Independentes S/S Ltda.
São Paulo, Brazil
June 29, 2023
RAÍZEN S.A.
Consolidated statements of financial position
as of March 31, 2023, and 2022
In thousands of Reais - R$
|
Note |
|
2023 |
|
2022 |
||
Assets |
|
|
|
|
|
||
Current assets |
|
|
|
|
|
||
Cash and cash equivalents |
3 |
|
8,733,396 |
|
8,234,568 |
||
Securities |
4.a |
|
8,751 |
|
87,529 |
||
Restricted cash |
4.b |
|
1,274,610 |
|
2,279,632 |
||
Derivative financial instruments |
27 |
|
6,452,593 |
|
5,409,266 |
||
Trade accounts receivable |
5.a |
|
8,423,769 |
|
6,271,015 |
||
Inventories |
6 |
|
10,230,124 |
|
9,931,945 |
||
Advances to suppliers |
14.b |
|
392,647 |
|
4,215,961 |
||
Biological assets |
7 |
|
4,140,465 |
|
3,913,957 |
||
Recoverable income tax and social contribution |
17.b |
|
744,795 |
|
605,854 |
||
Recoverable taxes |
8 |
|
4,336,386 |
|
3,325,080 |
||
Dividends receivable |
|
|
5,182 |
|
4,287 |
||
Related parties |
9.a |
|
1,020,519 |
|
975,556 |
||
Contract assets |
10 |
|
577,133 |
|
555,612 |
||
Other receivables |
|
|
1,142,061 |
|
1,235,078 |
||
Total current assets |
|
|
47,482,431 |
|
47,045,340 |
||
|
|
|
|
|
|
||
Non-current assets |
|
|
|
|
|
||
Trade accounts receivable |
5.a |
|
496,579 |
|
366,823 |
||
Securities |
4.a |
|
167,778 |
|
- |
||
Derivative financial instruments |
27 |
|
2,826,733 |
|
2,082,299 |
||
Recoverable taxes |
8 |
|
6,258,711 |
|
2,091,851 |
||
Related parties |
9.a |
|
1,159,965 |
|
1,110,082 |
||
Advances to suppliers |
14.b |
|
220,342 |
|
190,506 |
||
Contract assets |
10 |
|
2,654,134 |
|
2,530,981 |
||
Recoverable income tax and social contribution |
17.b |
|
532,188 |
|
71,818 |
||
Deferred income tax and social contribution |
17.d |
|
3,636,927 |
|
3,163,593 |
||
Judicial deposits |
18 |
|
744,880 |
|
723,460 |
||
Other receivables |
|
|
445,050 |
|
547,826 |
||
Investments |
11 |
|
1,378,851 |
|
1,354,419 |
||
Property, plant and equipment |
12 |
|
27,119,384 |
|
22,264,852 |
||
Intangible assets |
13 |
|
6,151,437 |
|
6,020,859 |
||
Rights of use asset |
15.a |
|
10,276,073 |
|
10,779,635 |
||
Total non-current assets |
|
|
64,069,032 |
|
53,299,004 |
||
Total assets |
|
|
111,551,463 |
|
100,344,344 |
Notes are an integral part of the combined consolidated financial statements.
RAÍZEN S.A.
Consolidated statements of financial position
as of March 31, 2023, and 2022
In thousands of Reais - R$
|
Note |
|
2023 |
|
2022 |
||
Liabilities |
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
||
Suppliers |
14 |
|
21,452,338 |
|
19,059,514 |
||
Lease liabilities |
15.b |
|
2,658,519 |
|
2,417,813 |
||
Loans and financing |
16 |
|
4,855,395 |
|
1,565,260 |
||
Related parties |
9.a |
|
2,363,289 |
|
1,746,606 |
||
Derivative financial instruments |
27 |
|
6,269,699 |
|
7,174,053 |
||
Payroll and related charges payable |
|
|
1,278,828 |
|
1,090,396 |
||
Income tax and social contribution payable |
17.c |
|
41,179 |
|
160,666 |
||
Taxes payable |
|
|
678,743 |
|
775,748 |
||
Dividends and interest on own capital payable |
20.b |
|
154,177 |
|
269,662 |
||
Deferred revenues |
|
|
66,006 |
|
114,699 |
||
Bonuses payable |
|
|
87,115 |
|
84,230 |
||
Advances from clients |
5.b |
|
2,153,912 |
|
4,796,239 |
||
Other liabilities |
|
|
2,771,485 |
|
1,160,321 |
||
Total current liabilities |
|
|
44,830,685 |
|
40,415,207 |
||
|
|
|
|
|
|
||
Non-current liabilities |
|
|
|
|
|
||
Lease liabilities |
15.b |
|
8,155,990 |
|
8,006,891 |
||
Loans and financing |
16 |
|
24,599,543 |
|
20,709,616 |
||
Related parties |
9.a |
|
3,174,168 |
|
3,271,094 |
||
Advances from clients |
5.b |
|
1,393,073 |
|
- |
||
Derivative financial instruments |
27 |
|
1,968,102 |
|
1,278,472 |
||
Taxes payable |
|
|
202,283 |
|
210,140 |
||
Provision for legal disputes |
18 |
|
1,924,010 |
|
1,835,953 |
||
Deferred income tax and social contribution |
17.d |
|
1,163,830 |
|
1,373,942 |
||
Bonuses payable |
|
|
346,349 |
|
267,681 |
||
Other liabilities |
|
|
889,269 |
|
716,440 |
||
Total non-current liabilities |
|
|
43,816,617 |
|
37,670,229 |
||
Total liabilities |
|
|
88,647,302 |
|
78,085,436 |
||
|
|
|
|
|
|
||
Equity |
20 |
|
|
|
|
||
Share capital |
|
|
6,859,670 |
|
6,859,670 |
||
Treasury shares |
|
|
(194,236 |
) |
|
(40,082 |
) |
Additional paid-in capital |
|
|
10,297,351 |
|
10,285,353 |
||
Accumulated other comprehensive |
|
|
2,537,367 |
|
1,939,039 |
||
Retained earnings |
|
|
2,751,597 |
|
2,604,433 |
||
Equity attributable to: |
|
|
|
|
|
||
Owners of the Raízen |
|
|
22,251,749 |
|
21,648,413 |
||
Interest of non-controlling shareholders |
|
|
652,412 |
|
610,495 |
||
Total shareholders’ equity |
|
|
22,904,161 |
|
22,258,908 |
||
Total shareholders’ equity and liabilities |
|
|
111,551,463 |
|
100,344,344 |
Notes are an integral part of the combined consolidated financial statements.
RAÍZEN S.A.
Years ended March 31, 2023, 2022 and 2021
In thousands of Reais - R$
|
Note |
|
2023 |
|
2022 |
|
2021 | |||
Net operating revenue |
22 |
|
245,831,790 |
|
194,767,318 |
|
114,601,988 |
|||
Cost of products sold, and services provided |
24 |
|
(230,564,083 |
) |
|
(182,653,455 |
) |
|
(106,608,028 |
) |
Gross income |
|
|
15,267,707 |
|
12,113,863 |
|
7,993,960 |
|||
|
|
|
|
|
|
|
|
|||
Operating (expenses) revenue |
|
|
|
|
|
|
|
|||
Selling |
24 |
|
(5,234,882 |
) |
|
(4,195,624 |
) |
|
(3,345,443 |
) |
General and administrative |
24 |
|
(2,553,864 |
) |
|
(2,083,287 |
) |
|
(1,330,703 |
) |
Other operating revenue, net |
25 |
|
737,472 |
|
556,405 |
|
386,717 |
|||
Equity accounting result |
11 |
|
(130,092 |
) |
|
(68,589 |
) |
|
(81,687 |
) |
|
|
|
(7,181,366 |
) |
|
(5,791,095 |
) |
|
(4,371,116 |
) |
Income before financial results and income tax and social contribution |
|
|
8,086,341 |
|
6,322,768 |
|
3,622,844 |
|||
|
|
|
|
|
|
|
|
|||
Financial results |
26 |
|
|
|
|
|
|
|||
Financial expenses |
|
|
(3,938,084 |
) |
|
(2,032,662 |
) |
|
(1,699,980 |
) |
Financial income |
|
|
819,660 |
|
617,521 |
|
533,137 |
|||
Net exchange variation |
|
|
(672,473 |
) |
|
2,051,267 |
|
(1,432,041 |
) | |
Net effect of derivatives |
|
|
(1,031,864 |
) |
|
(2,707,542 |
) |
|
1,182,683 |
|
|
|
|
(4,822,761 |
) |
|
(2,071,416 |
) |
|
(1,416,201 |
) |
Income before income tax and social contribution |
|
|
3,263,580 |
|
4,251,352 |
|
2,206,643 |
|||
|
|
|
|
|
|
|
|
|||
Income tax and social contribution |
17.a |
|
|
|
|
|
|
|||
Current |
|
|
(1,676,607 |
) |
|
(1,419,259 |
) |
|
(1,464,604 |
) |
Deferred |
|
|
916,353 |
|
446,539 |
|
804,802 |
|||
|
|
|
(760,254 |
) |
|
(972,720 |
) |
|
(659,802 |
) |
Net income for the year |
|
|
2,503,326 |
|
3,278,632 |
|
1,546,841 |
|||
|
|
|
|
|
|
|
|
|||
Attributable to: |
|
|
|
|
|
|
|
|||
Raízen’s controlling shareholders |
|
|
2,441,126 |
|
3,235,755 |
|
1,524,474 |
|||
Raízen’s non-controlling shareholders |
|
|
62,200 |
|
42,877 |
|
22,367 |
|||
|
|
|
2,503,326 |
|
3,278,632 |
|
1,546,841 |
|||
|
|
|
|
|
|
|
|
|||
Earnings per share (common and preferred) in R$ |
20.f |
|
|
|
|
|
|
|||
Basic |
|
|
0.24 |
|
0.37 |
|
0.17 |
|||
Diluted |
|
|
0.24 |
|
0.37 |
|
0.17 |
Notes are an integral part of the combined consolidated financial statements.
RAÍZEN S.A.
Years ended March 31, 2023, 2022 and 2021
In thousands of Reais - R$
|
2023 |
|
2022 |
|
2021 | |||
Net income for the year |
2,503,326 |
|
3,278,632 |
|
1,546,841 |
|||
Comprehensive income |
|
|
|
|
|
|||
Items that will not be reclassified to statement of income |
|
|
|
|
|
|||
Actuarial (loss) gain, net |
(22,095 |
) |
|
2,603 |
|
3,207 |
||
Deferred taxes on actuarial gain (loss), net |
7,402 |
|
(885 |
) |
|
(982 |
) | |
|
(14,693 |
) |
|
1,718 |
|
2,225 |
||
Items that are or may be reclassified to statement of income |
|
|
|
|
|
|||
Income (loss) from financial instruments designated as hedge accounting |
393,553 |
|
1,806,902 |
|
(1,895,844 |
) | ||
Other |
(4,394 |
) |
|
- |
|
- |
||
Deferred taxes on adjustments |
(132,314 |
) |
|
(614,347 |
) |
|
644,587 |
|
Effect of foreign currency translation |
364,456 |
|
(1,021,725 |
) |
|
650,345 |
||
|
621,301 |
|
170,830 |
|
(600,912 |
) | ||
Total comprehensive income for the year |
606,608 |
|
172,548 |
|
(598,687 |
) | ||
Comprehensive income for the year |
3,109,934 |
|
3,451,180 |
|
948,154 |
|||
Attributable to: |
|
|
|
|
|
|||
Raízen’s controlling shareholders |
3,039,454 |
|
3,448,344 |
|
925,787 |
|||
Raízen’s non-controlling shareholders |
70,480 |
|
2,836 |
|
22,367 |
|||
|
3,109,934 |
|
3,451,180 |
|
948,154 |
Notes are an integral part of the combined consolidated financial statements.
RAÍZEN S.A.
Years ended March 31, 2023, 2022 and 2021
In thousands of Reais - R$
|
Attributable to controlling shareholders |
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
Additional paid-in capital |
|
|
|
Retained earnings |
|
|
|
|
|
|
|
|
||||||||
|
Share capital |
|
Treasury shares |
|
Transactions with shareholders |
|
Capital reserve |
|
Special reserve - Law No. 8,200/91 |
|
Accumulated other comprehensive income |
|
Legal reserve |
|
Tax incentive reserve |
|
Retained profits |
|
Retained earnings |
|
Total |
|
Interest of non-controlling shareholders |
|
Total equity |
As of March 31, 2022 |
6,859,670 |
|
(40,082) |
|
42,305 |
|
10,242,954 |
|
94 |
|
1,939,039 |
|
197,097 |
|
375,803 |
|
2,031,533 |
|
- |
|
21,648,413 |
|
610,495 |
|
22,258,908 |
Comprehensive income for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the year |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
2,441,126 |
|
2,441,126 |
|
62,200 |
|
2,503,326 |
Share of equity of investees |
- |
|
- |
|
- |
|
- |
|
- |
|
263,899 |
|
- |
|
- |
|
- |
|
- |
|
263,899 |
|
- |
|
263,899 |
Net gain with financial instruments designated as hedge accounting |
- |
|
- |
|
- |
|
- |
|
- |
|
11,029 |
|
- |
|
- |
|
- |
|
- |
|
11,029 |
|
- |
|
11,029 |
Effect of foreign currency translation |
- |
|
- |
|
- |
|
- |
|
- |
|
323,400 |
|
- |
|
- |
|
- |
|
- |
|
323,400 |
|
8,280 |
|
331,680 |
Total comprehensive income for the year |
- |
|
- |
|
- |
|
- |
|
- |
|
598,328 |
|
- |
|
- |
|
- |
|
2,441,126 |
|
3,039,454 |
|
70,480 |
|
3,109,934 |
Contributions from shareholders, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of shares (Note 20.d) |
- |
|
(185,077) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(185,077) |
|
- |
|
(185,077) |
Exercise of share-based payment (Note 21) |
- |
|
30,923 |
|
(30,923) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Share-based payment (Note 21) |
- |
|
- |
|
46,112 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
46,112 |
|
- |
|
46,112 |
Business combination (Note 30.(i)) |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
1,453 |
|
1,453 |
Dividends and interest on own capital (Note 20.b) |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(2,163,800) |
|
(130,162) |
|
(2,293,962) |
|
(28,232) |
|
(2,322,194) |
Others |
- |
|
- |
|
- |
|
(3,191) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(3,191) |
|
(1,784) |
|
(4,975) |
Recognition of reserves and other |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
358,063 |
|
1,952,901 |
|
(2,310,964) |
|
- |
|
- |
|
- |
Total distributions to shareholders, net |
- |
|
(154,154) |
|
15,189 |
|
(3,191) |
|
- |
|
- |
|
- |
|
358,063 |
|
(210,899) |
|
(2,441,126) |
|
(2,436,118) |
|
(28,563) |
|
(2,464,681) |
As of March 31, 2023 |
6,859,670 |
|
(194,236) |
|
57,494 |
|
10,239,763 |
|
94 |
|
2,537,367 |
|
197,097 |
|
733,866 |
|
1,820,634 |
|
- |
|
22,251,749 |
|
652,412 |
|
22,904,161 |
Notes are an integral part of the combined consolidated financial statements.
RAÍZEN S.A.
Consolidated statements of changes in equity
Years ended March 31, 2023, 2022 and 2021
In thousands of Reais - R$
|
Attributable to controlling shareholders |
|
|
|
|
||||||||||||||||||||||
|
|
|
|
|
Additional paid-in capital |
|
|
|
Retained earnings |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Share capital |
|
Treasury shares |
|
Transactions with shareholders |
|
Capital reserve |
|
Special reserve - Law No. 8,200/91 |
|
Accumulated other comprehensive income |
|
Legal reserve |
|
Tax incentive reserve |
|
Retained profits |
|
Retained earnings |
|
Net parent investment |
|
Total |
|
Interest of non-controlling shareholders |
|
Total equity |
As of March 31, 2021 |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
12,129,956 |
|
12,129,956 |
|
368,436 |
|
12,498,392 |
Net income for the year |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
419,164 |
|
419,164 |
|
320,586 |
|
739,750 |
Net gain with financial instruments designated as hedge accounting |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(391,911) |
|
(391,911) |
|
- |
|
(391,911) |
Effect of foreign currency translation |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(395,851) |
|
(395,851) |
|
- |
|
(395,851) |
Dividends |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(738,433) |
|
(738,433) |
|
- |
|
(738,433) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(1,107,031) |
|
(1,107,031) |
|
320,586 |
|
(786,445) |
As of May 31, 2021 |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
11,022,925 |
|
11,022,925 |
|
689,022 |
|
11,711,947 |
Comprehensive income for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the year |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
2,816,591 |
|
- |
|
2,816,591 |
|
(277,709) |
|
2,538,882 |
Actuarial gain, net |
- |
|
- |
|
- |
|
- |
|
- |
|
1,713 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
1,713 |
|
- |
|
1,713 |
Net gain with financial instruments designated as hedge accounting |
- |
|
- |
|
- |
|
- |
|
- |
|
1,584,466 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
1,584,466 |
|
- |
|
1,584,466 |
Effect of foreign currency translation |
- |
|
- |
|
- |
|
- |
|
- |
|
(585,869) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(585,869) |
|
(40,041) |
|
(625,910) |
Total comprehensive income for the year |
- |
|
- |
|
- |
|
- |
|
- |
|
1,000,310 |
|
- |
|
- |
|
- |
|
2,816,591 |
|
- |
|
3,816,901 |
|
(317,750) |
|
3,499,151 |
Contributions from shareholders, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital increase (20.a) |
3,859,669 |
|
- |
|
- |
|
5,197,282 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
9,056,951 |
|
- |
|
9,056,951 |
Repurchase of shares (Note 20.e) |
- |
|
(40,082) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(40,082) |
|
- |
|
(40,082) |
Share-based payment (Note 21) |
- |
|
- |
|
42,305 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
42,305 |
|
- |
|
42,305 |
Share issuance expenses, net (Note 20.a) |
- |
|
- |
|
- |
|
(109,684) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(109,684) |
|
- |
|
(109,684) |
Business combination (Notes 30.(i).b and 30.(i).c) |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
272,982 |
|
272,982 |
Dividends and interest on own capital (Note 20.b) |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(1,394,018) |
|
(741,682) |
|
- |
|
(2,135,700) |
|
(39,255) |
|
(2,174,955) |
Effect of transaction between shareholders at subsidiary |
- |
|
- |
|
- |
|
(7,423) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(7,423) |
|
2,423 |
|
(5,000) |
Effect of redemption of preferred shares at subsidiary |
- |
|
- |
|
- |
|
2,220 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
2,220 |
|
- |
|
2,220 |
Recognition of reserves and other |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
375,803 |
|
2,031,533 |
|
(2,407,336) |
|
- |
|
- |
|
3,073 |
|
3,073 |
Total |
3,859,669 |
|
(40,082) |
|
42,305 |
|
5,082,395 |
|
- |
|
- |
|
- |
|
375,803 |
|
637,515 |
|
(3,149,018) |
|
- |
|
6,808,587 |
|
239,223 |
|
7,047,810 |
Reorganization adjustments |
3,000,001 |
|
- |
|
- |
|
5,160,559 |
|
94 |
|
938,729 |
|
197,097 |
|
- |
|
1,394,018 |
|
332,427 |
|
(11,022,925) |
|
- |
|
- |
|
- |
As of March 31, 2022 |
6,859,670 |
|
(40,082) |
|
42,305 |
|
10,242,954 |
|
94 |
|
1,939,039 |
|
197,097 |
|
375,803 |
|
2,031,533 |
|
- |
|
- |
|
21,648,413 |
|
610,495 |
|
22,258,908 |
Notes are an integral part of the combined consolidated financial statements.
10 |
RAÍZEN S.A.
Consolidated statements of changes in equity
Years ended March 31, 2023, 2022 and 2021
In thousands of Reais - R$
|
Net parent investments |
|
Interest of non-controlling shareholders |
|
Total equity |
As of March 31, 2020 |
11,364,386 |
|
365,717 |
|
11,730,103 |
Comprehensive income for the year |
|
|
|
|
|
Net income for the year |
1,524,474 |
|
22,367 |
|
1,546,841 |
Actuarial gain, net |
2,225 |
|
- |
|
2,225 |
Net loss with financial instruments designated as hedge accounting |
(1,251,257) |
|
- |
|
(1,251,257) |
Effect of foreign currency translation |
650,345 |
|
- |
|
650,345 |
Total comprehensive income for the year |
925,787 |
|
22,367 |
|
948,154 |
Distributions from shareholders, net |
|
|
|
|
|
Dividends allocated to holders of preferred shares |
(5,266) |
|
- |
|
(5,266) |
Dividends and interest on own capital |
(156,256) |
|
(19,648) |
|
(175,904) |
Others |
1,305 |
|
- |
|
1,305 |
Total distributions to shareholders, net |
(160,217) |
|
(19,648) |
|
(179,865) |
As of March 31, 2021 |
12,129,956 |
|
368,436 |
|
12,498,392 |
Notes are an integral part of the combined consolidated financial statements.
RAÍZEN S.A.
Years ended March 31
In thousands of Reais - R$
|
2023 |
|
2022 |
|
2021 | |||
Cash flows from operating activities |
|
|
|
|
|
|||
Income before income tax and social contribution |
3,263,580 |
|
4,251,352 |
|
2,206,643 |
|||
Adjustments: |
|
|
|
|
|
|||
Depreciation and amortization (Note 24) |
8,653,478 |
|
6,870,621 |
|
4,733,468 |
|||
Amortization of contract assets (Notes 10 and 22) |
615,494 |
|
579,822 |
|
502,468 |
|||
Change in the fair value and realization of loss or gain of biological assets fair value (Note 7) |
188,809 |
|
(1,340,766 |
) |
|
(441,222 |
) | |
Bargain purchase gain (Notes 30.(i).d and 30.(ii).a) |
(266,593 |
) |
|
- |
|
11,447 |
||
Equity accounting result (Note 11) |
130,092 |
|
68,589 |
|
81,687 |
|||
Net interest, inflation adjustments and exchange variation |
4,228,936 |
|
(92,128 |
) |
|
2,707,328 |
||
Change in fair value of liabilities financial instruments (Notes 9.a,16 and 26) |
(625,041 |
) |
|
(582,191 |
) |
|
(63,163 |
) |
Loss with derivative financial instruments, net |
1,687,589 |
|
5,961,685 |
|
502,613 |
|||
Gains on sales of property, plant and equipment (Note 25) |
(26,560 |
) |
|
16,844 |
|
(82,188 |
) | |
Gain on PIS and COFINS tax credits on fuel, net (Note 8) |
(3,765,456 |
) |
|
- |
|
- |
||
Recognition of extemporaneous tax credits and other losses (gains), net |
407,567 |
|
(332,845 |
) |
|
(277,167 |
) | |
Government grants (Note 17.a) |
(516,144 |
) |
|
- |
|
- |
||
Change in inventories’ fair value hedge (Note 6) |
(5,145 |
) |
|
55,876 |
|
(244,942 |
) | |
Others |
120,330 |
|
31,040 |
|
165,228 |
|||
Changes in assets and liabilities: |
|
|
|
|
|
|||
Trade accounts receivable and advances from clients |
(2,272,054 |
) |
|
788,523 |
|
(145,953 |
) | |
Inventories |
224,630 |
|
(3,482,749 |
) |
|
239,876 |
||
Restricted cash |
1,096,490 |
|
(1,243,422 |
) |
|
(889,250 |
) | |
Contract assets |
(769,194 |
) |
|
(1,006,665 |
) |
|
(978,498) |
|
Derivative financial instruments |
(1,855,460 |
) |
|
(1,093,090 |
) |
|
(1,181,057 |
) |
Related parties |
651,959 |
|
(282,922 |
) |
|
(172,882 |
) | |
Suppliers and advances to suppliers |
5,752,546 |
|
5,715,719 |
|
256,911 |
|||
Recoverable and payable taxes, net |
(1,794,205 |
) |
|
(1,253,514 |
) |
|
(567,250 |
) |
Payroll and related charges payable |
169,749 |
|
339,612 |
|
23,269 |
|||
Other assets and liabilities, net |
(1,108,099 |
) |
|
(281,067 |
) |
|
(348,792 |
) |
Payment of income tax and social contribution |
(1,131,024 |
) |
|
(903,769 |
) |
|
(333,088 |
) |
Net cash generated by operating activities |
13,056,274 |
|
12,784,555 |
|
5,705,486 |
|||
|
|
|
|
|
|
|||
Cash flows from investing activities |
|
|
|
|
|
|||
(Investments in) redemption of securities, net |
(76,140 |
) |
|
42,847 |
|
(95,795 |
) | |
Advance for future capital increase in joint venture (Note 9.a.) |
(45,000 |
) |
|
- |
|
- |
||
Additions to investments (Note 11) |
(120,094 |
) |
|
- |
|
- |
||
Acquisition of additional interest in subsidiary |
(5,121 |
) |
|
- |
|
- |
||
Payments for business combinations, net of cash acquired and investment additions (Notes 30.(i).a and 30.(i).e) |
(803,196 |
) |
|
(4,693,426 |
) |
|
(50,100 |
) |
Additions to biological assets (Notes 7 and 31.b) |
(1,942,697 |
) |
|
(1,294,348 |
) |
|
(752,810 |
) |
Additions to property, plant and equipment and intangible assets (Notes 12, 13 and 31.b) |
(8,714,579 |
) |
|
(5,379,613 |
) |
|
(2,635,215 |
) |
Cash received on disposal of equity interest |
123,299 |
|
48,791 |
|
19,599 |
|||
Cash received on disposal of property, plant and equipment |
157,292 |
|
88,641 |
|
193,280 |
|||
Dividends received from associated companies |
7,197 |
|
51,505 |
|
- |
|||
Net cash flows used investing activities |
(11,419,039 |
) |
|
(11,135,603 |
) |
|
(3,321,041 |
) |
|
|
|
|
|
|
|||
Cash flows from financing activities |
|
|
|
|
|
|||
Capital increase (Note 20.a) |
- |
|
6,709,671 |
|
- |
|||
Share issue expenses (Note 20.a) |
- |
|
(149,347 |
) |
|
- |
||
Repurchase of shares (Note 20.e) |
(185,077 |
) |
|
(40,082 |
) |
|
- |
|
Payments of dividends and interest on own capital (Note 20.b) |
(2,437,316 |
) |
|
(2,741,001 |
) |
|
(47,979 |
) |
Proceeds from loans and financing, net of issuance costs |
19,756,495 |
|
7,257,482 |
|
3,584,510 |
|||
Payments of principal of loans and financing |
(13,822,024 |
) |
|
(6,803,450 |
) |
|
(5,897,175 |
) |
Payment of interest on loans and financing |
(1,620,252 |
) |
|
(775,042 |
) |
|
(854,601 |
) |
Payments of third-party lease liabilities (Note 15.b) |
(2,737,691 |
) |
|
(2,512,155 |
) |
|
(1,388,175 |
) |
Payments of related parties lease liabilities (Note 9.a) |
(281,622 |
) |
|
(240,030 |
) |
|
(171,358 |
) |
Related parties and other |
(5,145 |
) |
|
1,800 |
|
56,233 |
||
Net cash (used in) generated by financing activities |
(1,332,632 |
) |
|
707,846 |
|
(4,718,545 |
) | |
|
|
|
|
|
|
|||
Increase (decrease) in cash and cash equivalents, net |
304,603 |
|
2,356,798 |
|
(2,334,100 |
) | ||
Cash and cash equivalents at beginning of year |
8,234,568 |
|
6,512,805 |
|
8,601,660 |
|||
Effect of exchange rate change on cash and cash equivalents |
194,225 |
|
(635,035 |
) |
|
245,245 |
||
Cash and cash equivalents at the end of the year |
8,733,396 |
|
8,234,568 |
|
6,512,805 |
Notes are an integral part of the combined consolidated financial statements.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
1.Operations
Raízen S.A., formerly Raízen Combustíveis S.A., (“Raízen” or “Raízen Combustíveis” and together with its subsidiaries, the “Company”) is a publicly-held corporation with shares traded on B3 S.A. – Brasil, Bolsa, Balcão (“B3”), under ticker “RAIZ4”, in the listing segment named Level 2 of corporate governance. Raízen is a corporation established for an indefinite term, under Brazilian laws, headquartered and under the jurisdiction at Avenida Almirante Barroso, 81, 36th floor, room 32B109, in the city and state of Rio de Janeiro, Brazil. The Company is jointly controlled by Shell PLC (“Shell”), and Cosan S.A. (“Cosan”).
On June 1, 2021, the shareholders of Cosan and Shell approved a corporate reorganization (the “Corporate Reorganization”), pursuant to which they contributed all their shares in Raízen Energia S.A. (“RESA”) to Raízen Combustíveis. As a result of the Corporate Reorganization, RESA became a wholly owned subsidiary of Raízen Combustíveis.
In the Special General Meeting held on June 2, 2021, Raízen Combustíveis shareholders approved the change of the corporate name to Raízen S.A.
On August 5, 2021, the Company completed an initial public offering of its preferred shares that begun trading in B3. See Note 20.a.
The Company’s main activities are: (i) distribution and sale of fossil and renewable fuels; (ii) production and sale of automotive and industrial lubricants; (iii) oil refining; (iv) operations related to convenience stores; (v) development of technology on a global scale relating to the production of sugar, ethanol and new energy sources; (vi) production, trading and sale of sugar, ethanol and bioenergy; (vii) development of projects for the generation of electric energy from renewable sources; and (viii) equity interest in other companies.
The planting of sugarcane (main source of raw material to produce sugar, ethanol and bioenergy) requires a period from 12 to 18 months for maturation and the harvest period usually begins between the months of April and May every year and ends, in general, between the months of November and December, period in which sugar and ethanol production also takes place.
The sale of production takes place throughout the year and is not subject to changes due to seasonality, but to changes in the regular market conditions of supply and demand. Due to its production cycle, the Company’s fiscal year begins on April 1 and ends on March 31 of each year.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
The main transactions in the year ended March 31, 2023, were:
1.1Acquisition of lubricant business from Shell Brasil Petróleo Ltda. (“SBPL”) in Brazil by Raízen
On May 1, 2022, the Company completed the acquisition of the lubricant business of SBPL through the acquisition of all the shares representing the capital stock of Neolubes Indústria de Lubrificantes Ltda. (“Neolubes”), through its subsidiary Blueway Trading Importação e Exportação S.A. (“Blueway”), in the amount of R$ 726,451 fully paid in cash on May 1, 2022.
The acquisition agreement provided for certain price adjustments after the transaction, which were agreed upon by the Company and the sellers on September 13, 2022, totaling R$ 5,345 in favor of the SBPL.
The details of this business combination are presented in Note 30.(i).d.
1.2Share buyback program
On August 11, 2022, Raízen's Board of Directors approved a new share buyback program for up to one hundred million preferred shares, representing 0.97% of total outstanding shares and 8.29% of floating shares, whose term for conducting the operation is 18 months, ending on February 12, 2024. See Note 20.e. The purpose of this program is to repurchase shares to meet obligations that may arise from the Company’s share-based compensation plans and maximize the generation of value for shareholders through efficient capital management. At management’s discretion the repurchased shares may be later delivered to the beneficiaries of share-based compensation programs, canceled, sold, or held in treasury.
1.3Acquisition of Payly Holding S.A. and Payly Soluções S.A. by Raízen
On December 1, 2022, the Company completed the acquisition of all shares of Payly Holding Ltda. and its subsidiary Payly Instituições de Pagamento S.A. (jointly “Payly”), in the amount of R$ 87,200. The acquisition agreement provides for possible post-closing price adjustments, pursuant to mechanisms usual in transactions of this nature.
The details of this business combination are presented in Note 30.(i).e.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
2. Presentation of the financial statements and significant accounting polices
2.1. Basis of preparation
The combined consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”).
These combined consolidated financial statements were authorized for issue by the Board of Directors of Raízen on June 29, 2023.
Corporate reorganization – Predecessor method
As described in Note 1, On June 1, 2021, the shareholders of Cosan and Shell approved the Corporate Reorganization.
IFRS provides no guidelines for the accounting of corporate reorganizations among entities under common control, as such, based on the guidance of International Accounting Standards (“IAS”) 8, Accounting Polices, Changes in Accounting Estimates and Errors, paragraphs 10 through 12, the Company developed and applied an accounting policy, considering the most recent pronouncements of other standard-setting bodies that use a similar conceptual framework to develop accounting standards other accounting literature and industry practices.
As a result, the Company accounted for the corporate reorganization using the predecessor method of accounting, and the consolidated financial statements are presented “as if” Raízen Energia S.A. and Raízen S.A. combined (the “Raízen Group”) are the predecessor of the Company prior to the corporate reorganization. Under the predecessor method, the historical operations of Raízen Energia S.A. and Raízen S.A. are deemed to be those of the Company. Thus, those combined consolidated financial statements reflect:
(i) | the historical combined consolidated operating results of the Raízen Group prior to the Corporate Reorganization; | |
(ii) | the consolidated results and financial positions of Raízen S.A. following the Corporate Reorganization; | |
(iii) | the assets and liabilities of the Raízen Group at their historical cost; | |
(iv) | the net investment for the periods prior to the Corporate Reorganization; | |
(v) | Raìzen’s earnings per share for all period presented. The number of shares issued by the Raìzen, as a result of the Corporate Reorganization is reflected retrospectively at the beginning of the earliest period presented, for purposes of calculating earnings per share. See note 20. f. |
(a)Basis of measurement
The combined consolidated financial statements were prepared on a historical cost basis, except, when applicable, for the valuation of certain assets and liabilities, such as short-term investments, inventories, biological assets and financial instruments (including derivative instruments), and loans and financing, which are measured at fair value.
(b)Functional and presentation currency
These combined consolidated financial statements are presented in Brazilian reais, which is also the Company’s functional currency. The functional currency of subsidiaries operating in the international economic environment is the U.S. dollar, except for subsidiary Raízen Paraguay acquired by the Company on November 1, 2021, which has the Paraguayan Guarani as its functional currency. All balances were rounded to the nearest thousand, unless otherwise stated. The financial statements of each subsidiary included in the Company’s consolidation and combination, as well as those used as a basis for investments measured by the equity method, are prepared based on the functional currency of each entity. For subsidiaries based abroad, their assets and liabilities were converted into Reais at the exchange rate at the end of the year and the results were calculated at the average monthly rate during the year. The translation effects are stated in equity from these subsidiaries.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(c) Significant accounting judgments, estimates and assumptions
The preparation of the combined consolidated financial statements requires that management make judgments and estimates and adopt assumptions that affect the amounts disclosed referring to revenues, expenses, assets and liabilities as of the financial statements reporting date.
These estimates and assumptions are reviewed on an ongoing basis. Changes in accounting estimates are recognized in the year in which the estimates are reviewed and in any subsequent years affected.
If there is a meaningful change in the facts and circumstances on which the assumptions and estimates are based, the statement of income and the financial position of the Company and its subsidiaries could be significantly impacted.
Significant accounting estimates and assumptions that require a higher level of judgment or complexity in their application are as follows:
• |
Income tax, social contribution, and other taxes payable |
The Company is subject to income tax and social contribution in all countries in which it operates. Accordingly, a significant judgment is required to determine the provision for these taxes.
In certain transactions, the final determination of the tax is uncertain. The Company also recognizes provisions to cover certain situations in which it is probable that additional tax amounts will be due. When the result of these matters is different from the amounts initially estimated and recorded, these differences affect current and deferred tax assets and liabilities and income or comprehensive income for the year in which the definitive amount is determined. For further details, see Note 17.
• |
Deferred income tax and social contribution |
Deferred income tax and social contribution asset are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which losses can be used in the future. Additionally, the Company recognizes deferred taxes based on temporary differences determined from the tax base and the carrying amount of certain assets and liabilities, using the rates in force. Management’s significant professional judgment is required to determine the deferred income tax and social contribution tax assets to be recognized based on reasonable timing and future taxable profit level, jointly with future tax planning strategies. (Note 17. d.).
• |
Biological assets |
Biological assets are measured at fair value on each statement of financial position date and the effects of changes in fair value between periods are allocated directly to the cost of products sold. For further details, see Note 7.
• |
Property, plant and equipment and intangible assets, including goodwill |
The accounting treatment of property, plant and equipment and intangible assets includes making estimates to determine the useful life for depreciation and amortization purposes, in addition to the fair value on the acquisition date, especially regarding assets acquired in business combinations.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
The Company has estimated obligations, recognized at present value, related to the expected expenses with the removal of fuel storage tanks, recorded as part of the cost of property, plant and equipment. The calculation of these estimates involves significant judgment, considering mainly risk-free discount rates adjusted for Raízen's credit risk and historical spending on services of this nature.
The Company annually assesses the impairment indicators of goodwill and intangible assets with indefinite useful lives. Property, plant and equipment and intangible assets with finite lives, subject to depreciation and amortization, are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recovered. Determination of the recoverable amount of the cash-generating unit to which goodwill was attributed also includes the use of estimates and requires significant judgment by management. For more details, see Notes 12 and 13.
• |
Provision for legal disputes |
The Company and its subsidiaries recognize the provision for tax, civil, labor and environmental disputes. Determination of the likelihood of loss includes determination of evidence available, hierarchy of laws, jurisprudence available, more recent court decisions and relevance thereof in legal system, as well as evaluation of internal and external attorneys. Such provisions are reviewed and adjusted to take into account changes in circumstances, such as statute of limitations applicable, tax inspection conclusions or additional exposures identified based on new matters or court decisions. For further details, see Note 18.
• |
Fair value of financial instruments |
When the fair value of financial assets and liabilities presented in the statement of financial position may not be obtained from active markets, it is determined using valuation techniques, including the discounted cash flow method. The data for these methods are based on those adopted in the market, whenever possible. However, when this is not possible, a certain level of judgment is required to establish the fair value. Judgment includes considerations of the inputs used, such as liquidity risk, credit risk and volatility. Changes in the assumptions relating to these factors could affect the reported fair value of financial instruments. For further details, see Note 27.
• |
Lease liabilities |
Management exercises significant judgment in determining the assumptions used to measure lease liabilities, such as determining the term of the various lease agreements, discount rates, the agreements that are within the scope of the standard, and the impacts of any changes in the assumptions associated with the judgments and estimates adopted by the Company and its subsidiaries. For further details, see Note 15.
• |
Share-based payment |
The management exercises judgment in determining the assumptions used in measuring and recognizing the fair value of share-based payment on the date of grant and in determining the impacts of any changes on the assumptions associated with the judgments and estimates adopted by the Company and its subsidiaries. For further details, see Note 21.
2.2.Basis of consolidation/combination
As of March 31, 2023 and 2022, the combined consolidated financial statements include financial information of Raízen and its subsidiaries, and boutique investment funds, which are listed below:
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
|
|
|
2023 |
|
|
|
2022 |
|
|
Direct |
|
Indirect |
|
Direct |
|
Indirect |
|
Blueway Trading Importação e Exportação S.A. |
100% |
|
- |
|
100% |
|
- |
|
Petróleo Sabbá S.A. |
80% |
|
- |
|
80% |
|
- |
|
Raízen Argentina S.A. (1) |
100% |
|
- |
|
100% |
|
- |
|
Raízen Energina S.A. (1) |
95% |
|
5% |
|
95% |
|
5% |
|
Deheza S.A. (1) |
- |
|
100% |
|
- |
|
100% |
|
Estación Lima S.A. (1) |
- |
|
100% |
|
- |
|
100% |
|
Raízen Mime Combustíveis S.A. (“Raízen Mime”) |
76% |
|
- |
|
76% |
|
- |
|
Raízen Serviços e Participações S.A. |
100% |
|
- |
|
100% |
|
- |
|
Sabor Raíz Alimentação S.A. |
69% |
|
- |
|
69% |
|
- |
|
Saturno Investimentos Imobiliários Ltda. |
100% |
|
- |
|
100% |
|
- |
|
Raízen Paraguay S.A. |
50% |
|
- |
|
50% |
|
- |
|
Raízen Energia S.A. (2) |
100% |
|
- |
|
100% |
|
- |
|
Agrícola Ponte Alta Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
|
Benálcool Açúcar e Álcool Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
|
Bioenergia Araraquara Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
|
Bioenergia Barra Ltda. (“Bio Barra”) (2) |
- |
|
100% |
|
- |
|
100% |
|
Bioenergia Caarapó Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
|
Bioenergia Costa Pinto Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
|
Bioenergia Jataí Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
|
Bioenergia Maracaí Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
|
Bioenergia Rafard Ltda. |
- |
|
100% |
|
- |
|
100% |
|
Bioenergia Serra Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
|
Bioenergia Tarumã Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
|
Bioenergia Univalem Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
|
Raízen Araraquara Açúcar e Álcool Ltda. (2 and 4) |
- |
|
- |
|
- |
|
100% |
|
Raízen Ásia PT Ltd. (2) |
- |
|
100% |
|
- |
|
100% |
|
Raízen Biomassa S.A. (“Raízen Biomassa”) (2) |
- |
|
82% |
|
- |
|
82% |
|
Raízen Biotecnologia S.A. (2) |
- |
|
100% |
|
- |
|
100% |
|
Raízen Caarapó Açúcar e Álcool Ltda. (“Caarapó”) (2 and 5) |
- |
|
100% |
|
- |
|
100% |
|
Raízen Centroeste Açúcar e Álcool Ltda. (2 and 4) |
- |
|
- |
|
- |
|
100% |
|
Raízen Energy Finance Ltd. (“Raízen Energy”) (2 and 7) |
- |
|
- |
|
- |
|
100% |
|
Raízen Fuels Finance S.A. ("Raízen Fuels") (2) |
- |
|
100% |
|
- |
|
100% |
|
Raízen GD Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
|
Raízen International Universal Corp. (2) |
- |
|
100% |
|
- |
|
100% |
|
Raízen North América, Inc. (2) |
- |
|
100% |
|
- |
|
100% |
|
Raízen Paraguaçú Ltda. (“Paraguaçú”) (2 and 5) |
- |
|
- |
|
- |
|
100% |
|
Raízen Trading Colombia S.A.S. (2) |
- |
|
100% |
|
- |
|
100% |
|
Raízen Trading LLP (2) |
- |
|
100% |
|
- |
|
100% |
|
Raízen Trading Netherlands BV (2) |
- |
|
100% |
|
- |
|
100% |
|
Raízen Trading S.A. (2) |
- |
|
100% |
|
- |
|
100% |
|
Raízen-Geo Biogás S.A. (2) |
- |
|
85% |
|
- |
|
85% |
|
Raízen-Geo Biogás Barra Ltda. (2) |
- |
|
100% |
|
- |
|
- |
|
Raízen-Geo Biogás Univalem Ltda. (2) |
- |
|
100% |
|
- |
|
- |
|
Raízen Comercializadora de Gás Ltda. (2) |
- |
|
100% |
|
- |
|
- |
|
RWXE Participações S.A. (2) |
- |
|
100% |
|
- |
|
100% |
|
RZ Agrícola Caarapó Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
|
Unimodal Ltda. (2) (6) |
- |
|
- |
|
- |
|
73% |
|
WX Energy Comercializadora de Energia Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
|
|
|
|
|
|
|
Continuation |
|
|
|
2023 |
|
|
|
2022 |
|
Direct |
|
Indirect |
|
Direct |
|
Indirect |
Raízen-Geo Biogás Paraguaçu Ltda. |
- |
|
100% |
|
- |
|
100% |
Raízen-Geo Biogás Rafard Ltda. |
- |
|
100% |
|
- |
|
100% |
Raízen-Geo Biogás Costa Pinto Ltda. |
- |
|
100% |
|
- |
|
100% |
Raízen Centro-Sul S.A. (formerly Biosev S.A.) (2) |
- |
|
100% |
|
100% |
|
- |
Raízen Centro-Sul Paulista S.A. (formerly Biosev Bioenergia S.A.) (2) |
- |
|
100% |
|
- |
|
100% |
Raízen Centro-Sul Comercializadora S.A. (formerly Biosev Comercializadora S.A.) (2) |
- |
|
100% |
|
- |
|
100% |
Biosev Bioenergia International S.A. (2) |
- |
|
100% |
|
- |
|
100% |
Gera Next Participações S.A. (2) |
- |
|
100% |
|
- |
|
100% |
Gera Energia Rio S.A. (2) |
- |
|
100% |
|
- |
|
100% |
Bio Gera Energia S.A. (2) |
- |
|
100% |
|
- |
|
100% |
Gera Serviços de O&M Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
Bio Gera Locações de Máquinas e Equipamentos Industriais Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
Bio Gera Consultoria em Engenharia Elétrica Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
CGB Santos Energia Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
Gera Microgeração Solar Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
CGS Piancó Ltda. (2) |
- |
|
100% |
|
- |
|
100% |
Raízen Gera Desenvolvedora S.A. (2) |
- |
51% |
|
- |
|
51% |
|
Neolubes Indústria de Lubrificantes Ltda. (3) |
- |
100% |
|
- |
|
- |
|
Payly Holding Ltda. (8) |
100% |
- |
|
- |
|
- |
|
Payly Instituições de Pagamentos S.A. (8) |
- |
100% |
|
- |
|
- |
(1) | Jointly called Raízen Argentina, all based in Argentina; |
(2) | Jointly called Raízen Energia and subsidiaries; |
(3) | Acquired on May 1, 2022, by direct subsidiary Blueway (Note 30.(i).d); |
(4) | On May 2, 2022, these indirect subsidiaries were merged into subsidiary RESA; |
(5) | On May 2, 2022, Paraguaçu was merged into Caarapó; |
(6) | On July 25, 2022, Unimodal Ltda. discontinued its activities; |
(7) | On August 11, 2022, Raízen Energy discontinued its activities; and |
(8) | Acquired on December 1, 2022, by Raízen (Note 30.(i).e). |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
Boutique investment funds (“FI”) |
|
Total interest |
||
|
|
2023 |
|
2022 |
FI renda fixa crédito privado RJ – Banco Santander S.A. |
|
100% |
|
100% |
FI renda fixa crédito privado RAÍZEN I – Banco BNP PARIBAS BRASIL S.A. |
|
100% |
|
100% |
Otto Energy – BTG Pactual S.A. (1) |
|
- |
|
100% |
(1) | Investment fund redeemed in full during the year ended March 31, 2023 |
As of March 31, 2021, the combined consolidated financial statements include information on RESA and its subsidiaries, Raízen and its subsidiaries, and boutique investment funds, whose direct and direct interests are listed below:
RESA`s subsidiaries, before the Corporate Reorganization (Note 20.a) |
2021 | |
Agrícola Ponte Alta. |
|
100% |
Benálcool Açúcar e Álcool Ltda. |
|
100% |
Bioenergia Araraquara Ltda. |
|
100% |
Bioenergia Barra Ltda. |
|
100% |
Bioenergia Caarapó Ltda. |
|
100% |
Bioenergia Costa Pinto Ltda. |
|
100% |
Bioenergia Gasa Ltda. |
|
100% |
Bioenergia Jataí Ltda. |
|
100% |
Bioenergia Maracaí Ltda. |
|
100% |
Bioenergia Rafard Ltda. |
|
100% |
Bioenergia Serra Ltda. |
|
100% |
Bioenergia Tarumã Ltda. |
|
100% |
Bioenergia Univalem Ltda. |
|
100% |
Raízen Araraquara Açúcar e Álcool Ltda. |
|
100% |
Raízen Ásia PT Ltd. |
|
100% |
RZ Agrícola Caarapó Ltda. |
|
100% |
Raízen Biogás SPE Ltda. |
|
100% |
Raízen Biotecnologia S.A. |
|
100% |
Raízen Biomassa S.A. |
82% |
|
Raízen Caarapó Açúcar e Álcool Ltda. |
|
100% |
Raízen Centroeste Açúcar e Álcool Ltda. |
|
100% |
Raízen GD Ltda. |
|
100% |
Raízen Energy Finance Ltd. |
|
100% |
Raízen Fuels Finance S.A. |
|
100% |
Raízen-Geo Biogás S.A. |
|
85% |
Raízen International Universal Corp. |
|
100% |
Raízen North América, Inc. |
|
100% |
Raízen Paraguaçú Ltda. |
|
100% |
Raízen Trading LLP. |
|
100% |
Raízen Trading Netherlands BV |
|
100% |
Raízen Trading AS |
|
100% |
Raízen Trading Colombia S.A.S. |
|
100% |
RWXE Participações S.A. |
|
70% |
Unimodal Ltda. |
|
73% |
WX Energy Comercializadora de Energia Ltda. |
|
70% |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
Raízen`s subsidiaries | 2021 | |
Blueway Trading Importação e Exportação Ltda. |
|
100% |
Petróleo Sabbá S.A. |
|
80% |
Raízen Argentina S.A. |
|
100% |
Raízen Energia S.A. |
|
100% |
Deheza S.A. |
|
100% |
Estación Lima S.A. |
|
100% |
Raízen Serviços e Participações S.A. (formerly Raízen S.A.) |
|
100% |
Raízen Mime Combustíveis S.A. |
|
76% |
Sabor Raíz Alimentação S.A. |
|
69% |
Saturno Investimentos Imobiliários Ltda. |
|
100% |
Boutique investment funds (“FI”) | 2021 | |
FI renda fixa crédito privado RJ – Banco Santander S.A. |
|
100% |
FI renda fixa crédito privado RAÍZEN I – Banco BNP PARIBAS BRASIL S.A. |
|
100% |
Investments in subsidiaries are fully consolidated from the date of acquisition of control and continue to be consolidated until the date that control ceases to exist. The financial statements of the subsidiaries are prepared on the same reporting date as Raízen, except for Gera Next Participações S.A. and its subsidiaries (“Grupo Gera”) (Note 2.3.i). Accounting policies are used consistently and, when necessary, adjustments are made to align accounting policies with those adopted by the Company.
Balances and transactions arising from transactions between consolidated companies, such as revenues, expenses, and unrealized results, are fully eliminated.
2.3.Summary of significant accounting policies
The main accounting policies applied in the preparation of these financial statements are defined below. Those accounting policies have been applied consistently to all the years presented, unless otherwise stated.
(a)Revenue recognition
Revenues from sales of products are recognized on the delivery to the client. Delivery is considered to be the moment when the client accepts the products and the risks and benefits from the ownership are transferred. Revenue is recognized at this time as long as revenue and costs can be reliably measured, receipt of the consideration is likely and there is no continuous involvement of management with the products. Sales prices are established based on purchase orders or contracts.
Storage and lease revenue comprises rental of gas stations and storage of fuels at the Raízen and its subsidiaries’ terminals and is recognized based on the effective rendering of services, under “other operating revenue (expenses), net”.
Revenue from the sale of cogeneration of power of the Raízen’s subsidiaries is recorded based on the power available on the network and at rates specified under the terms of the supply agreements or the market price in force, as applicable. The calculation of the volume of energy delivered to the buyer occurs monthly. Clients gain control of electricity from the moment they consume it. Due to the flow of billing of certain agreements, the electric power produced and sold through auction is initially recorded as anticipated revenue, recognized in the statement of income for the year only when available for use by clients.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
Energy operations are traded on an active market, and, for accounting purposes, they meet the definition of financial instruments at fair value. Raízen recognizes revenue when the energy is delivered to the client at the fair value of the consideration. In addition, unrealized net gains resulting from mark-to-market – difference between contracted and market prices – from open net contracted operations on the date of the annual financial statements are recognized as revenue.
Revenue is stated net of taxes: State VAT (“ICMS”), Contribution Tax on Gross Revenue for Social Integration Program (“PIS”), Contribution Tax on Gross Revenue for Social Security Financing (“COFINS”), Tax on Industrialized Products (“IPI”), Social Contribution Tax for Intervention in the Economic Order (“CIDE”), Fuel Transfer Tax (“ITC”), Value Added Tax (“IVA”); and Tax on Gross Income (“IIB”)), returns, rebates and discounts, amortization referring to exclusive supply rights.
(b)Transactions in foreign currency
Foreign currency transactions are initially recognized by the Company’s entities at the functional currency in effect on the transaction date or on the valuation dates when the items are remeasured.
Monetary assets and liabilities denominated in foreign currency are translated into reais using the exchange rate in effect on the date of the respective statement of financial position, and foreign exchange gains and losses resulting from settlement of these transactions and from translation using the exchange rates at the year-end are recognized in the statement of income under “Financial results”, except when qualified as hedge accounting and, therefore, recognized in statement of comprehensive income.
Nonmonetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the initial transaction date. Nonmonetary items measured at fair value in a foreign currency, if any, are translated using the exchange rates prevailing on the date when the fair value was determined.
Goodwill and fair value adjustments arising from the acquisition of an entity abroad (entities with a functional currency different from the parent company Raízen) are treated as assets and liabilities of the entity abroad and translated at the closing rate, and the adjustments resulting from the translation are also recognized in equity as cumulative translation adjustments as a result of the effect of foreign currency translation.
(c)Financial instruments - initial recognition and subsequent measurement
(i)Financial assets
Measurement
Upon initial recognition, a financial asset is classified as measured: (i) at amortized cost; (ii) at fair value through other comprehensive income; or (iii) at fair value through profit or loss. Reclassification between classes occurs when there is a change in the business model for the management of financial assets and liabilities.
A financial asset is measured at amortized cost if it meets both of the following conditions: (i) the objective is to maintain financial assets to receive contractual cash flows; and (ii) its contractual terms generate, on specific dates, cash flows that are related to the payment of principal and interest on the principal amount outstanding.
A financial asset is measured at fair value through other comprehensive income if it meets both of the following conditions: (i) the objective is both the receipt of contractual cash flows and the sale of financial assets; and (ii) the contractual terms give rise, at specified dates, to cash flows that are Solely Payment of Principal and Interest (SPPI) on the principal amount outstanding.
All financial assets not classified as measured at amortized cost or at fair value through other comprehensive income, as described above, are classified as at fair value through profit or loss. Financial assets held for trading or managed with performance assessed based on fair value are measured at fair value through profit or loss.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
Business model evaluation
The Company assesses the business model applied in the management of its financial assets to obtain the contractual cash flows. The information considered includes: (i) the policies and objectives set for the portfolio, that is, identifying whether management’s strategy focuses on obtaining contractual interest income, maintaining a certain interest rate profile, the correspondence between the duration of financial assets and the duration of related liabilities or expected cash outflows, or the realization of cash flows through the sale of assets; (ii) how the portfolio’s performance is assessed and reported to the Company management; (iii) the risks that affect the performance of the business model (and the financial asset held in that business model) and the way those risks are managed; (iv) how the business executives are compensated - for example, if the compensation is based on the fair value of the assets managed or on the contractual cash flows obtained; and (v) the frequency, volume and timing of sales of financial assets in previous years, the reasons for such sales and expectations about future sales.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales, in a manner consistent with the continuous recognition of the Company’s assets.
Evaluation whether contractual cash flows are solely payments of principal and interest
The Company considers the contractual terms of the instrument to assess whether the contractual cash flows are solely payments of principal and interest.
This includes the analysis of a contractual term that could change the timing or the value of the contractual cash flows so that it would not meet this condition. When making this analysis, the Company considers: (i) contingent events that change the amount or timing of cash flows; (ii) terms that can adjust the contractual rate, including variable rates; (iii) prepayment and extension of the term; and (iv) the terms that limit the Company’s access to cash flows from specific assets (for example, based on the performance of an asset).
For purposes of assessment of contractual cash flows, “principal” is defined as the fair value of the financial asset at initial recognition. “Interest” is substantially defined as a consideration for the time value of money and the credit risk associated with the principal outstanding over a given period of time and the other basic risks and costs of borrowing (for example, liquidity risk and administrative costs), as well as a profit margin.
Impairment of financial assets
For the evaluation and measurement of the allowance for expected credit losses, an expected loss matrix is adopted as a practical expedient that considers the grouping of clients with similar default characteristics, sales channel and rating (client risk rating, measured internally).
The Company applies the expected credit loss model to financial assets measured at amortized cost, contract assets and debt instruments measured at fair value through other comprehensive income.
(ii)Financial liabilities
These are measured at amortized cost and fair value through profit or loss, comprising, in the case of the Company, mostly loans and financing, balances payable to suppliers and related parties, and derivative financial instruments.
Interest payments on loans and financing, from third parties and related parties, are classified as cash flow from financing activities.
(iii)Offset of financial instruments - net presentation
Financial assets and liabilities are presented net in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts, and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(iv)Derecognition (write-off)
A financial asset is derecognized when: (i) the rights to receive cash flows from the asset expire; and (ii) the Company transfers its rights to receive cash flows from the asset or assumes an obligation to fully pay the cash flows received to a third party under a “pass-through” agreement.
The effective transfer of the rights to receive cash flows from an asset is achieved when: (a) the Company transfers substantially all the risks and rewards of the asset, or (b) the Company neither transfers nor retains substantially all the risks and rewards relating to the asset but transfers control thereover.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales. For these cases, the recognition of the transferred asset is conducted to the extent of the Company's continuous involvement with these instruments.
A financial liability is written off when the obligation under the liability is extinguished, which means when the obligation specified in the contract is settled, canceled or expires. In addition, if an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective book values is recognized in the statement of income.
(v)Derivative financial instruments and hedge accounting
Initial recognition and subsequent measurement
The Company uses derivative financial instruments, such as currency forward contracts, commodity forward contracts, options and swaps to hedge against the risk of changes in exchange rates and commodity prices. These financial instruments are initially recognized at fair value on the date when the instrument is executed and are subsequently also revalued at fair value. Derivatives are stated as financial assets when the instrument’s fair value is positive and as financial liabilities when negative.
Any gains or losses resulting from changes in the fair value of derivatives not designated as hedge accounting during the year are recognized directly in profit or loss in the case of instruments related to operating transactions, in operating accounts (for example: revenue, cost, expenses) and, in the case of instruments related to financial operations, as financial income (expenses). For instruments designated as cash flow hedge, gains and losses arising from changes in the fair value of derivatives are recognized directly in equity, under “Equity adjustments”.
The following classifications apply for hedge accounting purposes: (i) fair value hedge by hedging against exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, as well as the component of any of these items that is attributable to a specific risk and may affect profit or loss; (ii) cash flow hedge by hedging against changes in cash flows that are attributable to a specific risk associated with a recognized asset or liability or a highly probable forecast transaction that may affect profit or loss; or (iii) net investment hedge in a foreign operation in a foreign operating unit.
Upon designation, the Company formally classifies and documents the hedge relationship. The documentation substantially includes: (i) identification of the hedging instrument; (ii) the hedged item or hedged transaction; (iii) the nature of the hedged risk; (iv) statement confirming that the transaction is within management's policies and practices; (v) statement confirming the correlation of the hedging instrument for the purpose of offsetting the exposure to the change in the fair value of the hedged item or cash flows related to the hedged risk; (vi) the highly probable nature of the forecast hedged transaction as well as the forecast periods of transfer of gains or losses arising from hedging instruments from equity to profit or loss and the management's risk management objective and strategy; and (vii) forecast that there are no over hedge relationships.
The Company has formal designations for hedge accounting for the following structures:
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
Cash flow hedge
The effective portion of the gain or loss of the hedging instrument is recognized directly in equity, under “Accumulated other comprehensive income”, while the ineffective portion is recognized immediately in profit or loss for the year.
The amounts recorded in other comprehensive income are transferred to profit or loss when the hedged transaction affects profit or loss, for example, when the hedged income or expense is recognized or when a forecasted sale occurs. When the hedged item is the cost of a nonfinancial asset or liability, the amounts recorded in equity are transferred to the initial carrying amount of such asset or liability. If occurrence of the forecast transaction or firm commitment is no longer expected, the amounts previously recognized in equity are transferred to profit or loss. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its classification as hedge is revoked, gains or losses previously recognized in comprehensive income remain in equity until the forecast transaction or firm commitment affects profit or loss.
The cash flow hedging relationships of highly probable future exports or imports are considered to be continuous hedging relationships and qualify for hedge accounting.
Net investment hedge in foreign entities
Hedge of net investment in foreign operations is accounted for similarly to cash flow hedge. Any gain or loss on the hedging instrument related to the effective hedge portion is recognized under equity, in “Accumulated other comprehensive income”. The gain or loss related to the ineffective portion is immediately recognized in profit or loss. Accumulated gains and losses in equity are included in profit or loss for the year, when the foreign investment is sold.
Fair value hedge of certain financial liabilities
The Company designates certain debts mainly related to certain pre-export financing (“PPEs”), Agribusiness Receivables Certificate (“CRA”), Debentures and Senior Notes Due 2027 as liabilities measured at fair value through profit or loss, to eliminate or significantly reduce inconsistencies in measurement that would otherwise result in the recognition of gains and losses on the loans and derivatives on different bases. As a result, fluctuations in the fair value of loans are recognized under “Financial income (expenses)”, as “Fair value of financial instruments payable”, classified in the “Financial expenses” group.
Fair value hedge - inventories
Raízen designates inventories of by-products with pegged derivatives at fair value, as detailed in Notes 6 and 27.d.
Qualitative evaluation of effectiveness tests
There is an economic relationship between the hedged items and the hedging instruments, since the instruments are contracted with the same characteristics as the operations designated as the hedged items. The Company established a 1:1 coverage ratio for the relationships designated for hedge accounting. This parameter was defined considering that the underlying risk of the hedging instruments is similar to the hedged risks.
To evaluate the effectiveness of the hedge, the Company uses the hypothetical derivative method and compares changes in fair value of hedging instruments with changes in fair value of hedged items attributable to hedged risks.
The sources of hedge ineffectiveness can be from: (i) Differences in timing of cash flows from hedged items and from hedging instruments; (ii) Different indices (and consequently different curves) associated with the hedged risk of hedged items and hedging instruments; (iii) Changes in expected amount of cash flows from hedged items and from hedging instruments.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(d)Decarbonization credits (“CBIO”)
The Company is a fossil fuel distributor and has carbon offsetting goals into the atmosphere through acquisition, and subsequent definitive withdrawal of the CBIO (retirement), according to established norms by Brazil’s National Petroleum Agency (“ANP”) and the Ministry of Mines and Energy (MME) under the terms of the new Brazil’s National Biofuels Policy. Carbon credit is an asset that must be converted into cash through a transaction conducted by B3.
The Company classifies the carbon credits purchased as a financial asset measured at fair value through profit or loss, including those issued for the certification of biofuel production to RESA and its subsidiaries. They are recognized under “Other Receivables", in current assets, and initially measured based on the carbon credit acquisition price and/or certification (in the case of producers), matched against operating income. The goals established and published by the ANP remain in force until December of each year and are recorded by the Company as provision in "Other liabilities", in current liabilities, matched against operating income.
Payments for the purchase of CBIO credits are classified as cash flows from operating activities, in changes in assets and liabilities, as “Others, net”.
In June 2022, Decree 11,141/2022 was published, which exceptionally established the CBIO retirement period, to prove the target for the year 2022, until September 2023.
(e)Inventories
In general, inventories are valued at the average cost of acquisition or formation of finished products, net of recoverable taxes, except for certain products that are measured at fair value based on observable market prices, if and when available, not exceeding net realizable value.
The costs of finished products and work in process comprise raw materials, direct labor, other direct costs and respective direct production expenses (based on normal operating capacity) and non-recoverable taxes, which are related to the processes necessary to put the products in conditions of sale.
Loss allowances, such as: (i) adjustments to net realizable value, (ii) impaired items; and (iii) slow-moving and/or obsolete inventories are recorded when necessary. Normal production losses are part of the production cost for the respective period, while other losses, if any, are recognized directly in profit or loss for the year, without transiting through inventories, under the line item “Cost of goods sold, and services provided”.
(f)Biological assets
The Company’s biological assets refer to unharvested cane cultivated in sugarcane crops, which will be used as a raw material source in the production of sugar, ethanol and bioenergy upon harvesting. The fair value measurement method is the cash flow discounted to present value. The valuation model considers the present value of expected cash flows to be generated, including projections of up to two years, considering the estimates of the effective date for cutting the unharvested cane.
Changes in fair values between the periods, as well as their amortization, are allocated to the profit or loss (P&L) under Cost of products sold and services provided.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(g)Related parties
Raízen and its subsidiaries have a fully integrated management of the cash flow, the main instruments used for cash management are described below:
• |
Funds Management Contract (“GRF”) - operation used between companies domiciled in Brazil |
The subsidiary RESA, which centralizes the corporate activities of the Company and its subsidiaries, is responsible for cash management, based on the mentioned contract.
Such transactions are presented in the statement of cash flows, on a net basis, under cash flows from financing activities.
• |
PPE contracts - transaction conducted between companies domiciled in Brazil and abroad |
In certain situations, the Raízen’s subsidiaries domiciled abroad raise funds in the international financial market and subsequently transfer them to Raízen companies domiciled in Brazil, in the form of PPE contracts. These contracts are formalized pegged to exported volumes of products sufficient to settle the contracts.
Such transactions are presented under cash flows from investing activities when granted (outflow of funds) and under cash flows from financing activities when received (inflow of funds).
Operational and financial transactions with related parties are conducted on an arm’s length basis, in line with those prevailing in the market or with conditions the Company would contract with third parties.
(h)Contract assets
The contract assets correspond to the bonuses granted to Raízen clients and are subject to deadlines and performance obligations, particularly the use of the quantities provided for in fuels supply contracts. As the contractual conditions are met, bonuses are amortized and recognized in the statement of income, under Net operating revenue.
(i)Investment in subsidiaries (individual financial statements) and in associates and joint ventures
Investments in entities over which the Company has significant influence or shared control are accounted for using the equity method, initially recorded in the statement of financial position at cost, plus changes after the acquisition of equity interest.
The statement of income reflects the share of the profit or loss from subsidiaries’ operations based on the equity method. When a change is directly recorded in equity of the subsidiary, associate or joint venture, the Company recognizes its portion in the variations occurred and discloses this fact in the statement of changes in equity.
After application of the equity method, the Company establishes whether an additional impairment loss on its investment in its subsidiary, associate and joint venture should be recorded. The Company establishes, at each statement of financial position date, whether there is objective evidence that the investment is impaired. If that is the case, the Company calculates the impairment amount as the difference between the recoverable amount and the carrying amount of the subsidiary, associate and joint venture, and records this amount in the statement of income.
The accounting policies of the associates and joint ventures are adjusted, when necessary, to ensure consistency with the policies adopted by the Company.
In relation to the Grupo Gera, including its associates and joint ventures, the equity method is measured based on the latest available information, whose date difference does not exceed two months, and does not have a material effect in relation to the consolidated result and, if had any significant event occurred by March 31, 2023, such effect would be adjusted in these financial statements.
Dividends and interest on own capital received from investments in subsidiaries (individual financial statements), in associates and joint ventures are classified as cash flow from investing activities.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(j)Property, plant, and equipment
Property, plant, and equipment items, including sugarcane plantation, are measured at historical acquisition or construction cost, less accumulated depreciation and accumulated impairment losses, if any.
Cost includes expenses directly attributable to the acquisition of an asset. The cost of assets built by the Company and its subsidiaries includes materials and direct labor, and any other cost to bring the asset to the location and condition necessary for it to operate as intended by management, borrowing costs on qualifying assets, and non-recoverable taxes. Borrowing costs related to funds raised for construction in progress are capitalized upon completion of these projects.
Expected expenses with removal of fuel storage tanks are estimated and recorded as part of the cost of property, plant, and equipment, matched against the provision that will support such expenses, in current and non-current liabilities, depending on the expected term of the obligation.
Subsidiary RESA conducts the main scheduled maintenance activities at its bioenergy plants on an annual basis (off-season). This usually takes place between January and March and aim the inspect and replace components. The principal annual maintenance costs include costs for labor, materials, external services and overhead allocated during the off-season period. These costs are classified as parts and components that are frequently replaced, in property, plant and equipment, and are fully amortized in the following harvest.
The cost of an equipment item that must be replaced annually is accounted for as a component of the equipment cost and depreciated over the next crop year. Periodic maintenance costs are expensed when incurred as the replaced components do not improve production capacity or introduce improvements to equipment.
Other repairs and maintenance are recognized in income over the period in which they are incurred. The cost of any renewal that increases the useful life must be recorded and included in the asset's carrying amount if it is probable that future economic benefits after the renewal will exceed the initially assessed performance standard for the existing asset and these benefits will flow to the Company. Major renovations are depreciated over the remaining useful life of the related asset.
Land is not depreciated.
As of March 31, 2023, and 2022, the depreciation was calculated based on the estimated useful life of each asset. The weighted average annual depreciation rates are as follows:
Categories |
|
2023 |
|
2022 |
Buildings and improvements |
|
2% |
|
3% |
Machinery, equipment, and facilities |
|
5% |
|
5% |
Vehicles, vessels, and aircraft |
|
8% |
|
8% |
Sugarcane planting |
|
20% |
|
20% |
Furniture, fixtures, and IT equipment |
|
16% |
|
15% |
The residual values and useful lives of assets are reviewed by competent technical members and adjusted, as appropriate, at each year end.
Gains and losses on disposals are determined by comparing the sales amounts with the carrying amount and are recognized in “Other operating revenue (expenses), net” in the statement of income.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(k)Leases
The Company recognizes a right-of-use asset and a lease liability at the lease commencement date.
Lease liabilities, including those whose underlying assets are of low value, are measured at the present value of lease payments without reflecting projected future inflation, which take into account recoverable taxes (PIS and COFINS), as well as non-cancellable terms and extension options when reasonably certain.
Payment flows are discounted at the nominal incremental borrowing rate on certain Raízen loans and financing, as interest rates implicit in lease agreements with third parties typically cannot be readily determined.
In the years ended March 31, 2023, and 2022, the discount rates applied in accordance with the contractual term were as follows:
|
|
|
|
Nominal |
|
|
|
Actual |
Contractual terms (years) |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
1 year |
|
13.8% |
|
13.3% |
|
7.5% |
|
5.6% |
2 years |
|
15.0% |
|
13.0% |
|
7.9% |
|
5.6% |
3 years |
|
15.6% |
|
12.5% |
|
8.1% |
|
5.6% |
4 years |
|
16.1% |
|
12.3% |
|
8.2% |
|
5.6% |
5 years |
|
16.5% |
|
12.3% |
|
8.4% |
|
5.6% |
6 years |
|
16.8% |
|
12.3% |
|
8.5% |
|
5.7% |
7 years |
|
17.1% |
|
12.4% |
|
8.5% |
|
5.7% |
8 years |
|
17.3% |
|
12.5% |
|
8.6% |
|
5.7% |
9 years |
|
17.5% |
|
12.5% |
|
8.7% |
|
5.8% |
More than 10 years |
|
18.1% |
|
13.3% |
|
8.8% |
|
5.6% |
The right-of-use asset is initially measured at cost, comprising the value of the initial measurement of the lease liability and, when applicable, adjusted for any lease payments made in advance, initial direct costs incurred, cost estimates for dismantling and removal, and incentives received.
The right-of-use asset is subsequently depreciated using the same depreciation method applied to similar property, plant and equipment items and, if applicable, will also be reduced by impairment losses.
The Company remeasures the lease liability if there is a change in the lease term or if there is a change in future lease payments resulting from a change in the index or rate used to determine these payments, and the remeasurement of the lease liability is recognized as an adjustment to the right-of-use asset.
The Company applies the short-term lease recognition exemption to its short-term leases contracts that have a lease term of 12 months or less from the commencement date and do not contain a purchase option.
Payments associated with short-term, indefinite-term leases without fixed payments are recognized as an expense over the term of the contract.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(l)Intangible assets
• |
Goodwill |
Goodwill is the excess difference between the amount paid for the acquisition of a business and the net fair value of the assets and liabilities of the acquiree, measured by the expected future profitability. Goodwill on acquisitions of subsidiaries is disclosed under Intangible assets.
Goodwill generated from acquisitions of Brazilian entities is recorded at cost and goodwill resulting from the acquisition of an entity abroad (with a functional currency different from the parent company Raízen) is denominated in foreign currency and converted to Reais at the closing rate, any exchange difference is recorded in other comprehensive income. Goodwill is recorded at cost, less any impairment losses, when applicable, subjected to testing at least annually. For impairment test purposes, goodwill acquired in a business combination is, as of acquisition date, allocated to each cash generating unit of the Company expected to benefit from the business combination, regardless of other assets or liabilities of the acquiree being attributed to these units.
• |
Intangible assets with defined useful life |
Intangible assets with defined useful life are carried at cost, less accumulated amortization, and impairment losses, when applicable.
As of March 31, 2023, and 2022, the annual weighted average amortization rates are as follows:
Categories |
|
2023 |
|
2022 |
Software license (1) |
|
16% |
|
20% |
Brands (2) |
|
8% |
|
8% |
Contractual relationships with clients (3) |
|
6% |
|
7% |
Operating authorization (4) |
|
3% |
|
- |
Sharecropping agreements (5) |
|
9% |
|
9% |
Sugarcane supply agreements (5) |
|
10% |
|
10% |
Technology and others (6) |
|
9% |
|
10% |
The residual values and useful lives of assets are reviewed and adjusted, as appropriate, at each year end.
(1)Software license
Licenses acquired for computer programs are capitalized and amortized over their estimated useful life by Raízen. Software maintenance costs are expensed as incurred. Expenses directly associated with software, controlled by Raízen, which are likely to generate economic benefits greater than costs for more than one year, are recognized as intangible assets.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(2)Brands
On May 20, 2021, and May 1, 2022, the Company, and the indirect subsidiary Neolubes, respectively, entered into licensing agreements for the use of the “Shell” brand with Shell Brands International AG (“Shell Brands”). Under these agreements, the Company maintains the right of use of the “Shell” Brand, in the fuel distribution, lubricant and related activities sector in Brazil, for a minimum period of 13 (thirteen) years, which can be renewed in certain cases, subject to compliance with certain conditions set out in the agreements.
The brands are amortized on a straight-line basis over the term of the contracts of the Shell brand.
Brands also contains the “Barcos & Rodados” brand arising from the acquisition of Raízen Paraguay by the Company on November 1, 2021 and are amortized on a straight-line basis over a period of 6 (six) years for the Barcos & Rodados brand, (Note 30.(i).b).
(3)Contractual relations with clients
It corresponds to the intangible asset with a defined useful life acquired in the business combination of Raízen Argentina and Neolubes and recognized at fair value on the acquisition date. Amortization is calculated using the straight-line method over the expected life of the contractual relation with the client.
(4)Operating authorization
Corresponds to the license granted by the regulator that allows the Company to sell energy in the Brazilian Market. This license was recognized in the acquisition of Gera (Note 30 (i).c). Such intangible asset, which was recognized at its fair value as of the acquisition date and is amortized through the license period ending in 2052.
(5)Sharecropping and sugarcane supply agreements
Represent intangible asset that arose from contractual arrangements with sharecroppers and independent sugarcane producers, assumed in a business combination, which the terms were favorable relative to market and give risen to a contract-based intangible assets.
(6)Technology
Refers to technologies developed by Iogen Corp. for the production of second-generation ethanol (“E2G”), represented by contractual rights including, among others, exclusivity to subsidiary RESA for the sale of these rights in the territories in which it operates.
(m)Impairment of non-financial assets
The Company and its subsidiaries assess if there are indications of impairment of an asset on an annual basis. If indications are identified, the Company estimates the asset’s recoverable amount. The recoverable amount of an asset item is the higher of: (a) its fair value less costs that would be incurred to sell it; and (b) its value in use. When necessary, the value in use is usually determined based on the discounted cash flow resulting from the continuous use of the asset until the end of its useful life.
Regardless of the existence of indications of impairment, goodwill and intangible assets with an indefinite useful life, if any, are tested for impairment annually.
When the carrying amount of an asset exceeds its recoverable amount, the loss is recognized as an operating expense in the statement of income.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(n)Provisions
Provisions are recognized when: (i) the Company has a present legal or constructive obligation as a result of past events; (ii) it is likely that an outflow of resources will be required to settle the obligation; and (iii) amounts may be reliably estimated.
(o)Provision for legal disputes and contingent assets
The Company recognizes provisions for losses on legal and administrative proceedings in cases where the technical assessments of its legal advisors and Management's judgments consider future cash disbursements to be probable and the other conditions for recognizing a provision are met.
Contingent liabilities with probable likelihood of loss that cannot have their value measured and those with possible likelihood of loss are disclosed in notes, considering the best information available up to the disclosure date.
Contingent assets are not recognized but are disclosed in notes when the inflow of economic benefits is considered probable, and the amounts are material. If the inflow of economic benefits is virtually certain, which, in general, considers the final and unappealable court decision, and whose value can be reliably measured, the related asset ceases to be a contingent asset and its recognition is adequate.
(p)Employee benefits
The Company and its subsidiaries have defined benefit and defined contribution supplementary pension plans, in addition to other post-employment benefits, for which studies and actuarial calculations are prepared annually by an independent professional, which are reviewed by Management.
For the defined contribution, the expense is recognized in profit or loss when it occurs, while, for the defined benefit, the Company recognizes a liability based on a methodology that considers a series of factors that are determined by actuarial calculations, which use certain assumptions to determine the cost (or revenue) for the pension plan.
Actuarial gains or losses arising from adjustments and changes in actuarial assumptions are recorded directly in equity as other comprehensive income, when incurred.
Past service costs are immediately recognized in the statement of income.
(q)Share-based payment
The share-based equity settled payment plan is measured based on the fair value on the date the shares are granted and recognized as personnel expenses, with a corresponding increase in equity, over the period in which the employees unconditionally become entitled to the benefits.
The amount recognized as an expense is adjusted to reflect the number of shares for which the service conditions and non-market vesting conditions are expected to be met, so that the amount ultimately recognized as an expense is based on the number of shares that do meet the related service conditions and non-market vesting conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no modification for differences between expected and actual benefits.
When the terms of an equity-settled transaction are modified (for example, by plan modifications), the recognized minimum expense is the fair value at the date of grant, provided that the original vesting conditions are met. An additional expense, measured at the modification date, is recognized for any modification that increases the fair value of share-based payments or that otherwise benefits employees. When a grant is canceled by the entity or counterparty, any remaining element of the grant's fair value is immediately recognized as an expense in the statement of income.
The fair value of the amount payable to employees in relation to the share appreciation rights, which are settled in cash, is recognized as an expense with a corresponding increase in liabilities during the period in which employees unconditionally acquire the right to payment. The liability is remeasured at each reporting date and at the settlement date, based on the fair value of the share appreciation rights. Any changes in the fair value of the corresponding liabilities are recognized in the statement of income as personnel expenses.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(r)Treasury shares
Treasury shares represent shares that are bought back by Raízen, recognized at acquisition cost and less equity, and are available for specific and limited purposes. No gain or loss is recognized in the statement of income on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Any difference between the carrying amount and the consideration is recognized in other capital reserves.
(s)Income tax and social contribution
Income tax and social contribution income (expenses) for the year comprise current and deferred taxes. Income taxes are recognized in the statement of income, except to the extent they relate to items directly recognized in equity or comprehensive income, as applicable. In this case, the taxes are also recognized in equity or comprehensive income.
Current and deferred income tax and social contribution are determined based on the tax legislation enacted or substantially enacted at the date of the statement of financial position in the countries where the Company entities operate and generate taxable profit. Management regularly assesses the positions assumed in the income tax calculations with respect to situations in which applicable tax regulations give rise to different interpretations, and records provisions, when appropriate, based on estimated amounts payable to tax authorities.
In Brazil, income tax is calculated on taxable profit at a rate of 15%, plus surtax of 10% on profit exceeding R$240 over 12 months, whereas social contribution tax is calculated at a rate of 9% on taxable profit, both recognized on an accrual basis. In other words, the Company is subject to a theoretical combined tax rate equivalent to 34%.
Deferred income tax and social contribution related to income tax and social contribution tax losses and temporary differences are stated net in the statement of financial position when there is a legal right and the intention to offset them when calculating current taxes, related to the same legal entity and the same tax authority.
Accordingly, deferred tax assets and liabilities in different entities or different countries are usually presented separately, and not on a net basis. Deferred taxes are calculated based on the rates established upon their realization and are reviewed annually.
Tax prepayments or current amounts subject to offsetting are stated under current or non-current assets, according to their estimated realization.
(t)Capital and remuneration to shareholders
Capital is represented by common and preferred shares. Incremental expenses directly attributable to the issue of shares, when incurred, are presented as a deduction from equity, as additional capital contribution, net of tax effects.
The only class A preferred share, as well as each common share, entitles to one vote in resolutions at the Company's general meetings, as well as fixed annual dividends of R$ 0.01 (one cent). Additionally, non-voting class D and E preferred shares entitle the shareholder Shell to the receipt of fixed annual dividends. Such classes of preferred shares A, D and E were fully converted into common shares and/or repurchased as per the Annual and Extraordinary General Meeting (“AEGM”) held on June 1, 2021.
Distribution of profits to the shareholders is made in the form of dividends and/or interest on own capital based on the limits defined in the Company’s bylaws and the laws in force. They are classified as cash flow from financing activities, when paid.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(u)Earnings per share
Basic earnings per share are calculated by dividing the profit for the year attributable to the Company's shareholders by the weighted average number of shares (common and preferred) outstanding during the year.
Diluted earnings per share are calculated by adjusting the profit and the weighted average number of shares, taking into account the conversion of all potential shares with a dilutive effect (equity instruments, contracts capable of resulting in the issuance of shares and/or restricted shares within share-based payment plans).
See Note 20.f in relation to the calculation of earnings per share for the periods prior to the Corporate Reorganization.
(v)Business combinations and goodwill
The Company adopts the acquisition method to account for business combinations. The consideration transferred for acquisition of a subsidiary is the fair value of the assets transferred, liabilities assumed, and any equity instruments issued by the Company. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement, where applicable. Acquisition-related costs are recorded in the statement of income as incurred. Identifiable assets acquired; liabilities (including contingent) assumed in a business combination are initially measured at fair value on the acquisition date.
The Company recognizes the noncontrolling interest in the acquiree, both for its fair value and for the proportional portion of the noncontrolling interest in the fair value of the acquiree's net assets. Measurement of the noncontrolling interest is determined for each acquisition made.
The excess of the consideration transferred and of the fair value on the date of acquisition of any previous equity interest in the acquiree in relation to the fair value of the Company’s interest in the net identifiable assets acquired is recorded as goodwill. When applicable, in acquisitions in which the Company attributes fair value to noncontrolling interests, the determination of goodwill also includes the value of any noncontrolling interest in the acquiree, and goodwill is determined considering the interest of the Company and of noncontrolling interests. When the consideration transferred is less than the fair value of the net assets of the acquiree, the difference is recognized directly in the statement of income for the year as a bargain purchase.
(w)Environmental issues
The Company minimizes the risks associated with environmental issues through operating procedures and controls and investments in pollution control systems and equipment. The Company records a provision for loss on environmental expenses, under Other liabilities, to the extent that it is necessary to conduct environmental remediation of the damage caused.
(x)Segment information
An operating segment is a component of the Company that conducts business activities from which revenues may be obtained and expenses incurred, including revenues and expenses related to transactions with other Company components. All operating income of the operating segments is frequently reviewed by the Company’s CEO and by the Board of Directors for purposes of decisions concerning funds to be allocated to the segment and performance evaluation, and for which individual financial information is available.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
2.4.Impacts of the new IFRS and IFRIC on the financial statements
The following amendments were adopted for the first time by Raízen for the year beginning on April 1, 2022:
• |
Annual improvements - 2018-2020 cycle: In May 2020, the IASB issued the following amendments as part of the annual improvement process: |
(i) | IFRS 9 – Financial Instruments: IFRS 9 - Financial instruments: clarifies which fees should be included in the 10% test for derecognition of financial liabilities. |
(ii) | IFRS 16 – Leases: Amendment to example 13 in order to exclude the example of lessor payments related to leasehold improvements. |
• |
Amendments to IAS 37 – Provisions, Contingent Liabilities and Contingent Assets: In May 2020, the IASB issued this amendment to clarify that, for the purpose of assessing whether a contract is onerous, the cost of fulfilling the contract includes the incremental costs of fulfilling such contract and an allocation of other costs directly related to its fulfillment. |
• |
Amendments to IAS 16 - Property, Plant and Equipment: In May 2020, the IASB issued an amendment that prohibits entities from deducting from the cost of an item of property, plant and equipment any proceeds of the sale of items produced while the asset is being prepared for its intended use. Such proceeds and related costs must be recognized in the statement of income for the year. |
• |
Amendments to IFRS 3 - Business Combinations Issued in May 2020, the amendments replace a reference to a previous version of the conceptual framework with a reference to the current version. |
• |
IFRS 1 First Time Adoption of International Financial Reporting Standards: Simplifies the application of said standard by a subsidiary that adopts IFRS for the first time after its parent company, with respect to measurement of cumulative translation differences. |
• |
IAS 41 - Biological assets and agricultural products: Removes the requirement to exclude taxes on profit from cash flow estimates when measuring the fair value of biological assets and agricultural produce, thus aligning the fair value measurement requirements in IAS 41 with those of other IFRS standards. |
The aforementioned amendments and improvements did not have material impacts for the Company.
The following amendments were adopted for the first time by Raízen for the year beginning on April 1, 2021:
• | Amendments to IFRS 9, IAS 39 and IFRS 37 – Financial Instruments, IFRS 4 – Insurance Contracts and IFRS 16 – Leases: The amendments provided for in Phase 2 of the IBOR reform address issues that may affect the financial statements during the reform of a benchmark interest rate, including the effects of changes in contractual cash flows or hedging relationships arising from the replacement of a rate with an alternative benchmark rate (replacement issues). |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
2.5.New IFRS and IFRIC (IFRS’ Interpretations Committee) applicable to financial statements
The following amendments to standards have been issued by the IASB but are not yet effective for the year ended March 31, 2023. Early adoption of standards is encouraged by the IASB:
• |
Amendments to IAS 1 - Classification of liabilities as current or non-current (equivalent to revision 20 of the Brazilian Accounting Pronouncements Committee): In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1, to specify the requirements for classifying liabilities as current or non-current. The amendments clarify what is meant by a right to defer settlement, that a right to defer must exist at the end of the reporting period, that classification is unaffected by the likelihood that an entity will exercise its deferral right, and also that only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification. Amendments are effective for periods beginning on or after January 1, 2023, and should be applied retroactively, as regards the Company, as from April 1, 2023. |
• |
Amendments to IAS 8 - Definition of accounting estimates: In February 2021, the IASB issued amendments to IAS 8, in which it introduces the definition of ‘accounting estimates. The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. They also explain how entities use measurement techniques and inputs to develop accounting estimates. The effective date of application of this amendment is January 1, 2023, and, in the case of the Company, April 1, 2023. |
• |
Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of accounting policies: In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgments, in which it provides guidance and examples to help entities apply materiality judgments to accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies; and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures. The effective date of application of this amendment is January 1, 2023, and, in the case of the Company, April 1, 2023. |
• |
Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction: In May 2021, the Board issued amendments to IAS 12, which narrow the scope of the initial recognition exception under IAS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences. The amendments should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, at the beginning of the earliest comparative period presented, a deferred tax asset (provided that sufficient taxable profit is available) and a deferred tax liability should also be recognized for all deductible and taxable temporary differences associated with leases and decommissioning obligations. |
The Company is currently reviewing the accounting policy disclosures to confirm whether they are consistent with the required amendments. However, no material impacts are expected for the Company from the amendments mentioned above.
There are no other IFRS standards or IFRIC interpretations not yet effective that could have a significant impact on the Company’s financial statements.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
3.Cash and cash equivalents
|
|
|
Weighted average yield |
|
|
|
|
||
|
Index |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Bank, cash and others |
|
|
|
|
|
|
5,159,881 |
|
4,182,878 |
Financial investments in CDB (Bank deposit certificate) commitments and others (1) |
CDI |
|
101.2% |
|
98.7% |
|
3,573,515 |
|
4,051,690 |
Total financial investments |
|
|
|
|
|
|
3,573,515 |
|
4,051,690 |
Total cash and cash equivalents |
|
|
|
|
|
|
8,733,396 |
|
8,234,568 |
Domestic (local currency) |
|
|
|
|
|
|
3,613,035 |
|
4,281,058 |
Abroad (foreign currency) (Note 27.d) |
|
|
|
|
|
|
5,120,361 |
|
3,953,510 |
|
|
|
|
|
|
|
8,733,396 |
|
8,234,568 |
(1) | Correspond substantially to fixed income investments in first-class financial institutions, with daily yield and liquidity. |
4.Securities and restricted cash
(a)Securities
|
|
|
Weighted average yield |
|
|
|
|
||
|
Index |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Financial treasury bill (“LFT”) |
SELIC |
|
100% |
|
100% |
|
8,751 |
|
87,529 |
Debentures (1) |
IPCA |
|
100% |
|
- |
|
118,954 |
|
- |
Investment funds (2) |
CDI + 4% p.a. |
|
100% |
|
- |
|
48,824 |
|
- |
|
|
|
|
|
|
|
176,529 |
|
87,529 |
Current |
|
|
|
|
|
|
(8,751) |
|
(87,529) |
Non-current |
|
|
|
|
|
|
167,778 |
|
- |
(1) | Refers to the acquisition of simple and non-convertible debentures, with unsecured guarantee, in a single series, for private placement, with payments of annual installments as from May 2024 and final maturity in 2051. |
(2) | Refer to subsidiary RESA’ shareholding interest in an investment fund with receivables, with annual remuneration based on CDI plus annual interest of approximately 4%, with maturity in up to 5 years. |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(b)Restricted cash
|
|
|
Weighted average yield |
|
|
|
|
||
|
Index |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Financial investments linked to financing |
CDI |
|
100.7% |
|
99.1% |
|
1,651 |
|
67 |
Financial investments linked to derivative operations (Note 27.g) (1) |
CDI |
|
100.7% |
|
99.1% |
|
62,110 |
|
100,821 |
Margin deposits in derivative transactions (Note 27.g) (2) |
|
|
|
|
|
|
1,210,849 |
|
2,178,744 |
|
|
|
|
|
|
|
1,274,610 |
|
2,279,632 |
Domestic (local currency) |
|
|
|
|
|
|
67,288 |
|
100,888 |
Abroad (foreign currency) (Note 27.d) |
|
|
|
|
|
|
1,207,322 |
|
2,178,744 |
|
|
|
|
|
|
|
1,274,610 |
|
2,279,632 |
(1) | Refers to financial investments in CDB conducted with top-tier banks, pledged as collateral for derivative instrument transactions. |
(2) | Margin deposits in derivative transactions refer to margin calls at a commodity exchange and are exposed to the dollar and commodities fluctuation in derivative transactions. |
5.Trade accounts receivable and advances from clients
(a)Trade accounts receivable
|
2023 |
|
2022 |
Domestic (local currency) |
4,628,253 |
|
3,920,718 |
Abroad (foreign currency) (Note 27.d) |
4,016,404 |
|
2,529,851 |
Other accounts receivable (1) |
485,711 |
|
366,267 |
Allowance for expected credit losses |
(210,020) |
|
(178,998) |
|
8,920,348 |
|
6,637,838 |
Current |
(8,423,769) |
|
(6,271,015) |
Non-current |
496,579 |
|
366,823 |
(1) | Other accounts receivable substantially refer to installments of overdue receivable and sales of real estate properties, through security interest, guarantees and collaterals. |
38 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
The Company does not have notes given as collateral. The maximum exposure to credit risk at the statement of financial position date is the carrying amount of each class of trade accounts receivable.
The maturity of trade accounts receivable is as follows:
|
2023 |
|
2022 |
Falling due |
8,289,328 |
|
6,123,548 |
Overdue: |
|
|
|
Within 30 days |
200,452 |
|
145,487 |
From 31 to 90 days |
90,442 |
|
59,327 |
From 91 to 180 days |
54,168 |
|
59,367 |
Over 180 days |
495,978 |
|
429,107 |
9,130,368 |
|
6,816,836 |
For long-overdue notes with no allowance for expected credit losses, the Company has guarantees, such as mortgages and letters of credit.
The allowance for expected credit losses was calculated based on the credit risk analysis, which includes the history of losses, the individual situation of clients, the situation of the economic group to which the clients belong, the security interest for debts and, where applicable, the assessment of legal advisors.
The allowance for expected credit losses is considered sufficient by management to cover any losses on receivables. Changes in this allowance for the years ended March 31, 2023, and 2022 are as follows:
As of March 31, 2021 |
(158,665) |
Business combination |
(10,746) |
Provision for expected credit losses |
(109,992) |
Reversal and write-off |
98,237 |
Effect of foreign currency translation and others |
2,168 |
As of March 31, 2022 |
(178,998) |
Business combination (Note 30.(i).b) |
(2,492) |
Provision for expected credit losses |
(99,988) |
Reversal and write-off |
70,846 |
Effect of foreign currency translation |
612 |
As of March 31, 2023 |
(210,020) |
(b)Advances from clients
As of March 31, 2023, the Company had R$ 3,546,985 (R$ 4,796,239 in 2022) recorded in current liabilities under “Advances from clients”, which refer mainly to amounts received from clients from the domestic market and abroad for the purchase of sugar, ethanol, and energy, with final maturity through 2023. During the year ended March 31, 2023, the advances on performance of commodities export were fully settled.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
6.Inventories
|
2023 |
|
2022 |
Finished products: |
|
|
|
Diesel (2) |
3,629,856 |
|
2,846,277 |
Gasoline (2) |
1,870,090 |
|
2,011,989 |
Jet fuel |
295,178 |
|
234,516 |
Petroleum by-products (1) |
628,936 |
|
280,940 |
Ethanol |
1,005,956 |
|
2,359,159 |
Sugar |
529,619 |
|
686,022 |
Oil (crude oil) |
509,527 |
|
418,453 |
Products in process |
752,577 |
|
344,331 |
Warehouse and others |
1,008,385 |
|
750,258 |
10,230,124 |
|
9,931,945 |
(1) | Refers substantially to inventories of fuel oil, lubricants and asphalt. |
(2) | Raízen designates at fair value the inventories and highly probable purchases of oil by-products with pegged derivatives. The main risk management objective (Note 27.e) is that inventories be recognized at a floating price, as will be Raízen's sales revenue upon completion of the sale. As of March 31, 2023, and 2022, such inventories include fair value measurement, considering a level-2 hierarchy, as follows: |
|
Cost value |
|
Fair value |
|
Income (loss) (1) |
||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2021 |
Finished products: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diesel |
3,644,605 |
|
2,850,636 |
|
3,629,856 |
|
2,846,277 |
|
(10,390) |
|
(20,560) |
|
131,581 |
Gasoline |
1,858,292 |
|
2,015,727 |
|
1,870,090 |
|
2,011,989 |
|
15,535 |
|
(35,316) |
|
113,361 |
|
5,502,897 |
|
4,866,363 |
|
5,499,946 |
|
4,858,266 |
|
5,145 |
|
(55,876) |
|
244,942 |
(1) | Recognized under “Costs of products sold, and services provided”. |
As of March 31, 2023, inventories are stated net of estimated loss with realizable value and slow-moving and/or obsolete inventories, amounting to R$ 78,657 (R$ 73,902 in 2022). Changes in the referred to losses for the years ended March 31, 2023, and 2022 are shown below:
As of March 31, 2021 |
(42,707) |
Business combination |
(11,689) |
Estimated loss |
(70,919) |
Reversal and write-off |
49,858 |
Effect of foreign currency translation and others |
1,555 |
As of March 31, 2022 |
(73,902) |
Business combination |
(7,517) |
Estimated loss |
(153,857) |
Reversal and write-off |
158,438 |
Effect of foreign currency translation and others |
(1,819) |
As of March 31, 2023 |
(78,657) |
The estimated loss reversals, in the amounts of R$ 158,438 and R$ 49,858, for the years ended March 31, 2023, and 2022, respectively, refer to inventory write-offs due to items sold and/or consumed.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
7.Biological assets
Raízen’s biological assets comprise unharvested cane cultivated in sugarcane crops, which will be used as a raw material source in the production of sugar, ethanol, and bioenergy upon harvesting.
Planted areas represent only sugarcane crops, not considering the land where the crops are located, which are recognized under Property, plant, and equipment.
The fair value measurement method is the cash flow discounted to present value. The valuation model considers the present value of expected cash flows to be generated, including projections of up to two years, considering the estimates of the effective date for cutting the unharvested cane.
The main assumptions used in determining the fair value, determined by level 3 of the fair value hierarchy, were:
|
2023 |
|
2022 |
Estimated harvest area (hectares) |
629,290 |
|
650,598 |
Number of total recoverable sugar (“ATR”) per hectare |
11.28 |
|
10.27 |
Projected average ATR price per kg (R$/kg) |
1.23 |
|
1.28 |
Annual discount rate (based on Weighted Average Capital Cost – WACC) |
8.62% |
|
7.68% |
In the year ended March 31, 2023, the Company reviewed the assumptions used to calculate the biological asset, the main impacts of which were: (i) increase in agricultural costs; and (ii) decrease in the average ATR price, influenced by the price of ethanol, and by the price of Very High Polarization (“VHP”) sugar, in line with what has been observed in recent months as well as new dollar price projections.
Changes in biological assets are as follows:
|
2023 |
|
2022 |
Opening balance |
3,913,957 |
|
1,353,185 |
Business combination |
- |
|
844,329 |
Additions to sugarcane treatments |
1,976,352 |
|
1,324,875 |
Absorption of harvested sugarcane costs |
(1,561,035) |
|
(949,198) |
Change in fair value, net of realization |
(188,809) |
|
1,340,766 |
As of March 31, 2023 |
4,140,465 |
|
3,913,957 |
The estimated fair value could increase (decrease) if:
• |
The estimated ATR price was higher (lower); |
• |
The projected productivity (tons per hectare and quantity of ATR) was higher (lower); and |
• |
The discount rate was lower (higher). |
The operational activities of sugarcane planting are exposed to variations resulting from climate changes, pests, diseases, and forest fires, among other natural forces,
Historically, climatic conditions can cause volatility in the sugar-energy sector and, consequently, in the Company's operating results, as they influence crops by increasing or reducing harvests.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
8. Recoverable taxes
|
2023 |
|
2022 |
ICMS (i) |
2,530,065 |
|
1,908,241 |
PIS and COFINS (ii) |
6,869,082 |
|
2,933,464 |
IVA (iii) |
673,790 |
|
381,173 |
Others |
550,484 |
|
222,377 |
Estimated loss on realization of taxes (iv) |
(28,324) |
|
(28,324) |
|
10,595,097 |
|
5,416,931 |
Current |
(4,336,386) |
|
(3,325,080) |
Non-current |
6,258,711 |
|
2,091,851 |
The movement of the main taxes to be recovered is detailed below:
|
ICMS |
|
PIS and COFINS |
|
IVA |
|
Others (2) |
|
Profit tax credits (Note 17.b) |
|
Total |
As of March 31, 2021 |
1,476,161 |
|
1,933,562 |
|
384,101 |
|
203,696 |
|
672,596 |
|
4,670,116 |
Business Combination |
111,490 |
|
32,884 |
|
- |
|
51,937 |
|
70,525 |
|
266,836 |
Credit generation (1) |
1,744,148 |
|
1,374,550 |
|
546,575 |
|
35,713 |
|
637,916 |
|
4,338,902 |
Offset/ liquidation |
(1,474,972) |
|
(472,106) |
|
(479,551) |
|
(40,674) |
|
(697,758) |
|
(3,165,061) |
Monetary update |
1,048 |
|
55,289 |
|
- |
|
- |
|
23,338 |
|
79,675 |
Others |
50,366 |
|
9,285 |
|
(69,952) |
|
(28,295) |
|
(28,945) |
|
(67,541) |
As of March 31, 2022 |
1,908,241 |
|
2,933,464 |
|
381,173 |
|
222,377 |
|
677,672 |
|
6,122,927 |
Business Combination (Note 30.(i).d and 30.(i).e) |
14,873 |
|
- |
|
- |
|
- |
|
897 |
|
15,770 |
Credit generation (1) |
1,451,458 |
|
5,716,616 |
|
934,535 |
|
187,189 |
|
785,478 |
|
9,075,276 |
Offset/ liquidation |
(928,739) |
|
(1,796,381) |
|
(666,739) |
|
(34,494) |
|
(226,945) |
|
(3,653,298) |
Monetary update |
3,465 |
|
8,417 |
|
- |
|
- |
|
58,868 |
|
70,750 |
Others |
80,767 |
|
6,966 |
|
24,821 |
|
175,412 |
|
(18,987) |
|
268,979 |
As of March 31, 2023 |
2,530,065 |
|
6,869,082 |
|
673,790 |
|
550,484 |
|
1,276,983 |
|
11,900,404 |
(1) | Includes reimbursements and refunds of ICMS. |
(2) | Substantially represented by credits of: IPI, Reintegra and others. |
(i)ICMS
It arises from interstate operations for the distribution of oil by-products, in which the tax burden of the receiving state is lower than that retained by the supplier, according to Agreement No, 110/07. The reimbursement takes place through formalization of a process with the States, whereby after the request is approved, the payment is made by the substitute taxpayer, in this case the refinery, by means of a credit in a bank checking account and ICMS credits granted by the states, as provided for in Constitutional Amendment No.123/22 (“EC No.123/2022”) (Note 20.d.i).
To use ICMS credit balances, the Company is internally reviewing certain activities, in particular the logistics of operations with changes in supply hubs. In addition, there are requests for special regimes from certain state tax authorities, requests for authorization to transfer balances between branches in the same state and analysis of credit sales to third parties.
The ICMS recoverable balance presented in these financial statements reflects the amount that the Company expects to realize, less the provision for loss on credits, for which management has no expectation to realize them.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(ii)PIS and COFINS
ICMS on the PIS and COFINS tax bases
On March 15, 2017, the Federal Supreme Court of Brazil (“STF”) completed the judgment of Appeal No. 574,706 and, under general resonance, established the thesis that the ICMS does not make up the PIS and COFINS tax base, since this amount does not represent the Company’s revenue/billing. In other words, taxpayers have the right to exclude the ICMS amount recorded in the invoice from the PIS and COFINS tax base.
In 2018, the Company recognized credits referring to periods after March 2017, based on the decision handed down on that date by the STF. In addition, the amounts recognized, referring to prior periods, for the group companies that have been awarded favorable final decisions on the referred matter, that is, a res judicata decision, were calculated based on the accounting and tax systems, considering the ICMS amount recorded in invoices. The accuracy of amounts was assessed by crosschecking the information with the relevant accessory obligations.
Since adoption of the PIS and COFINS noncumulative regime, the Company has been pleading in court the right to exclude ICMS from the PIS and COFINS tax base and concluded that the legal certainty necessary for the recognition of said credits had been reached, due to certain res judicata decisions handed down on lawsuits for the entire period after 5 years of the date of distribution of the lawsuits in court and, in the case of decisions not yet final, credits after October 2, 2017, prospectively, according to the conclusion of the leading case granting the appeal to taxpayers, for which amounts were recorded in tax assets.
On May 13, 2021, the STF concluded the judgment on the modulation of the effects of the decision that excluded the ICMS from the PIS and COFINS tax base (Appeal No. 574,706) and confirmed that the ICMS to be considered is that recorded in the invoice, and not the ICMS amount paid, recognizing credits of this nature for the period from April 2011 to December 2014.
Complementary Law 192/2022 (“LC 192/22”)
On March 11, 2022, LC 192/22 was published, aiming at reducing the tax burden on the oil and gas supply chain. Article 9 of the law established the reduction to zero by December 31, 2022, of PIS and COFINS rates levied on diesel oil, biodiesel and Liquefied Petroleum Gas (LPG), while ensuring that the credits linked to the entire economic chain would remain unaffected.
On May 18, 2022, Provisional Measure 1,118/22 (“MP 1,118/22”) was published, excluding the right to PIS and COFINS credits arising from purchases of diesel oil, LPG and biodiesel. Following this act by the Executive Branch, on June 2, 2022 a claim brought on grounds of unconstitutionality (ADI No. 7181) was filed, which challenged said provision in MP 1,118/22, On June 21, 2022, at a Plenary Meeting the Federal Supreme Court (STF) upheld, by unanimous vote, the decision previously issued by a single judge at a court of appeals level which considered said MP as unconstitutional on the grounds that it did not comply with the principle under which no new increases in social contributions may be collected in a period of less than ninety days after the publication of the respective statute.
As a result of the injunction and because MP 1,118/22 was not converted into law, the wording of LC 192/22 remained in force, which assured to all legal entities in the fuel chain, including Raízen subsidiaries, that PIS and COFINS credits linked to such operations would remain unaffected in the period from March 11, 2022 (date on which LC 192/22 was published) to August 15, 2022 (ninety days after the date of publication of MP 1,118/22, which limited the right to credit by taxpayers), when it started to generate effects, according to the STF’s decision.
Therefore, the Company, supported by external and internal legal counsels, recognized a gain of R$ 3,766,224 in profit or loss for the year ended March 31, 2023, and the related PIS and COFINS credits in the consolidated statement of financial position in “Recoverable taxes”, of which R$ 1,298,323 are current and R$ 2,467,901 are non-current. Additionally, during the year ended March 31, 2023, the Company offset an amount of R$1,107,149 against Corporate Income Tax (Imposto de Renda Pessoa Jurídica) ("IRPJ"), the Social Contribution on Net Income (Contribuição Social sobre o Lucro Líquido) ("CSLL") payable balances.
The recoverable balance of PIS and COFINS presented in these financial statements reflects the amount that the Company expects to realize, less the provision for loss of credits for which Management does not expect to realize, when applicable. The Company estimates that the PIS and COFINS credits will be realized in the next 10 years.
(iii)IVA
This refers to the federal tax applicable in Argentina and Paraguay on commercial transactions with clients and suppliers, whose triggering event, determination, and payment takes place monthly.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(iv) Estimated loss on realization of taxes
Changes in estimated loss on realization of taxes are as follows:
As of March 31, 2021 |
(28,782) |
Reversal of estimated loss, net |
458 |
As of March 31, 2022 |
(28,324) |
Reversal (additions) of estimated loss, net |
- |
As of March 31, 2023 |
(28,324) |
9. Related parties
(a) Summary of balances with related parties
|
2023 |
|
2022 |
Assets |
|
|
|
Assets classified by currency: |
|
|
|
Domestic (local currency) |
1,847,682 |
|
1,832,077 |
Foreign (foreign currency) (Note 27.d) |
332,802 |
|
253,561 |
|
2,180,484 |
|
2,085,638 |
Commercial and administrative transactions (1) |
|
|
|
Rumo Group |
281,450 |
|
339,443 |
Agricopel Group |
114,833 |
|
53,125 |
Shell Group |
339,039 |
|
250,908 |
Others |
52,625 |
|
45,045 |
|
787,947 |
|
688,521 |
Framework agreement and others (2) |
|
|
|
Shell Brazil Holding B.V. |
625,749 |
|
652,165 |
Shell Brasil Petróleo Ltda. |
132,633 |
|
100,897 |
Cosan |
580,287 |
|
635,200 |
Others |
53,868 |
|
8,855 |
|
1,392,537 |
|
1,397,117 |
Total assets |
2,180,484 |
|
2,085,638 |
Current |
(1,020,519) |
|
(975,556) |
Non-current |
1,159,965 |
|
1,110,082 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
|
2023 |
|
2022 |
Liabilities |
|
|
|
Liabilities classified by currency: |
|
|
|
Domestic (local currency) |
2,192,053 |
|
2,438,410 |
Foreign (foreign currency) (Note 27.d) |
3,345,404 |
|
2,579,290 |
|
5,537,457 |
|
5,017,700 |
Resource management |
|
|
|
Rio Power Participações S.A. |
- |
|
1,846 |
Others |
40 |
|
- |
|
40 |
|
1,846 |
Financial transactions |
|
|
|
Others |
9 |
|
9 |
|
9 |
|
9 |
Commercial and administrative transactions (1) |
|
|
|
Rumo Group |
112,362 |
|
64,058 |
Shell Group |
3,333,211 |
|
2,567,919 |
Others |
53,046 |
|
42,042 |
|
3,498,619 |
|
2,674,019 |
Framework agreement (2) |
|
|
|
Shell Brasil Petróleo Ltda. |
3,243 |
|
154,313 |
Shell Brazil Holding B.V. |
32,986 |
|
51,135 |
Cosan |
572,078 |
|
665,435 |
Others |
12,719 |
|
12,656 |
|
621,026 |
|
883,539 |
Preferred shares and others (3) |
|
|
|
Shell Brazil Holding B.V. |
184,654 |
|
173,497 |
|
184,654 |
|
173,497 |
Corporate reorganization (4) |
|
|
|
Uniduto Logística S.A. |
- |
|
1,095 |
Logum Logística S.A. |
- |
|
7,070 |
|
- |
|
8,165 |
Lease liabilities (Note 15.b) (5) |
|
|
|
Radar Propriedades Agrícolas S.A. |
255,129 |
|
245,595 |
Aguassanta Desenvolvimento Imobiliário S.A. |
133,530 |
|
157,340 |
Nova Agrícola Ponte Alta S.A. |
132,591 |
|
153,959 |
Aguassanta Agrícola S.A. |
73,220 |
|
107,124 |
Jatobá Propriedades Agrícolas Ltda. |
84,163 |
|
95,899 |
Nova Amaralina S.A. Propriedades Agrícolas |
65,271 |
|
79,189 |
Proud Participações S.A. |
63,230 |
|
74,872 |
Terrainvest Propriedades Agrícolas S.A. |
60,244 |
|
75,539 |
Águas da Ponte Alta S.A. |
62,398 |
|
67,653 |
Bioinvestiments Negócios e Participações S.A. |
62,056 |
|
71,654 |
Seringueira Propriedades Agrícolas Ltda. |
49,789 |
|
61,148 |
Others |
191,488 |
|
86,653 |
|
1,233,109 |
|
1,276,625 |
Total liabilities |
5,537,457 |
|
5,017,700 |
Current |
(2,363,289) |
|
(1,746,606) |
Non-current |
3,174,168 |
|
3,271,094 |
45 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(1)Commercial, administrative, and other transactions
The receivable amounts recorded in assets as related party captions refer to commercial transactions for the sale of products, such as gasoline, diesel, jet fuel, ethanol, sugar, and other materials, as well as advances for acquisition of sugarcane and cargo handling at ports.
The payable amounts recorded in liabilities as related party captions refer to commercial transactions for the purchase of products and provision of services such as: ethanol, diesel, gasoline, road and rail freight, storage, sugar, sugarcane, advances from clients for sugar exports, and granting of licenses for use of the Shell brand (Note 13).
(2)Framework agreement and others
Refer, substantially, to balances recoverable (from) or refundable (to) Raízen's shareholders, as they relate to the period prior to the formation of Raízen.
On March 7, 2023, in the minutes of the meeting of the Board of Directors of the jointly owned subsidiary “Rede Integrada de Lojas de Conveniência e Proximidade S.A.”, an advance for future capital increase (“AFAC”) was approved, in the amount of R$ 45,000, which was paid on March 17, 2023.
(3)Preferred shares and others
Substantially tax credits to be reimbursed to Shell, when effectively used by Raízen, determined by the balances of tax losses and negative basis of social contribution from periods prior to the formation of Raízen.
(4)Corporate reorganization
The amount recorded in liabilities refers to the capital to be paid up in these associates. During the year ended March 31, 2023, the capital amounts were fully paid up.
(5)Lease liabilities
Changes in lease liabilities in the years ended March 31, 2023, and 2022 are as follows:
As of March 31, 2021 |
933,717 |
Additions |
98,204 |
Write-offs |
(79,486) |
Payments |
(240,030) |
Interest |
101,473 |
Remeasurements |
462,747 |
As of March 31, 2022 |
1,276,625 |
Additions |
216,519 |
Write-offs |
(88,278) |
Payments |
(281,622) |
Interest |
106,049 |
Remeasurements |
3,816 |
As of March 31, 2023 |
1,233,109 |
Current |
(233,626) |
Non-current |
999,483 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(b)Transactions with related parties (8)
|
2023 |
|
2022 |
|
2021 |
Sale of goods |
|
|
|
|
|
Rumo Group (4) |
2,479,338 |
|
1,760,994 |
|
1,189,005 |
Shell Group (7) |
4,976,702 |
|
2,912,745 |
|
1,623,514 |
Agricopel Group (5) |
1,830,092 |
|
1,451,163 |
|
780,365 |
Others |
197,747 |
|
292,196 |
|
78,150 |
|
9,483,879 |
|
6,417,098 |
|
3,671,034 |
Purchase of goods and services |
|
|
|
|
|
Shell Group (7) |
(8,772,894) |
|
(4,345,682) |
|
(3,041,339) |
Rumo Group (4) |
(788,147) |
|
(589,465) |
|
(609,353) |
Agricopel Group (5) |
(183,992) |
|
(125,281) |
|
(84,683) |
Others |
(520,174) |
|
(86,751) |
|
(97,852) |
|
(10,265,207) |
|
(5,147,179) |
|
(3,833,227) |
Financial income (expenses) (1) |
|
|
|
|
|
Shell Group (7) |
(157,304) |
|
(114,321) |
|
12,379 |
Others |
(97,498) |
|
(108,265) |
|
(70,275) |
|
(254,802) |
|
(222,586) |
|
(57,896) |
Revenues from services and others (2) |
|
|
|
|
|
Shell Group (7) |
21,888 |
|
22,049 |
|
3,062 |
Comgás – Companhia de Gás de São Paulo |
15,024 |
|
27,365 |
|
36,863 |
Rumo Group (4) |
32,651 |
|
31,901 |
|
26,986 |
Cosan Lubrificantes e Especialidades S.A. |
14,159 |
|
10,037 |
|
7,319 |
Others |
57,285 |
|
18,680 |
|
13,369 |
141,007 | 110,032 | 87,599 | |||
Service expenses (3) |
|
|
|
|
|
Shell Group (7) |
(223,108) |
|
(19,486) |
|
(27,368) |
Others |
(2,841) |
|
(93) |
|
(467) |
|
(225,949) |
|
(19,579) |
|
(27,835) |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(1) | Financial income (expenses). net correspond mostly to: (i) interest and exchange differences of PPEs. raised with the indirect subsidiary Raízen Fuels; (ii) gains (losses) from the asset management agreement entered between the companies; (iii) interest on accounts payable to Shell for brand licensing; and (iv) other exchange variations. |
(2) | These refer to: (i) lubricant sales commissions to Shell; and (ii) collection of expenses with the sharing of corporate. management and operating costs. |
(3) | These refer to: (i) expenses with the sharing of corporate, management and operating costs with RESA; and (ii) expenses with technical support, maintenance of the billing and collection process, commissions on the sale of jet fuel and secondees to Shell. |
(4) | “Rumo Group” refers to the railway and port operations represented, mainly, by the following companies: Rumo S.A. Elevações Portuárias S.A. Logispot Armazéns Gerais S.A. Rumo Malha Sul S.A. Rumo Malha Oeste S.A. Rumo Malha Paulista S.A. Rumo Malha Norte S.A. Rumo Malha Central S.A. Portofer Transporte Ferroviário Ltda. ALL Armazéns Gerias Ltda. Terminal São Simão S.A. América Latina Logística Intermodal S.A and Brado Logística S.A. |
(5) | “Agricopel Group” refers to sales of fuel represented by the companies Agricopel Comércio de Derivados de Petróleo Ltda. Posto Agricopel Ltda. Agricopel Diesel Paraná Ltda. and Blue Administradora de Bens Ltda. whose relationship takes place through FIX Investimentos Ltda. which is the noncontrolling shareholder of Raízen Mime. |
(6) | The Company’s purchase transactions with the subsidiaries Blueway. Sabbá and Raízen Trading LLP, subsidiary of RESA, are substantially represented by those originating from imports of ethanol and oil and its derivatives in the foreign market. |
(7) | “Shell Group” refers to the commercial transactions conducted by Shell Aviation Limited, Shell Overseas Investments B.V., Shell Trading Rotterdam, Shell Companhia Argentina, Shell Trading US Company, Shell Brazil Holding B.V., Shell Brasil Petróleo Ltda. and Shell International Petroleum, and granting of the license to use the Shell brand by Shell Brands International AG. |
(8) |
Transactions with related parties are entered into on an arm’s length basis, in line with those prevailing in the market or that the Company would conduct with third parties. |
(c)Guarantees
Considering that Raízen operates a centralized corporate treasury area, the Company is the guarantor of certain debts of its subsidiary RESA.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(d)Officers and members of the Board of Directors
Fixed and variable compensation to key management personnel of Raízen, including statutory officers and members of the Board of Directors, recognized in profit or loss for the years ended March 31, 2023, 2022 and 2021, is as follows:
|
2023 |
|
2022 |
|
2021 |
Regular compensation |
(75,580) |
|
(74,766) |
|
(58,074) |
Bonuses and other variable compensation |
(69,489) |
|
(84,802) |
|
(41,973) |
Share-based payment (Note 21) |
(13,085) |
|
(24,540) |
|
- |
Total compensation |
(158,154) |
|
(184,108) |
|
(100,047) |
The Company shares the corporate, management and operating costs and structures with its subsidiary RESA. Key management personnel include mostly RESA employees, and the costs are transferred to the Company through the issue of debt note. In April and May 2021, the Company recognized in the consolidated statement of income the amount of R$ 11,897 related to these expenses transferred by RESA and that include key management personnel. As from June 1, 2021, with the corporate reorganization of RESA, these expenses are fully eliminated in the consolidation.
10.Contract assets
As of March 31, 2021 |
2,730,497 |
Business combination |
285,291 |
Additions |
724,290 |
Amortization (1) |
(579,822) |
Effect of foreign currency translation |
(73,663) |
As of March 31, 2022 |
3,086,593 |
Business combinations (Notes 30.(i).b and 30.(i).d) |
14,478 |
Additions |
824,925 |
Amortization (1) |
(615,494) |
Effect of foreign currency translation |
(79,235) |
As of March 31, 2023 |
3,231,267 |
Current |
(577,133) |
Non-current |
2,654,134 |
(1) | Recognized in the statement of income for the year under “Net operating revenue” (Note 22). |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
11.Investments
|
|
Investments |
|
Equity accounting result |
||||||||||||
|
|
Country |
|
Business activity |
|
Equity interest |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2021 |
Book value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grupo Nós |
|
Brazil |
|
Convenience and proximity stores |
|
50.00% |
|
145,248 |
|
190,499 |
|
(45,251) |
|
(11,946) |
|
7,715 |
Raízen and Wilmar Sugar Pte. Ltd. |
|
Singapore |
|
Trading |
|
50.00% |
|
- |
|
- |
|
- |
|
- |
|
(1,388) |
Other |
|
Brazil |
|
Energy |
|
50.00% to 57.89% |
|
17,095 |
|
15,246 |
|
2,088 |
|
3 |
|
- |
|
|
|
|
|
|
|
|
162,343 |
|
205,745 |
|
(43,163) |
|
(11,943) |
|
6,327 |
Associates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termap S.A. |
|
Argentina |
|
Sea terminal |
|
3.50% |
|
376 |
|
323 |
|
- |
|
- |
|
- |
Latitude Logística Portuária S.A. |
|
Brazil |
|
Port operation |
|
50.00% |
|
7,877 |
|
10,190 |
|
(2,313) |
|
1,111 |
|
(311) |
Navegantes Logística Portuária S.A. |
|
Brazil |
|
Port operation |
|
33.33% |
|
22,478 |
|
21,689 |
|
(11,211) |
|
(3.090) |
|
(1,218) |
Nordeste Logística I S.A. |
|
Brazil |
|
Port operation |
|
33.33% |
|
5,797 |
|
4,266 |
|
2,494 |
|
2,145 |
|
(197) |
Nordeste Logística II S.A. |
|
Brazil |
|
Port operation |
|
33.33% |
|
18,965 |
|
13,639 |
|
(2,341) |
|
(899) |
|
(190) |
Nordeste Logística III S.A. |
|
Brazil |
|
Port operation |
|
33.33% |
|
16,623 |
|
11,750 |
|
(460) |
|
320 |
|
(216) |
Centro de Tecnologia Canavieira S.A. |
|
Brazil |
|
R&D |
|
20.86% |
|
184,967 |
|
169,220 |
|
21,725 |
|
27,186 |
|
14,302 |
Logum Logística S.A. |
|
Brazil |
|
Logistics |
|
30.00% |
|
313,623 |
|
312,059 |
|
(57,035) |
|
(58,919) |
|
(73,438) |
Uniduto Logística S.A. |
|
Brazil |
|
Logistics |
|
46.48% |
|
48,560 |
|
48,338 |
|
(8,855) |
|
(9,139) |
|
(11,385) |
Gera Soluções e Tecnologia S.A. |
|
Brazil |
|
Energy |
|
30.00% |
|
7,732 |
|
3,939 |
|
(12,397) |
|
- |
|
- |
Dunamis SPE S.A. |
|
Brazil |
|
Energy |
|
1.00% |
|
1,048 |
|
- |
|
(30) |
|
- |
|
- |
|
|
|
|
|
|
|
|
628,046 |
|
595,413 |
|
(70,423) |
|
(41,285) |
|
(72,653) |
|
|
|
|
|
|
|
|
790,389 |
|
801,158 |
|
(113,586) |
|
(53,228) |
|
(66,326) |
Appreciation of assets, net attributed to joint venture and associates |
||||||||||||||||
Grupo Nós |
|
|
|
|
|
|
|
480,278 |
|
495,639 |
|
(15,361) |
|
(15,361) |
|
(15,361) |
CGB Caruaru Energia Ltda. |
|
|
|
|
|
|
|
5,819 |
|
- |
|
(233) |
|
- |
|
- |
Gera Soluções e Tecnologia S.A. |
|
|
|
|
|
|
|
3,056 |
|
- |
|
(123) |
|
- |
|
- |
J.F Energia S.A. |
|
|
|
|
|
|
|
5,731 |
|
- |
|
(230) |
|
- |
|
- |
Rio Power Participações S.A. |
|
|
|
|
|
|
|
13,938 |
|
- |
|
(559) |
|
- |
|
- |
|
|
|
|
|
|
|
|
508,822 |
|
495,639 |
|
(16,506) |
|
(15,361) |
|
(15,361) |
Goodwill on investments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Uniduto Logística S.A. |
|
|
|
|
|
|
|
5,676 |
|
5,676 |
|
- |
|
- |
|
- |
Centro de Tecnologia Canavieira S.A. |
|
|
|
|
|
|
|
51,946 |
|
51,946 |
|
- |
|
- |
|
- |
Gera Soluções e Tecnologia S.A. |
|
|
|
|
|
|
|
22,018 |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
79,640 |
|
57,622 |
|
- |
|
- |
|
- |
Total investments |
|
|
|
|
|
|
|
1,378,851 |
|
1,354,419 |
|
(130,092) |
|
(68,589) |
|
(81,687) |
50 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(a)Changes in investments
As of March 31, 2021 |
1,317,291 |
Additions |
133,556 |
Business combination |
28,509 |
Equity accounting result |
(68,589) |
Dividends |
(57,133) |
Effect of foreign currency translation and others |
785 |
As of March 31, 2022 |
1,354,419 |
Business combination (Note 30.(i).c) |
51,708 |
Equity accounting result |
(130,092) |
Share of equity of investees (2) |
(3,191) |
Additions (1) |
111,929 |
Dividends |
(7,494) |
Effect of foreign currency translation and others |
1,572 |
As of March 31, 2023 |
1,378,851 |
(1)The additions to the investment conducted in the years ended March 31, 2023, and 2022 were:
For the year ended March 31, 2023
51 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
For the year ended March 31, 2022
There were no changes in the percentage of interest held in the capital of these investees, since all shareholders made capital contributions proportionally to their held interest.
(2)Refers to gains (losses) from financial instruments designated as hedge accounting, net of deferred taxes, effects of foreign currency translation, and of actuarial revaluation recognized in comprehensive income and effects of capital transaction of Raízen’s investees and involving interest of non-controlling shareholders.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(b)Selected information of the “Grupo Nós”
The table below summarizes the financial information of the “Grupo Nós”, based on the financial statements, adjusted by the recognition of fair value adjustments on the date of establishment of the joint venture and by differences in accounting policies, when applicable. The table also reconciles the summarized financial information at the carrying amount of the interest held by Raízen in the joint venture.
|
2023 |
|
2022 |
Current assets |
232,783 |
|
311,040 |
Non-current assets |
624,081 |
|
333,963 |
Current liabilities |
(285,393) |
|
(112,571) |
Non-current liabilities |
(275,557) |
|
(145,525) |
Equity |
295,914 |
|
386,907 |
Attributable to non-controlling shareholders |
(5,418) |
|
(5,909) |
Attributable to controlling shareholders |
290,496 |
|
380,998 |
Equity interest of Raízen |
50.00% |
|
50.00% |
Share of equity |
145,248 |
|
190,499 |
Fair value adjustments on JV investments |
532,762 |
|
532,762 |
Accumulated amortization of fair value adjustments |
(52,484) |
|
(37,123) |
Net fair value adjustments |
480,278 |
|
495,639 |
Carrying amount of the equity interest |
625,526 |
|
686,138 |
|
2023 |
|
2022 |
Net operating revenue |
558,335 |
|
261,910 |
Loss for the year |
(89,401) |
|
(21,611) |
Capital transactions |
1,316 |
|
- |
Attributable to non-controlling shareholders |
(2,417) |
|
(2,280) |
Attributable to controlling shareholders |
(90,502) |
|
(23,891) |
Equity interest of Raízen |
50.00% |
|
50.00% |
Equity accounting result |
(45,251) |
|
(11,946) |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(c)Selected information on associates and other joint ventures
The table below describes the financial information of the Company’s main associates and other joint ventures:
|
|
|
|
|
|
|
|
|
2023 |
|
Assets |
|
Liabilities |
|
Equity |
|
Net operating revenue |
|
Income/(loss) |
Latitude Logística Portuária S.A. (1) |
77,919 |
|
(62,165) |
|
(15,754) |
|
13,091 |
|
(4,626) |
Navegantes Logística Portuária S.A. (1) |
175,269 |
|
(107,828) |
|
(67,441) |
|
- |
|
(33,636) |
Nordeste Logística I S.A. (1) |
40,803 |
|
(23,411) |
|
(17,392) |
|
19,918 |
|
7,483 |
Nordeste Logística II S.A. (1) |
78,620 |
|
(21,720) |
|
(56,900) |
|
3,334 |
|
(7,024) |
Nordeste Logística III S.A. (1) |
75,428 |
|
(25,553) |
|
(49,875) |
|
13,011 |
|
(1,380) |
Centro de Tecnologia Canavieira S.A. |
1,007,678 |
|
(120,971) |
|
(886,707) |
|
313,037 |
|
105,411 |
Logum Logística S.A. (1) |
3,529,780 |
|
(2,503,369) |
|
(1,026,411) |
|
251,941 |
|
(170,926) |
Uniduto Logística S.A. (1) |
104,543 |
|
(56) |
|
(104,487) |
|
- |
|
(19,054) |
Iogen Energy Corporation (2) |
38,359 |
|
(400,476) |
|
362,117 |
|
- |
|
(1,476) |
CGB Caruaru Energia Ltda. (1) |
13,838 |
|
(9,395) |
|
(4,443) |
|
- |
|
(576) |
J.F Energia S.A. (1) |
10,215 |
|
(1,424) |
|
(8,791) |
|
4,263 |
|
2,604 |
Rio Power Participações S.A. (1) |
34,311 |
|
(16,210) |
|
(18,101) |
|
5,114 |
|
1,855 |
Gera Soluções e Tecnologia S.A. (1) |
36,833 |
|
(11,059) |
|
(25,774) |
|
- |
|
(41,324) |
|
|
|
|
|
|
|
|
|
2022 |
|
Assets |
|
Liabilities |
|
Equity |
|
Net operating revenue |
|
Income/(loss) |
Latitude Logística Portuária S.A. (1) |
73,106 |
|
(52,726) |
|
(20,380) |
|
8,757 |
|
2,222 |
Navegantes Logística Portuária S.A. (1) |
171,917 |
|
(106,843) |
|
(65,074) |
|
- |
|
(9,271) |
Nordeste Logística I S.A. (1) |
69,870 |
|
(57,073) |
|
(12,797) |
|
16,381 |
|
6,436 |
Nordeste Logística II S.A. (1) |
55,456 |
|
(14,535) |
|
(40,921) |
|
3,135 |
|
(2,697) |
Nordeste Logística III S.A. (1) |
74,913 |
|
(39,659) |
|
(35,254) |
|
10,222 |
|
960 |
Centro de Tecnologia Canavieira S.A. |
910,117 |
|
(98,557) |
|
(811,560) |
|
367,427 |
|
132,145 |
Logum Logística S.A. (1) |
3,226,669 |
|
(2,269,038) |
|
(957,631) |
|
177,416 |
|
(196,396) |
Uniduto Logística S.A. (1) |
106,378 |
|
(2,371) |
|
(104,007) |
|
- |
|
(19,663) |
Iogen Energy Corporation (2) |
34,065 |
|
(384,082) |
|
350,017 |
|
- |
|
(219) |
CGB Caruaru Energia Ltda. (1) |
15,861 |
|
(8,849) |
|
(7,012) |
|
7 |
|
6 |
J.F Energia S.A. (1) |
8,516 |
|
(3,812) |
|
(4,704) |
|
- |
|
- |
Rio Power Participações S.A. (1) |
25,836 |
|
(9,615) |
|
(16,221) |
|
- |
|
- |
Gera Soluções e Tecnologia S.A. (1) |
14,566 |
|
(1,435) |
|
(13,131) |
|
- |
|
- |
(1) | The fiscal year of these investees ends on December 31 of each year. |
(2) | Shared controlled company, in which the Company holds 50% of the common shares, whose fiscal year ends on August 31 of each year. The Company did not recognize an estimated loss of equity in subsidiaries since it is not responsible for legal or constructive (non-formalized) obligations to make payments on behalf of this company. |
54 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
12. Property, plant, and equipment
|
Land and rural properties |
|
Buildings and improvements |
|
Machinery, equipment, and facilities |
|
Aircraft, vessels and vehicles |
|
Furniture, fixtures, and IT equipment |
|
Construction in progress |
|
Sugarcane planting |
|
Frequently replaced parts and components |
|
Others |
|
Total |
Cost or valuation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2021 |
1,274,330 |
|
3,453,910 |
|
14,666,126 |
|
708,620 |
|
299,098 |
|
1,939,720 |
|
7,299,280 |
|
1,457,327 |
|
63,980 |
|
31,162,391 |
Business combination |
93,598 |
|
446,489 |
|
2,020,194 |
|
18,929 |
|
12,527 |
|
80,774 |
|
495,869 |
|
111,895 |
|
5,601 |
|
3,285,876 |
Additions |
24 |
|
21,608 |
|
131,913 |
|
2,968 |
|
7,407 |
|
2,707,534 |
|
1,040,396 |
|
1,502,920 |
|
16,533 |
|
5,431,303 |
Write-offs |
(16,267) |
|
(9,415) |
|
(165,362) |
|
(46,794) |
|
(3,713) |
|
(17,393) |
|
(24,215) |
|
- |
|
(12) |
|
(283,171) |
Constitution of estimated loss, net |
(2,809) |
|
(25,617) |
|
(20,040) |
|
10,307 |
|
(315) |
|
17,378 |
|
- |
|
- |
|
- |
|
(21,096) |
Transfers (1) |
8,408 |
|
310,118 |
|
1,219,781 |
|
20,137 |
|
47,913 |
|
(1,717,362) |
|
(273,022) |
|
(752,873) |
|
(1,632) |
|
(1,138,532) |
Effect of foreign currency translation and others |
(149,982) |
|
(184,035) |
|
(794,461) |
|
(8,405) |
|
(10,516) |
|
(184,613) |
|
- |
|
- |
|
(15,276) |
|
(1,347,288) |
As of March 31, 2022 |
1,207,302 |
|
4,013,058 |
|
17,058,151 |
|
705,762 |
|
352,401 |
|
2,826,038 |
|
8,538,308 |
|
2,319,269 |
|
69,194 |
|
37,089,483 |
Business combination (Note 30.(i)) |
3,757 |
|
48,269 |
|
87,304 |
|
18 |
|
1,120 |
|
15,677 |
|
- |
|
- |
|
- |
|
156,145 |
Additions |
3,924 |
|
26,135 |
|
74,964 |
|
980 |
|
5,378 |
|
5,291,671 |
|
1,490,683 |
|
1,591,022 |
|
12,245 |
|
8,497,002 |
Write-offs |
(46,904) |
|
(21,665) |
|
(278,942) |
|
(60,181) |
|
(9,113) |
|
(14,524) |
|
(6,103) |
|
- |
|
(200) |
|
(437,632) |
Reversal of estimated loss, net |
(330) |
|
5,023 |
|
8,844 |
|
3,043 |
|
1,340 |
|
- |
|
- |
|
- |
|
192 |
|
18,112 |
Transfers (1) |
3,335 |
|
84,266 |
|
1,318,885 |
|
22,741 |
|
43,643 |
|
(1,816,507) |
|
643 |
|
(1,545,102) |
|
239,869 |
|
(1,648,227) |
Effect of foreign currency translation and others |
51,860 |
|
74,358 |
|
287,271 |
|
3,062 |
|
3,673 |
|
69,330 |
|
- |
|
- |
|
(2,002) |
|
487,552 |
As of March 31, 2023 |
1,222,944 |
|
4,229,444 |
|
18,556,477 |
|
675,425 |
|
398,442 |
|
6,371,685 |
|
10,023,531 |
|
2,365,189 |
|
319,298 |
|
44,162,435 |
Accumulated depreciation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2021 |
- |
|
(790,955) |
|
(6,068,409) |
|
(386,525) |
|
(204,744) |
|
- |
|
(5,191,761) |
|
(752,358) |
|
(41,027) |
|
(13,435,779) |
Depreciation in the year |
- |
|
(156,561) |
|
(1,235,600) |
|
(61,246) |
|
(37,666) |
|
- |
|
(645,050) |
|
(942,702) |
|
(11,460) |
|
(3,090,285) |
Write-offs |
- |
|
4,030 |
|
131,114 |
|
40,383 |
|
2,147 |
|
- |
|
- |
|
- |
|
12 |
|
177,686 |
Transfers (1) |
- |
|
(191) |
|
9,536 |
|
(4,096) |
|
(463) |
|
- |
|
273,022 |
|
753,495 |
|
714 |
|
1,032,017 |
Effect of foreign currency translation and others |
- |
|
78,426 |
|
403,016 |
|
5,134 |
|
5,053 |
|
- |
|
- |
|
- |
|
101 |
|
491,730 |
As of March 31, 2022 |
- |
|
(865,251) |
|
(6,760,343) |
|
(406,350) |
|
(235,673) |
|
- |
|
(5,563,789) |
|
(941,565) |
|
(51,660) |
|
(14,824,631) |
Depreciation in the year |
- |
|
(171,837) |
|
(1,212,553) |
|
(64,204) |
|
(43,482) |
|
- |
|
(813,854) |
|
(1,566,256) |
|
(22,184) |
|
(3,894,370) |
Write-offs |
- |
|
11,563 |
|
228,082 |
|
57,193 |
|
10,822 |
|
- |
|
- |
|
- |
|
85 |
|
307,745 |
Transfers (1) |
- |
|
26,819 |
|
(43,882) |
|
(114) |
|
5,382 |
|
(3,079) |
|
- |
|
1,566,318 |
|
(85) |
|
1,551,359 |
Effect of foreign currency translation and others |
- |
|
(29,192) |
|
(150,324) |
|
(1,963) |
|
(1,872) |
|
- |
|
- |
|
- |
|
197 |
|
(183,154) |
As of March 31, 2023 |
- |
|
(1,027,898) |
|
(7,939,020) |
|
(415,438) |
|
(264,823) |
|
(3,079) |
|
(6,377,643) |
|
(941,503) |
|
(73,647) |
|
(17,043,051) |
Net residual value: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2023 |
1,222,944 |
|
3,201,546 |
|
10,617,457 |
|
259,987 |
|
133,619 |
|
6,368,606 |
|
3,645,888 |
|
1,423,686 |
|
245,651 |
|
27,119,384 |
As of March 31, 2022 |
1,207,302 |
|
3,147,807 |
|
10,297,808 |
|
299,412 |
|
116,728 |
|
2,826,038 |
|
2,974,519 |
|
1,377,704 |
|
17,534 |
|
22,264,852 |
(1) | Refers, substantially, to transfers of construction in progress to the corresponding asset categories after being capitalized, including transfers of software costs to “Intangible assets”. |
55 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
Construction in progress
The balances of construction in progress refer mainly to: (i) construction of E2G plant; (ii) expansion of the bioenergy park (Barra Mansa 1 Project – Paraguaçu); (iii) construction of solar energy generation and distribution plants; (iv) irrigation implementation and expansion projects; (v) improvements in irrigation systems (economizers); (vi) construction and expansion of biogas plants; (vii) construction of solar energy plants; (viii) investments in industrial maintenance and improvement, agricultural automation, in addition to Safety, Health and Environment and administrative investments; (ix) projects for the construction of new fuel distribution terminals and expansion, modernization and improvement of existing terminals; (x) investment in service stations under the Shell banner; (xi) investments in large clients (B2B), such as acquisition and installation of equipment, installation of gas stations in these large consumer clients; and (xii) expansion, modernization and improvement of airports, such as the acquisition of supply vehicles, expansion of fire hydrant networks and supply points. During the year ended March 31, 2023, several projects were concluded, totaling R$ 1,816,507 (R$ 1,531,254 in 2022).
Capitalization of borrowing costs
In the year ended March 31, 2023, borrowing costs at Raízen totaled R$ 74,233 (R$ 71,200 in 2022). As of March 31, 2023, the weighted average annual rates of financial charges for certain debts were 12.42% (6.36% in 2022).
Raízen S.A. |
Notes to the combined consolidated financial statements |
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023 |
In thousands of Reais - R$, unless otherwise indicated |
13. Intangible assets
|
Software license |
|
Goodwill |
|
Brands |
|
Contractual relationships with clients |
|
Operating authorization |
|
Granting rights and others |
|
Sharecropping agreements |
|
Sugarcane supply agreements |
|
Technology |
|
Total |
Cost or valuation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2021 |
763,102 |
|
2,758,749 |
|
532,348 |
|
428,231 |
|
- |
|
87,640 |
|
18,123 |
|
181,516 |
|
185,061 |
|
4,954,770 |
Business combination |
8,844 |
|
1,297,156 |
|
60,746 |
|
- |
|
- |
|
1,470 |
|
- |
|
- |
|
- |
|
1,368,216 |
Additions (1) |
133,013 |
|
- |
|
1,722,993 |
|
- |
|
- |
|
28,769 |
|
- |
|
- |
|
- |
|
1,884,775 |
Capital contribution |
- |
|
- |
|
- |
|
- |
|
- |
|
(5,000) |
|
- |
|
- |
|
- |
|
(5,000) |
Transfers (2) |
122,837 |
|
- |
|
- |
|
- |
|
- |
|
(18,347) |
|
(1) |
|
- |
|
75 |
|
104,564 |
Effect of foreign currency translation and others |
(11,384) |
|
(120,423) |
|
(10,189) |
|
(67,962) |
|
- |
|
(2,284) |
|
- |
|
- |
|
- |
|
(212,242) |
As of March 31, 2022 |
1,016,412 |
|
3,935,482 |
|
2,305,898 |
|
360,269 |
|
- |
|
92,248 |
|
18,122 |
|
181,516 |
|
185,136 |
|
8,095,083 |
Business combination (Note 30.(i)) |
7,709 |
|
(107,815) |
|
- |
|
35,062 |
|
124,711 |
|
- |
|
- |
|
- |
|
- |
|
59,667 |
Additions (3) |
225,051 |
|
- |
|
37,332 |
|
45,000 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
307,383 |
Write-offs |
(1,095) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(1,095) |
Transfers (2) |
97,219 |
|
- |
|
- |
|
- |
|
- |
|
(57,202) |
|
- |
|
- |
|
- |
|
40,017 |
Effect of foreign currency translation and others |
5,241 |
|
33,672 |
|
1,845 |
|
24,777 |
|
- |
|
(478) |
|
- |
|
- |
|
- |
|
65,057 |
As of March 31, 2023 |
1,350,537 |
|
3,861,339 |
|
2,345,075 |
|
465,108 |
|
124,711 |
|
34,568 |
|
18,122 |
|
181,516 |
|
185,136 |
|
8,566,112 |
Accumulated amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2021 |
(489,035) |
|
(431,380) |
|
(527,963) |
|
(70,330) |
|
- |
|
(34,966) |
|
(18,077) |
|
(119,015) |
|
(109,292) |
|
(1,800,058) |
Amortization in the year |
(94,389) |
|
- |
|
(122,496) |
|
(42,911) |
|
- |
|
(477) |
|
- |
|
(10,658) |
|
(18,450) |
|
(289,381) |
Transfers (2) |
(5,097) |
|
- |
|
- |
|
- |
|
- |
|
76 |
|
(1) |
|
- |
|
(75) |
|
(5,097) |
Effect of foreign currency translation and others |
4,750 |
|
- |
|
487 |
|
15,075 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
20,312 |
As of March 31, 2022 |
(583,771) |
|
(431,380) |
|
(649,972) |
|
(98,166) |
|
- |
|
(35,367) |
|
(18,078) |
|
(129,673) |
|
(127,817) |
|
(2,074,224) |
Amortization in the year |
(126,570) |
|
- |
|
(144,861) |
|
(35,294) |
|
(4,830) |
|
(977) |
|
(39) |
|
(3,841) |
|
(18,591) |
|
(335,003) |
Write-offs |
250 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
250 |
Transfers (2) |
(351) |
|
- |
|
- |
|
- |
|
- |
|
2,502 |
|
- |
|
- |
|
- |
|
2,151 |
Effect of foreign currency translation and others |
(1,739) |
|
- |
|
129 |
|
(6,239) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(7,849) |
As of March 31, 2023 |
(712,181) |
|
(431,380) |
|
(794,704) |
|
(139,699) |
|
(4,830) |
|
(33,842) |
|
(18,117) |
|
(133,514) |
|
(146,408) |
|
(2,414,675) |
Net residual value: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2023 |
638,356 |
|
3,429,959 |
|
1,550,371 |
|
325,409 |
|
119,881 |
|
726 |
|
5 |
|
48,002 |
|
38,728 |
|
6,151,437 |
As of March 31, 2022 |
432,641 |
|
3,504,102 |
|
1,655,926 |
|
262,103 |
|
- |
|
56,881 |
|
44 |
|
51,843 |
|
57,319 |
|
6,020,859 |
Raízen S.A. |
Notes to the combined consolidated financial statements |
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023 |
In thousands of Reais - R$, unless otherwise indicated |
(1)On May 20, 2021, Raízen signed the renewal of the license agreement for use of the Shell brand with Shell Brands, for a minimum period of 13 (thirteen) years, renewable in certain cases, subject to the compliance with certain conditions established in the contract.
(2)These refer to amounts transferred from the line item “Property, plant and equipment” in the amount of R$ 96,868 and transfers to the line item “Right of Use” in the amount of R$ 54,700 referring to the granting of lease contracts of public infrastructure areas.
(3)Neolubes signed the renewal of the license agreement for use of the Shell brand with Shell Brands, for a minimum term of 13 (thirteen) years, renewable in certain cases, subject to the compliance with certain conditions established in the agreement.
Goodwill
This refers to goodwill paid for expected future profitability. As of March 31, 2023, and 2022, the balance of goodwill is as follows:
|
2023 |
|
2022 |
On business combination of Cosan Combustíveis Lubrificantes S.A. |
348,103 |
|
348,103 |
On acquisition of Latina |
70,432 |
|
70,432 |
On acquisition of Raízen Argentina (1) |
303,573 |
|
283,101 |
On acquisition of Raízen Centro-Sul (Note 30.(i).a) |
687,385 |
|
757,487 |
On acquisition of Raízen Paraguay (Note 30.(i).b) (1) |
313,034 |
|
313,075 |
On acquisition of Costa Rica Canavieira Ltda. |
57,169 |
|
57,169 |
On acquisition of Cerrado Açúcar e Álcool S.A. |
24,660 |
|
24,660 |
On acquisition of RESA (formerly Cosan S.A. Açúcar e Álcool) |
558 |
|
558 |
On acquisition of Univalem S.A. Açúcar e Álcool |
5,018 |
|
5,018 |
On acquisition of Usina Açucareira Bom Retiro S.A. |
81,575 |
|
81,575 |
On acquisition of Usina Benálcool |
149,247 |
|
149,247 |
On acquisition of Usina Santa Luíza |
42,348 |
|
42,348 |
On acquisition of Usina Zanin Açúcar e Álcool |
98,380 |
|
98,380 |
On acquisition of Vertical |
4,313 |
|
4,313 |
On acquisition of Corona Group |
380,003 |
|
380,003 |
On acquisition of Destivale Group |
42,494 |
|
42,494 |
On acquisition of Mundial Group |
87,435 |
|
87,435 |
On establishment of FBA – Franco Brasileira S.A. Açúcar e Álcool |
4,407 |
|
4,407 |
On merger of Curupay S.A. Participações |
109,841 |
|
109,841 |
On payment of capital at Mundial |
14,800 |
|
14,800 |
On acquisition of Usinas Santa Cândida e Paraíso |
431,272 |
|
431,272 |
On acquisition of RWXE |
8,430 |
|
8,430 |
On acquisition of Ryballa |
5,400 |
|
5,400 |
On acquisition of Gera Nex Participações (Note 30.(i).c) |
63,288 |
|
163,504 |
On acquisition of Payly (Note 30.(i).e) |
75,744 |
|
- |
Others |
21,050 |
|
21,050 |
|
3,429,959 |
|
3,504,102 |
(1)As of March 31, 2023, the goodwill generated by the acquisition of Raízen Argentina and Raízen Paraguay includes the balance of the effect of foreign currency translation in the amount of R$ 81,674 and less R$ 49,845 (R$ 61,202 and less R$ 63,090 in 2022), respectively,
Raízen S.A. |
Notes to the combined consolidated financial statements |
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023 |
In thousands of Reais - R$, unless otherwise indicated |
Impairment analysis for cash generating units containing goodwill
Raízen assessed the recoverable amount of goodwill at least annually.
Management uses the value in use method to determine the recoverable amount, which is based on the projection of the discounted cash flows expected from the cash-generating units (CGU) determined by management based on the budgets that consider the assumptions related to each CGU, using information available in the market and prior performance.
The Company’s discounted cash flows related to the CGU “Marketing and Services” of Brazil, Argentina and Paraguay were prepared for a 5-year period and carried at perpetuity without considering the actual growth rate, based on past performance and expectations for market development. Cash flows arising from the continued use of related assets are adjusted for specific risks and use the post-tax discount rate, calculated at 9.16% per year (6.91% in 2022),
The main assumptions used by the Company were: (i) prices based on the market expectation, (ii) estimated growth rates for the business sector, and (iii) extrapolations of growth rates based on the Brazil, Argentina and Paraguay Gross Domestic Product (GDP). The entire future cash flow was discounted at rates that reflect specific risks related to the relevant assets in each cash-generating unit.
The discounted cash flows of the subsidiary RESA and its subsidiaries, which comprise substantially the CGUs “Sugar” and “Renewables”, were prepared for a period of 25 years, in accordance with a reasonable time to recover the assets related to the activities of their economic sector. No real growth rate was considered in the year of the cash flow or in perpetuity, based on past performance and expectations for market development. The discount rate used was 9.16% per year (6.91% in 2022).
The main assumptions used for subsidiary RESA and its subsidiaries were: (i) expected price of sales of commodities over the long term; (ii) productivity in agricultural areas; (iii) performance of Total Recoverable Sugar (“TRS”); and (iv) operating and administrative costs. The entire cash flow was discounted at rates that reflect specific risks related to the relevant assets in each cash-generating unit.
As a result of the annual impairment tests, no significant losses were recognized in the years ended March 31, 2023, and 2022. The determination of the recoverability of assets depends on certain key assumptions as described above, which are influenced by the market, technological and economic conditions prevailing when such test is carried out and, therefore, it is not possible to determine whether impairment losses will occur in the future and, in the event, they occur, if they will be material.
Raízen S.A. |
Notes to the combined consolidated financial statements |
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023 |
In thousands of Reais - R$, unless otherwise indicated |
14.Suppliers and advances to suppliers
(a)Suppliers
|
2023 |
|
2022 |
Suppliers - agreement (i) |
9,681,469 |
|
9,483,222 |
Suppliers of materials and services (ii) |
6,943,091 |
|
5,767,281 |
Oil products suppliers (iii) |
3,489,503 |
|
2,046,248 |
Ethanol suppliers (iii) |
798,385 |
|
879,788 |
Sugarcane suppliers (iv) |
539,890 |
|
882,975 |
|
21,452,338 |
|
19,059,514 |
Domestic (local currency) |
13,911,342 |
|
11,873,453 |
Abroad (foreign currency) (Note 27.d) |
7,540,996 |
|
7,186,061 |
|
21,452,338 |
|
19,059,514 |
(i)The Company has agreements related to payments with financial institutions (“Agreements”) through which certain suppliers may anticipate their receivables related to products and services provided to the Company, directly with financial institutions. Under such Agreements, the supplier elects whether to anticipate the receivables and the financial institutions decide whether or not to acquire said credits, without interference from Raízen. The use of the Agreements does not imply any change in the notes issued by the suppliers, maintaining the conditions regarding the original amounts and payment terms which is approximately 99 days, falling within the Company's ordinary operational cycle.
(ii)Balance payable to suppliers of materials and services refers to acquisitions of machinery and equipment for the bioenergy parks, distribution bases and own reseller gas stations, as well as several services contracted.
(iii)The balances payable to suppliers of oil products and ethanol refer to installment purchases made by Raízen.
(iv)The sugarcane harvest period, which usually takes place between April and December of each year, generally has a direct impact on the balance with sugarcane suppliers and the respective cutting, loading and transportation services.
(b)Advances to suppliers
|
2023 |
|
2022 |
Performance (1) |
- |
|
3,383,055 |
Sugarcane (2) |
401,325 |
|
691,247 |
Suppliers of materials and services |
211,664 |
|
332,165 |
|
612,989 |
|
4,406,467 |
Domestic (local currency) |
521,607 |
|
4,318,161 |
Abroad (foreign currency) |
91,382 |
|
88,306 |
|
612,989 |
|
4,406,467 |
Current |
(392,647) |
|
(4,215,961) |
Non-current |
220,342 |
|
190,506 |
(1) |
These refer to advances on commodity export performance, backed by US dollars, related to the purchase of goods for future delivery, specifically for export purposes, which were fully performed in the year ended March 31, 2023. |
(2) |
These refer to advances made to sugarcane suppliers that are monetarily adjusted on a monthly basis according to the conditions and indices specifically agreed in the contracts. |
Raízen S.A. |
Notes to the combined consolidated financial statements |
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023 |
In thousands of Reais - R$, unless otherwise indicated |
15Leases
(a)Right of use assets
As of March 31, 2023, right of use assets are presented in the following categories:
|
Land |
|
Properties and other |
|
Aircraft and vehicles |
|
Machinery and equipment |
|
Manufacturing facilities |
|
Total |
Cost or valuation: |
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2021 |
6,526,339 |
|
436,698 |
|
865,255 |
|
398,860 |
|
97,323 |
|
8,324,475 |
Business combination |
2,685,755 |
|
143 |
|
3,563 |
|
251,227 |
|
- |
|
2,940,688 |
Additions |
1,185,531 |
|
94,814 |
|
164,508 |
|
239,083 |
|
- |
|
1,683,936 |
Write-offs |
(391,678) |
|
(4,437) |
|
(48,965) |
|
(26,213) |
|
- |
|
(471,293) |
Remeasurements (1) |
3,117,724 |
|
104,620 |
|
35,205 |
|
(812) |
|
30,811 |
|
3,287,548 |
Transfers |
- |
|
5,013 |
|
(85) |
|
- |
|
- |
|
4,928 |
Effect of foreign currency translation and others |
(48,334) |
|
(32,491) |
|
(108,377) |
|
(325) |
|
- |
|
(189,527) |
As of March 31, 2022 |
13,075,337 |
|
604,360 |
|
911,104 |
|
861,820 |
|
128,134 |
|
15,580,755 |
Business combination (Note 30.(i).d) |
- |
|
512 |
|
- |
|
- |
|
- |
|
512 |
Additions |
1,456,951 |
|
213,768 |
|
861,866 |
|
107,671 |
|
- |
|
2,640,256 |
Write-offs |
(459,078) |
|
(2,205) |
|
(21,214) |
|
(24,817) |
|
- |
|
(507,314) |
Remeasurements (1) |
15,592 |
|
52,577 |
|
25,518 |
|
23,709 |
|
11,883 |
|
129,279 |
Transfers |
(8,637) |
|
64,810 |
|
7,645 |
|
(66) |
|
- |
|
63,752 |
Effect of foreign currency translation and others |
13,360 |
|
13,006 |
|
37,980 |
|
85 |
|
- |
|
64,431 |
As of March 31, 2023 |
14,093,525 |
|
946,828 |
|
1,822,899 |
|
968,402 |
|
140,017 |
|
17,971,671 |
Accumulated amortization: |
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2021 |
(1,747,416) |
|
(241,355) |
|
(475,548) |
|
(102,643) |
|
(11,886) |
|
(2,578,848) |
Amortization in the year |
(1,952,606) |
|
(142,020) |
|
(221,673) |
|
(164,428) |
|
(6,512) |
|
(2,487,239) |
Write-offs |
115,450 |
|
701 |
|
38,264 |
|
4,230 |
|
- |
|
158,645 |
Transfers |
- |
|
(5,013) |
|
- |
|
- |
|
- |
|
(5,013) |
Effect of foreign currency translation and others |
8,950 |
|
25,224 |
|
77,070 |
|
91 |
|
- |
|
111,335 |
As of March 31, 2022 |
(3,575,622) |
|
(362,463) |
|
(581,887) |
|
(262,750) |
|
(18,398) |
|
(4,801,120) |
Amortization in the year |
(2,386,350) |
|
(134,639) |
|
(274,031) |
|
(192,092) |
|
(8,217) |
|
(2,995,329) |
Write-offs |
141,268 |
|
(974) |
|
11,484 |
|
575 |
|
- |
|
152,353 |
Transfers |
2,924 |
|
1,119 |
|
(13,086) |
|
(9) |
|
- |
|
(9,052) |
Effect of foreign currency translation and others |
(3,656) |
|
(9,662) |
|
(29,101) |
|
(31) |
|
- |
|
(42,450) |
As of March 31, 2023 |
(5,821,436) |
|
(506,619) |
|
(886,621) |
|
(454,307) |
|
(26,615) |
|
(7,695,598) |
Net residual value: |
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2023 |
8,272,089 |
|
440,209 |
|
936,278 |
|
514,095 |
|
113,402 |
|
10,276,073 |
As of March 31, 2022 |
9,499,715 |
|
241,897 |
|
329,217 |
|
599,070 |
|
109,736 |
|
10,779,635 |
(1) |
Index adjustment, substantially comprised of the variation in the price of the Council of Sugarcane, Sugar and Ethanol Producers of the State of São Paulo (“CONSECANA”) applied to lease and sharecropping agreements of RESA and its subsidiaries. |
Raízen S.A. |
Notes to the combined consolidated financial statements |
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023 |
In thousands of Reais - R$, unless otherwise indicated |
We present below the weighted average amortization rates by class of right of use as of March 31, 2023, and 2022:
Class |
|
2023 |
|
2022 |
Land |
|
12% |
|
18% |
Properties |
|
16% |
|
34% |
Aircraft and vehicles |
|
14% |
|
22% |
Machinery and equipment |
|
15% |
|
17% |
Manufacturing facilities |
|
6% |
|
6% |
(b)Lease liabilities
Changes in lease liabilities in the years ended March 31, 2023, and 2022 are as follows:
As of March 31, 2021 |
5,075,194 |
Business combination |
3,140,666 |
Additions |
1,585,732 |
Write-offs |
(236,699) |
Payments |
(2,512,155) |
Interest |
722,465 |
Amortizations by advances and others |
(112,175) |
Remeasurements (1) |
2,824,801 |
Effect of foreign currency translation |
(63,125) |
As of March 31, 2022 |
10,424,704 |
Business combination (Note 30.(i)) |
512 |
Additions |
2,423,737 |
Write-offs |
(304,949) |
Payments |
(2,737,691) |
Interest |
979,002 |
Amortization by advances and others |
(117,590) |
Remeasurements (1) |
125,463 |
Effect of foreign currency translation |
21,321 |
As of March 31, 2023 |
10,814,509 |
Domestic (local currency) |
10,440,259 |
Abroad (foreign currency) (Note 27.d) |
374,250 |
|
10,814,509 |
Current |
(2,658,519) |
Non-current |
8,155,990 |
(1) |
Updating of the restatement index, substantially composed of the variation in the price of CONSECANA applied to lease and sharecropping agreements of RESA and its subsidiaries. |
Raízen S.A. |
Notes to the combined consolidated financial statements |
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023 |
In thousands of Reais - R$, unless otherwise indicated |
The weighted average incremental rate applied to the Company’s lease liabilities as of March 31, 2023, was 10.1% (9.3% in 2022).
As of March 31, 2023, the maturity of lease liabilities of third parties and related parties (Note 9.a) is as follows:
Maturity |
|
Present value |
|
Future value |
1 to 12 months |
|
2,892,145 |
|
3,483,761 |
13 to 24 months |
|
2,053,205 |
|
2,899,494 |
25 to 36 months |
|
1,729,010 |
|
2,383,116 |
37 to 48 months |
|
1,472,012 |
|
1,965,098 |
49 to 60 months |
|
1,057,371 |
|
1,419,557 |
61 to 72 months |
|
754,666 |
|
1,018,930 |
73 to 84 months |
|
510,808 |
|
707,254 |
85 to 96 months |
|
383,087 |
|
530,113 |
97 to 120 months |
|
485,195 |
|
690,099 |
More than 121 months |
|
710,119 |
|
1,034,244 |
Gross amount |
|
12,047,618 |
|
16,131,666 |
Potential right of PIS and COFINS recoverable (1) |
|
1,079,787 |
|
1,439,887 |
(1) |
This refers to the potential right of PIS/COFINS credits on payments of lease calculated based on the theoretical rate of 9.25%, applicable in Brazil. The purpose of this disclosure is to comply with Memorandum Circular CVM/SNC/SEP No. 02/2019 and is only an estimate. Therefore, these credits are not those that could effectively be used by Raízen, and its subsidiaries located in Brazil in the future. In such event, the referred to credits may be materially different due to possibility of the effective rate being different from the theoretical rate or due to subsequent changes in Brazilian tax legislation. |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
16.Loans and financing
Purpose |
|
Final maturity |
|
Index |
|
Annual effective average interest rate (1) |
|
|
|
|
||
|
|
|
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Debt classification per currency: |
|
|
|
|
|
|
|
|
|
|
|
|
Denominated in Brazilian real (R$) |
|
|
|
|
|
|
|
|
|
13,178,849 |
|
8,667,568 |
Denominated in foreign currency (Note 27.d) |
|
|
|
|
|
|
|
|
|
16,305,127 |
|
13,657,246 |
|
|
|
|
|
|
|
|
|
|
29,483,976 |
|
22,324,814 |
Debt type (2): |
|
|
|
|
|
|
|
|
|
|
|
|
PPE |
|
Mar/30 |
|
US$ + Libor |
|
4.92% |
|
2.10% |
|
6,714,549 |
|
7,283,197 |
PPE |
|
Mar/29 |
|
Fixed rate |
|
4.10% |
|
2.56% |
|
3,833,982 |
|
1,338,946 |
PPE |
|
May/27 |
|
SOFR |
|
6.74% |
|
- |
|
253,010 |
|
- |
Senior Notes Due 2027 |
|
Jan/27 |
|
US$ |
|
5.30% |
|
5.30% |
|
3,622,804 |
|
3,565,225 |
Agribusiness Receivables Certificate (“CRA”) |
|
Aug/37 |
|
IPCA |
|
10.36% |
|
10.35% |
|
5,906,491 |
|
3,721,611 |
Agribusiness Receivables Certificate (“CRA”) |
|
Jul/29 |
|
CDI |
|
13.18% |
|
11.29% |
|
1,836,809 |
|
2,297,306 |
BNDES |
|
Mar/24 |
|
URTJLP |
|
7.45% |
|
6.08% |
|
314 |
|
982 |
BNDES |
|
Dec/30 |
|
Fixed rate |
|
4.20% |
|
3.66% |
|
92,595 |
|
176,269 |
BNDES |
|
Apr/24 |
|
UMBND |
|
5.41% |
|
5.04% |
|
5,785 |
|
14,315 |
BNDES |
|
Dec/38 |
|
IPCA |
|
9.23% |
|
11.72% |
|
150,840 |
|
160,546 |
Advances on Exchange Contracts (“ACC”) |
|
- |
|
Fixed rate |
|
- |
|
1.21% |
|
- |
|
189,843 |
Debentures |
|
Mar/32 |
|
IPCA + interest |
|
9.80% |
|
11.26% |
|
2,432,079 |
|
1,170,895 |
Term Loan Agreement |
|
Apr/24 |
|
US$ + Libor |
|
6.01% |
|
2.00% |
|
1,014,572 |
|
957,484 |
Rural financial product note (“CPF-R”) |
|
Nov/29 |
|
CDI |
|
15.74% |
|
13.42% |
|
1,052,373 |
|
1,037,064 |
Schuldschein |
|
- |
|
Euribor |
|
- |
|
1.82% |
|
- |
|
318,931 |
Finep |
|
- |
|
Fixed rate |
|
- |
|
5.00% |
|
- |
|
22,069 |
Machinery and Equipment Financing (Finame)/Lease |
|
Jul/25 |
|
Fixed rate |
|
6.93% |
|
6.70% |
|
13,657 |
|
27,358 |
Resolution No, 2471 (PESA) |
|
Apr/23 |
|
IGP-M |
|
5.01% |
|
16.51% |
|
35,303 |
|
35,226 |
Resolution No, 2471 (PESA) |
|
Oct/25 |
|
Fixed rate |
|
3.00% |
|
3.00% |
|
23 |
|
30 |
Export Credit Notes (“NCE”) |
|
Jul/30 |
|
CDI |
|
15.69% |
|
- |
|
1,652,582 |
|
- |
Working capital and others |
|
Mar/24 |
|
Fixed rate |
|
13.13% |
|
2.84% |
|
866,208 |
|
7,517 |
|
|
|
|
|
|
|
|
|
|
29,483,976 |
|
22,324,814 |
Expenses incurred with the placement of the securities: |
|
|
|
|
|
|
|
|
||||
CRA |
|
|
|
|
|
|
|
|
|
(2,394) |
|
(25,316) |
CPR-F |
|
|
|
|
|
|
|
|
|
(8,570) |
|
(9,855) |
Senior Notes Due 2027 |
|
|
|
|
|
|
|
|
|
(2,622) |
|
(3,099) |
BNDES |
|
|
|
|
|
|
|
|
|
(1,198) |
|
(1,653) |
PPE |
|
|
|
|
|
|
|
|
|
(6,598) |
|
(10,015) |
NCE |
|
|
|
|
|
|
|
|
|
(7,656) |
|
- |
|
|
|
|
|
|
|
|
|
|
(29,038) |
|
(49,938) |
|
|
|
|
|
|
|
|
|
|
29,454,938 |
|
22,274,876 |
Current |
|
|
|
|
|
|
|
|
|
(4,855,395) |
|
(1,565,260) |
Non-current |
|
|
|
|
|
|
|
|
|
24,599,543 |
|
20,709,616 |
(1) | The annual effective interest rate corresponds to the contract fee plus Libor (London InterBank Offered Rate), Euribor (European Interbank Offered Rate), SOFR (Secured Overnight Financing Rate), URTJLP, IGP-M, UMBND, IPCA or CDI, where applicable. |
(2) | Loans and financing are generally guaranteed by promissory notes from Raízen. In certain cases, they also have security interest, such as: i) credit rights arising from energy trading contracts (BNDES); ii) National Treasury Certificates (“CTN”) and land mortgage (PESA); iii) property, plant, and equipment; and/or iv) fiduciary alienation of financed assets (Finame/PESA). |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
As of March 31, 2023, overdue installments in the long term, less amortization of expenses with placement, is as follows:
Maturity |
|
2023 |
13 to 24 months |
|
4,837,670 |
25 to 36 months |
|
1,305,443 |
37 to 48 months |
|
5,410,090 |
49 to 60 months |
|
3,819,063 |
61 to 72 months |
|
4,280,241 |
73 to 84 months |
|
2,186,297 |
85 to 96 months |
|
1,015,843 |
More than 97 months |
|
1,744,896 |
|
|
24,599,543 |
Raízen’s main loans and financing are detailed below:
(a)Pre-export financing
Between 2015 and 2022, the Company and its subsidiaries entered into pre-export financing agreements with various financial institutions for financing for future export of products, including the withdrawal from credit facilities held by the Company with a syndicate of international banks. During the year ended March 31, 2023, the Company, through its subsidiaries RESA and Raízen Argentina, entered into new PPE agreements totaling R$ 4,386,107 (R$ 4,215,685 in 2022), equivalent to US$ 872,406 thousand (US$ 785,094 thousand in 2022). Outstanding PPE agreements on March 31,2023 expire in 2030.
In March 2023, the Company renegotiated the maturities of certain PPE contracts, originally scheduled for 2023 and 2025, in the amount of US$425,000 thousand, equivalent to R$2,161,185, for new maturities between 2028 and 2030, with immaterial changes to other contractual terms.
(b)Term Loan Agreement
On March 25, 2019, the indirect subsidiary Raízen Fuels took out a syndicated loan of US$ 200,000 thousand, corresponding to approximately R$ 775,00 on that date, with final maturity on April 30, 2024.
(c)Senior Notes Due 2027
In January 2017 and July 2020, the indirect subsidiary Raízen Fuels issued Senior Notes in the international market, totaling the principal amount of US$ 500,000 thousand and US$ 225,000 thousand, respectively, with payment of half-yearly interest in July each year and principal in January 2027.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(d)Agribusiness Receivables Certificate (CRA)
The funds raised were used in the activities conducted by the Company and its subsidiaries, substantially related to agribusiness, in the ordinary course of business. As of March 31, 2023, the CRA agreements payable are as follows:
Taken out on |
|
Company |
|
Issuer |
|
Issue |
|
Series |
|
Maturity |
|
Principal |
May/16 |
|
RESA |
|
RB Capital Companhia de Securitização |
|
1st |
|
4th |
|
May/23 |
|
209,294 |
May/17 |
|
RESA |
|
RB Capital Companhia de Securitização |
|
1st |
|
6th |
|
Apr/23 |
|
738,814 |
May/17 |
|
RESA |
|
RB Capital Companhia de Securitização |
|
1st |
|
7th |
|
Apr/24 |
|
230,877 |
Dec/17 |
|
Raízen S.A. |
|
RB Capital Companhia de Securitização |
|
1st |
|
11th |
|
Dec/23 |
|
501,489 |
Dec/17 |
|
Raízen S.A. |
|
RB Capital Companhia de Securitização |
|
1st |
|
12th |
|
Dec/24 |
|
204,024 |
Mar/19 |
|
RESA |
|
RB Capital Companhia de Securitização |
|
6th |
|
1st |
|
Mar/25 |
|
300,000 |
Mar/19 |
|
RESA |
|
RB Capital Companhia de Securitização |
|
6th |
|
2nd |
|
Mar/26 |
|
600,000 |
Jul/19 |
|
RESA |
|
True Securitizadora S.A. |
|
6th |
|
1st |
|
Jul/29 |
|
228,190 |
Jul/19 |
|
RESA |
|
True Securitizadora S.A. |
|
6th |
|
2nd |
|
Jul/29 |
|
787,658 |
Jun/20 |
|
RESA |
|
True Securitizadora S.A. |
|
8th |
|
2nd |
|
Jun/27 |
|
352,426 |
Jun/20 |
|
RESA |
|
True Securitizadora S.A. |
|
8th |
|
2nd |
|
Jun/30 |
|
728,056 |
Sep/22 |
|
RESA |
|
True Securitizadora S.A. |
|
38th |
|
1st |
|
Aug/32 |
|
1,060,000 |
Sep/22 |
|
RESA |
|
True Securitizadora S.A. |
|
38th |
|
2nd |
|
Aug/37 |
|
940,000 |
|
|
|
|
|
|
|
|
|
|
|
|
6,880,828 |
In May 2022, RESA settled the CRA agreement, related to the first issue of the single series signed in May 2016, in the principal amount of R$ 465,706.
(e)Debentures
Between November 2019 and April 2022, the Brazilian SEC (“CVM”) granted to subsidiary RESA registration for its Public Issue of Simple Debentures, non-convertible into shares, of the unsecured type, at the nominal value of R$ 1,000,00, as shown below:
|
|
Index |
|
Principal |
|
Receipt date |
|
Maturity |
4th Series |
|
IPCA |
900,000 |
|
11/28/2019 |
|
11/16/2029 |
|
5th Series |
|
IPCA |
|
169,518 |
|
06/15/2020 |
|
06/15/2030 |
7th Series I (1) |
|
IPCA |
|
768,094 |
|
04/13/2022 |
|
03/15/2029 |
7th Series II (1) |
|
IPCA |
|
428,591 |
|
04/13/2022 |
|
03/15/2032 |
|
|
|
|
2,266,203 |
|
|
|
|
(1) | Contracts entered into by RESA related to the first issue of Sustainability-Linked Debentures (SLD) linked to Environmental, Social and Corporate Governance (ESG) goals. |
(f)Advances on Exchange Contracts (ACC)
In May and June 2022, the subsidiary RESA raised ACCs in the amount of R$ 442,350, equivalent to US$ 90,000 thousand, which were fully settled during the year ended March 31, 2023.
(g)NCE
In July and December 2022, the subsidiary RESA raised NCEs in the amount of R$ 600,000 and R$ 1,000,000, with final maturity in July 2030 and December 2029, respectively.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(h)Other loans raised and/or settled in this year
In June 2022, the subsidiary RESA raised R$1,750,000 for working capital with annual fixed rate of 14.09%. This agreement was fully settled in March 2023.
In September 2022, the indirect subsidiary Raízen Fuels settled the Schuldschein agreement, signed in September 2015, in the principal amount of € 60,000 thousand, for R$ 317,842, of which R$ 316,120 refers to principal and R$ 1,722 to interest.
(i)Revolving Credit Facility
As of March 31, 2023, the revolving credit facilities taken out by the Company and not used until the closing date of these financial statements are as follows:
Beneficiary |
|
Institution |
|
Amount in US$ |
|
Maturity |
Raízen Fuels |
|
Syndicate of banks |
|
300,000 |
|
Apr/2024 |
Raízen Fuels |
|
Syndicate of banks |
|
700,000 |
|
Dec/2026 |
|
|
|
|
1,000,000 |
|
|
(j)Covenants
The Company is not subject to compliance with financial ratios and is subject only to certain covenants of loan and financing agreements, such as cross-default and negative pledge, which have been met in accordance with contractual requirements. As of March 31, 2023, and 2022, the Company is in compliance with all covenants referring to loans, financing and debentures.
(k)Fair value
As of March 31, 2023, and 2022, the carrying amount and fair value of the loans and financing, determined by level 2 of the fair value hierarchy, are shown below:
|
|
Amount raised, updated |
|
Fair value (1) |
|
Financial income (expenses) |
||||||||
Type |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2021 |
PPE |
|
9,281,619 |
|
5,909,878 |
|
9,079,993 |
|
5,908,687 |
|
200,436 |
|
27,900 |
|
29,056 |
CRA |
|
6,201,995 |
|
3,437,400 |
|
5,906,491 |
|
3,300,027 |
|
158,131 |
|
185,230 |
|
10,837 |
Term Loan Agreement |
|
1,017,947 |
|
948,244 |
|
1,014,572 |
|
957,484 |
|
12,615 |
|
1,419 |
|
397 |
Senior Notes Due 2027 |
|
1,948,031 |
|
3,499,794 |
|
1,824,506 |
|
3,565,225 |
|
188,957 |
|
261,804 |
|
12,465 |
Schuldschein |
|
- |
|
315,524 |
|
- |
|
318,931 |
|
3,407 |
|
16,135 |
|
16,149 |
Debentures |
|
2,613,704 |
|
1,291,025 |
|
2,432,079 |
|
1,170,895 |
|
61,495 |
|
89,703 |
|
(5,741) |
|
|
21,063,296 |
|
15,401,865 |
|
20,257,641 |
|
15,221,249 |
|
625,041 |
|
582,191 |
|
63,163 |
(1) |
Includes a fair value assessment balance as of March 31, 2023, and 2022, amounting to R$ 805,655 and R$ 180,614, respectively. |
Other loans and financing have no quoted value and the fair value substantially approximates their carrying amount, due to exposure to variable interest rates and the immaterial changes in the Raízen’s credit risk.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
17.Income tax and social contribution
(a)Reconciliation of income tax and social contribution income (expenses)
|
2023 |
|
2022 |
|
2021 |
Income before income tax and social contribution |
3,263,580 |
|
4,251,352 |
|
2,206,643 |
Income tax and social contribution at nominal rate (34%) |
(1,109,617) |
|
(1,445,460) |
|
(750,259) |
Adjustments to calculate the effective rate: |
|
|
|
|
|
Government grant |
175,489 |
|
78,386 |
|
28,258 |
Tax overpayment - Selic (1) |
98,141 |
|
79,093 |
|
- |
Change in rate of foreign company (2) |
- |
|
(195,038) |
|
(12,773) |
Unrecognized deferred taxes |
3,197 |
|
76,767 |
|
(11,810) |
Reversal of deferred taxes (3) |
(94,796) |
|
- |
|
- |
Effect of foreign exchange variations on assets and liabilities abroad |
25,859 |
|
154,389 |
|
(24,232) |
Interest on own capital |
97,648 |
|
154,524 |
|
50,055 |
Difference between deemed income and taxable income rates |
35,728 |
|
57,870 |
|
34,295 |
Equity accounting result |
(44,231) |
|
57,587 |
|
(22,550) |
Others |
52,328 |
|
9,162 |
|
49,214 |
Income tax and social contribution income (expenses) |
(760,254) |
|
(972,720) |
|
(659,802) |
Effective rate |
23.3% |
|
22.9% |
|
29.9% |
(1) | On September 24, 2021, the Federal Supreme Court of Brazil (“STF”), upon ruling Appeal No. 1,063,187 that has not yet become final and unappealable, recognized the unconstitutionality of the IRPJ and CSLL on the Selic-based adjustment (arrears interest and monetary update) levied on tax overpayments. The Company and its subsidiaries are parties to ongoing individual lawsuits, which have not yet become final and unappealable, claiming the definitive exclusion of this tax levy. Considering the legal grounds contained in the appeal to the STF, the Company reassessed the likelihood of success, considering that it is probable that the tax treatment will be accepted, and started recognizing the credit from IRPJ and CSLL. |
(2) | This refers to the change in Argentine tax legislation, enacted in June 2021, which changed the income tax rate from 25% to 35%. |
(3) | On March 31, 2023, the indirect subsidiary Raízen Biomassa reversed the totality of the deferred tax assets due to the revision of the evaluation of its ability to recover the referred credits, resulting from projections of future taxable income. |
(b)Recoverable income tax and social contribution
|
2023 |
|
2022 |
IRPJ |
622,058 |
|
516,493 |
CSLL |
211,950 |
|
120,476 |
Tax credits of domestic entities |
834,008 |
|
636,969 |
Tax credits of entities abroad |
442,975 |
|
40,703 |
|
1,276,983 |
|
677,672 |
Current assets |
(744,795) |
|
(605,854) |
Non-current assets |
532,188 |
|
71,818 |
On March 31, 2023, the indirect subsidiary Raízen Biomassa reversed all deferred tax assets, due to the review of the assessment of its ability to recover said credits, resulting from projections of future taxable income.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(c)Income tax and social contribution payable (current)
|
2023 |
|
2022 |
IRPJ |
27,183 |
|
118,613 |
CSLL |
8,841 |
|
37,558 |
Tax debts of domestic entities |
36,024 |
|
156,171 |
Tax debts of entities abroad |
5,155 |
|
4,495 |
|
41,179 |
|
160,666 |
(d) Deferred income tax and social contribution assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
Assets/(liabilities) |
Basis |
|
IRPJ 25% |
|
Basis |
|
IRPJ 25% |
|
CSLL 9% |
|
Total |
|
Total |
Tax losses |
1,148,140 |
|
287,035 |
|
11,857,104 |
|
2,964,276 |
|
- |
|
2,964,276 |
|
2,462,315 |
Tax losses of foreign entities |
- |
|
- |
|
235,296 |
|
58,824 |
|
- |
|
58,824 |
|
6,190 |
Negative basis for social contribution |
1,149,644 |
|
- |
|
12,537,478 |
|
- |
|
1,128,373 |
|
1,128,373 |
|
836,405 |
Temporary differences: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Remuneration and employee benefits |
193,244 |
|
48,311 |
|
710,709 |
|
177,677 |
|
63,964 |
|
241,641 |
|
194,099 |
Unrealized income (loss) from derivatives |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
533,537 |
Lease liability and right of use |
31,415 |
|
7,854 |
|
2,157,832 |
|
539,458 |
|
194,205 |
|
733,663 |
|
399,466 |
Tax overpayment – Selic |
81,309 |
|
20,327 |
|
402,547 |
|
100,637 |
|
36,229 |
|
136,866 |
|
70,875 |
Share-based payment |
58,003 |
|
14,501 |
|
58,003 |
|
14,501 |
|
5,220 |
|
19,721 |
|
14,384 |
Fair value of inventories |
2,951 |
|
738 |
|
2,951 |
|
738 |
|
266 |
|
1,004 |
|
2,753 |
Exchange variation |
856,909 |
|
214,227 |
|
2,252,603 |
|
563,151 |
|
202,734 |
|
765,885 |
|
492,527 |
Capitalized borrowing costs |
10,888 |
|
2,722 |
|
- |
|
- |
|
- |
|
- |
|
- |
Provisions and other temporary differences |
700,159 |
|
175,040 |
|
1,840,444 |
|
460,111 |
|
165,640 |
|
625,751 |
|
779,418 |
Total deferred tax assets |
|
|
770,755 |
|
|
|
4,879,373 |
|
1,796,631 |
|
6,676,004 |
|
5,791,969 |
Amortized tax goodwill |
(940,094) |
|
(235,024) |
|
(2,535,524) |
|
(633,881) |
|
(228,197) |
|
(862,078) |
|
(787,932) |
Capitalized borrowing costs |
- |
|
- |
|
(339,609) |
|
(84,902) |
|
(30,565) |
|
(115,467) |
|
(106,490) |
Biological assets |
- |
|
- |
|
(2,169,382) |
|
(542,346) |
|
(195,244) |
|
(737,590) |
|
(801,785) |
Refund of ICMS |
(284,315) |
|
(71,079) |
|
(481,815) |
|
(120,454) |
|
(43,363) |
|
(163,817) |
|
(98,972) |
Revaluation of property, plant and equipment |
- |
|
- |
|
(1,165,741) |
|
(291,435) |
|
(104,917) |
|
(396,352) |
|
(527,229) |
Effect on changes in depreciation rates of PPE |
(351,921) |
|
(87,980) |
|
(2,966,915) |
|
(741,729) |
|
(267,022) |
|
(1,008,751) |
|
(1,033,465) |
Unrealized income (loss) from derivatives |
(514,638) |
|
(128,660) |
|
(410,976) |
|
(102,744) |
|
(36,988) |
|
(139,732) |
|
- |
Fair value of financial liabilities |
(161,076) |
|
(40,269) |
|
(686,953) |
|
(171,738) |
|
(61,826) |
|
(233,564) |
|
(57,191) |
Fair value in the formation of the joint venture (Note 11.b) |
(480,278) |
|
(120,069) |
|
(480,278) |
|
(120,069) |
|
(43,225) |
|
(163,294) |
|
(168,517) |
Contractual relationships with clients |
(155,829) |
|
(38,957) |
|
(157,994) |
|
(39,499) |
|
(14,219) |
|
(53,718) |
|
(59,549) |
Fair value of property, plant and equipment items, intangible assets and others |
(123,379) |
|
(30,845) |
|
(966,306) |
|
(241,576) |
|
(86,968) |
|
(328,544) |
|
(361,188) |
Total deferred tax liabilities |
|
|
(752,883) |
|
|
|
(3,090,373) |
|
(1,112,534) |
|
(4,202,907) |
|
(4,002,318) |
Total deferred taxes |
|
|
17,872 |
|
|
|
1,789,000 |
|
684,097 |
|
2,473,097 |
|
1,789,651 |
Deferred taxes - Assets, net |
|
|
|
|
|
|
|
|
|
|
3,636,927 |
|
3,163,593 |
Deferred taxes - Liabilities, net |
|
|
|
|
|
|
|
|
|
|
(1,163,830) |
|
(1,373,942) |
Total deferred taxes |
|
|
|
|
|
|
|
|
|
|
2,473,097 |
|
1,789,651 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(e)Changes in deferred taxes, net
As of March 31, 2020 |
(623,278) |
Use of income tax and social contribution tax loss carryforwards for settlement of Refis |
(13,794) |
Credit in P&L |
804,802 |
Deferred taxes on other comprehensive income |
643,605 |
Effect of foreign currency translation and others |
(196,649) |
As of March 31, 2021 |
614,686 |
Business combination |
1,113,368 |
Credit on share issuance costs (Note 20.a) |
56,504 |
Credit in P&L |
446,539 |
Deferred taxes on other comprehensive income |
(615,232) |
Effect of foreign currency translation and others |
173,786 |
As of March 31, 2022 |
1,789,651 |
Business combination (Note 30.(i)) |
77,624 |
Credit in P&L |
916,353 |
Deferred taxes on other comprehensive income |
(124,912) |
Use of income tax and social contribution tax loss carryforwards for settlement of Refis |
(2,833) |
Effect of foreign currency translation and others |
(182,786) |
As of March 31, 2023 |
2,473,097 |
(f)Realization of deferred income tax and social contribution
In assessing the ability to recover deferred taxes, management takes into consideration projections of future taxable profit and changes in temporary differences. Deferred tax assets are recognized only when it is probable that they will be used in the future. There is no expiration date for the use of the income tax and social contribution tax loss carryforwards balances, however the use of the tax loss carryforward is limited to 30% of annual taxable profits.
As of March 31, 2023, Raízen expects to realize deferred tax assets in certain entities, including income and social contribution tax loss carryforwards and temporary differences, as follows:
Years |
|
Total |
2023 and 2024 |
|
899,781 |
2025 |
|
781,165 |
2026 |
|
482,355 |
2027 |
|
956,743 |
From 2027 onwards |
|
3,555,960 |
Total |
|
6,676,004 |
(g)Uncertain tax positions
From the perspective of the provisions of this decision and considering the Company's accounting policies, as well as Circular Letter No. 1/2023/CVM/SNC/SEP of February 13, 2023, the Company evaluated its final and unappealable legal proceedings and did not identify material impact on the individual and consolidated financial statements for the year ended March 31, 2023.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
18.Provision for legal disputes and judicial deposits
Breakdown of legal disputes considered as probable loss
When Raízen was set up in 2011 it was agreed that Shell and Cosan would reimburse Raízen and its subsidiaries for legal disputes that were ongoing or originated before its formation. As of March 31, 2023, and 2022, the balances of reimbursable and non-reimbursable lawsuits are described below:
|
2023 |
|
2022 |
Tax |
607,457 |
|
608,725 |
Civil |
443,855 |
|
463,364 |
Labor |
787,251 |
|
672,124 |
Environmental |
85,447 |
|
91,740 |
|
1,924,010 |
|
1,835,953 |
Non-reimbursable legal disputes |
991,160 |
|
913,218 |
Reimbursable legal disputes |
932,850 |
|
922,735 |
|
1,924,010 |
|
1,835,953 |
When Raízen was set up in 2011 it was also agreed that the Company and its subsidiaries would reimburse shareholders Shell and Cosan regarding the judicial deposits made on the date before its formation. As of March 31, 2023, and 2022, the balances of refundable deposits and non-refundable deposits are as follows:
|
2023 |
|
2022 |
Tax |
537,750 |
|
469,245 |
Civil |
41,297 |
|
79,734 |
Labor |
165,833 |
|
174,481 |
|
744,880 |
|
723,460 |
Own judicial deposits |
448,541 |
|
356,426 |
Refundable judicial deposits |
296,339 |
|
367,034 |
|
744,880 |
|
723,460 |
(i)Non-reimbursable legal disputes
|
Tax |
|
Civil |
|
Labor |
|
Environmental |
|
Total |
As of March 31, 2022 |
135,759 |
|
147,895 |
|
588,451 |
|
41,113 |
|
913,218 |
Provisioned for the year (a) |
30,369 |
|
40,015 |
|
290,401 |
|
- |
|
360,785 |
Reversals and write-offs (a) |
(63,306) |
|
(10,145) |
|
(157,198) |
|
(11,135) |
|
(241,784) |
Payments |
(22,165) |
|
(9,598) |
|
(113,144) |
|
(2,220) |
|
(147,127) |
Monetary and foreign exchange updates (b) |
13,024 |
|
15,361 |
|
104,987 |
|
2,315 |
|
135,687 |
Effect of foreign currency translation |
(988) |
|
(25,597) |
|
(4,800) |
|
1,766 |
|
(29,619) |
As of March 31, 2023 |
92,693 |
|
157,931 |
|
708,697 |
|
31,839 |
|
991,160 |
(a) | Recognized in the statement of income for the year, except for the reversals of monetary update, recognized under “Financial income (expenses)”. |
(b) | Recognized in the statement of income for the year under “Financial income (expenses)”. |
71 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(ii)Reimbursable legal disputes (1)
|
Tax |
|
Civil |
|
Labor |
|
Environmental |
|
Total |
As of March 31, 2022 |
472,964 |
|
315,470 |
|
83,674 |
|
50,627 |
|
922,735 |
Provisioned for the year |
65,770 |
|
27,689 |
|
9,212 |
|
12,753 |
|
115,424 |
Reversals and write-offs |
(106,519) |
|
(95,979) |
|
(16,991) |
|
(5,657) |
|
(225,146) |
Payments |
(5,274) |
|
(6,886) |
|
(4,477) |
|
(5,815) |
|
(22,452) |
Monetary and foreign exchange updates |
87,822 |
|
45,632 |
|
7,137 |
|
1,698 |
|
142,289 |
As of March 31, 2023 |
514,763 |
|
285,926 |
|
78,555 |
|
53,606 |
|
932,850 |
(1) | The movement does not have and will never affect the result, due to the Company’s right to reimbursement. |
(iii)Total legal disputes
|
Tax |
|
Civil |
|
Labor |
|
Environmental |
|
Total |
As of March 31, 2022 |
608,725 |
|
463,364 |
|
672,124 |
|
91,740 |
|
1,835,953 |
Provisioned for the year |
96,139 |
|
67,704 |
|
299,613 |
|
12,524 |
|
475,980 |
Reversals and write-offs |
(169,825) |
|
(106,124) |
|
(174,189) |
|
(16,792) |
|
(466,930) |
Payments |
(27,439) |
|
(16,484) |
|
(117,621) |
|
(8,035) |
|
(169,579) |
Monetary and foreign exchange updates |
100,846 |
|
60,993 |
|
112,124 |
|
4,013 |
|
277,976 |
Effect of foreign currency translation |
(989) |
|
(25,598) |
|
(4,800) |
|
1,997 |
|
(29,390) |
As of March 31, 2023 |
607,457 |
|
443,855 |
|
787,251 |
|
85,447 |
|
1,924,010 |
(a)Tax
|
2023 |
|
2022 |
ICMS (i) |
266,549 |
|
264,709 |
IPI (ii) |
167,359 |
|
135,614 |
PIS and COFINS (iii) |
65,531 |
|
21,355 |
IRPJ and CSLL (iv) |
35,841 |
|
88,175 |
Others (v) |
72,177 |
|
98,872 |
|
607,457 |
|
608,725 |
Non-reimbursable legal disputes |
92,693 |
|
135,759 |
Reimbursable legal disputes |
514,764 |
|
472,966 |
|
607,457 |
|
608,725 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(i)ICMS
The amount recorded as a provision for ICMS credits is represented by: a) tax assessments received that, despite being defended, are assessed as probable loss by the Company’s legal advisors; (b) use of finance credits and charges in matters on which understanding of the Company’s management and tax advisors differ from tax authorities’ interpretations; (c) questioning of the breach of accessory obligation (CAT Ordinance) in the period from January 2001 to December 2004, related to the methodology for calculating ICMS credits in the state of São Paulo, in the monetarily adjusted amount of R$ 127,663 (R$ 123,185 in 2022).
In the year ended March 31, 2022, payments were made in the consolidated amount of R$287,313, mainly related to ICMS debts, prior to the formation of Raízen due to the enrollment in the Minas Gerais State amnesty program. Therefore, the tax contingencies were paid and reimbursed by Shell to the Company, with a consequent reduction in the balances of related parties due from contractual transactions with shareholders.
(ii)IPI
The amount recorded as a provision for IPI credits is represented by: (a) tax assessment notice received referring to imported goods and other notices; (b) offset of credits deriving from inputs used in exempt shipment; and (c) IPI Seletividade, a matter recently judged by the Federal Supreme Court of Brazil (“STF”), under General Resonance (RE No. 592145, matter 080) unfavorably to the taxpayer.
(iii)PIS and COFINS
The amount recorded as a provision for PIS and COFINS credits is represented by: (a) contribution from 1997 to 1999 referring to merger of company; and (b) IPI credits used to offset PIS and COFINS deriving from inputs used in exempt shipments.
(iv)IRPJ and CSLL
These refer to interlocutory decisions related to different offsets carried out by PER/DCOMP (E-Requests for Federal Tax Recovery, Refund or Offset) related to IPI credits used to offset IRPJ and CSLL. Said offset stopped being approved because a tax assessment notice was issued to stop recognition of credits based on the fact that, in the period from January 2008 to September 2010: (a) the Company did not record and pay IPI owed at the rate of 8% on certain transactions classified in TIPI (table of IPI levy); and (b) the Company did not reverse IPI credits referring to inputs used in the industrialization of certain products classified in TIPI, considering that shipment of such products is not taxed.
In the first item, the dispute occurs due to difference about classification of products as oil by-products and, in the second item, it occurs because authorities do not recognize the right to maintain IPI credits on shipment transactions that are exempt or not taxed.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(v)CIDE
The Company provisioned CIDE on services rendered in oil and natural gas exploration and production activities conducted before the formation of Raízen, whose balance as of March 31, 2023, totals R$ 422,919 (R$ 476,060 in 2022). The amounts due were deposited in court, in the same amount, reason there will be no financial disbursement by the Company. Accordingly, both balances are presented on a net basis in these financial statements.
(b)Civil, labor, and environmental
Raízen is a party to several civil lawsuits related to compensation for property and pain and suffering damages, contractual disputes, real estate and credit recovery discussions, among others.
Raízen is also a party to several labor claims filed by former employees and employees of service providers who question, among others, the payment of overtime, night shift, employee's safety and health risk premiums job reinstatement, refund of deductions made in payroll of payment such as confederative association dues and union dues.
The main environmental demands are related to environmental remediation work to be conducted at filing stations, distribution bases and airports.
Legal disputes considered as possible losses and, thus, no provision for legal disputes has been recognized in the financial statements
(a)Tax
|
2023 |
|
2022 |
ICMS (i) |
6,561,901 |
|
6,436,674 |
IRPJ and CSLL (ii) |
3,935,115 |
|
3,913,090 |
PIS and COFINS (ii) |
8,160,714 |
|
7,115,541 |
INSS (iii) |
333,188 |
|
232,596 |
ISS (iv) |
289,117 |
|
255,393 |
Offsets with IPI credit - IN No. 67/1998 (v) |
139,905 |
|
140,239 |
MP 470/2009 – debt in installment payment (vi) |
246,801 |
|
243,688 |
IPI (vii) |
287,300 |
|
394,184 |
Others |
1,868,295 |
|
1,610,158 |
|
21,822,336 |
|
20,341,563 |
Non-reimbursable legal disputes |
13,894,645 |
|
12,492,413 |
Reimbursable legal disputes |
7,927,691 |
|
7,849,150 |
|
21,822,336 |
|
20,341,563 |
74 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(i)ICMS
Refers substantially to: (i) portion related to fine of the tax assessment notice served due to the alleged nonpayment of ICMS and noncompliance with accessory obligation, in an operation involving sharecropping agreement and toll manufacturing, from May 2005 to March 2006 and May 2006 to March 2007; (ii) ICMS levied on shipping of crystallized sugar for export, which, according to the tax agent, is classified as semi-finished good and, under ICMS regulation, is subject to taxation; (iii) ICMS levied on alleged divergences in the sugar and ethanol inventories, arising from the comparison between the magnetic tax files and the Inventory Registration Books; (iv) tax assessment notices related to collection of the ICMS tax differential resulting from sales of ethanol intended to companies located in other States of the Country, which, based on a superseding rule, had their state registrations revoked; (v) ICMS requirement resulting from disallowance of diesel oil credits used in the agro-industrial production process, with a defense filed for being essential to the Company’s activities, based on article 155, paragraph 2, item I of the Federal Constitution and Supplementary Law No. 87/96; (vi) ICMS credits not reversed; (vii) lack of full reversal of ICMS-ST credits for ICMS tax substitution (ICMS-ST); (viii) noncompliance with accessory obligations; (ix) ICMS-ST requirement in interstate sales to industrial clients; (x) undue use of credits from Controls for ICMS tax credits on permanent assets (“CIAP”); (xi) inventory difference; (xii) alleged undue use of credits related to ICMS-ST on diesel in the capacity of final consumer; (xiii) matching credit allegedly unduly taken; and (xiv) tax credits related to freight (transport services) allegedly unduly used since the subsequent operation is exempt or not taxed.
(ii)IRPJ, CSLL, PIS, COFINS and IOF
Main legal disputes refer to: (a) tax assessment notices on credit offsetting arising from the Semi-Annual PIS regime and offsets of federal taxes not approved by the Brazilian IRS (“RFB”), for which Raízen has been challenging these collections at the proper levels; and (b) tax assessment notices for the collection of IRPJ and CSLL for the years 2011, 2012, 2013 and 2014, derived from the exclusion of income from amortization of goodwill on investments accounted for under the equity method. This goodwill was contributed by Cosan Lubrificantes e Especialidades S.A., formerly named Cosan Combustíveis e Lubrificantes S.A., to the Company. Raízen presented an objection requesting full cancellation of the tax assessment notice issued; (c) disallowances of PIS and COFINS credits, in the non-cumulative system, provided for in Law No. 10,637/2002 and Law No. 10,833/2003. These disallowances stem, in summary, from the restrictive interpretation of the RFB regarding the concept of "inputs", as well as different interpretations of the said laws. These challenges are still at the administrative level; (d) requests for reimbursement of PIS and COFINS in connection with offsetting proceedings. After presentation of the Protest Letter in March 2013, the DRJ (Judgment Office) determined the write-off of ongoing proceedings, so that PIS and COFINS credit rights referring to certain quarters from 2008 to 2009 are recalculated; (e) in the year ended March 31, 2020, the Brazilian IRS considered as “non-declared” the requests for reimbursement and/or offsetting of non-cumulative PIS and COFINS credits with different origins (Law No. 10,637/02 and Law No. 10,833/03) for the periods from 2014 to 2016, based on the argument that the credits are linked to a lawsuit that challenges the exclusion of ICMS from the PIS and COFINS tax base. Because the understanding of the tax authorities is mistaken, Raízen continues with the administrative discussion; (f) tax assessment notices related to the unconstitutionality of expansion of PIS and COFINS tax base brought by Law No. 9,718/98, in which STF considered as unconstitutional; (g) tax assessment notices filed by the Brazilian IRS for the collection of IRPJ and CSLL from prior years relating to offsets of tax losses, deductibility of amortization expenses of certain goodwill and taxation of differences of revaluations of assets comprising property, plant and equipment; (h) lawsuit in 2018, related to the disallowance of goodwill based on expected future profitability, deducted from the IRPJ and CSLL tax base of subsidiary RESA for calendar years 2013 to 2016. The defense was presented considering that the amortization of goodwill occurred under the terms of the applicable legislation (article 386 of RIR/99 and articles 7 and 8 of Law No. 9,532/97); and (i) PIS and COFINS difference determined because of CIDE offset. For tax authorities, such deduction could only have been made in the event of payment.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(iii)INSS
Possible legal disputes related to INSS involve mainly: (i) revision of the legal disputes linked to MPS/SRP Revenue Procedure No. 03/2005, from 2005 to 2011, which are now assessed as remote loss due to the probable recognition of laches term, MPS/SRP Revenue Procedure No. 03/2005 restricted the constitutional immunity of social security taxes on export revenue, and exports are now taxed through commercial exporting companies or trading companies; (ii) requirement of the contribution for purposes of the National Rural Learning Service (SENAR) on direct and indirect export operations, where the Brazilian IRS (“RFB”) understands that there is no right to constitutional immunity; and (iii) requirement of the social security tax on resale of goods in the domestic market and to third parties that are not included in the social security tax base calculation, which only applies to gross revenue resulting from the production effectively occurring in the facilities and not from purchased goods.
(iv)ISS
This refers to the collection of ISS by the cities in the state of Espírito Santo, on services rendered in sea waters (in the BC-10 block), as those cities understand that those services would have been provided within their territory and, therefore, the ISS should have been paid to those cities in that state.
(v)Offsets with IPI credit – IN 67/98
RFB Regulatory Instruction No. 67/98 brought with it the possibility of a refund of IPI collected in the period from January 14, 1992, to November 16, 1997, on amorphous refined sugar. Accordingly, subsidiary RESA, for the years in which the payment was made, pleaded to offset amounts against other taxes due. However, the Brazilian IRS dismissed requests for refund as well as an offset. Thus, subsidiary RESA administratively appealed against the dismissal.
After notification of payment of debts object of an offset in view of the changes introduced by IN SRF No. 210/02, subsidiary RESA filed a writ of mandamus with an injunction request to suspend the enforceability of offset taxes, with the aim of impeding the Public Administration from executing these debts. The injunction was granted by the competent court.
(vi)MP 470/2009 – installment payment of debts
Federal Revenue Service partially rejected requests for payment of federal tax debts in installments made by subsidiary RESA, with the argument that offered tax loss is not sufficient to settle respective debts. Subsidiary RESA and its legal advisors consider that the losses indicated existed and were available for such use.
(vii)IPI
RFB Regulatory Instruction No. 67/98 validated the procedure adopted by industrial facilities that shipped products without recording and paying IPI, related to operations with demerara, upper quality granulated sugar, special granulated sugar, extra special granulated sugar, and refined granulated sugar, carried out from July 6, 1995, to November 16, 1997, and with refined amorphous sugar carried out from January 14, 1992, to November 16, 1997. This ruling was used in the respective proceedings brought by the Brazilian Federal Revenue Services, whose likelihood of loss is classified as possible, according to the assessment of Raízen’s legal advisors.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(b)Civil, labor, and environmental
|
2023 |
|
2022 |
Civil |
1,688,652 |
|
1,540,894 |
Labor |
342,036 |
|
351,950 |
Environmental |
173,861 |
|
201,000 |
|
2,204,549 |
|
2,093,844 |
Non-reimbursable legal disputes |
984,781 |
|
1,039,410 |
Reimbursable legal disputes |
1,219,768 |
|
1,054,434 |
|
2,204,549 |
|
2,093,844 |
These legal disputes substantially refer to: (a) change in risk assessment in administrative proceeding with CADE filed against Shell; (b) reparation for emergent damages; (c) loss of profits; (d) compensation for pain and suffering damages; and (e) attorney’s fees.
Contingent assets
Raízen, through its subsidiary Blueway, engages in tax claims for damages related to the right to exclude the ICMS from the PIS and COFINS tax base, the realization of which is not virtually certain yet and, therefore, represent contingent assets not recognized in these financial statements. Accordingly, it is not yet possible to estimate the possible future accounting and financial effects of these claims.
19.Commitments
The Company has fuel purchase agreements with third parties in order to guarantee part of its future trading, it also has contracts for rail transportation with the purpose of transporting fuel from the supply bases to the reseller stations, whose amount to be paid is determined according to the price agreed in the contract.
Raízen has stockpiling service contracts for fuels with third parties, in accordance with the logistics and storage objectives in certain regions.
Through RESA and its subsidiaries, Raízen has commitments to purchase sugarcane, fuel, industrial equipment, electric and steam energy, lease and sharecropping agreements, sugar storage, transportation and handling services.
The commitments to purchase sugarcane with third parties are intended to guarantee part of its production in subsequent harvests. The amount of sugarcane to be acquired is calculated based on the estimated amount to be milled per area based on their expected productivity where sugarcane plantations are located. The amount to be paid by RESA and its subsidiaries is determined at the end of each crop year, according to the price published by the CONSECANA (Council of Sugarcane, Sugar and Ethanol Producers in the São Paulo State – Brazil).
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
Raízen entered into agreements with the Rumo Group for the transportation and handling of sugar for exports.
As of March 31, 2023, the volumes related to purchase commitments and service agreements by crop are as follows:
Years |
|
Sugarcane (in tons) |
|
Fuel (in cubic meters) |
|
Transport (in cubic meters) |
|
Storage (in cubic meters) |
|
Sugar transportation and handling (in tons) |
2024 |
|
44,242,657 |
|
1,855,910 |
|
4,894,820 |
|
5,969,800 |
|
10,199,429 |
2025 |
|
38,851,678 |
|
- |
|
4,769,622 |
|
4,355,208 |
|
1,400,000 |
2026 |
|
33,151,814 |
|
- |
|
3,786,109 |
|
3,144,858 |
|
- |
2027 |
|
27,219,945 |
|
- |
|
3,786,109 |
|
2,522,360 |
|
- |
2028 onwards |
|
40,241,490 |
|
- |
|
3,786,109 |
|
2,331,864 |
|
- |
Total contracted volume |
|
183,707,584 |
|
1,855,910 |
|
21,022,769 |
|
18,324,090 |
|
11,599,429 |
Total estimated payments (nominal value) |
|
29,217,200 |
|
7,702,510 |
|
1,261,445 |
|
1,532,241 |
|
493,239 |
20. Equity
As mentioned in Note 2.1, the Company accounted for the Corporate Reorganization using the predecessor method of accounting, as a result the consolidated financial statements are presented “as if” Raízen Group, is the predecessor of the Company.
Prior to the Corporate Reorganization, the combined consolidated financial statements of the Raízen Group presented a Net Investment, as the Raízen Group was not a stand-alone legal entity and therefore it did not have equity accounts such as capital, capital reserves, income reserves, equity valuation adjustments, among other. As such, the statements of changes in equity of these combined consolidated financial statements include only two items named equity attributable to controlling interest and noncontrolling interest.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(a) Capital and capital reserve
As of March 31, 2023, the Raízen’s fully subscribed and paid-in capital amounts to R$ 6,859,670 and is represented as follows:
|
2023 |
||||||||||
|
Common shares |
|
% |
|
Preferred shares |
|
% |
|
Total |
|
% |
Shell |
4,496,786,292 |
|
50.0% |
|
60,810,825 |
|
4.5% |
|
4,557,597,117 |
|
44.0% |
Cosan |
4,496,786,292 |
|
50.0% |
|
60,810,825 |
|
4.5% |
|
4,557,597,117 |
|
44.0% |
Treasury shares |
- |
|
- |
|
34,284,534 |
|
2.5% |
|
34,284,534 |
|
0.3% |
Free float |
- |
|
- |
|
1,203,030,716 |
|
88.5% |
|
1,203,030,716 |
|
11.7% |
Total shares (book-entry and no-par-value shares) |
8,993,572,584 |
|
100.0% |
|
1,358,936,900 |
|
100.0% |
|
10,352,509,484 |
|
100.0% |
|
2022 |
||||||||||
|
Common shares |
|
% |
|
Preferred shares |
|
% |
|
Total |
|
% |
Shell |
4,496,786,292 |
|
50.0% |
|
55,810,825 |
|
4.1% |
|
4,552,597,117 |
|
44.0% |
Cosan |
4,496,786,292 |
|
50.0% |
|
55,810,825 |
|
4.1% |
|
4,552,597,117 |
|
44.0% |
Treasury shares |
- |
|
- |
|
6,907,800 |
|
0.5% |
|
6,907,800 |
|
0.1% |
Free float and others |
- |
|
- |
|
1,240,407,450 |
|
91.3% |
|
1,240,407,450 |
|
11.9% |
Total shares (book-entry and no-par-value shares) |
8,993,572,584 |
|
100.0% |
|
1,358,936,900 |
|
100.0% |
|
10,352,509,484 |
|
100.0% |
Both common and preferred shares are entitled to receive mandatory dividends on the same basis. Dividends should be equivalent, at least, 1% of net income, net of mandatory legal reserve.
Common and preferred shares are entitled to reimbursement based on share price.
Common shares have full voting rights and preferred shares have restricted voting rights related to certain matters set forth in the Company’s Bylaws.
Only common shares have convertibility rights. Each common share can be converted by decision of its holder into a preferred share at the ratio of 1:1, subject to the limits set forth in the Brazilian Corporate Law.
As part of the Corporate Reorganization, at the Annual and Extraordinary General Meeting (“AEGM”) held on June 1, 2021, shareholders Shell and Cosan contributed 100% of the shares they owned in RESA to Raízen in exchange of shares issued by Raízen in the amount of R$ 5,727,866, the which amount was allocated to capital and capital reserve for R$ 1,078,157 and R$ 4,649,709, respectively. As a result Raìzen issued 7,332,154,111 new common registered book-entry and no-par-value shares and its subscribed and paid-in capital resulted in R$ 3,000,000, represented by 8,993,572,584 registered and no-par-value shares.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
The consolidated net assets of RESA at book value contributed by the shareholders to Raízen on June 1, 2021, are shown below:
Accounts |
|
Amount |
Cash and cash equivalents |
|
2,636,055 |
Restricted cash |
|
1,770,440 |
Derivative financial instruments – assets |
|
7,228,593 |
Trade accounts receivable |
|
1,849,584 |
Inventories |
|
2,395,789 |
Advances to suppliers |
|
588,145 |
Dividends receivable |
|
54,466 |
Biological assets |
|
1,288,025 |
Recoverable income tax and social contribution |
|
341,382 |
Recoverable taxes |
|
818,714 |
Deferred income and social contribution tax assets, net |
|
2,054,100 |
Related parties – assets, net |
|
2,571,372 |
Judicial deposits |
|
468,343 |
Investments |
|
517,929 |
Property, plant and equipment |
|
11,003,796 |
Intangible assets |
|
1,802,920 |
Right of use |
|
6,727,692 |
Suppliers |
|
(5,169,692) |
Lease liabilities |
|
(5,757,038) |
Loans and financing |
|
(16,036,178) |
Derivative financial instruments – liabilities |
|
(9,158,205) |
Payroll and related charges payable |
|
(563,668) |
Dividends payable |
|
(746,686) |
Income tax and social contribution payable |
|
(307,992) |
Taxes payable |
|
(145,496) |
Provisions for legal disputes |
|
(547,389) |
Other current and non-current assets, net |
|
70,319 |
Consolidated net assets of RESA |
|
5,755,320 |
Attributable to non-controlling shareholders |
|
(27,454) |
Attributable to controlling shareholders |
|
5,727,866 |
Capital increase according to AEGM of June 1, 2021, |
|
5,975,956 |
Changes in contributed net assets |
|
(248,090) |
Consolidated net assets contributed |
|
5,727,866 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
At that same AEGM held on June 1, 2021, shareholders Shell and Cosan approved the conversion of the single Class A preferred share and of the 100,000 Class D preferred shares issued by Raìzen into one common share of Raìzen. The conversion of these preferred shares did not give shareholders the right to withdraw. At that same AEGM, the repurchase of all 81,897,057 Class E preferred shares issued by Raìzen was ratified, with their cancellation without reduction of the capital, observing the limit of the balance of profits and reserves available, except for the legal reserve, under the terms of the share purchase and sale agreement entered into by and between Raìzen and the shareholder of the referred to shares.
At the Extraordinary General Meeting (“EGM”) held on July 12, 2021, shareholders Shell and Cosan resolved and approved the increase in Raìzen’s capital by R$ 130,135, increasing it from R$ 3,000,000 to R$ 3,130,135, with bonus in preferred shares, through capitalization of part of the capital reserve balance, that resulted in the issuance of 121,621,650 preferred shares with no par value, allocated in the proportion of 50% to each shareholder.
Also, as part of Raízen’s IPO, 121,621,650 preferred shares were issued as part the overallotment of additional shares, in the amount of R$ 900,000, as resolved at the EGM held on July 12, 2021, for purposes of stabilization activities.
On August 3, 2021, Raízen's Board of Directors announced the fixing of the IPO price per preferred share at R$ 7.40. Therefore, from August 5, 2021, the preferred shares began trading on B3, under ticker name “RAIZ4”. The IPO resulted in the issuance of 810,811,000 preferred shares of Raízen, in the amount of R$ 6,000,000, as part of the base offering, of which R$ 3,000,000 was allocated to the Capital account and R$ 3,000,000 to the Capital reserve account. In addition, on September 3, 2021, the Company issued 95,901,350 new supplementary preferred shares, in the total amount of R$ 709,670, which was fully recorded in the Capital account.
In the IPO Raízen incurred share issuance costs amounting to R$ 166,188 (R$ 109,684 net of taxes), related to commissions to structuring banks, lawyers, auditors, fees and others. These costs were recorded in equity.
On August 10, 2021, the Board of Directors of Raízen resolved on the ratification of the exercise of subscription warrants issued by the Company on June 1, 2021, on behalf of Hédera Investimentos e Participações S.A. (note 30.(i).a), in the process of acquiring Biosev, with the issuance of 330,602,900 preferred, book-entry and share with no-par value, equivalent to a 3,2% equity interest in Raízen’s capital, at the total issue price of R$ 2,423,944, of which R$ 19,864 and R$ 2,404,080 were allocated to the Capital and Capital reserve accounts, respectively.
(b) Dividends and interest on own capital
In accordance with the Company's Bylaws and Brazilian Corporation Law, the amounts of the dividends for the years ended March 31, 2023, and 2022 were determined as follows:
Minimum mandatory dividend |
2023 |
|
2022 |
|
2021 |
Net income for the year |
2,441,126 |
|
3,149,018 |
|
996,486 |
(-) offset of losses, first-time adoption of IFRS and other |
- |
|
- |
|
(2,729) |
(-) Dividends to Class D preferred shareholders |
- |
|
- |
|
(1,726) |
(-) Effect of tax incentives of the Parent Company (Note 20.d) |
(122,537) |
|
- |
|
- |
(-) Effect of tax incentives of subsidiaries (Note 20.d) |
(235,526) |
|
(375,803) |
|
- |
Common dividend distribution calculation basis |
2,083,063 |
|
2,773,215 |
|
992,031 |
Common and preferred shares |
|
|
|
|
|
Minimum mandatory dividend - 1% (1) |
(20,831) |
|
(27,732) |
|
(9,920) |
(-) Interest on own capital |
- |
|
(741,682) |
|
(147,219) |
(-) Dividends paid in advance |
(2,163,800) |
|
- |
|
- |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
Dividends and interest on own capital |
2023 |
|
2022 |
|
2021 |
Net income for the year basis for allocation |
2,441,126 |
|
3,235,755 |
|
1,524,474 |
(-) Net income for the period net parent investment |
- |
|
(419,164) |
|
- |
(-) Income reserves (Note 20.d.iii) (2) |
(1,952,901) |
|
(2,031,533) |
|
(1,284,165) |
(-) Tax incentive reserve |
(358,063) |
|
(375,803) |
|
(83,112) |
Predecessor adjustments |
- |
|
332,427 |
|
- |
Additional dividends proposed (2) |
130,162 |
|
741,682 |
|
157,197 |
(1) |
In the years ended March 31, 2023, and 2022, dividends paid in advance and interest on own capital totaled R$ 2,163,800 and R$ 741,682, respectively. Accordingly, there are no mandatory minimum dividends provisioned since these repayments, related to income determined in referred to fiscal years, were higher than those determined on the percentage defined in the bylaws. |
|
(2) |
As described in Note 20.d., the set-up of the income reserve for each fiscal year cannot exceed 80% of the net income for the year. Accordingly, additional proposed dividends of R$ 130,162 were accrued, which will be submitted for approval at the shareholder meeting. |
Changes in dividends and interest on own capital payable are as follows:
|
Raízen |
|
RESA (2) |
|
Total |
As of March 31, 2021 |
199,926 |
|
8,252 |
|
208,178 |
Prior years’ dividends |
1,407,732 |
|
738,429 |
|
2,146,161 |
Dividends for the year |
25,541 |
|
- |
|
25,541 |
Interest on own capital, net of Withholding Income Tax (IRRF) |
631,603 |
|
- |
|
631,603 |
Payments |
(1,994,320) |
|
(746,681) |
|
(2,741,001) |
Others |
(820) |
|
- |
|
(820) |
As of March 31, 2022 |
269,662 |
|
- |
|
269,662 |
Prior years’ dividends |
2,168,038 |
|
- |
|
2,168,038 |
Dividends for the year (1) |
154,156 |
|
- |
|
154,156 |
Payments |
(2,437,316) |
|
- |
|
(2,437,316) |
Others |
(363) |
|
- |
|
(363) |
As of March 31, 2023 |
154,177 |
|
- |
|
154,177 |
(1) |
Consolidated dividends include dividends payable to non-controlling shareholders in the amount of R$ 23,994, which will be submitted for approval at the shareholders’ meeting. |
|
(2) |
Refer to operations before the corporate reorganization. |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
The breakdown of shareholder compensation is shown below:
2023 | ||||||||
Dividends and/or interest on own capital distributed in the year |
|
Price per share (R$) |
|
Amount |
|
IRRF |
|
Net value |
Dividends from income reserve on 09/27/2022 |
|
0.0316 |
|
326,000 |
|
- |
|
326,000 |
Dividends from income reserve on 12/02/2022 |
|
0.0890 |
|
918,800 |
|
- |
|
918,800 |
Dividends from income reserve on 03/13/2023 |
|
0.0891 |
|
919,000 |
|
- |
|
919,000 |
Proposed additional dividends |
|
0.0126 |
|
130,162 |
|
- |
|
130,162 |
Dividends – noncontrolling shareholders |
|
|
|
28,232 |
|
- |
|
28,232 |
|
|
|
|
2,322,194 |
|
- |
|
2,322,194 |
|
|
|
|
|
|
|
|
2022 |
Dividends and/or interest on own capital distributed in the year |
|
Price per share (R$) |
|
Amount |
|
IRRF |
|
Net |
Dividends from income reserve on 06/01/2021 |
|
0.1019 |
|
738,429 |
|
- |
|
738,429 |
Interest on own capital on 06/30/2021 |
|
0.0065 |
|
58,497 |
|
8,775 |
|
49,722 |
Dividends from income reserve on 06/01/2021 |
|
0.1529 |
|
1,394,018 |
|
- |
|
1,394,018 |
Interest on own capital on 09/30/2021 |
|
0.0162 |
|
168,115 |
|
24,706 |
|
143,409 |
Interest on own capital on 12/31/2021 |
|
0.0220 |
|
227,870 |
|
33,518 |
|
194,352 |
Interest on own capital on 03/31/2022 |
|
0.0278 |
|
287,200 |
|
43,080 |
|
244,120 |
Dividends - noncontrolling shareholders |
|
|
|
39,255 |
|
- |
|
39,255 |
|
|
|
|
2,913,384 |
|
110,079 |
|
2,803,305 |
(c) Equity adjustments
(i) Income from financial instruments designated as hedge accounting
This refers to changes in the fair value of financial instruments arising from cash flow hedge of revenues from exports of its products and from imports of fuel.
(ii) Income (loss) from net investment hedge abroad
These refer to the effective portion with the foreign exchange differences of the hedge of the Company’s net investments in a foreign entity.
(iii) Actuarial gain (loss)
These arise from gains and losses from adjustments through experience and changes in actuarial assumptions about the defined benefit plan. This component is recognized in other comprehensive income and will never be reclassified to the statement of income in subsequent years.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(iv) Effect of foreign currency translation
Cumulative translation adjustments with foreign exchange differences resulting from the translation of the financial statements of investees with functional currency different from the Parent company’s currency.
(v) Changes in equity valuation adjustments, net of taxes
|
2022 |
|
Comprehensive income |
|
2023 |
Actuarial gain (loss) on defined benefit plan, net |
(6,768) |
|
(14,693) |
|
(21,461) |
Income from financial instruments designated as hedge accounting |
(782,410) |
|
259,745 |
|
(522,665) |
Loss on hedge of net investment in a foreign entity |
(45,741) |
|
- |
|
(45,741) |
Others |
- |
|
(2,900) |
|
(2,900) |
Effect of foreign currency translation |
526,590 |
|
364,456 |
|
891,046 |
|
(308,329) |
|
606,608 |
|
298,279 |
Attributable to controlling shareholders |
(268,288) |
|
598,328 |
|
330,040 |
Attributable to non-controlling shareholders |
(40,041) |
|
8,280 |
|
(31,761) |
|
2021 |
|
Comprehensive income |
|
2022 |
Actuarial gain (loss) on defined benefit plan, net |
(8,486) |
1,718 |
|
(6,768) |
|
Income from financial instruments designated as hedge accounting |
(1,974,965) |
|
1,192,555 |
|
(782,410) |
Loss on hedge of net investment in a foreign entity |
(45,741) |
|
- |
|
(45,741) |
Others |
- |
|
- |
|
- |
Effect of foreign currency translation |
1,548,315 |
|
(1,021,725) |
|
526,590 |
|
(480,877) |
|
172,548 |
|
(308,329) |
Attributable to controlling shareholders |
(480,877) |
|
212,589 |
|
(268,288) |
Attributable to non-controlling shareholders |
- |
|
(40,041) |
|
(40,041) |
|
2020 |
|
Comprehensive income |
|
2021 |
Actuarial gain (loss) on defined benefit plan, net |
(10,711) |
|
2,225 |
|
(8,486) |
Income from financial instruments designated as hedge accounting |
(723,708) |
|
(1,251,257) |
|
(1,974,965) |
Loss on hedge of net investment in a foreign entity |
(45,741) |
|
- |
|
(45,741) |
Others |
- |
|
- |
|
- |
Effect of foreign currency translation |
897,970 |
|
650,345 |
|
1,548,315 |
|
117,810 |
|
(598,687) |
|
(480,877) |
Attributable to controlling shareholders |
117,810 |
|
(598,687) |
|
(480,877) |
Attributable to non-controlling shareholders |
- |
|
- |
|
- |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(d) Income reserves
(i) Tax incentive reserve
Body |
Tax benefit |
|
2023 |
|
2022 |
||||
Federal Government |
Sale of diesel (1) |
|
212,722 |
|
212,722 |
||||
Goiás |
Goiás State Industrial Development Program (2) |
|
212,564 |
|
106,489 |
||||
Mato Grosso do Sul |
Term of agreement No. 331/2008 (3) |
|
114,666 |
|
56,592 |
||||
States of the Brazilian Federation |
ICMS granted credit granted - CA No. 123/2022 (4) |
|
193,914 |
|
- |
||||
733,866 | 375,803 | ||||||||
|
Use of tax incentive reserve of investees (5) |
|
(132,267) |
|
- |
||||
|
|
|
601,599 |
|
375,803 |
||||
|
Effects of Parent company |
|
122,537 |
|
- |
||||
|
Effects of subsidiaries |
|
479,062 |
|
375,803 |
||||
|
Total tax incentive reserve (6) |
|
601,599 |
|
375,803 |
(1) | Refers to the economic grant given by the federal government in diesel sales operations of direct subsidiary Blueway. | |
(2) | Refers to the Goiás state incentive program “Produzir,” which finances part of the ICMS payment. | |
(3) | Refers to the tax benefit on sugar industrial processing operations in the state of Mato Grosso do Sul, equivalent to 67% of the ICMS debt balance and the matching credit of ethanol. | |
(4) | Refers to the benefit granted by States under ICMS Agreement No. 116/2022 and Constitutional Amendment No. 123/2022 attributing granted credit (or matching credit), used in taxpayers’ bookkeeping to offset ICMS debts in their ordinary calculation, resulting from hydrated ethanol production and commercialization operations. | |
(5) | In a BoD of March 13, 2023, the allocation of dividends from the Company's income reserve was approved, for which part of the tax incentive reserve of investees was used, in the amount of R$ 132,267. | |
(6) |
During the year ended March 31, 2023, the impact of these tax incentives on the consolidated operating income was R$ 516,144 (R$ 226,524 in 2022). |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(ii) Legal reserve
As of March 31, 2023, and 2022, as established in Brazilian Corporation Law, the Company did not allocate 5% of net income to the Legal reserve, due to the fact that the total balance of the legal and capital reserves has exceeded 30% of the capital amount.
(iii) Profit retention reserve
This refers to the remaining balance of the Company’s net income for the year, after allocations for set up of the legal reserve and provision for mandatory minimum dividends, which was allocated to Profit retention reserve until its final allocation is approved at the Annual General Meeting. The Company’s Bylaws provide that up to 80% of the profit for the year can be allocated to this reserve, for operations and new investments and projects, not exceeding 80% of the capital amount.
(e) Treasury shares
In June 2022, the Company completed the program for repurchase of forty million preferred shares of its own issue, as approved by the Board of Directors on January 6, 2022.
As mentioned in Note 1.2, on August 11, 2022, the Board of Directors approved a new program for the repurchase of shares issued by the Company of up to one hundred million preferred shares to be carried out up to February 12, 2024, aiming to meet obligations that may arise from the Company’s share-based compensation plans and maximize the generation of value for shareholders through efficient capital management. At Management’s discretion, the repurchased shares may be later delivered to the beneficiaries of share-based compensation programs, cancelled, sold, or held in treasury. Up to December 31, 2022, no share of this program was repurchased.
The change in treasury shares during the years ended March 31, 2023, and 2022 were as follows:
|
Number |
|
Average cost per share |
|
Amount |
As of March 31, 2022 |
6,907,800 |
|
5.80 |
|
40,082 |
Repurchase |
33,092,200 |
|
5.59 |
|
185,077 |
Exercise of share-based payment |
(5,715,466) |
|
5.41 |
|
(30,923) |
As of March 31, 2023 |
34,284,534 |
|
5.67 |
|
194,236 |
As of March 31, 2023, and 2022, the average unit cost of shares held in treasury and their market value are as follows:
|
|
|
R$ per share |
|
2023 |
|
2022 |
Average cost of shares repurchased |
5.67 |
|
5.80 |
Market value |
2.85 |
|
6.83 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(f) Earnings per share
Basic
Basic earnings per share is calculated by dividing the net income for the year attributable to the Company’s shareholders by the weighted average number of common and preferred shares outstanding during the year, excluding treasury shares. As noted in Note 20 (a), common and preferred shares are entitled to receive mandatory dividends on the same basis, and both are considered in the denominator factor of earnings per share.
|
2023 |
|
2022 |
|
2021 |
Numerator |
|
|
|
|
|
Net income for the year |
2,441,126 |
|
3,235,755 |
|
1,524,474 |
Income available to preferred shareholders |
- |
|
- |
|
(3,251) |
|
2,441,126 |
|
3,235,755 |
|
1,521,223 |
Denominator |
|
|
|
|
|
Weighted average number of shares outstanding (in thousands) (*) |
10,321,732 |
|
8,698,655 |
|
8,904,701 |
Basic earnings per share (R$ per share ON and PN) |
0.24 |
|
0.37 |
|
0.17 |
(*) For the periods prior to the Corporate Reorganization, the number of ordinary shares outstanding of Raízen S.A. outstanding as a result of the Corporate Reorganization is reflected retrospectively at the beginning of the earliest period presented for purposes of calculating earnings per share.
Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of outstanding shares, considering that the conversion of all shares would cause dilution.
|
2023 |
|
2022 |
|
2021 |
Numerator |
|
|
|
|
|
Net income for the year |
2,441,126 |
|
3,235,755 |
|
1,524,474 |
Income available to preferred shareholders |
- |
|
- |
|
(3,251) |
|
2,441,126 |
|
3,235,755 |
|
1,521,223 |
Denominator |
|
|
|
|
|
Weighted average number of common shares outstanding (in thousands) (*) |
10,327,956 |
|
8,714,436 |
|
8,904,701 |
Basic earnings per share (R$ per share ON and PN) |
0.24 |
|
0.37 |
|
0.17 |
(*) For the periods prior to the Corporate Reorganization, the number of ordinary shares outstanding of Raízen S.A. outstanding as a result of the Corporate Reorganization is reflected retrospectively at the beginning of the earliest period presented for purposes of calculating earnings per share.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
21. Share-based payment
The Company offers restricted share plans linked to: (i) non-interruption of the relationship between the executive and the Company (vesting period); and (ii) achievement of performance conditions.
The fair value of grants related to the period the participant remains in the Company during the vesting period (restricted share unit - RSU) was determined based on the market value of the Company’s shares in B3.
Regarding the portion of the plan that is linked to the performance conditions (performance share unit – PSU), the fair value was measured based on the Monte Carlo method (“MMC”) considering market conditions.
As of March 31, 2023, Raízen has the following share-based payment programs and their vesting conditions in effect:
(1) |
IPO Incentive (PSU): The effectiveness of this program, as well as the beginning of the vesting period, was conditioned to the satisfactory conclusion of the initial public offering of the Company's shares. The acquisition of the right to receive shares is subject to performance conditions in five annual installments, each installment corresponding to a vesting period. |
|
(2) |
VLP 20/21 (PSU): The delivery of shares will occur in a single installment, at the end of the 3-year period, cumulatively subject to the application of performance and permanence conditions during the vesting period. |
|
(3) |
VLP 20/21 (RSU): Grants are subject to the maintenance of the employment relationship during the vesting period. |
|
(4) |
Program Transition – 17/18: The purpose of this program is the migration of participants granted under the terms of the former long-term variable compensation plans to the current share-based compensation plan of Raízen, as approved at an EGM held on July 2, 2021. The delivery of shares will occur in a single installment, subject to the maintenance of the employment relationship during the vesting period. |
|
(5) |
VLP 21/22 (RSU): RSU grants are subject to the participant's stay during the vesting period. Upon completion of this period, for each 1 (one) RSU, the participant will be entitled to receive 1 (one) share of the Company. |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
The table below presents the information of the agreed plans:
|
|
|
|
|
|
In number of shares |
|
|
||||
Program |
|
Lot |
|
Life expectancy (years) |
|
Granting of plans |
|
Exercised |
|
Available |
|
Fair value on grant date (R$ per share) |
Incentive IPO (RSU) |
|
1 |
|
1 |
|
406,044 |
|
(406,044) |
|
- |
|
7.57 |
Incentive IPO (PSU) |
|
2 |
|
2 |
|
483,945 |
|
- |
|
483,945 |
|
7.95 |
Incentive IPO (PSU) |
|
3 |
|
3 |
|
801,744 |
|
- |
|
801,744 |
|
8.17 |
Incentive IPO (PSU) |
|
4 |
|
4 |
|
599,926 |
|
- |
|
599,926 |
|
8.28 |
Incentive IPO (PSU) |
|
5 |
|
5 |
|
575,135 |
|
- |
|
575,135 |
|
8.59 |
VLP 20/21 (PSU) |
|
1 |
|
3 |
|
513,788 |
|
(29,398) |
|
484,390 |
|
8.19 |
VLP 20/21 (PSU) |
|
1 |
|
3 |
|
672,603 |
|
(12,600) |
|
660,003 |
|
7.34 |
Program Transition – 16/17 |
|
1 |
|
1 |
|
2,384,686 |
|
(2,384,686) |
|
- |
|
6.75 |
Program Transition – 17/18 |
|
1 |
|
2 |
|
3,638,775 |
|
(176,744) |
|
3,462,031 |
|
6.75 |
VLP 18/19 |
|
1 |
|
- |
|
2,705,994 |
|
(2,705,994) |
|
- |
|
4.52 |
VLP 21/22 (PSU) |
|
1 |
|
3 |
|
509,102 |
|
- |
|
509,102 |
|
4.62 |
VLP 21/22 (RSU) |
|
1 |
|
3 |
|
736,867 |
|
- |
|
736,867 |
|
4.29 |
|
|
|
|
|
|
14,028,609 |
|
(5,715,466) |
|
8,313,143 |
|
|
During the year ended March 31, 2023, the Company delivered 5,715,466 preferred shares, equivalent to the amount of R$ 30,923 (R$ zero in 2022). There was no cancellation of shares in the year ended March 31, 2023.
Share-based payment expenses, included in the consolidated statement of income for the year ended March 31, 2023, were R$ 46,112 (R$ 42,305 in 2022).
The fair value of the PSU option plans is measured based on the MMC method. The fair value was determined by the TSR (Total Shareholder Return) and the share values of other companies, which are considered market performance conditions. The restricted shares plan considers the following assumptions:
(i) |
Except for “VLP 21/22”, the expectation of volatility, peer alternatives were sought due to Raízen's low closing history. The Company used Cosan's volatility track record, based on the proximity between the sectors in which it operates and the fact that the shareholder Cosan holds a relevant stake in Raízen's capital stock, which indicates that Raízen's business implicitly represents part of Cosan's volatility, using the standard deviation model of daily returns for the aforementioned calculation; |
|
(ii) |
The “VLP 21/22” program used the value of Raízen shares (RAIZ4) for the business day prior to the grant date; |
|
(iii) |
Since the grant agreement adjusts the participant’s gain in relation to the distribution of dividends during the vesting period, no adjustments were required in the amount of the assets granted resulting from the distribution of dividends; |
|
(iv) |
The weighted average risk-free interest rate used was the curve of prefixed interest rate in Reais (DI estimate) observed in the open market; |
|
(v) |
The fee for exit before vesting, which affects the provision for plan costs, was estimated by the Company at approximately 7%; and |
|
(vi) |
There are no clauses related to share lockup. |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
22.Net operating revenue
The breakdown of the Company’s gross revenue is shown below:
|
2023 |
|
2022 |
|
2021 |
Domestic market |
191,441,044 |
|
162,803,534 |
|
92,247,991 |
Foreign market |
69,860,145 |
|
49,026,810 |
|
33,448,085 |
Loss from financial instruments, net |
(839,203) |
|
(2,708,924) |
|
(1,102,324) |
Gross operating revenue |
260,461,986 |
|
209,121,420 |
|
124,593,752 |
Returns and cancellations |
(997,542) |
|
(663,363) |
|
(384,015) |
Sales taxes |
(11,970,326) |
|
(12,418,471) |
|
(8,519,896) |
Trade discounts and others |
(1,046,834) |
|
(692,446) |
|
(585,385) |
Amortization of contract assets (Note 10) |
(615,494) |
|
(579,822) |
|
(502,468) |
Net operating revenue |
245,831,790 |
|
194,767,318 |
|
114,601,988 |
23.Segment information
Segment information reporting is stated consistently with internal reports provided by key operational decision makers. The key operational decision makers, responsible for the strategic decision making, allocation of funds and for the assessment of performance of operating segments are the Chief Executive Officer (CEO) and the Board of Directors. The Company’s operating segments are:
(i) |
Marketing and services: refer to the trading and sale activities of fossil and renewable fuels and lubricants, through a franchised network of service stations under the Shell brand in all the national territory and Latin America, operating in Argentina and, as of November 1, 2021, in Paraguay (Note 30.(i).b). |
(ii) | Sugar: this refers to sugar production, sale, origination, and trading activities. |
(iii) |
Renewables: this refers to: (a) ethanol production, sale, origination, and trading activities; (b) production and sale of bioenergy; (c) resale and trading of electric power; and (d) production and sale of other renewable products (solar energy and biogas). These business activities were aggregated into a single segment, as their products and services come from renewable sources, use similar technologies, and present synergies in their production and distribution process. The combination of these activities results in the portfolio of clean energy and retirement of carbon credits offered by the Company. |
Operating results by segment
The performance of the segments is evaluated based on the operating income and this information is prepared based on items directly attributable to the segment, as well as those that can be allocated on a reasonable basis. During the years ended March 31, 2023, 2022, and 2021, operating income by segment is described below:
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
|
2023 |
||||||||||||||||
|
Reportable segments |
|
|
|
|
|
|
|
|
||||||||
|
Marketing and Services |
|
|
|
|
|
|
|
Reconciliation |
|
|
||||||
|
Brazil |
|
Latin America |
|
Total |
|
Sugar |
|
Renewables |
|
Total segmented |
|
Eliminations (ii) |
|
Not segmented |
|
Consolidated |
Net operating revenue |
168,923,999 |
|
33,838,680 |
|
202,762,679 |
|
29,202,441 |
|
28,730,250 |
|
260,695,370 |
|
(14,863,580) |
|
- |
|
245,831,790 |
Cost of products sold, and services provided |
(160,314,380) |
|
(32,070,450) |
|
(192,384,830) |
|
(27,477,691) |
|
(25,535,120) |
|
(245,397,641) |
|
14,833,558 |
|
- |
|
(230,564,083) |
Gross income |
8,609,619 |
|
1,768,230 |
|
10,377,849 |
|
1,724,750 |
|
3,195,130 |
|
15,297,729 |
|
(30,022) |
|
- |
|
15,267,707 |
Selling expenses |
(2,457,012) |
|
(1,206,184) |
|
(3,663,196) |
|
(894,547) |
|
(681,272) |
|
(5,239,015) |
|
4,133 |
|
- |
|
(5,234,882) |
General and administrative expenses |
(783,380) |
|
(368,702) |
|
(1,152,082) |
|
(685,045) |
|
(703,728) |
|
(2,540,855) |
|
(13,009) |
|
- |
|
(2,553,864) |
Other operating revenue, net |
353,932 |
|
157,707 |
|
511,639 |
|
114,327 |
|
114,949 |
|
740,915 |
|
(3,443) |
|
- |
|
737,472 |
Equity accounting result |
(74,422) |
|
- |
|
(74,422) |
|
58,996 |
|
(114,650) |
|
(130,076) |
|
(16) |
|
- |
|
(130,092) |
Income (loss) before financial results and income tax and social contribution |
5,648,737 |
|
351,051 |
|
5,999,788 |
|
318,481 |
|
1,810,429 |
|
8,128,698 |
|
(42,357) |
|
- |
|
8,086,341 |
Financial results (i) |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(4,822,761) |
|
(4,822,761) |
Income tax and social contribution (i) |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(760,254) |
|
(760,254) |
Net income (loss) for the year |
5,648,737 |
|
351,051 |
|
5,999,788 |
|
318,481 |
|
1,810,429 |
|
8,128,698 |
|
(42,357) |
|
(5,583,015) |
|
2,503,326 |
Other selected information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
(392,485) |
|
(716,916) |
|
(1,109,401) |
|
(3,433,645) |
|
(4,110,432) |
|
(8,653,478) |
|
- |
|
- |
|
(8,653,478) |
Amortization of contract assets |
(547,640) |
|
(67,854) |
|
(615,494) |
|
- |
|
- |
|
(615,494) |
|
- |
|
- |
|
(615,494) |
Acquisition to property, plant and equipment and intangible assets (cash basis) |
707,804 |
|
1,136,923 |
|
1,844,727 |
|
3,388,390 |
|
3,481,462 |
|
8,714,579 |
|
- |
|
- |
|
8,714,579 |
Loss arising from changes in fair value of biological assets, net of realization |
- |
|
- |
|
- |
|
(99,518) |
|
(89,291) |
|
(188,809) |
|
- |
|
- |
|
(188,809) |
(i) |
Information on financial results and income tax and social contribution (current and deferred) was not disclosed by segment due to the non-use by management of the referred to data in a segmented manner, as they are managed and analyzed on a consolidated basis in the operation. |
(ii) | Eliminations refer to intersegment operations. |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
|
2022 |
||||||||||||||||
|
Reportable segments |
|
|
|
|
|
|
|
|
||||||||
|
Marketing and Services |
|
|
|
|
|
|
|
Reconciliation |
|
|
||||||
|
Brazil |
|
Latin America |
|
Total |
|
Sugar |
|
Renewables |
|
Total segmented |
|
Eliminations (ii) |
|
Not segmented |
|
Consolidated |
Net operating revenue |
146,580,322 |
|
19,054,342 |
|
165,634,664 |
|
18,152,422 |
|
23,994,859 |
|
207,781,945 |
|
(13,014,627) |
|
- |
|
194,767,318 |
Cost of products sold, and services provided |
(142,388,665) |
|
(17,197,561) |
|
(159,586,226) |
|
(16,170,888) |
|
(19,914,863) |
|
(195,671,977) |
|
13,018,522 |
|
- |
|
(182,653,455) |
Gross income |
4,191,657 |
|
1,856,781 |
|
6,048,438 |
|
1,981,534 |
|
4,079,996 |
|
12,109,968 |
|
3,895 |
|
- |
|
12,113,863 |
Selling expenses |
(1,751,381) |
|
(1,062,957) |
|
(2,814,338) |
|
(775,109) |
|
(607,554) |
|
(4,197,001) |
|
1,377 |
|
- |
|
(4,195,624) |
General and administrative expenses |
(528,698) |
|
(329,541) |
|
(858,239) |
|
(657,580) |
|
(567,468) |
|
(2,083,287) |
|
- |
|
- |
|
(2,083,287) |
Other operating revenue, net |
382,523 |
|
135,636 |
|
518,159 |
|
19,496 |
|
20,119 |
|
557,774 |
|
(1,369) |
|
- |
|
556,405 |
Equity accounting result |
(27,625) |
|
- |
|
(27,625) |
|
13,792 |
|
(54,748) |
|
(68,581) |
|
(8) |
|
- |
|
(68,589) |
Income (loss) before financial results and income tax and social contribution |
2,266,476 |
|
599,919 |
|
2,866,395 |
|
582,133 |
|
2,870,345 |
|
6,318,873 |
|
3,895 |
|
- |
|
6,322,768 |
Financial results (i) |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(2,071,416) |
|
(2,071,416) |
Income tax and social contribution (i) |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(972,720) |
|
(972,720) |
Net income (loss) for the year |
2,266,476 |
|
599,919 |
|
2,866,395 |
|
582,133 |
|
2,870,345 |
|
6,318,873 |
|
3,895 |
|
(3,044,136) |
|
3,278,632 |
Other selected information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
(337,938) |
|
(828,997) |
|
(1,166,935) |
|
(2,720,532) |
|
(2,982,879) |
|
(6,870,346) |
|
(275) |
|
- |
|
(6,870,621) |
Amortization of contract assets |
(512,411) |
|
(67,411) |
|
(579,822) |
|
- |
|
- |
|
(579,822) |
|
- |
|
- |
|
(579,822) |
Acquisition to property, plant and equipment and intangible assets (cash basis) |
407,298 |
|
1,033,352 |
|
1,440,650 |
|
2,005,239 |
|
1,933,724 |
|
5,379,613 |
|
- |
|
- |
|
5,379,613 |
Loss arising from changes in fair value of biological assets, net of realization |
- |
|
- |
|
- |
|
674,505 |
|
666,261 |
|
1,340,766 |
|
- |
|
- |
|
1,340,766 |
(i) |
Information on financial results and income tax and social contribution (current and deferred) was not disclosed by segment due to the non-use by management of the referred to data in a segmented manner, as they are managed and analyzed on a consolidated basis in the operation. |
(ii) | Eliminations refer to intersegment operations. |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
|
2021 |
||||||||||||||||
|
Reportable segments |
|
|
|
|
|
|
|
|
||||||||
|
Marketing and Services |
|
|
|
|
|
|
|
Reconciliation |
|
|
||||||
|
Brazil |
|
Latin America |
|
Total |
|
Sugar |
|
Renewables |
|
Total segmented |
|
Eliminations (ii) |
|
Not segmented |
|
Consolidated |
Net operating revenue |
84,417,880 |
|
10,556,131 |
|
94,974,011 |
|
11,376,200 |
|
15,155,905 |
|
121,506,116 |
|
(6,904,128) |
|
- |
|
114,601,988 |
Cost of products sold, and services provided |
(81,148,411) |
|
(9,437,129) |
|
(90,585,540) |
|
(9,623,376) |
|
(13,261,114) |
|
(113,470,030) |
|
6,862,002 |
|
- |
|
(106,608,028) |
Gross income |
3,269,469 |
|
1,119,002 |
|
4,388,471 |
|
1,752,824 |
|
1,894,791 |
|
8,036,086 |
|
(42,126) |
|
- |
|
7,993,960 |
Selling expenses |
(1,357,637) |
|
(787,690) |
|
(2,145,327) |
|
(537,939) |
|
(635,290) |
|
(3,318,556) |
|
(26,887) |
|
- |
|
(3,345,443) |
General and administrative expenses |
(447,652) |
|
(197,452) |
|
(645,104) |
|
(304,639) |
|
(380,966) |
|
(1,330,709) |
|
6 |
|
- |
|
(1,330,703) |
Other operating revenue, net |
233,654 |
|
137,794 |
|
371,448 |
|
(28,143) |
|
45,352 |
|
388,657 |
|
(1,940) |
|
- |
|
386,717 |
Equity accounting result |
(56,235) |
|
- |
|
(56,235) |
|
6,824 |
|
(78,733) |
|
(128,144) |
|
46,457 |
|
- |
|
(81,687) |
Income (loss) before financial results and income tax and social contribution |
1,641,599 |
|
271,654 |
|
1,913,253 |
|
888,927 |
|
845,154 |
|
3,647,334 |
|
(24,490) |
|
- |
|
3,622,844 |
Financial results (i) |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(1,416,201) |
|
(1,416,201) |
Income tax and social contribution (i) |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(659,802) |
|
(659,802) |
Net income (loss) for the year |
1,641,599 |
|
271,654 |
|
1,913,253 |
|
888,927 |
|
845,154 |
|
3,647,334 |
|
(24,490) |
|
(2,076,003) |
|
1,546,841 |
Other selected information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
(242,671) |
|
(682,002) |
|
(924,673) |
|
(1,687,098) |
|
(2,060,618) |
|
(4,672,389) |
|
(61,079) |
|
- |
|
(4,733,468) |
Amortization of contract assets |
(459,397) |
|
(43,071) |
|
(502,468) |
|
- |
|
- |
|
(502,468) |
|
- |
|
- |
|
(502,468) |
Acquisition to property, plant and equipment and intangible assets (cash basis) |
- |
|
- |
|
- |
|
240,758 |
|
200,464 |
|
441,222 |
|
- |
|
- |
|
441,222 |
Loss arising from changes in fair value of biological assets, net of realization |
208,894 |
|
321,081 |
|
529,975 |
|
1,041,275 |
|
1,063,965 |
|
2,635,215 |
|
- |
|
- |
|
2,635,215 |
(i) | Information on financial results and income tax and social contribution (current and deferred) was not disclosed by segment due to the non-use by management of the referred to data in a segmented manner, as they are managed and analyzed on a consolidated basis in the operation. |
|||
(ii) | Eliminations refer to intersegment operations. |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
The Company monitors the consolidated net operating revenue, in the local and foreign markets by product, as follows:
|
2023 |
|
2022 |
2021 | |
Domestic market |
190,479,964 |
|
159,288,344 |
90,075,844 | |
Foreign market |
70,215,406 |
|
48,493,601 |
31,430,272 | |
Eliminations |
(14,863,580) |
|
(13,014,627) |
(6,904,128) | |
Net operating revenue |
245,831,790 |
|
194,767,318 |
114,601,988 | |
Reportable segments |
|
|
|
||
Marketing and services – Brazil |
|
|
|
||
Diesel |
99,005,595 |
|
79,837,479 |
44,963,188 | |
Gasoline |
51,958,486 |
|
53,005,498 |
30,460,597 | |
Ethanol |
9,132,456 |
|
10,544,272 |
7,432,107 | |
Jet fuel |
5,558,512 |
|
2,647,415 |
1,258,180 | |
Fuel oil |
535,739 |
|
303,529 |
152,504 | |
Lubricants |
1,969,559 |
|
- |
- | |
Others |
763,652 |
|
242,129 |
151,304 | |
|
168,923,999 |
|
146,580,322 |
84,417,880 | |
Marketing and Services – Argentina |
|
|
|
||
Diesel |
13,802,632 |
|
6,917,404 |
4,444,219 | |
Gasoline |
9,817,718 |
|
6,349,058 |
3,556,424 | |
Jet fuel |
1,691,748 |
|
579,218 |
257,995 | |
Fuel oil |
2,712,660 |
|
1,585,343 |
1,037,767 | |
Lubricants |
1,218,704 |
|
961,383 |
540,076 | |
Others |
1,751,954 |
|
1,708,245 |
719,650 | |
|
30,995,416 |
|
18,100,651 |
10,556,131 | |
Marketing and Services – Paraguay |
|
|
|
||
Diesel |
1,917,702 |
|
548,794 |
- | |
Gasoline |
908,076 |
|
401,778 |
- |
|
Ethanol |
17,486 |
|
3,119 |
- |
|
|
2,843,264 |
|
953,691 |
- |
|
Sugar |
29,202,441 |
|
18,152,422 |
11,376,200 | |
Renewables |
|
|
|
||
Ethanol |
23,643,526 |
|
18,035,409 |
12,439,004 | |
Energy |
3,788,560 |
|
4,203,005 |
2,109,567 | |
Others |
1,298,164 |
|
1,756,445 |
607,334 | |
|
28,730,250 |
|
23,994,859 |
15,155,905 | |
Eliminations |
(14,863,580) |
|
(13,014,627) |
( 6,904,128) | |
Total |
245,831,790 |
|
194,767,318 |
114,601,988 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
Geographically, consolidated operating revenues, net is presented as follows:
|
2023 |
|
2022 |
2021 | |
Brazil |
176,272,676 |
|
157,365,430 |
93,108,321 | |
Argentina |
24,249,837 |
|
17,666,806 |
10,247,656 | |
Paraguay |
2,843,264 |
|
972,786 |
1,751 | |
Latin America, except for Brazil, Argentina, and Paraguay |
9,668,341 |
|
4,293,567 |
2,216,567 | |
North America |
12,253,854 |
|
9,244,463 |
5,786,439 | |
Asia |
21,018,496 |
|
6,283,924 |
6,245,999 | |
Europe |
11,800,584 |
|
8,941,304 |
3,033,968 | |
Others |
2,588,318 |
|
3,013,665 |
865,415 | |
|
260,695,370 |
|
207,781,945 |
121,506,116 | |
Eliminations |
(14,863,580) |
|
(13,014,627) |
(6,904,128) | |
Total |
245,831,790 |
|
194,767,318 |
114,601,988 |
No specific clients or group represented 10% or more of consolidated net operating revenue in the reporting years.
Operating assets by segment
The assets of the Marketing and Services segment are geographically allocated, comprising Brazil, Argentina, and Paraguay.
In addition, considering that part of the assets of RESA and its subsidiaries is also used for the production of sugar and renewables, Raízen segregated these assets by segment through the corresponding cost center in which they are allocated and/or apportionment criteria, which take into consideration the production of each product in relation to its total production.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
|
2023 |
||||||||||||||||
|
Reportable segments |
|
|
|
|
|
|
||||||||||
|
Marketing and Services |
|
|
|
|
|
Reconciliation |
||||||||||
|
Brazil |
|
Argentina |
|
Paraguay |
|
Total |
|
Sugar |
|
Renewables |
|
Total segmented |
|
Not segmented |
|
Consolidated |
Investments |
697,293 |
|
348 |
|
- |
|
697,641 |
|
116,799 |
|
564,411 |
|
1,378,851 |
|
- |
|
1,378,851 |
Property, plant, and equipment |
2,348,005 |
|
5,305,249 |
|
20,780 |
|
7,674,034 |
|
8,519,751 |
|
10,925,599 |
|
27,119,384 |
|
- |
|
27,119,384 |
Intangible assets |
2,442,771 |
|
584,195 |
|
353,149 |
|
3,380,115 |
|
1233,737 |
|
1,537,585 |
|
6,151,437 |
|
- |
|
6,151,437 |
Right of use |
290,772 |
|
384,209 |
|
- |
|
674,981 |
|
4,773,934 |
|
4,827,158 |
|
10,276,073 |
|
- |
|
10,276,073 |
Total assets allocated by segment |
5,778,841 |
|
6,274,001 |
|
373,929 |
|
12,426,771 |
|
14,644,221 |
|
17,854,753 |
|
44,925,745 |
|
- |
|
44,925,745 |
Other current and non-current assets |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
66,625,718 |
|
66,625,718 |
Total assets |
5,778,841 |
|
6,274,001 |
|
373,929 |
|
12,426,771 |
|
14,644,221 |
|
17,854,753 |
|
44,925,745 |
|
66,625,718 |
|
111,551,463 |
Total liabilities |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(88,647,302) |
|
(88,647,302) |
Total net assets |
5,778,841 |
|
6,274,001 |
|
373,929 |
|
12,426,771 |
|
14,644,221 |
|
17,854,753 |
|
44,925,745 |
|
(22,021,584) |
|
22,904,161 |
|
2022 |
||||||||||||||||
|
Reportable segments |
|
|
|
|
|
|
||||||||||
|
Marketing and Services |
|
|
|
|
|
Reconciliation |
|
|
||||||||
|
Brazil |
|
Argentina |
|
Paraguay |
|
Total |
|
Sugar |
|
Renewables |
|
Total segmented |
|
Not segmented |
|
Consolidated |
Investments |
747,673 |
|
324 |
|
- |
|
747,997 |
|
112,160 |
|
494,262 |
|
1,354,419 |
|
- |
|
1,354,419 |
Property, plant, and equipment |
2,045,973 |
|
4,383,451 |
|
19,645 |
|
6,449,069 |
|
6,831,657 |
|
8,984,126 |
|
22,264,852 |
|
- |
|
22,264,852 |
Intangible assets |
2,321,351 |
|
570,235 |
|
360,257 |
|
3,251,843 |
|
1,280,248 |
|
1,488,768 |
|
6,020,859 |
|
- |
|
6,020,859 |
Right of use |
136,663 |
|
327,966 |
|
- |
|
464,629 |
|
5,095,282 |
|
5,219,724 |
|
10,779,635 |
|
- |
|
10,779,635 |
Total assets allocated by segment |
5,251,660 |
|
5,281,976 |
|
379,902 |
|
10,913,538 |
|
13,319,347 |
|
16,186,880 |
|
40,419,765 |
|
- |
|
40,419,765 |
Other current and non-current assets |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
59,924,579 |
|
59,924,579 |
Total assets |
5,251,660 |
|
5,281,976 |
|
379,902 |
|
10,913,538 |
|
13,319,347 |
|
16,186,880 |
|
40,419,765 |
|
59,924,579 |
|
100,344,344 |
Total liabilities |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(78,085,436) |
|
(78,085,436) |
Total net assets |
5,251,660 |
|
5,281,976 |
|
379,902 |
|
10,913,538 |
|
13,319,347 |
|
16,186,880 |
|
40,419,765 |
|
(18,160,857) |
|
22,258,908 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
24.Costs and expenses by nature
Reconciliation of costs and expenses by nature
Costs and expenses are shown in the statement of income by function. The reconciliation of the Company’s statement of income by nature for the years ended March 31, 2023, 2022 and 2021 is as follows:
|
2023 |
|
2022 |
2021 |
|
Fuel for resale, raw material, costs of collections and transfers |
(217,228,157) |
|
(175,548,160) |
(100,542,609) |
|
Freight |
(1,245,464) |
|
(806,038) |
(550,037) |
|
Depreciation and amortization |
(8,653,478) |
|
(6,870,621) |
(4,733,468) |
|
Personnel expenses |
(3,692,551) |
|
(2,848,778) |
(2,087,206) |
|
Cutting, loading and transportation |
(1,616,532) |
|
(1,103,746) |
(1,134,116) |
|
Change in the fair value of biological assets, net of realization (Note 7) |
(188,809) |
|
1,340,766 |
441,222 |
|
Selling expenses |
(1,199,800) |
|
(721,150) |
(602,091) |
|
Hired labor |
(596,408) |
|
(611,986) |
(527,676) |
|
Logistic expenses |
(535,312) |
|
(350,343) |
(325,994) |
|
Others |
(3,396,318) |
|
(1,412,310) |
(1,222,199) |
|
|
(238,352,829) |
|
(188,932,366) |
(111,284,174) |
Classified as:
|
2023 |
|
2022 |
|
2021 |
Cost of products sold, and services provided |
(230,564,083) |
|
(182,653,455) |
|
(106,608,028) |
Selling expenses |
(5,234,882) |
|
(4,195,624) |
|
(3,345,443) |
General and administrative expenses |
(2,553,864) |
|
(2,083,287) |
|
(1,330,703) |
|
(238,352,829) |
|
(188,932,366) |
|
(111,284,174) |
25.Other operating revenue (expenses), net
|
2023 |
|
2022 |
|
2021 |
Bargain purchase gain (Notes 30.(i).d and 30.(ii).a) |
266,593 |
|
- |
|
(11,447) |
Recognition of extemporaneous tax credits and others results, net (1) |
52,856 |
|
226,761 |
|
97,160 |
Gain (loss) on commercial operations |
(56,583) |
|
7,194 |
|
(16,588) |
Gain (loss) on sale of property, plant, and equipment |
26,560 |
|
(16,844) |
|
82,188 |
Government grant |
46,445 |
|
106,489 |
|
67,218 |
Revenues from rent and leases |
47,095 |
|
44,007 |
|
81,146 |
Revenue from merchandising |
17,403 |
|
16,136 |
|
12,403 |
Revenue from sale of scrap and waste |
47,880 |
|
30,534 |
|
16,746 |
Royalty income |
22,214 |
|
18,439 |
|
14,144 |
Commissions on sales of lubricants, cards and means of payment |
6,271 |
|
9,514 |
|
63,307 |
Revenue from convenience products |
71,333 |
|
47,547 |
|
24,382 |
Reversal (set up) of estimated loss on property, plant and equipment, net |
18,452 |
|
(21,096) |
|
(6,027) |
Other revenues, net |
170,953 |
|
87,724 |
|
(37,915) |
|
737,472 |
|
556,405 |
|
386,717 |
(1) |
Includes recovery of tax credits mainly related to PIS, COFINS and ICMS arising from the Company's ordinary activities. |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
26.Financial results
|
2023 |
|
2022 |
|
2021 |
Financial expenses |
|
|
|
|
|
Interest |
(3,856,161) |
|
(2,047,674) |
|
(1,389,108) |
PIS and COFINS on financial income |
(124,315) |
|
(46,157) |
|
(44,010) |
Monetary variation losses |
(406,862) |
|
(509,679) |
|
(337,583) |
Others |
(250,020) |
|
(93,456) |
|
(47,261) |
|
(4,637,358) |
|
(2,696,966) |
|
(1,817,962) |
Fair value of financial instruments (Notes 9.a.2 and 16) |
625,041 |
|
582,191 |
|
63,163 |
Amounts capitalized on qualifying assets |
74,233 |
|
82,113 |
|
54,819 |
|
(3,938,084) |
|
(2,032,662) |
|
(1,699,980) |
Financial income |
|
|
|
|
|
Interest |
347,432 |
|
321,820 |
|
369,950 |
Yields from financial investments |
436,768 |
|
290,569 |
|
101,160 |
Monetary variation gains and others |
35,460 |
|
5,132 |
|
62,027 |
|
819,660 |
|
617,521 |
|
533,137 |
Exchange rate change, net |
(672,473) |
|
2,051,267 |
|
(1,432,041) |
Net effect of derivatives |
(1,031,864) |
|
(2,707,542) |
|
1,182,683 |
|
(4,822,761) |
|
(2,071,416) |
|
(1,416,201) |
27. Financial instruments
(a)Overview
The Company is exposed to the following risks arising from its operations, which are equalized and managed through certain financial instruments:
This note presents information on the Company’s exposure to each of the mentioned risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s capital management.
(b)Risk management structure
The Company has specific treasury and trading policies that define how risk management should be carried out, never operating with derivatives which are beyond the notional total of the underlying asset or liability.
To monitor activities and ensure compliance with policies, the Company has the following main committees: (i) Risk Committee that meets weekly to analyze the behavior of the commodities (sugar, ethanol and oil by-products) and foreign exchange markets and deliberate on hedging positions and pricing strategy for exports or imports of products, so as to reduce the adverse effects of changes in prices and exchange rates; and (ii) Ethanol and Oil byproducts Committee that meets monthly to assess the risks associated with the sale of ethanol and Oil byproducts and to adapt to the limits defined in the risk policies.
The financial instruments for hedging purposes are taken out by analyzing the risk exposure to which management seeks coverage.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
As of March 31, 2023, and 2022, the fair values related to transactions involving derivative financial instruments for hedging purposes are presented below:
|
|
|
Notional |
|
|
|
Fair value |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Price risk |
|
|
|
|
|
|
|
Commodity derivatives |
|
|
|
|
|
|
|
Futures contracts |
39,854,841 |
|
14,156,943 |
|
515,401 |
|
(1,930,960) |
|
39,854,841 |
|
14,156,943 |
|
515,401 |
|
(1,930,960) |
Exchange rate risk |
|
|
|
|
|
|
|
Foreign exchange rate derivatives |
|
|
|
|
|
|
|
Futures contracts |
157,492 |
|
(113,708) |
|
956 |
|
102 |
Forward contracts |
8,693,968 |
|
7,313,582 |
|
246,246 |
|
473,517 |
Locked-in exchange |
232,716 |
|
996,082 |
|
4,344 |
|
63,014 |
Exchange swap |
(12,104,053) |
|
(8,938,162) |
|
9,783 |
|
117,394 |
|
(3,019,877) |
|
(742,206) |
|
261,329 |
|
654,027 |
Interest rate risk |
|
|
|
|
|
|
|
Interest rate swap |
(7,583,083) |
|
(4,206,248) |
|
264,795 |
|
315,973 |
|
(7,583,083) |
|
(4,206,248) |
|
264,795 |
|
315,973 |
Total |
|
|
|
|
1,041,525 |
|
(960,960) |
Current assets |
|
|
|
|
6,452,593 |
|
5,409,266 |
Non-current assets |
|
|
|
|
2,826,733 |
|
2,082,299 |
Total assets |
|
|
|
|
9,279,326 |
|
7,491,565 |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
(6,269,699) |
|
(7,174,053) |
Non-current liabilities |
|
|
|
|
(1,968,102) |
|
(1,278,472) |
Total liabilities |
|
|
|
|
(8,237,801) |
|
(8,452,525) |
Total |
|
|
|
|
1,041,525 |
|
(960,960) |
(c)Price risk
Price risk arises from the possibility of fluctuating market prices for products traded, mainly VHP sugar, refined and white sugar, diesel (heating oil), gasoline, ethanol, electric power and crude oil. These price oscillations may lead to material changes in sales revenues and costs. To mitigate this risk, the Company constantly monitors the market to anticipate price changes. As of March 31, 2023, and 2022, the Company has contracted the operations described below:
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
Price risk: commodity derivatives outstanding as of March 31, 2023 |
||||||||||||||||
Derivatives |
|
Long/Short |
|
Market |
|
Contract |
|
Maturity |
|
Notional (units) |
|
Notional (R$ thousand) |
|
Fair value (R$ thousand) |
||
Futures |
|
Short |
|
ICE |
|
Sugar#11 |
|
Apr/23 to Feb/25 |
|
9,102,977 |
t |
18,578,941 |
|
(3,519,332) |
||
Futures |
|
Short |
|
NYSE LIFFE |
|
Sugar#5 |
|
Apr/23 to Nov/23 |
|
511,400 |
t |
1,418,755 |
|
(183,083) |
||
Futures |
|
Short |
|
OTC |
|
Sugar#11 |
|
Apr/23 to Sep/25 |
|
2,877,702 |
t |
5,989,089 |
|
(730,152) |
||
Options |
|
Short |
|
ICE |
|
Sugar#11 |
|
Apr/23 to Feb/24 |
|
960,572 |
t |
(1,972,914) |
|
(64,974) |
||
Subtotal – sugar futures short position |
|
|
|
|
|
13,452,651 |
|
24,013,871 |
|
(4,497,541) |
||||||
Futures |
|
Long |
|
ICE |
|
Sugar#11 |
|
Apr/23 to Sep/24 |
|
(8,714,339) |
t |
(16,938,219) |
|
2,751,806 |
||
Futures |
|
Long |
|
NYSE LIFFE |
|
Sugar#5 |
|
Apr/23 to Nov/23 |
|
(112,550) |
t |
(312,309) |
|
39,968 |
||
Options |
|
Long |
|
OTC |
|
Sugar#5 |
|
Jul/23 |
|
(5,000) |
t |
(23,167) |
|
660 |
||
Options |
|
Long |
|
ICE |
|
Sugar#11 |
|
Apr/23 to Sep/23 |
|
(883,759) |
t |
1,807,441 |
|
65,025 |
||
Subtotal - sugar futures long position |
|
|
|
|
|
(9,715,648) |
|
(15,466,254) |
|
2,857,459 |
||||||
Physical fixed |
|
Short |
|
ICE |
|
Sugar#11 |
|
Apr/23 to Oct/31 |
|
16,533,724 |
t |
34,404,823 |
|
(59,408) |
||
Physical fixed |
|
Short |
|
NYSE LIFFE |
|
Sugar#5 |
|
Apr/23 to Dec/23 |
|
37,445 |
t |
118,019 |
|
8,017 |
||
Subtotal – physical fixed sugar short position |
|
|
|
|
|
16,571,169 |
|
34,522,842 |
|
(51,391) |
||||||
Physical fixed |
|
Long |
|
ICE |
|
Sugar#11 |
|
Apr/23 to Jun/27 |
|
(2,964,232) |
t |
(7,077,946) |
|
746,464 |
||
Physical fixed |
|
Long |
|
NYSE LIFFE |
|
Sugar#5 |
|
Apr/23 to Dec/24 |
|
(268,085) |
t |
(814,771) |
|
53,538 |
||
Subtotal - physical fixed sugar long position |
|
|
|
|
|
(3,232,317) |
|
(7,892,717) |
|
800,002 |
||||||
Subtotal – sugar futures (1) |
|
|
|
|
|
17,075,855 |
|
35,177,742 |
|
(891,471) |
||||||
Futures |
|
Short |
|
B3 |
|
Ethanol |
|
Apr/23 to Dec/23 |
|
80,700 |
m³ |
221,550 |
|
(2,787) |
||
Futures |
|
Short |
|
NYMEX |
|
Ethanol |
|
Apr/23 to Dec/23 |
|
1,423,525 |
m³ |
4,809,004 |
|
116,278 |
||
Futures |
|
Short |
|
OTC |
|
Ethanol |
|
Apr/23 to Dec/23 |
|
75,923 |
m³ |
239,317 |
|
10,100 |
||
Options |
|
Short |
|
NYMEX |
|
Ethanol |
|
Apr/23 to May/23 |
|
(111,818) |
m³ |
188,021 |
|
5,416 |
||
Subtotal – ethanol futures short position |
|
|
|
|
|
1,468,330 |
|
5,457,892 |
|
129,007 |
||||||
Futures |
|
Long |
|
B3 |
|
Ethanol |
|
Apr/23 to Dec/23 |
|
(22,710) |
m³ |
(61,362) |
|
189 |
||
Futures |
|
Long |
|
NYMEX |
|
Ethanol |
|
Apr/23 to Dec/23 |
|
(1,302,382) |
m³ |
(3,939,398) |
|
96,406 |
||
Futures |
|
Long |
|
OTC |
|
Ethanol |
|
Apr/23 to Dec/23 |
|
(64,584) |
m³ |
(161,227) |
|
(7,071) |
||
Options |
|
Long |
|
NYMEX |
|
Ethanol |
|
Apr/23 to May/23 |
|
125,333 |
m³ |
(219,540) |
|
(462) |
||
Subtotal – ethanol futures long position |
|
|
|
|
|
(1,264,343) |
|
(4,381,527) |
|
89,062 |
||||||
Physical fixed |
|
Short |
|
CHGOETHNL |
|
Ethanol |
|
Apr/23 to Jun/30 |
|
1,062,326 |
m³ |
4,087,206 |
|
159,994 |
||
Physical fixed |
|
Long |
|
CHGOETHNL |
|
Ethanol |
|
Apr/23 to Dec/23 |
|
(136,834) |
m³ |
(478,213) |
|
1,472 |
||
Subtotal - physical fixed ethanol |
|
|
|
|
|
925,492 |
|
3,608,993 |
|
161,466 |
||||||
Subtotal – ethanol futures |
|
|
|
|
|
1,129,479 |
|
4,685,358 |
|
379,535 |
||||||
Futures |
|
Short |
|
NYMEX |
|
Gasoline |
|
Apr/23 |
|
62,964 |
m³ |
212,774 |
|
(12,240) |
||
Subtotal - gasoline futures short position |
|
|
|
|
|
62,964 |
|
212,774 |
|
(12,240) |
||||||
Futures |
|
Long |
|
NYMEX |
|
Gasoline |
|
Apr/23 |
|
(17,172) |
m³ |
(60,198) |
|
62 |
||
Subtotal - gasoline futures long position |
|
|
|
|
|
(17,172) |
|
(60,198) |
|
62 |
||||||
Subtotal - gasoline futures |
|
|
|
|
|
45,792 |
|
152,576 |
|
(12,178) |
||||||
Futures |
|
Short |
|
NYMEX |
|
Heating Oil |
|
Apr/23 to Oct/23 |
|
834,415 |
m³ |
3,885,798 |
|
93,863 |
||
Futures |
|
Short |
|
ICE |
|
Heating Oil |
|
Apr/23 to Dec/23 |
|
273,625 |
m³ |
1,006,636 |
|
73,437 |
||
Options |
|
Short |
|
NYMEX |
|
Heating Oil |
|
Jul/23 to Sep/23 |
|
(238,500) |
m³ |
611,383 |
|
(9,769) |
||
Subtotal - heating oil futures short position |
|
|
|
|
|
869,540 |
|
5,503,817 |
|
157,531 |
||||||
Futures |
|
Long |
|
NYMEX |
|
Heating oil |
|
Apr/23 to Oct/23 |
|
(718,832) |
m³ |
(3,019,474) |
|
(76,380) |
||
Futures |
|
Long |
|
ICE |
|
Heating oil |
|
Apr/23 to Dec/23 |
|
(240,487) |
m³ |
(868,212) |
|
(21,197) |
||
Options |
|
Long |
|
NYMEX |
|
Heating oil |
|
Apr/23 to Sep/23 |
|
178,398 |
m³ |
(632,332) |
|
3,053 |
||
Subtotal - heating oil futures long position |
|
|
|
|
|
(780,921) |
|
(4,520,018) |
|
(94,524) |
100 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuation |
||
Derivatives |
|
Long/Short |
|
Market |
|
Contract |
|
Maturity |
|
Notional (units) |
|
Notional (R$ thousand) |
|
Fair value (R$ thousand) |
||
Futures |
|
Short |
|
ICE |
|
Heating Oil |
|
Apr/23 to May/23 |
|
29,100 |
t |
83,594 |
|
1,016 |
||
Futures |
|
Long |
|
ICE |
|
Heating Oil |
|
Apr/23 to May/23 |
|
(29,680) |
t |
(86,171) |
|
(1,965) |
||
Subtotal - heating oil futures |
|
|
|
|
|
(580) |
|
(2,577) |
|
(949) |
||||||
Physical fixed |
|
Short |
|
NYMEX |
|
Heating Oil |
|
Apr/23 |
|
59,000 |
m³ |
217,865 |
|
(15,760) |
||
Physical fixed |
|
Long |
|
NYMEX |
|
Heating Oil |
|
Apr/23 |
|
(95,836) |
m³ |
(322,751) |
|
19,090 |
||
Subtotal - physical fixed heating oil |
|
|
|
|
|
(36,836) |
|
(104,886) |
|
3,330 |
||||||
Subtotal - heating oil futures |
|
|
|
|
|
51,203 |
|
876,336 |
|
65,388 |
||||||
Physical fixed |
|
Short |
|
CCEE/OTC |
|
Energy |
|
Apr/23 to Dec/41 |
|
29,297,842 |
mwh |
6,253,570 |
|
2,262,654 |
||
Physical fixed |
|
Long |
|
CCEE/OTC |
|
Energy |
|
Apr/23 to Sep/53 |
|
(32,855,743) |
mwh |
(7,290,741) |
|
(1,288,527) |
||
Subtotal - physical fixed energy |
|
|
|
|
|
(3,557,901) |
|
(1,037,171) |
|
974,127 |
||||||
Net exposure of commodity derivatives as of March 31, 2023 |
|
39,854,841 |
|
515,401 |
||||||||||||
Net exposure of commodity derivatives as of March 31, 2022 |
|
14,156,943 |
|
(1,930,960) |
(1)Includes sales of 100% traceable raw sugar produced from non-genetically modified sugarcane (“Non-GMO”).
(d)Exchange rate risk
Currency risk derives from the possibility of fluctuations in exchange rates used for revenue from exports, imports, debt flows and other assets and liabilities in foreign currency. The Company uses derivative operations to manage cash flow risks denominated in US dollars, net of other cash and cash equivalent flows. As of March 31, 2023, and 2022, the Company has contracted the operations described below:
|
|
|
|
Exchange rate risk: foreign exchange derivatives outstanding as of March 31, 2023 |
||||||||||
Derivatives |
|
Long/Short |
|
Market |
|
Contract |
|
Maturity |
|
Notional (US$ thousand) |
|
Notional (R$ thousand) |
|
Fair value (R$ thousand) |
Futures |
|
Short |
|
B3 |
|
Commercial Dollar |
|
Apr/23 to May/23 |
|
544,500 |
|
2,766,277 |
|
10,809 |
Futures |
|
Long |
|
B3 |
|
Commercial Dollar |
|
Apr/23 to May/23 |
|
(513,500) |
|
(2,608,785) |
|
(9,853) |
Options |
|
Short |
|
OTC |
|
Dollar Option |
|
Mar/24 |
|
20,646 |
|
104,890 |
|
(3,213) |
Options |
|
Long |
|
OTC |
|
Dollar Option |
|
Mar/24 |
|
(20,646) |
|
(104,890) |
|
3,213 |
Subtotal - futures |
|
|
|
|
|
31,000 |
|
157,492 |
|
956 |
||||
Forward |
|
Short |
|
OTC |
|
NDF |
|
Apr/23 to Mar/25 |
|
2,147,005 |
|
10,907,643 |
|
283,349 |
Forward |
|
Long |
|
OTC |
|
NDF |
|
Apr/23 to Mar/24 |
|
(435,728) |
|
(2,213,675) |
|
(37,103) |
Subtotal - forward |
|
|
|
|
|
1,711,277 |
|
8,693,968 |
|
246,246 |
||||
Exchange swap |
|
Long |
|
OTC |
|
Exchange swap |
|
Apr/24 to Mar/30 |
|
(2,382,500) |
|
(12.104.053) |
|
9,783 |
Subtotal - foreign exchange swap |
|
|
|
|
|
(2,382,500) |
|
(12,104,053) |
|
9,783 |
||||
Locked-in exchange |
|
Short |
|
OTC |
|
Locked-in exchange |
|
Apr/23 to Dec/26 |
|
346,768 |
|
1,761,721 |
|
(45,742) |
Locked-in exchange |
|
Long |
|
OTC |
|
Locked-in exchange |
|
Apr/23 to Oct/24 |
|
(300,962) |
|
(1,529,005) |
|
50,086 |
Subtotal - Locked-in exchange |
|
|
|
|
|
45,806 |
|
232,716 |
|
4,344 |
||||
Net exposure of foreign exchange derivatives as of March 31, 2023 |
|
|
|
(594,417) |
|
(3,019,877) |
|
261,329 |
||||||
Net exposure of foreign exchange derivatives as of March 31, 2022 |
|
|
|
(156,656) |
|
(742,206) |
|
654,027 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
As of March 31, 2023, the summary of the net foreign exchange exposure of the Company’s consolidated statement of financial position, considering the parity of all foreign currencies to US$, is presented below:
|
R$ |
|
US$ (in thousands) |
Cash and cash equivalents (Note 3) |
5,120,361 |
|
1,007,866 |
Restricted cash (Note 4.b) |
1,207,322 |
|
237,643 |
Foreign trade accounts receivable (Note 5.a) |
4,016,404 |
|
790,568 |
Advances to suppliers (Note 14.b) |
91,382 |
|
17,987 |
Related parties (Note 9.a) |
(3,012,602) |
|
(592,985) |
Advances from clients |
(1,546,507) |
|
(304,406) |
Suppliers (Note 14.a) |
(7,540,996) |
|
(1,484,331) |
Loans and financing (Note 16) |
(16,305,127) |
|
(3,209,418) |
Lease liabilities (Note 15.b) |
(374,250) |
|
(73,665) |
Other liabilities (1) |
(319,158) |
|
(62,821) |
Derivative financial instruments (Note 27.d) (2) |
|
|
594,417 |
Foreign Currency exposure, net |
|
|
(3,079,145) |
Derivatives settled in the month following closing (3) |
|
|
104,881 |
Net foreign currency exposure, adjusted as of March 31, 2023 (4) / (5) |
|
|
(2,974,264) |
Net foreign currency exposure, adjusted as of March 31, 2022 (5) |
|
|
(3,139,209) |
(1)Consideration payable for the acquisition of Raízen Paraguay.
(2)This refers to the notional amount of foreign exchange derivative transactions.
(3)Maturities as of the 1st business day of the subsequent month, whose settlement was given by reference rate of the US dollar, calculated by the Central Bank of Brazil on the last closing day of the month, quoted at R$ 5.08 (R$ 4.74 in 2022).
(4)The adjusted net currency exposure will be substantially offset in the future with highly probable future revenues of product exports and/costs of product imports.
(5)Book balance of assets and liabilities denominated in foreign currencies at the statement of financial position date.
(e)Hedge accounting effect
Raízen formally designates transactions subject to hedge accounting for the purpose of hedging cash flows. The main hedges designated are sugar and ethanol revenues, as applicable, cost of by-products import, and foreign currency debt.
The impacts recognized in the Company’s equity and the estimated realization in statement of income are as follows:
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
|
|
|
|
|
|
Year of realization |
|
|
|
|
||||||
Financial instruments |
|
Market |
|
Risk |
|
2022/2023 |
|
2023/2024 |
|
2024/2025 |
|
Above 25 |
|
Contributed equity valuation adjustments (1) |
|
2023 |
Futures |
|
OTC / ICE |
|
Sugar#11 |
|
- |
|
(868,210) |
|
(115,601) |
|
13,577 |
|
2,580,141 |
|
1,609,907 |
Futures |
|
B3 / NYMEX / OTC |
|
Ethanol |
|
- |
|
(1,820) |
|
- |
|
- |
|
446,098 |
|
444,278 |
Option |
|
ICE |
|
Sugar#11 |
|
- |
|
(11,364) |
|
- |
|
- |
|
90,028 |
|
78,664 |
Forward |
|
OTC / ICE |
|
Exchange |
|
- |
|
371,521 |
|
117,221 |
|
302,041 |
|
(381,935) |
|
408,848 |
Swap |
|
Debt |
|
Exchange |
|
- |
|
- |
|
- |
|
(726,937) |
|
892,097 |
|
165,160 |
PPE |
|
Debt |
|
Exchange |
|
- |
|
(25,544) |
|
- |
|
(66,406) |
|
178,392 |
|
86,442 |
|
|
|
|
|
|
- |
|
(535,417) |
|
1,620 |
|
(477,725) |
|
3,804,821 |
|
2,793,299 |
(-) Deferred taxes |
|
|
|
- |
|
182,042 |
|
(551) |
|
162,427 |
|
(1,293,640) |
|
(949,722) |
||
Effect on equity in 2023 |
|
|
|
- |
|
(353,375) |
|
1,069 |
|
(315,298) |
|
2,511,181 |
|
1,843,577 |
||
Effect on equity in 2022 |
|
|
|
(629,396) |
|
14,461 |
|
34,846 |
|
(347,260) |
|
2,511,181 |
|
1,583,832 |
(1)Other comprehensive income contributed by the corporate reorganization of RESA and the business combination of Raízen Centro-Sul, in the amount of R$ 2,366,246 and R$ 144,935, respectively, occurred during the fiscal year ended March 31, 2022.
Changes in consolidated balances in other comprehensive income for the year are as follows:
Cash flow hedge
|
2023 |
|
2022 |
|
2021 |
Balance at beginning of year |
(782,410) |
|
(1,974,965) |
|
(723,708) |
Movement occurred in the year: |
|
|
|
|
|
Designation as hedge accounting |
|
|
|
|
|
Fair value of commodity futures |
(892,510) |
|
(3,471,437) |
|
(2,468,392) |
Fair value of forward exchange contracts |
102,736 |
|
2,502,674 |
|
(475,686) |
|
(789,774) |
|
(968,763) |
|
(2,944,078) |
Realizations and write-offs of commodities and foreign exchange results |
|
|
|
|
|
Net operating revenue |
1,169,822 |
|
2,863,860 |
|
1,058,100 |
Cost of products sold, and services provided |
14,093 |
|
(36,916) |
|
(32,895) |
Other operating expenses, net |
(589) |
|
(51,279) |
|
23,029 |
Total movements occurred during the year (before deferred taxes) |
393,552 |
|
1,806,902 |
|
(1,895,844) |
Effect of deferred taxes on equity adjustments |
(133,807) |
|
(614,347) |
|
644,587 |
|
259,745 |
|
1,192,555 |
|
(1,251,257) |
Balance at end of year |
(522,665) |
|
(782,410) |
|
(1,974,965) |
For the year ended March 31, 2023, there were no reclassifications to financial results referring to ineffective portions of the structures designated as cash flow hedges.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
Fair value hedge
The Company designates at fair value the inventories and highly probable purchases of oil by-products with pegged derivatives. Risk management is primarily intended for recognizing inventory at a floating price, as Raízen’s sales revenue will be upon sale of products to its clients. Hedge accounting aims to minimize any type of mismatching in the statement of income for the year, causing both the derivatives and the inventory to be recorded at fair value, whose positive impact in the year ended March 31, 2023, was R$ 5,145 (negative impact of R$ 55,876 in 2022). As of March 31, 2023, the fair value measurement balance of inventories is decreased by R$ 2,952 (decreased by R$ 8,097 in 2022).
(f)Interest rate risk
The Company monitors fluctuations in variable interest rates related to certain debts, especially those linked to Libor and IPCA, SOFR and, when necessary, uses derivative instruments to minimize these risks. The positions of derivative financial instruments used to hedge against the interest rate risk are as follows:
Interest rate risk: Interest derivatives outstanding as of March 31, 2023 |
||||||||||||||
Derivatives |
|
Long/Short |
|
Market |
|
Contract |
|
Maturity |
|
Notional (US$ thousand) |
|
Notional (R$ thousand) |
|
Fair value (R$ thousand) |
Interest rate swap |
|
Long |
|
OTC |
|
Interest rate swap |
|
May/23 to Aug/37 |
|
(1,492,615) |
|
(7,583,083) |
|
264,795 |
Total interest swap |
|
|
|
|
|
(1,492,615) |
|
(7,583,083) |
|
264,795 |
||||
Net exposure of interest derivatives as of March 31, 2023 |
|
|
|
(7,583,083) |
|
264,795 |
||||||||
Net exposure of interest derivatives as of March 31, 2022 |
|
|
|
(4,206,248) |
|
315,973 |
104 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(g)Summary of hedge effects on the consolidated profit or loss for the year
|
|
|
|
|
|
Hedge effects on the consolidated profit or loss |
|
|
|
|
||||||
Selected result information |
|
Exposure |
|
Hedge |
|
Exchange |
|
Commodities |
|
Interest |
|
Total |
|
Result excluding hedge effects |
|
2023 |
Net operating revenue |
|
Operating income |
|
Cash flow and fair value |
|
844,185 |
|
(2,234,068) |
|
- |
|
(1,389,883) |
|
247,221,673 |
|
245,831,790 |
Cost of products sold, and services provided |
|
Operating income |
|
Cash flow and fair value |
|
(10,784) |
|
(616,094) |
|
- |
|
(626,878) |
|
(229,937,205) |
|
(230,564,083) |
Gross income (loss) |
|
|
|
|
|
833,401 |
|
(2,850,162) |
|
- |
|
(2,016,761) |
|
17,284,468 |
|
15,267,707 |
Other operating revenue (expenses), net |
|
Operating income |
|
Cash flow |
|
591 |
|
- |
|
- |
|
591 |
|
736,881 |
|
737,472 |
Income (loss) before financial results and income tax and social contribution |
|
|
|
|
|
833,992 |
|
(2,850,162) |
|
- |
|
(2,016,170) |
|
18,021,349 |
|
16,005,179 |
Financial results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial expenses |
|
Interest and foreign exchange variations on loans and financing |
|
Fair value |
|
534,568 |
|
- |
|
90,475 |
|
625,043 |
|
(4,563,127) |
|
(3,938,084) |
Exchange variations |
|
Foreign exchange variations on loans and financing |
|
Cash flow |
|
5,077 |
|
- |
|
- |
|
5,077 |
|
(677,550) |
|
(672,473) |
Net effect of derivatives |
|
Interest and foreign exchange variations on loans and financing |
|
Cash flow and fair value |
|
(779,604) |
|
(122,005) |
|
(130,255) |
|
(1,031,864) |
|
- |
|
(1,031,864) |
|
|
|
|
|
|
(239,959) |
|
(122,005) |
|
(39,780) |
|
(401,744) |
|
(5,240,677) |
|
(5,642,421) |
Income (loss) before income tax and social contribution |
|
|
|
|
|
594,033 |
|
(2,972,167) |
|
(39,780) |
|
(2,417,914) |
|
12,780,672 |
|
10,362,758 |
105 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
|
|
|
|
|
|
Hedge effects on the consolidated profit or loss |
|
|
|
|
||||||
Selected result information |
|
Exposure |
|
Hedge |
|
Exchange |
|
Commodities |
|
Interest |
|
Total |
|
Income excluding hedge effects |
|
2022 |
Net operating revenue |
|
Operating income |
|
Cash flow and fair value |
|
(43,811) |
|
(2,890,322) |
|
- |
|
(2,934,133) |
|
197,701,451 |
|
194,767,318 |
Cost of products sold, and services provided |
|
Operating income |
|
Cash flow and fair value |
|
55,743 |
|
(970,786) |
|
- |
|
(915,043) |
|
(181,738,412) |
|
(182,653,455) |
Gross income (loss) |
|
|
|
|
|
11,932 |
|
(3,861,108) |
|
- |
|
(3,849,176) |
|
15,963,039 |
|
12,113,863 |
Other operating revenue (expenses), net |
|
Operating income |
|
Cash flow |
|
44,031 |
|
1,114 |
|
- |
|
45,145 |
|
511,260 |
|
556,405 |
Income (loss) before financial results and income tax and social contribution |
|
|
|
|
|
55,963 |
|
(3,859,994) |
|
- |
|
(3,804,031) |
|
16,474,299 |
|
12,670,268 |
Financial results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial expenses |
|
Interest and foreign exchange variations on loans and financing |
|
Fair value |
|
318,506 |
|
- |
|
274,200 |
|
592,706 |
|
(2,625,368) |
|
(2,032,662) |
Exchange variations |
|
Foreign exchange variations on loans and financing |
|
Cash flow |
|
(12,360) |
|
- |
|
- |
|
(12,360) |
|
2,063,627 |
|
2,051,267 |
Net effect of derivatives |
|
Interest and foreign exchange variations on loans and financing |
|
Cash flow and fair value |
|
(1,921,090) |
|
54,435 |
|
(445,546) |
|
(2,312,201) |
|
(395,341) |
|
(2,707,542) |
|
|
|
|
|
|
(1,614,944) |
|
54,435 |
|
(171,346) |
|
(1,731,855) |
|
(957,082) |
|
(2,688,937) |
Income (loss) before income tax and social contribution |
|
|
|
|
|
(1,558,981) |
|
(3,805,559) |
|
(171,346) |
|
(5,535,886) |
|
15,517,217 |
|
9,981,331 |
106 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
|
|
|
|
|
|
Hedge effects on the consolidated profit or loss |
|
|
|
|
||||||
Selected result information |
|
Exposure |
|
Hedge |
|
Exchange |
|
Commodities |
|
Interest |
|
Total |
|
Income excluding hedge effects |
|
2021 |
Net operating revenue |
|
Operating income |
|
Cash flow and fair value |
|
(1,192,726) |
|
177,717 |
|
- |
|
(1,015,009) |
|
115,616,997 |
|
114,601,988 |
Cost of products sold, and services provided |
|
Operating income |
|
Cash flow and fair value |
|
32,918 |
|
(543,822) |
|
- |
|
(510,904) |
|
(106,097,124) |
|
(106,608,028) |
Gross income (loss) |
|
|
|
|
|
(1,159,808) |
|
(366,105) |
|
- |
|
(1,525,913) |
|
9,519,873 |
|
7,993,960 |
Other operating revenue (expenses), net |
|
Operating income |
|
Cash flow |
|
(34,862) |
|
11,833 |
|
- |
|
(23,029) |
|
409,746 |
|
386,717 |
Income (loss) before financial results and income tax and social contribution |
|
|
|
|
|
(1,194,670) |
|
(354,272) |
|
- |
|
(1,548,942) |
|
9,929,619 |
|
8,380,677 |
Financial results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial expenses |
|
Interest and foreign exchange variations on loans and financing |
|
Fair value |
|
58,756 |
|
- |
|
4,406 |
|
63,162 |
|
(1,763,142) |
|
(1,699,980) |
Exchange variations |
|
Foreign exchange variations on loans and financing |
|
Cash flow |
|
12,465 |
|
- |
|
- |
|
12,465 |
|
(1,444,506) |
|
(1,432,041) |
Net effect of derivatives |
|
Interest and foreign exchange variations on loans and financing |
|
Cash flow and fair value |
|
1,262,348 |
|
(65,743) |
|
(13,922) |
|
1,182,683 |
|
- |
|
1,182,683 |
|
|
|
|
|
|
1,333,569 |
|
(65,743) |
|
(9,516) |
|
1,258,310 |
|
(3,207,648) |
|
(1,949,338) |
Income (loss) before income tax and social contribution |
|
|
|
|
|
138,899 |
|
(420,015) |
|
(9,516) |
|
(290,632) |
|
6,721,971 |
|
6,431,339 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
The breakdown of commodity hedge effects on the consolidated operating income, during the year ended March 31, 2023, 2022 and 2021, is shown below:
|
|
|
|
|
|
|
2023 |
|
Sugar |
|
Ethanol |
|
Petroleum and its derivatives |
|
Total commodities |
Net operating revenue |
(2,257,626) |
|
23,558 |
|
- |
|
(2,234,068) |
Cost of products sold, and services provided |
(482,287) |
|
376,472 |
|
(510,279) |
|
(616,094) |
Gross income (loss) |
(2,739,913) |
|
400,030 |
|
(510,279) |
|
(2,850,162) |
Income (loss) before financial results and income tax and social contribution |
(2,739,913) |
|
400,030 |
|
(510,279) |
|
(2,850,162) |
|
|
|
|
|
|
|
2022 |
|
Sugar |
|
Ethanol |
|
Petroleum and its derivatives |
|
Total commodities |
Net operating revenue |
(2,052,055) |
|
(838,267) |
|
- |
|
(2,890,322) |
Cost of products sold, and services provided |
(85,279) |
|
(144,303) |
|
(741,204) |
|
(970,786) |
Gross income (loss) |
(2,137,334) |
|
(982,570) |
|
(741,204) |
|
(3,861,108) |
Other operating revenue, net |
- |
|
1,114 |
|
- |
|
1,114 |
Income (loss) before financial results and income tax and social contribution |
(2,137,334) |
|
(981,455) |
|
(741,204) |
|
(3,859,994) |
|
|
|
|
|
|
|
2021 |
|
Sugar |
|
Ethanol |
|
Petroleum and its derivatives |
|
Total commodities |
Net operating revenue |
95,453 |
|
72,542 |
|
9,722 |
|
177,717 |
Cost of products sold, and services provided |
(7,263) |
|
(51,563) |
|
(484,996) |
|
(543,822) |
Gross income (loss) |
88,190 |
|
20,979 |
|
(475,274) |
|
(366,105) |
Other operating revenue, net |
- |
|
11,833 |
|
- |
|
11,833 |
Income (loss) before financial results and income tax and social contribution |
88,190 |
|
32,811 |
|
(475,274) |
|
(354,272) |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(h)Credit risk
A substantial part of the sales made by the Company and its subsidiaries is to a select group of highly qualified counterparties.
Credit risk is managed by specific rules for client acceptance, credit analysis and establishment of exposure limits per client, including, when applicable, requirement of letter of credit from first-tier banks and capturing security interest on loans granted. Management considers that the credit risk is substantially covered by the allowance for expected credit losses.
Individual risk limits are established based on internal or external ratings, according to the limits determined by the Company management. The use of credit limits is regularly monitored. No credit limits were exceeded in the year, and management does not expect any losses from non-performance by the counterparties at an amount higher than that already provisioned.
The Company operates commodity derivatives in the New York – ICE US and NYMEX, Chicago - CBOT, Chicago - CME, and London - LIFFE commodity futures and options markets, as well as in the over the counter (OTC) market with selected counterparties. The Company operates exchange rate and commodity derivatives in over-the-counter markets registered with B3, mainly with the main national and international banks considered Investment Grade by international rating agencies.
Guarantee margins (Restricted cash, Note 4.b) - Derivative transactions on commodity exchanges (ICE US, NYMEX, LIFFE and B3) require guarantee margins. The total consolidated margin deposited as of March 31, 2023, amounts to R$ 1,272,959 (R$ 2,279,565 in 2022), of which R$ 62,110 (R$ 100,821 in 2022) in restricted financial investments and R$ 1,210,849 (R$ 2,178,744 in 2022) in margin on derivative transactions.
The Company’s derivative transactions in over the counter do not require a guaranteed margin.
Credit risk on cash and cash equivalents is mitigated through the conservative distribution of investment funds and CDBs that make up the item. The distribution follows strict criteria for allocation and exposure to counterparties, which are the main local and international banks considered, in their majority, as Investment Grade by the international rating agencies.
(i)Liquidity risk
Liquidity risk is that in which the Company may encounter difficulties in honoring the obligations associated with its financial liabilities that are settled with cash payments or with another financial asset. The approach to this risk consists of prudential management that guarantees sufficient liquidity to meet its obligations upon maturity, under normal and stress conditions, without causing unacceptable losses or risking damage to the Company's reputation.
As part of the liquidity management process, management prepares business plans and monitors their execution, discussing the positive and negative cash flow risks and assessing the availability of financial resources to support its operations, investments, and refinancing needs.
The table below states the main financial liabilities contracted by maturity:
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
Up to 1 year |
|
Up to 2 years |
|
From 3 to 5 years |
|
Above 5 years |
|
Total |
|
Total |
Loans and financing |
5,252,175 |
|
5,660,658 |
|
14,716,070 |
|
16,089,102 |
|
41,718,005 |
|
28,473,070 |
Suppliers (Note 14) |
21,452,338 |
|
- |
|
- |
|
- |
|
21,452,338 |
|
19,059,514 |
Lease liabilities from third parties and related parties (1) (Note 15.b) |
3,483,761 |
|
2,899,494 |
|
5,767,771 |
|
3,980,640 |
|
16,131,666 |
|
15,402,520 |
Derivative financial instruments (Note 27.b) |
6,269,699 |
|
626,903 |
|
1,150,055 |
|
191,144 |
|
8,237,801 |
|
8,452,525 |
Related parties (1) |
2,140,033 |
|
160,663 |
|
633,267 |
|
3,470,788 |
|
6,404,751 |
|
5,961,712 |
Other liabilities (2) |
91,447 |
|
91,447 |
|
182,894 |
|
- |
|
365,788 |
|
426,402 |
|
38,689,453 |
|
9,439,165 |
|
22,450,057 |
|
23,731,674 |
|
94,310,349 |
|
77,775,743 |
(1)Except lease liabilities with related parties.
(2)Consideration payable for the acquisition of Raízen Paraguay.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(j)Fair value
The fair value of financial assets and liabilities is the amount for which a financial instrument may be exchanged in a current transaction between willing parties, other than a forced sale or settlement. The fair value of cash and cash equivalents, trade accounts receivable, suppliers, related parties and other short-term obligations approximates the respective carrying amount. The fair value of long-term assets and liabilities does not differ significantly from their carrying amount.
The fair value of loans and financing is obtained by determining the present value of future cash flows of obligations using, for this purpose, interest rate curves (according to contracted indexes). These financial instruments are substantially subject to variable interest rates (Note 16), resulting in a fair value approximates the amounts recorded in the financial statements.
Derivatives measured by valuation techniques with observable market data refer mostly to swaps and forward contracts. The most frequently applied valuation techniques include forwards and swap pricing models, using present value calculation. The models include various inputs, including in connection with the creditworthiness of the counterparties, spot and forward foreign exchange rates, interest rate curves and forward rate curves of the hedged commodity.
The categories of the main consolidated financial instruments are presented as follows:
|
|
|
|
|
2023 |
|
|
|
|
|
2022 |
Financial assets |
Amortized cost |
|
Fair value through profit or loss |
|
Total |
|
Amortized cost |
|
Fair value through profit or loss |
|
Total |
Cash and cash equivalents (Note 3) |
5,159,881 |
|
- |
|
5,159,881 |
|
4,182,878 |
|
- |
|
4,182,878 |
Financial investments (Note 3) |
- |
|
3,573,515 |
|
3,573,515 |
|
- |
|
4,051,690 |
|
4,051,690 |
Financial treasury bill (“LFT”) |
- |
|
8,751 |
|
8,751 |
|
- |
|
87,529 |
|
87,529 |
TVM except LFT |
167,778 |
|
- |
|
167,778 |
|
- |
|
- |
|
- |
Restricted cash (Note 4.b) |
1,212,500 |
|
62,110 |
|
1,274,610 |
|
2,178,744 |
|
100,888 |
|
2,279,632 |
Trade accounts receivable (Note 5) |
8,920,348 |
|
- |
|
8,920,348 |
|
6,637,838 |
|
- |
|
6,637,838 |
Derivative financial instruments (Note 27.b) |
- |
|
9,279,327 |
|
9,279,327 |
|
- |
|
7,491,565 |
|
7,491,565 |
Related parties (Note 9) |
2,180,484 |
|
- |
|
2,180,484 |
|
2,085,638 |
|
- |
|
2,085,638 |
Total financial assets |
17,640,991 |
|
12,923,703 |
|
30,564,694 |
|
15,085,098 |
|
11,731,672 |
|
26,816,770 |
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
Loans and financing (Note 16) |
(9,197,289) |
|
(20,257,641) |
|
(29,454,930) |
|
(7,053,700) |
|
(15,221,249) |
|
(22,274,949) |
Derivative financial instruments (Note 27.b) |
- |
|
(8,237,800) |
|
(8,237,800) |
|
- |
|
(8,452,525) |
|
(8,452,525) |
Suppliers (Note 14.a) |
(21,452,338) |
|
- |
|
(21,452,338) |
|
(19,059,514) |
|
- |
|
(19,059,514) |
Other liabilities |
(319,158) |
|
- |
|
(319,158) |
|
(359,478) |
|
- |
|
(359,478) |
Related parties (Note 9) |
(5,537,457) |
|
- |
|
(5,537,457) |
|
(5,017,700) |
|
- |
|
(5,017,700) |
Total financial liabilities |
(36,506,242) |
|
(28,495,441) |
|
(65,001,683) |
|
(31,490,392) |
|
(23,673,774) |
|
(55,164,166) |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
Fair value hierarchy
The Company uses the following hierarchy to determine and disclose the fair value of financial instruments by the valuation techniques:
As of March 31, 2023, the hierarchies used in the valuation techniques of the Company's financial instruments are described below:
Financial instruments measured at fair value |
|
Level 1 |
|
Level 2 |
|
Total |
Financial investments (Note 3) |
|
- |
|
3,573,515 |
|
3,573,515 |
LFT (Note 4.a) |
|
- |
|
8,751 |
|
8,751 |
Financial investments - restricted cash (Note 4.b) |
|
- |
|
62,110 |
|
62,110 |
Derivative financial assets (Note 27.b) |
|
5,169,214 |
|
4,110,113 |
|
9,279,327 |
Loans and financing (Note 16) |
|
- |
|
(20,257,641) |
|
(20,257,641) |
Derivative financial liabilities (Note 27.b) |
|
(5,630,013) |
|
(2,607,787) |
|
(8,237,800) |
Total as of March 31, 2023 |
|
(460,799) |
|
(15,110,939) |
|
(15,571,738) |
Total as of March 31, 2022 |
|
(2,350,439) |
|
(9,591,663) |
|
(11,942,102) |
During the years ended March 31, 2023, and 2022, there were no transfers between these levels to determine the fair value of financial instruments.
(k)Sensitivity analysis
Raízen adopted three scenarios for its sensitivity analysis, one probable and two (possible and remote) that may have adverse effects on the fair value of its financial instruments. The probable scenario was defined based on the commodities futures market curves for sugar, ethanol, diesel (heating oil), US dollar and other currencies on March 31, 2023, corresponding to the balance of the derivatives’ fair value on that date. Possible and remote adverse scenarios were defined considering adverse impacts of 25% and 50% on product price curves and US dollar, which were calculated based on the probable scenario.
Sensitivity analysis table
(1)Changes in fair value of derivative financial instruments
|
|
|
|
|
|
Impact on profit or loss (*) |
||||||
|
|
Risk factors |
|
Probable scenario |
|
Possible scenario +25% |
|
Fair value balance |
|
Remote scenario +50% |
|
Fair value balance |
Price risk |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
Futures contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
Purchase and sale commitments |
|
Sugar price increase |
|
(891,471) |
|
(8,934,741) |
|
(9,826,212) |
|
(17,869,482) |
|
(18,760,953) |
Purchase and sale commitments |
|
Ethanol price increase |
|
379,535 |
|
(1,083,286) |
|
(703,751) |
|
(2,166,572) |
|
(1,787,037) |
Purchase and sale commitments |
|
Gasoline price decrease |
|
(12,178) |
|
19,124 |
|
6,946 |
|
38,248 |
|
26,070 |
Purchase and sale commitments |
|
Heating oil price increase |
|
65,388 |
|
(220,936) |
|
(155,548) |
|
(441,872) |
|
(376,484) |
Purchase and sale commitments |
|
Energy price decrease |
|
974,127 |
|
(902,599) |
|
71,528 |
|
(1,805,198) |
|
(831,071) |
|
|
|
|
515,401 |
|
(11,122,438) |
|
(10,607,037) |
|
(22,244,876) |
|
(21,729,475) |
111 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
|
|
|
|
|
|
Continuation |
||||||
|
|
Risk factors |
|
Probable scenario |
|
Possible scenario +25% |
|
Fair value balance |
|
Remote scenario +50% |
|
Fair value balance |
Foreign exchange rate risk |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange rate derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
Futures contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
Purchase and sale commitments |
|
US$/R$ exchange rate increase |
|
956 |
|
(39,509) |
|
(38,553) |
|
(79,018) |
|
(78,062) |
Forward contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
Purchase and sale commitments |
|
US$/R$ exchange rate increase |
|
256,762 |
|
(1,709,848) |
|
(1,453,086) |
|
(3,419,696) |
|
(3,162,934) |
Purchase and sale commitments |
|
€/US$ exchange rate increase |
|
(10,484) |
|
(428,917) |
|
(439,401) |
|
(857,834) |
|
(868,318) |
Purchase and sale commitments |
|
€/R$ exchange rate decrease |
|
(32) |
|
(2,200) |
|
(2,232) |
|
(4,400) |
|
(4,432) |
Exchange swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
Purchase and sale commitments |
|
€/US$ exchange rate increase |
|
4,344 |
|
(287,551) |
|
(283,207) |
|
(575,103) |
|
(570,759) |
Locked-in exchange |
|
|
|
|
|
|
|
|
|
|
|
|
Purchase and sale commitments |
|
US$/R$ exchange rate decrease |
|
9,783 |
|
(2,993,640) |
|
(2,983,857) |
|
(5,987,280) |
|
(5,977,497) |
|
|
|
|
261,329 |
|
(5,461,665) |
|
(5,200,336) |
|
(10,923,331) |
|
(10,662,002) |
Interest rate risk |
|
|
|
|
|
|
|
|
|
|
|
|
Interest swap: |
|
|
|
|
|
|
|
|
|
|
|
|
Purchase and sale commitments |
|
Interest rate decrease |
|
264,795 |
|
47,867 |
|
312,662 |
|
95,735 |
|
360,530 |
|
|
|
|
264,795 |
|
47,867 |
|
312,662 |
|
95,735 |
|
360,530 |
Total |
|
|
|
1,041,525 |
|
(16,536,236) |
|
(15,494,711) |
|
(33,072,472) |
|
(32,030,947) |
(*) Projected result considering a horizon of up to 12 months from March 31, 2023.
As of March 31, 2023, the commodity and foreign exchange futures curves used in the sensitivity analysis are described below:
|
|
|
|
|
|
|
|
Scenarios |
Risk factors |
Index |
Position |
|
Probable |
|
Possible |
|
Remote |
Sugar price increase |
R$/ton |
Short |
|
2,289 |
|
2,861 |
|
3,434 |
Ethanol price increase |
R$/ m³ |
Short |
|
3,604 |
|
4,505 |
|
5,406 |
Gasoline price decrease |
R$/ m³ |
Long |
|
3,264 |
|
2,448 |
|
1,632 |
Heating oil price increase |
R$/ m³ |
Short |
|
4,980 |
|
6,226 |
|
7,471 |
Energy price decrease |
R$/mwh |
Long |
|
168 |
|
126 |
|
84 |
Exchange rate increase |
US$/R$ |
Short |
|
4.78 |
|
5.97 |
|
7.17 |
Exchange rate increase |
€/US$ |
Short |
|
1.05 |
|
1.31 |
|
1.58 |
Exchange rate decrease |
€/R$ |
Long |
|
5.67 |
|
4.25 |
|
2.83 |
Exchange rate decrease |
US$/R$ |
Long |
|
5.08 |
|
3.81 |
|
2.54 |
Interest rate decrease |
(%) per year |
Long |
|
13.65 |
|
10.24 |
|
6.82 |
112 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(2)Foreign exchange exposure, net
The probable scenario considers the position as of March 31, 2023. The effects of the possible and remote scenarios that would be posted to the consolidated statement of income as foreign exchange gains (losses) are described below:
|
|
|
|
Effect of exchange rate changes |
||||||
Net foreign exchange exposure as of March 31, 2023 |
|
Asset/liability balances |
|
Possible scenario +25% |
|
Remote scenario +50% |
|
Possible scenario -25% |
|
Remote scenario -50% |
Cash and cash equivalents (Note 3) |
|
5,120,361 |
|
1,280,090 |
|
2,560,181 |
|
(1,280,090) |
|
(2,560,181) |
Restricted cash (Note 4.b) |
|
1,207,322 |
|
301,831 |
|
603,661 |
|
(301,831) |
|
(603,661) |
Foreign trade accounts receivable (Note 5.a) |
|
4,016,404 |
|
1,004,101 |
|
2,008,202 |
|
(1,004,101) |
|
(2,008,202) |
Advances to suppliers (Note 14.b) |
|
91,382 |
|
22,846 |
|
45,691 |
|
(22,846) |
|
(45,691) |
Related parties (Note 9.a) |
|
(3,012,602) |
|
(753,151) |
|
(1,506,301) |
|
753,151 |
|
1,506,301 |
Advances from clients |
|
(1,546,507) |
|
(386,627) |
|
(773,254) |
|
386,627 |
|
773,254 |
Suppliers (Note 14.a) |
|
(7,540,996) |
|
(1,885,249) |
|
(3,770,498) |
|
1,885,249 |
|
3,770,498 |
Loans and financing (Note 16) |
|
(16,305,127) |
|
(4,076,282) |
|
(8,152,564) |
|
4,076,282 |
|
8,152,564 |
Lease liabilities (Note 15.b) |
|
(374,250) |
|
(93,563) |
|
(187,125) |
|
93,563 |
|
187,125 |
Other liabilities (1) |
|
(319,158) |
|
(79,790) |
|
(159,579) |
|
79,790 |
|
159,579 |
Impact on statement of income for the year |
|
|
|
(4,665,794) |
|
(9,331,586) |
|
4,665,794 |
|
9,331,586 |
(1)Consideration payable for the acquisition of Raízen Paraguay.
As of March 31, 2023, the rates used in the mentioned sensitivity analysis were as follows:
|
|
R$/US$ |
Probable, statement of financial position balance |
|
5.08 |
Possible scenario +25% |
|
6.35 |
Remote scenario +50% |
|
7.62 |
Possible scenario -25% |
|
3.81 |
Remote scenario -50% |
|
2.54 |
(3)Interest rate sensitivity
As of March 31, 2023, the probable scenario considers the weighted average post-fixed annual interest rate on loans and financing, and for financial investments and securities (except LFT), the CDI and IPCA accumulated over the past 12 months. In both cases, simulations were performed with an increase and decrease of 25% and 50%. The consolidated results of this sensitivity analysis are presented below:
|
|
Interest rate sensitivity |
||||||||
|
|
Possible scenario |
|
Possible scenario |
|
Remote scenario |
|
Possible scenario |
|
Remote scenario |
Financial investments (including LFT) |
|
480,974 |
|
120,244 |
|
240,487 |
|
(120,244) |
|
(240,487) |
Debentures (securities) |
|
5,532 |
|
1,383 |
|
2,766 |
|
(1,383) |
|
(2,766) |
Investment funds (securities) |
|
8,699 |
|
1,687 |
|
3,374 |
|
(1,687) |
|
(3,374) |
Restricted financial investments (restricted cash) |
|
8,527 |
|
2,132 |
|
4,264 |
|
(2,132) |
|
(4,264) |
Post-fixed loans and financing |
|
(2,133,702) |
|
(533,426) |
|
(1,066,851) |
|
533,426 |
|
1,066,851 |
Additional impact on income for the year |
|
(1,629,970) |
|
(407,980) |
|
(815,960) |
|
407,980 |
|
815,960 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
As of March 31, 2023, we applied the following rates and assumptions in the sensitivity analysis:
|
|
|
|
|
|
|
|
|
|
Scenarios |
|
|
|
|
Possible |
|
Remote |
|
Possible |
|
Remote |
|
|
Probable |
|
25% |
|
50% |
|
-25% |
|
-50% |
101% of the accumulated CDI - % per year |
|
13.43% |
|
16.78% |
|
20.14% |
|
10.07% |
|
6.71% |
100% of the accumulated CDI + 4% per year |
|
17.82% |
|
21.27% |
|
24.73% |
|
14.36% |
|
10.91% |
Accumulated IPCA - % per year |
|
4.65% |
|
5.81% |
|
6.98% |
|
8.14% |
|
9.30% |
Weight post-fixed annual interest rate on loans and financing |
|
8.65% |
|
10.81% |
|
12.97% |
|
6.48% |
|
4.32% |
(l)Capital management
The Company’s objective when managing its capital structure is to ensure the continuity of its operations and finance investment opportunities, maintaining a healthy credit profile and offering an adequate return to its shareholders.
Raízen has a relationship with the main local and international rating agencies, as shown below:
Agency |
|
Scale |
|
Rating |
|
Outlook |
|
Date |
Fitch |
|
National |
|
AAA (bra) |
|
Stable |
|
August/2022 |
|
|
Global |
|
BBB |
|
Stable |
|
August/2022 |
Moody's |
|
National |
|
AAA,Br |
|
Stable |
|
September/2022 |
|
|
Global |
|
Baa3 |
|
Stable |
|
February/2023 |
Standard & Poor's |
|
National |
|
brAAA |
|
Stable |
|
November/2022 |
|
|
Global |
|
BBB- |
|
Stable |
|
November/2022 |
Raízen monitors its capital through a combined treasury management of its business, using a leverage ratio represented by net debt divided by equity.
The Company's net debt is calculated as the total of loans and financing with the market, net of cash and cash equivalents, investments and trade notes held as collateral for debt items and derivative financial instruments taken out to hedge the indebtedness.
Financial leverage ratios as of March 31, 2023, and 2022 were calculated as follows:
|
2023 |
|
2022 |
Third party capital |
|
|
|
Loans and financing (Note 16) |
29,454,938 |
|
22,274,876 |
(-) Cash and cash equivalents (Note 3) |
(8,733,396) |
|
(8,234,568) |
(-) Securities (Note 4.a) |
(176,529) |
|
(87,529) |
(-) Financial investments linked to financing (Note 4.b) |
(1,651) |
|
(67) |
(-) National Treasury Certificates – CTN |
(34,940) |
|
(31,126) |
(-) Foreign exchange and interest rate swaps and other derivatives |
(147,303) |
|
(94,207) |
|
20,361,119 |
|
13,827,379 |
Own capital |
|
|
|
Equity |
|
|
|
Attributable to Company’s controlling shareholders |
22,251,749 |
|
21,648,413 |
Interest of non-controlling shareholders |
652,412 |
|
610,495 |
|
22,904,161 |
|
22,258,908 |
Total own capital and third parties |
43,265,280 |
|
36,086,287 |
Leverage ratio |
47.06% |
|
38.32% |
114 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
28. Retirement supplementation plan
(a) Pension fund
The Company sponsors the Retirement Plan Raíz, administered by Raizprev – Entidade de Previdência Privada, a closed nonprofit supplementary pension plan entity.
The Entity has administrative, equity and financial autonomy, and its objective is to administer and provide private pension plans, as defined in the Benefit Plan Regulations.
The Company has legal and contractual obligations that could give rise to the need to make additional extraordinary contributions in case of shortfall. In the year ended March 31, 2023, the contribution recognized as an expense totaled R$ 32,141 (R$ 21,314 in 2022).
The subsidiary Raízen Centro-Sul granted its employees a defined contribution private pension plan. Contribution has been suspended since April 1, 2022, and the plan is closed to new participants, which ended on March 24, 2023.
The subsidiary Raízen Centro-Sul’s expense with the private pension plan totaled R$ 742 in the period from August 10 to March 31, 2022. Due to the plan’s characteristics and design, Raízen Centro-Sul does not have any future obligation arising from post-employment or actuarial benefits.
Pension and healthcare plan of subsidiary Raízen Argentina
Raízen Argentina granted pension plans to non-union employees with defined and non-financed benefit. These plans are effective but closed to new participants since the end of 2014. The healthcare coverage of retired employees is an inherited and frozen benefit, whose cost is equally apportioned between the Company and the former employees.
(b) Profit sharing
The Company recognizes a liability and an expense for profit sharing based on a methodology that considers previously defined goals of employees. The Company recognizes a provision when it is contractually bound or when there is a past practice that has created a constructive obligation.
29. Insurance
Raízen has an insurance and risk management program that provides coverage and protection compatible with its assets and operation.
The insurance coverage taken out is based on a careful study of risks and losses conducted by local insurance advisors, and the types of insurance taken out are considered sufficient by management to cover claims, if any, considering the nature of the activities of the Company and its subsidiaries, which are described below:
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
Insurance type |
|
Coverage |
|
Value |
Operational risks |
|
Fire, lightning, explosion, among others |
|
2,352,476 |
General civil liability |
|
Third-party claims |
|
530,200 |
|
|
|
|
2,882,676 |
30. Business combination
(i) Transactions carried out in the year ended March 31, 2023, and 2022
(a) Acquisition of Raízen Centro-Sul by Raízen
On August 10, 2021, the Company completed the acquisition of all shares issued by Biosev, for an amount of of R$ 4,581,899, paid in cash. The agreement provided for certain possible post-closing price adjustments, according to usual mechanisms in transactions of this nature, which are currently under discussion between the Company and the sellers.
As part of this acquisition transaction, Hédera (former controlling shareholder of Biosev) exercised the subscription of warrants, and contributed to Raízen of all of its Biosev shares in the amount of R$ 2,423,944, issued at the time of Raízen’s general meeting held on June 1, 2021, becoming the holder of 330,602,900 preferred shares issued by Raízen, representing 3.2% of its capital, which was adjusted to market value for the amount of R$ 76,663, totaling R$ 2,347,281, equivalent to the unit value of R$ 7.10 per share on the acquisition date.
On May 11, 2022, the Company and the sellers signed the settlement agreement and the amendment to the acquisition contract of Raízen Centro-Sul, whereby a price adjustment in favor of Raízen was established in the amount of R$ 78,326, equivalent to US$ 15,000 thousand, which will be received in five annual installments, with final maturity in 2026.
On June 6, 2022, the Company received the first installment of the price adjustment, amounting to R$ 14,386, according to the maturity established in such agreement. Additionally, on February 10, 2023, Hédera Investimentos e Participações S.A. advanced the payment of the remaining balance of the price adjustment due to Raízen, in the amount of R$ 62,774.
On August 9, 2022, the Company concluded the procedures for allocating the purchase price for the acquisition of Raízen Centro-Sul. Accordingly, the consideration for the acquisition of Raízen Centro-Sul totaled R$ 687,385 (preliminary goodwill of R$ 757,487 in 2022).
The final purchase price allocation was as follows:
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
Accounts |
|
Amount |
Cash and cash equivalents |
|
287,400 |
Restricted cash |
|
16,040 |
Derivative financial instruments – assets |
|
280,873 |
Trade accounts receivable |
|
355,026 |
Inventories |
|
1,379,221 |
Advances to suppliers |
|
3,015,331 |
Biological assets |
|
844,329 |
Recoverable income tax and social contribution |
|
54,379 |
Recoverable taxes (Note 8) |
|
192,535 |
Deferred income and social contribution tax assets, net |
|
1,186,205 |
Judicial deposits |
|
176,632 |
Investments |
|
9,324 |
Property, plant, and equipment |
|
3,177,226 |
Intangible assets |
|
8,844 |
Right of use |
|
2,936,175 |
Suppliers |
|
(1,372,940) |
Lease liabilities |
|
(3,133,772) |
Derivative financial instruments – liabilities |
|
(291,211) |
Payroll and related charges payable |
|
(111,726) |
Related parties – liabilities, net |
|
(479,676) |
Advances from clients |
|
(2,166,964) |
Income tax and social contribution payable |
|
(28,325) |
Taxes payable |
|
(96,174) |
Provision for legal disputes |
|
(363,425) |
Other, net |
|
296,366 |
Consolidated net assets |
|
6,171,693 |
Consideration transferred prior to the price adjustment |
|
6,929,180 |
Preliminary goodwill generated on the acquisition as of March 31, 2022 |
|
757,487 |
Goodwill adjustments: |
|
|
Price adjustment in favor of Raízen |
|
(78,326) |
Present value adjustment of the price adjustment |
|
10,913 |
Allocation of surplus value of property, plant and equipment (Note 12) |
|
(4,074) |
Deferred tax on the allocation of surplus value (Note 17.d) |
|
1,385 |
Total goodwill adjustments (Notes 11.c and 13) |
|
(70,102) |
Final goodwill generated on the acquisition of Raízen Centro-Sul |
|
687,385 |
The valuation techniques used to measure the fair value of property, plant and equipment were as follows:
Assets acquired |
|
Valuation technique |
Property, plant, and equipment (1) |
|
Market comparison technique and cost technique: the valuation model considers the market prices quoted for comparable items, when available, and the depreciated replacement cost, when applicable. The depreciated replacement cost reflects adjustments of physical deterioration, as well as the functional and economic obsolescence. In the final allocation, fair value of property, plant, and equipment items on the acquisition date totaled R$ 3,022,727, which represented surplus value of R$ 158,573 (R$ 154,499 in 2022) to be depreciated based on the assets’ useful lives of approximately 14 years. |
(1) | In the final allocation of the goodwill, on the mentioned an additional surplus value, deferred tax liabilities were recorded in the amount of R$ 53,915 (R$ 52,530 in 2022). |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(b) Acquisition of Raízen Paraguay’s fuel distribution network in Paraguay by Raízen
On November 1, 2021, the Company acquired a 50% interest in the capital of Raízen Paraguay, a company headquartered in Paraguay.
Pursuant to the shareholders' agreement, signed on the acquisition date, Raízen will have the right to appoint the executive board and the majority of the members of the company’s board of directors, and will also be entitled to a preferential dividend, depending on the financial performance of the business. For these reasons, from the acquisition date Raízen controls the acquiree and consolidates the financial statements of B&R.
On June 23, 2022, the Company and the sellers signed the price adjustment agreement, whereby a price adjustment in favor of Raízen was established in the amount of R$ 12,752, equivalent to US$ 2,255 thousand, deducted from the portion paid by Raízen during the year ended March 31, 2023.
On September 27, 2022, the Company concluded the procedures for allocating the purchase price for the acquisition of Raízen Paraguay. Accordingly, the final goodwill generated on the acquisition of Raízen Paraguay totaled R$ 362,924 (preliminary goodwill of R$ 376,165 in 2022).
The final purchase price allocation was as follows:
Accounts |
|
Amount |
Cash and cash equivalents |
|
80,198 |
Trade accounts receivable |
|
163,564 |
Inventories |
|
110,407 |
Advances to suppliers |
|
8,166 |
Recoverable income tax and social contribution |
|
15,708 |
Recoverable taxes |
|
3,457 |
Contract assets |
|
285,291 |
Property, plant, and equipment |
|
25,409 |
Intangible assets |
|
60,746 |
Suppliers |
|
(225,704) |
Deferred income tax and social contribution liabilities, net |
|
(72,445) |
Payroll and related charges payable |
|
(2,165) |
Other, net |
|
(10,213) |
Consolidated net assets |
|
442,419 |
Equity interest of Raízen |
|
50% |
Share in consolidated net assets |
|
221,210 |
Consideration transferred prior to the price adjustment |
|
597,375 |
Preliminary goodwill generated on the acquisition of Raízen Paraguay as of March 31, 2022 |
|
376,165 |
Goodwill adjustments: |
|
|
Price adjustment in favor of Raízen |
|
(12,752) |
Present value adjustment of the price adjustment |
|
964 |
Allocation of the surplus value of contract assets and others |
|
(2,201) |
Deferred tax on the allocation of surplus value (Note 17.d) |
|
748 |
Total goodwill adjustments (Notes 11.c and 13) |
|
(13,241) |
Final goodwill generated on the acquisition of Raízen Paraguay |
|
362,924 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
In the final allocation of the goodwill of Raízen Paraguay, the Company recognized a non-controlling shareholders through the proportional interest (50%), in the additional amount of R$ 1,453, totaling a fair value of R$ 222,663 (preliminary goodwill of R$ 221,210 in 2022).
The valuation techniques used to measure the final fair value of net assets that changed significantly in relation to those mentioned in the annual financial statements as of March 31, 2023, were as follows:
Assets acquired |
|
Valuation techniques |
Contract assets (1) |
|
Exclusivity rights/Primas: Multi-Period Excess Earnings Method (“MPEEM”) technique. This model estimates fair value based on discounting the business unit's future cash flow discounts. Cash flows considered revenues from the activities of Primas and their corresponding expenses in the period of 7 years. In the final allocation, the fair value of Primas totaled R$ 285,291, resulting in a surplus value of R$ 227,640 (R$ 225,439 in 2022), to be amortized on a straight-line basis over the referred term. |
(1) | In the final allocation of the goodwill, on the mentioned surplus value and loss, deferred tax liabilities were recorded in the amount of R$77,970 (R$ 77,222 in 2022). |
(c) Acquisition and formation of the Grupo Gera
On January 5, 2022, indirect subsidiary Biobarra Energia Ltda. (“Biobarra”) concluded the acquisition and formation of the Grupo Gera.
On December 28, 2022, the Company concluded the procedures for allocating the purchase price for the acquisition of the Grupo Gera. Accordingly, the final goodwill generated on the acquisition of the Grupo Gera resulted in R$ 63,288 (preliminary goodwill of R$ 163,504 in 2022).
The final purchase price allocation was as follows:
Accounts |
|
Amount |
Cash and cash equivalentes |
|
53,493 |
Trade accounts receivable |
|
8,168 |
Related parties – assets |
|
3,060 |
Recoverable income tax and social contribution |
|
438 |
Recoverable taxes |
|
319 |
Right of use |
|
4,513 |
Investments |
|
19,185 |
Property, plant, and equipment |
|
72,604 |
Intangible assets |
|
1,470 |
Suppliers |
|
(6,498) |
Related parties – liabilities |
|
(1,865) |
Lease liabilities |
|
(6,894) |
Income tax and social contribution payable |
|
(272) |
Payroll and related charges payable |
|
(43) |
Taxes payable |
|
(932) |
Deferred income tax and social contribution liabilities, net |
|
(392) |
Other, net |
|
(391) |
Consolidated net assets |
|
145,963 |
(-) Interest of non-controlling shareholders |
|
(51,772) |
Total consideration |
|
257,695 |
Preliminary goodwill generated on the acquisition as of March 31, 2022 |
|
163,504 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
|
|
Continuation |
Goodwill adjustments: |
|
|
Price adjustment in favor of the seller (i) |
|
22,490 |
Surplus value of investments (Note 11.a) |
|
(51,708) |
Surplus value of property, plant, and equipment (Note 12) |
|
(9,575) |
Surplus value of intangible assets (Note 13) |
|
(124,711) |
Deferred taxes on the allocation of surplus value (Note 17.d) |
|
63,288 |
Total goodwill adjustments (Notes 11.c and 13) |
|
(100,216) |
Final goodwill generated on the acquisition and formation of the Grupo Gera |
|
63,288 |
(i) Price adjustments recorded in the fiscal year according to the conditions stipulated in the contract.
The valuation techniques used to measure the final fair value of the net assets acquired were as follows:
Assets acquired (1) |
|
Valuation techniques |
Investments |
|
Allocation of goodwill to the following assets, over which the Company does not have control: (i) operating authorization (valid until 2052): (ii) intellectual property (useful life of 10 years); and (iii) remaining goodwill. |
Property, plant, and equipment |
|
Market comparison technique: the valuation model considers the market prices quoted for comparable items, when available. |
Intangible assets |
|
Operating authorization: Income approach. The enterprise value (EV) of each cash-generating plant on the Transaction date is adjusted by the surplus value of property, plant and equipment. Then, the carrying amount of each cash-generating plan is deducted, resulting in the fair value adjustment. The operating authorization is valid until 2052, to be amortized on a straight-line basis over the referred to period. |
(1) | In the final allocation of the goodwill, on the mentioned surplus value and loss, deferred tax liabilities were recorded in the amount of R$ 63,288. |
(d) Acquisition of SBPL's lubricants business by Blueway
Since 2011, the Company has acted as a marketing agent for Shell brand lubricants, based on the contract signed between Raízen and Shell, which had a term of 10 (ten) years.
With maturity of this intermediation agreement on June 7, 2021, Raízen and Shell negotiated an extension of the scope of the relationship held until then, with acquisition of 100% interest in SBPL by Raízen.
On May 1, 2022, the acquisition of the business was concluded, through the subsidiary Blueway, in the amount of R$ 750,000 (base price), and a amount, in the transaction closing date, of R$ 726,451.
The agreement provides other price adjustments, according to usual mechanisms for this type of transactions. During the year ended March 31, 2023, the Company and the sellers concluded discussions on price adjustments, resulting in an amount of R$ 5,345 in favor of SBPL, fully paid up by Blueway on September 19, 2022.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
The lubricant business is now part of Raízen's portfolio, which includes the lubricant plant located in Ilha do Governador (Rio de Janeiro), the base oil terminal in Campos Elíseos, Duque de Caxias (Rio de Janeiro), the Shell Marine division of lubricants and the business of supply and distribution of Shell lubricants in Brazil.
This acquisition will allow Raízen the opportunity of increasing its supply of premium products to more than fifty thousand industrial and commercial clients and more than fifty million customers to whom it provides services in its network every year.
The Company identified the initial assets acquired and liabilities assumed, as well as the classification of such assets, based on the economic, political, and operational conditions of Neolubes, existing on the acquisition date.
The preliminary gain in bargain purchase determined by the Company on the acquisition of Neolubes was R$ 266,593, which was recognized in income for the year ended March 31, 2023, under “Other operating revenue (expenses), net”, for which a deferred tax liability was recognized in the amount of R$ 90,641, included in “Provisions and other temporary differences” (Note 17.d).
The net assets acquired, and preliminary gain on bargain purchase are detailed as follows:
Accounts |
|
Amount |
Cash and cash equivalents |
|
1,505 |
Trade accounts receivable (i) |
|
517,244 |
Inventories |
|
408,684 |
Contract assets (Note 10) |
|
10,076 |
Related parties, net |
|
144,818 |
Recoverable taxes (Note 8) |
|
14,873 |
Deferred income tax and social contribution – asset, net (Note 17) |
|
12,203 |
Right of use (Note 15.a) |
|
512 |
Property, plant, and equipment (Note 12) |
|
141,172 |
Intangible assets (Note 13) |
|
35,062 |
Lease liabilities (Note 15.b) |
|
(512) |
Suppliers |
|
(87,490) |
Taxes payable |
|
(41,658) |
Payroll and related charges payable |
|
(8,938) |
Other liabilities, net |
|
(149,162) |
Net assets of Neolubes |
|
998,389 |
Consideration paid |
|
750,000 |
(-) Price adjustment in favor of Raízen |
|
(23,549) |
|
|
726,451 |
(+) Price adjustment in favor of SBPL |
|
5,345 |
Consideration paid in cash |
|
731,796 |
Preliminary bargain purchase gain from Neolubes (Note 25) |
|
(266,593) |
(i) | Neolubes’ accounts receivable balance, on the acquisition date, is composed of gross contractual amounts due of R$ 519,736, of which R$ 2,492 was estimated to be non-recoverable on the acquisition date. |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
The valuation techniques used to measure the final fair value of the net assets acquired were as follows:
Assets acquired (1) |
|
Valuation techniques |
Intangible assets |
|
Contracts with customers and other contractual relationships: Multi-period excess earning method (“MEEM”) technique this model estimates fair value based on discounting the business unit's future cash flows. Cash flows considered, substantially, future revenue linked to existing contracts with customers. In the preliminary allocation, the fair value of contracts with customers and other contractual relationships totaled R$ 35,062, fully recognized as added value to be amortized on a straight-line basis over an average period of approximately 6 years. |
(1) A deferred tax liability was recorded on said capital gains, in the amount of R$ 11,921.
Other assets acquired and liabilities assumed were analyzed and the respective accounting balances reflect the respective fair values.
Neolubes’ net operating revenue and net income for the period from May 1 to March 31, 2023, considered from the acquisition date, amounted to R$ 2,399,963 and R$ 38,105, respectively. If the consolidation of subsidiary Neolubes had taken place since April 1, 2022, the consolidated income statement for the year ended March 31, 2023, would present consolidated net revenue of R$ 246,053,710 and consolidated net income of R$ 2,505,409.
These effects are preliminary, since on the date of the disclosure of these annual financial statements, the review process for the issuance of the report for allocation of the purchase price is still in progress, substantially related to the inspection of the fixed assets acquired and other analyses, and within the measurement period, as provided by IFRS 3.
(e) Acquisition of Payly
On October 17, 2022, the Company issued a press release informing its shareholders and the market the creation of Raízen’s Financial Services Unit (“Unit”), through the acquisition of Payly, a company controlled by its shareholder Cosan.
The acquisition of Payly and the creation of this Unit will allow: (i) the offering of convenience and loyalty to end customer and partners, through commercial channels and platforms; (ii) proprietary data intelligence; and (iii) factoring and raising of funds from third parties, adding value to the Company’s business chain.
On November 24, 2022, Brazil’s Antitrust Agency (CADE) granted the definitive approval, without restrictions, of the application to conduct joint operations referring to the transaction between Raízen and the shareholder Cosan, after a period of 15 days from its publication in the Federal Gazette, on November 7, 2022.
The acquisition was subject to the fulfillment of other conditions precedent usual for this type of transaction, which were fully concluded on December 1, 2022.
On December 1, 2022, Raízen paid in cash to Cosan R$ 87,200 for the acquisition of 100% of its interest in Payly, free of any debt.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
The preliminary fair value of assets acquired, and liabilities assumed on the acquisition date is presented below. These effects are preliminary since at the date of this disclosure the purchase price allocation procedures are still in progress.
The difference between the amount paid and the net assets at fair value resulted in the recognition of a preliminary goodwill due to expected future profitability. The goodwill allocation will be finalized after completion of the purchase price allocation procedures.
Accounts |
|
Amount |
Cash and cash equivalents |
|
54,416 |
Securities |
|
8,451 |
Recoverable taxes (Note 8) |
|
897 |
Property, plant and equipment (Note 12) |
|
1,413 |
Intangible assets (Note 13) |
|
7,709 |
Obligations with digital portfolio |
|
(60,456) |
Other liabilities, net |
|
(974) |
Consolidated net assets of Payly |
|
11,456 |
Consideration paid in cash |
|
87,200 |
Preliminary goodwill generated in the acquisition of Payly |
|
75,744 |
Other assets acquired and liabilities assumed were analyzed and the respective accounting balances reflect the respective fair values.
The expected goodwill (after completion of the final purchase price allocation) is attributable to supply synergies and the profitability of the acquired business. Goodwill recognized is not expected to be deductible for income tax.
Payly’s net operating revenue and loss for the period from December 1 to March 31, 2023, starting from the acquisition date, were R$ 1,060 and R$ 11,610, respectively. If the consolidation of the subsidiary had occurred since April 1, 2022, there would be no material change in revenue and consolidated results for the year ended March 31, 2023, since they do not show material revenues and results.
These effects are preliminary, since on the date of the disclosure of these annual financial statements, the review process for the issuance of the report for allocation of the purchase price is still in progress, substantially related to the inspection of the fixed assets acquired and other analyses, and within the measurement period, as provided by IFRS 3.
(ii) Acquisitions completed in the year ended March 31, 2021
(a) RZ Agrícola Caarapó Ltda.
On October 25, 2019, RESA entered into a share purchase and sale agreement with Nova América Agrícola Ltda., which provides for the terms and conditions for the acquisition of shares of RZ Agrícola Caarapó Ltda. (“RZ Agrícola Caarapó”) held by Nova América Agrícola Ltda. (100% of the capital) for R$ 162,434.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
The difference between the amount paid and the net assets at fair value resulted in the recognition of a bargain purchase gain, recognized in the combined consolidated statement of income for the year ended March 31, 2021, under Other operating revenue (expenses), net.
Movement |
|
Amount |
Consolidated net assets |
|
364,019 |
Consideration before the price adjustment |
|
162,434 |
Preliminary bargain purchase gain on the acquisition as of March 31, 2020 |
|
(201,585) |
Movement of bargain purchase gain: |
|
|
Advances to suppliers |
|
7,092 |
Property, plant and equipment |
|
4,355 |
Reduction of bargain purchase gain (Note 25) |
|
11,447 |
Final bargain purchase gain |
|
190,138 |
The valuation techniques used to measure the fair value of property, plant and equipment were as follows:
Assets acquired |
|
Valuation technique |
Property, plant, and equipment |
|
Market comparison technique and cost technique: the valuation model considers the market prices quoted for similar items, when available, and the depreciated replacement cost, when applicable. The depreciated replacement cost reflects adjustments of physical deterioration, as well as the functional and economic obsolescence. The fair value of property, plant and equipment items on the acquisition date totaled approximately R$ 314 million, which represented an adjustment of approximately R$ 29 million. |
Other assets acquired and liabilities assumed were analyzed and the respective accounting balances reflect the respective fair values.
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
31. Cash flow supplementary information
(a) Reconciliation of changes in equity with cash flows from financing activities ("FCF")
(Assets) / Liabilities |
Financial investments linked to financing |
|
Lease liabilities |
|
Loans and financing (2) |
|
Related parties (1) |
|
Dividends and interest on own capital payable |
|
Total |
As of March 31, 2022 |
(67) |
|
10,424,704 |
|
22,243,823 |
|
1,451,977 |
|
269,662 |
|
34,390,099 |
Transactions with impact on FCF |
|
|
|
|
|
|
|
|
|
|
|
Loans and financing taken out, net expenses |
- |
|
- |
|
19,756,495 |
|
- |
|
- |
|
19,756,495 |
Amortizations of principal |
- |
|
- |
|
(13,822,024) |
|
- |
|
- |
|
(13,822,024) |
Payments of interest |
- |
|
- |
|
(1,620,252) |
|
- |
|
- |
|
(1,620,252) |
Amortizations of lease liabilities |
- |
|
(2,737,691) |
|
- |
|
(281,622) |
|
- |
|
(3,019,313) |
Payments of dividends and interest on own capital |
- |
|
- |
|
- |
|
- |
|
(2,437,316) |
|
(2,437,316) |
Applications (redemptions), net |
(1,487) |
|
- |
|
- |
|
- |
|
- |
|
(1,487) |
Asset management and others |
- |
|
- |
|
- |
|
(3,658) |
|
- |
|
(3,658) |
|
(1,487) |
|
(2,737,691) |
|
4,314,219 |
|
(285,280) |
|
(2,437,316) |
|
(1,147,555) |
Other movements that do not affect the FCF |
|
|
|
|
|
|
|
|
|
|
|
Business combination |
- |
|
512 |
|
- |
|
- |
|
|
|
512 |
Interest, monetary and exchange variations, net |
(97) |
|
979,002 |
|
3,445,122 |
|
106,049 |
|
- |
|
4,530,076 |
Change in financial instruments fair value (Note 26) |
- |
|
- |
|
(625,041) |
|
- |
|
- |
|
(625,041) |
Dividends and interest on own capital |
- |
|
- |
|
- |
|
- |
|
2,322,194 |
|
2,322,194 |
Transfers |
- |
|
(132,667) |
|
- |
|
- |
|
- |
|
(132,667) |
Addition, write-off and remeasurement |
- |
|
2,259,328 |
|
- |
|
132,057 |
|
- |
|
2,391,385 |
Foreign currency conversion effect and others |
- |
|
21,321 |
|
41,867 |
|
11,157 |
|
(363) |
|
73,982 |
|
(97) |
|
3,127,496 |
|
2,861,948 |
|
249,263 |
|
2,321,831 |
|
8,560,441 |
As of March 31, 2023 |
(1,651) |
|
10,814,509 |
|
29,419,990 |
|
1,415,960 |
|
154,177 |
|
41,802,985 |
(Assets) / Liabilities |
Financial investments linked to financing |
|
Lease liabilities |
|
Loans and financing (2) |
|
Related parties (1) |
|
Dividends and interest on own capital payable |
|
Total |
As of March 31, 2021 |
(39) |
|
5,075,194 |
|
24,420,267 |
|
1,108,640 |
|
208,178 |
|
30,812,240 |
Transactions with impact on FCF |
|
|
|
|
|
|
|
|
|
|
|
Loans and financing taken out, net expenses |
- |
|
- |
|
7,257,482 |
|
- |
|
- |
|
7,257,482 |
Amortizations of principal |
- |
|
- |
|
(6,803,451) |
|
- |
|
- |
|
(6,803,451) |
Payments of interest |
- |
|
- |
|
(775,042) |
|
- |
|
- |
|
(775,042) |
Amortizations of lease liabilities |
- |
|
(2,512,155) |
|
- |
|
(240,030) |
|
- |
|
(2,752,185) |
Payments of dividends and interest on own capital |
- |
|
- |
|
- |
|
- |
|
(2,741,001) |
|
(2,741,001) |
Redemption of preferred shares |
1,009 |
|
- |
|
- |
|
- |
|
- |
|
1,009 |
Asset management and others |
- |
|
- |
|
- |
|
(2,402) |
|
- |
|
(2,402) |
|
1,009 |
|
(2,512,155) |
|
(321,011) |
|
(242,432) |
|
(2,741,001) |
|
(5,815,590) |
Other movements that do not affect the FCF |
|
|
|
|
|
|
|
|
|
|
|
Business combination |
- |
|
3,140,666 |
|
- |
|
- |
|
|
|
3,140,666 |
Interest, monetary and exchange variations, net |
(1,009) |
|
722,465 |
|
(1,051,841) |
|
101,473 |
|
- |
|
(228,912) |
Change in financial instruments fair value |
- |
|
- |
|
(582,191) |
|
- |
|
- |
|
(582,191) |
Dividends and interest on own capital |
- |
|
- |
|
- |
|
(2,220) |
|
2,803,305 |
|
2,801,085 |
Addition, write-off and remeasurement |
- |
|
4,061,659 |
|
- |
|
481,465 |
|
- |
|
4,543,124 |
Foreign currency conversion effect and others |
(28) |
|
(63,125) |
|
(221,401) |
|
5,051 |
|
(820) |
|
(280,323) |
|
(1,037) |
|
7,861,665 |
|
(1,855,433) |
|
585,769 |
|
2,802,485 |
|
9,393,449 |
As of March 31, 2022 |
(67) |
|
10,424,704 |
|
22,243,823 |
|
1,451,977 |
|
269,662 |
|
34,390,099 |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(Assets) / Liabilities |
Financial investments linked to financing |
|
Lease liabilities |
|
Loans and financing (2) |
|
Related parties (1) |
|
Dividends and interest on own capital payable |
|
Total |
As of March 31, 2020 |
(50,460) |
|
4,411,784 |
|
25,029,911 |
|
916,848 |
|
95,542 |
|
30,403,625 |
Transactions with impact on FCF |
|
|
|
|
|
|
|
|
|
|
|
Loans and financing taken out, net expenses |
- |
|
- |
|
3,584,510 |
|
- |
|
- |
|
3,584,510 |
Amortizations of principal |
- |
|
- |
|
(5,897,175) |
|
- |
|
- |
|
(5,897,175) |
Payments of interest |
- |
|
- |
|
(854,601) |
|
- |
|
- |
|
(854,601) |
Amortizations of lease liabilities |
- |
|
(1,388,175) |
|
- |
|
(171,358) |
|
- |
|
(1,559,533) |
Payments of dividends and interest on own capital |
- |
|
- |
|
- |
|
- |
|
(47,979) |
|
(47,979) |
Redemption of preferred shares |
51,974 |
|
- |
|
- |
|
- |
|
- |
|
51,974 |
Asset management and others |
- |
|
- |
|
- |
|
4,259 |
|
- |
|
4,259 |
|
51,974 |
|
(1,388,175) |
|
(3,167,266) |
|
(167,099) |
|
(47,979) |
|
(4,718,545) |
Other movements that do not affect the FCF |
|
|
|
|
|
|
|
|
|
|
|
Interest, monetary and exchange variations, net |
(1,823) |
|
372,469 |
|
2,514,602 |
|
67,706 |
|
- |
|
2,952,954 |
Change in financial instruments fair value |
- |
|
- |
|
(63,163) |
|
- |
|
- |
|
(63,163) |
Dividends and interest on own capital |
- |
|
- |
|
- |
|
(1,525) |
|
182,690 |
|
181,165 |
Addition, write-off and remeasurement |
- |
|
1,638,582 |
|
- |
|
296,805 |
|
- |
|
1,935,387 |
Foreign currency conversion effect and others |
270 |
|
40,534 |
|
106,183 |
|
(4,095) |
|
(22,075) |
|
120,817 |
|
(1,553) |
|
2,051,585 |
|
2,557,622 |
|
358,891 |
|
160,615 |
|
5,127,160 |
As of March 31, 2021 |
(39) |
|
5,075,194 |
|
24,420,267 |
|
1,108,640 |
|
208,178 |
|
30,812,240 |
(1) | Mainly composed of asset management and financial operations balances, see Note 9.a. |
(2) | This is presented net of the CTN. |
RAÍZEN S.A.
Notes to the combined consolidated financial statements
as of March 31, 2023, and 2022 and for the three years in the period ended March 31, 2023
In thousands of Reais - R$, unless otherwise indicated
(b) Non-cash investing transactions
|
2023 |
|
2022 |
|
2021 |
Consideration payable for the acquisition of Raízen Paraguay |
(319,158) |
|
- |
|
- |
Installments receivable for the sale of participation and training of a joint venture |
- |
|
87,024 |
|
113,206 |
Depreciation of agricultural area assets capitalized as biological assets (Note 7) |
(33,655) |
|
(30,527) |
|
(28,791) |
Depreciation of agricultural area assets capitalized as property, plant and equipment (Note 12) |
(95,956) |
|
(120,817) |
|
(83,412) |
Capital contributions to be made in associates (Note 9.a) |
- |
|
(8,165) |
|
- |
Additions to property, plant and equipment and intangible assets |
(82,337) |
|
(1,722,993) |
|
- |
Interest capitalized as property, plant and equipment (Note 26) |
(74,233) |
|
82,113 |
|
(54,819) |
Right of use |
(2,437,068) |
|
(4,580,559) |
|
(2,034,050) |
Others |
(3,668) |
|
(10,542) |
|
(23,579) |
|
(3,046,075) |
|
(6,304,466) |
|
(2,111,445) |
32. Subsequent events
a) Loans and financing
From April to June of 2023, the subsidiary RESA raised loans and financing, in the amount of R$ 5,173,413, which R$ 4,443,053 with maturity in March of 2024 and R$ 730,360 in May of 2029. Such funding is in line with the Company`s financing strategies.
* * *
127 |
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