6-K 1 lndpr4q18_6k.htm LNDPR4Q18_6K lndpr4q18_6k.htm - Generated by SEC Publisher for SEC Filing  

FORM 6-K
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934

dated August 27, 2018

BRASILAGRO – COMPANHIA BRASILEIRA DE PROPRIEDADES AGRÍCOLAS
(Exact Name as Specified in its Charter)

BrasilAgro – Brazilian Agricultural Real Estate Company

U(Translation of Registrant’s Name)

1309 Av. Brigadeiro Faria Lima, 5th floor, São Paulo, São Paulo 01452-002, Brazil

U(Address of principal executive offices)

Gustavo Javier Lopez,

Administrative Officer and Investor Relations Officer,

Tel. +55 11 3035 5350, Fax +55 11 3035 5366, ri@brasil-agro.com

1309 Av. Brigadeiro Faria Lima, 5th floor

São Paulo, São Paulo 01452-002, Brazil

U(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F x   Form 40-F 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(1): 
U                   

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(7): 
U                   

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o   No 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable.


 

 


 


For the quarter and year ended June 30, 2018

 

 

 

São Paulo, August 27, 2018 BrasilAgro (B3: AGRO3) (NYSE: LND), the Brazilian leader in acquiring, developing and selling rural properties that offer high potential for price appreciation in Brazil, announces its consolidated results for the quarter and year ended June 30, 2018. The consolidated annual and quarterly information is prepared in accordance with International Financial Reporting Standards (IFRS).

4Q18 and 2018 Conference Call
August 28, 2018

Portuguese with simultaneous
English translation
2:00 p.m. (Brasília)
1:00 p.m. (NY)

Phone Brazil: +55 (11) 3127 4971
Phone U.S.: +1 929 378 3440

Password: BrasilAgro

 

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BRASILAGRO 2018



 
 

 

2018

Highlights
   
Sale of 10,740 ha
of the Jatobá Farm in Bahia
and the Araucária Farm in Goiás
for R$244,1 million. 
R$ 134.7 million
Adjusted Ebitda 
 
Issue of ARC
R$
142.2 million


R$
296.7 million
Net Revenue 
 

17/18 Harvest:
134,000 tons of grains,
1.8 million tons of
sugarcane and
21,000 head of cattle 
R$ 126.3 million
Net Income 
 
 
PRICE  CONTACTS 
AGRO3: R$14,15  + 55 (11) 3035 5374 
LND: US$3,50  ri@brasil-agro.com 
 
Gustavo Javier Lopez 
IRO 
   
Ana Paula Zerbinati Ribeiro Gama 
  Elisa Cardoso Castelani 
  Investor Relations 
 

MESSAGE FROM MANAGEMENT

 

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......................................................................................................................................................

At the beginning of the 16/17 harvest, we implemented a strategic plan to reduce the volatility of agricultural operations results and maximize the combination of the Company’s operating and real estate return. In this period, we delivered important results that reflect the actions and projects developed, showing that we are going in the right direction and confirming our commitment to deliver positive results in a recurring and sustainable manner.

We ended the 17/18 harvest year with Adjusted EBITDA of R$134.7 million and Net Income of R$126.3 million, an increase of 217% and 363% compared to the previous year, respectively. This result reflects Net Revenue of R$296.7 million, consisting of R$52.4 million for sale of properties and R$244.3 million for sale of agricultural products.

In 2018, we sold two areas of the Araucária and Jatobá farms for R$66.2 million and R$177.9 million, respectively. The gain on the sale of the Araucária Farm was recognized in the 17/18 fiscal year and the gain on the sale of the Jatobá Farm will be recorded in the 18/19 fiscal year.

These sales reinforce the success and consistency of our business model, with the capture of capital gains through the sale of properties. The average value of property sales in the last 7 years is R$102.6 million, with IRR (Internal Rate of Return) ranging between 14% and 27%.

Still regarding value generation in the real estate segment, we added another 2,000 hectares in the operation in Paraguay. The development of the land creates value by itself. Since the beginning of operations in 2006, we have developed more than 123,400 hectares, representing an average growth of 32% in the portfolio transformation.

Regarding agricultural operations, we delivered a strong performance – Operations EBITDA (excluding farm sales) of R$91.8 millions in the 17/18 harvest year – reflecting the results of the grains and sugarcane harvests and the actions implemented during the last two years: (i) cattle raising activities – we closed the year with 20,000 head of cattle, (ii) incorporation of mature areas in the operation (via acquisition and leasing), (iii) lease to third party areas with greater volatility and (iv) investments in the development and maturation of the portfolio.

We also issued Agribusiness Receivables Certificates (ARC) in the amount of R$142.2 million this fiscal year, with the aim of leveraging and extending the Company's lending and financing structure, allowing greater flexibility in the allocation of capital in the short term.

Another important achievement was the Great Place to Work certification, recognizing BrasilAgro’s excellent working environment. The granting of this certificate reflects all the

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BRASILAGRO 2018

 

 


 
 

measures to improve processes, train and develop people, who are the Company’s foundation.

We believe that we made the right decisions, and their positive impacts are already reflected in the financial results of this fiscal year and will be even more clearly observed in the coming years. We remain focused on generating value for our shareholders.

 

 

 

 

 

 

 

 

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BRASILAGRO 2018

 

 


 
 

OPERATING PERFORMANCE

......................................................................................................................................................

Definitions: 4Q17 and 4Q18 – quarters ended June 30, 2017 and June 30, 2018, respectively | 2017 and 2018 – twelve-month periods ended June 30, 2017 and June 30, 2018, respectively | 2016/2017 Harvest Year – fiscal year started on July 1, 2016 and ended on June 30, 2017 | 2017/2018 Harvest Year – fiscal year started on July 1, 2017 and ended on June 30, 2018.

 

Property Sale

......................................................................................................................................................

 

Sales of Property

Araucária Farm
(Plateau)

Jatobá Farm

Date of Sale

May/18

 July/18

Location

 Mineiros - GO

 Jaborandi - BA

Area (hectares)

 Total: 956 / Arable: 660

 Total: 9,784 / Arable: 7,485

Acquisition Value

 R$10.7 MM

 R$10.1 MM

Nominal Sales Value

 1,208 bags/ha                                                            R$66.2 MM

 285 bags/ha                                                                 R$177.9 MM

IRR - R$

16.5%

14.0%

 

An area of the Araucária Farm was sold for R$66.2 million (~R$100,303/arable hectare), equivalent to 1,208 soybean bags per arable hectare. The buyer made an initial payment of 79,200 soybean bags in the amount of R$5.3 million. The second installment of 79,200 soybean bags will be paid in September 2018 and the remaining balance will be paid in six annual installments.

The property was acquired in 2007 and had a total area of 9,682 hectares, of which 394 hectares were sold in May 2013, 1,164 hectares in July 2014, 274 hectares in March 2017 and 1,360 hectares in May 2017, remaining 5,534 hectares in the portfolio after this sale.

In the Jatobá Farm, a total of 9,784 hectares (7,485 arable hectares) were sold, amounting to 285 soybean bags per arable hectare or R$177.9 million (~ R$23,768/arable hectares). The buyer made an initial payment of 300,000 soybean bags in the amount of R$16.0 million in July. The remaining balance will be paid in seven annual installments.

The sale will be accounted for in the results of the next fiscal year (2018/2019) and the transfer of ownership occurred in July 2018.

The property was acquired in 2007 and had a total area of 31,606 hectares, of which 625 hectares were sold in 2017, with 21,197 hectares remaining in the portfolio after the two sales.

The definitive sales figures will be accounted for on the date of the first payment, therefore,

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they may vary in relation to that disclosed in the respective material facts.

 

Property Portfolio

......................................................................................................................................................

On the date of this release, the Company’s property portfolio consisted of 215,137 hectares across six Brazilian states and Paraguay.

 

 

FARMS

LOCATION

AQUISITION DATE

PROJECT

 TOTAL AREA (ha)

ARABLE AREA  (ha)

1

 Jatobá Farm

Jaborandi / BA

Mar-07

Grains and Pasture

                        21,197

                        16,741

2

 Alto Taquari Farm

Alto Taquari / MT

aug/07

Sugarcane

                          5,394

                          3,774

3

Araucária Farm

Mineiros / GO

apr/07

Sugarcane

                          5,534

                          4,124

4

Chaparral Farm

Correntina / BA

Nov-07

Grains

                        37,182

                        26,444

5

 Nova Buriti Farm

Bonito de Minas / MG

dec/07

Forest

                        24,212

                        17,846

6

 Preferência Farm

Baianópolis / BA

sep/08

Grains and Pasture

                        17,799

                        12,410

7

Partnership II(1)

Ribeiro Gonçalves / PI

Nov-13

Grains

                          7,500

                          7,500

8

Partnership III(2)

Alto Taquari / MT

may/15

Sugarcane

                          4,263

                          4,263

9

Partnership IV(3)

São Raimundo das Mangabeiras / MA

feb/17

Sugarcane

                        15,000

                        15,000

10

São José Farm

São Raimundo das Mangabeiras / MA

feb/17

Grains and Pasture

                        17,566

                        10,137

11

Palmeiras(4) (Paraguay)

Boquerón

dec/13

Grains and Pasture

                        59,490

                        29,745

 

Total

 

 

 

                      215,137

                      147,984

1- BrasilAgro entered into an agricultural exploration partnership in the Parceria II Farm for up to 11 harvests, involving up to 10,000 hectares.

   

2- BrasilAgro entered into an agricultural exploration partnership in the Parceria III Farm potentially up to March 31, 2026.

   

3 - BrasilAgro entered into an agricultural exploration partnership in the Parceria IV Farm  for 15 years of planting of sugarcane, with option of renewal for another 15 years.

4- New social denomination of the operation in Paraguay.

       

 

 

 

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BRASILAGRO 2018

 

 


 
 

Development of Areas

......................................................................................................................................................

We concluded a process to transform 2,000 hectares in Paraguay, representing an average growth of 32% in the portfolio transformation in the last 10 years.

The chart below shows the evolution of the portfolio (own land) regarding the land development:

EVOLUTION OF THE PORTFOLIO (OWN LAND)

 

LAND DEVELOPMENT – FARM BREAKDOWN

 

 

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Market Value of the Portfolio

......................................................................................................................................................

We hired the independent consulting firm Deloitte Touche Tohmatsu to conduct a market valuation of our properties. According to their appraisal, as of June 30, 2018, the market value of the portfolio was R$1.32 billion, an increase of 12.5% in relation to the previous year, adding the farm sales of the period.

We update the internal appraisal of our farms on a yearly basis and in June 30, 2018, our Market value of the portfolio was of R$1.26 billion, an increase of 15.1% in relation to last year’s appraisal, adding the farm sales made in the period.

In order to estimate the market value of our farms, we considered for each property: (i) its level of development; (ii) soil quality and maturity; and (iii) agricultural aptitude and potential.

The table below shows the market valuation performed by independent consulting firm Deloitte Touche Tohmatsu on June 30, 2018 and 2017.

 

FARM

LOCATION

Internally Appraise (R$ thousand)

 Independent Valuation (R$ thousand)

06/30/2017

Period Sales

06/30/2018

06/30/2017

06/30/2018

1

Jatobá Farm

Bahia

321,802

177,900

215,127

360,758

220,050

2

Alto Taquari Farm

Mato Grosso

150,940

 

158,726

119,706

125,910

3

Araucária Farm

Goiás

166,352

66,200

137,796

172,327

135,170

4

Chaparral Farm

Bahia

291,751

 

312,256

352,391

397,500

5

Nova Buriti Farm

Minas Gerais

30,282

 

32,145

23,407

23,180

6

 Preferência Farm

Bahia

54,680

 

58,171

64,392

61,510

7

São José Farm

Maranhão

148,255

 

156,798

156,981

168,260

8

Palmeiras (Paraguay)

Chaco Paraguay

143,074

 

188,946

143,039

190,954

 

Total

 

1,307,136

244,100

1,259,965

1,393,001

1,322,534

 

 

 

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Agricultural Operations

......................................................................................................................................................

The table below shows the breakdown of the planted area by farm in the 17/18 Harvest:

 

Planted Area by Farm - Crop 17/18 (ha)

Ratoon Cane

Plant Cane

Soybean

Corn

Corn - 2nd Crop

Pasture

Other

Total

Jatobá Farm

 

 

4,203

1,433

 

5,005

10,252

20,893

Alto Taquari Farm

3,116

395

 

 

 

 

176

3,687

Araucária Farm

3,046

336

 

 

 

 

255

3,637

Chaparral Farm

 

 

9,596

795

 

4,673

3,919

18,983

Preferência Farm

 

 

 

 

 

6,376

134

6,510

Partnership II Farm

 

 

7,452

 

 

 

 

7,452

Partnership III Farm

3,921

806

 

 

 

 

357

5,084

São José Farm and Partnership IV Farm

16,286

3,674

5,302

 

350

 

 

25,612

Palmeiras (Paraguay)

 

 

5,300

776

 

3,733

1,187

10,996

Total

26,369

5,211

31,853

3,004

350

19,787

16,280

102,854

 

 

 

 

 

 

 

 

 

Planted area  by crop (ha)

Crop 16/17

Crop 17/18

Harvest Participation 17/18 (%)

Change (%)

Grains

30,139

35,207

34.2%

16.8%

Soybean

22,549

31,853

31.0%

41.3%

Corn

7,590

3,354

3.3%

-55.8%

Sugarcane

29,698

31,580

30.7%

6.3%

Pasture

16,425

19,787

19.2%

20.5%

Others

12,611

16,280

15.8%

29.1%

Total

88,873

102,854

100.0%

15.7%

                 

Planted area by Land Ownership (ha)

Crop 16/17

Crop 17/18

Harvest Participation 17/18 (%)

Change (%)

Ownn Area

59,678

74,706

72.6%

25.2%

Operated by BrasilAgro

52,027

65,185

63.4%

25.3%

Leased to third parties

7,651

9,521

9.3%

24.4%

Leased area

29,195

28,148

27.4%

-3.6%

Total

88,873

102,854

100.0%

15.7%

 

GRAINS

We concluded the 17/18 soybean and corn harvest this quarter. We reached a result 20.5% above that initially estimated.

 

Productivity per culture (tons)

Crop 16/17
Realized
(A)

Crop 17/18                          Estimated
(B)

Crop 17/18
Realized
(C)

Change
C/A
(%)

Change
C/B
(%)

Soybean

65,057

82,020

111,123

70.8%

35.5%

Corn

40,502

27,111

21,220

-47.6%

-21.7%

Corn - 2nd Crop

-

2,319

1,986

n.a.

-14.4%

Total

105,559

111,450

134,329

27.3%

20.5%

 

- Soybean

The table below shows soybean yields in the 17/18 harvest:

 

Soybean Productivity (Kg/ha)

Crop 16/17
Realized
(A)

Crop 17/18
Estimated
(B)

Crop 17/18
Realized
(C)

Change
C/A
(%)

Change
C/B
(%)

Brazil

2,659

2,514

3,532

32.8%

40.5%

Paraguay

3,917

2,100

3,266

-16.6%

55.5%

 

Soybean average yield were above expectations in Brazil and Paraguay, impacted by the good rainfall during crop development and harvesting periods.

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New and under development areas represent 18% of the total planted area. These areas present lower yields, since they have a less mature soil structure and are consequently more affected by adverse weather conditions. The table below shows productivity by soil maturity level:

 

Soybean Productivity Kg/ha

Brazil

Paraguay

New Area - 1st and 2nd year

2,963

2,610

Under Development Area - 3rd and 4th year

3,100

3,440

Developed Area - Above 4th year

3,630

3,666

 

- Corn

The table below shows corn yields in the 17/18 harvest:

 

Corn Productivity (Kg/ha)

Crop 16/17
Realized
(A)

Crop 17/18
Estimated
(B)

Crop 17/18
Realized
(C)

Change
C/A
(%)

Change
C/B
(%)

Crop - Brazil

5,457

5,222

7,598

39.2%

45.5%

2nd Crop - Brazil

 -

6,008

5,674

n.a.

-5.6%

Crop - Paraguay

4,980

4,198

5,626

13.0%

34.0%

 

Brazil’s corn (harvest) production is concentrated in Bahia and also had a higher productivity than estimated due to the good rainfall during planting and harvesting period.

SUGARCANE

The following table shows the sugarcane results appropriated in the sugarcane harvest year (April to November) and during the Company’s fiscal year:

Crop Year Result - Sugarcane

Crop 2017 Realized
(01/apr to 30/nov)
(A)

Crop 2018 Estimated
(01/apr to 30/nov)
(B)

Crop 17/18 Realized
(01/apr to 30/jun)
(C)

Change
B/A
(%)

Change
C/B
(%)

Tons harvested

1,858,754

1,845,578

434,174

-0.7%

-76.5%

Hectares harvested

27,130

26,344

5,022

-2.9%

-80.9%

TCH - Harvest tons per hectares

68.51

70.06

86.45

2.3%

23.4%

           

Accounting Year Result - Sugarcane

 

 

2017
(01/jul to 30/jun)

2018
(01/jul to 30/jun)

Change                                             (%)

Tons harvested

 

 

1,015,303

1,812,728

78.5%

Hectares harvested

 

 

13,217

25,452

92.6%

TCH - Harvest tons per hectares

 

 

76.82

71.22

-7.3%

 

In April, we began harvesting sugarcane in the Alto Taquari, Araucária, Parceria III and Parceria IV Farms. We estimate to deliver 1.8 million tons until the end of the sugarcane harvest year.

 

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CATTLE RAISING

As of June 30, we had 20,993 head of cattle in the Preferência and Jatobá Farms and in Paraguay, distributed in 11,381 hectares of already active pasture in Brazil and 3,733 hectares of already active pasture in Paraguay.

Livestock

Crop 17/18
Estimated

Crop 17/18
Realized

Change
(%)

Hectares

14,029

15,114

7.7%

Number of heads

15,799

20,993

32.9%

Meat production (kg)

2,414,186

2,398,894

-0.6%

Weight Gain per Day

0.42

0.42

-0.7%

Weight Gain per hectare

172.09

158.72

-7.8%

 

OTHERS

In order to improve the Company’s results and mitigate operating risks, we leased 9,521 hectares to third parties in the state of Bahia and in the Midwest region, as a real estate strategy. The areas were leased to local farmers and the contracts have a term of up to five harvests.

In addition, we have 6,759 hectares of grasses cover crops and sorghum, in order to increase the organic matter and accelerate the maturation of the soil.

 

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FINANCIAL PERFORMANCE

......................................................................................................................................................

The consolidated financial statements were prepared and are being presented in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

 

 

EBITDA and Adjusted EBITDA

......................................................................................................................................................

As of this quarter EBITDA and Adjusted EBITDA are presented based on Net Income adjusted for interest, taxes, depreciation and amortization, pursuant to accounting standards. Adjusted EBITDA was calculated by excluding biological assets in progress (sugarcane and grains planted) and adjusted for the harvest’s derivative results and depreciation expenses, including depreciation of fixed assets of the farms and administrative installations, developed areas and permanent crops.

 

EBITDA (R$ thousand)

4Q18

4Q17

Change

2018

2017

Change

Net Income

            40,717

            21,127

93%

          126,338

            27,310

363%

Interest

            (1,283)

           (11,240)

-89%

             8,556

           (33,444)

n.a.

Taxes

             2,246

                618

263%

            25,919

             5,949

336%

Depreciations and amortizations

             4,858

             7,826

-38%

            23,222

            15,027

55%

EBITDA

            46,537

            18,331

154%

          184,035

            14,842

n.a.

             

Adjusted EBITDA (R$ thousand)

4Q18

4Q17

Change

2018

2017

Change

Net Income

            40,717

            21,127

93%

          126,338

            27,310

363%

Interest

            (1,283)

           (11,240)

-89%

             8,556

           (33,444)

n.a.

Taxes

             2,246

                618

263%

            25,919

             5,949

336%

Adjusted Depreciations (1)

             6,400

            12,600

-49%

            20,442

            20,423

0%

Equity

                  28

                695

-96%

           (14,671)

             4,425

n.a.

Other operating income/expenses, net (2)

                 (58)

                  -  

n.a.

           (35,713)

                  -  

n.a.

Elimination of the effects of gains on biological assets (grains and sugarcane planted)

            25,697

            21,773

18%

             9,033

             7,893

14%

Derivatives Results

            (9,211)

             8,818

n.a.

            (5,247)

            10,882

n.a.

EBITDA Cresca

                  20

                178

-89%

                  11

               (899)

n.a.

Adjusted EBITDA

            64,556

            54,569

18%

          134,668

            42,539

217%

(1) Adjusted Depreciation includes depreciation of harvested grains and sugarcane.

         

(2) Cresca spin-off effects.

           

 

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Income Statement

......................................................................................................................................................

Since March 2017, the results of the operation in Paraguay have been disclosed, consolidated with the results of the operation in Brazil.

NET REVENUE FROM SALES

Net Revenue (R$ thousand)

 

4Q18

4Q17

Change

2018

2017

Change

Total

 

          147,192

          110,234

34%

          296,684

          182,927

62%

Farms Sale

 

            52,406

            32,162

63%

            52,406

            36,016

46%

Soybean

 

            59,892

            48,339

24%

            83,444

            63,285

32%

Corn

 

             4,339

             4,753

-9%

            13,400

             5,476

145%

Sugarcane

 

            26,332

            23,605

12%

          138,220

            73,658

88%

Livestock

 

             1,233

                369

234%

             4,081

                369

n.a.

Leasing

 

             2,170

             1,047

107%

             5,133

             2,467

108%

Services

 

                  -  

                  -  

n.a.

                  -  

                  26

n.a.

Others

 

                820

                 (41)

n.a.

                  -  

             1,630

n.a.

 

In 2018, the recorded net revenue from sales was R$296.7 million, 62.0% higher than the same period of the previous year, with an increase in volume sold during the period of 846,900 tons compared to the same period of the previous year. This is due to (i) the revenue of R$52.0 million (present value) from the sale of the Araucaria Farm and (ii) the increase of all revenue lines from our products.

SALE OF FARMS

In 2018, the Company sold an area of 956 hectares (660 arable hectares) of the Araucária Farm, in Goiás, amounting to R$66.2 million (~R$100,303/arable hectare).

The amount of R$36.0 million of Farms Sale in 2017 refers to the sale of an area of 2,259 hectares of the Araucária and Jatobá Farms, in Goiás and Bahia, respectively. In addition, a total of R$3.8 million was recorded related to the sale of Fazenda Cremaq in 2015, this amount refers to the balance bound to the environmental license of an area of 6,020 hectares that were in the process of splitting geo-referencing and that is why the real estate was pending, with the record the amount was released.

The table below shows the revenue from the sale of the property:

R$ (thousand)

2018

2017

Nominal Value of Sale

                                  66,224

                                  43,583

Present Value Adjustment

                                 (13,818)

                                   (7,567)

Revenue from Farms Sale

                                  52,406

                                  36,016

Sales Taxes

                                   (1,913)

                                   (1,314)

Selling Costs

                                 (10,676)

                                   (7,986)

Farm Sale Gain

                                  39,817

                                  26,716

 

The sale of another plot of the Jatobá Farm, an agricultural property located in the municipality of Jaborandi, Bahia, as announced in June 2018, will be accounted for in the next fiscal year (2018/2019). A total of 9,784 hectares (7,485 arable hectares) were sold, corresponding to R$177.9 million (~R$23,767/arable hectare).

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14

BRASILAGRO 2018

 

 


 
 

SALE OF AGRICULTURAL PRODUCTS

 

Net Revenue (R$ thousand)

 

4Q18

4Q17

Change

2018

2017

Change

Total

 

            94,787

            78,072

21%

          244,278

          146,911

66%

Soybean

 

            59,892

            48,339

24%

            83,444

            63,285

32%

Corn

 

             4,339

             4,753

-9%

            13,400

             5,476

145%

Sugarcane

 

            26,332

            23,605

12%

          138,220

            73,658

88%

Livestock

 

             1,234

                369

234%

             4,081

                369

n.a.

Leasing

 

             2,169

             1,047

107%

             5,133

             2,467

108%

Services

 

                  -  

                  -  

n.a.

                  -  

                  26

n.a.

Others

 

                821

                 (41)

n.a.

                  -  

             1,630

n.a.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quantity sold

 

4Q18

4Q17

Change

2018

2017

Change

Total

 

          805,971

          476,827

69%

       2,622,706

       1,004,582

161%

Soybean (tons)

 

            51,526

            46,907

10%

            74,237

            60,063

24%

Corn (tons)

 

             6,054

            12,672

-52%

            31,083

            14,044

121%

Sugarcane (tons)

 

          456,779

          352,687

30%

       1,681,530

          865,384

94%

Livestock (Kg)

 

          291,546

            64,538

352%

          835,736

            64,538

n.a.

Others (tons)

 

                  66

                  23

187%

                120

                553

-78%

 

Net revenue from grains (soybean and corn) in 2018 increased R$28.1 million compared to the previous year, from R$68.8 million, from the sale of 74,100 tons, to R$96.8 million, from the sale of 105,300 tons.

Soybean revenue increased by R$20.2 million in 2018 when compared to the previous year, from R$63.3 million, from the sale of 60,100 tons at R$1,053.64 per ton, to R$83.4 million, from the sale of 74,200 tons at R$1,124.02 per ton.

Corn revenue in 2018 increased by R$7.9 million when compared to the previous year, from R$5.5 million from the sale of 14,000 tons at R$389.92 per ton, to R$13.4 million, from the sale of 31,100 tons at R$431.10 per ton.

Sugarcane revenue in 2018 increased by R$64.6 million when compared to the previous year, from R$73.7 million from the sale of 865,400 tons at R$85.12 per ton, to R$138.2 million from the sale of 1.7 million tons at R$82.20 per ton of sugarcane. The reduction in per-ton sugarcane price was due to the decrease of CONSECANA (sugarcane price index in Brazil), going from 0.625 R$/kg in 2017 to 0.607 R$/kg in 2018. The difference of 131,200 tons of sugarcane produced in relation to the total sold is the result of leasing payment.

Cattle-raising revenue totaled R$4.1 million in 2018, resulting from the sale of 2,006 head of cattle in Brazil and Paraguay at R$4.88 per kg.

Leasing revenue reached R$5.1 million in 2018 and refers to third-party leases of Farms in Bahia and in the Midwest region totaling 9,521 hectares. These lease contracts have a duration of up to 5 years with value of up to 18% of production, and the minimum value is 5 soybean bags per hectare.

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15

BRASILAGRO 2018

 

 


 
 

In 2017 we had other revenue in the amount of R$1.6 million, which came from the sale of inputs (seeds, fertilizers and byproducts) from areas that were not planted in the 16/17 harvest year and the sale of 369 tons of sorghum.

GAINS OR LOSSES OF AGRICULTURAL PRODUCTS AND BIOLOGICAL ASSETS

 

Biological Assets and Agricultural Products (R$ thousand)

Soybean               17/18

Corn (crop) 17/18

Sugarcane

Livestock

Others

Gain / Loss 06/30/18

Gain and losses in agricultural products

            58,034

                303

            52,782

                239

            (3,242)

          108,116

Gain and losses in biological assets

                  -  

               (203)

            (8,830)

                  -  

                  -  

            (9,033)

Change in fair value of biological assets and agricultural products

            58,034

                100

            43,952

                239

            (3,242)

            99,083

 

Gains or losses from the variation in the fair value of agricultural products are determined by the difference between their harvested volume at market value (net of selling expenses and taxes) and the production costs incurred (direct and indirect costs, leasing and depreciation).

Harvested agricultural products are measured at their value at the time of harvest considering the market price of the area of each farm.

Biological assets corresponding to ratoons of sugarcane are measured at cost less depreciation (Accounting Standard IAS 16), while planted cane is measured at fair value (Accounting Standard IAS 41).

 

Agricultural Products

Soybean               17/18

Corn (crop) 16/17

Sugarcane

Livestock

Others

Gain / Loss 06/30/18

Area (hectares)

            31,853

             3,941

            32,151

            15,114

                  -  

            83,059

Production (Tons)

          113,789

            25,810

       1,812,728

       2,398,894

                  -  

       4,351,221

Yield (Ton./ha)

               3.57

               6.55

             56.38

            158.72

                  -  

             52.39

Livestock - head of cattle

                  -  

                  -  

                  -  

            20,993

                  -  

            20,993

Production fair value (R$ thousand)

          135,688

             9,888

          151,234

             9,654

                536

          307,000

Production Cost (R$ thousand)

           (77,654)

            (9,585)

           (98,452)

            (9,415)

            (3,778)

         (198,884)

Gain and losses in agricultural products (R$ thousand)

            58,034

                303

            52,782

                239

            (3,242)

          108,116

 

Biological assets correspond to agricultural products in formation (not yet harvested) and cattle, measured at fair value. The calculation of fair value considers the best estimates in relation to sales prices, discount rates, direct and indirect costs, leasing, yields and selling expenses.

Cattle biological assets are measured at fair value and controlled in accordance with two methodologies: 12 to 15-month calves and steers (heifers) are controlled and valued by head, while older animals are controlled by weight.

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16

BRASILAGRO 2018

 

 


 
 

 

Biological Assets - Livestock

Total Heads

Value (R$/thousand)

In June 30, 2017

8,644

13,435

Aquisition, Birth | Aquisition Expenses

14,680

15,598

Handling Expenses

-

9,409

Sales

(2,006)

(4,332)

Deaths

(325)

(476)

Fair value variation

-

418

In June 30, 2018

20,993

34,052

 

Fair value variation is impacted by variations between fair value and cost, as well as by fair value variations between the periods.

Gains or losses from the variation in the fair value of grains and sugarcane biological assets are determined by the difference between their fair value and their book value. Book value includes investments and costs effectively incurred until the moment of appraisal, as well as write-offs arising from the harvesting of the agricultural products.

The table below shows the results of the sugarcane harvest in the fiscal year, including gains (losses) in the value of agricultural products and biological assets:

 

Period ended June 30, 2017

2016 Crop

2017 Crop

Total

Net Revenue

48,948

23,072

72,020

Cost of sales

(43,420)

(31,078)

(74,498)

Gain (loss) of agricultural products and biological assets value

7,215

4,316

11,531

Total

12,743

(3,689)

9,054

Tons

535,103

480,200

1,015,303

       

Period ended June 30, 2018

2017 Crop

2018 Crop

Total

Net Revenue

111,888

26,332

138,220

Cost of sales

(97,778)

(36,250)

(134,028)

Gain (loss) of agricultural products and biological assets value

37,297

6,655

43,952

Total

51,407

(3,263)

48,144

Produced Tons

1,378,554

434,174

1,812,728

 

IMPAIRMENT (REVERSAL OF PROVISIONS OF THE RECOVERABLE AMOUNT OF AGRICULTURAL PRODUCTS, NET)

A provision to adjust inventories at the net realized value of agricultural products is constituted when the fair value of the inventory is higher than the realized value. The realization value is the sales price estimated during the normal course of business less estimated selling expenses.

On June 30, 2018, the recognized amount corresponded to a gain of R$883 thousand.

 

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17

BRASILAGRO 2018

 

 


 
 

COST OF PRODUCTION

 

(R$ / ha)

Crop 16/17
Realized
(A)

Crop 17/18
Estimated
(B)

Crop 17/18
Realized
(C)

Change
C/A
%

Change
C/B
%

Soybean

2,159

2,431

2,438

12.9%

0.3%

Corn

2,398

2,471

2,432

1.4%

-1.6%

Sugarcane

3,507

3,845

3,062

-12.7%

-20.4%

 

The cost of production per hectare of sugarcane in the 17/18 harvest decrease 20.4% in relation to the estimate that included the costs of cultural treatment (CCT - cut, loading and transport) of Fazenda São José, which after renegotiation of the contract of this exercise, were paid by the former owner.

COST OF GOODS SOLD

 

(R$ thousand)

4Q18

4Q17

Change

2018

2017

Change

Cost of goods sold

(78,407)

(74,154)

6%

(168,060)

(130,074)

29%

Soybean

(44,465)

(42,214)

5%

(63,419)

(59,022)

7%

Corn

  (2,793)

  (6,618)

-58%

(13,659)

  (7,518)

82%

Sugarcane

(29,050)

(25,187)

15%

(86,177)

(60,395)

43%

Livestock

  (1,502)

(754)

99%

  (4,378)

(864)

407%

Services

  -

  -

n.a.

  -

(48)

n.a.

Others

(596)

  620

n.a.

(427)

  (2,227)

-81%

             

 (R$ thousand)

4Q18

4Q17

Change

2018

2017

Change

Ativos Biológicos Apropriados ao Custo

(19,437)

  (3,440)

465%

(60,259)

  (6,288)

858%

Soybean

(13,790)

1,287

n.a.

(16,261)

5,884

n.a.

Corn

1,482

1,466

1%

3,706

1,797

106%

Sugarcane

  (7,200)

  (6,035)

19%

(47,852)

(14,103)

239%

Livestock

  -

(46)

-100%

  -

  -

n.a.

Services

  -

  -

n.a.

  -

  -

n.a.

Others

  70

(112)

n.a.

  147

  134

10%

             

 (R$ thousand)

4Q18

4Q17

Change

2018

2017

Change

Total of cost of goods sold

(97,845)

(77,593)

26%

(228,319)

(136,362)

67%

Soybean

(58,255)

(40,927)

42%

(79,680)

(53,138)

50%

Corn

  (1,311)

  (5,152)

-75%

  (9,953)

  (5,721)

74%

Sugarcane

(36,251)

(31,223)

16%

(134,029)

(74,498)

80%

Livestock

  (1,503)

(800)

88%

  (4,378)

(864)

407%

Services

  -

(48)

n.a.

  -

(48)

n.a.

Others

(526)

  557

n.a.

(280)

  (2,093)

-87%

 

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18

BRASILAGRO 2018

 

 


 
 

Cost of goods sold (COGS) came to R$168.1 million in 2018. Due to the fair value adjustments of agricultural products, period changes in costs are directly linked to the market price of commodities at the time of harvest.

Soybean COGS increased by R$4.4 million in 2018 compared to the previous year, from R$59.0 million, from the sale of 60,100 tons at R$982.67 per ton, to R$63.4 million, from the sale of 74,200 tons at R$854.28 per ton. Soybean COGS in 2018 and 2017 reflect the reversal of the provision for loss.

Corn COGS increased by R$6.1 million in 2018 versus the previous year, from R$7.5 million, from the sale of 14,000 tons at R$535.35 per ton, to R$13.7 million, from the sale of 31,100 tons at R$439.45 per ton.

Sugarcane COGS increased by R$25.8 million in 2018 versus the previous year, from R$60.4 million, from the sale of 865,400 tons at R$69.79 per ton, to R$86.2 million, from the sale of 1.7 million tons at R$51.25 per ton of sugarcane.

Cattle-raising COGS reached R$4.4 million in 2018 and reflects the sale cost of 2,006 head of cattle in Brazil and Paraguay at R$4.3 million and the animal death and birth during the period.

Other COGS in the amount of R$427,000 in 2018 mainly refers to the raw material inventory adjustment. In 2017, other COGS in the amount of R$2.2 million refers to the sale of inputs (seeds, fertilizers and byproducts) and R$900,000 refers to the sale of 369 tons of sorghum.

SELLING EXPENSES

(R$ thousand)

4Q18

4Q17

Change

2018

2017

Change

Selling expenses

            (5,740)

            (6,139)

-6%

           (10,087)

            (6,676)

51%

Freight

            (3,567)

            (2,182)

63%

            (4,377)

            (2,358)

86%

Storage and Processing

            (2,775)

            (2,370)

17%

            (5,495)

            (2,951)

86%

Fees

                   (9)

                   (8)

13%

                 (82)

                   (8)

925%

Others

                611

            (1,579)

n.a.

               (133)

            (1,359)

-90%

 

In 2018, we recorded R$10.1 million in selling expenses, 51% higher compared to 2017, mainly due to the increase in grain sales in the period and the incorporation of a storage silo at the São José Farm.

Other selling expenses refer to provision for doubtful accounts (PDD).

 

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19

BRASILAGRO 2018

 

 


 
 

GENERAL AND ADMINISTRATIVE EXPENSES

 

(R$ thousand)

4Q18

4Q17

Change

2018

2017

Change

General and administrative expenses

           (13,326)

           (11,303)

18%

           (34,945)

           (30,941)

13%

Depreciations and amortizations

               (334)

               (171)

95%

               (816)

               (701)

16%

Personnel expenses

           (10,512)

            (8,296)

27%

           (24,133)

           (21,199)

14%

Expenses with services providers

               (865)

            (1,370)

-37%

            (4,279)

            (3,772)

13%

Leases and Rents

               (193)

               (139)

39%

               (689)

               (728)

-5%

Taxes

               (151)

                 (59)

156%

            (1,290)

               (816)

58%

Travel expenses

               (331)

               (250)

32%

               (888)

               (873)

2%

Software expenses

               (233)

               (490)

-52%

               (733)

               (888)

-17%

Other expenses

               (707)

               (528)

34%

            (2,117)

            (1,964)

8%

 

As of March 2017, we began to consolidate general and administrative expenses of the operation in Paraguay, which were previously accounted for under the equity pick up.

In 2018, general and administrative expenses increased by 13% in comparison to the same period of the previous year, from R$30.9 million to R$34.9 million. This increase is mainly due to the consolidation of general and administrative expenses related to the operation in Paraguay, in the amount of R$2.2 million in 2018, and R$689 thousand in provisions for the Long-Term Incentive program implemented during the year.

The 14% increase in Personnel Expenses is due to the provision for the Long-Term Incentive Plan, salary classification and collective bargaining agreements.

The 13% increase in Expenses with service providers is due mainly to expenses with new projects advisory, legal assistance and information technology assistance, and with expenditures with the Agribusiness Receivables Certificates (ARC).

The 5% reduction in Leases and Rents in general is due to renegotiation of the values of lease contracts.

The 58% increase in Taxes is explained by the incorporation of production areas and adjustments in raw land value, which affected the Tax on the Territorial Rural Property (ITR).

Other Expenses include costs regarding telephony services, building maintenance, registry, insurances, shares listing and others.

 

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20

BRASILAGRO 2018

 

 


 
 

OTHER OPERATING INCOME / EXPENSES

 

(R$ thousand)

4Q18

4Q17

Change

2018

2017

Change

Other operating income/expenses

(440)

(283)

55%

35,432

  (6,019)

n.a.

Gain/Loss on sale of fixed assets

  (86)

57

n.a.

(380)

(479)

-21%

Management Fee - Cresca Reversal

  -

(828)

-100%

  -

  (3,318)

-100%

Provisions for lawsuits

88

  406

-78%

  387

(139)

n.a.

Alto Taquari Farm

  -

  -

n.a.

  -

34

-100%

Added value obteined by spin-off (Cresca - Paraguay)

58

  -

n.a.

5,098

  -

n.a.

Written-off in the conversion of joint venture by spin-off (Cresca - Paraguay)

  -

  -

n.a.

30,616

  -

n.a.

Others

(500)

82

n.a.

(289)

  (2,117)

-86%

 

The increase in other operating expenses (income) is a result of the recognition of amounts incurred with the conclusion of the spin-off of the Cresca operation in Paraguay, in the amount of R$35.7 million. In 2017, the management fee reversal of Cresca, in the amount of R$3.3 million, was recorded.

Spin-off of the Joint Venture Cresca S.A.

On February 9, 2018, the spin-off process of the Joint Venture Cresca S.A. (company that owns the property in Paraguay) was formalized. At that moment, the part owned by BrasilAgro was transferred to its subsidiary Agropecuária Morotí S.A., which is 100% controlled by the Company.

After the spin-off, considering that the Company obtained the control of assets and liabilities previously jointly controlled, pursuant to IFRS 3 – Business Combinations, the assets acquired, and the liabilities assumed were re-calculated at their fair values on the acquisition date and the gain/loss was recorded in the result.

The investment was recorded at the Company in the amount of R$115.6 million and the fair value totaled R$120.6 million; therefore, we recorded a gain of R$5.0 million.

Moreover, the effects from the translation of investments abroad were recorded under other comprehensive income. With the spin-off, as required by accounting practices, the accumulated effect from the translation of investments abroad, totaling R$30.6 million, was written-off from other comprehensive income and recorded under profit/loss.

 

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21

BRASILAGRO 2018

 

 


 
 

FINANCIAL RESULT

 

(R$ thousand)

4Q18

4Q17

Change

2018

2017

Change

Total

             1,283

            10,621

-88%

            (8,556)

            32,825

n.a.

Interest (i)

            (4,170)

               (543)

668%

           (18,306)

            (4,085)

348%

Monetary variation (ii)

               (180)

                 (46)

291%

               (186)

               (541)

-66%

Exchange vartiation (iii)

                456

             1,629

-72%

                266

                249

7%

Unwind of present value adjustment (iv)

             8,836

            10,917

-19%

            12,721

             8,029

58%

Results with derivatives (v)

            (5,615)

            (1,303)

331%

            (5,335)

            17,435

n.a.

Other financial income / expenses (vi)

             1,956

                 (33)

n.a.

             2,284

            11,738

-81%

 

The consolidated financial result is composed of the following items: (i) interest on financing; (ii) the impact of the monetary variation on the amount payable from the acquisition of the Nova Buriti Farm; (iii) the impact of the U.S. dollar exchange variation on the offshore account and Cresca’s receivables; (iv) the present value of Cremaq, Araucária and Jatobá Farms’ sales receivables, fixed in soybean bags; (v) the result from hedge operations; and (vi) bank fees and expenses and returns on cash investments.

Interest variation is mainly due to the recognition of the financial revenue obtained from the Nova Buriti Farm renegotiation, in the amount of R$9.3 million, interest on loans and financing in the amount of R$11.4 million, and interest on Cresca’s loan of R$16.6 million which was pardoned.

On August 30, 2017, the title deed for the Nova Buriti Farm was given and, consequently, the outstanding balance of the Farm was paid. The Farm’s total price was adjusted, with the partial cancellation of the monetary adjustments (by the IGP-M – General Market Price Index) that would be owed by the Company.

The realization of the present value of assets and liabilities, in the amount of R$12.7 million, shows the variation in the amount to be received due to the sales of the Araucária and Jatobá Farms, referring to 1.1 million soybean bags. This variation is explained by the soybean price index, considering the Chicago Stock Exchange (CBOT), port premium (basis), exchange rate and interest rate (with reference to the CDI).

The derivatives result reflects the commodities hedge operations result and the impact of the exchange variation on cash, which was partially dollarized in order to maintain purchasing power in regard to inputs, investments and new acquisitions, which have a positive correlation with the US currency. In 2018, the result of derivative transactions was a negative R$5.3 million, of which R$17.8 million (negative) are related to currency operations and R$12.5 million are related to operations with commodities. In 2017, derivative operations totaled R$17.4 million, of which R$10.7 million are a loss related to currency operations and R$6.7 million are in operations with commodities.

 

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22

BRASILAGRO 2018

 

 


 
 

The reduction in other financial income / expenses is due to the decrease in the Company’s cash position, from an average cash flow of R$89.6 million in 2017 to R$70.0 million in 2018 and also decrease in the SELIC rate (Brazil’s basic interest rate) in the period, in addition to bank fees and expenses with financial investments.

DERIVATIVE OPERATIONS

Our risk policy primarily aims to hedge the Company’s cash flow. In this context, we are concerned not only with the main components of our revenue, but also the main components of our production costs. We therefore monitor on a daily basis: a) the international prices of the main agricultural commodities produced by the Company, usually expressed in U.S. dollars; b) the base premium, i.e. the difference between the international and domestic commodity price; c) exchange rates; and d) the prices of the main components such as freight, fertilizers and chemicals, that can significantly impact costs.

The points analyzed when deciding on the price and margin hedging strategy and tools are listed below:

• Estimated gross margin based on the current price environment.

• Standard deviation from the estimated gross margin for different pricing strategy scenarios.

• Analysis of the estimated gross margin in stress scenarios for different hedge strategies.

• Comparison between current estimates and the Company’s budget.

• Comparison of the estimated gross margin and the historical average.

• Market expectations and trends.

• Tax aspects.

 

Hedge Position on August 20, 2018

 

Crop

Soybean

FX

Volume(1)

% of hedge(2)

Price (USD/bu)

Volume (thousand)

% of hedge(3)

BRL/USD

17/18

92.962 ton

100.0%

10.39

USD 33,398

1

3.33

18/19

42.731 ton

54.8%

9.79

USD 13,248

0.482

3.73

(1) Net estimated volume of production + farm sales receivables.

     

(2) % of the volume of soybean locked in tons.

       

(3) % of estimated revenue in USD.

         

 

 

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BRASILAGRO 2018

 

 


 
 

Balance Sheet

......................................................................................................................................................

Allocation of Net Income and Distribution of Dividends

The Board of Directors meeting of August 24, 2018 approved the Management Proposal to be submitted to the next Annual Shareholders' Meeting, to be held in October 2018.

Pursuant to the current corporate legislation and the Company’s Bylaws, Management proposed the following distribution of net income for the fiscal year ended June 30, 2018:

R$ thousand

2018

2017

Net income

126,338

  27,310

(-) Appropriation of the legal reserve (5% of net income)

(6,317)

   (1,366)

Adjusted Net Income

120,021

  25,945

(-) Minimum compulsory dividends - 25% of adjusted net income

(30,005)

   (6,486)

(-) Proposed aditional dividends

(10,995)

   (6,486)

Proposed Dividends

(41,000)

(12,972)

Appropriation of reserve for investment and expansion

  90,016

  12,972

Number of shares

56,888,916

56,888,916

(-) Treasury Shares

(3,086,748)

 (3,086,748)

(=) Outstanding shares

53,802,168

53,802,168

Dividends per share (R$)

      0.76

      0.24

 

NET ASSET VALUE – NAV

(R$ thousand)

June 30, 2018

Book

NAV

BrasilAgro's Equity

755,864

755,864

Properties appraisal

0

1,259,964

(-) Balance Sheet - Net Agri Openning Capex

0

-101,800

(-) Balance Sheet - Land Value

0

-557,152

NAV - Net Asset Value

755,864

1,356,876

Shares

56,889

56,889

NAV per share

13.29

23.85

 

 

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BRASILAGRO 2018

 

 


 
 

CASH AND CASH EQUIVALENTS

Cash and Cash equivalents

06/30/2018

06/30/2017

Change

Cash and Cash equivalents

          104,314

            43,798

138%

Cash and Banks

            23,101

            15,159

52%

Repurchase agreements

            15,242

            28,639

-47%

Bank deposit certificates

            33,137

                  -  

n.a.

Finance Lease bills

            32,834

                  -  

n.a.

Marketable securities

            11,215

             6,972

61%

Restricted financial investments

                  -  

                    2

n.a.

Bank deposit certificates

             1,129

                  -  

n.a.

Banco do Nordeste (loan guarantees)

                  -  

             5,502

n.a.

Treasury financial bills

            10,086

             1,468

587%

Restricted Marketable securities

            18,226

            17,088

7%

Bank deposit certificates

             9,588

             8,982

7%

Banco do Nordeste (loan guarantees)

             8,638

             8,106

7%

Total

          133,755

            67,858

97%

 

The Company ended the quarter with a cash position of R$133,7 million, an increase of 97% over June 30, 2017, mainly due to the issue of Agribusiness Receivables Certificates in the amount of R$142.2 million in May 2018.

INVENTORY

 

(R$ thousand)

06/30/2018

06/30/2017

Change

Soybean

            50,289

             6,837

n.a.

Corn

             6,247

             6,819

-8%

Livestock

            34,053

            11,153

205%

Other crops

             1,153

                  50

n.a.

Agricultural Products

            91,742

            24,859

269%

Supplies

            11,933

             8,952

33%

Total

          103,675

            33,811

207%

 

The Company ended the 2017/2018 harvest with an inventory of 46,400 tons of soybean, 15,700 tons of corn – which will be sold in the next semester – and 21,000 head of cattle. At the end of the 2016/2017 harvest the Company's inventory was 7,700 tons of soybean, 21,200 tons of corn – which were sold in 2018 – and 8,600 head of cattle.

 

 

INDEBTEDNESS

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BRASILAGRO 2018

 

 


 
 

 

(R$ thousand)

Expiration

Annual Interest Tax - %

06/30/2018

06/30/2017

Change

Short term

 

 

 

 

 

Financing for Agricultural Funding

Sep-18

8.50 to 12.75

            43,333

            10,703

305%

Financing of Projeto Bahia

Dec-18

TJLP + 3.45 and 4.45 / SELIC + 3.45 / Pre 4.00 to 9.00

             3,131

            15,236

-79%

Working Capital

May-18

 1.40 up to 2.30% + 100% of CDI

                  -  

            15,782

n.a.

Working Capital  (USD)

Aug-17

3.49%

                  -  

             5,031

n.a.

Machinery and Equipment Financing

Dec-18

TJLP +  3.73

                630

                    1

n.a.

Sugarcane Financing

Dec-18

TJLP + 2.70 and 12.75%

            21,318

             8,248

158%

Sugarcane Plantation Leasing - Parceria III

May-18

6.92%

             1,676

             1,619

4%

 

 

 

            70,088

            56,620

24%

Long term

 

 

                  -  

                  -  

0%

Sugarcane Financing

Dec-23

TJLP + 2.70 and 12.75%

            13,194

             1,025

n.a.

Machinery and Equipment Financing

Jun-24

TJLP + 3.73%

             5,411

             1,208

348%

Financing of Projeto Bahia

Aug-23

TJLP + 3.45 and 4.45/SELIC + 3.45/Pre 4.00 up to 9.00

            27,146

            30,862

-12%

Debentures

Jul-23

106.5 and 110 of CDI

          141,642

                  -  

n.a.

Sugarcane Plantation Leasing - Parceria III

Nov-18

6.92%

                  -  

             1,665

n.a.

Sugarcane Plantation Leasing - Parceria IV

Jan-32

R$/kg 0.6462

            18,539

            20,795

-11%

 

 

 

          205,932

            55,555

271%

Total

 

 

          276,020

          112,175

146%

 

On June 30, 2018 and June 30, 2017, the balance of loans and financing was R$276.0 million and R$112.2 million, respectively. The payment of interest and principal totaled R$115.8 million in 2018.

In May 25, 2018, 142,200 simple, unsecured first issue debentures, not convertible into shares, were subscribed and paid-in, to be converted into collateral, in two series, for private placement totaling R$142.2 million, of which R$85.2 milllion in the first series and R$57.0 million in the second series.

The Debentures were tied to a securitization transaction, used as guarantee for the issue of 142,200 Certificates of Agribusiness Receivables.

The first series will mature on August 1, 2022, subject to interest corresponding to 106.5% of the DI Rate, and the second series will mature on July 31, 2023, subject to interest corresponding to 110.0% of the DI Rate.

During the period, R$116.2 million was also disbursed to finance the cost of sugarcane, soybean and corn operations and R$13.9 million to investments related to area opening.

 

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BRASILAGRO 2018

 

 


 
 

ACQUISITIONS PAYABLE

(R$ thousand)

Adjustment Rate

06/30/2018

06/30/2017

Change

Nova Buriti Farm

 IGP-M

  -

22,085

n.a.

São José Farm

 CDI

  -

2,561

n.a.

Total

 

  -

24,646

n.a.

 

On August 30, 2017, the title deed for the Nova Buriti Farm was given and, consequently, the partial payment of R$5.8 million was made. Part of the remaining balance, in the amount of R$1.5 million, was paid on October 18, 2017, and in January 2018, R$6.1 million of the outstanding balance of accounts payable on acquisitions were paid.

At the time of the negotiation, the Farm’s total price was adjusted, with the partial cancellation of the monetary adjustments (by the IGP-M – General Market Price Index) that would be owed by the Company. The discount in the amount of R$9.3 million was recognized as financial income in 2018.

PROPERTIES FOR INVESTMENT

The fundamental pillars of the Company’s business strategy are the acquisition, development, exploration and sale of rural properties suitable for agricultural activities. The Company acquires rural properties with significant potential for generating value, subsequently holding the assets and carrying out profitable agricultural activities on them.

Once we acquire our rural properties, we begin to implement high-value added crops and to transform these rural properties by investing in infrastructure and technology, while also entering into lease agreements with third parties. In line with our strategy, when we deem a rural property has reached its optimal value, we sell it to capture the capital gains.

The rural properties acquired by the Company are booked at their acquisition cost, which does not exceed their realized net value, and are recognized under “Non-Current Assets”.

Properties for investment are evaluated at their historical cost, plus investments in buildings, improvements and the clearing of new areas, less accrued depreciation, in accordance with the same criteria detailed for fixed assets.

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(R$ thousand)

Acquisition value

Buildings and improvements

Opening area

Construction in progress

Investment Properties

Initial Balance

300,487

26,369

53,021

9,922

389,799

In June 30, 2017

 

 

 

 

 

Acquisitions

2,231

152

1,390

20,088

23,861

Incorporation - corporate reorganization

113,158

4,141

                  -  

23,653

140,952

Reductions

           (10,676)

               (116)

                  -  

                   (1)

           (10,793)

(-) Depreciation/ Amortization

                  -  

               (983)

           (11,916)

                  -  

           (12,899)

Cumulative Translation Adjustment

            19,879

                710

                  36

             5,607

            26,232

In June 30, 2018

425,079

30,273

42,531

59,269

557,152

 

On June 30, 2018, we recorded R$59.3 million in ongoing work, which refers to the clearance of areas not yet concluded and other investments in the Palmeiras, Chaparral and Araucária Farms.

In February, we formalized the spin-off process of Cresca S.A., which started in October 2016. With the end of the Joint Venture, BrasilAgro acquired 50% of Cresca’s assets and liabilities through the subsidiary Agropecuária Morotí S.A. As a result, the farm was accounted for as properties for investment as of this fiscal year in the amount of R$141.0 million, as mentioned at the table above in incorporation – corporate reorganization. The exchange rate effect over Paraguay assests is shown in the ‘Cumulative Transition Adjustment’ account.

CAPEX – AREA OPENING

(R$ thousand)

4Q18

4Q17

Change

2018

2017

Change

Maintenance

             2,038

                 (33)

n.a.

             5,445

             2,232

144%

Opening

                 (43)

             1,948

n.a.

             5,887

             7,929

-26%

Total

             1,995

             1,915

4%

            11,332

            10,161

12%

 

DEPRECIATION – AREA OPENING

(R$ thousand)

4Q18

4Q17

Change

2018

2017

Change

Maintenance

               (677)

               (517)

31%

            (2,416)

            (1,908)

27%

Opening

            (2,415)

            (1,868)

29%

           (11,870)

            (8,531)

39%

Total

            (3,092)

            (2,385)

30%

           (14,286)

           (10,439)

37%

 

 

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SOCIAL RESPONSABILITY

..........................................................................................................................................

 

The Company's values are focused on social and environmental responsibilities, as part of our business is to invest in properties and their surroundings. BrasilAgro has been continuously transforming this commitment into concrete actions, investing in projects and social and environmental activities that contribute to the development of the regions where it operates.

The projects supported today are:

 

ADUS – REFUGEE REINTEGRATION INSTITUTE

Adus works with refugees to reduce the challenges they face to effectively reintegrate into society. The project supported by BrasilAgro is located in São Paulo and is aimed at the inclusion of refugees and asylum seekers and family members by teaching Portuguese so that they can integrate into society. To date, 135 refugees from 21 countries have participated in the Institute’s program and 27 students are now employed.

 

 

CASA DO ZEZINHO

Casa da Zezinho, is a space focused on development opportunities and, since its foundation, has helped 900 children and young people living in situations of high social vulnerability, at São Paulo’s poverty-stricken areas. The Company sponsors the “Suburban Opera” action, and the funds donated are used to hire dance, singing and theater teachers, disseminating culture and entertainment. We also support the Institution’s end-of-year party, with BrasilAgro employees working as volunteers.

 

 

 

 

 

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AMIGOS DO BEM

The Amigos do Bem institution provides support to communities in the backlands of Brazil’s Northeastern region, with several educational and sustainable projects with the goal of transforming people’s lives, providing basic goods for survival and the possibility of employment through cashew cultivation and the sale of handicraft products. The program reaches more than 60,000 people in the states of Alagoas, Ceará and Pernambuco.

BrasilAgro supports the institution through the work of an agricultural technician, whose responsibility is to monitor and improve cashew plantations, as well as an environmental team to assist with irrigation projects, obtaining environmental licenses and the Rural Environmental Cadastre.

 

 

PRECAVI ASSOCIATION

The PRECAVI Association (Child and Adolescent Preparation for Life) is an educational and cultural center that assists children in situations of social vulnerability and aims to provide human, citizen and ethical training. The Company sponsors sport activities for children and adolescents, financing: the salary and expenses of the teacher, sports equipment (uniforms, shoes, whistles, vests, net for the post), food and other expenses with championships.

In the first week of July, we participated in the first championship of the Espoente Project – Sport and Environment Activities in Fortaleza dos Nogueiras, MA, near one of our farms.

 

 

 

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BRASILAGRO 2018

 

 


 
 

In addition to our continuous support for the projects mentioned above, we have also developed specific campaigns that involve the employees in our mission to make a difference:

 

SEMENTE DO AMANHÃ ASSOCIATION

The Semente do Amanhã Association provides activities for the development and social insertion of underprivileged children in the region of Taboão da Serra (SP). During November and December of 2017, the Company’s employees collected children’s books for the Institution’s library.

 

 

ANJOS DA CIDADE INSTITUTION

The Anjos da Cidade Institution provides care, love and attention to homeless people in order to bring back their self-esteem. With around 30 volunteers per month, who carry out weekly deliveries in the regions of Barra Funda, Santa Cecília and Campos Elíseos, more than 350 people are benefited by the Institution’s actions. We gathered old or new clothes and/or blankets and donated them to the institution.

 

PUKET – MEIAS DO BEM

The Campaign collects sock fabric to be turned into blankets and new socks, which are donated to those who need them. Since 2013, it has recycled more than 15 tons of textile waste that were transformed into over 30,000 blankets. In June and July 2018 BrasilAgro’s employees donated their old and/or damaged socks contributing to the campaign.

 

 

ENVIRONMENT DAY COMPETITION

In June, when the World Environment Day is celebrated, BrasilAgro recognized and awarded the daily practices adopted by its employees in the work environment that benefit the environment. The awarded proposals included the reuse of paper, the proper handling and storage of empty packaging of pesticides, as well as examples of wildlife care.

 

VERONILDO MENDES PEREIRA STATE SCHOOL

 

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BRASILAGRO 2018

 

 


 
 

BrasilAgro has built a composting system for the disposal of organic waste at the Veronildo Mendes Pereira State School in the municipality of Baianópolis (BA), where it also carried out training on organic waste disposal and how it can reduce environmental impacts and improve the school’s gardens and community.

 

 

 

 

 

 

 

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CAPITAL MARKETS

......................................................................................................................................................

The Company was the first agricultural production company to list its shares on the Novo Mercado segment of the B3 (São Paulo Stock Exchange) and was also the first Brazilian agribusiness company to list its ADRs (American Depositary Receipts) on NYSE (New York Stock Exchange).

 

Share Performance

......................................................................................................................................................

On August 24, 2018, BrasilAgro’s shares (AGRO3) were traded at R$14.15, resulting in a market cap of R$805.0 million, while its ADRs (LND) were traded at US$3.50.

 

 

 

 

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Disclaimer

The statements contained in this document related to the prospects for BrasilAgro’s businesses, projected operating and financial income and growth are merely projections, and as such are based exclusively on management’s expectations. These expectations depend materially on market conditions, the performance of the Brazilian economy, the industry and international markets, and are therefore subject to change without prior notice.

 

WEIGHTS AND MEASURES USED IN AGRICULTURE

......................................................................................................................................................

 

Weights and Measures used in Agriculture

 

 1 ton

 1,000 kg

 

 1 Kilo

 2.20462 pounds

 

 1 pound

 0.45359 kg

 

 1 acre

 0.1840 bushel

 

 1 hectare (ha)

 2.47105 acres

 

 1 hectare (ha)

 10,000 m2

 

 1 bushel

 5.4363 acres

 

 

 

 

Soybean

 

 

 1 bushel of soybean

 60 pounds

27.2155 kg

 1 bags of soybean

 60 kg

2.20462 bushels

 1 bushel/acre

 67.25 kg/ha

 

 1.00 US$/bushel

 2.3621 US$/saca

 

 

 

 

Corn

 

 

 1 bushel of corn

 56 pounds

25.4012 kg

 1 bags of corn

 60 kg

2.36210 bushels

 1 bushel/acre

 62.77 kg/ha

 

 1.00 US$/bushel

 2.3621 US$/saca

 

 

 

 

Cattle

 

 

 1 arroba

~33.1 pounds

15 Kg

 

 

 

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INCOME STATEMENT

......................................................................................................................................................

 

 

(R$ thousand)

4Q18

4Q17

Change

2018

2017

Change

Revenues from Farm Sales

            52,406

            32,162

63%

            52,406

            36,016

46%

Revenues from grains

            66,202

            54,852

21%

            99,875

            71,272

40%

Revenues from sugarcane

            26,915

            24,259

11%

          142,037

            75,986

87%

Revenues from leasing

             2,731

             1,257

117%

             6,592

             2,820

134%

Revenues from Livestock

             1,246

                  -  

n.a.

             4,115

                  -  

n.a.

Other revenues

                   (4)

                  90

n.a.

                132

             2,227

-94%

Deductions from gross revenue

            (2,303)

            (2,386)

-3%

            (8,473)

            (5,394)

57%

Net Sales Revenue

          147,193

          110,234

34%

          296,684

          182,927

62%

Change in fair value of biological assets and agricultural products

            24,454

             6,802

260%

            99,083

            12,266

708%

Impairment

                    1

            (1,218)

n.a.

                883

            (1,655)

n.a.

Net Revenue

          171,648

          115,818

48%

          396,650

          193,538

105%

Cost of Farm Sale

           (12,589)

            (9,300)

35%

           (12,589)

            (9,300)

0%

Cost of agricultural products sale

           (97,845)

           (77,593)

26%

         (228,319)

         (136,362)

67%

Gross Profit

            61,214

            28,925

112%

          155,742

            47,876

225%

Selling expenses

            (5,740)

            (6,139)

-6%

           (10,087)

            (6,676)

51%

General and administrative expenses

           (13,326)

           (11,303)

18%

           (34,945)

           (30,941)

13%

Depreciations and amortizations

               (334)

               (171)

95%

               (816)

               (701)

16%

Personnel expenses

           (10,512)

            (8,296)

27%

           (24,133)

           (21,199)

14%

Expenses with services provider

               (865)

            (1,370)

-37%

            (4,279)

            (3,772)

13%

Leases and Rents

               (193)

               (139)

39%

               (689)

               (728)

-5%

Others expenses

            (1,422)

            (1,327)

7%

            (5,028)

            (4,541)

11%

Other operating income/expenses, net

               (440)

               (283)

55%

            35,432

            (6,019)

n.a.

Equity pick up

                 (28)

               (695)

-96%

            14,671

            (4,425)

n.a.

Financial result

             1,283

            11,240

-89%

            (8,556)

            33,444

n.a.

Financial income

            71,945

            38,615

86%

          129,323

          110,090

17%

Interest on Financial Investments

             2,693

                769

250%

             4,341

            15,383

-72%

Interest on assets

                196

             1,606

-88%

            10,462

             4,878

114%

Monetary variations

                  -  

                619

-100%

                160

                619

-74%

Foreign exchange variations on liabilities

             4,889

             2,169

125%

            12,058

            11,166

8%

Unwind of present value adjustment

            20,323

            11,697

74%

            39,337

            15,818

149%

Realized results with derivatives

             9,777

             8,242

19%

            16,861

            19,576

-14%

Unrealized results with derivatives

            34,067

            13,513

152%

            46,104

            42,650

8%

Financial expenses

           (70,662)

           (27,375)

158%

         (137,879)

           (76,646)

80%

Interest expenses

               (502)

               (659)

-24%

            (1,372)

            (2,565)

-47%

Bank charges

               (235)

               (143)

64%

               (685)

            (1,080)

-37%

Interest on liabilities

            (4,366)

            (2,149)

103%

           (28,768)

            (8,963)

221%

Monetary variations

               (180)

                 (46)

291%

               (346)

               (541)

-36%

Foreign exchange variations on liabilities

            (4,433)

               (540)

721%

           (11,792)

           (10,917)

8%

Unwind of present value adjustment

           (11,487)

               (780)

1373%

           (26,616)

            (7,789)

242%

Realized results with derivatives

           (19,019)

            (1,505)

1164%

           (23,968)

            (3,654)

556%

Unrealized results with derivatives

           (30,440)

           (21,553)

41%

           (44,332)

           (41,137)

8%

Profit (loss) before income and social contribution taxes

            42,963

            21,745

98%

          152,257

            33,259

358%

Income and social contribution taxes

            (2,246)

               (618)

263%

           (25,919)

            (5,949)

336%

Profit (loss) for the period

            40,717

            21,127

93%

          126,338

            27,310

363%

Outstanding shares at the end of the period

     56,888,916

     56,888,916

 

     56,888,916

     56,888,916

 

Basic earnings (loss) per share  - R$

               0.72

               0.37

93%

               2.22

               0.48

363%

 

 

www.brasil-agro.com

35

BRASILAGRO 2018

 

 


 
 

BALANCE SHEET – ASSETS

......................................................................................................................................................

 

 

Assets  (R$ thousand)

06/30/2018

06/30/2017

Change

Current assets

 

 

 

Cash and Cash equivalents

          104,314

            43,798

138.2%

Marketable securities

            11,215

             6,972

60.9%

Trade accounts receivable

            95,176

            54,026

76.2%

Inventories

            69,622

            22,658

207.3%

Biologial assets

            61,993

            38,260

62.0%

Derivative financial instruments

            28,299

             4,090

n.a.

Transactions with related parties

             1,660

             1,298

27.9%

 

          372,279

          171,102

117.6%

 

 

 

 

Non-current assets

 

 

 

Biological assets

            34,053

            13,435

153.5%

Markable securities

            18,226

            17,088

6.7%

Diferred taxes

            32,742

            53,780

-39.1%

Derivative financial instruments

             4,053

                    1

n.a.

Accounts receivable and sundry credits

            74,775

            44,605

67.6%

Investment properties

          557,152

          389,799

42.9%

Transactions with related parties

                  -  

            35,640

-100.0%

Investments

                  86

          101,426

-99.9%

Property, plant and equipment

            84,830

            54,745

55.0%

Intagible assets

             1,403

             1,672

-16.1%

 

          807,320

          712,191

13.4%