CZZ Cosan Limiited

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Issuer
Pursuant To Rule 13a-16 Or 15d-16 of the
Securities Exchange Act of 1934

 

For the month of October 2020

 

Commission File Number: 1-33659

 

COSAN LIMITED

(Translation of registrant’s name into English)

 

 

Av. Brigadeiro Faria Lima, 4100, – 16^th floor
São Paulo, SP 04538-132 Brazil
(Address of principal executive offices)

 

 

 

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

 

Form 20-F ☒      Form 40-F ☐

 

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

 

Yes ☐       No ☒

 

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

 

Yes ☐       No ☒

  

 

 

Contents

 

Consolidated statement of financial position	3
Consolidated statement of profit or loss and other comprehensive income	5
Consolidated statement of changes in equity	7
Consolidated statement of cash flows	9
Notes to the consolidated financial statements	12

 

Consolidated statements of financial position

(In thousands of Brazilian Reais - R$)

 

		Note				June 30, 2020				December 31, 2019
Assets
Cash and cash equivalents			5.1				10,953,572				8,472,274
Marketable securities			5.2				2,658,608				3,115,503
Trade receivables			5.3				1,796,514				1,786,095
Derivative financial instruments			5.8				219,105				144,422
Inventories			7				869,598				787,322
Receivables from related parties			5.4				68,146				58,619
Income tax receivable							179,003				215,578
Other current tax receivable			6				1,055,462				950,246
Dividends receivable							42,217				23,252
Sector financial assets			12				404,907				—
Other financial assets							92,475				81,972
Other current assets							482,110				356,554
Total current assets							18,821,717				15,991,837
Trade receivables			5.3				28,558				28,299
Restricted cash			5.2				42,672				147,910
Deferred tax assets			14				1,665,304				1,607,566
Receivables from related parties			5.4				120,190				114,722
Income taxes receivable							219,291				168,089
Other non-current tax receivable			6				766,370				726,766
Judicial deposits			15				823,746				943,457
Other financial assets							1,168				69,791
Derivative financial instruments			5.8				9,350,821				3,679,988
Contract asset			10.4				719,382				600,541
Dividends receivable							15,725				—
Other non-current assets							261,370				245,716
Investments in associates			8.1				374,093				377,707
Investments in joint ventures			9				7,598,440				7,548,960
Property, plant and equipment			10.1				12,759,902				12,153,136
Intangible assets and goodwill			10.2				17,067,413				16,843,659
Right-of-use assets			10.3				7,883,327				4,469,730
Total non-current assets							59,697,772				49,726,037
Total assets							78,519,489				65,717,874
The accompanying notes are an integral part of these interim financial statements.

 

 

Consolidated statements of financial position

(In thousands of Brazilian Reais - R$)

 

		Note				June 30, 2020				December 31, 2019
Liabilities
Loans, borrowings and debentures			5.5				4,810,360				3,518,225
Leases			5.6				1,134,841				542,475
Derivative financial instruments			5.8				11,578				30,784
Trade payables			5.7				2,377,310				2,190,264
Employee benefits payables							289,163				381,337
Income tax payables							193,448				424,138
Other taxes payable			13				437,755				363,051
Dividends payable							8,596				214,104
Sector financial liabilities			12				93,587				—
Concessions payable			11				111,652				9,847
Payables to related parties			5.4				398,644				392,458
Deferred revenue							6,358				7,300
Other financial liabilities							405,798				543,879
Other current liabilities							354,482				299,349
Total current liabilities							10,633,572				8,917,211
Loans, borrowings and debentures			5.5				34,666,904				25,533,990
Leases			5.6				6,867,114				4,052,413
Preferred shareholders payable in subsidiaries							446,984				611,537
Derivative financial instruments			5.8				124,401				50,267
Other taxes payable			13				150,476				155,070
Provision for legal proceedings			15				1,374,249				1,354,171
Concessions payable			11				2,851,064				3,445,033
Payables to related parties			5.4				741				—
Post-employment benefits			23				715,063				705,003
Deferred tax liabilities			14				3,609,989				3,883,564
Sector financial liabilities			12				403,467				—
Deferred revenue							46,099				48,036
Other non-current liabilities							778,503				721,098
Total non-current liabilities							52,035,054				40,560,182
Total liabilities							62,668,626				49,477,393
Shareholders' equity			16
Share capital							5,328				5,328
Additional paid-in capital							631,031				887,165
Accumulated other comprehensive loss							(1,590,933	)			(805,471	)
Retained earnings							5,180,179				5,314,843
Profit for the period							748,552				—
Equity attributable to:
Owners of the Company							4,974,157				5,401,865
Non-controlling interests			8.3				10,876,706				10,838,616
Total shareholders' equity							15,850,863				16,240,481
Total shareholders' equity and liabilities							78,519,489				65,717,874
The accompanying notes are an integral part of these interim financial statements.

Consolidated statement of profit or loss

and other comprehensive income

(In thousands of Brazilian Reais - R$, except earnings per share)

 

		Note				April 1, 2020 to June 30, 2020				January 1, 2020 to June 30, 2020				April 1, 2019 to June 30, 2019 (Restated) 1				January 1, 2019 to June 30, 2019 (Restated) 1
Net sales			18				4,174,911				9,097,417				5,072,851				9,792,758
Cost of sales			19				(2,793,309	)			(6,343,520	)			(3,477,315	)			(6,946,642	)
Gross profit							1,381,602				2,753,897				1,595,536				2,846,116
Selling expenses			19				(315,013	)			(603,618	)			(267,902	)			(532,032	)
General and administrative expenses			19				(316,488	)			(611,807	)			(281,770	)			(539,734	)
Other expenses, net			20				214,457				86,595				7,075				5,788
Operating expenses							(417,044	)			(1,128,830	)			(542,597	)			(1,065,978	)
Profit before equity in earnings of investees, finance results and taxes							964,558				1,625,067				1,052,939				1,780,138
Interest in earnings of associates			8.1				7,180				10,420				6,004				(22,112	)
Interest in earnings of joint ventures			9				(221,151	)			(29,808	)			58,410				362,243
Equity in earnings of investees							(213,971	)			(19,388	)			64,414				340,131
Finance expense							(755,660	)			(2,983,294	)			(1,120,766	)			(1,924,801	)
Finance income							61,129				381,062				191,623				318,039
Foreign exchange, net							(766,358	)			(3,967,798	)			177,485				106,668
Derivatives							1,246,203				5,970,945				437,113				666,158
Finance results, net			21				(214,686	)			(599,085	)			(314,545	)			(833,936	)
Profit before taxes							535,901				1,006,594				802,808				1,286,333
Income taxes			14
Current							(242,315	)			(404,329	)			(253,209	)			(405,479	)
Deferred							46,272				263,071				(4,167	)			66,814
							(196,043	)			(141,258	)			(257,376	)			(338,665	)
Profit from continuing operations							339,858				865,336				545,432				947,668
Profit (loss) from discontinued operation, net of tax			25				—				—				(4,769	)			(10,576	)
Profit for the period							339,858				865,336				540,663				937,092
Other comprehensive income
Items that may not be reclassified to profit or loss
Actuarial loss on defined benefit plan							—				4				—				(2	)
							—				4				—				(2	)
Items that are or may subsequently be reclassified to profit or loss:
Foreign currency translation effect							(20,417	)			(200,027	)			(19,152	)			(52,246	)
Gain on cash flow hedge in joint ventures							(262,828	)			(418,462	)			27,957				(151,920	)
Changes in fair value of financial assets							40				40				65				75
							(283,205	)			(618,449	)			8,870				(204,091	)
Total other comprehensive (loss) income, net of tax							(283,205	)			(618,445	)			8,870				(204,093	)

 

Consolidated statement of profit or loss

and other comprehensive income

(In thousands of Brazilian Reais - R$, except earnings per share)

 

Comprehensive income			56,653				246,891				549,533				743,575
Comprehensive income (loss) - Discontinued operation			—				—				—				(10,576	)
Total comprehensive income for the period			56,653				246,891				549,533				732,999
Profit attributable to:
Owners of the Company			101,899				748,552				208,401				398,617
Non-controlling interests			237,959				116,784				332,262				538,475
			339,858				865,336				540,663				937,092
Total comprehensive income attributable to:
Owners of the Company			(158,798	)			(36,910	)			228,318				282,294
Non-controlling interests			215,451				283,801				321,215				450,705
			56,653				246,891				549,533				732,999
Earnings per share from continued operation
The accompanying notes are an integral part of these consolidated interim financial statements. ¹ For details on this restated, see Note 25.

 

 

Consolidated statement of changes in equity

(In thousands of Brazilian Reais - R$)

 

		Share capital				Additional  paid-in capital				Accumulated other comprehensive loss				Retained earnings				Equity attributable to owners of the Company				Non-controlling interest				Total equity
At December 31, 2019			5,328				887,165				(805,471	)			5,314,843				5,401,865				10,838,616				16,240,481
Net income for the period			—				—				—				748,552				748,552				116,784				865,336
Other comprehensive income (Note 16):
Loss on cash flow hedge in joint ventures			—				—				(274,029	)			—				(274,029	)			(144,433	)			(418,462	)
Foreign currency translation effects			—				—				(511,460	)			—				(511,460	)			311,433				(200,027	)
Actuarial loss on defined benefit plan			—				—				—				—				—				4				4
Change in fair value of financial assets			—				—				27				—				27				13				40
Total comprehensive income for the period			—				—				(785,462	)			748,552				(36,910	)			283,801				246,891
Contributions by and distributions to owners of the Company:
Capital increase in subsidiary			—				—				—				—				—				6,666				6,666
Dividends - non-controlling interests			—				(6,145	)			—				—				(6,145	)			(7,516	)			(13,661	)
Dividends			—				—				—				(134,664	)			(134,664	)			—				(134,664	)
Stock option exercised			—				(12,911	)			—				—				(12,911	)			(6,539	)			(19,450	)
Share-based payment transactions			—				34,233				—				—				34,233				7,423				41,656
Total contributions by and distributions to owners of the Company			—				15,177				—				(134,664	)			(119,487	)			34				(119,453	)
Transactions with owners of the Company
Change of shareholding interest in subsidiary			—				(271,311	)			—				—				(271,311	)			(245,745	)			(517,056	)
Total transactions with shareholders			—				(271,311	)			—				—				(271,311	)			(245,745	)			(517,056	)
At June 30, 2020			5,328				631,031				(1,590,933	)			5,928,731				4,974,157				10,876,706				15,850,863
The accompanying notes are an integral part of these consolidated interim financial statements.

Consolidated statement of changes in equity

(In thousands of Brazilian Reais - R$)

 

		Share capital				Additional  paid-in capital				Accumulated other comprehensive loss				Retained earnings				Equity attributable to owners of the Company				Non-controlling interest				Total equity
At December 31, 2018			5,328				3,112,274				(587,173	)			4,083,974				6,614,403				11,354,953				17,969,356
Adjustment on initial application of IFRS 16, net of tax			—				—				—				(97,971	)			(97,971	)			(377,420	)			(475,391	)
At January 1, 2019			5,328				3,112,274				(587,173	)			3,986,003				6,516,432				10,977,533				17,493,965
Net income for the period			—				—				—				398,617				398,617				538,475				937,092
Other comprehensive income:
Loss on cash flow hedge in joint ventures			—				—				(91,541	)			—				(91,541	)			(60,379	)			(151,920	)
Foreign currency translation effects			—				—				(24,827	)			—				(24,827	)			(27,419	)			(52,246	)
Actuarial loss on defined benefit plan			—				—				—				—				—				(2	)			(2	)
Change in fair value of financial assets			—				—				45				—				45				30				75
Total comprehensive income for the period			—				—				(116,323	)			398,617				282,294				450,705				732,999
Contributions by and distributions to owners of the Company:
Dividends - non-controlling interests			—				(5,667	)			—				—				(5,667	)			5,667				—
Share options exercised - Subsidiaries			—				—				—				—				—				—				—
Dividends			—				—				—				—				—				(12,131	)			(12,131	)
Treasury shares acquired			—				(473,456	)			—				—				(473,456	)			—				(473,456	)
Share-based payment transactions			—				23,502				—				—				23,502				5,587				29,089
Total contributions by and distributions to owners of the Company			—				(455,621	)			—				—				(455,621	)			(877	)			(456,498	)
Transactions with owners of the Company
Change of shareholding interest in subsidiary			—				(639,499	)			—				—				(639,499	)			(939,053	)			(1,578,552	)
At June 30, 2019			5,328				2,017,154				(703,496	)			4,384,620				5,703,606				10,488,308				16,191,914
The accompanying notes are an integral part of these consolidated interim financial statements.

Consolidated statement of cash flows

(In thousands of Brazilian Reais - R$)

 

		Note				June 30, 2020				June 30, 2019 (Restated)
Cash flows from operating activities
Profit before taxes							1,006,595				1,286,333
Adjustments for:
Depreciation and amortization							1,244,856				1,118,126
Lease and concession							(348,319	)			—
Interest in earnings of associates			8.1				(10,420	)			22,112
Interest in earnings of joint ventures			9				29,808				(362,243	)
Loss on disposals assets							2,309				7,346
Share-based payment							35,501				30,091
Legal proceedings provision							64,101				64,739
Indexation charges, interest and exchange, net							656,039				912,844
Sectorial financial assets and liabilities			12				101,812				—
Deferred revenue							(3,162	)			(5,080	)
Provisions for employee benefits							64,999				104,351
Allowance for doubtful accounts							67,699				(6,786	)
Contractual obligations for sales of credit rights			20				68,311				—
Gas paid and not used							—				(91,821	)
Recovering tax credits			20				(18,062	)			(48,285	)
Other							11,048				(45,801	)
							2,973,115				2,985,926
Changes in:
Trade receivables							181,313				(450,877	)
Inventories							(40,621	)			(99,728	)
Other current tax, net							(59,623	)			132,276
Income tax							(603,065	)			(120,840	)
Related parties, net							(36,252	)			4,578
Trade payables							4,608				173,007
Employee benefits							(151,381	)			(150,718	)
Provision for legal proceedings							(59,183	)			(59,298	)
Other financial liabilities							(213,886	)			(67,244	)
Judicial deposits							(7,636	)			(36,295	)
Discontinued operation			25				—				1,377
Contractual obligations for sales of credit rights			20				(1,278	)			—
Post-employment benefits							(17,885	)			(16,645	)
Gas paid and not used							—				161,463
Concessions payable							—				(7,730	)
Other assets and liabilities, net							(190,201	)			(250,357	)
							(1,195,090	)			(787,031	)
Net cash (used in) generated by operating activities							1,778,025				2,198,895
Cash flows from investing activities
Capital contribution in associates			8.1				(1,142	)			(26,045	)
Acquisition of subsidiary, net of cash acquired in consolidated			8.2				(90,247	)			(8,785	)
Sale (purchase) of marketable securities							497,553				2,071,851

 

Consolidated statement of cash flows

(In thousands of Brazilian Reais - R$)

 

Restricted cash							112,954				(52,818	)
Dividends received from associates							6,274				8,246
Dividends received from joint ventures							—				688,120
Other financial assets							9				—
Acquisition of property, plant and equipment, intangible assets and contract assets							(1,791,888	)			(1,315,448	)
Net cash from sale of discontinued operations			25				—				1,108
Discontinued operation							(22,586	)			—
Cash received on sale of fixed assets, and intangible assets							—				8,028
Net cash generated (used) in investing activities							(1,289,073	)			1,374,257
Cash flows from financing activities
Loans, borrowings and debentures raised			5.5				5,511,144				3,019,872
Repayment of principal on loans, borrowings and debentures			5.5				(2,413,001	)			(1,801,878	)
Payment of interest on loans, borrowings and debentures			5.5				(736,372	)			(614,254	)
Payment of derivative financial instruments							(39,856	)			(93,007	)
Receipt of derivative financial instruments							619,595				137,171
Payment of derivative financial instruments, except debt							(101,461	)			—
Receipt of derivative financial instruments, except debt							106,519				—
Payment of principal on leases			5.6				(184,578	)			(108,214	)
Payment of interest on leases			5.6				(254,651	)			(85,255	)
Equity contribution from non-controlling interest			8.3				75,000				434,000
Equity contribution from shareholders interest			8.3				6,666				—
Payments to redeem entity's shares							(318,828	)			(473,456	)
Non-controlling interest subscription							—				1,192
Acquisition of non-controlling interests							(269,977	)			(2,141,675	)
Dividends paid							(341,417	)			(171,945	)
Dividends paid - Preferential shares							(174,227	)			(242,965	)
Receipts of consideration assets			8.1				65,478				—
Discontinued operation			25				—				(10,702	)
Share options exercised							(20,431	)			—
Net cash used in financing activities							1,529,603				(2,151,116	)
Decrease (increase) in cash and cash equivalents							2,018,555				1,422,036
Cash and cash equivalents at beginning of period							8,472,274				3,621,798
Effect of exchange rate fluctuations on cash held							462,797				(41,071	)
Cash and cash equivalents at end of period							10,953,626				5,002,763
Additional information
Income tax paid							539,604				115,554
The accompanying notes are an integral part of these interim financial statements.
1 For details on this restated, see Note 25.

Consolidated statement of cash flows

(In thousands of Brazilian Reais - R$)

 

 

Non-cash transaction

 

i.

At the Cosan Logística subsidiary, provision was made for social security tax assets related to the recovery of credits on the salary limit for contributions on behalf of third parties and taxation of the co-participation expenses of health plans, food vouchers and transportation vouchers, in the amount of R$ 20,022, of the of which R$ 18,062 (Note 20) are recorded under the heading “Recovering tax credits” and R$ 2,014 as “Interest, monetary and exchange variations, net”.

 

ii.

Acquisition of assets for construction of the distribution network with payment in installments in the amount of R$ 24,894, (R$ 60,493 on June 30, 2019).

 

iii.

Contribution of Comgás assets and liabilities, as detailed in note 8.2;

 

 

iv.

Refinancing of some debts with BNDES.

 

v.

Capital contribution in the subsidiary Payly Soluções de Payments S.A. (“Payly”) in the amount of R$ 10,000, through the capitalization of reimbursable expenses.

 

vi.

Recognition of interest on equity decided by the Raízen Combustíveis S.A. in the amount of R$ 37,500

 

 

vii.

Recognition of contractual obligations for sales of credit rights, in the amount of R$ 68,311 (Note 20).

 

viii.

Registration of rights of use in the amount of R$ 3,434,832 related to new contracts covered by the lease (Note 5.6).

 

ix.

In the period ended June 30, 2020, the subsidiary controlled by Compass, Comgás, recorded the net sectoral financial liability balance of (R$ 92,747) against net sales (Note 18) and costs and expenses by nature (Note 19).

 

Disclosure of interest and dividends

 

The Company discloses the dividends and interest on shareholders' equity received as cash flow from investing activities.

 

Interest received or paid is classified as cash flow in financing activities.

 

1 Operations

 

Cosan Limited (“Cosan”) was incorporated in Bermuda on April 30, 2007. Cosan’s class A common shares are traded on the New York Stock Exchange, or “NYSE,” (ticker—CZZ). Mr. Rubens Ometto Silveira Mello is the ultimate controlling shareholder of Cosan. Cosan controls its subsidiaries Cosan S.A. and Cosan Logística S.A. (“Cosan Logística”) through a 66.28% and 73.49% interest, respectively. Cosan, Cosan S.A., Cosan Logística and its subsidiaries are collectively referred to as the “Company.”

 

On January 14, 2020, the subsidiary Cosan S.A. contributed to the share capital of the subsidiary Compass Gás e Energia S.A. (“Compass Gás e Energia”), the totality of the shares it held in Companhia de Gás de São Paulo - COMGÁS (“Comgás” ), that is, 103,699,333 common shares and 27,682,044 preferred shares equivalent to 99.15% of the share capital, for the amount of R$ 2,861,936. Contributed shareholders' equity was that of December 31, 2019 and, therefore, as of January 1, 2020, Compass Gás e Energia became the holder of its control.

 

On January 30, 2020, the Company acquired, through its subsidiary Comercializadora de Gás S.A. (“Comercialização”), control of Black River Participações Ltda. (“Black River”), Compass Comercializadora de Energia Ltda., Compass Geração Ltda. and Compass Energia Ltda. jointly called “Compass Trading” for an amount equivalent to R$ 95,000. The purpose of the investment is to enter the electricity trading business.

 

On March 9, 2020, Cosan S.A. announced the creation of the “Gas and Energy” segment. This segment will integrate the operations of Comgás, TRSP - LNG Regasification Terminal of São Paulo S.A. (“TRSP”), Rota 4 Participações S.A. (“Rota 4”) and Compass Trading. Our new gas and energy segment will be the vehicle through which we will develop the activities of (i) distribution of piped natural gas in part of the State of São Paulo to customers in the industrial, residential, commercial, automotive and cogeneration sectors; (ii) sale of electricity and natural gas; (iii) infrastructure in a regasification terminal and offshore flow pipeline; and (iv) thermal generation through natural gas.

 

 

Cybersecurity Incident

 

On March 11, 2020, the Company, its subsidiaries, jointly controlled and affiliated companies were subject to a ransomware cyberattack that caused a partial and temporary interruption of its operations. The affected entities within our group implemented their contingency plans, continued operating partially during the cyberattack, and have been progressively reconnecting their operating systems since the attack.

 

Following the incident, we have taken certain additional preventative measures to reduce cyber risks, including engaging a company to carry out a forensic analysis of the cyberattack we suffered, which affected the data center located at our Shared Service Center as well as user desktops and laptops connected to our network. Based on the experience and tools of the company we engaged, interviews with our information technology personnel and technical evidence present in the environment, we identified a number of servers to be examined in more detail. Although the entrance vector of the cyber-attack could not be identified, the process and characteristics of the cyber-attack could be satisfactorily identified. We believe this will assist us in reviewing our information technology systems to prevent further cyber-attacks.

 

Until June 30, 2020, Cosan Group companies had spent R$ 7,595 in relation to the cyber attack, including the costs of prevention, detection, response and management, implementation of additional cybersecurity technologies and hiring of specialized labor.

 

Renewal of Malha Paulista’s concession

 

On May 27, 2020, Cosan Logística, through its subsidiary Rumo Malha Paulista, celebrated with the union through the regulatory agency, the National Land Transportation Agency (ANTT), the 2nd amendment to the Rumo Malha Paulista Concession Agreement. The amendment was reviewed and authorized by the TCU - Federal Audit Court according to the order of May 20, 2020, a statement issued under TC 009.032 / 2016-9. As a result, the concession term for Malha Paulista was extended until 2058, through a series of financial commitments, in addition to the operational obligations stipulated in the renewal amendment:

·

Payment of an additional grant in the amount of R$ 3,382,030, which is divided into quarterly installments over the term of the contract;

·

Resumption of payment of the lease and concession of the original contract, quarterly payments that extend until December 2028;

·

Payment of the remaining balance of the meeting of accounts related to the economic imbalance action, in the amount of R$ 1,347,609, in eight annual installments;

·

Execution of a set of investment projects to increase capacity and reduce urban conflicts, estimated by the agency at R$ 6,100,000 (updated value until December 2017).

 

The extension of the concession of Rumo Malha Paulista fits as a relevant amendment to a contract registered in accordance with the provisions of IFRS 16. In this context, the present value of the additional grant, as well as the variation of the pre-existing lease due to the recalculation at the rate of implicit interest of the addendum (regulatory WACC), were recorded in lease liabilities against the corresponding use rights asset. In addition, future investments related to the concession contract will be recorded in property, plant and equipment as incurred.

 

Covid-19

 

On March 11, 2020, the World Health Organization officially declared this Covid-19 outbreak a pandemic. Our business has been and will continue to be adversely affected by the coronavirus pandemic and, as a consequence, some of our businesses decided to suspend the guidance for 2020.

The Company implemented a contingency plan with the objective of preserving the health and integrity of its employees and partners, in addition to ensuring the safety and continuity of operations considered essential activities, as it is a strategic input in hospitals, safety, food and energy.

Despite the measures taken to curb the progress of Covid-19 and the aid measures announced by governments worldwide, including the Brazilian government, to date, we cannot predict the extent, duration and impacts of these containment measures. or the results of aid measures in the countries where we operate and / or sell our products. Based on the information available, the main assessments and, where applicable, the main effects of the Covid-19 pandemic on our results of operations are:

a)

Government assistance measures

 

Several measures of economic and financial assistance were introduced by the federal entities, with the objective of assisting companies in mitigating the effects of the pandemic, with emphasis on the following, which were adopted by the companies of the Group:

i.

Ordinance of the Ministry of Economy No. 139 and No. 150 postponed the term for collecting the following federal taxes, due to the COVID-19 pandemic. The (a) Social contributions due by employers and domestic employers related to March and April, 2020 should be paid in August and October, 2020, respectively; and (b) PIS/PASEP and COFINS contributions regarding March and April, 2020 were also postponed to August and October, 2020, respectively.

ii.

Provisional Measure No. 927 suspended the enforceability of the FGTS payments by employers concerning March, April and May of 2020, with maturity in April, May and June, respectively, which can be paid as from July in up to six installments.

iii.

Provisional Measure No. 932. The Provisional Measure No. 932 reduces, until June 30, 2020, the rates of contributions to autonomous social services. The reductions were different for each entity that belongs to autonomous social services, varying from 0.05% to 1.25%.

iv.

Federal Decree No. 10,305. The Federal Decree No. 10,305 reduces to zero the tax on financial transactions (Imposto sobre Operações Financeiras), or “IOF,” applicable to credit transactions contracted between April 3 and July 3, 2020.

 

v.

Ordinance of the Ministry of Economy No. 201. Ordinance No. 201 extended the maturity date of the monthly installments related to the installment programs administered by the Special Secretariat of the Federal Revenue of Brazil (Receita Federal do Brasil), or “RFB,” and by the National Treasury Attorney's Office (Procuradoria-Geral da Fazenda Nacional), or “PGFN.” As a result, the installments due in May, June and July 2020 are extended until the last business day of August, October and December 2020, respectively.

vi.

Commitment signed between Comgás and the Government of the State of São Paulo to maintain the supply of gas to defaulting customers until July 31, 2020.

 

b)     Impact on interim financial statements

 

The Company ended the period ended June 30, 2020 with cash of R$10,953,572, positive net working capital of R$ 8,188,145 and a profit of R$ 865,336 million.

In order to preventively reinforce the liquidity level during this period of high volatility, in March to June 2020, financing lines were contracted and used with financial institutions in the amount of R$ 7,697,300, (R$ 2,276,000 contracted by joint ventures) without any financial covenant clauses. Considering the current level of liquidity, the additional initiatives mentioned above, other lines of credit under negotiation and the prospects for the short and medium term, the Company does not foresee a material impairment of its operational and financial capacity that could affect the Company's continuity.

Our covenants are assessed monthly for our need to generate sufficient cash flows to meet indebtedness and our ability to meet the covenants contained in the contracts that govern our indebtedness. As of June 30, 2020, the Company's leverage (gross debt / pro forma EBITDA) was 2.48x (2.3x as of December 31, 2019). As of June 30, 2020, the Company and its subsidiaries have been complying with all restrictive financial clauses.

Amid high market volatility, the Company believes that, at that moment, there will be a shift in cash flow between the months with circulation restrictions for the following months. Additionally, considering the low level of interest rates in Brazil and in the locations of our subsidiaries, we believe that despite the short-term fluctuations in some macroeconomic assumptions due to the impacts of the Covid-19 pandemic, our weighted average cost of capital should not change materials.

The Company assessed the circumstances that could indicate the impairment of its non-financial assets and concluded that there were no changes in the circumstances that would indicate an impairment loss. Therefore, the main long-term assumptions applied in the preparation of the cash flow models remain unchanged for the assessment of the impairment indicator. As a conclusion, it was verified that the discounted cash flows when compared to the book value of each segment, would result in a recoverable value higher than the book value. Our tax recovery projections are based on the same scenarios and assumptions above.

Losses due to the non-recoverability of financial assets were calculated based on the credit risk analysis, which includes the history of losses, the individual situation of customers, the situation of the economic group to which they belong, the real guarantees for debts and macroeconomic indicators. , and is considered, on June 30, 2020, sufficient to cover possible losses on the amounts receivable, in addition to a prospective assessment that takes into account the change or expected change in economic factors that affect the expected credit losses, which will be determined based on weighted probabilities and measured at an amount equal to the expected credit loss for life.

The maximum exposure to the Company's credit risk, net of losses due to the non-recoverability of financial assets, is the value of accounts receivable. The credit quality of accounts receivable falling due is considered adequate, and the amount of the effective risk of possible losses in accounts receivable from customers is presented as losses due to the non-recoverability of financial assets. Other counterparty credit risks for cash and cash equivalents, marketable securities, restricted cash and derivative financial instruments are determined by rating agencies widely accepted by the market. Balances are allocated to institutions with a minimum grade of “A”. As of June 30, 2020, there was no deterioration in credit risk in these counterparties.

The Company will continue, throughout 2020, its constant monitoring of the market seeking to identify any deterioration, significant drop in demand from the sectors in which we operate, relevant changes in the economy or financial market that lead to an increase in the perception of credit risk on accounts a receive from customers. Eventual changes that deteriorate the economic and business environment, if manifested at a greater intensity than anticipated in the scenarios evaluated by the Company, may result in an additional expected credit loss recognition.

Inventories are valued based on the loweer of the historical acquisition or production cost and the net realizable value. The Company uses the estimated sale price in the normal course of business to estimate the net realizable value, therefore, a decline in the level of activity in the domestic or international markets in which the Company operates, as a result of the Covid-19 pandemic and measures to contain it, can affect the demand and price of these products and have an adverse effect on the realizable value of inventories. As our inventories are substantially comprised of lubricants, basic oil and materials for the construction of gas pipelines that are products that are not valid or have a long duration, we have identified any indicators of impairment.

To date, there have been no changes in the scope of the Company's leases, no adjustments to the right of use, including adding or terminating the right to use one or more underlying assets, or extending or reducing the term of the contractual lease. We also believe that there has been no change in the consideration for the leases that we are both lessees and lessors.

 

2 Statement of compliance

 

The consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB). They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company’s financial position and performance since the last annual consolidated financial statements as at and for the period ended June 30, 2020.

 

 

These interim financial statements were prepared following the basis of preparation and accounting policies consistent with those adopted in the preparation of the financial statements of December 31, 2019 and should be read together.

 

The information in the explanatory notes that have not undergone significant changes compared to December 31, 2019 has not been fully presented in this quarterly information.

 

On December 2, 2019, Cosan S.A. sold its shares in Cosan Biomassa S.A. to Raízen Energia S.A.. The comparative consolidated statement of profit or loss and statements of cash flows have been restated to show the discontinued operation separately from continuing operations (See Note 25).

 

These consolidated financial statements were authorized for issue by the Board of Directors on August 07, 2020.

 

3 Accounting policies

 

These interim consolidated financial statements were prepared based on the preparation basis and accounting policies consistent with those adopted in the preparation of the financial statements as of December 31, 2019. All balances have been rounded to the nearest thousand, except where otherwise indicated.

 

 

4 Segment information

 

Segment information is used by the Company's top management (the Chief Operating Decision Maker) to assess the performance of the operating segments and make decisions regarding the allocation of resources. This information is prepared in a manner consistent with the accounting policies used in the preparation of the financial statements. The Company evaluates the performance of its operating segments based on earnings before interest, depreciation and amortization (“EBITDA - Earnings before interest, taxes, depreciation, and amortization”).

 

Reported segments:

 

i.

Raízen Energia: production and marketing of a variety of products derived from sugar cane, including raw sugar (Very High Polarization, or “VHP”), anhydrous and hydrated ethanol, and activities related to energy cogeneration from sugarcane bagasse. In addition, this segment holds interests in companies engaged in research and development on new technology;

 

ii.

Raízen Combustíveis: distribution and marketing of fuels, mainly through a franchised network of service stations under the “Shell” brand throughout Brazil, petroleum refining, the operation of fuel resellers, a convenience store business, the manufacture and sale of automotive and industrial lubricants, and the production and sale of liquefied petroleum gas throughout Argentina;

 

iii.

Gas and Energy: its main activities are: (i) distribution of piped natural gas in part of the State of São Paulo to customers in the industrial, residential, commercial, automotive and cogeneration sectors; and (ii) commercialization of electricity, comprising the purchase and sale of electricity to other traders, to consumers who have a free choice of supplier and to other agents permitted by law.

 

iv.

Logistics: logistics services for rail transportation, storage and port loading of commodities, mainly for grains and sugar, leasing of locomotives, wagons and another railway equipment;

 

 

v.

Moove: production and distribution of lubricants under the Mobil brand in Brazil, Argentina, Bolivia, Uruguay, Paraguay, the United States of America and Europe, as well as in the European and Asian markets under the “Comma” trademark and corporate activities;

 

Reconciliation:

 

i.

Cosan Corporate: digital wallet platform and other investments, in addition to the corporate activities of the Company. The Cosan corporate segment includes the financing subsidiaries for the Cosan group.

 

Although Raízen Energia and Raízen Combustíveis are joint ventures recorded under the equity method and are no longer proportionally consolidated, Management continues to review the information by segment. The reconciliation of these segments is shown in the “Deconsolidated effects” column.

 

 

		April 1, 2020 to June 30, 2020
		Reported segments																								Reconciliation												Consolidated
		Raízen Energia				Raízen Combustíveis								Gas and Energy				Moove				Logistics				Cosan Corporate				Deconsolidated effects				Segment elimination
						Brazil				Argentina
Statement of profit or loss:
Gross sales			5,293,288				14,346,684				2,738,951				2,552,575				1,017,223				1,925,826				228				(22,378,923	)			(9,881	)			5,485,971
Domestic market (i)			4,023,825				14,346,684				2,738,951				2,552,575				986,387				1,925,826				228				(21,109,460	)			(9,881	)			5,455,135
External market (i)			1,269,463				—				—				—				30,836				—				—				(1,269,463	)			—				30,836
Net sales			4,993,446				13,751,175				1,791,114				1,559,752				796,866				1,827,960				214				(20,535,735	)			(9,881	)			4,174,911
Cost of sales			(4,505,679	)			(13,432,855	)			(1,982,828	)			(1,033,876	)			(617,878	)			(1,150,885	)			(551	)			19,921,362				9,881				(2,793,309	)
Gross profit			487,767				318,320				(191,714	)			525,876				178,988				677,075				(337	)			(614,373	)			—				1,381,602
Selling expenses			(167,878	)			(326,632	)			(165,421	)			(202,166	)			(104,256	)			(8,169	)			(422	)			659,931				—				(315,013	)
General and administrative expenses			(162,586	)			(105,013	)			(41,386	)			(107,140	)			(57,172	)			(86,130	)			(66,046	)			308,985				—				(316,488	)
Other income (expenses), net			(28,916	)			53,329				24,189				29,677				688				205,683				(21,591	)			(48,602	)			—				214,457
Interest in earnings of associates			—				(275,205	)			—				3				—				4,264				71,487				275,205				(68,574	)			7,180
Interest in earnings of joint ventures			(82,759	)			518				—				—				—				—				(221,151	)			82,241				—				(221,151	)
Finance results, net			(178,825	)			(49,579	)			(4,604	)			(45,256	)			(30,977	)			(201,031	)			62,578				233,008				—				(214,686	)
Finance expense			(463,470	)			(95,977	)			(47,768	)			(83,117	)			(7,653	)			(452,400	)			(212,490	)			607,215				—				(755,660	)
Finance income			90,918				47,470				2,218				68,999				6,782				42,217				(56,869	)			(140,606	)			—				61,129
Foreign exchange, net			(131,889	)			(657,122	)			50,386				(48,507	)			(41,827	)			(389,353	)			(286,671	)			738,625				—				(766,358	)
Derivatives			325,616				656,050				(9,440	)			17,369				11,721				598,505				618,608				(972,226	)			—				1,246,203
Income tax (expense)benefit			29,228				48,245				103,731				(70,122	)			(905	)			(185,182	)			60,166				(181,204	)			—				(196,043	)
Profit for the period			(103,969	)			(336,017	)			(275,205	)			130,872				(13,634	)			406,510				(115,316	)			715,191				(68,574	)			339,858
Profit (loss) attributable to:
Owners of the Company			(106,647	)			(335,679	)			(275,205	)			128,408				(10,001	)			86,104				(113,856	)			717,531				11,244				101,899
Non-controlling interests			2,678				(338	)			—				2,464				(3,633	)			320,406				(1,460	)			(2,340	)			(79,818	)			237,959
			(103,969	)			(336,017	)			(275,205	)			130,872				(13,634	)			406,510				(115,316	)			715,191				(68,574	)			339,858
Other select data
Depreciation and amortization			618,630				73,766				172,773				119,518				26,221				532,028				3,963				(865,169	)			—				681,730
EBITDA			664,258				(260,917	)			(201,559	)			365,768				44,469				1,324,751				(234,097	)			(201,782	)			(68,574	)			1,432,317
Additions to PP&E, intangible and Contracts assets			574,010				54,912				55,627				234,702				7,219				722,215				7,388				(684,549	)			—				971,524
Reconciliation of EBITDA
Profit (loss) for the period			(103,969	)			(336,017	)			(275,205	)			130,872				(13,634	)			406,510				(115,316	)			715,191				(68,574	)			339,858
Income tax and (expense) benefit			(29,228	)			(48,245	)			(103,731	)			70,122				905				185,182				(60,166	)			181,204				—				196,043
Finance results, net			178,825				49,579				4,604				45,256				30,977				201,031				(62,578	)			(233,008	)			—				214,686
Depreciation and amortization			618,630				73,766				172,773				119,518				26,221				532,028				3,963				(865,169	)			—				681,730
EBITDA			664,258				(260,917	)			(201,559	)			365,768				44,469				1,324,751				(234,097	)			(201,782	)			(68,574	)			1,432,317

 

 

 

		January 1, 2020 to June 30, 2020
		Reported segments																								Reconciliation												Consolidated
		Raízen Energia				Raízen Combustíveis								Gas and Energy				Moove				Logistics				Cosan Corporate				Deconsolidated effects				Segment elimination
						Brazil				Argentina
Statement of profit or loss:
Gross sales			14,748,306				35,957,615				6,926,719				5,651,450				2,331,065				3,424,177				328				(57,632,640	)			(17,542	)			11,389,478
Domestic market (i)			8,934,768				35,957,615				6,926,719				5,651,450				2,247,093				3,424,177				328				(51,819,102	)			(17,542	)			11,305,506
External market (i)			5,813,538				—				—				—				83,972				—				—				(5,813,538	)			—				83,972
Net sales			13,988,779				34,288,848				4,777,566				4,035,097				1,828,033				3,251,524				305				(53,055,193	)			(17,542	)			9,097,417
Cost of sales			(12,685,462	)			(33,177,384	)			(4,715,762	)			(2,714,337	)			(1,422,616	)			(2,222,053	)			(2,056	)			50,578,608				17,542				(6,343,520	)
Gross profit			1,303,317				1,111,464				61,804				1,320,760				405,417				1,029,471				(1,751	)			(2,476,585	)			—				2,753,897
Selling expenses			(377,123	)			(695,473	)			(356,180	)			(360,994	)			(223,879	)			(17,321	)			(1,424	)			1,428,776				—				(603,618	)
General and administrative expenses			(307,048	)			(232,071	)			(78,634	)			(192,808	)			(103,842	)			(184,565	)			(130,592	)			617,753				—				(611,807	)
Other income (expenses), net			240,905				166,371				48,678				40,364				29,028				113,781				(96,578	)			(455,954	)			—				86,595
Interest in earnings of associates			—				(288,511	)			—				8				—				6,684				540,206				288,511				(536,478	)			10,420
Interest in earnings of joint ventures			(87,097	)			967				—				—				—				—				(29,808	)			86,130				—				(29,808	)
Finance results, net			(514,835	)			(214,724	)			(56,277	)			(45,852	)			(70,017	)			(731,696	)			248,480				785,836				—				(599,085	)
Finance expense			(691,550	)			(374,478	)			(71,543	)			(172,598	)			(15,765	)			(1,792,512	)			(1,002,419	)			1,137,571				—				(2,983,294	)
Finance income			188,250				122,628				9,709				124,617				16,769				78,660				161,016				(320,587	)			—				381,062
Foreign exchange, net			(740,100	)			(3,536,461	)			19,662				(199,787	)			(115,840	)			(1,965,117	)			(1,687,054	)			4,256,899				—				(3,967,798	)
Derivatives			728,565				3,573,587				(14,105	)			201,916				44,819				2,947,273				2,776,937				(4,288,047	)			—				5,970,945
Income tax (expense)benefit			(80,004	)			(48,315	)			92,098				(253,018	)			(14,516	)			(86,351	)			212,627				36,221				—				(141,258	)
Profit for the period			178,115				(200,292	)			(288,511	)			508,460				22,191				130,003				741,160				310,688				(536,478	)			865,336
Profit (loss) attributable to:
Owners of the Company			137,736				(198,395	)			(288,511	)			500,604				15,284				27,060				741,108				349,170				(535,304	)			748,752
Non-controlling interests			40,379				(1,897	)			—				7,856				6,907				102,943				52				(38,482	)			(1,174	)			116,584
			178,115				(200,292	)			(288,511	)			508,460				22,191				130,003				741,160				310,688				(536,478	)			865,336
Other select data
Depreciation and amortization			1,816,150				151,987				315,357				236,280				49,690				951,213				7,673				(2,283,494	)			—				1,244,856
EBITDA			2,589,104				214,734				(8,975	)			1,043,610				156,414				1,899,263				287,726				(2,794,863	)			(536,478	)			2,850,535
Additions to PP&E, intangible and Contracts assets			1,642,320				129,834				142,999				485,460				10,359				1,283,310				12,759				(1,915,153	)			—				1,791,888
Reconciliation of EBITDA
Profit (loss) for the period			178,115				(200,292	)			(288,511	)			508,460				22,191				130,003				741,160				310,688				(536,478	)			865,336
Income tax and (expense) benefit			80,004				48,315				(92,098	)			253,018				14,516				86,351				(212,627	)			(36,221	)			—				141,258
Finance results, net			514,835				214,724				56,277				45,852				70,017				731,696				(248,480	)			(785,836	)			—				599,085
Depreciation and amortization			1,816,150				151,987				315,357				236,280				49,690				951,213				7,673				(2,283,494	)			—				1,244,856
EBITDA			2,589,104				214,734				(8,975	)			1,043,610				156,414				1,899,263				287,726				(2,794,863	)			(536,478	)			2,850,535

 

(i) Domestic markets: sales within the countries where each entity is located; external markets: sales export.

 

 

		April 1, 2019 to June 30, 2019
		Reported segments																								Reconciliation												Consolidated
		Raízen Energia				Raízen Combustíveis								Gas and Energy				Moove				Logistics				Cosan Corporate				Deconsolidated effects				Segment elimination
						Brazil				Argentina
Statement of profit or loss:
Gross sales			6,414,950				23,106,912				4,361,663				2,956,167				1,255,566				1,821,590				—				(33,883,525	)			828				6,034,151
Domestic market (i)			5,322,458				23,106,912				4,361,663				2,956,167				1,239,762				1,821,590				—				(32,791,033	)			828				6,018,347
External market (i)			1,092,492				—				—				—				15,804				—				—				(1,092,492	)			—				15,804
Net sales			6,084,101				22,026,216				3,084,782				2,338,800				1,004,483				1,728,740				—				(31,195,099	)			828				5,072,851
Cost of sales			(5,690,189	)			(21,209,525	)			(2,806,390	)			(1,550,871	)			(784,921	)			(1,140,694	)			(1	)			29,706,104				(828	)			(3,477,315	)
Gross profit			393,912				816,691				278,392				787,929				219,562				588,046				(1	)			(1,488,995	)			—				1,595,536
Selling expenses			(172,208	)			(386,104	)			(166,731	)			(152,088	)			(120,743	)			7,258				(2,329	)			725,043				—				(267,902	)
General and administrative expenses			(150,989	)			(121,047	)			(31,390	)			(89,503	)			(39,713	)			(88,385	)			(64,169	)			303,426				—				(281,770	)
Other income (expenses), net			423				117,241				28,825				17,450				(972	)			(5,489	)			(3,914	)			(146,489	)			—				7,075
Interest in earnings of associates			—				51,242				—				—				(774	)			3,825				655,127				(51,242	)			(652,174	)			6,004
Interest in earnings of joint ventures			(8,947	)			—				—				—				—				—				58,410				8,947				—				58,410
Finance results, net			(243,951	)			(106,568	)			(19,125	)			(36,898	)			13,049				(258,617	)			(32,079	)			369,644				—				(314,545	)
Finance expense			(443,947	)			(295,372	)			(14,614	)			(100,418	)			(15,793	)			(624,910	)			(379,645	)			753,933				—				(1,120,766	)
Finance income			122,308				89,958				7,106				63,480				14,647				45,354				68,142				(219,372	)			—				191,623
Foreign exchange, net			27,268				127,255				21,498				9,232				20,685				86,300				61,268				(176,021	)			—				177,485
Derivatives			50,420				(28,409	)			(33,115	)			(9,192	)			(6,490	)			234,639				218,156				11,104				—				437,113
Income tax (expense)benefit			56,939				(94,478	)			(38,729	)			(180,473	)			(17,560	)			(61,621	)			2,278				76,268				—				(257,376	)
Profit (loss) from continuing operations			(124,821	)			276,977				51,242				346,417				52,849				185,017				613,323				(203,398	)			(652,174	)			545,432
Loss from discontinued operations			—				—				—				—				—				—				(4,769	)			—				—				(4,769	)
Profit (loss) attributable to:
Owners of the Company			(138,456	)			262,621				51,242				335,897				36,302				50,751				606,418				(175,407	)			(820,967	)			208,401
Non-controlling interests			13,635				14,356				—				10,520				16,547				134,266				2,136				(27,991	)			168,793				332,262
			(124,821	)			276,977				51,242				346,417				52,849				185,017				608,554				(203,398	)			(652,174	)			540,663
Other select data
Depreciation and amortization			626,195				67,620				119,623				115,211				20,597				416,978				3,368				(813,438	)			—				556,154
EBITDA			688,386				545,643				228,719				678,999				77,957				922,233				646,492				(1,462,748	)			(652,174	)			1,673,507
Additions to PP&E, intangible and Contracts assets			629,734				66,391				145,082				174,205				6,119				438,729				2,787				(841,207	)			—				621,840
Reconciliation of EBITDA
Profit (loss) for the period, continuing operations			(124,821	)			276,977				51,242				346,417				52,849				185,017				613,323				(203,398	)			(652,174	)			545,432
Income tax and (expense) benefit			(56,939	)			94,478				38,729				180,473				17,560				61,621				(2,278	)			(76,268	)			—				257,376
Finance results, net			243,951				106,568				19,125				36,898				(13,049	)			258,617				32,079				(369,644	)			—				314,545
Depreciation and amortization			626,195				67,620				119,623				115,211				20,597				416,978				3,368				(813,438	)			—				556,154
EBITDA			688,386				545,643				228,719				678,999				77,957				922,233				646,492				(1,462,748	)			(652,174	)			1,673,507

 

 

		January 1, 2019 to June 30, 2019
		Reported segments																								Reconciliation												Consolidated
		Raízen Energia				Raízen Combustíveis								Gas and Energy				Moove				Logistics				Cosan Corporate				Deconsolidated effects				Segment elimination
						Brazil				Argentina
Statement of profit or loss:
Gross sales			13,975,948				44,180,317				8,752,357				5,563,600				2,537,914				3,544,027				3				(66,908,622	)			(8,604	)			11,636,940
Domestic market (i)			11,071,665				44,180,317				8,752,357				5,563,600				2,512,321				3,544,027				3				(64,004,339	)			(8,604	)			11,611,347
External market (i)			2,904,283				—				—				—				25,593				—				—				(2,904,283	)			—				25,593
Net sales			13,204,129				42,059,356				6,212,905				4,398,851				2,038,823				3,363,686				2				(61,476,390	)			(8,604	)			9,792,758
Cost of sales			(12,341,464	)			(40,329,972	)			(5,585,410	)			(3,049,798	)			(1,611,279	)			(2,294,168	)			(1	)			58,256,846				8,604				(6,946,642	)
Gross profit			862,665				1,729,384				627,495				1,349,053				427,544				1,069,518				1				(3,219,544	)			—				2,846,116
Selling expenses			(407,658	)			(729,049	)			(330,344	)			(301,326	)			(232,767	)			4,416				(2,355	)			1,467,051				—				(532,032	)
General and administrative expenses			(275,426	)			(251,744	)			(63,264	)			(173,110	)			(77,356	)			(171,610	)			(117,658	)			590,434				—				(539,734	)
Other income (expenses), net			48,453				377,873				48,830				20,919				72				(27,015	)			11,812				(475,156	)			—				5,788
Interest in earnings of associates			—				161,986				—				—				951				8,575				1,017,766				(161,986	)			(1,049,404	)			(22,112	)
Interest in earnings of joint ventures			(4,258	)			1				1				—				—				—				362,243				4,256				—				362,243
Finance results, net			(399,001	)			(72,700	)			(124,033	)			(89,375	)			9,930				(583,062	)			(171,429	)			595,734				—				(833,936	)
Finance expense			(760,252	)			(472,174	)			(31,905	)			(199,457	)			(26,496	)			(1,060,028	)			(638,820	)			1,264,331				—				(1,924,801	)
Finance income			247,679				151,653				12,379				110,114				18,156				87,229				102,540				(411,711	)			—				318,039
Foreign exchange, net			53,756				185,961				(71,392	)			5,916				11,433				59,355				29,964				(168,325	)			—				106,668
Derivatives			59,816				61,860				(33,115	)			(5,948	)			6,837				330,382				334,887				(88,561	)			—				666,158
Income tax (expense)benefit			63,829				(319,948	)			3,301				(279,805	)			(32,930	)			(89,431	)			63,501				252,818				—				(338,665	)
Profit (loss) from continuing operations			(111,396	)			895,803				161,986				526,356				95,444				211,391				1,163,881				(946,393	)			(1,049,404	)			947,668
Loss from discontinued operations			—				—				—				—				—				—				(10,576	)			—				—				(10,576	)
Profit (loss) attributable to:
Owners of the Company			(125,811	)			860,635				161,986				495,728				65,693				57,730				1,158,280				(896,810	)			(1,378,814	)			398,617
Non-controlling interests			14,415				35,168				—				30,629				29,751				153,661				(4,976	)			(49,583	)			329,410				538,475
			(111,396	)			895,803				161,986				526,357				95,444				211,391				1,153,304				(946,393	)			(1,049,404	)			937,092
Other select data
Depreciation and amortization			1,354,792				150,935				222,153				230,605				41,078				839,432				7,011				(1,727,880	)			—				1,118,126
EBITDA			1,578,568				1,439,386				504,871				1,126,141				159,522				1,723,316				1,278,820				(3,522,825	)			(1,049,404	)			3,238,395
Additions to PP&E, intangible and Contracts assets			1,707,755				139,386				163,562				320,387				9,401				981,337				4,323				(2,010,703	)			—				1,315,448
Reconciliation of EBITDA
Profit (loss) for the period, continuing operations			(111,396	)			895,803				161,986				526,356				95,444				211,391				1,163,881				(946,393	)			(1,049,404	)			947,668
Income tax and (expense) benefit			(63,829	)			319,948				(3,301	)			279,805				32,930				89,431				(63,501	)			(252,818	)			—				338,665
Finance results, net			399,001				72,700				124,033				89,375				(9,930	)			583,062				171,429				(595,734	)			—				833,936
Depreciation and amortization			1,354,792				150,935				222,153				230,605				41,078				839,432				7,011				(1,727,880	)			—				1,118,126
EBITDA			1,578,568				1,439,386				504,871				1,126,141				159,522				1,723,316				1,278,820				(3,522,825	)			(1,049,404	)			3,238,395

 

  

		June 30, 2020
		Reported segments																								Reconciliation												Consolidated
		Raízen Energia				Raízen Combustíveis								Gas and Energy				Moove				Logístics				Cosan Corporate				Deconsolidated effects				Segment elimination
						Brazil				Argentina
Statement of financial position:
Cash and cash equivalents			4,725,142				900,239				338,587				2,435,638				850,984				5,472,459				2,194,491				(5,963,968	)			—				10,953,572
Marketable securities			—				—				—				1,011,180				136,022				404,289				1,107,117				—				—				2,658,608
Trade receivables			1,041,650				1,877,915				277,716				937,810				405,608				481,604				50				(3,197,281	)			—				1,825,072
Derivative financial instruments			5,098,514				3,447,669				—				589,830				64,342				4,577,814				4,337,940				(8,546,183	)			—				9,569,926
Inventories			3,314,212				2,434,004				1,334,341				118,346				471,852				279,195				205				(7,082,557	)			—				869,598
Sectorial financial assets			—				—				—				404,907				—				—				—				—				—				404,907
Other financial assets			489,328				—				—				—				70,375				—				23,268				(489,328	)			—				93,643
Other current assets			4,047,930				3,464,107				962,113				324,087				242,751				648,721				1,164,398				(8,474,150	)			(553,019	)			1,826,938
Other non-current assets			5,515,217				4,176,914				108,577				89,758				250,516				2,552,016				1,360,898				(9,800,708	)			(338,520	)			3,914,668
Investments in associates			—				3,269,149				375				—				350				45,310				13,674,413				(3,269,524	)			(13,345,980	)			374,093
Investments in joint ventures			521,544				739,546				—				—				—				—				7,598,440				(1,261,090	)			—				7,598,440
Biological assets			1,035,981				—				—				—				—				—				—				(1,035,981	)			—				—
Contract asset			—				—				—				710,290				9,092				—				—				—				—				719,382
Right-of-use assets			4,363,427				126,233				539,981				10,614				40,374				7,797,233				35,106				(5,029,641	)			—				7,883,327
Property, plant and equipment			12,386,191				2,553,751				4,287,440				5,797				328,321				12,346,973				78,811				(19,227,382	)			—				12,759,902
Intangible assets and goodwill			3,610,737				2,531,372				11,032				8,468,538				1,259,221				7,317,067				22,587				(6,153,141	)			—				17,067,413
Loans, borrowings and debentures			(18,844,883	)			(7,715,335	)			(1,285,892	)			(7,336,786	)			(881,134	)			(17,878,557	)			(13,380,787	)			27,846,110				—				(39,477,264	)
Derivative financial instruments			(4,049,558	)			(361,956	)			(6,991	)			(8,906	)			(2,671	)			—				(124,402	)			4,418,505				—				(135,979	)
Trade payables			(4,080,912	)			(3,433,845	)			(638,401	)			(1,271,962	)			(524,069	)			(577,816	)			(3,463	)			8,153,158				—				(2,377,310	)
Employee benefits payable			(538,807	)			(138,756	)			(71,319	)			(52,899	)			(59,452	)			(152,043	)			(24,769	)			748,882				—				(289,163	)
Sectorial financial liabilities			—				—				—				(497,054	)			—				—				—				—				—				(497,054	)
Other current liabilities			(3,088,771	)			(2,515,628	)			(1,280,063	)			(440,318	)			(263,789	)			(736,831	)			(540,568	)			6,884,462				64,773				(1,916,733	)
Preferred shareholders payable in subsidiaries			—				—				—				—				—				—				(446,984	)			—				—				(446,984	)
Leases			(3,798,443	)			(135,955	)			(494,126	)			(11,409	)			(43,325	)			(7,908,724	)			(38,497	)			4,428,524				—				(8,001,955	)
Other non-current liabilities			(1,840,973	)			(5,495,402	)			(813,846	)			(2,016,750	)			(535,593	)			(5,912,196	)			(1,888,411	)			8,150,221				826,766				(9,526,184	)
Total assets (net of liabilities) allocated by segment			9,907,526				5,724,022				3,269,524				3,470,711				1,819,775				8,756,514				15,149,843				(18,901,072	)			(13,345,980	)			15,850,863
Total assets			46,149,873				25,520,899				7,860,162				15,106,795				4,129,808				41,922,681				31,597,724				(79,530,934	)			(14,237,519	)			78,519,489
Shareholders' equity attributable to:
Equity attributable to owners of the Company			9,800,838				5,464,994				3,269,524				3,408,949				1,266,602				1,775,657				4,974,157				(18,535,356	)			(6,451,208	)			4,974,157
Non-controlling interests			106,688				259,028				—				61,762				553,173				6,980,857				10,175,686				(365,716	)			(6,894,772	)			10,876,706
Total shareholders' equity			9,907,526				5,724,022				3,269,524				3,470,711				1,819,775				8,756,514				15,149,843				(18,901,072	)			(13,345,980	)			15,850,863

 

 

		December 31, 2019
		Reported segments																								Reconciliation
		Raízen Energia				Raízen Combustíveis								Gas and Energy				Moove				Logistics				Cosan Corporate				Deconsolidated effects				Segment elimination				Consolidated
						Brazil				Argentina
Statement of financial position:
Cash and cash equivalents			2,715,055				1,036,151				266,309				1,083,410				610,605				1,963,018				4,815,241				(4,017,515	)			—				8,472,274
Marketable securities			—				—				—				200,233				43,856				1,751,853				1,119,561				—				—				3,115,503
Trade receivables			1,135,079				2,455,365				442,204				987,397				427,714				399,249				34				(4,032,648	)			—				1,814,394
Derivative financial instruments			2,139,240				911,874				5,165				374,730				17,005				1,624,023				1,808,652				(3,056,279	)			—				3,824,410
Inventories			4,592,428				3,007,893				1,099,632				89,586				449,211				248,456				69				(8,699,953	)			—				787,322
Other financial assets			602,542				—				—				—				134,636				—				17,127				(602,542	)			—				151,763
Other current assets			7,125,332				4,026,776				882,624				315,744				165,070				604,988				1,307,714				(12,034,732	)			(789,267	)			1,604,249
Other non-current assets			4,196,166				4,231,350				62,869				90,662				150,683				2,638,286				1,562,822				(8,490,385	)			(488,227	)			3,954,226
Investments in associates			—				2,612,576				276				—				365				52,012				12,760,443				(2,612,852	)			(12,435,113	)			377,707
Investments in joint ventures			577,008				727,936				—				—				—				—				7,548,960				(1,304,944	)			—				7,548,960
Biological assets			734,495				—				—				—				—				—				—				(734,495	)			—				—
Contract asset			—				—				—				594,602				5,939				—				—				—				—				600,541
Right-of-use assets			4,017,503				97,374				476,251				10,128				22,592				4,410,952				26,058				(4,591,128	)			—				4,469,730
Property, plant and equipment			11,342,326				2,595,878				3,304,040				—				310,007				11,770,168				72,961				(17,242,244	)			—				12,153,136
Intangible assets and goodwill			3,666,186				2,548,927				9,637				8,291,608				1,161,426				7,375,033				15,592				(6,224,750	)			—				16,843,659
Loans, borrowings and debentures			(15,653,705	)			(5,745,735	)			(912,807	)			(5,244,942	)			(670,263	)			(11,720,477	)			(11,416,533	)			22,312,247				—				(29,052,215	)
Derivative financial instruments			(1,422,923	)			(325,018	)			—				—				(1,801	)			(482	)			(78,768	)			1,747,941				—				(81,051	)
Trade payables			(5,101,474	)			(2,568,885	)			(943,789	)			(1,154,206	)			(515,759	)			(513,325	)			(6,974	)			8,614,148				—				(2,190,264	)
Employee benefits payable			(360,414	)			(77,692	)			(48,752	)			(59,928	)			(70,068	)			(216,685	)			(34,656	)			486,858				—				(381,337	)
Other current liabilities			(4,317,609	)			(5,859,807	)			(856,185	)			(683,555	)			(217,706	)			(711,305	)			(1,113,182	)			11,033,601				471,622				(2,254,126	)
Preferred shareholders payable in subsidiaries			—				—				—				—				—				—				(611,537	)			—				—				(611,537	)
Leases			(3,504,501	)			(103,807	)			(439,860	)			(10,843	)			(27,431	)			(4,529,139	)			(27,475	)			4,048,168				—				(4,594,888	)
Other non-current liabilities			(2,046,961	)			(4,492,725	)			(734,762	)			(1,998,107	)			(408,385	)			(6,531,054	)			(2,180,301	)			7,274,448				805,872				(10,311,975	)
Total assets (net of liabilities) allocated by segment			10,435,773				5,078,431				2,612,852				2,886,519				1,587,696				8,615,571				15,585,808				(18,127,056	)			(12,435,113	)			16,240,481
Total assets			42,843,360				24,252,100				6,549,007				12,038,100				3,499,109				32,838,038				31,055,234				(73,644,467	)			(13,712,607	)			65,717,874
Equity attributable to owners of the Company			10,358,052				4,808,076				2,612,852				2,861,954				1,107,137				1,746,668				5,401,864				(17,778,980	)			(5,715,758	)			5,401,865
Non-controlling interests			77,721				270,355				—				24,565				480,559				6,868,903				10,183,944				(348,076	)			(6,719,355	)			10,838,616
Total shareholders’ equity			10,435,773				5,078,431				2,612,852				2,886,519				1,587,696				8,615,571				15,585,808				(18,127,056	)			(12,435,113	)			16,240,481

 

4.1 Net sales by segment

 

		April 1, 2020 to June 30, 2020				January 1, 2020 to June 30, 2020				April 1, 2019 to June 30, 2019 (Restated)				January 1, 2019 to June 30, 2019 (Restated)
Reported segment
Raízen Energia
Ethanol			2,087,864				5,757,665				1,912,101				4,862,646
Sugar			1,085,080				3,387,961				751,317				2,332,914
Gas			196,147				1,020,194				731,409				1,354,939
Diesel			1,095,068				2,607,602				1,736,908				2,936,184
Cogeneration			437,989				1,105,270				911,268				1,647,148
Other			91,298				110,087				41,098				70,298
			4,993,446				13,988,779				6,084,101				13,204,129
Raízen Combustíveis
Fuels			15,350,786				38,591,263				24,745,688				47,551,699
Other			191,503				475,151				365,310				720,562
			15,542,289				39,066,414				25,110,998				48,272,261
Gas and Energy
Distribution of natural gas
Industrial			758,015				2,245,829				1,512,161				2,900,568
Residential			309,596				620,736				308,026				518,953
Cogeneration			55,740				149,935				110,597				214,120
Automotive			26,783				103,078				87,980				167,950
Commercial			36,710				163,022				125,582				229,508
Construction revenue			219,098				416,319				182,114				342,050
Other			8,696				22,289				12,340				25,702
Electricity trading			145,114				313,889				—				—
			1,559,752				4,035,097				2,338,800				4,398,851
Moove
Finished goods			735,814				1,689,164				839,959				1,810,948
Basic oil			36,230				87,624				155,676				212,261
Services			24,822				51,245				8,848				15,614
			796,866				1,828,033				1,004,483				2,038,823
Logistics
North operations			1,383,083				2,468,044				1,283,959				2,523,962
South operations			386,188				654,067				371,811				700,233
Container operations			58,689				129,413				72,970				139,491
			1,827,960				3,251,524				1,728,740				3,363,686
Reconciliation
Cosan Corporate			214				305				—				2
Deconsolidated effects and eliminations			(20,545,616	)			(53,072,735	)			(31,194,271	)			(61,484,994	)
Total			4,174,911				9,097,417				5,072,851				9,792,758

 

 

5 Financial assets and liabilities

 

The carrying amount of financial assets and financial liabilities are as follows:

 

		Note				June 30, 2020				December 31, 2019
Assets
Fair value through profit or loss
Cash and cash equivalents			5.1				2,051,887				3,279,170
Marketable securities			5.2				2,658,608				3,115,503
Other financial assets							93,643				134,637
Derivate financial instruments			5.8				9,569,926				3,824,410
							14,374,064				10,353,720
Amortized cost
Cash and cash equivalents			5.1				8,901,685				5,193,104
Trade receivables			5.3				1,825,072				1,814,394
Restricted cash			5.2				42,672				147,910
Receivables from related parties			5.4				188,336				173,341
Sector financial assets			12				404,907				—
Dividends receivable							57,942				23,252
							11,420,614				7,352,001
Total assets							25,794,678				17,705,721
			Note				June 30, 2020				December 31, 2019
Liabilities
Amortized cost
Loans, borrowings and debentures			5.5				16,250,050				12,682,049
Leases			5.6				8,001,955				4,594,888
Trade payables			5.7				2,377,310				2,190,264
Other financial liabilities							405,798				543,879
Payables to related parties			5.4				399,385				392,458
Preferred shareholders payable in subsidiaries							446,984				611,537
Dividends payable							8,596				214,104
Sector financial liabilities			12				497,054				—
Tax installments - REFIS			13				204,281				213,360
							28,591,413				21,442,539
Fair value through profit or loss
Loans, borrowings and debentures			5.5				23,227,214				16,370,166
Consideration payable							219,362				184,370
Derivative financial instruments			5.8				135,979				81,051
							23,582,555				16,635,587
Total liabilities							52,173,968				38,078,126

 

5.1 Cash and cash equivalents

 

		June 30, 2020				December 31, 2019
Cash and bank accounts			872,518				364,151
Savings account			1,219,980				885,740
Financial investments			8,861,074				7,222,383
			10,953,572				8,472,274

 

Financial investments are composed as follows:

 

		June 30, 2020				December 31, 2019
Investment fund
Repurchase agreements			477,736				2,799,706
Bank certificate of deposits - CDB			1,574,151				479,464
			2,051,887				3,279,170
Bank investments
Repurchase agreements			1,305,833				1,400,735
Bank certificate of deposits - CDB			5,429,059				2,339,058
Other			74,295				203,420
			6,809,187				3,943,213
			8,861,074				7,222,383

 

The Company’s onshore financial investments are remunerated at rates around 97% of the Brazilian interbank offering rate (Certificado de Depósito Interbancário), or “CDI,” at June 30, 2020 (100% of CDI in 2019) and offshore financial investments are remunerated at rates around 100% of Fed Funds. The sensitivity analysis on interest rate risks is in Note 22.

 

 

 

 

5.2 Marketable securities and restricted cash

 

		June 30, 2020				December 31, 2019
Marketable securities
Government security (i)			2,544,394				2,719,630
Bank certificate of deposit - CDB			83,698				125,413
Repurchase agreements			30,516				270,460
			2,658,608				3,115,503
Restricted cash
Investments linked to loans			—				86,681
Securities pledged as collateral			42,672				61,229
			42,672				147,910

 

(i)       Government securities have stated interest connected to Special System for Settlement and Custody (Sistema Especial de Liquidação e de Custódia), or “SELIC”.

 

5.3 Trade receivables

 

		June 30, 2020				December 31, 2019
Domestic – Local currency			1,952,961				1,874,400
Export – Foreign currency			56,915				60,401
			2,009,876				1,934,801
Expected credit losses (i)			(184,804	)			(120,407	)
			1,825,072				1,814,394
Current			1,796,514				1,786,095
Non-current			28,558				28,299
			1,825,072				1,814,394

 

(i)

Of the total recognized, approximately R$ 54,000 was added to the subsidiary Comgás due to higher defaults due to the COVID-19 pandemic.

 

 

 

 

5.4 Related parties

 

a)

Summary of balances to related parties

 

		June 30, 2020				December 31, 2019
Current asset
Corporate operation / Agreements
Raízen Energia S.A. (i)			63,002				50,296
Aguassanta Participações S.A.			626				444
Raízen Combustíveis S.A. (i)			4,334				7,588
Other			184				291
			68,146				58,619
Total current assets			68,146				58,619
Non-current assets
Corporate operation / Agreements
Raízen Combustíveis S.A. (i)			41,277				36,410
Other			460				—
			41,737				36,410
Preferred shares
Raízen Energia S.A. (i)			78,304				78,304
Janus Brasil Participações S.A			8				8
Raízen Combustíveis S.A. (i)			141				—
			78,453				78,312
Total non-current assets			120,190				114,722
Total assets			188,336				173,341

 

 

 

 

 

		June 30, 2020				December 31, 2019
Current liabilities
Corporate operations / agreements
Raízen Energia S.A. (i)			260,025				262,612
Raízen Combustíveis S.A. (i)			137,099				127,773
Radar Propriedades Agrícolas S.A.			—				150
Other			1,520				1,923
Total current liabilities			398,644				392,458
Non-current liabilities
Corporate operations / agreements
Other			741				—
Total non-current liabilities			741				—

 

(i)

Current and non-current assets receivable from Raízen Energia and Raízen Combustíveis are, primarily, tax credits which will be reimbursed to the Company when realized. The preferred shares are used to Raízen reimburse Cosan, with preferential dividends, when the net operating loss is consumed in Raízen.    Current liabilities represent reimburse to Raízen Energia and Raízen Combustíveis related to expenses regarding legal disputes and other liabilities, generated before the formation of joint ventures, which are responsibility of Cosan S.A..

 

b)

Related party transactions

 

		April 1, 2020 to June 30, 2020				January 1, 2020 to June 30, 2020				April 1, 2019 to June 30, 2019 (Restatement)				January 1, 2019 to June 30, 2019 (Restatement)
Product sales
Raízen Energia S.A.			63,493				174,327				68,954				176,758
Raízen Combustíveis S.A			34,622				77,728				56,125				105,909
Other			550				818				2,265				6,204
			98,665				252,873				127,344				288,871
Purchase of goods / inputs
Raízen Energia S.A.			—				—				(2,204	)			(2,400	)
Raízen Combustíveis S.A			(250,514	)			(501,411	)			(300,038	)			(578,372	)
Other			(14	)			(27	)			(256	)			(256	)
			(250,528	)			(501,438	)			(302,498	)			(581,028	)
			—				—				—				(133	)
Shared expense
Raízen Energia S.A.			(20,040	)			(43,476	)			(17,992	)			(37,026	)
			(20,040	)			(43,476	)			(17,992	)			(37,026	)
Financial result
Usina Santa Luiza			—				—				—				(41	)
Raízen Energia S.A.			4				5				—				—
Raízen Combustíveis S.A			1,946				4,013				1,392				2,760
Other			4				4				(101	)			(130	)
			1,954				4,022				1,291				2,589

 

c)

Officers’ and directors’ compensation

 

The Company has a compensation policy approved by the Board of Directors. Compensation of the Company’s key management personnel includes salaries, non-cash benefits and contributions to a post-employment defined benefit plan.

 

		April 1, 2020 to June 30, 2020				January 1, 2020 to June 30, 2020				April 1, 2019 to June 30, 2019				January 1, 2019 to June 30, 2019
Short-term benefits to officers and directors			10,780				30,199				29,017				52,290
Share-based payment transactions			1,652				6,591				5,224				7,758
Post-employment benefits			215				431				307				476
Other long-term benefits			—				—				547				547
Benefits from termination of employment contract			—				—				1,193				1,193
			12,647				37,221				36,288				62,264

 

5.5 Loans, borrowings and debentures

 

		Interest
Description		Index		Annual interest rate				June 30, 2020				December 31, 2019				Maturity				Objective
With guarantee
BNDES		URTJLP			7.41	%			3,495,824				2,213,704				Dec-29			Expansion project
		Fixed			5.59	%			740,650				834,039				Jan-25			Expansion project
		TJ462			7.89	%			—				144,573				Oct-20			Investment
		Selic			5.52	%			—				73,540				Oct-20			Investment
		Selic			5.68	%			—				52,031				Jun-23			Investment
		TJLP			7.09	%			—				83,174				Jun-23			Investment
		TJLP			5.09	%			—				1,667				Jun-23			Investment
		Selic			3.52	%			371				1,118				Sep-20			Expansion project
		Fixed			3.50	%			1,251				1,426				Jan-24			Expansion project
		IPCA			9.48	%			1,591				1,528				Nov-21			Expansion project
		URTJLP			7.10	%			2,001				4,952				Mar-22			Expansion project
Export credit agreement (ECA)		Euribor + 0.58%			0.58	%			104,733				79,528				Sep-26			Investment
EIB		U.S.$			3.88	%			—				31,770				Jun-20			Investment
		U.S.$			2.94	%			19,864				29,081				Sep-20			Investment
		U.S.$ + LIBOR			1.11	%			65,308				71,129				May-21			Investment
		U.S.$ + LIBOR			1.35	%			92,051				89,336				Sep-21			Investment
									4,523,644				3,712,596
Without guarantee
Foreign loans		GBP + Libor			1.29	%			135,549				106,643				Dec-21			Acquisition
		GBP + Libor			1.84	%			237,264				186,604				Dec-22			Acquisition
		GBP + Libor			2.05	%			170,605				150,253				Jul-21			Acquisition
		Fixed			1.16	%			3,342				3,561				Mar-22			Investment
NCE		CDI + 0,80%			2.97	%			508,166				512,078				Dec-23			Working capital
		CDI + 1,03%			3.63	%			80,974				—				Feb-23			Working capital
		CDI + 3,05%			5.27	%			203,280				—				Mar-21			Working capital
		CDI + 3,15%			5.37	%			455,501				—				Mar-21			Working capital
Perpetual Notes		U.S.$			8.25	%			2,772,510				2,040,752				Nov-40			Acquisition
Resolution 4131		U.S.$			4.79	%			13,411				20,688				Oct-20			Working capital
		U.S.$ + Libor			2.90	%			—				81,107				Feb-20			Working capital
		U.S.$			3.67	%			439,848				313,493				May-23			Working capital
		U.S.$			1.36	%			514,716				217,537				Nov-22			Working capital
		U.S.$			1.59	%			408,013				—				Apr-21			Working capital
		CDI			4.86	%			201,707				—				Apr-21			Working capital
Senior Notes Due 2023		U.S.$			5.00	%			602,861				438,985				Mar-23			Acquisition
Senior Notes Due 2027		U.S.$			7.00	%			4,565,361				3,234,647				Jan-27			Acquisition
Senior Notes Due 2024		U.S.$			7.38	%			5,033,761				3,318,895				Feb-24			Acquisition
Senior Notes Due 2024		U.S.$			5.95	%			1,297,701				903,636				Sep-24			Acquisition
Senior Notes Due 2025		U.S.$			5.88	%			3,290,398				2,182,089				Jan-25			Acquisition
Senior Notes Due 2029		Fixed			5.50	%			4,142,356				3,071,052				Sep-29			Acquisition
Guaranteed account		122% of CDI			2.69	%			3,120				—				Aug-20			Working capital
		125.5% of CDI			5.53	%			—				740				Jan-20			Working capital
Prepayment		U.S.$+Libor			4.87	%			55,442				—				Mar-21			Working capital
		100% Libor			1.43	%			109,734				80,932				Nov-21			Working capital
		100% Libor 0,76%			2.72	%			55,739				40,474				Oct-20			Working capital
Debentures		IGPM + 6,10%			12.23	%			252,248				240,900				May-28			Working capital
		IPCA + 5.57%			7.29	%			110,106				108,133				Sep-20			Working capital
		IPCA + 7.14%			8.89	%			331,762				318,412				Dec-20			Working capital
		IPCA + 7.48%			9.23	%			298,734				286,271				Dec-22			Working capital
		IPCA + 7.36%			9.11	%			98,418				94,367				Dec-25			Working capital
		IPCA + 5.87%			7.60	%			903,517				859,996				Dec-23			Working capital
		IPCA + 4.33%			6.03	%			444,278				431,817				Oct-24			Working capital
		IPCA + 4.68%			6.39	%			578,955				570,098				Feb-26			Working capital
		IPCA + 4.50%			6.20	%			677,168				668,034				Feb-29			Working capital

 

 

				IPCA + 3,90%			5.59	%			977,971				895,249				Oct-29			Working capital
				IPCA + 4,00%			5.70	%			239,466				219,466				Oct-29			Working capital
				IPCA - 3.25% base 252			4.93	%			540,663				—				Apr-29			BNDES
				IPCA - 4.10% base 252			5.80	%			184,920				—				Apr-29			BNDES
				CDI - 2.75%			4.96	%			100,047				—				Jun-22			Working capital
				IPCA + 6,80%			8.54	%			766,952				—				Apr-30			Debentures
				CDI - 3.00% base 252			5.21	%			584,914				—				Apr-21			Promissory note
				CDI - 3.40% base 252			5.62	%			505,689				—				Apr-21			Promissory note
				106 % of CDI			4.67	%			—				1,727,459				Feb-21			Acquisition (i)
				100% CDI + 0,50%			2.66	%			2,056,453				2,015,251				Oct-22			Working capital
											34,953,620				25,339,619
	Total										39,477,264				29,052,215
	Current										4,810,360				3,518,225
	Non-current										34,666,904				25,533,990

 

(i)

On December 20, 2019, Cosan S.A. announced a tender offer with an optional early redemption of the debentures from its second issuance of non-convertible, single series, unsecured debentures issued in February 28, 2019 and due on February 28, 2021. The optional early full redemption took place on January 16, 2020. Cosan S.A. redeemed debentures in aggregate amount of R$1,735,203.

 

The Company used the annual average rate of the CDI of 2.15% and Brazilian long-term interest rate (taxa de juros de longo prazo), or “TJLP,” of 4.94 %.

 

Non-current borrowings are scheduled to fall due as follows:

 

				June 30, 2020				December 31, 2019
	13 to 24 months				1,903,483				1,813,849
	25 to 36 months				4,502,025				3,240,861
	37 to 48 months				6,747,001				2,294,198
	49 to 60 months				5,653,443				5,032,388
	61 to 72 months				715,662				2,520,671
	73 to 84 months				5,104,217				456,983
	85 to 96 months				1,276,692				3,821,149
	Thereafter				8,764,381				6,353,891
					34,666,904				25,533,990

 

The carrying amounts of loans, borrowings and debentures are denominated in the following currencies:

 

 

		June 30, 2020				December 31, 2019
Brazilian reais (R$)			15,346,697				12,360,022
U.S. Dollar (U.S.$)			23,479,073				16,165,604
British pound (GBP)			543,419				443,500
Euro (EUR)			108,075				83,089
			39,477,264				29,052,215

 

 

Below are the movements that occurred for the period ended June 30, 2020:

 

At December 31, 2019			29,052,215
Raised			5,511,144
Amortization of principal			(2,413,001	)
Payment of interest			(736,372	)
Interest, exchange rate and fair value			8,063,278
June 30, 2020			39,477,264

 

a)

Guarantees

 

Some financing agreements with the Brazilian National Economic and Social Development Bank (Banco Nacional de Desenvolvimento Econômico e Social), or “BNDES,” of the subsidiaries Comgás and Rumo, are guaranteed by bank guarantee, or by real guarantees (assets) and escrow account. On June 30, 2020, the balance of bank guarantees contracted was R$180,464 with an average cost of 0.99% p.a. (R$532,558 as of December 31, 2019).

 

b)

Available credit line

 

As of June 30, 2020 and on December 31, 2019, the subsidiary Rumo S.A. had available credit lines from BNDES, which were not used, in the total amount of R$1,946,194.

 

At June 30, 2020, the subsidiary Cosan S.A. had available credit lines from financial institutions AA, which were not used, in the total amount of R$501,000.

 

The use of these credit lines is subject to certain contractual conditions.

 

c)

Financial covenants

 

Under the terms of the major borrowing facilities, the Company and its subsidiaries are required to comply with the following financial covenants:

 

Debt		Triggers		Ratios
Debenture 3rd and 4th Issue – Comgás		Short-term indebtedness / Total indebtedness cannot exceed 0.6			0.31
Debenture 3rd to 8th Issue – Comgás		Net debt / EBITDA cannot exceed 4.00			1.40
BNDES		Net debt / EBITDA cannot exceed 4.00			1.40
Loan 4131		Net debt / EBITDA cannot exceed 4.00			1.40
Promissory note		Net debt / EBITDA cannot exceed 4.00			1.40
Senior Notes 2027 - Cosan S.A.		Net debt (i)/ EBITDA not higher than or equal to 3.5			2.39
Senior Notes Due 2024 – Cosan Limited		Net debt (i)/ EBITDA not higher than or equal to 3.5			2.30
Senior Notes Due 2029 – Cosan Limited		Net debt (i)/ EBITDA not higher than or equal to 3.5			2.30
Senior Notes Due 2024 – Rumo		Net debt / EBITDA not higher than or equal to 3.3			1.97
Senior Notes Due 2025 - Rumo		Net debt / EBITDA not higher than or equal to 3.3			1.97
BNDES - Rumo		Net debt / EBITDA not lower than or equal 3.3x in December 2020			1.97
BNDES - Rumo		EBITDA / Consolidated Financial Result not lower than or equal 2.0x in December 2020			9.68

 

(i)     Net debt and EBITDA pro forma, including joint ventures numbers;

(ii)    Net debt consists of current and non-current debt (including preferred shareholders payable in subsidiaries), net of cash and cash equivalents, marketable securities and derivatives on debt recorded in our consolidated financial statements as other non-current assets. Net debt is a non-GAAP measure.

(iii)  Net debt consists of current and non-current loans and financing, net of cash and cash equivalents and of securities and securities recorded in these interim financial statements;

(iv)  The effects of initial recognition of IFRS 16 are not part of triggers measures for financial covenants purposes.

 

For the other loans, borrowings and debentures of the Company there are no financial clauses.

 

The loan terms include provisions for cross-default.

 

As of June 30, 2020, the Company and its subsidiaries were in compliance with all restrictive financial clauses.

 

 

d)

Fair value and exposure to financial risk

 

The fair value of the loans is based on the discounted cash flow using its implicit discount rate. They are classified as a level 2 fair value in the hierarchy (Note 5.9) due to the use of unobservable data, including own credit risk.

 

The details of the Company’s exposure to risks arising from loans are shown in Note 22.

 

5.6 Leases

 

The balance sheet shows the following amounts relating to leases:

 

		Finance leases				Operating leases				Total
At January 1, 2020			429,591				4,165,297				4,594,888
Recognition of interest			—				1,849				1,849
Transfer of liabilities (i)			31,795				307,906				339,701
Payment of principal			(50,420	)			(134,158	)			(184,578	)
Payment of interest			(31,080	)			(223,624	)			(254,704	)
Additions			87,976				3,416,823				3,504,799
At June 30, 2020			467,862				7,534,093				8,001,955
Current			257,931				876,910				1,134,841
Non-current			210,282				6,656,832				6,867,114
			468,213				7,533,742				8,001,955

 

(i)               Transfer of parcels under litigation to lease and concessions (Note 11).

 

The lease agreements have varying expirations, with last due to expire in June 2043. The amounts are adjusted annually for inflation rates (General Market Price Index (Índice Geral de Preços – Mercado), or “IGP-M,” or Extended National Consumer Price Index (Índice Nacional de Preços ao Consumidor Amplo), or “IPCA”) or may incur interest based on the TJLP) or CDI and some contracts have renewal or purchase options that were considered in determining the classification as lease.

 

 

In addition to the amortization and appropriation of interest and exchange variation highlighted in the previous tables, the following impacts on income during the period ended June 30, 2020 were recorded for other lease agreements that were not included in the measurement of lease liabilities:

 

		June 30, 2020
Variable lease payments not included in the measurement of lease liabilities			11,567
Expenses relating to short-term leases			498
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets			23,552
			35,617

 

Additional Information

 

The Company, in full compliance with the rules, in measuring and remeasuring its lease liabilities and the right to use, proceeded to discount the present value of future lease installments without projecting the projected future inflation in the installments to be discounted.

 

The incremental interest rate (nominal) used by the Company and its subsidiaries was determined based on the interest rates to which the Company has access, adjusted to the Brazilian market and the terms of its contracts. Rates between 10.9% and 14.2% were used, according to the term of each contract.

 

5.7 Trade payables

 

The carrying amounts of trade and other payables are the same as their fair values, due to their short-term nature.

 

 

 

		June 30, 2020				December 31, 2019
Materials and service suppliers			1,274,379				1,356,978
Natural gas suppliers			1,001,351				815,798
Other			101,580				17,488
			2,377,310				2,190,264

 

5.8 Derivative financial instruments

 

Accounting policy (new operations)   Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedge instrument and, if so, the nature of the hedged item. The Company designates certain derivatives as:   (i)       fair value hedge of recognized assets or liabilities or a firm commitment (fair value hedge); or (ii)       hedge of a particular risk associated with cash flows from recognized assets and liabilities and highly probable forecast transactions (cash flow hedge).   At the beginning of the hedge relationship, the Company documents the economic relationship between the hedge instruments and the hedged items, including changes in the cash flows of the hedge instruments, which should offset the changes in the cash flows of the hedged items. The Company documents its risk management objective and strategy for carrying out its hedge operations. Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognized immediately in the income statement and are included in other gains / (losses).   The fair values of the derivative financial instruments designated in hedge relationships are disclosed below. The total fair value of a hedge derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is greater than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.

The Company makes an assessment, both at the beginning of the hedge relationship and on an ongoing basis, on whether the hedge instruments should be highly effective in offsetting changes in fair value or in the cash flows of the respective attributable hedged items. For the hedged risk, and if the actual results of each hedge are within a range of 60% to 140%.   The Company has a portfolio of energy contracts (purchase and sale) aimed at meeting demands and offers for consumption or supply of energy. In addition, there is a portfolio of contracts that comprises forward positions, usually short-term. For this portfolio, there is no purchase commitment with a sales contract.   The Company has the flexibility to manage the contracts in this portfolio in order to obtain gains from variations in market prices, considering its policies and risk limits. Contracts in this portfolio can be settled at the net cash value or by another financial instrument (for example: entering into a clearing contract with the counterparty; or “undoing its position” of the contract before its exercise or prescription; or shortly after purchase) , make a sale for the purpose of generating profit through short-term price fluctuations or gain with resale margin).   Such energy purchase and sale transactions are traded on an active market and meet the definition of financial instruments, due to the fact that they are settled at the net cash value, and are readily convertible into cash. Such contracts are accounted for as derivatives and are recognized in the balance sheet at fair value, on the date the derivative is entered into, and are revalued at fair value on the balance sheet date.   Financial assets and liabilities are offset and the net amount is shown in the balance sheet when there is a legal right to offset the recognized amounts and there is an intention to settle them on a net basis, or to realize the asset and settle the liability simultaneously. The legal right must not be contingent on future events and must be applicable in the normal course of business and in the event of default, insolvency or bankruptcy of the company or the counterparty.   The fair value of these derivatives is estimated based, in part, on price quotes published in active markets, insofar as such observable market data exist, and, in part, by the use of valuation techniques, which considers: (i ) prices established in recent purchase and sale operations, (ii) risk margin in supply and (iii) projected market price in the availability period. Whenever the fair value at initial recognition for these contracts differs from the transaction price, a gain in fair value or loss in fair value is recognized on the base date.

 

 

 

 

 

		Notional								Fair value
		June 30, 2020				December 31, 2019				June 30, 2020				December 31, 2019
Fuel derivative agreements
Forward agreements (i)			13,422				—				(2,671	)			—
Energy derivative agreements
Forward agreements (ii)			450,357				—				31,353				—
Exchange rate derivatives
Forward agreements			1,626,880				1,542,535				95,561				(30,784	)
Interest rate and exchange rate risk
Swap agreements (shares) (iii)			600,000				—				34,284				—
Swap agreements (interest rate)			2,284,808				2,633,796				724,272				692,642
Swap agreements (exchange and interest rate)			12,032,704				10,888,474				8,551,148				3,081,501
			14,917,512				13,522,270				9,309,704				3,774,143
Total financial instruments											9,433,947				3,743,359
Assets											9,569,926				3,824,410
Liabilities											(135,979	)			(81,051	)

 

(i)

Forward contracts for fuels contracted by the subsidiary Moove, which seek to reduce possible impacts on the price fluctuation of the commodity that interferes with our lubricant costs.

(ii)

The subsidiary Compass Gás e Energia has a portfolio of energy contracts (purchase and sale) aimed at meeting demands and offers for consumption or supply of energy. In addition, there is a portfolio of contracts that comprises forward positions, usually short-term. For this portfolio, there is no purchase commitment with a sales contract.

(iii)

On April 9, 2020, the Company entered into a shares purchase and derivatives negotiation plan, or the Total Return Swap, with Banco Santander (Brasil) S.A. – Cayman Branch and Santander Fundo de Investimento Amazonas Multimercado Crédito Privado Investimento no Exterior. Pursuant to the Total Return Swap, the Santander Fund will be able to purchase, on its own behalf, common shares issued by Cosan S.A., and Santander Cayman will be able to enter into equity swap transactions on its own behalf and on our behalf in connection with such shares. The maximum aggregate amount of derivatives which may be negotiated pursuant to the Total Return Swap and the maximum aggregate number of underlying Cosan S.A. shares thereunder are R$600,000 and 19,500,000, respectively.

 

 

Debt derivative financial instruments are used only for economic hedge purposes and not as speculative investments.

 

Fair value hedge

 

Currently the Company has adopted the hedge accounting of fair value for some its operations that both the hedging instruments and the hedged items are accounted for at fair value through profit or loss.

 

 

 

 

The effects of the foreign currency-related hedging instruments and interest rate swaps on the Company’s financial position and performance are as follows:

 

						Book value								Accumulated fair value adjustment
		Notional				June 30, 2020				December 31, 2019				June 30, 2020				December 31, 2019
Loans, financing and debentures
Designated items
Debenture 3rd issue - 3rd series (Comgás)			79,299				(110,106	)			(108,133	)			(1,749	)			(14,822	)
Debenture 5th issue - single series (Comgás)			684,501				(903,517	)			(859,996	)			(34,899	)			(90,110	)
Senior notes 2023 (Cosan S.A.)			547,600				(602,861	)			(438,985	)			(208,263	)			(99,541	)
Senior notes 2024 (Rumo S.A.)			4,107,000				(5,033,761	)			(3,318,895	)			(1,834,922	)			(471,159	)
Senior notes 2025 (Rumo S.A.)			2,738,000				(3,290,398	)			(2,182,089	)			(1,169,094	)			(295,208	)
Senior notes 2024 (Cosan Limited)			1,095,200				(1,297,701	)			(903,636	)			(13,453	)			(865,908	)
Total debt			9,251,600				(11,238,344	)			(7,811,734	)			(3,262,380	)			(1,836,748	)
Derivative financial instruments
Hedge instruments
Debenture 3rd issue swaps - 3rd series (Comgás)			(79,299	)			27,161				24,842				2,319				5,510
Debenture 5th issue swaps - single series (Comgás)			(684,501	)			205,778				175,262				30,516				88,583
Senior swaps notes 2023 (Cosan S.A.)			(547,600	)			431,091				227,315				30,981				128,357
Senior swaps notes 2024 (Rumo S.A.)			(4,107,000	)			2,618,855				989,022				1,657,767				340,264
Senior swaps notes 2025 (Rumo S.A.)			(2,738,000	)			1,553,448				479,481				1,074,801				201,679
Senior swaps notes 2024 (Cosan Limited)			(1,095,200	)			537,876				154,523				83,345				805,312
Derivative total			(9,251,600	)			5,374,209				2,050,445				2,879,729				1,569,705
Total			—				(5,864,135	)			(5,761,289	)			(382,651	)			(267,043	)

 

There is an economic relationship between the hedged item and the hedge instrument, since the terms of the interest rate and exchange rate swap correspond to the terms of the fixed rate loan, that is, notional amount, term and payment. The Company established a 1: 1 hedge ratio for hedging relationships, since the underlying risk of the interest rate and exchange rate swap is identical to the hedged risk component. To test the effectiveness of the hedge, the Company uses the discounted cash flow method and compares the changes in the fair value of the hedge instrument with the changes in the fair value of the hedged item attributable to the hedged risk.

 

 

 

5.9 Recognized fair value measurements

 

The market value of the Senior Notes are listed on the Luxembourg Stock Exchange (Note 5.5) is based on their quoted market price are as follows:

 

		Company		June 30, 2020				December 31, 2019
Senior notes 2023		Cosan S.A			99.73	%			101.46	%
Senior notes 2024		Rumo S.A			105.41	%			107.90	%
Senior notes 2024		Cosan Limited			102.53	%			105.18	%
Senior notes 2025		Rumo S.A			105.56	%			107.27	%
Senior notes 2027		Cosan S.A			105.30	%			109.18	%
Senior notes 2029		Cosan Limited			95.53	%			104.48	%
Perpetual notes		Cosan S.A			100.73	%			104.06	%

 

All of the resulting fair value estimates are included in level 2 except for a contingent consideration payable where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.

 

 

The carrying amounts and fair value of financial assets and financial liabilities are as follows:

 

						Carrying amount								Assets and liabilities measured at fair value
						June 30, 2020				December 31, 2019				June 30, 2020												December 31, 2019
Assets		Note												Level 1				Level 2				Level 3				Level 1				Level 2				Level 3
Investment funds			5.1				2,051,887				3,279,170				—				2,051,887				—				—				3,279,170				—
Marketable securities			5.2				2,658,608				3,115,503				—				2,658,608				—				—				3,115,503				—
Other financial assets							93,643				134,637				93,643				—				—				134,637				—				—
Derivate financial instruments			5.8				9,569,926				3,824,410				—				9,569,926				—				—				3,824,410				—
Total							14,374,064				10,353,720				93,643				14,280,421				—				134,637				10,219,083				—
Liabilities
Loans, borrowings and debentures			5.5				(23,227,214	)			(16,370,166	)			—				(23,227,214	)			—				—				(16,370,166	)			—
Consideration payable (i)							(219,362	)			(184,370	)			—				(202,246	)			(17,116	)			—				(158,275	)			(26,095	)
Derivative financial instruments			5.8				(135,979	)			(81,051	)			—				(135,979	)			—				—				(81,051	)			—
Total							(23,582,555	)			(16,635,587	)			—				(23,565,439	)			(17,116	)			—				(16,609,492	)			(26,095	)

 

 

(i)

Composed of: (i) consideration payable related to the intangible asset of the contract with ExxonMobil in the amount of R$202,246 (level 2); and (ii) variable contingent consideration payable of R$17,116 (level 3), which considers the present value of the expected payment discounted, using a risk-adjusted discount rate. The expected payment is determined considering the most likely scenario of revenue and projected EBITDA, which, in turn, determine the cash generation capacity. Significant unobservable inputs are the expected annual growth rate of revenue, the expected EBITDA margin and the 9,41% risk-adjusted discount rate.

 

 

6 Other tax receivables

 

		June 30, 2020				December 31, 2019
COFINS - Revenue tax			784,075				706,165
ICMS - State VAT			638,674				602,127
ICMS CIAP - State VAT			133,045				141,514
PIS - Revenue tax			171,647				150,099
Credit installment			41,919				41,516
Other			52,472				35,591
			1,821,832				1,677,012
Current			1,055,462				950,246
Non-current			766,370				726,766

 

7 Inventories

 

		June 30, 2020				December 31, 2019
Finished goods			483,590				457,447
Spare parts and accessories			244,860				236,347
Raw material for construction process			117,636				55,347
Warehouse and other			15,699				31,287
Fuels and lubricants			7,813				6,894
			869,598				787,322

 

  

8 Investments in associates

 

8.1 Investments in subsidiaries and associates

 

Cosan’s subsidiaries are listed below:

 

		June 30, 2020				December 31, 2019
Directly owned subsidiaries
Cosan Logística S.A.			73.49	%			73.49	%
Cosan S.A. (iii)			66.28	%			64.59	%
Cosan Limited Partners Brasil Consultoria Ltda.			60.00	%			60.00	%
Sinlog Tecnologia em Logística S.A.			64.52	%			47.62	%
Interest of Cosan S.A. in its subsidiaries
Comgás			—				99.15	%
Compass Gás e Energia			99.01	%			—
Cosan Lubes Investments Limited (CLI) (i)			70.00	%			70.00	%
Cosan Cayman II Limited			100.00	%			100.00	%
Cosan Global Limited			100.00	%			100.00	%
Cosan Investimentos e Participações S.A.			100.00	%			100.00	%
Cosan Luxembourg S.A. (ii)			100.00	%			100.00	%
Cosan Overseas Limited			100.00	%			100.00	%
Pasadena Empreendimentos e Participações S.A.			100.00	%			100.00	%
Payly Soluções de Pagamentos S.A.			75.00	%			75.00	%
Rumo S.A.			1.71	%			1.71	%
Cosan Logística S.A.			0.10	%			0.10	%
Interest of Cosan Lubes Investments Limited in its subsidiaries
Cosan Cinco S.A.			100.00	%			100.00	%
Cosan Lubrificantes e Especialidades S.A.			100.00	%			100.00	%
Moove Lubricants Limited			100.00	%			100.00	%
Stanbridge Group Limited			100.00	%			100.00	%
Wessesx Petroleum Limited			100.00	%			100.00	%
Airport Energy Limited			100.00	%			100.00	%
Airport Energy Services Limited			100.00	%			100.00	%
Cosan Lubrificantes S.R.L.			100.00	%			100.00	%
Lubrigrupo II - Comércio e Distribuição de Lubrificantes S.A.			100.00	%			100.00	%
Commercial Lubricants Moove Corp			100.00	%			100.00	%
Cosan Paraguay S.A.			100.00	%			100.00	%
Cosan US, Inc.			100.00	%			100.00	%
Ilha Terminal Distribuição de Produtos Químicos			100.00	%			100.00	%
Zip Lube S.A.			100.00	%			100.00	%
TTA – SAS Techniques et Technologie Appliquées			75.00	%			75.00	%

 

 

		June 30, 2020				December 31, 2019
Interest of Cosan Logística S.A. in its subsidiaries
Rumo S.A.			28.47	%			28.47	%
Rumo Malha Oeste S.A.			28.47	%			28.47	%
Rumo Malha Paulista S.A.			28.47	%			28.47	%
Rumo Malha Sul S.A.			28.47	%			28.47	%
Rumo Malha Norte S.A.			28.40	%			28.40	%
Rumo Malha Central S.A.			28.47	%			28.47	%
Elevações Portuárias S.A.			28.47	%			28.47	%
Logispot Armazéns Gerais S.A.			14.52	%			14.52	%
Rumo Luxembourg Sarl			28.47	%			28.47	%
Rumo Intermodal S.A.			28.47	%			28.47	%
Boswells S.A.			28.47	%			28.47	%
ALL Argentina S.A.			28.47	%			28.47	%
Paranaguá S.A.			28.47	%			28.47	%
ALL Armazéns Gerais Ltda.			28.47	%			28.47	%
Portofer Ltda.			28.47	%			28.47	%
ALL Mesopotâmica S.A.			20.09	%			20.09	%
ALL Central S.A.			20.94	%			20.94	%
Servicios de Inversión Logística Integrales S.A			28.47	%			28.47	%
Brado Logística e Participações S.A.			17.71	%			17.71	%
Brado Logística S.A.			17.71	%			17.71	%

 

(i)

On March 31, 2020, Cosan Lubes Investments Limited (“CLI”) received R$65,478 due to the satisfaction of conditions precedent on December 31, 2019, as a result and pursuant to the terms of the investment agreement between the CLI and CVC Fund VII (“CVC”).

 

(ii)

Management concluded that there are no material uncertainties that put the subsidiaries' operational continuity in doubt. Despite presenting on June 30, 2020 a combined investment amount with an unsecured liability of R$ 413,988, as shown below, no events or conditions were identified that, individually or collectively, could raise significant doubts as to the ability to maintain their continuity operational. The subsidiaries have the financial support of the Company.

 

(iii)

On June 30, 2020, 6,291,200 shares were repurchased ordinary shares in the amount of R$ 318,828, with a maximum unit cost of R$ 61.24, a minimum unit cost of R$ 47.37 and an average unit cost of R$ 52.01. These shares represent 4.87% of Cosan's issued and outstanding common shares.

 

Set out below are the associates as at June 30, 2020 which are material to the Company:

  

		Shares issued by the associate				Shares held by Cosan				Cosan ownership interest				Economic benefit (%)
Radar II Propriedades Agrícolas S.A.			81,440,222				24,920,708				51.00	%			3.00	%
Radar Propriedades Agrícolas S.A.			1,735,703				531,125				51.00	%			2.51	%
Tellus Brasil Participações S.A.			120,920,492				61,359,624				50.74	%			5.00	%
Janus Brasil Participações S.A.			136,928,272				69,361,678				50.77	%			5.00	%

 

		At January 1, 2020				Interest in earnings of subsidiaries				Other comprehensive income				Dividends				Increase of capital				Other				At June 30, 2020
Tellus Brasil Participações S.A.			102,342				1,768				—				(1,126	)			—				—				102,984
Janus Brasil Participações S.A.			126,087				426				—				(2,148	)			1,132				—				125,497
Radar Propriedades Agrícolas S.A			59,861				706				32				—				—				—				60,599
Radar II Propriedades Agrícolas S.A			31,976				438				6				—				—				—				32,420
Other			57,441				7,082				1,267				(7,184	)			10				(6,023	)			52,593
			377,707				10,420				1,305				(10,458	)			1,142				(6,023	)			374,093

 

 

8.2 Acquisition of subsidiaries

 

On January 30, 2020, the subsidiary Cosan completed the acquisition of 100% of the capital of the following companies:

 

Acquired name	Description of the operation
Compass Comercializadora de Energia Ltda	Commercialization of natural gas and electricity
Compass Geração Ltda	Commercialization of natural gas and electricity
Compass Energia Ltda	No operation
Black River Participações Ltda	No operation

 

The acquisition aims to reinforce the strategy of expansion and consolidation of the gas and energy operation, which tends to grow significantly.

 

The fair value on the acquisition date of the consideration transferred from the three combined businesses totaled R$ 95,000 with cash payment, without additional installments (fixed or variable).

 

Accurate and reliable estimates of the purchase price were made to determine the amount of goodwill paid on the transaction. Goodwill is the difference between the value of the net assets acquired and the price paid for the shares.

 

The Company, through independent consultants, assessed whether the fair value of all assets and liabilities in the opening balance sheet is different from the declared book value. Assets and liabilities assessed include fixed assets, customer portfolios, brands and, possibly, also long-term loans. No material differences were identified between fair value and book value, and the net price paid was fully allocated to goodwill.

 

The balances of the acquired entities are substantially composed of assets and liabilities measured at fair value and, therefore, no adjustment should be made.

 

 

a)

Identifiable assets acquired and liabilities assumed

 

The fair value of the assets and liabilities acquired is shown below:

		Compass Comercializadora				Compass Geração				Compass Energia				Total
Cash and cash equivalents			4,539				177				37				4,753
Trade receivables			12,384				149,163				—				161,547
Advance of suppliers			15				—				—				15
Other current tax receivable			134				89				31				254
Derivative financial instruments			1,377				—				—				1,377
Investments in associates			9				28				—				37
Property, plant and equipment			69				—				—				69
Trade payables			(13,585	)			(83,669	)			—				(97,254	)
Other taxes payable			—				(162	)			—				(162	)
Other current liabilities			(97	)			—				—				(97	)
Other financial liabilities			—				(48.007	)			—				(48,007	)
Dividends payable			—				(508	)			—				(508	)
Payables to related parties			—				(17,063	)			—				(17,063	)
Deferred tax liabilities			(468	)			—				—				(468	)
Total identifiable assets, net			4,377				48				68				4,493

 

 

b)

Preliminary goodwill

 

The fair value on the date of acquisition of goodwill consisted of the following:

 

		Total
Total net assets acquired and liabilities assumed at fair value			4,493
Consideration transferred (i) (ii)			95,000
Preliminary goodwill			90,507

 

(i)                Effect of consideration transferred net of acquired cash R$ 90,247.

(ii)               On July 17, 2020, the subsidiary Compass made an additional payment for the acquisition of Compass Trading in the amount of R$ 4,385, as provided for in the contract.

 

Information obtained about facts and circumstances existing on the acquisition date may result in adjustments to the allocation of goodwill. The goodwill of R$ 90,507 comprises the amount of future economic benefits from the acquisition.

 

 

	Nature		Evaluation methodology	Fair value		Useful life
Goodwill	It represents the part of the purchase price greater than the sum of the net fair value of all assets acquired in the acquisition and the liabilities assumed in the process.		Discounted cash flow	90,507		Undefined

 

 

If the acquired subsidiaries had been consolidated since January 1, 2020, the subsidiary Cosan SA in its consolidated statement of income for the period on June 30, 2020, would have net income of R$ 5,951,670 and a loss of R$ 58,954 .

 

8.3 Non-controlling interests in subsidiaries

 

Set out below is summarized financial information for each subsidiary that has non-controlling interests that are material to the group. The amounts disclosed for each subsidiary are before inter-company elimination.

 

		Shares issued by the subsidiary				Shares held by non-controlling shareholders				Non-controlling interest
Compass Gás e Energia			628,487,690				5,402,779				0.99	%
Comgás			132,520,587				1,124,363				0.85	%
Logispot			2,040,816				1,000,000				49.00	%
Rumo			1,559,015,898				1,115,164,072				71.53	%
Brado Participações			12,962,963				4,897,407				37.78	%
Rumo Malha Norte			1,189,412,363				3,144,187				0.26	%
Cosan Lubes			34,963,764				10,489,129				30.00	%
Cosan S.A.			394,210,000				132,924,458				33.72	%
Cosan Logística S.A.			463,224,241				122,813,171				26.51	%
Payly			44,861,170				11,215,293				25.00	%
Sinlog Tecnologia em Logística S.A.			21,000				10,000				35.48	%
TTA			10,521				2,630				25.00	%

 

The following table summarizes the information relating to each of the Company’s subsidiaries that has material non-controlling interests, before any intra-group elimination.

 

 

		At January 1, 2020				Interest in earnings of subsidiaries				Sales or purchase of interests				Other comprehensive income				Dividends				Capital increase				Other				At June 30, 2020
Cosan S.A.			3,604,875				1,564				(276,335	)			91,760				—				—				(3,849	)			3,418,015
Cosan Logística S.A.			630,185				9,767				159				618				—				—				135				640,864
Comgás			24,569				4,236				—				15				(1,158	)			—				14				27,676
Compass Gás e Energia (i)			—				3,620				30,431				—				—				—				35				34,086
Cosan Lubes			470,497				6,550				—				62,141				—				—				—				539,188
Rumo S.A.			6,058,973				90,245				—				5,850				(2,262	)			—				4,513				6,157,319
Logispot Armazéns			34,218				385				—				—				—				—				—				34,603
Other			15,299				417				—				6,633				(4,096	)			6,666				36				24,955
			10,838,616				116,784				(245,745	)			167,017				(7,516	)			6,666				884				10,876,706

 

(i)

On January 30, 2020, a capital increase was made at Compass Gás e Energia, through the subscription of 6,222,650 registered shares in favor of non-controlling shareholders, totaling a total amount of R$ 75,000 (equivalent to 0 , 99% of the share capital of Compass Gás e Energia), generating a equity gain in the subsidiary Cosan S.A. of R$ 44,569.

 

9 Investments in joint ventures

 

Changes to investments in joint ventures were as follows:

 

		Raízen Combustíveis S.A.				Raízen Energia S.A.				Total
Shares issued by the joint venture			1,661,418,472				7,243,283,198
Shares held by Cosan			830,709,236				3,621,641,599
Cosan ownership interest			50	%			50	%
Interest in earnings of joint ventures as at June 30, 2019			425,897				(63,654	)			362,243
At January 1, 2020			3,212,601				4,336,359				7,548,960
Interest in earnings of joint ventures			(98,330	)			68,522				(29,808	)
Other comprehensive (losses) income			465,702				(348,497	)			117,205
Interest on capital (i)			(37,500	)			—				(37,500	)
Dividends			—				(417	)			(417	)
At June 30, 2020			3,542,473				4,055,967				7,598,440

 

(i)               Amount proposed but not paid in the period.

 

According to the terms of the jointly-controlled subsidiary - Raizen, the subsidiary Cosan is responsible for certain legal proceedings that existed before the formation of Raízen, net of judicial deposits on April 1, 2011, as well as tax installments under the terms of the tax amnesty and Refinancing program recorded in “Other taxes payable”. In addition, Cosan granted Raízen access to a credit line (stand-by) in the amount of US$ 350,000 thousand, unused on June 30, 2020.

The statement of financial position and statement of profit or loss of the joint ventures are disclosed in Note 4 – Segment information.

 

As of June 30, 2020, the Company was in compliance with the convenants of the contracts that govern the respective joint ventures.

 

10 Property, plant and equipment, intangible assets, goodwill, right-of-use assets and contract asset

 

10.1 Property, plant and equipment

 

a)

Reconciliation of carrying amount

		Land, buildings and improvements				Machinery, equipment and facilities				Railcars and locomotives (i)				Permanent railways				Construction in progress				Other				Total
Cost
At December 31, 2019			1,186,365				1,163,862				6,000,272				6,724,322				1,509,025				434,555				17,018,401
Additions			61				1,438				8,459				2,281				1,350,336				752				1,363,327
Business combinations (ii)			—				69				—				—				—				—				69
Disposals			(44	)			(806	)			(65,918	)			—				(123	)			(4,464	)			(71,355	)
Transfers (iii)			20,919				63,444				402,622				254,970				(809,566	)			38,963				(28,648	)
Effect of exchange rate fluctuations			17,280				26,412				—				—				349				14,818				58,859
At June 30, 2020			1,224,581				1,254,419				6,345,435				6,981,573				2,050,021				484,624				18,340,653
Depreciation and impairment losses
At December 31, 2019			(360,434	)			(532,019	)			(1,914,789	)			(2,020,767	)			(6,870	)			(30,386	)			(4,865,265	)
Additions			(30,557	)			(69,771	)			(286,352	)			(253,962	)			—				(16,258	)			(656,900	)
Disposals			7				562				62,336				—				—				3,783				66,688
Transfers (iii)			—				—				7,941				—				75				1				8,017
Impairment			(2,811	)			(8,614	)			(27,391	)			(52,224	)			(19,364	)			4,264				(106,140	)
Effect of exchange rate fluctuations			(6,190	)			(13,394	)			—				—				—				(7,567	)			(27,151	)
At June 30, 2020			(399,985	)			(623,236	)			(2,158,255	)			(2,326,953	)			(26,159	)			(46,163	)			(5,580,751	)
At December 31, 2019			825,931				631,843				4,085,483				4,703,555				1,502,155				404,169				12,153,136
At June 30, 2020			824,596				631,183				4,187,180				4,654,620				2,023,862				438,461				12,759,902

 

(i)

On June 30, 2020 and December 31, 2019, wagons and locomotives in the amount of R$ 745,203 were pledged to guarantee bank loans. (Note 5.5);

 

(ii)

For more details, see Note 8.2.

 

(iii)

They are substantially transfers from property, plant and equipment under construction as a result of the capitalization of said assets.

 

 

In the period ended June 30, 2020, the Company identified impairment indicators for the cash generating unit represented by the Rumo Malha Oeste concession: i) the network recorded a significant reduction in the volume transported due to operational problems on the road caused by the strong rains in the first quarter, causing management to seek alternatives to perform certain contracted volumes, volumes that supported the cash flow projection of that cash-generating unit until then; ii) the Management's decision to file the request for re-bidding creates uncertainty about the period in which Malha will be the operator, since it depends on the progress of the process. Accordingly, the Company recorded a provision for impairment of R$ 107,106 (of which R$ 106,041 related to fixed assets and R$ 996 related to the right to use, equivalent to the remaining balance of the permanent assets of this cash-generating unit. as a counterpart to “Other net income (expenses)”.

The determination of the recoverability of the assets depends on certain key assumptions, as described above, which are influenced by the market, technological and economic conditions in force at the time that this recovery is tested and, therefore, it is not possible to determine whether further losses by reduction recovery will occur in the future and, if they occur, whether they would be material.

10.2 Intangible assets and goodwill

 

		Goodwill				Concession rights				Operating license				Trademarks				Customer relationships				Other				Total
Cost
At December 31, 2019			904,977				18,024,518				435,795				46,170				829,091				387,278				20,627,829
Additions			3,778				1,078				—				—				36,715				7,926				49,497
Business combination (i)			90,507				—				—				—				—				—				90,507
Disposals			—				(18,052	)			—				—				(80	)			(2,525	)			(20,657	)
Transfers			—				241,024				—				—				(11,377	)			65,891				295,538
Effect of exchange rate fluctuations			65,547				—				—				11,045				54,472				13,250				144,314
At June 30, 2020			1,064,809				18,248,568				435,795				57,215				908,821				471,820				21,187,028
Amortization and Impairment:
At December 31, 2019			—				(2,884,699	)			(236,122	)			(9,201	)			(410,449	)			(243,699	)			(3,784,170	)
Additions			—				(246,443	)			(5,887	)			—				(40,741	)			(42,637	)			(335,708	)
Disposals			—				12,572				—				—				67				2,269				14,908
Transfers			—				(10	)			—				—				4,853				842				5,685
Effect of exchange rate fluctuations			—				—				—				—				(13,787	)			(6,543	)			(20,330	)
At June 30, 2020			—				(3,118,580	)			(242,009	)			(9,201	)			(460,057	)			(289,768	)			(4,119,615	)
At December 31, 2019			904,977				15,139,819				199,673				36,969				418,642				143,579				16,843,659
At June 30, 2020			1,064,809				15,129,988				193,786				48,014				448,764				182,052				17,067,413

 

(i)               For more details, see Note 8.2.

 

a)               Capitalization of borrowing costs

 

Capitalized borrowing costs for the period ended June 30, 2020, R$ 23,621 was capitalized at an average rate of 6,12% p.a. (R$3,202 and 8.60 % p.a. on December 31, 2019).

 

 

 

 

 

 

 

b)               Amortization methods and useful lives

 

Intangible assets (excluding goodwill)	Annual rate of amortization		June 30, 2020		December 31, 2019
Comgás (i)	During the term of the concession and extension of this date		8,179,565		8,129,822
Rumo(ii)			6,944,536		7,009,997
			15,124,101		15,139,819
Operating license for port terminal (iii)	4.00%		199,674		199,673
Trademarks:
Comma	Undefined		48,014		36,969
			48,014		36,969
Customers relationship:
Comgás	20.00%		167,858		161,786
Moove	6.00%		280,906		256,856
			448,764		418,642
Other
Software license	20.00%		126,845		81,669
Other			55,206		61,910
			182,051		143,579
Total			16,002,604		15,938,682

 

(i)		Refers to the intangible asset for the public gas distribution service concession, which represents the right to charge users for the supply of gas, comprised of: (i) the concession rights recognized in the business combination and (ii) concession assets;
(ii)		Refers to the concession right agreement of Rumo Malha Norte S.A., which will be amortized until the end of the concession in 2079;
(iii)		Port operating license and customer relationships of Rumo S.A., from the business combination.

 

c)               Impairment testing of cash-generating units (“CGU”) goodwill

 

The Company annually tests the recoverable amounts of goodwill arising from business combinations. Property, plant and equipment and intangible assets with finite lives that are subject to depreciation and amortization are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

For the purpose of impairment analysis, concession contracts were defined as cash generating units, each recorded on separated legal entities. The basis for annual assessment and testing on September 30, 2020.

 

During the period ended June 30, 2020, we did not identify any provisions for impairment indicators, so that no impairment test was necessary for property, plant and equipment and intangible assets with a defined useful life.

 

10.3 Right-of-use assets

 

 

		Land, buildings and improvements				Machinery, equipment and facilities				Railcars and locomotives				Software				Vehicles				Port and rail infrastructure				Total
Cost:
At December 31, 2019			247,430				10,718				1,038,641				66,931				14,259				3,803,954				5,181,933
Additions (i)			96,652				4,479				—				—				—				3,406,560				3,507,691
Contractual adjustments			17,212				8,234				1,450				14,219				(176	)			13,830				54,769
Disposals			(203	)			—				—				—				—				—				(203	)
Currency translation adjustments			3,500				1,173				—				—				—				—				4,673
At June 30, 2020			364,591				24,604				1,040,091				81,150				14,083				7,224,344				8,748,863
At December 31, 2019			(78,965	)			(3,074	)			(365,657	)			(7,594	)			(6,457	)			(250,456	)			(712,203	)
Additions			(12,233	)			(3,473	)			(25,394	)			(1,638	)			(6,392	)			(97,068	)			(146,198	)
Transfers			(44	)			—				—				—				—				—				(44	)
Impairment			—				(1,643	)			—				—				—				(966	)			(2,609	)
Currency translation adjustments			(3,415	)			(58	)			(4,123	)			—				3,114				—				(4,482	)
At June 30, 2020			(94,657	)			(8,248	)			(395,174	)			(9,232	)			(9,735	)			(348,490	)			(865,536	)
At December 31, 2019			168,465				7,644				672,984				59,337				7,802				3,553,498				4,469,730
At June 30, 2020			269,934				16,356				644,917				71,918				4,348				6,875,854				7,883,327

 

(i)               Recognition of the grant amount and update of the lease, by renewing the concession contract of the subsidiary Rumo Malha Paulista S.A.

 

10.4 Contract asset

 

Accounting policy   Contract assets are measured at acquisition cost, including capitalized borrowing costs. When the assets enter into operation, the depreciable amounts in the concession contract are transferred to intangible assets. Comgás reassesses the useful life, whenever this assessment indicates that the amortization period will exceed the term of the concession contract, part of the asset is converted into a financial asset, as it represents an accounts receivable from the granting authority. This classification is in accordance with IFRIC 12 - Concession Contracts.

 

 

		Contract asset
At December 31, 2019			600,541
Additions			419,473
Transfer to intangible (i)			(300,632	)
At June 30, 2020			719,382

 

(i)               The amount of the transfers also includes a portion of the intangible asset that was reclassified to a financial asset in accordance with IFRIC 12.

 

11 Concessions payable

 

Accounting policy:   The Company records in this account the balance of the lease installments involved in disputes with the Granting Authority. The initial registration takes place at the amount of the installment at maturity, by transferring the “Liabilities for lease” account. Subsequently, the values are corrected by Selic.   Balances in installments with the Granting Authority are maintained in this account. The initial registration takes place at the amount that was left over from the resolution of the dispute. The amounts are corrected by Selic until payment.   Balances payable as a concession for concession rights (“Concessions”) are also recorded in this account, initially recorded against intangible assets. Subsequent measurement occurs at the effective rate.

 

The Company, through its subsidiaries, is a party to sub-concession and lease agreements with the Government. The main liabilities and provisions generated by the contracts are:

 

 

a)

Installment of leases and concessions under litigation

 

 

		June 30, 2020				December 31, 2019
Lease and concession in dispute:
Rumo Malha Paulista			151,727				1,870,018
Rumo Malha Oeste			1,578,684				1,528,238
			1,730,411				3,398,256
Installment leases:
Rumo Malha Paulista			1,174,703				—
			1,174,703				—
Concessions:
Rumo Malha Sul			36,423				36,621
Rumo Malha Paulista			21,179				20,003
			57,602				56,624
Total			2,962,716				3,454,880
Current			111,652				9,847
Non-current			2,851,064				3,445,033
			2,962,716				3,454,880

 

Lease and concession under litigation:

 

Rumo Malha Oeste pleads for the reestablishment of the economic and financial balance, lost due to the cancellation of transportation contracts existing at the time of privatization, constituting a change in the regulatory scenario and conditions established in the Privatization Notice - besides, the growth forecasts that defined the value of the business did not materialize. The lawsuit is pending before the Federal Regional Court of the 2nd Region. The amount referring to the Company's overdue installments was guaranteed by the acquisition of public debt securities (Financial Treasury Bills - FTB). In March 2008, the Company obtained authorization to replace the guarantee with a bank guarantee and in May 2008 the Company redeemed the amounts. In December 2014, a decision was handed down that upheld the lawsuit, recognizing the occurrence of economic and financial imbalance in the contracts. In December 2015, a request for replacement of letters of guarantee presented by the Company with guarantee insurance was granted. An appeal judgment is pending before the TRF. Management, supported by the opinion of its lawyers, assesses the chances of success as probable but maintains the record of the liability because it is a contractual obligation not yet withdrawn from the Company and because the amount is still pending.

 

 

Also in the context of the disputes involving the Western Network, in January 2020, the National Land Transport Agency (ANTT) decided to initiate an Ordinary Administrative Process to generate a conclusive report as to the suitability, or not, of the declaration of expiry of the concession of the Malha Oeste by the Union. The analysis will be conducted by a commission to be appointed by the Infrastructure and Railroad Cargo Transport Services area. Management, supported by the opinion of its lawyers, assesses the risk of loss as possible.

 

Judicial deposits at June 30, 2020 and December 31, 2019 concerning the above claims totaled:

 

		June 30, 2020				December 31, 2019
Rumo Malha Paulista S.A.			—				119,806
Rumo Malha Oeste S.A.			22,119				21,703
			22,119				141,509

 

The judicial deposits of the Subsidiary Rumo Malha Paulista linked to the balance in litigation on rebalancing the lease and concession contract were converted in favor of the Brazilian Federal Government in the offsetting of balances resulting from the agreement signed between the parties in the process of renewing the contract.

 

Installment leases:

 

As a condition for entering into the renewal amendment for Malha Paulista, there was a need for the Company to resolve the dispute involving the economic and financial rebalancing of the original contract. To this end, an agreement was signed between Rumo Malha Paulista, Brazilian Federal Government and ANTT, in which it was agreed: i) a credit in favor of the Company related to labor liens paid up to 2005; ii) the conversion of existing judicial deposits in favor of the Union; iii) an uncontroversial balance in favor of the Federal Government, divided into eight annual installments adjusted by Selic (balance transferred from the “Lease and concession under litigation” account to “Leased installments”); iv) a portion of liabilities to be offset against potential credits in favor of the Company, these credits, subject to the assessment to be carried out by a working group involving the parties (balance maintained in the “Lease and concession under litigation” account).

 

 

The effects of the offsetting of balances were updated up to the registration date and resulted in a reversal of R$ 479,563 (R$ 348,319 in other expenses and income and R$ 131,243 in the financial result).

 

As a result of the agreement, suspensions of the proceedings for return lawsuits filed by Rumo against the Brazilian Federal Government were required to determine labor claims that were not part of the agreement (from 2005) and which will be the subject of an investigation to be carried out by working group involving the parties. In parallel, the parties will submit a request for judicial approval of the agreement in the records of the economic and financial rebalancing action of the contract.

 

 

 

 

 

 

b)

Leases and grants under IFRS16

 

		June 30, 2020				December 31, 2019
Leases:
Rumo Malha Sul			516,304				532,496
Rumo Malha Paulista			416,961				377,944
Rumo Malha Oeste			218,989				216,096
Elevações Portuárias			78,303				74,584
Portofer			13,470				13,435
			1,244,027				1,214,555
Grants:
Rumo Malha Paulista (renewal)			3,321,964				—
Malha Central			2,721,916				2,728,931
			6,043,880				2,728,931
Total			7,287,907				3,943,486
Current			821,295				402,991
Non-current			6,466,612				3,540,495
			7,287,907				3,943,486

 

c)

Investment commitments

 

Sub-concession contracts to which the Company, through its subsidiaries, is a party, often includes commitments to execute investments with certain characteristics during the term of the contract. Can be highlighted:

 

The renewal addendum to the concession of Malha Paulista, which foresees the execution of a set of investment projects to increase capacity and reduce urban conflicts, estimated by the agency at R$ 6,100,000 (value updated until December 2017).

 

The Malha Central sub-concession contract provides for investments with a fixed term (one to three years from the signing of the contract), estimated by ANTT at R$ 620,050. As of June 30, 2020, the subsidiary’s investments for R$ 178,972.

 

The Elevações Portuárias concession and lease agreement provide for investments aimed at improving and modernizing the facilities and equipment allocated therein, estimated for R$ 340,000. At the balance sheet date, the subsidiary had made investments for R$ 261,506.

 

12 Sectorial financial assets and liabilities

 

Accounting policy   The sectorial financial assets and liabilities are intended to neutralize the economic impacts on the result of the subsidiary Comgás, due to the difference between the cost of gas and rates contained in the ordinances issued by ARSESP (Sanitation and Energy Regulatory Agency of the State of São Paulo), and those effectively included in the tariff, at each tariff adjustment / review.   These differences between the real cost and the cost considered in the tariff adjustments generate a right to the extent that the realized cost is greater than that contemplated in the tariff, or an obligation, when the costs are lower than those contemplated in the tariff. The differences are considered by ARSESP in the subsequent tariff adjustment, and are now included in the Company's tariff adjustment index.   On June 10, 2020, ARSESP published Resolution No. 1,010, which provides for the mechanism for updating the weighted average cost of gas and transportation in piped gas tariffs and the mechanism for recovering the balance of the graphic account, due to variations the price of gas and transport. This mechanism aims at monthly calculation by segment of users and considering the recovery installments previously established and in the process of compensation. As provided in such ordinance, any balances in the graphic accounts existing at the end of the concession will be indemnified to the subsidiary Comgás or returned to users within 12 months before the end of the concession period. The balance consists of: (i) the previous cycle (in amortization), which represents the balance approved by ARSESP already included in the tariff and (ii) by the cycle being constituted, which are the differences that will be approved by ARSESP in the next tariff adjustment.   In addition, this resolution dealt with the balance contained in the current account of taxes, which accumulated amounts related to tax credits taken advantage of by Comgás, but which essentially are part of the tariff composition and must subsequently be transferred via the tariff.   With the advent of this resolution, the subsidiary Comgás understands that there is no longer significant uncertainty that would hinder the recognition of sectorial financial assets and liabilities as amounts actually receivable or payable. Accordingly, as of June 10, 2020, it recognizes the sectorial financial assets and liabilities in its financial statements. In the period ended June 30, 2020, the subsidiary Comgás recorded a net sectoral financial liability balance of (R$ 92,147), of which (R$ 101,812) against net operating revenue and cost of products sold, and R$ 9,665 against the financial result.

 

 

 

 

 

The balance of the net sectorial financial asset (liability) is shown below:

 

				At June 30, 2020
	Cost of gas				404,907
	Credits of taxes				(497,054	)
	Total				(92,147	)

 

The change in the net sectorial financial liability (liability) for the period ended June 30, 2020 was as follows:

 

		Assets Sectorial				Liabilities Sectorial				Total
At January 1, 2020			—				—				—
Cost of gas (i)			368,297				—				368,297
Credits of taxes (ii)			—				(497,054	)			(497,054	)
Monetary variation (iii)			9,665				—				9,665
Other revenue (iv)			26,945				—				26,945
At June 30, 2020			404,907				(497,054	)			(92,147	)

 

 

	Current				404,907				(93,587	)			311,320
	Non-current				—				(403,467	)			(403,467	)
					404,907				(497,054	)			(92,147	)

(i)

Refers to the cost of gas purchased in excess of the ordinance that will be collected from consumers.

(ii)

Credits, mainly, from the exclusion of ICMS on the basis of PIS and COFINS that will be returned to consumers when the lawsuit is final.

(iii)

Monetary update on the cost of gas

(iv)

Reimbursement of expenses with regulatory losses in accordance with Resolution ARSESP 977 of April 8, 2020 that will be collected from consumers.

 

13 Other taxes payable

 

		June 30, 2020				December 31, 2019
Tax amnesty and refinancing program - REFIS			204,281				213,360
ICMS – State VAT			144,179				161,254
COFINS – Revenue tax			139,405				84,953
PIS – Revenue tax			33,031				19,426
Social Security Charges			34,621				10,513
Withholding Income Tax			3,930				4,941
ISS – Service tax			769				578
IOF – Financial tax			309				309
Other			27,706				22,787
			588,231				518,121
Current			437,755				363,051
Non-current			150,476				155,070

 

 

 

14 Income tax and social contribution

 

a)    Reconciliation of income and social contribution tax expenses

 

		April 1, 2020 to June 30, 2020				January 1, 2020 to June 30, 2020				April 1, 2019 to June 30, 2019 (Restated)				January 1, 2019 to June 30, 2019 (Restated)
Profit before taxes			535,901				1,006,594				802,808				1,286,333
Income tax and social contribution nominal rate (34%)			(182,206	)			(342,242	)			(272,955	)			(437,353	)
Adjustments to determine the effective rate
Interest in earnings of investees (non-taxable income)			(72,557	)			(6,398	)			23,891				120,058
Differences in tax rates on earnings / losses of overseas companies			48,818				223,248				(27,159	)			(38,656	)
Granted income tax incentive			37,744				37,744				44,129				72,103
Share-based payment transactions			7,165				8,024				(276	)			(553	)
Interest on shareholders’ equity			(6,290	)			(12,750	)			(6,800	)			(14,790	)
Non-deductible expenses (donations, gifts, etc.)			(5,018	)			(738	)			(3,029	)			(7,686	)
Tax losses not recorded (i)			(29,157	)			(63,520	)			(28,964	)			(68,377	)
Goodwill amortization effect			318				635				317				635
Other			5,140				14,739				13,470				35,954
Income tax and social contribution benefit (expense) - current and deferred			(196,043	)			(141,258	)			(257,376	)			(338,665	)
Effective rate - %			36.58	%			14.03	%			32.25	%			26.55	%

 

(i)

Refers mainly to tax losses not recorded in subsidiaries of Rumo which under current conditions do not attend the requirements of future taxable profits that justify the recognition of the deferred tax assets. In accordance with Brazilian Federal Taxes rules those losses do not expire.

 

 

 

 

 

 

 

b)   Deferred income tax assets and liabilities

 

The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities are presented below:

 

		June 30, 2020				December 31, 2019
Assets credit of:
Income tax loss carry forwards			2,548,689				2,136,077
Social contribution tax loss carry forwards			932,101				779,252
Temporary differences
Foreign exchange - Loans and borrowings			2,245,310				921,811
Legal proceedings provision			309,900				305,473
Impairment provision			227,934				203,057
Provisions for employee benefits			221,620				214,496
Allowance for doubtful accounts			45,478				26,969
Regulatory asset (liability)			—				53,875
Impairment of tax credit			81,613				79,928
Share-based payment transactions			13,566				9,879
Profit sharing			14,808				63,987
Interest on preferred shareholders payable in subsidiaries			125,654				89,931
Property, plant and equipment - useful life review			405,661				408,581
Miscellaneous provisions			353,373				348,212
Other			186,384				112,240
Total			7,712,091				5,753,768
(-) Deferred taxes assets net not recognized			(2,255,335	)			(2,198,164	)
Liabilities credit of:
Temporary differences
Business combination - property, plant and equipment			18,090				27,666
Tax deductible goodwill			(390,249	)			(390,249	)
Leases			(45,927	)			(36,347	)
Unrealized gains on derivatives instruments			(2,576,338	)			(923,672	)
Fair value option in loans			534,678				174,596
Income on formation of joint ventures			(1,135,036	)			(1,135,036	)
Business combination - Intangible asset			(3,634,100	)			(3,663,085	)
Provision for realization - Goodwill recorded in equity (i)			(449,155	)			—
Other			276,596				114,525
Total			(7,401,441	)			(5,831,602	)
Total of deferred taxes recorded			(1,944,685	)			(2,275,998	)
Deferred income tax - Assets			1,665,304				1,607,566
Deferred income tax - Liabilities			(3,609,989	)			(3,883,564	)

 

 

(i)

In January 2020, Cosan subsidiary contributed to the capital of the subsidiary Compass Gás e Energia the investment it held in the subsidiary Comgás. As a result, the costs recorded in shareholders' equity, derived from the goodwill paid on the acquisitions of Comgás shares in voluntary tender offer occurred during the year 2019, totaling R$ 1,321,000 capital loss. Associated with this amount, a deferred income tax loss of R$ 449,000 was recorded. On the other hand, deferred income tax liabilities were recorded, canceling the effect of the result in the accounting, to be reversed when the future write-off of said goodwill.

 

c)    Analytical movement in deferred tax

 

Assets		Tax loss and negative basis				Post-employment obligations				Employee benefits				Provisions				Property				Other				Unregistered credits				Total
Balance on January 1, 2020			2,915,329				214,496				73,866				963,639				408,581				1,177,857				(2,218,619	)			3,535,149
Credited to the profit for period			564,413				7,124				(45,492	)			54,659				(2,920	)			(11,412	)			—				566,372
Other comprehensive income (loss)			1,048				—				—				—				—				67,404				—				68,452
Exchange differences			—				—				—				—				—				1,323,499				(57,171	)			1,266,328
Balance on June 30, 2020			3,480,790				221,620				28,374				1,018,298				405,661				2,557,348				(2,275,790	)			5,436,301

 

Liabilities		Effects on the formation of jointly-owned subsidiaries				Intangible				Unrealized income from derivatives				Leases				Debt Fair Value Adjustment				Other				Unregistered credits				Total
Balance on January 1, 2020			(1,135,036	)			(3,663,085	)			(923,672	)			(36,347	)			174,596				(248,058	)			20,455				(5,811,147	)
Credited to the profit for period			—				28,985				(1,652,666	)			(9,801	)			360,082				(296,231	)			2				(1,569,629	)
Other comprehensive income (loss)			—				—				—				221				—				(429	)			(2	)			(210	)
Business combination			—				—				—				—				—				—				—				—
Balance on June 30, 2020			(1,135,036	)			(3,634,100	)			(2,576,338	)			(45,927	)			534,678				(544,718	)			20,455				(7,380,986	)
																															(1,944,685	)

 

The Company expects to realize the full deferred tax on tax losses and social contribution.

 

 

15 Provision for legal proceedings and judicial deposits

 

The Company had provision for legal proceedings and judicial deposits recorded in the financial position at June 30, 2020 and December 31, 2019 in respect of:

 

			Provision for legal proceedings								Judicial deposit
			June 30, 2020				December 31, 2019				June 30, 2020				December 31, 2019
Tax			591,819				589,180				459,077				476,706
Civil, environmental and regulatory			365,449				332,527				99,512				220,933
Labor			416,981				432,464				265,157				245,818
			1,374,249				1,354,171				823,746				943,457

 

Changes in provision for legal proceedings:

 

		Tax				Civil, environmental and regulatory				Labor				Total
At December 31, 2019			589,180				332,527				432,464				1,354,171
Provisions			1,322				29,155				29,286				59,763
Settlement / Write-offs			(2,373	)			(14,600	)			(57,372	)			(74,345	)
Exchange rate			—				—				92				92
Interest and exchange variation (i)			3,690				18,367				12,511				34,568
At June 30, 2020			591,819				365,449				416,981				1,374,249

 

(i)

Includes interest reversal.

 

The Company’s debts with legal proceedings are secured by assets, cash deposit, bank guarantee or insurance guarantee.

 

The subsidiary Cosan S.A. has indemnity actions in addition to those mentioned, which, since they are considered probable, were not recorded because they represent contingent assets.

 

a)

Probable losses

 

Tax: The principal tax proceedings for which the risk of loss is probable are described below:

 

 

		June 30, 2020				December 31, 2019
Compensation with FINSOCIAL			295,337				293,291
INSS - Social security			96,697				95,979
State VAT - ICMS credit			98,533				97,534
PIS and COFINS			2,764				2,889
IPI - Excise tax credit - NT			53,980				53,693
Federal income taxes			1,352				1,707
Other			43,156				44,087
			591,819				589,180

 

Civil, regulatory, environmental and other claims: Company and its subsidiaries are parties to a number of civil legal claims related to (i) indemnity for material and moral damages; (ii) termination of different kinds of agreements (iii) public civil claims related to sugarcane stubble burning; and (iv) compliance with terms of conduct adjustment, among other issues.

 

Labor claims: Cosan and its subsidiaries are also parties to a number of labor claims filed by former employees and service providers challenging, among other matters, the payment of overtime, night shift premiums and risk premiums, the recognition of employment relationships and the reimbursement of discounts from payroll, such as social contribution and trade union charges. Additionally, we are involved in several labor administrative and judicial proceedings such as labor investigations and class actions filed by the labor prosecutor’s office regarding alleged non-compliance with certain labor regulations, including work and safety rules, labor conditions and work environment, and social assistance plans. Moreover, we entered into certain consent orders (Termos de Ajustamento de Conduta) with Brazilian authorities and in the event, we fail to comply with such consent orders, we could be subject to fines.

 

b)

Possible losses

 

The principal proceedings for which we deem the risk of loss as possible are described below:

 

 

				June 30, 2020				December 31, 2019
	Civil				3,570,891				3,493,260
	Labor				960,608				968,426
	Tax				13,048,541				11,382,113
	Regulatory				850,794				860,025
	Environmental				702,421				679,621
					19,133,255				17,383,445

 

Tax:

		June 30, 2020				December 31, 2019
ICMS - State VAT			2,900,516				2,869,089
Federal income taxes (i)			4,980,690				3,619,834
IRRF - Withholding tax			1,219,876				1,030,981
PIS and COFINS - Revenue taxes			1,579,802				1,529,885
INSS - Social security and other			213,876				226,857
Goodwill Rumo			84,524				83,734
IPI - Excise tax credit - NT			454,921				451,781
Penalties related to tax positions			489,761				483,577
MP 470 - Tax installments			307,231				304,961
Foreign financial operation			28,983				28,701
Compensation with IPI - IN 67/98			182,906				181,655
Stock option			70,741				70,072
Financial transactions tax on loan			54,144				53,765
Other			480,570				447,221
			13,048,541				11,382,113

 

 

(i)

On February 14, 2020, the subsidiary Comgás received tax assessment notices from the Brazilian tax authorities, for the years ended in 2015 and 2016, related to the amortization of the goodwill paid for the acquisition in the reverse merger of Provence Participações S.A., in the amount of R$ 1,228,416. The Company's lawyers assessed the probability of loss as possible, with a remote loss bias and, therefore, no provision was recorded in accordance with IAS 37. ”

 

In addition, the effects of IFRIC 23 - Uncertain Tax Position that could affect the accounting policies of the Company and its subsidiaries and these interim financial statements were not identified.

 

 

 

c)

Contingent assets

 

(i)

On March 15, 2017, the Federal Supreme Court (“STF”) concluded the judgment of Extraordinary Appeal No. 574,706 and, under the system of general repercussion, established the thesis that the Tax on Circulation of Goods and Services (“ICMS” ) does not compose the basis for calculating the Social Integration Program (“PIS”) and the Contribution for the Financing of Social Security (“COFINS”), since this amount does not constitute company revenue / billing. That is, taxpayers have the right to exclude the amount related to ICMS highlighted in the invoice of the PIS / COFINS calculation base. There is still an approximate amount of R$ 932,000 in Comgás, related to the exclusion of ICMS on the basis of PIS and COFINS, arising from the period prior to the decision of the STF and without final judgment, which remains a contingent asset.

 

(ii)

On December 6, 2019, ARSESP published Resolution 933, for the purpose of non-tariff compensation to the Concessionaire, in the amount of R$ 697,233 in April 2018 currency, before monetary restatements, as a result of the 3rd Ordinary Tariff Review, a be applied in the form that may be defined by the Granting Authority until May 31, 2020. With the publication of the aforementioned Resolution, there are no more tariff discussions related to previous periods with the Regulatory Agency. The amount indicated in the resolution was not recognized in these interim financial statements for not complying with the accounting criteria. On May 27, 2020, in continuation of Resolution 933, ARSESP approved, by means of Resolution 995, the amount of R$ 683,358 plus monetary restatement since April 2018, as a result of the Third Ordinary Tariff Review, to be applied to value of assets returned by Comgás, at the end of the concession, or any amount payable by the subsidiary Comgás, if the concession is renewed or in connection with any renewal of the concession contract.

 

  

(iii)

The Company has an action for damages due to the economic and financial imbalance of the Concession Agreement, with regard to tariff reviews. The right to recomposition is the result of mistaken criteria regarding the tariff review. The updated value of the share is R$ 419,900 as an economic-financial rebalancing of Comgás.

 

16 Shareholders’ equity

 

a)

Share capital

 

At June 30, 2020, Cosan Limited’s share capital is composed of the following:

 

Shareholders - Common shares		Class A common shares				%				Class B common shares				%
Controlling group			20,603,636				13.61	%			96,332,044				100	%
Renaissance Technologies LLC			9,228,442				6.10	%			—				—
Free Float			104,873,623				69.30	%			—				—
Total shares outstanding			134,705,701				89.01	%			96,332,044				100	%
Treasury shares			16,638,275				10.99	%			—				—
Total			151,343,976				100.00	%			96,332,044				100	%

 

b)

Treasury shares

 

The Company holds 16,638,275 Class A treasury shares on June 30, 2020 and December 31, 2019, with a market value of US$ 15.06 and US$ 22.84 respectively.

 

c)

Other comprehensive (loss) income

 

		December 31, 2019				Comprehensive (loss) income				June 30, 2020
Loss on cash flow hedge in joint ventures			(790,403	)			(418,462	)			(1,208,865	)
Foreign currency translation effects			49,281				(200,027	)			(150,746	)
Actuarial loss on defined benefit plan			(180,958	)			4				(180,954	)
Financial instruments with subsidiaries			15,000				—				15,000
Change in fair values of financial assets			1,277				40				1,317
Total			(905,803	)			(618,445	)			(1,524,248	)
Attributable to:

Owners of the Company			(805,471	)			(785,462	)			(1,590,933	)
Non-controlling interests			(100,332	)			167,017				66,685

 

 

 

17 Earnings per share

 

The Company’s subsidiaries have two categories of potential dilutive effects: share options and put options. For the share options, a calculation is done to determine the effect of the dilution in the profit attributable to shareholders of the parent due the exercise of the share options at subsidiaries. For the put option, is assumed to have been converted into ordinary shares, and the profit attributable to shareholders of the parent is adjusted.

 

The following table sets forth the calculation of earnings per share (in thousands of Brazilian reais, except per share amounts):

 

		April 1, 2020 to June 30, 2020				January 1, 2020 to June 30, 2020				April 1, 2019 to June 30, 2019 (Restated)				January 1, 2019 to June 30, 2019 (Restated)
Profit attributable from to ordinary equity holders for basic earnings - basic			101,899				748,552				208,401				398,617
Profit attributable from to ordinary equity holders for basic earnings - continued operation - basic			101,899				748,552				213,170				409,193
Effect of dilution:
Dilutive effect of subsidiary's stock option plan			(901	)			(1,947	)			(967	)			(1,685	)
Profit attributable to ordinary equity holders adjusted for the effect of dilution			100,998				746,605				207,434				396,932
Profit attributable to ordinary equity holders adjusted for the effect of dilution - Continued operation			101,899				746,605				212,203				409,193
Weighted-average number of shares outstanding (In thousands of shares)
Basic			221,809				221,809				230,448				230,692
Dilutive effect of stock option plan			7,844				7,844				8,964				9,206
Dilutive			229,653				229,653				239,412				239,898
Earnings per share
Basic earnings per share			R$ 0.4594				R$ 3.3748				R$ 0.9043				R$ 1.7279
Diluted earnings per share			R$ 0.4594				R$ 3.2510				R$ 0.8664				R$ 1.6546
Earnings per share from continued operation
Basic earnings per share			R$ 0.4398				R$ 3.3748				R$ 0.9250				R$ 1.7738
Diluted earnings per share			R$ 0.4437				R$ 3.2510				R$ 0.8864				R$ 1.7057

 

 

18 Net sales

 

Accounting policy (new operations)   The Company recognizes revenue from the supply and supply of electricity at the fair value of the consideration, through the delivery of electricity in a given period. The volume of energy delivered to the buyer is determined on a monthly basis. Customers obtain control of electricity from the moment they consume it. Invoices are issued monthly and are usually paid within 30 days of being issued.   Revenue from energy commercialization is recorded based on bilateral contracts signed with market agents and duly registered with the Electric Energy Trading Chamber (“CCEE”).   Revenue is recognized based on the energy sold and at prices specified under the terms of supply and supply contracts. The subsidiary will be able to sell the energy in two environments: (i) in the Free Contracting Environment (FCE), where the sale of electric energy occurs through the free negotiation of prices and conditions between the parties, through bilateral contracts; and (ii) at Regulated Contracting Environment (RCE), where electricity is sold to distribution agents.   (a) Short-term market   The Company recognizes revenue at the fair value of the consideration receivable when transactions in the short-term market occur. The price of energy in these operations is characterized by the link with the Differences Settlement Price – PLD (short-term price).   (b) Trading operations   Energy trading operations are traded on an active market and, for accounting measurement purposes, they meet the definition of financial instruments at fair value.   The subsidiary recognizes revenue when the energy is delivered to the customer 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 financial statements are recognized as revenue.

 

 

 

 The following is an analysis of the Company's revenue for the period from continuing operations:

 

		April 1, 2020 to June 30, 2020				January 1, 2020 to June 30, 2020				April 1, 2019 to June 30, 2019 (Restated)				January 1, 2019 to June 30, 2019 (Restated)
Gross revenue from sales of products and services			5,266,874				10,973,158				5,852,037				11,294,889
Construction revenue			219,098				416,319				182,114				342,050
Indirect taxes and deductions			(1,311,061	)			(2,292,060	)			(961,300	)			(1,844,181	)
Net sales			4,174,911				9,097,417				5,072,851				9,792,758

 

In the following table, revenue is disaggregated by products and service lines and timing of revenue recognition:

 

 

 

 

 

 

 

		April 1, 2020 to June 30, 2020				January 1, 2020 to June 30, 2020				April 1, 2019 to June 30, 2019 (Restated)				January 1, 2019 to June 30, 2019 (Restated)
At a point in time
Gas distribution			1,186,845				3,282,600				2,144,345				4,031,099
Commercialization of energy			145,114				313,889				—				—
Lubricants and basic oil			772,044				1,776,788				995,634				2,023,209
			2,104,003				5,373,277				3,139,979				6,054,308
Over time
Transportation			1,723,999				3,084,403				1,654,735				3,223,160
Port elevation			92,431				155,590				74,005				140,526
Construction revenue			219,098				416,319				182,114				342,050
Other services			45,260				85,370				21,172				41,300
			2,080,788				3,741,682				1,932,026				3,747,036
Elimination			(9,880	)			(17,542	)			846				(8,586	)
Total of net sales			4,174,911				9,097,417				5,072,851				9,792,758

 

 

  

 

19 Costs and expenses by nature

 

The costs and expenses are presented in the statement of profit and loss by function. The reconciliation of income by nature/purpose is as follows:

 

		April 1, 2020 to June 30, 2020				January 1, 2020 to June 30, 2020				April 1, 2019 to June 30, 2019 (Restated)				January 1, 2019 to June 30, 2019 (Restated)
Raw materials			(474,152	)			(1,060,973	)			(617,805	)			(1,277,776	)
Cost of gas and electricity (i)			(814,770	)			(2,298,018	)			(1,368,757	)			(2,707,748	)
Transportation expenses			(592,526	)			(1,159,870	)			(624,063	)			(1,232,275	)
Depreciation and amortization			(525,997	)			(1,064,917	)			(555,343	)			(1,117,991	)
Salaries and wages			(382,252	)			(781,531	)			(408,468	)			(783,348	)
Construction cost			(219,098	)			(416,319	)			(182,114	)			(342,050	)
Expenses with third-party services			(170,565	)			(330,326	)			(148,012	)			(288,240	)
Selling expenses			(5,582	)			(10,558	)			(11,314	)			(20,178	)
Other			(239,868	)			(436,433	)			(111,111	)			(248,802	)
			(3,424,810	)			(7,558,945	)			(4,026,987	)			(8,018,408	)
Cost of sales			(2,793,309	)			(6,343,520	)			(3,477,315	)			(6,946,642	)
Selling expenses			(315,013	)			(603,618	)			(267,902	)			(532,032	)
General and administrative expenses			(316,488	)			(611,807	)			(281,770	)			(539,734	)
			(3,424,810	)			(7,558,945	)			(4,026,987	)			(8,018,408	)

 

(i)

Includes the amount of R$ 368,297 resulting from the recognition of the financial sectorial asset and liabilities, Note 12.

 

 

 

20 Other income (expenses), net

 

		April 1, 2020 to June 30, 2020				January 1, 2020 to June 30, 2020				April 1, 2019 to June 30, 2019 (Restated)				January 1, 2019 to June 30, 2019 (Restated)
Contractual obligations for sales of credit rights (ii)			—				(68,311	)			—				—
Recovering tax credits			7,587				18,062				38,847				48,285
Revenue from sale of scrap			9,634				16,885				5,264				14,498
Loss from impairment (v)			(107,106	)			(107,106	)			—				50,284
Gain (loss) from port operations			(5,139	)			(3,532	)			—				—
Reimbursement of losses in the gas process (iv)			26,945				26,945				—				—
Loss on disposal of non-current assets and intangibles			(1,638	)			(1,693	)			(2,140	)			(7,212	)
Depreciation of right-of-use (i)			(24,206	)			(48,413	)			—				—
Settlement of disputes in the renewal process (iii)			348,319				278,496				—				—
Net effect of legal proceedings, recoverable and tax installments			(35,908	)			(61,730	)			(19,014	)			(64,739	)
Other			(4,031	)			36,992				(15,882	)			(35,328	)
			214,457				86,595				7,075				5,788

 

(i)

Depreciation cost of the grant of "Malha Central" (subsidiary in pre-operating phase).

 

(ii)

On December 21, 2017, the subsidiary Cosa S.A. entered into a “Credit Rights Assignment and Other Covenants Agreement”. In return, it received R$ 1,340,000 (“acquisition price”), resulting from certain indemnity actions. In addition to the acquisition price, Cosan S.A. will be entitled to additional payments related to these credit rights, provided that its result is positive. The additional payment will be determined by applying 95% of the difference between the net amount received from the Union's credit rights by the transferee, less the return of the transferees. Being recognized in the results only upon receipt.   In September and December 2019, there was an assignment of the additional payment mentioned in the previous paragraph, plus credit related to the portion of the controversial share of the action of Açucareiro Corona S.A.   In both contracts there are clauses of the Company's obligations towards buyers, in the event of any discounts, retentions or compensations that may be promoted by Copersucar, higher than certain percentages, in which the Company will indemnify buyers.

 

 

On January 2, 2020, the first installment of the second precatory and second installment of the first precatory was received, with Copersucar retaining the amount referring to taxes, expenses and other withholdings. The Company indemnified the Buyers at R$ 132,200 on February 11, 2020, as represented in the cash flow statement, comprising: (i) R$ 28,700 taxes and expenses; (ii) R$ 103,500 other retentions, R$ 130,922 was received on April 2, 2020. Copersucar retained the credit for Corona's share to cover the interest that will be incurred.   In relation to the other retentions, accounts receivable were created against Copersucar, referring to the reimbursement of the installments received from the court orders, totaling R$ 134,903, consisting of: (i) the first installment of the first court order R$ 31,403 recorded in May 2019; and (ii) first installment of the second precatory and second installment of the first precatory in the total amount of R$ 103,500 recorded in February 2020.   On March 31, 2020, the Company made a provision of R$ 68,311 related to the taxes and expenses of the installments falling due that the Company will have to indemnify the Fund for the remaining installments of the first precatory and the second precatory.

 

(iii)

R$ 348,319 with a positive effect related to the reversal of lease liabilities in litigation registered in May and R$ 69,823 of negative effect recorded in January due to administrative and judicial disputes involving the Granting Authority and Malha Paulista, whose discussion the Company gave up as a prerequisite for the conclusion of the concession's early renewal process, one of the requirements imposed by TCU - Federal Audit Court.

 

(iv)

Reimbursement of expenses with regulatory losses in accordance with Resolution ARSESP 977 of April 8, 2020, which was recognized, as detailed in note 12 .

 

(v)

Details note 10.2

 

21 Finance results

 

 

Foreign currency gains and losses on financial assets and financial liabilities are reported on a net basis as either finance income or finance cost depending on whether the net foreign currency fluctuations result in a gain or loss position.

 

Details of finance income and costs are as follows:

 

		April 1, 2020 to June 30, 2020				January 1, 2020 to June 30, 2020				April 1, 2019 to June 30, 2019 (Restated)				January 1, 2019 to June 30, 2019 (Restated)
Cost of gross debt
Interest on debt			(426,705	)			(862,550	)			(414,739	)			(777,024	)
Monetary and exchange rate variation			(761,439	)			(3,919,288	)			168,567				96,921
Derivatives and fair value measurement			983,082				4,393,001				635				65,225
Amortization of borrowing costs			(13,469	)			(28,811	)			(9,533	)			(23,846	)
Finance and warranties on debt			(13,152	)			(22,478	)			(20,426	)			(40,217	)
			(231,683	)			(440,126	)			(275,496	)			(678,941	)
Income from financial investment and exchange rate in cash and cash equivalents			74,734				153,963				95,726				183,853
			74,734				153,963				95,726				183,853
Cost of debt, net			(156,949	)			(286,163	)			(179,770	)			(495,088	)
Other charges and monetary variations
Interest on other receivables			31,563				68,926				79,527				101,546
Interest on other liabilities			(2,276	)			(9,673	)			(17,858	)			(33,274	)
Monetary variation on leases and concessions agreements			83,362				9,802				(49,780	)			(98,391	)
Monetary variation on leases			(159,717	)			(295,381	)			(89,087	)			(137,521	)
Interest on shareholders' equity			—				—				(925	)			(925	)
Interest on contingencies and contracts			(43,744	)			(84,618	)			(40,628	)			(129,634	)
Bank charges and other			2,535				(18,992	)			(24,942	)			(49,651	)
Exchange variation and non-debt derivatives			30,540				17,014				8,918				9,002
			(57,737	)			(312,922	)			(134,775	)			(338,848	)
Finance results, net			(214,686	)			(599,085	)			(314,545	)			(833,936	)
Reconciliation
Finance expense			(755,660	)			(2,983,294	)			(1,120,766	)			(1,924,801	)
Finance income			61,129				381,062				191,623				318,039
Foreign exchange, net			(766,358	)			(3,967,798	)			177,485				106,668
Derivatives			1,246,203				5,970,945				437,113				666,158
Finance results, net			(214,686	)			(599,085	)			(314,545	)			(833,936	)

 

 

22 Financial risk management

 

a)

Market risk

 

The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

 

The Company uses derivatives to manage market risks. All such transactions are carried out within the guidelines set by the risk management committee. Generally, the Company seeks to apply hedge accounting to manage volatility in profit or loss.

 

i.

Foreign exchange risk

 

At June 30, 2020 and December 31, 2019, the Company had the following net exposure to the exchange rate variations on assets and liabilities denominated in U.S.Dollar (U.S.$.) and Euro (EUR):

 

		June 30, 2020				December 31, 2019
Cash and cash equivalents			3,431,801				901,718
Trade receivables			27,564				22,771
Trade payables			(107,877	)			(86,732	)
Loans, borrowings and debentures			(23,587,148	)			(16,245,131	)
Leases			(101,337	)			(65,348	)
Consideration payable			(219,362	)			(184,370	)
Derivative financial instruments (notional)			19,803,476				13,621,791
Foreign exchange exposure, net			(752,883	)			(2,035,301	)

 

The sensitivity of profit or loss to changes in the exchange rates arises mainly from U.S. Dollar denominated financial instruments and the impact on other components of equity arises from foreign forward exchange contracts designated as cash flow hedges though its joint ventures.

 

A reasonably possible strengthening (weakening) of the real to U.S. dollar and Euro at December 31, 2020 would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. Stressed scenarios (positive and negative effects, before tax effects) were defined based on changes of a 25% and 50% to the U.S. dollar and Euro exchange rates used in the probable scenario. The Company’s exposure to foreign currency changes for all other currencies is not material.

 

 

									Variation scenario
Instrument		Risk factor			Probable				25	%			50	%			-25	%			-50	%
Cash and cash equivalents		Currency fluctuation			42,172				69,489				97,180				14,668				(12,837	)
Trade receivables		Currency fluctuation			15,558				22,165				28,772				8,952				2,345
Trade payables		Currency fluctuation			(100,945	)			(126,783	)			(152,536	)			(75,279	)			(49,527	)
Derivative financial instruments (Notional)		Currency fluctuation			1,775,675				5,937,018				10,013,564				(2,216,074	)			(6,292,622	)
Loans, borrowings and debentures		Currency fluctuation			748,299				(3,642,870	)			(8,012,976	)			5,033,612				9,382,475
Leases		Currency fluctuation			4,182				(20,106	)			(44,394	)			28,471				52,759
Consideration payable		Currency fluctuation			(210,310	)			(262,887	)			(315,465	)			(157,733	)			(105,155	)
Impacts on profit or loss					2,274,631				1,976,026				1,614,145				2,636,617				2,977,438

 

The probable scenario considers the estimated exchange rates, made by a specialized third part, at the due date of the transactions for the companies with functional currency Real (positive and negative, before tax effects), as follows:

 

				Exchange rate sensitivity analysis (R$/U.S.$) and (R$/Euro)
								Scenario
					June 30, 2020				Probable				25	%			50	%			-25	%			-50	%
	U.S.$				5.4760				5.2500				6.5625				7.8750				3.9375				2.6250
	Euro				6.1539				5.9300				7.4125				8.8950				4.4475				2.9650

 

ii.

Interest rate risk

 

The Company and its subsidiaries monitor the fluctuations in variable interest rates in connection with its borrowings, especially those that accrue interest using LIBOR, and uses derivative instruments in order to minimize variable interest rate fluctuation risks.

 

A sensitivity analysis on the interest rates on loans and borrowings in compensation for the CDI investments with pre-tax increases and decreases of 25% and 50% is presented below:

 

							Variation scenario
Exposure interest rate			Probable				25	%			50	%			-25	%			-50	%
Cash and cash equivalents			218,020				272,090				327,031				(70,379	)			(124,884	)
Marketable securities			57,160				71,450				85,740				25,486				11,196
Consideration asset			65,163				81,454				97,745				48,872				32,582
Restricted cash			917				1,147				1,376				(1,147	)			(1,376	)
Other financial assets			(6,073	)			(7,591	)			(9,110	)			7,591				9,110
Leases			(821,151	)			(788,729	)			(790,447	)			(785,295	)			(783,577	)
Derivative financial instruments			64,342				2,038,682				2,256,996				546,300				(17,638	)
Loans, borrowings and debentures			(1,710,606	)			(314,503	)			(432,460	)			(78,592	)			39,365
Impacts on profit or loss			(2,132,228	)			1,353,999				1,536,871				(307,164	)			(835,222	)

 

The probable scenario considers the estimated interest rate, made by a specialized third part and Central Bank of Brazil (Banco Central do Brasil), or BACEN, as follows:

 

			Probable				25	%			50	%			-25	%			-50	%
SELIC			2.15	%			2.69	%			3.23	%			1.61	%			1.08	%
CDI			2.15	%			2.69	%			3.23	%			1.61	%			1.08	%
TJLP462 (TJLP + 1% p.a.)			5.80	%			7.00	%			8.20	%			4.60	%			3.40	%
TJLP			4.80	%			6.00	%			7.20	%			3.60	%			2.40	%
IGPM			3.84	%			4.80	%			5.75	%			2.88	%			1.92	%
IPCA			3.07	%			3.83	%			4.60	%			2.30	%			1.53	%
Fed Funds			0.15	%			0.19	%			0.23	%			0.11	%			0.08	%
Libor			0.61	%			0.76	%			0.92	%			0.46	%			0.31	%

 

iii.

Price risk

 

As of January 2020, the Company entered the energy trading market, with the objective of obtaining results with variations in the price of energy, within the limits of risk and pre-established counterparties by Management, exposing the Company to risk price of this commodity.

 

Equity position and unrealized gains on energy trading operations, net. Trading operations are traded on an active market and recognized at fair value through profit or loss, based on the difference between the contracted price and the market price of the open contracts on the balance sheet date.

 

This fair value is estimated, in large part, in the price quotations used in the active over-the-counter market, insofar as such observable market data exist, and, to a lesser extent, by the use of valuation techniques that consider prices established in operations of purchase and sale and market prices projected by specialized entities, in the period of availability of this information.

 

The equity balances referring to the open trading transactions are shown below.

 

										June 30, 2020
		Assets				Liabilities				Net gain
Trading operations			40,260				(8,906	)			31,354

 

The main risk factor that impacts the pricing of trading operations is exposure to energy market prices. The scenarios for sensitivity analysis for this factor are prepared using market data and specialized sources, considering future prices, applied to the market curves of June 30, 2020, as follows:

 

							Variation scenario
			Probable				25	%			50	%			-25	%			-50	%
Unrealized gains on trading operations			31,354				(53,140	)			(137,633	)			115,847				200,340
			31,354				(53,140	)			(137,633	)			115,847				200,340

 

b)

Credit risk

 

The Company’s regular operations expose it to potential defaults when customers, suppliers and counterparties are unable to comply with their financial or other commitments. The Company seeks to mitigate this risk by entering into transactions with a diverse pool of counterparties. However, the Company continues to remain subject to unexpected third party financial failures that could disrupt its operations. The exposure to credit risk was as follows:

 

 

		June 30, 2020				December 31, 2019
Cash and cash equivalents			10,953,572				8,472,274
Trade receivables			1,825,072				3,115,503
Marketable securities			2,658,608				1,814,394
Derivative financial instruments			9,569,926				3,824,410
Receivables from related parties			188,336				173,341
Dividends receivable			57,942				23,252
Restricted cash			42,672				147,910
			25,296,128				17,571,084

 

The Company is also exposed to risks in connection with its cash management activities and temporary investments.

 

Liquid assets are invested primarily in government security and other investments in Banks with a minimum grade of “A.” Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy.

 

Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed on an annual basis and may be updated throughout the period. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through potential counterparty’s failure to make payments. The credit risk on cash and cash equivalents, marketable securities, restricted cash and derivative financial instruments are determined by rating instruments widely accepted by the market and are arranged as follows:

 

 

				June 30, 2020				December 31, 2019
	AAA				18,823,518				11,538,846
	AA				4,378,190				4,021,251
	B-				23,070				—
					23,224,778				15,560,097

 

c)

Liquidity risk

 

The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

 

The financial liabilities of the Company sorted by due dates (based on undiscounted cash flows contracted) are as follows:

 

 

		June 30, 2020																				December 31, 2019
		Up to 1 year				1 - 2 years				3 - 5 years				More than 5 years				Total				Total
Loans, borrowings and debentures			(6,440,102	)			(3,967,672	)			(23,372,652	)			(19,711,336	)			(53,491,762	)			(42,443,289	)
Trade payables			(2,377,234	)			—				—				—				(2,377,234	)			(2,190,264	)
Other financial liabilities			(405,798	)			—				—				—				(405,798	)			(543,879	)
Tax installments - REFIS			(8,441	)			(4,553	)			(9,271	)			(183,939	)			(206,204	)			(207,416	)
Leases			(1,266,908	)			(1,032,579	)			(3,018,545	)			(20,024,275	)			(25,342,307	)			(11,666,959	)
Payables to related parties			(402,610	)			(741	)			—				—				(403,351	)			(392,458	)
Dividends payable			(21,590	)			—				—				—				(21,590	)			(214,104	)
Preferred shareholders payable			—				(446,984	)			—				—				(446,984	)			(611,537	)
			(10,922,683	)			(5,452,529	)			(26,400,468	)			(39,919,550	)			(82,695,230	)			(58,269,906	)

 

 

 

 

23 Post-employment benefits

 

		June 30, 2020				December 31, 2019
Defined contribution
Futura II			437				361
Defined benefit
Futura			75,567				74,093
Comgás			639,059				630,549
			715,063				705,003

 

During the period ended June 30, 2020, the amount of sponsor contributions to the plans was R$ 21,153 (R$ 8,462 on December 31, 2019).

 

24 Share-based payment

 

The plans have been administered by the Board of Directors, at its option, by a Committee, within the limits established in the guidelines for the elaboration and structuring of each plan and in the applicable legislation.

 

The detail of plans, including the quantity of granted shares and expected life in years is as follow:

 

a)

Description of share-based payment arrangements

 

According to the plan, eligible employees can receive common shares annually without payment in cash. The number of shares issued to program participants is the value of the offer divided by the weighted average price at which the Company's shares are traded on the Stock Exchange.

 

For share-based compensation settled with shares, the expense is based on the date of granting the fair value of the premiums that must be acquired during the grace period. For awards with graduated vesting, the fair value of each tranche is recognized during the respective grace period. At the end of each reporting period, the Company reassesses its estimates of the number of premiums that must be acquired and recognizes the impact of the revisions in the income statement.

 

 

The Black-Scholes methodology was used to calculate the fair value under the terms of the Share-Based Compensation Plan.

 

Type of award / Grant date		Company		Expected life (years)				Granted				Exercised / canceled / transferred				Available
Stock grant programs
April 27, 2017		Cosan S.A.			5				274,000				(76,900	)			197,100
July 31, 2017		Cosan S.A.			5				298,107				(78,948	)			219,159
July 31, 2018		Cosan S.A.			5				210,602				—				210,602
July 31, 2019		Cosan S.A.			5				31,031				—				31,031
									813,740				(155,848	)			657,892
April 20, 2017		Comgás			5				61,300				(4,725	)			56,575
August 12, 2017		Comgás			5				97,780				(6,000	)			91,780
August 1, 2018		Comgás			5				96,787				—				96,787
July 31, 2019		Comgás			5				83,683				—				83,683
February 01, 2020		Compass Gás e Energia			5				1,858,959				—				1,858,959
									2,198,509				(10,725	)			2,187,784
October 1, 2015		Rumo S.A			5				1,485,900				(258,300	)			1,227,600
January 2, 2017		Rumo S.A			5				1,476,000				(226,900	)			1,249,100
September 1, 2017		Rumo S.A			5				870,900				(131,300	)			739,600
August 1, 2018		Rumo S.A			5				1,149,544				(155,621	)			993,923
August 15, 2019		Rumo S.A			5				843,152				(19,956	)			823,196
									5,825,496				(792,077	)			5,033,419
August 18, 2017		Cosan Limited			5				3,530,163				(3,530,163	)			—
Stock grant - Modification
August 18, 2011 - (B) (iii)		Cosan S.A.			1 to 12				1,501,626				(1,276,283	)			225,343
December 12, 2012 - (C)		Cosan S.A.			1 to 7				24,647				(24,647	)			—
April 24, 2013 (i)		Cosan S.A.			5 to 7				122,123				(116,802	)			5,321
April 25, 2014 (ii)		Cosan S.A.			5 to 7				283,808				(273,056	)			10,752
August 31, 2015		Cosan S.A.			5 to 7				463,906				(157,242	)			306,664
									2,396,110				(1,848,030	)			548,080
August 18, 2011 - (B)		Cosan Logística			1 to 12				162,464				(162,464	)			—
December 12, 2012 - (C)		Cosan Logística			1 to 7				277				(277	)			—
April 24, 2013		Cosan Logística			5 to 7				1,926				(1,806	)			120
April 25, 2014		Cosan Logística			5 to 7				23,682				(22,396	)			1,286
									188,349				(186,943	)			1,406
Cash-settled transactions
September 21, 2017		Cosan Limited			5				255,000				(255,000	)			—
July  31, 2019		Moove			5				132,670				—				132,670
Total									15,340,037				(6,778,786	)			8,561,251

 

(i)

On January 23, 2020, 9,579 shares were delivered, equivalent to the amount of R$ 333.

(ii)

On March 5, 2020, 21,504 shares were delivered, equivalent to the amount of R$ 748.

(iii)

On April 30, 2020, 225,531 shares were settled in cash in the amount of R $ 20,281.

 

b)

Reconciliation of outstanding share options

 

The movement in the number of awards outstanding and their related weighted-average exercise prices are as follows:

 

				Stock option programs				Stock grant programs				Total
	At December 31, 2019				150,662				7,501,866				7,652,528
	Granted				—				1,858,959				1,858,959
	Vested				—				(435,160	)			(435,160	)
	Cancelled				(51,311	)			(364,414	)			(415,725	)
	At June 30, 2020				99,351				8,561,251				8,660,602

 

c)

Expense recognized in profit or loss

 

Share-based compensation expense included in the statement of profit and loss for the period ended June 30, 2020 and 2019 was as follows:

 

				Stock option programs				Stock grant programs				Total
	June 30, 2019				1,627				29,279				30,906
	At June 30, 2020				7,271				37,304				44,575

 

 

(i)               Incremental cost was recognized in income for the period.

 

25 Operation discontinued

 

On December 2, 2019, the subsidiary Cosan S.A. sold its interest in Cosan Biomassa S.A. to the joint venture Raízen Energia S.A. for R$ 1 (One Real). Considering the unsecured liability of R$47,531, plus the 11-month result of this entity of R$ 15,386 and other transaction expenses of R$21,124, generating a gain in the amount of R$11,021.

 

Accordingly, as presented below and also required by IFRS 5 - Non-current assets held for sale and discontinued operations -, the Company is changing the presentation of its income statements and cash flow statements for the period ended on June 2019.

 

		April 1, 2019 to June 30, 2019 (Published)				Discontinued operation				April 1, 2019 to June 30, 2019 (Restated)				January 1, 2019 to June 30, 2019 (Published)				Discontinued operation				January 1, 2019 to June 30, 2019 (Restated)
Gross profit			1,595,513				23				1,595,536				2,846,398				(282	)			2,846,116
Selling, general and administrative expenses			(550,601	)			929				(549,672	)			(1,073,108	)			1,342				(1,071,766	)
Other income (expenses), net			3,384				3,691				7,075				(1,684	)			7,472				5,788
Profit before equity in earnings of investees, finance results and taxes			1,048,296				4,643				1,052,939				1,771,606				8,532				1,780,138
Interest in earnings of associates			7,086				(1,082	)			6,004				(19,712	)			(2,400	)			(22,112	)
Interest in earnings of joint ventures			58,410				—				58,410				362,243				—				362,243
Equity in earnings of investees			65,496				(1,082	)			64,414				342,531				(2,400	)			340,131
Finance results, net			(315,753	)			1,208				(314,545	)			(838,380	)			4,444				(833,936	)
Profit before taxes			798,039				4,769				802,808				1,275,757				10,576				1,286,333
Income taxes			(257,376	)			—				(257,376	)			(338,665	)			—				(338,665	)
Profit from continuing operations			540,663				4,769				545,432				937,092				10,576				947,668
Loss from discontinued operations, net of taxes			—				(4,769	)			(4,769	)			—				(10,576	)			(10,576	)
Profit for the period			540,663				—				540,663				937,092				—				937,092
Profit attributable to:
Owners of the Company			208,401				—				208,401				398,617				—				398,617
Non-controlling interests			332,262				—				332,262				538,475				—				538,475
			540,663				—				540,663				937,092				—				937,092

 

 

 

		January 1, 2019 to June 30, 2019 (Published)				Discontinued operation				January 1, 2019 to June 30, 2019 (Restated)
Cash flows from operating activities
Profit before taxes			1,275,757				10,576				1,286,333
Adjustments for:
Depreciation and amortization			1,118,653				(527	)			1,118,126
Interest in earnings of associates			19,712				2,400				22,112
Interest in earnings of joint ventures			(362,243	)			—				(362,243	)
Indexation charges, interest and exchange, net			918,090				(5,246	)			912,844
Provisions for employee benefits			104,333				18				104,351
Other			(94,946	)			(651	)			(95,597	)
			2,979,356				6,570				2,985,926
Changes in:
Trade receivables			(442,819	)			(8,058	)			(450,877	)
Inventories			(98,383	)			(1,345	)			(99,728	)
Current tax, net			10,414				1,022				11,436
Related parties, net			8,333				(3,755	)			4,578
Trade payables			170,589				2,418				173,007
Employee benefits			(151,489	)			771				(150,718	)
Other assets and liabilities, net			(259,087	)			8,730				(250,357	)
Discontinued operation			—				1,377				1,377
Other			(18,019	)			(7,730	)			(25,749	)
Net cash generated by operating activities			2,198,895				—				2,198,895
Marketable securities			2,073,212				(1,361	)			2,071,851
Additions to property, plant and equipment, intangible assets, contract assets and right to use			(1,315,701	)			253				(1,315,448	)
Discontinued operation			—				1,108				1,108
Other			616,746				—				616,746
Net cash used in investing activities			1,374,257				—				1,374,257
Loans, borrowings and debentures raised			3,020,332				(460	)			3,019,872
Amortization of principal on loans, financing and debentures			(1,809,575	)			(100,517	)			(1,910,092	)
Payment of interest on loans, borrowings and debentures			(618,364	)			(81,145	)			(699,509	)
Derivative financial instruments, net			44,816				(44,816	)			—
Discontinued operation			—				(10,702	)			(10,702	)
Other			(2,788,325	)			237,640				(2,550,685	)
Cash flow from financing activities			(2,151,116	)			—				(2,151,116	)
Increase (decrease) in cash and cash equivalents			1,422,036				—				1,422,036
Cash and cash equivalents at beginning of period			3,621,798				—				3,621,798
Effect of exchange rate fluctuations on cash held			(41,071	)			—				(41,071	)
Cash and cash equivalents at end of period			5,002,763				—				5,002,763

 

 

26 Subsequent events

 

26.1 Cosan S.A.

 

Corporate reorganization

 

The Boards of Directors of Cosan S.A., Cosan Logística S.A. and Cosan Limited approved the start of the study of a corporate restructuring proposal that will result in Cosan S.A. as the only holding company in the entire group. Such corporate restructuring aims to simplify the Cosan Group's structure, unifying and consolidating the various free floats of the Companies, increasing the liquidity of their securities, as well as unlocking the value that exists within the Cosan Group.

 

The corporate reorganization will consist of the merger of companies under common control, whereby Cosan Limited and Cosan Logística S.A. will be merged into Cosan S.A.

 

Deliberations OGM

 

According to the Ordinary and Extraordinary General Meeting held on July 29, 2020, we present below the main resolutions:

 

i.

Cancellation of 4,694,353 treasury shares issued by the subsidiary Cosan S.A .;

ii.

Approval of the capital increase of the subsidiary Cosan S.A in the amount of R $ 682,264 without the issue of new shares;

iii.

Approval of the increase in the authorized capital of the subsidiary Cosan S.A to up to R $ 7,000,000.

 

IPO Compass Gás e Energia

Approved at the Ordinary and Extraordinary General Meeting of the subsidiary Compass held on July 30, 2020, request for registration of the public offering of primary distribution of common shares, together with the submission of:

 

i.

application for membership of Compass to the special listing segment of the Novo Mercado of B3 S.A. - Brasil, Bolsa, Balcão; and

ii.

application for registration as an issuer of “Category A” securities with the CVM.

 

26.2 Cosan Logística

 

Issue Green Notes

 

On July 1, 2020, the Company completed the raising of USD 500,000 thousand, by the subsidiary Rumo Luxemburgo Sarl, through the issuance of Green Notes, with an interest rate of 5.25% p.a. and maturity on January 10, 2028.

 

The funds raised through the issuance of Notes will be used to finance new investments in eligible “Green Projects”, according to the Green Bond Framework issued with Second Party Opinion by Sustainalytics and certification by the CBI - Climate Bond Initiative.

 

Re-bidding process of Malha Oeste

 

On July 21, 2020, the Company filed with the National Land Transportation Agency (ANTT), a request for adherence to a re-bidding process related to the object of the Concession Contract signed between Malha Oeste and the Union, through the Ministry of Transport ( “Relicitation Process”), pursuant to Law No. 13,448 of June 5, 2017 and regulated by Decree No. 9,957 of August 7, 2019.

 

Public offering of shares of subsidiary Rumo

 

On August 13, 2020, the subsidiary Rumo S.A. has announced a primary public offering of shares, through which it intends to sell 235,000,000 shares, a volume that can be increased by 35%, for a capital increase, whose authorized limit is R$ 7,000.000.

 

 

 

Debenture issuance

 

On August 13, 2020, the Board of Directors approved the 1st issuance of simple unsecured debentures, not convertible into shares, with an additional personal guarantee, in a single series, of the Company, in the total amount of up to R$ 1,740,000. The proceeds will be used in the public offering of shares of the subsidiary Rumo S.A.

 

 

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: October 2, 2020

 

COSAN LIMITED
By:		/s/ Marcelo Eduardo Martins
		Name: Marcelo Eduardo Martins Title: Chief Financial Officer