Amaggi Exportação e Importação Ltda.
Financial Statements as of December 31, 2014 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Content
Independent auditor’s report 3
Statements of financial position 5
Statement of comprehensive income 6
Statements of changes in equity 7
Statements of cash flows 8
Notes to the financial statements 9
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KPMG Auditores Independentes Central Tel 55 (16) 2106-6700 Rua Sete de Setembro, 1.950 Fax 55 (16) 2106-6767 13560-180 - São Carlos, SP - Brasil Internet www.kpmg.com.br Caixa Postal 708 13560-970 - São Carlos, SP - Brasil
Independent auditor’s report
To The Board of directors and quotaholders of Amaggi Exportação e Importação Ltda. Cuiabá - MT
We have audited the accompanying individual and consolidated financial statements of Amaggi Exportação e Importação Ltda. (“the Company”), identified as Company and Consolidated, respectively, which comprise the statement of financial position as at December 31, 2014, the statements of profit and loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.
Management’s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these individual and consolidated financial statements in accordance with accounting practices adopted in Brazil and in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board – IASB and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility Our responsibility is to express an opinion on these individual and consolidated financial statements based on our audit. We conducted our audit in accordance with the Brazilian and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the individual and consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the individual and consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the individual and consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the individual and consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
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KPMG Auditores Independentes, uma sociedade simples brasileira e KPMG Auditores Independentes, a Brazilian entity and a member firma-membro da rede KPMG de firmas-membro independentes e firm of the KPMG network of independent member firms affiliated afiliadas à KPMG International Cooperative (“KPMG International”), with KPMG International Cooperative (“KPMG International”), a uma entidade suíça. Swiss entity.
Opinion In our opinion, the individual and consolidated financial statements give a true and fair view of the individual and consolidated financial position of the Amaggi Exportação e Importação Ltda. as at December 31, 2014, and of its individual and consolidated financial performance and its individual and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board – IASB.
KPMG Auditores Independentes CRC 2SP014428/O-6
Claudio José Biason Accountant CRC 1SP144806/O-7
São Carlos, February 27, 2015
4 Amaggi Exportação e Importação Ltda.
Statements of financial position
December 31, 2014 and 2013
(In thousands of US Dollars) Consolidated Company Consolidated Company Assets Note 2014 2013 2014 2013 Liabilities Note 2014 2013 2014 2013
Cash and cash equivalents 8 312,303 283,354 307,558 255,857 Accounts payable to suppliers 17 149,188 119,943 152,233 108,769 Trade accounts receivable 9 124,264 119,330 109,941 107,886 Loans and financing 18 175,667 291,043 149,476 267,608 Inventories 10 165,354 158,871 161,877 155,274 Advances from customers 19 128,335 126,997 126,837 126,862 Advances to suppliers 12 414,151 442,767 413,812 439,826 Taxes payable 6,964 9,647 1,636 1,213 Recoverable taxes 13 76,962 66,968 51,993 52,622 Salaries and vacation payable 28,929 26,091 23,772 20,561 Securities brokerage operations 26,493 16,411 26,271 16,249 Derivative financial instruments 20 72,099 90,450 66,870 89,791 Derivative financial instruments 20 94,918 148,628 91,981 148,628 Securities brokerage operations 3,911 - 3,911 - Prepaid expenses 8,066 6,141 5,486 3,582 Dividends payable 1,040 561 - - Other credits 4,347 6,190 11,022 11,762 Others accounts payable 2,166 3,008 1,915 2,088 Total current assets 1,226,858 1,248,660 1,179,941 1,191,686 Total current liabilities 568,299 667,740 526,650 616,892
Marketable securities 6,902 3,374 1,353 561 Loans and financing 18 1,024,077 845,240 798,093 628,826 Trade accounts receivable 9 6,285 1,907 6,282 1,904 Advances from customers 19 13,906 - - - Advances to suppliers 12 - - 4,718 5,816 Provision for fiscal, labor and tax risks 22 2,905 1,661 979 874 Recoverable taxes 13 6,926 13,843 290 215 Deferred income and social contribution taxes 11 5,563 25,338 - 6,720 Loans granted 14 27,951 10,766 27,951 33,217 Total non-current liabilities 1,046,451 872,239 799,072 636,420 Prepaid expenses 13,306 4,014 13,296 4,004 Other credits 445 331 155 146 Total liabilities 1,614,750 1,539,979 1,325,722 1,253,312 Deferred income and social contribution taxes 11 33,537 320 32,864 - Biological assets 10,310 8,695 10,310 8,695 Equity Investments 15 67,935 54,931 446,963 367,973 Capital 128,326 123,943 128,326 123,943 Property, plant and equipment 16 927,621 815,597 273,092 216,620 Equity valuation adjustments 29,675 38,140 29,675 38,140 Intangible assets 3,635 1,925 3,315 1,686 Cumulative translation adjustments 15,028 11,497 15,028 11,497 Total non-current assets 1,104,853 915,703 820,589 640,837 Goodwill on capital transactions (584) - (584) - Retained earnings 502,363 405,631 502,363 405,631 Total equity attributable to equity holders of the company 674,808 579,211 674,808 579,211
Non-controlling interest 42,153 45,173 - -
Total equity 24 716,961 624,384 674,808 579,211
Total assets 2,331,711 2,164,363 2,000,530 1,832,523 Total equity and liabilities 2,331,711 2,164,363 2,000,530 1,832,523
The notes are an integral part of these consolidated financial statements.
5 Amaggi Exportação e Importação Ltda.
Statements of comprehensive income
Years ended December 31, 2014 and 2013
(In thousands on US Dollars)
Consolidated Company Note 2014 2013 2014 2013
Net revenue 25 3,755,699 3,949,448 3,463,580 3,552,857 Changes in fair value of biological assets - (2,594) - - Cost of goods and services (3,424,669) (3,605,675) (3,229,620) (3,306,138) Gross profit 331,030 341,179 233,960 246,719
Selling expenses 26 (62,715) (69,003) (58,319) (64,377) Administrative expenses 27 (89,724) (95,884) (69,038) (69,951) Net other operating income (expenses) 28 15,644 23,527 18,918 12,838 Equity interest gain (loss) in subsidiaries (328) 3,263 42,481 42,185
Income from operating activities and emplayees' profit sharing 193,907 203,082 168,002 167,414
Financial revenues 113,267 135,698 110,124 135,235 Financial expenses (129,795) (143,651) (112,469) (132,275) Translation gain (loss) (26,096) (60,501) (31,316) (60,126) Net financial income (expenses) 29 (42,624) (68,454) (33,661) (57,166)
Net income before income tax and social contribution and employees' profit sharing 151,283 134,628 134,341 110,248
Income tax and social contribution - deferred 45,715 19,648 37,013 19,806 Income tax and social contribution - current (35,325) (51,736) (21,826) (36,901) Net income before emplayees' profit sharing 161,673 102,540 149,528 93,153
Employees' profit sharing (22,700) (19,700) (20,000) (16,500)
Net income for the year 138,973 82,840 129,528 76,653
Net income for the year Controlling interests 129,528 76,653 129,528 76,653 Non-controlling interests 9,445 6,187 - - Net income for the year 138,973 82,840 129,528 76,653
The notes are an integral part of these consolidated financial statements.
6 Amaggi Exportação e Importação Ltda.
Statements of changes in equity
Years ended December 31, 2014 and 2013
(In thousands on US Dollars)
Equity Cumulative Goodwill on valuation translation capital Retained Non-controlling Total Capital adjustments adjustments transactions earnings Total interests equity
Balances at January 1, 2013 123,943 37,793 10,711 - 332,992 505,439 38,837 544,276
Dividends distribution - - - - (8,880) (8,880) (395) (9,275)
Deemed cost realization - (4,684) - - 4,684 - - -
Effect of hedge accounting in joint ventures - (583) - - - (583) - (583)
Impairment provision of property, plant and equipament - 5,614 - - - 5,614 1,107 6,721
Cumulative translation adjusments - - 786 - 182 968 486 1,454
Capital integralization of minority shareholders on Amaggi Paraguay S.R.L. ------3 3
Capital increase in subsidiaries ------5 5
Net income for the year - - - - 76,653 76,653 6,187 82,840
Profit destination Statutory dividends in subsidiaries ------(1,057) (1,057)
Balances at December 31, 2013 123,943 38,140 11,497 - 405,631 579,211 45,173 624,384
Dividends distribution - - - - (33,866) (33,866) (1,070) (34,936)
Capital integralization of minority shareholders on Divisa Energia S.A. ------39 39
Deemed cost realization - (1,819) - - 1,819 - - -
Deemed cost realization in subsidiaries - (3,145) - - 3,145 - - -
Effect of hedge accounting in joint ventures - 407 - - - 407 - 407
Impairment provision of property, plant and equipament - (3,908) - - - (3,908) (557) (4,465)
Cumulative translation adjusments in subsidiaries - - 3,531 - - 3,531 107 3,638
Capital integralization of minority shareholders on Amaggi Paraguay S.R.L. ------3 3
Capital increase through the incorporation of Maggi Armazéns Gerais Ltda 4,383 - - - (3,894) 489 - 489
Goodwill on capital transactions - Hermasa Navegações da Amazônia S.A. - - - (584) - (584) - (584)
Acquisition of minority shareholders participation ------(9,947) (9,947)
Net income for the year - - - - 129,528 129,528 9,445 138,973
Profit destination Statutory dividends in subsidiaries ------(1,040) (1,040)
Balances at December 31, 2014 128,326 29,675 15,028 (584) 502,363 674,808 42,153 716,961
The notes are na integral part of these consolidated financial statements
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Statements of cash flows
Years ended December 31, 2014 and 2013
(In thousands on US Dollars)
Consolidated Company Note 2014 2013 2014 2013
Cash flows from operating activities
Net income for the year 138,973 82,840 129,528 76,653
Adjustment to: Depreciation and amortization 36,425 35,625 11,984 12,355 Residual cost on disposal of fixed assets 5,530 4,219 2,102 1,091 Deferred income tax and social contribution (45,715) (19,648) (37,013) (19,806) Conversion translation adjustments on subsidiaries 6,295 1,136 - 248 Equity interest gain (loss) in subsidiaries 328 (3,263) (42,481) (42,185) Provision (reversion) for civil, labor and tax risks 1,309 (1,303) 170 (129) Incurred interests and exchange variation 26,639 (9,543) 31,180 (4,561) Accrued interests on marketable securities (2,359) 264 (2,982) (4,704) Changes in fair value of biological assets - 2,594 - - Impairment provision of property, plant and equipment (241) (8,413) - - Unrealized derivatives 35,359 7,481 33,726 6,894 Allowance for doubtful accounts 1,314 (4,200) 1,314 (4,200) Provision for inventory losses 12,493 888 12,493 888 216,350 88,677 140,021 22,544 Changes on assets and liabilities Decrease (Increase) trade accounts receivable (10,895) 38,630 (8,016) 26,890 Decrease (Increase) inventories (18,976) 107,594 (19,096) 94,452 Decrease advances to suppliers 28,828 85,013 27,324 88,812 Decrease (Increase) recoverable taxes (3,088) 27,343 543 (11,027) Decrease (Increase) securities brokerage operations (6,171) 35,922 (6,111) 35,642 Decrease (Increase) prepaid expenses (11,217) 1,262 (11,196) 1,093 Decrease other credits 1,749 16,168 2,089 10,808 (Increase) marketable securities (3,400) (2,660) (927) (380) (Increase) biological assets (1,615) (563) (1,615) (1,603) Increase (Decrease) accounts payable to suppliers 29,245 (6,596) 43,464 (12,604) Increase (Decrease) advances from customers 15,244 (88,433) (25) (88,477) Increase (Decrease) taxes payable (2,285) 3,962 821 187 Increase salaries and vacation payable 2,838 5,446 3,211 7,026 Increase (Decrease) other accounts payable (419) (9,625) 250 (1,187) Increase (Decrease) deferred income tax and social contribution (7,223) 44,921 (2,571) 38,883 Cash provided in from operations 12,615 258,384 28,145 188,515
Interest paid (50,384) (71,263) (36,038) (48,261) Net cash provided in operating activities 178,581 275,798 132,128 162,798
Cash flow from investing activities Increase on investments (247) (215) (11,332) (2,855) Dividends and interests of own capital received - 1,143 6,382 10,677 Advances from future capital increase (15,371) (18,971) (33,487) (47,454) Acquisition of property, plant and equipment and intangible (160,420) (161,260) (72,640) (40,891) Increase of non-controlling interest 42 8 - - Acquisition of minority shareholders participation (10,531) - - - Loans granted to related parties (94,848) (23,602) (96,403) (38,701) Receipt of loans granted from related parties 79,894 20,265 104,786 58,963 Cash flowrovided (utilized) in investing activities (201,481) (182,632) (102,694) (60,261)
Cash flows from financing activities Financial funding 680,729 1,440,149 678,482 1,045,727 Payments of loans and financing (593,383) (1,534,041) (622,349) (1,170,279) Dividends paid (35,497) (11,737) (33,866) (8,880) Net cash provided (utilized) in financing activities 51,849 (105,629) 22,267 (133,432)
Increase (decrease) in cash and cash equivalents 28,949 (12,463) 51,701 (30,895)
Statements of increase (decrease) in cash and cash equivalents At beginning for the year 283,354 295,817 255,857 286,752 At end for the year 312,303 283,354 307,558 255,857 28,949 (12,463) 51,701 (30,895)
The notes are na integral part of these consolidated financial statements
8 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Notes to the consolidated and individual financial statements
(In thousands of U.S. dollars)
1. Reporting entity
Amaggi Exportação e Importação Ltda. (Company) is domiciled in the city of Cuiabá, state of Mato Grosso, Brazil and its main objectives are the commodities trading, mainly soybean exportation, seed processing, fertilizers importation and commercialization, extraction and commercialization of crude and degummed soybean oil and soybean meal.
Substantial part of its exportation is performed, through the direct subsidiary Amaggi International Ltd., which is considered as a branch due to the fact that does not have autonomy and works, in the essence, as an extension of the Company.
Due to this branch characteristic, the accounting amounts of Amaggi international Ltd. are consolidated on the individual Financial Statements presented on this set of Financial Statements.
2. Acquisition of non-controlling participation
As of August 7, 2014, the controlling entity Amaggi Exportação e Importação Ltda. acquired an additional participation of 3.99% of Hermasa Navegação da Amazônia S.A. that was owned by Petrobras Distribuidora S.A., paying ton this participation an amount of U$ 10,531, increasing its participation from 83.52811% to 87.51878%.
Due to the acquisition of shares, the entity recognized a reduction on non-controlling interest of USD 9,947 and a goodwill reserve of USD 584.
9 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
3. Incorporation of Maggi Armazéns Gerais Ltda on September 30, 2014
In accordance with Company’s strategy, the Company incorporated the entity Maggi Armazéns Gerais Ltda. in September, 2014.
Net assets incorporated were as follows:
Assets Liabilities
Cash and cash equivalents 856 Taxes payable 397 Trade accounts receivable 40 Others accounts payable 423 Inventories 23 Total current liabilities 820 Total current assets 919
Provision for fiscal, labor and tax risks 64 Property, plant and equipment 454 Total non-current liabilities 64 Total non-current assets 454
Total liabilities 884
Net assets Capital 533 Revaluation reserve (451) Accumulates loss 407 489
Total assets 1,373 Total equity and liabilities 1,373
4. Subsidiaries
Amaggi Exportação e Importação Ltda. owns the following investments in direct subsidiaries, joint ventures and associates.
Shareholding Country 2014 2013 Direct subsidiaries Amaggi Argentina S.A. Argentina 89.00% 89.00% Amaggi International Ltd. (considered a branch) BVI 100.00% 100.00% Amaggi Paraguay S.R.L. Paraguay 99.00% 99.00% Aruanã Comercializadora de Energia Ltda. Brazil 55.00% 55.00% Divisa Energia S.A. Brazil 97.50% 97.50% Hermasa Navegação da Amazônia S.A. Brazil 87.52% 83.53% Ilha Comprida Energia S.A. Brazil 98.75% 98.75% Jesuíta Energia S.A. Brazil 98.75% 98.75% Maggi Energia S.A. Brazil 55.00% 55.00% Segredo Energia S.A. Brazil 98.75% 98.75%
Jointly controlled entities Amaggi & LD Commodities S.A. Brazil 50.00% 50.00% Amaggi & LD Terminais Portuários S.A. Brazil 50.00% 50.00% Navegações Unidas Tapajós Ltda. Brazil 50.00% 50.00% Rio Madeira Administração de Bens Ltda. Brazil 50.00% 50.00%
Associates Terminal de Granéis do Guarujá S.A. Brazil 33.00% 33.00%
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Amaggi Argentina S.A.
Amaggi Argentina S.A. is located in the city of San Isidro, state of Buenos Aires, Argentina and its operations mainly consist in the commercialization of soybean, corn, wheat, sorghum and barley.
Amaggi Paraguay S.R.L.
Amaggi Paraguay S.R.L. is a controlled entity domiciled in the city of Ciudad del Este, state of Alto Paraná, Paraguay. It’s activities are based in trading of soybean, corn and wheat.
Aruanã Comercializadora de Energia Ltda.
Aruanã Comercializadora de Energia Ltda. is located in the city of Cuiabá, state of Mato Grosso, Brazil, and its main objective is the commercialization of electric power.
Divisa Energia S.A.
Divisa Energia S.A. is domiciled in the city of Cuiabá, state of Mato Grosso, Brazil and its main objective is the electric power generation in Brazil’s territory, with the authorization of the competent legal authorities.
Divisa Energia S.A. was created on June, 2007, and its operations began on November 2011.
Hermasa Navegação da Amazônia S.A.
Hermasa Navegação da Amazônia S.A. is domiciled in the city of Manaus, state of Amazonas, Brazil, and its main objective is the rendering of services related to fluvial navigation, transportation, storage and transshipment of grains, substantially to related parties at market prices and conditions.
In connection with such objectives, Hermasa Navegação da Amazônia S.A. sails Madeira river since a support terminal in Porto Velho, state of Rondônia, until a private port terminal in Itacoatiara, Stated of Amazonas seeking the economic use of Madeira and Amazonas rivers waterways.
Ilha Comprida Energia S.A.
Ilha Comprida Energia S.A. is domiciled in the city of Cuiabá, state of Mato Grosso, Brazil and its main objective is the electric power generation in Brazil’s territory, with the authorization of the competent legal authorities.
Ilha Comprida Energia S.A. was created on June, 2007, and its operations began in 2013.
Jesuíta Energia S.A.
Jesuíta Energia S.A. is domiciled in the city of Cuiabá, state of Mato Grosso, Brazil and its main objective is the electric power generation on Brazil’s territory, with the authorization of the competent legal authorities.
The Company was created on June, 2007, and its construction is being projected.
11 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Maggi Energia S.A.
Maggi Energia S.A. is domiciled in the city Cuiabá, state of Mato Grosso, Brazil and its principal objective is the implementation and operation of hydro and thermal power generation units with the authorization of the competent legal authorities, comprising activities related to the development of studies and projects and construction and operation of hydroelectric and thermoelectric units in Brazilian territory.
Segredo Energia S.A.
Segredo Energia S.A. is domiciled in the city of Cuiabá, state of Mato Grosso, Brazil and its main objective is the electric power generation on Brazil’s territory, with the authorization of the competent legal authorities.
Segredo Energia S.A. was created on June, 2007, and its operations began in 2013.
Amaggi & LD Commodities S.A.
Amaggi & LD Commodities S.A. is a joint venture between Amaggi Exportação e Importação Ltda. and Louis Dreyfus Commodities Brasil S.A., domiciled in the city of Luís Eduardo Magalhães, state of Bahia, Brazil. Amaggi & LD Commodities S.A. activities consists on the trade of agricultural and agro industrial products in general; purchase, sale, import and export of agricultural products and techniques used in agricultural activity; rendering of agricultural services; storage of seeds, grain, fertilizer / lime and fertilizers to soil; rendering of transport services; rendering of inland navigation, maritime, coastal, port operation and management; leasing and rental of boats; and other related activities.
Amaggi & LD Terminais Portuários S.A.
Amaggi & LD Terminais Portuários S.A. is a joint venture between Amaggi Exportação e Importação Ltda. and Louis Dreyfus Commodities Brasil S.A., domiciled in the city of São Paulo, state of São Paulo, Brazil, which main activity consists in the operation of port terminals, storage, transshipment, loading and unloading of grains in the state of Maranhão.
Navegações Unidas Tapajós Ltda.
Navegações Unidas Tapajós Ltda. is a joint venture between Amaggi Exportação e Importação Ltda. and Bunge, domiciled in the city of Cuiabá, state of Mato Grosso, Brazil. Its main activities are the maritime and river transportation services.
Rio Madeira Administração de Bens Ltda.
Rio Madeira Administração de Bens Ltda. is a jointly controlled entity domiciled in the city of São Paulo, state of São Paulo, Brazil. It’s activities are based in purchases, sales and administration of own property.
Terminal de Granéis do Guarujá S.A.
The associate Terminal de Granéis do Guarujá S.A. is domiciled in the city of Guarujá, state of São Paulo, Brazil. It’s main objective is to act as a marine terminal to receive, store and load grains (corn, soybeans and their sub products) on ships to export and is located on the left channel of the Port of Santos, in the city of Guarujá, state of São Paulo.
12 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
5. Basis of preparation
a. Basis of accounting
The financial statements of the Company, which were prepared in accordance with accounting practices adopted in Brazil, including the pronouncements issued by the Accounting Pronouncements Committee - CPC and the International Financial Reporting Standards - IFRS issued by the International Accounting Standards Board - IASB, one since starting in 2014, the IFRS applicable to separated financial statements allowed the application of the equity method in subsidiaries in the separated financial statements.
The financial statements, accompanied by the independent auditors report were authorized for issue by the Board of Directors on February 27, 2015.
Details about accounting policies are presented in note 6.
b. Basis of measurement
The financial statements have been prepared based on the historical cost basis except for the following material items, which are measured on an alternative basis on each reporting date:
Derivative financial instruments measured at fair value through profit and loss; Non-derivative financial instruments measured at fair value through profit or loss; Inventories evaluated at marked values less selling expenses; and Biological assets are measured at fair value.
c. Functional and presentation currency
Management defined Dollar (USD) as Company’s functional currency, according with the rules described on “IAS 21 – The Effects of Changes in Foreign Exchange Rates”.
All financial information presented in U.S. Dollar has been rounded to the nearest thousands, except when otherwise indicated.
d. Use of estimates and judgments
The preparation of financial statements according to IFRS requires management to perform judgments, estimates and to adopt assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenues and expenses. Actual results of assets, liabilities, revenues and expenses may differ from these estimates.
Estimates and assumptions are reviewed on an ongoing basis. Reviews of accounting estimates are recognized prospectively.
(i) Judgments
Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements is included in the following notes:
Note 4 and 6.a – Classification of joint arrangement;
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Note 4 and 6.a – Consolidation: whether the Company has the facto control over an investee.
(ii) Assumptions and estimation uncertainties
Information about uncertainties on assumptions and estimates that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes:
Note 6.d. (iii) – Useful life of property, plant and equipment;
Note 6.e. (iii) – Useful life of intangible assets;
Note 6.g. – Determination of fair value of inventories;
Note 6.h. – Impairment test: key assumptions underlying recoverable amounts.
Note 20 – Determination of fair value of financial assets and liabilities; and
Note 22 – Provision for civil, labor and tax risks.
6. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods reported in these consolidated and individual financial statements.
a. Basis of consolidation
(i) Controlled entities
The entity controls another entity when is exposed, or have the rights, on the variable income if this entity and has the ability to affect this income exercising its power over the entity. The financial statements of controlled entities are included in the consolidated financial statements from the date the control begins and they are maintained until the date the control no longer exists.
(ii) Investments in associates and joint ventures
Associates are those entities in which the Company, directly or indirectly, has significant influence, but not control, over the financial and operating policies.
Joint ventures are those entities whose activities the Company has joint control, established by contractual agreements and requiring unanimous consent on the strategic financial and operating decisions.
The investments on associates and joint ventures are accounted by equity method on the consolidated and individual financial statements and are initially recognized by cost plus transaction costs. After initial recognition, consolidated financial statements include the participation on profit or loss and other comprehensive income of the investee until the date that significant influence or shared control exists.
The consolidated financial statements include the profit or loss and other comprehensive income of equity accounted investees, after adjustments to align its the accounting policies
14 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
with those of the Company, from the date that significant influence or joint control begins until the date that significant influence or joint control ceases.
When the Company’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of the investment, including any long-term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.
(iii) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealized profit or loss arising from intra- group transactions, are eliminated during the preparation of the consolidated financial statements.
Unrealized gains arising from transactions with equity-accounted investees are eliminated against the investment on the extent of the Company’s interest in the investee.
Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there’s no evidence of impairment. b. Foreign currency
(i) Transactions in foreign currency
Transactions in foreign currency are converted to the respective functional currency of the Company at exchange rates in the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are converted to the functional currency at the exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are converted to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences are generally recognized in profit or loss. Non-monetary items that are measured based on historical cost in foreign currency are not translated.
The income and expenses of foreign operations are converted to U.S. Dollar at exchange rates on the date of transactions c. Financial instruments
(i) Non-derivative financial assets
Loans and receivables are recognized on the date they are originated. All other financial assets (including assets designated as at fair value through profit or loss) are recognized initially on the trade date, which is the date that the Company or its subsidiaries become party to the contractual dispositions of the instrument.
A financial asset is derecognized when the contractual rights to the cash flows from the asset expire, or when the rights to receive the contractual cash flows of a financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial assets that is created or retained is recognized as a separate asset or liability.
15 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when, and only when, the Company or its subsidiaries have legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
Non-derivative financial assets are classified into the following categories: recorded at fair value through profit or loss and loans and receivables.
Financial assets at fair value through profit or loss
A financial asset is classified as at fair value through profit or loss if it is classified as held for trading or is designated as such on initial recognition. Financial assets are designated as at fair value through profit or loss if the Company or its subsidiaries manage such investments and make purchase and sales decisions based on the fair value in accordance with the documented risk management and investments strategy. Attributable transaction costs are recognized as incurred after the initial recognition. Financial assets recorded as at fair value through profit or loss are measured at fair value and changes on the fair value are recognized in profit or loss.
Loans and receivables
Loans and receivables are financial assets with fixed or determinate payments that are not quoted in an active market. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses.
Loans and receivables comprise cash and cash equivalents, trade accounts receivable, securities brokerage operation (assets), Loans granted and other credits.
Cash and cash equivalents
Cash and cash equivalents includes cash balances, bank deposits and financial investments convertible into cash in an period within 90 days without significant loss on the amounts.
(ii) Non-derivative financial liabilities
Financial liabilities are initially recognized on the trade date, which is the date that the Company or its subsidiaries become party to the contractual dispositions of the instrument. A financial liability is derecognized when its contractual obligations are discharged, cancelled or expire.
Non-derivative financial liabilities are classified into the other financial liabilities category. Such liabilities are recognized initially at fair value plus any directly attributable transaction cost. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method.
The Company or its subsidiaries have the following non-derivative financial liabilities: accounts payable to suppliers, loans and financing, and other accounts payable.
(iii) Capital
Company’s capital is composed by quotas of limited responsibility.
16 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
(iv) Derivative financial instruments
The Company or its subsidiaries have derivative financial instruments to protect itself from exposures resulting from changes in foreign currency and interest rate. Embedded derivatives are separated from their principal contracts and are recorded individually in case the economic features, the risks of the principal contract and the embedded derivative aren’t intrinsically related; or if an individual instrument with the same conditions of the embedded derivative meets the same conditions as a derivative, and the instrument combined is not measured by the fair value through profit or loss.
Derivatives are initially recognized at the fair value; directly attributable transaction costs are recognized at profit or loss as incurred. Subsequent to the initial recognition, derivatives are recorded by its fair value, and the changes on fair value are recognized on profit or loss. d. Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost of acquisition or construction less accumulated depreciation and accumulated losses by impairment.
Cost includes disbursements that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the following:
The cost of materials and direct labor;
Any other costs directly attributable to bring the assets to a working condition for their intended use by Management;
Dismantling costs and the costs to restore the site on which the assets are located; and
Capitalized borrowing costs on qualifying assets.
Purchased software that is an integrant part of the functionality of equipment is capitalized as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Gains and losses on the disposal of an item of property, plant and equipment (the difference between the amount of the disposal and the carrying amount), are recognized in “net other operating income (expense)” in the “statements of comprehensive income”.
(ii) Subsequent costs
Subsequent costs are capitalized only when it is probable that the future economic benefits associated with the costs will flow to the Company or its subsidiaries. Ongoing repairs and maintenance are costs as incurred.
17 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
(iii) Depreciation
Items of property, plant and equipment are depreciated on a straight-line basis in profit or loss over the estimated useful lives of each component. Land is not depreciated.
Items of property, plant and equipment are depreciated from the date that they are installed and are ready for use, or in respect of internally constructed assets, from the date that the asset is completed and ready for use.
The estimated useful lives for the current and comparative year are as follows:
Useful life (Average) Weighted Average Classes of assets years Rate (p.y.) Aircraft 10.00 10.00% Improvements in properties of third 25.00 4.00% Buildings 34.67 2.88% Vessels 18.41 5.43% Hardware 3.22 31.06% Facilities 27.93 3.58% Machines and equipments 19.88 5.03% Furniture and fixtures 11.42 8.75% Radio-communication 8.04 12.43% Reservoirs, dams and aqueducts 50.00 2.00% Vehicles 5.26 19.02%
Depreciation methods, useful lives and residual amounts are reviewed at each reporting date and eventual adjustments are recorded as changes in accounting estimates. e. Intangible assets and goodwill
(i) Other intangible assets
Other intangible assets that are acquired and have finite useful lives are measured at cost less accumulated amortization and impairment.
(ii) Subsequent costs
Subsequent costs are capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other costs, including costs on internally generated goodwill and brands, is recognized in profit or loss as incurred.
(iii) Amortization
Amortization is recorded on a straight-line basis in profit or loss over their estimate useful lives, from the date that they are available for use. The estimated useful lives for software to the current and comparative periods are 5 years.
Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. f. Biological assets
Biological assets are measured at fair value, less costs to sell. Any change is recognized on
18 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
profit or loss. g. Inventories
Commodities are adjusted in accordance to the market value (“mark to market”) less costs to sell. In order to perform the calculation of the fair value, it is used as reference the quotations and rates published by public sources that are related to the products and active markets in which the Company and its subsidiaries act. Changes in the fair value of inventories are recognized in the profit or loss.
Other inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the mobile weighted average. In the case of manufactured inventories and work in progress cost includes an appropriate share of production overheads based on normal operating capacity. h. Impairment
(i) Non-derivative financial assets
Financial assets not classified at fair value through profit or loss, including in an interest in an equity-accounted investee, are assessed at each reporting date to determine whether there is objective evidence of impairment.
Objective evidence that financial assets are impaired includes:
default or delinquency by a debtor;
restructuring of an amount due terms that would not be considered otherwise;
indications that a debtor or issuer will enter bankruptcy;
adverse changes in the payment status of borrowers or issuers;
the disappearance of an active market for a security; and
Observable date indicating that there is measurable decrease in expected cash flows from a group of financial assets.
For an investment in an equity security, objective evidence of impairment includes a significant or prolonged decline in its fair value below its cost.
Financial assets measured at amortized cost
The Company and its subsidiaries consider evidence of impairment for assets measured at amortized cost at both a specific asset and collective level.
All the assets individually significant assets are assessed for specific impairment and if found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified.
Assets that are not individually significant are collectively assessed for impairment by grouping together assets with similar risk characteristics.
19 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
In assessing collective impairment, it is used historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management’s judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the assets original effective interest rate.
Losses are recognized in profit or loss and reflected in an allowance account against loans and receivables.
When an event occurring after the impairment was recognized causes the amount of the impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
Equity-accounted investees
An impairment loss in respect of an equity-accounted investee is measured by comparing the recoverable amount of the investment with is carrying amount. An impairment loss is recognized on profit or loss and is reversed if there has been a favorable change in the estimates used to determine the recoverable amount.
(ii) Non-financial assets
The carrying amounts of non-financial assets (other than biological assets, inventories and deferred tax assets) are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, than the asset's recoverable amount is estimated. Goodwill is tested annually for impairment.
An impairment loss is recognized if the carrying amount of the asset or cash generation unit (“CGU”), that comprises assets that cannot be tested individually and that for this reason are grouped into the smallest group of assets that generates inflows in a continuous use and that are significantly independents of inflows generated by other assets or group of assets, exceeds the recoverable amount.
The recoverable amount of an asset or CGU is the greater between its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.
Impairment losses are recognized in profit or loss, except in the case of the assets that suffered impact of Deemed Cost, when the provision is first recognized on equity (until the carrying amount of Deemed Cost on equity) and only the remaining amounts are recorded on profit or loss.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
20 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014 i. Advances to suppliers
The advances to suppliers with prices to be determined are update in accordance with the rates defined in the purchase agreement. Other advances are maintained by their original amount. j. Employee benefits
(i) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity (Private pension entity) and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognized as an employee benefit expense in profit or loss in the periods during which related services are rendered by employees.
(ii) Short-term employee benefits
Short-term employee benefits obligations are measured on an undiscounted basis and are expensed as the related service is rendered. A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. k. Provisions
A provision is recognized, as a result of a past event, if there is a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. l. Revenue
(i) Goods sale
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates.
Revenue is recognized when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the costumer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably.
The timing of the transfer of risks and rewards varies depending on the individual terms of the sales agreement. For sales of the following products: soybean, gross soybean oil and degummed, soy meal, soybean hulls, corn, cotton, seeds and fertilizers, the transference usually occurs when the product is delivered to the client’s warehouse; however, in cases where the sells take place in foreign markets, the transferences are made when the shipment of the products occurs in the seller’s port.
21 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
(ii) Services and other revenue
Revenue from services rendered and supply of electric power is recognized in profit or loss in proportion to the stage of completion. Revenue is not recorded if there is significant uncertainty of its realization.
When two or more activities that generate revenue or when the delivery of selling products are done under the same agreement. The allocation of the revenue for the components is based on the relative fair value of which specific component. m. Government grants
Government grants are recognized initially as deferred income at fair value when there is reasonable assurance that they will be received and the Company or its subsidiaries will comply with the conditions associated with the grant, and are then recognized in profit or loss as other income on a systematic basis over the useful life of the asset.
Grants that compensate Company or its subsidiaries for incurred expenses are recognized in profit or loss as on a systematic basis in the periods that the expenses are recognized. n. Lease
(i) Lease payments
Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease.
(ii) Determining whether an arrangement contains a lease
At inception of an arrangement, it is determined whether such arrangement is or contains a lease, this will be the case if the following conditions are fulfilled:
the arrangement is dependent on the use of a specific asset or assets; and
the arrangement contains a right to use the assets.
On the begin or in the moment of an eventual revaluation of the contract, payments and other consideration required by an arrangement into those for the lease and those for other elements on the basis of their relative fair values. o. Finance income and costs
Financial income comprises interest on marketable securities, gains on hedge instruments and gains on exchange rates variation. The interest income is recognized in profit or loss using the effective interest method.
The finance cost comprises interest expense on borrowings, losses with hedge instruments and losses with exchange rates variation.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in profit or loss using the effective interest method.
22 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Exchange rata variation gains and losses are presented on a net basis. p. Income taxes
The Company and its subsidiaries are or on the real profit tax regime or on the presumed tax regime.
(i) Entities on the real profit regime
The current and deferred income tax and social contribution are calculated on the basis of the following rates: 15% with an additional of 10% over the taxable profit exceeding BRL 240 for the income tax and 9% over the taxable profit for social contribution and it takes into consideration the compensation of tax losses and the negative base of social contribution limited to 30% of the annual taxable profit.
The expenses with income tax and social contribution comprise current and deferred income taxes. The current tax and the deferred tax are recognized in the income unless they are related to a business combination or to items directly recognized in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized taking into consideration the aliquots that are expected to be used in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be performed.
In the determination of current and deferred income taxes entities take into consideration the impact of uncertainties related to tax positions taken and if the payment of an additional income tax and interest is necessary.
(ii) Entities on the presumed profit regime
On this regime, taxable profit corresponds to 8% of operational revenue plus other operational income, to income tax, and 12% of operational revenue plus other operational income to social contribution.
Income tax is calculated based on a 15% aliquot plus 10% of the presumable taxable profit that exceeds annually R$ 240. Social contribution is calculated based on a 9% aliquot of the presumed taxable profit.
23 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
q. Environmental aspects
The Company and its subsidiaries consider that their facilities and activities are subject to environmental regulations and decrease the risk associated to environmental aspects with operating procedures and controls and with investments on equipments that controls pollution. Management believes that no provision for losses related to environmental aspects is required, based on the actual laws and regulations.
r. New rules and interpretations not yet adopted
A series of new rules and changes in rules and interpretations are effective to the exercises started after January 1, 2013 and were not adopted on the preparation of these consolidated financial statements. Those that may be relevant to the Company or its subsidiaries are shown below. The Company or its subsidiaries do not intend to adopt these rules until they be mandatory.
IFRS 9 Financial Instruments (2010 and 2009)
IFRS 9 (2009) introduces new requirements to classification and measurement of financial assets. In IFRS 9 (2009) financial assets are classified and measured based in the model they are maintained and according to its contractual cash flow characteristics. IFRS 9 (2010) introduces changes related to financial liabilities.
IASB has a project to implement changes on requirements of classification and measurement of IFRS 9 and to add new requirements relate to impairment of financial assets and hedge accounting.
IFRS 9 (2010 and 2009) is effective to the exercises started on or after January 1, 2015. The adoption of IFRS 9 (2010) may not cause impacts in financial assets and liabilities of the Company
7. Determination of fair value
Many accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair value is disclosed in the notes specific to that asset or liability.
(i) Inventories
Inventories are measured at fair value less the estimated costs of completion and sale, on mark to market, according to commodities and Company market.
(ii) Derivative financial instruments
The fair value of forward exchange contract is based on their quoted price, if available. The fair value of derivative instruments to protect currency and interest is determined by the future value of agreed conditions and the present value based on market curves, taken from the Bloomberg and BM&F database.
If a quoted price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity
24 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
of the contract using a risk-free interest rate (based on CDI rate).
(iii) Transactions with brokers
The fair value of assets and liabilities of the brokerage operations is measured by updating these amounts at the end of each period, based on contracts of sale and the future price of commodities in its active markets.
(iv) Trade Accounts receivable
The fair value of trade accounts receivable is estimated as the present value of future cash flow, discounted by the market rate of interest at the reporting date.
(v) Other credits
The fair value of other receivables is estimated as the present value of future cash flow, discounted by the market rate of interest at the reporting date.
(vi) Other non-derivative financial liabilities
The fair value of other non-derivative financial liabilities is estimated as the present value of future cash flow, discounted by the market rate of interest at the reporting date.
8. Cash and cash equivalents
Consolidated Company 2014 2013 2014 2013 Cash 32 28 24 18 Marketable securities (a) 235,369 244,913 234,298 220,767 Collection accounts (b) 12,456 15,891 12,456 15,891 Bank deposits 63,846 22,522 60,180 19,181 Exchange to internalize 600 - 600 - 312,303 283,354 307,558 255,857
(a) Marketable securities refer substantially to Banking Deposits Certificate (CDB), remunerated at market rates based on Interbank Deposit Certificate (CDI) determined by Cleaning House for the Custody and Financial Statement of Securities (CETIP). The average percentage of CDI that remunerates short-term investments of Company on December 31, 2014 is 101.40%.
(b) The collection accounts refer to payments received from foreign customers to be liquidated with pre export financing.
Details about credit risk, interest rate and other risks related to those assets are reported on note 20.
25 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
9. Trade accounts receivable
Consolidated Company 2014 2013 2014 2013 Foreign market 31,493 57,810 31,493 57,810 Foreign market - related parties (note 23) 33,597 4,849 29,050 4,849 Domestic market 60,469 49,927 54,535 41,074 Domestic market – related parties (note 23) 7,106 12,329 3,261 9,735 (-) Allowance for doubtful accounts (a) (2,116) (3,678) (2,116) (3,678) 130,549 121,237 116,223 109,790
Current assets 124,264 119,330 109,941 107,886 Non-current assets 6,285 1,907 6,282 1,904 a) Allowance for doubtful accounts
Consolidated Company 2014 2013 2014 2013 Initial balances (3,678) - (3,678) - Addition - (4,535) - (4,535) Reversed 1,543 860 1,543 860 Exchange rate variation 19 (3) 19 (3) Final balances (2,116) (3,678) (2,116) (3,678)
Exposure to currency and credit risk and impairment related to trade accounts receivable and other accounts, except to working in process, are reported on note 20.
10. Inventories
Consolidated Company 2014 2013 2014 2013 Storeroom materials 7,059 6,713 5,874 6,002 Soybean meal hipro 34,698 51,926 36,099 53,486 Inputs 15,057 15,892 14,028 15,191 Corn 65,741 69,948 68,520 72,432 Soybean oil 12,297 10,644 12,297 10,644 Soybean 14,563 7,609 14,781 7,696 Other inventories 16,768 9,462 11,107 3,146 (-) Impairment provision (829) (13,323) (829) (13,323) 165,354 158,871 161,877 155,274
Impairment provision of inventories is calculated based on the technical losses estimated to incur during the transportation of commodities between farms and ports and is related to the following inventory items:
Consolidated Company 2014 2013 2014 2013 Soybean meal hipro (102) (2,001) (102) (2,001) Corn (333) (1,863) (333) (1,863) Soybean oil (363) (114) (363) (114) Soybean (31) (9,345) (31) (9,345) (829) (13,323) (829) (13,323)
26 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
11. Income and social contribution taxes
a) Deferred assets and liabilities
Deferred tax assets and liabilities are recorded to reflect future tax effects related to temporary differences between the tax bases and their respective carrying amount.
Deferred assets and liabilities are originated from:
Consolidated Company 2014 2013 2014 2013 Exchange rate variation 45,114 13,189 36,810 15,004 Interest capitalization (1,482) - - - Deemed cost (18,536) (21,632) (2,374) (3,305) Negative goodwill on investment (1,773) (2,405) (1,773) (2,405) Impairment 2,537 1,082 - - Fair value of inventories 1,176 (1,736) 1,176 (1,736) Employees' profit sharing 7,582 - 6,800 - Tax losses carry forward 142 - - - Provision for civil, labor and tax risks 499 - 333 - Allowance for doubtful accounts 387 - 387 - Impairment of inventories 282 4,530 282 4,530 Fair value of derivative financial instruments (7,954) (19,780) (8,777) (20,004) Other - 1,734 - 1,196 27,974 (25,018) 32,864 (6,720)
Assets 33,537 320 32,864 - Liabilities (5,563) (25,338) - (6,720)
b) Income Tax and Social Contribution
The income tax and social contribution amounts recorded on profit or loss is calculated according to the terms of Brazilian regulation and do not consider, on the calculation, the translation amounts due to financial statements conversion to functional currency.
Income tax reduction
By the year 2018 the indirect controlled Hermasa Navegação da Amazônia S.A and the direct controlled Amaggi Exportação e Importação Ltda., has an income tax established in accordance with article 3, paragraph 2 of law number 9.532/97, which arises from a development project approved by Superintendence for the Development of the Amazon (SUDAM).
12. Advances to suppliers
Consolidated Company 2014 2013 2014 2013 Foreign market 25,038 21,546 24,001 16,336 Domestic market 361,268 373,345 361,500 375,126 Domestic market - related parties (note 23) 28,912 48,668 34,096 54,972 (-) Allowance for doubtful accounts (1,067) (792) (1,067) (792) 414,151 442,767 418,530 445,642
27 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Consolidated Company 2014 2013 2014 2013
Current assets 414,151 442,767 413,812 439,826 Non-current assets - - 4,718 5,816
Advances with prices to be fixed and fixed prices are secured by commercial pledge represented by ballot farmer and guarantees provided by third parties.
Allowance for doubtful is recorded to advances outstanding over 360 days, when there is no recoverability expectation.
13. Recoverable taxes
Consolidated Company 2014 2013 2014 2013 COFINS – Contribution for social security funding 40,087 40,211 37,485 40,185 CSLL - Social contribution taxes recoverable 1,032 463 995 463 ICMS – Value-added tax on sales and services (on fixed assets recoverable) 8,605 15,231 1,966 1,602 Exportation tax 12,861 6,962 - - Income tax 4,814 1,371 4,548 1,117 IVA - Value Added Tax 5,726 5,702 - - PIS – Social integration program 7,696 9,118 7,130 9,112 Other taxes 3,067 1,753 159 358 83,888 80,811 52,283 52,837
Current assets 76,962 66,968 51,993 52,622 Non-current assets 6,926 13,843 290 215
14. Loans granted
Consolidated
Weighted average rate Currency on 12/31/2014 Maturity 2014 2013 Amaggi Construções Ltda. BRL 122% CDI Undetermined - 68 Amaggi Europe BV USD 2% p.y. Undetermined 20,425 - Amaggi Luxembourg S.A. USD 2% p.y. Undetermined 7,526 5,183 Amaggi S.A. (Suíça) USD 4% p.y. 2013 - 1,552 Terminal de Granéis do Guarujá S.A. BRL 130% CDI Undetermined - 3,963 27,951 10,766
28 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Company
Weighted average rate Currency on 12/31/2014 Maturity 2014 2013 Amaggi Construções Ltda. BRL 122% CDI Undetermined - 68 Amaggi Europe BV USD 2% p.y. Undetermined 20,425 - Amaggi Luxembourg S.A. USD 2% p.y. Undetermined 7,526 5,183 Amaggi S.A. (Suíça) USD 4% p.y. 2013 - 1,552 Ilha Comprida Energia S.A. BRL 122% CDI Undetermined - 14,177 Segredo Energia S.A. BRL 122% CDI Undetermined - 8,274 Terminal de Granéis do Guarujá S.A. BRL 130% CDI Undetermined - 3,963 27,951 33,217
15. Investments
a. Investments value
Consolidated Company 2014 2013 2014 2013 Amaggi Argentina S.A. - - 12,481 12,228 Amaggi & LD Commodities S.A. 13,903 13,587 13,903 13,587 Amaggi & LD Terminais Portuários S.A. 29,509 17,334 29,509 17,334 Amaggi SRL - - 466 294 Aruanã Comercializadora de Energia Ltda. - - 10 20 Divisa Energia S.A. - - 26,043 22,910 Hermasa Navegação da Amazônia S.A. - - 211,694 171,495 Ilha Comprida Energia S.A. - - 53,636 43,171 Jesuíta Energia S.A. - - 5,478 5,608 Maggi Energia S.A. - - 10,976 10,322 Navegações Unidas Tapajós Ltda. 3,897 5,655 3,897 5,655 Rio Madeira Administração de Bens Ltda. 978 1,059 978 1,059 Segredo Energia S.A. - - 58,350 47,100 Terminal de Granéis do Guarujá S.A. 19,532 17,180 19,532 17,180 Other 116 116 10 10 67,935 54,931 446,963 367,973
b. Changes on investments
Consolidated
Receipt of Cumulative Effects dividends and Balances on Equity translation on interest s / Disposal/ Balances on 12/31/2013 method adjustments equity AFAC equity Transfer Addition 12/31/2014 Amaggi & LD Commodities S.A. 13,587 21 (14) - - - 61 247 13,902 Amaggi & LD Terminais Portuários S.A. 17,334 (1,239) - 407 13,007 - - - 29,509 Navegações Unidas Tapajós Ltda. 5,655 (4,404) 343 - 2,364 - (61) - 3,897 Rio Madeira Administração de Bens Ltda. 1,059 (14) (67) - - - - - 978 Terminal de Granéis do Guarujá S.A. 17,180 5,308 (2,919) - - (36) - - 19,533 Other 116 ------116 Total 54,931 (328) (2,657) 407 15,371 (36) - 247 67,935
29 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Receipt of Cumulative Effects dividends and Balances on Equity translation on interest s / Disposal/ Balances on 12/31/2012 method adjustments equity AFAC equity Transfer Addition 12/31/2013 Amaggi & LD Commodities S.A. 12,194 1,626 14 - - - (247) - 13,587 Amaggi & LD Terminais Portuários S.A. 7,431 (1,305) - (583) 11,771 - 20 - 17,334 Amaggi Transportes Ltda. 22 - - - - - (22) - - Navegações Unidas Tapajós Ltda. - (1,307) (260) - 7,203 - - 19 5,655 Rio Madeira Administração de Bens Ltda. 1,099 (147) (108) - (3) - - 218 1,059 Terminal de Granéis do Guarujá S.A. 13,008 4,396 919 - - (1,143) - - 17,180 Other 136 - - - - - (20) - 116 Total 33,890 3,263 565 (583) 18,971 (1,143) (269) 237 54,931
Company
Receipt of Cumulative Effects dividends and Balances on Equity translation on interest s / Disposal/ Balances on 12/31/2013 method adjustments equity AFAC equity Transfer Addition 12/31/2014 Amaggi Argentina S.A. 12,228 253 ------12,481 Amaggi & LD Commodities S.A. 13,587 21 (14) - - - 61 247 13,902 Amaggi & LD Terminais Portuários S.A. 17,334 (1,239) - 406 13,007 - - - 29,508 Amaggi SRL. 294 (126) - - - - - 298 466 Aruanã Comercializadora de Energia Ltda. 20 (8) (2) - - - - - 10 Divisa Energia S.A. 22,910 1,622 1,564 - - (255) - 202 26,043 Hermasa Navegação da Amazônia S.A. 171,495 40,087 - (4,490) - (5,927) - 10,531 211,696 Ilha Comprida Energia S.A. 43,171 (1,033) 2,407 - 9,037 - - 53 53,635 Jesuíta Energia S.A. 5,608 (93) (37) - - - - - 5,478 Maggi Energia S.A. 10,322 2,180 11 - - (1,537) - - 10,976 Navegações Unidas Tapajós Ltda. 5,655 (4,404) 342 - 2,364 - (61) - 3,896 Rio Madeira Administração de Bens Ltda. 1,059 (14) (67) - - - - - 978 Segredo Energia S.A. 47,100 (73) 2,245 - 9,079 - - - 58,351 Terminal de Granéis do Guarujá S.A. 17,180 5,308 (2,919) - - (36) - - 19,533 Other 10 ------10 Total 367,973 42,481 3,530 (4,084) 33,487 (7,755) - 11,331 446,963
Receipt of Cumulative Effects dividends and Balances on Equity translation on interest s / Disposal/ Balances on 12/31/2012 method adjustments equity AFAC equity Transfer Addition 12/31/2013 Amaggi Argentina S.A. 7,238 4,949 - - - - - 41 12,228 Amaggi & LD Commodities S.A. 12,194 1,626 14 - - - (247) - 13,587 Amaggi & LD Terminais Portuários S.A. 7,431 (1,305) - (583) 11,771 - 20 - 17,334 Amaggi Transportes Ltda. 22 - - - - - (22) - - Amaggi SRL. - (3) - - - - - 297 294 Aruanã Comercializadora de Energia Ltda. 8 19 (7) - - - - - 20 Divisa Energia S.A. 18,298 4,146 826 - - (360) - - 22,910 Hermasa Navegação da Amazônia S.A. 147,383 18,143 - 5,613 - (1,946) - 2,302 171,495 Ilha Comprida Energia S.A. 24,680 5,618 (593) - 13,466 - - - 43,171 Jesuíta Energia S.A. 5,730 (101) (21) - - - - - 5,608 Maggi Energia S.A. 9,902 1,123 591 - - (1,294) - - 10,322 Navegações Unidas Tapajós Ltda. - (1,307) (260) - 7,203 - - 19 5,655 Rio Madeira Administração de Bens Ltda. 1,099 (147) (108) - (3) - - 218 1,059 Segredo Energia S.A. 27,448 5,028 (393) - 15,017 - - - 47,100 Terminal de Granéis do Guarujá S.A. 13,008 4,396 919 - - (1,143) - - 17,180 Other 30 - - - - - (20) - 10 Total 274,471 42,185 968 5,030 47,454 (4,743) (269) 2,877 367,973
30 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014 c. Information concerning the direct subsidiaries
2014 Total Net income for Share % Total assets liabilities Total equity the year Amaggi Argentina S.A. 88.99914% 36,198 22,174 13,740 284 Amaggi & LD Commodities S.A. 50.00000% 71,370 43,565 25,859 1,946 Amaggi & LD Terminais Portuários S.A. 50.00000% 105,158 29,082 61,024 15,052 Amaggi SRL. 99.00000% 600 130 597 (127) Aruanã Comercializadora de Energia Ltda. 55.00000% 23 4 33 (14) Divisa Energia S.A. 97.50000% 45,062 18,516 24,883 1,663 Hermasa Navegação da Amazônia S.A. 87.51878% 453,270 205,662 199,074 48,534 Ilha Comprida Energia S.A. 98.74897% 88,401 34,664 54,783 (1,046) Jesuíta Energia S.A. 98.74878% 5,478 1 5,571 (94) Maggi Energia S.A. 55.00000% 21,283 1,327 15,993 3,963 Navegações Unidas Tapajós Ltda. 50.00000% 80,228 72,596 17,193 (9,561) Rio Madeira Administração de Bens Ltda. 50.00000% 1,249 51 1,227 (29) Segredo Energia S.A. 98.74906% 97,929 39,469 58,534 (74) Terminal de Granéis do Guarujá S.A. 33.00000% 86,990 27,802 46,883 12,305 72,802
2013 Total Net income for Share % Total assets liabilities Total equity the year Amaggi Argentina S.A. 88.99914% 33,979 20,239 8,179 5,561 Amaggi & LD Commodities S.A. 50.00000% 72,682 45,025 24,891 2,766 Amaggi & LD Terminais Portuários S.A. 50.00000% 37,865 4,658 37,277 (4,070) Amaggi SRL. 99.00000% 297 - 300 (3) Aruanã Comercializadora de Energia Ltda. 55.00000% 49 12 3 34 Divisa Energia S.A. 97.50000% 46,572 23,274 19,046 4,252 Hermasa Navegação da Amazônia S.A. 83.52811% 387,923 177,612 183,593 26,718 Ilha Comprida Energia S.A. 98.74897% 91,703 48,449 37,565 5,689 Jesuíta Energia S.A. 98.74878% 5,609 1 5,710 (102) Maggi Energia S.A. 55.00000% 20,149 1,383 16,724 2,042 Navegações Unidas Tapajós Ltda. 50.00000% 12,031 294 13,911 (2,174) Rio Madeira Administração de Bens Ltda. 50.00000% 1,425 60 1,471 (106) Segredo Energia S.A. 98.74906% 103,035 55,853 42,090 5,092 Terminal de Granéis do Guarujá S.A. 33.00000% 104,683 52,624 38,738 13,321 59,020
Non-realized gains/losses on intercompany services provided to the investor were eliminated to calculate equity profit or loss.
31 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
16. Property, plant and equipment
Consolidated
Balances on Balances on Balances on January 1, December 31, December 31, Cost 2014 Additions Disposals Transfers 2014 2013 Lands 25,619 367 - - 25,986 25,619 Reservoirs, dams and aqueducts 38,862 4 - - 38,866 38,862 Buildings 257,856 372 (1,090) 8,824 265,962 257,856 Machine and equipment 197,944 23,202 (4,035) 5,333 222,444 197,944 Facilities 24,782 30 (237) 676 25,251 24,782 Furniture and fixtures 4,750 811 (349) 5 5,217 4,750 Vehicles 4,863 973 (782) - 5,054 4,863 Hardware 5,306 998 (467) 153 5,990 5,306 Vessels 258,354 168 (12) 19,169 277,679 258,354 Aircraft 4,100 - - - 4,100 4,100 Radio-communication 585 114 (45) - 654 585 Improvements in properties 1,390 - (858) 29 561 1,390 Work in progress (a) 67,456 131,760 (192) (31,490) 167,534 67,456 Equipment for mounting 2,727 7,099 - (2,699) 7,127 2,727 Spare parts 11,951 926 - - 12,877 11,951 Advances to suppliers 67,432 100,453 (109,832) - 58,053 67,432 Other - 407 - - 407 - 973,977 267,684 (117,899) - 1,123,762 973,977
Balances on Balances on Balances on January 1, December 31, December 31, Depreciation 2014 Additions Disposals Transfers 2014 2013 Reservoirs, dams and aqueducts (756) (777) - - (1,533) (756) Buildings (28,716) (8,174) 63 - (36,827) (28,716) Machine and equipment (41,197) (9,693) 1,823 - (49,067) (41,197) Facilities (3,361) (910) 16 - (4,255) (3,361) Furniture and fixtures (1,739) (436) 195 - (1,980) (1,739) Vehicles (2,100) (867) 479 - (2,488) (2,100) Hardware (3,373) (1,170) 418 - (4,125) (3,373) Vessels (71,803) (13,501) (1,316) - (86,620) (71,803) Aircraft (513) (410) - - (923) (513) Radio-communication (276) (75) 30 - (321) (276) Improvements in properties (1,362) (7) 829 - (540) (1,362) (155,196) (36,020) 2,537 - (188,679) (155,196) - Impairment provision (b) (3,184) 3,184 (7,462) - (7,462) (3,184)
Net carrying amount 815,597 927,621 815,597
32 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Company
Balances on Balances on Balances on January 1, December 31, December 31, Cost 2014 Additions Disposals Transfers 2014 2013 Lands 24,295 367 - - 24,662 24,295 Buildings 104,712 374 (13) 8,263 113,336 104,712 Machine and equipment 86,868 12,322 (3,055) 1,551 97,686 86,868 Facilities 16,009 30 (222) 652 16,469 16,009 Furniture and fixtures 3,092 548 (240) 4 3,404 3,092 Vehicles 3,001 746 (384) - 3,363 3,001 Hardware 4,244 804 (441) 155 4,762 4,244 Aircraft 4,100 - - - 4,100 4,100 Radio-communication 181 67 (24) - 224 181 Improvements in properties 1,258 - (857) 29 430 1,258 Work in progress (c) 20,757 45,252 (191) (9,831) 55,987 20,757 Equipment for mounting 715 6,475 - (823) 6,367 715 Advances to suppliers 5,481 31,571 (28,727) - 8,325 5,481 Other - 407 - - 407 - 274,713 98,963 (34,154) - 339,522 274,713
Balances on Balances on Balances on January 1, December 31, December 31, Depreciation 2014 Additions Disposals Transfers 2014 2013 Buildings (22,334) (4,579) 4 - (26,909) (22,334) Machine and equipment (27,348) (4,390) 1,601 - (30,137) (27,348) Facilities (1,444) (433) 11 - (1,866) (1,444) Furniture and fixtures (903) (277) 144 - (1,036) (903) Vehicles (1,455) (581) 303 - (1,733) (1,455) Hardware (2,772) (970) 415 - (3,327) (2,772) Aircraft (513) (410) - - (923) (513) Radio-communication (65) (22) 18 - (69) (65) Improvements in properties (1,259) - 829 - (430) (1,259) (58,093) (11,662) 3,325 - (66,430) (58,093)
Net carrying amount 216,620 273,092 216,620
(a) On December 31, 2014, the balance of work in progress refers mainly to:
i. Construction projects of river tugs and pusher craft, construction of barges and construction of the shipyard in Itacoatiara city, state of Amazonas in indirect subsidiary Hermasa Navegação da Amazônia S.A.
ii. Construction of warehouses on the cities of Matupá, Santa Rita do Trivelato and São Félix do Araguaia, on Mato Grosso state, and one warehouse on the city of Porto Velho, on Rondônia state. iii. Projects implementation of UHE Cachoeirão 64 MW; UHE Juruena 46 MW on the studies and project phases, in Sapezal city, estate of Mato Grosso.
(b) Impairment amounts are related to property, plant and equipment acquired by the indirect subsidiary Hermasa Navegação da Amazônia S.A. to transport minerals in Brazilian north region, whose contracts were terminated.
(c) On December 31, 2014, the balance of work in progress refers mainly to:
33 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
i. Construction of warehouses on the cities of Matupá, Santa Rita do Trivelato and São Félix do Araguaia, on Mato Grosso state, and one warehouse on the city of Porto Velho, on Rondônia state.
17. Accounts payable to suppliers
Consolidated Company 2014 2013 2014 2013 Foreign market 5,848 3,865 5,029 2,879 Foreign market - related parties (note 23) 15,022 6,129 15,022 6,129 Domestic market 117,106 85,331 107,323 73,185 Domestic market - related parties (note 23) 11,212 24,618 24,859 26,576 149,188 119,943 152,233 108,769
18. Loans and financing
Consolidated Weighted average rate Carrying amount Currency on 12/31/2014 Maturity 2014 2013 ACC - Advances on exchange contracts USD 2.56% p.y. 2014 - 104,425 CCB - Certificate of bank credit BRL 2.15% p.y. 2014 - 6,287 CCF - Working capital BRL 2.53% p.y 2015 10,017 2,808 FCO - Constitutional Funds (a) BRL 5.33% p.y. 2015-2031 112,870 101,609 BNDES FINEM - National Bank for Economic and Social Development URTJLP 6.78% p.y. 2015-2023 22,109 35,783 FINAME BRL 6.00% p.y. 2015-2019 218 - Fixed asset financing UMB 4.04% p.y. 2015-2016 1,422 - FINIMP - Importation financing USD 3.30% p.y. 2015-2021 16,837 - FMM - Merchant Marine Fund USD 3.17% p.y. 2015-2032 139,997 125,317 FNO - Constitutional Funds BRL 3.98% p.y. 2015-2032 25,235 15,446 Related party loans (note 23) USD 4.50% p.y. Undetermined 18,861 7,915 NCE - Export notes BRL 1.39% p.y. + CDI 100% 2015-2017 17,051 19,281 PPE - Prepayment USD 2.67% p.y.+ Libor 2015-2020 835,127 717,412 1,199,744 1,136,283
Current liabilities 175,667 291,043 Non-current liabilities 1,024,077 845,240
Company Weighted average rate Carrying amount Currency on 12/31/2014 Maturity 2014 2013 ACC - Advances on exchange contracts USD 2.56% p.y. 2014 - 104,425 FCO - Constitutional Funds BRL 4.72% p.y. 2015-2027 33,215 13,901 BNDES FINEM - National Bank for
Economic and Social Development URTJLP 10.04% p.y. 2015-2023 7,390 18,054 FINAME BRL 6.00% p.y. 2015-2019 218 - Fixed asset financing UMB 4.04% p.y. 2015-2016 1,422 - FINIMP - Importation financing USD 3.30% p.y. 2015-2021 16,837 - FNO - Constitutional Funds BRL 3.92% p.y. 2015-2031 17,448 15,446 Related party loans (nota 23) USD 4.50% p.y. Undetermined 18,861 7,915 NCE - Export notes BRL 1.39% p.y. + CDI 100% 2015-2017 17,051 19,281 PPE – Prepayment USD 2.67% p.y. + Libor 2015-2020 835,127 717,412 947,569 896,434
Current liabilities 149,476 267,608 Non-current liabilities 798,093 628,826
34 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014 a. Fundo Constitucional do Centro-Oeste
The direct controlled entities Divisa Energia S.A., Ilha Comprida Energia S.A. and Segredo Energia S.A. are part in financing operations of Fundo Constitucional de Financiamento do Centro-Oeste (FCO) include credits given to the investment on small hydroelectric plants on the state of Mato Grosso.
(i) Interest rate
The interest rate agreed on the contract is 10% p.y., however, if the installments are paid until its maturity date it is given a discount of 15% of the interest amounts.
(ii) Covenants
The responsibilities of the Company are:
To respect all the clauses of the agreement;
To constitute and maintain until the liquidation of all obligation raised through the agreement a reserve account sufficient to the coverage of 3 installments of the financing operation;
To maintain during the duration of the contract a Ratio of Coverage of Debit Service of, at least, 1,2;
Not to celebrate new loans arrangements without the previous written permission of the financial agent;
Not to celebrate new loans between related parties or reduce the capital of the entities without the previous written permission of the financial agent.
The entities that compose the Consolidated are meeting with these restrictive clauses on the date of these financial statements.
(iii) Guarantees
Guaranteeing the financing operations the shareholders have engaged:
100% of Maggi Energia S.A., Segredo Energia S.A. and Ilha Comprida Energia S.A. shares;
The rights arising from authorizations of ANEEL to the following entities: Segredo Energia S.A., Ilha Comprida Energia S.A. and Divisa Energia S.A.;
The revenues earned through the energy sell of Segredo Energia S.A., Ilha Comprida Energia S.A., Maggi Energia S.A. and Divisa Energia S.A.
It was also constituted chattel mortgages of the assets financed and offered guarantees of the direct controlling entity Amaggi Exportação e Importação Ltda.
35 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014 b. Fundo da Marinha Mercante
The controlled entity Hermasa is part in 5 financing contracts under the modality of Fundo da Marinha Mercante (FMM), through its agents, the Banco Nacional de Desenvolvimento Econômico e Social (BNDES), Banco do Brasil S.A and Banco da Amazônia S.A., used to river fleet acquisition.
(i) Covenants
The company needs to attend to many restrictive clauses related to these contracts, between them, the entity needs:
To respect all clauses of the agreements;
To constitute reserve accounts;
To maintain a minimum level, during all the duration of the contract, of Ratio of Coverage of Debit Service;
To maintain a minimum level, during all the duration of the contract, of Ratio of Coverage of Debit;
Not to distribute dividends beyond the minimum mandatory dividends without the previous written authorization of the bank.
The entity Hermasa Navegação da Amazônia S.A. is meeting with these restrictive clauses on the date of these financial statements.
(ii) Guarantees
The shareholders have given, as guarantees:
100% of the financed assets;
The credit rights of the services provided with the use of the assets financed;
Guarantees provided by André Maggi Participações S.A. (related party);
Guarantees provided by Amaggi Exportação e Importação Ltda.;
Urban property that the entity occupies, in the city of Itacoatiara, state of Amazonas.
36 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
19. Advances from customers
Consolidated Company 2014 2013 2014 2013 Foreign market - related parties (note 23) - 17 - 17 Domestic market 126,036 126,923 126,031 126,788 Domestic market - related parties (note 23) 16,205 57 806 57 142,241 126,997 126,837 126,862
Current liabilities 128,335 126,997 126,837 126,862 Non-current liabilities 13,906 - - -
20. Financial instruments
The Company and its subsidiaries have exposure to the following risks arising from financial instruments:
Credit risk; Liquidity risk; and Market risk,
This note presents information about exposure to each of the above risks, objectives, polices and processes for measuring risks, risk management and capital management.
20.1 Risk management framework
The Chief Executive Officer - CEO has overall responsibility for the establishment and oversight Company’s risk management structure and is assisted on this function by the Department of Risk Management, which is responsible for monitor and analyze with the objective of identify risks the Company is exposed, as well as to map possible impacts due to economic and financial variables, like exchange and interest fluctuations and other.
These analyzes are also used as a management tool to set commercial and hedge strategies, reducing exposures.
Policies of risk management were established to identify and analyze exposure risks and define acceptable risk limits. It was also created an appropriate structure of controls to monitor risks and the utilization of limits set, Policies and limits are revised in a regular base.
20.2 Credit risk
Credit risk is the risk of financial losses due to a customer or counterparty in a financial instrument and arises from a fail of them to meet their contractual obligations.
20.2.1 Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was the follows:
37 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Consolidated Company Note 2014 2013 2014 2013 Marketable securities (a) 8 242,271 248,287 235,651 221,328 Foreign currency 8 600 - 600 - Trade accounts receivable (b) 9 130,549 121,237 116,223 109,790 Collection accounts 8 12,456 15,891 12,456 15,891 Bank deposits (c) 8 63,846 22,522 60,180 19,181 Loans granted 14 27,951 10,766 27,951 33,217 Derivative financial instruments 94,918 148,628 91,981 148,628 Securities brokerage operations 26,493 16,411 26,271 16,249 Other credits 4,792 6,521 11,177 11,908 603,876 590,263 582,490 576,192
(a) Marketable securities
Amounts maintained in first line financial institutions to minimize credit risk of these operations.
(b)Trade accounts receivables
Management seeks to mitigate credit of trade accounts receivable through monitoring and periodic individual evaluation of its customers.
Criteria for accepting new customers include an analysis of potential customer’s financial condition and socio-economic profile, defining credit limits and payment terms, The analysis of this information by the Company may include external ratings, where available, and bank references.
Credit limits are established to each customer, in an individual basis, and represent the maximum amount of exposure accepted to each customer. Credit limits are reviewed when considered necessary or when it is required, Transactions with customers with no approved credit limits are only The Company's exposure to credit risk is influenced mainly by the individual characteristics only performed through advances.
The segment where the Company operates rarely presents losses by default, however, when necessary, it is recorded a provision for doubtful accounts, analyzing each customer individually.
(c) Bank deposits
Amounts maintained in first line financial institutions to minimize credit risk of these operations.
20.3 Liquidity risk
Liquidity risk is the risk of difficulties to meet the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. Company’s approach to manage liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to
38 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014 meet its liabilities when it is due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.
Below, the contractual maturities of financial liabilities are presented, including estimated interest payments:
Consolidated
Total Contractual Until 1 1 - 2 2 - 4 More than December 31, 2014 Note amount cash flow year years years 4 years Non-derivative financial liabilities Accounts payable to suppliers 17 149,188 149,188 149,188 - - - Loans and financing 18 1,199,744 1,358,774 201,672 350,379 448,641 358,082 Securities brokerage operations 3,911 3,911 3,911 - - - Others accounts payable 2,166 2,166 2,166 - - - 1,355,009 1,514,039 356,937 350,379 448,641 358,082 Derivative financial liabilities Derivative financial liabilities 72,099 72,099 72,099 - - - 72,099 72,099 72,099 - - -
1,427,108 1,586,138 429,036 350,379 448,641 358,082
Total Contractual Until 1 1 - 2 2 - 4 More than December 31, 2013 Note amount cash flow year years years 4 years Non-derivative financial liabilities Accounts payable to suppliers 17 119,943 119,943 119,943 - - - Loans and financing 18 1,136,283 1,294,354 323,201 265,347 456,794 249,012 Others accounts payable 3,008 3,008 3,008 - - - 1,259,234 1,417,305 446,152 265,347 456,794 249,012 Derivative financial liabilities Derivative financial liabilities 90,450 90,450 90,450 - - - 90,450 90,450 90,450 - - -
1,349,684 1,507,755 536,602 265,347 456,794 249,012
Company
Total Contractual Until 1 1 - 2 2 - 4 More than December 31, 2014 Note amount cash flow year years years 4 years Non-derivative financial liabilities Accounts payable to suppliers 17 152,233 152,233 152,233 - - - Loans and financing 18 947,569 1,017,793 173,842 321,991 393,302 128,658 Securities brokerage operations 3,911 3,911 3,911 - - - Others accounts payable 1,915 1,915 1,915 - - - 1,105,628 1,175,852 331,901 321,991 393,302 128,658 Derivative financial liabilities Derivative financial liabilities 66,870 66,870 66,870 - - - 66,870 66,870 66,870 - - -
1,172,498 1,242,722 398,771 321,991 393,302 128,658
39 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Total Contractual Until 1 1 - 2 2 - 4 More than December 31, 2013 Note amount cash flow year years years 4 years Non-derivative financial liabilities Accounts payable to suppliers 17 108,769 108,769 108,769 - - - Loans and financing 18 896,434 953,562 292,071 238,284 403,657 19,550 Others accounts payable 2,088 2,088 2,088 - - - 1,007,291 1,064,419 402,928 238,284 403,657 19,550 Derivative financial liabilities Derivative financial liabilities 89,791 89,791 89,791 - - - 89,791 89,791 89,791 - - -
1,097,082 1,154,210 492,719 238,284 403,657 19,550
Amounts stated above represent cash flows related to derivative and non-derivative financial instruments recorded as liabilities maintained to risk management and normally, not liquidated before their contractual maturity.
20.4 Market risk
Market risk is the risk that changes on market prices, such as foreign exchange rates, interest rates and commodity prices will affect income or the value of investments in financial instruments.
The objective of market risk management is to manage and control market risk exposures, within acceptable parameters, while optimizing returns.
The Company and its subsidiaries also operate with derivative financial instruments and complies with financial obligations to manage market risks. All these operations are conducted within the Department of Risk Management requirements.
20.4.1 Exchange rate risk
The Exchange rate risk is related to market risk and is related to the possibility of oscillations of exchange rates that may cause losses, reducing assets or increasing obligations.
As the Company is located in Brazil, the main Company’s exposure to exchange rate risk refers to the fluctuation of Dollar (USD), its functional currency, in relation to Real (BRL), the Brazilian currency.
The entity gets into some non-deliverable (NDF) and option contracts with financial institutions to hedge itself from this exposure.
Follows, below, the composition of these financial instruments:
40 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Consolidated
a) Non-deliverable of currency
2014 2013
Kind of Notional Effect on Notional Effect on Position asset (USD) Maturity Fair value profit/loss (USD) Maturity Fair value profit/loss Long Dollar - - - - 68,639 2014 511 511 Long Dollar 79,931 2015 806 806 - - - - Short Dollar - - - - 521,542 2014 (884) (884) Short Dollar 5,000 2015 (27) (27) - - - - Short Dollar 458,652 2015 (12,499) (12,499) 275 2015 2 2 Short Dollar 27,182 2015 (1,037) (1,037) - - - - Short Dollar 2,586 2016 18 18 - - - - Short Dollar 232 2017 (7) (7) 232 2017 (2) (2) Short Dollar 216 2018 (8) (8) 216 2018 (3) (3) (12,754) (12,754) (376) (376)
Company
a) Non-deliverable of currency
2014 2013
Kind of Notional Effect on Notional Effect on Position asset (USD) Maturity Fair value profit/loss (USD) Maturity Fair value profit/loss Long Dollar - - - - 68,639 2014 512 512 Long Dollar 79,931 2015 806 806 - - - -
Short Dollar - - - - 502,954 2014 (226) (226) Short Dollar 458,652 2015 (12,499) (12,499) 275 2015 2 2 Short Dollar 2,586 2016 18 18 - - - - Short Dollar 232 2017 (7) (7) 232 2017 (2) (2) Short Dollar 216 2018 (8) (8) 216 2018 (3) (3) (11,690) (11,690) 283 283
Consolidated and Company
b) SWAP of currency
2014 2013
Notional Fair Effect on Notional Fair Effect on Position Kind of asset (USD) Maturity value profit/loss (USD) Maturity value profit/loss Dollar + pre
Active fixed rate - - - - 226,884 2014 231,085 231,085 Dollar + pre
Active fixed rate 149,450 2015 149,333 149,333 - - - - Dollar + pre
Active fixed rate 24,356 2016 63,576 63,576 - - - - Passive %CDI - - - - 226,884 2014 (223,076) (223,076) Passive %CDI 149,450 2015 (136,751) (136,751) - - - - Passive %CDI 24,356 2016 (59,992) (59,992) - - - -
16,166 16,166 8,009 8,009
Exchange rate sensitivity analysis
Company presents three scenarios, to sensitivity analysis, one probable and two others that present the deterioration of fair value, Follows, the scenarios:
41 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Consolidated
Scenarios Risk Remote Possible Possible Remote Probable (-50%) (-25%) (+ 25%) (+50%) Non-deliverable of currency Variation of Dollar (6,377) (9,566) (12,754) (15,943) (19,131) SWAP of currency Variation of Dollar 24,249 20,208 16,166 12,125 8,083 17,872 10,642 3,412 (3,818) (11,048) Company
Scenarios Risk Remote Possible Possible Remote Probable (-50%) (-25%) (+ 25%) (+50%) Non-deliverable of currency Variation of Dollar (5,845) (8,768) (11,690) (14,613) (17,535) SWAP of currency Variation of Dollar 24,249 20,208 16,166 12,125 8,083 18,404 11,440 4,476 (2,488) (9,452)
20.4.2 Interest rate risk
The Company and its subsidiaries seek to maintain its exposure to interest rates at acceptable levels. Exposure to this risk is substantially related to loans and financing and financial investments.
On the date of these financial statements, the profile of financial investments remunerated through interests was, without any interference of hedge instruments, as follows:
Consolidated Company Note 2014 2013 2014 2013 Variable rate financial instruments Marketable securities 8 242,271 248,287 235,651 221,328 Loans and financing 18 (869,016) - (852,178) - (626,745) 248,287 (616,527) 221,328 Fixed rate financial instruments Loans granted 14 27,951 10,766 27,951 33,217 Loans and financing 18 (330,728) (1,136,283) (95,391) (896,434) (302,777) (1,125,517) (67,440) (863,217)
(929,522) (877,230) (683,967) (641,889)
The Company and its subsidiaries do not account for any financial assets or liabilities indexed to fixed rates at fair value through profit or loss and does not designate derivatives (swap of interest rates) as fair value hedges. This results that any variation on interest rates at the date of financial statements would not change profit or loss.
Hedge instruments contracted to mitigate this risk that prevails on the date of these financial statements are presented below:
42 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Consolidated a) SWAP of interest rates
2014 2013
Notional Fair Effect on Notional Fair Effect on Position Kind of assets (USD) Maturity value profit/loss (USD) Maturity value profit/loss Active Libor - - - - 3,636 2014 3,643 3,643 Active Pre fixed rate 2,130 2015 113 113 2,131 2015 271 271 CDI + Pre fixed
Active rate 19,269 2017 527 527 19,269 2017 19,990 19,990 Active Pre fixed rate 11,482 2019 825 825 - - - - Active Pre fixed rate 7,668 2024 2,736 2,736 - - - - Active Pre fixed rate 13,936 2027 1,598 1,598 7,668 2024 2,777 2,777 Active Pre fixed rate 9,298 2023 1,282 1,282 - - - - Active/ Dollar + Libor Passive 200,000 2015 164 164 200,000 2014 (193) (193) Active/ Dollar + Libor Passive ------Dollar + pre
Passive fixed rate 2,130 2015 (806) (806) 3,636 2014 (3,654) (3,654) Dollar + pre
Passive fixed rate 9,298 2023 (2,665) (2,665) 2,131 2015 (894) (894) Dollar + pre
Passive fixed rate - - - - 7,668 2024 (4,009) (4,009) Dollar + Libor +
Passive pre fixed rate 19,269 2017 (2,811) (2,811) 19,269 2017 (20,337) (20,337) Passive Pre fixed rate 11,482 2019 (2,243) (2,243) - - - - Dollar + pre
Passive fixed rate 7,668 2024 (4,310) (4,310) - - - - Dollar + pre
Passive fixed rate 13,936 2027 (3,548) (3,548) - - - - (9,138) (9,138) (2,406) (2,406)
Company a) SWAP of interest rates
2014 2013
Notional Fair Effect on Notional Fair Effect on Position Kind of assets (USD) Maturity value profit/loss (USD) Maturity value profit/loss Active Libor - - - - 3,636 2014 3,643 3,643 Active Pre fixed rate 2,130 2015 113 113 2,131 2015 271 271 CDI + Pre fixed
Active rate 19,269 2017 527 527 19,269 2017 19,990 19,990 Active Pre fixed rate 11,482 2019 825 825 - - - - Active Pre fixed rate 7,668 2024 2,736 2,736 7,668 2024 2,777 2,777 Active Pre fixed rate 13,936 2027 1,598 1,598 - - - - Active/ Dollar + Libor
Passive 200,000 2015 164 164 200,000 2014 (193) (193) Dollar + pre
Passive fixed rate 2,130 2015 (806) (806) 3,636 2014 (3,654) (3,654) Dollar + pre
Passive fixed rate - - - - 2,131 2015 (894) (894) Dollar + Libor +
Passive pre fixed rate 19,269 2017 (2,811) (2,811) 19,269 2017 (20,337) (20,337) Dollar + pre
Passive fixed rate - - - - 7,668 2024 (4,009) (4,009) Passive Pre fixed rate 11,482 2019 (2,243) (2,243) - - - - Dollar + pre
Passive fixed rate 7,668 2024 (4,310) (4,310) - - - - Dollar + pre
Passive fixed rate 13,936 2027 (3,547) (3,547) - - - - (7,754) (7,754) (2,406) (2,406)
43 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Interest rate sensitivity analysis
Company presents three scenarios to sensitivity analysis, one probable and two others that present the deterioration of fair value. Follows, the scenarios:
Consolidated Scenarios Risk Remote Possible Possible Remote Probable (-50%) (-25%) (+ 25%) (+50%)
SWAP of interest rates Variation of interest rates (4,569) (6,854) (9,138) (11,423) (13,707) (4,569) (6,854) (9,138) (11,423) (13,707)
Company Scenarios Risk Remote Possible Possible Remote Probable (-50%) (-25%) (+ 25%) (+50%)
SWAP of interest rates Variation of interest rates (3,877) (5,816) (7,754) (9,693) (11,631) (3,877) (5,816) (7,754) (9,693) (11,631)
20.4.3 Commodities price risk
Company commercializes soybean, soybean meal, soybean oil and corn, products considered as commodities.
Company acquires the grains in the domestic market and sells industrialized products and grains in the domestic or foreign market.
As commodities are traded, in Brazil (BM&FBOVESPA) and abroad (CBOT) it is able to adopt some hedge tools. Between the most common practices adopted, we can see the use of future contracts and options as the main hedge tools to mitigate the risk of price variations.
Buy and sell operation of grains and industrialized products are done simultaneously, using hedge tools to protect prices when clients are not immediately available in the moment of grains acquisition.
The Company may incur in physical position open, in acquisitions and sells, on the following situations:
Purchase long position: if the quantity of products acquired or contracted exceeds the quantity of products sold or contracted so, the difference is protected through hedge tools; and
Sell short position: if the quantity of products acquired or contracted is lower than the quantity of products sold or contracted so, the difference is protected through hedge tools
Hedge instruments contracted to mitigate this risk that prevails on the date of these financial statements are presented below:
44 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Consolidated and Company a) Future of commodities
2014 2013
Kind of Notional Effect on Notional Effect on Position asset (Ton.) Maturity Fair value profit/loss (Ton.) Maturity Fair value profit/loss Soybean
Long meal - - - - 186,700 2014 (459) (459) Soybean
Long meal 47,265 2015 (7,240) (7,240) - - - - Long Corn - - - - 507,258 2014 (8,157) (8,157) Long Corn 545,370 2015 (4,234) (4,234) - - - - Soybean
Long oil - - - - 59,901 2014 (3,481) (3,481) Soybean
Long oil 36,605 2015 (1,819) (1,819) - - - - Long Soybean - - - - 919,843 2014 635 635
Long Soybean 132,670 2015 (5,950) (5,950) - - - - Soybean
Short meal 77,021 2015 2,319 2,319 - - - - Short Corn - - - - 551,963 2014 7,488 7,488 Short Corn 235,471 2015 5,143 5,143 - - - - Soybean
Short oil - - - - 70,161 2014 4,370 4,370 Soybean
Short oil 62,759 2015 2,140 2,140 - - - - Short Soybean - - - - 1,357,720 2014 4,579 4,579 Short Soybean 125,186 2015 11,085 11,085 - - - - 1,444 1,444 3,389 3,389
45 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Consolidated b) Term of commodities
2014 2013
Kind of Notional Fair Effect on Notional Fair Effect on Position asset (Ton.) Maturity value profit/loss (Ton.) Maturity value profit/loss Long Barley 28,000 2015 402 402 - - - - Long Barley 6,980 2015 18 18 - - - - Soybean
Long meal - - - - 187,991 2013 3,170 3,170 Soybean
Long meal 77,561 2014 (465) (465) 230,000 2014 (1,333) (1,333) Long Corn - - - - 94,446 2014 2,742 2,742 Long Corn 872,958 2015 (6,133) (6,133) - - - - Long Corn 217,797 2015 436 436 - - - - Soybean
Long oil 2,150 2014 19 19 - - - - Long Soybean - - - - 1,566,010 2014 31,778 31,778 Long Soybean 1,237,287 2015 7,601 7,601 - - - - Long Soybean 5,186 2015 (35) (35) - - - - Long Wheat 21,344 2015 198 198 - - - - Long Wheat 80,925 2015 (1,294) (1,294) - - - - Short Barley 28,000 2015 (210) (210) - - - - Short Barley 28,000 2015 (420) (420) - - - - Soybean
Short meal - - - - 777,325 2013 4,080 4,080 Soybean
Short meal - - - - 25,000 2014 (20) (20) Soybean
Short meal 244,500 2015 1,433 1,433 - - - - Short Corn - - - - 231 2013 156 156 Short Corn 388,006 2014 2,353 2,353 59,000 2014 597 597 Short Corn 438,000 2015 4,019 4,019 - - - - Short Corn 308,683 2015 1,454 1,454 - - - - Soybean
Short oil - - - - 1,267,500 2014 8,392 8,392 Soybean
Short oil 51,000 2015 1,614 1,614 - - - - Short Soybean 1,026,003 2015 16,454 16,454 - - - - Short Wheat 49,582 2014 (3) (3) - - - - Short Wheat 34,000 2015 (340) (340) - - - - 27,101 27,101 49,562 49,562
46 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Company b) Term of commodities
2014 2013
Kind of Notional Fair Effect on Notional Fair Effect on Position asset (Ton.) Maturity value profit/loss (Ton.) Maturity value profit/loss Long Barley 28,000 2015 402 402 - - - - Soybean Long 77,561 2014 (465) (465) - - - - meal Long Corn - - - - 94,446 2014 2,742 2,742 Long Corn 872,958 2015 (6,133) (6,133) - - - - Soybean Long 2,150 2014 19 19 - - - - oil Long Soybean - - - - 1,566,010 2014 31,778 31,778 Long Soybean 1,237,287 2015 7,601 7,601 - - - - Long Wheat 21,344 2015 198 198 - - - - Short Barley 28,000 2015 (210) (210) - - - - Soybean Short - - - - 187,991 2013 3,170 3,170 meal Soybean Short - - - - 230,000 2014 (1,333) (1,333) meal Soybean Short 244,500 2015 1,433 1,433 - - - - meal Short Corn - - - - 777,325 2013 4,080 4,080
Short Corn 388,006 2014 2,353 2,353 25,000 2014 (20) (20) Short Corn 438,000 2015 4,019 4,019 - - - - Soybean Short - - - - 231 2013 156 156 oil Soybean Short - - - - 59,000 2014 597 597 oil Soybean Short 51,000 2015 1,614 1,614 - - - - oil Short Soybean - - - - 1,267,500 2014 8,392 8,392 Short Soybean 1,026,003 2015 16,454 16,454 - - - - Short Wheat 34,000 2015 (340) (340) - - - - 26,945 26,945 49,562 49,562
Commodity price risk sensitivity analysis
Company presents three scenarios to sensitivity analysis, one probable and two others that present the deterioration of fair value. Follows the scenarios:
Consolidated
Scenarios Risk Remote Possible Probable Possible Remote (-50%) (-25%) (+ 25%) (+50%) Future of commodities Long position Price decrease (9,622) (14,432) (19,243) (24,054) (28,865) Short position Price increase 31,031 25,859 20,687 15,515 10,344 21,409 11,427 1,444 (8,539) (18,521) Term of commodities Long position Price decrease 1,122 935 748 561 374 Short position Price increase 39,530 32,941 26,353 19,765 13,177 40,652 33,876 27,101 20,326 13,551
62,061 45,303 28,545 11,787 (4,970)
47 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Company
Scenarios Risk Remote Possible Probable Possible Remote (-50%) (-25%) (+ 25%) (+50%) Future of commodities Long position Price decrease (9,622) (14,432) (19,243) (24,054) (28,865) Short position Price increase 31,031 25,859 20,687 15,515 10,344 21,409 11,427 1,444 (8,539) (18,521) Term of commodities Long position Price decrease 2,435 2,029 1,623 1,217 812 Short position Price increase 37,983 31,653 25,322 18,992 12,661 40,418 33,681 26,945 20,209 13,473
61,827 45,108 28,389 11,670 (5,049)
20.5 Reconciliation of net effects of fair value of derivatives with balance sheet
The fair value of derivative financial instruments is recorded as an asset or a liability on financial statements.
Follows, below, the reconciliation of net effects of fair value recorded on the balance sheet: a) Amounts on the balance sheet: Consolidated Company 2014 2013 2014 2013 Derivative financial instruments (assets) 94,918 148,628 91,981 148,628 Derivative financial instruments (liabilities) (72,099) (90,450) (66,870) (89,791) 22,819 58,178 25,111 58,837 b) Amounts by kind of operation: Consolidated Company 2014 2013 2014 2013 NDF of currency (12,754) (376) (11,690) 283 SWAP of currency 16,166 8,009 16,166 8,009 SWAP of interest rates (9,138) (2,406) (7,754) (2,406) Future of commodities 1,444 3,389 1,444 3,389 Term of commodities 27,101 49,562 26,945 49,562 22,819 58,178 25,111 58,837
20.6 Capital management
The Board’s policy is to maintain a strong capital base to maintain investors, creditors and market confidence and to sustain future development of the business. The Board of Directors monitors capital returns that Company defines as result of operational activities divided by total equity, excluding non-redeemable preference shares, and non-controlling interests. The Board of Directors also monitors the level of dividends to ordinary shareholders.
48 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
The Board of Directors tries to maintain a good relation between high returns and adequate level of loans, advantages and security, provided by a healthy position of capital.
The Company’s net debt to adjusted equity ratio was as follows:
Consolidated Company Note 2014 2013 2014 2013 Current and non-current liabilities 1,614,750 1,539,979 1,325,722 1,253,312 (-) Cash and cash equivalents 8 (312,303) (283,354) (307,558) (255,857) (=) Net debt 1,302,447 1,256,625 1,018,164 997,455 (/) Shareholders' equity 24 716,961 624,384 674,808 579,211 (=) Net debt by shareholders' equity 1.82 2.01 1.51 1.72
20.7 Accounting classifications and fair value
Fair value versus carrying amounts
The fair value of financial assets and liabilities, together with the carrying amounts presented in financial statements, are as follows:
Consolidated
Fair value Liabilities at through Loans and amortized Carrying Note profit or loss receivables cost amount Fair value December 31, 2014 Non derivative financial instruments Marketable securities 8 242,271 - - 242,271 242,271 Cash 8 - 32 - 32 32 Foreign currency 8 - 600 - 600 600 Bank deposits 8 - 63,846 - 63,846 63,846 Trade accounts receivable 9 - 130,549 - 130,549 130,549 Securities brokerage operations - 26,493 - 26,493 26,493 Loans granted 14 - 27,951 - 27,951 27,951 Other credits - 4,792 - 4,792 4,741 Accounts payable to suppliers 17 - - (149,188) (149,188) (149,188) Loans and financing 18 - - (1,199,744) (1,199,744) (1,028,965) Securities brokerage operations - - (3,911) (3,911) (3,911) Others accounts payable - - (2,166) (2,166) (2,166) 242,271 254,263 (1,355,009) (858,475) (687,696) Derivative financial instruments Assets 94,918 - - 94,918 94,918 Liabilities (72,099) - - (72,099) (72,099) 22,819 - - 22,819 22,819
265,090 254,263 (1,355,009) (835,656) (664,877)
49 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Fair value Liabilities at through Loans and amortized Carrying Note profit or loss receivables cost amount Fair value December 31, 2013 Non derivative financial instruments Marketable securities 8 248,287 - - 248,287 248,287 Cash 8 - 28 - 28 28 Collection accounts 8 - 15,891 - 15,891 15,891 Bank deposits 8 - 22,522 - 22,522 22,522 Trade accounts receivable 9 - 121,237 - 121,237 121,237 Securities brokerage operations - 16,411 - 16,411 16,411 Loans granted 14 - 10,766 - 10,766 10,766 Other credits - 6,521 - 6,521 6,521 Accounts payable to suppliers 17 - - (119,943) (119,943) (119,943) Loans and financing 18 - - (1,136,283) (1,136,283) (1,188,353) Others accounts payable - - (3,008) (3,008) (3,008) 248,287 193,376 (1,259,234) (817,571) (869,641) Derivative financial instruments Assets 148,628 - - 148,628 148,628 Liabilities (90,450) - - (90,450) (90,450) 58,178 - - 58,178 58,178
306,465 193,376 (1,259,234) (759,393) (811,463)
Company
Fair value Liabilities at through Loans and amortized Carrying Note profit or loss receivables cost amount Fair value December 31, 2014 Non derivative financial instruments Marketable securities 8 235,651 - - 235,651 235,651 Cash 8 - 24 - 24 24 Foreign currency 8 - 600 - 600 600 Bank deposits 8 - 60,180 - 60,180 60,180 Trade accounts receivable 9 - 116,223 - 116,223 116,223 Securities brokerage operations - 26,271 - 26,271 26,271 Loans granted 14 - 27,951 - 27,951 27,951 Other credits - 11,177 - 11,177 11,177 Accounts payable to suppliers 17 - - (152,233) (152,233) (152,233) Loans and financing 18 - - (947,569) (947,569) (776,788) Securities brokerage operations - - (3,911) (3,911) (3,911) Others accounts payable - - (1,915) (1,915) (1,915) 235,651 242,426 (1,105,628) (627,551) (456,770) Derivative financial instruments Assets 91,981 - - 91,981 91,981 Liabilities (66,870) - - (66,870) (66,870) 25,111 - - 25,111 25,111
260,762 242,426 (1,105,628) (602,440) (431,659)
50 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Fair value Liabilities at through Loans and amortized Carrying Note profit or loss receivables cost amount Fair value December 31, 2013 Non derivative financial instruments Marketable securities 8 221,328 - - 221,328 221,328 Cash 8 - 18 - 18 18 Collection accounts 8 - 15,891 - 15,891 15,891 Bank deposits 8 - 19,181 - 19,181 19,181 Trade accounts receivable 9 - 109,790 - 109,790 109,790 Securities brokerage operations - 16,249 - 16,249 16,249 Loans granted 14 - 33,217 - 33,217 33,217 Other credits - 11,908 - 11,908 11,908 Accounts payable to suppliers 17 - - (108,769) (108,769) (108,769) Loans and financing 18 - - (896,434) (896,434) (932,916) Others accounts payable - - (2,088) (2,088) (2,088) 221,328 206,254 (1,007,291) (579,709) (616,191) Derivative financial instruments Assets 148,628 - - 148,628 148,628 Liabilities (89,791) - - (89,791) (89,791) 58,837 - - 58,837 58,837
280,165 206,254 (1,007,291) (520,872) (557,354)
20.8 Fair value hierarchy
The table below presents financial instruments recorded at fair value, based on the evaluation method.
Level 1: quoted prices available in active markets for identical assets or liabilities on the date of the Financial Statements. Active markets are those where transactions to the assets or liabilities occurs in a sufficient frequency and in volumes that allows anyone to gather information about the price in any moment. Level 1 is normally composed by derivatives, shared and other assets traded on stock exchanges.
Level 2: other prices observable in different markets of Level 1, but that is directly or indirectly observable on the date of Financial Statements. Level 2 includes derivative financial instruments evaluated through an evaluation model or other evaluation methodology. These models are standardized by the market and are largely used by other players that consider many assumptions as future commodity prices, amounts through time, volatility factors, actual market and contractual prices to subjacent instruments, as well as any other relevant economic measurements. Almost all of these assumptions may be observed in the long term market of the instrument which is being priced, derived from observable inputs or though levels that may be observed where similar transactions are performed in the market. Instruments in this level include derivatives not traded on stock exchanges as swaps, futures and options traded in over-the-counter market.
Level 3: price information that is less observable, but from objective sources. These sources can be combined with internal methodologies developed by the Company that results in the best fair value estimate of management. On the date of each Financial Statements, the Company performs an analysis and includes on level 3 all those fair values that are not based on non-observable information.
51 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Consolidated
December 31, 2014 Note Level 1 Level 2 Level 3 Total
Assets Marketable securities 8 - 242,271 - 242,271 Derivative financial instruments - 94,918 - 94,918 - 337,189 - 337,189
Liabilities Derivative financial instruments - (72,099) - (72,099) - (72,099) - (72,099)
- 265,090 - 265,090
December 31, 2013 Note Level 1 Level 2 Level 3 Total
Assets Marketable securities 8 - 248,287 - 248,287 Derivative financial instruments - 148,628 - 148,628 - 396,915 - 396,915
Liabilities Derivative financial instruments - (90,450) - (90,450) - (90,450) - (90,450)
- 306,465 - 306,465
Company
December 31, 2014 Note Level 1 Level 2 Level 3 Total
Assets Marketable securities 8 - 235,651 - 235,651 Derivative financial instruments - 91,981 - 91,981 - 327,632 - 327,632
Liabilities Derivative financial instruments - (66,870) - (66,870) - (66,870) - (66,870)
- 260,762 - 260,762
52 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
December 31, 2013 Note Level 1 Level 2 Level 3 Total
Assets Marketable securities 8 - 221,328 - 221,328 Derivative financial instruments - 148,628 - 148,628 - 369,956 - 369,956
Liabilities Derivative financial instruments - (89,791) - (89,791) - (89,791) - (89,791)
- 280,165 - 280,165
21. Employee benefits
The Company provides several benefits to its employees and the most important ones are:
Managers and employees salaries:
Consolidated Company 2014 2013 2014 2013
Wages and benefits 80,299 74,359 56,563 50,497
Supplementary pension plan with defined contribution:
The Company maintains a defined contribution plan to which contributions are made in proportion to the contribution made by their employees. The Company's contributions correspond to the percentage up to 4% of employee salary, in accordance with internal rules. The values are:
Consolidated Company 2014 2013 2014 2013
Defined contribution plan 239 267 194 216
Profit sharing plan: 100% of employees are eligible and the Company distributes the minimum percentage of 6% of the net results, as the collective bargaining agreement;
Health plan: 100% of employees are eligible and includes dependents;
Life insurance: 100% of employees are eligible;
Meal tickets: 100% of employees are eligible;
Education assistance: employees are eligible according to a specific internal rule; and Cafeteria: the Company holds cafeteria in some plants, especially at manufacture plants and all farms, pushers and tugs.
53 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
22. Provision for civil, labor and tax risks
The Company and its subsidiaries are part of judicial and administrative proceedings in several courts and government agencies, arising from the normal course of operations, including tax, labor, civil and other proceedings.
Management, based on information from its legal advisors, review of pending legal proceedings, and previous experience with regards to amounts claimed, recorded the following provisions in amounts considered sufficient to cover probable estimated losses from the current actions:
Consolidated Balances at: Civil Labor Tax Total January 01, 2014 - 638 1,023 1,661 Addition 793 773 - 1,566 Reversed - (84) (92) (176) Exchange rate variation - (64) (82) (146) December 31, 2014 793 1,263 849 2,905
January 01, 2013 670 963 1,331 2,964 Addition - 477 180 657 Reversed (585) (680) (317) (1,582) Exchange rate variation (85) (122) (171) (378) December 31, 2013 - 638 1,023 1,661
Company Balances at: Civil Labor Tax Total January 01, 2014 - 160 714 874 Addition - 279 - 279 Reversed - - (92) (92) Exchange rate variation - (19) (63) (82) December 31, 2014 - 420 559 979
January 01, 2013 - 184 819 1,003 Exchange rate variation - (24) (105) (129) December 31, 2013 - 160 714 874
Company and its subsidiaries are part in other lawsuits related to labor, civil and tax issues in which according to its consultants, the loss is possible, but not probable, and no accurate measurement of the amount in risk can be performed. To these lawsuits, management, supported by its consultants and according to accounting practices, understand that no provision is necessary.
23. Related parties
Company and ultimate parent company
The Company's ultimate parent entity is André Maggi Participações S.A.
54 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Related party transactions
The main balances of assets and liabilities, as well as transactions that influence profit or loss related to transactions with related parties are:
Impact on balance sheet Consolidated Company Note 2014 2013 2014 2013 Trade accounts receivable Agro Sam Agricultura e Pecuária Ltda. 4,631 - 925 - Agropecuária Maggi Ltda. 2,225 12,432 2,225 9,362 Amaggi Argentina S.A. - - 64 - Amaggi Europe BV. 4,736 470 91 470 Amaggi Insumos Agrícolas e Comércio
Ltda. 25 - 25 - Amaggi Paraguay S.R.L. - - 34 - Amaggi S/A (Suíça) 27,891 3,636 27,891 3,636 André Maggi Participações S.A. 497 517 497 517 Divisa Energia S.A. - - 19 29 Hermasa Navegação da Amazônia S.A. - - 401 413 Ilha Comprida Energia S.A. - - 33 54 Maggi Energia S.A. - - 23 34 Navegações Unidas Tapajós Ltda. 698 123 38 - Segredo Energia S.A. - - 45 69 9 40,703 17,178 32,311 14,584 Advances to suppliers Agro Sam Agricultura e Pecuária Ltda. 9,653 - 9,653 - Agropecuária Maggi Ltda. - 48,628 - 48,628 Divisa Energia S.A. - - 5,184 6,305 Navegações Unidas Tapajós Ltda. 19,208 - 19,208 - Rio Madeira Administração de Bens
Ltda. 51 40 51 39 12 28,912 48,668 34,096 54,972 Loans granted Amaggi Construções Ltda. - 68 - 68 Amaggi Europe BV. 20,425 - 20,425 - Amaggi Luxembourg S.A. 7,526 5,183 7,526 5,183 Amaggi S/A. - 1,552 - 1,552 Ilha Comprida Energia S.A. - - - 14,177 Segredo Energia S.A. - - - 8,274 Terminal de Granéis do Guarujá S.A. - 3,963 - 3,963 14 27,951 10,766 27,951 33,217 Accounts payable to suppliers Agro Sam Agricultura e Pecuária Ltda. 711 - 711 - Agropecuária Maggi Ltda. 24,019 30,091 24,013 30,081 Amaggi Europe BV. - 591 - 590 Divisa Energia S.A. - - 125 98 Hermasa Navegação da Amazônia S.A. - - 13,522 1,867 Ilha Comprida Energia S.A. - - 4 2 Navegações Unidas Tapajós Ltda. 1,447 - 1,447 - Rio Madeira Administração de Bens Ltda. 57 65 57 65 Segredo Energia S.A. - - 2 2 17 26,234 30,747 39,881 32,705
55 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Loans and financing BBM Administração e Participação Ltda. 7,556 3,499 7,556 3,499 HFLC Administração e Participação Ltda. 7,614 2,876 7,614 2,876 Shareholder’s 3,037 1,540 3,037 1,540 VIP Administração e Participação Ltda. 654 - 654 - 18 18,861 7,915 18,861 7,915 Advances from customers Agropecuária Maggi Ltda. 1,558 57 65 57 Agro Sam Agricultura e Pecuária Ltda. 741 - 741 - Amaggi Europe BV. - 17 - 17 Navegações Unidas Tapajós Ltda. 13,906 - - - 19 16,205 74 806 74
Impact on income statement
Consolidated Company Note 2014 2013 2014 2013 Revenue Agro Sam Agricultura e Pecuária Ltda. 4,611 - 871 - Agropecuária Maggi Ltda. 26,815 31,318 2,255 5,691 Amaggi Europe B.V. 282,072 359,039 - - Amaggi Insumos Agrícolas e Comércio
Ltda. 563 568 563 569 Navegações Unidas Tapajós Ltda. 7,697 736 - - 25 321,758 391,661 3,689 6,260 Corporate revenues Agropecuária Maggi Ltda. 6,380 7,497 6,401 7,540 André Maggi Participações S.A. 1,183 1,547 1,183 1,547 Divisa Energia S.A. - - 207 364 Hermasa Navegação da Amazônia S.A. - - 3,156 4,418 Ilha Comprida Energia S.A. - - 357 678 Maggi Energia S.A. - - 251 431 Navegações Unidas Tapajós Ltda. 325 - 326 - Segredo Energia S.A. - - 493 880 27 7,888 9,044 12,374 15,858 Agricultural lease Agropecuária Maggi Ltda. 16 63 16 63 28 16 63 16 63 Demurrage Agro Sam Agricultura e Pecuária Ltda. 11 - 11 - Agropecuária Maggi Ltda. 70 345 70 345 Amaggi Europe B.V. - (378) - (378) Amaggi S/A (Suíça) (328) - (328) - 28 (247) (33) (247) (33) Despatch Agropecuária Maggi Ltda. - (13) - (13) Amaggi S/A (Suíça) 68 - 68 - 28 68 (13) 68 (13)
56 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
Financial revenues Agro Sam Agricultura e Pecuária Ltda. 41 - - - Agropecuária Maggi Ltda. 392 54 - - Amaggi Europe B.V. 391 - 391 - Amaggi Luxembourg S.A. 201 340 201 340 Amaggi S/A (Suíça) 18 52 19 52 Cidezal Agrícola Ltda. - 2 - 1 Divisa Energia S.A. - - - 1 Ilha Comprida Energia S.A. - 1,272 520 2,412 Maggi Armazéns Gerais Ltda. - 4 - 4 MP Administração e Participação Ltda. - 3 - 3 Segredo Energia S.A. - 978 365 1,672 Terminal de Granéis do Guarujá S.A. 199 489 199 489 29 1,242 3,194 1,695 4,974 Financial expenses BBM Administração e Participação Ltda. (275) (318) (275) (318) Hermasa Navegação da Amazônia S.A. - - (361) (44) HFLC Administração e Participação
Ltda. (333) (155) (333) (155) MP Administração e Participação Ltda. (37) - (37) - MS Administração e Participação Ltda. (17) - (17) - Shareholder’s (123) (53) (123) (53) VIP Administração e Participação Ltda. (111) (23) (111) (23) 29 (896) (549) (1,257) (593)
24. Equity
Capital
Company’s subscribed capital as of December 31, 2014 is represented by USD 128,326 (USD 123,943 as of December 31, 2013), which corresponds to 276,656,675 quotes (276,656,675 quotas as of December 31, 2013), in the nominal amount of BRL 1.00.
Equity valuation adjustments
The Company recognizes in this account increases or decreases in value assigned to assets and liabilities as a result of its evaluation at fair value, while not recorded in profit or loss according to the accrual basis.
Cumulative translation adjustments
Differences generated on the conversion of financial statements from the local currencies of the entities to the currency presented on these financial statements.
Goodwill on capital transaction
Records the amount of goodwill paid in acquisition of additional participation of non- controlling shareholders of subsidiary. The amount is presented as a reduction on the controlling equity.
57 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
25. Net revenue a) Reconciliation of net revenue Consolidated Company 2014 2013 2014 2013 Sale to related parties - foreign market (note 23) 282,072 359,039 - - Sale to related parties - domestic market (note 23) 1,357 4,394 1,357 4,394 Sale to third parties - foreign market 3,023,076 3,154,001 3,003,598 3,086,809 Sale to third parties - domestic market 476,502 526,059 442,342 488,907 Services rendered to related parties (note 23) 38,329 28,228 2,332 1,866 Services rendered to third parties 14,950 33,897 3,204 3,606 (=) Gross revenue 3,836,286 4,105,618 3,452,833 3,585,582
(-) Sales returns (3,144) (19,579) (3,144) (19,579) (-) Tax on sales (a) (77,443) (136,591) 13,891 (13,146) (=) Net revenue 3,755,699 3,949,448 3,463,580 3,552,857
(a) Tax on sales are not reducing gross revenue in 2014 due to the impacts of Law 12.865/2013, which first impact is in 2014, and that enables the Company to take credits of PIS and COFINS (Brazilian taxes), even in exportation operations, that are predominant in Company revenues and that are not base to taxes in Brazil. b) Revenue by kind of product/service sold Consolidated Company 2014 2013 2014 2013 Soybean meal – common 205,776 85,095 205,776 85,095 Soybean meal – hipro 593,221 730,825 593,221 730,825 Fertilizers 134,255 124,594 134,255 124,594 Corn 509,735 688,781 396,320 505,923 Soybean oil 304,985 459,828 304,985 459,828 Soybean 1,884,704 1,782,554 1,741,097 1,581,619 Other 203,610 233,941 77,179 97,698 3,836,286 4,105,618 3,452,833 3,585,582 c) Revenue month by month Consolidated Company 2014 2013 2014 2013 January 169,321 270,964 149,437 240,848 February 417,915 296,632 395,800 267,950 March 271,026 328,055 257,952 305,993 April 426,408 518,017 361,541 392,260 May 439,316 522,629 374,592 403,736 June 488,597 487,853 420,879 458,332 July 446,746 417,873 401,519 346,420 August 392,379 421,475 345,440 363,748 September 187,379 200,537 178,736 189,365 October 244,657 282,651 225,839 276,983 November 191,390 160,186 189,372 151,220 December 161,152 198,746 151,726 188,727 3,836,286 4,105,618 3,452,833 3,585,582
58 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
26. Selling expenses
Consolidated Company 2014 2013 2014 2013 Storage and transshipment (4,037) (5,278) (3,190) (4,396) Benefits (162) (157) (189) (166) Brokerage and commissions (3,528) (3,954) (3,436) (3,913) Social charges (751) (685) (675) (584) Freight (12,762) (17,601) (12,762) (17,601) Royalts (380) (402) (380) (402) Salaries (2,397) (2,035) (2,059) (1,683) Other services (4,399) (3,905) (3,534) (2,952) Port fees (31,253) (29,281) (30,139) (27,733) Other selling expenses (3,046) (5,705) (1,955) (4,947) (62,715) (69,003) (58,319) (64,377)
27. Administrative expenses
Consolidated Company 2014 2013 2014 2013 Benefits (5,036) (4,825) (3,877) (3,571) Fuels and lubricants (1,603) (1,668) (1,255) (1,136) Electric power (3,746) (4,333) (3,646) (4,263) Depreciation and amortization (7,866) (6,497) (7,719) (6,147) Corporate revenue (note 23) 7,888 9,044 12,374 15,858 General expenses (7,624) (4,993) (5,384) (3,301) Social charges (8,362) (8,133) (7,301) (6,981) Taxes (3,925) (18,104) (3,013) (12,257) Maintenance (5,148) (4,506) (4,850) (4,184) Materials (1,487) (1,488) (1,202) (1,207) Salaries and benefits (36,179) (34,270) (30,148) (29,015) Consultancy and audit services (5,067) (5,912) (4,029) (4,021) Other services (4,642) (5,439) (3,701) (4,458) Other administrative expenses (6,927) (4,760) (5,287) (5,268) (89,724) (95,884) (69,038) (69,951)
59 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
28. Net other operating income (expenses)
Consolidated Company 2014 2013 2014 2013 Other operational revenues Non realized gain on non-deliverable forward (NDF) - 12,078 - 12,779 Realized gain on non-deliverable forward (NDF) 31,003 - 30,392 265 Despatch 3,671 1,419 3,671 1,419 Despatch – related parties (note 23) 68 - 68 - Loading and execution - 632 - 632 Taxes on other revenues - 651 - 692 Dividends revenue 2 - - - Term market 99 1,864 - - Take-or-pay revenue 2,900 - - - Impairment 186 8,415 - - Rural lease revenue – related parties (note 23) 16 63 16 63 Indemnity revenues 3,067 1,614 97 - Other revenues 19,086 9,955 8,922 9,608 60,098 38,070 43,166 26,528 Other operational expenses Write-off of ICMS (recoverable) (7,049) - - - Demurrage (4,745) (12,574) (4,745) (12,574) Demurrage – related parties (247) (33) (247) (33) Non realized gain on non-deliverable forward (NDF) (13,457) - (13,078) - Realized loss on non-deliverable forward (NDF) - (544) - - Despatch – related parties (note 23) - (13) - (13) Expense grains of intermediation - - (410) - Industrial idleness expenses (724) (170) (724) (170) Loading and execution (238) - - - Costs on projects implementation (1) (29) - - Taxes on other revenues (983) - (595) - Gain on the disposal of property, plant and equipment (3,449) (1,862) (1,712) (900) Other expenses (13,561) 682 (2,737) - (44,454) (14,543) (24,248) (13,690)
Net 15,644 23,527 18,918 12,838
60 Amaggi Exportação e Importação Ltda. Financial statements December 31, 2014
29. Net financial income (expenses)
Consolidated Company 2014 2013 2014 2013 Financial revenues Discounts obtained 1,973 1,790 1,969 1,788 Gains on derivatives 63,727 90,407 62,044 90,096 Interest on advances to suppliers 16,036 15,768 16,036 15,768 Interest on marketable securities 25,565 17,690 24,075 16,886 Interest on related party transactions (note 23) 1,242 3,194 1,695 4,974 Price index variation 2,144 3,763 2,144 3,763 Other 2,580 3,086 2,161 1,960 113,267 135,698 110,124 135,235 Financial expenses Discounts granted (454) (879) (449) (878) Taxes on financial transactions (2,469) (1,183) (370) (218) Interest on advances (41) - - - Interest on loans and financing (55,201) (49,916) (43,292) (41,691) Interest on related party transactions (note 23) (896) (549) (1,257) (593) Loss on derivatives (64,450) (84,711) (61,860) (84,711) Price index variation (1,934) (3,225) (1,934) (3,225) Other (4,350) (3,188) (3,307) (959) (129,795) (143,651) (112,469) (132,275) Translation gain (loss) Translation adjustments (26,096) (60,501) (31,316) (60,126) (26,096) (60,501) (31,316) (60,126)
Net financial income and expenses (42,624) (68,454) (33,661) (57,166)
61