2013/2014 - · PDF filea Business Plan for the 2014-2018 period ... • Inverted sugar syrup ... Unity 2013/2014 Products Processing of sugarcane (tons) Storage

Sustainability Report2013/2014

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24 CORPORATE GOVERNANCE

31 ECONOMIC PERFORMANCE

39 SOCIAL PERFORMANCE

50 PERSONNEL MANAGEMENT

59 ENVIRONMENTAL MANAGEMENT

71 GRI CONTEN INDEX

75 CORPORATE INFORMATION

5 Message from management

12 Awards15 About this report 16 Engagement and materiality19 Strategy and vision for the future22 Competitive advantages

27 Ethical behavior30 Risk management

32 Operating performance35 Financial performance 38 Capital market

40 Relations with suppliers 43 Relations with the community47 Clients and consumers

51 The workforce 53 Employee health 56 Compensation and benefits57 Training and education

62 Resource consumption65 Biodiversity67 Emissions68 Effluents and waste

BIOSEV SUSTAINABILITY REPORT 2013/2014

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MESSAGE FROM MANAGEMENT GRI 1.1, 1.2

Evolution and sustainability sum up Biosev’s performance during the 2013/2014 crop year. We are a company anchored in the concept of sustainability based on an economic-social-environmental tripod, and we comprise part of an industry built on technology that is authentically national, sustainable and highly inclusive.

Our raw material is sugarcane, which consumes nothing other than carbon, oxygen and hydrogen and, in its productive process, it is transformed into food, fuel and energy. It is a highly labor-intensive industry, which in recent years has been offering accelerated training for the operation of sophisticated sowing and reaping equipment equipped with GPS and autopilot systems.

Building on the inherent features of the business, we are moving forward in all dimensions. This is Biosev’s first year as a public company listed on the Stock Exchange, in a process that has enabled us to raise R$ 700 million. Despite a very challenging cycle for the industry, we have developed significantly in economic terms. We reached our goal and crushed 30 million tons of sugarcane, the highest volume in the last three years, achieving revenues of R$ 4.3 billion, 3% above the previous harvest. Cogeneration of energy for sale was 15% higher, exhibiting 28% growth in net revenues for this product. For the next crop year, our goal is to crush between 29 and 31.5 million metric tons.

We have set ourselves the challenge to achieve efficiency gains. We have drawn up a Business Plan for the 2014-2018 period and making it our key objective to establish a positive cash flow on a sustainable basis, starting with the 2014/2015 crop year. To do this, we have reorganized our operations into four agro-industrial clusters, seeking to develop a sense of ownership, of complete

RUI CHAMMASCEO

In Brazil we have an established and competitive platform, and we are going to prioritize increasing the yields and operating efficiency of this structure, which is anchored in the economic-social-environmental tripod.”

entrepreneurship within a changing structure that has decentralized operational decision-making and made the organization more versatile, with fewer levels of hierarchy and optimized logistics. We have decided to maintain our investments in planting, treatments and industrial maintenance at the same levels as earlier crop years, which will enable us to maintain projected targets.

Water is a strategic input in our operation. In the crop year, we invested in water recirculation technology, with a consequent reduction of consumption. Projects for maximum water exploitation are under way, aiming to optimize volume intake, reduce processing losses and improve our environmental indicators.

After analysis of the outlook for our industry and assessing the economic viability of our mills, we decided to put the Jardest facility at Jardinópolis (SP) into hibernation, whose biological assets have begun to be used by other units in the Ribeirão Preto region. To soften the social impact of this decision, we carried out the entire process carefully, engaging in dialogue with the municipal government and reabsorbing most of the employees at other units.

This attitude reflects our belief that ours is an inclusive company. We have invested in training our employees and worked to raise the sugarcane industry to another level. We are also providing more technical knowledge for our suppliers through the Mais Cana (More Cane) program. We endeavor to maintain a relationship of open dialogue with communities, and pay special attention to the Liga pela Paz (Promoting Peace) program, dedicated to stimulating non-violence, respect for differences and solidarity among children and young people.

We know that many challenges still lie ahead: we must enhance the full use of our assets, whether biological or industrial, and we are well aware our industry is in the midst of a process of transformation. And so it is that we remain committed to the sustainable development of our business and the creation of value for all of our stakeholders.


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The company is the second largest processor of sugarcane in the world, and operates 11 industrial units located in the Southeast, Center-West and Northeast Regions of Brazil

BIO

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Sugar

Ethanol

Energy

Other products

The second largest sugarcane processor in the world, Biosev’s origin dates from 2000 when the

Louis Dreyfus Commodities Group, the company’s controlling shareholder, acquired Usina Cresciumal. It operates with a main office in the city of São Paulo, 11 agro-industrial units distributed among four clusters located in the Southeast, Center West and Northeast regions of Brazil, and a terminal at the Port of Santos (SP). GRI 2.1, 2.6

Managing 340,000 hectares of land and with the capacity to crush 36.4 million metric tons per year while generating 1,346 GWh of cogen from biomass, Biosev has a diversified portfolio of products commercialized throughout Brazil and in 40 other countries. It produces a variety of different lines of sugar and ethanol, as well as powdered molasses, yeast and animal feed, which are sold to food, fuel distribution and commercial companies. In the domestic market, it sells sugar under the Estrela and Dumel brand names, with Estrela the market leader for granulated sugar in the Northeast Region, according to Nielsen data. All units are energy self-sufficient, and nine of them produce cogeneration surplus that is sold. GRI 2.2, 2.3, 2.5, 2.7

The company closed the 2013/2014 crop year with 16,124 employees. For this period, net revenues totaled R$ 4.3 billion, cash flow in terms of EBITDA stood at R$ 1.1 billion and gross profit came to R$ 560.4 million. GRI 2.8

MAIN PRODUCTS GRI 2.2

• Granulated sugar

• Refined sugar

• Liquid sugar (liquid sucrose solution of high purity)

• Inverted sugar syrup (sucrose, glucose and fructose solution)

• VHP sugar

• CG Sugar (controlled granulometry sucrose crystals)

• Hydrous alcohol (fuel with 94.5% purity)

• Anhydrous alcohol (fuel with 99.3% purity)

• Neutral or industrial alcohol

• Generated from sugarcane bagasse

• Dry yeast • Molasses powder (energy supplement)• Molasses powder (MBS)• Animal feed

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Biosev has annual processing capacity of

36.4

milliontons of sugarcane1

The company operates

11 agroindustrial unitsin three regions of Brazil

PRESENCE OF BIOSEV GRI 2.3, 2.5

Cresciumal – Leme (SP)Continental – Colômbia (SP)Vale do Rosário – Morro Agudo (SP)MB – Morro Agudo (SP)Santa Elisa – Sertãozinho (SP)Jardest – Jardinópolis (SP) (in hibernation)

Lagoa da Prata – Lagoa da Prata (MG) Passa Tempo – Rio Brilhante (MS)Rio Brilhante – Rio Brilhante (MS)Maracaju – Maracaju (MS) Estivas – Arez (RN) Giasa – Pedra do Fogo (PB)

1 Does not include the capacity of the Jardest unit, which was placed in hibernation during the 2013/2014 crop year

BIOSEV

www.biosev.com08009409199

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1 Biosev chose to use current data, considering that this report was completed in December 20142 The Jardest unit was placed in hibernation in the 2013/2014 crop year, and because of this, the consolidated data for installed capacity do not include this plant. GRI 2.9, 3.10

PROFILE OF OPERATING UNITS 1

Capacity

Maximum Flexibility 2013/2014 ProductsUnity

Processing of sugarcane (tons)

Storage (‘000 tons)

Tankage (‘000 cubic meters)

Energy (MW)

RIBEIRÃO PRETO AGRO-INDUSTRIAL CLUSTER

Santa Elisa (SEL)SERTÃOZINHO (SP)

6.1 million 90 126 58 55.6% ethanol and 53.9% sugar

Granulated sugar, liquid sugar, VHP sugar, anhydrous alcohol, hydrous alcohol, neutral alcohol, energy, powdered molasses (MBS and energy supplement), animal supplement

Vale do Rosário (VRO)MORRO AGUDO (SP)


VHP sugar, anhydrous alcohol, hydrous alcohol, energy

MB (UMB)MORRO AGUDO (SP)


Granulated sugar, VHP sugar, anhydrous alcohol, hydrous alcohol, energy

Continental (CTN)COLÔMBIA (SP)


VHP sugar, hydrous alcohol

Jaboticabal - 47 21 - - -

Jardest (JDT)JARDINÓPOLIS (SP) 2

- 22 40 - 60.9% ethanol and 57.3% sugar

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LEME/LAGOA DA PRATA AGRO-INDUSTRIAL CLUSTER

Cresciumal (LEM)LEME (SP)

2.1 million 6 48 36 51% ethanol and 63.9% sugar

Granulated sugar, anhydrous alcohol, hydrous alcohol, energy, dry yeast

Lagoa da Prata (LPT)LAGOA DA PRATA (MG)


Granulated sugar, VHP sugar, anhydrous alcohol, hydrous alcohol, energy

MATO GROSSO DO SUL AGRO-INDUSTRIAL CLUSTER

Passa Tempo (PST)RIO BRILHANTE (MS)

3.3 million 49 66 78 66% ethanol and 49.7% sugar

Granulated sugar, anhydrous alcohol, hydrous alcohol

Rio Brilhante (RBR)RIO BRILHANTE (MS)


Anhydrous alcohol, hydrous alcohol, energy

Maracaju (MAR)MARACAJU (MS)


Granulated sugar, hydrous alcohol

NORTHEAST AGRO-INDUSTRIAL CLUSTER

Estivas (EST)AREZ (RN)

1.8 million 49 22 21 24.6% ethanol and 78% sugar

Granulated sugar, refined sugar, VHP sugar, anhydrous alcohol, hydrous alcohol, energy

Giasa (GIA)PEDRA DO FOGO (PB)

1.2 million - 54 30 100% ethanol Neutral alcohol, anhydrous alcohol, hydrous alcohol, energy

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The MB unit, in Morro Agudo (SP),has a processing capacity of

2.8 million tons of sugarcane

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DESTINATION OF EXPORTS

Products aresold in Brazil and about

40 other countries

AFRICASouth Africa Algeria AngolaBeninCameroonIvory Coast EgyptGambiaGhanaGuineaLiberiaMadagascarMoroccoMauritaniaNigeriaSenegalSierra LeoneTanzaniaTogoZimbabwe

ASIABangladeshChinaSouth KoreaPhilippines IndiaIndonesiaMalaysiaVietnamSri LankaUzbekistan

OCEANIAAustraliaSolomon Islands

NORTH AMERICA Canada

EUROPEBulgariaCroatiaSpainGeorgiaGreeceHollandItaly LithuaniaMontenegroPolandPortugalRomaniaRussiaTurkey

MIDDLE EAST United Arab EmiratesYemenIranIsraelJordanSyria

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AWARDSGRI 2.10

During this fiscal year, Biosev received two recognitions, and four of its units received

certifications:

• The 20 agribusiness companies that are the biggest employers: in 2013, Biosev was listed in the annual publication of Exame magazine, ranked in 12th place.

• Agroindustry Vision Award: in the 2013 edition of this award, the company was included in the ranking of Biggest and Best in Sales Operations.

CERTIFICATIONS

Certification Scope

Bonsucro EU Production Standard

Santa Elisa: Bonsucro is a multi-stakeholder association created to reduce the environmental and social impacts of sugarcane production, based on a standard that incorporates a set of principles, criteria and indicators. The certification for ethanol (anhydrous, hydrous, neutral) and sugar (granulated and VHP) encompasses the chain of custody, including industrial units, our own, as well as leased plantations. In 2013, the certification was extended to include the port.

EPA and CARB Vale do Rosário, MB, Santa Elisa, Cresciumal and Giasa: Biosev is one of the few companies in this sector that produces ethanol fuel registered with the EPA’s RFS2 Program (Renewable Fuel Standard 2), for commercialization in the United States. The Vale do Rosário, MB, Santa Elisa, Cresciumal and Giasa plants have all been approved. For the state of California, the company is registered with the LCFS (Low Fuel Carbon Standard) Program of CARB (California Air Resources Board), for which the Vale do Rosário, MB, Santa Elisa and Cresciumal plants have been approved.

NBR ISO 9001:2008 Santa Elisa: Production and sale of sugar (granulated, liquid, inverted syrup), alcohol (anhydrous, hydrous, extra-neutral, refined, distilled alcoholic) and cogen.

MB: Harvesting, loading, shipping of cane, production and sale of granulated sugar, anhydrous alcohol, hydrous alcohol and cogen.

Vale do Rosário: Production and sale of granulated sugar, anhydrous alcohol, hydrous alcohol and cogen.

NBR ISO 22000:2005 Santa Elisa: Production of sugar (liquid, inverted syrup and granulated) from intake of raw materials to shipment of finished products; Production of granulated sugar from intake of raw materials to shipment of finished products.

Kosher Certification Santa Elisa, MB and Vale do Rosário: Production of sugar and alcohol at these units meets the standards of the Jewish community.

Biosev has an installed cogen capacity of

532 MW

of energy

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KEY INDICATORS GRI 2.8

2011/2012 2012/2013 2013/2014 Var. 12/13 X 13/14 (%)

FINANCIAL

Net revenues (R$ million) 3,402.9 4,152.2 4,267.5 2.8%

Gross profit (R$ million) 457.3 390.5 560.4 43.5%

Adjusted EBITDA (R$ million) 1,134.6 1,286.0 1,147.8 -10.7%

Adjusted EBITDA Margin 33.3% 31.0% 26.9% - 4.1 p,p,

Net income (R$ million) (279.5) (619.6) (1,466.8) -

Adjusted net debt (R$ million) 3,845 3,660 3,302 -9.8%

EQUITY

Total assets (R$ million) 9,717 9,737 9,529 - 2.1%

Net equity 2,471 2,457 1,529 - 37.8%

SHARES 1

No. of shares (Common Stock-ON) - - 206,810,613 -

Share price on March 31 (R$/share) - - 8.50 -

Market cap (R$ million) - - 1,758 -

Average daily trading volume (R$ ‘000) - - 472 -

OPERATIONAL

Crushing (‘000 metric tons) 27,514 29,533 30,009 1.6%

In-house 17,286 18,515 17,623 -4.8%

Third parties 10,228 11,018 12,386 12.4%

Use of installed capacity (%) 68.7% 73.8% 79.2% 1.6%

Production (‘000 metric tons of TRS Product) 2 3,636 3,860 3,767 -2.4

Sugar (‘000 metric tons) 1,963 2,136 1,723 -19.3%

Ethanol (‘000 cubic meters) 928 952 1,150 20.7%

Harvest mechanization 89% 93% 94.7% 1.7 p,p,

Cogen for sale (GWh) 571 619 712 15.0%

SOCIO-ENVIRONMENTAL

Total employees 15,322 16,450 16,124 -2.0%

Water consumption per ton of processed cane (m3/tc) 1.19 1.34 1.37 2.2%

Indirect energy consumption (GJ/tc) 3 ND 0.0033 0.0029 - 12.1%

1 Biosev shares began to be traded on Bovespa (São Paulo Securities Exchange) on April 19, 2013 | 2 TRS = Total Recoverable Sugar 3 tc = ton of cane

BIOSEV

Going public with an IPO, starting to trade on the Novo Mercado segment of the BM&FBovespa

HIGHLIGHTS OF 2013/2014 CROP YEAR

Increase of 2.8% in net revenues, which totaled

R$ 4.3 billion

Crushing of 30 million tons of sugarcane, the largest volume in the past three years

13.2% increase in the efficiency of cogeneration, which reached 23.7 kWh/crushed ton

Improved utilization of capacity, which came to 79.2%

Investments of :

R$ 417,000in the community

R$ 9.4 million in environmental initiatives

R$ 13.6 millionin health and safety

Sale of the São Carlos industrial unit’s biologi-cal asset and cessation

of its activities GRI 2.9

R$ 358 million reduction in net adjusted debt

Restructuring of the units at four agro-industrial clusters GRI 2.9

Revision of the Business Plan, resulting in the hibernation of the Jardest unit, and reassignment of its biological assets to a nearby plant

28% growth in net revenues from energy, which stood at 23.7 kWh/crushed ton

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ABOUT THIS REPORT

For the third year in a row, Biosev is presenting its Sustainability Report, aiming to preserve

transparency with its stakeholders regarding the principles and commitments that guide its business, and on its performance during the fiscal year. This report covers the 2013/2014 crop year, encompassing the period from April 1, 2013 to March 31, 2014.

To prepare this document, the company adopted the guidelines of the Global Reporting Initiative (GRI), version G3.1, a global and multi-industry standard that guides companies in the use of indicators and principles for reporting their activities. GRI 3.1

With 46 performance indicators, as opposed to 36 in the previous report, this document provides economic, environmental, social and industry information for 11 plants in operation during the 2013/2014 crop year, located in the Southeast, Northeast and Center-West regions of Brazil, and for its subsidiary, Biosev Bioenergy S.A. The financial indicators follow International Financial Reporting Standards (IFRS), and have been audited by Deloitte Touche Tohmatsu. The socio-environmental data are keyed to Brazilian labor standards and in ISO 9001, ISO 22000 and Bonsucro certifications. GRI 3.6, 3.7, 3.9

In addition to Biosev S.A. and its subsidiary, Biosev Bioenergia S.A., economic performance indicators include data for companies that are part of the group: Biosev Bioenergia International S.A.; Biosev Bioenergia

Ltda.; Bioenergia Finance International B.V.; Biosev Bioenergia S.A.; Biosev Terminais Portuários e Participações Ltda.; Biosev Passatempo Bioenergia S.A.; Crystalsev Comércio e Representações Ltda.; Sociedade Operadora Portuária de São Paulo Ltda.; Terminal de Exportação de Açucar do Guarujá Ltda. (Teag); Crystalsev Participações Ltda.; Crystalsev International S.A.; Crystalsev Fomento Ltda.; Crystalsev Serviços de Intermediação de Negócios Ltda.; Crystalsev Bioenergia Ltda.; Indumel – Indústria e Comércio de Melaço Ltda.; and Agrícola e Comercial MB Ltda. GRI 3.8

Consolidated data on installed capacity for 2013/2014 do not take the Jardest Unit into account, which was put into hibernation during the harvest. Other changes of information published in earlier reports are due to enhancements of methods for taking measurements, such as atmospheric emissions, and are referenced throughout the document. GRI 3.10, 3.11

LEVELS OF APPLICATIONBiosev declares that this report fulfills the requirements of Level B for application of the GRI G3.1 guidelines, having complied with the requisites indicated in the table below for such purpose:

C C+ B B+ A A+

Profile of G3.1 Covers all items: 1.1; 2.1 to 2.10; 3.1 to 3.8; 3.10 to 3.12; 4.1 to 4.4; 4.14 and 4.15

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Covers all criteria listed for Level C, plus: 1.2; 3.9, 3.13; 4.5 to 4.13; 4.16 to 4.17

By

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The same as required for level B

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Disclosures on Management Approach

Not required Information on Form of Management for each indicator category

Form of Management reported for each indicator category

Performance indicators of G3.1 & Performance indicators of sector supllement

Covers a minimum of 10 performance indicators, including at least one from each one of the following performance areas: social, economic and environmental.

Covers a minimum of 20 performance indicators, including at least one from each one of the following performance areas: economic, environmental, human rights, labor practices, society, product responsibility.

Covers each essential G3 and industry supplement* indicator with due consideration of the materiality principle in one of the following ways: a) by including the indicator, or b) by explaining the reason for the omission.

*The industry supplement in its final version

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ENGAGEMENT AND MATERIALITY GRI 3.5, 4.14, 4.15, 4.16

To determine the content of this report, the company carried out an indirect updating

of significant issues raised in the 2011/2012 cycle when, with the help of specialized consultants, a survey was conducted of interests and expectations that stakeholders considered strategic. These stakeholders were identified on the basis of an analysis of both the impacts and influence they exercise on company business, together with an analysis of the repercussions of Biosev activities. They include suppliers of sugarcane, clients, shareholders and investors, communities, municipal governments, non-governmental organizations working in the area of company operations, as well as the press.

The updating of issues involved consultation on the internal focal points relating most strongly to strategic stakeholders. The revision also takes into account an analysis of matters given priority status by companies and institutions in the sector, and surveys of the socio-environmental concerns of clients and financial institutions, as expressed in their questionnaires, websites, policies and relationship strategies.

On the basis of this, Biosev made adjustments and introduced the topic of the business’ environmental impacts. Senior company management validated the most significant issues identified by this process. Not all indicators on

MOST SIGNIFICANT SUBJECTS GRI 4.17

1st materiality Updating of materiality Related GRI Indicators

The workforce;

Employee health;

Freedom of association;

Respect for union negotiation;

Conditions of the workforce, and freedom of association

LA7, LA8, HR5, LA1

Possible risk of occurrence of child labor and/or labor equivalent to slavery;

Possible risk of occurrence of child labor and/or equivalent to slave labor in the supply chain

HR6,HR7

Local community;

Transfer of agricultural technology;

Relationship with neighboring and traditional communities. Local development

SO1, EC6, EC7, EC9

Climate change; Climate change and impacts on the sugar-energy sector

EC2

Market presence;

Economic-financial balance;

Corporate Governance;

Corporate governance EC1, SO7

Healthy foods;

Labeling of products and services;

Product quality and responsibility

PR1, PR2, PR3, FP5, FP8

- Environmental impacts of business

(water use, energy production, biodiversity, emissions, effluents and waste)

EN3 a EN7

EN8 a EN10

EN11 a EN15

EN16 a EN24

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subjects considered significant have been included in this document, but Biosev is committed to publishing this information in its next report.

RELATIONSHIP ACTIONS

Engagement activities with strategic stakeholders are one-time events, taking place at gatherings, business meetings, seminars and presentations of results, among other occasions, where changes are identified in the market and in operations that could have an impact.

• Shareholders and investors – Regular meetings, quarterly teleconferences to present earnings results, and participation in events where issues relating to operational and financial indicators are addressed.

• Clients – Ongoing communication via the Sales and Quality departments, including pro-active technical visits. For retail brands (Estrela and Dumel), a 0800 telephone customer service number is provided. Topics of greatest relevance include product quality, and commercial and logistical matters.

• Communities, municipal governments, NGOs – A department for Social Responsibility, Community Relations and Private Social Investment has been established that engages in outreach through social projects undertaken jointly with NGOs, municipal governments and community associations, and can also be reached by phone and e-mail at any time. Recurring issues involve environmental protection, preservation and education, employee training and social development.

• Employees – Ongoing contact via intranet, e-mail and departmental

meetings, involving subjects such as pay, health and safety, training and capacity building.

• Suppliers – In addition to one-time contacts organized by the Origination department, there are annual gatherings held by factories or regional clusters where issues relating to production, yields and labor practices are taken up.

• The Press – Activities involving economic, social and environmental issues are organized on a case-by-case basis by the Press Affairs Office via mailings, press releases, responses to inquiries and scheduling of interviews with executives.

Activities with company stakeholders

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PARTICIPATION IN INDUSTRY ASSOCIATIONS GRI 4.13

To defend the interests of the sugar-energy industry and help companies to conduct their activities sustainably, Biosev is a member of industry associations such as:

Unica – This is the largest organization representing the sugar-energy industry. The company has a seat on the board, and contributes to the development of environmental projects such as the Green Ethanol Program, conceived to encourage sustainable production of biofuels from sugarcane.

Association of Producers of Bionergy of Mato Grosso do Sul (Biosul) – By participating in the organization, Biosev endeavors to follow and support the development of the sugar-energy industry and its interactions with society. In addition, the association is responsible for organizing technical committees whose job it is to come up with solutions for this sector.

Sindalcool – Participation in the Alcohol Production Industry Syndicate of Paraíba.

Siamig – This organization brings together the Association of Sugar-Energy Industries of Minas Gerais, the Alcohol Manufacturing Industry Syndicate and the Sugar Industry Syndicate of the State of Minas Gerais.

It also sits on committees for the Hydrographic Basins of the Paraíba River, the Southern Coast and the Tributaries of the Upper São Francisco River.

COMMITMENTS GRI 4.12

Biosev is a signatory of initiatives geared towards progress in the sustainable performance of its activities, notably:

The Agro-Environmental Protocol – All company units located in the state of São Paulo are signatories of this state government initiative aimed at recognizing good environmental practices in the sugar-energy industry through a certificate of compliance that is renewed annually. This initiative was undertaken on the basis of an understanding between the government, mills and suppliers of sugarcane on the RFS2 (Renewable Fuel Standard 2) program of the U.S. Environmental Protection Agency (EPA), and the LCFS (Low Fuel Carbon Standard) of the California Air Resources Board (CARB), and also in response to the need to organize agricultural and industrial activities so that they harmonize with the environment, thereby minimizing their social and environmental impact. The Santa Elisa, MB, Continental and Vale do Rosário units signed the protocol in 2007, and the Leme unit, in 2008. The company is registered with the LCFS Program of the California Air Resources Board (CARB) – an exceptional case for the state of California.

Madeira Legal (Legal Wood) – The Green Seal represents forest replacement, which is granted by the Secretary of the Environment to companies that properly fulfill tree replacement targets at a volume equivalent to that of forest products or by-products sold, used or processed in the previous year. At Biosev units, eucalyptus wood is used for starting up and stoking industrial boilers. This practice has been implemented by the Santa Elisa, MB, Continental, Vale do Rosário and Leme units.

Activities with company stakeholders

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STRATEGY AND VISION FOR THE FUTURE GRI 1.2

Biosev seeks to strengthen its position of leadership in the Brazilian and international

sugar-alcohol industry profitably and sustainably, to create value for all of its stakeholders. The company operates in a vertically integrated manner, participating in all stages of production from planting, harvesting and processing sugarcane, to storage, logistics and commercialization of a range of products in the Brazilian and international markets.

Asset organization at the agro-industrial clusters, a measure adopted during the 2013/2014 crop year, allows for gains of scale and cost cutting on sugarcane production, purchasing and logistics, ensuring efficient management of economic performance and the creation of value for all stakeholders. Operations are supported by four strategic pillars:

ASSET OPTIMIZATION

Asset optimization involves expanding our own cane production and purchasing sugarcane from third parties. In its productive chain, as an incentive to suppliers, the company operates the Projeto Mais Cana (More Cane Project), which seeks to foster partnerships among producers by offering a package of benefits including materials, technology transfer and credit lines, among other things, so as to bring about

an increase at units in the use of installed capacity, maximizing the dilution of fixed production costs and product margins.

To reduce costs, increase scale and improve efficiency, the company seeks to strengthen operations at clusters through the following actions:

• Additional investment in the mechanization of agricultural activities, and agricultural, industrial and information technologies;

• Enhancement of the logistical structure (ports, terminals, warehouses and transportation);

• Investment in technologies that allow for greater flexibility and optimization of the production mix of sugar and ethanol, so as to ensure balance with price fluctuations;

• Achieving better industrial and agricultural market performance indicators;

• Use of supplementary fuels, such as sugarcane straw at industrial units with assets for cogen.

GROWTH THROUGH BROWNFIELDS AND COGENERATION

Growth involves expanding sugarcane processing capacity units, to maximize the potential of their installed assets. Expansion projects (brownfields) adhere to operating efficiency and logistical criteria to ensure significant gains in margin, yields and scale, in addition to boosting capacity for cogeneration and cogen export, which must receive investments in technology.

PILLARSWith its focus on production of sugar, alcohol and cogen,the company has defined key points to ensure its leadership positionin a model for profitable and sustainable operations

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GOALS

Goal 2013/2014 AccomplishedGoal

2014/2015

Crushing of Cane (million tons) 28.7 - 30.1 30 29.0-31.5

TRS Cane (Kg/ton) 125.0 - 131.0 124.9 128.0-134.0

TRS Product (million tons)1 3.6 - 3.9 3.7 3.7-4.21 TRS = Total Recoverable Sugar

GETTING THE MOST OUT OF PRODUCTS AND MARKETS

Getting the most out of products and markets involves taking advantage of flexibility in the production mix of sugar and ethanol in their various forms, access to the international market, the company’s strong brands and extensive sales channels so as to ensure speed and flexibility in three dimensions: 1) the product and its quality; 2) the market for commercialization; and 3) the right time to execute the operation. Furthermore, Biosev is getting ready for possible opportunities, such as:

• Exports of sugar and ethanol in the medium- and long-terms, owing to liberalization in restrictions on trade and imports that currently restrict access to certain big markets;

• Growth in the demand for ethanol fuel in Brazil;

• The current trend in a variety of countries to find renewable sources of energy that pollute less, such as clean ethanol;

• Growth in the demand for ethanol for other purposes, such as production of bioplastics, beverages and industrial pharmaceuticals and cosmetics.

STRATEGIC CHANGES GRI 2.9

The 2013/2014 crop year was marked by major challenges, both in terms of weather as well as macroeconomic conditions. To contend with these circumstances, Biosev reorganized its operating structure, with the creation of four agro-industrial clusters and

a reduction in levels of hierarchy, which has entailed a 20%

reduction in the number of directors and managers.

NEW OPERATING STRUCTURE

The premise for the reorganization was to increase the competitiveness of assets already installed, and to boost yields and operating efficiency. To consolidate this, Biosev undertook a detailed analysis of the economic viability of its plants, deciding to place the Jardest unit in Jardinópolis (SP) in hibernation.

The biological assets of the unit have been maintained along with the supply of sugarcane for its partners, which will be used by other units in the Ribeirão Preto region in the 2014/2015 crop year, and will raise operating efficiency.

The initial results for these measures were presented at the end of the harvest. Despite unfavorable weather events during the period, which was marked by drought, the volume of crushing totaled 30 million metric tons, the largest volume in the past three years, while the rate of capacity use also improved, reaching 79.2% – compared to 73.8% in the previous harvest.

Northeast (NE) Cluster: Giasa (PB) and

Estivas (RN) units

Leme-Lagoa Cluster: Leme (SP) and Lagoa da Prata

(MG) units

Ribeirão Preto Cluster (RP): Santa Elisa (SP), MB (SP), Vale do Rosário (SP) and Continental (SP)

units

Mato Grosso do Sul (MS) Cluster: Rio Brilhante (MS),

Passa Tempo (MS) and Maracaju (MS) units

BIOSEV


21

AGRICULTURAL INTELLIGENCE The key approach for the 2013/2014 crop year was to increase competitiveness of assets already installed, to introduce a new profile of varieties better suited to exploiting the potential of sucrose, with a lower incidence of disease and improved yields and operating efficiency.

To ensure improvements in processes involving technology, Biosev maintains partnerships with institutions such as the Centro de Tecnologia Canavieira (Center for Sugarcane Field Technology - CTC), Ridesa Agro and the Instituto Agronômico Campinas (Campinas Institute of Agronomy - IAC). As an example of their contributions, the CTC and IAC run programs for enhancements in various productive settings, and the performance of these varieties is monitored at Biosev units.

Through a technical cooperation agreement with these institutions, Biosev actively participates in new crop development, providing technical support and areas for planting in order to select the best performing varieties. After the selection stage, the final materials are distributed to Biosev units based on their specific characteristics, with a view to achieving their maximum productive potential.

PLANTING TECHNOLOGY

Since 2011, the company has adopted the practice of alternate planting, with spacing between sugarcane rows geared towards optimizing activities and boosting production. With this approach, two sugarcane rows are planted 90 centimeters apart, with a gap to the next row measuring 1.6 meters. Traditional planting maintains a uniform distance of 1.5 meters between each row. As a result, the planted area goes from 6,700 to 8,000 linear meters per hectare, which allows for increased production in the same area.

Alternate planting uses equipment that operates on autopilot. For harvesting, this system has been implemented for 100% of the crop at the MS Cluster, and is being introduced at the Ribeirão Preto and Leme/Lagoa da Prata Clusters. At the MS Cluster, mapping of the stools has already begun in preparation for the next harvest.

Autopilot allows for high quality planting based on the parallel arrangement and spacing of cane rows, resulting in better use of space. The cane rows are geo-referenced and stored for subsequent use in other agricultural operations, which benefit directly from this. Leveling and sowing, for example, is carried out without harming or even pulling up the stools. And at harvest time, there is a reduction in losses of raw materials and stool trampling.

The principal objectives of autopilot are:

1) reduction of row trampling, avoiding a decline in yields in later harvests, and greater plantation longevity;

2) reduced raw materials losses, because the harvester is centered on the crop row;

3) total use of the cultivated area because of the correct parallel arrangements and uniform gaps between rows.

ON-BOARD COMPUTERAll harvesters today are monitored from a distance through an on-board computer, which results in higher productivity.

GENETIC IMPROVEMENTVariety could leverage productivity, due to the genetic material it presents. For the next harvest, Biosev should obtain competitive varieties from the market, deriving from adequate treatment for a high-standard crop that is disease-free.

BIOSEV


22

COMPETITIVE ADVANTAGES

In its nearly 15 years of history, Biosev has established distinguishing characteristics that contribute to

its growth.

Strategic location – Biosev assets are divided among four clusters (São Paulo-South, São Paulo-North, Mato Grosso do Sul and the Northeast) strategically located in regions with climate conditions favorable to the production of sugarcane, which ensures mitigation of risks involving weather, cash flow and logistical optimization. Dividing assets into clusters keyed to proximity between company units also allows for gains of scale, optimizing inventory management and assignment of specialized labor, fine-tuning distribution of raw materials, reducing transportation costs and establishing conditions that are more favorable for sugarcane acquisition, among other benefits.

Operational, agricultural and industrial efficiency – The company has a flexible and integrated production platform, which encompasses everything from sugarcane planting to retail sugar sales. At present, 10 of the 11 industrial units exhibit ample production flexibility switching between sugar and ethanol, which allows us to allocate production based on the most favorable market opportunities. Due to regional peculiarities, this model enables us to:

• Institute profit margins normally associated with the agricultural production of sugarcane;

• Minimize the risk of insufficiency of raw materials and ensure higher quality for these inputs, since the company has access to technological resources that smaller companies and producers can only arrange with difficulty;

• Share production and price risks with sugarcane suppliers.

Furthermore, the company’s agricultural activities are characterized by a high degree of mechanization – from planting (63.5%), to crop treatments (100%) and harvesting (84%), the result of investments that have brought about reductions in production costs and labor dependence. The level of mechanization of the harvest itself, for example, stood at 94.7% at the close of the 13/14 crop year, 1.7 percentage points higher than the 12/13 crop year.

High processing capacity – Biosev’s average monthly processing capacity is more than 3 million metric tons, which helps dilute fixed costs. In addition, with the high flexibility of the production mix at its units, it is possible to adjust production in response to market opportunities based on the margins for each product. Other factors include the structure for storage, with an inventory capacity of 754,000 metric tons of sugar and 829,000 cubic meters of ethanol – which makes it possible to control the supply of these products on the market, as well as the best moment for their sale – and a joint venture at the Guarujá Sugar Export Terminal (TEAG), which expedites getting production to foreign markets at competitive costs.

Products with added value and access to profitable markets – In addition to VHP sugar (the raw product for export) and ethanol fuel, Biosev also produces granulated sugar, GC sugar (sucrose crystals with controlled granulometry), liquid sugar, inverted sugar syrup, refined sugar, industrial ethanol and neutral ethanol, which help to expand our client base. In the

DISTINGUISHING CHARACTERISTICSA set of attributes that enables the company to operate more competitively in the market, differentiating it from competitors and ensuring the sustainable growthof its business

BIOSEV


23

INVESTMENTS (R$ MILLION)

2011/2012 2012/2013 2013/2014

Expansion 173 189 54

Operations 1,163 1,156 1,152

TOTAL 1,336 1,345 1,206

domestic sugar market, products with their own brands – Estrela and Dumel – are commercialized. In the ethanol market, on the other hand, the company has been certified to sell its product in the United States. For energy cogeneration, it has purchase and sale contracts at attractive prices that enhance financial performance.

Integration with the Louis Dreyfus Commodities Group – The Group has over 160 years of history operating in the global commodity and Brazil’s sugar-alcohol markets. In addition to being one of the company’s main clients, accounting for the purchase of a portion of the sugar sent to foreign markets, the Group provides Biosev with access to information about sugar demand, which assists with sales policy planning the management of financial and market risks.

Growth capacity – Since 2000, Biosev has acquired 13 industrial units belonging to five groups, with a presence in different regions of Brazil, which ensures a more advantageous position in an industry that is still quite fragmented. At present, 11 units are in operation – São Carlos, in Jaboticabal (SP), was de-activated in 2012, and the Jardest unit in Jardinópolis (SP) was put into hibernation in 2013. Acquisitions added to the units’ organic growth giving rise to the current status as largest overall competitor in the industry, according to the Anuário da Cana 2012 (2012 Cane Yearbook), with a leap in industrial processing capacity from 900,000 metric tons/year in 2000, to 36.4 million metric tons/year, as of March 31, 2014.

INVESTMENTSBiosev has built a competitive platform of assets over the past few years, the result of a cycle of investment expansion executed with the disciplined use of capital. Using this platform as a point of departure, Biosev will plan for growth based on increased yields and efficiency. In this context, the company will keep up its investments in planting, treatments and industrial maintenance in keeping with previous crop years, substantially cutting back on investments in expansion.

Investment in the completed 2013/2014 crop year totaled R$ 1.2 billion, a 10.3% drop in relation to the previous harvest. The key factor in reducing the amount of investment between these two periods was a cutback of expenditures for expansion due to the completion of the Passa Tempo (MS) cogeneration projects that entered into operation in May of 2013. As a consequence, the company’s cogeneration capacity went from 973 GWh in 2010, to the current 1,346 GWh.

Products with added value and access to profitable markets

BIOSEV

INVESTMENTS(R$ ‘000)

1,336

2011/2012

1,345

2012/2013

1,206

2013/2014


24

Listed in the Novo Mercado of the São Paulo Stock Exchange (BM&FBovespa), the company has adopted differentiated practices and ensures equal rights for all of its shareholders

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25

Based on best governance practices, business is conducted by a Board of Directors and an Executive

Board. The Company’s By-laws provide for a non-permanent Fiscal Council responsible for supervising administrative activities and analyzing financial statements. Currently, the company has not convened a Fiscal Council. GRI 4.1

BOARD OF DIRECTORS

The Company’s By-laws state that the Board of Directors, the company’s highest governance body, is responsible for establishing policies and general business guidelines, including long-term strategy, control and supervision of company performance, oversight of management and general adherence to rules and regulations.

Meetings of the Board occur at least once per quarter, for analysis of issues relating to economic, social and environmental performance. The Executive Board, appointed by the Board of Directors, oversees risks incurred and compliance with internal rules, external laws and regulations, conducting business in a quest for better economic, environmental and social performance. GRI 4.9

The Board is made up of nine members, four of them independents and none of them executives, elected by the General Assembly, with concurrent terms of two years, with re-election permitted. The concept of independence is the same as the one adopted by regulations of BM&FBovespa’s Novo Mercado, whereby individuals are not supposed to have any connection to the company, although they may own stock. All are men, white, with 44.5% between the ages

of 30 and 50, and 55.5% over 50. The Chairman of the Board does not hold any management position at Biosev, but is an executive of the controlling shareholder group. GRI 4.3, LA13, 4.2

Three committees work to support the Board of Directors: GRI 4.1

Strategic Committee – It is responsible for reviewing budget proposals and their adjustments, the business plan, the risk management policy, major investment projects, plans for mergers and acquisitions, formation of joint ventures and partnerships involving the company, its subsidiaries and affiliates.

Audit Committee – It is incumbent on the committee to review the financial statements; to analyze the Policy for Transactions between Related Parties and suggest to Board of Directors possible adjustments regarding transactions; to review the proposed fees for contracting the independent auditor and the compliance policies and practices adopted by the company; to analyze instances of fraud, and generally, to carry out any tasks that may be assigned by the chairman of the Board of Directors.

Human Resources Committee – It is responsible for reviewing policies and plans for compensation and benefits

The Board is responsible for overseeing and supervising company performance

CORPORATE GOVERNANCE


26

of all employees, including managers, and for seeking information on market conditions for compensation and recommending modifications to the Board regarding these policies.

EXECUTIVE BOARD

Responsible for coordinating and supervising Company activities, the Executive Board was made up of 16 members at the close of the 2013/2014 crop year, five of them Statutory Executive Board members. Of the 16 directors, two (12.5%) are women. All are white, 56.2% are between the ages of 30 and 50, and 43.8% are over 50; 100% of the members of are between the ages of 30 and 50. Their term of office is one year, and they have the experience necessary to manage Biosev and execute its strategy. GRI LA13

COMMUNICATION GRI 4.4

The General Shareholders Meeting is the main communication channel to enable shareholders to make decisions about company affairs, whose priority is the company’s economic-financial performance. Convened by the chairman of the Board of Directors, or by shareholders, it ordinarily occurs once a year, within four months following the close of the company’s fiscal year and, under extraordinary circumstances, whenever it may be required for the sake of company interests.

The Investor Relations department also provides an indirect channel for communication with the Board of Directors, via e-mail and telephone, available through company communication channels. Shareholders and/or their representatives have access to the company’s administrative committees.

Currently under review are the functions of the Internal Employee Commissions (CIC), created for the purpose of resolving issues involving human resources, safety, service

providers, quality, etc., as well as hearing suggestions and complaints. Subsequently, information is forwarded to management for analysis and the implementation of suitable responses. In the 2013/2014 crop year, these commissions will not be convened at the Northeast and Santa Elisa units.

COMPENSATION GRI 4.5

Remuneration policies for executive officers and members of the Board of Directors essentially aim to attract, motivate and retain highly skilled professionals with experience and ability to create and implement the strategies of our business, generating value for our shareholders and promoting results, based on sustainable growth over the short, medium- and long-term.

The total compensation of officers is composed of fixed and variable remuneration. The benchmark for analysis of values is market research carried out by independent consultants. Variable remuneration is divided into short-term (50%) and long-term (50%) compensation, encompassing the business’ performance and sustainable growth strategy.

To ensure alignment and consistency of long-term results, Biosev uses the variable remuneration long-term deferred model, with a grace period of four years for total redemption of amounts (4 X 25%), aligned with the business’ growth in each year of operation.

CONFLICTS OF INTEREST GRI 4.6

Biosev has adopted rules and practices to identify and manage conflicts of interest as set forth in the Corporations Law, and in the regulations of BM&FBovespa’s Novo Mercado. In addition, there is a Policy for Transactions with Related Parties, reviewed and approved by the Board of Directors in September of 2013, which establishes rules for executing transactions of this nature in order to preserve and protect company interests.

ALIGNMENTVariable compensationof officers is tied to performance,sustainabilityand business growth strategy



27

ETHICAL BEHAVIOR GRI 4.4, 4.8

To conduct business, Biosev bases itself on four values: commitment,

entrepreneurship, humility and diversity. These are communicated to new employees through the company’s internal media (bulletin boards, intranet and the Conexão Cana - Cane Connection) radio program, as well through visual communication in the main office and the units.

COMMITMENT

We build relationships based on trust, through consistent ethical personal conduct. It satisfies us to serve our partners well, to develop as individuals and to offer superior results for our shareholders. We have an unshakeable determination to achieve excellence in everything we do, respecting the law and the communities where we operate.

ENTREPRENEURSHIP

We are entrepreneurs. We make fast and clear decisions at the boundaries of our authority, drawing on reasoned arguments to take calculated and controlled risks. Because our approach is brimming with energy and enthusiasm we take initiatives and act creatively.

HUMILITY

The cycle is not eternal. We create and encourage a culture of trust to generate growth and stability in the long-term. We learn through questioning and constructive criticism. Even though we may recognize that a way of doing things may be good, we constantly strive to learn from each other and to find better solutions.

DIVERSITY

We respect each individual. We respect a variety of approaches to solving problems and honest communication between employees from diverse regions, cultures and activities, helping to develop the communities where we operate.

Solid values for business sustainability

VALUES GRI 4.8



28

CONDUCTWith the aim of guiding its business in line with environmental, economic and social factors, Biosev has internal policies based on the following premises:

• All accidents and losses suffered by employees, third parties, visitors, facilities and the environment can be prevented, and it is up to the company to take the necessary steps to mitigate them;

• Every member of the company must be engaged in his or her respective activities in such a way as to inspire good practices and attitudes, assigning maximum priority to people’s safety and health, and to the environment;

• Everyone must actively participate in safety programs, audits and inspections, and aspire to meet or surpass all standards and regulations applicable to safety, health and the environment;

• To reduce the environmental impacts of activities, taking measures to prevent pollution and promote the sustainability of natural resources used;

• To manufacture products competitively in accordance with standards for quality, food safety and the applicable legal requirements;

• To monitor and promote continuous improvement in the Quality Management and Food Safety systems that are vital to the conduct of our business;

• To foster quality relationships encouraging communication, participation and employee development.

The manufacturing of products to top quality and food safety standards



29

EMPLOYEES TRAINED IN THE CODE OF CONDUCT GRI SO3

2011/2012 2012/2013 2013/2014

NON-MANAGEMENT STAFF

Number of employees trained 14,249 16,328 15,997

Percentage of all employees 94.68% 100% 100%

MANAGEMENT STAFF

Number of employees trained 1,483 121 127

Percentage of all employees 83.36% 100% 100%

FIGHTING CORRUPTION GRI SO3, SO4

Biosev does not tolerate anti-competitive practices or any practices involving corruption. In addition to being stated in the Code of Conduct, this matter is addressed by preventive mechanisms.

The Internal Audit includes a risk matrix to ensure that all verifiable processes and units are audited at least once every five years. In the 2013/2014 crop year, 100% of all business and operating units were evaluated for risks of corruption. The result of these audits is forwarded to the Louis Dreyfus Group’s Executive Committee and Audit Committee, which can take steps to reduce or eliminate risks of corruption, as well as make improvements. GRI SO2

The Internal Audit area also is responsible for handling complaints of unethical behavior, including cases of corruption, which are then assessed and can lead to disciplinary measures and penalties for those involved, such as contract termination and/or dismissal. In addition to receiving training in ethical questions upon joining the company, when the Code of Conduct is presented, all regular employees are retrained annually on the subject when they come back from vacation. No cases of corruption were registered in this crop year.

COMMUNICATION CHANNELSDuring this crop year Biosev expanded its communication channels, consolidating them into a single 0800 number, (0800 9409-199) to receive suggestions, opinions, criticism and doubts about the company. The focus is on issues of health, consumer safety, employees and communities, the environment, social responsibility and clients. It is an outsourced, automated service operating from 8 a.m. to 8 p.m. Monday-Friday.

A Code of Conduct establishes principles and standards to guide daily activities and the personal deportment of management, members of the Board of Directors, senior management and other employees. The Code of Conduct and internal rules together constitute a fundamental part of company governance, and the Executive Board establishes internal processes and committees, assigning staff to ensure that they are upheld.

This document establishes guidelines for ethical conduct as well as standards, limitations and specific conditions aimed at preventing the risk of corruption. The text addresses issues such as discrimination, moral or sexual harassment, occupational safety, conflicts of interest, child labor or labor analogous to slavery, and indigenous issues.

It is available on the company website, the Investor Relations website, and on the intranet, while all new employees are given the Code upon arrival to become familiar with the issues it addresses.

To receive complaints involving violations of the principles of the Code, the company operates the Ethics Hotline. All cases reported are registered and brought before the Audit Committee, which determines appropriate measures and possible penalties following analysis of the Internal Audit.



30

RISK MANAGEMENT GRI 1.2

Biosev has developed an integrated management system to identify and monitor on an ongoing

basis the risk factors to which it is exposed that can directly affect the sustainability of the business. This system determines the application of techniques for the analysis of issues/impacts for all company activities, and by cross-matching probability data with outcome data (the risk matrix), as well analyzing historical data and engaging in discussions in multi-disciplinary committees, it is possible to assess the impact of processes and products.

In September 2013 the Board of Directors approved a Financial and Risk Management policy that establishes prudent parameters and a transparent orientation for all company stakeholders. For example, as an objective for the medium-term, it sets limits on leverage levels, with a maximum net debt 2.5 times adjusted EBITDA, and fixes the current liquidity index at a minimum of 1.1. It also sets minimum guidelines for debt structure, currency exchange risk management and prices. The policy can be obtained in the Download Folder on the Investor Relations website: www.biosev.com/ri

When it comes to the environment, the company uses the precautionary principle whereby, if there is a threat of serious or irreversible damage, the lack of absolute scientific certainty shall not be invoked as grounds for moving forward with measures that are otherwise economically viable, to

prevent environmental degradation. Sustainability committees monitor water consumption, atmospheric emissions, areas that are permanently protected as well as areas undergoing restoration. For each one of these factors, measures are adopted to reduce impacts. Initiatives include studies on ways to optimize the transportation of raw materials and products consumed. GRI 4.11

The Department of Risk Management and Compliance, under the supervision of Financial management, calculates, measures, analyzes, mitigates and monitors exposure to risk factors, allowing for corrective action to be taken. The following programs support this process:

Nice Program – Seeks to guarantee reliability in the preparation of financial statements and ensure compliance with the requirements of CVM Instruction No. 480, of December 7, 2009, applicable to all public companies traded on the BM&FBovespa.

Axia Project – The purpose of this project is to unify budgetary management by redefining its processes and forecasting company results, drawing on input from operational departments and processing SAP/BPC data.

UNDER CONTROLAn integrated risk management systemallows for monitoring of key factors that may have an impact onbusiness performanceand deciding on corrective and mitigatingactions.



31

With the crushing of 30 million metric tons of sugarcane, the highest volume in recent years, the company registered 79% capacity utilization in its mills in the 2013/2014 crop year

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OPERATING PERFORMANCE

Crushing of sugarcane for the 2013/14 crop year came to 30 million metric tons, the highest

volume in the past three years. The portion of our own cane was 58.7%, compared to 62.7% in the previous harvest. This variation was due chiefly to the sale of the biological assets of the São Carlos plant, which took place in 2013, and involved the conversion of some 900,000 metric tons of our own cane into cane from third parties, with a consequent reduction in the percentage of our own cane. In addition, there was the impact of frost in Mato Grosso do Sul, which primarily affected our own cane fields, also helping to account for this mix.

Biosev moved forward with improvements in its operating efficiency, and the capacity utilization rate went from 73.8% to 79.2% between harvests. The highlight was the Ribeirão Preto cluster, where the utilization rate was 87.4%. This result reflects improved yields from our own sugarcane fields together with an increase in the supply of cane from third parties.

Mechanization of our own harvest reached 94.7% at the close of the 2013/2014 crop year, 1.7 percentage points above the 2012/2013 crop year, the result of investments made over the past few years to increase the use of harvesting technology.

Mechanized harvesting: 94.7% in our own areas

ECONOMIC PERFORMANCE

CRUSHING OF CANE

2011/2012

2012/2013

2013/2014

27,51429,533 30,009

Crushing (‘000 metric tons)Utilization ratio (%)

68.7%73.8%

79.2%


33

PRODUCTIVITY

Yields from sugarcane fields, as measured by Ton of Cane per Hectare (TCH), stayed in line with the 2012/2013 crop year, adding up to 71.0 t/ha in a performance heavily impacted by frosts occurring in the Mato Grosso do Sul Agroindustrial Cluster in the second quarter.

The increase in yields from sugarcane fields in the Ribeirão Preto region helped to maintain TCH at base levels consolidated at the same volumes in the previous harvest, even with the occurrence of frosts. This performance is due chiefly to the use of planting technology with alternating double spaced rows and the development of crop management adjusted to plantation age, varieties (types of cane) and harvest planning (for more information, see Agricultural Intelligence). TCH went up by 6.6%, from 78.1 t/ha to 83.3 t/ha at the Ribeirão Preto Agroindustrial Cluster.

Total Recoverable Sugar (TRS) content declined 6.1% in relation to the 2012/2013 crop year, to 124.9 kg/t. This variation is mainly due to adverse weather conditions, particularly frost at the MS Cluster.

PRODUCTION

Production of TRS product stood at 3.7 million metric tons, a decline of 2.4% in relation to the 2012/2013 crop year, chiefly in response to the 6.1% drop in cane TRS content. This decline was partly offset by a 1.6% increase in crushing and an increase in the efficiency of the industrial process. The harvest mix was balanced, with 51% assigned to sugar, compared to 61% in the previous harvest. This result reflects Biosev’s operational flexibility, which constitutes a major competitive advantage.

Efficiency of operational capacity


1,963

2011/2012

2,136

2012/2013

1,723

2013/2014

SUGAR PRODUCTION (‘000 t)

ETHANOL PRODUCTION (‘000 m3)

928

2011/2012

952

2012/2013

1,150

2013/2014

METRIC TONS OF CANE PER HECTARE (TCH)

69.0

2011/2012

71.1

2012/2013

71.0

2013/2014

TOTAL RECOVERABLE SUGAR – TRS (kg/ton)

132.7

2011/2012

133.0

2012/2013

124.9

2013/2014


34

Sustainable energy with cogenerationSugarcane bagasse, which is the waste left over from the crushing process, powers Biosev’s 11 mills, which do not need to buy energy for their industrial process. At nine of these units, cogeneration technology produces more energy than needed to operate. Accordingly, they export this surplus to the National Interconnected System, which is responsible for the production and transmission of cogen all over Brazil.

Cogeneration intended for sale went up 15.0% in the 2013/2014 crop year, totaling 712 GWh, the result of the greater availability of energy for sale, due to investments in additional export capacity at the Lagoa da Prata (LPT) plant, completed in July of 2012, and the Passa Tempo (PTP) plant, completed in May of 2013, and also due to the increase in yields at cogeneration units. Yields rose 13.2%, going from 21.0 kWh/t of crushed sugarcane to 23.7 kWh/t, as a result of the startup of new units equipped with steam boilers with new technology.

By ceasing to use fuels from non-renewable sources, such as oil, coal and natural gas, Biosev is locking in a self-sustaining process that is economical in financial terms and environmentally friendly, since the energy generated does not pollute. Another advantage is that cogeneration offers benefits to some of the regions where the company operates: when there is no rain and the hydroelectric plants face water shortages, the energy produced by Biosev supplies public energy needs.

Clean energy: 9 out of 11 plants are self-sufficient


COGENERATION SURPLUS SOLD (GWH)

571

2011/2012

619

2012/2013

712

2013/2014


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FINANCIAL PERFORMANCE EC1, EC2

NET REVENUES

Net revenues for the 2013/2014 crop year totaled R$ 4.3 billion, 2.8% above the figure for the

2012/2013 crop year. This performance is due to the increase in the volume of ethanol sales and revenues from cogen, which rose by 28% in comparison with the previous harvest.

Sugar – Net revenues stood at R$ 2.2 billion, a drop of 7.7% in relation to the previous harvest. This decline is directly tied to the change in the mix, with production oriented more towards ethanol. The average price of Biosev sugar for the 2013/2014 crop year was 1.2% higher. The average appreciation of the dollar by roughly 8% offset the decline of approximately 20% in average prices on the international market.

Ethanol – Net revenues came to R$1.7 billion, an 11.1% increase in relation to the 2012/2013 crop year. This increase is the result of the shift to ethanol production owing to higher profitability observed in the domestic market. Average prices rose by 6.7%, featuring a 9.9% gain in the domestic market. Demand for anhydrous ethanol in the domestic market that was about 10% greater also helped to boost revenues.

Energy – Cogeneration surplus sales net revenues came to R$ 243 million. This 28% increase over the previous

harvest is due to: (i) a greater volume of co-generated energy because of the startup of the Passa Tempo plant; (ii) additional cogeneration using biomass purchased in the marketplace; (iii) higher electricity prices on the spot market, which reached the ceiling of R$ 823/MWh.

Other products – Revenues came to R$ 138 million, 141.5% more than the last harvest. These include earnings from dry yeast, powdered molasses, raw bagasse and hydrolyzed bagasse for animal feed, among other things that are booked under Other Products.

NET REVENUES (R$ MILLION)

NET REVENUES BY PRODUCT2013/2014 CROP YEAR

REVENUES BY TYPE OF SUGAR 2013/2014 CROP YEAR

NET REVENUES BY MARKET2013/2014 CROP YEAR

REVENUES BY TYPE OF ETHANOL2013/2014 CROP YEAR

Sugar 52.0%

Ethanol 39.1%

Energy 5.7%

Others 3.2%

VHP 75.2%

Granulated 20.3%

Refined 4.5%

External 56.0%

Domestic 44.0%

Anhydrous 51.2%

Hydrated 43.0%

Neutral 5.8%

3,403

2011/2012

4,152

2012/2013

4,268

2013/2014



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COST OF GOODS SOLD (COGS)

Total COGS of R$ 3.7 billion for the harvest was 1.5% lower than that registered for 2012/2013. Excluding cash effects, an increase of 2.7% was registered. The main factors with an impact on cost were the 3.5% rise in raw materials, due to the greater proportion of third-party cane, and a 14.3% reduction in expenditures on industrial inputs owing to the 20% drop in sugar production, with concomitantly lower packaging costs.

GROSS PROFIT

Gross cash profit totaled R$ 1.6 billion, a reduction of 11.2% in relation to the year before. This decline was the result of a 14% rise in the cash cost of goods sold (COGS), chiefly due to a 6.1% loss in the TRS content of sugarcane, primarily because of weather events during the harvest.

EBITDA

Adjusted EBITDA stood at R$ 1.1 billion, a 10.7% decline in relation to the close of the previous crop year. Adjusted EBITDA margin was 26.9%, a drop of 4.1 p.p. Key factors contributing to this result were: (i) a 14.0% increase in the cash cost of goods sold (COGS); (ii) the positive impact of the provision for writing off assets and expenditures owing to organizational restructuring. Excluding resale effects, adjusted EBITDA margin stood at 31.7% for the 2013/2014 crop year, as opposed to 35.3% for the previous harvest.

CLIMATE IMPACT GRI EC2

Adverse weather events negatively affected Biosev’s results. The amount of the impact was estimated at R$ 328 million, before taxes, for the 2013/2014 crop year.

Severe frosts hit the state of Mato Grosso do Sul, where the company’s sugarcane plantations that feed the three mills (Maracaju, Passa Tempo and Rio Brilhante) that make up this agribusiness cluster are located. Temperatures dropped below 0° C and impacted the growth of the affected cane fields, with potential to reduce the grinding of industrial units in the region.

The frost caused a reduction of 6.1% in Total Recoverable Sugar content (TRS), which ended the harvest at 124.9 kg/ton of cane crushed.

GROSS CASH PROFIT (R$ MILLION)

EBITDA AND EBITDA MARGIN

1,600

2011/2012

1,848

2012/2013

1,641

2013/2014

1,135

2011/2012

1,286

2012/2013

1,148

2013/2014

33.3% 31.3%

26.9%

Impact of changes in weather assessed at

R$328 million

chiefly due to the effect of frosts


EBITDA (R$ million)EBITDA margin


37

HEDGE

Biosev’s hedge policy is mainly designed to protect its future cash flow. As part of this policy, the company makes use of hedge mechanisms through futures contracts and other exchange rate derivatives, for sugar, ethanol and interest rates, including operations on derivatives markets in Brazil and abroad aimed at protecting results from some of the possible fluctuations in exchange rates, sugar and ethanol prices, as well as interest rates.

EARNINGS RESULT FOR THE FISCAL YEAR

Income for the 2013/2014 crop year was a negative (-) R$ 1.5 billion. Apart from factors bearing on the gross profit and generation of cash flow, there was a negative impact from a provision of R$ 467 million, having to do with a reduction of deferred income tax. Excluding the non-recurring effects that accrued, income stood at (-)R$725 million, as compared to R$ 620 million posted in the previous crop year.

DEBT

Adjusted net debt totaled R$ 3.3 billion, 9.8% below the previous crop year. Key factors impacting this decline were: (i) the use of IPO resources in a R$ 700 million offering; (ii) amortization of advances for foreign currency exchange contracts (ACCs) and other international financings, partially offset by new funding; (iii) reduction in the need for working capital in the amount of R$ 171 million.

Of total indebtedness at the end of the 2013/2014 crop year, about 70% represented US dollar loans and financings, of which 48.1% were naturally protected (with hedges) by future export flows.

DEBT GRI 2.8

31/3/2014 31/3/2013 Var. %

Gross Debt (5,322) (5,222) 1.9%

Short term (1,907) (1,254) 52.0%

Long term (3,415) (3,967) -13.9%

Cash and financial investments 1,848 1,364 35.5%

Net debt (3,474) (3,858) -10.0%

Readily marketable inventories 172 198 -13.4%

Adjusted net debt (3,302) (3,660) -9.8%

DISTRIBUTION OF ADDED VALUE (DAV) GRI EC1

Composition of Added Value (R$/’000) 2011/2012 2012/2013 2013/2014

Direct Economic Value Generated (EVG) 3,974,627 4,995,067 4,912,511

1) Revenue 3,686,780 4,785,813 4,712,543

2) Value received in transfers 287,847 209,254 199,968

Economic Value Distributed (EVD) 3,974,627 4,995,067 4,912,511

2) Operating Costs 2,669,576 3,769,756 4,069,085

3) Employees (salaries and benefits) 547,882 553,638 586,994

4) Suppliers of capital 850,563 641,920 -322,963

4.1) Remuneration of third party capital 1,130,016 1,261,478 1,143,836

4.2) Remuneration of own capital -279,453 -619,558 -1,466,799

5) Government and society (taxes, fees and contributions)

-93,394 29,753 579,395

Adjusted net debt registered a reduction of

9.8%

compared to the previous crop year



38

CAPITAL MARKET

Biosev launched its IPO in April 2013, when its shares were listed on the São Paulo

Stock Exchange’s Novo Mercado segment under ticker symbol BSEV3.

The shares are part of the Differentiated Corporate Governance (IGC) index, that consists of companies quoted on the Novo Mercado (IGCNM) and which offer tag-along rights (Itag) – a mechanism by which, in the event of transfer of control of the company, minority shareholders are granted the same rights as the controlling shareholders.

The initial public offering (IPO) comprised 46,666,667 common shares and 37,406,609 put options. The exercise date of the put options is July 21, 2014; they have an exercise price of R$ 16.57 per share, with the counterparty being the controlling shareholder, the Louis Dreyfus Commodities Group. Since its listing, the average daily trading volume of BSEV3 is R$ 427,000.

The chart to the right shows the company’s share price performance since the IPO, up to the end of the crop year:

PUT OPTIONS1

Biosev became a publicly traded company on April 16, 2013, when 46,666,667 common shares were issued on the Brazilian Stock Exchange (BM&FBovespa) and R$ 700 million were raised in an IPO.In the same offering, 37,406,609 put options were acquired by certain shareholders, at a price of R$ 0.25 per option. The holders of such put options had the right to exercise them against Hédera Investimentos e Participações (subsidiary of the controlling shareholder LDCH Group) on July 21, 2014, at a strike price of R$ 16.57 per option. On July 21, 2014, 37,402,763 put options were exercised, representing 99,9% of the outstanding put options. GRI 2.6

SHAREHOLDER COMPOSITION AS AT 31/3/2014

ShareholderNumber

of sharesShareholding

stake

Sugar Holding B.V. 103,126,446 49.87%

NL Participações Holdings 2 B.V. 8,919,302 4.31%

NL Participações Holdings 4 B.V. 8,919,302 4.31%

Hédera Investimentos e Participações Ltda. 37,402,763 18.09%

Santelisa Participações S.A. 12,094,232 5.85%

Others 36,348,568 17.58%

TOTAL 206,810,613 100.00%

BSEV3 VS. IBOVESPA

Apr/13 May/13 Jun/13 Jul/13 Ago/13 Sep/13 Oct/13 Nov/13 Dec/13 Jan/14 Feb/14 Mar/14

20%

10%

0

-10

-20%

-30%

-40%

-50%

IBOV BSEV3

50,414

8.50

-6.5%

-33.9%

1 Note: In view of the fact this Report, exceptionally, was completed and published in December 2014, and because this is information that is important to the market, Biosev decided to update the topic as the facts occurred.



39

Biosev’s relationship with its sugarcane suppliers, customers, communities in the areas where it operates and society in general, is characterized by commitment to sustainable development.

SOC

IAL

PERF

ORM

AN

CE


40

RELATIONS WITH SUPPLIERS

A strong link in Biosev’s value chain, sugarcane suppliers account for approximately

40% of the raw material processed by the company. As part of its strategy of generating sustained value, the company seeks to build solid, ethical and transparent relationships with its suppliers, and encourages the adoption of good practices.

MAIS CANA (MORE CANE) PROGRAM

In order to strengthen this relationship, the company has created the Mais Cana Program, which consists of a series of tools and that seeks to promote greater synergy and loyalty on the part of suppliers, as well as agricultural partners. Focused on boosting yields and reducing costs, the program brings benefits for Biosev, suppliers and partners alike, and is applied at all the operating units. The initiatives comprise the following:GRI EC9

The passing-on of land area for the planting of sugarcane: Biosev’s land is passed on to partners and suppliers based on criteria such as production capacity and efficiency. The objective is to achieve cost reductions both for the supplier as well as the company, increasing yields and encouraging loyalty in the supply of new sugarcane sales volume.

Passing-on of areas for the plantation of cereals: Biosev passes on areas of land so that selected suppliers can

plant other crops between sugarcane intercrop period, providing additional income during the period. For the company, this represents a saving of resources in the preparing of soil for sugarcane planting, since the supplier conducts the preparation after reaping the cereal during the intercrop period. In addition to this, crop rotation leaves various nutrients in the soil that are subsequently consumed by the sugarcane.

Sale of the company’s farms: Biosev prioritizes the offering of its own land for sale to potential suppliers who are thus able to add additional new sugarcane sales volume. This tool has enabled the company to obtain an additional 1.3 million metric tons of sugarcane in the last five years. During the 2013/2014 crop year, 1,755.92 hectares were sold, as part of a strategy of maximizing the use of assets and reducing bank debt.

Mais Cana (more cane) Program: initiative that seeks to promote greater synergy with suppliers

SOCIAL PERFORMANCE


41

Purchase of ICMS credits: Biosev acquires ICMS credits from suppliers in the state of São Paulo, comprising balances referring to the purchase of inputs and diesel. For the 2013/14 crop year, R$ 1.3 billion in ICMS credits were purchased.

Planting: replenishment and renewal of the suppliers’ and partners’ sugarcane fields is encouraged through the granting of credit, or providing funds in advance for the purchase of inputs and sugarcane seedlings. The payment period is spread over three crop years.

Sugarcane saplings: Biosev has a number of nurseries for the production of seedlings, reproducing new sugarcane varieties both for its own use, as well as its suppliers, to whom special sales conditions are offered.

Credit: Advance funding for the purchase of sugarcane, agricultural partnerships and the purchase of

Advantages of more animal feed Biosev has increased its animal feed production capacity by 70%, with the inauguration of its third animal feed plant, annexed to the plant at Lagoa da Prata (MG). With production based on by-products – principally sugarcane bagasse, molasses and yeast – animal feed enables Biosev to create a differential in negotiating and encouraging loyalty on the part of producers who also raise cattle, as well as offering a more economic and efficient option for animal breeders.

R$ 5.3 million have been invested in the plant, which has a production capacity of 35,000 metric tons of animal feed, raising Biosev’s total production to 85,000 metric tons a year. The company also has animal feed plants annexed to the Vale do Rosário and MB plants, both located in Morro Agudo (SP).

According to Regina Margarido, Biosev’s zootech manager, the gain in animal weight amounts to an average of 1.6 kg per day, with the price of animal feed per ton being approximately R$ 100 less than normal animal feed. As 80% of the feed is manufactured from by-products resulting from the extraction of sugar and the production of sugarcane alcohol, its production cost is lower, and this is saving is passed on to the animal breeders.

The principal gain in the use of animal feed based on sugarcane bagasse is cost reduction. Producers do not need to produce fodder for their animals, which eliminates the cost of the installation and maintenance of silos, as well as the labor necessary to operate this equipment. It also allows agricultural land to be freed up for other more profitable crops, such as sugarcane.

Animal nutrition: a differential in encouraging loyalty on the part of rural producers

SOCIAL PERFORMANCE


42

sugarcane stumps. In addition to encouraging supplier loyalty, the aim is to create new partnerships and invest the quality of the sugarcane fields.

Technology transfer: A series of technical seminars promotes the integration and transfer of technology to partners and sugarcane suppliers. Themes are chosen that have the greatest relevance to the ongoing harvest. For the period covered by this report, topics were covered such as pest control, plant nutrition, the application of crop defense products, mechanization of the sector, and market initiatives.

Purchase of agricultural inputs – in partnership with Coopercitrus, Biosev buys crop defense products and fertilizers more cheaply, due to the large scale of its purchases, selling these to suppliers and passing on the discount obtained.

Feed for livestock breeding: The animal feed produced at three of the company’s units is supplied at cost price to business partners and sugarcane suppliers. This measure helps to reduce production costs; assists in the diversification and optimization of the property and in the providing of food during periods of drought. Suppliers have the right to a quota of 1% of the sugarcane sales volume delivered at the previous harvest.

HUMAN RIGHTS ASPECTS COVERED IN CONTRACTS 1 GRI HR2

2010/2011 2011/2012 2012/2013 2013/2014

Total number of suppliers and other partners in the business

1,286 2,337 8,024 3,856

Number of contracts with human rights clauses 2

1,710 4,149 5.587 6,816

Number of audits and inspections with human rights criteria

158 241 151 2

Contracts with human rights clauses

100% 93.38% 100% 100%

CONTRACTS REFUSED 0% 0% 0% 0%1 includes suppliers of sugarcane and other supplies 2 the same supplier may have more than one contract

SELECTION GRI HR2, HR6, HR7

Buying decisions and the selection of suppliers take into consideration economic and qualitative factors, as well as legal compliance. The main items assessed from a legal compliance perspective are those related to the risk of occurrence of child labor or labor that is forced or analogous to slavery. To this end, 100% of contracts carry human rights clauses, which express the repudiation of these practices and make provision for contract cancellation in the event of their occurrence. The planting and manual harvesting operations are susceptible to this risk, but there were no cases of this nature identified during the harvest, when audits were carried out of those sugarcane suppliers considered material to the company.

In addition to the clause present in the contracts signed by suppliers, the company is striving to mechanize the largest possible number of operations. For the 2013/2014 crop year, 94.7% of the harvest was mechanized. This measure aims to achieve greater efficiency and create a more satisfactory and specialized working environment, thus minimizing risks of child or forced labor. A pamphlet was also distributed to suppliers carrying guidelines on good labor practices. This material is available for consultation on the Internet (http://www.biosev.com.br/cartilha/).

SOCIAL PERFORMANCE


43

RELATIONS WITH THE COMMUNITY GRI SO1

Operating in one of the most inclusive business segments in Brazil, capable of generating jobs in the countryside in regions under development a long way from major cities, Biosev seeks to ensure sustainability by prioritizing its relationship with the community. It operates on the premise of following and complying with legislation, technical standards and good practices, which results in the company having a very organized management. Biosev has a department — Corporate Social Responsibility — especially dedicated to building closer ties with the populations near its units, which manages both this relationship as well as social investments.

In this way, there is an active connection with public bodies from all three spheres, associations and NGOs, with open dialogue channels via e-mail and a toll-free number 0800-9409-199. To this end, in September 2013 the 0800 toll-free number, previously available only to Estrela consumers, also became a contact channel for other matters, such as suggestions, opinions, criticisms and queries with respect to health, safety, the environment, and corporate social responsibility at the company’s plants.

Interface with municipal authorities in the municipalities where the units are based usually takes place

Emphasis on education in community relationships

SOCIAL PERFORMANCE


44

through the environmental and social development secretarial departments.

While through sector and class associations such as Siamig-MG, Biosul-MS, Sindálcool-PB and Unica, the company defines priority areas for investment. Frequently these associations seek to form partnerships or programs with major significance or influence in the sugar-energy sector, such as environmental education and the qualification and technical training of labor as a consequence of the phasing out of jobs due to mechanization in the field.

Significant socio-environmental aspects for the communities close to the company’s operational units were among the main concerns for the public audiences that have the closest relationship with the department during the harvest. For the period covered by this report, the themes of recycling, Brazilian biomes, soil and water conservation and the donation of seedlings have been covered, with the communities neighboring the units in Lagoa da Prata, Estivas, Giasa, Maracaju, Passa Tempo and Ribeirão Preto.

All the social responsibility projects are related to the company’s social, economic and environmental impacts. In the table below are shown the potential and real impacts identified that are related to projects invested in, with a view to mitigating them:

MANAGEMENT OF IMPACTS

Potential or real impacts Mitigating actions

Degradation of Permanent Preservation Areas

Seedling nursery

APProximar program (Estivas and Giasa)

Plan for the recuperation of degraded areas

Mata da Bela (Estivas)

ASF environmental education program (Lagoa da Prata)

Air pollution resulting from the burning of sugarcane and bagasse

Agro-Environmental Protocol – Green Ethanol Certification

Investment in gas scrubbing systems

Soil contamination Residue centers (Corporate)

Integrated Management of Solid Residues (Corporate)


Clean town program – municipal authority of Colômbia and Coopercolombia recycling co-operative (Continental)

Training and educational campaigns (Corporate)

Recycling station (Santa Elisa)

Contamination and excessive consumption of water

Investment in:

ETE - Sewage-Treatment Plants

ETA – Water Treatment Plants

ETAR – Treatment Plants for the Reuse of Water

Decanting plant for soot and grime

Cooling towers

Reduction in the hiring of laborers as a result of mechanization


Overloading of public municipal health system

Vaccination campaigns

Training and internal campaigns for disease prevention

Occupational health structure, with doctors and nurses in the workplace

Health and dental plans offered to all employees

SOCIAL PERFORMANCE


45

LIGA PELA PAZ (PROMOTING PEACE) PROGRAM

In 2013, Biosev completed the fourth year of its Liga pela Paz (Promoting Peace) Program, created by the Inteligência Relacional (Relational Intelligence) non-governmental organization. Developed in partnership with the education departments of the municipalities where the company has its units, the project has the objective of encouraging a culture of peace, respect for differences, non-violence, understanding, compassion and solidarity among pupils in elementary schools, through the distribution of material to students in the public education network of these municipalities. The material consists of CDs with songs, digital books, orientation guides, training videos, as well as tools for continuous training, and the evaluation of results, among other aspects.

The Liga pela Paz Education System also employs an evaluation process, which measures the development of the behavioral skills of pupils from the perception of class teachers. In this evaluation process, a “before” test is applied at the beginning of the year, with a subsequent comparison “after” test at the end of the educational year. Data from each application is measured and compared, as well as the child’s development of general social skills, empathy, assertiveness, self-control and level of participation.

Having shown a significant improvement in 2011 and 2012 – learning to deal with emotions and improvement in the ability to live alongside colleagues, teachers and families – in 2013 the results of the evaluation process were also excellent: pupils showed themselves better able to identify, understand and deal with their emotions, building a more harmonious relationships in a quest for peaceful living.

LIGA PELA PAZ PROGRAM

Municipality No. of schools No. of educators No. of pupils

Colômbia/SP 3 14 239

Jardinópolis/SP 9 64 1,306

Morro Agudo/SP 6 56 1,189

Viradouro/SP 3 24 615

Lagoa da Prata/MG 6 37 730

Rio Brilhante/MS 6 40 874

Maracaju/MS 9 62 1,484

Arez/RN 2 15 366

Goianinha/RN 1 9 200

Pedras de Fogo/PB 16 65 1,234

TOTAL 61 386 8,237

PROGRESS SEEN IN LIGA PELA PAZ PROGRAM

EVALUATION OF SOCIAL AND EMOTIONAL SKILLS GENERAL AVERAGE

3,041

58.8%67.9% 66.6%

76.3%64.7%

81.9%

143

12

7,283 376

13

8,237386 10

12,164 525

10

Pupils

2011 2012 2013

2011

Before test

2012

After test

2013 2014

Educators Municipalities

SOCIAL PERFORMANCE


46

APPROXIMAR PROGRAM

Created in 2012 with the objective of establishing initiatives that contribute to sustainable development in the local communities neighboring the units at Estivas (RN) and Giasa (PB), the APProximar program (preservation of native forests and permanent preservation areas – APPs – in the Northeast) underwent development of a second phase in 2013, the execution of an Action Plan in communities identified as being a priority in the project’s first phase.

A circuit of 12 workshops was organized in the Imbiribeira/Riacho do Salto community in Pedras de Fogo (PB). Carried out in partnership with the Association for the Protection of Atlantic Forest of the Northeast (Amane) and the Center for Environmental Research of the Northeast (Cepan), the workshops brought together dozens of people to deal with themes such as Agro-ecology and Biodiversity Conservation, Environmental Education and Citizenship, Agro-ecology and the distribution of the benefits of Atlantic Forest biodiversity. At the meetings, those present have the opportunity of participating in entertaining and educational activities, such as seminars, thematic video presentations and even a theater presentation, which raises the spectators’ awareness of the need to protect the forests.

Also part of the initiative’s agenda is the start of practical courses for forest sapling nursery workers, the construction of a nursery for the cultivation of seedlings (50,000 seedlings/year) and the holding of a socio-cultural event in the community.

NATIONAL SUGAR AND ALCOHOL MUSEUM

Since December 2013, employees from the unit at Santa Elisa (SP), in addition to the community as a whole, have been able to make use of a space set aside dedicated to memorabilia from the sugarcane industry. This is the National Sugar and Alcohol Museum, located in the municipality of Pontal (SP), built on the site of the old installations of Engenho Central mill, which produced sugar in the 20th century. Sponsored by Biosev, the museum’s collection includes historic objects and rare equipment, such as a Scottish machine from the 1880s, consisting of grinders, boilers and crystallizers, among other items. As a point of curiosity, all these items are shown in their original positions on the mill’s production line. All this is designed to preserve each individual memory of the place, in accordance with the wishes of the Biagi family, when it conceived and created the museum. It is open to the public from Tuesday to Sunday, from 10 a.m. to 4 p.m, with entrance free of charge.

Machinery on display at the Museum of Sugar and Alcohol, in Pontal (SP)

Acervo Museu Nacional do Açúcar e do Álcool

SOCIAL PERFORMANCE


47

CLIENTS AND CONSUMERS

Biosev has a broad client base distributed across the sugar and ethanol markets, with sales both

in Brazil and international markets.

The domestic market sugar client portfolio includes wholesale and retail chains, as well as food and beverage manufacturers. In retail, the company sells its products under its own Estrela and Dumel brands, with the Estrela brand, according to figures published by Nielsen do Brasil Ltda., being the leader in the crystal sugar market in the Brazilian Northeast.

The company exports to various regions around the globe, in particular China, Southeast Asia, Russia, the European Union, North and East Africa and the Middle East, with the majority of transactions being with international trading companies.

In the ethanol area, the Brazilian market accounts for over two-thirds of the product, with domestic ethanol fuel and industrial ethanol clients being principally fuel distributors, and food, pharmaceutical and beverage industries. With regard to the export market, ethanol is exported directly to end-customers, or through international trading companies, with export sales mainly being to the United States, Japan, Greece and Switzerland.

The clients, as specified by contract, receive technical visits aimed at improving interaction and identification of their needs. Improvements discussed and agreed with clients are monitored

through action plans managed by Corporate Quality Management department, which participates actively in meetings and workshops held by clients for the publicizing of demands related to Food Safety (responsible sourcing) and presentation of supplier rankings.

The implementation of the process of dealing with requests and complaints, and the continuous monitoring of the initiatives arising from these processes enables Biosev to meet the demands of its clients in a timely manner to ensure their satisfaction.

In addition, satisfaction levels are measured through polls carried out annually. The information obtained through this process also enables Biosev to draw up initiatives for continuous improvement of its processes. GRI PR5

Aerial view of the Guarujá export terminal at the Port of Santos

SOCIAL PERFORMANCE


48

PRODUCT QUALITY

Biosev’s 11 operational units manufacture products adhering to good manufacturing practices, based on national regulatory requirements (RDC 275 – Anvisa), which involves the verification of items material to the food safety management system.

Management of the regulatory requirements applicable to the company’s businesses is carried out at all the units using CAL software, from Ius Natura. The technical specifications of the products sold are updated and monitored by Corporate Quality Management in accordance with needs and legislation, and involve physical-chemical analyses, microbiological analyses, analyses for heavy metals and pesticides, and information on use, handling, transport and validity dates.

Meanwhile, verification of the compliance of the units to standard quality certification requirements, which have a validity period of three years, is carried out through internal and external audits (the latter being an outsourced company - SGS).

The Santa Elisa, Vale do Rosário and MB units carry external certification in accordance with the internationally recognized standards of the NBR ISO 9001 Quality Management System, pursuant to the specific scope of each unit. However, only the Santa Elisa unit carries NBR ISO 22000 external certification – Food Safety Management System for the manufacture of liquid sugar and inverted liquid sugar, from receipt of the raw material up to the shipping of the final products, as well as the manufacturing process.

In the period covered by this report, the Santa Elisa unit produced 416,707.815 metric tons of sugar, 81% of which being crystal sugar – 335,486.09 metric tons or 6,709,721 50 kg bags – and 19% (81,221.72 metric tons) being liquid sugar or inverted liquid sugar (AL/ALI). The unit production corresponded to 11.06% of the total sugar sales volume produced by Biosev for the crop-year. GRI FP5

LABELING

Labeling of packaging for products sold in the retail segment – the company’s own Estrela and Dumel sugar brands – complies with domestic regulatory requirements. The regulations require the publication of nutritional information, production data (type of product, manufacturing batch, manufacturing date, validity, crop year, sequential production number, quantity) for the purpose of traceability; guidelines on conservation as well as product origin (production unit). GRI PR3, FP8

Biosev, however, does not have a communications, marketing and advertising policy, neither does it have a policy or program which involves the publicizing of the nutritional information on its products in the community.

Considered as being a potential cause of allergies, the sulfite present in sugar is monitored during the production stages and in the final product. The amounts considered are those permitted by Codex Alimentarius. While gluten, also considered as potentially allergy causing, is not part of the sugar composition make-up, this information is displayed on the retail packaging. The retail packaging also includes a number of culinary recipes for sugar application.

Sugar carrying ISO 22000 certificationcorresponded to

11%

of total production for the 2013/2014 crop-year

SOCIAL PERFORMANCE

BIOSEV RELATÓRIO DE SUSTENTABILIDADE SAFRA 2013/2014

49

Advances made in Minas Gerais The new Forestry Code, the practice of environmental compensation, and care with relation to civil environmental responsibility, were discussed at the Seminar for Environmental Advances in the Sugar-Energy Sector in Minas Gerais, which took place in June 2013, at Lagoa da Prata, which is approximately 203 km from Belo Horizonte.

Hosted by Biosev, which has an operational unit in the municipality, the event’s focus was on sugar-alcohol production, one of Lagoa da Prata’s principal economic activities. The event brought together

Seminar for the discussion of the Forestry Code in sugar-alcohol production

representatives from the entire production chain, from farmers to government representatives, inspection bodies, universities and the community in general.

The objective was to present information, promote debate and provide clarification for queries on themes important to agricultural activities, and which contribute to the economic and environmental development of the region. Researchers and professional staff from Biosev also provided clarification on the principal myths surrounding sugarcane cultivation.

Avan

ços d

o Setor Sucroenergético em

MG

Sem

inário Ambiental

Lâmina C

SOCIAL PERFORMANCE


50

Biosev contributes to create quality jobs, train and qualify its employees in the use of new technologies and encourage attitudes and practices that promote people’s health and safety

PERS

ON

NEL

M

AN

AG

EMEN

T


51

THE WORKFORCE

Biosev is aware that with the mechanization of cultivation it has an important role to play in

the generation of quality jobs, for which study and knowledge are necessary. Based on this, the company has begun a process of bringing its workforce in-house, and a portion of the maintenance workers, previously outsourced, began to be directly employed in the 2013/2014 crop year.

However, the overall headcount declined 2% during the crop year due to operational restructuring and the consequent mothballing of the Jardest unit, in Jardinópolis (SP). Part of the workforce was reallocated to other units and Biosev ended the period with 16,124 direct employees. GRI LA1, 3.10

During the year, 100% of Biosev’s employees were covered by collective wage bargaining agreements and there is no inherent risk whatsoever within the company to freedom of association of this type, as associations and union participation are both permitted. The company also allows the unions to fully exercise their role and at the end of the 2013/2014 crop year, it had a relationship with 47 different entities. GRI LA4, HR5

TOTAL NUMBER OF EMPLOYEES GRI LA1

3,409

380

3,02978

2,500

655

9,482

Center-West

Northeast Southeast

2,578

10,137

Men Women

Commitment to the generation of quality jobs

PERSONNEL MANAGEMENT


52

EMPLOYEES BY REGION GRI LA1

2011/2012 2012/2013 2013/2014

Men Women Total Men Women Total Men Women Total

Center-West 3,001 351 3,352 3,194 379 3,573 3,029 380 3,409

Northeast 2,532 86 2,618 2,628 82 2,710 2,500 78 2,578

Southeast 8,904 666 9,570 9,540 627 10,167 9,482 655 10,137

TOTAL 14,437 1,103 15,540 15,362 1,088 16,450 15,011 1,113 16,124

EMPLOYEES BY TYPE AND WORK CONTRACT 1 GRI LA1

2011/2012 2012/2013 2013/2014

Men Women Total Men Women Total Men Women Total

Limited time period 1,359 15 1,374 2,894 73 2,967 2,892 99 2,991

Unlimited time period 13,078 1,088 14,166 12,468 1,015 13,483 12,119 1,014 13,133

Subtotal 14,437 1,103 15,540 15,362 1,088 16,450 15,011 1,113 16,124

1 All employees are hired on a full-time basis, including temporary shift workers

STAFF TURNOVER GRI LA2

Average of employees

in the year

Average of employees

admitted

Average of employees dismissed Admission rate Dismissal rate Turnover

BY GENDER 16,124 765 484 4.74% 3.00% 3.87%

Masculine 15,011 718 452 4.78% 3.01% 3.90%

Feminine 1,113 47 33 4.22% 2.92% 3.57%

BY AGE 16,124 765 484 4.74% 3.00% 3.87%

18 to 25 years 2,714 234 119 8.61% 4.38% 6.50%

26 to 30 years 3,197 161 107 5.02% 3.34% 4.18%

31 to 40 years 5,273 217 152 4.11% 2.88% 3.49%

41 to 50 years 3,289 107 71 3.26% 2.16% 2.71%

51 to 60 years 1,464 43 30 2.90% 2.07% 2.48%

Over 60 years 186 4 5 2.28% 2.86% 2.57%

BY REGION 16,124 765 484 4.74% 3.00% 3.87%

Center-West 3,409 129 103 3.79% 3.02% 3.41%

Northeast 2,578 165 58 6.41% 2.25% 4.33%

Southeast 10,137 470 323 4.64% 3.19% 3.91%

Note: In the 2013/2014 crop year, Biosev changed the way of reporting “Turnover” to better reflect the company’s reality. Now, the calculation is based on the average of the numbers (admitted or dismissed) for the period encompassing April/13 to March/14, to follow the same assumption already used to calculate the number of employees, which also makes up the formula used for the turnover rate. The formula is ((average admitted + average dismissed)/2)/HC average. HC average = average of employees (excluding trainees and those dismissed) in the April 13 to March 14 period.



53

EMPLOYEE HEALTH

Based on a policy of sustainable development based on the key elements of people, the

environment, the community and partners, Biosev’s safety, health and environmental management system has functioned since 2010 through the application of this strategy. Using internationally recognized standards of management efficiency, the system’s main aim is to prevent harm coming to people, the company’s assets and the environment; it meets or exceeds applicable standards and regulations; it reduces general environmental impacts, adopting measures for the preventing of pollution; and promotes the sustainability of the natural resources used.

Implemented by the Department for Safety, Health and Environment (SHE), the management of occupational safety is backed by safety committees that represent 100% of employees. Present at all Biosev’s units, these committees ensure compliance with this policy. These are the Accident Prevention Internal Commissions (Cipas), with members from both the industrial as well as the administrative area; CipaTRs, with members from the agricultural and administrative areas; Specialist Services in Engineering Safety and Occupational Medicine (SESMT) and the SHE committee. GRI LA6

Information on accidents is compiled weekly at the focal points of the agro-industrial clusters and passed on to the corporate area of SHE where data is evaluated, discussed and control

SAFETY COMMITTEES

Number of Members 2011/2012 2012/2013 2013/2014

Cipas 387 360 358

Local committees (NR10 and others) 408 378 410

measures presented to management. Accident control statistics are summarized monthly, with all accidents being classified (fatal, very severe, severe, light and those not involving lost work time), time lost, near accidents and number of accidents (both for direct employees as well as outsourced staff). In this summary, the Frequency and Severity Rate is calculated in accordance with NBR 14280 and all information is evaluated and approved by the engineers at each unit as well as the management of SHE at the cluster, before being passed on for consolidation.

REDUCTION

The standardization of the group’s units has made a positive contribution to the management of SHE and Biosev achieved a 20% reduction in accidents in the 2013/2014 crop year, compared to the previous period. The frequency and severity of accidents occurring in the group declined 28% and 54%, respectively. However, one death occurred at the Santa Elisa unit as a result of an accident to one of the company’s own employees in the industrial milling area.

Programs provide support for improving the culture of health and safety



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2012/2013 2013/2014

Men Women Men Women

Center-West 20.0 19.0 19.41 -

Northeast 9.0 6.0 - -

Southeast 35.0 17.0 16.37 13.45

In addition to the management controls, behavioral programs applied at the company contributed to improving safety culture, of particular note being BBS – Behavior Based Safety. In its first phase, in 2011, this program worked towards raising awareness of employees and training them in the identification of dangers and risks, training specialist staff to pass on this culture. During the 2013/2014 crop year, the program trained operational leaders as observers and facilitators for behavioral change.

SHE PYRAMID

Another important initiative, the development of which was begun this crop year, was the SHE pyramid, a project for the registration and informing of possible irregularities in terms of safety, health and the environment. The intention of the SHE pyramid is to communicate deviations that take place, both behavioral as well as those related to working environment conditions, enabling appropriate measures to be taken to prevent problems, so avoiding accidents. Records of irregularities are entered on block notation forms, which can be obtained by workers from the Occupational Safety sector. Having filled in a form it is only then necessary to put it in one of the boxes that are placed around the unit. The manager responsible for the sector collects the forms and has an obligation to provide a response to the individual employees who submitted them.

The vehicle safety program, in turn, has the objective of disseminating the importance of safe driving behavior to eliminate accidents occurring with light vehicles, and reducing fines for exceeding the speed limit. Every crop year the program has shown itself to be increasingly satisfactory, as a result of the efforts made by the Occupational Safety Department. During the year, there was a reduction of 87% in fines for driving over the speed limit (15 fines in 2013 and only two in 2014) and zero accidents for light vehicles in 2014.

QUALITY OF LIFE GRI LA8

The creation of agro-industrial clusters that took place during the crop year is also reflected in the area of health within the company. Now, a doctor in the workplace, who reports directly to the SHE manager of the corresponding cluster, coordinates teams from the health area at the units. However, directives for the area are defined globally, in accordance with SHE standards, with the results being assessed and discussed together with SHE management.

All Biosev’s units have collective bargaining wage agreements signed with local unions which are renegotiated on an annual basis. Comprehensive in nature, these agreements include specific clauses on health and safety and the free provision of work tools and individual protection equipment (EPI); rules on the constitution of Cipa/CipaTR, proper sanitary facilities and water supply for agriculture, as well as medicine expenses. GRI LA9

SAFETY INDICATORS GRI LA7

2012/2013 2013/2014

Men Women Total Men Women Total

NUMBER OF ACCIDENTS NOT INVOLVING LOST TIME

Center-West 78 11 89 73 9 82

Northeast 54 2 56 37 1 38

Southeast 295 9 304 230 11 241

Total 427 22 449 340 21 361

NUMBER OF ACCIDENTS WITH LOST TIME

Center-West 112 12 124 34 3 37

Northeast 58 - 58 13 - 13

Southeast 102 2 104 75 5 80

Total 272 14 286 122 8 130

FREQUENCY RATE INCLUDING ACCIDENTS REQUIRING FIRST AID TREATMENT (%)

Process standardization resulted in a

20%reduction in the number of accidents during the crop year



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Aware of the importance of working in a safe and healthy location, Biosev’s employees have actively participated in campaigns scheduled annually by the Corporate Health area. Seminars and informational materials passed out to employees help to cover these themes both within the units, as well as with their families and the community at large.

INDUSTRIAL HEALTH

At the Leme unit, for example, the Industrial Health Program, carried out in partnership with Sesi, include services that are integrated with the promotion of workers’ health and quality of life. The objective is to create a working environment that allows the adoption of a safe, healthy and productive lifestyle,

Initiatives seek to create a work environment that is healthy, safe and productive

thus contributing effectively in raising yield and competitiveness.

During the program a diagnosis is also made to assist the company in identifying the condition of the quality of life of its workers, measuring variables that have a direct influence on yield, such as: quality of work, health and lifestyle, assessing the conditions of the working environment and organizational climate.

Since 2010, all Biosev’s units have carried a seal of certification referring to the National Commitment for the Improvement of Working Conditions in the Sugarcane Segment, a tripartite initiative involving representation from agro-industries, agricultural workers and the Federal government.



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COMPENSATION AND BENEFITS

Biosev surveyed salaries in 2012 with the objective of remaining aligned with the best market

practices, as well as meeting the needs and expectations of its workers in accordance with the region and job function exercised. The company’s benefits package — which is covered by collective wage bargaining agreements for each unit — includes medical assistance, vaccinations, a subsidy for pharmaceutical expenses, freight transport, transport vouchers, variable compensation according to the Profit Sharing Plan (PPR), subsidies for education and language courses, meal vouchers, a range of basic foodstuffs and private pension arrangements. GRI LA3

For the 2013/2014 crop-year, the wage floor negotiated with the unions was R$ 868.80, based on a total of 220 hours/month, in other words an average of R$ 3.95 per hour for operational staff. On average, these salary floors are 120% above the minimum regional salary.

The lowest average wage floor negotiated was at the Estivas unit,

where the average annual salary is R$ 688 (101% of the minimum national salary, of R$ 678). While the highest wage floor negotiated is at the Leme unit, with an average monthly salary of R$ 1,049.18 (155% of the minimum salary). GRI EC5

PERFORMANCE EVALUATION

Biosev has two types of performance evaluations: one for managers and the other aimed at the operational contingent, both linked to variable compensation.

Evaluation of the performance of officers, managers, supervisors, coordinators and specialists, a universe around 500 people, takes place using a management performance tool (Nine Box), aligned with market practices, known and used globally. Using an electronic system, each person evaluated together with their respective manager, draws up and carries out half-yearly revisions to their Individual Development Plan. This includes feedback, quantitative targets and qualitative analyses with respect to behavioral skills defined by the company. Meeting of individual targets is what defines annual bonus payments, in conjunction with the results achieved by the particular area, and the company as a whole.

Workers not covered by this methodology are assessed using collective targets defined by the different unions annually, because they have a direct bearing on profit-sharing payments (PPR).

The controls are kept within the system itself and collective targets are registered on spreadsheets by Department, and centralized at Human Resources, which accompanies the entire process and manages the collective targets. The evaluation results form the basis of the targets that define profit-sharing payments and annually underpin the salary progression of those who are evaluated.

WORKERS EVALUATED 1 GRI LA12

2011/2012 2012/2013 2013/2014

Quantity % Quantity % Quantity %

Masculine 945 6.55% 295 1.92% 307 2.05%

Feminine 259 23.48% 44 4.04% 54 4.85%

TOTAL2 1,204 7.89% 339 2.06% 361 2.24%1 Not including trainees and those on sick leave.2 As of 2012/2013, the evaluation system was restructured to encompass the group eligible to receive a bonus

MERITOCRACY Biosev uses a bonus model linked to operational results and performance assessment, in line with the best market practices. It is a more transparent concept, which values merit.



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TRAINING AND EDUCATION GRI LA11

Biosev seeks, through the training and qualification of its workers, to increase its operational efficiency.

To eliminate and reduce knowledge gaps within its teams, the company has an Annual Training Program, which runs courses for the promotion of awareness with respect to attitudes on safety, quality, technical training in specific activities, and acquisition of new knowledge with a view to career evolution.

In addition to this, there are various types of training at the operational level, the principal aim of which is to comply with operational standards for machinery. For the 2013/2014 crop-year, the total amount of training hours amounted to 512,789 hours, with an average of 32 hours per employee.

The company also offers financial assistance for technical training, higher education, post-graduation and English language courses. Rules such as time worked with the company, performance evaluation and job held, as well as budgetary questions, define who can take advantage of these benefits.

There are also partnerships with different institutions. Seven workers from the Estivas (RN) unit, for example, completed an Industrial Apprenticeship and Technical Qualification in July 2013 after two years of study, a result of student grants offered in partnership with the National Industrial Apprenticeship Service (Senai).

One new development in the training area in this crop year was the start of Mapeamento de Prontidão (Readiness Mapping), which is the identification of technical and behavioral aspects, which can improve the leadership skills of managers in their current positions. Approximately 185 leaders above the co-ordination level participated in the project.

FORMAR (TO TRAIN) PROJECT

The Formar project seeks to train employees who work directly in the field as machinery operators and drivers. Classes operate on a partnership basis with the National Agricultural Apprenticeship Service (Senar) and the National Program for Access to Technical Instruction and Employment (Pronatec). Approximately 150 employees from the Estivas unit were qualified in these training programs, which took place from April to July 2013. In addition to the machinery operator course, pupils also went through modules on Human Relations, the Environment, and Occupational Health and Safety. Pronatec is a Federal government Initiative in partnership with state and

AVERAGE TRAINING HOURS GRI LA10

Men Women

Management positions 12 3

Posts requiring higher education 27 19

Posts not requiring higher education

33 23

TOTAL AVERAGE 32

All training hours are considered, including English classes. Training hours for student trainees were not included.

INVESTMENT IN TRAINING (R$)

Type Total

Education subsidies 500,604

Language course subsidies 160,259

Technical training 1,342,410

Behavioral training 1,342,410

TOTAL 3,345,683

For the 2013/2014 crop year,total training amounted to

32

hours on average per worker



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municipal governments, the objective of which is to provide student grants and financing for professional qualification courses.

MAINTENANCE OPERATOR PROGRAM

Started in the 2013/2014 crop-year as a pilot labor program in the Rio Brilhante Unit (MS), the Maintenance Operator Program’s goal is to train harvesting machine operators, developing the necessary skills for the basic maintenance of sugarcane harvesting machines, with a view to improving results, as well as maintenance standards (both during the harvest and between harvests).

The scheme involved 20 employees (operators and leaders) and was so

successful that it is to be expanded to other units in the MS complex and other clusters. As a result of the program, there was a gain seen in average repair times (MTTR), the average time between breakdowns (MTBF) and in consumption of diesel fuel and hydraulic fluids.

DIGITAL INCLUSION

In partnership with the Social Service for Industry (Sesi) and the municipal authority of Pedras de Fogo, Biosev began a digital inclusion program at its Giasa unit (PB). Aimed at employees and their dependents, the program consists of classes in basic information technology and Internet access. The 168 students in the first 12 classes concluded a course lasting 90 class/hours in December 2013. The project represents an opportunity to acquire knowledge and training, and emphasizes to students the importance of access to technology in today’s world.

TRAINEE PROGRAM

Launched in June 2013, the Trainee Program runs for two years, during which time recently graduated young people learn the company’s various processes and specialize in their respective areas.

The selection was divided into three phases (online evaluation, group dynamics and interview panels with managers). The process reviewed over 17,000 applications, and took place in four cities: São Paulo (SP), Ribeirão Preto (SP), Campo Grande (MS) and Belo Horizonte (MG). A total of 19 young people were selected, who will work in Safety, Health and the Environment (SHE), Finance, Commerce, Human Resources, Agriculture and Industry areas.

Operators are being trained to maintain sugarcane harvest equipment



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Biosev’s actions are based on impact monitoring and management policies and programs, along with initiatives for the environmental education of employees, suppliers and communities

ENV

IRO

NM

ENTA

L

MA

NA

GEM

ENT


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Important social-environmental issues for communities neighboring our operations were among the

principal concerns of Biosev’s main stakeholders during the 2013/2014 crop year. During the period, topics related to recycling, Brazilian biomes, water and soil conservation and seedling donations were brought up with the Lagoa da Prata, Estivas, Giasa, Maracaju, Passa Tempo communities and the Ribeirão Preto Complex.

Biosev frequently conducts qualitative and quantitative environmental monitoring of water resources and atmospheric emissions, making it possible to prepare engineering studies that are reflected in the installation of systems and equipment to mitigate the more significant environmental impacts of its activities. Monitoring is carried out as follows:

• Water resources: through laboratory analyses, installation of automatic measuring equipment, closing industrial process circuits, setting annual efficiency reduction targets (m³/tc), and using effluents after analysis of aspects such as sugarcane crop fertigation, pursuant to rules established by the environmental agencies;

• Atmospheric emissions: via collection, by specialized laboratories, which issue analytical certificates for the purpose of regular maintenance and adjustments in particulate capture systems.

Our own nurseries produce native seedlings for reforestation purposes

ENVIRONMENTAL MANAGEMENT


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MANAGEMENT OF ENVIRONMENTAL IMPACTS GRI EN26

Impact Mitigation action

Water consumption Investment in water re-use and recirculation in the process

Waste generation Training and qualification of the main generation areas, creation of a website to disseminate good practices, focusing on the 3Rs – reduce, re-use and recycle – and training and qualification of the team responsible for process management

Atmospheric emissions Investment in technologies for treatment of atmospheric emissions, which include gas scrubbing equipment preventive maintenance programs

Industrial effluents Investment in improvements in the water channels and ducts, river crossings and storage tanks, as well as conducting pilot studies on automation of the entire process.

Forest fires Training of firefighting brigade, conducting simulations and investments in anti-flame technologies for the mechanized harvest equipment

Permanent Preservation Areas Reform and expansion of native seedling nurseries, training and qualification of those responsible for the nurseries, preparation of research, recovery of degraded areas using new technologies — tubettes, gel to retain seedling humidity, among others — and investments in environmental education programs in communities neighboring the mills

For their part, reduction of impacts caused by generation of waste in the industrial manufacturing process occurs through use of filter cake and soot as organic materials for crops. Other wastes are separated out and stored in the units’ Waste Collection Centers until the moment of disposal or sale to companies licensed by the environmental agencies or through Integrated Waste Management centers implemented in some of the units since 2011. GRI EN26

As precautionary measures, investments totaling some R$ 16 million were carried out for the following purposes: installation of cooling towers for closing the circuits, to minimize captured volumes; soot, to improve water reutilization efficiencies; modern gas scrubbers to satisfy emission standards and waste collection centers for their management; a Wastewater Treatment Station (ETAR) and a Sewage Treatment Station (ETE); construction of a chemical product storage facility and revamping of an effluent pump house.

During the period, some R$ 9.2 million was invested to improve processes and apply technologies to minimize the environmental impacts of its activities. Despite these efforts, some impacts — such as, forest fires that affect the entire sugar–energy sector and neighboring communities — still require more study to find effective solutions.

We are presenting below the company’s main environmental impacts and the mitigating actions conducted in period:

Technology for the treatment and verification of atmospheric emissions



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RESOURCE CONSUMPTION

WATER

Water consumption at Biosev’s units increased 9.4% in the 2013/2014 crop year compared to the previous one, totaling 40,994,993 cubic meters. This is due to some operational flaws that have already been resolved, adopting more rigorous monitoring of consumption.

The company continued applying its action plan to reduce water consumption, and pursued investment in training and development of its environmental professionals, sponsoring internal and external courses taught by specialists in various fields, including water and effluent management.

New equipment allowing for recirculation of more water in the manufacturing process was installed, along with remote monitoring systems linked to the industrial units’ Operating Control Centers (OPCs), permitting interaction with other systems and flow control integration for managing environmental risks.

In addition, specific measures were implemented in the mills to improve this management. The Rio Brilhante unit, for example, received a filtration system for the wastewater from the filter press screen washing process, using it for wetting the presser. In the Leme unit, improvements were made to the bagasse slurry drainage system. For their part, the Estivas and Giasa units received more investments

TOTAL WATER CONSUMED BY SOURCE (‘000 m3) GRI EN8

2011/2012 2012/2013 2013/2014

Capture Volume (m3) m3/tc* Volume (m3) m3/tc* Volume (m3) m3/tc*

Subterranean 4,005.8 0.15 5,604.2 0.19 5,512.8 0.18

Surface 28,687.6 1.05 33,757.5 1.15 35,482.2 1.18

TOTAL 32,693.4 1.19 39,361.7 1.34 40,995.0 1.37

*tc = total tons of crushed sugarcane referring to the crop year.

AFFECTED WATER SOURCES GRI EN9

2012/2013 2013/2014

Units Main sources DescriptionVolume (m3/h) Description

Volume (m3/h)

Rio Brilhante Guarani (Botucatu) Subterranean 760.0 Subterranean 760.0

Lagoa da Prata

Rio São Francisco Surface 3,525 Surface 3,525

Vale do Rosário

Serra Geral/ Guarani (Botucatu) Formation

Subterranean 169.53 Subterranean 169.53

Santa Elisa Formação Serra Geral/ Guarani (Botucatu) Formation

Subterranean 435 Subterranean 435

Jardest Guarani (Botucatu) Subterranean 220 Subterranean 220

TOTAL 5,190.62 5,190.62

* The sources of the unlisted units are not significantly affected by withdrawal of water

RECYCLED AND RE-USED WATER GRI EN10

2011/2012 2012/2013 2013/2014

Effluents re-used by the organization’s other facilities (m3)

35,920,774.31 38,189,830.87 41,796,086.74

Percentage of water recycled/re-used 96.97% 98.12% 101.95%



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earmarked for environmental controls: two industrial effluent storage tanks were sealed at Estivas and a system to control ruptures was installed by Giasa.

These improvements reduced the generation of wastewater (stemming from sugarcane washing and cooling systems, and effluents passing through treatment plants or water and oil separation tanks) by about 4 million liters (volume equivalent to 172 Olympic pools). At the same time, there was greater generation of vinasse, which was primarily due to an increase in the mix of ethanol production during the harvest. Thus, the volume of recycled water topped 100% of the total captured, since the calculation of this value takes into account the sum of the volume of vinasse with wastewater divided by the total amount of water withdrawn from the source. GRI EN26

ENERGY

Biosev posted energy consumption of 84,952,773.34 gigajoules (GJ) in the 2013/2014 crop year, of which 84,864,909.84 GJ was direct energy and 87,863.5 GJ was indirect energy. The data are not comparable to the previous crop year because the calculation now includes purchased bagasse and ethanol as renewable energy sources and there was a change in methodology for calculating direct energy produced from renewable sources. GRI 3.10

Until the 2012/2013 crop year, direct energy produced from renewable sources was considered exclusively to be that which was generated by burning bagasse. As of the 2013/2014 crop year, the calculation was extended to include all energy available in the bagasse (taking into account the calorific value of this material in the same way as is done for diesel, ethanol and wood), which explains the significant difference between the values of one crop year to the another.

DIRECT ENERGY CONSUMPTION (GJ) (GJ) GRI EN3

Uso 2012/2013 1 2013/2014

RENEWABLE ENERGY SOURCES – OWN PRODUCTION

Ethanol Vehicles - 91,746.75

Biofuels (sugarcane bagasse) Boiler 4,430,142.79 77,703,423.12

RENEWABLE SOURCES – ENERGY PURCHASED

Biofuels (bagasse plus wood) Boiler 74,493.92 5,956,956.40

NON-RENEWABLE SOURCES – ENERGY PURCHASED

Gasoline Vehicles 5,537.71 2,135.51

Diesel Agricultural machinery 3,939,599.38 4,043,933.01

Liquefied Petroleum Gas – GLP Forklift trucks - 27,335.44

DIRECT ENERGY FROM RENEWABLE SOURCES SOLD

Bagasse - - 402,916.40

Biofuels - 2,249,367.23 2,557,713.00

TOTAL CONSUMPTION OF DIRECT ENERGY

Renewable - 2,255,269.48 80,791,505.88

Non-Renewable - 3,945,137.09 4,073,403.96

TOTAL 6,200,400.60 84,864,909.84

INDIRECT ENERGY CONSUMPTION 1 GRI EN4

2012/2013 2013/2014

GJ GJ/tc2 GJ GJ/tc

Electric energy 3 96,529.3 0.0033 87,863.5 0.00291 Energy consumed for the supply of intermediate energy needs (such as electricity, heating and cooling) 2 tc = total tons of sugarcane crushed in the referred crop year.3 The energy consumed comes from the National Interconnected System (SIN). According to the National Energy Balance Sheet - 2014, based on data from 2013, published by Empresa de Pesquisa Energética (EPE), the share of renewable sources in the Brazilian energy matrix was 79.3%, predominantly hydropower (70.6% ).

Closing of water circuitsThe most emblematic success in reducing water consumption in the crop year was at the MB unit, where investments in two processes involving water circuits accounted reduction of 821 m³ per hour in water capture.

Improvements occurred through closing the water cooling circuit for sugar production and the water circuit for the boiler combustion gas scrubber. GRI EN26

1 Data from the 2012/2013 does not include ethanol produced and sugarcane bagasse acquired from third parties.



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The new methodology now also includes sugarcane bagasse and its respective calorific value for the calculations of renewable energy purchased and renewable energy sold. Cogenerated electricity sold was considered to be the electricity sold to the National Interconnected System (SIN).

The beginning of replacement of Biosev’s automobile fleet with flex vehicles, to use ethanol as primary fuel, led to a reduction of 60% in gasoline purchases in the crop year and inclusion of own ethanol production, among consumed fuels, which also has an effect of reducing greenhouse gas emissions. As of the current crop year the company will begin to include the LPG consumption of its forklift trucks in the calculation. GRI EN26

Several other investments in the crop year were made to improve equipment performance and, hence, reduce energy consumption. Among these, we are highlighting those aimed at improving the efficiency of the mills, such as installing broth/condensate regenerators in the Lagoa da Prata and Maracuja units, installing more efficient turbines (condensation) in the Lagoa da Prata unit, and other adjustments and maintenance of steam generation (boilers, water treatment, etc.) systems, with a focus on reducing bagasse humidity.

Electricity cogeneration (cogen) was installed in the Passa Tempo unit, swapping lower pressure and lower capacity boilers for a higher pressure and more efficient unit. The turbine crushing machine’s drives were replaced by a much more effective electric motor and generator turbines were substituted for new, more efficient models.

Process redesign also included replacement of heating and evaporation equipment for those using more noble materials and

reducing consumption of steam. The strategy included maximizing power generation when using the thermoelectric plant, which operates during crushing operation shutdowns and thus increases overall energy consumption during times when there is no sugarcane processing and directly impacts the rates of specific consumption.

Suppliers and partners also were optimized. All new motors are purchased from WEG (the manufacturer), featuring greater efficiency and lower power consumption. Cleansing evaporation now is conducted more intensively, to improve heat exchange efficiencies and to reduce steam consumption.

Another element in the pursuit of maximum efficiency was employee training for the operation, supervision and coordination of steam and power generation, always using the best equipment configuration.

An energy committee meets weekly to review results and propose corrective actions, as well as working to enhance energy exports to the maximum. Daily meetings are held with all power generation unit supervisors,

ENERGY SAVED (GJ) GRI EN5

Conservation and efficiency improvements 2011/2012 2012/2013 2013/2014

Equipment conversion and retrofitting

42,140.00 52,081,173,16 32,870,942

Change in employee behavior 63,211.00 34,720,782,10 43,827,922

Process redesign 316,053.00 260,405,865,78 142,449,747

TOTAL 421,404.00 347,207,821.04 219,139.61

CONSUMPTION EVOLUTION

Evolution 2012/2013 2013/2014

Steam consumption (tons) 13,946,514 15,124,913

Specific consumption of steam (Kg/tc) 506.67 504.01

Electric energy consumption (MWh) 625,414 674,741

Specific consumption of electric energy (kWh/tc) 21.33 22.48



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PROTECTED AND RESTORED HABITAT GRI EN13

2012/2013 2013/2014

Protected habitats (ha) 14,557.07 15,820.67

Restored habitats (ha) 81.63 18.00

during which reactive and proactive indicators and action plans are drawn up to address existing deviations. New proactive energy indicators were inserted into the routines at the units, also to maximize focus and results.

However, consumption was not reduced even more because of high rainfall levels and the need to conduct process startups and shutdowns, leading to higher consumption of steam and energy due to very high liquidation and start levels.

BIODIVERSITYIn the 2013/2014 crop year, Biosev continued to invest in new environmental technologies, in environmental preservation in its crop areas, in native species seedlings for protection of riparian forest, in springs and permanent preservation areas and in training and qualification of professionals who work in its nurseries. It also was involved during the period in environmental education, promotion of events to discuss important Brazilian environmental legislation issues and donations of tree seedlings to public schools, municipalities and farmers.

It increased the amount of land under protection during the crop year by 1,263 hectares (8.68%) compared to the previous period. The Giasa unit was particularly notable in this aspect, intensifying actions designed to protect water sources and riparian forest areas. The Estivas and UMB units maintained a total of 81.63 hectares of restored native areas during the period. Restoration, which began in 2013, will continue for at least two and a half years to ensure the native species planted achieve sufficient size to grow into adult trees. These areas were recovered as a result of damage caused by fires of unknown origin, caused by factors such as unfavorable weather conditions and proximity to urban

Control of protected areas to ensure the preservation of biodiversity



66

areas or highways. Furthermore, new areas were added in Vale do Rosario, Santa Elisa and Continental as a result of the continuing pursuit on the part of these units to regularize their legal reserves with the competent authorities.

FIRES

The high rate of fires of unknown origin has caused damage to conservation areas under Biosev’s protection. Concerned about the issue, the company has been seeking solutions to minimize impacts of fires, such as the creation of specific environmental indicators.

Among the actions taken, of note are training and formation of forest firefighting brigades, creation of procedures for inspection and maintenance of equipment and vehicles used in emergency situations and fire simulators, involving participation of companies and organizations affiliated with the Mutual Assistance Plan (Pame).

TECHNOLOGIES

Green Ethanol is an important agricultural technology project for the preservation of biodiversity. Accepting the program advances elimination of the burning of sugarcane straw in mechanized areas by 2014 and by 2017 in non-mechanized areas for mills located in the state of São Paulo. By state law, the deadlines are, respectively, 2021 and 2031.

The following chart shows a comparison of the Green Ethanol Agro-Environmental Protocol with State Law No. 11.241/02.

Nurseries for restoration purposesBiosev produces seedlings for forest restoration purposes in the regions in which it operates, both in its own areas as well as those of partners, and it also donates them to communities. The nurseries in Vale do Rosário (SP), Continental (SP), Santa Elisa (SP), Lagoa da Prata (MG), Giasa (PB) and Estivas (RN) units have production capacity of 410,000 native seedlings per year. Production includes several species found in Atlantic Forest and Cerrado region biomes, such as Luehea divaricata, mimosa, Jatoba, Cedar, ceiba speciosa, and ingazeiro ipe, among others.

The Vale do Rosário unit has entered into partnership with the Luiz de Queiroz School of Agriculture (Esalq), USP, in Piracicaba. For its part the Estivas unit (RN) works with the Chico Mendes Institute for Biodiversity Conservation (ICMBIO), which it assists by providing seedlings from its nursery and also offering training to employees, enhancing the methodologies used for seedling production and planting practices. The Continental unit joined the Semear (Seed) Program, which strives to rehabilitate prison inmates, through cultivation of native tree seedlings in São Paulo state penitentiaries.

In partnership with Biosev, the Environmentalist Association of the Upper São Francisco (ASF) and the Committee of the Tributaries of the Upper São Francisco Water Basin (CBHSF1) donated 900 urban and fruit tree seedlings to the Sol Nascente neighborhood community in Lagoa da Prata in January 2014. The initiative, which was supported by the Environmental Police and the Municipal Environmental Secretariat, aimed to encourage tree planting and foster environmental awareness of members of the local community. GRI EN13

DEADLINE FOR ELIMINATION OF BURNING OF SUGARCANE STRAW IN THE STATE OF SÃO PAULO

MECHANIZABLE AREAS%0

10

20

30

40

50

60

70

80

90

100

2006 2010 2011 2014 2016 2021

NON-MECHANIZABLE AREAS%0

102030405060708090

100

2007 2010 2011 2016 2017 2021 2026 2031

Agro-environmental Protocol

State Law no. 11.214/02

Note: The highlighted points show the specific years cited in the law or protocol. Prepared by Unica.



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Another contribution to higher renewable emissions was startup of a new cogeneration unit, which burns biomass (bagasse), at the Passa Tempo mill, with installed capacity of 77.8 MW.

During a review of 2013-2014 crop year data, an error was identified in the calculation of indirect emissions from transportation of workers, which also occurred in the 2012/2013 inventory. As a result, the values informed in the previous report, also including the calculation of emissions from road transportation of agricultural inputs, were corrected. GRI 3.10

One of Biosev’s chief concerns is to reduce the environmental impacts of its operations. To this end, the company invests in actions and technologies that contribute to sustainable development of its activities. The main actions in 2013/2014 related to harvest and transportation emissions involved GRI EN18, EN26 :

• Optimize sugarcane transportation

logistics - The initiative included use of satellite imagery and highway mapping tools, leading to a comprehensive study at the

EMISSIONSEmissions of greenhouse gases (GHGs) totaled 8,672,363 metric tons of carbon equivalent. The inventory is based on the GHG Protocol international methodology and the ABNT NBR ISO 14064-1 standard and encompasses all operating units.

Renewable emissions represented 85.18% of total emissions, compared to 84.74% in the 2012/2013 crop year, remaining stable at 0.23 tCO2e per metric ton of sugarcane produced. These emissions reflect carbon recently sequestered from the atmosphere, thus not contributing to an increase in GHG concentrations.

Nonrenewable emissions were lower, going from 0.41t CO2e per metric ton of sugarcane crushed to 0.40 CO2e, due to: an increase in the burning of bagasse in fermentation tanks, higher emission of CO2 in fermentation vats as a result of higher ethanol blending in fuels, expansion of the car fleet using ethanol as a primary fuel and an increase of the fraction of biodiesel used in diesel-fueled equipment.

GREENHOUSE GAS EMISSIONS GRI EN16, EN17

Emissions considered

2012/2013 2013/2014 Change

tCo2e tCO2e/tc tCo2e tCO2e/tc tCO2e/tc

Scope 1 425,415.88 0.014 489,554.00 0.017 -14.48%

Scope 2 3,568 0.0001 3,348.00 0.0001 4.87%

Scope 3 779,272 0.026 721,524 0.024 6.30%

TOTAL 1,208,255.16 0.040 1,214,426 0.041 -2.08%

Renewable Emissions

Scope 1 6,932,483.52 0.2310 6,736,458.00 0.2281 1.28%

Scope 2 - 0.0 0.0 0.0000000

Scope 3 9,501.59 0.0003 7.341 0.0002 27.38%

TOTAL 6,941,985.10 0.23 6,743,798 0,23 1.30%

Total emissions (considered + renewable)

8,150,240.26 0.27 7,958,225 0.27 0.79%

Note: Data from the 2012/2013 crop year was revised due to improvement of measurements GRI 3.10Scope 1: direct GHG emissions | Scope 2: emissions from consumption of purchased electricity | Scope 3:other indirect emissions

Atmospheric emissions are inventoried based on GHG Protocol methodology



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Ribeirão Preto Complex’s units. The goal is to improve sugarcane transportation, taking into account factors such as distance, mill capacity, road conditions and municipal restrictions.

• Optimize logistics of transporting finished products - Biosev invested in use of multimodal transportation for distribution of finished products (sugar and ethanol) using road transportation for transshipment to railways, a cleaner and more efficient mode.

• Use of ethanol in the light vehicle fleet - Over the past few years the company has been replacing its fleet of light vehicles used for administrative, agricultural and industrial support activities for flexible fuel vehicles (which run on both gasoline and ethanol). These vehicles are fueled up at the mills with internally produced ethanol.

• Planting and harvest technologies - Another important advance, currently in an experimental stage, is use of planting and harvesting technologies together with satellite navigation systems. With systems linked electronically to the equipment, it is possible to precisely conduct planting, fertilizing, pesticide application and sugarcane harvesting operations, minimizing the process and, thus, optimizing fuel consumption.

EFFLUENTS AND WASTEBiosev is continuously improving effluent and waste control by sharing good practices developed in-house by employees. Termed wastewater, the effluent generated by the mills originates in various process sectors (sugarcane washing, cooling, effluent treatment plants, final effluent from the water and oil separation tanks, etc.).

This effluent is mixed with vinasse, a manufacturing process by-product, and the entire volume is used for soil fertigation. In 2012, a vinasse Master Plan was created, consisting of a technical diagnosis of the full structure for handling, transportation and disposal of industrial effluents that assists in making decisions and setting priorities to drive effluent control results.

During the crop year, several actions to better control management and reduction of environmental risks were taken. The Giasa unit installed an automatic control system that prevents rupture of water mains in event of accidental leakage of effluents, using automated controls connected to the facility’s pumping system. The Estivas unit was equipped with the same automated controls along with improvements in its industrial wastewater pumping system, improving process efficiency, reducing time spent on these operations and enhancing equipment safety protection. A new system for capturing the Leme unit’s mulch pile effluents was built, ensuring proper disposal. GRI EN21

METHODS OF DISPOSAL DISCARDS GRI EN22

Type of wasteTotal

generated (t) Recycling (t) Reuse (t)1 Waste (t)2

2012/2013

2013/2014

2012/2013

2013/2014

2012/2013

2013/2014

2012/2013

2013/2014

Class I waste 1,194 1,024 505 156 297 457 392 410

Class II waste 11,952 9,813 10,098 7,692 50 487 1,803 1,628

TOTAL 13,146 10,837 10,603 7,848 348 944 2,195 2,0381 Waste destined for co-processing and re-refining2 Waste destined for industrial and sanitary landfill

Total waste generationregistered reduction of

18%compared to previous crop

EFFLUENTS 1 GRI EN21

2012/2013 2013/2014

Generation (m³) m³/tc

WW + vinasse (m3/tc)

Generation (m³) m³/tc

WW + vinasse (m3/tc)

Wastewater (m3) 26,433,829.97 0.901.34

26,429,829.79 0.881.39

Vinasse (m3) 13,074,174.63 0.44 15,366,256.95 0.511 100% of the effluents are used for soil irrigation; tc: tons of sugarcane



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The total waste generated was 17.6% lower than in previous crop: 10,837 tons compared to 13,146 tons.

SELECTIVE COLLECTION

For waste management, selective collectors from reused drums, storage containers for light bulbs made of packaging equipment (wooden boxes), containment basins to store discarded oil and grease built with scrap parts, shelves for storage of tires, also from scrap, are some examples of good practices that have been shared and multiplied.

Biosev has central, modern temporary waste storage facilities equipped with hydraulic presses and electric pallet jacks for baling and transportation of waste, which helps reduce the ergonomic risks of these activities.

Support for recyclingThrough the Continental unit, Biosev donates recyclable materials such as cardboard, plastic and big bags to the Colômbia Cooperativa, a cardboard collector family cooperative in the municipality of Colômbia (SP). The project, besides adding financial value to the association with the profit from the sale of these materials to recycling companies being transferred to the cooperative - is environmentally responsible, because it ensures proper disposal of waste materials.

Another aim is distribution of ecobags (ecologically friendly bags) made by the cooperative and offered city residents, used for storage of recyclable materials. The initiative contributes to the Colômbia city authority’s Clean City Project, which makes dumpsters available for disposal of construction site debris and waste from tree pruning activities, among others.

The Santa Elisa unit received the Recycling Station pilot project



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The company also maintained its commitment to promote training and effectively control all waste generated in its agricultural and industrial processes, expanding opportunities to reduce or recycle waste.

Automotive Workshops employee sin all units received Solid Waste Management training covering 212 training participants. A partnership between the Agriculture area and SHE made it possible to orient participants about appropriate ways to segregate, package and store solid waste. Adoption of these initiatives results in lower solid waste generation, with environmental, economic and social gains. During the training session also addressed were SHE Good Practices, presenting examples of suggestions that already have been adopted.

RECYCLING STATION

The Santa Elisa unit launched a pilot project in July 2013 to raise environmental awareness about the Recycling Station, encouraging employees to deposit recyclable waste from their homes. Collection bins are in the central building’s parking lot to receive items such as paper, cardboard, plastics and packaging, aluminum, glass, light bulbs and electronics. In 2013, 23,680 kilos of waste were collected and sent for recycling.

Selective garbage collection encourages good practices among employees

WORLD ENVIRONMENT DAY

To commemorate and strengthen World Environment Day, the HSE team organized an intensive program in all of Biosev’s units during the week of June 5. Waste was the central campaign theme in 2013 to raise awareness among our employees and in communities. The goal was for everyone to realize the importance of reducing, reusing and recycling all kinds of waste at home, in the workplace or in the community. A Clean Mill seal, to encourage this attitude among employees, marked the visual identity of the campaign.

Large bins displaying the seal were spread on the grounds of the facilities to call everyone’s attention to the theme. Furthermore, partnerships with SESI/SENAI enabled various recycling workshops. In the SP North and South units, employees painted screens made from the reuse of sugar packing bags. The agenda for the commemorative week also included distribution of educational booklets about waste in schools in 12 municipalities where the mills are located; the running of an Environmental Seminar in Lagoa da Prata (MG), and Simulated Chemical Emergencies in the Estivas (RN), Rio Brilhante (MS) and Jardest (SP) units.



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Page/Comment Reporting level

STRATEGY AND ANALYSIS

1.1 Statement by holder of greater decision-making power in the organization about the relevance of sustainability to the organization and its strategy

5 Partial

1.2 Description of main impacts, risks and opportunities 5, 19, 30 Partial

ORGANIZATIONAL PROFILE

2.1 Name of Organization 7 Complete

2.2 Main brands, products and/or services 7 Complete

2.3 Operational structure, i including main divisions, operating units, subsidiaries and joint ventures 7, 8 Complete

2.4 Location of headquarters 75 Complete

2.5 Number of countries where the organization operates, and names of countries in which its main operations are located or are specifically relevant to the sustainability issues covered in the report

7, 8 Complete

2.6 Type and legal nature of the property 7 Complete

2.7 Markets served (regions, sectors and types of customers / beneficiaries) 7, 38 Complete

2.8 Size of the Organization 7, 13, 37 Complete

2.9 Significant changes during the reporting period regarding size, structure or ownership 9, 14, 20 Complete

2.10 Awards received during the period covered by the report 12 Complete

REPORT PROFILE

3.1 Period covered by the report for the information presented 15 Complete

3.2 Date of most recent past report 2012/2013 Complete

3.3 Report issuance cycle Annually Complete

3.4 Contact information in case of questions regarding the report or its contents 75 Complete

3.5 Process for defining report content 16-17 Partial

3.6 Limit of the report (countries, divisions, subsidiaries, suppliers) 15 Complete

3.7 Declaration about specific limitations with respect to report scope or limit 15 Complete

3.8 Basis for preparation of the report in relation to joint ventures, subsidiaries, leased facilities, outsourced operations and other entities that can significantly affect comparability from period to period and / or between organizations

15 Complete

3.9 Data measurement techniques and bases for calculations 15 Complete

3.10 Effect of any restatements of information provided in earlier reports and the reasons for such reformulations

9, 15, 51, 63, 67 Complete

3.11 Significant changes compared to previous years regarding the scope, boundary, or measurement methods applied in the report

15 Complete

3.12 Table identifying the location of information in the report 71 Complete

3.13 Policy and current practice in relation to search for external verification for the report There was no external verification for the 2013/2014 crop year.

Complete

GOVERNANCE, COMMITMENTS AND ENGAGEMENT

4.1 Governance structure of the organization 25 Complete

4.2 Indicate whether the head of the highest governance body is also an officer 25 Complete

4.3 Independent or non-executive members of the highest governance body 25 Complete

4.4 Mechanisms for shareholders and employees to provide recommendations or guidance to the highest governance body

26, 27 Partial

4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives (including rescission agreements) and the organization's performance

26 Complete

4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided 26 Complete

GRI CONTENT INDEXGRI 3.12


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4.7 Process for a given composition, skills and knowledge of members of the highest governance body to define the strategy of the Organization

Process for a given composition, skills and knowledge of members of the highest governance body to define the strategy of the Organization There is no structured process. Members of the Board must ensure the faithful observance of the legal rules and regulations pertaining to the activities of the company and its subsidiaries, and must possess an unblemished reputation, and those prevented by law or judicial condemnation are not eligible for election.

Complete

4.8 Statements of mission or values, codes of conduct and principles relevant to economic, environmental and social performance and the status of their implementation

27 Complete

4.9 Procedures of the highest governance body for overseeing the identification and management of the organization's economic, environmental and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct and principles

25 Complete

4.10 Processes for evaluating the performance of the highest governance body, particularly with respect to economic, environmental and social performance

The company does not have a structured self-assessment of the Board process, rather only performance analysis of officers, managers, supervisors, coordinators and specialists.

Complete

4.11 Explanation of how the organization applies the precautionary principle 30 Partial

4.12 Charters, principles or other initiatives of economic, environmental and social nature to which the organization subscribes or endorses

18 Complete

4.13 Memberships in associations and/or national/international advocacy organizations 18 Complete

4.14 Relationship of stakeholder groups engaged by the organization 16 Complete

4.15 Basis for identification and selection of stakeholders with whom to engage 16 Complete

4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group

16 Complete

4.17 Key topics and concerns raised through stakeholder engagement, and what measures the company has adopted to treat them

16 Partial

PERFORMANCE INDICATORS Page / Comment Level of reporting


Form of management 19-23, 30, 35-37 Partial

EC1 Direct generated and distributed economic value 35 Complete

EC2 Financial implications, risks and opportunities for the organization's activities due to climate change 35, 36 Complete

EC5 Lowest wage by gender compared to local minimum wage 56 Complete

EC6 Policies, practices and proportion of spending on locally-based suppliers The company is improving the management of this material subject and the data should be available in the 2014/2015 season

Not available

EC7 Procedures for local hiring The company is improving the management of this material subject and the data should be available in the 2014/2015 season

Not available

EC9 Identifying and describing significant indirect economic impacts, including the extent of impacts The company is improving the management of this material subject and the data should be available in the 2014/2015 season

Not available

ENVIRONMENTAL PERFORMANCE

Form of management 60-70 Partial

EN3 Direct energy consumption breakdown by main energy source 63 Complete

EN4 Indirect energy consumption by primary source 63 Complete

EN5 Energy saved due to conservation and efficiency improvements 64 Complete

EN6 Energy saved due to conservation and efficiency improvements The company is improving its management of this material subject and the information should be available in the 2014/2015 crop year.

Not available

EN7 Initiatives to provide products and services with low power consumption Not available

EN8 Total water intake by source 62 Complete

EN9 Water sources significantly affected by water intake 62 Complete

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EN10 Percentage and total volume of water recycled and reused 62 Complete

EN11 Location and size of the company's land in protected or high biodiversity areas The company is improving management of this material subject and the data should be available in the 2014/2015 crop year.

Not available

EN12 Description of significant impacts on biodiversity Not available

EN13 Protected or restored habitats 65, 66 Partial

EN14 Managing impacts on biodiversity The company is improving management of this material subject and the data should be available in the 2014/2015 crop year.

Not available

EN15 Number of species on the IUCN Red List and national conservation list Not available

EN16 Total direct and indirect emissions of greenhouse gases responsible, by weight 67 Complete

EN17 Other significant indirect emissions of greenhouse gases, by weight 67 Complete

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved 67 Partial

EN19 Emissions of substances that destroy the ozone layer, by weight The company is improving the management of this material subject and the data should be available in the 2014/2015 crop year.

Not available

EN20 NOx, SOx and other significant air emissions, by type and weight Not available

EN21 Total water discharge, by quality and destination 68 Complete

EN22 Total weight of waste by type and disposal method 68 Partial

EN23 Total number and volume of significant spills The company is improving the management of these material issues, and data will be available in the 2014/2015 crop year.

Not available

EN24 Weight of hazardous waste transported, imported, exported, or treated Not available

EN25 Biodiversity value of water bodies and habitats affected by discharges of water and runoff Not available

EN26 Initiatives to mitigate environmental impacts of products and services and extent of impacts 61, 63, 64, 67 Partial

LABOR PRACTICES AND DECENT WORK

Form of management 51, 53-58 Complete

LA1 Workers by employment type, employment contract and region, broken down by gender 51, 52 Complete

LA2 Total number of employees leaving employment and new hires during the period and rate of employee turnover by age group, gender and region

52 Complete

LA3 Benefits provided to full-time employees that are not provided to temporary or part-time employees 56 Complete

LA4 Percentage of employees covered by collective bargaining agreements 51 Complete

LA6 Percentage of total workforce represented in formal health and safety committees, composed of managers and workers that help monitor and advise on occupational health and safety programs

53 Complete

LA7 Rates of injuries, occupational diseases, lost days, absenteeism and work-related fatalities by region 54 Partial

LA8 Education, training, counseling, prevention and risk-control programs in place to assist workforce members, their families or community members regarding serious diseases

54-55 Partial

LA9 Issues relating to health and safety covered in formal agreements with trade unions 54 Complete

LA10 Average hours of training per year per employee, by employee category 57 Complete

LA11 Program for skills management and continuous learning that support the continued employability of employees and to manage end of careers

57There are programs for managing end-of-career

Complete

LA12 Percentage of employees receiving regular performance analyses 56 Complete

LA13 Composition of governance bodies and breakdown of employees per category according to gender, minority group membership and other indicators of diversity

25, 26 Partial

HUMAN RIGHTS

Form of management 27-29, 42 Partial

HR2 Percentage of significant suppliers, contractors and business partners that have undergone screening on human rights and actions taken

42 Complete

HR5 Operations and significant suppliers identified in which the right to exercise freedom of association and collective bargaining may be being violated or at significant risk, and actions taken to support these rights

51 Complete

HR6 Operations and significant suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor

42 Complete

HR7 Significant operations and suppliers identified as having significant risk for incidents of forced labor or analogous to slave labor, and measures taken to contribute to the eradication of forced or analogous to slave labor

42 Complete

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SOCIETY

Form of management 43-46 Partial

SO1 Nature, scope and effectiveness of any programs and practices that assess and manage the impacts of operations in communities, including installation, operations and closeout

43-46 Complete

SO1 (G3.1)

Percentage of operations in which engagement practices were implemented with the community, impact assessment and program development

100% Complete

FP4 Nature, scope and effectiveness of any programs and practices that promote access to healthy lifestyles Does not have programs or practices that promote access to healthy lifestyles or raise awareness about the consumption of sugar.

Complete

SO2 Percentage and total number of business units analyzed for risks related to corruption 29 Complete

SO3 Percentage of employees trained in anti-corruption policies and procedures of the Organization 29 Complete

SO4 Actions taken in response to incidents of corruption 29 Complete

SO7 Lawsuits for unfair competition, anti-trust and monopoly - Not available

SO8 Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations

During the period, there were a total of ten non-monetary sanctions for noncompliance with laws and regulations. The sum of significant fines was R$ 336,605.88.

Complete

PRODUCT LIABILITY

Form of management 47-48 Complete

PR1 Phases of the product life cycle and services that are valued impacts of health and safety The company is improving the management of this material theme and the information should be available in the 2014/2015 crop year.

Not available

PR2 Compliance with regulations and voluntary codes concerning health and safety Not available

PR3 Type of information on products and services required by labeling procedures 48 Partial

FP5 Percentage of production volume in certified units - food safety 48 Complete

FP8 Communication to consumers about ingredients and nutritional information 48 Complete

PR5 Related to customer satisfaction practices, including results of surveys measuring customer satisfaction 47 Partial

PR6 For adherence to laws, standards and voluntary codes related to marketing communications, including advertising, promotion and sponsorship programs

Biosev sells Estrela and Dumel own brands in the regional wholesale market and there are no advertising and marketing communication actions for these brands.

Complete

PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion and sponsorship by type of result

Were not recorded. Complete

PR8 Total number of substantiated complaints regarding breaches of customer privacy and loss of customer data

Were not recorded. Complete

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CREDITS

General coordination and GRI contentHSE Department - Health Safety and the EnvironmentCorporate Communication Department

Text and editingEditora Contadino

TranslationDash Ltda. – Steve Yolen

Graphic and layout projectMulti Design

PhotographsBiosev Image Bank

The preparation of this Sustainability Report is the result of the efforts of the entire Biosev team. Requests for clarifications regarding the content of this publication should be sent by e-mail to [email protected] GRI 3.4

CORPORATE INFORMATION

BOARD OF DIRECTORSClaude Pierre EhlingerCHAIRMAN

Adrien Dominique Lucien TardyVICE CHAIRMAN

André RothMEMBER

Antonio Delfim NettoINDEPENDENT MEMBER

Ciro EchesortuMEMBER

Cristiano BiagiMEMBER

Ian Clive BarnardINDEPENDENT MEMBER

Philippe Jean Henri DelleurINDEPENDENT MEMBER

Ricardo Barbosa LeonardosINDEPENDENT MEMBER

EXECUTIVE BOARDRui ChammasCHIEF EXECUTIVE OFFICER - CEO

Carlos Alberto Ribeiro Campos GradimTREASURY OFFICER

Daniel Schmidt PittaLEGAL OFFICER

Dante Lanza dos SantosORIGINATION ASSOCIATE DIRECTOR

Eduardo Lemes Das NevesCOMPETITIVENESS DIRECTOR

Enrico BiancheriCOMMERCIAL OFFICER

Evandro Schmidt PauseCHIEF OPERATING OFFICER

Luiz Henrique Cerqueira ValverdeINVESTOR RELATIONS OFFICER

Manoel de Moura Silva FilhoCONTROLLING AND DIRECTOR OF FP & A

Marcel Resende PortoINVESTMENTS OFFICER

Maria Paula Ferreira CurtoHUMAN RESOURCES OFFICER

Mauro Sergio Gines MartinsENGINEERING OFFICER

Patrick Julien TreuerSTRATEGY OFFICER

Paulo PrignolatoCHIEF FINANCIAL AND INVESTOR RELATIONS OFFICER

Tereza Cristina PeixotoAGRICULTURE OFFICER

Walter Biagi BeckerNATIONAL ORIGINATION OFFICER

HEADQUARTERS GRI 2.4

Biosev The Louis Dreyfus Commodities CompanyAv. Brigadeiro Faria Lima, 1355 -11TH FloorSão Paulo / SP CEP 01452-919 Telephone: (11) 3092-5200

Documents

2013/2014 - · PDF filea Business Plan for the 2014-2018 period ... • Inverted sugar syrup ... Unity 2013/2014 Products Processing of sugarcane (tons) Storage