release 2q15 - slc agrícola

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2016 Management Report and 4Q16 Earnings Release

RELEASE 2Q15

MANAGEMENT REPORT 2016

EARNINGS RELEASE 4Q16

Record-high EBITDA and Net Income in 4Q16 of R$160 million and R$114 million,

respectively

Record-high Free Cash Flow of R$208.7 million in 2016

Net Debt reduction of R$241 million compared to end-2015

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Porto Alegre, March 15, 2017 - SLC AGRÍCOLA S.A. (Bovespa: SLCE3; ADR: SLCJY; Bloomberg: SLCE3BZ; Reuters: SLCE3.SA), one of Brazil’s largest producers of grains and fibers, announces today its results for the fiscal year and fourth quarter of 2016. The following financial and operating information is presented in accordance with International Financial Reporting Standards (IFRS). The information was prepared on a consolidated basis and is presented in thousands of Brazilian real, except where stated otherwise. NOTE: 4Q15 and 4Q16 refer to the cumulative three-month periods from October to December of fiscal years 2015 and 2016. 2015 and 2016 refer to the cumulative 12-month periods from January to December of fiscal years 2015 and 2016. HA refers to the horizontal percentage variation between two periods and VA refers to the vertical percentage variation of a given total.

4Q16 CONFERENCE CALL Date: Thursday, March 16, 2017

PORTUGUESE 10:00 a.m. (Brasilia) 9:00 a.m. (New York) 1:00 p.m. (London) Dial-in: +55 (11) 2188-0155 Replay for 7 days: +55(11)2188-0400

ENGLISH 12:00 p.m. (Brasilia) 11:00 a.m. (New York) 3:00 p.m. (London) Dial-in: +55 (11) 21880155 Replay for 7 days: +55 (11) 2188-0400

CONTACTS IVO MARCON BRUM

CFO & IRO

FREDERICO LOGEMANN

IR Manager

ALISANDRA MATOS

IR Analyst

MÔNICA PIVA

IR Assistant [email protected] +55 51 3230.7799 +55 51 3230.7864 +55 51 3230.7797 www.slcagricola.com.br/ri Rua Bernardo Pires, 128, 3º andar, Bairro Santana, Porto Alegre/RS

http://www.slcagricola.com.br/ri

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TABLE OF CONTENTS

CONTACTS ................................................................................................................................ 2

REFERENCES – TABLES........................................................................................................... 4

REFERENCES – FIGURES AND CHARTS ............................................................................... 5

MESSAGE FROM MANAGEMENT .......................................................................................... 7

MARKET OVERVIEW.............................................................................................................. 13

OPERATING PERFORMANCE ................................................................................................ 18

FINANCIAL PERFORMANCE ................................................................................................. 24

PEOPLE ..................................................................................................................................... 39

SUSTAINABILITY .................................................................................................................. 42

SUBMISSION TO THE ARBITRATION CHAMBER ........................................................ 44

RELATIONSHIP WITH THE INDEPENDENT AUDITORS ............................................ 44

LOCATION OF UNITS ........................................................................................................... 44

DISCLAIMER ........................................................................................................................... 44

EXHIBIT 1: AGRICULTURAL WEIGHTS AND MEASURES ........................................ 45

EXHIBIT 2: BALANCE SHEET - ASSETS .......................................................................... 46

EXHIBIT 3: BALANCE SHEET - LIABILITIES................................................................. 47

EXHIBIT 4:INCOME STATEMENT FOR THE FISCAL YEAR ...................................... 48

EXHIBIT 5:STATEMENT OF CASH FLOWS .................................................................... 49

EXHIBIT 6:STATEMENT OF VALUE ADDED .................................................................. 50

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REFERENCES – TABLES

Table 1Summarized Results .......................................................................................................... 7

Table 2 Currency and Agricultural Commodity Hedge ................................................................ 11

Table 3 Production Cost per Hectare .......................................................................................... 11

Table 4 World cotton supply and demand .................................................................................. 14

Table 5 Yields ............................................................................................................................... 20

Table 6 Planted Area by Crop ...................................................................................................... 20

Table 7 Planted Area by Land Ownership ................................................................................... 21

Table 8 Land Development ......................................................................................................... 21

Table 9 Property Appraisal .......................................................................................................... 22

Table 10 Property Portfolio ......................................................................................................... 22

Table 11 Machinery and Storage Capacity .................................................................................. 22

Table 12 EBITDA Conciliation ...................................................................................................... 24

Table 13 Net Revenue ................................................................................................................. 25

Table 14 Volume Invoiced ........................................................................................................... 25

Table 15 Biological Assets in Net Revenue .................................................................................. 25

Table 16 Cost of Goods Sold ........................................................................................................ 26

Table 17 Biological Assets in COGS ............................................................................................. 26

Table 18 Gross Income ................................................................................................................ 26

Table 19 Gross Margin of Cotton Lint and Cotton Seed ............................................................. 27

Table 20 Soybean Gross Margin .................................................................................................. 27

Table 21 Corn Gross Margin ........................................................................................................ 27

Table 22 Breakdown of Production Cost by Crop ....................................................................... 28

Table 23 Production Cost by Hectare .......................................................................................... 28

Table 24 Selling Expenses ............................................................................................................ 28

Table 25 General and Administrative Expenses .......................................................................... 29

Table 26 Net Financial Income (Expense) ................................................................................... 29

Table 27 Gains (Losses) from Derivative Operations .................................................................. 29

Table 28 Adjusted Net Financial Income (Expense) .................................................................... 30

Table 29 Net Income ................................................................................................................... 30

Table 30 Currency and Agricultural Commodity Hedge .............................................................. 31

Table 31 CAPEX............................................................................................................................ 32

Table 32 Financial Net Debt ........................................................................................................ 33

Table 33 Return on Equity ........................................................................................................... 34

Table 34 Return on Net Assets .................................................................................................... 34

Table 35 Return on Invested Capital ........................................................................................... 34

Table 36 Net Asset Value ............................................................................................................ 34

Table 37 Changes in Working Capital .......................................................................................... 34

Table 38 Proposed Dividend Distribution ................................................................................... 36

Table 39 Educational level by number of employees ......................Erro! Indicador não definido.

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REFERENCES – FIGURES AND CHARTS Figure 1 Accidents per million hours worked................................................................................ 9

Figure 2 Evolution in area with Precision Agriculture ('000 ha) .................................................... 9

Figure 3 Tractors (hp/ha) .............................................................................................................. 9

Figure 4 Soybean Yields (ha/h) – Xingú Planters ......................................................................... 10

Figure 5 Soybean Yields (ha/h) – DB Planters ............................................................................. 10

Figure 6 Evolution of percentage of cotton lint with superior quality ........................................ 10

Figure 7 Change in Commodity Prices from January 2015 to February 2017 (base 100) ........... 13

Figure 8 Figure 8 Cotton Price in the International Market vs. Brazil ......................................... 13

Figure 9 Cotton Stocks ................................................................................................................ 14

Figure 10 Soybean Price in International Market vs. Brazil ........................................................ 15

Figure 11 Brazil: Soybean Yield and Production .......................................................................... 15

Figure 12 Argentina: Soybean Production .................................................................................. 16

Figure 13 Corn Prices in the International Market vs. Brazil ....................................................... 16

Figure 14 Corn Production in Brazil ............................................................................................. 17

Figure 15 Harvest operations at the Planalto Farm (Mato Grosso do Sul) in February .............. 18

Figure 16 Plants (defoliated for analysis) presenting excellent conditions at the Planeste Farm

(Maranhão) ................................................................................................................................. 18

Figure 17 Crop with high potential at the Panorama Farm (Bahia) ............................................ 18

Figure 18 Crop with excellent pod development at the Planorte Farm (Mato Grosso) ............. 18

Figure 19 Cotton crop in boll development phase, Palmares Farm (Bahia) ............................... 19

Figure 20Close-up of Figure 19, with excellent boll development ............................................. 19

Figure 21 Cotton 2nd crop at the Planorte Farm (Mato Grosso) ................................................ 19

Figure 22 Corn 2nd crop, with optimal establishment and good plant distribution at the

Planeste Farm (Maranhão).......................................................................................................... 20

Figure 23 Gross Debt Profile in 4Q16 .......................................................................................... 33

Figure 24 Amortization Schedule of Adjusted Net Debt in 4Q16 ............................................... 33

Figure 25 History and Proposition - Dividends ............................................................................ 36

Figure 26 SLC x Ibovespa ............................................................................................................. 37

Figure 27 Breakdown of workforce by geographic location ....................................................... 40

Figure 28 Manager Development ............................................................................................... 41

Figure 29 Operational Training ................................................................................................... 41

Figure 30 Profile of Leadership Positions .................................................................................... 42

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MESSAGE FROM MANAGEMENT

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MESSAGE FROM MANAGEMENT

In 2016, our Company harvested 377,259 hectares from the 2015/16 crop year. As detailed in our

earnings releases over the course of the year, the period was marked by significant water stress (due to

the El Niño phenomenon, which was the most intense of the past 50 years), with a reduction in

cumulative precipitation of over 30% compared to the historical average. The effects from this weather

anomaly led to an average drop of 20% in the yields of our three main crops (soybean, corn and cotton)

compared to the initial estimate.

This challenging scenario became evident already in the first quarter of the year, which forced

Management to adjust its plans for the year, with a focus on ensuring the Company’s financial solidity.

The main measures taken follow:

Reduction of R$48 million in the plan for Acquisitions of Property, Plant and Equipment (CAPEX);

Adjustments to the cash conversion cycle, which included establishing new terms for the

payables and receivables of our suppliers and clients, respectively, and accelerating our

inventory turnover;

Reduction in costs and expenses of approximately R$90 million in relation to the initial budget,

with cuts to items not directly related to efficiency gains or future expense cuts;

Review of the Agricultural Planning:

Leasing to third parties any areas for which we were unable to optimize economies of

scale: Paineira Farm (7,642 hectares), located in Piauí, and a remote portion of the

headquarters at the Palmares Farm in Bahia state (4,392 hectares);

Return of 5,000 hectares leased at the Piratini Farm in Bahia to reduce exposure to

areas with more volatile weather, as from the 2017/18 crop year.

These actions enabled us to end the year with Net Income of R$15.6 million, with R$29.9 million

attributable the Parent Company (SLCE3). Furthermore, Free Cash Flow came to R$208.7 million, a new

record for the Company, which supported a reduction in Net Debt from R$1.093 billion at the end of 2015

to R$852.8 million at the end of 2016. The Net Debt/EBITDA ratio ended the year at 3.42x, virtually

stabled compared to the prior year. A summary of the results reported in 4Q16 and 2016 follows:

Table 1Summarized Results (R$ Thousand) 2015 2016 AH 4Q15 4Q16 AH Net revenue 1,761,581 1,659,649 -5.8% 583,617 629,639 7.9% Gross income 433,121 246,468 -43.1% 117,750 204,806 73.9%

Gross margin 29.2% 15.4% -13.8 p.p 21.3% 35.6% 14.3 p.p Operating income 285,497 110,315 -61.4% 69,649 183,899 164.0%

Operating margin 19.3% 6.9% -12.4 p.p 12.6% 32.0% 19.4 p.p Net profit 121,171 15,641 -87.1% 35,335 114,048 222.8%

Net Margin 8.2% 1.0% -7.2 p.p 6.4% 19.8% 13.4 p.p

Adjusted EBITDA (1) 339,741 249,109 -26.7% 151,839 159,948 5.3% Adjusted EBITDA Margin (2) 22.9% 15.6% -7.3 p.p 27.5% 27.8% 0.3 p.p

Net debt 1,093,757 852,854 -22.0% 1,093,757 852,854 -22.0% (1) As a ratio of net revenue excluding the effects from Biological Assets. (2) Excludes the effects from Biological Assets (revenue and cost), since they are noncash. (3) Net Debt adjusted for any gains and/or losses from derivative instruments linked to Financial Investments and Debt.

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In 2016, the values of the Company’s land portfolio were restated to an aggregate amount of R$3,741,271 thousand, which represents appreciation of 6.8% in the average price per hectare compared to the previous year. The appraisal was based on a report by an independent company (Deloitte), and on other market sources, which include data from real estate brokerages and specialized magazines, as well as other independent sources. We also received several important accolades during the year:

Great Place to Work: tenth best company to work for in Rio Grande do Sul SLC Agrícola figured among the ten Best Companies to Work For in Rio Grande do Sul. The recognition was conferred by the Great Place to Work, an organization operating in 53 countries that compiles a ranking of the best workplaces. Top Human Being, Internal Communication Case Study “Our Way of Being” SLC Agrícola won the Top Human Being award of the Brazilian Human Resources Association of Rio Grande do Sul (ABRH RS) for its case study “Our Way of Being – Internal Communication at SLC Agrícola,” which provides an account of the communication actions and strategies implemented over the last two years. These efforts supported improvements in employee perceptions and engagement.

Social Responsibility Award from the State Legislative Assembly The purpose of the award is to encourage organizations from the state of Rio Grande do Sul to implement projects focusing on social well-being and environmental preservation to support continuous improvement in society. The award garnered by SLC Agrícola was the Social Responsibility Certificate, which is conferred to companies and organizations that obtain the highest scores based on the indicators extracted from the Balance Sheet reported.

SLC Agrícola among Top 10 Public Meetings (APIMEC) In 2016, we received the Quality Award from the São Paulo Chapter of the Capital Market Professionals and Investors Association (APIMEC-SP) for the Public Meeting we hosted in November 2015. The event was selected as one of the ten best of the year of all meetings held at APIMEC-SP. The selection of best meeting was made by an expert jury based on the evaluations made by investment professionals at the end of every meeting.

Institutional Investor – Latam Executive Team In the last six years, the company has been recognized by Institutional Investor magazine in the Agribusiness industry. In 2016, we were recognized in the following categories:

Best Investor Relations Program, first place, elected by sell-side analysts, and third place, elected by buy-side analysts;

Best CEO, second place, elected by sell-side analysts, and third place, elected by buy-side analysts;

Best CFO, second place, elected by sell-side analysts, and third place, elected by buy-side analysts;

Best IR Professional, first place, elected by sell-side analysts, and second place, elected by buy-side analysts.

Best IR Team, first place, elected by sell-side analysts, and second place, elected by buy-side analysts

We maintained our certifications under the international standards ISO 14,001:2004 (environmental management), NBR 16001:2004 (social responsibility) and OHSAS 18,001:2007 (health and safety management) at our five certified farms: Pamplona, Planalto, Paiaguás, Planorte and Panorama. These certifications allow us to standardize processes and to enhance our management. We expect to obtain certification for all of our developed farms by 2020.

We also hold certifications for the sustainable production of soybean, namely from the Round Table on Responsible Soy (RTRS), International Sustainability & Carbon Certification (ISCC) and Certified Responsible Soya (CRS), and of cotton, namely from the Better Cotton Initiative (BCI) and the Sustainable Brazilian Cotton (ABR).

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Given our focus on continually enhancing our operations, in 2016, we launched an internal program to strengthen the three main pillars related to the sustainability and efficiency of our business: Safety, Quality and Productivity, which is known by the acronym SQP. We reached significant reduction in the number of accidents per hour worked, one continuous improvement, ensuring greater workplace safety for our employees. We are striving to reach zero accidents, and we will continue to work towards this goal.

Figure 1 Accidents per million hours worked

Source: SLC Agrícola

We expanded the area with precision agriculture and improved the performance of our tractors by reducing horsepower per hectare (hp/ha).

Figure 2 Evolution in area with Precision Agriculture ('000 ha)

Figure 3 Tractors (hp/ha)


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We obtained an increase in operating yields, as shown by figures 4 and 5, which reflects the adoption of modern machinery, intensive training, the conscientious use of resources and efforts to reduce employee turnover.

Figure 4 Soybean Yields (ha/h) – Xingú Planters


Figure 5 Soybean Yields (ha/h) – DB Planters


We registered improvement in the quality of the cotton lint produced compared to recent crop years, as shown in figure 6, which was due to the ongoing efforts to enhance our processes and variety choices. This superior cotton quality is measured based on physical criteria such as fiber length, length uniformity, fiber elongation, color grade and luster. This factor helps us obtain a premium over market prices and consequently to boost the company’s revenue.

Figure 6 Evolution of percentage of cotton lint with superior quality


6.3

7.3

Crop 2014/15 Crop 2015/16

Rendimentos Plantio de Soja (ha/h) - Plantadeiras Xingú

12.6

14.3

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Rendimentos Plantio de Soja (ha/h) - Plantadeiras DB

47.5%

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63.7%

2013/14 2014/15 2015/16

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OUTLOOK FOR 2017

For the 2016/17 crop year, we expanded the planted area by 4.7%, to 395,141 hectares. Weather conditions have not presented relevant fluctuations to date, which leaves us optimistic on surpassing the pre-established yields, which are shown in Table 5.

Sales prices are also favorable. We already have a good percentage of the new crop with prices in BRL hedged at levels higher than the actual prices in 2016, as shown in the following table:

Table 2 Currency and Agricultural Commodity Hedge Fiscal Year 2016 2017

FX Rate(1) Hedge (%) R$/ US$ Hedge (%) R$/ US$ FX Hedge 92.9 3.5963 63.8 3.7012 Commitments(1) 7.1 1.8425 5.4 1.8790

Total 100.0 3.4720 69.2 3.5594

Cotton Hedge (%) US¢ / pound(2) Hedge (%) US¢ / pound(2) Commercial Hedge 100.0 70.4 73.0 73.86 Financial Hedge(4) - - 21.9 74.05

Cotton – Total Hedge 100.0 70.4 94.9 73.91

Soybean Hedge (%) US$/ bushel(2) Hedge (%) US$/ bushel(2) Commercial Hedge 100.0 10.5 53.0 10.6 Financial Hedge(4) - - - - Commitments(3) - - 5.0 -

Soybean – Total Hedge 100.0 10.5 58.0 10.6 (1) Commitments with debt payments in U.S. dollar. (2) Based on FOB Port (prices at our production units are also influenced by transport expenses and possible quality discounts). (3) Natural hedge with payments for land acquisitions and lease agreements based on soybean bags.(4) Includes transactions involving futures, swaps and accumulators.

In addition, projections for cost per hectare in the 2016/17 crop year are stable in relation to the 2015/16 crop year, as shown below:

Table 3 Production Cost per Hectare A B C

Total ( R$/ha)(1) Initial Estimate

2015/16 Achieved 2015/16 Forecast 2016/17 B/A C/A

Cotton 1st crop 7,592 7,096 7,155 -6.5% -5.7% Cotton 2nd crop 6,157 5,868 6,164 -4.7% 0.1% Soybean 2,229 2,206 2,251 -1.0% 1.0% Corn 1nd crop 1,841 1,548 1,781 -15.9% -3.3%

Average total cost (2) 3,271 3,104 3,203 -5.1% -2.1 (1) Based on the position at December 31, 2016. Figures may suffer changes by the end of cotton processing and the sale of grains. (2) Total average cost weighted by area.

Therefore, considering production within the normal range, which is highly probable, combined with hedged prices higher than last crop year and production costs per hectare remaining stable, we expect significant margin expansion in 2017 compared to 2016.

Because of that, and also considering the current steep discount of our shares in comparison to our net asset value, we launched, as per the Minutes of the Board Meeting occurred today, a share repurchase program, through which we shall repurchase a total of up to 2.5 million shares. We believe this to be the best use of the Company’s resources, given the considerable discount on the shares, for it is a form of repurchasing our own land for a fraction of it’s market value.

The Company’s Management thanks its employees, shareholders, clients and suppliers and reiterates its strong confidence in the business and in the excellent opportunities offered by Brazilian agriculture, and will continue to work diligently to build an increasingly efficient company focused on creating value.

The Management

OUR BIG DREAM

To positively impact future generations, trough global leadership in

agribusiness and respect to the planet

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MARKET

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MARKET OVERVIEW

Figure 7 Change in Commodity Prices from January 2015 to February 2017 (base 100)

COTTON

Cotton prices in the international market recovered over the course of 2016. After reaching a low of 56.31 cents/lb early in the year, spot prices on ICE Futures US rose consistently to levels over 70.0 cents/lb in the second half of the year and remained on an upward trend in this start of 2017. The recovery was supported by a reduction in planted area and production at the global level, which led to a significant decrease in stocks.

Figure 8 Figure 8 Cotton Price in the International Market vs. Brazil

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Cotton - ICE: 126

Commercial Dolar: 117

Soybean - CBOT: 104

Petróleo - Nymex: 101

Corn - CBOT: 94

Source: CMA

Prices VariationFrom Jan 2015 to Fev 2017

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Feb 17

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In Brazil, prices also recovered, accompanying the international market and even exceeding it at some

moments, mainly due to the shortfall in the 2015/16 crop, which according to CONAB was 17.5% lower

than expected, at 1,289 thousand tons. For the 2016/17 crop year, the planted area is estimated at

911.7 thousand hectares, representing contraction of 4.5% from the previous year. The main factors

leading to the reduction in planted area, also according to CONAB, were the adverse weather conditions

in the previous crop year, especially in the Northeast, and the fact that cotton has a high production

cost. Given the expectation a 15.5% recovery in yield, however, Brazilian production should reach 1,421

thousand tons, which would represents an increase of 10.3% compared to 2015/16.

Due to the reduction in planted in many countries in the 2016/17 crop year, world production once

again should considerably lag consumption, leading to a drawdown in stocks. According to the USDA,

stocks fell 13.3% in the 2015/16 crop year and are expected to fall another 7.2% in the 2016/2017 crop

year.

Table 4 World cotton supply and demand World 2008/9 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17** Area (million ha)

Mill

ion

of

bal

es

30,630 30,233 33,713 36,100 34,407 32,726 34,214 30,499 29,282 Prod(kg/ha) 770 744 760 770 784 801 758 689 784 Beginning Stocks 62,8 62,6 47,7 51,4 74,6 92,1 103,3 111,7 96,8 Production 108,3 103,4 117,6 127,6 123,9 120,4 119,2 96,5 105,4 Imports 30,6 36,9 36,3 45,5 47,7 41,2 36,1 35,2 35,7 Total Supply 201,7 202,9 201,7 224,4 246,2 253,7 258,6 243,4 238,0 Exports 30,3 35,7 34,8 46,0 46,4 41,0 35,3 35,3 35,7 Consumption 110,4 119,6 115,5 104,26 108,46 109,79 111,4 111,3 112,5 Ending Stocks 62,6 47,7 51,4 74,6 92,1 103,3 111,7 96,8 89,9

Stocks/consumption (%) 56.7% 39.8% 44.5% 71.5% 84.9% 94.1% 100.3% 87.0% 79.9%

** Forecast

China is leading the decline in world cotton stocks. After intensive stockpiling of cotton between 2011 and 2014, the Chinese government sold a large volume of its reserves in 2016. The Chinese government should resume its sales of stocks in March 2017 (when the local off-season begins). If Chinese demand is similar to last year, it would confirm the expectation that these stocks will be consumed sooner than initially projected.

Figure 9 Cotton Stocks

*Estimated **Projection Source: USDA

SOYBEAN

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Soybean prices on the Chicago Board of Trade (CBOT) also recovered well during 2016 and maintained good support in early 2017, despite the record crop in the United States and the favorable prospects for South America in the 2016/17 crop year.

Figure 10 Soybean Price in International Market vs. Brazil

One of the main factors supporting higher prices is stronger demand, especially from China, where

imports remain strong. Another supporting factor is weather uncertainty. According to NOAA, the

weather rapidly transitioned from a strong El Niño to La Niña weather conditions in 2016. As a result, for

2017, the agency envisages the possibility of a return to neutral conditions or even the development of

a weak El Niño, which has increased the risk of production losses around the world. In Brazil, despite

isolated weather problems, the soybean crop has been presenting good development and soybean

production in the 2016/17 crop year is currently estimated at 105.6 million tons by CONAB. The forecast

represents a new record and a 10.6% increase on the prior crop year. The planted area stood at 33.8

million hectares, expanding 1.6% on the previous crop year. Meanwhile, yield should recover by 8.9%.

Figure 11 Brazil: Soybean Yield and Production

Source: USDA

In Argentina, current estimates point to a significant contraction in the soybean planted area in the current crop. According to the Buenos Aires Grain Exchange, the planted area should contract by 4.5% to 19.2 million hectares, due to economic and weather factors. On the economic front, the corn and

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Preço da Soja no Mercado Internacional

Source: ESALQ-USP, CBOT/CMA

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wheat crops, which recently had their export duties reduced to zero, expanded their planted areas at the expense of soybean (which had its export duty cut from 35% to only 30%). The weather also adversely affected Argentina’s soybean planted area: first the lack of precipitation in southern Buenos Aires province, which was followed by floods in the core zone, which affected the size of the planted area and the country's production potential. In the February WASDE report, the USDA revised downward its forecast for Argentina’s production, from 57 to 55.5 million tons.

Figure 12 Argentina: Soybean Production

Source: USDA

CORN

The corn market underwent various periods of turbulence in Brazil during 2016, with prices decoupling significantly from the international market. In 2015, the weaker BRL against the USD supported strong export volumes and inventory drawdowns, which, combined with the substantial shortfall in second-crop corn in 2016, led prices to record highs.

Figure 13 Corn Prices in the International Market vs. Brazil

In the international market, corn prices were pressured in 2016, especially after confirmation of a record crop in the United States, where the planted area expanded 7.4%, combined with a yield at

11.5

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Source: ESALQ-USP, CBOT/CMA

1Q16 2Q16 3Q16 4Q16 Feb 17

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unprecedented levels. As a result, U.S. production reached 385 million tons in 2016/17, representing an increase of 11.4% on the prior year, according to the USDA. Corn prices in Brazil continue to exceed prices in the international market in 2017. Despite the expansion in planted area of first-crop corn, especially given its higher profitability in relation to soybean in certain regions, prices remain above export parity in key markets, with the situation expected to normalize only after the start of the second crop around midyear. According to CONAB, the first-crop corn planted area expanded 1.7% and yield should increase 9.6% compared to the previous crop year. Production should reach 28.8 million tons, an increase of 11.5% in the same comparison. For second-crop corn, CONAB forecasts increases of 4.7% in planted area and 37.5% in yield. Production should grow by 44% to 58.6 million tons. Combining the first-crop and second-crop, total corn production in Brazil should increase 31.4% to 87.4 million tons.

Figure 14 Corn Production in Brazil

Source: CONAB

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OPERATING PERFORMANCE

2016/17 CROP YEAR

4Q16 was marked by the end of soybean planting and beginning of harvesting of super-early soybean varieties in the last week of December, with the consequent start of second crop cotton planting.

Soybean

Total soybean planted area, which comprises approximately 230,000 hectares in the current crop year, in general presents good conditions. As of the base date of March 3, 2017, the total area harvested amounted to 85,189 hectares, 67,494 of which in the Midwest and 17,695 in Maranhão. In Bahia and Piauí, the harvest will begin in mid-March. At all farms, current production potential suggests exceeding initial projections. Figure 15 Harvest operations at the Planalto Farm (Mato Grosso do Sul) in February

Figure 16 Plants (defoliated for analysis) presenting excellent conditions at the Planeste Farm (Maranhão)

Figure 17 Crop with high potential at the Panorama Farm (Bahia)

Figure 18 Crop with excellent pod development at the Planorte Farm (Mato Grosso)

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Cotton 1st crop

The planted area remained within the ideal planting window for each unit, i.e. until the end of December for the units in Mato Grosso do Sul, Goiás and Bahia and until early January for the farms in Maranhão. The areas in Goiás and Bahia are currently in the flowering phase, while the Mato Grosso do Sul and Maranhão region is in the vegetative phase. The crop is presenting excellent production potential. Figure 19 Cotton crop in boll development phase, Palmares Farm (Bahia)

Figure 20Close-up of Figure 19, with excellent boll development

Note: Boll development is one of the main indicators of the cotton crop’s production potential. The number of bolls is directly proportional to the volume of cotton lint produced.

Cotton 2nd crop

The planting of the cotton 2nd

crop began after the harvest of the super-early soybean varieties, which began in the last week of December and was concluded in early February. The crop is in full vegetative development and presents excellent production potential.

Figure 21 Cotton 2nd crop at the Planorte Farm (Mato Grosso)

Cotton Boll

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Corn 2nd

crop The planting of corn 2

nd crop began in the second half of January 2017, since progress was made on

harvesting the super-early and early soybean varieties. The areas already planted are well established

and present good vegetative development.

Figure 22 Corn 2nd crop, with optimal establishment and good plant distribution at the Planeste Farm (Maranhão)

YIELD Table 5 Yields

Yield (kg/ha)

Achivied 2015/16

Initial Estimate 2016/17

∆%

Cotton Lint 1st crop 1,250 1,619 29.5 Cotton Lint 2nd crop 1,389 1,570 13.0 Cotton Seed 1,679 2,055 22.4 Soybean 2,580 3,077 19.3 Corn 2nd crop 5,378 6,877 27.9

PLANTED AREA

The following table presents the latest data on planted area for the 2016/17 crop year and a comparison with the previous season. Table 6 Planted Area by Crop

Crop Mix

Planted Area Planted Area Shares

Δ% 2015/16 2016/17(1) 2016/17 ------------------ ha ------------------ %

Cotton 93,405 87,520 22.1 -6.3

Cotton 1st crop 74,404 58,951 14.9 -20.8 Cotton 2 ndcrop 19,002 28,569 7.2 50.3

Soybean (Commercial + Seeds) 212,586 230,142 58.2 8.3

Corn 2 ndcrop 65,681 72,717 18.4 10.7

Other crops(2) 5,587 4,762 1.2% -14.8

Total Area 377,259 395,141 100.0 4.7 (1)

Weather factors may affect the planted area forecast. (2) Wheat, corn 1st crop, corn seed and sugarcane.

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Table 7 Planted Area by Land Ownership

Area Mix

Planted Area Planted Area Shares 2016/17

Δ% 2015/16 2016/17(1) ------------------ ha ------------------ %

1st crop 290,351 290,651 73.6 0.1 Owned Land 124,807 118,089 29.9 -5.4 Leased Area 93,867 97,929 24.8 4.3 Joint Ventures Area(2) 41,375 38,879 9.8 -6.0 SLC LandCo Area 30,301 35,754 9.0 18.0 2nd crop 86,908 104,490 26.4 20.2 Owned Land 49,318 59,853 15.1 21.3 Leased Area 24,533 25,764 6.5 5.0 Joint Ventures Area(2) 7,570 8,544 2.2 12.9 SLC LandCo Area 5,486 10,330 2.6 88.3

Total Area 377,259 395,141 100.0 4.7 (1) Weather factors may affect the planted area forecast. (2)

Areas owned by Grupo Dois Vales and Mitsui. (3) A SLC Agrícola holds an interest of 81.23% in SLC LandCo.

LAND DEVELOPMENT Over the course of the 2015/16 and 2016/17 crop years, we concluded clearing and soil correction on 2,553 hectares of the Paineira Farm, with the area leaded to a third party. We also concluded clearing operations on 9,993 hectares and soil correction on 6,000 hectares at the Piratini Farm. Table 8 Land Development

SLC Agricola Farms Areas in transformation Areas in licensing process

(ha) (ha) Palmares - 601 Parnaíba - 1,464 Parnaguá 1,005 5,347 Parceiro 9,162 6,698

Sub Total 10,167 14,110

SLC LandCo Farms Areas in transformation Areas in licensing process

(ha) (ha) Parnaíba (1) - 4,749 Piratini 9,993 - Parceiro (1) 1,115 1,530

Sub Total 11,108 6,279

Total 21,275 20,389 (1)

Areas acquired by SLC LandCo to be developed jointly with these farms. Note: The estimate of areas in the licensing process could change due to georeferencing.

LAND PORTFOLIO APPRAISAL

The updated values of the land owned by the company are presented below. There was a slight revision in comparison to the figures that were presented on the 3Q16 Earnings Release. This update was necessary due to the fact that Paineira Farm and also part of Palmares Farm were leased to third parties, and thus were reclassified on the Balance Sheet as “Properties for Investment”. Because of this, these units had to be independently appraised at the end of 2016. With that, there was an increase of R$55,9 million in the total land value of the Company, when compared to the figures disclosed on the previous Release. 2016’s land value update, thus, was done via an independent report (Deloitte), in the cases of SLC LandCo farms, Paineira Farm and also part of Palmares Farm, and other market sources in the case of the other units, which include data from real estate brokerages and specialized magazines, as well as other independent sources.

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The average price per hectare of the Company’s properties, after this revision, appreciated 6.8% compared to the previous year (numbers reported on 3Q16 showed a 5.2% appreciation), excluding variations in areas. Including the land acquisitions between the periods (notably the 13,268 hectares acquired by SLC LandCo in 2015, as announced in the Notice to the Market dated September 24, 2015), the total value of the company's own land portfolio is currently of R$3,741,271 thousand (against R$3,685,361 thousand disclosed on 3Q16).

Table 9 Property Appraisal

2015 Appraisal 2016 Appraisal

Region Total land Appraisal(ha) R$ thd R$/ha Total land Appraisal(ha) R$ thd R$/ha

Midwest 114,159 1,706,260 14,946 127,426 1,911,925 15,004

Northeast 194,561 1,695,580 8,715 195,103 1,829,346 9,376

Total 308,719 3,401,840 11,019 322,529 3,741,271 11,600

PROPERTY PORTFOLIO The portfolio of properties under our management on March 15 is presented below: Table 10 Property Portfolio

2016/17 Crop Year (ha) Owned(1) SLC LandCo(2) Leased Joint

Ventures Under

Control Total Planted

Area(3) Farms State ---------------------------------------- ha ---------------------------------------- Pamplona GO 17,385

3,860

21,245 20,337

Planalto(7) MS 15,006

1,635

16,641 20,503 Planorte MT 23,784

23,784 31,228

Paiaguás MT 34,257

10,295

44,552 65,237 Perdizes(5) MT 28,857 13,288

42,145 23,350

Pioneira(4) MT

19,469 19,462 28,006 Panorama BA

10,374 14,252

24,626 21,793

Paladino(5) BA

19,417 19,417 19,417 Piratini BA

25,355 4,931

30,286 13,377

Palmares BA 16,168 543 15,609

32,320 24,948 Parnaíba(8) MA 31,580 10,200 26,230

68,010 58,177

Planeste MA

23,325 15,591

38,916 48,866 Parceiro BA 32,983 3,680 5,526

42,189 11,588

Paineira (6) PI 12,040

12,040 - Parnaguá PI 24,603

24,603 8,315

Total - 236,663 86,765 97,929 38,879 460,236 395,141 (1)

Own property, includes Legal Reserve. (2)

SLC Agrícola currently owns 81.23% of SLC LandCo, while the Valiance fund owns 18.77%. (3)

Including the second crop. Weather factors may affect the planted area forecast. (4) The Pioneira Farm is part of the joint arrangement with Grupo Dois Vales. (5) The Perdizes and Paladino Farms are part of the joint arrangements with Mitsui in SLC-Mit. (6) Farm leased to third parties. (7) Donation of 2,431 hectares to the Taquari River Headwaters State Park in Mato Grosso do Sul. (8)Termination of the acquisition contract .

MACHINERY AND STORAGE CAPACITY

The following table presents the machinery owned by the Company. Table 11 Machinery and Storage Capacity

Machinery Quantity

Tractors 191 Grain Combines 184 Cotton Pickers 80 Planters 192 Self-propelled sprayers 137

Storage Capacity Grains Cotton Tons 613,700 115,981 % Production 50% 83%

(1) Estimate based on the estimated planted area and yield for 2016/17.

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FINANCIAL

PERFORMANCE

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FINANCIAL PERFORMANCE EBITDA Table 12 EBITDA Conciliation (R$ thousand ) 2015 2016 AH 4Q15 4Q16 AH Net revenue 1,761,581 1,659,649 -5.8% 583,617 629,639 7.9% (-) Cost of Goods and/or Services Sold (1,328,460) (1,413,181) 6.4% (465,867) (424,833) -8.8% Gross Income 433,121 246,468 -43.1% 117,750 204,806 73.9% (-) Sales Expenses (92,070) (97,589) 6.0% (37,240) (35,036) -5.9% (-) General and administrative expenses (58,438) (59,087) 1.1% (16,277) (13,121) -19.4%

(-) Sales Expenses (39,770) (42,894) 7.9% (10,217) (9,260) -9.4% (-) General and administrative (7,940) (2,839) -64.2% (3,248) (1,175) -63.8% (-) Management compensation (10,728) (13,354) 24.5% (2,812) (2,686) -4.5%

(-) Other operating revenues (loss) 2,884 20,523 611.6% 5,415 27,250 403.2% (=) Income from Activity 285,497 110,315 -61.4% 69,649 183,899 164.0%

(+) Depreciation and amortization 106,803 104,242 -2.4% 31,984 27,158 -15.1%

EBITDA 392,300 214,557 -45.3% 101,632 211,057 107.7%

(-) Biological Assets on revenue (note 28*) (279,830) (57,704) -79.4% (31,167) (54,428) 74.6% (+) Biological Assets on costs (note 28*) 227,270 84,933 -62.6% 81,373 2,694 -96.7% (+) Low Fixed Assets - 7,323 100.0% - 625 100.0%

Adjusted EBITDA (1) 339,741 249,109 -26.7% 151,839 159,948 5.3%

Adjusted EBITDA Margin (2) 22.9% 15.6% -7.3 p.p 27.5% 27.8% 0.3 p.p (1) Excludes the effects from Biological Assets, since they are noncash. (2) As a ratio of net revenue excluding the effects from Biological Assets. * Note in the Financial Statements

In 4Q16, Adjusted EBITDA set a new quarterly record, of R$159,948 thousand, with adjusted EBITDA margin of 27.8%, up 0.3 percentage points from adjusted EBITDA margin in 4Q15 (27.5%).

As noted in 3Q16, Adjusted EBITDA in 4Q16 recovered significantly from the previous three quarters, due to the prices contracted in the period (particularly gain/loss from currency hedge), the growth in other operating income due to apportionment of the fair value of property for investment (Paineira Farm, which is currently leased to a third party), in accordance with the independent valuation report (impact of R$20.5 million on EBITDA in the quarter).

In 2016, however, Adjusted EBITDA decreased 26.7%, from R$339,741 thousand in 2015 to R$249,109 thousand in 2016, with a reduction of 7.3 percentage points in EBITDA margin.

This decrease in Adjusted EBITDA is mainly due to the decrease in Gross Income (excluding Biological Assets) from cotton (lint and seed) and soybean, which decreased R$94,391 thousand and R$14,433 thousand, respectively, compared to 2015.

This margin contraction is directly related to the production shortfall in the 2015/16 crop year, as mentioned in recent earnings releases, caused by the severe drought, which affected the yields of all crops.

NET REVENUE

Net Revenue in 4Q16 increased 7.9% on the year-ago period. Excluding the noncash effect from Biological Assets, net revenue advanced 4.1%, due to the increase in invoiced unit price for all crops compared to 4Q15.

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In 2016, Net Revenue excluding the effect from Biological Assets grew 8.1% compared to 2015. Invoiced unit prices increased for all crops, which was partially offset by the 9.8% decrease in invoiced volume due to the production shortfall. Table 13 Net Revenue (R$ thousand) 2015 2016 AH 4Q15 4Q16 AH Net Revenue 1,761,581 1,659,649 -5.8% 583,617 629,639 7.9%

Cotton lint 812,693 749,417 -7.8% 450,106 313,062 -30.4% Cotton seed 85,019 98,902 16.3% 35,464 34,158 -3.7% Soybean 634,055 583,990 -7.9% 72,663 102,474 41.0% Corn 121,877 164,514 35.0% 66,567 58,583 -12.0% Others 59,480 26,361 -55.7% 19,898 5,746 -71.1% Hedge income (231,373) (21,239) -90.8% (92,248) 61,188 n.m. Biological Assets 279,830 57,704 -79.4% 31,167 54,428 74.6%

Table 14 Volume Invoiced (Tons) 2015 2016 AH 4Q15 4Q16 AH Volume Invoiced 1,440,067 1,299,075 -9.8% 418,516 322,418 -23.0%

Cotton lint 158,183 148,429 -6.2% 79,238 61,756 -22.1% Cotton seed 191,566 173,202 -9.6% 77,167 55,261 -28.4% Soybean 634,879 539,570 -15.0% 61,414 85,364 39.0% Corn 335,695 345,691 3.0% 171,625 109,800 -36.0% Others 119,744 92,183 -23.0% 29,072 10,237 -64.8%

Table 15 Biological Assets in Net Revenue (R$ thousand) 2015 2016 AH 4Q15 4Q16 AH Effect of Biological Asset on Net Revenue 279,830 57,704 -79.4% 31,167 54,428 74.6%

Cotton lint 131,818 (40,946) -131.1% (30) - -100.0% Cotton seed 12,657 (4,108) -132.5% (4) - -100.0% Soybean 130,567 81,702 -37.4% 31,201 51,880 66.3% Corn 4,788 21,056 339.8% - 1 100.0% Others - - - - 2,547 100.0%

Biological assets are calculated as follows: market price, net of taxes and selling expenses (freight), less costs incurred.

The amount of biological assets apportioned to net revenue in 4Q16 increased 74.6%, mainly due to the projection for the soybean harvest in January 2017, which incorporates the expectation of higher margin and area in relation to the 2015/16 crop year.

In 2016, the amount of biological assets decreased 79.4% (R$222,126 thousand) for all crops except corn, reflecting the lower margins in 2015/16 compared to 2014/15.

COST OF GOODS SOLD

Cost of goods sold decreased 8.8% in 4Q16 compared to 4Q15. Excluding the effect from biological assets, cost of goods sold increased 9.8% in 4Q16. Despite the lower volume of products invoiced, the increase is due to the higher costs per hectare, combined with the lower yield in the 2015/16 crop year compared to the 2014/15 crop year, which increases unit costs. In 2016, cost of goods sold increased 6.4% from 2015. Excluding biological assets allocated at cost, the increase in relation to 2015 was 20.6%.

This increase is also attributed to the higher cost per hectare and to the lower yield in the 2015/16 crop year compared to the 2014/15 crop year.

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Table 16 Cost of Goods Sold (R$ thousand) 2015 2016 AH 4Q15 4Q16 AH Cost of Goods Sold (1,328,460) (1,413,181) 6.4% (465,867) (424,833) -8.8%

Cotton lint (501,326) (629,116) 25.5% (267,458) (292,868) 9.5% Cotton seed (64,080) (97,913) 52.8% (28,403) (31,735) 11.7% Soybean (419,781) (463,229) 10.4% (30,947) (57,318) 85.2% Corn (81,088) (106,401) 31.2% (40,483) (32,078) -20.8% Other (34,915) (31,589) -9.5% (17,203) (8,140) -52.7% Biological Assets Allocated at Cost (227,270) (84,933) -62.6% (81,373) (2,694) -96.7%

Table 17 Biological Assets in COGS

(R$ thousand) 2015 2016 AH 4Q15 4Q16 AH

Biological Assets Allocated at Cost (227,270) (84,933) -62.6% (81,373) (2,694) -96.7% Cotton lint (94,147) (5,145) -94.5% (59,307) 23,412 n.m. Cotton seed (11,358) 3,109 n.m. (5,477) (660) -87.9% Soybean (116,304) (62,206) -46.5% (12,502) (19,189) 53.5% Corn (5,577) (20,691) 271.0% (4,087) (6,257) 53.1% Other 116 - 100.0% - - -

GROSS INCOME

Table 18 Gross Income (R$ thousand) 2015 2016 AH 4Q15 4Q16 AH Gross income 433,121 246,468 -43.1% 117,750 204,806 73.9% Cotton Lint 154,650 80,209 -48.1% 94,369 76,943 -18.5% Cotton seed 20,939 989 -95.3% 7,061 2,423 -65.7% Soybean 144,876 130,443 -10.0% 41,801 45,156 8.0% Corn 35,531 67,284 89.4% 22,030 30,944 40.5% Other 24,565 (5,228) n.m. 2,695 (2,394) n.m. Biological Assets 52,560 (27,229) n.m. (50,206) 51,734 n.m. Note: To calculate gross margin, the results from Biological Assets allocated to Net Revenue are excluded.

Gross Income in 4Q16 amounted to R$204,806 thousand, with gross margin of 35.6%, an increase of 14.3 percentage points from 21.3% in 4Q15. This increase is significantly influenced by the apportionment of Biological Assets, which increased R$101,940 thousand between the periods. This variation reflects the prospects for high margins for the soybean crop in the 2016/17 crop year compared to 2015/16.

Excluding the effect from Biological Assets, Gross Income decreased 8.9%, mainly due to the lower volume invoiced (except for soybean) and to the higher unit cost for all crops, given the lower yield in the 2015/16 crop year.

Analyzing the 12-month period, Gross Income decreased 43.1% compared to 2015. Excluding Biological Assets, Gross Income decreased by 28.1%.

ANALYSIS OF MARGINS BY CROP

To contribute to a better understanding of margins, in this section, the gain (loss) from currency hedge is allocated among cotton, soybean and corn.

Cotton Lint and Cotton Seed

Of the cotton invoiced in 4Q16, 100% is associated with the 2015/16 crop year.

The unit margin of cotton invoiced in 4Q16 increased 4.6% compared to 4Q15. The increase in unit price in the quarter was partially offset by the increase in unit cost.

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In 2016, margin decreased by 44.7% compared to 2015. The impact from the higher unit costs due to the lower yield in the 2015/16 crop year was greater than the improvement in invoiced prices, leading to margin compression from the year-ago period. Table 19 Gross Margin of Cotton Lint and Cotton Seed Cotton Invoiced 2015 2016 AH 4Q15 4Q16 AH Cotton Lint Invoiced

Volume Invoiced Ton 158,183 148,429 -6.2% 79,238 61,756 -22.1% Net Revenue R$ thousand 812,693 749,417 -7.8% 450,106 313,062 -30.4% Result of currency hedge R$ thousand (156,717) (40,092) -74.4% (88,279) 56,749 n.m.

Net income adj.the res.of cur.hedging R$ thousand 655,976 709,325 8.1% 361,827 369,811 2.2% Unit Price R$ thd / Ton 4,147 4,779 15.2% 4,566 5,988 31.1% Cost Total R$ thousand (501,326) (629,116) 25.5% (267,458) (292,868) 9.5% Unit Cost R$ thd / Ton (3,169) (4,238) 33.7% (3,375) (4,742) 40.5% Unitary Margin R$ thd / Ton 978 541 -44.7% 1,191 1,246 4.6%

Cotton Seed Invoiced Volume Invoiced Ton 191,566 173,202 -9.6% 77,167 55,261 -28.4% Net Revenue R$ thousand 85,019 98,902 16.3% 35,464 34,158 -3.7% Unit Price R$ thd / Ton 440 571 28.6% 460 618 34.5% Cost Total R$ thousand (64,080) (97,913) 52.8% (28,403) (31,735) 11.7% Unit Cost R$ thd / Ton (335) (565) 68.7% (368) (574) 56.0% Unitary Margin R$ thd / Ton 109 6 -94.5% 92 44 -52.2%

Soybean

Soybean unit margin in the quarter decreased 22.3% from 4Q15, mainly due to the increase in unit cost resulting from lower yield in the 2015/16 crop year.

In 2016, margin increased 5.7% from 2015, due to the increase in the unit price of 23.7%, which was partially offset by the increase in unit cost of 30.0%.

Table 20 Soybean Gross Margin Soybeans Invoiced 2015 2016 AH 4Q15 4Q16 AH

Volume Invoiced Ton 634,879 539,570 15.0% 61,414 85,364 39.0% Net Revenue R$ thousand 634,055 583,990 -7.9% 72,663 102,474 41.0% Result of currency hedge R$ thousand (69,398) 9,682 n.m. 85 - 100.0% Net income adj.the res.of cur.hedging hedging R$ thousand 564,657 593,672 5.1% 72,748 102,474 40.9% Unit Price R$ thd / Ton 889 1,100 23.7% 1,185 1,200 1.3% Cost Total R$ thousand (419,781) (463,229) 10.4% (30,947) (57,318) 85.2% Unit Cost R$ thd / Ton (661) (859) 30.% (504) (671) 33.2% Unitary Margin R$ thd / Ton 228 241 5.7% 681 529 -22.3%

Corn

Corn unit margin increased 120.3% in 4Q16 and 83.9% in 2016, mainly due to the increase in unit price, which was partially offset by the increase in unit cost. The price increase is explained by the shortage of corn in the domestic market in 2016, caused by the shortfall in second-crop corn in Brazil. There also was an increase in the volume of sales with freight paid by the Company, which improves the invoice price, though with a proportionate increase in selling expenses, which are not recognized in gross income. Table 21 Corn Gross MarginCorn Invoiced 2015 2016 AH 4Q15 4Q16 AH

Volume Invoiced Ton 335,695 345,691 3,0% 171,625 109,800 -36,0% Net Revenue R$ thousand 121,877 164,514 35,0% 66,567 58,583 -12,0% Result of currency hedge R$ thousand (5,258) 9,171 n.m. (4,054) 4,439 n.m.

Net income adj.the res.of cur.hedging R$ thousand 116,619 173,685 48,9% 62,513 63,022 0,8% Unit Price R$ thd / Ton 347 502,00 44,6% 364,00 574,00 57,7% Cost Total R$ thousand (81,088) (106,401) 31,2% (40,483) (32,078) -20,8% Unit Cost R$ thd / Ton (242) (308) 27.4% (236) (292) 23.7% Unitary Margin R$ thd / Ton 106 195 83.9% 128 282 120.3%

PRODUCTION COST

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The breakdown of our total production costs is shown below: Table 22 Breakdown of Production Cost by Crop

% Cotton Soybean Corn Average 2016/17

Average 2015/16

Variable Costs 79.8 71.1 80.7 76.2 77.0 Seeds 9.5 14.9 22.8 12.7 11.0 Fertlizers 17.3 16.6 32.5 18.1 19.3 Defensives 28.8 22.9 11.3 24.9 28.1 Air Spraying 1.5 1.7 2.2 1.6 1.5 Fuels and Lubrificants 3.8 4.3 4.0 4.0 4.1 Labor 1.3 0.7 0.4 1.0 0.9 Gining 9.1 1.6 2.3 5.6 4.7 Maintenance of machines and instruments 4.2 5.3 3.7 4.6 4.4 Others 4.2 3.0 1.4 3.6 3.1

Fixes Cost 20.2 28.9 19.3 23.8 23.0 Labor 8.9 10.8 7.9 9.6 9.3 Depreciation and Amorrization 4.4 8.3 5.3 6.0 6.5 Leasing 4.9 7.0 4.1 5.8 4.9 Others 2.1 2.8 2.0 2.3 2.3

Our estimates of total production cost per hectare for the 2016/17 crop year are presented below: Table 23 Production Cost per Hectare A B C

Total ( R$/ha)(1) Initial Estimated

2015/16 Achivied 2015/16

Forecast 2016/17

B/A C/A

Cotton 1st crop 7,592 7,096 7,155 -6.5% -5.7% Cotton 2nd crop 6,157 5,868 6,164 -4.7% 0.1% Soybean 2,229 2,206 2,251 -1.0% 1.0% Corn 2nd crop 1,841 1,548 1,781 -15.9% -3.3%

Average total cost (2) 3,271 3,104 3,203 -5.4% -2.1% (1)According to the position on September 30, 2016 (budget amounts). Figures may suffer changes by the end of cotton processing and the sale of grains. (2) Total average cost weighted by area.

In an analysis of cost per hectare in the 2015/16 crop year compared to the budget, the decrease was 5.4% or approximately R$80 million, reflecting the lower yield and actions to contain costs. Total average production cost per hectare estimated for the 2016/17 crop year presented a slight decrease of 2.1% in relation to the budget for the 2015/16 crop year, despite inflation of approximately 6% in the period.

SELLING EXPENSES

Selling expenses decreased 5.9% in 4Q16 compared to 4Q15, due to the lower volume of cotton invoiced in the period. In 2016, selling expenses increased 6.0% from 2015, mainly due to the higher volume of corn invoiced in the period with freight paid by the company.

Table 24 Selling Expenses (R$ thousand) 2015 2016 AH 4Q15 4Q16 AH

Freight 45,441 52.353 15.2% 22,850 22,825 -0.1% Storage 17,559 18.515 5.4% 3,253 3,505 7.7% Commissions 6,951 5.342 -23.1% 1,231 704 -42.8% Classification of Goods 1,844 1.916 3.9% 907 822 -9.4% Export Expenses 19,844 15.988 -19.4% 8,875 6,953 -21.7% Others 431 3.475 706.3% 124 227 83.1%

Total 92,070 97.589 6.0% 37,240 35,036 -5.9%

% Net Revenue 6.2% 6.1% -0.1 p.p 6.7% 6.1% -0.6 p.p (1) As a ratio of net revenue excluding the effects from Biological Assets.

GENERAL AND ADMINISTRATIVE EXPENSES

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In 4Q16, General and Administrative Expenses decreased 9.4% from 4Q15, but increased 7.9% in relation to 2015. These changes are shown in table 25, in the line Subtotal, before expenses with Profit Sharing, since it varies in accordance with the Company’s net income expectation.

In the quarter and year, the main changes were in the following items:

(i) Personnel Expenses: a. 4Q16: decrease in allocation resulting from stock option plans; b. 2016: increase due to wages increases under the collective bargaining agreement;

(ii) Third-party fees: a. 4Q16: decrease due to lower costs with land appraisal services; b. 2016: higher expenses with tax legal advisory, consulting and external audit

services; (iii) Higher expenses with software maintenance due to contractual increases and the

effects from currency fluctuations, with impacts in the quarter and year; (iv) Decrease in expenses with depreciation and amortization due to the end of the

useful life of software assets, with effects in the quarter and year; (v) Increase in Contingencies due to new labor claims.

General and Administrative Expenses corresponded to 2.9% of Net Revenue in 2016, compared to 3.2% in 2015 (excluding Biological Effects), a decrease of 0.3 p.p.

Table 25 General and Administrative Expenses

(R$ thousand) 2015 2016 AH 4Q15 4Q16 AH Expenses with personnel 20,101 22,090 9.9% 5,460 4,313 -21.0% Fees 3,327 3,843 15.5% 1,028 888 -13.6% Depreciations and amortizations 3,025 2,088 -31.0% 772 347 -55.1% Expenses with travels 1,505 1,369 -9.0% 365 257 -29.6% Software maintenance 2,520 3,585 42.3% 727 996 37.0% Marketing/Advertisement 1,668 1,947 16.7% 426 559 31.2% Expenses with Communications 2,437 2,357 -3.3% 647 645 -0.3% Rentals 956 893 -6.6% 212 198 -6.6% Labor, Tax and Environmental Contingencies (206) 832 -503.9% (473) 260 n.m. Electricity 125 147 17.6% 33 34 3.0% Taxes and other fees 464 388 -16.4% 83 54 -34.9% Contribuitions and donations 1,332 997 -25.2% 313 304 -2.9% Other 2,515 2,358 -6.2% 623 405 -35.0%

Subtotal 39,769 42,894 7.9% 10,216 9,260 -9.4% Provision for profit share program 7,940 2,839 -64.2% 3,248 1,175 -63.8%

Total 47,709 45,733 -4.1% 13,464 10,435 -22.5%

% Net Revenue 3.2% 2.9% -0.3 p.p 2.4% 1.8% -0.6 p.p (1) As a ratio of net revenue excluding the effects from Biological Assets.

NET FINANCIAL INCOME (EXPENSE)

Table 26 Net Financial Income (Expense) (R$ thousand) 2015 2016 AH 4Q15 4Q16 AH Revenues (expenses) with derivatives 102,041 (127,608) n.m. (30,316) (1,186) -96.1% Interest (66,182) (67,307) 1.7% (14,194) (22,483) 58.4% Monetary variation (1,219) (1,037) -14.9% 413 519 25.7% FX variation (145,583) 93,487 n.m. 21,885 905 -95.9% Other financial revenues (expenses) (7,901) (12,011) 52.0% (1,539) (4,154) 169.9%

Total (118,844) (114,476) -3.7% (23,751) (26,399) 11.1%

% Net Revenue -8.0% -7.1% 0.9 p.p -4.3% -4.6% -0.3 p.p (1) As a ratio of net revenue excluding the effects from Biological Assets.

Table 27 Gains (Losses) from Derivative Operations

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(R$ thousand) 2015 2016 AH 4Q15 4Q16 AH Swap of debt in Dollar to Reais 92,268 (129,887) n.m. (21,388) (1,186) -94.5% Swap of Financial asset in Reais to Dollar 10,365 - -100.0% (7,575) - -100.0% Commodities Hedge (229) 13 n.m. (1,353) - -100.0% FX Hedge (not designed as hedge accounting) (363) 2,266 n.m. - - -

Total 102,041 (127,608) n.m. (30,316) (1,186) n.m. Note: As per Note 22 to the Financial Statements. Note that, since a portion of debt in USD was swapped to BRL and another portion is designated as hedge accounting, so that the effects of exchange variation are recorded as Sales Revenue and only after payment of the principal, the effects from exchange variation on dollar-denominated debt does not affect Net Financial Income (Expense) when we analyze the aggregate figures, since any gains and losses on such debt not allocated to hedge accounting are offset by gains/losses in an equal proportion to the respective swap. For a better understanding of this impact, we suggest analyzing below Table 28 - Adjusted Net Financial Income (Expense). Table 28 Adjusted Net Financial Income (Expense) (R$ thousand) 2015 2016 AH 4Q15 4Q16 AH Gain and Losses with derivates (66,182) (94,903) 43.4% (14,194) (26,648) 87.7% Interest and FX variation net of swap operation (43,542) (6,525) -85.0% (8,431) 3,884 n.m. Monetary Variation (1,219) (1,037) -14.9% 413 519 25.7% Other financial revenues (expenses) (7,901) (12,011) 52.0% (1,539) (4,154) 169.9%

Total (118,844) (114,476) -3.7% (23,751) (26,399) 11.1%

% Net Revenue(1) -8.0% -7.1% 0.9p.p. -4.3% -4.6% -0.3p.p (1) As a ratio of net revenue excluding the effects from Biological Assets.

In 4Q16, we recorded a net financial expense of R$26,399 thousand, compared to an expense of R$23,751 thousand in 4Q15, representing an increase of 11.1% or R$2,648 thousand. The main variations included an exchange variation gain of R$3,884 thousand, compared to a loss of R$8,431 thousand in 4Q15, when the BRL appreciated against the USD. Interest increased in the period, from R$14,194 in 4Q15 to R$26,648 in 4Q16, mainly due to the lower interest rate in the period. In addition, in 4Q15 the gain of R$7,575 from the Swap from BRL to USD (see Table 27) contributed to a reduction in net interest, which did not occur in 4Q16, since the transaction was settled.

In 2016, we recorded a net financial expense of R$114,476 thousand, compared to an expense of R$118,844 thousand in 2015, a decrease of 3.7%. The main changes were in interest, due to the higher average debt balance in 2016 compared to 2015 and to the higher interest rate, with these factors partially offset by the lower exchange variation, due to the fluctuation in the exchange rate between the periods. The increase of R$4,110 in Other financial expenses in 2016 was due to the discount on ICMS sale, which did not occur in 2015.

NET INCOME Table 29 Net Income(R$ thousand) 2015 2016 AH 4Q15 4Q16 AH Income before Income Tax 166,654 (4,161) n.m. 45,898 157,500 243.2% Income Tax and Social Contribution (45,483) 19,802 n.m. (10,563) (43,452) 311.4%

Net Income for the period 121,171 15,641 -87.1% 35,335 114,048 222.8%

Attributed to the Parent company’s partners 122,528 29,945 -75.6% 35,020 112,574 221.5%

Attributed to non-controlling partners (1,358) (14,304) -953.3% 314 1,474 369.4%

% Net Revenue(1) 8.2% 1.0% -7.2p.p. 6.4% 19.8% 13.4p.p. (1) As a ratio of net revenue excluding the effects from Biological Assets.

Net Income in 4Q16 increased 222.8% compared to 4Q15, from net income of R$114,048 thousand compared to net income of R$35,335 thousand in 4Q15, setting a new record for quarterly net income.

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As we anticipated in the 3Q16 Earnings Release, Net Income in 4Q16 recovered significantly from the previous three quarters, due to the prices contracted in the period (particularly currency hedge), as well as to the growth in other operating income due to apportionment of the fair value of property for investment (Paineira Farm, which is currently leased to a third party), in accordance with the independent valuation report (impact of R$19.8 million on Net Profit of the quarter). As such, we ended 2016 with Consolidated Net Income of R$15,641 thousand, down 87.1% from 2015. Net Income attributed to the Parent Company, which is the most important result for the Company's shareholders, stood at R$29. 9 million. Despite the sharp drop, the result is still considered satisfactory considering the extremely challenging weather conditions we faced all year (most intense El Niño phenomenon of the last 50 years). The fact that Net Income was positive demonstrates the effectiveness of the series of internal initiatives taken to ensure the Company's continued financial health, which included: reducing the investment plan and intense efforts to cut costs and expenses without losing efficiency. Furthermore, free cash flow in the period was a record R$208.7 million, reflecting Management’s commitment to prioritizing financial solidity.

CURRENCY AND AGRICULTURAL COMMODITY HEDGE

The Company’s sales revenues are generated mainly by the trading of agricultural commodities such as cotton, soybean and corn, which are quoted in U.S. dollar on international exchanges, such as the Chicago Board of Trade (CBOT) and the Intercontinental Exchange Futures US (ICE). Therefore, we are actively exposed to variations in foreign exchange rates and in the prices of these commodities. To protect from currency variation we use derivative instruments, with the portfolio of these instruments basically comprising non-deliverable forwards (NDFs) and option contracts. In line with the Company’s Risk Management Policy, whose purpose is to obtain a pre-established Adjusted EBITDA margin with a combination of factors such as Price, Foreign Exchange and Cost, most of the instruments for protecting against commodity price variation are accomplished through advanced sales directly with our clients (forward contracts). We also use futures and options contracts negotiated on the exchange and swap and option transactions contracted with financial institutions. The mark-to-market adjustments of future, swap and option transactions are recorded under financial income (expense). The hedge position on Feb. 24, 2017 for commodities (in relation to the estimated total volume invoiced) and currency (in relation to the total estimated revenue in U.S. dollar) is shown below broken down by commercial hedge and financial hedge:

Table 30 Currency and Agricultural Commodity Hedge Fiscal Year 2017 2018

FX Rate(1) Hedge (%) R$/ US$ Hedge (%) R$/ US$

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FX Hedge 63.8 3.7012 8.1 3.7575 Commitments(1) 5.4 1.8790 2.7 1.9418

Total 69.2 3.5594 10.8 3.3040

Cotton Hedge (%) US¢ / pound (2) Hedge (%) US¢ / pound(2) Commercial Hedge 73.0 73.86 34.0 75.6 Financial Hedge(4) 21.9 74.05 1.0 79.0

Cotton – Total Hedge 94.9 73.91 35.0 75.7

Soybean Hedge (%) US$/ bushel(2) Hedge (%) US$/ bushel(2) Commercial Hedge 53.0 10.6 10.0 10.7 Financial Hedge(4) - - - - Commitments(3) 5.0 - 9.0

Soybean – Total Hedge 58.0 10.6 19.0% 10.7 (1) Commitments with debt payments in U.S. dollar. (2) Based on FOB Port (prices at our production units are also influenced by transport expenses and possible quality discounts). (3) Natural hedge with payments related to land acquisitions and leasing agreements in soybean bags. (4) Includes transactions involving futures, swaps and accumulators. Reference price on 03/02/2017: Cotton ICE July/17 US¢/lb 79.22-. Cotton ICE DEC/17 ¢/lb 74.98 - Soybean 10.45, Soybean CBOT May/17 US$/bushel.

PROPERTY, PLANT AND EQUIPMENT / INTANGIBLE ASSETS

The main investments in 4Q16 were:

(i) Acquisition of agricultural machinery and tools at the Pamplona, Planeste and Perdizes farms;

(ii) Buildings and facilities, mainly at the Pamplona, Planeste, Perdizes and Parnaguá farms.

(iii) Soil correction at the Planeste, Perdizes and Parnaíba farms. Table 31 CAPEXCAPEX (R$ thousand) 2015 AV 2016 AV 4Q16 AV Machinery, implements and equipment 32,767 16.4% 25,864 33.2% 6,504 32.2% Land Acquisition 85,579 42.8% 2 0.0% - 0.0% Soil Correction 23,743 11.9% 14,585 18.7% 3,780 18.7% Building and facilities 24,435 12.2% 17,903 23.0% 4,596 22.7% Cotton ginning plant 4,313 2.2% 1,015 1.3% - 0.0% Grain Storage 10,954 5.5% 954 1.2% - 0.0% Soil Cleaning 11,742 5.9% 11,855 15.2% 3,468 17.2% Vehicles 2,912 1.5% 1,110 1.4% 363 1.8% Software 897 0.4% 1,813 2.3% 1,027 5.1% Others 2,671 1.3% 2,886 3.7% 467 2.3% Total 200,013 77,987 20,204

FINANCIAL NET DEBT

Adjusted net debt in 2016 decreased 22.0% to R$852,854 thousand, from R$1,093,757 thousand in 2015. The main variations were:

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(i) Operating Cash Generation of R$208.7 million, as shown in Exhibit 5 of this earnings release;

(ii) Non-cash effect from exchange variation on USD operations not swapped (gain of R$37 million). This variation was designated as hedge accounting and as such

recognized as Sales Revenue, upon maturity.

A highlight was the increase in the Rural Credit and Constitutional Funds compared to 2015 in the amount of R$154 million and R$48 million, respectively, due to the higher availability of these financing facilities in the market.

Table 32 Financial Net Debt Average Interest Rates (%) Consolidated

(R$ thousand) Index 2016 2015 2016 2015 Applied in Fixed Assets Finame – BNDES Pré and TJLP¹ 7.25% 6.21% 177,635 175,494 Constitutional Funds² Pré 7.23% 7.34% 6,980 11,137 Financing of Investments US$+ Libor³ 6.38% 5.89% 3,787 13,559

188,401 200,190

Applied in working capital Rural Credit Pré 12.82% 9.45% 479,468 325,424 Constitutional Funds² Pré 10.50% 9.44% 311,987 263,952 Working Capital Pré 0% 15.53% - 20,447 Working Capital CDI 14.73% 15.05% 348,660 518,445 External Loans CDI 14.82% 15.21% 416,010 242,204 External Loans US$, Libor³+Pré 5.50% 4.91% 156,718 308,215

1,712,844 1,678,687

Total Indebtedness 12.07% 10.72% 1,901,245 1,878,877

Gain and losses with deivates connected with applications and debts(5)

(16,115) 83,661

(=) Adjusted Debt 1,917,360 1,795,216

(-) Cash 1,064,506 701,460

(=) Adjusted Debt 852,854 1,093,757

EBITDA of last 12 months

249,109 339,740

Adjusted Net Debt/Adjusted EBITDA(4) 3.42x 3.22x

Adjusted Net Debt/NAV 21.8% 30.6%

(1) Long-Term Interest Rate (TJLP) (2) To calculate the average cost of the Constitutional Funds, we considered a discount of 15% relative to the performance bonus applicable to these operations. (3) London Interbank Offer Rate (Libor): Interest rate charged by London banks used as a reference for most loans in the international financial system. (4)

Adjusted EBITDA in the last 12 months. (5) Transactions with gains and losses from Derivatives (note 19 of the Quarterly Information).

The Adjusted Net Debt/Adjusted EBITDA ratio increased slightly throughout 2016, from 3.22 times in 2015 to 3.42 times in 2016, since, despite the 26.7% decrease in Adjusted EBITDA, Adjusted Net Debt decreased 22.0%, which was mainly due to the stronger BRL and to the measures adopted by the Company to mitigate the effects from weather problems, such as reducing and postponing CAPEX and OPEX. The Adjusted Net Debt/Net Asset Value ratio ended the quarter at 21.8%, compared to 30.6% in 2015.

Figure 23 Gross Debt Profile in 4Q16

Figure 24 Amortization Schedule of Adjusted Net Debt in 4Q16

1) Weighted average debt cost in BRL. (2) Weighted average debt cost in USD

INDICATORS

The Company believes that the calculation of Return on Equity, Return on Net Assets and Return on Invested Capital should consider, in addition to operating income in the period, the net annual appreciation (based on the report of an independent auditor prepared every year) in the value of its land.

1,162,534

398,606

263,391

24,760 21,602 46,469

2017 2018 2019 2020 2021 After 2011

12.67%(1)

61.2%

38.8%

91.6%

8.4%

Short Term Long Term R$ US$

5,42(2)

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Table 33 Return on Equity (R$ million) 2010 2011 2012 2013 2014 2015 2016 Net Profit 59 160 38 97 70 121 16 Net Land Appreciation SLC Agricola(1) -36 179 222 313 396 108 78 Net Land Appreciation LandCo (1)(2) - - 48 61 32 32 69 Subtotal 23 339 308 471 498 261 163

Shareholder’s Equity(3) 1,839 2,063 2,407 2,924 3,608 3,748 4,065

Return on Equity 1.3% 16.4% 12.8% 16.1% 13.8% 7.0% 4.0% (1) Based on independent (Deloitte), and internal appraisal , net of taxes, updated in June 2016. (2) Adjusted by the interest of 81.23% held by SLC Agrícola in SLC LandCo. (3) Adjusted by the appreciation in the value of land properties.

Table 34 Return on Net Assets (R$ million) 2010 2011 2012 2013 2014 2015 2016 Net Profit 59 160 38 97 70 121 16 Net Land Appreciation(1) (36) 179 271 373 428 140 147 Subtotal 23 339 309 470 498 261 163

Invested Capital 2,598 3,196 3,635 4,113 4,696 4,906 4,805

Working Capital 395 504 626 641 733 628 561 Fixed Asset(2) 2,203 2,692 3,009 3,472 3,963 4,278 4,244

Return 0.9% 10.6% 8.5% 11.4% 10.6% 5.3% 3.4% (1)

Based on independent (Deloitte), and internal appraisal , net of taxes, updated in June 2016. (2) Adjusted by land-price appreciation.

Table 35 Return on Invested Capital (R$ milion) 2010 2011 2012 2013 2014 2015 2016 Operating Income 126 257 145 150 190 285 110 Taxes (38) (87) (72) (35) (40) (78) 20 Adjusted Operating Income 88 170 73 116 150 207 130 Net Land Appreciation(1) (36) 179 270 374 428 140 147

Operating Result 52 349 343 490 578 347 277

Invested Capital 2,110 2,527 2,987 3,753 4,329 4,788 4,856

Gross Debt(2) 450 640 811 1,170 1,332 1,711 1,807 Cash(2) 110 131 157 376 355 671 1,016

Net Debt (2) 339 509 654 794 977 1,040 791

Shareholder’s Equity (3) 1,771 2,018 2,333 2,781 3,352 3,748 4,065

Return on Invested Capital 2.5% 13.8% 11.5% 13.0% 13.3% 7.2% 5.7% (1) Based on independent (Deloitte), and internal appraisal , net of taxes, updated in June 2016.

(2) Adjusted by the interest held in the subsidiaries. (3) Adjusted by land-price appreciation.

Table 36 Net Asset Value (R$ million) 2016 SLC Agrícola Farms (1)

2,704

SLC LandCo Farms(2) 638 Infrastructure (excl.land) (3)

768

Accounts Receivable (excl. derivates) (3)

177 Investories (3)

462

Biological Assets (3)

478 Cash (3)

1,016

Subtotal

6,244 Suppliers (3)

405

Adjusted Gross Debt (3)(4)

1,807 Outstanding debt related to land acquisitions (3)

76

Subtotal

2,288

Net Asset Value

3,956

Net Asset Value per share 40.0 (1) Based on an internal study considering market information updated in June 2016, net of taxes. (2) Based on the independent appraisal report (Deloitte), net of taxes, updated in June 2016 and adjusted by the interest held by SLC Agrícola in the subsidiary.

(3) Adjusted by the interest held by

SLC Agrícola in the subsidiaries. (4)

Gross Debt adjusted by operations with derivative instruments and the interest held by SLC Agrícola in the subsidiaries.

Table 37 Changes in Working Capital Working Capital (R$ thousand) 2013 2014 2015 2016 Asset

Trade Account Receivable 85,334 143,759 228,024 185,538 Hedge Accounting (Non-Cash) (5,278) (8,936) (26,639) (99,963)

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Inventories 514,819 622,101 782,192 486,425 Biological Assets + (Non Cash) (42,280) (20,185) (58,164) (12,093) Recoverable Taxes 78,361 98,566 89,321 66,727 Biological Assets 378,481 374,372 423,705 521,174 Biological Assets + (Non Cash) (27,009) (17,684) (31,200) (50,693) Expenses incurred in advance 3,793 2,712 5,469 7,721 Subtotal 986,221 1,194,705 1,412,708 1,104,836

Liabilities

Suppliers 236,217 312,759 398,860 439,735 Tax and Social Obligations 27,480 24,270 20,465 23,303 Other 223,444 207,794 376,498 204,675

Land Payables (126,494) (49,689) (75,564) (81,813) Hedge Accounting (Non-Cash) (31,433) (51,651) (120,544) (56,604)

Provisions 16,187 17,724 20,415 15,022 Subtotal 345,401 461,207 620,130 544,318

Total 640,820 733,498 738,578 560,518

Change in WC 10,017 92,678 5,080 (178,060)

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DIVIDENDS A meeting of the Board of Directors held on this date (March 15, 2017) approved the Management Proposal to be submitted to the next Annual Shareholders’ Meeting to be held on April 26, 2017. In accordance with Brazilian Corporation Law and with the Bylaws of the Company, management proposes the following distribution of net income for fiscal year 2016: Table 38 Proposed Dividend Distribution

(R$) 2016 2015

Net Income for the year 29,944,844.33 122,527,790.25

Appropriation of Legal Reserve 1,497,244.22 6,126,389.51

Calculation base for the dividends proposed 28,447,640.11 116,401,400.74

Minimum Compulsory Dividend 25% 7,111,910.03 29,100,350.19

Additional Prpoposed Dividend 25% 7,111,910.03 29,100,350.19

Proposed Dividends 14,223,820.06 58,200,700.38

% on Net Income for the year 50% 50%

Balance of Net Income to Others Reserves 14,223,820.06 58,200,700.38

Others Comprehensive Income 7,213,158.92 8,471,624.19

Calculation Base for Expansion Reserve 21,436,978.98 66,672,324.55

Appropriation of Expansion Reserve 21,436,978.98 66,672,324.55

The following chart shows the history of distribution of dividends by the Company:

Figure 25 History and Proposition - Dividends

8 11 7 16 62 15 38 27 58 14

5.1%

0.7%0.4%

0.7%

4.1%

0.8% 0.8%

2.0%

4.2%

1.0%

-4,0%

6,0%

0

10

20

30

40

50

60

70

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

R$

MM

Dividends ( R$ million) Dividend Yield ( última dia útil do ano)

40%2011 - 2014

50%2015 - 2016

% Adjusted Net Income

25%2007 - 2010

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CAPITAL MARKETS In 2016, the stock of SLC Agrícola (SLCE3) dropped 8%, compared to the 48% increase in the Bovespa Index (IBOVESPA). In 2017 as of march 14, SLCE3 appreciated 19%, against 9% increase of Bovespa Index (IBOVESPA) The Company has 98,897,500 thousand shares outstanding, of which 48.7% is free-float traded on the Novo Mercado segment of the São Paulo Stock Exchange (BM&FBOVESPA).

Figure 26 SLC x Ibovespa

In the last six years, the company has been recognized by Institutional Investor magazine in the Agribusiness industry. In 2016, we were recognized in the following categories:

Best Investor Relations Program, first place, elected by sell-side analysts, and third place, elected by buy-side analysts;

Best CEO, second place, elected by sell-side analysts, and third place, elected by buy-side analysts;

Best CFO, second place, elected by sell-side analysts, and third place, elected by buy-side analysts;

Best IR Professional, first place, elected by sell-side analysts, and second place, elected by buy-side analysts.

Best IR Team, first place, elected by sell-side analysts, and second place, elected by buy-side analysts.

80

100

120

Ja

n-1

7

Fe

b-1

7

Ma

r-1

7

SLCE3 IBOV

Base 100 -Source: BM&FBOVESPA/ CMA - Update 03/14/2017

+19%

+9%

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PEOPL

E SUSTAINABILITY

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PEOPLE

People development is an integral part of the corporate DNA of SLC Agrícola. With over 2,700 employees, communication and trust are the foundation of good work performance. We value our employees by offering a comprehensive benefit package, profit sharing, a career and salary advancement plan, continuous education, workplace safety, recognition for years of service and promoting quality of life. Internal campaigns are conducted to encourage Security, Innovation and Quality of Life in the Workplace. We also carry out practices to meet our commitments to preventing accidents, preserving the environment, promoting ethics and sustainable development. Guided by this objective, we encourage our employees to work as volunteers through the Social and Environmental Action Group (GAS) implemented at all units, where citizenship projects related to environmental and social issues are carried out, with a focus on improving the quality of life of local communities. Also at the units, SLC Agrícola works to promote the inclusion of persons with disabilities in the workplace through the Semear Program.

Social and Environmental Action Group (GAS)

Formed by volunteer employees, the Social and Environmental Action Group (GAS) was created to develop social projects and initiatives with organizations in need, seeking to contribute to the growth and quality of life of these institutions. The company and its employees take part in social programs that aim to achieve these goals and provide the community with brighter prospects by contributing and fulfilling their social role.

Furnishing Lives Project

Volunteer employees from the Social and Environmental Action Group (GAS) organize, with the support

of the Company, workshops on producing shower chairs made from PVC adapted for children with

multiple disabilities who received assistance from Kinder, a philanthropic organization in the city of

Porto Alegre. Visit the following link to learn more about the project:

https://www.youtube.com/watch?v=vV0ZgfRR654.

Semear Program

The Semear Program was developed by the Human Resources Department to raise awareness among employees and leaders on fostering the inclusion of persons with disabilities at their units. Initiatives included producing a video and textbook for the Semear Program, lectures, workshops, training teams on sign language and hiring interpreters for communication meetings.

Certifications

SLC Agrícola has five units certified by the standard ABNT NBR 16001:2012 Social Responsibility and aims to have ten farms certified by 2020. The certification process is integrated with that of the Environmental Responsibility certifications: ISO 14 001: 2004 Occupational Health and Safety: OHSAS 18 001: 2007.

Recognition

These certifications, combined with the continuous pursuit of best practices in processes and products by raising awareness and adopting efficient people management programs, led SLC Agrícola to be recognized for its practices. In 2016, the Company was elected by its employees one of the 10 Best Companies to Work For in Rio Grande do Sul (Great Place to Work) and received the Top Human Being Award from the Brazilian Human Resources Association in Rio Grande do Sul (ABRH-RS) for the internal communication case study “Our Way of Being.”

Employees

https://www.youtube.com/watch?v=vV0ZgfRR654

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In 2016, we ended the year with a total 2,764 employees, of which 2,289 were permanent and 475 were seasonal workers. In 2015, we ended the year with 3,016 employees (2,343 permanent and 673 seasonal workers).

Our employee turnover rate has been declining over the past two years, to 22.9% in 2015 and 18.9% in

2016.

The following chart presents a breakdown of the workforce by geographic location on the base date of

December 31, 2016:

Figure 27 Breakdown of workforce by geographic location

Educational level profile:

Table 39 Educational level by number of employees

Complete High School 799 Complete Elementary School 437 Elementary School – 5th to 8th grade 312 Complete Technician 304 College Education 219 Incomplete High School 214 Elementary School - 4 Complete 154 Elementary School - 4 Incomplete 130 Incomplete College Education 76 Post Graduate 66 Incomplete Technician 26 Illiterate 17 Masters Degree 8 Doctorate Degree 2

Total 2,764

Investments in Training and Development of Continued Education

RS8%

GO7%

BA24%

MA24%

MS6%

MT28%

PI3%

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Figure 28 Manager Development

Figure 29 Operational Training

Our employees can use tools such as distance learning and other structured methods to support their career advancement within the company. Aligned with the Organizational Competencies and value assessment, they can plan their career based on the experiences they amassed and knowledge they acquired through our annual investments in training and development for both leaders and the teams in general. The company has a Leader Academy, which works to develop leaders, successors and potential leaders in the organizational competencies essential to the business, with a view to preparing them to work strategically. The academy also offers career guidance and Leader Performance Management, the latter a program involving competency assessments employing a 180° methodology as well as value assessments. The program generates positive results in our talent matrix and involves the calibration committee for updating the Company's Succession Plan and the subsequent individual feedback, which is a process conducted annually. Attracting, developing and retaining employees are key to the company’s performance. Through the Internship Program and Trainee Program, we have built a network with agribusiness vocational schools across the country to support the hiring of new professionals to complement our team. In this way, we guarantee our Big Dream of “positively impacting future generations.” In 2016, the company had 20 trainees and 97 interns. As recognition of the various actions executed, in 2016, SLC Agrícola was recognized by Great Place to Work as one of the ten best companies to work for in Rio Grande do Sul.

111 h/emp 55 h/emp

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Career Opportunity and Development

More than 75% of leadership positions at SLC Agrícola are held by employees who were promoted.

Figure 30 Profile of Leadership Positions

SUSTAINABILITY

Environment and Sustainability

Sustainability Policy SLC Agrícola is committed to preventing accidents, promoting ethical conduct and sustainable development and preserving the environment in all aspects, for which it works to continually improve its processes and products, raise awareness and adopt effective programs. To achieve this, it undertakes the following commitments to its stakeholders:

To continuously improve our processes and systems.

To ensure, as a minimum standard, the compliance of the activities of SLC AGRÍCOLA S.A. with applicable legal and other requirements related to the safety and health of employees and to the company’s environmental and social aspects.

To minimize risks and prevent pollution, accidents and other incidents by adopting appropriate practices for:

the efficient use of natural resources; the reduction wastewater and gaseous effluents; the reuse, recycling and proper disposal of solid waste generated; the elimination of unsafe work conditions and the pursuit of “zero accidents”;

To promote ethics and sustainable development through: stakeholder engagement; tolerance of different opinions; not discriminating and respecting human rights; fair compensation; combating child and forced labor; accountability, transparency and ethical conduct.

To assume its leadership position in building a safe, environmentally adequate and socially responsible workplace.

To thoroughly investigate all environmental and occupational accidents on the farms owned by SLC AGRÍCOLA S.A.

75.9%

Promoted employees

24.1%

External Recruitment

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To inform service providers that carry out any kind of activity in its facilities, of the need to comply with internal rules and those related to social responsibility, the environment and occupational safety and health.

To maintain and implement projects to raise awareness on environmental, occupational and social responsibility issues across all levels of the organization, including professionals and other people acting on behalf of SLC AGRÍCOLA S.A.

Management and Certification Systems For more than nine years, we have adopted the use of an Integrated Management System (IMS) that complies with the international standards ISO 14001 OHSAS 18001 and the Brazilian standard NBR 16001. The activities of the IMS include addressing issues that go beyond mere legal compliance to focus on aspects related to the Environment, Occupational Health and Safety and Social Responsibility. The system is implemented and certified at the Planalto (Mato Grosso do Sul), Paiaguás and Planorte (Mato Grosso), Panorama (Bahia) and Pamplona (Goiás) farms, and is in the final implementation stage at the Parnaíba and Planeste (Maranhão) farms. Practices linked to this management system are being complied with by the employees, suppliers and outsourced service providers at these units. The plan is to extend the implementation of this system to the other production units of the Company, with the process expected to be concluded at 10 units by year-end 2020. In 2012, the Planalto Farm became the first agricultural company to be simultaneously certified by the international standards 14001 and OHSAS 18001 and by the Brazilian standard NBR 16001. SLC Agrícola’s sustainable production practices are also demonstrated by the agricultural production certifications that it holds, which include those for soybean (RTRS) and cotton (BCI and ABR).

5S Program Actions to raise environmental awareness involve all of the Company’s employees as well as their family members, and include lectures or seminars and environmental education classes at schools to encourage the adoption of the 5S phases along with the 3 Rs (Reduce, Reuse and Recycle waste). The purpose is to show the importance of preserving the environment, as well as the simplicity of the methods adopted and the returns generated by the project. 5S is a method for organizing the workplace. The letter “S” in 5S comes from Japanese and relates to the following words: SEIRI – Sort: eliminate all unused and obsolete objects; SEITON – Streamline: arrange things in their proper places with a view to increasing efficiency; SESIO – Cleanliness: keep the environment clean and conduct regular maintenance; SEIKETSU – Hygiene and Workplace Safety: practice safe acts and maintain good relationships in the work environment; SHITSUKE - Discipline: adopt the other S phases as a regular routine.

Sustainability: An Organizational Competency Sustainability is one of the competencies required and developed in all leadership levels at the Company. It is attributed great importance because it is one of the main pillars of the Company's growth and perpetuity. Leaders are encouraged to increasingly consider sustainable development in the planning, implementation and operation of their projects or areas. This involves knowing legal, regulatory and technical aspects, minimizing social, economic and environmental impacts, using resources rationally and the interaction of their projects with society. Promoting sustainability helps to ensure the desired level of profitability, legal security, risk management and reductions in non-compliance and future losses.

Sustainability in the Organizational Climate Survey Conducted every two years among all of the Company's employees, the Climate Survey is an excellent tool for assessing employee's perceptions and level of satisfaction with regard to various aspects of the Company, including Sustainability. The opportunities for improvement identified in areas related to Sustainability are addressed through action plans developed in cooperation with all areas of the Company.

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SUBMISSION TO THE ARBITRATION CHAMBER The Company submits to arbitration by the Novo Mercado Arbitration Chamber, as per the arbitration clause in its Bylaws.

RELATIONSHIP WITH THE INDEPENDENT AUDITORS KPMG Auditores Independentes was engaged by the Company to conduct the external audit of its financial statements. In compliance with CVM Instruction 381/03, we inform that in 2016 the audit firm did not provide services other than those related to the external audit whose fees exceeded 5% of the total fees received for this service.

LOCATION OF UNITS

DISCLAIMER This release makes statements concerning future events that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of our Management and on the information currently available to the Company. Forward-looking statements include information on our current plans, beliefs or expectations, as well as those of the Company’s directors and officers. Forward-looking statements include information on potential or assumed operating results as well as statements that are preceded, followed by or include the words "believe," "may," "will,” "continue," "expect," "project," "intend," "plan," "estimate" or similar expressions. Forward-looking statements and information provide no guarantee of performance. Because they refer to future events, they involve risks, uncertainties and assumptions and as such depend on circumstances that may or may not occur. The Company's future results and creation of value for shareholders may differ significantly from the figures expressed or suggested in the forward-looking statements. Many factors that will determine these results and values are beyond our capacity to control or predict.

STRATEGIC AND DIVERSIFIED LOCATION OF FARMS

Fully owned by SlCAgrícola

HEAD OFFICE

PORTO ALEGRE - RIO GRANDE DO SUL

MIDWEST

MARANHÃO

PIAUÍ & BAHIA

SlCLandCo‘s farms

Joint Venture with Grupo DoisVales

Joint Venture with Mitsui Co.

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EXHIBIT 1: AGRICULTURAL WEIGHTS AND MEASURES

1 tonelada 1,000 kg

1 kg 2.20462 libras

1 libra 0.45359 kg

1 acre 0.40469 hectares

1 acre 0.1840 alqueire

1 hectare (ha) 2.47105 acres

1 hectare (ha) 10,000 m²

1 alqueire 5.4363 acres

Soja e Trigo

1 bushel de soja 60 libras 27.2155 kg

1 saca de soja 60 kg 2.20462 bushels

1 bushel/acre 67.25 kg/ha

1.00 US$/bushel 2.2046 US$/saca

Milho

1 bushel de milho 56 libras 25.4012 kg

1 saca de milho 60 kg 2.36210 bushels

1 bushel/acre 62.77 kg/ha

1.00 US$/bushel 2.3621 US$/saca

Algodão

1 fardo 480 libras 217.72 kg

1 arroba 14.68 kg*

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EXHIBIT 2: BALANCE SHEET - ASSETS

(R$ thd) 2015 AV 2016 AV AH Current Asset 2,176,848 41.0% 2,332,168 42.8% 7.1%

Cash and cash equivalents 623,608 11.7% 888,740 16.3% 42.5% Short-term interest earnings bank deposits 77,852 1.5% 175,766 3.2% 125.8% Accounts receivable 228,024 4.3% 185,538 3.4% -18.6%

Trade accounts receivable 176,691 3.3% 73,392 1.3% -58.5% Other accounts receivable 51,333 1.0% 112,146 2.1% 118.5%

Advances to suppliers 4,438 0.1% 1,728 0.0% -61.1% Operations with derivatives 26,639 0.5% 99,963 1.8% 275.3% Securities and credits receivable 4,444 0.1% 7,948 0.1% 78.8% Other accounts receivable 15,812 0.3% 2,507 0.0% -84.1%

Inventories 728,192 13.7% 486,425 8.9% -33.2% Biological assets 423,705 8.0% 521,174 9.6% 23.0%

Cotton Lint 141,635 2.7% 148,702 2.7% 5.0% Soybean 249,037 4.7% 330,231 6.1% 32.6% Corn 22,628 0.4% 32,904 0.6% 45.4% Others 10,405 0.2% 9,337 0.2% -10.3%

Current taxes recoverable 89,321 1.7% 66,727 1.2% -25.3% Prepaid expenses 5,469 0.1% 7,721 0.1% 41.2% Discontinued operations assets 677 0.0% 77 0.0% -88.6%

Non-current assets 3,132,785 59.0% 3,121,208 57.2% -0.4% Long term assets 276,030 5.2% 223,375 4.1% -19.1%

Biological assets 4,239 0.1% 2,120 0.0% -50.0% Deferred taxes 23,509 0.4% 26,265 0.5% 11.7% Other non-current assets 245,452 4.6% 191,213 3.5% -22.1%

Operations with derivatives 101,852 1.9% 48,648 0.9% -52.2% Accounts receivable 7,464 0.1% - 0.0% -100.0% Recoverable taxes 51,954 1.0% 55,834 1.0% 7.5% Other accounts receivable 7,752 0.1% 15,189 0.3% 95.9% Advances to suppliers 76,430 1.4% 71,542 1.3% -6.4%

Prepaid expenses 2,830 0.1% 3,777 0.1% 33.5% Investments 93,350 1.8% 210,644 3.9% 125.6% Property for investiment 93,350 1.8% 210,644 3.9% 125.6%

Property, plant and equipment 2,760,438 52.0% 2,683,944 49.2% -2.8% Fixed assets in operation 2,703,822 50.9% 2,635,986 48.3% -2.5% Constructions in progress 56,616 1.1% 47,958 0.9% -15.3%

Intangible assets 2,967 0.1% 3,245 0.1% 9.4% Intangible assets 2,967 0.1% 3,245 0.1% 9.4% Others 2,967 0.1% 3,245 0.1% 9.4%

Total Asset 5,309,633 100.0% 5,453,376 100.0% 2.7%

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EXHIBIT 3: BALANCE SHEET - LIABILITIES (R$ thd) 2015 AV 2016 AV AH Current liabilities 1,747,970 32.9% 1,838,376 33.7% 5.2%

Social and labor obligations 13,763 0.3% 15,308 0.3% 11.2% Social charges 13,351 0.3% 14,947 0.3% 12.0% Labor obligations 412 0.0% 361 0.0% -12.4%

Suppliers 398,860 7.5% 439,735 8.1% 10.2% Domestic suppliers 398,860 7.5% 439,735 8.1% 10.2%

Tax liabilities 6,702 0.1% 7,995 0.1% 19.3% Federal tax liabilities 5,655 0.1% 6,480 0.1% 14.6%

Income and social contribution tax payable 4,155 0.1% 4,626 0.1% 11.3% Taxes, fees and sundry contributions 1,500 0.0% 1,854 0.0% 23.6%

State tax liabilities 828 0.0% 1,370 0.0% 65.5% Municipal tax liabilities 219 0.0% 145 0.0% -33.8%

Loans and financing 931,732 17.5% 1,155,641 21.2% 24.0% Loans and financing 931,732 17.5% 1,155,641 21.2% 24.0%

In local currency 691,775 13.0% 913,499 16.8% 32.1% In foreign currency 239,957 4.5% 242,142 4.4% 0.9%

Others 376,498 7.1% 204,675 3.8% -45.6% Others 376,498 7.1% 204,675 3.8% -45.6%

Securities payable 75,564 1.4% 81,813 1.5% 8.3% Advances from clients 110,401 2.1% 19,285 0.4% -82.5% Operations with derivatives 120,544 2.3% 56,604 1.0% -53.0% Minimum compulsory dividend payable 29,100 0.5% 7,112 0.1% -75.6% Lease 34,196 0.6% 37,467 0.7% 9.6% Other debits 6,693 0.1% 2,394 0.0% -64.2%

Provisions 20,415 0.4% 15,022 0.3% -26.4% Tax, social security, labor and civil provisions 20,415 0.4% 15,022 0.3% -26.4%

Social security and labor provisions 10,132 0.2% 10,232 0.2% 1.0% Provisions to employee benefits 8,659 0.2% 2,704 0.0% -68.8% Provision for labor contingencies 1,624 0.0% 2,086 0.0% 28.4%

Non-current liabilities 1,169,400 22.0% 986,114 18.1% -15.7% Loans and financing 947,145 17.8% 745,604 13.7% -21.3%

Loans and financing 947,145 17.8% 745,604 13.7% -21.3% In local currency 346,883 6.5% 468,580 8.6% 35.1% In foreign currency 600,262 11.3% 277,024 5.1% -53.8%

Other liabilities 68,946 1.3% 24,425 0.4% -64.6% Securities payable 36,700 0.7% - 0.0% -100.0% Operations with derivatives 31,624 0.6% 24,346 0.4% -23.0% Other debits 622 0.0% 79 0.0% -87.3%

Deferred income and social contribution taxes 153,309 2.9% 216,085 4.0% 40.9% Shareholders' equity 2,392,263 45.1% 2,628,886 48.2% 9.9%

Realized capital 947,522 17.8% 947,522 17.4% 0.0% Capital reserves 75,056 1.4% 80,984 1.5% 7.9%

Goodwill in the issue of shares 72,282 1.4% 72,102 1.3% -0.2% Options granted 35,121 0.7% 39,534 0.7% 12.6% Treasury shares (32,347) -0.6% (30,652) -0.6% -5.2%

Profit reserves 291,798 5.5% 292,744 5.4% 0.3% Legal reserve 8,977 0.2% 10,474 0.2% 16.7% Profit retention reserve 5,628 0.1% 27,065 0.5% 380.9% Statutory reserve 248,093 4.7% 248,093 4.5% 0.0%

Additional Proposed Dividend 29,100 0.5% 7,112 0.1% -75.6% Retained Earnings/Losses - 0.0% - 0.0% n.m. Other comprehensive income 891,332 16.8% 1,129,785 20.7% 26.8% Interest of non-controlling shareholders 186,555 3.5% 177,851 3.3% -4.7%

Total Liabilities 5,309,633 100.0% 5,453,376 100.0% 2.7%

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EXHIBIT 4:INCOME STATEMENT FOR THE FISCAL YEAR

(R$ thd) 4Q15 4Q16 AH 2015 2016 AH Net Revenue 583,617 629,639 7.9% 1.761.581 1,659,649 -5.8%

Cotton lint 450,106 313,062 -30.4% 812,693 749,417 -7.8%

Cotton seed 35,464 34,158 -3.7% 85,019 98,902 16,3%

Soybean 72,663 102,474 41.0% 634,055 583,990 -7.9%

Corn

66,567 58,583 -12.0% 121,877 164,514 35.0%

Others 19,898 5,746 -71.1% 59,480 26,361 -55.7%

Hedge revenue (92,248) 61,188 -166.3% (231,373) (21,239) -90.8%

Biological assets 31,167 54,428 74.6% 279,830 57,704 -79.4%

Cost of goods sold (465,867) (424,833) -8.8% (1,328,460) (1,413,181) 6.4%

Cotton lint (267,458) (292,868) 9.5% (501,326) (629,116) 25.5%

Cotton seed (28,403) (31,735) 11.7% (64,080) (97,913) 52.8%

Soybean (30,947) (57,318) 85.2% (419,781) (463,229) 10.4%

Corn

(40,483) (32,078) -20.8% (81,088) (106,401) 31.2%

Others (17,203) (8,140) -52.7% (34,915) (31,589) 9.5%

Biological assets (81,373) (2,694) -96.7% (227,270) (84,933) -62.6%

Gross Income 117,750 204,806 73.9% 433,121 246,468 -43.1% Operating expenses/income (48,101) (20,907) -56.5% (147,623) (136,153) -7.8%

Sales expenses (37,240) (35,036) -5.9% (92,070) (97,589) 6.0%

General and administrative expenses (13,464) (10,435) -22.5% (47,709) (45,733) -4.1%

General and administrative expenses (10,216) (9,260) -9.4% (39,769) (42,894) 7.9%

Provision for profit share program (3,248) (1,175) n.m (7,940) (2,839) -64.2%

Management compensation (2,812) (2,686) -4.5% (10,728) (13,354) 24.5%

Other operating income (expenses) 5,415 27,250 403.2% 2,884 20,523 611.6%

Income (loss) before financial income (loss) and taxes 69,649 183,899 164.0% 285,498 110,315 -61.4% Financial income (loss) (23,751) (26,399) 11.1% (118,844) (114,476) -3.7%

Financial income 129,114 95,536 -26.0% 447,366 399,656 -10.7%

Financial expenses (152,865) (121,935) -20.2% (566,210) (514,132) -9.2%

Income (loss) before income tax 45,898 157,500 243.2% 166,654 (4,161) n.m. Income and social contribution taxes (10,563) (43,452) 311.4% (45,483) 19,802 n.m.

Current (7,265) (5,807) -20.1% (33,038) (27,061) -18.1%

Deffered (3,298) (37,645) n.m. (12,445) 46,863 n.m.

Net Income (loss) for the period 35,335 114,048 222.8% 121,171 15,641 -87.1% Attributed to the Parent company's partners 35,020 112,574 221.5% 122,528 29,945 -75.6% Attributed to non-controlling partners 314 1,474 369.4% (1,358) (14,304) 953.3%

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EXHIBIT 5:STATEMENT OF CASH FLOWS (R$ thd) 4Q15 4Q16 AH 2015 2016 AH Net cash from operational activities 176,040 432,496 145.7% 274,832 305,651 11.2% Cash generated in operations 144,880 47,654 -67.1% 482,199 204,468 57.6%

Net income (loss) before income and social contribution taxes 45,898 157,500 243.2% 166,654 (4,161) n.m.

Depreciation and amortization 31,984 27,158 -15.1% 106,803 104,242 -2.4%

Depreciation and amortization recorded in the income 31,984 27,158 -15.1% 106,803 104,242 -2.4%

Income from write-off of permanent assets 1,009 - -100.0% 6,230 2,938 -52,8%

Interest, foreign exchange variation and price-level restatement 10,989 (65,544) n.m. 241,705 87,174 -63.9%

Share-based compensation 1,715 108 -93.7% 4,898 4,906 0.2%

Variation in biological assets 50,206 (51,733) n.m. (52,560) 27,228 n.m.

Provision (reversal) of inventory adjustments and onerous contracts 304 (790) n.m. 736 (649) n.m.

Provision (reversal) of profit sharing and labor contingencies 2,775 1,434 -486.3% 7,733 3,269 -57.7%

Fair Value Investment Properties - (20,479) 100.0% - (20,479) 100.0% Changes in assets and liabilities 31,160 384,842 n.m (207,367) 101,183 n.m.

Trade accounts receivable (50,984) 387,318 n.m. (56,029) 103,299 n.m.

Inventories and biological assets (115,305) (28,084) -75.6% (106,010) 110,573 n.m.

Recoverable taxes (3,601) 6,120 n.m. (11,133) 18,712 n.m.

Accounts receivable - - - 3,961 4,837 22.1%

Interest earnings bank deposits-pledged 33,041 7,791 n.m 54,969 (97,914) n.m.

Other accounts receivable (15,661) 18,746 n.m. (23,721) 8,008 n.m.

Suppliers 162,767 289,241 77.7% 86,101 70,567 -18.0%

Taxes and social payables (3,028) (2,960) -2.2% (18,367) (5,736) -68.8%

Operations with derivatives 27,074 134,854 398.1% (72,313) 183,097 n.m.

Securities payable - (29,187) 100.0% (17,809) (39,574) 122.2%

Advances from clients 30,154 (15,831) n.m. 57,200 (91,116) n.m.

Lease 15,299 14,544 -4.9% 5,744 3,271 -43.1%

Other accounts payable (16,032) (21,455) 33.8% 4,618 (13,744) n.m.

Interest paid (25,086) (38,048) 51.7% (88,370) (131,339) 48.6%

Income tax and social contribution paid (7,478) (9,085) 21.5% (26,208) (21,758) -17.0% Net cash used in investment activities (18,072) (36,413) 101.5% (142,348) (96,922) -31.9%

In Investment - - - - - -

In biological assets - - - - - -

In Fixed assets (17,886) (35,458) 98.2% (141,437) (83,352) -32.8%

In Intangible assets (186) (955) 413.4% (911) (1,915) 110.2%

Net cash before cash used in investment activities 157,968 398,559 154.3% 132,484 208,729 -55.7%

Net cash generated/(consumed) in financing activities 243,797 79,328 -67.5% 251,983 56,403 -77.6%

Sale (repurchase) of shares (1,180) 401 n.m. 35 1,023 n.m

Loans and financing obtained 454,615 164,821 -63.7% 1,321,100 1,135,244 -14.1%

Loans and financing paid (209,638) (85,894) -59.0% (1,041,268) (1,021,663) -1.9%

Dividends paid - - - (27,884) (58,201) 107.1%

Payment of capital - - - - - - Increase (decrease) in cash and cash equivalents 401,765 477,887 18.3% 384,467 265,132 -31.0% Opening balance of cash and cash equivalents 221,843 410,853 85.2% 239,141 623,608 160.8% Closing balance of cash and cash equivalents 623,608 888,740 42.1% 623,608 888,740 42.5%

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EXHIBIT 6:STATEMENT OF VALUE ADDED

(R$ thd) 4Q15 4Q16 AH 2015 2016 AH Revenues 732,087 625,056 -14.6% 2,146,679 1,836,715 -14.4%

Sale of merchandise, products and services 662,294 541,713 -18.2% 1,776,804 1,719,453 -3.2%

Other income 52,923 83,068 57.0% 308,392 89,400 -71.0%

Variation of the fair value of biological assets 31,167 54,427 74.6% 279,830 57,704 -79.4%

Other income 21,756 28,641 31.6% 28,562 31,696 11.0%

Income from construction of own assets 16,870 275 -98.4% 61,483 27,862 -54.7%

Inputs acquired from third parties (418,967) (364,076) -13.1% (1,156,158) (1,183,909) 2.4%

Cost of goods, merchandise and services sold (15,698) (602) 96.2% (24,452) (11,115) -54.5%

Materials, Energy, Third-party services and other (126,944) (113,119) -10.9% (341,337) (352,263) 3.2%

Loss/recovery of asset values (305) 726 n.m. (1,003) 585 n.m.

Others (276,020) (251,081) -9.0% (789,366) (821,116) 4.0%

Raw material used (194,647) (248,388) 27.6% (562,096) (736,184) 31.0%

Adjustment of fair value of biological assets (81,373) (2,693) -96.7% (227,270) (84,932) -62.6%

Gross added value 313,120 260,980 -16.7% 990,521 652,806 -34.1% Retentions (31,984) (27,158) -15.1% (106,803) (104,242) -2.4%

Depreciation, amortization and depletion (31,984) (27,158) -15.1% (106,803) (104,242) -2.4%

Net added value produced 281,136 233,822 -16.8% 883,718 548,564 -37.9% Added value received as transfer 125,312 102,380 -18.3% 434,645 409,406 -5.8%

Financial income 125,243 98,350 -21.5% 434,002 403,359 -7.1%

Others 69 4,030 n.m 643 6,047 840.4%

Total added value payable 406,448 336,202 -17.3% 1,318,363 957,970 -27.3% Distribution of added value 406,448 336,202 -17.3% 1,318,363 957,970 -27.3% Personnel 61,921 61,065 -1.4% 188,094 213,028 13.2%

Direct remuneration 38,772 41,375 6.7% 119,292 139,727 17.1%

Benefits 19,939 16,245 -18.5% 59,081 61,258 3.7%

F.G.T.S. 3,210 3,445 7.3% 9,721 12,043 23.9%

Taxes, rates and contributions 53,331 76,009 42.5% 188,068 138,581 -26.3%

Federal 34,897 73,095 109.5% 138,639 91,962 -33.7%

State 18,353 2,820 -84.6% 49,093 46,256 -5.8%

Municipal 81 94 16.0% 336 363 8.0%

Third-party capital remuneration 255,862 85,080 -66.7% 821,031 590,720 -28.1%

Interest 240,587 63,743 -73.5% 780,085 537,676 -31.1%

Rents 15,275 21,337 39.7% 40,946 53,044 29.1%

Remuneration of own capital 35,334 114,048 222.8% 121,170 15,641 -87.1%

Retained earnings/Loss for the period 35,020 112,574 n.m 122,528 29,945 -75.6%

Dividends - - - - - -

Interest of non-controlling shareholders in retained earnings 314 1,474 369.4% (1,358) (14,304) 953.3%

release 2q15 - slc agrícola

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