EX-99.3 4 a993-1q24lavorolimited6xk.htm EX-99.3

Interim condensed consolidated statement of financial position As of September 30, 2023 (In thousands of Brazilian reais - R$, except if otherwise indicated) |

Content

Unaudited interim condensed consolidated financial statements |
Interim condensed consolidated statement of financial position | 3
Interim condensed consolidated statement of profit or loss | 6
Interim condensed consolidated statement of comprehensive income or loss | 7
Interim condensed consolidated statement of changes in equity | 8
Interim condensed consolidated statement of cash flows | 9
1. Background information | 11
2. Significant accounting policies | 11
3. Segment information | 16
4. Cash equivalents | 20
5. Trade receivables | 21
6. Financial instruments | 23
7. Financial and capital risk management | 25
8. Inventories | 33
9. Taxes recoverable | 34
10. Commodity forward contracts – Barter transactions | 35
11. Right-of-use assets and lease liabilities | 37
12. Property, plant and equipment | 38
13. Intangible assets | 39
14. Trade payables | 41
15. Borrowings | 42
16. Obligations to FIAGRO quota holders | 44
17. Payables for the acquisition of subsidiaries | 44
18. Acquisition of subsidiaries | 46
19. Accounting considerations related to the SPAC Transaction | 50
20. Income taxes | 52
21. Provisions for contingencies | 54
22. Advances from customers | 54
23. Related parties | 55
24. Equity | 56
25. Revenue from contracts with customers | 61
26. Costs and expenses by nature | 62
27. Finance income (costs) | 63
28. Non-cash transactions | 63
29 Subsequent events | 64

Interim condensed consolidated statement of financial position As of September 30, 2023 (In thousands of Brazilian reais - R$, except if otherwise indicated) |

| Notes | September 30, 2023 | June, 30 2023
Assets |  |  |
Current assets |  |  |
Cash equivalents | 4 | 564,312 |  | 564,294 |
Trade receivables | 5 | 3,070,618 |  | 2,667,057 |
Inventories | 8 | 2,556,598 |  | 1,868,204 |
Taxes recoverable | 9 | 73,781 |  | 57,001 |
Derivative financial instruments | 7 | 39,145 |  | 40,410 |
Commodity forward contracts | 10 | 92,779 |  | 114,861 |
Advances to suppliers |  | 679,772 |  | 192,119 |
Other assets |  | 27,783 |  | 32,701 |
Total current assets |  | 7,104,788 |  | 5,536,647 |
Non-current assets |  |  |
Restricted cash | 19 | 147,917 |  | 139,202 |
Trade receivables | 5 | 31,559 |  | 41,483 |
Other assets |  | 20,870 |  | 8,390 |
Judicial deposits |  | 24,246 |  | 8,820 |
Right-of-use assets | 12 | 171,332 |  | 173,679 |
Taxes recoverable | 9 | 330,979 |  | 282,903 |
Deferred tax assets | 20 | 382,383 |  | 329,082 |
Investments |  | 2,376 |  | - |
Property, plant and equipment | 12 | 203,395 |  | 196,588 |
Intangible assets | 13 | 941,152 |  | 807,192 |
Total non-current assets |  | 2,256,209 |  | 1,987,339 |
Total assets |  | 9,360,997 |  | 7,523,984 |

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

Interim condensed consolidated statement of financial position As of September 30, 2023 (In thousands of Brazilian reais - R$, except if otherwise indicated) |

| Notes | September 30, 2023 | June 30, 2023
Liabilities |  |  |
Current liabilities |  |  |
Trade payables | 14 | 3,620,208 |  | 2,575,701 |
Trade payables – Supplier finance | 14(c) | - |  | 26,157 |
Lease liabilities | 11 | 82,306 |  | 85,865 |
Borrowings | 15 | 1,700,925 |  | 922,636 |
Obligations to FIAGRO quota holders | 16 | 160,249 |  | 150,018 |
Payables for the acquisition of subsidiaries | 17 | 236,783 |  | 221,509 |
Derivative financial instruments | 7 | 46,281 |  | 44,008 |
Commodity forward contracts | 10 | 82,538 |  | 207,067 |
Salaries and social charges |  | 201,246 |  | 223,376 |
Taxes payable |  | 49,381 |  | 37,105 |
Dividends payable |  | 1,324 |  | 1,619 |
Warrant liabilities | 19 | 37,866 |  | 36,446 |
Advances from customers | 22 | 630,301 |  | 488,578 |
Other liabilities |  | 90,788 |  | 34,388 |
Total current liabilities |  | 6,940,196 |  | 5,054,473 |
Non-current liabilities |  |  |
Trade payables | 14 | 333 |  | 2,547 |
Lease liabilities | 11 | 100,616 |  | 98,554 |
Borrowings | 15 | 37,484 |  | 42,839 |
Payables for the acquisition of subsidiaries | 17 | 31,632 |  | 53,700 |
Provision for contingencies | 21 | 12,729 |  | 8,845 |
Liability for FPA Shares | 19 | 144,572 |  | 139,133 |
Other liabilities |  | 181 |  | 223 |
Taxes payable |  | 16,100 |  | 963 |
Deferred tax liabilities | 20 | 18,499 |  | 12,351 |
Total non-current liabilities |  | 362,146 |  | 359,155 |
Equity | 24 |  |
Share Capital |  | 591 |  | 591 |
Additional Paid-in Capital |  | 2,127,299 |  | 2,134,339 |
Capital reserve |  | 20,497 |  | 14,533 |
Other comprehensive loss |  | (14,440) |  | (28,634) |
Accumulated losses |  | (327,247) |  | (260,710) |
Equity attributable to shareholders of the Parent Company |  | 1,806,700 |  | 1,860,119 |
Non-controlling interests |  | 251,955 |  | 250,238 |

Interim condensed consolidated statement of financial position As of September 30, 2023 (In thousands of Brazilian reais - R$, except if otherwise indicated) |

Total equity |  | 2,058,655 |  | 2,110,357 |
Total liabilities and equity |  | 9,360,997 |  | 7,523,984 |

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

Interim condensed consolidated statement of profit or loss (In thousands of Brazilian reais - R$, except if otherwise indicated) |

| Notes | September 30, 2023 | September 30, 2022
Revenue | 25 | 2,365,956 |  | 2,285,964 |
Cost of goods sold | 26 | (2,072,671) |  | (1,811,756) |
Gross profit |  | 293,285 |  | 474,208 |
Operating expenses |  |  |
Sales, general and administrative expenses | 26 | (320,238) |  | (315,425) |
Other operating (expenses) income, net |  | 352 |  | 13,617 |
Share of profit of an associate |  | (967) |  | - |
Operating profit |  | (27,568) |  | 172,400 |
Finance Income (costs) |  |  |
Finance income | 27 | 85,899 |  | 88,819 |
Finance costs | 27 | (235,987) |  | (227,420) |
Other financial income (costs) | 27 | 21,136 |  | (9,219) |
Profit (loss) before income taxes |  | (156,520) |  | 24,580 |
Income taxes |  |  |
Current | 20 | 38,493 |  | 16,232 |
Deferred | 20 | 47,030 |  | 37,267 |
Profit (loss) for the year |  | (70,997) |  | 78,079 |
Attributable to: |  |  |
Net investment of the parent/ Equity holders of the parent |  | (66,537) |  | 59,615 |
Non-controlling interests |  | (4,460) |  | 18,464 |
Earnings (loss) per share |  |  |
Basic, profit (loss) for the period attributable to net investment of the parent/ equity holders of the parent | 24 | (0.59) |  | 0.52 |
Diluted, profit (loss) for the period attributable to net investment of the parent/ equity holders of the parent | 24 | (0.59) |  | 0.52 |

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

Interim consolidated statement of comprehensive income or loss (In thousands of Brazilian reais - R$, except if otherwise indicated) |

| September 30, 2023 | September 30, 2022
Profit (loss) for the period | (70,997) |  | 78,079 |
Items that may be reclassified to profit or loss in subsequent periods |  |
Exchange differences on translation of foreign operations | 14,194 |  | 61,024 |
Total comprehensive (loss) income for the year | (56,803) |  | 139,103 |
Attributable to: |  |
Net investment of the parent/ equity holders of the parent | (52,343) |  | 120,639 |
Non-controlling interests | (4,460) |  | 18,464 |

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

Interim condensed consolidated statement of changes in equity For the three-month period ended September 30, 2023 and 2022 (In thousands of Brazilian reais - R$, except if otherwise indicated) |

| Notes | Net investment of the Parent | Share Capital | Additional Paid-in Capital | Share-Based Compensation reserve | Acumulated gain/losses | Foreign currency translation reserve | Total | Non-controlling interest | Total Equity/ Net Investment
At June 30, 2022 |  | 1,451,647 |  | - |  | - |  | - |  | - |  | - |  | 1,451,647 |  | 218,080 |  | 1,669,727 |
Exchange differences on translation of foreign operations |  | (1,374) |  | - |  | - |  | - |  | - |  | - |  | (1,374) |  | - |  | (1,374) |
Share-based payment |  | 8,912 |  | - |  | - |  | - |  | - |  | - |  | 8,912 |  | - |  | 8,912 |
Acquisition of non-controlling interests |  | (8,058) |  | - |  | - |  | - |  | - |  | - |  | (8,058) |  | - |  | (8,058) |
Acquisition of subsidiaries |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (4,597) |  | (4,597) |
Other |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (8,109) |  | (8,109) |
Profit for the period |  | 59,615 |  | - |  | - |  | - |  | - |  | - |  | 59,615 |  | 18,464 |  | 78,079 |
At September 30, 2022 |  | 1,510,742 |  | - |  | - |  | - |  | - |  | - |  | 1,510,742 |  | 223,838 |  | 1,734,580 |
At June 30, 2023 |  | - |  | 591 |  | 2,134,339 |  | 14,533 |  | (260,710) |  | (28,634) |  | 1,860,119 |  | 250,238 |  | 2,110,357 |
Exchange differences on translation of foreign operations |  | - |  | - |  | - |  | - |  | - |  | 14,194 |  | 14,194 |  | - |  | 14,194 |
Share-based payment | 24 | - |  | - |  | - |  | 5,964 |  | - |  | - |  | 5,964 |  | - |  | 5,964 |
Acquisition of subsidiaries | 18 | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 2,118 |  | 2,118 |
Other |  | - |  | - |  | (7,040) |  | - |  | - |  | - |  | (7,040) |  | 4,059 |  | (2,981) |
Loss for the period |  | - |  | - |  | - |  | - |  | (66,537) |  | - |  | (66,537) |  | (4,460) |  | (70,997) |
At September 30, 2023 |  | — |  | 591 |  | 2,127,299 |  | 20,497 |  | (327,247) |  | (14,440) |  | 1,806,700 |  | 251,955 |  | 2,058,655 |

The accompanying notes are an integral part of the interim consolidated financial statements.

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Interim condensed consolidated statement of cash flows For the three-month period ended September 30, 2023 (In thousands of Brazilian reais - R$, except if otherwise indicated) |

| Notes | September 30, 2023 | September 30, 2022
Operating activities: |  |  |
Profit (loss) before income taxes |  | (156,520) |  | 24,580 |
Adjustments to reconcile profit (loss) for the period to net cash flow: |  |  |
Allowance for expected credit losses | 26 | 26,496 |  | 12,061 |
Foreign exchange diferences | 27 | 4,862 |  | 11,889 |
Accrued interest expenses | 27 | 80,143 |  | 53,265 |
Interest arising from revenue contracts | 27 | (65,647) |  | (65,129) |
Interest on trade payables | 27 | 142,360 |  | 148,911 |
Loss (gain) on derivatives | 27 | (26,281) |  | 450 |
Interest from tax benefits | 27 | (10,465) |  | (7,407) |
Fair value on commodity forward contracts | 27 | 284 |  | (3,121) |
Gain on changes in fair value of warrants |  | 1,420 |  | - |
Amortization of intangibles | 26 | 18,376 |  | 24,350 |
Amortization of right-of-use assets | 26 | 19,441 |  | 16,613 |
Depreciation | 26 | 4,515 |  | 3,578 |
Losses and damages of inventories | 26 | 1,565 |  | 4,209 |
Provisions for contingencies |  | 3,884 |  | 8,313 |
Share-based payment | 24 | 5,964 |  | 8,911 |
Share of profit of an associate |  | 967 |  | - |
Changes in operating assets and liabilities: |  |  |
Assets |  |  |
Trade receivables |  | (446,075) |  | (715,626) |
Inventories |  | (643,982) |  | (897,943) |
Advances to suppliers |  | (480,712) |  | (499,853) |
Derivative financial instruments |  | 29,819 |  | (1,106) |
Taxes recoverable |  | (15,651) |  | (19,360) |
Other receivables |  | (122,747) |  | 13,987 |
Liabilities |  |  |
Trade payables |  | 1,057,664 |  | 1,081,930 |
Advances from customers |  | 138,212 |  | 473,146 |
Salaries and social charges |  | (23,781) |  | (25,143) |
Taxes payable |  | 23,719 |  | 36,057 |
Other payables |  | 72,283 |  | 152,902 |

| 9

Interim condensed consolidated statement of cash flows For the three-month period ended September 30, 2023 (In thousands of Brazilian reais - R$, except if otherwise indicated) |

Interest paid on borrowings and FIAGRO quota holders |  | (84,501) |  | (45,644) |
Interest paid on acquisitions of subsidiary |  | (4,461) |  | (2,652) |
Interest paid on trade payables and lease liabilities |  | (234,048) |  | (307,574) |
Interest received from revenue contracts |  | 86,825 |  | 122,981 |
Income taxes paid/received |  | 5,578 |  | (40,004) |
Net cash flows from (used in) operating activities |  | (590,494) |  | (432,429) |
Investing activities: |  |  |
Acquisition of subsidiary, net of cash acquired |  | (109,724) |  | (91,773) |
Additions to property, plant and equipment and intangible assets |  | (23,896) |  | (57,201) |
Proceeds from the sale of property, plant and equipment |  | 3,720 |  | 32 |
Net cash flows used in investing activities |  | (129,900) |  | (148,942) |
Financing activities: |  |  |
Proceeds from borrowings | 15 | 1,218,074 |  | 731,007 |
Repayment of borrowings | 15 | (481,957) |  | (156,751) |
Payment of principal portion of lease liabilities | 11 | (18,787) |  | (15,171) |
Proceeds from FIAGRO quota holders, net of transaction costs | 16 | 137,496 |  | 141,645 |
Repayment of FIAGRO quota holders | 16 | (117,297) |  | (6,632) |
Trade payables – Supplier finance | 14(c) | (26,157) |  | - |
Acquisition of non-controlling interests |  | - |  | (31,500) |
Dividend payments |  | (295) |  | - |
Net cash flows provided by financing activities |  | 711,077 |  | 662,598 |
Net increase (decrease) in cash equivalents |  | (9,317) |  | 81,228 |
Net foreign exchange difference |  | 9,335 |  | - |
Cash equivalents at beginning of year |  | 564,294 |  | 254,413 |
Cash equivalents at end of year |  | 564,312 |  | 335,641 |

accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

| 10

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

1.Background information
Lavoro Limited is a Cayman Island exempted company incorporated on August 22, 2022.
Lavoro Limited is a public company listed with the US Securities and Exchange Commission (“SEC”) and its shares are traded on Nasdaq Global Select Market under ticker symbol “LVRO”.
Lavoro Limited (“Lavoro” and collectively with its subsidiaries, the “Group”) is one of the main agricultural input distribution platforms in Latin America, with relevant agricultural input distribution operations in Brazil and Colombia, and an early stage agricultural input trading company in Uruguay. Also, as a result of a verticalization strategy, the Group produces agricultural biological and special fertilizers products through its own facilities. The Group offers farmers a complete portfolio of products and services with the goal of helping farmer customers succeed by providing multi-channel support.
As of September 30, 2023, the Group is controlled by investment funds, managed by general partners which are ultimately controlled by Patria Investments Limited (the “Parent” or “Patria”), a manager of alternative assets with its shares listed on the NASDAQ.
As of September 30, 2023, the Group is controlled by investment funds managed by by Patria
Investments Limited (“Patria”), a global alternative asset manager with shares listed on NASDAQ.
Relevant events
•Acquisitions
The Group concluded one business acquisition during the three-month period ended September, 30, 2023, for which the total consideration was R$140,000 including cash, amounts payable in installments and issuance of shares. These acquisitions are further described in Note 18. Additionally, the Group completed an acquisition subsequent to September 30, 2023, which are described in note 29.
2.Significant accounting policies
(a)Basis for preparation of the unaudited interim condensed consolidated financial statements
The unaudited interim condensed consolidated financial statements for the three-month period ended September 30, 2023 have been prepared in accordance with IAS 34 Interim Financial Reporting. The Group has prepared the financial statements on the basis that it will continue to operate as a going concern. The Directors

| 11

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

consider that there are no material uncertainties that may cast significant doubt over this assumption. They have formed a judgement that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, and wich is definided as not less than 12 months from the end of the reporting period.
These unaudited interim condensed consolidated financial statements for the period ended of September 30, 2022, reflect the historical operating results of Lavoro Brazil, Crop Care and Lavoro Colombia on a combined basis prior to the corporate reorganizations as disclosed in the annual consolidated financial statements for the year ended June 30, 2023.
The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group’s annual consolidated financial statements as of June 30, 2023.
These interim condensed consolidated financial statements as of September 30, 2023 and for the three-month period ended September 30, 2023 and 2022 were authorized for issuance by the Board of Directors on January 23, 2024
(b)New standards, interpretations and amendments adopted by the Group
The accounting policies adopted in the preparation of the unaudited interim condensed consolidated financial statements are consistent with those used in the preparation of the Group’s annual consolidated financial statements for the year ended June 30, 2023. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
Certain amendments applicable for the first time in 2022 and 2023 do not have an impact on
the interim consolidated financial statements of the Group.
(c)Basis of combination/consolidation procedures
All unrealized intra-group and intercompany balances, transactions, gains and losses relating to transactions between group companies were eliminated in full.
The interim condensed consolidated financial statements include the following subsidiaries of Lavoro Limited:

|  | Equity interest
Name | Core activities | Location | September 30, 2023 | June 30, 2023
Corporate: |  |  |  |

| 12

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

Lavoro Agro Limited | Holding | George Town – Cayman Island | 100% | 100%
Lavoro America Inc. | Holding | California - USA | 100% | 100%
Lavoro Merger Sub II Limited (i) | Holding | George Town – Cayman Island | 100% | 100%
Lavoro Agro Cayman II | Holding | George Town – Cayman Island | 100% | 100%
Lavoro Latam SL | Holding | Madrid - Spain | 100% | 100%
Lavoro Uruguay S.A. (formerly Malinas SA) | Holding | Montevideu – Uruguay | 100% | 100%
Lavoro Brazil: |  |  |  |
Lavoro Agro Holding S.A. | Holding | São Paulo – Brazil | 100% | 100%
Lavoro Agrocomercial S.A. | Distributor of agricultural inputs | Rondonópolis – Brazil | 97.42% | 97.42%
Agrocontato Comércio e Representações de Produtos Agropecuários S.A. | Distributor of agricultural inputs | Sinop – Brazil | 97.42% | 97.42%
PCO Comércio, Importação, Exportação e Agropecuária Ltda. | Distributor of agricultural inputs | Campo Verde – Brazil | 97.42% | 97.42%
Agrovenci Distribuidora de Insumos Agrícolas Ltda. (MS) | Distributor of agricultural inputs | Chapadão do Sul – Brazil | 93.11% | 93.11%
Produtiva Agronegócios Comércio e Representação Ltda. | Distributor of agricultural inputs | Paracatu – Brazil | 87.40% | 87.40%
Facirolli Comércio e Representação S.A. (Agrozap) | Distributor of agricultural inputs | Uberaba – Brazil | 62.61%- | 62.61%-
Agrovenci Comércio, Importação, Exportação e Agropecuária Ltda. | Distributor of agricultural inputs | Campo Verde – Brazil | 97.42% | 97.42%
Central Agrícola Rural Distribuidora de Defensivos Ltda. | Distributor of agricultural inputs | Vilhena – Brazil | 97.42% | 97.42%
Distribuidora Pitangueiras de Produtos Agropecuários S.A. | Distributor of agricultural inputs | Ponta Grossa – Brazil | 93.11% | 93.11%
Produtec Comércio e Representações S.A. | Distributor of agricultural inputs | Cristalina – Brazil | 87.4% | 87.4%

| 13

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

Qualiciclo Agrícola S.A. | Distributor of agricultural inputs | Limeira – Brazil | 66.75% | 66.75%
Desempar Participações Ltda. | Distributor of agricultural inputs | Palmeira – Brazil | 93.11% | 93.11%
Denorpi Distribuidora de Insumos Agrícolas Ltda. | Distributor of agricultural inputs | Palmeira – Brazil | 93.11% | 93.11%
Deragro Distribuidora de Insumos Agrícolas Ltda. | Distributor of agricultural inputs | Palmeira – Brazil | 93.11% | 93.11%
Desempar Tecnologia Ltda. | Holding | Palmeira – Brazil | 93.11% | 93.11%
Futuragro Distribuidora de Insumos Agrícolas Ltda. | Distributor of agricultural inputs | Palmeira – Brazil | 93.11% | 93.11%
Plenafértil Distribuidora de Insumos Agrícolas Ltda. | Distributor of agricultural inputs | Palmeira – Brazil | 93.11% | 93.11%
Realce Distribuidora de Insumos Agrícolas Ltda. | Distributor of agricultural inputs | Palmeira – Brazil | 93.11% | 93.11%
Cultivar Agrícola Comércio, Importação e Exportação S.A. | Distributor of agricultural inputs | Chapadão do Sul – Brazil | 93.11% | 93.11%
Nova Geração. | Distributor of agricultural inputs | Pinhalzinho – Brazil | 66.75% | 66.75%
Floema Soluções Nutricionais de Cultivos Ltda. | Distributor of agricultural inputs | Uberaba – Brazil | 62.61% | 62.61%
Casa Trevo Participações S.A. | Holding | Nova Prata – Brazil | 79.14% | 79.14%
Casa Trevo Comercial Agrícola LTDA. | Distributor of agricultural inputs | Nova Prata – Brazil | 79.14% | 79.14%
CATR Comercial Agrícola LTDA | Distributor of agricultural inputs | Nova Prata – Brazil | 79.14% | 79.14%
Sollo Sul Insumos Agrícolas Ltda | Distributor of agricultural inputs | Pato Branco – Brazil | 93.11% | 93.11%

| 14

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

Dissul Insumos Agrícolas Ltda. | Distributor of agricultural inputs | Pato Branco – Brazil | 93.11% | 93.11%
Referência Agroinsumos LTDA. (i) | Distributor of agricultural inputs | Dom Pedrito - Brazil | 65,18% | -
Perterra Trading S.A. (ii) | Private label products | Montevideu - Uruguay | 100% | 100%
Lavoro Agro Fundo de Investimento nas Cadeias Produtivas Agroindustriais | FIAGRO | São Paulo – Brazil | 5% | 5%
Lavoro Colômbia: |  |  |  |
Lavoro Colombia S.A.S. | Holding | Bogota – Colombia | 94.90% | 94.90%
Crop Care Colombia | Distributor of agricultural inputs | Bogota - Colombia | 94.90% | 94.90%
Agricultura y Servicios S.A.S. | Distributor of agricultural inputs | Ginebra - Colombia | 94.90% | 94.90%
Grupo Cenagro S.A.S. | Distributor of agricultural inputs | Yumbo – Colombia | 94.90% | 94.90%
Cenagral S.A.S | Distributor of agricultural inputs | Yumbo – Colombia | 94.90% | 94.90%
Grupo Gral S.A.S. | Distributor of agricultural inputs | Bogota - Colombia | 94.90% | 94.90%
Agrointegral Andina S.A.S. | Distributor of agricultural inputs | Bogota – Colombia | 94.90% | 94.90%
Servigral Praderas S.A.S. | Distributor of agricultural inputs | Bogota – Colombia | 94.90% | 94.90%
Agroquímicos para la Agricultura Colombiana S.A.S. | Distributor of agricultural inputs | Bogota – Colombia | 94.90% | 94.90%
Provecampo S.A.S. | Distributor of agricultural inputs | Envigado – Colombia | 94.90% | 94.90%
Crop Care: |  |  |  |
Crop Care Holding S.A. | Holding | São Paulo – Brazil | 100% | 100%

| 15

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

Perterra Insumos Agropecuários S.A. | Private label products | São Paulo – Brazil | 100% | 100%
Araci Administradora de Bens S.A. | Private label products | São Paulo – Brazil | 100% | 100%
Union Agro S.A. | Private label products | Pederneiras – Brazil | 73% | 73%
Agrobiológica Sustentabilidade S.A. | Private label products | São Paulo – Brazil | 65.13% | 65.13%
Agrobiológica Soluções Naturais Ltda. | Private label products | Leme – Brazil | 65.13% | 65.13%
Cromo Indústria Química LTDA. | Private label products | Estrela - Brasil | 70% | 70%

(i)See note 18 of Acquisitions of subsidiaries.
(ii)Perterra Trading S.A. was acquired in March 2023 by the subsidiary Distribuidora Pitangueiras de Produtos Agropecuários S.A. in a transaction with a related party Lavoro Uruguay S.A.
Additionally, the interim condensed consolidated financial statements include the following non-consolidated affiliate company:

|  | Equity interest
Name | Core activities | Location | September 30, 2023 | June 30, 2023
Gestão e Transformação Consultoria S.A. | Consulting | São Paulo – Brazil | 40% | 40%

3.Segment information
(a)Reportable segments by management
The chief operating decision-maker of the Group (the “CODM”) is the board of directors which is responsible for allocating resources among operating segments and assessing their performance and for making strategic decisions.
The determination of the reportable segments is based on internal reports reviewed by the CODM, which include considerations in relation to risks and returns, organizational structure, etc. Certain expenses across segments are allocated based on reasonable allocation criteria, such as revenues or historical trends.
The Group’s reportable segments are the following:
•Brazil Cluster: comprising companies located in Brazil that sell agricultural inputs;
• LATAM Cluster: comprising companies located in Colombia that sell agricultural inputs;
• Crop Care Cluster: consisting companies that produce and import their own portfolio of proprietary products including off-patent crop protection and specialty products (e.g, biologicals and specialy fertilizers).

| 16

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

The CODM used information on a pro forma basis giving effect of the acquisitions completed during the year to assess the segment performance. Starting from March 31, 2023, the CODM began using historical segment financial information. Segment information for the prior period has been recast for comparative purposes.
(b)Financial information by segment
Segment assets and liabilities as of September 30, 2023:

Description | Brazil | LATAM | Crop Care | Total reportable segments | Corporate (i) | Eliminations between segments (ii) | Consolidated
Certain assets |  |  |  |  |  |  |
Cash equivalents | 266,605 |  | 19,305 |  | 86,349 |  | 372,259 |  | 192,053 |  | - |  | 564,312 |
Trade receivables | 2,502,896 |  | 395,801 |  | 309,279 |  | 3,207,976 |  | - |  | (105,799) |  | 3,102,177 |
Inventories | 2,153,485 |  | 234,117 |  | 205,305 |  | 2,592,907 |  | - |  | (36,309) |  | 2,556,598 |
Advances to suppliers | 654,137 |  | 2,516 |  | 23,231 |  | 679,884 |  | - |  | (112) |  | 679,772 |
Total assets | 7,664,723 |  | 781,697 |  | 818,210 |  | 9,264,630 |  | 2,030,669 |  | (1,934,302) |  | 9,360,997 |
Certain liabilities |  |  |  |  |  |  |
Trade payables | 3,224,160 |  | 358,974 |  | 142,376 |  | 3,725,510 |  | 830 |  | (105,799) |  | 3,620,541 |
Borrowings | 1,532,322 |  | 92,055 |  | 114,032 |  | 1,738,409 |  | - |  | - |  | 1,738,409 |
Advances from customers | 625,153 |  | 480 |  | 4,780 |  | 630,413 |  | - |  | (112) |  | 630,301 |
Total liabilities and equity | 7,664,723 |  | 781,697 |  | 818,210 |  | 9,264,630 |  | 2,030,669 |  | (1,934,302) |  | 9,360,997 |

(i)Corporate items refer to balances and expenses with certain corporate demands not directly related to any operating segment.
(ii)Transactions between the Crop Care segment and the Brazil segment.

| 17

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

Statement of profit or loss data for the three-month period ended September 30, 2023:

Description | Brazil | LATAM | Crop Care | Total reportable segments | Corporate (i) | Eliminations between segments (ii) | Consolidated
Revenue | 2,017,918 |  | 324,161 |  | 175,045 |  | 2,517,124 |  | - |  | (151,168) |  | 2,365,956 |
Cost of goods sold | (1,841,573) |  | (279,486) |  | (99,179) |  | (2,220,238) |  | - |  | 147,567 |  | (2,072,671) |
Sales, general and administrative expenses (iii) | (230,637) |  | (31,091) |  | (56,207) |  | (317,935) |  | (2,303) |  | - |  | (320,238) |
Equity results and other results from subsidiaries | (1,459) |  | - |  | 492 |  | (967) |  | (57,391) |  | 57,391 |  | (967) |
Other operating income, net | 17,653 |  | (1,147) |  | 1,519 |  | 18,025 |  | (17,673) |  | - |  | 352 |
Financial (costs) income | (121,849) |  | (5,376) |  | (12,557) |  | (139,782) |  | 10,830 |  | - |  | (128,952) |
Income taxes | 85,958 |  | (2,251) |  | 592 |  | 84,299 |  | - |  | 1,224 |  | 85,523 |
Profit (loss) for the year | (73,989) |  | 4,810 |  | 9,705 |  | (59,474) |  | (66,537) |  | 55,014 |  | (70,997) |
Depreciation and amortization | (41,570) |  | (2,810) |  | (5,342) |  | (49,722) |  | - |  | - |  | (49,722) |

(i)Corporate items refer to balances and expenses with certain corporate demands not directly related to any operating segment.
(ii)Sales between the Crop Care segment and the Brazil segment.
(iii)Sales, general and administrative expenses include Depreciation and amortization.

| 18

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

Segment assets and liabilities as of June 30, 2023:

Description | Brazil | LATAM | Crop Care | Total reportable segments | Corporate (i) | Eliminations between segments (ii) | Consolidated
Certain assets |  |  |  |  |  |  |
Cash equivalents | 207,744 |  | 22,003 |  | 95,585 |  | 325,332 |  | 238,962 |  | - |  | 564,294 |
Trade receivables | 2,194,853 |  | 343,745 |  | 242,391 |  | 2,780,989 |  | - |  | (72,449) |  | 2,708,540 |
Inventories | 1,547,384 |  | 202,239 |  | 151,289 |  | 1,900,912 |  | - |  | (32,708) |  | 1,868,204 |
Advances to suppliers | 176,831 |  | 2,266 |  | 13,088 |  | 192,185 |  | - |  | (66) |  | 192,119 |
Total assets | 5,926,380 |  | 683,894 |  | 680,294 |  | 7,290,568 |  | 449,779 |  | (216,363) |  | 7,523,984 |
Certain liabilities |  |  |  |  |  |  |
Trade payables | 2,304,043 |  | 309,828 |  | 46,506 |  | 2,660,377 |  | 455 |  | (56,427) |  | 2,604,405 |
Borrowings | 824,868 |  | 71,562 |  | 69,045 |  | 965,475 |  | - |  | - |  | 965,475 |
Advances from customers | 478,313 |  | 7,020 |  | 3,245 |  | 488,578 |  | - |  | - |  | 488,578 |
Total liabilities and equity | 5,926,380 |  | 683,894 |  | 680,294 |  | 7,290,568 |  | 449,779 |  | (216,361) |  | 7,523,984 |

(i)Transactions between the Crop Care segment and the Brazil segment.

| 19

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

Statement of profit or loss data for the three-month period ended September 30, 2022:

Description | Brazil | LATAM | Crop Care | Total reportable segments | Corporate (i) | Eliminations between segments (i) | Combined
Revenue | 1,874,853 |  | 349,364 |  | 187,962 |  | 2,412,179 |  |  | (126,215) |  | 2,285,964 |
Cost of goods sold | (1,512,328) |  | (299,405) |  | (100,537) |  | (1,912,270) |  | - |  | 100,514 |  | (1,811,756) |
Sales, general and administrative expenses (ii) | (251,998) |  | (28,071) |  | (35,356) |  | (315,425) |  | - |  | - |  | (315,425) |
Other operating income, net | 9,841 |  | (2,404) |  | 6,180 |  | 13,617 |  | - |  | - |  | 13,617 |
Financial (costs) income | (138,352) |  | (2,934) |  | (6,533) |  | (147,819) |  |  | - |  | (147,819) |
Income taxes | 64,525 |  | (6,598) |  | (13,166) |  | 44,761 |  |  | 8,738 |  | 53,499 |
Profit for the year | 46,541 |  | 9,952 |  | 38,550 |  | 95,043 |  | - |  | (16,963) |  | 78,080 |
Depreciation and amortization | (38,452) |  | (3,617) |  | (2,229) |  | (44,298) |  |  |  | (44,298) |

(i)Sales between the Crop Care segment and the Brazil segment.
(ii)Sales, general and administrative expenses include Depreciation and amortization.
Revenues from external customers for each product and service are disclosed in Note 25. Further breakdown in relation to products and services provided by the Group is not available and such information cannot be produced without unreasonable effort.
4.Cash equivalents

| Annual yield | September, 30 2023 | June, 30 2023
Cash equivalents (R$) | 75% CDI (i) | 352,954 |  | 304,292 |
Cash equivalents (COP) | 13.77% DTF(ii) | 19,305 |  | 22,003 |
Cash equivalents (US$) | 3.65% a year(iii) | 192,053 |  | 237,999 |
Total cash equivalents |  | 564,312 |  | 564,294 |

(i)Represents the Brazilian interbank deposit rate, which is an average of the overnight interbank rates in Brazil (the "CDI").
(ii)Colombian investment rate, which is an average of interbank and corporate finance ("DTF").
(iii)Average annualized yield obtained in the last year from overseas bank accounts.

| 20

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

5.Trade receivables

| September, 30 2023 | June, 30 2023
Trade receivables (Brazil) | 2,877,760 |  | 2,525,845 |
Trade receivables (Colombia) | 424,875 |  | 370,767 |
(-) Allowance for expected credit losses | (200,458) |  | (188,072) |
Total | 3,102,177 |  | 2,708,540 |
Current | 3,070,618 |  | 2,667,057 |
Non-current | 31,559 |  | 41,483 |

The average effective interest rate used to discount trade receivables for the three-month period ended September 30, 2023 was 0.96% per month (0.96% as of June 30, 2023). The Group does not have any customer that represents more than 10% of its trade receivables or revenues.
As of September 30, 2023, the Group also transferred trade receivables to the FIAGRO in the amount of R$160,648 (R$167,278 in June 30, 2023).
As the Group has retained the risks and rewards of ownership, these amounts were not derecognized from trade receivables. Consequently, the liability resulting from these operations is recorded as obligations to FIAGRO quota holders (note 16).
Allowance for expected credit losses:

| September, 30 2023 | September, 30 2022
Opening balance | (188,072) |  | (151,114) |
Increase in allowance | (26,496) |  | (12,061) |
Allowance for credit losses from acquisitions | (9,642) |  | (714) |
Trade receivables write-off | 25,554 |  | 5,108 |
Exchange rate translation adjustment | (1,802) |  | (1,905) |
Ending balance (i) | (200,458) |  | (160,686) |

(i)The credit risk of the Group is described in note 7.b.

| 21

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

The aging analysis of trade receivables is as follow:

| September, 30 2023 | June, 30 2023
Not past due | 2,373,773 |  | 2,089,543 |
Overdue |  |
1 to 60 days | 393,983 |  | 169,556 |
61 to 180 days | 249,062 |  | 359,958 |
181 to 365 days | 70,270 |  | 90,734 |
Over 365 days | 215,547 |  | 186,821 |
Allowance for expected credit losses | (200,458) |  | (188,072) |
| 3,102,177 |  | 2,708,540 |

| 22

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

6.Financial instruments
The Group’s financial instruments were classified according to the following categories:

| September, 30 2023
| Amortized cost | Fair value through profit or loss
Assets: |  |
Trade receivables | 3,102,177 |  | - |
Commodity forward contracts | - |  | 92,779 |
Derivative financial instruments | - |  | 39,145 |
Restricted cash | 147,917 |  | - |
Total | 3,250,094 |  | 131,924 |
Liabilities: |  |
Trade payables | 3,620,541 |  | - |
Lease liabilities | 182,922 |  | - |
Borrowings | 1,738,409 |  | - |
Obligations to FIAGRO quota holders | 160,249 |  | - |
Payables for the acquisition of subsidiaries | 268,415 |  | - |
Derivative financial instruments | - |  | 46,281 |
Salaries and social charges | 201,246 |  | - |
Commodity forward contracts | - |  | 82,538 |
Dividends payable | 1,324 |  | - |
Warrant liabilities | - |  | 37,866 |
Liability for FPA Shares | 144,572 |  | - |
Total | 6,317,678 |  | 166,685 |

| 23

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

| June, 30 2023
| Amortized cost | Fair value through profit or loss
Assets: |  |
Trade receivables | 2,708,540 |  | - |
Commodity forward contracts | - |  | 114,861 |
Derivative financial instruments | - |  | 40,410 |
Restricted cash | 139,202 |  | - |
Total | 2,847,742 |  | 155,271 |
Liabilities: |  |
Trade payables | 2,578,248 |  | - |
Lease liabilities | 184,419 |  | - |
Borrowings | 965,475 |  | - |
Obligations to FIAGRO quota holders | 150,018 |  | - |
Payables for the acquisition of subsidiaries | 275,209 |  | - |
Derivative financial instruments | - |  | 44,008 |
Salaries and social charges | 223,376 |  | - |
Commodity forward contracts | - |  | 207,067 |
Dividends payable | 1,619 |  | - |
Warrant liabilities | - |  | 36,446 |
Liability for FPA Shares | 139,133 |  | - |
Total | 4,517,497 |  | 287,521 |

The Group considers that assets and liabilities measured at amortized cost, have a carrying value approximate to their fair value and, therefore, information on their fair values is not presented.
(a)Hierarchy of fair value
The Group uses various methods to measure and determine fair value (including market approaches and income or cost approaches) and to estimate the value that market participants would use to price the asset or liability. Financial assets and liabilities carried at fair value are classified and disclosed within the following fair value hierarchy levels:
Level 1 - Quoted prices (unadjusted) in active, liquid and visible markets, for identical assets and liabilities that are readily available at the measurement date;

| 24

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and
Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
All financial instruments accounted for at fair value are classified as level 2, except for the Warrant liability which is classified as level 1. On September 30, 2023 and June 30, 2023, there were no changes in the fair value methodology of the financial instruments and, therefore, there were no transfers between levels.
7.Financial and capital risk management
(a)Considerations on risk factors that may affect the business of the Group
The Group is exposed to several market risk factors that might impact its business. The Group’s board of directors is responsible for monitoring these risk factors, as well as establishing policies and procedures to address them. The Group’s risk management structure considers the size and complexity of its activities, which allows for a better understanding of how such risks could impact Group’s strategy through committees and other internal meetings.
Currently, the Group is focused on action plans relating to risks that could have a significant impact on its strategic goals, including those required by applicable regulations. To efficiently manage and mitigate these risks, its risk management structure conducts risk identification and assessments to prioritize the risks that are key to pursuing potential opportunities that may prevent value from being created or that may compromise existing value, with the possibility of impacting its results, capital, liquidity, customer relationships and/or reputation.
The Group’s risk management strategies were developed to mitigate and/or reduce the financial market risks which it is exposed to, which are as follows:
•credit risk
•liquidity risk
•capital risk
•interest rate risk
•exchange rate risk
•commodity price risk in barter transactions

| 25

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

(b)Credit risk
Credit risk is the risk of financial losses if a customer or a counterparty to a financial instrument fails to fulfill its contractual obligations, which arise mainly from the Group’s trade receivables. The Group maintains short-term investments and derivatives with financial institutions approved by its management according to objective criteria for diversification of such risk.
The Group seeks to mitigate its credit risk related to trade receivables by setting forth credit limits for each counterparty based on the analysis of its credit management process. Such credit exposure determination is performed considering the qualitative and quantitative information of each counterparty. The Group also focuses on the diversification of its portfolio and monitors different solvency and liquidity indicators of its counterparties, In addition, primarily for receivables in installments, the Group monitors the balance of allowances for expected credit losses, (see Note 5).
The main strategies on credit risks management are listed below:
•creating credit approval policies and procedures for new and existing customers.
•extending credit to qualified customers through a review of credit agency reports, financial statements and/or credit references, when available.
•reviewing existing customer accounts every twelve months based on the credit limit amounts.
•evaluating customer and regional risks.
•obtaining guarantees through the endorsement of rural producer notes (“CPR”), which give physical ownership of the relevant agricultural goods in the event of the customer’s default.
•establishing credit approval for suppliers in case of payments in advance.
•setting up provisions using the lifetime expected credit loss method considering all possible default events over the expected life of a financial instrument, Receivables are categorized based on the number of overdue days and/or a customer’s credit risk profile, Estimated losses on receivables are based on known troubled accounts and historical losses, Receivables are considered to be in default and are written off against the allowance for credit losses when it is probable that all remaining contractual payments due will not be collected in accordance with the terms of the agreement.
•requiring minimum acceptable counterparty credit ratings from financial counterparties.
•setting limits for counterparties or credit exposure; and
•developing relationships with investment-grade counterparties.
The current credit policy sets forth credit limits for customers based on credit score analysis made by the Group’s credit management area. Such score is determined

| 26

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

considering the qualitative and quantitative information related to each customer, resulting in a rating classification and a level of requirement of guarantees as follows:

|  |  | % Of guarantees required on sales
Credit rating | % Customers | Risk classification | Medium-sized farmers (i) | Other
AA & A | 18% | Very small | 80-90% | 0%
B | 49% | Medium | 100% | 30%
C & D | 15% | High | 100% | 60%
Simplified | 18% | Small farmers | N/A | N/A

(i)Medium-sized farmers ranging between 100 and 10,000 hectares in planted acreage that are typically not serviced directly by agricultural input producers,
For Colombia there is a similar credit scoring process, however, guarantees are not required based on credit ratings but instead based on qualitative factors such as relationships and past experiences with customers.
Maximum exposure to credit risk as of September 30, 2023 and June 30, 2023:

| September 30, 2023 | June 30, 2023
Trade receivables (current and non-current) | 3,102,177 |  | 2,708,539 |
Advances to suppliers | 679,772 |  | 192,119 |
| 3,781,949 |  | 2,900,658 |

(c)Liquidity risk
The Group defines liquidity risk as the risk of financial losses if it is unable to comply with its payment obligations in connection with financial liabilities settled in cash or other financial assets in a timely manner as they become due. The Group’s approach to managing this risk is to ensure that it has sufficient cash available to settle its obligations without incurring losses or affecting the operations. Management is ultimately responsible for managing liquidity risk, which relies on a liquidity risk management model to manage funding requirements and liquidity in the short, medium and long term.
The Group’s cash position is monitored by its senior management, through management reports and periodic performance meetings. The Group also manages its liquidity risk by maintaining reserves, bank credit facilities and other borrowing facilities deemed appropriate, through ongoing monitoring of forecast and actual

| 27

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

cash flows, as well as through the combination of maturity profiles of financial assets and liabilities.
The following maturity analysis of the Group’s financial liabilities and gross settled derivative financial instruments contracts (for which the cash flows are settled simultaneously) is based on the expected undiscounted contractual cash flows from the year end date to the contractual maturity date:

| September, 30 2023
| Up to 1 year | From 1 to 5 years | Total
Trade payables | 3,861,655 |  | 333 |  | 3,861,988 |
Lease liabilities | 87,759 |  | 107,281 |  | 195,040 |
Borrowings | 1,813,611 |  | 39,967 |  | 1,853,578 |
Obligations to FIAGRO quota holders | 170,865 |  | - |  | 170,865 |
Payables for the acquisition of subsidiaries | 237,411 |  | 31,716 |  | 269,127 |
Commodity forward contracts | 82,757 |  | - |  | 82,757 |
Derivative financial instruments | 46,404 |  | - |  | 46,404 |
Salaries and social charges | 201,780 |  | - |  | 201,780 |
Dividends payable | 1,327 |  | - |  | 1,327 |
Warrant liabilities | 37,866 |  | - |  | 37,866 |
Liability for FPA Shares | - |  | 144,956 |  | 144,956 |
| 6,541,435 |  | 324,253 |  | 6,865,688 |

| 28

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

| June, 30 2023
| Up to 1 year | From 1 to 5 years | Total
Trade payables | 2,765,354 |  | 2,547 |  | 2,767,901 |
Lease liabilities | 91,419 |  | 111,304 |  | 202,723 |
Borrowings | 982,318 |  | 48,382 |  | 1,030,700 |
Obligations to FIAGRO quota holders | 159,722 |  | - |  | 159,722 |
Payables for the acquisition of subsidiaries | 224,689 |  | 55,242 |  | 279,931 |
Commodity forward contracts | 210,040 |  | - |  | 210,040 |
Derivative financial instruments | 44,639 |  | - |  | 44,639 |
Salaries and social charges | 226,583 |  | - |  | 226,583 |
Dividends payable | 1,642 |  | - |  | 1,642 |
Warrant liabilities | 36,446 |  | - |  | 36,446 |
Liability for FPA Shares | - |  | 139,133 |  | 139,133 |
| 4,742,852 |  | 356,608 |  | 5,099,460 |

(d)Capital risk
The Group manages its capital risk through its leverage policy to ensure its ability to continue as a going concern and to maximize the return of its stakeholders by optimizing its balances of debt and equity.
The Group's strategy is to maintain the net debt up to 2.4 times the projected adjusted EBITDA for twelve months to be ended on June 30, 2024.
(i)Interest rate risk
Fluctuations in interest rates, such as the Brazilian interbank deposit rate, which is an average of interbank overnight rates in Brazil, and Colombian investment rate, which is an average of interbank and financial corporation loans, may have an effect on the cost of the Group’s borrowings and new borrowings.
The Group periodically monitors the effects of market changes in interest rates on its financial instruments portfolio. Funds raised by the Group are used to finance working capital for each crop season and are typically raised at short term conditions.
As of September 30, 2023 and June 30, 2023, the Group had no derivative financial instruments used to mitigate interest rate risks.

| 29

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

(i)Sensitivity analysis – exposure to interest rates
To mitigate its exposure to interest rate risk, the Group uses different scenarios to evaluate the sensitivity of variations transactions impacted by the CDI Rate and IBR Rate. The Scenario 1 represents the impact on booked amounts considering the most current (December 2023) CDI Rate and IBR Rate and reflects management’s best estimates. The Scenario 2 and Scenario 3 consider an appreciation of 25% and 50% in such market interest rates, before taxes, which represents a significant change in the probable scenario for sensitivity purposes.
The following table sets forth the potential impacts on the statements of profit or loss:

| September, 30 2023
|  | Expense on profit or loss
| Current Index | Scenario 1 | Scenario 2 | Scenario 3
Floating rate borrowings in Brazil | CDI Rate (12,65%) | 277,693 |  | 325,644 |  | 373,594 |
Floating rate borrowings in Colombia | IBR Rate (12,75%) | 17,185 |  | 20,207 |  | 23,230 |
|  | 294,878 |  | 345,851 |  | 396,824 |

(ii)Exchange rate risk
The Group is exposed to foreign exchange risk arising from its operations related to agricultural inputs, mainly related to the U.S. dollar, which significantly impacts global prices of agricultural inputs in general. Although all purchases and sales are conducted locally, certain purchase and sales contracts are indexed to the U.S. dollar.
The Group’s current commercial department seeks to reduce this exposure. Its marketing department is responsible for managing pricing tables and commercial strategies to seek a natural hedge between purchases and sales and to match currency and terms to the greatest extent possible.
The Group’s corporate treasury department is responsible for monitoring the forecasted cash flow exposure to the U.S. dollar, and whenever any mismatches as to terms and currencies are identified, non-deliverable forwards derivative financial instruments are purchased to offset these exposures, and therefore fulfill internal policy requirements, U.S. dollar exposure is managed by macro hedging through the analysis of the forecasted cash flow for the next two harvests. The Group may not have any leveraged derivative position.
The Group’s exchange rate exposure monitoring committee meets periodically across the commercial, treasury and corporate business departments. There are also

| 30

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

committees on purchase valuation and business intelligence for the main goods traded by the Group.
The Group does not adopt hedge accounting. Therefore, gains and losses from derivative operations are fully recognized in the statements of profit or loss, as disclosed in Note 27.
(i)Sensitivity analysis – exposure to exchange rates
To gauge its exposure to exchange rate risk, the Group uses different scenarios to evaluate its asset and liability positions in foreign currency and their potential effects on its results.
The Scenario 1 below represents the impact on carrying amounts of the most current (December 2023) market rates for the U.S. dollar (R$4.9397 to US$1.00). This analysis assumes that all other variables, particularly interest rates, remain constant. The Scenario 2 e Scenario 3 consider the appreciation of the Brazilian real against the US dollar at the rates of 25% and 50%, before taxes, which represents a significant change in the probable scenario for sensitivity purposes.
The following table set forth the potential impacts on the statements of profit or loss:

| September 30, 2023
|  | Effect on profit or loss
| Current Index | Scenario 1 | Scenario 2 | Scenario 3
Cash equivalents in U.S. Dollars | 4.9397 |  | (2,565) |  | 44,079 |  | 90,724 |
Trade receivables in U.S. Dollars | 4.9397 |  | (1,023) |  | 17,577 |  | 36,177 |
Trade payables in U.S. Dollars | 4.9397 |  | 4,635 |  | (79,668) |  | (163,971) |
Borrowings in U.S. Dollars | 4.9397 |  | 6,314 |  | (108,529) |  | (223,372) |
Net impacts on commercial operations |  | 7,361 |  | (126,541) |  | (260,442) |
Derivative financial instruments | 4.9397 |  | (6,136) |  | 105,465 |  | 217,067 |
Total impact, net of derivatives |  | 1,225 |  | (21,076) |  | (43,375) |

(iii)Commodity prices risk in barter transactions
In all barter transactions mentioned in Note 10, the Group uses future commodity market price as the reference to value the quantities of commodities included in the forward contracts to be delivered by the customers as payment for the Group’s

| 31

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

products into currency. The Group uses prices quoted by commodity trading companies to value the grain purchase contracts from farmers, Lavoro enters into grain sale contracts with trading companies or forward derivatives with financial institutions to sell those same grains, at the same price of the purchased contracts with farmers. As such, the Group strategy to manage its exposure to those commodity prices by entering into the purchase and sale contracts at similar conditions.
These transactions are conducted by a corporate department which manages and controls such contracts as well as the compliance of Group’s policies.
(i)Sensitivity analysis – exposure to commodity price
To gauge its exposure to commodity price risk, the Group uses different scenarios to evaluate its asset and liability positions on commodity forward contracts in soybean and corn and their potential effects on its results.
The “current risk” scenario below represents the impact on carrying amounts as of September 30, 2023, with assumptions described in Note 10. The other scenarios consider the appreciation of main assumptions at the rates of 25% and 50%, before taxes, which represents a significant change in the probable scenario for sensitivity purposes.
As of September 30, 2023:

| Tons | Position | Current Risk | Average of contract prices | Current Market (R$/bag) | +25% current | +50% current
Position |  |  |  |  |  | Market | Impact | Market | Impact
Soybean 2024 | 555,257 | Purchased | (8,272) | 128 | 127 | 159 | (2,068) | 191 | (4,136)
Soybean 2024 | (174,338) | Sold | 3,232 | 149 | 148 | 185 | 808 | 222 | 1,616
Corn 2024 | 95,141 | Purchased | (5,642) | 48 | 44 | 56 | (1,411) | 67 | (2,821)
Corn 2024 | (50,355) | Sold | (1,543) | 41 | 43 | 54 | (386) | 65 | (771)
Soybean 2025 | 59,627 | Purchased | 22,703 | 107 | 130 | 162 | 5,676 | 195 | 11,351
Net exposure on grain contracts | 485,332 | Net purchased | 10,478 |  |  |  | 2,619 |  | 5,239
Soybean 2024 | (412,777) | Sold on derivatives | 7,255 | 151 | 150 | 187 | 1,814 | 224 | 3,627
Corn 2024 | (8,480) | Sold on derivatives | 3,224 | 86 | 63 | 79 | 806 | 95 | 1,612
Soybean 2025 | (59,447) | Sold on derivatives | (23,000) | 125 | 148 | 185 | (5,750) | 222 | (11,500)
Net exposure on derivatives | (480,704) |  | (12,521) |  |  |  | (3,130) |  | (6,261)
Net exposure | 4,628 |  | (2,043) |  |  |  | (511) |  | (1,022)

| 32

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

(iv)Derivative financial investments
The Group is exposed to market risks mainly related to fluctuations in exchange rates and commodity prices. The Group maintains operations with financial instruments of protection to mitigate exposure to these risks. The Group has been implementing and improving the internal controls to identify and measure the effects of transactions with trading companies and with financial institutions, so that such transactions are captured, recognized and disclosed in the consolidated financial statements. The Group does not carry out investments of a nature speculative in derivatives or any other risk assets. Trading derivatives are classified as current assets or liabilities.

| September 30, 2023 | June 30, 2023
Options (put/call of commodities) | 8,343 | (513)
Forwards (R$/US$) (i) | (12,250) | 8,837
Swap (R$/US$) | (3,229) | (11,922)
Derivative financial instruments, net | (7,136) | (3,598)

(i) See note 7 (d) that describe the exposure to commodity prices and volume.
8.Inventories
(a)Inventories composition

| September 30, 2023 | June 30, 2023
Goods for resale | 2,576,140 |  | 1,885,941 |
(-) Allowance for inventory losses | (19,542) |  | (17,737) |
Total | 2,556,598 |  | 1,868,204 |

(b)Allowance for inventory losses

| September 30, 2023 | September 30, 2022
Opening balance | (17,737) |  | (10,186) |
Increase in allowance | (1,565) |  | (4,209) |
Exchange rate translation adjustment | (240) |  | 246 |
Ending balance | (19,542) |  | (14,149) |

| 33

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

9.Taxes recoverable

| September 30, 2023 | June 30, 2023
State VAT (“ICMS”) (i) | 80,136 |  | 78,805 |
Brazilian federal contributions (ii) | 295,480 |  | 239,815 |
Colombian federal contributions | 29,144 |  | 21,284 |
Total | 404,760 |  | 339,904 |
Current | 73,781 |  | 57,001 |
Non-current | 330,979 |  | 282,903 |

(i)Refers to the Brazilian value-added tax on sales and services, The Group’s ICMS relates mainly to the purchase of inputs and the Group has the benefit of a reduced ICMS tax rate.
(ii)Includes: a) credits arising from the Brazilian government’s taxes charged for the social integration program (PIS) and the social security program (COFINS), and Brazilian corporate income tax and social contributions, These credits, which are recognized as current assets, will be used by the Group to offset other Federal taxes; b) withholding and overpaid taxes which can be used to settle overdue or future payable federal taxes; c) withholding income tax on cash equivalents which can be used to offset taxes owed at the end of the calendar year, in case of taxable profit, or are carried forward in case of tax loss; and
Income tax Benefits arising from ICMS deduction
During 2022/2023 the Group obtained the benefit of deducting the ICMS benefit explained in item (i) in the income tax calculation. This was applied for the current year tax calculation and for the prior years and generated an income tax credit recorded in the year ended September 30, 2023 in the amount of R$52,613 recorded under “Brazilian federal contributions”.
In accordance with Article 30 of Law No, 12,973/2014, the amount of ICMS benefits must be allocated to the fiscal incentive reserve category when there is sufficient profit in each subsidiary. Additionally, under the same law, these tax benefits must be included in the calculation base for Corporate Income Tax (IRPJ) and Social Contribution on Net Profits (CSLL) when dividends are distributed or capital is refunded to the shareholders of the subsidiaries.
As of September 30, 2023, the amount of fiscal incentive reserve in the subsidiaries is R$358,834 and the balance of the fiscal benefit not yet allocated due to insufficient profits for this allocation stands at R$835,140. The Group has no intention to make our subsidiaries to distribute the incentive amounts to the parent, In the event of dividend distribution taxation will apply, as per the provisions of tax laws.

| 34

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

10.Commodity forward contracts – Barter transactions
As of September 30, 2023, fair value of commodity forward contracts is as follows:

| September 30, 2023 | June 30, 2023
Fair value of commodity forward contracts: |  |
Assets |  |
Purchase contracts | 85,666 |  | 53,695 |
Sale contracts | 7,113 |  | 61,166 |
| 92,779 |  | 114,861 |
Liabilities |  |
Purchase contracts | (77,114) |  | (206,881) |
Sale contracts | (5,424) |  | (186) |
| (82,538) |  | (207,067) |

The changes in fair value recognized in the statements of profit or loss are in note 28.

| 35

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

The main assumptions used in the fair value calculation are as follows:

| Outstanding Volume (tons) | Average of contract prices R$/Bag | Average Market Prices (Corn R$/bag (ii); Soybean US$/bu(i)) | Soybean market premium (US$/bu) | Freight (R$/ton)
Purchase Contracts |  |  |  |  |
Soybean |  |  |  |  |
As of June 30, 2023 | 449,847 | 127.95 | 13.16 | (0,3) | 294.65
As of September 30, 2023 | 614,885 | 125.91 | 13.16 | (0,3) | 317.58
Corn |  |  |  |  |
As of June 30, 2023 | 303,432 | 65.25 | 56.04 | N/A | 282.23
As of September 30, 2023 | 95,141 | 48.21 | 63.30 | N/A | 310.86
Selling Contracts |  |  |  |  |
Soybean |  |  |  |  |
As of June 30, 2023 | 145,915 | 145.71 | 13.16 | 0,0 | 0,0
As of September 30, 2023 | (174,338) | 148.87 | 13.19 | 0,0 | 0,0
Corn |  |  |  |  |
As of June 30, 2023 | 255,499 | 48.36 | 56.04 | N/A | 284.59
As of September 30, 2023 | 50,355 | 41.49 | 63.30 | N/A | 333.82

(i)Market price published by Chicago Board of Trade which is a futures and options exchange in United States.
(ii)Market price published by B3 – Brasil, Bolsa, Balcão which is a futures, options and stock exchange in Brazil.

| 36

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

11.Right-of-use assets and lease liabilities
(a)Right-of-use assets

| Vehicles | Buildings | Machinery and equipment | Total
Cost | 120,052 |  | 141,915 |  | 73,236 |  | 335,203 |
Accumulated depreciation | (54,560) |  | (77,732) |  | (29,232) |  | (161,524) |
Balance at June 30, 2023 | 65,492 |  | 64,183 |  | 44,004 |  | 173,679 |
Cost | 125,055 |  | 147,117 |  | 71,030 |  | 343,202 |
Accumulated depreciation | (56,658) |  | (85,764) |  | (29,448) |  | (171,870) |
Balance at September 30, 2023 | 68,397 |  | 61,353 |  | 41,582 |  | 171,332 |

Right-of-use assets amortization expense for the three-month period ended September 30, 2023 was R$19,441 (R$16,613 for the three-month period ended September 30, 2022.
(b)Lease liabilities

| September, 30 2023 | June, 30 2023
Vehicles | 73,484 |  | 68,420 |
Buildings | 82,242 |  | 85,839 |
Machinery and equipment | 27,196 |  | 30,160 |
Total | 182,922 |  | 184,419 |
Current | 82,306 |  | 85,865 |
Non-current | 100,616 |  | 98,554 |

Total interest on lease liabilities for the three-month period ended September 30, 2023 was R$4,258 (R$3,939 for the three-month period ended September 30, 2022).

| 37

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

12.Property, plant and equipment
(a)Property, plant and equipment balance is as follows:

| Vehicles | Lands, buildings and improvements | Machines, equipment and facilities | Furniture and fixtures | Computer equipment | Total
Cost | 40,851 |  | 142,561 |  | 75,134 |  | 15,610 |  | 10,015 |  | 284,171 |
Accumulated depreciation | (31,349) |  | (14,698) |  | (26,817) |  | (7,198) |  | (7,521) |  | (87,583) |
Balance at June 30, 2023 | 9,502 |  | 127,863 |  | 48,317 |  | 8,412 |  | 2,494 |  | 196,588 |
Cost | 42,050 |  | 151,347 |  | 76,338 |  | 16,073 |  | 10,775 |  | 296,583 |
Accumulated depreciation | (33,235) |  | (16,945) |  | (27,105) |  | (7,621) |  | (8,282) |  | (93,188) |
Balance at September 30, 2023 | 8,815 |  | 134,402 |  | 49,233 |  | 8,452 |  | 2,493 |  | 203,395 |

Depreciation expense of property, plant and equipment for the three-month period ended September 30, 2023 was R$4,515 (R$3,578 for the three-month period ended September 30, 2022.
There were no indications of impairment of property and equipment as of and for the three-month period ended September 30, 2023.

| 38

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

13.Intangible assets
(a)Intangible assets balance is as follows:

| Goodwill | Customer relationship | Purchase contracts and brands | Software and other | Total
Cost: |  |  |  |  |
At June 30, 2022 | 451,974 |  | 301,477 |  | 21,846 |  | 56,373 |  | 831,670 |
Additions | - |  | - |  | - |  | 5,025 |  | 5,025 |
Business combinations (i) | 98,890 |  | 50,600 |  | 1,207 |  | — |  | 150,698 |
Other (ii) | (3,201) |  | — |  | — |  | — |  | (3,201) |
Translation adjustment | (998) |  | (666) |  | (48) |  | (10) |  | (1,722) |
At June 30, 2023 | 546,665 |  | 351,411 |  | 23,005 |  | 61,388 |  | 982,470 |
Additions | - |  | - |  | - |  | 6,520 |  | 6,520 |
Business combinations (i) | 97,169 |  | 44,244 |  | - |  | - |  | 141,413 |
Other (iii) | 2,748 |  | — |  | - |  | - |  | 2,748 |
Translation adjustment | 1,440 |  | 137 |  | 335 |  | - |  | 1,912 |
At September 30, 2023 | 648,022 |  | 395,793 |  | 23,340 |  | 67,650 |  | 1,134,805 |
Amortization: |  |  |  |  |
At June 30, 2022 | - |  | 89,502 |  | 6,929 |  | 10,918 |  | 107,349 |
Amortization for the period | - |  | 50,263 |  | 8,983 |  | 8,682 |  | 67,928 |
At June 30, 2023 | - |  | 139,765 |  | 15,912 |  | 19,600 |  | 175,277 |
Amortization for the period | - |  | 13,641 |  | 1,919 |  | 2,816 |  | 18,376 |
At September 30, 2023 | - |  | 153,406 |  | 17,831 |  | 22,416 |  | 193,653 |
At June 30, 2023 | 546,665 |  | 211,646 |  | 7,093 |  | 41,788 |  | 807,192 |
At September 30, 2023 | 648,022 |  | 242,387 |  | 5,509 |  | 45,234 |  | 941,152 |

| 39

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

(i) Balances arising from business combinations (Note 18).
(ii) Balance arising from the adjustment in the purchase price from acquisition of Agrozap, which occurred in the year ended June 30, 2022, The consideration for the acquisition was subject to post-closing price adjustment, based on the working capital variations of the purchased company.
(iii) Balance arising from the adjustment in the purchase price from acquisition of Casa Trevo Participações, which occurred in the year ended June 30, 2023. The consideration for the acquisition was subject to post-closing price adjustment, based on the working capital variations of the purchased company.
Impairment of intangible assets
For the three-month period ended September 30, 2023, there were no indications that the Group’s intangible assets might be impaired.

| 40

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

14.Trade payables
(a)Trade payables

| September 30, 2023 | June 30, 2023
Trade payables – Brazil | 3,210,155 |  | 2,268,420 |
Trade payables – Colombia | 410,386 |  | 309,828 |
Total | 3,620,541 |  | 2,578,248 |
Current | 3,620,208 |  | 2,575,701 |
Non-current | 333 |  | 2,547 |

The average effective interest rate used to discount trade payables for the three-month period ended September 30, 2023 was 1.58% per month (1.58% as of June 30, 2023).
(b)Guarantees
The Group acquires guarantees with financial institutions in connection with installment purchases of agricultural inputs from certain suppliers. These guarantees are represented by short-term bank guarantees and endorsement to the supplier of CPRs obtained from customers in the sale process. The amount of these guarantees as of September 30, 2023 was R$1,475,550 (R$920,870 as of June 30, 2023).
(c)Trades payable — Supplier finance
During the year ended June 30, 2023, the Group signed agreements with financial institutions to negotiate with suppliers to extend the payment terms and discounting of trade receivable from its suppliers, with interest rates ranging from 1 and 1.5 per month. When trade payable is included in this transaction, such amount is transferred from “Trade Payables” to “Trades payable — Supplier finance”. The Group did not sign supplier finance agreements for the period ended September 30, 2023.
As of September 30, 2023 the Group fully settled the supplier finance operation.

| 41

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

15.Borrowings

| September 30, 2023 | June 30, 2023
Borrowing in Colombia | 92,055 |  | 71,562 |
Borrowings in Brazil | 1,646,354 |  | 893,913 |
Total borrowings | 1,738,409 |  | 965,475 |

The Group’s borrowings are contracted for the purpose of strengthening the working capital and have repayment terms scheduled in conjunction with the operating cycles of each harvest.
(a)Debt composition

| Average interest rate September 30,2023 (i) | September 30, 2023 | Average interest rate June 30, 2023 (i) | June 30, 2023
Debt contracts in Brazil in: |  |  |  |
R$, indexed to CDI (ii) | 15.76 | % | 1,149,975 |  | 16.62 | % | 725,563 |
R$, with fixed interest | 9.73 | % | 7,010 |  | 8.76 | % | 8,590 |
U.S. Dollars, with fixed interest | 2.71 | % | 489,368 |  | 4.03 | % | 159,760 |
Debt contracts in Colombia in: |  |  |  |
COP, indexed to IBR (iii) | 17.19 | % | 82,328 |  | 15.43 | % | 69,862 |
COP, with fixed interest | 16.75 | % | 9,728 |  | 15.72 | % | 1,700 |
Total |  | 1,738,409 |  |  | 965,475 |
Current |  | 1,700,925 |  |  | 922,636 |
Non-current |  | 37,484 |  |  | 42,839 |

(i)In order to determine the average interest rate for debt contracts with floating rates, the Group used the rates prevailing during the years.
(ii)Brazilian reais denominated debt that bears interest at the CDI Rate (see Note 7 for a definition of those indexes), plus spread.
(iii)Colombian peso-denominated debt that bears interest at the IBR rate (see Note 7 for a definition of those indexes), plus spread.

| 42

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

(b)Movement in borrowings

At June 30, 2022 | 710,552 |
Proceeds from borrowings | 731,007 |
Repayment of principal amount | (156,751) |
Accrued interest | 36,303 |
Exchange rate translation | (5,574) |
Interest payment | (24,342) |
At September 30, 2022 | 1,291,195 |

At June 30, 2023 | 965,475 |
Proceeds from borrowings | 1,218,074 |
Repayment of principal amount | (481,957) |
Accrued interest | 61,268 |
Borrowings from acquired companies | 32,429 |
Foreign exchange differences | 8,735 |
Exchange rate translation | 3,921 |
Interest payment | (69,536) |
At September 30, 2023 | 1,738,409 |

(c)Schedule of maturity of noncurrent portion of borrowings
The installments are distributed by maturity year:

| September 30, 2023 | June 30, 2023
2024 | 4,751 |  | 726 |
2025 | 12,312 |  | 15,452 |
2026 | 11,274 |  | 1,376 |
2027 | 6,634 |  | 25,285 |
2028 | 2,513 |  | - |
Total | 37,484 |  | 42,839 |

| 43

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

(d)Covenants
The Group has no financial covenants as of September 30, 2023.
16.Obligations to FIAGRO quota holders
On July 22, 2022, the Group entered into an agreement to transfer receivables in the aggregate amount of R$160,000 to FIAGRO, a structured entity, as defined by IFRS 10, established under Brazilian law designed specifically for investing in agribusiness credit rights receivables. The acquisition of such receivables by the FIAGRO investment fund enables the Group to anticipate the receipt of funds from such receivables.
The Group holds all subordinated quotas issued by the FIAGRO, representing approximately 5% of the total outstanding quotas in an aggregate amount of R$8,100 while other parties hold all senior and mezzanine quotas, representing approximately 95% of the total outstanding quotas, which includes certain of Patria’s related parties that acquired the mezzanine quotas of FIAGRO in an aggregate amount of R$56,000. Under the terms of the FIAGRO, we are not liable in case there is a default on the credit rights acquired by the fund, but any such default may adversely affect our stake in FIAGRO quotas. Our agreement to assign certain credit rights to FIAGRO will expire when all assigned receivables have been liquidated.
The bylaws of the FIAGRO were established by the Group at their inception, and grant the Group significant decision-making authority over these entities, such as the right to determine which credits rights are eligible to be acquired by the FIAGRO.
In addition, senior and mezzanine quota holders receive interest at a benchmark rate of return ranging from the CDI rate +2.45% per year up to the CDI rate +8.0% per year. Residual returns from the FIAGRO fund, if any, are paid on the subordinated quotas, which do not bear interest and are not otherwise entitled to any pre-established rate of return. Senior and mezzanine quotas amortize annually over a three-year period after an initial 24-month grace period, whereas subordinated quotas amortize at the end of the fifth annual period.
In accordance with IFRS 10, we concluded we control FIAGRO and, therefore, it is consolidated in our financial statements. The senior and mezzanine quotas are accounted for as a financial liability under “Obligations to FIAGRO quota holders” and the remuneration paid to senior and mezzanine quota holders is recorded as interest expense.
17.Payables for the acquisition of subsidiaries
The purchase agreements for acquisition of subsidiaries include payments to the seller in the event of successful collection, after the acquisition date of outstanding

| 44

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

receivables and certain tax credits subject to administrative proceedings. See Note 17.
Consideration paid during the year ended September 30, 2023, net of cash acquired, was R$109,724 which includes installment payments for acquisitions completed in previous years in the amount of R$44,542 (R$162,317 on June 30, 2023, which includes payments for acquisitions made in previous years in the amount of R$106,764). All these payments are included in the “Acquisition of subsidiary, net of cash acquired” in the cash flows.

| 45

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

18.Acquisition of subsidiaries
(a)Acquisition in the three-month period ended September 30, 2023.
The fair value of the identifiable assets and liabilities, consideration transferred and goodwill as of the date of each acquisition was:

Fair value as of the acquisition date
Assets | Referência Agroinsumos (a)
Cash equivalents | 8,135 |
Trade receivables | 31,464 |
Inventories | 43,680 |
Other assets | 11,473 |
Property, plant and equipment | 1,556 |
Intangible assets | 44,244 |
| 140,552 |
Liabilities |
Trade payables | 56,137 |
Borrowings | 32,429 |
Advances from customers | 40,757 |
Other liabilities | 4,168 |
| 133,491 |
Total identifiable net assets at fair value | 7,061 |
Non-controlling interests (i) | (2,118) |
Goodwill arising on acquisition | 97,169 |
Consideration transferred | 102,112 |
Cash paid | 67,112 |
Payable in installments | 35,000 |

(i)The total of non-controlling interests and shares issued represents the acquisition of subsidiaries presented in the statement of changes in equity.

| 46

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

(b)Acquisitions in the year ended June 30, 2023
The fair value of the identifiable assets and liabilities, consideration transferred and goodwill as of the date of each acquisition was:

| Fair value as of the acquisition date
Assets | Floema (b) | Casa Trevo (c) | Provecampo (d) | Sollo Sul and Dissul (e) | Cromo (f) | Total
Cash equivalents | 24,167 |  | 12,306 |  | 10,479 |  | 16,307 |  | 8,735 |  | 71,994 |
Trade receivables | 19,892 |  | 32,106 |  | 7,499 |  | 132,467 |  | 11,907 |  | 203,871 |
Inventories | 52,133 |  | 61,734 |  | 11,320 |  | 84,226 |  | 5,311 |  | 214,724 |
Other assets | 11,739 |  | 4,750 |  | 23 |  | 46,663 |  | 664 |  | 63,839 |
Property, plant and equipment | 1,152 |  | 867 |  | 983 |  | 2,372 |  | 3,151 |  | 8,525 |
Intangible assets | 14,879 |  | 1,676 |  | 12,117 |  | 2,083 |  | 2,722 |  | 33,477 |
| 123,962 |  | 113,439 |  | 42,421 |  | 284,118 |  | 32,490 |  | 596,430 |
Liabilities |  |  |  |  |  |
Trade payables | 88,902 |  | 48,070 |  | 10,980 |  | 80,811 |  | 1,200 |  | 229,963 |
Borrowings | - |  | - |  | - |  | 25,756 |  | - |  | 25,756 |
Provision for contingencies | - |  | 10,245 |  | - |  | - |  | - |  | 10,245 |
Other liabilities | 1,543 |  | 13,659 |  | 6,910 |  | 87,921 |  | 4,056 |  | 114,089 |
| 90,445 |  | 71,974 |  | 17,890 |  | 194,488 |  | 5,256 |  | 380,053 |
Total identifiable net assets at fair value | 33,517 |  | 41,465 |  | 24,531 |  | 89,630 |  | 27,234 |  | 216,376 |
Non-controlling interests (1) |  | (6,220) |  | - |  | - |  | (8,169) |  | (14,389) |
Goodwill arising on acquisition | 25,796 |  | 9,625 |  | 2,010 |  | 57,719 |  | 5,331 |  | 100,481 |
Consideration transferred | 59,313 |  | 44,870 |  | 26,541 |  | 147,349 |  | 24,395 |  | 302,468 |
Cash paid | 25,294 |  | 23,619 |  | 17,682 |  | 52,832 |  | 8,120 |  | 127,547 |
Shares issued (1) | 12,296 |  | - |  | - |  | - |  | - |  | 12,296 |
Payable in installments | 21,723 |  | 21,251 |  | 8,859 |  | 94,517 |  | 16,275 |  | 162,625 |

(1)The total of non-controlling interests and shares issued represents the acquisition of subsidiaries presented in the statement of changes in net investment.

| 47

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

(c)Fair value of assets acquired.
The Group estimated the fair value of significant assets acquired using the following valuation methods:

Item | September 30, 2023 | June 30, 2023 | Nature | Valuation method
Customer relationship | 34,731 | 33,477 | A loyal relationship between the acquirees and its customers, which translates into recurring purchases of products and services | Multi Period Excess Earnings Method (MPEEM)
Inventories | — | 214,724 | Inventories | Selling price less all expenses related to the distribution of that good
Purchase Contracts | - | - | Favorable purchase contract with suppliers | Multi Period Excess Earnings Method (MPEEM)
Total | 34,731 | 248,201 |  |

There were no differences between accounting basis and tax basis on fair value adjustments, and therefore no deferred taxes were recorded.
(a)Acquisition of Referência Agroinsumos
On February 28, 2023, the Group signed an agreement for the acquisition of Referência Agroinsumos Ltda, (“Referência Agroinsumos”), establishing the terms and other conditions for its acquisition.
The acquisition was completed on July 31, 2023, and the Group currently owns a 65.18% interest.
(b)Acquisition of Floema
On March 22, 2022, the Group signed an agreement for the acquisition of Floema Soluções Nutricionais de Cultivos Ltda, (“Floema”), establishing the terms and other conditions for its acquisition.
The fair value of the shares issued to this acquisition was based on an equity transaction with third parties close to the acquisition date.
The acquisition was completed on August 4, 2022 and the Group currently owns a 62.61% interest.
(c)Acquisition of Casa Trevo Participações S,A,
On May 5, 2022, the Group signed an agreement for the acquisition of Casa Trevo Participações S,A, (“Casa Trevo”), establishing the terms and other conditions for its acquisition.

| 48

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

The acquisition was completed on August 31, 2022 and the Group currently owns a 79.14% interest.
(d)Acquisition of Provecampo
On June 16, 2022, the Group signed an agreement for the acquisition of Provecampo S,A,S, (“Provecampo”), an entity incorporated in Colombia, establishing the terms and other conditions for its acquisition.
The acquisition was completed on July 29, 2022 and the Group currently owns a 94.90% interest.
(e)Acquisition of Sollo Sul e Dissul
On July 22, 2022, the Group signed an agreement for the acquisition of Sollo Sul Insumos Agrícolas Ltda (“Sollo Sul”) and Dissul Insumos Agrícolas Ltda ("Dissul"), establishing the terms and other conditions for its acquisition.
The acquisition was completed on November 30, 2022 and the Group currently owns a 93.11% interest.
(f)Acquisition of Cromo
On January 13, 2023, the Group signed an agreement for the acquisition of Cromo Indústria Química Ltda, (“Cromo”), establishing the terms and other conditions for its acquisition.
The acquisition was completed on May 31, 2023 and the Group currently owns a 70% interest.
(g)Pro forma information (unaudited)
The following tables discloses the Group’s revenues and profit or loss for the period assuming all of the acquisitions completed during the year were completed at the beginning of such year:

| September 30, 2023 | September 30, 2023
Revenues | 45,670 |  | 2,405,360 |
Profit (loss) for the year | (14,090) |  | 86,491 |

| 49

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

(h)Revenues and results from new subsidiaries
The revenues and profit or loss of the acquisitions from the acquisition date through the end of the fiscal year in which the acquisition was completed and included in the consolidated statement of profit or loss are as follows:
Acquisitions in the period ended September 30, 2023:

| Revenues | Profit (loss) | Period from
Referência Agroinsumos | 39,114 |  | (696) |  | July 2023
Total | 39,114 |  | (696) |  |

Acquisitions in the year ended September 30, 2023:

| Revenues | Profit (loss) | Period from
Provecampo | 37,291 |  | 1,656 |  | August 2022
Floema | 205,451 |  | 12,628 |  | August 2022
Casa Trevo | 136,003 |  | 20,787 |  | September 2022
Total | 378,745 |  | 35,071 |  |

(i)Signed agreement for future acquisitions
The Group signed an agreement on August 25, 2022, for the acquisition of an 82% interest in NS Agro S.A. (“NS Agro”), establishing the terms and other conditions for its acquisition. The precedent conditions for this transaction were not completed by August 31, 2023 and the parties subsequently canceled the agreement. As a result, the consideration which was transferred in advance for the acquisition amounted to R$14,924 was not recovered and was therefore transferred for other operating income for the three months period ended September 30, 2023.
19.Accounting considerations related to the SPAC Transaction
On February 28, 2023, Lavoro and TPB Acquisition Corp, consummated a capital reorganization transaction as described in note 1.b. Warrants and forward purchase agreements were assumed in the SPAC Transaction and are detailed above.
Warrants
TPB Acquisition Corp, issued 10,083,606 public and private warrants to certain of its shareholders and its maturity is February 28, 2028. Such public and private warrants were assumed by Lavoro as a result of the SPAC Transaction. The outstanding warrants as of September 30, 2023, is 10,083,592 and aggregate fair value of the private and public warrants is R$37,866, and the warrants are reported in the

| 50

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

consolidated statement of financial position as warrant liabilities under non-current liabilities. For the three-month period ended September 30, 2023, the Group recognized a loss of R$1,420 related to changes to the fair value of public warrants and private warrants. The fair value of the warrants was calculated based on the listed market price of such warrants.
Forward share purchase agreements
TPB Acquisition Corp, entered into certain Forward Share Purchase Agreements with certain shareholders of TPB Acquisition Corp., in which TPB Acquisition Corp. agreed to purchase, in the aggregate, up to 2,830,750 of TPB Acquisition Corp,’s Class A Ordinary Shares held by those equity holders, either after 24 months after closing of the SPAC Transaction or after meeting certain criteria as defined in the Forward Share Purchase Agreements. Such Forward Share Purchase Agreements were assumed by Lavoro, whereby Lavoro agreed to purchase the same number of Lavoro’s ordinary shares under the same conditions as defined in those Forward Share Purchase Agreements. Lavoro placed a designated balance of funds into an escrow account at the closing of the SPAC Transaction for the purpose acquiring such shares.
Lavoro’s Ordinary Shares subject to the Forward Share Purchase Agreement are considered financial liabilities and are recorded in the consolidated statement of financial position as Liability for FPA Shares in non-current liabilities at the amounts deposited in the escrow account. The designated balance of funds in the escrow account is reported in the consolidated statement of financial position as restricted cash. The amount of Liability for FPA Shares and the restricted cash was R$144,572 as of September 30, 2023.

| 51

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

20.Income taxes
(a)Reconciliation of income taxes expense

| September 30, 2023 | September 30, 2022
Profit (loss) before income taxes | (156,520) | 24,581
Statutory rate (i) | 34% | 34%
Income taxes at statutory rate | 53,217 | (8,358)
Unrecognized deferred tax asset (ii) | (21,964) | (3,143)
Difference from income taxes calculation based on taxable profit computed as a percentage of gross revenue | (21) | (23)
Deferred income taxes over goodwill tax recoverable | (845) | (619)
Tax benefit (iii) | 52,613 | 66,561
Other | 2,523 | (919)
Income tax expense | 85,523 | 53,499
Income tax and social contribution effective rate | -55% | 218%
Current income taxes | 38,493 | 16,232
Deferred income taxes | 47,030 | 37,267

(i)The effective tax rate reconciliation considers the statutory income taxes rates in Brazil, due to the significance of the Brazilian operation when compared to Colombia, The difference to reconcile the effective rate to the Colombian statutory rate (35%) is included in others.
(ii)The Group did not recognize deferred tax assets on accumulated tax losses from certain subsidiaries in a total amount of unrecognized credits on tax losses of R$202,040 (R$187,310 for June 30, 2023). The Group assessed that is unlikely that these subsidiaries will generate future taxable income in the foreseeable future.
(iii)This amount reflects the tax benefit from the deduction of the ICMS tax benefits in the calculation of the income tax (see note 9).

| 52

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

(b)Deferred income taxes balances

| September 30, 2023 | June 30, 2023
Deferred assets and liabilities: |  |
Amortization of fair value adjustment | 69,195 |  | 66,065 |
Tax losses | 150,716 |  | 123,072 |
Allowance for expected credit losses | 47,729 |  | 49,026 |
Adjustment to present value | 10,147 |  | 14,222 |
Provision for management bonuses | 17,341 |  | 22,182 |
Allowance for inventory losses | 9,491 |  | 3,841 |
Financial effect on derivatives | 1,937 |  | (1,468) |
Fair value of commodity forward contracts | (48) |  | 31,343 |
Unrealized exchange gains or losses | 439 |  | (7,618) |
Unrealized profit in Inventories | 12,345 |  | (11,121) |
Amortized right-of-use assets | 6,706 |  | 6,273 |
Deferred tax on goodwill | (3,290) |  | (2,067) |
Other provisions | 41,178 |  | 22,981 |
Deferred income tax assets, net | 382,383 |  | 329,082 |
Deferred income tax liabilities, net | (18,499) |  | (12,351) |
Deferred income tax assets, net | 363,884 |  | 316,731 |

| Deferred income tax and social contribution
At June 30, 2022 | 193,495 |
Recognized in the statement of profit or loss | 128,362 |
Deferred tax from acquired companies | (5,126) |
At June 30, 2023 | 316,731 |
Recognized in the statement of profit or loss | 41,951 |
At September 30, 2023 | 358,682 |

| 53

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

The aging analysis of net deferred income tax is as follow:

| September 30, 2023 | June 30, 2023
Up to 1 year | 211,256 |  | 185,123 |
Over 1 year | 147,426 |  | 131,608 |
Total | 358,682 |  | 316,731 |

21.Provisions for contingencies
Probable losses
The balance of probable losses from civil, tax and labor contingencies recognized by the Group was R$12,729 and R$8,845 respectively as of September 30, 2023 and June 30, 2023.
Possible losses
The Group is a party to various proceedings involving tax, environmental and civil matters that were assessed by management, under advice of legal counsel, as possibly leading to losses. Possible losses from contingencies amounted to R$97,646 and R$77,724 as of September 30, 2023 and June 30, 2023, respectively.
22.Advances from customers
Advances from customers arise from the “Cash sale” modality, in which rural producers advance payments to the Group at the beginning of a harvest, before the billing of agricultural inputs. These advances are settled in the short term.
(a)Movement in the period

| September 30, 2023 | June 30, 2023
Balance as of the beginning of the year | 488,578 |  | 320,560 |
Revenue recognized that was included in the contract liability balance at the beginning of the year | (488,578) |  | (320,560) |
Increase in advances | 626,790 |  | 427,463 |
Advances from acquired companies | 3,511 |  | 61,115 |
Balance at the end of the year | 630,301 |  | 488,578 |

| 54

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

23.Related parties
Related parties of the Group that have receivable, payable or other balances are either (i) Non-controlling shareholders, (ii) Patria Investments Limited, which manages the funds that control the Group, or (iii) Key management personnel.
(a)Breakdown of assets and liabilities:

| September 30, 2023 | June 30, 2023
Assets |  |
Trade receivables (i) | 21,626 |  | 24,487 |
Total assets | 21,626 |  | 24,487 |
Liabilities |  |
Trade payables (i) | 1,467 |  | 1,675 |
Payables for the acquisition of subsidiaries (ii) | 159,387 |  | 100,287 |
Total liabilities | 160,854 |  | 101,962 |

(i)Refer to commercial transactions in the ordinary course of business with non-controlling shareholders of subsidiaries, Such transactions are carried at the same commercial terms as non-related parties customers.
(ii)Payments in installments to the non-controlling shareholders related to certain business combinations as described in Note 18.
(b)Statement of profit or loss

| September 30, 2023 | September 30, 2022
Revenue from sales of products (i) | 3,601 |  | 9,927 |
Monitoring expenses (ii) | (7,026) |  | (4,967) |
Interest on payables for the acquisition of subsidiaries | (4,461) |  | (2,652) |
Other expenses | (450) |  | (516) |
Total | (8,336) |  | 1,792 |

(i)Refer to commercial transactions in the ordinary course of business with non-controlling shareholders of subsidiaries, Such transactions are carried at the same commercial terms as non-related party customers.
(ii)Expenses paid to the Parent in relation to management support services rendered by the investee Gestão e Transformação S.A. in connection with acquisition transactions.

| 55

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

(c)Key management personnel compensation

| September 30, 2023 | September 30, 2022
Wages | 3,606 |  | 5,268 |
Direct and indirect benefits | 485 |  | 413 |
Variable compensation (bonuses) | - |  | 7,421 |
Short-term benefits | 4,091 |  | 13,102 |
Share-based payment benefits | 5,964 |  | 8,912 |
Total | 10,055 |  | 22,014 |

Key management personnel compensation includes payments to Group board of directors and the executive officers.
24.Equity
The following table illustrates the outstanding amount of issued shares as of September 30, 2023. There were no changes in relation to June 30, 2023:

Ordinary authorized and issued shares | Number of shares | Share capital
Shares issued to the shareholders of Lavoro Agro Limited | 98,726,401 | 514 |
Shares issued to the shareholders of TPB Acquisition Corp | 14,875,879 | 77 |
As of September 30, 2023 | 113,602,280 | 591 |

Ordinary Shares
A Lavoro ordinary shares have a par value of US$0.001 and are entitled to one vote per share.
Other capital reserves
Other capital reserves is comprised of a reserve set-up by the Group share-based payment (an equity-settled share-based compensation plan).
Share based payment
Share Options
On August 17, 2022, the Group approved the Lavoro Agro Holding S,A, Long-Term Incentive Policy (the “Lavoro Share Plan”). Under the Lavoro Share Plan, individuals

| 56

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

selected by the Lavoro board of directors (“Selected Employees”) are eligible to receive incentive compensation consisting of cash, assets or share options issued by Lavoro Agro Limited, in an amount linked to the appreciation in the Lavoro Agro Limited share price at the time of the liquidity event, upon the satisfaction of certain conditions, as described below.
As of September 30, 2023, Lavoro has granted 49,518,732 share options as incentive compensation to Selected Employees, Share options granted under the Lavoro Share Plan will vest in the event the following market conditions are met (the “Market Conditions”):
(i)the occurrence of a liquidity event satisfying a minimum internal rate of return specified in the Lavoro Share Plan; and
(ii)the price per share obtained under such liquidity event must be greater than or equal to one of the following amounts:
(a)a pre-established reference price multiplied by three; or
(b)an amount calculated in accordance with a pre-established formula, in each case specified under the Lavoro Share Plan.
Moreover, upon the satisfaction of the Market Conditions, such share options will vest according to the following schedule (the “Service Conditions”):
(i)one-third of the options vest on the third anniversary of the grant date;
(ii)one-third of the options vest on the fourth anniversary of the grant date; and
(iii)one-third of the options vest on the fifth anniversary of the grant date.
The Lavoro Share Plan has a term of five years: if the Market Conditions have not been satisfied within this year, all options granted under the Lavoro Share Plan will be extinguished, with no further payment or incentive obligation remaining due by Lavoro. The consummation of the SPAC Transaction (see note 1) did not satisfy the Market Conditions.
As of February 28, 2023, the shareholders of Lavoro approved the Lavoro Share Plan. As a result, Lavoro reserved for issuance the number of ordinary shares equal to the number of Lavoro Share Plan Shares under the Lavoro Share Plan, as adjusted in accordance with the Business Combination Agreement, in an amount of 1,663,405 ordinary shares.
The exercise price of the share-based payment is equal to the options price agreed with the employee in the contracts, representing the amount of R$1 monetarily adjusted until the date on which the liquidity event occurs.
The fair value of share options granted is estimated at the date of grant considering the terms and conditions using the Black-Scholes model, taking into account the terms and conditions on which the share options were granted. The model also takes into account historical and expected dividends, and the share price volatility of Lavoro.

| 57

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

The expense recognized for employee services received during the period and the number of options granted is shown in the following tables:

| Other capital reserves
At June 30, 2022 | - |
Share-based payments expense during the year | 14,533 |
At June 30, 2023 | 14,533 |
Share-based payments expense during the year | (336) |
At September 30, 2023 | 14,197 |

| Options granted
At June 30, 2022 | -
Granted options | 49,518,732
Canceled | (3,800,000)
At June 30, 2023 | 45,718,732
Canceled | (1,724,990)
At September 30, 2023 | 43,993,742

The weighted average fair value of the options granted was R$0.44 per option. The significant data included in the model were: weighted average share price of R$2.88 on the grant date, exercise price presented above, volatility of 33.88%, no dividend yield, an expected option life of 3.37 years and a risk-free annual interest rate of 12.45%.
Lavoro Limited Restricted Stock Unit Plan (“RSU Plan”)
On May 26, 2023 the Board of Directors approved a long-term incentive plan (the “Restricted Stock Unit Plan” or the “RSU Plan”) in which eligible participants may include members of our management, our employees and our directors. Beneficiaries under the New Lavoro Equity Plan will be granted equity awards pursuant to the terms and conditions of the New Lavoro Equity Plan and any applicable award agreement. Each RSU to which the participant is entitled, once all

| 58

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

the conditions under the plan are met, shall entitle the participant to receive one share issued by Lavoro Limited.
The total number of shares that may be delivered to the participants within the scope of the plan shall not exceed five percent of shares representing the Group’s total share capital.
On August 16, 2023 and September 28, 2023, (the grant date) the board of directors of Lavoro (the “Board”) approved the RSU Plan, which provides for the grant of restricted stock units to participants identified by the Board.
The RSUs will vest according to the following schedule, except if otherwise established by the Board of Directors:
(i)one-third of the options vest on the third anniversary of the grant date;
(ii)one-third of the options vest on the fourth anniversary of the grant date; and
(iii)one-third of the options vest on the fifth anniversary of the grant date.
In the event of termination/dismissal of the participant, all unvested RSUs shall be automatically extinguished with not compensation rights. participant, all RSUs whose vesting period has not elapsed on the date of such termination/dismissal shall be automatically extinguished without being entitled any right to compensation.
The fair value of share granted is estimated at the date of grant considering the current market price of the Lavoro’s share in the Nasdaq Stock Exchange.
As of September, 2023, 1,689,632 RSUs have been granted, with each RSU entitling the holder to one share of Lavoro stock after the vesting period, as detailed below:

| RSUs granted
At June 30, 2023 | -
Granted options | 1,597,076
Canceled | -
At September 30, 2023 | 1,597,076

The weighted average fair value of the shares granted was R$26.99 per share.
The expense for employee services received during the period was R$6,300.

| 59

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

Earnings per share
Earnings (loss) per share is calculated by dividing the profit (loss) for the period attributable to net investment of the parent/equity holders of the parent by the weighted average number of common shares available during the fiscal year. Diluted earnings (loss) per share is calculated by adjusting the weighted average number of common shares, presuming the conversion of all the potential diluted common shares.
The number of ordinary shares issued by Lavoro, as a result of the corporate reorganization is reflected retroactively, for purposes of calculating earnings per share in the period ended September 30, 2022.
The table below show data used in calculating basic and diluted earnings (loss) per share attributable to the net investment of the parent/equity holders of the parent:

| 2023 | 2022
Weighted average ordinary shares of Lavoro | 113,602 | 113,602
Effects of dilution from: |  |
Share-based payment (i) | 2,248 | 1,638
Restricted stock unit plan (ii) | 1,003 | -
Number of ordinary shares adjusted for the effect of dilution | 116,853 | 115,210
Profit (loss) for the period attributable to net investment of the parent/equity holders of the parent | (66,537) | 59,615
Basic earnings (loss) per share | (0.59) | 0.52
Diluted earnings (loss) per share | (0.59) | 0.52

(i)Based on the numbers of shares reserved by Lavoro Limited to the Lavoro Share Plan, as explained above
(ii)Based on the numbers of shares reserved by Lavoro Limited to the Lavoro RSU Plan, as explained above.
The Group reported a loss for the three-month period ended September 30, 2023, accordingly the ordinary shares related to the share-based payment and RSU Plan have a non-dilutive effect and therefore were not considered in the total number of shares outstanding to determine the diluted earnings (loss) per share.
All public and private warrants are out of the money as of September 30, 2023; therefore, the approximately 6,012,085 and 4,071,507 public and private warrants, respectively, were not included in the calculation of the diluted earnings (loss) per share. Similarly, the 3,060,662 Founder Shares, that were detailed in note 22 to the Group’s annual consolidated financial statements as of June 30, 2023, were not

| 60

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

considered in the calculation of the diluted earnings (loss) per share due to the Group’s market share price.
25.Revenue from contracts with customers
Below is revenue from contracts with customers disaggregated by product line and geographic location:

| September 30, 2023 | September 30, 2022
Inputs Retails sales |  |
Brazil | 1,679,850 |  | 1,726,013 |
Colombia | 265,609 |  | 305,229 |
Private Label products |  |
Crop Care | 166,557 |  | 121,521 |
Grains (i) |  |
Brazil | 195,386 |  | 89,065 |
Colombia | 30,616 |  | 27,524 |
Services |  |
Colombia | 27,938 |  | 16,612 |
Total Revenues | 2,365,956 |  | 2,285,964 |
Summarized by region |  |
Brazil | 2,041,793 |  | 1,936,599 |
Colombia | 324,163 |  | 349,365 |

(i)As explained in Note 10, the Group receives grains from certain customers in exchange to the product sold. The fair value of such non-cash consideration received from the customer is included in the transaction price and measured when the Group obtains control of the grains. The Group estimates the fair value of the non-cash consideration by reference to its market price.

| 61

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

26.Costs and expenses by nature
The breakdown of costs and expenses by nature is as follows:

| September 30, 2023 | September 30, 2022
Cost of inventory (i) | 2,043,280 |  | 1,794,563 |
Personnel expenses | 123,447 |  | 146,916 |
Maintenance of the units | 11,946 |  | 7,443 |
Consulting, legal and other services | 30,453 |  | 23,831 |
Freight on sales | 26,821 |  | 15,993 |
Commissions | 22,119 |  | 18,629 |
Storage | 6,323 |  | 2,280 |
Travel | 8,556 |  | 7,812 |
Depreciation | 4,515 |  | 3,578 |
Amortization of intangibles | 18,376 |  | 22,837 |
Amortization of right-of-use assets | 19,441 |  | 16,613 |
Taxes and fees | 9,556 |  | 8,774 |
Short term rentals | 3,025 |  | 4,276 |
Business events | 3,888 |  | 3,870 |
Marketing and advertising | 4,267 |  | 2,336 |
Insurance | 3,643 |  | 1,884 |
Utilities | 3,124 |  | 2,443 |
Allowance for expected credit losses | 26,496 |  | 12,061 |
Losses and damage of inventories | 1,565 |  | 4,209 |
Fuels and lubricants | 6,953 |  | 6,256 |
Other administrative expenditures | 15,115 |  | 20,577 |
Total | 2,392,909 |  | 2,127,181 |
Classified as: |  |
Cost of goods sold | 2,072,671 |  | 1,811,756 |
Sales, general and administrative expenses | 320,238 |  | 315,425 |

(i)Includes fair value on inventory sold from acquired companies, in the amounts of R$7,829 and R$1,513 respectively for the periods ended September 30, 2023 and 2022.

| 62

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

27.Finance income (costs)

| September 30, 2023 | September 30, 2022
Finance income |  |
Interest from cash equivalents | 6,806 |  | 1,450 |
Interest arising from revenue contracts | 65,647 |  | 65,129 |
Interest from tax benefit (see note 20) | 10,465 |  | 7,407 |
Other | 2,981 |  | 14,833 |
Total | 85,899 |  | 88,819 |
Finance costs |  |
Interest on borrowings | (62,370) |  | (36,303) |
Interest on acquisitions of subsidiary | (3,636) |  | 602 |
Interest on FIAGRO | (9,880) |  | (13,625) |
Interest on leases | (4,258) |  | (3,939) |
Interest on trade payables | (142,360) |  | (148,911) |
Gain on changes in fair value of warrants | (1,420) |  | - |
Other | (12,063) |  | (25,244) |
Total | (235,987) |  | (227,420) |
Other Finance Income (Cost) |  |
Gain on changes in fair value of derivative instruments | 26,281 |  | - |
Loss on changes in fair value of derivative instruments | - |  | (450) |
Gain on fair value of commodity forward contracts | — |  | 3,121 |
Loss on fair value of commodity forward contracts | (284) |  | - |
Foreign exchange differences on cash equivalents | 9,335 |  | - |
Foreign exchange differences on trade receivables and trade payables, net | (5,446) |  | (11,890) |
Foreign exchange differences on borrowings | (8,750) |  | - |
Total | 21,136 |  | (9,219) |
Finance costs, net | (128,952) |  | (147,820) |

28.Non-cash transactions
The Group carries out non-cash transactions which are not reflected in the statement of cash flows.

| 63

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

The Group had non-cash transactions related to the acquisition of subsidiaries through the issuance of shares and accounts payable as described in Note 18.
Additionally, the Group reported non-cash additions to right-of-use assets and lease liabilities of R$9,081 in the three-month period 2023 (R$6,207 in the period ended September 30, 2022).
29 Subsequent events
•New financing transactions
Following September 30, 2023, and up to the date of this interim condensed consolidated financial statements, several of our Brazilian subsidiaries have executed multiple financing agreements, with a combined principal sum of R$279,4 million. These agreements feature interest rates spanning from CDI Rate plus 1,40% to 3,0% and maturities ranging from December 2023 to July 2024.
•Closing of CORAM acquisition
On July 24, 2023, the Group entered into an agreement for the acquisition of a 62.15% interest in Comércio e Representações Agrícolas Ltda,, or “CORAM”. The consideration transferred for the acquisition amounted R$49,873 of which R$29,873 was paid in cash on the closing date (R$20,000 installment + R$9,873 preliminar price adjustment), and the remaining R$20,000 will be paid in cash a year after the closing date.
This acquisition was completed on November 30, 2023, and the Group currently owns a 62.15% interest.
Currently, the Group is actively engaged in estimating the fair value of the acquired assets and assumed liabilities.
•Agribusiness Receivables Certificates (“CRA”)
On December 27, 2023, Lavoro Agro Holding S.A raised a total of R$420 million in debt through the issuance of Agribusiness Receivables Certificates ("CRA"). These certificates are divided into two series (“Series”) maturing in December 2027. Series I, amounting to R$68 million carries an interest rate of CDI plus 3% per annum and Series II, amounting to R$352 million, carries an interest rate of 14.2% per annum.
This new debt includes covenants related to level of indebtedness of the subsidiary Lavoro Agro Holding S.A requiring to meet a net debt to EBITDA ratio of not more than 2.5 x to be calculated as of June 30 of each year.
•Provisional measure – Tax benefits suspention
The federal government suspended the income tax benefit arising from ICMS deduction, with effects starting in 2024. Consequently, in 2024, the Group will no longer be able to benefit from the income tax explained in note 9.

| 64

Notes to the interim condensed consolidated financial statements (In thousands of Brazilian reais - R$, except if otherwise indicated)

| 65